RESA RFBT Last Minute Tips October 2019 PDF

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OBLIGATIONS If the debtor is in delay in delivering a specific thing which subsequently got lost due to fortuitous event, the debtor shall be liable for the loss. In case a passenger is injured due to the negligence of the taxi driver, the passenger may sue the taxi driver based on quasi- delict. He...

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LAST-MINUTE TIPS FOR RFBT (OCTOBER 2019) OBLIGATIONS 1. If the debtor is in delay in delivering a specific thing which subsequently got lost due to fortuitous event, the debtor shall be liable for the loss. 2. In case a passenger is injured due to the negligence of the taxi driver, the passenger may sue the taxi driver based on quasidelict. He may include the taxi operator in the suit based on the employer’s solidary liability for the acts of its employee. 3. In case a passenger is injured due to the negligence of the taxi driver, the passenger may sue the taxi operator based on breach of contract of carriage. He may not include the taxi driver since a contract of carriage is only between the taxi operator and the passenger. 4. In case a passenger is injured due to the negligence of the taxi driver, the passenger may sue the taxi driver based on delict. He cannot include the taxi operator in the suit since only the actor can be charged criminally. But, the taxi operator is subsidiarily liable in case the taxi driver is convicted and insolvent. 5. The diligence required of common carriers is extraordinary diligence, which is greater than the diligence of a good father of a family. 6. While solidary debtors may be compelled to pay the share of an insolvent co-debtor, joint debtors may not be compelled to do so. 7. In alternative obligations, the person entitled to choose cannot choose the things lost due to fortuitous event or due to the fault of the one entitled to choose. 8. In alternative obligations, once the choice is made, the obligation becomes pure and demandable. 9. In facultative obligations, whatever happens to the thing substituted after substitution does not affect the substituting obligation. 10. In facultative obligations, the choice to substitute always belong to the debtor. 11. Solidarity does not mean indivisibility. Neither does indivisibility mean solidarity. 12. In case two debtors are obliged to deliver an indivisible thing (e.g. car), if one refuses to perform, the obligation to deliver shall be converted into an obligation to pay the value of the undelivered car where only the refusing debtor is liable for damages and the debtor willing to perform paying for his share in the obligation (without damages) had it been properly performed. 13. In dacion en pago, if the property given in exchange is valued less than the monetary obligation, the extinguishment shall only be partial and up to the extent of the value of the property, unless the conduct of the parties or a stipulation provides that the exchange is in consideration of the total extinguishment of the obligation. 14. In dacion en pago, if the property given in exchange is lost by the creditor through eviction, the original obligation shall be revived, and the accessory obligation shall remain extinguished. 15. In payment by cession, ownership over the debtor’s property is not transferred to the creditors. The extinguishment is only up to the extent of the proceeds of the sale of ceded properties. 16. Compensation is only available when both debts are in money or to deliver consumable things. 17. A third person who pays the debt of a debtor without the debtor’s knowledge and consent, cannot be subrogated to the rights of the creditor and is only entitled to reimbursement up to the extent beneficial to the debtor. This strict rule ensures that third persons are more careful in paying debts of other persons and protecting debtors from being liable for more than what they actually owe. 18. Remission, being gratuitous in nature, must observe the formalities required of donations. 19. If a father loans his son an amount and donates the same credit to his son, the obligation to pay the loan is extinguished by merger or confusion. Same effect happens if the father dies and leaves the son as his only heir. 20. When a debtor promised to deliver a determinate thing to each of two persons, the debtor will be liable to the creditors in case of loss of said thing even if it is due to fortuitous event. CONTRACTS 21. Love and affection, though not valuable consideration, is still a consideration that can complete the requisites of a valid contract like donation. 22. Obligatoriness refers to the force and effect of contract as law between the contracting parties. 23. Relativity of contracts refers to the binding effect of a contract to its contracting parties, their heirs, and assigns. 24. Mutuality of contracts refers to the equality of standing of contracting parties in a contract. 25. Autonomy of contracts refers to the freedom of the contracting parties to agree to any term or condition provided it is not contrary to law, public policy, good morals, and good customs. 26. The Philippines follows the Cognition Theory (when the acceptance comes to the knowledge of the offeror) when it comes to perfection of contracts. 27. Before an offer is accepted, it may be withdrawn by the offeror, except if there is consideration given in order for the offeree to decide on the offer. 28. When an offeror is convicted for a crime which is punishable by imprisonment of at least reclusion temporal, the offer is considered withdrawn because civil interdiction is deemed imposed with the prison sentence. 29. Stipulations in favor of third persons only bind the third persons upon their acceptance. Prior to said acceptance, contracting parties may withdraw said stipulations. 30. In case a minor enters into a contract, the other contracting party, who is capacitated, cannot seek the annulment of the voidable contract. 31. If the lesion or damage suffered by a minor, ward, or absentee in a contract entered into by the guardian or representative is exactly 25% of the property, the contract is valid. It must be more than 25% to be rescissible. 32. An action for rescission is a subsidiary remedy or a remedy of last resort. 33. Unenforceable contracts may be ratified by partial performance no matter how small since such performance is deemed an admission to the existence of said contract.

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LAST-MINUTE TIPS FOR RFBT (OCTOBER 2019) 34. For an oral sale of chattel to be enforceable, the price of the chattel sold must be less than P500. If the price is exactly P500, such sale of chattel must be in writing to be enforceable. 35. A minor who entered into a contract cannot ratify said voidable contract during his minority. Only his or her guardian can ratify said contract. Once he or she reaches the age of majority, his or her guardian cannot ratify said contract anymore. 36. The prescriptive period to annul a voidable contract is 4 years. 37. A contract entered into by two persons legally incapacitated to enter into a contract is unenforceable; but those entered into by two persons whose consents are both vitiated are voidable. 38. Void contracts are imprescriptible and not capable of being ratified. 39. When contracting parties are in pari delicto, the law leaves where they are. They cannot go to courts to enforce the contract. 40. A sale of shabu is void even if the document is couched as a sale of baby powder. A sale of baby powder is valid even if the document is couched as a sale of shabu. It is the parties’ intention that prevails. SALES 41. A sale of future inheritance is void. 42. An oral sale of large cattle is void. 43. A deed of sale where the consideration had not in fact been paid is a void contract of sale. 44. Inadequacy of price does not invalidate a sale unless such inadequacy is so gross that it is unconscionable or shocking to the senses of men or to the judicial sensibilities of the court. 45. While a contract of sale is void since it has no valuable consideration, it may be some other valid contract like a donation. 46. Failure to pay the consideration is different from lack of consideration. The first only results to breach of contract of sale, while the latter voids a contract of sale. 47. In the absence of a principal contract of loan, no contract of sale can be construed as an equitable mortgage. 48. A contract of sale of necessaries entered into by a minor is valid. 49. Married couples who are legally separated may enter into a contract of sale. 50. An unpaid seller can no longer exercise his or her right of stoppage in transitu if the goods have already been received by the buyer or its agent. 51. When an unpaid seller exercises his or her right of resale, the buyer shall be liable for any deficiency. But in case of profit, it shall inure to the benefit of the unpaid seller. 52. In case of foreclosure of chattel mortgage over a personal property bought in installments, recovery of deficiency is not allowed. In case of excess, it shall belong to the mortgagor unless there is a stipulation to the contrary. 53. If the redemption period is “after 10 years from date of sale”, it is a void stipulation and considered as if not written. Hence, the period shall be 4 years. 54. The right of redemption of a co-owner defeats the pre-emptive right of an adjacent landowner. CREDIT TRANSACTIONS 55. A contract of pledge is a real contract because it requires delivery in order to be perfected. 56. In legal pledge, the excess in the sale proceeds shall belong to the legal pledgor and the legal pledgee shall be entitled to recover in case of deficiency. 57. While a real estate mortgage requires registration in order to be valid, an unregistered real estate mortgage is binding between the contracting parties. 58. In judicial foreclosure of real estate mortgage, there is right of redemption and equity of redemption. 59. In chattel mortgage, there is equity of redemption which must be exercised before the foreclosure sale. 60. A chattel mortgage over a house is valid. PARTNERSHIPS 61. A partnership has a separate and distinct personality of its own apart from the partners constituting it. 62. An assignee of partnership interest does not become a partner until and after the acceptance of all the other partners. 63. A partnership for a particular undertaking is automatically dissolved upon fulfilment of said undertaking. 64. An illegal partnership does not need a judicial proceeding in order to be dissolved. It is void from the beginning. 65. When a general partner dies, the partnership whether general or limited, is dissolved. But when a limited partner dies, the limited partnership remains as long as there is at least one limited partner remaining. 66. Partners in a partnership are mutual agents of another. 67. When there are immovable properties contributed, there must be an inventory and the public instrument must be executed. Otherwise, the partnership is void. 68. Non-registration of the partnership, when required, does not invalidate the partnership. 69. An industrial partner cannot be liable for additional capital contributions if needed by the partnership. 70. If a capitalist partner refuses to contribute additional capital when needed, his or her interest may be bought out by the other partners willing to contribute additional capital. 71. A partner who is admitted to the partnership is liable for obligations incurred by the partnership prior to his or her admission but only up to the extent of his contribution, unless there is a stipulation to the contrary. 72. A managing partner whose credit against a debtor is more onerous to the debtor than the debtor’s debt to the partnership, may apply the entire payment made by the debtor in his name, should the debtor elect his right to apply it wholly to his debt to the managing partner. 73. When an industrial partner engages in any other business, he may be excluded from the partnership, but a capitalist partner who engages in the same business, may only be made to account for the profits earned. 74. While an industrial partner cannot be made liable for any losses, he may be held liable for partnership debts to partnership creditors with right of reimbursement from the capitalist partners.

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LAST-MINUTE TIPS FOR RFBT (OCTOBER 2019) 75. The non-filing of the certificate of limited partnership does not void the partnership. It will then be considered as a general partnership. 76. The firm name must not have the surname of a limited partner, unless such surname has been in the firm name prior to the admission of the limited partner or it is the surname of a general partner as well. 77. When a limited partner participates in the management of the limited partnership, he becomes liable as a general partner, but he does not become entitled to the rights of a general partner. 78. A limited partner can extend a loan to the limited partnership, but the limited partnership cannot secure said loan using partnership property. 79. A substituted limited partner does not become a limited partner until and after the certificate of limited partnership is amended. 80. In case illegal partnership, the capital contributed shall be returned to the contributing partner, but the proceeds of the partnership shall be escheated in favor of the State. CORPORATIONS (UPDATED PER THE REVISED CORPORATION CODE) 81. A corporation is said to be have a strong juridical personality because of its inherent attribute that it has the right of succession. 82. The piercing of the corporate veil is used to reach the persons forming it, instead of reaching the corporations formed by persons liable. This principle also applies to One Person Corporations (OPCs). 83. A corporation has the constitutional rights to due process, equal protection, and against unreasonable search and seizure. 84. A corporation sole has no nationality. 85. The Roman Catholic Church is a corporation by prescription. 86. An ultra vires act is not necessarily an illegal act, but an illegal act is always an ultra vires act. 87. If a corporation aims to amend its articles of incorporation to change its corporate name, the dissenting stockholders cannot exercise their appraisal right. 88. Incorporators of a corporation may be natural or juridical persons. 89. There is no minimum paid up capital for corporations. 90. Authorized capital stock >= issued shares >= outstanding shares 91. In case of increase of authorized capital, the 25%-25% rule must be based on the net increase. 92. A postdated check cannot be considered as a valid consideration for shares of stocks. 93. For services to be a valid consideration for shares of stocks, it must have already been rendered. 94. Advances for future subscription are not covered by the trust fund doctrine. They cannot be used to pay the creditors of the corporation. 95. Foreigners can incorporate a corporation. 96. In the absence of any denial of voting right in the articles of incorporation, holders of preferred shares and redeemable shares are entitled to vote in the similar manner as the holders of common shares. 97. All matters where a stockholder’s right of appraisal is available, require 2/3 vote of the stockholders holding outstanding capital stock. 98. In matters which has important or significant consequences to the corporation and its stockholders, holders of non-voting shares are entitled to vote. 99. Directors and trustees can never vote by proxy in directors’ or trustees’ meeting. 100. A proxy form can be valid for just one meeting or for a period not exceeding 5 years. 101. A voting trust agreement can be valid for more than 5 years if it is executed as required in a loan agreement, but it shall be automatically terminated upon full payment of said loan. 102. The 10% (of prior year’s net income before taxes) ceiling limiting the compensation given to directors in their capacity as directors does not apply to compensation given to them in other capacity (e.g. when the director is also a Vice President with compensation, his compensation as VP is not considered for purposes of computing the 10% ceiling). 103. Tenure refers to the period of time an incumbent actually holds office. It is different from “term”. 104. A President cannot be the Secretary or Treasurer at the same time. But in case of OPCs, a President can also be the Treasurer, provided that he posts a bond. 105. A Vice President can be the Secretary or Treasurer at the same time. 106. A person can be both the Secretary and Treasurer at the same time. 107. Between the President, Secretary, and Treasurer, only the President is required to be a director. 108. Between the President, Secretary, and Treasurer, only the Secretary is required to be a citizen and resident of the Philippines. 109. A buyer of shares of a corporation does not become the owner of the said shares as far as the corporation is concerned until and after the sale is registered in the books of the corporation and the buyer is recorded as the owner. 110. If the foreign corporation not having a license to do business in the Philippines is the one being sued before Philippine courts, its lack of standing can no longer be attacked. 111. The power to amend or repeal any by-laws or adopt a new by-laws may be delegated to the board of directors or trustees by 2/3 vote, and revoke such delegation by majority vote. 112. When a director or trustee is removed, the resulting vacancy can be filled up by the stockholders or members. 113. An amended or new by-laws shall only be effective upon the issuance by the SEC of a certification that the same are not inconsistent with the Corporation Code. 114. When a holdover director or trustee resigns, the resulting vacancy can only be filled up by the stockholders or members. 115. When a director or trustee dies or resigns, the resulting vacancy may be filled up by the remaining directors or trustees still constituting majority.

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