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Law of Contract
Law of Contract
Condonation or remission is essentially gratuitous, and requires the acceptance by the obligor. It may be made expressly or impliedly. One and the other kind shall be subject to the rules which govern inofficious donations. Express condonation shall, furthermore, comply with the forms of donation. (1187)
Condonation or Remission is an act of liberality by which the obligee, without receiving any price or equivalent, renounces the enforcement of the obligation, as a result his right against the debtor. (4 Sanchez Roman 422) Requisites of Condonations or Remissions it must be gratuitous; it must be accepted by the debtor; the parties must have capacity; must not be inofficious; and if made expressly, it must comply with the forms Effect of inofficious Remission: While a person may make donations, no one can give more than that which he can give by a testamentary will, otherwise, the excess shall be inofficious and shall be reduced by the Court accordingly. Like for example, a part of the testators property called legitimate cannot be disposed of because the law has reserved it from certain heirs called the compulsory heirs. Art. 1271. The delivery of a private document evidencing a credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action which the former had against the latter. If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his heirs may uphold it by proving that the delivery of the document was made in virtue of payment of the debt. (1188) Art. 1272. Whenever the private document in which the debt appears is found in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved. (1189)
Presumption In Case Document Found In the Possession Of Debtor: If the document is found in the hands of the debtor and it is not known how he came into possession of the same, the presumption is that there was payment by virtue of the payment of the debt. Or it was voluntarily delivered to the debtor, which gives rise to the remission of the obligation. Example, Gaya owes Tito P10, 000 evidenced by a promissory note. The note as signed by Gaya was given to Tito. If the promissory note is voluntarily delivered to Gaya, the presumption is that the debt must have been paid by Gaya. it is known that Gaya has not yet paid Tito, it must be presumed that the obligation has been remitted. Suppose it is not known how Gaya came into possession of the promissory note, the presumption is that it was voluntarily delivered by Tito unless Tito proves to the contrary. Art. 1273. The renunciation of the principal debt shall extinguish the accessory obligations; but the waiver of the latter shall leave the former in force. (1190)
Of Effect Renunciation Of the Principal Debt: The above provision follows the rule that the accessory follows the principal. The accessory cannot exist without the principal obligation. Example, Arvin owes Tito P10, 000 with Gaya as guarantor. The principal debt here is the P10, 000 while the accessory obligation is the guaranty of Gaya. The remission of the debt of Arvin by Tito extinguishes the guaranty of Gaya. But if only the guaranty of Gaya is condoned, the obligation of Arvin shall remain in force.
Art. 1274. It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing. (1191a)
Pledged is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable or instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and accessions. Presumption In case Thing in Possession of Debtor: If the thing pledged is found in the hands of debtor or the third person, only the accessory obligation of pledge is presumed remitted, not the obligation itself .
SECTION 4. - Confusion or Merger of Rights Art. 1275. The obligation is extinguished from the time the characters of creditor and debtor are merged in the same person. (1192a) Meaning of Confusion or Merger Confusion is the meeting in one person of the qualities of creditor and debtor with respect to the same obligation. (4Sanchez Roman 421) Requisites of A Valid Confusion: 1. the merger of the qualities of creditor and debtor must be in the same person; 2. it must take place in the person of either the principal debtor and principal creditor; and 3. it must be complete, clear and definite; and 4. the very obligation must be the same. Example, Gaya issued a promissory note for P10, 000 in favor of Tito payable 30 days after sight. Before the maturity of the note, Tito indorsed it to Arvin; Arvin indorsed it to Mary; Mary indorsed it to Gaya. The obligation of Gaya to Tito is extinguished because there is here a merger of the qualities of the debtor and creditor in one and the same person with respect to one and the same obligation cannot demand and collect payment from himself. Art. 1276. Merger which takes place in the person of the principal debtor or creditor benefits the guarantors. Confusion which takes place in the person of any of the latter does not extinguish the obligation. (1193) Art. 1277. Confusion does not extinguish a joint obligation except as regards the share corresponding to the creditor or debtor in whom the two characters concur. (1194)
SECTION 5. - Compensation Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. (1195) Art. 1279. In order that compensation may be proper, it is necessary: (1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) That the two debts be due; (4) That they be liquidated and demandable; (5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor. (1196) Art. 1280. Notwithstanding the provisions of the preceding article, the guarantor may set up compensation as regards what the creditor may owe the principal debtor. (1197) Art. 1281. Compensation may be total or partial. When the two debts are of the same amount, there is a total compensation. (n) Art. 1282. The parties may agree upon the compensation of debts which are not yet due. (n) Art. 1283. If one of the parties to a suit over an obligation has a claim for damages against the other, the former may set it off by proving his right to said damages and the amount thereof. (n) Art. 1284. When one or both debts are rescissible or voidable, they may be compensated against each other before they are judicially rescinded or avoided. (n) Art. 1285. The debtor who has consented to the assignment of rights made by a creditor in favor of a third person, cannot set up against the assignee the compensation which would pertain to him against the assignor, unless the assignor was notified by the debtor at the time he gave his consent, that he reserved his right to the compensation. If the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the compensation of debts previous to the cession, but not of subsequent ones. If the assignment is made without the knowledge of the debtor, he may set up the compensation of all credits prior to the same and also later ones until he had knowledge of the assignment. (1198a) Art. 1286. Compensation takes place by operation of law, even though the debts may be payable at different places, but there shall be an indemnity for expenses of exchange or transportation to the
place of payment. (1199a) Art. 1287. Compensation shall not be proper when one of the debts arises from a depositum or from the obligations of a depositary or of a bailee in commodatum. Neither can compensation be set up against a creditor who has a claim for support due by gratuitous title, without prejudice to the provisions of paragraph 2 of Article 301. (1200a) Art. 1288. Neither shall there be compensation if one of the debts consists in civil liability arising from a penal offense. (n) Art. 1289. If a person should have against him several debts which are susceptible of compensation, the rules on the application of payments shall apply to the order of the compensation. (1201) Art. 1290. When all the requisites mentioned in Article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation. (1202a) SECTION 6. - Novation Art. 1291. Obligations may be modified by: (1) Changing their object or principal conditions; (2) Substituting the person of the debtor; (3) Subrogating a third person in the rights of the creditor. (1203) Art. 1292. In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. (1204) Art. 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237. (1205a) Art. 1294. If the substitution is without the knowledge or against the will of the debtor, the new debtor's insolvency or non-fulfillment of the obligations shall not give rise to any liability on the part of the original debtor. (n) Art. 1295. The insolvency of the new debtor, who has been proposed by the original debtor and accepted by the creditor, shall not revive the action of the latter against the original obligor, except when said insolvency was already existing and of public knowledge, or known to the debtor, when the delegated his debt. (1206a) Art. 1296. When the principal obligation is extinguished in consequence of a novation, accessory obligations may subsist only insofar as they may benefit third persons who did not give their consent. (1207)
Art. 1297. If the new obligation is void, the original one shall subsist, unless the parties intended that the former relation should be extinguished in any event. (n) Art. 1298. The novation is void if the original obligation was void, except when annulment may be claimed only by the debtor or when ratification validates acts which are voidable. (1208a) Art. 1299. If the original obligation was subject to a suspensive or resolutory condition, the new obligation shall be under the same condition, unless it is otherwise stipulated. (n) Art. 1300. Subrogation of a third person in the rights of the creditor is either legal or conventional. The former is not presumed, except in cases expressly mentioned in this Code; the latter must be clearly established in order that it may take effect. (1209a) Art. 1301. Conventional subrogation of a third person requires the consent of the original parties and of the third person. (n) Art. 1302. It is presumed that there is legal subrogation: (1) When a creditor pays another creditor who is preferred, even without the debtor's knowledge; (2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor; (3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter's share. (1210a) Art. 1303. Subrogation transfers to the persons subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to stipulation in a conventional subrogation. (1212a) Art. 1304. A creditor, to whom partial payment has been made, may exercise his right for the remainder, and he shall be preferred to the person who has been subrogated in his place in virtue of the partial payment of the same credit. (1213) 224 226. ART. 1276. Merger which takes place in the person of the principal debtor or creditor benefits the guarantors. Confusion which takes place in the person of any of the latter does not extinguish the obligation. (1193) Effect of Merger This article reiterates the principles established in Articles 1176, 1274, NCC, that accessory follows the principal. The extinguishment of the principal obligation extinguishes the accessory obligation; but the extinguishment of the accessory does not extinguish the principal obligation Example, Gaya obtains P10, 000 loan from Tito which loan was
guaranteed by Arvin. Later, Tito assigned the credit to Mary, who in turn assigned it to Gaya. The principal debt is extinguished and Arvin is released from his obligation as guarantor. If, in this same example, the credit was assigned by Tito to Mary and Mary to Arvin. The contract of guaranty is extinguished but the principal obligations remains. Gaya has now the obligation to pay Arvin. 227. ART. 1277. Confusion does not extinguish a joint obligation except as regards the share corresponding to the creditor or debtor in whom the two characters concur. (1194) Effect of Merger in Joint Obligation In a joint obligation, the debts are distinct and separate from each other. In case there is merger in a joint obligation, it affects only the share corresponding to the creditor or debtor in whom the two characters concur. The co-debtor will not owe his corresponding share to this former joint co-debtor. Example, Gaya, Mary and Arvin are jointly indebted to Tito in the amount of P15, 000. Tito assigns his credit to Ian who in turn assigned it to Gaya. There is here a merger between Gaya and Tito but Mary and Arvin would now owe Gaya P5, 000 each. 228. Section 5. Compensation ART. 1278. Compensation shall take place when two persons, in their own right are creditors and debtors of each other. (1195) 229. Compensation,Defined Compensation shall take place when two persons, in their own rights are creditors and debtors of each other. Compensation Distinguished From Confusion as to number of persons in compensation there must be two persons; in confusion, there is only one person in whom the quality of creditor and debtor is merged; as to number of obligation in compensation thEre must be two obligations; in confusion there is only one obligation. 230. Kinds of Compensation 1. as to cause a. Legal takes effect by operation of law provided all the requisites prescribed by law are present. b. Voluntarily takes place by virtue of the agreement of the parties. c.
Judicial takes place only through court orders. 2. as to effect a. Total when both debts are completely extinguished because the debt are the same amount b. Partial the debts are not the same amount hence after compensation, a balance remains outstanding. 231. 232. 233. Requisites of a Proper Compensation or Legal Compensation 1. the parties are principal creditor and principal debtor of each other; Example, Arvin owes Tito P10, 000 payable on Dec. 20, 1999. Tito on the other hand owes Arvin P10, 000 also due and payable on Dec. 30, 1999. These two obligation become due on Dec. 30, 1999 compensation takes place because both Arvin and Tito are principal creditor and principal debtor of each other. 2. both debts consists in a sum of money or of consumable things of the same kind and quality; Example, Arvin obliged himself to deliver to Tito 100 sacks of rice on October 30, 1999. Tito, on the other hand, has an obligation to deliver 100 sacks of rice to Arvin on October 20, 1999. There is compensation because they are consisting of consumable things. 3. the two debts are due and demandable; Example, Gaya owes Maya P10, 000 payable on October 30, 1999. Maya owes Gaya P10, 000 payable also on October 30, 1999. There is compensation when the obligation becomes due on October 30, 1999. 234. the two debts liquidated; and The liquidated means that the amount of debt has already been fixed and determined, while the word demandable means when it is due; 5. there be no retention or controversy means a third person who is claiming to be a creditor. Example, Arvin woes Ian P10, 000 and Ian owes Arvin P10, 000 but Arvin credit of P10, 000 has been garnished by Gaya who claims to be an unpaid creditor of Arvin. Ian has been duly notified of the controversy. Any possible compensation is in the meantime suspended. If Gaya wins her claim, there can be no
compensation. If she loses, the controversy is resolved, and then compensation can take place. 235. ART. 1280. Notwithstanding the provision of the preceding article, the guarantor may set up compensation as regards what the creditor may owe the principal debtor Guarantor May Set Up Compensation This is an exception to Article 1279, part. 1 because the article allows setting up compensation as regard what the creditor may owe to the principal debtor. Example, Arvin owes Tito P10, 000. Maya is the guarantor of Arvin. Tito owes Arvin P10, 000. When Tito sues Arvin for P4, 000. When Tito sues Arvin and Arvin cannot pay, Maya will be liable for only P6, 000 because he can set the P4, 000 credit of Arvin as the basis of partial compensation. 236. ART. 1281. Compensation may be total or partial. When the two debts are of the same amount, there is a total compensation. Kinds of Compensation Total compensation is when the amount due are equal or of the same amount, hence both obligations are extinguished. Example, Gaya is indebted to Maya the amount of P10, 000 due on Dec. 19, 1999. Maya is likewise indebted to Gaya in the amount of P10, 000 due on Dec. 19, 1999. There is here a total compensation; hence both debts will be extinguished. 237. Partial compensation is when the amount are not the same after compensation took place, there is a balance remains. Example, Gaya owes Maya P10, 000 due on Dec. 19, 2009. On the other hand, Maya owes the due date arrives because a balance of P4, 000 will remain after compensation takes place. ART. 1282. The parties may agree upon the compensation of debts which are not yet due. (n) 238. Compensation By Agreement Of the Parties This is a voluntary compensation as an execution to the general rule that only debts which are due and demandable can be compensated.(Art.1279) Example, Gaya owes Maya P10, 000 due on Nov. 30, 2001. On the other hand Maya owes Gaya P10, 000 due on Dec. 19, 2001. Generally compensation the parties there may be compensation cannot take place comes Nov. 30, 2001
because Mayas debt is not yet due. However, by voluntary agreement between 239. ART. 1283. If one of the parties to a suit over an obligation has acclaim for damages against the other, the former may set it off by providing his right to said damages and the amount thereof. (N) Judicial Compensation A judicial compensation is one whereby a money debt of a person may be allowed by the court to be compensated with a claim of damages by another. Example, X owes Y P1, 000. When Y demanded payment, X failed to pay. In anger, Y damaged the property of X to the extend of P800. X can set off the obligation of Y to pay him damages in the amount of P800 against his debt of P1, 000. 240. ART. 1284. When one or both debts are rescissible or voidable, they may be compensated against each other before they are judicially rescinded or avoided. Compensation Of Rescissible or Voidable Debts Rescissible and voidable obligations are valid until they are judicially rescinded or avoided and prior rescission or annulment, the debts may be compensated. Example, A owes B P 10, 000. Subsequently, A, through fraud was able to make B sign a promissory note that B is indebted to A for the same amount. The debt of A is valid, but that of B is voidable. Before the debt of B is nullified, both debts may be compensated against each other if all the requisites for legal compensation are present. If suppose the debt of B is later annulled by the court, A is still liable considering compensation had already taken place because the effect of annulment is retroactive, it is as if there was no compensation. 241. ART. 1285. The debtor who has consented to the assignment of rights made by a creditor in favor of a third person, cannot set up against the assignee the compensation which would pertain to him against the assignor, unless the assignor was notified by the debtor at the time he gave his consent, that he reserve his right to the compensation. If the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the compensation of debts previous to the
cession , but not of subsequent ones. If the assignment is made without the knowledge of the debtor, he may set up the compensation of all credits prior to the same and also later ones until he had knowledge of the assignment. 242. When Compensation Has Taken Place BEFORE Assignment If an extinguished obligation has been assigned by the creditor to third person, the debtor can raise the defense of compensation with respect to the debt. The remedy of the assignee is against the assignor. Example, A owes B P5, 000 due yesterday. B owes A P3, 000 due also yesterday. Both debts are extinguished up to amount of P3, 000. Hence, A still owes B P2, 000 today. If B assigns his right to C, latter can collect only P2, 000 from A. However, if A gave his consent to the assignment before it was made on will be liable to C for P5, 000 but he can still collect the P2, 000 owed by B. It is as if no compensation took place. 243. Where Compensation Has Taken Place AFTER Assignment There are three cases of compensation which take place after an assignment of rights made by the creditor. They are: Assignment with consent of debtor Example, A owes B P5, 000 due Dec. 19. B owes A P3, 000 due Dec. 19. B assigned his right to C, the assignee, the compensation which would pertain to him against B, the assignor. A is still liable to C for P5, 000 but he can still collect the P2, 000 debt from B. However, if A while consenting to the assignment, reserved his right to the compensation, he would be liable only P2, 000 to C. 244. Assignment with the knowledge but without the consent of debtor Example, A owes B P1, 000 due Dec. 1. B owes A P2, 000 Dec. 10. A owes B P1, 000 due Dec. 15. A assigned his right to C on Dec. 12. A notified B but the latter did not give his consent to the assignment, how much can C collect from B? B can set up the compensation of debts on Dec. 10 which was before the cession on Dec. 12. There being partial compensation, the assignment is valid only up to the amount of P1, 000 but B cannot raise the defense of compensation with respect to the debt of A
due on Dec. 15 which has not yet matured. So, on Dec. 12, B is liable to C for P1, 000. Come Dec. 15, A will liable for his debt of P1, 000 to B. Assignment without the knowledge of the debtor Example, in the preceding example, let us suppose that the assignment was made without the knowledge of B who learned of the assignment only on Nov. 16. In this case, B can set up the compensation of credits before and after the assignment. The crucial time is when B acquired knowledge of the assignment and not the date of the assignment. If B learned of the assignment after the debts had already matured, he can raise the defense of compensation, otherwise, he cannot. 245. ART. 1286. Compensation takes place by operation of law, even thought eh debts may be payable at different places, bu there shall be an indemnity for expenses of exchange or transportation to the place of payment. (1199a) Compensation Where Debts Payable At Different Places This legal compensation does not refer to the difference in the value of the things in their respective places but to the expenses of monetary exchange and expenses of monetary exchange and expenses in transportation. Once these expenses are liquidated, the debts also become compensated. The indemnity shall be paid by the person who raises the defense of compensation. Example, Gaya owes Maya $1, 000 payable in New York. Maya owes Gaya P38, 000(equivalent amount) payable in Manila. If A claim compensation, he must pay for the expenses of exchange. 246. ART. 1287. Compensation shall not be proper when one of the debts arises from a depositum or from the obligations of a depository or of a bailee in commodatum. Neither can compensation be set up against a creditor who has a claim for support due by gratuitous title, without prejudice to the provision of paragraph 2 of article 301. ART. 1288. Neither shall there be compensation if one of the debts consists in civil liability arising from a penal clause. 247. PART III General Provisions on Contracts Learning Objectives: After studying this lesson, you should: 1. know the definition of contract 2. learn
the different classifications of contracts; 3. know the elements of contracts; and 4. that contracts take effect only between parties and its exceptions. The classifications of contracts summarizes those types of contracts that may be freely agreed upon as long as they are not contrary to law, morals, good customs, public order or public policy. 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 service. (1254a) 248. Contracts, Defined The above article defines the term Contract. In a contract, one or more persons bind themselves with respect to another or reciprocally, to the fulfillment of a presentation to give, to do or not to do. 249. Elements of Contract: 1. Essential elements those elements without which there can be no valid contract. This element are consent, object or subject matter and cause or consideration 2. Natural elements those elements which are found in a contract by its nature and presumed by law to exist, such as Warranty of hidden defects or eviction in contract of sale. 3. Accidental elements - those which exist by virtue of an agreement for the purpose of expanding, limiting, or modifying a contract. Such accidental elements are condition, clauses, terms, modes of payment, or penalties. 250. Stages of A Contract: 1. Preparatory or conception process of formation such as bargaining, negotiation to arrive at a define contract. 2. Perfection or birth there is now a meeting of minds to arrive at a definite agreement as to the subject matter, cause or consideration, terms and conditions of contract. 3. Consumption or death which is the fulfillment or performance of the terms and conditions agreed upon in the contract may be said to have been fully accomplished or executed. 251. Characteristics of Contracts: 1. Freedom to contract they may establish terms and conditions as they may deem convenient. 2. Relativity it is binding only upon the parties and their successors. 3. Obligatory force it constitutes the law as between the parties. 4. Mutuality its validity and performance cannot be left to the wil of only one of the parties.
252. Classification of A Contract: (FROM) 1. As to perfection a. Consensual one which is perfected by mere consent (Art. 1315 b. Real Contract perfected by mere consent and by the delivery of the object or subject matter. Ex. Deposit, pledge, or commodatum. 2. As to dependence to other contract. a. Principal one which can stand alone. Ex. A contract of sale, lease. b. Accessory those which are dependent upon another contract. Ex. Contract of mortgage, pledge of guaranty. c. Preparatory those which is created in order that a future transaction or contract may be entered into by te parties. Ex. Contract of partnership or agency.
253. 3. According to name or designation a. Nominate one which has particular name or designation such as sale, agency, etc. b. Innominate those without particular name. 4. According to the nature of obligation a. Unilateral where only one ha an obligation to perform. Ex. Contract of donation, commodation. b. Bilateral where both parties have reciprocal obligation to perform. Ex. Sale. 5. According to risk involved a. Commutative - where there is an exchange of values, such as lease. b. Aleatory - one which the fulfillment of the obligation depends upon chance. Ex. Contract of insurance. 6. According to cause a. Onerous one which imposes valuable consideration such as sale, mortgage. b. Gratuitous one which one of the parties does not receive any valuable consideration, such as commodatum.
254. 7. According to form a. Oral by word of mouth of the parties b. Written the agreement which is reduced in writing which may be public or private or private document ART. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (1255a)
255. Contract Binds by Both Parties ART. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. (1256a)
256. Contracts entered by and between the parties mush bind both parties in order that it can be enforced against each other. This is also known as mutuality of contract. Hence, its validity or compliance cannot be left to the will of one of them. This principle is based on the essential equality of the parties. It is elementary rule that no party can renounce or violate the law of the contract without the consent of the other. (11 Manresa 380) Example, Gaya and Laura entered into a contract to sell whereby Gaya binds herself to sell her only parcel of land to Laura if Gaya decides to leave for States. The contract is void because the fulfillment of the condition depends on the will of Gaya.
257. ART. 1309. The determination of the performance may be left to a third person, whose decision shall not be binding until it has been made known to both contracting parties. ART. 1310. The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances.
258. Determination of Performance by Third Person As a rule, compliance with a contract cannot be left to the will of one of the contracting parties. However, the determination of its performance may be left to a third person after it has been made known to both contracting parties. Provided, further, the parties are not bound by the determination if it is evidently inequitable or unjust when the third person acted in bad faith or by mistake, the courts shall decide what is equitable under the circumstances. Example, Gaya sold her parcel of land to Laura. It was agreed that Maya, a real estate appraiser would be the one to determine the reasonable price of the land. Maya, then, fixed the price after considering the factors affecting the value of the land, and informing both contracting party that the decision is just and suitable. If the decision made by Maya is manifestly inequitable, the court may be called upon to decide what is equitable.