Law1101-chapter-2 (1).docx

LAW REVIEWER – MIDTERMS Chapter 2 – Nature and Effect of Obligations Specific or Determinate Thing – particularly designated or physical segregated from others of the same class; individuality Generic or Indeterminate Thing – refers to only a class or genus to which it pertains and cannot be pointed out with particularity; specie

Duties of a Debtor in Obligation to Give a Determinate Thing (Art. 1163) 1. Preserve the thing a. Diligence of a Good Father of a Family – average diligence a person exercises over his own property.

When Obligation to Deliver Fruits Arises 1. Arises from the time of the “perfection of the contract.” 2. If subject to suspensive condition or period, it arises upon the fulfillment of the condition or the arrival of the term. 3. In the contract of sale, obligation arises from the perfection of the contract even if it is subject to suspensive condition or period. 4. In obligations to give arising from law, quasicontracts, delicts, and quasi-delicts, the time of performance is determined by the specific provisions of the law applicable. Personal Right and Real Right

b. Another Standard of Care – slight or extraordinary diligence

Personal – right or power to demand from another the fulfillment of the latter’s obligation to give, to do, or not to do.

c. Factors to be Considered – nature of the obligation, circumstances of the person, time, and place.

Real – right or interest of a person over a specific thing without a definite passive subject against whom the right may be personally enforced.

d. Reason for Debtor’s Obligation – debtor must exercise diligence to insure that the thing to be delivered would subsist in the same condition as it was when the obligation was contracted.

Modes of Acquiring Ownership Occupation

Tradition (Delivery)

Law

Intellectual Creation

Donation

Prescription (Lapse of Time)

2. Deliver the fruits of the thing Succession 3. Deliver the accessions and accessories Ownership Acquired by Delivery 4. Deliver the thing itself 5. Answer for damages in case of non-fulfillment or breach

- “He shall acquire no real right over it until the same has been delivered to him.”

Duties of a Debtor in Obligation to Deliver a Generic Thing

- when there has been no delivery yet, the proper court of action of the creditor is one for specific performance or rescission of the obligation.

1. Deliver a thing of the quality intended by the parties, in consideration of the purpose and other circumstances.

Remedies of Creditor in Real Obligation (Art. 1165)

2. To be liable for damages in case of fraud, negligence, or delay.

1. In a specific real obligation: a. Demand specific fulfillment with damages

Right of Creditor to the Fruits (Art. 1164)

b. Demand rescission with damages

- the creditor is entitled to the fruits of the thing to be delivered, from the time the obligation to make delivery arises.

c. Demand payment of damages only, where it is the only feasible remedy

Different Kinds of Fruits 1. Natural Fruits – spontaneous products of the soil, the young and other products of animals. 2. Industrial Fruits – produced by lands of any kind through cultivation or labor. 3. Civil Fruits – derived by virtue of a juridical relation.

* Creditor must bring the matter to court and the court will be the one to order the delivery.

2. In a generic real obligation: - can be performed by a third person.

- not necessary for the creditor to compel the debtor to make the delivery, although he may ask for performance of the obligation.

Right of Creditor to Accessories (Art. 1166)

Accessions

and

- general rule is that all accessions and accessories are considered included in the obligation to deliver a determinate thing although they may not have been mentioned.

Ordinary Delay – failure to perform an obligation on time. Legal Delay/Default/Mora – failure to perform an obligation on time which constitutes a breach of the obligation. Kinds of Delay: 1. Mora Solvendi – part of the debtor 2. Mora Accipiendi – part of the creditor 3. Compensatio Morae – in reciprocal obligations

- accessory follows the principal. Accessions – fruits of a thing or additions to or improvements upon a thing.

* There is Obligations

Accessory – things joined or included with the principal thing for the latter’s embellishment or completion.

Requisites of Mora Solvendi:

Situations Contemplated in Article 1167 1. Debtor fails to perform an obligation to do. 2. Debtor performs an obligation to do but contrary to the terms thereof. 3. Debtor performs an obligation to do but in a poor manner. Remedies of Obligation

Creditor

in

Positive

Personal

Creditor has the right to: a. have the obligation performed by himself or by another at the debtor’s expense b. recover damages c. order (by the court upon complaint) the undoing of the act if still possible Performance by a Third Person - a personal obligation to do can be performed by a third person. - where the personal qualifications of the debtor are the determining motive for the obligation contracted, the performance of the same by another would be impossible or would result to be so different that the obligation could not be considered performed.

Remedies of Creditor in Negative Personal Obligation (Art. 1168) - undoing of the forbidden act plus damages. - if it is not possible to undo what was done, either physically or legally, the remedy is action for damages caused by the debtor’s violation of his obligation.

Meaning of Delay (Art. 1169)

no

delay

in

Negative

Personal

1. Failure of the debtor to perform his obligation on the date agreed upon. 2. Demand made by the creditor which may be either judicial or extrajudicial. 3. Failure of the debtor to comply with such demand. * Creditor has the burden of proving that demand has been made. * In absence of evidence for extra-judicial demand, effects of default arise from the date of the judicial demand. Effects of Delay 1. Mora Solvendi: - debtor is guilty of breach - he is liable to creditor for interest or damages - he is liable even for a fortuitous event; if the debtor can prove that the loss would have resulted just the same even if he had not been in default, the court may equitably mitigate the damages - in obligation to deliver a generic thing, debtor can still be compelled to deliver a thing of the same kind or held liable for damages. 2. Mora Accipiendi: - creditor is guilty of breach - he is liable for damages suffered by debtor - he bears the risk of loss of the thing due - debtor is not liable to pay interest from the time of creditor’s delay (if obligation to pay money) - debtor may release himself from the obligation by consignation in court of the thing or sum due.

3. Compensatio Morae:

- delay of the obligor cancels the delay of the oblige and vice versa.

- can be demandable with respect to all kinds of obligation

- liability of first infractor shall be equitably tempered by the courts.

- fraud is deemed serious and evil that its employment should be discouraged.

- if first infractor is unknown, contract is extinguished and each shall bear his own damages.

- waiver of an action for future fraud is void because it is against the law and public policy.

When Demand is Not Necessary to Put Debtor in Delay (P.U.T.O.L.)

- waiver of action for past fraud is valid and is considered as an act of generosity and magnanimity on the part of the party who is the victim of the fraud.

1. When there is Performance by a party in reciprocal obligations

- what is renounced is the right to indemnity of the part entitled thereto.

2. When demand would be Useless 3. When Time is of the essence

Responsibility Arising Demandable (Art. 1172)

4. When the Obligation so provides

from

Negligence

- courts are given wide discretion in fixing the measure of damages.

5. When the Law so provides (ex. Taxes)

Grounds for Liability/Breach (Art. 1170) 1. Delay – see Art. 1169 2. Fraud (Deceit or Dolo) – deliberate or intentional evasion of the normal fulfillment of the obligation.

- negligence is a question which must necessarily depend upon the circumstances of each particular case. - no deliberate intention to cause injury or damages.

a. Incidental – committed in performance of an existing obligation

- when both parties are negligent, the fault of one may cancel the negligence of the other.

b. Causal – employed in the execution of a contract

Validity of Waiver of Acton Arising from Negligence

3. Contravention of Terms – violation of terms stipulated in the obligation; not due to fortuitous event or force majeure. 4. Negligence (Fault or Culpa) – voluntary act or omission without bad faith that prevents normal fulfillment of an obligation.

- an action for future negligence may be renounced except if the nature of the obligation requires the exercise of extraordinary diligence. - where negligence shows bad faith, it is equivalent to fraud. Kinds of Negligence:

Negligence

1. Culpa Contractual – negligence in contracts resulting to breach. Makes the debtor liable for damages.

- there is deliberate intention to cause damage

- there is no such intention

2. Culpa Aquiliana – negligence which by itself is the source of an obligation. (Quasi-delict)

- waiver for future fraud is void

- waiver is allowed

- must be clearly proved

- presumed from violation of a contractual obligation

- liability cannot be mitigated by the courts

- liability may be reduced according to circumstances

Fraud and Negligence Distinguished Fraud

3. Culpa Criminal – negligence resulting in the commission of a crime. Aggrieved party may choose between a criminal action under Article 100 of the Revised Penal Code or a civil action for damages under Article 2176 of the Civil Code. Effect of Negligence on the Part of the Injured Party - plaintiff’s own negligence was the immediate cause of his injury: cannot recover damages. - plaintiff’s negligence was only contributory: may recover damages mitigated by the courts.

Responsibility Arising Demandable (Art. 1171) - refers to incidental fraud.

from

Fraud

* To be entitled to damages, it is not required that the negligence of the defendant should be the sole cause.

Meaning of Fault or Negligence (Art. 1173)

- failure to observe for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury. Factors to be Considered: 1. Nature of the obligation 2. Circumstances of the person 3. Circumstances of place 4. Circumstances of time Damages – money compensation awarded to a party for loss or injury resulting from breach of contract or obligation by the other. Kinds of Damages: 1. Moral – alleviate the moral suffering 2. Exemplary – not to compensate but to penalize

1. Independent of human WILL or at least of the debtor’s will. 2. Unforeseen, or if foreseen is inevitable. 3. Impossible for debtor to render or comply with obligation. 4. Debtor is free from any PARTicipation Rules as to Liability in Case of Fortuitous Event - obligation is extinguished; except: 1. When expressly specified by law a. Debtor is guilty of DeFConNe b. Debtor has promised to deliver the specific thing to two or more persons c. Obligation to deliver a specific thing arises from a crime d. The thing to be delivered is generic. (Genus nunquam perit = Genus never perishes)

3. Nominal – recognize injured party’s right to a property violated

2. When declared by stipulation

4. Temperate – judge is empowered to calculate moderate damages

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

5. Actual – simply make good or replace the loss caused by the wrong.

Usurious Transactions (Art. 1175)

6. Liquidated – agreed upon by the parties to avoid controversy on the amount of damages Kinds of Diligence Required 1. Agreed upon by the parties. 2. In absence of stipulation that required by law in the particular case.

Simple Loan or Mutuum – contract whereby one of the parties delivers to another, money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. Usury – contracting interest in excess of the amount allowed by law. * 6% Legal Interest Requisites for Recovery of Interest:

3. If both contract and law are silent: Diligence of a good father of a family.

1. Payment of interest must be expressly stipulated

Meaning of Fortuitous Event (Art. 1174)

2. Agreement must be in writing

- by chance - an event which cannot be foreseen or if foreseen, is inevitable.

3. Interest must be lawful

Presumption (Art. 1176)

1. Acts of Man – independent of debtor’s will but not of other human wills.

- inference of a fact not actually known arising from its usual connection with another which is known or proved.

2. Acts of God – force majeure; totally independent of the will of every human being.

2 Kinds:

Kinds of Fortuitous Events: 1. Ordinary – common and could be reasonably foreseen. 2. Extra-Ordinary – uncommon and could not be reasonably foreseen. Requisites of a Fortuitous Event:

1. Conclusive – cannot be contradicted 2. Disputable – can be contradicted by presenting proof to the contrary When Presumptions in Art. 1176 Do Not Apply 1. With reservation as the interest

2. Receipt without indication of particular installment paid 3. Receipt for a part of the principal 4. Payment of taxes 5. Non-payment proven

Remedies Available to Creditors for the Satisfaction of their Claims (Art. 1177) 1. Exact fulfillment with right to damages 2. Pursue the leviable property of the debtor 3. Exercise all the rights and bring all the actions of the debtor, except those inherent in or personal to the person of the latter 4. Ask the court to rescind or impugn acts or contracts which the debtor may have done to defraud him.

Transmissibility of Rights (Art. 1178) - all rights are generally transmissible or assignable except those: 1. Prohibited by Law a. Contract of Partnership – two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. b. Contract of Agency – a person binds himself to render service in behalf of another. c. Contract of Commodatum – one of the parties delivers to another something not consumable so that the latter may use it for some time and return it. 2. Prohibited by Stipulation of the Parties

Classification of Obligations PRIMARY - Pure and Conditional - Obligations with a Period - Alternative and Facultative - Joint and Solidary - Divisible and Indivisible - Obligations with a Penal Clause

SECONDARY - Unilateral and Bilateral - Real and Personal - Determinate and Generic - Civil and Natural - Legal, Conventional, and Penal