Professional Documents
Culture Documents
Oblicon Memory Aid
Oblicon Memory Aid
PART I - OBLIGATION - An obligation is a juridical necessity to give, to do or not to do ELEMENTS: 1. Active subject ( obligee/creditor ) the one in whose favor the obligation is constituted 2. Passive subject ( obligor/debtor ) the one who has the duty of giving, doing or not doing 3. Object prestation; the conduct which has to be observed by the debtor/obligor 4. Vinculum Juris juridical/legal tie 5. Causa (causa debendi/causa obligationes) - why obligation exists Requisites of Object: a. licit - if illicit, it is void b. possible - if impossible, it is void c. determinate or determinable - or else, void d. pecuniary value SOURCES OF OBLIGATION:
2 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
when acquittal is due to reasonable doubt no civil liability when acquittal is due to exempting circumstances there is civil liability when there is preponderance of evidence there is civil liability
QUASI MALEFICIO ) - It is a fault or act of negligence ( or omission of care ) which causes damage to another, there being no pre-existing contractual relations between the parties Elements: a) There must be fault or negligence attributable to the person charged b) There must be damage or injury c) There must be a direct relation of cause and effect between the fault or negligence on the one hand and the damage or injury on the other hand ( proximate cause )
Note: The SC in Sagrada v. Naccoco implied that the sources of obligation in Art 1157 is exclusive. Many commentators believe, however that it should not be. At present, there is one more possible source of obligations - PUBLIC OFFER (Public Offer is in fact a source of obligation in the German Civil Code) EFFECTS OF OBLIGATION 1. Obligation to give - obligation to deliver the thing agreed upon 2. Obligation to do/not to do - obligation to do/not to do the service agreed upon ACCESSORY OBLIGATIONS: 1. Exercise diligence / Preserve the thing standard of care: that of a good father of a family unless the law or stipulation requires another standard of care 2. Delivery of fruits When does the right begin to exist : from the time to deliver arises a) when there is no term/condition from the perfection of the contract b) when there is a term/condition from the moment the term or condition arises
3 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
Remedies SPECIFIC PERFORMANCE EQUIVALENT PERFORMANCE SUBSTITUTE PERFORMANCE RESCISSION/ CANCELLATION X Obligation to give (Real Obligation) Specific generic
X X X X
Obligations to do (Personal Obligation) To do Not to do undo the things X already done Can only be demanded if obligation is not very X personal Undo the things X already done at debtor's expense
X
IRREGULARITY OF PERFORMANCE/BREACH A. CAUSES ATTRIBUTABLE TO DEBTOR 1. Contravention of tenor 2. Delay/ Mora - Non performance with respect to time Mora solvendi default on the part of the debtor; 2 kinds: (1) Mora Solvendi Ex re default in real obligations (2) Mora Solvendi Ex persona default in personal obligations Elements: (1) The obligation must be due, enforceable and already liquidated or determinate in amount (2) There must be non-performance (3) There must be a demand, unless demand is not required When demand is not necessary: (1) When law declares (2) When obligation expressly declares (3) When designation of time of delivery or rendering the service was a controlling motive (4) When demand would be useless as when debtor has rendered it beyond his powers to perform Effects: a. if determinate thing - debtor bears risk of loss (even when there is fortuitous event) b. debtor liable for damages/interest c. resolution (art 1170, in proper cases)
3.
Fraud / Dolo Voluntary execution of a wrongful act or willful omission, knowing and intending the effects which naturally and necessarily arise from such act or omission a. Causante ( causal ) - makes contract voidable b. incidente ( incidental ) - fraud in performance of obligation; does not affect validity of obligations Remedies of Person in fraud under obligations are: a. insist on specific performance (art 1233) b. resolve contract (art 1191) c. claim damages, in either case
4.
4 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
b) Diligence required per nature of obligation, circumstances of persons, time and place FRAUD DISTINGUISHED FROM NEGLIGENCE FRAUD NEGLIGENCE There is deliberate intention to cause There is no deliberate intention to cause damage. damage. Liability cannot be mitigated. Liability may be mitigated. Waiver for future fraud is void. Waiver for future negligence may be allowed in certain cases: a) gross can never be excused in advance; against public policy b) simple may be excused in certain cases B. CAUSES NOT ATTRIBUTABLE TO DEBTOR
5 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
1. 2. 3. Exact performance - specific, substitute, equivalent Attach and execute debtor's property which is not exempt (art 2236) Accion subrogatoria (art 1171) Requisites: a. Creditor must have right of return against debtor b. The debt is due and demandable c. There is a failure of the debtor to collect his own debt from 3rd persons either through malice or negligence d. Debtor's assets are insufficient e. The right of account is not purely personal Accion directa (arts 1729 & 1652) Accion pauliana Requisites: a. There is a credit in favor of plaintiff b. The debtor has performed an act subsequent to the contract, giving advantage to other persons c. The creditor is prejudiced by the debtor's act which are in favor of 3rd parties and rescission will benefit the creditor d. The creditor has no other legal remedy e. The debtor's acts are fraudulent
4. 5.
DIFFERENT KINDS OF OBLIGATIONS CATEGORIES: a. Demandability - pure, conditional or with a term b. Plurality of object - simple, alternative or facultative c. Plurality of subject - simple, joint or solidary d. Performance - divisible or indivisible e. Sanctions for breach - with or without a penal clause
(1) (2)
Conditional - A condition is a future and an uncertain event or a past event unknown to the parties Kinds: i. Suspensive happening of condition gives rise to obligation Effects: 1. effectivity is retroactive 2. no retroactivity with reference to fruits or interest & prescription 3. creditor may preserve rights 4. debtor recovery of payment by mistake or even w/o mistake Rules on loss, impairment, improvement of the subject matter pending the happening of suspensive condition/ term Loss/ Impairment Improvement w/ fault or at expense of obligor/ usufructuary Indemnity & damages specific performance rescission & damages If it improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary. (art 1189) Creditor to bear damages Creditor gets it
at
Extinguished
6 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
1. There is a suspensive condition 2. There is an obligation to deliver a determinate thing 3. There is loss, deterioration or improvement before the happening of the condition 4. The condition happens ii. Resolutory happening of condition extinguishes obligation Effects: 1. no retroactive effect 2. obligation extinguished 3. restore to each other what was received plus interest/fruits iii. Potestative dependent on sole will of 1 party; if on part of debtor & suspensive - void iv. Casual dependent on chance or hazard v. Mixed chance, or any of parties vi. With term a) Positive extinguished if time expires or indubitable of condition to happen b) Negative effective from moment of time elapsed or evident it can't happen vii. Impossible and illegal (1) To do - both the condition and the obligation are void (2) Not to do disregard the condition, the obligation is still valid Impossible condition physically not feasible Illegal condition prohibited by law, good custom, public policy and morals
(3)
With a period future & certain, past & uncertain, payable when able
When stipulation says payable when able it is with a period, remedy: a) agreement among parties b) court shall fix period of payment when parties unable to agree Kinds: a. Resolutory ( in diem ) takes effect at once but terminate upon arrival of the day certain; Day certain that which must necessarily come, although it may not be known when b. Suspensive ( ex die ) takes effect on the day stipulated WHEN COURTS MAY FIX PERIOD: a) art 1197 b) art 1197, 2nd paragraph c) art 1191, 3rd paragraph d) art 1687, 2nd, 3rd, 4th sentence e) art 1180 WHEN DEBTOR LOSES RIGHT TO PERIOD: a. insolvency of debtor, unless security provided b. did not deliver security c. impaired security- thru fault or fortuitous event d. violate undertaking in consideration of extension of period e. attempts to abscond (4). Facultative only one prestation has been agreed upon but another may be given in substitution Effect of loss or deterioration thru negligence, delay or fraud of obligor: a) of thing intended as substitute - no liability
7 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
b) of the substitute after substitution is made with liability (5). Alternative bound by different prestations but only one is due Right of choice: General rule: right of choice belongs to debtor a. the choice is with debtor (1) If only 1 is left either because of fortuitous events or due to debtor's acts, perform what is left. The effect is that the debtor loses the right of choice (2) if the choice is limited because of the creditor's acts, the debtor has the right of resolution and damages (3) if all are lost due to debtor, the creditor is entitled to damages (4) if some are lost, the debtor can choose from the remaining b. the choice is with creditor (1) if one or some are lost due to fortuitous event, the creditor chooses the remainder (2) if one or some is lost because of the fault of debtor, the creditor may choose either the remainder or the value of any which disappeared, and damages in either case (3) if all is lost due to the debtor's fault, the creditor may choose the value of any if some is lost due to debtor's fault, the creditor chooses the remainder (4) if all is lost due to fortuitous event, obligation is extinguished (5) if all is lost due to creditor's fault, the obligation is extinguished Requisites for making the choice: a) Made properly so that creditor or his agent will actually know b) Made with full knowledge that a selection is indeed being made c) Made voluntarily and freely d) Made in due time before or upon maturity e) Made to all proper persons f) Made w/o conditions unless agreed by the creditor g) May be waived, expressly or impliedly DISTINCTIONS BETWEEN ALTERNATIVE AND FACULTATIVE OBLIGATIONS ALTERNATIVE FACULTATIVE a) Various things are due but the giving a) Only one thing is due but a substitute may be principally of one is sufficient given to render payment/fulfillment easy b) If one of prestations is illegal, others b) If principal obligations is void and there is no may be valid but obligation remains necessity of giving the substitute; nullity of P carries with it nullity of S c) If it is impossible to give all except c) If it is impossible to give the principal, the one, the last one must still be given substitute does not have to be given; if it is impossible to give the substitute, the principal must still be given d) Right to choose may be given either d) The right of choice is given only to the debtor to debtor or creditor
(6)
Joint presumption when 2 or more creditors or 2 or more debtors concur in one and the same obligation Effects: a. Demand on one produces delay only with respect to the debt b. Interruption in payment by one does not benefit or prejudice the other c. Vices of one debtor to creditor has no effect on the others d. Insolvency of one debtor does not affect other debtors
(7)
8 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001 a. Active on the part of creditor or obligee
Effects: 1. Death of 1 solidary creditor transmits share to heirs (but collectively) 2. Each creditor represents the other in the act of recovery of payment 3. Credit is divided equally between creditors as among themselves 4. Debtor may pay any of the solidary creditors
c. Mixed on the part of the obligors and obligees, or the part of the debtors and
the creditors d. Conventional agreed upon by the parties e. Legal imposed by law Instances where law imposes solidary obligation: 1. obligations arising from tort 2. obligations arising from quasi-contracts 3. legal provisions regrading obligation of devisees and legatees 4. liability of principals, accomplices, and accessories of a felony 5. bailees in commodatum Effects: a. payment made before debt is due, no interest can be charged, otherwise interest can be charged b. insolvency of one others are liable for share pro-rata c. if different terms & conditions collect only what is due, later on collect from any d. no reimbursement if payment is made after prescription or became illegal d. remission made after payment is made co-debtor still entitled to reimbursement e. effect of insolvency or death of co-debtor still liable for whole amount f. fault of any debtor every one is responsible price, damage & interest g. complete/ personal defense total or partial ( up to amount of share only ) if not personal to him Effect of loss or impossibility of the prestation: a. if without fault no liability b. if with fault there is liability (also for damage and interest) c. loss due to fortuitous event after default there is liability (because of default)
(8)
Divisible obligation that is capable of partial performance a. execution of certain no of days work b. expressed by metrical units c. nature of obligation susceptible of partial fulfillment a. b. c. d. Indivisible one not capable of partial performance to give definite things not susceptible of partial performance provided by law intention of parties
(9)
9 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
1. Subsidiary - As a general rule, only penalty can be demanded, principal cannot be demanded, except: Penalty is joint or cumulative 2. Exclusive - takes place of damage, damage can only be demanded in the ff. cases: a. Stipulation granting right b. refusal to pay penalty c. with dolo ( not of creditor ) Causes for reduction of penalty: a. partial/irregular performance b. penalty provided is iniquitous/unconscionable EXTINGUISHMENT OF OBLIGATIONS Modes of Extinguishment of Obligation: 1. Payment or performance 2. Loss of the thing due 3. Condonation or remission of debt 4. Confusion or merger of rights 5. Compensation 6. Novation 7. Annulment 8. Rescission 9. Fulfillment of resolutory condition
10 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
PAYMENT TO A 3RD PARTY NOT AUTHORIZED, VALID IF PROVED & ONLY TO THE EXTENT OF BENEFIT; PRESUMED IF: 1. After payment, 3rd person acquires the creditors rights 2. Creditor ratifies payment to 3rd person 3. By creditors conduct, debtor has been led to make the payment (estoppel) PAYMENT MADE IN GOOD FAITH TO A PERSON IN POSSESSION OF CREDIT SHALL RELEASE DEBTOR, Requisites: 1. Payment by debtor must be made in good faith 2. Creditor must be in possession of the credit & not merely the evidence of indebtedness C. With respect to time and place of payment - must be according to the obligation Where payment should be made: 1. In the place designated in the obligation 2. If there is no express stipulation and the undertaking is to deliver a specific thing at the place where the thing might be at the moment the obligation was constituted 3. In other case in the place of the domicile of the debtor Time of payment - time stipulated Effect of payment extinguish obligation Except: order to retain debt SUBSTANTIAL PERFORMANCE 1. Attempt in Good Faith to perform without willful or intentional departure 2. Deviation is slight 3. Omission/Defect is technical or unimportant 4. Must not be so material that intention of parties is not attained Effect of Substantial performance in good faith 1. Obligor may recover as though there has been strict and complete fulfillment, less damages suffered by the obligee 2. Right to rescind cannot be used for slight breach SPECIAL RULES/FORMS OF PAYMENT - Special Forms:
11 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
2. If not, creditor makes it by so stating in the receipt that he issues unless there is cause for invalidating the contract 3. If neither the debtor nor creditor has made the application or if the application is not valid, then application, is made by operation of law WHO MAKES APPLICATION: General Rule: Debtor Exception: Creditor a) Debtor without protest accepts receipt in which creditor specified expressly and unmistakably the obligation to which such payment was to be applied debtor in this case renounced the right of choice b) When monthly statements were made by the bank specifying the application and the debtor signed said statements approving the status of her account as thus sent to her monthly by the bank IN CASE NO APPLICATION HAS BEEN MADE 1. Apply payment to the most onerous 2. If debts are of the same nature and burden, application shall be made to all proportionately
d. Consignation
Tender -the act of offering the creditor what is due him together with a demand that the creditor accept the same (When creditor refuses w/o just
12 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
cause to accept payment, he becomes in mora accepiendi & debtor is released from responsibility if he consigns the thing or sum due) Consignation the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment; generally requires prior tender of payment REQUISITES OF VALID CONSIGNATION: (1) Existence of valid debt (2) Consignation was made because of some legal cause - previous valid tender was unjustly refused or circumstances making previous tender exempt (3) Prior Notice of Consignation had been given to the person interested in performance of obligation (1st notice) (4) actual deposit/Consignation with proper judicial authorities (5) subsequent notice of Consignation (2nd notice) Effects: Extinguishment of obligation (1) Debtor may ask judge to order cancellation of obligation (2) Running of interest is suspended (3) Before creditor accepts or before judge declares consignation has been properly made, obligation remains ( debtor bears risk of loss at the meantime, after acceptance by creditor or after judge declares that consignation has been properly made risk of loss is shifted to creditor) Consignation w/o prior tender allowed in: 1. creditor absent or unknown/ does not appear at the place of payment 2. incapacitated to receive payment at the time it is due 3. refuses to issue receipt w/o just cause 4. 2 or more creditor claiming the same right to collect 5. title of obligation has been lost 2.LOSS OF THE THING DUE partial or total/ includes impossibility of performance WHEN IS THERE A LOSS: 1) When the object perishes (physically) 2) When it goes out of commerce 3) When it disappears in such a way that: its existence is unknown or it cannot be recovered WHEN IS THERE IMPOSSIBILITY OF PERFORMANCE 1) Physical impossibility 2) Legal impossibility : (a) Directly caused as when prohibited by law (b) Indirectly caused as when debtor is required to enter a military draft OBLIGATION TO DELIVER A SPECIFIC THING General Rule: Extinguished Exceptions: a) Debtor is at fault b) Debtor is made liable for fortuitous event because of a provision of law, contractual stipulation or the nature of the obligation requires assumption of risk on part of debtor OBLIGATION TO DELIVER A GENERIC THING General Rule: Not extinguished Exceptions: a) if the generic thing is delimited
13 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
b) if the generic thing has already been segregated c) monetary obligation OBLIGATION TO DO General Rule: Debtor is released when prestation becomes legally or physically impossible without fault on part of debtor EFFECT OF PARTIAL LOSS ( judicial determination of extent is necessary) a) when loss is significant may be enough to extinguish obligation b) when loss insignificant not enough to extinguish obligation WHEN THING IS LOST IN THE POSSESSION OF THE DEBTOR Presumption: Loss due to debtors fault ( disputable ) Exception: natural calamity, earthquake, flood, storm 3. REBUS SIC STANTIBUS - agreement is valid only if the same conditions prevailing at time of contracting continue to exist at the time of performance EFFECT OF DIFFICULTY BEYOND PARTIES CONTEMPLATION Rule: Obligor may be released in whole or in part REQUISITES: The event or change could not have been forseen at the time of the execution of the contract (a) The performance is extremely difficult, but not impossible (because if it is impossible, it is extinguished by impossibility) (b) The event was not due to the act of any of the parties (c) The contract is for a future prestation 4. CONDONATION/REMISSION OF THE DEBT gratuitous abandonment of debt; right to claim; donation; rules of donation applies; express or implied REQUISITES: a. There must be an agreement b. There must be a subject matter (object of the remission, otherwise there would be nothing to condone) c. Cause of consideration must be liberality (Essentially gratuitous, an act of liberality ) d. Parties must be capacitated and must consent; requires acceptance by obligor; implied in mortis causa & expressed inter vivos e. Formalities of a donation are required in the case of an express remission f. Revocable subject to rule on inofficious donation ( excessive, legitime is impaired ) & ingratitude & condition not followed g. Obligation remitted must have been demandable at the time of remission h. Waivers or remission are not to be presumed generally Forms: Extent: a. Express formalities a. total of donation b. Implied conduct is b. partial sufficient Kinds: a. Principal accessory also condoned b. accessory principal still outstanding c. accessory oblig. Of pledge condoned; presumption only, rebuttable Requisites of Implied: 1. voluntary delivery presumption; when evidence of indebtedness is w/ debtor presumed voluntarily delivery by creditor; rebuttable
14 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
2. effect of delivery of evidence of indebtedness is conclusion that debt is condoned already conclusion; voluntary delivery of private document a. if in hands of joint debtor only his share is condoned b. if in hands of solidary debtor - whole debt is condoned c. Tacit voluntary destruction of instrument by creditor; made to prescribe w/o demanding 5. CONFUSION OR MERGER OF RIGHTS character of debtor & creditor is merged in same person with respect to same obligation REQUISITES: a. It must take place between principal debtor & principal creditor only b. Merger must be clear & definite c. The obligation involved must be same & identical one obligation only d. Revocable, if reason for confusion ceases, the obligation is revived 6. COMPENSATION Set off; it is a mode of extinguishment to the concurrent amount the obligation of persons who are in their own right reciprocally debtors or creditors REQUISITES: a. Both parties must be mutually creditors and debtors - in their own right and as principals b. Both debts must consist in sum of money or if consumable , of the same kind or quality c. Both debts are due d. Both debts are liquidated & demandable (determined) e. Neither debt must be retained in a controversy commenced by 3rd person & communicated w/ debtor (neither debt is garnished) Kinds: a. legal by operation of law; as long as 5 requisites concur- even if unknown to parties & if payable in diff places; indemnity for expense of exchanges; even if not equal debts only up to concurring amount b. conventional agreement of parties is enough, forget other requirement as long as both consented c. facultative one party has choice of claiming/opposing one who has benefit of period may choose to compensate - not all requisites are present - depositum; commodatum; criminal offense; claim for future support; taxes d. judicial set off; upon order of the court; needs pleading & proof; all requirements must concur except liquidation e. total when 2 debts are of the same amount f. partial when 2 debts are not of the same amount Effect of assignment of credit to 3rd person; can there still be compensation a. if made after compensation took place no effect; compensation already perfected b. if made before compensation took place depends 1. with consent of debtor debtor is estopped unless he reserves his right & gave notice to assignee 2. with knowledge but w/o consent of debtor compensation may be set up as to debts maturing prior to assignment 3. w/o knowledge compensation may be set-up on all debts prior to his knowledge 7. NOVATION extinguishment of obligation by creating/ substituting a new one in its place a. changing object or principal conditions b. substituting person of debtor
15 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001 c.
subrogating 3rd person in right of creditor
REQUISITES: a. valid obligation b. intent to extinguish old obligation expressed or implied: completely/substantially incompatible old and new obligation on every point c. capacity & consent of parties to the new obligation d. valid new obligation EFFECT OF NOVATION: a. extinguishment of principal carries accessory, except: stipulation to contrary stipulation pour autri unless beneficiary consents modificatory novation only; obliged to w/c is less onerous old obligation is void b. old obligation subsists if: new obligation is void or voidable but annulled already ( except: intention of parties ) c. if old obligation has condition if Resolutory & it occurred old obligation already extinguished; no new obligation since nothing to novate if suspensive & it never occurred as if no obligation; also nothing to novate d. if old obligation has condition, must be compatible with the new obligation; if new is w/o condition deemed attached to new e. if new obligation has condition if resolutory: valid if suspensive & did not materialize: old obligation is enforced KINDS:
2.
subrogating 3rd person to rights of creditor ( active ) a. conventional- agreement & consent of all parties; clearly established b. legal- takes place by operation of law; no need for consent; not presumed except as provided for in law: presumed when1. creditor pays another preferred creditor even w/o debtors knowledge 2. 3rd person not interested in obligation pays w/ approval of debtor 3. person interested in fulfillment of obligation pays debt even w/o knowledge of debtor
16 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
Difference from payment by 3rd person 1. debtor is not nec. Released from debt 2. can be done w/o consent of creditor 3. 1 obligation 4. 3rd person has no oblig. to pay if insolvent Change of debtor 1. debtor is released 2. needs consent of creditor express or implied 3. 2 obligations; 1 is extinguished & new one created 4. new debtor is obliged to pay
PART II - CONTRACTS -meeting of minds bet 2 parties whereby one binds himself with respect to other to give something or render some service PRINCIPAL CHARACTERISTICS: 1. Autonomy of wills parties may stipulate anything as long as not illegal, immoral, etc. 2. Mutuality performance or validity binds both parties; not left to will of one of parties 3. Obligatory Force parties are bound from perfection of contract: a. fulfill what has been expressly stipulated b. all consequences w/c may be in keeping with good faith, usage & law 4. Relativity binding only between the parties, their assigns, heirs; strangers cannot demand enforcement EXCEPTION TO RELATIVITY: a. Accion pauliana b. Accion directa c. Stipulation pour autrui REQUISITES OF STIPULATION POUR AUTRUI (1) Parties must have clearly and deliberately conferred a favor upon a 3rd person (2) The stipulation in favor of a 3rd person should be a part of, not the whole contract (3) That the favorable stipulation should not be conditioned or compensated by any kind of obligation whatsoever (4) Neither of the contracting parties bears the legal representation or authorization of 3rd party (5) The third person communicates his acceptance before revocation by the original parties d. Art 1312 e. Art 1314 REQUISITES OF ART 1312: (1) Existence of a valid contract (2) Knowledge of the contract by a 3rd person (3) Interference by the 3rd person KINDS OF CONTRACTS As to perfection or formation: 1. consensual perfected by agreement of parties 2. real perfected by delivery ( commodatum, pledge, deposit ) 3. formal/solemn perfected by conformity to essential formalities ( donation ) As to cause 1. Onerous with valuable consideration 2. Gratuitous founded on liberality 3. Remunerative prestation is given for service previously rendered not as obligation
17 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
As to importance or dependence of one upon another 1. principal contract may stand alone 2. accessory depends on another contract for its existence; may not exist on its own 3. Preparatory not an end by itself; a means through which future contracts may be made As to parties obliged: 1. Unilateral only one of the parties has an obligation 2. Bilateral both parties are required to render reciprocal prestations As to name or designation: 1. Nominate 2. Innominate a) Do ut des I give that you may give b) Do ut facias I give that you may do c) Facio ut des I do that you may give d) Facio ut facias I do that you may do STAGES IN A CONTRACT: 1. Preparation - negotiation 2. perfection/birth 3. consummation performance ESSENTIAL ELEMENTS: 1. Consent meeting of minds between parties on subject matter & cause of contract; concurrence of offer & acceptance Requirements: a. Plurality of subject b. Capacity c. Intelligence and free will d. Manifestation of intent of parties e. Cognition by the other party f. Conformity of manifestation and cognition Note: We follow the theory of cognition and not the theory of manifestation. Under our civil law, the offer and acceptance concur only when the offeror comes to know, and not when the offeree merely manifests his acceptance ELEMENTS OF VALID OFFER a. definite b. complete c. intentional ELEMENTS OF VALID ACCEPTANCE a. unequivocal b. unconditional
WHEN OFFER BECOMES INEFFECTIVE: 1. death, civil interdiction, insanity or insolvency of either party before acceptance is conveyed 2. express or implied revocation of the offer by the offeree 3. qualified or conditional acceptance of the offer 4. subject matter becomes illegal or impossible before acceptance is communicated PERIOD FOR ACCEPTANCE 1. stated fixed period in the offer 2. no stated fixed period a) offer is made to a person present acceptance must be made immediately b) offer is made to a person absent acceptance may be made within such time that, under normal circumstances, an answer can be received from him
18 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
OPTION - option may be withdrawn anytime before acceptance is communicated but not when supported by a consideration other than purchase price: option money Note: Ang Yu v. CA (1994) states that a unilateral promise to buy or sell, if not supported by a distinct consideration, may be withdrawn but may not be done whimsically or arbitrarily; the right of the grantee here is damages and not specific performance; Equatorial v. Mayfair(264 SCRA 483) held that an option clause in order to be valid and enforceable must indicate the definite price at which the person granting the option is willing to sell, contract can be enforced and not only damages; Paranaque Kings V CA (1997) states that right of first refusal may be enforced by specific performance. PERSONS WHO CANNOT GIVE CONSENT TO A CONTRACT: 1. Minors 2. Insane or demented persons 3. Illiterates/ deaf-mutes who do not know how to write 4. Intoxicated and under hypnotic spell 5. Art 1331 - person under mistake; mistake may deprive intelligence 6. Art 1338 - person induced by fraud (dolo causante) Note: Dolus bonus (usual exaggerations in trade) are not in themselves fraudulent RULE ON CONTRACTS ENTERED INTO BY MINORS General Rule: VOIDABLE EXCEPTIONS: 1. Upon reaching age of majority they ratify the same 2. They were entered unto by a guardian and the court having jurisdiction had approved the same 3. They were contracts for necessities such as food, but here the persons who are bound to give them support should pay therefor 4. Minor is estopped for having misrepresented his age and misled the other party (when age is close to age of majority as in the Mercado v Espiritu & Sia Suan v Alcantara cases) Note: In the Sia Suan v Alcantara case, there is a strong dissent by J.Padilla to the effect that the minor cannot be estopped if he is too young to give consent; one that is too young to give consent is too young to be estopped. Subsequently, in Braganza v Villa-Abrille, the dissent became the ruling. Minors could not be estopped DISQUALIFIED TO ENTER INTO CONTRACTS: ( contracts entered into are void ) 1. those under civil interdiction 2. hospitalized lepers 3. prodigals 4. deaf and dumb who are unable to read and write 5. those who by reason of age, disease, weak mind and other similar causes, cannot without outside aid, take care of themselves and manage their property, becoming an easy prey for deceit and exploitation CAUSES WHICH VITIATE FREEDOM 1. violence REQUISITE: a. Irresistable physical force b. Such force is the determining cause for giving consent 2. Intimidation
19 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
REQUISITE: a. Determining cause for the contract b. Threatened act is unjust and unlawful c. Real and serious d. Produces a well grounded fear that the person making it will carry it over 3. undue influence SIMULATED CONTRACTS a. absolute no intention to be bound at all, fictitious only void from beginning b. relative there is intention to be bound but concealed; concealed contract binds: 1. no prejudice to 3rd persons 2. not contrary to law, morals, etc.
4. FORM in some kind of contracts only as contracts are generally consensual; form
is a manner in which a contract is executed or manifested a. Informal may be entered into whatever form as long as there is consent, object & cause b. Formal required by law to be in certain specified form such as: donation of real property, stipulation to pay interest, transfer of large cattle, sale of land thru agent, contract of antichresis, contract of partnership, registration of chattel mortgage, donation of personal prop in excess of 5,000
20 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
c. Real creation of real rights over immovable prop must be written WHEN FORM IS IMPORTANT: 1) for validity (formal/solemn contracts) 2) for enforceability (statute of frauds) 3) for convenience General Rule: contract is valid & binding in whatever form provided that 3 essential requisites concur Exception: a. Law requires contract to be in some form for validity - donation & acceptance of real property b. Law requires contract to be in some form to be enforceable - Statute of Frauds; contract is valid but right to enforce cannot be exercised; need ratification to be enforceable
c. Law requires contract to be in some form for convenience - contract is valid &
enforceable, needed only to bind 3rd parties ex: public documents needed for the ff: 1. contracts w/c object is creation, transmission or reformation of real rights over immovables 2. cession, repudiation, renunciation of hereditary rights/CPG 3. power to administer property for another 4. cession of action of rights proceeding from an act appearing in a public inst. 5. all other docs where amount involved is in excess of 500 ( must be written even private docs ) REFORMATION OF CONTRACTS remedy to conform to real intention of parties due to mistake, fraud, inequitable conduct, accident CAUSES/GROUNDS: a. mutual: instrument includes something w/c should not be there or omit what should be there mutual mistake of fact clear & convincing proof causes failure of instrument to express true intention b. unilateral one party was mistaken other either acted fraudulently or inequitably or knew but concealed party in good faith may ask for reformation c. mistake by 3rd persons due to ignorance, lack of skill, negligence , bad faith of drafter, clerk, typist d. others specified by law to avoid frustration of true intent REQUISITES: 1. there is a written instrument 2. there is meeting of minds 3. true intention not expressed in instrument 4. clear & convincing proof 5. facts put in issue in pleadings Note: prescribes in 10 years from date of execution of instrument WHEN NOT AVAILABLE: a. simple donation inter vivos b. wills c. when real agreement is void
21 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
d. estoppel; when party has brought suit to enforce it
2. VOIDABLE CONTRACTS intrinsic defect; valid until annulled; defect is due to vice
of consent or legal incapacity CHARACTERISTICS: a. Effective until set aside b. May be assailed or attacked only in an action for that purpose c. Can be confirmed ( Note: CONFIRMATION IS THE PROPER TERM FOR CURING THE DEFECT OF A VOIDABLE CONTRACT) d. Can be assailed only by the party whose consent was defective or his heirs or assigns WHAT CONTRACTS ARE VOIDABLE: a. THOSE WHERE ONE OF THE PARTIES IS INCAPABLE OF GIVING CONSENT TO A CONTRACT (legal incapacity) (1) minors ( below 18 ) (2) insane unless acted in lucid interval
22 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
(3) (4) (5) (6) deaf mute who cant read or write persons specially disqualified: civil interdiction in state of drunkenness in state of hypnotic spell
b. THOSE WHERE THE CONSENT IS VITIATED BY MISTAKE, VIOLENCE, INTIMIDATION, UNDUE INFLUENCE OR FRAUD (vice of consent)
(1)
REQUISITES: 1. Refers to the subject of the thing which is the object of the contract 2. Refers to the nature of the contract 3. Refers to the principal conditions in an agreement 4. Error as to person - when it is the principal consideration of the contract 5. Error as to legal effect - when mistake is mutual and frustrates the real purpose of parties
(2) (3)
intimidation one party is compelled by a reasonable & well-grounded fear of an imminent & grave danger upon person & property of himself, spouse, ascendants or descendants (moral coercion) undue influence person takes improper advantage of his power over will of another depriving latter of reasonable freedom of choice fraud thru insidious words or machinations of contracting parties, other is induced to enter into contract w/o w/c he will not enter (dolo causante)
(4) (5)
EFFECTS OF ANNULMENT: 1. Obligation to give mutual restitution 2. Obligation to do value of service PRESCRIPTION IN ACTION FOR ANNULMENT OF VOIDABLE CONTRACTS: Intimidation/Violence/undue Influence 4 years from time defect of consent ceases Mistake/Fraud 4 years from time of discovery Contracts entered into by 4 years from time guardianship ceases minors/incapacitated persons
23 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
b. Special promise to answer for debt, default or miscarriage of another c. Agreement made in consideration of promise to marry d. Agreement for sale of goods, chattels or things in action at price not less than 500; exception: auction when recorded sale in sales book e. Agreement for lease of property for more than 1 year & sale of real property regardless of price f. Representation as to credit of another 2 WAYS OF CURING UNENFORCEABLE CONTRACTS: 1. Failure of defendant to object in time, to the presentation of parole evidence in court, the defect of unenforceability is cured 2. Acceptance of benefits under the contract. If there is performance in either part and there is acceptance of performance, it takes it out of unenforceable contracts; also estoppel sets in by accepting performance, the defect is waived
1)
Those lacking in essential elements: no consent, no object, no cause (inexistent ones) essential formalities are not complied with ( ex: donation propter nuptias should conform to formalities of a donation to be valid ) (a) Those w/c are absolutely simulated or fictitious no cause (b) Those which cause or object did not exist at the time of the transaction no cause/object (c) Those whose object is outside the commerce of man no object (d) Those w/c contemplate an impossible service no object (e) Those w/c intention of parties relative to principal object of the contract cannot be ascertained 2) Prohibited by law (f) Those expressly prohibited or declared void by law - Contracts w/c violate any legal provision, whether it amounts to a crime or not
3)
Illegal/Illicit ones Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy ; Ex: Contract to sell marijuana KINDS OF ILLEGAL CONTRACTS CONTRACT CONSTITUTE CONTRACT DOES NOT CRIMINAL OFFENSE CONSTITUTE CRIMINAL OFFENSE BUT IS ILLEGAL OR UNLAWFUL PER SE Parties are in No action for specific No action for specific pari delicto performance performance No action for restitution on No action for restitution on either side. The law will leave either side. The law will leave you where you are you where you are
24 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
Only one party is guilty Both shall be prosecuted Thing/price to be confiscated in favor of government No action for specific performance Innocent party is entitled to restitution Guilty party is not entitled to restitution Guilty party will be prosecuted Instrument of crime will be confiscated in favor of govt No confiscation
No action for specific performance Innocent party is entitled to restitution Guilty party is not entitled to restitution
PARI DELICTO DOCTRINE -both parties are guilty, no action against each other; those who come in equity must come with clean hands; applies only to illegal contracts & not to inexistent contracts; does not apply when a superior public policy intervenes EXCEPTION TO PARI DELICTO RULE 1. If purpose has not yet been accomplished & If damage has not been caused to any 3rd person Requisites: a) contract is for an illegal purpose b) contract must be repudiated by any of the parties before purpose is accomplished or damage is caused to 3rd parties c) court believes that public interest will be served by allowing recovery (discretionary upon the court ) based on remorse; illegality is accomplished when parties entered into contract; before it takes effect party w/c is remorseful prevents it 2. Where laws are issued to protect certain sectors: consumer protection, labor, usury law a) Consumer protection if price of commodity is determined by statute, any person paying an amount in excess of the maximum price allowed may recover such excess b) Labor if law sets the minimum wage for laborers, any laborer who agreed to receive less may still be entitled to recover the deficiency; if law set max working hours & laborer who undertakes to work longer may demand additional compensation c) Interest paid in excess of the interest allowed by the usury law may be recovered by debtor with interest from date of payment 3. If one party is incapacitated, courts may allow recovery of money, property delivered by incapacitated person in the interest of justice; pari delicto cannot apply because an incapacitated person does not know what he is entering into; unable to understand the consequences of his own action 4. If agreement is not illegal per se but merely prohibited & prohibition is designated for the protection of the plaintiff may recover what he has paid or delivered by virtue of public policy MUTUAL RESTITUTION IN VOID CONTRACTS General Rule: parties should return to each other what they have given by virtue of the void contract in case where nullity arose from defect in essential elements 1. return object of contract & fruits 2. return price plus interest
25 CIVIL LAW (OBLIGATIONS AND CONTRACTS) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001
Exception: No recovery can be had in cases where nullity of contract arose from illegality of contract where parties are in pari delicto; except: a. incapacitated not obliged to return what he gave but may recover what he has given b. other party is less guilty or not guilty