2016-2017
Obligations and Contracts Reviewer Obligation is a juridical necessity to give, to do or not to do.
one’s own act but also for those persons for whom one is responsible. e.g: fathers and in case of his incapacity, mothers are responsible for the acts or omission of their minor children who are still living in their company. Guardians: to the acts of the minor or incapacitated person living in their company
Requisites of Obligation: Obligation: 1. Passive Subject: Debtor or Obligor 2. Active Subject: Creditor or Obligee 3. Object or prestation: the subject of the Obligation 4. Juridical or Legal Ties Requisites of Prestation: Prestation: 1. It must be Licit or legal 2. It must be Physically or juridical possible 3. It must be Determinate or determinable 4. It must be of Pecuniary Value Sources of Obligation: 1. Law: Obligations arising from law shall not be presumed. 2. Contracts: Parties willingly comes into agreement with each other to execute such obligations. 3. Quasi-contracts: Voluntary and Unilateral in nature. Juridical relation resulting from lawful voluntary and unilateral act, by virtue of which the two parties are bound to each other. a. Negotiorum Gestio: voluntary management of anothers affair without the knowledge or consent of the latter b. Solutio Indebiti: Requisites: There is no right to receive the thing delivered The thing was delivered through mistake c. Other Quasi-Contracts: 4.
Delicts: A person criminally liable may also be civilly liable. (art 100, RPC)
5.
Quasi-Delicts: Whoever by act or omission causes damage to another there being fault or negligence is obliged to pay for the damage done. Such fault or negligence, there being no pre-existing contractual relation between the parties is called quasi-delicts. Vicarious Liability – Liability – Art. Art. 2180: The obligations imposed by the article 2176(Quasi-Delicts) shall not only for
Compliance of Prestations: Prestations: General: Art. 19: Every person must, in the e xercise of his right and in the performance of his duties, act with justice, give everyone his dues and observe honesty and good faith. Specific: Real obligations:
For person obliged to give something: take care of the thing stipulated in the prestation with the proper diligence of a good father of his family, unless the law or the stipulation of the parties requires another standard of care.(Art. 1163) The creditor has the right to the fruits of the thing if the time to deliver the obligation arises. However, he shall not acquire any real right over it until it was delivered to him. (1164) If the thing to be delivered is a determinate thing: Aside from the benefit of the Art. 1170, which pertains to the right to payment of damages, the creditor may compel the debtor to make the delivery. If the thing to be de livered is an indeterminate thing, he may ask the that the obligation be complied with at the expense of the debtor. If debtor delays or has promised to deliver the same thing to two different person with different interest, he shall be responsible for fortuitous event until he has effected the delivery. (1165)
Alonzo, Eymarie Julia A.
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Obligations and Contracts Reviewer
The obligation to give a determinate thing includes the delivery of all its Accessions and Accessories, even though they may not have been mentioned(in the obligation).(1166)
Accessions: Fruits of a thing, addition to or improvement to the principal o Accessories: things joined or included with the principal thing for its embellishment, better use or completion Positive Personal Obligations: (1167) If a person obliged to do something but fails to do it, the same shall be executed at his cost. The same shall be done if done in contravention of tenor. “What has been poorly done be undone.” Negative Personal Obligation: (1168) If the obligation consist in not doing and the debtor has done what has been forbidden him, it must be undone at his expense. “What is forbidden to be done must be undone” o
Causes of Breach of Obligations: (1170) “Those who in the performance of their obligation are guilty of Fraud, Negligence or Delay and those who in any manner Contravene the Tenor thereof shall be liable to damages.” 1.
Fraud: Dolo Incidente (1171) Incidental Fraud Responsibilities arising from fraud are demandable in all obligations. Waiver of an action for future fraud is void. Committed in performance of the obligation already existing Dolo Causante (1338) Causal Fraud Through insidious words or machination of one of the contracting parties the other is induced in entering into a contract, w hich without them he would not have agree d to.
2.
Fraud is committed in the execution of the contract itself. Negligence: Responsibility arising from negligence is also demandable but such liability may be regulated by the courts according to circumstances.(1172) The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person of the persons of the time and of the place.(1173) When negligence shows bad faith provisions 1171(fraud) shall apply.(1173) o Culpa Contractual negligence in contracts resulting in their breach(1172) Not a source of obligation, but it only makes debtor liable for damages o Culpa Aquiliana Negligence which by itself is a source of obligation between parties not so related before by any preexisting contract. Quasi-delicts or torts Fortuitous Event: No person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. Exceptions: (a) in cases expressly specified by law; (b) when otherwise declared in the stipulation , or; (c) when the nature of the obligation requires the assumption of risk . Requisites: 1. INDEPENDENT of Human will, or at least of the debtor’s will; 2. Could NOT be FORESEEN, or though foreseen, is inevitable; 3. Makes it IMPOSSIBLE for the debtor to comply with his obligation in a normal manner; and 4. Debtor must be FREE from any participation in or aggravation of the injury to the creditor, that is there is NO
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Obligations and Contracts Reviewer CONCURRENT NEGLIGENCE on the debtors part. 3.
4.
Delay: Those obliged to deliver or to do or not to do something incur in delay from the time the oblige judicially or extra judicially demands from them the obligation. However demand is not necessary in order that delay may exist: 1. When the obligation or the law expressly so declares; or 2. When the nature and circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or 3. When the demand would be useless as when the obligor has rendered it beyond his power to perform *in RECIPROCALOBLIGATIONS: Neither party incurs delay if the other party is does not comply or is not ready in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begin.(1169) KINDS OF DELAY: a. Mora Solvendi- Delay on the part of the debtor to fulfill obligation o Ex Re- Default in real obligation o Ex Personae- Default in Personal Obligations b. Mora Accipiendi- Delay on the part of the creditor to accept the performance of the obligation Requisites: o Fulfillment requires the COOPERATION of the on the part of the creditor o Debtor has DONE what is incumbent upon him o REFUSAL by creditor c. Compensatio Morae Delay of the obligors in reciprocal obligations Contravention of Tenor: Violation of the terms and conditions stipulated in the obligation
Exception: Must not be due to FORTUITOUS EVENTS or FORCE MAJEURE.
REMEDIES FOR BREACH A. Extra-judicial No Court Action is needed: The unpaid seller of a thing, though the ownership of the good may been passed to the buyer, has the following remedies: 1. A lien on the good or the RIGHT TO RETAIN THEM FOR THE PRICE, while he is in possession of them; 2. In case of insolvency of the buyer, a RIGHT TO STOPPING THE GOODS IN TRANSITU after he has parted with the possession of them; 3. Right to RESALE 4. Right to RESCIND the sale.(1526) When the ownership of the good has not been passed to the buyer, the unpaid seller has, in addition to his other remedies, a RIGHT OF WITHHOLDING DELIVERY.(1526) In the sale of immovable property, even though it may be stipulated that upon failure to pay the price at the time agreed upon rescission of the contract shall of right take place the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or a notarial act. After the demand the court may not grant him a new term.(1592) B. Judicial Principal Remedies: If the thing to be delivered is a determinate thing, aside from the rights provided for in the Art 1170, the creditor may compel the debtor to make delivery.(1165) If the thing to be delivered is an indeterminate thing, he may ask that the obligation be complied with in the expense of the debtor. (1165) If a person is obliged to do it but fails to do it, the same shall be executed at his cost. The same rule if he does it in the contravention of tenor, it may also be decreed that what has been poor ly done be undone.(1167)
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When the obligation consists of not doing something but the debtor has done what is forbidden upon him, it shall also be undone at his expense.(1168) The power to rescind obligation is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. (1191) The injured party may choose between rescission of the obligation or its fulfillment, with payment of damages to each case. However, the injured party may still choose rescission, even on the onset he chose fulfillment, should the latter become impossible. (1191). Subsidiary Remedies: The creditors, having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights to bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them(1177). Ancillary Remedies:
KINDS OF OBLIGATIONS: 1. Pure and Conditional Pure Obligation: one which is not subject to any condition and no specific date is mentioned for its fulfillment and is therefore, immediately demandable. Conditional Obligation: one whose consequence are subject in one way or another to the fulfillment of a condition. Kinds of Condition: a. Suspensive Condition: demandability of the obligation is suspended until the happening of the uncertain event which constitutes the condition. b. Resolutory Condition: one the fulfillment of which will extinguish an obligation alre ady existing. Effects of Condition: a. In Real Obligation: An obligation to give subject to a suspensive condition, becomes demandable only upon the fulfillment of the condition. However, once the condition
is fulfilled, its effects shall retroact to t he day when the obligation constituted. b. In Personal Obligations: No fixed rule is provided. The courts are empowered, through the use of sound discretion to determine in each case the retroactive effect of the suspensive condition has been complied with. In case of improvements, loss or deterioration of the thing during pendency: a. If lost without the fault of the debtor: obligation is EXTINGUISHED. b. If lost through the fault of the debtor: debtor is OBLIGED TO PAY DAMAGES(When thing perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or cannot be recovered it is deemed and understood as lost) c. When the thing deteriorates without the fault of the debtor: impairment must be BORNE BY THE CREDITOR. d. If thing deteriorates through the fault of the debtor: creditor may RESCIND obligation or demand FULFILLMENT with INDEMNITY OF DAMAGES in either case. e. If improved by nature of the thing or by time: improvement shall inure it the BENEFIT OF THE CREDITOR. f. If improved in the expense of the debtor: he shall have NO RIGHT other than that granted to the usufructuary. Effects of Fulfillment of Resolutory Condition: a. In Real Obligations: Obligation is extinguished; parties are obliged to return to each other what they have received under the obligation. b. In personal Obligations: Court shall determine the retroactivity of the obligation and may even disallow retroactivity. 2. With Period: Obligations with Period are one whose consequences are subjected in one way or another to the expiration of said period. *Period: future and CERTAIN event upon the arrival of which the obligation (or right) subject to it either arises or terminated. Kinds of period or Term: According to effect
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Obligations and Contracts Reviewer a.
Suspensive Period: obligation begins only from a day certain upon the arrival of the period. b. Resolutory Period: The obligation is valid up to the a day certain and terminates upon the arrival of the period According to Source: (who fixes the period) a. Legal Period: Fixed by law b. Conventional or Voluntary Period: agreed by the parties c. Judicial Period: Fixed by the court According to Definiteness: a. Definite Period: When it is fixed or known when it will come b. Indefinite Period: not fixed and not known when it will come. Effects of Period: The creditor has the right to the fruits of the thing from the time the obligation to deliver it arises. However he shall acquire no real right over it until the same has been delivered to him.(1164) Anything paid or delivered before the arrival of the period, the obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered with the fruits and interests. In case of loss, deterioration and improvement before the arrival of period: 1189: a. If the thing was lost without fault of t he debtor: OBLIGATION IS EXTINGUISHED. b. If lost through the fault of the debtor: he shall be obliged to pay damages c. If thing deteriorates without debtor’s fault: impairment shall be borne by the creditor. d. If thing deteriorates through the fault of debtor: creditor may rescind or compel for the fulfillment of obligation with indemnity of damages in both cases. e. Thing is improved by nature: Improvement shall inure to the benefit of the creditor f. If improved at the expense of the debtor: No other right than that granted to the usufructuary. When court may fix period:
a.
If the obligation does not fix a period but from its nature and circumstances it may be inferred that a period was intended b. When period depends on the debtor c. When under the circumstances it may have been contemplated by the parties *once fixed by the court, period may no longer be changed by them.
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