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4 ELEMENTS OF OBLIGATION
1. ACTIVE SUBJECT (creditor/obligee) – whose obligation is constituted
2. PASSIVE SUBJECT (debtor/obligor) – has duty to give, to do or not to do
3. OBJECT/PRESTATION – subject matter
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) – reason
5 SOURCES OF OBLIGATION
1. LAW
2. CONTRACTS
3. QUASI-CONTRACTS – arise from lawful, voluntary acts; no one shall be unjustly
enriched...
2Kinds
a. Solutio indebiti – something received (delivered on a mistake), no right to demand
it
b. Negotiorum gestio – voluntary mgt of property/affairs of another w/o his
knowledge/consent
4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise from damage; fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law – arise from civil liability that is a
consequence of a criminal offense
3 KINDS OF FRUITS
1. NATURAL – w/o human intervention
2. INDUSTRIAL – w/ human intervention
3. CIVIL – derived by virtue of juridical relation
1. DEFAULT/MORA – delay
3kinds
a. Mora solvendi – debtor’s delay to give (real ob.), to do (personal ob.)
b. Mora accipiende – creditor’s delay to accept
c. Compensatio Morae – delay of both in reciprocal obligation
CONCEPT OF DELAY
General Rule: No demand, No delay
Exceptions:
1. Law states
2. Obligation states
3. Time is the essence
4. Demand be useless if delay
5. Debtor guilty of delay
EFFECTS OF DELAY
1. Damages
2. When to deliver determinate thing, STILL LIABLE in fortuitous event.
2. FRAUD/DOLO – conscious, deliberate, intentional evasion of fulfillment
2Kinds
a. Dolo causante/Causal fraud – fraud in obtaining consent; consent is defective,
contract is voidable. Remedy: annulment
b. Dolo incidente/Incidental fraud – fraud w/c vitiates consent. Remedy: damages
TRANSMISSIBILITY OF RIGHTS
General Rule: ALL RIGHTS are transmissible.
Exceptions:
1. Law states
2. Contract states
3. Obligation is purely personal
10 Kinds of Obligation
1. Pure
2. Conditional
3. Alternative
4. Facultative
5. Joint
6. Solidary
7. Divisible
8. Indivisible
9. Obligation w/ a period
10. Obligation w/ a penal clause
1. PURE OBLIGATION
- w/o condition, demandable at once (pure has resolutory condition/period)
2. CONDITIONAL OBLIGATION
- there is condition in performance; future & uncertain
2Kinds
a. Suspensive condition – happening of condition gives RISE to obligation
b. Resolutory condition – happening of condition EXTINGUISHES obligation
2. DETERIORATION
a. w/ debtor’s fault - (1) cancel obligation & damages; or (2) fulfill obligation w/
damages
b. w/o debtor’s fault – creditor suffer impairment
3. IMPROVEMENT
a. By nature/time – benefit to creditor
b. at expense of debtor – debtor no right than that granted to usufructuary (debtor no
right to compensate amount for improvement)
3. OBLIGATION W/ A PERIOD
- demandability/extinguishment subject to the expiration of period
PERIOD CONDITION
certain uncertain
future only future/past but
unknown
(*influence upon (*) on the very existence
obligation) only upon its of obligation itself
demandability
4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be substituted.
ALTERNATIVE FACULTATIVE
OBLIGATION OBLIGATION
several prestations due, one prestation due, but
giving one is sufficient can be subtituted
right to choose (debtor) right to choose DEBTOR
unless granted to ONLY
creditor
If 1 of the prestation is nullity of principal
illegal, others may be carries w/ it nullity of
valid, obligation accessory/
remains substitute
loss/impossibility of loss/impossibility of
ALL prestations due, presta-tion due, w/o
w/o debtor’s fault, debtor’s fault,
extinguishes obligation extinguishes obligation
6. JOINT OBLIGATION
- obligation is to be paid proportionately by debtors or to be
demanded proportionately by creditors
7. SOLIDARY OBLIGATION
- each one of debtors has right to render or each one of creditors has right to demand
the entire compliance w/ prestation
8. DIVISIBLE OBLIGATION
- prestation is capable of partial performance
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance
1. PAYMENT/PERFORMANCE
- Payment means delivery of money & performance of obligation
2 PLACE OF PAYMENT
1. At place agreed upon
2. If w/o agreement
a. Object is indeterminate – paid at domicile of DEBTOR
b. Object is determinate – place of thing at the time of constitution of obligation
a. APPLICATION OF PAYMENT
- designation of debt to w/c payment must be applied when debtor has several
obligations of same kind in favor of same creditor.
b. CESSION
- debtor abandons ALL his property for creditor’s benefit to obtain payment from
proceeds of his property
CESSION DACION IN
PAYMENT
all properties NOT all properties
require more than 1 NOT require all
creditor creditors
NOT act of novation act of novation
NOT transfer ownership transfer ownership
requires may happen
partial/total insol-vency during solvency of
debtor
5 REQUISITES OF CONSIGNATION
1. Debt due.
2. Creditor refused the tender of payment w/o just cause
3. Notice of consignation already given to persons interested in fulfillment of obligation
4. Consignation of thing/amount due
5. Subsequent notice of consignation to interested persons
3. CONDONATION/REMISSION
- gratuitous abandonment of right by the creditor
4. CONFUSION/MERGER
- meeting in 1 person of qualities of debtor & creditor w/ same obligation
5. COMPENSATION
- 2 persons are debtors & creditors of each other
2. As to origin or cause
a. LEGAL – by law
b. VOLUNTARY/CONVENTIONAL – agreement of parties
c. JUDICIAL – order from the court
d. FACULTATIVE – 1 of parties can choose/oppose claiming compensation
6. NOVATION
- substitution/change of obligation
- substitution of debtor
- subrogation of creditor
4 REQUISITES OF NOVATION
1. Old valid obligation.
2. Agreement of parties to new obligation.
3. Extinguishment of old obligation.
4. Validity of new obligation.
7. SUBROGATION
- change of creditor
2 KINDS OF SUBROGATION
1. CONVENTIONAL – consent of original parties & 3rd person
2. LEGAL – by law
a. creditor pays another preferred creditor even w/o debtor’s knowledge
b. 3rd person pays the express approval of debtor
c. 3rd person pays even w/o knowledge of debtor
3 ELEMENTS OF CONTRACT
1. ESSENTIAL – w/o them, contract cannot exist
a. CONSENT of contracting parties
b. OBJECT CERTAIN – subject matter
c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
d. FORM
e. DELIVERY
2. PARTIES OBLIGATED
a. UNILATERAL – only 1 has obligation
b. BILATERAL – both parties require to render reciprocal prestations
3. CAUSE
a. ONEROUS – exchange of considerations
b. GRATUITOUS – no consideration received in exchange of what is given
c. REMUNERATORY – something is given for benefit/service that had been rendered
previously
4. RISK OF FULFILLMENT
a. COMMUTATIVE – equivalent values are given by both parties
b. ALEATORY – fulfillment of contract depends on chance (eg. insurance)
5. IMPORTANCE
a. PRINCIPAL – contract may stand alone (eg. sale, partnership)
b. ACCESSORY – existence depends on another contract (pledge, guarantee)
c. PREPARATORY – contract not an end by itself but a means thru w/c other
contracts may be made (eg. agency)
6. NAME
a. NOMINATE – contract given a particular/special name (eg. partnership)
b. INNOMINATE – not given special name (eg. I give that you may give)
7. SUBJECT MATTER
a. Contracts involving things
b. Contracts involving rights/credits
c. Contracts involving services
3 STAGES OF CONTRACT
1. PREPARATION/CONCEPTION – preparatory steps to perfect contract
2. PERFECTION/BIRTH – meeting of minds between 2 contracting parties
3. CONSUMMATION/TERMINATION – terms of contract are performed, & contract is
fully executed
2. MUTUALITY OF CONTRACTS
- the contract must bind both parties; its validity/compliance cannot be left to the will of
one of them
3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the parties, their assigns & heirs except when there
are rights & obligations not transmissible:
a. by their nature
b. by stipulation (stipulation por autri)
c. by provision of law
4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere consent
Exceptions:
a. REAL CONTRACTS – perfected by delivery
b. FORMAL/SOLEMN CONTRACTS – special form required for its perfection
5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the force of law between parties which bound to
comply in good faith
CONSENT
- meeting of offer (certain) & acceptance (absolute) upon a thing
5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
2. Parties are capacitate to enter in contract
3. No vitiation of consent
4. No conflict between declared & intended
5. Legal formalities must be complied
7 RULES ON OFFER/ACEPTANCE
1. An offer must be certain.
2. Business advertisements for sale are NOT offers but ONLY invitations to make an
offer.
3. Advertisements for bidders are ONLY invitations.
4. An acceptance made by letter/telegram does NOT bind offeror EXCEPT from the
TIME it came to his knowledge.
5. An offer made through an agent is accepted from the TIME the acceptance is done
through an agent.
6. An offer is ineffective upon death, insanity, insolvency, of EITHER party BEFORE
acceptance is made.
7. When offeror allowed offeree a certain period to accept, offer MAY be withdrawn AT
ANYTIME unless there is something PAID/PROMISED.
3 persons who CANNOT GIVE CONSENT to a contract (if entered into, contract
is voidable)
1. UNEMANCIPATED MINORS
2. INSANE/DEMENTED PERSONS (unless they acted DURING LUCID INTERVAL)
3. DEAF-MUTES who DO NOT know how to write
5 VICES OF CONSENT
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of parties, contract
is voidable; Remedy: annulment of contract.
1. MISTAKE/ERROR
2. FRAUD/DECEIT
3. VIOLENECE
4. INTIMIDATION
5. UNDUE INFLUENCE
1. MISTAKE/ERROR
- wrong conception & lack of knowledge upon a thing
4 RULES ON MISTAKE
1. Mistake to identity/qualifications of either of parties will vitiate consent ONLY when
IT is the principal cause of contract.
2. Simple mistake of account must be corrected.
3. No mistake if parties knew the risk/doubt affecting OBJECT of contract.
4. When one of parties is unable to read or the contract is in language not understood by
him, & mistake/fraud is alleged, the person enforcing the contract must FULLY
explained the terms to him.
2. FRAUD/DOLO
- when through insidious words/machinations of one of the parties, INDUCED the
other to enter into a contract, & w/o them, he will not agree.
DOLO CAUSANTE DOLO INCIDENTE
Serious Not serious
cause induces party to NOT the cause to enter
ENTER into contract into contract
make contract voidable contract is valid; liable
for damages
7 RULES OF FRAUD
1. Failure to disclose facts when these needs to be revealed, is a fraud.
2. Fraud should be SERIOUS (dolo causante) & SHOULD NOT be done by BOTH
parties to make contract voidable.
3. Incidental fraud (dolo incidente) ONLY obliges person to PAY DAMAGES.
4. Usual exaggerations in trade, when other party know the “real” facts, is NOT
FRAUD.
5. A mere expression of opinion is NOT FRAUD UNLESS made by an expert & the other
party relies on his special knowledge.
6. Misrepresentation made in good faith is NOT FRAUD but may constitute an error.
7. Misrepresentation by 3rd person DOES NOT vitiate consent UNLESS it
created substantial mistake.
3. VIOLENCE
- serious/irresistible force is employed.
2 RULES ON VIOLENCE
1. Serious/irresistible force is employed w/c constitutes the reason why one entered into
a contract.
2. Violence ANNULS obligation although it is DONE by 3rd person not part of contract.
4. INTIMIDATION
- 1 of the parties is compelled by a reasonable & well-grounded fear of an imminent &
grave evil upon his person/property to give his consent.
3 RULES ON INTIMIDATION
1. Age, sex, & condition of person must used to determine the degree of intimidation.
2. Intimidation ANNULS obligation although it is DONE by 3 rd person not part of
contract.
3. A threat to enforce one’s claim (claim must be just & legal), DOES NOT vitiate
consent.
VIOLENCE INTIMIDATION
External Internal
Physical NO physical coercion;
contact/coercion ONLY
MENTAL/MORAL
coercion
5. UNDUE INFLUENCE
- a person takes improper advantage of his power over other’s will, depriving the other
to his reasonable freedom of choice.
SIMULATION OF CONTRACT
- process of INTENTIONALLY deceiving others by producing a contract not really
exist (absolute simulation), or w/c is different from true agreement (relative
simulation).
4 REQUISITES OF CAUSE
1. It is just & equitable.
2. It exists.
3. It is lawful.
4. It is true.
LESION
- inadequacy of cause (eg. insufficient price for thing sold)
RULES ON LESION
- Lesion DOES NOT invalidate contract, except there is:
a. Fraud
b. Mistake
c. Undue influence
2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument
REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written instrument is made/construed to the REAL
intention of parties when there is an error/mistake.
5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & suffered LESION by more than ¼ of value of the value
that is the OBJECT.
2. Those agreed upon in representation of absentees, if the absentees suffered LESION.
3. Those undertaken in FRAUD of creditors when the creditors cannot further claim.
4. If entered into contract w/o knowledge/approval of litigants under litigation.
5. Contracts subjected to rescission declared by law.
3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving consent to a contract.
2. Those where consent vitiates by vices of consent. (MFVIU)
3. Those agreed in the state of drunkenness/hypnotic spell.
3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other person, or who acted BEYOND his powers.
2. Those who do not comply w/ the Statute of Frauds.
3. Both parties are incapable of giving consent to a contract.
7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY simulated/fictitious.
2. Those w/c contemplate an impossible service.
3. Those whose OBJECT is outside the commerce of man.
4. Those whose CAUSE/OBJECT did not exist at time of tran-saction.
5. Those whose CAUSE/OBJECT/PURPOSE is contrary to law, morals, good customs,
public order, or public policy.
6. Those where INTENTION of parties to principal object CANNOT be ascertained.
7. Those expressly prohibited/declared VOID by law.