oblicon notes abe iloilo.doc

8/11/2019 OBLICON NOTES ABE ILOILO.doc

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Week 1 Welcome / Introduction to Law

I. Introduction to Law

1.Not Divine Law, law of religion and faith2.Not Natural Law, justice, fairness and righteousness

3.Not Moral Law, norms of good and right conduct

4.Not Physical Law, order or regularity in nature

a.a. Sources of Law

i)i) Constitution Fundamental Law of the land

ii)ii) Legislations Passed by Senate and House of

Representatives

iii)iii) Administrative issuances Quasi Legislative

Functions

iv)iv) Jurisprudence Decisions of the Supreme

Court (SCRA) Stare decisis

v)v) Treaties and Generally accepted principles of

International Law - Art II Sec 2, Pacta sund

servanda

vi)vi) Customs habits and practices through long

and accepted usage have become binding rules of

conduct

vii)vii) Principles of Justice and Equity common law

jurisdiction

a.b. Characteristics of Law

- - Rule of Conduct

- - Obligatory

- - Promulgated by legitimate authority

- - Of common observance and benefit

b.c. Organization of courts


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- - Supreme Court

- - Court of Appeals, Sandiganbayan, Court of

Tax Appeals

- - Regional Trial Court

- - Metropolitan Trial Court, Municipal Trial

Court

- - Quasi Judicial Bodies

1.1. Comelec

2.2. NLRC

3.3. LTFRC

4.4. ERB

c.d. Quantum of Evidence

-- Criminal cases: Proof Beyond ReasonableDoubt

- - Civil cases: Preponderance of Evidence-

greater weight of all the evidence which as a whole

shows that the act sought to be proved is more

probable than not.

- - Administrative cases: Substantial Evidence

Such evidence that a reasonable mind might

accept as adequate to support a conclusion

d.e. Effects and Applications of law

- - Requirement for publication

1.1. 15 days after publication in OG or

newspaper

2.2. Ignorance of the law excuses no one

from compliance

3.3. Due Process

- - Law is prospective except:

1.1. If the law provides for retroactivity

2.2. Penal law insofar as it favors the

accused

3.3. Remedial or curative law


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- - Computing time

1.1. Year is 12 calendar months

2.2. Month is 30 days, except when it refers

to a calendar month

3.3. First day excluded, last day included

- - Conflict of Laws Provisions

i.i. Penal laws apply to all who sojourn to

Phils

ii.ii. Family Law and inheritance based on

national law of the party regardless of where

he lives

iii.iii. Forms and solemnities of contracts and

other instrument based on the place where itis executed

e.f. Obligations and Contracts Defined

The body of rules which deals with the nature and

sources of obligations and the rights and duties arising

from agreements and the particular contracts.

Obligation A Juridical relation whereby a person may

demand from another the observance of a determinative

conduct (giving, doing, not doing), and in case of breach,

may demand satisfaction from the assets of the latter.

Contract Meeting of the mind between two persons

whereby one binds himself, with respect to the other, to

give something or to render some service.

A contract necessarily gives rise to an obligation but an

obligation does not always need to have a contract.

f.g. Corporation and Partnership Defined

Partnership Two or more persons bind themselves to

contribute money, property, or industry to a common


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fund, with the intention of dividing the profits among

themselves.

Corporation Artificial being created by operation of law,

having right of succession and the powers, attributes,

properties expressly authorized by law or incident to its

existence.

Weeks 2 to 4 Obligations

I. General Provisions, Nature and Effects of Obligations

a. General Provision

-- Juridical Necessity enforce compliance; seekdamages

- - To give, to do, and not to do Examples

- - Four essential requisites of an obligation

(i)(i) A passive subject (Debtor to give; Obligor to

do)

(ii)(ii) An active subject (Creditor/Obligee)

(iii) (iii) Object (Prestation) subject matter

(iv)(iv) Juridical tie (Vinculum) Source of Obligation

- - Form as a manifestation of intent; but no specific

form unless required by law

(b)(b) Kinds of Obligations

1.1. According to subject matter

a.a. Real Obligation to give

b.b. Personal Obligation to do

i.i. Positive to give or doii.ii. Negative - not to do or not to give

A borrower agreed to pay his debt in 60 days, and

in case of non-payment to render free service as

driver/servant. When due date came, borrower

refused to render free service. Decide.


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2.2. According to person obliged

a.a. Unilateral

b.b. Bilateral (Reciprocal or non-reciprocal)

(c)(c) Sources of Obligation

1.1. LAW Imposed by law

- - A wife was about to deliver a child. Her

neighbor brought her to hospital. Who should

pay the hospital bill Husband or Neighbor?

- - P.D. 1517 grants the right of first refusal

to person who has leased for more than 10 years

an urban land and who construct his housethereon. Lessee of a Condo in Manila now claims

his right of first refusal because he has been

living in the unit for almost 15 years. Decide.

Obligations derived from law are not presumed.

- - In a newspaper ad, there was an offer to

replace 30 sachets of Tide for one Venetian cut

Glass until the end of the year. At the end of the

year, you present your tide sachets, but Tide

refused to honor it anymore since the ad was

posted more than half a year ago. Decide. 657

a.a. Quasi-contracts Juridical relations based

on the principle that no one shall be unjustly

enriched or benefited at the expense of another.

i.i. Negotiorum Gestio When a person

voluntarily takes charge of the managementof a business or property of another that has

been neglected or abandoned, without any

power from the latter, as a consequence of

which, he is obliged to continue the same

until the termination of the affair or to


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require the owner to substitute him. Ex. NPA

infested area Fishpond

ii.ii. Solutio indebiti When a person

unduly delivers a thing through mistake to

another who has no right to demand it.

(melon bank v. Javier)

b.b. Crimes (acts or omission punished by law)

If you commit a crime, you are liable both

criminally and civilly for the consequence of your

acts or omissions such as restitution, reparation

for damages caused and indemnification forconsequential damages.

Ex. Support for impregnated rape victim; loss of

earning capacity of murder victim

c.c. Quasi delict or Torts The fault or

negligence of a person who, by his act or

omission, independent from any contractual

relation, causes damage to another person

A 3-year-old child was bitten by a dog

of her neighbor. As a result, she got infected

by rabies and died. Can the neighbor be held

liable for the acts of the dog?

A signboard of hanging out of a

building dropped on a car resulting in total

wreck of the car. The car owner sues the

building owner and demand to replace thecar. Building owner cites the strong wind as

force majeure condition indicating no fault on

his part. Decide.

2.2. Contracts


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Have the force of law between the

contracting parties and should be complied

with in good faith.

Sincerity and Honesty

II. Nature and Effect of Obligations

(a)(a) Specific v. Generic Thing

1.1. Specific is designated or physically segregated

from others of the same class.

2.2. Generic refers to a class or genus and cannot

be determined with particularity.

(b)(b) Duties of debtor in delivery of generic thing1.1. To delivery a thing which must neither be of

superior nor inferior quality (1246)

2.2. To pay damages in case of breach (1170)

(c)(c) Duties of debtor in delivery of specific thing

1.1. To deliver the thing which he has obligated

himself to give

2.2. To take care of the thing with the proper

diligence of a good father of a family

The ordinary care that an average or

reasonably prudent person exercises over his

property

Another standard of c are may be required

by law or by stipulation of the parties

3.3. To deliver all the accessions and accessories

4.4. To pay damages in case of breach

(d)(d) Remedies of Creditors in breach of obligation

1.1. To Give Determinate Thinga.a. To compel specific performance

b.b. To recover damages

2.2. To Give Indeterminate Thing

a.a. To ask for performance of the obligation


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b.b. To ask that obligation be complied with by

another at expense of debtor

c.c. To recover damages

3.3. To Do

a.a. To have the obligation performed at

debtors expense


4.4. Not to Do

a.a. Undone at his expense


(e)(e) Rules on Fruits

1.1. Kinds of fruitsa.a. Natural product of the soil, young and

other products of animals

b.b. Industrial produced thru cultivation or

labor

c.c. Civil derived by juridical relations

2.2. Creditor has rights to the fruits from the time

the obligation to deliver arises

3.3. Real rights acquired only when delivered to

him

a.a. Real rights - right over a specific thing

without any passive subject, directed against the

whole word.

b.b. Personal rights right to demand from

another debtor the fulfillment of the latters

obligation

(f)(f) Accessions and accessories Accessions fruits of a thing or additions to

or improvement upon a thing

Accessories joined to or included with the

principal thing for better use or completion.


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1.1. Even if not mentioned, accessories follow the

principal

2.2. But obligation to deliver accessions or

accessories does not include the principal

(g)(g) Legal Delay

1.1. From the time obligee judicially or extra-

judicially demand fulfillment; not mere notice

2.2. No demand from creditor necessary in

following cases:

a.a. When obligation or law expressly so

declares

b.b. Time is of the essence (controlling motive)

c.c. When demand would be useless

3.3. In reciprocal obligation, from the moment one

party fulfills his obligation, delay by the other

begins.

4.4. Kinds of Delay

a.a. Mora solvendi delay on the part of debtor

b.b. Mora acccipiendi delay of creditor

c.c. Compensatio more delay in reciprocal

obligation

5.5. Effects of Delay

a.a. Liable for interest and damages

b.b. Liable even for fortuitous event when the

obligation is to delivery a determinate thing

(h)(h) Fortuitous Events

1.1. Any event which cannot be foreseen or which

though foreseen is inevitable, independent of thewill or from aggravation of the debtor, render

impossible the fulfillment of obligation

2.2. No person shall be responsible for fortuitous

events, except:

a.a. Where expressly specified by law or

stipulated in contract


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b.b. When nature of the obligation requires

assumption of risk

c.c. When debtor incurs delay

d.d. When debtor promises to deliver same

thing to two or more persons

e.e. When obligation to deliver arises from

criminal offense

f.f. When obligation is generic

(i)(i) Fraud (deceit or dolo) Deliberate or intentional

evasion of the normal fulfillment of an obligation;

1.1. Dolo incidente (Incidental Fraud) - committed

in the performance of pre-existing obligation,

remedy is damages

2.2. Dolo causante (Causal Fraud) Fraudemployed at the time of the execution of a contract

in order to secure consent, remedy is annulment

bec of vitiation of consent

3.3. Demandable in all obligations

4.4. Waiver of future fraud is void

(j)(j) Negligence (culpa) Omission of that diligence which

is required by the nature of the obligation, but no malice

1.1. Culpa contractual Negligence in the

performance of contractual obligation,

a.a. Pre-existing contract

b.b. Liable for damages based on breach of

contract

c.c. Proof of contract and breach is enough for

recovery of damage

d.d. Negligence of employee conclusive

presumption of employers negligence

e.e. Proof of due diligence in the selection of

employee not a defense

2.2. Culpa aquiliana Negligence between parties

not so related by any pre-existing contract,

a.a. Obligation for damages based on quasi

delict

b.b. No pre existing contract


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c.c. Negligence must be proved for recovery of

damage

d.d. Negligence of employee prima facie

presumption of employers negligence

e.e. Due diligence in the selection and

supervision of employee is a valid defense

3.3. Can be regulated by the Court depending on

circumstance

4.4. Waiver of future negligence allowed

(k)(k) Presumptions

1.1. Receipt of principal without reservation as to

interest = presumption of interest paid

2.2. Receipt of later installment of debt withoutreservation of prior ones = presumption that prior

ones paid

(l)(l) Remedies to satisfy claim

1.1. Exhaust property of debtor

2.2. Subrogated to rights and actions of debtors,

except those inherent to person

3.3. Impugn all of acts by debtor done to defraud

creditor


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II. Different Kinds of Obligations

(a)(a) Pure and Conditional Obligations

1.1. Pure Obligation One whose effectivity or

extinguishments does not depend upon the

fulfillment or nonfulfillment of a condition or upon

the expiration of a term or period. Characterized by

Immediate Demandability.

2.2. Conditional Obligation Effectivity is

subordinated to the fulfillment or non-fulfillment of

a future or uncertain fact or event

Future and uncertain event or

Past event and unknown to the

parties

a.a. Suspensive v. Resolutory

In suspensive condition, fulfillment

give rise to an obligation acquisition of

rights In resolutory condition, fulfillment

extinguishes obligation loss of rights

acquired

b.b. Casual, Potestative, Mixed

Casual Depends on chance or will

of third party (Valid)

Potestative Depends on the will of

one of the contracting parties(1)(1) If suspensive condition

depends on will of debtor, the

obligation is void

(2)(2) If resolutory condition depends

on will of debtor, the obligation is

valid


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(3)(3) If depends on will of creditor, it

is valid.

Mixed Depends partly upon the will

of a party and partly upon chance or third

party (Valid)

c.c. Impossible Conditions

- - Physically Impossible or legally

impossible

- - If to do, whole obligation is void

- - If not to do, obligation is valid, as if

not written

-- If divisible, part not affected byimpossible condition is valid.

d.d. Positive v. Negative

i.i. Positive Condition (event will happen)

extinguished:

As soon as time expires without

the event taking place

As soon as it becomes indubitable

that the event will not take place

ii.ii. Negative Condition (event will not

happen) effective:

As soon as time expired without

event taking place

As soon as it becomes evident the

event cannot occur

e.e. Reciprocal v. Unilateral

i.i. If reciprocal, the fruits are deemed

mutually compensated


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ii.ii. If unilateral, fruits and interest belongs

to debtor

3.3. Condition deemed fulfilled when obligor

prevents its fulfillment

4.4. Creditor may before the fulfillment of the

condition bring appropriate actions for the

preservation of the rights.

5.5. Debtor may recover what he has paid by

mistake before the fulfillment of condition.

6.6. Effects of the fulfillment of a condition

retroacts to the day of the constitution of theobligation.

7.7. Rule on loss or deterioration, improvements

before the fulfillment of condition

Lost when perished, go out of

commerce, or disappear in such a way

that its existence unknown or cannot be

recovered

a.a. If without the fault of debtor, the obligation

is extinguished

b.b. If lost thru fault of debtor, obliged to pay

damages

c.c. When deteriorate without fault of debtor,

creditor bores the impairment

d.d. When deteriorate with fault of debtor,

creditor may rescind or fulfillment with damages

e.e. When improved by nature, or by time,inure to the benefit of creditor

f.f. When improved by debtor, no right to be

indemnified, but may remove such improvement,

or set off against damage

8.8. Remedies in reciprocal obligation


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a.a. Specific Performance or Rescission

b.b. With damages in either case

c.c. Alternative remedy not cumulative can

choose one but not both

d.d. After action for specific performance

impossible, option for rescission

e.e. Injured party must resort to judicial

rescission,

i.i. Except where automatic rescission

expressly stipulatedii.ii. Or where there is no performance yet

f.f. Power of the court to fix period

g.g. Subject to right of good faith third party

h.h. Substantial breach not slight breach

i.i. Where both parties have breach, liability

of first infractor equitably tempered; where first

infractor not know, both parties bear own

damages

(b)(b) Obligations with a Period

1.1. Demandability or extinguishments subject to

expiration of a term or period

2.2. Term or period future and certain event

3.3. Rules on loss, deterioration, improvements of

conditional obligation applicable


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4.4. If paid or delivered before period arrives,

debtor may recover the thing, with fruits and

interests.

5.5. Established for the benefit of both debtor and

creditor, unless otherwise stated

6.6. Court may fix period

a.a. If obligation does not fix a period

b.b. Depends on will of debtor

When means permit not condition,

but period

Period fixed by court cannot be changed

7.7. Debtor loses right to make use of the period

a.a. Debtor becomes insolvent, unless he gives

guaranty or security

b.b. When debtor does not furnish guaranties

or securities promised

c.c. When guaranties or securities impaired or

disappear

d.d. When debtor violates an undertaking

e.e. When debtor attempts to abscond

(c)(c) Alternative Obligations

Alternative several objects or prestations

but performance of one sufficient

Facultative One object or prestation but

debtor may substitute.

1.1. Must completely perform one of them

2.2. Right of choice to debtor, unless expressly

granted to creditor

Except those impossible, unlawful,

which could not have been the object of the

obligation or only one prestation is practicable


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3.3. Choice no effect until communicated,

irrevocable once communicated

4.4. Debtor may rescind the contract with

damages if thru creditors acts debtor cannot make

a choice

5.5. If lost due to fortuitous event,

a.a. If two or objects remain, the obligation

subsists

b.b. If only one object remain, it becomes

simple obligation

c.c. If none remains, obligation is extinguished

6.6. If lost due to fault of debtor,

When right of choice belongs to

debtor

a.a. If 2 or more objects remain, debtor can

choose from remaining, not liable for damages

b.b. If only one remain, simple obligation to

deliver remaining

c.c. If none remains, debtor indemnify

damages based on value of last object

When right of choice belongs to

creditor

a.a. If alternative object still remain, creditor

can choose the one lost and ask value of object

lost and damages; if creditor choose the

remaining object, debtor cannot be liable fordamages

b.b. If none remains, debtor to indemnify for

damages based on the price of the object chosen

by the creditor plus consequential damages

7.7. Facultative Obligation


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a.a. Right of choice only to debtor

b.b. If lost before substitution, debtor not

liable.

c.c. Debtor liable for loss due to his fault once

substitution has been made

d.d. If after substitution, it is lost thru

fortuitous event, obligation extinguished, debtor

not liable

(d)(d) Joint and Solitary Obligations

1.1. Joint Obligation Each of creditor has right

to demand, and each debtor is bound to render

compliance, with his proportionate part of theprestation

a.a. Default rule is obligation is JOINT

b.b. Joint creditor cannot act in representation

of the other creditors

c.c. Joint debtor cannot be compelled to

answer for liability of other debtors

d.d. Jointly, We promise to pay, Pro rata,

proportionately

2.2. Solidary Obligation Each creditor has a

right to demand, and each debtor is bound to

render compliance, with the entire prestation; but

as to co-debtor he is liable only for his share

a.a. Instances when obligation is solidary:

i.i. When obligation expressly states so

ii.ii. When law requires solidarity:


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1.1. If 2 or more heirs take possession

of estate

2.2. Partners in partnership

3.3. If principal allowed agent to act

as though he has full power

4.4. If 2 or more appointed an agent

for common undertaking or transaction

5.5. 2 or more bailees to whom a

thing is loaned

6.6. 2 or more officious managers,

unless management was assumed to

save thing from imminent danger

7.7. 2 or more persons liable for quasi

delict8.8. 2 or more payees when there has

been payment of what is not due

9.9. Principal, accomplices, and

accessories of a felony.

iii.iii. When nature of obligation requires

solidarity

1.1. Ex. Accident fr Kabit system

b.b. Solidarily, Jointly and severally, in

solidum, together and/or separately, I promise

to pay

c.c. Creditors and debtors need not be bound

in the same manner and by the same periods

and conditions

d.d. Not same as indivisible obligation

i.i. Solidary refers to vinculum;

Indivisibility refers to prestation

ii.ii. Solidary requires plurality of subjects


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iii.iii. In solidary, all debtors liable for breach

of obligation; In indivisibility, only debtor

guilty of breach of obligation is liable for

damage

iv.iv. In indivisible obligation, other debtors

not liable for insolvency; if solidary debtor

becomes insolvent, the co-debtors bore his

debt in proportion

e.e. Solidary creditors may do whatever may be

useful to others, but not anything which may be

prejudicial to the others

f.f. A solidary creditor cannot assign his rightswithout the consent of the others, except if to co-

creditors

g.g. Debtor must pay to the creditor who made

demand, if none demanded, then he may pay

any one of the solidary creditor

h.h. Novation, compensation, confusion or

remission of a solidary creditor shall extinguish

the obligation but the creditor who did these

acts shall be liable to the other creditors

i.i. No re-imbursement if payment made after

obligation prescribed or illegal

j.j. Remission of the whole obligation obtained

by a solidary debtor does not entitle him to

reimbursement from his co-debtors

k.k. Defenses available to solidary debtors

i.i. Derived from nature of obligation

Payment, fraud, prescription,

remission, illegality, non performance of

condition


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ii.ii. Personal to the debtor

Insanity, incapacity, mistake,

violence, minority

iii.iii. Personal to the other solidary debtors

Partial defense

(e)(e) Obligations with a Penal Cause

1.1. With accessory undertaking in case of breach

of obligation

a.a. To insure performance

b.b. To liquidate the amount of damage to be

awarded

c.c. To punish the obligor in case of breach

2.2. No need to prove actual damage

3.3. Shall substitute for damages and interest,

except

a.a. When there is stipulation to the contrary

b.b. When obligor is sued for refusal to pay

agreed penalty

c.c. When obligor is guilty of fraud

4.4. When court may reduce penalty

a.a. If principal obligation partly complied withb.b. If principal obligation irregularly complied

with

c.c. If penalty is iniquitous or unconscionable


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Weeks 5 to 7 - Extinguishments of Obligations

Modes of Extinguishing Obligations

1.Payment or performance

2.Loss of the thing due

3.Condonation or remission

4.Confusion or merger of the rights of creditor and debtor

5.Compensation

6.Novation

7.Death of a party in personal obligation

8.Annulment or Rescission of contract

9.Arrival of Resolutory period or fulfillment of resolutory conditon10. Impossibility of fulfillment

11. Prescription

I. Payment

(a)(a) General Provisions Payment

(i)(i) Complete Delivery of money,

performance of obligation

(ii)(ii) If substantially performed in good

faith, obligor may recover as though

there had been complete fulfillment less

damages

(iii) (iii) Third party cannot compel

creditor to accept payment or

performance, except

a.a. When there is stipulation to

the contraryb.b. When third person has an

interest in the fulfillment of

obligation

(iv)(iv) Rights available to third party who

pays:


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a.a. If payment made with the

consent of the debtor

i.i. Recover from debtor the

entire amount

ii.ii. Subrogated to all the

rights of creditor

b.b. If payment made without

the knowledge or against the will

of debtor, he can recover only

insofar as payment has been

beneficial to the debtor

(v)(v) To whom payment must be made

(1240)a.a. To the person in whose

favor obligation has been

constituted

b.b. His Successor in interest

c.c. Any person authorized to

receive it

d.d. Third person provided it

has redounded to benefit of

creditor. (1241, 1242)

Presumption of benefit in the

following case:

If after payment, third person

acquires creditors rights

If creditor ratifies payment to third

party

If creditors conduct let debtor to

believe that the third person had authority to

receive payment

e.e. Possessor of the credit

(vi)(vi) Payment must be in Legal Tender

a.a. Foreign currency may be

used as currency of contract


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b.b. Promissory notes, bills of

exchange, checks not legal

tender. They produce effect of

legal tender only when encashed

or impaired thru the fault of

creditor (1249)

c.c. In case of extraordinary

inflation or deflation, the basis is

the value of currency at the time

obligation is established. (1250)

(b)(b) Applications of Payments

1.1. The right belongs to the

debtor, but if he does not exercise it,creditor may do it

2.2. If creditor issues a receipt

designating the debt to be applied,

debtor can accept or reject

3.3. Where neither debtor nor

creditor made a choice, it shall be

applied on the debt which is most

onerous

a.a. Older debts more onerous

than newer ones

b.b. One bearing interest more

onerous than one that is not

c.c. Secured debt more

onerous than unsecured

d.d. Debt as principal more

onerous than debt as guarantor

e.e. Solidary obligation more

onerous than sole debtor

4.4. If similar nature and burden,payment shall be applied

proportionately

(c)(c) Payment by Cession

Assignment or abandonment of all the

properties of the debtor for the benefit of his creditors


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in order that the latter may sell same and apply

proceeds thereof to

1.1. Cession does not make the

creditors owners of the property

2.2. Unless stipulation to contrary,

debtor still required to pay balance

3.3. Requires two or more

creditors, debtors insolvent, cession

accepted by creditors

(d)(d) Dacion en pago

Dation in payment is the transmission of the

ownership of a thing by the debtor to the creditor asan accepted equivalent of the performance of an

obligation.

Governed by law on sales

1.1. Difference between Dacion

and Cession

a.a. Dacion usually only one

creditor

b.b. Dacion does not require

insolvency

c.c. Dacion does not involve all

the property of debtor

d.d. Dacion makes creditor

owner of the property

e.e. Dacion is a novation

(e)(e) Tender of Payment and Consignation

Tender of payment The act of the debtor of

offering to the creditor the thing or amount due Consignation Deposit of the object or the

amount due with the proper court after refusal or

inability of the creditor to accept the tender of payment

1.1. Requisites of Consignation

a.a. Debt Due


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b.b. Tender of payment by

debtor and refusal by creditor to

accept it without justifiable

reason

c.c. Previous notice of the

consignation had been given to

persons interested in fulfillment

of obligation

d.d. Thing or amount due has

been deposited with judicial

authority

e.e. Subsequent notice of

consignation to interested parties

2.2. Exception to requirement fortender of payment:

a.a. When creditor is absent or

unknown or does not appear at

place of payment

b.b. When he is incapacitated to

receive payment

c.c. When he refuses to give

receipt, without just cause

d.d. When two or more persons

claim same right to collect

e.e. When title of the obligation

has been lost

3.3. Expenses of consignation for

Creditors account

a.a. If creditor allows debtor to withdraw the consignation, creditor

lose preference over the thing. Co-debtor, guarantors, sureties shall be

released.

II. Loss of the Thing Due

(a)(a) Lost when perished, go out of commerce, or

disappear in such a way that its existence unknown or

cannot be recovered


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Or becomes legally or physically impossible to perform, or

so difficult as to be manifestly beyond the contemplation

of the parties

(b)(b) The obligation to deliver specific thing is

extinguished if

1.1. Without the fault of debtor, and

2.2. Debtor not in delay

(c)(c) No person shall be responsible for fortuitous events,

except:

1.1. Where expressly specified by law or stipulated

in contract

2.2. When nature of the obligation requires

assumption of risk3.3. When debtor is at fault, partly

4.4. When debtor incurs delay

5.5. When debtor promises to deliver same thing

to two or more persons

6.6. When obligation to deliver arises from

criminal offense

7.7. When obligation is generic

(d)(d) In case of partial loss the court shall determine

whether it is so important as to extinguish the obligation

(e)(e) In case lost when the thing is in the possession of

debtor, presumption is it is his fault

Except earthquake, flood, storm or other

natural calamity

(f)(f) Creditor shall have right to go against any third

person responsible for the loss.


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III. III. Condonation or Remission of Debt

g.h. Act of liberality by virtue of which creditor

abandons his right

Gratuitous

Accepted by debtor

Obligation must be demandable

Parties must be capacitated

Donation not inofficious

Forms in express condonation

h.i. Implied remission

-- Delivery of private document evidencingcredit

- - If thing pledge is found in the possession

of debtor or owner of thing

- - Renunciation of principal extinguish

accessory obligation

IV. Confusion or Merger of Rights

Creditor and Debtor merged in the same

person1.1. Between principal debtor and principal

creditor

2.2. Complete and definite merger

a.a. Merger of debtor and creditor benefits the

guarantor

b.b. Extinguish only the portion of the joint

obligation corresponding to the creditor and debtor

merged

c.c. Merger of one solidary debtor with creditorextinguishes obligation

V. Compensation


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a.a. Persons who in their own rights are debtors and

creditors of each other extinguishes the debts to the

concurrent amount

b.b. Guarantor can set up compensation of what

principal debtor may owe creditor

c.c. Compensation may be total or partial

d.d. Parties may agree to compensate debts not yet due

e.e. When one or both debts are rescissible or voidable,

they may be compensated before they are judicially

rescinded or avoided

f.f. Requisites of legal compensation (by operation of

law ):

1.1. Parties are principal creditors and debtors

of each other

2.2. Both debts consist in sum of money orconsumable of same kind and quality

3.3. Both debts are due and demandable

4.4. Two debts are liquidated (amount is

certain)

5.5. No retention or controversy commenced by

3rdparty

b.g. Compensation after assignment

i.

Assignment made with consent of debtor

Debtor cannot set up compensation against

previous creditor

ii.

Assignment with knowledge but without consent

Debtor can set up compensation for debts

before the notification

Debtor cannot set up compensation with

respect to debts which matured after notification

iii. Assignment

without knowledge of debtor

Debtor can set up compensation for debts

maturing before he learned of assignment

c.h. Compensation cannot take place in following case:


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i. Debts

from Contracts of Depositum (A person receives a

thing belonging to another for safekeeping and of

returning the same; not bank deposits)

ii. Debts from

Commodatum (One person delivers to another

something for him to use and return it)

iii. Claims for

support due by gratuitous title

iv. Debts from

Criminal offense

v. Taxes

VI. Novation extinction of an obligation through the creation of

a new one which substitutes ita.a. Requisites:

i. Previous valid obligation

ii. Agreement to enter new obligation

iii. Extinguishments of old

iv. Creation of new valid obligation

b.b. Must be declared in unequivocal terms

c.c. Or incompatible on every point Test: Whether

old and new contract can stand together each having

its own independent existence

d.d. Substitution of Debtor

i. Expromision Without the knowledge

or consent of debtor, at the instance of the new

debtor

1.1. Payment by new debtor gives himright to beneficial reimbursment

2.2. Insolvency or non fulfillment of

obligation by new debtor will not give rise

to liability of old debtor


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ii. Delegacion Substitution made at the

instance of old debtor

3.1. Payment by new debtor entitles him

to reimbursement and subrogation

4.2. Non fulfillment of obligation by new

debtor will not give rise to liability of old

debtor

5.3. Insolvency of new debtor will revive

action against old debtor if insolvency was

already existing and of public knowledge,

or known to the debtor when he delegated

his debt

e.e. If new obligation is void, the original one shall

subsistsf.f. If original obligation is void, novation is void;

except when annulment may be claimed only by debtor

or when voidable acts have been ratified

g.g. Subrogation Substitution of Debtor

i. Conventional By express agreement

of the old creditor, debtor and the new creditor

ii. Legal Without agreement, by

operation of law

1.1. When creditor pays another creditor

who is preferred, even without the debtors

knowledge

2.2. When a third person, not interested

in the obligation, pays with the express or

tacit approval of debtor

3.3. When a third person interested in

the fulfillment of obligation pays, even

without the knowledge of debtor


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Definition of a ContractDefinition of a Contract

A meeting of the minds

Between two persons

Whereby one binds himself, with respect to the other

To give something or to render some service

Different phases or stages in the life of a contractDifferent phases or stages in the life of a contract

1.1. Preparation Preliminary to formation

2.2. Perfection birth of the contract

3.3. Consummation - fulfillment

Essential characteristics of ContractsEssential characteristics of Contracts

1.1. Obligatory force must be complied with in good faith

2.2. Autonomy parties are free to enter such stipulations,

clauses, terms and conditions

Clauses and condtions must not be contrary to:

LAW

Morals

Good Customs

Public Order

Public Policy

3.3. Mutuality contract must bind both parties

Determination can be left to third party, whose decision

shall be binding only when communicated to both parties

Unless such determination be evidently inequitable

4.4. Relativity takes effect only bet parties, their assigns and

heirs

Stipulation pour autrui accepted by third party

Where third persons comes into possesion of the object of

contract creating real rights

Where contract is to defraud a third person


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Where third person induces a contracting party to violate his

contract

a.a.

Different Classes of ContractsDifferent Classes of Contracts

According to perfection

Consensual Perfected by mere agreement of the parties

Real Requires not only consent, but also the delivery of

the object

According to form

Common Do not require particular form

Formal Those which require particular form, likedonation, mortgage

According to nature of vinculum

Unilateral Obligation of one party only

Bilateral Reciprocal obligations for both parties

According to cause

Onerous Giving of an equivalent or compensation

Gratuitous Given without compensation, just pureliberality

According to risks involved

Commutative Prestation is pecuniarily appreciable and

determined at the moment of celebration of contract

Aleatory Pecuniarily appreciable but not yet determined

at the moment of celebration, since it depends upon the

happening of an uncertain event. Ex. Insurance

According to name

Nominate with specific names or designation in law

Innominate no specific name


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Essential Requisites of ContractsEssential Requisites of Contracts

Consent of the contracting parties

Object certain subject matter of the contract Cause of the obligation which is established

Elements of ConsentElements of Consent

Concurrence of the offer and the acceptance

o Definite Offer that may be exactly fixed

oAssent to the terms without qualifications or conditions

o Conveyed before the death, civil interdiction, insanity, or

insolvency

o Qualified acceptance is a counter offer

o Perfected when acceptance comes to knowledge of offeror

o Offer can be withdrawn anytime before acceptance, unless

option is founded on consideration

o If offer made thru agent, accepted when communicated to

the agent

By parties with legal capacity to contract

o Not minors, insane or demented, deaf-mutes who do not

know how to write, incompetents under guardianship, civil

interdiction

o Minor can be liable if he misrepresents his age

o Prohibited by law from entering into contracts

Husband and Wife to each other

o o Insolvents

o o Persons prohibited from giving donations

o o Adultery, concubinage

o o In consideration of criminal offense


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o o Made to public officer, spouse, by reason of

office

o o Persons with fiduciary relations

o o Guardian, for property under his

guardianshipo o Agents, for property entrusted to them

o o Executor/administrator

o Public officers, judges, for property under their

jurisdiction

o o

Intelligently, freely given, consciously

- - Vices of the will

Mistake - False notion of a thing or a fact

materrial to the contract

Simple mistake gives rise to correction

Render voidable in following cases:

Mistake as to object of the contract

o Identity of thing, Substance, Condition

,

Quantity only if principal reasono o

Mistake of Law

oWill not make it voidable except:

Mutual error as to the legal effect of an agreement when the real purpose

of the parties is frustrated

Mistake as to person

o If such identity or qualification is principal

cause of contract

Violence Employment of external physical

force, irresistible and serious to wrest consent


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Intimidation Moral compulsion to influence

another to give his consent thru fear of imminent or

grave evil

o o Force employed must be serious or

irresistible

o o Determining cause for the party in

entering into the contract

Undue Influence Improper advantage of his

power over the will of another depriving the latter of

reasonable freedom of choice

Confidential, Family, Spiritual and other

relations or Person influenced suffering from mental

weakness, ignorant, financial distress

Fraud Insidious words or machinations of one

of the contracting parties induced the other to enter

into a contract, which without them he would not have

agreed; Failure of one party to disclose facts to other

party when there is a duty to reveal them

Dolo incidente (Incidental Fraud) - committed in

the performance of pre-existing obligation,

remedy is damages

Dolo causante (Causal Fraud) Fraud employed at the

time of the execution of a contract in order to secure

consent, remedy is annulment bec of vitiation of

consent

o o Must be employed by one of thecontracting parties,

o o but not by both or by third parties

o o Must be Serious

o Must have induced the other party to

enter into the contract


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- - Vices of Declaration

Simulated Contracts

1. Absolute1. Absolute

Contracting parties do not intend to be bound

by the contract at all

Void

2. Relative

Contracting parties conceal their true

intentions

Real agreement binding on the parties if itdoes not prejudice third person

ObjectsObjects

Thing, right or service which is the subject matter of the obligationcreated or established

Thing or service must be within the commerce of man

o o The law prohibits future inheritance as object of

contract

o o Transmissible and can be appropriated

o o Not contrary to Law Moral Good Conduct Public

Order Public Policy

o

o Real or possibleo o Determinate or determinable

CauseCause


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Essential reason why the parties enter into the contract

o Cause should be in existence

o Licit or lawful

oTrue

Interchangeable with consideration, but not same as motive

o General rule: Particular motive of the party in entering

into a contract are not material. Except: When it

predetermines the purpose of the contract

FormForm

Whatever may be the form, Contract shall be obligatory on all

provided all the essential requisites are present

Two exceptions:

When Law requires a certain form for validity

When Law requires form for enforcement

Must appear in Writing to be valid:

o o Donation exceeding P 5,000o o Sale of piece of land or interest therein by an agent

o o Antichresis - Creditor acquires rights to fruits of

immovable but applying to payment of interest

o o Agreement regarding payment of interest

Must appear in Public Instrument to be valid:


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Donations of immovable property

Partnership where immovable or real rights are

contributed

Must appear in Public Instrument for Enforcement

Creation, transmission, modification, sales or

extinguishments of real rights over immovable properties

Cession, repudiation, or renunciation of hereditary

rights, or those of conjugal partnership of gains

Power to administer property

Cession of actions or rights proceeding from an act

appearing in a public document

ReformationReformation

When the true intention of the parties are not expressed in the

instrument, one of the party may ask for the instrument to bechanged so that true intention may be expressed.

Requisities

Must be a meeting of the minds of the parties

True intention is not expressed in the instrument

Failure due to mistake, fraud, inequitable conduct oraccident

What may be reformed

Mutual mistake of parties cause failure to disclose

real agreements


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One party mistaken and the other acted fraudulently

or inequitably

One party was mistaken and the other knew that

instrument did not state real agreement, yet concealed it

Ignorance, lack of skill,, negligence or bad faith on thepart of person drafting it

Where parties agree on mortgage, but instrument states

property is sold absolutely or with right to repurchase

o o What may not be reformed

o o Simple Donations with no condition

o o Wills

o o Those where real agreement is void

Defective ContractsDefective Contracts

o o As to defect

o o Rescissible - Injury or damage

o o Voidable - Vitiation of consent or legal capacityo o Unenforceable - In excess of authority or do not

complyy with S of Fraud

o o Void - Lack of an element of a valid contract

o o As to effect

o o Rescissible and Voidable - Valid until annulled

o o Unenforceable - Cannot be enforced by action in

courto o Void - No legal effects at all

o o As to parties who can file action

o o Rescissible and Void May be attack directly By

contracting parties or by third parties


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o o Voidable and Unenforceable - Cannot be attacked

by third persons

Resolution (Rescission of reciprocal obligation

o Party who may institute action

For resolution, only party to the contract

o Causes

Failure of one party to comply w/ obligation

o Kind of contract

Reciprocal obligation only

o Power of the courts

Can grant extension for performance

Rescissible Contracts

Guardian who represent ward, lession of more than

of the value of the thing

In representation of absentee, lession of

In fraud of creditor who is unable to collect

Things under litigation, entered into by defendant

without approval of litigants and court

Payment made in state of insolvency where debt not

yet due

oThose which may be declared by law

Partition (1098)

Result of deterioration (1189)

Unpaid seller (1526 and 1534)

Badges of Fraud

o o Cause or consideration is inadequate

o o Transfer made after suit has begun or pending

o o Sale on credit by an insolvent debtor

o o Evidence of large indebtedness or complete

insolvency


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o o Transfer of all or nearly all of debtor properties

o o Between father and son, with any of above

circumstances

o o Failure of vendee to take exclusive possession

Voidable ContractsVoidable Contracts

Where one party is incapable of giving consent to a contract

Where the consent is vitiated by mistake, violence,

intimidation, fraud, undue influence

ConvalidationConvalidation

Prescription (Four years)

From time incapacity ceases

From discovery of such fraud or mistake

Ratification or confirmation

Loss of the thing by thru the fault of the person who has

right to annul

Effects of annulment of Voidable ContractEffects of annulment of Voidable Contract

If not consummated, then parties are released from obligation

If consummated, parties are to restore to each other what they

have given, with fruits and interests, plus damages If to do or not to do, there will be apportionment of damages

Incapacitated party not obliged to make restitution except for

what he was benefited

Unenforceable ContractsUnenforceable Contracts

Those entered into in the name of another person by one who

has been given no authority or legal representation or who has

acted beyond his powers

Those not complying with Statute of Frauds.

Statute of FraudStatute of Fraud

Purpose is to prevent fraud, not to aid the commission of

fraud

Basic and fundamental principles


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Applies only to executory contracts

Cannot apply if action is not for damage bec of violation

of agreement or for specific performance

Exclusive

May be waived Personal defense

Contracts are not void

Rule of exclusion

Concerns admissibility of evidence, not credibility

Does not apply if action is to claim reformation

Following must be in writing or in some notes or memorandum:

Agreement not to be performed within a year from the

making thereof

A special promise to answer for debt, defaults or

miscarriage of another

Agreement in consideration of marriage

Sales of goods, chattels, things above P500

Lease of more than one year

Representation as to credit of another

Void ContractsVoid Contracts

No concurrence of offer/acceptance

Cause, object, purpose contrary to law, morals, good customs,

public order, or public policy

Absolutely simulated or fictitious

Cause or object did not exist at the time of the transaction

Object outside commerce of men

Impossible service

Intention of the parties relative to principal object cannot beascretained

Prohibited or declared void by law

EstoppelEstoppel


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Estoppel in pais - by ones conduct or acts, representatioons,

admissions or silence, culpable negligience induces another to

believe certain facts to exist and such other rightfully relies and

acts on such belief.

Estoppel by Deed - A party to a deed, are precluded from

aasserting against the other party to the deed any right or title in

derogation of the deed, or from denying any material fact asserted

therein.

Estoppel by Record - A party precluded from denying the

truth of matters set forth in a record, whether judicial or

legislative.

Estoppel by LachesEstoppel by Laches

Estoppel by Laches

Failure or neglect to enforce a right for an

Unreasonable and unexplained length of time

Despite knowledge or notice

EXTINCTIVE PRESCRIPTION

(Arts. 1139-1155)

40 days Redhibitory action based on defects

of animals.

6 months (a)(a) Action for reduction of price for

rescission in case of breach of sale of

real estate, either with a statement of

its area at a certain price for a unit

of measure or number.

(b)(b) Action for warranty against

hidden defects of thing sold.1 year (a)(a) Action by husband against wife

to impugn childs legitimacy if

husband is in the same place as

wife.

(b)(b) Action for revocation of donation

for acts of ingratitude.


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(c)(c) Action for forcible entry or

unlawful detainer.

(d)(d) Action for defamation.

(e)(e) Action for rescission or for

damages if immovable sold is

encumbered with non-apparent

burden or servitude.

2 years Action to impugn childs legitimacy if

husband is in the Philippines but

not in same place as wife.

3 years Action to impugn childs legitimacy if

husband is abroad.

4 years (a)(a) Action for revocation or reduction

of donation based on supervening

birth, appearance or adoption of achild.

(b)(b) Action for revocation of donation

based on fulfillment of condition.

(c)(c) Action for recovery of movable

(replevin) if possessor is in good

faith.

(d)(d) Action upon injury to rights of

plaintiff.

(e)(e) Action upon a quasi-delict.(f)(f) Action for rescission of

rescissible contracts.

(g)(g) Action for annulment of voidable

contracts.

5 years (a)(a) Action for legal separation.

(b)(b) Action for annulment of marriage

based on

1. Lack of parental consent.

2. Fraud.

3. Force, intimidation or undueinfluence.

4. Physical incapacity and afflicted with

a sexuality transmissible

disease.

(c)(c) Action to claim legitimacy if child

should die during minority or in


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state of insanity.

(d)(d) Action for declaration of

incapacity of heir.

(e)(e) Action for warranty of solvency of

debtor if credit is assigned to co-heir

during partition.

(f)(f) All other actions whose periods

are not fixed by law.

6 years (a)(a) Action upon oral contract.

(b)(b) Action upon a quasi-contract.

8 years Action for recovery of movables

(replevin) if possessor is in bad faith.

10 years (a)(a) Action for recovery of possession

of immovables (accionpubliciana) if

real right of possession is lost.(b)(b) Action for recovery of ownership

of immovables (accion

reinvindicatoria) if possessor is in

good faith.

(c)(c) Action upon a mortgage contract.

(d)(d) Action upon a written contract.

(e)(e) Action upon an obligation created

by law.

(f)(f) Action upon a judgment.Lifetime (a)(a) Action to claim legitimacy.

(b)(b) Action to obtain declaration of

illegitimate filiation.

oblicon notes abe iloilo.doc

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