OBLIGATIONS ●​ Degree of care: Diligence of a good

father of a family Art. 1163 of Civil

Requisites of an Obligation: Code
●​ Active subject – creditor ○​ take precautions against any
●​ Passive subject – debtor [pass - harm when there is
naay ipasa] something before you that
●​ Prestation – to give, to do, or not to will suggest any danger
do ●​ Fruits of the thing: the creditor has
●​ Legal or juridical tie – sources of the personal rights to the fruits of
obligation; law, contracts, the thing from the time the obligation
quasi-contracts, delicts, or to deliver it arises
quasi-delicts ○​ the creditor will only have
real rights to the fruits will
Obligations are civil [may be brought to only arise upon the delivery,
court for fulfillment] or natural [cannot be because delivery transfers
brought to court for fulfillment; voluntary ownership
fulfillment] ●​ Rights of creditor if the obligation
is to deliver a:
Sources of Obligations:
●​ Law – not presumed; must be DETERMINATE GENERIC
explicitly provided by the law THING THING
●​ Contracts
○​ has a force of law between compel delivery ask that
of the thing and obligation be
the contracting parties;
all its complied with at
○​ must be complied in good accessions the expense of
faith and not in contrary to [PIA - the debtor
the tenor thereof; Produced,
○​ 3 Elements: Consent, Object, Incorporated,
Cause Attached] and
accessories
●​ Quasi-contracts
[joined, included
○​ juridical relations arising from with the
lawful, voluntary, and principal thing
unilateral acts for its
○​ no one shall be unjustly enjoyment or for
enriched at the expense of its use]
another
if not delivered, if not delivered,
○​ Negotiorum Gestio – remedy is remedy is
unilateral management of the rescission rescission
property while the owner was [cancellation] of [cancellation] of
away the contract the contract
○​ Solutio Indebiti – may
recover recover
nareceive ka by mistake
damages for damages for
●​ Delicts breach of the breach of the
○​ crime; every person obligation obligation
criminally liable is also civilly
liable Art. 100 of Revised if lost or the loss or
Penal Code destroyed due destruction of
to anything of the
●​ Quasi-delicts
unforeseeable same kind does
○​ acts or omission that causes events before not extinguish
damage to another he was in delay, the obligation;
○​ there being fault or obligation is “genus never
negligence extinguished perishes
○​ obliged to pay the damage

[] OBLIGATION TO DO
[] OBLIGATION TO GIVE
●​ Fails to do it: the same shall be
executed at his cost, plus damages;
 hindi pwedeng palitan because ang gagawin nya to protect his
involuntary servitude is prohibited property or the life of others? Kung
●​ In contravention of the tenor of ginamit nya ang necessary na
the obligation: the same shall be diligence, then hindi sya negligent.
executed at his cost; furthermore, it Pero kung hindi, then he is guilty of
may be decreed that what has been negligence]
poorly done be undone; the creditor ●​ Kinds of Negligence:
may also demand damages ○​ Culpa Contractual –
negligence in the
[] OBLIGATION NOT TO DO performance of a contract;
Art. 1170
●​ Does it: it shall be undone at his ○​ Culpa Aquiliana – acts or
expense; damages may also be omissions that cause
claimed damage to another, there
being no contractual relation
GIVE RISE TO DAMAGES Art. 1170 between the parties;
Fraud, Negligence, Delay, and Contravene Quasi-delict
to the tenor thereof ○​ Culpa Criminal – negligence
[] Fraud Dolo that results in the
●​ Kinds of Fraud commission of a crime;
○​ in obtaining consent, the reckless imprudence
contract is voidable resulting to damage in
■​ Dolo Causante – property
fraud of serious
character that was [] Delay Mora
employed to obtain ●​ nonfulfillment of an obligation on
the consent; vitiates time, even if the loss was due to a
the consent fortuitous event, debtor is still liable
■​ Dolo Incidente – ●​ Kinds of Delay:
employed to obtain ○​ Mora Solvendi – debtor
consent, however, it’s ○​ Mora Accipiendi – creditor
not serious in [accip- naay dawaton,
character; the other iaccept si creditor]
party would still give ○​ Compensatio Morae – both
consent even ●​ When is the debtor considered in
knowing the fraud delay:
○​ in the fulfillment of the ○​ General Rule: no demand,
obligation, where damages no delay
arises ○​ Exceptions:
■​ responsibility arising ■​ when law so provides
from fraud is ■​ expressed in the
demandable in all stipulation;
obligations ■​ time is of the
■​ any waiver of an essence;
action for future fraud ■​ demand would be
is void; any waiver for useless;
past fraud is valid ■​ in reciprocal
[] NEGLIGENCE Culpa obligations, there will
●​ omission of that required diligence be an automatic delay
and corresponds with the if one of the parties
circumstances of the persons, time, have done their part
and place and the other did not;
●​ Test of Negligence: did the because it must be
defendant in doing the alleged done at the same
negligent act use that person would time
have used in the situation? If not,
then he is guilty of negligence [kung
ang ordinaryong tao ba nilagay mo FORTUITOUS EVENTS aka Acts of God
sa ganong circumstance, ano kaya Art. 1174
 rescission of the obligation, with the
●​ unforeseeable or foreseeable but payment of damages in either case.
inevitable ○​ he may also seek rescission,
●​ Elements of fortuitous events for even after he has chosen
the application of its general rule: fulfillment, if the latter should
○​ the cause is independent of become impossible
the debtor’s will;
○​ the occurrence of the event ●​ the court shall decree the rescission
must be of such character as claimed, unless there be just cause
to render it impossible for the authorizing the fixing of a period Art.
debtor to perform his 1191
obligation in a normal
manner; and
○​ the debtor did not contribute PRESUMPTION ON RECEIPT OF
or had no participation in the INTEREST OR OF LATER INSTALLMENT
aggravation of the damage
●​ GR: no person shall be liable for ●​ for payment of a monetary obligation
fortuitous event ●​ kapag may interest tapos naga issue
○​ XPN: si creditor ng resibo for the principal
■​ when the law so without stating anything about
provides; interest, may presumption na bayad
■​ when expressly na yung interest
stipulated; ●​ kapag may resibo for later
■​ nature of the installments, pag debt is due
obligation requires periodically, meron ding presumption
the assumption of that the previous installments have
risk; been paid
■​ when the debtor ●​ all of these presumptions are
promise the same disputable
thing to 2 or more
people who does not REMEDIES OF A CREDITOR TO
have the same ENFORCE PAYMENT IN MONETARY
interest; OBLIGATIONS AGAINST THE DEBTOR
■​ when the thing to be [order of priority]
delivered is generic; ●​ exact performance enforce
■​ when the debtor is in [fulfillment of the obligation];
delay; or ●​ exhaust assets in possession of the
■​ when the liability debtor, except those exempted by
proceeds from a law;
criminal loss ●​ accion subrogatoria [you, as creditor,
can exercise all rights and actions of
POWER OF RESCISSION a debtor, except those that are
●​ the power to rescind obligations is personal to him]; or
implied in reciprocal ones, in case ●​ accion pauliana [impugning of the
one of the obligors should not acts which the debtor may have
comply with what is incumbent upon done to defraud the creditors;
him example: si debtor ge baligya niya
○​ if merong breach of iyang mga properties kay di sya
obligation sa reciprocal gusto mo bayad kay creditor, you, as
obligations, impliedly a creditor, can file an action to
considered na pwedeng impugn those deed of sale]
marescind ng either of the
parties TRANSMISSIBILITY OF RIGHTS
○​ proper term for this is ●​ GR: all rights acquired in virtue of an
resolution, not rescind obligation are transmissible
[namatay ang parents, naay
●​ the injured party may choose gepamana na assets tapos naa man
between the fulfillment and the sab liabilities ang parents – ang
creditors ni parents kay pwede ra
 mabayaran up to sa total assets na ●​ those contrary to good customs or
gipamana] public policy and those prohibited by
○​ XPNs: law
■​ if the law prohibits ●​ it annuls the obligation which
[right to public office; depends upon them; hindi lang yung
criminal liability]; condition yung void kundi yung
■​ if prohibited in the buong obligation na nakadepende
stipulation [marriage, duon sa condition
right as husband or ●​ if the obligation is divisible, yung part
wife]; or na hindi apektado ng impossible
■​ if the right is condition ay pwedeng valid pa rin
non-transmissible in ●​ if the condition is not to do an
nature impossible thing, it is considered to
be as no condition at all, so, valid

Pure Obligation POSITIVE CONDITION Art. 1184

– one without a term or condition; ●​ condition that some event will
demandable at once happen at a determinate time
●​ the obligation will extinguish:
Conditional Obligation ○​ as soon as that time expires;
– there’s a condition or period in the or
acquisition of rights or extinguishment or ○​ it become impossible na
loss of those already acquired mangyayari pa yung
condition
CONDITION
●​ a future uncertain event NEGATIVE CONDITION Art. 1185
●​ Kinds of Condition: ●​ condition that the event will not
○​ Suspensive – happen at a determinate time
happening of which ●​ if no time has been fixed, the
give rise to the condition shall be deemed fulfilled at
obligation such time may have probably been
○​ Resolutory – contemplated
demandable at once;
happening of which RIGHTS OF THE PARTIES BEFORE
extinguishes the FULFILLMENT OF CONDITION
obligation ●​ As to the creditor
○​ Potestative – a ○​ may avail appropriate actions
condition that for the preservation of his
depends upon the will rights
of one of the ●​ As to debtor
contracting parties ○​ if nagbigay na sya by
■​ on the part of mistake kasi akala nya
debtor – void nangyari na ang condition,
in suspensive, pwede nya marecover ang
valid in binigay nya
resolutory ●​ the condition shall be deemed
■​ on the part of fulfilled when the obligor voluntarily
creditor – prevents the fulfillment of the
valid in both condition
suspensive
and resolutory EFFECTS OF FULFILLMENT OF
○​ Casual – depends CONDITION
upon chance or will of ●​ GR: it will retroact to the day of the
a third party constitution of the obligation
○​ Mixed – partly ○​ XPNs as to the retroactivity
potestative and partly of the fruits and interests:
casual ■​ in reciprocal
obligations, the fruits
IMPOSSIBLE CONDITION Art. 1183 and interests during
 the pendency of the Condition that is dependent upon the
obligation shall be debtor’s will
deemed to have been (2)​ “To Jinky, my moon and stars, I
mutually obligate myself to pay you the 100K
compensated I owe to you when I feel like it.” –
■​ in unilateral valid, because there is an existing
obligations, the 100k monetary obligation from
debtor keeps the different contract; the date may be
fruits and interests stipulated by the parties or be
received before the brought to the court, therefore, this is
fulfillment of the an obligation with a period
obligation
OBLIGATIONS WITH A PERIOD
RULES IN CASE OF LOSS, ●​ future certain event, not known when
DETERIORATION OR IMPROVEMENT OF [passing the QE level 3 and topping
THE DETERMINATE THING BEFORE THE the CPALE]
FULFILLMENT OF THE OBLIGATION ●​ as an assumption, the period is
established for the benefit of both
(1)​ Loss of the thing parties
(a)​ W/o debtor’s fault – ●​ pag may nadeliver before the period,
obligation is extinguished pwedeng marecover with fruits and
(b)​Through debtor’s fault – interests
debtor is obliged to pay ●​ “when my means permit me to do
damages so”
(2)​ Deterioration of the thing ○​ is considered as an
(a)​ W/ o debtor’s fault – the obligation with a period
impairment shall be borne by ○​ the courts may fix the
the creditor duration kung kailan even if
(b)​Through debtor’s fault – dependent upon the will of
the debtor may choose the debtor
between:
(i)​ rescission + damages WHEN WILL THE DEBTOR LOSSES HIS
(ii)​ fulfillment + damages RIGHT TO MAKE USE OF THE PERIOD
(3)​ Improvement of the thing [IGIVA]
(a)​ By nature or by time – the ●​ Insolvent, unless he gives a
improvement shall be a guaranty or security for the debt
benefit to the creditor ●​ Guaranties/securities promised were
(b)​At the expense of the not furnished [hindi binigay]
debtor – he [creditor] shall ●​ Impairs the guaranties/securities by
have no other right than that his own acts or when through
granted to the usufructuary fortuitous event they disappear,
[rights to use and fruits of the unless he gives new ones equally
thing only] satisfactory
●​ Violates any undertaking in
RULES IN CASE OF FULFILLMENT OF consideration of which the creditor
RESOLUTORY CONDITION agrees to the period
(1)​ the obligation is extinguished; ●​ Attempts to abscond [run away]
(2)​ the parties shall return to each other
what they have received; and Alternative Obligation
(3)​ in case of loss, deterioration, or ●​ madami ang prestations ang
improvement of the thing, the debtor pwedeng ibigay; but the complete
shall be applied to the party who is performance of one is already
bound to return sufficient to extinguish an obligation
●​ “or”
EXAMPLE: ●​ right to choose: debtor, unless
(1)​ “To Pau, my one and true love, I expressly granted to the creditor
promise to give you my Toyota ●​ when the debtor has the right to
Fortuner 2016 model when I feel like choose, he shall not choose those
it” – void, Suspensive Potestative that are impossible or unlawful
 ●​ if the debtor wasn’t able to make a ■​ principal was lost due
choice because of the creditor’s to fortuitous event –
acts, the debtor can rescind the obligation is
contract and receive damages extinguished
■​ principal thing is lost
WHEN AN OBLIGATION CEASES TO BE due to debtor’s fault –
AN ALTERNATIVE AND BECOMES A liable for damages
SIMPLE OBLIGATION ■​ substitute is lost – not
(1)​ when the debtor has communicated liable
his choice to the creditor ○​ After substitution
(2)​ when among the prestations, only ■​ principal is lost – not
one is practicable liable
(3)​ when the creditor was given the right ■​ substitute is lost due
to choose and he has communicated to fortuitous event –
his choice to the debtor obligation is
extinguished
RULES IN CASE MAWALA YUNG ■​ substitute is lost due
ALTERNATIVES BEFORE THE CHOICE to debtor’s fault –
WAS COMMUNICATED liable for damages
A.​ If the right of choice is with the
debtor JOINT OBLIGATION
1.​ if only 1 or some was lost – ●​ the debt is divided as to as many
the debtor may deliver any of equal shares as there are debtors or
the remainder creditors
2.​ if all are lost due to fortuitous ●​ liability of the debtors and the right of
event – obligation is the creditors are proportionate only
extinguished ●​ this is the general rule when there
3.​ if all are loss due to debtor’s are two or more creditors and/or
fault – debtor shall pay the debtors
value of the last thing that ●​ jointly, individually, proportionally,
was lost + damages man-comonada
B.​ If the right of choice is with the
creditor SOLIDARY OBLIGATION
1.​ if only 1 or some was lost ●​ there is mutual guaranty
due to fortuitous event – the ●​ one for all, all for one
debtor shall deliver the ●​ solidary debtors; all of them are
remainder chosen by the liable to pay the obligation as a
creditor whole
2.​ if all are lost due to fortuitous ●​ solidary creditor; all of them has the
event – obligation is rights to claim the entire credit
extinguished ●​ severally, collectively, insulido
3.​ if only 1 or some was lost ●​ Kinds of solidarity:
due to debtor’s fault – ○​ Passive – solidarity on
creditor may choose any of debtors
the remaining or the value of ○​ Active – solidarity on
those which were lost + creditors
damagest ○​ Mixed – solidarity on both
4.​ if all are loss due to debtor’s ●​ solidarity may exist although the
fault – creditor may choose creditors and the debtors may not be
from the value of any of the bound in the same manner and by
lost + damages the same periods and conditions Art.
1211
FACULTATIVE OBLIGATION ●​ when one of the solidary debtors are
●​ only one prestation, but may be insolvent, the other solidary debtors
substituted shall proportionately borne the said
●​ rules in case of loss of principal debtor’s share in the credit
thing and substitute: ●​ if one of your co-solidary debtor is a
○​ Before substitution minor, you may raise for a defense,
 pwedeng mabawasan ang obligation ●​ Characteristics of payment:
na you are obliged to pay ○​ 1.) Integrity – GR: payment
●​ the solidary creditors cannot assign or performance must be
their rights without the consent of the complete
others ○​ XPN:
■​ if there is already a
SOLIDARITY & INDIVISIBILITY substantial
●​ indivisibility pertains to the object performance in good
itself; solidarity pertains to the tie faith, the obligor may
between the parties recover as though
there had been a
DIVISIBLE complete fulfillment,
●​ capable of partial performance minus damages
suffered by obligee
INDIVISIBLE ■​ if despite of the
●​ not capable of partial performance incompleteness, the
obligee accepts the
​ Note: even though the object or performance without
service may be physically divisible, the protest, the obligation
parties or law may agree na indivisible sya is deemed fully
complied with
[] in joint indivisible obligation, it will give ○​ 2.) Identity – GR: the
rise for indemnity of damages in case any of payment of the obligation
the debtors did not comply with his must consist the
undertaking performance of the very thing
due
OBLIGATION WITH PENAL CLAUSE ○​ 3.) Indivisibility – GR: the
●​ obligation with penalty debtor cannot be compelled
●​ in the absence of stipulation to the by the creditor to perform
contrary, the penalty shall substitute obligation in parts and
any damages and interests of neither can the debtor
noncompliance compel the creditor to accept
●​ penalty cannot be a substitute of the obligation in parts
principal or performance ○​ XPN: When
●​ the nullity [pagiging void] of the ■​ part of the obligation
penal clause does not make the is liquidated and part
principal obligation void is unliquidated;
●​ the nullity [pagiging void] of the ■​ to require the debtor
principal obligation makes the to perform in full is
penal clause void; the accessory impractical
follows the principal
PAYMENT BY THE THIRD PERSONS
EXTINGUISHMENT OF OBLIGATIONS ●​ GR: the creditor is not bound to
●​ Payment or performance; accept payment or performance by a
●​ Loss of the thing due; third party
●​ Condonation or Remission of the ○​ XPNs:
debt; ■​ when made by a third
●​ Confusion or Merger of the rights of person who has
creditor and debtor; interest in the
●​ Compensation; fulfillment of the
●​ Novation; obligation;
●​ Prescription; ■​ contrary to the
●​ Annulment; stipulation
●​ Rescission; ●​ Rights of a third person who
●​ Fulfillment of resolutory condition made the payment:
○​ If the payment was made w/
PAYMENT OR PERFORMANCE consent of the debtor:
●​ no creditor is obliged to accept ■​ total reimbursement
partial performance of what he has paid
 ■​ right of subrogation to LOSS OF THE THING DUE
all the rights of the – when it perishes, or goes out of
creditor commerce, or disappears in such a way its
○​ If the payment was made existence is unknown or it cannot be
w/o the consent of the recovered
debtor: – obligation is extinguished for specific
■​ can recover only things
insofar as payment – obligation is also extinguished when it
has been beneficial to becomes impossible or difficult to do the
the debtor; obligation to do
■​ no right of – when it’s the third person’s fault: the
subrogation creditor may avail of himself all the rights
which the debtor may have against the third
​ Note: payment to an unauthorized person
person is not a valid payment
CONDONATION OR REMISSION
SPECIAL FORMS OF PAYMENT ●​ pinapatawad yung utang
(1)​ Dation in Payment dacion en pago ●​ a gratuitous mode of extinguishment
– what was paid in a monetary ●​ if the donation is immovable property
obligation was property; debtor is or more than 5k, the donation and
released [ownership] acceptance must be in writing, or
(2)​ Application of Payment – a debtor otherwise it’s void
owes two or more debts of same ●​ if the property to be remitted or
nature that are due and demandable condoned is an immovable, the
to a creditor; money is not sufficient remission and acceptance must be
to cover all debts; generally, debtor’s in public instrument, or otherwise it
choice will be void
(3)​ Payment by Cession – maraming ●​ kapag yung promissory note ay
utang but insolvent si debtor; napunta na kay debtor, there’s a
ibibigay nya lahat ng kanyang rebuttable assumption that the note
properties except those exempted was delivered by the creditor himself
from execution; one debtor, one or and the obligation was condoned
more creditors [may be sold]; debtor
is not released MERGER/CONFUSION
(4)​ Tender of Payment – you present ●​ the personality of the debtor and
payment creditor ay na merge sa iisang tao
(5)​ Consignation – you present ●​ applies to the person who is
payment but the creditor refuses to principally liable or the principal
receive the presented payment; to creditor
extinguish the obligation, debtor will
consign the payment to the courts COMPENSATION
and inform the creditor about the ●​ kwets na tayo; I owe you, you owe
consignation, then may ask the me an equal thing
judge to order the cancellation of the ●​ Obligations not subject to
obligation compensation:
(a)​ When consignation w/o a ○​ debts arising from
previous tender of depositary/depositum
payment will produce the ○​ debts arising from a bailee
same effect: commodatum
(i)​ when the creditor’s ○​ claims for support due by
domicile is unknown gratuitous title
(ii)​ when creditor is ○​ obligations from criminal
incapacitated offense
(iii)​ when two or more ○​ certain obligations in favor of
persons claim the government
same right to collect ●​ Facultative compensation – may
(iv)​ when the title of the be claimed or opposed by third
obligation has been parties [pwede nila ma kuan as
lost compensation tung naas babaw na
 bawal if sila ang apektado if ma ●​ offer must be certain
compensate] ●​ acceptance must be absolute
[expressed or implied]; a qualified
NOVATION acceptance only means a
●​ agreed substitution or change of an counter-offer
obligation by another, resulting in an ●​ offeror may fix the time, place, and
extinguishment or modification manner of acceptance, all of which
●​ changes may be in: must be complied with
○​ objects ●​ in acceptance, the knowledge of the
○​ condition offeror is important for the
○​ personality ng parties perfection; in withdrawal of offer,
●​ a void obligation cannot be cured the knowledge of the offeree thereof
with novation is not necessary [cognition theory]
●​ a voidable obligation can be cured ●​ option agreement:
by a novation; but can still be ○​ the offerer has allowed the
annulled ha offeree a certain period of
●​ in any changes, what matters is the time to accept the offer
consent of the creditor ○​ may be withdrawn at any
●​ old obligation is extinguished by new time before acceptance,
valid obligation without being liable to
●​ Gr: extinguishment of the principal damages
obligation shall also extinguish its ●​ option contract:
accessory obligations ○​ there is a separate
●​ any conditions attached to the consideration; involves
original condition shall be option money
transferred to the new obligation, ○​ withdrawing can cause
unless otherwise stipulated damages
●​ Advertisement: only becomes a
​ Note: when a third person is definite offer if it states a definite
interested in fulfilling the obligation, he is cause and object
entitled to subrogation even w/o the
knowledge of the debtor SITUATIONS CONCERNING CONSENT
OF THE CONTRACTING PARTIES
CONTRACTS (1)​ Both parties gave their consent as
to the essential elements of the
STAGES OF A CONTRACT contract – contract is valid
(1)​ Negotiation (2)​ Simulation on the part of any of the
(2)​ Perfection – meeting of minds parties: which can either be:
(3)​ Consummation – obligations have (a)​ Absolute simulation – when
already been performed one or both parties did not
intend to be bound by the
​ the liability to pay interest is an contract [joking]: contract is
accidental element of contract; required to void because consent is
be stipulated in writing in order to validly absent
attach to the contract (b)​Relative simulation – the
parties agreed to a different
ESSENTIAL ELEMENTS OF THE intentions, but they make it
CONTRACT appear otherwise: not
(1)​ Consent entirely void, bound to the
(2)​ Object original intention
(3)​ Cause (3)​ Incapacity of one party
​ absence of any will make the said (a)​ Juridical incapacity – void
contract VOID (b)​ Legal incapacity – (a)
absolute legal incapacity:
CONSENT void, (b) relative legal
●​ manifested by the meeting of the incapacity: may be void, may
offer and the acceptance, be valid
concerning the object and the cause (4)​ Both are incapacitated:
OFFER AND ACCEPTANCE unenforceable
 (5)​ Both parties gave consent but the the property [rescissible
consent was vitiated by vices of contracts] – voidable
consent – voidable ●​ particular motives or secret motives
are ignored
VICES OF CONSENT [affects;]
(1)​ Mistake [intelligence in giving FORMS OF CONTRACTS
consent] – must relate to the facts, ●​ GR: no form is required by law
not with law ○​ XPNs:
(2)​ Violence [voluntariness] ■​ donations of real
(3)​ Intimidation voluntariness property, must be in
(4)​ Undue Influence voluntariness – public instrument
when a person takes improper for validity
advantage of his power over the will ■​ donation of personal
of another, depriving the latter of a property with value
reasonable freedom of choice of more than 5k,
(5)​ Fraud intelligence in giving consent must be in writing for
– insidious words or machinations validity
[causal fraud] ■​ stipulation to pay
interest, must be in
writing for validity
OBJECT ■​ sale of large cattle,
●​ subject matter of the contract must be in a public
●​ can either be: things, rights, or instrument for validity
services
●​ must be within the commerce of man ■​ those under the
●​ must be transmissible statute of frauds for
●​ must be determinate enforceability
●​ future inheritance is generally void ■​ agreement made in
as an object; however: consideration of
○​ partition inter-vivos: when marriage, other than
the owner predecessor of the mutual promise to
properties divides it to the mary for
heirs while he’s still alive enforceability
[valid]; ■​ sale of goods at a
○​ marriage settlement price of at least P500
[pre-nuptial]: [valid] for enforceability
■​ lease of real property
CAUSE / CONSIDERATION for more than a year
●​ the reason why you are entering for enforceability
into a contract ●​ compelling to execute a public
●​ types of cause: instrument is only applicable as
○​ Onerous – when the cause remedy to contracts that are valid
is the prestation or promise and enforceable
of a thing or service by the
other [] Statute of Frauds – lists the transactions
○​ Gratuitous – when cause is under the law which are required to be in
mere liberality of the writing in order for them to be enforceable
benefactor [donation] because they’re prone to fraud; the contract
○​ Remuneratory – when is valid but unenforceable under the law
cause is the service already
rendered in the past Reformation of Instruments
●​ a false cause with another true and ●​ remedy for written instruments to
lawful cause is a valid contract reform the said instrument to
●​ rebuttably assumed to exist express the true intention of the
●​ the inadequacy of the price [SP < parties when some error or mutual
FVM] won’t generally make the mistake has been made to the
contract void, except in: original instrument
○​ Lesion – economic injury for
more than ¼ of the value of
 incapacitated is only
KINDS OF CONTRACTS AS TO VALIDITY obligated for restitution
Rescissible Contracts insofar as he has been
●​ rescission is a subsidiary action, benefited by the thing
except for resolution in a reciprocal received by him
obligation
●​ up to the extent to cover the UNENFORCEABLE CONTRACTS
damages caused ●​ unauthorized
●​ creates mutual restitution ●​ those that do not comply with
●​ prescriptive period: action to claim the Statute of Frauds; the
rescission must be within 4 years defense may be waived
●​ lesion – economic injury of a ward ●​ both parties are
or absentee for more than ¼ of the incapacitated
value of the things entered by its
guardian or representative [except VOID CONTRACTS
those entered by agents] ●​ either inexistent, illegal, or illicit
●​ in fraud of creditors – when the ●​ any one of the essential elements is
creditor cannot in any other manner missing
collect the claims due [accion
pauliana] PARTNERSHIP
●​ things under litigation – when
entered into a contract by the Test to Determine the Existence of a
defendant w/o the consent of Partnership
litigants or court [] First Test – whether or not there
●​ provided by the law: is an agreement to contribute to money,
○​ rights of an unpaid seller property, or industry to a common fund
○​ the thing deteriorates with []Second Test – whether or not
the fault of the debtor, one of there is an intent of the contracting parties
the options to divide profits among themselves
○​ lesion of at least ¼ in
partition Characteristics of a Contract of
○​ sale of real estate is deficient Partnership
by at least 1/10 1)​ Consensual – perfected by mere
consent
VOIDABLE CONTRACTS 2)​ Commutative – contributions are
●​ valid until they have been annulled considered equal
by proper action in court 3)​ Principal – didn’t depend on other
●​ subject to ratification to cure the contracts
defect 4)​ Bilateral – entered by two or more
●​ kinds of voidable contracts: persons
○​ where one of the parties is 5)​ Onerous – every partner contributes
incapable of giving consent 6)​ Nominate – has name in law
○​ the consent is vitiated from 7)​ Preparatory – preparation for
vices of consent another contract/s
●​ prescriptive period: 4 years
●​ annulment or ratification ​ Joint Venture is limited to one task
●​ ratification: or venture, also governed by the law of
○​ extinguishes the right to partnership
annul since it cleanses the
contract Delectus Personae – choice of persons
○​ may be effected by the Delectus Personarum – choice of the
guardian person
●​ annulment:
○​ as if the contract was never Effects of an Unlawful Partnership
entered into 1)​ contract is void from the very
○​ only the injured party can ask beginning;
for annulment 2)​ profits shall be confiscated by the
○​ mutual restitution; in case of government;
incapacity, the person
 3)​ instruments/tools and proceeds of GR: unanimous consent of all managing
the crime are forfeited by the partners, including those who are absent or
government; and incapacitated, is necessary for the validity of
4)​ contributions to the partnership any of their decisions or acts
that are not from #3 are not ​ XPN: when waiting could cause
confiscated imminent harm to the partnership

​ Associations and Co-ownership ​ no partner can make any important

are governed by the same law and not by alterations with the partnership’s
the law of partnership immovable property w/o the unanimous
consent–even if said alterations may be
[] Particular Partnership – particularity in useful to the partnership
its contributions
[] Particular Undertaking – particularity in ​ every partner may copy and inspect
its venture the books of the partnership within the
reasonable time
​ when silent, partnership is
considered to be a universal partnership GR: no formal accounting is demandable
of profits until after the dissolution

Persons Who Cannot Enter Into a Remedy for when:

Universal Partnership: ★​ Industrial partner engages in
●​ legally married spouses business for himself – for the
●​ live-in partners capitalist partners
●​ guilty of adultery or concubinage ★​ Capitalist partner engage in same
●​ guilty of same criminal offense kind of business – for the common
●​ person and a public officer or his fund
wife, descendants and ascendants,
by reason of his office Charging Order
●​ received from court due to the
​ a partner who failed to deliver his actions taken by the separate
contribution on time makes the partner a creditor of a partner
debtor to the partnership, even without ●​ where the debtor-partner’s interest
demand will be assigned to its separate
creditor
Remedies of Capitalist Partner When an
Industrial Partner Engaged in Business ​ those who are not parties yet
for Himself includes their names in the firm’s name
(1)​ exclude the industrial partner from is liable like a partner as to the 3rd
the partnership + damages; or persons who suffered injury due to the
(2)​ avail themselves of the benefits misrepresentation
which the industrial partner may
have obtained + damages Transactions Entered by Unauthorized
Partners​
​ damages of a negligent partner to [] an unusual business transaction
the partnership cannot be offset from his between an unauthorized partner and 3rd
benefits from the partnership person in good faith is not valid
[] usual or unusual transactions
​ partnership is governed by fiduciary between an unauthorized partner and
relationship – mutual trust and confidence knowledgeable 3rd person are not binding

​ industrial partners are liable to 3rd ​ conveyance of a property that is

persons, but may recover from the under the partnership’s name, that was
capitalist partners done by an unauthorized partner, cannot be
recovered if it’s in line of the business
Breaking the Tie in Decision-Making
order of priority: ​ the buyer of any conveyance of a
(1)​ head count; or property by someone whose name is not on
(2)​ ownership interest
the its title will only receive equitable ★​ on the dissolution;
interest ★​ date specified in the certificate; or
★​ 6 months after giving a written notice
​ an admission [like a whistleblower]
by a former partner cannot be held as an ​ a Limited Partner can ask for the
evidence against the firm, especially when dissolution of the partnership when he
it’s about things beyond his former scope of rightfully but unsuccessfully demands
authority the return of his contribution

​ a notice to the partner is a notice to

the partnership; a notice to the partnership COOPERATIVE
is not a notice to the partners
COOPERATIVE
​ a partnership is dissolved when the ●​ an autonomous and duly registered
initial contribution of a partner, a property association of persons
for use, was lost before or after the delivery ●​ in areas where appropriate
cooperative exists, they enjoy the
In order to discharge a partner’s liability, preferential rights to supply the
all must agree: government institutions and
(1)​ the said partner; agencies
(2)​ the other partners; and ●​ limited liability
(3)​ the creditors
Registration of Cooperative
RIGHTS OF A PARTNER ENTITLED TO ●​ 15 or more Filipinos of legal age
RESCIND THE PARTNERSHIP DUE TO actually residing or working in the
FRAUD intended area of operation
★​ right of lien/retention ●​ prospect members must have
★​ right of subrogation substitution completed the Pre-Membership
★​ right of indemnification Education Seminar
●​ initial length of operation: 50
​ the creditors of the old partnership, years, may be extended
that was only dissolved and not winded up, ●​ after 60 days of filing to COA, no
are also creditors of the continuing response from the COA deemed the
partnership filled registration as approved
●​ in case of denial of application, an
​ when to render an account? at the appeal may be filed within 90 days
date of dissolution or as stipulated upon the receipt of denial

LIMITED PARTNERSHIP ​ amendment of AOC needs to have

●​ must always made in writing ⅔ votes of members with voting rights
●​ the surname of limited partner
shall not appear on the firm’s name ​ consolidation and division of
●​ interest is assignable w/o the need cooperatives needs ¾ votes from members
of all partners’ consents with voting rights, and must be in quorum
●​ death, insolvency, etc. of a limited
partner does not dissolve the Membership in Cooperative
partnership ★​ Regular Member
○​ submitted all the
General-Limited Partner requirements
★​ Rights – GP ○​ enjoys all the rights and
★​ Liabilities – GP benefits
★​ Contribution – LP ★​ Associate Member
○​ has no voting rights
​ being a limited partner is like ○​ entitled only to the rights and
having preferential rights over returns and benefits as provided on their
compensations by-laws
○​ need to qualify as a regular
When can the contributions of an LP be member within 2 years
returned?
​ elective officials are ineligible to Illegal use of confidential information
become officers/directors of the – shall compensate the cooperative for the
cooperative, except those party-list direct losses suffered and account to the
representatives cooperative any direct advantage gained or
yet to gain
General Assembly
●​ like the shareholders Removal of Officers
●​ highest policy-making body ●​ must be filled to the BOD
composed of members entitled to ●​ upon finding a prima facie
vote evidence of guilt, the BOD will
●​ regular meetings: annually forward it to the General Assembly
●​ special meetings: when called ●​ the officer may be removed by ¾
upon by the majority of the BOD or votes
CDA
●​ general quorum: 25%; cooperative ​ cooperatives are only taxed to
banks: ½ + 1 of those in good their transactions with non-members
standing; electric cooperatives: 5%
●​ 1 member = 1 vote ​ insolvent cooperatives may apply
for remedies under the RA 1956 or the
Board of Directors Insolvency Law
●​ 5-15 members
●​ term: 2 years, may be justly Dissolution
removed ★​ Voluntary, W/o Affected Creditors
●​ regular meetings: once a month ○​ majority vote of the BOD
●​ special meetings: called upon by ○​ resolution of at least ¾ votes
the chair or majority of the directors of General Assembly
●​ proxy votes are not allowed in ★​ Voluntary, W/ Affected Creditors
meetings ○​ petition by majority of BOD
●​ filling of vacancy: or other officers, verified by
○​ still in quorum – by the the chair or board secretary
directors ○​ affirmative ¾ votes of
○​ no longer in quorum – by the General Assembly
general assembly ★​ Involuntary
●​ the chair & v-chair are elected by ○​ by CDA
the BODs ○​ one may due to not operating
●​ relatives of the directors up to the within 2 years after
3rd degree cannot be elected as receiving its COR
officers
●​ plain loss of confidence is not a Liquidation of Cooperative – may be done
valid reason of removal within 3 years after the dissolution

Committees of Cooperative a member can’t transfer his interest,

★​ Audit & Election – elected by the unless:
General Assembly ★​ he’s held the share for more than a
★​ Other Committees – elected by the year
BOD ★​ transfer is to the existing member
or cooperative
Liability for secret profits, self-dealing &
disloyalty of directors – double the profits; Governing Law of Cooperatives
may be ratified by ¾ votes of the members ●​ RA 11364, the CDA Charter of 2019
●​ RA 9520, the Philippine Cooperative
Compensation Code of 2008
●​ when not fixed in the by-laws: per
diem ​ the CDA has 37 powers, functions,
●​ no compensation if there was a net and responsibilities; the old charter had 15
loss or dividend’s % is less than the
inflation rate from the previous year Liability of Officers, Directors for:
●​ Members & Officers: fixed (1)​ Damages – jointly and severally
●​ Employees: by-laws or BOD (2)​ Secret Profits – double the profits
CORPORATION ★​ Corporation Sole – formed by one
●​ artificial being created by operation individual
of law ★​ Religious Societies – composed of
●​ fines for corporate crimes: one or more individuals; ⅔ votes
corporation
●​ held criminally liable: corporate Lay Corporations
officers – organized for purposes other than religion
●​ cannot file for moral damages ★​ Eleemosynary – for charitable
●​ centralized management purposes
●​ perpetual existence ★​ Civil – for the benefits of persons
●​ number of incorporators: not more composing it
than 15 Questioning the Personality of the
●​ those vested with public interest Corporation
shall have independent directors, ★​ Direct Attack – the very subject is
constituting at least 20% of the its existence; for de jure & estoppel
board ★​ Collateral Attack – questioned as a
●​ at least 25% of the authorized side subject
capital stock must be subscribed
and that 25% of the subscription [] Affiliate – a member corporation of a
must be paid up [not less than group of companies
P5,000] [] Associate – a corporation significantly
influenced by an investor
Doctrine of Piercing the Veil of Corporate
Entity Promotional Stage – undertaken by
●​ whenever the court finds that the promoters who are looking for investors; no
corporate fiction, its juridical established corporation just yet
personality, is being misused
●​ the court will hold the individuals ​ the principal office [may not be the
behind it liable place of operations] should be in the
Philippines
Powers of Corporation
★​ Express Powers – those Corporation W/ Definite Term
authorized by the RCCP and its – for those with definite term, extensions
AOI can only be made no earlier than 3 years
★​ Implied Powers – those necessary before its expiry; unless with justifiable
for the exercise of express powers reasons
★​ Incidental Powers – apparent and – after expiration, the corporation may file
emergency for powers of corporate for revival
agents
Filipino Ownership Requirement:
​ no foreign corporations shall give ★​ Mass Media – 100%
donations for any partisan political ★​ Advertising – 70%
activities ★​ Public Utility – 60%
★​ Educational Institution – 60%
Ultra-Vires Acts ★​ EED of Natural Resources – 60%
– acts beyond the powers of the ★​ Ownership of Land – 60%
corporation; not necessarily illegal
(1)​ those illegal per se in itself – null # of BOD – not more than 15
and void # of BOT – may exceed 15
(2)​ for failure to comply required
votings – null and void; but nullity Requirements for the Amendment of AOI
may be prevented by denying the (1)​ majority approval of the BOD;
enjoyment (2)​ written approval of stockholders, ⅔
(3)​ for being outside the primary and of outstanding shares; and
secondary purposes of the (3)​ approval SEC
business – voidable depending to
other party [] insolvent person is permanently
disqualified from being elected as a director
Ecclesiastical / Religious Corporations
Doctrine of Management Prerogative
– the decisions of the BOD with the
management cannot be changed by the
court unless it’s ultra-vires or destructive
to the minority

Corporate Opportunity Doctrine

– a director can’t appropriate himself
opportunity which in fairness should belong
to the corporation
– liable or may be ratified by ⅔ votes
– acquiring adverse interest on a matter
reposed in him in confidence cannot be
ratified

Methods of Voting
★​ Straight Voting
○​ majority-friendly
○​ a stockholder’s vote is
determined by the number of
his shares
○​ can vote up to its number of
shares per seat
★​ Cumulative Voting
○​ minority-friendly
○​ total votes = # of shares x #
of seats to be voted upon
○​ may be voted in lump-sum
to one candidate or
distributed

Removal & Filling Up Vacancies

●​ a director not representing the
minority may be removed w/o
cause
●​ removal must be voted by ⅔ of
outstanding shares
●​ filling up by shareholders:
vacancies due to removal,
expiration, or increase of the # of
BOD
●​ filling up by directors: other
causes when they’re still in quorum

[] Hold-Over Director – whose term has

expired but continued because no election
yet
[] Emergency Board – vacancy filled by an
officer, voted by the BOD; must notify SEC
[] Self-dealing Directors – who transacts
business w/ his own corporation and the
corporation, GR: void
[] Interlocking Director – a director of 2
corporations transacting with one another
GR: valid, void when he owns more than
20% ownership interest in one of them