Civil Law Reviewer By D. Jurado.pdf

Arts. 1319-1346

OBLIGATIONS AND CONTRACTS Contracts Consent

spective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession; (f)

Any others specially disqualified by law.

47. Distinguish between incapacity to enter into a contract and prohibition to enter into a contract. ANS: Incapacity to enter into a contract and prohibition to enter into a contract may be distinguished from each other in the following ways: (1) Incapacity restrains the exercise of the right to contract, whereas prohibition to contract restrains the very right itself; in other words, in the first, the incapacitated person may still enter into the contract, but with the consent of his parents or guardian, whereas in the second, the disqualified person cannot; (2) Incapacity is based upon subjective circumstances of certain persons which compel the law to suspend for a definite or indefinite period their right to contract, whereas prohibition to contract, which has been improperly called special incapacity by certain authors, is based upon public policy and morality; and (3) A contract entered into by an incapacitated person is merely voidable in accordance with Art. 1390 of the NCC, whereas that entered into by one against whom a prohibition is directed is void in accordance with Arts. 5 and 1409, No. 7, of the NCC. (3 Castan, 7th Ed., p. 255.)

48. What are the vices of consent? ANS: According to Castan, the vices of consent may be divided into two (2) distinct groups - vices of the will (vicious de la formacion de la voluntad) and vices of declaration (vicious de la declaracion). The first comprehends mistake, violence, intimidation, undue influence, and fraud; the second comprehends all forms of simulated contracts. (3 Castan, 7th Ed., p . 330; Art. 1330, NCC.)

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Arts. 1350-1355

OBLIGATIONS AND CONTRACTS Contracts Cause

(2) The cause is the objective or juridical reason of a contract, whereas the motives are the psychological or personal reasons. (3) The cause for a certain contract is always the same, whereas the motives will differ or vary depending upon who are the parties. (4) The cause can affect the validity of a contract, whereas the motives cannot. 73. Is there any exception to the rule that the particular motives of the parties in entering into a contract are different from the cause of the contract? If there is, what is it? Give examples. ANS: There is an exception to the ru1e and that is when the contract is conditioned upon the attainment of the motive of either contracting party. In other words, the motive may be regarded as causa when it predetermines the purpose of the contract. (Liguez us. Court of Appeals, 102 Phil. 577.) The best examples are the decided cases. Thus (1) Where a married man of mature years donated a parcel of land to a girl of 16 subject to the condition that the latter shall cohabit with him, and such condition is accepted, it is clear that the donation is conditioned upon the attainment of the motive of the donor; in other words, it predetermines the purpose of the contract. Thus considered, the conveyance is clearly predicated upon an illegal causa. Consequently, it is void. Therefore, under what is now Art. 1412 of the NCC, there can be no recovery ofwhat has already been delivered. (Liguez vs . CA, supra.) (2) Where a mother sold two (2) fishponds to a daughter and the latter, in turn, resold the same fishponds to her and her stepfather, as a consequence of which said fishponds were converted into conjugal properties, it is clear that the motive or purpose is to circumvent the law against donations between spouses. (Art. 133, NCC.) This motive or purpose is the illegal causa rendering the contract void. Consequently, the ru1e of in pari delicto non oritur actio, now enunciated in Art. 1412 of the NCC, is applicable. (Rodriguez us. Rodriguez, 20 SCRA 908.) 856

Arts. 1350-1355

OBLIGATIONS AND CONTRACTS Contracts Cause

The same is true if the cause stated in the contract is false, unless it can be proved that the contract is, in reality, founded upon another cause which is true and lawful. (Art. 1353, NCC.)

76. W, wife of H and daughter ofF, while employed in a pawnshop owned by P, embezzled P2,000 belonging to said pawnshop. In order to prevent her criminal prosecution for estafa, H and F signed a document obligating themselves jointly and severally to pay to P the am~unt embezzled including interest. Because of their failure to comply with their promise, the latter brought an action against them for collection. Will the action prosper? Reasons. (2000) ANS: The action will not prosper. The consideration for the agreement is clearly illicit, which fact is apparent on the face of the contract, and the case is accordingly governed by Art. 1352 of the NCC. There has been no period since contract law 1·eached the state of consciousness, when the maxim ex turpi causa non oritur actio was not recognized. A contract based upon an unlawful object is and always has been void ab initio by the common law, by the civil law, moral law, and all laws whatsoever. It is immaterial whether the illegal character is revealed in the matter of the consideration, in the promise as expressed in the agreement or in the purpose which the agreement, though legal in expression, is intended to accomplish. If the illegality lurks in any element, or even subsists exclusively in the purpose of the parties, it is fatal to the validity of the contract. By the universal consensus of judicial opinion in all ages it has been considered contrary to public policy to allow parties to make an agreement designed to prevent or stifle prosecution for crime. (Velez us. Ramas, 40 Phil. 787.)

77. A gave to B P2,000, to be used in the purchase of palay, with the obligation to return said amount within 10 days, if not spent for said purpose. B neither bought palay nor returned said amount. As a result, A accused him of estafa. When the case was about to be heard, X, a common friend, acting upon B's request prevailed upon A to move for the dismissal of the case and be contented with a promissory note to be executed by B. The note was executed, and

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Arts. 1359-1369

OBLIGATIONS AND CONTRACTS Contracts Reformation of lnsb·uments

88. (a) What is a contract of adhesion? (b) Are contracts of adhesion void or prohibited? ANS: In the case of Development Bank of the Philippines us. Perez (G.R. No. 148541, November 11, 2004), the Court held that: (a) A contract of adhesion is so-called because its terms are prepared by only one party while the other party merely affixes his signature signifying his adhesion thereto. (b) A contTact of adhesion is just as binding as ordinary contracts. It is true that we have, on occasion, struck down such contracts as void when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it, completely deprived of the opportunity to bargain on equal footing. Nevertheless, contracts of adhesion are not invalid per se; they are not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. In the case of Sps. Francisco us. BPI Family Savings Bank, Inc. (G. R. Nos. 149840-41, March 31, 2006), where the petitioner spouses undertook to secure the P15M loan of Transbuilders Resources & Development Corporation to BPI-FSB "and other credit accommodations of whatever nature obtained by the Borrower I Mortgagor" under the Real Estate Mortgage they executed in favor of BPI-FSB, the SC held that while the stipulation proved to be onerous to the petitioners, neither the law nor the courts will extricate a party from an unwise or undesirable contract entered into with all the required formalities and with full awareness of its consequences. Petitioners voluntarily executed the REM on their property infavor ofBPI-FSB to secure the loan. They cannot now be allowed to repudiate their obligation to the bank after Transbuilder's default. While petitioner's liability was written in fine print and in a contract written by BPI-FSB, it has been the consistent holding of the Court that contracts of adhesion footing are not invalid per se. On numerou s occasions, the SC has upheld the binding effects of such contracts.

89. Comment on the acceptability/validity of stipulations of the credit card company that (i) it is not responsible if the card is not honoured by any merchant affiliate for any

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Arts . 1403-1408

OBLJGATIONS AND CONTRACTS Contracts Unenforceable Contracts

the bank, withdrew the necessary amount, and returned to "A,, for the consummation of the contract. "A/' however, had changed his mind and refused to go through with the sale. Is the agreement valid? Will an action by "B'' against "An for specific performance prosper? Reason. (1982) ANS: It must be observed that there are two (2) questions in the case at bar. They are: (1) Is the agreement valid? The answer is yes. It is a time honored rule that even a verbal agreement to sell land is valid so long as there is already an agreement with respect to the object and the purchase price. (2) Will an action by ''B" against "A" for specific performance prosper? The answer is no, unless it is ratified. The reason is obvious. The property is covered by the Statute of Frauds. It cannot, therefore, be enforced by a court action because it is not evidenced by any note or memorandum or writing properly subscribed by the party charged. (Note: The above answer is based on No. 2 of Art. 1403 of the NCC and on decided cases.)

129. (a) What is the "Statute of Frauds,'? {b) What is its purpose? ANS: (a) The "Statute of Frauds" is descriptive of statutes which require certain classes of contracts to be in writing. The contract shall be unenforceable by action unless the same or some note or memorandum thereof be in writing and subscribed by the party charged or by his agent. Evidence of the contract, therefore, cannot be received without the writing or a secondary evidence of its content. (Art. 1403[2], NCC.) (b) The purpose of the Statute of Frauds is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing a signed by the party to be charged. rRosencor Development C01p. vs. Inquing, supra.)

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Arts. 1458-1637

OBLIGATIONS AND CONTRACTS Special Contracts Sales

property, the true owner who had lost it or who has been unduly deprived of it can still recover the same from the vendee. However, if the latter had acquired it in good faith, such owner cannot obtain its return without reimbmsing the price paid therefore. (Art. 559 of the NCC is applicable.)

47. Define negotiable document of title. ANS: A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document is a negotiable document of title. (Art. 1507, NCC.)

48. How may a negotiable document of title be negotiated by delivery? ANS: A negotiable document of title may be negotiated by delivery: (1) Where by the terms of the document the carrier, warehouseman or other billee issuing the same undertakes to deliver the goods to the bearer; or (2) Where by the terms of the document the carrier, warehousemen or other bailee issuing the same undertakes to deliver the goods to the order of specified person, and such person or a subsequent indorsee of the document has indorsed it in blank or to the bearer. Where by the terms of a negotiable document of title the goods are deliverable to bearer or where a negotiable document of title has been indorsed in blank or to bearer, any holder may indorse the same to himself or to any specified person, and in such case the document shall thereafter be negotiated only by the indorsement of such indorsee. (Art. 1508, NCC.)

49. How may a negotiable document of title be negotiated by indorsement? ANS: A negotiable document of title may be negotiated by the indorsement of the person to whose order the goods are by the terms of the document deliverable. Such indorsement may be in blank to bearer or to a specified person. If indorsed to a specified person, it

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