Obligation (1).pptx

(1)

Obligation

An obligation is a

juridical necessity

to

give, to do or not do. (Art.1156, Civil Code of

the Philippines)

Juridical

necessity

means that the court

may be asked to order the performance of

an obligation if the debtor does not fulfill it.

If an obligation cannot be enforced through

the courts, it may be disregarded with

(2)

Requisites of obligation

1. Active subject (creditor or obligee) - The party who

has the right to demand performance of the obligation.

2. Passive subject (debtor or obligor) - The party who

is obliged to perform the obligation.

3. Prestation - The object or subject matter of the

obligation. It may consist of giving, doing or not doing

something. .

4. Efficient cause - The vinculum or the legal or

juridical tie which binds the parties to an obligation.

The efficient cause of an obligation may be any of the

the sources of obligation.

(3)

Examples:

1. D is obliged to give C P50,OOO.00with

interest at 12% per annum on December 31,2015

pursuant to a contract of loan. D is the passive

subject; C is the active subject; the giving of

P50,OOO.00with 12% interest is the prestation;

and the contract of loan is the efficient cause.

The obligation here is unilateral, i.e., only one

party is required to perform a particular conduct.

(4)

Examples:

D is obliged to transport the goods of C from Manila to

Cebu, and C is obliged to pay D P1,OOO.00as transport

costs, under a contract of carriage. 'As regards the

transport of the goods which is the prestation, C is the

active subject and D is the-passive subject. As regards

the payment of transport costs which is the prestation,

C is the passive subject and D is the active subject.

The contract of carriage is the efftcient cause for the

obligations of both D and C. The obligations here are

bilateral, i.e., each party is required to perform a

particular conduct.

(5)

Civil obligation and natural obligation

distinguished

Civil obligation

Civil obligation and natural obligation distinguishedand natural obligation distinguished

A civil obligation (as defined in Art. 1156) is based on positive law; hence, it is enforceable by court action.

A natural obligation, on the other hand, is based on natural law; hence, it is not enforceable by court action. The obligation, however, exists in equity and moral justice, such that if the debtor voluntarily performs it, he can no longer recover what he has given.

(6)

Example:

M is the maker of a promissory note with P as payee for P20,OOO.OO. If M does not pay on due date, P can enforce payment by filing a court action. If P does not file a court action against M within 10 years from due date which is the prescriptive period for actions upon a written contract, ~ loses the right to enforce payment by court action. However, if M voluntarily makes the payment to P although the obligation has prescribed, M will no longer be

allowed to recover the payment because in equity and moral justice; he still owed P the amount of P20,OOO.OO.

(7)

Sources of obligation (

Art. 1157)

1. Law

- A rule of conduct, just and obligatory, laid down by legitimate authority for common observance and benefit. (Sanchez Roman). Obligations derived from law are not presumed. Only more expressly determined 'in the Civil 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 on Obligations. (Art 1158)

Examples: The National Internal Revenue Code which provides for the payment of taxes; the Anti-Mendicancy Law which prohibits the giving of alms to beggars.

(8)

2. Contracts

- 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 (Art. 1305).

Obligations arising from contracts have the force

of law between the contracting parties and should

be complied with in good faith (Art. 1159)

(9)

Examples:

A contract of lease which provides for the

payment of rental by the lessee;

A contract of sale which requires the seller

to deliver the thing sold and the buyer to

pay the price.

(10)

3. Quasi

--

contracts

- They refer to

certain lawful, voluntary and unilateral

acts giving rise to a juridical relation to the

end that no one shall be unjustly enriched at

the expense of another. (Art. 2142).

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Examples:

(Quasi

--

contracts)

Negotiorum gestio - This refers to' the voluntary

administration of the property, business or affairs

of another without his consent or authority. It

creates the obligation to reimburse the gestor

for necessary and useful expenses. (Art. 2150)

(12)

Example:

(Quasi

--

contracts)

D and C are the owners of adjacent vegetable

farms. One day, D was not around to tend to his

farm, When C noticed that D had not been around'

for almost a week, he himself cultivated the soil

and placed fertilizer on it, watered the plants,

removed the weeds and wilted leaves, C

incurred

necessary

and

useful

expenses in the

process. D must reimburse C for such expenses.

Otherwise, he will be unjustly enriching himself at

C's expense,

(13)

Solutio indebiti - This refers to payment by

mistake of an obligation which was not due

when paid. It creates the obligation to return

the payment (Art. 2154)

Example:

D, the payee of check for P5,000,00 cashes it

with the drawee bank, but the teller gives him

P10,000.00 by mistake. D is duty bound to

return the excess of P5,000.00 to the bank.

Otherwise, he will be unjustly enriching himself

at the expense of another.

(14)

Other Quasi

--

contracts:

1. When without the knowledge of the person

obliged to give support, it is given by a

stranger

, the latter shall have the right to

claim the same from the former, unless it

appears that he gave it out of piety and without

intention of being paid in return.

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2. When funeral expenses are borne by a third person, without knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third persons;

3. When through an accident or other cause a

persons is injured or become serioulsly ill, and he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable for the services of the physician or other person aiding him, unless the services has been rendered out of pure generosity.

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4. 4. Acts or omission punishable by

Acts or omission punishable by law (

law (

Delicts

);

Example: The obligation of a thief to return the car stolen by him.

5. Quasi

delict

or Torts.

Example:

a. The obligation of the head of a family that lives

in building or a part thereof to answer for damages

caused by things thrown or falling from the same.

b. The obligation of the possessor of an animal to

pay for the damages which it may have caused.

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NA

NATURE AND E

TURE AND EFFECT O

FFECT OF O

F OBLIGA

BLIGATIONS

TIONS

Concept

A thing' is determinate when it is particularly designated or

physically segregated from all others of the same class. (Art.1460). Examples:

A 2009 Toyota Corolla with engine no.123456 body no. 546611, and plate no. FRS 840; my only wristwatch; the house located at 234 Moret Street, Sampaloc, Manila; my horse nam ed "Black Stallion."

A thing is indeterminate or generic when it is not particularly designated or physically separated from all others of the same class, i.e, one of a class. Examples: A horse, a car,

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Importance of knowing whether a thing is

determinate or generic

As a rule, the loss of a determinate thing

through a fortuitous event extinguishes the

obligation. (Art. 1262)

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Obligations

Obligations of

of one

one obliged

obliged to

to give

give a

a

determinate thing.

1. To take good care of the thing with the

diligence of a good father of a family unless the

law or agreement of the parties requires

another standard of care. (Art. 1163)

Diligence of a

good father of a family

means the

ordinary care that an average person

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2. To deliver the thing. (Art. 1163)

This involves placing the thing in the

possession or control of the creditor

either actually or constructively.

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3. To deliver the fruits of the thing. (Art. 1164)

a. Kinds of fruits

1. Natural fruits - They are the spontaneous

products of the soil and the young and other

products of animals. (Art. 442) Thus, the trees

that grow naturally on the soil without the

intervention of man and the colt delivered by a

mare are natural fruits. For the young and other

products of animals, they are natural fruits even

with the intervention of human labor.

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2. Industrial fruits - They refer to those produced

by land of any kind through cultivation or labor.

(Art. 442) Examples are rice, corn and other crops

produced through the intervention of human labor.

3. Civil fruits - They refer to fruits which are the

result of a juridical relation such as the rent of a

building, price of lease of land and other

property and the amount of perpetual or life

annuities. (Art. 442)

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b. When creditor has a right to the fruits of a

determinate thing

The creditor has the- right to the fruits of a

thing from the time the obligation to deliver

it arises. However, he shall acquire no real

right over it until the thing has been

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c. When obligation to deliver the thing arises

1). If the obligation is a pure obligation or

one whose performance is not subject to a

suspensive period or suspensive condition, the

obligation to deliver arises from perfection..

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2) If the obligation is subject to a suspensive period or suspensive condition, the obliqation to deliver arises upon the arrival of the term or the fulfillment of the condition.

Thus, if 0 is obliged to give C a specific car on Christmas day next year, the obligation to deliver arises only on the arrival of such date. Or if the obligation of 0 is to give C such car if C passes the CPA Examination, then the obligation to deliver arises only upon the fulfillment of such condition.

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d. Rights of the creditor

1) Personal right - This is a right that may be enforced by one person on another, such as the right of the creditor to demand the delivery of the thing and its fruits from the

debtor. This is also called jus in personam or jus ap rem.

2) Real right - This refers to the right or power over a specific thing, such as possession or ownership, which is a right enforceable against the whole world. This is the right acquired by the creditor over the thing and its fruits when they have been delivered to him. This is also called jus in reo

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4.

4. To deliver its accessions and accessories even if theyTo deliver its accessions and accessories even if they have not been mentioned. (Art. 1160)

have not been mentioned. (Art. 1160)

a. Accessions - They include everything that is produced by a thing or is incorporated or attached thereto, either naturally or artificially, (Art. 440) such as alluvium, the soil gradually deposited by the current of a river on a river bank, or whatever is built, planted or sown on a parcel of land.

b. Accessories - Those joined to or included with the principal thing for the latter's better use, perfection or enjoyment (such as the keys to a car or a house, or the bracelet of a wristwatch).

(28)

Remedies of the creditor

1. If the debtor fails to perform his obligation to deliver a determinate thinga.

a.To compel the debtor to make the delivery.(Art. 1165) . b.To demand damages from the debtor. (Art. 1170)

Example:

D is obliged to give C a specific car. On due date, C demands delivery but D does not deliver. In this case, C can compel D to deliver the car because there is no other person in possession or control of it. C can also demand payment of damages from him.

(29)

2. After the debtor fails to perform his obligation to deliver a generic

a. To ask that the obligation be complied with at the expense of the debtor. (Art. 1165)

b. To demand damages from the debtor. (Art. 1170) Example:

D is obliged to deliver 10 sacks of rice to C. It D does not perform his obligation as stipulated, C can obtain 10 sacks of rice from other sources at the expense of D. C can do so because the thing is generic and thus can be replaced with the same kind. C can also ask for damages from D.

(30)

3. If the debtor fails to perform his obligation in

obligations to do

a. If the debtor fails to perform the obligation or

performs it but contravenes the tenor

thereof-1) Creditor may have the obligation executed at the

expense of the debtor. (Art. 1161)

2) He may also demand damages from the

debtor. (Art. 1170)

(31)

Example:

D is obliged to construct a hollow block fence for C. By agreement, the fence will be 2 meters high and 10 meters long, fine-finished and painted. If D does not perform his obligation, C can ask another person to, or he himself may, construct the fence at the expense of D. . C can also ask for damages from D. C cannot compel D to perform the obligation because compulsion will violate D's right against involuntary servitude.

If D constructs the fence but did not follow the measurements agreed upon (i.e., there was contravention of the tenor of the obligation), C will have the same rights

1) Creditor may have the same be undone at debtor's expense. (Art. 1167)

2) Creditor may also demand damages from the debtor. (Art.1170)

(32)

Example:

If in the same illustration above, D constructs

the fence following the measurements

but it was not properly aligned, the finishing

was rough, and materials used were

substandard,

C can have the fence be

demolished by another person or even by

himself at D's. expense. C can also demand

damages from D.

(33)

4. If the debtor does what has been forbidden him a. The creditor may demand that what has been done be undone.

b. He may also demand damages from the debtor. (Art.1168) Example:

B bought a farm lot from S. However, the only access from the road to B's lot is the lot of D. So B entered into a

contract with D for a right of way over a period of 10 years and paid a sum therefor. It was agreed that for the duration of the contract D would not construct any fence between B's lot and his. Sometime thereafter, however, D constructed a fence in violation of the agreement. B may demand that D remove the fence at D's expense.and pay damages.

(34)

Grounds for liability to pay damages

1. Fraud

2. Negligence 3. Delay

4. Contravention of the tenor of the obligation. (Art. 1170.)

(35)

Damages

1. Concept, distinguished from injury

Damages refer to the harm done and the

sum of money that may be recovered.

Injury refers to the wrongful, unlawful or

tortuous act. It is the legal wrong to be

redressed.

(36)

Kinds of damages (MENTAL)

a. Moral damages - They include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, . moral shock, social humiliation, and similar injury. (Art. 2217)

b. Exemplary or corrective damages - These are imposed by way of example or correction for public good, in addition to the moral, temperate, liquidated or compensatory damages. (Art. 2229)

c. Nominal damages - They refer to damages to vindicate a right. (Art. 2221) d. Temperate or moderate damages - They are more than nominal but less than compensatory damages, but may be recovered if the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be

proved with certainty. (Art. 2224)

e. Actual or compensatory damages - These refer to the pecuniary loss, (such as loss in business or profession) that may be recovered. It includes the value of the loss suffered and profits not realized. (Art. 2199)

f. Liquidated damages - Those agreed upon by the parties to a contract, to be paid in case of breach. (Art. 2226)

(37)

Fraud

1. Concept

Fraud is the deliberate or intentional evasion'

by the debtor of the normal compliance of his

obligation. Under Art.1170, this actually refers

to the fraud committed by the debtor at the

time of the performance of his obligation.

(38)

Kinds of

Kinds of fraud in general

fraud in general

a

a..AccordingAccording to meaningto meaning

1)Fraud in obtaining consent a)

a) Causal Causal fraud fraud oror dolocausante - This refers to fraud without which consent would not have been given. It renders the contract voidable.

Example: B bought a ring from S who told. him that the ring was embellished with diamond. However, S knew all alsrc that the embellishment was not diamond but ordinary glass. B here gave his consent because of the fraud employed by S, hence, the contract is voidable.

(39)

b)

b) IncidentalIncidentalfraud orfraud ordolo incidente - This refers to fraud without which consent would have still been given but the person giving it would have agreed on different terms. The contract is valid but the party employing it shall be liable for damages.

Example: C hired D to teach in the school of C. D placed in his application that he had earned units in MBA.

However, D had actually dropped the subjects for the said units. If C would have hired D even if D did not complete the said units but that he would have given a lower salary to D, the fraud committed by D was only incidental but it would entitle C to recover damages.

(40)

2) Fraud in the performance of the

obligation

This is the deliberate act of evading fulfillment of an obligation in a normal manner. This presupposes an existing obligation; hence, the fraud has -no effect on the validity of the contract since it was employed after perfection. However, the party employing it shall be liable for damages. (Art. 1170)

Example: B ordered 10 bags of powder soap from S who agreed to deliver the same after 2 days. On due date, S delivered 10 bags of powder soap which he mixed with chalk. This is fraud in the performance of an obligation which entitles B to recover damages. The fraud, however, does not have any effect on the validity of the contract.

(41)

b. According

to time of commission

1) Future fraud

A waiver of an action for future fraud cannot be made. If there is an agreement for its waiver, the same is void. (Art. 1171)' Thus, the debtor will still be liable for damages if he commits fraud in the performance of his obligation despite the waiver.

2) Past fraud

A waiver of an action for past fraud may be made, since the commission of fraud can no longer be encouraged. Such waiver is an act of liberality on the part of the creditor.

(42)

Negligence

1. Concept

_{It is the omission of that diligence which is required by} the nature of the obligation and corresponds with the circumstances of the person, of the time, and of the place. (Art. 1173). It is the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury. (National Power Corporation vs. Heirs of Noble Casionan, supra; Guillang vs. Bedania, G.R. No. 1629a7, May 21, 2009) .

(43)

The test of negligence is whether the defendant in doing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation. (GuiJlangvs. Bedania, supra)

If the law or contract does not state the diligence which is to be observed in the performance of the obligation, the debtor must observe the ~iligence of a good father of a family.

(44)

Examples:

a. If the obligation is to deliver a specific window

glass, the debtor must ensure that the glass,

considering its fragility, is well-protected when

he transports it as required by the nature of the

obligation. Otherwise, he will be negligent.

b. A baby-sitter, 21 years old strong and healthy,

will be negligent if she sleeps while on duty

considering that the circumstances of her person

were considered when she was hired for the job.

(45)

c. If the driver of a car drives at night without

any headlight, he will be considered negligent

considering that the circumstances of night

time require such light.

d. If the same car driver drives at 50

kilometers per hour along a busy street where

many people are crossing, he will be negligent

because the circumstances of the place.

(46)

Kinds:

a. Culpa contrectuei(contractual negligence)

This is negligence' in the performance of a contract (such as the negligence committed by the driver of a bus when a passenger is hurt during a trip because there is here a breach of contract of carriage)

Here, the master-servant rule applies, ie.,· the negligence of the servant is the· negligence of the master.

Accordingly, the defense of a good father of a family in the selection and supervision of employees is not a defense on the part of the employer although it may mitigate the liability. Thus, in the example, the negligence of the bus driver is also the negligence of the bus owner.

(47)

Saludaga vs. Far Eastern UniversityG.R.No. 179337, April 30, 2008

 _{Facts: S, a student of X University, was shot and wounded by G, a security guard of the} school, while inside the campus. S sued X University for damages on the ground that it breached its obligation under the enrollment contract to provide students with a safe and secure environment and an atmosphere conducive to learning. In defense, X University pleaded fortuitous event on the ground that it could not have reasonably foreseen nor avoided the accident since G was not its employee, and that it complied with its obligation to ensure a safe environment for its students by having exercised due diligence in selecting the security services of the SA Security Agency.

 _{Held: Respondent school is liable for damages for breach of contract due to negligence in} providing a safe learning environment. It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. The school failed to prove that it undertook steps to ascertain that the security guards assigned to it actually possessed the required

qualifications. A learning institution should not be allowed to completely relinquish security matters in its premises to the security agency it hired. To do so would result in contracting away its inherent obligation to ensure a safe learning environment for its students. The defense of fortuitous event or force majeure must also fail. An act .of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of the loss sustained.

(48)

b.

b. Culpa aquiliana (civil negligence or tort or quasi-delict(civil negligence or tort or quasi-delict or

or culpa extra-contractual)

These are acts or omissions that cause damage to another, there beinq no contractual relation between the parties. (Art. 2176)

The master-servant rule does not apply. Hence, the defense of a good father of a family in the selection and supervision of employees is a defense on the part of the employer to escape liability. Thus, if a pedestrian is hit by a bus through the reckless driving of the driver, the latter's negligence is not the negligence of the owner.

(49)

c.

c. Culpacriminal((criminaicriminai negligence)negligence)

-This is negligence that results in the commission of a crime. Defense of a good fath er of a family is not proper because the employee's guilt is automatically the employer's civil guilt if the former is insolvent.

The passenger of the bus may bring a court action not only for culpa contractual against the bus owner, but also one for culpa criminal against the bus driver for physical injuries

through reckless imprudence. In the same way, the pedestrian may bring not only a suit for culpa aquiliana against the driver and the owner, but also one forculpa criminal against the bus driver for physical injuries through reckless

(50)

Delay or default or

mora

Concept Concept

Delay or default or

Delay or default ormote is is the the 'non-'non-fulfifulfillmenllmentt of of an an obligobligation ation withwith respect to time.

respect to time. Kinds

Kinds a.

a. Mora solvendi - Delay on the part of the debtor.Delay on the part of the debtor.

1) Ex re - Delay in real obligations (obligations to give)..Delay in real obligations (obligations to give)..

2) Ex persona - Delay Delay in in personal personal obligations obligations (obligations (obligations toto do).

do). b.

b. Mora accipiendi - Delay on the part of the creditor.Delay on the part of the creditor. This exists w

This exists when the credihen the creditor refuses tor refuses to accept the to accept the thing due wthing due withoutithout justifiable reason.

justifiable reason. c.

c.Compensatio morae - Delay Delay in in reciprocal reciprocal obligations, obligations, Le., Le., bothboth parties are in default.

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When debtor incurs in delay in

obligations to give or to do, requisites:

General

Generalrule: The debtor incurs in delay from the time the creditor demands fulfillment of the obligation but the debtor fails to comply with such demand

(no demand,

no delay,

as

a rule).

The following are the requisites of delay:

a. The debtor does not perform his obligation on the date it is due.

b. The creditor demands the performance of the

obligation. c. The debtor does not comply with the creditor's demand.

(52)

Example:

D owes C P5,OOO.OO. The obligation is due

on May 15. If D does not pay on May 15, he

is not yet in delay. But if C makes a

demand on him to pay on that date or

thereafter and D does not comply, then D

will be in delay.

(53)

Exceptions,

i.e.,

delay will exist

even

without demand in the following cases (Art.

1169):

a. When the law so provides.

Thus, where the law provides for the payment of

penalty if the obligation is not performed on due

date (such as in the case of taxes), then demand

shall not be necessary.

(54)

b. When the obligation expressly so declares.

Hence, no demand is necessary if a lease contract provides that "(T)he rental shall be paid by the Lessee within the first five days of the month in advance without need of demand."

c. When time is of the essence of the contract.

Thus, where a rent-a-car company is obliged to provide for the bridal car during a wedding at a particular date, time and place, the said company is liable if it fails to perform the said obligation notwithstanding the absence of demand since time was a controlling motive for the establishment of the

(55)

d. When demand would be useless.

Thus, the debtor will be in delay even without demand from the creditor if the thing he is obliged to deliver has been destroyed through his fault or he has delivered it to another person.

e. In reciprocal obligations, where the obligations arise out of the same cause and must be fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by the other begins notwithstanding the absence of demand.

Note: There is no delay in an obligation not to do as one cannot be in delay for not doing something.

(56)

Effects of delay

a. The debtor shall be liable for the

payment of damages. (Art. 1170)

b. If the obligation consists in the delivery

of a determinate thing, he shall be

responsible for any fortuitous event until he

has effected the delivery. (Art. 1165)

(57)

Fortuitous events

1. Concept

Fortuitous events are those events that could not be . foreseen, or which, though foreseen, are inevitable. (Art. 1174).

It is not enough that the event should not been foreseen or anticipated, but it must be one impossible to foresee or avoid. (Sicam vs. Jorge, GR. No. 159617, August 8, 2007) Examples: Natural calamities or acts of God such as

earthquake, typhoon and lightning; and acts of man ("force majeure") such as war and armed robbery.

(58)

Elements

a. The cause must be independent of the debtor's will. b. There must be impossibility of foreseeing the event or of avoiding it even if it can be foreseen.

c. The occurrence of the event must be of such character as to render it impossible for the debtor to perform his obligation in a normal manner. (See Sicam vs. Jorge, G.R No. 159617, August 8,2007, for similar elements or characteristics.)

(59)

Liability for fortuitous events

General

General rule:

rule: No

No person

person shall

shall be

be

liable for fortuitous events, i.e., his

obligation will be extinguished.

(60)

Exceptions

Exceptions to the rule (Art. 1174):

a. When the law. expressly provides for liability even in case of fortuitous events (such as that provided in Art.1165 where the obligor is liable for fortuitous events if he delays or has promised to deliver the same thing to two or more persons who do not have the same interest).

b. When the parties have declared liability even in case of fortuitous event.

c. When the nature of the obligation requires the assumption of risk (such as the obligation of an insurer who must pay the policy holder even if the loss is caused by a fortuitous event if the cause thereof is the risk insured against).

(61)

Burden of proving loss due to fortuitous event

The burden of proving that the loss was due to

fortuitous event rests on him who invokes it.

And, in order for a fortuitous event to exempt

one from liability, it is necessary that he must

have committed no negligence or misconduct

that may have occasioned the loss. (Sicam vs.

Jorge, supra)

(62)

Presumptions

Presumptions on receipt on receipt of principal of principal or of later or of later installmentinstallment (these are disputable presumptions and evidence may be (these are disputable presumptions and evidence may be introduced to the contrary by the creditor) (Art. 1176) introduced to the contrary by the creditor) (Art. 1176)

1. The receipt of the principal without reservation as, to interest, shall give rise to the presumption that the interest has been paid.

2. The receipt of a later installment without reservation as to prior installments, shall give rise to the

presumption that such prior installments have been paid.

The above presumptions are disputable; hence, they may be rebutted by contrary evidence. If the

presumption is conclusive, then no evidence to the contrary may be admitted.

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Remedies

Remedies of

of creditor

creditor to

to enforce

enforce payment

payment

of

of his

his claims

claims against

against debtor

debtor (Art.

(Art. 1177)

1177)

1. Pursue the property in the possession of the debtor, except those exempt by law.

This is usually by attachment where the creditor files a court action to exact fulfillment with a prayer that the court set aside a property belonging to the debtor. If the court decides infavor of the creditor and the debtor does not pay, the property attached will be ordered sold and the proceeds thereof applied to the payment of the obligation.

(64)

Exercise all the rights and bring all the

actions of the debtor except those personal

to him (accion subrogatoria).

Example: A owes D. D owes C. If C files a court

action against D to collect, he may ask the court to

order A not to pay D so that in the event that the

court rules in favor of C, A will be required to pay

C. In effect, C is exercising the right to collect

from A which is a right that belongs to D.

(65)

Impugn the acts which the debtor may have

done to defraud his creditors (accion pauliana).

This remedy must be of last resort. The creditor must have taken the successively the foregoing measures before he can bring this action. (Metrobank vs International Exchange Bank, G.R. No. 176008,August10, 2011)

Example: D owes C P50,000.00. To defraud C, D sells his lot, his only property, to B who knows of the fraudulent intention of D. C may ask the court to order the rescission of the sale made by D. Once the sale is rescinded and the lot is returned to D, C may ask the court to order its attachment and its sale at public auction, and the proceeds of the sale applied in payment of his claim.

(66)

DIFFERENT KINDS OF OBLIGATIONS DIFFERENT KINDS OF OBLIGATIONS

((PrimaryPrimary classification under the Civilclassification under the Civil Code)Code)

1

1..PurePure obligationobligation 2.

2.ConditionalConditional obligationobligation 3.

3.ObligationObligation with a periodwith a period 4.

4.AlternativeAlternativeobligationobligation 5.

5.FacultativeFacultativeobligationobligation 6. Joint

6. Jointobligationobligation 7.

7.SolidarySolidary obligationobligation 8.

8.DivisibleDivisible obligationobligation 9.

9.IndivisibleIndivisible obligationobligation 10.

(67)

Pure and Conditional Obligations

Pure obligation, concept

A pure obligation is one without a term or

condition and is demandable at once.

Example: I promise to give you P5,000.00.

This is immediately demandable since there is

no term that must expire or a condition that

must happen for the obligation to be

(68)

Conditional

Conditional obligation,

obligation, concept

concept

A conditional obligation is one whose

demandability or extinquishrnent depends upon the

happening of a condition.

Examples:

(1.) "I will give you my car if you pass the CPA

Examination." The condition here is suspensive. You may

not demand the delivery of my car until you pass the CPA

Examination.

(2.) "I will let you use my car until you pass the CPA

Examination." The conditionhere is resolutoiy. You may

demand the delivery of my Car now but you must return

it to me when you pass the CPA Examination.

(69)

Condition

Concept

It is an uncertain event which wields an influence on a legal relationship. (Manresa)

Classification

a.

Suspensive

and

resolutory

1) Suspensive - This is a condition the happening of which gives rise to the obligation. This is also called condition antecedent or condition precedent. The demandability of the obligation is suspended until the happening of the condition. 2) Resolutory - This is a condition the happening of which extinguishes the obligation. This is also called condition subsequent. The obligation is demandable at once but it shall be extinguished upon the happening of the condition.

(70)

b.

Potestative

, casual and mixed

1) Potestative - A condition that depends upon the will of one of the contracting parties.

a) P

a) Potestotestativeative on the. paon the. part of the dert of the debtorbtor

(1) If suspensive - The obligation is void. (Art. 1182) Even if the condition is fulfilled, the obligation. is not demandable. (Example: D is to give C P50,OOO.OO if D goes to Baguio.)

(2) If resolutory - The obligation is valid. (Example: D is to allow the use of his car by C until D returns from Baguio.)

(71)

b)

b) P

Pot

otes

esta

tati

tive

ve on

on th

the pa

e part

rt of

of th

the cr

e cred

edit

itor -

or - Th

The

e

obligation

obligation is

is valid

valid whether

whether the

the condition

condition is

is

su

susp

spen

ensi

sive

ve or

or re

reso

solu

luto

tory

ry..

Examples:

(1) 0 is to give C P50,000.00 if C goes to Baguio.

(2) 0 is to allow the use of his car by C until C

returns from Baquio.

(72)

2) Casual - A condition that depends upon chance or

upon the will of a third person.

Examples: (1) 0 is to give C PSO,OOO.OifO0 wins

first prize in the lotto on the bet he placed this

morning. (2) D is to give C P50,000.00 if X goes to

Baguio.

3) Mixed - A condition that depends partly upon the

will of one of the parties and partly upon chance

or upon the will of a third person. (Example:

0 to give C P50,000.00 if C will marry X.)

(73)

c.

Possible

and impossible

1) Possible - One that is capable of fulfillment in its nature and by law.

2) Impossible - One that is not capable of fvlfillment in its nature or due to operation of law, such as "if you can swim across the Pacific Ocean" or "if you kill X'. In this case, the obligation and the condition are void. (Art.1183).

Note: If the condition is not to do an impossible thing, it shall be deemed as not having been agreed upon. (Art. 1183) Thus, the obligation is immediately demandable. (Example: 0 is to give C P50,000.00 if C does not swim across the Pacific Ocean.)

(74)

d.

Positive

and negative

1) Positive - This is a condition that some event

happen at a determinate time. Here, the obligation is

extinguished as soon as the time expires or it has

become indubitable that the event will not take place.

(Art. 1184)

Example: 0 is to give C P50,000 00 if c will marry X on or

before June 30, 2015. The obligation will be extinguished

on July 1, 2015 if C has not yet married X as of June 30,

2015. If X dies on June 1, 2015 before C has

married her, then the obligation is extinguished on

such date because there is no more doubt that the

marriage will not take place.

(75)

2) Negative - This is a condition that some event will

not happen at a determinate time. Here, the

obligation becomes effective as soon as the time

indicated has elapsed or it has become evident that

the event will not occur. (Art. 1185)

Example: D is to give C P50,000.00 if C will not marry

X on or before June 30, 2015. The obligation becomes

effective on July 1, 2015 if C has not yet married X as

of June 30, 2015. 'If X dies on June 1, 2015 before C

has married her, then the obligation becomes

effective on such date because there is no more doubt

that the marriage will not take place.

(76)

e. Divisible

and indivisible

1) Divisible - One that is capable of partial performance. Under Art. 1183, if the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid.

Examples (a): D is to give C a car if C finishes his law course, and P1,000,000.00 if C tops the Bar Examination. If D finishes his law course, he may demand the delivery of the car. However, he may not demand the payment of P1,000,000.do if he does not top the Bar. (2) D is to give C a car if C finishes his law course and,

P1,000,000.00 if C can get a copy of the test questions in the Bar Examination in advance. Even if both conditions are fulfilled, C can only ask for the delivery of a car from D because the second condition is unlawful.

(77)

2) Indivisible - One that is not capable of partial

performance by its nature or by law or

agreement of the parties.

Example:

D is to give C a car if C finishes his

law course and tops the Bar. C must comply

with both conditions before he can ask for the

delivery of a car from D.

(78)

Effect of

Effect of fulfillmentfulfillmentofof suspensivesuspensivecondition (condition (Art.1187Art.1187))

G

Geenneerraall rruullee:: TThhee eeffffeecctt ooff tthhee ffuullffiillllmmeenntt ooff tthhee ssuussppeennssiivvee ccoonnddiittiioonn rreettrrooaaccttss ttoo tthhee ddaayy ooff tthhee co

consnstititututitionon ofof ththee obobliligagatitionon.

Exceptions: There shall be no retroactive effect with respect to the fruits and interests as follows:

1. In reciprocal obligations, the fruits and interests shall be deemed to have been mutually compensated, i.e., each party shall keep the fruits and interest received by him prior to the fulfillment of the condition. Example: On May 1, 2011, S agreed to sell his land to B and B agreed to pay the price of P50,OOO.OOif X finishes his Accounting degree on March 15, 2015. X finished his Accounting degree as stipulated. It was as if S was entitled to the price and B to the land beginning on May 1, 2011. However, S shall keep the fruits on the land and B the interest on the price during the pendency of the condition.

(79)

2. In unilateral obligations, the debtor keeps the fruits

and interests received before the fulfillment of the

condition.

Example: On May 1, 2012, S promised to give B his

land if B passed the Bar Examination in February

2015.

B passed the Bar Examination as stipulated. It

was as if B was entitled to the land beginning on May 1,

2012. However, still keep the fruits on the land during

the pendency of the condition.

(80)

Rights' of the parties before the fulfillment of

the condition (Art.1188)

1. Creditor -

He may bring the appropriate

actions for the preservation of his right, such as

registering his claim with the Register of Deeds, if

appropriate, to notify all third persons, or asking

the debtor to provide a security if the debtor is

about to become insolvent.

2. Debtor - He may recover what he has paid by

mistake.

(81)

Effect

Effect when

when the

the debtor

debtor voluntarily

voluntarily

pr

even

ents

ts fu

fulf

lfill

illme

ment

nt of

of th

the

e con

condlt

dltio

ion

n

The condition is deemed fulfilled if the debtor voluntarily prevents its fulfillment (Art. 1186); hence, the obligation becomes immediately. demandable. Here, there must be an intent on part of the debtor to prevent compliance with the condition and actually prevents its fulfilment. Example:

D promised to give P10,OOO.OOto C, a marathon athlete, if C finishes the race during the athletic meet. However, on the eve of the scheduled race, D put a substance. on the drink of C who experienced weakening after taking the drink, and hence, was not able to join the race. Here, D must give

(82)

Rules in

Rules in case case of of loss, deterioration loss, deterioration or or improvemenimprovement t of of determinatedeterminate' ' thingthing befor

before the fulfille the fulfillmentment of the suspenof the suspensivesive condcondition (Aition (Art. 1189rt. 1189)) 1

1. Loss. Lossof the thingof the thing

a. Without debtor's fault - Obligation is extinguished. b. With debtor's fault '- Debtor is obliged to pay damages. Concept of loss ,

A thing is considered lost when it perishes, or goes out of. commerce or disappears in such a way that its existence is unknown 9r it cannot be recovered.

Example: D is obliged to give C a specific house if C passes the CPA Examination. If the house is destroyed in a fire without the fault of D before C passes the CPA Examination, D's obligation is extinguished even if C, thereafter, passes the CPA Examination. But if the house is destroyed through the fault of D such as when he placed inside the house highly flammable chemicals which caused the fire, then D shall be obliged to pay damages should C pass the CPA Examination..

(83)

2.

2.DeteriorationDeteriorationof the thing·of the thing·

a. Without debtor's fault - The impairment shall be borne by the creditor, i.e., no liability on the part of the debtor to pay damages. b. With debtor's fault - The creditor may choose between:

1) Rescission, plus damages 2) Fulfillment, plus damages Example:

D is obliged to give a specific car to C if C finishes his economics degree. The deterioration of the car due to wear and tear before C finishes his economics degree will be borne by C when C later finishes the said degree. However, if the car is damaged in an accident due to D's fault, C, when he finishes his economics degree may rescind the contract' and ask for damages, or ask D to deliver the car in its deteriorated condition plus damages.

(84)

3. Improvement of the thing

a. By nature or by time - The improvement shall

inure to the benefit of the creditor.

Example: D is obliged to give his violin to C if C

finishes his course in music. If the quality of the

tone produced by the violin had improved between

the time that D's obligation was constituted and

the completion by C of his course in music, then

such improvement shall inure to the benefit of C.

(85)

b. At the expense of the debtor - The debtor will have the rights

granted to a usufructuary, i.e., he 'can have enjoyment of the use of the improved thing and its fruits. He may remove the improvement if no damage is caused to the principal thing. If the improvement cannot be removed without causing damage to the principal thing, the thing and the improvement shall be delivered to the creditor without any right on the part of the debtor to indemnity. He may, however, set off the improvements against any damage to the thing. (Arts. 579 and 580)

Example: D is obliged to give his only car to C if C finishes his economics degree. Before C finished the said degree, D had the car repainted. In this case, D can continue using the car in its improved condition. Upon the completion by C of his economics degree, D cannot remove the paint because it will cause damage to the car. However, if he had caused a dent on the car due to his fault, he may set off the cost of repainting against the cost of damage brought by such dent.

(86)

Rul

Rule in case o

e in case of fulfi

f fulfillme

llment

nt of reso

of resoluto

lutory

ry

condition (Art. 1190)

1. Upon the fulfillment of the resolutory condition, the obligation is extinguished.

2. The parties shall return to each other what they have received.

3. In case of loss, deterioration or improvement of the thing, the provisions in the above rule (Art. 1189), which pertain to the debtor shall be applied to the party who is bound to return.

(87)

Reciprocal obligation, concept Reciprocal obligation, concept

A reciprocal obligation is one that arises from the same cause and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obliqation of the other. (Goldloop Properties, Inc. vs. Government Service Insurance System, G.R. No. 171076, August 1, 2012). Reciprocal obligations are to be performed simultaneously so that the performance of one is conditioned upon the simultaneous fulfillment of the other. (Jalandoni vs. Cabalum Commercial School, 61216-R, July 15, 1980)

Example: S sold his Toyota car to B for P200,000.00. The delivery of the car by S is dependent upon the payment of the price by B.

(88)

Obligations with

Obligations with a P

a Period

eriod

Obligation

Obligation with

with a

a period,

period, concept

concept

An obligation with a period is one whose

demandability or extinguishment is

subjected to the expiration of the term

which must necessarily come .. In

other words, there is a day certain

when the obligation will arise or cease.

(89)

Examples: (1) D is obliged to give his car to C on May 1, 2015. On May 1, 2015, the obligation becomes

demandable by reason of the expiration of the term or period. The period here is one with a suspensive effect or ex die. (2) On January 1, 2015, D allowed C to use his car until May 1, 2015. The obligation is demandable on January 1,.2015 but on May 1, 2015, D's- obligation to let C use his car is extinguished by reason of the expiration of the term. The period here is- one with a resolutory effect or in diem. C must therefore return the car.

(90)

Concept of period and day certain

Period is a space of time which determines the

effectivity or extinguishment of an obligation.

Thus, the space of time between January 1,

2015 and January 1, 2016 is a period the lapse of

which will cause an obligation to arise or cease.

A day certain is that which must necessarily come

although it may not be known when. (Art.

1193) An example is the death of a person which

will necessarily come. Thus, if the obligation of

D is to give C P10,OOO.OO when X dies, the

obligation is one with a period.

(91)

P

Period distinguished from eriod distinguished from condition.condition. 1. As to fulfillment

-A condition is an event that mayor may not happen; a period is an event that must necessarily come, at a gate known beforehand, or at a time that cannot be determined.

2. As to time

-A condition may refer to the future or to a past event . unknown to the parties; a period always refers to the future.

3. As to influence on the obligation

-A condition causes an obligation to arise or to cease; a period merely fixes the time for the efficaciousness of an obligation. (8 Manresa 153, 154)

4. As to the will of the debtor

A period that depends upon the will of the debtor authorizes the court to fix its duration. (Art. 1197, par. 2), while a condition that depends upon the will of the debtor which is suspensive shall annul the obligation. (Art.1182).

(92)

Kinds of period Kinds of period

1. Ex die - This is a period with a suspensive effect. Here, the obligation becomes demandable upon the lapse of the period. (Art. 1193)

2. In diem - This is a period with a resolutory effect. Here, the obligation is demandable at once but is extinguished upon the lapse of the period: (Art. 1193)

Other kinds are:

1. Legal - A period that is fixed by law.

2. Voluntary - This is fixed by the parties.

(93)

Problem:

"I Willpay you my debt when my means

permit me to do so." Is this an obligation

(94)

Answer:

This is an obligation with a period. Here, the

remedy of the creditor is to ask the court to fix

the period. (Art. 1180, 1197) Once the court

has fix:edthe period, it may no longer change it

as it becomes a part of the agreement by the

parties.

(95)

Presumption as to who has the benefit of

Presumption as to who has the benefit of the periodthe period

Whenever a period is designated in an obligation, it shall be presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the obligation or other circumstances, it should appear that it has been established for the benefit of only one of the parties. (Art. 1196).

Therefore, the debtor cannot be compelled to perform, and the creditor cannot be compelled to accept ~erformance, before the term expires.

Example: D borrowed Pi 0,000.00 from C on January 1, 2015. The loan bears interest at 10% per annum with both

principal and interest being due on December 31, 2015. Before December 31, 2015, C cannot compel D to pay and deprive him of the use of the money until the said date. Neither may D compel C to accept payment before December 31, 2015 and deprive C of the interest for remaining term.

(96)

P

Period eriod is fis for the or the benefit benefit of oof one one of the f the partiesparties

1. For the benefit of the debtor - He cannot be compelled to perform his obligation before the expiration of the term, but he may choose to perform before such expiration at his option.

Example: D is obliged to pay CP1P1 0,000.00 on or before December 31, 2015. D cannot be compelled to pay before December 31, 2015. However, he may Choose to pay at any time before December 31,2015 or on December 31,2015 at his option.

2. For the benefit of the creditor - He cannot be compelled to accept performance before expiration of the term, but he may choose to demand performance before such expiration at his option..

Example: On November 1, 2014, D borrowed from C P10,000.00. "collectible" on or before June 30, 2015. C may demand payment on June 30, 2015 or at any time before the said date. However, D cannot compel him to accept the payment at any time before June 30, 2015.

(97)

When

When debtor debtor loses loses his his right right to to make make use use of of the the period period ifif it

it is is for for his his benefit; benefit; (Art. (Art. 1198),1198),

i.e., the creditor the creditor may demand may demand immediate immediate paymentpayment

1. When he becomes insolvent, unless he gives a guaranty or security for the debt.

2. When he fails to furnish the guaranties or securities that he has promised.

Example: D borrowed P20,000.00 from .C promising to pledge his ring to C to secure the debt within one month. C gave D one year to pay the loan. D, however, failed to pledge his ring within the period agreed upon. In this case, C can demand immediate payment even before the agreed due date thereof.

(98)

3. When he impairs the said guaranties or securities by

his own acts, or when through a fortuitous eventthey

disappear, unless he gives new ones equally

satisfactory.

Example: D obtained a loan from C, the same being

secured by a chattel mortgage on D's car. The loan is

payable within one year. On the seventh month, the

car was razed by fire. C can demand immediate

payment unless 0 gives another security that is equally

satisfactory. This is true even if the cause of the Joss or

impairment was not due to the fault of D.

(99)

4. When he violates any undertaking in consideration of which the creditor agreed to the period.

Example: C granted a loan of P50,OOO.OO to D giving D one year to pay provided D did not engage in any gambling until he has paid the debt. If D enters a casino to play in the slot machine, say after one month, C can already demand immediate payment.

5. When he attempts to abscond.

Thus, if the debtor has been disposing all his property with an attempt to leave his place of business or residence to escape his creditors, such creditors can demand immediate payment of his debts although their maturity date is not yet due.

(100)

Alternative

Alternative Obligations Obligations and and FFacultative acultative ObligationsObligations

Kinds of obligations according to the number of prestations Kinds of obligations according to the number of prestations

1. Simple - One where there is only one prestation.

2. Compound - One when there are several prestations. This may be:

a. Conjunctive - Here, several prestations are due but all must be performed.

Example: D is to give C a specific ring, a specific watch and a specific bracelet to C. D must deliver all the items to C.

b.Distributive or disjunctive - This may either be alternative or facultative..

(101)

Alternative obligation, concept

An alternative obligation is one where several

prestations are due but the complete

performance of one of them is sufficient to

extinguish the obligation. (Art. 1199)

Example: D is obliged to give a specific ring, a

specific watch or a specific bracelet to C. The

delivery of any of the three articles will extinguish

the obligation.

(102)

Right to choose prestation

The right of choice belongs to the debtor, unless it has been expressly given to the creditor. (Art. 1199)

Limitations

Limitations on on debtor's debtor's right to right to choosechoose

1. The debtor must completely perform the prestation chosen. He cannot compel the creditor to receive part of one and part of another undertaking. (Art. 1199)

2. He cannot choose those prestations which are impossible, unlawful or which could not have been the object of the obligation. (Art. 1199)

(103)

When

When obligation

obligation ceases

ceases to

to be

be alternative

alternative

and becomes a simple obligation.

1. When the debtor has communicated his choice to the creditor. (Art. 1201)

2. When among the prestations whereby the debtor is alternatively bound, only one is practicable. (Art. 1202)

3. When the creditor has communicated his choice to the debtor, if the creditor has been expressly given the right of choice. (Art.1205)

(104)

Rules in case of loss of things or

impossibility of services which are

alternatively the object of the obligation.

1. When right of choice is with the debtor (Art. 1204)

a. If only one or some are lost through a fortuitous event or through the debtor's fault, the debtor may deliver any of the remainder, or that which remains if only one subsists.

b.IfIf all are lost through a fortuitous event, the obligation is extinguished (based on the rule that no person shall be responsible for fortuitous event).

c. If all are lost through the debtor's fault, the debtor shall pay the value of the last thing that was lost plus damages.

(105)

Examples:

D is to give C a specific ring, a specific

bracelet or a specific wristwatch. The

obligation is silent as to who will choose the

item to be delivered. Therefore, the right of

choice belongs to D.

(106)

a. If the ring is lost through a fortuitous event, D may deliver the bracelet or the wristwatch. The same rule applies if the ring is lost through the fault of D. In the case of the latter, D shall have no liability for damages because he can still perform his obligation by choosing to deliver the bracelet or the wristwatch,

b. If the ring and the bracelet are lost through a fortuitous event or through D's fault, the obligation is converted into a simple obligation to deliver the wristwatch. There is no liability for damages on the part of D even if the loss is due to his fault because he can s!ill perform his obligation. It was as if D chose to deliver the wristwatch.

c. If all things are lost due to a fortuitous event, D's obligation is extinguished.

(107)

d. If the ring and the bracelet are lost through a fortuitous event, the obligation becomes a simple obligation to deliver the wristwatch. If the

wristwatch is thereafter lost due to the fault of D, D shall pay damages.

e. If the ring, the bracelet and the wristwatch are lost one after the other due to D's fault, D shall pay the value of the wristwatch, the last item that was lost, plus damages.

f. If the ring and the bracelet are lost through D's fault, the obligation becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost

(108)

When

When right of

right of choice

choice is

is expressly gr

expressly granted

anted to

to

the creditor (Art. 1205)

When right of choice is expressly granted to the creditor (Art.1205)

a. If only one or some are lost through a fortuitous event, the debtor shall deliver that which the creditor should choose among the remainder, or that which remains if only one subsists.

b. If all are lost through a fortuitous event, the obligation shall be extinguished.

c. If only one or some are lost through the debtor's fault, the creditor may claim any of those subsisting, or the price of those which were lost through the debtor's fault plus damages.

d. If all are lost through the debtor's fault, the creditor may claim the price of any of them plus damages.