7/27/2019 obli.ppsx

1/337

General Provisions on

Obligation

The definition of obligations establishes the

unilateral act of the debtor either to give, to do

or not to do as a patrimonial obligation. It

means that the debtor has the obligation whilethe creditor has its rights.

On the sources of obligation, the main sourcesare really Law and Contracts. The other

sources are also established by law.

7/27/2019 obli.ppsx

2/337

ART. 1156. An obligation is a juridicalnecessity to give, to do or not to do.

OBLIGATIONS as defined by ARIAS RAMOSis a juridical relation whereby a person (calledthe creditor) may demand from another (calledthe debtor) the observance of a determinate

conduct, and, in case of breach, may obtainsatisfaction from the assets of the latter.(Approved by Mr. Justice J. B. L. Reyes)

7/27/2019 obli.ppsx

3/337

The obligations referred to in our manual is a

patrimonial obligations that is, those obligations

with pecuniary value or assessable in terms of

money.

Characteristics of patrimonial obligations:

They represent an exclusively private interest. They create ties that are by nature transitory.

They exist a power to make effective in case of non-

fulfillment, the economic equivalent obtained at the

patrimony of a debtor.

7/27/2019 obli.ppsx

4/337

Meaning of Juridical Necessity it means

the rights and duties arising from

obligation are legally demandable and the

courts of justice may be called upon

through proper action to order the

performance.

7/27/2019 obli.ppsx

5/337

Action means an ordinary suit in court of justice by which

one party prosecutes another for the enforceable or

protection for a right or a prevention or redress of a wrong

( Sec. 1. Rules of court ).

Example

Gaya bought refrigerator from Tito but Gaya did not pay

the refrigerator. If after demand, Gaya still did not pay, Titocan sue Gaya in Court either to demand payment or for

recovery of the refrigerator.

7/27/2019 obli.ppsx

6/337

Essential requisites of an obligation

a) An active subject, who has the power to demand the

prestation, known as the creditor or oblige;b) A passive subject, who is bound to perform the prestation,

known as debtor or obligor.

c) An objector the prestation which may consist in the act ofgiving, doing or not doing something.

d) The vinculum juris or the juridical tie between the twosubjects by reason of which the debtor is bound in favor ofthe creditor to perform the prestation. It is the legal tie whichconstitutes the source of obligationthe coercive forcewhich makes the obligation demandable. It is the legal tiewhich constitutes the devise of obligation the coercive

force which makes the obligation demandable.

7/27/2019 obli.ppsx

7/337

Juridical Tie

Debtor To give, to do CreditorOr Obligor or not to do or Obligee

Illustration:

Gaya enters into a contract of sale with Tito whopaid the purchase of a GE refrigerator. Gaya didnot deliver the refrigerator. Gaya is the passive

subject or debtor and Tito is the active subject orcreditor. The object or prestation is the GErefrigerator and the obligation to deliver is thelegal tie or the vinculum juris which binds Gaya

and Tito.

7/27/2019 obli.ppsx

8/337

This is also known as a unilateral obligation, that

is, the obligation of the debtor to fulfill or comply

his commitment, in this case, the delivery of the

refrigerator.

On the other hand, if Gaya, delivered the

refrigerator and Tito did not pay, then Titobecomes the debtor who is bound to pay while

Gaya is the creditor who has the right to demand

the prestation.

7/27/2019 obli.ppsx

9/337

Distinctions between Obligations and Contracts:

Contract is the only one of the sources of

obligation, while obligations have other sources

like law, quasi-contracts, delicts or quasi-delicts; Contract is a bilateral obligation while obligation is

a unilateral obligation;

All contracts are obligations while not all

obligations are contracts.

7/27/2019 obli.ppsx

10/337

Civil obligations as distinguished from Natural

obligations

Civil obligations derive their binding force from

positive law; Natural Obligation derives their bindingeffect from equity and natural justice.

Civil can enforced by court action of the coercive

power of public authority;

Natural the fulfillment cannot be compelled by

court action but depends on the good

conscience of debtor.

7/27/2019 obli.ppsx

11/337

ART. 1157. Obligations arise from: Law;

Contracts;

Quasi-contracts;

Acts or omissions punished by law; and

Quasi-delicts. (1089a)

ART. 1158. Obligations derived from law are not presumed.Only those expressly determined in this Code or in speciallaws are demandable, and shall be regulated by the precepts

of the law which establishes them; and as to what has notbeen foreseen, by the provisions of this Book. (1090)

ART. 1159. Obligations arising from contracts have the forceof law between the contracting parties and should be

complied with in good faith. (1091a)

7/27/2019 obli.ppsx

12/337

ART. 1160. Obligations derived from quasi-contracts shallbe subject to the provisions of Chapter 1, Title XVII, of thisBook.

ART. 1161. Civil obligations arising from criminal offenses

shall be governed by the penal laws, subject to theprovisions of article 2177, and of the pertinent provisionsof Chapter 2, Preliminary Title, on Human Relations, and ofTitle XVIII of this Book, regulating damages. (1092a)

ART. 1162. Obligations derived from quasi-delicts shall begoverned by the provisions of Chapter 2, Title XVIII of thisBook, and by special law. (1093a)

7/27/2019 obli.ppsx

13/337

Source of Obligations

1. LAW as a source of obligations

The provisions of Art. 1158 refers to the legalobligations or obligations imposed by specificprovisions of law, which means that obligations

arising form law are not presumed and that to bedemandable must be clearly provided for,expressly or impliedly in the law.

Examples:

It is the duty of the Spouses to support each other. (Art.291, New Civil Code)

And under the National Internal Revenue Code, it is theduty of every person having an income to pay taxes.

7/27/2019 obli.ppsx

14/337

Source of Obligations

2. CONTRACT as a source of obligations

Contract as defined in Art. 1305, NCC is the meeting of mindsbetween two person whereby one binds himself with respect tothe other,

Obligations arising from contracts have the force of law betweenthe contracting parties because that which is agreed upon in thecontract by the parties is the law between them, thus, theagreement should be complied with in good faith. (Art. 1159).

For examples:

A contract of lease was executed between Gaya as the lesseeand Tito as the lessor for the rent of an apartment.

7/27/2019 obli.ppsx

15/337

Although contracts have the force of law, it

does not mean that contract are over and

above the law. Contracts are with the

limitations imposed by law in Art. 1306, NCC, itstates that the contracting parties may

establish such stipulations, clauses terms and

conditions as, they may deem convenient,

provided that are not contrary to law, morals,good custom, public order or public policy.

7/27/2019 obli.ppsx

16/337

Sources of Obligations

3. QUASI-CONTRACTS as a source of obligations

The quasi literally means as if.

Quasi-contract is the juridical relation resulting from a lawful,voluntary and unilateral act which has for its purpose thepayment of indemnity to the end that no one shall unjustlyenrich or benefited at the expense of another. (Art. 2142,NCC)

Contracts and quasi-contracts distinguished: in a contract, consent is essential requirement for its validity while

in quasi-contract, there is no consent as the same is implied bylaw;

contract is a civil obligation while quasi-contract is a naturalobligation.

7/27/2019 obli.ppsx

17/337

2 Kinds of Quasi-contracts

1. Solut io Indebit i(Payment by mistake)It is the juridical relation which arises when a

person is obliged to return something received

by him through error or mistake.

Example-

Arvin owed Ian the sum of P1, 000.00. Bymistake, Arvin paid P2, 000.00. Ian has the

obligation to return the P1, 000.00 excess

because there was payment by mistake.

7/27/2019 obli.ppsx

18/337

2 Kinds of Quasi-contracts

2. Nego tiorum gestio(management of anothers

property)

It is the voluntary management or administration by a

person of the abandoned business or property of

another without any authority or power from the latter.

(Art. 2144, NCC)

Example-

Victor, a wealthy landowner suddenly left for abroad

leaving his livestock farm unattended. Ramon, a

neighbor of Victor managed the farm thereby incurring

expenses. When Victor returns, he has the obligation

to reimburse Ramon for the expenses incurred by him

and to pay him for his services. It is bases on the

7/27/2019 obli.ppsx

19/337

Sources of Obligations

4. DELICTS or acts or omissions punished by

law as a source of obligations

Acts or omission punished by law is known as

Delict or Felony or Crime.

While an act or omission is felonious because it is

punished by law, the criminal act gives rise to civilliability as it caused damage to another.

7/27/2019 obli.ppsx

20/337

Civil liability arising from delicts:

Restitution which is the restoration of or returning

the object of the crime to the injured party.

Reparation which is the payment by the offender

of the value of the object of the crime, when such

object cannot be returned to the injured party.

Indemnification the consequential damages which

includes the payment of other damages that may

have been caused to the injures party.

7/27/2019 obli.ppsx

21/337

Illustration:

Mario was convicted and sentenced to imprisonment by

the Court for the crime of theft, the gold wrist watch, ofRito. In addition to whatever penalty that the Court may

impose, Mario may also be ordered to return (restitution)

the gold wrist watch to Rito. If restitution is no longer

possible, for Mario to pay the value (reparation) of the

gold wrist watch. In addition to either restitution orreparation, Mario shall also pay for damages

(indemnification) suffered by Rito.

7/27/2019 obli.ppsx

22/337

Sources of Obligations

5. QUASI-DELICTS as a source of obligations

Concepts of Quasi-Delict

Quasi-delict is one where whoever by act or omission causesdamage to another, there being fault of negligence, is obliged topay for the damage done. Such fault of negligence, if there isno pre-existing contractual relation between the parties. (Art.2176)

Example-

If Pedro drives his car negligently and because of hisnegligence hits Jose, who is walking on the sidewalk of thestreet, inflicting upon him physical injuries. Then Pedrobecomes liable for damages based on quasi-delict.

7/27/2019 obli.ppsx

23/337

Sources of Obligations

6. DELICTS or acts or omissions punished by law asa source of obligations

Acts or omission punished by law is known as Delict or

Felony or Crime.

While an act or omission is felonious because it is punished bylaw, the criminal act gives rise to civil liability as it caused

damage to another.

Civil liability arising from delicts: Restitution which is the restoration of or returning the

object of the crime to the injured party.

Reparation which is the payment by the offender of the

value of the object of the crime, when such object cannot be

returned to the injured party.

7/27/2019 obli.ppsx

24/337

Requisites of a Quasi-Delicts -

There must be fault of negligence attributable to

the offended;

There must be damage or injury caused to

another;

There is no pre-existing contract.

7/27/2019 obli.ppsx

25/337

Negligence Defined

is the failure to observe for the protection of theinterests of another person, that degree of care,precaution and vigilance which the circumstancesjustly demand, whereby such other person suffersinjury. (Judge Cooley)

Test of Negligence

For the existence of negligence, the following arenecessary:

a duty on a party of the defendant to protect the plaintifffrom the injury of which the letter complains;

a failure to perform that duty; and

7/27/2019 obli.ppsx

26/337

Kinds of Negligence

Culpa Aquiliana, also known as quasi-delict or

negligence as a source of obligation.

Culpa contractual or negligence in the

performance of a contract.

7/27/2019 obli.ppsx

27/337

An illustration showing this difference is founding Gutierrezvs . Gutierrez, 56 Phil 177-

While trying to pass each other on a narrow bridge, a passengertruck and private automobile collided, and the plaintiff, a passengerin the truck, was injured.

The owner of the passenger truck was made a defendant, althougha driver was driving the truck and the owner of the car was alsomade a defendant, although he was not in the car but which was

being driven by his 18 year old son and in which members of hisfamily were then riding. The court found both drivers negligent,basing basing the liability of the owner of the truck to the plaintiff onthe contract of carriage; while the liability of the owner of the car wasbased on Quasi-delict of the Civil Code. As against the owner of thetruck, there was Culpa contractual, while as against the owner of thecar there was culpa Aquiliana.

NATURE AND EFFECT OF

7/27/2019 obli.ppsx

28/337

NATURE AND EFFECT OF

OBLIGATIONS

ART. 1163. Every person obliged to givesomething is also obliged to take care of it with theproper diligence of a good father of a family, unlessthe law or the stipulation of the parties requires

another standard of care. (1904a)

ART. 1664. The creditor has a right to the fruitsof the thing from the time the obligation to deliver itarises. However, he shall acquire no real right over

it until the same has been delivered to him. (1905)

ART. 1165. When what is to be delivered is adeterminate thing, the creditor, in addition to theright granted him by article 1170, may compel thedebtor to make the delivery.

7/27/2019 obli.ppsx

29/337

If the thing is indeterminate or generic, he mayask that the obligation be complied with at theexpense of the debtor.

If the obligor delays, or has promised to deliverthe same thing to two or more persons who donot have the same interest, he shall beresponsible for any fortuitous event until he haseffected the deliver. (1906)

ART. 1166. The obligation to give a determinatething includes that of delivering all itsaccessions and accessories, even though they

may not have been mentioned. (1097a)

Obligations of the Debtor To Give a

7/27/2019 obli.ppsx

30/337

Obligations of the Debtor To Give a

determinate thing-

To preserve or take care of the thing with the

proper diligence of a good father of a family. It

means the ordinary diligence that a prudent manwould exercise in taking care of his own property

taking into consideration the nature of the

obligation, of the time and of the place, like a

person who is obliged to deliver a determinate

horse to another should, pending its delivery,

preserve it by taking care of the same as if the

horse is his own.

O f G

7/27/2019 obli.ppsx

31/337

Obligations of the Debtor To Give a

Determinate Thing-

To deliver the object or thing when the obligation todeliver arises, including:

1. Fruits of the thing if any. Kinds of fruits: Natural;industrial or civil.

Natural - spontaneous product of the soil; the youngand other products of animal. E.g. tress, plants onlands without he intervention of man.

Industrial - produced by lands of any kingthrough cultivation and labor. E.g. sugar cane,

vegetables, rice. Civil - derived by virtue of juridical relations. E.g.

rents of a building; prices of leases of lands and othersimilar income.

Obli ti f th D bt T Gi

7/27/2019 obli.ppsx

32/337

Obligations of the Debtor To Give a

determinate thing-

2. Accessions and accessories. Accession is the right pertaining to the owner of a

thing over its products and whatever is attached

thereto either naturally or artificially.Example-

Accretion which refers to the gradual and addition ofsediment to the shore by action of water.

Accessoriesare those things which are joined

attached to the principal object as ornament or torender it perfect.

Example- Radio attached to a car; or key to a car.

Obli ti f th D bt T Gi

7/27/2019 obli.ppsx

33/337

Obligations of the Debtor To Give a

determinate thing-

3. To be liable for damages in case of breach ofobligation (Art. 1170, NCC)

When creditor acquire a right to the thing to be

delivered and its fruits-The creditor has a right to the fruits of the thing

from the time the obligation to deliver it arises.However, he shall acquire no real right over it until thesame have been delivered to him. (Art. 1164, NCC)

Example a binds himself to sell his horse to B for froP10, 000. No date nor condition is stipulated fordelivery of the horse. Later, the horse gave birth to acolt. A has right to the colt, if B has not paid the horse.

Before delivery, B does not acquire ownership over it.

D fi iti f t

7/27/2019 obli.ppsx

34/337

Definition of terms:

1. Determinate thinga thing is determinate when

it is particularly designated or physically

segregated from all others from the same class.

(Art. 1460, NCC)2. Indeterminate or generic thingA thing is

generic when it refers to a class or thing or

genus and cannot be designated with

particularity. (Art. 1460, NCC)3. Fortuitous Events those events which could not

be foreseen or which though foreseen were

inevitable. (Art. 1174, NCC)

7/27/2019 obli.ppsx

35/337

Art. 1167. If a person obliged to do

something fails to do it, the same shall be

executed at his cost.

This same rule shall be observed if he does

it in contravention of the tenor of the

obligation. Furthermore, it may be decreedthat what has been poorly done be undone.

( 1098 )

7/27/2019 obli.ppsx

36/337

7/27/2019 obli.ppsx

37/337

ART. 1168. When the obligation consists in not doing, andthe obligor does has been forbidden him, it shall also beundone at his expense, (1099a)

Obligation of the Debtor NOT To Do

This is negative personal obligation which is consisting of anobligation, of not doing something. If the debtor does what hasbeen forbidden him to do, the obligee can ask the debtor to haveit undone. If it is impossible to undo what was done, the remedyof the injured party is for an action of damages.

Example-

A bought a land from B. It was stipulated that A would notconstruct a fence in a certain portion of his land adjoining thatland sold by B. Should A construct a fence in violation of theagreement, B. can bring an action to have the fence remove atthe expense of A.

7/27/2019 obli.ppsx

38/337

ART. 1169. Those oblige to deliver or to do something incur in

delay from the time the obligee judicially or extra - judicially demands from themethe fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that

delay may exist:

( 1 ) When the obligation or the law expressly declares; or

( 2 ) When from the nature and the circumstances of the obligation it appearsthat the destination of the time when the thing is to be delivered or the service isto rendered was controlling motive for the establishment of the

contract; or

( 3 ) When demand would be useless, as when the obligor has rendered it beyondhis power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply in

a proper manner with what is incumbent upon him. From the moment one of theparties fulfills his obligation, delay by the other begins. ( 1100a )

7/27/2019 obli.ppsx

39/337

Delay ( Mora )

Means a legal delay or default and it consists of failuredischarge a duty resulting to ones owndisadvantaged.

The debtor incurred delay if: The debtor fails to perform his obligation when it falls due;

and

A demand has been made by the creditor judicially or extrajudicially.

Example

Gaya obliged herself to deliver a determinate horse toTito on June 20. this year. Gaya failed to delivered onthe agreed date, Is Gaya already on delay on June 20,only when Tito makes a judicial or extra-judicial

demand and from such date of demand when Gaya ison default or dela .

7/27/2019 obli.ppsx

40/337

However, there are instances when the demandby the Creditor is not necessary to place the debtor

on delay:

1. When the obligation expressly so provides

The mere fixing of the period is not sufficient to

constitute a delay. An agreement to the effect

that fulfillment or performance is not made

when the obligation becomes due, default or

delay by the debtor will automatically arise.

7/27/2019 obli.ppsx

41/337

2. When the law so provides

The express provision of law that a debtor is indefault. For instance, taxes must be paid on thedate prescribed by law, and demand is not

necessary in order that the taxpayer is liable forpenalties.

3. When time is of the essence

Because time is the essential factor in the fulfillmentof the obligation. Example, Gaya binds herself to sewthe wedding gown of Maya to be used by the latteron her wedding date. Gaya did not deliver the weddinggown on the date agreed upon. Even without demand,

Gaya will be in delay because time of the essence.

7/27/2019 obli.ppsx

42/337

4. When demand would be useless

When the debtor cannot comply his obligation as when it is

beyond his power to perform. Like when the object of the

obligation is lost or destroyed through the fault of thedebtor, demand is not necessary.

5. In a reciprocal obligation, from the moment one

of the parties fulfills his obligation, delay to theother begins

For instance, in a contract of sale, if the seller delivers the

object to the buyer and the buyer does not pay, then delay

by the buyer begins and vice versa, if the buyer pays andthe seller did not deliver the ob ect then the seller is on

Ki d f d l

7/27/2019 obli.ppsx

43/337

Kinds of delay

Mora Solvendi delay on the part of the

debtor.

Mora Accipiendi delay on the part of the

creditor, like when the creditor unjustifiably

refused to accept payment at the time it wasdue, is in delay.

Compensatio Morae delay both parties in a

7/27/2019 obli.ppsx

44/337

ART. 1170. Those who in the performance of theirobligations are guilty of fraud, negligence, or delay, and

those whoin any manner contravene the tenor thereof,

are liable for damages. (1101)

ART. 1171. Responsibility arising from fraud is

demandable in all obligations. Any waiver of an action

for future fraud is void. (1120a)

ART. 1172. Responsibility arising from negligence in the

performance of every king of obligation is also

demandable, but such liability may be regulated by the

courts, according to the circumstances. (1130)

7/27/2019 obli.ppsx

45/337

ART. 1173. The fault or negligence of the obligor

consists in the omission of that diligence which is

required by the nature of the obligation and corresponds

with the circumstances of the persons, of the time and of

the place. When negligence shows bad faith, theprovisions of articles 1171 and 2201, paragraph 2, shall

apply.

If the law or contract does not state the diligence ofwhich is to be observed in the performance, that which

is expected of a good father of a family shall be required.

(1104a)

7/27/2019 obli.ppsx

46/337

Sources of liability for damages:

1. Fraud (dolo)is the intentional deception made

by one person resulting in the injury of another.

The fraud referred to is incidental fraud, that is,

fraud incident to the performance of a pre-existingobligation.

2. Negligence (culpa)consists in the omission bythe obligor 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, NCC)

Sources of liability for damages:

7/27/2019 obli.ppsx

47/337

Sources of liability for damages:

3. Delay (Mora)like when there has been judicialor extra-judicial demand and the debtor does notcomply his obligation, delay will occur.

4. In contravention of the tenor of the obligationrefers to the violation of the terms and conditionsor defects in the performance of the obligation,like when a landlord fails to maintain a legal andpeaceful possession of a tenant being leased bythe latter because the landlord was not the ownerand the real owner wants to occupy the land,there is contravention of the tenor of theobligation.

Other Sources of Liability for

7/27/2019 obli.ppsx

48/337

Other Sources of Liability for

Damages

Loss of the thing with the fault of debtor.

Deterioration with the fault of debtor. (Art. 1189)

7/27/2019 obli.ppsx

49/337

Kinds of Damages

1. Moraldamages include physical sufferings,mental anguish, fright, serious anxiety,besmirched reputation, wounded feeling,moral shock, social humiliation and similarinjury.

2. Exemplarydamages imposed by way of

example or correction for the public good.

Like in quasi-delicts, if the defendant acted withgross negligence. (Art. 2231, NCC)

Kinds of Damages

7/27/2019 obli.ppsx

50/337

Kinds of Damages

3. Nominaldamages are adjudicated in order that aright of the plaintiff, which has been violated by thedefendant, may be vindicated or recognized and notfor the purpose of indemnifying the plaintiff for any

loss suffered by him. (Art. 2221, NCC)

4. Temperate or moderate damages are more thannominal but less than compensatory damages may

be recovered when the courts finds that its amountcannot, from the nature of the case, be proved withcertainty. Pecuniary loss means loss of money, or ofsomething by which money or something of money

value may be acquired. (Black Law Dict. P. 1131)

7/27/2019 obli.ppsx

51/337

Kinds of Damages

5. Actual or compensatory damagesexcept as

provided by law, or a stipulation, one is entitled

to an adequate compensation only for such

pecuniary loss suffered by him as he has duly

proved. (Art. 2199, NCC)

Damages may be recovered: For loss or impairment of earning capacity in cases of

temporary or permanent personal injury;

For injury, to the plaintiffs business standing or

commercial credit.

7/27/2019 obli.ppsx

52/337

Kinds of Damages

6. Liquidateddamages are those agreed upon

by parties to a contract to be paid in case of

breach thereof. (Art. 2226, NCC)

Distinguish Fraud (Dolo) from

7/27/2019 obli.ppsx

53/337

Distinguish Fraud (Dolo) from

Negligence (Culpa)

1. Dolo there is deliberate intent to cause damage orinjury.

Culpa there is no deliberate intent to cause damage.

2. Dolo waiver of liability of future fraud is void.

Culpa waiver may in some cases be allowed.

3. Dolo fraud must be clearly proved.

Culpa presumed from breach of contractual obligation.

4. Dolo liability cannot mitigated by the courts.

Culpa may be reduced according to circumstances.

7/27/2019 obli.ppsx

54/337

ART. 1174. Except in cases expressly

specified by the law, or when it is otherwise

declared by stipulation, or when the nature

of the obligation requires the assumptionof risk, no person shall be responsible for

those events which could not be foreseen,

or which, though foreseen, were inevitable

(1105a)

7/27/2019 obli.ppsx

55/337

Fortuitous event is an event which cannot be foreseenwhich though foreseen is inevitable.

Fortuitous event proper are acts of God such as volcanic

eruption, earthquake, lightning, etc. is now similar withforce majuere or acts of man such as conflagration, war,robbery, etc.

1. Requisite necessary to constitute fortuitous event The failure of the debtor to comply with the obligation must be

independent from the human will;

The occurrence makes it impossible for the debtor to fulfill theobligation on a normal manner, and the obligor did not take part

as to aggravate the injury of the creditor. (Vasquez v.C.A. G.R.

7/27/2019 obli.ppsx

56/337

2. As a general rule, no person shall be held

responsible for fortuitous events

Example Gaya obliged herself to deliver adetermine car to Tito on Dec. 30, 1998. Before the

arrival of the period, the car was struck by lightning

and was totally destroyed. Gaya cannot be held

responsible for the destruction of the car, hence herobligation to deliver is extinguished.

7/27/2019 obli.ppsx

57/337

Exceptions (when the person is responsible despite the fortuitouseven).

a. When the law expressly so provides, such as: The debtor is guilty of fraud, negligence or in contravention of the

tenor of the obligation. (Art, 1170, NCC) The debtor has proved to deliver the same thing to two or more

persons who do not have the same interest. ( Art. 1165,NCC )

The thing to delivered is generic.

The debtor is guilty of default or delay. ( Art. 1169,NCC )

The debtor is guilty of concurrent negligence.

b. When declared by stipulation;

c. When the nature of obligation requires the assumption of risk.

An example of this is a contract of insurance.

7/27/2019 obli.ppsx

58/337

ART. 1175. Usurious transaction shall be governed byspecial laws.

Note: C.B. Circular No. 905 suspends the ceilings in the usury law.Hence, parties can agree as to the rate of interest.

Kinds of interest

1. Conventional *The rate which is agreed upon bythe parties.

2. Legal Interest *The rate which is prescribed by law.

3. Lawful Interest *The rate which is agreed upon bythe parties but which rate iswithin the rate authorized bylaw.

4. Usurious Interest *The rate which is in excess

of the maximum rate ofinterest allowed by law.

7/27/2019 obli.ppsx

59/337

ART. 1176. The receipt of the principal by thecreditor without reservation with respect to theinterest, shall give rise to the presumption thatsaid interest has been paid.

The receipt of a later installment of a debtwithout reservation as to prior installments, shalllikewise raise the presumption that such

installments have been paid. (1110a)

Presumption means the inference as to theexistence of a certain fact which if not contradicted is

considered as true.

7/27/2019 obli.ppsx

60/337

The presumption in the above article is a disputablepresumption, whereby one which can becontradicted by presenting proof to the contrary whilea conclusive presumption does not admit any

evidence or proof, hence, it is considered as a fact.

Presumption under this article:

1. Receipt of the principal, without reservation as to the

interest, shall give rise to the presumption that the saidinterest has been paid.

2. When the creditor issues a receipt of a later installmentof a debt without reservation as to prior installment ispresumed to have been paid.

7/27/2019 obli.ppsx

61/337

ART. 1177. The creditors, after having pursued the property inpossession of the debtor to satisfy their claims, may exercise all therights and bring all the actions of the latter for the same purpose,save those which are inherent in his person; they may also impugnthe acts which the debtor may have done to defraud them. (1111)

Rights of CreditorsIn order to satisfy their claims against the debtor, creditors have thefollowing successive rights:

1. to levy by attachment and execution upon all the property of the debtor,

except such as are exempt by law from execution;

2. to exercise all the rights and actions of the debtor, except, such as areinherently personal to him; and

3. to ask for the rescission of the contracts made by the debtor in fraud oftheir rights.

7/27/2019 obli.ppsx

62/337

ART. 1178. Subject to the laws, all rightsacquired in virtue of an obligation are

transmissible, if there has been no stipulation

to the contrary. (1112)

As a rule, all rights acquired in virtue of an obligation

are transmissible, except in the following cases:

1. When the law so provides.

2. When the parties stipulate otherwise by

agreement of parties that the rights acquired by

them will not be transmitted to any other person.

Kinds of Obligations

7/27/2019 obli.ppsx

63/337

Kinds of Obligations

Classification of Obligations: The Civil Code classifies obligations primarily into: (PU CO PE

ALFA JOS DIP)

1. Pure;

2. Conditional;

3. With a period;

4. Alternative;

5. Facultative;

6. Joint;

7. Solidary or several or in solidum;8. Divisible;

9. Indivisible;

10. With a penal clause.

7/27/2019 obli.ppsx

64/337

Other provisions of the Civil Code, however,

impliedly admit other classes of obligations, to

wit:

a.) Unilateral and bilateral;

b.) determinate and generic;

c.) legal, conventional and penal;d.) real and personal

7/27/2019 obli.ppsx

65/337

Section I. Pure and Conditional Obligations

ART. 1179. Every obligation whose

performance does not depend upon a futureor uncertain event, or upon a past event

unknown to the parties, is demandable at

once.

Every obligation which contains a resolutory

condition shall also be demandable, without

prejudice to the effects of the happening of

7/27/2019 obli.ppsx

66/337

1. Pure Obligation when the obligation contain

no term or condition whatever upon which

depends the fulfillment of the obligation

contracted by the debtor. It is immediately demandable and there is nothing to

exempt the debtor from compliance therewith.

Example Gaya obliged herself to pay her loan of

P1,000 to Tito on demand. Instances when obligations immediately

demandable:

1. It is a pure obligation;

2. It is subject to a resolutory condition;

7/27/2019 obli.ppsx

67/337

2. Conditional Obligations one which is subject to acondition of one whose performance depends upon afuture or uncertain events or upon past event unknownto the parties.

ART. 1180. When the debtor binds himself

to pay when his means permits him to do so, theobligation shall be deemed to be one with theperiod, subject to the provisions of article 1197.(n)

Example

A promissory note states that This is to acknowledgereceipt of sum of One thousand Six Hundred pesos (P1,600.00) and I am to pay my debt to Arvin as soon aspossible or as soon as I have the money. It was held thatthe conditional obligation is void, because the collection

would be impossible, the remedy of the creditor is to ask

7/27/2019 obli.ppsx

68/337

ART. 1181. In conditional obligations, the acquisition of rights aswell as the extinguishment or loss of those already acquired, shalldepend upon the happening of the event which constitutes thecondition. (1114)

ART. 1182. When the fulfillment of the condition depends upon thesole will of the debtor, the conditional obligation shall be void. If itdepends upon chance or upon the will of a third person, theobligation shall take effect in conformity with the provisions of thiscode. (1115)

ART. 1183. Impossible conditions, those contrary to good customsor public policy and those prohibited by law shall annul theobligation which depends upon them. If the obligation is divisible,that part thereof which is not affected by the impossible or unlawfulcondition shall be valid,

The condition not to do an impossible thing shall be considered asnot havin been a reed u on. 1116a

7/27/2019 obli.ppsx

69/337

ART. 1184. The condition that some event happen at adeterminate time shall extinguish the obligation as soon asthe time expires or if it has become indubitable that the eventwill not take place. (1117)

ART. 1185. The condition that some event will not happen at adeterminate time shall render the obligation effective fromthe moment the time indicated has elapsed, or if it hasbecome evident that the event cannot occur.

Ifnot time has been fixed, the condition shall be deemedfulfilled at such time as may have probably beencontemplated, bearing in mind the nature of the obligation.(1118)

ART. 1186. The condition shall be deemed fulfilled when the

obligor voluntarily prevents its fulfillment. (1119)

n s or c ass ca ons oditi

7/27/2019 obli.ppsx

70/337

condition:

1. Suspensive and Resolutory

Suspensive the happening of the condition gives

rise to an obligation.

Example:

Maya binds herself to deliver a determinate car to Tito if

he marries Gaya. The obligation is only demandableupon the happening of the condition that is, if Tito marries

Gaya. The obligation is suspended and not yet

demandable.

7/27/2019 obli.ppsx

71/337

Resolutory the happening of the condition

extinguishes the obligation already existing.

Example:

Arvin binds himself to lend his only car to Ian until the

latter passes the CPA Board. The obligation to lend is

immediately demandable. Ians right over the car is

extinguished upon his passing the CPA board. Ian is now

obliged to return the car.

Kinds or classifications of

7/27/2019 obli.ppsx

72/337

Kinds or classifications of

condition:

2. Potestative, Casual and Mixed

Potestat ive is one the fulfillment of which depends

upon the sole will of the debtor. This kind of conditionis void.

Example:

Arvin Promise to give his only parcel of land to Maya if

he decides to leave for the United States.

7/27/2019 obli.ppsx

73/337

Casualis one the fulfillment of which depends upon

chance.

Example:

Mario agrees to give Maria a determinate car if Marias

only racing horse will win the sweepstake race.

7/27/2019 obli.ppsx

74/337

Mixedis one which depends partly upon the will of

third person and partly upon chance

Example:

Vincent promise to give Victor a new Toyota Car if Victor

will be able to play with and beat Karpov in a game of

chess. This is mixed condition, that is Karpov

willingness to play chess with Victor and the latters

winning over Karpov.

Kinds or Classifications of

7/27/2019 obli.ppsx

75/337

Condition:

3. Possible and Impossible

Impossible condition is divided into 2:

a) Phys ical Imposs ibi l i ty the condition imposed

is not capable of being performed physically.

Example:

Grace will give Christine a gold necklace if

she swims across the Pacific Ocean.

7/27/2019 obli.ppsx

76/337

b) I l legal Impossibi l i ty when the conditionimposed is contrary to law, good custom or

public policy.

Example:

1. Contrary to law Pedro agrees to give Ernesto

P100,000 if Ernesto will kill Mario.

2. Contrary to good custom Santos binds himself

to give Maria a gold wrist watch if she will cohabit

with Mr. Reyes without benefit of marriage.

3. Contrary to publ ic pol icy Maria agrees to

employ Grace in her company if Grace will not join

a labor union.

Kinds or Classifications of

7/27/2019 obli.ppsx

77/337

Condition:

4. Positive and Negative:

A Negative condit ion is one where some event will nothappen at a determinate time, either

a.) the time indicated has elapsed; or

b.) it has become evident that the event cannotoccur (Art. 1185, NCC)

Example:

Victor will give Jason a car if he will not marry Helen untilDec. 19, 2001, if Jason has not married Helen until Dec. 19,2001 or if Helen has died within the prescribed time withouthaving married to Jason, the obligation becomesdemandable. If Jason married Helen within the prescribedtime, the obligation of Victor is extinguished.

Kinds or Classifications of

7/27/2019 obli.ppsx

78/337

Condition:

5. Divisible and Indivisible

Div is ib lethat part of obligation which is not affected byimpossible or unlawful condition shall be valid (Art. 1183,NCC)

Example-X promise to pay Y the sum of P1, 000.00 if Y furnishes X withinformation as to the whereabouts of Z and another sum ofP2, 000.00 if Y kills Z. in the obligation, the first part (to payP1, 000.00) is valid while the second part (P2, 000.00) isvoid because only the latter is affected by the condition.

6. Express and Implied

7/27/2019 obli.ppsx

79/337

ART. 1187. The effects of a conditionalobligation to give, once the condition has beenfulfilled, shall retroact to the day of the constitution ofthe obligation. Nevertheless, when the obligationimposes reciprocal prestations upon the parties, the

fruits and interests during the pendency of thecondition shall be deemed to have been mutuallycompensated. If the obligation is unilateral, thedebtor shall appropriate the fruits and interests

received, unless from the nature and circumstancesof the obligation it should be inferred that theintention of the person constituting the same wasdifferent.

In obli ations to do and not to do the courts shall

Effects of Conditional Obligation

7/27/2019 obli.ppsx

80/337

g

to Give:

Once the condition is fulfilled, the effects of theconditional obligations shall retroact to the day ofthe constitution of the obligation and not on thedate when the condition was fulfilled.

Example

On Jan. 1, 1999 A agreed to give B a parcel of land ifhe passes the May, 1999 CPA exams. If B passes theCPA exams in May, 1999, he is entitled to the landeffective Jan. 1, 1999 because Bs right over the landretroacts to the date when the obligation wasconstituted.

7/27/2019 obli.ppsx

81/337

As to the fruits and interest The effect of conditionalobligation to give, as a rule, do not retroact to the date ofthe constitution of the obligation. The following rules shallgovern:

1. In reciprocal obligation (like a contract of sale) - the fruitsand interest during the pendency of the condition shall bedeemed to have been mutually compensated.

Example:

A agrees to sell and B agrees to buy As parcel ofland if B passes the May, 1999 CPA exams. If Bpasses the May, 1999 CPA Board, the obligationbecomes demandable. B is entitled to all the intereststhat his money (with which to pay A) may earn while A

is entitled to the fruits which the parcel of land

7/27/2019 obli.ppsx

82/337

2. In unilateral obligation the debtor shall appropriatethe fruits and interests received during the pendencyof the condition unless a contrary intention appears.

Example:

X agreed to give Y a parcel of land if Ypasses the CPA Board in May, 1999 exams.Pending the happening of the condition, A isentitled to the fruits which the land may

produce, A will deliver only the parcel of land if thecondition is fulfilled, unless a contrary intentionappears.

7/27/2019 obli.ppsx

83/337

ART. 1188. The creditor may, before the fulfillment of

the condition, bring the appropriate actions for the

preservation of his right. The debtor may recover

what during the same time he has paid by mistake in

case of a suspensive condition (1121a)

Preservation ofCreditors Right

The action for the preservation of the creditors right

may have for their objectives:

1. To prevent the loss or deterioration of the things which are

the objects of the obligation by enjoining or restraining acts of

alienation or destruction by the debtor himself or by third

person;

Preservation of reditors Right

7/27/2019 obli.ppsx

84/337

2. To prevent concealment of the debtorsproperties which constitute the guaranty in case

of non-performance of the obligation;

3. To demand security if the debtor becomes

insolvent;

4. To compel the acknowledgement of the debtorssignature on a private document or the

execution of proper public document for

registration so as to affect third person.

Preservation of Creditors Right

7/27/2019 obli.ppsx

85/337

5. To register the deeds of sale or mortgages;

6. To set aside fraudulent alienation made by thedebtor;

7. To interrupt the period of prescription by actions

against adverse possessors of the things which

are objects of the obligation. (Lawyers journal,

1951, p. 47)

7/27/2019 obli.ppsx

86/337

Paragraph I of the above article authorizes the creditor totake any appropriate actions for the preservation of

creditors right during the pendency of the condition:

Example:

On Jan. 1, 1999, Raul obliged himself to sell a parcel of

land to Dennis if he passes the CPA exams in October,

1999. From the time the obligation was constituted and

pending the happening of the condition (passing the CPAExams) Dennis may cause the annotation of the

condition in the certificate of title in the Register of Deeds

where the land is located, to preserve his right over the

parcel of land.

7/27/2019 obli.ppsx

87/337

Paragraph II in order that debtor may recover what he has

paid by mistake, during the pendency of the condition, the

following requisites may be present:

1. The debtor paid the creditor before the fulfillment of the

condition;

2. Payment made by debtor was through mistake and error;

3.

The action to recover what was paid by mistake should bemade before the fulfillment of the condition.

7/27/2019 obli.ppsx

88/337

Example

Pedro obliged himself to pay Santos P20, 000 if a PAL

plane crashes at Cebu before Dec. 30, 1998. After the

obligation was constituted and before Dec. 30, 1998,a plane crushed in Cebu. Pedro honestly and

believing that the condition was fulfilled paid the P20,

000 to Santos. It turned out however that it was a

Cebu airline that crushed. Thus, Pedro may recoverthe amount paid to Santos by mistake for the reason

that the condition has not yet been fulfilled.

7/27/2019 obli.ppsx

89/337

ART. 1189. When the conditions have been imposedwith the intention of suspending the efficacy of an

obligation to give, the following rules shall be

observed in case of the improvement, loss or

deterioration of the thing during the pendency of the

condition:

1) If the thing is lost without the fault of the debtor,

the obligation shall be extinguished.

2) If the thing is lost through the fault of the debtor,

he shall be obliged to pay damages; it is

understood that the thing is lost when it

perishes, or goes out of commerce, or

disappears in such a way that its existence is

7/27/2019 obli.ppsx

90/337

3) When the thing deteriorates without the fault of

the debtor, the impairment is to be borne by

the creditor;

4) If it deteriorates through the fault of the debtor;

the creditor may choose between therescission of the obligation and its fulfillment,

with indemnity for damages in either case;

5) If the thing is improved by its nature, or by

time, the improvement shall inure to thebenefit of the creditor;

6) If it is improved at the expense of the debtor,

he shall have no other right than that granted

to the usufructuary.

7/27/2019 obli.ppsx

91/337

These rules apply only to obligation to give adeterminate or specific thing subject to a suspensivecondition in case of loss, deterioration or improvement ofthe thing.

1. In case of loss of the thing

a) If the thing is lost without the fault of the debtor, the obligationshall be extinguished.

Example

Reyes obliged himself to give Santos a determinate car ifhe passes the CPA Exams in Oct. the current year. If during thependency of the condition the car was lost through fortuitousevent without the fault of Reyes, the obligation to deliver the caris extinguished even if the condition is fulfilled later.

b) If the thing is lost through the fault of the debtor, he shall be

obliged to pay damages. If in the example above, the specificcar was lost throu h the fault of Re es, he shall be liable for

7/27/2019 obli.ppsx

92/337

It is understood that the thing is lost:

1. When it perishes (as when a house is burnt to

ashes)

2.

When it goes out of commerce (as when the objectbefore which is not prohibited becomes prohibited)

3. When disappears in such a way that its existence

is unknown (as when a particular car has been

missing for some time)4. When it disappears in such a way that it cannot be

recovered (as when a particular diamond ring is

dropped in the middle of the Atlantic Ocean).

7/27/2019 obli.ppsx

93/337

2. When the thing deteriorates -

a) When the thing deteriorates during the pendency of thecondition, without the fault of the debtor, the impairment isto be borne by the creditor.

ExampleArvin obliged himself to give Ian a determinate Toyota car ifIan passes the October CPA Exams. During the pendencyof the condition, the car was partially damaged by flood,without the fault on the part of Arvin. If the condition isfulfilled, Ian will bear the impairment.

b) If the thing deteriorates, during the pendency of thecondition, through the fault of the debtor, the creditor maychoose, after the fulfillment of the condition, between therescission of the obligation or its fulfillment, with indemnityfor damages in either case.

7/27/2019 obli.ppsx

94/337

3. When the thing improveda) If the thing improved during the pendency of the

condition, by its nature, or by time, the improvement

shall inure to the benefit of the creditor. The reason for

this is to compensate the creditor who would suffer incase, instead of improvement, there would be

deterioration without the fault of the debtor.

b) If the thing is improved at the expense of the debtor, he

have no other right than that granted to the usufructuary.

By us usufruct is meant the right to enjoy the property ofanother which includes the right to enjoy and use the

fruits of the property.

Effects When Resolutory

7/27/2019 obli.ppsx

95/337

Condition is fulfilled

1. The obligation is extinguished. (Art. 1181, NCC)

2. Because the obligation is extinguished and considered to have had noeffect, the parties should restore to each other what they have received.

3. The fruits and interests thereon should also be returned after deducting ofcourse the expenses made for the production, gathering and preservation, ifany.

4. The rules given in Art. 1189, N CC will apply to whoever has the duty toreturn in case of loss, deterioration or improvement of the thing.

5. The courts are given power to determine the retroactivity of the fulfillment ofa resolutory conditions.

Example :

A gave B a parcel of land on condition that B will pass theCPA Exams on May, this year. B did not pass the CPA Exams. Theobligation is extinguished and therefore, it is as if there was neveran obligation at all. B will therefore have to return both the landand the fruits he had received there from the moment A has givenhim the land.

7/27/2019 obli.ppsx

96/337

ART. 1191. The power to rescind obligatiosis implied in reciprocal ones, in case one of theobligors should not comply with what isincumbent upon him.

The injured party may choose between thefulfillment and the rescission of the obligation,with the payment of damages in either case. Hemay also seek rescission, even after he haschosen fulfillment, if the later should become

impossible. The court shall decree the rescission

claimed, unless there be just cause authorizingthe fixing of a period.

This is understood to be without prejudice to

the rights of third persons who have acquired the

7/27/2019 obli.ppsx

97/337

ART. 1190. When the conditions have fortheir purpose the extinguishment of anobligation to give, the parties, upon thefulfillment of said conditions, shall return toeach other what they have received.

In case of the loss, deterioration orimprovement of the thing, the provisions which,with respect to the debtor , are laid down to the

preceding article shall be applied to the partywho is bound to return.

As for obligations to do or not to do, theprovisions of the second paragraph of article1187 shall be observed as re ards the effect of

Right to Rescind

7/27/2019 obli.ppsx

98/337

Right to Rescind

The right to rescind means the right to cancel or toresolve in case of reciprocal obligation in case of

non-fulfillment on the part of one.

Example:

In a contract of sale, the buyer can rescind if the seller

does not deliver or te seller can rescind if the buyer

does not pay.

The power to rescind is given to the injured party

and the injured party has the following alternative

remedies:

1. Demand fulfillment of the obligation plus damages;

or

7/27/2019 obli.ppsx

99/337

ART. 1192. In case both parties have committed abreach of the obligation, the liability of the firstinfractor shall be equitably tempered by thecourts. If it cannot be determined which of theparties first violated the contract, the same shallbe deemed extinguished, and each shall bear hisown damages.

Rules if Both Parties Have Committed a Breach

The above rules are deemed just. The first one isfair to both parties because the second infract or,though they would derive some advantage by hisown act or neglect. The second rule is likewise just,because it is presumed that both parties at aboutthe same time tried to rea some benefits. Re ort of

7/27/2019 obli.ppsx

100/337

Section 2 - Obligations with a period`

ART. 1193. Obligations for whose fulfillment a daycertain has been fixed, shall be demandable only when thatday comes.

Obligations with a resolutory period take effect atonce, but terminate upon arrival of the day certain.

A day certain is understood to be that which must

necessarily come, although it may not be known when.

If the uncertainty consists in whether the day willcome or not, the obligation is conditional, and it shall beregulated by the rules of the preceding Section.

Period Defined

7/27/2019 obli.ppsx

101/337

A period is a future and certain length of time

which determines the effectivity or the

extinguished of obligation.

Obligation with a period is one whoseconsequences are subject in one way or

another to the expiration of said period or term.

(8Manresal58)

A day certain is understood to be that which

must necessarily come, although it may not be

known when.

Period and ConditionDi ti i h d

7/27/2019 obli.ppsx

102/337

Distinguished:

a) As to fulfillment -A period is a certain event which musthappen sooner or later while a condition is an uncertain

event.

b) As to time a period refers only to the future while a

condition may refer to a past unknown event.

c) As to influence or effect on the obligation the period

fixes the time of the effectivity of the obligation while a

condition may cause the demandability of the obligation to

arise or to terminate.

7/27/2019 obli.ppsx

103/337

ART. 1194. In case of loss, deterioration orimprovement of the thing before the arrival of

the day certain, the rules in article 1189 shall

be observed. (n)

Effect of loss, deterioration, or improvement before

the arrival of period.

Note the cross reference to Art. 1189, NCC.

Example:If A is suppose to deliver to B a particular car

on Dec. 19, 1999 by the car was destroyed by

fortuitous event in July 1, 1999, the obligation is

7/27/2019 obli.ppsx

104/337

ART. 1195. Anything paid or delivered before the arrivalof the period, the obligor being unaware of the period orbelieving that the obligation has become de anddemandable, may be recovered, with the fruits and interests.(1126a)

Effect Of Payment Before Arrival of Period

This article which is similar to Article 1188, NCC, in an obligationto give, allows the recovery of what has been paid by mistake beforethe fulfillment of a suspensive condition.

Example -

E owes G P20, 000.00, which was supposed to be paid on December 25this year. By mistake, E paid his obligation on December 25 last year.Assuming that today is only June 30, E can recover the amount plusinterest therein. But E cannot recover, except he interest, if the debt had

already matured or if E had knowledge of the period.

7/27/2019 obli.ppsx

105/337

ART. 1196. Whenever in an obligation a period isdesignated, it is presumed to have beenestablished for the benefit of both the creditorand the debtor, unless from the tenor of the sameor other circumstances it should appear that the

period has been established in favor of one or ofthe other. (1127)

Presumption As to Benefit Of A Period

The general rule is that when a period is fixed by theparties , the period is presumed to be for the benefit ofboth creditor and debtor.

Which means that before the expiration of the period, the

debtor may not fulfill the obligation and neither the

7/27/2019 obli.ppsx

106/337

By way ofexceptions, however, if the tenor of the obligation or othercircumstances may indicate that a period is have been established forthe benefit of either the creditor or debtor:

1. For the benefit of both creditor and debtor Example

Gaya obtained a loan of P10, 000 at 12% interest per annum from Tito for one year.Gaya has a period of one year within which to use the money, while Tito will benefitfrom the interest which the money will earn.

2. For the benefit of the creditor Example -

Gaya executes a promissory note in favor of Tito which reads: I promise to pay Titoor order the amount of P10, 000 on demand. Thus, Tito can demand payment from

Gaya anytime.

3. For the benefit of debtor Example

Gaya executes a promissory note which reads: I promise to pay Tito r order theamount of P 10,000 or before December 31, 2001. Gaya can pay her obligation on

or before Dec. 31, 2001.

7/27/2019 obli.ppsx

107/337

ART. 1197. If the obligation does not fix aperiod, but from its nature and circumstances it canbe inferred that a period was intended, the courtsmay fix the duration thereof.

The courts shall also fix the duration of the periodwhen it depends upon the will of the debtor.

In every case, the courts shall determine such periodas may under the circumstance have been probablycontemplated by the parties. Once by the courts, the

period cannot be changed by them. (1128 a)

Court Generally is Without Power to Fix a PeriodIf an obligation does not state a judicial period and no periodis intended, the court is not authorized to fix a period. The

courts have no right to make contracts for the parties.

Exceptions to the general rule

7/27/2019 obli.ppsx

108/337

p g

1. If the obligation does not fix a period but it can be inferred from its

nature and circumstances that a period is intended.

Example:

S sold a parcel of land to B with a right of repurchase.

No term is specified in the contract for the exercise of theright. Then, the court is authorized to fix the period to

repurchase.

2. If the duration of the period depends upon the sole will of the

debtor

Example:

I will pay you as soon as possible. Here , the period is

not fixed, so the court may fix the same because if this is

not so the obligation may never be complied with by the

debtor.

7/27/2019 obli.ppsx

109/337

ART. 1198. The debtor shall lose every right tomake use of the period:

1) When after the obligation has been contracted, hebecomes insolvent, unless he gives a guaranty orsecurity for the debt;

2) When he does not furnish to the creditor theguaranties or securities which he has promised ;

3) When by his own acts he has impaired saidguaranties or securities after their establishment,

and when through a fortuitous event theydisappear, unless he immediately gives new onesequally satisfactory;

4) When the debtor violates any undertaking, inconsideration of which the creditor agreed to the

eriod

When Debtor Loses The Right toMake Use Of A Period

7/27/2019 obli.ppsx

110/337

Make Use Of A Period

The general rule is that the obligation is not

demandable before the lapse of the period.

The exceptions are based on the fact that the

debtor might not be able to comply with hisobligation:

1. When debtor becomes insolvent:The insolvency need not be judicially declared. It is

sufficient that the debtor has less assets than his

liabilities or if debtor is unable to pay his debts as they

mature. It is noted that the insolvency of the debtor

must occur after the obli ation has been contracted.

When Debtor Loses The Right to

M k U Of A P i d

7/27/2019 obli.ppsx

111/337

Make Use Of A Period

2. When debtor does not furnish guaranties or securitiespromised:

Example:

Gaya borrowed loan from Tito which loan was secured by achattel mortgage of Gayas car as a guaranty. After obtaining the

loan, Gaya fails or does not execute a chattel mortgage, theloan becomes demandable or the debtor loses her right to makeuse of the period.

3. When by his own acts he has impaired said guaranties orsecurities:

Example:Gaya borrowed P50, 000 from Tito which loan was secured by achattel mortgage on Gaya s car. Later, Gayas fault, the car wasdamaged or she causes the impairment of the car, Gaya losesher right to make use of the period, unless she gives another oneequally satisfactory.

When Debtor Loses The Right to

M k U Of A P i d

7/27/2019 obli.ppsx

112/337

Make Use Of A Period4.

When by fortuitous event, the guaranty or security was lost.Example:

Gaya borrowed P50, 000 from Tito which loan was secured by a chattelmortgage on Gayas car. After obtaining the loan, the car was lost by fortuitousevent. Gaya loss her right to male use of the period unless she gives anotherguaranty or security equally satisfactory.

5. When debtor violates an undertakingExample:

Art secured a loan from Arnold on condition that Art will paint the house of Arnold.If after the proceeds of the loan was given to Art, he did not pant the house of

Arnold, Art loses his right to make use of the period.

6. When the debtor attempts to abscond.Abscond means a depart or escape from creditors knowledge to avoid paymentof his debt. Mere attempt on the part of debtor will entitle the creditor to demandpayment of the obligation without waiting for the period to expire.

7/27/2019 obli.ppsx

113/337

Section 3. Alternative and Facultative obligations

ART. 1199. A person alternatively bound by differentprestations shall completely perform one of them.

The creditor cannot be compelled to receive part of one and partof the other undertaking. (1131)

Meaning of Alternative ObligationIt means an obligation where two or more prestations are due but

the delivery of one is sufficient to extinguish the obligation.

Example:

Gaya binds herself to give Tito either a determinate refrigerator or a TVset. If Gaya chooses and delivers the TV set, the obligation isextinguished. Thus, Gaya cannot compel Tito to accept part of one andthe part of the other prestations.

7/27/2019 obli.ppsx

114/337

ART. 1200. The right of choice belongs to

the debtor, unless it has been expressly

granted to the creditor.

The debtor shall have no right to choose

those prestations which are impossible,

unlawful or which could not have been theobject of the obligation.

Rule on Who Makes the Choice

7/27/2019 obli.ppsx

115/337

As a general rule, the right of choice or to select the prestation belongs to thedebtor, unless the right to choose is expressly granted to the creditor. But theright of the debtor is subject to the following:

The debtor cannot choose those prestations which are:

a) ImpossibleE.g.- Gaya promised to deliver to Tito 100 sacks of rice or a stonefrom Mars. Gaya cannot chose to deliver the stone coming from Mars as it isphysically impossible.

b) Unlawful E.g. Gaya obliged herself to deliver to Tito a kilo of dangerous drug or aparcel of land. Gaya can choose only the delivery of parcel of land.

c) Could not have been the object of the obligation - E.g. Gaya borrowed from TitoP50, 000. It was agreed that Gaya would give Tito her horse or her German Piano.Now, Gaya has two horses, a race horse worth P50, 000 and an ordinary horse

which is worth for only P5, 000. Gaya cannot choose

d) Only one prestation is practicable (Art. 1202) E.g. Gaya will deliver to Tito hercarabao, or her horse or her refrigerator. Through no fault of Gaya, the horse and thecarabao were lost by fortuitous event. Gaya can only delivery the refrigerator whichis the only one practicable.

7/27/2019 obli.ppsx

116/337

ART. 1201. The choice shall produce no effect

except from the time it has been communicated.

(1133)

Right of Choice Must be Communicated

Until the choice is made and communicated, the

communicated, the obligation remains alternative. Once

the notice to the effect that a choice is made, theobligation ceases to be alternative and becomes a simple

obligation.

Where the choice has been expressly given to the

creditor, such choice shall likewise produce legal effects

7/27/2019 obli.ppsx

117/337

ART. 1202. The debtor shall lose the right of choice whenamong the prestations whereby he is alternatively bound,only one is practicable.

ART. 1203. If Through The creditors acts the debtor cannotmake a choice according to the terms of the obligation, thelatter may rescind the contract with damages.

When debtor may rescind contract

If through the creditors fault, the debtor cannot made a choiceaccording to the terms of the obligation the debtor is given the right torescind and recover damages.

Example:

Gaya borrowed from Tito P5, 000.00. it was agreed that instead of P5, 000,Gaya could deliver a TV set or a refrigerator or a piano. If through the faultof Tito, the TV set was destroyed, Gaya can rescind the contract if shewants. In case of rescission, the amount of P 5, 000.00 must be returned by

Gaya with interest. Tito, in turn, must pay Gaya the value of the TV set plusdama es.

7/27/2019 obli.ppsx

118/337

ART. 1204. The creditor shall have a right to indemnity fordamages when, through the fault of the debtor, all the thingswhich are alternatively the object of the obligation havebeen lost, or the compliance of the obligation has becomeimpossible.

The indemnity shall be fixed taking as a basis the value of thelast thing which disappeared, or that of the service which lastbecame impossible.

Damages other than the value of the last thing or service may

also be awarded. (1135a)

When right of choice is with debtor and all prestations were lost

This article entitles the creditor to indemnity for damages when allthe alternative objects are lost through the fault of the debtor beforehe has made his choice. The indemnity for which the creditor is

7/27/2019 obli.ppsx

119/337

ART. 1205. When the choice has been expressly given tothe creditor, the obligation shall cease to be alternative fromthe day when the selection has been communicated to thedebtor.

Until then the responsibility of the debtor shall be governedby the following rules

1) If one of the things is lost through a fortuitous event, he shallperform the obligation by delivering that which the creditorshould choose from among the remainder, or that whichremains if only one subsists;

2) If the loss of one of the things occurs through the fault of thedebtor, the creditor may claim any of those subsisting, or theprice of that which, through the fault of the former, hasdisappeared, with a right to damages

3) If all the things are lost through the fault of the debtor, the

7/27/2019 obli.ppsx

120/337

The same rules shall be applied to obligations to do ornot to do in case one. Some or all of the prestationsshould become impossible. (1136a)

When Right of Choice is With Creditor and All Prestations

Were LostThis article provides for the rules to be observed

when the right of choice is expressly granted to the creditor, therules are as follows:

1. When a thing is los through a fortuitous eventExample

Gaya obliged herself to deliver to Tito a TV set, or arefrigerator, or a piano. If the TV set was lost throughfortuitous event, Tito can choose from among theremainder or that which remains if onl one subsists.

7/27/2019 obli.ppsx

121/337

2. When a thing is lost through debtors faultExample:

If the loss of the TV set occurs through the fault of Gaya, Tito mayclaim the refrigerator or the piano with a right of damages or the priceof the TV set with a right of damages.

3. When all the things were lost through debtors fault

Example:

If all the items are lost through the fault of Gaya, then Tito candemand the payment of the price of any one of them with a right toindemnity for damages.

4. When all the thing are lost through a fortuitous event

Example:

The obligation of Gaya shall be extinguished if all the items which arealternatively the object of the obligation are lost through a fortuitousevent (Art. 1174 will apply).

7/27/2019 obli.ppsx

122/337

ART. 1206. When only one prestation hasbeen agreed upon, but the obligor may renderanother in substitution, the obligation is calledfacultative. The loss or deterioration of the thing intended as a

substitute, through the negligence of the obligor,does not render him liable. But once the substitutionhas been made, the obligor is liable for the loss ofthe substitute on account of his delay, negligence orfraud.

Meaning of Facultative Obligation A facultative obligation is one where only one prestation

has been agreed upon but the obligor may renderanother in substitution.

Example:

Alternative and FacultativeDistinguished

7/27/2019 obli.ppsx

123/337

Distinguished

1) As to choiceIn facultative the right for substitution isgiven only to the debtor in Alternative the choice may begiven either to the debtor or to the creditor;

2) As to things due In facultative only the principalobligation is due by may substitute another; in alternative,there are several things due but the delivery of one issufficient;

3) As to validity or nullity In facultative if the principal thingis unlawful or impossible, there is no need of delivering the

substitute in alternative if one of the thing is unlawful orimpossible, there is still a need to deliver any of those whichremain valid or the only remaining one is valid.

7/27/2019 obli.ppsx

124/337

Section 4 Joint and Solidary Obligations

ART. 1207. The concurrence of two or more creditorsor of two or more debtors in one and the same obligationdoes not imply that each one of the former has a right todemand, or that each one of the latter is bound to render,entire compliance with the prestation. There is a solidaryliability only when the obligation requires solidarity. (1137a)

ART. 1208. If from the law, or the nature or thewording of the obligations to which the preceding article

refers the contrary does not appear, the credit or debt shallbe presumed to be divided into as many equal shares asthere are creditors or debtors, the credits or debts beingconsidered distinct from one another, subject to the Rulesof Court governing the multiplicity of suits. (1138a)

7/27/2019 obli.ppsx

125/337

Joint ObligationIt is an obligation where there is a concurrence of twoor more debtors or two or more creditors or of severaldebtors and creditors, by virtue of which each of thedebtors is liable for a proportionate part of the credit.

Example of different instances

1) A, B, and C borrowed P9, 000 for D. The presumption is thatA, B and C are jointly liable. D can demand only P3, 000 from

each or a total of P9, 000.2) A borrowed from B, C and D P9, 000. There is one debtor and

three creditors. Each creditor can demand only P3, 000 fromA.

3) A and B are liable to C and D for P9, 000. There are two

debtors and two creditors. Each creditor can demand only P4,

SOLIDARY OBLIGATION

7/27/2019 obli.ppsx

126/337

There are solidary liability when

1)

The obligation expressly so states, or

2) The law requires solidarity or

3) The nature of the obligation requires solidarity.

Kinds of Solidary Obligation

7/27/2019 obli.ppsx

127/337

1. Passivesolidarity on the part of the debtors, where anyone ofthem can be made liable for the fulfillment of the entire obligation.

Example A and B are solidary debtors of C in the amount of P 10, 000

2. Activesolidarity on the part of the creditors, where anyone ofthem can demand the fulfillment of the entire obligation.

Example A is liable to B and C for the amount of P10, 000. B and Care solidary creditors.

3. Mixed Solidaritysolidarity on the part of the debtors andcreditors where each one of the debtors is liable to render andeach one of the creditors has a right to demand, entire compliance

with the obligation. Example A and B are solidarity debtors to C and D, solidary creditors

in the amount of P 10, 000.

7/27/2019 obli.ppsx

128/337

Solidarity not presumed

The presumption, where there are two or more persons in the sameobligation, is that it is joint. The reason is that solidary obligations are veryburdensome for they create unusual rights and liabilities. Solidarity betweendebtors increases their responsibility while solidarity between creditorspresuming that they are bound jointly and not solidarily.

ART. 1209. If the division is impossible, the right of the creditorsmay be prejudiced only by their collective acts, and the debt can beenforced only by proceeding against all the debtors. If one of thelatter should be insolvent, the others shall not be liable for hisshare.

Indivisible Joint Obligation The object is indivisible and the T/E between the parties are merely

proportionately liable.

Example

A and B are jointly liable to give C a particular car. The obligation is joint but since

the object is indivisible, the creditor must proceed against al the joint debtor. If any

7/27/2019 obli.ppsx

129/337

ART. 1210. The indivisibility of an obligation does notnecessarily give rise t solidarity. Nor does solidarity of itselfimply indivisibility. (n)

Indivisibility as Distinguished from Solidarity

Indivisibility refers to the subject matter while solidarityrefers to the Tie between the parties. Examples:

1. Joint divisible obligation A and B are jointly liable to C for P10, 000.

2. Joint indivisible obligation A and B are jointly liable to give C their car.

3. Solidary divisible obligation A and B are solidarily liable to give CP10, 000.

4. Solidary indivisible obligation A and B are solidarily liable to give Ctheir car.

7/27/2019 obli.ppsx

130/337

ART. 1211. Solidarity may exist although thecreditors and the debtors may not be bound in thesame manner and by the same periods andconditions.

The solidary character of the obligation is notdestroyed even if the creditors and debtors are bound bydifferent terms and conditions. The solidarity is stillpreserved by recognizing in the creditor the power of

claiming from any or all debtors the payment of the entireobligation.

Example:

A and B solidarily bound themselves to pay a total of P10, 000 to

7/27/2019 obli.ppsx

131/337

ART. 1212. Each one of the solidary creditors may do whatevermay be useful to the others, but not anything which may beprejudicial to the latter. (1141a)

ART. 1213. A solidary creditor cannot assign his rights without theconsent of the others.

Solidary Creditors May Do Useful Act; Not Prejudicial Acts

A solidary creditor may do any act beneficial or useful to the others but hecannot act prejudicial to them.

Example of Beneficial Acts

To interrupt the running of prescription, the act of one solidary creditor in making ajudicial demand upon any of the solidary debtors is sufficient. (Art. 1155, NCC)

Example of Prejudicial Acts Should not be performed, otherwise, there will be liability for damages. However, in

the case of remission or condonation, the solidary creditor is allowed to so remit,and the obligation is extinguished.

7/27/2019 obli.ppsx

132/337

Art. 1214. The debtor may pay any one of thesolidary creditors but if any demand, judicial orextrajudicial, has been made by one of them,payment should be made to him.

Payment to Any of the Solidary CreditorsThe rule is that the debtor may pay any one of the

creditors. But when a demand is made by any of thecreditors, payment should be made to him who made thedemand, judicially or extra-judicially.

Example

A is liable to B and C P5, 000. A may pay either B or C But if Bmade a demand then payment should only be made to him. If Apaid C, B is still entitled to his share from A in case C does not

turn over to B his share.

7/27/2019 obli.ppsx

133/337

ART. 1215. Novation, compensation, confusionor remission of the debt, made by any of the solidarycreditors or with any of the solidary debtors, shallextinguish the obligation, without prejudice to theprovisions of article 1219.

The creditor who may have executed any of these acts, aswell as he who collects the debt, shall be liable to theothers for the share in the obligation corresponding tothem.

Liability of Solidary Creditor in case of Novation,Compensation, Confusion or Remission

When a creditor who executed any of these acts, it is logical

7/27/2019 obli.ppsx

134/337

ART. 1216. The creditor may proceed against any one of thesolidary debtors or some or all of them simultaneously. Thedemand made against one of them shall not be an obstacleto those which may subsequently be directed against theothers, so long as the debt has not been fully collected.(1144a)

Creditor May Proceed Against Any Solidary Debtor In a solidary obligation, the creditor may proceed against any, some

or all of the solitary creditors simultaneously so long as it has notbeen fully collected.

Example

A, B and C solidarily owe D the amount of P9, 000. D can collect from A orB or C alone or from any two of them or all of them simultaneously. Ifdemand is made on A, the latter cannot require D to make a demand alsoon B and C or to include them as party defendants as D has the right toproceed against any one of them.

7/27/2019 obli.ppsx

135/337

ART. 1217. Payment made by one of the soldiery debtorsextinguishes the obligation. If two or more solidary debtors

offer to pay the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the share which corresponds to each, with the

interest for the payment already made. If the payment is

made before the debt is due, no interest for the intervening

period may be demanded.

When one of the solidary debtors cannot, because of

his insolvency, reimburse his share to the debtor paying the

obligation, such share shall be borne by all his co-debtors,

in proportion to the debt to each. (1145a)

7/27/2019 obli.ppsx

136/337

Effects of Payment by a Solidary DebtorPayment is one of the ways by which an obligation isextinguished and consist in the delivery of the thing or therendition of the service which is the object of theobligation.

Example

A, B and C are solidarily liable to D and E in the amountof P9, 000 due on Dec. 31. If both A and B offer to pay Don Dec. 31, the latter may choose which offer to accept. If

A pays the entire amount of P9, 000 on Dec. 31, theobligation is extinguished.

The payment of A gives him the right of reimbursementfrom B and C P3, 000 each with interest from the date of

a ment However if C is insolvent both A and B shall

7/27/2019 obli.ppsx

137/337

ART. 1218. Payment by a solidary debtor shall not entitle into reimbursement from his co-debtors if such payment ismade after the obligation has prescribed or become illegal.(n)

Effect of Payment After Obligation Has Prescribed or Become

Illegal

1. Prescription is one where one acquires ownership and otherrights through the lapse of time in the manner and under theconditions laid down by law.

Example A and B are solidarily indebted to C in the amount of P 10,000. The debt prescribed. If A paid the debt, he cannot collect form B hisshare of the debt. Neither can A can recover from C.

2. Becomes Illegal A and B are solidarily bound to deliver medicaldrugs to C. the transaction of such medical drugs were later

prohibited by law. Notwithstanding the prohibition, B performed the

7/27/2019 obli.ppsx

138/337

ART. 1219. The remission made by the creditor of the share whichaffects one of the solidary debtors does not release the latter from hisresponsibility towards the co-debtors, in case the debt had been totallypaid by anyone of them before the remission was effected. (1146a)

ART. 1220. The remission of the whole obligation obtained by one ofthe solidary debtors, does not entitle him to reimbursement from his co-

debtors.

Remission by Creditor

1) If payment if made first, the remission is of no effect. There is no more to remit.

2) If remission is made prior to the payment and payment is made, then there ispayment by mistake.

3) If one of the solidary debtors obtained remission on the whole obligation, he is notentitled to reimbursement from his co-debtors because remission is essentiallygratuitous.

7/27/2019 obli.ppsx

139/337

ART. 1221. If the thing has been lost or if the prestation hasbecome impossible without the fault of the solidary debtors,

the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be

responsible to the creditor, for the price and the payment of

damages and interest, without prejudice to their action

against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or theperformance has become impossible after one of the

solidary debtors has incurred in delay through the judicial

or extrajudicial demand upon him by the creditor, the

provisions of the preceding paragraph shall apply. (1147a)

u es n ase ng as een osor Prestation Has Become

Impossible

7/27/2019 obli.ppsx

140/337

Impossible

1. If the thing is lost or has become impossibleto perform through a fortuitous event without

the fault of the debtor, the obligation is

extinguished.

Example:

A, B and C are solidarily bound to deliver a

determinate car to D. Without any fault on the partof any one of the debtors, the car was lost

through the fortuitous event. The obligation is

extinguished.

u es n ase ng as een osor Prestation Has Become

Impossible

7/27/2019 obli.ppsx

141/337

Impossible

2. If in the preceding paragraph, the car was lostthrough the fault of anyone of the solidary debtors,anyone of them may be held liable by D for the priceof the car plus damages. The debtors who did notany fault on the lost of the car have the right torecover from the co-debtor who is at fault.

3. The solidary debtors are likewise liable even if thething is lost through fortuitous event if the lossoccurs after anyone of the solidary debtors has been

in delay. The debtors, however who were not indelay have the right to recover from their co-debtorswho was responsible due to his delay.

7/27/2019 obli.ppsx

142/337

ART. 1222. A solidary debtor may, in

actions filed by the creditor, avail himself of

all de