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Creditors rights if debtor fails to comply w/ the 4. Contrary to the terms of obligation
obligation
1. Determinate 2 RULES OF PRINCIPAL & INSTALLMENT
a. Performance 1. Receipt of principal w/o mention of interest,
b. Damages presumed interest is paid also.
2. Generic 2. Receipt of latter installment w/o mention of prior
a. Performance installment, presumed prior installment is paid also.
b. Damages
c. Obligation be complied at debtors expense 4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy
claim against DEBTOR
Creditors rights if debtor does in contravention 1. Exact payment
1. Damages 2. Attach debtors properties
2. Ask it be UNDONE at debtors expense 3. Accion subrogatoria exercise rights & actions
except inherent in person
FORTUITOUS EVENT cannot be foreseen, if 4. Accion pauliana cancel acts/contracts by debtor to
foreseen, inevitable defraud creditor
General Rule: No person liable to fortuitous event.
Exceptions: TRANSMISSIBILITY OF RIGHTS
1. Law states General Rule: ALL RIGHTS are transmissible.
2. Stipulation/contract states Exceptions:
3. Assumption of risk 1. Law states
4. Delay 2. Contract states
5. Debtor promises deliver to 2/more persons who do 3. Obligation is purely personal
not have same interest (bad faith)
10 Kinds of Obligation
EFFECTS OF FORTUITOUS EVENT to thing to be 1. Pure
delivered 2. Conditional
- extinguish the obligation if determinate; generic does 3. Alternative
not extinguish the obligation 4. Facultative
5. Joint
3 MISCELLANEOUS RULES ON PERFORMANCE OF 6. Solidary
OBLIGA-TION 7. Divisible
1. When to deliver determinate, accessions (additions/ 8. Indivisible
improvements) and accessories (joined/included with 9. Obligation w/ a period
the principal) are INCLUDED even not mentioned. 10. Obligation w/ a penal clause
1. PURE OBLIGATION
- w/o condition, demandable at once (pure has 1. Little by little
resolutory condition/period) 2. In partial payment
3. Payable ASAP
2. CONDITIONAL OBLIGATION 4. When I can afford it
- there is condition in performance; future & uncertain 5. When I have the money
2Kinds 6. When I am able to
a. Suspensive condition happening of condition 7. When my means permit me to do so
gives RISE to obligation
b. Resolutory condition happening of condition PERIOD CONDITION
EXTINGUISHES obligation certain uncertain
future only future/past but unknown
6 MISCELLANEOUS RULES ON CONDITIONAL (*influence upon obligation) (*) on the very existence of
OBLIGATION only upon its demandability obligation itself
1. Impossible conditions, contrary to law, shall ANNUL
obligation.
FOR WHOSE BENEFIT IS THE PERIOD?
2. The condition not to do an impossible thing is
General Rule: Both the debtor & creditor.
considered not agreed upon.
Therefore, NEITHER of them can demand performance
3. The condition that happens in determinate time,
of obligation.
EXTINGUISHES obligation.
Exception: If the term of obligation has to favor one of
4. The condition that happens in INDETERMINATE time,
them.
obligation only effective at arrival.
5. The condition is fulfilled if DEBTOR prevents
5 INSTANCES WHEN DEBTOR LOSES RIGHT TO
fulfillment.
USE PERIOD
6. The effect of conditional obligation, once fulfilled:
1. Debtor is insolvent.
- to give: retroact to the day of constitution of
2. Debtor attempts to abscond.
obligation
3. Impairment of guarantees/securities.
- has reciprocal prestations: fruits & interests be
4. Failure to furnish guarantees/securities promised.
mutually compensated
5. Violation of undertaking.
- has unilateral obligation: debtor shall give fruits &
interests
4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
RULES in case of Loss, Improvement, or
Deterioration of thing during the pendency of
5. FACULTATIVE OBLIGATION
condition
- w/ ONLY 1 prestation but can be substituted.
1. LOST
a. w/ debtors fault damages
ALTERNATIVE prestations LOST w/ debtors fault
b. w/o debtors fault extinguishes obligation
Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
2. DETERIORATION
2. All prestations lost/become impossible due to
a. w/ debtors fault - (1) cancel obligation & damages;
debtors fault.
or (2) fulfill obligation w/ damages
b. w/o debtors fault creditor suffer impairment
ALTERNATIVE FACULTATIVE OBLIGATION
OBLIGATION
3. IMPROVEMENT
a. By nature/time benefit to creditor several prestations due, one prestation due, but can
b. at expense of debtor debtor no right than that giving one is sufficient be subtituted
granted to usufructuary (debtor no right to compensate right to choose (debtor) right to choose DEBTOR
amount for improvement) unless granted to creditor ONLY
If 1 of the prestation is nullity of principal carries w/
EFFECTS OF FULFILLMENT OF SUSPENSIVE illegal, others may be valid, it nullity of accessory/
CONDITION obligation remains substitute
General Rule: The obligation becomes effective loss/impossibility of ALL loss/impossibility of presta-
retroactively to the day obligation was constituted. prestations due, w/o tion due, w/o debtors fault,
Exceptions: debtors fault, extinguishes extinguishes obligation
1. In reciprocal obligation, fruits & interests during obligation
pendency of condition shall compensate each other.
2. In unilateral obligation, debtor gets fruits & interests (3) SUMMARY OF RULES, OBLIGATIONS, &
unless there is a contrary intent. RIGHTS OF DEBTOR IN ALTERNATIVE OBLIGATION
1. If 1 of prestations lost through fortuitous event, shall
3 EFFECTS OF FULFILLMENT OF RESOLUTORY still be perform by choosing (creditor) from the
CONDITION remainder.
1. Extinguish obligation. 2. If 1 of prestations lost through debtors fault,
2. Both parties restore what they received plus fruits & creditor may claim any of remainders w/ damages.
interests. 3. If ALL prestations lost through debtors fault, creditor
3. The rule on L, D, or I will apply to person who has to choose price w/ damages.
return the thing.
When one of debtors in reciprocal obligation RULES on LOSS/DETERIORATION of the thing
does not comply w/ his obligation intended as SUBSTITUTE in FACULTATIVE
1. The right of injured party is (1) cancel contract & OBLIGATION
damages; or (2) fulfill obligation & damages 1. If there is a loss/deterioration of thing intended as
substitute, debtor is NOT liable if NOT HIS FAULT.
3 Kinds of Obligation (Accdng to PERSON But if substitution is already made, debtor is liable for
OBLIGED) loss of substitute when in DELAY, NEGLIGENCE, or
1. UNILATERAL only 1 party obliged to comply FRAUD.
2. BILATERAL both parties; performance not same
time 6. JOINT OBLIGATION
3. RECIPROCAL both parties; performance same time - obligation is to be paid proportionately by debtors or
to be demanded proportionately by creditors
3. OBLIGATION W/ A PERIOD
- demandability/extinguishment subject to the 7. SOLIDARY OBLIGATION
expiration of period - each one of debtors has right to render or each one of
creditors has right to demand the entire compliance w/
PERIOD interval of time; either suspends prestation
demandability or produces extinguishment
MAXIMS & SYNONYMS
DAY CERTAIN must come, not known when MAXIMS SYNONYMS
JOINT Obligation To each his own proportionate
7 CASES CONSIDERED TO BE OBLIGATION W/ A SOLIDARY One for all, all individually &
PERIOD
Obligation for one collectively 3. If debtor accepts the receipt, he cannot complain
unless THERE IS just cause to invalidate the contract.
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
1. Law states b. CESSION
2. Stipulation states - debtor abandons ALL his property for creditors
3. Nature of obligation requires benefit to obtain payment from proceeds of his
property
2 PRESUMPTIONS THAT OBLIGATION IS JOINT
1. The debts be divided as many shares as there are 5 REQUISITES OF VALID CESSION
debtors/creditors. 1. 1 debtor & 2 or more creditors
2. The debtors/creditors are distinct from one another. 2. Debtor is in partial/total insolvency.
3. Debtor to deliver ALL his property to creditors
8. DIVISIBLE OBLIGATION 4. Debt is due & demandable.
- prestation is capable of partial performance 5. Creditors must sell the properties & apply the
proceeds to their respective credits proportionately.
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance c. DACION IN PAYMENT (dacion en pago)
- alienation of property to the creditor in satisfaction of
10. OBLIGATION W/ A PENAL CLAUSE debt
- one w/ accessory undertaking attached to obligation
to assume greater liablity in case of breach/non- 3 REQUISITES OF DACION IN PAYMENT
fulfillment of obligation 1. Consent of creditor
2. NOT prejudicial to another creditor
3 PURPOSES OF PENAL CLAUSE 3. Debtor not insolvent declared by a judicial decree
1. Ensure performance of obligation
2. Substitute for damages & interest in case of CESSION DACION IN PAYMENT
noncompli-ance all properties NOT all properties
3. Penalize debtor in case of breach require more than 1 creditor NOT require all creditors
NOT act of novation act of novation
In case obligation has a PENAL CLAUSE NOT transfer ownership transfer ownership
General Rule: Penalty takes the place of damages & requires partial/total insol- may happen
interest in case of non-compliance. vency during solvency of debtor
Exceptions:
1. Stipulation states.
d. TENDER OF PAYMENT & CONSIGNATION
2. Debtor refuse to pay penalty.
TENDER OF PAYMENT act of offering the creditor
3. Debtor guilty of fraud in performance of obligation.
what is due to him w/ a demand that the creditor
accept it
NULLITY OF PRINCIPAL OBLIGATION OR THE
CONSIGNATION act of depositing thing due w/ the
PENAL CLAUSE
court when creditor cannot/refuses acceptance of
Nullity of principal obligation = nullity of penal clause
payment
Nullity of penal clause = NOT nullity of principal
obligation
5 REQUISITES OF CONSIGNATION
1. Debt due.
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
2. Creditor refused the tender of payment w/o just
1. Payment or performance
cause
2. Prescription
3. Notice of consignation already given to persons
3. Compensation
interested in fulfillment of obligation
4. Confusion/merger
4. Consignation of thing/amount due
5. Condonation/remission
5. Subsequent notice of consignation to interested
6. Fulfillment of resolutory condition
persons
7. Annulment
8. Rescission
5 VALID CONSIGNATION W/O PREVIOUS TENDER
9. Novation
OF PAYMENT
10. Loss of thing due
1. Creditor is absent/unknown.
2. Creditor is incapacitate to receive at time it is due.
1. PAYMENT/PERFORMANCE
3. Creditor refused give a receipt, w/o just cause.
- Payment means delivery of money & performance of
4. 2 or more persons claim the right to collect.
obligation
5. Title of obligation lost.
2 PLACE OF PAYMENT
2. LOSS OF THING DUE
1. At place agreed upon
- perishes, disappears, or goes out of commerce;
2. If w/o agreement
existence is unknown; cannot be recovered
a. Object is indeterminate paid at domicile of DEBTOR
b. Object is determinate place of thing at the time of
3 REQUISITES TO EXTINGUISH OBLIGATION DUE
constitution of obligation
TO LOSS
1. Determinate thing.
4 SPECIAL MODES OF PAYMENT
2. W/o debtors fault.
a. Application of payment
3. No delay.
b. Cession
c. Tender of payment & consignation
3. CONDONATION/REMISSION
d. Dacion in payment
- gratuitous abandonment of right by the creditor
a. APPLICATION OF PAYMENT
3 REQUISITES OF A VALID
- designation of debt to w/c payment must be
CONDONATION/REMISSION
applied when debtor has several obligations of same
1. It must be gratuitous.
kind in favor of same creditor.
2. Accepted by obligor.
3. Obligation is demandable.
3 REQUISITES OF APPLICATION OF PAYMENT
1. Only 1 debtor & 1 creditor
4. CONFUSION/MERGER
2. 2 or more debts, same kind
- meeting in 1 person of qualities of debtor & creditor
3. All debts are due
w/ same obligation
4. Insufficient payment to exinguish ALL debts
3 REQUISITES OF VALID CONFUSION/MERGER
3 RIGHTS TO MAKE APPLICATION OF PAYMENT
1. The merger of characters of debtor & creditor must
1. Right belongs to CREDITOR.
be in same person.
2. If debtor does not avail, creditor can give him receipt
2. Take place between principal debtor & creditor.
designating the debt from which payment will be
3. Clear & definite.
applied.
5. COMPENSATION 3. ACCIDENTAL various particular stipulations that
- 2 persons are debtors & creditors of each other may be agreed upon by contracting parties
3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the parties, their
CONTRACT meeting of minds between 2 persons to assigns & heirs except when there are rights &
give something or to render service. obligations not transmissible:
a. by their nature
3 ELEMENTS OF CONTRACT b. by stipulation (stipulation por autri)
1. ESSENTIAL w/o them, contract cannot exist c. by provision of law
a. CONSENT of contracting parties
b. OBJECT CERTAIN subject matter 4. CONSENSUALITY OF CONTRACTS
c. CAUSE/CONSIDERATION - Contracts are perfected by mere consent
In some contracts, ff are also essential: Exceptions:
d. FORM a. REAL CONTRACTS perfected by delivery
e. DELIVERY b. FORMAL/SOLEMN CONTRACTS special form
required for its perfection
2. NATURAL found in certain contract, presumed to
exist unless stipulated 5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the force of law
between parties which bound to comply in good faith 1. MISTAKE/ERROR
- wrong conception & lack of knowledge upon a thing
4 KINDS OF INNOMINATE CONTRACTS
1. I give that you may give (2) MISTAKES W/C VITIATES CONSENT
2. I do that you may do It should refer to:
3. I give that you may do 1. substance of thing that is the OBJECT of contract
4. I do that you may give 2. conditions w/c MOVED either/both parties to enter
into contract
4 RULES FOR INNOMINATE CONTRACTS
1. Agreement of parties 4 RULES ON MISTAKE
2. Law on Obligations & Contracts 1. Mistake to identity/qualifications of either of parties
3. Rules on most analogous nominate contract will vitiate consent ONLY when IT is the principal cause
4. Customs of place of contract.
2. Simple mistake of account must be corrected.
STIPULATION POR AUTRI 3. No mistake if parties knew the risk/doubt affecting
- stipulation in favor of 3rd person OBJECT of contract.
4. When one of parties is unable to read or the contract
5 REQUISITES OF STIPULATION POR AUTRI is in language not understood by him, & mistake/fraud
1. Stipulation in favor of 3rd person is alleged, the person enforcing the contract must
2. Stipulation is only PART, not the whole of the FULLY explained the terms to him.
contract.
3. Both parties must conferred upon a favor of 2. FRAUD/DOLO
3rd person - when through insidious words/machinations of one of
4. 3rd person must accept & say it to debtor before its the parties, INDUCED the other to enter into a contract,
revocation/cancellation & w/o them, he will not agree.
5. Neither of both parties be the legal
representation/autho-rization of 3rd person DOLO CAUSANTE DOLO INCIDENTE
Serious Not serious
CONSENT cause induces party to NOT the cause to enter into
- meeting of offer (certain) & acceptance ENTER into contract contract
(absolute) upon a thing make contract voidable contract is valid; liable
for damages
5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
7 RULES OF FRAUD
2. Parties are capacitate to enter in contract
1. Failure to disclose facts when these needs to be
3. No vitiation of consent
revealed, is a fraud.
4. No conflict between declared & intended
2. Fraud should be SERIOUS (dolo causante) & SHOULD
5. Legal formalities must be complied
NOT be done by BOTH parties to make
contract voidable.
7 RULES ON OFFER/ACEPTANCE
3. Incidental fraud (dolo incidente) ONLY obliges person
1. An offer must be certain.
to PAY DAMAGES.
2. Business advertisements for sale are NOT offers but
4. Usual exaggerations in trade, when other party know
ONLY invitations to make an offer.
the real facts, is NOT FRAUD.
3. Advertisements for bidders are ONLY invitations.
5. A mere expression of opinion is NOT FRAUD UNLESS
4. An acceptance made by letter/telegram does NOT
made by an expert & the other party relies on his
bind offeror EXCEPT from the TIME it came to his
special knowledge.
knowledge.
6. Misrepresentation made in good faith is NOT FRAUD
5. An offer made through an agent is accepted from
but may constitute an error.
the TIME the acceptance is done through an agent.
7. Misrepresentation by 3rd person DOES NOT vitiate
6. An offer is ineffective upon death, insanity,
consent UNLESS it created substantial mistake.
insolvency, of EITHER party BEFORE acceptance is
made.
3. VIOLENCE
7. When offeror allowed offeree a certain period
- serious/irresistible force is employed.
to accept, offer MAY be withdrawn AT ANYTIME unless
there is something PAID/PROMISED.
2 RULES ON VIOLENCE
1. Serious/irresistible force is employed w/c constitutes
3 persons who CANNOT GIVE CONSENT to a
the reason why one entered into a contract.
contract (if entered into, contract is voidable)
2. Violence ANNULS obligation although it is DONE by
1. UNEMANCIPATED MINORS
3rd person not part of contract.
2. INSANE/DEMENTED PERSONS (unless they acted
DURING LUCID INTERVAL)
4. INTIMIDATION
3. DEAF-MUTES who DO NOT know how to write
- 1 of the parties is compelled by a reasonable & well-
grounded fear of an imminent & grave evil upon his
DEMENTED PERSON NOT exactly insane; difficult to
person/property to give his consent.
distin-guish right from wrong
3 RULES ON INTIMIDATION
LUCID INTERVAL period when an INSANE has
1. Age, sex, & condition of person must used to
acquired SANITY temporarily, therefore, capacitated to
determine the degree of intimidation.
enter into a valid contract
2. Intimidation ANNULS obligation although it is DONE
by 3rd person not part of contract.
2 RULES on persons WHO CANNOT GIVE
3. A threat to enforce ones claim (claim must be just &
CONSENT to a contract
legal), DOES NOT vitiate consent.
1. Age of majority is 18 yrs old
2. A contract entered into by UNEMANCIPATED MINOR
VIOLENCE INTIMIDATION
w/o parents/guardians consent is voidable, except:
a. Minor MISREPRESENTS his age (estoppel) External Internal
b. Contract involves sale & delivery of necessities to Physical contact/coercion NO physical coercion; ONLY
minor MENTAL/MORAL coercion
LESION
- inadequacy of cause (eg. insufficient price for thing
sold) 3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving consent to a
RULES ON LESION contract.
- Lesion DOES NOT invalidate contract, except there is: 2. Those where consent vitiates by vices of consent.
a. Fraud (MFVIU)
b. Mistake 3. Those agreed in the state of drunkenness/hypnotic
c. Undue influence spell.