The following are the requisites of an obligation, except: a. Passive subject, debtor or obligor. - The party who has the right to demand. b. Active
... [Show More] subject, creditor or oblige. -the party who is obliged to perform. c. Efficient cause. -legal or juridical tie which binds the parties. d. Demand.Test 1 Multiple Choice 1. The following are the requisites of an obligation, except: a. Passive subject, debtor or obligor. - The party who has the right to demand. b. Active subject, creditor or oblige. -the party who is obliged to perform. c. Efficient cause. -legal or juridical tie which binds the parties. d. Demand. Other requisites of obligation: Prestation- the subject matter of the obligation. 2. Obligations may arise from any of the ff. except: a. Contracts- a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305) b. Law- A rule of conduct, just and obligatory, laid down by legitimate authority for common observance and benefit. c. Quasi-contracts-they refer to certain lawful, voluntary and unilateral acts giving rise to a juridical relation to the end that no one shall be unjustly enriched at the expense of another. (Art. 2142). The principal kinds of quasi-contracts are negotiorum gestio and solutio indebiti. d. Prestation -because it is part of the requisite of an obligation. Other sources of obligation: Acts or omissions punishable by law- these are crimes or felonies. The commission of a crime makes the offender civilly liable. Such civil liability includes restitution, reparation of the damage caused, and indemnification of consequential damages. Quasi-delict- (also known as "tort" or "culpa aquiliana") these are acts or omissions that cause the damage to another, there being fault or negligence but without any preexisting contractual relation between parties. (Art. 2176) For quasi-delict case to prosper, the complaint must establish: (a). Damages to complaint (b). Negligence, by act or omission of the defendant must respond, was guilty; (c). The connection of cause and effect between such negligence and damages. With respect to the third element, the negligent act or omission must be the proximate cause of the injury. 3. It is voluntary administration of the property of another without his consent a. Negotiorum gestio (Art. 2150) This refers to the voluntary administration of the property, business or affairs of another without the consent or authority. It creates the obligation to reimburse the gestor for necessary and useful expenses. b. Quasi-delictc. Solutio indebiti- This refers to payment by mistake of an obligation which was not due when paid. It creates the obligation to return the payment. Solutio indebiti applies where: (a) payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (b) the payment is made through mistake1 and not through liberality or some other cause. d. Contract 1 4. It is wrong committed without any pre-existing relations between the parties a. Natural obligation b. Quasi-contract c. Quasi-delict- Quasi-delicts or torts. — when they arise from damage caused to another through an act or omission, there being fault or negligence, but no contractual relation exists between the parties (Art. 2176.), d. Crime 5. Unless the law or the stipulations of the parties require another standard of care, every person obliged to give something is also obliged to take care of it with: a. Extra-ordinary diligence. b. Diligence of a father of a good family. c. Diligence of a good father of a family. d. Good diligence of a father of a family. 6. The creditor has a right that is enforceable against a definite passive subject. This right is known as: a. Personal right or jus in personam b. Nature right c. Real right or jus in re d. Civil right Meaning of personal right and real right. (1) Personal right2 is the right or power of a person (creditor) to demand from another (debtor), as a definite passive subject, the fulfillment of the latter’s obligation to give, to do, or not to do. (2) Real right2 is the right or interest of a person over a specific thing (like ownership, possession, mortgage, lease record) without a definite passive subject against whom the right may be personally enforced. (Enforceable against the whole world.) There are two rights creditors are entitled. The first one is the personal right and the other one is the real right. Real right refers right or power over a specific things or what we call ownership. Personal right that is enforceable by the passive subject to the active subject "debtor to the creditor", right to demand by the creditor to the debtor. 7. It is a thing that is particularly designated or physically segregated from all others of the same class. a. Generic thing b. Determinate thing c. Indeterminate thing d. Real thing Specific thing and generic thing distinguished. (1) A determinate thing is identified by its individuality. The debtor cannot substitute it with another although the latter is of the same kind and quality without the consent of the creditor. (Art. 1244.) (2) A generic thing is identified only by its specie. The debtor can give anything of the same class as long as it is of the same kind. 8. One of the ff. is a determinate thing. Which is it? a. A cow. b. A horse. c. A Toyota car with plate no. 123. d. A ring with diamond embellishment. 9. Demand must be made on the due date of the obligation in order delay to exist in one of the ff. cases. Which is it? a. When it was stipulated by the parties that demand need not be made. b. When the law provides that demand need not be made. 2 contact: royfields212@gmail.com c. When the obligation does not indicate whether demand must be made or not on due date. d. When time is of the essence of the contract 10. This refers to delay on the part of the creditor. a. Mora solvendi ex re- delay on the part of the debtor. Delay in real obligations (obligations to give) b. Compensatio morae- delay in reciprocal obligations, both parties are in default. Here it is as if there is no delay. c. Mora solvendi ex personae- delay on the part of the debtor. Delay in personal obligations (obligations to do) d. Mora accipiendi-delay in the part of the creditor. This exist when the creditor refuses to accept the thing due without justifiable reason. 11. There shall be no liability for loss due to fortuitous events in one of the following cases. Which is it? 1) When he delays. 2) When the parties so stipulated that there shall be liability even in case of loss due to fortuitous events. 3) When the nature of the obligation requires the assumption of risks. 4) When the obligation is to deliver a determinate thing and there was no stipulation as to liability of the debtor in case of loss due to fortuitous events. General Rule: No person should be liable for fortuitous events; his obligations will be extinguished. 12. One of the following obligations is not immediately demandable. a. Pure obligation. -demandable at once/ immediately demandable because it has no term that must expire. b. Obligation with a resolutory condition.-conditional obligation c. Obligation with an in diem period. -obligation is demandable up until a period. d. Obligation with an ex die period. -obligation begins at the arrival of the period. "from a certain day" 13. D is obliged to give C P10,000.00 if X dies. This is an example of: a. An obligation with suspensive condition. Suspensive condition- is a condition the happening of which will give rise to the obligation. -the obligation is not void at the death of X. b. An obligation with a resolutory condition. -the obligation is not extinguished upon the happening of the condition. c. An obligation with a period. -waiting for a certain time period before the time of the thing due which is the death of X. d. A pure obligation. - No term. 14. When the debtor binds himself to pay when his means permit him to do so, the obligation is: a. An obligation with a resolutory condition. b. A pure obligation. c. An obligation with suspensive condition d. An obligation with a suspensive period. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197. A period is a future and certain event upon the arrival of which the obligation subject to it either arises or is extinguished. If the obligation is subject to a condition which depends upon the will of the debtor, the conditional obligation is void (Art. 1182.) because in such case, it is actually the fulfillment of the obligation that depends upon the will of the debtor. (see Art. 1308.) 15. Whenever a period is designated in an obligation, the said period shall be presumed to have been established for the benefit of: a. The debtor b. The creditor c. Both the debtor and the creditor d. Neither of the parties. II –True or False 1. In an obligation to give a determinate thing which is subject to a suspensive condition, the creditor has a right to the fruits of the thing upon the perfection of the obligation. FALSE Explanation: the obligation arises only upon the fulfillment of the obligation. Example: I promised to give you a car after you graduated from college. The right of the debtor will only arise upon the arrival of the term. Art. 1164-65 2. A person criminally liable is also civilly liable. TRUE Other sources of obligation: Acts or omissions punishable by law- these are crimes or felonies. The commission of a crime makes the offender civilly liable. Such civil liability includes restitution, reparation of the damage caused, and indemnification of consequential damages. 3. Obligations arising from contracts have the force of law between the contracting parties. TRUE Contracts- a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305) 4. A natural obligation cannot be enforced in a court of justice. TRUE Explain: because natural obligations is not enforceable by the state only civil obligations. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles. 5. A person obliged to give something is also obliged to take care of it with the diligence of a father of a good family, unless the law or stipulation of the parties requires a greater degree of care. FALSE It should be diligence of a good father of a family, 6. If the debtor fails to perform an obligation to do, the creditor may compel the debtor to comply with the obligation. FALSE 1. Creditor may have the obligation executed at the expense of the debtor 2. He may also demand damages from the debtor. Explanation: if the debtor cannot fulfill the obligation the creditor can ask another person to fulfill it at the expense of the debtor. 7. If an obligation to do has been poorly done, the creditor may have the same be undone at the expense of the debtor. TRUE 8. As a general rule, the debtor incurs in delay if he does not perform his obligation on the date it is due. FALSE Delay-non-fulfillment of the obligation with respect to time 9. If the obligation consists in the delivery of a determinate thing, the debtor who incurs in delay shall not be responsible for loss due to fortuitous event. FALSE Article 1165 if the obligation consist in delivery of a determinate thing, the debtor shall be responsible for any fortuitous event until he has affected the delivery. 10. A waiver of an action for future fraud is valid. FALSE Debtor is still liable if he commits fraud. 11. In an obligation to give an indeterminate thing, the loss or destruction of anything of the same kind will extinguish the obligation if the cause of the loss is a fortuitous event. FALSE ART. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost. 12. Acts of men such as armed robbery or piracy are considered fortuitous events if they occur independently of the debtor’s will. TRUE 13. As a general rule, rights acquired in virtue of an obligation are not transmissible. FALSE 14. An obligation subject to a resolutory condition is demandable at once. TRUE 15. An obligation which is subject to a suspensive condition that is potestative on the part of the debtor at the same time, is valid. FALSE 16. An obligation binds himself to pay when his means permit him to do so is a conditional obligation. FALSE 17. An obligation which is demandable upon the death of a person is an obligation with a period. TRUE 18. The condition not to do an impossible thing shall be considered as not having been agreed upon. In such a case, the obligation is immediately demandable. TRUE 19. The condition that some event happen at a determinate time shall extinguish the obligation as soon as the time expires or it has become indubitable that the event will not take place. TRUE 20. The condition shall be deemed fulfilled if the debtor voluntarily prevents its fulfillment. TRUE 21. 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. TRUE 22. A thing, although it still physically exists, may be considered lost if it goes out of commerce. TRUE 23. In an obligation to give a determinate thing which is subject to a suspensive condition, the deterioration of the thing without the debtor’s fault shall render debtor liable for damages. FALSE 24. A condition may refer to a past event unknown to the parties. TRUE 25. If the thing is improved at the expense of the debtor before the fulfillment of a suspensive condition, the debtor may demand reimbursement of such expense from the creditor. FALSE 1. Statement 1: Obligations and contracts are identical. Statement 2: The object of a contract of sale is its subject matter. a Both are true b Statement 1 is true; Statement 2 is false c Both are false d Statement 1 is false; Statement 2 is true 2. Contract that is made for a valuable consideration is: a. Onerous b. Onerous and gratuitous c. Gratuitous d. None of them 3. The stage of “conception” of a contract is: a. When the contract is fully executed. b. When the parties come to an agreement. c. When negotiations are in progress. d. A appoints B to sell his land. 4. Which of the following is wrong in relation to the rules on interpretation of contracts? a. The contemporaneous and subsequent acts of the parties shall be principally considered in order to ascertain their intention. b. If the terms of the contracts are clear, the literal meaning of its stipulations shall control. c. Obscure words or stipulations in a contract shall not favor the party who caused the obscurity. d. Doubts in gratuitous contracts shall be settled in such a way that the greatest transmission of rights and interests shall prevail. 5. The stipulation in a contract to the effect that the debtor should remain as a servant in the house and in the service of her creditor so long as she had not paid her debt is void because it is: a. Contrary to good custom b. Contrary to law and morality c. Contrary to public policy d. None of these 6. X, after the death of his father, sold his inheritance though its amount has not yet been determined to B, for a consideration of P50,000. a. The contract is valid only if the inheritance values at least equal or more than P50,000. b. The contract is rescissible c. The contract is valid even though nothing remains of the inheritance to be turned over to B. d. Contract is void, future inheritance cannot be the object of sale. 7. One of the stipulations contained in the contract between M Company and its employees is that the company shall pay a bonus to employees of the company who shall continue its employment for at least 2 consecutive years, unless he quits or is discharged before the expiration of the period of 2 years. X, an employee of the company was discharged without just cause one week before the completion of the two-year period. a. X is not entitled to the bonus because his discharge was in accordance with the contract. b. X is entitled to the bonus, because the employer’s right to terminate is superior than the right of the employee to be employed. c. X is entitled to the bonus whether the discharge is with or without cause. d. X is entitled to the bonus because the debtor company has voluntarily prevented the happening of the condition. 8. In order that a stipulation in favor of a third person in a contract would be valid and binding upon the parties thereto, three of the requisites are mentioned in the following enumeration. Which among them is not a requisite? a. There must be a stipulation in favor of a third person. b. The contracting parties must have clearly and deliberately conferred a favor upon that third person. c. The third person communicated his acceptance to the obligor before its revocation. d. That there must be an existing agency between either of the contracting parties and the third person. 9. D owes C P500. However, C’s right has already prescribed. Notwithstanding the knowledge of this fact, D paid the amount. Realizing this mistake, D wants to recover the amount he paid a. D can be made to recover on ground of mistake. b. D can be made to recover on the ground that his obligation is not legally enforceable. c. D can be made to recover because this will enrich C at the expense of D. d. D cannot recover. 10. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Which of the following constitutes a definite offer? a. An offer made through an agent. b. Business advertisement of things for sale. c. Advertisement for bidders. d. All of the above. 11. On July 15, 2014, X entered into a contract with Y. On February 10, 2015, X discovered that fraud was committed at the time he entered into a contract, a fraud that vitiated his consent. The action for annulment shall be brought a. Within three years from the time of the fraud. b. Within four years from February 10, 2015. c. Within four years from the time A entered into the contract. d. On February 10, 2015. 12. D owes C P10,000. But the debt soon prescribed. Later X, against the consent of D, pays C P10,000. a. X can recover from D P10,000 because the latter was enriched at the expense of X. b. X has no right. c. X cannot recover from D what he pays C. d. Both D and C are liable to X. 13. In a contract of sale executed by S and B; it appears S sold his motor vehicle to B and B bought it for P10,000. It turned out however, S has three motor vehicles. Gallant valued P80,000; Hi-Ace van valued P70,000; and a Jeep valued at P60,000. Which of the following is correct? a. The contract shall be reformed because there was mistake. b. The parties can ask for interpretation because the word Motor vehicle is ambiguous. c. The parties can ask for annulment of the contract. d. There is no contract. 14. A written contract of sale entered into between S (seller) and B (buyer). The object of the sale is the right lung of S. B has paid the price amounting to P200,000.00. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. Unenforceable e. Void 15. A written contract of sale of a computer worth P20,000.00 between S (seller), a minor, an B (buyer), an insane person. The computer has not been delivered and the price has not been paid. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. Unenforceable e. Void 16. An oral contract of commodatum whereby M, 17 y.o, lent his phone to B, 25 years old for a week. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. Unenforceable e. Void 17. An oral sale of a lot worth P50,000.00 between S (Seller) and B (buyer). S has not delivered the lot, but B has given a down payment of P5,000.00. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. Unenforceable e. Void 18. A written contract of sale of a lot between S, seller, and B, buyer, for P50,000.00. The lot is the only property of S who sold it to defraud C, his creditor. B was aware of the fraudulent intent of S in selling the lot to him. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. Unenforceable e. Void 19. A deed of sale of a lot worth P100,000.00 between S (seller) and B (buyer). S has not delivered the lot, but B has not given any payment. The sale is in writing but has not yet been acknowledged by the parties before a notary public. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. Unenforceable e. Void 20. An oral contract of lease of a room between R (lessor), who is 40 years old, and S (lessee), a 17-year old student for a period of one year while S is studying at ABC School. The monthly rental is P5,000.00. S paid the first month rental in advance. The contract is: a. Valid and enforceable b. Rescissible c. Voidable d. d. Unenforceable e. Void Notes in Business Law, 2016 edition Fidelito R. Soriano OBLIGATIONS Obligations, concept An obligation is a juridical necessity to give, to do or not to do. (Art. 1156, Civil Code of the Philippines) Juridical necessity means that the court may be asked to order the performance of an obligation if the debtor refuses to perform it. If an obligation cannot be enforced through courts, it may be disregarded with impunity. Requisites of an obligation 1. Active subject (creditor or obligee) - the party who has the right to demand performance of the obligation. 2. Passive subject (debtor or obligor) - the party who is obliged to perform the obligation. 3. Prestation - The object or subject matter of the obligation. It may consist of giving, doing or not doing something. 4. Efficient cause- the vinculum or the legal or juridical tie which binds the parties to an obligation. The efficient cause of an obligation may be any of the five sources of the obligation. Civil obligation and natural obligation distinguished A civil obligation (as defined on Art. 1156) is based on positive law; hence, it is enforceable by court action. A natural obligation, on the other hand, is based on natural law; hence, it is not enforceable by court of action. The obligation, however, exists in equity and moral justice, such that if the debtor voluntarily performs it, he can no longer recover what he has given. Sources of obligation (Art. 1156) 1. Law- A rule of conduct, just and obligatory, laid down by legitimate authority for common observance and benefit. Obligations derived from law are not presumed. Only those expressly determined in the Civil Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishers them; and as to what has not been foreseen, by the provisions on obligations. (Art. 1158) 2. Contracts- a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305) Obligations arising from contracts have the force of law between the contracting parties and should be complied with good faith. (Art. 1159) 3. Quasi-contracts- they refer to certain lawful, voluntary and unilateral acts giving rise to a juridical relation to the end that no one shall be unjustly enriched at the expense of another. (Art. 2142). There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principle of justice, equity and good conscience." The principal kinds of quasi-contracts are negotiorum gestio and solutio indebiti. 1. Negotiorum gestio- this refers to the voluntary administration of the property, business or affairs of another without the consent or authority. It creates the obligation to reimburse the gestor for necessary and useful expenses. (Art. 2150) 2. Solutio indebiti- this refers to payment by mistake of an obligation which was not due when paid. It creates the obligation to return the payment. (Art. 2154) 3. Other kinds of quasi-contracts 1) When without the knowledge of the obliged to give support, is given by a stranger, the latter shall have the right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being paid. (Art. 2164) 2) When funeral expense are borne by a third person, without knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should latter claim reimbursement. (Art. 2166) 4. Acts or omissions punishable by law- these are crimes or felonies. The commission of a crime makes the offender civilly liable. Such civil liability includes restitution, reparation of the damage caused, and indemnification of consequential damages. 5. Quasi-delict- (also known as "tort" or "culpa aquiliana") these are acts or omissions that cause the damage to another, there being fault or negligence but without any pre-existing contractual relation between parties. (Art. 2176) For quasi-delict case to prosper, the complaint must establish: (d). Damages to complaint (e). Negligence, by act or omission of the defendant must respond, was guilty; (f). The connection of cause and effect between such negligence and damages. With respect to the third element, the negligent act or omission must be the proximate cause of the injury. NATURE AND EFFECT OF OBLIGATIONS 1. Concept A thing is determinate when it is particularly designated or physically segregated from all other of the same class. (Art. 1460) A thing is indeterminate or generic when it is not particularly designated or physically segregated from all other of the same class. 2. Importance of knowing whether a thing is determinate or generic As a rule, the loss of a determinate thing through a fortuitous event extinguishes the obligation. (Art. 1262) Obligation of one obliged to give a determinate thing 1) To take good care of the thing with the diligence of a good father of a family unless the law or agreement of the parties requires another standard of care. (Art. 1163) Diligence of a good father of a family means the ordinary care that an average person exercises in taking care of his property. 2) To deliver the thing. (Art. 1163) 3) To deliver the fruits of the thing (Art. 1164) a. Kinds of Fruits i. Natural fruits- they are the spontaneous products of the soil and the young and other product of animals. (Art. 442) ii. Industrial fruits- they refer to those produced by land of any kind through cultivation or labor. (Art. 442) iii. Civil fruits- they refer to fruits which the result of a juridical relation such as the rent of a building, price of lease of land and other property and the amount of perpetual or life annuities. (Art. 442) b. When creditor has a right to the fruits of a determinate thing. The creditor has the right to the fruits of a thing from the time the obligation to deliver it arises. However, he shall acquire no right over it until the thing has been delivered to him. (Art. 1164) c. When the obligation to deliver the thing arises i. If the obligation is a pure obligation or one whose performance is not subject to a suspensive period or suspensive condition, the obligation to deliver arises from perfection. ii. If the obligation is subject to suspensive period or suspensive condition, the obligation to deliver arises upon the arrival of the term or upon the fulfillment of the condition. d. Rights of the creditor i. Personal right- the right that may be enforced by one person on another, such as the right of the creditor to demand the delivery of the things and its fruit from the debtor. This is also called jus in personam or jus ad rem. ii. Real right- this refers to the right or power over a specific thing, such as possession or ownership, which is a right enforceable against the whole world. This is the right acquired by the creditor over the thing and its fruit when they have been delivered to him. This is also called jus in re. 4) To deliver its accessions and accessories even of they have not been mentioned. (Art. 1166) a. Accessions- They include everything that is produced by a thing or is incorporated or attached thereto, either naturally or artificially, (Art. 440) such as alluvium, the soil gradually deposited by [the current river on a river bank, or whatever is built, planted or sown on a parcel of land. b. Accessories- Those joined to or included with principal thing for the latter's better use, perfection or enjoyment (such as the keys to a car or a house, or the bracelet of a wristwatch0. Remedies of the creditor 1. If the debtor fails to perform his obligations to deliver a determinate thing a. To compel the debtor to made the delivery (Art. 1165) b. To demand damages from the debtor. (Art. 1170) 2. If the debtor fails to perform his obligations to deliver a generic thing a. To ask the obligation to be complied with at the expense of the debtor. (Art. 1165) b. To demand damages from the debtor. (Art. 1170) 3. If the debtor fails to perform his obligations to do a. If the debtor fails to perform his obligations or performs it but contravenes the tenor thereofi. Creditor may have the obligation executed at the expense of the debtor. (Art. 1167) ii. He may also demand damages from the debtor. (Art. 1170) b. If the debtors performs the obligation but does it poorly i. Creditor may have the same be undone at debtor's expense. (Art. 1167) ii. Creditor may also demand damages from the debtor. (Art. 1170) 4. If the debtors does what has forbidden him a. The creditor may demand that what has been done be undone. b. He may also demand damages from the debtor. (art. 1168) Grounds for liability to pay damages 1. Fraud 2. Negligence 3. Delay 4. Contravention of the tenor of the obligation. (Art. 1170) Damages 1. Concept, distinguished from injury Damages refers to the harm done and the sum of money that may be recovered in reparation for the harm done. 2. Kinds of damages a. Actual or compensatory damages- These refers to the pecuniary loss, (such as loss in business or profession) that may be recovered. It includes value of the loss suffered and profits realized. (Art. 2199) b. Moral damages- They include physical suffering, mental anguish, fright, serious anxiety, social humiliation and similar injury, (Art. 2217) c. Nominal damages- They refer to damages to vindicate a right. (Art. 2221) d. Temperate or moderate damages- They are more than nominal but less that compensatory damages, but may be recovered is the courts finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. (Art.2224) e. Liquidated damages- Those agreed upon by the parties to a contract, to be paid in case of breach. (Art. 2226) f. Exemplary or corrective damages- these are imposed by way of example or correction for public good, in addition to the moral, temperate, liquidated or compensatory damages. (Art. 2229) 3. Proof of pecuniary loss a. Actual damages- proof is required unless provided by law or stipulation. (Art. 2199) b. Other damages- proof is not required in order that moral, nominal, temperate or liquidated or exemplary damages may be adjudicated. The assessment of such damages, except liquidated ones, is left discretion of the court, according to the circumstances of each case. (Art. 2216) Fraud 1. Concept Fraud is the deliberate or intentional evasion by the debtor of the normal compliance of his obligation. Under Art. 1170, this actually refers to the fraud committed by the debtor at the time of the performance of his obligation. Kinds of fraud in general a. According to meaning i. Causal fraud or dolo causenteThis refers to fraud without which consent would not have been given. It renders the contract voidable. ii. Incidental fraud or dolo incidenteThis refers to fraud without which consent would have still been given but the person given it would have agreed on different terms. The contract is valid but the party employing it shall be liable for damages. 2. Fraud in the performance of the obligation a. This is the deliberate act of evading fulfillment of an obligation in a normal manner. This presupposes an existing obligation; hence, the fraud has no effect on the validity of the contract since it was employed after perfection. However, the party employing it shall be liable for damages. (Art. 1170) b. According to time of commission i. Future fraud- A waiver of action for future fraud cannot be made. If there is an agreement for its waiver, the same is void. (Art. 1171) thus, the debtor will still be liable for damages if he commits fraud in the performance of his obligation despite any waiver made by his creditor. ii. Past fraud- A waiver of action for past fraud may be made, since the commission of fraud can no longer be encouraged. Such is an act of liberality on the part of the creditor. Negligence 1. Concept It is the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time and of the place. (Art. 1173). It is the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury. It is the omission to do something which is reasonable man, guided by those consideration which ordinarily regulate the conduct of human affairs, would do, or doing of something which a prudent and reasonable man, would not do. 2. Test of negligence The test of negligence is whether the defendant is doing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation. 3. Diligence to be observed If the law or contract does not state the diligence which is to be observed in the performance of the obligation, the debtor must observe the diligence of a good father of a family, as required by the nature of the obligation and which corresponds with the circumstances of the person, of the time or of the place. 4. Kinds a. Culpa contractual (contractual negligence)- This is negligence in the performance of a contract (such as negligence committed by the driver of a bus when a passanger is hurt during a trip because there is here a breach of contract of carriage) Here the master-servant rule applies, the negligence of the master is the negligence of the master. Accordingly, the offense of a good father of a family in the selection and supervision of employees is not a defense on the part of the employer although it may mitigate the liability. Thus, in the example, the negligence of the bus driver is the negligence of the bus owner. b. Culpa aquiliana (civil negligence or tort or quasi delict or culpa exra-contractual)- Thse are acts or omissions that cause damage to another, there being no contractual relation between the parties (Art. 2176) The master-servant rule does not apply. Hence, the defense of a good father of a family in the selection and supervision of employees is a defense on the part of the employer to escape liability. Thus, if the pedestrian hit by a bus through reckless driving of the driver, the latter's negligence is not the negligence of the owner. c. Culpa criminal (criminal negligence)- This negligence that results in the commission of a crime. Defense of a good father of a family is not proper because the employee's guilt is automatically the employer's civil guilt if the former is insolvent. The passenger of the bus may bring a court of action not only for culpa contractual against the bus owner, but also one for culpa criminal against the bus driver for reckless imprudence resulting in physical injuries. In the same way, the pedestrian may bring not only a suit for culpa aquiliana against the driver and the bus owner, but also for culpa criminal against the bus driver for reckless imprudence resulting to physical injuries. Default or delay or mora 1. Concept- Delay or default or mora is the nonfulfillment of an obligation with respect to time. 2. Kinds a. Mora solvendi- Delay on the part of the debtor 1)Ex re- Delay in real obligations (obligations to give) 2)Ex die- Delay in personal obligations (obligations to do) b. Mora accipiendi- Delay on the part of the creditor. This exist when the creditor refuses to accept the thing due without justifiable reason. c. Compensation morae- Delay in reciprocal obligations, both parties are in default. Here, it is as if there is no delay. 3. When the debtor incurs in delay in obligations to give or to do, requisites General rule: the debtor incurs a delay from the time the creditor demands fulfillment of the obligation (either judicially or extra-judicially) but the debtors fails to comply with such demand (no demand, no delay, as a rule). The following are the requisites of delay: a. That the obligation be demandable and already liquidated. b. The debtor does not perform the obligation. c. The creditor demands the performance either judicially or extra-judicially. d. The debtor fails to comply with such demand. Exceptions: delay will exist even without demand in the following cases (Art. 1169) a. When the law so provides Thus, where the law provides for the payment of penalty if the obligation is not performed on due date (such as in the case of taxes), then demand shall not be necessary. b. When the obligation expressly so declares Hence, no demand is necessary such as when a lease contract provides that "the rental shall be paid by the lessee within the first five days of the month in advance without need of demand." c. When time is of essence of the contract Thus, where a rent-a-car company is obliges to provide for the bridal car during a wedding at a particular date, time and place, the said company is liable if it fails to perform the said obligation notwithstanding the absence of demand since time was a controlling motive for the establishment of the contract. d. When demand would be useless Thus, the debtor will be in delay even without demand from the creditor if the thing he is obliged to deliver has been destroyed through his fault or he has delivered it to another person. e. In reciprocal obligations, where the obligation arise out of the same cause and must be fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by the other begins notwithstanding the absence of demand. Notes: 1) In (a) and (b) above, it is not sufficient that the law or obligation fixes a date for performance; it must further state expressly that after the period lapses, default will commence. 2) There is no delay in an obligation not to do as one cannot be in delay for not doing something. 4. Effects of delay a. On the part of the debtor i. The debtor shall be liable for the payment of damages. (Art. 1170) ii. If the obligation consists in the delivery of a determinate thing, he shall be responsible for any fortuitous event until he has effected the delivery. (Art. 1165) b. On the part of the creditor i. He shall bear the risk of loss and shoulder the expenses for the preservation of the thing. ii. The debtor may resort to the consignation of the thing due. (Art. 1258) Fortuitous event 1. Concept Fortuitous events are those events that could not be foreseen, or which, though foreseen, are inevitable. (Art. 1174). It is not enough that the event should not be one impossible to foresee or avoid. 2. Elements a. That cause must be independent of the debtor's will. b. There must be impossibility of foreseeing the event or of avoiding it even if it can be foreseen. c. The occurrence of the event must be of such character as to render it impossible for the debtor to perform his obligation in a normal manner. 3. Liability for fortuitous events General Rule: No person shall be liable for fortuitous events, his obligation will be extinguished. Exception to the rule (Art. 1174) a. When the law expressly provides for the liability even in case fortuitous events (such as provided in Art. 1165 where the obligor is liable for fortuitous event if he delays or has promised to deliver the same thing to two or more persons who do not have the same interest). b. When the parties have declared liability even in case of fortuitous event. c. When the nature of the obligation requires the assumption of risk (such as the obligation of an insurer who must pay the policy holder even if the loss is caused by a fortuitous event if the cause thereof if the risk insured against). 4. Burden proving loss due to fortuitous event The burden of proving that the loss was due to fortuitous event rests on him who invokes it. And, in order for fortuitous event to exempt one from liability, it is necessary that he must have committed no negligence or misconduct that may have occasioned the loss. 5. Case Presumptions on receipt of principal or of latter installment (these are disputable presumptions and evidence may be introduced to the contrary by the creditor) (Art. 1176) 1. The receipt of the principal without reservation as to interest, shall give rise to the presumption that the interest has been paid. 2. The receipt of a letter installment without reservation as to prior installments, shall give rise to the presumption that such prior installments have been paid. The above presumptions are disputable; hence, they have the rebutted by the creditor with contrary evidence. Thus, the creditor may show proofs that the interest or a priori installment has not been paid. If the presumption is conclusive, then no evidence to the contrary may be admitted. Remedies of creditor to enforce payment of his claims against the debtor (Article 1177) 1. Pursue the property in the possession of the debtor except those exempt by law. This is usually by attachment where the creditor files a court action to exact fulfillment with a prayer that the court set aside a property belonging to the debtor. If the court decides in favor of the creditor and the debtor does not pay , the property attached will be ordered sold and the proceeds thereof applied to the payment of the obligation . 2. Exercise all the rights and bring all the actions of the debtor except those personal to him (accion subrogatoria). 3. Impugn the acts which the debtor have done to defraud his creditors (accion paulina). This remedy must be of last resort . The creditor must not have taken successively the foregoing measures before he can bring this action. Rule on transmissibility of rights and exceptions thereto (Art. 1178) General Rule: all rights acquired in virtue of an obligation are transmissible. (Thus, a creditor may assign his credit to a third person or such right is transmitted to the heirs upon his death.) Exceptions: 1. If the law prohibits the transmission of the right. Thus, the rights of a general partner in a partnership are not transmitted to his heirs upon his death as provided by law. 2. If the parties agreed against transmission. Thus, the right is not transmitted to an assignee or to the heirs if there was a stipulation to that effect between the parties. 3. If the right is by nature for not transmissible. Example: S was granted a scholarship grant by is cool after a series of examination and interviews. S, however , dice with two-year still remaining before he finishes his studies period the right of S to enjoy the scholarship grant is not transmitted to his heirs because it is strictly personal. DIFFERENT KINDS OF OBLIGATIONS Pure obligation, concept A pure obligation is one without a term or condition and is demandable at once. Example: I promise to give you P5, 000.00. This is immediately demandable since there is no term that must expire or a condition that must happen for the obligation to be demandable. Conditional obligation, concept A conditional obligation is one whose demandability or extinguishments depends upon the happening of a condition. Examples: (1) I will give you my car if you pass the CPA Examination. The condition here is suspensive. You may not demand the delivery of my car until you pass the CPA Examination. (2) I will let you see my car until you pass the CPA Examination. The condition here is resolutory. You may demand the delivery of my car now but you must return it to me when you pass the CPA Examination. CONDITION 1. Concept- It is an uncertain event which wields an influence on a legal relationship. 2. Classification a. Suspensive and resolutory 1. Suspensive- this is a condition the happening of which will give rise to the obligation. This is also called condition antecedent or condition precedent. Here, the demandability of the obligation is suspended until the happening of the condition. When an obligation is subject to a suspensive condition, its birth place or its effectivity commences only if and when the event that constitutes the condition happens or is fulfilled. 2. Resolutory- this is a condition the happening of which sting bushes the obligation. This is also called condition subsequent. The obligation is demandable at once but it shall be extinguished upon the happening of the condition. b. Potestative, casual and mixed 1. Potestative- a condition that depends upon the will of one of the contracting parties. a)Potestative on the part of the debtor. (1) If suspensive- the obligation is void. (Art. 1182) Even if the condition is fulfilled, the obligation is not demandable. Example: D is to give C P50, 000 of D goes to Baguio. (2) If resolutory- The obligation is valid. Example: D is to allow the use of his car by C until D returns from Baguio. b)Potestative on the part of the creditor- the obligation is valid whether the condition is suspensive or resolutory. Examples: (1) D is to give C 50,000 if C goes to Baguio. (2) D is allowed the use of his car by C until C returns from Baguio. 2. Casual- A condition that depends upon the chance or upon the will of a third person. Examples :(1) D is to give X 50,000 if he wins first prize in the lotto on the bet he plays this morning. (2) D is to give C 50,000 if X goes to Baguio. 3. Mixed- A condition that depends partly upon the will of one of the parties and partly upon the chance or upon the will of a third person. Example: D is to give X 50,000 if X will marry C. c. Possible and impossible 1. Possible- one that is capable of fulfillment in its nature and by law. [Show Less]