GENERAL PROVISIONS

Makati Stock Exchange vs. Campos

The petition filed by Campos should be dismissed for failure to state a cause of action. A cause of

action is the act or omission by which a party violates a right of another. A complaint states a cause

of action where it contains three essential elements of a cause of action, namely: (1) the legal right

of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the

defendant in violation of said legal right. If these elements are absent, the complaint becomes

vulnerable to dismissal on the ground of failure to state a cause of action.

Petition in SEC Case No. 02-94-4678 asserts a right in favor of respondent: Campos's alleged right

to subscribe to the IPOs of corporations listed in the stock market at their offering prices; and

stipulates the correlative obligation of petitioners to respect respondent's right by continuing to

allow respondent to subscribe to the IPOs of corporations listed in the stock market at their offering

prices.

Although the Petition in SEC Case No. 02-94-4678 does allege a right and an obligation, it utterly

failed to lay down the source or basis of respondent's right and/or petitioners' obligation.

Campos merely quoted in his Petition the MKSE Board Resolution granting him the position of

Chairman Emeritus of MKSE for life. However, there is nothing in the said Petition from which the

Court can deduce that Campos was granted by law, contract, or any other legal source, the right to

subscribe to the IPOs of corporations listed in the stock market at their offering prices

Ang Yu Asuncion Vs. CA

We affirm the decision of the appellate court.

An obligation is a j... uridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation is
constituted upon the concurrence of the essential elements thereof, viz: (a) The vinculum juris or juridical tie
which is the efficient... cause established by the various sources of obligations (law, contracts, quasi-contracts,
delicts and quasi-delicts); (b) the object which is the prestation or conduct, required to be observed (to give,
to do or not to do); and (c) the subject-persons... who, viewed from the demandability of the obligation, are
the active (obligee) and the passive (obligor) subjects.
Among the sources of an obligation is a contract (Art. 1157, Civil Code), which 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, Civil Code). A contract undergoes various... stages that include its negotiation or
preparation, its perfection and, finally, its consummation. Negotiation covers the period from the time the
prospective contracting parties indicate interest in the contract to the... time the contract is concluded
(perfected). The perfection of the contract takes place upon the concurrence of the essential elements thereof.
A contract which is consensual as to perfection is so established upon a mere meeting of minds, i.e., the...
concurrence of offer and acceptance, on the object and on the cause thereof. A contract which requires, in
addition to the above, the delivery of the object of the agreement, as in a pledge or commodatum, is
commonly referred to as a... real contract. In a solemn contract, compliance with certain formalities
prescribed by law, such as in a donation of real property, is essential in order to make the act valid, the
prescribed form being thereby an essential element... thereof. The stage of consummation begins when the
parties perform their respective undertakings under the contract culminating in the extinguishment thereof.
Metropolitan Bank vs Rosales
Yes. The Court held that Metrobank’s reliance on the “Hold Out” clause in the Application and Agreement for
Deposit Account is misplaced. Bank deposits, which are in the nature of a simple loan or mutuum, must be
paid upon demand by the depositor.

The “Hold Out” clause applies only if there is a valid and existing obligation arising from any of the
sources of obligation enumerated in Article 1157 of the Civil Code, to wit: law, contracts, quasi-contracts,
delict, and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to it under
any law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed by petitioner
against respondent Rosales, this is not enough reason for petitioner to issue a “Hold Out” order as the case is
still pending and no final judgment of conviction has been rendered against respondent Rosales.

In fact, it is significant to note that at the time petitioner issued the “Hold Out” order, the criminal
complaint had not yet been filed. Thus, considering that respondent Rosales is not liable under any of the five
sources of obligation, there was no legal basis for petitioner to issue the “Hold Out” order. Accordingly, we
agree with the findings of the RTC and the CA that the “Hold Out” clause does not apply in the instant case.

In view of the foregoing, the Court found that petitioner is guilty of breach of contract when it
unjustifiably refused to release respondents’ deposit despite demand. Having breached its contract with
respondents, petitioner is liable for damages.

OSG vs Ayala Land

No. Respondents are not obligated to provide for free parking to the people.

Article 1158 of the Civil Code provides that “Obligations derived from law are not presumed. Only
those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts
of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book”.

The court does not agree to the petitioner’s reliance on the National Building Code as the same does not
expressly provide that respondents are required to provide free parking to the public. Moreover, the court
holds that the code regulates buildings and not traffic congestion. Police power is a power to regulate but not
to confiscate. The OSG’s contention is a deprivation of private property and falls under eminent domain which
requires just compensation. Thus, the RTC decision is affirmed and petition is dismissed for lack of merit.

PADCOM vs Ortigas

Yes. The Supreme Court held that as resident and lot owner in the Ortigas area, PADCOM was definitely
benefited by the Association's acts and activities to promote the interests and welfare of those who acquire
property therein or benefit from the acts or activities of the Association.

Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor dictated
by equity and by the principles of absolute justice. Examples of these principles are: (1) it is presumed that a
person agrees to that which will benefit him; (2) nobody wants to enrich himself unjustly at the expense of
another; or (3) one must do unto others what he would want others to do unto him under the same
circumstances.
Finally, PADCOM's argument that the collection of monthly dues has no basis since there was no board
resolution defining how much fees are to be imposed deserves scant consideration. Suffice it is to say that
PADCOM never protested upon receipt of the earlier demands for payment of membership dues. In fact, by
proposing a scheme to pay its obligation, PADCOM cannot belatedly question the Association's authority to
assess and collect the fees in accordance with the total land area owned or occupied by the members, which
finds support in a resolution dated 6 November 1982 of the Association's incorporating directors and Section
2 of its By-laws.

Metrobank Vs Absolute Management Corporation

Metrobank acted in a manner akin to a mistake when it deposited the AMC checks to Ayala Lumber and
Hardware’s account because it assumed that the checks payable to AMC could be deposited to Ayala Lumber
and Hardware’s account. This disjunct created an obligation on the part of Ayala Lumber and Hardware,
through its sole proprietor, Chua, to return the amount of these checks to Metrobank.

This fulfills the requisites of solutio indebiti. Metrobank’s fourth-party complaint falls under the quasi-
contracts enunciated in Article 2154 of the Civil Code. Article 2154 embodies the concept “solutio indebiti”
which arises when something is delivered through mistake to a person who has no right to demand it. It
obligates the latter to return what has been received through mistake. Solutio indebiti, as defined in Article
2154 of the Civil Code, has two indispensable requisites: first, that something has been unduly delivered
through mistake; and second, that something was received when there was no right to demand it.

Deiparine vs CA

Yes. Article 1385 states that rescission creates the obligation to return the things which were the object of the
contract, together with the fruits, and the price with its interest; consequently, it can be carried out only when
he who demands rescission can return whatever he may be obliged to restore.

The construction contract falls squarely under Article 1191 because it imposes upon Deiparine the obligation
to build the structure and upon the Carungays the obligation to pay for the project upon its completion. Article
1191 is not predicated on economic prejudice to one of the parties but on breach of faith by one of them that
violated the reciprocity between them. The violation of reciprocity between Deiparine and Carungay spouses,
to wit, the breach caused by Deiparine’s failure to follow the stipulated plans and specifications, has given the
Carungay spouses the right to rescind or cancel the contract.

Barredo vs Garcia

Authorities support the proposition that a quasi-delict or "culpa aquiliana" is a separate legal institution
under the Civil Code, with a substantivity all its own, and individuality that is entirely apart and independent
from a delict or crime. Upon this principle, and on the... wording: and spirit of article 1903 of the Civil Code,
the primary and direct responsibility of employers may be safely anchored.
"Such civil actions in the present case (without referring to contractual, faults which are not pertinent and
belong to another scope) are derived, according to article 1902 of the Civil Code, from every act or omission
causing losses and damages in which culpa or... negligence intervenes.
Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the principles above set
forth: that a quasi-delict or culpa extra-contractual is a separate and distinct legal institution, independent
from the civil responsibility arising from... criminal liability, and that an employer is, under article 1903 of the
Civil Code, primarily and directly responsible for the negligent acts of his employee.
First. That the conductor was not sued in a civil case, either separately or with the street car company. This is
precisely what happens in the present case: the driver, Fontanilla, has not been sued in a civil action, either
alone or with hia employer.
In the present case, the taxi driver was found guilty of criminal negligence, so that if he had even sued for hia
civil responsibility arising from the crime, he would have been held primarily liable for civil damages, and
Barredo would have been held subsidiarily liable... for the same
But the plaintiffs are directly suing Barredo, on his primary responsibility because of his own presumed
negligence which he did not overcome under article 1903. Thus, there were two liabilities of Barredo: first,
the subsidiary one because of the civil liability... of the taxi driver arising from the latter's criminal negligence;
and, second, Barredo's primary liability as an employer under article 1903.
The plaintiffs were free to choose which course to take, and they preferred the second remedy. In so doing,
they were acting within... their rights. It might be observed in passing, that the plaintiffs chose the more
expeditious and effective method of relief, because Fontanilla was either in prison, or had just been released,
and besides,... he was probably without property which might be seized in enforcing any... judgment against
him for damages.
Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable civilly,
notwithstanding the acquittal of the employee (the conductor) in a previous criminal case, with greater
reason should Barredo, the employer in the case at bar, be held... liable for damages in a civil suit filed against
him because his taxi driver had been convicted.
Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable civilly,
notwithstanding the acquittal of the employee (the conductor) in a previous criminal case, with greater
reason should Barredo, the employer in the case at bar, be held... liable for damages in a civil suit filed against
him because his taxi driver had been convicted.
The degree of negligence of the conductor in the Spanish case cited was less than that of the taxi driver,
Fontanilla, because the former was acquitted in the previous criminal case... while the latter was found guilty
of criminal negligence and was sentenced to an indeterminate sentence of one year and one day to two years
of prision correctional.
It is not clear how the above case could support the defendant's proposition, because the Court of Appeals
based its decision in the present case on the defendant's primary responsibility under article 1903 of the Civil
Code and not on his subsidiary liability arising from
Fontanilia's criminal negligence
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple negligence. If we
were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law,
according to the literal import of article 1093 of the
Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required,
while in a civil case, preponderance of evidence is sufficient to make the defendant pay in damages.
Thirdly, to hold that there is only one way to make, defendant's liability effective, and that is, to sue the driver
and exhaust his (the latter's) property first, would be tantamount to compelling the plaintiff to follow a
devious and cumbersome method of obtaining relief.
In the present case, we are asked to help perpetuate this usual course. But we believe... it is high time we
pointed out to the harm done by such practice and to restore the principle of responsibility for fault or
negligence under articles 1902 et seq. of the Civil Code to its full rigor.
It is high time we caused the stream of quasi-delict or culpa... aquiliana to flow on its own natural channel, so
that its waters may no longer be diverted into that of a crime under the Penal Code
This will, it is believed, make for the better safeguarding of private rights because it re-establishes an ancient
and additional remedy, and... for the further reason that an independent civil action, not depending on the
issues, limitations and results of a criminal prosecution, and entirely directed by the party wronged or his
counsel, is more likely to secure adequate and efficacious redress.
Principles:
CIVIL COM
"ART. 1089. Obligations arise from law, from contracts and quasi-contracts, and from acts and omissions
which are unlawful or in' which any kind of fault or negligence intervenes."
* * * * * * *
"ART. 1092. Civil obligations arising from felonies or misdemeanors shall be governed by the provisions of
the Penal Code.
ART. 1093. Those which are derived from acts or omissions in which fault or negligence, not punishable by
law, intervenes shall be subject to the provisions of Chapter II, Title XVI of this book."
"ART. 1902. Any person who by an act or omission causes damage to another by his fault Or negligence shall
be liable for the damage so done.
"ART. 1903. The obligation imposed by the next preceding article is enforcible, not only for person si acts and
omissions, but also for those of persons for whom another is responsible.
"The father, and, in case of his death or incapacity, the mother, are liable for any damages caused by the minor
children who live with them.
"Guardians are liable for damages done by minors or incapacitated persons subject to their authority and
living with them.
"Owners or directors of an establishment or business are equally liable for any damagea caused by their
employees while engaged in the branch of the service in which employed, or on occasion of the performance
of their duties.
"The State is subject to the same liability when it acts through a special agent, but not if the damage shall have
been caused by the official upon whom properly devolved the duty of doing the act performed, in which case
the provisions of the next preceding article shall be... applicable.
"Finally, teachers or directors of arts and trades are liable for any damagea caused by their pupils Or
apprentices while they are under their custody. "The liability imposed by this article shall cease in case the
persons mentioned therein prove that they exercised all the... diligence of a good father of a family to prevent
the damage."
"ART. 1901. Any person who pays for damage Caused by his employees may recover from the latter what he
may have paid."
"Art. 101. Rules regarding civil liability in certain cases. The exemption from criminal liability established in
subdivisions 1, 2, 3, 5, and 6 of article 12 and in subdivision 4 of article 11 of this Coden does not include
exemption from civil liability, which... shall be enforced subject to the following rules:
First. In casts of subdivisions 1, 2 and 3 of article 12 the civil liability for acts committed by any imbecile or
insane person, and by a person under nine years of age, or by one over nine but under fifteen years of age,
who has acted without discernment, shall... devolve upon those having such person under their legal
authority or control, unless it appears that there was no fault or negligence on their part.
"Should there be no person having such insane, imbecile or minor under his authority, legal guardianship, or
control, or if such person be insolvent, said insane, imbecile, or minor shall respond with their own property,
excepting property exempt from execution, in accordance... with the civil law.
"Second. In cases falling within subdivision 4 of article 11, the persons for whose benefit the harm has been
prevented shall be civilly liable in proportion to the benefit which they may have received.
" The courts shall determine, in their sound discretion, the proportinate amount for which each one shall be
liable.
ART. 103. Subsidiary civil liability of other persons. The subsidiary liability established in the next preceding
article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for
felonies committed by their... servants, pupils, workmen, apprentices, or employees in the discharge of their
duties."
"ART. 365. Imprudence and negligence. Any person who, by reckless impurdence, shall commit any act which,
had it been intentional, would constitute a grave felony, shall suffer the penalty of arresto mayor in its
maximum period to prision correccional... in its minimum period; if it would have constituted a less grave
felony, the penalty of arresto mayor in its minimum and medium periods shall be imposed.
Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the principles above set
forth: that a quasi-delict or culpa extra-contractual is a separate and distinct legal institution, independent
from the civil responsibility arising from... criminal liability, and that an employer is, under article 1903 of the
Civil Code, primarily and directly responsible for the negligent acts of his employee.

Mendoza vs arrieta

Insofar as Timbol is concerned the answer is yes. The respondent Judge wrongfully sustained
Timbol’s allegations that the civil suit is barred by the prior joint judgment in a criminal case filed
against him, wherein no reservation to file a separate civil case was made by petitioner and where
the latter actively participated in the trial and tried to prove damages against Salazar only. For
petitioner's cause of action against Timbol in the civil case is based on quasi-delict. Respondent
Judge committed reversible error when he dismissed the civil suit against the truck-owner, as said
case may proceed independently of the criminal proceedings and regardless of the result of the
latter. Article 31 of the Civil Code provides that, “When the civil action is based on an obligation not
arising from the actor omission complained of as a felony, such civil action may proceed
independently of the criminal proceedings and regardless of the result of the latter.”
Timbol’s submission that petitioner's failure to make a reservation in the criminal action of his right
to file an independent civil action, as required under section 2, Rule 111, Rules of Court, bars the
institution of such separate civil action is untenable. For inasmuch as Article 31 (in relation to
Articles 2176 and 2177) of the Civil Code creates a civil liability distinct and different from the civil
action arising from the offense of negligence under the Revised Penal Code, no reservation is
required to be made in the criminal case. And so, to reiterate, the civil case filed against Timbol is
not barred by the fact that petitioner failed to reserve, in the criminal action, his right to file an
independent civil action based on quasi-delict. But insofar as Salazar is concerned the answer is no.
Inasmuch as civil liability co-exists with criminal responsibility in negligence cases, the offended
party has the option between an action for enforcement of civil liability based on culpa criminal
under Article 100 of the Revised Penal Code, and an action for recovery of damages based on culpa
aquiliana under Article 2177 of the Civil Code. The action for enforcement of civil liability based on
culpa criminal under section 1 of Rule 111 of the Rules of Court is deemed simultaneously
instituted with the criminal action, unless expressly waived or reserved for separate application by
the offended party. The circumstances attendant to the criminal case yields the conclusion that
petitioner had opted to base his cause of action against Salazar on culpa criminal and not on culpa
aquiliana as evidenced by his active participation and intervention in the prosecution of the
criminal suit against said Salazar. The latter's civil liability continued to be involved in the criminal
action until its termination. Such being the case, there was no need for petitioner to have reserved
his right to file a separate civil action as his action for civil liability was deemed impliedly instituted
in the criminal case. Salazar cannot be held civilly liable for damages sustained by petitioner’s car
for considering that the collision between the jeep driven by him and the car owned and driven by
Mendoza was the result of the hitting on the rear of the jeep by the truck driven by Montoya, it
cannot be said that Salazar was at fault. Hence, the right of petitioner to claim damages from Salazar
did not arise. Accordingly, inasmuch as petitioner's cause of action as against jeep-owner driver
Salazar is ex- delictu, founded on Article 100 of the Revised Penal Code, the civil action must be held
to have been extinguished in consonance with Section3(c) which provides that, “Extinction of the
penal action does not carry with it extinction of the civil, unless the extinction proceeds from a
declaration in a final judgment that the fact from which the civil right arise did not exist
PSBA VS CA
The SC did not agree with the premises of the CA’s ruling. Article 2180, in conjunction with Article
2176 of the Civil Code, establishes the rule in in loco parentis. It had been stressed that the law
(Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or
students of the educational institution sought to be held liable for the acts of its pupils or students
while in its custody. However, this material situation does not exist in the present case for, as
earlier indicated, the assailants of Carlitos were not students of PSBA, for whose acts the school
could have been made liable.
IS PSBA EXCULPATED FROM LIABILITY?
It does not necessarily follow. When an academic institution accepts students for enrollment, there
is established a contract between them, resulting in bilateral obligations which both parties are
bound to comply with. Moreover, there is that “built-in” obligation to provide students with an
atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge.
The school must ensure that adequate steps are taken to maintain peace and order within the
campus premises and to prevent the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between PSBA and
Carlitos, the rules on quasi-delict do not really govern. However, the mere fact that a person is
bound to another by contract does not relieve him from extra-contractual liability to such person.
When such a contractual relation exists the obligor may break the contract under such conditions
that the same act which constitutes a breach of the contract would have constituted the source of an
extra-contractual obligation had no contract existed between the parties. Art. 21 of the Civil Code
comes to mind, so that should the act which breaches a contract be done in bad faith and violative
of Art. 21, then there is a cause to view the act as constituting a quasi-delict.
In the present case, there is no finding that the contract between the school and Carlitos had been
breached thru the former’s negligence in providing proper security measures.

Amadora vs CA
The Court has come to the conclusion that the provision in question (Art. 2180) should apply to all
schools, academic as well as non-academic.
Following the canon of reddendo singular singuli, where the school is academic, responsibility for
the tort committed by the student will attach to the teacher in charge of such student. This is the
general rule. Reason: Old academic schools, the heads just supervise the teachers who are the ones
directly involved with the students.
Where the school is for arts and trades, it is the head and only he who shall be held liable as an
exception to the general rule. Reason: Old schools of arts and trades saw the masters or heads of the
school personally and directly instructed the apprentices.
Therefore, the heads are not liable. The teacher-in-charge is not also liable because there’s no
showing that he was negligent in enforcing discipline against the accused or that he waived
observance of the rules and regulations of the school, or condoned their non-observance. Also, the
fact that he wasn’t present can’t be considered against him because he wasn’t required to report on
that day. Classes had already ceased.

NATURE AND EFFECT OF OBLIGATIONS

Songfo Vs Hawaiian
As to the first question, yes, SFC is entitled to damages. Article 1170 of the Civil Code provides
“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”
The failure of HPC to deliver the rest of the molasses constitutes a breach of contract by
contravention of tenor and is thus liable for damages. The bases for damages is the cost in excess of
the agreed price in the contract when SFC was made to acquire the needed molasses from another
supplier and the expenses related to the transportation of the same. Loss of profits would have
been included as part of damages had SFC been able to substantiate such a claim.

Spouses Velarde vs CA
Yes. In a contract of sale, the seller obligates itself to transfer the ownership of and deliver a
determinate things, and the buyer to pay therefor a price certain in money or its equivalent.
Private respondents had already performed their obligation through the execution of the Deed of
Sale, which effectively transferred ownership of the property to petitioner through constructive
delivery. Prior physical delivery or possession is not legally required, and the execution of the Deed
of Sale is deemed equivalent to delivery.
Petitioners, on the other hand, did not perform their correlative obligation of paying the contract
price in the manner agreed upon. Worse, they wanted private respondents to perform obligations
beyond those stipulated in the contract before fulfilling their own obligation to pay the full
purchase price.
Woodhouse vs Halili
No. Article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud, the causal fraud,
which may be ground for the annulment of a contract, and the incidental deceit, which only renders
the party who employs it liable for damages only. The Supreme Court has held that in order that
fraud may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo
incidente) inducement to the making of the contract.
If ever the plaintiff was guilty of a false representation, this was not the causal consideration that
led plaintiff to enter into the partnership agreement. The main cause that induced defendant to
enter into the partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive
franchise to bottle and distribute for the defendant or for the partnership
Geraldez vs CA
In either case, whether private respondent has committed dolo causante or dolo incidente by
making misrepresentations in its contracts with petitioner and other members of the tour group,
which deceptions became patent in the light of after-events when, contrary to its representations, it
employed an inexperienced tour guide, housed the tourist group in substandard hotels, and
reneged on its promise of a European tour manager and the visit to the leather factory, it is
indubitably liable for damages to petitioner. The effects of dolo causante are the nullity of the
contract and the indemnification of damages, 63 and dolo incidente also obliges the person
employing it to pay damages. Wherefore, ordering private respondent Kenstar Travel Corporation
to pay petitioner Lydia L. Geraldez the sums of P100,000.00 by way of moral damages, P50,000.00
as exemplary damages, and P20,000.00 as and for attorney’s fees, with costs against private
respondent.
Gutierrez vs Gutierrez
Bonifacio Gutierrez’s obligation arises from culpa aquiliana. On the other hand, Saturnino Cortez’s
and his chauffeur Abelardo Velasco’s obligation rise from culpa contractual.
The youth Bonifacio was na incompetent chauffeur, that he was driving at an excessive rate of
speed, and that, on approaching the bridge and the truck, he lost his head and so contributed by his
negligence to the accident. The guaranty given by the father at the time the son was granted a
license to operate motor vehicles made the father responsible for the acts of his son. Based on these
facts, pursuant to the provisions of Art. 1903 of the Civil Code, the father alone and not the minor or
the mother would be liable for the damages caused by the minor.
The liability of Saturnino Cortez, the owner of the truck, and his chauffeur Abelardo Velasco rests
on a different basis, namely, that of contract.