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LAW (OBLIGATIONneeded toLEGE) e.EX see this pictur

ATENEO CENTRAL BAR OPERATIONS 2007Civil Law

SUMMER REVIEWER

OBLIGATIONS AND CONTRACTS neither party may unilaterally evade his obligationin the contract, unless:

TITLE 1 - OBLIGATION

Art. 1156. An obligation is a juridical necessityto give, to do or not to do. (n)

a. Contract authorizes itb. Other party assentsParties may freely enter into any stipulationsprovided they are not contrary to law, morals,good customs, public order or public policy

QUASI-CONTRACT (OBLIGATION EX QUASI-CHAPTER 1. – GENERAL PROVISIONS CONTRACTU)

See Arts. 1156 - 1162

ELEMENTS OF AN OBLIGATION:1. Active subject (obligee/creditor): one in whose

favor the obligation is constituted2. Passive subject (obligor/debtor): one who has

Juridical relation resulting from lawful, voluntaryand unilateral acts, which has for its purpose, thepayment of indemnity to the end that no one shallbe unjustly enriched or benefited at the expenseof another.Distinguished from other Sources

the duty of giving, doing or not doing3. Object: prestation; the conduct which has to be

observed by the debtor/obligor

REQUISITES1. it must be licit (otherwise it is void)2. it must be possible, physically and juridically

(otherwise it is void)3. it must be determinate or determinable

(otherwise it is void)4. it must have pecuniary value

a. Vinculum Juris: juridical/legal tie; binds theparties to the obligation

b. Causa (causa debendi/causa obligationes):why obligation exists

SOURCES OF OBLIGATION

Art. 1157. Obligations arise from:(1) Law;(2) Contracts;(3) Quasi-contracts;(4) Acts or omissions punished by law; and(5) Quasi-delicts. (1089a)

1. act giving rise to a quasi contract must beLAWFUL distinguishing it from delict;

2. act must be VOLUNTARY distinguishing it fromquasi-delict which is based on fault ornegligence;

3. act must be UNILATERAL distinguishing it fromcontract which is based on agreement.(Tolentino, Volume IV, p. 68)

KINDS OF QUASI-CONTRACT Negotiorum gestio: unauthorized management;

arises whenever a person voluntarily takescharge of the agency or management ofanother’s abandoned business or propertywithout the latter’s authority

Solutio indebiti: undue payment. Arises when aperson unduly delivers a thing through mistake toanother who has no right to demand it (must notbe through liberality or some other cause)

DELICTS (OBLIGATION EX MALEFICIO OR EXDELICTO )

RPC: Art. 100 Every person criminally liable for afelony is also civilly liable.

Must be expressly or impliedly set

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cannot be presumedforth and

GOVERNING RULES1. Articles 100-113 of the RPC and other penal laws

subject to Art 2177 Civil Code (quasi-delict);2. Chapter 2, Preliminary title, on Human Relations

CONTRACT (OBLIGATION EX CONTRACTU) Must be complied with in good faith it is the “law” between parties;

( Civil Code )3. Title 18 of Book IV of the Civil Code on damages

SCOPE OF CIVIL LIABILITY1. Restitution

—Adviser: Dean Cynthia del

Castillo

Head: Joy Ponsaran, Eleanor Mateo; Understudy: Joy Tajan, John Paul Lim;

Subject Head: Jennifer Sanchez; Pledgees: Maria Angela Alarilla, Gregorio Rafael Bueta, Kristi Fe Mari Lu

Personal RealJus ad rem, a rightenforceable only

Jus in re, a rightenforceable against

NATURE OF OBLIGATIONS picture.

Civil Law Summer ReviewerATENEO CENTRAL BAR OPERATIONS 2007

2. Reparation for damage caused3. Indemnity for Consequential damages

EFFECT OF ACQUITTAL IN CRIMINAL CASE1. When due to reasonable doubt – no civil liability2. When due to exempting circumstances – there is

civil liability3. When there is preponderance of evidence – there

is civil liability

CRIMES WITHOUT CIVIL LIABILITY1. Contempt2. Insults to persons in authority3. gambling4. violations of traffic regulations (De Leon, 2003

2. Real Obligations: obligations to give; where thesubject matter is a thing which the obligor mustdeliver to the obligeea. Determinate or specific – object is particularly

designated or physically segregated from allother things of the same class

b. Generic –object is designated by its class orgenus

c. Limited Generic – generic objects confined toa particular class

Ex: An obligation to deliver one of my horses(Tolentino, Volume IV, p. 91; De Leon, 2003 ed.,p. 7)

EFFECT OF OBLIGATIONSed.,p. 23)

DUTIES OF DEBTOR IN AN OBLIGATION TO GIVEQUASI-DELICT/TORTS (OBLIGATION EX QUASI-DELICTO Or EX QUASI MALEFICIO )

A DETERMINATE THING (See Arts. 1163, 1164,1166.)

It is an act or omission arising from fault ornegligence which causes damage to another,there being no pre-existing contractual relationsbetween the partiesELEMENTS:

1. To preserve or take care of the thing due with thediligence of a good father of a family

DILIGENCE OF A GOOD FATHER OF A FAMILY –ordinary care or that diligence which an average or

1. There must be an act or omission2. There must be fault or negligence attributable to

the person charged3. There must be damage or injury4. There must be a direct relation of cause and

effect between the act arising from fault ornegligence and the damage or injury (proximatecause );

5. There is no pre-existing contractual relationbetween the parties.

NEGLIGENCE

reasonably prudent person would exercise over hisown property

NOTE: Rule on Standard of Care That which the law requires; or That stipulated by the parties; or In the absence of the two, diligence of a good

father of a family

2. To deliver the fruits of the thing: Right to thefruits of the thing from the time the obligation todeliver it arises

Failure to observe for the protection of theinterests of another person, that degree of care,precaution and vigilance which the circumstancesjustly demand, whereby such other personsuffers injury. (US v. Barrias, 23 Phil. 434 [1912])

WHEN OBLIGATION TO DELIVER ARISES GENERAL RULE: From the time of the

perfection of the contract (i.e. meeting of theminds between the parties)

CHAPTER 2. – NATURE & EFFECTS OFOBLIGATIONS

See Arts. 1163 - 1178

EXCEPTIONSa. when the parties made a stipulation as

regards the right of the creditor to the fruits ofthe thing


are needed to see this

1. Personal Obligations: obligations to do or notto do; where the subject matter is an act to bedone or not to be donea. Positive – obligation to dob. Negative – obligation not to do

b. when the obligation is subject to asuspensive condition or period; arises uponfulfillment of the condition or arrival of theperiod

PERSONAL V. REAL RIGHT

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equivalentperformance X X

Canonlybedemandedifobligationis notverypersonal

X

substituteperformance X X

Undo thethingsalreadydone atdebtor'sexpense

rescission/cancellation X X X

against a definiteperson or group ofpersons

the whole world

Right pertaining to aperson to demandfrom another, as adefinite passivesubject, thefulfillment of theprestation to give, todo or not to do.

Right pertaining to aperson over a specificthing, without a definitepassive subjectagainst whom the rightmay be personallyenforced

RemediesReal

ObligationsPersonal

Obligations

Specific

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3. To deliver its accessions and accessories Accessions – additions to or improvements

upon a thing. Ex: air conditioner in a car. Accessories – things joined to, or included

with the principal thing for its better use,embellishment or completion. Ex:key of ahouse; frame of a picture (De Leon, 2003ed., pp. 37-38)

4. To deliver the thing itself5. To pay damages in case of breach of the

obligation by reason of delay, fraud, negligenceor contravention of the tenor of the obligation.

DUTIES OF DEBTOR IN AN OBLIGATION TO GIVEA GENERIC THING1. To deliver the thing which is neither of superior

nor of inferior quality2. To pay damages in case of breach of the

obligation by reason of delay, fraud, negligenceor contravention of the tenor of the obligation.

REMEDIES OF THE CREDITOR IN CASE OF NON-PERFORMANCE (See Arts 1165 – 1168)

BREACH OF OBLIGATIONS (See Arts. 1170 –1174)1. Voluntary – debtor in the performance of the

obligation is guilty of: fraud (Dolo) negligence (culpa) delay (mora) contravention of the tenor of the obligation

NOTE: debtor is liable for damages1.

2.

Specific Performance: Performance by thedebtor of the prestation itselfSubstitute Performance: someone else

2.

Involuntary – debtor is unable to comply with hisobligation due to fortuitous event/sNOTE: debtor is not liable for damages

performs or something else is performed at theexpense of debtor FRAUD (Dolo)

3. Equivalent Performance: damages It is the deliberate or intentional evasion of thenormal fulfillment of an obligation. (8 Manresa 72)

O’leary Macondray & Co., 45 Phil. 812 [1924[– Itimplies some kind of malice or dishonesty and itcannot cover cases of mistake and errors ofjudgment made in good faith. It is synonymous tobad faith

TYPES OF FRAUD

Deleted: Corliss v. Manila Railroad

– The law presumes or requires aman to possess ordinary capacity toavoid harming his neighbors unless a

1.2.3.

Causal Fraud (Dolo Causante): fraud employedin the execution of the contractIncidental Fraud (Dolo Incidente): fraud inperformance of obligation already existingbecause of a contract

clear and manifest incapacity isshown and the law does not hold himliable for unintentional injury unless,possessing such capacity, he mightand ought to have foreseen thedanger.¶¶

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Fraud in thePerformance

(Art. 1170)

Causal Fraud(Art. 1338)

IncidentalFraud (Art.

1344)Presentduring theperformanceof a pre-existingobligation

Presentduring theperfection of acontract

Presentduring theperfection of acontract

Purpose is toevade thenormalfulfillment ofthe obligation

Purpose is tosecure theconsent ofanother toenter into thecontract

Purpose is tosecure theconsent of theother party butthe fraud wasnot theprincipalinducement inmaking thecontract

Results in thebreach of anobligation

Results invitiation ofconsent;voidablecontract

Does notresult in thevitiation ofconsent

Gives rise to aright in favorof the creditorto recoverdamages

Gives rise to aright of aninnocent partyto annul thecontract

Gives rise to aright of aninnocent partyto claim fordamages

Culpa Aquiliana Culpa ContractualNegligence issubstantive andindependent

Negligence merely anincident of performanceof an obligation

There may or maynot be a pre-existingcontractual obligation

There is a pre-existingcontractual relation

Source of theobligation is thenegligence itself

Source of the obligationis the breach of thecontractual obligation

Negligence must beproved

Proof of existing of thecontract and its breachis prima facie sufficientto warrant recovery

Diligence in theselection andsupervision of theemployees is adefense

Diligence in theselection andsupervision of theemployees is notavailable as a defense

Fraud NegligenceThere is deliberateintention to causedamage.

There is no deliberateintention to causedamage.

Liability cannot bemitigated.

Liability may bemitigated.

Waiver for future fraudis void.

Waiver for futurenegligence may beallowed in certaincases

KINDS OF NEGLIGENCEsee this picture.


NOTE: Negligence can be waived except incases where the nature of the obligation or publicpolicy requires another standard of care.EXCEPTIONS: Nature of Obligation of aCommon carrier

FRAUD V. NEGLIGENCE

KINDS OF NEGLIGENCE, DISTINGUISHED

NOTE: Future fraud cannot be waived. However, thelaw does not prohibit renunciation of the action fordamages on the ground of fraud already committed.

REMEDIES OF DEFRAUDED PARTY

Insist on specific performance (Art 1233)Resolve contract (Art 1191)Claim damages, in either case

NEGLIGENCE Consists in the omission of that diligence which is

required by the nature of the obligation andcorresponds with the circumstances of thepersons, of the time and of the place.


are needed to

1. Quasi-Delict (Culpa aquiliana/culpa extra

EFFECTS OF CONTRIBUTORY NEGLIGENCE OFTHE CREDITOR GENERAL RULE: Reduces or mitigates the

damages which he can recover EXCEPTION: If the negligent act or omission of

the creditor is the proximate cause of the eventwhich led to the damage or injury complained of,he cannot recover.

2.contractual)- source of obligationContractual Negligence (Culpa Contractual)-negligence in the performance of a contract

DELAY (MORA)

1. Ordinary Delay – failure to perform an obligationon time

2. Legal Delay/ Default – failure to perform anobligation on time which failure constitutes a

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a. Debtor needed toguiltypicture.is of breach of the


breach of the obligation. (De Leon, 2003 ed., p.42)

c. Obligations to deliver a determinatething, liable for fortuitous events. If debtorcan prove that loss would have resulted

REQUISITES OF DELAY1. Obligation must be due, demandable and

liquidated;2. Debtor fails to perform his positive obligation on

the date agreed upon;3. A demand (not merely a reminder or notice),

judicial or extra-judicial, made by the creditorupon the debtor to fulfill, perform or comply withhis obligation otherwise, he will be in default; and

4. Failure of the debtor to comply with such

even if he had not been in default, thecourt may equitably mitigate thedamages (Art. 2215[4])

d. Resolution (Art 1170, in proper cases)

2. Mora Accipiendi – default on part of creditorwhen he unjustifiably refuses to accept theperformance of the obligation. REQUISITES:

a. Offer of performance by the debtordemand.

KINDS OF DELAY

b.

c.

Offer must be to comply with theprestation as it should be performedCreditor refuses the performance without

1. Mora Solvendi– default on the part of the debtor: Mora Solvendi Ex re – default in real

just causeEFFECTS:

obligationsMora Solvendi Ex persona – default inpersonal obligationsREQUISITES:a. The obligation must be due, enforceable

and already liquidated or determinate inamount;

b. There must be non-performance; andc. There must be a demand, unless

demand is not required.GENERAL RULE: Those obliged to deliveror to do something incur in delay from thetime the obligee judicially or extrajudiciallydemands from them the fulfillment of theirobligation.EXCEPTIONS (no demand necessary)a. When the obligation or the law expressly

a. Responsibility of debtor is limited tofraud and gross negligence

b. Debtor is exempted from risk of lossof thing; creditor bears risk of loss

c. Expenses by debtor for preservationof thing after delay is chargeable tocreditor

d. If obligation bears interest, debtor doesnot have to pay from time of delay

e. Creditor liable for damagesf. Debtor may relieve himself of

obligation by consigning thething

3. Compensatio morae – both parties are indefault (in reciprocal obligations); there is noactionable default on the part of both parties

so declare; orb. When from the nature and the

circumstances of the obligation itappears that the designation of the timewhen the thing is to be delivered or theservice is to be rendered was a

Rule in Reciprocal Obligations: In reciprocalobligations, neither party incurs in delay if theother does not comply or is not ready to complyin a proper manner with what is incumbent uponhim. From the moment one of the parties fulfills

controlling motive for the establishmentof the contract; or

his obligation, delay by the other begins.Performance must be simultaneous unless

c. When demand would be useless, aswhen the obligor has rendered it beyond

different dates for the performance of theobligation were fixed by the parties

his power to perform

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obligationb. Liability: If obligation to pay money- must

pay interest. If no extra-judicial demand,interest runs from the filing of thecomplaint. In other obligations, paydamages.

CESSATION OF THE EFFECTS OF MORA: renunciation (express or implied) prescription NOTE: There is no delay in negative obligations

and natural obligations.

FORTUITOUS EVENT – An event which could not beforeseen, or which though foreseen, was inevitable

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DeterminateObligation

Generic Obligation

Obligation isextinguished

Obligation is notextinguished based on therule that the genus neverperishes (genus nunquamperuit)


REQUIREMENTS: (Nakpil and Sons vs. CA):1. The cause of the breach of the obligation must be

independent of the will of the debtor2. The event must be either unforeseeable or

unavoidable3. The event must be such as to render it

impossible for the debtor to fulfill his obligation ina normal manner

4. The debtor must be free from any participation in,or aggravation of injury to the creditor

RULE ON FORTUITOUS EVENT: GENERAL RULE: No liability for fortuitous event EXCEPTIONS:1. When expressly declared by law ( bad faith,

subject matter is generic, debtor is in delay )2. When expressly declared by stipulation or

contract3. When nature of obligation requires assumption of

risk4. When the obligor is in default or has promised to

deliver the same thing to two or more personswho do not have the same interest (Art. 1165[3])

Art. 1178 Subject to the laws, all rights acquired invirtue of an obligation are transmissible, if there hasbeen no stipulation to the contrary. (1112)Art. 1191. The power to rescind obligations is impliedin reciprocal ones, in case one of the obligors shouldnot comply with what is incumbent upon him.The injured party may choose between the fulfillmentand the rescission of the obligation, with the paymentof damages in either case. He may also seekrescission, even after he has chosen fulfillment, if thelatter should become impossible.The court shall decree the rescission claimed, unlessthere be just cause authorizing the fixing of a period.This is understood to be without prejudice to therights of third persons who have acquired the thing, inaccordance with Articles 1385 and 1388 and theMortgage Law. (1124)Art. 1192. In case both parties have committed abreach of the obligation, the liability of the firstinfractor shall be equitably tempered by the courts. Ifit cannot be determined which of the parties firstviolated the contract, the same shall be deemedextinguished, and each shall bear his own damages.(n)

EFFECT OF FORTUITOUS EVENTREMEDIES AVAILABLE TO CREDITORS FOR THESATISFACTION OF THEIR CLAIMS

Art. 1176 The receipt of the principal by the creditor,

1.

2.

3.

Exact fulfillment of the obligation by specific orsubstitute performance with a right to damages ineither case;In case of reciprocal obligations, petition the courtto resolve the contract;Pursue the leviable (not exempt from attachmentunder the law) property of the debtor;

without reservation with respect to the interest, shall 4. Accion directa (Arts. 1729 and 1652):Right ofgive rise to the presumption that said interest has beenpaid.

The receipt of a later installment of a debt withoutreservation as to prior installments, shall likewise raisethe presumption that such installments have been paid.

PRINCIPLE IN ARTICLE 1176 Before the presumption that a prior installment

had been paid may arise, the receipt mustspecify the installment for which payment is

5.

the lessor to go directly to sublessee for unpaidrents of the lessee. Right of the laborers orpersons who furnish materials for a piece of workundertaken by a contractor to go directly to theowner for any unpaid claims due to the contractorAccion subrogatoria – to be subrogated to allthe rights and actions of the debtor save thosewhich are inherent in his person REQUISITES:a. The debtor to whom the right of action

properly pertains must be indebted to themade. QuickTime™ and a creditor;

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Art. 1177 The creditors, after having pursued theproperty in possession of the debtor to satisfy theirclaims, may exercise all rights and bring all theactions of the latter for the same purpose, save thosewhich are inherent in his person; they may alsoimpugn the acts which the debtor may have done todefraud them. (1111)

b. The creditor must be prejudiced by theinaction or failure of the debtor to proceedagainst the third person;

c. The creditor must have pursued first orexhausted all the properties of the debtorwhich are not exempt from execution;

d. The debtor's assets are insufficient to satisfyhis claims; and

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Without thefault of thedebtor

With the fault of thedebtor

Loss Obligation isextinguished

Debtor obliged to paydamages

Deterioration Impairmentborne by thecreditor

Creditor may choosebetween rescissionor its fulfillment withdamages in eithercase

with a penalneeded to see this picture.a. clause


e. The right of account is not purely personal6. Accion Pauliana – asking the court to rescind or

fulfillment of a condition or upon the expiration of aperiod and is demandable at once

to impugn all the acts which the debtor may have CONDITIONAL – one whose effectivity isdone to defraud the creditors (Arts. 1380-1389) REQUISITES:

subordinated to the fulfillment or non-fulfillment of afuture AND uncertain event or upon a past event

a.b.

c.

d.e.

There is a credit in favor of plaintiffThe debtor has performed an act subsequentto the contract, giving advantage to otherpersonsThe creditor is prejudiced by the debtor's actwhich are in favor of 3rd parties andrescission will benefit the creditorThe creditor has no other legal remedyThe debtor's acts are fraudulent

unknown to the partiesCONDITION - Future and uncertain event or a pastevent unknown to the parties

1. Suspensive – happening of condition gives riseto obligation

Effects:a. Effectivity retroacts to the day of the

constitution of the obligationb. No retroactivity with reference to fruits or

interest and prescriptionc. Creditor may preserve rightsd. Debtor – recovery of payment by mistake or

even w/o mistake

RULES ON LOSS, DETERIORATION, ANDIMPROVEMENTS DURING PENDENCY OF ASUSPENSIVE CONDITION (Art. 1189)

CHAPTER 3. - DIFFERENT KINDS OFOBLIGATIONS

See Arts. 1179 - 1230

PRIMARY CLASSIFICATION OF OBLIGATIONS

Improvement If by nature orby timeinures to thebenefit of thedebtor

If at the expense ofthe debtor debtor’sright is only that of ausufructuary

UNDER THE CIVIL CODE1. Demandability

a. pure,b. conditionalc. with a period

2. Plurality of objecta. simpleb. alternativec. facultative

3. Plurality of subjecta. Simpleb. Joint

REQUISITES FOR THE APPLICATION OFARTICLE 1189

a. 1.The obligation must be a real obligationb. 2.The object is a specific or determinate thingc. The obligation is subject to a suspensive

conditiond. The condition is fulfillede. There is loss, deterioration or improvement of

the thing during the pendency of thehappening of the condition

c. solidary 2. Resolutory – happening of condition4. Performance extinguishes obligation

a.b.

Divisibleindivisible

EFFECTS:a. No retroactive effect

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b. without a penal clause

PURE AND CONDITIONAL OBLIGATIONS(See Arts. 1179 – 1190)

b. Obligation extinguishedc. Restore to each other what was received

plus interest/fruits

3. Potestative – dependent on sole will of 1 party; ifon part of debtor and suspensive – void

4. Casual – dependent on chance or hazardPURE – one whose effectivity or extinguishmentdoes not depend upon the fulfillment or non-

5. Mixed – chance, or any of parties6. With term

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TERM CONDITIONInterval of time whichis future and certain

Fact or event which isfuture or uncertain or apast event unknown tothe parties

Time w/c mustnecessarily comealthough it may not beknown when

Future and uncertain factor event which may ormay not happen

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Does not have anyretroactive effectunless there is anagreement to the

Has retroactive effect

contraryWhen it is leftexclusively to the willof the debtor, theexistence of theobligation is affected

When it is left exclusivelyto the will of the debtor,the obligation is void


a. Positive – extinguished if time expires orindubitable of condition to happen

b. Negative – effective from moment of timeelapsed or evident it can't happen

IMPOSSIBLE AND ILLEGAL CONDITIONS GENERAL RULE: They shall annul the

obligation which depends upon themEXCEPTIONS:a. pre-existing obligationb. if obligation is divisible WHEN COURTS MAY FIX PERIOD:c. in simple or remuneratory donations 1. If the obligation does not fix a period, but from itsd. testamentary dispositionse. conditions not to do an impossible thing

OBLIGATIONS WITH A PERIOD

WITH A PERIOD – An obligation which depends on a

2.

3.

4.

nature and circumstances it can be inferred that aperiod was intended by the partiesIf the duration of the period depends upon the willof the debtorIn case of reciprocal obligations, when there is ajust cause for fixing a periodIf the debtor binds himself when his meanspermit him to do so

future and certain event (See Arts 1193, 1196)PERIOD FOR WHOSE BENEFIT

WHEN STIPULATION SAYS “PAYABLE WHENABLE” – IT IS WITH A PERIOD, REMEDY:1. Agreement among parties2. Court shall fix period of payment when

parties unable to agree

KINDS:1. Resolutory ( in diem ) – demandable at once but

terminates upon arrival of the day certain

GENERAL RULE: When a period is designatedfor the performance or fulfillment of an obligation,it is presumed to have been established for thebenefit of both creditor and debtor.EXCEPTION: When it appears from the tenor ofthe obligation or other circumstances that theperiod has been established in favor of one or theother.

Day certain – that which must necessarilycome, although it may not be known when

PERIOD FOR THE BENEFIT OF THE CREDITOR Creditor may demand the fulfillment of the

2. Suspensive ( ex die ) –obligation becomesdemandable on the day stipulated

obligation at any time but the debtor cannotcompel him to accept before the expiration of theperiod

PERIOD FOR THE BENEFIT OF THE DEBTOR Debtor may oppose any premature demand of

the creditor but he may renounce the benefit ofthe period by performing his obligation inadvance (Manresa)

WHEN DEBTOR LOSES RIGHT TO PERIOD:

Insolvency of debtor, unless security providedDid not deliver security promisedImpaired security through his own acts or throughfortuitous event unless he gives new securitiesequally satisfactoryViolates undertaking in consideration ofextension of periodAttempts to abscond

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ALTERNATIVE FACULTATIVEa) Variousthings are due butthe giving principallyof one is sufficient

a) Only one thing is duebut a substitute may begiven to renderpayment/fulfillment easy

b) If one ofprestations is illegal,others may be validbut obligationremains

b) If principal obligationsis void and there is nonecessity of giving thesubstitute; nullity of Pcarries with it nullity of S

c) If it is impossibleto give all exceptone, the last onemust still be given

c) If it is impossibleto give the principal, thesubstitute does not haveto be given; if it isimpossible to give thesubstitute, the principalmust still be given

d) Right to choosemay be given eitherto debtor or creditor

d) The right of choice isgiven only to the debtor

which remainsQuickTime™ and a

If the lossare(Uncompressed)thepicture.TIFF of 1 of things occurs through


upon the price of any 1 of them, also withindemnity for damages.

ALTERNATIVE OBLIGATIONS (See Arts. 1199 –1206)

FACULTATIVE - only one prestation has beenagreed upon but another may be given in substitution

EFFECT OF LOSS OR DETERIORA0TION THRUNEGLIGENCE, DELAY OR FRAUD OF OBLIGOR: Of thing intended as substitute - no liability Of the substitute after substitution is made – with

liability

ALTERNATIVE – bound by different prestations butonly one is due

RIGHT OF CHOICE IN ALTERNATIVEOBLIGATIONS

REQUISITES FOR MAKING THE CHOICE:1. Made properly so that creditor or his agent will

actually know2. Made with full knowledge that a selection is

indeed being made3. Made voluntarily and freely4. Made in due time – before or upon maturity5. Made to all proper persons6. Made w/o conditions unless agreed by the

creditor7. May be waived, expressly or impliedly

ALTERNATIVE vs. FACULTATIVE

As a general rule the right of choice belongs todebtor

EFFECT OF LOSS OF OBJECTS OFALTERNATIVE OBLIGATIONS1. If the right of choice belongs to the debtor

If through a fortuitous event all were lost,debtor cannot be held liable for damagesIf 1 or more but not all of the things are lostor one or some but not all of the prestationscannot be performed due to fortuitous eventor fault of the debtor, creditor cannot hold thedebtor liable for damages because the debtorcan still comply with his obligationIf all things, except one, were lost, the debtormust comply by performing that which remainIf all were lost by fault of the debtor the lateris liable for the value of the last thing orservice which became impossible

2. If right of choice belongs to the creditor If 1 of the things is lost through a fortuitous

event, the debtor shall perform the obligationby delivering that which the creditor shouldchoose from among the remainder or that

JOINT AND SOLIDARY OBLIGATIONS (See Arts.1207 – 1222)

JOINT – presumption when two or more creditors ortwo or more debtors concur in one and the sameobligation

if only 1 subsistsdecompressor

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the fault of the debtor, the creditor may claimany of those subsisting or the price of thatwhich, through the fault of the former, hasdisappeared with a right to damagesIf all the things are lost through the fault ofthe debtor, the choice by the creditor shall fall

EXCEPTIONS TO THE PRESUMPTION1. when expressly stated that there is solidarity2. when the law requires solidarity3. when the nature of the obligation requires

solidarity4. when a charge or condition is imposed upon

heirs or legatees and the testament expresslymakes the charge or condition in solidum(Manresa)

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INDIVISIBILITY SOLIDARITYRefers to theprestation which

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Plurality of subjects isnot required

Plurality of subjects isindispensable

In case of breach,obligation is convertedinto 1 of indemnity fordamages because of

When there is liability onthe part of the debtorsbecause of the breach,the solidarilty among the


5. when a solidary responsibility is imputed by a breach, indivisibility of debtors remainsfinal judgment upon several defendants(Gutierrez v. Gutierrez)

EFFECTS OF JOINT LIABILITY1. Demand on one produces delay only with respect

to the debt2. Interruption in payment by one does not benefit

or prejudice the other3. Vices of one debtor to creditor has no effect on

the others4. Insolvency of one debtor does not affect other

debtors

JOINT DIVISIBLE OBLIGATIONS1. Each creditor can demand for the payment of his

proportionate share of the credit, while eachdebtor can be held liable only for the payment ofhis proportionate share of the debt

2. A joint creditor cannot act in representation of theother creditors while a joint debtor cannot becompelled to answer for the acts or liability of theother debtors

the obligation isterminated

SOLIDARY – must be expressed in stipulation orprovided by law or by nature of obligation

1. Active – on the part of creditor or oblige EFFECTS:

Death of 1 solidary creditor transmits shareto heirs (but collectively)

Each creditor represents the other in the actof recovery of payment

Credit is divided equally between creditors asamong themselves

Debtor may pay any of the solidary creditors2. Passive – on the part of debtors or obligors EFFECTS:

Each debtor may be requested to pay wholeobligation with right to recover from co-debtors

Interruption of prescription to one creditoraffects all

JOINT INDIVISIBLE OBLIGATIONS Interest from delay on 1 debtor is borne by all1. If there are 2 or more debtors, the fulfillment of or

compliance with the obligation requires theconcurrence of all the debtors, although each forhis own share. The obligation can be enforcedonly by proceeding against all of the debtors.

2. If there are 2 or more creditors, the concurrenceor collective act of all the creditors, although eachfor his own share, is also necessary for theenforcement of the obligation

EFFECT OF BREACH

3. Mixed – on the part of the obligors and obligees,or the part of the debtors and the creditors

4. Conventional – agreed upon by the parties5. Legal – imposed by law Instances where law imposes solidary

obligation:a. Obligations arising from tortb. Obligations arising from quasi-contractsc. Legal provisions regarding obligation of

devisees and legateesd. Liability of principals, accomplices, and

If one of the joint debtors fails to comply with accessories of a felonyhis undertaking, the obligation can no longerbe fulfilled or performed. Consequently, it isconverted into one of indemnity for damages.Innocent joint debtor shall not contribute to theindemnity beyond their corresponding share ofthe obligation.

e. Bailees in commodatumEFFECTS:a. Payment made before debt is due, no

interest can be charged, otherwise – interestcan be charged

b. Insolvency of one – others are liable forshare pro-rata

c. If different terms and conditions – collect onlywhat is due, later on collect from any

d. No reimbursement if payment is made afterprescription or became illegal

e. Remission made after payment is made – co-debtor still entitled to reimbursement

f. Effect of insolvency or death of co-debtor –still liable for whole amount

g. Fault of any debtor – every one isresponsible – price, damage and interest

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ii. 3 person pays/performs - only the

a. Stipulationare(Uncompressed) thisright r–needed to see picture.granting

except if the 3 person intended it to be

ii. 3 person - if any of the ff. concur:

in the ff.


h. Complete/ personal defense – total or partial( up to amount of share only ) if not personalto him

EFFECT OF LOSS OR IMPOSSIBILITY OF THEPRESTATION:1. If without fault – no liability2. If with fault – there is liability (also for damage

and interest)3. Loss due to fortuitous event after default – there

is liability (because of default)

DIVISIBLE AND INDIVISIBLE OBLIGATIONS (SeeArts. 1223 – 1225)

DIVISIBLE - obligation that is capable of partialperformance

CHAPTER 4. - EXTINGUISHMENT OFOBLIGATIONS

See Arts. 1232 - 1304

MODES OF EXTINGUISHMENT OF OBLIGATION(Art. 1231):1. Payment or performance2. Loss of the thing due3. Condonation or remission of debt4. Confusion or merger of rights5. Compensation6. Novation7. Annulment8. Rescission9. Fulfillment of resolutory condition

Execution of certain no of days workExpressed by metrical unitsNature of obligation – susceptible of partial

PAYMENT OR PERFORMANCE- delivery of money and performance, in any othermanner of the obligation

fulfillment REQUISITES FORPAYMENT/PERFORMANCE

VALID

INDIVISIBLE – one not capable of partialperformance 1. With respect to prestation itself

a. Identity

To give definite thingsNot susceptible of partial performanceProvided by lawIntention of parties

2.

b. Integrity or completenessc. IndivisibilityWith respect to parties - must be made byproper party to proper partya. Payor

OBLIGATIONS WITH A PENAL CLAUSE (SeeArts. 1226 – 1230)

WITH PENAL CLAUSE – One to which an accessoryundertaking is attached for the purpose of insuring itsperformance by virtue of which the obligor is bound topay a stipulated indemnity or perform a stipulatedprestation in case of breach

CHARACTERISTICS OF PENAL CLAUSES:1. Subsidiary - As a general rule, only penalty can

be demanded, principal cannot be demanded,except: Penalty is joint or cumulative

2. Exclusive - takes place of damage, damage canonly be demandedQuickTime™ andcases:

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b. Refusal to pay penaltyc. With dolo ( not of creditor )

CAUSES FOR REDUCTION OF PENALTY:1. Partial/irregular performance2. Penalty provided is iniquitous/ unconscionable

i. Payor - the one performing, he can bethe debtor himself or his heirs or assignsor his agent, or anyone interested in thefulfillment of the obligation; can beanyone as long as it is with the creditor'sconsent

RD

creditor's consent; If performance is donealso with debtor's consent - he takes theplace of the debtor. There is subrogation

rd

a donationiii. 3rd person pays/performs with consent of

creditor but not with debtor's consent, therepayment is only to the extent that thepayment has been beneficial to debtor

b. Payeei. Payee - creditor or obligee or successor

in interest of transferee, or agentrd

It must have redounded to theobligee's

benefit and only to the extent of suchbenefit

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PAYMENT TO 3 PARTY NOT AUTHORIZED,

2. Creditor ratifies payment to 3 person

Art. 1233. A debt(Uncompressed) decompressorshall not™ bea understood to havebeen paid unless the thing or service in which the


It falls under art 1241, par 1,2,3 - the

benefit is total so, performance istotal

iii. Anyone in possession of the credit - butwill apply only if debt has not beenpreviously garnished

Art. 1235. When the obligee accepts theperformance, knowing its incompleteness orirregularity, and without expressing any protest orobjection, the obligation is deemed fully compliedwith. (n)

PAYMENT MADE TO AN INCAPACITATEDPERSON, VALID IF1. Incapacitated person kept the thing delivered, or2. Insofar as the payment has been beneficial to

him

Attempt in Good Faith to perform without willful orintentional departureDeviation is slightOmission/Defect is technical or unimportantMust not be so material that intention of parties isnot attained

RD

VALID IF PROVED AND ONLY TO THE EXTENTOF BENEFIT; PRESUMED IF1. After payment, 3rd person acquires the creditor’s

rightsrd

3. By creditor’s conduct, debtor has been led tomake the payment (estoppel)

PAYMENT MADE IN GOOD FAITH TO A PERSONIN POSSESSION OF CREDIT SHALL RELEASEDEBTOR; REQUISITES:1. Payment by debtor must be made in good faith2. Creditor must be in possession of the credit and

not merely the evidence of indebtedness

EFFECT OF SUBSTANTIAL PERFORMANCE INGOOD FAITH Obligor may recover as though there has been

strict and complete fulfillment, less damagessuffered by the oblige

Right to rescind cannot be used for slight breach

SPECIAL RULES/FORMS OF PAYMENT

1. APPLICATION OF PAYMENTS – the designationof the debt which payment shall be made, out of2 or more debts owing the same creditor:stipulation or application of party given benefit ofperiod – OK; to be valid: must be debtor’s choiceor w/ consent of debtor

NOTE: With respect to time and place ofpayment - must be according to the obligation REQUISITES FOR THE APPLICATION OF

PAYMENT:

WHERE PAYMENT SHOULD BE MADE1. In the place designated in the obligation2. If there is no express stipulation and the

undertaking is to deliver a specific thing – at theplace where the thing might be at the moment theobligation was constituted

3. In other case – in the place of the domicile of thedebtor Time of payment - time stipulated Effect of payment – extinguish obligation

Except: order to retain debt

a. Various debts of the same kindb. Same debtorc. Same creditord. All debts must be dueEXCEPTION: there may be application ofpayment even if all debts are not yet due if:a. Parties so stipulateb. When application of payment is made by the

party for whose benefit the term has beenconstituted

c. Payment is not enough to extinguish all debts

SUBSTANTIAL PERFORMANCE

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are needed to see this picture.

obligation consists has been completely delivered orrendered, as the case may be. (1157)

Art. 1234. If the obligation has been substantiallyperformed in good faith, the obligor may recover asthough there had been a strict and completefulfillment, less damages suffered by the obligee. (n)

HOW APPLICATION IS MADE:a. Debtor makes the designationb. If not, creditor makes it by so stating in the

receipt that he issues – unless there is causefor invalidating the contract

c. If neither the debtor nor creditor has madethe application or if the application is notvalid, then application, is made by operationof law

WHO MAKES APPLICATION OF DEBTS

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DATION INPAYMENT

CESSION INPAYMENT

One creditor Plurality of creditorsNot necessarily instate of financialdifficulty

Debtor must b partiallyor relatively insolvent

Thing delivered isconsidered asequivalent ofperformance

Universality of propertyof debtor is what isceded

Payment extinguishesobligation to the extentof the value of thething delivered asagreed upon, provedor implied from theconduct of the creditor

Merely releases debtorfor net proceeds ofthings ceded of,assigned, unless thereis a contrary intention

KINDS OF ASSIGNMENT:


GENERAL RULE: DebtorEXCEPTION: Creditora. Debtor without protest accepts receipt in

which creditor specified expressly andunmistakably the obligation to which suchpayment was to be applied – debtor in this

d. Abandonment of all debtor’s property notexempt from execution

e. Acceptance or consent on the part of thecreditors

EFFECTS OF ASSIGNMENT:case renounced the right of choice

b. When monthly statements were made by thebank specifying the application and thedebtor signed said statements approving thestatus of her account as thus sent to hermonthly by the bank

d. In case no application is made:

a.

b.

c.

Creditors do not become the owner; they aremerely assignees with authority to sellDebtor is released up to the amount of thenet proceeds of the sale, unless there is astipulation to the contraryCreditors will collect credits in the order ofpreference agreed upon, or in default of

Apply payment to the most onerousIf debts are of the same nature and

agreement, in the order ordinarily establishedby law

burden, application shall be made to allproportionately

2. DACION EN PAGO

DACION EN PAGO – mode of extinguishing anobligation whereby the debtor alienates in favor of thecreditor property for the satisfaction of monetary debt;extinguish up to amount of property unless w/contrary stipulation; A special form of paymentbecause 1 element of payment is missing: IDENTITY

CONDITIONS FOR A VALID DACION:a. If creditor consents, for a sale presupposes

the consent of both partieb. If dacion will not prejudice the other creditorsc. If debtor is not judicially declared insolvent

NOTE: DACION is governed by the law on sales

4. CESSION or ASSIGNMENT

CESSION/ASSIGNMENT IN FAVOR OFCREDITORS – the process by which debtor transferall the properties not subject to execution in favor ofcreditors is that the latter may sell them and thus,apply the proceeds to their credits; extinguish up toamount of net proceeds ( unless w/ contrarystipulation )



a. Legal – governed by the insolvency law

4. CONSIGNATION

TENDER -the act of offering the creditor what isdue him together with a demand that the creditoraccept the same (When creditor refuses w/o justcause to accept payment, he becomes in moraaccepiendi and debtor is released fromresponsibility if he consigns the thing or sum due)

CONSIGNATION – the act of depositing the thingdue with the court or judicial authorities wheneverthe creditor cannot accept or refuses to acceptpayment; generally requires prior tender ofpayment

b. Voluntary – agreement of creditorsREQUISITES OF VALID CONSIGNATION:

REQUISITES OF VOLUNTARY ASSIGNMENT:a. More than one debtb. More than one creditor

a. Existence of valid debtb. Consignation was made because of some

legal cause - previous valid tender wasc. Complete or partial insolvency of debtor

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obligation (1 notice)

i. Directlyneededcaused picture.when prohibited byare – to see this asQuickTime


unjustly refused or circumstances makingprevious tender exempt

c. Prior Notice of Consignation had been givento the person interested in performance of

st

d. Actual deposit/Consignation with proper

a. Debtor is at faultb. Debtor is made liable for fortuitous event

because of a provision of law, contractualstipulation or the nature of the obligationrequires assumption of risk on part of debtor

judicial authoritiese. Subsequent notice of Consignation (2

notice)

ndOBLIGATION TO DELIVER A GENERIC THING GENERAL RULE: Not extinguished EXCEPTIONS:

a. If the generic thing is delimitedEFFECTS: EXTINGUISHMENT OF OBLIGATION

a. Debtor may ask judge to order cancellation ofobligation

b. Running of interest is suspendedc. Before creditor accepts or before judge

declares consignation has been properlymade, obligation remains ( debtor bears riskof loss at the meantime, after acceptance bycreditor or after judge declares thatconsignation has been properly made – riskof loss is shifted to creditor)

CONSIGNATION W/O PRIOR TENDER – allowed in:a. Creditor absent or unknown/ does not appear

at the place of paymentb. Incapacitated to receive payment at the time

it is duec. Refuses to issue receipt w/o just caused. 2 or more creditor claiming the same right to

b. If the generic thing has already beensegregated

c. Monetary obligation

OBLIGATION TO DO GENERAL RULE: Debtor is released when

prestation becomes legally or physicallyimpossible without fault on part of debtor

EFFECT OF PARTIAL LOSSa. When loss is significant – may be enough to

extinguish obligationb. When loss insignificant – not enough to

extinguish obligationNOTE: judicial determination of extent is necessary

WHEN THING IS LOST IN THE POSSESSION OFTHE DEBTOR

collecte. Title of obligation has been lost

5. LOSS OF THE THING DUE

Presumption: Loss due to debtor’s fault(disputable)Exception: natural calamity, earthquake, flood,storm

LOSS OF THE THING DUE – partial or total/includes impossibility of performance

WHEN IS THERE A LOSSa. When the object perishes (physically)b. When it goes out of commercec. When it disappears in such a way that: its

existence is unknown or it cannot berecovered

WHEN IS THERE IMPOSSIBILITY OFPERFORMANCE:

a. Physical impossibilityb. Legal impossibility™ and a

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lawii. Indirectly – caused as when debtor is

required to enter a military draft

OBLIGATION TO DELIVER A SPECIFIC THING

5. REBUS SIC STANTIBUS

REBUS SIC STANTIBUS - agreement is valid only ifthe same conditions prevailing at time of contractingcontinue to exist at the time of performance; Obligormay be released in whole or in part based on thisground.

REQUISITESa. The event or change could not have been

foreseen at the time of the execution of thecontract

b. The performance is extremely difficult, butnot impossible (because if it is impossible, itis extinguished by impossibility)

c. The event was not due to the act of any ofthe parties

d. The contract is for a future prestation

GENERAL RULE: ExtinguishedEXCEPTIONS:

6. CONDONATION

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Forms: Extent: Kinds:a. Express –formalities ofdonation

a. total a. Principal – accessoryalso condoned

b. Implied –conduct issufficient

b. partial b. accessory – principalstill outstanding

c. accessory obligationof pledge – condoned;presumption only,rebuttable

person andcontroversy commenced by 3

2. Effect of deliveryQuickTime™ and a

is TIFF (Uncompresseconclusion that debt is


CONDONATION/REMISSION OF THE DEBT –gratuitous abandonment of debt; right to claim;donation; rules of donation applies; express orimplied

REQUISITES:a. There must be an agreementb. There must be a subject matter (object of the

remission, otherwise there would be nothingto condone)

c. Cause of consideration must be liberality(Essentially gratuitous, an act of liberality )

d. Parties must be capacitated and mustconsent; requires acceptance by obligor;implied in mortis causa and expressed intervivos

e. Formalities of a donation are required in thecase of an express remission

6. CONFUSION OR MERGER

CONFUSION OR MERGER OF RIGHTS– characterof debtor and creditor is merged in same person withrespect to same obligation

REQUISITES:a. It must take place between principal debtor

and principal creditor onlyb. Merger must be clear and definitec. The obligation involved must be same and

identical – one obligation onlyd. Revocable, if reason for confusion ceases,

the obligation is revived

f. Revocable – subject to rule on inofficiousdonation ( excessive, legitime is impaired )

7. COMPENSATION

and ingratitude and condition not followedg. Obligation remitted must have been

demandable at the time of remissionh. Waivers or remission are not to be presumed

COMPENSATION –Set off; it is a mode of extinguishment to theconcurrent amount the obligation of persons who arein their own right reciprocally debtors or creditors

generallyREQUISITES:

a. Both parties must be mutually creditors anddebtors - in their own right and as principals

b. Both debts must consist in sum of money orif consumable , of the same kind or quality

c. Both debts are dued. Both debts are liquidated and demandable

(determined)e. Neither debt must be retained in a

rd

communicated w/ debtor (neither debt isgarnished)

KINDS OF COMPENSATIONa. Legal – by operation of law; as long as 5

REQUISITES OF IMPLIED CONDONATION1. Voluntary delivery – presumption; when

evidence of indebtedness is w/ debtor –presumed voluntarily delivery by creditor;rebuttable

of evidence of indebtednessd) decompressor


condoned – already conclusion; voluntarydelivery of private documenta. If in hands of joint debtor – only his share is

condonedb. If in hands of solidary debtor - whole debt is

condoned

requisites concur- even if unknown to partiesand if payable in diff places; indemnity forexpense of exchanges; even if not equaldebts – only up to concurring amount

b. Conventional – agreement of parties isenough, forget other requirement as long asboth consented

c. Facultative – one party has choice ofclaiming/opposing one who has benefit ofperiod may choose to compensate:i. Not all requisites are presentii. Depositum; commodatum; criminal

offense; claim for future support; taxes

c. Tacit – voluntary destruction of instrument bycreditor; made to prescribe w/o demanding

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Subrogating 3 person in right of creditor

accessory,(Uncompressed) decompressorexcept: ™ and a

i. Stipulation to contrary

Subrogating 3 person to rights of


d. Judicial – set off; upon order of the court;needs pleading and proof; all requirementsmust concur except liquidation

e. Total – when 2 debts are of the sameamount

b. Old obligation subsists if new obligation isvoid or voidable but annulled already(except: intention of parties)

c. If old obligation has conditioni. If Resolutory and it occurred – old

f. Partial – when 2 debts are not of the same obligation already extinguished; no newamount

EFFECT OF ASSIGNMENT OF CREDIT TO 3RD

PERSON; CAN THERE STILL BECOMPENSATION

a. If made after compensation took place – noeffect; compensation already perfected

b. If made before compensation took place –dependsi. With consent of debtor – debtor is

estopped unless he reserves his rightand gave notice to assignee

obligation since nothing to novateii. If Suspensive and it never occurred –as

if no obligation; also nothing to novated. If old obligation has condition, must be

compatible with the new obligation; if new isw/o condition – deemed attached to new

e. If new obligation has conditioni. If resolutory: validii. If suspensive and did not materialize:

old obligation is enforced

KINDS OF NOVATION:ii. With knowledge but w/o consent of a. REAL/OBJECTIVE – change object,

debtor – compensation may be set up as cause/consideration or principal conditionto debts maturing prior to assignment

iii. W/o knowledge – compensation may beset-up on all debts prior to his knowledge

b. PERSONAL/SUBJECTIVEi. Substituting person of debtor

(passive)

-1EXPROMISION; initiative is from 3 rd

8. NOVATION person or new debtor ; new debtor andcreditor to consent; old debtor released

NOVATION –extinguishment of obligation by creating/ substitutinga new one in its place

from obligation; subject to fullreimbursement and subrogation if madew/ consent of old debtor; if w/o consentor against will , only beneficial

Changing object or principal conditionsSubstituting person of debtor

rd

reimbursement; if new debtor isinsolvent, not responsible since w/o hisconsentDELEGACION; initiative of old debtor ; all

REQUISITES:a. Valid obligationb. Intent to extinguish old obligation –

expressed or implied:completely/substantially incompatible old andnew obligation on every point

c. Capacity and consent of parties to the newobligation

d. Valid new obligation

EFFECTS OF NOVATION:a. Extinguishment of principal carries

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ii. Stipulation pour autrui unless beneficiaryconsents

iii. Modificatory novation only; obliged to w/cis less onerous

iv. Old obligation is void

ii.

parties to consent; full reimbursement; ifinsolvent new debtor – not responsibleold debtor because obligationextinguished by valid novation unless:insolvency already existing and of publicknowledge or know to him at time ofdelegacion1. Delegante – old debtor2. Delegatario - creditor3. Delegado – new debtor

rd

creditor ( active )1. Conventional - agreement and

consent of all parties; clearlyestablished

2. Legal - takes place by operation oflaw; no need for consent; notpresumed except as provided for inlaw:PRESUMED WHEN-

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Difference fromrd

payment by 3person

Change of debtor

1. debtor is notnecessarilyreleased from debt

1. debtor is released

2. can be done w/oconsent of creditor

2. needs consent of creditor– express or implied

3. one obligation 3. two obligations; one isextinguished and new onecreated

rd4. 3 person has noobligation to pay ifinsolvent

4. new debtor is obliged to pay

CONVENTIONALSUBROGATION

ASSIGNMENT OF RIGHTS

governed by Arts.1300-1304

governed by Arts. 1624 to 1627

debtor’s consent isrequired

debtor’s consent is not required

extinguishes theobligation and givesrise to a new one

transmission of right of thecreditor to third person withoutmodifying or extinguishing theobligation

defects and vices inthe old obligationare cured

defects and vices in the oldobligation and not cured

takes effect uponmoment of novationor subrogation

as far as the debtor isconcerned, takes effect uponnotification

3 person not interested in

representation or authorization of 3 party

3. Interference by the 3 person

Arts. 1305


a.

b.

c.

Creditor pays another preferredcreditor even w/o debtor’sknowledge

rd

obligation pays w/ approval ofdebtorPerson interested in fulfillment of

4.5.

6.

Fulfill what has been expressly stipulatedAll consequences w/c may be in keeping withgood faith, usage and lawRelativity – binding only between the parties,their assigns, heirs; strangers cannot demandenforcement

obligation pays debt even w/oknowledge of debtor

EXCEPTION TO RELATIVITY:1. Accion pauliana2. Accion directa3. Stipulation pour autrui

REQUISITES OF STIPULATION POUR AUTRUI1. Parties must have clearly and deliberately

conferred a favor upon a 3rd person2. The stipulation in favor of a 3rd person should be

a part of, not the whole contract3. That the favorable stipulation should not be

conditioned or compensated by any kind ofobligation whatsoever

4. Neither of the contracting parties bears the legalrd

5. The third person communicates his acceptancebefore revocation by the original parties

6. Art 1312; Art 1314

REQUISITES OF ART 1312:1. Existence of a valid contract2. Knowledge of the contract by a 3rd person

rd

KINDS OF CONTRACTS

1. As to perfection or formationa. Consensual – perfected by agreement of

partiesb. Real – perfected by delivery ( commodatum,

pledge, deposit )c. Formal/solemn – perfected by conformity to

essential formalities (donation )2. As to cause

a. Onerous – with valuable considerationb. Gratuitous – founded on liberality

TITLE II – C O N T R A C T S c. Remunerative – prestation is given forservice previously rendered not as obligation

CHAPTER 1. GENERAL PROVISIONSSee QuickTime™ and-a1317TIFF (Uncompressed) decompressor


PRINCIPAL CHARACTERISTICS:

3. As to importance or dependence of one uponanothera. Principal – contract may stand aloneb. Accessory – depends on another contract

1. Autonomy of wills – parties may stipulate for its existence; may not exist on its ownanything as long as not illegal, immoral, etc. c. Preparatory – not an end by itself; a means

2.

3.

Mutuality – performance or validity binds bothparties; not left to will of one of partiesObligatory Force – parties are bound fromperfection of contract:

through which future contracts may be made4. As to parties obliged

a. Unilateral – only one of the parties has anobligations

Page 120 of 297

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contract, containingtothethisstipulations he desires,


b. Bilateral – both parties are required torender reciprocal prestations

5. As to name or designationa. Nominateb. Innominate

offeror comes to know, and not when the offereemerely manifests his acceptance

ELEMENTS OF VALID OFFER / ELEMENTS OFVALID ACCEPTANCE

I.II.

Do ut des – I give that you may giveDo ut facias – I give that you may do

1. Definite--unequivocal2. Complete--unconditional

III. Facio ut des – I do that you may give 3. IntentionalIV. Facio ut facias – I do that you may do

WHEN OFFER BECOMES INEFFECTIVE:STAGES IN A CONTRACT:1. Preparation - negotiation2. Perfection/birth3. Consummation – performance

CHAPTER 2. – ESSENTIAL REQUISITES OF ACONTRACT

See Arts. 1318 - 1355

ESSENTIAL ELEMENTS:1. Consent2. Subject Matter3. Consideration

CONSENT

CONSENT – meeting of minds between parties on

1. Death, civil interdiction, insanity or insolvency ofeither party before acceptance is conveyed

2. Express or implied revocation of the offer by theofferee

3. Qualified or conditional acceptance of the offer,which becomes a counter-offer

4. Subject matter becomes illegal or impossiblebefore acceptance is communicated

PERIOD FOR ACCEPTANCE1. Stated fixed period in the offer2. No stated fixed period

a. Offer is made to a person present –acceptance must be made immediately

b. Offer is made to a person absent –acceptance may be made within such timethat, under normal circumstances, an answer

subject matter and cause of contract; concurrence ofoffer and acceptanceREQUIREMENTS:1. Plurality of subject

can be received from him

NOTE: Acceptance may be revoked before itcomes to the knowledge of the offerror.

2. Capacity AMPLIFIED ACCEPTANCE3. Intelligence and free will under certain circumstances, a mere4. Manifestation of intent of parties5. Cognition by the other party6. Conformity of manifestation and cognition

AUTO CONTRACTS made by a person acting in another’s name in

one capacity

COLLECTIVE CONTRACTS will of majority binds a minority to an agreement

notwithstanding the opposition of the latter

amplification on the offer must be understood asan acceptance of the original offer, plus a newoffer which is contained in the amplification.

RULE ON COMPLEX OFFERS1. Offers are interrelated – contract is perfected if

all the offers are accepted2. Offers are not interrelated – single acceptance

of each offer results in a perfected contractunless the offeror has made it clear that one isdependent upon the other and acceptance ofboth is necessary.

CONTRACTS OF ADHESION one party has already™ and prepared form of a Malbarosa vs. CA 2003 G.R.12576 - Offer

TIFF (Uncompressed) decompressorare needed see picture. inter praesentes must be accepted

and he simply asks the other party to agree tothem if he wants to enter into the contract

IMMEDIATELY. If the parties intended that thereshould be an express acceptance, the contractwill be perfected only upon knowledge by the

NOTE: We follow the theory of cognition and notthe theory of manifestation. Under our Civil Law,the offer and acceptance concur only when the

offeror of the express acceptance by the offereeof the offer. An acceptance which is not made inthe manner prescribe by the offeror is NOTEFFECTIVE, BUT A COUNTER-OFFER which

Page 121 of 297

Incapacity DisqualificationRestrains the exerciseof the right to contract

Restrains the very rightitself

May still enter intocontract throughparent, guardian orlegal represemtative

Absolutely disqualified

Based upon subjectivecircumstance ofcertain person

Based upon public policyand morality

Contracts entered intoare merely voidable

Contracts entered intoare void

MINORS GENERAL RULE: VOIDABLE


the offeror may accept or reject.

RULE ON ADVERTISEMENTS AS OFFERS

c. They were contracts for necessities such asfood, but here the persons who are bound togive them support should pay therefor

Business advertisements – Not a definite offer,but mere invitation to make an offer, unless itappears otherwiseAdvertisement for Bidders – only invitation to

d. Minor is estopped for having misrepresentedhis age and misled the other party (when ageis close to age of majority as in the Mercadov Espiritu and Sia Suan v Alcantara cases.

make proposals and advertiser is not bound toaccept the highest or lowest bidder, unlessappears otherwise

*In the Sia Suan v Alcantara case, there is aOPTION - option may be withdrawn anytime beforeacceptance is communicated but not when supportedby a consideration other than purchase price: optionmoney

*Ang Yu v. CA (1994 ) states that a unilateralpromise to buy or sell, if not supported by a distinctconsideration, may be withdrawn but may not bedone whimsically or arbitrarily; the right of thegrantee here is damages and not specificperformance; Equatorial v. Mayfair(264 SCRA 483 )held that an option clause in order to be valid andenforceable must indicate the definite price at whichthe person granting the option is willing to sell,contract can be enforced and not only damages;Paranaque Kings V CA (1997 ) states that right of

PERSONS WHO CANNOT GIVE CONSENT TO ACONTRACT:1. Minors2. Insane or demented persons3. Illiterates/ deaf-mutes who do not know how to

write4. Intoxicated and under hypnotic spell5. Art 1331 - person under mistake; mistake may

deprive intelligence6. Art 1338 - person induced by fraud (dolo

strong dissent by J.Padilla to the effect that theminor cannot be estopped if he is too young to giveconsent; one that is too young to give consent istoo young to be estopped. Subsequently, inBraganza v Villa-Abrille, the dissent became theruling. Minors could not be estopped.

DISQUALIFIED TO ENTER INTO CONTRACTS:(contracts entered into are void)1. Those under civil interdiction2. Hospitalized lepers3. Prodigals4. Deaf and dumb who are unable to read and write5. Those who by reason of age, disease, weak mind

and other similar causes, cannot without outsideaid, take care of themselves and manage theirproperty, becoming an easy prey for deceit andexploitation

causante)NOTE: Dolus bonus (usual exaggerations intrade) are not in themselves fraudulent

CAUSES WHICH VITIATE FREEDOMRULE ON CONTRACTS ENTERED INTO BY



EXCEPTIONS:a. Upon reaching age of majority – they ratify

the sameb. They were entered unto by a guardian and

the court having jurisdiction had approvedthe same

1. Violence REQUISITES

a. Irresistible physical forceb. Such force is the determining cause for

giving consent2. Intimidation REQUISITES:

a. Determining cause for the contractb. Threatened act is unjust and unlawfulc. Real and serious

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Absence OfCausa

Void - produce no legal effect

Illegality OfCausa

Void - produce no legal effect

Falsity OfCausa

Voidable – party must prove thatcause is untruthful; presumption ofvalidity but rebuttable

Causa NotStated InContract

Presumed to Exist - burden of proof ison the person assailing its existence

InadequacyOf Causa

Does not Invalidate Contract per seExceptions: fraud mistake undue influence cases specified by law

- contracts entered when ward sufferslesion of more than 25%

Cause MotiveDirect and mostproximate reason of acontract

Indirect or remotereasons

Objective and juridicalreason of contract

Psychological or purelypersonal reason

Cause us always samefor each contractingparty

The motive differs foreach contracting party

4. services which(Uncompressed) decompressorlaw, morals, goodare contrary tocustoms, public order or public policy


d. Produces a well grounded fear that theperson making it will carry it over

3. Undue influence

immediate, direct and most proximate reasonwhy parties enter into contractREQUISITES:

1. It must existSIMULATED CONTRACTS1. Absolute – no intention to be bound at all,

fictitious only – void from beginning2. Relative – there is intention to be bound but

2. It must be true3. It must be licit

MOTIVEconcealed; concealed contract binds:a. No prejudice to 3rd personsb. Not contrary to law, morals, etc.

OBJECT

REQUISITES:1. Within the commerce of man - either existing or

in potency2. Licit or not contrary to law, good customs3. Possible4. Determinate as to its kind or determinable w/o

need to enter into a new contract5. Transmissible

purely private reason; illegality does notinvalidate contract except when it predeterminespurpose of contract; when merged into one

NOTE: Legality or illegality of cause affects theexistence of validity of the contract; Legality orillegality of motive does not affect the existenceor validity of contract

CAUSA IN SOME CONTRACTS:1. Onerous contracts – the prestation of promise

of a thing or service by the other2. Remuneratory contracts – the service or benefit

remunerated3. Pure Beneficence – mere liberality of the donor

or benefactor4. Accessory – identical with cause of principal

contract, the loan which it derived its life andexistence (ex: mortgage or pledge)

THINGS WHICH CANNOT BE THE OBJECT OFCONTRACT:1. things which are outside the commerce of men2. intransmissible rights3. future inheritance, except in cases expressly

authorized by lawQuickTime™ and a

TIFFare needed to see this picture.

CHAPTER 3. – FORM OF CONTRACTSSee Arts. 1356 - 1358

FORM – in some kind of contracts only as contractsare generally consensual; form is a manner in whicha contract is executed or manifested

5. impossible things or services 1. Informal – may be entered into whatever form6. objects which are not possible of determination

as to their kind

CAUSA

CAUSA

as long as there is consent, object and cause2. Formal – required by law to be in certain

specified form such as: donation of real property,stipulation to pay interest, transfer of large cattle,sale of land thru agent, contract of antichresis,contract of partnership, registration of chattel

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either to one of the parties or to a 3 person and

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mortgage, donation of personal prop in excess of5,000

3. Real – creation of real rights over immovable

CAUSES/GROUNDS:1. Mutual: instrument includes something w/c should

not be there or omit what should be thereprop must be written

WHEN FORM IS IMPORTANT:1. For validity (formal/solemn contracts)

a.b.c.d.

MutualMistake of factclear and convincing proofcauses failure of instrument to express true

2. For enforceability (statute of frauds)3. For convenience

intention2. Unilateral

GENERAL RULE: contract is valid and binding inwhatever form provided that 3 essentialrequisites concurEXCEPTIONS

a. Law requires contract to be in some formfor validity - donation and acceptance ofreal property

a. one party was mistakenb. other either acted fraudulently or inequitably

or knew but concealedc. party in good faith may ask for reformation

3. Mistake by 3rd persons – due to ignorance, lackof skill, negligence , bad faith of drafter, clerk,typist

4. Others specified by law – to avoid frustration ofb. Law requires contract to be in some form to

be enforceable - Statute of Frauds; contractis valid but right to enforce cannot beexercised; need ratification to beenforceable

c. Law requires contract to be in some formfor convenience - contract is valid andenforceable, needed only to bind 3rdpartiesEx: public documents needed for the ff:

true intentRequisites:a. There is a written instrumentb. There is meeting of mindsc. True intention not expressed in instrumentd. Clear and convincing proofe. Facts put in issue in pleadingsNOTE: prescribes in 10 years from date ofexecution of instrument

i. Contracts w/c object is creation,transmission or reformation of realrights over immovables

ii. Cession, repudiation, renunciation ofhereditary rights/CPG

WHEN REFORMATION NOT AVAILABLE:1. Simple donation inter vivos2. Wills3. When real agreement is void4. Estoppel when party has brought suit to enforce it

iii. Power to administeranother

property for

iv. Cession of action of rights proceedingfrom an act appearing in a public inst.

v. All other docs where amount involved

CHAPTER 5. – INTERPRETATION OFCONTRACTS

See Arts. 1370 - 1379is in excess of 500 ( must be writteneven private docs )

CHAPTER 6. - DEFECTIVE CONTRACTS NOTE: RA 8792 (E-COMMERCE ACT) – formal

requirements to make contracts effective asSee Arts. 1370 - 1422

against third persons and to establish theexistence of acontract are deemed complied withprovided that the electronic document isunaltered and can be authenticated as to beuseable for future reference.a

TIFF (Uncompressed) decompressorare needed to see this picture.

CHAPTER 4. – REFORMATION OF INSTRUMENTS

KINDS OF DEFECTIVE CONTRACTS:1. RESCISSIBLE CONTRACTS – Those which

have caused a particular economic damagerd

which may be set aside even if valid. It may beset aside in whole or in part, to the extent of thedamage caused'

See Arts. 1359 - 1369REQUISITES:

REFORMATION OF CONTRACTS – remedy toconform to real intention of parties due to mistake,fraud, inequitable conduct, accident

a. Contract must be rescissiblei. Under art 1381: Contracts entered into bypersons exercising fiduciary capacity:

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Rescission in Art1191

Rescission Proper inArt 1381

It is a principal actionretaliatory in character

it is a subsidiary remedy

Only ground is non-performance of one’sobligation or what isincumbent upon him

There are 5 grounds torescind. Non-performance by the otheris not important

Applies only toreciprocal obligation

Applies to both unilateraland reciprocal obligations

Only a party to thecontract may demandfulfillment or seek therescission of thecontract

Even a third person whois prejudiced by thecontract may demand therescission of the contract.

Court may fix a periodor grant extension oftime for the fulfillmentof the obligation

Court cannot grantextension of time forfulfillment of theobligation

Its purpose is to cancelthe contract

Its purpose is to seekreparation for the damageor injury caused, thusallowing partial rescissionof the contract

or more alienations – liability of 1 infractor

a. consideration(Uncompressed) decompressor conveyance is


1. Entered into by guardian wheneverward suffers damage by more than1/4 of value of object

2. Agreed upon in representation ofabsentees, if absentee suffers lesionby more than ¼ of value of property

3. Contracts where rescission is basedon fraud committed on creditor(accion pauliana)

4. Objects of litigation; contract enteredinto by defendant w/o knowledge orapproval of litigants or judicialauthority

5. Payment by an insolvent – on debtsw/c are not yet due; prejudices claimof others

6. Provided for by law - art 1526, 1534,1538, 1539, 1542, 1556, 1560, 1567and 1659

ii. Under art 1382 - Payments made in astate of insolvency1. Plaintiff has no other means to obtain

reparation.2. Plaintiff must be able to return

whatever he may be obliged to returndue to rescission

3. The things must not have beenpassed to 3rd parties who did not actin bad faith

4. It must be made within theprescribed period (of 4 years)

OBLIGATION CREATED BY THE RESCISSION OFTHE CONTRACT: Mutual Restitution

a. Things w/c are the objects of the contractand their fruits

b. Price with interest

MUTUAL RESTITUTION NOT APPLICABLE WHENa. creditor did not receive anything from

contractb. thing already in possession of party in good

faith; subject to indemnity only; if there are 2st

e. transfer of all his property by a debtor whenhe is financially embarrassed or insolvent

f. transfer made between father and son wherethere is present any of the abovecircumstances

g. failure of the vendee to take exclusivepossession of the property

2. VOIDABLE CONTRACTS – intrinsic defect; validuntil annulled; defect is due to vice of consent orlegal incapacity

CHARACTERISTICS:a. Effective until set asideb. May be assailed or attacked only in an action

for that purposec. Can be confirmed ( NOTE: confirmation is

the proper term for curing the defect of avoidable contract)

d. Can be assailed only by the party whoseconsent was defective or his heirs or assigns

BADGES OF FRAUD QuickTime™ and a


inadequate or fictitiousb. transfer was made by a debtor after a suit

has been begun and while it is pendingagainst him

c. sale upon credit by an insolvent debtord. evidence of indebtedness or complete

insolvency

WHAT CONTRACTS ARE VOIDABLE:a. Minors ( below 18 )b. Insane unless acted in lucid intervalc. Deaf mute who can’t read or writed. Persons specially disqualified:

interdictione. In state of drunkennessf. In state of hypnotic spell

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civil

would TIFF (Uncompressed) decompressor into; contract isVOIDABLE (Art. 1338)picture.

have and a


MISTAKE qualities and giving it qualities it does not

false belief into somethingREQUISITES:a. Refers to the subject of the thing which is the

object of the contractb. Refers to the nature of the contractc. Refers to the principal conditions in an

agreementd. Error as to person - when it is the principal

consideration of the contracte. Error as to legal effect - when mistake is

have; LAWFUL misrepresentationNOTE:Expression of an opinion – not fraud unlessmade by expert and other party relied on theformer’s special knowledgeFraud by third person – does not vitiateconsent; only action for damages except if thereis collusion between one party and the thirdperson, or resulted to substantial mistake, mutualbetween parties.

mutual and frustrates the real purpose ofparties

VIOLENCE serious or irresistible force is employed to wrest

consent

INTIMIDATION

CAUSES OF EXTINCTION OF ACTION TO ANNULa. PRESCRIPTION - Period to bring an action

for Annulmenti. Intimidation, violence, undue influence -

4 years from time defect of consentceases

ii. Mistake, fraud – 4 years from time of one party is compelled by a reasonable and well-

grounded fear of an imminent and grave dangerupon person and property of himself, spouse,

discoveryiii. Incapacity - From time guardianship

ceasesascendants or descendants (moral coercion)

Carantes vs. CA, 76 SCRA 514, discovery ofUNDUE INFLUENCE person takes improper advantage of his power

over will of another depriving latter of reasonable

fraud must be reckoned to have taken place fromthe time the document was registered in theoffice of the register of deeds. Registration

freedom of choice

Martinez vs. Hongkong and Shanghai Bank, 12Phil 252, The doctrine on reluctant consentprovides that a contract is still valid even if one ofthe parties entered it against his wishes or evenagainst his better judgment. Contracts are alsovalid even though they are entered into by one ofthe parties without hope of advantage or profit.

FRAUD

constitutes constructive notice to the whole world

b. RATIFICATION

REQUISITESi. knowledge of reason rendering contract

voidableii. such reason must have ceased, except in

case of ratification effected by the guardianto contracts entered into by anincapacitated,

iii. the injured party must have executed an

Deleted: (9a)

Formatted: Font: 10 pt

Formatted: Font: 10 pt

thru insidious words or machinations ofcontracting parties, other is induced to enter intocontract w/o w/c he will not enter (dolo causante)

act which expressly or impliedly conveysan intention to waive his right

c. LOSS OF THE THING which is the object ofKINDS OF FRAUD IN THE PERFORMANCE OFOBLIGATION OR CONTRACTS

a. Causal Fraud (dolo causante) – deception ofserious charcter without which the other party

not QuickTime™enteredare needed to see this

the contract through fraud or fault of theperson who is entitled to annul the contractNOTE: Object is lost through a fortuitousevent, the contract can still be annulled, butthe person obliged to return the same can beheld liable only for the value of the thing at

b. Incidental Fraud (dolo incidente) – the time of the loss, but without interestdeception which are not serious and withoutwhich the other party would still have enteredinto the contract; holds the guilty party liablefor DAMAGES (Art. 1344)

thereon.Ratification cleanses the contract of itsdefects from the moment it was constituted.

c. Tolerated Fraud – includes minimizing thedefects of the thing, exaggeration of its god

3. UNENFORCEABLE CONTRACT – valid butcannot compel its execution unless ratified;

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as such is ipsoQuickTime™ and ajudicial declaration tothat effectare(Uncompressed) this declarationTIFF is merely a


extrinsic defect; produce legal effects only afterratified

g. Anyone may invoke the nullity of the contractwhenever its juridical effects are assertedagainst him

KINDS:a. Unauthorized or No sufficient authority –

entered into in the name of another when:KINDS OF VOID CONTRACT:

a. Those lacking in essential elements: noi. No authority conferred consent, no object, no cause (inexistentii. In excess of authority conferred ( ultra

vires)b. Curable by Ratification - Both parties

incapable of giving consent -2 minor or 2insane persons

ones) – essential formalities are not compliedwith ( ex: donation propter nuptias – shouldconform to formalities of a donation to bevalid )i. Those w/c are absolutely simulated or

c. Curable by Acknowledgment - Failure tocomply with Statute of Fraudsi. Agreement to be performed within a year

after making contractii. Special promise to answer for debt,

default or miscarriage of anotheriii. Agreement made in consideration of

promise to marryiv. Agreement for sale of goods, chattels or

things in action at price not less than500; exception: auction when recordedsale in sales book

fictitious – no causeii. Those which cause or object did not exist

at the time of the transaction – nocause/object

iii. Those whose object is outside thecommerce of man – no object

iv. Those w/c contemplate an impossibleservice – no object

v. Those w/c intention of parties relative toprincipal object of the contract cannot beascertained

b. Prohibited by lawv. Agreement for lease of property for more

than one year and sale of real propertyregardless of price

vi. Representation as to credit of another

c. Those expressly prohibited or declaredvoid by law - Contracts w/c violate any legalprovision, whether it amounts to a crime ornot

d. Illegal/Illicit ones – Those whose cause,TWO WAYS OF CURING UNENFORCEABLECONTRACTS:

a. Failure of defendant to object in time, tothe presentation of parole evidence in court,the defect of unenforceability is cured

b. Acceptance of benefits under thecontract. If there is performance in eitherpart and there is acceptance of performance,it takes it out of unenforceable contracts; alsoestoppel sets in by accepting performance,the defect is waived

object or purpose is contrary to law, morals,good customs, public order or public policy ;Ex: Contract to sell marijuana

4. VOID OR INEXISTENT – of no legal effectCHARACTERISTICS:

a. It produces no effect whatsoever eitheragainst or in favor of anyone

b. There is no action for annulment necessaryjure. A

decompressorneeded to see picture.

c. It cannot be confirmed, ratified or curedd. If performed, restoration is in order, except if

pari delicto will applye. The right to set up the defense of nullity

cannot be waivedf. Imprescriptible

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CONTRACTCONSTITUTECRIMINAL OFFENSE

DOES NOTCONSTITUTECRIMINAL OFFENSEbut is ILLEGAL/UNLAWFUL PER SE

Partiesare inparidelicto

a. No action forspecificperformance

h. No action forrestitution oneither side.The law willleave youwhere you are

i. Both shall beprosecuted

j. Thing/price tobe confiscatedin favor ofgovernment

a. No action forspecificperformance

b. No action forrestitution oneither side. Thelaw will leaveyou where youare

c. No confiscation

Onlyoneparty isguilty

a.No action forspecificperformance

b.Innocent partyis entitled torestitution

c. Guilty party isnot entitled torestitution

d. Guilty party willbe prosecuted

e.Instrument ofcrime will beconfiscated infavor of gov’t.

a.No action forspecificperformance

b. Innocent party isentitled torestitution

c. Guilty party isnot entitled torestitution

superior public(Uncompressed) decompressorpolicy intervenes EXCEPTION TO PARI DELICTO RULE - If


the purpose has been accomplished, orbefore any damage has been caused to a 3rd

personc. payment of money or delivery of property

made by an incapacitated persond. agreement or contract which is not illegal per

se and the prohibition is esigned for theprotection of the plaintiff

e. payment of any amount in excess of themaximum price of any article or commodityfixed by law or regulation by competentauthority

f. contract whereby a laborer undertakes towork longer than the maximum number ofhours fixed by law

g. one who lost in gambling because offraudulent schemes practiced on him isallowed to recover his losses (Art. 313 RPC)even if gambling is prohibited.

REQUISITES OF ILLEGAL CONTRACTS:a. Contract is for an illegal purposeb. Contract must be repudiated by any of the

parties before purpose is accomplished ordamage is caused to 3rd parties

c. Court believes that public interest will beserved by allowing recovery (discretionaryupon the court ) – based on remorse;illegality is accomplished when partiesentered into contract; before it takes effect– party w/c is remorseful prevents it

WHERE LAWS ARE ISSUED TO PROTECTCERTAIN SECTORS: CONSUMER PROTECTION,LABOR, USURY LAW

a. Consumer protection – if price ofcommodity is determined by statute, anyperson paying an amount in excess of themaximum price allowed may recover such

KINDS OF ILLEGAL CONTRACTS

PARI DELICTO DOCTRINE Both parties are guilty, no action against each

other; those who come in equity must come withclean hands; applies only to illegal contracts andnot to inexistent contracts; does not apply when a

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purpose has not yet been accomplished and Ifdamage has not been caused to any 3rd personOTHER EXCEPTIONS:a. Payment of Usurious interestb. payment of money or delivery of property for

an illegal purpose, where the party who paidor delivered repudiates the contract before

excessb. Labor – if law sets the minimum wage for

laborers, any laborer who agreed to receiveless may still be entitled to recover thedeficiency; if law set max working hoursand laborer who undertakes to work longermay demand additional compensation

c. Interest paid in excess of the interestallowed by the usury law may berecovered by debtor with interest from dateof payment

EFFECTS OF ILLEGAL CONTRACTSa. If one party is incapacitated, courts may

allow recovery of money, property deliveredby incapacitated person in the interest ofjustice; pari delicto cannot apply because an

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LACHES PRESCRIPTIONConcerned witheffect of delay

Concerned with fact of delay

Question ofinequity ofpermitting theclaim to beenforced

Question or matter of time

Not statutory StatutoryApplies in equity Applies at lawNot based on afixed time

Based on a fixed timeobligation hasarefailed to see this picture.

and


incapacitated person does not know what heis entering into; unable to understand theconsequences of his own action

b. If agreement is not illegal per se but merelyprohibited and prohibition is designated forthe protection of the plaintiff – may recoverwhat he has paid or delivered by virtue ofpublic policy

MUTUAL RESTITUTION IN VOID CONTRACTS

1. estoppel in pais (by conduct)c. estoppel by silenced. estoppel by acceptance of benefits

2. Technical estoppela. Estoppel by deedb. Estoppel by recordc. Estoppel by judgmentd. Estoppel by laches

LACHES OR STALE DEMANDS GENERAL RULE: parties should return to each

other what they have given by virtue of the voidcontract in caseWhere nullity arose from defect in essentialelementsa. return object of contract and fruitsb. return price plus interestEXCEPTION: No recovery can be had in cases

LACHES Failure or neglect, for an unreasonable and

unexplained length of time to do that which, byexercising due diligence, could or should havebeen done earlier; it is negligence or omission toassert a right within reasonable time warranting apresumption that the party entitled to assert it

where nullity of contract arose from illegality ofcontract where parties are in pari delicto; except:

either has abandoned it or declined to assert itELEMENTS

a. incapacitated – not obliged to return what hegave but may recover what he has given

b. other party is less guilty or not guilty

1. conduct on part of the defendant, or of one underwhom he claims, giving rise to the situation ofwhich complaint is made and for which thecomplaint seeks a remedy

TITLE 3. – NATURAL OBLIGATIONSSee Arts. 1423 - 1430

NATURAL OBLIGATIONS

2. delay in asserting the complainant’s rights, thecomplainant having knowledge or notice, of thedefendant’s conduct and having been affordedthe opportunity to institute a suit

they are real obligations to which the law deniesan action, but which the debtor may performvoluntarily.It is patrimonial, and presupposes a prestation.The binding tie of these obligations is in theconscience of man, for under the law, they do not

3.

4.

lack of knowledge or notice on the part of thedefendant that the complainant would assert theright on which he bases his suitinjury to the defendant in the event relief isaccorded to the complainant, or the suit in notheld to be barred.

have the necessary efficacy to give rise to anaction.

EXAMPLES OF NATURAL OBLIGATIONSENUMERATED UNDER THE CIVIL CODE:1. Performance after the civil obligation has

prescribed2. reimbursement of a third person for a debt that

has prescribed3. restitution by minor after annulment of contract4. Delivery by minor of money or fungible thing in

fulfillment of obligation5. Performance afterQuickTime™action to enforce civil

TIFF (Uncompressed) decompressorneeded

6. payment by heir of debt exceeding value ofproperty inherited

7. payment of legacy after will have been declaredvoi

KINDS

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Civil Law Summer Reviewer

ATENEO CENTRAL BAR OPERATIONS 2007

TITLE 4. – ESTOPPELSee Arts. 1431 - 1439

ESTOPPEL - a condition or state by virtue ofwhich an admission or representation is rederedconclusive upon the person making it andcannot be denied or disproved as against theperson relying thereon.



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Obligations+and+Contracts.printable

Documents

sources of obligation

civil code quasidelict2

quasi contract

parties civil code

law and5 quasidelicts

unilateral distinguishing

preliminary title

voluntary distinguishing