The Equity of New Civil Code

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Part of The Lawyers Journal

Title: The Equity of New Civil Code
extracted text: EOlJITY IN THE NEW CIVIL CODE One of the principal reforms in the new Civil Code is the emphasis laid upon equity and justice as against striCt legalism or form. The project recognizes that more significmt and more far-reachi ng than the formulation of legal rules, justice and equity should prevail in any legislation. In working out rhe rules ro be embodied in the proposed Civil Code, the Code Commission drew principally from two sources: ( l) rhc Anglo-American equity jurisprudence and (2) the general principles of natural justice. Among the branches of Anglo~America n equity jurisprudence which are incorporated into the new Civil Code are those relative to implied trusts, estoppcl, quieting of title and reformation of instruments. A nd among the features taken from natural justice are those which relate to natural obligations, reduction of iniquitous penalty, recovery in case of substantial performance, wilfully causing damage in a manner contrary to morals, the doctrine against unjust enrichment (which includes rhe addition.11 quasi-contracts found in the new Code). the :i.warding of moral damages, and certain rules relative to illegal contracts. These various topics will now be discussed briefly. I. ANGLO-AMERICAN EQUITY. 1. Implied T111sls.-The subject of implied trusts is :i very importmt one in Anglo-American jurisprudence. It is unknown in the present Civil Code. It is developed in :irticles 1461, 1462, :ind :irticles 1467 to 1477- of rho:: proposed Civil Code. Implied trusts come into being by operation of l:iw. Here are three examples of implied trusts found in articles 1470, 1472 and 1474, which re:id as follows: "Art. 1470. If the price of J sale of property i•loanedorpaidbyoneperson for the benefit of Jnothn and the conveyanq is mAde to the lender or payor to secure th~ payment of the debc, a trust ui•H by operation of hw in favor of the pcrsor>S to whom the money is loaned or for whom it is paid. The latter nuy red...,m the propeny and compel a conveyJncc thereof to him." "Art. 1472. If two or more persons agree 10 purchase property and by whom consent the lcg•l ticle is taken in the name of one of them for the benefit of al!, a trust h created by force of hw in favor of the others in proportion to the intere1t of och." "Art. 1474. If an absolute converance of property is made in order to secure the performance oi an obligation of the grantor toward the grantee, J crun by virtue of law is esubH1hed. If the fulfillment of the obligation is offered by the guntor when ic become• doe, he may demand the reconveyance of the property to him." 2. E~toppef.-Therc seems to be a gen~ era! impression in the legal profession in the Philippines rhat estoppel is essentially a part 230 By JORGE BOCOBO of remedial law. This is an error, because estoppcl is a division of both substantive and adjective law in the Anglo-American legal system. T he subject of estoppcl in its substantive aspect is developed in articles 1451 to 1469 of the p(oposed Civil Code. Here is :in example of estoppcl as applied to substantive law: "Art. 14H. When a pen<l n who is the owner of a thing se!h or a li~natc• and deli,·ers it, and later the seller or grJntor acquires tide thereto, such tide passes by operation of hw to the buyer or grantee." 3. Quieting ·of Title.-The quieting of title is a remedy which is resorted to in American b w in order to remove a cloud on tide to real property. Article 496 provides: "An. 496. \'\1 hene\•er there is a cloud on tide to real property or any interest therein, by ruson of any instrument. record, d.im, cncumbunce or proceeding which i• app.ircntly valid or effecti••e but is in truth and in face invJlid, incffrctive, voidable, or unenforceable, and may bepreiudicial to u id title, an action may be brought to remove such cloud or to quiet the titk "An action may also be brought to prevent a cloud from being can upon title to real property oranyintcrentherein." 4. Rl'/on111.1/io11 of lnstrumrnfs.-This is a very import.mt remedy in order to carry out the real intenti'on of the parties to :i contract. This subject is dealt with in art· ides 1379 to 1389 of the draft of the Civil Code. Article 1379 cxp!Jins the nature of this remt'dy :is follows: "Art. 1379.-Wlicn. there luving been a muting of the minds of the parties 10 a contract, their rrue intention is not expres!Od in the instrument purporting to cmbodr the >grecment, by reuon of mistak~. fr•ud. inequitabk conduct as >tcident, one of the parties may ask for the reformation of the innrument to the end du1 such true intention may be expressed. "If mi1uke, fr.ud, inequir.bl~ conduct, or accident hu prc,·cntcd a meeting of the minds of the panic" the proper remedy is not reformation of the instrument but annulment of the contract." Article I J 8 5 is of immediate practiol v:alue as a remedy agJinst the oppressive practices of many lenders who impose upon borrowers the contr::ict of s:ale with paclo dr rr!ro. S:aid article provides: "An. IJ8f. If two puties agree upon the rnortgage or pledge of rcal or pcrsonal property, bot the instrument states that the proP"rt)' is sold absolutely or with a right of repurchu~, reformation of the in11roment is proper." IL GENERAL PRINCIPLES OF JUSTICE. T he followi ng subjects, among others, :ire trelted of in the proposed Civil Code by way of carrying out general principles of narural justice as ::i.gainst legalism and technicality. 1., Natura{ Obligatiom.-The present Ciyi\ Code has practically abolished the old institution called "natural obligations." The drafters of the Civil Code in force believed that by a careful" formulation of rhe provisions concerning illegal contracts, this problem of natural obligations would be solved. However, the present Civil Code fai ls to bring out the proper solution when certain cases arise that call for the ancient doctrine of natural obligations. T he codes of France, Italy, Germany, Louisiana :ind Argentin:1, among o_thcrs, deal with this subject. The project of Civil Code defines narur:il oblig:itions as follows: "Art. !HJ. Obligations ore ci,·il or natural. Ci,·il obligations gi1·e a right of ~ction to compel their performance. Natur•l oblii;ations, not being bsed On positive law but on e<juity and natural bw, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they ~uthorize the retention of whac has b~n delivered or rendered by reason thereof. Some natural obligations HC 1et forth in the following articles." Illustrations of natural obligations are fou nd in articles 1444, 1448 and 1449. "An. 1444. When 2 right to sue upon a civil obligationla$lapS"dbyextinctive prescription, the obligor who voluntarily performs the contract can- · not recover wh~t he has delivered or the value of the Jen·ice he has rendered." "Art. 1448. When, after an ~ction to enforce a civil obligation has failed, the defendant ~·olunnrily perfoms the obligation, he cannot demand the return of whn he has delivered or the plyment of the value of the .crvice he hn rendered." "Art. 1449. 'Vhen a testate or intestate heir volunurily pap a debt of the decedent eitceeding <h~ nluc of the property which he received by will or by the law of intestacy from the cscace of the dccu1ed, the payment is ulid and cannot be resc inded by 1liep3yer." 2. Pe11afty.-At the present time, the Civil Code provides for a reduction of the penalty only when there has been a partial or irregubr performance of the contract (Art. 1154). However, under the new Code it is not necessary that t here should have been a partial or irregular performance. A penalty may be reduced if it is found by the courts to be iniquitous or unconscionable (Art. 1249). Moreover, :i.rticle 2247 provides as follows: "Art. ~247. Liquidaicd damages, whether intended as an indemnity or a penalty, •hall bl! equitably reduced if they are iniqui1ousorun<;onscionabk" }. S11bsla11fial Per/a. 1111111cr.-The new Code docs not insist upon a strict fulfillment of the contract, it being s.ufficient t hat there has been a substantial p~rfor m:incc in good faith, although damages suffered by the obligec are paid. Article 12 5 4 reads :ts follows: (Co11tit111rd 011 prlge 23 I) May Ji, 1949 THE JUDICIARY ACT OF 1948 (With Annotations) [CONTINUED FROM LAST IssuE] SEC. 46. Clerks a11d other snbordinate employees of Courts of First Iustance. - Clerks, deputy clerks, assistants, and other subordinate employees of Courts of First Instance shall, for administrative purposes, belong to the Department of Justice; but in the performance of their duties they shall be subject to the supervision of the Judges of the courts to which they respectively pertain. authorize any suitable person to act as his special deputy and in such capacity to perform such functions as may be specified in the authority granted. NOTES l. Appointment of subordinate employee~. 2. Clerks of court departments. S. Clerk of Court as commissioner to receive evidence. The clerks of Courts of First Instance shall be appointed by the President of the Philippines with the consent of the Commission on Appointments. No person shall be appointed clerk of court unless he is duly authorized to practice law in the Philippines: Provided, however, That this requirement shall not 'affect persons who, at the date of the approval of this Act, are holding the position of clerk of court, nor those who have previously qualified in the Civil Service ex.:. amination for said position; 3. Duties of clerk to judge. -4. Acts under direction. L Matters requiring judge's approval. 6. Function of judge performed by clerk. 7. Clerk of court has no authority to refuse admission of record on appeal. 9. Oath of Clerk of Court as commissioner. 10. Officer of Court may be punished for contempt. 11. Compensation. 12. Negligence of Court's personnel. 13. Liability. 1. APPOINTMENT OF SUBORDINATE EMPLOYEES. Where a statute vests the appointive power in an official other than the judge, such enactment controls. However, under particular statutory regulations the court may have the power to recomThe clerk of a Court of First Instance may, by special written deputization approved by the judge, EQUITY ... (Co11tin11ed from page 2JO) "Art. IH4. If the obligation hu been 111bstantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, len damages suffued by the ohl.igee." -4. Immoral Acts.-Article 2} provides as follows: "Art. 2l. Any per!On who wilfully couses loss or injury to another in a manner t hat is contrHY to morals, good cus1oms or public poliq shall compensate the bttcr for the d•mage.'• This provision has been taken from article 826 of the German Civil Code, with a certain modification, by adding "good customs" and "public policy." An illustration of the scope of article 23 is the following: A man seduces a 19year old girl who becomes pregnant. Under the Revised Penal Code there is no crime inasmuch as the girl is above 18 years of age. Therefore, no damages can be recovered by her. But by article 23 she can recover damages, because the defendant is guilty of a willful and immoral act, although positive law has not been violated. The above article brings within the sphere of statutory law all immoral acts wilfully committed which cause damage, but which are not denounced by any statute. This provision fills innumtrable gaps in our corles :ind statutes, which of course cannot foresee every wrongful deed. May JI, 1949 S. U11j11sf E11richml'11f. - The ancient doctrine against unjust enrichment is restated in article 24, which reads thus: "Arr. 2.4. Every pt'rlOn who through an act of performance by another, or any orhu means, acquires or comes into possesiion of something at d1e upense of the bttu without just or legal ground, shall return the s.me 10 him." Although the present Civil Code implements the above doctrine in some instances, still it docs not formulate a principle on this point. Hence, the need of article 24. The maxim concerning unjust enrichment finds a m:mifest:ition (among other subjects) in the additional quasi-contracts under the new Code. Herc are three examples of unjust enrichment, for which the new Civil Code offers solutions under the principle of quasi-contracts: "Art. 2188. When during a fire, flood, storm. or othercahmil)., property is sand from destruction by another person without the knowledge of 1he crwncr, the latter is bound 10 pay 1he formtr iu11 compenution." Art. 2.189. When the government, upon the failure of my person to comply with hnlth orufety regulations conccrnig property, undcrtJkes to do the necessary work, e"cn over his objection, he sho ll be liabletop:iy 1hcn:.penses." Art. 2191. Any person who is constriined to pay the taxes of another shall be entitled to reimbursement from the Iner." 6. Damages.-The new Civil Code awards moral damages. The usual objection to the giving of moral damages is that they cannot be pecuniari\y estimated. This is purely a technical argumenr. Justice should be done by :idjudicating some amount of damage, which should be left to the discretion of the court. 7. Illegal Co11tracts.-Finaily, there is a general principle that when borh pJrties are to biame neither may enforce the same. However, the new Civil Code makes certain exceptions: For example, articles 1434 to 14 3 6 provide: .. Art. 1434. Wlocn munc)' is paid or property deli•·ered for all illcg•l purpose, the contract ma)' be repudiated by one of the puties before the purpose h>s been accomplished, or before my damage hubuncHued to a third person . In such case. the courts may, if the public interest will thus be subserved, allow the party repudioting the "tontnCt to recover the money or prolX'rty." "Art. 1435. Where one of the parties 10 an illegal contract is incapiblc of givingconsenr, the courts may, if the inurest of justice so demands, allow recovery of money or property deli"ered by the incap•~itated person." .. Art. 1436. When 1he agrccmenr is not illegal per u but is merely prohibited, and the prohibition by the law is designed for the protection of the phintiH, he may, if public polky is thereby enhanced, recover what he has paid or ddivered." CONCLUSION The foregoing brief exposition, I hope, will give an idea of how the new Civil Code strives to temper the rigor of legalism in order that justice may triumph. After all, the paramount aim oi the courts is to do justice, which should not be defeated by any technicality, or by, the letter of the law. 2JI
Date: 1941
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