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OBLIGATIONS AND CONTRACTS
I. OBLIGATIONS
OBLIGATION
A juridical necessity to give, to do, or not to do (Article 1156), one impressed with the character of enforceability. Requisites: a. juridical or legal tie or efficient cause b. active subject (obligee or creditor) c. passive subject (obligor or debtor) d. fact, prestation or service constituting the object of the obligation Requisites: i) it must be licit ii) it must be possible, physically & juridically iii) it must be determinate or determinable iv) it must have a possible equivalent in money
- Law
- Contracts
- Quasi-contracts
- Delicts
- Quasi-delicts QUASI-CONTRACTS 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. Principal Kinds of Quasi-contracts:
- Negotiorum gestio - 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.
- Solutio indebiti - arises whenever a person unduly delivers a thing through mistake to another who has no right to demand it. QUASI-DELICTS An act or omission by a person (tortfeasor) which causes damage to another giving rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-existing contractual relation between the parties (Article 2176). Requisites:
- There must be an act or omission;
- There must be fault or negligence;
- There must be damage caused to the plaintiff;
- There must be a direct relation of cause and effect between the act or omission and the damage; and
- There is no pre-existing contractual relation between the parties. NOTES:
The same negligent act or omission
causing damage may produce civil liability arising from crime under Art. 100 of the RPC or create an action for quasi-delict under Article 2176.
While it is true that in order that a
person may be liable for quasi- delicts, there must be no pre- existing contractual relationship between the parties, yet, “ the act that breaks the contract may also be a tort .” ( Air France vs. Carrascoso, 18 SCRA 155). Nature of Obligations
- Personal Obligations - obligations to do a. Positive – obligation to do b. Negative – obligation not to do
- Real Obligations - obligations to give a. Determinate or specific – object is particularly designated or
if, under the circumstances of the case, the result of the specific performance of the contract would be harsh, inequitable, oppressive or result in an unconscionable advantage to the plaintiff. The courts may adjust the rights of the parties in accordance with the circumstances obtaining at the time of rendition of judgment, when these are significantly different from those existing at the time of generation of those rights. (Agcaoili vs. GSIS, G.R. No. 30056, August 30, 1988) OBLIGATIONS OF THE DEBTOR Determinate Generic
1. deliver the thing which he has obligated himself to give 2. take care of the thing with the proper diligence of a good father of a family 3. deliver all accessions and accessories of the thing even though they may not have been mentioned 4. pay damages in case of breach of the obligation by reason of delay, fraud, negligence or contravention of the tenor thereof 1. deliver the thing which is neither of superior nor inferior quality 2. pay damages in case of breach of the obligation by reason of delay, fraud, negligence or contravention of the tenor thereof EFFECTS OF BREACH Positive Personal Obligations Negative Personal Obligations The creditor can: If the obligor does 1. have the what has been obligation performed forbidden him, the or executed at the creditor can: expense of the 1. have it undone at obligor (except in the expense of the cases where the obligor; and personal 2. ask for damages qualifications of the debtor are taken into account in which case the only remedy is an action for
damages)
2. ask that what has
3 Kinds:
- Mora solvendi - delay of the debtor to perform his obligation. It may be: a. Ex re – obligation is to give b. Ex persona – obligation is to do
- Mora accipiendi - delay of the creditor to accept the delivery of the thing w/c is the object of the obligation
- Compensatio morae - delay of the parties or obligors in reciprocal obligation There must be a demand (judicial or extra-judicial) before delay may be incurred.
- obligation or law expressly so declares
- time is of the essence of the contract
- demand is useless as when obligor has rendered beyond his power to perform
- there is acknowledgment of default NOTES:
There can be delay only in positive
obligations (to give/to do). There can be no delay in negative obligations (not to give/not to do).
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. The general rule is that fulfillment by both parties should be simultaneous except when different dates for the performance of obligation is fixed by the parties.
Demand is still necessary if their
respective obligations are to be performed on separate dates FRAUD
Deliberate and intentional evasion
of the fulfillment of an obligation
NOTE: Future fraud cannot be waived because it would result to illusory obligation. Incidental Fraud/ dolo incidente (Article 1170) Causal Fraud/ dolo causante (Article 1338)
1. Present during 1. Present during the the performance time of birth or of a pre-existing perfection of the obligation obligation 2. Purpose is to 2. Purpose is to evade the normal secure the consent of fulfillment of the the other to enter obligation into a contract 3. Results in the 3. Results in the non-fulfillment or vitiation of consent breach of the obligation 4. Gives rise to a 4. Gives rise to a right of the creditor right of an innocent to recover damages party to annul the from the debtor contract NEGLIGENCE
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 NOTE: Negligence can be waived unless the nature of the obligation or public policy requires extraordinary diligence as in common carrier. Diligence Required
- That agreed upon by the parties
- In the absence of stipulation, that required by law in the particular case
- If both the contract and law are silent, diligence of a good father of a family Concept of Diligence of Good Father of a Family
That reasonable diligence which an
ordinary prudent person would have done under the same circumstances Test of Negligence
The test of negligence can be
determined by this standard: If the defendant, in committing or causing the negligent act, had used reasonable care and vigilance which a man of ordinary prudence would have employed under the same situation, he is not guilty of negligence. Otherwise, he is guilty. Doctrine of Res Ipsa Loquitur as Applied in Negligence Cases
The thing or transaction speaks for
itself
When the thing which caused injury,
without fault of the injured person, is under the exclusive control of the defendant and the injury is such as in the ordinary course of things does not occur if he having such control use proper care, it affords reasonable evidence, in the absence of explanation from the defendant, that the injury arose from defendant’s want of care (Africa vs. Caltex, 16 SCRA 448 and Republic vs. Luzon Stevedoring, 21 SCRA 279). FORTUITOUS EVENT
An event which could not
be foreseen or which though foreseen was inevitable.
Requisites:
- cause is independent of the will of the debtor
- the event must be unforeseeable or unavoidable
- occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner
- debtor must be free from any participation in 5. the aggravation of the injury resulting to the creditor (Lasam vs. Smith, 45 Phil. 657) NOTE: It must not only be the proximate cause but it must be the ONLY and SOLE CAUSE.
- Negative - condition involves the omission of an act
- Divisible - condition is susceptible of partial realization
- Indivisible - condition is not susceptible of partial realization
- Conjunctive - where there are several conditions, all of which must be realized
- Alternative - where there are several conditions but only one must be realized Rule in Potestative Conditions a. If the fulfillment of the potestative condition depends upon the sole will of the debtor, the condition as well as the obligation itself is void. It renders the obligation illusory. (Applicable only to a suspensive condition and to an obligation which depends for its perfection upon the fulfillment of the potestative condition and not to a pre- existing obligation.) b. If the fulfillment depends exclusively upon the will of the creditor, both the condition and obligation is valid. NOTE: In case of simple potestative condition, e.g. right of first refusal, such condition is valid. Rule in Impossible Conditions They shall annul the obligation which depends upon them.
- pre-existing obligation
- if obligation is divisible
- in simple or renumeratory donations
- in testamentary dispositions
- in case of conditions not to do an impossible thing Effects of Suspensive Condition
- Before fulfillment of the condition, the demandability as well as the acquisition or effectivity of the rights arising from the obligation is suspended
- After the fulfillment of the condition, the obligation arises or becomes effective
- The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation
- When the obligation imposes reciprocal prestations upon the parties, the fruits & interests shall
they will soon be acquired threat or danger of extinction
Effects of Loss, Deterioration and Improvement in real obligations (during the pendency of the condition)
1. Loss a. without debtor’s fault - obligation is extinguished b. with debtor’s faul t - debtor pays damages 2. Deterioration a. without debtor’s fault - impairment to be borne by the creditor b. with debtor’s fault - creditor may choose between the rescission of the obligation and its fulfillment with indemnity for damages in either case 3. Improvement a. by the thing’s nature or by time
- improvement shall inure to the benefit of the creditor b. at the debtor’s expense - debtor shall have no other right than that granted to a usufructuary NOTE: Applies only to determinate things A Thing is Lost when it:
- perishes
- goes out of commerce
- disappears in such a way that its existence is unknown or it cannot be recovered RECIPROCAL OBLIGATIONS Those which are created or established at the same time, out of the same cause, and which result in mutual relationships of creditor & debtor between the parties TACIT RESOLUTORY CONDITION with what is incumbent upon him, there is a right on the part of the other to rescind the obligation.
RIGHT TO RESCIND (ART 1191)
The right to rescind needs judicial approval.
- If there is an express stipulation of automatic rescission
- When the debtor voluntarily returned the thing NOTES:
Article 1191 refers to judicial
rescission. It does not apply if there is an express stipulation to rescind, in which case such stipulation must prevail. There is nothing in the law which prohibits the parties from entering into an agreement that violation of the terms of the contract would cause its cancellation without court intervention. Said stipulation is in the nature of facultative resolutory condition (Angeles vs. Calasanz, 135 SCRA 323).
Rescission will be ordered only
where the breach is substantial as to defeat the object of the parties in entering into the agreement.
The injured party may choose
between fulfillment and rescission of the obligations, with the payment of damages in either case. These remedies are alternative, not cumulative. However, should fulfillment become impossible, the injured party may also seek rescission.
The right to rescind belongs
exclusively to the injured party. OBLIGATION WITH A PERIOD Those whose demandability or extinguishment is subject to the expiration of a term or period
Requisites:
- future
- certain
- possible, legally and physically CLASSIFICATION OF TERM OR PERIOD
- a. suspensive ( ex die ) – obligation becomes demandable only upon arrival of a day certain
- If the debtor binds himself when his means permit him to do so (Article 1180) NOTE: The only action that can be maintained is an action to ask the court to fix the duration of the term or period. The fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith, and such period has arrived. However, such technicality need not be adhered to when a prior and separate action would be a mere formality and would serve no other purpose than to delay (Borromeo vs. CA, 47 SCRA 65). Reason for Fixing the Period (ART
There can be no possibility of any breach of contract or failure to perform the obligation unless the period is fixed by courts. When debtor loses right to make use of period: (IGIVA)
- when after the obligation has been contracted, he becomes i nsolvent, unless he gives guaranties or securities for the debt (the insolvency need not be judicially declared)
- when he does not furnish to the creditor the g uaranties or securities he promised
- when by his own act he has i mpaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he gives new ones equally satisfactory when debtor v iolates any undertaking, in consideration of which the creditor agreed to the period or
- when debtor attempts to a bscond
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FACULTATIVE
Obligations
ALTERNATIVE
Obligations
1. comprehends 1. comprehends only one object or several objects or prestation which is prestations which are due, but it may be due but may be complied with by complied with by the the delivery of delivery or another object or performance of only performance of one of them
another prestation in substitution
2. fortuitous loss 2. fortuitous loss of extinguishes the all prestations will obligation extinguish the obligation 3. culpable loss 3. culpable loss of any obliges the debtor object due will give to deliver rise to liability to substitute debtor prestation without liability to debtor 4. choice pertains only to debtor 4. choice may pertain to creditor or even third person NOTES:
In alternative obligations, choice
takes effect only upon communication of the choice to the other party and from such time the obligation ceases to be alternative.
The debtor cannot choose those
prestations or undertakings which are impossible, unlawful or w/c could not have been the object of the obligation. EFFECT OF LOSS OF OBJECT OF OBLIGATION:
1. If right of choice belongs to debtor a. If through a fortuitous event - debtor cannot be held liable for damages b. If 1 or more but not all of the things are lost or one or some but not all of the prestations cannot be performed due to the fault of the debtor, creditor cannot hold the debtor liable for damages because the debtor can still comply with his obligation. 2. If right of choice belongs to the creditor a. If 1 of the things is lost through a fortuitous event, the debtor shall perform the obligation by delivering that which the creditor should choose from among the remainder, or that which remains if only 1 subsists
longer be fulfilled or performed. Consequently, it is converted into one of indemnity for damages. Innocent joint debtors shall not contribute to the indemnity beyond their corresponding share of the obligation. Effect of insolvency of a debtor – If one of the joint debtors should be insolvent, the others shall not be liable for his share. INDIVISIBILITY SOLIDARITY
1. refers to the 1. refers to the prestation which legal tie or vinculum constitutes the juris & consequently object of the to the subjects or obligation parties of the obligation 2. plurality of subjects is not required 2. plurality of subjects is indispensable 3. in case of breach, 3. when there is obligation is liability on the part converted into 1 of of the debtors indemnity for because of the damages because of breach, the breach, indivisibility solidarity among the of the obligation is debtors remains terminated KINDS OF SOLIDARITY 1. Active solidarity solidarity of creditors each creditor is empowered to exercise against the debtor not only the rights which correspond to him, but also all the rights which correspond to the other creditors, with the consequent obligation to render an accounting of his acts to such creditors creates a relationship of mutual agency among solidary creditors 2. Passive solidarity solidarity of debtors liability of each debtor for the payment of the entire obligation, with the consequent right to demand reimbursement from the others for their corresponding shares once payment has been made 3. Mixed solidarity solidarity among creditors and debtors Effect of Assignment by Solidary Creditor Without Consent of Others
- assignee is co-creditor – no violation of Article 1213 because there can be no invasion of the personal or confidential relationship
- assignee is third person – co- creditors and debtors are not bound by the assignment Effect of Novation upon Solidary Obligation
- If the novation is prejudicial, the solidary creditor who effected the novation shall reimburse the others for damages incurred by them
- If it is beneficial and the creditor who effected the novation is able to secure performance of the obligation, such creditor shall be liable to the others for the share which corresponds to them, not only in the obligation, but also in the benefits
- If the novation is effected by substituting another person in place of the debtor, the solidary creditor who effected the novation is liable for the acts of the new debtor in case the is deficiency in performance or in case damages are incurred by the other solidary creditors as a result of the substitution.
- If the novation is effected by subrogating a third person in the rights of the solidary creditor responsible for the novation, the relation between the other creditors not substituted and the debtor or debtors is maintained. Effect of Compensation and Confusion upon Solidary Obligation
- If the confusion or compensation is partial, the rules regarding application of payment shall apply. This is without prejudice to the right of other creditors who have not caused the
confusion or compensation to be reimbursed to the extent that their rights are diminished or affected.
- If the confusion or compensation is total, the obligation is extinguished, what is left is the ensuing liability
