civil obligations (seventhlast, piece)

Subtopic under civil obligations What the law says What the commentaries, the professor etc. say haha

AgreementH. Saura v. DBP (1972)

DifficultyI.

What is clausula rebus sic stantibus?- A1267

102)

- Clausula rebus sic stantibus- a discredited theory in public international law where parties stipulate in the light of certain prevailing conditions, and once these conditions cease to exist, the contract also ceases to exist.

- Considering practical needs and equity and good faith, disappearance of the basis of a contract gives rise to a right to relief in favor of the party prejudiced.

Art. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. (n)

Occena v. Jabson (1976)

Naga Telephone v. CA (1994)

1. Change of circumstances

But in such case, courts not authorized to remake, modify or revise the contract.

○ But when service has become so difficult as to be manifestly beyond contemplation of the parties, court should be authorized to release obligor, in whole or in part.

- General rule: impossibility of performance releases the obligor.

Intention of parties should govern XXX.-

○ Doctrine said to be based on discredited theory of rebus sic stantibus.

- 1267 states in our law the doctrine of unforeseen events.

○ Parties to the contract must be presumed to have assumed the risk of unfavorable developments.

○ So, only in absolutely exceptional changes of circumstances that equity demands assistance for the D.

- But 1267 is not an absolute application of rebus sic stantibus, which would endanger the security of contractual relations.

○ demands a certain economic equilibrium between the prestation and the counter-prestation , and does not permit the unlimited impoverishment of one party for the benefit of the other by the excessive rigidity of the principle of the obligatory force of contracts. Mainly a question of fact left to the courts.

○ Rule NA to obligations for payment of sum of money when there is a change in value of the stipulated currency. In such case, 1250 will apply.

- Equity

(1) Event or change in circumstances could not have been foreseen at the time of the execution of the contract.

But change must be greatly beyond XXX. Contract must be respected as long as injustice not intolerable.

- Basis: events and risks which normally and in the ordinary course of life, according to the circumstances of time and place, the parties may reasonably contemplate as possible. Any change of circumstances beyond these limits, beyond the contemplation of the parties.

(2) Event makes the performance of the contract extremely difficult but not impossible.

A manifest disequilibrium in the prestations such that one party would be placed at a disadvantage by the unforeseen event. Such disadvantage does not pertain to small losses which constitute normal risks of the contract.

- Difficulty of performance

(3) Event must not be due to the act of any of the parties.

(4) Contract is for a future prestation

2. Change of circumstances; requisites (four)

- Excluded from 1267 are aleatory contracts and those which are purely speculative.

3. Loss of protected interest

○ If obligation is based on interest of C worthy of protection, juridical protection cannot extend beyond that interest.

- Disappearance of creditor's interest which is sought to be protected by the obligation, will extinguish the obligation.

ImpossiblityJ.

What is the effect of 103)

Art. 1266. The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor. (1184a)

CIVIL OBLIGATIONS (seventh/last, piece)Friday, January 14, 2011

4:51 AM

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What is the effect of impossiblity?- A1266/NCC

103)

104) Subsequent impossibility

- Distinction:

Impossibility according to time of occurrence

effect

Impossibility existing at the time the obligation is constituted (1348)

Nullity of contract

Impossibility which supervenes at the time of performance (1266)-> after obligation constituted

modification or extinguishment of the obligation, depending on WON imputable to D

fault of the obligor. (1184a)

a. Physical impossibility- occurs when the act by reason of its nature cannot be accomplished

Legal impossibility- occurs when the act by reason of a subsequent law is prohibited

1. Subsequent impossibility; nature of impossibility

b. Objective impossibility- when the act or service in itself, without considering the person of the obligor, becomes impossible

Subjective impossibility- when act or service cannot be done by D himself but can be accomplished by others

1. Both have same effect.2. Impossibility extinguishes so long as it is not due to fault or

negligence of D.

Notes:

2. Effect of impossibility

- Debtor released but liable for restitution of what he may have received in advance from C.

- D cannot be made liable for damages.

- It should be the prestation which should become impossible.

3. Partial impossibility

- Its importance and consequence should be considered and the purpose of the obligation as well.

- Circumstances may be equivalent to a total impossibility. 1264 may be applied.

If at time performance becomes impossible, D has already fulfilled part:

C pays part done so long as he benefits therefrom.

If D has already received something from C

D must return anything excess of what corresponds to part done when impossibility supervened.

4. Temporary impossibility

○ Unless by its nature or by the will of the parties it has to be performed at a determinate time

- Do not extinguish obligation but merely delay fulfillment

- But if obstacles of unknown and unforeseen duration, obligation may be considered juridically impossible--> extinguished. And not revived by fact that it becomes possible later when circumstances change.

5. Reciprocal obligations

○ Each obligation depends upon the other.

- Release of D due to impossibility also releases C from counter-prestation, because:

Other performance excusesIV.

Volenti non fit injuriaK.

What is volenti non fit injuria?- A1174/NCC

104)

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)

1. Fortuitous event; force majeure

- An event which takes place by accident and could not have been foreseen.

- Essential element: some extraordinary circumstance independent of the will of the obligor or of his employees.

(1) Nature (earthquakes, storms, floods, epidemics, fires etc.)(2) Act of man(armed invasion, attack by bandits, governmental

prohibitions, robbery, war etc.)

- Element: force of an imposition which the D could not have resisted

- May be produced by two general causes

- Includes unavoidable accidents, even if there has been an intervention of human element, provided fault or negligence cannot be imputed to D.

- No essential difference between fortuitous event and force majeure--> both refer to causes independent of the will of the

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majeure--> both refer to causes independent of the will of the obligor.

(1) Cause of the unforeseen and unexpected occurrence, or failure of D to comply with his obligations, must be independent of the human will.

(2) It must be impossible to foresee the event which constitute the caso fortuito or if it can be foreseen, it must be impossible to avoid.

(3) The occurrence must be such as to render it impossible for D to fulfill his obligation in a normal manner.

(4) The obligor must be free from any participation in the aggravation of the injury resulting to C.

○ One who creates a dangerous condition cannot escape liability although an act of God may have intervened.

- In a legal sense and in relation to contracts, has the following characteristics:

- Effect in general: no liability for damages for non-performance.

- Effect of negligence: not exempt from liability

Stipulation must be clearly expressed.

○ Parties may expressly stipulate in contract that D shall be liable to C even of performance is rendered impossible by fortuitous event or force majeure.

- Express stipulation:

○ One of the exception to the general rule on fortuitous event is when the nature of obligation requires assumption of risk.

○ Principle of * based on social justice: Owners who benefit from operation of properties should also bear risks arising therefrom.

- Assumption of risks:

2. Acts of creditor

- D released from liability not only when nonperformance is due to fortuitous event but also when due to act of C himself.

Fortuitous eventL.

What are acts of God?-A1174, 1262, 1221/NCC

105) 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. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay.

When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk. (1182a)

Art. 1221. If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become impossible after one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand upon him by the creditor, the provisions of the preceding paragraph shall apply. (1147a)

1. Please see notes for 104.

2. Robbery and theft

4. Exceptions to the rule: please see handwritten notes under loss of thing due.

5. [1221] limited to loss of thing

- If loss due to fault of any SD or due to FE after D delayed, O converted into an O to pay indemnity, consisting of the price, damages and interest.

6. [1221] Nonperformance without loss

- No loss but delay, fraud, fault or negligence or some other breach of O: C may recover indemnity for damages from any of the SDs.--> SDs will perform still, each to give his share, but guilty D shoulders damages alone.

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- Thing lost via robbery with violence, D should show he could not resist violence.

- If theft: D considered negligent for having placed thing within reach of thieves XXX hence liable for damages.

2. Robbery and theft

3. Loss of determinate object, effect on reciprocal obligations

- Affects both C and D so entire juridical relation is extinguished. D has to return to C whatever C may have already delivered by reason of obligation.

- Rule: risk pertains to D. D released but cannot demand prestation stipulated for his benefit.

When will force majeure not extinguish an obligation?-A1174, 1262, 1221, 1262, 1268, 1165/NCC

106) 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. 1221. If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become impossible after one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand upon him by the creditor, the provisions of the preceding paragraph shall apply. (1147a)



Art. 1268. When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it. (1185)

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)

NAPOCOR v. CA (1993)

Nakpil and Sons v. CA (1986)

1. Please see above notes for 1174, 1262 and 1221.

2. [1268] Offer of payment

(1) To consign thing(2) Just keep thing in his possession,

with the obligation to use diligence subject to the general rules of obligations but no longer to the special liability imposed by 1268.- Q: What is that special liability?

- Two alternative for D:

(1) An action for specific performance, to obtain compliance of the prestation;

Whether determinate or generic

Generic: D cannot pay damages in lieu of thing if C wants the thing. This is aside from damages.

Q: Where here is loan categorized?

(2) An action in some cases to rescind or resolve O

(3) An action for damages, exclusively or in addition to either of the first actions

3. [1165] Remedies of C when D fails to comply:

4. [1165] Imprisonment for debt

○ This without prejudice to subsidiary imprisonement for nonpayment of civil liability imposed in a criminal case, or to imprisonment as a punishment for contempt.

- CON87: No person shall be imprisoned for debt.

5. [1165] Delay and Fes

- German Civil Code: D in default not liable for FEs if proves that even if he had performed O, loss would have occurred same manner.--> This is NA here. Otherwise, it would encourage delay by permitting D to gamble on chance of exemption if a FE of a general character occurs. But damages for which D is liable may be equitably mitigated under 2215(4)/NCC.

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civil obligations (seventhlast, piece)

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