Obligation and Contracts (Final Term) PDF

Buyer – Seller Bank – Client Article 1157 Donor – Donee Obligation arise from: Doctor – Patient 1. Law...

Buyer – Seller Bank – Client Article 1157 Donor – Donee Obligation arise from: Doctor – Patient 1. Law Trustor – Agent 2. Contracts Insurer – Insured 3. Quasi-contracts Husband – Wife 4. Acts or omissions punished by law Service Provider – Customer 5. Quasi-delicts CONTRACTS are FOR EVERYONE CONTRACTS are EVERYWHERE LAW - By Congress (Republic Acts) ORDINANCES - By Local Governments CONTRACTS - “A contact is a meeting of REGULATIONS - By Administrative Bodies minds between two persons whereby one (DOH, LTO, etc.) binds himself, with respect to the other, to give Law Between the Parties - CONTRACTS something or to render some service.” (Art. Constitution 1305, Civil Code) “The law is deemed written into every contract.” Heirs of Severina San Miguel v Court of Appeals IN AN OBLIGATION IN A CONTRACT Is it possible for a contract to affect the rights of ➔ Passive subject Obligor (a party others who are not parties to it? - One who must in a contract) Art. 1311. “Contracts take effect only fulfill the e.g. Debtor, Tenant, between the parties, their assigns and heirs, obligation/duty. Mortgagor except in cases where the rights and ➔ Active subject Obligee (a party obligations arising from the contract are not - One who has the in a contract) transmissible…” right to demand e.g. Creditor, A creditor may collect the loan against the the fulfillment of Landlady, Mortgagee estate (inheritance/property) of a dead the obligation/duty debtor. ➔ Object (or Object A son cannot inherit the employment of his “prestation”) - Purpose dead father. - “To give, to do, or “ subject matter of not to do” the contract” (Art. THE ESSENTIAL ELEMENTS: To give - real 1305) Parties (Obligor & Obligee) obligation LEGAL CAPACITY To do & not to do - *sale *lease - When a person is authorized by law to personal obligation *loan *service *donation *agency enter into a contract. Examples of contracts where a party ➔ Cause cause has no legal capacity: - Juridical or legal Condition / service / - Marriage where one of the tie benefit / purpose parties is below 18 years old. (Art. 1350) - Contract of sale of cigarettes to consent a 15-year old smoker. - Contract of donation of real estate to a foreigner. PARTIES:  If a party in a contract has no legal Stolen items capacity, the contract is void. The elements of a crime Prohibited items Public domain OBJECT Others (e.g., R.A. 8485, as Its object must be a service NOT contrary to amended) law, morals, good customs, public order, or public policy. (Art. 1347, Civil Code) Art. 1407. “The following contracts are inexistent and VOID from the beginning: (1) Those whose cause, object or purpose is Nature of a “contact” contrary to law, morals, good customs, Its object must be a service NOT public order, or public policy. contrary to law, morals, good customs, public order, or public ➔ Some examples of contracts against policy. (Art. 1347, Civil Code) LAW: Its business must involve something Agreement of spouses to separate “within the commerce of man” (Art. Prostitution 1347, Civil Code) It must not involve impossible Some examples of contracts against MORALS: things. (Art. 1348, Civil Code) Simulation of births Some examples of contracts against GOOD Art. 1409. “The following contracts are CUSTOMS: inexistent and VOID from the beginning: (5) Living separately when you reach 18 Those which contemplate an impossible service; Some examples of contracts against PUBLIC ORDER: “The sale of vain hope or expectancy is Faked or forged documents (e.g. void” Art. 1461, 3rd par. diploma) Falsification “Impossible conditions, those contrary to Granted to humans, specific professions only (e.g. Robots in Hospitals as good customs or public policy and those Doctors) prohibited by law shall annul the obligation which depends upon them…” Art. 1183 Some examples of contracts against PUBLIC POLICY: 1. ABSOLUTE Very high interest rates Art. 1345. Simulation of a contract may be Sale of one’s organs absolute or relative. The former [absolute] takes place PUBLIC POLICY: when the parties do not intend to be State LIMITATIONS on personal rights for bound at all; community welfare. You don’t violate others’ rights You don’t harm others ex. Sammy sells his house and lot to his Limit on what you can do daughter, Rosa. She did not pay him. He did not transfer the title to her. They did not register the sale. He continued to live in the house & lot. This is an absolutely simulated contract. What are beyond the commerce of man? This is VOID.  Condition / service / Art. 1346. An absolutely simulated or benefit / purpose fictitious contract is VOID. (Art. 1350) Art. 1409. “The following contracts are PAYMENT inexistent and VOID from the beginning: (2) Those which are absolutely simulated or fictitious; Art. 1352: “Contracts without cause, or with unlawful cause, produce no effect whatever. 2. RELATIVE The cause is unlawful if it is contrary to law, Art. 1345. Simulation of a contract may be morals, good customs, public order, or absolute or relative. public policy.” The former [absolute] takes place when the parties do not intend to be Employees cannot be compensated by the bound at all; distribution of the employer’s goods. They The latter [relative], when the parties must be pain in money. conceal their real agreement. ex. Sammy sells his house and lot to his daughter, Rosa, for 100,000 pesos. The actual value of the property is 6 million. He IN AN OBLIGATION IN A CONTRACT did not receive payment from her although ➔ Passive subject Obligor (a party he transferred the title to her. in a contract) This is a relatively simulated contract. This ➔ Active subject Obligee (a party binds the parties to their real agreement in a contract) which is a transfer of ownership. ➔ Object (or Object “prestation”) Art. 1346. A relative simulation when it does ➔ Cause cause not prejudice a third person and is not Condition / service / intended for any purpose contrary to law, benefit / purpose morals, good customs, public order or public (Art. 1350) policy binds the parties to their real CONSENT agreement. The ESSENTIAL ELEMENTS: Parties (Obligor & Obligee) Object Cause IN AN OBLIGATION IN A CONTRACT Consent ➔ Passive subject Obligor (a party - Examples of contracts where in a contract) consent is absent (void ➔ Active subject Obligee (a party contracts) in a contract) - Examples of contracts where consent is defective (you ➔ Object (or Object were intimidated, threatened, “prestation”) or coerced to get married.) ➔ Cause cause  - If in a contract, the consent is or ascendants, to give his defective, the contact is consent” (Art. 1335, 2nd par) VOIDABLE. - Valid until ANNULLED - IF YOU DON’T BUT THIS, Art. 1330: “A contract where consent is - SOMETHING WILL HAPPEN given through mistake, violence, TO YOU. intimidation, undue influence, or fraud is - YOU BETTER BE CAREFUL voidable.” NOT INTIMIDATION “Contracts are perfected by mere consent, undue influence: “when a and from that moment the parties are bound person takes improper not only to the fulfillment of what has been advantage of his power over expressly stipulated but also to all the the will of another, depriving consequences which, according to their the latter of reasonable nature may be in keeping with good faith, freedom of choice.” (Art. usage, and law” (Art. 1315) 1337) “Consent is manifested by the meeting of offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified Some (not all) verbal contracts are acceptance constitutes a counter-offer. (Art valid. 1319, 1st par) Question: Do contracts have to be “An acceptance may be expressed or notarized? implied.” (Art. 1320) For example, contracts involving real estates do. VOCABULARY These are what you call Vice of consent (Vitiated Consent) formal/solemn contracts. Where consent is defective – given Formal contracts require through solemnities (procedures). mistake: “it must refer to the thing which is the object of Contracts that have to be in written form: the contract” (Art. 1331) 1. Those involving real rights violence: “when in order to Buying, selling, renting, donating, wrest consent, serious or receiving, or mortgaging real irresistible force is employed. property (Art. 1335, 1st par) 2. Repudiation of hereditary rights intimidation: “when one of When a daughter doesn’t want to the contracting parties is receive her father’s inheritance compelled by a reasonable 3. Those involving more than P500. and well-grounded fear of an imminent and grave evil upon Question: What if the written words his person or property, or of the contract do not reflect the true upon the person or property parties? of his spouse, descendants Reformation of instruments  The contract may be written – if the any other manner collect the claims wrong words were written because of due them; mistake, fraud, inequality, or accident. When something’s wrong: INTERPRETATION ❖ Void “If the terms of a contract are clear ❖ Voidable and leave no doubt upon the ❖ Rescissible intention of the parties, the literal ❖ Unforceable meaning of its stipulations shall control.” UNFORCEABLE Those without proper authority The words must be clear UNWRITTEN agreement for a One part of the contract will be service to be rendered more than 1 interpreted in connection to the other year later parts. UNWRITTEN promise to answer for debt, default, and miscarriage RESCISSIBLE (cancellable) UNWRITTEN agreement in Those which are entered into by consideration of marriage guardians whenever the wards UNWRITTEN sale worth at least whom they represent suffer lesion P500 by more than one-fourth of the UNWRITTEN lease longer than 1 value of the things which are the year object thereof’ UNWRITTEN sale of real property UNWRITTEN representation for Those agreed upon in another’s debt representation of absentees, if the Those where the parties cannot give latter suffer the lesion stated in the consent. preceding number; Characteristics: Freedom Obligatory Mutuality Relativity Classifications of Contracts As to how they are executed: Consensual Real Formal/Solemn As to the parties’ responsibilities: Unilateral Bilateral Onerous Gratuitous Those undertaken in fraud of Remuneratory creditors when the latter cannot in As to the object: Principal (loan)  Accessory (interest) P500 to P25,000 or (mortgage/security) 3% to 10% of gross sales for the day or Some Latin Words/Phrases Suspension from operation “Non scholae sed vitae discimus” for 3 months or We learn not for school but for life Revocation of permit to Cum laude operate With distinction Curriculum Vitae 2. NEGOTIORUM GESTIO Carpe diem - unauthorized management “Seize the day” - OBLIGATION: take care of Making most of your day neighbours property even without Doing something extraordinary for permission. that day Art. 2144 (Civil Code): “Whoever voluntarily takes charge of the agency or management of the business or 1. SOLUTIO INDEBTI property of another, without any power from - the la tter, is obliged to continue the same Examples: until the termination of the affair and its The cellphone bill is only 2,300, but incidents, or to require the person it was computed wrongly so you paid concerned to substitute him, if the owner is 2,900. The cellphone company in a position to do so…” becomes your debtor for the amount of 600. Art. 1456 (Civil Code) In the jeepney, you paid 1,000 pesos “If property is acquired through mistake or because you thought it was 100 fraud, the person obtaining it is, by force of pesos. The driver gave you change law, considered a trustee of an implied trust worth 92 pesos. The driver owes you for the benefit of the person from whom the 900. property comes.” Walter paid tuition in a private school. Then he was granted a Example of Negotiorum Gestio: scholarship. The school must give I went out, and my dog, Oreo, got him a refund. lost. But you found him. You are You have been paying your taxes obliged to take care of him until he is every month. At the end of the year, returned to me. it was computed that you overpaid. A saleslady asks you to look after The BIR will deduct your excess the store of her boss while she goes payment from next year’s taxes. for a break. Reminder: R.A. 10909 “It shall be unlawful for any business The obligation is to receive the punishment. establishment to shortchange a customer, To serve the prison sentence even if such change is only of a small To pay a fine amount.” The Revised Penal Code PENALTIES: Largest collection of criminal laws  Uses the nomenclature for Special Penal Laws (Recent): imprisonment - R.A. 11053 (Anti-Hazing Act of - Death 2018) - Reclusion Perpetua - R.A. 10911 (Anti-Age Discrimination - Reclusion Temporal in Employment Act) - Prision Mayor - R.A. 10909 (No Shortchanging Act - Prision Correccional of 2016) - Arresto Mayor - R.A. 10175 (Cybercrime Prevention - Arresto Menor Act) Treason & Murder: Reclusion Temporal to Death Espionage: Prision Correccional Mutiny: Reclusion Perpetua Direct Assault: Prision Correccional Sometimes called CRIMINAL (Min) NEGLIGENCE. Alarms & Scandals: Arresto Mayor Using False Certificates: Arresto An act or omission by a person (tortfeasor) Mayor (Max) to Prision Correccional which causes damage to another in his (Min) person, property, or rights giving rise to an Using Fictitious Names: Arresto obligation to pay for the damage done, there Mayor being fault or negligence but there is no Prostitution: Arresto Mayor pre-existing contractual relation between the Abortion (by Pharmacists): Arresto parties. (Art. 2176, Civil Code) Mayor Serious Physical Injuries: Prision CRIMINAL NEGLIGENCE Correccional (Min) Reckless Imprudence vs. Simple Slight Physical Injuries: Arresto Imprudence Menor Maltreatment: Arresto Menor Examples: Trespass to Dwelling: Arresto Reckless imprudence resulting in homicide Mayor Theft: Arresto Menor to Prision Why is there no crime of “reckless Correccional (Min) imprudence resulting in murder?” Adultery: Arresto Mayor (Max) to Prision Correccional (Min) HOMICIDE MURDER Slander: Arresto Mayor (Max) to Unlawful killing Killing a person Prision Correccional (Min) with or through Special Penal Laws (Examples): THRU - treachery, - R.A. 10883 (Anti-Carnapping Law of superior strength, 2016) armed men - B.P. 702 as amended by R.A. 10932 FOR - price or (Prohibition on Hospital Deposits in reward Emergency Cases) - P.D. 1612 (Anti-Fencing Law) DURING - - C.A. 142 (Anti-Alias Law) calamities  WITH - evident premeditation or cruelty Some examples: Reckless imprudence resulting in damage to property Why is there no crime of “reckless imprudence resulting in malicious mischief?” Reckless imprudence resulting in physical injuries Why is there no crime of “reckless imprudence resulting in maltreatment?”