CHAPTER I - OBLIGATION WHAT IS AN OBLIGATION? ANS. An obligation is a juridical necessity to give, to do or not to do.

(1156) Note: only the duty of debtor is stressed. WHAT IS JURIDICAL NECESSITY? ANS: Legally enforceable; courts can be called upon: 1. to enforce compliance, or 2. if not possible, to have its economic value with damages, in proper case, be paid to the person whose right is violated. DOES JURIDICAL NECESSITY APPLY TO ALL KINDS OF OBLIGATIONS ? ANS. NO. Applies only to CIVIL OBLIGATIONS-based on positive law. Not applicable to natural obligations which are based on equity and natural law WHAT ARE THE ESSENTIAL REQUISITES OF OBLIGATION? 1. Passive subject (debtor or obligor)- DUTY/OBLIGATION 2. Active Subject (creditor or obligee)-RIGHT 3. Object or prestation (subject matter): A. to give B. to do C. not to do 4. Juridical or legal tie (efficient cause)-BIND parties to obligation SOURCE of obligation Duty/obligation an enforceable ACT Right - power to demand the prestation Wrong or injury act or omission in violation of right of another. WHAT ARE THE KINDS OF OBLIGATION ACCORDING TO PRESTATION? 1. Real obligation (to give) THING ex. 2. Personal Obligation; a. Positive Personal Obligation (to do) ACT ex. b. Negative Personal Obligation (not to do, including not to give) ex. WHAT ARE THE SOURCES OF OBLIGATION (Art. 1157)? 1. Law imposed by law itself ex. obligation to deliver the thing itself in specific real obligation. - legal obligations: not presumed because they imposed BURDEN on the obligor. 2. Contracts - stipulations of the parties ex. to pay interest at 3.5% per month

- CONTRACTUAL OBLIGATION - have force of a law between contracting parties - COMPLIANCE IN GOOD FAITH (sincerity and honesty) 3. Quasi-Contract lawful, voluntary and unilateral act which are enforceable to the end that no one shall be unjustly enriched at the expense of another (a principle of equity) KINDS: 1. SOLUTIO INDEBITI (payment by mistake) obligation to return Ex. 2. NEGOTIORUM GESTIO (unauthorized management) - obligation to reimburse for incurred expenses Ex. 4. CRIMES or Omissions punished by law (DELICT) civil liability aspect of a crimina l offense. ex. duty to indemnify the victim or his heirs Scope of Civil Liability: 1. restitution 2. reparation for damage caused 3. indemnification for consequential damages. 5. Quasi-delict or Torts damage caused by negligent act or omission without contractual relation between the parties. ex. obligation of a person, who did shadow boxing in a crowded place, accidentally hit someone resulting to some eye-injury WHAT ARE THE DIFFERENCE BETWEEN CRIME (DELICT) AND QUASI-DELICT? 1. 2. 3. 4. 5. INTENT - criminal intent vs none PURPOSE punishment vs indemnification INTEREST AFFECTED public vs private LIABILITIES two vs one PROOF NEEDED proof beyond reasonable doubt vs preponderance of evidence

II - NATURE AND EFFECTS OF OBLIGATION Every person obliged to give something is also obliged to take care of it with the proper diligence of good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1163) A OBLIGATION TO GIVE (REAL OBLIGATION) A. Specific/Determinate thing particularly designated or physically segregated from others of the same class. ex. the car I am driving today; the necklace that your 1st and only boyfriend gave to you last summer. B. Generic or indeterminate thing a class or genus, not particularized ex. the sum of P1,000,000; a cavan of rice; a 2006 Toyota car B - DUTIES OF DEBTOR IN SPECIFIC REAL OBLIGATION

1. Preserve the thing HOW? With diligence of a good father of a family What is diligence of a good father of a family? The ordinary care of a reasonably prudent person over his property. Is this the only standard of care required in all specific real obligation? contract so requires. No. Other standard of care must be followed when law or

Ex. extra-ordinary (utmost) diligence imposed on common carrier to carry the passengers safely. 2. Deliver the fruits of the specific thing. WHAT ARE THE KINDS OF FRUITS? 1. Natural fruits spontaneous product of soil, young of animal. 2. Industrial fruits produce by land through human labor 3. Civil fruits result of juridical relations. When does the creditor acquire right over the fruits of the thing? ANS. Creditor has a right to the fruits of the thing from the time the obligation to deliver arises. When does the obligation to deliver arises ? ANS. Obligation to deliver arises from the time of the perfection of the contract. When is a contract perfected? ANS. A contract is perfected when there is a meeting of minds between the parties (consensual delivered (real contract).

contract) or when the thing is

What kind of right to the fruits is acquired from the time the obligation to deliver arises? ANS. Only personal right the right to demand from a definite passive subject (debtor) the fulfillment of his obligation. When the thing has already been delivered, what kind of right is acquired by the creditor over the fruits of the thing? ANS. The creditor acquires real right over the fruits. What is real right ? ANS. Real right means the right over the specific thing (like ownership) without a definite passive subject). In other words, right directed against the whole world. 3. Deliver the accessions and accessories. What are accessions? Accessories? ANS. Accessions are fruits of a thing or additions to or improvements upon a principal thing. Ex. house on a land, rents of building, air-con of a car Accessories things joined, included to principal for its embellishment, better use or completion. Ex. Key of house, frame of picture NOTE: accessions are not necessary to principal while accessories and principal go together. Are accessions and accessories included in specific real obligation even if not mentioned? ANS. Yes, a general rule, following the principle of law that accessory follows the principal. To be excluded, there must be agreement to that effect.

In obligation to deliver the accessions or accessories of a thing, is the principal included? ANS. NO, unless otherwise stipulated. Ex. sale of improvements (house) on a land does not convey title or right over the land. 4. Deliver the thing itself. What is the debtor refuses to deliver the thing itself ? ANS. The creditor can compel the debtor to make DELIVERY (specific performance) plus damages. NOTE: substitute performance not allowed. 5. Answer for damages in case of breach. What are the four(4) grounds for liability for damages: (1170) 1. Fraud (deceit or dolo) deliberate or intentional evasion of the normal fulfillment of obligation. Waiver of action for future fraud is VOID. Refers to incidental fraud (dolo incidente) fraud in performance of existing obligation. Causal fraud (dolo causante) fraud employed in the execution of contract; vitiates consent.

2. Negligence (fault or culpa) - voluntary act or omission, there being no malice, which prevents the normal fulfillment of an obligation. The omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time and of the place. (1173). Action for future negligence may be renounced except in some cases like in the exercise of extra-ordinary diligence of common carrier, it cannot be waived. BUT, if negligence shows bad faith, it is equivalent to fraud.

KINDS OF NEGLIGENCE: 1. 2. 3. Culpa contractual (contractual negligence) (1172) Culpa aquiliana (civil negligence) source of obligation Culpa criminal negligence resulting in the commission of a crime.

3. Delay (mora) see discussion below.

4. Contravention of the terms of the obligations violation of the terms and conditions of the obligation. NOTE: These grounds apply to all kinds of obligations. C. DUTIES OF DEBTOR in GENERIC REAL OBLIGATION

1. To deliver a thing which is of the quality intended by the parties. 2. To be liable for damages. D. What are the remedies of the CREDITOR in REAL OBLIGATION? In specific real obligation: 1. Demand specific performance or fulfillment with right to damages 2. Demand rescission or cancellation of obligation (in certain cases) with right to damages 3. Demand payment of damages only. In generic real obligation: 1.Demand the generic thing of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances. 2. Where there is lack of precise declaration in the obligation as to the quality, demand the delivery of the generic thing of medium quality (neither superior nor inferior). 3. Demand that the obligation be complied with at the expense of the debtor. NOTE: 3rd par. 1165. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for fortuitous event until he has effected the delivery. - This provision applies only to specific real obligation because in relation to fortuitous event, the principle is GENUS NUNQUAM PERIT (genus never perishes). E. PERSONAL OBLIGATION To do an ACT 1. Position Personal Obligation - ex. A agrees to construct a tree-house for B Remedies if debtor fails to comply with his obligation: 1. 2. Creditor has the right to have the obligation performed by himself or by another, unless personal considerations are involved, at debtors expense. To recover damages.

Remedies in case the obligation is done in contravention of terms or is poorly done: 1. Creditor asked from the Court to order that it be undone, if is still possible to be undone.

NOTE: Specific performance cannot be sought in a positive personal obligation because this may amount to involuntary servitude which, as a rule, proscribed by the Constitution.

1.

Negative Personal Obligation ex. A agreed not to construct a fence on his land without Bs prior approval.

REMEDY in case debtor does what has been forbidden him?

IT SHALL BE UNDONE AT HIS EXPENSE. NOTE: Since in this obligation, the duty of debtor/obligor is to abstain from an act, he obligation is fulfilled in not doing what is forbidden. Thus, the debtor cannot be guilty of delay. F. LEGAL DELAY (MORA) or DEFAULT The failure to perform an obligation on time which failure constitutes a breach of the obligation.

REQUISITES OF LEGAL DELAY 1. failure of debtor to perform his positive obligation on the date agreed upon. 2. demand (not mere reminder or notice) made by creditor upon the debtor to comply, judicially (filing of complaint) or extrajudicially (orally or in writing). 3. failure of the debtor to comply with such demand. DEMAND can only be made if the obligation is already due and demandable. The burden to prove that demand was made is on the CREDITOR. EFFECTS OF DELAY MORA SOLVEDI (delay on the part of the debtor): 1. 2. 3. Debtor is guilty of breach of obligation Debtor is liable for interest (obligation to pay money) or damages (in other obligations) Debtor is liable for fortuitous event in specific real obligation.

MORA ACCIPIENDI (delay on the part of creditor) 1. 2. 3. 4. 5. Creditor is guilty of breach of obligation Creditor is liable for damages Creditor bears the risk of loss of the thing due In obligation to pay money, debtor is not liable for interest Debtor may release himself from obligation by consignation

COMPENSTION MORAE (delay in reciprocal obligation) -delay of the obligor cancels the delay of the oblige and vice-versa, thus, no actionable default -In case of successive delay, the liability of first infractor shall be equitably tempered by courts. In cannot be determined contract deemed extinguished, and each bears his own damages. WHEN DEMAND IS NOT NECESSARY to put a debtor in delay (1169): 1. When the obligation so provides 2. When the law so provides 3. When demand would be useless as when obligor/debtor has rendered it beyond his power to perform. 4. When there is performance by one party in reciprocal obligations (compensation morae)

G. FORTUITOUS EVENT - event which cannot be foreseen or which though foreseen, is inevitable. Examples: war, fire, robbery (ACTS OF MAN); Earthquake, flood, shipwreck, eruption (ACTS OF GOD) GEN. RULE : A person is not responsible for loss or damage caused to another resulting from fortuitous event. EXCEPTION TO THE GEN. RULE: 1. When expressly specified by law. i. debtor is guilty of fraud, negligence or delay or contravention of obligation ii. debtor promised to deliver same specific thing to two or more persons who do not have the same interest iii. obligation to deliver specific thing arises from a crime iv. the thing to be delivered is generic. 2. When declared by stipulation 3. When the nature of obligation requires the assumption of risk. H. PRESUMPTION - inference of a fact not actually known arising from its usual connection with another which is known KINDS: 1. Conclusive cannot be contradicted ex. everyone is conclusively presumed to know the law. 2. Disputable presumption can be contradicted or rebutted Example: 1. 2. Receipt of principal by creditor, WITHOUT reservation as to interest, give rise to the presumption that the said interest has been paid. Receipt of later installment of a debt without reservation as to prior installments raise the presumption that such installments have been paid.

I. REMEDIES OF CREDITORS FOR THE SATISFACTION OF THEIR CLAIMS (1177) 1. Exact fulfillment (specific performance) plus damages 2. Pursue the leviable (not exempt from attachment) property of the debtor 3. Exercise all the rights (like right to redeem) and bring all the actions (like to collect from the debtor of his debtor) of the debtor except those inherent in or personal to the person of the debtor (ex. right to vote) 4. Ask the court to rescind or impugn acts or contracts in fraud of creditor when he cannot in any manner recover his claim. J . TRANSMISSIBILITY OF RIGHST - Subject to laws, ALL RIGHTS acquired in virtue of an obligation are TRANSMISSIBLE. SOME EXCEPTIONS: 1. Prohibited by law: rights in partnership, agency, commodadum (all are purely personal). 2. Prohibited by stipulation or agreement of the parties.

KINDS OF OBLIGATIONS ((Articles 1179 to 1230, NCC) I PURE OBLIGATION

Obligation whose performance does not

depend upon a future or uncertain event,

or upon a past event unknown to the parties. Simply stated, obligation whose performance does not depend upon a CONDITION.

DEMANDABLE AT ONCE.

Examples: 1. Wilbert promises to pay Tommy P500,000. 2. Emma binds herself to give a car to Albert. 3. I will give you a cellphone. 4. Mr. Cruz binds himself to Mrs. Dy not to II CONDITIONAL OBLIGATION sell his house.

It is an obligation whose consequences are subject in one way or another to the fulfillment of condition.
WHAT IS A CONDITION? It is a: (1) a future and uncertain event ; or (2) a past event unknown to the parties the happening of which gives rise or extinguish an obligation (or right). Two principal classification of condition: 1. Suspensive condition (condition precedent)

one the fulfillment of which will give rise to an obligation. Example: . . .if you pass Law 1. 2. Resolutory condition (condition subsequent)

the fulfillment of which will extinguish an obligation already existing. Example: . . .until you pass Law 1. Q. What makes a past event (which necessarily had already occurred) a condition ? A. The knowledge of the past event determines whether the obligation will arise or not. Q. What are the other classifications of conditions under the law? A. There are: Potestative condition - depends upon will of one of the contracting parties.

if depends on SOLE WILL OF THE DEBTOR, and suspensive in nature, Examples: I will pay you if i want.

conditional obligation is VOID.

I will continue to lease your property as long as I need the premises. EXCEPTION: If the obligation is a pre-existing one, only the potestative condition is void. Example: A borrowed P5,000 from B. Later, A promised to pay B after he sells his watch. Q. What is the status of obligation if the suspensive condition depends upon the sole will of creditor? A. The obligation is VALID because the creditor is normally interested in the fulfillment of the obligation since it is for his benefit. Example: I will pay you upon your demand. Q. If the resolutory condition depends upon sole will of debtor, is the conditional obligation valid? A. YES, because the fulfillment of the condition causes the extinguishment of the Obligation, and normally, the debtor is interested in its fulfillment. Example: right to repurchase in a sale with pacto de retro. Casual condition depends upon chance or upon will of a third person. Example: A binds to buy the land of B if he wins in lotto (or if C becomes the wife of D). Mixed Condition partly chance & partly will of 3rd person. Example: I will give you a rolex watch if UST wins its game against Ateneo and Jeric Teng scores 30 pts. Q. What is the effect of the happening of the condition in conditional obligations? A. It depends: Suspensive condition - gives rise to the obligation Resolutory condition - extinguishes the obligation Q. What is the status of a positive conditional obligation with impossible condition? A. It is invalid if the impossibility already existed at the time the obligation was constituted. The upon it is ANNULLED or invalidated.

obligation which depends

BUT, if the impossibility arises after the creation of the obligation, then the debtor shall be released from the obligation provided the impossibility is not due to his fault. Q. When is a condition impossible? A. A condition is impossible if it is contrary to law, morals, good customs, public order, or public when in the nature of things, it cannot exist or cannot be done (physical impossibility). Q. What is the effect of impossible condition in an obligation not to do or not to give?

policy (legal impossibility) or

A. The impossible condition is disregarded and the obligation is rendered pure and valid. Positive condition - It is one that some event will happen at a determinate time. Example John obliges to have a date with Cristy if Cristy tops the nursing board exam this year. Q. When will the obligation with positive condition be extinguished ? A. 1. Once the debtor fulfills his obligation. 2. As soon as the time expires without the event taking place; or 3. As soon as it becomes indubitable (sure) that the event will not take place although the time has not yet expired. Negative condition - A condition that an event will not happen at a determinate time. Example: John obliges to have a date with Cristy if Cristy does not top the nursing exam this year. Q. When will the obligation become effective and binding? A. From the moment the time indicated has elapsed without the event taking place OR From the moment it has become evident that the event cannot occur although the time indicated has not yet elapsed. Q. What happen to the obligation if the debtor voluntarily prevents the fulfillment of a suspensive condition? A. The condition is deemed fulfilled, hence, the obligation arises. Q. What if the debtor voluntarily prevents the happening of a resolutory condition? Q. What if it is the creditor who prevents the fulfillment of the resolutory condition? (see 1190). RETROACTIVE EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION.

Obligation to give retroact to the day when the obligation was constituted. WHY? Condition is only an accidental element of contract. THUS, obligation is should be considered from the time it is constituted and not from the time the condition is fulfilled.

Obligation to do and not to do court will determine the retroactive effects bearing in mind the intent of parties and its use of sound discretion. Q. What can the creditor do before the fulfillment of the condition ? A. Creditor can bring appropriate action for the preservation of his right (like prevent alienation of property, annotate his right in the registry of property etc.). Q. HOW ABOUT THE DEBTOR? A. Recover what he has paid by mistake.

Art. 1189 Rule in case of loss, deterioration, or improvement of thing during pendency of suspensive condition in specific real obligation. (memorize) Loss: with debtors fault liable for damages without (like due to fortuitous event) obligation to deliver extinguish Deterioration: with debtors fault, creditor may choose between fulfillment of obligation or rescission with damages in either case without debtors fault, deterioration shall be borne by the creditor Improvement: by nature or time, the improvement inures (goes) to the creditor at the expense of debtor, the debtor has right of a usufructruary (that, is the right to enjoy and remove the improvement provided it will not damage the specific thing). Q. A. What is the retroactive effect of fulfillment of resolutory condition? It depends:

In real obligation, there is mutual restitution of things received plus debtor's right to fruits and interest. In positive and negative personal obligations, the Court determines retroactive effect. Q. What are the remedies of injured party in reciprocal obligation? A. Specific performance (fulfillment) with damages; OR Rescission of the obligation with damages. v HOWEVER, the court may give the guilty party term for performance. (applicable if guilty party is willing to comply with his obligation but needs time to do so). v RIGHT TO DEMAND RESCISION IS NOT ABSOLUTE. Q. What are the kinds of obligation according to the person obliged (debtor)? A. Unilateral one party is obliged Bilateral both parties are bound to each other 1. Reciprocal obligation performance is conditioned upon the performance of the other. (ex. contract of sale) 2. Non-reciprocal obligation do not impose simultaneous and correlative performance.