OBLIGATION AND CONTRACTS

If regarding an obligation ex lege, there is a conflict between the new Civil Code and a special law, the latter prevails unless the contrary has been expressly stipulated in the new Civil Code.

Civil Code versus Special Laws

that where the physical transfer is implied. This is done by; a. Symbolical Tradition - as when the keys of a bodega are given. b. Delivery by Mere Consent or the Pointing Out of an Object c. Delivery by Short Hand (Traditio Brevi Manu) - that kind of delivery whereby a possessor of a thing, not as an owner, becomes the possessor as owner. d. Opposite of Traditio Brevi Manu - the delivery, whereby a possessor of thing as an owner, retains possession of the thing no longer as an owner, but in some other capacity. e. Tradition by the Execution of Legal Forms and Solemnization - like the execution of a public instrument selling land.

Constructive Delivery

RULE WHEN DEBTOR CANNOT MAKE A CHOICE BECAUSE OF CREDITOR'S ACTS:

DETBOR"S RIGH TO RESCIND THE CONTRACT: The debtor may RESCIND the contract with the right to recover whatever damages he has suffered. NOTE: The contract is not automatically rescinded. The law says that the debtor 'may rescind", implying that he may allow it to remain in force insofar as the possible choice or choices are involved.

This is the first effect of an obligation - to deliver a determinate thing (as distinguished from a generic thing - or one of a class) - namely - the duty to exercise proper diligence.

DUTY TO EXERCISE DILIGENCE

is that delay which amounts to a virtual non-fulfilment of the obligation.

Default

As a rule, to put a debtor in default, there must be a demand for fulfilment, the demand being either judicial or extrajudicial.

Default(Legal Delay)

Of course, if there is a stipulation to said effect, accessions and accessories do not have to be included.

EFFECT OF STIPULATION:

1. If the reason why there was an acquittal was because the accused could not have committed the act, no civil action can later on be brought. 2. If the reason for the acquittal was because of an exempting circumstance, he would still be civilly liable. 3. If there is an independent civil action allowed by the law, civil liability will arise if the action is instituted and the defendant's civil liability is proved by mere preponderance of evidence

Effect of Acquittal in Criminal case to his Civil Liability:

1. There is DELIBERATE intention to cause damage or prejudice. 2. Liability arising from fraud or dolo cannot be mitigated or reduced by courts. 3. Waiver of an action to enforce liability due to future fraud is void.

FRAUD (DOLO)

when it refers only to a class, to a genus, and cannot be pointed out with particularity.

GENERIC OR INDETERMINATE THINGS

WHAT THE OBLIGATION TO GIVE A DETERMINATE THING INCLUDES:

If I am obliged to deliver a determinate or particular thing, I must also give the accessories. If I am obliged to deliver a land, I must give also the accessions (like the building constructed thereon). This true even if no mention of them was made in the contract.

the relationship between the active and passive subjects is so close that each of the former or of the latter may demand the fulfilment of or must comply with the whole obligation. "ALL FOR ONE, ONE FOR ALL."

In a SOLIDARY OBLIGATION (or JOINT AND SEVERAL OBLIGATION),

Those liable under Article 1170 should pay damages, but generally only if from the breach of contract, prejudice or damage was caused. Damages should be paid by those responsible for them.

LABILITY FOR DAMAGES:

The creditor is guilty of default when he unjustifiably refuses to accept payment or performance at the time said payment or performance can be done.

Mora Accipiendi (Default on the Part of the Creditor)

NOTE: In purchase by instalments, default in the payment of one instalment does not mean default in the whole amount. If there is an acceleration clause, all that happens will be that the whole amount becomes due. And demand is still necessary to put the debtor in default.

Mora Solvendi (Default on the Part of the Debtor)

NOTE: There is no Mora Solvendi in negative obligations and in natural obligations

Mora Solvendi (Default on the Part of the Debtor)

1. Although VOLUNTARY (that is, not done thru force), still there is NO deliberate intent to cause damage. 2. Liability due to negligence or culpa may be reduced in certain cases. 3. Waiver of an action to enforce liability due to future culpa or negligence may in a certain sense be allowed.

NEGLIGENCE (CULPA)

is the failure to observe, for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury. As defined in the Civil Code, is the omission of the diligence which is required by the circumstances of person, place, and time. Thus, a question of fact.

Negligence

This takes place when a person voluntarily takes charge of another's abandoned business or property without the owner's authority. Reimbursement must be made to the gestor for necessary and useful expenses, as a rule.

Negotiorium Gestio (Unauthorized Management)

No agreement is necessary before obligation ex lege can arise, but of course the law steps in only because of human actuations. The law says "obligations derived from law are not presumed". This means that the obligation must be clearly (expressly or impliedly) set forth in the law (the Civil Code or Special Laws).

OBLIGATION EX LEGE

While obligations arising from contract have the force of law between the parties, this does not mean that the law is inferior to contracts. This is because before a contract can be enforced, it must first be valid, and it cannot be valid if it is against the law. Moreover, the right of the parties to stipulate is limited by law. Hence, Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. As long as Article 1306 is complied with, the contract should be given effect, even if at the time it was entered into, no legal provision exists governing it.

OBLIGATION EX-CONTRACTU

Article 100 of the RPC states that, "Every person criminally liable for a felony is also civilly liable." The reason lies in the fact that oftentimes the commission of a crime causes not only moral evil but also material damage. If no material damage is done, civil liability cannot be enforced.

OBLIGATIONS EX DELICTO/EX MALEFICI(arising from wrongdoing)

Governing Rules: 1. Pertinent provisions of the Revised Penal Code and other penal laws, subject to the provisions of Article 2177 of the Civil Code; 2. Chapter 2, Preliminary Title, on Human Relations of the Civil Code; 3. Title 18 of Book VI of the Civil Code on Damages

OBLIGATIONS EX DELICTO/EX MALEFICI(arising from wrongdoing)

NOTE: Affidavits of Desistance such as an express pardon in private crimes after filing of the criminal case, do not justify the dismissal of a criminal complaint.

OBLIGATIONS EX DELICTO/EX MALEFICI(arising from wrongdoing)

NOTE: Civil liability arising from a crime is not governed by the Civil Code but by Articles 100-111 of the Revised Penal Code.

OBLIGATIONS EX DELICTO/EX MALEFICI(arising from wrongdoing)

NOTE: In criminal case, civil liability may be claimed even if there is no specific allegation of damages in the information or complaint that has been filed

OBLIGATIONS EX DELICTO/EX MALEFICI(arising from wrongdoing)

Obligation is the result of a contract or some other source. Hence, while a contract, if valid, always results in obligation, not all obligations come from contracts. A contract always presupposes a meeting of the minds; this is not necessarily true for all kinds of obligations.

Obligation versus Contract

NOTE: A debtor who incurs in delay or default is liable for damages plus interest, generally from extrajudicial demand or judicial demand in the form of interest.

Obligations:

NOTE: If a debt is not paid at the stipulated period, INTEREST (as damages) should be charged not from the date of maturity but from the time the judicial action is filed, in case no extrajudicial demand was made.

Obligations:

this is merely non-performance at the stipulated time

Ordinary Delay

is that adequate and efficient cause, which in the natural order of events necessarily produces the damages or injury complained of

PROXIMATE CAUSE

is called "jus in personam" or "jus ad rem"; a personal right is power demandable by one person of another - to give, to do, or not to d

Personal Right

is a fault or act of negligence (or omission of care) which causes damages to another, there being no pre-existing contractual relations between the parties. can refer to acts which are criminal in character, whether the same be voluntary or negligent.

QUASI-DELICT (Tort or Culpa Acquiliana)

NOTE: There are instances when "although there is damage, there is no legal injury or wrong - damage without legal injury.

Quasi-Delict

is a "jus in re"; a real right is a power over a specific thing (as in ownership or possession) and is binding on the whole world.

Real Right

NOTE: In reciprocal obligations, default on the part of one begins only from the moment the other party fulfills what is incumbent upon him or her.

Reciprocal Obligations:

depend upon each other for performance. For example, in SALE, the buyer must pay and the seller must deliver. In here, performance may be set on different dates. If the performance is not set on different dates, either by law, or contract, or custom, it is understood that performance must be simultaneous. Hence, one party cannot demand performance by the other, if the former himself cannot perform. And when neither has performed, there is compensation morae (default on the part of both parties, so it is as if no one is in default). If one party performs, and the other does not, the latter world be in default.

Reciprocal Obligations:

NOTE: Mere pecuniary inability to pay does not discharge an obligation to pay, nor does it constitute any defense to a decree for specific performance.

Remedies of the Creditor when the Debtor Fails to Comply with his Obligation:

NOTE: STIPULATIONS ON NEGLIGENCE must be strictly construed against the party stipulated in a higher or more advantageous position.

Rule in Contracts of Adhesion:

There is greater freedom to stipulate on negligence if the parties are on equal plane, not where they are obviously in unequal positions (CONTRACTS of ADHESION) such as in the case of employment or transportation contracts.

Rule in Contracts of Adhesion:

when it is capable of a particular designation.

SPECIFIC OR DETERMINATE THINGS

NOTE: Article 1197 should be considered as part and parcel (or automatically incorporated) in all obligations which are contemplated therein. The only action which the creditor can bring upon an obligation that does not fix a term, but where a term was indeed intended, is to ask the court to fix the period, within which the debtor must pay for the simple reason that the fulfilment of the obligation itself cannot be demanded until after the court has fixed the period for compliance.

SPECIFIC PERFORMANCE cannot be demanded at the same time that the court is asked to fix the period. Such action for specific performance is premature. In exceptional cases, the Supreme Court has allowed an action for specific performance to prosper as when a prior and separate action would be a mere formality and serve no other purpose but delay, there is no necessity of such prior action.

RULE #1: GROSS Negligence can never be excused in advance for this would be contrary to public policy. RULE #2: SIMPLE Negligence may in certain cases be excused or mitigated.

STIPULATIONS REGARDING NEGLIGENCE (Future Negligence)

This takes place when something is received when there is no right to demand it and it was unduly delivered thru mistake. The recipient has the duty to return it.

Solutio Indebiti (Undue Payment)

HOW the Court Fixes the Period:

The court determines the period by considering the time probably contemplated by the parties. Once the period is fixed by the courts, period becomes part of the contract, thus, the courts cannot change it.

RULES TO PUT DEBTOR IN DEFAULT General Rule:

To put a debtor in default, as a rule, DEMAND is needed.

Article 1164. The creditor has a 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.

WHEN CREDITOR IS ENTITLED TO THE FRUITS

NOTE: In the case of a purchase of land, for example, before the land is delivered, the proper remedy of the buyer (since he is not yet the owner) is to compel specific performance and delivery and not an accion reivindicatoria (for the latter presupposes ownership).

WHEN CREDITOR IS ENTITLED TO THE FRUITS

Effect of Fortuitous Events

a. A specific obligation, that is, an obligation to deliver a specific thing is, as a rule, extinguished by a fortuitous event or act of God. b. Upon the other hand, generic obligations are never extinguished by fortuitous events.

Requisites for Solutio Indebiti:

a. He who paid was NOT under obligation to do so; b. The payment was made by reason of an essential mistake of fact.

Two Kinds of Bilateral Obligation:

a. Reciprocal Obligation - the performance of an obligation is conditioned on the simultaneous fulfilment of the other obligation. b. Non-Reciprocal Obligation - where the performance by one is not dependent on the performance by the other.

NOTE: A quasi-contract is NOT considered an implied contract because there is NO meeting of the minds in quasi-contracts.

quasi-contract

means that we must interpret "not by the letter that killeth but by the spirit that giveth life.

"Compliance in Good Faith"

Article 1157. Obligations arise from:

(1) Law; (2) Contracts; (3) Quasi-contracts; ( 4) Acts or omissions punished by law; and (5) Quasi-delicts

Requisites of an OBLIGATION.

1. Active Subject - called the obligee or creditor; the possessor of a right; he in whose favour the obligation is constituted. 2. Passive Subject - called the obligor or the debtor; he who has the duty of giving, doing, or not doing. 3. Object or Prestation - the subject matter of the obligation. 4. Efficient Cause - the vinculum or the juridical tie; the reason why the obligation exists.

Kinds of Delivery

1. Actual Delivery 2. Constructive Delivery

KINDS of OBLIGATIONS: From the viewpoint of "sanction":

1. Civil Obligation - the sanction is judicial process 2. Natural Obligation - the duty not to recover what has voluntarily been paid although payment was no longer required. The essential element is 'voluntariness". 3. Moral Obligation - the sanction here is conscience or morality; or the law of the church.

Remedies of the Creditor when the Debtor Fails to Comply with his Obligation:

1. Demand specific performance or compliance of the obligation. This is true whether the obligation be generic or specific. 2. Demand rescission or cancellation (in some cases). 3. Demand damages either with or without either of the first two (1 or 2).

According to meaning, fraud may be:

1. FRAUD IN OBTAINING CONSENT - may be causal or merely incidental 2. FRAUD IN PERFORMING A CONTRACT - a. Causal Fraud b. Incidental fraud NOTE: While causal fraud is so important, a fraud that vitiates consent (allowing therefore annulment), incidental fraud is not important

GROUNDS FOR LIABILITY in the PERFORMANCE OF OBLIGATIONS:

1. Fraud (deceit or dolo) (intentional evasion of fulfilment) 2. Negilgence (fault or culpa) 3. Default (or Mora) (if imputable to debtor) 4. Violation of the terms of the obligation (unless excused in proper cases by fortuitous events)

If an obligation arises ex delicto (as the result of a crime), the debtor-criminal is responsible for loss even though this be through a fortuitous event, unless the creditor is in mora accipiendi. "When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it." Remedies of the Debtor-Criminal if Creditor is in Mora Accipiendi:

1. He must consign the thing to the court (expenses chargeable to the creditor; or 2. He can keep the thing to himself. In this instance, he should still exercise diligence and care, but this time, he would not be liable for loss due to fortuitous event

When Thing may be Ordered Undone:

1. If made poorly - here performance by another and damages may be demanded. 2. If the obligation is a negative one - provided the undoing is possible.

Effects of Mora Solvendi:

1. If the debtor is in default, he may be liable for interest or damages. 2. He may also have to bear the risk of loss. NOTE: In both cases (1 and 2), it is, however, essential that his being in default is attributable to his own fault. 3. He is liable even for a fortuitous event, although damages here may be mitigated if he can prove that even if he had not been in default, loss would have occurred just the same.

Two Instances where Fortuitous Event does not exempt

1. If the obligor delays 2. If the obligor is guilty of bad faith

When Damages or Interest May Be Lost: A creditor entitled to damages or interest because of MORA may lose the same:

1. If the principal obligation is allowed to lapse by prescription; 2. If the damages or interest are allowed to prescribe; 3. If the damages or interest are condoned (waived or remitted).

NOTE: The following do not excuse fulfilment:

1. Increase in cost of performance; 2. Poverty; 3. War between the subject of neutral country and the subject of a country at war, as long as substantial compliance can still be done.

Two Kinds of Demand:

1. Judicial Demand - as when a complaint for specific performance is filed. 2. Extrajudicial Demand - without court proceedings.

FIVE SOURCES OF OBLIGATION:

1. Law - like the duty to pay taxes and to support one's family. 2. Contracts - like the duty to repay loan by virtue of an agreement. 3. Quasi-Contracts - like the duty to refund an over change of money because of the quasi-contract of solutio indebiti or undue payment. 4. Crimes or acts or omissions punished by law - like the duty to return a stolen carabao. 5. Quasi-Delicts or TORTS - like the duty to repair damage due to negligence.

Different Kinds of MORA (Default);

1. Mora Solvendi - default on the part of the debtor a. Mora Solvendi Ex Re - debtor's default in real obligations b. Mora Solvendi Ex Persona - debtor's default in personal obligations 2. Mora Accipiendi - default on the part of the creditor 3. Compensatio Mora - when in reciprocal obligation both parties are in default; here it is as if neither is in default.

KINDS of DAMAGES: (M.E.N.T.A.L)

1. Moral Damages - for mental and physical anguish 2. Exemplary Damages - corrective or to set an example 3. Nominal Damages - to vindicate a right; when no other kind of damages may be recovered; the assessment of which is left to the discretion of the court. 4. Temperate Damages - when the exact amount of damages cannot be determined 5. Actual Damages - actual losses as well as unrealized profit 6. Liquidated Damages - predetermined beforehand; by agreement

Two Kinds of Quasi-Contract

1. Negotiorium Gestio (Unauthorized Management) 2. Solutio Indebiti (Undue Payment)

According to time of commission, fraud may be:

1. PAST FRAUD - which may be waived 2. FUTURE FRAUD - which cannot be void; any stipulation thereto is void.

KINDS of OBLIGATIONS: From the "affirmativeness and negativeness of the obligation":

1. Positive or Affirmative Obligation - the obligation to give or to do 2. Negative Obligation - the obligation not do (which naturally includes "not to give")

KINDS of OBLIGATIONS: From the viewpoint of "subject matter":

1. Real Obligation - the obligation to give 2. Personal Obligation - the obligation to do or not do

What Civil Liability Arising from a Crime Includes:

1. Restitution 2. Reparation of the damage caused 3. Indemnification for consequential damages

Damages in Monetary Obligation:

1. That agreed upon; 2. In the absence of agreement, the legal rate of interest. If a contract of simple loan stipulates the time when the interest will be counted, said stipulated time controls.

Diligence Needed:

1. That which is required by the nature of the obligation and corresponds with the circumstances of person, time, and place. This is really diligence of a good father of a family. 2. However, if the law or contract provides for a different standard of care, said law or stipulation must prevail.

Remedies of the Creditor when the Debtor Violates Negative Personal Obligation:

1. The creditor can demand that the act be undone at the expense of the debtor. 2. Plus Damages

Mora Solvendi (Default on the Part of the Debtor) Requisites:

1. The obligation must be due, enforceable, and already liquidated or determinate in amount. 2. There must be non-performance. 3. There must be a demand, unless the demand is not required. NOTE: When demand is necessary, proof of it must be shown by the creditor. 4. The demand must be for the obligation that is due.

Requirement before a Person can be held Liable for Quasi-Delict (3):

1. There must be fault or negligence attributable to the person charged; 2. There must be damage or injury; 3. There must be a direct relation of cause and effect between the fault or negligence on the one hand and the damage or injury on the other hand (proximate cause).

REMEDIES OF THE CREDITOR IF DEBTOR FAILS TO DO

1. To have the obligation performed (by himself or another) at the debtor's expense (only if another can do the performance; 2. Also to obtain damages. Damages alone cannot substitute for performance if owners can do it; if purely personal or special, only damages may be asked, unless substitution is permitted.

KINDS of OBLIGATIONS: From the viewpoint of "persons obliged":

1. Unilateral Obligation - where only one of the parties is bound. (NOTE: Every obligation has two parties; if only one of them is bound, we have a unilateral obligation.) 2. Bilateral Obligation - where both parties are bound.

When the Court MAY NOT Fix the Term:

1. When no term was specified by the parties because no term was even intended, in which case a pure one, and demandable at once, unless of course absurd consequences would arise. 2. When the obligation or note is payable on demand; 3. When specific periods are provided for in the law, as in an employment contract where if no period was agreed upon the time of employment depends upon the time for payment of salary. 4. When what appears to be a term is really a condition; 5. When the period within which to ask the court to have the period fixed has itself already prescribed.

RULES TO PUT DEBTOR IN DEFAULT Exceptions: When demand is not necessary to put debtor in demand:

1. When the law so provides 2. When the obligation expressly so provides NOTE: The mere fixing of a period is not enough. There must be a provision that if payment is not made when due, default or liability for damages or interests automatically arises. 3. When time is of the essence of the contract or when the fixing of time was the controlling motive for the establishment of the contract. NOTE: It is not necessary for the contract to categorically state that time is of the essence; the intent is sufficient as long as that it is implied. 4. When demand would be useless, as when the obligor has rendered it beyond his power to perform. 5. When the obligor has expressly acknowledged that he really is in default. NOTE: His mere asking of an extension of time is not an express acknowledgement of the existence of default on his part.

is an obligation; more specifically, it is the subject matter of an obligation - and may consist of giving a thing, doing or not doing a certain act.

A prestation

is that juridical relation resulting from a lawful, voluntary and unilateral act, and which has for its purpose the payment of indemnity to the end that "no one shall be unjustly enriched or benefited at the expense of another". (Article 2142, NCC)

A quasi-contract

additions or improvements upon a thing. These include alluvium and whatever is built, planted, or sown on a person's parcel of land.

ACCESSIONS

those joined to or included with the principal for the latter's better use, perfection, or enjoyment. Example: the keys to a house The dishes in restaurant

ACCESSORIES

where physically, the property changes hands.

Actual Delivery (Tradition or Material Delivery)

When Does the Obligation to Deliver Arise?

Answer: It depends. a. If there is no term or condition, then from the perfection of the contract. b. If there is a term or condition, then from the moment the term arrives or the condition happens.

WITHIN WHAT PERIOD MUST THE ACTION TO FIX THE PERIOD BE BROUGHT?

Answer: Within the prescriptive period for specific performance if a period had been originally fixed, but to be counted from the perfection of the contract. This is because the right exists by operation of law from the moment of such agreement. Extra-judicial demand is not therefore essential for the creation of the cause of action to have the period fixed.

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

Article 1156. An obligation

Article 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery.

Article 1165.

Article 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned.

Article 1166

Article 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost. (Positive Personal Obligation - to do) This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone.

Article 1167.

Article 1168. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense. (Negative Personal Obligation)

Article 1168

Article 1169. 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 obligation. However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare; or (2) When from the nature and the 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 demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.

Article 1169.

Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

Article 1170

Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.

Article 1171

Article 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances.

Article 1172