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8/10/2019 Obligations and Contracts Dean Del Castillo Notes
1/57
CIV
IL
L W REVIEW 11-
Dean
Del
Castillo
OBLIGATIONS
Obligation-
juricilcal necessity to give,
to
do,
or
not
to
do
Obligation is broader than
contrac
ts
Contracts
is only
one
sou
rce of obligation
Five sources
of
Obligations:
a. Law
b. Contract
c. Quasi-Contr.tct
d Delict
e.
Quasi-Dehcts
LAW CONTRACTS
-
What do we refer
as
law?
- \XIhat makes Contract
Laws that cr\ ates
unique?
obligations and
Th
ere are
meeting of
contract.
Civil
Code
minds
between the
does not creare
parues.
(only in this
obligations and source
that
this is
c
ontract.
needed)
We
are
nor talking
about general law but
rather
specific laws (e.g
dury
to pay ra x;
duty to
support) where the law
provides
for your
obligation. General law
only provides
concepts
e.g.
.
requirements) but
does
not create obligaoons.
DELICTS
-
When
your obligation
comes
from
delict, what is
it?
The
ctv .lliability
arismg from the
cnme
l Y t l ' person
criminally hable
is
civilly liable
-
What
is it
compnsed
of?
Due to the offended
party. resritution, etc.
Nugwd
\'. N1cdao:
BP22 - the accu-;ed
e ltf4 was
eventually
d
acquitted,
but
the
offended
party
kept
on
msiscing
that th
e
accused
is still civilly
liable. Is s
he
still liable?
'
a. The
court
held that
you are only ctvil.ly
liable
(JI.
b.
The acquinal
is
'
based on
The Civil liability
docs not anse
l i
Page
Every good
and
perfect gift s from above, coming down from the Fatherof the heavenly lights, who
does nor change like shifting shadow
s.
Caroline Ton, Jessamyn
y
James L:gan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
2/57
CIV
IL LA
W REVlEW
-
Dean Del Castillo
from the crJnunal
act
QUASI-CONTRACTS QU
AS
I-DELICTS
-
Not a
Lrue
contract
-
Act
or
omission is not
-
Meaning one
of
the punishable by law.
elements
of
a valid contract
-
Is reckless imprudence
ts
rrusstng, i.e., megting of
mcluded? No They arc
the minds.
'
delicts as being punished
by
-
We caU
it
q oJi because the
RPC
obligauon is sourced from a
-
Obligauon is you have to
natural obligaoon,
like
pay
negotorium gestio
-
This is unilarer:J, cre:ned
only by an act of one
person
Two
k i
nds
o quasi
c
ontract:
a
Negotoriwn
gestio
one
party undertakes to
admini .ter or rake care
of
proper)'
of
another. Your
unilateral
act
in
here
is
the
cakmg care
of
the property
It
came
rom
your own
volition This pertains to
emergency Situations. An
act of kindness
There
is no obligation for
you to do this but you did
it anyway. So where is the
oblJgation? Once he
decided to t:&e care
of
the
-
he
is
OBLIGED
to care
of t
until the
emergency ceases.
of
the owner
1
there
is
an obligaoon created. The
OBUGATION
IS
TO
COMPENSATE
b
Solution indebiti -
payment
by
mistake. You
thought you were obliged
to pay it
but in fact you are
not obliged:Or you have
2 P a g e
Every good ond perfect gift i5 from above, coming down from the Father of the heavenly lights, who
does
not
change like shifting shadows.
Caroline Ton Jessamyn
Uy
James Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
3/57
, 0
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..
f
i
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l .
CIVIL LAW REVJ
EW
II - Dea n Del Castillo
paid even 1f you
are not
yet
required to pay This is to
be differentiated with
natural wherein
you
do
not have any
obligation to
az
at
all
You
just
wanted
to pay. l f t is a
natural obligation,
whatever
you paid
voluntary, the
same cannot
be
recovered, unlike in S.I.,
the recipient is obliged to
return.
A
source
of
obligation is
an
exclusive list. l f
not
coming from this one then
you
do
not
have any
obligation.
Juridical Necessity
Meaning, it is mandatory.
Once
an obligation is created from these 5 sources, someone has
to
comply Ths is
complete
m itself
Three phrases to do
not to
do
and
co give are what we c:ill PRESTATIONS.
a Obhgaoon to give
\Vhat arc rou requLred to
do
m here?
To
deliver, real r personal
b Obligation to
do
or not
do
\\7hat
are
you reqwred to do?
Service, to
do or
to refrrun
Obligation
to give (real obllgations)
a Genetic
-
or
indeterminate
thing- one of
a class
b. Specific
set apart
from a class
l s this dassificacion applicable
to
real properties? O f course Personal and Real Propernes can t:Hher
be specific
or
real
For example a car:
It will be speci
fic
i fyou provided the plate number,
or
serial number
or
chassis number.
For
real property:
If
you
say deliver a piece of land, then it is generic. Even if you say a land from
Barrio
Bangkal in
Makati
it
is still generic.
Obligation
to do/not to do (personal obligations):
a. Legal.
b.
Moral
IPage
N ve
ry good
nd
perfect gift is from above, coming down from the Father of
the
heavenly lights, who
does not
change like shifting shadow s.
Caroline Ton, Jessamyn y James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
4/57
CIVIL LAW REVlEWil - Dea n Del Castillo
c. Possible
Obli
gatio
n to deli
ver a s
pecific
prop
erty
Has
more
obligati
on
as compued i only
to
delnrer: a generic property
Added
obligations:
a. ake
caft
o t with
due diligen
ce o good
father
o
f mily
Illustration:
Perfection
Condition
Deli
I
very
Today
the
obligation is created.
Th
en there is gap where
the
property
is
exposed from periL
Then the day you have to deliver.
So
this obligation is accual.ly to take .into account this
interregnum.
This
is the guarantee that you will
be
able
to
deliver.
What
happens
when
your obligation is subject to a condition?
Your
obligacion starts only from
the
tir:::le
the
condition is fulfilled
Diligence required
o Diligence.of a good father
of
a
fatnily-
that which
is
reqnired by
the
nature
of the
ob
ligati
on
and corresponds with the circumstances of person, time, and place,
Exception:
when the
law o r cont ract provides for a different standard
of
care
(e.g.
common carrier-
requires extraordinary care)
b D
el
i ver fruits
The
fruits earned from
the
property from the perfection of the obligation?
If
the obligati
on
is
PURE - then
you are obliged to deliv
er
the fruits from the time you are
obliged to make delivery- all the fruits earned from the time you are supposed to deliver must
be delivered, he was
already
the
owner
om
the
time
the
co
ntract was perfe
cted
.
If
the
obligation is
CONDITIQNAL
(suspensive), refer
to
Article
1187.
,,
1
oc'(\s
If
the obligation
is
reciprocal - the fruits are murually
compensated
If the obliga
tion
is unilateral -
the debtor
shall appropriate the fruits:
debtor
does
not need
to
.
_;
de.liverr .: .
lf the obligation
is
with a
PERIOD
no equivalent of article 1187.
CRC: 2
views
1
a. One group: obligation
to
deliver arises
or ly
from
the
arrivel of ath term, then the
obligation starts only from the arrival of l period - therefore, to delivery all the fruits
b. Second g
roup
: obligation to deliver starts from day 1 (where the con
trac
t was
perf
ected)
CRC
:
in
both cases, you
cannot
apply article 1187. You still have to deliver fruits
lf
the
obligation is RESOLUT
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
5/57
CIVIL LAW REVIEW
Dean Del Castillo
constructively dehvered only ou
March
15,2011, B becomes
owner
of said fruits
and
land only from said
date.
Between March
3 and 15, B
had only
personal
right
(enforceable agains t A); after March
15,
he Pas a
real
right over the
properoes.
o Personal
Right- power
demandable
y one person
of
another
- to give,
to
do.
or
nor
to
do
.
o Real
Right- power
over
a specific thing (e.g. right
of
ownerslup or
posscss10n)
and is binding
on
the whole world.
o
In
the case above mentioned, before the land is del.tvered,
the
proper
remedy
ot the
buyer (since
he
ts
not
yet the owner) is to
compel
specific performance
and
debvery.
and
not
an accion reinvmdicatoria.
c. Deliver ccessions
Accessories-
those joined to
or
included w1tb the p1incipal for the latter s
better
use, perfection,
enjoyment
(e.g., the keys
to
a house, the dishes in a
restaurant
).
o They
are
attached to the property but this can be separated without any damage
Only for embellishment or ornamentation.
1\ccessions - additions to
or
improvements
upon
a thing.
The
se Accessions
are attached, cannot
be
removed without
causing damage
to the
principal.
These become part
of
the
principal,
so
rhe
owne
r of the principal property
gets the
accessions.
o Example: obligation to deliver a car,
it ha4momo
steering wheel, 1pod dock etc.
Do you have to deliver these wtth the accessories?
GR: once you sajd you will deliver this ca.c,
you
have to deliver
everything. But of course, you can scipulate othetw1se.
f he object ts generic, then genus does
not
pensh. So you don t actually have these Lh.ree added
obligations.
Breach - failed to deliver
or
perform the prestacion
Remedies
of
the
CREDITOR
n case there is a Breach
of
Obligation:
To Give
To
Do
Not
to
Do
Specific Generic
Specific
performance
X
-
Right to compel the
(
no
prohibition
obligor to deliver or
provided
in
the
to perform his
law;
but
t
is not
obligation
:LI effccove
remedy)
Substitute
Performance
X
X
lu ..W-k
(except:
purdy
personal/
.
rohibited
by
the agyeement)
,.....II \
Damages
J
Page
Every good
and
perfect gift
is
from above, coming down from the Father of the heavenly lights, who
does
not
change like shifting shadows.
Caroline Tan Jessamyn Uy
&
James
Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
6/57
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
7/57
CIV IL lAW REVIEW D
ean
Del Casti
ll
o
These cases
of
Villanueva ancl Bernabe, these are K
of and
K to Sell. The
doctnne
now IS thar
it
is a K to sell, the remdy
of
rcsoluoon
of
cancellatiOn
is
NOT a remedy because
there
is nothtng to
cancel or
resolve.
This remedy presumes
that
there is
an
existing
obliM.Uon.
If t 1s
a
K
to sell,
th1
s
IS
an obligation subject to a suspensive condition, that is, the payment
of
the buyer,
so if
there has
been no payment, no obligation has perfected.
Ji is t a resolutory condition, such as the K
of
sale, then an obligation has already been perfected so
you can resolve or cancel the obligation
Racquel
and
Unlad: ; _not
int
e
rch
ange
resciSSIOn
Aroclc 1380 and Article 1191
The
latter should
bt
Ltrmed as
resolution/
cancellation
RESC ISSION {tNtlts.tJ. RESOLUTION
Obh
Article
1380- 1385
Article
1191
,
Basis:
Lesion or economic
prejudice; this is Breach
-you have
valid obligation
as
well
some
thing intrinsic in
the
obligation;
we
are not
talking
about
breach here;
these
are
actually
limited
to those
K
entered
between
specific
people like guardians
and
wards.
If you
l
ook
at
the
K l t
is valtd, but then there
is
somcthtng
wrong because someone
is preJudiced.
Subsidiary Remedy:
resorted
to only
when all
Pnne1pal remedy :
1t does
not
depend
on
o
ther
remedies
fail
anythmg
Since tlus IS b:tsed on economic prejudice. the
yo
u to avail
of
rhis
remedy
,
creditor
mav
be compelled to
accept settlement
mal:
no
lo
nger
revoke
it. The
OEooq t$
or
payment). Right
of
rescissiOn may
not
e,Ost.
TR.REVOCABLE
11us remed
y
IS not
totally vm:hin the
prerogative
of the credit
or.
Once there has
been
breached, then you can ntJ
longer VNBREACHED it
Mutual resotution applicable only
in
specific is always a
requiremen
t
of
mutual
instances:
re
su
rucion
a.
Those
entered into m :a fiduciary
re.lanons
hip
BREACH
What is breach?
Ther
e is breach i
you do not
co
mp l
y with tht: oblJ.gation exactly in the
manner
a
nd
Stipulati
ons
agreed
upon
4 Sources o f Breach
a Dolo
-
b. Culpa ..; f\/C
H7 't.c.
c.
Default
d. Contraventio
n
of
the
Terms
71 age
Every good and perfect gift is from above, coming down from the Father
of
he heavenly lights, who
does
not
change like shifting shadows.
Caroline
Ton
Jessamyn Uy James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
8/57
I
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.-
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CIVIL
LAW REVIEW
II - Dean Del CastillQ
DOLO CRC: this is reaJly not FRAUD) CULPA negligence)
;
There
is
deliberate intention to cause a. ll1ere
is no
deliberate intention to cause
damage
or
prejudice damage
b.
Liabihty arising from dolo cannot be
b.
uability due co negligence
may
be
miciga red
or
reduced by the couns. reduced in certain cases
c. Waiver
of
an action to
Liability
c
Waiver
of
an
action
to enforce
liability
due co furore fr:1ud is void.
due
to furore culpa
may
in a certain
sense
be allowed.
DEFAULT CONTRAVENTION
OF
TER.l\ttS
a A brench
or
non-performance in point in a. You do nor comply with the terms and
orne
conditions
b. But look ar the reason why the debtor
failed to perform
If
Dolo/Culpa
-liable
If not e.g. fortuitous event) - not hable
mer
e are really just two cases
of
breach:
a. DOLO
b
CULPA
The
contravention and default is the EFFECT of breach
DOLO
CULPA Fortuitous
Event
Person most liable People who are in the No liabU Hy
lruddle
of
the road; they
are liable but nor so much
as compared to Dolo
asis
He
is liable
because >
he Person is
not
aware
but Two
kinds:
is AWARE that he has he is punished because he
a Could
not
have
an obligation and yet FAILED TO
lt J.
foreseen
deliberatelY fails to
EXERCISE
THE
1. 4/
b
Foreseen but
cX;mply
with
it
Dll.JGENC
E I
unavaoicl.ablc
REQUIRED
OF
HIM;
HE
COUlD/OUGHT
ro have foreseen
Extent
o
Liable for all the
Liable only for those that Not liable
Liabifjty
consequences of his could have been foreseen
actions, whether
foreseen
or
unforeseen
3
Kinds
of
CULPA
CULPA
CO 'rr
RAc ruAL CULPA AQUlLIANA
CuLPA
CRIMINAL
I Page
Every
good
and perfect gift is from above, coming down from the Father
of
the heavenly lights, who
does
not
change like shifting shadows.
Caroline
Ton
Jessamyn
Uy
James
Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
9/57
ClVIL
LAW REV
I
EW
- Dean Del Castillo
Basis: Contract N egligcm Act ivil uability aasing
cnme
As l0ng as it
IS
proved that
The
victim has
lO
eroYe the
Accused td P,tesumed innocent
there was a comract, and that
negligence of the defendant. until contrary is
proved,
so
was not carm:d_s>ut, it is Tills is because his action is
prosecution has
the burden
of
that
the
debtor
is at
based
on
alleged negligence
on
provmg
negligence
of
the
fawt, and it
1s
h1s duty to prove
the part of the defendant
accused.
that there
was
no negligence in
carrpng out the ttems of the
contr:tct
Defense
of good father
of
a
Defense of good father, etc. This IS not
a
proper defense.
famtl) thr.: selection and
S
proper
and
complete defense
Here,
the employee's guilt is
supervisJon of em ployees i@
(insofar as employers
or
automatically the employer's
a
proper defense.
guardians ar civll guil t, if the fom1er JS
insol
vent (SUBSIDIARY
LIABILITY).
USURY LAW
Usury - exaction of excessive interest.
Not abolished
but
merely suspended.
1he WHOLE INTEREST that is USURIOUS is voided, not only the excess interest
1
NST
ALLMENTS
Please see Art. 1176
:\n. 1176 is merely a rebut table
presumption not
a conclusive
presumption.
r:or
par
2,
Art
1176 to apply, 1t 1s n
ot
enough that the recei
pt
for the msralmenr paid be dated,
n must also specify that the receipt is for payment of a particular installement due.
RIGHTS OF CREDITORS (An.
1177
)
1 Exact Payment
2. Exhaust debtor 's property, generally by attachment (except properties exempted by law).
3. Accion subrogatoria (subrogatory action)
-I.e.,
exercise all rights
and
actions except those
inherit
in
the
person
(e.g. parental authority, right to revoke donations on ground of
ingratirude,
hold
office, carry
out
an agency). This is not a remedy of
subrogaoon
referred to
In the Chapter
on
Novation.
. ;\ccton pautiana- impugn or rescind acts or contracts
done
by the debtor to defraud the
credi tors.
General rule RJghts arc transmissible.
Exceptions:
1. If
the law.provides otherwise
2. If the contract provides
I Page
N very good ond
perfe t
gift
is
from above, coming down from
the
Father of
the
heavenly lights, who
does
not change like shifting shadows.
Caroline Tan, Jessamyn
Uy &
James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
10/57
CIVIL LAW REVIEW l
-
Dean Del Castillo
3. If the
obligation Is purely personal
DIFFERENT
KINDS
OF
OBLIGATIONS
PURE
OBLIGATIONS-
one without
a condition or a
term
(hence,
demandable
at
once)
How \\111 you be placeJ tn
default?
Demand IS
needed
CONDITIONAL
OBLIGATIONS- : \ND uncen:iln-
cannot
be
past and
uncertain
(du :i
period uf uncertainty- is a PERIOD)
a. Suspenstve-
the
happerung
of
the condition gives rise
to
the obligation
J
IW 1
h
fl v
/r
1
b
I FRUJTJ
I
Entry
Fulfllmen\
of
the Condmon Dehvery
o You
need
a
demand
o
When
does your obligaoon anse?
Upon
the rime the
condjtion
is fulfilled. But once it
is fulfilled, it retroacts from the ti.-ne you entered
into
the
K.
o
\ 'hat
is the
consequence of th1s? You
can sue only
upon happerung of
the condition
but what is the sigru6cance of this retroactivity? The cred.ttor can
sue
you wtthin
the
period
entering
until the happening
of
the
ccndiuon.
Resolutory- the happcrung of .he condition extinguishes
the
obl.igaoon
Remember
you
can always 1mpose any condiuon, except
It
s
hould
not
be ILLEGAL.
Il\Uv0R.\L,
and
tlvfPOSSlBLE
You
can mixed these
two
(suspensive/resolutory) with the followUlg:
a. Potescstive depends upon the will
of one of
the parties
a..
Potestative
on the part
of
the
DEBTOR
i. f also suspensive- BOTH the condirion
and
the obligauon are VOID
ii.
f
resolutory - Valid
b. Potestative on
the part of
the CREDITOR -VALID
b. Casu3/-
depends
on
chance
or the
will of
a third
person
c.
Mixed
depends
partly on
the Vv ill of
one
of
the parties
and partly on chance
or v..-ill
of
a
thud
person
FO
RT
U
ITOUS EVENT
Somethmg beyond
the debtor's vtll
It is
an act
of God that no
one
has control of
f u
ss
a
FE,
then your liability is 0. Because this is something which you have nor foreseen or
foreseen
but
unavoidable
Exceptions:
1. By sopuhtion or contract
10
Ira g
e
N very
good nd
perfecc
gift
is
from
above, coming down
from
the Father
of
the heavenly lights,
who
does noc change like shifting shadows.
Caroline Ton, Jessamyn Uy James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
11/57
.
..
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CIVlL LAW REVIEW II - Dea n Del Casti l lo
2. Debtor assumes the risk (e.g. msurance contract)
3. If
the obligor
is
in default
4. If
the obligor is guilcy
of Bad
Fruth (for havmg promised
to
deliver the same
thmg
to
2/more persons who
do
not have the same Interest -
liable to
BOTI I
5. Provisions of aw
6.
Rule
on
concurrent
negligence
Example: civil liability arising from
criminal
offenses
Exception: When the creditor (offended party tn the crime ts in Mora
Accipiendi)
Illustration:
A commits a crime of theft and
JS
asked
to
return the srolen ro
ns
owner B. f A
had
previously asked
the
owner to
accept
the cor,
but
the
owner
without
JU
stifiable cause to
accept
the car,
and
later
on, the
car
was lost thru a FE. Is A still liable;;.:>
___
No longer liable because the c reditor is
7. Rule on commodatum
- bailor scill liable - del )
t
R
eq
uisites:
IFIN)
1
a.
Independent of
the will
of
the debtor- something he has not control of, an
act of god
or
nature,
it can involve acciden ts like ftre, catastrophy, war, rebellion, sedition
b.
Could not have been
Foreseen
or
foreseen
bur
ur.avoided
c. An
event which
render
you
IlvfPOSSIBLE
to
perform-
difficult-j ts
not
an excuse, it is
the
imposs1bilicy
of
perf01mance that excuses you from
performing your obugaoon-
1f it can
still be perform even tn the uunost difficulty, you a re
not
d.
No contributory NEGLIGENCE
Cases:
\Vhere parries have inststed that they were supposed
co
be excused from perfoarung theJr obugauon
because
of
martial law, the courts said that this
should not
be considered as a fortuitouse event
unless
of
course
this is very direct say for
example
you have to deliver a thing
to
a
compan
y which
was already escheated by Marcos.
The
fact that
you are
not is also
nor
a forruirous event
Example:
Contracts cove.red by a
period
;
I I 2 YRS FE I I
Delwer
i@ a r s
therl..lJ'ears in between a
6rc
has prevented you from detivenng
your
product,
the court said that one you have to the cause the So if the two-year perioj IS .
because
of
fortuitou5 eve
nt
, you do
not extend
your obligation for another
two yeru;
because in this
1 \No years you were excused from ji';'Qliry because again it is a fortuitous event
EFFECTS OF ILLEGAL,
IMMORAL,
OR IMPOSSIBLE
CONDITION
'
i
1
\1
l l i P ag
e
Every goo and perfect gift is
rom
above; coming down from the Father of the heavenly lights, who
does
not
change like shifting shadows.
Caroline Tan Jessamyn Uy James Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
12/57
.
L ..
CIVIL LAW
REVIEW
II-
Dean
Del
Castillo
J\
Positive
condition
r
you
must do)
G.R. both the condition
and
the
obl..tgation is v01d
E>:cept graruirous(donation
etc)-
conditions are not deemed written- the reason for this is that
you cannot be an Indian giver, you say you will give but because of the condition you
are
nor
bound to deliver. ( flr"& Jl l .vr.. /-..
1 ?/i
VJ\.
A
B.
Negative
condition
(if you
do
om
commit
an illegal act,
that
nothing must happen)-
the
condition will be
deemed as not having been agreed
upon by
the paroes. The condition
lS
treated as not written.
Why
Because
the condition is
superfluous. Everybody is expected
not to
do
immo:aJ things.
llus wJil be
as
if
you h3vc entered Into a PURE obligaoon.
On the assumption that your condition does not fall within the three aforementioned limitations,
then tbe
condinon
must be fulfilled.
Example: to pass the bar. But what if the person keeps on failing
the
bar, how long
should you
wait?
GR:
if
the
parries have nor agreed to
fix the date
as to when it should
be
fulfilled, then you have
to wait, subJeCt to
the
rules on prescription (well one may argue there is no runrung of
prescription yet because there is no obligation yet)
Exception: if t ts obvious that you will not be able to pass.
Now
we
JUSt
have 5 years to
do
HI
Article 1185
CRC: 1would reaUy
understMd
this provision to mean that
it
IS not that the condition is fulfilled
but the debtor is already released according to 1nrent:ion of
the
paroes and the narure of the
obugation.
t
is wrong to say
deemed
to be fulfilled because by thi > we
wtll
mean the.re
wac;
obligation. In other words, if
the
tnteotion of the paroes is not to walt fotever, then the court
sho
uld take this into considcnwon.
Period
or
Fullilmenr o .he Obligation
A.
Positive form
I
will
give
you
Php 1M if the
ticle will be issued before Dccembe:- 31,2011.
What happens if before the said date, condition is fulfilled? Obligation anses at the
wne
of
fulfilment, not
on
the agreed penod.
lf
the period arrives and the condition has not been fulfilled - debtor is released from the
obligation. Except: when
the
creditor prevents
the
fulfilment of the condition or it becomes
indubitable that the condition
will not happen
{ t hi
B. Negative
- which means that nothing should happen before the period
Effect
if
something happens, then the
debtor
is released
Effect if
nothing
happens,
then the
obligaoon is created
OBLIGATIONS
WITHA
PERIOD
12
I age
'Every
good
and perfect gift
is
from ubove, coming down from the Father
of
the heavenly lights, who
does
not
change like shifting shadows.
Caroline Ton, Jessamyn Uy
P t
James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
13/57
CIVIL
LAW
REVIEW
II
- Dean Del Castillo
;\n
obhgation with a day ccwun
What
is
the meaning of a certain ?
a. Can be
a
fiXe date
b. Future andcertain event- must necessarily come, although it may not be
known
when.
c. Past event which is unknown to the parti s what is the period here?
Date
of
discovery or knowledge: of the party because it
is
SURE that it happened but there is
an uncertainty as to when
will
the knowledge be acquired
d. Pa able able t ime- this is a sure obligaoon. What IS the
penod
for payment here?
e period
is
fixed by the court.
The
court s obligation is to
try
the tntention of the
parties based
on
rhe of the obiJgation and the cucumstances of the parries
and
fix
the
penod. Is there :1ny
other
mstance the court fixes the period? Yes. article
1197
Requisites for
a Valid Pcn od
or Term
1.
It
must
refe to the
future
2.
t
must
be certain (sure to come)
but
can be extended
3. t
must
be physical
and
legally possible
Fixtng the period
a. Firs t step: is there an intent ion to
fix
a peood?
b. Second step: when the pertod has armed and the
debtor
has nor paid
so
you avail the
remedies provided in the Cl\ tl Code
The
coun sometimes consolidate like if tht debtor has
not
fulfllled after tlus penod. rhe c;.rediror
Js entitled
to
this 01: that remedy
When
the
Court
May
fix
a penod?
I
When
the duration depends
upon
the
\Vill of
tlte debtor
2.
\\ hen
although the obligation does
not
fix a
penod,
It can
be
Inferred that a
penod
was
intended
hen Court May Not Fix the Term (Paras)
1 \Vhen no tetm
was
speofied by the parties because no term was even intended, in wiuch
case the obligaoon is cP ally a
pure
ooe, and
dem:mdable at
once
2. Payable on demand
3. Specific periods are prov1ded for in
the
law
Suspensive Period (ex die)- the obligauon begins from a day cert:Url, In other words. upon the
arrival
of
the period.
Resolutory Period (in diem) - up to a tune certain, the obligation remams vahd,
but
upon the arrival
of said period,
the
obligation terminates.
Period
rom
a
ondition
l
Podod
ondition
1 31Page
Every good and perfect gift is from above, coming down from
the
Father of the heavenly lighcs, who
does
not change like shifting shadows .
Coraline Tan Jessamyn Uy James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
14/57
CIVIL LAW REVIEW
J
- Dean
De
l Castillo
Event
which must happen soosH.:r or iaicr, 11
.l
Unc
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
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,
-
, .
.
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;
fr
JJ ?
{ II
, ft
}7/c / fvt
ttcr
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CJV
IL
LAWREVIEW
II-
D
ea
n
De
l Castillo
The
unpa.Lrment must be bec:J.me of
debtors
fault.
Make sure you can distioglllsh (b) and (c\
Jn
(c), you
can
replace the security
d . Violation of any condJoon
Remember
it
must be dear that the undercaiUng/ concliuoo JS the one that induced
rhe
creditor in
granting
the debtor
a
period
e.
Debtor
attemets to
abs
cond
Abscond
:
runmng
away from your obhgation,
in
most cases,
due
to flight
Take
no te, mere attempt
wiU
entitle the: creditor to accelerate
the
period because 1f you
still have to w:m, then you mjght be left \Vllh nothing
f Those instances where the snpulation of the parties for the acceleration of the parues
Re t
roact
ivity
Retroactive Effecr
C) delivery
\
J>
ab Condioon is fulfuled, effccti\,ty: nme condition
is
fulfilled but retroacts to
the
date
when
rht:
obligation is entered you have rights
but
accruing only
upon
the cond.ioon)
So
UJ
between
A
and B, vou mr y have these protecnve actJons:
Bond, escrow, etc
Sometlung the paraes
may agree
to.
not forced by law
c. f he debtor
dd ivers in (A),
what is the
effect?
Rec
over acrual payment and mtercsr thJs
is payment
by
mistake (soluoon indebiti gives
the
payor
the right
to recover with interest)
dus is of cou.rse jf he discovers the mistake be fore the happening of the condition.
But what
1f
he knew
of
the
mistake
after the
condition has already been fulfilled?
YOU
DO NOT
H A
VE THE RIGHT
TO
ASK
FOR
TI-lE
RETURN
OF
THE
PRINCrP \L, you can recover for
the
tncerest
for the
period
befor
e
tht>
happenmg o f
the
period.
If the debtor knew mat payment was
not
yet d
u e he
cannot recover what has been
paid.
Thi
s is true whether the creditor is in go od faith o r bad faith, since the
important thing
is
the knowledge of the debtor (Implied Waive r).
Example (From Tolentino s
Bo
ok)
X sells a piece of land, subject to a suspensive condioon, to A. Then, before the happemng
of
the condition, he .it unconditionally to
B.
There is neith
er
registrat.ion of the sale nor
delivery of possession etther to \ or B. Upon the happening of the condJuon, the sale to v.,ll
retroact to the date when it was made, he will haye a better
right
than B.
\Vhen there is no Retroactivity?
a. Fruits or interest
Art
.
1187
15
I
P
age
Every
good nd
perfect gift
is
from above, coming down from the
Fa
ther
of
the heavenly lights, who
does
not
change like shifting shadows.
Coraline Ton, Jessamyn Uy James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
16/57
CIVIL LAW REVlEW II - Dean Del Castillo
[n un.i.iateral obi.Jgauons - debtor gets the fruits .tnd mterests, unless
there
ts contr
tn
lntenr
In
reciprocal obLg:mons - the fruits and Interests
dunng the pendency
of tht:
condition shall
be
deemed
to compensate
each
other.
b. Prescription
-you
start c-ounting from
the
time
the
condition wok effect
Is tlus the
same
rule .if we talk
about
those
Wth
a Period?
You already have
an
obligation from
DAY
1, that
is why
tough you may ask for
protective acts
but
tht:
debtor is already obligation Period
is
merely
a SUSPENSION of
the obligation
to fulG.I.
Hence, retroactivity is acmally
N
I
A
For
prescription though, same rule applies.
You count
only
upon
the
happerung of
the penod
(suspenstve)
For the
fruHS,
well since your oblJgatJon arises from
DAY
I
if t is
a period.
CRC: Caguioa group: since
we
do
not
have equiva.lent
of
Article
1187
for .geriods,
fruits
fwm day 1 up to
the date the
period anses
belong
to
the
creditor. ..
Paras
gro_ P:
since
you
cannot
rea.lly
bring
an
action before
the
amval
of
the
period:""then techrucally you do not
hav
e rights
OYet
the fruits
before
the arrival
of
the
penod
as
well.
LOSS, DETERIORATlON IMPROVEMENT i
.
Th is onlv appLes
to
those OBLIGATIONS
TO
GIVF
SPECIFIC
PROPERTIES Bt:cause it you
talk about
gcnenc
propertJes, res perit
domino
In those to Jo
or
not
ro
do, nothing
can be lust. Duh . Also for retroacovity, it is up
to
the court if
they will allow this
LOSS
DE
TERIORAT
E
IMPROVED
a. Total loss
-
Fault of
debtor:
-+
Caused by
-
Depends:
Creditor's option:
debtor:
Fault of debtor
a.
Specific
Usfrucuary
Debtor pay damages
perfoonance
+ rights- can he
No
specipc perfonnan
ce
damages
get payment
for
because
it
is one of a
b.
Resolution/cancell
the
kind. No subsrirute
at.ion
+
damages
tmprovemen
s?
performance
as
well.
Fault of creditor No.
He can
Resolution
I
cancellation?
- Debtor delivers
the
prope1('
remove if
it can
There is nothmg more
111
its status. Tapos { -
be
removed .
ro cancel.
( I >t f
Fortuitous
event
Caused by rhc
Fault of
Creditor
-
oebto
de s
pwpeny
creditor:
Debtor
is
released
U
its status
Tapos Credttor
-
Not
entitled
to
No obligaaon
suffers
imp
t.
any
expenses
for
created
in
the first
-
1mprovement.
16 I P
a
g l
Every good
and
perfect gift
s
from above, coming down from the Father
of
the heavenly lights, who
;Joes
not
chonge like shifting shadows.
/ -
Caroline Ton
Jessamyn Uy James
Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
17/57
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
18/57
,
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t
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CIVIL LAW R VI
W -
Dean Del Castillo
Muluplc
Obligaoons
a. Multiple parries -Joint
and
soildary obligations
b. Multiple prestat ions
Alternative is where out of rl-)e two or more prestations which may
be
given,
only one is
due
ConJunctive-
if all the conditions
must be performed
.
.
Facultative- only one prestation has been agreed
upon (prtnopal
prest.-uion) but the
obligor may
renderanother
m
substituoon
ALTERNATIVE OBLIGATIONS
How to determine
which one
is due?
I. Exercise Right of
Choice
\ V ho
has the Right of Choice?
o GR: the right belongs to the debtor
o Exception:
when
it is expressly gramed to the
or
there s a
granting
the
right of choice to 3 d party
Luni.tations:
No
right
to
choose
those prcstatioos which are:
a. Imposs1ble
b. Unlawful
c. Which
could
not have been the object of the obligation
If H is impossible to give all except one,
that
one must still be given
Jf one of the
prestarions is illegal,
Lhe
others may
be
v:ilid and
the
obligatl.on remams
2. Choice must be
communicated
lt 1s
a noofication process not a
conscnr
process
o
Debtor s choice - notify the creclitor
o Creditor s choice
-notify the debtor
o
3rd
Person s
chmcc-
noufy
BOTH
tht:
Jebwr and Lhe crednor
Choice can be commurucated orally or m
wnung,
e..xpressly or impliedly
o
Tacit
Choice-
person having
the
right
of
choice
performs
act
that
limits Ius
choice (e.g. destroys one of the prestations)
o Implied ChOice- when the debtor delivers to the creditor and the latter accepts H
Once
notice has been
made, the obligation becomes a simple obliga cion
An
elec:Oon once made is binding on the person
who
he will not be permitted
to
renounce
his choice an take an alternative which was first open to him (irrevocable)
Effect
o Loss
D b Ch.
i
. d
e
tors
o1ce - spec1
JC
property
smce
res
pem
orruno
One Some All
Debtors
Fault
a.
\Vhen hr destroys one
a.
Crednor to receive
of
the several
damages -
what
is the
prestations,
then
the value? Based
on
the
la
st
debtor i c;
just makmg
his
choice -
choose
one
18
I
Page
Every good and perfect gift is
from
above, comfng dawn from the Father of the heavenly lights, who
does
nat
change like shifting shadows.
aroline Ton Jessamyn
Uy
James
Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
19/57
CIVIL LAW
REVIEW IJ
- Dean Del
Castillo
from the remaming
Crcdiror
1
s Fault
2 Deliver any of the
:i Resoluoon Damages
remammg based
on
the cho1cc of
b. Resoluoon damages
the
debtor
FortuitOus
Event
a. Choose from remaining
a.
Obligation
s
extinguished
2. Poss1ble combinations
If you destroy everything then
the
last one
ts
lost due to FE, then rou
do
not have any
ob Jgation already. The debtcr has aheady chosen bv desrro',1ng other presratJons and cotwt:rrcd
H
mro a simple obugation
A - bst
due
ro FE
B - lose due ro credltor's fault (at thts
poim.
debtor can choose between the two opoons 'ls
menooned above)
C Qast item) - destroyed by the debtor Qost due to debtor's fault) tt means
that
the debtor has
chosen resoluoon/cancellation (not liable for the loss)
3 Creditor's Choice
One/Some
l l
Debtor's
F:wft a.
Choose
from the a.
Damages based on
remaining whatever his cho1ce IS
b
Damages- Value of
the thing destroyed by
the
debtor
Cred
u ors
iault
a Can choose from the a.
Obligation 1
remaining
extinguished
Fortuitous Event a
Choose from a. Obligaoon
i:
remrumng
exting01shd
i
FACULTAT VEOBUGAT/ON .
1l1c nulliry
of
the principal caroes
with
l t the nullity
of
the accessones or substitute
f t s impossible to give the the substitute
doe
s not have to be given;
if
it is
m1possible to give the substitute, lhe principal must still be given
1l1e right
of
choice is 0 12; to the
debtor
;
Effect o Loss
a. Loss
of
Substitute-
GR: Does
not
affect the principal prestation.
Debtor
cao still deliver prinopal prestation
Except: if
debtor
chooses substitute
and
communicates to creditor
and
the credttor does
some
thing
w/c results in loss
of
subst.
19 I Page
Every
good
and
perfect
gift is from above, coming down from the Fatherof
the
heavenly lights, who
does
not
change like shifting shadows.
Cora/me
Ton
Jessamyn
Uy &
James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
20/57
' .
CIVJL
LAW
REVIEW II - D
ea
n Dei
Castillo
-? credltor liable to debtor
b. Loss
of
Pnncipal-
Loss
due to FE obligation is exongwshed
Loss
thru
fault of
Debtor
o
convert
subsorute into tJne
of
pnnctpal obligations;
By
destropng pnnapaL it
is
:IS if
debwr
has chosen
Loss thru
fault
of
Creditor- obugaoon 1s exunguished
If it can t be determmed if the obligation ts /
Consider it as an al ternative obligation because it creates more :coproetry
of
rights
To
be facultaove intention must be cle by
prO\ision of l:lw
fOINT
SOLIDARY OBLIGATIONS
GR:
Joint Obligatton-
each obligor answers only for
a part
of the whole liability
and to
each obligee
belongs only a pan
of
the correlative rights
Dtfferent shares
of
the
debt
or
the credit are constdered from
one
another
Excepoon: Solidary Obl.igauons the active and passtve may demand the fulfilment
of
or
must
comp
ly '">ith the whole
When do you have solidary obligations?
E.xpresslv s
op
ulated
v law (e.g obligaoons arismg from bailees in commodarum)
stOf
words
such as JOint
and
severally
( the use
of
the word sever".J.ly in the Philipp1nes, tt mean:- ::.olidary)
lnwvtdually, collccrivc:fY. separately, disuncnvely, I \Vlth a lot of st&T: atures a
-
\7hen the nature of the obligation reqwres liability to be solidary
Different Kinds
of
Solidarity:
J _ Solidarity - on the part
of
the creditors
or
obligees
2 Solidanty on the
part
of the debtors
or
obligors
3. Mixed
solidarity-
on the
part of
the obhgors and obligees, or on the part
of
the debtors and
the crerutors
Solidanry despite Dtfferent Terms or Condmons
Creditor may recover that e..,art wruch is pure and unconditional, and should lea\e
in
suspense or
pentrg,
the righr to
demand the the
remainder
unnl
the expiration
o
rhe term
or
the ftlment of the condition.
The
whole
solidary obiJgations can be recovered from any
of
the solidary
d e b t o rs@ .
he
share of those with unmatu;-ed condit ions -
---------------------------
20
I
age
Every good
and
perfect gift is from above, coming dawn from the Father
of
ile heavenly lights. who
does
not
change like shifting shadows.
Caroline Ton Jessamyn
Uy
James
Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
21/57
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
22/57
CIV
IL LAW
REVIEW
J -
Dean Del Casti
ll
o
GR: liabiliry
depends
on agreement
o Exception: if there is
no
agreement, e.9.ual apportionn1ent of liability
QB:
solidary
do
anything prejudicial to
other
solidary creditors. Bur
he can
do
anything thar
o Excepti9ns J_ . L
1.
,..,}1
t'Ol
he has the obligation to reimburse the other creditors
Except If
condorung creditor has
consent of all other
creditors,
Condoning
creditor
has NO more duty to reimburse the
other
2. Assignment
of
- GR: consent
of all is
(can be given later)
- o
Exception:
assignment
of
shares to another solidacy p-editor
w/"o consent of others G%1iJ.e assjgnment (can be
ratifif'd)
E
ect of Form s of Extinoo uishnu:nt (Passive So/idadty)
.Wv
f :A
Obligation extinguished as between creditor
and
solida;y debwrs
However,
a new obligation is creared as among the
so
lidary debtors = o the paJing
=
payment; novation; compensation; confusion; remission
o Obligation among themselves
i ,_iol lt
Rule on exnngu.ished thru PAYMf:NT
GR: Obligation ro
Exception:
if payment is made after
ob l iwon-
Vrescribed
or
has become legally impossjble
o - Paying
debtor
shoulders whole gQl. gation lU.mself- he
can t
claim
reimbursement
from
other
solidary
debtor
o Remedy:
Recover from
the creditor: follow rules on natural obligation soJutio indebiti
- i f
he
KNOWS that debt
already presccibed - -
7 narural obligation-
N O
recovery
i f
he did not know debt prescribed
7 can recover from creditor
Rule on extinguished thru
NOVATION
Modificatory Novatioo- other solidary debtors must REIMBURSE paying debtor (with
respect to
the
lower
amount)
o e.g. one solidary debtor able to renegotiaLe lower
amt of
Extinctive Novation- NO obligatton to reimburse
o condonation
ofTOTAL
obligation
Rule
on
Extinguishme
nt thro
COMPENSATION, CONFUS
I
ON,
REMISSION
GR
There
right
of
l'dffil5Ursernent -
Exception: NO
reimbursement:
:J hi.. '
.
i ; t / JJJ 2 If age
''Every good
and
perfect gift is from above, coming down from the Father
of
t
he
heavenly
who
does
not
change like shifting shadows.
Caroline Tan, Jessamyn Uy James Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
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CIVIL
LAW REVIEW - Dean Del Castillo
o Condonaoon
of
TOT:\L obllgation
o when debtor sued is guilty
of
loss of d mg due
Effect
o
Loss or Impossibility
1.
Due
w FE
BEFORE
demand was
made-
obligation is exungwshed
AFTER demand was made -debtor still liable
Convened
to liability for damage
2. due w
fault
of one of
the solidary debtors - debtor liable
Kinds o
Defences
1
Complete
Defense-
denved from the narure
of
the obligation: you don t need to
pay
anything
Examples:
lack of
consideration; absolute simulation; illegal consideration;
extinguishment of the obligation; non-fulfilment of the suspensive condition; statute
of
frauds
2. Personal Defense to the
Debtor Sued-
Complete
deft>nse
(generally)
Vitiated Consent -Complete Defense
Incapacity to give
consent-
Complete Defense
Non-fulfilment of condition imposed regarding Ius share- Partial Defense
Non-arrival
of
the
rc.rm
regarding his share- Partial Defense
3. Personal to
Othe
rs
-Partial
Defense regarding share others involved
f one of
debtors
IS
uwoki.ng a personal defense (personal to hunself) you
CANNOT
be made to
pay. Example you are saymg your signarure s forged. Unbke when
It
is invoked bv another debtor,
be
may be liable to pay less the debtor s share that has
a
personal dt:fense.
Subrogaoon - the debtor who paid DOES
NOT
STEP INTO THE SHOES
O THE
CREDITOR
Rule on Insolvency of a Solidary Debtor
Insolvency s
NEVER a
defense
Insolvency of one
is
shared proportionately by the others
A solidary debtor who
pays
can later
on
recover from the insolvent
debtor
Upon payment by
tht:
other solidary debtors, the obligation of nsolvent debtor nor yet
extinguished UNLESS the insolvent debtor has been declared insolvem
on
erences between a so id d b
ary
e
tor and a suret :
Solid uy Debtor
Surety
principal party in me contract not a pnncipal party
cnn be made to pay the whole amount of the can bind himself for less
obligatJon (can
you
bind _yourself less?
No)
collects from othec debtors and cmoot collect
collects the entire
amount
agreed upon
the full amount (ofcourse minus his share)
Extension
of
time will
not
release the solidary
An extension of time to the pnnCipal debtor
3 I
P
NEvery goo ond perfect gift is from above, coming down from the Father of che heavenly lights, wf
does noc change fike
shifting
shadows.
Caroline Ton , Jessamyn Uy James Ligon
> a;.;
.;. JJJ., t,..fl .,.
1
,
' ltl ;. k t
I
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CIVIL LAW REVIF W II - Dean Del Castill o
deb1or
TO N
T
INDIVISI
BLE OBLIG
ATION
S
Solidarity
Refers to rhe oe between the parties
wjrhout the surety's consent will release the
surety from the
contract
Indivisibility
Refers to
natUJ::e of
obligaoon
.
Need at
least
2
debtors
or
creditors May exist even
if
there
IS
only
one debtor and
only
one
creditor
The
fault
of one is
the fault
of
the others
The
fault
of one
is
not
the fault
of
the others
;jl
The
liability
of the
parties
is reaUy but
we objec1 that is indivJSJble
Obligations deemed INDIVISIBLE: '
1
/C.INJ
o Obligations
to
give definit s (e.g.
to
a
car ' H I I
o Those
which
are
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
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CIVlL LAW REVIEW Dea n Del Castillo
Whc::r:
penalty
may be reduced by
court.
'
I
,.
The
obbgacion has been
pardy complied
with. by
the debtor
Penalty
is
Penal Clause CANNOT be enforced tf:
1. The
breach is
due
to the
fault
of
the creditor
2 Fortuitous s:yeot unless the debtor expressly agreed
3.
Debtor is
I'JOTyet
in
DEF ULT
Two provisions thar are confusing:
' 'cannot
collect penalty & principal"
and
' 'collect on ly penalty in
lieu of principal"
onetary
Obli
gation
(payment of
a
sum
o f
money)-
can collect
BOTH
the
printipal and
penalty
If
NOT a
monetary
obl.tg-ation (e.g. fat.lure to deliver the thing) must
pay
the penalry
Problem:
Facts: Credit: Pl
000;
Penalty- P200, interest-
12%;
payable in
3
years
1 y ru
Interest-
120
2
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CIVIL LAW
REVIE
W
II
- D
ea
n Del Castillo
:\n
12.3i is
NOT
an ext.iusive there are
other modes of exonguishmcnr (e.g.
tlt:arh-
tn case
of
personal obl.igauon;
compromlsc; fonwtous
even; fulfilment of resolutmy term:
prescription)
PAYM
EN
T
Payment-
is
the
mode of
extinguishlng obligations whl ch consists
of.
a.
The
delivery of money: or
b.
The
performance in an} other manner of an obligation
Three Principl
es
in Paym ent
Integrity
'
You can subsume mdivjsibiliry here
If your obligation is to pay Php1M, then you want ro pay PhpSOOK
only, then tius
vwlares
the
rule on integriry
Performance or payment must be made m :1ccordance with
the
terms and condioons agreed
upon
Exceptions:
'(ff
a
Substantial
performance
(Article 1234
and
1235J
performance accorJmg to
the
f.ur
tntent of the
contrnct ....vah an attempt
LO
perform
b. Waiver
if
you
read Article 1234 ,
it
IS a bit
confus1ng. It the ob
Jg
or
rna\ rel: OVt"r
le
s.s
the darnzges - what is the mea:Ung
of recover? Doe
s this
mean rhar
the
obligor
can take back his money:>
No. otherwise
the
obligation v ril l still eXJst. Th js only means th:\t the
debtor
can be considered as hanng ful.filled hls obhgaoon and can
enforce
fulfilment
of
his obligation,
but he
is still liable
to make good as
to
what has not
be
n performed (balance)
-
Example: the obligation is at Php 100.00 bu t
the debtor
only patd
1'hp90.00,
the
debtor will
be deem
ed to have been fulfilled his obhgacion
but he stiJJ has
to
pay the remaining).
If
this is the
case, is
1234 and 1235 the same?
Nol In Article 1234, there is
the
phrase less the.: damages obt:uncd
by
the ctetlitor-
tllis means
that the debtor is
not vet off
the hook,
the
effect of
rhis
is
the
crc
dttor cannot
cancel the obljgau
on. Th1s
ts
an
cxcepoon
because
the at
this n.me
cannot
snll av:ul o f
rem
edies
such as resolution
but at
the
;ame time
the
debtor cannot be considered
as
fuUy
patd
becau
se
he
still to pay.
6 Page
Every
good and
perfect gift s from above, coming down from the Father of the heavenly lights, who
does
not
change like shifting shadows.
Caroline Tan , Jessamyn Uy James Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
27/57
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
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CIVILLAW REVIEW II- Dean
Del
Castillo
P c
1
_wnetJt y
Jd Person
The
creditor can refuse payment by srranger .3rd person), except:
a.
There
ts a
all
owing this
b. 3rd person has an inte:-e5t in the fulfilmem of the ob Jgation (e.g. co-debtor,
guarantor)
3'J
perso
n is
NOT
interested
f
creditor does not accept
payment-
c:an't bt. considered
in
default
I f
he accepts payment, obligation is created between the
debtor
and payor
Debtor
3"'
Person
with interest
3rt person without interest
The 3 d person
ma
y pay:
,
..
Can Creditor
to
accept?
I
I
If
creditor refuses to accept,
can
he
be considered tn default;l
With
knowledge
AND consent
gf
the debtor-
pavor
is
en titled
to
Re.unbursemenr
AND
Subrogation
o Subrogation -putting somebody imo the :;hoes of the creditor, bencc, enabling the
'I\ fom1er to exercise all the nghts and actions that could have been e:
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
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CIVIL LAW REVlEW II - Dean
Del
Castillo
o Can be ranfied
Creditor cannot
be
compelled
to
accept I t
Remedy of consignation would not
be
proper (Paras)
Exception: Art
1427 CC
- "\'\ hen a
nunor
between 18 a.f Jd 21 years of age, who has
enrered
Into a contract without the consent of the parents or guardian voluntarily pays a
sum
of money
or
delivers a fungible thing
in
fulfilment
of the
obligation, there shall
be
no nghr
to
r
ecO\ Cr
the
me
from the obligee
who
has
spent 0 1
conswned it m
good
fmth.
:;,ubJeCt to the mJe
on
natural obligauons
To whom payment must be made
a. Creditor
b Heirs
c. assigns
Assignment of credit does NOT
reqwre
consent of
debtor;
mere nouce is enough
d
Person
authorized to
recei
ve
I t 11 '}ti
p 'Jt-l A
(f.,
;v
Excepgons: (payment
made
to the
above mentioned
not vahd [void])
There is judicial order for retention of debts (e.g. garnishment)
Wm of injunction that prohibits payment to creditor
lnsolvcnt creditors
Pa_
vmenr
to Unauchon
zed Pe
rson
'D1c payment is Vaud nm only
w the
extent of
beneti
t to the creditor
Burden of
Proof
that
the benefit redounded to the credJtor
DE TOR
'J(
tt ? 1
ft
A rl
,1-
t
..A.
. klh
Excepuons:
'' '1
obl-t ll vJ;l
.1
1
after
payment
the tlurd persor;
acquJreu
the creditor's rtghts W
b. If the creditor ratifies the payment to the third person ft) ),. __ J
c
If
by the creditor's
conduct,
the
debtor
has been
lt:cl to make
the payment (estop
pel
)
t/P nv
Payment to Person in Possession o he Credit
Requisites (to consider as valid payment and release
the
debtor):
a.
Payment
must
be made in good faith
b. The
payee must
be
in
possession
of
the
m il
itself (nor merely the
document)
When one possesses the c
redit-
there
IS
color
of
title
to
it
Payment
to Incapacitat
ed Person
Valid only:
I f
the
incapacitated person has kept the thmg dcl veud; or
/ Insofar as
the
payment ha s been beneficial to hin1 vp tv k ri
/
Rules
on
Monetary
Ob
ligations
-"
QJ
kr-A
&
rrlft:.hr,.:
a. It
must be
io legal tender- it is tl1at whsch a debtor compel a
creditor to
accept in pa)mCn(
of
the debt.
29 I
P il
g e
Every
good
and
perfect
gift
is
from above, coming
down from
the Father of the heavenly lights,
who
does
not
like shifting shadows .
V .
). M .
.
I
Coroltne Tan, Jessamyn Uy & James Ligan rvr
v -
. v J n, .. tl
I.
A
(WI If rh l Vf/111'
(';\,- r
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
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CIVIL LAW REVIEW II - Dea n Del
C
as
tillo
iJ
Can vou pay in dollars?
Viii f r tJ,
h 72
o No The only currency that
is
a legal tender
n
the Philipptnes
ts
the Philippine
Peso.
o
But
you can agree to pay in o ther currenoes other than Philippine Peso.
b. 1t is subJect to rule on inflation
These are only applicable
if
payable m money.
l t
refers
to
the value
of
our money; as
to
its purchasing power
of
the Php
How
do we detennine the lncreast:
or
decrease
In
the value
of
the money?
o Based on the purchasing power
of
your money
o If there has been a decrease
tn
the
v:\lue of
money-
then
it
is inflation
o
There is
a consumer pnce index as ;:elcased in the Central Bank
of
the
Pru.hppines
Does
tlus affecl your obligation?
I
v
o Generally
no
but
it
begms to take effect when there
is ll'TRAORDINARl.
INFLATION
or
DEFLATION
--;--p;xtraordinary - when there 1s a sharp increase/ decrease
on
the
purchasing power
but
generally the determination is a judicial matter.
But
we
have the Ramos Case that has been decided
in
the 1980's where
the
court
has said thar
it is
the BSP that has the right.
CRC: BSP merely says the
RATE oflNFLATION
In
2007, Cicibank v. Sabin.iano talked about compensation
of
your
debt
from
one
branch to another. The Court said
thllt
it
is
the person who
alleges thaT there 1:> an extraordinary inflation who has the burden of
provmg. this. the courr wiU no[ declare if there 15 an extraordinary
in
flacon.
only reconahaoon we can make
ts
that JS soli a JUdicial
deterrruoation bul in
pro\,ng
such, vou can use BSP figures. Th ese
fJ.gUres from the BSP are
mcrdy
eVJdence. These are not conclusive
evidence.
This has nothmg to
do
with the exchange rale
o In the past, the value
of
the Php v. kepl on increasing, of course
ow
lftlporred
components have been increasing as
well. But
there is no relation as
to
yow:
purchasing power as
ro
the exchange
of
rate. These cases therefore are correct m
saying that exchange rnte has nothing
to
do
with
your purchasing power
On
the assumption that we have a finding that we have an extraordinary mfiaoon, what
is the effect? }
o Again,
if no
extraordinary inflation, then
Jf
your
debt is
PhplOO.O
O
you
still pay
Php100.00 today
o
f
there
IS
a finding, then:
o Example:
2010 2011
Php 100
Php?
Determine the inflation rate (max a[
100%)-
how much will you pay? Php200.00 tf
Lhe in
flacion is at 100
30 I P a g
Every good and perfect
gift
Is from above, coming down from the Father of the heavenly fights, who
does
not
change like shifting shadows.
n
Caroline
Ton
Jessamyn Uy
&
james Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
31/57
CIVIL LAW REV iEW ll - Dean De l Castillo
c.
Payment
using coins
a. These are legal tender but 1fyou use
n
coins:
o
Cent:tvos
()-only
up to
PhplOO.OO.
o Pesos -only
up
to
Php1,000.00
d. Mercantile documen rs
I pt11
pJf
Pll.oO
1/v t,tJIJ(;. Gb
Take
note:
new
rule:
ll
kinds
of
checks
are
NOT
LEGAL
TENDER
You have
to
in cash
if
the creditor refuses
to
receive rhe checks
Creditor can refuse
to
accept personal check unless
t
has been scipuJated
However, the moment the Creditor accepts the check
-cAnnot put
up the uefense that
the
check is not
a legal tender
J
Problem
February
11 :
check 1s tendered
February
15: encashment/
clearance
February
14: Due date
o Are you already m default because your obligation was due on February 1-P
-
No.
As long as the
check
has
been
cleared, you'll be credited
on
the 11 to
(retroactive effect)
Place
o
Payment
1
w hJ
Sopulation
of
the contract
;,
If rhere is
no
stipulation
-l dJfh.
Obligation ro deliver Detertnlnate
or
Spec1fic properuel'
-where
t
is
located
/4
Indeterrrunate properoes- dorrucile of
debtor
(CRC: H
sh ouJd
be
RESIDENCE
becau
se=
1f t
as dom1c1ie, you have to guess your debtor s tntcnoon)
o What i[ your debtor has changed b1s residence?
r depends whether good f:urh
or
bad
faarh.
If it is n
bad
fauh however, rhen
you can charge extra expenses (transporracion expense)
you
have incurr.ed m
collecong what is due to you.
/v
f
bf=
1
(lftJ
PECIAL FORMS
OFPAYMENT
A. Application
o Payme
nt
s
Definition: it is the destgnation of the debr to which
should
be
apphed
a
payment
made by a
debtor who owes several debts in favor of the
same
creditor.
Remember the requisites of valid payment (identity, integnry, indiVlsibility)- mu st sull be
complied
REQUISITES:
a. There must be
two or
more debts (severality of debts)
b. The
debts must be
of
the same kind
c
Owed
by the
same debtor
in favor
of
the
same
(thus, there must
be
only one
debtor and
onJy
one
creditor)
d. All the debts
must
be due
Exceptions:
'f'ttt ttl I
{JA /
/Mi
.:
,
M
Every good and perfect gift
is
from above, coming down from the Father of the heavenly ltgh ts, who
does
not change like shifting shadows.
n
Caroline Tan, Jessamyfl Uy lomes Ligon V _,
fzu
(.r-f/Pr;
( ,.
ti
;; J
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CIV
IL
LAW REVIEW ll - D
ea
n
De
l Castillo
0 Jf mere IS a
o When it is made
by
the party for whose benefit the terrn
is
constituted i
e. Paymem s nor enough ro exnngwsh all the debts
- -
How Appltcauon is Made?
a.
PREfEREN
TIA
L
RI
GH
T
OF
DEBTOR
.
Debtor is given by the law the right of the debts he is paying.
Exception: Contrary agreement
Lunitadons:
o
Debtor cannot choose to pay
part
of the principal ahead of the interest, unless
creditor consents
o
Rule on
incliv1sibiliry
(partial payment)
:\pplicatioo must be made
at
the time when payment
by
debtor
is
made
o If
debtor fails to make applicaoon - creclitor has the right to make proposal or
recornmcndacion
o
If
debtor agrees- apply creditor 's rccorn.mcndauon
o
If
debtor disagrees-
be makes the application
b. Creditor makes the Jes1gnaoon, :JS agreed upon by the parties
UNLESS there is cuuse for invalidating the
contract-
refers to invalidity of payme111
o If obligation itself is VOID- application
of
payment lS also void
o Payment
V01d
(e.g. payment to incapacituted
person -
application of payment is
invalidated BUT obltgauon still remains
f he crechcor makes the application \vithout the knowledge and consent
of
the debtor,
the application
is
not valld (Paras).
c.
lf
neither the debtor nor rhe debtr has made the appllcatio ' or
if
the appllcation is not
valid, then application IS
rrutCe by optrafiOII oj tiR
Apply I t to the most onerous
[ f the debts are
of
the same nature and burden, application shall be made to
aU
proportionately
Once applicaoon of payment
is
made,
Jt
cannot be revoked
c. Exception: BO
TH
parties agree
d. Exception to the exception: not allowed
tf
3rd persons would
be
prejudiced
B . Dacion en Pa
go
- Definicion: Mode of extinguishing an bligauon where the debtor alienates in favor of the
creditor, property for the saosfacuon of monetary debt.
- Governed by the Law of Sales
e. Partakes the nature
of
sale -i.e. the creditor is buying some property of the debtor,
payment for which S co be charged against the debtor's debt.
f.
So, warranties
in
Sales applies
in
this case
Effect of Breach of warranty: No payment
Does it
extinguish the
ob
ligation in
ful
l?
32
I
P
g
e
Every good and perfe tgift
is
from above, coming down from the
Father
of the heavenly llgh rs who
does not change
like
shifting shadows.
Caroline
Ton,
Jessamyn Uy
&
James Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
33/57
CIV
JL LAW
REVIEW
l l-
De
an Del Castillo
g.
Not ncce5:;aq, here can be nc::gou:u:ion m the pncc of the property and 1f l l
lower than the debt balance
Requires consent of the creditor
C. Cession Assignmen t
in
Favor ofCcewtors)
tt
swh
1
/..; v
,
ml
11 lh
- Definioon:
it is a
process by whtch
a debtor
cransfers all the propernes not subject to execution
in favor of his creditors so
Ll)ar
the latter may se
ll
them, and thus apply the proceeds to their
credits.
- Kmds
ol
Assignment
f f
h. Lega governed
br
the Insolvency Law; maJOrtcy of creditors muse agree
1. \ oluntary - this what ts referred to in An. 1255 CC;
ALL
the creditors
mnst
agree
- Requisites.
j.
More than ooe debt
k. More than
one
creditor
1.
Complete or partial insolvencv of
debtor
(does nor have
co
be declared .insolvent)
m. Abandonment of all debtor s co not exempt from execution in favor of creditors
n. cceptance or
consent
on
the
parr
of
the
C
j.
e.ditors
- Effects:
o. The
ctedllors
do not
become
the owner:>; they are
merdy
ass1gnees with sell
p.
ne
balance remams collectible
q. Creditors will collect ere ts in the ord
er
of preference agreed upon,
or
in default of
agreement. in the order established by law
- Cession Distin 'shed from Daoon en Pa o Jt tr
\AV.
t
uires
the
consent of all
the
creditors
Requires
full
or partial inso lvenqr
Transfers owne
r
sh
i
Docs
not
transfer
own
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
34/57
.
L
CML LAW
REV IEW
II
- Dean De l Castillo
u. Requ1Sl. . d:.
a. Exmence of a vaLd debt
In case
of
an
option
this
s a
privilege, not
an
obugaaon or debt.
Debt must
also
be
due
b. Valid prior tender
Exceptions:
o
Creditor
is ab >ent or
unknown or does
not
appear at the place
of
payment
o Crediwr is incapacitated at the rime it
s
due AND does nor have a legal
representative
o Without just cause, the creditor refuses to gtve a recepr
o
Two or more persons claim the same nght to collect (an action
m
interpleader would be proper here)
o Title (written document) of the obligation has been lost
o Debtor previously been notified by the creditor that the latter would not
accept ny payment
c. Prior nooce of consignation (before deposit) to
all
persons Interested
Exception: uotice would be useless
Persons mtercsred - e.g. solidary creditors;
as1de
from
the creditor
why?
o Tender =nooce to crednor-
(so,
there s alreadv
in
compliance with
this requjsite)
d. Actual (deposit)
Effect: Property
is
in 'custodia
legis'
e. Subsequent notice
of
cgnsignarioa tg all persons
Again, creditor is not included in the term persons 1.meresred - why?
o Notice accomplished by = service of surrunons
Tender of payment WITHOUT consignation docs NOT extmgwsh the debt; consignaoon must
follow
When Consignation produces the effect
of payment
when the court approves the consign
auon
\ND
orders the cancellation of obligaoon
v. Prior w the obligation RE:MAINS
Creditor generally bears the expenses
of
consignation; it includes expenses for the preservation
of the goods
Effects
of
Valid Tender WITHOUT Consignation:
,
1 .
w. Stops the running of prescriptive pt:riod '
x. Stops the running of llllercst
Effects of Improper Consignation:
y.
TI1e
ob l.Jgaoon REi\1AINS
z. Debtor s considered in defauh
aa Interest conunues to run from
the
time it is due
bb. Prescriptive period continues to run
Withdrawal of the Thing Consigned
(by
the
Debt.Q. ,).
cc.
As
a manet of right:
BEFORE the creditor accepted the consignation; or
34 I
age
Every good
nd
perfect gift is from above, coming down from the Fatherof the heavenly lights, who
does
not
change like shifting shadows.
Caroline Ton Jessamyn Uy &James Ligon
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
35/57
C
IVI
LLAW RE VI
EW lJ
D
ea
n Del Castillo
BErORE there is a
jud IClal
declu:mon rhat rhc consignauon has been properly
made
dd. As a marter of erivtl sge
AFTER consignauon had been properly made,
the
Crednor authonzu the Debror
to
withdraw
the
thing
o Effects:
1.
The obligation rernall1s
2
The
creditor loses an} preference over
the thing
3. The
guaramors and succoes (accessory obl.tgacions) are
RELEASED (unless they consented)
Ri:;k of Loss during constgnat:ion)
ee.
GR:
borne
bv
the CredJtor
ff
1 ts
due to:
Fortuitous event- ob Jgatioo extingUished
Crednor's
Fault-
obligation extinguis,
hed
Deb
tor's Fault- obligation remains (llable for damages)
Fault of court/sheriff-
Creditor
assumes the acoon of the former; borne by
the
Creditor J
LOSS OF TH TH
I
NG
D
U
obttJ
S
oss- refers ro obligaoons to
give '
lmposstbllny -refers to ob Jgation to
do
or
not
to do
- Must be FTER the constituoon of rhe obligauon
If the performance was t.mposstble at the START-
VOID
Kin
ds
o mpossibility:
L
Legal Impossibility
Example: when prohibited by law
2
Phyucal Impossibility
3 Moral Impossibility (Impracticability) - see notes in rebus sic stantibus
The
obligation become
so
difficult that
it
was manifestly
beyond
the
contemplanon
of
Both Parries
f fccr
o
Loss
Spectfic Thmg- Obi.Jgaoon
1s
cxtingmsh :d
o Exceptions
Debtor
is at faulr
Debtor
is made Jable for a forrwtous event
o Satd obligation is
ronVtrttJ
into a Monetary Obligation for
Damages
Generic 1biog- obligation continues to eXIst because it does
not
perish
o
35
I Page
Every
good
and
perfect
gift
is
from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadow
s. '
Caroline
7
an, Jessamyn
U} &
James Ligan
8/10/2019 Obligations and Contracts Dean Del Castillo Notes
36/57
vrJ,I/,.,
.
f.t
}.Wiitr
CIVlL
l.A
W REVIEW
II
- D
ea
n
Del
Castillo
i
1
IS
deluruted (e.
g.
SO
kilos
of
sugar from .my 201U harvest)
Has alre:1dy been segregated or set aside ,(becomes spec1fic)
If
cause
of
loss
is NOT
known,
PRESUMP110N- debtor
's fault
IF rhc dung lost
is
tn lus
possesSJon
Exception;
1f it is lo;;s is caused hy narural calamity
I
floss is due
co 3m Person
Obligaoon IS extinguished
WITHOUT
prejudice to the