Law on Obligations and Contracts - Preliminary Exam Reviewer PDF

*Note: The materials in this reviewer are intended for educational purposes only. All content remains the intellectual property of their respective authors and publishers.* *Sources:* - - - **------ INTRODUCTION TO LAW ------** +------------------------------------------------------------...

*Note: The materials in this reviewer are intended for educational purposes only. All content remains the intellectual property of their respective authors and publishers.* *Sources:* - - - **------ INTRODUCTION TO LAW ------** +-----------------------------------------------------------------------+ | **DEFINITION OF LAW** | +=======================================================================+ | ** ** In its broadest sense | | | | Any rule of action or norm of conduct applicable to all objects of | | creation. | | | | ** ** In its specific sense | | | | Rule of conduct, just, obligatory, promulgated by a legitimate | | authority, and of common observance and benefit. | | | | ** ** Organs of social control | | | | It may be viewed as a means of social control - the control of social | | behavior that affects others. | +-----------------------------------------------------------------------+ | **CHARACTERISTICS** | | | | 1\. A rule of conduct | | | | 2\. Obligatory | | | | 3\. Promulgated by legitimate authority | | | | 4\. Common Observance and Benefit | +-----------------------------------------------------------------------+ +-----------------------------------+-----------------------------------+ | **SOURCES OF LAW** | | +===================================+===================================+ | **Constitution** | Fundamental/supreme/highest law | | | of the land. | | | | | | Promulgated by the people | | | themselves, binding on all | | | individuals citizens and all | | | agencies of the government. | +-----------------------------------+-----------------------------------+ | **Legislation** | Consists in the declaration of | | | legal rules by a competent | | | authority. | +-----------------------------------+-----------------------------------+ | **Administrative or executive | Issued by administrative | | orders, regulations, and ruling** | officials under legislative | | | authority. | +-----------------------------------+-----------------------------------+ | **Judicial decisions or | Decision of the Supreme Court. | | jurisprudence** | | +-----------------------------------+-----------------------------------+ | **Custom** | Consists of those habits and | | | practices which through long and | | | uninterrupted usage have become | | | acknowledged and approved by | | | society as binding rules of | | | conduct. | +-----------------------------------+-----------------------------------+ **SUBJECTS OF LAW** --------------------- ------------------------------------------------------------------------------------------------------- **Divine** Law of religion and faith **Natural** Divine inspiration in man of the sense of justice, fairness, and righteousness **Moral** Norms of good and right conduct **Physical** Uniformities of actions and orders of sequence which are the physical phenomena that we sense and fee **State** Promulgated and enforced by the state. +-----------------------------------+-----------------------------------+ | **CLASSIFICATIONS OF LAW** | | +===================================+===================================+ | *As to its purpose* | | +-----------------------------------+-----------------------------------+ | **Substantive** | Creating, defining, and | | | regulating rights and duties | | | which may be either public or | | | private. | +-----------------------------------+-----------------------------------+ | **Adjective/** | Prescribing the manner or | | | procedure by which rights may be | | **Procedural/** | enforced or their violations | | | redressed | | **Remdial** | | +-----------------------------------+-----------------------------------+ | *As to its subject matter* | | +-----------------------------------+-----------------------------------+ | **Public** | Regulates the rights and duties | | | arising from the relationship of | | | the state to the people. | +-----------------------------------+-----------------------------------+ | **Private** | Regulates the relations of | | | individuals with one another for | | | purely private ends. | +-----------------------------------+-----------------------------------+ **------ LAW ON OBLIGATIONS ------** **GENERAL PROVISIONS** +-----------------------------------------------------------------------+ | **Art. 1156.** An obligation is a juridical necessity to give, to do, | | or not to do. (Civil Obligation) | +=======================================================================+ | **Juridical Necessity** - Civil obligations give a right of action to | | compel their performance or fulfillment. | | | | **Right** - the power which a person has under the law, to demand | | from another any prestation. | | | | **Wrong** - an act or omission of one party in violation of the legal | | right of another. | | | | **Injury** - wrongful violation of the legal right of another. | +-----------------------------------------------------------------------+ | **Natural Obligation** - Not being based on positive law but on | | equity and natural law, do not grant a right of action to enforce | | their performance, but after voluntary fulfillment by the obligor, | | they authorize the retention of what has been delivered or rendered | | by reason thereof. (Art. 1423) | | | | **Moral Obligation** - Sanction is conscience or morality, or the law | | of the church. | +-----------------------------------------------------------------------+ | **Real Obligation** (obligation to give) | | | | 1\. **Determinate or Specific Real Obligation** | | | | - | | | | 2\. **Indeterminate or Generic Real Obligation** | | | | - | +-----------------------------------------------------------------------+ | **Personal Obligation** (obligation to do or not do) | | | | 1\. **Positive Personal Obligation** | | | | - | | | | 2**. Negative Personal Obligation** | | | | - | +-----------------------------------------------------------------------+ | **ESSENTIAL ELEMENTS OF OBLIGATION** | | | | 1**. Passive Subject / Debtor / Obligor** | | | | - - | | | | 2**. Active Subject / Creditor / Obligee** | | | | - - | | | | 3\. **Prestation / Object** | | | | - - | | | | 4\. **Juridical Tie / Legal Tie / Vinculum Juris / Efficient Cause** | | | | - - | +-----------------------------------------------------------------------+ ------------------------------------------------------------------------------------------------------------------------------ **Art. 1157**. Obligation arises from Law; Contracts; Quasi-contracts; Acts or omissions punished by law; and Quasi-delicts. ------------------------------------------------------------------------------------------------------------------------------ +-----------------------------------------------------------------------+ | **Art. 1158**. Obligations derived from law are [NOT | | PRESUMED]. Only those expressly determined in this Code | | or in special laws are demandable, and shall be regulated by the | | precepts of the law which establishes them; and as to what has not | | been foreseen, by the provisions of the Civil Code. | +=======================================================================+ | Obligations Arising from Law (*Obligatio Ex Lege*) | | | | ○ Unless such obligations are EXPRESSLY provided by law, they are not | | demandable and enforceable, and cannot be presumed to exist. | | | | ○ The Civil Code can apply suppletorily to obligations arising from | | laws other than the Civil Code itself. | +-----------------------------------------------------------------------+ | **Special laws** -- refer to all other laws that are not included in | | the Civil Code. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1159**. Obligations arising from contracts have the force of | | law between the contracting parties and should be complied in good | | faith. | +=======================================================================+ | Obligations Arising From Contracts (*Obligatio Ex Contractu*) | | | | ○ This principle presupposes the existence of a valid and enforceable | | contract. | +-----------------------------------------------------------------------+ | **Contract** - a meeting of minds between two persons whereby one | | binds himself, with respect to the other, to give something or to | | render some service. (Art. 1305) | | | | **Good faith** - it implies honesty of intention and freedom from | | knowledge of circumstances which ought to put the holder upon | | inquiry. | | | | Note: Contracting parties may freely enter into any stipulations, | | provided they are not contrary to law, morals, good customs, public | | order or public policy. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1160.** Obligations derived from quasi-contracts shall be | | subject to the provisions of Chapter 1, Title XVII, of this Book. | +=======================================================================+ | Obligation Arising from Quasi-contracts (*Obligatio Ex Cuasi | | Contractu*) | | | | ○ The obligation is not contractual in nature in the absence of the | | element of consent, whether express or implied. | | | | ○ While there is no consent, the same is based on the presumed will | | or intent of the obligor dictated by equity and by the principle of | | absolute justice. | +-----------------------------------------------------------------------+ | **Quasi-contract** - Certain [lawful], | | [voluntary] and [unilateral acts] give rise | | to the juridical relation of quasi-contract to the end that no one | | shall be unjustly enriched or benefited at the expense of the | | another. (Art. 2142) | +-----------------------------------------------------------------------+ | **Forms of Quasi-contracts** | | | | **1. Negotiorum Gestio** | | | | - | | | | 2\. **Solutio Indebiti** | | | | - | | | | 3\. **Other Quasi Contract** (Art. 2164 - 2175) | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1161**. Civil obligations arising from criminal offenses shall | | be governed by the penal laws, subject to the provisions of Article | | 2177, and of the pertinent provisions of Chapter 2, Preliminary | | Title, on Human Relations, and of Title XVIII of this Book, | | regulating damages. | +=======================================================================+ | Obligation Arising from Delicts (*Obligatio Ex Delicto*) | | | | ○ The basis of civil liability is the fundamental postulate embodied | | in Article 100 of the Revised Penal Code. *Every person criminally | | liable for a felony is also civilly liable (Art. 100, RPC)* | +-----------------------------------------------------------------------+ | Scope of Civil Liability (Art. 104) | | | | ○ **Restitution** - must be made whenever possible, with allowance | | for any deterioration, or diminution of value as determined by the | | court. | | | | ○ **Reparations of the damage caused** - determine the amount of | | damage, taking into consideration the price of the thing, whenever | | possible, and its special sentimental value to the injured party. | | | | ○ **Indemnification for consequential damages** - shall include not | | only those caused by the injured party, but also those suffered by | | his family or by a third person by reason of the crime. | +-----------------------------------------------------------------------+ | *Effect of Acquittal of the Accused* | | | | **Acquittal of Accused** **Effect of Acquittal** | | ---------------------------------- -------------------------------- | | ----- | | Did not do the act complained of There is no civil liability | | Due to reasonable doubt. There can still be civil liabili | | ty. | | Preponderance of evidence. There is civil liability. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1162.** Obligations derived from quasi-delicts shall be | | governed by the provisions of Chapter 2, Title XVII of this Book, and | | by special laws. | +=======================================================================+ | Obligations Arising from Quasi-delicts *(Obligatio Ex Cuasi Delicto)* | | | | The following requisites must concur: | | | | - - - | +-----------------------------------------------------------------------+ | **Quasi-delicts** - whoever by act or omission causes damages to | | another, there being fault or negligence, is obliged to pay for the | | damage done. Such fault or negligence, if there is no pre-existing | | contractual relation between the parties. (Art. 2176) | +-----------------------------------------------------------------------+ | Scope of Quasi-delict | | | | ○ only private concern | | | | ○ indemnification, merely repairs the damage | | | | ○ include all acts in which any kind of negligence intervenes. | +-----------------------------------------------------------------------+ **NATURE AND EFFECT OF OBLIGATIONS** **Determinate/Specific Thing** **Indeterminate/Generic Thing** --------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ When it is particularly designated or physical segregated from all other of the same class. (Art. 1460) When only the genus or class has been determined from all other of the same class. **OBLIGATIONS OF THE DEBTOR** **Determinate Real Obligation** +-----------------------------------------------------------------------+ | 1\. To take care of the thing with the proper diligence of a good | | father of the family, unless there is stipulation or the law | | requires another standard of care. (Art. 1163) | +=======================================================================+ | **Diligence -** the attention and care required from a person in a | | given situation. | | | | **Diligence of a Good Father of a Family** | | | | - - | | | | | | | | - | | | | **Extraordinary Diligence** - extreme care that a person of unusual | | prudence exercises to secure rights or property. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | 2\. To deliver the fruits of the thing from the time the obligation | | to deliver it arises. | +=======================================================================+ | *Kinds of Fruits* | | | | **Natural** | | **Industrial** | | **Civil** | | ------------------------------------------------------------------- | | -------------------------------------- ------------------------------ | | ------------------------------------------------ -------------------- | | ------------------------------- | | These are the spontaneous products of the soil, and the young and o | | ther products of animals. (Art. 442) Those produced by lands of any | | kind through cultivation or labor. (Art. 442) Those derived from j | | uridical relation of parties. | +-----------------------------------------------------------------------+ 3\. To deliver all accessions and accessories, even though they may not have been mentioned. (Art. 1166) ----------------------------------------------------------------------------------------------- ------------------------------------------------------------ **Accessories** **Accessions** Things included with the principal for the latter's embellishment, better use, or completion. Things or additions to or improvements upon the principal. **Indeterminate Real Obligation** ------------------------------------------------------------------------------------------ To deliver the thing which must be neither of superior nor inferior quality. (Art. 1246) ------------------------------------------------------------------------------------------ **RIGHTS OF THE CREDITOR** **Determinate Real Obligation** +-----------------------------------------------------------------------+ | 1\. To compel specific performance (Art. 1165) | +=======================================================================+ | **Remedies for Failure of Delivery** | | | | ○ Complaint for specific performance -- an action to compel the | | fulfillment of the obligation. | | | | ○ Complaint for rescission of the obligation -- action to rescind | | | | ○ Complaint for damages -- action to claim for compensation of | | damages suffered. | | | | Note: Obligation is extinguished if the thing is due to a fortuitous | | event. | +-----------------------------------------------------------------------+ +-----------------------------------+-----------------------------------+ | 2\. Right to the fruits of the | | | thing from the time the | | | obligation to deliver it | | | arises. [However, he shall | | | acquire no real right over it | | | until the same has been | | | delivered to him.] | | | (Art. 1164) | | +===================================+===================================+ | **Personal Right** | **Real Right** | | | | | *(jus ad rem)* | *(jus in re)* | +-----------------------------------+-----------------------------------+ | right pertaining to a person to | right pertaining to a person over | | demand from another, as a | a specific thing, without a | | definite passive subject, the | passive subject individually | | fulfillment of a prestation to | determined against whom such | | give, to do or not to do. | right may be personally enforced. | +-----------------------------------+-----------------------------------+ | right enforceable only against a | right enforceable against the | | definite person or group of | whole world | | persons. | | +-----------------------------------+-----------------------------------+ **Indeterminate Real Obligation** +-----------------------------------------------------------------------+ | 1\. To ask for performance of the obligation (Art. 1246) | | | | *Note: Obligation to deliver is not so extinguished by fortuitous | | events because genus never perishes.* | | | | 2\. To ask the obligation be complied with at the expense of the | | debtor. (Art. 1165) | | | | 3\. To recover damages in case of breach of the obligation. (Art. | | 1170) | +-----------------------------------------------------------------------+ **Positive Personal Obligation** (Art. 1167) +-----------------------------------------------------------------------+ | 1\. Have the obligation performed or executed at the expense of the | | obligor. | | | | 2\. Ask that what has been poorly done be undone | | | | *Note: When the prestation consists of an act where the personal and | | special qualification of the obligor is the principal motive for the | | establishment of the obligation. In such cases the remedy is an | | action for damages.* | | | | 3\. To recover damages in case of breach of the obligation. (Art. | | 1170) | +-----------------------------------------------------------------------+ **Negative Personal Obligation** (Art. 1168) +-----------------------------------------------------------------------+ | If the obligor does what has been forbidden him, the obligee shall | | have the following remedies | | | | 1\. To have it undone at the expense of the obligor. | | | | 2\. To ask for damages (Art. 1170) | +-----------------------------------------------------------------------+ **BREACH OF OBLIGATIONS** +-----------------------------------------------------------------------+ | **Art. 1170.** Those who in the performance of their obligations are | | guilty of fraud, negligence, or delay, and those who in any manner | | contravene the tenor thereof, are liable for damages. | +=======================================================================+ | **Kinds of Damages** (Art. 2197) | | | | 1. 2. 3. 4. 5. 6. | +-----------------------------------------------------------------------+ | **Contravention of Tenor of Obligation** | | | | - | +-----------------------------------------------------------------------+ +-----------------------------------+-----------------------------------+ | **Art. 1169.** Those obliged to | | | deliver or to do something incur | | | in delay from the time the | | | obligee judicially or | | | extrajudicially demands from them | | | the fulfillment of their | | | obligation. (p.1) | | +===================================+===================================+ | **General Rule:** "No demand, no | | | delay" | | +-----------------------------------+-----------------------------------+ | **Mora/Delay/Default -** | | | non-fulfillment of the obligation | | | with respect to time. | | +-----------------------------------+-----------------------------------+ | *Kinds of Delay* | | +-----------------------------------+-----------------------------------+ | **1. Mora Solvendi -** delay on | | | the part of DEBTOR to fulfill his | | | obligation. | | | | | | Kinds: | | | | | | a\. **Mora Solvendi Ex Re** - | | | delay in real obligations (to | | | give) | | | | | | b\. **Mora Solvendi Ex Persona** | | | - delay in personal obligation | | | (to do) | | +-----------------------------------+-----------------------------------+ | Requisites | Effects | +-----------------------------------+-----------------------------------+ | Obligation must be liquidated, | Creditor may ask for damages. | | due and demandable | | +-----------------------------------+-----------------------------------+ | Debtor must guilty of | Debtor shall bear the risk of | | non-performance | loss | +-----------------------------------+-----------------------------------+ | There was demand made judicially | Debtor is liable even if the loss | | or extrajudicially | is due to a fortuitous event | +-----------------------------------+-----------------------------------+ | 2\. **Mora Accipiendi** - delay | | | on the part of the CREDITOR to | | | accept the performance of the | | | obligation. | | +-----------------------------------+-----------------------------------+ | Requisites | Effects | +-----------------------------------+-----------------------------------+ | Offer of performance by the | Creditor is liable for damages | | debtor | | +-----------------------------------+-----------------------------------+ | Refusal of the creditor to accept | Creditor shall bear the risk of | | | loss | +-----------------------------------+-----------------------------------+ | Refusal is without just cause | All expenses for the preservation | | | of the thing after the delay | | | shall be borne by the creditor | +-----------------------------------+-----------------------------------+ | 3\. **Compensatio Morae** - | | | delay on the part of both | | | parties because neither has | | | completed their part in their | | | reciprocal obligations. | | | | | | Note: This mutual delay of the | | | parties cancels out the effects | | | of delay, such that it is as if | | | no one is guilty of delay. | | +-----------------------------------+-----------------------------------+ | **Demand shall not be necessary | | | when:** (Art. 1169 p.2) | | | | | | 1\. The obligation or the law | | | expressly declares. | | | | | | 2\. From the nature and the | | | circumstances of the obligation | | | it appears that the designation | | | of the time when the thing is | | | to be delivered or the service | | | is to be rendered was a | | | controlling motive for the | | | establishment of the contract. | | | | | | 3\. Demand would be useless, as | | | when the obligor has rendered | | | it beyond his power to perform. | | +-----------------------------------+-----------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1171.** Responsibility arising from fraud is | | [demandable] in all obligations. Any waiver of an action | | for future fraud is [void]. | +=======================================================================+ | **Dolo / Fraud -** connotes some kind of dishonesty, malice or bad | | faith on the part of one of the contracting parties. | | | | **Waiver -** voluntary relinquishment or abandonment, express, or | | implied, of a legal right or advantage. | +-----------------------------------------------------------------------+ | *Kinds of Fraud* | | | | **Dolo Causante / Causal Fraud** | | **Dolo Incidente | | / Incidental Fraud** | | ------------------------------------------------------------------- | | --------------------------------------------------- ----------------- | | --------------------------------------------------------------------- | | ------------------- | | deception used by one party prior to or simultaneous with the contr | | act, in order to secure the consent of the other. not serious in ch | | aracter and without which the other party would have entered into the | | contract anyway. | | renders the contract voidable (Art. 1390) | | renders a party t | | o be liable for damages. | +-----------------------------------------------------------------------+ +-----------------------+-----------------------+-----------------------+ | **Art. 1172.** | | | | Responsibility | | | | arising from | | | | negligence in the | | | | performance of every | | | | kind of obligation is | | | | also demandable, but | | | | such liability may be | | | | regulated by the | | | | courts, according to | | | | the circumstances. | | | | | | | | **Art. 1173.** The | | | | fault or negligence | | | | of the obligor | | | | consists in the | | | | omission of that | | | | diligence which is | | | | required by the | | | | nature of the | | | | obligation and | | | | corresponds with the | | | | circumstances of the | | | | persons, of the time | | | | and of the place. | | | | When negligence shows | | | | bad faith, the | | | | provisions of | | | | Articles 1171 and | | | | 2201, paragraph 2, | | | | shall apply. If the | | | | law or contract does | | | | not state the | | | | diligence which is to | | | | be observed in the | | | | performance, that | | | | which is expected of | | | | a good father of a | | | | family shall be | | | | required. | | | +=======================+=======================+=======================+ | **Bad faith** - | | | | imports a dishonest | | | | purpose or some moral | | | | obliquity and is | | | | conscious of doing | | | | wrong. | | | | | | | | **Negligence/Culpa/Fa | | | | ult** | | | | | | | | - | | | +-----------------------+-----------------------+-----------------------+ | *Kinds of Negligence* | | | +-----------------------+-----------------------+-----------------------+ | **Culpa** | **Culpa** | **Culpa** | | | | | | **Contractual** | **Aquiliana** | **Criminal** | | | | | | (Contract) | (Quasi-delict) | (Delict) | +-----------------------+-----------------------+-----------------------+ | Merely incidental to | Failure to observe | Results in the | | the performance of an | the required | commission of a | | obligation already | diligence to the | crime. | | existing because of a | obligation causes | | | contract | damage to another. | | +-----------------------+-----------------------+-----------------------+ +-----------------------------------+-----------------------------------+ | **Art. 1174**. Except in cases | | | expressly specified by the law, | | | or when it is otherwise declared | | | by stipulation, or when the | | | nature of the obligation requires | | | the assumption of risk, no person | | | shall be responsible for those | | | events which could not be | | | foreseen, or which, though | | | foreseen, were inevitable. | | +===================================+===================================+ | **General Rule:** No person shall | | | be responsible for a fortuitous | | | event | | +-----------------------------------+-----------------------------------+ | **Fortuitous Event** | **Force Majeure** | | | | | (*Caso Fortuito*) | | +-----------------------------------+-----------------------------------+ | act of God | act of Man | +-----------------------------------+-----------------------------------+ | any event which cannot be | an event caused by the legitimate | | foreseen, or which, though | or illegitimate acts of persons | | foreseen, were inevitable. | other than the obligor | +-----------------------------------+-----------------------------------+ | **Conditions which exempt the | | | debtor from liability** | | | | | | 1. 2. 3. 4. | | | | | | Note: If the obligation is | | | generic in a sense, the loss or | | | destruction of it even without | | | the debtor's fault and before he | | | has incurred in delay will not | | | have the effect of extinguishing | | | the obligation. | | +-----------------------------------+-----------------------------------+ ------------------------------------------------------------------------- **Art. 1175.** Usurious transactions shall be governed by special laws. ------------------------------------------------------------------------- **Art. 1176. T**he receipt of the principal by the creditor without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid. The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the presumption that such installments have been paid. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Note: Before the presumption that a prior installment had been paid may arise, the receipt must specify the installment for which payment is made. +-----------------------------------------------------------------------+ | **Art. 1177.** The creditors, after having pursued the property in | | possession of the debtor to satisfy their claims, may exercise all | | the rights and bring all the actions of the latter for the same | | purpose, save those which are inherent in his person; they may also | | impugn the acts which the debtor may have done to defraud them. | +=======================================================================+ | **Remedies of Creditor to Protect and Satisfy His Claims:** | | | | (1)Exhaust the properties of the debtor through levying by attachment | | and execution of all the property of the debtor, except such exempt | | by law. | | | | (2)**Accion Pauliana** - exercise all the rights and actions of the | | debtor, save those personal to him. | | | | (3)**.Accion Subrogatoria** - seek rescission of the contracts | | executed by the debtor in fraud of their rights. | +-----------------------------------------------------------------------+ | Note: An action for rescission is a subsidiary remedy. | +-----------------------------------------------------------------------+ --------------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1178.** Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary. --------------------------------------------------------------------------------------------------------------------------------------------------------- **KINDS OF OBLIGATION** **I. PURE AND CONDITIONAL OBLIGATION** +-----------------------------------------------------------------------+ | **Art. 1179**. 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. Every obligation which contains a | | resolutory condition shall also be demandable, without prejudice to | | the effects of the happening of the event. | +=======================================================================+ | **Pure Obligation** | | | | \- An 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]. | +-----------------------------------------------------------------------+ ------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1180**. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one WITH A PERIOD. ------------------------------------------------------------------------------------------------------------------------------------------------- +-----------------------------------------------------------------------+ | **Art. 1181**. In conditional obligations, the acquisition of rights, | | as well as the extinguishment or loss of those already acquired, | | shall depend upon the happening of the event which constitutes the | | condition. | +=======================================================================+ | **Condition** - [FUTURE] and [CERTAIN] events | | upon which an obligation is made to depend. | +-----------------------------------------------------------------------+ | **CLASSIFICATIONS OF CONDITIONS** | | | | *As to capacity to be performed in parts* | | --------------------------------------------------- --------------- | | --------------- | | **Divisible Condition** can be performe | | d in parts | | **Indivisible Condition** cannot be perfo | | rmed in parts | | *As to number of obligations are to be performed* | | **Conjunctive Condition** all must be per | | formed | | **Alternative Condition** only one must b | | e performed. | | *As to how made known to the other party* | | **Express Condition** stated expressl | | y | | **Implied Condition** merely inferred | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1181.** In conditional obligations, the acquisition of rights, | | as well as the extinguishment or loss of those already acquired, | | shall depend upon the happening of the event which constitutes the | | condition. | +=======================================================================+ | **Resolutory Condition** **Suspensi | | ve Condition** | | -------------------------------------------------------- ---------- | | -------------------------------------------------- | | the happening of which will EXTINGUISH the obligation. **t**he ha | | ppening of which will GIVE RISE to an obligation | | Condition subsequent Condition | | precedent | +-----------------------------------------------------------------------+ ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1182**. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- +-----------------------------------------------------------------------+ | **Casual Condition** **M | | ixed Condition** | | **Potestative Co | | ndition** | | --------------------------------------------------------------- --- | | --------------------------------------------------------------------- | | ---------------------------------------------------- ---------------- | | ----------------------------- | | Depends upon chance and/or upon the will of the third person. Par | | tly depends upon the will of a party to the obligation and partly upo | | n chance and/or upon the will of the third person. Depends upon the | | will of one of the parties | +=======================================================================+ | Note: | | | | If the fulfillment depends exclusively upon the will of the debtor, | | the conditional obligation shall be VOID. | | | | If the fulfillment depends exclusively upon the will of the | | creditor, the conditional obligation shall be VALID. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1183.** Impossible conditions, those contrary to good customs | | or public policy and those prohibited by law shall annul the | | obligation which depends upon them. If the obligation is divisible, | | that part thereof which is not affected by the impossible or unlawful | | condition shall be valid. | +=======================================================================+ | **Possible Condition** **Impossible Con | | dition** | | -------------------------------------------------- ---------------- | | --------------------------------------------------------------------- | | -------------- | | capable of fulfillment, legally, and physically. not capable of f | | ulfillment because it is contrary to nature, law, public policy, or g | | ood customs. | +-----------------------------------------------------------------------+ | *Kinds of Impossible Conditions* | | | | **Physical Impossible Condition** ** | | Legally Impossible Condition** | | ---------------------------------------------------------------- -- | | --------------------------------------------------------------------- | | contrary to the law of nature, cannot exist or cannot be done. co | | ntrary to law, morals, good customs, public order or public policy. | +-----------------------------------------------------------------------+ | *Effects of Impossible Conditions* | | | | 1\. In divisible obligations that part thereof which is not affected | | by the impossible or unlawful condition is VALID. | | | | 2\. If the condition is negative, it shall be considered as not | | having been agreed upon. Thus the obligation is PURE and VALID. | | | | 3\. If the obligation is pre-existing and not depending on the | | fulfillment of the impossible condition for its existence, only the | | condition is VOID. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1184**. The condition that some event happen at a determinate | | time shall extinguish the obligation as soon as the time expires or | | if it has become indubitable that the event will not take place. | +=======================================================================+ | **Positive Condition** | | | | **- i**nvolves the performance of an act. | | | | \- obligation is extinguished as soon as the time | | | | \- expires or if it has become indubitable that the event will not | | take place. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1185.** The condition that some event will not happen at a | | determinate time shall render the obligation effective from the | | moment the time indicated has elapsed, or if it has become evident | | that the event cannot occur. If no time has been fixed, the condition | | shall be deemed fulfilled at such time as may have probably been | | contemplated, bearing in mind the nature of the obligation. | +=======================================================================+ | **Negative Condition** | | | | \- involves the non-performance of an act. | | | | -obligation is effective from the moment the time indicated has lapse | | or it becomes evident that the event cannot occur, although the time | | indicated has not yet lapsed. | +-----------------------------------------------------------------------+ **Art. 1186**. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. --------------------------------------------------------------------------------------------------------------- Art. 1186 is also known as the Doctrine of Constructive Fulfillment of Suspensive Condition +-----------------------------------------------------------------------+ | **Art. 1187**. Once the condition has been fulfilled, it shall | | RETROACT to the day of the constitution of the obligation. | +=======================================================================+ | **Retroactive Effect in Obligation to do or not to do** | | | | \- court is empowered to determine retroactive effect of the | | suspensive condition that has been complied to. | | | | \- this rule is applicable to resolutory conditions in accordance | | with Art. 1190, par. 3 | +-----------------------------------------------------------------------+ | *Retroactive Effect as to Fruits and Interest on Obligation to Give* | | | | **Reciprocal Obligation** | | **Unilateral Obligation** | | ------------------------------------------------------------------- | | ------------------------------------------- ------------------------- | | --------------------------------------------------- | | Fruits and interests during the pendency of the condition shall be | | deemed to have been MUTUALLY COMPENSATED. The debtor is entitled to | | the fruits, unless a contrary intention appears, | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1188.** Rights of the Parties in Suspensive Condition | +=======================================================================+ | **Creditor** | | **Debtor** | | ------------------------------------------------------------------- | | --------------------------------------------- ----------------------- | | ---------------------------------------- | | may, before the fulfillment of the condition, bring the appropriate | | actions for the preservation of his right. may recover what during | | the same time he has paid by mistake. | +-----------------------------------------------------------------------+ **Art. 1189**. The rules as to improvement, loss, or deterioration will only be observed when the condition is imposed with the intention of an obligation to give. --------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------ --------------------------------------------------------------------------------- **Loss** Debtor with fault Obligation is extinguished Debtor without fault Debtor is liable for damages **Deterioration** Debtor with fault Creditor can choose between rescission of its obligation fulfillment, indemnity Debtor without fault Impairment is borne by the creditor **Improvement** By nature or time Inure to the benefit of the creditor At the expense of the debtor The debtor shall have no other right than that granted to the usufructuary **Art. 1190.** Effect of the fulfillment of Resolutory Condition ------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------- **Obligation to Give** **Obligation to do or not to do** The parties shall return to each other what they have received The courts shall determine, in each case, the retroactive effect of the condition that has been complied for. +-----------------------------------------------------------------------+ | **Art. 1191**. In mutual obligations, if one person doesn\'t do their | | part, the other can cancel and ask for damages. They can also | | continue, but change if it becomes impossible. The court can cancel | | unless there\'s a good reason. Others\' rights aren\'t affected. | +=======================================================================+ | **Reciprocal Obligation** | | | | \- Each party is a debtor and creditor of the other, such that the | | performance of one is conditioned upon the simultaneous fulfillment | | of the other. | +-----------------------------------------------------------------------+ | **Remedies of the Injured Party** | | | | 1\. Fulfillment of the obligation with damages. | | | | 2\. Rescission of the obligation with damages | +-----------------------------------------------------------------------+ | **Rescission -** resolution or cancellation of the contract | | | | **Injured Party** - faithfully fulfilled his obligation or is ready | | and willing to perform his obligation. | +-----------------------------------------------------------------------+ | Note: The right to rescind under Art. 1191 is not absolute. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1192**. Both parties have committed a breach of the | | obligation. | +=======================================================================+ | *Effects of Breach by Both Parties* | | | | **1st Infractor** **2nd In | | fractor** **Cannot be determined** | | ---------------------------------------------------------- -------- | | ------------------------ -------------------------------------------- | | ------------------------------------------------------ | | the liability shall be equitably tempered by the courts. not liab | | le for damages at all. The court shall declare the extinguishment o | | f the obligation and each shall bear his own damages | +-----------------------------------------------------------------------+ **II. OBLIGATION WITH A PERIOD** +-----------------------------------------------------------------------+ | **Art. 1193** | +=======================================================================+ | **Obligations with a Period** | | | | - - | | | | **Day Certain** | | | | - | | | | **Term / Period** | | | | - | +-----------------------------------------------------------------------+ | *Kinds of Period / Term* | | | | *As to effect* | | ------------------------------ ------------------------------------ | | --------------------------------------- | | **Ex Die** Suspensive effect | | **In diem** Resolutory effect | | *As to definiteness* | | **Definite** Specific date | | **Indefinite** May arrive upon fulfillment of a cer | | tain event which is certain to happen | | *As to source* | | **Voluntary / Conventional** Agreed upon by the parties | | **Legal** Imposed or provided by law | | **Judicial** Fixed by courts | +-----------------------------------------------------------------------+ --------------------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1194.** In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules in Article 1189 shall be observed. --------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1195**. Anything paid or delivered before the arrival of the period, the obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered, with the fruits and interests. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1196.** Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Presumption:** The period is presumed to have been established for the benefit of the both creditor and debtor. **Exception:** If the has been established in favor of the debtor or of the creditor. +-----------------------------------------------------------------------+ | **Art. 1197** | +=======================================================================+ | **General Rule**: The court is not authorized to fix a period. | +-----------------------------------------------------------------------+ | *Exceptions*: | | | | 1\. If the obligation does not fix a period, but from its nature and | | the circumstances it can be inferred that a period was intended, | | the courts may fix the duration thereof. | | | | 2\. If the period depends upon the will of the debtor. | | | | 3\. If under circumstances the parties have contemplated a period. | | | | 4\. When the debtor binds himself to pay when his means permit him | | to do so. | +-----------------------------------------------------------------------+ | **Judicial Period** **Contractual Period** | | --------------------------------- --------------------------------- | | --------------- | | period designated by the court. period fixed by the parties in th | | eir contract. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1198**. The debtor shall lose every right to make use of the | | period: | | | | 1\. When after the obligation has been contracted, he becomes | | insolvent, unless he gives a guaranty or security for the debt | | | | 2\. When he does not furnish to the creditor the guaranties or | | securities which he has promised; | | | | 3\. When by his own acts he has impaired said guaranties or | | securities after their establishment, and when through a fortuitous | | event they disappear, unless he immediately gives new ones equally | | satisfactory; | | | | 4\. When the debtor violates any undertaking, in consideration of | | which the creditor agreed to the period; | | | | 5\. When the debtor attempts to abscond. | +-----------------------------------------------------------------------+ **III. ALTERNATIVE AND FACULTATIVE OBLIGATION** +-----------------------------------------------------------------------+ | **Art. 1199.** A person alternatively bound by different prestations | | shall completely perform one of them. | | | | The creditor cannot be compelled to receive part of one and part of | | the other undertaking. | +=======================================================================+ | **Simple Obligation** **Compound Obligation** | | ----------------------- ------------------------- | | Only one prestation. Two or more prestation. | +-----------------------------------------------------------------------+ | *Kinds of Compound Obligation* | | | | **Conjunctive Obligation** | | **Distributive Obligation** | | ------------------------------------------------------------------- | | - ------------------------------------------------------------------- | | All of the objects must be performed to extinguish the obligation. | | One of the objects must be performed to extinguish the obligation | +-----------------------------------------------------------------------+ | *Kinds of Distributive Obligation* | | | | **Alternative Obligation** | | **Facultative Obligation** | | ------------------------------------------------------------------- | | ---- ---------------------------------------------------------------- | | ----------------- | | Two or more objects are due but the performance of one is sufficien | | t. Only one object is due but the debtor may substitute another obj | | ect (Art. 1206) | | | | *Note: Full Comparison on page 13* | +-----------------------------------------------------------------------+ **Art. 1200.** -------------------------------------------------------------------------------------------------------------------------- **General Rule:** The debtor has the right to choose which of the available prestations he is to perform. *Exception:* The right of choice may only be exercised by the creditor if he is expressly granted. Note: The right of choice may, be granted to a third person by express agreement as long as it is not prohibited by law. **Art. 1201.** The choice shall produce no effect except from the time it has been communicated. -------------------------------------------------------------------------------------------------- Note: Once the selection has been communicated, it becomes IRREVOCABLE. **Art. 1202.** The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable. ---------------------------------------------------------------------------------------------------------------------------------------------------------- Note: The obligation ceases to be alternative and is converted into a simple obligation because the other object may have been lost or become impossible ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Art. 1203.** If through the creditor\'s acts the debtor cannot make a choice according to the terms of the obligation, the latter may rescind the contract with damages. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- +-----------------------------------------------------------------------+ | **Art. 1204.** | +=======================================================================+ | The creditor is entitled to indemnity for damages when through the | | fault of the debtor: | | | | 1\. All the things which are alternatively the object of the | | obligation have been lost. | | | | 2\. The compliance of the obligation has become impossible. | +-----------------------------------------------------------------------+ | *Loss of Object when Choice belongs to Debtor* | | | | Due to Fortuitous Event | | -------------------------------- ---------------------------------- | | --------------------------------------------------------------------- | | ---- | | All objects are lost Obligation debtor is extinguished | | Only one of the object remains Obligation becomes a simple obliga | | tion | | Two or more objects remains Obligation still subsits | | Due to Debtor's Fault | | All objects are lost The creditor is entitled to indemn | | ity for damages based on the value of the last thing which disappeare | | d. | | Only one of the object remains Obligation becomes a simple obliga | | tion | | Two or more objects remains Obligation still subsits | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1205** | +=======================================================================+ | When the choice has been expressly given to the creditor, the | | obligation shall cease to be alternative from the day when the | | selection has been communicated to the debtor | +-----------------------------------------------------------------------+ | *Loss of Object when Choice belongs to Creditor* | | | | Due to Fortuitous Event | | -------------------------------- ---------------------------------- | | --------------------------------------------------------------------- | | --------------------------------------------- | | All objects are lost Obligation debtor is extinguished | | Only one of the object remains Obligation becomes a simple obliga | | tion | | Two or more objects remains Obligation still subsits | | Due to Debtor's Fault | | All objects are lost The creditor shall choose the pric | | e of any of the object were indemnity for damages. | | Only one of the object remains The creditor may choose the object | | which remains however the creditor may choose the value of any one o | | f the objects which were lost plus damages. | | Two or more objects remains Obligation still subsits however t | | he creditor may choose the value of any one of the objects which were | | lost plus damages | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1206.** | +=======================================================================+ | Facultative Obligation - only one prestation has been agreed upon, | | but the obligor may render another in substitution | +-----------------------------------------------------------------------+ | *Effect of Loss or Deterioration of Substitute* | | | | Before Substitution The loss or deterioration of the thing intend | | ed as a substitute, through the negligence of the obligor, does not r | | ender him liable | | --------------------- --------------------------------------------- | | --------------------------------------------------------------------- | | ------------------ | | After Substitution The obligor is liable for the loss of the sub | | stitute on account of his delay, negligence or fraud. | +-----------------------------------------------------------------------+ +-----------------------------------+-----------------------------------+ | **Alternative Obligation** | **Facultative Obligation** | +===================================+===================================+ | Several prestation are due, but | Only one prestation, the | | the performance of one is | principal obligation, is due | | sufficient | | +-----------------------------------+-----------------------------------+ | If there are void prestation, the | If the principal obligation | | others may still be valid, hence, | | | the obligation remains | is void, the debtor is not | | | | | | required to give a substitute | +-----------------------------------+-----------------------------------+ | The right of choice is with | The right of choice belongs to | | | the debtor only | | the debtor, unless expressly | | | given to the creditor | | +-----------------------------------+-----------------------------------+ | If all prestation are impossible | If the principal obligation | | except one, that | | | | is impossible, the debtor is | | which is possible shall still be | | | given. | not required to give the | | | | | | substitute. | +-----------------------------------+-----------------------------------+ **IV. JOINT AND SOLIDARY OBLIGATION** +-----------------------------------------------------------------------+ | **Art. 1207.** | +=======================================================================+ | **General Rule:** Obligation is presumed to be joint if there is | | concurrence of two or more creditors or of two or more debtors in one | | and the same obligation.. | +-----------------------------------------------------------------------+ | *Exception:* | | | | When the obligation expressly so states that there is a solidary | | liability or when the law or the nature of the obligation requires | | solidarily. | +-----------------------------------------------------------------------+ | +--------------------------------+--------------------------------+ | | | **Joint Obligation** | **Solidary Obligation** | | | +================================+================================+ | | | Each debtor is liable only for | each debtor is liable for the | | | | a proportionate part of the | whole obligation, and each | | | | debt, and each creditor is | creditor is entitled to | | | | entitled only to a | | | | | proportionate part of the | demand payment of the whole | | | | credit | obligation | | | +--------------------------------+--------------------------------+ | +-----------------------------------------------------------------------+ | *Joint Obligation* | | | | +--------------------------------+--------------------------------+ | | | **Debtor's Side** | **Creditor's Side** | | | +================================+================================+ | | | each one of the debtors | each one has a right to | | | | | | | | | has an obligation to render | demand compliance with the | | | | compliance with the prestation | prestation only with regard to | | | | with regards to his share. | his share. | | | +--------------------------------+--------------------------------+ | +-----------------------------------------------------------------------+ | *Solidary Obligation* | | | | +--------------------------------+--------------------------------+ | | | **Debtor's Side** | **Creditor's Side** | | | +================================+================================+ | | | each one has an obligation to | each one has a right to | | | | render entire compliance with | | | | | the prestation. | demand entire compliance of | | | | | the debtors with the | | | | | prestation. | | | +--------------------------------+--------------------------------+ | +-----------------------------------------------------------------------+ | *Terms Interchangeably Used* | | | | **Joint Obligation** **Solidary Obligation** | | ---------------------- ------------------------------- | | Joint/jointly Joint and severally | | conjoint In solidum | | Mancomunada simple Mancomunada solidaria | | Pro rata simple Juntos o separadamante | | Proportionate Individually and collectively | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1208** | +=======================================================================+ | **General Rule**: Equal sharing of creditors and debtors in the | | credit or debt in the absence of any law or stipulation in the | | contrary. | +-----------------------------------------------------------------------+ | *Effect of Joint Divisible Obligation* | | | | \- Each creditor can demand only for the payment proportionate share | | of the credit, while each debtor can be held liable only for the | | payment of his proportionate share of the debt. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1209.** If the division is impossible, the right of the | | creditors may be prejudiced only by their collective acts, and the | | debt can be enforced only by proceeding against all the debtors. If | | one of the latter should be insolvent, the others shall not be liable | | for his share. | +=======================================================================+ | *Characteristics of Joint Indivisble Obligation* | | | | 1\. No joint creditor can act in representation of the other joint | | creditor/s | | | | 2\. No joint debtor can be compelled to fulfill the obligation of | | the other joint debtor/s | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1210**. The indivisibility of an obligation does not | | necessarily give rise to solidarity. Nor does solidarity of itself | | imply indivisibility. | +=======================================================================+ | **Indivisibility** | | **Solidarity** | | ------------------------------------------------------------------- | | ---------------- ---------------------------------------------------- | | --------------- | | Every debtor is not lliable to perform the entire obligation more t | | han his share. Every debtor will become liable to perform the entir | | e obligation. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | **Art. 1211.** Solidarity may exist although the creditors and the | | debtors may not be bound in the same manner and by the same periods | | and conditions. | +=======================================================================+ | *Kinds of Solidarity* | |