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(Art. 1158)
(Art. 1156) obligations arising from law:
Obligation- juridical relation, created by virtue of -agreement of the parties is still necessary
certain facts, between two or more persons, -not presumed
whereby one of them, known as the creditor, may
demand from the other, known as the debtor, a (Art. 1159)
definite prestation. (Civil obligation) obligations arising from contracts
-force of law between the contracting parties
Credit- the right to demand of the object -payment for damages incurred from pre-
obligations contractual obligations may be awarded only if:
debt- the duty to give, to do, or not to do • offer must be clear and definite thus
leading the offeree to believe in good faith
Elements of obligation: to incur expenses in the expectation of
• Personal elements entering into the contract
◦ active subject-creditor • the withdrawal must be without just cause.
◦ passive subject-debtor
• object or the prestation (Art. 1160)
◦ to give quasi-contract- juridical relation which arises from
◦ to do certain lawful, voluntary, and unilateral acts, to the
◦ not to do end that no one may be unjustly enriched at the
expense of another.
▪ the prestation must have the ffg
requisites:
(Art. 1161)
• possible
civil obligations arising from crimes
• determinate or at least -based on Art. 100 of RPC
determinable except: (Art. 12, RPC)
• must have a possible • imbecile or an insane person
equivalent in money
• a person under 9 years of age
• efficient cause or the juridical tie- vinculum
• a person over 9 years and under 15 unless
◦ established by law – husband & wife; he has acted with discernment
mother & child relationships
• any one who acts under the compulsion of
◦ by bilateral acts- contracts an irresistable force
◦ by unilateral acts – crimes and quasi- • acts under the impulse of an uncontrollable
delicts fear or fear of an equal or greater injury
Civil obligation vs Natural obligation
Gives right of effect Cannot be enforced (Art. 1162)
action to compel by action but which obligations arising form quasi-delicts
their performance are binding on the quasi-delict- act or omission through fault or
party who makes negligence that causes damage to another is a
them, in conscience source of obligation.
and according to -distinct from crime.
equity and natural
justice. Negligence- failure to observe for the protection of
the interests of another person, that degree of
Positive law source Equity and natural care, precaution and vigilance which the
justice circumstances justly demand, whereby such other
person suffers injury.
(Art. 1157) -want of care
Sources of obligations
• law 2 kinds of negligence:
• contracts • culpa aquiliana- quasi-delict
• quasi-contracts • culpa-contractual-contract
• crimes
• quasi-delicts dolo- willful or deliberate intent to cause damage or
injury to another comply with his obligation:
• action for specific performance
***The obligation arising from quasi-delict is • action to rescind or resolve the obligation
demandable not only for one's own acts or • action for damages
omissions, but also those of persons fro whiom
one is responsible (El Cano vs Hill) (Art. 1166)
accessories- things destined for embellishment,
CHAPTER 2 use, or preservation of another thing of more
NATURE AND EFFECTS OF OBLIGATIONS importance, have fo their object the completion of
the latter for which they are indispensable or
generic/indeterminate thing- indicated only by its convenient.
kinds, without being designated and distinguished
from others of the same kind. Accession- everything whch is produced by a
– the moment it was delivered, it became thing, or which is incorporated or attached thereto,
determinate either naturally or artificially.
–
specifi/determinate thing- individualized and can be ***both the accessories and accessions must be
identified or distinguished from others of its kinds delivered except if the parties have agreed that
3 incidental or accessory obligation: they be excluded.
• obligation to preserve the thing with due
care (Art. 1163) (Art. 1167)
• obligation to deliver the fruits (Art. 1164) -obligation to do: things not done by the debtor
• obligation to deliver the accessions and may be done by a 3rd person at the expense of the
accessories (Art. 1166) debtor
-what has been poorly done be undone
(Art. 1163) -indemnification for damages
diligence of a good father of a family (Art. 1173)
effect of breach: (Art. 1168)
• liability fro damages when the debtor fails obligation not to do:
to exercise the diligence of a good father in -the debtor does what was forbidden, the same
preserving the thing can be undone at his expense
• if due to fortuitous event, he is exempted -liability of debtor for damages
from liability
(Art. 1169)
(Art. 1164) need for judicial or extra-judicial demand
right to the fruits of the prestation from the time the
obligation to deliver it arises. delay- non-fulfillment of the obligatiion with respect
of time.
Real right – direct and immediate juridical power -applicable only to positive obligations (to give and
over a thing, susceptible of being exercised not to do), not to negative obligations (not to do)
only against a determinate person, but against the Kinds of mora:
whole world (right of ownership and possession) • mora solvendi- default on the part of the
debtor
personal right – power belonging to one person to ◦ ex re- obligations to give
demand of another the fulfillment of a prestation to ◦ ex persona- obligations to do
give, to do, or not to do. ◦ requisites:
▪ that the obligation be demandable
“the ownership of things is transferred not by mere and already liquidated
agreements but by delivery” ▪ that the debtor delays performance
▪ that the creditor requires the
***when the object has not been delivered yet, the performance judicially or extra-
right action is specific performance not judicially
revindicacion • mora accipiendi- default on the part of the
(Art. 1165) creditor
remedies of creditor when the debtor fails to ◦ requisites:
▪ offer of performance by the debtor diligence of a good father (bonos paterfamilias)-
who has the required capacity person of ordinary diligence
▪ offer must be to comply with the
prestation as it should be (Art. 1174)
performed fortuitous event (force majeure)- event which
▪ the creditor refuses performance takes place by accident and could not have been
without just cause. foreseen, or though foreseen was inevitable.
• compensatio morae- default of both Effect: the debtor cannot be held liable for
parties in reciprocal obligations damages for non-performance.
- the liability of the parties should be
offset equitably (Art. 1175)
- neither party incur in delay if the other Usurious transaction shall be governed by special
does not comply or is not ready to laws.
comply in a proper manner what is Usury- contracting for or receiving something in
incumbent upon him. excess of the amount allowed by law.
(Art. 1202)
(Art. 1205)
***when the creditor has the right of selection, his (Art. 1209)
selection shall take effect from the moment it is ***the obligation not to, when there are several
communicated to the debtor debtors, is a joint indivisible obligation.
• express
• tacit
Creditor's delay
• the debtor will not incur in delay in the
performance of the obligation, even if there
is a definite period fixed for performance.
• In such case, the period is deemed waived
through the creditor's own inaction.
(Art. 1206)
***Before the substitution is effected, the substitute
is not the prestatition that is due; only the principal (Art. 1223)
prestation is due and enforceable by the creditor at Indivisible thing – if divided into parts, its value is
that time. Therefore, if the substitute prestation diminished disproportionately.
becomes impossible due to the fault or negligence
of the debtor, the obligation is NOT affected and he Divisible thing– when each one of the parts into
cannot be held liable for damages. which it is divided forms a homogenous and
analogous object to the other parts as well as the
Sec. 4 – Joint and Solidary Obligations thing itself.
***If the obligation is solidary and indivisible, every 3 cases when damages and interest may be
debtor is liable for losses and damages, although recovered in addition to the penalty
those ready to perform can later recover from the • when there is an express provision to that
guilty one. effect (i.e Attorney's fees)
• when the debtor refuses to pay the penalty
***But if the debtor who has paid the entire • when the debtor is guilty of fraud in the
indemnity may recover from the others their non-fulfillment of the obligation
respective shares in the price, and from the guilty
debtor the entire amount of damages.
(Art. 1229)
(Art. 1225) ***The power of the judge to reduce the penalty
factors to consider in determining whether the refers only to penalties prescribed in contracts. It
obligation is divisible or not. does not cover the collection of surcharge on tax
• The will or intention of the parties that are due, which is mandatory on the collector.
• the objective or purpose of the stipulated
prestation Iniquitous – contrary to good custom; would
• the nature of the thing occasion the economic ruin and represent an
• provisions of law affecting the prestation undue exploitation of the debtor
to give: certain objects – indivisible
to do – indivisibility is presumed. excessive – taking into account the interests of the
creditor, it is in open contradiction to the demands
The purpose of the parties is controlling. of justice and equity.
In indivisible obligations, partial performnace is ***penalty not enforceable when the principal
equivalent to non-performance. obligation has been extinguished due to fortuitous
Except: event or when the creditor prevents the debtor
• where the obligation has been substantially from performing the principal obligation.
performed in good faith, the debtor may
recover as if there had been complete (Art. 1230)
performance General Rule: the nullity of the principal obligation
• when the creditor accepts performance, carries with it the nullity of the penalty. Exceptions:
knowing its incompleteness, and without • when the penalty is undertaken by a third
protest, the obligation is deemed fully person precisely for an obligation which is
performed. unenforceable, voidable, or natural, in
which case it assumes the form of a
Severable and entire (pp. 256 – 258) guaranty which is valid under Art. 2152
Sec. 6 – obligations with penal clause • when the nullity of the principal obligation
itself gives rise to liability of the debtor for
(Art. 1226) damages
penal clause- is an accessory undertaking to
assume greater liability in case of breach Chapter 4
EXTINGUISHMENT OF OBLIGATIONS
***the penalty and liquidated damages are the
same (Lambert vs Fox) (Art. 1231)
(modes of extinguishing obligation same as those
***The creditor cannot recover more than the listed in notes on Jurado )
penalty stipulated even if he proves that the
damage suffered by him exceed in amount such Sec. 1. Payment or Performance
penalty.
(Art. 1232) creditor cannot object because of defects in
payment – is the fulfillment of the prestation due; performance resulting from his own acts or
– a juridical act which is voluntary, licit and directions)
made with the intent to extinguish the
obligation; (Art. 1236)
– payment and fulfillment are identical. ***Payment by a 3rd person results in the
modification of the prestation that is due.
Requisites of payment
• the person who pays ***if the debt has been remitted, paid,
• the person to whom payment must be compensated or prescribed, a payment by a 3rd
made person would constitute a payment which is not
• the thing to be paid due; his remedy would be against the person who
received the payment under such conditions, and
• the manner, the time and place of payment
not against the debtor who did not benefit from the
payment.
Kinds of payment
• normal – when the debtor voluntarily
(Art. 1237)
performs the prestation stipulated
subrogation – produces the effect of only a change
• abnormal – when the debtor is forced by in the active subject but not in the extinguishment
means of a judicial proceeding, either to of obligation.
comply with the prestation or to pay ***Should be interpreted for the benefit of the
indemnity. debtor. This provision does not mean that there
may be subrogation if the creditor willingly and
(Art 1233) spontaneously permits the 3rd person who has paid
identity – the very thing or service due must be to be subrogated in his rights, even without the
delivered or released consent of the debtor.
integrity – the prestation must be fulfilled (Art. 1238)
completely ***embodies the principle that no one should be
compelled to accept the generosity of another.
time of payment – date stipulated (Code Commission)
proof of payment – devolves upon the debtor (Art. 1239)
Effect of incapacity – where the person paying has
(Art. 1234) no capacity to make the payment, the creditor
substantial performance – there must have been cannot be compelled to accept it; consignation will
an attempt in good faith to perform, without any not be proper; in case he accepts it, the payment
willful or intentional departure therefrom. will not be valid, except in the case provided in Art.
– deviation must be slight 1427.
– omission or defect must be technical and
unimportant, and must not pervade the (Art. 1240)
whole or be so material that the object to whom payment must be made
which the parties intended to accomplish in • person in whose favor the obligation has
a particular manner is not attained. been constituted
• his successor in interest
(Art. 1235)
• any person authorized to receive payment
waiver – there must be an intentional
◦ by the creditor himself (conventional
relinquishment of a known right
authority)
– there must have been acceptance of the
◦ by law or legal authority (guardian,
defective performance with the actual
executor or administrator of the estate
knowledge of the incompleteness or the
of a deceased person, assignee or
defect, under circumstances that would
liquidator of a partnership or
indicate an intention to consider the
corporation)
performance as complete and renounce
***payment to a wrong party does not extinguish
any claim arising from defect.
the obligation as to the creditor
***Rule in Art. 1235 is based on estoppel (the
Assignment Dation in payment
(Art. 1241)
***when the creditor is incapacitated to receive the Art. 1255 Art. 1245
payment, this must be done to his representative if Both are substitute forms of performance of an
there be one. If there be none, the debtor may obligation
deliver the ting to the Court in consignation, by
virtue of Art. 1256. Involves plurality of Does not involve
creditors plurality of creditors
benefit to the creditor – intelligent and reasonable Involves the whole of Does not involve the
use of the payment made, for purposes necessary the property of the whole of the property of
or useful to the creditor, such as that which his debtor the debtor
legal representative would have or could have
done under similar circumstances, even if at the Pledge – personal property delivered to the
time of complaint the effect of such use no lonegr creditor
exists.
(Art. 1246)
In the following situations, payment to a 3rd person quality of the thing delivered- determined by the
also releases the debtor: court taking into consideration the purpose and
• when, without notice of the assignment of other circumstances of the obligation.
the credit, he pays to the original creditor
(Art. 1256) (Art. 1247)
• when in good faith he pays to the one in reason for the article – extra judicial expenses
possession of the credit (Art. 1242) required by the payment s borne by the debtor, in
the absence of stipulation, because payment is his
(Art. 1242) duty and it inures to his benefit in that he is
one in possession of credit – the person who discharged form the burden of the obligation.
appears to be the owner of the credit but is not
actually the owner (Art. 1248)
– different from possession of the document ***The creditor who refuses to accept partial
representing the credit. prestation does not incur in delay or mora
– Good faith on the part of the debtor is accipiendi, except when there is an abuse of right
necessary or if good faith requires acceptance.
(Art. 1243)
***The payment to the creditor after the credit has ***Not applicable to obligations where there are
been attached or garnished is void as to the party several subjects or where the various parties are
who obtained the attachment or garnishment bound under different terms and conditions.
Counterclaim Compensation
Must be pleaded to be Takes place by
effectual operation of law
Kinds of compensation:
As to their effects/extinguishment:
• total
• partial
As to origin:
• legal – by law
• facultative – by the creditor (Art. 1283-1284)
• conventional – by agreement of te two effect of judgment – voidable contract can be
parties compensated before it is rescinded or annulled.
• judicial – by court decree The decree of rescission is retroactive, and the
compensation is considered canceled. Rescission
(Art. 1279) requires mutual restitution. The party whose
1. That each one of the obligors be bound obligation is annulled can thus recover to the
principally, and that he be at the same time extent that his credit was extinguished by
a principal creditor of the other; compensation, because to that extent he is
– there can be no compensation when deemed to have made payment.
one is occupying a representative
capacity (Art. 1285)
2. That both debts consist in a sum of money, compensation--------->Assignment – there has
or if the things due are consumable, they already been extinguishment of one or the other of
be of the same kind, and also of the same the obligation
quality if the latter has been stated; – assignee is left only with an action for
– consumable – those which cannot be eviction or for damages for fraud against
used in a manner appropriate to their the assignor.
nature without being consumed – Exception: when the debtor consents to the
– fungible – things of the same kind assignment; consent constitutes a waiver
which in payment can be of the compensation unless he reserved
substituted for each other his right.
– when the obligation refer to
determinate or specific things, there Assignment---------->compensation - with the
can be no compensation consent of the debtor – the debtor cannot set up
3. That the two debts be due; against the assignee the compensation
4. That they be liquidated and demandable; ◦ if he notified the assignor that he
– prescription: reserves his right to the compensation,
he can still set up compensation as a
– voidable debts
defense when the assignee demands
– liquidated debts – amount ans
the payment of the credit.
existence are determined; when the
determination of the amount depends • With knowledge but without consent of the
ony on a simple arithmetical operation debtor – the debtor may set up the defense
5. That over neither of them there be any of compensation of debts prior to the
retention or controversy, commenced by assignment but not subsequent ones.
third persons and communicated in due ◦ Purpose: to prevent fraud.
time to the debtor. • Without knowledge of debtor - the debtor
may set up the defense of compensation of
(Art. 1280) all credits which he may have against the
reason: the liability of the guarantors only assignor and which may have become
subsidiary; it is accessory to the principal obligation demandable, before he was notified of the
of the debtor. If the principal debtor has a credit assignment.
against the creditor which can be compensated, it Remedy for the assignee: action for
would mean the extinguishment of the guaranteed indemnification against the assignor
debt, either totally or partially. This extinguishment
benefits the guarantor, for he can be held liable (Art. 1286-1287)
only to the same extent as the debtor. reason: based on justice
deposit is made or commodatum given on the
(Art. 1281-1282) basis of confidence
voluntary compensation is not limited to obligations
which are not yet due. The arties may compensate support- based on common policy and humanity.
by agreement. It is necessary however that the To allow its extinguishment by compensation would
parties should have the capacity to dispose of the defeat its exemption from attachment and
credits which they compensate. execution (Art 205, Family Code) ad may expose
the recipient to misery and starvation
(Art. 1288-1289)
effects of compensation:
1. both debts are extinguished to the
concurrent amounts
2. interests stop accruing on the extinguished
obligation or the part extinguished
3. the period of prescription stops with
respect to the obligation or part
extinguished
4. all accessory obligations of the principal
obligation which has been extinguished are
also extinguished.