Before Classes Started Deck

Question 1

according to Article 1156, what is an obligation

Answer 1

An obligation is a juridical necessity to give, to or do, not to do

Question 2

The term obligation is derived from the Latin word _________
which means a “tying” or “binding.”

Answer 2

obligatio

Question 3

another term for obligation?

Answer 3

tie of law or juridical bond by by virtue of one being bound in favor of another to render something

=====================
[gpt]
the term “tie of law” and “juridical bond” essentially refer to the legal relationship or connection created by an obligation.

Question 4

what is the meaning of juridical necessity?

Answer 4

obligation is a juridical necessity such that non-compliance may justify calling upon the courts to enforce its fulfillment and absent of the fulfilment, the economic value the obligation represents

=======================
[book]
Obligation is a juridical necessity because in case of non-compliance,
the courts of justice may be called upon to enforce its fulfillment or, in
default thereof, the economic value that it represents.

[gpt]
if someone does not fulfill their obligation, the courts may step in to enforce it or, if necessary, ensure that the economic value tied to the obligation is realized. The term “in default thereof” underscores the idea that the legal system can intervene when obligations are not met.

If enforcement of the obligation itself is not feasible, the court may award the obligee with monetary compensation, representing the economic value associated with the obligation.

Question 5

the debtor may also be made liable for________, which represent the
sum of money given as a compensation for the injury or harm suffered by the creditor or obligee (he who has the right to the performance of the obligation) for the violation of his rights.

Answer 5

damages

Question 6

If obligations were not made enforceable, then people can disregard them with impunity (exemption from punishment).

If an obligation cannot be enforced, it may be only a _____________.

Answer 6

natural obligation

=============
ex of natural obligation

Now, consider a situation where Party A voluntarily supports Party B financially during a difficult time, even though there is no legal contract or obligation requiring Party A to do so. In this case, Party B does not have a legal right of action to force Party A to continue providing financial support. However, based on principles of equity and natural law, Party A may feel a moral or ethical duty to continue the support voluntarily. If Party A stops providing support, Party B cannot legally compel them to continue, but there may be a sense of moral obligation.

Question 7

Obligations which give to the creditor or obligee a right of action in courts of justice to enforce their performance are known as ___________

Answer 7

civil obligations

Question 8

what are the essential requisites of an obligation?

LB.

Answer 8

1. passive subject
2. active subject
3. object/prestation
4. juridical or legal tie

A. 1156

===================
An obligation as defi ned in Article 1156 is constituted upon the
concurrence of the four (4) essential elements thereof, namely:

(1) A passive subject (called debtor or obligor) or the person who is
bound to the fulfi llment of the obligation; he who has a duty;

(2) An active subject (called creditor or obligee) or the person who
is entitled to demand the fulfillment of the obligation; he who has a
right;

(3) Object or prestation (subject matter of the obligation) or the conduct required to be observed by the debtor. It may consist in giving,
doing, or not doing. (see Art. 1232.) Without the prestation, there is
nothing to perform. In bilateral obligations (see Art. 1191.), the parties
are reciprocally debtors and creditors; and

(4) A juridical or legal tie (also called effi cient cause) or that which
binds or connects the parties to the obligation. The tie in an obligation
can easily be determined by knowing the source of the obligation. (Art.
1157.)

Question 9

what are the forms of obligation?

Answer 9

1. Generally, the law does not require a specific form in obligations (Art. 1356)
2. Obligations arising from Article 1157 do NOT have form at all

[GPT]
contracts are generally valid regardless of the form they take, as long as they meet the essential requirements for contract formation.

Question 10

State Article 1157:

Answer 10

Art. 1157.

Obligations arise from:

law
contracts
quasi-contracts
acts or omissions punished by law; and
quasi-delicts

Question 11

__ is the act or performance which the law will enforce.

Question 12

___ is the power which a person has
under the law, to demand from another any prestation

Question 13

___ or (_______) is an act or omission of one party in violation of the legal right or rights of another, causing injury to the latter

Question 14

Essential Elements of Cause of Action

Answer 14

• Right given by law
• Obligation to follow to respect that right
• Act or Omission violating that right

[book]
(a) a legal right in favor of a person (creditor/plaintiff) by whatever means and under whatever law it arises or is created;

(b) a correlative legal obligation on the part of another (debtor/defendant) to respect or not to violate said right; and

(c) an act or omission in breach or violation of said right by the defendant with consequential injury or damage to the plaintiff for which he may maintain an action for the recovery of damages or other appropriate relief.

Question 15

what happens if any of the element is absent?

LB

Answer 15

the complaint may be dismissed on the ground of failure to state a cause of action

San Lorenzo Village Assoc. Inc. V. Court of Appeals
Uy v. Evangelista

Question 16

when does a cause of action arise?

Answer 16

when the last element occur, act or omission in violation of right, or when a right has been transgressed.

Question 17

Cause of Action

VS.

Right of Action

Answer 17

COA
- governed by procedural law

ROA
- governed by substantive law

[book]
The right of action springs from the cause of action, but does not accrue until all the facts which constitute the cause of action have occurred

[GPT]
The right of action is dependent on the completion of all the elements that make up the cause of action.

In practice, when a person has a cause of action (e.g., their legal right is violated), they have the right of action, enabling them to bring the matter to court. The right of action arises from the existence of a valid cause of action.

Question 18

S rejected or cancelled a contract to sell his property even before the arrival of the period in the exercise of the option to buy by the purchaser who has already made a downpayment.

Facts: S and B entered into a contract to sell, whereby B, after making
a downpayment, was given the option to pay the balance of the purchase
price of a parcel of land. Later, S “rejected the contract to sell’’ even before the arrival of the period for the exercise of said option on the ground that the terms and conditions of the contract are grossly disadvantageous and highly prejudicial to his interest. S sent two (2) checks to B in an apparent effort to return the downpayment.

S contends that the complaint was prematurely fi led because at the
time of the institution of the complaint, B has yet to exercise his option under the “Option of Buyer’’ clause of the contract.

Issue: Has B a cause of action against S for prematurity?

Answer 18

Yes. B has a cause of action against S

All elements of a COA is present here. One, B had the right to exercise his option to buy as it was within the period to exercuse such. Two, the contract between S and B is legally binding thus obliged. Three, S violated that right by cancelling/rejecting the contract prematurely.

[book]
Held: Yes. (1) All the elements of a cause of action are present. — First,
there is a legal right in favor of B, i.e., the right to complete the payment
of the purchase price should he choose to do so; there is an obligation
on the part of S to sell the subject property exclusively to B upon full
payment of the purchase price; and there was a breach of S’s obligation to
sell the property, when S rejected the contract to sell even before B could
exercise his option to buy notwithstanding that he had already made a downpayment.

Question 19

Was the rejection of S of the contract lawfully done?

Answer 19

No.

S did not cancel the contract judicially or by notarial act. His mere attempts to return B’s down payment does not constitute a defense and is such act is of no moment.

[book]
S rejected contract to sell in no uncertain terms. — The fact that the
rejection or cancellation of the contract by S was not made judicially or by notarial act (see Art. 1592.) is of no moment. It is enough for purposes
of determining the existence of a cause of action that S has declared in
no uncertain terms his refusal to be bound by the contract to sell. Such
declaration, coupled with S’s act of returning B’s down payment, clearly
indicates S’s rejection of the contract to sell. (Leberman Realty Corporation
vs. Typingco)

Question 20

what is the cause of action based upon a written contract?

Answer 20

the COA of a written contract is from the breach and not the commencement of the contract. It should be brought within 10 years from the accrual of the right of action

[book]
Actions based upon a written contract should be brought within 10
years from the time the right of action accrues. (Art. 1144.) The accrual refers to the cause of action. Accordingly, an action based on a contract accrues only when an actual breach or violation thereof occurs. (China Banking Corp. vs. Court of Appeals, 461 SCRA 162 [2005]; see Art. 1169.) Therefore, the period of prescription commences, not from the date of execution of the contract but from the occurrence of the breach.

Question 21

In an action to rescind a contract of sale on installment basis, for non-payment, the cause of action is

LB

Answer 21

the last unpaid installment

Nabus v CA

Question 22

Where an overdraft agreement stipulates that the obligation is payable on demand, the breach starts?

LB

overdraft - An overdraft is a financial arrangement where a bank allows an account holder to withdraw or borrow more money than is actually available in the account, up to a certain limit. It’s essentially a form of short-term loan, often used for covering temporary deficits in funds

Answer 22

breach starts only from the time of the demand and is not satisfied

Elido v. CA

Question 23

In a contract of loan with real estate mortgage, whereby the creditor could unilaterally increase the interest rate, where the creditor foreclosed the mortgage when the debtor failed to pay the loan,

the cause of action for the annulment of the foreclosure sale is?

Answer 23

the COA for debtor’s annulment of the foreclosure sale is NOT the failure to pay but from the time he was aware of the unilateral increase interest

[book]
should be counted from the date the debtor discovered the increased interest rate (Banco Filipino Savings & Mortgage Bank vs. Court of Appeals

Question 24

Where the agreement to buy and sell was conditioned upon the conduct of a preliminary survey of the land to verify, whether it contained the area stated in the tax declaration, the right of action for specific performance arose when?

LB

Answer 24

[book]
arose only when the plaintiff discovered the completion of the survey. (Cole vs. Gregorio,

Question 25

Jane has been employed by XYZ Corporation for the past three years. During her tenure, she often worked overtime hours, which were not compensated. Jane believes that she is entitled to unpaid overtime pay for the past two years. In January, Jane formally approached her supervisor, Mr. Smith, and submitted a written request for the payment of her unpaid overtime. Mr. Smith acknowledged the request but did not provide a clear response. In September, Jane received a letter from XYZ Corporation's HR department, stating that after a thorough review, the company has decided not to grant her request for unpaid overtime pay. when did the cause of action accrue?

Answer 25

the cause of action accrue when the HR gave a definite denial to the claim of Jane. It did not accrue from the date Jane submitted a written request for payment [book] With respect to money claims arising from a contract of employment, which would prescribe in three (3) years from the time the cause of action accrued, the cause of action would arise from the date the employer made a definite denial of the employee’s claim, for prior to such denial, it is deemed that the issues had not yet been joined because the employee could have still been reinstated (Serrano vs. Court of Appeals)

Question 26

In an action for reformation of a contract, where the plaintiff alleged, among others, that the contract was one-sided in favor of the defendant, and that certain events had made the arrangement inequitable, the cause of action is? LB

Answer 26

when the contract appeared disadvantageous Naga Telephone Co v CA

Question 27

What is the major factor in determining COA in products sold? (a) in case of short deliveries, the cause of action will arise only from when? (b) LB

Answer 27

a - nature of product sold b - only from discovery with certainty Pilipinas Shell Petroleum Corp v John Bordment

Question 28

__________ is the illegal **i**nvasion of a legal right; it is the wrongful act or omission which causes loss or harm to another

Answer 28

injury

Question 29

__________ is the loss, hurt, or harm which results from the thereof

Answer 29

damage

Question 30

____ denote the **sum of money **recoverable as amends for the wrongful act or omission

Answer 30

damages

Question 31

differentiate injury from damage**s**

Answer 31

injury is the legal wrong to be redressed while damages is the compensatory aspect of the damage that came from the injury Injury is the legal wrong to be redressed, while damages are the recompense or compensation awarded or recoverable for the damage or loss suffered. (Custodio vs. CA)

Question 32

John, a tenant in an apartment building owned by ABC Realty, discovers that the building's fire alarm system has not been functioning for several months, which is a clear violation of the safety regulations outlined in his lease agreement. Concerned for his safety and that of other tenants, John formally notifies ABC Realty of the issue, requesting immediate repairs to the fire alarm system. Despite the notification, ABC Realty fails to take any action to address the non-functional fire alarm system. John believes that the non-compliance with safety regulations constitutes a wrongful violation of his legal right to a safe living environment as stipulated in the lease agreement. is the wrongful violation of John's legal right to a safe living environment sufficient on its own to entitle him to sue ABC Realty in a court of justice? what is the pecuniary proof in this scenario? LB

Answer 32

No, the violation of John's legal right is not sufficient on its own. As a rule of actual/compensatory damages (Art. 2199), there must be, in addition, loss or damage caused to him by the violation of his right. There is no pecuniary proof in this scenario however if a fire does occur, the proof would be medical expenses incurred, damages by receipts or bank statements.

Question 33

what are violations or injuries that does not need pecuniary proof to be awarded

Answer 33

exemplary moral nominal temperate liquidated

Question 34

He who uses his own right harms no one" or more colloquially, "One who makes use of his legal right does no injury." latin of that

Answer 34

Qui jure suo utitur mullum damnum facit

Question 35

If damage results from a person’s exercising his legal rights, it is (damage without injury) latin

Answer 35

damnum absque injuria

Question 36

Acts of importer contesting forfeiture, delay in the delivery of goods to highest bidder. Facts: X imported certain goods. The Collector of Customs declared the goods forfeited in favor of the government and ordered the sale thereof at public auction. The bid of Y was approved and the goods were awarded to him. Under the law, X has the right to have the decision of the Collector of Customs reviewed by the Commissioner of Customs, and from the decision of the latter, to appeal to the Court of Tax Appeals (Secs. 2313, 402, Tariff and Customs Code.), and from the latter’s decision, to the Supreme Court. X will be prejudiced if the sale is not set aside. (see Art. 1397.) Issue: Is X liable to Y for damages from the consequent delay in the delivery of the goods? LB

Answer 36

no. x is not liable to y's delay because x's exercise of his right to have the decision reviewed is *qui JURE suo utitur mullum damnum facit* the delay is a result to x's exercise of such right therefore does not make him liable. **Auyong Hian v CA** [book] Held: Such delay is an incident to the exercise by X of his right to contest the forfeiture and the sale of his goods. (see Auyong Hian vs. Court of Appeals, supra.) [gpt] The court's decision is based on the understanding that the delay is considered an incident to X's exercise of his right to contest the forfeiture and the sale of his goods.

Question 37

Kinds of obligation according to subject matter. From the viewpoint of the subject matter, obligation may either be:

Answer 37

- real obligation (to give) - personal obligation - positive p.o. (to do) - negative p.o. (not to do) [book] (1) Real obligation (obligation to give) or that in which the subject matter is a thing which the obligor must deliver to the obligee; or (2) Personal obligation (obligation to do or not to do) or that in which the subject matter is an act to be done or not to be done. There are thus two (2) kinds of personal obligation: (a) Positive personal obligation or obligation to do or to render service (see Art. 1167.); and (b) Negative personal obligation or obligation not to do (which naturally includes obligations “not to give”). (see Art. 1168.)

Question 38

a situation where you were wrongly given money, what obligation arise out of that?

Answer 38

a quasi-contract

Question 39

a situation where you own a condo and dropped something and hurt a stranger below or your dog hurts another. what obligation arise of that?

Answer 39

torts/ quasi-delicts

Question 40

The law enumerates five (5) sources of obligations. They may be classified as follows:

Answer 40

1. from law 2. from private acts - licit acts (contracts & quasi-contracts) - illicit acts (punished by law delicts & quasi-delicts) basically there are only 2 sources of obligation: law & contracts as the others are imposed by law

Question 41

Liability of sheriff lawfully enforcing a judgment in an ejectment suit. Facts: A judgment was rendered by a justice of the peace court (now municipal court) in favor of X who brought an ejectment suit against Y, the owner of the house built on the land of X. Z, the deputy sheriff who executed the judgment, was obliged to remove the house of Y from the land according to the usual procedure in the action for ejectment. Issue: Is Y entitled to indemnity arising from the destruction of his house?

Answer 41

No. Y is not entitled to compensation. X & Y did not enter into a contract much less have stipulations regarding indemnification of damages. Further, X and Z did not commit anything illegal that may have violated Y's rights that can support Y's claim for indemnification For these reasons, Y's contention is untenable. **Navales v. Rias** [book] No proof has been submitted that a contract had been entered into between plaintiff (Y) and the defendants (X and Z) or that the latter had committed illegal acts or omissions or incurred in any kind of fault or negligence, from any of which an obligation might have arisen on the part of X and Z to indemnify Y. For this reason, the claim for indemnity, on account of acts performed by the sheriff, while enforcing a judgment, cannot under any consideration be sustained. [gpt] Relevance of a Contractual Obligation: In general, contractual relationships create legal obligations between parties. If there had been a contract between Y (plaintiff) and X or Z (defendants), and the terms of that contract included provisions related to the removal of the house or indemnification in case of damage, it could have formed the basis for a legal obligation to indemnify Y.

Question 42

who is liable for medical assistance rendered to the husband's wife but such assistance was contracted by husband's parents LB

Answer 42

the liability to pay is of the husband Pelayo v. Lauron

Question 43

Title to property purchased by a person for his own benefit but paid by another. Facts: X, of legal age, bought two vessels from B, the purchase price thereof being paid by C, X’s father. Subsequently, differences arose between X and C. The latter brought action to recover the vessels, he having paid the purchase price. Issue: Is there any obligation on the part of X to transfer the ownership of the vessel to C? LB

Answer 43

No. The son has no legal obligation to return the ownership to the father. When the father paid for the vessels in behalf of the son, there is recognition of ownership to the father. The father merely paid for the son and the owner is the son. **Martinez v. Martinez** [book] Held: None. If any such obligation was ever created on the part of X, said obligation must arise from law. But obligations derived from law are not presumed. Only those expressly determined in the Civil Code or in special laws are demandable. Whatever right C may have against X either for the recovery of the money paid or for damages, it is clear that such payment gave him no title, either legal or equitable, to these vessels. (Martinez vs. Martinez) Note: If X were a minor, the vessels would belong to C in ownership and usufruct under Article 161 of the old Civil Code. (now Art. 324) Under Article 1448, the payment may give rise to a gift or an implied trust.

Question 44

define a contract according to the CCP

Answer 44

Art 1305 - a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service

Question 45

The mere proof of the existence of the contract and the failure of its compliance justify, ____, a corresponding right of relief.8

Answer 45

prima facie

Question 46

On December 11, 1973, Teresita Dio entered into a Pre-Need Purchase Agreement with St. Ferdinand Memorial Park, Inc. (SFMPI) to buy a memorial lot in Lucena City on an installment basis. The agreement incorporated SFMPI's rules and regulations, including Rule 69, which prohibited lot owners from hiring outside contractors for building construction in the memorial park. In 1986, Dio decided to construct a mausoleum on her lot and sought approval from SFMPI. The company insisted on building the mausoleum at a minimum cost of P100,000. Dio protested, demanding permission to construct it herself, or she would take legal action. SFMPI responded, citing Rule 69 and its provision that owners could submit designs but construction had to be done by SFMPI or its agents. Dio filed a Complaint for Injunction with Damages against SFMPI, arguing that she was not aware of Rule 69 when she signed the agreements and that the cost imposed was oppressive. The trial court ruled in favor of SFMPI, stating Dio was aware of the rules and regulations. The Court of Appeals affirmed the decision. is Dio contention tenable?

Answer 46

No. Dio's contention is not tenable In the case of **Dio v. SFMPI**, the SC ruled a person is obliged to uphold a contract and cannot feign ignorance especially when the person obliged to abide the rules of the contract

Question 47

a compromise agreement is immediately executory and **not** appealable, except for ____ (art. 1330) or ___

Answer 47

- vices of consent (mistake, violence, intimidation, undue influence, or fraud) - forgery [gpt] a compromise agreement is generally considered final and immediately executory. Once the parties have entered into a compromise agreement, it carries the effect and authority of res judicata, which means the matter is considered adjudicated and cannot be re-litigated. In other words, the compromise agreement serves as a conclusive resolution to the dispute.

Question 48

what are the characteristics of a valid contract?

Answer 48

art. 1306 they are not contrary to law, morals, good customs, public order or public policy

Question 49

a type of contractual obligation , which is valid, which needs approval. give example

Answer 49

contract requiring government approval contract for overseas employment must be approved by the Philippine Overseas Employment Administration (POEA)

Question 50

in a contract, what would constitute *unjust enrichment on his part*?

Answer 50

evasion of obligation after receiving benefits of the same contract

Question 51

legal basis of the mere breach of contract may award the party damages

Answer 51

article 2210 "Interest may, in the discretion of the court, on equitable grounds, be allowed upon damages for the breach of contract."

Question 52

can a violation to a contract be ineffective even when it was valid?

Answer 52

yes, if - the party fails to demand the other party for an unreasonable length of time and - contract did not specify time frame for such demands delaying party may be deemed to have waive or abandon its right to demand performance

Question 53

Phil. First Insurance Co., Inc. (Plaintiff) entered into a contract with Wallen Phils. Shipping, Inc. (Defendant) for the transportation of goods. Due to alleged delays and damages to the shipped items, Plaintiff, through its legal counsel, sent a demand letter to Defendant, requesting compensation and addressing the issues within 30 days. However, Defendant failed to respond to the demand letter within the specified time frame. Subsequently, Plaintiff initiated legal action seeking damages for the breach of contract and failure to respond to the demand letter. is the non-response constitute an implied admission of liability?

Answer 53

No. The non-response is not an admission to liability in the case of **Phil. First Insurance v Wallen Phils. Shipping**, the mere failure to respond to a demand letter, in absence of other circumstances making an answer requisite or natural, does NOT constitute an implied admission of liability.

Question 54

Binding force of an oral agreement inconsistent with a prior written one. Facts: X verbally agrees to pay Y the balance of an account in advance, notwithstanding the different stipulation of a prior written agreement. Issue: Is X bound to perform said obligation?

Answer 54

[book] Held: Yes. Since he agreed to pay Y the balance of the account independently of the terms of the written contract, he must perform his obligation to pay according to the tenor of his verbal agreement which has the force of law between them.

Question 55

Validity of contract stipulating that in case of failure of debtor to pay amount of loan, his property shall be considered sold to creditor. Facts: D borrowed from C money to be paid within a certain period, under the agreement that, if D fails to pay at the expiration of said period, the house and lot described in the contract would be considered sold for the amount of the loan. D failed to pay as promised. C brought action for the delivery of the house and lot. Issue: Are both contracts valid and, therefore, should be given effect?

Answer 55

[book] *Held*: Yes. The fact that the parties have agreed at the same time, in such a manner that the fulfi llment of the promise of sale would depend upon the non-payment or return of the amount loaned has not produced any change in the nature and legal conditions of either contract, or any essential defect which would nullify them. As the amount loaned has not been paid and continues in possession of the debtor, it is only just that the promise of sale be carried into effect, and the necessary instruments be executed. That which is agreed to in a contract is law between the parties, and must be enforced. (Alcantara vs. Alinea, 8 Phil. 111 [1907].) *Note*: In the above case, the court found that no contract of mortgage, pledge, or antichresis was entered into. (see Arts. 2088, 2137.) [gpt] 2088 (mortgage) - The article states that the creditor (the person to whom a debt is owed) is not allowed to appropriate or take ownership of the things given as collateral through a pledge or mortgage. This means that the creditor cannot automatically become the owner of the pledged or mortgaged property. 2137 (antichresis) - "The creditor does not acquire the ownership of the real estate for non-payment of the debt within the period agreed upon."

Question 56

Validity of contract for attorney’s fees where amount stipulated is unreasonable. Facts: D executed a promissory note in favor of C for the purchase price of a truck sold by the latter. In the note, D bound himself to pay an additional 25% as attorney’s fees in the event of becoming it necessary for C to employ counsel to enforce its collection. Issue: Has the court the power to ignore the contract as to attorney’s fees, considering that a contract has the force of law between the contracting parties?

Answer 56

Yes the court has the power to ignore the contract insofar as atty's fees are concerned. in the case of **Bachrach v. Golingco**, the court ruled that - where no special agreement is made, courts are authorized to determine amount paid - courts authorized to ignore that part of contract if amount is unreasonable and unconscionable [book] Held: Yes. Where no special agreement is made by the parties with reference thereto, the courts are authorized to determine the amount to be paid to an attorney as reasonable compensation for his professional services; and even where parties have made a written agreement as to the fee, the courts have the power to ignore their contract, if the amount fixed is unconscionable or unreasonable, and to limit the fee to a reasonable amount.10 (Bachrach vs. Golingco, 35 Phil. 138 [1916].)

Question 57

A big corporation, to avoid cancellation of contract it has breached, pleaded *considerations of equity*. Facts: The contract between the parties (two big real estate corporations) was a contract to sell or conditional with title expressly reserved in S (seller) until the suspensive condition of full and punctual payment of the full price by B (buyer) shall have been met on pain of automatic cancellation of the contract upon failure to pay any of the monthly installments. B failed to pay the P5,000.00 monthly installments notwithstanding that it was punctually collecting P10,000.00 monthly rentals from the lessee of the property. Issue: The main issue posed by B is that there has been no breach of contract by it; and assuming there was, S was not entitled to rescind or resolve the contract without recoursing to judicial process.

Answer 57

[book] Held: B only pleads that it be given special treatment and that the cancellation of its contract be somehow rejected notwithstanding S’s clear right under the contract and the law to do so. The contract between S and B, entered into with the assistance of counsel and with full awareness of the import of its terms and conditions, is the binding law between them and equity cannot be pleaded by one who has not come with clean hands nor complied therewith in good faith but instead willfully breached the contract. **They are bound by the lawful contracts that they enter into and they do not ask for nor are they entitled to considerations of equity** Luzon Brokerage Co Inc v Maritime Bldg [gpt] Considerations of equity refer to the principles of fairness and justice that may be invoked in legal proceedings. Equity allows a court to consider fairness and moral principles when deciding a case, especially when strict application of the law may lead to an unjust result. It often involves looking beyond the literal terms of a contract to ensure that the parties are treated fairly.

Question 58

Corporation unconditionally undertook to redeem preferred shares at specified dates. Facts: The terms and conditions of the Purchase Agreement shows that the parties intended the repurchase of the preferred shares in question on the respective dates to be an absolute obligation made manifest by the fact that a surety was required to see to it that the obligation is fulfilled in the event of the corporation’s inability to do so. Defendant corporation contends that it is beyond its power and competence to redeem the preferred shares due to fi nancial reverses. Issue: Can this contention serve as a legal justifi cation for its failure to perform its obligation under the agreement? Purchase Agreement: This is a legal contract between a buyer and a seller that outlines the terms and conditions of a transaction, in this case, the purchase and later redemption of preferred shares. [terms-gpt] Unconditional Undertaking: The corporation had made a clear and absolute commitment to redeem the preferred shares without any conditions attached, indicating a firm obligation. Surety: A surety is a person or entity that agrees to be responsible for another party's debt or performance under a contract if that party fails to meet its obligations. Financial Reverses: The corporation claimed financial reverses, indicating a situation where it experienced financial setbacks or difficulties.

Answer 58

[gpt] By stating that the Purchase Agreement constitutes the law between the parties, the court is emphasizing the binding nature of the contractual obligations. The corporation's inability to meet its financial obligations does not release it from the absolute obligation it undertook in the Purchase Agreement to redeem the preferred shares at specified dates [book] Held: No. The unconditional undertaking of the corporation does not depend upon its financial ability: it constitutes a debt which is defined “as an obligation to pay money at some fixed future time, or at a time which becomes definite and fixed by acts of either party and which they expressly or impliedly agree to perform in the contract.” The Purchase Agreement constitutes the law between the parties.

Question 59

QUASI CONTRACTS OBLIGATIONS

Answer 59

PG. 19

Question 60

define quasi-contracts according to the CCP

Answer 60

A quasi-contract is certain lawful, voluntary, and unilateral acts that gives rise to juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.

Question 61

Quasi-contracts are governed by the Civil Code, more particularly, by Articles _____ - _____ , Chapter I, Title XVII.

Answer 61

Articles 2142-2175 (33)

Question 62

When a party benefited at the expense of another not liable to the latter. Facts: By virtue of an agreement between X and Y, X assisted Y in improving a large tract of land which was later declared by the court as belonging to C. Issue: Has X the right to be reimbursed by Z for X’s services and expenses on the ground that the improvements are being used and enjoyed by Z?

Answer 62

Held: No. From the language of Article 2142, it is obvious that a presumed quasi-contract cannot emerge as against one party when the subject matter thereof is already covered by an existing contract with another party. X’s cause of action should be against Y who, in turn, may seek relief against Z. (Cruz vs. J.M. Tuazon Co., Inc., supra.) The party benefited: Z The party not liable to the latter: Y

Question 63

Bank paid the seller of goods under an expired letter of credit but the goods subject thereof were voluntarily received and kept by the buyer which refused to pay the bank. Facts: X opened with B (bank) a domestic letter of credit (LC) in favor of Y for the purchase from the latter of hydraulic loaders. B paid Y for the equipment after the expiration of the letter of credit. X refused to pay B claiming that there was breach of contract by B which acted in bad faith in paying Y knowing that Y delivered the loaders to X after the expiry date of the subject LC. X offered to return the loaders to B which refused to take possession three (3) years after X accepted delivery, when B made a demand for payment. Issue: Was it proper for B to pay the LC which had long expired or been cancelled? [gpt] Bank Paid the Seller: Despite the letter of credit being expired, the bank went ahead and paid the seller for the goods. Buyer Received the Goods: Even though the letter of credit had expired, the buyer received the goods from the seller. Buyer Refused to Pay the Bank: Despite receiving the goods, the buyer refused to make payment to the bank.

Answer 63

Held: B should not have paid the LC which had become invalid upon the lapse of the period fixed therein. Be that as it may, X should pay B the amount B expended for the equipment belatedly delivered by Y and voluntarily received and kept by X. B’s right to seek recovery from X is anchored, not upon the inefficacious LC, but on Article 2142 of the Civil Code X was not without fault in the transactions in view of its unexplained inaction for almost four (4) years with regard to the status of the ownership or possession of the loaders and the fact that it formalized its offer to return the equipment only after B’s demand for payment, which came more than three (3) years after X accepted delivery ** When both parties to a transaction are mutually negligent in the performance of their obligations, the fault of one cancels the negligence of the other and as in this case, their rights and obligations may be determined equitably under the law proscribing unjust enrichment.** [gpt] The concept of mutual negligence in this context suggests that both parties, the bank and the buyer, were negligent in the performance of their obligations. The bank was negligent in paying under an expired LC, and the buyer was negligent in not addressing the status of ownership or possession of the loaders promptly.

Question 64

what are the kinds of quasi-contracts

Answer 64

1. negotiorum gestio 2. solutio indebiti

Question 65

when does negotiorum gestio do NOT apply?

Answer 65

- when property/business is NOT neglected or abandoned - if manager is impliedly authorized by owner [book] (a) When the property or business is not neglected or abandoned, in which case the provisions of the Civil Code regarding unauthorized contracts (Arts. 1317, 1403[1], 1404.) shall govern; or (b) If, in fact, the manager has been tacitly authorized by the owner, in which case the rules on agency shall govern. (Art. 2144.)

Question 66

what is negotiorum gestio

Answer 66

is the voluntary management of the property or affairs of another without the knowledge or consent of the latter. (Art. 2144.) Thus, if through the efforts of X, a neighbor, the house of Y was saved from being burned, Y has the obligation to reimburse X for the expenses X incurred although Y did not actually give his consent to the act of X in saving his house on the principle of quasi-contract.

Question 67

what is solutio indebiti

Answer 67

is the juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake. (Art. 2154.) The obligation to pay money mistakenly paid arises from the moment said payment was made, and not from the time the payee (who receives payment) admits the obligation to reimburse.

Question 68

when does solutio indebiti apply?

Answer 68

1. PAYMENT when no duty to pay and the person receive payment 2. PAYMENT made thru mistake [mistake meaning] Art. 2163. It is presumed that there was a mistake in the payment if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause. [book] (a) payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (b) the payment is made through mistake11 and not through liberality or some other cause. (Power Commercial and Industrial Corp. vs. Court of Appeals, 274 SCRA 597 [1997]; National Commercial Bank of Saudi Arabia vs. Court of Appeals, 396 SCRA 541 [2003]; Moreño-Lenifer vs. Wolf, 144 SCRA 584 [2004]; Bank of the Phil. Islands vs. Sarmiento, 484 SCRA 261 [2006].)

Question 69

1. Recovery of taxes paid under a mistake. Facts: X, a tax-exempt cooperative store, paid taxes to the City of Manila, believing that it was liable. Issue: May X recover the payment?

Answer 69

Yes, X can recover payment as there was no obligation to pay to begin with Held: Yes, as it was made under a mistake. (UST Cooperative Store vs. City of Manila,

Question 70

Facts: X, an employee of Cebu City, sued certain officials of the City for claim of backwages. Issue: May the City of Cebu successfully recover the payment later made by it to X on the ground that it was not made a party to the case?

Answer 70

Held: No, because a judgment against a municipal officer in his official capacity binds the city. The city was under obligation to make the payment. It cannot, therefore, be said that the payment was made by reason of mistake. (City of Cebu vs. Piccio and Caballero, 110 Phil. 870 [1969].)

Question 71

ART. 1161. _____obligations arising from criminal offenses shall be governed by the ________, subject to the provisions of Article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title on Human Relations,16 and of Title XVIII of this Book, regulating damages. (1092a)

Answer 71

civil obligations penal laws

Question 72

what is a quasi-delict

Answer 72

- act or omission causing damage - fault / negligence - obliged to pay for damage done - no pre-existing contractual relation [art. 2176] Art. 2176. Whoever, by act or omission, causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, there being no pre-existing contractual relation between the parties, is called a quasi-delict.

Question 73

Art. 2177. Responsibility arising from fault or negligence based on quasi-delict [Art. 2176] is ________ from civil liability ___________ under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant.

Answer 73

entirely separate and distinct civil liability arising from **negligence**

Question 74

what are the effects of Civil liability arising from crimes or delicts.

Answer 74

- commission of felony has two-pronged effects: (a) on public, as it breaches the social order; and (b) on private victim, as it causes personal suffering and injury - imposition of heavier punishment on the accused - remedy of public effect - awarding of additional damages to victim - remedy of private effect

Question 75

when is there criminal liability without civil liability

Answer 75

In crimes which cause no material damage (like contempt, insults to person in authority, gambling, violations of traffic regulations, etc.), there is no civil liability to be enforced.

Question 76

when is there civil liability W/O criminal liability

Answer 76

when obligation arises from quasi-delict or tort, not alleged or proven as constituting criminal offense (Art. 29; Rules of Court, Rule 111, Sec. 2[c].)

Question 77

is there a need for the reservation of right to recover civil liability.

Answer 77

There is no more need for a reservation of the right to file the independent civil actions under Articles 32, 33, 34 and 2176 of the Civil Code. Under the present rule, only the civil liability arising from the criminal offense charged is deemed instituted with the criminal action unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action.

Question 78

what are the exceptions to the automatic institution of civil liability arising from criminal offenses charged

Answer 78

[1] The Offended; - waives the civil action - reserves his right to institute it separately - institute civil action before criminal action (referring only to civil action for recovery of civil liability **arising** from the offense charged) [2] Civil Liability under Art. 32,33,34 & 2176 which may be prosecuted separately without reservation

Question 79

The extent of the civil liability arising from crimes is governed by the Revised Penal Code and the Civil Code. This civil liability includes:

Answer 79

- restitution - reparation for damage caused and - indemnification for consequential damage

Question 80

Can the SC, on appeal, modify the decision of a trial court ordering the indemnification of the offended party when the trial court ruled none? Where the trial court convicts an accused of a crime, without, however, ordering payment of any indemnity, it has been held that the Supreme Court, on appeal, may modify the decision by ordering indemnification of the offended party pursuant to Articles 100, 104(3), and 107 of the Revised Penal Code.

Answer 80

Yes, in the case of Pp. v. Peña Where the trial court convicts an accused of a crime, without, however, ordering payment of any indemnity, it has been held that the Supreme Court, on appeal, may modify the decision by ordering indemnification of the offended party pursuant to Articles 100, 104(3), and 107 of the Revised Penal Code.

Question 81

what is a quasi-delict

Answer 81

is an act or omission by a person (tort feasor) which causes damage to another in his person, property, or rights giving rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-existing contractual relation between the parties

Question 82

What are the requisites of quasi-delict?

Answer 82

Before a person can be held liable for quasi-delict, the following requisites must be present: (1) There must be an act or omission by the defendant; (2) There must be fault or negligence of the defendant; (3) There must be damage caused to the plaintiff; (4) There must be a direct relation or connection of cause and effect between the act or omission and the damage; and (5) There is no pre-existing contractual relation between the parties.

Question 83

The responsibility treated of in article 2176 shall cease when the persons prove that they observed _______(1903a)

Answer 83

all the diligence of a good father of a family to prevent damage.

Question 84

Delict (Crime) v. Quasi-Delict

Answer 84

The following are the distinctions: (1) In crime or delict, there is criminal or malicious intent or criminal negligence, while in quasi-delict, there is only negligence; (2) Crime affects public interest, while quasi-delict concerns private interest; (3) In crime, there are generally two liabilities: criminal and civil,23 while in quasi-delict, there is only civil liability; (4) In crime or delict, the purpose is punishment, while in quasi delict, indemnifcation24 of the offended party; (5) Criminal liability can not be compromised or settled by the parties themselves, while the liability for quasi-delict can be compromised as any other civil liability; (6) In crime, the guilt of the accused must be proved beyond reasonable doubt, while in quasi-delict, the fault or negligence of the defendant need only be proved by preponderance of evidence; and (7) In crime, the liability of the person responsible for the author of the negligent act or omission is subsidiary, while in quasi-delict, it is direct and primary

Question 85

can you Recovery of damages twice for the same act or omission prohibited

Answer 85

civil liability arising from a crime (Art. 100) OR create an action for quasi-delict (Art. 2176)

Question 86

Under Article 1157, quasi-delict AND an act or omission punishable by law are two different sources of obligations. Inasmuch as civil liability co-exists with criminal responsibility in negligence cases, the offended party has the option between an action for enforcement of:

Answer 86

- civil liability based on *culpa criminal* under Article 100 of the Revised Penal Code and - an action for recovery of damages based on *culpa aquiliana* under Article 2177.

Question 87

what are the causes of action the offended party has against the offender? can the offended party recover damages twice for the same act or omission prohibited?

Answer 87

ex delicto (civil liability arising from crime) AND ex quasi delicto (civil liability arising from quasi-delict) may be availed but cannot recover damages twice for the same act or omission

Question 88

Suppose Juan failed to recover damages in his action against Pedro for culpa criminal, can Juan file something else?

Answer 88

He can file for culpa aquiliana. BUT must file an independent civil action

Question 89

The coverage of quasi-Delicts

Answer 89

- acts punished in the RPC - acts 'not punishable by law' (your dog biting someone else isn't part of the law)

Question 90

Juan is acquitted from his criminal charge against Pedro. Juan still wants to file a civil action against Pedro, will it prospoer?

Answer 90

Yes, regardless if the accused is guilty or acquitted.

Question 91

Can Juan file an civil action against Pedro AND a independent and distinct civil action based on Art. 2176? Suppose Juan wins both cases, which award is given?

Answer 91

Yes. The offended party can pursue both the civil action arising from the criminal offense (ex delicto) and the civil action based on quasi-delict (ex quasi delicto). While this might seem like pursuing two actions for the same act, legally, they are distinct causes of action. The principle is that the offended party can't recover damages twice for the same legal ground or cause (double recovery). If the awards in both actions vary, the offended party is entitled to the larger award.