OBLIGATIONS AND CONTRACTS

Midterm Notes:
Art. 1156
Obligation is a juridical necessity to:
Give;
To do or;
Not to do (this also includes not to give).

Civil obligations are enforceable because
there are sources of law behind them.
Hence, non-compliance with these, one will
be sanctioned for such non-compliance
(payment for damages).

Art. 1157
With regard to the sources of obligations
(law, contracts, quasi-contracts, act or
omissions punishable by law, quasi-delicts),
they are exclusive.

Art 1162
Barredo vs. Garcia & Almario act
involved is a negligent act.
Elcano vs. Hill same act results to two
distinct liabilities: (a) delict and (b) quasi-
delict. Expanding the scope of quasi-delict.
Quasi delict although an act is intentional
or voluntary.

Art. 1163-1166
Ordinary diligence actions of a prudent
man (Kung ano ang gagawin ng ordinaryong
tao in the same circumstance).
Extraordinary diligence highest form of
diligence (ex. Medical practitioners, common
carrier).
Ownership once the object has been
delivered to the obligee.
Obligation to deliver arises from the
moment of the perfection of the contract,
except if there is a suspensive condition.
Personal right right enforceable against a
specific person vs. Real right right
enforceable against the whole word.
Debtor is liable: (even by the cause of
fortuitous event)
When the debtor incurred in delay;
Debtor has promised to deliver the
same thing to two or more persons
who do not have the same interest.
Art. 1170-1173
General Rule: No delay, no demand.
Exceptions:
Law or stipulation;
From the nature of the obligation
(time is of the essence and
controlling factor);
Demand will be useless.

Ways of committing breach of obligation:
Default;
Fraud or Deceit;
Negligence;
Manner that contravener the tenor
of the obligation.

Delay
Q: In reciprocal obligation, is delay possible?
YES.
Q: In reciprocal obligation, is demand
necessary? NO, as a general rule (if the
performance is simultaneous).

Kinds of Delay
1. Delay of the debtor to perform his
obligation;
2. Delay of the creditor to accept the
delivery;
3. Delay of both parties in reciprocal
obligation.

Requisites:
1. Obligation is demandable and already
liquidated;
2. The obligor delays performance;
3. The creditor requires the performance
(judicially or extra-judicially).

In obligations to do or not to do, undo is
not always possible due to legal or physical
impossibility.
In reciprocal obligation, if performance is
simultaneous, there is no demand.
In reciprocal obligation, if the delivery
and payment differs in dates, there is no
delay in the payment although the other
obligation to deliver has already been
complied with. However, if there is no date
as to the payment, there is no delay. The
debtor can file a demand.

Fraud evasion of fulfillment of obligation.
Waiver of future fraud is void; law
sanctions ILLUSORY OBLIGATION.
Waiver of past fraud is valid; an act
of generosity.

Negligence when a person omits or fails
to observe a degree of care that an ordinary
man of reasonable prudence may observe
under the same circumstance.

Civil Negligence:
1. Culpa contractual negligence of the
obligor in which he is unable to perform his
obligation arising from a pre-existing
contract.
2. Culpa aquiliana omission of the
diligence, thus causing damage to another.

Proximate cause cause which is natural
sequence, unbroken by intervening cause,
without which the result will not be
produced.

In the absence of valid reason, the
incident happened because of want
of care thus, there is negligence.
Meaning if they exercised diligence,
the accident will not happen.

Art. 1174
Caso Fortuito or fortuitous event
unforeseen and inevitable event.

Assumption of risk (a) knowledge and
appreciation of the risk and (b) voluntary choice
to encounter it.

Art. 1175
Usury Law is suspended for now.

Art. 1176
Payment of principal obligation
gives an impression that with
respect to the interest, such interest
has already been paid in the
absence of the reservation to the
contrary.

Art. 1178
All rights are transmissible (alienable and
transferrable to third persons).
Exceptions:
1. Stipulation to the contrary;
2. Purely personal rights;
3. Not transmissible according to law.

Art. 1179-1180
Pure obligation subject to immediate
demandability.
Condition futurity and uncertainty
Period/term futurity and certainty

Art. 1187-1188
Obligation subject to suspensive condition;
Remedy: registration.
Obligation (suspensive condition)
condition is not fulfilled extinguishment
of obligation.
If the debtor has paid or deliver the object of
the obligation (suspensive condition) by
mistake recovery of the object as well
as its fruits and interests.

Art. 1189
Thing is lost when it perishes, goes out of
commerce (cannot be legally transferred or
reacquired), or disappears (unknown or
cannot be recovered).

Art. 1191
One of the most important
provisions.
Reciprocal obligations
obligations are conditioned upon
each other.
Power to rescind obligations in
reciprocal ones by the injured party
Alternatives by the injured party: a.
rescission b. fulfillment, with
payment of damages.
Contract of sale vs. Contract to sell
Right to rescission is always available
(stipulated or not).
Substantial breach is needed for a
rescission to be granted; not mere or casual
breach.
Reciprocal contracts which contain no
resolutory conditions.
Rescission or fulfillment? Alternative, one at
a time.
Notice of rescission should be always
complied with.
Damages should be compatible with the
idea of rescission.

Art. 1192-1193
Acceleration clause due to the non-payment
of previous installments, all other installments
will immediately become due and demandable.

Suspensive term demandability is suspended
until the arrival of a day certain.
Resolutory term obligation is already
effected; there is a right already.
Art. 1197
In the absence of a fixed period of the
obligation, one can ask the Court to fix
it.
However, parties are not prohibited to
change the fixed period. Prohibition:
parties to go to court and have the fixed
period changed again.
Obligation with no fixed period: One
party cannot immediately file a case for
collection unless the court has fixed a
period first.
10 years prescription for written
document.

Art. 1203-1205
Alternative vs. Facultative
Alternative several objects are due
and demandable; can be complied with
by delivering one of them.
Facultative only one object is due and
demandable; can be complied with by
delivering an object in substitution.
Right of choice belongs to debtor in
facultative while in alternative, it may
belong as well to the creditor.
If the choice has been delivered to the
creditor, then the object chosen was lost
due to caso fortuito, obligation to deliver
such object is extinguished.
If all alternatives have been lost due to
caso fortuito, obligation is extinguished.
If the creditor was given right of choice,
then the debtor was able to deliver what
the creditor has chosen, no damages
will be recovered by debtor since the
obligation has been complied with.
In facultative, if the object has been lost,
obligation is extinguished.
Once the creditor has been notified of
the substitution, the obligation ceases to
be facultative.

Art. 1206-1222 (Joint and Solidary
Obligations)
Note: Limited info with regard to this topic. Better
see Bantays notes.
Presumption of joint obligation unless
there it is expressly provided, it is
solidary (e.g. jointly and severally,
individually and collectively, use of I
but signed by all the debtors or
creditors).
Tolentino: In joint obligation, whether it
is beneficial or prejudicial, obligation
should be compelled by all creditors.
In joint, one creditor or debtor cannot act
in representation of others; no mutual
representation.
In solidary, right to demand
reimbursement from his co-debtors the
share which corresponds to each.

Art. 1222-1225
General rule: the creditor cannot be
compelled partially to receive prestation
Exceptions:
1. Stipulation to the contrary;
2. Objects of the obligation are subject to
different terms and conditions;
3. obligation is partly liquidated and partly
unliquidated.

Obligation to give Important factor:
WON the obligation is susceptible of
partial compliance.
Obligation to do WON the obligation is
divisible or indivisible: consider the
object of the obligation.

Art. 1226-1230
Penalty clause accessory obligation attached
to the penalty obligation.

Purposes of penalty:
1. To insure the performance of the obligation;
2. To liquidate of the amount of damages to be
awarded;
3. To punish the obligor.

Art. 1232-1235
Payment not only the delivery of money but
also the performance of the obligation.
The creditor is not bound to accept
payment/performance by a third person
who has no interest in the obligation
unless there is a stipulation to the
contrary.

Art.1246
Dation in payment the creditor must agree;
transfer of ownership by the debtor to the
creditor.

Art. 1249
Parties can now stipulate to pay money
in what currency they intended
otherwise, it should be legal tender of
the Philippines.
Any check is not a legal tender of
payment hence; the creditor may refuse
to accept it unless it has been cashed.
If the check became stale, although it is
the fault of the creditor, the obligation is
not yet paid.

Art. 1251

In the absence of the stipulation in
delivery of determinate thing, payment
shall be made where the thing is being
habitually kept.
In unilateral obligation, payment shall be
made in the domicile of the debtor.

Art. 1252
Application of payment is important
because without this provision, we do
not know which debt would be paid.
Identical payment does not necessarily
mean to be applied in the identical debt,
there should be a need for application of
payment.
Mere statement of account not a receipt
contemplated by law.
Debts must be identical or
homogeneous species
Right to make an application is available
at the time when the payment is made.
General Rule: AP by the debtor;
Exception: AP by the creditor

Art. 1253-1254
Payment should be applied first to the
interest before the principal obligation
directory not mandatory stipulation.
There can be partial payment in the AP
Debts (same nature and burden) AP
shall be applied to all of them
proportionally.
Onerous not on amount but based on
circumstances.

Art. 1255
Cession or assignment
Requisites:
1. plurality of debts;
2. partial or relative insolvency;
3. acceptance of the cession by the
creditor.

Art. 1256-1261
Legal tender of payment should be done
in full amount, not in partial payment.
LTP first before consignation
LTP manifestation or willingness to
pay for the compliance of the obligation
Legal consequences of LTP:
Exempts the debtor from paying
any interest
Preserves a right (e.g. right to
repurchase as long as within the
repurchase period)
Five special requisites should be all
comply with to have a valid consignation
Deposit and complaint may be
given simultaneously before the
court
First (prior consignation) and
second notice (after
consignation); second notice
shall be provided as to give the
creditor to rethink the TP offered
by the debtor.
Defenses if the creditor wants to contest the
consignation:
Debt is not yet due;
Lack of notice;
Payment of invalid legal tender of
payment.
Proper consignation shall be charged
against the creditor

Art. 1262-1269
Delivery of money generic obligation
Money not susceptible of loss
Remember: Generic thing never perishes

Caso fortuito not only the proximate
cause, but the sole cause
JBL Reyes: In reciprocal obligation, if the
other obligation was lost die to caso fortuito,
other obligation remains.
Exceptions:
Arts. 1504, 1665, 1770.

Tolentino: In reciprocal obligation, if the
other obligation was lost die to caso fortuito,
other obligation is extinguished.
Proof: Provisions cited by JBL Reyes
PNCC vs. CA: No application of Art. 1266
because what is involved is obligation to
give not obligation to do.
General rule, when there is loss and the
obligation involves determinate thing,
debtor, without his fault, is released from
complying with the obligation.

In obligation arising from criminal offense,
debtor is still held liable for the loss of the
thing due whatever the reason for the loss
is.