Obligations and Contracts Reviewer

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OBLIGATIONS AND CONTRACTS REVIWER BY FRANCES DAMAZO

CHAPTER 1 (c) the object or prestation (the subject matter of the obligation). -the conduct required to be observed by the debtor. It may consist in giving, doing, or not doing. (see Art. 1232.) Without the prestation, there is nothing to perform A prestation is an obligation; more specifi cally, it is the subject matter of an obligation and may consist of giving a thing, doing or not doing a certain act. The law speaks of an obligation as a juridical necessity to comply with a prestation. There is a juridical necessity, for noncompliance can result in juridical or legal sanction
Art. 1156. An obligation is a juridical necessity to give, to do or not to do. Manresa: OBLIGATION - legal relation established between one person and another, whereby the latter is bound to the fulfillment of a prestation which the former may demand of him.
obligations may be either civil or natural A civil obligation is one which has a binding force in law, and which gives to the obligee or creditor the right of enforcing it against the obligor or debtor in a court of justice. This is the obligation which is defined in Art. 1156 of the Code. A natural obligation is one which cannot be enforced by action, but which is binding on the party who makes it in conscience and according to natural law
Requisites of Prestation: a. Physically and juridically possible b. Determinate (defined; determined) or at least determinable (clear; capable of being determined) according to pre-established elements or criteria c. Must be within the commerce of man/possible d. Must be licit (legal, permissible) e. Possible equivalent in money
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Requisites of Obligations (a) (a) an active subject (called the obligee or creditor) the possessor of a right; he in whose favor the obligation is constituted; the person who is entitled to demand the fulfi llment of the obligation
(d) the efficient cause (the vinculum or juridical tie) the reason why the obligation exists.
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Who can be creditors? 1.Natural and Juridical Persons 2.Legal Capacity (fitness to be the subject of legal relations; inherent in natural persons) (b) (b) a passive subject (called the obligor or debtor) he who has the duty of giving, doing, or not doing. Who can be debtors? 1.Persons 2.with legal capacity 3.and capacity to act (power to do acts with legal effects; because it would create a burden to them so there should be representation)
Form of obligation. (1) As a general rule, the law does not require any form in obligations arising from contracts for their validity or binding force. (see Art. 1356.) (2) Obligations arising from other sources (Art. 1157.) do not have any form at all.
Essential elements of cause of action. (1) Its essential elements are: (a) a legal right in favor of a person (creditor/plaintiff) by whatever means and under whatever law it arises or is created; (b) a correlative legal obligation on the part of another (debtor/defendant) to respect or not to violate said right; and (c) an act or omission in breach or violation of said right by the defendant with consequential injury or damage to the plaintiff for which he may maintain
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Error! No text of specified style in document.OBLIGATIONS AND CONTRACTS REVIWER BY FRANCES DAMAZO
an action for the recovery of damages or other appropriate relief. (a) Law (obligations ex lege) when they are imposed by the law itself, like the duty to pay taxes and to support ones family. (a) -obligations arising from LAW are NOT presumed; only those EXPRESSLY DETERMINED in the NCC or Special Laws are DEMANDABLE (b) Contracts (obligations ex contractu) when they arise from the stipulation of the parties (Art. 1306.) like the duty to repay a loan by virtue of an agreement. (c) Quasi-contracts (obligations ex quasicontractu) when they arise from lawful, voluntary and unilateral acts and which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another (Art. 2142.), e.g., the obligation to return money paid by mistake or which is not due. (Art. 2154.) In a sense, these obligations may be considered as arising from law; like the duty to refund an over change of money because of the quasi-contract of solutio indebiti or undue payment. (d) Crimes or Acts or Omissions Punished by Law (obligations ex malefi cio or ex delicto) when they arise from civil liability which is the consequence of a criminal offense (Art. 1161.)ike the duty to return a stolen carabao.; indemnification (e) Quasi-delicts or Torts (obligation ex quasidelicto or ex quasi-malefi cio) when they arise from damage caused to another through an act or omission, there being fault or negligence, but no contractual relation exists between the parties (Art. 2176.) like the duty to repair damage due to negligence.
Kinds of Obligations (a) From the viewpoint of sanction 1) civil obligation (or perfect obligation) 2) natural obligation 3) moral obligation (or imperfect obligation) Related provision: Art. NATURAL Obligations 1423 governs
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(b) From the viewpoint of subject matter 1) real obligation the obligation to give 2) personal obligation the obligation to do or not to do (c) From the affi rmativeness and negativeness of the obligation 1) positive or affi rmative obligation the obligation to give or to do 2) negative obligation the obligation not to do (which naturally includes not to give) (d) From the viewpoint of persons obliged 1) unilateral where only one of the parties is bound (NOTE: Every obligation has 2 parties; If only one of them is bound, we have a unilateral obligation. Example: A owes B P1 million. A must pay B.) 2) bilateral where both parties are bound (Example: In a contract of sale, the buyer is obliged to pay, while the seller is obliged to deliver.)
Art. 1157. Obligations arise from: 1. Law; 2. Contracts; 3. Quasi-contracts; 4. Acts or omissions punished by law; and 5. Quasi-delicts (Note: these are what we call JURIDICAL TIE Source of CAUSE OF ACTION) Sources of Obligations Note: The list is EXCLUSIVE
Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book.
Manresa: when the law establishes the obligation and the act or condition upon which it is based is nothing more than a factor for determining the
moment when it becomes demandable, then the law itself is the source of the obligation; however, when the law merely recognizes or acknowledges the existence of an obligation generated by an act which may constitute a contract, quasi-contract, criminal offense or quasi-delict and its only purpose is to regulate such obligation, then the act itself is the source of the obligation and not the law (1) Obligations Ex Lege (a) Examples: 1) the duty to support. (Art. 291, Civil Code). 2) the duty to pay taxes. (NIR Code) NOTE: If regarding an obligation ex lege, there is a conflict between the New Civil Code and a special law, the latter prevails unless the contrary has been expressly stipulated in the New Civil Code. therewith in good faith, where neither one may renege therefrom without the consent of the Other The law stresses the obligatory nature of a binding and valid agreement (William Golangco Construction Corporation vs. Phil. Commercial International Bank, 485 SCRA 293 [2006].), absent any allegation that it is contrary to law, morals, good customs, public order, or public policy. (Art. 1306.) LIMITATION: Art. 1306 of the Civil Code says: The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided, they are not contrary to law, morals, good customs, public order, or public policy. As long as Art. 1306 is complied with, the contract should be given effect, even if at the time it was entered into, no legal provision existed governing it. Although a contract is the law between the contracting parties, the provisions of positive law which regulate such contracts are deemed included and shall limit and govern the relations between the parties.
Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (Art. 1305)
Elements of Contract (a) essential elements (without them a contract cannot exist) consent subject matter cause or consideration NOTE: A contract may not always be in writing; It can be presumed, implied, or oral
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-perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all of the consequences which according to their nature may be in keeping with good faith, usage and law -In a contract, one or more persons bind himself or themselves with respect to another or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do -Once the contract is perfected, the valid contract has the force of law binding the parties to comply
Characteristics of contracts (1) Freedom or autonomy of contracts. The parties may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided, they are not contrary to law, morals, good customs, public order, and public policy (Art. 1306.); (2) Obligatoriness of contracts. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith (Arts. 1159, 1315.);
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(3) Mutuality of contracts. Contracts must bind both and not one of the contracting parties; their validity or compliance cannot be left to the will of one of them (Art. 1308.); (4) Consensuality of contracts. Contracts are perfected, as a general rule, by mere consent, and from that moment the parties are bound not only by the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law (Art. 1315.); (5) Relativity of contracts. Contracts take effect only between the parties, their assigns and heirs, except in cases where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation, or by provision of law. (Art. 1311.) Art. 1160. Obligations derived from quasicontracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book Obligations Arising from Quasi Contracts. (Contracts implied in law) Quasi-contracts are those juridical relations arising from lawful, voluntary and unilateral acts, by virtue of which the parties become bound to each other, based on the principle that no one shall be unjustly enriched or benefited at the expense of another. (Art. 2142.) NOTE: In a quasi-contract, there is no consent but the same is supplied by fiction of law. In other words, the law considers the parties as having entered into a contract, irrespective of their intention, to prevent injustice A Quasi-Contract is a UNILATERAL contract created by the sole act or acts of the gestor, no express consent given by the other party.
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Differences Between an Obligation and a Contract Obligation is the result of a contract (or some other source). Hence, while a contract, if valid, always results in obligations, not all obligations come from contracts. A contract always presupposes a meeting of the minds; this is not necessarily true for all kinds of obligations. a contract may itself be the result of an obligation. Thus, if P engages A as the formers agent, we have the contract of agency. As an agent, A has the obligation, say to look around for clients
The 2 Principal Kinds (a) negotiorum gestio (unauthorized management) -This takes place when a person voluntarily takes charge of anothers abandoned business or property without the owners authority. (Art. 2144, Civil Code). Reimbursement must be made to the gestor for necessary and useful expenses, as a rule. -the juridical relation which arises whenever a person voluntarily takes charge of the agency or management of the business or property of another without any power or authority from the latter -once the gestor or officious manager has assumed the agency or management of the business or property, he shall be obliged to continue such agency or management until the termination of the affair and its incidents, exercising such rights and complying with such obligations as provided for in the Code
Compliance in good faith. It means compliance or performance in accordance with the stipulations or terms of the contract or agreement. Good faith and fair dealing must be observed to prevent one party from taking unfair advantage over the other. Evasion by a party of legitimate obligations after receiving the benefits under the contract would constitute unjust enrichment on his part Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.
NOTE: Juridical relation does not arise when: (i) property or business NOT NEGLECTED or ABANDONED and (ii) the manager has been AUTHORIZED (tacitly) by the OWNER (b) solutio indebiti (undue payment)
-is the juridical relation which arises whenever a person unduly delivers a thing through mistake to another who has no right to demand it -once the delivery has been made, the person to whom the delivery is unduly made shall have the obligation to return the property delivered or the money paid. Solutio indebiti applies where: (a) payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; (b) the payment is made through mistake11 and not through liberality or some other cause. OTHERS: Civil Code provides other instances of quasi-contract. Examples are those found in Articles 2159, 2164 to 2175. (a) When during a fi re, flood, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation. (Art. 2168, Civil Code). (b) Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter. (Art.2175, Civil Code). In a quasi contract where no express consent is given by the other party, the consent needed in a contract is provided by law through presumption (presumptive consent). Presumptive consent gives rise to multiple juridical relations resulting in obligations for delivery of the thing and rendering of service. General rule: Whenever a criminal action is instituted, the civil action for the civil liability is also impliedly instituted together with the criminal action. In crimes, however, which cause no material damage (like contempt, insults to person in authority, gambling, violations of traffic regulations, etc.), there is no civil liability to be enforced. But a person not criminally responsible may still be liable civilly. (Art. 29; Rules of Court, Rule 111, Sec. 2[c].) What Civil Liability Arising from a Crime Includes (a) restitution; (b) reparation of the damage caused; (c) indemnification for consequential damages. (Art. 104, Rev. Penal Code).
EXAMPLE: X stole the car of Y. If X is convicted, the court will order X: (1) to return the car (or to pay its value if it was lost or destroyed); (2) to pay for any damage caused to the car; and (3) to pay such other damages suffered by Y as a consequence of the crime. Enforcement of civil liability (1) Institution of criminal and civil actions. When acriminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action, unless the offended party (i) expressly waives the civil action, or (ii) reserves his right to institute it separately, or (iii) institutes the civil action prior to the criminal action. (2) Independent civil action. In the cases provided in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.
Art. 1161. Civil obligations arising from 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. Obligations Arising from Criminal Offenses. As a rule, every person liable for a felony is also civilly liable. This principle is based on the fact that, generally, a crime has a dual aspect the criminal aspect and the civil aspect.
NOTE: A final judgment rendered in a civil action absolving the defendant from civil liability is no bar to a criminal action. Effect of Acquittal in Criminal Case Suppose a defendant in a criminal case is acquitted, can he still be held liable civilly? ANS.: It depends. (a) If the reason why there was an acquittal was because the accused could not have committed the act (as when he was in another country at the time he was supposed to have murdered somebody in the Philippines), no civil action can later on be brought. (b) If the reason for the acquittal was because of an exempting circumstance (as in the case of an insane defendant), he would still be civilly liable (if he has no guardian, or if the guardian who may under the circumstance be ordinarily liable, is insolvent). (c) If there is an independent civil action allowed by the law, civil liability may still arise if this action is instituted and the defendants liability is proved by mere preponderance of evidence (because while guilt beyond reasonable doubt might not have been proved, it would be a simpler matter to prove guilt by mere preponderance of evidence). Culpa aquiliana (quasi-delicts) can refer to acts which are criminal in character, whether the same be voluntary or negligent. Requisites of liability. (1) The fault or negligence of the defendant; (2) The damage suffered or incurred by the plaintiff; (3) The relation of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff Proximate cause is that adequate and efficient cause, which in the natural order of events, necessarily produces the damages or injury complained of (4) There is no pre-existing contractual relation between the parties. Persons liable. Obligations arising from quasidelicts are demandable not only from the person directly responsible for the damage incurred, but also against the following: (1) The father and, in case of his death or incapacity, the mother, with respect to damages caused by the minor children who live in their company; (2) Guardians, with respect to damages caused by the minors or incapacitated persons who are under their authority and who live in their company; (3) The owners and managers of an establishment or enterprise, with respect to damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions; (4) Employers with respect to damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry; (5) The State, when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains; (6) Teachers or heads of establishments of arts and trades, with respect to damages caused by their pupils and students or apprentices, so long as they remain in their custody Quasi-delicts and crimes (1) Crimes affect the public interest, while quasidelicts are only of private concern; (2) The Penal Code punishes or corrects the criminal act, while the Civil Code, by means of
Art. 1162. Obligations derived from quasidelicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws. Obligations Arising from Quasi-Delicts. As it is used in this part of the Civil Code, the term quasi-delicts refers to all of those obligations which do not arise from law, contracts, quasicontracts, or criminal offenses. (tort or culpa aquiliana) Art. 2176 of the Civil Code and decided cases as bases or anchors, it may be defined as the fault or negligence of a person, who, by his act or omission, connected or unconnected with, but independent from, any contractual relation, causes damage to another person. It is, therefore, the equivalent of the term tort in Anglo-American law.
indemnification, merely repairs the damages incurred; (3) Generally, there are two liabilities in crime: criminal and civil. In quasi-delict, there is only civil liability; (4) Crimes are not as broad as quasi-delicts, because the former are punished only if there is a law clearly covering them, while the latter include all acts in which any kind of fault or negligence intervenes. NOTE: Under Article 1157, quasi-delict and an act or omission punishable by law are two different sources of obligations. Inasmuch as civil liability co-exists with criminal responsibility in negligence cases, the offended party has the option between an action for enforcement of civil liability based on culpa criminal under Article 100 of the Revised Penal Code and an action for recovery of damages based on culpa aquiliana under Article 2177.25 (see Art. 1161.) These two causes of action (ex delicto or ex quasi delicto) may be availed of subject to the caveat that the offended party cannot recover damages twice for the same act or omission or under both causes. A thing is generic or indeterminate when it refers only to a class or genus to which it pertains and cannot be pointed out with particularity. Specific thing and generic thing distinguished (1) A determinate thing is identified by its individuality. The debtor cannot substitute it with another although the latter is of the same kind and quality without the consent of the creditor. (Art. 1244.) (2) A generic thing is identified only by its specie. The debtor can give anything of the same class as long as it is of the same kind. CONCEPT OF LIMITED GENERIC -When generic objects are confined to a particular class -e.g. Deliver one of MY horses
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(1) Duty to Exercise Diligence This Article deals with the first effect of an obligation to deliver (TO GIVE) a determinate thing (as distinguished from a generic thing or one of a class) namely the duty to exercise proper diligence. Unless diligence is exercised, there is a danger that the property would be lost or destroyed, thus rendering illusory the obligation. (2) Diligence Needed (a) That which is required by the nature of the obligation and corresponds with the circumstances of person, time, and place. (Art. 1173, Civil Code). This is really diligence of a good father of a family. (b) However, if the law or contract provides for a different standard of care, said law or stipulation must prevail. (Art. 1163, Civil Code). [Example of a case where the law requires extraordinary care (not merely that of a prudent man): A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. (Art. 1755, Civil Code).] Obligation to take care of the thing due. (1) Diligence of a good father of a family. In obligations to give (real obligations), the obligor has the incidental duty to take care of the thing due with the diligence of a good father of a family
CHAPTER 2 NATURE AND EFFECT OF OBLIGATIONS
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 requires another standard of care. Meaning of specific or determinate thing. The above provision refers to an obligation to give a specific or determinate thing. A thing is said to be specific or determinate when it is particularly designated or physically segregated from all others of the same class. Since it has already been individually determined, the obligor cannot fulfill his obligation by delivering another as a substitute. (Art. 1459.) Meaning of generic or indeterminate thing.
pending delivery. The phrase has been equated with ordinary care or that diligence which an average (a reasonably prudent) person exercises over his own property. (2) Another standard of care. However, if the law or the stipulation of the parties provides for another standard of care (slight or extraordinary diligence), said law or stipulation must prevail. (Art. 1163.) any real right over it until the same has been delivered to him. Duties of debtor in obligation to give a determinate thing. They are: (1) To preserve or take care of the thing due; (2) To deliver the fruits of the thing (see Art. 1164.); (3) To deliver its accessions and accessories (see Art. 1166.); Accessions signifies all of those things which are produced by the thing which is the object of the obligation as well as all of those which are naturally or artificially attached thereto. It comprehends all of the different kinds of accessions defined and regulated by the provisions of Art. 441 to Art. 475 of the Civil Code, such as accesin discreta (natural, industrial and civil fruits) accesin industrial (building, planting and sowing) accesin natural (alluvion, avulsion, abandoned river beds, and islands formed in non-navigable or non-floatable rivers) accession with respect to movable property (adjunction or conjunction, confusion or commixtion, and specification).
NOTE: With respect to the thing itself, the obligation to deliver arises from the time of perfection of the contract; with respect to the fruits, the obligation to deliver also arises from the time of the perfection of the contract. It must be noted, however, that these rules are not absolute in character. In case there is a contrary stipulation of the parties with respect to the time when the thing or fruits shall be delivered, such stipulation shall govern. Personal Right is a right pertaining to a person to demand from another, as a definite passive subject, the fulfillment of a prestation to give, to do or not to do. It is a jus ad rem, a right enforceable only against a definite person or group of persons, such as the right of a creditor to demand from the debtor the delivery of the object of the obligation after the perfection of the contract. Real right is a right pertaining to a person over a specific thing, without a passive subject individually determined against whom such right may be personally enforced. It is a jus in re, a right enforceable against the whole world, such as the right of ownership, possession, usufruct or easement. It is clear from these definitions that before delivery, the creditor, in obligations to give, has merely a personal right against the debtor a right to ask for delivery of the thing and the fruits thereof. Once the thing and the fruits are delivered, then he acquires a real right over them, a right which is enforceable against the whole world. This explains why according to Art. 1164 of the Code, although the creditor acquires a right to the fruits of the thing from the time the obligation to deliver it arises, he does not acquire
Accessories, signify all of those things which have for their object the embellishment, use or preservation of another thing which is more important and to which they are not incorporated or attached. In other words, it includes all of those things which are necessary or convenient for the perfection of another thing, such as the equipment of a factory, the spare parts and tools of a machine, the key of a house, and others of a similar nature (4) To deliver the thing itself (see Arts. 1163, 1233, 1244; as to kinds of delivery, Arts. 1497 to 1501.); and Art. 1163 (5) To answer for damages in case of non fulfillment or breach. (see Art. 1170.)
Rights of creditor in determinate obligations
(1) To compel specific performance. This right is expressly recognized by the first paragraph of Art. 1165 of the Code which states that the creditor may compel the debtor to make the delivery. It is complemented by the first paragraph of Art. 1244 which states that the debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or morevaluable than that which is due. Note: Mere pecuniary inability to fulfill an engagement does not discharge the obligation, nor does it constitute any defense to a decree for specific performancee (2) To recover damages for breach of the obligation. In case of breach of the obligation through delay, fraud, negligence or contravention of the tenor thereof Duties of debtor in obligation to deliver a generic thing. (1) To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances (see Art. 1246.); (2) To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor thereof. (see Art. 1170.) Rights of creditor in generic obligations. (1)To ask for performance of the obligation. He can only ask for the delivery of a thing or object belonging to the class or genus stipulated which must be neither of superior nor inferior quality (2) To ask that the obligation be complied with at the expense of the debtor (3)To recover damages for breach of the obligation
By law, the creditor is entitled to the fruits of the thing to be delivered from the time the obligation to make delivery of the thing arises. The intention of the law is to protect the interest of the obligee should the obligor commit delay, purposely or otherwise, in the fulfillment of his obligation. In case of rescission, the parties are under obligation to return the things which were the object of the contract, together with their fruits and the price with its interest. (Art. 1385.) (1) When Creditor Is Entitled to the Fruits Example: A is obliged to give B on Dec. 3, 2004, a particular parcel of land. (Before Dec. 3, he has no right whatsoever over the fruits). After Dec. 3, 2004, B, the creditor is entitled (as of right) to the fruits. But if the fruits and the land are actually or constructively delivered only on Dec. 15, 2004, B becomes owner of said fruits and land only from said date. Between Dec. 3 and Dec. 15, B had only a personal right (enforceable against A); after Dec. 15, he has a real right (over the properties), a right that is enforceable against the whole world. [NOTE: A personal right is also called jus in personam or jus ad rem; a real right is a jus in re. A personal right is power demandable by one person of another to give, to do, or not to do (3 Sanchez Roman 6, 8); a real right is a power over a specifi c thing (like the right of ownership or possession) and is binding on the whole world.
When obligation to deliver arises. (1) Generally, the obligation to deliver the thing due and, consequently, the fruits thereof, if any, arises from the time of the perfection of the contract. Perfection in this case refers to the birth of the contract or to the meeting of the minds between the parties. (Arts. 1305, 1315, 1319.) (2) If the obligation is subject to a suspensive condition or period (Arts. 1179, 1189, 1193.), it arises upon fulfillment of the condition or arrival of the period. However, the parties may make a stipulation to the contrary as regards the right of the creditor to the fruits of the thing. (3) In a contract of sale, the obligation arises from the perfection of the contract even if the obligation is subject to a suspensive condition or a suspensive period where the price has been paid.
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.
(4) In obligations to give arising from law, quasicontracts, delicts, and quasi-delicts, the time of performance is determined by the specific provisions of law applicable. that the creditor can use force or violence upon the debtor. The creditor must bring the matter to court and the court will be the one to order the delivery. (2) A generic real obligation (obligation to deliver a generic thing), on the other hand, can be performed by a third person since the object is expressed only according to its family or genus. It is thus not necessary for the creditor to compel the debtor to make the delivery although he may ask for performance of the obligation. In any case, the creditor has a right to recover damages under Article 1170 in case of breach of the obligation. The manner of compliance with an obligation to deliver a generic thing is governed by Article 1246. Under the Constitution, no person shall be imprisoned for non-payment of debt. (Art. III, Sec. 20 thereof.) However, a person may be subject to subsidiary imprisonment for non-payment of civil liability adjudged in a criminal case. (see Art. 1161.) The constitutional prohibition refers to purely civil debt or one arising from contractual obligations only.
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Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for fortuitous event until he has effected the delivery.
Remedies of the Creditor When the Debtor Fails to Comply With His Obligation (1) In a specific real obligation (obligation to deliver a determinate thing) (a) demand specific performance or fulfillment (if it is still possible) of the obligation with a right to indemnity for damages; (b) demand rescission or cancellation (in certain cases) of the obligation also with a right to recover damages (Art. 1170.); or (c) demand the payment of damages only (see Art. 1170.) where it is the only feasible remedy. NOTE: In an obligation to deliver a determinate thing, the very thing ng iitself must be delivered. (Art. 1244.) Consequently, only the debtor can comply with the obligation. This is the reason why the creditor is granted the right to compel the debtor to make the delivery. (Art. 1165, par. 1.) It should be made clear, however, that the law does not mean
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Effect of Fortuitous Events An obligation to deliver a specific thing, is, as a rule, extinguished by a fortuitous event or act of God. Upon the other hand, generic obligations are never extinguished by fortuitous events. An indeterminate thing cannot be the object of destruction by a fortuitous event because genus nunquam perit (genus never perishes) Two Instances Where a Fortuitous Event Does Not Exempt (a) if the obligor delays (This is really default or mora.)
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(b) if the obligor is guilty of BAD FAITH (for having promised to deliver the same thing to two or more persons who do not have the same interest as when one is not the agent merely of the other) (3) The debtor performs an obligation to do but in a poor manner. In obligation to do (positive personal obligations), if the obligor fails to do that which he has obligated himself to do, the obligee can have the obligation performed or executed at the expense of the former, and, at the same time, demand for damages by reason of the breach.
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Art. 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned. General rule: all accessions and accessories are considered included in the obligation to deliver a determinate thing although they may not have been mentioned. This rule is based on the principle of law that the accessory follows the principal. In order that they will be excluded, there must be a stipulation to that effect. Accession is also used in the sense of a right. In that sense, it may be defined as the right pertaining to the owner of a thing over its products and whatever is incorporated or attached thereto, either naturally or artifi cially. (3 Sanchez Roman 89; Art. 440.) Accession includes, therefore, the right to the fruits and the right to the accessory. It is one of the rights which go to make up dominion or ownership. (3 Manresa 166.) But it is not, under the law, a mode of acquiring ownership. (see Art. 712.)
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NOTE: Unlike obligations to give, in obligations to do the oblige does not possess the power to compel the obligor to comply with his obligation. In this type of obligation the law recognizes the individuals freedom or liberty to choose between doing that which he has promised to do and not doing it. It falls within what Spanish commentators have called a personal act (acto personalisimo), of which courts may not compel compliance as it is considered an act of violence to do so. Since compliance or fulfillment can only be voluntary, the Code in the first paragraph of Art. 1167 has granted a remedy to the obligee to have the obligation performed or executed at the expense of the obligor, a remedy which, although irregular, is most analogous to fulfilment. EXCEPTION: however, that the right of the obligee to have the prestation executed at the expense of the obligor cannot be availed of when such prestation consists of an act where the personal and special qualification of the obligor is the principal motive for the establishment of the obligation, as for instance, the talent and prestige of an artist. In such case, there is no other remedy of the obligee except to proceed against the obligor for damages under Art. 1170 of the Code. (NOTE: Specific performance is not a remedy in personal obligations (TO DO and NOT TO DO); otherwise, this may amount to involuntary servitude, which as a rule is prohibited under our Constitution.) Remedies of creditor in positive personal obligation. (1) If the debtor fails to comply with his obligation to do, the creditor has the right:
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Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost. This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone. Obligations To Do (POSITIVE PERSONAL) Situations contemplated in Article 1167 Article 1167 refers to an obligation to do, i.e., to perform an act or render a service. It contemplates three situations: (1) The debtor fails to perform an obligation to do; (2) The debtor performs an obligation to do but contrary to the terms thereof;
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(a) to have the obligation performed by himself, or by another unless personal considerations are involved, at the debtors expense; and (b) to recover damages. (Art. 1170.) (2)In case the obligation is done in contravention of the terms of the same or is poorly done, it may be ordered (by the court) that it be undone if it is still possible to undo what was done. NOTE: In obligations TO DO or NOT TO DO, an ACT or FOREBEARANCE CANNOT BE SUBSTITUTED by another act or forebearance AGAINST the OBLIGEES/CREDITORS WILL (Art. 1244, par. 2)
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EXCEPTIONS: There are, however, certain cases where the remedy provided for in Art. 1168 is not available 1. cases where the effects of the act which is forbidden are definite in character, in which case, even if it is possible for the obligee to ask that the act be undone at the expense of the obligor, consequences contrary to the object of the obligation will have been produced which are permanent in character. 2. Cases where it would be physically or legally impossible to undo what has been done because of the very nature of the act itself, or because of a provision of the law, or because of conflicting rights of third persons. Hence, in these cases, the only remedy available to the obligee would be to proceed against the obligor for damages under Art. 1170 of the Code.
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When a Thing May Be Ordered Undone (a) if made poorly (Art. 1167) (Here performance by another and damages may be demanded). (b) if the obligation is a negative one (provided the undoing is possible).
Art. 1168. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense. Obligations Not To Do The object of the obligation is fulfilled or realized so long as that which is forbidden is not done by the obligor. If the obligor does what has been forbidden him, two remedies are available to the obligee to have it undone at the expense of the obligor in accordance with Art. 1168 and to ask for damages in accordance with Art. 1170. EXAMPLE: If the obligor obligated himself not to construct his house beyond a certain height in order not to obstruct the view from the house of the obligee, and subsequently, he adds another story beyond the stipulated height, the obligee has the right to demand for the demolition of the additional storey at the expense of the obligor. In addition, he can also demand indemnity for damages. In obligations not to do, delay or mora is not possible unlike positive obligations. This is so because in negative obligations, the obligation is either fulfilled or not fulfilled. Here, there is no specific performance. The very obligation is fulfilled in not doing what is forbidden.
Rights of creditor in personal obligations (To Do or Not To Do) Art. 1167 To Do Art. 1168 Not To Do
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1.Have obligation If obligor does what performed or executed was forbidden of him: at the expense of the 1.Have it undone at the obligor/debtor expense of the obligor; (EXCEPT when 2. Ask for damages prestation consists of an act where the personal and special qualification of the obligor is principal motive for the establishment of obligation. REMEDY: action for damages under Art. 1170) 2.Ask what has been poorly done be undone 3.Recover damages because of breach of obligation Rights of creditor in real obligations (To give) 1.Right to specific performance 2.Right to rescission or resolution 3.Right to damages due to the following: a. failure to deliver b. delay/default c. Negligence d. Fraud e. any manner in contravention of the tenor thereof ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfi lls his obligation, delay by the other begins.
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A. Voluntary Breach Through Default or Mora Default or mora signifi es the idea of delay in the fulfillment of an obligation with respect to time. (1) Ordinary delay is merely the failure to perform an obligation on time. (2) Legal delay or default or mora is the failure to perform an obligation on time which failure, constitutes a breach of the obligation. Necessity in General of Demand To put a debtor in default, as a rule, DEMAND is needed. The demand may be judicial, as when a complaint for specific performance is filed; or extrajudicial, without court proceedings. When Demand Is Not Needed to Put Debtor in Default (a) When the law so provides. (Example: Taxes should be paid within a definite period, otherwise penalties are imposed without need of demand for payment.) (b) When the obligation expressly so provides. [NOTE: The mere fixing of the period is not enough; there must be a provision that if payment is not made when due, default or liability for damages or interests automatically arises. (See De la Rosa v. Bank of P.I., 51 Phil. 926).] (c) When time is of the essence of the contract (or when the fixing of the time was the controlling motive for the establishment of the contract). Examples: The making of a wedding dress, if the wedding is scheduled at the time the dress is due; agricultural contracts where implements are needed at a particular time; the selling of land with payment at specified time, so that the seller could pay off certain debts that were due on said date (Abella v. Francisco, 55 Phil. 447); money needed to finance mining installations if said installations had to be made on a certain date. (Hanlon v. Hausserman, 40 Phil. 796). [NOTE: It is not essential for the contract to categorically state that time is of the essence; the intent is sufficient as long as this is implied.] (d) When demand would be useless, as when the obligor has rendered it beyond his power to
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Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfi llment 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 the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; 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
perform. (Examples: When before the maturity, the seller has disposed of it in favour of another, or has destroyed the subject matter, or is hiding.) (e) When the obligor has expressly acknowledged that he really is in default (But it should be noted that his mere asking for extension of time is not an express acknowledgment of the existence of default on his part). (See 3 Salvat 64). -the delay of the obligee or creditor to accept the delivery of the thing which is the object of the obligation -The creditor is guilty of default when he unjustifiably refuses to accept payment or performance at the time said payment or performance can be done. Some justifiable reasons for refusal to accept may be that the payor has no legal capacity or that there is an offer to pay an obligation other than what has been agreed upon
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When demand is useless: 1. When the debtor denies the existence of the obligation 2. When obligor rendered it beyond his power to perform Different Kinds of Mora 1. Mora Solvendi -the delay of the obligor or debtor to perform his obligation. This delay is called mora solvendi ex re when the obligation is an obligation to give or mora solvendi ex persona when the obligation is an obligation to do (a) There is no mora solvendi in negative obligations (one cannot be late in not doing or giving). (b) There is no mora in natural obligations. [NOTE: A mere reminder, like This is to remind you that your next installment falls due on Jan. 7, 2005, is not a demand because for all that we know, lateness may still be tolerated by the creditor. (2 Castan 528).]
3. Compensatio morae -the delay of one of the parties or obligors in reciprocal obligations -performance must be simultaneous. Hence, one party cannot demand performance by the other, if the former himself cannot perform. -From the moment a party in reciprocal obligations fulfils or is ready to fulfill his obligation, delay by the other begins. Where the parties fi x a period for the performance of their reciprocal obligations, neither party can demand performance nor incur in delay before the expiration of the period. -The rule then is that in reciprocal obligations, one party incurs in delay from the moment the other party fulfills his obligation, while he himself does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Requisites which should be present in order that the obligor or debtor may be considered in default: (1) The obligation is demandable and already liquidated; (2) The obligor or debtor delays performance; and (3) The creditor requires the performance judicially or extrajudicially (orally or in writing.) If extrajudicial: Date of demand In uncertain: Date of filing the complaint NOTE: But even without demand, debtor incurs delay if he acknowledges his delay such as requesting for an extension of time.
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Effects of Mora Solvendi 1) If the debtor is in default, he may be liable for interest or damages. 2) He may also have to bear the risk of loss. (In both cases, it is, however, essential that his being in default is attributable to his own fault.) 3) He is liable even for a fortuitous event (Art. 1165, Civil Code), although damages here may be mitigated if he can prove that even if he had not been in default, loss would have occurred just the same. (Art. 2215, Civil Code). 2. Mora Accipiendi
Purpose of demand: Presumption of GOOD FAITH Effect of default. Once the obligor or debtor has incurred in delay, he can be held liable by the obligee or creditor for damages. This liability subsists even if the thing which constitutes the object of the obligation may have been lost or destroyed through a fortuitous event. Cessation of the effects of Delay (mora) 1.Upon renunciation by the creditor (express or implied) 2. Upon prescription breach thereof giving rise to a right by the innocent party to recover damages. The Civil Code refers to civil fraud. Criminal fraud gives rise to criminal liability. Effect of fraud. If there is a breach or nonfulfillment of the obligation by reason of fraud or dolo on the part of the obligor or debtor, he can be held liable for damages. As a ground for damages, malice or dishonesty is implied. C. Voluntary Breach through Negligence or Culpa It is any voluntary act or omission, there being no malice, which prevents the normal fulfillment of an obligation. (see Arts. 1173, 1174.) Negligence: It consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place : absence of due care required by the nature of the obligation.
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Art. 1170. Those who in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof, are liable for damages. B. Voluntary Breach through Fraud or Dolo Manresa: fraud or dolo consists in the conscious and intentional proposition to evade the normal fulfi llment of an obligation. (a) As a ground for damages, it implies some kind of malice or dishonesty and it cannot cover cases of mistake and errors of judgment made in good faith. It is synonymous to bad faith in that it involves a design to mislead or deceive another (b) Article 1170 refers to incidental fraud (dolo incidente) committed in the performance of an obligation already existing because of contract. It is to be differentiated from causal fraud (dolo causante) or fraud employed in the execution of a contract under Article 1338, which vitiates consent and makes the contract voidable and to incidental fraud under Article 1344 also employed for the purpose of securing the consent of the other party to enter into the contract but such fraud was not the principal inducement to the making of the contract. (c)Under Article 1170, the fraud is employed for the purpose of evading the normal fulfillment of an obligation and its existence merely results in
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NOTE: According to the second paragraph of Art. 1173, if the law or contract does not state the diligence which is to be observed in the performance of the obligation, that which is expected of a good father of a family shall be required (DOAGFOAF). Hence, the law has adopted the standard supposed to be supplied by the imaginary conduct of the discreet pater familias of the Roman Law. Kinds of negligence. I. Civil -governed by Arts. 1170, 1172,1173, and other provisions of the New Civil Code a. culpa contractual - fault or negligence of the obligor by virtue of which he is unable to perform his obligation arising from a pre-existing contract b. culpa aquiliana (quasi-delicts) -fault or negligence of a person, who, because of the omission of the diligence which is required by the nature of the obligation
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and which must correspond with the circumstances of the persons, of the time and of the place, causes damage to another II. Criminal -governed by Art. 365 of the Revised Penal Code. -fault or negligence which results in the commission of a crime Fraud and negligence distinguished (1) In fraud, there is deliberate intention to cause damage or injury, while in negligence, there is no such intention; (2) Waiver of the liability for future fraud is void (Art. 1171.), while such waiver may, in a certain sense, be allowed in negligence; (3) Fraud must be clearly proved, mere preponderance of evidence not being sufficient, while negligence is presumed from the breach of a contractual obligation; (4) Lastly, liability for fraud cannot be mitigated by the courts, while liability for negligence may be reduced according to the circumstances. (Art. 1173.) NOTE: Where the negligence shows bad faith or is so gross that it amounts to malice or wanton attitude on the part of the defendant, the rules on fraud shall apply. (see Art. 1173.) In such case, no more distinction exists between the two at least as to effects. Effects of Negligence: a. Damages are demandable which the court may regulate according to circumstances b. Invalidates defense of fortuitous event Effect of good faith - liable only for natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.
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NOTE: whether the negligence is culpa contractual or culpa aquiliana, the provision of Art. 1173 of the Civil Code applies. The negligence of the defendant in both cases is characterized by the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. culpa contractual negligence of the defendant is merely an incident in the performance of an obligation there is always a pre-existing contractual relation breach or nonfulfillment of the contract existence of the contract and of its breach or nonfulfi llment is suffi cient prima facie to warrant a recovery proof of diligence in the selection and supervision of employees is not available as a defense culpa aquiliana substantive and independent
character of the negligence of the defendant
relationship of the parties
source of the obligation
proof required for recovery
there may or may not be a pre-existing contractual relation defendants negligent act or omission itself negligence of the defendant must be proved
D. Voluntary Breach Through Contravention of Tenor of Obligation includes not only any illicit act which impairs the strict and faithful fulfillment of the obligation, but also every kind of defective performance
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availability of due diligence as a defense
Yes
Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.
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This article refers to incidental fraud which is employed in the fulfillment of an obligation. (Art. 1170.) Waiver of action for future fraud void. According to the time of commission, fraud may be past or future. A waiver of an action for future fraud is void (no effect, as if there is no waiver) as being against the law and public policy. (Art. 1409[1].) Waiver of action for past fraud valid. A past fraud can be the subject of a valid waiver because the waiver can be considered as an act of generosity and magnanimity on the part of the party who is the victim of the fraud. Here, what is renounced is the effects of the fraud, that is, the right to indemnity of the party entitled thereto. occurred as the passenger was boarding the taxi. (See Lasam v. Smith, 45 Phil. 657). 2) The hurt passenger may bring a civil case of culpa contractual (for breach of the contract of carriage) against the owner of the taxicab company, and not against the driver, because the contract is between the passenger and the owner, and not between the passenger and the driver, who merely represents the owner. Hence, properly, only the owner should be the defendant (without prejudice to his right to reimbursement from his driver) 3) If the owner can prove that he exercised due diligence in the selection and supervision of the driver, said owner is still responsible because of respondeat superior or the master-servant rule (the negligence of the servant is the negligence of the master). 4) All that the passenger must prove is the existence of the contract of carriage, and the fact that there was a breach because he did not arrive at his destination unhurt. If the company wants to escape liability, it is its duty to prove that the driver was really careful; otherwise, the presumption of the drivers negligence remains. 5) If the taxi contained defective parts, this is also negligence on the part of the company. The company cannot claim force majeure as an excuse here. (b) CULPA AQUILIANA A pedestrian was hit by a taxi and suffered physical injuries. The taxi driver was negligent and was responsible for the injury. 1) This is culpa aquiliana, there being no previous existing contractual relations between the pedestrian on the one hand, and the taxi driver and the owner of the taxicab company, upon the other hand. 2) The injured pedestrian can bring an action based on culpa aquiliana (tort or quasi-delict) against BOTH the taxi driver and the owner or operator of the taxicab company. Reason: The driver is responsible for his negligence in making possible the injury. 3) THEREFORE, in this case of culpa aquiliana, if the owner can prove due diligence in the selection and supervision of his driver, he could not have been responsible in any way for the injury. Thus, this defense is proper for the employer, and if proved, will exempt him from liability. (Here, the master-servant rule does not apply).
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Art. 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. Validity of waiver of action arising from negligence. (1) An action for future negligence (not fraud) may be renounced except where the nature of the obligation requires the exercise of extraordinary diligence as in the case of common carriers. (see Art. 1733.) (2) Where negligence is gross or shows bad faith, it is considered equivalent to fraud. Bad faith does not simply connote negligence or bad judgment causing damages to another. Any waiver of an action for future negligence of this kind is, therefore, void. Some Illustrative Examples (a) CULPA CONTRACTUAL A passenger in a taxi was hurt because of the taxi drivers negligence. 1) This is culpa contractual (there was a contract of carriage between the passenger and the owner of the taxicab company). This is true even if the passenger had not yet paid; true also, even if he had no money to pay; true also even if the accident
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4) Since it is the pedestrian who alleges negligence on the part of the defendant, it is his (the pedestrians) duty to present and prove said negligence. In other words, he will have the burden of proof: As a general rule, it is logical that in case of culpa aquiliana, a suing creditor should assume the burden of proving the existence of the negligence, as the only fact upon which his action is based. Effects of Victims Own Negligence and of His Contributory Negligence (a) When a plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages (because there is no culpa aquiliana on the part of the defendant). (Art. 2179, Civil Code). Example: A pedestrian, not looking where he was going, bumped into a carefully driven car. He cannot recover damages in culpa aquiliana. As a matter of fact, if any damage was caused the car, the owner can recover from the pedestrian. Test for determining whether a person is negligent. (1) Reasonable care and caution expected of an ordinary prudent person. Did the defendant in doing the alleged negligent act use the reasonable care and caution which an ordinary prudent person would have used in the same situation. If not, then he is guilty of negligence. Kinds of Diligence Under the Civil Code (a) that agreed upon by the parties (b) in the absence of (a), that required by the law (particular provision)
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[NOTE: The responsibility of a common carrier is EXTRAORDINARY and lasts from the time the goods are placed in its possession until they are delivered actually or constructively, to the consignee or to the person who has a right to receive them. (Art. 1736, Civil Code). It can only be exempt therefrom for causes enumerated in Art. 1734. (American Pres. Lines v. Richard A. Klepper, et al., L-15671, Nov. 29, 1960).] (c) in the absence of (b), that expected of a good father of a family (bonum pater familia)
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Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation.
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Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which, though foreseen, were inevitable. Concept of Fortuitous Event An event which could not be foreseen, or which, though foreseen, was inevitable. General Rule for Fortuitous Events If the obligor is unable to comply with his obligation by reason of a fortuitous event, he is exempted from any liability whatsoever. May either be:
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(1) Acts of man. an event independent of the will of the obligor but not of other human wills, e.g., war, fire, robbery, murder, insurrection, etc. (2) Acts of God. They are those events which are totally independent of the will of every human being, e.g., earthquake, flood, rain, shipwreck, lightning, eruption of volcano, etc. The term generally applies to a natural accident. Requisites of a fortuitous event. 1. that the event must be independent of the human will or will of the obligor; 2. that the event must be either unforeseeable or inevitable; 3. that the event must be of such a character as to render it impossible for the obligor to fulfill his obligation in a normal manner; and 4. that the obligor must be free from any participation in the aggravation of the injury resulting to the obligee or creditor NOTE: In order that a fortuitous event may exempt a person from liability, it is necessary that he be free from any previous negligence or misconduct by reason of which the loss may have been occasioned. An act of God cannot be invoked for the protection of a person who has been guilty of gross negligence in not trying to forestall its possible adverse consequences. When a persons negligence concurs with an act of God in producing damage or injury to another, such person is not exempt from liability by showing that the immediate or proximate cause of the damage or injury was a fortuitous event. General rule stated in Art. 1174 can be applied only to determinate obligations and not to generic ones. Exceptions: (a) When expressly declared by the law [such as when the possessor is in BAD faith (Art. 552, Civil Code) or is in default. (Art. 1165, Civil Code).] (b) When expressly declared by stipulation or contract (c) When the nature of the obligation requires the assumption of risk (the doctrine of CREATED RISK) Assumption of risk -it refers to a situation in which the obligor or debtor, with full knowledge of the risk voluntarily enters into some relation with the obligee or creditor. It is based on the doctrine of volenti non fi t injuria no wrong is done to one who consents. Hence, if the obligor enters into an obligation which by its very nature involves the assumption of risks, he shall be liable to the obligee for breach even in case of fortuitous events. EXCEPTIONS TO FORTUITOUS EVENTS: Art. 1165, par. 3: If the obligor delays, or has promised to deliver the same thing to 2 or more persons who do not have the same interest, he shall be responsible for fortuitous event until he has effected the delivery Art. 552, par. 2: A possessor in bad faith shall be liable for deterioration or loss in every case, even if caused by fortuitous event Art. 1268: When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it. Art. 1942 Art. 2147: (officious manager; negotiorum negotio) Art. 2148 Art. 2159 par. 2: Whoever in bad faith accepts an undue paymentshall be furthermore answerable for any loss or impairment of the thing from any cause, and for damages to the person who delivered the thing, until it is recovered Art. 2001: The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force.
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Art. 1175. Usurious transactions shall be governed by special laws. Usury Defined
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It is contracting for or receiving something in excess of the amount allowed by law for the loan or use of money, goods, chattels, or credits. Interest rules. Under the Usury Law, they are: (1) Legal rate. 12% per annum. receipt evidencing payment of the principal, the accumulated interest may in certain cases still be recovered. (2) Example of Par. 2 (Receipt of a Later Installment) If a creditor receives the fourth installment of a debt, it is understood that the first three installments have been paid. [NOTE: The presumption in par. 2 is also rebuttable]. When presumptions in Article 1176 do not apply. (1) With reservation as to interest. The presumptions established in Article 1176 do not arise where there is a reservation as to interest or prior installments, as the case may be. The reservation may be made in writing or verbally. (2) Receipt for a part of principal. The first paragraph of Article 1176 only applies to the receipt of the last installment of the entire capital, not to a mere fraction thereof. This is logical. A receipt for a part of the principal, without mentioning the interest, merely implies that the creditor waives his right to apply the payment first to the interest and then to the principal, as permitted by Article 1253. (infra.) Only when the principal is fully receipted for, may failure to reserve the claim for interest give rise to the presumption that said interest has been paid. (see Jocson vs. Capital Subdivision, Inc., [CA] No. 7635-R, Jan. 6, 1953.) (3) Receipt without indication of particular installment paid. It has been held that the presumption in paragraph 2, Article 1176 is not applicable if the receipt does not recite that it was issued for a particular installment due as when the receipt is only dated. (4) Payment of taxes. Article 1176 does not apply to the payment of taxes. Taxes payable by the year are not installments of the same obligation. (5) Non-payment proven. Of course, Article 1176 is not applicable where the non-payment of the prior obligations has been proven. Between a proven fact and a presumption pro tanto, the former stands, and the latter falls. (Ledesma vs. Realubin, 8 SCRA 608 [1963].)
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Art. 1176. The receipt of the principal by the creditor, without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid. The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the presumption that such installments have been paid. Meaning of presumption. By presumption is meant the inference of a fact not actually known arising from its usual connection with another which is known or proved. Two kinds of presumption. (1) Conclusive presumption. one which cannot be contradicted like the presumption that everyone is conclusively presumed to know the law (see Art. 3.); e.g. Art. 1431: Estoppel Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. (2) Disputable (or rebuttable) presumption. one which can be contradicted or rebutted by presenting proof to the contrary like the presumption established in Article 1176. (1) Example of Par. 1 (Receipt of Principal Without Reservation as to Interest) A creditor of P1,000,000, with 8% interest, received P1,000,000 in payment of the principal. Interest was not referred to in the payment. It is presumed that the 8% interest had already been previously paid. This is because under Art. 1253, Civil Code, payment of the interest as a rule precedes payment of the principal. (Of course, Art. 1176 establishes merely a rebuttable, not a conclusive presumption). Thus, even if there is a
RELATED PROVISIONS
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(d) accion pauliana (impugn or rescind acts or contracts done by the debtor to defraud the creditors). (See Arts. 1380 to 1389 of the Civil Code which deals with rescissible contracts.) - refers to the right available to the creditor by virtue of which he can secure the rescission of any act of the debtor which is in fraud and to the prejudice of his rights as a creditor. By its very nature, it is subsidiary in character; can only be availed of in the absence of any other legal remedy to obtain reparation for the injury Exhaustion of debtors property. The principal remedy of the creditor to protect and enforce his credit is to exhaust all properties in the possession of the debtor.
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Art. 1956: No interest shall be due unless it has been expressly stipulated in writing. BUT: In Art. 1235: When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing any protest or objection, the obligation is DEEMED FULLY COMPLIED WITH. -if the article is used as basis, Debtors obligation is extinguished.
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Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them.
Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary. Transmissibility of Rights. Rights of obligations or those rights which are acquired by virtue of an obligation are as a general rule transmissible in character. Exceptions 1. where they are not transmissible by their very nature, such as in the case of a purely personal right; 2. where there is a stipulation of the parties that they are not transmissible; The stipulation against transmission must not be contrary to public policy. (see Art. 1306.) Such stipulation, being contrary to the general rule, should not be easily implied, but must be clearly proved, or at the very least, clearly inferable from the provisions of the contract itself. 3. where they are not transmissible by operation of law (like the rights in partnership, agency, and commodatum which are purely personal in character)
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Remedies of Creditor To Protect Credit (a) exact payment (b)exhaust debtors properties, generally by attachment (except properties exempted by the law). (See Art. 2236, Civil Code). See: Art. 1255 Extent of Debtors Liability The debtor is liable with all his property, present and future, for the fulfi llment of his obligations subject to the exemptions provided by law. (Art. 2236, Civil Code). (c) accion subrogatoria (subrogatory action) i.e., exercise all rights and actions except those inherent in the person (like parental authority, right to revoke donations on ground of ingratitude, hold office); carry out an agency the right to exercise all of the rights and bring all of the actions which the debtor may have against third persons.
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Related provisions: Art. 1300 and Art. 1301
Intransmissibility by stipulation of the parties, being exceptional and contrary to the general rule, should not be easily implied, but must be clearly
established, or at the very least, clearly inferable from the provisions of the contract itself.
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OBLIGATIONS AND CONTRACTS REVIWER BY FRANCES DAMAZO

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CHAPTER 2 NATURE AND EFFECT OF OBLIGATIONS

Rights of creditor in determinate obligations

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character of the negligence of the defendant

relationship of the parties

source of the obligation

proof required for recovery

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availability of due diligence as a defense

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Related provisions: Art. 1300 and Art. 1301

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