OBLIGATIONS & CONTRACTS Questions/Discussions What is an obligation? An obligation is a juridical necessity to give, to do or not to do.

Who are the ones liable in quasi-delicts? -The parent with respect to minors under their parental authority. -The guardian with respect to minors or incapacitated persons -The owners and managers of establishment or enterprise with respect to their employees -Employers with respect to employees and household helpers (not engaged in business or industry) -The State when it acts through a special agent -Teachers and head of establishments of arts and trades with respect to their pupils and students or apprentices What are contracts? A contract is a meeting of the minds between two persons whereby one binds himself with respect to the other, to give something or to render some service. What are laws? Laws are rules of action which governs the conduct and activities of men. Article 1163-diliigence of a good father of family as standard of care Consensual vs. Real Contracts Consensual contracts are perfected by mere consent of the parties while real contracts are perfected only by the delivery of the prestation. Give examples of consensual and real contracts - consensual contracts-Real contracts- deposit, pledge, commodatum May the parties stipulate terms that are contrary to law? No. Stipulations, terms and conditions agreed by the parties must not be contrary to law, morals, good customs or public policy. The laws referred to are those which are mandatory and prohibitive, those expressive of fundamental principles of justice, and those imposing essemtial requisites for the contract to exist. What are quasi-delicts?The fault or negligence of a person, who by his act or omission, independent from any contractual relation causes damage to another person. Culpa Contractual v. Culpa Aquiliana Culpa contractual is negligence in the performance of a contract; culpa-aquiliana is negligence as a source of obligation -In CC there is pre-existing contractual relation, in CA none -The negligence in CC is merely an incident in the performance of an obligation, in CA it is substantive and independent -The source of liability in CC is the breach of contract, in CA it is the negligent act or omission itself -In CC proof of contract and its breach is prima facie evidence, in CA negligence must be proved -In CC, proof of diligence is not a defense ,in CA it is Indeterminate thing v. Determinate thing An indeterminate thing is specified only by its class or genus w/o any particular designation; a determinate thing is particularly designated or segregated from all others of the same class. What is the diligence of a good father of a family? The diligence of a good father of a family is that reasonable standard of care and caution exercised by an ordinarily prudent man based on similar circumstances When does the obligation to deliver arise? -In obligations arising from contracts, the obligation to deliver arises from time of the perfection of the contract; in obligations arising from other sources, from what is provided under the Code and special laws

December 2, 2010 In case the debtor fails to comply, what are the remedies of the creditor? It depends on the obligation. -If the obligation is to give a determinate thing: compel specific performance; recover damages for breach -Obligation is to give an indeterminate thing: to ask for the performance of the obligation; to ask that the obligation be complied with at the expense of the debtor; recover damages -In obligations to do: have the obligation performed at the expense of the debtor, recover damages -In obligations not to do: to have it undone at the expense of the obligor; to ask for damages Article 1165 par(3)- 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 1191- Power to rescind in reciprocal obligations is implied - Injured party may choose bet. Fulfilment and rescission, if he chooses fulfilment and it becomes impossible, he may still choose rescission - It requires judicial decree, belongs to the injured party alone - Termination must not be contrary to law, morals, good customs, public order or public policy - Applicable only for such breaches that are substantial and fundamental as to defeat the object of the parties What is Article 1170? If the debtor fails to comply, is he liable for damages? 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. What is a fortuitous event? Kinds of fortuitous event? Distinguish. An event which cannot be foreseen, or which though foreseen is inevitable. -Act of God- event which is absolutely independent of human intervention -Force majeure-dependent upon human intervention other than that of the obligor Requisites (in fortuitous events) for the debtor to be exempt from liability for damages Conditions for Article 1174 to apply, what are the 4 conditions? 1. Must be independent of the will of the debtor 2. Must be either unforeseeable or inevitable 3. Must be of such character as to render it impossible for the debtor to normally fulfil the obligation 4. Obligor must be free from any participation in the aggravation of the injury Assuming that all these conditions are present, are there instances when the obligor is still liable? He incurs in delay and promised the thing to two or more persons w/o the same interest -Expressly specified by law -Declared by stipulation of the parties -Nature of the obligation requires the assumption of risk Examples to the 3 exceptions enumerated in Article 1174 What is the last paragraph Article 1165, explain. What is an obligation to do?The debtor obliges himself to perform or execute an act Article 1167 If the obligation is an obligation to do, what are the remedies of the creditor? -ask the performance at the expense of the debtor -recover damges Chavez v. Gonzales doctrine Explain: When the nature of the obligation requires an assumption of risk -knowledge and appreciation of the risk

What is default? -delay in the performance of obligation with respect to time What is the effect or importance of stating the delivery date in the contract?-perfection of the contract/demandability Are there instances when an obligor incurs in delay WITHOUT any demand?-YES. What is fraud? Causal fraud?Incidental fraud? Can it be waived? Fraud consist in the conscious and intentional proposition to evade the normal fulfilment of an obligation -causal fraud- fraud in the performance of a pre-existing obligation -incidental fraud-fraud in the perfection of a contract -waiver for future fraud is void (contrary to law and public policy) -waiver for past fraud is valid (act of generosity) Distinction between fraud in Article 1170 and causal or intentional fraud -CF is present only during the performance of a pre-existing obli; IF is only at the time of birth of the obligation -CF is employed for the purpose of evading the normal fulfilment of the obli;FI is to secure the consent of the other party -CF results in the nonfulfillment or breach of the obli; IF results in the vitiation of the consent -CF gives rise to the right to recover damages; IF gives rise to right to ask for the annulment of the contract Article 1173-fault or negligence of the obligor consists in the omission of that diligence w/c is required by the nature of the obligations and corresponds w/ the circumstances of the time and of the place Examples of Article 1169 If there is no demand, there is no delay, any exception? -when obligation or law expressly declares -when the designation of time is controlling motive -demand would be useless(beyond the debtor to perform) Proximate v. Contributory negligence Proximate-creditor cannot recover;w/o which the damage or injury would not have been casued CN-liability of debtor is mitigated/concurs with act of God Effect of the presence of contributory negligence on the part of the obligor-liablity of debtor is reduced or mitigated Test of negligence Did the defendant in doing the alleged negligent act or omission use the reasonable care and caution which an ordinarily prudent man would have used in the same situation How do you determine contributory negligence? What is demand? Types and distinctions of demand? Judicial-filing of a complaint extra-judicial-orally or in writing Remedies of the creditor to protect his credit? Article 1177 Article 1177: remedies of the creditor to protect his credit -exhaust all property of the debtor -subrogation -impugn fraudulent acts

Article 1192: obligation with a period- obligations for whose fulfilment a day certain has been fixed and shall only be demandable when that day comes Define conditional obligation- an obligation whose fulfilment depends a future or uncertain fact or event What is a pure obligation? An obligation whose fulfilment does not depend upon a future or uncertain fact or event/immediately demandable AccionSubragatoria vs. AccionPauliana AS-right to exercise all of the rights and bring all of the actions which the debtor may have against third persons AP-impugn all the acts which the debtor may have done to defraud him 3 Conditions before AccionSubragatoria can be availed -the debtor to whom the right pertains is indebted to the creditor -the creditor is prejudiced by the debtors inaction -the creditor must have first exhausted all the properties of the debtor Exception in AccionSubragatoria-rights purely personal to the debtor When you incur additional debts, does it constitute fraud? Do new contracts by the debtor fall within the scope of AccionPauliana? No, new debts contracted by the insolvent debtor are not included although they make the position of existing creditors worse, because only acts which impair the assets of the debtor are covered by the provision and those which merely increase his liabilities are not (Paras) What is a term? Interval of time upon which the fulfilment or extinguishment of obligations depend Term vs. Condition; what is the most distinctive difference? Term-must necessarily come(certain),condition-may or may not happen(uncertain) What kind of obligation? Ill pay you on demand-conditional Ill pay you when I receive my allowance- w/ a period In obligations with a period, for whose benefit is the period fixed? It is presumed to be for both the debtor and creditor Article 1198: Instances when the debtor loses his right to make use of the period When he becomes insolvent He fails to deliver the securities and guaranties promised Impairs the guaranties by his own acts Violates any undertaking Attempts tp abscond Alternative vs. Facultative obligation Victorias Planters Case What does the debtor shall lose every right to make use of the period mean?It means that the term is extinguished and the obligation is demandable at once Potestative, Casual and Mixed Obligations Potestative-fulfillment is based on the will of one of the parties to the obli Casual-based on chance or upon third persons Mixed-both/joint Lim vs. People

Suspensive vs. Resolutory Suspensive-the demandability is suspended and it is only upon the happening of a future and uncertain event that rights are acquired, in resolutory, rights are already acquired upon constitution but extinguished upon the happening of the condition Prior to the happening of the future or uncertain event, does the creditor have any right? In suspensive condition, oblige has mere hope or expectancy protected by law, in resolutory conditions, rights are acquired immediately What is the effect of a potestative and suspensive condition? If it depends upon the will of debtorVOID; upon the will off creditor-VALID and enforceable Article 1182; 1183; 1189 Art. 1183-Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid. Art.1189- Loss, Deteriorations and Improvements Loss: if w/o the fault of the debtor, obligation is extinguished If through the fault of the debtor, obliged to pay damages -A thing is lost when it perishes, goes out of commerce or disappears in such a way that its existence is unknown or cannot be recovered Deteriorations: w/o the fault of the debtor, impairment is to be borne by the creditor If through the fault of the debtor, creditor may choose between fulfilment or rescission with damages in both sides Improvements: if improved by nature or time, the improvement shall inure to the benefit of the creditor If improved at the expense of the debtor- no other right than that granted to usufructuary -debtor cannot ask reimbursement for the expenses incurred for useful improvements and for mere pleasure -if for necessary expenses, can ask for reimbursement

What is constructive fulfilment? Fulfilment of the condition when the debtor through his acts voluntary and wilfully prevented the oblige from fulfilling the condition Why does it retroact to the constitution of the obligation? The condition which is imposed is only an accidental, not an essential element of the obligation. Rights of the debtor during the pendency of the fulfilment- bring appropriate actions for the preservation of his right (1188) Effect of the fulfilment or happening of a resolutory condition- rights acquired are extinguished Limitations on the power to rescind- belongs to the injured party only -must be judicially decreed -must not be contrary to law, good morals, customs and public policy -breach must be substantial and fundamental Angeles vs. Calasang Roque vs. Lapuz