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Law on Obligation and Contract Reviewer
Typology: Exercises
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OBLIGATION juridical necessity to give REAL OBLIGATION ↓ to do POSITIVE PERSONAL OBLIGATION CIVIL legally enforceable not to do NEGATIVE PERSONAL OBLIGATION ↓ remedy court vs.
NATURAL & MORAL
not enforceable ( conscience )
court Prescription: Oral – 6 years Writing – 10 years
*In natural obligation, the third person can recover if he is not aware.
”You are excuse for not knowing the facts.”
Quasi-contract vs. Quasi-delict vs. Delict
Lawful
Lawful
Unlawful
Benefit
Damages
Damages
Real Obligation transferable right
DAMAGE – injury DAMAGES – compensation
Bilateral ee & or Contract of Lease
Subject
Prestation
Efficient Cause
Law
Contract
Quasi-contract
Quasi-delict
Delict
Active creditor obligee (COA) BENEFIT Passive debtor obligor (OPD) BURDEN Object (to give, to do, not to do) Subject Matter Vinculum Legal/Juridical Tie
Not presumed There should be a law Meeting of minds Offer express Acceptance implied No meeting of minds Negotiorum Gestio Gestor Officious Manager Solutio Indebiti Other Quasi-contract Culpa acquiliana/Torts
Crimes, acts, omissions punishable by law lawful/unilateral
DELICT crime PP vs. Accused A if Convicted
Acquitted
Criminal Liability = imprisonment Civil Liability = damages
Criminal Liability = guilt without reasonable doubt = Civil Liability guilt with reasonable doubt = POSITIVE To give REAL delivery object ↓ certain
B only cow = DETERMINATE A to give C a horse = INDETERMINATE D four legged animals = INDETERMINABLE
REAL – enforceable against the whole world PERSONAL – enforceable against another person
B demands delivery “All owners can possess, but possessors are not all owners.” Deliver = obligation extinguished A Court A to deliver specific performance Fails B or & To require another to deliver = pay damages = delay
C demands delivery Deliver obligation extinguish Superior
A neither Inferior = obligation extinguish
Fails C court to require A to deliver specific performance or & to require another to deliver pay damages = delay
Positive To do Personal Law Source Contract
A Reg. of Deeds ↓ record title Obli. to transfer land
S sells land to B Title – Name – S B demands transfer of title
Transfer Title Name B Obligation = Extinguished A Fails B Court To require A to transfer Title Specific performance ( mandamus )
cannot be foreseen foreseeable are inevitable
Cause is dependent of the will of the debtor Unforeseeable or unavoidable Impossible for the debtor to fulfill the obligation in normal manner The debtor must be free from any participation in aggravation to the creditor
GENERAL RULE: No person shall be liable for fortuitous events. ( Obligation Extinguished )
EXCEPTIONS: When
Expressly declared by the law Expressly declared by stipulation The nature of the obligation requires the assumption of risk The debtor has incurred delay/guilty of fraud/negligence/breach of contract The debtor promised to deliver the same thing to two or more persons who do not have the same interest The thing to deliver is indeterminate/generic The obligation to deliver a specific thing arises from crime The bailee in commodatum allows third person to use the thing borrowed
Dolo Causante
Dolo Incidente
Causal Fraud Vitiating consent / obtaining consent Consent would not have been given The contract is voidable Committed at the time of performance or after the contract is already perfected
Incidental Fraud Giving rise to the right to demand damages Consent would have still been given The contract is valid Committed at the time of performance or after the contract is already perfected
Future Fraud
Past Fraud
Cannot be renounced Waiver cannot be made void the debtor is liable for damages
Can be renounced Waiver may be made valid act of liberality of creditor
( Contractual Negligence )
Source: Contract Example: Breach of Contract of Carriage (Even with the supervision, the employer may mitigate the liability) Performance of contract The master-servant rule applies
NEGLIGENCE (or Culpa )
( Civil Negligence )
Source: Quasi-delict Example: Reckless driving of the driver (With the supervision, the employer may escape the liability) Independence of contract & without criminal intent The master-servant rule does not apply Culpa extra-contractual
( Criminal Negligence )
Source: Delict Example: Physical injuries through reckless imprudence (The employee‟s guilt is automatically the employer‟s guilt if the former is insolvent) Commission of a crime
A – Driver B – Passenger C – Pedestrian Y - Operator
Contractual
Criminal
Aquiliana
Responsibility
Demandable?
*COMMON CARRIER presumed to be negligence
ACCION PAULIANA the right to rescind or impugn fraudulent act the rights to set aside, revoke, or cancel the acts, which the debtor may have done to defraud him.
ACCION SUBROGATORIA the right to be subrogated the creditor may exercise in the place of his debtor in order to preserve or recover the property lost or transferred so that he can satisfy his own credit
GENERAL RULE : All rights acquired by virtue of an obligation are transmissible.
(to the General Rule)
(1) When the law prohibits the transfer of rights (2) When the stipulation of the parties prohibits the transfer of rights (3) When the nature of the obligation does not permit transmission of rights
Note: It is the right of a person that is transmissible not the obligation. The creditor may assign a third person or such right is transmitted to the heirs upon death.
PURE/SIMPLE ^ Not subject to any condition No specific date
With Resolutory Condition Resolutory Period^ You may demand the delivery of the thing now but you must return it when the condition happened.
Will it happen?
Yes = Period
Maybe = Condition
(1) Future and uncertain (2) Past but unknown (3) Must not be impossible
2. CONDITION Suspensive Resolutory
CONDITION – not
Contrary
Impossible
Law Moral Good Custom Public Order Public Practice
Before ―
Upon Ext.
Condition precedent/antecedent Will give rise to an obligation No fulfillment, no obligation CONDITION OBLIGATION
Condition subsequent Will extinguish an obligation OBLIGATION CONDITION
Suspensive = VOID Resolutory = VALID
Suspensive = VALID Resolutory = VALID
If B will
Kill C = Sex A = Slap faces of parents = Pose nude = ; beside Rizal Monument = Draw rectangle with 4 sides = Draw circle with 4 sides =
Capable of fulfillment, legally or physically Not capable of fulfillment, legally or physically = VOID An act is supposed to be performed = TO DO
An act is supposed to be omitted = NOT TO DO Will of one of the contracting parties Chance or will of a third person
Partly upon chance and will of a third person
Suspensive Resolutory Suspensive Resolutory
(void) (valid) (valid) (valid)
Chance Will third persons
One person Third person
Will one person Chance
May or may not happen
May refer to the future or to a past event Causes to arise or to cease
Must necessarily come
Always refers to the future Merely fixes the time for the efficaciousness of an obligation
BENEFIT both
Debtor Creditor “when my means permit” = period
KINDS
Suspensive ― ex die Resolutory ― in diem
no means Court To require A to pay To fix period September 30 Change the period
Court Parties
A ―― 8M ―― B , if B will marry C (^) THE DEBTOR DEPRIVED THE BENEFIT OF PERIOD
2017 COP Obli. A ―― Ext.? July September October
B ― vow ― Priest B ― marries Y C dies
Woman Widow remarry 300 days, unless bears a child Man Widower can remarry immediately
secured ― race horse due ― June 7, 2018 June 8, 2017 lightning ― frightened
horse runs cliff fell ― broken
A hits horse broken
Debtor deprived ― period = Obli. – demandable? leg = impaired ― fortuitous event head = dies lost ― fortuitous event
leg = impaired fault ― debtor head = dies lost fault ― debtor
4. ALTERNATIVE two or more
fulfillment of one obligation ― ext.
Cow June 8 dies ― fortuitous event
lightning
Carabao June 9, AM dies ― fault of A
A hits
only June 12, 2017
Cow Carabao Horse
1 kilo shabu
Horse June 9, PM dies ― fortuitous event
collides ― bus
Obligation ― Ext.? The lost of the last thing is due to fortuitous event
5. CONJUCTIVE two or^ more
fulfillment of all are necessary
only
Alternative
Cow or Horse 2 cows die
Fortuitous Event
Fault Debtor
Obli – Ext?
E ―――― F Cow only & Horse
One prestation with substitute
Right of debtor
only
Cow or If C wants Horse
Two or More
Debtor
Creditor
To each his own
One for all All for one
Number of Debtors 3
× Number of Creditors 2
= No. Obligation Credits
A. Debtors – Joint, Creditors – Joint (1) W - ₱ 2000 A ₱ 4000 Y - ₱ 2000
Joint ― (^3) ₱ 6000 C - ₱ 2000 Joint ― 3 Solidary ― 1 Solidary ― 1
Joint ― 2 Solidary ― 1 Joint ― 2 Solidary ― 1
Debtors, A-B-C Equal 2:3:
₱12,000 Creditors, W-Y Equal 1:
or or
June 15, 2017 Y demand payment
or B ― ₱ 3600
or C ― ₱ 6000 due
A pays Y ₱ 6000 R B - ₱- 0 - C - ₱ 6000
B pays Y ₱ 6000 R A - ₱- 0 - C - ₱ 6000
C pays Y ₱ 6000 R A - ₱- 0 - B - ₱- 0 -
A and B obliged to give Y Bn Ms 1.5M 750000 7000 demands
Failed to deliver delay A Ready damages B Both Solidary
9. INDIVISIBLE Joint
A and B solidary, obliged to give Y 100 sacks of wagwag rice demands delivers 50 sacks delay delivers 50 socks A damages B 1 sack Both
failed to deliver
10. DIVISIBLE Joint Solidary
A ₱ 100 , 000 B demands Interest due June 15, 2017 delay in lieu & Except if Stipulated refuses to give penalty if A fails to pay Damages Debtor fully of fraud fulfillment obligation
A will give Cow With penal clause Penalty A fails to pay
Obligation of A
To deliver Cow Interest To pay Damages ₱100,000
Estate
Maturity
EXTINGUISHMENT OF OBLIGATION
To whom
By whom
When
Where
How
Special Form
Creditor Ratification Representative/Agent Subrogation TO WHOM Executor burden to prove Debtor Except Estoppel Administrator Third Person If redownded benefit Creditor ― Ext. presumed benefit Creditor
If debtor cannot pay, is third person liable?
Interested in the fulfillment of obligation Not interested in the fulfillment of obligation
B ― ₱100,000 accepts
G ― guarantor pays
C ― ₱100,000 accepts
S ― Suitor of A pays
With consent of A Without consent of A With consent of A Without consent of A
(1) Previous ― partial payment ₱60, (2) Due and demandable ₱100, If A fails to reimburse, can S declare?
Beneficial Reimbursement
at WHEN after before?
Only cow A ₱100, On June 15, 2018
June 15, 2017 A deliver Cow B ₱100,000 Accepts Obligation Extinguished
Legal Tender stipulation CHECKS refuse except if exercise right Can creditor Cr. ― encashed accepts = Obligation ― Extinguished Yes IF Impaired June 15, 2017 June 16, 2017 Bank pays = Obligation ― Ext. PRESENTMENT Fault Cr. Injury Dr. FOR (stale) PAYMENT February 14, 2017 Bank Dishonored = Obligation ― Extinguish Closed = Obligation ― Extinguished ― PDIC
Up to ₱500,
Court if approved
C O U R T
10k June 4 15k June 8 Due 20k June 14 30k June 30
₱8,000 = Application of payment June 15 A pays ₱10, ₱20,000 = Application of payment ₱15, ₱20, If the debtor waives, application of payment right Creditor Issue Receipt Onerous If silent Mortgage Equal burden = Proportionately
Due on June 15, 2017 offers to pay
Assets
Cash – ₱400, Cars – 8 – BMW Planes – 8 Vessels – 8
Possession Last yr. 3M Ownership
Extinguished = DATION IN PAYMENT (*debtor is solvent)
A C ― ₱3M proportionately D ― ₱4M to sell = proceeds (INSOLVENT) Creditor possession Assets = ₱5M deliver Ownership = Debtor
Extinguished up to the proceeds PAYMENT BY CESSION
A Tender of Payment B ― refused Deposit ₱ Notice to Creditor Object Obligation ― Ext.
Consignation notice Creditor
Can the debtor withdraw? Before approval = Yes After approval = Yes, IF creditor consents
Revived If debtor withdraws Obligation of A Co-debtors IF they Guarantor will consent Surety
On mere suspicion, you cannot sacrifice the Bill of Rights *Search Warrant *Warrant of Arrest If the act is illegal, anything you get out of an illegal act is illegal No need of search warrant / warrant of arrest:
TENDER OF PAYMENT is necessary before consignation, except in five (5) cases. Consignation is allowed even without prior tender of payment = TIRAT
(1) (^) T wo or more persons claiming the right
Interpleader TRO Injunction to restrain PRO Certiorari abuse of right Quo-warantu what is your right Mandamus to compel performance
Creditor (2)^ I ncapacitated to receive payment
Kept Obligation Extinguish Benefited
Court
Debtor Creditor BF dies due 2020 2019 crying Creditor refuse to eat crying
Insane
Creditor refuses to issue (3)^ R ECEIPT without just cause.
Creditor (4)^ A BSENT
Loss of the (5) (^) T itle Obligation lost thing due Determinate/Specific
not applicable Generic/Indeterminate
(1) Perishes
(2) Goes out of commerce
Existence unknown (3) Disappears Cannot be recovered
A only Carabao B June 30, 2017 Carabao dies fortuitous event Extinguished perishes
A buys 2 pigs B pays deliver ― July 4 June 15 A did not choose 2 pigs generic – limited
Obligation ― B Ext.? 10 July 1- 4 6 9 partial
A only car B car napped lost existence unknown ₱100, No engine (₱100,000)
June 15 A sells ½ B
A only necklace B USA demands
Europe Rose TITANIC Disappears = cannot be recovered sunk in Atlantic Ocean Obligation Extinguished
B to pay ₱100,000 ― June 16
A upon receipt to buy engine payment
Obligation ― Ext.?
(Remission)
Essentially gratuitous
Nature: Donation
Essential
Formal
Arises from the obligations of a bailee in commodatum Arises from a deposit Arises because of a claim for support by gratuitous title Consists in civil liability arising from a penal offense
(1) Both the debtor and creditors are principally bound (EXCEPTION: A guarantor may set up compensation as regards what the creditor may owe the principal debtor) consist in a sum of money (2) Both debts the things due are consumable same quality & same kind (3) The two debts be due Maturity date of both debts must have arrived (4) Both debts be liquidated and demandable (5) No retention or controversy commenced by third persons and communicated in due time to the debtor
One person Debtor and creditor of himself
(1) It must take place between the principal debtor and creditor
(2) The merger must be clear and definite
(3) Obligations are the same or identical
Debtor A A ― B ― C ― D ― A Extinguished
A Principal G Guarantor
A ― B ― C ― D
modification or extinguishment of an obligation by another.
REAL (objective) PERSONAL (subjective)
EXPRESS IMPLIED
TOTAL/EXTINCTIVE PARTIAL/MODIFICATORY
Novation by changing the object or principal condition Novation by change of the parties (debtor/creditor)
Novation declared in unequivocal terms Old and new obligation are incompatible with each other
The old obligation is totally extinguished The old obligation still remains in force except as it has been modified
(1) Substituting the person of the debtor (always with the creditor’s consent)
(2) Subrogating a third person in the rights of the creditor
EXPROMISION initiated by new debtor DELEGACION initiated by original debtor
CONVENTIONAL by the agreement of the parties LEGAL by operation of law MIXED change of object and parties of obligation
(1) When a creditor pays another creditor who is preferred, even without the debtor‟s knowledge. (2) When a third person, not interested in the obligation pays with the express/tacit approval of debtor. (3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter‟s share.