Far Eastern University Law on Obligations and Contracts PDF

FAR EASTERN UNIVERSITY – MANILA BSBA ENTREPRENEURIAL MANAGEMENT LAW ON OBLIGATIONS AND CONTRACTS Professor: Mr. Amado Villegas ADAPTED FROM: Lecture / Canvas INTRODUCTION TO LAW Moral law THE GENERAL NAT...

FAR EASTERN UNIVERSITY – MANILA BSBA ENTREPRENEURIAL MANAGEMENT LAW ON OBLIGATIONS AND CONTRACTS Professor: Mr. Amado Villegas ADAPTED FROM: Lecture / Canvas INTRODUCTION TO LAW Moral law THE GENERAL NATURE OF LAW totality of the norms of good and right conduct growing out of the collective sense of right and Sanchez Roman wrong of every community “A rule of conduct, just, obligatory, promulgated by legitimate authority, and of common observance Physical law and benefit.” “In the operation or course of nature, there are uniformities of actions and orders of sequence Meaning of law in general. which are the physical phenomena that we law means any rule of action or any system of sense or feel. They are known as the laws of uniformity physical science or physical law.” (Ibid., p.19.) General divisions of law. State law particularly concerns us in this work is the divided into two (2) general groups: state law or the law that is promulgated and enforced by the state 1) Law (in the strict legal sense) which is promulgated and enforced by the state (state Characteristics of law. law / imperative / positive / municipal) 2) Law (in the non-legal sense) which is not The characteristics of law in its (specific sense) are: promulgated and enforced by the state (divine law, natural law, moral law, and physical law) 1) It is a rule of conduct. — law tells us what shall be done and what shall not be done. Concepts of (state) law. 2) It is obligatory. — law is considered a positive 1) General sense — refers to all the laws taken command imposing a duty to obey and together. involving a sanction which forces obedience. 2) Specific sense — the term has been defined as 3) It is promulgated by legitimate authority. — In a “a rule of conduct, just, obligatory, democratic country, like the Philippines, the promulgated by legitimate authority and of legitimate or competent authority is the common observance and benefit” legislature. Under the Constitution, competent (I Sanchez Roman 3.) authority is the legislature. Under the Constitution, laws called “statutes” are enacted GENERAL CLASSIFICATION OF LAW by Congress which is the name of the legislative branch of our government Divine law is the law of religion and faith which concerns 4) It is of common observance and benefit. — Law itself with the concept of sin (as contrasted must, therefore, be observed by all for the with crime) and salvation. benefit of all. Natural law Necessity for law. — Order defined as the divine inspiration in man of the sense of justice, fairness, and righteousness, History of law. not by divine revelation or formal Greece — Rome — Spain — Phils. promulgation, but by internal dictates of reason alone. Mangalino, Reyshe 1 Sources of law. Title of the Law — Civil Code of the Philippines The principal sources of law in the Philippines - Divided into 4 books are the Constitution, legislation, administrative rules and - Book 4 is divided into 19 titles regulations, judicial decisions, and customs. Title of the course — Obligations and Contracts 1) Constitution. — It is often referred to as the fundamental law or supreme law or highest law Citation of law — RA 386 of the land because it is promulgated by the Effectivity of the law — August 30, 1950 people themselves, binding on all individual citizens and all agencies of the government. Organization of Courts Supreme Court - highest court of the land 2) Legislation. — It is the preponderant source of law in the Philippines. Acts passed by the legislature are so-called enacted law or statute law. Legislation includes ordinances enacted by local governments units. 3) Administrative or executive orders, regulations, and rulings. — They are those issued by administrative officials under legislative authority. Administrative rules and regulations Classifications of law. are intended to clarify or explain the law and 1) As to its purpose: carry into effect its general provisions. a. Substantive law. — “rights and duties of 4) Judicial decisions or jurisprudence. — The parties” decisions of the courts, particularly the b. Procedural Adjective law / Remedial. — Supreme Court, applying or interpreting the provides the remedy / cure laws or the Constitution form part of the legal system of the Philippines. (Art. 8, Ibid.) The 2) As to its subject matter: decisions of a superior court on a point of law are binding on all subordinate courts. This is a. Public law. — affects all called the doctrine of precedent or stare decisis. b. Private law. — affects certain individuals 5) Custom. Latin Terms 6) Other sources (3). Ignorantia Legis Neminem Excusat (Ignorance of the law excuses no one from compliance 3 Branches / Departments of Government. therewith) conclusive presumption Nemo Est Suprema Lex (No One is above the 1) Legislative. — creates the law law) 2) Executive. — implements the law Dura Lex Sed Lex (Law may be harsh but it is 3) Judiciary. — decides / interprets the law the law) Law applies to all or none at all 3 Independent Constitutional Commissions. 1) Civil Service Commission (CSC). — HR of government 2) Commission on Elections (Comelec). — election 3) Commission on Audit (COA). — transaction of law Mangalino, Reyshe 2  Chapter 1: 10 years OBLIGATIONS 1. Written Contract - much better because the prescription is longer ARTICLE 1156 and have proof in court application in problem: An obligation is a juridical necessity to give, to do suppose A borrowed from B 9,000 pesos on or not to do. October 1, 2000 and due on November 30, 2000 ↳ the written contract will start from the due Meaning of obligation. date Obligation comes in Latin word “OBLIGATIO” § Civil Obligation – within 10 years means tying or binding. (11/30/2000 – 11/30/2010) suppose B demands from A within the 10 year Kinds of Obligations period (January 5, 2005) Ø B can demand from A and A should pay for juridical necessity - demand it (file case in the obligation because it’s still civil obligation court) Ø creditor has the right to demand and debtor has the duty to pay the demand From viewpoint of sanction: 1. CIVIL OBLIGATION § Natural Obligation – exceeds the 10 year period - based on positive law suppose B demanded from A on January 5, 2020 - if we can demand obligation (exceeded the 10 year period) - much better than natural because we can demand/ Ø B cannot demand on A and A should not pay file the case in the court the obligation - demandable in the court Ø if you pay voluntarily, you cannot demand for return of payment because you’re not 2. NATURAL OBLIGATION supposed to pay it - based on equity and natural law - we cannot demand obligation 2. Obligation created by law 3. Judgment of the court As to viewpoint of subject matter: 1. REAL OBLIGATION (obligation to give) 6 years ⁃ to give – deliver 1. Oral contract ⁃ the subject matter is a thing which the 2. Quasi – Contract obligor must deliver to the obligee. 4 years ex: A → B is promise to give specific car 1. Injury to the rights of plaintiff 2. Quasi – Delict 2. PERSONAL OBLIGATION 1 year - to do or not to do 1. Defamation Ø positive – to do or to render service (you have 2. Ejectment to do the thing) ex: A promise to sing a song to B Essential Requisite / Elements of Obligation Ø negative – not to do (you are not supposed to do) 1. Active Subject / Oblige / CREDITOR ex: A promise not to marry B ⁃ can demand the performance of obligation Prescription / Statue of Limitations 2. Passive Subject / Obligor / DEBTOR Extinctive – extinct (nawala) ⁃ the person who will perform / has duty to - lose the right to demand or file in court pays the obligation Acquisitive – acquire (becomes yours) 3. Object / Prestation / Service Ø prescriptive period basis: ARTICLE 1218 ⁃ subject matter of the obligation (gagawin mo) ⁃ consist in giving, doing or not doing Mangalino, Reyshe 3  4. Juridical Vinculum / Legal Tie / Efficient but did not do right of the Cause has the right it? plaintiff ⁃ reason that which binds the parties to the obligation in this case has the duty example: ARTICLE 1157 suppose A promise B to build a house (personal obligation) ART. 1157. Obligations arise from: Ø who will build the house? A is the DEBTOR Ø who can demand A to build the house? B is 1) Law CREDITOR 2) Contracts (Art. 1305) Ø what will A perform? going to build the 3) Quasi-contracts (Art. 2142) house PRESTATION 4) Delict / Crime / Felony (Art. 3 RPC) Ø why is it necessary for A to build a house? because he made a promise and the 5) Quasi-delicts / Tort / Culpa Aquilina promise is called as JURIDICAL VINCULUM Sources of Obligations 1) Law A promise B to PAY 9,000 pesos (loan) Ø who’s the person who will pay or perform ⁃ legal obligation the obligation? A is the DEBTOR ⁃ obligation arises from the law Ø who can demand A to demand the performance of obligation? B is the examples: CREDITOR suppose A owes the government taxes Ø What should A going to do? his going to Ø why should A pay the necessary taxes? pay PRESTATION because the law mandates A to pay the Ø Why should A pay? there’s a contract in taxes this case JURIDICAL VINCULUM suppose A is the father and B is the son Obligation, right and wrong distinguished. Ø why the father supposed to give monthly support to his son? because the law 1) Obligation is the act or performance which the mandates him to support his son law will enforce 2) Right, on the other hand, is the power which a 2) Contract Art. 1305 person has under the law, to demand from ⁃ there is consent on the part of parties another any prestation. ⁃ when they arise from the stipulation of the 3) Wrong (cause of action), is an act or omission parties of one party in violation of the legal right or rights of another. In law, the term injury is also A contract is a meeting of minds between two used to refer to the wrongful violation of the persons whereby one binds himself, with respect to legal right of another. the other, to give something or to render some service example: Obligation Right Wrong example: The creditor The debtor suppose A is the seller and sold a specific car under 1156 has the right to does not pay or for 100,000 and B is the buyer collect and perform Ø what is the basic obligation of A? to deliver demand the car Ø what is the basic obligation of B? to pay the Plaintiff Defendant Cause of car Action Ø why should A deliver and should B pay? who’s going to Who is they have a contractual obligation file the case in supposed to If the defendant court? the obligation violated the Mangalino, Reyshe 4 3) Quasi – Contract Art. 2142 5) Quasi – Delict / Torts (Art. 2176) ⁃ no consent ⁃ no contract but there is damage caused arises from lawful, voluntary, and unilateral due to negligence acts that give rise to a juridical relation to the end that no one shall be unjustly enriched or example: Taxi Cab Driver Incident benefited at the expense of another Ø A is the driver, B is the passenger Ø the driver came from birthday party and his TWO KINDS OF QUASI - CONTRACT wallet slipped (no driver’s license) Ø While driving, pinara siya ng passenger 1. Negotiorum Gestio Art. 2144 Ø nag-usap sila and yung contract called ⁃ voluntary management COMMON CARRIAGE ⁃ “If a person voluntarily takes charge of the Ø the owner of taxi is COMMON CARRIER property of another, without the owner's Ø the driver is the EMPLOYEE authority, the provisions on quasi-contracts Ø C is crossing the pedestrian lane and the driver shall be applicable." hit him (dead), dog died and fence broken Ø LAW: Drunk Driving, Driving without License, example: etc. fighting for Marawi: A fled to US and abandon Ø CONTRACT: COMMON CARIIAGE, the property, B takes care the property obligation to bring passenger safely but Ø the act of B in managing is lawful and affected voluntarily Ø QUASI-DELICT: Driver and Pedestrian Lane Ø the act of B in managing is unilateral Ø DELICT: Homicide because there is no because A didn’t hire B and B didn’t have intention to kill, simple damage for dog and consent of A fence Ø A goes back to Marawi, B should return the property to A because If he can’t, it can be ARTICLE 1158 considered as UNJUST ENRICHMENT Obligations derived from law are not presumed. 2. Solutio Indebiti Art. 2154 Only those expressly determined in this Code or in ⁃ payment by mistake or undue payment special laws are demandable, and shall be regulated by the precepts of the law which establishes them; ⁃ "If something is received when there is no and as to what has not been foreseen, by the right to demand it, and it was unduly provisions of this Book. delivered through mistake, the obligation to return it arises. Legal Obligations example: Latin word is “EX LEGE” Suppose A owes B 9,000 but did not agree in interest but he pay for interest because he Are obligations presumed? thought that there was an agreement ⁃ They are not presumed because they are Ø payment by mistake considered a burden upon the obligor. Other instances of Quasi-Contract example: Gambling Ø you won in gambling, the loser is no legal 4) Delict / Crime / Felony (Art. 3 RPC) obligation to pay you because the law is ⁃ acts or omissions punishable by law are prohibited by the law and the winner cannot file felonies a case ⁃ when they arise from civil liability which is the consequence of a criminal offense ⁃ committed a crime there are 2 liabilities: o Criminal: going to go to prison o Civil: going to pay for damages Mangalino, Reyshe 5  ARTICLE 1159 ARTICLE 1162 Obligations arising from contracts have the force Obligations derived from quasi- delicts shall be of law between the contracting parties and should governed by provisions of Chapter 2, Title XVII of be complied with in good faith. this Book and by special laws. (Quasi-Delicts under Extra Contractual Obligations) Contractual Obligation - Obligatory Force of Contract QUASI – DELICT / EX QUASI-DELICTO / TORTS - obligations arising from contracts or voluntary agreements 5 Requisite of Quasi-Delict (2/3/5) Latin word “EX CONTRACTU” or Voluntary / 2. Negligence Conventional / Contractual 3. Damage Cause 5. No Contract Obligatory - mandatory / compulsory Additional notes: - supposed to comply 1. There must not be pre-existing contractual ARTICLE 1160 relation between parties 2. Liability under quasi-delict is solidary. Obligations derived from quasi contracts shall be 3. Prescription of an action ex quasi-delicto is not subject to the provisions of Chapter 1, Title XVII, of a bar to an action ex-delicto. this Book. SIX DISTINCTIONS Quasi – Contractual Obligations Delict Quasi-Delict Latin word “EX QUASI-CONTRACTU” Requisite Malicious Intent Negligence Purpose Putting the Payment of Is quasi-contract an implied contract? person in Damages - NO, because unlike in an implied impact, there prison is NO meeting of minds in a quasi-contract Affected Public Private persons / interest ARTICLE 1161 Liabilities 2 Liabilities: 1 Liability: Civil Criminal and because there is Civil obligations arising from criminal offenses Civil no imprisonment shall be governed by penal laws, subject to the Compromise NO – cannot YES - can lessen provisions of Article 2177, and of pertinent compromise the liability provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of this Book, Evidence Criminal: Civil: Criminal Proof beyond Preponderance regulating damages. ↑ Civil reasonable of evidence Penal Obligation / EX DELICTO / EX MALEFACTO ↑ doubt Administrative Art. 100 RPC – every person criminally liable is (only substantial) also civil liable If a crime / delict is committed, there are two liabilities: 1. Criminal liability – imprisonment 2. Civil liability – payment for damages Scope of Civil Liability 1. Restitution - return 2. Reparation - repair 3. Indemnification for Consequential Damages - to pay for damages Mangalino, Reyshe 6  Chapter 2: NATURE AND EFFECT OF Levels of Diligence Extraordinary – highest form of diligence OBLIGATIONS (1) common carriage (2) banking industry ↑ ARTICLE 1163 Ordinary Diligence / DGFF – required by law, average (diligence of a good father of a family) Every person obliged to give something is also ↑ obliged to take care of it with the proper diligence Slight Meager – minimal amount of a good father of a family, unless the law or the stipulation of the parties requires another standard Diligence Required of care. 1) by provision of law (ex: common carriage) 2) by stipulation of parties Meaning of specific or determinate thing. 3) is the absence of both, apply “diligence of good father of a family” The above provision refers to an obligation ↳ Latin word “BONUM PATERFAMILIA” specific or determinant thing. means with ordinary care or that diligence A thing said to be specific or determinate which an average person exercises over his particularly designates or physically segregated own property from others of the same class (Art. 1459). by its individuality ARTICLE 1164 cannot be substituted / replace The creditor has a right to the fruits of the thing from ex: A promise B a red Honda car model 1991 with model the time the obligation to deliver it arises. However, XYZ 123. he shall acquire no real right over it until the same money with serial number (specific) has been delivered to him. Meaning of generic or indeterminate thing. Three Rights given: A thing generic or indeterminate when it refers 1) Personal Right (JUS INPERSONAM) only to a class or genus to which it pertains and demandable only from a specific person cannot be pointed out with particularly. right or power of a person (creditor) to can be substituted / replace demand from another (debtor) ex: supposed to give a Honda car 2) Real Right (JUS IN RE) (JUS IN REM) supposed to give 10,000 (money is generic) demandable against the whole world right or interest of a person over a specific Exemption to the rule of generic thing (ownership, possession, mortgage) limited generic thing – confined to a particular without a definite passive subject against class whom the right may be personally enforced. Duties of debtor in obligation to give a determine 3) Rights to the Fruits thing. a. Natural fruits — are spontaneous products of the soil, and the young and other Three basic obligations: products of animals (made by nature) 1) Preserve or take care of the thing with the ex: trees in the forest DGFF b. Industrial fruits — are those produced by 2) Deliver the fruits of the thing lands of any kind through cultivation or 3) Deliver the accessions and accessories labor (man made) ex: mango plantation c. Civil fruits — are those derived by virtue of a juridical relation ex: lease, employee Mangalino, Reyshe 7 The creditor has the right to the fruits of the thing from GENERIC SPECIFIC the time the obligation to deliver it arises 1. Ask the debtor 1. Compel the debtor In contracts, from the time of the perfection of the 2. Ask a third person 2. Ask for damages contract (1170) 3. Ask for damages Delivery transfers ownership. (1170) Registration creates the real right over the thing. example: Ø A promise B 100 cavans of rice example: Ø X promise Y a specif land after Y finishes college Can B compel A to deliver the rice? GENERIC, cannot o Delivery / tradition transfers compel only ask ownership ARTICLE 1166 before y finishes college: no right after y finishes college: personal right The obligation to give a determinate thing includes before delivery: personal right that of delivering all its accessions and after delivery: real right accessories, even though they may not have been right to the fruits: natural, industrial, civil mentioned. diligence required: diligence of a good father of a family Meaning of accessions and accessories. when was ownership transferred? The moment it has been DELIVERED in this case 1) Accessions are the fruits of a thing or additions how about the fruits? to or improvements upon a thing (the principal) ARTICLE 1165 Types of Accession: (law) When what is to be delivered is a determinate thing, Discreta – natural, industrial, civil the creditor, in addition to the right granted him by Industrial – building, planting, sewing Article 1170, may compel the debtor to make the Natural – alluvion, avulsion delivery. 2) Accessories are things joined to or (added) If the thing is indeterminate or generic, he may ask included with the principal thing for the latter’s that the obligation be complied with at the expense embellishment, better use, or completion. of the debtor. ACCESSIO CEDIT PRINCIPALI – accessory follows If the obligor delays, or has promised to deliver the the principal same thing to two or more persons who do not have the same interest, he shall be responsible for ex: land – principal, house – accessory fortuitous event until he has effected the delivery. Can the principal exist without the accessory? YES Remedies of creditor in real obligation. (to give) Can the accessory exist without the principal? NO ↳ there is substative or procedural law ARTICLE 1167 1) Specific real obligation — identify by which individuality, cannot replace If a person obliged to do something fails to do it, the 2) Generic real obligation — classified by class, same shall be executed at his cost. (POSITIVE PERSONAL replace OBLIGATION) GENUS NUNQUAM PERUIT – genus never perishes This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone. Mangalino, Reyshe 8 Remedies of creditor in positive personal Meaning of delay. obligation. (to do) The word delay, as used in the law, not to be understood according to its meaning in 3 situations: common parlance. 1) The debtor fails to perform a obligation to do 2) The debtor performs an obligation to do but 1) Ordinary delay — is merely the failure to contrary to the terms thereof perform an obligation on time 3) The debtor performs an obligation to do but in 2) Legal delay or default or mora — is the failure poor manner to perform an obligation on time which failure constitutes a breach of the obligation. 3 basic remedies: 1) Ask the debtor Kinds of Delay / Default / Mora - you cannot compel the debtor because this is INVOLUNTARY SERVITUDE, but 1) Mora solvendi or the delay on the part of the you can ASK debtor to fulfill his obligation (to give or to do) 2) If debtor refuses, ask a third person o EX RE – delay in real obligations (to 3) Ask for damages give) o EX PERSONA – delay in personal Exception to the rule – if personal consideration obligations (to do) which is involved 2) Mora accipiendi or the delay on the part of the Note: creditor to accept the performance of the obligation A personal obligation to do, like a real obligation to deliver a generic thing, can be performed by a third 3) Compensatio morae or the delay of the (both person. While the debtor can be compelled to make the parties) obligors in reciprocal obligations (like in delivery of a specific thing (Art. 1165.), a specific sale) i.e., the delay of the obligor cancels the performance cannot be ordered in a personal obligation delay of the obligee, and vice-versa. to do because this may amount to INVOLUNTARY SERVITUDE which, as a rule, is prohibited under our No delay in negative personal obligation. Constitution. In an obligation not to do, non-fulfillment may ARTICLE 1168 take place but delay is impossible for the debtor fulfills by not doing what has been forbidden When the obligation consists in not doing, and the him. obligor does what has been forbidden him, it shall also be undone at his expense. Requisites of delay or default by the debtor. Remedies of creditor in negative personal 1) Ordinary delay (it must be due date) obligation. (not to do) 2) Demand – made on or later of the due date (extrajudicial, judicial) 1) Undoing of the forbidden thing plus damages 3) Failure to comply 2) If not possible, ask for damages When demand is not necessary to put debtor in ARTICLE 1169 delay. Those obliged to deliver or to do something incur in Exceptions – even if there is no demand there is delay delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of 1) Law – ex: taxes, partnership (contribution) their obligation. 2) Stipulation / Agreement 3) Time is of the essence General Rule – NO DEMAND, NO DELAY 4) Useless 5) Reciprocal obligations (kaliwaan) Mangalino, Reyshe 9  ARTICLE 1170 Culpa Culpa Culpa Contractual Aquiliana Criminal Those who, in the performance of their obligation negligence is direct & direct & are guilty of fraud, negligence, or delay and those incidental substantive substantive who, in any manner contravene the tenor thereof, are liable for damages. pre-existing none none obligation Instances when the debtor is liable to pay for preponderance preponderance proof beyond damages of evidence of evidence reasonable doubt 1) Fraud (deceit or dolo) — it is the deliberate or intentional evasion of the normal fulfillment of DGFF not a YES NO an obligation. defense to be proved to be proved - presumed Two Kinds of Fraud - contract and negligence innocent breach 1) Dolo Causante (Casual Fraud) master & NO NO 2) Dolo Incidente (Incidental Fraud) servant rule CASUAL FRAUD INCIDENTAL FRAUD before creation after creation FRAUD NEGLIGENCE deliberate no intention annulment pay / ask for damages Future fraud (not allow, Allowed future fraud voidable valid void) to get the consent of the to breach / to violate the Clearly proved Presumed from violation person violation Cannot be mitigated Can be mitigated How is causal fraud committed? 3) Delay (mora) — under article 1169 a) Insidious words or machinations b) Concealment 4) Breach / Violation / Contravention 2) Negligence (fault or culpa) — it is any Two Kinds of Breach voluntary act or omission, there being no bad faith or malice, which prevents the normal fulfillment of an obligation. a) 1170 – voluntary, liable to pay for damages b) 1174 – involuntary, not liable to pay for Three Kinds of Negligence damages Kinds of Damages (MENTAL) 1) Culpa Contractual (Contractual Negligence) — agreement between the parties but one of the parties committed negligence 1) Moral — feelings / reputation 2) Exemplary / Corrective — as an example or to 2) Culpa Criminal (Criminal Negligence) — arises because there’s crime committed correct the wrong doing 3) Nominal — smallest form of damages 3) Culpa Aquiliana (Civil Negligence / Quasi- Delict / Torts) — there is no contract but there 4) Temperate / Moderate — in between, more is damaged cause because of the negligence of than nominal, but less than actual, because not other country able to prove your claim with certainty the fault of the Master & Servant Rule Respondeat Superior Command Responsibility } employee is the fault of employer 5) Actual / Compensatory — proven with certainty, highest form 6) Liquidated — damages agreed upon by the parties Mangalino, Reyshe 10  Kinds of Evidence If the wine is already delivered and B found out that the wine is fake and he accepted it – WAIVER VALID 1) Proof beyond Reasonable doubt - Criminal Case If the wine is not been delivered and B mentioned that whatever happens to wine either fake or not, I’ll accept 2) Preponderance of Evidence – Civil Case it (future fraud) – NOT VALID 3) Substantial Evidence – administrative or labor ARTICLE 1172 cases ex: you caught the guard sleeping (CCTV) Responsibility arising from negligence in the performance of every kind of obligation is also Taxi Cab Driver Incident demandable, but such liability may be regulated by the courts, according to the circumstance 1) RPC – heirs of passenger & pedestrian can file against the driver and employer Negligence is any voluntary act or omission, there CULPA CRIMINAL being no malice, which prevents the normal fulfillment of an obligation. Driver – liability in direct / primarily (first) Employer – subsidiary (second) Three Kinds of Negligence Ø employer cannot relieve himself of liability by proving DGFF 1) Contractual (Culpa contractual) 2) Civil (Culpa Aquiliana) 2) Civil Code 3) Criminal (Culpa Criminal) AQUILIANA – heirs of pedestrian can hold BOTH 4 scenarios the driver & employer or employer only liability of BOTH in DIRECT / PRIMARILY 1) passenger – cannot recover damages (DGFF - YES) on employer 2) driver – can recover based on CULPA CONTRACTUAL or respondeat superior or CONTRACTUAL – heirs of passenger master and servant rule 3) case of CULPA AQUILIANA employer only – BREACH OF CONTRACT 4) case of Contributory Negligence (DGFF – NO) ARTICLE 1171 ARTICLE 1173 Responsibility arising from fraud is demandable in The fault or negligence of the obligor consists in the all obligations. Any waiver of future fraud is void. omission of that diligence which is required by the nature of the obligation and corresponds with the Waiver circumstances of the person, of the time and of the you’re going to give up a right or going to place. When negligence shows bad faith, the relinquish it (hindi mo siya tatanggapin / provisions of Article 1171 and 2201, paragraph 2, waive) shall apply. If the law or contract does not state the diligence Waiver of future fraud – not valid (NO) which is to be observed in the performance, that - any waiver for future fraud cannot be waived which is expected of a good father of a family shall because it would be contrary to law and it is void in be required. this case Factors to be considered when a person is negligent. Waiver of past fraud – valid (YES) 1) Nature of the Obligation Waver of past or future negligence – valid (YES) 2) Circumstances of the person ex: 3) Circumstances of time Ø Suppose A promise to give B a specific 4) Circumstances of the place (branded) wine Mangalino, Reyshe 11  ARTICLE 1174 ARTICLE 1175 Except in cases expressly specified by the law, or “Usurious transactions shall be governed by when it is otherwise declared by stipulation or when special laws.” the nature of the obligation requires the assumption of risk, no personal shall be responsible for those Usury law is legally inexistent (CB 905) events which could not be foreseen, or which, though foreseen, were inevitable. Requisites to recovery of interest Meaning of fortuitous event. 1) agreement is any event which cannot be foreseen, or 2) writing which, though foreseen, is inevitable. 3) lawful an event which is either impossible to foresee or impossible to avoid. Mutuum (simple loan) - money or consumable thing synonyms – CASO FORTUITO / FORCE MAJEURE Commodatum – other than money (ex. table, ballpen) Kinds of Fortuitous Event ARTICLE 1176 1) Ordinary fortuitous event. — happens every day, common (ex. rain) The receipt of the principal by the creditor, without reservation with respect to the interest, shall give 2) Extra - ordinary fortuitous event. — doesn’t rise to the presumption that said interest has been happen in every day (ex. earthquake, fire, flood) paid. 3) Acts of God (force majeure) — natural disasters The receipt of a later installment of a debt without (typhoon, tsunami, flood, rain) reservation as to prior installment, shall likewise raise the presumption that such installments have 4) Acts of Man — made by man (robbery, theft, been paid. murder) Meaning of presumption. Requisites of Fortuitous Event the inference of a fact not actually known arising from its usual connection with another which is known or proved. 1) The event must be independent of the human o inference – guess / hula will or at least of the debtor’s will Two kinds of presumption 2) The event could not be foreseen, or if foreseen, is inevitable 1) Conclusive presumption. — one which cannot 3) The event must be of such a character as to be contradicted, like the presumption that render it impossible for the debtor to comply everyone is conclusively presumed to know the with his obligation in a normal manner law (final / fixed) 4) The debtor must be free from any 2) Disputable (or rebuttable) presumption. — participation in, or the aggravation of, the injury to the creditor, that is, there is no one which can be contradicted or rebutted by concurrent negligence on his part. presenting proof of the contrary, like the presumption established in Article 1176. (can General Rule – Debtor not liable be changed) Exceptions – DEBTOR IS LIABLE 1st paragraph Rule – Interest is paid ahead of the principal 1) Law (1170, 1165 , 1268, 1263) Presumption – interest is already paid (DP) 2) Stipulation / Agreement Conclusive Presumption 3) Nature of the obligation requires the 2nd paragraph assumption of risk (ex: insurance) Rule – Prior installments are first liquidated Doctrine of Assumed Risk Presumption – prior installments are already Doctrine of Assumption of Risk paid Volenti Non Fit Injuria Disputable Presumption Mangalino, Reyshe 12 When presumption in Article 1176 do not apply. Chapter 3: DIFFERENT KINDS OF 1) With reservation as the interest. OBLIGATIONS 2) Receipt without indication of particular installment paid Classifications of obligations. 3) Receipt for a part of the principal. Primary classifications of obligations a) Pure and conditional obligations 4) Payment of taxes. b) Obligations with a period 5) Non – payment proven. c) Alternative and facultative obligations d) Joint and solidary obligations ARTICLE 1177 e) Divisible and indivisible obligations f) Obligations with a penal code The creditors, after having pursued the property in possession of the debtor to satisfy their claims, Secondary classifications of obligations may exercise all the rights and bring all the actions a) Unilateral and bilateral obligations of the latter for the same purpose, save those which ↓ ↓ are inherent in his person; they may also impugn one two obligation the acts which the debtor may have done to defraud multilateral – more than two obligation them. b) Real and personal obligations Remedies available to the creditors for the ↓ ↓ satisfaction of their monetary claims. to give to do or not to do Primary remedy / Principal Remedy – SPECIFIC c) Determinate and generic obligations PERFORMANCE / Exact Fulfillment / Collection of ↓ ↓ Sum of Money cannot can be replace first thing you are supposed to file in the court Secondary remedies / Subsidiary Remedy d) Civil and natural obligations ↓ ↓ 1) Exhaust the properties – find / located other can demand cannot demand in court properties of the debtor e) Legal, conventional, and penal obligations 2) Accion Subrogatoria – subrogation ↓ ↓ ↓ law voluntary / crime (substitution) contractual 3) Accion Pauliana - rescind the contract obligation ARTICLE 1178 Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary. Obligations are NOT transmissible General Rule: Rights are transmissible Exceptions: 1) prohibited by law a. contract of partnership b. contract of agency c. contract of commodatum 2) prohibited by stipulation of the parties 3) not transmissible by nature Mangalino, Reyshe 13  Section 1: 3. When condition is 3. Its effect flow but there Pure and Conditional Obligations not yet fulfilled – there is termination hope or expectancy ARTICLE 1179 4. Acquisition of rights 4. Termination of rights Every obligation whose performance does not 5. The law does not 5. Consolidation of rights depend upon a future or uncertain event, or upon a appear past event unknown to the parties is demandable at once. ARTICLE 1180 Every obligation which contains a resolutory Period / Term — sure na mangyayari condition shall also be demandable, without future + CERTAIN prejudice to the effects of the happening of the event. 1) The debtor promises to pay when his means Meaning of pure obligation. permit him to do so. pure obligation is one which is not subject to duration of period depends on the debtor any condition and no specific date is mentioned for its fulfillment 2) Other cases. no condition + no period a. little by little effect: demandable at once, immediately b. as soon as possible demandable c. from time to time d. at any time I have the money Meaning of conditional obligation. e. in partial payments conditional obligation is one whose f. when I am in position to pay consequences are subject in one way or REMEDY – court will fix the period another to the fulfillment of a condition. ARTICLE 1181 Meaning of condition. — hindi sure kung mangyayari condition is a future and uncertain event, upon In conditional obligations, the acquisition of rights, the happening of which, the acquisition or as well as the extinguishment or loss of those extinguishment of an obligation (or right) already acquired shall depend upon the happening subject to it depends. of the event which constitutes the condition. future + uncertain Effect of happening of condition. Instances when obligation is immediately demandable. 1) Suspensive — Acquisition of rights. 1) Pure obligation 2) Resolutory — Termination of rights. 2) Resolutory Condition ARTICLE 1182 3) Resolutory Period When the fulfillment of the condition depends upon Two principal kinds of condition. the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the 1) Suspensive Condition (condition precedent or will of a third person, the obligation shall take effect condition antecedent) in conformity with the provisions of this Code. 2) Resolutory Condition (condition subsequent) Classifications of conditions. Suspensive Condition Resolutory Condition 1. If the obligation 1. If the obligation fulfilled As to effect fulfilled – the obligation – the obligation Suspensive - happening of the condition gives ARISES EXTINGUISHED rise to the obligation 2. Demandability - 2. Demandable AT 3) Resolutory - happening of the condition Suspended ONCE extinguishes the obligation Mangalino, Reyshe 14 As to form ARTICLE 1183 Express – the condition is clearly stated Implied – the condition is merely inferred Impossible obligation Impossibility in the performance of the obligation As to possibility Beginning After the creation Possible - capable of fulfillment in nature an in Annulled / void Debtor is released law; doable 2 kinds of impossible conditions. Impossible - not capable of fulfillment due to the nature or due to the operation of the law or 1) Physically impossible conditions. — in nature morals or public policy or due to a contradiction of things, cannot exist or cannot be done in its terms 2) Legally impossible conditions. — contrary to law, morals, good customs, public order, or As to cause / origin public policy. Potestative – depends on debtor or creditor Casual – depends on third person or chance Effect — General rule: Mixed – depends on third person and chance Impossible condition shall ANNUL the obligation As to mode both the obligation and condition are VOID Positive - an act is to be performed Negative - something will be omitted or not Exception: only the condition is void, the obligation is valid As to numbers 1) Pre-existing obligation Conjunctive – 2 or more conditions and all 2) Divisible conditions must be complied 3) Negative Disjunctive – 2 or more conditions and only one condition must be complied Others 1) Simple or Remuneratory ones As to divisibility 2) Testamentary Dispositions Divisible - capable of partial performance 3) Negative Obligations Indivisible – the condition is not susceptible of partial performance ARTICLE 1184 Exception to condition on debtor. The condition that some event happen at a determinate time shall extinguish the obligation as 1) Resolutory condition soon as the time expires or if it has become 2) Pre-existing obligation indubitable that the event will not take place. If debtor depends on VALID Positive condition. debtor If condition depends on VOID 1) as soon as the time expires without the event debtor taking place If condition depends on VALID 2) as soon as it has become indubitable that the creditor event will not take place although the time If condition depends on VALID specified has not expired. third person If condition depends on VALID Example: chance If condition depends on VALID Supposed A promise to give X 10,000 pesos third person & chance If X will marry Y before the age of 30 If condition potestative “one” Supposed X was able to marry at the age of 28 – is it If condition casual “or” liable? YES If condition mixed “and” Mangalino, Reyshe 15 Supposed X was able to marry at the age of 31 – is it What happens when the party obligated to fulfill a liable? NO suspensive condition prevents it from happening? Effect: The obligation is extinguished, DEBTOR DEEMED FULFILLED is not liable ARTICLE 1187 Supposed X die at the age of 28, will the dead person marry another person? NO, the debtor is not liable The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the ARTICLE 1185 day of the constitution of the obligation. Nevertheless, when the obligation imposes The condition that some event will not happen at a reciprocal prestations upon the parties, the fruits determinate time shall render the obligation and interests during the pendency of the condition effective from the moment the time indicated has shall be deemed to have been mutually elapsed, or if it has become evident that the event compensated. If the obligation is unilateral, the cannot occur. debtor shall appropriate the fruits and interests received, unless from the nature and circumstances If no time has been fixed, the condition shall be of the obligation it should be inferred that the deemed fulfilled at such time as may have probably intention of the person constituting the same was been contemplated, bearing in mind the nature of different. the obligation. In obligations to do and not to do, the courts shall Negative condition. determine, in each case, the retroactive effect of the 1) From the moment the time indicated has condition that has been complied with. elapsed without the event taking place 2) from the moment it has become evident that the GENERAL RULE: The obligation becomes effective event cannot occur, although the time retroactively on the day when the obligation was indicated has not yet elapsed constituted. Example: Supposed A promise to give X 10,000 pesos, Retroactive effects of fulfillment of suspensive If X will not marry Y before the age of 30 condition. ↓ Supposed X was able to marry at the age of 28 – is it the obligation arises liable? NO 1) To give – YES, the obligation to give will have Supposed X was able to marry at the age of 31 – is it retroactive effect. This means once the liable? YES condition is met, it’s like you were obligated to give from the start. Supposed X die at the age of 28, will the dead person marry another person? YES, the debtor is liable 2) To do or not to do – NO, there’s no retroactive effect. The court will decide what happens if ARTICLE 1186 there’s an issue with fulfilling these obligations. The condition shall be deemed fulfilled when the 3) Reciprocal Obligation – NO, both parties are obligor voluntarily prevents its fulfillment. mutually compensated (compensated for what they give and receive, no retroactive effects. Constructive fulfillment or suspensive condition. Provision: Doctrine of Constructive Fulfillment 4) Unilateral – NO, gratuitous act or free, Doctrine of Presumed Fulfillment meaning one party benefits without paying or giving anything in return. No retroactive Effect: DEEMED FULFILLED effects. ↳ because the debtor voluntarily prevented the happening of condition No retroactive effect in fruits / interest Mangalino, Reyshe 16  ARTICLE 1188 (2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; The creditor may, before the fulfillment of the it is understood that the thing condition, bring the appropriate actions for the (3) When the thing deteriorates without the preservation of his right. fault of the debtor, the impairment is to be borne by the creditor; The debtor may recover what during the same time (4) If it deteriorates without the fault of the he has paid by mistake in case of suspensive debtor, the creditor may choose between condition. rescission of the obligation and its fulfillment, with indemnity for damages in Rights pending the fulfillment of the suspensive either case; condition (5) If the thing is improved by its nature, or by time, the improvement shall inure to the The condition has not been fulfilled benefit of the creditor; (6) If it is improved at the expense of the 1st paragraph: right of Creditor debtor, he shall have no right that that - right to bring appropriate actions granted to the usufructuary. example: A is the debtor, B is the Creditor 3 kinds of Loss A tells B to give to give specific land it pass the CPA 1) Physical – it perishes , physically destroyed Board Exam, the promise was made on January and B 2) Legal – goes out of commerce will take exam on May 3) Civil – it disappears in such a way that its existence is unknown A already promised the land to B, can A can sell the land to C? YES because A is still the owner 5 requisites Can B protect his rights when he passes the exam, he 1) The obligation is a real obligation can claim the land? YES, transfer certificate of title or 2) The object is a specific or determinate thing original certificate of title, annotate at the back the 3) The obligation is subject to a suspensive promise condition 4) The condition is fulfilled 2nd paragraph: rights of Debtor 5) There is loss, deterioration, or improvement of the thing during the pendency of the condition example: Loss – Nawala A is the debtor, B is the Creditor Deterioration – it decreases the value Suppose A thought that B is was able to pass the exam, (Depreciation in Accounting) so he gives the land to B but B has not yet pass the Improvement – the value of property increases exam. (Appreciation in Accounting) Can A can recover the land from C? YES – Solutio 6 instances Indebiti - Right to recover what he has paid by mistake 1) If the thing is lost without the fault of the debtor – the debtor is not liable, the obligation ARTICLE 1189 shall be extinguished When the conditions have been imposed with the 2) If the thing is lost through the fault of the intention of suspending the efficacy of an obligation debtor – the debtor is liable because it was to give, the following rules shall be observed in destroyed through debtors fault, negligence case of the improvement, loss or deterioration of the thing during the pendency of the condition: 3) Deteriorates of thing without debtor’s fault – the debtor is not liable (1) If the thing is lost without the fault of the 4) Deteriorates of thing through debtor’s fault – the debtor, the obligation shall be extinguished; debtor is liable Mangalino, Reyshe 17  5) Improvement of the thing by nature by time – in accordance with Articles 1385 and 1388 and the value increase, the creditor increase Mortgage Law. (1124) 6) Improvement at the expense of debtor – he has - only if the reciprocity arises from the same cause the right of USUFRUCTUARY, if the value - only one party refuses to comply decreases the creditor suffer Kinds of obligation according to the person obliged. ARTICLE 1190 1) Unilateral – only one party is obliged (ex: When the conditions have for their purpose the Donation) extinguishment of an obligation to give, the parties upon the fulfillment of said conditions, shall return 2) Bilateral – both parties are mutually bound to to each other what they have received. each other. In case of loss, deterioration or improvement of the a. Reciprocal obligations – arises from the thing, the provisions which, with respect to the SAME CAUSE (same contract) debtor are laid down in the preceding article shall b. Non-reciprocal obligations – different be applied to the party who is bound to return. CAUSES As for obligations to do and not to do, the provisions of the second paragraph of Article 1187 Remedies in reciprocal obligations. shall be observed as regards the effect of the extinguishment of the obligation. 1) Choice of remedies. a. Specific performance / Exact fulfillment Effects of Absolutory Condition of the obligation with damages b. Rescission of the obligation with 1) To give – NO, if the obligation is fulfilled, the damages obligation to give something does not automatically come into effect. The obligation 2) Rescission for non-compliance is extinguished, so you don’t have to give o NOT Cumulative / NOT Successive anything. 2) To do or not to do – NO, if the condition is General Rule – Alternative fulfilled, it doesn’t automatically mean you E – if it become impossible have to perform it or refrain from performing the action. Instead the court will decide what General Rule – Judicial Rescission (demand) happens next, if anything. Exception – Extrajudicial Rescission 1) Express stipulated Fulfillment of Resolutory Condition converts the debtor into creditor, vice versa 2) Contract is still executory ARTICLE 1191 Limitations on right to demand rescission. The power to rescind obligations is implied in 1) Resort to the courts reciprocal ones, in case one of the obligors should 2) Power of court to fix period not comply with what is incumbent upon him. 3) Right of third person The injured party may choose between the 4) Substantial violation fulfillment and the rescission of the obligation, with 5) Waiver of right the payment of damages in either case. He may also seek rescission, even after he has chosen 1191 1381 fulfillment, if the latter should become impossible. Breach of obligations Lesion on damage The court shall decree the rescission claimed, Principal action Subsidiary action unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, Mangalino, Reyshe 18  ARTICLE 1192 Meaning of obligation with a period. In case both parties have committed a breach of the An obligation with a period is one whose effects obligation, the liability of the first infractor shall be or consequences are subjected in one way or equitably tempered by the courts. If it cannot be another to the expiration or arrival of said period determined which of the parties first violated the or term. contract, the same shall be deemed extinguished, and each shall bear his own damages. Meaning of period or term. Where BOTH PARTIES are guilty of breach. A period is a future and certain event upon the arrival of which the obligation (or right) subject 1) First infractor known. — One party violated his to it either arises or is terminated. obligation; subsequently, the other also violated Future + CERTAIN to happen his part of the obligation. In this case, the liability of the first infractor should be Kinds of period or term. equitably reduced. 2) First infractor cannot be determined. — One 1) According to effect party violated his obligation followed by the other, but it cannot be determined which of a. Suspensive period (ex die). — The them was the first infractor. The contract shall obligation begins only from a day certain be deemed extinguished and each shall upon the arrival of period (arises) bear his own damages. Ex: Supposed A promise to give B to give specific car Section 2: at the end of semester Obligations with a Period b. Resolutory period (in diem). — The ARTICLE 1193 obligation is valid up to a day certain and terminates upon arrival of period of the Art. 1193 – Obligations for whose fulfillment a day period. (termination) certain has been fixed, shall be demandable only when that day comes. Ex: You can use my car until the end of semester – when it be supposed to use? AT THE START Obligations with a resolutory condition take effect at once, but terminate upon arrival of the day certain. 2) According to source a. Legal period. — When. — When it is A day certain is understood to be that which must provided for by laws. necessarily come, although it may not be known b. Conventional or voluntary period. — when. When it is agreed to by the parties / fixed by parties If the uncertainty consists in whether the day will come or not, the obligation is conditional and it c. Judicial period. — When it is fixed by the shall be regulated by the rules of the preceding court. Section. 3) According to definiteness Obligations for whose fulfillment a day certain has been a. Definite period. — When it is fixed or it is fixed, shall be demandable only when that day comes. known when it will come (sure when will it happen) Obligations with a resolutory period take effect at once, b. Indefinite period. — When it is not fixed but terminate upon arrival of the day certain. or it is not known when it will come. Where the period is not fixed but a period is A day certain is understood to be that which must intended, the courts are usually necessarily come, although it may not be known when empowered by law to fix the same. (ex: death of a person) ex: death – are you going to die? YES when are you supposed to die? NO ONE KNOWS Mangalino, Reyshe 19  Period / Term Condition ARTICLE 1196 As to fulfillment: event Condition is uncertain if it Whenever in an obligation a period is designated, it is which must happen will happen or not, as a presumed to have been established for the benefit sooner or later at a date fact of both the creditor and the debtor [GR], unless known beforehand or a from the tenor of the same or other circumstances it time which cannot be should appear that the period has been established in determined favor of one or of the other. With reference to time: May refer even to the past always refers to the Presumption as to benefit of period. future As to influence on Causes an obligation to General Rule – Period is for BOTH parties obligation: merely fixes arise or to cease Effect – no advance demand, no advance payment the time or efficaciousness of an Exceptions to the general rule. obligation - For the benefit of ONLY ONE party 1) Term is for the benefit of the debtor alone ARTICLE 1194 Hint: On or before, within, no interest that for the benefit of the debtor In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules 2) Term is for the benefit of the creditor in Article 1189 shall be observed. Hint: Collectibles / on creditor’s demand Case of loss, deterioration or improvement of the thing Example: Collectible on or before – benefit of before the arrival of the day certain, the rules in article CREDITOR 1189 shall be observed. (n) ARTICLE 1197 Effects of loss, deterioration, or improvement before arrival of period. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that - talks about suspensive period a period was intended, the courts may fix the duration - 6 instances (Art.1189) thereof (exception). The courts shall also fix the duration of the period when it depends upon the ARTICLE 1195 will of the debtor. In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once Anything paid or delivered before the arrival of the fixed by the courts, the period cannot be changed by period, the obligor being unaware of the period or believing that the obligation has become due and them. demandable, may be recovered, with the fruits and Judicial Period – fixed by the court interests. General Rule – Court cannot fix the period Payment before arrival of period. - applies only to obligation to give Exceptions - court can fix the period General Rule – debtor presumed aware of the period (1) Art 1180 (2) parties intended a period, they forgot Exception – Debtor is NOT AWARE he pays by mistake (before due date) Court generally without power to fix a period. What can be recovered? The period mentioned in the above provision Before due date – the debtor can recover the refers to a judicial period as distinguished from principal and interest the period fixed by the parties in their contract After due date - he cannot longer recover the which is known as contractual period. principal but the interest can recover The party should be the one who fix it Mangalino, Reyshe 20 Exceptions to the general rule. Section 3: 1) No period is fixed but a period was intended Alternative Obligations 2) Duration of the period depends upon the will of the debtor ARTICLE 1199 Period fixed cannot be changed by the courts. A person alternatively bound by different prestations shall completely perform one 1) Period agreed upon by the parties. — if there [GENERAL RULE] of them. is a period agreed upon and it has already lapsed, the court cannot fic another period The creditor cannot be compelled to receive part of one and part of the other undertaking. 2) Period fixed by the courts. Kinds of Obligations according to object. ARTICLE 1198 1. Simple obligation - one prestation 2. Compound obligation – 2 or more prestations The debtor shall lose every right to make use of the 2 kinds of compound. period: 1. Conjunctive – one where there are several 1) When after the obligation has been contracted, prestations and all are due (need to comply) he becomes insolvent, unless he gives a guaranty or security for the debt; 2. Distributive – one where two (2) or more prestations is due 2) When he does not furnish to the creditor the guaranties or securities which he has 2 kinds of distributive. promised; 1. Alternative – several prestations are due but 3) When by his own acts he has impaired said the performance of one is sufficient (the guaranties or securities after their establishment, and when through a fortuitous debtor choose, what’s due) event they disappear, unless he immediately § You don’t know what will be given because the gives new ones equally satisfactory; debtor will still choose 4) When the debtor violates any undertaking, in consideration of which the creditor agreed to 2. Facultative – only one prestation is due but the period; the debtor may substitute another (the 5) When the debtor attempts to abscond. debtor can substitute) § You know what is due, the principal, but the General Rule - Respect the period Exceptions – debtor loses the benefit of the period debtor can substitute Effect – it becomes pure, demandable at once Why? He cannot pay the obligation Similarity: both cases have to do only one MNEMONICS A person alternatively bound by different prestations 1) I — INSOLVENT (E – gives security / shall completely perform one of them. guaranty), more liabilities than asset, bankrupt Example: OR - Alternative Object 1 – give a car 2) F — does not FURNISH the guaranty Object 2 – give a house 3) O — OWN acts he has impaired or FE Object 3 – give a land 4) V — Violate the undertaking (project / Choose only 1, object 1 & 2 can’t deliver the part of promise) object [1-must give only one] [2-must completely perform one of them] 5) A — Attempts to ABSCOND (ayaw magbayad, nagtago) Mangalino, Reyshe 21  ARTICLE 1200 If all are lost thru Fortuitous Event – obligation is The right of choice belongs to the debtor, unless it extinguished has been expressly granted to the creditor