Law on Obligations & Contracts PDF

Law on Obligations & Contracts Atty. Villegas LAW 2 Definitions of Law 1) Law (definition by Sanchez Roman) Sources of Law: - rule of conduct (system) a. Constitution - just and obligatory promulgated by legitim...

Law on Obligations & Contracts Atty. Villegas LAW 2 Definitions of Law 1) Law (definition by Sanchez Roman) Sources of Law: - rule of conduct (system) a. Constitution - just and obligatory promulgated by legitimate - written instrument by which the authority of common observance and benefit fundamental powers of the government 2) Law in its broadest sense are established limited and defined and - any system of action or rule of uniformity by which these powers are distributed among the several organs for their safe Characteristics of Law and useful exercise for the benefit of the 1. rule of conduct body politic - system of action - highest law of the land x - behave in a society b. Legislation 2. just and obligatory - Enacted Law or Statute Law - just is fair, obligatory is mandatory or compulsory - product: laws created by the legislative Mayor Lim "the law applies to all, or none at all" branch ex. class rules c. Administrative/ Executive purpose of rules: for order, so there is no chaos - legislations are implemented through 3. promulgated by legitimate authority administrative/ executive orders, rules promulgated is created and regulations 4. common observance and benefit ex. the government is mandated to - common observance is everybody has to comply protect the welfare of the people no one is exempted, benefit is order otherwise chaos (Constitution "The welfare of the people 3 Branches of the Government is the paramount thing which is a. Legislative/ Congress important in the state”) - create laws > constitution is the source of the law - legislate meaning create > (congress) legislation will pass the aa. Lower House seatbelt law - house of representative > administration/ executive will ab. Upper House implement the seatbelt law while issuing - senate of the PH executive orders, rules and regulations - PH is bicameral (two chambers) LTO will issue the rules and regs (opposite is unicameral) pertaining to the creation of law b. Executive pertaining to seatbelt - enforce laws - execute, implement basic explanation: - headed by president of PH make law: congress c. Judiciary/ Judicial implement: executive - issuance of - divide laws executive orders, rules and regulations - decide, interpret what law is about d. Judicial Decisions/ Jurisprudence Hierarchy of Courts - decisions of supreme court I. Supreme Court - highest law of the court x ex. file in MTC not law, lost > appeal in II. Court of Appeals RTC not law, lost > appeal in CA not III. Regional Trial Court law, lost, appeal in SC is law, lost and a. Municipal Trial Court never can be appealed again b. Metropolitan Trial Court c. Municipal Circuit Trial Court - only decisions of Supreme Court are d. Municipal Trial Court in Cities called Judicial Decisions or - where to file case initially Jurisprudence > Doctrine of Precedent/ Stare Law in Senses Decisis 1. Legal Sense - effect of decision; become -created by the state laws of the land synonyms:municipal law, imperative law, e. Customs and Traditions (not law) positive law, civil law, state law, etc. - can be sources of law 2. Non-legal Sense (not discussed) f. Other Sources (not law) -not created by sense fa. decisions of foreign courts a. divine law - not mandatory to follow but - law of religion we can copy it b. natural law fb. principle of justice and equity - law of metaphysics fc. religion c. moral law - law of ethics d. physical law - law of physical science Law on Obligations & Contracts Atty. Villegas History of Constitution: 3. Commercial Law Malolos (emilio aguinaldo) - 1935 (quezon)- 1973 (marcos) 4. Criminal Law - Freedom (EDSA revolution) - 1987 (present constitution, 5. Labor Law cory aquino) 6. Ethics Law 7. Constitution Law 8. ? History of Law: Laws started in Greece > Copied by Rome Latin > Rome invaded Spain > Rome passed law to Spain > Spain invaded Obligations & Contracts Philippines > How we have latin terms - Substantive & Private - 20% of CPALE BOARD Independent Constitutional Commissions Obligation - not under the 3 branches of government - Juridical necessity to give (REAL), to do or not to 1. Civil Service Commission do (PERSONAL) - HR department of Government - 1156 - 1304 - all government employees 2. COMELEC 1. Civil Obligation - run during election - can be demanded 3. COA - positive law -auditing system of PH government 2. Natural Obligation -audit all financial transactions of the - cannot be demanded government - equity & natural law Admissive Body Classification of Obligations - under executive branch of government A. Primary Classification a. Quasi-Legislative 1. Pure and conditional aa. create law 2. Obligation with a period ab. implement the law 3. Alternative and facultative ex. LTO 4. Joint and Solidary b. Quasi-Judiciary 5. Divisible and indivisible ba. implement law 6. Obligation of a penal clause bb. decide the law B. Secondary Classification ex. NLRC 1. Unilateral and Bilateral 2. Real and Personal Classifications of Law 3. Determinate/Specific and Generic 1. As to its purpose 4. Civil and Natural A. Substantive 5. Legal, Conventional, and Penal - creates & defines - rights and duties of parties Obligatio - OBLIGATIONS & CONTRACTS - Latin Term meaning tying or binding ex. A borrowed from B 9000 php, the contract is loan Requisites of Obligation A=Debtor, B=Creditor 1. Creditor RIGHT of B; can collect from A 2. Debtor DUTY of A; should pay B 3. Juridical Vinculum B. Procedural/ adjective/ remedial 4. Prestation - provides remedy/cure/ procedure Ex. Situation: A can’t pay B, B can file a Title of the Law: Civil Code of the Philippines case in court - Date of Effectivity: August 30, 1950 - Citation: RA 386 2. As to subject matter - Divided into 4 books A. Public law - Book 4 is divided into 19 titles - affects everyone - Patterned after spanish civil code - regulates relationship of state and people RA (Republic Act) Citation B. Private law - The number - affects certain individuals Ex. RA 11232: Corporation Code of the Philippines - only the two parties - OBLIGATIONS & CONTRACTS 3 Latin Principles 1. Ignorantia Legis Neminem Excusat 8 Major Classifications of Law (BAR) - Ignorance of the law excuses no one from compliance therewith 1. Civil Code - Conclusive presumption 2. Taxation Law Law on Obligations & Contracts Atty. Villegas - even if you don't know the law, you are B/ Creditor has the right to demand supposed to know the law A/ Debtor has the duty to pay - “I did not know” is not an excuse 2. Nemo Est Suprema Lex - No one is above the law Elements of the Obligation/ Essential requisites 3. Dura Lex Sed Lex 1. Active Subject/ Obligee/ Creditor - Law may be harsh but it is the law - can demand obligation Art. 1156: Juridical Necessity 2. Passive Subject/ Obligor/ Debtor “An obligation is a juridical necessity to give, to do or not to - perform/pays obligation do” 3. Object/ Prestation/ Service - We can demand, can file case in court - fact/ thing To give - subject matter of obligation - Real obligation, to deliver 4. Juridical Vinculum/ Juridical Tie/ Legal Tie/ Ex. A promised B to give a specific car Efficient Cause Real - reason/ binds - to give (Opposite of Real is Personal) Ex. A promised B he’s going to build a House - it is a Personal Obligation; build is personal, give is real A is the debtor, B is the creditor Personal A will build the house, build is Prestation A. To do B can demand for the house - positive personal obligation Why should A build a house? Because A made a promise, Ex. A promised to sing a song for B, you have to promise is the Juridical Vinculum do it It is interchangeable B. No to do If A built the house and B promised to pay 10,000php - negative personal obligation Then B is the debtor, and A is the creditor Ex. A promised B not to marry, not supposed to do B will pay the 10,000php, pay is Prestation A can demand for the payment Prescription/ Statute of Limitations Why should B pay? Because B made a promise, promise is - Layman’s term: expire the Juridical Vinculum - Can be Extinctive or Acquisitive Extinctive, extinct: gone Process: Acquisitive, acquire: have it, acquire it Obligation > Right > Wrong > Plaintiff > Defendant > Cause Extinctive of Action - Lose right to demand, to file, or to enforce in court Prescriptive Periods (Art. 1218) Wrong 10yrs - violation 1. Written Contract Ex. did not pay - after 10yrs its gone, becomes natural obligation Plaintiff - better because prescription is longer and have - has the right to file the case because right is violated proof for court - file case against defendant 2. Obligation created by Law Defendant 3. Judgment of the Law - has the duty 6yrs Cause of action 1. Oral Contract - why? Because of violation of defendant to plaintiff - after 6yrs its gone, becomes natural obligation 2. Quasi-Contract Art. 1157: Sources of Obligations 4yrs 1. Law 1. Injury to the rights of the plaintiff - legal obligation 2. Quasi-Delict - obligation arises from law 1yr Ex. 1. Defamation A. A should pay taxes to government because A is 2. Ejectment obligated to pay from law Ex. A borrowed from B 9000php; Contract of Loan B. Father should give monthly support to son Borrowed When: Oct 1, 2000 because of law Due: Nov 30, 2000 2. Contract - it is a written contract starting from Nov 30, 2000 - 2010 - Art. 1305 > called civil obligation - a meeting of minds between two persons - if it exceeds 10 years it becomes natural obligation whereby one binds himself, with respect to the other, to give something or to render some service Law on Obligations & Contracts Atty. Villegas Ex. A sold B car for 100k pesos, criminally liable A obligated to deliver car - but you can be criminally liable B obligated to pay for car and not civilly liable, vice versa Because they have contractual obligation Ex. self defense, no prison, pay for 3. Quasi-Contract life - Art. 2142 5. Quasi-Delict/ Torts - seeming but is not a contract because there is - Art. 2176 NO CONSENT - No contract but there is damaged caused due to - consent is supplied by fiction of law negligence - arises from lawful, voluntary and unilateral acts of Ex. a construction site injures you because of an the parties object that fell Kinds of Quasi-Contract No mutual contracts but you were neglected A. Negotiorum Gestio (2144) - voluntary management Quasi-Contract VS Quasi-Delict - when person manages - Good & bad Abandoned property without consent of owner Taxicab driver incident Ex. A child is lost and you - Classic example bring the child to the guard to - Driver came from bday party, he is drunk and his find their mother wallet slipped containing his driver’s license > B. Solutio Indebiti (2154) Passenger rides taxi to go to Cubao - payment by mistake/ undue Contract: Common Carriage payment Owner of taxi: Common Carrier - something is received Driver: Employee of Common Carrier when there is no right to > He hits pedestrian and he dies > car gets demand it, u get something wrecked > fence got broken > dog dies > that is not yours passenger almost died becomes disabled Ex. your bank account mistakenly gets, Sources of Obligation in problem: 10M, you should return it A. legal obligation - laws violated; drunk driving, driving w no Unjust Enrichment seatbelt, driving under the influence of liquor, - A fulfills their part of the agreement and B does not driving without license fulfill their part of the agreement. B. Contract - Bawal malamang - obligated to bring passenger safely to - You cannot unduly deprive yourself with the destination expense of another person C. Delict/ Crime/ Felony - driver to passenger; serious physical injuries, Other Cases of Quasi-Contract driver to pedestrian; homicide, driver to fence and Ex1. neighbor accident, then you take care of him dog; simple damage to property Ex2. neighbor unpayable funeral expenses, you D. Quasi-delict pay for it - no contract to pedestrian, pedestrian is damaged - No contract to help in times of mishaps due to negligence 4. Delict/ Crime/ Felony - Art. 3 RPC - Acts or omissions punishable by law Art. 1158: Legal Obligations/ EX LEGE Ex. murder, robbery, theft, homicide, estafa, etc. “ Obligations derived from law are not presumed. Only those 2 Liabilities expressly determined in this code or in special laws are A. Criminal Liability demandable, and shall be regulated by the precepts to the - go to jail law which establishes them; and as to what has not been B. Civil Liability foreseen, by the provisions of this book (1090)” - pay for damages - Do we presume obligations? No - life of a person minimum Ex. A. Gambling, you are not obligated to give = 50k php money to mendicant(moral obligation) B. gambling, loser is not obligated to pay you Art. 100 RPC (prohibited by law) - every person criminally liable is civilly liable - every person civilly liable is NOT Law on Obligations & Contracts Atty. Villegas Art. 1159: Contractual Obligation/ EX 2. There must be Fault or negligence CONTRACTU/ Voluntary Obligations/ 3. There must be Damage caused Conventional Obligations/ Contractual 4. There must be a direct relation or connection of cause Obligations 5. There must be no pre-existing “Obligation arising from contract have the force of law contractual relation between the contracting parties and should be complied with in good faith” - Obligatory force of contract Delict VS Quasi-Delict Basis Distinction Ex. A sell car for 100k to B Delict Quasi-Delict A is obligated to deliver car to B B is obligated to pay car to A Malicious Intent Negligence Refusal is a NO, if, then liable to pay for damages under Art. 1191 Putting person in prison Payment of Damages Art. 1160: Quasi-Contractual Obligations/ EX QUASI-CONTRACTU Public in General Private Persons “ Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII of this book.” 2 Liabilities; Criminal and 1 Liability; Civil Civil - Same as Quasi-Contract Cannot be compromised Can be compromised Solutio Indebiti vs Natural Obligation proof beyond reasonable preponderance of evidence Solutio Indebiti doubt - payment by mistake Ex. A owes B 9K, A mistakenly pays B 20k, 9K is valid, A can ask for 11K back, can demand return Levels of Evidence Natural Obligation 1. Administrative Liability - element of time - substantial Ex. A owes B 9K, A paid B after prescription, cannot demand (minimal evidence only) return 2. Civil Liability Art. 1161: Penal Obligation/ EX DELICTO/ EX - preponderance of evidence (multitude of evidence) HALE FACTO 3. Criminal Liability “ Civil obligations arising from criminal offenses shall be - proof beyond reasonable doubt governed by the penal laws, subject to the provisions of (judge has no suspicion or doubt, person is guilty) Article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVII of Nature and Effects of Obligation (1163-1178) this Book, regulating damages (1092a)” - Art. 100 RPC Art. 1163: Obligations to give a Determinate/ Specific Thing Scope of Civil Liability 1. Restitution 3 Basic Obligations - return 1. To preserve and take good care of the thing 2. Reparation (DGFF) - repair 2. To deliver the thing including the fruits (1164) 3. Indemnification for Consequential 3. To deliver all accessions and accessories (1166) Damages - to pay for damages Generic VS Specific Ex. A stole B’s car, destroyed windshield, and damaged B’s mental Generic Specific health A should restitute, reparate, and Indeterminate Determinate indemnify consequential damages By its class By its individuality Art. 1162: Quasi-Delict/ EX QUASI-DELICTO/ Can be substituted Cannot be substituted TORTS - Same as Quasi-Delict Not sure and is so many Very sure and it is only one 5 Requisites of Quasi-Delict thing in the world 1. There must be an act or omission Law on Obligations & Contracts Atty. Villegas Lease (Upahan), A promised B a Honda car, A promised B a red Honda the rental payments it can be any Honda car car model 1991 with plate number XYZ 123, it is only is the Civil Fruit one in the world Employment, the salary is the Civil Principle/ Basis of fifth row cell in the table: Fruit Genus Nunquam Peruit; Genus Never Perishes Ex. On August 1, 2024, Allyhna promised to give Lance a Pig on December 1, 2024 Money is always Generic as it can be replaced unless you Rights: get its serial number 1. On August 1, 2024, Lance has No Right on the pig 2. On Dec1, 2024, Lance has a Personal right on the pig, Levels of Diligence he can demand the pig from Allyhna, but he is still not the 1. Extraordinary owner of the pig - Only two examples must observe 3. Allyhna delivered the pig to Lance, he is now the owner, it extraordinary diligence is now a Real Right a. Common Carriage b. Banking Industry Delivered transfers ownership 2. Ordinary/ DGFF - Average and required by law diligence If the pig gave birth before December 1, 2024, the piglets are 3. Slight Meager still owned by Allyhna - Minimal amount of diligence is exercised by the debtor If the pig gave birth on December 1, 2024, the piglets are now owned by Lance Diligence Required 1. By provision of law BUT if it is sold and NOT promised, Lance owns the piglets 2. By stipulation/agreement of parties and the mother pig even before Dec 1, 2024 3. In the absence of both; DGFF or BONUM PATER FAMILIA Obligation (a promise) - From the time the obligation must be delivered Sale or Contract Art. 1164: Rights Given - Perfection 1. Personal Right/ JUS IN PERSONAM - Demandable only from a specific person Remedies (1165/1167/1168/1177/1191) 2. Real Right/ JUS IN REM Art. 1165: Remedies of Creditor in Real - Demandable against the whole world Obligations 3. Right to the Fruits - Obligations to GIVE - the creditor has the right to the fruits of the thing from the time the oblig to Generic VS Specific deliver it arises Generic Specific a. Natural Fruit - Made by nature, Situation: A does not want Situation: A does not want spontaneous to give the car to B to give the specific car to B products of the soil the young, and Ask the debtor “Where is Compel the debtor (Force), other products of it?”, B cannot compel as B can compel A, no one animals the car’s kind is not known else can comply as the Ex. Trees in Forest and can be replaced thing cannot be replaced b. Industrial Fruit - Man-made, Human ONLY REMEDY: Ask a cultivation or labor Third Person to deliver the car Ex. Mango plantation Ask for damages (1170), A Ask for damages (1170) c. Civil Fruit will pay Third Person - Arises by the virtue of the juridical Genus Nunquam Peruit; Genus Never Perishes relation of the parties Ex. Contract of Law on Obligations & Contracts Atty. Villegas Art. 1166: Accessions & Accessories 3. Ask for damages Accessions - The fruits of a thing or additions to or Ex. A promised to sing a song to B improvements upon a thing (the principal) 1. A refuses to sing the song Ex. House in a Land, House is Accession, Land is 2. B cannot compel A he can only ask, A Principal still refuses, so B can ask a TP Types of Accession: 3. A will pay TP 1. ACCESSION DISCRETA - Natural, industrial, civil Ex. A promised to build B a house with 4 2. ACCESSION INDUSTRIAL bedrooms, - Building, planting, sowing A. 3. ACCESSION NATURAL 1. A fails to build the house - Alluvion, avulsion 2. B can ask A to build the house, if he still Accessories refuses, ask TP - Things added (additions) to the principal thing B. upon the latter’s better embellishment, completion, 1. A built the house but contrary to the or use. terms, built only 3 bedrooms - Principal; Expensive Accessory; Important 2. B can ask A to built the 4th bedroom, if ACCESSIO CEDIT PRINCIPALI A refuses, ask TP - Principal can exist without accessory but 3. A pays TP accessory cannot exist without principal C. - Principal can stand alone 1. A built the house but in a poor manner 2. B ask A to fix it, if A refuses, B can ask Ex. Phone’s case and screen protector is TP accessions, Phone’s battery is the accessory 3. A pay TP due to violation of obligation If you promise to give a specific thing, you must Art. 1168: Remedies of Creditor in Negative include; Personal Obligations 1. Observe DGFF - Obligations NOT to DO 2. Deliver thing or Fruits 2 Basic Remedies 3. Deliver all Accessions and Accessories 1. Undoing of the forbidden thing + Damages 2. If not possible, ask for damages Ex. A will not build a fence for B 1. A built the fence 2. B can ask A to remove/ undo the fence, Art. 1167: Remedies of Creditor in Positive A refuses Personal Obligations 3. If cannot be undone, B can ask A for - Obligations to DO damages 3 Scenarios 1. Debtor fails to perform Art. 1169: Delay 2. Debtor does something contrary to the terms 2 Concepts of Delay: thereof 1. Ordinary Delay 3. Debtor does something in a poor manner - Due date, failure to pay 2. Legal Delay 3 Basic Remedies - Default/ Mora 1. Ask the Debtor General Rule: - you cannot compel a person against his No DEMAND, No DELAY will 1987 Constitution; called forced Art. 1170: Grounds for Liability labor or involuntary servitude 4 Instances when debtor is liable to pay for 2. If debtor refuses, ask a Third Person damages Exception; if there is personal consideration is 1. Delay/ Default/ Mora (1169) involved in the case a. Mora Solvendi - Delay on the part of the debtor Ex. B believes A can only sing the song and Aa. EX RE nobody else, B cannot ask TP, he can only ask for - Delay To give damages Ab. EX PERSONA - Delay To do Law on Obligations & Contracts Atty. Villegas b. Mora Accipiendi 4. Useless - Delay on the part of the Ex. A promised to give B a specific creditor horse c. Compensatio Morae a. Horse died, B cannot demand for the - Delay on the part of both specific horse because it is dead parties 5. Reciprocal Obligations 2 Instances where debtor is not liable for delay - neither party incurs in delay if A. Negative(1168) the other does not comply or - Not supposed to do is not ready to comply in a the thing proper manner with what is B. Natural incumbent upon him - Cannot be - Delay by the other begins the demanded or case enforced - If A performs, B must perform Requisites for delay (Legal) A. A performed but B cannot A. Ordinary Delay perform, then B is in delay B. Demand - Respect the Period given BA. Extra-judicial - Demand made outside the 2. Fraud/ Deceit/ Dolo court - Deliberate or intentional evasion of the - Can be oral or written normal fulfillment of the obligation BB. Judicial - PANLOLOKO - Demand made in court, filed a Types: case C. Failure to Comply Dolo Causante Dolo Incidente Premature Demand - Demand before due date, demand must Casual Fraud Incidental Fraud: Covered be on due date by Art. 1170 - No effect, no delay - Demand must be on or after due date Committed at the start Committed after the Ex. A owes B money payable today creation of the obligation 1. A did not pay today 2. A is not in delay because NO Remedy: Annulment Remedy: Ask for damages DEMAND NO DELAY Ex. A owes B money payable today Contract is Voidable Contract is Valid 1. A did not pay today 2. A is not in delay because NO To get consent of person To breach, to violate DEMAND NO DELAY obligation Exceptions - Even if there is no demand, there is delay Ex. Fundador, but the Ex. 10 boxes of Fundador content is Matador, arriving in december and 1. Law meaning it is fake. If I told you say it is genuine, when Ex. Taxes it came december they are (1786/1788) A promised to pay ABC the buyer that it is not fake fake. contribution TODAY a. A was not able to give contribution today (date agreed upon), A is in delay 2. Stipulation/ Agreement 3. Negligence/ Fault/ Culpa Ex. A owes B money on August 30 - no - Any voluntary act or omission therefore need for demand being no malice preventing normal a. A did not pay, he is liable to pay for fulfillment of normal obligation damages - Opposite of diligence, being careless 3. Time is of the essence a. Culpa Contractual civil code Ex. A promised to give B wedding gown - contract a. A cannot give the wedding gown after b. Culpa Criminal revised penal code the wedding, TIME IS IMPORTANT - crime b. A must give the wedding gown on or c. Culpa Aquiliana civil code - Quasi-delict/ Civil negligence before the wedding, else there is nothing or torts to wear Law on Obligations & Contracts Atty. Villegas 4. Violation/ Breach/ Contravention of the terms a higher insurance for it. If you don’t of teller of the obligation declare then it is already agreed upon - AKA Breach of Contract that you will receive 5000 php only. 2 Kinds of Breach 1. 1170 - Voluntary - Liable to pay for damages bc it is a voluntary omission 2. 1174 - Involuntary (PE) - Prevented by an Art. 1171: Waiver event, not liable to Waiver pay for damages - Give up/ relinquish/ deny a right Kinds of Damages (MENTAL) Past Fraud 1. Moral - Can be waived, act of forgiveness - feelings / reputation of person Future Fraud Ex. slap face of classmate, he will be - Cannot be waived, as it would promote fraud emotionally and physically hurt - It is void He can recover moral damages, the Past & Future Negligence more famous a person would be the - Can be waived higher the moral damages Ex. A promised B a specific wine 2. Exemplary/ Corrective - If wine was delivered and B found out it was fake - Example, correct a wrongdoing but he waived it nonetheless, waiver is VALID Ex. Filipino boarded a flight to US, stop - If wine is not yet delivered and B waives it no over in europe, the Filipino was in matter if it is fake or authentic (Future Fraud), business class, the flight attendant waiver is VOID made him go to economy because there - is a white man who needs the seat even Art. 1172: Kinds of Negligence if it was already paid for by him, he was Test of Negligence humiliated, he filed a case against the - Question of fact airline, he is a senator, he does not - You have to decide based on the circumstances of want the incident to happen to each party in the case, look deeper and analyze to another filipino, as an asian you are determine if the person is in fact negligent discriminated. > If negligent, then hold person to pay for 3. Nominal damages (1170) - Smallest form of damages 4 Scenarios 4. Temperate/ Moderate 1. Passenger who boarded a bus, while bus was - If you cannot prove damages with traveling the passenger jumped off the bus killing certainty himself - More than nominal but less than actual/ Q: Who is negligent? compensatory - The passenger 5. Actual/ Compensatory Q: Can passengers hold the driver liable for - HIghest form of damages damages? - Proven with certainty - No. - Original receipts 2. Passenger who boarded a bus, the driver was Ex. drunk driving recklessly, because of that they met 1. you ride a PUV, there was an with an accident. accident and you suffered injuries, you Q: Who is negligent? must prove that you are a passenger - The driver using the ticket given to you Q: Can passengers hold the driver liable for 2. Hospitalized for 1 month and was not damages? able to work, present with proof of - Yes. Based on the principle of Respondeat hospital bill, pay slip with deductions Superior 6. Liquidated Respondeat Superior - Agreed upon - master and servant rule of command responsibility - Always read terms and conditions - the fault of the employee is the fault of the employer (Culpa Ex. Cebu Pacific, if you lose your bag Contractual) there, they will only pay 5000 php, 3. Passenger who boarded a bus, he was so tired declare that you have important and from work, so he placed his face beside the expensive things inside the bag and pay Law on Obligations & Contracts Atty. Villegas window glass, while the bus was traversing a Smoking near or inside a factory of LPG, bystander threw the rock to the bus hitting the considered negligent window glass, breaking the glass and his face. 2. Circumstance of the person Q: Who is negligent? - - Not the Driver, not the Passenger, it is the Third Ex. Security guard caught sleeping, Person (Not Culpa Contractual as the TP has no considered negligent because you are contract with anyone, it is Culpa Aquiliana) supposed to guard and not to sleep 3. Circumstance of the time IF a common carrier knows that there are - bystanders throwing stones and failed to warn Ex. Driving in the morning without lights passengers. on, not negligent - Failure to exercise extraordinary diligence Driving at night without lights on, Q: Who is negligent? considered negligent - Driver/ common carrier 4. Circumstance of the place 4. Passenger boarded a bus, plenty of seats were - available but he decided to stand beside the door Ex. Driving 40-50kmph, not negligence which was open, he was asked by the driver and because it's the highway conductor to sit numerous times, while the driver Driving inside FEU for 40-50kmph, was driving recklessly, he made a quick curve to considered negligent because maximum the right resulting in the fall of the passenger. speed is 5-10kmph Q: Who is negligent? - Both driver and the passenger Art. 1174: Fortuitous Event/ CASO FORTUITO/ Q: Can the passenger recover damages from the FORCE MAJEURE common carrier? - An event which cannot be foreseen, or which, - Yes. though foreseen, were inevitable. - the negligent of the common carrier is the Kinds: proximate cause of the accident, then the 1. Ordinary passenger can hold the common carrier liable - happens everyday Ex. rain Contributory Negligence 2. Extraordinary - both parties are negligent - doesn’t happen everyday 3. Acts of God Case: Cangco vs MRR (38 Phil 263) - natural disasters - Cangco boarded a train Ex. lightning, earthquake, typhoon, tsunami - Train was loaded with watermelons 4. Acts of Man - Cangco did not notice the watermelons because - made by man, basically delicts the light inside the train was not functioning well 4 Essential Requisites - The operator of the train announced that they were 1. It must be independent of human participation near the stop 2. the event must be either unforeseeable or - Cangco went to the door but he accidentally unavoidable stepped on one of them 3. the event must be such as to render it impossible - Cangco lost his balance and fell of the train for the debtor to fulfill his obligation in a normal - The wheels of the train severed Cangco’s right manner foot 4. the debtor must be free from any participation in, Q: Who is negligent? or aggravation of the injury to the creditor - Contributory Negligence (both) Case: La Mallorca vs De Jesus Q: Why? - Brand new bus traversing the road using brand - Common carrier placed the watermelons inside new tires the train without any warning and without providing - Tires explode; can be Tire blow-out or Mechanical sufficient light defect (not a fortuitous event) - Cangco was alighting off the train while it was Q: Who is negligent? moving - Common carrier Q: Why? Art. 1173: Factors to be considered when a person - If the bus has been conducted thorough is negligent examination, accident could’ve been prevented 1. Nature of the Obligation General Rule: - - Debtor is not liable, obligation is extinguished Ex. Smoking, not negligence Ex. A promised B a specific car, the car was hit by Law on Obligations & Contracts Atty. Villegas lightning and got destroyed. - No injury if the person gives consent - A is not liable and the obligation is extinguished Ex. Insurance; A got a life insurance, A Ex. A promised B a specific horse, the horse died died, Insurance company is liable naturally Art. 1175: Usury - A is not liable and the obligation is extinguished Usury Exception/s: Debtor is still liable to pay, obligation is - Charging excessive interest extinguished but there is still liability to pay for damages - CB Circular 905 (1982) 1. Law > parties can now agree in any rate of interest a. 1165: Fraud & Delay Mutuum Fraud Ex. A promised B a specific car, A - Single loan also promised C the specific car - Borrow money or a consumable thing (nauubos) - cannot be given to both as it is one Ex. A borrows 10k from B specific car Commodatum - A is committing FRAUD - Borrow something which is not money - even if the car is destroyed by a Ex. A borrows table from B fortuitous event, A is still liable as he General Rule: committed fraud. - If it is unconscionable then it is still void Delay Ex. A promised B a specific - They can agree, provided it is not unconscionable horse, due date is today, A was not able to give it today, Unconscionable Q: Is A in delay? NO. BECAUSE NO - shocking to the conscience of man DEMAND NO DELAY Ex. A promised B a specific horse but Legal Interest the horse died, - 6% became 12% (CB 416) then 6% (CB 799 Q: Is A liable for the death? Yes 2013) because of the delay. Requisites for Interest b. 1170: Delict/ Fraud/ Negligence/ 1. Agreement Violation 2. In Writing Ex. Lance promised Allyhna a specific 3. Lawful horse, Lance fed the horse with poison, Ex. A borrowed 9k from B it is NEGLIGENCE Q1: Can B demand interest? Q: Is Lance liable? YES - NO because there is no agreement c. 1263: Generic Supposed A agreed to the interest Ex. Lance promised Allyhna a car, car Q2: Can B demand interest? was destroyed by a fortuitous event - YES Q: Is Lance liable? Yes because the car Suppose A agreed orally can be replaced Q3: Can B demand interest? Ex: Lance owes me 1M pesos but he - NO because it must be written got robbed before paying, he is still - Oral = void liable to pay. Suppose A & B agreed that there is interest in writing but d. 1268: Obligation to deliver a specific forgot to discuss the rate of interest thing arises from a crime Q4: Can B recover interest? Ex. Lance stole a pig from Me, he is - YES as it is in writing and the interest is 6% in supposed to return it but the pig died of standard natural causes. LANCE IS LIABLE, he should not have stolen it in the first Art. 1176: Presumption place. Presumption Exception/s: MORA ACCIPIENDI - Any inference, a guess e. 1942: Commodatum Kinds of Presumption: 2. Stipulation/ Agreement 1. Conclusive Ex. Agreement of terms, if something happens to - final, fixed, cannot be changed the thing the debtor is liable Ex. Ignorantia Legis Neminem Excusat 3. Nature of the Obligation requires the 2. Disputable/ Rebuttable assumption of risk/ Doctrine of Assumed Risk/ - can be changed Doctrine of Assumption of Risk/ VOLENTI NON Ex. innocence of a person, Partnership FIT INJURIA 1st Paragraph - Interest is paid ahead of the principal (RULE) Law on Obligations & Contracts Atty. Villegas - Disputable Presumption c. ACCION PAULIANA - rescind, revoke, cancel Ex. A borrowed 9k from B with an interest of 2% - fraudulent transaction 9k = Principal 2% = Accession Ex. D owes C 200k that is due TODAY Q1: What must A pay first? D did not pay today - 2% Interest (Accession) Q1:Is D in delay? Suppose A paid 9k before interest, then he - No because C did not demand VIOLATED the law C must make an extrajudicial demand to 2nd Paragraph put debtor in delay if debtor does not - Prior installments are first liquidated (RULE) pay then he is now liable to pay for - Disputable presumption damages under 1170 C is going to file a case in court in MTC Ex. A owes B monthly rental payments D owns a car worth 100k Suppose today is Aug X owes D 50k June - prior installment D sold the land to Y with element of July - prior installment fraud for 1M Aug - present installment Q2: What will C file in the MTC? Q1: What should be paid first? - Case: Collection of Sum of Money - Prior installments But D still did not pay Suppose A paid the present installment C will now have to go to other remedy - he violated the law 1. C will exhaust D’s car 200k (Prestation) - 100k (car, Exceptions to 1176 - (not applicable) D’s property) = 100k left 1. Reservation obligatory Ex. Receipt mentions interest is not yet paid 2. Court will tell X do not pay D, 2. Taxes pay C the 50k = 50k left Ex. suppose u paid the present not the prior, there obligatory is no presumption 3. Land will be rescinded and the 3. Duly Proven 1M - 50k = obligation is paid - by the creditor that the interest is not yet paid or Art. 1178: Obligations are NOT transmissible, the prior installments are not yet paid Rights are Transmissible (GR) 4. If the receipt is dated but the month paid is not Ex. A owes B 100K stated A has two sons A1 A2 Ex. Receipt with date aug 12, 2020, receipt did not B has two sons B1 B2 input month so it will be applied to the prior Q1: If A dies should A1 A2 pay B - No because obligations are not transmissible 1165 - Obligation to give Q2: If B dies, can B1 B2 collect from A? 1167 - Obligation to do - YES because rights are transmissible 1168 - Obligation not to do 1177 - Monetary Claims/ Obligation Exceptions to 1178 1191 - Remedies in reciprocal obligation 1. If prohibited by law 2. If prohibited by stipulation of the parties Art. 1177: Available to creditors for the satisfaction 3. If not transmissible by nature of their MONETARY claims - Before this there must be demand or NO Art. 1179: Pure Obligation DEMAND NO DELAY “Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once. - Extrajudicial demand > Judicial demand 1. Principal Remedy Every obligation which contain a resolutory condition shall also be demandable, - first thing you are supposed to file in without prejudice to the effects of the happening of the depend. (1113)” court - Exact fulfillment/ Specific Performance/ Collection of Sum of Money Condition 2. Subsidiary Remedy - Future and uncertain to happen a. Exhaust the property of debtor Period - find other properties - Future and certain to happen b. ACCION SUBRIGATORIA - substitution Pure Obligation Law on Obligations & Contracts Atty. Villegas - No Condition and No Period Ex. little by little, as soon as possible, from time to - Demandable at once/ anytime/ immediately time, at any time I have the money, in partial Ex. A owes B 9k pesos payments, when i am in a position to pay Instances when obligation is demandable at once Remedy 1. Pure Obligation (1179) - Court will be the one to fix the period 2. Resolutory condition (1197) 3. Resolutory period Art. 1181: Effect of Happening of Condition Classification of Condition 1. Suspensive As to effect (1179) - Acquisition of rights 1. Suspensive 2. Resolutory synonyms: precedent, antecedent - Termination of rights - if condition is fulfilled, obligation arises Art. 1182: Classification of Condition - cannot be demanded as you have to wait for Potestative fulfillment - Depends on Debtor or Creditor - When condition is not yet fulfilled there is mere Casual Casual hope for expectancy - Depends on TP or Chance - acquisition of rights Mixed 2. Resolutory - Depends on TP and Chance Synonyms: subsequent Ex. - if condition is fulfilled, obligation is extinguished Situations: - demandable at once 1. If period depends on debtor - its effect flow but there is termination - A will pay B 9k little by little (Period) - consolidation of rights - Potestative, Valid 2. If condition depends on debtor Ex. There is a race with a start and finish, you are - A will pay B 9k if i want to pay at the start. (Condition) If the prize is given at the start it is RESOLUTORY - Potestative, Void because the debtor will If the prize is given at the end it is SUSPENSIVE not pay As to form 3. If condition depends on creditor 1. Express - A owes B 9k, i will pay u if u want me to 2. Implied pay As to possibility (1183) - Potestative, Valid because it is 1. Possible dependent on the creditor 2. Impossible 4. If condition depends on TP As to cause/ origin (1182) - A will pay B 9k if the court (TP) tells me 1. Potestative to pay 2. Casual - Casual, Valid 3. Mixed 5. If condition depends on chance As to mode (1184 & 1185) - A will pay B 9k if it rains tomorrow 1. Positive - Casual, Valid 2. Negative 6. If condition depends on TP & chance As to numbers - A owes B 9k, i will pay u if it rains 1. Conjunctive tomorrow and the court tells me - 2 or more conditions must be complied - Mixed, Valid 2. Disjunctive Exceptions to conditions on debtor - 2 or more conditions and only one must be 1. Resolutory Condition complied Ex. Sale with right to repurchase (SRR) As to divisibility (1223 & 1224) Facto de retro sale 1. Divisible - If condition is fulfilled, obligation is 2. Indivisible extinguished if not there is consolidation of rights Art. 1180: Duration of period depends on the 2. Pre-existing Obligation debtor - Period (if duration decided by the debtor) Art. 1183: Impossible Condition General Rule: If there is an impossible condition it shall annul the obligation, both are void Law on Obligations & Contracts Atty. Villegas 2 Kinds of Impossible Condition Why? Because debtor voluntarily prevented happening of 1. Physically Impossible condition Ex. A will give B 9k if you can carry 10 Ex. A promised B 10k if you can sell my land sacks of rice at ur back Condition, Suspensive Effect: Obligation & Condition are VOID B finds a buyer and tells A, i am not entitled to the 10k 2. Legally Impossible But A fires B (Agent) Ex. A will give B 9K if you kill X A is liable to pay B 10k because A (debtor) voluntarily Effect: Obligation & Condition are VOID prevented B (creditor) from fulfilling the condition Exceptions Art. 1187: Retroactive Effects of the Fulfillment of - Only the condition is void but obligation is valid Suspensive Condition 1. Pre-existing obligation Retroactive Effect Ex. A owes B 9k - Goes back to the beginning After some time, A said to B i will give u 9k if u kill - It does not occur to fruits/ interest X 1. To give Eliminate condition, now a valid obligation - ownership arises from the day it was promised 2. Divisible 2. To do or not to do Ex. A owes B 9k - court decides A said i will pay u if you sing a song and kill X 3. Reciprocal Obligation Remove impossible condition, now a valid - no retroactive effect as both parties are mutually obligation compensated/ benefited 3. Negative 4. Unilateral Ex. A owes B 9k - no retroactive effect, as it is gratuitous and A said to B i will pay you if you don't kill X obligation is free Remove negative condition, valid obligation remains Art. 1188: Rights Pending the Fulfillment of the Others Suspensive Condition 1. Simple or Remenatory ones 1st Paragraph 2. Testamentary Dispositions - Right of Creditor 3. Negative Obligations > Right to bring appropriate action Proof of Ownership 1183 1266 TCT - Transfer Certificate of Title Impossible condition Impossibility in the OR fulfillment of the obligation - original receipt CR Void from the start Void after creation of - Certificate of Registration obligation Proof must be annotated in the back of these proofs Effect:Void Effect: Debtor is released 2nd Paragraph from obligation - Right of Debtor > Right to recover what he has paid in mistake Art. 1184: Positive Suspensive Condition (Solutio Indebiti) - To do 1. Time expires Art. 1189: 3 Kinds of Loss 2. Condition becomes indubitable 1. Physical Effect: - destroyed Obligation is Extinguished, Debtor is not liable 2. Legal Art. 1185: Negative Obligations - expropriation - Not to do - you will lose the thing but government will 1. Time elapsed compensate 2. Evident that event cannot occur 3. Civil Effect: - Disappears but you are not certain Obligation becomes effective, Debtor is liable Requisites for Application of 1189 Art. 1186: Doctrine of Constructive/ Presumed 1. Obligation to give Fulfillment Condition 2. Specific Effect: Deemed fulfilled 3. Subjected to a Suspensive Condition Law on Obligations & Contracts Atty. Villegas 4. There is loss deterioration improvement pending Ex. A borrows B specific car the fulfillment of a Suspensive Condition - Contract: Commodatum Loss B borrows 9k from A - Gone - Contract: Loan Deterioration 2 Obligations - Decreased value Obligation of A to return Improvement Obligation of B to pay 9k - Increased value Remedies in Reciprocal Obligation Scenarios - Alternative, not cumulative, not successive 1. Loss of thing without the debtor’s fault - Only one of the parties fails to comply - Fortuitous Event - Can be debtor or creditor - Debtor is not liable 1. Specific Performance/ Exact Fulfillment + 2. Loss of thing through debtor’s fault Damages - Negligence - compel performance of act - Debtor is liable 2. Rescission/ Cancellation + Damages 3. Deterioration of thing without debtor’s fault - don’t want to continue, want to cancel - Debtor is not liable Exception: 4. Deterioration of thing through debtor’s fault - if it becomes impossible - Debtor is liable Ex. B chooses to get a car but the car was destroyed by FE, 5. Improvement of the thing by nature or by time remedy is either of the two - value increases General Rule: - creditor receives increase Judicial Rescission Ex. Collector’s item 6. Improvement at the expense of debtor Can be Extrajudicial Rescission - right of usufructuary 1. Expressly stipulated 2. Contract is still executory Art. 1190: Effects of Resolutory Condition - Fulfillment of Resolutory Condition converts the Limitations on the power to rescind debtor into creditor and the creditor into debtor 1. Resort to courts mandated 1. To give 2. Power of the court to fix the period - no retroactive effect 3. If property is already in the hands of TP in - obligation is extinguished Good Faith 2. To do or not to do 4. Substantial violation is needed - no retroactive effect 5. No waiver on the part of creditor - court decides 1191 1381 Art. 1191: Remedies in Reciprocal Obligations - Only if the reciprocity arises from the same cause Breach of obligation Lesion on damage Kinds of Obligation according to the person obliged 1. Unilateral Principal Action Subsidiary Action - one party is obliged Ex. donation 2. Bilateral Art. 1192: Where BOTH parties are guilty of - both parties are mutually bound to each other breach of the obligation Ex. A promise B something, B promise A 1. First infractor is known something - if we know who first violated Kinds of Bilateral - equitably tempered or reduced 1. Reciprocal 2. First infractor cannot be determined - arises from SAME CAUSE/ - obligation is EXTINGUISHED CONTRACT - each shall bear/ suffer his damage Ex. A sold specific car B for 100K, B buys the car Art. 1193: Obligations for whose fulfillment a day - Contract: Sale certain has been fixed, shall be demandable only 2 Obligations when that day comes Obligation of A to deliver Period Obligation of B to pay - Future + Certain to happen 2. Non-Reciprocal Day Certain/ Nego - different CAUSES Law on Obligations & Contracts Atty. Villegas - It is understood to be that which must necessarily come but you do not know when it will happen Ex. death Art. 1195: Payment before arrival of period Kinds of Period - Only on obligation to give a. General Rule 1. Legal - Debtor is presumed aware of the period - Period fixed by law Exception Ex. Written contract - Debtor is not aware, he pays by mistake 2. Conventional/ Voluntary/ Contractual Ex. A owes B 9k payable after 2yrs - Period fixed by parties A pays before due date by mistake (Solutio 3. Judicial Indebiti) - Period is fixed by court Q1: What can A recover? b. - depends when he discovered it 1. Definite Before Due Date: - Very sure when it will occur Debtor can recover principal + interest 2. Indefinite After Due Date: - Not sure when it will occur but you are Can no longer recover as it is already due, only sure it will happen interest c. Art. 1196: Presumption as to the benefit of the Suspensive Period Resolutory Period period General Rule Ex Die In Diem - Period is for BOTH parties Ex. A owes B 9k + 2% interest on Sept 30, 2024 Suspended At once payable on Dec 30, 2024 A benefit because he can use the money and pay When obligation There is termination anytime arises there is of rights or obligation B benefit because there is interest acquisition of rights is extinguished B cannot demand before Dec 30 A cannot pay before Dec 30 Ex. A promised B a Ex.A said you can use Exceptions: specific car at the end my car at the end of 1. Benefit of debtor of semester the semester to B - “ within, on or before, no interest” - no advanced demand, debtor can pay anytime Art. 1194: Effects on Suspensive Period 2. Benefit of creditor 6 Situations - “ collectible, on demand” A promised B a specific car at the end of the semester - yes advanced demand. debtor cannot pay before Q1: When did A make the promise? - no advanced payment - August Exercises: Q2: When is the sem supposed to end? 1. Within 5 years - December - benefit of debtor Q3: Is B entitled already to the car? 2. After 5 years - No, he has to wait for the end of the sem - benefit of both parties 1. Thing is destroyed due to a Fortuitous Event 3. 5 years on demand - A is not liable - benefit of creditor 2. A destroyed the thing 4. 5 years from date - thing cannot be replaced - benefit of both parties - A is liable 5. Within 2 years on demand 3. Value of thing increased - benefit of creditor - B gets the increase 4. Value increase because debtor introduce Art. 1197: If the obligation does not fix a period, improvements but from its nature and the circumstances it can - A can remove improvements or he can set off be inferred that a period was intended, the courts (rise of use of fructuary) may fix the duration thereof. 5. Deterioration through time or nature General Rule - B will suffer deterioration - Court cannot fix the period 6. A did the deterioration Why? Parties should FIX it - Art. 1191 (Remedies) Law on Obligations & Contracts Atty. Villegas Exception Art. 1200: The right of choice belongs to the - Court can fix the period debtor, unless it has been expressly granted to Instances: the creditor. 1. Intended by the parties General Rule Ex. forgotten to include period - Debtor’s choice 2. Duration of the period depends on Exception the Debtor (1180) - Creditor or TP can choose if authorized - little by little by debtor 3. Whenever his means permit him to Limitations on the Debtor’s do so (1180) 1. (1199) Paragraph 2 - as soon as i have the money - Must completely perform, cannot give