Obligations in Law

• An obligation is a juridical necessity to give, to do, or not to do.
• Obligations can be civil, giving a right of action to compel performance or natural, based on equity and natural law.
• Natural obligations do not grant a right of action but authorize retention after voluntary fulfillment.

Essential Elements of an Obligation:

• Active subject (obligee/creditor): has the power to demand prestation.
• Passive subject (obligor/debtor): is bound to perform the prestation.
• Object/prestation: the conduct to be performed (giving, doing, or not doing).
• Efficient cause: the juridical tie binding the parties.

Sources of Obligation:

• Law: expressly determined in the Civil Code or special laws, not presumed.
• Contract: has the force of law between parties and must be complied with in good faith.
• Quasi-contract: arises from lawful, voluntary, and unilateral acts to prevent unjust enrichment.
• Quasi-delict: arises when damage is caused to another due to fault or negligence without a pre-existing contract.
• Crime/delict: arises from acts or omissions punishable by law, leading to civil liability.

Quasi-Contracts:

• Negotiorum Gestio: voluntary management of another's property without their consent.
• Solutio Indebiti: created when something is received without the right to demand it, unduly delivered by mistake.

Kinds of Things or Objects:

• Determinate/specific: individualized and distinguished from others of its kind.
• Generic/indeterminate: indicated by its kind, not designated or distinguished from others.

Obligations for Determinate Things:

• To deliver the thing.
• To take care of it with the diligence of a good father of a family.
• To deliver accessions and accessories.

Accessions and Accessories:

• Accessions: everything produced by a thing or incorporated/attached, naturally or artificially.
• Accessories: items used for embellishment, use, or preservation of another thing.
• Damages must be paid in case of breach of obligation.

Obligations for Indeterminate Things:

• Deliver a thing of neither superior nor inferior quality.
• Damages must be paid in case of breach of obligation.

Required Diligence

• As provided by law – Extraordinary diligence is required of common carrier with resptect to passengers
• As stipulated by parties
• As required by a "good father of a family" – If a person is oblieged to give something, he must take good care of it, as if he is the read owner. Otherwise, he must answer for damanges.

Rights of the Creditor in Obligations to Do:

• If the debtor fails, the creditor can demand performance by the debtor or a third party at the debtor's expense.
• If the debtor performs against the agreement, the creditor can have another perform at the debtor's expense.
• If the obligation is poorly done, it can be undone at the debtor's expense.
• If the debtor does what is forbidden, it can be undone at the debtor's expense with indemnification for damages.

Delay/Default/Mora

• Mora solvendi: Delay on the part of the debtor.
• Mora accipiendi: Delay on the part of the creditor.
• Compensatio Morae: Delay by both parties.

Requisites of Mora Solvendi:

• The obligation must be liquidated, due, and demandable.
• The debtor must be guilty of nonperformance.
• Demand must have been made judicially or extrajudicially.

Effects of Mora Solvendi:

• The creditor can ask for damages.
• The debtor is liable even for fortuitous events.
• The debtor bears the risk of loss for a determinate thing.

Requisites of Mora Accipiendi:

• Offer of performance by the debtor.
• Refusal of the creditor without just cause.

Effects of Mora Accipiendi:

• The creditor bears the risk of loss of the thing.
• The creditor bears preservation expenses after the delay.
• The creditor is liable for damages.

Effect of Compensatio Mora - the delay on both parties will be compensated.

Liability for Damages:

• Fraud/Dolo: deliberate and intentional evasion of normal fulfillment.
• Negligence/Fault/Culpa: failure to observe the required care, precaution, and vigilance.
• Delay/Default/Mora: nonfulfillment concerning time.
• Contravention of tenor: illicit act impairing strict and faithful fulfillment.

Kinds of Fraud:

• Fraud in obtaining consent.
• Fraud in performing a contract.
• Future fraud cannot be renounced; past fraud can be.
• Fraud in law: malice or bad faith in performance.

Kinds of Culpa or Negligence:

• Culpa Aquiliana: independent of contract, without criminal intent.
• Culpa Contractual: in the performance of a contract.
• Culpa Criminal: in the commission of a crime.

Classifications of Obligations:

• Pure and conditional.
• With a period or term.
• Alternative and facultative.
• Joint and solidary.
• Divisible and indivisible.
• With a penal clause.

Pure vs. Conditional Obligations:

• Pure: demandable at once, without conditions or terms.
• Conditional: depends on a future and uncertain event.

Kinds of Conditions:

• Suspensive: the fulfillment gives rise to the obligation..
• Resolutory: the fulfillment extinguishes the obligation.
• Potestative: depends on the will of one of the parties.
• Casual: depends on chance or a third person's will.
• Mixed: depends partly on chance and partly on a party's will.
• Impossible: physically or legally impossible.
• Positive: performance of an act.
• Negative: omission of an act.

Effects of Fulfillment:

• Suspensive condition: retroacts to the day the obligation was constituted; fruits and interests are mutually compensated.
• Resolutory condition: the obligation is extinguished, and parties must restore what they received.

Period

• Period: a certain length of time determining effectivity/extinguishment of the obligation, presumed to benefit both parties.
• Suspensive period or ex die: Upon arrival, the obligation becomes demandable.
• Resolutory period or in diem: Upon arrival, the obligation is extinguished.
• Conventional/Voluntary: fixed by parties.
• Legal: fixed by law.
• Judicial: fixed by the court.

Condition vs. Period:

• A condition is an uncertain event while a period is one that will necessarily come.
• A condition gives rise to/extinguishes an obligation; a period affects demandability/performance.
• A condition may refer to a past event; a period always refers to the future.

Alternative vs. Facultative Obligations:

• Alternative: several prestations, fulfilling one is sufficient, chosen by debtor.
• Facultative: only one thing due, but the debtor may substitute it.

Joint vs. Solidary Obligations:

• Joint: each debtor liable for a proportionate part of debt; each creditor entitled to a proportionate share of credit.
• Solidary: each debtor liable for the entire obligation; each creditor entitled to demand the whole obligation.
• Credit/debt presumed divided unless law/wording provides otherwise.
• Indivisibility does not imply solidarity, nor does solidarity imply indivisibility.

Synonyms for Joint and Solidary Obligations:

• Joint: prorata, proportionate, mancomunada, mancomunada simple.
• Solidary: in solidum, jointly and severally, individually and collectively, mancomunada solidaria.

Divisible vs. Indivisible Obligations:

• Divisible: susceptible of partial performance.
• Indivisible: not susceptible of partial performance.
• Joint indivisible obligation: gives rise to indemnity for damages if one debtor does not comply.

Obligations with a penal clause

• A penal clause is an accessory undertaking to assume greater liability in case of breach.
• The penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary.
• The nullity of the penal clause does not carry with it that of the principal obligation. The nullity of the principal obligation carries with it that of the penal clause.

Modes of Extinguishing an Obligation:

• Payment or performance.
• Loss of the thing due.
• Condonation or remission of the debt.
• Confusion or merger of rights.
• Compensation.
• Novation.

Payment:

• Delivery of money, a thing, doing something, or not doing something.
• Monetary obligation: full delivery of money.
• Obligation involving a thing/object: delivery of the thing/object.
• Obligation to do something: performance of the undertaking.
• Obligation not to do something: desisting or refraining.

Payment by a Third Person:

• Creditor not bound to accept payment from a third person without interest in fulfillment, unless stipulated.
• Third-party payer can demand reimbursement from debtor for the paid amount but recovers only the benefit amount if paid without knowledge or against the debtor’s will.
• Third-party payer without debtor’s knowledge cannot compel creditor subrogation.
• Payment shall be made to the creditor, successor, or authorized person. The validity of payment is not affecte by lack of debtorn's consnt.

Payment to a Third Person:

• Payment to a third person is not normally valid BUT
  • When the third person is authorized to receive it.
  • When the payment benefits the creditor.
  • When the third person has the credit possession and payment was in good faith.

Legal Tender in the Philippines:

• Philippine currency that the creditor cannot refuse as payment.
  • 1, 5, 10, and 25 centavos are legal tender up to P100.
  • P1, P5, and P10 coins are legal tender up to P1,000.
  • P20, P50, P100, P200, P500, P1,000 bills have unlimited legal tender power.

Delivery of Commercial Instrument as Payment:

• A check is not a legal tender so the creditor is not compelled to accept except:
• When the creditor previously promised or is estopped from refusing.
• When the check has lost its value due to creditor's fault.
• When the check has been cashed.

Place of Payment:

• Specified place, if stipulated. Otherwise:
  • Specific thing: place where the thing was at perfection.
  • Indeterminate thing: debtor's domicile.

Special Modes of Payment:

• Dation in payment or dacion en pago.
• Application of payment.
• Cession or assignment.
• Tender of payment and consignation.

Dacion en Pago:

• Extinguishes obligation when debtor alienates property to creditor for monetary obligation satisfaction.

Application of Payment:

• Designates the debt to which payment should be applied when a debtor owes several debts to one creditor, so that the one to be extinguished gets extinguished (makes sense).
• Lacking designation: payment applied to most onerous debt, or proportionately if debts are similar.
• In an obligation production of interest, the paid interest is applied first to the principal.

Cession:

• Payment by a debtor transferring all properties to creditors for sale, applying proceeds to credits, after which the payment is deemed satisfied.
• Debtor is released up to net proceeds from sale.

Tender of Payment and Consignation:

• Tender of payment: debtor's manifestation of willingness to comply
• Consignation: deposit with judicial authorities.

Requisites of Valid Consignation:

• Due debt.
• Debtor tender, creditor refusal (without just cause).
• Previous notice, court disposal, and notice after consignation.

Condonation or Remission:

• Creditor renounces obligation enforcement.
• Principal obligation renunciation extinguishes accessory.

Confusion or Merger:

• Meeting of creditor and debtor qualities in one person regarding the same obligation; complete confusion required.
• Requires it to happen between the creditor and the principal debtor.
• Merger benefits guarantor, unless taking place in the guarantor's person.

Compensation:

• Two persons are each other's creditors and debtors. Legal: by operation of law. Facultative: one party claims, the other cannot. Conventional: by agreement. Judicial: decreed by the court with a counterclaim.

Compensation by Operation of Law:

• Each obligor must be bound principally and be a principal creditor of the other.
• Both debts consist of money or consumable items of the same kind/quality.
• Both debts must be due, liquidated, and demandable without third-party retention/controversy.

Novation:

• Substitution or change of obligation, which can involve changing the object, debtor, or subrogating a new creditor.
• Must be a previous valid obligation, agreement, old contract extinguishment, and a valid new obligation.
• Expromission: third person assumes obligation without original debtor's knowledge.
• Delegacion: creditor accepts third party proposed by the debtor.
• Subrogation: transfer of rights to a third person.

Subrogation:

• Transfer of rights to the creditor, subject to provisions/modifications.
• Conventional subrogation is substitution by agreement between parties and the new creditor.
• Legal subrogation: in exceptional cases, presumed: when a creditor pays a preferred creditor, a disinterested third party pays, or an interested party pays without knowledge.

Definition of a contract

• A contract is a meeting of minds between two people whereby one binds himself to another, to give something, or to render some service.

Stages of a Contract:

• Conception/Preparation: negotiations and bargaining with preliminary discussions and discussions of terms and conditions, yet to form a definite agreement.
• Perfection/Birth: When a definite subject matter, along with a valid cause, are met and agreed on
• Termination/Consummation Stage: contract is fulfilled; their respective obligations are performed, and the contract is terminated.

Characteristics of Contracts:

• Freedom/Liberty to Stipulate: Freedom to set clauses, stipulations, terms, and conditions, as long as they are not contrary to morals, law, public order, good customs, or public policy.
• Obligatory Force of Contract: Obligations from contracts have the force of law between parties.
• Perfection by Mere Consent: Contracts are perfected by mere consent.
  • Real contracts (pledge, deposit, commodatum) require delivery.
• Both Parties Bound: a contract’s compliance/validity cannot rest on the will of only one party.
• Relativity of Contract: contracts affect parties, assigns, and heirs only, except when obligations/rights are intransmissible by law, stipulation, or nature. Exception to the Relativty of a contract: Exceptions include violations to the heir who doesn’t exceed the value from the decedent, stipulations pour autrui, induces.

Pour Autrui stipulation

• Stipulation in favor of a third person, conferred clearly with deliberate intention, giving them the ability to demand fulfillment before revocation.
• Contract should include a stipulation that favors a third party that can only be demanded before revocation. Requisites of being Pour autrui: Must stipulate in a third person contract and deliberately favor with clear contracts.

Nominate vs. Innominate Contracts:

• Nominate: with a name under Civil Code/special law (e.g., sale, partnership).
• Innominate: without a name (e.g., do ut facias, facio ut des, facio ut facias).

Essential Elements of Contracts:

• Consent.
• Object.
• Cause/consideration.

Consent:

• Manifestmeeting: The agreement of offer, acceptance and other thigns
• Cognitive theory
• Before conveyance (death, insolvensy and insanity), offer not valid.
• An acceptance may become more invalidated if there is an option to be founded from a thing that has been paid or promises, and may be withdrawwn at any time before acceptance.

Persons Incapable of Giving Consent:

• Unemancipated minors.
• Insane/demented persons.
• Deaf-mutes not knowing how to write.
• Person under civil interdiction.
• Incompetents under guardianship.
• Married women (specified cases).

Vitiation of Consent:

• Mistake: substantial, excusable, of fact.
• Violence: serious or irresistible force = physical coercion.
• Intimidation: fear of imminent/grave evil = moral coercion.
• Undue influence.
• Fraud/deceit: insidious words inducing contract.
• Incidental Fraud or Dolo Incidente: Dmaoages are in the after of perfection.
• Casual Fraus or Dola Causante: annulment is ask at or before perfection.

Caveat emptor

• Meaning "Let buyer beware".
• This is where another party can be found the other party should be able to know facts in exaggeration
• When opinion made through an expert and the party relys, make an eception to the facts.

Lucid intervel

• Where an intenval is temporary (sanity)
• Contracts found during a lucid intenval can be valid.
• VoidContracts: Drunkness state and spell and hypnotic.

Simulation:

• Deliberately manifested, with the purpose of deceiving others.
• Requires a purpose to deceiive

Object Certain:

• The subject matter that can't be subjected to a valid contract

Four aspects of object certainty:

• Object must be within the commerce of men.
• Object must be permissible
  • Not be contrary to morals
  • Good customs
  • Public odrer
  • or Policy.
• Must be possible
• Must be determined, that is, its kind.

Cause of contract that creates the desiree that imples contracting parties

Must exist, real, ture and LAWFUL

Kind of Contract According to Cause:

• Onerous: the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the other.
• Remuneratory: the cause is the service or benefit which is remunerated.
• Contract of pure beneficence or gratuitous contract: the cause is the mere liberality of the benefactor.

Lesion:

• Insufficiency/inadequacy of cause
• Valid unless caused by fraud, undue influence, or mistake.
• Contracts are obligatory regardless of form, provided essential requisites are present, unless form is required for validity/enforceability.

Formal Contracts:

• Donation of real property: public instrument.
• Donation of personal property exceeding Php 5,000: writing.
• Partner contribution of immovable property: writing.
• Agent selling land, authority given: writing.
• These cannot be validated through the instrument of reformation.

Reformation of an Instrumed

• The end of expressing there true is not expresses because, in accordance to fraud, there will be a correction to what might be the true expression
• Annulment of K must have inequilable conduct and meeting ends is not the end to be found true.
• Simole donations are an instrument of where there is no reformation and therefor the conduct may not be inflicted.

Rescission

• A valid process of entering that has normally binding that causes prejudice to it

Four Kinds of Defective Contracts:

• The rescissible (valid util resinied).
• A voidable K
• (Valid until annuled).
• Un-enforacable contract. (cannot be sued on or enforced unless Ratified) Void Contract

Rescissible Contracts:

• Lesion to wards.
• Those with absentees suffering lesion.
• In fraud of creditors.
• Things under litigation (without approval).

Four Rescissible Contract

a) - Through the gaurds of whenever whom that suffer the lesion throguh which it takes to have the valie of the things that take the object there of b) - Those agreed upon in representation of absentees, if the latter suffer stated in he preceding number c)- Thise that had under taken to the of the creditors in where they cannot an manner colect claims the due them d) - Those the refere ti thing and which may undertake without the knowledge and apvalv or of those litigationf through the authority of 5) ALO other contsractd dectrate for the lw to be subjext to the

Voidable Contract

• Have all requirments exvcept where there is in the way of consent.

Unenforable Contract

• Acontract that canniot be enforced by reason of the law unless ratified in way of the lav
• those excuted by one in the name of another without authority of excute and autrhotly is there to take place

Statue of Fraud:

• Law requiring contracts to be written.
• An agreemwnt for the debt to be pertformed
• Marraige of the agreemtne
• Agreemnet for that more then 5 hundred
• An agreement for more then 500
• More then 1 yaer
• Or for an interest threin

Void Contracts:

• No effect at all, no contract.
• Cannot be ratified
• Is not valid/enforcable from the beginging
• Maxim of"Contract AT ALL"

Void contract can be ex of of being a coutnrty to law and not being able the contract for the

• Those cause with
• Order of the coutn
• Thosr for
• The sercie for whihc at all
• Canot the be ascertain

In Pari delicto Principle

• No remedy for defect of the contract's void illegality because both are at fault, or with 'delicto', and that the court leaves them where they are as the maxim's rule of who comes must do so with clean hands.