Obligations & Contracts PDF

OBLIGATIONS & CONTRACTS 9. Personal obligation consists of doing or 18. The obligation to pay damages caused not doing. to another due to fault or negligence arises 1. Obligation is defined as...

OBLIGATIONS & CONTRACTS 9. Personal obligation consists of doing or 18. The obligation to pay damages caused not doing. to another due to fault or negligence arises 1. Obligation is defined as a juridical from quasi-delict. necessity to give, to do, or not to do. 10. An obligation to do or to render service is a positive personal obligation. 19. In quasi-delict, the cause of the damage 2. The essential requisites of an obligation is the fault or negligence of the debtor. are as follows: 11. An obligation not to do is a negative personal obligation. 20. When the object is a specific or (a) a passive subject (called debtor or determinate and the thing is lost, it cannot obligor); 12. The obligation to pay taxes arises from be substituted with another thing even if it (b) an active subject (called creditor or law. is of the same kind and quality. oblige); (c) object or prestation; and 13. The obligation to pay a loan arises from 21. When the object is generic and is lost, (d) a juridical or legal tie. contract. it can be substituted for as long as it is of the same kind. 3. The person who is required to fulfill the 14. The obligation to return money paid by obligation is called the debtor or obligor. mistake or which is not due arises from 22. When the object to be delivered is quasi-contract. determinate, the loss of the thing due to a 4. The person who is entitled to demand fortuitous event will extinguish the the fulfillment of the obligation is called the 15. The obligation to return something obligation, provided the loss is not due to creditor or obligee. which has been delivered by mistake is the fault of the debtor and the debtor is not solution indebiti. guilty of delay. 5. Object or prestation is the subject matter of the obligation. 16. The obligation to reimburse expenses 23. A debtor obliged to give a determinate incurred by a person who voluntarily thing has the duty to take care of the thing 6. Object or prestation may consist in managed the property of another without with the diligence of a good father of a giving, doing or not doing. the knowledge and consent of the latter is family before delivery. negotiorum gestio. 7. A juridical or legal tie is the cause which 24. Ownership over property is acquired binds the parties together. 17. The obligation to return a stolen item by delivery. The creditor does not become arises from crime. the owner of the thing subject matter of 8. Real obligation consists of delivery of a the obligation until it has been delivered to thing to the creditor. him. 25. In an obligation to deliver a 31. A pure obligation is one which is not determinate thing, the creditor has the (b) when the law so provides (e.g. subject to any condition and no specific following remedies in case the debtor fails Professional tax, business tax must be paid date is mentioned for its fulfillment and is, to comply with his obligation: on or before January 31 of each year); therefore, immediately demandable. E.g. D promises to pay C P500.00. (a) demand specific performance; (c) when demand would be useless (e.g. (b) demand cancellation of the obligation when the thing to be delivered is 32. A conditional obligation is one whose with a right recover damages; determinate and it is lost); consequences are subject to the fulfillment (c) demand payment of damages where it (d) when there is performance by a party in of an obligation. is the only remedy available. reciprocal obligations (S agreed to sell to B his car for P100,000.00. The obligation of S 33. A condition may be suspensive or 26. If the thing to be delivered is generic, is to deliver the car while that of B is to pay resolutory. the loss of the thing will not extinguish the P100,000.00. S cannot demand payment if obligation. In case the debtor fails to fulfill he cannot deliver the car.); 34. A suspensive condition is one the his obligation, the creditor may ask a third fulfillment of which will give rise to an person to perform the obligation at the (e) when from the nature and obligation. E.g. I will give you P5,000.00 if expense of the debtor. circumstances of the obligation, the you graduate from college. designation of the time when the thing is to 27. A debtor incurs in delay: be delivered or the service is to be 35. A resolutory condition is one the performed was a controlling motive (e.g. fulfillment of which will extinguish the (a) when the debtor fails to perform his delivery or balloons or catering of food on obligation. The obligation is immediately obligation on the date agreed upon; a birthday or other significant event like demandable. E.g. I will give you P500.00 a (b) there is a demand made by the creditor X’mas or New Year). month allowance until you graduate from upon the debtor to comply with his college. obligation; and 29. A fortuitous event is any event which (c) the debtor fails to comply with the cannot be foreseen, or which, though 36. When the fulfillment of the obligation demand. foreseen, is inevitable. A fortuitous event depends upon the sole will of the debtor, refers to acts of God like earthquake, flood, the conditional obligation is void. 28. Demand is not necessary in order that typhoon, eruption of volcano, etc.). delay may exist in the following instances: E.g. I will pay you if I can sell my car. I will 30. A force majeure refers to acts of man pay you if I am able to get a loan from a (a) when the obligation so provides (e.g. D like war, fire, rebellion, insurrection, etc. bank. Only the condition is void. Thus, if promised to pay C P1,000.00 on Dec. 15 there is a pre-existing obligation, only the without need of demand); condition is void and the pre-existing obligation remains valid. E.g. D owes C (b) as soon as it becomes evident that the 44. A period is a future and certain event P5,000.00. D promises to pay the loan if he event will not happen. (In the same upon the arrival of which the obligation is able to sell his car. Only the condition is example above, the obligation is subject to it either arises or is extinguished. void. extinguished if M dies at the age of 24.) It is a day certain which must necessarily come, although it may not be known when. 37. If the resolutory condition depends on 41. A negative condition is one where an the will of the debtor, the obligation is event will not happen at a determinate 45. When the debtor binds himself to pay valid. time. The obligation shall become effective an obligation when his means permit him and binding: to do so, the obligation shall be deemed to 38. If the suspensive condition depends be one with a period. upon chance or upon the will of a third (a) from the moment the time indicated person, the obligation subject to it is valid. has elapsed without the event happening 46. The period fixed by the parties is E.g. I will give you P1,000.00 if I win in the (e.g. X binds himself to give M P10,000.00 presumed to have been established for the lotto. I will give you P1,000.00 if A will if M is not yet married to W by the time M benefit of both the creditor and debtor. E.g. marry me. reaches 25 years old. The obligation D borrowed from C P10,000.00 payable on becomes effective if M is not yet married to December 31 with 10% interest. 39. A conditional obligation dependent W when M reaches the age of 25.); upon impossible conditions is void. 47. An alternative obligation is one where Impossible conditions may be physically (b) from the moment it has become evident various prestations are due but the impossible or legally impossible. E.g. I will that the event will not happen, although performance of one of them is sufficient pay you P5,000.00 if you can fly. I will pay the time indicated has not yet elapsed (In the right of choice, as a rule, belongs to the you P5,000.00 if you will kill Z. the same example above, the obligation debtor. becomes effective when W dies before M 40. Positive suspensive condition is one reaches the age of 25). 48. The debtor cannot choose prestations where an event will happen at a which are impossible, unlawful or which determinate time. The obligation is 42. The condition shall be deemed fulfilled could not have been the object of the extinguished: when the debtor voluntarily prevents its obligation. fulfillment. (a) as soon as the time expires without the 49. A joint obligation is one where the event happening (E.g. X binds himself to 43. An obligation with a period is one whole obligation is to be paid or fulfilled give M P10,000.00 if M will marry W before whose consequences are subject to the proportionately by the different debtors or M reaches the age of 25. If M does not expiration of the period. is to be demanded proportionately by the marry W when he reaches 25, the different creditors. obligation is extinguished); 50. A solidary obligation is one where each thing, the doing of an act, or not doing an third person may recover from the debtor one of the debtors is bound to render, or act. only insofar as the payment has been each one of the creditors has a right to beneficial of the debtor. demand from any of the debtors, entire 57. A debt may consist of delivery of a thing compliance with the including money or rendering of a service. 62. A contract is a meeting of the minds prestation. between two persons whereby one binds 58. A debt shall not be considered paid himself, with respect to the other, to give 51. Words to indicate joint liability: unless the thing or service has been something or render some service. proportionately, pro rata, jointly, “we completely delivered or rendered. Partial promise to pay” signed by two or more payment or performance will not 63. The essential requisites of a contract persons. extinguish the obligation. are as follows: 52. Words to indicate solidary liability: 59. Payment shall be made to: (a) consent; jointly and severally, solidarily, individually (b) object; and collectively, “I promise to pay” signed (a) the creditor; (c) cause. by two or more persons. (b) his successor in interest; or (c) any person authorized to receive it. 64. The contracting parties may enter into 53. A divisible obligation is one the object such stipulations as they may deem of which is capable of partial fulfillment. 60. The creditor is bound to accept convenient provided they are not contrary E.g. D promised to pay C P10,000.00 in four payment or performance from the to law, morals, good customs, public order, equal monthly installments. following: or public policy. 54. An indivisible obligation is one the (a) the debtor; 65. As a general rule, contracts take effect object of which is not capable of partial (b) any person who has interest in the between the parties, their assigns and fulfillment. D Promised to pay C P10,000.00 obligation like a guarantor; heirs. on December 31. (c) a third person who has no interest in the obligation when there is a stipulation that 66. Cases when a contract is effective only 55. A penal clause is an accessory he can make payment. between the parties: obligation. The penalty shall substitute the (a) by their nature (a contract involving indemnity for damages. 61. A third person who pays the debt of the personal qualifications, as singing, painting, debtor shall be entitled to reimbursement etc.); 56. Payment may consist of not only in the and subrogation if the payment is with the (b) by stipulation; or delivery of money but also the giving of a knowledge of the debtor. If the payment is (c) by provision of law (as in agency). without the knowledge of the debtor, the 66. Consent is the meeting of minds 74. A contract where consent is given 79. There is fraud when, through insidious between the parties on the subject matter through mistake, violence, intimidation, words or machinations of one of the and cause. undue influence, or fraud is voidable. contracting parties, the other is induced to enter into a contract which, without them, 67. Consent is manifested by the 75. In order that mistake may vitiate he would not have agreed to. acceptance of the offer upon the thing and consent, it must refer to: cause. 80. Simulation of a contract is the act of (a) the object (S is buying a pig from B deliberately deceiving others, by feigning 68. The offer must be certain. thinking it is for breeding but the pig B is or pretending by agreement, the selling is for slaughtering); appearance of a contract which is either 69. Acceptance is the manifestation by the non-existent or does not express offeree of his assent to the terms of the (b) the condition of the contract (seller his the true agreement of the parties. offer. Acceptance must be absolute or land for cash but buyer is buying thinking it unqualified. is payable in installments); 81. Simulation of a contract may be absolute or relative. 70. An offer may be withdrawn before (c) identity or qualifications (A hired B acceptance, except when there is option thinking B is a CPA who is not a CPA). 82. There is absolute simulation when the money paid by the offeree. contract does not really exist and the 76. Violence requires the use of physical parties do not intend to be bound at all. 71. The following cannot give consent: force. (Contract of sale of land where the buyer did not pay a single centavo and the seller (a) unemancipated minors; 77. There is intimidation when one of the remained in possession of the land.) (b) insane or demented persons; contracting parties is compelled by a (c) deaf-mutes who do not know how to reasonable and well-grounded fear of an 83. There is relative simulation when the write. imminent and grave evil upon his person or contract does not express the true property, or upon the person or property of agreement of the parties. (D borrowed 72. Contracts entered into by an insane his spouse, descendants or ascendants, to from C and agreed to mortgage his person during a lucid interval is valid. give his consent. property as security. Instead of a contract of loan, the parties executed a contract of 73. Contracts entered into in a state of 78. There is undue influence when a person sale.) drunkenness or during a hypnotic spell is takes improper advantage of his power voidable. over the will of another, depriving the 84. Object of a contract must be certain. latter of a reasonable freedom of choice. 85. In order that things may be the object 89. The reason the written instrument fails 93. When a contract is rescinded, the of a contract, the following requisites must to express the real agreement or intention parties have the obligation to return to be present: of the parties is either mistake, fraud, each other the object of the contract with inequitable conduct or accident. its fruits and the price thereof with legal (a) the thing must be within the commerce interest. of men; 90. Difference between reformation and (b) it must not be physically or legally annulment is: in reformation, there is a 94. Voidable contracts are those which impossible; meeting of the minds, hence there is a possess all the essential requisites of a valid (c) it must be in existence or capable of contract; in annulment there is no meeting contract but one of them is incapable of coming into existence; of the minds, hence there is no contract. giving consent, or consent is vitiated by (d) it must be determinate or mistake, violence, intimidation, undue determinable. 91. Rescissible contracts are those validly influence, or fraud. agreed upon because all the essential 86. A contract may be oral, or in writing, or elements are present and, therefore, 95. Unenforceable contracts are those partly oral and partly in writing. legally effective but may be rescinded in which cannot be enforced in court by order to secure reparation reason of defects provided by law and 87. Contracts which must be in a public of damages caused on one of the unless they are ratified according to law. instrument: contracting parties or even a third person (a) creation, transmission, modification or by reason of the 96. Unenforceable contracts: extinguishment of real rights over contract. (a) unauthorized contracts; immovable property (mortgage of real (b) those that do not comply with the property; donation of land); 92. Cases of rescissible contracts: Statute of Frauds; (a) contracts entered into by guards (c) those where both parties are incapable (b) renunciation or waiver of inheritance; whenever the wards they represent suffer of giving consent. (c) power to administer property (special lesion by more than ¼ of the value of the power of attorney) things which are the object thereof; 97. Void contracts are those which, (d) waiver of actions or rights. because of certain facts, produce no effect (b) contracts agreed upon in at all. Void contracts cannot be ratified. The 88. Reformation is the remedy by means of representation of absentees; action or defense for the declaration of its which a written instrument is amended or (c) contracts undertaken in fraud of non-existence does not prescribe. It cannot rectified in order to express the real creditors; give rise to a valid contract. A void contract agreement or intention of the parties. (d) contracts involving things under cannot be novated. litigation. 98. Instances of void or inexistent contracts: (a) contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; (b) contracts which are absolutely simulated; (c) contracts without a cause or consideration; (d) contracts whose object is outside the commerce of men; (e) contracts which contemplate an impossible service; (f) contracts where the intention of the parties relative to the object cannot be ascertained; (g) contracts expressly prohibited or declared void by law.