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Aligada
jumieann1C
22 November 2011
-codal definition is incomplete, because it is viewed only from the standpoint of the
debtor
-an obligation is a juridical relation whereby a person known as the creditor, may
demand from another, known as the debtor, the observation of a conduct, known as
the prestation, and in case of breach, may obtain satisfaction from the assets of the
latter.
-complete, it mentions both parties (active & passive subjects) and the object of an
obligation (always a prestation), duties of the parties, and remedies in case of breach
1. Active subject
2. Passive subject
3. Juridical tie
4. Prestation
** All of them go into the very essence of the obligation so that absence of one will
render the obligation void
Active Subject
-creditor
Passive Subject
-obliged to perform
-debtor
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Natural and Juridical persons- because the law does not make a distinction
Natural persons can do anything as long as the law does not prohibit them
25 November 2011
-to give
-to do
Efficient cause
Sources of an Obligation
1. Law
-cannot be presumed
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
2. Contract
-whatever the parties agree on, it shall be the law between them
Right to stipulate
The parties have the right to decide whatever should be in the contract
Right to contract
3. Quasi-Contract
-is juridical relationship resulting from lawful, voluntary, unilateral act for the
purpose of providing compensation to the end that no one should be unjustly
enriched at the expense of another
28 November 2011
A unilateral act can never give rise to a contract, hence it is not a contract
2 Kinds of Quasi-Contracts (not the only kind, but the most common)
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-even if the gestor brings in losses instead of profits, he shall still be compensated
because the basis of the obligation to compensate is/are service/s rendered
-obligation that is said to arise, to return what has been paid by mistake
According to Respondent:
1. voluntary
3. already used for the construction & maintenance of roads. Petitioner was one
of its beneficiaries
Held:
-a case of solutio indebiti, under such principle, whenever something was paid by
mistake, the recipient acquires no right to that payment
4. Crimes
Governed by:
-penal laws
-human relations
-damages2
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2!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.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Civil Liability
** Acquittal beyond reasonable doubt/ the accused did not commit the offense,
there is no civil liability.
29 November 2011
Crime as an obligation:
-a person entitled to recover damages from both law should choose which law to
recover from
-no law that provides for recovery of damages for breach of promise to marry made
by the father
02 December 2011
a. Fraud
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!Art.'100.!Every!person!criminally!liable!for!a!felony!is!also!civilly!liable.!
3
4!Art.'2177.!Responsibility!for!fault!or!negligence!under!the!preceding!article!is!entirely!separate!and!distinct!from!the!civil!liability!arising!from!negligence!
under!the!Penal!Code.!But!the!plaintiff!cannot!recover!damages!twice!for!the!same!act!or!omission!of!the!defendant.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
b. Negligence
c. Delay
d. Breach of contract
2 (TWO)
The law provides in Art. 1170 of the Civil Code that those who in the performance of
an obligation are guilty of FRAUD, shall be liable for damages.
b. CULPA CONTRACTUAL
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
5!Art.'1170.!Those!who!in!the!performance!of!an!obligation!are!guilty!of!fraud,!negligence,!delay,!and!those!who!in!any!manner!contravene!the!tenor!
thereof,!are!liable!for!damages.!
!Keywords,!do!not!forget.!
6
!A!marriage!may!be!annulled!for!any!of!the!following!causes,!existing!at!the!time!of!the!marriage:!
7 ! ! !
3.)!That!the!consent!of!either!party!was!obtained!by!fraud,!unless!such!party!afterwards,!with!full!knowledge!of!the!facts!constituting!the!fraud,!freely!
cohabited!with!the!other!as!husband!and!wife;! !
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
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Under the law, an action for future negligence may be waived, provided, it is
SIMPLE NEGLIGENCE because gross negligence is tantamount to fraud which cannot
be waived.
(Art. 1171. Responsibility arising from fraud is demandable in all obligations. ANY
WAIVER OF AN ACTION FOR FUTURE FRAUD IS VOID.)
*8 Therefore, under the law, waiver of an action for FUTURE FRAUD or GROSS
NEGLICENCE is not allowed.
What is DELAY?
**9 Mere non-performance of a duty does not necessarily put a debtor in delay
because when the law speaks of delay, it means, CULPABLE DELAY (delay due to the
fault of the debtor).
** If the non-performance is not due to the fault of the debtor, then there is no
delay.
KINDS OF DELAY/MORA:
Mora Accipiendi- is delay on the part of the creditor to accept performance offered
by the debtor.
Compensatio Morae- since both parties are in delay, the delay of one compensates
that of the other.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
8 !(*)!Jumie!
9 !(**)!Important!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
** Generally, there are 3 kinds of Mora, however, Mora Solvendi is further classified
in to 2 kinds.
3. When the period is a controlling motive or the principal inducement for the
creation of the obligation.
05 December 2011
Duties of an Obligor
In an Obligation, there are 3 prestations, to give, to do, or not to do, including not to
give.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
! ! 10 !Tolentino,!A.M.!(1987).!Vol.IV,!Civil!Code!of!the!Philippines!.!p.!104!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
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SPECIFIC THING:
If the thing to be given however, is GENERIC, the principal duty of the Obligor is to
give the thing promised, and thats all.
NOT TO DO/GIVE- duty of the obligor is to desist from doing or from giving what he
promised not to do or not to give.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!Art.1163.!Every!person!obliged!to!give!something!is!also!obliged!to!take!care!of!it!with!the!proper!diligence!of!a!good!father!of!a!family,!
11
unless!the!law!or!the!stipulation!of!the!parties!require!another!standard!of!care.!
12 !Art.!1164.!The!creditor!has!a!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.!1166.The!obligation!to!give!a!determinate!thing!includes!that!of!delivering!all!its!accessions!and!accessories,!even!though!they!may!
13
not!have!been!mentioned.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
In an Obligation TO GIVE:
1. Specific Performance
2. Rescission
In an Obligation TO DO:
2. Equivalent Performance- he can simply ask for damages if he does not want
substitute performance. 15
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
! ! 14 !(Art.!1170Z!breach!of!contract!as!source!of!DAMAGES)!
! ! 15 !(Art.!1170Z!breach!of!contract!as!source!of!DAMAGES)!
16 !Art.168.!When!the!obligation!consists!in!not!doing,!and!the!obligor!does!what!has!been!forbidden!him,!it!shall!be!undone!at!his!expense.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
** If the source of the Obligation is a contract, and the obligation is to give, even if
the contract is silent of these additional duties, they are part & parcel of the obligation
TO GIVE.
** The contract may be silent or may provide only the primary duty.
** Additional duties may also arise from contracts; all of them may come down as
principal duties.
From the moment of perfection of contract and continues until the moment of
delivery.
The degree of care that the law requires in the preservation of the thing is the
diligence of a good father of a family.
Is the degree of care required by law should always be equal to the diligence of a
good father of a family?
Can we say that the degree of care depends upon the agreement in the contract or
what the law provides?
1. If the contract is silent, the general rule on the standard of care shall be applied.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-not only the thing due, but also the fruits, as well as the accessories &
accessions.
To what kind of fruits does the law refer under Art. 1164?
1. Natural Fruits- spontaneous product of the soil and the young of an animal no
matter how they are produced.
2. Industrial Fruits- product of the soil and the young of an animal with the
intervention of a human being.18
3. Civil Fruits-
** They are Natural Fruits if they came to existence as a product of the soil, but if
they are planted by persons, they are no longer spontaneous products of the soil, they
become Industrial Fruits.
Can the obligation to preserve the thing due, deliver the fruits, accessories &
accessions be waived?
Obligations cannot be waived, only rights, but even waiver of rights is subject to
limitations.19
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
17!Art.1163.!Every!person!obliged!to!give!something!is!also!obliged!to!take!care!of!it!with!the!proper!diligence!of!a!good!father!of!a!family,!unless&the&law&
or&the&stipulation&of&the&parties&require&another&standard&of&care.!
18 !Jumie!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-DELAY-
If the parties have fixed the date for the fulfillment of an Obligation, is demand still
necessary?
When one of the parties offers to perform or actually performs and the other
party is not ready to comply with what is incumbent upon him, delay exists.
Is an Obligation where the parties are creditors and debtors of each other but
their respective obligations arise from the same cause, so that performance by one is
conditioned by the performance of the other.
NO.
Bilateral Obligation- their Obligations do not arise from the same cause.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
19 !Art.!6!of!the!Civil!Code!states:!
Rights!may!be!waived,!unless!the!waiver!is!contrary!to!law,!public!policy,morals!or!good!customs,or!prejudicial!to!a!third!person!with!a!
right!recognized!by!law.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
2. In Reciprocal Obligations
06 December 2011
If the Obligation is Reciprocal, what takes the place of demand is an offer or actual
performance of one and the other party is not yet ready to comply with what is
incumbent upon him.
In Bilateral Obligations, obligations are imposed on both sides, but their respective
obligation does not arise from the same cause, that is why it is not called reciprocal.
If demand is necessary in order to put the debtor in delay, when must demand be
made?
It is the time when the creditor acquires the right to enforce the obligation.
Before the arrival of the due date, the creditor does not have a right.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
! ! 20!!Art.1169.!Those!obliged!to!deliver!or!to!do!something!incur!in!delay!from!the!time!the!obligee!judicially!or!extra!judicially!demands!!
! ! from!them!the!fulfillment!of!their!obligation.!However,!the!demand!by!the!creditor!shall!not!be!necessary!in!order!that!delay!may!exist:!!
1. When!the!obligation!or!the!law!expressly!so!declares;!or!
2. When!from!the!nature!and!the!circumstances!of!the!obligation!it!appears!that!the!designation!of!time!when!the!thing!is!to!be!delivered!or!!
! the!service!to!be!rendered!was!a!controlling!motive!for!the!establishment!of!the!contract;!or!!
3. When!demand!would!be!useless,!as!when!the!obligor!has!rendered!it!beyond!his!power!to!perform.!
! In!reciprocal!obligations,!neither!party!incurs!in!delay!if!the!other!does!not!comply!or!is!not!ready!to!comply!in!a!proper!manner!with!!
! ! what!is!incumbent!upon!him.!From!the!moment!one!of!the!parties!fulfills!his!obligations!delay!by!the!other!begins.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
For purposes of determining where demand should be made, what are the rules to be
observed?
Rules:
If the contract specifies where payment should be made, then it should be made as
agreed upon.
Specific- the place where the thing was at the time of the constitution of the contract
except where the thing is in motion or in transit, then in the domicile of the debtor.
What is domicile?
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
21 !Art.'1251.!Payment!shall!be!made!in!the!place!designated!in!the!obligation.!!
! There!being!no!express!stipulation!and!if!the!undertaking!is!to!deliver!a!determinate!thing,!the!payment!shall!be!made!
wherever!the!thing!might!be!at!the!moment!the!obligation!was!constituted.!
! In!any!other!case!the!place!of!payment!shall!be!the!domicile!of!the!debtor.!
! If!the!debtor!changes!his!domicile!in!bad!faith!or!after!he!has!incurred!delay,!the!additional!expenses!shall!be!borne!by!him.!
! These!provisions!are!without!prejudiced!to!venue!under!the!Rules!of!Court.!
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
The place where a person may be absent from but has the intention of returning
to. It is PERMANENT.
If the proper place of payment is the debtors domicile, and the debtor keeps on
changing his domicile to evade payment, where will be the proper place of
payment?
It is still the debtors new domicile whether in good faith or bad faith.
The debtor who changes his domicile in bad faith shall be liable for all the
expenses incurred by the creditor in tracking down the whereabouts of the debtor.
A demand is not a reminder, it must indicate that he wants to enforce the obligation.
It will be a valid demand if he has a TV set, but even if he has a TV set, if it is out of
order, or he is tune in another channel, then it is invalid.
The law requires that demand must reach the other party.
03 January 2011
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
However, in so far as the rate of interest is concern, the Monetary Board, who is
authorized to regulate & fix the charging of interest, removed the ceiling on interest
rate through a resolution.
The Anti-Usury law is not in effect anymore for as long as the suspension exists.
The Monetary Board is the only government agency that is authorized to fix, regulate &
supervise the rate of interest in the country.
1. Moratory Interest
2. Compensatory Interest
Moratory- No
Compensatory- Yes
2. Kind- determined based on the value of the thing at the time of payment
! 17!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
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COMPOUNDING OF INTEREST
The law says, when interest becomes due but remains unpaid, that will not earn
interest.
Interest that has become due that has not been paid does not earn interest.
(repeat chorus)
Interest on Interest
The law does not expressly prohibit, but the law does not favor it either.
Suppose interest was paid, but there was no Obligation to pay, may the interest be
recovered?
If the parties did not agree but despite not agreement, interest was paid, it may
be recovered.(Solutio Indebiti)
If there was an agreement but was made orally/verbally, interest was paid, it
cannot be recovered since it becomes a Natural Obligation.
! 18!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
NATURAL OBLIGATION- valid but not enforceable and not recoverable. Sanction is
justice, equity, & conscience.
Article 1175
Z does not mean that parties can just stipulate on any rate
Z the Court said it was unconscionable but it did not say what was conscionable
If the parties agreed on the payment of interest and fixed the rate of interest, the legal
rate cannot be applied.
Did the MB Resolution abolished, repealed, modified the 6% per annum sanctioned by
the Civil Code?
! 19!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Whether the MB Resolution repealed the Civil Code, the answer is NO.22
MB is not a lawmaking body, although it is vested with the power to promulgate rules
& regulations, it does not have the power to repeal laws.
Liability not arising from loan nor forbearance of money, 6% per annum must be the
legal rate.
When the obligation involves a loan or arises from a loan, forbearance of money,
chattels, credit, or judgment thereon, the legal rate of 12% should apply.
-if the judgment becomes final and executory, still the judgment debtor refuses to
pay, the obligation becomes a forbearance of money, in which case, a legal rate of
12 % per annum is justified.
06 January 2012
Should a debtor fail to comply with his obligations, what remedy or remedies does the
law provide to the creditor?
1. Specific Performance
2. Rescission
3. Damages
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
22 !Article!7,!Civil!Code!provides:!
Laws!are!repealed!only!by!subsequent!ones!
! 20!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
You can combine Specific Performance or Rescission with Damages, but not Specific
Performance & Rescission because they are incompatible with each other.
DAMAGES- to take the place of whatever injury may have suffered by the creditor as
a consequence of the debtors non fulfillment of the obligation
In addition to the 3 Principal Remedies, what are the ancillary remedies provided by
law?
3. An Action Pauliana
- Go after the debtors properties, but before you can levy, you must first become a
judgment creditor.
-must first go to court, bring an action, and if you get a favorable decision, then you
can enforce the judgment against the debtor.
-5 years, from the time the judgment becomes final and executory
If the judgment remains unsatisfied, what will be next remedy of the creditor?
(assuming there is no property)
! 21!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
1st Action
2nd Action
If after the second 5 years, the creditor still has nothing to collect, what now is his next
remedy?
What do you mean against the property of the debtor? Can the creditor choose?
Under the Rules of Court, whenever a creditor levies on the debtors property, he
cannot execute on the real property without exhausting first the personal property of
the debtor.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
In levying the property, can you levy on any property as long as it is personal?
Yes, any property. However, a debtor is given by law the right to claim
exemption (for practice of profession) up to a certain amount determined by law.
(Fixed by law)
Suppose the judgment could not be executed for lack of properties, what is the
second ancillary remedy?
An Indirect Action
Why?
-because the creditor cannot bring the action in his own name
Debtor
Why?
-there are no ties that bind the creditor to the debtors debtor.
No.
In Lease Contracts
Z even if the sub-lessee is up to date, if the sub-lessor is not, the lessor may kick
them out both
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Action Pauliana
To illustrate:
-only a vintage car, but does not want to lose because of personal & sentimental
reason
No, because the contract must be valid, if it is void, it does not lie.
RESCISSION
-harsh remedy, so that availment of such is allowed by law only after the creditor has
exhausted all the remedy
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Common Purpose
-to reach out assets or properties of a debtor which has been concealed
All Ancillary Remedies must be availed first in order to avail Rescission as a remedy
Preliminary Examinations
13 January 2012
1. Immediately demandable OR
Condition
! 25!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Period
Sometimes you may not know when it will come but it is certain
E.g. death
Table 1
DISTINCTION
CONDITION PERIOD
Elements: Elements:
1. Futurity 1. Futurity
2. Uncertainty 2. Certainty
! 26!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
03 February 2012
The mere attachment of these conditions does not necessarily make the obligation
void.
1. If you can separate from the rest of the obligation and it can stand, only those that
are subject to illegal, impossible or negative condition are void.
If the obligation is subject to a period, when may the performance of the obligation be
demanded?
The effect that will be produced will depend for whose benefit the period has been
attached.
! 27!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
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1. If the period was attached for the benefit of the debtor alone, upon the arrival of
the period, it can be demanded. It cannot be demanded before the arrival of the
period.
2. If the period was attached for the benefit of the creditor alone, it can be
demanded at anytime, even before the arrival of the period.
3. If the period was attached for the benefit of both parties, neither party can
demand the performance of the obligation until after the arrival of the period.
Whenever the parties have agreed on a period for the performance of the obligation,
the presumption of the law is (Art. 1196).
Therefore, both will have to wait for the arrival of the period.
The only presumption created by law by the establishment of a period, is that, it is for
the benefit of both parties.
Whenever a period has been fixed, the presumption of the law, that particular
provision applies only to period fixed by the parties, but not to period fixed by the
courts.
Article 1198. The debtor shall lose every right to make use of the period:
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 gives new ones equally satisfactory;
! 28!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
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Article 1198 contemplates a period, which is suspensive in character but in order that
Article 1198 may be applicable to any given case, the period agreed upon which is
suspensive must be for the benefit of the debtor alone, if not, Article 1198 will never
apply, so that, if the period agreed is for the benefit of the creditor alone or both
parties, Article 1198 does not apply.
Notice that Article 1198 speaks of the debtor losing the benefit of a period, the period
referred to is suspensive and before he loses the same, it must be for his benefit
06 February 2012
1. Pure Obligations- obligations that are neither subject to a condition nor a period.
5. Obligations subject to a suspensive period but the debtor has lose the right to make
use of the period
Article 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;
EXCEPTION: But even if the insolvency exists before the obligation, if the creditor
does not know he is insolvent, then the debtor will also lose the right to make use
of the period.
! 29!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Judicial Insolvency
1. Voluntary- if the debtor himself goes to court and asks to declare him insolvent.
2. Involuntary- when it is the creditor who goes to court and asks to declare the
debtor insolvent.
Will it release the debtor from his obligation when he is declared insolvent?
When the court issues a DISCHARGE, that will release him from his obligations
Suspension of payment does not mean the debtor is insolvent, but that he is not liquid.
An insolvent person does not mean he is property less; or even if he does not
have a single property in his name, there can still be a third person because under the
law on guarantee, if he can find a friend to bail him out and provide the guarantee for
him.
2. When he does not furnish to the creditor the guaranties or securities which he
has promised;
Will it make any difference under paragraph 2 if instead of what was given is
more valuable than what was promised?
! 30!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
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jumieann1C
-therefore, as long as the debtor did not comply, there is no exception, the rule
is absolute
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 gives
new ones equally satisfactory;
-the impairment must take place after the establishment of the guaranty or
security
Causes of Impairment:
The debtor is not entitled to be given time, he is not given the luxury of time
Neither of them
-the one who will determine is not the debtor or creditor alone, it should be both
parties, if the parties cannot agree, let the court determine.
! 31!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
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4. When the debtor violates any undertaking, in consideration of which the creditor
agreed to the period;
Not necessarily
It depends, if those 4 were not the undertaking that made the creditor
agree to the period, then he can still make use of the period, but if it were or one of
those was the undertaking that made the creditor agree to the period, then he loses
the right to make use of the period
-the undertaking that was violated should be the one that made the creditor
agree to it
Not actual absconding, mere attempt to hide from the creditor is what is
provided by the law
The debtor must go into hiding where his whereabouts is unknown to the creditor
Will the mere presence of all the 5 make the debtor lose the right to make use of the
period?
No, if the period agreed upon is not for the benefit of the debtor alone, this
provision will not apply.
This Article applies for suspensive period and for the benefit of the debtor alone.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Article 1179 defines what a condition is but the codal definition does not truly satisfy
It must be future AND it must be uncertain, notice the conjunction AND used, in the
codal definition OR was used.
If we will follow the codal definition, it is not true that the elements of condition are
futurity and uncertainty
If it is a thing in the past, technically it is not a condition anymore, but the law says that
even if it is a thing in the past but it is uncertain, it becomes a condition
Death is a certain event, but if the cause of death is specified, then it becomes a
condition
GO BACK TO TABLE 1
-NO
-the potestative condition will only be void if it depends solely upon the debtor alone
because it will render the obligation nugatory
-If the potestative condition depends upon the will of the creditor, it is valid, because
between the two parties, the creditor is the most interested in the performance of the
obligation.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
A potestative condition is one, which depends upon the will of one of the contracting
parties.
A casual condition is one, which depends exclusively upon chance or other factors
and not upon the will of the contracting parties.
A mixed condition is one, which depends upon the will of one of the contracting
parties and other circumstances, including the will of a third person.
Even if the period is dependent upon the will of the debtor alone, obligation is still
valid, only that the court becomes empowered to fix the duration of the period.
Article 1197. 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.
The courts shall also fix the duration of the period when it depends upon the will
of the debtor.
In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them.
The court does not have the power to determine whether there is a period or not.
Period and duration are not the same, it is given that the obligation has a period.
2 Instances:
1. If the parties to an obligation have agreed on a period but they failed to stipulate
on the duration of the period.
Both instances, there is a period, what is not known is the duration of the period
Gregorio Araneta, Inc v. The Philippine Sugar Estate Company, Ltd. (1967)
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
The Court cannot fix a period merely because in its opinion it is or should be
reasonable, but must set the time that the parties are shown to have intended.
-What is in the mind of the court to be reasonable is not material, it should not be the
basis in fixing the duration of the period.
After the court shall have fixed the duration of the period, can it be changed? By
them? Who is them?
-the Court cannot change it because once the duration of period has been fixed, it
becomes part and parcel of the contract.
Effects.
Article 1190. When the conditions have for their purpose the extinguishment of
an obligation to give, the parties, upon the fulfillment of said conditions, shall return to
each other what they have received.
! 35!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
As for obligations to do and not to do, the provisions of the second paragraph
of Article 1187 shall be observed as regards the effect of the extinguishment of the
obligation.
But this should be understood to include also the rights of the creditor.
Article 1189. When the conditions have been imposed with the intention of
suspending the efficacy of an obligation to give, the following rules shall be observed
in case of the improvement, loss or deterioration of the thing during the pendency of
the condition:
1. If the thing is lost without the fault of the debtor, the obligation shall be
extinguished;
2. If the thing is lost through the fault of the debtor, he shall be obliged to
pay damages; it is understood that the thing is lost when it perishes, or
goes out of commerce, or disappears in such a way that its existence is
unknown or it cannot be recovered;
3. When the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor;
4. If it deteriorates through the fault of the debtor, the creditor may choose
between the rescission of the obligation and its fulfillment, with indemnity
for damages in either case;
! 36!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Should it happen that the creditor loses not only his right to the obligation but also the
ownership of the object, he is obliged to return the object.
No. 5 Obligations subject to a suspensive period but the debtor lose the right to make
use of the period.
-NEVER
-For it to exist, there must always be plurality of parties, and this may exist under the
debtors side or the creditors side or on both sides.
-No
-The law does not require for an obligation to become solidary that the name be used,
as long as the ------------ ---------------- solidary
Solidarily
In solidium
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Sum of money which the Plaintiff was seeking from the 3 defendants
Before the case was decided, the parties entered into a compromise agreement
Condition:
1. Plaintiff agreed to reduce his claim to 110,000 pesos, from 117,000 pesos,
condoning the 17,000 pesos.
2. The 4 defendants shall pay 50% of the 110,000 pesos on the day specified in the
compromise agreement. The balance of 50% specified in the compromise
agreement shall also be paid.
3. For all obligations above mentioned, we------- hereby bind ourselves to the
Plaintiff, jointly and individually. ---signed.
Ronquillo, manifested to the court that he was willing to pay his share in the obligation
What is the meaning of jointly and individually; does it connote joint obligation or
solidary?
SC:
This is issue is not new because we have ruled on this in a prior case Parot vs. Gemora
-juntos or separadamente
! 38!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
In Active Solidarity, the law says, anyone of the solidary creditors can demand
payment from any solidary debtor.
In Passive Solidarity, the law says, anyone of the solidary debtor can pay the entire
obligation to any solidary creditor.
07 February 2012 PM
Why is each and every one given the right to demand payment from any solidary
debtor?
-Because the PRINCIPLE of MUTUAL AGENCY governs the relationship existing among
solidary creditors
Mutual Agency- means that whenever anyone of the solidary creditor acts, said
creditor acts not only on his own behalf, but also in behalf of the other solidary
creditors.
in Passive Solidarity, each and every debtor can be compelled to pay the entire
obligation
Mutual Guarantee- means that each solidary debtor guarantees payment for the
other solidary debtors.
So that
When anyone of the solidary creditor demands fulfillment to any solidary debtor, the
debtor who receives the demand can only pay to the demanding creditor.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Should a solidary debtor pay to a solidary creditor who did not demand, payment is
considered paid to a third person, that solidary debtor can be compelled to repeat
such payment.
-Because in solidarity,
if it exists on the creditors side, the law grants in each solidary creditor
tremendous power because anyone of them can demand full payment.
If it exist on the debtors side, the law imposes in each solidary debtor
tremendous burden because anyone can be compelled to pay the entire obligation.
So much so that those 3 things that were just mentioned, they are said to be the test of
solidarity.
So that when you are given a problem whether they are solidary or not,
If still the answer is no, the presumption of the law is it is joint obligation.
Example:
! 40!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-That is if a promissory note, the pronoun I is used but the note is signed by several
makers, if the promise to pay uses the pronoun I, but there are several makers, the
obligation is solidary.
-If the pronoun WE is used and there are several makers of the note, the obligation is
joint only.
WHY?
Because with the use of I with several makers under the note, each one of the
makers makes an individual promise to pay the obligation.
Because with the use of WE, with several makers under the note, the several makers
are making a collective promise to pay, therefore, the obligation simply becomes joint
& not solidary.
If an instrument is not negotiable, despite the use of the pronoun I, it does not
become solidary.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
(e) Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.
Illustration No. 1:
While the general rule is that, the debtor can pay to any of solidary creditor, the
exception is when there is demand.
Since no demand was made to them, the general rule can apply.
YES
What will apply to X is the general rule because there was no demand made to
Y or Z.
Illustration No. 2:
! 42!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Situation: X pays the entire obligation, the effect will be extinguishment of the
obligation, what will be the effects as against the other debtors?
YES
No, because the law says, should a solidary debtor made to pay, he acquires
the right to seek reimbursement up to the extent of the respective share of his co-
debtors.
The co-debtors are obliged to pay the paying debtor up to extent of their
respective share in the debt
NO, because if we are to subrogate the paying debtor, that means giving to the
paying debtor all the rights of the solidary creditors, if allowed, he will be able to
collect not only the share of his co-debtors, but the entire amount of the obligation
including his share which is not right.
Subrogation means to take the place of somebody else, and if you are said to be
subrogated to the rights of someone, you are allowed to acquire all the rights of this
person as against another.
May the solidary debtors agree that 1 of them will not share in the debt?
Yes
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Valid only as between the debtors themselves, because they bound themselves
solidarily to the creditors, said agreement would not bind the creditors because
the creditors were not parties to the agreement.
The creditors can still demand from any of the solidary debtor the full amount
regardless of the agreement of the solidary debtors.
Cases:
1.
2.
13 February 2012
Illustration No. 3:
A or B or C
So that, should any one of them acts, that creditor acts not only on behalf of
himself but also in behalf of Y & Z
The moment one creditor acts, made a demand, with respect to the debtor,
mutual agency ceases because the rights of Y & Z are fully concentrated.
! 44!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Since there is no demand yet, the principle of mutual agency still exists.
No
Because in so far as B & C are concerned, since no demand has been made
yet, the mutual agency exist including X
In the case of A, because demand has already been made, mutual agency ceases,
he cannot pay to Y or Z
All the rights that belong to Y and Z are FULLY CONCENTRATED to X, but not with respect
to B & C.
In Solidarity, does the law require that the parties (debtors) be bound by the same
terms?
NO, parties in solidary obligation need not be bound by the same terms and
conditions.
Illustration No. 4
Jan 10 A 300 X
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Mar 10 B 200
April 5 C 500
June 6 D 300
Dec 10 E 200
VALID
On Jan 10, only 300 should be paid because that is the amount that fell due.
A will have the right to seek reimbursement only from B because what has
become due is only the 200, share of B
Because that is what corresponds to his share that has become due
Illustration No. 5
The law says, none of the solidary creditors may do anything prejudicial to the other
creditors, only those that are beneficial.
XYZ creditors
ABC debtors
! 46!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Principle of Mutual Agency, under the law on Agency, the agent cannot do
anything prejudicial to his principal because he is always considered as extension of
the personalities of the principal.
Illustration No. 6
Article 1215
Provided the acting creditor delivers the respective share of the other creditors
Whether the obligation was performed or not becomes immaterial because the
creditors receive what is due them.
Should the acting creditor, after performing the act he did, becomes insolvent, what
will be the status of the act of the creditor?
The remedy should have been to recover from the acting creditor but because of
insolvency, they do not have remedy.
14 February 2012 AM
ALTERNATIVE OBLIGATIONS
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
1. Conjunctive obligation
2. Alternative obligation
3. Facultative obligation
Conjunctive Obligation
-several things are due and to extinguish the obligation, all must be complied
with.
Alternative Obligation
Facultative Obligation
-there is only one thing due but the debtor reserves to himself the right to
substitute the thing due.
Conjunctive Obligation
-that if among the several things due , one is unlawful/impossible, it will affect
the validity of the obligation because of the requirement that all should be complied
with.
-since compliance with one is sufficient, there is a right of choice which does not
exist in Conjunctive obligations
Yes. In favor of the creditor or a third person but must be by mutual agreement,
it cannot be left to only one party.
Facultative Obligation
! 48!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
The debtor cannot choose an object that is illegal, impossible, & which was not
contemplated by the parties
If the right of choice belongs to the debtor, once the debtor has made the choice,
can he change?
It depends. As long as the choice of the debtor has not come to the knowledge
of the creditor, it is still alternative
In Facultative obligation
Suppose the principal thing due is lawful, and the debtor intended to substitute that
unlawful?
*Not valid
What determines the legality or validity of an obligation is the validity of the principal
thing due
! 49!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Causing the lost, it is like exercising the right to choose, what determines if
the debtor is liable or is how the last thing got lost
Yes
If specific share of one solidary debtor that has been condoned or remitted will
result to partial extinguishment, it shall be reduced to what has been condoned
If not part but only the solidary tie, what will be extinguished is only the tie that
binds the debtor to the creditor
-Commodatum
What passes from lender to borrower is the possession and use of the thing
! 50!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
There is no substitution
To grant to the borrower the right to possess & use the thing borrowed is the
purpose of the law
Bank deposit- not governed by law on deposit, contract is governed by law on loan
Contract of loan
You: Lender
Bank: Borrower
In solidary obligations, should the thing get lost through the fault of only one of the
solidary debtors:
! 51!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
All the debtors will be liable to the creditor, not only the value of the thing lost
but also the interest and for damages
However, the law says, should the thing due get lost through the fault of one of
the solidary debtors, if one who was made to pay is an innocent debtor, such debtor,
despite his innocence shall be liable for the value of the thing due, interest &
damages, he is given by law the right of recourse against the guilty debtor.
So that, in the end, it is the guilty debtor who pays the full amount
Should the guilty debtor be made to pay, he shall be liable for the value of the thing
due, interest, & damages, and without the right of recourse.
Following the provision of the law, the purpose of the penalty is to serve as a
substitute for indemnification for damages.
YES. Provided such injured party can prove that he suffered injury/damage by
the breach of the guilty party (this proof is indispensable)
That is, if an obligation does not contain a penal clause and breach is
committed, recovery of damages is dependent from the proof of injury suffered
(condition precedent)
! 52!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Because the remedy of the innocent party is to claim for the penalty but he
does not have to prove that he suffered a damage/injury but he has to prove that
there is breach
If an obligation contains a penal clause, can the injured party recover both damages
& penalty?
Yes.
3 INSTANCES:
3. When the debtor is guilty of fraud in the performance of the obligation (Dolo
Incidente- kind of fraud which is a source of damages)
REMEMBER:
If an obligation does not contain a penal clause, and breach was committed, only
damages can be claimed
Any kind of penalty as long as that agreed upon is not contrary to law, morals,
good customs, public order or public policy
! 53!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Subject to the limitation of the right to stipulate as well as the right to contract
Art. 1306
Suppose the parties have agreed on a penalty that can be recovered in case breach
is committed, can that penalty be reduced?
Yes.
The kind of penalty that can be reduced by the court is one that is valid and not
a null & void penalty because it does not exist in the eyes of the law, therefore,
nothing can be reduced
3. Even if there has been no performance at all, if the penalty is found to be iniquitous
and unconscionable
Partial
Answers the question, how much of the obligation has been performed?
Extent of performance
Irregular
There can be total performance but not within the tenor of the obligation
Manner of performance
Unconscionable
When the agreed penalty becomes shocking to the conscience of the world
! 54!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
When may this provision be availed of, the power of the court to reduce the penalty?
Commercial Credit Corporation CDO vs. The Court of Appeals and The CDO
Coliseum, Inc. (1989)
ART. 1229. The Judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
The foregoing provision of the law applies only to obligations or contract, subject of a
litigation, the condition being that the same has been partly or irregularly complied
with by the debtor. The provision also applies even if there has been no performance,
as long as the penalty is iniquituous or unconscionable. It cannot apply to a final and
executory judgment.
The benefits of this provision can be availed of only when the obligation with a penal
clause became a subject of court litigation.- DA
As long as it is not brought to a court, the penalty agreed upon cannot be reduced in
accordance with the provision.
Not when parties agreed to reduce an agreed penalty, this can be done.
14 February 2012 PM
Prescription
! 55!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-The Court in the case of DBP, said, that Prescription does not extinguish an obligation;
what is extinguished is the right of the creditor to enforce the obligation.
Such that, after an Obligation has prescribed and the creditor still seeks to enforce the
same, the debtor can invoke Prescription as a defense on the claim that once an
Obligation has prescribed, the creditor loses the same.
-In Civil Obligation, the sanction is court action, whereas in Natural Obligation, the
sanction is justice & equity.
The entire Chapter in Natural Obligation is new which was taken from the American
Law.
For example, an Obligation involving debt in money exists; let us assume that the
Obligation is in writing, under the Law on Prescription, what is the period of
prescription? -10 years.
(Juliet Juliet)
If the creditor does not enforce the Obligation within that prescription of 10 years, the
Obligation is not extinguished.
If on the 90th year, assuming parties are still alive, the debtor offers to pay and the
creditor accepts the payment, is the obligation extinguished?
-Yes, what extinguishes the obligation is still the payment, not the prescription.
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-When only the debtor can perform the obligation, that is, when the obligation is
purely personal to the debtor.
-If an obligation can still be performed even after the death of the debtor, then the
obligation is not extinguished.
-It depends, if the obligation cannot be performed because of the death of the
creditor, it can lead to extinguishment.
*The personal character of an obligation is not only determined through the debtors
side, but also through the creditors side.
-Simply means that payment does not only apply to obligation to give, it also applies
to obligation to do or not to do.
1. Integrity of Payment
2. Identity of Payment
3. Indivisibility of Payment
-Simply means that what is performed must always conform to the thing due.
-Yes
1. Dation in Payment
! 57!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-Because what the creditor receives is not exactly the thing due, he receives
something different.
Is there an exception?
-Yes
1. Substantial performance
Substantial Performance
Estoppel/ Waiver
Why?
Z In estoppel, the creditor knowing, accepts the performance without any protest or
objection, then the debtor is not liable
Z The creditor has the right to insist the fulfillment of the obligation, such right may be
waived by the creditor.
Exception
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
2. ---
When the law says it is not valid, does it mean that the payment it is void?
-It does not mean that the payment is void, this is without prejudiced to the provision of
Article 1427
-Should be read in conjunction with RA 6809, which reduced the age of majority
from 21- 19
-Under the Civil Code, they are minors, but under RA 6809, they are of age of majority
17 February 2012
! 59!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
We said before that Requisites of Payment are not the same with Characteristics of
Payment, why?
1. Parties- are always two, the one who makes the payment, the other one is the one
who receives payment
Time
-The moment the creditor acquires the right to demand the obligation
-The general rule is that obligation must be paid on the date if fells due
Exception
-if it does not fall under any of the obligation, the obligation must be paid on that day
even if it is on a Sunday or a holiday
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-provides that any stipulation in a contract which authorizes the creditor to demand
payment in gold or currency other than Philippine legal tender is void
-only the stipulation is void, said obligation must be discharged in Philippine legal
tender or currency
-That currency which when offered in payment of a debt, the creditor cannot refuse
to accept
-Payment on monetary
-In the absence of an agreement, the debt must always be discharged in legal tender
-so that the debtor cannot compel the creditor to accept payment in other currency,
or that the creditor cannot demand payment from the debtor in other currency
-the law is silent in the place of demand, but in as much as you make a demand, you
expect to be paid, then it must be made in the proper place of payment
1st Rule
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
2nd Rule
If Specific
Then in the place where the thing is located at the time of the constitution of the
contract.
If Generic
-Domicile is a place where a person may be absent from but has the intention of
returning to
-If an obligation is payable in the debtors domicile, the proper place will be the new
domicile of the debtor, but he becomes liable to the creditor for all the expenses
incurred in tracking down his whereabouts
20 February 2012
1. Identity of Payment
-the thing that is offered must be the same as the thing due
Exception
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
So that if the thing valued is not equal to the thing due, it cannot be made?
-There can never be Dation in Payment without the consent of the creditor
because the debtor offers a different thing than what is due
Alienation= sale
-YES
-Despite the fact the laws definition on Dation in Payment, even if the
obligation does not involve payment of money, Dation in Payment is still
available to goods to goods, although that is not a SALE anymore but BARTER,
but BARTER is still governed by the Law on Sale
Debtor= seller
Creditor= buyer
! 63!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Application of Payment
-Application of Payment is proper when the debtor has several debts of the
same kind due in favor of the same creditor but the payment of the debtor is
not enough
Is there an absolute right on the part of the debtor to choose how the payment
should be made?
-It is not an absolute right because the exercise of this right is subject to
limitations by law
! 64!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
Payment by Cession
-Only the right to sell, but insofar as the property is concerned, it is not being
ceded to the creditor, ownership remains to the debtor.
Why is it necessary?
-because with out it, the creditors will not have the power to sell, what does not
belong to them cannot be sold by them
Voluntary- it is the debtor who is the one who goes to court and asks the court to
declare him insolent
Involuntary- it is not the debtor but any one of his creditors who goes to court
and asks the court to declare the debtor insolvent
! 65!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-Yes
Five Insatances
1. When the creditor is absent or unknown or does not appear at the place
of payment
-Consignation under BP 25 is allowed only when the things due are rentals in
arrears
If the debtor deposits the thing to Judicial disposal, is the obligation extinguished
! 66!
OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
-1. The obligation is extinguished when the creditor claims the thing due that is
deposited to the court
-2. When the court makes a declaration that consignation was properly done,
the debtor will be discharged of the obligation
If the debtor consigns the thing due to the court, and the creditor wants to
claim the thing, can the debtor prevent the creditor from claiming the thing
due?
-the debtor can prevent the creditor if the creditor is withdrawing the thing with
reservation, meaning, that the thing consigned is not equal to extinguishment of
obligation
-the debtor can ask the court to settle first how much is the total amount due
-because the debtor, pending the consignation, still owns the thing
-The Court in Vda de Quirino v. P said that Consignation is not proper in two
things, if what is involved is the right of redemption or right of option.
-Because there is no debt due, there is nothing to pay, consignation will never lie
-Case:
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OBLIGATIONS AND CONTRACTS, Notes 2nd Semester, SY 2011-2012, Dean Augusto
Aligada
jumieann1C
21 February 2012
Characteristics of Payment
1. Integrity of Payment
Exceptions:
a. Substantial Performance
-There is none
-There is
Why?
-Because of the absence of the total performance, the debtor is not relieved of the
entire obligation
b. Estoppel
-There is none
-There is none
Why?
2. Identity of Payment
Should the creditor accept the Dation in Payment, what would be the effect to the
obligations?
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-Dation in Payment will not always result to the extinguishment of the obligation,
because the value of the thing offered may be less than the thing due. It depends on
the agreement of the parties.
3. Indivisibility
Exceptions:
-Art. 1239. In obligations to give, payment made by one who does not have the free
disposal of the thing due and capacity to alienate it shall not be valid, without
prejudice to the provisions of Art. 1427 under the Title on Natural Obligations
-Provisions of Art. 1427 that makes payment voidable because under 1427, a minor
can recover what he has paid for as long as what has been paid is still in the
possession of the creditor.
When the one who makes the payment is a minor between 18-21, however, age
of majority was reduced to 18 by RA 6809, thus a minor is below 18 years of age
2. insofar as payment has been beneficial to him (even if he did not keep the thing
paid)
Insofar as benefit is concerned, it refers to ALL KINDS of BENEFITS, the ONLY EXCEPTION
refers to SENSUAL BENEFIT.
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-No
1. Status of Payment
2. What rights does the payer acquire from the principal debtor
Explanation:
1. The mere fact of payment by a third person does not make the payment void,
for as long as the creditor accepts the payment, it is valid.
If the third person who makes the payment, has the intention of seeking
reimbursement:
If the third person pays without the consent or knowledge of the principal debtor,
he only acquires the right of BENEFICIAL REIMBURSEMENT
His remedy is to go after the creditor (since creditor condoned the obligation, e.g.
Condonation)
Suppose payment was authorized by the principal debtor, the third person acquires 2
rights:
2. Right of Subrogation
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Right of Subrogation
What will be the effect of payment made by a third person who has no intention of
seeking reimbursement?
What will make it a donation is when the principal debtor consents to such
payment
The donee must accept the donation for it to be valid, in this case, the debtor
must consent to the payment in order to become a donation (the donee is the
debtor)
What is the effect of payment if made by a debtor not to the creditor but to a third
person?
Payment made to a third person shall also be valid insofar as it has redounded
to the benefit of the creditor. Such benefit to the creditor need not be proved in the
following cases:
(1) If after the payment, the third person acquires the creditor's rights;
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(3) If by the creditor's conduct, the debtor has been led to believe that the third
person had authority to receive the payment. (1163a)
Proof of payment is always necessary, why is proof being dispense here by the law?
1. If after the payment, the third person acquires the creditor's rights;
The fact that the third person who received the payment has now acquired the rights
of the creditor, the third person becomes the creditor, thus, as a creditor, he does not
need to issue a proof.
The act of ratifying the payment is an act of validation. The creditor validates the
payment.
3. If by the creditor's conduct, the debtor has been led to believe that the third person
had authority to receive the payment.
24 February 2012
REAL NOVATION
Two ways
Expromision
Delegacion
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Suppose all parties come to an agreement whereby the new debtor will assume the
obligation, if the new debtor fails to comply, what remedy does the creditor have?
Against who the creditor may run after?
All, the creditor may run after the old debtor as well
No
Assuming the obligation by the new debtor does not necessarily release the old
debtor
What will release the old debtor will be an agreement between the 3 parties to release
the old debtor from the obligation
Suppose the new debtor assumes the obligation of the old debtor, should new debtor
become insolvent, what would be the effect?
2. By Delegacion- liability of the old debtor is still not revived but there are
exemptions.
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27 February 2012
CONTRACTS
The codal definition of obligation has been the topic of criticism, many as inaccurate
as well as incomplete because it views only from the standpoint of the obligor.
The definition of obligation has been said to be very incomplete because it does not
mention the other party.
Because it is not the plurality of persons that is necessary but the plurality of
parties
e.g. A principal may authorized his agent to borrow money for the principal, the
agent himself can be the lender himself
And when a promissory note is executed, the agent can execute the promissory
note not only as the lender but also as the agent, borrower of the principal
Where only 1 party prepares all the conditions, will that kind of contract be valid? Will
there be mutuality?
YES
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A contract where all the terms & condition are prepared by only one party and
presented to the other party either for acceptance or rejection
If rejected-no contract
Technically, the other party participated and when he signs the contract he
adheres, which gives rise to mutuality or consensuality, a contract therefore, must be
understood to be an agreement between two or more parties.
2. Obligatory force
3. Mutuality of contracts
4. Relativity of contracts
Freedom of the mind, there is no doubt that the State recognizes the right of the
individual to contract, but as much as the individual has the right to contract, he also
has the right to stipulate.
But it does not mean absolute freedom, there can only be freedom within the
law
It must always be understood to mean freedom of the mind within the law,
never outside of the law
Obligatory force
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Simply means, parties to a contract are bound not only to what they have
expressly provided for in the contract but also to whatever naturally flows from the
contract as a natural consequence.
So that, if parties do not agree on natural consequences, they are still bound
Mutuality of contracts
The validity as well as effectivity not only of the contract but also of the terms
thereof are never left to the will of one of the parties, there must be mutuality.
He will have the power, this is what will make the contract illusory
However, the law say, if instead of validity & effectivity, what is left is the
termination, it will be valid
The contract becomes potestative but if what is left is not the birth but only the
extinguishment, that is not prohibited by law
Relativity of contracts
If Transmissible Rights
Not only between parties but also upon their heirs, assigns & successors in
interest
If Intransmissible Rights
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If no applicable law
If the grant is merely incidental & not deliberate, it is not Stipulation Pour
Atrui
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parties
Mutual withdrawal
Because the beneficiary being third party not party to a contract yet
once he accepts, the said beneficiary can enforce the contract against the
parties.
2. Natural matters which became part of the contract because the law made
them so
3. Accidental matters which became part of the contract because the parties
made them so
1. Consent
2. Object
3. Cause or consideration
The law does not prohibit provided the following conditions are satisfied
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Should any one of this is missing, the contract is still valid but not enforceable to
the person sought to be represented
1. Lack of Authority
2. Contracts covered by the Statute of Frauds that fail to comply with its requirement
Innominate Contracts are contracts without names; they do not occupy a definite
position in our legal system
Nominate Contracts are contracts which are given specific names; they occupy a
definite position in our legal system
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When a third person induces a person to violate his contract, what liability does the
inducer incur?
Mere act of the inducer to violate the contract does not make him liable for
damages
It is when a person in bad faith induces another to violate his contract that
makes him liable for damages
In the absence of bad faith, the inducer cannot be made liable for damages
If liable, how will you determine the liability considering he is not a party to the
contract?
Geo W. DAYWALT vs. La Corporacion De Los Padres Agustinos Recoletos, et.al (1919)
Court said, whenever an inducement is made in bad faith, the liability of the inducer
can never be more than the liability of the one who violates the contract
Measure is the liability of the party who actually violates the contract
1. Consensual
2. Real
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What is Policitation?
In English, Imperfect Contract, refers to an offer that has never been accepted.
Of the 3 essential elements of a contract, number 1 is Consent, the law does not give
a definition of consent, what the law provides is how consent is manifested
Article 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the things and the cause which are to constitute the contract. The
offer must be absolute. A qualified acceptance constitute a counter-offer.
1. Offer
2. Acceptance
As long as the offer has not yet been accepted, it can be withdrawn at anytime
Suppose the offeror in making an offer gives the offeree an option period within which
to accept or reject the offer, can the offer be withdrawn?
Mere grant of an option does not preclude the offeror from withdrawing the
offer, no liability will attach, unless the withdrawal is made arbitrarily or in abuse of
rights
If an offeree wants to make sure that the offer is not withdrawn within the option
period?
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Option Money
There is no law that fixes the amount, it all depends upon the agreement of the
parties
Always for the benefit of the offeree and never the offeror.
Why?
Because the option of whether to proceed with the principal contract or not is
given to the offeree.
While the offeree can compel the offeror to proceed with the principal
contract, the converse is not true
The option is not given to the offeror, it is always given to the offeree
3. As long as the option period has not yet expired, the offeror cannot withdraw his
offer
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Suppose an option contract is created by the grant of an option money, and the
principal contract does not push through, may it be recovered?
NEVER. Even if the parties agreed that it is refundable, it will not be valid (the
agreement)
But unlike option money, earnest money is refundable if agreed upon by the
parties
An acceptance to be valid must always be clear, never should it vary the offer,
the moment it deviates from the offer, no matter how significant, that is not valid.
It is said, the law said, under paragraph 2 Article 1319, if an acceptance is made either
by letter or telegram, not between persons who are face to face with each other, the
acceptance will not bind the offeror unless the acceptance comes to the knowledge
of the offeror
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28 February 2012
1. Unemancipated minors
2. Insane or demented persons and deaf mutes who do not know how to write
3. Alienage
4. Drunkenness
Unemancipated minors
Because minors are emancipated upon reaching the age of majority (18 years
old)
Therefore, minors cannot give consent to a contract? Are they absolutely prohibited
from giving consent?
NO, because under the Law on Sales, minors are allowed to enter into a
contract without their parents or guardians if the object of the sale is of NECESSITIES.
This provision must be read subject to other laws because here, minors, despite
minority are allowed provided the object of contract are of necessities (food, clothing,
medicine, for sustenance)
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Although both are mental illness, damage is greater in insanity than dementia
Demented persons
Have the mental faculty of children, think and act like a kid
Insane persons
Deafness
Inability to hear
Muteness
Refers to a case of absence (lack) of knowledge of writing) not about the ability
or power to write
Alienage
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Aliens are not authorize to acquire or own immovable properties with the
exception of succession (contracts of acquisition of real/immovable properties)
Drunkenness
Not all persons who are under the influence of alcohol are disqualified from
giving consent to a contract, it is when the degree of influence of alcohol is so much
as to deprive such person of the use of his mental faculty, thats when he is
disqualified.
VICES OF CONSENT
1. Mistake
2. Violence
3. Intimidation
4. Undue Influence
5. Fraud
Mistake
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Table No. 2
DISTINCTION
When a person does not know how to read or even if he knows, and contract is
written in a language not known to him, and he claims mistake, what obligation does
the law impose upon the parties?
Article 1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake of fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained to
the former.
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When will the obligation of the enforcing party to show that the terms have been fully
explained to the party alleging mistake of fraud arise?
SC: the obligation to show that the terms have been fully explained to the party
alleging mistake of fraud will only arise after it has been shown or established that the
party alleging mistake does not know how to read or that the language of the
contract is unknown to him.
In both vices, force is employed for the purpose of getting the consent of a
person to a contract (Juliet)
Table No. 3
DISTINCTION
VIOLENCE INTIMIDATION
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An action for Annulment of marriage due to intimidation employed by the father of his
wife to obtain his consent to their marriage
CA: Intimidation employed should be an unlawful threat, the threat employed by the
father was not to commit an unlawful act since it is the right of every parent to
vindicate the honor of his child.
Suppose violence & intimidation is employed by a third person, will it vitiate consent?
Under the Law on Fraud, if fraud is employed by a third person, that kind of fraud will
never vitiate consent unless that third person acted in collusion with one of the
contracting parties, will this rule in case of fraud apply to violence or intimidation?
UNDUE INFLUNCE
Table No. 4
DISTINCTION
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FRAUD (1st N)
Fraud means deceit, although the law does not define what fraud is. It simply tells us
how fraud may be committed, because under the law, fraud is committed through
the use of insidious words, or machinations for the purpose of inducing another to
enter into a contract without which the party would not have entered into such
contract.
At the time the contract has been entered into, in other words, fraud must be
employed in getting ones consent to a contract. (DOLO CAUSANTE)
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SIMULATION OF CONTRACTS
Absolute Simulation
Relative Simulation
Parties intend to be bound but not in the manner which appears in the contract
because the parties conceal their true agreement
Contract is valid as long as it does not prejudice a third person and it does not
violate the law
The first kind cannot be ratified nor reformed, but while the second kind may be
ratified, it cannot be reformed because contracts are not subject to reformation. It is
the instrument, which can be reformed, and not the agreement.
What are future things that can be made the object of a contract?
Those, which may not exist at the present but with potential existence in
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the present
Despite the non-existence of the thing at present, it may be the object of the
contract.
What is the effect if the future thing made as the object of the contract does
not come into existence?
Is it necessary for the validity of the contract that the object be in existence at the
time of perfection?
No, because future things that have potential existence may be the object of
contracts
2. Right
3. Services
CAUSE OF CONTRACTS
1. Remuneratory
2. Onerous
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3. Gratuitous
Motive may be known only to one of the parties, cause must always be known
to both parties.
General rule, motive has nothing to do with cause. Cause is not affected by
motive. Even if the motive is unlawful, if the cause is lawful, the contract is still valid, but
if the cause is unlawful, even if the motive is lawful, the contract is void.
Exception, is when the motive forms an integral part of the cause so that when
the realization of cause depends upon the realization of motive. If motive is unlawful, it
will affect the validity of contracts because cause is made to depend in the motive.
The law presumes every contract has a cause and that the cause of every
contract is valid.
FORMS OF CONTRACTS
Art. 1356. Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present. However,
when the law requires that a contract be in some form in order that it may be valid
and enforceable, or that a contract be proved in a certain way, that requirement is
absolute and indispensible. In such cases, the right of the parties stated in the following
article cannot be exercised.
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1. Validity
2. Enforceability
4. Registerability
Example:
Validity
Law on Agency:
Enforceability
Statute of Frauds
2nd part, whenever an agreement involves an amount exceeding 500 pesos, the same
must appear in writing, even a private one.
Did the case of Dauden fall within the context of Art. 1358?
YES.
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Di the case
NO.
There is nothing in the law and the Chapter of Forms of Contract that says that
failure to comply with the requirements of 1358 will make the contract null and void.
However, under Article 1357,
Art. 1357. If the law requires a document or other special form, as in the acts
and contracts enumerated in the following article, the contracting parties may
compel each other to observe that form, once the contract has been perfected. This
right may be exercised simultaneously with the action upon the contract.
REFORMATION OF INSTRUMENTS
A remedy whereby the true intention or agreement of the parties are made to reflect
in the instrument as reformed
It presupposes that there is a valid agreement, but in spite of the validity of the
agreement, the instrument does not reveal the real intent and agreement of the
parties due to mistake, fraud, inequitable conduct, and accident.
The law allows both, under circumstances, as long as both parties agree
DISTINCTION
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the instrument
1. Mistake
2. Fraud
3. Inequitable conduct
4. Accident
If it is mutual mistake, either party may ask for the reformation of instrument
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If there is mistake on one side, the remedy is not reformation of instrument but
annulment of contract.
2. Wills, because both are gratuitous, and reformation being in the nature of specific
performance requires a valuable consideration
3. When the real agreement is void, because even if corrected, the instrument will
remain void and inoperative. It will not produce any effect. It will be useless.
4. When a party to a contract has sought to enforce the instrument, that party cannot
later on ask for reformation, because an action to enforce and action to reform
are incompatible with each other. In the former, you are admitting/recognizing the
existing instrument, while in the latter, you are denying/ not recognizing the
instrument sought to be reformed.
DEFECTIVE CONTRACTS
Under the law, there are four defective contracts. What are these?
1. Rescissible Contracts
2. Voidable Contracts
3. Unenforceable Contracts
1. Voidable Contracts
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2. Unenforceable Contracts
RESCISSIBLE CONTRACTS
They are not truly defective contracts because they do not suffer from any defect. The
only reason why they are rescissible is because of the effect produced by the contract
upon one of the parties or upon third persons.
One proof that these contracts are not defective is that there is no provision in this
chapter for ratification.
Requisites of Rescission
2. The party seeking for rescission must have no other legal means by which to
obtain reparation for the injury suffered.
3. The object of the contract must not have passed to the possession of a third
person who has acquired it in good faith.
4. That the party seeking for rescission must be able to return whatever he has
received by virtue of the contract if rescission is granted by the court
5. That the action to rescind must be brought within the period of prescription
Discuss each.
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1. Those which are entered into by guardians whenever the wards whom
they represent suffer lesion by more than of the value of the things
which are the object thereof;
3. Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them;
4. Those which refer to things under litigation if they have been entered into
by the defendant without the knowledge and approval of the litigants or
of competent judicial authority;
In Article 1381, paragraphs 1 & 2, what must be the nature of the contract for it to be
rescinded?
Under the Civil Code, the husband is the administrator of the conjugal partnership
(property)
Law gave the control & power and can only be removed by law.
SC:
However, administration does not include acts of ownership. For while the
husband can administer the conjugal assets unhampered, he cannot alienate or
encumber the conjugal realty.
When you lease a property to another, in effect you are creating a burden,
which is an act of encumbrance, an act of ownership, which requires the consent of
the wife.
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If prior approval of the court is necessary, the act is not rescissible, but unenforceable
because the guardian/representative does not have the authority.
2. The party seeking for rescission must have no other legal means by which to
obtain reparation for the injury suffered.
DISTINCTION
RESCISSION RESOLUTION
Available: Available:
Once the ground for rescission has Even if the ground for resolution has
been established, the court cannot been established, for just reasons, the
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3. The object of the contract must not have passed to the possession a third person
who acquired it in good faith.
SC:
Statute of Frauds does not apply outside the contracts enumerated therein,
therefore, if it involves oral agreement, oral evidence may be accepted.
SC in Hernandez, not all cases involving real properties are covered by the Statute of
Frauds
In the case of Mindanao Lumber, the SCourt held: Right of way is not covered by the
Statute of Frauds, even if it involves real properties.
Inquing was allowed by the Court to prove the right of first refusal
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Good faith is always presumed; it is incumbent upon the party alleging bad faith to
show proof.
4. The party seeking for rescission must be able to return whatever he has received
by virtue of the contract.
1. Abrogation- absolute
Why does the law require the ability to return whatever he might have received?
Mutual Restitution is not absolute if it will violate the principle of unjust erichment.
For example, in a contract of lease, the lessee is required to return the leased premises
to the lessor, if the lease contract is rescinded, but the lessor is not required to return
the rentals paid by the lessee during which he occupied the leased premises, in so far
as the rentals paid in advance, the lessor must return the same.
Occupying the leased premises for free will amount to unjust enrichment by the
lessee.
4 years
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No
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with payment of damages in either case. He may also seek rescission even
after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
Ground: BREACH
1. Specific Performance
2. Rescission
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VOIDABLE CONTRACTS
YES.
No.
YES.
Both contracts are valid, both produces effect until they are annulled or rescinded .
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3. When the object of the contract has been lost through the fault of the party
entitled to the action
Mercado Case:
Active Misrepresentation
The minor expressly and positively misrepresented his age to of major age when
in truth he is not
Passive Misrepresention
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If he does not bring an action to annul, and allow the action the prescribe, can he still
invoke minority as a defense?
Both contracts are valid, and because they are valid, they produce effect.
Rescissible contracts are not defective contracts, they do not suffer from any defect,
the only reason why they are rescissible is because of the effect produced by the
contract to one of the parties or to a third person.
Rescission produces two effects, abrogation and mutual restitution, the same effect is
produced by annulment.
In rescission, the right to bring an action is not limited to the party in a contract, third
persons may also bring an action provided he suffered injury because of the contract
sought to be rescinded.
In voidable contracts, while the law says only those parties to a contract may bring an
action to annul, yet in the case of DBP, there is an exception.
DBP v. CA (1980)
The general rule is that the action for the annulment of contracts can only be
maintained by those who are bound either principally or subsidiarily by virtue thereof.
11 There is, however, an exception to the rule. This Court, in Teves v. People's Homesite
and Housing Corporation, 12 held that "a person who is not obliged principally or
subsidiarily in a contract may exercise an action for nullity of the contract if he is
prejudiced in his rights with respect to one of the contracting parties, and can show
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the detriment which could positively result to him from the contract in which he had
no intervention."
UNENFORCEABLE CONTRACTS
Art.1403. The following contracts are unenforceable, unless they are ratified:
1. Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
authority;
2. Those that do not comply with the Statute of Frauds as set forth in this
number. In the following agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum
thereof, be in writing, and subscribed by the party charged, or by his
agent, evidence, therefore, of the agreement cannot be received
without the writing, or a secondary of its contents:
e. An agreement of the leasing for a longer period than one year, or for
the sale of real property or of an interest therein;
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How many kinds of Unenforceable Contracts are there under the law?
2. Contracts which are covered by the Statute of Frauds but failed to comply with the
Statute of Frauds
If a contract is covered by the Statute of Frauds, but fails to comply, what will be the
effect of such failure?
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Ones memory is not always accurate, the tendency always is either to expand
or retract , resulting to the commission of perjury.
What do you understand y the provision of law in note, memorandum, in writing, duly
subscribed by the parties?
Court said, that requirement does not necessarily mean that everything must be
written; only the essentials in the agreement are required to be in writing.
Only the first five are truly covered by the Statute of Frauds.
They are exclusive character, any other contract not included in the
enumeration are deemed excluded.
1. An agreement that by its terms is not to be performed within a year from the
making thereof;
No
Yes
Yes
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What must be the reason of not performing the contract within 1 year?
Not included.
Contract of Guaranty
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marry;
2. Marriage Settlements
Under the provision of the New Civil Code, they are covered by the Statute of
Frauds.
4. An agreement for the sale of goods, chattels or things in action, at a price not less
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If the price is not less than 500 pesos, it must be in note, memorandum or in
writing.
5. An agreement of the leasing for a longer period than one year, or for the sale of
real property or of an interest therein;
Period must be more than 1 year no matter how short the excess.
What will be the status of the sale of real properties if it was made orally?
An oral sale of real property is valid, regardless of the amount involved but
it is not registerable.
Because in registration, the law requires that only public documents can be
recorded or registered.
Sale of real property under the Statute of Frauds should not be confused with the Sale
of property under the Law on Agency.
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Under that provision, what the law requires to be in writing is not the sale,
but the authority of the agent.
Under the Statute of Frauds. The price of an immovable is immaterial & the writing is
not for validity but for enforceability.
Mindanao Lumber
Rosencor v. Inquing
(answers in Rescission)
Partition agreement, even if they involve real properties are not covered by the
Statute of Frauds.
Because in partition, there is not lease for more than 1 year or sale of real property
involved, what is involved is only the adjudication of the share of the owners of the
property subject of partition.
2. In Statute of Frauds
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3. Either or both the parents or guardians of the parties as long as they are
incapacitated.
This is one kind of valid contract, which does not produce effect, this is what
differentiates it from Rescissible and Voidable contracts.
VOID CONTRACTS
They do not suffer defect because in the eyes of the law, they do not exist.
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Art. 1409 enumerates but it does not mean that these are the only void contracts
under the law.
In-delicto- both parties are at fault, but it does not mean that they are equally at fault
There can be recovery but it is not a matter of right, it is upon the sound
discretion of the court whether to grant recovery or not.
The doctrine of pari delicto does not apply to actions for declaration of Nullity
under Article 36.
Navarro v. Navarro
Because nothing can prevent the court from declaring that both parties are
psychologically incapacitated
Court
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When parties are in pari delicto, neither one may bring an action
Also, the doctrine of pari delicto does not apply to violation of Homestead Law
1. Encumbrance
2. Alienation
3. Disposition
But should the grant be violated because of the performance of any of the 3
within 5 years, will pari delicto apply?
No
Torres v. Ventura
Court:
Pari Delicto does not apply to violation of the Homestead Law, so that, should the
patentee act in violation of the law, and the one who bought it knew of the violation,
makes parties both in pari-delicto
Does it mean that the state can bring an action, for reversion to the public domain?
The state is not precluded from reverting the Homestead to the public domain
should the patentee act in violation of the condition of the patent
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When the same thing is sold twice by the same seller but to different buyers, the
case is what we call double sale.
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it sshould be movable property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
Caram v. Laureta
Court recognized the sale made to Laureta, rejected the sale made to Caram
Caram:
Article 1409 does not involve, even Art. 1554 that if one transaction is recognized
and the other is rejected by the court, the latter is void
Common sense dictates that if one transaction is recognized and the other is rejected,
the latter is not valid, because if not, dispute will never end!
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