This action might not be possible to undo. Are you sure you want to continue?
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. If the thing is indeterminate or generic. TO GIVE: DELIVERY Art. (Art. or even a genuine one. (a) or (b). Remedies of the Creditor when the Debtor fails to comply with his Obligation: a) Demand specific performance (or compliance) of the obligation. After constitution of the obligation and before delivery. then from the perfection of the contract. 1163). TO GIVE: ACCESSIONS AND ACCESSORIES Art.possession no longer as an owner. Hence. does not transfer ownership. 2. the demand is being either judicial or extrajudicial. 1165. 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. where there is no delivery of the object. to put a debtor in default. To give a specific thing (set apart from a class) b. However. to take care of it with the proper diligence of a good father of the family. c) Demand damages either with or without either of the first. as a rule. The obligation to give a determinate thing includes that of delivering all its accessions and accessories. Accessions: those joined to or included with the principal for the latter’s better use. Generic or Indeterminate Things: when it refers only to a class. 1164). Obligation to deliver arises from: a) If there is no term or condition. 1166). Effect of Fortuitous Events: a specific obligation is an obligation to deliver a specific thing is. Accessories: additions to or improvements upon a thing. the creditor. enjoyment or perfection. BALANE: TO GIVE A DETERMINATE THING Primary obligation: giving what is supposed to be given. extinguished by a fortuitous event or act of God. but in some other capacity) e. accessions and accessories do not have to be included. b) If there is a term or a condition. and cannot be pointed out with particularity. in addition to the right granted him by Art. Classification of Obligation from the Viewpoint of Subject Matter (or Object of the Obligation): a) Real obligations (to give): a. or has promised to deliver the same thing to two or more persons who do not have the same interest. As a rule. even though they may not have been mentioned. 1166. then from the moment the term arrives or the condition happens. creditor’s rights over the fruits is merely personal. If the obligor delays. he may ask that the obligation be complied with at the expense of the debtor. Effect of stipulation: if there is a stipulation to said effect. Legal Delay (Default) Delay which amounts to a virtual non-fulfillment of the obligation. ownership is transferred only by delivery. may compel the debtor to make the delivery. Luz 5 . b) Demand rescission or cancellation (in some cases). he shall be responsible for fortuitous event until he has effected the delivery. 3 Accessory Obligations: 1. genus. Traditio by the execution of legal forms and solemnities) *A sale which is simulated. 3. Generic obligations are never extinguished by fortuitous events. (Art. 1170. To deliver the accessions and accessories. When what is to be delivered is a determinate thing. there must be a demand for fulfillment. 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. To account and deliver to the creditor the fruits if the thing bears fruits upon the time the obligation to deliver it arises. These include alluvium (soil gradually deposited by the current of a river on a river bank) and whatever is built. planted or sown on a person’s parcel of land.
Equivalent performance. Equivalent performance. Not applicable because of the prohibitio n against involuntar y servitude. May be obtained exclusively or in addition to the 1st 2 actions.the debtor must perform it personally.damages.damages. it shall also be undone at his expense. When the obligation consists in not doing. TO DO Art. and the obligor does what has been forbidden him. Equivalent performance. Substitute performance.done by someone else (performed at the expense of the debtor). Remedies available to the creditor: 1. if purely personal or special – only damages may be asked. unless substitution is permitted.Remedies available to the creditor: 1. This same rule shall be observed if he does it in contravention of the tenor of the obligation. b) Also.to obtain damages. Equivalent performance.done by someone else (performed at the expense of the debtor). Specific performance is not a remedy in personal obligations. Anyone else can do it (not personalisimo) 1. 3. Specific performance. b) If the obligation is a negative one.damages. Specific performance. Furthermore. √ X √ √ Luz 6 . the same shall be executed at his cost. itself.damages. 2. (Damages alone cannot substitute for performance if owners can do it. this may amount to involuntary servitude.the debtor must perform it personally. Substitute performance. Substitut e Performa nce When someone else performs or something else is performed at the expense of the debtor. Obligatio n TABLE OF REMEDIES Specific Equivale Performa nt nce Performa nce The The performan payment ce of the of prestation damages. If a person obliged to do something fails to do it. Only the obligor can do (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. it may be decreed that what has been poorly done be undone. NOT TO DO Art. 1167.done by someone else (perform at the expense of the debtor). otherwise.damages. TO GIVE A GENERIC THING Remedies available to the creditor: 1. Substitute performance. 2. 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). Can be obtained exclusively or in addition to other actions. provided the undoing is possible. which as a rule is prohibited under our Constitution). Equivalent performance. 2. 2. 1168. May be obtained exclusively or in addition to the 1st 2 actions. Here performance by another and damages may be demanded. May be obtained exclusively or in addition to the 1st action. A thing may be ordered undone: a) If made poorly.
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.NOT TO DO X √ √ 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). enforceable. delay by the other begins. b) Extrajudicial. 3. except in certain instances. or (3) When demand would be useless. If the debtor is in default. From the moment one of the parties fulfills his obligation.Requisites for mora solvendi: 1.There is no mora in natural obligations. 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. demand is needed. (in both cases. Mora Solvendi ex re (debtor’s default in real obligations) b. When Demand is not needed to put Debtor in Default: a) When the law so provides.there is no mora solvendi in negative obligations (one cannot be late in not doing or not giving). The obligation must be due. there must be a provision that if payment is not made when due. The mere fixing of the period is not enough. unless the demand is not required. d) When demand would be useless.Effects of Mora Solvendi: 1. In reciprocal obligations. . . (When demand is needed. as when the obligor has rendered it beyond his power to perform. 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. However. And demand is still needed to put the debtor in default. If there is an acceleration clause. upon default in one installment). b) When the obligation expressly so provides. 1169. The demand must be for the obligation that is due (and not for another obligation. and already liquidated or determinate in amount. 2. 4. nor one with a bigger amount. There must be non-performance. He is liable even for a fortuitous event. 2. as when the obligor has rendered it beyond his power to perform. a. proof of it must be shown by the creditor). 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. loss would have occurred just the same. Luz 7 . considering all the circumstances). he may be liable for interests or damages. Different Kinds of Mora: a) Mora Solvendi (default on the part of the debtor). the intent is sufficient as long as this is implied. . although damages here may be mitigated if he can prove that even if he had not been in default. He may also bear the risk of loss. Mora Solvendi ex persona (debtor’s default in personal obligations) b) Mora Accipiendi (default on the part of the creditor). default or liability for damages or interests automatically arises. the contract may provide for an “acceleration clause” (a clause which would make all installments due. It is not essential for the contract to categorically state that time is of the essence. without court proceedings. all that happens will be that the whole amount becomes due. The demand may be: a) Judicial. . as when a complaint for specific performance is filed. essential that his being in default is attributable to his own fault). 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). it is. Default in the payment of one installment does not mean default in the whole amount.the creditor is guilty of default when he unjustifiably refuses to accept DELAY Art. however. There must be a demand. Necessity of Demand: to put a debtor in default.In a purchase by installments. 3.
. When neither has performed. Grounds for Liability in the Performance of their Obligations: a) Fraud (deceit or dolo). 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. Actual.to vindicate a right.payment or performance at the time said payment or performance can be done.) That agreed upon b.depend upon each other for performance. contract. this is not so for future fraud). (Fraud here may be either: i. but generally only if aside from the breach of contract. are liable for damages. 1. IRREGULARITY IN PERFORMANCE: FRAUD Art. Kinds of Damage: damages should be paid by those responsible for them. the debtor shall not be exempted from the payment of its price. IRREGULARITY IN PERFORMANCE: FRAUD. Liability for damages: those liable under Art. b) Negligence (fault or culpa) c) Default or mora. NEGLIGENCE OR DELAY Art. 5.intentional evasion of fulfillment.) In the absence of agreement. Any waiver of an action for future fraud is void.when the exact amount of damages cannot be determined.if imputable to the debtor. d) Violation of the terms of the obligation (violation). If one party performs. Moral. Fraud in obtaining consent (may be causal or merely incidental) b. it is understood that performance must be simultaneous.for mental and physical anguish.predetermined beforehand – by agreement. b) If the damages or interest are allowed to prescribe.when no other kind of damages may be recovered. Dolo causante (causal fraud) ii. It cannot be recovered unless proved. either by the law. Dolo incidente (incidental fraud) *while dolo causante is so important a fraud that vitiates consent (allowing therefore annulment). the legal rate of interest. fraud may be classified as follows: a. the debtor-criminal is responsible for loss.corrective or to set an example. said stipulated time controls. 1170. Performance may be set on different dates. Those who in the performance of their obligations are guilty of fraud. Exemplary. When Damages or Interest may be lost: a) If the principal obligation is allowed to lapse by prescription. unless the creditor is in mora accipiendi. the latter would be in default. the latter refused without justification to accept it. c) If the damages or interest are condoned (waived or remitted). or delay and those who in any manner contravene the tenor thereof. 4.If the performance is not set on different dates. 6. If a contract of simple loan stipulates the time when interest will be counted. negligence. Responsibility arising from fraud is demandable in all obligations. Nominal. Damages in Monetary Obligations: indemnity for damages consists of: a. fraud may be past or future (liability for past fraud may be waived. “When the debt of a thing certain and determinate proceeds from a criminal offense.” (Civil Code) c) Compensatio Morae (when in a reciprocal obligation.If an obligation arises ex delicto (as the result of a crime). dolo incidente is not important Luz 8 . . there is compensatio morae (default on the part of both. 1170 should pay damages. Temperate. unless the thing having been offered by him to the person who should receive it. Liability for Fraud or Dolo: a) According to time of commission. whatever may be the cause for the loss. and the other does not. both parties are in default.unless excused in proper cases by fortuitous events. prejudice or damage was caused.actual losses as well as unrealized profit. even though this be through a fortuitous event. here it is as if neither is in default). 3. Fraud in performing a contract. 2. b) According to meaning. Liquidated. 1171. or custom. so it is as is no one is in default).
Dolo There is deliberate intention to cause damage or prejudice. not done through force) still there is no deliberate intention to cause damage. Proof needed in a crimeproof of guilt beyond reasonable doubts.” is a proper and incomplete defense (insofar as employers or guardians are concerned) in culpa aquiliana. Culpa Although voluntary (that is. of the time and of the place. Culpa Criminal Negligence here is direct. Liability arising from dolo cannot be mitigated or reduced by the courts. Accused is presumed innocent until the contrary is proved. 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). Responsibility arising from negligence in the performance of every kind of obligation is also demandable. 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. When negligence shows bad faith. incident to the performance of an obligation already existing because of a contract.that which results in a breach of contract. Proof neededpreponderance of evidence. substantive. b) Culpa Aquiliana (civil negligence or tort or quasi-delict) c) Culpa Criminal (criminal negligence).IRREGULARITY IN PERFORMANCE: NEGLIGENCE Art. ¶2. (except the duty never to harm others). and independent. and that it was not carried out. Waiver of an action to enforce liability due to future culpa may in a certain sense be allowed. and it is his duty to prove that there was no negligence in carrying out the terms of the contract. Culpa Contractual Negligence is merely incidental. Ordinarily. If the law or contract does not state the diligence which is to be observed in the performance. There is a preexisting Culpa Aquiliana Negligence here is direct. Liability due to negligence may be reduced in certain circumstances. it is presumed that the debtor is at fault. according to the circumstances. 1171 and 2201. that which is expected of a good father of a family shall be required. Art. Here the employee’s guilt is automatically the employer’s civil guilt. (except of course the duty to be careful in all human actuations). and independent of a contract. so prosecution has the burden of proving the negligence of the accused. the victim has to prove the negligence of the defendant. shall apply. This is because his action is based on alleged negligence on the part of the defendant. substantive. No pre-existing obligation No pre-existing obligation Luz 9 . 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). 1173. if the former is insolvent.that which results in the commission of a crime or a delict. 1172. Proof neededpreponderance of evidence. but such liability may be regulated by the courts. Waiver of an action to enforce liability due to future fraud is void. As long as it is proved that there was a contract. the provisions of Arts. Defense of “good father. either express or implied). This is not a proper defense in culpa criminal. etc. obligation (a contract.
even if the quality is excellent but the performance is not in due time. 1170) DELAY/MORA: Definition: the non-fulfillment of the obligation with respect to time. or delay and those who in any manner contravene the tenor thereof. or which though foreseen. no person shall be responsible for those events which could not be foreseen. In the absence of a) that required by law. Exceptions: a) When expressly declared by the law or is in default. negligence. 2 Types of Negligence: 1. thus the obligation before the obligation is voidable. Nature and circumstances of a. The deliberate and intentional evasion of the normal fulfillment of the obligation. The nature of the obligation 2. Creditor requires performance either judicially (through court action) or Luz 10 . Gross The determination of due diligence is always relative. or when it is otherwise declared by stipulation or when the nature of the obligation requires the assumption of risk.those who in the performance of their obligations are guilty of fraud. but it is characterized by lack of care (lack of due diligence in the care of a good father of the family). Fraud under Art. The deceit occurs by using insidious words machinations. 1233) 2. 3. Art. (Art. (Art.more properly called malice. Place Effects: (Art. 1170). Delay is through fault or negligence. Person b. Simple 2. Fraud under Art. 1170-1171) Definition: the voluntary execution of a wrongful act. Without this deceit. 2.Kinds a) b) c) of Diligence Under the Civil Code: That agreed upon by the parties. Creditor may insist on proper substitute or specific performance. or willful omission. In the absence of b) that expected of a good father of a family. Like fraud. 1173). 1338 1171 Deceit is antecedent Malice is subsequent fraud. the question is the quality even if performed on time. 3. In fraud. force majeure or unavoidable accident): no liability. 1170. 1191). 2. Obligation is demandable and liquidated. 1170. the debtor is liable. Deceit vitiates consent in contracts. fraud. In delay. (Art. Except in cases expressly specified by the law. unlike fraud which is characterized by malice. which is lacking in the latter. Rescission/Resolution. FRAUD: (Art. 1172) 1. NEGLIGENCE: The absence of due diligence (Art. Rescission/Resolution (Art. Essential characteristics of a Fortuitous Event: a) The cause must be independent of the will of the debtor (free from participation or aggravation). c) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. Distinguished from negligence by the presence of deliberate intent. fraud exists. act of God. Art. Fraud preexists the There was already an obligation. 1191) 3. negligence. It will depend on: 1. negligence results in improper performance. 1171Fraud under Art. 1170. b) Impossibility of foreseeing or impossibility of avoiding it. 1233). 1174. Damages in either case (Art. were inevitable. Effects: 1. c) When the nature of the obligation requires the assumption of risk. Damages in either case. General rule for fortuitous events (caso fortuito. Time c. even if foreseen. knowing and intending the effects which naturally and necessarily arise from such act or omission. the other party would not have entered into the contract. are liable for damages. b) When expressly declared by stipulation or contract. Creditor may insist on proper substitute or specific performance (Art. BALANE: IRREGULARITY IN PERFORMANCE: ATTRIBUTABLE TO DEBTOR (CULPABLE) Art. Requisites: 1.
Mere setting of due date is not enough. o When demand would be useless. Luz 11 . Mora Accipiendi Related to payment (consignation). it must be impossible to avoid. 6. 2. when obligor has rendered it beyond his power to perform. Act of God Also governed by Art. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. The cause of the unforeseen and unexpected occurrence. Mora Solvendi: Delay in performance incurred by the debtor. What is the form of such a demand? Any communication of a party that he is ready and willing to comply with his obligation. 3. If after receipt of demand and the other party does not comply with his obligation. General rule: demand is necessary. 2. 5. 1191) 2. cancel each other out. Debtor is exempted from risk of loss of thing which automatically pass to creditor. Effects: 1. Thus. 3. Compensatio Morae Delay on both sides on reciprocal obligations. An offer of performance by the debtor who has the required capacity. must be independent of the human will. 3. NOT ATTRIBUTABLE TO THE DEBTOR (NONCULPABLE) Fortuitous event (Art. Art. debtor shall not have obligation to pay the same from the time of the delay. 2. Requisites: 1. a cause for extinguishment of obligation. o Rescission/Resolution. no demand. he is in delay. Requisites: 1. the risk is placed on the aprt of the debtor. Creditor becomes liable for damages. Responsibility of debtor for the thing is limited to fraud and gross negligence. 1174). extrajudicially (any communication by the creditor to debtor). 4. 1165) o Damages. (Art. no delay. or the failure to comply with his obligations. o Debtor delays performance either because of dolo or culpa. Requisites: o The obligation is demandable and liquidated. caso fortuioto. If the obligation has interest. o When it appears from the nature and controlling motive the obligation that time was a controlling motive for the establishment of the contract. force majeure. but the creditor refuses to accept it without just cause. (Mora solvendi expersona). It must be impossible to foresee the event which constitutes caso fortuito. demand is still needed. The creditor incurs in delay when debtor tenders payment or performance. or if it can be foreseen. Expenses incurred by the debtor for preservation of thing after the delay shall be chargeable to the creditor. The creditor refuses the performance without just cause. o The creditor demands the performance either judicially or extrajudicially. 1221 but is called ‘loss’ there. Exceptions: (Mora solvendi ex re. Debtor may relieve himself by consignation of the thing. The offer must be to comply with the prestation as it should be performed. 3. This does not constitute automatic delay. 1169). 3 kinds of delay: 1. In reciprocal obligations (obligations with a counterpart prestation) which require simultaneous performance. There must be an express stipulation to that stipulates that non-performance on the due date is delay without need of demand. (Art. o When the obligation or the law expressly so declares. Effects: o When the obligation is to deliver a determinate thing.
Insufficiency of assets of the debtor to satisfy the creditor’s credit. Debt payable in installments. he cannot be held liable for damages or non-performance. 2. Falure of debtor to collect his own credit from a third person either through malice or negligence. Requisites: 1. 5. 1175. 1176. they may also impugn the acts which the debtor may have done to defraud them. for the fulfillment of his obligations subject to the exemptions provided by law. Credit is due and demandable. 1380-1389). The debtor has performed an act subsequent to the contract. 4. it compensates the damage caused. Luz 12 . after having pursued the property in possession of the debtor to satisfy their claims. The receipt of a later installment of a debt without reservation as to prior installment. 2. Kinds of interest: a. The creditor is prejudiced by the debtor’s acts which are in favor of third parties and rescission will benefit the creditor.) Interest given by way of damages. 3. Usurious transaction shall be governed by special laws. Moratory interest. The obligor must be free from any participation in the aggravation of the injury resulting to the creditor. Premised on the theory that “the debtor of my debtor is my debtor. without reservation with respect to the interest. 1177.presumption that earlier installments have been paid if the later installment has been received without reservation regarding the previous installments. There is a credit in favor of the plaintiff. The receipt of the principal by the creditor. 3. 3. Fortuitous event yields to contrary stipulations. 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. chattels or credits. Extent of Debtor’s Liability: the debtor is liable with all his property. 1163) 2. The exaction of excessive interest. When the law so provides (Art. Simple Loan (Mutuum): by the contract of simple loan. General Rule: when a debtor is unable to fulfill his obligation because of a fortuitous event or force majeure. Interest bearing debt. Art. d) Accion pauliana (impugn or rescind acts or contracts done by the debtor to defraud the creditors. When the nature of the obligation requires the assumption of risk Art. shall give rise to the presumption that said interest has been paid. 2 Presumptions: 1. Arts. save those which are inherent in his person.right of creditors to rescind alienations by debtor which are prejudicial to them to the extent of the prejudice. 4. Usury: contracting for or receiving something in excess of the amount allowed by law for the loan or use of money. Exception: 1. 2.) Interest given for compensation or use of the money. Right (of account) is not intuitu personae. The creditor has no legal remedy. giving advantage to other persons. 4.” Requisites: 1.a direct (not subragatory) action by the creditor against his debtor’s debtor. present and future. goods. b.presumption that interest has been paid if the principal has been received without reservation regarding interest. 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. Rights of Creditors: Enforcement of Creditor’s Remedies a) Exact payment b) Exhaust debtor’s properties. shall likewise raise the presumption that such installments have been paid. may exercise in all the rights and bring all the actions of the latter for the same purpose. 5. The creditors. a remedy which gives the creditor the prerogative to act in his own name. When there is express stipulation. Art. The debtor’s acts are fraudulent. Compensatory interest. This is an exception to the relativity of contracts. e) Accion directa. Creditor has a right of credit against the debtor.
It Is one which is subject to no contingency. the happening of the condition determines its birth or death. 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. By the principle of retroactivity. Transmissibility of Rules: General Rule: rights are transmissible. The right to the fuirts of the thing is not within the principle of retroactivity of conditional obligations. is demandable at once. (Art. (Art. 1184) The moment the suspensive condition happens. 1188). Every obligation whose performance does not depend upon a future or uncertain event. Pure obligation: one without a condition or a term (hence. The condition that some event happens at a determinate time Resolutory shall extinguish the obligation as soon as the time expires or if it has become indubitable that the event will not take place. 1178. 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. Every obligation which contains a resolutory condition shall also be demandable. before the fulfillment of the condition. therefore. The fulfillment of the resolutory condition results in the extinguishment of rights arising Luz 13 . (Art. a fiction is created whereby the binding tie of the conditional obligation is produced from the time of its perfection. The fulfillment of a suspensive condition results in the acquisition of rights arising out of the obligation. 1188) The happening of the condition extinguishes the obligation. Conditional obligation: when there is a condition. fruits and interest are deemed mutually compensated. bring the appropriate actions for the preservation of his right (Art. 1187) The creditor may. without prejudice to the effects of the happening of the event. (Art. if there have been no stipulation to the contrary. the obligation becomes effective and enforceable. 1179. must be clearly proved. Exceptions: 1) If the law provides otherwise 2) If the contract provides otherwise 3) If the obligation is purely personal *intransmissibility by contractual stipulation. In conditional obligations. the courts shall use sound discretion to determine the retroactive effect of the fulfillment of the condition. Chapter 3: Different Kinds of Obligations Section 1: Pure and Conditional Obligations DIFFERENT KINDS OF OBLIGATIONS Art. In term. A condition is a future and uncertain event. all rights acquired in virtue of an obligation are transmissible. 1187) If the obligation imposes reciprocal prestations. In obligations to do and not to do. 1187) The law does not require the delivery or payment of the fruits or interests accruing before the happening of the suspensive condition. Subject to the laws. demandable at once. debtor appropriates the fruits. being the exception to the rule. and not from the happening of the condition. However. (Art. the happening of the term determines its demandability. If the obligation is unilateral. the effects of the obligation retroact to the moment when such obligation was constituted or created. provided there will be no absurdity). or upon a past event unknown to the parties.Art.
Furthermore. If the condition depends upon the will of the creditor. each party is bound to return to the other whatever he has received. Art. Each prestation is designed to be the counterpart of the other. the aggrieved party must go to court in order to recover it. The creditor can compel the debtor to perform the obligation. This notice of resolution is necessary. The right of resolution can be exercised extrajudicially and will take effect upon communication to the defaulting party. the obligation is treated as if it did not exist. The fulfillment of the condition depends upon the will of a party to the obligation. 6. 2 prestations arising from the same source. Proof of substantial breach is a prerequisite for resolution. An obligation is one which has to be performed regardless of the will of the debtor. 2. The right of resolution applies to reciprocal obligations. there is a vinculum juris. There is no element of compulsion. the breach is a resolutory condition which extinguishes the obligations. there must be mutual restitution of the object and its fruits. the reciprocal prestation is not taken into consideration. the plaintiff must show that there is no other recourse. the character of resolution is principal and retaliatory while the character of rescission is subsidiary. The right to resolve is in inherent in reciprocal obligations. In rescission. Thus. 7. Rescission is based on economic prejudice. The parties are returned to their original situation. A reciprocal obligation has 2 elements: 1. In reciprocal obligations. Depends on chance or hazard or the will of a third person. If the defaulting party refuses to return it. the law only talks about the first prestation. Resolution is different from rescission. 1191 uses the term “rescission” but the better term is resolution. 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. 2. Summary of rulings on resolution: 1. The exercise of this right b ) Potestative Casual Mixed can be the subject of judicial review. the aggrieved party can demand recovery. 5. 1190) Resolution (Art. If the aggrieved party has not performed the prestation and resolves extrajudicially. 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. The breach of obligation must be substantial. If the resolutory condition is fulfilled. The entire obligation is void because there is no juridical tie.out of the obligation. 3. Luz 14 . 4. 1191) is found on the conditional obligations because if there is a breach. 1182 prohibits a suspensive potestative condition dpendent on the will of the debtor. If the aggrieved party has performed the prestation. then the obligation is valid In this case. Resolution is based on the nonfulfillment of obligation. Upon resolution. Depends upon 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. Art. This means that in resolution there is no need to show that there is no other remedy. (Art.
Actual prevention of compliance. 1197. Positive condition to do something impossible . 2.Void condition and obligation.c ) Divisible Indivisible d ) Positive Negative f) Express Implied 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. Art. In donations and succession. Not capable of partial performance because of the nature of the thing. The condition merely inferred f) Possible Impossible g ) Conjunctive Alternative When the condition is tacit. Conjunctive when there are several conditions. Where the act of the debtor. it will not fall under the doctrine of constructive compliance. or because of the intention of the parties. 3. although voluntary. 1186). If all the conditions must be performed. Negative condition not to do anything illegal . 1183). the obligation is void. When the condition involves the performance of an act.Disregard the condition. However. all of which must be realized. the obligation shall be deemed to be one with a period. an impossible condition is simply disregarded. 1. When the debtor binds himself to pay when his means permit him to do so. The condition is stated. When the condition is not susceptible of partial realization. if the obligation is divisible and that part of the obligation is not unaffected by the impossible condition. then the obligation is valid (Art. only one of which must be realized. If only a few of the conditions have to be performed. Capable of partial performance. Not capable of fulfillment due to nature or due to the operation of the law or morals or public policy. Capable of fulfillment in nature and in law. did not have for its purpose the prevention of the fulfillment of the condition. the obligation is valid. Doctrine of Constructive Compliance: the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment (Art. Negative condition to do something impossible . When the condition is stated expressly. 1180. Intent of the debtor to prevent fulfillment of the obligation. When the condition is susceptible of partial realization. Luz 15 . subject to the provisions of Art. or due to a contradiction in its terms.Valid condition and obligation. Something will be omitted. An act is to be performed. 2. Alternative when there are several conditions. The distinction can be explained by the fact that Art. 1183 refers to onerous obligation whereas donations and succession are gratuitous. Rights are transmissible unless the rights are personal. When the condition involves the non-performance of an act. The doctrine applies also to potestative and mixed conditions. Requisites: 1. The effect of an impossible condition regarding donations and succession is different. The effect of an impossible condition is to annul the obligation (Art. When the condition depends not only upon the will of the debtor. but also upon chance or will of the others. 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). however.
for the obligation is really illusory b. that is. public policy. 1182.depends on chance or upon the will of the third person. b) Potestative on the part of the Creditor Art. What depends really on him is not payment. non-fulfillment thereof means the non-perfection of the contract since the suspensive condition should have been first fulfilled. Suspensive conditions: the happening of which will give rise to the acquisition of a right (also called conditions precedent or conditions antecedent). Any action to recover before this is done is considered premature. Effect if period of fulfillment is not fixed: if the period is not fixed in the contract. If also suspensive. not to do the impossible. the parties would stand as if the conditional obligation had never existed. both the condition and obligation are valid. Art. NEGATIVE CONDITIONS Luz 16 . should determine what period was really intended. Impossible conditions.also called facultative condition. and it is only when that term set arrives that he can demand fulfillment. Rights already acquired are lost once the condition is fulfilled. How long is the term: The general rule is for the creditor to ask the court first for the fixing of the term. Casual. not to do an illegal thing. 1183. Depends on the exclusive will of one of the parties. the conditional obligation shall be void. shall depend upon the happening of the event which constitutes the condition. considering the parties’ intentions. Potestative. The condition not to do an impossible thing shall be considered as not having been agreed upon. 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.e. directly. Resolutory conditions: also called conditions subsequent. Conditional Perfection of a Contract: if the perfection of a contract depends upon the fulfillment of a condition. Art. b) If the condition is negative. as well as the extinguishment or loss of those already acquired. those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. In conditional obligations. if the suspensive condition does not take place. Impossible conditions: illogical condition. by law. that part thereof which is not affected by the impossible or unlawful condition shall be valid. 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). c) If the condition is negative. Hence. the obligation shall take effect in conformity with the provisions of this Code. the acquisition of rights. but the time when payment is to be made.valid. prohibited. or indirectly. Potestative (Facultative) Condition a) Potestative on the part of the Debtor a. If also resolutory. i. If it depends upon chance or upon the will of a third person. When the fulfillment of the condition depends upon the sole will of the debtor. Mixed Conditions a) Potestative. If the obligation is divisible. Effects: a) If the condition is to do an impossible or illegal thing. the court. Illegal conditions: prohibited by good customs. 1184. b) Casual.both the condition and the obligations are void. POSITIVE CONDITIONS Art. just disregard the condition but the obligation remains. 1181. the law consider this obligation as one with a term or a period.Debtor to pay “when his means permit”: payment does not depend on debtor’s will. 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.
promises to sell to Maria his land provided she passes the bar in 2006 and she does.Art. there is a danger the creditor will receive nothing.) No retroactivity with reference to: a) Fruits or interests. 1186 applies only to a suspensive condition. 1188. In the meantime. the courts shall determine. the debtor has lost the use of the object. Any alienation on the land made by Jose will be considered invalid. debtor gets the fruits and interests unless there is a contrary intent. In reciprocal obligations. or prevention without intention is not sufficient. 2) Actually prevents. Art. Same as with mortgages because the mortgagor must be the owner.in unilateral obligations. The creditor may. Art. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give. the following rules shall be observed in case of the improvement. Art. hidden or alienated. 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. Retroacts: as a general rule. Applicable of the Article to Resolutory Conditions: although in general. shall retroact to the day of the constitution to the obligation.either maliciously or not. the retroactive effect of the condition that has been complied with. 1186. Appropriate actions means to sue in court. The debtor is also entitled to fruits or legal interest if the creditor be in bad faith. Requisites: 1) Voluntarily made. It is unfair for the creditor to unjustly enrich himself (solution indebiti. as a rule. to the day the obligation was constituted. when the obligation imposes reciprocal prestations upon the parties. unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. In obligations to do and not to do. Nevertheless. bearing in mind the nature of the obligation. bring the appropriate actions for the preservation of his right. if Jose. the condition shall be deemed fulfilled at such time as may have probably been contemplated. it may sometimes apply to a resolutory condition.intention without prevention. If no time has been fixed. Actions to preserve Creditor’s rights: if not allowed to take appropriate action. Here the period runs from the day the condition was fulfilled. that is. because it can be enforced only from said date. as when the object is deliberately destroyed. after all. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. b) Period of prescription. 1185. before the fulfillment of the condition. (for example. undue payment). the debtor shall appropriate the fruits and interests received. But intention and prevention in the exercise of a lawful right will not render the Article applicable. 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. in 2004. Art. the intent to prevent must be present. 1189. 1187. 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. the property cannot be considered a future one. The effects of a conditional obligation to give. loss or deterioration of Luz 17 . Art. the condition may not materialize. the fruits and interests during the pendency of the condition shall be deemed to compensate each other (even though they really be unequal). once the condition has been fulfilled. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. If the obligation is unilateral. Right of Debtor to recover what was paid by mistake: what was paid by mistake may be recovered because. in each case. but inasmuch as she is entitled to the land since 2004. if the creditor knew that payment was being made prior to the fulfillment of the condition. Future property cannot. or it has become evident that the event cannot occur. be donated.
May deteriorate (value is reduced or impaired) a. By nature or by time b. Without the fault of the debtor b. with the payment of damages in Luz 18 . May be lost a. The rules given in Art. 1191. In case of the loss. 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. 4. he shall have no other right than that granted to the usufructuary. the parties. Partly with and partly without the fault of the debtor 2. When the conditions have for their purpose the extinguishment of an obligation to give. Partly with and partly without the fault of the debtor 3. Deterioration. upon the fulfillment of said conditions. 1190. 1187 shall be observed as regards the effect of the extinguishment of the obligation. Loss. 5. with respect to the debtor. the creditor may choose between the rescission of the obligation and its fulfillment. or by time. or disappears in such a way that its existence is unknown or it cannot be recovered. Because the obligation had been extinguished and considered to have had no effect. the impairment is to be borne without the creditor. May be improved a. (6) If it is improved at the expense of the debtor. gathering and preservation. 3. shall return to each other what they have received. with indemnity for damages in either case. the obligation shall be extinguished. b) That would merely be considered a deterioration of the thing. in which case the rules on deterioration should apply. the provisions which. (2) If the thing is lost through the fault of the debtor. With fault of the debtor c. he shall be obliged to pay damages. the provisions of the 2nd paragraph of Art. or goes out of commerce. and Improvement During the Pendency of the Condition: • Applies only if: 1) The suspensive condition is fulfilled. Effects when Resolutory Condition is Fulfilled 1. Art. in case one of the obligors should not comply with what is incumbent upon him. are laid down in the preceding article shall be applied to the party who is bound to return. Art. As for obligations to do and not to do. it is understood that the thing is lost when it perishes. The courts are given power to determine the retroactivity of the fulfillment of resolutory conditions. The obligation is extinguished.the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor. (3) When the thing deteriorates without the fault of the debtor. (4) If it deteriorates through the fault of the debtor. The injured party may choose between the fulfillment and the rescission of the obligation. 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). deterioration or improvement of the thing. the parties should restore to each other what they have received. the improvement shall inure to the benefit of the creditor. Through the expense of the debtor c. 1189 will apply to whoever has the duty to return in case of the loss. 2. (5) If the thing is improved by its nature. deterioration. Aside from the actual things received. or improvement of the thing. Without the fault of the debtor b. With the fault of the debtor c. the fruits or the interests thereon should also be returned after deducting of course the expenses made for their production. The power to rescind obligations is implied in reciprocal ones.
He who comes to equity must come with clean hands. 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. However. and in others. expressly or implied. need not be expressly stipulated upon. and still insist on the performance of subordinate stipulations. 3. if fulfillment be impossible. The right to rescind may be waived. the obligation or promise of each party is the cause or consideration for the obligation or promise of the other. if neither is ready. The right to rescind is not absolute. the court will not decree rescission. in accordance with Arts. The rule is vice-versa. does not need such approval. 5. but on the breach of faith by the defendant. He may also seek rescission. 1380 and 1381). The cause must be indentical and the obligations should arise simultaneously. therefore. and the other is not. Thus: a. b. however. Thus. If the property is now in the hands of an innocent third party who has lawful possession of the same. that is. The right to rescind is implied (presumed) to exist and. in the interest of justice partial rescission and partial fulfillment may be allowed. However. the contract stipulate that either party can rescind the same or take possession of the property upon non-fulfillment of the party. the rule is still that the rescission or resolution of a contract has the effect of abrogating it in all its parts. 1385 and 1388 and the Mortgage Law. rescission thereof may not be declared at the same time. Trivial causes or slight breaches will not cause rescission. Judicial approval is not needed when there has been no delivery yet. in some cases. that if the obligation is reciprocal but with a period. in reciprocal contracts or transactions. The right to rescind needs judicial approval in certain cases. The court shall decree the rescission claimed. a. Choice by the Injured Party: 1) The injured party may choose between: a. Otherwise. the plaintiff cannot ask for both remedies. the guilty party cannot rescind. b. willing and able to comply with his own obligation. 4) The injured party who has elected fulfillment may. if the plaintiff elects fulfillment of a reciprocal obligation. Reciprocal Obligations: refers to obligations where two parties are reciprocally obliged to do or give something. a clause allowing for attorney’s fees for the foreclosure of a mortgage cannot be availed of if the mortgage itself is rescinded. Judicial approval is needed when there has already been delivery of the object (unless of course there is a voluntary returning). If there be just cause for fixing the period within which the debtor can comply. 6. 5) If an action is brought for specific performance. if the latter should become impossible. provided the court has not yet given final judgment. unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing. 3) The right is not conjunctive. still ask for rescission (provided that rescission is otherwise proper). It exists only in reciprocal obligations. 4. Moreover. neither can resolve. even after he has chosen fulfillment. It is not enough that both parties are indebted to each other. 2. 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. Or in case there has been delivery. the creditor cannot demand rescission. Fulfillment (specific performance) (plus damages) b. Parenthetically. the damages sought must Luz 19 . c.either case. Be it noted. Characteristics of the Right to Rescind or Resolve: 1. neither party can demand performance or be considered in default before the expiration of the period. 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. which breach is violative of the reciprocity between the parties. Hence. It can be demanded only if the plaintiff is ready.
A day certain is understood to be that which must necessarily come. those whose consequences are subjected in one way or another to the expiration of said term. In the former. refer even to the past. exerting an influence on an obligation as a consequence of juridical acts. upon the arrival of the period. and each shall bear his own damages. and in the latter. or a time which cannot be determined. although it may not be known when. c Ex die A period with a suspensive ) effect. Art. If both parties have committed a breach: The above rules are deemed just. Conventi Period agreed upon or stipulated onal or by the parties. under the law. at a date known beforehand. 1193. which. In case both parties have committed a breach of the obligation. the obligation begins only from a day certain. Period: a certain length of time which determines the effectivity or the extinguishment of the obligation. May. the obligation is conditional and it shall be regulated by the rules of the preceding Section. Section 2: Obligations with a Period TERM Art. If it cannot be determined which of the parties first violated the contract. Here. 1192. Always refers to the future. The second rule is likewise just. therefore. Obligations with a resolutory period take effect at once. but the date of happening is unknown (as in the case of death). May have a suspensive or resolutory effect. the liability of the first infractor shall be equitably tempered by the courts. or produces their extinguishment… Obligations with a period are. and either suspends their demandableness. Indefinite something that will surely happen. In diem a period or term with a resolutory effect. because it is presumed that both at about the same time tried to reap some benefit. Causes an obligation to arise or to cease. Manresa: a term or a period consists in a space of time which has an influence on obligations as a result of judicial act. The Different Kinds of Terms and Periods a Definite The exact date or time is known ) and given. in other words. it cannot prevent the birth of the obligation in due time. Condition An uncertain event. 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.be asked in the same action. suspends its demandability or determines its extinguishment. Voluntary Judicial The period or term fixed by the courts for the performance of an obligation or for its termination. but terminate upon arrival of the day certain. Obligations for whose fulfillment a day certain has been fixed. shall be demandable only when that day comes. Merely fixes the time or the efficaciousness of an obligation. otherwise the damages are deemed waived. In their fulfillment With reference to time As to influence on the obligation Period An event which must happen sooner or later. Up to a time Luz 20 . b Legal A period granted under the ) provisions of the law. the same shall be deemed extinguished. it does not militate against its existence. If the uncertainty consists in whether the day will come or not. A future and certain event. Term: a length of time.
the obligation is extinguished. To be able to recover: 1. 1194. Obligation has a suspensive condition. since the important thing is the knowledge by the debtor of the prematureness (Implied waiver). In case of loss. the debtor shall have the same rights as a usufructuary. For whose benefit the term has been established: Luz 21 . must be shown by debtor. for it is only from that date that it is due and demandable. 3. The obligor is obligated to deliver a determinate thing. Even after was not yet due maturity (regarding interest) for after all the creditor was in bad faith. 6. goes out of commerce or disappears in such a way that its existence is unknown or cannot be recovered. This is true whether the creditor is in good or bad faith. 1189 shall be observed. Rules in case of Loss. When Period of Prescription Begins: it commences from the time the term in the obligation arrives. may be recovered. or 2. 1196. If the thing deteriorates without the fault of the debtor. The condition is fulfilled or the period arrives. he must pay damages. 3. Whenever in an obligation a period is designated. (But the right prescribes 5 yrs. the obligation remains valid. loss or deterioration before the fulfillment of the condition or the period. the improvement shall inure to the benefit of the creditor. if any be given. it is presumed to have been established for the benefit of both the creditor and debtor. Period within which recovery may be made: If the debtor did not Before the debt know that payment matures. the creditor may choose between Resolution (Art. a resolutory condition or term. the obligation terminates. be rebutted by him. Presumption that Debtor knew of Prematureness: the law presumes that the debtor knew of the prematureness. 1189) plus damages Fulfillment of the obligation plus damages 5.certain. 4. Extension of Period: evidence of extension of period. Art. the rules in Art. Rules: 1. with the fruits and interests. This may. (if eliminated subsequently by mutual agreement. 2. Must have believed that the obligation has become due and demandable. Art. If the thing is improved by nature or by time. 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. If the debtor knew No recovery can be had that payment was of what has been paid. BALANE: Requirements: 1. 1189 of the Civil Code. Anything paid or delivered before the arrival of the period. There is improvement. the creditor must accept the thing in its impaired condition. If the thing is lost without the fault of the debtor. It must be certain (sure to come) but can be extended. Art. It must refer to the future. Deterioration or Improvement: 1. The obligor must be unaware of the period. 2. but upon the arrival of said period. 1195. Art. 2. The thing is lost when it perishes. If the thing is lost through the fault of the debtor. If the thing deteriorates through the fault of the debtor. Requisites for a Valid Period or Term: 1. after premature payment). If the thing is improved at the expense of the debtor. not yet due much less can there be recovery of interest. the obligation becomes pure and immediately demandable). 4. deterioration or improvement of the thing before the arrival of the day certain. the obligor being unaware of the period or believing that the obligation has become due and demandable. however.
as when the contract provides that no payment should be made till after a certain given period. 3. For the benefit of the debtor a. 2. the period cannot be changed by them. When the obligation or note is payable on demand. he has lost whatever right he originally had to have the period fixed under Art. Term is for the benefit of debtor alone. from the time the right of action accrues. The debtor cannot pay prematurely and the creditor cannot demand prematurely. still he may have entered into the contract to protect himself against the sudden decline in the purchasing power of the currency. In ever case the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. 2. Exceptions: 1. This Art. returns the machine without performing any work on it. When although the obligation does not fix a period. When the loan is without interest. When payment is to be made within a certain period from date of contract. 2. Luz 22 . the courts may fix the duration thereof. but he may pay even before. the time of employment depends upon the time for payment of salary. When the creditor is interested in keeping his money safely invested (thus making the debtor a sort of depository). this only exists if there is a stipulation to this effect. 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. 1197. for this does not depend upon the exclusive will of the debtor). When there is interest stipulated. is not absolute. the debtor is interested because he is given enough time to pay. and not to a case where the parties have authorized the Court to fix a reasonable term. 5. for even if the creditor receives no interest. Circumstances which indicate for whom the benefit of the term is 1. For the benefit of the creditor. Creditor can demand at any time even before the term expires. When no term was specified by the parties because no term was even intended. and demandable at once. 1197. 3. Term is for the benefit of the creditor alone. as in an employment contract where if no period was agreed upon. This rule. the creditor is interested in the term because of the interests that would be earned. When Prescriptive Period Begins: an action upon a written contract must be brought within 10 yrs. For the benefit of both a. Here. unless of course absurd consequences would arise.usually. Art. When a repairer of a machine has been given something to repair but without a period within which to do the work. In obligations with the benefit of the term given to both debtor and creditor. applies only where the parties to a contract themselves have fixed a period. 2. the right of action accrues from the end of the stipulated period. The debtor is required to pay only at the end. 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. When the Court may not fix the Term: 1. When the duration depends upon the will of the debtor. this is generally only for the benefit of the debtor. but from its nature and the circumstances it can be inferred that a period was intended. however. it can be inferred that a period was intended. When the Court may fix a Period: 1. in which case the obligation is really a pure one.General rule: term is for the benefit of debtor or creditor. If the obligation does not fix a period. b. because it is only from that time that the obligation really becomes enforceable. or when the creditor wants to protect himself from the dangers of currency depreciation. and he cannot be compelled to accept payment from the debtor prior to the stipulated period. When specific periods are provided for in the law. b. The Court has ruled that the original repairman can be required to pay the person who actually made the needed repairs. Once fixed by the courts. The courts shall also fix the duration of the period when it depends upon the will of the debtor. 4.
even if this has not been specifically asked. If the Court actually fixes the term. the law treats it as a term. There are 2 views about who is entitled to the fruits which have been produced in the meantime: 1. When after the obligation has been contracted. unless he immediately gives new ones equally satisfactory. 1180). in consideration of which the creditor agreed to the period. This is because the right exists by operation of law from the moment of such an agreement. asks for “such other and further relief as to the court may appear just and equitable. When the debtor is aware of the period and pays anyway – waiver. the obligation is one with a term (Art. How the Courts Fix a Period: The Court determines the period by considering the time probably contemplated by the parties. When the obligation is reciprocal and there has been prepayment on both sides. thus the courts cannot change it. 2. 3. Art. unless he gives a guaranty or security for the debt. The Action to bring out this Article: the only action which the creditor can bring upon an obligation that does not fix a term. When he does not furnish to the creditor the guaranties or securities which he had promised. Extrajudicial demand is not therefore essential for the creation of the cause of action to have the period fixed. When the period is exclusively for the creditor’s benefit. 1196). When the period within which to ask the Court to have the period fixed has itself already prescribed. Applicability of the Article to the Obligations Contemplated therein: Art.6. The Court may fix a period. The effect of this presumption is that the creditor cannot demand payment before the period arrives nor can the debtor Luz 23 . such action for specific performance being premature. Instances when the Fruits cannot be recovered: 1. then the debtor waives the benefit of the term. Although Art. If prepayment is made without the debtor being aware that the period had not yet arrived. The debtor is entitled to the fruits produced in the meantime. 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. 4. the obligation becomes a pure one. or may even disregard the same in which case. the period becomes part of the contract. When the obligation is a loan and the debtor is bound to pay interest. When by his own acts he has impaired said guaranties or securities after their establishment. 1195). 4.” And ordinarily specific performance cannot be demanded at the same time that the court is asked to fix the period. and demandable at once. 2. 3. The Court merely enforces or carries out an implied stipulation in the contract. 2. When the debtor violates any undertaking. so long as the prayer. The debtor shall lose every right to make use of the period: 1. and the obligation is demandable at once. he becomes insolvent. 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. 1197 should be considered as part and parcel (or automatically incorporated) in all obligations which are contemplated therein. for example. but to be counted from the perfection of the contract. The creditor is entitled to the fruits since the obligation is demandable only when the period arrives. BALANE NOTES: When the debtor binds himself to pay when his means permit him to do so. and when through a fortuitous event they disappear. The presumption is that the period is for the benefit of both the debtor and the creditor (Art. 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. 5. the Court does not amend or modify the obligation. Once the period is fixed by the courts. When the debtor attempts to abscond. then the thing and the fruit can be recovered (Art. 1198. If prepayment is made and the debtor was aware that the period had not yet arrived. but where a term was indeed intended. 1180 looks like a condition dependent on the sole will of the debtor. The parties may of course change the period by mutual agreement.
3. the period is for the benefit of the debtor. 1687. 1198). 1606). 8. 3. The insolvency here need not be judicial. If the obligation does not fix a period. When the debtor attempts to abscond (Art. Court shall decide what period was probably contemplated by the parties.refers to an event which will necessarily happen but the date of its happening is unknown. Luz 24 . Grace. but may validly pay at any time before the period expires. 11. Exceptions: 1. 1197). Resolutory (in diem). but the debtor cannot compel him to accept payment before the period expires. They should fix a period which was probably contemplated by the parties. Voluntary. 6. When he does not furnish to the creditor the guarantees or securities which he has promised (Art. Legal. If the period is for the benefit of the debtor only. the courts may fix the duration thereof (Art. Definite. If the period is for the benefit of the creditor only. Generally. the period is for the benefit of the debtor. 1191. Indefinite. When after the obligation has been contracted. 2.when it is granted by law. 1198). 5. 4. the debtor becomes insolvent unless he gives a guaranty or security for the debt (Art. unless no immediately gives new ones equally satisfactory (Art.when it is stipulated by the parties. 10. but from its nature and circumstances it can be inferred that a period was intended. Art.when period is specifically stated. in consideration of which the creditor agreed (Art. 1180.refers to a fixed known date or time. 1197. 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. Contract of services for an indefinite period. o When the obligation is worded such that payment is to be made “on or before”. Instances when Court may fix a period: 1.when it is fixed by the courts. 1198). 4.when the obligation becomes demandable only upon the arrival of the period. 1197. o Section 3: Alternative Obligations ACCORDING TO PLURALITY OF OBJECT Art. It can be actual insolvency.when a person undertakes to do some work which can be done only during a particular season. and when through a fortuitous event they disappear. 2. 1. 1199. o 2 steps involved in an action for fixing a period: 1. 2. o When the obligation is worded such that payment is to be made within 6 mos. Art. the debtor may oppose a premature demand for payment. Express. 7. the creditor may either claim another thing in its stead or demand immediate payment of the principal obligation (Art. Original 9. Art. 2. Art. 3. Tacit. 1198). 3.. 5. Judicial. When by his own acts he has impaired the said guaranties or securities alter their establishment. Art.an extension fixed by the parties or by the court.the period is resolutory when the performance must terminate upon the arrival of the period. hence to ask for specific performance would be illogical. When the creditor is deceived on the substance or quality of the thing pledged. 5. 2109). demand the creditor to accept payment before the period arrives. 2. you cannot ask for specific performance because fixing a period contemplates something in the future.court cannot fix a period or else it would amount to involuntary servitude. A person alternatively bound by different prestations shall completely perform one of them. 1682 and 1687. 1198). The debtor shall lose every right to make use of the period: 1. Pacto de retro sales (Art. Art. When the debtor violates any undertaking. Types of periods: Suspensive (ex die). When the obligation does not fix for a period. 6. the creditor can demand performance at any time. 4.
the law says that the debtor may rescind. 1200. the obligation becomes a simple obligation to do or deliver the object selected. An election once made is binding on the person who makes it. it can be said that no real choice is being made). If through the creditor’s acts the debtor cannot make a choice according to the terms of the obligation. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound. 4. Impossible prestations 2. 1203.The creditor cannot be compelled to receive part of one and art of the other undertaking. Thus error in appreciating the meaning of alternative obligations will give rise to vitiated consent. expressly or impliedly (since all rights in general may be waived. Made in due time. The choice shall produce no effect except from the time it has been communicated. Alternative rights of creditor when Loss or Impossibility occurs before Debtor’s Choice: applies when Limitation on the Debtor’s Choice: 1. that is. 1. only one is practicable. or that of the service which last become impossible. intimidation. Alternative obligation with reference to benefit The general rule is that the debtor has the right of choice. depending upon your choice. The right of choice belongs to the debtor. unless it has been expressly granted by the creditor. through the default of the debtor. Art. 1204. no longer alternative. Art. Made voluntarily and freely (without force. Hence. 3. Made to all the proper persons. Made with full knowledge tat a selection is indeed being made. coercion or undue influence). 6. if there be joint creditors. May be waived. Or which could not have been the object of the obligation Art. 1201. unlawful or which would not have been the object of the obligation. if tender of the same has been made. 2. Obligation with a term The general rule is that the term is for the benefit of both the debtor and creditor. Alternative Obligation: (facultative) where out of the two or more prestations which may be given. all the things which are alternatively the object of the obligation have been lost. Effect of Notice that Choice has been made: Once notice has been made that a choice has been done. the right belongs to the debtor.) Art. The creditor shall have a right to indemnity for damages when. Who has the right of choice: as a general rule. *the contract is not automatically rescinded. it may belong to the creditor when such right has expressly been granted to him. The debtor shall have no right to choose those prestations which are impossible. Damages other than the value of the last thing or service may also be awarded. all of them must be notified. the creditor can sue him in court with an alternative relief as give this or that. By way of exception. Art. 7. or the compliance of the obligation has become impossible. and the choice can later on be annulled. and he will not. for the creditor to receive the object being delivered. The indemnity shall be fixed taking as a basis the value of the last thing which disappeared. therefore. Reason for Communicating the Choice to the Creditor: To inform the creditor that the obligation is now a simple one. Made without conditions unless agreed to by the creditor (otherwise. only one is due. Requisites for the Making of the Choice: Luz 25 . the latter may rescind the contract with damages. 5. before or upon maturity (otherwise. and if already due. 1202. be permitted to renounce his choice and take an alternative which was first open to him. Made properly so that the creditor or his agent will actually know. Unlawful prestations 3. implying that he may allow it to remain in force insofar as the possible choice or choices are involved.
The same rules shall be applied to obligations to do or not to do in case one. with resultant damages if any. When all the things are lost due to a debtor’s fault. 3. When all the objects are lost due to a fortuitous event. if the debtor wants to relieve himself. The debtor’s obligation had ceased to be alternative and had become a simple one. then the creditor chooses from the remainder. 1. for in such case it is the debtor who can choose. the obligation is extinguished. the choice by the creditor shall fall upon the price of any one of them. the right must be expressly given to him.1. or that which remains if only one subsists. and the last object is lost through the debtor’s fault. he may petition the court to compel creditor to accept it. Upon the other hand. 1204). General Rule: the right of choice belongs to the debtor. When the choice has been expressly given to the creditor. 4. also with indemnity for damages. c. Rules when the choice has been given to creditor: 1. Until then the responsibility of the debtor shall be governed by the following rules: 1. When 1 or some of the objects are lost through fortuitous events. but the payment or performance of 1 of them would be sufficient. a. b. The loss or impossibility happened before selection was made Art. 1203). As in the case of the debtor. If all the things are lost through the fault of the debtor. then the creditor can sue for damages. does not apply when the contract does not state to whose the right to choose Is given. at the creditor’s option. the obligation is extinguished. some or all of the prestations should become impossible. he shall perform the obligation by delivering that which the creditor should choose from among the remainder. 1202). When all the things are lost due to a fortuitous event. the creditor may claim any of those subsisting. This Art. When some things are lost due to the debtor’s fault but there are still some things remaining. in the alternative. When it is expressly granted by the creditor. When 1 or some of the objects are lost due to the debtor’s faults. 6. 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. the obligation ceases to be alternative (Art. Exception: 1. 2. BALANE: ALTERNATIVE: when several objects or prestations are due. the obligation is extinguished. then the debtor has the remedy of resolution (art. Luz 26 . 2. When through fortuitous event or through the debtor’s acts. for the debtor does not know what to deliver. f. the creditor can get the value of any of the object s lost plus damages. then the obligation is extinguished. the creditor can sue for damages (Art. 1205. When all the things are lost due to the debtor’s fault. If one of the things is lost through a fortuitous event. The right to choose belonged to the debtor 2. If the loss of one of the things occurs through the fault of the debtor. the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor. 3. d. 2. or the price of that which. e. 1191) plus damages (Art. it should be understood that the creditor loses the right to choose if only one of the prestations is practicable. When all the objects are lost due to the creditor’s fault. there is only 1 prestation left. When all but 1 of the things are lost due to a fortuitous event. then the debtor can choose from what’s left. 5. When some are lost through the debtor’s fault. Effect of Creditor Delays in making a choice: he cannot yet hold the debtor in default. the creditor chooses from the remainder. For the choice to be given the creditor. 3. When the choice of the debtor is limited through the creditor’s own acts. through the fault of the former has disappeared with a right to damages. 7. the creditor may choose from the remainder or get the value of any of the objects lost plus damages in either case. notwithstanding the lapse of maturity.
Liability of principals. does not render him liable. the principal must still be given. give the principal. 1201). When the law declares the obligation to be solidary. or when the law or the nature of the obligation requires solidarity. then everything is annulled. Each obligor answers only for a part of the whole liability and to each obligee belongs only a part of the correlative rights. Solidary Obligations One for all. all for one. Once the choice has been made. the obligation is called facultative. that last one must still be given. Legal provisions regarding the obligations of devisees and legatees 4. When it is agreed upon by the parties that a 3rd person shall make the choice. The loss or deterioration of the thing intended as a substitute. 1207. There is a solidary liability only when the obligation expressly so states. If it is impossible to Luz 27 . and there is no necessity of giving the substitute. Facultative Only one thing is principally due. The creditor has to communicate his choice to the debtor so that the debtor will know. negligence or fraud. 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. Arising from quasi-contracts 3. If one of the prestations is illegal. When the nature of the obligation requires liability to be solidary. but the obligor may render another in substitution. the obligor is liable for the loss of the substitute on account of his delay. or that each one of the latter is bound to render. Some instances: 1. If the principal obligation is impossible. Art. through the negligence of the obligor. When only one prestation has been agreed upon. give all except one. Alternative Various things are due. the substitute does not have to be given. the other may be valid and the obligation remains. But once the substitution has been made. 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. but the giving of one is sufficient. Whoever has the right of choice must communicate it to the other party (Art. Facultative Obligation: it is one where only one prestation has been agreed upon but the obligor may render another in substitution. entire compliance with the prestation. If the principal obligation is void. and it is that one which generally is given. then the obligation is concentrated in one object.2. Section 4: Joint and Solidary Obligations ACCORDING TO PLURALITY OF SUBJECT Art. The act of making the choice is called concentration. The right to choose may be given either to debtor or creditor. When there is a stipulation in the contract that the obligation is solidary. FACULTATIVE: when only 1 object or prestation has been agreed upon by the parties to the obligation. The right of choice is always with the debtor. but the other (the substitute) may be given to render payment or fulfillment easy. but the debtor may deliver or render another in substitution. (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. Bear a resemblance to alternative obligations particularly when the choice in an alternative obligation is with a debtor. if it is impossible to give the substitute. Arising from tort/damages 2. 1206. Joint Obligations To each his own. The right of choice is given only to the debtor.
Vitiated consent on the part of one debtor does not affect the others. it doesn’t make the other debtors share bigger to compensate for his share. 1208. 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 obligation is presumed joint and as a consequence: 1. Distinct Shares: In joint obligations. The debt shall be divided into as many shares as there are creditors or debtors. Demand by the creditor on one joint debtor puts him in default. Defenses of one debtor are not necessarily available to all the others.) 3. Insolvency of one debtor does not make others responsible for his share. This means that ordinarily one creditor may sue one of the debtors for the latter’s share of obligation but to obtain a just. the credits or debts being considered distinct from one another. the creditor debt shall be presumed to be divided into as many equal shares as there are creditors or debtors. But they are subject to the Rules of Court governing the multiplicity of suits. Art. or the nature of the wording of the obligations to which the preceding article refers the contrary does not appear. while the others have not. the right of the creditors may be prejudiced only by their collective acts. and the debt can be enforced only by proceeding against Luz 28 . it would be better to sue all the necessary parties at the same time. It is possible that the share of one debtor has prescribed.Mancomunada Mancomunada simple Proportionate Pro rata We promise to pay (when there are two or more signatures) Some consequences: 1. 2. 1209. if A and B were joint debtors of C for P1000 and A’s consent was obtained by C through fraud. speedy and inexpensive determination of every action or proceeding. 4.) 2. Presumption that Obligation is Joint: when there are two or more debtors or creditors. When the creditor interrupts the running of the accomplices and accessories of a felony 5. Art. (for example. BUT regarding the bringing of the action in court. If the division is impossible. but not the others since the debts are distinct. the different shares of the debt or the credit are considered distinct from one another. If from the law. They must pay only for theirs. (if one is insolvent. 5. the others are not affected. *The obligation may be joint on the side of the creditors and solidary on the side of the debtors. The creditors or the debts will be distinct from one another. or vice-versa. 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. subject to the Rules of Court governing the multiplicity of suits.
Prejudicial Acts: should not be performed. delivery must be made to all. Passive solidarity Mixed solidarity Second Conventional Solidarity Legal solidarity obligees On the part of the debtors or obligors On the part of the obligors and obligees. If one of the latter should be insolvent.where the obligors though liable for the same prestation. Nor does solidarity itself imply indivisibility. Manresa: the obligation is in a sense midway between the joint and the solidary. a solidary obligation implies mutual agency and mutual confidence. hence. joint refers to the tie between the parties. Indivisibility Refers to the Subject Matter Solidarity Refers to the tie between the parties. Art. Should the assignee or substitute do acts which would prejudice the others. Uniform. there is no doubt that the other creditor’s rights are endangered. 1211. If there be joint creditors. the others shall not be liable for his share. the necessity of their consent. the creditor must proceed against ALL the joint debtors. and (b) no debtor can be made to answer for the others. 3. 2. However. 6. without prejudice to his liability to other creditors. The peculiarity of this obligation. are nevertheless not subject to the same secondary stipulations and clauses. for compliance is possible only if all joint debtors act together. although each for his part. Art. The obligation to pay monetary damages is no longer indivisible then.all the debtors. 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. Otherwise. the others shall not be liable for his share. in which case it becomes a solidary indivisible obligation. is that fulfillment requires the consent of all the debtors. unless that one be specifically authorized by the others. but not anything which may be prejudicial to the latter. 1210. A solidary creditor cannot assign his rights without the consent of the others. On the side of the creditors.when the debtors are bound by the same stipulations and clauses 2. 1212. there will be liability for damages. unless solidarity has been stipulated by the parties or by the law. who are merely proportionately liable. The obligation is joint but since the object is indivisible. 1213. therefore. If any one of the joint debtors be insolvent. collective action is also required for acts which may be prejudicial. the solidary creditor is allowed to so remit. Non-assignment of rights by Solidary Creditor: General rule: solidary creditor cannot assign his rights. Each one of the solidary creditors may do whatever may be useful to the others. and the obligation is extinguished. First Different Kinds of Solidarity Active solidarity On the part of the creditors or Luz 29 . or on the part of the debtors and the creditors Agreed upon by the parties That imposed by law Art. however. otherwise. Art. Indivisible Joint obligation: indivisible refers to the object. 4. The indivisibility of an obligation does not necessarily give rise to solidarity. in the case of rescission or condonation (which is really prejudicial. Each joint creditor is allowed to renounce his proportionate credit. be made on ALL the joint debtors. although it preserves the two characteristics of the joint obligation in that: (a) no creditor can do an act prejudicial to the others. Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions. and therefore. 5. Demand must. Solidarity despite different terms or conditions: 1. Reason: essentially. Characteristics: 1. Exception: if all the others consent.
confusion or remission of debt. Solidarit y Similarities Both the solidary debtor and the surety guarantee for another person. payment should be made to him. Novation The modification of an obligation by changing its object or principal conditions. not to joint ones. whether known or unknown to the parties. That which takes place when the characters of creditor and debtor are merged in the same person. That which takes place when two persons. It applies to what is called passive solidarity (solidarity among the debtors).1215. regarding the insolvent debtor’s share. but if any demand. The demand made against one of them shall not be an obstacle to those which may subsequently Luz 30 . Effect of not proceeding against all: if the creditor sues only one. Total compensation automatically extinguishes the obligation. or by substituting the person of the debtor.Art. The surety is indebted only for the share of the principal debtor. depending upon the amount involved. or two. Exception: payment must be made to solidary creditor who made a demand (judicial or extrajudicial). To any of the solidary creditors 2. compensation. Differences The solidary debtor is indebted for his own share only. Remission may be total or partial. without prejudice to the provision of Art. without the surety’s consent. that where the creditor tells the debtor to forget about the whole thing. Art. The surety can be reimbursed for everything he had paid. The solidary debtor can be reimbursed what he has paid minus his own share. 1219. That act of liberality whereby a creditor condones the obligation of the debtor.The debtor may pay any one of solidary creditors. or by subrogating the person of the debtor. shall extinguish the obligation. the surety is released. 1214. for in the latter. Against whom Creditor may proceed: against any. some. so long as the debt has not been fully collected. be directed against the others. 1216. It can also apply to mixed solidarity. shall be liable to the others for the share in the obligation corresponding to them. failure to collect from one joint debtor his share does not authorize the creditor to proceed against the others. in their own right. or by subrogating a third person in the rights of creditor. They may be proceeded against later. The creditor who may have executed any of these acts. as well as he who collects the debt. has been made by one of them. or all of the solidary debtors – simultaneously. If a solidary debtor receives an extension of the period for payment. 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). the others are still liable for the whole obligation now. judicial or extrajudicial. Novation. made by any of the solidary creditors or with any of the solidary debtors. Effect of Compensa tion Effect of Confusion (or Merger) Effect of Remission or Waiver Suretys hip Art. To Whom Debtor Must Pay: 1. are creditors and debtors of each other. The creditor may proceed against any one o the solidary debtors or some or all of them simultaneously. Both can demand reimbursem ent. If a principal debtor receives an extension. Applicability: applies only to solidary obligations. or several of the debtors (but not all) there is no waiver against those not yet sued. It may be total or partial.
all shall be responsible to the creditor for the price and the payment of damages and interest.these are defenses derived from the nature of the obligation. for not until then had he the right to be reimbursed. without prejudice to their action against the guilty or negligent debtor. Real defenses. A real defense is a total defense. 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. Defenses which are personal to the other co-debtors. If the payment is made before the debt is due. When one of the solidary debtors cannot. An example of a partial defense is that a certain amount is not yet due. If without fault. obtained by one of the solidary debtors. Reason for the Provision: since payment extinguishes the obligation. with the interests for the payment already made.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. 1220. Effect of Loss or Improbability: 1. in case the debt had been totally paid by anyone of them before the remission was effected. This Art. If with fault. 1222. • The debtor sued can invoke all three kinds of defenses. applies only when the whole obligation is remitted. 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. there will be liability because of default. 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. the creditor may choose which offer to accept. If two or more solidary debtors offer to pay. Personal defenses. 1219. It is partial since there may be amounts which are already due. These defenses are partial. because of his insolvency. Art. Art. Art. such share shall be borne by all his codebtors. the debtor has to pay for those amounts which are due. or pertain to his own Luz 31 . Payment made by one of the solidary debtors extinguishes the obligation.no liability. there is nothing more to remit. avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him. The remission of the whole obligation.personal defenses may either be total or partial defenses. Remission of the whole obligation: Remission is essentially gratuitous. 3. 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. 1221. 1218. If through a fortuitous event. 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. 3. Thus. If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors. Art. in proportion to the debt of each. He who made the payment may claim from his co-debtors only the share which corresponds to each. Hence. the provisions of the preceding paragraph shall apply. The difference is whether such defense would result in total or partial exculpation. If there was a fault on the part of any one of them. A solidary debtor may. It benefits all the debtors. reimburse his share to the debtor paying the obligation. An example of a total personal defense is if the consent of the debtors were all vitiated. 1217. 3 Kinds of Defenses 1. no interest for the intervening period may be demanded.there is liability (also for damages and interest). in actions fled by the creditor. the obligation shall be extinguished. Art. 2.here.Art. 2. Loss because of a fortuitous event after default. does not entitle him to reimbursement from his co-debtors. the obligation of the others to reimburse him arises only from the time payment is made.
The demand of 1 creditor on 1 debtor will not constitute a demand on the others. he can recover from his co-debtors their respective shares. Section 5: Divisible and Indivisible Obligations ACCORDING TO PERFORMANCE Art. is made on him. 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. 3. Mixed solidary. The debtor may pay any of the creditors. 2 of this Title. Those derived from the nature of the obligation (this is a complete defense). judicial or extrajudicial is made on him. Each debtor may be required to pay the entire obligation but after payment. The debtor can still recover from the paid creditor (unjust enrichment). Types of Solidary Obligations: 1. The prescription of 1 of the debts will not affect the other debts. Active Joint. Agreement of the parties. It cannot be validly performed in parts. 1223. and any if the creditors is entitled to demand the entire obligation. Types of Joint Obligations: 1. Active solidary. The parties so agree. Rule: Obligations are indivisible: Indivisible One not capable of partial performance. and each creditor is entitled only to a partial part of the credit. The demand of 1 creditor on 1 debtor will not constitute a demand on the others. Also called joint and several. When nature of the obligation requires the obligation to be solidary. that s. Passive solidary. he must pay only to the one demanding payment (Art. When: 1. he will still be liable except for his own share in the meantime). 2. A credit once paid is shared equally among the creditors unless a different intention appears. he may avail himself thereof only as regards that part of the debt for which the latter are responsible. Gen.there are multiple creditors.e. Mixed joint. tort feasors are solidarily liable) 3.there are multiple creditors. But the payment to the demanding creditor can be reduced by the share of the paid creditor. The debtor may pay any of the creditors. The debtor can still be made to pay by the one who made a demand on him. Law (i. 2. Problematic: the debtor cannot pay the other non-demanding solidary creditors only if one of the solidary creditor makes a judicial demand. Conventional. 3. General: joint obligations are less onerous. Kinds of Defenses: 1. With respect to those which personally belongs to the others. but if any demand. the payment is considered a payment to a third person. 1214). 2. A credit once paid is shared equally among the creditors unless a different intention appears. Exceptions: 1. 1214). judicial or extrajudicial. Divisible One capable of partial performan ce.there are multiple creditors and debtors. 2. 2. Nature of the obligation.there are multiple debtors and creditors. 3. Exceptions: Kinds of indivisibility: 1.there are multiple debtors. joint and individual. but if any demand.there are multiple debtors. but if the defense is non-fulfillment yet of the term. and in solidum. 3. Natural or absolute. 2. he must pay only to the one demanding payment (Art. (This is a complete defense generally. Essential nature: there are as many obligations as there are creditors multiplied by as many debtors. Those personal to the debtor sued.because Luz 32 . The prescription of 1 of the debts will not affect other debts. Passive Joint. The insolvency of 1 of the debtors will not affect the burden of the other debtors. Those personal to the others (partial defense regarding share of others involved). he can recover from his codebtors their respective shares.by common agreement. JOINT: when each of the debtor is liable only for a proportional part of the debt. When the law so provides. If the debtor pays a creditor who did not make a demand.share. Each debtor may be required to pay the entire obligation but after payment. this Is only a partial defense. SOLIDARY: when any of the debtors can be held liable for the entire obligation. BALANE: SINGLE: only 1 debtor and 1 creditor.
For the purposes of the preceding articles. it may be indivisible if such was the intention of the parties concerned. an obligation is indivisible if: . When the object of the obligation is the execution of a certain number of days of work. May exist even if there is only one debtor and only one creditor. 2. if the illegal terms can be separated from the legal ones. 2. Effect of Non-Compliance: 1. But indivisibility of the object necessarily means an indivisible obligation.So provided by law. The fault of one is not the fault of the others. Even if the thing is physically divisible.Intended by the parties.of the nature of the object of undertaking (Art. A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with this undertaking. Intellectual or moral division. 3. 2. even thought the object or service may be physically divisible. Nevertheless. In obligations with a penal clause. divisibility or indivisibility shall be determined by the character of the prestation in each particular case. Art. the accomplishment of work by metrical units. Even if the thing is physically divisible. 1225). Kinds of Division: 1. Solidarity Refers to tie between the parties.one that exists merely in the mind and not in physical reality. 1226. the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance. When the purpose of the obligation is to pay a certain amount in installments. The test of divisibility of an obligation is whether or not it is susceptible of partial performance. Qualitative. However. The obligation is converted into a monetary one for indemnity. Obligations to give definite things. 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. Indivisibility Refers to nature of obligation. 1225. damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of obligation. Those which are not susceptible of partial performance. Quantitative. Art. work. Obligations that are deemed divisible: 1. When the object of obligation is the accomplishment of work by metrical units. 4.depends on quantity. irrespective of quantity. In obligations not to do. Effect of illegality on a Divisible contract: in case of a divisible contract. obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible. Needs at least two debtors or creditors. However. 3. an obligation is indivisible if so provided by law or intended by the parties. 4. Obligations that are deemed indivisible: 1. it shall be divisible. or analogous things which by their nature are susceptible of partial performance. Section 6: Obligations with a Penal Clause ACCORDING TO SANCTION FOR BREACH Art. Divisibility of the object does not mean that the obligation is also divisible. even though the object or service may be physically divisible.depends on quality. the latter may be enforced. Legal. The fault of one is the fault of the others. When the obligation has for its object the execution of a certain number of days of Luz 33 . When the object of the obligation is the accomplishment of work susceptible of partial performance. 3.if so provided for by law. 1224. it may be indivisible if so provided by law. . if there is no stipulation to the contrary. 3.
A penal clause is an accessory undertaking to assume greater liability in case of breach. unless this right has been clearly granted him.2226-2228. The only limitation that the courts will reduce the liquidated damages if the same is scandalously unconscionable. one of which states that the penalty may be reduced if it is iniquitous or unconscionable. the performance thereof should become impossible without his fault. Subsidiary or alternative (Art. Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the penalty at the same time. This occurs when the creditor has been clearly granted such right. while the former or the Luz 34 . Exclusive (Art. Governed by Arts. However. Instances when ADDITIONAL DAMAGES MAY BE RECOVERED: 1. The debtor cannot exempt himself from the performance of the obligation by paying the penalty. this is against public policy and against the express provisions of law. It may be reduced by the courts if unconscionable. 2. When both the principal contract and the penal clause can be enforced. the penalty may be enforced only when it is demandable in accordance with the provisions of the Civil Code. The latter constitutes an obligation although accessory. 3. To provide liquidated damages The creditor can demand liquidated damages without having to prove actual damages. 2. if after the creditor has decided to require the fulfillment of the obligation. the provisions on liquidated damages since a penal clause is the same as liquidated damages. save in the case where this right has been expressly reserved for him. the penalty may be enforced. The reason for the third exception is clear: there can be no renunciation of an action to enforce liability for future fraud because. When the debtor refuses to pay the penalty imposed in the obligation. 2 Characteristics of a Penal Clause: 1. May become demandable in default of the unperformed principal obligation. and sometimes jointly with it. despite the presence of the penalty clause. 1227) General rule: upon breach of the obligation. When there is express stipulation to the effect that damages or interest may still be recovered. either expressly or impliedly.1226) General rule: the penalty clause takes the place of other damages. Art. • Breach of obligation without fraud cannot constitute one of the exceptions. Kinds of Penal Clauses Legal Penal Clause Conventi onal Penal Clause Subsidiar y Joint condition is never demandable. Condition Seco nd Penal Clause The former does not. Functions of a Penal Clause: 1. Stipulates a penalty which is greater than one without a penal clause. When the debtor is guilty of fraud or dolo in the fulfillment of the obligation. 1227. When only the penalty may be asked. the creditor has to choose whether to demand the principal or the penalty. That which has been agreed upon by the parties. Penal Cause: it is a coercive means to obtain from the debtor compliance from the debtor.The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. First One that is imposed by the law. Exception: the principal obligation and the penalty can be demanded when the penal clause is joint or cumulative. It is attached to obligations in order to insure their performance. 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. May any penalty be demandable: No. as we have seen. To strengthen the coercive force of the obligation by the threat of greater responsibility in case of breach. The implied right must be one ascertainable from the nature of the obligation. 2.
when the obligation has been partly complied with by the debtor. the creditor does not have this right to demand fulfillment of the obligation and the penalty at the same time. and prescription. By the loss of the thing due 3. 3. fulfillment of a resolutory condition. Reason: when a penal clause has been agreed upon in a contract. By compensation 6. nor the extent of the same in order to demand the enforcement of the penal clause agreed upon.Exception: both the penalty and actual damages may be recovered in the following: 1. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. By novation Other causes of extinguishment of obligations. The nullity of the penal clause does not carry with it that of the principal obligations.) Express stipulation 2. 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. it is a lawful means for repairing losses and damages. the penal clause will have no more use for existence and is therefore also considered null and void. Art. Unconscionable or Iniquitouswhen the penalty is iniquitous or unconscionable. Classification of Causes of Extinguishment of Obligations: CASTAN Voluntary Involuntary Performance By failure to bring an action. The word expressly means that any implied reservation is not allowed. and the void penal clause will just be disregarded.) Refusal by the debtor to pay the penalty 3. By the confusion or merger of the rights of creditor and debtor 5. CHAPTER 4: EXTINGUISHMENT OF OBLIGATION General Provisions EXTINGUISHMENT OF OBLIGATION Art. Generally. fulfillment of the obligation will be considered an alternative one. No Necessity in Proving Actual Damages: the penalty may. payment or performance consignation Substitution of Resolutory condition or performance condition subsequent. Compensation Novation Luz 35 . 1230. Art.When the obligation has been irregularly complied with by the debtor. The exception arises when such a right has been clearly granted to him. 1229. Obligations are extinguished: 1. more as a punishment for the infraction thereof than a mere security. By the condonation or remission of the debt 4. even if there has been no performance at all. in the proper case. such as annulment. 2. By payment or performance 2. the injured party is not obliged to prove losses and damages suffered. Upon the other hand. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. Creditor cannot demand both fulfillment and the penalty at the same time: as a general rule.) The debtor is guilty of fraud (malice) in the performance of the obligation. Even if there has been no performance. are governed elsewhere in this Code. The reason is that if he can just pay. Effect of Nullity of the Penalty Clause: if the principal obligation is null and void. rescission. He can only do so if the right has been expressly reserved. Irregular Performance. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. The principal obligation can stand alone. When Penalty may be reduced by the Court: 1. Generally. it does not mean that its nullity will also make the principal obligation null and void. be demanded without the necessity of proving actual damages. Partial performance. The nullity of the principal obligation carries with it that of the penal clause. and upon evidence of the violation of the conditions stipulated. Art. 1228. 1231. just because the penal clause is not valid.
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. Confusion or merger of the rights of creditor and debtor 5.Natural waiver . e) An alleged creditor has the burden of showing that a valid debt exists. PAYMENT OR PERFORMANCE Art. there is no payment. 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. Payment: that mode of extinguishing obligations which consists of: 1. Indebtedness has been defined as an unconditional and legally enforceable obligation for the payment of money. in any other manner. If no such obligation exists.death of a party in case the other obligation is a personal one causes . of an obligation. Art.Compromise Simultaneous with creation of obligations . Once he Classification according to the Civil Code: Ordinar 1. The amount paid must be full.Remission . as the case may be. the performance in any other manner of an obligation Pre-existing Obligation: a person pays a preexisting obligation. by the performance of said personal undertaking.prescription 1231 but govere ned under other Chapter s Still . Payment or performance ily by 2.Resolutory condition or condition subsequent Section 1: Payment or Performance By reason of the object.fortuitous event Luz 36 . the creditor has to accept the same. the payment made thereunder is also null and void. unless of course otherwise stipulated in the contract.Unilateral waiver .Annulment causes . d) If the debt is not doing of something.Rescission mentio . by refraining from doing the action. Novation Other . Acceptance by Creditor: for payment to properly exist. 1233.compromises . 1232. Payment means not only the delivery of money but also the performance. Payment.change of civil status . for valid reasons. expressly or implicitly.resolutory term here the obligation ceases upon the arrival of the term .impossibility of fulfillment . .Mutual dissent (disenso) .mutual dissent . by delivery of the thing or things.Dacion en pago (datio in solutum) Agreement to release Subsequent obligation . c) If the debt is the doing of a personal undertaking.Resolutory term or extinctive period . Loss of the thing due 3. Compensation 6. Condonation or remission of the debt or waiver 4. delivery of money 2. may properly be rejected. strictly speaking. b) If the debt is the delivery of a thing or things. Effect of Payment made under a Void Judgment: if the judgment upon which the aggrieved party made payment is null and void.Fulfillment of resolutory ned in condition Art. by delivery of the money.
When the debt had been completely remitted c. except that if he had paid without the knowledge or against the will of the debtor. either against the debtor or against the third persons. less damages suffered by the obligee. or mortgage. d. be they guarantors or possessors of mortgages. A creditor may conditionally accept performance by the debtor after the time of maturity. subject to stipulation in a conventional subrogation. guaranty or penalty. If the obligation has been substantially performed in good faith. the obligee is benefited. If there is a stipulation allowing this. 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. it follows that the right to rescind cannot be used simply because there have been slight breaches of the obligation. Art. Subrogation Reimbursement Luz 37 . Without the debtor’s knowledge or against his will. c) Inasmuch as substantial performance in good faith may already be equivalent to “fulfillment” or “payment”. If said third person has an interest in the fulfillment of obligation (co-debtor.does this. 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. Hence. Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining. the payor is entitled to reimbursement and subrogation to such rights as guaranty. When the obligee accepts the performance. there is what is called “qualified acceptance of incomplete or irregular payment. Other instances when recovery can be had from the creditor and not from the innocent debtor: a. guarantor. 1237. Art. This last condition affords a just compensation for the relative breach committed by the obligor. With the knowledge and consent of the debtor. the payor is not entitled to subrogation. the obligation is deemed fully complied with. Payment by a 3rd Person: 1. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter. knowing its incompleteness or irregularity. and without expressing any protest or objection. Subrogation: the act of putting somebody into the shoes of the creditor. hence. Art. So the obligor should be allowed to recover as if there had been a strict and complete fulfillment. 1235. enabling the former to exercise all the rights and actions that could have been exercised by the latter. and therefore the Court may even grant. Art. Whoever pays for another may demand from the debtor what he has paid. the debtor has the burden of proving that he has paid the same. When the debt has already been paid. Here. 2. the obligor may recover as though there had been a strict and complete fulfillment. His actuations may show his dissatisfaction. Qualified Acceptance: there is a possibility that a protest or objection can be made. a period to a person in default. Right of Creditor to Refuse Payment by 3rd Person: 1. penalty clause. he is allowed only beneficial reimbursement. 2. cannot compel the creditor to subrogate him in his rights. 1236. Here. even a joint debtor).” A creditor who gives a receipt for partial payment does not necessarily acquiesce to such incomplete payment. Substantial Performance in Good faith: a) In case of substantial performance. In this way. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation. at its discretion. When legal compensation had already taken place. Such right to rescind is not absolute. 1234. less damages suffered by the obligee. he can recover only insofar as the payment has been beneficial to the debtor.1235. within which the obligation can be fulfilled. such as those arising from a mortgage. the surety or guarantor cannot claim that he had been released from the obligation. When the debt had prescribed b. unless there is a stipulation to the contrary.
Payment made to a third person shall also be valid insofar as it has been redounded to the benefit of the creditor. payment made by one who does not have the free disposal of the thing due and capacity to alienate it shall not be valid. Such benefit to the creditor need not be proved in the following cases: 1. Payment by payor must be made in good faith but payor may be in bad or good faith. But the payment is in any case valid as to the creditor who has accepted it. to what has been paid. the debtor has been led to believe that the third person had authority to receive the payment. the payment is generally not valid (w/o prejudice to Art. 2. 1247 under the Title on “Natural Obligations”. 2. To the person in whose favor the obligation has been constituted (the creditor). Payment made after Judicial Order to retain: the judicial order may have been prompted by an order of attachment. The debt is extinguished in one sense. 3. or his successor in interest. If the creditor ratifies the payment to the third person. The payee must be in possession of the credit itself (not merely the document evidencing the credit). of age has entered into a contract without the consent of parents or guardian. 3. Art. appears on the scene. Payment is not valid – if accepted. Exceptions: when a minor between 18 and 21 yrs.1241. without prejudice to the provisions of Art. Art. The new creditor has different rights. This refers to the creditors at the Luz 38 . Art. Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing delivered. 1240. Art. To any person authorized to receive it. not the original creditor at the time the obligation was constituted. 1243. There can be a recovery No such recourse. To whom payment has been made: 1. Reason for consent: no one should be compelled to accept the generosity of another. or any person authorized to receive it. It consists in the citation of some stranger to the litigation. the third person acquires the creditor’s rights. Only a personal action to recover the amount. time of the payment.Recourse can be had to the mortgage or guaranty or pledge. If the recipient is not authorized. Payment shall be made to the person in whose favor the obligation has been constituted. If after the payment. 1239. The remedy of consignation would not be proper. Requisites: 1. To the successor-in-heirs. 3. 2. who is the Art. 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. which requires the debtor’s consent. there shall be no right to recover the same from the obligee who has spent or consumed it in good faith. voluntarily pays a sum of money or delivers a fungible thing in fulfillment of obligation. If by the creditors conduct. Payment by an incapacitated person General rule: if person paying has no capacity to give: 1. Art. 1241). so it is as if there has indeed been an extinguishment of obligation. Something more than a personal action of recovery. 1238. 1242. but a new creditor. Garnishment: the proceeding by which a debtor’s creditor is subjected to the payment of his own debt to another. Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall not be valid. 2. 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). with exactly the same rights as the old one. In obligations to give. Payment made in good faith to any person in possession of the credit shall release the debtor. Creditor cannot even be compelled to accept it.
Art. With regard to judicial costs. whereby property is alienated to the creditor in satisfaction of a debt in money. such debtor-stranger becomes a forced intervenor. In case of waiver by the creditor (expressly or impliedly). Art. 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. from the viewpoint of the creditor. The debtor cannot deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into consideration. If the dation in payment will not prejudice the other creditors. It is called preliminary injunction if the prohibition is during the pendency of certain proceedings. The creditor cannot demand a thing of superior quality (but if he so desires. 1291) 3. who is the creditor in the main litigation.debtor of one of the parties to the action. 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. the debtor in dation in payment is the extinguishment of his debt. having acquired jurisdiction over his person by means of the citation required of him to pay his debt. not to his former creditor. In case there is another agreement resulting in either: 1. 2. 2. 1247. Dation: datio in solutum or adjudicacion en pago. 1244. 1244 does not apply: 1. or the obtaining of the object (from the viewpoint of the buyer) There is greater freedom in the determination of the price. Art. the extrajudicial expenses required by the payment shall be for the account of the debtor. That mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor. and the court. Unless it is otherwise stipulated. an act or forbearance cannot be substituted by another act or forbearance against the obligees will. By this means. but if he so desires. Art. Dation in payment (Art. for here his property is supposed to be administered by the assignee. The giving of the object in lieu of the credit may extinguish completely or only partially the credit (depending on the agreement). the Rules of Court shall govern. In obligations to do or not to do. The debtor of a thing cannot compel the creditor to receive a different one. If the creditor consents. whose quality and circumstances have not been stated. or more valuable than that which is due. 2. Conditions under which a Dation in Payment would be valid: 1. The giving of the price may generally end the obligation of the buyer. 1246. Novation (Art. although the latter may be of the same vale as. Waiver: If the contract does not specify quality: 1. If the debtor is not judicially declared insolvent. 1245. In case of facultative obligations. he may demand and accept one of inferior quality). Art. shall be governed by the law in sales. When the obligation consists in the delivery of an indeterminate or generic thing. from the viewpoint of viewpoint of the seller). 1244). Instances where Art. for this might lead the debtor to connive with one creditor in defrauding the other creditors. Injunction: a judicial process by virtue of which a person is generally ordered to refrain from doing something. it is the acquisition of the object offered in credit. but to the new creditor. he may deliver one of superior (provided it is not of a different kind. 3. the creditor cannot demand a thing of superior quality. property for the satisfaction of monetary debt. Luz 39 . Neither can the debtor deliver a thing of inferior quality. for a sale presupposes the consent of both parties. 1245) 2. Dation in payment. There is less freedom in determining the price.
3. When a joint debtor pays his share or the creditor demands the same. Exceptions: 1. However. Judicial Costs: generally. it follows that a balance is left. Exception is when there is a stipulation to the contrary. Since the value of money here tends to increase. There being no express stipulation and if the undertaking is to deliver a determinate thing. Where Payment must be made: 1. then in the currency which is legal tender in the Philippines. 4. When a debt is in part liquidated and in part unliquidated. the creditor cannot be compelled partially to receive the prestations in which the obligation consists. These provisions are without prejudice to venue under the Rules of Court. 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. When the different prestations are subject to different conditions or different terms.Debtor pays generally for extrajudicial reasons: it is the debtor who benefits primarily since his obligation is thus extinguished. In the meantime. The delivery of promissory notes payable to order. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. Inflation: a sharp sudden increase of money or credit or both without a corresponding increase in business transaction. In case an extraordinary inflation or deflation of the currency stipulated should supervene. the value of the currency at the time of the establishment of the obligation shall be the basis of the payment. 1251. when the debt is in part liquidated and in part unliquidated. Neither may the debtor be required to make partial payments. 2. Legal tender: that which a debtor may compel a creditor to accept in payment of the debt (whether public or private). the additional expenses shall be borne by him. when one debt is larger than the other. the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. and if it is not possible to deliver such currency. The payment of debt in money shall be made in the currency stipulated. unless there is an agreement to the contrary. Payment shall be made in the place designated in the obligation. If the debtor charges his domicile in bad faith or after he has incurred in delay. or when through the fault of the creditor they have been impaired. 1233. 1248. 5. 1250. as the case may be. 1249. In case of compensation. the payment shall be made wherever the thing might be at the moment the obligation was constituted. Art. 2. Hence. in which case performance of the liquidated part may be insisted upon either by the debtor or the creditor. In any other case the place of payment shall be the domicile of the debtor. 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. costs shall be awarded to the winning party but this is subject to the discretion of the court. When there is stipulation to this effect. partial performance is not allowed generally under this Article. Art. 6. Performance should generally be complete: Under Art. Art. This is a complete payment of his share. • Applied only during the Japanese occupation. but it is still a partial fulfillment of the whole obligation. the action derived from the original obligation shall be held in abeyance. Art. When work is to be done by parts. If there is none Luz 40 . 7. Unless there is an express stipulation to that effect. If there is a stipulation – in the place designated. the natural result is an increase in the price of goods or services.
A. Negotiable papers and other commercial documents can be refused by the creditor unless there is a stipulation to the contrary. 1245)when property is alienated to the creditor in satisfaction of a debt in money. without protest or objection. Neither may the debtor be required to make partial payments. then in the domicile of the debtor). 1st ¶). o Exceptions: 1.1. knowing its incompleteness or irregularity. 1249. 1254. • When through the fault of the creditor.the obligor must perform the prestation in one act and not in installments (Art. and if it is not possible to deliver such currency. Novation 2.if the debts due are of the same nature and burden. the parties except payment or performance. R. the creditor cannot demand a thing of superior quality. they have been impaired. The creditor can validly refuse if the performance is not in one act. 2.means that the entire prestation must be performed – completeness (Art. o Payment: The payment of debts in money shall be made in the currency stipulated. the obligation is deemed fully complied with. it shall be made in pesos. No. the creditor cannot be compelled partially to receive the prestations in which the obligations consists. Express stipulation and if the debts are liquidated and unliquidated in parts(Art. delivery is in domicile of debtor. However. BALANE: Payment refers to obligations to give while performance refers to obligations to do. o If the prestation: Specific. 1248) – Unless there is an express stipulation to that effect. 1233) o Exceptions: Substantial compliance in good faith (Art. when the debt is in part liquidated and unliquidated. IDENTITY. the debtor cannot give a thing of inferior quality (Art. it has only a provisional effect. 2nd ¶) . If the negotiable papers and other commercial documents are accepted by the creditor. which allows payment in a different currency but in the absence of an agreement. No. o Exceptions: Dacion en pago (Art.if the obligation has been substantially performed in good faith. In application of payments if the debts are equally onerous (Art. 3. 1246). less damages suffered by the obligee. When obligations are entered into.means the very prestation must be performed. Waiver (Art. If it is an obligation to deliver a determinate specific thing. If the obligation is any other thing. 529 has been repealed by R. REQUISITES OF PAYMENT: As to Prestation: 1. 1235).when the obligee accepts the performance. 2nd ¶): • When they have been honored and cashed. then in the place where the thing might be at the time the obligation was constituted (if temporary.the debtor must give or deliver the specific thing which was agreed upon (Art. However. the obligor may recover as though there had been a strict and complete fulfillment. There is payment only in the ff (Art. 1234). 8183. the payment shall be applied to all of them proportionately. A certified check or a manager’s check may not be considered as legal tender and thus. INTEGRITY. 1249. All other modes of extinguishing payment are abnormal modes. 1244). the creditor may demand and the debtor Luz 41 . the creditor can refuse to accept. INDIVISIBILITY. 1248). then in the currency which is legal tender in the Philippines (Art. Generic.A.
o Exception: No subrogation if intended to be a donation (Article 1238). CREDITOR Who may be the Payee 1. 1720). Any third person subject to the following conditions: a. 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. Anyone in possession of the credit (Article 1242) * In all these 5 instances. 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. In prestations which necessarily entail partial performance (Art. 2nd ¶). The creditor’s successor or transferee (Article 1240) 3. the price or compensation for each part having been fixed (Art. In compensation when there is a balance left (Art. 7. In solidary obligations when the debtors are bound under different terms and conditions (Article 1211). If work is to be deliver partially. The creditor himself (Articles 1240. If it falls under Article 1241 ¶2 (1). 1225. was without the Debtor’s 2. but also to exercise all the rights which the creditor could have exercised – subrogation (Articles 1236. 6. DEBTOR: Who may be the Payor 1. the General Rule is that demand is still necessary. 4. If there is payment despite garnishment. pay if the creditor 2. The creditor’s agent (Article 1240) 4. 5. 1. or analogous things which by their nature are susceptible of partial performance. In joint divisible obligations (Art. Payment Consent o The 3rd person may demand repayment to the extent that the debtor has benefited (Article 1236. the accomplishment of work by metrical units. it is required that the debt should not be garnished (Article 1242). 2nd ¶). Payment was with the Debtor’s Consent o General Rule: The payor steps into the shoes of the creditor and becomes Luz 42 . 3. • Even if the payment is due.may effect the payment of the former without waiting for the liquidation of the latter. 1237). (2) and (3). When the obligation or the law expressly so declares 2. Demand would be useless Where Payment Should be Made o Primary Rule: Agreement of the Parties Effect of payment by a third person. 1626) 2. In case of impossibility or extreme difficult of a single performance As to the Parties: entitled not only to recover what he has paid.when the obligation has for its object the execution of a certain no. it shall be divisible. 5.if from the law. the credit or debt. Provided it redounded to the creditor’s benefit and only to the extent of such benefit (Article 1241. 2. • Article 1169 provides the instances when demand is not necessary PAYOR. In case of several guarantors who demand the right of division (Article 2065) 8. OBLIGEE. of days of work. AS TO TIME AND PLACE OF PERFORMANCE When Payment should be made • Payment should be made when it is due. the benefit is total. 1290). 1208). There is no extinguishment of the obligation but a change in the active subject.g. PAYEE. OBLIGOR. 2nd par) b. With the consent of the creditor o 1. then there is no payment. guarantor) Anyone can consents.
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. dation en paiement and datio in solutum. There are 2 ways of looking at dacion en pago. It is not novation since there is no new obligation. 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. the prestation is changed. CA). Tertiary Rule: Debtor’s domicile (not residence). He believes that it is neither a sale nor a novation but a special form of payment. 4 Special Forms of Payment a. It is a species/variation of payment implying an onerous transaction similar to but not equal to a sale. The traditional way is to view dacion en pago as a sale. Dacion en pago is governed by the law on sales (Article 1245). Dacion en pago will take place only if the parties consent.Dacion en pago is the act of extinguishing the obligation by the substitution of payment. However.o o Secondary Rule: Place where the thing was at the time the obligation was constituted if the obligation is to deliver a determinate thing. Castan has another view of dacion en pago. By agreement of the parties. Luz 43 . the modern view is to look at dacion en pago as a novation. Dacion en pago (Article 1245). Dacion en pago is a special form of payment since it does not comply with the requisite of identity. Other terms for dacion en pago include dation in payment.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.