Professional Documents
Culture Documents
Obligations and Contracts
Obligations and Contracts
Obligations and Contracts
I. Introduction to Law
a. a. Sources of Law
i) i) Constitution – Fundamental Law of the land
a. b. Characteristics of Law
- - Rule of Conduct
- - Obligatory
- - Promulgated by legitimate authority
- - Of common observance and benefit
b. c. Organization of courts
- - 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 Reasonable
Doubt
- - 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
Weeks 2 to 4 – Obligations
a. General Provision
2. 2. Contracts
3. 3. To Do
a. a. To have the obligation performed at
debtor’s expense
b. b. To recover damages
4. 4. Not to Do
a. a. Undone at his expense
b. b. To recover damages
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
a. a. Suspensive v. Resolutory
c. c. Impossible Conditions
d. d. Positive v. Negative
e. e. Reciprocal v. Unilateral
7. 7. Facultative Obligation
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
delict
8. 8. 2 or more payees when there has
been payment of what is not due
9. 9. Principal, accomplices, and
accessories of a felony.
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
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 conditon
10. Impossibility of fulfillment
11. Prescription
I. Payment
(a) (a) General Provisions Payment
(i) (i) Complete Delivery of money,
performance of obligation
c. c. In case of extraordinary
inflation or deflation, the basis is
the value of currency at the time
obligation is established. (1250)
h. i. Implied remission
- - Delivery of private document evidencing
credit
- - If thing pledge is found in the possession
of debtor or owner of thing
- - Renunciation of principal extinguish
accessory obligation
V. Compensation
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 or
consumable 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
3rd party
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:
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 it
a. a. Requisites:
LAW
Morals
Good Customs
Public Order
Public Policy
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, like
donation, mortgage
According to cause
– – Onerous – Giving of an equivalent or compensation
– – Gratuitous – Given without compensation, just pure
liberality
According to name
– – Nominate – with specific names or designation in law
– – Innominate – no specific name
Elements of Consent
Mistake as to person
Violence – Employment of external physical
force, irresistible and serious to wrest consent
Intimidation – Moral compulsion to influence
another to give his consent thru fear of imminent or
grave evil
- - Vices of Declaration
Simulated Contracts
1. Absolute
2. Relative
– Contracting parties conceal their true
intentions
– Real agreement binding on the parties if it does
not prejudice third person
Objects
Cause
Form
Two exceptions:
When Law requires a certain form for validity
When Law requires form for enforcement
Reformation
When the true intention of the parties are not expressed in the
instrument, one of the party may ask for the instrument to be
changed so that true intention may be expressed.
Requisities
Defective Contracts
o o As to defect
o o Rescissible - Injury or damage
o o Voidable - Vitiation of consent or legal capacity
o 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
court
o o Void - No legal effects at all
Rescissible Contracts
Partition (1098)
Result of deterioration (1189)
Unpaid seller (1526 and 1534)
Badges of Fraud
Voidable Contracts
Where one party is incapable of giving consent to a contract
Convalidation
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 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 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
Statute of Fraud
– –Purpose is to prevent fraud, not to aid the commission of
fraud
– – Basic and fundamental principles
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
Void 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 be
ascretained
– – Prohibited or declared void by law
Estoppel
Estoppel 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)