Obligations and Contracts: San Beda College of Law

San Beda College of Law
85
MEMORY AID IN CIVIL LAW
OBLIGATIONS AND CONTRACTS

to each other, based on the
principle that no one shall be
I. OBLIGATIONS unjustly enriched or benefited
at the expense of another.
OBLIGATION
Principal Kinds of Quasi-contracts:
☞ A juridical necessity to give, to do,
or not to do (Article 1156), one 1. Negotiorum gestio - arises
impressed with the character of whenever a person voluntarily
enforceability. takes charge of the agency or
management of the business or
property of another without any
☞ Requisites:
power or authority from the latter.
a. juridical or legal tie or efficient
2. Solutio indebiti - arises whenever
cause
a person unduly delivers a thing
b. active subject (obligee or
creditor)
through mistake to another who has no
c. passive subject (obligor or
right to demand it.
debtor)
d. fact, prestation or service
QUASI-DELICTS
constituting the object of the
☞ An act or omission by a person
obligation
(tortfeasor) which causes damage to
☞
another giving rise to an obligation to
Requisites
pay for the damage done, there
:
being fault or negligence but there is
i) it must be licit
no pre-existing contractual relation
ii) it must be possible,
between the parties (Article 2176).
physically & juridically
iii) it must be determinate or
☞ Requisites:
determinable
1. There must be an act or
iv) it must have a possible
omission;
equivalent in money
2. There must be fault
or negligence;
3. There must be damage caused to
1. Law the plaintiff;
2. Contracts 4. There must be a direct relation
3. Quasi-contracts of cause and effect between the
4. Delicts act or omission and the damage;
5. Quasi-delicts and
5. There is no pre-existing
QUASI-CONTRACTS contractual relation between the
☞ Those juridical relations parties.
arising from lawful, voluntary
and unilateral acts, by virtue of NOTES:
which the parties become bound
✍ The same negligent act or omission 2. right pertaining 2. right pertaining
causing damage may produce civil to the person to to a person over a
liability arising from crime under Art. demand from specific thing,
100 of the RPC or create an action another, as a without a passive
for quasi-delict under Article 2176. definite passive subject individually
subject, the determined against
✍ While it is true that in order that a fulfillment of a whom such right
person may be liable for quasidelicts, prestation to give, may be personally
there must be no preexisting to do or not to do. enforced
contractual relationship between the
parties, yet, “the act that breaks RIGHTS OF A CREDITOR
the contract may also be a tort.” Determinate Generic
(Air France vs. 1. compel specific 1. ask for
Carrascoso, 18 SCRA 155). performance performance of the
obligation
Nature of Obligations 2. recover 2. ask that the
1. Personal Obligations - obligations to damages in case of obligation be
do breach of the complied with at
a. Positive – obligation to do obligation, the expense of the
b. Negative – obligation not to do exclusive or in debtor
2. Real Obligations - obligations to give addition to specific
performance
🕮CHAIRPERSON: Romuald Padilla 🕮ASST.CHAIRPERSON: Vida Bocar, Joyce V

3. entitlement to 3. recover damages
🕮 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relat fruits, interests in case of breach of
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contra from the time the the
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alip
obligation to obligation
Ma. Ricasion Tugadi (Conflict of Laws)
a. Determinate or specific – object deliver arises.
is particularly designated or
physically segregated from all Principle of Balancing of Equities as
other of the same class Applied in Actions for Specific
b. Generic – object is designated Performance
merely by its class or genus ☞ In decreeing specific
c. Limited generic thing – when the performance, equity requires not
generic objects are confined to a only that the contract be just and
particular class, e.g. an equitable in its provisions, but that
obligation to deliver one of my the consequences of specific
horses (Tolentino, Volume IV, p. performance likewise be equitable
91). and just. The general rule is that this
equitable relief will not be granted
PERSONAL vs. REAL RIGHT if, under the circumstances of the
Personal Real case, the result of the specific
performance of the contract would
1. jus ad rem, a 1. jus in re, a right
right enforceable enforceable be harsh, inequitable, oppressive or
only against a against the whole result in an unconscionable
definite person or world advantage to the plaintiff. The
group of persons courts may adjust the rights of the
parties in accordance with the
circumstances obtaining at the time
of rendition of judgment, when these
are significantly different from those
existing at the time of generation of
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer Ang(VC-
Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law), Mark David
Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)
San Beda College of Law 87

those rights. (Agcaoili vs. GSIS, G.R. Cases where the remedy granted under
No. 30056, August 30, Article 1168 is not available:
1988) 1. Where the effects of the act which is
forbidden, are definite in character,
OBLIGATIONS OF THE DEBTOR in which case, even if it is possible
Determinate Generic for the obligee to ask that the act be
1. deliver the 1. deliver the undone at the expense of the obligor,
thing which he has thing which is consequences contrary to the object
obligated himself to neither of superior of the obligation will have been
give nor inferior quality produced which are permanent in
2. take care 2. pay
of the thing with damages in case of
character
the proper diligence breach of the 2. Where it would be physically or
of a good father of a obligation by reason legally impossible to undo what has
family of delay, fraud, been undone because of the very
3. deliver all negligence or
nature of the act itself or because of
accessions and contravention of the
tenor thereof a provision of law, or because of
accessories of the
conflicting rights of 3rd persons
thing even though
NOTE: In either case, the remedy is
they may not have
been mentioned 4. to ask for damages.
pay damages in case
of breach of the BREACH OF OBLIGATIONS
obligation by reason 1. Voluntary - debtor, in the
of delay, fraud, performance of the obligation, is
negligence or guilty of:
contravention of the a. default (mora)
tenor thereof b. fraud (dolo)
c. negligence (culpa)
EFFECTS OF BREACH d. contravention of the tenor of
Positive Personal Negative Personal the obligation
Obligations Obligations NOTE: debtor is liable for damages
The creditor can: If the obligor does what
1. have the has been forbidden 2. Involuntary - debtor is unable to
obligation performed him, the creditor can: comply with his obligation because
or executed at the 1. have it undone at
of fortuitous event
expense of the the expense of the
obligor (except in obligor; and 2. ask NOTE: debtor is not liable for
cases where the for damages damages
personal
qualifications of the DEFAULT or DELAY
debtor are taken into
☞ Non-fulfillment of the obligation with
account in which
case the only remedy respect to time ☞ Requisites:
is an action for 1. Obligation is demandable and already
damages) liquidated
2. ask that 2. The debtor delays performance
what has
3. The creditor requires performance
been poorly done be judicially or extra-judicially
undone
3. recover damages
because of breach of
the obligation
☞ 3 Kinds:
CIVIL LAW COMMITTEE

🕮CHAIRPERSON: Romuald Padilla 🕮ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad 🕮EDP: Alnaiza Hassiman, Dorothy Gayon
🕮 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT),
Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
1. Mora solvendi - delay of the debtor ✍ Deliberate and intentional evasion of
to perform his obligation. It may be: the fulfillment of an obligation
a. Ex re – obligation is to give
b. Ex persona – obligation is to do
2. Mora accipiendi - delay of the
creditor to accept the delivery of the NOTE: Future fraud cannot be waived
thing w/c is the object of the because it would result to illusory
obligation obligation.
3. Compensatio morae - delay of the
parties or obligors in reciprocal Incidental Causal Fraud/dolo
obligation Fraud/dolo causante
incidente (Article 1338)
(Article 1170)
There must be a
demand (judicial or extra-judicial) before 1. Present during 1. Present during the
delay may be incurred. the performance of time of birth or
a pre-existing perfection of the
obligation obligation
1. obligation or law expressly so
declares
2. Purpose is to 2. Purpose is to
2. time is of the essence of the evade the normal secure the consent of
contract fulfillment of the the other to enter
3. demand is useless as when obligation into a contract
obligor has rendered beyond his
power to perform 3. Results in the 3. Results in the
4. there is acknowledgment of non-fulfillment or vitiation of consent
default breach of the
obligation
NOTES:
4. Gives rise to a 4. Gives rise to a
✍ There can be delay only in positive right of an innocent
right of the creditor
obligations (to give/to do). There party to annul the
to recover damages
can be no delay in negative from the debtor
contract
obligations (not to give/not to do).
✍ In reciprocal obligations one party NEGLIGENCE
incurs in delay from the moment the
other party fulfills his obligation, ✍ Omission of that diligence which is
while he himself does not comply or required by the nature of the
is not ready to comply in a proper obligation and corresponds with the
manner with what is incumbent upon circumstances of the persons, of the
him. The general rule is that time and of the place
fulfillment by both parties should be NOTE: Negligence can be waived unless
simultaneous except when different the nature of the obligation or public
dates for the performance of policy requires extraordinary diligence as
obligation is fixed by the parties. in common carrier.
✍ Demand is still necessary if their Diligence Required
respective obligations are to be
1. That agreed upon by the parties
performed on separate dates
2. In the absence of stipulation, that
required by law in the particular case
FRAUD

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3. If both the contract and law are 4. debtor must be free from any
silent, diligence of a good father of a participation in
family 5. the aggravation of the injury
resulting to the creditor (Lasam vs.
Concept of Diligence of Good Father of Smith, 45 Phil. 657)
a Family
NOTE: It must not only be the
✍ That reasonable diligence which an
proximate cause but it must be the
ordinary prudent person would have
ONLY and SOLE CAUSE.
done under the same circumstances
Test of Negligence ✍ The test of
negligence can be determined by this
standard: If the defendant, in GENERAL RULE: No liability in case of
committing or causing the negligent fortuitous event.
act, had used reasonable EXCEPTIONS:
care and vigilance which a man of 1 When expressly declared by law
ordinary prudence would have NOTE: e.g. Article 552(2),
employed under the same situation, he 1165(3), 1268, 1942, 2147, 2148
is not guilty of negligence. Otherwise, and 2159 of the Civil Code.
he is guilty. 2 When expressly declared by
stipulation or contract
Doctrine of Res Ipsa Loquitur as Applied
3 When the nature of the
in Negligence Cases ✍ The thing or obligation requires the
transaction speaks for itself assumption of risk
✍ When the thing which caused injury, 4 When the obligor is in default or
without fault of the injured person, has promised to deliver the same
is under the exclusive control of the thing to 2 or more persons who
defendant and the injury is such as in do not have the same interest
the ordinary course of things does [Article 1165(3)].
not occur if he having such control
use proper care, it affords EFFECT OF FORTUITOUS EVENT
reasonable evidence, in the absence Determinate Generic
of explanation from the defendant, Obligation Obligation
that the injury arose from obligation is obligation is not
defendant’s want of care (Africa vs. extinguished extinguished based
Caltex, 16 SCRA 448 and Republic vs. on the rule that a
genus never perishes
Luzon Stevedoring, 21 SCRA 279). (genus nunquam
peruit)
FORTUITOUS EVENT ✍ An event which
could not be foreseen or which though
foreseen was inevitable.
PRINCIPLE UNDER ARTICLE 1176 ✍
✍ Requisites: Before the presumption that a prior
1. cause is independent of the will of installment had been paid may arise, the
the debtor receipt must specify the installment for
2. the event must be unforeseeable or which payment is made.
unavoidable
3. occurrence must be such as to render ✍ REMEDIES OF CREDITOR TO
it impossible for the debtor to fulfill PROTECT CREDIT:
his obligation in a normal manner 1. Exhaustion of debtor’s property
CIVIL LAW COMMITTEE
2. Accion subrogatoria - to be 3. Potestative - fulfillment of the
subrogated to all the rights and condition depends upon the will of a
actions of the debtor save those party to the obligation
which are inherent in his person. 4. Casual - fulfillment of the condition
3. Accion pauliana - impugn all the acts depends upon chance and/or upon
w/c the debtor may have done to the will of a third person
defraud them. 5. Mixed - fulfillment of the condition
NOTE: 2nd & 3rd remedies are subsidiary depends partly upon chance and/or
to the first the will of a third person
6. Possible - condition is capable of
Rights acquired by realization according to nature, law,
virtue of an obligation are transmissible public policy and good customs
in character 7. Impossible - condition is not capable
of realization according to nature,
law, public policy and good customs
8. Positive - condition involves the
performance of an act
9. Negative - condition involves the
1. When they are not transmissible omission of an act
by their very nature e.g. purely 10. Divisible - condition is susceptible of
personal right partial realization
2. When there is a stipulation of the 11. Indivisible - condition is not
parties that they are not susceptible of partial realization
transmissible 12. Conjunctive - where there are
3. Not transmissible by operation of several conditions, all of which must
law be realized
13. Alternative - where there are several
PURE OBLIGATION conditions but only one must be
☞ One whose effectivity or realized
extinguishment does not depend
upon the fulfillment or Rule in Potestative Conditions
nonfulfillment of a condition or upon a. If the fulfillment of the
the expiration of a term or period potestative condition depends
and is demandable at once. upon the sole will of the debtor,
the condition as well as the
CONDITIONAL OBLIGATION obligation itself is void. It renders
☞ One whose effectivity is the obligation illusory.
subordinated to the fulfillment or (Applicable only to a suspensive
non-fulfillment of a future AND condition and to an obligation
uncertain fact or event which depends for its perfection
upon the fulfillment of the
Kinds of conditions: potestative condition and not to a
1. Suspensive - fulfillment of the pre-existing obligation.)
condition results in the acquisition of b. If the fulfillment depends
rights arising out of the obligation exclusively upon the will of the
2. Resolutory - fulfillment of the creditor, both the condition and
condition results in the obligation is valid.
extinguishments of rights arising out NOTE: In case of simple potestative
of the obligation condition, e.g. right of first refusal,
such condition is valid.

Ethics)

prevention must have been voluntary
Rule in Impossible Conditions and willful in character.
They shall annul the
obligation which depends upon them. Effects of Resolutory Condition
1. Before the fulfillment of the
condition, the right which the
1. pre-existing obligation creditor has already acquired by
2. if obligation is divisible virtue of the obligation is subject to
3. in simple or renumeratory donations a threat of extinction.
4. in testamentary dispositions 2. If condition is not fulfilled, rights are
5. in case of conditions not to do an consolidated; they become absolute.
impossible thing
3. Upon fulfillment of the condition,
the parties shall return to each other
Effects of Suspensive Condition
what they received including the
1. Before fulfillment of the condition, fruits
the demandability as well as the
acquisition or effectivity of the rights SUMMARY:
arising from the obligation is
SUSPENSIVE RESOLUTORY
suspended
CONDITION CONDITION
2. After the fulfillment of the
1.if fulfilled, 1. if fulfilled,
condition, the obligation arises or
obligation arises obligation is
becomes effective or becomes extinguished
3. The effects of a conditional effective
obligation to give, once the condition 2.if not fulfilled, no 2. if not fulfilled,
has been fulfilled, shall retroact to juridical relation juridical
is created relation is
the day of the constitution of the 3.rights are not yet consolidated
obligation acquired, but 3. rights are
4. When the obligation imposes there is hope or already
reciprocal prestations upon the expectancy that acquired, but
parties, the fruits & interests shall they will soon be subject to the
be deemed to have been mutually acquired threat or danger
compensated of extinction
5. If the obligation is unilateral, the
debtor shall appropriate the fruits &
interests received, unless from the Effects of Loss, Deterioration and
nature & circumstances it should be Improvement in real obligations (during
inferred that the intention of the the pendency of the condition)
persons constituting the same was
different 1. Loss
6. In obligations to do or not to do, the a. without debtor’s fault -
court shall determine the retroactive obligation is extinguished
effect or the conditions that has b. with debtor’s fault - debtor pays
been complied with damages
Constructive fulfillment of Suspensive 2. Deterioration

Condition a. without debtor’s fault -
☞ The condition shall be deemed impairment to be borne by the
fulfilled when the obligor actually creditor
prevented the obligee from b. with debtor’s fault - creditor may
complying with the condition and such choose between the rescission of
CIVIL LAW COMMITTEE

the obligation and its fulfillment NOTES:
with indemnity for
✍ Article 1191 refers to judicial
damages in either case
rescission. It does not apply if there
is an express stipulation to rescind,
3. Improvement
in which case such stipulation must
a. by the thing’s nature or by time - prevail. There is nothing in the law
improvement shall inure to the which prohibits the parties from
benefit of the creditor entering into an agreement that
b. at the debtor’s expense - debtor violation of the terms of the contract
shall have no other right than would cause its cancellation without
that granted to a usufructuary court intervention. Said stipulation is
in the nature of facultative
NOTE: Applies only to determinate resolutory condition (Angeles vs.
things Calasanz, 135 SCRA 323).
A Thing is Lost when it: ✍ Rescission will be ordered only where

1. perishes the breach is substantial as to defeat
2. goes out of commerce the object of the parties in entering
3. disappears in such a way that its into the agreement.
existence is unknown or it cannot be ✍ The injured party may choose
recovered between fulfillment and rescission of
the obligations, with the payment of
RECIPROCAL OBLIGATIONS damages in either case. These
Those which are created or established remedies are alternative, not
at the same time, out of the same cause, cumulative. However, should
and which result in mutual relationships fulfillment become impossible, the
of creditor & debtor injured party may also seek
between the parties rescission.
TACIT RESOLUTORY CONDITION ✍ The right to rescind belongs

exclusively to the injured party.
with what is incumbent upon him, there OBLIGATION WITH A PERIOD

is a right on the part of the other to ☞ Those whose demandability or
rescind the obligation. extinguishment is subject to the
expiration of a term or period ✍
Requisites:
1. future
2. certain
3. possible, legally and physically
RIGHT TO RESCIND (ART 1191) CLASSIFICATION OF TERM OR PERIOD

The right to rescind 1. a. suspensive (ex die) – obligation
needs judicial approval. becomes demandable only upon
arrival of a day certain
1. If there is an express stipulation
b.resolutory (in diem) – arrival of
of automatic rescission
day certain terminates the
2. When the debtor voluntarily
obligation
returned the thing
2. a. legal – granted by law

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b.
conventional – stipulated by 2. if the duration of the period depends
parties upon the will of the debtor; and
c. judicial – fixed by courts 3. If the debtor binds himself when his
3. a. definite – date/time is know means permit him to do so (Article
beforehand 1180)
b. indefinite – the date/time of day
certain is unknown NOTE: The only action that can be
maintained is an action to ask the court
TERM CONDITION to fix the duration of the term or period.
1. interval of time 1. fact or event w/c The fulfillment of the obligation itself
w/c is future & is future and cannot be demanded until after the court
certain uncertain has fixed the period for compliance
2. interval of time 2. future and therewith, and such period has arrived.
w/c must uncertain fact or However, such technicality need not be
necessarily come, event w/c may or adhered to when a prior and separate
although it may not may not happen action would be a mere formality and
be known when would serve no other purpose than to
3.exerts an 3. exerts an influence delay (Borromeo vs. CA, 47 SCRA 65).
influence upon the upon the very
time of existence of the Reason for Fixing the Period (ART 1197)
demandability or obligation itself ☞ There can be no possibility of any
extinguishment of breach of contract or failure to
an obligation perform the obligation unless the
4. does not have 4. has retroactive period is fixed by courts.
any retroactive effect
effect unless there When debtor loses right to make use of
is an agreement to period: (IGIVA)
the contrary
1. when after the obligation has been
5. when it is left 5. when it is left contracted, he becomes insolvent,
exclusively to the exclusively to the will
of the debtor, the
unless he gives guaranties or
will of the debtor,
very existence of the securities for the debt (the
the existence of the
obligation is affected insolvency need not be judicially
obligation is not
declared)
affected
2. when he does not furnish to the
creditor the guaranties or securities
When a period is he promised
designated for the performance or 3. when by his own act he has
fulfillment of an obligation, it is impaired said guaranties or
presumed to have been established for securities after their establishment,
the benefit of both creditor and debtor. and when through fortuitous event
When it appears from the they disappear, unless he gives new
tenor of the obligation or other ones equally satisfactory when
circumstances that the period has been debtor violates any undertaking, in
established in favor of one or of the consideration of which the creditor
other. agreed to the period or
4. when debtor attempts to abscond
When court may fix period:
1. if the obligation does not fix a FACULTATIVE ALTERNATIVE
period, but from its nature and Obligations Obligations
circumstances it can be inferred that
a period was intended by the parties
CIVIL LAW COMMITTEE
cannot hold the debtor liable for
1. comprehends 1. comprehends damages because the debtor can
only one object or several objects or still comply with his obligation.
prestation which is prestations which are 2. If right of choice belongs to the
due, but it may be due but may be creditor
complied with by complied with by the a. If 1 of the things is lost through
the delivery of delivery or
a fortuitous event, the debtor
another object or performance of only
shall perform the obligation by
performance of one of them
delivering that which the
another prestation
creditor should choose from
in substitution
among the remainder, or that
which remains if only 1 subsists
2. fortuitous loss 2. fortuitous loss of
b. If the loss of 1 of the things
extinguishes the all prestations will
occurs through the fault of the
obligation extinguish the
debtor, the creditor may claim
obligation
any of those subsisting, or the
price of that which, through the
3. culpable loss 3. culpable loss of any
obliges the debtor object due will give fault of the former, has
to deliver rise to liability to disappeared with a right to
substitute debtor damages
prestation without c. If all the things are lost through
liability to debtor
the fault of the debtor, the
choice by the creditor shall fall
upon the price of any 1 of them,
4. choice pertains 4. choice may pertain
also with indemnity for damages
only to debtor to creditor or even
third person
JOINT AND SOLIDARY OBLIGATIONS
Obligation is
NOTES: presumed joint if there is concurrence of
two or more debtors and/or creditors.
✍ In alternative obligations, choice
takes effect only upon communication of
the choice to the other party and from 1. when expressly stated that there is
such time the obligation ceases to be solidarity
alternative. ✍ The debtor cannot choose 2. when the law requires solidarity
those prestations or undertakings which 3. when the nature of
are impossible, unlawful or w/c could not the obligation requires solidarity
have been the object of the obligation.
JOINT DIVISIBLE OBLIGATIONS
EFFECT OF LOSS OF OBJECT OF ☞ Each creditor can demand for the
OBLIGATION: payment of his proportionate share
1. If right of choice belongs to debtor of the credit, while each debtor can
a. If through a fortuitous event - be held liable only for the payment
debtor cannot be held liable for of his proportionate share of the
damages debt.
b. If 1 or more but not all of the ☞ A joint creditor cannot act in
things are lost or one or some representation of the other creditors
but not all of the prestations while a joint debtor cannot be
cannot be performed due to the compelled to answer for the acts or
fault of the debtor, creditor liability of the other debtors.

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1. Active solidarity
JOINT INDIVISIBLE OBLIGATIONS ☞ solidarity of creditors
1. If there are 2 or more debtors, the ☞ each creditor is empowered to
fulfillment of or compliance with the exercise against the debtor not only
obligation requires the concurrence the rights which correspond to him,
of all the debtors, although each for but also all the rights which
his own share. Consequently, the correspond to the other creditors,
obligation can be enforced only by with the consequent obligation to
proceeding against all of the debtors. render an accounting of his acts to
2. If there are 2 or more creditors, the such creditors
concurrence or collective act of all ☞ creates a relationship of mutual
the creditors, although each for his agency among solidary creditors
own share, is also necessary for the 2. Passive solidarity
enforcement of the obligation. ☞ solidarity of debtors
☞ liability of each debtor for the
Effect of breach – If one of the joint payment of the entire obligation,
debtors fails to comply with his with the consequent right to demand
undertaking, the obligation can no longer reimbursement from the others for
be fulfilled or performed. Consequently, their corresponding shares once
it is converted into one of indemnity for payment has been made
damages. Innocent joint debtors shall 3. Mixed solidarity
not contribute to the indemnity beyond ☞ solidarity among creditors
their corresponding share of the and debtors
obligation. Effect of Assignment by Solidary
Creditor Without Consent of Others
Effect of insolvency of a debtor – If one 1. assignee is co-creditor – no violation
of the joint debtors should be insolvent, of Article 1213 because there can be
the others shall not be liable for his no invasion of the personal or
share. confidential relationship
2. assignee is third person – cocreditors
INDIVISIBILITY SOLIDARITY and debtors are not bound
1. refers to the 1. refers to the by the assignment
prestation which legal tie or vinculum
constitutes the juris & consequently Effect of Novation upon Solidary
object of the to the subjects or Obligation
obligation parties of the
1. If the novation is prejudicial, the
obligation
solidary creditor who effected the
2. plurality of 2. plurality of novation shall reimburse the others
subjects is not subjects is
for damages incurred by them
required indispensable
2. If it is beneficial and the creditor
3. in case of breach, 3. when there is
who effected the novation is able to
obligation is liability on the part
of the debtors secure performance of the
converted into 1 of
because of the obligation, such creditor shall be
indemnity for
breach, the liable to the others for the share
damages because of solidarity among the
breach, indivisibility which corresponds to them, not only
debtors remains
of the obligation is in the obligation, but also in the
terminated benefits
3. If the novation is effected by
substituting another person in place
KINDS OF SOLIDARITY of the debtor, the solidary creditor
CIVIL LAW COMMITTEE

who effected the novation is liable entire share in the obligation, he is
for the acts of the new debtor in completely released from the
case the is deficiency in performance creditors but is still bound to his
or in case damages are incurred by codebtors.
the other solidary creditors as a 3. If the remission is for the benefit of
result of the substitution. one of the debtors and it covers only
4. If the novation is effected by a part of his share in the obligation,
subrogating a third person in the his character as a solidary debtor is
rights of the solidary creditor not affected.
responsible for the novation, the
relation between the other creditors Effect of Payment by Solidary Debtor
not substituted and the debtor or 1. Whole or partial extinguishment of
debtors is maintained. debt
2. Right to recover against co-debtor
Effect of Compensation and Confusion 3. Right to recover interest from time
upon Solidary Obligation the obligation becomes due
1. If the confusion or compensation is
partial, the rules regarding Effect of Loss or Impossibility of
application of payment shall apply. Performance
This is without prejudice to the right 1. If it is not due to the fault of the
of other creditors who have not solidary debtors, the obligation is
caused the confusion or extinguished.
compensation to be reimbursed to 2. If the loss or impossibility is due to
the extent that their rights are the fault of one of the solidary
diminished or affected. debtors or due to a fortuitous event
2. If the confusion or compensation is after one of the solidary debtors had
total, the obligation is extinguished, already incurred in delay, the
what is left is the ensuing liability obligation is converted into an
for reimbursement within each obligation of indemnity for damages
group: but the solidary character of the
a. The creditor causing the obligation remains.
confusion or compensation is
obliged to reimburse the other
creditors
b. The debtors benefited by the Defenses available to a Solidary Debtor
extinguishments of the 1. Defenses derived from the very
obligation are obliged to nature of the obligation
reimburse the debtor who made 2. Defenses personal to him or
the confusion or compensation pertaining to his own share
possible. 3. Defenses personal to the others, but
only as regards that part of the debt
Effect of Remission upon Solidary for w/c the latter are responsible
Obligation
1. If the remission covers the entire DIVISIBLE OBLIGATIONS
obligation, the obligation is totally ☞ Those which have as their object a
extinguished and the entire juridical prestation which is susceptible of
relation among the debtors is partial performance without the
extinguished all together. essence of obligation changed.
2. If the remission is for the benefit of
one of the debtors and it covers his

Ethics)

INDIVISIBLE OBLIGATIONS 3. in certain exceptional cases, to
☞ Prestation is not susceptible of punish the obligor in case of
partial performance, otherwise, the breach of the principal obligation
essence of the obligation will be (punitive).
changed
ULE: The penalty fixed by
NOTES: the parties is a compensation or
☞ Divisibility or indivisibility of the substitute for damages in case of breach.
obligation refers to the performance
of the prestation and not to the thing
1. when there is a stipulation to the
which is the object thereof.
contrary;
☞ Intention of parties should be taken
2. when the debtor is sued for
into account to determine whether
refusal to pay the agreed
obligation is divisible or not.
penalty; and
3. when debtor is guilty of fraud
The creditor cannot
be compelled partially to receive the NOTE: Article 1228 does not apply to
prestation in which the obligation these exceptions; there must be
consists; neither may the debtor be proof of actual damages.
required to make partial payments.
NOTES:
1. When the obligation expressly ✍ The debtor cannot exempt himself
stipulates the contrary;
from the performance of the
2. When the different prestations
principal obligation by paying the
constituting the objects of the
stipulated penalty unless when the
obligation are subject to
right has been expressly reserved for
different terms and conditions;
him.
and
3. When the obligation is in part ✍ The creditor cannot demand the
liquidated and in part fulfillment of the principal obligation
unliquidated. and the satisfaction of the stipulated
penalty at the same time unless the
OBLIGATIONS WITH A PENAL CLAUSE right has been clearly granted him.
☞ One to which an accessory
undertaking is attached for the When penalty may be reduced
purpose of insuring its performance 1. If the principal obligation has been
by virtue of which the obligor is partly complied with;
bound to pay a stipulated indemnity 2. If the principal obligation has been
or perform a stipulated prestation in irregularly complied with; and 3. If
case of breach. the penalty is iniquitous or
unconscionable even if there has
☞ Purpose of Penalty: been no performance.
1. To insure the performance of the
obligation; MODES OF EXTINGUISHMENT O
2. to liquidate the amount of F
damages to be awarded to the
OBLIGATIONS (LFC3NARP2)
injured party in case of breach of
the principal obligation 1. loss of the thing due
(compensatory); and 2. fulfillment of resolutory condition
3. compensation
CIVIL LAW COMMITTEE

4. condonation or remission of the debt
5. confusion or merger of rights of the
1. when made by a third person
creditor and debtor
who has an interest in the
6. novation
fulfillment of the obligation;
7. annulment
2. when there is a stipulation to the
8. rescission
contrary.
9. prescription
10. payment or performance
Rights of 3rd person who paid the
obligation:
Payment or Performance
☞ Means not only the delivery of 1. If payment was made with
money but also the performance, in knowledge and consent of the
any other manner, of an obligation. debtor:
a. can recover entire
Integrity of Payment amount paid
A debt shall not be b. can be subrogated to all
understood to have been paid unless the the rights of the creditor.
thing or service in which the obligation 2. If payment was made without
consists has been completely delivered or knowledge or against the will of
rendered, as the case may be. the debtor, he can recover only
insofar as the payment has been
beneficial to the debtor.
1. When the obligation has been
substantially performed in good To whom payment must be made:
faith; 1. The person in whose favor the
2. When the obligee accepts obligation has been constituted;
performance, knowing its 2. His successor in interest; or 3. Any
incompleteness or irregularity & person authorized to receive it.
w/out expressing any protest or
objection;
If payment is made to
3. When there is an express stipulation;
a person other than those enumerated, it
and
shall not be valid.
4. When the debt is in part liquidated
and in part unliquidated.
1. Payment made to a 3rd person,
Identity of Payment provided that it has redounded
☞ requires that the very thing, service to the benefit of the creditor.
or forbearance, as the object of the Such benefit to the creditor is
prestation, must be performed or presumed in the following cases:
observed • If after the payment, the
third person acquires the
Persons who may pay the obligation: creditor’s rights;
1. the debtor himself or his legal • If the creditor ratifies the
representative payment to the third
2. any third person person;
• If by the creditor’s conduct,
Creditor is not bound the debtor has been led to
to accept payment or performance by a believe that the third
third person. person had authority to
receive the payment.

Ethics)

2. Payment made to the possessor reasonably foreseen or which was
of the credit, provided that it manifestly beyond their
was made in good faith. contemplation at the time the
obligation was established.
Obligation to Deliver a Generic Thing ☞ Applies only to
☞ If the quality and circumstances contractual obligations
have not been stated, the creditor ☞ Requisites:
cannot demand a thing of superior a. The decrease in the value of the
quality; neither can the debtor currency could not have been
deliver a thing of inferior quality. reasonably foreseen
by the parties or
beyond their contemplation at
the time the obligation was
Rules in Monetary Obligations: established ;
1. Payment in cash - must be made in b. There must be a declaration of
the currency stipulated; if it is not such extraordinary inflation or
possible to deliver such currency,
then in the currency which is legal
tender in the Philippines.
2. Payment in check or other negotiable deflation by the Bangko Sentral.
instrument - not considered Without such declaration, the
payment; not considered legal tender creditors cannot demand an
and may be refused by the creditor. increase, and debtors a
It shall only produce the effect of decrease, of what is due to or
payment: from them. (Ramos vs. CA, 275
a. when it has been cashed or SCRA 167 and Mobil Oil Phils. vs.
b. when it has been impaired CA, 180 SCRA 651)
through the fault of the creditor.
Place of payment
LEGAL TENDER 1. Place stipulated by the parties.
☞ Such currency which may be used for 2. No stipulation and the obligation is
the payment of all debts, whether to deliver a determinate thing,
private or public. The kind of payment shall be made at the place
currency which a debtor can legally where the thing might be at the time
compel a creditor to accept in the obligation was constituted.
payment of a debt in money when 3. In any other case, the payment shall
tendered by the debtor in the right be made at the domicile of the
amount. debtor.
☞ Legal tender of the Philippines would
be all notes and coins issued by the Special Forms of Payment:
Central Bank. a. Application of payment
☞ Section 52, R.A. No. 7653 b. Dation in Payment
1. 25c and above, legal tender up c. Payment by Cession
to P50 d. Tender of payment
2. 10c and below, legal tender up to and
P20 Consignation
Extraordinary inflation or deflation a. Application of Payment

☞ unusual or beyond the common ☞ Designation of the debt to which the
fluctuation in the value of currency, payment must be applied when the
which the parties could not have debtor has several obligations of the
CIVIL LAW COMMITTEE
same kind in favor of the same c. satisfaction of the money
creditor. obligation of the debtor
☞ Requisites:
a. there must be only 1 debtor & c. Payment by Cession
only 1 creditor; ☞ Debtor abandons all of his property
b. there must be 2 or more debts of for the benefit of his creditors in
the same kind; order that from the proceeds
c. all of the debts must be due; thereof, the latter may obtain
except: if there’s stipulation to payment of their credits.
the contrary; or application of ☞ Requisites:
payment is made by the party for a. plurality of debts
whose benefit the term has been b. partial or relative insolvency of
constituted; and the debtor
d. amount paid by the debtor must c. acceptance of the cession by the
not be sufficient to cover the creditors
total amount of all the debts.
DATION IN PAYMENT BY
The right to designate PAYMENT CESSION
the debt to which the payment shall be
applied primarily belongs to the debtor. 1. one creditor 1. plurality of
creditors
If the debtor does not
avail of such right and he accepts from
the creditor a receipt in 2. not necessarily 2. debtor must be
in state of financial partially or
which the application is made.
difficulty relatively insolvent
Legal Application of Payment (ART1254)

1. If neither the debtor nor the creditor 3. thing delivered 3. universality of
is considered as property of debtor is
makes any application of payment, equivalent of what is ceded
or if it cannot be inferred from other performance
circumstances, the debt which is
most onerous to the debtor, among
those which are due, shall be
deemed to have been satisfied.
2. If the debts due are of the same
nature and burden, payment shall be
applied to all of them
proportionately.
b. Dation in Payment (DACION EN PAGO)

☞ Delivery and transmission of
ownership of a thing by the debtor to
the creditor as an accepted
equivalent of the performance of the
obligation.
☞ Requisites:
a. existence of a money obligation
b. alienation to the creditor of a
property by the debtor with the
consent of the former

Ethics)

e. The consignation having been
made, the interested parties
4. payment 4. merely releases shall also be notified thereof.
extinguishes debtor for net
obligation to the proceeds of things ☞ Effects of consignation:
extent of the value ceded or assigned,
unless there is 1. If the creditor accepts the thing
of the
contrary intention or amount deposited without
thing delivered as
agreed upon, contesting the validity or
proved or implied efficacy of the consignation, the
from the conduct obligation is extinguished.
of 2. If the creditor contests the
the validity or efficacy of the
creditor consignation or if the creditor is
not interested or unknown or is
d. Tender of Payment and absent, the result is a litigation.
Consignation Tender of Payment If the debtor complied with all
☞ Manifestation of he debtor to the the requisites, the obligation is
creditor of his decision to comply extinguished.
immediately with his obligation.
☞ It is the preparatory act and
Consignation shall
extrajudicial in character.
produce effects of payment only if there
is a valid tender of payment.
Consignation
☞ Deposit of the object of the
obligation in a competent court in 1. creditor is absent or unknown, or
accordance with the rules prescribed does not appear at the place of
by law, after the tender of payment payment
has been refused or because of 2. creditor incapacitated to receive
circumstances which render direct payment at the time it is due
payment to the creditor impossible 3. when two or more persons claim the
or inadvisable. right to collect
☞ It is the principal act and judicial in 4. when the title of the obligation has
character. been lost
5. when without just cause creditor
☞ Special Requisites: refuses to give a receipt
a. The debt sought to be paid must
be due; NOTES:
b. There must be a valid and
unconditional tender of payment ✍ It is the consignation which
or any of the causes stated by constitutes a form of payment and
law for effective consignation must follow, supplement or complete
without previous tender of the tender of payment in order to
payment exists; discharge the obligation. ✍ A valid
c. The consignation of the thing due tender of payment has the effect of
must first be announced to the exempting the debtor from payment
persons interested in the of interest and/or damages.
fulfillment of the obligation; ✍ If tender is made by means of a
d. Consignation shall be made by check, such tender is valid because it
depositing the things due at the is an exercise of a right. Article 1249
disposal of judicial authority; and is not applicable.
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Obligation is extinguished when
LOSS OF THE THING DUE prestation becomes legally or physically
In Determinate Obligations to Give impossible.
Obligation is Effect of Relative Impossibility or

extinguished. Doctrine of Unforeseen Events (ART
☞ Requisites: 1267)
1. The thing which is lost is ☞ When the service has become
determinate; difficult as to be manifestly beyond
2. The thing is lost without the fault the contemplation of the parties, the
of the debtor; and obligor may also be released
3. The thing is lost before the therefrom, in whole or in part.
debtor has incurred in delay. ☞ Requisites:
1. The event or change
in circumstances could not have
been foreseen at the time of the
1. when by law, obligor is liable execution of the contract;
even for fortuitous event; 2. It makes the performance of the
2. when by stipulation, obligor is contract extremely difficult but
liable even for fortuitous event; not impossible;
3. when the nature of the 3. The event must not be due to the
obligation requires the act of any of the parties; and
assumption of risk; 4. The contract is for a future
4. when the loss of the thing is due prestation.
partly to the fault of the debtor;
5. when the loss of the thing occurs Principle of Subjective Impossibility
after the debtor incurred in ☞ When there is no physical or legal
delay; loss but the thing object of the
6. when the debtor promised to obligation belongs to another, the
deliver the same thing to two or performance by the debtor of the
more persons who do not have obligation undoubtedly becomes
the same interest; and impossible. Failure of performance is
7. when the debt of a certain and imputable to the debtor. Thus, the
determinate thing proceeds from debtor must indemnify the creditor
a criminal offense for the damages suffered by the
latter. (Tolentino, Volume IV, p.
In Generic Obligations to Give 336)
Obligation is not Effect of Loss on Reciprocal Obligations

extinguished because the genus of a thing ☞ First view (Tolentino, Volume IV, pp.
cannot perish. 337-338) – If an obligation is extinguished
In case of by the loss of the thing or impossibility of
generic obligations whose object is a performance through fortuitous events,
particular class or group with the counter-prestation is also
specific or determinate qualities extinguished. The debtor is released from
(Limited Generic liability but he cannot demand the
Obligations) prestation which has been stipulated for
his benefit. He who gives nothing has no
In Obligations to Do reason to demand anything.

Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)

☞ Second View (JBL Reyes) – The loss or ☞ Extinguishment in the concurrent
impossibility of performance must be amount of the obligation of those
due to the fault of the debtor. In this persons who are reciprocally debtors
case, the injured party may ask for and creditors of each other.
rescission under Article 1191 plus ☞ Requisites:
damages. If the loss or impossibility a. there must be 2 parties, who, in
was due to a fortuitous event, the their own right, are principal
other party is still obliged to give the creditors & principal debtors of
prestation due to the other. each other (except in case of
guarantor, Article 1280);
CONDONATION OR REMISSION OF THE b. both debts must consist in
DEBT money, or if the things due are
☞ An act of pure liberality by virtue of fungibles, they must be of the
which the obligee, without receiving same kind & quality;
any price or equivalent, renounces c. both debts must be due;
the enforcement of the obligation, as d. both debts must be liquidated &
a result of which it is extinguished in demandable;
its entirety or in that part or aspect e. there must be no retention or
of the same to which the remission controversy commenced by 3rd
refers. persons over either of the debts
☞ It is the gratuitous abandonment by & communicated in due time to
the creditor of his right. ☞ the debtor; and
Requisites: f. compensation must not be
a. It must be gratuitous prohibited by law.
b. It must be accepted by the
debtor Compensation Confusion
c. The obligation must 1. two persons who 1. one person
be demandable are mutual debtors where qualities of
and creditors of debtor and creditor
NOTE: Express condonation or each other are merged
remission must comply with the 2. there must be 2. only one
formalities of donation. at least two obligation
obligations
CONFUSION OR MERGER OF RIGHTS
☞ Merger of the characters of the
Compensation Payment
creditor and the debtor in one and
1. The requisites prescribe by law for
the same person by virtue of which
compensation are different from those
the obligation is extinguished.
prescribed by law for payment.
☞ Requisites:
2. Takes effect by 2. Takes effect by
a. that the characters of creditor &
operation of law act of the parties
debtor must be in the same
3. Capacity to 3. Capacity to give
person;
give and to and to acquire is
b. that it must take place in the
acquire is not essential
person of either the principal
necessary
creditor or the principal debtor;
4. As a rule, it is 4. As a rule,
and complete and
partial
c. it must be complete & definite indivisible
COMPENSATION
Compensation Counterclaim
renounce his right to oppose the
1. Requires 2 debts 1. Not necessary compensation and he himself can set
must consist in it up. It differs from conventional
money or if compensation because it is unilateral
fungibles, same while the latter depends upon the
kind and quality agreement of both parties.
(Tolentino, Volume IV, p. 367)
2. Both debts must 2. Does not require
be liquidated that debts be NOVATION
liquidated ☞ Substitution or change of an
obligation by another, resulting in its
3. Need not be 3. Must be pleaded extinguishment or modification,
pleaded to be effectual either by changing its object or
principal conditions, or by
substituting another in place of the
Kinds of Compensation debtor, or by subrogating a third
1. Legal – takes effect by operation person in the rights of the creditor.
of law ☞ Requisites:
2. Voluntary – agreed upon by the a. a previous valid obligation;
parties b. agreement of the parties to the
3. Judicial – takes effect by judicial new obligation;
decree c. extinguishment of the old
4. Facultative – when it can be obligation; and
claimed by one of the parties d. validity of the new obligation.
who, however, has the right to
object to it
Kinds:
1. As to its essence
Debts not subject to Compensation:
a. Objective/Real - refers to the
1. debts arising from contracts of
change either in the cause,
deposit
object or principal conditions of
2. debts arising from contracts of
the obligations
commodatum
b. Subjective/Personal - refers to
3. claims for support due by
the substitution of the person of
gratuitous title
the debtor or to the subrogation
4. obligations arising from criminal
of a 3rd person in the rights of
offenses
the creditor
5. certain obligations in favor of
c. Mixed
government
2. As to its form/constitution
NOTE: Taxes are not subject to set-off or
a. Express - when it is declared in
legal compensation because the
unequivocal terms that the old
government & taxpayers are not mutually
obligation is extinguished by a
creditors & debtors of each other
new one w/c substitutes the
(Francia vs. IAC, 162 SCRA 753).
same.
b. Implied - when the old & new
Facultative Compensation
obligation are incompatible w/
☞ This is compensation which can be
each other on every point.
set up only at the option of a
creditor, when legal compensation
Test of Incompatibility
cannot take place because of want of
☞ Whether or not the old and new
some legal requisites for the benefit
obligations can stand together, each
of the creditor. The latter can

Ethics)

having its own independent
existence. If they can stand together, CONVENTIONAL ASSIGNMENT OF
there is no incompatibility; SUBROGATION RIGHTS
consequently, there is no novation. If
they cannot stand together, there is 1. governed by Arts. 1. governed by Arts.
incompatibility; consequently, there 1300 to 1304 1624 to 1627
is novation.
2. debtor’s consent 2. debtor’s consent
Forms of Substitution of Debtors: is required is not required
1. Expromision - effected with the
consent of the creditor at the 3. extinguishes 3. transmission of
instance of the new debtor even the obligation and right of the creditor
without the consent or even against gives rise to a new to third person
the will of the old debtor. one without modifying or
Requisites: extinguishing the
a. Initiative for substitution must obligation
emanate from the new debtor
b. Consent of the creditor to the 4. defects and 4. defects and vices
vices in the old in the old obligation
substitution
obligation are cured are not cured
2. Delegacion - effected with the
5. takes effect 5. as far as the
consent of the creditor at the
upon moment of debtor is concerned,
instance of the old debtor, with the
novation or takes effect upon
concurrence of the new debtor.
subrogation notification
Requisites:
a. Initiative for substitution must
☞ Kinds of Subrogation
emanate from the old debtor
1. Conventional – takes place by
b. Consent of the new debtor
agreement of the parties; this kind of
c. Acceptance by the creditor
subrogation requires the intervention
and consent of 3 persons: the original
Effect of insolvency of new debtor
creditor, the new creditor and the
1. Expromision – the new debtor’s
debtor.
insolvency or nonfulfillment of the
2. Legal – takes place without
obligation shall not revive the
agreement but by operation of law
original debtor’s liability to the
because of certain acts (Article
creditor whether the substitution is
1302).
effected with or without the
knowledge or against the will of the
original debtor. Legal subrogation
2. Delegacion – the creditor can sue the cannot be presumed.
old debtor only when the
insolvency was prior to the 1. Creditor pays another creditor who is
delegation and publicly known or
preferred, without debtor’s
when the old debtor knew of such
knowledge;
insolvency at the time he delegated
the obligation. 2. A third person not interested in the
obligation pays with the express or
NOTE: A change in the incidental tacit approval of the debtor; or
elements of, or an addition of such 3. Even without debtor’s knowledge, a
elements to an obligation, unless person interested in the fulfillment
otherwise expressed by the parties, will of the obligation pays without
not result in its extinguishment.
prejudice to the effects of confusion barter or exchange (Article 1638).
as to the latter’s share.
Characteristics of Contracts: (ROMA)
II. CONTRACTS 1. Relativity (ART 1311)
2. Obligatory Force and Consensuality
CONTRACT (ART 1315)
☞ A contract is a meeting of minds 3. Mutuality (ART 1308)
between two persons whereby one 4. Autonomy (ART 1306)
binds himself, with respect to the Relativity
other, to give something or to render Contracts take
some service (Article 1305). effect only between parties, their assigns
and heirs.
☞ Elements
1. Essential – those without which there
1. Stipulation pour atrui -
can be no contract. a. Consent
stipulation in favor of a third
b. Object or Subject Matter
person.
c. Cause or Consideration
☞ Requisites:
2. Natural – those derived from the
a. the stipulation must be a
nature of the contract and ordinarily
part, not the whole of
accompany the same.
the contract;
3. Accidental – those which exist only
b. the contracting parties
when the parties expressly provide
must have clearly and
for them for the purpose of limiting
deliberately conferred a
or modifying the normal effects of
favor upon a third
the contract.
person, not a mere
incidental benefit or
Nominate contracts
interest;
☞ Those which have their own
c. the third person must
distinctive individuality and are
have communicated his
regulated by special provisions of
acceptance to
law.
the obligor before
Innominate contracts
its
☞ Those which lack individuality and
revocation;
are not regulated by special
d. the favorable stipulation
provisions of law.
should not be
☞ Regulated by the stipulations of the
conditioned or
parties, by the general provisions of
compensated by any kind
the Civil Code on obligations and
of obligation whatever;
contracts, by rule governing the most
and
analogous nominate contracts and by
the customs of the place. e. neither of the
☞ Kinds: contracting parties bears
the legal representative
a. Do ut des - I give that you give
or authorization of the
b. Do ut facias - I give that you do
third person.
c. Facio ut des - I do that you give
d. Facio ut facias - I do that you do
Test of Beneficial Stipulation – the
NOTE: According to some
fairest test to determine whether the
authorities. do ut des in no longer an
interest of a 3rd person in a contract is a
innominate contract. It has already
stipulation pour atrui or merely an
been given a name of its own, i.e.

Ethics)

incidental interest is to rely upon the their nature may be in keeping with
intention of the parties as disclosed by good faith, usage and law.
their contract. Determine whether the
contracting parties desired to tender him CONSENT
such an interest (Uy Tam vs. Leonard, 30 ☞ Manifested by the concurrence of the
Phil. 471). offer and acceptance upon the thing
and the cause which are to
constitute the contract.
2. When a third person induces a
☞ Requisites:
party to violate contract
(ART1314) a. Legal capacity of the contracting
☞ Requisites: parties
a. Existence of a valid contract; b. Manifestation of the conformity
b. knowledge of contract by of the contracting parties
third person; and c. The parties’ conformity to the
c. interference by third person object, cause, the terms and
without legal justification or conditions of the contract must
excuse. be intelligent, spontaneous and
3. Third persons who come into free from all vices of consent
possession of the object of the d. The said conformity must be real
contract creating real rights and not simulated or fictitious
4. Contracts entered into in fraud
of creditors
Mutuality
☞ The contract must bind both parties;
its validity or compliance must not
be left to the will of one of them.
(ART 1308)
☞ The contract cannot have any
stipulation authorizing one of the
contracting parties (a) to determine
whether or not the contract shall be
valid, or (b) to determine whether or
not the contract shall be fulfilled.
Autonomy
☞ The parties are free to stipulate
anything they deem convenient
provided that they are not contrary
to law, morals, good customs, public
order and public policy. (ART 1306)
Consensuality
☞ Contracts are perfected by mere
consent and from that moment, the
parties are bound not only to the
fulfillment of what has been
expressly stipulated but also to all
consequences which, according to
Offer formalities prescribed by law, such
☞ A proposal made by one party to prescribed form being an essential
another to enter into a contract. element (i.e., donation of real
☞ It must be certain or definite, property).
complete and intentional. ✍ An offer made inter praesentes must
be accepted IMMEDIATELY. If the
NOTE: Offer/proposal may be withdrawn parties intended that there should be
so long as the offeror has no knowledge an express acceptance, the contract
of acceptance by offeree. will be perfected only upon
Acceptance knowledge by the offeror of the
☞ Manifestation by the offeree of his express acceptance by the offeree of
assent to the terms of the offer. the offer. An acceptance which is
☞ It must me absolute. not made in the manner prescribed
☞ A qualified acceptance constitutes by the offeror is NOT EFFECTIVE BUT
counter-offer. A COUNTER-OFFER which the offeror
may accept or reject. (Malbarosa vs.
NOTE: Acceptance may be revoked CA, et al., G.R. # 125761, April 30,
before it comes to the knowledge of the 2003)
offeror. ✍ Contracts under the Civil Code
generally adhere to the Cognition
Amplified Acceptance
Theory (contract is perfected from
☞ Under certain circumstances, a mere
the moment the acceptance comes
amplification on the offer must be
to the knowledge of the offeror),
understood as an acceptance of the
while transactions under the Code of
original offer, plus a new offer which
Commerce use the Manifestation
is contained in the amplification.
Theory (it is perfected from the
(Tolentino, Volume IV, p. 452)
moment the acceptance is declared
Rule on Complex offers
or made).
1. Offers are interrelated – contract is
perfected if all the offers are PERSONS INCAPACITATED
accepted. TO GIVE CONSENT:
2. Offers are not interrelated – single 1. Minors EXCEPTIONS:
acceptance of each offer results in a
• Contracts where the minor is
perfected contract unless the offeror
estopped to raise minority as a
has made it clear that one is
defense through his own
dependent upon the other and
misrepresentation
acceptance of both is necessary.
• Contracts for necessaries
• Contracts by guardians or legal
NOTES:
representatives
✍ Consensual contracts are perfected • Voluntary fulfillment of a natural
from the moment there is a obligation provided that the
manifestation of concurrence minor is between 18-21 years of
between the offer and the age
acceptance regarding the object and • Contracts of life, health or
the cause. accident insurance taken on the
✍ Real contracts like deposit, pledge life of the minor
and commodatum requires delivery 2. Insane or demented persons, unless
of object for perfection. the contract was entered into during
✍ Solemn contracts are those which a lucid interval
requires compliance with certain

Ethics)

3. Deaf-mutes who do not know how to 5. Undue influence - when a person
read and write takes improper advantage of his
power over the will of another,
Effect of Misrepresentation of Age by depriving the latter of a reasonable
the Minor freedom of choice.
☞ Misrepresentation by minors with
regard to their age when entering Reluctant Consent ✍ A contract is valid
into a contract shall bind them in the even though one of the parties entered
sense that they are estopped into it against his wishes and desires or
subsequently from impugning the even against his better judgment.
validity of the contract on the Contracts are also valid even though
ground of minority. It is necessary they are entered into by one of the
that the misrepresentation must be parties without hope of advantage or
active (e.g. when minors specifically profit. (Martinez vs. Hongkong and
stated in a contract that they were Shanghai Bank, 15 Phil. 252)
of age), not merely constructive. Simulation of Contracts
1. Absolute – when the contracting
VICES OF CONSENT (VIMFU) parties do not intend to be bound by
1. Violence - when in order to wrest the contract at all. Thus, an
consent, serious or irresistible force absolutely simulated contract is
is employed. VOID.
2. Intimidation - when 1 of the 2. Relative – when the contracting
contracting parties is compelled by a parties conceal their true
reasonable & well-grounded fear of agreement. A relatively simulate
an imminent & grave evil upon his contract binds the parties to their
person or property, or upon the real agreement, when it does not
person or property of his spouse, prejudice a 3rd person and is not
descendants or ascendants, to give intended for any purpose contrary to
his consent. law, morals, good customs, public
3. Mistake - should refer to the order or public policy.
substance of the thing which is the
object of the contract, or to those OBJECT
conditions which have principally ☞ The thing, right or service which is
moved one or both parties to enter the subject matter of the obligation
into the contact. ✍ Must be mistake arising from the contract.
of fact and not of law, except under ☞ Requisites:
Article 1334. a. It must be w/in the commerce of
☞ Requisites under Article 1334: man
a. Mistake must be with respect b. It must be licit or not contrary
to the legal effect of an law, morals, good customs,
agreement public order or public policy
b. Mistake must be mutual c. It must be possible
c. Real purpose of the parties d. It must be determinate as to its
must have been frustrated. kind
4. Fraud - when, through insidious
words or machinations of 1 of the Things which Cannot be the Object of
contracting parties, the other is Contract
induced to enter into a contract 1. Things which are outside the
which, without them, he would not commerce of men
have agreed to. 2. Intransmissible rights
CIVIL LAW COMMITTEE

3. Future inheritance, except in another cause which
cases expressly authorized by law is true and lawful
4. Services which are contrary to does not invalidate
law, morals, good customs, 5. Lesion the contract, unless
public order or public policy (a) there is fraud,
mistake or undue
5. Impossible things or services
influence; or (b) when
6. Objects which are not possible of the parties intended a
determination as to their kind donation or some
other
CAUSE contract
☞ The immediate, direct and most
proximate reason which explains and
justifies the creation of obligation. FORM OF CONTRACTS
☞ Requisites Contracts shall be
a. Cause should be in existence at obligatory, in whatever form they may
the time of the celebration of have been entered into, provided all the
the contract essential requisites for their validity are
b. Cause should be licit or lawful present.
c. Cause should be true
1. When the law requires that a
☞ Rules:
contract be in some form in order
1. In onerous contracts, the cause is
that it may be valid
understood to be, for each
contracting party, the prestation of
promise of a thing or service by the
other.
2. In remuneratory contracts, the
service or benefit w/c is
remunerated.
2. When the law requires that a
3. In contracts of pure beneficence,
contract be in some form in order
the mere liberality of the donor or
that it may be enforceable
benefactor.
4. In accessory contracts (mortgage or
NOTES:
pledge), the cause is identical with
the cause of the principal contract, ✍ Parties may compel each other to
that is, the loan from which it comply with the form required once the
derives its life and existence. contract has been perfected. (Article
1357) ✍ Contracts under Art 1358 which
CAUSE EFFECT
are required to be in some specific form
the contract confers
is only for the convenience of parties and
1. Absence of cause no right and produces
does not affect its validity and
no legal effect
enforceability as between them.
does not render the
2. Failure of cause contract void
RA 8792 (E- COMMERCE ACT) provides
the contract is null
that the formal requirements to make
3. Illegality of cause and void
contracts effective as against third
the contract is void, persons and to establish the existence of
4. Falsity of cause unless the parties
a contract are deemed complied with
show that there is
provided that the electronic document is

Ethics)

unaltered and can be authenticated as to
be usable for future reference. 4. Not cured by Cured by prescription Cured by prescrip
prescription
REFORMATION OF INSTRUMENTS ☞
Requisites: 5. Cannot be ratified Can be ratified Need not be ratif
a. meeting of the minds to the
contract 6. Assailed not only Assailed only by a Assailed not onl
b. true intention is not expressed in by a contracting contracting party contracting part
party but even by a even by a third
the instrument by reason of who is prejudic
mistake, accident, relative third person whose
damaged by the
simulation, fraud, or inequitable interest is directly contract
affected
conduct
c. clear and convincing proof of
mistake, accident, relative 7. Assailed directly or Assailed directly or Assailed directly
collaterally collaterally
simulation, fraud, or inequitable
conduct
Instances when there can be no

reformation: RESCISSIBLE CONTRACTS
1. Simple unconditional donations ☞ Contracts validly agreed upon but,
inter vivos; by reason of lesion or economic
2. Wills; prejudice may be rescinded in cases
3. When the agreement is void; established by law.
When one of the parties has brought an What contracts are rescissible
action to enforce the instrument, no
1. those entered into by guardians
subsequent reformation can be asked.
where the ward suffers lesion of
COMPARATIVE TABLE O
more than ¼ of the value of the
things which are objects thereof;
VOID VOIDABLE 2. those agreed upon in representation
of absentees, if the latter suffer
1. Defect is caused Defect is caused by vice lesion by more than ¼ of the value of
by lack of essential of consent the things which are subject thereof;
elements or illegality
3. those undertaken in fraud of
creditors when the latter cannot in
any manner claim what are due
them;
2. Do not, as a Valid and enforceable
general rule produce until they are annulled
4. those which refer to things under
any legal effect by a competent court
litigation if they have been entered
into by the defendant without the
3. Action for the Action for annulment or
knowledge and approval of the
declaration or nullity defense of annulability
or inexistence or may prescribe litigants and the court;
defense of nullity or 5. all other contracts especially
inexistence does not declared by law to be subject to
prescribe rescission; and
6. payments made in a state of
insolvency on account of obligations
not yet enforceable
CIVIL LAW COMMITTEE

☞ Requisites: what is incumbent the other party is not
a. the contract must be rescissible upon him. important.
b. the party asking for rescission 3. It applies only to 3. It applies to both
must have no other legal means reciprocal obligation unilateral and
c. to obtain reparation for the reciprocal
damages suffered by him obligations.
d. the person demanding rescission 4. Only a party to the 4. Even a 3rd person
must be able to return whatever contract may demand who is prejudiced by
fulfillment or seek the contract may
he may be obliged to restore if
demand the
rescission is granted the rescission of the
rescission of the
contract.
e. the things w/c are the object of contract.
the contract must not have 5. Court may fix a 5. Court cannot grant
passed legally to the possession period or grant extension of time for
of a 3rd person acting in good extension of time for fulfillment of the
faith obligation.
the fulfillment of the
f. the action for rescission must be obligation.
brought w/in the prescriptive 6. Its purpose is to 6. Its purpose is to
period of 4 years cancel the contract. seek reparation for
the damage or injury
caused, thus allowing
BADGES OF FRAUD: partial rescission of
1. Consideration of the conveyance the contract.
is inadequate or fictitious;
2. Transfer was made by a debtor VOIDABLE CONTRACTS
after a suit has been begun and ☞ Those in which all of the essential
while it is pending against him; elements for validity are present,
3. Sale upon credit by an insolvent although the element of consent is
debtor; vitiated either by lack of capacity of
4. Evidence of indebtedness or one of the contracting parties or by
complete insolvency VIMFU.
5. Transfer of all his property by a
debtor when he is financially What contracts are voidable
embarrassed or insolvent; 1. Those where one of the parties is
6. Transfer made between father & incapable of giving consent to a
son, where there is present any contract
of the above circumstances 2. Those where the consent is vitiated
7. Failure of the vendee to take by mistake, violence, intimidation,
exclusive possession of all the undue influence or fraud
property
Causes of extinction of action to annul:
1. PRESCRIPTION
Rescission in Rescission Proper ☞ the action must be commenced
Article 1191 in Article 1381 within 4 years from:
1. It is a principal 1. It is a subsidiary a. the time the incapacity ends;
action retaliatory in remedy. b. the time the violence,
character. intimidation or undue
2. The only ground is 2. There are 5 influence ends; or
non-performance of grounds to rescind. c. the time the mistake or fraud
one’s obligation/s or Non-performance by is discovered.

Ethics)

NOTE: Discovery of fraud must be Agreements within the scope of the
reckoned to have taken place from Statute of Frauds (EXCLUSIVE LIST):
the time the document was 1. Agreements not to be performed
registered in the office of the within one year from the making
register of deeds. Registration thereof;
constitutes constructive notice to the 2. Special promise to answer for the
whole world. (Carantes vs. CA, debt, default or miscarriage of
76 SCRA 514) another;
NOTE: This does not refer to the
2. RATIFICATION ☞ original or independent promise of
Requisites: the debtor to his own creditor. It
a. there must be knowledge of refers rather to a collateral promise.
the reason which renders 3. Agreement in consideration of
the contract voidable marriage other than a mutual
b. such reason must have promise to marry;
ceased and 4. Agreement for the sale of goods, etc.
c. the injured party must have at a price not less than P500.00;
executed an act 5. Contracts of lease for a period longer
which expressly or than one year;
impliedly conveys an 6. Agreements for the sale of real
intention to property or interest therein; and
waive his right 7. Representation as to the credit of a
3. By loss of the thing which third person.
is the object of the
contract through fraud or NOTES:
fault of the person who is
entitled to annul the ✍ The contracts/agreements under
contract. the Statute of Frauds require that
the same be evidenced by some
NOTE: If the object is lost through note, memorandum or writing,
fortuitous event, the contract can still subscribed
be annulled, but the person obliged to by the party charged or by his agent,
return the same can be held liable only otherwise, the said contracts shall be
for the value of the thing at the time of unenforceable. ✍ The statute of frauds
the loss, but without interest thereon. applies only to executory contracts, not
to those that are partially or completely
UNENFORCEABLE CONTRACTS fulfilled.
☞ Those which cannot be enforced
by proper action in court unless they Ratification of contracts in violation of
are ratified the Statute of Frauds
1. Failure to object to the presentation
What contracts are unenforceable of oral evidence to prove such
1. those entered into in the name of contracts
another by one without or acting in 2. Acceptance of benefits under these
excess of authority; contracts
2. those where both parties are
VOID CONTRACTS
incapable of giving consent; and
☞ Those where all of the requisites
3. those which do not comply with the
of a contract are present but the
Statute of Frauds
cause, object or purpose is contrary
CIVIL LAW COMMITTEE

to law, morals, good customs, public before the purpose has been
order or public policy, or contract accomplished, or before any
itself is prohibited or declared void damage has been caused to a 3rd
by law. person.
3. Payment of money or delivery of
What contracts are void property made by an
1. Those whose cause, object or incapacitated person
purpose is contrary to law, morals 4. Agreement or contract which is
good customs, public order or public not illegal per se & the
policy; prohibition is designed for the
2. Those whose object is outside the protection of the plaintiff
commerce of men; 5. Payment of any amount in excess
3. Those which contemplate an of the maximum price of any
impossible service; article or commodity fixed by
4. Those where the intention of the law or regulation by competent
parties relative to the principal authority.
object of the contract cannot be 6. Contract whereby a laborer
ascertained; and undertakes to work longer than
5. Those expressly prohibited or the maximum # of hours fixed by
declared void by law. law.
7. Contract whereby a laborer
INEXISTENT CONTRACTS accepts a wage lower than the
minimum wage fixed by law.
☞ Those where one or some or all of
8. One who lost in gambling
the requisites essential for the
because of fraudulent schemes
validity of a contract are absolutely
practiced on him is allowed to
lacking.
recover his losses [(Art. 315, 3
What contracts are inexistent (b), RPC] even if gambling is a
prohibited one.
1. Those which are
absolutely simulated or fictitious;
Rules when only one of the parties is at
and
fault:
2. Those whose cause or object did not
1. Executed Contracts:
exist at the time of the transaction.
a. Guilty party is barred from
recovering what he has given to
NOTE: The principle of In Pari Delicto is
the other party is barred from
applicable only to void contracts and not
recovering what he has given to
as to inexistent contracts.
the other party by reason of the
Principle of In Pari Delicto
contract.
RAL RULE: When the defect of a
b. Innocent party may demand for
void contract consists in the illegality of
the return for the return of what
the cause or object of the contract and
he has given.
both of the parties are at fault or in pari
2. Executory Contracts - Neither of the
delicto, the law refuses them every
contracting parties can demand for
remedy and leaves them where they are.
the fulfillment of any obligation
from the contract nor may be
1. Payment of usurious interest compelled to comply with such
2. Payment of money or delivery of obligation
property for an illegal purpose,
where the party who paid or
delivered repudiates the contract

Ethics)

NATURAL OBLIGATIONS 6. Payment by heir of debt exceeding
☞ They are real obligations to which value of property inherited; and
the law denies an action, but which 7. Payment of legacy after will have
the debtor may perform voluntarily. been declared void.
☞ It is patrimonial, and presupposes a
prestation. ESTOPPEL
☞ The binding tie of these obligations is ☞ A condition or state by virtue of
in the conscience of man, for under which an admission or representation
the law, they do not have the is rendered conclusive upon the
necessary efficacy to give rise to an person making it and cannot be
action. denied or disproved as against the
person relying thereon.
Examples of natural ☞ Kinds:
obligations enumerated under the Civil 1. Estoppel in Pais (by conduct)
Code: a. Estoppel by silence
1. Performance after the civil obligation b. Estoppel by
has prescribed; acceptance of benefits
2. Reimbursement of a third person for 2. Technical Estoppel
a debt that has prescribed; a. Estoppel by deed
3. Restitution by minor after annulment b. Estoppel by record
of contract; c. Estoppel by judgment
4. Delivery by minor of money or d. Estoppel by laches
fungible thing in fulfillment of
obligation;
5. Performance after action to enforce
civil obligation has failed;
LACHES PRESCRIPTION
1. concerned with 1. concerned with

effect of delay fact of delay
2. question of 2. question or
inequity of matter of time
permitting the claim
to be enforced
3. not statutory 3. statutory
4. applies in equity 4. applies at law
5. not based on a 5. based on a fixed

fixed time time
LACHES or “STALE DEMANDS”
☞ Failure or neglect, for an unreasonable and unexplained length of
time, to do that which, by exercising due diligence, could or should have been done
earlier; it is negligence or omission to assert a right within reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.
CIVIL LAW COMMITTEE

☞ Elements:
a. Conduct on part of
the defendant, or of one
under whom he claims, giving rise
to
the situation of which complaint
is made and for which the complaint seeks

a remedy
b. Delay in asserting
the complainant’s rights,
the complainant having
knowledge or notice, of the
defendant’s conduct and
having been afforded the
opportunity to
institute a suit
c. Lack of knowledge or notice on
the part of the defendant that the
complainant would assert the
right on which he bases his suit
d. Injury to the defendant in the
event relief is accorded tot the
complainant, or the suit in not
held to be barred

Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer Ang(VC- Secretariat),
Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Ethics)

Obligations and Contracts: San Beda College of Law

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San Beda College of Law

MEMORY AID IN CIVIL LAW