Obligations and Contracts Reviewer PDF

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OBLIGATIONS AND CONTRACTS

Requisite of Object:

Title I – OBLIGATIONS

Licit or Lawful

Art. 1156 An Obligation is a juridical necessity to give, to do, or not to do.

Possible

Obligation – is a tie or bond recognized by law by virtue of which one is bound in favor of another to render something and this may consist of giving a thing, doing a certain act or not doing a certain act. It is a duty of a person to satisfy a specific demandable claim of another person which if breached may be enforceable in courts. Juridical Necessity – Juridical Tie; it connotes that in case of noncompliance there will be legal sanctions. NOTE: A contract necessarily gives rise to an obligation but an obligation does not always need to have a contract.

Determinate or determinable With pecuniary value NOTE: it must be within the commerce of men, must not be impossible legally or physically, must be inexistence or capable of existence. Forms of Obligations – manner of which an obligation is manifested or incurred. Can be oral or in writing, partly oral or partly in writing. GENERAL RULE – the law does not require any form of obligations arising from contracts for their validity (Art. 1356) Right – power which a person has under the law, to demand from another.

Damages – sum of money given as a compensation for the injury or harm suffered by the oblige for the violation of his rights.

Wrong – an act or omission of one party in violation of the legal right/s of another.

REQUISITES OF OBLIGATION:

Injury – wrongful violation of legal right of another.

Active Subject (creditor/oblige) entitled to demand Passive Subject (debtor/obligor) – bound to fulfill Prestation (object) – subject matter Juridical Tie (Vinculum Juris) – efficient cause.

CLASSIFICATIONS OF OBLIGATIONS: Sanction Civil Natural Creation Law Conventional Nature Personal Real Object Determinate/Specific Indeterminate/Generic Performance Positive Negative Person Obliged Unilateral Bilateral Existence of Burden/Condition Pure Conditional Character of Responsibility Joint Solidary Susceptible of Partial Fulfillment Divisible Indivisible Right to Choose Substitution Alternative Facultative Imposition of Penalty Simple Obligation w/ a penal clause Civil Obligation – obligations which give to the creditor or oblige the right under the law to enforce their performance in Courts of Justice.

Natural Obligations – cannot be enforced in court but which authorizes the retention of the voluntary payment or performance made by the debtor. Legal Consequences: Can be ratified, can be converted into civil obligation. If voluntarily fulfilled, creditor is authorized to retain the payment. Voluntary if: Freedom from coercion Freedom from error/mistake NOTE: in natural obligation there is still juridical tie. Ex: Prescription Art. 1144 The following must be brought within 10 years from the time the right of action accrues: Written Contract; Obligations created by law; upon judgement. NOTE: Prescription is generally used with reference to the acquisition (or loss) of a right by the lapse of time. The prescriptive period refers to the time within which an action must be brought; otherwise, such right to file action is lost.

SOURCES OF OBLIGATIONS:

OBLIGATIONS FROM LAW:

Art. 1157 obligations arise from: law; contracts; quasi-contracts; acts or omission punishable by law; quasidelicts.

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.

Law (ex lege) – when they imposed by law itself. Ex: pay taxes, support family. Contracts (ex contractu) – when they arise from stipulation of the parties. Quasi Contracts (ex quasi contractu) – when they arise from lawful, voluntary, unilateral acts which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of others (Art. 2142). Crimes, Acts, Omission (Delicts, ex delicto, ex maleficio) – when they arise from civil liability which is the consequence of criminal offense (Art. 1161) Quasi Delicts (Torts, quasi delicto, quasi maleficio) – when they arise from damage caused to another through an act or omission, there being fault or negligence but no contractual relation exits between the parties (Art. 2176). NOTE: The enumeration by the law is exclusive; hence, no obligation exists if its source is not one of those enumerated under Art. 1157.

Unless such obligations are expressly provided by law, they are not demandable e and enforceable and cannot be presumed to exist. NOTE: to be demandable they must be clearly set forth in the law. NOTE: if there is conflict between New Civil Code and a Special Law, the latter prevails unless the contrary has been expressly stipulated in the New Civil Code. Time of Perfection: Law – from the time designated by law creating or regulating them.

PRINCIPLE OF OBLIGATORY FORCE OF CONTRACTS:

customs, public order, or public policy.

Art. 1159 Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

Binding Force – obligations arising from contracts have the force of law between the contracting parties.

Art. 1305 A 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. GENERAL RULE – obligations arising from contracts are primarily governed by the stipulations, clauses, terms, and conditions of their agreement. EXCEPT – Contracts with prestations that are unconscionable or unreasonable.

Breach of Contract – by whole or in part, it takes place when a party fails or refuses to comply without legal reason with his obligation under the contract as promised. COMPLIANCE IN GOOD FAITH – compliance or performance in accordance with the stipulations or terms of the contracts or agreements. Falsification of a valid contract – only the unauthorized insertions will be disregarded. The original terms and stipulations should be considered valid and subsisting or the parties to fulfill.

NOTE: There must be a valid contract. In the eyes of the law, a void contract does not exist and no obligation will arise from it.

Time of Perfection:

Requirements of a valid contract:

Innominate Contracts:

It should not be against the law, contrary to morals, good customs, public order, and public policy.

Do ut des — I give that you may give.

Art. 1306 The contracting parties may establish such stipulations clauses, terms, conditions as they may deem convenient provided that they are not contrary to law, morals, good

Contracts – from the time of the perfection of the contract.

Do ut facias — I give that you may do. Facio ut des — I do that you may give. Facio ut facias — I do that you may do.

QUASI-CONTRACTS:

KINDS OF QUASI-CONTRACTS:

Art. 1160 Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book.

Negotiorum Gestio – voluntary management of the property of another without the knowledge or consent of the latter.

Art. 2142 Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.

Reimbursement must be made to the gestor for necessary and useful expenses, as a rule.

Contract

Quasi-contract

There is consent

no consent

Formal agreement

Not entered into by implied words

Consent essential

is

Created by the parties

Consent presumed

Solutio Indebiti – when something is received when there is no right to demand it and it was unduly delivered through mistake. Requisites of Solutio Indebiti:

is

Created by the Court

Quasi-Contract is not properly a contract at all. There is no consent but the same is supplied by fiction of law. The law considers the party as having entered into a contract although they have not actually done so, and inspective of their intention, to prevent injustice or unjust enrichment of a person at the expense of another. NOTE: it is not an implied contract because there is no meeting of minds.

*No right to receive the thing delivered *The thing was delivered through mistake.

GOVERNING RULES ON DELICTS: Art. 1161 Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the provisions of Article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of this Book, regulating damages. GENERAL RULE: Every person criminally liable for a felony is also civilly liable (Art. 100 RPC). EXCEPTIONS: Crimes of Treason, Rebellion, Espionage, Contempt and others wherein no civil liability arises on the part of the offender either because there are no damages to be compensated or there is no private person injured by the crime. The commission of a crime causes not only moral evil but also material damage. When there is no material damage, there is no civil liability.

the civil liability is also impliedly instituted together with the criminal action. SCOPE OF LIABILITY: Restitution – restoration of property previously taken away; the thing itself shall be restored, even though it be found in possession of 3 rd person who has acquired it by lawful means, saving to the latter his action against the proper person who may be liable to him. Reparation for the damage caused – court determines the amount of damage: price, value. Indemnification for consequential damages – includes damages suffered by the family of the injured party or by a 3rd person by reason of the crime. Effect of Acquittal I Criminal Case: Reasonable doubt – no civil liability

NOTE: but a person not criminally responsible may still be liable civilly (Art. 29 Sec 2 (c) Rule III, Rules of Court).

Exempting Circumstances – civil liability

An accused in a criminal case may be sued CIVILLY whether or not he is found guilty or is acquitted. But the victim cannot recover damages in both cases (only in one).

PROOF NEEDED:

GENERAL RULE: whenever a criminal action is instituted, the civil action for

Preponderance of evidence – civil liability.

Civil Action – preponderance of evidence Criminal Action w/ Civil – Proof Beyond Reasonable Doubt.

QUASI-DELICTS (Torts): Art. 1162 Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws.

Proximate Cause – is that adequate and efficient cause, which in the natural order of events, necessarily produces the damages or injury complained of. Damnum absque injuria – damage without legal injury.

Art. 2176 Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called quasi-delict and is governed by the provision of this chapter.

BASIS

DELICTS

TORTS

Requisites of Quasi-Delict:

INTENT

Criminal

Negligence

INTEREST

Affects public interest

Affects private interest

LIABILITY

Criminal & civil liability

Civil liability

PURPOSE

punishm ent

Indemnific ation

COMPROMISE

Cannot be compro mised

Can be compromis ed

GUILT

Proved beyond reasonab le doubt

Preponder ance of evidence.

*There must be an act or omission;

Art. 2197 Damages may be: actual or compensatory; moral; nominal; temperate or moderate; liquidated; exemplary or corrective.

*There must be fault or negligence; *There must be damaged caused; *There must be a direct relation or connection of cause and effect between the act or omission and the damage; *There is no pre-existing contractual relation between the parties. Fault or Negligence – consist of omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, time, and of the place. Also known as “Culpa Aquiliana”

OBLIGATION TO GIVE (REAL): 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. (Determinate) Specific/Determinate – particularly designated or physically segregated others of the same class. It 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) Generic/Indeterminate – refers only to class or genus to which it pertains and cannot be pointed out with particularity. Duties of the debtor in obligation to give a determinate thing: *Preserve the thing; *Deliver the fruits of the thing; *Deliver accessions and accessories; *Deliver the thing itself; *Answer for damages in case of noncompliance or breach. GENERAL RULE: the debtor is not liable if his failure to preserve the thing is not due to his fault or negligence but to fortuitous events or force majeure.

Reason for debtor’s obligation: the debtor must exercise diligence to insure that the thing to be delivered would subsists in the same condition as it was when the obligation was contracted. DILIGENCE NEEDED: Diligence of a good father – ordinary care; a good father does not abandon his family, he is always ready to provide and protect his family; ordinary care which an average and reasonably prudent man would do. Another standard of care – extraordinary diligence provided in the stipulation of the parties. Factors to be considered – diligence depends upon the nature if the obligation and corresponds with the circumstances of the person, time, and place. NOTE: if there is no stipulation as to what diligence is required, it is presumed to be the diligence of the good father of a family. Duties of the debtor in obligation to give a generic thing: *deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances (Art. 1246); *to be liable for damages in case of fraud, negligence, or delay in the performance of his obligation, or

contravention of the tenor thereof (Art. 1170). FRUITS: 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. DIFFERENT KINDS OF FRUITS: Natural Fruits – spontaneous products of the soil and the young and other products of animals. Industrial Fruits – produced by lands of any kind through cultivation and labor. Civil Fruits – derived by virtue of a judicial relation. Right of the creditor to the fruits – the creditor is entitled to the fruits of the thing to be delivered from the time the obligation to make delivery arises. Reason: to protect the interest of the obligee should the obligor commit delay, purposely or otherwise, in the fulfillment of his obligation. NON NUDIS, SED TRADITIONIS DOMINIA RERYM TRANSFERATUR – as a consequence of a certain contract, it is not agreement but tradition or delivery that transfers ownership.

Personal Right (jus ad rem) – right or power of a person to demand from another, as a definite passive subject, the fulfillment of a prestation to give, to do, or not to do. A right enforceable only against a definite person or persons. Real Right (jus in re) – right or interest of a person over a specific thing without a definite subject against whom right may be personally enforced. A right enforceable against the whole world. BEFORE THE DELIVERY – the creditor, in obligation to give, has merely a personal right against the debtor. A right to ask for the delivery of the thing and fruits thereof. ONCE THE THING & FRUITS ARE DELIVERED – then he acquires a real right over them. REMEDY OF THE BUYER – when there is no delivery despite demands is to file a complaint for SPECIFIC PERFORMANCE AND DELIVERY because he is not yet the owner of the property before the delivery. PERSONAL

REAL

Definite active & passive subject

Definite active subject without definite passive subject

Against particular person

Against the whole world.

KINDS OF DELIVERY:

suspensive condition where the price has been paid.

Active – actual delivery of a thing from the hand of the grantor to the hand of the grantee. Constructive Tradition – representative of symbolical in essence & with intention to deliver ownership. *Traditio Symbolica – ex: keys are given. *Traditio Longa Manu – by mere consent. Ex: pointing out *Traditio Breui Manu – already n possession then buys it to be its owner. *Traditio Constitutum Possessorium – sells something but retains possession no longer as owner. *Tradition by the execution of legal forms and solemnities. WHEN DOES OBLIGATION DELIVER FRUITS ARISES:

TO

Generally, from the time of the perfection of contract. If there is term or condition, from the moment the term or the condition happens. In a contract of sale, the obligation arises from the perfection of contract even if the obligation is subject to a

In obligation to give arising from law, quasi contracts, delicts and quasidelicts, the tie of the performance is determined by the specific provisions of the law applicable.

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.

GENUS NUNQUAM PERIT – genus never perishes.

If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.

REMEDIES OF CREDITOR IN REAL OBLIGATION:

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.

Generic thing – obligation to deliver is not so extinguished by fortuitous events.

Specific Real Obligation: *Demand specific performance or fulfillment of the obligation with a righto indemnity for damages; *Demand rescission or cancellation of the obligation also with right to recover damages;

Determinate Thing – obligation is extinguished if the thing lost due to fortuitous events.

*Demand payment of damages only, where it is only feasible remedy.

GENERAL RULE: In case of fortuitous event, obligation is extinguished.

*Can be performed by 3 rd person since the object is expressed only according to its family or genus.

EXCEPT: if the obligor delays, if the obligor is guilty of Bad Faith. GENERAL RULE: No person shall be responsible for those events which could not be foreseen, or which, though foreseen, are inevitable. EXCEPTION: in case expressly specified by law, when it its stipulated by the parties, when the nature of the obligation requires assumption of risk.

Generic Real Obligation:

*Right to recover damages und...