Set aR Oo ee COMMITTEE HEADS SBLIGATIONS AND CONTRACTS Ss KU Boguila neeeus ——_—_———_ AGENCY & PARTNERSHIP ACADEMICS COMMITTEE Gene CIVIL LAW TEAM Beate Kristine Bosgcara Dyer Ratda PUTER Behe Lee eh G&S aa e vonTs a. ies TORTS & DAMAGES Densons & FANMILY RELATIONS iota Tebies Anisah moi eee free "Tretres Darwin Ange Rien g's Bente Fe WS Zon 9 pie : BER ob EER tee an giana Gervacio E Pacrici: Hernandse EYYSthe Beg Oleeg és Hay k tuctane UP LAW sa.0 Professional Enhancement Program 2010 == E2_ “h. Od “ein BAR REVIEWER ComnissionCIVIL Law Reviewer TABLE of CONTENTS OBLIGATIONS Table of Contents Chapter |. General Provisions. | Obligations ..... I Sources af Obligations. ‘and Effect of Obligations93 {s of Presiations ...... IL Breach of Obligation... Ill Fortuitous Event (Force Majeure) 96 Iv. Remedies to Creditors... V. Usurigus Transactions and Rules on Interest. OBLIGATIONS Chapter Ill Different Kinds of Obligations .98 Bure and Canditianal Obligations .....98 I Reciprocal Obligation: 00 Ill Obligations with a Period . 100 IV. Alternative and Facultative Obligations 101 V.__ dint and Solidary Obligations .....103 Effects of Prejudicial and Beneficial Acts (art.1212).. vo 105 VI. Divisible and indivisible Obligations . 106 Vil, Obligations with a Penal Clause. 106 Chapter IV. Extinguishment of Obligations 107 L- Payment ar Performance. 107 IL Loss of Impossibility. 409 Ill, Candanation or Ramission of the Debt 109 NM. Canfusion or Merger of Rights Ve Compensation cnn VL Novation concn 10 110 ni Charts: Payment & Performance... 14 UNIVERSITY OF THE PI CoLLeGe OF LAW SOLID BAR OPERATIONS COMMISSIONScIMIL Law Reviewe! Chapter GENERAL PROVISIONS Pete ae Coa ey eerie eee Lead Writ ee repeat De ea een) Kae Guerrera Brac ele aor) Dieta a rage ome Ce RY Wana oo Retort a ee ated eer mae La ed eee) OBLIGATIONS & CONTRACTS INcS Chapter I. General Provisions Ss i. SOURCES OF OBLIGATIONS AL LAW B. CONTRACTS: . QUASL-CONTRACTS D. DELICTS. E. QUASLDELICTS_ ligations. Elements of an Obligation (De Leon, 2003)— 1. ACTIVE SUBJECT (ObligaeiCraditor): the person who has the right or power to demand the prestation. 2. PASSIVE SUBJECT (Obligor/Debtar): the person bound to the perform the prestation. 3. PRESTATION (Object): the — conduct fequired to be observed by the dobtarlobligar (to give, to da or not to-do}, 4. VINCULUM JURIS (Juridical or Legal Tie Efficient Cause): that which binds or connects the parties tothe obligation, ‘Sources of Obligations AL Law ‘Ar. 1188, Clvil Code, Obligations derived fom law sumed. Only those expressly determined in of in spool lame are damandable, ard ES of the law which them; and as 10 what has not been foreseen, by the provisions of this Book B._ Contracts An. 1159. Has the Force of Law Between Parties. Obligations arising from contracts have the force of law botwaen the contracting partios and should be complied with in gaod faith ©._Quasi-Contracts ‘Art. 2142, Clvil Code, Certain lawil, voluntary and Unilateral ‘acts glve rise to the uridcal relation of to the and tat no-one shall be unjustly sxpanga of anather. Lawiul rom erimes ‘Voluntary from quasrd based on fault and Unilater paged on agraer OBLIGATIONS OLM2010 BAR OPERATIONS COMMISSIONS COLLEGE OF LAWCIVIL LAW REVIEWER Kinds of QuasisContracts: Negotiorum Gestio: officious er voluntary management of the property or affairs of another without the knowledge er cansent of the latter. » Solutio Indebiti: undue payment. The juridical relation arises when: © a thing is received without any right; and © the thing delivered by mistake, ® Others: See Arts. 2164-2175 (De Leon, 2003) D. Delicts (Acts or omissions punished by law: crimes) Extent of Civil Liability Governed by the Revised Penal Code and the Civil Code, inetudas: 1. Restitution; 2 Reparation of damages caused: and 3. Indemnity for consequential damages (Art 104, Revised Penal Cade), (Folenting, 1987) 1. Independant: Criminal and civil action arising from the cama offense may be instituied separately 2 Suspended: However, after criminal action has been commenced prosecutian for civil action is suspended in whatever stage it may be found, until final judgment in the criminal proceeding is renderad: 3. Impliedly Instituted: Civil action is impliedly instituted vith the enminal aetien, when: offanded party expressly waives the civil faction or resarvas the right to institute a ‘separate civil action: or © the law providas for an independant civil action Barreda v" Garcia. (184z)- The same negligent’ act” may give nse to an acton based on debct or quasi- ebct and the injured pary fs free ta choose which remedy to enforce Mendoza vs. Arrieta, (1978): If the civil action is ‘based on qUEEI-delct, hare Is no need to reserve the Chapter L GENERAL PROVISIONS ‘lon (res judicata) > if judgment of aequital contained a declaration nat no nagiigence can ba atriouied to me accused and thal the fect trom which civ action might arise oa ot exist E. Quasi-Delicts (Voluntary acts or omissions ‘with fault or nagigance causing damage to another; not a crime nor a contract) ‘Quasi-Delict Grimes Private, Ince Cominal intent & nce | Criminal intent ie necessary necessary for erminal tiapinty against | Public, agains the Slate Present In any act or| An act can only comission winere fault of | punishable when there i5 egigencs intorvanas | a law penalizing Gives rise to lability for | There are crimes from damages 10 the Injured | whicn na cull babaty party atises Reparation, Fina or imprsonmant or compansatian or | bath, to public treasury Indemnification of the Injury suffered by tha Injured party Prepandarancs of | Proof af guilt beyand evence reasonable doubt Can be compromised | Gan never be ‘compromised Wrongful act or omission by fault or negligence 2. Damage or injury proven by the person claiming recovery rect causal connection betwaen the fault ornegligence and the damage or injury Liability for Guas> | Liability for Crimes Delict (art.2180, NGC) | __ (Art. 103, RPC) Primary, ¢an be directly | Subsiaiary. employes sued by the injured | must first be convicted party ‘and sentenced ta pay fel indemnity ‘ight fi the criminal Effect of Acquittal on Civil Actions Barred Wo Effect if based on the very yan independent civil same facts on which | action is alowed by lav. the criminal action | > acquital is due to lack which ended in| ot proof’ beyond ‘soquital was based reasonable doubt rif the facts alleged in the ovilease nae been found to be none existent in the criminal ‘Al employers, whathar | Employer i= only lable engaged in some | when he ls engaged in enterprise of not are | some kind of businass liable for act of | ar industry employees, even household helpers ‘Avoid civ lability by | Subsidiary ebay ie provng exercise of | absolute and cannot te igonce of a good | avowed by any proot of father of a famil digence UNIVERSITY OF THE PHI INcS COLLEGE OF LAW oS OBLIGATIONS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter I. Nature and Effect of Obligations Chapter OBLIGATION TO GIVE BREACH OF OBLIGATIONS FORTUITOUS EVENTS REMEDIES USURIOUS TRANSACTIONS, L Kinds of Prestations KINDS OF PRESTATION. 1. TO GIVE: real obligation; (1) @ specific or determinate thing, or (2) a ganeric or indeterminate thing, 2 TO DO: positive personal obligation; includes all kinds of wark or services. 3. NOT TO DO: negative personal obligation: to abstain from daing an act: includes the obligation not to give. Accessories: those joined to or included with the principal for the latter's completion, batter use, perfection or enjoyment Accessions: additians to or improveriant upon a thing, either naturally or artificially Specitic Thing | Generle Thing | Limited Generic Thing Particularly | Object is [When the designatad or | designated only | generic objects physically by its class! | are confined to segregated — | genus! species. |a —partcular from al othar of | Debtor can give | class the seme class; | anything of the Idantiaa by | same cass as Individuaity. | tong as it is of the same kina, Gannet be | Can be substituted substituied by ‘any of the same class and same sina Personal Right Real Right Vested before delivery | Vested after delivery ‘A night enforceable only | A ngnt — enfarcsabie ‘against the debtor ‘against the wort Fugnt of the credior to demand trom the debtor, Right pecaining wo a person ver a specie the fufflment of | thing, without passive prastabon to give. to de | subject Individually fr not to do atarmined against ‘whom such right may be personally enforced Duties of the Debtor hts of the creditor circumstances Creditor cannot demand a thing of superior quality neither can the debtor deliver a thing of inferior quality To be liable for damages in case of breach Te Give |> To preserve or take care of the thing| > To compel specific performance Specific | due » To recover damages in casa of braach of Thing | > To deliver the thing itself the obligation, exclusive or in addition to (Asked | > To deliver the fruits of the thing specific performance in 83,| To deliver the accessions and| » Entitlement to fruits and interests from the B4, 85| accessories time the abligation to deliver arises. and | > To pay for damagas in case of breach 6) To Give |> To deliver a thing of the quality intended | > To ask for performance of the obligation Generic | by the partis taking into consideration | > To ask that the obligation ba complied with Thing the purpose of tha obligation and other | by a third person at the expense af the debtor ® To recover damages in case of breach of obligation Te Bo Ta do ft Ta shoulder the cost of having someone else doit To undo What has been poorly dane To pay for damagas in case of breach Ta compal performance * To recover damages where personal qualifications of the debtor are involved UNIVERSITY OF THE PHI COLLEGE OF LAW INcS oS NATURE and EFFECT of OBLIGATIONS: OBLIGATIONS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter Nat To | > Nol fo do what should nat be done Da % To shoulder the cost of undoing what should not have bean done To pay for damages incase of breach To ask fo undo what should nol be dane » To recover damages, where it would be physically or legally impossible to undo what has been undone, because of ° ° ‘the very nature of the aet itself; rights acquired by third persons who acted in good faith; ‘whan the effects of the acts prahibitad are definite in character and will not the thing prohibited be Il. Breach of Obligation ‘A. Voluntary — fraud, negligence, delay or contravention of tenor of the obligation B. Involuntary — fortuitous event ‘TYPES OF BREACH ‘Substantial Breach Sight or Gasual Breach Total breach Partial breach Amounts t Non | Obligation Is parially Performance: performed, Basis for rosclssion | Gives risa to labilty for under AL 1191 and | damages only payment of damages 1. FRAUD (DOLO): daliberate or intentional evasion of the normal fulfilment of an ‘obligation (De Leon, 2003). > Future Fraud: Any waiver of action for future fraud is void (Art. 1171), Past Fraud: can be subject of a valid waiver by the aggrieved party (De Lean, 2003). > Woodhouse vs. Halll, (1953): In order that fraud may vitiata consent, it must be the doo causante and not merely the dolo jincidente, inducement to the making of the contract The false representation was used by plaintiff to get from defendant a bigger share of net profits. This is just incidental to the mattar in agreement, Because despite plaintif’s deeatt, respondent would have stil entered into the contract. 2 NEGLIGENCE or FAULT (CULPA): ‘omission of that diligence which is required by the nature of the obligation and corraspands with the circumstances of the person, of the time and of the place (Art. 1173). UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW Reduces ar mitgates the recoverable damages, UNLESS, the negligent act or omission of the cradilor is the proximate cause of the event which led to the damage or injury complained of. In this case, he cannat recaver. Diligence Reauited (Oe Leen, 2003) By stipulation: that agreed upon by the partias, b. By law: in the absence of stipulation, that requirad by lew in the particular case. igence af a good father of a ‘family: if both the contract and law are silent, Future Negligence: may be waived except in cases where the nature of the obligation or tha public requires anather standard of care (i.e, extraordinary diligence as for a common carrier) Fraud We There Imention gamage ‘Ly rsigated ' deliberate | There is no deiberate to cause | imention to cause damage earmet ba | Liabiliymay ba mitgatad Waiver for future Fraud | Waver for fiture Isvoa egigenco may be allowed in certain cases: > grass - can NEVER bbe excused in advance: amounts 12 ‘wanton attitude: rulas on fraud shall apply > simple - may De. fxcusad in eortain ‘Mandarin Vile Dis the use the ordinary ¥. CA (i906) Test of Negligence: defendant in doing the alleged negigent act easonable cars and caution which ar ‘and prudent persan would hava used in thé NATURE and EFFECT of OBLIGATIONS: OBLIGATIONS SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Culpa Criminal: wrong or nagligence in the commission of a crime 3. DELAY or DEFAULT (MOR. parfarm an obligation on tima which fallure to Bul Chapter i. NATURE and EFFECT of OBLIGATIONS. Mora Solvendl [ Mora Aecipiendl Beauisites Requisites: ad Fath ‘eed Fath Ae Oblgason must be | 1. Debtor fers of Dabior Is table Yor all | Debtor is lable only Tor Tuidated. due end | performance damages which can be | the natural ond demandabie 2. Offer "must be in feasonably atrbuted te | probable 2. Nonpertormance by | comolance withthe the norpertomanes of | consequences of the the depter an pared | preston the obligation. Any waiver | breach of obligation and agreed upon 3. Creditor refuses the fr renuncation mage in | fortuous events a. Demand. judilel or | performance antcpaton of such srejudica, by te | Yanout ust cause ‘Rability is. null and void oon + w Effects Eftects 3 Culpa Coniraciual —]Culpa Rquitana Safed] | 1 The. deter Ie Nabe |The responsmaty of Pe for camages the Seton aE Weaigence marty | Wegipence substantive | | T= debi Is tale | reqiced 0 Fail) g perormance "of ‘on | to fouous events nelgence 3 performan 3. For aoiwminate |2. Tne debtor 6 There Is alwaye_a pra | Thera may or may norbe objects, the “debior | exempted trom risk existing onlracual | a pressing contachsal fal bear the nik af | of lass of th sing relation, ‘obligation loss, which is bone by The source of obligation | The source of obligaton 3 OO nes of” dotenaant “to pay | isthe defendant's Tne apenas ‘damagas is the breach ar | nagiganca fsaif a fomfuliiment of he semtor fer | he sora fing ater tne mor Proof of the eietance of | The negligence of The tung afar the mara the contact and of is | defendant must be shal be charg outhlrtprms facet | 4 Ife colton Dears interest the ‘aman reczvery Proot of diigenca Whe | Proof of digence im the Sebor nol Sleclon end supervson | seledion and superison nave pa ofthe employees is NOT | of Ine employee ls a 5 Meme ately avalahie asdetence | defence ins The debtor may roliave himself of abigaton by consigning the thing constitutes braach of the obligation (De Leon, 2003). > Mora Solvendi: delay on the part of the debar to fulfil his obligation either to give (Ex ra) or to do (Ex persona), (Asked in ‘83, 84, 85, and ‘26) No Mora Solvendi in: = Nagative Obligations because delay ig impossible (Be Laon, 2003); Unilateral Obligations — | Reciprocal Obligations “No demand ne delay” The mece expiration of me pened fixed by the partes 1s not enough in frder that the dabtor may nour in stay ‘General Rule: Delay occurs from the moment one party fuflls hig undertaking, white the ather does nat comply or Is not reedy to-comply in a proper manner with ‘what is incumbent upan him. No delay # nalther party "Natural Obligations (Tolentino, performs his undertaking 1987). (art. 1189, par. 2) jong Exception: Mota Aecipiendi: delay on the part of the obligation ariaw | different dates for the the creditor to accept the parfarmance of Powe Poe el the crecias pt the 2. timais of the respective obligations are obligation essence fixed by the parties > Compensatio Morae: delay of the 3. demand ussiess partias in reciprocal obligations; effect 4. debtor a if there is na default, acknowledges that UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW he isin default SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER 4. CONTRAVENTION OF THE TENOR: violation of the terms and conditions stipulated in the obligation, which must not be dus to a fortuitous event or force majeure {De Lean, 2003). In any manner contravenes the tenor" moans any illicit act, which impairs the strict and faithful fulfilment of the obligation, or every kind of defective performance (Tolentino, 1987). ) Il. Fortuitous Event (Force Majer Any event'which could not be foreseen, ar which though foreseen are inevitable (Ast. 1174) A happening independent of the will of the debtor and which makes the narmal fulfilment of the obligation impossible (De Leon, 200%), A. Act of Gad: an accident, due cirectly or ‘exclusively to natural causes without human intervention, which by no amount of foresight, pains or care, reasonably to have been expected, cald have been prevented. B. Act of Man: force majeure is 2 superior or irresistible force, which is essentially an act of man; Includes unavoidable accidants, ‘even if thera has been an intervention of human element, provided that no fault or nagligence can be imputad to the debtor (Asked in 81, 87 and 83) Liability in case of Fortuitous E\ Na person shall be responsible for fortuitous ‘events, UNLESS: 1. expressly specified by law (Arts. 55212), 1942, 2147, 2148, 2153) 2. Sablity spocifiod by stipulation 3. the nature of the obligations requires assumption of risk (Art. 1174) 4. when debtor is guilly of concument or contributory negligence 5. dabtor has promised to deliver the same thing to two or more persons who do not have the sama interests (Art. 1165 par. 3) 6 the thing is lost dua to the obligor's fraud, negligence, delay or contravention of the tenor of the obligation (Art. 1170) 7. the obligation to deliver a specific thing arises from a crime (Art. 1268) the object is a generic thing, ie. the genus never perishes, 1. The avant must ba independent of the dabtor's will (fraud or negligence) Chapter i. NATURE and EFFECT of OBLIGATIONS. 2. The event must be unforeseeable or inevitable 3. The event renders it impossible far deblor to fuifil his obligation in a nermal manner 4. Tha debtor must be free from any participation in the aggravation of the injury leo the craditor (Tolentina, 1987; De Leon, 2003) 5. It must be the only and sole cause, not merely a proximate cause. IV. Remedies to Creditors ‘An. 1178, Chil Code. Those who in the performance of their cbligations are guety af fraud, negligence, or delay and those wha in any manner contravene the tenor thereof, are lable for damages Ast. T17B: Rights acquired by virtue of an obligation ara transmissible in character, UNLESS prohibited: 1. by their very natura (le. obligations} 2. by stipulation of the parties 3. by operation of law (De Leon, 2003) personal “Arts, 1165-1165: PRESS: 1, Specific Performance — perfarmance by the debtor of the prestation itself 2. Substituted Performance — someone else performs or something else is performed at the deblor’s expense 3, Equivalent Performance — right to claim damages (in either performance or rescission) 4, Bescission — right to rascind or cancel the contract 5. Pursue the Leviable — to attach the properties of the debtor, excent those exempt by law from execution General Rule: Contracts are binding only batwean the parlies thereto, and thair heirs, assigneos, and the estate, UNLESS: Accion Subrogatoria and Accion Pauliana 1. Accion Subrogatoria: right of creditor to exercise all of the rights and bring all of the actions which his debtor may have against third persons; Novation by change of debtor (art. 1291, par.3). OBLIGATIONS UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Requisites: a. Dablor to whom the right of action properly pertains must be indebted to the creditor The debt is dus and demandable ©. The craditar must be projuciced by the failure of the debtor to collect his own debt from 3” persons either through malice or negigence d. The debiors assets are insufficient (debtor is insolvent) ‘8, The right of action is not purely personal tothe debtor ‘Accion Pauliana: = Rescission, which involves the right of the creditor to'attack or impugn by means of a rescissory action any acl of the debtor which is in fraud and to the prejudice of his rights as creditor. Requisites: CASAL a. There is a gredit in favor of plaintiff prior to alienation b. The debtor has performed a subsequent contract conveying a patrimonial benafit to third persons ©. The creditor has ne ather legal remedy to satisfy his claim d. The debtor's acts are fraudulent to the prejudice of the creditor 8, The third person who received the property is an accomplice in the fraud Chapter i. NATURE and EFFECT of OBLIGATIONS. ‘Sigitan Lim 71938) Beiiboner” cannot invoke the | creat of a aifforent croditor to Justiy tha rescission 0} {the subject deed of donation, because the onl creditor ‘who may benef from the rescission Is the Creator who brought the action; those who ar { strangers to the action cannot baneft fom ls effects, V. Usurious Transactions and Rules on Interest USURY: stipulation of interest rates higher than the ceiling provided by law. OBLIGATIONS Note: Usury Law (Act No. 2655, as amended) was repealed by Central Bank Circular No, 905, Dec. 10, 1982. INTEREST ‘Ant. 1176, Chil Code. Receipt ofthe principal without reservation as to the Interest shall gve nse to disputable presumption that the interest has been paid. Receipt of the latter installment wethout Foservaton a6 to prier Installments shal skawise give rise to a disputable presumption that such prior Inctallmarts have bean paid Determination of Interests Eastern Shipping Lines v. CA (1961) Siege: For loan orferbaarance | NOT for lean or ‘Recion Subrogatoria ‘Acelon Pauliana Not necessary that ¢recttor’s claim i priar to the acquisrion of the night ‘Gragit must exist before the fraudulent act Wo period far prevention bby the debtor No need for fraudulent | Fraudulent nient is ‘ment required if the contract rescinded fs onerous Prosorbes in 4 years fram the discovery of the fraud 3. Accion Directa (Ant 1729, 1652, 1608, 1893): the right of lessor to go directly to a sublesses for unpaid rents of the lessee The right of laborers or persons who furnish materials for a piece of work undertaken by fa contractor to go direclly to the owner for any unpaid claim due to the contractor ‘Ths right of vendor against every possessor whose right is dorived from the werdaa ‘The right of a principal against a substitution appropriated by an agent UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW of maney, goods ar | forbearance of manay, credit, the interest rate | goods or credit. the le 12% Inarast rate [5 6% 3) interest = interest | a) W date of demand rate stipulated in | certain, compute trom wating + 12% legal | te date when demand Interest, ‘computed | is made {judicial or from data of judicial | excra-juciol) demand fing of complaint b) if mere no |b) date of domand stipulated interest rate, | NOT certain, compute the interest rate Is 12% | fram te date of tial Computed from date of | court decision (judicial etaut of demand | demand) (udest or extra Judicit) Stage 2 ‘Ada 12% interest from nasty af SC decision uni fully paid (equivalent to a forbearance of credit) SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter Ill, Different Kinds of Obligations BORE ANG CONDITIONAL OBLIGATIONS RECIPROCAL OBLIGATIONS OBLIGATIONS WITH A PERIOD ALTERNATIVE AND FACULTATIVE OBLIGATIONS. JOINT AND SOLIDARY OBLIGATIONS DIVISIBLE AND INDIVISIBLE OBLIGATIONS OBLIGATIONS WITH A PENAL CLAUSE. Pure and Conditional Obligations (Asked in 79, 88, 09, 03) Pure Obligation oxi ful (ar1178); Effectivity or inguishment does not depend upan the iment or non-fulfilment of a condition or upon the expiration of 2 term or periad and characterized by the quality of its being IMMEDIATELY DEMANDABLE, Cor ditional Obligation (Art.1181): Etfectivity i= Subject to the fulfilment or non-fulfllmant of a condition, which is characterized to be a FUTURE and UNCERTAIN event. ‘Suspensive Condition: Obligation shall only be effective upon the fulfilment of the condition (Art.1181). What is acquired by the obliges upon the constitution of the ‘obligation is mere hope oF expactancy, but is protacted by law Chapter ‘| The mere intention of the debtor to prevent, without actually preventing fulfilment isnot sufficient Constructive fulfilment will nat hold ‘when the debtor acts pursuant to a I DIFFERENT KINDS of OBLIGATIONS. Before Fulfillment ‘After Fulfilment The demandabaty and facquistion or effactiaty The obligation arses or bacomes effectve, of the rights arising fram | The obligor can be the —abligaton Is | campolied to comply with suspended. Anything | what is incumbent upan paid by mistake during | him. Such time) maybe recovered. UNIVERSITY OF THE PHI COLLEGE OF LAW > Doctrine of Constructi of Suspensive Conditions ‘Aft. 1186: the condition shall be deomed fulfilled when the obligor actually prevented the cbligee from complying with the condition, and that such prevention must have been voluntary or willfulin character. * Applicable to suspensive. conditions land net to resolutory conditions. "The article can have no application {to an external cantingency which is lawfully within the control of the obligor. Fulfillment INcS right. fulfiment: Thara is, ‘constructive a. Intent of the obligor to prevent fulfiment: and b. Actual prevention of compliance > Principle ANLTIB7, part fulfiled its effects must logically retract to the moment when elamants, which gave birth to obligation have condition which Retroactivity in ‘ance the condition is OBLIGATIONS the assential the taken place. The is imposed is only accidental, not an essential element of the obligation. = Applied contracts which perfected by delivery. only fo consensual contracts. No application to real can only be To DoMNet To Bo To Give if recprocal, the fruts| and interests shall ba deemed to have been mutually compensated Be a mater of justice and (An. 1187, par. 1) if unilateral the debtor shal appropriate | tha fruns and Intarasts received, unless from tha ture and circumstance Wt should be inferred that the intenten of tha persons constiung tha same was diferent, 1190 par. 3 in obligations to-do or nat to do, the court shall detarmine tha retroactive fffect of the condition that has been complied swith, (ar1187, par. 2) The power of the court Inetudes the detarmination whether or riot there will be any retroactive effects. This rule shall licewese apply In obligatons win = resoutary condition (Art. » Preservation of Creditor's Rights An 1188, pat. The creditor may, bafora the fulfilment of the condition, bring the appropriate action for the preservation of his rights. However, this daes not grant any preference of credit but only allows the bringing of the proper action for creditor's rights. demandable the Resolutory Conditio! immediately preservation of the Obligation becomes after its astablishmant or constitution. The rights ara immediately vested to the creditor, but always subject to the threat or danger of exiinction by the happening of the resolutory condition (Tolentino, oS 1987). BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter i DIFFERENT KINDS of OBLIGATIONS: [headed to make the obligation derma ia thal the | Before Fulfillment ‘After Fulfliment sale be consummated and the price thereof remitted Preservation of creditors | Whatever may have | | the islands. There were soll otmer conditions that | rights (Ac. 1166, par. 1) | been paid or delivered by | {had to concur to effect the sala, manly that of the | also apples te | one or both of the partas obligations with a | upon te oonsbtuton of prasenca of a buyer, roady, able and willing 19 purchase the property under the conditions set by the resolutory condition the obligation shall have | —_ Imestate. a soos to be retumed upon the fuliament “ofthe 6. Impossible Condition: conditions which ‘condition. There Is no are impossible, contrary to good customs, or retum fo the status quo However, when condition ‘pot fuitllad, rights are ‘consobdated ‘and thay public policy and those prohibited by law shall annul the obligations which depend upon them (Art. 1183), OBLIGATIONS become abeohte Ih >» If pre-existing obligation, only the ‘character impossibia condition is void, but not the obligation, 3. Potestative Condition > If divisible ebligation, that part which is nat affected by the impossible or Exclusively | Exclusively | Exclusively unlawful condition shall be vali ‘upon the upon the ‘upon the ® If the condition is not to do an reditor’s Will Debtor's Will | Debtor's Wit impossible thing, it shall be considered imease ota | incase of a as nat having been agreed upon (Ar Suspanaive Ree 1183, par. 2). Consequently, it becomes rT ae ar pure and immediately demandable. 3 > If attached to a simple or remuneratory donation (Art. 727), or testamentary Canaiian ene’ Canavan and | Candin and nigation = | obligation are | ablgaton tz disposition (Art 873), concition is vad vold because to | val because in considerad as not imposed while the liew such | such situation, obligation is valid. condition would | te position of be equivalent to | me debtor is 7. Positive Condition: Obligation shall be sanctioning — | exacty the extinguished as soon as the time expires or obligations seme 5 the if i becomes indubitable that the event will whiety are | position of the not take place (Art.1 184) sory. 1 alsa | creatar when consitutes a | the condition is direct cuspansiva. Ik contravention af | does not render 8. Negative Condition: Obligation shall be rendarad effective from tha moment tha time fhe prndipe ot | fie obgation indicated has lapsed, or if it has become muulty ot | isory evident that the event will not occur contracts. (Art1 185) > When no period has been fixed, the 4. Casual Condition: The fulfillment of the intention of the parties is controling, Condition depends upon chanea andlor upon and the time shall be that which the the will ofa third parson (At. 1182) parties may have contemplated, taking into account the nature of the obligation 5. Mixed Condition: The fulfillment of the (Art 1185, par. 2) condition depends partly upon the will of party to the obligation and parly upon ‘chance and/or will ofa third person Effects of Loss, Deterioration, and Osmena “vam: Datendant’ “executed “an! endorsement saying that shall pay her debt if the : house in which she lives is sold. Such condition Without £ depended upon her exclusive wal hus IIs word Debtor's FaulliAct Hevmasa’ ¥.” Legare: The “condition” thai “payment ‘should be made By Hermosa a8 soon as he receives: funds trem the cals of his propery tn Spain is a mixed condition. The condition implies that the obligor house ang COLLEGE OF LAW SS BAR OPERATIONS COMMISSIONS Gbligazon Ie extinguished ‘Obagation ie converted into one of Indemnity for damagesCIVIL LAW REVIEWER Deterioration | Impaiment fo be | Greditor may boma by the | chaosé creditor beeen bringing an ction for rescission of the obligation OR bringing an. ction tor specific performance win damages Ineither case. Improvement | Improvement at | Improvement the debtors | by the thing's expense, the | naure or by debtor shall | time shall inure ONLY —— have | to the benefit of Usuuctuary | the creditar rights Loss, defined: when the thing perishes: goes out of commerce: disappears in such a way that its existance is unknown or it cannot be recovered I Reciprocal Obligations Obligations which are established from same cause, such that ona obligation is correlative to the other. It results in mutual relationship between the creditor and tha debtor. It is performed simultaneously, so that the performance of one is conditioned upon the simultaneous fulfillment of the ather. Tacit Resolutory Condition: if one of the parties fail to comply with what is incumbant Upan him, thara is a right on the part af the ether to rescind the abligation. The powar to rascind is given to the injured party (Tolentina, 1987). Rescission of Reciprocal ations (Art, > Right to rescind is implied in reciprocal ‘obligations thus where one party falls to ‘comply with this obligation undar a cantact, the other parly has the right to either damand the performance or ask for the resolution of the contract. Based on the breach of faith committed by the persan who is supposed to. comply with the abligation as compared to the rescission referred to in Ad. 1308 which involves the damage of lesion, or injury to the economic interest of a person, » Whore both parties have committed a breach of obligation, the lability will be UNIVERSITY OF THE PHI INcS COLLEGE OF LAW Chapter i DIFFERENT KINDS of OBLIGATIONS: shouldered by the first infractor. This shall be determined by the caurts. However, if it cannot be determined who was the first infractor, the contract shall be deemed extinguished and gach shall bear his own damages (ér.1192) i Bioias Arigeias (7976)" The injured party may extra udlcisy rescind the contact on account of the breach at the other party. Howaver, this ' without | prejudice to the option of the other party to resort to | | ine cours in order to dotermene Ifthe rastission mage is valid, i not, the party who rescinded the contract wl be, Semanced to psy damanes, > Where the other party does net oppose the extra-judicial declaration of rescission, such doclaration shall praduce legal effect. > Effect Is retroactive therefara invalidating and unmaking the juridical tie betwaen the contracting parties, leaving things in their status before the celebration of the contract. Obligations with a Period Period of Term (Asked im 'B4, ‘86 and '91): Interval of tims, which sither suspends damandabilty or produces extinguishment. ‘The pariod must be: future, certain, and possible (Tolentino, 1987). > Fortuitous event dacs not interrupt the running of the period. It only relieves the contracting parties from the fulfillment of their respective obligations during the period > Kinds of Period (Art. 1193): 1, Ex die - period with a suspensive affect Obligation becamas demandable after the lapse of the period, 2. In diem - period with a rasolutory effect. Obligation is demandable at once but is exlinguished upon the lapse of the period, ‘Ant. 1486, Cuil Code. When the debtor binds himself to pay when his means peamit him to do so. the jbiigaton shall be deemed ta be ona with a periad subject to the provisions of Aricle 1197. ‘Term/Period and Condition Distinguished Term/Period Condition Tatarval of time which & | Fact or event which = future ana certain future and unearain Must necessary came, sttnough it may not De kon when oS May or may nat happen BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter i DIFFERENT KINDS of OBLIGATIONS: Exerfs an influence upan | Exeris an influence upon % Art 1197 does not apply to contract of the time of demandabilty | the vary existence of the services and to pure obligations. or exigashnent of an | obligation heel * The cour, however, to prevent sgatton | No retroactive affect | Has retroactive effect Cae ETS aon vation immediate demandabilty of pure obligations, may fix a reasonable tima in which the dobiar may pay, uniess there isan ‘agreement to the contrary ‘When i 65 left exclusively | When I lief exclusively to the wil of the debtor, | to the wil of the debtor. (Tolentino, 1987) the existence of the | the very exastence of the obbgation ts not aflected | obligation is sffected When Debtor Li htt ri ADL 1198: 1 GIV ALA. 1. Debtor becomes Insolvent, unless he gives OBLIGATIONS Presumption: Period in an obligation is a guaranty or setunty for his debt, after presumed to be established for the benefit of abligation is contracted both the creditor and debior. UNLESS: If fram 2. Debtor fails to furnish the Guaranties or the tenor of the obligation or other securities promised circumstances, it shall appear that the period 3. Debtor by his own acts Impaired said has been esiablished in favor of eithar the guaranties or secures afler their creditor or dobior (Art. 1198). establishment, and when through a fortuitous event they disappear, unless he Periad for the Benefit of either Creditor at immediately gives new one equally Debtor satisfactory 4, Debtor Viclatss any undertaking, in ‘Greditar Debior consideration of which the creditor agreed to Creditor may demand | Debtor may oppose any the period the fulfiment ar | premature demand on 5. Debtor attempts to Abscond Performance of the | the part of the oblige for 6. By Law or stipulation obligation st any time | the performance of the 7. Parties stipulate an Acceleration Clause Bee eset fanaa | ebigaans at be ae compl em fo acoap| denen, he AY in the cases provided, the abigaton becomes payment lore the | renounce te bene of] Rmediataly due and demandabie even. I ie wre parody pecorming | Parid han nal yet exped The agoton Ia thus @ into @ pure obligation (Tolentino, ‘An. 1197: as ganeral rule, the court is not authorizad ta fix a pariad for the partios (De IV. Alternative and Facultative Lean, 2003). Obligations Fst the Court shall determine ‘Altemative Obligations | Facultative Obligations > if the obligation does not fx a period, but from Several objects ate dus __| Gniy ons objects Gus. its nature and circumstaneas, it can be inferred May be compled with by | May be complied with by that a period was intended Gelvry ‘of “one of tne | the. deiveny of anctner if the period is void, such as when it depends objects or by performance | object or by the Upon the lof the debtor af one of the prestatons | performance ot another ifthe debior binds himself when his means which are altematively | prestation in substitution perme him to dsc. due cof that which is due Second, it must decide what period was “probably ! [Choice may pertain te | Choloe pertains only to cantemelsted by the partes” debtor, exeditor, or third | the debtor ° person % The only action that can be maintained under Art. 1197 is the action to ask the Lossimpossibilty “of all Lossiimpossaty of the objecisfprestations due to | objectprestaton due to ‘courts to fix the term within which the debtor Tee event Snat | teres een ie must comply with his obligation. The extinguish the abligaton. | suffient to extinguish fulfilment of the obligation itself cannot be The loss/impossibity of | the obagation damanded until after the court has fied the fone of the things does nat period for compliance, therewith, and such extinguish te abligaten. Period has arrived. Culpabie loss of any of | Culpable lass of tha the_objects alternatively | object which the debtor UNIVERSITY OF THE PHI COLLEGE OF LAW SS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER (Chapter iL DIFFERENT KINDS of OBLIGATIONS: dus before the choice & [may delver in Effect of Loss of Objects made may gWve rise to | substtuton before the abaty on the part of the | subauiuton is efleced Art, 1204; Debtor's Choice anor does nat ave rise to any Forwlteus Datiers Fault labily-on ta part of ts en {debtor All Lost Debtor is | Greditor shall have feleased fom the | aight ta indemnity A. Alternative Obligations abigason for damages based fn the value of the Several prestations are due but the performance lst thing’ wévch of one is sufficient (De Leon, 2003). disappeared or | yy fecionunen |B Right of Choice become imposshie 8 Some |Desiar we daiver [Deetor to aewver) & Al 1200: fo the deblor, UNLESS: Deeiar te fever | Debtor so aeiver) 1. when it is expressly granted to the ee et creditor from among the | choose from amang 2. when itis expressly granted to a third femanger te remalnder person without damages One Debior to dalver [Dentar to diver tations to the right of choice Remains | that which | that which remains 7. impossibie prestations remains 2. Unlawul prestations 3. those which could not have been the Art. 1205: Greditor's Choice ebjact of the abligation Forultoue Debtor's Fauit 4. oflly one prestation practicable (Art wer 202) pe u ‘AllLost | Deotor is | Creditor may claim feleased fom the | me prcvalie of (De Leon, 2003) obligation any of them with indematy or When choice shall produce effect damages ‘Ant 1201: Choice shall praduce na effact except | Sama] Dastarw Gener essater may Gam from the time it has bean communicated. The wnat whieh he | any of ose effect af the notice isto limit the abligation of the shal" choose | subsisting without a ebject or prestation selected. Notice of selection feom among the | Aaght to” damages ‘or choice may be in any farm provided it is remainder OR pricenwalue of sufficienl to make the other party know thal the the thing let wth selection nas been made Ica be me eee ae 8 oral it Remains | claim any af | the remaining thing © inwriting those suputsing | winou! @ night to © tacit . without a right 1o | damages OR the © any other equivocal means damages OR | pricefvaue of the Choice of the dablor when communicated to prica/iaiue of fhe | tung lost with ght the creditor does nol require the laller’s thing lost wrth | to damages concutanoa fight damages, > When the choice is rendered impossible through the creditor's fault, the debtor may bring an action to raseind the contract with B. Facultative Obligation damages (Art.1203). * Obligation is converted into a simple Only one prestation has been agread upon but obligation when: the debtor may render another in substitution © When the person who has the right of (De Leon, 2003) choica has communicated his choice (art 1201} Effect of Loss of Substitute © When only one prestation is practicable (art. 1202) Before Substitution Is | After Substitution Is Made Made W due to bad faith or |The loss oF fraud of obligor: cbigar | deterioration of the ‘sable substitute on account ‘of the obligor’s delay, negligence or fraud UNIVERSITY OF THE PHI COLLEGE OF LAW SS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER due fo the negligence | oblgor is lable of the obligor: oblger is | because once rat lable substitution is made the obligation is Cconvertad inte a simple fone wih the substituted thing as the object of the obligation V. Joint and Solidary Obligations A. Joint Obligations ‘One where a concurrence of several creditors, cor of several debtors, ar of several craditars and deblars, by virtue of which, each of the creditors: has a right to demand, and each of the debtors is bound to render compliance with his proportionate part of the prastation which Constitute the object of the obligation (Obligacion, Mancomunada), Presumption: Obligation is presumed joint if there is a concurrence of several creditors, of several debtors, or of several creditors and debtors in one and the same obligation (Art. 1207). Exceptions: 1. When the obligation expressly slated that thera is solidarity 2. When the law requires the solidarity 3. When the natura of the obligation requires solidarity 4. When the nature or condition is imposed upon heirs or legatees, and the testament ‘exprossly makes tha charge or condition in solidum 5. When the solidary responsibilty is imputed by a final judgment upon several defendants Demand by one creditor upon the debtor, produces the effects of dafault only with rospact to the craditar whe demanded and the dabtor on whom the demand was made, but not with respact ta others 2. Interruption of prescription by the judicial damand of one creditor upon a debtor, does not benefit the other creditors nor interrupt the prescription a5 to other debtors 3. Vices of each obligation arising from the personal defect of a particular debtor or creditor does not affect the obligation or right cof the others 4. Insolvency of a debtor does nat increase the responsibilty of his co-dabtors, nar does it (Chapter iL DIFFERENT KINDS of OBLIGATIONS: authorize a creditor to demand anything from his ca-deblars Defense of ras judicata is not extended from ane debtor to another ation Ast. 1208: Each creditor can damand only for the payment of his proportionate share of the credit, while each debior can be liable only for the payment of his proportionate share of the debit Presumption: Credit or debt shall be presumed to be dividad into as many equal shares as there are creditors or debtors. > Joint craditor cannot act in reprosantation of the others, neither can a joint debtor be compelled’ to answer for the liability of others. ‘Art. 1209: no creditor can act in representation of the other; no debter can be compelled to ancwer for tha liability of the othars. > lf there are two or more debtors, the fulfilment of or compliance with the abligation requires the concurrence of all the debiars, although each for his own share and/or the enforcement of the obligation > Incase of breach where one of the joint debtors fails to comply with his undertaking, the obligation can no longer be fulfiled or performed. Consequently, it is converted into one of indemnity for damages. > In case of insolvency of one of the debtors, the others shall nat be liable for his shares. To hold otherwise would destray the joint character of the obligation. Joint Divisible Joint indivisible Obligations ‘Obligations. Ta case of breach of | in case of breach where ‘oblgaton by one of the | one of the Joint debtors debtors, damages dus | fails 10 comply with his must be bome by him | undertaking, me sone ‘obligation can no bonger bbe futilled o° perfooned. Thus action Trust. De ‘corwerted into. Indemnity sor damages. > Plurality of Creditors: If one or some of the creditors demands the prestation, the debtor may logally refuse to deliver to them, hho can insist that all the creditors together receive the thing, and if any of them refuses ta join the others, the debtor may deposit the thing in court by way of consignation (Tolentino, 1987). OBLIGATIONS UNIVERSITY OF THE PHI INcS COLLEGE OF LAW oS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER B. Solidary Obligation ‘An obligation whera there is concurrence of several creditors, or of saveral debtors, or of ‘several creditors and several debtors, by virlue Cf which, each of the creditors has tha right to demand, and each of the deblors is bound to render, entire compliance with the prestation which constitutes the object of the obligation 2 (Obligacian Selidaria) indivisibilty Solidarity Refers to tne pretation which constitulas the ‘abject of the obligation Refers to tha legal ta oF viacullr, and consequently tthe subjects or partes of ‘ebbgation Is converted Into ‘ndemnity for damages because the indivisiiity of tha obligation ig terminated the obligation Phuralty of subjects Is not | Pluralty of subjects is required indispensable In case of Breach, | When there is lability on the part of the debtors because of the breaen, tha solldenty ‘among the deblors > The indivisibilty of an cbligation does not necessarily give rise to solidarity. Nor does solidarity itself imply indivisibilty. (Art. 1211) 3. ‘Active (soldarity among creditors}: Each qxeditor has the authority to claim and enforce the rights of all, with the resulting obligation of paying everyone of what belongs to him. > Creation of a relationship of mutu: agency among co-creditors Chapter ‘A solidary creditor cannot assign his rights withaut the consent of the others. (Art 1213) » Each debtor may pay to any solidary creditor, but if any demand, judicial or extrajudicial, has baen made by one of them, payment must ba made to him (ar 1214) Passive (solidarity among debtors): Each deblor can be made to answer for the athers, with the right an the part of the debtor-payor to recover from the others their respactiva shares. » Creation of @ relationship of mutual guaranty among co-debtors » Tho total rmission of the debt in favor of a debtor ralaasas all the debtors All the debiors are liable for the loss of the thing dua, even if such loss is caused by the fault of only one of them and for delay, even ifit is caused by just fone of them >» The interruption of prescription as to one deblor affects all the othars; but the renunciation by one debtor of prescription already had does not prejudice the others Mixed: Solidarity among debtors > Solidarity is not destroyed by the fact that the obligation of each debtor is subject to different conditions or periods, The creditor can commence an action against anyone of the debtors for the compliance with tha antira obligation ws the portion or share which corresponds to the debtor affectad by the canditian or period, creditors and Effects of Modes of Extingulshment ‘Assignment of ‘Compensation & Rights in Solidary Novation ator Remission ‘Obligations | __Centuston_| ihe colidary | > if prejudielal, tha | > Wt partial, tha | > i ‘entire creditor cannot | solidary creditor | mules regarding | obligation, fssign his right | who effected the | application of | obligation is totally because it is | novation shall) payment — hall | extinguished, predicated upon | reimburse the | apply fio) | * If for the benetit mutual others tor | prejudice to the | of one of the| OR fortuitous confidence, Gamages incurad | right’ of other | debtors covering | event after delay, UNLESS, the (1) | by therm: credtors who | la entie share, | the obligation is the aseagnment is | > to a co-credion, (2) assignment is with consent of 1 benefielat anc secured by one, he shall Be lable ta the others for have not caused the confusion or compensation to be reimbursed t0 convensd into indemnity for damages but the sobdasy character he is completely released from the ‘reditaris. > it for the benefit ce-treditor the ‘share | the extant that| of one of the | of the obligation (ovegaion —& | thew rights ara | debtors and it) romans. benefits} which | diminished or | _eovers_ only part UNIVERSITY OF THE PHI INcS COLLEGE OF LAW oS I DIFFERENT KINDS of OBLIGATIONS. OBLIGATIONS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter i DIFFERENT KINDS of OBLIGATIONS: ‘corresponds to them >it ovation is lable for the acts of the new debtor in deficiency or damages » I by subrogating a third person in creditor's rights, the obsgation is pot in really extinguished — 35 the relstion between the other creators and the debionis 5 maintained affected » if by eubsthuting | abligaton’ is | solldary debtor is te debtor, the | extinguished, not affected. solitary creator | what Is laf is the wha effected the | ensuing lability ‘or reimbursement ‘of his share, his the} character as 3 OBLIGATIONS Prejudicial and Beneficial (Art. 1212) 1. Each one of the solidary creditors may do Whatever may be useful or beneficial to the others, but not anything which may be prejudicial to the latter. 2 As far as the dabiors are concemed. @ prejudicial act performed by a solidary creditor is binding. 3. As between the solidary creditors, the creditor who performed such act shall incur the obligation of indemnifying the others for damages. Defenses Available to a Solidary Debtor (Art. 1222) 1. Those derived fram the nature of the obligation 2. Those personal to him 3. Those pertaining to his own share 4. Those personally belonging to other co dabtors but only as regards that part of the abt for which the latter are respensibla. Effects Demand Upon Solidary Debtor Payment by a Debtor The demand made | Full payment mada by against one of them shall | one of the solidary not be an obstacle to | debtors extinguishes tne those which may | obligaton. (Ar. 1217), subsequently be directed aganst the others so long as the debt has not been fully collected. (Ar, 1216) UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW ‘The creditor may proceed | f twa or more scidary against any one of the | dabtors after to pay, the sobdary debtors or all | ctedilor may choose simultaneously (Art. | which offer to aceapt 4216 (act 4247) ‘A. creditors ight te | The solidary debtor who proceed against the | mada the payment shall surety exists | have the right to clam Independently of his nght | from nis co-debtars the to proceed against te | share which corresponds principal to them with interest, UNLESS bared by [peescription of Megalty. (an 1218) > When a solidary dobtor pays tho onto abligation, tha resulting obligation af the co debiors to reimburse him becomes joint > If payment was made before the debt became due, no interest during the intervening period may be demanded. (Art. 1217 par. 2) > When ane of the soldary dabtors cannot reimburse his share to tha debtor paying tho abligation due to insolvency, such share shall be borne by all his condeblors, in proportion to the dabt of each. (Art. 1217, par. 2) Tnchaust 0" "Yule, (73741: Bebiors “obligate: themselves Solldaily, 60 creditor ean Bring Its actor against any of them. Remission of any part o ‘the debt, made by the creditor in favor of one of the sobdary debtors, Inures to the benefit of the rest of them SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER VI. Divisible and indivisible Obligations A Divi Ie Obligations ‘One which is susceptible of partial performance: that is, the debtor can legally perform the obligation by parts and the creditor cannot demand a single performance of the entire obligation (Tolentino, 1987). B. In le Obligations ‘One which cannot be validly perfarmed in parts (Tolentina, 1987) * Divisibillyfindivisibilty refers tothe performance of the prestation and not tothe thing which is the object thereof. The thing may be divisible, yet the obligation may be indivisible, » Whon the obligation has for its abject the execution of a certain number of days of work, the accomplishment of wark by metrical units, of analogaus things which by their nature are susceptible of partial performance, it shall be divisible (Art.1225, par. 2). » When there is plurality ef debtors and cxeditors, the affect of divisibiltylinaivisibiity cf the obligation depend upan whether the obligation is joint or solidary. * A jpint indivisible obligation give rise to indemnity for damages from the time anyone of the debtors does not comply with is undertaking. (art 1224) Effect Creditor cannot be campalled partially ta receive the prestation in which the obligation consists; neither may the debior be required to make the partial payment (Art, 1248), UNLESS: * The obligation expressly stipulates the contrary > The different prestations constituting the ‘objects of the obligation are subject to differant tarms and conditions The obligation is in part liquidated and in part unliquidated Vil. Oblligations with a Penal Clause Penal Clause: An accessory undertaking to assume greater liability in case of breach (Da Lean, 2003). It is attached to an obligation in order to ensure performance. The enforcement of the penalty can be demanded by the creditor only when the non-performancs i due to the fault or fraud of the debtor. (Chapter iL DIFFERENT KINDS of OBLIGATIONS: » If the principal obligation is. void, penal clause shall also be void. However, the nullity of the penal clause does not carry with ft the nullity of the principal obligation (Art.1230), 1. Funcion coerativa de garantia - to insure the performance af tne obligatan, 2. Funcion squidstoria - 10 bquidate the amount of damages {9 be awarded to the injured party in case of breach af the principal obligation (compensatory). 3. Function estreiamente penal - to punisty the abligor in casa of breach of the princpal abligation (punitve). 1. The penalty shall cubstitute the indemnity tor damages and payment of interest in casa of non-compliance (Art. 1226), UNLESS: a. There [s a stipulation to the contrary The obliger refuses to pay the pony ©. The obligor guaty of fraud 2. Debtor cannot exempt himself fram the performance of the principal obligation by paying the stipulated penalty unless this Fight has baen exprossly reserved for him (art. 1227). 3. Creditor cannot demand the fulfilment of the principal obligation and damanding the salisfaction of the penalty at the same time unless the right has been clearly granted to him (Art. 1227), Tacit or implied grant is admissible. a. If credter has chosen fulllment of the principal obligation and performance thereat become impossible wrhaut his feult, ne may stil emand tha satsfacoon af the penalty. b. Ifthere was fault on the part of the debtor, creator may damand nat only satsfacton af penalty but asa the payment of damages. ©. if ereaitar chooses to demand ine satisaction of the penalty, he cannot afterwards demand the fulfilment of the ‘bigaton, Proof of JActual Damage Art. 1228: Proof of actual damages is not nacessary is applicable only to the general rule stated in Ar, 1226 and not to the excepticns. The penalty is exactly identical with what is known as “liquidated damages” in Art, 2226. When Penalty may be Reduced Ast. 1229: 1. If the principal obligation has been partly omplied wits. 2. If the principal obligation has been irregularly omplied wits. 3. If the panalty te iniqutous or unseansclanabla even if there has been no performance. OBLIGATIONS UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter IV. Obligations Extinguishment of 1 BAVMERY OF PERFORMANCE I LOSS OF THE THING DUE OR IMPOSSIBILITY (OF PERFORMANCE I, CONDONATION OF REMISSION OF THE DEBT IW. CONFUSION OR MERGER OF RIGHTS V. COMPENSATION ViL_NOVATION L Payment or Performance ‘An. 1282, Civil Code. Payment means not only owvery of money but also performance, in any ‘manner, of the obligation See Diagrams of Prof. Labitag at the end ‘section of Obligations. ‘SPECIAL FORMS OF PAYMENT A. Application of Payment (Art. 1252) Designation of the debt to which should be applied a payment made by a deblar who owes ‘several debts to the same creditor Rules on Apptication— 1. Preferential right of debtor - debtor has the right ta select which of his debts he is paying. 2 The debtor makes the designation at the fime he makes the payment 3. If not, the creditor makes the application, by sa slating in the receipt that he issues, unless there is cause for invalidating the contract. 4. If neither the craditor nor dabtor exercises: the fight to apply, or if the application is not valid, the application is made by aparation of law. 5. If debt produces interest - payment not deemed applied to the principal unless interests ara covered, 6 When no application can ba inferred fram the circumstances of payment. it is applied to: fo tha most onerous debt of the debtor; or if debts due are of the same nature and burden, to all the debts in proportion 7. Rules of application of payment may not be invoked by a surety or solidary guarantor. Reparations ammissian vs. Universal Bage "Sea Fisning Cerp. (1978): Rules on application of paymant cannot be made applicable Ia @ person whose | pbgation fy. 5 bom UNIVERSITY OF THE PHI o [ singular. |wath the terms of the contact NCS COLLEGE OF LAW ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. ie B. Payment by Cossion (Art. 1255) ‘Act whereby a deblor abandons all his property to his exeditors, so thal the later may apply the proceeds (of its sale) to their credits ©. Dation payment (Art. 1245) Delivery and transmission of enmerchip of a thing by the deblor to the creditor as an accepted equivalent of tha performance of the obligation (dacion en pago). OBLIGATIONS Dation in payment | Payment by cession in favor of only one | There are vanous creditor creditors Payment exinguishes the | Extingushes credits ‘obigation to the extent of | only up to tha extant of the value of the thing | proceeds from sale of ‘dalvered, unless tha | assigned progeny, panies agree that the | uniess otherwise ‘obligation be totally | agreed upon ‘extinguished Transfer of ownership of | Only possession and thing alienated to eredter | acminisiraton wth ‘suthorization to convert property to cash with Wwhien the debts. shall bbe paid Not necessarily in state of | Assignment financial aficuty presupposes Insolvency of debtor. “Assignment of only same | Assignment involves all ‘specific tung the proparty of the debtor. D. Tender of payment and cansignation 1. Tender of payment: Manifestation made by dobiar to craditor of his desire to comply ‘with his obligation, with offer of immediate performance » Preparatory act to consignation » Extrajudicial in character Consignation: Deposit of the object of abligation in a competent court in accordance to the mules prescribed by law, whenaver the creditor unjustly refuses payment or because of some circumstances which render direct payment to the creditor impossible or inadvisable. Principal act which constitutes a form of payment, Judicial in character. oS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. When Tender and Refusal Not Required (Art. 2. After approval of the court or accepiance by 1259)— the creditor. with the consent of the latter 1. Creditor is absent or unknown, oF does not Obligation remains in force, but guarantors appear atthe placa of payment and co-dabtors are liberated. Preference of 2. Creditor is incapacitated to receive the thing the creditor over the thing is lost. dua at time of payment 3. After approval of the court or acceptance by 3. Without just cause, craditor rafusas to give the creditor, and without creditor's consent receipt Obligation subsists, without change in the 4. Two or more persons claim the same right to liability of guarantors and co-debtors. or the calleet creditor's right of preference. 5. Title of the obligation has been lost ‘An. 1258, CWwil Code. Expenses of consignation, when properly made, shall be charged against the OBLIGATIONS Arts. 1260-1261 creator. 1 Bolte approval af the court - Obligation remane ore Requisites and Effects ‘Application of Cesion Dation Tender and Cansignation ayant Raquisies Reaguisies Reauistes Requisies 1 Pisaltyof | 1 Puraltyofdabis | 1" Shoud natbe There fea bt de sats 2 Phralty of projcical to | 2 Gonsgnaon i made because 2 Debiearecf | creciors other creditors | of some lal couse fesamsknd | 3 Pattslisavency |2 Shouldrot | 3, previous nates of sansignation 3. Dabiewreoved | "ofthe sossr const 3 trae gven fo thse poreane Binecome | 4. abandonmertar | pactum imrssteg mths peormanca freator an by | fetotaityottme | commissodum | ofthe abigaton fe same Sabor 4. Smountorthing due was fatto properties forth pineod at tha tara! ofthe 4. debts must | Banetto the cour be due emtrs 5. afer he consigation hasbeen 5. Payment made | 5. eseplance by rade, the persone nierested Sraeuficent |” the erestors wore noses eect beavers acts ettocts tects ttocte Htocte Payment of debt | Assignment liberates designated as to| debtor up to tha corresponding amount of the net amount proceeds of the sala of his assets Assignment does not vets title to the property in tha croditors, who ‘are only authorizad to call it Extinguishmant of | if accepted by the creditor or debt from as an declared properly made by the equivalent of the | Court: performance of tha | 1. Debtor is released in same abligation manner as if he had performed the obligation at the time of consignation 2, Accrual of interest is suspendad fram the moment of consignation. 3. Deterioration or lass of the thing or amount cansignad, occurring withaut the fault of dablor. must be borne by creditor from the moment of deposit 4. Any incramant or increase in the value of the thing after consignation inures to the banat of the eraditar UNIVERSITY OF THE PHI COLLEGE OF LAW SS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER IL Loss or Impossibility (Asked in 3, 84, 85, and 94) AL Loss A thing is lost when it perishes, goes out of commerce or disappears in such a way thal its existence is unknown ar it cannot be recovered (Art, 1189, par. 2) Effects of Loss Obiigation to Deliver a | Gbligation to Deliver @ Specific Thing _ Generic Thing Exinguishmen af the | Loss of a generic tung ‘ebegation ifthe thing was | dass not axtinguish an UNLESS, generic things. kind o Cass is limited itself, and the ‘whole class perishes destroyed wa fault of the | obligation, ‘aobtor and before ne nas | Delimited Incurred day. Action against 3 persons - creditor shall have all the rights af action the debtor may have against 3” persons by reason of the loss. Presumption: The loss was due ta the debtor's fault, UNLESS: 1. Law provides that the debtor shall be liable even if the loss is due to fortuitous events (Arts, 1942, 1979, 2147, 2159) 2. Obligor is made liable by express stipulation 3. Nature of the obligation requires an ‘ascumption of risk 4. Fault or negligence concurs with the fortuitous event 5. Loss occurs after delay & Deblor has promised to deliver the same thing to two or more different parties 7. Obligation arises from a criminal act & Borrower in commedatum: saves his own things and not the thing of the craditor during a fortuitous event Exlinguishment of the obligation due to loss of the thing or impossibility of performance affects both the creditor and debtor, the entire juridical relation is extinguished, Partialloss Aft. 1264: Partial loss due to a fortuitous evant doas not extinguish the obligation; thing due shall be delivered in its present condition, without any liability on the part of the debtor, UNLESS. the obligation is extinguished when the part lost was of such extent as to make the thing useless. ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. Loss of the thing when in possession of the debtor: Loss was due to the deblor's fault Burden of explaining the loss of the thing falls upon him, UNLESS, due to a matural calamity: earthquake, flood, storm, atc. Subjective impossibility: Where thers ie no physical oF lagal loss, but the thing belongs to another, the performanos by the dabtor becomes Impossibte. Tha debtor must Indemnity the cedior for damages, B. Impossibility of Performance (Arts. 1256- 1267, CC) When prestation bacomes lagally or physically Impossibia (by fortuitous event or farce majeure), the deblor is released.Impossbility must have occurred without fault of debtor, and ater the obligation has been constituted PARTIAL IMPOSSIBILITY 1. Courts shall determine whether it Is so important as to extinguish the obligation. 2. If debtor has performed part of the obligation ‘when Impossibilly occurred, creditor must pay the part done as long as he benefits from it 3. If debtor raceived full payment from craditar, he must retum = gxcass amount corresponding to part which was impossible to perform, Doctrine of Untoreseen Events When the service has become 0 difficult. as to ba manifestly beyond the contemplation af all the parties, the obligor may be released in whole or in part (De Leon, 2003). Requisites: 1, Event could nat have been foresaen at the lima of the constitution of the contract. 2. Event makas performance extremely difficult, but not impossible. 3. Event not due to any act of the parties 4. Contract is for future prestation. Condonation or Remission of the Debt CONDONATION: An act of liberality, by virtue of which, withaut receiving any equivalent, creditor Fenaunces tha enforcement of the obligation: ‘The obligation is extinguished either in whole of in such part of the same which to remission refers. OBLIGATIONS UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER 1. Debt must be existing and demandable 2 Renunciation must be gratuitous; without any consideration 3. Debtor must aceapt the remission Effect Art. 1273: Renunciation of the principal debt shall extinguish the accessory obligations, but remission of the latter leaves the principal obligation in force, Presumptions Ants. 1271, 1272, 1274: > Whenever the private decumant in which the dabt is found in the possession of the abtor, it shall be prasumed that tha craditor delivered it voluntarily, unless contrary is proved. Delivery of a private document evidencing czedil, made voluntarily by the creditor to the abtor, implies the renunciation of the action ‘of creditor agains! the latter ‘Kinds. 1. As to form (Art. 1270) Express: made formally: in accordance with farms of ordinary donations + Implied: inferred from the act of the parties ‘As to extent > Total: entire obligation > Partiak may refer only to amount of indobladness, or to an accessory obligation, or to some other aspect of the obligation 3. AAs to constitution Inter vivos: effective during the lifetime of the creditor > Mortis causa: effective upon death of the creditor; must be contained in a will or testament IV. Confusion or Merger of Rights CONFUSION: The meating in one parson of the qualities of creditor and debtor of the same cbligation. 1. It should take place between principal debtor and creditor 2 It must be complete and definite- Parties must meet all the qualities of creditor and abtor in the obligation/ in the part affacted, ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. Effects Arts, 1275- 1277. 1. The obligation is extinguished from the time the characters of the debter and creditor ars merged in the same person. 2. In joint obligations, confusion does not axtinguish the obligation excapt as regards the corresponding share of the creditor or debiar in whom tha two charactars concur. 3. In solidary obligations, confusion in one of the solidary debtors extinguishes the entire abligation. 4, Obligation is nat extinguished when confusion takes place in the person of subsidiary debtor (e.g. guarantor), but morger in the person of the principal debtor shall banafit the former. Compensation COMPENSATION: Offsetting of two obligations which are raciprocally extinguished if thay are of the same value, or extinguished to the concurrent amount iff different values. (Asked im'80, 81, °98, and 02) ‘Compensation ‘Confusion There must always be 2 | Invoives only one ‘obligations ‘bligaton There are 2 persons who are | There fs only ane muualy— ‘Gebtors and | parson wham the ‘creditors of each other In 2 | characters of the ‘separate obligations, ach | creditor and debtor _ansing ftom the same cause, | meet Kinds 1. Astoextent > Total: Debts are of the same amount » Partial: Amounts are not equal 2. Astoorigin » Lagal: takos place by operation of law » Conventional: parlies agree to compensate their mutual obligations even when some requisite in Art 1279 is lacking (Art. 1282). >» Judicial: decreed by court vhen there is counterclaim; effective upon final judgment (Art. 1283). » Facultative: when it can be claimed by fone of the partias who, however, has the Fight to objact ta it. OBLIGATIONS UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. Requisites I Effects i Each obager is 7. Effects rise from the ‘bound principas mament al the ‘and at the same time fa principal creditor of | 2 the other 2 Bain seb most consist ina sum of money, ofthe things due are FUNGIBLE, of the same kind &.quaity | 3, Both debi are due Debts are liquidated ‘and demandabie There must be no retention or requisites concur. Debtor elaiming Is benefits must prove compensation; onca proven, effects Felroact from the mament when the requisites concurred. Both debts are extn guished tothe coneurent amount, ‘eventhough the craditors and debtors are notaware of the controversy over compensation, either of the debis, | 4, Accessory ‘commenced by 3” ‘obligations are also persons and extinguished ‘communicated in ‘ous'tma tothe debtor 6 Compensation is not prohibited by lw ‘Compensation is prohibited in: Contracts af depositum Contracts of commadatum Future support due by gratuitous ttle (Civil lability arising from a penal affance Obligations due to the government Damage caused fo the parinership by a partner ASSIGNMENT OF CREDIT (Art. 1285): No effect and does not bind the debtor unless and until the latler is notified of the assignment or learns of it. With Debtor's Consent, Debtors Debtor may st consent to | up assignment of | compensation craait ot cobts | of al erecats constitutes a | (maturing): (maturing) prior waver of | bates the | ta he compensation, | assignment of | assignment and uuniess he | credit but not of | also latter ones: reserved his | subsequent | until he had fight to | ones. knowiadge of ‘compensation. the assignment, Facuiiaiive” compansaiion’ Compancaian” which can only be set up at the option of a creditor, when | ‘egal compensation cannot tate place because some legal requisites in favor of ta creditor ara tacking. Creditor may renaunce his ight to compensation. and ho himself may set Icup.Aé opposad to convertianal compensation, fapultative compensation is. unisteral and does not depend upon the agreement of the partes. VI. Novation NOVATION: Exiinguishment of an obligation by the substitution or change of the obligation by @ subsequent one which extinguishes or modifies the first either by changing the abject or principal conditions, or by substituting the person of the debtor, or by subrogating a third person in the rights ‘of the creditor. A juridical act of dual function—it extinguishes an obligation, and at the same time, it creates a new one in lieu of the old. (Asked in 78, ‘88, ’S4 and "01) 1. Aprevious valid objigation Agreement of all the parties to the new abligation 3. Extinguishment of the old obligation 4. Validity of the new obligation Novation is not presumed, > Express novation: Parties must expressly disclose their intent to extinguish the old abligation by creating a new ane. > Implied novation: No specific form is required, There must be incompatibilty between the old and new obligation or contract, (Asked in 79, 82, '88, and '94) 1 Galitomia Bus Fine v. Stats invasiment (2003): in the | sbsence of an unequivocal declaration of extinguishment of tha pre-csting bligation, only proof of incompstibity between the old and new Sbiigaton would warrant a navation by Impecaton, The restructuring agreement merely provided for a ew schedule of payments and authonty giving Data to take over management and operations of CBLI in cease it fails to pay installments. There was no change Inthe object of prior opeaations. ‘Test of Incompatibility. Whether or not the old and new obligation can stand together. each one having an independent existence. Na incompatibility exists when they can stand together. Hence, there is no novation. Incempatibiity exists when they cannot stand togather. Hence, thera is novation, Effects Ta Geneval 1 Griainal | Wee Obligation ie | Obligation te Wale Voie 7 Od avalon & val | New abligaloa fs eigation | the orginal | yard, bie ae fatingushed | obligation “was | atigaton andreplaced | void exept | subsists, unless bythenen | when annulment | he partine one fay be laimed | intended tal the sipaated | only by the | farmer _sealations OBLIGATIONS UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. hal be fexinguiehed in fry event (AH tem) 1. New obgation ‘eer, oF when rabcaticn Vaisotee acts thal are voidable (he 1288), 1 ‘Grignal | vais Na nawation hligasan fe vod: | 2 New ctigeban Nomoto | vaidable ee Giignal | Novation ie clgasan teetve ‘oidatle Efecive comiract raed belere novation > Accessory obligations are also extinguishad, but may subsist only insofar as they may banefit 3" persons who did not give their consent to tha novation OR may not be affected upon agreement between the parties Original or new obligation with suspensive or resolutory condition Art, 1299: If original obligation was subject to a suspansive or rosolutory condition, the new obligation shall be under the same condition, unless itis otherwise stipulated. Expromision Tafiatve for change dees ot emanate from me debtor, and may Even be mada wahaut his knowledge. Delegacion | Debior (delegante) afters ‘or iniuates the change, andthe creditor {(@elegatoria) accopts 3° person (delagado) as eonsenting tothe ‘Compatible Conditions Incompatible Conditions > Fuifiment af boih| > Original obligation is conditions: naw) extinguished, while foblgation becomes | new obligation exists demandable % Demandability shall > Fulfament of} be subject to condition conceming | fulflimants the original | nonfulfllment of ‘the ‘obagation: ‘aid | condition affacting t ‘obligation Is revived: an obligation lass Fulfilment of condition conceming the new obligaton: n ovaten; requisite ofa previous vald and effective abagation lacking QBJECTIVE NOVATION 1 2 3 ‘Change of the subject matter (Change of causa of consideration Change of the principal conditions or terms ‘SUBJECTIVE NOVATION 1 UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW ‘Substitution of the Debtor: Consent of creditor is an indispensable requirement both in expromision and delegacion Beauisites ‘Requiaites: Gomatcine | meets debtor and creditor ¥ 2. Knowtedge or & ‘consent of the old & et = i eae Tange Ingalvency of re naw debtor das nat revive the old obligation in case the ld gebtar did not agres to expromision 3. tf witn knowledge and consent of old dabtor, nen debtor can demand reimbursement the fentre amount paid and w! subrogation af creators rights 4. Hfwithout knowledge of te old debtor, raw destar oan demand reimbursement only Up to the extent that the later has bean bonetiad wi subrogation of creditors rights the obligation of the fold cotter it was ‘anterior and public, ‘and known tothe old ebtor. 2. Newdettor can amand reimbursement of the entire amount ha has paid, from me ‘onignal debter. He ‘may compel creditor to subrogate him to ll of his rights 2. Subrogation of a of the creditor a, Conventional 3" parson in the rights subrogation: by agreemant of the parties: Reaquisites: the consent of the 3 Parson, and of the criginal parties (Art 1301). ‘Convention: ‘Assignment of eredit ‘subrogation Debtors consent ls | Debtors consent is nat necessary required Exingushes an | Refers to the same right ‘obligation and ges vse 10 8 new ane Wwhien passes. ftom one person to another. without ‘modifying or extinguishing the obbgation SOL192010 BAR OPERATIONS COMMISSIONSthe old old obligation are | obligation are not cured cured Legal subrogation: by operation of law Legal subrogation is not presumed, ‘except in the falowing circumstances: 1. When croditor pays anothar creditor who is preferred, even without the dablor's knowledge 2. When 2 3” person not interested in the abligation pays with the express or tacit approval of the debtor 3. When, even without the knowledge of the debtor, a persan interested in the fulflimant of the obligation without prejudice to the effects of confusion as to the latter's share effets of confusion as to the latter's share Effects Total Partial 1. Tansers ta he | 1. A credfor, to whom person subrogated | partial payment has the crecit wah au the | been made, may rights thereto | exercise his right for appertaining, ether the remainder, and aint the debtor or | shail be preferred to 3° parsons. the person 2 Gbigation ts nat | subrogated m_his extinguished, even if) placa In virtue of the the intention is to partial payment. pay i 3. Defenses against the old creditar are retained, unless waived by the debtor UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW ‘Chapter IV EXTINGUISHMENT of OBLIGATIONS. OBLIGATIONS SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE Charts: Payment & Performance by Professor Eduarda A. Labitag UP College of Law (Asked in 75, 84, 88, 95, and "96) ‘WHO CAN PAY? Lager Ge General Rule =n 8 © Exception 1 Deo EMER AL C= creditor y 2 Ratered gent D = Debtor 8 4 Bc < i ¥ + reid n anigaton ey reed n obioni 9 pono (hater or oot (Gredarcarnet tise (creditor may refiusets accept imerestea M ctigatont does Rot Sacco aacipyeen) armen iz finite Payment or ayant th Payment Deter run ove ‘ebantcrs stars eo etter shrewd concert Tscnedae ‘erect. | | crayanatine wat ¥ ¥ ¥ Eft: teste: : ici: Teegtalt,fomert: Tatpenan is ented | FPeperen ean ery be | 1 Payer dpemed stipaionexingucted”— | (sumer | imbued on" wockie at fas a aration ef 2 ager to ramrburse | 2. "Logalaubrogaian || poymers fs heen terete to genaion fay paren tderaisd | avatb) - 3 poron || Sebuail2a8, 2 par) 2" Donaion must be in bneklgatn fsubeaadstap ino | —sturcen of pos en #* paren | proper fom "Wore Se per thecteet atawdter "|| camatconga © © eifopae | pete “smut” be i iene a crodeor wenttaa?y ving Etec Payment Inala swe prowace io Minor who entered |__| cin No ight to recaver iungéie i congere at | ting dotted to crestor wha spent 1 ‘used fr eenmumyed in goo an couceGe of Taw _SOLIN2010 BAR OPERATIONS COMMISSIONSCIVIL Law Reviewer TO WHOM PAYMENT MAY BE MADE Ia GENERAL constituted, or + His ouceessor in interest, ot g vaD 3° pers that t rdounded 80 In Case of [ACTIVE SOLIDARITY Effect: No H payment is made 10 WRONG PARTY (1242) IH debtor pays cradtor after bain judicisty cedered to retain dabe = payment nat valid (17243), Payment made in good faith to any parson in possassion of ered UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW Creditor Jperson in whose favor obligation was ‘Any person authorized to received payment (1240) NOT valid ‘Payment to incapacitated Greditor (244), linguishment Charts: PAYMENT & PERFORMANCE @1)10C haz hep the thing delivered 2) nse a: payers benefited © OBLIGATIONS ® Exception toproof of bene 3” persan acquites Cis rights after payment proves yp Crates payment (Cs conduct leads D to believe that 3° person had authorty to receive payment ‘paige of erect witha matics te O Wa deena ie muss, O may pay te ANY of soldary creditors 1 oxy jcalcsrajcicial omar is made by any tne ol me credibrs who made the Garand (121 115 © Exenguishment it fautt or " negligence can be imputed [to creditor @ Payment in good fal to person in possession of credit debtor released SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE WHAT IS TO BE PAID? — IDENTITY Tn GENERAL The very presiation (hing ‘SPECIFIC ting ‘Obligation to give: ‘GENERIC thing 1. Specific thing itself 2 Atcessions & accessories 3 Hwitt les, improvements, | C+ eannot demand a thing ef superior quay. }—F) sisted (1248) purpose and aiher ckcumstances (Obligation to DO or NOT ta 00 Payment of MONEY |__| property oC * DACIGN EN PAGO gevernad by | No intorest (Le. for tha use of someone's money) Payment of INTEREST UNIVERSITY OF THE PHTUPPINeS COLLEGE OF LAW Give: Deter canal compel © to. receive a diferent spect thing even later has ame value ot mare deterioration» Apply Act valuable than thot due i189 (aaa) o fn demand inferior D> cannat deliver a thing of inferor quality © Unless qually & crcumatances have been of ebigation casera (Obigaton 10 pay sum af money. WD allenates law on SA (i245) Taenlty. The very same act promised Yo be dane drat a bs dane > Subeltuton canal be dane agains! C's wll 1244, 7" pr) 1. Payment of domestic obligatians in Phil Currency ® Exceptions under RA 4100; R.A.8183 — Foreign currency if agreed to by parties 2. In case of extraordinary: inflation/deflation, basis of paymant is value of currency at the time of obligation was established (1250) ‘shall be due unless expressly stipulated in writing OBLIGATIONS SOL192010 BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE HOW IS PAYMENT TO BE MADE -> INTEGRITY e 1 GENERAL, 4238~ Complete delveryo¢reeesig sserommaace.tiB35) WAIVER 1248 ~ Cannot be compelled lo = Maybe express o implied received aria presiaions D carat 1 Co thane. tha iecmpetoness! imegusrty al the payer and he stil accepts wo cbjection, en bigstion te deemed eninge ‘Except festonpe) " 1 Centar sputtion : be inter to waive 2. When debt sn part Equidsted & in part: | © Except fC hae no kncaecge of oneal Se mecrrelteness 5. When frere sre several subjects/parte | ace bound under eiferert imatvondbans. | Ir creme in fon rll ret OBLIGATIONS In Case ef SUBSTANTIAL © may recover as if there had PERFORMANCE IN Deen orpete utimert GOOD FAITH (1234) Lees damages suflered by © INTEREST = principal arount is pH resales wie reservation an ts interest -> interest i presumed to PRES URIPTIONE fave been paid (1176; 1253) in payment of INTERESTS & INSTALLMENTS NSTALLMENTS 5 If 8 latter iralalimert of a debt is received Lp iio "“Tesenwtion to price ‘retalman > Prior instalimects are resumed! paid (1978, 2" par) couceGe of Taw _SOLIN2070 BAR OPERATIONS COMMISSIONSCIVIL Law Reviewer Charts: PAYMENT & PERFORMANCE WHERE PAYMENT IS TO BE MADE (ART. 1251) Inthe place designated inthe obiigation Tobigetion & ie deber a | | Expenses SPECIFIC thing Payt » Pace of peflarmance i wherever the thing wae 8 3 fhe meraart celgatian was a GENERAL E oc to os reauree ay the paymer i @ Unless aterwee | Tw any ether enoe sles i > Damiile af debloe jf TWD changes his domicile in bad falth oe after he ha ‘neuen aay » Additional expanses hall be nome by D ‘As la JUDICIAL expanses > Ree af Court sal gover couceGe of Taw _SOLIN2070 BAR OPERATIONS COMMISSIONSCIVIL Law Reviewer Charts: PAYMENT & PERFORMANCE WHEN PAYMENT IS TO BE MADE? When obligation i dua and demandable but D may pay bets fate If pariad is far Bane of D In GENERAL, Payment to ba made when tha craditor makes a demand (Qucciallyfextrajudicianyy Excentions mharsin demand af crcttor is nat OBLIGATIONS 1, When obligatn/iaw expressty declares 2. Nature & circumstances of the abiigation-> designation af ime Is controling motve or establishment of cantract 55. When domand would be useless, WHY SHOULD PAYMENT BE MADE? Because C may compel D to pay. and failure to pay vill alow C to satisfy credit from properves of D thal ar from executon fend af Obligations ~ couceGe of Taw _SOLIN2070 BAR OPERATIONS COMMISSIONSSet aR Oo ee COMMITTEE HEADS SBLIGATIONS AND CONTRACTS Ss KU Boguila neeeus ——_—_———_ AGENCY & PARTNERSHIP ACADEMICS COMMITTEE Gene CIVIL LAW TEAM Beate Kristine Bosgcara Dyer Ratda PUTER Behe Lee eh G&S aa e vonTs a. ies TORTS & DAMAGES Densons & FANMILY RELATIONS iota Tebies Anisah moi eee free "Tretres Darwin Ange Rien g's Bente Fe WS Zon 9 pie : BER ob EER tee an giana Gervacio E Pacrici: Hernandse EYYSthe Beg Oleeg és Hay k tuctane UP LAW sa.0 Professional Enhancement Program 2010 == E2_ “h. Od “ein BAR REVIEWER ComnissionCIVIL Law Reviewer CONTRACTS Table of Contents Chapter |. General Provisions. 122 Classification of ComMacts. conn 122 Ui, Elements of Contracts 123 Wl, Stages of Contracts 123 IV. Charactertics of Contracts (MARCO) 123 Chapter I, Essential Requisites 25 1. Consent 125 i. Object. 127 Wi, Cause 127 Chapter Il. Forms of Contracts nen 128 3 Rules 12a Kinds of Formaities 12a Chapter IV. Reformation of Contracts......130 Chapter V. Interpretation of Contracts......190 Chapter VI. Defective Contracts ..enmnn-- 131 L Rascissible Contracts (Arts. 1380-1389) 131 IL Voldabla Contracts (Arts. 1390-1402) 132 Il Unenforceable Contracts (Arts. 1403- 1408). 133 Iv. Void ar Inexistent Contracts (Arts. 1409- 1422). 134 UNIVERSITY OF THE PI CoLLeGe OF LAW SOLID BAR OPERATIONS COMMISSIONScIMIL Law Reviewe! Chapter GENERAL PROVISIONS Pete ae Coa ey eerie eee Lead Writ ee repeat De ea een) peeteter Brac ele aor) Dieta a rage P POCO n Rata Pee Meera Cy Pea ees ed OBLIGATIONS & CONTRACTS Chapter I. General Provisions ‘Article 1308, Civil Code. A contract & meeting of minds, between two persons whereby one binds rumesif, wih raspect to the ther, ta giva something ox to render sor ce, L Classification of Contracts A. Totormation T° Sones conse’ is enough: 9 an 2. Fan content and dave is rcuted: 8 2.9. deposi, pledge 3, Solemn or formal: special formalities ars Fequirad ‘tor perfoction e.g. donation of realty B. Tovelation to other contracts. 1. Principal: may exist alane: e.9. lease 2. Accessory: depends on another cantract for its existence: e.g. guaranty 3, Preparatory: a praiiminary step towards the celabration of a subsequent contract; e.g. agancy ©. Te nature of vinculum 1. Unilateral: only one party is bound by the prestation; e.g. commadaturn 2. Bilateral (synallagmatic): where both parlies are bound by reciprocal prestations; .9. sale D. To tultiliment of prestations 1, Commutative: fufliment is determined in advance 2. Aleatory: futfilment chance’ datermined by E. By equivalence of prestations 1, Gratuitous: no correlative prestation is received by a party 2. Gnerous: thera is an exchanga of correlative prastations 3. Remuneratary: the prastation is based on services or benefits already received F. By the time of fulfillment 1. Executed: obligation is fulfilled at the time contract is entered into 2, Executory: fulfilment does not take place atthe time the contract is mada G. To their purpose COLLeGe OF LAW SOLID BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER 4. Transfer af avmership, 2g. sale 2. Canvayance of Use, e.g. Commodatum 3. Rendition of Service, ¢.9. agency H. To their subject matter 1. Things, 0.9. sale, doposit 2. Services, 0.g. agency L. To their designation 1. Nominate: the law gives the contract a special designation or particular name 2g. deposit 2. innominate: the contract has no special Berformance of the terms agreed upon ani 305, ‘Code. INNOMINATE IV. Characterties of Contracts (MARCO) CONTRACTS shall be regulated by the stipulations, of the partes, by the general provisions af Tries | and il of [te Civil Code), by the rules governing the most analogous nominate contacts, and py the customs af the place, Classes of Innominate Contracts 1. Daut des: | give so that you may give 2. Do ut facias: | give se-that you may do 3. Facio ut facias: I do so that you may do 4, Faciout des: I do so that you may give Il. Elements of Contracts ‘A. Essential: Those without which the contract, would not exist (consent, abject, causa). B. Natural: Those which are derived from the nalure of the contract and ordinarily accompany the same-they are presumed to exist unless the contrary is stipulated e.9, warranty in sales Chapter L GENERAL PROVISIONS Stages of Contracts A. Preparation, conception or generation: period of negotiation and bargaining, ending at tha moment of agreement B, Perfection or birth: the moment when the pares come to agree on the terms of the contract ©. Consummation or death: the fulfillment or A. MUTUALITY The contract must bind bath contracting parties; its validity or compliance cannot be left fo the will of one of them (Art. 1308) iain "Of Tana ia, 483: (S| a canes expressly confer upon one party the right ta cancel the contract Because the exarcise of that right I= @ % The release must be binding on both parties, * The determination of the performance may be left to a 3 person, whose decisian shall NOT be binding if + tis evidently inequitable (the courts will decide) +The decision had nat been made known to both partins (Art. 1308) B. AUTONOMY 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, ©. Accidental: Those which exist only if stipulated public order, of public policy (Art, 1306), Solemn_[ Real | Consensual ‘Gommon | Consent, subject matier. causa ©. RELATIVITY Elements ‘Special | Formally | Delivery | None assigns and heirs UNLESS, obi arising Elements from the conitact are nat transmissible by their Example | Donaiiona | Loan. | Others (1) natura, (2) by stipulation or (2) by provision of # personal | pledge law. The heir is not lidble beyond the value of property the property he received from the decedent, (Art more than 1a") PSK Exception: Strangers may antoree the contract, In their favor in the fF. cases. 1. Stipulations Pour Autrui— Ia contract shauld contain same stipulation in favar af a third person, he may demand its fulfiment provided he communicated his UNIVERSITY OF THE PHIUPPINGS COLLEGE OF LAW oS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER facceplance to the obligor before its revocation. A mere incidanlal benefit or interest of @ person is nol sufficient. The contracting parties must have clearly and daliberately conferred a favour upon a third parson (ar.1311), Requisites: a There must be a stipulation in favor of a third person b. The stipulation must be part, not the Whole of the contract . The contracting parties must have clearly and deliberately confarred a favor upon a third person, NOT a mere incidental banefit or interest. d. The third person must have communicated his acceptance to the obligor before its revacation ©. Na relation of agency exists between any of the parties and the third person favored Florentino v. Encarnacion, 1977: a. Contracts to porform’ personal acts which cannot be as well performed by others are discharged by the death of the promissor. Conversely, where the service or act is of such a character that it may as well be performed by another, or where the contract, by its terms, shows that performance by others was_contemplated, death does not ferminate the contract or excuse b. In this case the stipulation is a stipulation pour atrui because the true intent of the parties is to confer a direct and material benefit upon a third party. Accion Directa: Where the statute ‘authorizas the creditor to sue en his debtor's contract, e.g. lascor v. sub- lessee (Art. 1651,1652) (J.B.L. Reyes) Third Person In Possession — When the third persan comes into possession of the object of a contract ‘creating real rights (Art 1312) Fraud— Whore the contract is enterad into in order to dafraud a parson (Art. 1313) Tortuous interference— Where the third person induces @ contracting party to violate his contract tart.1314), Chapter L GENERAL PROVISIONS Requisites: a. Existence of a valid contract b. Knowledge of the third person of the existence of the contract: and Interference by third person without legal justification or excuse D. CONSENSUALITY and from that moment, the parlies are bound not only to the fulfilment of whal has bean expressly stipulated but also to all consequences which, according to thair nature, may be in keeping with good faith, usage and law, (Ar.1315) EXCEPT real contracts, such as deposit, pledge and commodatum, are not parfectad until the dalivery of the object of the obligation. (Tolentino) E, OBLIGATORY FORCE An. 1159, Civil Code. Obligations arising tram coniracts have the force of law between the contracting parties and shoud be complied with in (goad fac. ‘An. 1308, Civil Code. The contract must bind both contracting pares; ts validty or compliance cannot be left to the wil of ne of them. ‘An. 1318, Civil Code. Coniracts are perfected by ere consent, and from that moment the pares are bound not only 10 the fulimant of what has Baan expressly stipulated but also to all the consequences wich, according to their nature, may be in Keping with good faith, usage and law. ‘Ant. 1986, Civil Code. Contracts shall be obbgaiary, In woataver form they may have bacn entaradt into, provided all the essential requisites for thelr valicity fre present. However, when the law requires that 3 Cconifact be in some form in order that it may be valid or enforceable, or that @ contract be proved in cerain way, that requremant Is absolute and Indispensable. In such cases, the right of the parties stated in the following artele cannat be exercised. UNIVERSITY OF THE PHI INcS COLLEGE OF LAW oS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter I ESSENTIAL REQUISITES. OFFER TERMINATES upon: Chapter Il, Essential Requisites a rasiooumn ty-necrnee co eoMseaT b. Incapacity (death, civil interdiction, iL OBJECT inganity, or insolvency) of the offeror or 4 I Consent Conformity of the parties to the terms of the contract; the acceptance by one of the offer made by the other. (Manresa) Requisites 1. It must be manifested by the concurrence of the offer and acceptance (Aris. 1319-1326) 2. The contracting parties must possess the nacessary legal capacity (ris. 1327-1329) 3. It must be intelligent, free, spontaneous, and real (not viliated) (Arts. 1330-1346) ‘A. Concurrence 1. Offer: unilateral proposition which one party makas to the other for the colebration of the contract. (Tolentino) offeres before acceptances is conveyed ce. Counter-offer 4. Lapsa of the time stated in the offer without acceptance being conveyed @. Revacation of the offer before learning of acceptance {. Supervening illegality before acceptance (BL. Reyes) Mole ama; nconationl eee eel a a) », BtBhumietad to tte fer en learned by him (Arts. 1319, 1322). If made through an agent, the offer is accepted from the time the acceptance ©. Express/implied, but is not presumed OPTION CONTRACT: A preparatory Requisites: contract in which one party grants to the a. Definite ather, far a fixed period, the aptian to decide b. Intentional whether or not to enter into principal ©. Complete contract, (Art. 1224) Invitations = to. = make ~—ooffers With consideration | Without consideration {advertisements) Offeror ‘cannot | Offeror may withdraw by > Business advertisements of things for sale, ara NOT definite offars, just invitations to make an offer, UNLESS the contrary appears (Art. 1325) + Advertisements — for bidders are tunilaterally withdraw his. offer ‘communicating vilthdrawal to tha oferes before acceptance 8. Capacity ivtatons ta meke proposals, advertiser f'NOT bound ta accept lowest ar ‘Meapaeiatad to Glve Consont : highest bid, UNLESS contrary appears; 3 Minors, UNLESS; the minors consen the bidder is the offeror (Art. 1326). 5 er ive in con ta saz > Statements of inrtion, no contrac necessaries (Ar.1427) results even if accepted + Where the minor actively misrepresents his age (estoppel) {Rosenstock v. Burke, 1824 FACTS: Elser, in informed Burke that he was » Mercado v. Espiritu, 1917: ‘in position and is willing to entertain’ the purchase Minors held Im estoppel throaigh ihe yooh nla some es acve msrepesaniation | HELD howard escat opl man act oe ot > Bonbatan Marampa 1928 Ineen ts rset to perio sd ct ut soy Tare iho osteo minority | uur te delbar or ecang a param of nas wohnown Fertrm Sou at twos erly poston eles b Insane ee” demented! — parsons. Sivoo othe wld purse the yooh ond ny Heienied— paisa | Matin'No'» propa toby mae fo tun, Wc UNLESS, they contact dung a hed {might be accepted by him or not, interval nat SEEN c. De ites. who do not know how to road and wit, UNIVERSITY OF THE PHIUPPINGS oS BAR OPERATIONS COMMISSIONS COLLEGE OF LAWCIVIL LAW REVIEWER 2. Disqualified to Contraet (Art. 1229): a. Those under Civil interdiction transactions inter vives (RPC Art. 24) Undischarged insalvents (Insolvency Law, Sec.24) Husband and wife: cannot donate (Ar. 123 FC) to each other, nor sell if the marriage is under ACP (Art. 1490) The ff cannot purchase (Art. 1431): The guardian: his ward's property ‘The agent the principal's property Executors and administrators: property under administration Public officers-stata property under their administration Justices, judges, prosecutors, clerks for b Ethnic Minorities: their contracts (excluding sale of personal property of personal service contracts) must be approved by the Governor or Fis representative. (Public Land Act) Give | Bisquailfication ‘Contract (Art.1329) Restraing tha very night itself Based on pubic polcy ‘and maralty Incapacity — to ‘Consent (Art. 1927) Reciraine the exercise of the night to contract Based on subjective rcumstancas of certain persons 10 Vesa ©. Vices of Consent (Art. 1330, CC) (MIVUF) Mistake Inadvertent and excusable disregard of a ‘circumstance material to the contract. (J.B.L. Reyas) > In order that mistake may invalidate consent, it should refer to the substance of the thing which Is the Chapter I ESSENTIAL REQUISITES. 2. Intimidation When one of the contracting parties is compelled by a reasonable and well grounded fear of an imminent and grave evil upon his parson or property, or upon tha person ar properly of his spouse, descendants or ascendants, to give his consent (Art. 1335). [Martinez i propersas by to har husbang's creditors. though [reluctant is stil | requirements of the defendants, ihe ell and cnminal jaclions against them would be dropped, A contract is {valid even thaugh one of the parties entered into it ‘against his wiches and desiras, or evan against Ms beter judgment. Contracts are aiso valid even though they are entered Into by one of tne partes without hope of acvantane er prot 3 cansent. She assented to the Violence Irresistible force used to extort consent WBL. Reyes) Undue Influence ‘When a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice (at. 1397). Circumstances: a. Relationship of the parties (family, Spiritual, confidential etc.) That the person unduly influenced was suffering from infirmity (mental ‘weakness, ignorance atc.) (Art.1337) b, Fraud When through insidious. words or machinations of ona of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to (Art, 1338). Ghject of the contrac, or in those Secs Wich ein cbal meta [Ari 1858, Gu Code. Fale to dacose ac, when condlons which Have poncipaly moved fee edly to reveal fem, ag when the paris re gra or bah, pa bound by corona ona, covets fa acme arte —| Wowace) [RT TWO, Ghar Goae, The waus) erangeraiane Tr] isms Fat Tae atta wea Wm] | Cae, wanna pry had an cepa ” ee know the facts, are not in themselves fraudulent. both contin | both parios | tothe egal gener _Desoue [sa at an | fet of 3m aa, Gill COaBy A Fake IpARGN oF BA option soe not sgny frau, unless mode By sn yon may t|concuson on |> Mus be) | Sa nd he ater pety ha led he fers versa: interpretation of | > Reel purpose petal knowedkge. a cusgon of | of Me pales | a7 3MH, Chl Code. Mixepsonision by @ Th] ine a mat pert dose not iow ‘consa, unlesa, such Tes fnstepresegton has sie’ aubstatal mistake UNIVERSITY OF THE PHI INcS COLLEGE OF LAW oS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER ‘and the same fs mutual ‘AR. 1343, Civil Code. Misropresentation made in | good fath is not fraudulent but may constitute error. SIMULATION OF CONTRACTS (Art. 1245. 1346): Declaration of a non-existant will made deliberately for the purpose of producing the appearance of a transaction that does not exist, (oF which is differant fram the one which actually Chapter I ESSENTIAL REQUISITES. ‘Aleatory contract: where one of the contracting parlies assumes the risk that the thing will never come ina existence. @.g. insurance Cause It is the impeliing reason for which a party assumes an obligation under a contract arose. (JBL. Reyes| Roquisite: : a a. Existing Absolute Relative b. Lit or Lawtul No real Gansaction is | Raal transection i hidden c. True intended Fictitous contract Disguised contract Cause in; Void Bound as to hidden jagreemant, so long ast ‘onerous Henumeratery | Pure 3 does not prejudice a thied Contacts _| Contracts Beneticence person and is nat contrary ‘As to each of [The senioe or | Recs iam, morals.” good the contracting | benef whieh Is | iberaty of customs. pubic order ot partes 1s | remunscatad the pubic patie Understocd to benefactor be whe undertaking a the promise of I. Object the ing or service by the ‘The thing right or service which i the subject omer party mattar of the obligatian arising fram the contract. wn _. nn fin Wiaroel “v."Esivadia (ado). where “3” maral | Requisites: obligaten is based upon a previous ell abigaton, a. Lawful: Not contrary to law, morals, good which has already been barred by the statute of ‘customs, public order or public policy. b. Actual oF possible ¢, Transmissibie: Within the commerce of man d. Determinate or determinable All things or services may be the object of contracts, EXCEPT: limeatons at the tme the canzact Is enteced into, i constitutes a sufficient cause or consideration 12 support @ contract (Natural Obligaton), BUT, In Fichor v. Rabb (1959), If the mara obligation arises ‘wholly from atical consideration, it cannot constitute 5 sufficient cause to support an onerous contact, 3 when Sie promise is made on the eroneous bebet that one was morally responsible forthe fallure of an Things which are outside the commerce of men meeps Ml Ontgston) _ > Intransmissible rights > Future inheritance except in cases Cause Defined suhortzed by low Lack of Absence ortota | The conlact > Impossible things or services Cause lack of cause — | confers no right > Objects whien sre Fedeterminable 2s to thle fc hs no lel kind, the genus should be expressed Tregany at Conan ot cave Cause moras goad In order that a thing. right or service may be the costoms, public object of a contract, it should he in existence at policy and the moment of the celebration of the cantract, or public order at least, it can exist subsequently or in the | Falaiy af | Gause s stated [Ved Wf ahould future, cause butis untue | not be proved that wee founded A EUTURE THING may be the abject of a spon meer contract, such contract may ba interprotod as a: gauss which was » Conditional contract: where its elficacy | Taq ar | Cause & not | Shall not invabcate should depend upon the future existence of | jeieuac” | pepertonsta’ te [the won the thing oteause | objet ‘secopt hon UNIVERSITY OF THE PHI Nes COLLEGE OF LAW oS BAR OPERATIONS COMMISSIONSCIVIL Law Reviewer Chapter I ESSENTIAL REQUISITES. mistake, und influance bywhen partes Intends a donation igues’ vi GA FAGS7% Inv making’ the” “donation” in question, Lopez was not moved exclusively By the sire to benefit Liguez but also to secure fe cohabiting wth him, ga that he could gratly his sexu The donation was an onerous transactor nee UNIVERSITY OF THE PI CoLLeGe OF LAW SOLID BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter Ill, Forms of Contracts Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. (Art 1366) ‘Spiral System of the Spaniah Code: the few looks’ Exceptions: When the law requires that a contract be in ‘some form for validity (Arts. 1857-1358) % When the law requires thal contract be im some form to be enforceable (Statute of Frauds} I Kinds of Formali A. Contracts Which Must Appear in Writing: 1. Donation of personal property whose value exceeds five hundred pasos (Art 748) 2. Sale of piece of land or any interest therein through an agent (Art 1874) 3. Antichrasis (Art 2134) 4. Agreements regarding payment of interests in contracts of loans (Art, 2314) B. Contracts Which Must Appear in a Public Document 4. Art. 1388: | Acts and contracts which have for their object. the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an intorast therain a govemed by Articles 1403, No. 2, and 1405, b. The cession, repudiation or renunciation of hereditary rights or cf those of the conjugal partnership of gains: c. The power to administer property, oF any other power which has for its ‘object an act appearing or which ‘should appear in a public document, or should prejudice a third person; UNIVERSITY OF THE PI IPPINGS COLLEGE OF LAW Chapter il. FORMS OF CONTRACTS. d. The cession of actions or rights proceeding from an act appearing in a public document. 2. All other contracts where the amount involved exceeds five hundred pasos must appaar in ‘writing, even a privala one, But sales of goods, chattels or things in action are governed by Articles, 1403, No. 2and 1405, 2, Donation of immovable properties (Art, 749) 3, Partnership where immovable property of real rights are contributed to the common fund (Arts.1771 and 1773) 5 BE Baipialion Ww" CA TRA K csairadd Thay be noampassed in several nsuments even though { every instruments not signed by the parties since iis | suftclant ff te unsigned instruments are carly Idanttlad oF rafarred to and made part of the signed instruments. oS BAR OPERATIONS COMMISSIONSCIVIL Law REVIEWER Chapter IV. REFORMATION OF CONTRACTS. ‘Chapter V. INTERPRETATION OF CONTRACTS Chapter IV. Reformation of Contracts Reformation of Contracts (Art 1359-1989) REFORMATION: is that remedy in equity by Chapter V. Interpretation of Contracts RULES ON DOUBTS (A:1. 1378) means of which a writtan instrument is made or construed so as to express or conform to the raal intantion of the parties when some error or mistake has bean committed, (J.8... Reyas) Regulates (st 1359) ‘There must be a meeting of the minds of the contracting parties: 2 Their true intention is nat expressed in the instrument: 3. Such failure to express their true intention is dus to mistake, fraud, inequitable conduct, or accident, and 4. There is clear and convincing proof of mistake, fraud, inequitable conduct, or accident, ac einai earidiey oF weet has prevented the meeting of the minds of tha partie the proper remedy is nat reformaton but annulment of 300) Who May JAsk for Reformation (Art. 1368): 1. Either party or his successors in interest, if the mistake was mutual; otherwise, 2 Upon petition of the injured party, or his heirs and assigns NO REFORMATION in (Art. 1266): 1. Simple donations inter vivos whergin no condition is imposed; 2 wills; 3. When the real agreements void. Implied Ratification (Art. 1367}: The action to enforce the instrument bars subsequent action to reform, UNIVERSITY OF THE PHIUPPINGS COLLEGE OF LAW Principal | Gratuitous ‘Onerous Objects Contracts Contracts Daubis where | Absolutely “Absolutely it cannat pe | Impossibla | Impossible to kon what | settle doubis by | satie doubts by may have | the ules and | the mules and bean the | only refer to | only refer to Intention | incidental incidental wal of tne | circumstances | circumstances partes, the | the the doubt shat coniract shall | transmissian | be seitled da be aull_and wold, oS CONTRACTS BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter V1. Detective Contracts Chapter VL DEFECTIVE CONTRACTS RESCISSIBLE VOIDABLE UNENFORCEABLE VOID OR INEXISTENT I Rescissible Contracts (Arts. 1380-1389) What are the rescissible Contracts in contracts? (At | | Contracts of | resentation 1381; see also Art guardians of absentees 1382}, | What makes | When the acls of When the acts defective? administration | of administration caute LESION or | causa LESION damage to tha |e damage to WARD thoy | tie ABSENTEE represent By mora | they roprosant than 25% of the | by more than value ofthe thing | 25% of the value oi the thin Effect on the | Valid unliiescindad (Act 1980) Contract Contracts are ‘entered into to Conacts rete devrucexising | ‘tings in 4 Vian te aasias | Tenet) & Cael ney ater | th ele se ae ON mance caer leet, cela ne ie sect jas one How to rescind? | Direct Action (differant from action for rescission under Art 1191) NO rescission if: 1. Injured party has other legal means 19 oblain reparation (Art 1383}. 2. Plaintiff cannot return his part of the obligation (Art 1385 par 1) 3. Object of the contract is in the hands of third person, onsrously ‘acquired by him in good faith (Art 1385 par 2) 4. if the court approves the ‘contracts under Art 1381 par 1 and 2 (Art 1386) Wha can rescind? | In ganeral, by | By absenies injured party By ward, or by guardian ad litem of ward during incapacity of ward in an action against the coiginal guardian ‘Accion Pauliana for Contracts in Fraud of Creditors NO rescission if: 1. Injured party has other legal means to ‘obtain reparation (Art 1383) 2. Plaintiff cannot return his part of the obligation (Art 1385 par 1) 3. Object of the contract is in the hands of third person, onerously acquired by hhim im good faith (Art 1385 par 2) By eraditor(a) By pavly itigant When torescind | Within four years | Within 4 years Within 4 years trom | Within 4 years (Art 1359) fram [re] gaining | from knowledge | knowledge of | fram knowledge of capacity ef domicile of | fraudulent contract | fraudulent contract absentee UNIVERSITY OF THE PHIUPPINGS oS BAR OPERATIONS COMMISSIONS COLLEGE OF LAWCIVIL LAW REVIEWER Chapter VL DEFECTIVE CONTRACTS IL Voidable Contracts (Arts. 1390-1402) What makes it defective? (Art 1390) Effect on the Contract Incapacity of one party te the Consent vitiated by mistake, violence, contract imidation, undue influence or fraud Valid until annulled by competent court (Art 1390 last par) Haw to annul? Wha canieannat annul? (art 1397) 1. Direclly. by an action for annulment 2. Indirectly, by counterclaim asking for positive action of the court to set aside the contract Annulment cannot proceed when: 1. the object of the contract is lost through fraud or daceit af tha parson with right to institule proceedings (art 1404 par t); 2. the right of action is based upon the incapacity of any one of the contracting parties and the thing is last through the fault or fraud of the plaintif (Art 1401 par 2 1. Pariies who are obliged principally or subsiially 2. Persons who are capable canno! allege the incapacity of those with whom they contracted 4. Parsons who exerted intimidation, violence, or undue intimidation, or emplayed fraud, or caused mistake, cannot base thelr action upon these flaws of the contract When? (art 1397) Within four years aflar guardianship of | Within four years minors or incapacitatad persons | 1. Afler intimidation, violence er undue ceases influence ceases 2. From the time of discovery of mistake or fraud Effect of Annulment 1. Mutual restitution of the things delivered, along with fruits and price paid wilh interest (Art 1398) 2. Damages to be paid by party who caused defect of the contract, by virtua of Article 20 and 21 af the Civil Code Haw to Cure Defect? (Arts 1392 - 1296) UNIVERSITY OF THE PI 1. Express (written or oral manifestation) or tacit ratification (acts or conducl) by injured party, or quardian of incapacitated person. - Ratfication does not require the conformity of the contracting party who has no right to bring tha action for annulment (Art 1395) COLLEGE OF LAW SS i BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter VL DEFECTIVE CONTRACTS Il. Unenforceable Contracts (Arts. 1403-1408) What are the unenforceable contracts? (Art 1403) Effect on the Contract Contract entered into without authority of, or in excess of authority given by owner No effect unless ratified, Cannot be enforced by a praper action in court. Contracts covered by Statute of Frauds which did not comply with the written memorandum requirement (See Art 1403 par 2) Contract where bath parties aro incapable ‘af giving consent to contract Haw to ascall? Nol by direct action. LAs a defense, by motion to dismiss the complaint on the ground that the contract is unenforceable Not by direct action, 1. As a defense, by motion to dismiss the complaint on the ground that the contract is unenforceable: 2 Objection tothe presentation of oral evidence to prove an oral contract (See Art 1405) Nat by awetacion whe a oetenen, by moon to does he round tha the contract is 5 cnerfoosabl Who can assall? "an unenforceable contract cannot be assallad by third persons (Art By person whose name the contract was entered into; By owner of property. By party against whom the contract is being enforced fr his privios, By party against whom the contract is being ‘enforced; oF his privies; fr parents ar guardians persons, as it is a personal defense UNIVERSITY OF THE PI into 1408) When? When & parly asks the court fo enforce the contract How to Cure | 1. Ratification by person | 1. Ratification by party| 1. By ralifcation of Defect? (Art) whose name the | against whom the | Bally against whom 1403) contract was entered the contract is being contract is being enforced 2. By feilure to object to the presentation of oral evidence to prove an oral contract or by the acceptance of benefits under the contract (Art 1405} COLLEGE OF LAW SS enforced; or his privies; or parents or guardians » The ratification by ane pary converts the contract into a voidlable contract (Art 1407) BAR OPERATIONS COMMISSIONSCIVIL LAW REVIEWER Chapter VL DEFECTIVE CONTRACTS IV. Void or Inexistent Contracts (Arts. 1409-1422) What makes it Contract’s Cause, Object | inexistent contracts, or | Contracts defective? of Purpose is contrary to contracts whase essential | prohibited or declared morals, good customs, | elements are absent void by law (Art 1409 public order or public (Art Ar 1409par 2.3.4.5) | par 7; contracts policy which are direct (Art 1409 par 1) results of a previous jal contract fart 1422) Contracts which are inconsistent beginning — (Art 1409) How to assall? Wha can assal? 7. Those whose Cause, Objact of Purpose is contrary to morals, good custome, public order ar public policy 2.Those which are absolutely simulated or fictitious 3. Those whose cause or abjact did not exist at the lima of the transaction 4. Those whose object is outside the commerce of men 5. Those which contemplate an impossible servica 6. Those where the intention of the parties relative ta the principal object of the contract eannat be ascertained 7. Those expressly prohibited or declared void by law 1. File for action for declaration of inaxistence or nullity of contract 2.As a defence during trial (Art 1409 last par). Such dafense not available to third persons not directly affected by cantract (Art 1421) 3.ln pari delicio applies when cause or object of contract constitutes @ criminal offense (Art 1411) 7 Innocent party Ad | 1. Anyofthe parlios 7. Any person whose 1411 par 2 Art 1412 | 2. Any person whose | interests are parz) interests are directly rectly affected by 2 Less-guilty party, upon | affected by the contract | the contract Art court discretion (art 1421) (1421) 3. incapacitated person 2. By party for whose who is a party to an protection the illegal contract, upon prohibition of the court diseration (Art law is dosignad (Art 1415) 1816) 4. Any person whose interests are directly aifected by the contract (Art 1421) When? Tha action or defense does not prescribe (Art 1410) UNIVERSITY OF THE PI ‘end of Contracts, COLLEGE OF LAW SS 5 BAR OPERATIONS COMMISSIONS