ih San Beda College of Law 8s (Memory AID In Civit Law OBLIGATIONS AND CONTRACTS 1. OBLIGATIONS OBLIGATION 7 A juridical necessity to give, to do, fr not to do (Article 1156), one impressed with the character of enforceability. Requisites: a. juridical or legal tie or efficient cause b. active subject (obligee or creditor) cc. passive subject (obligor or debtor) d. fact, prestation or service constituting the object of the obligation * Requisites: i) it must be licit fl) it must be possible, physically & juridically fii) it must be determinate or determinable fv) it must have a possible ‘equivalent in money ® Sources (Article 1157): law Contracts Quasi-contracts Delicts Quasi-deticts ‘QUASECONTRACTS 7 Those juridical relations arising from lawful, voluntary and unilateral acts, by virtue of which the parties become bound to each other, based ‘on the principle that no one shall be unjustly enriched or benefited at the expense of another. Principal Kinds of Quasheontrats ‘Negotiorum gestio - arises whenever {2 person voluntarily takes charge of the agency or management of the business or property of another without any power or authority from the latter. 2. Solutio indebiti - arises whenever a person unduly delivers a thing through mistake to another who has no right to demand it. Quastoevicts ‘An act or omission by a person (tortfeasor) which causes damage to another giving rise to an obligation to pay for the damage done, there being fault or negligence but there is ‘no pre-existing contractual relation between the parties (Article 2176). 7 Requisites: 1, There must be an act or omissfon; 2. There ‘must be fault or negligence; 3. There must be damage caused to the plaintiff; 4, There must be a direct relation of cause and effect between the act or omission and the damage; and 5, There is no pre-existing contractual relation between the parties, NOTES: 2 The same negligent act or omission causing damage may produce civil liability arising from crime under Art, 100 of the RPC or create an action for quasi-delict under Article 2176. 46 While it fs true that in order that a person may be liable for quasi- delicts, there must be no pre- existing contractual relationship between the parties, yet, “the act that breaks the contract may also be a tort.” (Air France vs. Carrascoso, 18 SCRA 155). Nature of Obligations 1. Personal Obligations - obligations to do ‘a. Positive - obligation to do b. Negative - obligation not to do 2. Real Obligations - obligations to give a. Determinate or specific - object is particularly designated or a eta eae nS toa oncom Ve [Ee a Ferris and Scent ba Px Obligatans na Corr ‘ho tan Dunamasse and ese) John teh ‘GuamasAT) Cistopher igs(credt anscon) lige potions ane Oomape) Athan PuraranL 10), a. anon Tuga (Comet Lae) Scanned with CamScanner86. 2005 CENTRALIZED BAR OPERATIONS. Ss physically segregated from alt other of the same class b. Generic - object is designated merely by its class or genus c. Limited generic thing - when the generic objects are confined toa particular class, e.g. an ‘obligation to deliver one of my horses (Tolentino, Volume IV, p. 1). PERSONAL vs. REAL RIGHT Personal ro 1. fusad rem, a | 1. Jus in re, aright right enforceable | enforceable only against 2 | against the whote definite person or | world foup of persons 2. right pertaining | 2. right pertaining to the person to | toa person over a ‘demand from specific thing, ‘another, as a without a passive definite passive | subject individually subject, the determined against fulfillment of a | whom such right prestation to give, | may be personally to door nat todo. | enforced RIGHTS OF A CREDITOR Pen rm 1. compel specific. | 1. ask for performance performance of the ‘obligation 7 recover 2. ask that the damages in case of | obligation be breach of the ‘complied with at ‘obligation, the expense of the exclusive orin | debtor addition to specific performance 3. entitlement to | 3. recover fruits, interests | damages in case of from the time the | breach of the ‘obligation to ‘obligation deliver arises. Principle of Balancing of Equities as Applied in Actions for Specific Performance In decreeing specific performance, equity requires not only that the contract be just and equitable in its provisions, but thatthe consequences of specific performance likewise be equitable and just. The general rule is that this equitable relief will not be granted if, under the circumstances of the case, the result of the specific performance of the contract would be harsh, inequitable, oppressive or result ‘in an unconscionable advantage to the plaintiff. The courts may adjust the rights of the parties in accordance with the circumstances obtaining at the time of rendition of judgment, when these are significantly different from those existing at the time of generation of those rights. (Agcaoili vs. GSIS, G.R. No. 30056, August 30, 1988) OBLIGATIONS OF THE DEBTOR Pn em 1. deliver the thing | 1. deliver the thing. which he has wich is neither of obligated himself to | superior nor inferior give quality 2. take care of the | 2. pay damages in thing with the case of breach of proper diligence of | the obligation by a good father of a | reason of delay, family fraud, negligence or 3. deliver all ‘contravention of the accessions and tenor thereof accessories of the thing even though they may not have been mentioned 4. pay damages in case of breach of the obligation by reason of delay, fraud, nestigence or contravention of the tenor thereof EFFECTS OF BREACH ess er eT Obligations Coreen The creditor can: | If the obligor does 1, have the | what has been ‘obligation performed | forbidden him, the for executed at the | creditor can: expense of _ the | 1. have it undone at ‘obligor (except _in | the expense of the ‘eases where the | obligor; and personal 2. ask for damages ‘qualifications of the debtor are taken into ‘account in which ‘case the only remedy fs an action for damages) 2. ask that what has ‘Warcal pbarertor (Overs Charperon) Ronald Jakmanar (Overall Wee Cha), Yolanés TalentmoVe Acad ener ‘AagNG Secretar oy ndtv (Vina) Ene Masa (VC ED), Aa Marga res VC Logbts) nathan Mangundaye (Pot! Ln), franc ened Rotate (Labor ts), Rul Pal (Cl tae, Charmaine Torres (Tanase 13) ant ood morn: (corre am any tn alegre (Camere tow), ky An Uy (Rem ta) ce Law ase (ca ee) Scanned with CamScanner@ San Beda College of Lato ‘been poorly done be undone 3. recover damages because of breach of the obligation Cases where the remedy granted under Article 1168 ts not available: 1. Where the effects of the act which is, forbidden, are definite in character, in which case, even if it is possible for the obligee to ask that the act be undone at the expense of the obligor, consequences contrary to the object of the obligation will have been produced which are permanent in character 2. Where it would be physically or legally impossible to undo what has been undone because of the very nature of the act itself or because of a provision of law, or because of conflicting rights of 3rd persons NOTE: In either case, the remedy fs to ask for damages. BREACH OF OBLIGATIONS 1. Voluntary - debtor, in the performance of the obligation, is guilty of: default (mora) fraud (dolo} negligence (culpa) contravention of the tenor of the obligation NOTE: debtor is lable for damages 2. Involuntary - debtor is unable to comply with his obligation because of fortuitous event NOTE: debtor is not liable for damages DEFAULT or DELAY + Non-fulfillment of the obligation with respect to time 7 Requisites: 1. Obligation is demandable and already liquidated 2. The debtor delays performance 3. The creditor requires performance Judictally or extra-judically a7 Memory Ain in Cit Law 7 3 kinds: 1. Mora solvendi - delay of the debtor to perform his obligation. It may be: a. Ex re - obligation is to give . Ex persona - obligation ts to do 2. Mora accipiendi - delay of the creditor to accept the delivery of the thing w/c fs the object of the obligation 3. Compensatio morae - delay of the parties or obligors in reciprocal ‘obligation © When incurred: ‘General Rule: There must be a demand (judicial or extra-judicial) before delay may be incurred. ‘Exceptions: 1. obligation or law expressly so declares 2. time is of the essence of the contract 3. demand is useless as when obligor has rendered beyond his ower to perform 4, there is acknowledgment of default NOTES: 46 There can be delay only in positive obligations (to give/to do). There can be no delay in negative “obligations (not to give/not to do). 46 In reciprocal obligations one party incurs in delay from the moment the other party fulfills his obligation, while he himself does not comply or is not ready to comply in a proper manner with what fs incumbent upon him. The general rule is that fulfillment by both parties should be simultaneous except when different dates for the performance of ‘obligation is fixed by the parties. 46 Demand is still necessary if their respective obligations are to be performed on separate dates FRAUD 46 Deliberate and intentional evasion of the fulfillment of an obligation Sala Sean a REE REET pr serge ori lee lame apa ree ees ei eer ec ae ee ee Ma Rion Tuga (Coes of tan) Scanned with CamScanner88. 2005 CENTRALIZED BAR OPERATIONS. ey NOTE: Future fraud cannot be waived because it would result to illusory obligation. Causal Fraud/dolo eed (Article 1338) ocr eter) ferent (article 1170) 1. Present during the time of birth or 1, Present during the performance ‘of apre-existing | perfection of the obligation obligation 2. Purpose isto | 2. Purpose is to secure the consent of the other to enter into a contract ‘evade the normat fulfillment of the obligation 3. Results in the ‘on-fulfillment or breach of the ‘obligation 3. Results in the vitiation of consent 4,Gives rise toa | 4. Gives rise toa right of the creditor | right of an innocent to recover damages | party to annul the from the debtor | contract NEGLIGENCE 44 Omission of that diligence which ts required by the mature of the obligation and corresponds with the circumstances of the persons, of the time and of the place NOTE: Negligence can be waived unless the nature of the obligation or public policy requires extraordinary diligence as in common carrier. Diligence Required “That agreed upon by the parties 2. inthe obsence of stipulation, that required by law in the particular case If both the contract and law are silent, diligence of a good father of a famity Concept of Diligence of Good Father of a Family © That reasonable diligence which an ‘ordinary prudent person would have done under the same circumstances areal Abwevos (Oval Charperion) Ronald Jalmmcar (Over at Vice Char). Yelmds elentnelVCAC Test of Negligence 46 The test of negligence can be determined by this standard: If the defendant, in committing or causing the negligent act, had used reasonable care and vigilance which a man of ordinary prudence would have employed under the same situation, he is not guilty of negligence. Otherwise, he is guilty. Doctrine of Res Ipsa Loquitur as Applied in Negligence Cases The thing or transaction speaks for itself When the thing which caused injury, without fault of the injured person, is under the exclusive control of the defendant and the injury is such as in the ordinary course of things does ‘not occur if he having such controt use proper care, it affords reasonable evidence, in the absence of explanation from the defendant, that the injury arose from defendant's want of care (Africa vs. Caltex, 16 SCRA 448 and Republic vs. Luzon Stevedoring, 21 SCRA 279). FORTUITOUS EVENT 2 An event which could not be foreseen or which though foreseen was inevitable. Requisites: cause is independent of the will of the debtor 2. the event must be unforeseeable or unavoidable 3. occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner 4, debtor must be free from any participation in 5. the aggravation of the injury resulting to the creditor (Lasam vs. Smith, 45 Phil. 657) aN NOTE: It must not only be the proximate cause but it must be the ‘ONLY and SOLE CAUSE. mde Ingle Secret) Joy inuctio( nses) ane Manat (VLD?) Anna Margarares (WC Logue) Jonathan Mangundaya (ott! Law), Fae Benet Re tar (Labor Lan, Ram Pads (Cet Lo), Charmane Totes (Tantion Low) ‘Mant bad Maries (Comal ae, Cay La Alegre (Cmmeral Law), ky nn Uy (Remedi awh Sue Une Batt (Lega ee) Scanned with CamScanner89, Bi San Beda College of Lato GENERAL RULE: No liability in case of fortuitous event. EXCEPTIONS: 1 When expressly declared by law NOTE: e.g. Article 552(2), 1465(3), 1268, 1942, 2147, 2148 and 2159 of the Civil Code. 2 When expressly declared by stipulation or contract 3 When the nature of the obligation requires the assumption of risk 4 When the obligor is in default or has promised to deliver the same thing to 2 or more persons who do not have the same interest [Article 1165(3)]. EFFECT OF FORTUITOUS EVENT Determinate cog oie ‘obligation is extinguished eae ‘obligation fs not extinguished based fon the rule that a ‘genus never perishes (genus nunquam eruit) PRINCIPLE UNDER ARTICLE 1176 Z Before the presumption that a prior installment had been paid may arise, the receipt must specify the installment for which payment is made. 2 REMEDIES OF CREDITOR TO PROTECT CREDIT: 1. Exhaustion of debtor's property 2. Accion subrogatoria - to be subrogated to all the rights and actions of the debtor save those which are inherent in his person. 3. Accfon pauliana - impugn all the acts wie the debtor may have done to defraud them. NOTE: 2nd & 3rd remedies are subsidiary to the first ‘GENERAL RULE: Rights acquired by virtue of an obligation are transmissible in character (Memory Aton Civit Law EXCEPTIONS: 1. When they are not transmissible by their very nature e.g. purely personal right 2. When there is a stipulation of the parties that they are not transmissible 3. Not transmissible by operation of law PURE OBLIGATION = One whose effectivity or extinguishment does not depend upon the fulfillment or —non- fulfillment of a condition or upon the expiration of a term or period and is demandable at once. CONDITIONAL OBLIGATION * One whose effectivity is subordinated to the fulfillment or non-fulfillment of a future AND uncertain fact or event Kinds of conditions: 1. Suspensive - fulfillment of the ‘condition results in the acquisition of rights arising out of the obligation 2. Resolutory - fulfillment of the condition results inthe extinguishments of rights arising out of the obligation 3. Potestative - fulfillment of the condition depends upon the will of a party to the obligation 4. Casual - fulfillment of the condition depends upon chance and/or upon the will of a third person 5. Mixed - fulfillment of the condition depends partly upon chance and/or the will of a third person 6. Possible - condition is capable of realization according to nature, law, public policy and good customs 7. Impossible - condition is not capable of realization according to nature, law, public poticy and good customs 8. Positive - condition involves the performance of an act 9. Negative - condition involves the omission of an act 10. Divisible - condition is susceptible of partial realization 11. Indivisible - condition is not susceptible of partial realization SE ee VS a ee cn neste ae oreo een es ae cea eee Ma Reason Tuga (Coit of Ln) Scanned with CamScanner90. 2005 CENTRALIZED BAR OPERATIONS 12. Conjunctive - where there are several conditions, all of which must be realized 13, Alternative - where there are several conditions but only one must be realized Rule in Potestative Conditions a. If the fulfillment of the potestative condition depends Upon the sole will of the debtor, the condition as well as the obligation itself is void. It renders the obligation _ illusory. (Applicable only to a suspensive condition and to an obligation which depends for its perfection upon the fulfillment of the potestative condition and not to a pre-existing obligation.) b. If the fulfillment’ depends exclusively upon the will of the creditor, both the condition and obligation is valid. NOTE: In case of simple potestative condition, e.g. right of first refusal, such condition ts valid. Rule in impossible Conditions @GENERAL RULE: They shall annul the obligation which depends upon them. EXCEPTIONS: 1. pre-existing obligation 2. if obligation is divisible 3. in simple or renumeratory donations 4. in testamentary dispositions 5. in case of conditions not to do an {impossible thing Effects of Suspensive Condition 1. Before fulfillment of the condition, the demandability as well as the acquisition or effectivity of the rights arising from the obligation is suspended 2. After the fulfillment of the condition, the obligation arises or becomes effective 3. The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation 4. When the obligation imposes reciprocal prestations upon the parties, the fruits & interests shall be deemed to have been mutually compensated 5. If the obligation is unilateral, the debtor shall appropriate the fruits & Interests received, unless from the nature & circumstances it should be inferred that the intention of the Persons constituting the same was different 6. In obligations to do or not to do, the court shall determine the retroactive effect or the conditions that has been complied with Constructive fulfillment of Suspensive Condition * The condition shall be deemed fulfilled when the obligor actually prevented the oblige from complying with the condition and such prevention must have been voluntary and willful in character. Effects of Resolutory Condition 1. Before the fulfillment of the condition, the right which the creditor has already acquired by virtue of the obligation is subject to a threat of extinction. 2. If condition is not fulfilled, rights are consolidated; they become absolute. 3. Upon fulfillment of the condition, the parties shall return to each other what they received including the fruits SUMMARY: Aa orc 1. tf fulfiled, obligation arises or becomes effective 2. Hf not fulfilled, Cy aru 1. i fulfilled, obligation is: extinguished 2. if not fulfilled, juridical relation és consolidated 3. rights are 3. rights are not yet ‘acquired, but there is hope or already expectancy that acquired, but they will soon be | subject to the acquired threat or danger of extinction —__siis Ceti a Ovens Exec Conatrnr an Sumer Cuaron Marcel Abwrotos (Overal Charpeon), RenaléJaimanzar (Oval ce Ca) Yolanda Tle Acat) emailer ‘Angv Secretar oy induct (VC inane) Eine Manat VCEDF) Ara Marga res (Lopate) natn Mangundayoe (Pola! Law), anc Benet Reta (or Uae} Remlé Pad (Chan, Charmaine Torres (Fass 2) ‘Mant bad Martins (imu am), Cay Ln Alegre (Commer Uw}, ky Ann Uy Rei a, Sade Law Baa eg the) Scanned with CamScannero Bi San Beda College of Lau Effects of Loss, Deterioration and Improvement in real obligations (during the pendency of the condition) 1. Loss a. without debtor's fault - obligation is extinguished b. with debtor's fault - debtor pays damages 2, Deterioration a. without debtor's fault impairment to be borne by the creditor b. with debtor’s fault - creditor may choose between the rescission of the obligation and its fulfillment with indemnity for damages in either case 3. Improvement a. by the thing's nature or by time - improvement shall inure to the benefit of the creditor b. at the debtor's expense - debtor shall have no other right than that granted to a usufructuary NOTE: Applies only to determinate things A Thing ts Lost when 1. perishes 2. goes out of commerce 3. disappears in such a way that its existence is unknown or it cannot be recovered RECIPROCAL OBLIGATIONS © Those which are created or established ‘at the same time, out of the same cause, and which’ result in mutual relationships of creditor & debtor between the parties ‘TACIT RESOLUTORY CONDITION elf one of the parties fails to comply with what is incumbent upon him, there {sa right on the part of the other to rescind the obligation, (Memory Aib In Civit LAW RIGHT TO RESCIND (ART 1191) GENERAL RULE: The right to rescind needs judicial approval. EXCEPTIONS: 1. If there is an express stipulation of automatic rescission 2. When the debtor voluntarily returned the thing NOTES: 4 Atticle 1191 refers to judicial rescission. It does not apply if there {s an express stipulation to rescind, in which case such stipulation must prevail. There is nothing in the law which prohibits the parties from entering into an agreement that Violation of the terms of the contract would cause its cancellation without court intervention. Said stipulation is in the nature of facultative resolutory condition (Angeles vs, Calasanz, 135 SCRA 323). 46 Rescission will be ordered only where the breach fs substantial as to defeat the object of the parties in entering into the agreement. 46 The injured party may choose between fulfillment and rescission of the obligations, with the payment of damages in either case. These remedies are alternative, not cumulative. However, ‘should fulfillment become impossible, the injured party may also ‘seek rescission. 4 The right to rescind belongs exclusively to the injured party. OBLIGATION WITH A PERIOD Those whose demandability or extinguishment is subject to the expiration of a term or period Requisites: future certain possible, legally and physically Pron CLASSIFICATION OF TERM OR PERIOD 1. a. suspensive (ex die) - obligation becomes demandable only upon arrival of a day certain Salou a a ee ees See ee en ae Pace free ple ert eehec ede eters Wa Remon tugaa(Conitsafi) Scanned with CamScanner2 2005 CENTRALIZED BAR OPERATIONS = b. resolutory (in diem) - arrival of day certain terminates the obligation 2. a. legal - granted by law b. conventional - stipulated by parties ¢. judicial - fixed by courts 3. a. definite - date/time is know beforehand b. indefinite - the date/time of day certain is unknown oe wicenauee” | imrcare see oan 2. interval of time | 2. future and whe must ‘uncertain fact or necessarily come, | event w/c may or although it may "| may not happen not be known when 3.exerts an 3. exerts an influence upon the | influence upon the time of very existence of the demandabitity or | obligation itself extinguishment of, ‘an obligation “4. does not have | 4, has retroactive anyretroactive | effect ‘effect unless there fs an agreement to the contrary 5. when it isleft | 5. when is left exclusively to the | exclusively to the will of the debtor, | will of the debtor, the existence of | the very existence of the obligation is | the obligation is, not affected affected SGENERAL RULE: When a period is designated for the performance or fulfillment of an obligation, it is presumed to have been established for the benefit of both creditor and debtor. ‘EXCEPTION: When it appears from the tenor of the obligation or other circumstances that the period has been established in favor of one or of the other. When court may fix period: 4. if, the obligation does not fix a period, but from its nature and circumstances it can be inferred that a period was intended by the parties 2. if the duration of the period depends upon the will of the debtor; and o) 3. If the debtor binds himself when his means permit him to do so (Article 1180) NOTE: The only action that can be maintained is an action to ask the court to fix the duration of the term or period. The fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith, and such period has arrived. However, such technicality need not be adhered to when a prior and separate action would be a mere formality and would serve no other Purpose than to delay (Borromeo vs. CA, 47 SCRA 65). Reason for Fixing the Period (ART 1197) = There can be no possibility of any breach of contract or failure to Perform the obligation unless the Period fs fixed by courts. When debtor loses right to make use of Period: (IGIVA) 1. when after the obligation has been contracted, he becomes insolvent, unless he gives guaranties or securities for the debt (the insolvency need not be judicially declared) 2, when he does not furnish to the creditor the guaranties or securities he promised 3. when by his own act he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he gives new ‘ones equally" satisfactory when debtor violates any undertaking, in consideration of which the creditor agreed to the period or 4, when debtor attempts to abscond Ber Cireccnd ‘ALTERNATIVE ieee 4. comprehends | 1. comprehends only one object or | several objects or prestation which is | prestations which are ‘due, but it may be | due but may be ‘complied with by _| complied with by the the delivery of | delivery or another object or | performance of only performance of | one of them YR h sere arca crnrprsm Ron naar (Over 8 ce Ca, Yanda oll Ase ermter Iegive Secret nductivo¥¢fnees) Ene Mast (EDP) Ana Marat res (YC Logs) Jonata Mangundoyas (Police Law) rans Senet Recta (bor Lor), Romaalé Pail (Cn ta), Charmaine Terres (Tnston Ls) ‘Mark band Martine (Arar te) 5 carny tie Alegre (Conver tae ky Ann Uy (Reed! te) Jace Lou Batt (Le Scanned with CamScannerBh San Beda College of Zan ‘another prestation {in substitution 2. fortuitous loss ‘extinguishes the 2. fortuitous toss of ait prestations will obligation ‘extinguish the obligation 3. culpable toss | 3. culpable loss of any ‘obliges the debtor | object due will give to deliver rise to lability to substitute debtor prestation without liability to debtor 4. choice pertains | 4. choice may pertain only todebtor | to creditor or even third person’ NOTES: 2 In alternative obligations, choice takes effect only upon. communication of the choice to the ther party and from such time the obligation ceases to be alternative. 2 The debtor cannot choose those prestations or undertakings which are impossible, unlawful or w/c could not have been the object of the obtigation. EFFECT OF LOSS OF OBJECT OF ‘OBLIGATION: 1. If right of choice betongs to debtor a. If through a fortuitous event - debtor cannot be held liable for damages b. If 1 of more but not all of the things are lost or one or some but not all of the prestations ‘cannot be performed due to the fault of the debtor, creditor cannot hold the debtor liable for damages because the debtor can still comply with his obligation. 2. If right of choice belongs to the creditor a. IF 1 of the things is lost through a fortuitous event, the debtor shall perform the obligation by delivering that which — the creditor should choose from ‘among the remainder, or that ‘which remains if only 1 subsists 3 Memory Aib in Civit LAW b. If the loss of 1 of the things ‘occurs through the fault of the debtor, the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared with a right to damages If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any 1 of them, also with indemnity for damages JOINT. AND SOLIDARY OBLIGATIONS ®GENERAL RULE: Obligation is presumed Joint if there is concurrence of two or ‘more debtors and/or creditors. EXCEPTIONS: 1. when expressly stated that there is solidarity 2. when the law requires solidarity 3. when the nature of the obligation requires solidarity JOINT DIVISIBLE OBLIGATIONS > Each creditor can demand for the Payment of his proportionate share of the credit, while each debtor can be held liable only for the payment of his proportionate share of the debt. A joint creditor cannot actin representation of the other creditors while a joint debtor cannot be compelled to answer for the acts or ability of the other debtors. JOINT INDIVISIBLE OBLIGATIONS 1. If there are 2 or more debtors, the fulfillment of or compliance with the obtigation requires the concurrence of all the debtors, although each for hhis_own share. Consequently, the obtigation can be enforced only by Proceeding against all of the debtors. 2. If there are 2 or more creditors, the concurrence or collective act of all the creditors, although each for his own share, is also necessary for the enforcement of the obligation. Effect of breach - If one of the joint debtors fails to comply with his undertaking, the obligation can no eee ee ee Gases Nectar accent te cen ese tone er Na Remon lgea (ConictnefL) Scanned with CamScanner4 2005 CENTRALIZED BAR OPERATIONS. w longer be fulfilled or performed. Consequently, it is converted into one of indemnity for damages. Innocent joint debtors shall not contribute to the indemnity beyond their corresponding share of the obligation. Effect of insolvency of a debtor - If one of the joint debtors should be insolvent, the others shall not be liable for his share. INDIVISIBILITY. Rong 1. refers to the 1. refers to the prestation which | legal tie or vinculum constitutes the Juris & consequently “object of the to the subjects or ‘obligation parties of the obligation 2 plurality of 2. plurality of subjects is not subjects is required indispensable 3. in case of Breach, | 3. when there obligation is Uiability on the part converted into 1 of | of the debtors indemnity for because of the damages because of | breach, the breach, indivisibility | solidarity among the ‘of the obligation is | debtors remains terminated KINDS OF SOLIDARITY 1. Active solidarity > solidarity of creditors each creditor is empowered to exercise against the debtor not only the rights which correspond to him, but also all the rights which correspond to the other creditors, with the consequent obligation to Fender an accounting of his acts to such creditors + creates a relationship of mutual agency among solidary creditors Passive solidarity solidarity of debtors liability of each debtor for the payment of the entire obligation, with the consequent right to demand reimbursement from the others for their corresponding shares once payment has been made Mixed solidarity solidarity among creditors and debtors yan we Effect of Assignment by Solidary Creditor Without Consent of Others 1. assignee is co-creditor - no violation of Article 1213 because there can be no invasion of the personal or confidential relationship 2. assignee is third person - co- creditors and debtors are not bound by the assignment Effect of Novation upon Solidary Obtigation If the novation is prejudicial, the solidary creditor who effected the novation shall reimburse the others for damages incurred by them 2. If it is beneficial and the creditor who effected the novation is able to secure performance of the obligation, such creditor shall be liable to the others for the share which corresponds to them, not only {in the obligation, but also in the benefits 3. If the novation is effected by substituting another person in place of the debtor, the solidary creditor who effected ‘the novation is liable for the acts of the new debtor in case the is deficiency in performance or in case damages are incurred by the other solidary creditors as a result of the substitution. 4. If the novation is effected by subrogating a third person in the rights of the solidary creditor responsible for the novation, the relation between the other creditors ot substituted and the debtor or debtors is maintained. Effect of Compensation and Confusion upon Solidary Obligation 1. If the confusion or compensation is partial, the rules regarding application of payment shall apply. This is without prejudice to the right of other creditors who have not caused the confusion or compensation to be reimbursed to the extent that their rights are diminished or affected. 2. If the confusion or compensation is total, the obligation is extinguished, what is left is the ensuing lability ‘Mark David rns (Cal a, Cay Lbs Alegre (Creal Law ky Ann Uy (Reel ae) Jae Lu Bt the) Scanned with CamScanneriS San Beda College ot Law for reimbursement within each ‘group: a. The creditor causing the confusion or compensation is obliged to reimburse the other creditors b. The debtors benefited by the cextinguishments ofthe obligation are obliged to reimburse the debtor who made ‘the confusion or compensation possible. Effect of Remission upon Solidary Obligation 1. If the remission covers the entire obligation, the obligation is totally ‘extinguished and the entire juridical relation among the debtors is extinguished all together. IF the remission is for the benefit of ‘one of the debtors and it covers his entire share in the obligation, he is completely released from the Creditors but is still bound to his co- debtors. 3. If the remission is for the benefit of ‘one of the debtors and it covers only a part of his share in the obligation, his character as a solidary debtor is not affected. Effect of Payment by Solidary Debtor 1. Whole or partial extinguishment of debt 2. Right to recover against co-debtor 3. Right to recover interest from time the obligation becomes due Effect of Loss or Impossibility of Performance 1. If it is not due to the fault of the solidary debtors, the obligation is extinguished. 2. If the loss or impossibility is due to the fault of one of the solidary debtors or due to a fortuitous event after one of the solidary debtors had already incurred in delay, the obligation is converted into an obligation of indemnity for damages but the solidary character of the obligation remains. eee ore Ey (Memory Aion Civit Law Defenses available to a Solidary Debtor 1. Defenses derived from the very nature of the obligation 2. Defenses personal to him or pertaining to his own share 3. Defenses personal to the others, but only as regards that part of the debt for w/c the latter are responsible DIVISIBLE OBLIGATIONS 7 Those which have as their object a prestation which is susceptible of partial performance without the essence of obligation changed. INDIVISIBLE OBLIGATIONS 7 Prestation is not susceptible of partial performance, otherwise, the essence of the obligation will be changed Nor! + Divisibility or indivisibility of the obligation refers to the performance of the prestation and not to the thing which is the object thereof. Intention of parties should be taken into account to determine whether obligation is divisible or not. ‘GENERAL RULE: The creditor cannot be compelled partially to receive the prestation in which the obligation Consists; neither may the debtor be required to make partial payments. ‘EXCEPTIONS: 1. When the obligation expressly stipulates the contrary; 2. When the different prestations constituting the objects of the obligation are subject to different terms and conditions; and 3. When the obligation is in part liquidated and in part unliquidated. OBLIGATIONS WITH A PENAL CLAUSE 7 One to which an accessory undertaking is attached for the Purpose of insuring its performance by virtue of which the obligor is bound to pay a stipulated indemnity or perform a stipulated prestation in case of breach. cts cvitopher ey Marra (Persons and Far elton) Nef asso roper Ms. Rbogora ‘Fevers and sree) an Darine Pa obgaons ne Corts sha tliah Ocara(eses and ee) a stephen {quonba(Pat- sph Cabiao( ret Tana) gaya Alps Tos and Duroges) hon Puan} ‘Ma Reason Tuga (Contes fam) Scanned with CamScanner6. 2005 CENTRALIZED BAR OPERATIONS Ww Purpose of Penalty: To insure the performance of the obligation; 2. to liquidate the amount of damages to be awarded to the {injured party in case of breach of the principal obligation (compensatory); and 3. in certain exceptional cases, to Punish the obligor in case of breach of _ the principal “obligation (punitive). GENERAL RULE: The penalty fixed by the parties is a compensation or substitute for damages in case of breach. ‘EXCEPTIONS: 1. when there fs a stipulation to the contrary; 2. when the debtor is sued for refusal to pay the agreed penalty; and 3. when debtor is guilty of fraud NOTE: Article 1228 does not apply to these exceptions; there must be proof of actual damages. NOTES: The debtor cannot exempt himself from the performance of the principal obligation by paying the stipulated penalty unless when the right has been expressly reserved for him. 4 The creditor cannot demand the fulfillment of the principal obligation and the satisfaction of the stipulated Penalty at the same time unless the right has been clearly granted him. When penalty may be reduced 4. If the principal obligation has been partly complied with; 2. If the principal obligation has been {regularly complied with; and 3. If the penalty is iniquitous or ‘unconscionable even if there has been ‘no performance. MODES OF —EXTINGUISHMENT OF OBLIGATIONS (LFC'NARP?) 1. loss of the thing due 2. fulfillment of resolutory condition 3. compensation 4. condonation or remission of the debt 5. confusion or merger of rights of the creditor and debtor novation annulment rescission Brescription 10. payment or performance Payment or Performance * Means not only the delivery of ‘money but also the performance, in any other manner, of an obligation. Integrity of Payment ‘GENERAL RULE: ‘A debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered, as the case may be. EXCEPTIONS: 1. When the obligation has been substantially performed in good faith; 2. When the —obligee_— accepts performance, knowing its, incompleteness or irregularity & w/out expressing any protest or objection; 3. When there fs an express stipulation; and 4, When the debt is in part liquidated and in part unliquidated. Identity of Payment 7 requires that the very thing, service or forbearance, as the object of the prestation, must be performed or observed Persons who may pay the obligation: 1. the debtor himself or his legal representative 2. any third person ‘GENERAL RULE: Creditor is not bound to accept payment or performance by a third person. EXCEPTIONS: 1. when made by a third person who has an interest in the fulfillment of the obligation; 2. when there is a stipulation to the contrary. —__3ns curusuines Ras Qorxaions Eee Conuirms an Suni Cuamoonsons ‘Marcel Abaronos (Over Chairperson) Rona amare (Over Vie Coy Yolanda Teenie vCACaCS, emer ‘Angiv Secrets) Jo Inde (VC Fnce ane Masuat (VC EDP) ara Marga res (Logs) Jonathon | mangundayas (ole! Ls), Hands Bnedet Reotta (bor Law), Rema Paa (Ont Ln), Charmane Tare (Teton 20) ‘ark id marines (ches La ary tan sg (Carel a), ky an Uy (eal ah a La Bat op te) Scanned with CamScanner@ San Beda College of Lato Rights of 3rd person who paid the obligation: 1. If payment was made with knowledge and consent of the debtor: a. can recover entire amount paid b. can be subrogated to all the rights of the creditor. 2. If payment was made without knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. ‘To whom payment must be madé 1. The person in whose favor the obligation has been constituted; 2. His successor in interest; or 3. Any person authorized to receive it. ‘GENERAL RULE: If payment is made to a Person other than those enumerated, it shall not be valid. ‘EXCEPTIONS: 1. Payment made to a 3rd person, provided that it has redounded to the benefit of the creditor. Such benefit to the creditor fs presumed in the following cases: If after the payment, the third person acquires the creditor's rights; + If the creditor ratifies the payment to the third person; + If by the creditor's conduct, the debtor has been led to believe that the third person had authority to receive the payment. 2. Payment made to the possessor of the credit, provided that it was made in good faith, Obligation to Deliver a Generic Thing If the quality and_ circumstances have not been stated, the creditor cannot demand a thing of superior quality; neither can the debtor deliver a thing of inferior quality. 7 (Memory Alp In Civit LAW Rules in Monetary Obigations: Payment in cash - must be made in the currency stipulated; if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines. 2. Payment in check or other negotiable instrument - not considered payment; not considered legal tender and may be refused by the creditor. It shall only produce the effect of payment: a. when it has been cashed or b. when it has been impaired through the fault of the creditor. LEGAL TENDER 7 Such currency which may be used for the payment of all debts, whether private or public. The kind of ‘currency which a debtor can legally compel a creditor to accept in Payment of a debt in money when tendered by the debtor in the right amount. 7 Legal tender of the Philippines would be all notes and coins issued by the Central Bank. * Section 52, R.A. No. 7653 1. 25c and above, legal tender up to P50 2. 10¢ and below, legal tender up to P20 Extraordinary inflation or deflation unusual or beyond the common fluctuation in the value of currency, which the parties could not have reasonably foreseen or which was manifestly beyond their contemplation at the time the obligation was established. * Applies only to contractual obligations 7 Requisites: a. The decrease in the value of the currency could not have been reasonably foreseen by the parties or beyond their contemplation at the time the obligation was established ; b. There must be a declaration of such extraordinary inflation or (sae tore ts nas Wao sd EGE van nay com Ve neat rte oy neon tos on esa) ede Crp he ars Frei scr rc nse an Cran) Dares an {Gaunt epee Fann iaAlpgs an Barapeh mthory Pep a Renn raga (Conte) Scanned with CamScanner8. 2005 CENTRALIZED BAR OPERATIONS w deflation by the Bangko Sentral. Without such declaration, the creditors cannot demand an increase, and debtors a decrease, of what is due to or from them. (Ramos vs. CA, 275 SCRA 167 and Mobil Oil Phils. vs. CA, 180 SCRA 651) Place of payment Place stipulated by the parties. 2, Ne stipulation and the obligation is to deliver a determinate thing, payment shall be made at the place ‘where the thing might be at the time the obligation was constituted. 3. In any other case, the payment shall be made at the domicile of the debtor. Specisl Tons of Fayre: Application of payment Dation in Payment Payment by Cession Tender of payment and Consignation 2. Application of Payment Designation of the debt to which the payment must be applied when the debtor has several obligations of the same kind in favor of the same creditor. + Requisites: a. there must be only 1 debtor & only 1 creditor; b. there must be 2 or more debts of the same kind; c. all of the debts must be due; except: if there's stipulation to the contrary; or application of payment is made by the party for whose benefit the term has been constituted; and 4d. amount paid by the debtor must not be sufficient to cover the total amount of all the debts. ‘GENERAL RULE: The right to designate the debt to which the payment shall be applied primarily belongs to the debtor. ‘EXCEPTION: If the debtor does not avail of such right and he accepts from the creditor a receipt in which the application is made. Legal Application of Payment (ART1254) If neither the debtor nor the creditor makes any application of payment, or if it cannot be inferred from other circumstances, the debt which is most onerous to the debtor, among those which are due, shall be deemed to have been satisfied. 2. If the debts due are of the same nature and burden, payment shall be applied to all of — them proportionately. b. Dation in Payment (DACION EN PAGO) Delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. + Requisites: ‘a. existence of a money obligation bi alienation to the creditor of a property by the debtor with the consent of the former ¢. satisfaction of the money obligation of the debtor c. Payment by Cession Debtor abandons all of his property for the benefit of his creditors in order that from the proceeds thereof, the latter may obtain payment of their credits. = Requisites: a. plurality of debts . partial or relative insolvency of the debtor «acceptance of the cession by the creditors PY PVs DNC atin A.onecreditor | 4. plurality of creditors 2. not necessarily | 2. debtor must be in state of financial | partially or itficult relatively insolvent 3. thing delivered | 3. universality of is considered as | property of debtor is. equivalent of | what is ceded performance —_$ os Crnatien Ba Orenamows Exec Consus ap Sunset Cuasneeasons ‘aca Abareron (Overs) Cnpertn) Ronald Jalmansar (Overs Vice Cai), Yolanda Tolentna(VeAace),Jemer ng(ve Secreta) Joy indie (nace) ane Manat (VED?) Anna Margaret (Cope) erate Margundayee (Plt! Law), an Benedet Reta (Labor Ln), Ramald Pals (nl Law), Charmaine Tore (Tacabon La) ‘Mark Dad Martins (Cima ay Cay ba Alegre (Commer Law) the) Scanned with CamScanner99 @ San Beda College of Law 4. payment | 4. merely releases ‘extinguishes debtor for net obligation to the | proceeds of things extent of the value | ceded or assigned, of the — thing | unless there is delivered as agreed | contrary intention upon, proved or implied from the conduct of the creditor d, Tender of Payment and Consignation Tender of Payment > Manifestation of he debtor to the creditor of his decision to comply immediately with his obligation. * It is the preparatory act and extrajudicial in character. Consignation * Deposit of the object of the obligation in a competent court in accordance with the rules prescribed by law, after the tender of payment hhas been refused or because of circumstances which render direct payment to the creditor impossible or inadvisable. + Itis the principal act and judicial in character. 7 Special Requisites: a. The debt sought to be paid must be due; b. There must be a valid and ‘unconditional tender of payment for any of the causes stated by law for effective consignation without previous tender of payment exists; . The consignation of the thing due must first be announced to the persons interested in the fulfillment of the obligation; d. Consignation shall be made by depositing the things due at the disposal of judicial authority; and fe. The consignation having been made, the interested parties shall also be notified thereof. 7 Effects of consignation: 1. If the creditor accepts the thing Memory Ain In Civ Law efficacy of the consignation, the ‘obligation is extinguished. 2. If the creditor contests the validity or efficacy of the cconsignation or if the creditor is not interested or unknown or is absent, the result is a litigation. If the ‘debtor complied with all the requisites, the obligation is extinguished. ‘GENERAL RULE: Consignation shall produce effects of payment only if there isa valid tender of payment. ‘EXCEPTIONS: (TIRAT or TRAIT) 1. creditor is absent or unknown, or does not appear at the place of payment. 2. creditor incapacitated to receive payment at the time it is due 3. when two or more persons claim the right to collect 4. when the title of the obligation has been lost 5. when without just cause creditor Fefuses to give a receipt NOTES: It is the _consignation which constitutes a form of payment and must follow, supplement or complete the tender of payment in order to discharge the obligation. © Ayalid tender of payment has the effect of exempting the debtor from payment of interest and/or damages. © If tender is made by means of a check, such tender is valid because it is an exercise of a right. Article 1249 is not applicable. LOSS OF THE THING DUE In Determinate Obligations to Give GENERAL — RULE: extinguished. + Requisites: 1. The thing which is lost is determinate; 2. The thing is lost without the fault of the debtor; and 3. The thing is lost before the Obligation is or amount deposed witout or has incuted in ay contertng the vali or Se i eos lel SSS nega rae moar Ferrers an sxccesson) an Doric Pode, a Cosocs), Sta Bah Darts ad tease) Joh Stephen {quarry Ovistopher abu rea arson Lays AipatTors an Daages) Anon Pz a Remon tgaa (Contre) Scanned with CamScanner