Law on Obligations and Contracts

This is the person who is demanding the performance of the obligation.

Active Subject

The one bound to perform the prestation or to fulfill the obligation or duty.

Passive Subject

This is the subject matter of the obligation. It is also the conduct required to be observed by the debtor. This is the to give, to do or not to do.

Object/Prestation

This is what binds the parties to the obligation. The sources of obligation.

Efficient Cause/Juridical Tie

This is an obligation, if not fulfilled when it becomes due and demandable, may be enforced  in court through action. 

Civil Obligation

This is a special kind of obligation which cannot be enforced in court but which authorizes the retention of the voluntary payment or performance made by the debtor.

Natural Obligation

This is a duty or responsibility that one feels bound to perform because of personal beliefs and values.

Moral Obligation

The obligation to give.

Real Obligation

The obligation to do or not to do.

Personal Obligation

This is the Obligor

Debtor

This is the Obligee

Creditor

It must be expressly or impliedly set forth and cannot be presumed.

Law

It arises from stipulations of the parties.

Contracts

It arises from lawful, voluntary and unilateral acts and which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another.

Quasi-Contracts

It arises from civil liability which is the consequence of a criminal offense.

Delicts

It arises from damage cause to another through an act or omission, there being no fault or negligence, but no contractual relation exists between the parties.

Quasi-Delicts/Torts

This takes place when a person voluntarily takes charge of another's abandoned business or property without the owner's authority. (Unauthorized management)

Negotiorium gestio (gesture)

This takes place when something is received when there is no right to demand it, and it was unduly delivered thru mistake. (Undue payment)

Solutio Indebiti (debt)

Scope of Civil Liability in Delicts

• Restitution - ibabalik yung thing or yung value ng thing

• Reparation - babayaran yung damage doon sa thing

• Indemnification - babayaran yung tao na napinsala

Requisites of Quasi-Delict

1. There must be an act or omission by the defendant

2. There must be fault or negligence of the defendant

3. There must be damaged caused to the plaintiff

4. There must be a direct relation or connection of cause and effect between the act or omission and damage

5. There is no pre-existing contractual relation between the parties.

Spontaneous products of the soil, the young and other products of animals.

Natural Fruits

Produced by lands of any cultivation or labor.

Industrial Fruits

Those derived by virtue of juridical relation.

Civil Fruits

Fruits of the thing or additions to or improvements upon the principal. Those which are naturally or artificially attached to the thing. (earphone in a cellphone)

Accessions

Things included with the principal for the latter's embellishment, better use, or completion. (charger in a cellphone)

Accessories

Duties of Debtor in Obligation To Give a Determinate Thing

1. To preserve or take care of the thing due

2. To deliver the fruits of the thing

3. To deliver its accessions and accessories

4. To deliver the thing itself

5. To answer for damages in case of non-fulfillment or breach

Duties of Debtor in Obligation To Give a Generic Thing

1. 1.    To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances

2. To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor thereof.

It is a mere failure to perform an obligation at the appointed time.

Ordinary Delay

Remedies of Creditor in Real Obligation

1. Demand the specific performance or fulfillment (if it is still possible) of the obligations with a right to indemnity for damages

2. Demand recission or cancelation of the obligation with a right to recover damages

3. Demand the payment of damages only where it is the only feasible remedy

If a person obliged to do something fails to do it, the creditor can compel him to do it. (T/F)

False (the creditor cannot compel the debtor to do what he doesn’t want to do)

Delay can still be incurred even without demand when:

1. The obligation or the law expressly so declares

2. When timing is of the essence

3. When demand would be useless, as when the obligor has render it beyond his power to perform (Useless Demand)

Tantamount to non-fulfillment of the obligation (breach of obligation) and arises an extrajudicial or judicial demand was made upon the debtor.

Legal Delay

Delay on the part of the debtor/obligor

Mora Solvendi

Delay on the part of the creditor/obligee to accept the performance of the obligation.

Mora Accipiendi (Accept)

Delay of both obligors in reciprocal obligations

Compensatio Morae

There is a delay when the creditor demand the negative personal obligation (T/F)

False

Effects of Mora Solvendi:

• The debtor is guilty of breach of the obligation

• He is liable for the interest in case of obligations to pay more or damages in other obligations

• He is liable even for a fortuitous event when the obligation is to deliver a determinate thing.

Effects of Mora Accipiendi:

• The creditor is guilty of breach of obligation

• He is liable for damages suffered, if any, by the debtor

• He bears the risk of loss of the thing due

• Where the obligation is to pay money, the debtor is not liable for interest from the time of the creditor’s delay

• The debtor may release himself from the obligation by the consignation of the thing or sum due.

Deliberate intentional evasion of the faithful fulfillment of an obligation

Fraud (Dolo)

Voluntary act or omission of diligence, there is no malice, which prevents the normal fulfillment of an obligation.

Negligence (Culpa)

Default or tardiness in the performance of an obligation after it has been due and demandable

Delay (Mora)

It is employed in the execution of the contract in order to secure consent.

Causal Fraud

Committed in the performance of an obligation already existing because of a contract. Deceives one party but is not essential to secure consent.

Incidental Fraud

Responsibility arising from fraud is demandable in all obligation, but such liability may be regulated by the court (T/F)

False (liability from negligence can be regulated by the court, while fraud is not)

Kinds of Diligence Required

1. Stipulation, orally or in writing

2. Law

3. Diligence expected of a good father of a family or ordinary diligence

Requisites of a Fortuitous Event

1. The event must be independent of human will or at least of the obligor’s will

2. The event could not be foreseen (unforeseeable), or if it could be foreseen, must be impossible to avoid (unavoidable)

3. The event must be of such a character as to render it impossible for the obligor to comply with his obligation in a normal manner; and

4. The obligor must be free form any participation in, or the aggravation of the injury to the obligee

One which cannot be contradicted, like the presumption that everyone is conclusively presumed to know the law.

Conclusive Presumption

One which can be contradicted or rebutted by presenting proof to the contrary

Disputable Presumption

Remedies Available to Creditors for the Satisfaction of Their Claims

1. Exact fulfillment with the right to damages;

2. Pursue the leviable property of the debtor;

3. After having pursued the property in possession of the debtor, exercise all the rights and bring all the actions of the debtor (kolektahin yung utang ng may utang sa debtor niya)

4. Ask the court to rescind the contracts which the debtor have done to defraud him when he cannot in any other manner recover his claim.

An obligation which does not contain any condition or term upon which the fulfillment is made to depend.

Pure Obligation

Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once. (T/F)

True

An obligation subject to a condition.

Conditional Obligation

Its fulfillment gives rise to an obligation.

Suspensive Condition

Its fulfillment extinguishes the obligation which already existing.

Resolutory Condition

When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be ______________

Obligation with a period

When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void (T/F)

True

When the fulfillment of the condition depends upon chance or upon the will of a 3rd person, the obligation is void.

False

The condition depends upon the will of one of the contracting parties

Potestative

The condition depends upon the chance or upon the will of a 3rd person

Casual

The condition depends partly upon the chance or partly upon a 3rd person

Mixed

When suspensive condition depends upon the will of creditor (Valid or Not Valid)

Valid

When suspensive condition depends upon the will of debtor (Valid or Not Valid)

Not Valid

When resolutory condition depends upon the will of debtor/creditor (Valid or Not Valid)

Valid

On Jan. 20, S agreed to sell his land to B for P10k if B lose a case involving the recovery of another parcel of land. On Apr. 10, S sold his land to C. B lost the case on Dec. 1. Who has the better right to the land?

B (The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation.)
In this case, the sale to C is voidable.

The debtor who paid by mistake prior to the happening of the suspensive condition has a right to recover what he has paid (T/F)

True

Instances when debtor loses the benefit of the using the period

(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt (need not be judicially declared)

(2) When he does not furnish to the creditor the guaranties or securities which he has promised (hindi niya naibigay yung guaranties or securities)

(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory (yung guaranty ay nasira o nawala)

(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period

(5) When the debtor attempts to abscond (tatakas)

A, B, and C are debtors to give D a car valued at P240,000.00. On the date of delivery, A and B are willing to deliver but C is not. In this case, who will D sue?

A, B, and C (because the object is indivisible)

A, B, and C are debtors to give D a car valued at P240,000.00. On the date of delivery, A and B are willing to deliver but C is not. In this case, how much is the liability of A?

80,000 (240k/3)

A, B, and C are debtors of D and E for the amount of P240,000.00. How much can D collect from A?

40,000 (240k/3/2)

A, B, and C are solidary debtors of D and E for the amount of P240,000.00. How much can D collect from A?

120,000 (240k/2)

A joint creditor can assign his rights even without the consent of the other creditors

True

A and B are solidary liable to C in the amount of 10k. B paid C, subsequently, C remitted A’s share. How much is the liability of A to B?

5k (the obligation is extinguished because of payment not remission)

An obligation wherein various prestations are due but the performance of one of them is sufficient to extinguish the obligation

Alternative Obligation

Who has the right of choice in alternative obligation?

Debtor, unless it has been expressly granted to the creditor

When does alternative obligation becomes simple obligation?

When it is communicated to the other party, or when among the prestations, only one is practicable

The creditor may demand payment from any one of the solidary debtors or some or all of them simultaneously.

True (as long as the debt has not been fully collected)

When Debtor has the right of choice, and one or some of the prestations was lost through fortuitous event or through the debtor’s fault. What is the effect?

The debtor may deliver any of the remainder, or that which remains if only one subsists.

When Debtor has the right of choice, and all of the prestations are lost through fortuitous event

The obligation is extinguished

When Debtor has the right of choice, and all are lost through debtor’s fault

The debtor shall pay the value of the last thing or service that was lost plus damages

When Creditor has the right of choice, and only one or some was lost through fortuitous event

the debtor shall deliver that which the creditor should choose among the remainder, or that which remains if only one subsists

When Creditor has the right of choice, and only one or some was lost through debtor’s fault

The creditor may claim any of those subsisting or the price of those which were lost through the debtor’s fault plus damages

When Creditor has the right of choice, and all are lost through debtor’s fault

The creditor may claim the price of any of them plus damages.

When only one prestation has been agreed upon, but the obligor may render another in substitution

Facultative Obligation

Effect of loss:

Before Substitution:

If the principal thing is lost through fortuitous event

The obligation is extinguished

Effect of loss:

Before Substitution:

If the principal thing is lost due to debtor’s fault

The debtor shall be liable for damages

Effect of loss:

Before Substitution:

If the substitution is lost, regardless of cause

The debtor is not liable

Effect of loss:

After Substitution:

If the principal thing is lost, regardless of cause

The debtor is not liable

Effect of loss:

After Substitution:

If the substitution is lost through a fortuitous event

The obligation is extinguished

Effect of loss:

After Substitution:

If the substitution is lost due to debtor’s fault

The debtor shall be liable for damages

The debtor can exempt himself from the performance of the obligation by paying the penalty. (T/F)

False

In an obligation with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interest in case of non-compliance (T/F)

True

The general rule is that the creditor can accept payment or performance by a third party (T/F)

False

Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights (T/F)

True

Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing delivered, or insofar as the payment has been beneficial to him (T/F)

True

It is a kind of payment whereby the property is alienated to the creditor in satisfaction of a debt in money

Dation En Pago (Dation in Payment)

Requisites of Dation En Pago

1. The existence of money obligation

2. The alienation to the creditor of a property by the debtor with the consent of the creditor

3. The satisfaction of the money obligation of the debtor

Requisites for valid application of payment

1. There is only one debtor and creditor

2. The debtor owes the creditor two or more debts

3. Debts are of the same kind or identical in nature

4. All debts are due and demandable

5. The payment made is not sufficient to cover all obligations

How is the application of payment is made

1. The debtor will choose what debt will he pay

2. If the debtor did not choose, the creditor will choose

3. If both of them did not choose, it will apply to:

   a. Most Onerous

   b. If debts are of the same kind, Proportionately

It is a kind of payment where the debtor may assign his property to his creditors in payment of his debts. This shall only release the debtor from responsibility for the net proceeds of the thing assigned.

Payment by Cession

If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from the responsibility by the consignation of the thing or sum due. (T/F)

True