There are many things that encompass obligations such as an obligation to provide basic needs to children, deliver goods and services, perform agreements stated on the contract and many others. When these obligations are not fulfilled, the burden will be on the individual who made a promise. Avoiding these obligations have legal implications according to the provisions of Chapter 2 of the Civil Code of the Philippines. NATURE AND EFFECT OF OBLIGATIONSArt. 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a) Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. (1095) Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. (1096) Art. 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned. (1097a) Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost. This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone. (1098) Art. 1168. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense. (1099a) Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. (1100a) Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. (1101) Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void. (1102a) Art. 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. (1103) Art. 1173. The fault or negligence of the obligor consists in the 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. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. (1104a) Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. (1105a) Art. 1175. Usurious transactions shall be governed by special laws. (n) Art. 1176. The receipt of the principal by the creditor without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid. The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the presumption that such installments have been paid. (1110a) Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them. (1111) Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary. (1112)
Details Category: Obligations and Contracts
1. If the debtor fails to comply with the obligation at the time it falls due, the creditor is merely entitled to move for the sale of thing pledged 2. The creditor cannot appropriate himself without foreclosure the thing pledged as pledge or under mortgage nor can he dispose of the same as owner
The Latin aphorism "pacta sunt servanda" (what is agreed obliges) is a key principle of the Spanish Civil Code, which establishes specifically that "the obligations arising from contracts have the force of law between the contracting parties, and must be complied with in accordance with their own terms" (article 1091 of the Civil Code). Contracts are valid and by mere consent, and from then on they oblige not only to what has been expressly set out, but also to the consequences which, according to their nature, can be expected in accordance with good faith, common usage and the law. (article. 1.258 CCiv) 2. DESPITE BEING BINDING CONTRACTS ARE BREACHED: WHAT IS THERE TO DO THEN?Even though they are binding from the moment they are entered into, contracts are breached, as everyone knows. 2.1 So what can one do when the agreement you have entered into is breached by the other party?
Other articles of the Code also authorize to request the fulfilment of an obligation assumed contractually. Thus, when the obligation is the delivery of a certain thing, Art. 1096 entitles the creditor to compel the debtor to make delivery or, if the thing is indeterminate or generic, to demand specific performance at the debtor's expense. Art. 1098 provides that if the obligor does not do something that is was obliged to do then, it shall be enforced at its own expense. The law also allows for the undoing something which should not have been done (art. 1099) also at the debtor's expense. Certain specific types of agreements such as sale and purchase agreements, assignments of rights, etc. have specific rules and remedies set out in the Civil and Commercial Codes for cases of non-compliance. Be sure to check with a lawyer to verify if your specific agreement has also specific remedies in addition to the above. 2.2 What if a party to an agreement demands payment from me even if they have not fulfilled their obligation, or have only partly done so? In case of reciprocal obligations, if a party is asked to comply with its obligations when the other party has not done so, there are two main defences:
As a rule, in all reciprocal obligations "no one can demand fulfilment of an obligation without having done so itself". This is expressly set out in Supreme Court ruling of 27 December 1990. This means that if one party fails to perform its obligations, the other party may refuse to perform. This is the basis of the exceptio non adimpleti contractus - exception of unperformed contract - and its lesser sibling the exceptio non rite adimpleti contractus - exception of contract not accurately and completely performed. These exceptions are not expressly envisaged by the Civil Code, but are widely recognised case-law creations which are inferred from the collective interpretation of a number of articles (such as art. 1100, 1124, 1466 and 1467 of the Civil Code) So, how can they be used when you are being asked to perform by a non performing party? There a certain requirements to take into account:
2.3 Will the exceptions free me from an obligation? Please check with your lawyer to see if the exceptions are an appropriate defence for you and whether they are likely to succeed and/or provide the relief you need in your specific case. 3. WHAT ABOUT FORCE MAJEURE? DOES IT CHANGE ANYTHING?Yes it does. Force majeure is an impediment to performance which may lead to the extinction of an obligation, the suspension thereof or simply exonerate the debtor from liability for damages. (a) In unilateral obligations
(b) In the case of bilateral or reciprocal obligations the debtor who is affected by force majeure is exempt from liability for failure to perform but the other party may terminate the agreement. As an exception, in the case of generic obligations, the maximum "genus numquam perit" applies, according to which it is understood that the thing does not perish and, therefore, there is no impossibility of performance due to the loss of the things the debtor had counted on for performance. This applies for example to monetary obligations which case law usually determines cannot be affected by force majeure. The maxim "genus nunquam perit" does not apply where parties have specified certain conditions in generic goods. If it is not just wine, but an specific bottle of wine from a certain vintage and winery, then force majeure, which prevents the debtor from obtaining such specific defined type of a genus also has the effect of freeing the debtor: it is not liable for failure to perform but the other party may terminate the agreement. So, generically, if due to an event of force majeure, the debtor is unable to perform, it will not have any liability for non-performance: the obligation would not be performed, but the debtor is not liable for it. This "non-performance" allows the other party to free itself from its obligations under the agreement by exercising the power of termination (Art. 1124 of Civil Code mentioned above), but without the right to claim damages. Note in any case that the agreement is not extinguished ipso facto; it requires express termination by the creditor. If the impossibility to perform is neither total nor definitive, then naturally the right to claim performance is not extinguished completely. Whether your agreement is affected or not by force majeure is a matter of fact which needs to be ascertained on a case by case basis. For force majeure to be accepted by the courts certain specific requirements must be met. In cases where performance is not impossible but has become exorbitantly onerous the "rebus sic stantibus" doctrine may apply. Please do consult your lawyer. |