Civil Law and Practical Exercises
CANNOT maintain an action for rescission on the ground of
2) One must sell his hereditary rights;
3) Buyer is a stranger;
4) Sale made before partition;
5) At least 1 co-heir demands redemption;
6) Demand must be made within 1 month from the time of
noti cation in writing; AND
7) Redemptioner must reimburse the price of sale.
Effects of Partition
ART 1092. After the partition has been made, the co-heirs
Rescission and Nullity of Partition
shall be reciprocally bound to warrant
a) the title to, and
b) the quality of,
each property adjudicated.
ART 1093. The reciprocal obligation of warranty referred to
in the preceding article shall be proportionate to the
respective hereditary shares of the co-heirs, but if any one of
them should be insolvent, the other co-heirs shall be liable for
his part in the same proportion, deducting the part
corresponding to the one who should be indemni ed.
Those who pay for the insolvent heir shall have a right of
action against him for reimbursement, should his nancial
condition improve.
ART 1094. An action to enforce the warranty among heirs
must be brought within ten (10) years from the date the
right of action accrues.
Reviewer for the 2022 Bar
ART 1095. If a credit should be assigned as collectible, the
lesion, but he shall have a right to be indemni ed in cash.
co-heirs shall not be liable for the subsequent insolvency of the
debtor of the estate, but only for his insolvency at the time ART 1104. A partition made with preterition of any of the
the partition is made. compulsory heirs shall NOT be rescinded, unless it be proved
that there was bad faith or fraud on the part of the other
The warranty of the solvency of the debtor can only be
enforced during the ve (5) years following the partition. persons interested; but the latter shall be proportionately
obliged to pay to the person omitted the share which belongs
Co-heirs do NOT warrant bad debts, if so known to, and to him.
accepted by, the distributee. But if such debts are not assigned
to a co-heir, and should be collected, in whole or in part, the ART 1105. A partition which includes a person believed to be
amount collected shall be distributed proportionately among an heir, but who is not, shall be VOID only with respect to such
the heirs. person.
IV Obligations and Contracts
ART 1098. A partition, judicial or extrajudicial, may also be
rescinded on account of lesion, when any one of the co-heirs Obligations
received things whose value is less, by at least one-fourth,
General provisions
than the share to which he is entitled, considering the value of
the things at the time they were adjudicated. Nature and e ect
ART 1099. The partition made by the testator CANNOT be Kinds
impugned on the ground of lesion, except Extinguishment
a) when the legitime of the compulsory heirs is thereby Contracts
prejudiced, or
General provisions
b) when it appears or may reasonably be presumed, that
the intention of the testator was otherwise. Essential requisites
Reformation of instruments
ART 1100. The action for rescission on account of lesion shall
prescribe after four (4) years from the time the partition was Interpretation of contracts
made.
Rescissible contracts
ART 1102. An heir who has alienated the whole or a
Voidable contracts
considerable part of the real property adjudicated to him
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Unenforceable contracts Law (Art Imposed by the law itself Art 195 Civil Code - 1) Law
Void or inexistent contracts 1158) support
ART 1158. Obligations derived from law are not presumed.
Natural Obligations Contracts Arise from stipulation of Obligation to repay a loan Only those expressly determined in this Code or in special
(Art 1159) parties (Art 1306); by virtue of an agreement laws are demandable xxxx.
Estoppel

Trusts Quasi- Arise from lawful, Return money paid by Bautista v. F.O. Borromeo, Inc.
contracts voluntary and unilateral mistake (Art 2154)
Quasi-Contracts Borromeo paid the widow of its employee, Quintin Delgado,
acts and which are
enforceable to the end compensation (death bene t) and funeral expenses for the latter's
A Obligations death while in the course of employment. This obligation arises
that no one shall be
unjustly enriched (Art from law - Section 2 of the Workmen's Compensation Act.
1 General provisions 2142).
2) Contracts
ART 1156. An obligation is a juridical necessity to give, to do Acts or Arise from civil liability Restitution,
ART 1159. Obligations arising from contracts have the force
or not to do. omissions which is the consequence indemni cation,
of law between the contracting parties and should be complied
punished of a criminal o ense (Art reparation.
Obligation is a legal relation established between one party and with in good faith.
by law 1161)
another, whereby the latter is bound to the ful llment of a prestation
which the former may demand of him. Quasi- Torts; Arise from damage Art 2193 - head of the Maritime Company of the Philippines v.
delicts caused to another family liable for damage Reparations Commission
Elements
through an act or caused by things thrown Every contract contains not only what has been explicitly stipulated,
a) An active subject — the obligee or creditor;
omission, there being or falling from building in but the statutory provisions that have any bearing on the matter.
b) A passive subject — the obligor or debtor; fault or negligence, but which he resides;
no contractual relation Art 2183 - Possessor of an The rule is that the law forms part of, and is read into, every
c) The object or prestation; contract, unless clearly excluded therefrom in those cases where such
exists between the animal to pay for damages
The subject matter of an obligation — and may consist of parties. (Art 2176) which it may cause. exclusion is allowed.
giving a thing, doing or not doing a certain act.
ART 1157. Obligations arise from: 3) Quasi-Contracts
d) The e cient cause — the vinculum or juridical tie.
ART 1160. Obligations derived from quasi-contracts shall
Sources be subject to the provisions of Chapter 1, Title XVII, of this
Book.
Source De nition Examples

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A quasi-contract is that juridical relation resulting from a lawful,
voluntary, and unilateral act, and which has for its purpose the
payment of indemnity to the end that no one shall be unjustly enriched
or bene ted at the expense of another. It could either be:
a) Negotiorum gestio — the voluntary management of the
property or a airs of another without the knowledge or
consent of the latter (Art 2144). This does not apply when
i) property or business is not neglected, in which case
provisions on unauthorized contracts shall govern,
and
ii) the manager has been tacitly authorized by the owner,
in which case the rules on agency shall govern.
b) Solutio indebiti — created when something is received when
there is no right to demand it and it was unduly delivered
through mistake (Art 2154). Whether the payment was made
by mistake is a judicial matter. General presumption: “money
paid by one to another was due to the latter”.
c) Other cases — Arts 2164 - 2175. Recovery may be allowed in
view of the peculiar circumstances or factual environment to
the end that a recipient of bene ts or favors resulting from
lawful, voluntary and unilateral acts of another may not be
unjustly enriched at the expense of the latter.
Cruz v. J.M. Tuason & Co., Inc.
A presumed quasi-contract cannot emerge as against one party when
the subject matter thereof is already covered by an existing contract
with another party.
Reviewer
National Commercial Bank of Saudi Arabia v. CA
Solutio indebiti applies where:
1) a payment is made when there exists no binding relation
between the payor, who has no duty to pay, and the person
who received the payment, and
2) the payment is made through mistake, and not through
liberality or some other cause.
Here, PBC and NCBSA were bound by their contract, the letter of
credit. As such, the cause of action was based on a contract, and the
prescriptive period is ten, not six years.
Siga-an v. Villanueva
Under Article 1960, if the borrower of loan pays interest when there
has been no stipulation therefor, the provisions of the Civil Code
concerning solutio indebiti shall be applied.
4) Delict
ART 1161. Civil obligations arising from criminal o enses shall
be governed by the penal laws, subject to the provisions of
Article 2177, and of the pertinent provisions on Human
Relations, and of Title XVIII, regulating damages.
DMPI Employees Credit Cooperative, Inc. v. Velez
Every person criminally liable for a felony is also civilly liable. Civil
liability includes restitution, reparation for damage caused, and
indemni cation of consequential damages.
The case herein, an independent civil action for damages on
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for the 2022 Bar
account of the fraud committed against Villegas under Article 33,
may proceed independently even if there was no reservation.
Hun Hyung Park v. Eung Won Choi
The civil action based on delict may, however, be deemed
extinguished if there is a nding on the nal judgment in the
criminal action that the act or omission from which the civil
liability may arise did not exist.
5) Quasi-delict
ART 1162. Obligations derived from quasi-delicts shall be
governed by the provisions of Chapter 2, Title XVII of this
Book, and by special laws.
A quasi-delict is a fault or act of negligence or omission of care
which causes damage to another, there being no pre-existing
contractual relations between the parties. There must be:
1) An act or omission by the defendant;
2) Fault or negligence by the defendant;
3) Damage caused to the plainti ;
4) Direct relation or connection of cause and e ect between 1
and 3; and
5) No pre-existing contractual relations between the parties.
Lasam v. Smith
In a legal sense and, consequently, also in relation to contracts, a caso
fortuito presents the following essential characteristics:
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1) The cause of the unforeseen and unexpected occurrence, or
of the failure of the debtor to comply with his obligation,
must be independent of the human will.
2) It must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen, it must
be impossible to avoid.
3) The occurrence must be such as to render it impossible for
the debtor to ful ll his obligation in a normal manner.
and
4) The obligor (debtor) must be free from any participation
in the aggravation of the injury resulting to the creditor.
1. Compliance with Obligations
Elcano v. Hill
In this jurisdiction, the separate individuality of a cuasi-delito or
culpa aquiliana under the Civil Code has been fully and clearly
recognized, even with regard to a negligent act for which the
wrongdoer could have been prosecuted and convicted in a criminal
case and for which, after such a conviction, he could have been sued
for this civil liability arising from his crime.
The acquittal of Reginald Hill in the criminal case has not
extinguished his liability for quasi-delict, hence that acquittal is not
a bar to the instant action against him.
Virata v. Ochoa
It is settled that in negligence cases, the aggrieved parties may
choose between an action under the RPC or for quasi-delict
Duties of debtor in obligation to give a determinate thing
Reviewer
under Article 2176. What is prohibited by Article 2177 is to
recover twice for the same negligent act.
Neplum, Inc. v. Orbeso
Deemed instituted in every criminal prosecution is the civil liability
arising from the crime or delict per se (civil liability ex delicto), but
NOT those liabilities from quasi-delicts, contracts or
quasi-contracts.
2 Nature and e ect
1) In Obligations to Give
ART 1163. Every person obliged to give something is also
obliged to take care of it with the proper diligence of a good
father of a family, unless the law or the stipulation of the
parties requires another standard of care.
ART 1165. When what is to be delivered is a determinate
thing, the creditor, in addition to the right granted him by
article 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the
obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing
to two or more persons who do not have the same interest, he
shall be responsible for any fortuitous event until he has
e ected the delivery.
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for the 2022 Bar
1. Preserve or take care of the thing due;
2. Deliver the fruits of the thing (Art 1164);
3. Deliver its accessions and accessories (Art 1166);
4. Deliver the thing itself; and
5. Answer for damages in case of non-ful llment or breach (Art
1170).
Duties of debtor in obligation to deliver a generic thing
1. Deliver a thing which is of the quality intended by the parties
considering the purpose of the obligation and other
circumstances (Art 1246); and
2. Be liable for damages in case of fraud, negligence, or delay, in
the performance of his obligation, or contravention of the
tenor thereof (Art 1170).
Remedies of creditor when debtor fails to comply. Demand
a) Speci c performance;
b) Rescission or cancellation; or
c) Damages.
ART 1166. The obligation to give a determinate thing
includes that of delivering all its accessions and accessories,
even though they may not have been mentioned.
Fidelity & Deposit Co. v. Wilson
The delivery of a thing constitutes a necessary and indispensable
requisite for the purpose of acquiring the ownership of the same by
virtue of a contract. The ownership, the property right, is only
derived from the delivery of a thing.
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2) In Obligations to Do
ART 1167. If a person obliged to do something fails to do it,
the same shall be executed at his cost.
This same rule shall be observed if he does it in contravention
of the tenor of the obligation. Furthermore, it may be decreed
that what has been poorly done be undone.
Remedies of creditor if debtor fails to do
a) To have the obligation performed by himself or by
another at debtor’s expense.
b) Plus damages.
Chavez v. Gonzales
The defendant-appellee contravened the tenor of his obligation
because he not only did not repair the typewriter but returned it "in
shambles." He is liable under Article 1167 for the cost of executing
the obligation in a proper manner. In addition, he is likewise liable,
under Article 1170, for the cost of the missing parts for in his
obligation to repair the typewriter he was bound, but failed, to
return it in the same condition it was when he received it.
Tanguilig v. CA
Whether petitioner is under obligation to reconstruct the windmill
after it collapsed.
YES. When the windmill failed to function properly it became
incumbent upon petitioner to institute the proper repairs in
accordance with the guaranty stated in the contract. Thus,
respondent cannot be said to have incurred in delay; instead, it is
Reviewer
petitioner who should bear the expenses for the reconstruction of the
windmill. Article 1167 is explicit on this point that if a person
obliged to do something fails to do it, the same shall be executed at
his cost.
Vil-Rey Planners and Builders v. Lexber, Inc. 2016
Breach of contract is the failure of a party, without legal reason,
to comply with the terms of a contract or perform any promise that
forms either a part or the whole of it.
The reciprocal obligation in this case was Lexber's payment of the
50% balance upon Vil-Rey's completion of the works. However,
despite the grant of extension, and even after the lapse of another
ve-day grace period, Vil-Rey failed to nish the works.
The law provides that the obligation of a person who fails to
ful ll it shall be executed at that person's cost. Thus, Vil-Rey
should be held liable for the amount paid by Lexber to another
contractor to complete the works. Article 1169 provides that in
reciprocal obligations, delay by one of the parties begins from the
moment the other ful lls the obligation.
3) In Obligations Not to Do
ART 1168. When the obligation consists in not doing, and the
obligor does what has been forbidden him, it shall also be
undone at his expense.
As a rule, the remedy of the obligee is the undoing of the
forbidden thing plus damages (Art 1170). If it is not possible,
physically or legally, or because of the rights acquired by third
persons who acted in good faith, the remedy is an action for
damages caused by the violation.
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2. Breach of Obligations and Grounds for Liability
ART 1170. Those who in the performance of their obligations
are guilty of fraud, negligence, or delay, and those who in
any manner contravene the tenor thereof, are liable for
damages.
Areola v. CA
Respondent insurance company is liable by way of damages for
the fraudulent acts committed by Malapit that gave occasion to the
erroneous cancellation of subject insurance policy. Its earlier act of
reinstating the insurance policy can not obliterate the injury in icted
on petitioner-insured.
1) Fraud
ART 1171. Responsibility arising from fraud is demandable in
all obligations. Any waiver of an action for future fraud
is void.
Fraud (deceit or dolo) — deliberate or intentional evasion of the
normal ful llment of an obligation.
a) Includes any act, omission or concealment involving some
kind of malice or dishonesty. It is synonymous to bad faith.
Moral damages may be recovered.
b) Art 1170 refers to incidental fraud (dolo incidente)
committed in the performance of an obligation already
existing because of contract. It is di erent from causal fraud
(dolo causante) or fraud employed in the execution of a
contract under Art 1338, which vitiates consent and makes the
contract voidable.
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2) Negligence
ART 1172. Responsibility arising from negligence in the
performance of every kind of obligation is also demandable,
but such liability may be regulated by the courts, according to
the circumstances.
Picart v. Smith
The test by which to determine the existence of negligence in a
particular case may be stated as follows: Did the defendant in
doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used
in the same situation? If not, then he is guilty of negligence.
The proper criterion for determining the existence of
negligence in a given case is this — Conduct is said to be negligent
when a prudent man in the position of the tortfeasor would have
foreseen that an e ect harmful to another was su ciently probable
to warrant his foregoing the conduct or guarding against its
consequences.
PNB v. CA
Damages are not intended to enrich the complainant at the expense
of the defendant, and there is no hard-and-fast rule in the
determination of what would be a fair amount of moral damages
since each case must be governed by its own peculiar facts. The
yardstick should be that it is not palpably and scandalously
excessive.
Reviewer for the 2022 Bar
Samson v. CA the diligence required of it constitutes negligence, and negates its
assertion that it is a mortgagee in good faith.
Bad faith is essentially a state of mind a rmatively operating with
furtive design or with some motive of ill-will. Bad faith is thus
synonymous with fraud and involves a design to mislead or deceive
Vinluan v. CA
another, not prompted by an honest mistake as to one's rights or
duties, but by some interested or sinister motive. In case of injury to a passenger due to the negligence of the driver of
the bus on which he was riding and of the driver of another vehicle,
In contracts, the kind of fraud that will vitiate consent is known as
the drivers as well as the owners of the two vehicles are jointly and
dolo causante or causal fraud which is basically a deception
severally liable for damages.
employed by one party prior to or simultaneous to the contract in
order to secure the consent of the other.
Metro Manila Transit Corp. v. CA
PNCC v. CA Petitioner's attempt to prove its diligentissimi patris familias in the
selection and supervision of employees through oral evidence must
The petitioner failed to exercise the requisite diligence in maintaining
fail as it was unable to buttress the same with any other evidence,
the NLEX safe for motorists. PASUDECO's negligence in
object or documentary, which might obviate the apparent biased
transporting sugarcanes without proper harness/straps, and that of
nature of the testimony.
PNCC in removing the emergency warning devices, were two
successive negligent acts which were the direct and proximate
cause of Latagan's injuries. As such, PASUDECO and PNCC are
jointly and severally liable. Calalas v. CA
The doctrine of proximate cause is applicable only in actions
for quasi-delict, not in actions involving breach of contract.
Prudential Bank v. Rapanot, et al. 2017 The doctrine is a device for imputing liability to a person where there
is no relation between him and another party. In such a case, the
If only the Bank exercised the highest degree of diligence required
obligation is created by law itself. But, where there is a pre-existing
by the nature of its business as a nancial institution, it would have
contractual relation between the parties, it is the parties themselves
discovered that (i) Golden Dragon did not comply with the approval
who create the obligation, and the function of the law is merely to
requirement imposed by Section 18 of PD 957, and (ii) that Rapanot
regulate the relation thus created.
already paid a reservation fee and had made several installment
payments in favor of Golden Dragon. The Bank's failure to exercise
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moment one of the parties ful lls his obligation, delay by

Air France v. Carrascoso
Although the relation of passenger and carrier is "contractual both in
origin and nature" nevertheless "the act that breaks the contract
may be also a tort".
Barredo v. Garcia
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.
Macalinao v. Ong
Under local jurisprudence, the following are the requisites for the
application of res ipsa loquitur:
1) The accident is of a kind which ordinarily does not occur in
the absence of someone's negligence;
2) It is caused by an instrumentality within the exclusive
control of the defendant or defendants; and
An act or omission causing damage to another may give rise to two
the other begins.
separate civil liabilities on the part of the o ender, i.e.,
1) Civil liability ex delicto, under Article 100 of the RPC; GR: Demand is necessary to put debtor in default or mora.
and EXC: Art 1169(2)
2) Independent civil liabilities, such as those 1) When the law so provides;
a) not arising from an act or omission complained of as a 2) When the obligation expressly so provides;
felony, e.g., culpa contractual or obligations arising
3) When time is of the essence;
from law under Article 31 of the Civil Code,
intentional torts under Articles 32 and 34, and culpa 4) When demand would be useless, as when the debtor has
aquiliana under Article 2176 of the Civil Code; or rendered it beyond his power to perform;
b) where the injured party is granted a right to le an 5) When debtor has expressly acknowledged that he really is in
action independent and distinct from the criminal default.
action under Article 33 of the Civil Code. Kinds of Mora
At the time of the ling of the complaint for damages in this case, the 1) Mora solvendi — on the part of debtor;
cause of action ex quasi delicto had already prescribed. Nonetheless,
2) Mora accipiendi — on the part of creditor;
petitioners can pursue the remaining avenue opened for them by
their reservation, i.e., the surviving cause of action ex delicto. This is 3) Compensatio morae — both are in default; as if neither is in
so because the prescription of the action ex quasi delicto does default.
not operate as a bar to an action to enforce the civil liability
Mora solvendi
arising from crime especially as the latter action had been expressly
reserved. Requisites

3) The possibility of contributing conduct which would make
the plainti responsible is eliminated.
There exists a fourth requisite, that the defendant fails to o er any
explanation tending to show that the injury was caused by his or her
want of due care.
Sps Santos v. Pizarro
3) Delay
ART 1169. Those obliged to deliver or to do something incur
in delay from the time the obligee judicially or extrajudicially
demands from them the ful llment of their obligation. xxx
In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the
1) The obligation must be due, enforceable, and already
liquidated or determinate in amount;
2) There must be non-performance;
3) There must be a demand, unless not required;
4) The demand must be for the obligation that is due.
E ects

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1) If the debtor is in default, he may be liable for interest or
damages;
2) He may also have to bear the risk of loss;
3) He is liable even for a fortuitous event, subject to
mitigation.
Mora accipiendi
When creditor unjusti ably refuses to accept payment or
performance at the time it can be done.
Aerospace Chemical Industries, Inc. v. CA
Whether damages have been properly awarded against petitioner for
its unjustified delay in the performance of its obligation under the
contract. YES.
Records reveal that a tanker ship had to pick-up sulfuric acid in
Basay, then proceed to get the remaining stocks in Sangi, Cebu. A
period of three days appears to us reasonable for a vessel to travel
between Basay and Sangi. The general rule that before delivery, the
risk of loss is borne by the seller who is still the owner, is not
applicable in this case because petitioner had incurred delay in
the performance of its obligation as per Article 1504 of the Civil
Code.
Binalbagan Tech, Inc. v. CA
A party to a contract cannot demand performance of the other
party’s obligations unless he is in a position to comply with his
own obligations. Similarly, the right to rescind a contract can be
demanded only if a party thereto is ready, willing and able to comply
Reviewer
with his own obligations thereunder (Art 1191).
Petitioner was evicted from the subject subdivision lots in 1974 by
virtue of a court order and reinstated to the possession thereof only
in 1982. During that period, Echaus was not in a legal position to
demand compliance of the prestation of petitioner to pay the price of
said subdivision lots. In short, her right to demand payment was
suspended during that period.
Bricktown Development Corp. v.
Amor Tierra Development Corp.
A grace period is a right, not an obligation, of the debtor. When
unconditionally conferred, the grace period is e ective without
further need of demand either calling for the payment of the
obligation or for honoring the right. The grace period must not be
likened to an obligation. The provisions of Article 1169 would nd
no relevance.
While petitioner corporation acted within its legal right to declare
the contracts to sell rescinded or cancelled, it would be
unconscionable to sanction the forfeiture by petitioner of
payments made to it by private respondent.
Leaño v. CA
On the issue of whether Leaño was in delay in paying the
amortizations, we rule that while the contract provided that the total
purchase price was payable within a ten-year period, the same
contract speci ed that the purchase price shall be paid in monthly
installments for which the corresponding penalty shall be imposed in
case of default. The default committed by Leaño could be
By RGL
for the 2022 Bar
compensated by the interest and surcharges imposed upon her under
the contract in question.
Lee v. De Guzman, Jr.
It is well-settled that when after a judgment has become nal and
executory, facts and circumstances transpire which render its
execution impossible or unjust, the interested party may ask a
competent court to stay its execution or prevent its enforcement.
Unfortunately it is not possible for Motorcars to comply with the
writ of execution since admittedly, the then Delta Motors who
manufactured 1983 models of Toyota Liftback had already closed
shop. The relief left for Lee is that found under Article 1170. There
was therefore delay in the delivery of the subject vehicle which
entitles petitioner to be awarded damages.
Vermen Realty v. CA
Article 1191 provides the remedy of rescission in (more
appropriately, the term is “resolution”) in case of reciprocal
obligations, where one of the obligors fails to comply with what is
incumbent upon him. The general rule is that rescission of a
contract will not be permitted for a slight or causal breach, but
only for such substantial and fundamental breach as would
defeat the very object of the parties in executing the agreement.
Petitioner would never be able to ful ll its obligation in allowing
respondent to exercise the option to transfer from Phase I to Phase
II, as the construction of Phase II has ceased. The impossibility of
fulfillment of the obligation on the part of petitioner
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necessitates resolution of the contract for indeed, the
non-ful llment of the obligation constitutes substantial breach of
the O setting Agreement.
Heirs of Luis Bacus v. CA
Obligations under an option to buy are reciprocal obligations. In
Nietes v. CA, we held that notice of the creditor's decision to
exercise his option to buy need not be coupled with actual payment
of the price, so long as this is delivered to the owner of the property
upon performance of his part of the agreement. Consequently, since
the obligation was not yet due, consignation in court of the purchase
price was not yet required.
Corollary, private respondents did not incur in delay when they
did not yet deliver payment nor make a consignation before the
expiration of the contract.
⭐Lara’s Gift and Decors v. 2019 En Banc
Midtown Industrial Sales
With regard to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, goods, credits or judgments, the interest due shall
be that which is stipulated by the parties in writing,
provided it is not excessive and unconscionable.
2. In the absence of stipulated interest, in a loan or forbearance
Reviewer
of money, goods, credits or judgments, the rate of interest
on the principal amount shall be the prevailing legal
interest prescribed by the BSP.
For both Nos 1 and 2, the interest shall be computed from
default, i.e., from extrajudicial or judicial demand in
accordance with Article 1169 of the Civil Code, UNTIL
FULL PAYMENT, without compounding any interest
unless compounded interest is expressly stipulated by the
parties, by law or regulation.
Interest due on the principal amount accruing as of judicial
demand shall SEPARATELY earn legal interest at the
prevailing rate prescribed by the BSP, from the time of
judicial demand UNTIL FULL PAYMENT.
3. When the obligation, not constituting a loan or forbearance
of money, goods, credits or judgments, is breached, an
interest on the amount of damages awarded may be imposed
in the discretion of the court at the prevailing legal
interest prescribed by the BSP.
No interest, however, shall be adjudged on unliquidated
claims or damages until the demand can be established with
reasonable certainty.
Accordingly, where the amount of the claim or damages is
established with reasonable certainty, the prevailing legal
interest shall begin to run from the time the claim is made
extrajudicially or judicially UNTIL FULL PAYMENT, but
when such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin to run
only from the date of the judgment of the trial court
UNTIL FULL PAYMENT. The actual base for the
computation of the interest shall, in any case, be on the
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principal amount nally adjudged, without compounding
any interest unless compounded interest is expressly
stipulated by law or regulation.
2015 En Banc re Just
Republic v. Hon. Mupas
Compensation
Contrary to the Government’s opinion, the interest award is not
anchored either on the law of contracts or damages; it is based
on the owner’s constitutional right to just compensation. The
di erence in the amount between the nal payment and the initial
payment – in the interim or before the judgment on just
compensation becomes nal and executory – is not unliquidated
damages which do not earn interest until the amount of damages is
established with reasonable certainty. The di erence between nal
and initial payments forms part of the just compensation that the
property owner is entitled from the date of taking of the property.
Republic v. CA ruled that just compensation is e ectively a
forbearance of money, and not indemnity for damages.
Odiamar v. Valencia 2018
The Court notes that there are two (2) types of interest, namely,
monetary interest and compensatory interest.
Monetary interest is the compensation xed by the parties for the
use or forbearance of money. On the other hand, compensatory
interest is that imposed by law or by the courts as penalty or
indemnity for damages.
Anent monetary interest, it is an elementary rule that no interest
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shall be due unless it has been expressly stipulated in writing.
In this case, no monetary interest may be imposed on the loan
obligation, considering that there was no written agreement expressly
providing for such. This notwithstanding, such loan obligation may
still be subjected to compensatory interest, following Nacar.
Heirs of Jarque v. Jarque 2018
Since the obligation of P950.00 is a forbearance of money, the
amount shall earn interest from the time of demand in the
counterclaim. The awards of moral and exemplary damages and
attorney's fees shall earn interest at the rate of 6% p.a. from the time
they became determinable, i.e., date of the MCTC Decision, until
nality of judgment. The total amount shall thereafter earn interest
at the rate of 6% p.a. from such nality of judgment until
satisfaction.
Contravention of Tenor of Obligations
Pacmac v. IAC
The parties’ contract of exclusive distributorship arrangement was
still in existence on August 3, 1965 when VULCAN decided to stop
deliveries of its products to PACMAC. VULCAN's unilateral act
of terminating the contract without legal justi cation makes it
liable for damages su ered by PACMAC pursuant to Article 1170.
FGU Insurance Corp. v. G.P. Sarmiento Trucking
A breach upon the contract confers upon the injured party a
valid cause for recovering that which may have been lost or
Reviewer
su ered. The remedy serves to preserve the interests of the
promisee that may include his
a) “expectation interest,” which is his interest in having
the bene t of his bargain by being put in as good a
position as he would have been in had the contract been
performed, or his
b) “reliance interest,” which is his interest in being
reimbursed for loss caused by reliance on the contract by
being put in as good a position as he would have been in
had the contract not been made; or his
c) “restitution interest,” which is his interest in having
restored to him any bene t that he has conferred on the
other party.
3. E ects of Fortuitous Events in Obligations
ART 1174. Except
a) in cases expressly speci ed by the law, or
b) when it is otherwise declared by stipulation, or
c) when the nature of the obligation requires the
assumption of risk,
no person shall be responsible for those events which
could not be foreseen, or which, though foreseen, were
inevitable.
Republic v. Luzon Stevedoring
Whether nor not the collision of appellant's barge with the supports or
piers of the Nagtahan bridge was in law caused by fortuitous event or
force majeure. NO. The very measures adopted by appellant
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prove that the possibility of danger was not only foreseeable,
but actually foreseen, and was not caso fortuito.
Respondent, knowing and appreciating the perils posed by the
swollen stream and its swift current, voluntarily entered into a
situation involving obvious danger; it therefore assumed the risk,
and can not shed responsibility merely because the precautions it
adopted turned out to be insu cient.
Austria v. CA
Whether in a contract of agency (consignment of goods for sale) it is
necessary that there be prior conviction for robbery before the loss of the
article shall exempt the consignee from liability for such loss. NO.
To require in the present action for recovery the prior conviction of
the culprits in the criminal case, in order to establish the robbery as a
fact, would be to demand proof beyond reasonable doubt to
prove a fact in a civil case.
Southeastern College, Inc. v. CA
Whether the damage on the roof of the building of private respondents
resulting from the impact of the falling portions of the school building’s
roof ripped off by the strong winds of typhoon “Saling”, was, within
legal contemplation, due to fortuitous event. YES. In order to be
exempt from liability arising from any adverse consequence
engendered thereby, there should have been no human
participation amounting to a negligent act.
Here, petitioner has not been shown negligent or at fault regarding
the construction and maintenance of its school building in question
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