Professional Documents
Culture Documents
Obligation
[1156] a juridical necessity to give, to do or not to
do
Elements
1. Passive subject (Obligor/Debtor)
- person bound to fulfill obligation
3. Object (Prestation)
Delict
Criminal or malicious intent
or criminal negligence
For punishment
Public interest
Criminal and civil liability
Quasi-delict
Negligence only
For indemnification
Private interest
Civil liability only
Classifications
Pure not subject to a condition or period
Conditional depends on a future event
With a period
Kinds
Civil
obligations
Natural
obligations
Enforceability
Court action
Basis
Positive law
Conscience of
debtor
Equity and
natural justice
Sources
1. Law [1158]
2. Contracts [1159]
3. Quasi-contracts [2142]
5. Quasi-delicts [2176]
Individual unipersonal
Collective plurapersonal
1. Joint
2. Solidary
Kinds of Prestations
1. To give purpose to transfer title or real rights
Determinate thing
1. to deliver the thing itself [1244]
2. to preserve the thing diligence of a good
father of a family (ordinary care) [1163]
3. to deliver the accessions and accessories
4. deliver the fruits [1166, 1164]
Generic thing creditor cannot demand thing of
superior quality; debtor cannot deliver
thing of inferior quality [1246]
2. To do
3. Not to do
Breach of Obligation
1.
2.
3.
4.
5.
Pre-existing obligation
Conduct of the party in violation of the contract
Accountability of the conduct
Absence of justification
Injury to the other party
Modes of Breach
1. Fraud (Dolo) [1171]
- voluntary execution of wrongful act
- waiver of action for future fraud is
void
Dolo Incidente
- committed while in the performance of the
contract; consent was not based on the fraud
Dolo Causante
- fraud is the root of the obligation; injured
party would not have entered the contract had
he known about the fraud
Culpa
Contractual
Culpa
Aquiliana
Law presumes
negligence as the cause
of the damage
Interest is due
Accion
Subrogatoria
Accion
Pauliana
There must be a
fraudulent intent
No prescription period
Usurious Transactions
- governed by special laws [1175]
- interest paid in excess of the interest
allowed by the usury laws may be recovered
by the debtor [1413]
Fulfillment of Obligations
- receipt of the principal by the creditor give
rise to the presumption that the interest has
been paid
- receipt of later instalment of a debt give rise
to presumption that the prior instalment have
been paid [1176]
Transmissibility of Rights
- all rights acquired in virtue of an obligation
are transmissible if there is no stipulation to
the contrary [1178]
Kinds of Obligations
(Pure and Conditional, Reciprocal, With a Period, Alternative, Joint
and Solidary, Divisible and Indivisible, With a Penal Clause
As to MODE
Positive
- happening of an event [1184]
Negative
- non-happening of an event [1185]
[1189]
Suspensive
With fault of the
Without fault of the
debtor
debtor
Loss
Deterioration
Obligation extinguished
Impairment is to be
borne by the creditor
Improvement
As to EXPRESSION
Express
- period is specified
Implied
- from the nature and circumstances of the
obligation it can be inferred that a period was
intended
As to DEFINITENESS
Definite
- period is fixed
Indefinite
- duration is not fixed in an obligation to pay
when ones means permit
As to SOURCE
Voluntary
- fixed by the parties
Legal
- fixed by law
Judicial
- fixed by the court
Alternative Obligations
- debtor is required to perform completely
only
one of the several obligations provided [1199]
- right of choice belongs to the debtor unless
it
has been expressly granted to the creditor
[1200]
- the choice must be communicated to the
creditor [1201]
- in case of loss or improvement:
- if only one is lost, debtor shall chose between
the remaining ones
- if only one remains, the obligation ceases from
being an alternative obligation and becomes
simple
- if all alternatives are lost by fault of the
debtor, the creditor must be indemnified for
damages
- if all alternatives are lost by fortuitous event,
the creditor bears the loss
Solidary creditors
Common debtor
Solidary co-creditors
Novation, compensation,
confusion or remission made by
any of the creditors shall
extinguish the obligation
Solidary debtors
Common creditor
Solidary co-debtors
No contribution may be
demanded if payment is made
after obligation has prescribed
debtor:
Indivisible
Solidary
KINDS
Natural
- prestation is physically indivisible
Legal
- indivisible by law
Conventional
- intended by the parties
3. Object (solutio)
What is to be paid?
Payment or Performance
- carrying out of an obligation
- delivery of the money due
- requires acceptance of the creditor
- debtor has burden of proving payment
1. payor (solvens)
2. payee (accipiens)
3. object (solution)
4.
5.
6.
7.
manner (integrity)
time
place
expenses of making payment
4. Manner (integrity)
How is payment made?
1. Payor (solvens)
Who can pay?
is
Without debtors
consent
With debtors
Consent
5. Time
When is payment made?
-
6. Place
Where is payment made?
Reimbursement
Personal action to recover
the amount paid
Subrogation
Not only reimbursement but
the exercise of other rights
attached to the original
obligation
2. Payee (accipiens)
Who can accept payment? [1240]
debtor
Application of Payments
- designation of the debt to which should be
applied the payment made by a debtor who
has various debts of the same in favor of one
and the same creditor
1.
2.
3.
4.
5.
plurality of debts
plurality of creditors
partial or relative insolvency of the debtor
abandonment of the totality of the debtors
properties for the benefit of the creditors
5. acceptance by the creditors
Consignation
- deposit of the thing due made by
the debtor in lawful form, whenever
the creditor refuses or cannot accept
payment
- purpose is to avoid delay
- not required when the payment is
voluntary and not coercible
- if creditor accepts consignation, the
obligation is extinguished
- if the court declares that the consignation
was properly made, the obligation is
extinguished
- if before approval of the court the debtor
withdraws the deposit, the obligation
subsists
- if without creditors approval,
guarantors and co-debtors remain
liable
- if with creditors approval, guarantors and
co-debtors are
liberated
Procedure in Consignation
1. Tender of payment and unjustified
rejection
2. First notice to the interested parties to
give creditors a chance to reconsider
and accept payment thereby avoiding
litigation
3. Filing the complaint against the creditor
4. Judicial deposit of the thing due with
proof of tender and notice
5. Second notice to interested parties
6. Trial and judgment
7. Incidents of consignation
Loss or Impossibility
Cession
Dacion
Presupposes insolvency of
debtor
Novatory
Tender of Payment
- declaration of intention by the
debtor
manifesting his firm decision to pay
- coupled with a demand upon a
Physical impossibility
Legal impossibility
Condonation or Remission
-gratuitous abandonment by a creditor of his
right
1.
2.
3.
4.
5.
it must be gratuitous
accepted by the obligor
parties must have capacity
must not be inofficious
made expressly and comply with the forms of donation
Rules in Condonation
1. subject to the rules that govern
inofficious donations
2. remission in advance of future
obligation is void
Compensation
Confusion
Two obligations
There is impossibility of
payment
As to EXTENT
Total
- both obligations are of the same amount and
are entirely extinguished [1281]
Partial
- when two obligations are of different amounts
and a balance remains
As to ORIGIN
Legal
- by operation of law even without the
knowledge of the parties
Conventional
- by agreement of the parties
Judicial
- effected by decision of the Court
Facultative
- one of the parties have the option to claim
compensation or to object to it
Legal Compensation
1. each one of the obligors be bound principally
2. both debts consist in a sum of money, or of
consumable things of the same kinds and quality
3. two debts are due and demandable
4. two debts are liquidated
5. no retention or controversy commenced by a
third person
6. compensation not prohibited
Prohibitions:
or
Objective Novation
1. change on the nature or quality of the
subject matter
2. change of causa or consideration
3. change of the principal conditions or
terms
Subjective Novation
1. substitution or by change of debtor
Expromision
1. consent of two parties: creditor and new
debtor
2. knowledge or consent of old debtor not
required
3. old debtor is released
4. insolvency of the new debtor does not
revive the old obligation
Delegacion
1. consent of the old debtor, new debtor
and the creditor
2. insolvency of the new debtor revives the
obligation of the old debtor
2. contrary to morals
Contract
[1305] a meeting of minds between two persons
whereby one binds himself with respect to the other to
give something or render some service
Elements
1. Essential
1. Consent
2. Object
3. Cause
2. Natural
3. Accidental
Characteristics
1. Obligatory force [1308]
Classification
1. Subject matter
Things
Services
2. Name
Nominate law gives the contract a special name
Innominate [1307] no special name
2. Mutuality [1308-1310]
3. Relativity
Parties
1. Auto-contracts
2. Freedom to contract
Special disqualifications:
Limitations:
1. contrary to law
3. Perfection
Consensual [1315] consent is sufficient
Real [1316] delivery is required
4. Degree of Dependence
Preparatory contract based on future transaction
Principal contract may exist alone
Accessory depends upon some other contract
5. Form
Common/Informal - loan
Special/Formal law requires formalities
6. Purpose
Transfer of Ownership
Conveyance of Use
Rendition of Services
7. Parties obligated
Unilateral only one party is bound
Bilateral both parties are bound to reciprocal ones
8. Cause
Onerous exchange of correlative values
Gratuitous no correlative prestation
9. Risk
Commutative fulfillment is predetermined
Aleatory fulfillment is dependent upon chances
Stages
1. Preparation
2. Perfection
3. Consummation or Death
Promise
Perfect Promise
Offer
Third Persons
1. Stipulations pour autrui [1311]
Acceptance
- must be absolute [1319]
Express
- oral or written acceptance
Implied
- inferred by the conduct of the offeree
Qualified
- constitutes a counter-offer
Consent
- conformity of wills (offer and acceptance)
1. plurality of parties
2. parties be capable of formulating a desire or intent
Incapacity VOIDABLE
Prohibition VOIDABLE
Against public policy - VOID
3. no vice or defect in their wills; consent not vitiated
4. intent be expressed in due time and in proper form
5. no conflict between intent and expression or
declaration
or
Legal Capacity
- unemancipated minors and insane
demented persons as well as deafmutes who do not know how to read
and write cannot give consent [1327]
Vices of Consent
1. Mistake or Error
1. not intentional or reckless
2. excusable without failure to take
advantage of the opportunity to ascertain
the truth
3. mistake of fact, not of law
4. past or present mistake; non-realization of
the partys expectation is not an error
5. material mistake; must refer to factors
inducing consent
- substance of the thing
- principal qualities of the object
- quantity
- identity of the party
ascendants
is
1. misrepresentation or concealment
2. serious
3. employed by only one of the parties
bad faith or
withwhen
intent to
deceive
- failure4.toindisclose
facts
there
5. reveal
induced them
the consent
of the other
a duty to
constitutes
Object [1347]
- subject matter or the obligation created
- all things which are not outside the
commerce of men, including future things may
be the object of a contract
- all rights not intransmissible
- all services not contrary to law, morals, good
customs, public order or public policy
1.
2.
3.
4.
Form of Contracts
General Rule and Exception [1356]
General Rule:
Contracts shall be obligatory, in whatever
form they may have been entered into,
provided all the essential requisites for their
validity is present.
Exception:
When the law requires that a contract be in
some form in order that it may be valid or
enforceable or that a contract be proved in a
certain way, that requirement is absolute and
indispensable.
Kinds of Formalities
1. For the validity of contracts
- oral donation of a movable requires the
Cause [1350]
- essential or more proximate purpose which
the contracting parties have in view at the
time of entering into the contract
- consideration
In ONEROUS contracts
- cause for each contracting party is the prestation or
promise of a thing or service by the other
- reciprocal obligation
In REMUNERATORY contracts
- cause is the service or benefit which is remunerated
- purpose is to reward the service that had been
previously rendered
In GRATUITOUS contracts
- cause of which is the mere liberality of the benefactor
Cause
Motive
May be unknown
Essential element of a
contract
Defective causes
1. Absence of cause and unlawful case
[1352]
Formal
Real
Unenforceabl
Others
Contracts
Contracts
Statute of Frauds
Not binding
unless
formality is
observed
Binding even if
made orally
Binding
even if
made orally
Not
enforceable by
action if
formality is
not observed
Not enforceable
if there is no
delivery
Not enforceable
without
memorandum in
writing
Enforceable
by action as
between
parties
Reformation of Instruments
- remedy in equity by means of which a
written instrument is made or construed so as
to express or conform to the real intention of
the parties when some error or mistake has
been committed
1. meeting of the minds upon the contract
2. true intention of the parties is not expressed
3. failure of the instrument to express the true intent is
due to mistake, fraud, inequitable conduct, accident or
relative simulation
- person mistaken
- person defrauded
- victim of the inequity
- victim of the accident
- persons whose rights are prejudiced
by the relative simulation
Intention
- deduced from the language employed by the
parties and the terms of the contract, where
unambiguous, are conclusive in the absence of
averment and proof of mistake
- the question being not what the intention
was but what is express in the language used
- if the words appear to be contrary to the
evident intention of the parties, the intention
shall prevail [1370]
- contemporaneous and subsequent acts of
the parties shall be principally considered
[1371]
Interpreting
Defective Contracts
Rescissible, Voidable or Annullable, Unenforceable, Void or
Inexistent
Rescissible Contracts
- those contracts validly agreed upon because
the essential elements exist but due to injury
or damage, the remedy of rescission is
granted in interest of equity
Rescission remedy granted by law to the contracting parties
Kinds [1381]
1. entered into by guardians whenever the wards
whom they represent suffer lesion by more than
one-fourth of the value of the thing
2. agreed upon in representation of absentees, if the
absentee suffers lesion by more than one-fourth
of the value of the thing
3. undertaken in fraud of creditors
4. things under litigation if they have been entered
into by the defendant without the knowledge and
approval of the litigants or of competent judicial
authority
5. all other contracts specially declared by law
Characteristics
1. their defect consists in injury or damage either to
one of the contracting parties or to third persons
2. they are valid before rescission
3. they can be attacked directly only and not
collaterally
4. they can be attacked only either by a contracting
party or by a third person who is injured or
defrauded
5. they can be convalidated only by prescription and
not by ratification
1. contract is rescissible
2. party asking for rescission has no other legal
means
3. able to restore whatever he may be obliged to
restore
4. object of the contract is not in the possession of
a third person acting in good faith
5. actionshall
is brought
rescission
only within
be tothe
theprescriptive
extent toperiod
of four years
Voidable Contracts
- those contracts which possess all the
essential requisites of a valid contract but one
of the parties is incapable of giving consent,
or
consent is vitiated by mistake, violence,
intimidation, undue influence or fraud
- these are valid and binding unless annulled
by proper action in court
- once ratified, they become absolutely valid
[1390]
Annulment remedy granted by law for reason of public
Kinds [1390]
1. one of the parties is incapable of giving consent
2. consent is vitiated by mistake, violence,
intimidation, undue influence or fraud
Characteristics
1. their defect consists in the vitiation of consent of
one of the contracting parties
2. they are binding until they are annulled by a
competent court
3. they are susceptible of convalidation by ratification
or by prescription
- the party whose consent was vitiated but not the other
Statute of Frauds
1. agreement not to be performed within
one year from the making
e.g. Katz and Yen are freshies. Katz promised
Yen that she will make all her digests for her
come third year. If it is not done in writing, it is
unenforceable.
Void Contracts
- those which, because of certain defects
produce no effect at all
- considered inexistent from the very
beginning
Characteristics
1. it cannot be ratified
2. right to set up the defense of illegality cannot be
waived
3. action or defense for declaration of nullity does
not prescribe
4. defense of illegality is available to third persons
whose interests are directly affected
5. cannot give rise to a valid contract
previous
Void
Voidable
Rescissible
Unenforceabl
e
Lack of
essential
elements or
illegality
Vitiated
consent or
incapacity of
one party
Lesion or
prejudice
Lack of formal
authority or
capacity of both
parties
Not cured by
prescription
Cured by
prescription
Cured by
prescription
Not cured by
prescription
Cannot be
ratified
Can be
ratified
No need to be
ratified
Can be ratified
Not binding
Binding until
annulled
Binding unless
rescinded
Binding unless
the defect used
as a defense
Natural Obligations
Estoppel
Civil Obligations
Technical Estoppel
1. by record or judgement (res
judicata)
2. by deed, mortgage or bond
Equitable Estoppel
1. by express representation
2. by silence
3. by laches
debt
own
person
Trusts
- a fiduciary relationship with respect to
property, subjecting the person holding the
same to the obligation of dealing with the
property for the benefit of another person
- separation of the legal title from the
beneficial title
- differs from a stipulation pour autrui in that a
trust refers to a specific property
- differs from a condition in that
accomplishment of the latter is not
enforceable, but performance of a trust is
enforceable
- differs from guardianship in that the trustee
has legal title to the property
Parties [1440]
1. Trustee
- one who hold the property in trust
2. Trustor
3. Beneficiary
- person for whose benefit property is held for
by the trustee
Express Trust
- created by assent of the parties
Implied Trust
- created by law
1. Resulting trust
- imposed by law to carry out the
actual or presumed intent of the
parties, where express trust fails
2. Constructive trust
- established by law regardless of
intention, in order to prevent fraud,
oppression or unjust enrichment
to
Express trusts
- cannot be proved by parol evidence
[1443]
- no particular words required as long
as a trust is clearly intended [1444]
Implied trusts
- may be proved by oral evidence
[1457]
person
obtaining
considered a
the