Wednesday, January 2, 2013

Fortuitous Event


A fortuitous event is an unforeseen event or, if foreseen, inevitable. It is also called an act of God (if due to a natural occurrence, like an earthquake) and force majeure if caused by man, such as war. There are ordinary fortuitous events, which are events that normally happen, reasonable foreseeable and inevitable (like flooding during a typhoon) and extraordinary fortuitous events, which can't be foreseen/reasonably foreseen and don't usually happen (like war.) The requisites of a fortuitous event are the following:

1.) The cause is independent of the debtor/obligor's will (read: he didn't cause it)
2.) It was an unforeseen or unavoidable event
3.) The happening of the event made it impossible for the debtor/obligor to fulfill his obligation in a normal manner
4.) The debtor didn't take advantage of the event to aggravate the injury to thecreditor/obligee

The general rule is that there is no liability in case of a fortuitous event. The exceptions are the following:

1.) When the law itself expressly declares so (ex. Arts. 552(2,) 1165(3,) 1268, 1942, 2147 and 2159 of the Civil Code)
2.) When expressly stated in the contract
3.) When the obligation's nature requires the assumption of risk (Art. 1174)
4.) When the obligor/debtor is in default or has promised to deliver the same thing to 2 or more persons who don't have the same interest

A fortuitous effect will not affect a generic obligation, because a generic object can always be replaced by another. It will, however, affect a determinate/specific obligation because the object of the obligation is specified -but the exceptions must still be observed.

Some other exceptions are listed here:

1.) When it's expressly stipulated that the obligor/debtor is liable even if non-performance is due to a fortuitous event (Art. 1174, Civil Code)
2.) The obligor/debtor is in delay (Art. 1165)
3.) The possessor is in bad faith and the thing is lost or deteriorates because of the fortuitous event (Art. 552)
4.) The obligor/debtor contributed to the loss of the thing (Tan vs Inchausti, 22 Phil 152)
5.) The obligor/debtor is guilty of fraud, negligence or delay or if he violated the tenor of the obligation (144 SCRA 596, 160 SCRA 334)

Common carriers must pay heed to the following:

1.) Mechanical defects in vehicles or vessels are not fortuitous events (Sweet Lines vs. CA 121 SCRA 769, Necesito vs. Paras 104 Phil 75)
2.) Blowout of a passenger bus tire is not a fortuitous event (La Mallorca vs. de Jesus 123 Phil 875, Juntilla vs. Fontanar 136 SCRA 624)
3.) Defective brakes of the vehicle do not constitute a fortuitous event (Vergara vs. CA 154 SCRA 564)

suspensive & resolutory condition


To be or not to be - the effect of suspensive and resolutive conditions

Conditions are widely used in the drafting of contracts, but the precise consequences of different classes of conditions are often unknown to the parties themselves resulting in unexpected consequences when the contractual relationship unravels. We will briefly examine two common types of conditions, namely resolutive conditions and suspensive conditions, and the concomitant effect on the rights and obligations of parties.
In its most basic form a condition in a contract makes certain rights and obligations (and often the existence of the entire contract) dependant on the occurrence of a specified uncertain future event. Conditions are invaluable in contracts for they allow parties to determine in advance how the relationship between them will alter should a certain event occur. This provides the contracting parties with an element of certainty and a platform for negotiation.
Suspensive conditions
A suspensive condition is a condition which (as the name suggests) suspends rights and obligations until the uncertain future event occurs.
Upon the occurrence of the event, the suspended part of the contract (or indeed the entire contract) is brought to life. If the suspensive condition is never fulfilled, the suspended rights and obligations never come into existence. It is as though they never existed.
For example: Mr X sells his property to Mr Y on 1 April 2009 on condition that Mr Y obtains a mortgage bond. On 1 July, Mr Y obtains a mortgage bond and on 1 August the property is transferred into his name. The date of disposal is 1 July 2009, the date of the fulfilment of the suspensive condition. If Mr Y is unable to obtain a mortgage bond the sale never occurs. It is as if there was no agreement between the parties at all.
Resolutive conditions
Whereas the fulfilment of a suspensive condition breathes life into otherwise inoperative rights and obligations, the fulfilment of a resolutive condition ends the existence of rights and obligations.
In the case of a resolutive condition, there is no suspension or postponement of terms in a contract. Rights and obligations come into existence immediately upon agreement between the parties. If a resolutive condition is fulfilled, the operation of the rights and obligations cease.
For example: On 15 January 2004 Mr. X sold his property to Oak Tree (Pty) Ltd. The sale agreement provided that the sale would be cancelled and the parties would restore each other to their original position if the purchaser was unsuccessful in obtaining rezoning. Some time after taking possession of the property, the purchaser’s rezoning application failed. The sale of the property had to be transferred back to the Mr X and the purchase price remitted to Oak Tree (Pty) Ltd.
The importance of the distinction between the two
The question of whether a particular condition is resolutive or suspensive in nature becomes critical when one has to examine whether and when certain rights vest in a party to a contract. The use of resolutive conditions in a contract needs to be carefully considered. A fulfilled resolutive condition terminates existing rights and obligations and requires the parties to restore their pre-contractual position. The parties may, alternatively, make use of suspensive conditions and avoid the duties of unbundling, restoration and the possible enforcement of the original position.

Wednesday, December 5, 2012

EXTINCTIVE PRESCRIPTION (Arts. 1139-1155)



40 days        Redhibitory action based on defects of animals.
6 months    (a) Action for reduction of price for rescission in
                     case of breach of sale of real estate, either with a statement
                    of its area at a certain price for a unit of measure or number.
                    (b) Action for warranty against hidden defects of thing       
                               sold.
1 year         (a) Action by husband against wifeto impugn 
                   child’s legitimacy if husband is in the same place as wife.
                   (b) Action for revocation of donation for acts of 
                    ingratitude.
                    (c) Action for forcible entry or unlawful detainer.
                    (d) Action for defamation.
                    (e) Action for rescission or fordamages if immovable sold 
                    Is encumbered with non-apparent burden or servitude.

2 years        Action to impugn child’s legitimacy if husband
                     is in the Philippines butnot in same place as wife.
3 years        Action to impugn child’s legitimacy if husband is abroad.
4 years      (a) Action for revocation or reduction of donation
                      based on supervening birth, appearance or adoption of a
                      child.
                  (b) Action for revocation of donation based on fulfillment
                       of condition.
                  (c) Action for recovery of movable                         
                          (replevin) if possessor is in good faith.
                  (d) Action upon injury to rights of plaintiff.
                  (e) Action upon a quasi-delict.
                  (f) Action for rescission of rescissible contracts.
                  (g) Action for annulment of  voidable contracts.

5 years       (a) Action for legal separation.
                  (b) Action for annulment of marriage based on
                           1. Lack of parental consent.
                           2. Fraud.
                           3. Force, intimidation or undue influence.
                           4. Physical incapacity and afflicted with a sexuality     
                                transmissible disease.
                  (c) Actionto claim legitimacy if childshould die during 
                             minority or instate of insanity.
                  (d) Action for declaration of incapacity of heir.
                  (e) Action for warranty of solvency of debtor if credit is 
                              assigned to co-heir during partition.
                  (f) All other actions whose periods are not fixed by law.
6 years      (a) Action upon oral contract.
                  (b) Action upon a quasi-contract.
8 years     Action for recovery of movables(replevin ) if possessor is in
                     bad faith.
10 years    (a) Action for recovery of possession of immovables 
                            (accion publiciana ) if real right of possession is lost.
                  (b) Action for recovery of ownership of immovables 
                             (accion reinvindicatoria ) if possessor is igood faith.
                  (c) Action upon a mortgage contract.
                  (d) Action upon a written contract.
                  (e) Action upon an obligation created by law.
                  (f) Action upon a judgment.
Lifetime    (a) Action to claim legitimacy.
                 (b) Action to obtain declaration of illegitimate filiation. 

VI. Novation


VI. Novation – extinction of an obligation through the creation of a new  
                            one which substitutes it
       a.a.Requisites:
              i. Previous valid obligation
              ii. Agreement to enter new obligation
              iii. Extinguishments of old
              iv. Creation of new valid obligation
       b.b. Must be declared in unequivocal terms
       c.c. Or incompatible on every point – Test: Whether old and new  
               contract can stand together each having its own independent
               existence
       d.d. Substitution of Debtor
             i. Expromision – Without the knowledgeor consent of debtor, at  
                                           the instance of the new debtor
1.1.         Payment by new debtor gives him right to beneficial  
reimbursement
                2.2. Insolvency or non fulfillment of obligation by new debtor                
                          will not give rise to liability of old debtor
           ii. Delegacion – Substitution made at the instance of old debtor
             3.1. Payment by new debtor entitles him to reimbursement and  
                   subrogation
             4.2. Non fulfillment of obligation by new debtor will not give rise  
                    to liability of old debtor
       

              5.3. Insolvency of new debtor will revive action against old         
                     debtor  if insolvency was already existing and of public  
                     knowledge,  or known to the debtor when he delegated
                      his debt
      e.e. If new obligation is void, the original one shall subsists
      f.f. If original obligation is void, novation is void;except when 
               annulment may be claimed only by debtor or when voidable  
               acts have been ratified
      g.g. Subrogation – Substitution of Debtor
              i. Conventional – By express agreement of the old creditor,  
                                              debtor and the new creditor
              ii. Legal –Without agreement, by operation of law
1.1.         When creditor pays another creditor who is preferred, even             
 without the debtor’s knowledge
      2.2. When a third person, not interested in the obligation, pays with  
               the express or tacit approval of debtor
     3.3. When a third person interested inthe fulfillment of obligation
               pays, even without the knowledge of debtor

Definition of a Contract 
·        A meeting of the minds
·        Between two persons
·        Whereby one binds himself, with respect to the other
·        To give something or to render some service


 Different phases or stages in the life of a contract
1.1. Preparation – Preliminary to formation
2.2. Perfection – birth of the contract
3.3. Consummation - fulfillment 


Essential characteristics of Contracts
1.1.         Obligatory force – must be complied with in good faith
 2.2. Autonomy – parties are free to enter such stipulations, clauses,  
                                terms and conditions

  –  Clauses and conditions must not be contrary to

·        LAW
·        Morals
·        Good Customs
·        Public Order
·        Public Policy

 3.3. Mutuality – contract must bind both parties 
      -   Determination can be left to third party, whose decision shall be 
           binding only when communicated to both parties
      -   Unless such determination be evidently inequitable

 4.4. Relativity – takes effect only bet parties, their assigns andheirs
       -    Stipulation pour autrui accepted by third party
       -    Where third persons comes into possesion of the object 
             of contract creating real rights
       -   Where contract is to defraud a third person
       -   Where third person induces a contracting party to violate his
             CONTRACT
a.a.

Different Classes of Contracts

·        According to perfection
      Consensual – Perfected by mere agreement of the parties
      Real – Requires not only consent, but also the delivery of the object

·        According to form
      Common – Do not require particular form
      Formal – Those which require particular form, like donation,
                            mortgage

·        According to nature of vinculum
       Unilateral – Obligation of one party only
       Bilateral – Reciprocal obligations for both parties

·        According to cause
     Onerous – Giving of an equivalent or compensation
     Gratuitous – Given without compensation, just pure liberality

·        According to risks involved
      Commutative – Prestation is pecuniarily appreciable and
                             determined at the moment of celebration of contract
      Aleatory – Pecuniarily appreciable but not yet determined at the 
                          moment of celebration, since it depends upon the
                           happening of an uncertain event.
                    Ex. Insurance

·        According to name
       Nominate – with specific names or designation in law
        Innominate – no specific name


Essential Requisites of Contracts 

-         Consent of the contracting parties
-         Object certain subject matter of the contract 
-         Cause of the obligation which is established

Elements of Consent

·        Concurrence of the offer and the acceptance
-          Definite Offer that may be exactly fixed
-         Assent to the terms without qualifications or conditions
-         Conveyed before the death, civil interdiction, insanity, or insolvency
-         Qualified acceptance is a counter offer
-         Perfected when acceptance comes to knowledge of offer or
-         Offer can be withdrawn anytime before acceptance, unless option is founded on consideration
-         If offer made thru agent, accepted when communicated to the agent



·        By parties with legal capacity to contract
-         Not minors, insane or demented, deaf-mutes who do not know how to write, incompetents under guardianship, civil interdiction
-         Minor can be liable if he misrepresents his age
-         Prohibited by law from entering into contracts
                  Husband and Wife to each other
-         Insolvents
-          Persons prohibited from giving donations
-          Adultery, concubinage
-          In consideration of criminal offense

-          Made to public officer, spouse, by reason of office
-         Persons with fiduciary relations
-         Guardian, for property under his guardianship
-         Agents, for property entrusted to them
-          Executor/administrator
-         Public officers, judges, for property under their jurisdiction


·        Intelligently, freely given, consciously

-  -  - Vices of the will 

      Mistake - False notion of a thing or a fact materrial to the contract
              : Simple mistake gives rise to correction 
              : Render voidable in following cases: 
              : Mistake as to object of the contract
              -  Identity of thing, Substance, Condition,
              : Quantity only if principal reason
              : Mistake of Law
              -   Will not make it voidable except:
                   Mutual error as to the legal effect of an agreement when the
                    real purpose of the parties is frustrated 
               : Mistake as to person 
                -  If such identity or qualification is principal cause of contract


    Violence – Employment of external physical force, irresistible and 
                         serious to wrest consent
Intimidation – Moral compulsion to influence another to give his
                         consent thru fear of imminent or grave evil 
               : Force employed must be serious or irresistible
               : Determining cause for the party in entering into the contract 

Undue Influence – Improper advantage of his power over the will of another depriving the latter of reasonable freedom of choice 
    Confidential, Family, Spiritual and other relations or
    Person influenced suffering from mental weakness, ignorant, 
        financial distress 

Fraud – Insidious words or machinations of one of the contracting parties induced the other to enter into a contract, which without them he would not have agreed; Failure of one party to disclose facts to other party when there is a duty to reveal them

             
 Dolo incidente (Incidental Fraud) - committed in the
                  performance of pre-existing obligation, remedy is damages

 Dolo causante (Causal Fraud) – Fraud employed at the time of the execution of a contract in order to secure consent, remedy is annulment because  of vitiation of consent 

-          Must be employed by one of the contracting parties,
-         but not by both or by third parties
-          Must be Serious
-          Must have induced the other party to enter into the contract

Vices of Declaration

Simulated Contracts
1 . Absolute
     – Contracting parties do not intend to be bound by the contract at all
     –Void
2.           Relative
 – Contracting parties conceal their true intentions
 – Real agreement binding on the parties if it does not prejudice
     third person

                                                          Objects

·        Thing, right or service which is the subject matter of the obligation created or established

·        Thing or service must be within the commerce of man
oo The law prohibits future inheritance as object of contract
oo Transmissible and can be appropriated
oo Not contrary to Law Moral Good Conduct Public Order Public Policy
oo Real or possible
oo Determinate or determinable

                                                    
                                                       Cause

·        Essential reason why the parties enter into the contract
-         Cause should be in existence
-         Licit or lawful
-          True

·        Interchangeable with consideration, but not same as motive
-         General rule: Particular motive of the party in entering into a contract are not material. Except: When it predetermines the purpose of the contract

                                                        Form

·        Whatever may be the form, Contract shall be obligatory on all provided all the essential requisites are present 

·        Two exceptions:
-    When Law requires a certain form for validity
      -   When Law requires form for enforcement 
·        Must appear in Writing to be valid: 
-          Donation exceeding P 5,000
-         Sale of piece of land or interest therein by an agent
-          Antichresis - Creditor acquires rights to fruits of immovable but applying to payment of interest
-         Agreement regarding payment of interest

·        Must appear in Public Instrument to be valid: 
-         Donations of immovable property
-         Partnership where immovable or real rights are contributed 
-         Must appear in Public Instrument for Enforcement
-         Creation, transmission, modification, sales or extinguishments of real rights over immovable properties
-         Cession, repudiation, or renunciation of hereditary rights, or those of conjugal partnership of gains
-         Power to administer property
-         Cession of actions or rights proceeding from an act appearing in a public document

                                                     Reformation

·        When the true intention of the parties are not expressed in the instrument, one of the party may ask for the instrument to be changed so that true intention may be expressed. 

·        Requisities

-         Must be a meeting of the minds of the parties
-         True intention is not expressed in the instrument
-         Failure due to mistake, fraud, inequitable conduct or accident 
-          What may be reformed
-         Mutual mistake of parties cause failure to disclose real agreements
-         One party mistaken and the other acted fraudulently or inequitably
-         One party was mistaken and the other knew that instrument did not state real agreement, yet concealed it
-         Ignorance, lack of skill,, negligence or bad faith on the part of person drafting it
-         Where parties agree on mortgage, but instrument states property is sold absolutely or with right to repurchase 

·        What may not be reformed
-          Simple Donations with no condition
-         Wills
-          Those where real agreement is void

                   Defective Contracts

 As to defect
 Rescissible - Injury or damage
 Voidable - Vitiation of consent or legal capacity
Unenforceable - In excess of authority or do not comply with S of Fraud
Void - Lack of an element of a valid contract 

 As to effect
 Rescissible and Voidable - Valid until annulled
 Unenforceable - Cannot be enforced by action in court
 Void - No legal effects at all 

As to parties who can file action
 Rescissible and Void – May be attack directly By contracting parties                          
                                       or by third parties
Voidable and Unenforceable - Cannot beattacked by third persons

Resolution (Rescission of reciprocal obligation 
·        Party who may institute action
-         For resolution, only party to the contract
·        Causes
-         Failure of one party to comply w/ obligation
·        Kind of contract
-         Reciprocal obligation only
·        Power of the courts
-         Can grant extension for performance


Rescissible Contracts
·        Guardian who represent ward, lession of more than ¼of the value of the thing
-         In representation of absentee, lession of ¼
-         In fraud of creditor who is unable to collect
-          Things under litigation, entered into by defendant without approval of litigants and court
-         Payment made in state of insolvency where debt not yet due

·        Those which may be declared by law
-         Partition (1098)
-         Result of deterioration (1189)
-         Unpaid seller (1526 and 1534) 

·        Badges of Fraud 

-         Cause or consideration is inadequate
-         Transfer made after suit has begun or pending
-          Sale on credit by an insolvent debtor
-         Evidence of large indebtedness or complete insolvency
-         Transfer of all or nearly all of debtor properties
-          Between father and son, with any of above circumstances
-          Failure of vendee to take exclusive possession

Voidable Contracts

-         Where one party is incapable of giving consent to a contract
-         Where the consent is vitiated by mistake, violence, intimidation, fraud, undue influence 

Convalidation

-         Prescription (Four years)
 *From time incapacity ceases
           *From discovery of such fraud or mistake
-         Ratification or confirmation
-         Loss of the thing by thru the fault of the person who has right to annul

Effects of annulment of Voidable Contract
-          If not consummated, then parties are released from obligation
-          If consummated, parties are to restore to each other what they have given, with fruits and interests, plus damages
-         If to do or not to do, there will be apportionment of damages
-         Incapacitated party not obliged to make restitution except forwhat he was benefited

Unenforceable Contracts

-         Those entered into in the name of another person by one who has been given no authority or legal representation or who has acted beyond his powers
-         Those not complying with Statute of Frauds.

Statute of Fraud
·        Purpose is to prevent fraud, not to aid the commission of fraud
·         Basic and fundamental principles
-         Applies only to executory contracts
-         Cannot apply if action is not for damage bec of violation of agreement or for specific performance
-         Exclusive
-         May be waived
-         Personal defense
-         Contracts are not void
-         Rule of exclusion
-         Concerns admissibility of evidence, not credibility
-         Does not apply if action is to claim reformation 
·         Following must be in writing or in some notes or memorandum:
-         Agreement not to be performed within a year from the making thereof 
-         A special promise to answer for debt, defaults or miscarriage of another
-         Agreement in consideration of marriage
-         Sales of goods, chattels, things above P500
-          Lease of more than one year
-         Representation as to credit of another


Void Contracts
   –  No concurrence of offer/acceptance
   – Cause, object, purpose contrary to law, morals, good customs, 
       public order, or public policy

   – Absolutely simulated or fictitious

    – Cause or object did not exist at the time of the transaction
    – Object outside commerce of men
    – Impossible service
    – Intention of the parties relative to principal object cannot be 
        ascretained
   – Prohibited or declared void by law

Estoppel 

·        Estoppel in pais - by one’s conduct or acts, representatioons, admissions or silence, culpable negligience induces another to believe certain facts to exist and such other rightfully relies and acts on such belief.

·        Estoppel by Deed - A party to a deed, are precluded from a asserting against the other party to the deed any right or title in derogation of the deed, or from denying any material fact asserted therein.

·        Estoppel by Record - A party precluded from denying the truthof matters set forth in a record, whether judicial or legislative.

·         Estoppel by Laches

 Estoppel by Laches

Failure or neglect to enforce a right for an
Unreasonable and unexplained length of time
Despite knowledge or notice