Obligations and Contracts-Jurado-Midterms

8/14/2019 Obligations and Contracts-Jurado-Midterms

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AUF School of Law Obligations and Contract

BOOK IVOBLIGATIONS and CONTRACTS

TITLE I OBLIGATIONS

Art. 1156. Obligation is a !ridi"al n#"#ssit$ to

gi%#& to do or not to do.

Juridical necessity to comply with a prestation-Sanchez Roman

Legal relation established between one person andanother, whereby the latter is bound to thefulfillment of a prestation which the former maydemand from him. - Manresa

Ci%il obligation %s Nat!ralobligation

Gives to the obligeeor creditor the rightof enforcing itagainst the obligoror debtor in a courtof justice.(right of action)

#''#"t annot beenforced by courtaction

!ositive law so!r"# "#uity and naturallaw.

$e#uisites of %bligation

juridical or legal tie

-bilateral-unilateral

active subject

passive subject

fact, prestation or service

&&'s a general rule, the form of the obligation is notan essential elementre#uisite. E("#)t (the non-compliance of the following formalities would havethe effect of rendering the contract agreement voidor ineistent)*

---donation of personal property whose

value eceeds !+,., contract inwriting. ('rt. /, )---sale of a piece of land or any interesttherein through an agent, authority of suchagent be in writing. ('rt. 0/, )---1nterests in a contract of simple loan ormutual, agreement with respect to such bein writing. ('rt. 02+3, )

---anticheresis, principal amount andinterest be specified in writing. ('rt. 405,)---6onation of immovable property be madein a public document and the acceptance

be made in the same document or separatepublic document ('rt. 2, )---contribution of immovable property orreal rights to common fund (partnership)must be in a public instrument withattached inventory signed by the parties.('rt. 00, 05, )---hattel 7ortgage, personal propertymust be recorded in the hattel 7ortgage$egister ('rt. 40, )---sale or transfer of large cattle, suchtransfer or sale must be registered. (8ec.44, 'ct 9o. 00, 'rt. 0+/0, )

Classi'i"ations o' obligation

!rimary 8econdary

pure and conditional

with a period

alternative and

facultative

joint and solidary

divisible and indivisible

with a penal clause

legal, conventional,

penal

real and personal

determinate and

generic

unilateral and bilateral

individual and

collective

accessory andprincipal

"lassi'i"ations a""ording to *anr#sa

As to !ridi"al +!alit$ -9atural-civil-mied

As to )arti#s -:nilateral and bilateral-individual andcollective

As to ob#"t -6eterminate andgeneric-simple and multiple-positive and negative-real and personal-possible andimpossible-divisible and divisible

jmvdg 1 2ndSemester/2009-2010


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-principal and accessory

As to )#r'#"tion and#(ting!is,-#nt

-!ure-conditional-with term or period

Art. 115. Obligations aris# 'ro-/la0"ontra"ts+!asi "ontra"tsa"ts or o-issions )!nis,#d b$ la0 and+!asi2d#li"ts

&&;he addition of lege has been critici


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which the parties become bound to each other,based on the principle that no one shall be unjustlyenriched or benefited at the epense of others.

ase* ;raders :nion vs 9L$

N#gotior!- g#stio Sol!tio ind#biti

'rises whenever aperson voluntarily ta=escharge of the agency ormanagement of thebusiness or property ofanother withoutauthority from the latter

'rises whenever aperson unduly deliversa thing through mista=eto another who has noright to demand it.

;he gestor or officiousmanager shall beobliged to continue such

agency or managementuntil the termination ofthe affair and itsincidents

;he person to whom thedelivery has beenunduly made shall

return the propertydelivered or the moneypaid.


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defamation

fraud

physical injuries

refusal or neglect of a city or municipal

police to render aid or protection in

case of danger to life or property.

R#s#r%ation o' rig,t to 'il# s#)arat# and distin"t"i%il a"tion2 is a substantive right>

-procedural re#uirement under 8ec. 4 of$ule 000 of the 9ew $ules of ourt is notmandatory.-this was amended by 8ec. 5 of $evised $ules ofcriminal !rocedure 4.

Art. 116=. Obligations d#ri%#d 'ro- +!asi2d#li"ts s,all b# go%#rn#d b$ t,# )ro%isions o'

C,a)t#r =& Titl# :VII o' t,is Boo4& and b$s)#"ial la0s. 17@a8

;!asi2d#li"t2fault or negligence of a person who,by his acts or omission, connected or unconnectedwith, but independent from, any contractualrelation, causes damage to another person.-covers not only those that are not punished by lawbut also those acts which are voluntary andnegligent reasons* "it#d in Barr#do %s Gra"ia

&&&' single act can give rise to various obligations!ersons liable- the person directly responsible forthe damage incurred and*

;he father, and, in case of his death or

incapacity, the mother, are liable for anydamages caused by the minor childrenwho live with them.

Guardians are liable for damages done by

minors or incapacitated persons subject totheir authority and living with them.

%wners or directors of an establishment or

business are e#ually liable for any

damages caused by their employees whileengaged in the branch of the service inwhich employed, or on occasion of theperformance of their duties.

"mployers with respect to damages

caused by their employees and householdhelpers acting within the scope of theirassigned tas=s, even though the former arenot engaged in any business or industry.

;he 8tate when it acts through a special

agent, but not if the damage shall havebeen caused by the official upon whomproperly devolved the duty of doing the actperformed, in which case the provisions of

the net preceding article shall beapplicable.

?inally, teachers or directors of arts and

trades are liable for any damages causedby their pupils or apprentices while they areunder their custody.

;he liability shall cease in case the personsmentioned therein prove that they eercised all thediligence of a good father of a family to prevent thedamage.

R#+!isit#s o' liabilit$ ;here eist a wrongful act or omission

imputable to the defendant by reason of hisfault or negligence.

;here eist a damage or injury which must

be proved by the person claiming recovery. ;here must be a direct causal connection

between the fault or negligence and thedamage or injury. (proximate cause)

;!asi2d#li"t %s Cri-#

!rivate right Nat!r# o'rig,t

%iolat#d

!ublic right

ompensationor

indemnification(reparation ofinjury suffered

by theindividual)

or- o'r#dr#ss

!unishment(fine,

imprisonment, orboth)

1t eist in anyact or omissionwherein fault ornegligence

intervenes

L#gal basiso' liabilit$

"ists when thereare penal lawsclearly penali


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an becompromised

compromise an never becompromised.

Auasi-delict covers not only acts not punishable bylaws but it also includes acts which are criminal in

character, whether intentional, voluntary ornegligent. El"ano %s >ill8

T0o distin"t 'a!lts(!adua vs $obles, Justice @arredo)

"!l)a "ri-inal2civil liability arising from

crimes "!l)a2a+!iliana- liability arising from civil

negligence.-recovery of damages twice for the same negligentact is omission is precluded.

-the etinction of the civil liability referred in !ar (e)of 8ec. 5, $ule 000 refers eclusively to liabilityfounded on 'rt. 0 of $!, whereas the civilliability for the same act considered as #uasi delictis not etinguished even by a declaration in thecriminal case that the criminal act charged has nothappened or has not been committed by theaccused.("lcano vs Bill)

6iligence of employers*

;!asi2d#li"t Cri-#s

'rt. 40/ of 'rt. 05 of $!!rimary liability 8ubsidiary liability

"mployer can avoidliability after proving thathe eercised duediligence

Liability is absolute andcannot be avoided byproof of diligence.

'pplies to all employerswhether they areengaged in enterpriseor not.

'pplies only toemployers engaged insome =ind of businessor industry.

ubi jus ibi remedium- unvindicated civil wrongs

--;he death of the accused after arraignment andduring the pendency of the criminal action shalletinguish the civil liability arising from the delict.

&&'lthough the relation between the contractingparties is purely contractual a #uasi-delict can still

be committed in view of the manner in which thecontract is violated.

Neglect or malfeasance of thecarrier's employees could giveground for an action for damages.

Damages here are proper becausethe stress of respondent's action is

placed upon his wrongfulexpulsion, which is a violation of a

public duty by petitioner- air carrier a case of !uasi-delict." #$ir%rance vs &arrascoso, G.R. No. L2=1@3. S#)t#-b#r =3& 1766.

C,a)t#r =NAT9RE AN EECTS O OBLIGATION

Art. 116@21166 Obligation to Gi%#

Ddilig#n"# o' a good 'at,#r o' a 'a-il$-standard normal state of diligence-ordinary diligence-

obligations to gi%# d#t#r-inat#2 the object is particularly

designated or physically segregated fromall others of the same class ('rt. 0035applies particularly to determinate object)

g#n#ri"2 the object is merely designated

by its class or genus without any particulardesignation or physical segregation from allothers of the same class. (e.g. money)

&&&'rt. 0035 is a guaranty that the debtor willcomply with the obligation.

9ature of right of the creditor--;he obligeecreditor has the right to thething which is the object of the obligation aswell as the fruits thereof from the time theobligation to deliver it arises. ('rt. 003)

Obligation F,#n obligation tod#li%#r aris#s

;hose arising from law

#uasi-delicts

;he specific provisionsof law determine whenthe delivery should be



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#uasi-contracts

crimes

made.

contracts 7oment of perfection ofthe contract. ('rt. 0+5)

8ubject to asuspensivecondition

?rom the moment thecondition happens.

Cith suspensive

term or period

:pon the epiration ofthe term or period


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&&;he liability of debtor for damages in case ofbreach of obligation, etends only to breach whichis voluntary in character and not to one which isinvoluntary (fortuitous event)

&&%nly a determinate thing can be destroyed by afortuitous event, generic things can never perish.(genus nun!uam peruit)

Art. 116.Obligation to o

(positive personal obligation)

&&1f the obligor fails to do what he has obligatedhimself to do, the obligee can have the obligationperformed or eecuted at the epense of the latterand recover damages .

&&;his type of obligation recogni


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creditor to accept the delivery of the objectof the obligation

compensatio morae- default of both parties

in reciprocal obligations

$e#uisites to declare in default that the obligation be demandable and

already li#uidated that the debtor delays performance

that the creditor re#uires the

performance judicially or etra judicially

&&1n positive obligation, default arises from themoment the creditor demands the performance ofthe obligation.

Judicially- through a complaint

etra-judicially- oral or written demand

Chen demand not necessary when there is an epress stipulation to that

effect where the law so provides

when the period is the controlling motive or

the principal inducement for the creation ofthe obligation (when time is of the essence)

where demand would be useless

&&9egative obligations are not subject to delay.

R#"i)ro"al obligation-created or established atthe same time, out of the same cause and whichresults in the mutual relationship of creditor anddebtor between the parties.

-obligations which are conditioned uponeach other

-conditional obligation

&&1n case of delay, the liability of the obligor subsisteven if the thing which constitutes the object ofobligation may have been destroyed or lostthrough fortuitous events.

;he moment the other party has complied with hisobligation, delay on the other begins.E("#)tion/ 1f there are different dates for theperformance of the obligation, apply the generalrule in 0032 (demand is needed).

Art. 11211@8

ra!d dolo8- consist in the conscious andintentional proposition to evade the normalfulfillment of an obligation

-present at the time of birth of anobligations

4inds o' 'ra!d criminal fraud

civil fraud

ra!d in t,#)#r'or-an"# o'an obligation

%s ra!d in t,#"onstit!tion or#stablis,-#nt o'an obligation

6uring theperformance of aneisting obligation

F,#n)r#s#nt

't the time of thebirth of anobligation.

"vading normalfulfillment of anobligation

)!r)os# 8ecuring theconsent of theother party toenter into thecontract

9on-fulfillment orbreach of theobligation

r#s!lt Eitiation of theconsent of theother party

$ecover damagesfrom thedebtorobligor

R#-#d$'or t,#

inno"#nt)art$

Causal fraud-'nnulment of thecontract.Incidental fraud-

recover damages

&&&7alice or dishonesty is implied as a ground fordamages.

&&&?raud or dolo is synonymous with bad faith.

&&&Caiver or renunciation of liability made inanticipation of the fraud is VOI. ('rt. 000)

&&&Caiver or renunciation of liability made after thefraud has already been committed is VALI.

&&&Chat is renounced is the effect of fraud or theright of the party to indemnity.

E(t#nt o' r#"o%#rabl# da-ag#s/ all damages which may be attributable to

the breach or non-fulfillment of theobligation, regardless of whether suchconse#uences are natural or unnatural,



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probable or improbable, foreseeable orunforeseeable.

7oral and eemplary damages

9egligence (culpa)- omission of that diligence

which is re#uired by the nature of the obligationand corresponds with the circumstances of theperson, the time, and of the place.

-absence of due care re#uired by thenature of the obligation

&&&6iligence of good father of a family (paterfamilias) is the standard diligence re#uired if thecontract does not state the diligence which is to beobserved in the performance of the obligation.

Finds of negligence

&ulpacontractual

%s &ulpaa!uiliana

9egligence inthe performanceof a contract

d#'inition 9egligence as asource ofobligation.(#uasi-delict)

1ncident of theperformance ofan obligation

",ara"t#risti"

8ubstantive andindependent

!re-eistingcontractualrelation


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illicit act which impairs the strict fulfillment of theobligation but also every =ind of defectiveperformance.

T#st o' n#glig#n"#/

:se the reasonable care and caution which anordinary prudent person would have used in thesame situation.

Art. 118ort!ito!s #%#nt (caso fortuito)- event whichcould have not been foreseen, or though foreseen,were inevitable.

A"t o' God or"# -a#!r#

1ndependent of humanintervention

events that arise fromlegitimate or illegitimateacts of persons otherthan the obligor.

As to 'or#s##abilit$

%rdinary etraordinary

G#n#ral r!l#/ 1f the reason for the non-compliancein the obligation is a fortuitous event, the obligor iseempted from liability whatsoever.E:CE

4. where it is declared by stipulation of theparties>

5. where the nature of the obligation re#uiresthe assumption of ris=.

-(volenti non fit injuria) no wrong isdone to one who consents

&&&'rt. 00 applies only to determinate obligationsand not to generic ones.

***res ipsa loquitur

&&&;he caso fortuito must me the 8%L" andproimate cause of the incident, to avail of it as adefense.

&&&o-mingling negligence on the part of theobligor forfeits the defense of caso fortuito.

Ess#ntial "onditions 'or Art. 11 to a))l$/0. that the event must be independent of the

will of the obligor>4. that the event must be either foreseeable

or inevitable>

5. that the event must be of such a characteras to render it impossible for the obligor tofulfill his obligation in a normal manner>

. that the obligor must be free from anyparticipation in the aggravation of the injury

to the obligee.

&&()iration o' agr##-#nt/;he case of Ba"olod2*!r"ia %s CA comparedand contrasted with


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also a presumption that such prior installmentshave already been paid.

?or the presumption to arise, the receipt shouldclearly state that the payment is for the installment

for a latter installment or as payment for theinterest. (*anila Trading %s *#dina)

Art. 118$emedies of creditor to protect credits*

0. to ehaust the property in possession ofthe debtor>('rt. 4453, )

4. to be subrogated to all of the rights andactions of the debtor to save those whichare inherent in hi person. (accionsu!ro"atoria)onditions*

that the debtor is indebted to the

creditor> the creditor must be prejudiced by

the inaction of the debtor toproceed against the third person>

the creditor must have first pursued

all of the properties of the debtorwhich are not eempt fromeecution.

5. to impugn all of the acts which the debtormay have done to defraud him. (accion

pauliana)

$ccion subrogotoria- the right of the creditor toeercise all of the rights of the debtor to bring all ofthe actions against third persons.-the creditor merely acts in the name and for theaccount of the debtor.E:CE

characteri characteri


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obligee in theconstitution of theobligation is only merehope and epectancy,protected by law.

obligee in theconstitution of theobligation are rights thatare subject to threat ordanger of etinction.

=.


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Art. 11358


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0. 1f the thing is lostwithout the fault of thedebtor, the obligation shall be#(ting!is,#d>

4. 1f the thing is lostthrough the fault of thedebtor, he shall be obliged to )a$

da-ag#s> it is understood that the thing islost when it perishes, or goes out ofcommerce, or disappears in such a waythat its eistence is un=nown or it cannotbe recovered>

5. Chen the thing d#t#riorat#s without thefault of the debtor, the i-)air-#nt is to b#born# b$ t,# "r#ditor>

. 1f it d#t#riorat#sthrough the fault of thedebtor, the creditor may choose betweenthe r#s"ission o' t,# obligationand its'!l'ill-#nt, with ind#-nit$ 'or da-ag#sin either case>

+. 1f the thing is i-)ro%#d by its nature, or bytime, the improvement shall in!r# to t,#b#n#'it o' t,# "r#ditor>

3. 1f it is i-)ro%#dat the epense of thedebtor, he shall have no other right thanthat granted to the !s!'r!"t!ar$.

&&&$ule in 'rt. 00/2 are natural conse#uences ofthe principle of retroactivity.

&&&!redicated on the fulfillment of the condition.

&&&$efer only to conditional obligations to give adeterminate thing

!s!'r!"t- right or enjoyment of a thing, theproperty of which is vested in another and to drawfrom the same all the profit, utilities, and advantageit may produce without altering the formsubstanceof the thing.

Lossa thing is considered lost when it*

0. perishes>4. goes out of commerce D impossible to

legally transfer or re-ac#uire5. disappears in such a way that its eistence

is un=nown or it cannot be recovered

I-)ro%#-#ntsnat!ral a""#ssions/ alluvion, avulsion,abandoned river beds, island formed

&&&;he debtor cannot as= for reimbursement forepenses incurred for useful improvements orimprovements for pleasure.

&&&the debtor may have the right to remove such

improvements provided it is possible to do sowithout damage to the thing or property.

E''#"t o' R#sol!tor$ Condition/

B#'or# !l'ill-#nt A't#r !l'ill-#nt

;he obligation is subjectto the threat of etinction.

;he rights vested in theobligation isetinguished.

!laced in the sameposition with creditor inobligation withsuspensive condition.

Chatever is paid ordelivered to any of theparties should bereturned (return to

status #uo)

&&&;here are no eceptions in the retroactive effectof resolutory condition> what was delivered need tobe returned.

&&&;he fulfillment of a resolutory condition signifiesthe noneistence of the obligation, what isnoneistent must no give rise to any effectwhatsoever.

&&&&&&;here is no provision of mutual compensation

of fruits and interests but in connection with theconcept of justice, restitution in 'rt. 002 carrieswith it the conse#uence of reimbursement for allthe epenses incurred for the production,gathering, and preservation of the fruits.

&&&7utual restitution is absolute in resolutoryconditions because the obligation is etinguished,and it ceases to have effect thus does not carrywith it fruits and interests.&&&1n obligations to do or not to do, the retroactiveeffects shall depend upon the discretion of the

courts.

&&&'rt. 00/2 is also applicable with regard theeffects of loss, deterioration, and improvements ofthings during the pendency of resolutory condition.

&&&1n R#sol!tor$ "ondition the Dd#btor is theperson obliged to return while the D"r#ditoris the



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person to whom the thing must be returned.

R#"i)ro"al obligationsArt. 11718

remedy for the injured party* rescission or

fulfillment

R#"i)ro"al obligation-created or established atthe same time, out of the same cause and whichresults in the mutual relationship of creditor anddebtor between the parties.

-characteri one obligationis correlative of the other.-bilateral in character.-tacit resolutory condition.

&&&G#n#ral r!l#* 1f one of the parties fails tocomply with what is incumbent upon him,there is a

right on the part of the other to rescind (or resolve)the obligation.

Rig,t o' r#s"ission- belongs to the injured partyalone.

-must be invo=ed judicially by filing theproper action of rescission. not absolute> the court is given the

discretionary power to fi a periodwithin which the obligor in default maybe permitted to comply with what isincumbent upon him.

implied in reciprocal obligations('rt.0020, par. 0)

&&&1f the contract contains a resolutory provision byvirtue of which the obligation may be canceled oretinguished by the injured party in case of breachof obligation, judicial permission to cancel orrescind the contract is no longer necessary. @ut theourt may confirm such etra judicial rescission.

&&&1f there is no epress provision of rescission inthe contract, rescission should be invo=ed

judicially.

&&&;he termination of a contract must not becontrary to law, morals, good customs, publicorder, or public policy.

&&&9otice is always important in rescission so thealleged infractor can #uestion the propriety of therescission.

&&&'rt. 0020 is not applicable to contracts ofpartnership. ;here are special provisions thatgovern the latter, thus the general provision will notprevail. ;he same applies to sales of real property

($ecto Law) and sales of personal property byinstallment (7aceda Law).

&&&$escission will only be rendered when thebreach is s!bstantialso as to defeat the object ofthe parties in entering into the agreement.ase* *ong %o + &o. vs awaiian-hilippine&o.

'lternative remedies to the injured party*--fulfillment of the obligation with payment fordamages (8pecific performance with damages)--rescission of the obligation with payment for

damages (resolution with damages)ase* *ongcuan vs $&

&&&;he injured party can still see= the rescission orresolution of the obligation even if he has opted tochoose the fulfillment of such obligation iffulfillment should become impossible.ase*$yson-*imon vs $damos

&&&1n awarding damages...

1n case or rescission only those elements of damages can be admitted thatare compatible with the idea ofrescission.

1n case of specificperformance

%nly the elements of damagescan be admitted which arecompatible with the idea ofspecific performance.

E''#"ts o' R#s"ission* it is the duty of the court to re#uire the

parties to surrender whatever they may

have received from the other (withoutprejudice to the obligation of the party whowas not able to comply with what isincumbent upon him).

$escission can no longer be demanded

when he who demands is no longer in theposition to return whatever he may beobliged to restore> neither can it be



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demanded when the thing which is theobject of the contract is already in thepossession of a 5rdparty who obtained it ingood faith. $emedy for the latter will be an action

for the transfer or conveyance fordamages.

1f 5rdperson obtained the property in bad

faith, the injured party can still go after theproperty. 1f it cant really be recovered, the

remedy is for the injured party toproceed against 5rdperson who actedin bad faith for damages.

&&&;here can be partial rescission or fulfillmentunder 'rt. 0020.ase* &entral /an0 vs &$

&&&$escission calls for mutual restitution. (1aperalvs *olid omes)

&&&1f there is arbitration in the contract, arbitrationshould be resorted to before as=ing for rescission((orean 2echnology vs 1erma)

E''#"t o' br#a", b$ bot, )arti#sArt. 117=8

R!l#s*0. the liability of the first infractor shall bee#uitably tempered by the courts.

-fair to both parties because thesecond infractor also derived, orthought he would derive, someadvantage for his own act orneglect

4. 1f it cannot be determined which of theparties first violated the contract, the sameshall be deemed etinguished, and eachshall bear his own damages

-it is presumed that both at about

the same time tried to reap somebenefit

Sec - %!li"ations ith a $eriod

T#r- or


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b) conventional- stipulated by the partiesc) judicial- fied by the courts

5. definite or indefinitea) definite- the date or time is =nown

beforehand

b) indefinite- can only be determined byan even which must necessarily cometo pass, although it may not be =nownwhen

#''#"ts o' t#r- or )#riod/

suspensiveterm or period

the demandability of the obligationis etinguished, not the ac#uisitionof right or the effectivity of theobligation.

$esulotoryterm or period

;he fulfillment or performance ofthe obligation is demandable at

once, but it is etinguished orterminated upon the arrival of theday certain or the epiration of theterm.

ase* N/ vs 1ope3 4ito

&&&'cceleration clause is a clause where upondefault of the debtor with one or more payment willma=e the whole obligation demandable. ;his is avalid provision in contracts.

"ffect of fortuitous event- relieve the contractingparties from the fulfillment of their respectiveobligations during the term or period.ase* 4ictoria's lanters vs 4ictorias 5illing&o.

#''#"t o' ad%an"# )a$-#nt or d#li%#r$- obligorcan recover what he has paid or delivered withfruits or interests. ('rt. 002+)-applicable only to obligations to give

&&&;here can be no right of recovery if the obligordelivers the thing voluntarily or with =nowledge ofthe period or term or the fact that the obligation has

not yet become due and demandable.

('rt. 0023)

G#n#ral r!l#/ a period designated for theperformance or fulfillment of an obligation ispresumed to have been established for the benefit

of both the creditor and the debtor.ase* de 1eon vs *yjuco

&&&1f the tenor of the obligation or from othercircumstances that the term or period has been

established in favor of the creditor or of the debtor,the general rule will not apply.

!di"ial t#r- or )#riod('rt. 002)

!di"ial t#r- or )#riod- when fied by acompetent court, the period can no longer be

judicially changed ('rt. 002, par. 5).-becomes a law governing the contract

between the party

ases when court can fi term*

if the obligation does not fo a period, but itcan be inferred that a period was intendedby the parties cannot be applied to contract for

services in which no period was fiedby the parties. 1n such contracts theperiod of employment is understood tobe implicitly fied, in default of epressstipulation, by the period of thepayment of the salary of the employee,in accordance with the customuniversally observed throughout the

world. cannot be applied to pure obligations

if the duration of the period depends upon

the will of the debtor just and logical, because otherwise,

there would always be the possibilitythat the obligation will never be fulfilledor performed.

if the debtor binds himself to pay when his

means permit him to do so.ase*6on3ales vs 7ose

&&&9o other action can prosper unless the courthas fied the duration of the term or period.

&&&1n potestative term or period, in order to preventthe obligation contracted from becoming ineffectiveby non fulfillment, the courts must fi the durationof the term or period.

&&&8o long as such period has not been fied by



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the court, legally there can be no possibility of anybreach of contract or of failure to perform theobligation. 8uch cannot be raised for the first timeon appeal.

&&&'rt. 002 applies to a lease agreement, where acontract of lease clearly eists.

&&&1t is not necessary that the creditor will epresslyas= in the complaint for the court to fi the period,such may be granted although the complaint doesnot as= for such relief.

&&&;wo ultimate facts that need to be alleged in thecomplaint to describe an obligation with anindefinite period.

0. ?acts showing that the contract wasentered imposing on one of the parties an

obligation in favor of the other4. facts showing that the performance of the

obligation was left to the will of the obligor,or clearly showing, or from which aninference can be reasonably drawn that aperiod was intended.

&&&;he action recogni


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distrib!ti%# obligation- when only one object ofthe obligation is demandable.

Alt#rnati%#- comprehends several objects

or prestation which are due, but it may becomplied with by the delivery or

performance of only one of them. !erformance of one of the obligation is

sufficient a"!ltati%#- comprehends only one object

or prestation which is due, but it may becomplied with by the delivery of anotherobject or the performance of anotherprestation in substitution.

Alt#rnati%# Obligations('rt. 04)

G#n#ral r!l#/ ;he right of choice belongs orpertains to the debtor.

&&&%nce the debtor has made the choice, and suchchoice is duly communicated to the creditor, theobligation becomes simple.

"ceptions* when the right of choice belongs or

pertains to the creditor when it has been epressly granted to a

third person.

Limitation to the right of choice* debtor cannot choose those prestations or

underta=ings that are impossible, unlawful,or which could not have been the object ofthe obligation.

!restations which could not have been the objectof prestationK

underta=ings that are not included among

others those from which the obligor mayselect, or

those which are not yet due and

demandable at the time the selection ismade, or

those by reason of accident or some other

cause, have ac#uired a new characterdistinct or different from that contemplatedby the parties when the obligation wasconstituted.

&&&!ar. 4 of 'rt. 04 contemplates a case in whichthe right to choose or select is 9%; lost oretinguished altogether.

('rt. 040)&&&'pplicable to cases in which the choice isdependent on the debtor, creditor, or third person.

&&&ommunication is needed to ma=e the choiceeffective.

&&&9o special form for the communication ornotification of choice, although it is always better toma=e the notification either in a notari


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('rt. 045)

Art. 1= Art. 1=5

$ight of choice ofdebtor

$ight of choice of reditor

General rule eception

?actors to consider in =nowing the effect of loss ofthe object of prestation

to whom the right of choice belong

Chat is the cause of the loss of the object

of prestation (fortuitous event or fault ofthe debtor)

(for Summar of .ffects of /oss of %!li"ation0 seeAnnex 1A2 )

a"!ltati%# Obligations('rt. 043)

a"!ltati%# obligation- obligation wherein onlyone object or prestation has been agreed upon bythe parties to the obligation, but which may becomplied with by the delivery of another object orthe performance of another prestation insubstitution.

a"!ltati%# %s Alt#rnati%#

%nly one object Ob#"t d!# 8everal objects@y the deliveryof another objector by theperformance ofanotherprestation insubstitution

"o-)lian"# @y the delivery ofone of theobjects or by theperformance ofone of theprestations whichare alternativelydue.

!ertains only tothe debtor

",oi"# 7ay pertain tothe debtor, orcreditor, or third

person

Loss or impossibility ofthe objectetinguishes theobligation

E''#"t o''ort!ito!s

loss

Loss of all theobjects of prestation isnecessary toetinguish theobligation

6oes not giverise to liability onthe part of thedebtor

E''#"t o'"!l)abl#

loss

7ay give rise toa liability on thepart of the debtor

&&&'rt. 040 is applicable by analogy with respectto the time or moment when the substitution willta=e effect.

&&&ommunication is needed to ma=e thesubstitution effective.

&&&Chatever may be the cause of the loss ordeterioration of the thing intended as a substitute,such loss shall not render the debtor liable. - 3eanCapistrano

&&&%nce the substitution has been made, thedebtor shall be liable for the loss or deterioration ofthe substitute on account of his delay, negligence,or fraud.

&&&%nce the substitution is made, the obligation isconverted into a simple one.

Sec 4 - 5oint and Solidar %!li"ations

oint obligation - obligation where there is aconcurrence of several creditors, or of several

debtors, or of several creditors and debtors, byvirtue of which each of the creditors has a right todemand, and each of the debtors is bound torender, compliance with his proportionate part ofthe prestation which constitutes the obligation

o!li"acion mancomunada

Solidar$ obligation Dobligation where there is aconcurrence of several creditors, or of severaldebtors, or of several creditors and debtors, byvirtue of which each of the creditors has a right todemand, and each of the debtors is bound torender, entire compliance with the prestation whichconstitutes the obligation

o!li"acion solidaria

Coll#"ti%# Obligations('rt. 04)

General rule* 1f there is a concurrence of severalcreditors, or of several debtors, or of several



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tie or vinculum eisting among several

creditors of one and the sameobligations by virtue of which each ofthem, in relation to his co-creditors,possesses the character of a creditor

only with respect to his share of theobligation but in relation to other debtoror debtors, represents all othercreditors.

7utual representation

passive D among debtors

tie or vinculum eisting among several

debtors of one and the sameobligations by virtue of which each ofthem, in relation to his co-debtors,possesses the character of a debtoronly with respect to his share of theobligation, but in relation to othercreditor or creditors, represents allother debtors.

each solidarity debtors, as far as the

creditors are concerned, is the debtorto the entire amount

mied D among creditors and debtors

'!nda-#ntal #''#"t o' a"ti%# solidarit$- creationof a r#lations,i) o' -!t!al ag#n"$ amongsolidary creditors by virtue of which the creditor isempowered against the debtor or debtors not only

the rights which corresponds to him, but also allthe rights which correspond to the other creditors,with the conse#uent obligation to render anaccounting of his acts to such creditors.(e#ual mutual representation)

&&&relationship of mutual agency, basis of thedifference of the rules in 'rt. 0404 and 040+.

'!nda-#ntal #''#"t o' )assi%# solidarit$2 liabilityof each debtor for the payment of the entireobligation, with the conse#uent right to demandreimbursement from the others for theircorresponding shares, once payment has beenmade.


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the relationship of the creditor among themselves.

&&&'rt. 040+ refers to the effect of prejudicial actsupon the entirely different relationship of thecreditors with the debtor or debtors. 8hall result in

the etinguishment of the obligation

&&&!rejudicial acts* novation

compensation

confusion

remission

&&&;he act of etinguishment, which is prejudicial tothe co-creditors, will be valid so as to etinguishthe claim against the debtors, but not with respectto the co-creditors whose right subsists and can beenforced against the creditor who performed theact alone.

Assign-#nt o' rig,t('rt. 0405)

&&&onsent of other creditors in the assignment ofrights by another solidary creditor is needed.

&&&mutual agency"ffects if assigned without the consent*

0. if assigned to another co-creditor, there isno violation of the precept stated in 'rt.0405> Ealid assignment

4. if the assignment is made to a third person,there is a violation of the precept in 'rt.0405> 1nvalid assignment

('rt. 040)&&&'ny creditor may demand (judicial or etra

judicial) the payment or performance of theobligation from one, some, or all of the debtors.

&&&!ayment to be made on the creditor who madethe demand and to no other. 1f there is no demand,payment may be made by the debtor to anyone of

the solidary creditors.

&&&1n mied solidarity, judicial or etra judicialdemand prohibits the debtor upon whom thedemand is made from ma=ing payment to anycreditor other than to the one who made thedemand> does not etend to other debtors uponwhom no demand has been made.

('rt. 040+)No%ationD change or substitution of an obligationby another, resulting in its etinguishment or

modification, either by... changing its object or principal condition, or

if prejudicial D the creditor who effected

the novation shall reimburse the othersfor damages incurred by them

if beneficial D the creditor who effected

the novation is able to secureperformance of the new obligation,such creditor shall be liable to theothers for the share which correspondsto them, not only in the obligation, butalso in the benefits.

substituting another in place of the debtor,

or creditor shall be liable to the acts of thenew debtor in case there is a deficiency inperformance or in case damage is incurredby the other solidary creditors

subrogating a third person in the rights of

the creditor. ;he obligation of the debtor and

creditor is not in reality etinguished.

1f effected by subrogating a third

person in the rights of all the solidarycreditors, the creditor liable for suchnovation is liable to the creditors for the

share which corresponds to them in theobligation.

etinguishes the obligation but it creates a

new one in lieu of the old. ;he co-creditor who does not participate in

the novation of the obligation can have ashare in the benefits of the modification butnot in possible losses.

General rule* "tension of time for the payment ofthe obligation does not constitute novation.

&&&needed in order that an obligation may beetinguished by another which substitutes it.

"press declaration of novation

incompatibility of the old and new

obligation.

&&&1n suretyship, etension of time given to the



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principal debtor by the creditor without the consentof the surety etinguishes the latters liability,ecept when the surety is liable for differentpayments or upon series of installments.

Co-)#nsation D weighing two obligationssimultaneously in order to etinguish them to theetent that the amount of one is covered by theamount of the other.

Con'!sionD refers to the merger of the #ualities ofcreditor and debtor in one and the same personwith respect to one and the same obligation.

!artial compensation or confusion* there may be some doubt as to the part of

the obligation to which the confusion orcompensation shall be applied.

'pply the rules on 'pplication of payment

;otal compensation or confusion* obligation is etinguished altogether and

what is left is the ensuing liability forreimbursement within each group

R#-ission act of pure liberality by virtue ofwhich the creditor, without having received anycompensation or e#uivalent, renounces his right toenforce the obligation, thereby etinguishing thesame either in its entirety or in the part or aspect

thereof to which the remission refers.

"ffects* "o%#rs #ntir# obligation/

total etinguishment of the obligation.

the entire juridical relation is terminated

for the benefit of one of the debtors and

covers his entire share of the obligation. ;otally releases the debtor from the

creditors. @ut the debtor is still bound to his co-

debtors

for the benefit of one of the debtors andcovers only a part of his share of theobligation. Bis character as a solidary debtor is not

affected covers the entire share of a solidary debtor

in the obligation or only part thereof. !artial remission is a valid defense if

the creditors proceed against any oneof the solidary debtors for the paymentof the entire obligation.

&&&8uch rules cannot be applied if the debt had

already been totally paid by anyone of the solidarydebtors before the remission is effected.

&&&1f one of the solidary creditor was able to collectthe entire amount from one or some, or all of thesolidary debtors, the obligation is totallyetinguished and that creditor must render anaccount to his co-creditors.

('rt. 0403)

&&&reditor may proceed against any one, or some,or all of the solidary debtors simultaneously.

&&&@ringing of an action against the principal debtorto enforce the payment of the obligation is notinconsistent with, and does not preclude thebringing of another to compel the surety to fulfill hidobligation under the surety agreement.

&&&' creditors right to proceed against the suretyeist independently of his right to proceed againstthe principal.

&&&if the obligation is joint and several, the suretyhas the right to proceed even against the suretyalone.

&&&obligation of the surety is the same as that of aprincipal.

&&&;he surety is not entitled, as a matter of right, tobe given notice of the principals default.

ommencement of the suit is a sufficient demand.

('rt. 040)

&&&Chere payment is made by one of the solidarydebtors, the effect is either the total of partialetinguishment depending upon whether the entireamount of the debt is paid or only part thereof.



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&&&%nce payment is made by one of the solidarydebtors of the entire obligation,, there arisesimmediately a conse#uent right of such debtor toclaim from his co-debtors the share which

corresponds to them, with interest for the paymentalready made.

&&&the right is not available to a debtor who ma=esthe payment after the obligation has prescribed orhas become illegal.

&&&;he interest shall be computed not from the timepayment was made, but from the time the debtbecame due.

1f one of the solidary debtors become insolvent, hisshare shall be borne by all his co-debtors, in

proportion to the debt of each. (par. 5, 'rt. 040)

('rt. 0402 D 0440)

E''#"t o' Loss or I-)ossibilit$ o' res judicata>

prescription> those which invalidate thecontract such as mista=e, violence,undue influence, fraud, etc...

defenses personal to him or pertaining to

his own share minority> insanity, etc..

defenses personal to the others, but only

as regards that part of the debt for whichthe latter are responsible. 7erely a partial defense

Sec 9 = 3ivisi!le and Indivisi!le %!li"ations

6. i%isibl# %s Indi%isibl#

i%isibl# Indi%isibl#

condition is susceptibleof partial reali


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&&&;he divisibility or indivisibility of the object itselfis a very important factor, probably the mostimportant, in determining whether the prestationwhich constitutes the object of the obligation is

susceptible to partial performance, or not.

&&&?or a thing to be considered divisible, it isimportant that it must be possible for reconstructioninto its condition prior the division, by uniting thedifferent parts into which it had been divided.

T,r## 4inds o' i%ision

Auantitative D when the thing can me

materially divided into parts and such partsare homogeneous to each other. 7ovable- parts are actually separated

from each other immovable- the limits of the parts are

fied by metes and bounds

Aualitative D the thing can be materially

divided but the parts are not eactlyhomogeneous. (i.e inheritance)

1deal1ntellectual D the thing can only be

separated into ideal or intellectual parts,not material parts. (i.e. co-ownership)

('rt. 0445)%ne debtor one creditor- the divisibility is of littlesignificance.G#n#ral R!l#/ the creditor cannot be compelled topartially receive the prestation in which theobligation consists> neither may the debtor may there#uired to ma=e partial fulfillment.E("#)tions/

when the obligation epressly stipulates

the contrary when the different prestations constituting

the objects of the obligation are subject todifferent terms and conditions.

Chen the obligation is in part li#uidated

and in part unli#uidated.

!lurality of debtors and creditors- the effect of thedivisibility or indivisibility of the obligation shalldepend whether the obligation is joint or solidary.

Joint D

6ivisible- 'rt. 04/ shall apply

1ndivisible- 'rt. 042 and 044

8olidary D 'rt. 0400- 0444 shall apply

'rt. 044)@reach of joint indivisible obligation

the obligation can be enforced only by

proceeding against allof the debtors

if any of the debtors fails or refuse tocomply with the obligation, it is convertedinto indemnity for damages

the debtor who failed or refused to comply

with his obligation shall bear the burden ofpaying all of the damages suffered by thecreditors

the other debtor may also recover for

damages form the debtor at fault.

('rt. 044+);rue test of divisibility* FON t,# obligation iss!s"#)tibl# o' )artial "o-)lian"#.

&&&;he susceptibility of partial compliance shouldbe understood in the sense of the possibility ofreali from the fact that although the

object of the obligation can beseparated in parts, yet each partconstitutes a necessarycomplement of the other parts

from the very purpose of the

obligation itself it is so intended by the parties

epress

implied

To o

indivisible prestation- not susceptible of

partial fulfillment ('bsolute rule)



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1n order to determine whether the

prestation is divisible or not, the objector purpose of the obligation mustalways be considered it is divisible when it has for its

object...0. the eecution of a certain number or

days of wor=,4. the accomplishment of wor= by

metrical units> or5. the accomplishment of analogous

things which by their nature aresusceptible of partial performance.

6ivisible prestation- susceptible of partial

fulfillment, with certain #ualifications. when the law provides for its

indivisibility it is so intended by the parties

Not to o ;he determination of the character of the

obligation will depend upon the sounddiscretion of the court

Sec : = %!li"ations ith $enal Clause one in which an accessory underta=ing is

attached for the purpose of insuring itsperformance by virtue of which the obligor

bound to pay a stipulated indemnity orperform a stipulated prestation in case ofbreach.

!enalty or penal clause is an accessory

obligation attached to the principalobligation

's to origin

L#gal Con%#ntional

onstituted by law onstituted by

agreement of theparties

's to purpose

Co-)#nsator$(for reparation)

"stablished for thepurpose of indemnifyingthe damages sufferedby the obligee or creditor in case ofbreach

"stablished for thepurpose of punishingthe the obligor or debtorin case of breach

's to "ffect

S!bsidiar$'lternative ointHumulative

%nly the penalty may bedemanded in case ofbreach

both the penalty and theprincipal obligation maybe demanded

('rt. 0443)&&&!enalty may be considered as reparation orsubstitute for damages or as a punishment in caseof breach of the obligation.

R#)arationD the #uestion of damage is resolved,since the stipulated indemnity or prestationrepresents a legitimate estimate made by thecontracting parties of the damages caused by thebreach of the obligation.

proof of actual damage is not needed

general rule

t,# rig,t to da-ag#s& asid# 'ro-

)#nalt$& still s!bsists if the injured party desires to recover the

damages actually suffered by him inaddition to the penalty, he must prove suchdamages.

"ception to the general rule

G#n#ral R!l#* the penalty is fied by the parties asa compensation or substitute for damages in caseof breach.



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E("#)t/0. when there is a stipulation to the contrary4. when the obligor is sued for refusal to pay

the agreed penalty5. when the obligor is guilty of fraud

(see Art ##7*ENT O OBLIGATIONS

('rt. 0450)-od#s o' #(ting!is,ing obligations

payment or performance

loss of the thing due

condonation or remission of the debt

confusion

compensation

novation annulment

rescission

fulfillment of a resolutory condition

prescription

--renunciation or waiver by the creditor

compromise

epiration of the resolutory term or

condition death of one of the contracting parties

(personal obligations) will of one of the contracting parties

mutual assent or dissent

Sec # = $ament or $erformance

('rt. 0454)


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by any means or modes "onsists in t,# nor-al and %ol!ntar$

'!l'ill-#nt o' t,# obligation b$ t,#r#aliMation o' t,# )!r)os# 'or 0,i", it0as "onstit!t#d.

1ncludes )#r'or-an"# in any othermanner, of an obligation.

?ulfillment of the obligation by the delivery

of a sum of money.

('rt. 0455-045+)General $ule* there should be "o-)l#t#performance. ('rt. 0455)E("#)t/

substantial performance in good faith

the debtor may recover as though there

has been a strict and complete

fulfillment, less damages suffered bythe creditor. ('rt. 045) ase* Diesel &onstruction vs 9*

Chen the obligee accepts the performance

=nowing its incompleteness or irregularity,without epressing any objection or protest.('rt. 045+) @ased on the principle of estoppel

when the obligation has been converted

into an indemnification (falls under 'rt.0455)

('rt. 0453-045/)

G#n#ral R!l#/ reditor is not bound to acceptpayment or performance by a third person. @his is!ecause the creditor ma not have confidence inthe honest of the +rdperson ho mi"ht deliver adefective thin" or pa ith a chec hich ma not!e honored"cept*

when it is made by a 5rdperson who has

interest in the fulfillment of the obligation.(joint debtor, guarantor, surety)

when there is a stipulation to the contrary

)#rsons 0,o -a$ )a$ obligation/ the debtor himself or his legal

representatives any third person who have an interest in

the fulfillment of the obligation. (subject tosome juridical effects)

'rt.0453-045 are not applicable to a third

person who pays the redemption price insales with right to repurchase, because avendor a retro is not a debtor within themeaning of the law.

Rig,ts o' a @rd

)#rson(with the =nowledge and consent of the debtor)

right of reimbursement D recover from the

debtor the #ntir# a-o!nt which he haspaid.

right of subrogation

(without the =nowledge and consent of the debtor) right of reimbursement D recover only

insofar as the payment has been beneficialto the debtor

&&&1f the obligation has been previouslyetinguished by any mode, the 5 rd person mayproceed against the creditor based on the principleof unjust enrichment.

Gratuitous payments D payments effected by athird person who does not intend to be reimbursedby the debtor.

consent of the debtor is

necessary. ;here is no gift if thegift was not accepted by thedebtor.

1f the consent is 8":$"6

rules on ordinary donation willapply

if the consent is 9%;8":$"6, 'rt. 0453 and 045will apply.

8uch gratuitous payments are

valid as far as the creditor isconcerned.('rt. 045/) so the 5rd

person who offered the gift butwas declined by the debtor cancompel the debtor to reimbursehim (5rd person) the amountaccepted by the creditor.

('rt. 0452)&&&1t is essential that the person who pays theobligation should have the necessary legalcapacity to effect such payment.

free disposal of the thing due

capacity to alienate the thing

effect of absence of one or another will effect theinvalidity of payment



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&&&"ven if the creditor has already accepted thepayment, it may still be annulled by proper actionin court, subject to the eception provided in 'rt.04.(But such provision has alread !eenmodified hen the a"e of majorit has !een

loered to #8 o )('rt. 04)

to 0,o- )a$-#nt -!st b# -ad# person in whose favor the obligation has

been constituted his successor in interest

any person authori


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debtorjudicial costs D $ules of ourt will govern

&&&1f the debtor changed his domicile in bad faith orafter he has incurred in delay, the additional

epenses shall be borne by him.

('rt. 04/)5 conditions or characteristics of payment*

identity D only the prestation agreed upon

and no other must be complied with completeness D the thing or service in

which the obligation consists must becompletely delivered or rendered

indivisibility D the payment or performance

must be indivisible

General $ule* 'rt. 04/ is applicable only toobligation where there is one debtor and onecreditor. "ceptions*

when the obligation epressly states the

contrary when the different prestations which

constitutes the objects of the obligation aresubject to different terms and conditions

when the obligation is in part li#uidated and

in part unli#uidated.

('rt. 042)&&&' judgment awarding an amount in :8 dollar

may be made with its e#uivalent amount in localcurrency in the conversion rate prevailing at thetime of payment. ;he trial court should determinethe the conversion rate if the parties cannot agreeon the same. (a"ala vs 5imenez)$' +42 D 'n 'ct to assure the uniform value of!hilippine oins and urrency.

the rule that payment of debts imoney shall

be made in the currency stipulated wascompletely abrogated.

$' 0 D amending $' +42

the law prohibiting stipulations in domestic

monetary obligations purporting to give theobligee the right to re#uire payment incurrency other than the !hil. currency doesnot apply to transactions listed on pp. 43,%bligations and ontracts, 5urado

Legal tender D currency which may be used for thepayment of all debts, whether public or private

in the !hil., legal tender would be notes

and coins issued by the entral @an=. !romissory notes payable to order or bills

of echange, chec=s, etc. are not legaltender

$ule* the debtor cannot compel the creditor toaccept a chec= or draft. "cept*

when the document has been cashed

when it had been impaired through the fault

of the creditor.

('rt. 04+)&&&1n case of etraordinary inflation or deflation, thevalue of the currency at the time of theestablishment of the obligation would be the basisof payment.

"traordinary inflation or deflationO unusual or beyond the common fluctuation

in the value of the currency which theparties could not have been foreseen whenthe obligation was established. (;olentino)

uncommon decrease or increase in the

purchasing power of the currency whichcould not have been reasonably foreseen.(6ean apistrano)

&&&'rt. 04+ is applicable only to contractualobligations and not to obligations arising from torts.

&&&re#uisites for @allantyne schedule to apply* obligation should have been contracted

during the Japanese occupation it could have been paid during the

Japanese occupation it could have been paid with Japanese

military notes

('rt. 04+0)!lace of payment*

Obligation

Obligations and Contracts-Jurado-Midterms

Documents

Transcript of Obligations and Contracts-Jurado-Midterms