OBLICON lecture notes Dec 7, 2006 In case of breach: PERFORMANCE -depends on the prestation 1. If obligation to give a.

a specific thing: failure to deliver creditor can ask for specific performance + damages in case of default/negligence if specific thing fails to preserve it like a good father of a family if specific performance: make delivery but if debtor fails to do so or refuses to do so action for specific performance + damages > judgment requiring delivery + payment of damages if debtor does not obey the court, cant force him to deliver > suffer consequences >cited for direct contempt of court: jailed until he obeys >damages: could levy upon property which are not exempt fr damages but cant compel him to act: against his freedom ROC 39, Sec 10: creditor could become the owner of the thing promise to be delivered/ performance b. generic thing: creditor can ask for substituted performance (delivery of the generic thing at the cost of the debtor: 3rd person performs the prestation in the place of the debtor) either the creditor hasnt paid the 3rd person, the debtor pays the services of the 3rd person or the creditor pays for the services of the 3rd person and ask the debtor for the payment + damages *NO SUBSTITUTED PERFORMANCE IN DELIVERY Of SPecIFiC THING 2. Obligation to do: if purely personal: nobody else can substitute for the debtor if ordinary obligation to do: any 3rd person having the same skill could do it substituted performance + damages 3. Obligation not to do NO SUBSTITUTED PERFORMANCE strictest of all obligations no delay/default in obligation not to do: shempre wala ka ngang dapat gagawin eh DAMAGES usually should be alleged and proven (actual and compensatory) nominal damages: damages in name only; minimal; Consuelo de bobo (just so right is vindicated) moral damages: usually not given in breaches of contract unless breach in bad faith or acted in wanton, reckless manner amounting to bad faith (nearly fraud or fraud, crime, quasi-delicts); doesnt need to be proven exemplary damages: doesnt need to be proven Art 1191: RESCISSION: cancellation or dissolution (in a reciprocal obligation, there is an implied resolutory condition attached: if on the day agreed upon for the execution of the obligation arising from the reciprocal contract, one of the parties is not willing/ready to perform, the other one could rescind/resolve the contract) Xxxx 1

OBLICON lecture notes Dec 7, 2006 Subsidiary Remedies -in cases the creditor cant physically require the debtor to pay damages (debtor is insolvent) -cant send person to jail for nonpayment of debts (consti) -so make debtor less insolvent: prove that he ought not to be insolvent if he did not do certain things -so increase the patrimony of the insolvent debtor so the creditor could levy upon the patrimony of the debtor which are not included to those exempted from execution -INSOLVENCY=assets < liabilities (no need to file insolvency case so the debtor would be deemed to be insolvent) ...creditor could already file subsidiary remedies *objection of defendant: no privity of contract so why should defendant be liable to the plaintiff: but the law allows for such action (exception from the general rule: Relativity of contracts/ no privity of contracts: obli arising from contracts is only limited to the contracting parties and their privies) 1. Accion Subrogatoria -the debtor should be insolvent/ in state of insolvency (should be stated in the complaint) -2 ACTIONS: Voluntary insolvency (debtor admits insolvency) / involuntary insolvency -the debtor is in state of insolvency + debtor happens to be a creditor also of another person (3rd person): so debtor neglected to collect a credit which he owns-so creditor of debtor files action to collect credit of debtor so he could fulfill the debtor debts to him C1++++D1 (insolvent) C2 (D1) +++D2 C1++++D2 (C1 files against D2 for specific performance of obli to D1) Problems: if D1 has many creditors and only C1 collected the credit of D1, the other creditors are not prohibited to share from the collected credit-litigation costs -debtor(D2) of my debtor (D1=C2) is my debtor-C1 -garnishment: attach/garnish a tangible/corporeal property right (file for a writ of garnishment) C1 the right to collect/obligation to pay from D2 or would have preference over what is collected; if no garnishment, then everyone shares (there can be more credits aside from D2) 2. Accion Pauliana -made in fraud of creditors -aims to rescind the transfer of property of the debtor to a 3rd person so that the creditor could levy upon that property (or debtor enters into a contract which further reduces his estate/ or simulated contracts entered into by the debtor) -insolvent debtor further dissipates his assets -veritable donations/ gratuitous donations -so primary defendants: the transferees (debtor also included but not primary defendants) for rescission of the conveyance of the debtors property - made to defraud the creditors -defense of relativity of contracts -requisites: a. credit before rescission (credit must predate the fraudulent conveyance of the debtors property) b. debtor made contract conveying/dissipating his properties to other persons (para walang masingil sa kanya ung creditor) 2

OBLICON lecture notes Dec 7, 2006 c. no other legal remedy but the rescission of conveyance to 3rd person d. act impugned is fraudulent e. 3rd person: accomplice 3. Accion Derecta (Direct Actions) -one who files action is not the creditor of the debtor but law allows it -exception to the privity of contracts: even if not part of the parties to the contract, still liable ****see if not exception to the rule that the contract is only binding to the contracting parties... Art 1381: rescissible contracts: valid until rescinded 1. defective contracts
Art. 1381. The following contracts are rescissible: (1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than onefourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission. (1291a) Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible. (1292)

2.

AP Preference built in

AS Garnishment (so protection from other creditors to be a preferred creditor)