OBLIGATIONS
established them; and as to what has not been foreseen, by
the provisions of this book.
Definition.
Contract as source of obligation.
A juridical necessity to give, to do, or not to do
(Article 1156). One impressed with the character of
enforceability.
Obligations arising from contracts have the full force
of law between the contracting parties and should be
complied with in good faith.
Elements of an Obligation:
Quasi-contract as source of obligation.
1.
It is the is that juridical relation resulting from a
lawful, voluntary, and unilateral act, and which has for its
purpose the payment of indemnity to the end that no one
shall be unjustly enriched or benefited at the expense of
another
2.
3.
4.
Active subject (called the obligee or creditor)—the
possessor of a right; he in whose favor the obligation is
constituted.
Passive subject (called the obligor or debtor)—he who
has the duty of giving, doing, or not doing;
Object or Prestation –the subject matter of the
obligation.
Efficient Cause (vinculum or juridical tie)—the reason why
the obligation exists.
Sources of Obligation:
1.
2.
3.
4.
5.
Law (Obligations ex lege)—like the duty to pay taxes or
to support one’s family.
Contracts (Obligations ex contractu)—like the duty to
repay the loan by virtue of an agreement.
Quasi-Contracts (Obligations ex quasi-contractu)—like
the duty to refund an over-change of money because of
the quasi-contract of solution indebiti or “undue
payment.”
Crimes or Acts or Omissions Punished by Law
(Obligations ex maleficio or ex delicto)—like the duty to
return a stolen carabao.
Quasi-Delicts or Torts (Obligations ex quasi-delicto or ex
quasi-maleficio)—like the duty to indemnify a person who
suffered damages because your acts or negligence,
without criminal intent or pre-existing obligation.
Law as source of obligation.
Obligation derived from law are not presumed. Only
those expressly determined in this code or by special laws are
demandable, and shall be regulated by precepts of law which
2 kinds:
1.
A.
2.
3.
B.
C.
Delict as a source of obligation.
Every person criminally liable for a felony is also
civilly liable. (Article 100, Revised Penal Code)
Quasi-delict or culpa aquiliana or tort as a source of
obligation.
One which causes damage to another, there being
fault or negligence, but there is no pre-existing contractual
relation between the parties.
Real Obligation—the obligation to give.
Personal Obligation—the obligation to do or not
to do.
From the affirmativeness and negativeness of
the obligation
1.
2.
D.
Civil Obligation—that defined in Article 1156.
The sanction is judicial process.
Natural Obligation—the duty not to recover what
has voluntarily been paid although payment was
no longer required. The sanction is law but only
because conscience had originally motivated
the payment.
Moral Obligation—the duty of the Catholic to
hear mass on Sundays and holy days of
obligations. The sanction here is conscience or
morality, or the law of the church.
From the viewpoint of subject matter
1.
2.
Solutio Indebiti
This takes place when something is received when
there is no right to demand it, and it was unduly delivered thru
mistake. The recipient has the duty to return it.
From the view point of “sanction”
1.
Negotiorum Gestio (unauthorized management)
This takes place when a person voluntarily takes
charge of another’s abandoned business or property without
the owner’s authority (Article 2144). Reimbursement must
be made to the gestor for necessary and useful expenses, as
a rule.
2.
Classification of Obligations in General
Positive or Affirmative Obligation—the
obligation to give or to do.
Negative Obligation—the obligation not to do.
From the viewpoint of persons obliged.
a.
b.
Unilateral—where only one of the parties is
bound.
Bilateral—where both parties are bound.
The prestation in an obligation.
1.
2.
3.
To give (real obligation)
To do (positive personal obligation)
Not to do (negative personal obligation)
Obligations of a person obliged to give something.
Referred to as real obligation (“res” or thing), if what
is to be given is specific or particularly designated from all
others or the same class, it is real determinate obligation; if
object is designated merely by its class or genus, it is real
generic obligation.
Determinate
Generic
Deliver the thing which he has
obligated himself to give (Art.
1165);
Deliver the thing which is
neither of superior nor
inferior quality;
Take care of the thing with
proper diligence of a good
father of a family (Art. 1163);
Pay damages in case of
breach of the obligation by
reason of delay, fraud,
negligence or contravention
of the tenor thereof (Art.
1170);
Deliver all accessions and
accessories of the thing even
though they may not have been
mentioned (Art. 1166);
Pay damages in case of breach
of the obligation by reason of
delay, fraud, negligence or
contravention of the tenor
thereof (Art. 1170);
Creditor’s right to the fruits of the thing.
The creditor has a right to the fruits of the thing from
the time the obligation to deliver it arises.
Before delivery of
fruits
After delivery of fruits
The creditor’s right is
personal or jus in
personam, a right
which is enforceable
only
against
a
definite
passive
subject, the debtor.
The creditor has now a real right
over the fruits from the time of
delivery and becomes enforceable
against the whole world. In short, it
gives a person direct and
immediate juridical power over a
thing which can be exercised not
only against a definite passive
subject but against the whole
world. The rights of ownership and
possession are real rights.
Rights of the creditor in an obligation to do something.
Determinate
Compel
specific
Performance (Art. 1165)
Recover damages in case
of breach of the obligation,
exclusive or in addition to
specific performance (Art.
1165)
Entitlement to the fruits,
interests from the time the
obligation to deliver arises.
Generic
Ask for the performance of
the obligation (Art. 1165)
Ask that the obligation be
complied with at the
expense of the debtor (Art.
1165)
Recover damages in case
of breach of the obligation
(Art. 1170)
Breach of obligations.
1.
Kinds of fruits.
Voluntary—Debtor, in the performance of the obligation,
is guilty of:
1.
a.
default (mora)
b.
fraud (dolo)
c.
negligence (culpa)
d.
contravention of the tenor of the obligation
2.
3.
Natural fruits—spontaneous products of the soil without
the intervention of human labor, and the young and other
product of animals with or without the intervention of
human labor, such as forest products.
Industrial fruits—products of the soil through cultivation
or human labor, such as palay and vegetables, planted
by farmers.
Civil fruits—fruits as a result of civilization or fruits arising
out of juridical relation, such as rent of lands,
apartments and buildings.
Accessions and accessories defined and exemplified.
Accessories
Accessions
Those which are used for the
embellishment,
use,
or
preservation of another thing
of more importance.
Include everything which
is produced by a thing,
incorporated or attached
thereto, either naturally or
scientifically. It includes
natural accession, such
as alluvion, and industrial
accession,
such
as
building, planting and
sowing.
Example: tools and spare
parts with respect to a
machine
Debtor is liable for damages.
2.
Involuntary—Debtor is unable to comply with his
obligation because of fortuitous event. Debtor is not
liable for damages.
Effects of Breach.
Positive Personal Obligation
The Creditor can:
Have the obligation performed
at the expense of the obligor
(Art. 1167);
Negative Personal
Obligation
If the obligor does
what
has
been
forbidden him, the
creditor can:
Ask that what has been poorly
done be undone (Art. 1167);
Have it undone at the
expense of the obligor
(Art. 1168); and
Recover damages because of
the breach of the obligation (art.
1170).
Ask for damages (art.
1170)
Default or Delay (Mora)
Non-fulfilment of the obligation with respect to time,
generally after demand to perform it has been made.
Requisites:
1.
Obligation is demandable and already liquidated;
2.
The debtor delays performance;
3.
The creditor requires performance judicially or extrajudicially
2 Kinds:
1.
Mora Solvendi—delay of the debtor to perform his
obligation. It may be:
a. Ex re—obligation to give;
b.
Ex persona—obligation is to do;
2.
Mora Accipendi—delay of the creditor to accept the
delivery of the thing which is the object of the obligation
3.
Compensatio Morae—delay of the parties or obligors in
reciprocal obligations.
When delay is incurred.
Negligence (Culpa).
There must be a demand (judicial or extra-judicial)
before delay may be incurred.
Omission of that diligence which is required by the
nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place.
Exceptions:
Diligence required:
1.
When stipulated by the parties.
2.
By provision of law.
3.
When time is of the essence of the contract.
4.
Demand will be useless.
1.
That agreed upon by the parties
2.
In the absence of stipulation, that required by law in the
particular case
3.
If both the contract and law are silent, diligence of a good
father of a family
Fraud (Dolo).
Fraud or dolo consists in the conscious and
intentional proposition to evade normal fulfilment of an
obligation.
2 kinds:
1.
2.
Fraud in obtaining consent (causal fraud/dolo causante)
Fraud in performing a contract (incidental fraud/dolo
incidente)
Dolo incidente
Present
during
performance of a
existing obligation.
Dolo causante
Concept of a Good Father of a Family.
That reasonable diligence which an ordinary
prudent person would have done under the same
circumstances. The test of negligence can be determined by
this standard: If defendant, in committing or causing the
negligent act, had used reasonable care and vigilance which
a man of ordinary prudence would have employed under the
same situation, he is not guilty of negligence. Otherwise, he
is guilty.
Fortuitous Event.
the
pre-
Present during the time of
birth or perfection of the
obligation.
Purpose is to evade the
normal fulfilment of the
obligation.
Purpose is to secure the
consent of the other to
enter into a contract.
Requisites:
1.
Cause is independent of the will of the debtor.
Result in the non-fulfilment
or breach of the obligation.
Results in the vitiation of
consent.
2.
The event must be unforeseeable or unavoidable.
3.
Gives rise to a right of the
creditor to recover damages
from the debtor.
Gives rise to a right of an
innocent party to annul the
contract.
Occurrence must be such as to render it impossible for
the debtor to fulfil his obligation in a normal manner.
4.
Debtor must be free from any participation in.
5.
The aggravation of the injury resulting to the creditor.
An event which could not be foreseen or which
though foreseen was inevitable.
General Rule: No liability in case of fortuitous events.
Classification of Obligations.
Exceptions:
1.
When expressly declared by law [e.g. Article 552 (2),
1165 (3), 1268, 1942, 2147, 2148 and 2159 of the
Civil Code]
2.
When expressly declared by stipulation or contract
3.
When the obligor is in default or has promised to deliver
the same thing to 2 or more persons who do not have
the same interest [Article 1165 (3)].
Effect of Fortuitous Event:
Primary
a.
b.
c.
d.
e.
f.
Determinate Obligation
Generic Obligation
Obligation is extinguished
Obligation
is
not
extinguished based on the
rule that genus never
perishes (genus nunquam
peruit)
Pure and conditional
With a period or with
a term
Alternative
and
facultative
Joint and solidary
Divisible
and
indivisible
With a penal clause
Secondary
a.
b.
c.
d.
e.
f.
Unilateral and bilateral
Real and personal
Determinate
and
indeterminate
Positive and negative
Legal and conventional
Civil and natural
Pure Obligation.
One whose effectivity or extinguishment does not
depend upon the fulfilment or non-fulfilment of a condition or
upon the expiration of a term or period and is demandable at
once.
Conditional Obligation.
Remedies of the Creditor to Protect Credit.
1.
Exhaustion of debtor’s property
2.
Accion subrogatoria to be subrogated to all the rights
and actions of the debtor save those which are inherent
in his person.
3.
Accion pauliana—impugn all the acts which the debtor
may have done to defraud them.
General rule: Rights acquired by virtue of an
obligation are transmissible in character.
One whose effectivity is subordinated to the
fulfilment or non-fulfilment of a future and uncertain fact or
event.
Kinds of Conditions:
1.
Suspensive—fulfillment of the condition results in the
acquisition of rights arising out of the obligation.
2.
Resolutory—fulfillment of the condition results in the
extinguishments of rights arising out of the obligation.
3.
Casual—fulfillment of the condition depends upon
chance and/or upon the will of a third person.
4.
Possible—condition is capable of realization according to
the nature, law, public policy and good customs.
Exceptions:
1.
2.
3.
When they are not transmissible by their very nature,
e.g. personal right;
When there is a stipulation of the parties that they are
not transmissible.
Not transmissible by operation of law.
5.
Negative—condition involves the omission of an act.
6.
Divisible—condition is susceptible to partial realization.
7.
Indivisible—condition is not susceptible of partial
realization.
8.
Conjunctive—where there are several conditions, all of
which must be realized.
9.
Alternative—where there are several conditions but only
one must be realized.
Rule in Potestative Conditions.
If the fulfilment of the potestative condition
depends upon the sole will of the debtor, the condition as well
as the obligation itself is void. It renders the obligation illusory
(applicable only to a suspensive condition and to an
obligation which depends for its perfection upon the
fulfilment of the potestative condition and not to pre-existing
obligation).
If the fulfilment depends exclusively upon the will of
the creditor, both the condition and obligation is valid.
Rule in Impossible Conditions.
General rule: They shall annul the obligation which
depends upon them.
Exceptions:
1.
Pre-existing obligation
2.
If obligation is divisible
3.
In simple or renumeratory donations
4.
In testamentary disposition
5.
In case of conditions not to do an impossible thing.
Effects of Suspensive Condition.
1.
2.
Before fulfilment of the condition, the demandability as
well as the acquisition or effectivity of the rights arising
from the obligation is suspended;
After the fulfilment of the condition, the obligation arises
or becomes effective;
3.
4.
The effects of a conditional obligation to give, once the
condition has been fulfilled, shall retroact to the day of
the constitution of the obligation;
When the obligation imposes reciprocal prestations
upon the parties, the fruits and interests shall be
deemed to have been mutually compensated;
Effects of Loss, Deterioration and Improvement in Real
Obligations (During the Pendency of the Condition)
A.
Loss
Without debtor’s fault—obligation is extinguished
6.
If the obligation is unilateral, the debtor shall appropriate
the fruits & interests received, unless from the nature
and circumstances it should be inferred that the
intention of the persons constituting the same was
different;
Applies only to determinate thing. A thing is loss when it:
In obligations to do or not to do, the court shall determine
the retroactive effect or conditions that have been
complied with.
B.
Effects of Resolutory Condition.
Before the fulfilment of the condition, the right
which the creditor has already acquired by virtue of the
obligation is subject to a threat of extinction;
If condition is not fulfilled, rights are consolidated;
they become absolute, the parties shall return to each other
what they received including the fruits.
Suspensive Condition
If fulfilled,
arises
or
effective;
obligation
becomes
If not fulfilled, no judicial
relation is created;
Rights are not yet
acquired, but there is
hope or expectancy that
they will soon be
acquired.
Resolutory Condition
If fulfilled, obligation
extinguished;
is
If not fulfilled, judicial relation
is consolidated;
Rights are already acquired,
but subject to the threat or
danger of extinction.
1.
Perishes
2.
Goes out of commerce
3.
Disappears in such a way that its existence is
unknown or it cannot be recovered.
Deterioration
Without debtor’s fault, impairment is to be borne by the
creditor.
With debtor’s fault, creditor may choose between the
rescission of the obligation and its fulfilment with indemnity
for damages in either case.
C.
1.
2.
With debtor’s fault—debtor pays damages.
5.
Classification of Term or Period:
Improvement
If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor.
If it is improved at the expense of the debtor, he shall
have no other right than that granted to the usufructuary.
3.
4.
5.
6.
7.
Suspensive (Ex die)—obligation becomes demandable
only upon arrival of a day certain.
Resolutory (In Diem)—arrival of day certain terminates
the obligation;
Legal—granted by law.
Conventional—stipulated by parties.
Judicial—fixed by courts.
Definite—date/time is known beforehand.
Indefinite—the date/time of day certain is unknown.
Term
Condition
Interval of time which is
future and certain
Fact or event which is
future and certain
Interval of time which must
necessarily come, although
it may not be known when.
Future and uncertain fact
or event which may or may
not happen
Exerts an influence upon
time or demandability or
extinguishment
of
an
obligation.
Exerts influence upon the
very essence of the
obligation itself.
Does
not
have
any
retroactive effect unless
there is an agreement to the
contrary.
Has retroactive effect.
When it is left exclusively to
the will of the debtor, the
existence of the obligation is
not affected.
When it is left exclusively
to the will of the debtor,
the very existence of the
obligation is affected.
Obligations with a Period.
Those whose demandability or extinguishment is
subject to the expiration of a term or period.
Requisites:
1.
2.
3.
Future
Certain
Possible, legally and physically.
General rule: When a period is designated for the
performance or fulfilment of an obligation, it is presumed to
have been established for the benefit of both creditor and
debtor.
Exception: When it appears from the tenor of the
obligation or other circumstances that the period has been
established in favor of one or of the other.
When Court May Fix Period.
1.
If the obligation does not fix a period, but from its nature
and circumstances it can be inferred that a period was
intended by the parties;
2.
If the duration of the period depends upon the will of the
debtor;
3.
If the debtor binds himself when his means permit him
to do so (Art. 1180).
Limitations: The debtor shall have no right to choose those
prestations which are:
1.
1.
2.
3.
Impossible
Unlawful
Those which could not have been the object of the
obligation.
Effect of loss of the object of the obligation.
a.
If right of choice belongs to debtor:
Reason for Fixing Period (Art. 1197)
1.
If through fortuitous event, debtor cannot be held
liable for damages;
There can be no possibility of any breach of contract
or failure to perform the obligation unless the period is fixed
by the courts.
2.
If one or more but not all of the things are lost or
one or some but not all of the prestations cannot be
performed due to the fault of the debtor, creditor
cannot hold the debtor liable for damages because
the debtor can still comply with his obligation;
When debtor loses right to make use of period:
1.
When after the obligation has been contracted, he
becomes insolvent, unless he gives guaranties or
securities for the debt (the insolvency need not be
judicially declared);
2.
When he does not furnish to the creditor the guaranties
or securities he promised;
3.
When by his own act he has impaired said guaranties or
securities after their establishment, and when through
fortuitous event they disappear, unless he gives new
ones equally satisfactory when debtor violates any
undertaking, in consideration of which the creditor
agreed to the period; or
4.
When debtor attempts to abscond.
Definition of Alternative Obligation:
Alternative obligation is one where out of two or
more prestations which may be given, only one is due. In
short, there are several things due but the delivery of one is
sufficient to extinguish the obligation.
General Rule: Right to choose belongs to the debtor
Exception: Unless given to the creditor
The effect of the loss of the thing in facultative obligation.
b.
If the right of choice belongs to the creditor:
1.
If one of the things is lost through a fortuitous event,
the debtor shall perform the obligation by delivering
that which the creditor should choose from among
the remainder, or that which remains if only one
subsists;
2.
If the loss of one of the things occurs through the
fault of the debtor, the creditor may claim any of
those subsisting, or the price of that which, through
the fault of the former, has disappeared with a right
to damages;
3.
If all the things are lost through the fault of the
debtor, the choice by the creditor shall fall upon the
price of any one of them, also with indemnity for
damages.
Facultative obligation.
It is one where only one prestation has been agreed upon but
the debtor may give another object as substitute.
Before susbstitution—If the principal thing is lost due to
fortuitous event, obligation is extinguished; if due to
debtor’s fault, he is liable for damages.
If the thing intended as a substitute is the one which was
lost, with or without debtor’s fault, the obligation to deliver the
substitute is extinguished because what is to be delivered is
the principal object and not the substitute. The loss of this
substitute is immaterial.
2.
After substitution—If the principal thing is lost, the debtor
is no longer liable whatever be the cause of the loss,
because it is no longer due. If the substitute is lost due
to fortuitous event, obligation is extinguished; if due to
debtors fault, he is liable for damages.
Facultative
Alternative
Comprehends only one
object or prestation which
is due, but it may be
complied with by the
delivery of another object or
performance of another
prestation in substitution.
Comprehends
several
objects or prestations
which are due but may be
complied with by the
delivery or performance of
only one of them;
Fortuitous
loss
extinguishes the obligation
Fortuitous loss of all
prestations will extinguish
the obligation
Culpable loss obliges the
debtor to deliver substitute
prestation without liability
to debtor
Culpable loss of any object
due will give rise to liability
to debtor
Choice pertains only to
debtor
Choice may pertain to
creditor or even third
person
Joint Obligation.
Joint vs. Solitary Obligations
It is one where the whole liability is to be paid or
fulfilled proportionately by the different debtors and/or is to
be demanded also proportionately by the different creditors.
General rule: Obligation is presumed joint if there is
concurrence of two or more debtors and/or creditors.
3.
4.
5.
Insolvency of one debtor does not make the others liable.
Vitiated consent on the part of one debtor does not affect
the others.
Demand made to one of the debtors is not demand to all
because the debt of one is distinct from the others.
When the creditor interrupts the running of the
prescriptive period by demanding judicially from one, the
others are not affected.
Defences of one debtor are not necessarily available to
the others.
Solidary Obligation.
It is one where each one of the debtors is bound to
render compliance of the entire obligation and/or each one
of the creditors has a right to demand entire compliance of
the prestation.
Instances when the law requires solidarity:
1.
2.
3.
4.
5.
6.
7.
All the partners are liable solidarily with the partnership
if the act complained of arises from a crime or quasidelict.
In agency, if two or more persons have appointed an
agent for a common transaction, they shall be solidarily
liable to the agent for all the consequences of the
agency.
The responsibility of two or more persons who are liable
for a quasi-delict is solidary.
The responsibility of two or more payees, when there has
been payment of what is not due, is solidary.
Legal provisions regarding the obligations of devises and
legatees.
Liability of principals, accomplices, and accessories of a
felony.
Bailees in commodatum.
1.
Where there is a stipulation to the contrary;
2.
When the debtor is sued for refusal to pay the agreed
penalty; and
When debtor is guilty of fraud.
Exceptions:
Features:
1.
2.
Exceptions:
1.
When expressly stated that there is solidarity;
3.
2.
When the law requires solidarity;
3.
When the nature of the obligation requires solidarity.
The debtor cannot exempt himself from the
performance of the principal obligation by paying the
stipulated penalty unless when the right has been expressly
reserved for him.
Joint Indivisible Obligations
The object or prestation is indivisible, not
susceptible of division; while the tie between the parties is
joint, that is, liable only to a proportionate share.
The creditor cannot demand the fulfilment of the
principal obligation and the satisfaction of the stipulated
penalty at the same time unless the right has been clearly
granted him.
Characteristics:
When penalty may be reduced.
1.
2.
1.
If the principal obligation has been partly complied with;
2.
If the principal obligation has been irregularly complied
with; and
3.
If the penalty is iniquitous or unconscionable even if
there has been no performance;
3.
4.
5.
Demand must be made to all the joint debtors.
The creditor must proceed against all the joint debtors,
because the compliance of the obligation is possible only
if all of the joint debtors would act together.
If one of the debtors is insolvent, the other shall not be
liable for his share.
If one of the debtors cannot comply, the obligation is
converted into monetary consideration. One who is
ready and willing to comply will pay his proportionate
share, and the other not willing shall pay his share plus
damages when his financial condition will improve.
If there are more than one creditor, delivery must be
made to all, unless one is authorized to receive from the
others.
Obligations with a Penal Clause.
One to which an accessory undertaking is attached
for the purpose of insuring its performance by virtue of which
the obligor is bound to pay a stipulated indemnity or perform
a stipulated prestation in case of breach.
General Rule: The penalty fixed by the parties is a
compensation for substitute for damages in case of breach.
Modes of Extinguishment of Obligations
1.
2.
3.
4.
5.
6.
By payment or performance.
Loss of the thing due
Condonation or remission of the debt
Confusion or merger
Compensation
Novation
In addition:
7.
8.
9.
10.
11.
12.
13.
Annulment
Rescission
Fulfilment of a resolutory condition
Prescription
Death of a party in case the obligation is personal
Mutual desistance
Compromise
14. Impossibility of fulfilment
15. Happening of fortuitous event
Payment or Performance
If payment was made without knowledge or against
the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.
To whom payment must be made.
General rule: A debt shall not be understood to
have been paid unless the thing or service in which the
obligation in which the obligation consists has been
completely delivered or rendered, as the case may be.
Exceptions:
1.
When the obligation has been substantially performed
in good faith;
2.
When the obligee accepts performance, knowing its
incompleteness or irregularity & without expressing any
protest or objection;
3.
When there is an express stipulation; and
4.
When the debt is in part liquidated and in part liquidated.
1.
The person in whose favour the obligation has been
constituted;
2.
His successor in interest; or
3.
Any person authorized to receive it.
General rule: If payment is made to a person other
than those enumerated, it shall not be valid.
Exceptions:
1.
2.
Payment made to a 3rd person, provided that it has
redounded to the benefit of the creditor;
Payment made to the possessor of the credit, provided
that it was made in good faith.
Persons who may pay the obligation.
Obligation to deliver generic object.
1.
The debtor himself;
2.
Any third person.
If the quality and circumstances have not been
stated, the creditor cannot demand a thing of superior quality;
neither can the debtor deliver a thing of inferior quality.
General rule: Creditor is not bound to accept
payment or performance by a third person.
Exceptions:
1.
When made by a third person who has an interest in the
fulfilment of the obligation;
2.
When there is a stipulation to the contrary.
Rights of a 3rd person who paid the obligation.
If payment was made with knowledge and consent
of the debtor:
1.
Can recover the entire amount paid;
2.
Can be subrogated to all the rights of the creditor.
Legal tender.
Such currency which may be used for the payment
of all debts, whether in private or public. The kind of currency
which a debtor can legally compel a creditor to accept in
payment of a debt in money when tendered by the debtor in
the right amount.
Philippine currency notes have no limit to their legal
tender power. However, in the case of coins in denomination
of 1-, 5- and 10-piso they shall be legal tender in amounts not
exceeding Php1,000.00 while coins in denomination of 1-, 5and 10- and 25-sentimo shall be legal tender in amounts not
exceeding Php100.00, pursuant to BSP Circular No. 537,
Series of 2006.
Place of payment.
1.
Place stipulated by the parties;
2.
No stipulation and the obligation is to deliver a
determinate thing, payment shall be made at the place
where the thing might be at the time;
3.
In any other case, the payment shall be made at the
domicile of the debtor.
Special forms of payment.
Rules in monetary obligation
1.
2.
Payment in cash—must be made in the currency
stipulated; if it is not possible to deliver such currency,
then in the currency which is legal tender in the
Philippines;
Payment in check or other negotiable instrument—not
considered payment; not considered legal tender and
may be refused by the creditor. It shall only produce the
effect of payment:
a.
When it has been encashed; or
b.
When it has been impaired throught the fault
of the creditor.
1.
Application of payment;
2.
Dation in payment;
3.
Payment by cession;
4.
Tender of payment and consignation.
Application of payment.
Designation of the debt to which the payment must
be applied when the debtor has several obligations of the
same kind in favour of the same creditor.
Requisites:
1.
There must be only 1 debtor and only 1 creditor;
2.
There must be 2 or more debts of the same kind;
3.
All of the debts must be due except: if there is stipulation
to the contrary; or application of payment is made by the
party for whose benefit the term has been constituted;
and
4.
Amount paid by the debtor must not be sufficient to
cover the total amount of all debts.
General rule: The right to designate the debt to
which the payment shall be applied primarily belongs to the
debtor.
Exception: If the debtor does not avail of such right
and he accepts from the creditor a receipt in which the
application is made.
Legal application of payment.
1.
If neither the debtor nor the creditor makes any
application of payment, or if it cannot be inferred from
other circumstances, the debt which is most onerous to
the debtor, among those which are due, shall be deemed
to have been satisfied;
2.
If the debts due are of the same nature and burden,
payment shall be applied to all of them proportionately.
Payment by cession.
It is the principal act and judicial in character.
Debtor abandons all of his property for the benefit
of his creditors in order that from the proceeds thereof, the
latter may obtain payment of their credits.
Requisites:
1.
Plurality of debts;
2.
Partial or relative insolvency of the debtor;
3.
Acceptance of the cession by the creditors
Dation in payment
Payment by cession
Requisites:
1.
The debt sought to be paid must be due;
2.
There must be a valid and unconditional tender of
payment or any of the causes stated by law for effective
consignation without previous tender of payment exists;
3.
The consignation of the thing due must first be
announced to the persons interested in the fulfilment of
the obligation;
4.
Consignation shall be made by depositing the things due
at the disposal of judicial authority;
The consignation having been made, the interested
parties shall also be notified thereof.
One creditor
Plurality of creditors
5.
Not necessarily in state of
financial difficulty
Debtor must be partially or
relatively insolvent
Effects of consignation.
Thing
delivered
is
considered as equivalent of
the performance
Universality of property of
debtor is what is ceded
Payment
extinguishes
obligation to the extent of
the value of the thing
delivered as agreed upon,
proved or implied from the
conduct of the creditor.
Merely releases debtor for
the net proceeds of things
ceded or assigned, unless
there is contrary intention.
1.
If the creditor accepts the thing or amount deposited
without contesting the validity or efficacy of the
consignation, the obligation is extinguished;
2.
If the creditor contests the validity or efficacy of the
consignation or if the creditor is not interested or
unknown or is absent, the result is litigation. If the debtor
complied with all the requisites, the obligation is
extinguished.
General rule: Consignation shall produce the effects of
payment only if there is a valid tender of payment.
Exceptions:
Dation in payment (dacion en pago.)
Delivery and transmission of ownership of a thing by
the debtor to the creditor as an accepted equivalent of the
performance of the obligation.
Tender of payment.
1.
Creditor is absent or unknown or does not appear at the
place of the payment;
Manifestation of the debtor to the creditor of his
decision to comply immediately with his obligation.
2.
Creditor incapacitated to receive payment at the time it
is due;
3.
When two or more persons claim the right to collect;
4.
When the title of the obligation has been lost;
5.
When without just cause creditor refuses to give receipt.
Requisites:
1.
Existence of a money obligation;
2.
Alienation to the creditor of a property by the debtor with
the consent of the former;
3.
Satisfaction of the money obligation of the debtor
It is preparatory act and extrajudicial in character.
Consignation.
Deposit of the object of the obligation in a
competent court in accordance with the rules prescribed by
law, after the tender of payment has been refused or because
of circumstances which render direct payment to the creditor
impossible or inadvisable.
Loss of the Thing Due.
General rule: (In Determinate Obligations to give)
Obligation is extinguished.
When the service has become difficult as to be
manifestly beyond the contemplation of the parties, the
obligor may also be released therefrom, in whole or in part.
2.
That it must take place in the person of either the
principal creditor or the principal debtor;
3.
It must be complete and definite.
Requisites:
Compensation.
Requisites:
1.
1.
The thing which is lost is determinate;
2.
The thing lost without the fault of the debtor;
3.
The thing lost before the debtor has incurred in delay.
Exceptions:
2.
The event or change in circumstances could not have
been foreseen at the time of the execution of the
contract;
It makes the performance of the contract extremely
difficult but not impossible;
3.
The event must not be due to the act of any parties; and
The contract is for future prestation.
1.
When by law, obligor is liable for fortuitous event;
4.
2.
When by stipulation, obligor is liable even for fortuitous
event;
Condonation or Remission of Debt.
3.
When the nature of the obligation requires the
assumption of risk;
4.
When the loss of the thing occurs after the debtor
incurred in delay;
5.
When the debtor promised to deliver the same thing to
two or more persons who do not have the same interest;
6.
When the debt of a certain and determinate thing
proceeds from a criminal offense.
General Rule: (in generic obligations to give)
Obligation is not extinguished because the genus of a thing
cannot perish.
Exception: In case of generic obligations whose
object is a particular class or group with specific or
determinate qualities.
General rule (in obligations to do): Obligation is
extinguished when prestation becomes legally or physically
impossible.
Effect of relative impossibility or doctrine of unforeseen
events.
Extinguishment in the concurrent amount of the
obligation of those persons who are reciprocally debtors and
creditors to each other.
An act of pure liberality by virtue of which the oblige,
without receiving any price or equivalent, renounces the
enforcement of the obligation, as a result of which it is
extinguished in its entirety or in part or aspect of the same to
which remission refers.
Requisites:
1.
There must be 2 persons who in their own right are
principal creditors and principal debtors of each other;
2.
Both debts must consist in money, or if the things due
are fungibles, they must be of the same kind or quality
3.
Both debts must be due;
4.
Both debts must be liquidated or demandable;
5.
There must be no retention or controversy commenced
by 3rd persons over either of the debts communicated in
due time to the debtor; and
6.
Compensation must not be prohibited by law.
It is the gratuitous abandonment by the creditor of
his right.
Requisites:
1.
It must be gratuitous.
2.
It must be accepted by the debtor;
3.
The obligation must be demandable.
Kinds:
1.
Legal—takes effect by operation of law.
2.
Voluntary—agreed upon by the parties;
3.
Facultative—when it can be claimed by one of the parties
who, however, has the right to object to it;
4.
Judicial—takes effect by judicial decree;
5.
Facultative—when it can be claimed by one of the parties
who, however, has the right to object to it.
Confusion or Merger of Rights.
Merger of the characters of the creditor and debtor
in one and the same person by virtue of which the obligation
is extinguished.
Requisites:
1.
That the characters of creditor & debtor must be in the
same person;
Debts not subject to compensation.
1.
Debts arising from contracts of deposit;
2.
Debts arising from contracts of commodatum;
3.
Claims for support due by gratuitous title;
4.
Obligations arising from criminal offenses;
5.
Certain obligations in favour of government.
Taxes are not subject to set-off or legal
compensation because the government and taxpayers are
not mutually creditors and debtors of each other.
Novation.
Substitution or change of an obligation by another,
resulting in its extinguishment or modification, either by
changing its object or substituting another in place of the
debtor, or by subrogating a third person in the rights of the
creditor.
2.
Forms of substitution of debtors.
1.
2.
1.
Precious valid obligation;
2.
Agreement of the parties to the new obligation;
3.
Extinguishment of the old obligation; and
4.
Validity of the new obligation.
Kinds:
a.
Delegacion—effected with the consent of the creditor at
the instance of the old debtor, with the concurrence of
the new debtor.
Expromision—the new debtor’s insolvency or
nonfulfillment of the obligation shall not revive the
original debtor’s liability to the creditor whether the
substitution is effected with or without the knowledge or
against the will of the original debtor;
Delegacion—the credtor can sue the old debtor only
when the insolvency was prior to the delegation and
publicly known or when the old debtor knew of such
insolvency at the time he delegated the obligation.
Objective/Real—refers to the change either in the
cause, object or principal conditions of the
obligations;
Conventional—takes place by agreement of the parties;
this kind of subrogation requires the intervention and
consent of 3 persons: the original creditor, the new
creditor and the debtor;
2.
Legal—takes place without the agreement but by
operation of law because of certain acts.
2.
Subjective/Personal—refers to the substitution of
the person of the debtor or to the subrogation of a
3rd person in the rights of the creditor;
General rule:
presumed.
3.
Mixed
As to its essence
As to its form/constitution
1.
Express—when it is declared in unequivocal terms
that the old obligation is extinguished by new one
which substitutes the same.
Even without the debtor’s knowledge, a person
interested in the fulfilment of the obligation pays without
prejudice to the effects of confusion as to the latter’s
share.
CONTRACTS
Definition.
A contract is the meeting of minds between two
persons whereby one binds himself, with respect to the other,
to give something or to render some service.
Elements.
a.
1.
Creditor pays another creditor who is preferred, without
debtor’s knowledge;
2.
A third person is not interested in the obligation pays with
the express or tacit approval of the debtor; or
1.
Consent
2.
Object or Subject Matter
3.
Cause or Consideration
Natural—those derived from the nature of the
contract and ordinarily accompany the same.
c.
Accidental—those which exist only when the parties
expressly provide for them for the purpose of
limiting or modifying the normal effects of the
contract.
Different kinds of contracts.
a.
Legal subrogation cannot be
Exceptions:
Essential—those without which there can be no
contract.
b.
Kinds of subrogation.
1.
1.
b.
2.
3.
Expromision—effected with the consent of the creditor at
the instance of the new debtor even without the consent
or even against the will of the old debtor;
Effect of insolvency of new debtor.
Requisites:
1.
Implied—when the old and new obligation are
incompatible with each other on every point.
b.
According to perfection
1. Consensual—perfected by mere consent.
2. Real—perfected by the delivery of the object of
the contract, such as pledge, loan and deposit.
According to degree of importance
1. Principal—can stand alone, such as sale,
barter, deposit or loan.
2. Accessory—its existence and validity is
dependent upon another contract, such as
pledge, mortgage and guaranty.
3.
c.
d.
Preparatory—contract is not an end by itself,
but a means thru which other contracts may be
made.
According to subject matter
1. Contracts involving things, such as sale, barter.
2. Contracts involving rights or credits, such as
usufruct or assignment of credit.
3. Contracts involving services, such as agency,
lease of service and contract of carriage.
According to name
1. Nominate—Those which have their own
distinctive individuality and are regulated by
special provisions of law.
2. Innominate--Those which lack individuality and
are not regulated by special provisions of law
but regulated by stipulations of the parties, by
general provisions of the Civil Code on
obligations and contracts, by rules governing
the most analogous nominate contracts and by
customs of the place.
Kinds:
e.
f.
1.
Do ut des—I give that you give;
2.
Do ut facias—I give that you do;
3.
Facio ut des—I do that you give;
4.
Facio ut facias—I do that you do.
According to cause
1. Onerous—there
is
an
exchange
of
consideration such as sale, barter and lease.
2. Gratuitous—there is no consideration received
in exchange for what has been given, such as
donation, remission and condonation.
3. Remuneratory—something is given for a benefit
or service performed without any legal
obligation to do so.
According to nature of obligation produced or
number of parties obligated
1. Unilateral—where only one of the parties is
obliged to give or to do something, such as
commodatum, gratuitous deposit, and
gratuitous mutuum.
2.
g.
Bilateral—where both parties are obliged to
give or to do something, such as sale, barter
and lease.
According to risk
1. Commutative—where equivalent values are
given by both parties such as sale, barter or
lease.
2. Aleatory—where fulfilment of the contract is
dependent upon chance, such as insurance.
d.
The contract must bind both parties; its validity or
compliance must not be left to the will of one of them.
The contract cannot have any stipulation authorizing one
of the contracting parties (a) to determine whether or not the
contract shall be valid, or (b) to determine whether or not the
contract shall be fulfilled.
e.
Characteristics of Contracts.
a.
Principle of autonomy of contracts (liberty to
contract)
The contracting parties may establish such stipulations,
clauses, terms, and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs,
public order, or public policy.
b.
Principle of Relativity
General rule: Contracts take effect only between parties,
their assigns and heirs
Exceptions:
1.
Stipulations pour atrui—stipulations in favor of a third
person;
2.
When a third person induces a party to violate contract;
3.
Third persons who come in possession of the object of
the contract creating real rights;
4.
Contracts entered into in fraud of creditors.
c.
Principle of Obligatory Force and Consensuality
Contracts are perfected by mere consent and from that
moment, the parties are bound not only to the fulfilment of
what has been expressly stipulated but also to all
consequences which, according to their nature may be in
keeping with good faith, usage and law.
Principle of Mutuality
Principle Autonomy
The parties are free to stipulate anything they deem
convenient provided that they are not contrary to morals,
good customs, public order and public policy.
Consent.
Manifested by the concurrence of the offer and
acceptance upon the thing and the cause which are to
constitute the contract.
Requisites:
1.
Legal Capacity of the contracting parties;
2.
Manifestation of the conformity of the contracting
parties;
3.
The parties’conformity to the object, cause, the terms
and conditions of the contract must be intelligent,
spontaneous and free from all vices of consent;
4.
The said conformity must be real and not simulated or
fictitious.
Offer.
A proposal made by one party to another to enter
into a contract. It must be certain or definite, complete and
intentional.
Offer/proposal may be withdrawn so long as the
offeror has no knowledge of acceptance by offeree.
Rule in case of an offer to sell.
Vices of Consent.
When the offerer has allowed the offeree a certain
period to accept, the offer may be withdrawn at any time
before acceptance by communicating such withdrawal,
except when the option is founded upon a consideration as
something paid or promised.
1.
2.
Option contract—one giving a person a certain
period within which to accept the offer of the offerer.
Option money—money paid or promised to be paid
in consideration for the option.
3.
Acceptance.
1.
Manifestation by the offeree of his assent to the terms
of the offer.
2.
It must be absolute.
3.
A qualified acceptance constitutes counter offer.
4.
Violence—when in order to wrest consent, serious or
irresistible force is employed.
Intimidation—when one of the contracting parties is
compelled by a reasonable and well-grounded fear of an
imminent and grave evil upon his person or property, or
upon the person or property of his spouse, descendants
or ascendants, to give his consent.
Mistake—it must be substantial regarding: (a) object of
the contract; (b) conditions which principally moved one
or both parties to enter into the contract; (c) identity or
qualification of persons; error must be excusable, and
not caused by negligence; and the error must be a
mistake of fact, and not of law.
Fraud—when through insidious words or machinations of
one of the contracting parties, the other is induced to
enter into a contract, without which, he would not have
agreed.
Acceptance may be revoked before it comes to the
knowledge of the offeror.
5.
Persons incapacitated to give consent.
Caveat emptor (“let buyers beware”).
a.
The transaction is not fraudulent because this is
considered tolerable fraud. Exaggerations in trade, when the
other party had an opportunity to know the facts, are not in
themselves fraudulent. This is otherwise known as “dealer’s
talk.” Exception: If the opinion is made by an expert and the
other party has relied on such statement.
Minors
Exceptions:
1.
b.
c.
Contracts where the minor is stopped to false
minority as a defense through his own
misrepresentation;
2.
Contracts for necessaries;
3.
Contracts by guardians or legal representatives;
4.
Contracts of life, health or accident insurance taken
on the life of the minor.
Insane or demented persons, unless the contract was
entered into during lucid interval;
Deaf mutes who do not know how to read and write.
Undue Influence
appearance of a transaction which does not exist or which is
different from their true agreement.
Kinds:
1.
Absolute—when the contracting parties do not intend to
be bound by the contract at all. Thus, an absolutely
simulated contract is VOID.
2.
Relative—when the contracting parties conceal their true
agreement. A relatively simulated contract binds the
parties to their real agreement, when it does not
prejudice 3rd persons and is not intended for any
purpose contrary to law, morals, good customs, public
order or public policy.
Object of the Contract
The thing, right or service which is the subject
matter of the obligation arising from the contract.
Requisites:
1.
It must be within the commerce of man;
2.
It must be licit or not contrary to law, morals, good
customs, public order or public policy;
3.
It must be possible;
4.
It must be determinate as to its kind.
Things which cannot be object of contracts.
1.
Things which are outside the commerce of men;
Statement of Opinion.
2.
Intransmissible rights;
The mere expression of opinion, even if false, does
not vitiate consent that will render the contract voidable
unless such opinion is given by an expert and the other party
relied on such opinion.
3.
Services which are contrary to law, morals, good
customs, public order or public policy;
4.
Impossible things or services;
Simulation of Contracts
5.
Objects which are not possible of determination as to
their kind.
Is the declaration of a fictitious intent manifested
deliberately and by agreement by the parties in order to
produce, for the purposes of deceiving others, the
Cause of the Contract
The immediate, direct and most proximate reason
which explains and justifies the creation of obligation.
Contracts which are required to be in some specific
form is only for the convenience of parties and does not affect
validity and enforceability as between them.
5.
All other contracts especially declared by law to be
subject to rescission; and
6.
Payments made in a state of insolvency on account of
obligations not yet enforceable;
Reformation of instruments:
Requisites:
1.
Requisites:
Cause should be in existence at the time of the
celebration of the contract;
1.
Meeting of the minds to the contract;
2.
Cause should be licit and lawful;
2.
3.
Cause should be true.
True intentions is not expressed in the instrument by
reason of mistake, accident, relative simulation, fraud,
inequitable conduct;
3.
Clear and convincing proof of mistake, accident, relative
simulation, fraud or inequitable conduct.
Rules:
1.
2.
In onerous contracts, the cause is understood to be, for
each contracting party, the prestation of promise of a
thing or service by the other;
In renumenatory contracts, the service or benefit which
is renumerated;
3.
In contracts of pure beneficence, the mere liberality of
the donor or benefactor;
4.
In accessory contracts, the cause is identical with the
cause of the principal contract, that is, the loan from
which it derives its life and existence.
Form of Contracts
General rule: Contracts shall be obligatory, in
whatever form they may have been entered into, provided all
the essential requisites for their validity are present.
1.
Those where one of the parties is incapable of giving
consent to a contract;
2.
Those where the consent is vitiated by mistake, violence,
intimidation, undue influence, or fraud.
Simple unconditional donations inter vivos;
2.
Wills;
Causes of extinction to annul a voidable contract
3.
When the agreement is void.
1.
Rescissible Contracts
Contracts validly agreed upon byt, by reason of
lesion or economic prejudice may be rescinded in cases
established by law.
What contracts are rescissible
1.
Those entered into by guardians where the ward suffers
lesion of more than ¼ of the value of the things which
are objects thereof;
Those agreed upon in representation of absentees, if the
latter suffer lesion by more than ¼ of the value of the
things which are subject thereof;
When the law requires that a contract be in some form
in order that it may be enforceable.
3.
Those undertaken in fraud of creditors when the latter
cannot in any manner claim what are due them;
Parties may compel each other to comply with the
form required once the contract has been perfected;
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 and the court;
2.
What contracts are voidable
1.
2.
When the law requires that a contract be in some form
in order that it may be valid;
Those in which all of the essential elements for
validity are present, although the element of consent is
vitiated either by lack of capacity of one of the contracting
parties.
When reformation is not proper
Exceptions:
1.
Voidable Contracts
2.
Prescription—the action must be commenced within 4
years arising from:
a.
The time the incapacity ends;
b.
The time the violence, intimidation, or undue
influence ends;
c.
The time the mistake or fraud is discovered.
Ratification
Requisites:
a.
There must be knowledge of the reason which
renders the contract voidable;
b.
Such reason must have been ceased and
c.
The injured party must have executed an act
which expressly or impliedly conveys an
intention to waive his right;
3.
By loss of the thing which is the object of the contract
through fraud or fault of the person who is entitled to
annul the contract.
Ratification of contracts in violation of Statutes of Fraud
1.
Failure to object to the presentation of oral evidence to
prove such contracts;
Unenforceable Contracts
2.
Those which cannot be enforced by proper action in
court unless ratified.
What contracts are unenforceable:
1.
Those entered into in the name of another by one
without authority or acting in excess of authority;
2.
Those where both parties are incapable of giving
consent;
3.
Those which do not comply with the Statute of Frauds.
Acceptance of benefits under these contracts.
Void Contracts
Those where all of the requisites of a contract are present
but the cause, object or purpose is contrary to law, morals,
good customs, public order or public policy, or contract itself
is prohibited or declared void by law.
Those whose cause, object or purpose is contrary to
law, morals, good customs, public law or public policy;
Contracts covered by Statutes of Fraud
2.
Those whose object is outside the commerce of men;
1.
Agreements not be performed within one year from the
making thereof;
3.
Those which contemplate an impossible service;
4.
2.
Special promise to answer for the debt, default or
miscarriage of another;
Those where the intention of the parties relative to the
principal object of the contract cannot be ascertained;
5.
Those expressly prohibited or declared void by law.
Agreement in consideration of marriage other than a
mutual promise to marry;
4.
Agreement for the sale of goods at the price of not less
than P500.00;
5.
Contracts of lease for a period longer than one year;
6.
Agreements for the sale of real property or interest
therein; and
7.
Representation as to the credit of a third person.
The contracts/agreements under the Statute of
Frauds require that the same be evidence by some note,
memorandum or writing, subscribed by the party charged or
by his agent, otherwise, the said contracts shall be
unenforceable.
VOID
VOIDABLE
RESCISSIBLE
Defect is
caused by lack
of essential
elements or
illegality
Defect is
caused by vice
of consent
Defect is
caused by
injury/damage
either to one of
the parties or
to a 3rd person
Defect is caused
by lack of form,
authority, or
capacity of both
parties not cured
by prescription
Do not, as a
general rule,
produce legal
effects
Valid and
enforceable
until they are
annulled by a
competent
court
Valid and
enforceable
until they are
rescinded by a
competent
court
Cannot be
enforced by proper
action in court
Action for the
declaration of
nullity or
inexistence
does not
prescribe
Action for
annulment or
defense of
annulability
may prescribe
Action for
rescission may
prescribe
Corresponding
action for recovery,
if there was total or
partial
performance of the
unenforceable
contract may
prescribe
Not cured by
prescription
Cured by
prescription
Cured by
prescription
Not cured by
prescription
Cannot be
ratified
Can be ratified
Need not be
ratified
Can be ratified
Assailed not only
by contracting
party but even
by a third person
whose interest is
directly affected
Assailed only
by a
contracting
party
Assailed not
only by a
contracting
party but even
by third person
who is
prejudiced or
damaged by
the contract
Assailed only by a
contracting party
Assailed directly
or collaterally
Assailed
directly or
collaterally
Assailed
directly only
Assailed directly or
collateraly
What contracts are void.
1.
3.
Comparative Table of Defective Contracts
Inexistent Contracts
Those where one or some or all of the requisites
essential for the validity of the contract are absolutely
lacking.
What contracts are inexistent
1.
Those which are absolutely simulated or fictitious; and
2.
Those whose cause or object did not exist at the time of
the transaction.
UNENFORCEABLE
Principle of pare delicto
Natural Obligations
When the defect of a void contract consists in the
illegality of the cause or object of the contract and both of the
parties are at fault or in pari delicto, the law refuses them
every remedy and leaves them where they are.
They are real obligations to which the law denies an
action, but which the debtor may perform voluntarily.
Exceptions:
1.
Payment of usurious interest;
2.
Payment of money or delivery of property for an illegal
purpose, where the party who paid or delivered
repudiates the contract before the purpose has been
accomplkished, or before any damage has been caused
to a 3rd person;
3.
Payment in money or delivery of property made by an
incapacitated person;
4.
Agrrement or contract which is not illegal per se and the
prohibition is designed for the protection of the plaintiff;
5.
Payment of any amount in excess of the maximum price
of any article or commodity fixed by law or regulation by
competent authority;
6.
Contracts whereby a labourer accepts a wage lower than
the maximum number of hours fixed by law;
7.
One who lost in gambling because of fraudulent
schemes practiced on him is allowed to recover losses.
Examples:
1.
Performance after the civil obligation has prescribed;
2.
Reimbursement of a third person for a debt that has
prescribed;
Estoppel
A condition or state by virtue of which an admission
or representation is rendered conclusive upon the person
making it and cannot be denied or disproved as against a
person relying thereon.
Laches or “stale demands”
Failure or neglect, for an unreasonable length of
time, to do that which due diligence, could or should have
been done earlier.
Elements:
1.
Conduct on part of the defendant or of one under whom
he claim, giving rise to the situation of which
complainant is made and of which the complaint seeks
a remedy;
2.
Delay in asserting the complaint, rights, the complainant
having knowledge or notice of defendant’s conduct and
having been afforded the opportunity to institute the
action;
3.
Lack of knowledge or notice on the part of the defendant
that the complainant would assert on the right on which
he bases his suit;
4.
Injury to the defendant in the event relief is accorded to
the complainant or the suit is not held to be barred.
Rules when only one of the parties is at fault.
1.
2.
Executed contracts:
a.
Guilty party is barred from recovering what he has
given to the other party by reason of the contract;
b.
Innocent party may demand for the return of what
he has given.
Executory contract—neither of the contracting parties
can demand for the fulfilment of any obligation from the
contract nor may be compelled to comply with such
obligation.