Oblicon

Compensatio Morae Exception

Contrary stipulation (e.g. installment plans)

Physical impossibility

Contrary to law of nature

Mora Solvendi General Rule

Creditor should make demand before debtor incurs delay

Accion Pauliana

Creditors have the right to set aside or revoke acts which the debtor may have done to defraud them. All acts of the debtor which reduce his patrimony in fraud of his creditors, whether by gratuitous or onerous title, can be revoked by this action.

PAYMENT BEFORE HAPPENING OF CONDITION:

Debtor may only recover what he paid by mistake before happening of suspensive condition, hence if condition has been fulfilled, he can no longer claim because of retroactivity of the condition.

Pure Obligations

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.

Fortuitous Event (Force Majeure)

Except in cases expressly specified by law, or when it is otherwise declared by stipulation, or when the nature of obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen or which, though foreseen, were insevitable.

Exception in obligations to do

FACULTATIVE OBLIGATION wherein the debtor reserves the right to substitute another prestation

Fraud

Fraud is the voluntary execution of a wrongful act, or a willful omission, knowing and intending the effects which naturally and necessarily arise from such act or omission.

Compensatio Morae General Rule

Fulfillment of parties should be simultaneous

Obligations arising from Crime

GENERAL RULE: Criminal action bars civil action for the same offense EXCEPTIONS: 1. Offended party reserves the right to institute it separately 2. The law provides for an independent civil action (i.e. civil action may proceed to final judgment irrespective of result of the criminal action and filing of the criminal action does not suspend the civil action)

Preserving with due care

GENERAL RULE: Diligence of a good father EXCEPTION: Extraordinary diligence (common carriers, banks, pharmacies)

Impossible condition

IMPOSSIBLE CONDITIONS, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them.

General rule on impossible conditions

Impossible condition annuls the obligation dependent upon them

Conditional Obligations

In conditional obligations, the acquisition of rights, as well as extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.

Obligations to do

In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the obligee's will.

Effect of Fraud

Liability for damages, a crime or a quasi delict

Potestative condition

One which depends upon the will of one of the contracting parties; in the power of one of the parties to realize or prevent

Extent of Accion Subrogatoria

Plaintiff entitled only to so much as is needed to satisfy his credit, any balance shall pertain to the debtor

Action for Damages

Recoverable damages include any and all damages that a human being may suffer. Responsibility for damages is indivisible.

Rescission (General Rule)

Rescission requires judicial Approval to produce legal effects

Effect of Suspensive Condition

The binding tie of conditional obligation is produced from the time of perfection, not happening of condition.

Positive suspensive

The condition that some event happen at a determinate time shall EXTINGUISH the obligation as soon as the time expires OR if it has become indubitable that the event will not take place

Negative suspensive

The conditions that some event will not happen at a determinate time shall render the obligation EFFECTIVE from the moment the time indicated has elapsed OR if it has become evident that the event cannot occur. If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been contemplated, bearing in mind the nature of obligation.

Rights of creditor before fulfillment of suspensive condition

The creditor, may before the fulfillment of the obligation, bring the appropriate action for the preservation of his right. No preference of credit is granted to the creditor but only allows him to bring proper action for the preservation of his rights.

Rights of debtor before happening of suspensive condition

The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition.

Reciprocal Obligation

The injured party may choose between FULFILLMENT and the RESCISSION of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become IMPOSSIBLE.

Action for Rescission

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. The injured party may choose between FULFILLMENT and the RESCISSION of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become IMPOSSIBLE. The court shall decree the rescission claimed UNLESS there be a just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

Delay (Mora)

Those obliged to DELIVER or to DO something incur in delay from the time the OBLIGEE JUDICIALLY OR EXTRAJUDICIALLY DEMANDS from them the fulfillment of their obligations.

Kinds of prestation

To give, to do, not to do

Effect of passive purely potestative conditione

VOID because it is a direct contravention of Art 1308 on mutuality of contracts and to do so is to sanction illusory conditions

Effect of active purely potestative

Valid if it depends exclusively on the will of the creditor

Effect of CONCURRENT FAULT of the Debtor

When the negligence of a person concurs with an act of God in producing a loss, such person is not exempt from liability by showing that the immediate cause of the damage was the act of God. If he creates a dangerous condition or negligence although the act of God was the immediate cause, he cannot escape liability for the natural and probable consequence thereof. There must be NO fraud, negligence, delay or violation/contravention in any manner of the tenor of the obligation. When the effect is found to be partly resulting from the participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules applicable to the acts of God (NPC v CA - the case of Welming and the exploding dam)

Obligations not to do

When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense.

Obligations to give an indeterminate thing

When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into consideration.

Negotiorium Gestio

Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so

Obligation

a juridical necessity to give, to do or not to do.

ELEMENTS OF QUASI DELICT

a) duty on the part of the defendant to protect the plaintiff from injury of which the latter complains b) failure to perform such duty c) an injury to the plaintiff through such failure

Requisites for Rescission

a. One of the creditors failed to comply with what is incumbent upon him b. Obligor who performed chose rescission over fulfillment or performance is impossible c. The breach is substantial so as to defeat the object of the parties in making the

Requisites of Prestation

a. Physically and juridically possible b. Determinate or at least determinable according to pre-established elements or criteria c. Possible equivalent in money

Obligation to do

all kinds of work or services, whether mental or physical

debtor or obligor (passive)

bound to perform the prestation

Not to do

consists in abstaining from some act, includes "not to give," both being negative obligations

Obligation to give

consists in the delivery of a movable or an immovable thing, in order to create a real right or for the use of the recipient or for its simple possession or in order to return to its owner

Juridical impossibility

contrary to law, morals, good customs, and public policyAND restricts certain rights which are necessary for the free development of human activity i.e. political rights, family rights and constitutional rights and liberties e.g. condition not to change domicile, religion or contract marriage

Casual condition

depends exclusively upon chance, will of a third person or other factors, and not upon the will of the contracting parties

Purely potestative condition

depends solely and exclusively upon the will

Mixed condition

depends upon the will of one of the contracting parties and other circumstances, including the will of third persons

Resolutory Condition

extinguishes rights and obligations already existing

Rescission (Exception)

object is not yet delivered AND obligation has not yet been performed If the obligation has not yet been performed: extrajudicial declaration of party willing to perform would suffice; can refuse to perform if the other party is not yet ready to comply If the injured party has already performed: cannot extrajudicially rescind IF the other party opposes the rescission (otherwise, rescission produces legal effect). In the case the other party impugns rescission, the court comes in either to: a. Declare the rescission as properly made b. Give a period to the debtor in which to perform

Effect of Compensatio Morae

one is not compelled to perform his prestation when the other contracting party is not yet prepared to perform his prestation; default of one compensates the default of the other

creditor or obligee (active)

power to demand the prestation

Simple potestative condition

presupposes not only a manifestation of will but also the realization of an external act - On the part of the debtor: Does not prevent formation of valid obligation because in part depends on contingencies over which he has no control

Suspensive Conditions

the obligation arises, but if the condition does not happen, obligation does not come into existence

Effect of impossible condition

• Annuls only obligations which are POSITIVE and SUSPENSIVE. In the case of a negative impossible condition, it's considered as not written and the obligation is converted to a pure and simple one. • Applies only to contracts and not to simple and testamentary donations and to testamentary dispositions • Impossibility of condition must exist at the time of the creation of the obligation (not existence of a valid obligation subsequently rendered impossible under Art 1266 on "subsequent impossibility")

Exception on impossible conditions

○ Pre-existing obligation ○ Divisible obligation ○ Simple or remuneratory obligation ○ Testamentary disposition ○ Negative impossible things

Limitation on Retroactive effect of suspensive condition

○ acts of administration before fulfillment not affected by retroactivity; however abuse of rights in guise of administration are not allowed to defeat rights of creditor ○ usufructuary rights not within the principle of retroactivity of conditional obligations

Condition

every future and uncertain event upon which an obligation or provision is made to depend even though uncertain, it should be possible

Negligence (culpa aquilana)

- Source of Obligation - Fault or negligence which constitutes an independent source of obligation between parties not previously bound

Exceptions to Negotiorum Gestio

1) When the property or business is not neglected or abandoned 2) If in fact the manager has been tacitly authorized by the owner

Subsidiary Remedies of Creditor

1. Accion Subrogatoria 2. Accion Pauliana 3. Accion directa

Remedies of Creditor in case of Breach

1. Action for performance 2. Action for rescission 3. Action for damages

Elements of an Obligation

1. Active subject 2. Passive subject 3. Prestation or Object 4. Efficient cause/juridical tie/vinculum juris 5. Form in which the obligation is manifested

Requisites of Force Majeure

1. Cause of the unforeseen and unexpected occurrence or the failure of the debtor to comply with his obligation must be independent of human will 2. Impossible to foresee the event which constitute the caso fortuito (ordinary) OR if it can be foreseen, must be impossible to avoid (extraordinary) 3. Occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner 4. Obligor must be free from any participation in the aggravation of the injury resulting to the creditor (no concurrent negligence)

Requisites of Accion Subrogatoria

1. Creditor has an interest in the right or action not only because of his credit but because of insolvency of the debtor 2. Malicious or negligent inaction of the debtor in the exercise of his right or action of such seriousness as to endanger the claim of the creditor 3. The credit of the debtor against a third person is certain, demandable and liquidated ○ It is not essential that the creditor's claim be prior to the acquisition of the right by the debtor 4. The debtor's right against 3rd person must be patrimonial, or susceptible of being transformed to patrimonial value for the benefit of the creditor

Kinds of Quasi Delict

1. Culpa aquilana - or culpa extra-contractual; negligence as a source of obligation, a quasi-delict 2. Culpa contractual - negligence in the performance of a contract 3. Culpa criminal - criminal negligence

Effects of Negligence

1. Damages are demandable, which the courts may regulate according to circumstances 2. Invalidates defense of fortuitous event

Exception in Mora Solvendi

1. Express stipulation - Insertion of the clause "without further notice" 2. Law so provides - Not enough to merely fix date for performance, but also that default will commence after the period lapses 3. Period is the controlling motive or the principal inducement for the creation of the obligation - in cases where it appears that the obligation would not have been created for a date other than that fixed (Abella v. Francisco) 4. Demand would be useless - performance has become impossible

Debtor is still liable despite force majeure:

1. Expressly specified by law 2. Stipulation by parties 3. Assumption of risk 4. Debtor in delay 5. Debtor guilty of concurrent negligence

Effects of Rescission

1. Extinguishes obligatory relation as if it had never been created, extinction has a retroactive effect. Equivalent to invalidate the juridical tie, leaving things in their status before the celebration of the contract 2. Mutual restitution

Modes of Breach

1. Fraud 2. Negligence 3. Delay 4. Contravention of Tenor 5. Total Non-Performance

Kinds of Fraud

1. Fraud in Performance (1171) - cause of obligation 2. Fraud in execution/creation/birth of the contract

Exceptions to Accion Subrogatoria

1. Inherent rights of debtor a. Right to existence, exempting from the reach of creditors whatever he may be receiving as support b. Rights or relations of a public character c. Rights of an honorary character d. Rights consisting of powers which have not been used i. Power to administer e.g. debtor fails to have some property leased the creditor cannot give it in lease for him ii.Power to carry out an agency or deposit because purely personal acts iii.Power to accept an offer for a contract e. Non-patrimonial rights e.g. action to establish the creditor's status as a legitimate or natural child, action for legal separation or annulment of marriage, and other rights arising from family relations f. Patrimonial rights not subject to execution e.g. right to a government gratuity or pension g. Patrimonial rights inherent in the persons of the debtor e.g. right to revoke a donation by reason fo ingratitude, right to demand the exclusion of an unworthy heir 2. Art 772 Only those who at the time of the donor's death have a right to the legitime and their heirs and successors in interest may ask for the reduction or inofficious donations. Those referred to in the preceding paragraph cannot renounce their right during the lifetime of the donor, either by express declaration, or by consenting to the donation. The donees, devisees and legatees, who are not entitled to the legitime and the creditors of the deceased can neither ask for the reduction nor avail themselves thereof. 3. Sec 13, Rule 39, Rules of Court

Exceptions from Liability in Negligence

1. Insurance 2. Renunciation of right to enforce liability in cases of SIMPLE NEGLIGENCE (Cannot waive liability in GROSS Negligence)

Sources of Obligation

1. Law 2. Contracts 2. Quasi contracts 3. Delicts 4. Quasi Delicts

LOSS, DETERIORATION or IMPROVEMENT pending happening of the condition (Obligation to give DETERMINATE thing)

1. Loss without fault of debtor: obligation extinguished 2. Loss through the fault of debtor: obliged to pay damages. A thing is loss when it: a. Perishes b. Goes out the commerce of man c. Disappears in such a way that its existence is unknown or it cannot be recovered 3. Deteriorates without fault of the debtor: impairment to be borne by the creditor 4. Deteriorates through the fault of debtor: creditor may choose between the rescission of the obligation and its fulfillment with indemnity for damages in either case 5. Improved by its nature, time: inure to the creditor 6. Improved at the expense of the debtor: no other right than that granted to the usufructuary

Kinds of Mora

1. Mora Solvendi (default on part of the creditor) 2. Mora accipiendi (default on part of the creditor) 3. Compensatio Morae (parties in a bilateral contract can regulate the order in which they shall comply with their reciprocal prestations. Otherwise, the fulfillment must be SIMULTANEOUS and RECIPROCAL)

Kinds of Quasi-contracts

1. Negotiorum gestio - the involuntary management of the property or affairs of another without the knowledge or consent of the latter. 2. Solutio indebiti - the juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake. The requisites are: a. There is no right to receive the thing delivered. b. The thing was delivered through mistake.

No liability in the following cases where force majeure is present

1. Non performance 2. Delay 3. Loss of deterioration before happening of the suspensive or resolutory condition

Duties of Obligor in Obligations not to do

1. Not to do what should not be done 2. To should the cost to undo what should not have been done (Art 1168) 3. To pay damages (Art 1170, 2201-2202)

Requisites of Mora Accipiendi

1. Offer of performance by the debtor who has the required capacity 2. Offer must be to comply with the prestation as it should be performed 3. Creditor refuses the performance without just cause

Requisites of Mora Solvendi

1. PRESTATION is demandable and already liquidated 2. That the debtor delays performance 3. That the creditor requires or demands the performance extrajudicially or judicially

Requisites of Accion Pauliana

1. Plaintiff asking for rescission (subsidiary action) has a credit prior to the alienation, although demandable later 2. Debtor has made subsequent contract, giving advantage to a 3rd person 3. Creditor has no other remedy but to rescind the debtor's contract to the 3rd person (last resort) 4. Act being impugned is fraudulent ○ Presumption of fraud may be found in Art 1387 (gratuitous transfer without leaving sufficient funds for obligations OR gratuitous transfers by a judgment debtor) More details in page __ 5. 3rd person who received the property is an accomplice in the fraud ○ See Rescissible Contracts for more detail discussion on the effects of good faith and bad faith of the third party transferee (Page 82)

Primary Classification of Obligations

1. Pure and Conditional 2. With a term or period 3. Alternative and Facultative 4. Joint and Solidary 5. Divisible and Indivisible 6. With a penal clause

Cessation of the effects of delay

1. Renunciation by Creditor 2. Prescription

Effects of Mora Acciepiendi

1. Responsibility of the debtor for the thing is reduced and limited to fraud and gross negligence 2. Debtor is exempted from the risks of loss of thing, which automatically pass to the creditor 3. All expenses incurred by the debtor for the preservation of the thing after the mora shall be chargeable to the creditor 4. If the obligation bears interest, the debtor does not have to pay it from the moment of the mora 5. The creditor becomes liable for damages 6. The debtor may relieve himself of the obligation by the consignation of the thing

Extent of Civil Liability Arising from Crime

1. Restitution - thing itself is restored (Art 105, RPC) 2. Reparation of damage caused - court determines amount of damage (Art 106, RPC) 3. Indemnification for consequential damages - not only caused the 3rd party but also those suffered by his family or by a 3rd person by reason of the crime

Correlative rights of the Obligee in Obligations to give a determinate thing

1. Right to compel delivery of fruits, accessions, and accessories (only personal right) 2. Right to rescission or resolution 3. Right to damages in failure to deliver, fraud, negligence in performance, delay, contravention of tenor

Rights if the Obligee in Obligations to give an indeterminate thing

1. Right to rescission or resolution 2. Right to damages

Action for Performance

1. Specific Performance 2. Substituted performance 3. Undoing of poor work or substituted performance in obligations to do (EXCEPTION: Imposition of personal force or coercion upon the debtor to comply with his obligation —> tantamount to involuntary servitude and imprisonment for debt) 4. Action for undoing in obligation not to do (EXCEPTION: When the only feasible remedy is indemnification for the damages caused: - If has become impossible to undo the thing physically or legally - If the act is definite and will not cease even if undone)

Kinds of Conditions

1. Suspensive 2. Resolutory 3. Potestative 4. Casual 5. Mixed 6. Possible 7. Impossible 8. Positive suspensive 9. Negative suspensive

Requisites of Liability under Quasi Delict

1. There exists a wrongful act or omission imputable to the defendant by reason of his fault or negligence 2. There exists a damage or injury 3. Direct causal connection or relation of cause and effect between the fault or negligence and the damage or injury OR that the fault or negligence be the cause of damage or injury

Duties of the Obligor in Obligation to Give a DETERMINATE THING

1. To deliver the thing itself 2. To preserve the thing with due care 3. To deliver the accessions and accessories 4. To deliver the fruits

Duties of Obligor in Obligations to do

1. To do it (Art 1167) 2. To shoulder the cost if someone else does it (Art 1167) 3. To undo what has been poorly done (Art 1167) 4. To pay damages (Art 1170-1172, 2201-2202)

KINDS OF PRESTATION

1. To give 2. To do 3. Not to do

Effects of Mora Solvendi

1. When it has for its object a determinate thing, the delay places the risk of the thing on the debtor 2. Debtor becomes liable for damages of the delay

When demand is not necessary to incur delay

1. When the OBLIGATION or LAW expressly so declares 2. When from the nature and the circumstances of the obligation it appears that the DESIGNATION OF THE TIME when the thing to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract 3. When demand would be USELESS, as when the obligor has rendered it beyond his power to perform

2 concepts of force majeure

A. Act of God - by nature e.g. earthquakes, storms, floods, epidemics, fires, etc; all human agencies excluded B. Act of Man - by acts of man, e.g armed invasion, attack by bandits, governmental prohibitions, robbery, etc; for as long as that they have a force of an imposition which the debtor could not have resisted

Accion Subrogatoria

Action which the creditor may exercise in place of the negligent debtor in order to preserve or recover for the patrimony of the debtor the product of such action, and then obtain therefrom the satisfaction of his own credit.

Contravention of Tenor

Any illicit act which impairs the strict and faithful fulfillment of the obligation or every kind of defective performance