PRE MID Obligations and Contracts 1156-1230 - Lecture Notes

7/26/2019 PRE MID Obligations and Contracts 1156-1230 - Lecture Notes

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Obligations and Contracts – Lecture Notes

General Provisions

Article 1156 An obligation is a juridical necessity to give, to

do or not to do.

Q: What is an Obligation?A: It is a juridical necessity to give, to do, or not to do

Failure to compel with the juridical necessity willsubject the debtor to a sanction

4 essential elements of an obligation:! Acti"e subject # creditor or obligee$ person who can

demand the ful%llment of an obligation&! 'assi"e subject # debtor or obligor(! Object or prestation # object is any of to gi"e) to do

or not to do4! *+cient cause # judicial tie or "inculum

*,ample: - agreed to gi"e his car to .Acti"e # .'assi"e # -Object # obligation to gi"e the car*+cient cause # agreement

/i"ing 0as prestation1

2 3alled real obligation2 & types of real obligation

o o gi"e or deli"er a specifc or

determinate ting 0e,! 5. car1o to gi"e or deli"er a generic or

indeterminate ting 0e,! A car1

6inds of Obligation:

• 7iewpoint of 8anctiona! 3i"il obligation # can be obtained in courtb! 9atural obligation # action has already prescribed but

creditor failed to demand within the prescripti"eperiod! espite the prescription) debtor "oluntarydeli"ered payment! In this case) debtor cannot getbac; what he paid

c! 5oral obligation # e,! <ear mass

Q: What is the importance of di=erentiating a speci%c andgeneric obligation?A: *=ects of the laws for the two obligations are di=erent! Incase of fortuitous e"ent 0those which cannot be foreseen orcan be foreseen but are ine"itable1) liability to deli"er speci%cobligations are e,tinguished! <owe"er) this is not so in thecase of generic obligations because you can still deli"er anyother thing to the creditor which falls under the same class of the obligation 0genus does not perish1

o o or 9ot to O 0as prestation12 called 'ersonal obligation2 are either a+rmati"e or negati"e

• 7iewpoint of 'erson Obliged

a! >nilateral # only party has an obligation to performb! ilateral # & parties has an obligation to perform!*,ample: contract of sale 0buyer and seller1

Article 115!Obligations arise from:(1) Law;() !ontracts;(") #uasi$contracts;(%) Acts or omissions &unis'ed by law; and() #uasi$delicts.

8ources of Obligation 0@12 he list is e,clusi"e! hus if the source is not one o

the @) then there is no Obligation to spea; of ! aw&! 3ontracts(! Quasi23ontracts4! Acts or omissions punished by law 0delicts1@! Quasi2elicts

9ote: numbers (2@ are also pro"ided by law

Article 115"

Obligations derived from law are not &resumed. Only t'ose e&ressly determined in t'is!ode or in s&ecial laws are demandable, and s'all beregulated by t'e &rece&ts of t'e law w'ic' establis'est'em; and as to w'at 'as not been foreseen, by t'e

&rovisions of t'is *oo+.

st source # LA#2 hose deri"ed from law should not be 'B*8>5*2 hus) you ha"e to point out a speci%c pro"ision of the

law2 his is pro"ided by the 3i"il law and 8pecial aw 08

should pre"ail in case of conCict1

Article 115$Obligations arising from contracts 'ave t'e

force of law between t'e contracting &arties ands'ould be com&lied wit' in good fait'.

&nd source # CON%&A%C%'2 <a"e the force of law between contracting parties2 his must be complied with in /OO FAI<2 BeDuires consent from the parties$ bound by the

terms and conditions of contracts2 here are limitations for the right o"er the parties to

stipulate 0they should not be contrary to laws, public policy, good customs, morals, public order 1

'rinciple of iberty or Freedom of 3ontracts2 'arties ha"e the right to agree on terms and

conditions as they may deem it con"enient) pro"idedthat such are subject to limitation

Q: What are the essential elements of a contract?A: meeting of the minds) consent of the cause andconsideration

a! 3onsentb! 3ausec! 3onsideration

/ood Faith # not by the sword that ;illeth it but by the spiritthat gi"eth life 0it does not ma;e law inferior to a contract noa contract superior than the law1

Q: What are the di=erence of an obligation and a contract?A:

OI/AIO98 3O9BA3

2 Besult of a contract

2 9ot necessary reDuiremeeting of the minds

2 Besults to an obligation

2 Always presupposes ameeting of the mind0consent of cause andconsideration1

9O5I9A* A9 I99O5I9A* 3O9BA38

• 9ominate # law has gi"en a particular name for thacontract

• Innominate # contracts with no speci%c namea! O > *8 # I gi"e that you may gi"eb! O > FA3IA8 # I gi"e that you may do

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Paras and Atty. Valencia’s Class Discussion



c! FA3IO > *8 # I do that you may gi"ed! FA3IO > FA3IA8 # I do that you may do

Article 116(Obligations derived from uasi$contracts s'all

be subject to t'e &rovisions of !'a&ter 1, -itle /00, of t'is *oo+.

(rd 8ource # )*A'+ – CON%&AC%'2 Also pro"ided for by aw 03hapter I) itle -7II of 3i"il

3ode12 9o meeting of the minds

Q: What is a Quasi23ontract?A: Guridical relation resulting from a lawful) "oluntary andunilateral and which has for its purpose the pament o- indemnit to the end that no one shall unjustly enrichhimself at the expense of another

2 & common ;inds:a! 9egotorium /estio # unauthoriHed management

*,! 9eighbor sa"ed you properties thus hade,penses

b! 8olution Indebiti # undue payment

Article 1161!ivil obligations arising from criminal oenses

s'all be governed by t'e &enal laws, subject to t'e

&rovisions of Article 122, and of t'e &ertinent &rovisions of !'a&ter , 3reliminary -itle, on 4uman5elations, and of -itle /000 of t'is *oo+, regulatingdamages.

4th 8ource # AC%' O& O.+''+ON' P*N+'/0 23 LA# or0L+C%

2 3riminal liability carries ci"il liabilitieso Bestitution # return the e,act thing

o Beparation # pay eDui"alent price

o Indemni%cation # conseDuential damage

Article 1164Obligations derived from uasi$delicts s'all be

governed by t'e &rovisions of !'a&ter , -itle /00 of t'is *oo+, and by s&ecial laws.

@th 8ource # )*A'+ 0L+C%2 3hapter & itle -7II of 33 or 8pecial aws2 orts and damages2 asis: act of negligence or omission of care causing

damage to another with no pre2e,isting contractualrelations

Q: When is there negligence?A: Omission of that diligence which is reDuired by thecircumstances of person) place and time

Q: When can an obligation arise from a Duasi2delict?A: he reDuirements are as follows:

! here must be fault or negligence&! here must be damage or injury(! here must be a direct relation of cause and e=ect

between the fault or negligence and damage andinjury 0the act of negligence is the pro,imate causeof the damage1

What is important in Duasi2delict is that you ha"e to show thatthere is no pre2e,isting contract between the parties

a;e note: If the source is not any of the %"e sourcesstipulated) then in it is not considered an obligation 0article@1

*,! Is an employer obliged to pro"ide for legal ser"ice to hisemployee? 9o) for the law does not reDuire for such!

6ammum absue injuria (6amage wit'out injury)2 damage without legal injury2 here is damage but there is no injury2 here is no liability in this case

Injury # illegal in"asion of a legal right! .ou associateit with a wrongful act or omission which will result toloss or damage

amage # the loss or the hurt or harm done toanother which usually results from the injury

Nature and 0ect o- Obligations

&eal Obligation # obligation to deliver a speci%c andindeterminate thing

Article 1167very &erson obliged to give somet'ing is also

obliged to ta+e care of it wit' t'e &ro&er diligence of agood fat'er of a family, unless t'e law or t'esti&ulation of t'e &arties reuires anot'er standard ofcare.

2 here is an obligation to gi"e something

contemplates on 0%0&.+NA%0 OG*38 O9.2 'urpose: ensure that the creditor will recei"e theobject! hus debtor should ta;e care of the object soas to deli"er it to the creditor

2 If generic) there is no need to practice good diligenceof a father

2 In an obligation to deli"er a speci%c thing) while stilin the possession of the obligor) he has theresponsibility to ta;e care of such using ordinarydiligence 0diligence reDuired in the absence of anystipulation in law or contract1

Belate to art! J( # the diligence needed is that which isreDuired by the 9A>B* of the obligation and correspondswith the circumstances of person) time and place

*-3*'IO98If the law or contract pro"ides for a IFF*B*9 standard ofcare) said law or stipulation must pre"ail 0Art! K(1

*,traordinary diligence #reDuired only if e,pressly pro"ided bylaw or parties e,pressly pro"ided this in their contract/ood Father of a Family: 8tandard 3are or iligence gi"en

Q: What are the other types of standards?A:

a! 8light #by contract) this can be imposedb! *,traordinary # diligence of "ery cautious persons

e,! 3ommon carrier custody 0airplanes) bus) etc!1c! >tmost iligence # e,! imposed on ban;s

Article 1167-'e creditor 'as a rig't to t'e fruits of t'e

t'ing from t'e time t'e obligation to deliver it arises.4owever, 'e s'all acuire no real rig't over it until t'esame 'as been delivered to 'im.

eli"ery of fruits is only applicable to 8'*3IFI3 obligationsFruits # three types contemplated in this article

a! 9atural # spontaneous product of soil and young oanimals

b! Industrial # acDuire through industry or laborc! 3i"il # rent) lease) interest

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Q: what ;ind of right does the creditor ha"e o"er the fruits?A: distinguish personal right from a real right!'ersonal # enforceable only against another partyBeal right # enforceable against the whole world

Q: When does the obligation to deli"er it arises?A: his is Duali%able! It will depend on 8at is te sourceo- obligation9

• If pure obligation 0not subject to any condition orterm12 from the time the agreement is entered into oris perfected 0it is demandable at once1

• If the obligation has a term 0- obliged himself to

deli"er a land to . on 9o"! @1 # the obligation ariseupon the arri"al of the term

• If there is a conditional obligation2 obligation arisewhen the condition is ful%lled

2 his article contemplates on a situation where thedebtor has not yet deli"ered the obligation but thatcontract was already perfected! In this case) you onlyha"e a '*B8O9A right that will compel the seller todeli"er such obligation to the creditor! he buyer thusas;s what is due to him!

2 he moment the obligation arises) it is only apersonal right! he real right only happens upondeli"ery!

I>8BAIO9

8am is obliged to gi"e en on ecember ) &LL) a particularparcel of land

• 'rior to ecember # the creditor does not ha"e anyright o"er the fruits

• ecember 0without deli"ery yet1 # from ec to@: he is entitled to the fruits! <owe"er) this is only apersonal right

• ecember @ 0actual or constructi"e receipt1onwards # he becomes the owner of the fruits andthe land only AF*B the date of receipt 0Beal Bight1

6I98 OF *I*B.! Actual eli"ery2 the property changes hands2 e,! he moment the boo; is gi"en to you 0buying of

boo;: transfer of possession1

&! 3onstructi"e eli"ery2 he physical deli"ery is implied

6inds of 3onstructi"e eli"erya! radition simbolica # when you buy a house and the

;ey of the house is gi"en to youb! radition longa manu # the object is pointed to youc! radition bre"i manu # illustrated in a situation where

the person is occupying the property as a lessee ortenant! 8uch property is bought by the tenant fromthe lessor! <is possession is thus changed from alessee to an owner

d! radition constitutum possesorium # opposite of bre"imanu! 8elling your own property to another but afterthe sale you enter into a contract with the owner foryou to occupy the property as a lessee!

e! radition by the e,ecution of legal forms andsolemnities # when you buy a parcel of land) youdonMt ha"e to be physically placed on the land! hedocuments will be considered as a deli"ery

Article 11658'en w'at is to be delivered is a determinate

t'ing, t'e creditor, in addition to t'e rig't granted 'imby Article 1129, may com&el t'e debtor to ma+e t'edelivery.

0f t'e t'ing is indeterminate or generic, 'e mayas+ t'at t'e obligation be com&lied wit' at t'ee&ense of t'e debtor.

0f t'e obligor delays, or 'as &romised todeliver t'e same t'ing to two or more &ersons w'o donot 'ave t'e same interest, 'e s'all be res&onsible forany fortuitous event until 'e 'as eected t'e delivery.

2 he distinction between generic and speci%cobligation is presented!

2 8peci%c # if lost during fortuitous e"ent) the

obligation is e,tinguished2 /eneric # not e,tinguished because genus does no

perish

st par # compel the speci%c thing which was to be deli"ered2 ebtor cannot compel the creditor to recei"e anothe

thing other than that which was speci%ed&nd par # debtor should deli"er what belongs to the class notinferior or superior of Duality

2 .ou just deli"er the regular type2 If A lost the horse) can buy to 3 and A will pay 3

(rd par # the term I9*B*8 refers to BI/<2 *"en if the obligation is determinate) if two or more

persons who do not ha"e the same interest is torecei"e such) the liability will not be lost

2 Applies only to **B5I9A* <I9/8

he third paragraph is an e,ception to the rule on speci%cobligations which is lost due to fortuitous e"ent

! If he incurs delay 0obligor delays1Q: When is there delay?A: %rst distinguish ordinary delay and legal delay or defaultWhat is contemplated in delay here is the legal delay odefault 5OBA 0debtor fails to comply with the obligation onthe designated time1! elay happen when you still fail todeli"er after there has been a demand whether judicial oe,tra judicial

Ordinary # merely non performance at the stipulated timeegal delay # delay which amounts to a "irtual non2ful%llmenof the obligation 0principle behind is Nthere is no delay if thereis no demand1

a;e note: A mere reminder with respect to the due date is noa demand! From the time the demand is made) that is onlywhen the debtor will be liable for damages!

&! If obligor is in bad faith because he promised todeli"er the same thing to two persons with di=erentinterest

Bemedies of the 3reditor when the ebtor fails to comply withhis obligation

! emand 8'*3IFI3 '*BFOB5A93* of the obligation&! emand B*83I88IO9 or 3A93*AIO9(! emand A5A/*8 either with or without either o

the %rst two

Article 1166

-'e obligation to give a determinate t'ing includest'at of delivering all its accessions and accessories,even t'oug' t'ey may not 'ave been mentioned.

2 Accessions and Accessories: are included e"en if notspeci%ed in the contract

2 Applicable only to **B5I9A* obligations

Accessions # attachment that you can no longer separateunless you will cause damage$ additions to or impro"ementsupon a thing

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Q: oes the creditor always ha"e to demand?A: 9o) because there are some e,ceptions 0loo; at boo; page&(2&41

a! When laws e,pressly so declares or it is e,presslystipulated in the contract A6* 9O*: It is not enough that you only specify thedate of the e,piry) rather it should be stipulated thatthe debtor will be at default upon the arri"al of suchterm or ful%llment of condition

b! When time is of the essence # time was so importantthat you cannot ha"e other time 0e,! irthday ca;e1

c! emand would be useless because it is beyond thedebtorMs power to perform 0e,! If he already sold it toanother1

d! When obligation is B*3I'BO3A: when one does notperform his obligation) the other does not delay

9ote: stipulations in contract pre"ails o"er law e,cept if suchcontract is "oid

<ora # latin term for delay

6I98 OF *A.! <ora =olvendi # default on the part of the debtor

2 here is no mora sol"endi in negati"e personalobligation

BeDuisites:a! he obligation must be due) enforceable) andalready liDuidated or determinate in amount

b! here must be non2performancec! here must be a demand) unless the demand is not

reDuiredd! he demand must be for the obligation that is due

and not for another obligation) nor one with a biggeramount) e,cept in certain instances considering allthe circumstances!

*=ects:a! ebtor is liable for interest and damagesb! ebtor may bear the ris; of lossc! <e is liable for fortuitous e"ent

&! <ora Acci&iendi # default on the part of the creditor2 he obligation is already due) debtor complies

but creditor unjusti%ably refuses to acceptQ: Why does this happen?A: he creditorMs real intention was to reject the lessee 0ma;eit appear that the debtor has not been paying rentals1

a;e note: if you are a lessee) if the creditor unjusti%ablyrefuses) you should compl 8it tender o- pament andconsignation 0legal procedure1 so as to legally relinDuish ore,tinguish yourself with the liability! 0his act is in writing)consignation: deposit the money in court1!

(! !om&ensatio <orae # when in a reciprocalobligation both parties are in default$ here it is as if neither is in default 0both are in pari de licto1

2 hey are debtors and creditors to each other 0e,!3ontract of lease and sale1

Article 11!(-'ose w'o in t'e &erformance of t'eir

obligations are guilty of fraud, negligence, or delay,and t'ose w'o in any manner contravene t'e tenor t'ereof, are liable for damages.

Q: When are you liable for damages?A: When there isP

! ;&A* 0deceit or dolo1 # deliberate or intentionae"asion of the normal ful%llment of an obligation0synonymous to A FAI<1 # .ou can then be liablefor bigger damages

&! N0GL+G0NC0 0fault or culpa1 # any "oluntary act oomission) there being no malice) which pre"ents thenormal ful%llment of an obligation # your damagescan be mitigated

(! 0LA3 0mora1

4! CON%&A:0N%+ON O; %/0 %0&.' O; %/0O2L+GA%+ON # debtor does not comply with theagreement

6inds of amages 0discussed in torts and damages1! .oral # e,! amages for sleepless nights$ not

enough to allege) you ha"e to pro"e the e,tent of thedamage

&! 0<emplar # setting of an e,ample to others! eterthem from doing the same

(! Nominal # to "indicate your rights4! %emperate # damages is not ascertain@! Actual # this should be pro"enK! Li=uidated # damages already stipulated in the

contract 0common in construction contracts: failureto %nish the project on time1

Article 11!15es&onsibility arising from fraud is

demandable in all obligations. Any waiver of an actionfor future fraud is void.

2 al;s about FBA> which is intentional and withmalice

2 his is demandable on all obligation2 Wai"er o f an action for -uture fraud is "oid

because the law does not want to encouragefraud! If wai"er is allowed) it will not deter theperson in committing fraud!

2 amages cannot be mitigated by the court

Q: 3an a liability for a past fraud be wai"ed?A: .es) such shows the generosity and forgi"eness of thecreditor towards the debtor

Article 11!45es&onsibility arising from negligence in t'e

&erformance of every +ind of obligation is alsodemandable, but suc' liability may be regulated by t'ecourts, according to t'e circumstances.

2 al;s about negligence 0Duasi2delict12 his is also demandable but may be regulated

by court depending on the circumstance 0can bemitigated1

Article 11!-'e fault or negligence of t'e obligor consists

in t'e omission of t'at diligence w'ic' is reuired by

t'e nature of t'e obligation and corres&onds wit' t'ecircumstances of t'e &ersons, of t'e time and of t'e

&lace. 8'en negligence s'ows bad fait', t'e &rovisions of Articles 1121 and 91, &aragra&' ,s'all a&&ly.

0f t'e law or contract does not state t'ediligence w'ic' is to be observed in t'e &erformance,t'at w'ic' is e&ected of a good fat'er of a familys'all be reuired.

2 e%nes what constitutes negligence

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+t is te Omission o- tat diligence 8ic is re=uired bte nature o- te obligation and corresponds 8it tecircumstances o- te person, o- te time and o- teplace9

• 9egligence is the failure to obser"e) for theprotection of the interests of another person) thatdegree of care) precaution) and "igilance which thecircumstances justly demand) whereby such otherperson su=ers injury 0>8 "s! arrias1

• It is the Nwant of care reDuired by the circumstances

• Accident and negligence are intrincicallycontradictory$ one cannot e,ist with the other!Accident occurs when the person concerned ise,ercising ordinary care) which is not caused by faultof any person and which could not ha"e beenpre"ented by any means suggested by commonprudence!

9ote: here is really no fault in accidents because the personhas practiced ordinary care$ while negligence is de%ned as theabsence of such care!

a;e 9ote: 9egligence ad faith R fraud

*8 FOB **B5I9AIO9 0When is there negligence1 .ou as;: #ould a prudent man in is position -oreseearm to te person in>ured as a reasonableconse=uence o- te course about to be pursued? If so)the law imposes a duty on the actor to refrain from thatcourse) or to ta;e precaution against its mischie"ous results)and the failure to do so constitutes negligence! &easonable-oresigt o- arm -ollo8ed b te ignoring o- teadmonition born o- tis provision, is te constitutive-act o- negligence 0'icart "s! 8mith1

*,! Assigning of the most competent person is an indicationthat there is a -oresigt of danger! his cannot therefore beconsidered as an accident) rather it is negligence!

01 Beasonable care and caution e,pected of an ordinary

prudent person

id the defendant in doing the alleged negligent actuse reasonable care and caution which an ordinaryprudent person would ha"e used in the samesituation! If not) then he is guilty of negligence05andarin 7ila) Inc! case1

9egligence is therefore a Duestion of -act) itse,istence being dependent upon the particularcircumstances of each case!

Factors to be considered:a! 9ature of the obligation # you ;new that the area was

Cammable but you smo;ed! here is clear negligenceb! 3ircumstances of the person # you are on duty as a

police guard) you fell asleep not by reason of anyailment) then a robbery occurred

c! 3ircumstances of time # during night time you dro"eyour car without any headlight

d! 3ircumstance of 'lace # while dri"ing your car atcolon street) you dro"e at KL;ph

0&1 9o hard and fast rule for measuring degree of care

6I98 OF 9*/I/*93* 0refer pg! 4(24@ for comparison1! Culpa Contractual # negligence in contracts

resulting in breach

2 *,: you ha"e a contract of common carrie0transportation contract1: passenger can %le fordamages against operator$ you can also demandfor culpa criminal and for ci"il liability

&! Culpa A=uiliana # negligence which by itself is thesource of an obligation between the parties not sorelated before by any pre2e,isting contract

(! Culpa Criminal # negligence resulting in thecommission of a crime2 .ou will %le an action against the dri"er! If the

dri"er is con"icted but insol"ent) the owner wilbe subsidiarily liable

FBA> 78! 9*/I/*93*

eliberate intention to causedamage or injury

9o such intention

Wai"er of liability for futurefraud is "oid 0includes grossnegligence1

Wai"er is allowed

iability cannot be mitigated 5ay be reduced in certaincases

a;e note: this is ;raud in te per-ormance o- anobligation @dolo incidenteB &0.03 damages

*,! Instead of deli"ering a wine) what you deli"er is a winebottle howe"er what is inside is not wine) then this is doloincidente$ committed in the performance of the obligation!

olo causante # Fraud committed in the e,ecution of thecontract! 3onsent is "itiated by fraud! .ou should not ha"eentered the contract not unless there was a fraud! B*5*.annulment of contract!

Article 11!77ce&t in cases e&ressly s&ecied by t'e law,

or w'en it is ot'erwise declared by sti&ulation, orw'en t'e nature of t'e obligation reuires t'eassum&tion of ris+, no &erson s'all be res&onsible fort'ose events w'ic' could not be foreseen, or w'ic',t'oug' foreseen, were inevitable.

;O&%*+%*+O*' 0:0N%! Act of man

&! Act of /od

/B: no liability in fortuitous e"ent*,ceptions

a! When e,pressly declared by lawb! When e,pressly declared by stipulationc! 9ature of obligation reDuires assumption of ris;

BeDuisites:! *"ent happened without any participation of the

debtor 0independent of his will1&! *"ent cannot be foreseen) or if foreseen is ine"itable(! y reason of the e"ent) it was impossible for him to

comply with the obligation in a normal manner4! here is no contributory negligence on the debtorMs

part

Article 11!5>surious transactions s'all be governed by s&ecial

laws.

2 3ontemplated on *'*&3 LA#! <owe"er) such law isno longer applicable today

2 hus) interests are based on the agreement of thecontracting parties) which is complied in /ood faith

2 Bule: If there is consent or agreement) then that wilgo"ern the relationship

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2 <owe"er: e"en if >8>B. law is suspended) the 'Creduced the amount of interest imposable on theground that the right is ineDuitable orunconscionable 0thus) the party is not totally free1

Article 11!6-'e recei&t of t'e &rinci&al by t'e creditor

wit'out reservation wit' res&ect to t'e interest, s'all give rise to t'e &resum&tion t'at said interest 'asbeen &aid.

-'e recei&t of a later installment of a debt

wit'out reservation as to &rior installments, s'all li+ewise raise t'e &resum&tion t'at suc' installments'ave been &aid.

2 al;s about presumptions which could either be01 3onclusi"e or0&1 isputable or rebuttable 0what is contemplated inthis article1

2 'resumption applies and is ad"antageous to debtoror lessee

Conclusive # you are no longer allowed to present othere"idences to pro"e otherwise

2 hese are e"idences which you cannot rebut 0e,! Weare all presumed to ;now the law$ thus you cannotdefend yourself by saying that you are not aware of

such law1

2 8uch presumption is reasoned by e,perience andcon"enience

isputable – such fact is presumed unless you present othere"idences that will pro"e otherwise

a;e 9ote: a creditor can refuse to accept if you do not paythe amount you are obliged to pay

8 paragraph of JK2 ac;les presumption in payments of +N%0&0'%'2 the %rst payment is that of the interest and the

balance will be on the principal!

A6* 9O*: the creditor can rebut such claim wherein thelessee will say that he has already paid the interest for thereceipt shows payment for principal) howe"er the burden of proof is that of the creditor

he creditor can specify in the receipt a B*8*B7AIO9 withregards to the interest so that e"en though it is speci%ed inthe receipt that payment is for the principal amount) there willbe no presumption that the interest has already been paid!

&nd paragraph of JK2 ac;les presumptions in payments of

+N'%ALL.0N%'2 *,! A receipt ac;nowledging the payment of rentals

of march gi"es the presumption that rentals for Ganuary and February is paid

2 .ou can li;ewise) as a lessor) note the reser"ation

Q: What if no date is speci%ed with regards to the monthrental but the date of the receipt is dated march) can thisraise a presumption that payment for Ganuary and Februarywere made?A: NO) because such date only tac;les the date of receipt andnot on the date that corresponds to the payment of such

a;e 9ote: 3earl %a<es are not installment payments andthe law pro"ides for such presumption on installments aloneS

Article 11!!-'e creditors, after 'aving &ursued t'e &ro&erty in

&ossession of t'e debtor to satisfy t'eir claims, mayeercise all t'e rig'ts and bring all t'e actions of t'elatter for t'e same &ur&ose, save t'ose w'ic' arein'erent in 'is &erson; t'ey may also im&ugn t'e actsw'ic' t'e debtor may 'ave done to defraud t'em.

2 Bemedies of creditor when the debtor does nocomply with the obligation

! emand for speci%c performance plus damages fo

failure to comply with the demand of obligation&! 'ursue the properties belonging to your debtor(! A"ail of accion subrogatoria # you can e,ercise the

rights of your debtor 0e,! ebtor is the creditor oanother person) you can then e,ercise his rights tocollect what the debtor could collect as a creditor ofanother person1

4! Accion 'auliana # you can recei"e # impugn orescind acts or contracts done by the debtor todefraud the creditors 0e,! Fictitious sale: ma;e iappear that it was sold when in fact it is not$ it is justto e"ade his liabilities # 1

Article 11!"=ubject to t'e laws, all rig'ts acuired in virtue of

an obligation are transmissible, if t'ere 'as been no

sti&ulation to t'e contrary.

2 Bights are transmissible e,cept ifa! aw pro"ides otherwise # consent of other party

is necessaryb! 3ontract pro"ides otherwisec! If the obligation is purely personal

J a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




D+N' O; O2L+GA%+ON' @Classifcation

'BI5AB.! 'ure Obligation # there is no condition or term to

ful%ll$ emandable at the time the contract isperfected

&! 3onditional Obligation # there is a condition whichshould be ful%lled

a! 8uspensi"e # the condition is awaited! heobligation arises the moment the conditionis satis%ed

b! Besolutory # the condition is to be a"oided!

he obligation is e,tinguished the momentthe condition is satis%ed

(! Obligation with a 'eriod or erm # that whichnecessarily must come regardless of whether theparties ;now when it happen or not

4! Alternati"e or Faculati"e@! 3onjuncti"eK! Goint # there are more than one person who is liable

for the obligation! hey ha"e eDual share of responsibility

J! 8olidary # upon the insol"ency of one of the partieswho is responsible for the obligation) the other partyis to ful%ll the full liability of the contract

! i"isible # the ful%llment of the obligation may bedone at separate times

T! Indi"isible # the ful%llment of the obligation must be

done at one timeL! With a 'enal 3lause

8*3O9AB.! >nilateral # only one person or party has an

obligation to perform&! ilateral # two parties has an obligation to perform(! Beal # right which is demandable upon the whole

world upon the deli"ery of the debtor of theobligation to the creditor

4! 'ersonal # right of the creditor to demand upon thedebtor the deli"ery of the obligation as its due periodhas already lapsed

@! eterminate # speci%c object is the subject of theobligation

K! /eneric # the subject of the obligation belongs to aparticular class

J! 'ositi"e # there is a need for the performance of theobligation

! 9egati"e # eDui"alent to omission$ something shouldnot be done or is to be omitted

T! egalL! 3on"entional! 'enal&! 3i"il # obligation arises according the 3i"il law(! 9atural # obligation arises according to natural law

Article 11!$7very obligation w'ose &erformance does not

de&end u&on a future or uncertain event, or u&on a &ast event un+nown to t'e &arties, is demandable at once.

7very obligation w'ic' contains a resolutory condition s'all also be demandable, wit'out &rejudiceto t'e eects of t'e 'a&&ening of t'e event.

2 What is contemplated here are the types of obligations which are *5A9A* at once

2 st paragraph 8imply stated: an obligation with noterms or conditions is demandable at once

2 &nd paragraph: Besolutory conditions are alsodemandable at once without prejudice to the

e,tinguishment of the obligation once the conditionis ful%lled

'ast *"ents # would refer to the F>>B* 69OW*/* OF'A8 *7*98) which will determine whether or not anobligation will arise

Classifcation o- ConditionsA9

! 8uspensi"e 0conditions precedent or conditionsantecedent1 # the happening of the condition gi"es rise to

the obligation&! Besolutory 0conditions subseDuent1 # the happening ofthe condition e,tinguishes the obligation

29! 'otestati"e # the obligation arises from the personal wilof the debtor$ ful%llment of the condition depends upon thewill of a party to the obligation&! 3asual # obligation depends on chance or haHard or thewill of a third person 0winning of lotto1(! 5i,ed # depends partly on the will of the debtor and thatof a third person or on chance 0if I pass the bar1

C9! i"isible # capable of partial performance or realiHation&! Indi"isible # not capable of partial performance becauseof the nature of the thing) or because of the intention of theparties

9! 'ositi"e # an act is to be performed&! 9egati"e # something will be omitted

09! *,press # the condition is stated&! Implied # the condition is merely inferred

;9! 'ossible # capable of ful%llment in nature and in lawcondition is capable of realiHation according to nature) law public policy or good customs&! Impossible # not capable of ful%llment due to nature ordue to the operation of law or morals or public policy$ ordue to a contradiction in its terms

G9! 3onjuncti"e # when there are se"eral conditions) all ofwhich should be realiHed&! Alternati"e # if only one or a few of the conditions ha"e tobe performed or realiHed

Q: When is a pure obligation demandable?A: At once) the moment you said such obligation or suchcontract has been perfected! 0Immediately1

3ondition # future and uncertain e"ent'eriod # that which necessarily must come

Q: What is the e=ect of the happening of the resolutorycondition?A: he obligation is e,tinguished!

Article 11"(8'en t'e debtor binds 'imself to &ay w'en 'is

means &ermit 'im to do so, t'e obligation s'all bedeemed to be one wit' a &eriod, subject to t'e

&rovisions of Article 11?2.

2 his pro"ision contemplates on an obligation with a *B5 or '*BIO! he term is due upon the capacityof the debtor to pay such obligation!

2 N'ayment does not depend on the debtorMs willrather) what is dependent on the debtor is the I5*when payment by him can be made! N





Q: <ow long is the term?A: he term is not solely dependent neither on the creditor northe debtor! In this case) Article TJ is also applied whereinthe 3ourt is obliged to %, the duration of the period! >ponarri"al of this period) the creditor can now demand for thepayment!

Article 11"10n conditional obligations, t'e acuisition of

rig'ts, as well as t'e etinguis'ment or loss of t'ose

already acuired, s'all de&end u&on t'e 'a&&ening of t'e event w'ic' constitutes t'e condition.

2 his article contemplates on 3onditional Obligations$that such arises or is e,tinguished upon theful%llment of the condition

2 8uspensi"e # e+cacy or obligatory force issubordinated to the happening of a F>>B* or>93*BAI9 e"ent

2 Besolutory # rights are already acDuired are lost oncethe condition is ful%lled$ hus) there is a need tore"o;e the donation %rst before e,tinguishment of the obligation is ta;en to e=ect!

8>8'*98I7* 3O9IIO9

herefore) what is acDuired by the obligee or creditor uponthe constitution of the obligation is only a mere ope ore<pectanc! >nli;e other hope or e,pectancies) howe"er) itis protected by the law

Q: What happens if the suspensi"e condition does not ta;eplace?A: it is as if there is no obligation at all! he parties wouldstand as if the conditional obligation ne"er e,isted

B*8O>OB. 3O9IIO9

he obligation is immediately demandable after itsestablishment or constitution! >nli;e an obligation with asuspensi"e condition) rights arising out of the obligation areacDuired immediately and "ested in the oblige or creditor

Article 11"48'en t'e fulllment of t'e condition de&ends

u&on t'e sole will of t'e debtor, t'e conditional obligation s'all be void. 0f it de&ends u&on c'ance or u&on t'e will of a t'ird &erson, t'e obligation s'all ta+e eect in conformity wit' t'e &rovisions of t'is!ode.

2 8imply means: if the condition is 'O*8AI7*) theconditional obligation is 7OI

2 tal;s about an obligation subject to 'O*8AI7*condition 0dependent upon the will of the debtor1

2 If condition depends upon chance # it will ta;e e=ectupon the pro"ision of this code 0e,! I will gi"e youLL if I win the lotto$ he obligation is "alid because

it is dependent upon chance2 If the condition is mi,ed # the condition is also "alid

*OB! 'otestati"e and 8uspensi"e

2 oth the condition and the obligation are 7OI2 *,! I will gi"e you 5 ne,t month if I li;e

&! 'otestati"e and Besolutory2 oth the condition and the obligation are 7AI

2 *,! I will employ you now) but if in any e"ent decide not to need your ser"ices) your contractwill end

3B*IOB! 'otestati"e

2 oth the condition and the obligation are 7AI2 *,! IMll gi"e you my fountain pen if you desire to

ha"e it

*, of mi,ed: I will gi"e you LL if I sell my parcel of land!2 he selling is not solely dependent on the will of the

debtor coH such is as well dependent on the buyer or

price

If it made to depend upon the will of the creditor # "alidIf upon the debtor # "oid

a;e note: the precept contained n the %rst sentence of Article& is only applicable only to a 8>8'*98I7* 3O9IIO9

his means that if the obligation is subject to a resolutory andpotestati"e condition) the condition is 7AI 0"alid because itis already demandable at once1

Article 11"0m&ossible conditions, t'ose contrary to good

customs or &ublic &olicy and t'ose &ro'ibited by laws'all annul t'e obligation w'ic' de&ends u&on t'em. 0f

t'e obligation is divisible, t'at &art t'ereof w'ic' isnot aected by t'e im&ossible or unlawful conditions'all be valid.

-'e condition not to do an im&ossible t'ings'all be considered as not 'aving been agreed u&on.

2 his article contemplates on the e=ects of Impossibleand Illegal conditions

*=ects:! If the condition is to O and I5'O8I* or I*/A

thing) both the condition and obligation is 7OI&! If the condition is a 9*/AI7* 0not to do the

I5'O88I*1) you I8B*/AB the 3O9IIO9 buthe OI/AIO9 B*5AI982 In this situation) this becomes a '>B* and 7AI

obligation(! If the condition is a 9*/AI7* 0not to do an I*/A1

both the condition and the obligation are 7AI2 his only applies to obligations and contracts) noto testamentary disposition or to donations

a;e note: if some conditions in a contract are impossible tocomply with) the insurer cannot "alidly assert a breach of saidconditions

ecture 9ote:If the obligation) howe"er) is a pre2e,isting obligation) andtherefore does not depend upon the ful%llment of thecondition for its perfection) it is Duite clear that only thecondition is "oid) but 9O the obligation!

If the condition is 9O O O A9 I5'O8I* <I9/) it shall be

considered as not ha"ing been agreed upon! 3onseDuentlythe obligation becomes pure and immediately demandable

Article 11"7-'e condition t'at some event 'a&&en at a

determinate time s'all etinguis' t'e obligation assoon as t'e time e&ires or if it 'as becomeindubitable t'at t'e event will not ta+e &lace.

2 his deals with a 'O8II7* 3O9IIO92 Obligation subject to 8>8'*98I7* 3O9IIO9

T a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




2 8imply means that a condition which falls on aspeci%c or determinate time shall e,tinguish theobligation as soon as the time e,pires or that it issure not to ta;e place

2 If the period is not %,ed in the contract) the court )considering the partiesM intentions) should determinewhat period was really intended

2 al;s about an e"ent to happen a;e 9ote: 'O8II7* 2 *-I9/>I8*

*,! I will gi"e you a parcel of land if you marry - this year! If

by the end of the year) you still did not marry) the obligationof the debtor is e,tinguished!

Nor if it has become indubitable that the e"ent will not ta;eplace*,! On 9o"! @) - died) then the obligation is e,tinguishedbecause you can no longer marry

Article 11"5-'e condition t'at some event will not 'a&&en

at a determinate time s'all render t'e obligationeective from t'e moment t'e time indicated 'asela&sed, or if it 'as become evident t'at t'e event cannot occur.

0f no time 'as been ed, t'e condition s'all be deemed fullled at suc' time as may 'ave &robably

been contem&lated, bearing in mind t'e nature of t'eobligation.

2 his deals with a 9*/AI7* 3O9IIO92 8imilar with 4 howe"er) what is contemplated is a

condition that some e"ent will 9O happen at adeterminate or speci%c time!

2 he obligation is e=ecti"e from the moment the timeindicated has elapsed or is e"ident that it cannotoccur

2 If no speci%c date when the obligation is ful%lled: youconsider the circumstances surrounding theagreement$ what is contemplated by the parties

a;e 9ote: 9*/AI7* # *FF*3I7*

Article 11"6-'e condition s'all be deemed fullled w'en

t'e obligor voluntarily &revents its fulllment.

2 he condition shall be deemed ful%lled when theobligor "oluntarily pre"ents its ful%llment

2 3ontemplates generally of 8>8'*98I7* conditions2 his deals with 3O98B>3I7* or 'B*8>5*

ful%llment2 BeDuisites:

a! 7oluntaryb! Actually 'B*7*98 ful%llment

2 Applicable to B*8O>OB. conditions if the *OBis at FA>*,! A sold land now to on a condition that shouldmarry 3 within year) otherwise should return theland! If A ;ills 3) does not ha"e to return the land

because A is at fault!2 3an only be applied to suspensi"e conditions and not

to resolutory conditions

Article 11"!-'e eects of a conditional obligation to give,

once t'e condition 'as been fullled, s'all retroact tot'e day of t'e constitution of t'e obligation.@evert'eless, w'en t'e obligation im&oses reci&rocal

&restations u&on t'e &arties, t'e fruits and interestsduring t'e &endency of t'e condition s'all be deemed

to 'ave been mutually com&ensated. 0f t'e obligationis unilateral, t'e debtor s'all a&&ro&riate t'e fruitsand interests received, unless from t'e nature andcircumstances of t'e obligation it s'ould be inferredt'at t'e intention of t'e &erson constituting t'e samewas dierent.

0n obligations to do and not to do, t'e courts s'alldetermine, in eac' case, t'e retroactive eect of t'econdition t'at 'as been com&lied wit'.

2 he e=ects of a conditional obligation to /I7*

generally retroacts to the day of the constitution othe obligation 0applicable only to 3O98*98>Acontracts

2 *,ception to the /eneral Bule: with regards toFB>I8 or I9*B*88 and '*BIO OF 'B*83BI'IO90for reciprocal obligations because it is presumedthey are mutually compensated$ howe"er) in aunilateral prestation) you should deli"er the fruitsand interest unless it can be inferred that theintention is otherwise1

2 In an obligation to O) the 3O>B will determine theretroacti"e e=ect of the condition

8cenario:2 .ou ha"e a date of the constitution of the obligation

to the date of the happening of suspensi"e condition

0e,! In year &LL4) I obliged myself to gi"e you aparcel of land if you pass the bar e,amination1

*nilateral Obligation @e<ample&LL4 # date of the constitution of obligation&LL # date of happening of the suspensi"e condition

2 As far as the fruits are concerned: If the obligationsare >9IA*BA ) the debtor shall appropriate thefruits and interests recei"ed

2 In between # the debtor is still the owner of the fruits

&eciprocal Obligation2 in between 0in pendency1 # fruits shall be deemed to

ha"e been mutually compensated2 uyer is not obliged to pay interest) neither the selle

obliged to gi"e the fruits2 Why? ecause it will be incon"enient between the

parties to compute the interest and fruits

Article 11""-'e creditor may, before t'e fulllment of t'e

condition, bring t'e a&&ro&riate actions for t'e &reservation of 'is rig't.-'e debtor may recover w'at during t'e same time 'e'as &aid by mista+e in case of a sus&ensive condition.

2 his article contemplates on 01 actions to preser"e3reditorMs Bights and 0&1 Bight of the ebtor toBeco"er what was 'aid by 5ista;e

2 01: bring appropriate actions for the preser"ation ohis rights$ as; for security if debtor is about to beinsol"ent$ as; the court to pre"ent alienation oconcealment

2 0&1: his is a case of 8O>IO I9*II

Q: Why is there a need for such pro"ision?A: 8o that while the condition has not yet happened) thecreditorMs right is safeguarded

Q: What can the creditor do to protect his rights?A: .ou can ha"e an annotation in the papers!

a;e 9ote: uring the pendency of the condition) the obligeeor creditor has only a 5*B* <O'* OB *-'*3A93.! he hope

L a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




and e,pectancy is protected by law! his is for the protectionand preser"ation of his right! Without this protection) the rightof the creditor becomes meaningless!

Q: What is the appropriate action?A: ha"e the property annotated or registered in the registry of property 0ca"eat emptor1! 8o whoe"er acDuires the land willbe bound to such obligation!

a;e 9ote: When the obligation imposes reciprocal prestationsupon the parties) the fruits and interests during the pendencyof the condition shall be deemed to ha"e been mutually

compensation!

Article 11"$8'en t'e conditions 'ave been im&osed wit'

t'e intention of sus&ending t'e ecacy of anobligation to give, t'e following rules s'all beobserved in case of t'e im&rovement, loss or deterioration of t'e t'ing during t'e &endency of t'econdition:

(1) 0f t'e t'ing is lost wit'out t'e fault of t'edebtor, t'e obligation s'all be etinguis'ed;() 0f t'e t'ing is lost t'roug' t'e fault of t'edebtor, 'e s'all be obliged to &ay damages; it is understood t'at t'e t'ing is lost w'en it

&eris'es, or goes out of commerce, or disa&&ears in suc' a way t'at its eistence is

un+nown or it cannot be recovered;(") 8'en t'e t'ing deteriorates wit'out t'efault of t'e debtor, t'e im&airment is to beborne by t'e creditor;(%) 0f it deteriorates t'roug' t'e fault of t'edebtor, t'e creditor may c'oose between t'erescission of t'e obligation and its fulllment,wit' indemnity for damages in eit'er case;() 0f t'e t'ing is im&roved by its nature, or by time, t'e im&rovement s'all inure to t'ebenet of t'e creditor;

(B) 0f it is im&roved at t'e e&ense of t'e debtor, 'es'all 'ave no ot'er rig't t'an t'at granted to t'eusufructuary.

2 if the obligation i s to deliver a specifc thing) (things can happen during the pendency of thesuspensive conditiona! the speci%c thing promised to be deli"ered may

be lostb! there is deteriorationc! there could be impro"ements

Bules go"erning in these situations: 0during the pendency of the condition1

oss # when it perishes) disappears) its e,istence is un;owna! due to fault of debtor # the debtor is obliged to 'A.

A5A/*8b! not due to fault of debtor # the obligation is

*-I9/>I8<*

eterioration

a! due to fault of debtor # the creditor may choosebetween recission of the obligation and its ful%llmentwith indemnity for damages

b! not due to fault of debtor # the impairement shall be

borne by the creditor 0creditor will accept1

Impro"ementsa! by nature # inure to the bene%t of the creditorb! by passage of time 2 inure to the bene%t of the

creditor

c! introduced at the e,pense of the debtor # debtoha"e the right than that granted to the usurfructuary0if impro"ement cannot be remo"ed without causingdamage) then the debtor is not entitled to theimpro"ement! ut if it can be remo"ed withoucausing damage) the debtor can remo"e suchimpro"ement1

Article 11$(8'en t'e conditions 'ave for t'eir &ur&ose t'e

etinguis'ment of an obligation to give, t'e &arties,u&on t'e fulllment of said conditions, s'all return to

eac' ot'er w'at t'ey 'ave received.

0n case of t'e loss, deterioration orim&rovement of t'e t'ing, t'e &rovisions w'ic', wit'res&ect to t'e debtor, are laid down in t'e &recedingarticle s'all be a&&lied to t'e &arty w'o is bound toreturn.

As for t'e obligations to do and not to do, t'e &rovisions of t'e second &aragra&' of Article 11C2s'all be observed as regards t'e eect of t'eetinguis'ment of t'e obligation.

2 In short means: Once the resolutory conditions isful%lled) the obligation is e,tinguished

2 ecause obligation is e,tinguished) the parties

should restore to each other what they ha"e recei"ed# this would include the fruits and interests aftededucting the e,penses made for their productiongathering and preser"ation

2 In this situation) the creditor becomes the debtor inhis obligation to return

Article 11$1-'e &ower to rescind obligations is im&lied in

reci&rocal ones, in case one of t'e obligors s'ould notcom&ly wit' w'at is incumbent u&on 'im.

-'e injured &arty may c'oose between t'efulllment and t'e rescission of t'e obligation, wit't'e &ayment of damages in eit'er case. 4e may alsosee+ rescission, even after 'e 'as c'osen fulllment, ift'e latter s'ould become im&ossible.

-'e court s'all decree t'e rescission claimed,unless t'ere be just cause aut'oriDing t'e ing of a

&eriod.-'is is understood to be wit'out &rejudice to t'e rig'tsof t'ird &ersons w'o 'ave acuired t'e t'ing, inaccordance wit' Articles 1"C and 1"CC and t'e<ortgage Law.

2 'ower to rescind applies only to B*3I'BO3A0created and established at the same time) out of thesame cause) and which result in mutual relationshipbetween the parties$ the parties are debtors andcreditors to each other1 obligations due to breach obad faith

2 B*5*.: either 01 ful%llment 0%le an action fospeci%c performance$ demand the person in delay1

damages or 0&1 rescission damages 09O*: theright is not conjuncti"e thus the plainti= 3A99O as;for O< remedies

2 9ote howe"er that you can %le for rescission aftechoosing ful%llment if the latter becomes impossible

Bescission 0or Besol"e1 # abrogates the contracts from itsinception and reDuires a mutual restitution of bene%tsrecei"ed$ itMs as if no contract has been made 0restore theparties to their relati"e positions1





A6* 9O*: the cause must be I*9I3A and the obligationsshould arise simultaneously

9ote: the right to rescind belongs to the Injured 'arty! heinjured 'arty is the one who has complied with his part of hisobligation!

3haracteristics of the Bight to Bescind or Besol"e! Only e,ists in reciprocal obligations 0note: if there is

a period) you cannot declare default before thee,piration of the period1

&! It can be demanded only if the plainti= is ready)

willing and able to comply with his own obligations)and the other is not

(! he right to rescind in 9O absolute 0 looE atlimitations

a! ri"ial causes or slight breaches will notcause rescission

b! If there be a just cause for %,ing the periodwithin which the debtor can comply) thecourt will not decree rescission

c! If the property is now in the hands of aninnocent third party who has lawfulpossession of the same

4! he right to rescind needs judicial appro"al whenthere has already been deli"ery of the object!<owe"er) if it is e,pressly stipulated in the contractthat despite deli"ery rescission can be made without

going to court) such contract remains "alid! he right to rescind need not ha"e a judicial appro"alwhen there has been no deli"ery yet

9ote: if the Duestion is whether there was a "iolationin the contract) you should go to court and resol"esuch!

@! he right to rescind is implied 0presumed1 to e,istand therefore) need not be e,pressly stipulated upon

K! he right to rescind may be wai"ed) e,pressly orimpliedly

a;e note: e,trajudicial rescission of a contract is not possiblewithout an e,press stipulation to that e=ect

imitations on the Bight to Bescinda! he power of the court to %, the period # if there are

minor "iolationsb! Besort to the courtsc! Bight of third person # those who come into

possession and is not in bad faith are protected$ insuch case) the only remedy of the injured party is toproceed against the party responsible for the transferor con"eyance for damages

d! 7iolations should be 8ubstantial or serious so as toallow a rescission of contract

e! Wai"er of the right 0right to as; for a rescission1

Obligation of a 8eller! eli"er a car&! ransfer ownership

a;e note: if buyer) due to rescission) is obliged to return thecar but destroyed it) could no longer proceed in the process! his is because) if you %le for rescission) you should also beready to return the object subject of the obligation!

If (rd party is in bad faith) the only remedy of the injured partyis to proceed against the (rd person who acted in bad faith fordamages! .ou can also go after both the seller and (rd party if both of them acted in bad faith!

Article 11$4

0n case bot' &arties 'ave committed a breac'of t'e obligation, t'e liability of t'e rst infractor s'allbe euitably tem&ered by t'e courts. 0f it cannot bedetermined w'ic' of t'e &arties rst violated t'econtract, t'e same s'all be deemed etinguis'ed, andeac' s'all bear 'is own damages.

2 In case both parties committed a breach:o etermine the %rst infractor # he is to pay

the liability 0but this can be temperedbecause both committed a breach1

o If it cannot be determined # each shall bear

his own damages

CON%+%+ON' #+%/ A %0&.

Article 11$Obligations for w'ose fulllment a day certain

'as been ed, s'all be demandable only w'en t'atday comes.

Obligations wit' a resolutory &eriod ta+e eectat once, but terminate u&on arrival of t'e day certain.

A day certain is understood to be t'at w'ic'must necessarily come, alt'oug' it may not be +nownw'en.

0f t'e uncertainty consists in w'et'er t'e daywill come or not, t'e obligation is conditional, and its'all be regulated by t'e rules of t'e &receding=ection.

2 3ontemplates on obligations with a period # thasuch is demandable only when that day comes

'eriod2 3ertain length of time which determines the

e=ecti"ity or the e,tinguishment of obligations2 Inter"al of time which either suspends its

demandability or produces its e,tinguishment9ote8uspensi"e term # only speci%es when the obligation isdemandable

'*BIO "s! 3O9IIO9'*BIO 3O9IIO9

Ful%llment 2 e"ent which musthappen sooner orlater e"en if timecannot be determined

2 is an uncertaine"ent 0future anduncertain1

Beference totime

2 Always refers to thefuture

2 may under thelaw refer to thepast

InCuence onthe obligation

2 merely %,es thetime or thee+caciousness of an obligation

2 3auses anobligation toarise or to cease

i=erent 6inds of erms and 'eriodsA

! e%nite # the e,act date or time is ;nown and gi"en&! Inde%nite # something that will surely happen) bu

the date of happening is un;nown

! egal # period granted under the pro"ision of the law&! 3on"entional or 7oluntary # period agreed upon o

stipulated by the parties(! Gudicial # the period or term %,ed by the courts

3! *, die # a period with suspensi"e e=ect! Obligation

begins only from a day certain) upon the arri"al ofthe period





&! In diem # term with a resolutory e=ect! >p to a timecertain) the obligation remains "alid) but upon thearri"al of said period) the obligation terminates

3ondition # when you are not e"en sure if something willhappen as a fact or not

Acceleration 3lause # clause which e,pressly stipulates thatupon failure to pay installment for a certain month) the wholedebt should thereupon become at once payable!

a;e note:

A lease on a Nmonth2to2month basis is one with a*FI9I* term! In this ;ind of agreement) the lease is deemedfrom month to month) and the lessor is allowed to terminatethe lease after each month) pro"ided there is due notice!

B*Q>I8I*8 FOB A 7AI '*BIO OB *B5! It must refer to the F>>B*&! It must be 3*BAI9 0sure to come1 but can be

*-*9*(! It must be '<.8I3A and */A. possible

*=ect of a Fortuitous e"ent2 9o one is still liable for this! he obligation is

e,tinguished

Article 11$7

0n case of loss, deterioration or im&rovement of t'e t'ing before t'e arrival of t'e day certain, t'erules in Article 11C? s'all be observed.

2 In case of loss) deterioration or impro"ement of thething *FOB* the arri"al of the day certain) the rulesin article T shall be obser"ed

2 3ontemplates on a 8>8'*98I7* term

Article 11$5 Anyt'ing &aid or delivered before t'e arrival of

t'e &eriod, t'e obligor being unaware of t'e &eriod or believing t'at t'e obligation 'as become due and demandable, may be recovered, wit' t'e fruits and interests.

2 al;s about 'B*5A>B* payment2 8imply means that a debtor can reco"er his

payments of debts as well as the fruits and interestsif he paid before the arri"al of period and he wasunaware that the time has not yet accrued!

2 Only apply to OI/AIO98 O /I7*

a;e note: if debtor ;new that the arri"al of period has not yetcome but paid) he can no longer reco"er what he paid for!

If both the debtor and creditor implicitly changed theperiod) the debtor could no longer reco"er payment!

Q: Within what period must reco"ery be made if the debtordid not ;now that payment was not yet due?A: efore the debt matures 0regarding what was paid1! *"enafter maturity 0regarding interest1 for after all the creditor was

in A FAI<! ut note that the rigt prescribes 5 earsa-ter premature pament9

Article 11$68'enever in an obligation a &eriod is

designated, it is &resumed to 'ave been establis'ed for t'e benet of bot' t'e creditor and t'e debtor,unless from t'e tenor of t'e same or ot'er circumstances it s'ould a&&ear t'at t'e &eriod 'asbeen establis'ed in favor of one or of t'e ot'er.

2 he designation of a period is generally for the*9*FI of O< the creditor and the debtor*,! When there is I9*B*8 stipulated 0debtor #gi"en enough time to pay$ creditor # can earn fromthe interest1

/eneral rule: creditor cannot demand performance of theobligation before e,piration of the period and debtor cannotperform the obligation before the e,piration of the period!

9ote: this article applies if the setting of period is "oluntary ocon"entional! It is 9O applicable if period is set . 3O>B

0judicial1

2 *,ceptions:o erm is for the best of the debtor alone

0debtor reDuired to pay only at the end1o erm is for the bene%t of the creditor alone

0creditor can demand at any time) but hecannot be compelled to accept paymenbefore the e,piration of the period1

Article 11$!0f t'e obligation does not a &eriod, but from

its nature and t'e circumstances it can be inferredt'at a &eriod was intended, t'e courts may t'eduration t'ereof.

-'e courts s'all also t'e duration of t'e &eriod w'en it de&ends u&on t'e will of t'e debtor.

0n every case, t'e courts s'all determine suc' &eriod as may under t'e circumstances 'ave been &robably contem&lated by t'e &arties. Once ed byt'e courts, t'e &eriod cannot be c'anged by t'em.

2 If the obligation has no %,ed period but there was aclear intention to ha"e one) the court may %, theduration thereof! 3ourt also %,es period if period isbased on the will of the debtor

2 Applies only where a 3O9BA3 OF *A8* clearlye,ists

8>55AB. OF ( I98A93*8 <A 3O>B FI- '*BIO! If the obligation does not %, a period) but from its

nature and the circumstances it can be inferred thata period was intended by the parties

&! If the duration of the period depends upon the will othe debtor 0 I will pay you when I li;e or the day that I%,1

(! If the debtor binds himself to pay when his meanspermit to do so

9ote: once the date is %,ed) parties could no longer change it

When the 3ourt 5A. 9O %, the erm! When no term was e"en intended 0'>B* obligation1&! When obligation is 'A.A* on *5A9(! When speci%c periods are pro"ided for in the law

0*A/ '*BIO1 e,! *mployment contract: time fopayment of salary

Q: Within what period must the action to %, the period bebrought?A: within the proper prescripti"e period for speci%cperformance if a period had been originally %,ed) but to becounted from the perfection of the contract

he 'B*83BI'I7* '*BIO I8 L .*AB8

a;e 9ote: 3ourt determines the period by considering thetime probably contemplated by the parties! he parties my ocourse change the period by mutual agreement) or may e"en

( a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




disregard the same in which case) the obligation becomes apure one) and demandable at once!

Article 11$"-'e debtor s'all lose every rig't to ma+e use

of t'e &eriod:(1) 8'en after t'e obligation 'as been contracted, 'ebecomes insolvent, unless 'e gives a guaranty or security for t'e debt;() 8'en 'e does not furnis' to t'e creditor t'eguaranties or securities w'ic' 'e 'as &romised;(") 8'en by 'is own acts 'e 'as im&aired said

guaranties or securities after t'eir establis'ment, and w'en t'roug' a fortuitous event t'ey disa&&ear,unless 'e immediately gives new ones eually satisfactory;(%) 8'en t'e debtor violates any underta+ing, inconsideration of w'ic' t'e creditor agreed to t'e

&eriod;() 8'en t'e debtor attem&ts to abscond.

2 ebtor lose e"ery right to ma;e use of the periodwhen:

o <e becomes insol"ent) unless he gi"es a

guaranty or security for the debtQ: When is a debtor considered insol"ent? 8houldthere be a judicial proceeding or declaration?A: Gudicial declaration is not necessary in this case!

<e is insol"ent if his obligation e,ceeds his assets!

o <e does not furnish the creditor the

guarantees or securities which he haspromised 0ma;ing a mortgage in fa"or of athird person instead of the creditor1

o y his own acts he has impaired said

guarantees or securities after theirestablishment$ through fortuitous e"entthey disappear 0the security will disappear1unless he immediately gi"es new oneseDually satisfactorily

here are two situations in this

pro"ision a;e note: he security) if destroyed during thefortuitous e"ent) O 9O e,tinguishes the obligation

because this is not the real subject of the obligation! he more because of the fact that such is also ageneric thing!

o ebtor "iolates any underta;ing

o ebtor attempts to abscond 0debtor tries to

escape the obligation is a sign of bad faith!Intent is su+cient1

Article 11$$ A &erson alternatively bound by dierent

&restations s'all com&letely &erform one of t'em.

-'e creditor cannot be com&elled to receive &art of one and &art of t'e ot'er underta+ing.

2 'erson alternati"ely bound by di=erent prestationshall completely perform one of them

2 3reditor should not accept a portion of the di=erentprestations

Article 14((-'e rig't of c'oice belongs to t'e debtor,

unless it 'as been e&ressly granted to t'e creditor.

-'e debtor s'all 'ave no rig't to c'oose t'ose &restations w'ic' are im&ossible, unlawful or w'ic'could not 'ave been t'e object of t'e obligation.

2 he right to choose which of the prestation should beacted upon is on the hands of the *OB unless it is*-'B*88. granted to the creditor

2 ebtor cannot choose those which are impossibleunlawful or which could not ha"e been the object othe obligation! hose underta;ing which are not included

among those from which the obligor may select&! hose which are not yet due and demandable at

the time the selection is made(! hose which by reason) isP 0changed loo;s

because of fault1

Article 14(1-'e c'oice s'all &roduce no eect ece&t from

t'e time it 'as been communicated.2 he choice among the alternati"e obligations should

be communicated OBA. or WBI*9 0implied oe,pressed1 to the creditor before it ta;es e=ect

9ote: any form may be employed pro"ided that the otheparty is properly noti%ed of the selection

2 Once choice is made) debtor can 9O O9/*BB*9O>93* I and ta;e an alternati"e which was %rstopen to him

9ote: once choice is communicated to the creditor) the

obligation becomes simple thus ceasing to be alternati"e!

Beason behind the need for 3ommunication:2 It is to inform the creditor that the obligation is now a

simple one) no longer alternati"e) and if already duefor the creditor to recei"e the object being deli"ered

B*Q>I8I*8 FOB <* 5A6I9/ OF <* 3<OI3*! 5ade properly # creditor or agent is informed&! Full ;nowledge that a selection is indeed being made(! 5ade "oluntary and freely4! 5ade in due time # before or upon maturity

0otherwise) the creditor can sue him in court with analternati"e relief as Ngi"e this or that1

@! 5ade to all the proper personsK! 5ade without the conditions unless agreed to by the

creditorJ! 5ay be wai"ed) e,pressly or impliedly

Article 14(4-'e debtor s'all lose t'e rig't of c'oice w'en

among t'e &restations w'ereby 'e is alternativelybound, only one is &racticable

2 If only one of the prestations is left) then the debtohas no other choice but to deli"er it

Q: What are the instances where an alternati"e obligationbecomes simple?A:

! When the choice has been communicated&! When the choice has not been communicated) but by

some circumstances only is left to be practicable

Article 14(0f t'roug' t'e creditorEs acts t'e debtor cannot

ma+e a c'oice according to t'e terms of t'e obligation,t'e latter may rescind t'e contract wit' damages.

2 If through the creditorMs acts the debtor cannot ma;ea choice according to the terms of the obligation) thedebtor ma rescind the contract with damages

4 a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




9ote: the contract is 9O A>O5AI3A. B*83I9*! ebtormay allow the obligation to remain in force insofar as thepossible choice or choices are in"ol"ed!

Article 14(7-'e creditor s'all 'ave a rig't to indemnity for

damages w'en, t'roug' t'e fault of t'e debtor, all t'et'ings w'ic' are alternatively t'e object of t'eobligation 'ave been lost, or t'e com&liance of t'eobligation 'as become im&ossible.

-'e indemnity s'all be ed ta+ing as a basis

t'e value of t'e last t'ing w'ic' disa&&eared, or t'at of t'e service w'ic' last became im&ossible.6amages ot'er t'an t'e value of t'e last t'ing or service may also be awarded.

2 If the alternati"es are lost due to the negligence orfault of the debtor) the creditor ha"e the right toindemnity for damages

Q: What is the basis for the indemnity?A: the "alue of the last thing which disappeared or ser"icewhich last become impossible

9ote: if alternati"e and & are destroyed due to debtorMs faultbut the third is destroyed due to fortuitous e"ent) theobligation is e,tinguishedS

Article 14(58'en t'e c'oice 'as been e&ressly given to

t'e creditor, t'e obligation s'all cease to bealternative from t'e day w'en t'e selection 'as beencommunicated to t'e debtor.

>ntil t'en t'e res&onsibility of t'e debtor s'all be governed by t'e following rules:

(1) 0f one of t'e t'ings is lost t'roug' afortuitous event, 'e s'all &erform t'eobligation by delivering t'at w'ic' t'e creditor s'ould c'oose from among t'e remainder, or t'at w'ic' remains if only one subsists;() 0f t'e loss of one of t'e t'ings occurst'roug' t'e fault of t'e debtor, t'e creditor may claim any of t'ose subsisting, or t'e &riceof t'at w'ic', t'roug' t'e fault of t'e former,'as disa&&eared, wit' a rig't to damages;(") 0f all t'e t'ings are lost t'roug' t'e fault of t'e debtor, t'e c'oice by t'e creditor s'all fall u&on t'e &rice of any one of t'em, also wit'indemnity for damages.

-'e same rules s'all be a&&lied to obligationsto do or not to do in case one, some or all of t'e

&restations s'ould become im&ossible.

2 If choice is e,pressly gi"en to the creditor) the lattershall also communicate his choice to the debtor

9ote: right of choice can also be e,pressly granted to a ( rd

person! 0should be agreed upon by the parties1

8>55AB. OF B>*8 0&L4 A9 &L@1Bight of 3hoice elongs to the ebtor

oss! Fortuitous *"ent

a! All objects 2 obligation is e,tinguishedb! One or some # debtor chooses from the

remainder&! Fault or negligence of the ebtor

a! All objects # obligation is 9O e,tinguishedobject con"erted to monetary2liable "alue"alue of object which last disappeareddamages

b! One or some # choose from the remaindebut creditor cannot claim for damages

Bight of 3hoice elongs to the 3reditoross

! Fortuitous *"enta! All objects # obligations is e,tinguishedb! One or some # creditor chooses from the

remainder$ no liability on the part of thedebtor

&! Fault or negligence of debtora! All objects # "alue of any subject chosen

plus damagesb! One or some # chose any object) lost or not

If object chosen is already lost # "alue plusdamages$ if not lost # no damages

Article 14(68'en only one &restation 'as been agreed

u&on, but t'e obligor may render anot'er insubstitution, t'e obligation is called facultative.

-'e loss or deterioration of t'e t'ing intendedas a substitute, t'roug' t'e negligence of t'e obligor,

does not render 'im liable. *ut once t'e substitution'as been made, t'e obligor is liable for t'e loss of t'esubstitute on account of 'is delay, negligence or fraud.

2 3ontemplates on FA3>AI7* OI/AIO9o It is one where only one prestation has been

agreed upon but the obligor may rendeanother in substitution

A*B9AI7* 78! FA3>AI7* OI/AIO9

AL%0&NA%+:0 ;AC*L%A%+:0!If object is lost due to

fortuitous e"ent) debtor willha"e to deli"er object &

!If object is lost due tofortuitous e"en) theobligation is e,tinguished0no need to deli"er objec&1

&! 7arious things are due) butthe gi"ing of one issu+cient

&!Only one thing is principallydue

(! If one of the prestation isillegal) the others may be"alid and the obligationremains

(! If the principal obligation is"oid) and there is nonecessity of gi"ing thesubstitute! 0the nullity othe principal carries with ithe nullity of the accessoryor substitute1

4! If it is impossible to gi"e alle,cept one) that last onemust still be gi"en

4!If it is impossible to gi"ethe principal) the substitutedoes not ha"e to be gi"enif it is impossible to gi"e thesubstitute) the principamust still be gi"en

@! he right to choose may begi"en either to debtor orcreditor

@!he right of choice is gi"enonly to the debtor

Q: When does the substitution ta;e e=ect?A: in order that the creditor will be bound by the substitutionit is necessary that the debtor must communicate such fact tothe creditor

Q: What is the e=ect of loss of substitute?

@ a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




A: before the substitute is made by the obligor) the loss ordeterioration of the thing intended as a substitute) throughthe negligence of the said obligor) does not render him liable!Once the substitution has been made) the debtor shall beliable for loss or deterioration!

FO+N% AN 'OL+A&3 O2L+GA%+ON

Article 14(!-'e concurrence of two or more creditors or of

two or more debtors in one and t'e same obligationdoes not im&ly t'at eac' one of t'e former 'as a rig't

to demand, or t'at eac' one of t'e latter is bound torender, entire com&liance wit' t'e &restation. -'ere isa solidary liability only w'en t'e obligation e&ressly so states, or w'en t'e law or t'e nature of t'eobligation reuires solidarity.

2 8imply means that you do 9O render or demand the*9IB* compliance with the prestation to yourself

9ote: 8olidary liability arises only if it is e,pressly stipulated inthe contract) or when the law or the nature of the obligationreDuires solidarity!

GOI9 78! 8OIAB. OI/AIO982 Goint # each obligor answers only for a part of the whole

liability and to each obligee belongs only a part of the

correlati"e rights

2 8olidary or Goint and 8e"eral # the relationship between theacti"e and the passi"e subjects is so close that each of theformer or of the latter may demand the ful%llment of ormust comply with the whole obligation! 0can as; forreimbursement to others who are liable or subject torecei"e1

Bemember: if there is only one debtor and creditor) the rulesin this article O 9O apply

/*9*BA B>* 0when there are & or more debtors orcreditors1: GOI9

2 In the absence of any fact or law which would ma;e

the defendants solidarily liable) the presumption isthat they are only GOI9. liable*,ceptions:

a! here is a stipulation in the contract that theobligation is solidary

b! When the nature of the obligation reDuires liability tobe solidary

c! When the law declares the obligation to be solidary

Article 14("0f from t'e law, or t'e nature or t'e wording of

t'e obligations to w'ic' t'e &receding article referst'e contrary does not a&&ear, t'e credit or debt s'all be &resumed to be divided into as many s'ares ast'ere are creditors or debtors, t'e credits or debtsbeing considered distinct from one anot'er, subject tot'e 5ules of !ourt governing t'e multi&licity of suits.

2 al;s about the general rule when there are & ormore debtor or creditor

2 3O98*Q>*93*:o he debt shall be di"ided into as many

shares as there are creditors or debtorso he credit or the debts will be distinct from

one another) > regarding the brining of the action in court) the Bules of 3ourtgo"erning the multiplicity of suits will befollowed

'BI93I'*8 0GOI9 OI/AIO91A! Goint obligation is presumed by law! In joint obligations) the creditor is entitled to a

proportionate part of the credit and the debtor isliable only to a proportionate part of the debt 0toeach his own1

3! he debts or credits are being considered distincand separate form one another subject to the rules ofcourt go"erning the multiplicity of suits

9ote:

3ourtMs FI9A G>/5*9 outweighs stipulations in contracts!

3O98*Q>*93*8 OF GOI9 IAII.! 7itiated consent on the part of one debtor does no

a=ect the others&! Insol"ency of one debtor does not ma;e others

responsible for his share(! emand by the creditor on one joint debtor puts him

in default) but not the others since the debts aredistinct

4! When the creditor interrupts the running of theprescripti"e period by demanding judicially form onethe others are not a=ected

IAIII*8 OF 'AB9*B8! If it arises out of 3O9BA3) the liability is GOI9 o

pro rata! *,ception # claiming compensation foemployeeMs death in line of duty&! It if arises out of a 3BI5* or a Q>A8I2*I3) the

liability is 8OIAB.

Article 14($0f t'e division is im&ossible, t'e rig't of t'e

creditors may be &rejudiced only by t'eir collectiveacts, and t'e debt can be enforced only by &roceedingagainst all t'e debtors. 0f one of t'e latter s'ould beinsolvent, t'e ot'ers s'all not be liable for 'is s'are.

2 3ontemplates on I9I7I8I* GOI9 OI/AIO90joint with respect to the parties but indi"isible withrespect to the ful%llment of the obligation1

2 Ful%llment of obligations reDuires the consent of althe debtors) although each for his part! On the sideof the creditors) collecti"e action is also reDuired foacts which may be prejudicial!

3haracteristics:! 3reditor must proceed against A the joint debtors

for compliance is possible only if all the joint debtorswould act O/*<*B

&! emand is made on A the joint debtors(! If any of the joint debtors be insol"ent) the others

shall not be liable for his share4! If there is joint creditors) deli"ery must be made to

all) unless someone is speci%cally authoriHed by theothers

@! *ach joint creditor is allowed to renounce hisproportionate credit

9ote: A demand by one joint creditor is not a demand by the

others

Article 141(-'e indivisibility of an obligation does not

necessarily give rise to solidarity. @or does solidarityof itself im&ly indivisibility.

2 he indi"isibility of an obligation does not necessarilygi"e rise to solidarity! 9or does solidarity of itselimply indi"isibility

K a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




In e=ect you can ha"e a joint di"isible obligation 0e,!5onetary obligation1) joint indi"isible obligation 0e,! 3ar1)solidary di"isible obligation) solidary indi"isible obligation

Indi"isibility # refers to the 8>G*3 5A*B8olidarity # refers to the I* *W**9 <* 'ABI*8

IFF*B*9 6I98 OF 8OIABI.! Acti"e 8olidarity # on the part of the creditor or

obligee&! 'assi"e 8olidarity # on the part of the debtor or

obligor

(! 5i,ed 8olidarity # on both parts4! 3on"entional 8olidarity # agreed upon by the parties@! egal 8olidarity # that imposed by law

Article 1411=olidarity may eist alt'oug' t'e creditors and

t'e debtors may not be bound in t'e same manner and by t'e same &eriods and conditions.

2 ebtors may still be solidarily liable despite thedi=erence on terms or conditions

2 o do: the whole solidary obligation can be reco"eredfrom A9. of the solidary debtors 5I9>8 the share of those with unmatured conditions or terms

*FF*3 OF A3I7* 8OIABI. 0it will only happen if theobligation stipulates or the law so pro"ides or the nature of

the obligation so reDuires1

5utual Agency # each creditor is empowered to e,erciseagainst the debtor or debtors not only the rights whichcorresponds to him) but also all the rights which correspond tothe other creditors) with the conseDuent obligation to renderan accounting of his acts to such creditors!

Anyone of the creditors can collect the full amount from thedebtor but he must ma;e an account and reimburse theshares of his fellow creditors

*FF*3 OF 'A88I7* 8OIABI.

Anyone of them is compelled to ma;e the full amount but hasthe right to obtain reimbursement from other debtor plus theinterest!

*ach solidary debtor) insofar as the creditor or creditors areconcerned) is the debtor of the entire amount$ howe"er) withrespect to his co2debtors) he is a debtor only to the e,tent of his share in the obligation!

Article 14147ac' one of t'e solidary creditors may do

w'atever may be useful to t'e ot'ers, but not anyt'ing w'ic' may be &rejudicial to t'e latter.

2 8olidary creditors may do useful) not prejudicial actso ene%cial # to interrupt the running of

prescription9ote: the prescription of actions isinterrupted when they are %led before the

courts*,! .ou demand full payment from debtorwill stop the prescripti"e period

o 'rejudicial # remission or condonation

2 9ote: as far as the solidary creditors are concerned)the creditor who performed the act shall incur theobligation and damages to his fellow creditors

Article 141 A solidary creditor cannot assign 'is rig'ts wit'out

t'e consent of t'e ot'ers.

2 /B: a solidary creditor cannot assign his rightswithout consent of the others

2 Beason for such rule: because such obligation impliesmutual agency and mutual con%dence! If a creditordoes acts that is prejudicial to the others) then theirrights are endangered) hence) the necessity of theirconsent!

2 3riticism: at some cases) there is really no B>8that e,ists between two solidary creditors when thereason why they became solidary is due to theoperation of law 0e,cept when it arises from

"oluntary contracts12 If one of the creditors assigned without consent and

the person assigned collects from the debtor) suchcollection is not considered "alid! his is to a"oidconni"ance so as to result e,tinguishment oobligation through payment

2 9ote: debtor can also refuse to pay (rd person if thelatter claims to ha"e been assigned by one of thecreditors!

Q: what if assignment was made in fa"or of another solidarycreditor without the consent of the other creditor?A: there is no "iolation! In such case there can be no in"asionof the personal or con%dential relationship among the solidarycreditors!

Article 1417-'e debtor may &ay any one of t'e solidarycreditors; but if any demand, judicial or etrajudicial,'as been made by one of t'em, &ayment s'ould bemade to 'im.

2 8imply contemplates to whom the debtors must payo o any of the solidary creditors 0if there is no

demand made1o *,ception: payment must be made to

solidary creditor who made a demand0judicial or e,trajudicial1

2 9ote: if one of the creditors already sued for action) itis essential that the %rst action be %rst terminatedbefore other creditors could demand! <owe"er) if the%rst action was just an e,trajudicial demand and thedebtor does not pay) the other creditor may now %lea judicial demand!

Article 1415@ovation, com&ensation, confusion or

remission of t'e debt, made by any of t'e solidarycreditors or wit' any of t'e solidary debtors, s'alletinguis' t'e obligation, wit'out &rejudice to t'e

&rovisions of Article 11?.-'e creditor w'o may 'ave eecuted any of

t'ese acts, as well as 'e w'o collects t'e debt, s'allbe liable to t'e ot'ers for t'e s'are in t'e obligationcorres&onding to t'em.

2 3ontemplates on the di=erent prejudicial acts of thecreditor

2 *=ect: shall e,tinguish the obligation) withou

prejudice to the pro"ision of article &T 0loo; at thepro"ision1

! 9o"ation2 5odi%cation of an obligation by changing its

object or principal conditions) or by substitutionthe person of the debtor) or by subrogating theperson of the debtor) or by subrogating a thirdperson in the rights of creditor

2 It gi"es rise to a new obligation

&! 3ompensation

J a n g e l E s n o t e sO I / A I O 9 8 3 O 9 B A 3 8




2 a;es place when two persons) in their own right)are creditors and debtors of each other

2 5ay be total or partial depending on theamount in"ol"ed

otal 3ompensation: automatically e,tinguish the obligation

(! 3onfusion or 5erger2 a;es place when the characters of creditor and

debtor are merged in the same person 0originaldebtor e"entually becomes a creditor of his ownpayment1

2 >sually happens when the creditors endorsedebtorsM payment to another person and suchperson endorses the payment bac; to one of thedebtors!

2 In this case) the solidary obligation is*-I9/>I8<*

4! Bemission or Wai"er2 Act of pure liberality whereby a creditor

condones the obligation of the debtor! 0tells thedebtor Nforget about the whole thing1

2 Bemission may be OA or 'ABIA 0in partial)can remit only one of the debtors obligation1

2 In this case) the co2debtor in a total remissionbene%ts from the act of remission

Article 1416-'e creditor may &roceed against any one of t'e solidary debtors or some or all of t'emsimultaneously. -'e demand made against one of t'ems'all not be an obstacle to t'ose w'ic' may subseuently be directed against t'e ot'ers, so longas t'e debt 'as not been fully collected.

2 he creditor may proceed against anyone of thesolidary debtors or some or all of themsimultaneously so long as the debt has not been fullycollected

2 A suit %led against one does not mean a wai"er on%ling a suit against the other debtors in the future! he creditor may do so if he wants to!

2 9ote: this applies only to 'A88I7* 8OIAB. 0ormi,ed solidarity1 obligations) not joint because in thelatter) you cannot let one of the debtor pay for theotherMs debt!

'A88I7* 8OIABI. 78! 8>B*.8<I'8urety 3ase: 'almares "s! 3A 0loo; at bullet points for 83sdecision18imilarity

! oth the solidary debtor and the surety 0assumes asolidary role1 guarantee for another person

&! oth can demand for reimbursement

i=erence! he solidary debtor is indebted for his own share

only$ the surety is indebted only for the share of theprincipal debtor

&! 8olidary debtor can be reimbursed what he paid

5I9>8 his share$ surety can be reimbursed by thewhole amount he paid for

(! If a solidary debtor recei"es e,tension) the otherdebtor does not get the same e,tension! If a principaldebtor recei"es an e,tension without the suretyMsconsent) the surety is released!

• In suretyship) there is but one contract) and thesurety is bound by the same agreement which bindsthe principal

• emand on the sureties is not necessary beforebringing suit against them since the commencemenof the suit is su+cient demand

• A surety is not entitled to be gi"en notice of theprincipalMs default

9ote: guarantor # your liability is subsidiary! 3reditor should%rst demand from the principal! It is only when the principal isinsol"ent that the creditor could go after the guarantor

Article 141!3ayment made by one of t'e solidary debtors

etinguis'es t'e obligation. 0f two or more solidarydebtors oer to &ay, t'e creditor may c'oose w'ic'oer to acce&t.

4e w'o made t'e &ayment may claim from 'isco$debtors only t'e s'are w'ic' corres&onds to eac',wit' t'e interest for t'e &ayment already made. 0f t'e

&ayment is made before t'e debt is due, no interestfor t'e intervening &eriod may be demanded.

8'en one of t'e solidary debtors cannot,because of 'is insolvency, reimburse 'is s'are to t'edebtor &aying t'e obligation, suc' s'are s'all be borneby all 'is co$debtors, in &ro&ortion to t'e debt of eac'.

2 'ayment made by one of the solidary debtors

e,tinguishes the obligation2 <e who made the payment may claim from his co

debtors only the share which corresponds to eachwith the interests for the payment already made

2 When one of the solidary debtors cannot reimbursehis share due to his insol"ency) such share shall beborne by all his co2debtors) in proportion to tedebt o- eac! 0insol"ency of one should beshouldered by the rest1

'ayment # one of the ways which an obligation is e,tinguished2 3onsists in the deli"ery of the thing or the rendition

of the ser"ice which is the object of obligation

8ummary to whom shall the solidary debtor pay:! Any of the solidary creditor

&! If there was a demand # to the demanding creditoonly(! If there were & or more demands # to the %rst who

demanded 0priority in time is priority in right14! If there were & or more demands at the same time #

select form any who demanded

Article 141"3ayment by a solidary debtor s'all not entitle

'im to reimbursement from 'is co$debtors if suc' &ayment is made after t'e obligation 'as &rescribed orbecome illegal.

2 'ayment by a solidary debtor shall not entitle him toreimbursement from his co2debtors if such paymentis made after the obligation has prescribed obecome illegal

2 9ote: if debtor A paid 3 without ;nowing that thedebt had prescribed) A can reco"er from 3 on thebasis of solution indebiti

'rescription # one of the modes of e,tinguishing obligation0prescripti"e period for the creditor to collect1

Article 141$-'e remission made by t'e creditor of t'e

s'are w'ic' aects one of t'e solidary debtors doesnot release t'e latter from 'is res&onsibility towards





t'e co$debtors, in case t'e debt 'ad been totally &aid by anyone of t'em before t'e remission was eected.

2 he remission 0or condonation1 made by the creditorof the share which a=ects one of the solidary debtorsdoes not release the latter from his responsibilitytowards the co2debtors) in case the debt had beentotally paid by anyone of them before the remissionwas e=ected

2 Beason: since payment e,tinguishes the obligation)there is nothing more to remitS

2 For this to be "alid # there should be an acceptance

of the debtor2donee 0if you did not accept thedonation through remission) then your obligation isnot e,tinguished1

Article 144(-'e remission of t'e w'ole obligation,

obtained by one of t'e solidary debtors, does not entitle 'im to reimbursement from 'is co$debtors.

2 he remission of the whole obligation) obtained byone of the solidary debtor) does not entitle him toreimbursement from his co2debtors

2 Beason: there is nothing to reimburse because thedebtor himself who o=ered payment did not reallypay anything at all!

Article 14410f t'e t'ing 'as been lost or if t'e &restation'as become im&ossible wit'out t'e fault of t'esolidary debtors, t'e obligation s'all be etinguis'ed.

0f t'ere was fault on t'e &art of any one of t'em, all s'all be res&onsible to t'e creditor, for t'e

&rice and t'e &ayment of damages and interest,wit'out &rejudice to t'eir action against t'e guilty or negligent debtor.

0f t'roug' a fortuitous event, t'e t'ing is lost or t'e &erformance 'as become im&ossible after oneof t'e solidary debtors 'as incurred in delay t'roug't'e judicial or etrajudicial demand u&on 'im by t'ecreditor, t'e &rovisions of t'e &receding &aragra&'s'all a&&ly.

2 3ontemplates on e=ect of loss or impossibility:o If without fault of solidary debtors # no

liabilityo If with fault # there is liability for all debtors

but subject for reimbursement of thepayment of damages from the debtor who isat fault 0also for damages and interest1

o oss because of a fortuitous e"ent AF*B

default # here there will be liability becauseof the *FA> 0same pro"ision of secondsituation1

Article 1444 A solidary debtor may, in actions led by t'e

creditor, avail 'imself of all defenses w'ic' are derived

from t'e nature of t'e obligation and of t'ose w'ic'are &ersonal to 'im, or &ertain to 'is own s'are. 8it'res&ect to t'ose w'ic' &ersonally belong to t'eot'ers, 'e may avail 'imself t'ereof only as regardst'at &art of t'e debt for w'ic' t'e latter areres&onsible.

2 'ro"ides for defenses for actions %led by the creditor2 efenses may be a complete defense for all debtors

unless such defense is personal thus applicable onlyto one or few

6inds of efensesa! eri"ed from 9A>B* of the obligation 0this is a

3O5'** defense1i! ac; of consideration or causeii! Absolute simulation 0contract is totally %ctitious1iii! Illegal considerationi"! *,tinguishment of obligation 0whole debt is paid

remitted) or has prescribed1"! 9on2ful%llment of the suspensi"e condition 0i

made upon the whole object or upon all thedebtors1

"i! 8tature of frauds"ii! When A debtors are incapacitated to gi"e

consent"iii! When there are 7I3*8 OF 3O98*9 0"itiated

consent1 on the part of A the debtors

b! hose that are '*B8O9A to the debtor sued 0also a3O5'** defense unless the defense is 9O9F>FI5*9 .* of a 3O9IIO9 or the 9O92ABBI7A .* of the term) this is only a 'ABIA *F*98*1

3omplete defense! eri"ed from the nature of the obligation&! 'ersonal to the debtor

'artial defense! 'ersonal defense of his co2debtor

9ote: he contract entered into by the minors is "oidable!

+:+'+2L0 AN +N+:+'+2L0 O2L+GA%+ON'

Article 144-'e divisibility or indivisibility of t'e t'ings

t'at are t'e object of obligations in w'ic' t'ere is onlyone debtor and only one creditor does not alter ormodify t'e &rovisions of !'a&ter of t'is -itle.

2 3ontemplates on di"isible and indi"isible obligation2 i"isibility or indi"isibility refers to the nature of the

obligation whether it is capable of partiaperformance or not

i"isible obligation2 One capable of partial performance2 6inds of i"ision

o Q>A9IAI7* di"ision # depends on

Duantityo Q>AIAI7* di"ision # depends on Duality

irrespecti"e of Duantity$ e,! One childinherits land) the other inherit cash

o I9**3>A OB 5OBA di"ision # one that

e,ists merely in the mind) and not inphysical reality$ e,! 8isters owning acommon car) the half share is only in themind

Indi"isible obligation2 One not capable of partial performance2 6inds of Indi"isibility

o 3O97*9IO9A indi"isibility # made bycommon agreement

o 9A>BA or A8O>* indi"isibility # it is

due to the nature of the object ounderta;ing$ e,! rip to manila

o */A indi"isibility # if so pro"ided by law

I9I7I8II. "s! 8OIABI.I9I7I8II. 8OIABI.

!Befers to the nature of obligation

!Befers to tie between theparties

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&!5ay e,ist e"en if there isonly one debtor and onlyone creditor

&!9eeds at least two debtorsor creditors

(!the fault of one is not thefault of the other 0can be a joint1

(!he fault of one is the faultof others

Article 1447 A joint indivisible obligation gives rise to

indemnity for damages from t'e time anyone of t'edebtors does not com&ly wit' 'is underta+ing. -'edebtors w'o may 'ave been ready to fulll t'eir

&romises s'all not contribute to t'e indemnity beyond t'e corres&onding &ortion of t'e &rice of t'e t'ing or of t'e value of t'e service in w'ic' t'e obligationconsists.

2 A joint indi"isible obligation gi"es rise to indemnityfor damages from the time anyone of the debtorsdoes not comply with his underta;ing

2 <ere) the object is I9I7I8I* and yet the partiesare merely bound GOI9.

*=ect of noncompliance:! If joint indi"isible: he obligation is con"erted into a

monetary one for indemnity! he ;ind of obligation can be enforced onlyby proceeding against A of the debtors! If anyone of the debtors should fail or refuse

to comply with the obligation) it is con"ertedinto one of indemnity for damages

a;e note: the person who is ready to pay is notliable for damages!

&! If solidary indi"isible: one of the debtors is liable topay e"erything and can later reco"er reimbursementfrom co2debtor

/B: creditor cannot be compelled to recei"e partial paymentsand debtor to pay partial payment!

*,ceptions:! When the obligation e,pressly stipulates the contrary&! When the di=erent prestations constituting the

objects of the obligation arte subject to di=erentterms and conditions

(! When the oblation is in part liDuidated and in partunliDuidated

Article 1445or t'e &ur&oses of t'e &receding articles,

obligations to give denite t'ings and t'ose w'ic' arenot susce&tible of &artial &erformance s'all be deemed to be indivisible.

8'en t'e obligation 'as for its object t'eeecution of a certain number of days of wor+, t'eaccom&lis'ment of wor+ by metrical units, or analogous t'ings w'ic' by t'eir nature are susce&tibleof &artial &erformance, it s'all be divisible.

4owever, even t'oug' t'e object or servicemay be &'ysically divisible, an obligation is indivisibleif so &rovided by law or intended by t'e &arties.

0n obligations not to do, divisibility or indivisibility s'all be determined by t'e c'aracter of t'e &restation in eac' &articular case.

2 3ontemplates on the following:o obligations that are deemed indi"isible:

Obligations to gi"e de%nite things

hose which are not susceptible of partia

performance 0e,! 3onduct a performanceconcert1

*"en if physically di"isible) yet the law

pro"ides it to be indi"isible *"en if physically di"isible) but the parties

intended it to be indi"isible

o Obligations that are deemed di"isible

If it is the e,ecution of a certain number o

days of wor; If it is the accomplishment of wor; by

metrical units If obligation is to pay a certain amount in

installments If it is the accomplishment of wor;

susceptible of partial performance

a;e note: in obligations to do) the presumption isindi"isibility! 'artial performance is eDual to non2performance his is the general rule for indi"isible obligations!Q: What is the test of di"isibility?A: whether the obligation is susceptible of partial complianceor not

Q: What is the e=ect of illegality on a di"isible contract?A: if the illegal term can be separated from the legal ones) thelatter may be enforced!

O2L+GA%+ON' #+%/ A P0NAL CLA*'0@booE page 47 penal clause defned

Article 14460n obligations wit' a &enal clause, t'e &enalty

s'all substitute t'e indemnity for damages and t'e &ayment of interests in case of noncom&liance, if t'ereis no sti&ulation to t'e contrary. @evert'eless,damages s'all be &aid if t'e obligor refuses to &ay t'e

&enalty or is guilty of fraud in t'e fulllment of t'eobligation.

-'e &enalty may be enforced only w'en it isdemandable in accordance wit' t'e &rovisions of t'is!ode.

'enal 3lause2 3O*B3I7* means to obtain from the debto

compliance2 It is an A33*88OB. >9*BA6I9/ to assume greate

liability in case of breach2 'urpose: it is to insure the performance of an

obligation and also to substitute for damages andpayment of interest incase of noncompliance 0if nostipulation to the contrary1

28>55AB. OF '>B'O8*:

! o insure the performance of the obligation&! o liDuidate the amount of damages to be awarded to

the injured party in case of breach of the principaobligation

(! In certain e,ceptional cases) to punish the obligor incase of breach of the obligation

6inds of 'enal 3lausesa! egal 'enal clause # one that is imposed by lawb! 3on"entional 'enal clause # that which has been

agreed upon by the partiesc! 8ubsidiary # when only the penalty may be as;edd! Goint # when both the principal contract and the pena

clause can be enforced

Q: What is the di=erence between a penal clause and acondition?

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A: A penal clause constitutes an obligation althoughaccessory$ the condition does not! herefore) the penalty maybecome demandable in default of the unperformed principalobligation) and sometimes jointly with it) while the condition isne"er demandable

Q: What are the instances that you can demand both thepenalty and the payment for damages?A:

a! When there is *-'B*88 8I'>AIO9 to the e=ectthat damages or interest may still be reco"ered)despite the presence of the penalty clause

b! When the debtor refuses to pay the penalty imposedin the obligation and he is sued

c! When the debtor is />I. of FBA> or OO in theful%llment of the obligation! 0why? ecause there canbe renunciation of an action to enforce liability forfuture fraud because this is against public policy andagainst the e,press pro"ision of the law!

9ote: A penalty may be enforced only when it is*5A9A*! Further) the penalty may be B*>3* if it isI9*Q>IO>8 or >93O983IO9A*!

Article 144!-'e debtor cannot eem&t 'imself from t'e

&erformance of t'e obligation by &aying t'e &enalty,save in t'e case w'ere t'is rig't 'as been e&ressly

reserved for 'im. @eit'er can t'e creditor demand t'efulllment of t'e obligation and t'e satisfaction of t'e &enalty at t'e same time, unless t'is rig't 'as beenclearly granted 'im. 4owever, if after t'e creditor 'asdecided to reuire t'e fulllment of t'e obligation, t'e

&erformance t'ereof s'ould become im&ossiblewit'out 'is fault, t'e &enalty may be enforced.

2 3ontemplates on the limitation on the right of thedebtor and that of the creditor:

2 /enerally) debtor cannot substitute penalty for theprincipal obligation e,cept if such right has been*-'B*88. reser"ed

2 /enerally) creditor cannot demand both ful%llmentand the penalty at the same time e,cept if such righthas been 3*AB. granted to him

Article 144"3roof of actual damages suered by t'e

creditor is not necessary in order t'at t'e &enalty may be demanded.

2 'roof of actual damages su=ered by the creditor is9O 9*3*88AB. in order that the penalty may bedemanded

2 'roof is not needed because the penalty isconsidered as a AWF> means for repairing lossesand damages

2 Ad"antage: e"en if the actual damage is less thanwhat was stipulated) you can still collect suchwithout pro"ing it

Article 144$

-'e judge s'all euitably reduce t'e &enalty w'en t'e &rinci&al obligation 'as been &artly or irregularly com&lied wit' by t'e debtor. 7ven if t'ere'as been no &erformance, t'e &enalty may also bereduced by t'e courts if it is iniuitous or unconscionable.

2 3ontemplates on situations when the penalty may bereduced by the court:

o When the obligation has been partly

complied with by the debtor

o When the obligation has been irregularly

complied with by the debtoro When the penalty is iniDuitous o

unconscionable) e"en if there has been noperformance at all

9ote: 'enalties which are iniDuitous or unconscionable is 9O7OI) but subject merely to eDuitable reduction!

Q: What are the situations wherein penal clause cannot beenforced?A:

! he breach is the fault of the creditor&! A fortuitous e"ent inter"ened) unless the debto

e,pressly agreed on his liability in case of fortuitouse"ents

(! he debtor is not yet in default

Article 14(-'e nullity of t'e &enal clause does not carry

wit' it t'at of t'e &rinci&al obligation.

-'e nullity of t'e &rinci&al obligation carrieswit' it t'at of t'e &enal clause.

2 the nullity of the penal clause does not carry with ithat of the principal obligation

2 the nullity of the principal obligation carries with i

that of the penal clause2 this is based on the principle that the accessory

follows the principal and not the other way aroundreason: the penal clause is merely an access



PRE MID Obligations and Contracts 1156-1230 - Lecture Notes

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Transcript of PRE MID Obligations and Contracts 1156-1230 - Lecture Notes