TITLE I – OBLIGATIONS Chapter 1: General Provisions OBLIGATIONS Art. 1156. An obligation is a juridical necessity to give, to do or not to do.
Elements of an Obligation: (obligare- to bind) a.) Active subject- called the obligee (if the obligation is to do) or creditor (if the obligation is to give). The possessor of a right; he in whose favor the obligation is constituted. b.) Passive subject- called the obligor (if the obligation is to do) or debtor (if the obligation is to give). He who has the duty of giving, doing, or not doing. The passive subject must be determinate or determinable. a. How can both subjects be determinate or determinable? Obligations where the subjects are completely and absolutely determined at the birth of an obligation. Obligations where one subject is determined at the moment of the birth of the obligation and the other subject is to be determined subsequently at some fixed criterion, which criterion is fixed at the start of the obligation. Obligations in which subjects are determined in accordance with its relation to a real thing. Real rights. c.) Object or prestation- the subject matter of the obligation. It may consist of giving a thing, doing or not doing a certain act. The law speaks of an obligation as a juridical necessity to comply with a prestation. There is a juridical necessity, for noncompliance can result in juridical or legal sanction. Obligation -> prestation (object of the obligation) -> object of the prestation Requisites of the Object of the Obligation: o Licit (Legal) o Possible both in fact and in law o Determinate or determinablecan’t say you’re going to sell something. o Must have pecuniary value d.) Efficient cause- the vinculum or juridical tie. The reason why the obligation exists. e.) Vinculum juris- the legal tie. Consists of the enforceability of the obligation. If the debtor does not conform, the creditor has
the power to go to court to make the debtor perform – coercive. What makes an obligation is the power of the creditor to haul the debtor before the court, summoning powers of the state if needed. Voluntariness goes into entering into an obligation. But once you enter, it becomes involuntary. f.) Form- means manifestation of intent. There is no specific form for a valid obligation. Characteristics of Obligations: BALANE 1. It represents an exclusively private interest. 2. Creates ties which are by nature transitory. a. Because obligations are extinguished. But the period is relative. 3. It involves the power to make the juridical tie defective in case of non-fulfillment through satisfaction of the debtor’s property. Kinds of Obligations (a) Sanction 1) Civil obligation or perfect obligationArt. 1156. The sanction is judicial process. 2) Natural obligation- the duty not to recover what has voluntarily been paid although payment was no longer required. There is no real obligation on the part of the debtor, but due to conscience or guilt, he still fulfills the obligation. (for example, a debt had already prescribed, but the debtor pays the debt because of conscience or guilt) 3) Moral obligation (or imperfect obligation)- the sanction here is conscience or morality. (for example, going to mass) (b)Subject Matter 1) Real obligation- the obligation to give. 2) Personal obligation- the obligation to do or not to do. (for example, refraining from committing a crime) (c) Affirmativeness or Negativeness of the Obligation 1) Positive or affirmative obligation- the obligation to give or to do. 2) Negative obligation- the obligation not to do (which naturally includes “not to give”). (d)Viewpoint of Persons Obliged 1) Unilateral- where only one of the parties is bound. Every obligation has 2 parties; if
only one of them is bound, we have a unilateral obligation. 2) Bilateral- where both parties are bound. a. Reciprocal b. Non-reciprocal- where performance by one is non-dependent upon performance by the other. CRITICISM: the obligation stresses merely the duty of the debtor (the passive element) without emphasizing a corresponding right on the part of the creditor (the active element). The definition is incomplete, in that, it views obligations only from the debit side. There is no debt without a credit, and the credit is an asset in the patrimony of the creditor just as the debt is the liability of the obligor. Ramos: “an obligation is a juridical relation whereby a person (called the creditor) may demand from another (called the debtor) the observance of a determinative conduct (the giving, doing, or not doing), and in case of breach, may demand satisfaction from the assets of the latter. SOURCES OF OBLIGATIONS Art. 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts. Sources of Obligation: no obligation exists if the source is not one of those enumerated under Art. 1157 (exclusiveness of the enumeration). 1. Law- obligations ex lege. BALANE: there is really only one source of obligations, law. Without the law saying the particular contract is enforceable, the contract will not give rise to an obligation. However, “source” can be understood in both the ultimate and immediate sense. In the ultimate sense, law is the solidary sense. In the immediate sense, there are 5. Law is both an immediate and ultimate source. 2. Contracts- obligations ex contractu. 3. Quasi-contracts- obligations ex quasicontractu. (for example, the duty to refund an “over change” of money because of the quasi-contract of solution indebiti or “undue payment”) 4. Crimes or Acts or Omissions Punished by Law- obligations ex maleficio or ex delicto.
5. Quasi-delicts or Torts- obligations ex
delicto or ex quasi-maleficio. (for example, the duty to repair damage due to negligence) CRITICISM : In reality, there are only 2 sources: the law and contracts, because obligations arising from quasi-contracts, crimes and quasi-delicts are really imposed by law. LAW/OBLIGATION EX-LEGE Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable; and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book. Meaning of the Article: the obligation must be clearly (expressly or impliedly) set forth in the law. Conflicts between Civil Code and Special Laws: if regarding an obligation ex lege or law, 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. CONTRACTS/OBLIGATION EX-CONTRACTU Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Obligations ex-contractu: while obligations arising from a contract have the force of law between the parties, this does not mean that the law is inferior to contracts. 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. BALANE: combines equity or good faith and strict compliance by the parties. Meaning of the Article: Neither party may unilaterally and upon his own exclusive volition, escape his obligations under the contract, unless the other party asserted thereto, or unless for causes sufficient in law and pronounced adequate by a competent tribunal. OBLIGATIO NS The result of a contract or some other CONTRACTS A contract, if valid, always results in obligations.
source. Contracts obligations
A contract is a meeting of the minds between 2 persons whereby one binds himself, with respect to the other, to give something or to render some service. (Art. 1305) 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. (Art. 1306) Perfected by mere consent, and from that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. (Art. 1315). From another viewpoint. A contract may itself be a result of an obligation. (for example, if someone engages someone as an agent, you have the contract of agency)
made to the gestor for necessary and useful expenses, as a rule (Art. 2150). b) Solutio indebiti (undue payment)- this takes place when something is received when there is no right to demand it, and it was unduly delivered through mistake. The requisites for the claim of refund: a. He who paid was not under any obligation to do so. b. The payment was made by reason of an essential mistake of fact. OBLIGATION EX DELICTO OR EX MALEFICIO Art. 1161. Civil obligation arising from criminal offenses shall be governed by the penal laws, subject to the provisions of Art. 2177, and of the pertinent provisions of Chap. 2, Preliminary Title, on Human Relations, and of Title XVIII of this Book, regulating damages. Art. 100 of the RPC: Every person criminally liable for a felony is also civilly liable. 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. Civil Liability arising from a Crime includes: a) Restitution b) Reparation of the damage caused c) Indemnification for inconsequential damage Damages in case of death: At least P50,000 must be given to the heirs of the victim. (Loss of earning capacity and moral damages, among other things, should be given) Civil Action implicitly instituted in criminal case: as a general rule, whenever a criminal action is instituted, the civil action for the civil liability is also impliedly instituted together with the criminal action. Kind of Proof: a) If a civil action merely is instituted, mere preponderance of evidence is sufficient. b) If a criminal case is brought (and with it, the civil case), the guilt must be established by proof beyond reasonable doubt. OBLIGATIONS EX QUASI-DELICTS OR EX QUASI-MALEFICIO Art. 1162. Obligations derived from quasidelicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws.
Innominate Contracts (Contratas Innominado) a.) Do ut des- I give that you may give. b.) Do ut facias- I give that you may do. c.) Facio ut des- I do that you may give. d.) Facio ut facias- I do that you may do. QUASI-CONTRACTS/OBLIGATION EX QUASICONTRACTU Art. 1160. Obligations derived from quasicontracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book. Quasi-contractu: that juridical relation resulting from a lawful, voluntary, and unilateral act, and which has for its purpose that payment of indemnity to the end that no one shall be unjustly enriched or benefited at the expense of another. A quasi-contract is not an implied contract because there is no meeting of the minds. 2 Principal Kinds: a) Negotiorum gestior (unauthorized management)- when a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority (Art. 2144). Reimbursement must be
Quasi-delict: (tort or culpa aquiliana) a fault or act of negligence (or omission of care) which causes damages to another, there being no preexisting contractual relations between the parties. Negligence: “Negligence 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.” Negligence is the omission of that diligence which is required by the circumstances of person, place, and time. Thus, negligence is a question of fact (Civil Code). Test: would a prudent man foresee harm to the person injured as a reasonable consequence of the course about to be pursued? If so, the law imposes a duty on the actor to refrain from the course, or to take precaution against its mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition born of this provision, is the constitute fact of negligence. Requirements before a person can be held liable for a Quasi-delict: a) There must be fault or negligence attributable to the person charged b) There must be damage and injury c) 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 which is the adequate and efficient cause, which in the natural order of events, necessarily produces the damages or injury complained of) Contractual Liability There is already an obligation which exists prior to or even without a breach. The breach of the contract is immaterial to the legal obligation. Contract and breach may be separable. Quasi-Delict The obligation arises only when there is a violation. Without a violation, there is no obligation. It is the breach itself which gives rise to the obligation. Quasi-delict and breach are inseparable.
the parties requires another standard of care. Duty to exercise diligence: the first effect of an obligation to deliver a determinate thing (as distinguished from a generic thing – or one of a class) is the duty to exercise proper diligence. Unless it is exercised, there is a danger that the property would be lost or destroyed, thus rendering illusory the obligation. Diligence needed: a) That which is required by the nature of the obligation and corresponds with the circumstances of person, time and place. b) Or, if the law or contract provides for a different standard of care, said law or stipulation prevails. TO GIVE: FRUITS Art. 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. Personal right: jus in personam or jus ad rem. Power demandable by one person of another – to give, to do or not to do. Real right: jus in re. A power over a specific thing (like the right of ownership or possession) and is binding on the whole world. Non nudis pactis, sed traditionis dominia rerym transferatur. As a consequence of certain contracts, it is not agreement but tradition or delivery that transfers ownership. Kinds of Delivery: a) Actual delivery (or tradition)- where physically, the property changes hands. b) Constructive delivery- that where the physical transfer is implied. a. Traditio simbolica (symbolical tradition) b. Traditio longa manu (delivery by mere consent or the pointing out of an object) c. Traditio brevi manu (delivery by the short hand; that kind of delivery whereby a possessor of a thing not as an owner, becomes the possessor as an owner) d. Traditio constitutum possessorium (the opposite of brevi manu; thus, the delivery whereby a possessor of a thing as an owner, retains
Chapter 2: Nature and Effect of Obligations TO GIVE (Art.1163-1166): DUE DILIGENCE Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or stipulation of
(Art. extinguished by a fortuitous event or act of God. 1165. To give a generic or indeterminate thing (one of a class) b) Personal obligations (to do or not to do) Specific or Determinate Things: when it is capable of particular designation. 3. To give a specific thing (set apart from a class) b.possession no longer as an owner. accessions and accessories do not have to be included. Ordinary Delay Merely nonperformance at the stipulated time. The two instances where a fortuitous event does not exempt is if the obligor delays (this is default or mora) or if the obligor is guilty of bad faith. but in some other capacity) e. the creditor. To deliver the accessions and accessories. When what is to be delivered is a determinate thing. 1166. 1166). (a) or (b). in addition to the right granted him by Art. to put a debtor in default. Classification of Obligation from the Viewpoint of Subject Matter (or Object of the Obligation): a) Real obligations (to give): a. TO GIVE: DELIVERY Art. However. he shall be responsible for fortuitous event until he has effected the delivery.
. enjoyment or perfection. After constitution of the obligation and before delivery. planted or sown on a person’s parcel of land. BALANE: TO GIVE A DETERMINATE THING Primary obligation: giving what is supposed to be given. Traditio by the execution of legal forms and solemnities) *A sale which is simulated. TO GIVE: ACCESSIONS AND ACCESSORIES Art. genus. (Art. Effect of stipulation: if there is a stipulation to said effect. These include alluvium (soil gradually deposited by the current of a river on a river bank) and whatever is built. 1164). as a rule.
Effect of Fortuitous Events: a specific obligation is an obligation to deliver a specific thing is. As a rule. To account and deliver to the creditor the fruits if the thing bears fruits upon the time the obligation to deliver it arises. The obligation to give a determinate thing includes that of delivering all its accessions and accessories. b) If there is a term or a condition. 2. If the obligor delays. Legal Delay (Default) Delay which amounts to a virtual non-fulfillment of the obligation. even though they may not have been mentioned. 1163). he may ask that the obligation be complied with at the expense of the debtor. Accessories: additions to or improvements upon a thing. Remedies of the Creditor when the Debtor fails to comply with his Obligation: a) Demand specific performance (or compliance) of the obligation. to take care of it with the proper diligence of a good father of the family. Generic obligations are never extinguished by fortuitous events. creditor’s rights over the fruits is merely personal. b) Demand rescission or cancellation (in some cases). c) Demand damages either with or without either of the first. 1170. then from the perfection of the contract. and cannot be pointed out with particularity. (Art. or even a genuine one. Accessions: those joined to or included with the principal for the latter’s better use. there must be a demand for fulfillment. then from the moment the term arrives or the condition happens. where there is no delivery of the object. or has promised to deliver the same thing to two or more persons who do not have the same interest. Hence. does not transfer ownership. 3 Accessory Obligations: 1. Obligation to deliver arises from: a) If there is no term or condition. If the thing is indeterminate or generic. Generic or Indeterminate Things: when it refers only to a class. ownership is transferred only by delivery. the demand is being either judicial or extrajudicial. may compel the debtor to make the delivery.
Equivalent performance. unless substitution is permitted. Substitute performance. Remedies available to the creditor: 1.damages. TO GIVE A GENERIC THING Remedies available to the creditor: 1. Anyone else can do it (not personalisimo) 1. X √
TO GIVE Determin ate thing Determin able thing TO DO Very personal
Not very personal
Not applicable because of the prohibitio n against involuntar y servitude. Equivalent performance.to obtain damages. Specific performance is not a remedy in personal obligations. otherwise. A thing may be ordered undone: a) If made poorly.done by someone else (perform at the expense of the debtor). it may be decreed that what has been poorly done be undone. Specific performance.damages.damages. May be obtained exclusively or in addition to the 1st 2 actions. TO DO Art. May be obtained exclusively or in addition to the 1st action. 1167. 2. Equivalent performance.damages. if purely personal or special – only damages may be asked. 2. Not applicable because of the prohibitio n against involuntar y servitude. the same shall be executed at his cost.
NOT TO DO Art.the debtor must perform it personally. this may amount to involuntary servitude. 3. itself.
. When the obligation consists in not doing. Equivalent performance. it shall also be undone at his expense. Remedies of Creditor if Debtor fails to do: a) To have the obligation performed (by himself or another) at debtor’s expense (only if another can do the performance). Specific performance.Remedies available to the creditor: 1. and the obligor does what has been forbidden him. 1168.done by someone else (performed at the expense of the debtor). Equivalent performance.the debtor must perform it personally. 2. Furthermore. b) Also. b) If the obligation is a negative one. Obligatio n TABLE OF REMEDIES Specific Equivale Performa nt nce Performa nce The The performan payment ce of the of prestation damages.done by someone else (performed at the expense of the debtor). Substitut e Performa nce When someone else performs or something else is performed at the expense of the debtor. (Damages alone cannot substitute for performance if owners can do it. which as a rule is prohibited under our Constitution). If a person obliged to do something fails to do it. Substitute performance. provided the undoing is possible. Can be obtained exclusively or in addition to other actions. Only the obligor can do (personalisimo) 1. Substitute performance. Here performance by another and damages may be demanded. This same rule shall be observed if he does it in contravention of the tenor of the obligation.damages. May be obtained exclusively or in addition to the 1st 2 actions. 2.
except in certain instances. 1169. there must be a provision that if payment is not made when due. It is not essential for the contract to categorically state that time is of the essence. 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.In a purchase by installments. There must be non-performance. However. Mora Solvendi ex persona (debtor’s default in personal obligations) b) Mora Accipiendi (default on the part of the creditor). 3. If the debtor is in default. however. 2. he may be liable for interests or damages. the contract may provide for an “acceleration clause” (a clause which would make all installments due. The demand may be: a) Judicial. Mora Solvendi ex re (debtor’s default in real obligations) b. (in both cases. The obligation must be due. (When demand is needed. . unless the demand is not required. nor one with a bigger amount. 4. He may also bear the risk of loss. loss would have occurred just the same. b) Extrajudicial. . without court proceedings. the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declares. although damages here may be mitigated if he can prove that even if he had not been in default. delay by the other begins. and already liquidated or determinate in amount. default or liability for damages or interests automatically arises. If there is an acceleration clause. all that happens will be that the whole amount becomes due. There must be a demand. . upon default in one installment). . as when a complaint for specific performance is filed. 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. as when the obligor has rendered it beyond his power to perform. From the moment one of the parties fulfills his obligation. Necessity of Demand: to put a debtor in default. 2. or (3) When demand would be useless.the creditor is guilty of default when he unjustifiably refuses to accept
DELAY Art. considering all the circumstances). The mere fixing of the period is not enough. 3. 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. enforceable.There is no mora in natural obligations. Default in the payment of one installment does not mean default in the whole amount. He is liable even for a fortuitous event. And demand is still needed to put the debtor in default. it is.NOT TO DO
e) When the obligor has expressly acknowledged
that he really is in default (but it should be noted that his mere asking for extension of time is not an express acknowledgement of the existence of default on his part).
. When Demand is not needed to put Debtor in Default: a) When the law so provides. proof of it must be shown by the creditor). c) When time is of the essence of the contract (or when the fixing of the time was the controlling motive for the establishment of the contract). demand is needed. In reciprocal obligations.there is no mora solvendi in negative obligations (one cannot be late in not doing or not giving). The demand must be for the obligation that is due (and not for another obligation. Different Kinds of Mora: a) Mora Solvendi (default on the part of the debtor). b) When the obligation expressly so provides. as when the obligor has rendered it beyond his power to perform.Requisites for mora solvendi: 1.Effects of Mora Solvendi: 1. the intent is sufficient as long as this is implied. d) When demand would be useless. a. essential that his being in default is attributable to his own fault).
1170 should pay damages.corrective or to set an example. Liability for damages: those liable under Art. 1171. but generally only if aside from the breach of contract.predetermined beforehand – by agreement.if imputable to the
debtor. 1170. Any waiver of an action for future fraud is void. b) Negligence (fault or culpa)
c) Default or mora. Performance may be set on different dates.intentional evasion of fulfillment.when no other kind of damages may be recovered. “When the debt of a thing certain and determinate proceeds from a criminal offense. both parties are in default. IRREGULARITY IN PERFORMANCE: FRAUD Art. said stipulated time controls. Grounds for Liability in the Performance of their Obligations: a) Fraud (deceit or dolo). Dolo causante (causal fraud) ii. fraud may be classified as follows: a. Those who in the performance of their obligations are guilty of fraud. b) According to meaning. 3. . whatever may be the cause for the loss. .unless excused in proper cases by fortuitous events. fraud may be past or future (liability for past fraud may be waived. even though this be through a fortuitous event. Dolo incidente (incidental fraud) *while dolo causante is so important a fraud that vitiates consent (allowing therefore annulment). 2.) In the absence of agreement.If the performance is not set on different dates.for mental and physical anguish. It cannot be recovered unless proved. Moral. Nominal. so it is as is no one is in default). this is not so for future fraud). negligence. Some justifiable reasons for refusal to accept may be that the payor has no legal capacity or that there is an offer to pay an obligation other than what has been agreed upon. NEGLIGENCE OR DELAY Art. or custom. When Damages or Interest may be lost: a) If the principal obligation is allowed to lapse by prescription. (Fraud here may be either: i. If a contract of simple loan stipulates the time when interest will be counted. prejudice or damage was caused.depend upon each other for performance. or delay and those who in any manner contravene the tenor thereof. Responsibility arising from fraud is demandable in all obligations. Liability for Fraud or Dolo: a) According to time of commission. the debtor-criminal is responsible for loss. Damages in Monetary Obligations: indemnity for damages consists of: a. the latter would be in default. 5. c) If the damages or interest are condoned (waived or remitted). 4.
d) Violation of the terms of the
obligation (violation). IRREGULARITY IN PERFORMANCE: FRAUD.to vindicate a right. the latter refused without justification to accept it. Liquidated. the debtor shall not be exempted from the payment of its price. Fraud in obtaining consent (may be causal or merely incidental) b.” (Civil Code) c) Compensatio Morae (when in a reciprocal obligation. the legal rate of interest. there is compensatio morae (default on the part of both. Exemplary. and the other does not. Fraud in performing a contract. Kinds of Damage: damages should be paid by those responsible for them. 6.when the exact amount of damages cannot be determined. are liable for damages. When neither has performed. here it is as if neither is in default).payment or performance at the time said payment or performance can be done. If one party performs.If an obligation arises ex delicto (as the result of a crime).actual losses as well as unrealized profit. unless the creditor is in mora accipiendi. dolo incidente is not important
. either by the law. Actual. it is understood that performance must be simultaneous. Temperate. 1. unless the thing having been offered by him to the person who should receive it. contract.) That agreed upon b. b) If the damages or interest are allowed to prescribe.
Culpa Contractual Negligence is merely incidental. Culpa Criminal Negligence here is direct. 1171 and 2201. and independent. 1173.
No pre-existing obligation
No pre-existing obligation
. so prosecution has the burden of proving the negligence of the accused. of the time and of the place. When negligence shows bad faith. b) Culpa Aquiliana (civil negligence or tort or quasi-delict) c) Culpa Criminal (criminal negligence). and that it was not carried out. etc. As long as it is proved that there was a contract. and independent of a contract.that which results in the commission of a crime or a delict. Waiver of an action to enforce liability due to future culpa may in a certain sense be allowed. Waiver of an action to enforce liability due to future fraud is void. This is because his action is based on alleged negligence on the part of the defendant. shall apply. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person. Here the employee’s guilt is automatically the employer’s civil guilt. according to the circumstances. if the former is insolvent. but such liability may be regulated by the courts. Proof neededpreponderance of evidence. There is a preexisting Culpa Aquiliana Negligence here is direct. Liability due to negligence may be reduced in certain circumstances.
(except the duty never to harm others).
Accused is presumed innocent until the contrary is proved. it is presumed that the debtor is at fault. If the law or contract does not state the diligence which is to be observed in the performance.IRREGULARITY IN PERFORMANCE: NEGLIGENCE Art. the provisions of Arts. ¶2. Responsibility arising from negligence in the performance of every kind of obligation is also demandable.
(except of course the duty to be careful in all human actuations). that which is expected of a good father of a family shall be required.
Ordinarily. either express or implied).
Art. substantive. Proof neededpreponderance of evidence.” is a proper and incomplete defense (insofar as employers or guardians are concerned) in culpa aquiliana. This is not a proper defense in culpa criminal. and it is his duty to prove that there was no negligence in carrying out the terms of the contract. the victim has to prove the negligence of the defendant. not done through force) still there is no deliberate intention to cause damage.
Defense of “good father. Culpa Although voluntary (that is.
Proof needed in a crimeproof of guilt beyond reasonable doubts. Liability arising from dolo cannot be mitigated or reduced by the courts. Dolo There is deliberate intention to cause damage or prejudice.
Stipulations regarding Negligence (future Negligence): a) Gross negligence can never be excused in advance for this would be contrary to public policy b) Simple negligence may in certain cases be excused or mitigated Kinds of Culpa Classified According to the Source of Obligation a) Culpa contractual (contractual negligence).
obligation (a contract. incident to the performance of an obligation already existing because of a contract. 1172. substantive.that which results in a breach of contract.
Defense of “good father of a family” in the selection and supervision of employees is not a proper complete defense in culpa contractual (though this may mitigate damages).
but it is characterized by lack of care (lack of due diligence in the care of a good father of the family). are liable for damages. Like fraud. 1170. or delay and those who in any manner contravene the tenor thereof. 1170) DELAY/MORA: Definition: the non-fulfillment of the obligation with respect to time. 1191) 3. or willful omission. Simple 2. act of God. c) When the nature of the obligation requires the assumption of risk. negligence. Delay is through fault or negligence. 1191). (Art. In fraud. In the absence of b) that expected of a good father of a family. 3.
Art. 1172) 1. (Art. Effects: 1.more properly called malice. 1173). General rule for fortuitous events (caso fortuito. b) When expressly declared by stipulation or contract.Kinds a) b) c)
of Diligence Under the Civil Code: That agreed upon by the parties. In the absence of a) that required by law. the question is the quality even if performed on time. In delay. Person b. Distinguished from negligence by the presence of deliberate intent. even if foreseen. negligence results in improper performance. Fraud under Art. or when it is otherwise declared by stipulation or when the nature of the obligation requires the assumption of risk. 2. Creditor may insist on proper substitute or specific performance (Art. negligence. The nature of the obligation 2. knowing and intending the effects which naturally and necessarily arise from such act or omission. 1171Fraud under Art. 1170.those who in the performance of their obligations are guilty of fraud. Art. Deceit vitiates consent in contracts. Time c. Nature and circumstances of a. Essential characteristics of a Fortuitous Event: a) The cause must be independent of the will of the debtor (free from participation or aggravation). Creditor requires performance either judicially (through court action) or
. The deliberate and intentional evasion of the normal fulfillment of the obligation. Without this deceit. Rescission/Resolution (Art. Rescission/Resolution. 1170-1171) Definition: the voluntary execution of a wrongful act. BALANE: IRREGULARITY IN PERFORMANCE: ATTRIBUTABLE TO DEBTOR (CULPABLE) Art. thus the obligation before the obligation is voidable. 1233). even if the quality is excellent but the performance is not in due time. Damages in either case. the debtor is liable. It will depend on: 1.
1338 1171 Deceit is antecedent Malice is subsequent fraud. Fraud preexists the There was already an obligation. FRAUD: (Art. Requisites: 1. force majeure or unavoidable accident): no liability. Exceptions: a) When expressly declared by the law or is in default. (Art. Obligation is demandable and liquidated. 1170). c) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. 1170. 2 Types of Negligence: 1. b) Impossibility of foreseeing or impossibility of avoiding it. Except in cases expressly specified by the law.
NEGLIGENCE: The absence of due diligence (Art. Creditor may insist on proper substitute or specific performance. 1233) 2. the other party would not have entered into the contract. which is lacking in the latter. were inevitable. 2. fraud exists. 3. unlike fraud which is characterized by malice. fraud. or which though foreseen. Place Effects: (Art. no person shall be responsible for those events which could not be foreseen. Fraud under Art. 1174. Damages in either case (Art. Gross The determination of due diligence is always relative. The deceit occurs by using insidious words machinations.
o When the obligation or the law expressly so declares. 2. 3. There must be an express stipulation to that stipulates that non-performance on the due date is delay without need of demand. 4. If after receipt of demand and the other party does not comply with his obligation. he is in delay. The offer must be to comply with the prestation as it should be performed. (Art. The creditor refuses the performance without just cause. What is the form of such a demand? Any communication of a party that he is ready and willing to comply with his obligation. If the obligation has interest. Exceptions: (Mora solvendi ex re. or the failure to comply with his obligations. 2. Act of God Also governed by Art. The cause of the unforeseen and unexpected occurrence. Art. debtor shall not have obligation to pay the same from the time of the delay. 2. 3. o Rescission/Resolution. 1221 but is called ‘loss’ there. This does not constitute automatic delay. Requisites: 1. (Art. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. Expenses incurred by the debtor for preservation of thing after the delay shall be chargeable to the creditor. but the creditor refuses to accept it without just cause. Compensatio Morae Delay on both sides on reciprocal obligations. caso fortuioto. 3. Requisites: o The obligation is demandable and liquidated. o Debtor delays performance either because of dolo or culpa. 3 kinds of delay: 1. In reciprocal obligations (obligations with a counterpart prestation) which require simultaneous performance. It must be impossible to foresee the event which constitutes caso fortuito. Thus. o When it appears from the nature and controlling motive the obligation that time was a controlling motive for the establishment of the contract. (Mora solvendi expersona). Mora Accipiendi
Related to payment (consignation). 5. 1169). no delay. no demand. it must be impossible to avoid. Requisites: 1. o The creditor demands the performance either judicially or extrajudicially. a cause for extinguishment of obligation. cancel each other out. Effects: o When the obligation is to deliver a determinate thing. The creditor incurs in delay when debtor tenders payment or performance. Debtor is exempted from risk of loss of thing which automatically pass to creditor. 3.
extrajudicially (any communication by the creditor to debtor). the risk is placed on the aprt of the debtor. Effects: 1. o When demand would be useless. or if it can be foreseen. when obligor has rendered it beyond his power to perform. Responsibility of debtor for the thing is limited to fraud and gross negligence. Creditor becomes liable for damages. Mora Solvendi: Delay in performance incurred by the debtor. Debtor may relieve himself by consignation of the thing. 1165) o Damages. demand is still needed. 6. NOT ATTRIBUTABLE TO THE DEBTOR (NONCULPABLE) Fortuitous event (Art. An offer of performance by the debtor who has the required capacity. force majeure. 1174). must be independent of the human will. General rule: demand is necessary. 1191) 2. Mere setting of due date is not enough.
4. generally by attachment (except properties exempted by the law) c) Accion subragatoria (subragatory action)exercise all rights and actions except those inherent in the person. shall give rise to the presumption that said interest has been paid.presumption that interest has been paid if the principal has been received without reservation regarding interest. 2. The creditor is prejudiced by the debtor’s acts which are in favor of third parties and rescission will benefit the creditor. Arts.
. 2. 2 Presumptions: 1. Premised on the theory that “the debtor of my debtor is my debtor.presumption that earlier installments have been paid if the later installment has been received without reservation regarding the previous installments. 1380-1389). Moratory interest. 1176. 3. giving advantage to other persons. Kinds of interest: a. General Rule: when a debtor is unable to fulfill his obligation because of a fortuitous event or force majeure.) Interest given for compensation or use of the money.a direct (not subragatory) action by the creditor against his debtor’s debtor. Falure of debtor to collect his own credit from a third person either through malice or negligence. When the law so provides (Art. Art.
4. When the nature of the obligation requires the assumption of risk
Art. There is a credit in favor of the plaintiff. Insufficiency of assets of the debtor to satisfy the creditor’s credit. The receipt of a later installment of a debt without reservation as to prior installment. The creditors. Rights of Creditors: Enforcement of Creditor’s Remedies a) Exact payment b) Exhaust debtor’s properties. chattels or credits. e) Accion directa. 5. one of the parties delivers to another money or other consumable things upon the condition tat the same amount of the same kind and quality shall be paid. 5. after having pursued the property in possession of the debtor to satisfy their claims. he cannot be held liable for damages or non-performance. The obligor must be free from any participation in the aggravation of the injury resulting to the creditor. shall likewise raise the presumption that such installments have been paid.” Requisites: 1. Creditor has a right of credit against the debtor. goods. for the fulfillment of his obligations subject to the exemptions provided by law. Usury: contracting for or receiving something in excess of the amount allowed by law for the loan or use of money. b. 3. The receipt of the principal by the creditor. Fortuitous event yields to contrary stipulations. 1175. without reservation with respect to the interest. Compensatory interest.
Art.right of creditors to rescind alienations by debtor which are prejudicial to them to the extent of the prejudice. Simple Loan (Mutuum): by the contract of simple loan. The creditor has no legal remedy. 1163) 2. Interest bearing debt. The debtor has performed an act subsequent to the contract. it compensates the damage caused. may exercise in all the rights and bring all the actions of the latter for the same purpose. The exaction of excessive interest. 2. This is an exception to the relativity of contracts. Usurious transaction shall be governed by special laws. Requisites: 1. 3. save those which are inherent in his person. Extent of Debtor’s Liability: the debtor is liable with all his property. 4. Credit is due and demandable. present and future. d) Accion pauliana (impugn or rescind acts or contracts done by the debtor to defraud the creditors. Right (of account) is not intuitu personae. they may also impugn the acts which the debtor may have done to defraud them. 1177.) Interest given by way of damages. Debt payable in installments. When there is express stipulation. The debtor’s acts are fraudulent. a remedy which gives the creditor the prerogative to act in his own name. Exception: 1.
1179. Every obligation which contains a resolutory condition shall also be demandable. before the fulfillment of the condition. (Art. if there have been no stipulation to the contrary. the happening of the term determines its demandability. 1187) If the obligation imposes reciprocal prestations. without prejudice to the effects of the happening of the event. therefore. The right to the fuirts of the thing is not within the principle of retroactivity of conditional obligations. the courts shall use sound discretion to determine the retroactive effect of the fulfillment of the condition. In conditional obligations. Transmissibility of Rules: General Rule: rights are transmissible. all rights acquired in virtue of an obligation are transmissible. The debtor who paid before the happening of the condition may recover only when he paid by mistake and provided the action to recover is brought before the condition.Art. and not from the happening of the condition. 1178. 1187) The creditor may. When an obligation is demandable at once: a) When it is pure b) Or when it has a resolutory condition Classification of Conditions: a Suspensive The happening of the condition ) gives rise to the obligation. 1184) The moment the suspensive condition happens. being the exception to the rule. the effects of the obligation retroact to the moment when such obligation was constituted or created. In term. The condition that some event happens 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. Pure obligation: one without a condition or a term (hence. is demandable at once. 1188) The happening of the condition extinguishes the obligation. 1187) The law does not require the delivery or payment of the fruits or interests accruing before the happening of the suspensive condition. must be clearly proved. Chapter 3: Different Kinds of Obligations Section 1: Pure and Conditional Obligations DIFFERENT KINDS OF OBLIGATIONS Art. bring the appropriate actions for the preservation of his right (Art. debtor appropriates the fruits. The fulfillment of a suspensive condition results in the acquisition of rights arising out of the obligation. the happening of the condition determines its birth or death. Every obligation whose performance does not depend upon a future or uncertain event. fruits and interest are deemed mutually compensated. provided there will be no absurdity). The fulfillment of the resolutory condition results in the extinguishment of rights arising
. (Art. If the obligation is unilateral. a fiction is created whereby the binding tie of the conditional obligation is produced from the time of its perfection. By the principle of retroactivity. or upon a past event unknown to the parties. (Art. demandable at once. It Is one which is subject to no contingency. the obligation becomes effective and enforceable. (Art. (Art. 1188). In obligations to do and not to do. Subject to the laws. Exceptions: 1) If the law provides otherwise 2) If the contract provides otherwise 3) If the obligation is purely personal *intransmissibility by contractual stipulation. A condition is a future and uncertain event. Conditional obligation: when there is a condition. However.
If the defaulting party refuses to return it. Upon resolution. (Art. Depends upon the will of the debtor. Resolution is based on the nonfulfillment of obligation. then the obligation is valid In this case.out of the obligation. If the aggrieved party has not performed the prestation and resolves extrajudicially. so that they may be returned to their original condition before the creation of the obligation. then all the aggrieved party has to do is to refuse to perform his prestation. The entire obligation is void because there is no juridical tie. the obligation is treated as if it did not exist. If the resolutory condition is fulfilled. Art. If the condition depends upon the will of the creditor. 5. The right of resolution applies to reciprocal obligations. 1182 prohibits a suspensive potestative condition dpendent on the will of the debtor. A reciprocal obligation has 2 elements: 1.
. 6. The exercise of this right
can be the subject of judicial review. 7. Resolution is different from rescission. 4. there is a vinculum juris. 2 prestations arising from the same source. The parties are returned to their original situation. the breach is a resolutory condition which extinguishes the obligations. there must be mutual restitution of the object and its fruits. 1190) Resolution (Art. Each prestation is designed to be the counterpart of the other. Proof of substantial breach is a prerequisite for resolution. Summary of rulings on resolution: 1. each party is bound to return to the other whatever he has received. The right to resolve is in inherent in reciprocal obligations. Depends on chance or hazard or the will of a third person. In reciprocal obligations. the plaintiff must show that there is no other recourse. The fulfillment of a condition depends upon chance and/or upon the will of a 3rd person and not on the will of a party. Art. the character of resolution is principal and retaliatory while the character of rescission is subsidiary. the law only talks about the first prestation. the reciprocal prestation is not taken into consideration. This means that in resolution there is no need to show that there is no other remedy. 2. Rescission is based on economic prejudice. 2. An obligation is one which has to be performed regardless of the will of the debtor. Depends partly on the will of one of the parties and partly on chance or the will of a third person. This notice of resolution is necessary. the aggrieved party must go to court in order to recover it. The fulfillment of the condition depends upon the will of a party to the obligation. The right of resolution can be exercised extrajudicially and will take effect upon communication to the defaulting party. In rescission. the aggrieved party can demand recovery. 1191 uses the term “rescission” but the better term is resolution. 3. Thus. If the aggrieved party has performed the prestation. Furthermore. There is no element of compulsion. 1191) is found on the conditional obligations because if there is a breach. The breach of obligation must be substantial. The creditor can compel the debtor to perform the obligation.
When the condition depends not only upon the will of the debtor. it will not fall under the doctrine of constructive compliance. 2. When the debtor binds himself to pay when his means permit him to do so. Negative condition not to do anything illegal . 1183). then the obligation is valid (Art. 1180. subject to the provisions of Art. did not have for its purpose the prevention of the fulfillment of the condition. When the condition involves the performance of an act. The condition merely inferred
When the condition is tacit. 3.
. Art. or because of the intention of the parties. However.Valid condition and obligation. the obligation shall be deemed to be one with a period. the obligation is valid. When the condition is susceptible of partial realization. 1183). 2. however. Not capable of fulfillment due to nature or due to the operation of the law or morals or public policy. only one of which must be realized. 1. The effect of an impossible condition regarding donations and succession is different. Doctrine of Constructive Compliance: the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment (Art. The principle underlying constructive fulfillment of conditions is that a party to a contract may not be excused from performing his promise by the non-occurrence of an event which he himself prevented. 1183 refers to onerous obligation whereas donations and succession are gratuitous. all of which must be realized. When the condition involves the non-performance of an act. The doctrine applies also to potestative and mixed conditions. When the condition is stated expressly. When the condition is not susceptible of partial realization. Positive condition to do something impossible . Negative condition to do something impossible . The condition is stated. Requisites: 1. the obligation is void. If all the conditions must be performed. An act is to be performed. If only a few of the conditions have to be performed.
Rights are transmissible unless the rights are personal.Disregard the condition. or due to a contradiction in its terms. Capable of fulfillment in nature and in law. Conjunctive when there are several conditions. Capable of partial performance. 1197.Void condition and obligation. In donations and succession. Not capable of partial performance because of the nature of the thing. 1186). Alternative when there are several conditions. Intent of the debtor to prevent fulfillment of the obligation.c )
The fulfillment of a condition depends partly upon the till of a party to the obligation and partly upon chance and/or the will of a third person. Where the act of the debtor. if the obligation is divisible and that part of the obligation is not unaffected by the impossible condition. an impossible condition is simply disregarded. Something will be omitted. Actual prevention of compliance. although voluntary. but also upon chance or will of the others. The effect of an impossible condition is to annul the obligation (Art. The distinction can be explained by the fact that Art.
depends on chance or upon the will of the third person. directly. Effects: a) If the condition is to do an impossible or illegal thing. if the suspensive condition does not take place. If it depends upon chance or upon the will of a third person. both the condition and the obligation are void (because the debtor knows that no fulfillment can be done and therefore is not serious about being liable). Hence. Any action to recover before this is done is considered premature. 1184. but the time when payment is to be made. POSITIVE CONDITIONS Art. the acquisition of rights.valid. just disregard the condition but the obligation remains. shall depend upon the happening of the event which constitutes the condition. and it is only when that term set arrives that he can demand fulfillment. the parties would stand as if the conditional obligation had never existed. the obligation shall take effect in conformity with the provisions of this Code. b) If the condition is negative. NEGATIVE CONDITIONS
. considering the parties’ intentions. c) If the condition is negative. When the fulfillment of the condition depends upon the sole will of the debtor. those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. 1181. that is. In conditional obligations. Impossible conditions. or indirectly. Conditional Perfection of a Contract: if the perfection of a contract depends upon the fulfillment of a condition. the conditional obligation shall be void. Effect if period of fulfillment is not fixed: if the period is not fixed in the contract. public policy. Rights already acquired are lost once the condition is fulfilled. Illegal conditions: prohibited by good customs. 1182. If also suspensive. 1183. both the condition and obligation are valid. Casual. should determine what period was really intended. The condition that some even happens 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. i. b) Casual.both the condition and the obligations are void. the court. Art. not to do an illegal thing. If the obligation is divisible.
Potestative (Facultative) Condition a) Potestative on the part of the Debtor a.also called facultative condition. that part thereof which is not affected by the impossible or unlawful condition shall be valid.e. Impossible conditions: illogical condition. Mixed Conditions a) Potestative. non-fulfillment thereof means the non-perfection of the contract since the suspensive condition should have been first fulfilled. as well as the extinguishment or loss of those already acquired. by law. Suspensive conditions: the happening of which will give rise to the acquisition of a right (also called conditions precedent or conditions antecedent). Depends on the exclusive will of one of the parties.Debtor to pay “when his means permit”: payment does not depend on debtor’s will. prohibited. Potestative. Resolutory conditions: also called conditions subsequent. How long is the term: The general rule is for the creditor to ask the court first for the fixing of the term. Art. If also resolutory. What characterizes an obligation with a suspensive condition is the fact that its efficacy or obligatory force is subordinated to the happening of a future or uncertain event. b) Potestative on the part of the Creditor Art. for the obligation is really illusory b. The condition not to do an impossible thing shall be considered as not having been agreed upon. What depends really on him is not payment. not to do the impossible. the law consider this obligation as one with a term or a period.
The condition that some event will not happen at a determinate time shall render the obligation effective from the moment the time indicated has elapsed. once the condition has been fulfilled. if Jose. Actions to preserve Creditor’s rights: if not allowed to take appropriate action.in unilateral obligations. the following rules shall be observed in case of the improvement. undue payment). Any alienation on the land made by Jose will be considered invalid.intention without prevention. unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. after all. that is. debtor gets the fruits and interests unless there is a contrary intent. 1187. In obligations to do and not to do. the courts shall determine. If the obligation is unilateral. Requisites: 1) Voluntarily made. or prevention without intention is not sufficient. Retroacts: as a general rule. Art. The debtor is also entitled to fruits or legal interest if the creditor be in bad faith.either maliciously or not. there is a danger the creditor will receive nothing. to the day the obligation was constituted. Applicable of the Article to Resolutory Conditions: although in general. 1186. Future property cannot.) No retroactivity with reference to: a) Fruits or interests. (for example.Art. in each case. Art. The creditor may. the debtor shall appropriate the fruits and interests received. 1186 applies only to a suspensive condition. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give. bring the appropriate actions for the preservation of his right. the intent to prevent must be present. But intention and prevention in the exercise of a lawful right will not render the Article applicable. Art. the condition shall be deemed fulfilled at such time as may have probably been contemplated. in 2004. as well as other remedies such as asking for security if the debtor is about to be insolvent or asking the court to prevent alienation or concealment of pendent conditionae. If no time has been fixed. the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. hidden or alienated. In the meantime. The effects of a conditional obligation to give. Appropriate actions means to sue in court. Same as with mortgages because the mortgagor must be the owner. as a rule. it is as is she was entitled to the land since 2004 and any donation or mortgage made by her
in 2004 will be considered valid. In reciprocal obligations. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. the property cannot be considered a future one. the condition may not materialize. it may sometimes apply to a resolutory condition. the debtor has lost the use of the object. bearing in mind the nature of the obligation. 2) Actually prevents. It is unfair for the creditor to unjustly enrich himself (solution indebiti. before the fulfillment of the condition. shall retroact to the day of the constitution to the obligation. but inasmuch as she is entitled to the land since 2004. promises to sell to Maria his land provided she passes the bar in 2006 and she does. or it has become evident that the event cannot occur. 1185. 1188. as when the object is deliberately destroyed. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. when the obligation imposes reciprocal prestations upon the parties. the fruits and interests during the pendency of the condition shall be deemed to compensate each other (even though they really be unequal). Art. b) Period of prescription. Right of Debtor to recover what was paid by mistake: what was paid by mistake may be recovered because. be donated. Art. 1189. because it can be enforced only from said date. loss or deterioration of
. Nevertheless. Here the period runs from the day the condition was fulfilled. the retroactive effect of the condition that has been complied with. if the creditor knew that payment was being made prior to the fulfillment of the condition.
deterioration or improvement of the thing. 1190. he shall have no other right than that granted to the usufructuary. the obligation shall be extinguished. 2. it is understood that the thing is lost when it perishes. Because the obligation had been extinguished and considered to have had no effect. the impairment is to be borne without the creditor. The power to rescind obligations is implied in reciprocal ones. the provisions of the 2nd paragraph of Art. With fault of the debtor c. deterioration. with indemnity for damages in either case. The injured party may choose between the fulfillment and the rescission of the obligation. 4. the improvement shall inure to the benefit of the creditor. b) That would merely be considered a deterioration of the thing. (3) When the thing deteriorates without the fault of the debtor. As for obligations to do and not to do. The rules given in Art. with the payment of damages in
. By nature or by time b. Through the expense of the debtor c. Effects when Resolutory Condition is Fulfilled 1. Deterioration. and Improvement During the Pendency of the Condition: • Applies only if: 1) The suspensive condition is fulfilled. gathering and preservation. and 2) The object is specific (not generic) • 3 things that may happen to the object of an obligation pending the fulfillment of a suspensive condition: 1. Loss. 1191. he shall be obliged to pay damages. 1189 will apply to whoever has the duty to return in case of the loss. May be improved a. or disappears in such a way that its existence is unknown or it cannot be recovered. are laid down in the preceding article shall be applied to the party who is bound to return. with respect to the debtor. (6) If it is improved at the expense of the debtor. Without the fault of the debtor b. the creditor may choose between the rescission of the obligation and its fulfillment. in case one of the obligors should not comply with what is incumbent upon him. When the conditions have for their purpose the extinguishment of an obligation to give. Aside from the actual things received. 3. Partly with and partly without the fault of the debtor 2. (4) If it deteriorates through the fault of the debtor. the parties should restore to each other what they have received. Without the fault of the debtor b. Art. Partly with and partly without the fault of the debtor 3. With the fault of the debtor c. Art. (5) If the thing is improved by its nature. May deteriorate (value is reduced or impaired) a. or goes out of commerce. the parties. The courts are given power to determine the retroactivity of the fulfillment of resolutory conditions.the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor. the fruits or the interests thereon should also be returned after deducting of course the expenses made for their production. the provisions which. 5. shall return to each other what they have received. In case of the loss. or improvement of the thing. May be lost a. upon the fulfillment of said conditions. or by time. (2) If the thing is lost through the fault of the debtor. Partly through nature or time and partly by the debtor Loss: it is understood that a thing is lost if a) When it perishes b) When it goes out of commerce
c) When it disappears in such a way that its existence is unknown d) When it disappears in such a way that it cannot be recovered Effects of Partial Loss: a) That would amount to a loss important enough to be considered a complete loss (this will be determined by the courts). in which case the rules on deterioration should apply. 1187 shall be observed as regards the effect of the extinguishment of the obligation. The obligation is extinguished.
The cause must be indentical and the obligations should arise simultaneously. Hence. Moreover. Fulfillment (specific performance) (plus damages) b. unless there be just cause authorizing the fixing of a period. 5) If an action is brought for specific performance. still ask for rescission (provided that rescission is otherwise proper). Parenthetically. therefore. If the property is now in the hands of an innocent third party who has lawful possession of the same. If there be just cause for fixing the period within which the debtor can comply. It is not enough that both parties are indebted to each other. It can be demanded only if the plaintiff is ready. does not need such approval. 4. However. if the latter should become impossible. Right to Rescind: means the right to cancel or resolve the contract or reciprocal obligations in case of non-fulfillment on the part of one. It exists only in reciprocal obligations. He may also seek rescission. The rule is vice-versa. provided the court has not yet given final judgment. in accordance with Arts. The right to rescind may be waived. b. in the interest of justice partial rescission and partial fulfillment may be allowed. neither party can demand performance or be considered in default before the expiration of the period. 5. willing and able to comply with his own obligation. The right to rescind is not absolute. Or in case there has been delivery. but on the breach of faith by the defendant. the contract stipulate that either party can rescind the same or take possession of the property upon non-fulfillment of the party. 6. need not be expressly stipulated upon. in some cases. The right to rescind is implied (presumed) to exist and. 2. and still insist on the performance of subordinate stipulations. Thus: a. rescission thereof may not be declared at the same time. Otherwise. if neither is ready. Characteristics of the Right to Rescind or Resolve: 1. and in others. b. the plaintiff cannot ask for both remedies. in reciprocal contracts or transactions. however. the obligation or promise of each party is the cause or consideration for the obligation or promise of the other. 3. expressly or implied. Judicial approval is not needed when there has been no delivery yet. The court shall decree the rescission claimed. Or rescission (plus damages) 2) The right is alternative and an alternative prayer may be made in a court complaint unless either had been waived previously. Choice by the Injured Party: 1) The injured party may choose between: a. This is understood to be without prejudice to the rights of third persons who have acquired the thing. a. which breach is violative of the reciprocity between the parties. This the rescission referred to here is not predicated on injury to economic interests on the part of the party plaintiff (which is the basis for the rescission mentioned in Arts. Trivial causes or slight breaches will not cause rescission.
c. However. He who comes to equity must come with clean hands. the guilty party cannot rescind. 1385 and 1388 and the Mortgage Law. if the plaintiff elects fulfillment of a reciprocal obligation. Thus. 4) The injured party who has elected fulfillment may. the rule is still that the rescission or resolution of a contract has the effect of abrogating it in all its parts.either case. if fulfillment be impossible. 1380 and 1381). and the other is not. the creditor cannot demand rescission. that is. Be it noted. that if the obligation is reciprocal but with a period. Reciprocal Obligations: refers to obligations where two parties are reciprocally obliged to do or give something. Judicial approval is needed when there has already been delivery of the object (unless of course there is a voluntary returning). a clause allowing for attorney’s fees for the foreclosure of a mortgage cannot be availed of if the mortgage itself is rescinded. the damages sought must
. even after he has chosen fulfillment. neither can resolve. 3) The right is not conjunctive. The right to rescind needs judicial approval in certain cases. the court will not decree rescission.
the obligation is conditional and it shall be regulated by the rules of the preceding Section. under the law. it cannot prevent the birth of the obligation in due time. Art. If it cannot be determined which of the parties first violated the contract. therefore. upon the arrival of the period. refer even to the past. but terminate upon arrival of the day certain. exerting an influence on an obligation as a consequence of juridical acts. Here. In the former. If both parties have committed a breach: The above rules are deemed just. although it may not be known when. suspends its demandability or determines its extinguishment. Causes an obligation to arise or to cease. May have a suspensive or resolutory effect. b Legal A period granted under the ) provisions of the law. it does not militate against its existence. Conventi Period agreed upon or stipulated onal or by the parties. A future and certain event. Always refers to the future.
The Different Kinds of Terms and Periods a Definite The exact date or time is known ) and given.be asked in the same action. Section 2: Obligations with a Period TERM Art. which. or a time which cannot be determined. c Ex die A period with a suspensive ) effect. because it is presumed that both at about the same time tried to reap some benefit. 1192. Voluntary Judicial The period or term fixed by the courts for the performance of an obligation or for its termination. In diem a period or term with a resolutory effect. the obligation begins only from a day certain. 1193. The first one is fair to both parties because the second infractor also derived or thought he would derive some advantage by his own act or neglect. The second rule is likewise just. Obligations for whose fulfillment a day certain has been fixed. Period: a certain length of time which determines the effectivity or the extinguishment of the obligation. Term: a length of time. those whose consequences are subjected in one way or another to the expiration of said term. the liability of the first infractor shall be equitably tempered by the courts. Up to a time
. Merely fixes the time or the efficaciousness of an obligation. but the date of happening is unknown (as in the case of death). the same shall be deemed extinguished. If the uncertainty consists in whether the day will come or not. Manresa: a term or a period consists in a space of time which has an influence on obligations as a result of judicial act. at a date known beforehand. Indefinite something that will surely happen. In their fulfillment
With reference to time As to influence on the obligation
Period An event which must happen sooner or later. In case both parties have committed a breach of the obligation. otherwise the damages are deemed waived. and each shall bear his own damages. and in the latter. and either suspends their demandableness. Obligations with a resolutory period take effect at once. shall be demandable only when that day comes. or produces their extinguishment… Obligations with a period are.
May. in other words. A day certain is understood to be that which must necessarily come.
Condition An uncertain event.
(But the right prescribes 5 yrs. it is presumed to have been established for the benefit of both the creditor and debtor. If the thing deteriorates through the fault of the debtor. Must have believed that the obligation has become due and demandable. the creditor must accept the thing in its impaired condition. The thing is lost when it perishes. loss or deterioration before the fulfillment of the condition or the period. the obligation terminates. When Period of Prescription Begins: it commences from the time the term in the obligation arrives. Even after was not yet due maturity (regarding interest) for after all the creditor was in bad faith. There is improvement. To be able to recover: 1. If the debtor knew No recovery can be had that payment was of what has been paid. with the fruits and interests. Rules: 1. must be shown by debtor. the obligation is extinguished. If the thing is improved by nature or by time. In case of loss. he must pay damages. 6. BALANE: Requirements: 1. the creditor may choose between Resolution (Art. If the thing deteriorates without the fault of the debtor. 3. Deterioration or Improvement: 1. or 2. not yet due much less can there be recovery of interest. the debtor shall have the same rights as a usufructuary. If the thing is lost through the fault of the debtor. Whenever in an obligation a period is designated. however. the rules in Art. For whose benefit the term has been established:
. the obligor being unaware of the period or believing that the obligation has become due and demandable. after premature payment). (if eliminated subsequently by mutual agreement. If the thing is lost without the fault of the debtor. but upon the arrival of said period. 1189) plus damages Fulfillment of the obligation plus damages
5.certain. the improvement shall inure to the benefit of the creditor. 3. 1195. This is true whether the creditor is in good or bad faith. the obligation remains valid. for it is only from that date that it is due and demandable. Art. 1189 of the Civil Code. 1189 shall be observed. Extension of Period: evidence of extension of period. Period within which recovery may be made: If the debtor did not Before the debt know that payment matures. Obligation has a suspensive condition. if any be given. since the important thing is the knowledge by the debtor of the prematureness (Implied waiver). Presumption that Debtor knew of Prematureness: the law presumes that the debtor knew of the prematureness. The obligor must be unaware of the period. the obligation becomes pure and immediately demandable). deterioration or improvement of the thing before the arrival of the day certain. Anything paid or delivered before the arrival of the period. This may. 1194. Art. may be recovered. 2. 2. If the thing is improved at the expense of the debtor. Art. goes out of commerce or disappears in such a way that its existence is unknown or cannot be recovered. 4. a resolutory condition or term. Art. It must be certain (sure to come) but can be extended. Rules in case of Loss. The obligor is obligated to deliver a determinate thing. unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or the other. be rebutted by him. The condition is fulfilled or the period arrives. 2. It must refer to the future. Requisites for a Valid Period or Term: 1. 4. 1196.
When the creditor is interested in keeping his money safely invested (thus making the debtor a sort of depository). 3. When the duration depends upon the will of the debtor. 1197. The Court has ruled that the original repairman can be required to pay the person who actually made the needed repairs. for even if the creditor receives no interest. When payment is to be made within a certain period from date of contract. Here. as in an employment contract where if no period was agreed upon. the time of employment depends upon the time for payment of salary. and not to a case where the parties have authorized the Court to fix a reasonable term. For the benefit of the debtor a. In obligations with the benefit of the term given
to both debtor and creditor. When the Court may fix a Period: 1. When a repairer of a machine has been given something to repair but without a period within which to do the work. and demandable at once. or when the creditor wants to protect himself from the dangers of currency depreciation. the creditor is interested in the term because of the interests that would be earned. When the Court may not fix the Term: 1. b. When no term was specified by the parties because no term was even intended. 3. 2. When there is interest stipulated. Term is for the benefit of the creditor alone. in which case the obligation is really a pure one. returns the machine without performing any work on it. When Prescriptive Period Begins: an action upon a written contract must be brought within 10 yrs. the right of action accrues from the end of the stipulated period. this is generally only for the benefit of the debtor. 5. 2. If the obligation does not fix a period. the courts may fix the duration thereof. Creditor can demand at any time even before the term expires. he has lost whatever right he originally had to have the period fixed under Art. this only exists if there is a stipulation to this effect. is not absolute. For the benefit of the creditor. Term is for the benefit of debtor alone.General rule: term is for the benefit of debtor or creditor. because it is only from that time that the obligation really becomes enforceable.
. When what appears to be a term is really a condition (such as when a debt is payable only after the debtor’s estate’s other debts have been paid. The debtor cannot pay prematurely and the creditor cannot demand prematurely. This rule. from the time the right of action accrues. 1197. Circumstances which indicate for whom the benefit of the term is 1. as when the contract provides that no payment should be made till after a certain given period. it can be inferred that a period was intended. for this does not depend upon the exclusive will of the debtor). When the loan is without interest. For the benefit of both a. 4. This Art. The courts shall also fix the duration of the period when it depends upon the will of the debtor. When specific periods are provided for in the law. Acceptance of partial payment even before the expiration of the period means a waiver on the part of the creditor of his right to refuse payment before the end of said period. b. unless of course absurd consequences would arise. the period cannot be changed by them. In ever case the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. however. The debtor is required to pay only at the end. 2. and he cannot be compelled to accept payment from the debtor prior to the stipulated period. Art. Exceptions: 1. still he may have entered into the contract to protect himself against the sudden decline in the purchasing power of the currency. When the obligation or note is payable on demand. the debtor is interested because he is given enough time to pay. but from its nature and the circumstances it can be inferred that a period was intended. When although the obligation does not fix a period.usually. but he may pay even before. 2. applies only where the parties to a contract themselves have fixed a period. Once fixed by the courts.
Instances when the Fruits cannot be recovered: 1. the obligation is one with a term (Art. 1196). If prepayment is made without the debtor being aware that the period had not yet arrived. 5. 1180 looks like a condition dependent on the sole will of the debtor. This is because the right exists by operation of law from the moment of such an agreement. 4. There are 2 views about who is entitled to the fruits which have been produced in the meantime: 1. When the debtor is aware of the period and pays anyway – waiver. The creditor is entitled to the fruits since the obligation is demandable only when the period arrives. When the obligation is a loan and the debtor is bound to pay interest. 1180). The debtor shall lose every right to make use of the period: 1. 2.6. When the debtor loses the benefit of the period: meaning the debtor shall lose every right to make use of the period – the term is extinguished. he becomes insolvent. and demandable at once. Applicability of the Article to the Obligations Contemplated therein: Art. When he does not furnish to the creditor the guaranties or securities which he had promised. When the obligation is reciprocal and there has been prepayment on both sides. 2. When the debtor violates any undertaking. The effect of this presumption is that the creditor cannot demand payment before the period arrives nor can the debtor
. is to ask the court to fix the period within which the debtor must pay for the simple reason that the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for its compliance. or may even disregard the same in which case. the period becomes part of the contract. such action for specific performance being premature. the law treats it as a term. When the debtor attempts to abscond. When the period within which to ask the Court to have the period fixed has itself already prescribed. but to be counted from the perfection of the contract. 1197 should be considered as part and parcel (or automatically incorporated) in all obligations which are contemplated therein. 1198. The Action to bring out this Article: the only action which the creditor can bring upon an obligation that does not fix a term.” And ordinarily specific performance cannot be demanded at the same time that the court is asked to fix the period. unless he immediately gives new ones equally satisfactory. Although Art. Art. asks for “such other and further relief as to the court may appear just and equitable. 3. 1195). Extrajudicial demand is not therefore essential for the creation of the cause of action to have the period fixed. The parties may of course change the period by mutual agreement. unless he gives a guaranty or security for the debt. for example. The Court may fix a period. in consideration of which the creditor agreed to the period. When the period is exclusively for the creditor’s benefit. How the Courts Fix a Period: The Court determines the period by considering the time probably contemplated by the parties. the obligation becomes a pure one. even if this has not been specifically asked. If prepayment is made and the debtor was aware that the period had not yet arrived. The presumption is that the period is for the benefit of both the debtor and the creditor (Art. so long as the prayer. The debtor is entitled to the fruits produced in the meantime. and when through a fortuitous event they disappear. The Court merely enforces or carries out an implied stipulation in the contract. then the debtor waives the benefit of the term. If the Court actually fixes the term. then the thing and the fruit can be recovered (Art.
2. BALANE NOTES: When the debtor binds himself to pay when his means permit him to do so. When by his own acts he has impaired said guaranties or securities after their establishment. thus the courts cannot change it. the Court does not amend or modify the obligation. and the obligation is demandable at once. When after the obligation has been contracted. 4. but where a term was indeed intended. 3. Once the period is fixed by the courts. Within what period must the action to fix the period be brought: within the proper prescriptive period for specific performance if a period had been originally fixed.
When the debtor violates any undertaking. in consideration of which the creditor agreed (Art. When the debtor attempts to abscond (Art. Art.refers to a fixed known date or time.
demand the creditor to accept payment before the period arrives. o 2 steps involved in an action for fixing a period: 1. Exceptions: 1. 4.refers to an event which will necessarily happen but the date of its happening is unknown. When the creditor is deceived on the substance or quality of the thing pledged. Voluntary. 2.
1. the period is for the benefit of the debtor..when a person undertakes to do some work which can be done only during a particular season. 1198). When he does not furnish to the creditor the guarantees or securities which he has promised (Art. you cannot ask for specific performance because fixing a period contemplates something in the future. o When the obligation is worded such that payment is to be made “on or before”. the period is for the benefit of the debtor. Tacit. 4. Contract of services for an indefinite period. the debtor may oppose a premature demand for payment. 11. If the period is for the benefit of the debtor only. 5. 10. 1199. but the debtor cannot compel him to accept payment before the period expires. 6.when it is stipulated by the parties. If the period is for the benefit of the creditor only. 1180. the debtor becomes insolvent unless he gives a guaranty or security for the debt (Art. hence to ask for specific performance would be illogical. o When the obligation is worded such that payment is to be made within 6 mos. When after the obligation has been contracted. 1197. 5. 2. Express. Art. It can be actual insolvency. Legal. When the obligation does not fix for a period. 1682 and 1687. the creditor can demand performance at any time.when the obligation becomes demandable only upon the arrival of the period. 3. Art. 2109). 1606). but from its nature and circumstances it can be inferred that a period was intended. 3. They should fix a period which was probably contemplated by the parties.the period is resolutory when the performance must terminate upon the arrival of the period. Indefinite.
If the obligation does not fix a period. 1198). the courts may fix the duration thereof (Art. The debtor shall lose every right to make use of the period: 1. Pacto de retro sales (Art. and when through a fortuitous event they disappear. 7. unless no immediately gives new ones equally satisfactory (Art. Original 9. o Section 3: Alternative Obligations ACCORDING TO PLURALITY OF OBJECT Art. The court should determine that the obligation does not fix a period but it can be inferred that a period was intended due to the circumstances or the period is dependent on debtor’s will. Definite. Art. 3. 2. Art. 1198). 1197. the creditor may either claim another thing in its stead or demand immediate payment of the principal obligation (Art. 1198).when it is fixed by the courts. 1687. but may validly pay at any time before the period expires. Art. 4. 1191. 1198). 5. Types of periods: Suspensive (ex die). 2.when it is granted by law.when period is specifically stated. Resolutory (in diem). Grace. Instances when Court may fix a period: 1. 2. 1197). Court shall decide what period was probably contemplated by the parties. 8. A person alternatively bound by different prestations shall completely perform one of them.
.an extension fixed by the parties or by the court. The insolvency here need not be judicial. Generally. 6. Judicial. 3. When by his own acts he has impaired the said guaranties or securities alter their establishment.court cannot fix a period or else it would amount to involuntary servitude.
the latter may rescind the contract with damages. the creditor can sue him in court with an alternative relief as give this or that. be permitted to renounce his choice and take an alternative which was first open to him. 1204.) Art. and if already due. An election once made is binding on the person who makes it. May be waived. By way of exception. The indemnity shall be fixed taking as a basis the value of the last thing which disappeared. or that of the service which last become impossible. if tender of the same has been made. coercion or undue influence). Obligation with a term The general rule is that the term is for the benefit of both the debtor and creditor. 3. Reason for Communicating the Choice to the Creditor: To inform the creditor that the obligation is now a simple one. The right of choice belongs to the debtor. it may belong to the creditor when such right has expressly been granted to him. Hence.The creditor cannot be compelled to receive part of one and art of the other undertaking. all of them must be notified. before or upon maturity (otherwise. The debtor shall have no right to choose those prestations which are impossible. 1202. Unlawful prestations 3. all the things which are alternatively the object of the obligation have been lost. 1201. 1203. *the contract is not automatically rescinded. the law says that the debtor may rescind. If through the creditor’s acts the debtor cannot make a choice according to the terms of the obligation. that is. no longer alternative. if there be joint creditors. only one is due. the obligation becomes a simple obligation to do or deliver the object selected. 6. and he will not. Who has the right of choice: as a general rule. Made voluntarily and freely (without force. only one is practicable.
1. Alternative obligation with reference to benefit The general rule is that the debtor has the right of choice. Made in due time. Alternative rights of creditor when Loss or Impossibility occurs before Debtor’s Choice: applies when
Limitation on the Debtor’s Choice: 1. Made properly so that the creditor or his agent will actually know. Thus error in appreciating the meaning of alternative obligations will give rise to vitiated consent. Requisites for the Making of the Choice:
. Art. Impossible prestations 2. for the creditor to receive the object being delivered. unless it has been expressly granted by the creditor. Alternative Obligation: (facultative) where out of the two or more prestations which may be given. it can be said that no real choice is being made). The choice shall produce no effect except from the time it has been communicated. the right belongs to the debtor. Damages other than the value of the last thing or service may also be awarded. implying that he may allow it to remain in force insofar as the possible choice or choices are involved. unlawful or which would not have been the object of the obligation. or the compliance of the obligation has become impossible. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound. 5. expressly or impliedly (since all rights in general may be waived. 2. Art. 7. Made without conditions unless agreed to by the creditor (otherwise. The creditor shall have a right to indemnity for damages when. 1200. Or which could not have been the object of the obligation Art. 4. depending upon your choice. therefore. and the choice can later on be annulled. Effect of Notice that Choice has been made: Once notice has been made that a choice has been done. Art. Made with full knowledge tat a selection is indeed being made. intimidation. Made to all the proper persons. through the default of the debtor.
but the payment or performance of 1 of them would be sufficient. When all the things are lost due to a debtor’s fault. c. the creditor may choose from the remainder or get the value of any of the objects lost plus damages in either case. If one of the things is lost through a fortuitous event.
. 3. in the alternative. When all the objects are lost due to a fortuitous event. 6. the right must be expressly given to him. When through fortuitous event or through the debtor’s acts. or that which remains if only one subsists. The same rules shall be applied to obligations to do or not to do in case one. If all the things are lost through the fault of the debtor. the obligation ceases to be alternative (Art. b. For the choice to be given the creditor. Until then the responsibility of the debtor shall be governed by the following rules: 1. When it is expressly granted by the creditor. When 1 or some of the objects are lost due to the debtor’s faults. When all the things are lost due to a fortuitous event. then the debtor has the remedy of resolution (art. the choice by the creditor shall fall upon the price of any one of them. with resultant damages if any. notwithstanding the lapse of maturity. 2. 7. The right to choose belonged to the debtor 2. 3. or the price of that which.1. Exception: 1. e. When the choice of the debtor is limited through the creditor’s own acts. 3. the creditor can get the value of any of the object s lost plus damages. the creditor chooses from the remainder. 4. Effect of Creditor Delays in making a choice: he cannot yet hold the debtor in default. he shall perform the obligation by delivering that which the creditor should choose from among the remainder. When all the objects are lost due to the creditor’s fault. then the creditor can sue for damages. General Rule: the right of choice belongs to the debtor. f. there is only 1 prestation left. a. When all but 1 of the things are lost due to a fortuitous event. If the loss of one of the things occurs through the fault of the debtor. Upon the other hand. then the creditor chooses from the remainder.
BALANE: ALTERNATIVE: when several objects or prestations are due. does not apply when the contract does not state to whose the right to choose Is given. When 1 or some of the objects are lost through fortuitous events. 1202). d. When the choice has been expressly given to the creditor. 1203). the obligation is extinguished. This Art. When all the things are lost due to the debtor’s fault. for in such case it is the debtor who can choose. The loss or impossibility happened before selection was made Art. the creditor can sue for damages (Art. then the debtor can choose from what’s left. 1191) plus damages (Art. When some things are lost due to the debtor’s fault but there are still some things remaining. then the obligation is extinguished. for the debtor does not know what to deliver. the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor. 1205. 5. 2. As in the case of the debtor. if the debtor wants to relieve himself. 2. it should be understood that the creditor loses the right to choose if only one of the prestations is practicable. the obligation is extinguished. and the last object is lost through the debtor’s fault. he may petition the court to compel creditor to accept it. some or all of the prestations should become impossible. When some are lost through the debtor’s fault. Rules when the choice has been given to creditor: 1. The debtor’s obligation had ceased to be alternative and had become a simple one. When all but one of the things are lost through the debtor’s own acts and the last object is lost through the fortuitous event. also with indemnity for damages. at the creditor’s option. the obligation is extinguished. 1204). through the fault of the former has disappeared with a right to damages. the creditor may claim any of those subsisting. 1.
If it is impossible to
. There is a solidary liability only when the obligation expressly so states. Bear a resemblance to alternative obligations particularly when the choice in an alternative obligation is with a debtor. the other may be valid and the obligation remains. does not render him liable. Some instances: 1. The act of making the choice is called concentration. When the nature of the obligation requires liability to be solidary. The right of choice is given only to the debtor. then everything is annulled. and it is that one which generally is given. or that each one of the latter is bound to render. 1207. and there is no necessity of giving the substitute. Liability of principals.2. 1206. The loss or deterioration of the thing intended as a substitute. but the other (the substitute) may be given to render payment or fulfillment easy. Alternative Various things are due. Joint Obligations To each his own.
Section 4: Joint and Solidary Obligations ACCORDING TO PLURALITY OF SUBJECT Art. The relationship between the active and the passive subjects is so close that each of the former or of the latter may demand the fulfillment of or must comply with the whole obligation. but the giving of one is sufficient. When there is a stipulation in the contract that the obligation is solidary. entire compliance with the prestation. When the law declares the obligation to be solidary. the substitute does not have to be given. or when the law or the nature of the obligation requires solidarity. The concurrence of 2 or more creditors or of 2 or more debtors in one and the same obligation does not imply that each one of the former has a right to demand. if it is impossible to give the substitute. Solidary Obligations One for all. If the principal obligation is impossible. that last one must still be given. the obligation is called facultative. Once the choice has been made. Facultative Obligation: it is one where only one prestation has been agreed upon but the obligor may render another in substitution. the obligor is liable for the loss of the substitute on account of his delay. FACULTATIVE: when only 1 object or prestation has been agreed upon by the parties to the obligation.
give all except one. Whoever has the right of choice must communicate it to the other party (Art. Facultative Only one thing is principally due.
If one of the prestations is illegal. then the obligation is concentrated in one object. The creditor has to communicate his choice to the debtor so that the debtor will know. but the debtor may deliver or render another in substitution. When only one prestation has been agreed upon. the principal must still be given. (The nullity of the principal carries with it the nullity of the accessory or substitute) If it is impossible to
When there are two or more debtors or two or more creditors. all for one. Legal provisions regarding the obligations of devisees and legatees 4. 1201). If the principal obligation is void.
The right to choose may be given either to debtor or creditor. When it is agreed upon by the parties
that a 3rd person shall make the choice. Arising from quasi-contracts 3. through the negligence of the obligor. negligence or fraud. Arising from tort/damages 2.
give the principal.
Art. But once the substitution has been made. but the obligor may render another in substitution. The right of choice is always with the debtor. Each obligor answers only for a part of the whole liability and to each obligee belongs only a part of the correlative rights.
the right of the creditors may be prejudiced only by their collective acts. 1209. it doesn’t make the other debtors share bigger to compensate for his share. Distinct Shares: In joint obligations. It is possible that the share of one debtor has prescribed. (for example. the credits or debts being considered distinct from one another. 5. Art. B would still be liable for P500 while A will not be liable because the 2 debts are considered distinct from each other. the Rules of Court governing the multiplicity of suits will be followed. The creditors or the debts will be distinct from one another. 1208. (if one is insolvent. Presumption that Obligation is Joint: when there are two or more debtors or creditors. They must pay only for theirs. but not the others since the debts are distinct. speedy and inexpensive determination of every action or proceeding. 4. If from the law. if A and B were joint debtors of C for P1000 and A’s consent was obtained by C through fraud. or vice-versa. or the nature of the wording of the obligations to which the preceding article refers the contrary does not appear. But they are subject to the Rules of Court governing the multiplicity of suits. while the others have not. This means that ordinarily one creditor may sue one of the debtors for the latter’s share of obligation but to obtain a just. Vitiated consent on the part of one debtor does not affect the others. Art. *The obligation may be joint on the side of the creditors and solidary on the side of the debtors. BUT regarding the bringing of the action in court. 2.) 2. Bailees in commodation Joint and several In solidum Mancomunada solidaria Juntos o separadamanete Individually and collectively Each will pay the whole value I promise to pay (when there are two or more signatures)
prescriptive period by demanding judicially from one. The debt shall be divided into as many shares as there are creditors or debtors. the creditor debt shall be presumed to be divided into as many equal shares as there are creditors or debtors. the obligation is presumed joint and as a consequence: 1. it would be better to sue all the necessary parties at the same time. and the debt can be enforced only by proceeding against
. Defenses of one debtor are not necessarily available to all the others. the others are not affected. subject to the Rules of Court governing the multiplicity of suits.Mancomunada Mancomunada simple Proportionate Pro rata
We promise to pay (when there are two or more signatures) Some consequences: 1. Demand by the creditor on one joint debtor puts him in default. the different shares of the debt or the credit are considered distinct from one another. Insolvency of one debtor does not make others responsible for his share.) 3. If the division is impossible. When the creditor interrupts the running of the
accomplices and accessories of a felony 5.
in the case of rescission or condonation (which is really prejudicial. The obligation is joint but since the object is indivisible.
Different Kinds of Solidarity Active solidarity
On the part of the creditors or
. for compliance is possible only if all joint debtors act together. Each one of the solidary creditors may do whatever may be useful to the others. However. Art. Art. If one of the latter should be insolvent. Characteristics: 1. the necessity of their consent. a solidary obligation implies mutual agency and mutual confidence. the solidary creditor is allowed to so remit. If any one of the joint debtors be insolvent. Art. the others shall not be liable for his share. 5. unless solidarity has been stipulated by the parties or by the law. On the side of the creditors. Prejudicial Acts: should not be performed. The obligation to pay monetary damages is no longer indivisible then. 6. 1213. The peculiarity of this obligation. there will be liability for damages. 4.where the obligors though liable for the same prestation. delivery must be made to all. Should the assignee or substitute do acts which would prejudice the others. Uniform. 1210. but not anything which may be prejudicial to the latter. or on the part of the debtors and the creditors Agreed upon by the parties That imposed by law
Art. joint refers to the tie between the parties. If there be joint creditors. The indivisibility of an obligation does not necessarily give rise to solidarity. Reason: essentially. 2.all the debtors. Indivisibility Refers to the Subject Matter Solidarity Refers to the tie between the parties. and (b) no debtor can be made to answer for the others. is that fulfillment requires the consent of all the debtors. Exception: if all the others consent. although it preserves the two characteristics of the joint obligation in that: (a) no creditor can do an act prejudicial to the others. Manresa: the obligation is in a sense midway between the joint and the solidary. Each joint creditor is allowed to renounce his proportionate credit. although each for his part. the creditor must proceed against ALL the joint debtors.
Passive solidarity Mixed solidarity
Conventional Solidarity Legal solidarity
obligees On the part of the debtors or obligors On the part of the obligors and obligees. who are merely proportionately liable. 3. however. Non-assignment of rights by Solidary Creditor: General rule: solidary creditor cannot assign his rights. and the obligation is extinguished. Demand must. the others shall not be liable for his share. otherwise. Otherwise. A solidary creditor cannot assign his rights without the consent of the others. hence. the creditor may go against each debtor individually. If any one of the debtors does not comply with his monetary obligations for damages. and not merely to one. Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions.when the debtors are bound by the same stipulations and clauses 2. in which case it becomes a solidary indivisible obligation. therefore. Nor does solidarity itself imply indivisibility. 1211. and therefore. are nevertheless not subject to the same secondary stipulations and clauses. without prejudice to his liability to other creditors. Indivisible Joint obligation: indivisible refers to the object. Solidarity despite different terms or conditions: 1. be made on ALL the joint debtors. there is no doubt that the other creditor’s rights are endangered. unless that one be specifically authorized by the others. 1212. collective action is also required for acts which may be prejudicial.
has been made by one of them. are creditors and debtors of each other.The debtor may pay any one of solidary creditors. That which takes place when the characters of creditor and debtor are merged in the same person. Total compensation automatically extinguishes the obligation. Novation. depending upon the amount involved. failure to collect from one joint debtor his share does not authorize the creditor to proceed against the others.
be directed against the others. for in the latter. or by subrogating the person of the debtor. If a principal debtor receives an extension. minus the share of the debtor who has received the extension (but same share can be demandable also from them upon the arrival of the extended term). as well as he who collects the debt. It applies to what is called passive solidarity (solidarity among the debtors). made by any of the solidary creditors or with any of the solidary debtors. They may be proceeded against later. or by substituting the person of the debtor. payment should be made to him. or all of the solidary debtors – simultaneously. To any of the solidary creditors 2. It may be total or partial. The surety is indebted only for the share of the principal debtor. in their own right. confusion or remission of debt.
Effect of Compensa tion
Effect of Confusion (or Merger) Effect of Remission or Waiver
Art. or several of the debtors (but not all) there is no waiver against those not yet sued. not to joint ones. whether known or unknown to the parties. Novation The modification of an obligation by changing its object or principal conditions.1215. Against whom Creditor may proceed: against any. so long as the debt has not been fully collected. Differences The solidary debtor is indebted for his own share only. that where the creditor tells the debtor to forget about the whole thing. judicial or extrajudicial. Effect of not proceeding against all: if the creditor sues only one. without the surety’s consent. If a solidary debtor receives an extension of the period for payment. Art. The solidary debtor can be reimbursed what he has paid minus his own share. the others are still liable for the whole obligation now. 1219. the surety is released. Both can demand reimbursem ent.Art. That which takes place when two persons. or by subrogating a third person in the rights of creditor. Solidarit y Similarities Both the solidary debtor and the surety guarantee for another person. some. compensation. but if any demand. without prejudice to the provision of Art. The surety can be reimbursed for everything he had paid. shall extinguish the obligation. or two. To Whom Debtor Must Pay: 1. regarding the insolvent debtor’s share. 1216. The creditor may proceed against any one o the solidary debtors or some or all of them simultaneously. The creditor who may have executed any of these acts. shall be liable to the others for the share in the obligation corresponding to them. Applicability: applies only to solidary obligations. 1214. It can also apply to mixed solidarity. The demand made against one of them shall not be an obstacle to those which may subsequently
. Exception: payment must be made to solidary creditor who made a demand (judicial or extrajudicial). That act of liberality whereby a creditor condones the obligation of the debtor. Remission may be total or partial.
Art. in actions fled by the creditor. 2. avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him. An
example of a partial defense is that a certain amount is not yet due. in case the debt had been totally paid by anyone of them before the remission was effected. If without fault. does not entitle him to reimbursement from his co-debtors.there is liability (also for damages and interest). 1222. A solidary debtor may. 2. Real defenses. 1219. there will be liability because of default. If through a fortuitous event. Art. Art. Reason for the Provision: since payment extinguishes the obligation. because of his insolvency. the provisions of the preceding paragraph shall apply. The difference is whether such defense would result in total or partial exculpation. It is partial since there may be amounts which are already due. 1217. A real defense is a total defense. Payment: one of the ways by which an obligation is extinguished and consists in the delivery of the thing or the rendition of the service which is the object of the obligation. without prejudice to their action against the guilty or negligent debtor. He who made the payment may claim from his co-debtors only the share which corresponds to each. all shall be responsible to the creditor for the price and the payment of damages and interest. 1220.personal defenses may either be total or partial defenses. 3.The debtor can only avail himself of these defenses only with regard to the part of the debt which his co-debtors are responsible for. the obligation shall be extinguished. 1218. Hence. Basis of the right to be reimbursed: The fact of payment (and not the original contract) is the basis of the right to be reimbursed. 3. Defenses which are personal to the other co-debtors.here. in proportion to the debt of each. obtained by one of the solidary debtors. • The debtor sued can invoke all three kinds of defenses. 1221. The remission of the whole obligation. If with fault. This Art. Art. the thing is lost or the performance has become impossible after one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand upon him by the creditor. reimburse his share to the debtor paying the obligation. It benefits all the debtors. for not until then had he the right to be reimbursed. the creditor may choose which offer to accept. Thus. An example of a total personal defense is if the consent of the debtors were all vitiated. no interest for the intervening period may be demanded.no liability. with the interests for the payment already made. Payment made by one of the solidary debtors extinguishes the obligation. applies only when the whole obligation is remitted. When one of the solidary debtors cannot. there is nothing more to remit.these are defenses derived from the nature of the obligation. the obligation of the others to reimburse him arises only from the time payment is made. Loss because of a fortuitous event after default. Art. These defenses are partial. such share shall be borne by all his codebtors. 3 Kinds of Defenses 1. The remission made by the creditor of the share which affects one of the solidary debtors does not release the latter from his responsibility towards the co-debtors. the debtor has to pay for those amounts which are due. Personal defenses. If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors. Effect of Loss or Improbability: 1.Art. Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors if such payment is made after the obligation has prescribed or become illegal. If the payment is made before the debt is due. Remission of the whole obligation: Remission is essentially gratuitous. or pertain to his own
. If there was a fault on the part of any one of them. If two or more solidary debtors offer to pay.
this Is only a partial defense. tort feasors are solidarily liable) 3. 2 of this Title. Section 5: Divisible and Indivisible Obligations ACCORDING TO PERFORMANCE Art. Active Joint. is made on him. The debtor can still recover from the paid creditor (unjust enrichment). BALANE: SINGLE: only 1 debtor and 1 creditor. Each debtor may be required to pay the entire obligation but after payment. But the payment to the demanding creditor can be reduced by the share of the paid creditor. Those derived from the nature of the obligation (this is a complete defense). he must pay only to the one demanding payment (Art.e. joint and individual. (This is a complete defense generally.there are multiple debtors and creditors. 3.
Types of Solidary Obligations: 1. Agreement of the parties.there are multiple creditors. Rule: Obligations are indivisible: Indivisible One not capable of partial performance. Natural or absolute. 2.by common agreement. but if the defense is non-fulfillment yet of the term. Essential nature: there are as many obligations as there are creditors multiplied by as many debtors. The parties so agree. General: joint obligations are less onerous. 3. Active solidary. Problematic: the debtor cannot pay the other non-demanding solidary creditors only if one of the solidary creditor makes a judicial demand. and in solidum. Mixed solidary. Nature of the obligation. Exceptions: 1. Passive Joint. The demand of 1 creditor on 1 debtor will not constitute a demand on the others.share. The prescription of 1 of the debts will not affect the other debts. 2. he can recover from his co-debtors their respective shares. Divisible One capable of partial performan ce. When the law so provides. and each creditor is entitled only to a partial part of the credit. Gen. Passive solidary. 1223. 2. When nature of the obligation requires the obligation to be solidary. With respect to those which personally belongs to the others. The debtor may pay any of the creditors. 3. Mixed joint. 1214). The insolvency of 1 of the debtors will not affect the burden of the other debtors. 2. Each debtor may be required to pay the entire obligation but after payment. Kinds of Defenses: 1. 1214). 2. he may avail himself thereof only as regards that part of the debt for which the latter are responsible. JOINT: when each of the debtor is liable only for a proportional part of the debt. The demand of 1 creditor on 1 debtor will not constitute a demand on the others.because
. The prescription of 1 of the debts will not affect other debts. but if any demand. Those personal to the others (partial defense regarding share of others involved). but if any demand.there are multiple debtors. When: 1. If the debtor pays a creditor who did not make a demand. A credit once paid is shared equally among the creditors unless a different intention appears. Exceptions: Kinds of indivisibility: 1. 3. The divisibility or indivisibility of the things that are the object of obligations in which there is only one debtor and only one creditor does not alter or modify the provisions of Chap. It cannot be validly performed in parts. Law (i. that s. Conventional. The debtor may pay any of the creditors. he will still be liable except for his own share in the meantime). and any if the creditors is entitled to demand the entire obligation. 2. the payment is considered a payment to a third person.there are multiple creditors and debtors. judicial or extrajudicial. Also called joint and several. SOLIDARY: when any of the debtors can be held liable for the entire obligation. A credit once paid is shared equally among the creditors unless a different intention appears.there are multiple creditors. The debtor can still be made to pay by the one who made a demand on him. Types of Joint Obligations: 1. he must pay only to the one demanding payment (Art. judicial or extrajudicial is made on him. Those personal to the debtor sued. he can recover from his codebtors their respective shares.there are multiple debtors.
Obligations to give definite things. Obligations that are deemed indivisible: 1. 3. The fault of one is the fault of the others.of the nature of the object of undertaking (Art. For the purposes of the preceding articles. In obligations with a penal clause. 1225). When the object of the obligation is the execution of a certain number of days of work. But indivisibility of the object necessarily means an indivisible obligation. divisibility or indivisibility shall be determined by the character of the prestation in each particular case. 3. .depends on quality. Art. May exist even if there is only one debtor and only one creditor. 4. Even if the thing is physically divisible. Section 6: Obligations with a Penal Clause ACCORDING TO SANCTION FOR BREACH Art. When the purpose of the obligation is to pay a certain amount in installments. 2. Divisibility of the object does not mean that the obligation is also divisible. Obligations that are deemed divisible: 1. When the object of obligation is the accomplishment of work by metrical units. 2. it may be indivisible if so provided by law.
Kinds of Division: 1. the latter may be enforced. even though the object or service may be physically divisible.if so provided for by law.one that exists merely in the mind and not in physical reality. 2. 3. 1224.
work. Nevertheless. In obligations not to do. 1226. 4. or analogous things which by their nature are susceptible of partial performance. if there is no stipulation to the contrary. an obligation is indivisible if: . Even if the thing is physically divisible. Qualitative. Effect of Non-Compliance: 1. 3. However. it shall be divisible. 1225. even thought the object or service may be physically divisible. it may be indivisible if such was the intention of the parties concerned. Intellectual or moral division. Needs at least two debtors or creditors. the accomplishment of work by metrical units. Indivisibility Refers to nature of obligation. Effect of illegality on a Divisible contract: in case of a divisible contract. The test of divisibility of an obligation is whether or not it is susceptible of partial performance. obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible. an obligation is indivisible if so provided by law or intended by the parties.depends on quantity. Those which are not susceptible of partial performance. A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with this undertaking. Art. The debtors who may have been ready to fulfill their promises shall not contribute to the indemnity beyond the corresponding portion of the price of the thing or of the value of the service in which the obligation consists. The obligation is converted into a monetary one for indemnity.So provided by law.Intended by the parties. damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of obligation. the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance. When the obligation has for its object the execution of a certain number of days of
. Quantitative. Legal.
Solidarity Refers to tie between the parties. When the object of the obligation is the accomplishment of work susceptible of partial performance. irrespective of quantity. The fault of one is not the fault of the others. if the illegal terms can be separated from the legal ones. However.
and sometimes jointly with it. unless this right has been clearly granted him. one of which states that the penalty may be reduced if it is iniquitous or unconscionable.
One that is imposed by the law. The debtor cannot exempt himself from the performance of the obligation by paying the penalty. That which has been agreed upon by the parties. Exception: the principal obligation and the penalty can be demanded when the penal clause is joint or cumulative. To provide liquidated damages The creditor can demand liquidated damages without having to prove actual damages. Subsidiary or alternative (Art. It is attached to obligations in order to insure their performance. Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the penalty at the same time. May any penalty be demandable: No. However. May become demandable in default of the unperformed principal obligation. the creditor has to choose whether to demand the principal or the penalty. It may be reduced by the courts if unconscionable. save in the case where this right has been expressly reserved for him. When the debtor refuses to pay the penalty imposed in the obligation. Governed by Arts. The reason for the third exception is clear: there can be no renunciation of an action to enforce liability for future fraud because. 1227. 2. The implied right must be one ascertainable from the nature of the obligation. the performance thereof should become impossible without his fault. while the former or the
. 2 Characteristics of a Penal Clause: 1. Its principal purpose is to insure the performance of an obligation and also to substitute for damages and the payment of interest in case of noncompliance. • Breach of obligation without fraud cannot constitute one of the exceptions. When both the principal contract and the penal clause can be enforced. either expressly or impliedly. 2. When only the penalty may be asked. This occurs when the creditor has been clearly granted such right. The only limitation that the courts will reduce the liquidated damages if the same is scandalously unconscionable. as we have seen. 3. When there is express stipulation to the effect that damages or interest may still be recovered.1226) General rule: the penalty clause takes the place of other damages. Condition
Penal Clause The former does not. To strengthen the coercive force of the obligation by the threat of greater responsibility in case of breach. the provisions on liquidated damages since a penal clause is the same as liquidated damages.The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. Kinds of Penal Clauses Legal Penal Clause Conventi onal Penal Clause Subsidiar y Joint
condition is never demandable. this is against public policy and against the express provisions of law. When the debtor is guilty of fraud or dolo in the fulfillment of the obligation. 1227) General rule: upon breach of the obligation. Penal Cause: it is a coercive means to obtain from the debtor compliance from the debtor.
The latter constitutes an obligation although accessory. 2. Stipulates a penalty which is greater than one without a penal clause. the penalty may be enforced. the penalty may be enforced only when it is demandable in accordance with the provisions of the Civil Code. Art.2226-2228. Functions of a Penal Clause: 1. Instances when ADDITIONAL DAMAGES MAY BE RECOVERED: 1. despite the presence of the penalty clause. if after the creditor has decided to require the fulfillment of the obligation. A penal clause is an accessory undertaking to assume greater liability in case of breach. Exclusive (Art.
fulfillment of the obligation will be considered an alternative one. Reason: when a penal clause has been agreed upon in a contract. rescission. 3.When the
obligation has been irregularly complied with by the debtor. Art. the penal clause will have no more use for existence and is therefore also considered null and void. By the loss of the thing due 3. Effect of Nullity of the Penalty Clause: if the principal obligation is null and void. Classification of Causes of Extinguishment of Obligations: CASTAN Voluntary Involuntary Performance By failure to bring an action. Partial performance. even if there has been no performance at all. CHAPTER 4: EXTINGUISHMENT OF OBLIGATION General Provisions EXTINGUISHMENT OF OBLIGATION Art. are governed elsewhere in this Code. such as annulment. payment or performance consignation Substitution of Resolutory condition or performance condition subsequent. By the condonation or remission of the debt 4. The nullity of the penal clause does not carry with it that of the principal obligations. just because the penal clause is not valid. 1231.) The debtor is guilty of fraud (malice) in the performance of the obligation. The exception arises when such a right has been clearly granted to him.when the obligation has been partly complied with by the debtor. By novation Other causes of extinguishment of obligations. Art. it is a lawful means for repairing losses and damages. Creditor cannot demand both fulfillment and the penalty at the same time: as a general rule. fulfillment of a resolutory condition. Unconscionable or Iniquitouswhen the penalty is iniquitous or unconscionable. more as a punishment for the infraction thereof than a mere security. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. Even if there has been no performance. By compensation 6. No Necessity in Proving Actual Damages: the penalty may. By payment or performance 2. nor the extent of the same in order to demand the enforcement of the penal clause agreed upon. and prescription. 1230. By the confusion or merger of the rights of creditor and debtor 5.) Express stipulation 2. Generally. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. He can only do so if the right has been expressly reserved. Irregular Performance. Generally. Compensation Novation
. and upon evidence of the violation of the conditions stipulated. the injured party is not obliged to prove losses and damages suffered. 1228. in the proper case. be demanded without the necessity of proving actual damages.) Refusal by the debtor to pay the penalty 3. Upon the other hand. The word expressly means that any implied reservation is not allowed. The nullity of the principal obligation carries with it that of the penal clause. the creditor does not have this right to demand fulfillment of the obligation and the penalty at the same time. Art. Obligations are extinguished: 1. The principal obligation can stand alone. 1229. Debtor cannot substitute penalty for the principal obligation: The general rule is that the debtor is not allowed to just pay the penalty instead of fulfilling the obligation. and the void penal clause will just be disregarded. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor.Exception: both the penalty and actual damages may be recovered in the following: 1. When Penalty may be reduced by the Court: 1.
2. The reason is that if he can just pay. it does not mean that its nullity will also make the principal obligation null and void.
c) If the debt is the doing of a personal undertaking. 1233. b) If the debt is the delivery of a thing or things. A debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered.mutual dissent . Loss of the thing due 3. Indebtedness has been defined as an unconditional and legally enforceable obligation for the payment of money. d) If the debt is not doing of something. 1232. by refraining from doing the action. as the case may be. Once he
Classification according to the Civil Code: Ordinar 1.Resolutory condition or condition subsequent
Section 1: Payment or Performance By reason of the object. Condonation or remission of the debt or waiver 4. Payment means not only the delivery of money but also the performance. Confusion or merger of the rights of creditor and debtor 5. e) An alleged creditor has the burden of showing that a valid debt exists. . Art. PAYMENT OR PERFORMANCE Art. Effect of Payment made under a Void Judgment: if the judgment upon which the aggrieved party made payment is null and void.Mutual dissent (disenso) . If no such obligation exists.change of civil status .Remission . expressly or implicitly.Unilateral waiver . unless of course otherwise stipulated in the contract. the payment made thereunder is also null and void. Completeness of Payment: Requisites a) The very thing or service contemplated must be paid b) Fulfillment must be complete How Payment or Performance is Made: a) If the debt is a monetary obligation. by the performance of said personal undertaking.Dacion en pago (datio in solutum) Agreement to release Subsequent obligation .resolutory term here the obligation ceases upon the arrival of the term .Rescission mentio . there is no payment. in any other manner. for valid reasons. delivery of money 2. strictly speaking.fortuitous event
. of an obligation.impossibility of fulfillment .Compromise Simultaneous with creation of obligations .death of a party in case the other obligation is a personal one causes . Payment: that mode of extinguishing obligations which consists of: 1. Novation Other .prescription 1231 but govere ned under other Chapter s Still . may properly be rejected. the creditor has to accept the same.Annulment causes . by delivery of the thing or things. Compensation 6.Resolutory term or extinctive period . Payment or performance ily by 2.compromises .Fulfillment of resolutory ned in condition Art. the performance in any other manner of an obligation Pre-existing Obligation: a person pays a preexisting obligation.Natural waiver . The amount paid must be full. Payment. by delivery of the money. Acceptance by Creditor: for payment to properly exist.
This last condition affords a just compensation for the relative breach committed by the obligor. d. be they guarantors or possessors of mortgages. Substantial Performance in Good faith: a) In case of substantial performance. Without the debtor’s knowledge or against his will. Art. 1235. When legal compensation had already taken place. 2. even a joint debtor). 1236.does this. he is allowed only beneficial reimbursement. hence. Subrogation Reimbursement
. b) The liability of the debtor for damages suffered by the creditor in case of substantial performance does not arise under the conditions set forth in Art. When the obligee accepts the performance. the obligor may recover as though there had been a strict and complete fulfillment. except that if he had paid without the knowledge or against the will of the debtor. at its discretion. a period to a person in default. and without expressing any protest or objection. When the debt had been completely remitted c. If the obligation has been substantially performed in good faith. His actuations may show his dissatisfaction. less damages suffered by the obligee. Art. the surety or guarantor cannot claim that he had been released from the obligation. Such right to rescind is not absolute. When the debt has already been paid. knowing its incompleteness or irregularity. 2. A creditor may conditionally accept performance by the debtor after the time of maturity. subject to stipulation in a conventional subrogation. enabling the former to exercise all the rights and actions that could have been exercised by the latter. the debtor has the burden of proving that he has paid the same. the payor is entitled to reimbursement and subrogation to such rights as guaranty. When the debt had prescribed b. the payor is not entitled to subrogation. the obligee is benefited. The creditor is not bound to accept payment or performance by a third
person who has no interest in the fulfillment of the obligation. unless there is a stipulation to the contrary. penalty clause. If said third person has an interest in the fulfillment of obligation (co-debtor. Art. Art. Qualified Acceptance: there is a possibility that a protest or objection can be made. 1234. Subrogation: the act of putting somebody into the shoes of the creditor. within which the obligation can be fulfilled. less damages suffered by the obligee. Payment by a 3rd Person: 1. Right of Creditor to Refuse Payment by 3rd Person: 1. it follows that the right to rescind cannot be used simply because there have been slight breaches of the obligation. guarantor. either against the debtor or against the third persons. Here. So the obligor should be allowed to recover as if there had been a strict and complete fulfillment. In this way. but with the stipulation that the surety or guarantor of the debtor should give consent to prevent the surety or guarantor from later on alleging that the creditor had given an extension of time to the debtor. there is what is called “qualified acceptance of incomplete or irregular payment. If there is a stipulation allowing this. such as those arising from a mortgage. or mortgage. c) Inasmuch as substantial performance in good faith may already be equivalent to “fulfillment” or “payment”.1235. and therefore the Court may even grant. Here.” A creditor who gives a receipt for partial payment does not necessarily acquiesce to such incomplete payment. Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining. Whoever pays for another may demand from the debtor what he has paid. 1237. Hence. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter. the obligation is deemed fully complied with. he can recover only insofar as the payment has been beneficial to the debtor. Other instances when recovery can be had from the creditor and not from the innocent debtor: a. cannot compel the creditor to subrogate him in his rights. With the knowledge and consent of the debtor. guaranty or penalty.
This refers to the creditors at the
. Creditor cannot even be compelled to accept it. To whom payment has been made: 1. there shall be no right to recover the same from the obligee who has spent or consumed it in good faith. If after the payment. To the person in whose favor the obligation has been constituted (the creditor). Art. of age has entered into a contract without the consent of parents or guardian. payment made by one who does not have the free disposal of the thing due and capacity to alienate it shall not be valid. 3. Art. or any person authorized to receive it. 2. with exactly the same rights as the old one. Payment is not valid – if accepted. or his successor in interest. The new creditor has different rights. But the payment is in any case valid as to the creditor who has accepted it. To the successor-in-heirs. Reason for consent: no one should be compelled to accept the generosity of another. There can be a recovery
No such recourse. not the original creditor at the time the obligation was constituted. 1240. Art.Recourse can be had to the mortgage or guaranty or pledge. 3. Garnishment: the proceeding by which a debtor’s creditor is subjected to the payment of his own debt to another.
time of the payment. the payment is generally not valid (w/o prejudice to Art. The remedy of consignation would not be proper. Exceptions: when a minor between 18 and 21 yrs. If the recipient is not authorized. Payment made in good faith to any person in possession of the credit shall release the debtor. Payment by an incapacitated person General rule: if person paying has no capacity to give: 1. 2. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a donation. or insofar as the payment has been beneficial to him. Something more than a personal action of recovery. In obligations to give. Payment made after Judicial Order to retain: the judicial order may have been prompted by an order of attachment.1241. If the creditor ratifies the payment to the third person. 1243. voluntarily pays a sum of money or delivers a fungible thing in fulfillment of obligation. Only a personal action to recover the amount. but a new creditor. so it is as if there has indeed been an extinguishment of obligation. 1241). injunction or garnishment (garnishment takes place when the debtor of a debtor is ordered not to pay the latter so that preference would be given to the latter’s creditor). The debt is extinguished in one sense. It consists in the citation of some stranger to the litigation. 1238. Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing delivered. 2. Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall not be valid. 1247 under the Title on “Natural Obligations”. appears on the scene. the third person acquires the creditor’s rights. Requisites: 1. If by the creditors conduct. 3. The payee must be in possession of the credit itself (not merely the document evidencing the credit). the debtor has been led to believe that the third person had authority to receive the payment. Payment shall be made to the person in whose favor the obligation has been constituted. To any person authorized to receive it. to what has been paid. 2. 1242. which requires the debtor’s consent. without prejudice to the provisions of Art. Payment by payor must be made in good faith but payor may be in bad or good faith. Art. Such benefit to the creditor need not be proved in the following cases: 1. Art. who is the
Art. Payment made to a third person shall also be valid insofar as it has been redounded to the benefit of the creditor. 1239.
he may demand and accept one of inferior quality). Art. That mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor. If the debtor is not judicially declared insolvent. Injunction: a judicial process by virtue of which a person is generally ordered to refrain from doing something. When the obligation consists in the delivery of an indeterminate or generic thing. 1245. but if he so desires. for a sale presupposes the consent of both parties. If the dation in payment will not prejudice the other creditors. The giving of the object in lieu of the credit may extinguish completely or only partially the credit (depending on the agreement). In case of waiver by the creditor (expressly or impliedly). The debtor of a thing cannot compel the creditor to receive a different one. 2. from the viewpoint of the creditor. 1244). shall be governed by the law in sales. In obligations to do or not to do. Dation: datio in solutum or adjudicacion en pago. Dation in payment. 2. an act or forbearance cannot be substituted by another act or forbearance against the obligees will. the Rules of Court shall govern. Unless it is otherwise stipulated. having acquired jurisdiction over his person by means of the citation required of him to pay his debt. Art. whereby property is alienated to the creditor in satisfaction of a debt in money. 1246. It is called preliminary injunction if the prohibition is during the pendency of certain proceedings. If the creditor consents. The purpose of the obligation and other circumstances shall be taken into consideration. Waiver: If the contract does not specify quality: 1. or the obtaining of the object (from the viewpoint of the buyer)
There is greater freedom in the determination of the price. Novation (Art. for here his property is supposed to be administered by the assignee. 1244. 2. and the court. The giving of the price may generally end the obligation of the buyer.
Conditions under which a Dation in Payment would be valid: 1. such debtor-stranger becomes a forced intervenor.
. There is less freedom in determining the price. The debtor cannot deliver a thing of inferior quality. With regard to judicial costs. 1291) 3. it is the acquisition of the object offered in credit. he may deliver one of superior (provided it is not of a different kind. who is the creditor in the main litigation. the creditor cannot demand a thing of superior quality. from the viewpoint of
viewpoint of the seller). Art. whose quality and circumstances have not been stated. 3. Dation in payment (Art. not to his former creditor. The creditor cannot demand a thing of superior quality (but if he so desires. In case of facultative obligations.debtor of one of the parties to the action.
the debtor in dation in payment is the extinguishment of his debt. 1247. SALE There is no pre-existing contract This gives rise to obligations The cause or consideration here is the price (from the DATION IN PAYMENT There is a pre-existing credit This extinguishes obligation The cause or consideration here. Art. Art. In case there is another agreement resulting in either: 1. 1244 does not apply: 1. the extrajudicial expenses required by the payment shall be for the account of the debtor. Instances where Art. 1245) 2. property for the satisfaction of monetary debt. although the latter may be of the same vale as. Neither can the debtor deliver a thing of inferior quality. for this might lead the debtor to connive with one creditor in defrauding the other creditors. Interpleader: it is the technical name of the action in which a certain person in possession of certain property wants claimants to litigate among themselves for the same. but to the new creditor. By this means. or more valuable than that which is due.
Art. When there is stipulation to this effect. costs shall be awarded to the winning party but this is subject to the discretion of the court. There being no express stipulation and if the undertaking is to deliver a determinate thing. when one debt is larger than the other. then in the currency which is legal tender in the Philippines. This is a complete payment of his share. 5. Neither may the debtor be required to make partial payments. Payment shall be made in the place designated in the obligation. The payment of debt in money shall be made in the currency stipulated. the payment shall be made wherever the thing might be at the moment the obligation was constituted. Exceptions: 1. the action derived from the original obligation shall be held in abeyance. When a debt is in part liquidated and in part unliquidated. a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered. If there is a stipulation – in the place designated. the creditor cannot be compelled partially to receive the prestations in which the obligation consists. partial performance is not allowed generally under this Article. When a joint debtor pays his share or the creditor demands the same. If the debtor charges his domicile in bad faith or after he has incurred in delay. as the case may be. Hence. Judicial Costs: generally. Where Payment must be made: 1. 2.Debtor pays generally for extrajudicial reasons: it is the debtor who benefits primarily since his obligation is thus extinguished. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. When the different prestations are subject to different conditions or different terms. When a solidary debtor pays only the part demandable because the rest are not yet demandable on account of their being subject to different terms and conditions. the value of the currency at the time of the establishment of the obligation shall be the basis of the payment. 7. In any other case the place of payment shall be the domicile of the debtor. 4. Since the value of money here tends to increase. 1249. 2. Exception is when there is a stipulation to the contrary. Inflation: a sharp sudden increase of money or credit or both without a corresponding increase in business transaction. Art. • Applied only during the Japanese occupation. When work is to be done by parts. but it is still a partial fulfillment of the whole obligation. 6. Performance should generally be complete: Under Art. These provisions are without prejudice to venue under the Rules of Court. 1233. the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. Legal tender: that which a debtor may compel a creditor to accept in payment of the debt (whether public or private). However. If there is none
. Unless there is an express stipulation to that effect. In case of compensation. unless there is an agreement to the contrary. or when through the fault of the creditor they have been impaired. the additional expenses shall be borne by him. 1251. 3. Art. the natural result is an increase in the price of goods or services. it follows that a balance is left. in which case performance of the liquidated part may be insisted upon either by the debtor or the creditor. In case an extraordinary inflation or deflation of the currency stipulated should supervene. 1248. In the meantime. The delivery of promissory notes payable to order. when the debt is in part liquidated and in part unliquidated. Art. and if it is not possible to deliver such
If the obligation is any other thing. which allows payment in a different currency but in the absence of an agreement. 1235). 2nd ¶): • When they have been honored and cashed. o If the prestation: Specific. and if it is not possible to deliver such currency. the obligor may recover as though there had been a strict and complete fulfillment.the debtor must give or deliver the specific thing which was agreed upon (Art. 1254. The creditor can validly refuse if the performance is not in one act. the debtor cannot give a thing of inferior quality (Art. the creditor can refuse to accept. it shall be made in pesos. 1249. No. 3. 1245)when property is alienated to the creditor in satisfaction of a debt in money. the payment shall be applied to all of them proportionately. then in the currency which is legal tender in the Philippines (Art. Negotiable papers and other commercial documents can be refused by the creditor unless there is a stipulation to the contrary.if the debts due are of the same nature and burden.if the obligation has been substantially performed in good faith. 1234). INDIVISIBILITY. 1st ¶). then in the place where the thing might be at the time the obligation was constituted (if temporary. without protest or objection. If the negotiable papers and other commercial documents are accepted by the creditor. less damages suffered by the obligee. the creditor cannot demand a thing of superior quality. 2.means that the entire prestation must be performed – completeness (Art.1. R. o Exceptions: 1. it has only a provisional effect. 2nd ¶) . In application of payments if the debts are equally onerous (Art. No. the creditor cannot be compelled partially to receive the prestations in which the obligations consists. knowing its incompleteness or irregularity. Generic.means the very prestation must be performed. A certified check or a manager’s check may not be considered as legal tender and thus. However.A. 8183. REQUISITES OF PAYMENT: As to Prestation: 1. 1246). the obligation is deemed fully complied with. When obligations are entered into. 1233) o Exceptions: Substantial compliance in good faith (Art. 529 has been repealed by R. they have been impaired. Neither may the debtor be required to make partial payments.when the obligee accepts the performance. Waiver (Art. Novation 2.
• When through the fault of the creditor. There is payment only in the ff (Art.the obligor must perform the prestation in one act and not in installments (Art. the parties except payment or performance. 1248) – Unless there is an express stipulation to that effect. BALANE: Payment refers to obligations to give while performance refers to obligations to do. If it is an obligation to deliver a determinate specific thing. All other modes of extinguishing payment are abnormal modes. However. IDENTITY. 1249. 1244). o Payment: The payment of debts in money shall be made in the currency stipulated. the creditor may demand and the debtor
. delivery is in domicile of debtor. o Exceptions: Dacion en pago (Art.A. INTEGRITY. then in the domicile of the debtor). Express stipulation and if the debts are liquidated and unliquidated in parts(Art. when the debt is in part liquidated and unliquidated. 1248).
OBLIGOR. In joint divisible obligations (Art. then there is no payment. The creditor’s agent (Article 1240) 4. (2) and (3). 1626) 2. OBLIGEE. 1. 1225. AS TO TIME AND PLACE OF PERFORMANCE When Payment should be made • Payment should be made when it is due. Demand would be useless Where Payment Should be Made o Primary Rule: Agreement of the Parties
Effect of payment by a third person. In case of several guarantors who demand the right of division (Article 2065) 8. Any third person subject to the following conditions: a. If work is to be deliver partially. the credit or debt. 1237). There is no extinguishment of the obligation but a change in the active subject. In compensation when there is a balance left (Art. The creditor’s successor or transferee (Article 1240) 3. of days of work. the General Rule is that demand is still necessary. the benefit is total. When the obligation or the law
expressly so declares 2. it shall be divisible. If there is payment despite garnishment. it is required that the debt should not be garnished (Article 1242). Anyone in possession of the credit (Article 1242) * In all these 5 instances.g. guarantor) Anyone can consents. 2nd par) b. CREDITOR Who may be the Payee 1. 1290). DEBTOR: Who may be the Payor 1. 2nd ¶). Time is the controlling motive for the establishment of the contract 3. or the nature or the wording of the obligations to which the preceding article refers to the contrary does not appear. If it falls under Article 1241 ¶2 (1). Payment was with the Debtor’s Consent
General Rule: The payor steps into the shoes of the creditor and becomes
. 3. With the consent of the creditor o
1.when the obligation has for its object the execution of a certain no. 4. 1720). 7. • Even if the payment is due. 2nd ¶). 2.may effect the payment of the former without waiting for the liquidation of the latter. 5. Provided it redounded to the creditor’s benefit and only to the extent of such benefit (Article 1241. 6. was without the Debtor’s
2. or analogous things which by their nature are susceptible of partial performance. The creditor himself (Articles 1240. In case of impossibility or extreme difficult of a single performance As to the Parties:
entitled not only to recover what he has paid. In prestations which necessarily entail partial performance (Art. the accomplishment of work by metrical units. Payment Consent
The 3rd person may demand repayment to the extent that the debtor has benefited (Article 1236.
PAYEE. but also to exercise all the rights which the creditor could have exercised – subrogation (Articles 1236. the price or compensation for each part having been fixed (Art. pay if the creditor
Exception: No subrogation if intended to be a donation (Article 1238). Without the consent of the creditor o o o o The debtor himself The debtor’s heirs or assigns The debtor’s agent Anyone interested in the fulfillment of the obligation (e. 1208). In solidary obligations when the debtors are bound under different terms and conditions (Article 1211). • Article 1169 provides the instances when demand is not necessary
PAYOR.if from the law.
dation en paiement and datio in solutum. Other terms for dacion en pago include dation in payment. By agreement of the parties. The traditional way is to view dacion en pago as a sale. Dacion en pago will take place only if the parties consent. Tertiary Rule: Debtor’s domicile (not residence).
4 Special Forms of Payment a. Castan has another view of dacion en pago. He believes that it is neither a sale nor a novation but a special form of payment. It is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted performance/payment of an obligation. the prestation is changed. Dacion en pago is a special form of payment since it does not comply with the requisite of identity. It is not novation since there is no new obligation. However.
. Dacion en pago extinguishes the obligation up to the value of the thing delivered unless the parties agree that the entire obligation is extinguished (Lopez vs. There are 2 ways of looking at dacion en pago. It is a species/variation of payment implying an onerous transaction similar to but not equal to a sale. CA).o
Secondary Rule: Place where the thing was at the time the obligation was constituted if the obligation is to deliver a determinate thing. Dacion en pago is governed by the law on sales (Article 1245). Dacion en pago (Article 1245).Dacion en pago is the act of extinguishing the obligation by the substitution of payment. the modern view is to look at dacion en pago as a novation.