1
OBLIGATIONS SOURCES
(2023 EDITION)
Art. 1156. An obligation is a juridical necessity to give, to do or not to do.
An obligation is a juridical relation whereby a person should engage or refrain
from engaging in a certain activity for the satisfaction of the private interest of
another who, in the case of non-fulfillment of such duty, may obtain from the
patrimony of the former through proper judicial proceedings the very prestation
due or in default thereof, the economic equivalent that it represents .
ESSENTIAL REQUISITES
1.Active subject
The active subject is called a creditor if the obligation is to give. The active
subject is called an obligee if the obligation is to do.The active subject is always a
person whether juridical or natural.
2.Passive subject
The passive subject is called a debtor if the obligation is to give. The passive
subject is called an obligor if the obligation is to do. The passive subject must be
determinate or determinable
How can both subjects be determinate or determinable?
a.Obligations where the subjects are completely and absolutely determined at the
birth of an obligation.
--If A and B are parties to a contract of sale and B doesn‘t comply. A cannot sue
C.
b.Obligations where one subject is determined at the moment of the birth of the
obligation and the other subject is to be determined subsequently at some fixed
criterion, which criterion is fixed at the start of the obligation.
--B makes a promissory note payable to M or order. In this case, the creditor is
not necessarily M. The creditor is either M or to whomever the promissory note is
endorsed.
--At the time of the birth of the obligation, the payee is not yet known but the
obligation is valid.
c.Obligations in which subjects are determined in accordance with its relation to a
thing.
The ‗real‘ rights
A mortgaged property to X pursuant to a loan. The mortgage attaches to the
property. If A sells the property to B, the annotation in the TCT will follow and B
becomes the mortgagor. If A doesn‘t pay, X goes against B.
The obligor in this case is whoever owns the land. X doesn‘t care whether its A or
B.
3.Object of the obligation
The object of the obligation always consists in an activity or conduct to be
observed by the debtor towards the creditor. This conduct to be observed is also
known as the prestation.
In a contract of sale for example, the object of the obligation is the conduct of the
vendor in delivering the car. The car, on the other hand, is the object or the
prestation.
4.Juridical Tie (efficient cause)
That which binds or connects the parties to the obligation.
5.Form
Another commentators say that the 5th essential requisite is form. Form means
some manifestation of intent. In some cases the manifestation is specific such as
in the case of donations.
the general rule is that there is no specific form for a valid obligation. However, if
form means that there is some external manifestation, fine, since we are not
telepathic after all. However, there should still be no specific form.
(1) Law;
Art. 1158. Obligations derived from law are not presumed. Only those expressly
determined in this Code or in special laws are demandable, and shall be regulated by the
precepts of the law which establishes them; and as to what has not been foreseen, by the
provisions of this Book.
There is only 1 ultimate source of obligations – law. However, there are 5 proximate
sources of obligations (Article 1157).
(2) Contracts;
Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
A contract is a meeting of minds between 2 persons whereby one binds himself, with
respect to the other, to give something or to render some service (Article 1305)
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 the
consequences which, according to their nature, may be in keeping with good faith, usage
and law (Article 1315).
In case of doubt, the interpretation consistent with good faith is followed (People’s Car
vs. Commando Security).
Party cannot excuse themselves on the ground that it has become unprofitable. Law will
not protect you from your own bad judgment.
2006 notes: contract cannot be rescinded due to the bankruptcy of one parties, since
parties are bound not only to the fulfillment of what has been stipulated but also to all the
consequences (applicable to obligations to GIVE, like in payment of rent.)
However, such is not applicable in obligations to DO.
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
General Rule: If you commit a crime, you are liable both criminally and civilly.
Exception: No private offended party (e.g. contempt, etc.)
The Civil Code deals with the civil aspect (i.e. indemnification for loss of earning
capacity).
(5) Quasi-delicts.
Quasi-delict is a civil law term while tort is a common law term.
DIFFERENCE BETWEEN CONTRACTUAL LIABILITY AND QUASI-DELICT
In quasi-delict, the obligation arises only when there is a violation. Without violation,
there is no obligation. It is the breach itself which gives rise to the obligation.
In contracts, there is already an obligation which exists prior to or even without a breach.
The breach of the contract is immaterial to the legal obligation.
Example: Contract of sale of watch. If both parties perform their obligation, the contract
is extinguished. There is no breach, but there is an obligation.(Compare the above
example with the one below)
Example: Driving recklessly, A hits a child. When did the obligation came to being?
When there was injury due to negligence. (Negligence per se does not give rise to a
quasi-delict unless there is injury.)
Breach and quasi-delict are inseparable. But contract and breach may be separable.
Question: Are contracts and quasi-delicts mutually exclusive?No.
In Gutierrez vs. Gutierrez, It was proven that the driver of the car was a minor and an
incompetent driver. The passenger sued against them all. The Supreme Court held that
the bus driver, bus owner and the driver of the car (through his father) are jointly and
severally liable to the passenger. The liability of the owner of the bus and the bus driver
rests on that of a contract. On the other hand, the father is responsible for the acts of his
son and is therefore responsible for the negligence of the minor. Here, it is clear that
breach of contract and quasi-delict are separate.
However, they can overlap as can be seen in the following example: Bus driver drives
recklessly and the bus hits a tree. A passenger is injured. The passenger and sue the
driver for quasi-delict (due to negligence) or for crime or the bus company for breach of
contract of carriage or for quasi-delict (negligence in the selection and supervision).
The cause of action one chooses determines the:
1.Parties involved
2.Degree of proof
3.Defenses
One can tailor his suit depending on the cause of action he chooses.
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KINDS OF PRESTATIONS

1.TO GIVE (ARTICLES 1163-1166) 2.TO DO (ARTICLE 1167)

4blue95: it is only in TO GIVE (only,so NOT TO GIVE is not

included) that specific and generic thing exist and also SPECIFIC Art. 1167. If a person obliged to do something fails to do it, the same shall be
PERFORMANCE exist. 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.
A.TO GIVE A GENERIC THING
i.Only the obligor can do (personalisimo)
Remedies Available to the Creditor
Remedies Available to the Creditor -Damages
1.The debtor must perform it personally (SPECIFIC performance)
2. Done by someone else (at the expense of the debtor—
SUBSTITUTE performance) ii.Anyone else can do it (not personalisimo)
3 Damages (EQUIVALENT performance) Remedies Available to the Creditor

Damages may be obtained exclusively or in addition to the 1st 2 1. Substitute performance

actions.
2. Equivalent performance
Damages may be obtained exclusively or in addition to the 1st
actions.

B.TO GIVE A DETERMINATE THING

3.NOT TO DO (ARTICLE 1168)
Primary Obligation: Giving what is supposed to be given.
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.
3 Accessory Obligations:
This includes the obligation not to give.

1. AFTER CONSTITUTION of the obligation and BEFORE

DELIVERY, to take care of it with the proper diligence of a Remedies Available to the Creditor
good father of the family (Article 1163) i. Substitute performance
ii. Equivalent performance
General Rule: Diligence of a good father of the family Damages may be obtained exclusively or in addition to the 1st
Exception: Law or stipulation requires different standard of care actions.

If through negligence, something causes the thing damage, the

debtor is liable for damages.
This is NOT APPLICABLE to a generic thing.

2. To account and deliver to the creditor the fruits if the thing SPECIFIC PERFORMANCE is the performance of the prestation itself.
bears fruits upon the time the obligation to deliver it arises
(Article 1164). In obligations to do or not to do, specific performance is not
available since it will go against the constitutional prohibition
However, ownership is transferred only by delivery. Hence, against involuntary servitude.
creditor‘s right over the fruits is merely personal.
EQUIVALENT PERFORMANCE is the payment of damages
Example: A sold B a mango plantation to be delivered on January 1.
Come January 1, A did not deliver. A instead sold the fruits to C, a SUBSTITUTE PERFORMANCE is when someone else performs or
buyer in good faith. B sues A for specific performance. Court something else is performed at the expense of the debtor.
awards the plantation to B. Does B have a right to the fruits? Yes,
as against A. No, as against C, because B‘s right over the fruits is
only personal. B‘s remedy is to go against A for the value of the Specific Equivalent Substitute
fruits. OBLIGATION Performanc Performanc Performance
e e

3.To deliver the accessions and accessories (Article 1166) 1. TO GIVE

Don‘t take accession in the technical sense (or else, it might overlap a. Determinate thing √ √ ×
with ii). Understand it to mean things that go with the thing to be
b. Determinable thing √ √ √
delivered (i.e. radio of the car).
2. TO DO

Remedies Available to the Creditor a. Very personal × √ ×

1. The debtor must perform it personally b. Not very personal × √ √

2. Damages 3. NOT TO DO × √ √
st
Damages may be obtained exclusively or in addition to the 1 action.

IMPROVEMENT,LOSS & DETERIORATION
a. If the thing is lost WITHOUT the fault of the debtor, the obligation is
extinguished
b. If the thing is lost through the fault of the debtor, he must pay damages
The thing is lost when it perishes, goes out of commerce or
disappears in such a way that its existence is unknown or cannot be
recovered.
c.If the thing deteriorates WITHOUT the fault of the debtor, the creditor
must accept the thing in its impaired condition
d. If the thing deteriorates through the fault of the debtor, the creditor may
choose between
-Resolution (Article 1189) plus damages
-Fulfillment of the obligation plus damages
e.If the thing is improved by nature or by time, the improvement shall inure
to the benefit of the creditor
f. If the thing is improved at the expense of the debtor, the debtor shall the
same rights as a usufructuary
FORTUITIOUS EVENT
Art. 1174. Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were
inevitable.
Requisites (Nakpil vs. CA)
1.The cause of the unforeseen and unexpected occurrence, or the
failure to comply with his obligations, must be independent of the
human will
2.It must be impossible to foresee the event which constitute the
caso fortuito, or if it can be foreseen, it must be impossible to avoid
3.The occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner
4.The obligor must be free from any participation in the aggravation
of the injury resulting to the creditor
GENERAL RULE: WHEN A DEBTOR IS UNABLE TO FULFILL HIS
OBLIGATION BECAUSE OF A FORTUITOUS EVENT OR FORCE
MAJEURE, HE CANNOT BE HELD LIABLE FOR DAMAGES OR NON-
PERFORMANCE.
EXCEPTIONS:
1.When the law so provides (i.e. Article 1165, ¶2)
2.When there is express stipulation-Fortuitous event yields to contrary stipulation.
3.When the nature of the obligation requires the assumption of risk (i.e. insurance
contracts)
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INTEREST AND DEBT
Art. 1176. The receipt of the principal by the creditor without reservation
with respect to the interest, shall give rise to the presumption that said
interest has been paid. The receipt of a later installment of a debt without
reservation as to prior installments, shall likewise raise the presumption that
such installments have been paid.
a.In a loan, the interest due should be that stipulated in
writing and in the absence thereof, the rate shall be
12% per annum.
b.In case of other obligations, interest on the amount of
damages may be imposed at the court‘s discretion at
the rate of 6% per annum.
4blue95: Legal interest must be in writing and
demand is needed for it to accrue.
2 PRESUMPTIONS:
a.Interest bearing debt
Presumption that interest has been paid if the principal has been received without
reservation regarding interest,
b.Debt payable in installments
Presumption that earlier installments have been paid if the later installment has
been received without reservation regarding the previous installments.
These are only rebuttable presumptions, you can prove through other evidence.
You can prove mistake.
2024 BAR MATTER:
a. Fraud & Negligence exist after obligation while Delay exist after
delivery
b. OWNERSHIP is transferred only by DELIVERY.
c. SALE is not a mode but a title.
It must give way to a mode which is DELIVERY.
It does not create nor transfer ownership but it creates an obligation
for delivery. There must be DELIVERY to vest OWNERSHIP ( San
Lorenzo v CA)
d. Declaration of martial law, per se, is not a fortuitous event. While a
lot of businesses suffered financial reverses during this period, it
could not be used as a defense when sued for collection of debts
validly incurred. (Philippine Free Press v. CA, G.R. No. 132864,
Oct. 24, 2005)
e. The Asian Debt Crisis in 1997 is not a fortuitous event. A real estate
company engaged in preselling of condominium units should have
been able to assess foreign exchange risks. The fluctuating
movement of the Philippine Peso in the FX market is a daily
occurrence, so Megaworld cannot claim fortuitous events as an
excuse for non-delivery of units. (Megaworld Globus Asia Inc. v.
Tanseco, G.R. No. 181206, Oct. 9, 2009)
f. The Christmas season cannot be cited as an act of God that would
excuse a delay in the processing of claims by a government entity
that is subject to routine accounting and auditing rules. (MIAA v.
ALA Industries Corp, G.R. No. 147349, Feb. 13, 2004)
 4

ATTRIBUTABLE TO THE DEBTOR

Article 1170 provides that 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

I.FRAUD (ARTICLES 1170, 1171)

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.
Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for future fraud is void.
Irregularity in Performance
II. NEGLIGENCE-THE ABSENCE OF DUE DILIGENCE (ARTICLE 1173)
Like fraud, negligence results in improper performance. But it is characterized by lack of
care, unlike fraud which is characterized by malice.
Lack of care means lack of due diligence or the care of a good father of the family (bonus
paterfamilias) under Article 1163.

Fraud may be defined as the voluntary execution of a wrongful act, or willful omission,
knowing and intending the effects which naturally and necessarily arise from such act or KINDS OF NEGLIGENCE
omission. Fraud is the deliberate and intentional evasion of the normal fulfillment of the
obligation. It is distinguished from negligence by the presence of deliberate intent, which 1. Quasi-Delict (Culpa aquiliana/culpa extra contractual) – source of
is lacking in the latter. (Legaspi Oil vs. CA) obligation; wrong or negligence committed independent of contract and
without criminal intent
Fraud under Article 1170 is more properly called as malice. Fraud under Article 1170
must not be confused with fraud under Article 1338. Fraud under Article 1338 is more 2. Contractual Negligence (Culpa Contractual) – wrong or negligence in
properly called as deceit.In Article 1338, fraud preexists the obligation, thus the the performance of an obligation or contract
obligation is voidable. Deceit vitiates consent in contracts. Deceit is antecedent fraud.
The deceit occurs by using insidious words machinations. Without this deceit, the other 3. Criminal Negligence (Culpa Criminal) – wrong or negligence in the
party would not have entered into the contract. commission of a crime
In Article 1171, there was already an obligation before the fraud exists. Malice is
subsequent fraud.
In English law, due diligence is called the diligence of a prudent businessman, since they
Example of fraud as deceit under Article 1338: A and B entered into a contract of sale of are more commerce-oriented.
a diamond necklace. However, the necklace was really made of glass. Fraud here is
deceit. There was vitiation of consent hence the contract is voidable. 2 Types of Negligence
1. Simple
Example of fraud as malice under Article 1171. A and B entered into a contract. B will 2. Gross
deliver furniture made of narra but B delivered one made of plywood. Fraud here is
malice. It will not affect the validity of the contract. The determination of due diligence is always relative. It will depend on
1. The nature of the obligation
2. Nature of the circumstances of
a. Person
Effects of Fraud (Articles 1170, 1171)
b. Time
1. Creditor may insist on proper substitute or specific performance (Article 1233 ); c. Place
or
2. Rescission/Resolution (Article 1191) Example: The diligence required in shipping hinges is different from the diligence
3. Damages in either case (Article 1170) required in shipping the Pieta de Michaelangelo. The shipper must observe the diligence
of a good father of the family in both cases but the standard of care is different. It is
much higher for the Pieta.
The diligence of a good father of the family is the imaginary standard.

RULE ON STANDARD OF CARE

1. That which the law requires; or
2. That stipulated by the parties; or
3. In the absence of the above, diligence of a good father of a family
(CIVIL CODE, art. 1163)
However, parties cannot stipulate that there would be absolute exemption
from liability for any fault or negligence, since it is against public policy.
(Heacock vs. Macondray, G.R. No. L-16598, Oct. 3, 1921; CIVIL CODE,
arts. 1306, 1744, 1745)

Effects of Negligence (Articles 1170, 1172)

1. Creditor may insist on proper substitute or specific performance (Article 1233); or
2. Rescission/Resolution (Article 1191)
3. Damages in either case (Article 1170)
 5

III.DELAY (MORA)

Art. 1169. Those obliged to deliver or to do something incur in delay from the time 4 KINDS OF DELAY
the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.
1. MORA SOLVENDI -Delay in performance incurred by the debtor.
However, the demand by the creditor shall not be necessary in order that delay may
exist: Requisites:
2022 notes: no demand,no delay—no interest (except if expressly provided); yes demand,
a. The obligation is demandable and liquidated
yes delay—there is interest, but in the exceptions enumerated in 1169, this is a situation
b. Debtor delays performance either because of dolo or culpa
where no demand ,but there is delay (interest)
c.The creditor demands the performance either judicially or extrajudicially

(1) When the obligation or the law expressly so declare; or Effects of Mora Solvedi
Mere setting of due date is not enough. This does not constitute automatic delay. a. When the obligation is to deliver a determinate thing, the risk is placed on the
part of the debtor (Article 1165)
There must be an express stipulation to the following effect: ―Non-performance on that
day is delay without need of demand.‖ (Dela Rosa vs. BPI) b. Damages
c. Rescission/ Resolution (Article 1191)
(2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment of the contract; or
Example: The wedding gown has to be ready before the wedding.

2. MORA ACCIPIENDI -The creditor incurs in delay when debtor tenders payment or
performance, but the creditor refuses to accept it without just cause.
(3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform. Mora accipiendi is related to payment (consignation).
Example: A sold the fruits of the mango plantation he already sold to B to C. B need not
make a demand on A to deliver the fruits since demand would be useless.
Requisites:
In reciprocal obligations, neither party incurs in delay if the other does not comply a. An offer of performance by the debtor who has the required capacity
or is not ready to comply in a proper manner with what is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay by the other begins. b. The offer must be to comply with the prestation as it should be performed
c. The creditor refuses the performance without just cause.
Delay has nothing to do with quality but only with punctuality.
Delay is the non-fulfillment of the obligation with respect to time.
Effects of Mora Accipiendi:
a. Responsibility of debtor for the thing is limited to fraud and gross negligence
REQUISITES OF DELAY (SSS VS. MOONWALK)
b. Debtor is exempted from risk of loss of thing w/c automatically pass to creditor
Obligation is demandable and liquidated
c. Expenses incurred by debtor for preservation of thing after the delay shall be
Delay is through fault or negligence
chargeable to creditor.
Creditor requires performance either judicially (through court action) or extrajudicially
(any communication by the creditor to debtor). d. If the obligation has interest, debtor shall not have obligation to pay the same
from the time of the delay
In reciprocal obligations (obligations with a counterpart prestation) which require
e. Creditor becomes liable for damages
simultaneous performance, demand is still needed.
2006 notes:kahit lampas na sa stipulated date,if walang demand so walang delay f. Debtor may relieve himself by consignation of the thing

What is the form of such demand? Any communication of a party that he is ready and
willing to comply with his obligation. If after receipt of demand and the other party does
not comply with his obligation, he is in delay.

3. COMPENSATIO MORAE -Delay on both sides in reciprocal obligations, cancel

The sudden act of a passenger who stabbed another passenger in the bus is within the each other out.
context of force majeure. But before common carrier may be absolved, it is not enough
that the accident was caused by force majeure. The common carrier must still prove that Not Attributable to the Debtor (non-culpable)
it was not negligent in causing injuries. (Bachelor Express, Inc. v. CA, G.R. No. 85691,
Jul. 31, 1990)
If obligation is to deliver materials for a fixed period such as 30 years, fortuitous events
occurring within the period, such as the outbreak of war which took 6 years out of the 30-
year period and destroyed plants, machinery and equipment and prevented the obligor
from making deliveries, the occurrence of such a fortuitous event will not extend the 4. CONTRAVENTION OF THE TENOR OF THE OBLIGATION
period of the contract beyond its fixed period. This is because the obligor was excused
from performance during the period when the fortuitous events prevented it from
performing its obligations. (Victorias Planters Association v. Victorias Milling, G.R. No.
6648, Jul. 25, 1955) This refers to failure to comply with the terms of the obligation, and will require dolo,
culpa or delay as the cause of the failure to comply, in order to constitute a breach.
A person obliged to perform an obligation is NOT excused from a fortuitous event when (CIVIL CODE, art. 1170; DESIDERIO P. JURADO, COMMENTS AND
the nature of the obligation requires the assumption of risk. In other words, it is NOT JURISPRUDENCE ON OBLIGATIONS AND CONTRACTS, 74 (2010))
enough that the event should not be foreseen or anticipated, but it must be one that is
impossible to foresee or to avoid. (Republic v. Luzon Stevedoring, G.R. No. L21749, Defense against breach: FORTUITOUS EVENTS
Sept. 29, 1967)

REMEDIES OF CREDITOR IN CASE OF BREACH
1. Specific Performance - requiring delivery or performance of the obligation.
• Can be combined with damages, but inconsistent with the remedy of resolution or
cancellation. (Magdalena Estate, Inc. v. Myrick, G.R. No. L-47774, Mar. 14, 1941)
• Can be pursued successively (but not simultaneously) with resolution or
cancellation; if initial action is for specific performance and obligor does not or.
cannot deliver, courts have allowed obligee to pursue resolution or cancellation.
(CIVIL CODE, art. 1191)
• This is NOT a remedy in an obligation ―Not to do‖ that has been breached since
the prohibited act has been done. (HECTOR S. DE LEON & HECTOR M. DE
LEON, JR., COMMENTS AND CASES ON OBLIGATIONS AND
CONTRACTS 44 (2014))
2. Damages - can be combined with any remedy or pursued independently – also
available in breach of any prestation. (CIVIL CODE, art. 1191)
3. Substitute performance - ask others to perform and charge the cost to the obligor
(CIVIL CODE, arts. 1165-1168)
• Not available in:
a. Obligation to give specific things (already set apart from class or genus to
which it belongs); (CIVIL CODE, art. 1165)
b. Obligations not to do; (CIVIL CODE, art. 1168) and
c. Obligations to do which are purely personal in character. (4 ARTURO M.
TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL
CODE OF THE PHILIPPINES 99-100 (1991))
4. Resolution/Cancellation - implied in reciprocal obligations, but not available if the
breach is slight, unless time is of the essence. (Biando v. Embestro, G.R. No. L11919,
Jul. 27, 1959) If breach is only slight, generally courts will grant additional time for the
obligor to pay or perform and after this additional time, if obligor still does not perform,
courts will allow resolution or cancellation. (CIVIL CODE, art. 1191; Kapisanan
Banahaw v. Dejarme, G.R. No. L32908, Nov. 28, 1930) The principle is that resolution
will not be permitted for a slight or casual breach of a contract, but only for such breaches
as are so substantial and fundamental as to defeat the object of the parties in entering into
the agreement. (Multinational v. Ara Security, 441 SCRA 126 (2004)) Remedy Specific
only to Obligations Not to Do: to compel that the act in violation of the obligation to be
undone if possible and if not, only damages may be pursued. (CIVIL CODE, art. 1168)
Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary.
Rights are transmissible unless the rights are personal.
General Rule: All rights acquired in virtue of an obligation are generally transmissible
(CIVIL CODE, art. 1178)
Exception: Rights acquired in virtue of an obligation are NOT transmissible when:
1. Prohibited by law
Examples:
(a) Contract of partnership (CIVIL CODE, art. 1767)
(b) Contract of agency (CIVIL CODE, art. 1868)
(c) Contract of commodatum (CIVIL CODE, art. 1933)
2. Prohibited by stipulation of the parties, as long as it is not contrary to public policy.
3. The obligation is purely personal in nature— when the obligor‘s personal
qualifications and skill was the motive behind the contract.
6
Q: In two separate documents signed by him, Juan Valentino "obligated" himself each to
Maria and to Perla, thus -'To Maria, my true love, I obligate myself to give you my one
and only horse when I feel likeIt." - and – 'To Perla, my true sweetheart, I obligate myself
to pay you the P500.00 I owe you when I feel like it." Months passed but Juan never
bothered to make good his promises. Maria and Perla came to consult you on whether or
not they could recover on the basis of the foregoing settings. What would your legal
advice be? (1997Bar)
A: I would advise Maria not to bother running after Juan for the latter to make good his
promise. This is because a promise is not an actionable wrong that allows a party to
recover especially when she has not suffered damages resulting from such promise. A
promise does not create an obligation on the part of Juan because it is not something
which arises from a contract, law, quasi-contracts or quasi-delicts. (Art, 1157) Under Art.
1182, Juan's promise to Maria is void because a conditional obligation depends upon the
sole will of the obligor. As regards Perla, the document is an express acknowledgment of
a debt, and the promise to pay what he owes her when he feels like it is equivalent to a
promise to pay when his means permits him to do so, and is deemed to be one with an
indefinite period under Art. 1180. Hence the amount is recoverable after Perla asks the
court to set the period as provided byArt. 1197, par. 2.
Q: Roland, a basketball star, was under contract for one year to play-for-play exclusively
for Lady Love, Inc. However, even before the basketball season could open, he was
offered a more attractive pay plus fringes benefits by Sweet Taste, Inc. Roland accepted
the offer and transferred to Sweet Taste. Lady Love sues Roland and Sweet Taste for
breach of contract. Defendants claim that the restriction to play for Lady Love alone is
void, hence, unenforceable, as it constitutes an undue interference with the right of
Roland to enter into contracts and the impairment of his freedom to play and enjoy
basketball. Can Roland be bound by the contract he entered into with Lady Love or can
he disregard the same? Is he liable at all? How about Sweet Taste? Is it liable to Lady
Love? (1991Bar)
A: Yes,Roland is liableunder the contract as far as Lady Love is concerned. He is liable
for damages under Article 1170 of the Civil Code since he contravened the tenor of his
obligation.Not being a contracting party, Sweet Taste is not bound by the contract, but it
can be held liable under Art. 1314. The basis of its liability is not prescribed by contract
but is founded on quasi-delict, assuming that Sweet Taste knew of the contract. Article
1314 of the Civil Code provides that any third person who induces another to violate his
contract shall be liable for damages to the other contracting party.
Q: Printado is engaged in the printing business. Suplico supplies printing paper to
Printado pursuant to an order agreement under which Suplico binds himself to deliver the
same volume of paper every month for a period of 18 months, with Printado in turn
agreeing to pay within 60 days after each delivery. Suplico has been faithfully delivering
under the order agreement for 10 months but thereafter stopped doing so, because
Printado has not made any payment at all. Printado has also a standing contract with
publisher Publico for the printing of 10,000 volumes of school textbooks. Suplico was
aware of said printing contract. After printing 1,000 volumes, Printado also fails to
perform under its printing contract with Publico. Suplico sues Printado for the value of
the unpaid deliveries under their order agreement. At the same time Publico sues Printado
for damages for breach of contract with respect to their own printing agreement. In the
suit filed by Suplico, Printado counters that: (a) Suplico cannot demand payment for
deliveries made under their order agreement until Suplico has completed performance
under said contract; (b) Suplico should pay damages for breach of contract; and (c) with
Publico should be liable for Printado‘s breach of his contract with Publico because the
order agreement between Suplico and Printado was for the benefit of Publico. Are the
contentions of Printado tenable? Explain your answers as to each contention. (2002Bar)
A: No, the contentions of Printado are untenable. Printado having failed to pay for the
printing paper covered by the delivery invoices on time, Suplico has the right to cease
making further delivery. And the latter did not violate the order agreement. (Integrated
Packaging Corporation v. Court of Appeals, G.R. No. 115117, June 8, 2000. Suplico
cannot be held liable for damages, for breach of contract, as it was not, he who violated
the order agreement, but Printado Suplico cannot be held liable for Printado‘s breach of
contract with Publico. He is not a party to the agreement entered into by and between
Printado and Publico. Theirs is not a stipulation pour atrui. Such contracts could not
affect third persons like Suplico because of the basic civil law principle of relativity of
contracts which provides that contracts can only bind the parties who entered into it, and
it cannot favor or prejudice a third person, even if he is aware of such contract and has
acted with knowledge thereof. (Integrated Packaging Corporation v. CA, G.R. No.
115117, June 8, 2000)
Q: A van owned by Orlando and driven by Diego, while negotiating a downhill slope of a
city road, suddenly gained speed, obviously beyond the authorized limit in the area, and
bumped a car in front of it, causing severe damage to the care and serious injuries to its
passengers. Orlando was not in the car at the time of the incident. The car owner and the
injured passengers sued Orlando and Diego for damages caused by Diego‘s negligence.
In their defense, Diego claims that the downhill slope caused the van to gain speed and
that, as he stepped on the brakes to check the acceleration, the brakes locked, causing the
van to go even faster and eventually to hit the car in front of it. Orlando and Diego
contend that the sudden malfunction of the van‘s brake system is a fortuitous even and
that, therefore, they are exempt from any liability. Is this contention tenable? Explain.
(2002 Bar)
A: No. Mechanical defects of a motor vehicle do not constitute fortuitous event, since the
presence of such defects would have been readily detected by diligent maintenance
check. The failure to maintain the vehicle in safe running condition
constitutesnegligence.

Q: AB Corp. entered into a contract with XY Corp. whereby the former agreed to
construct the research and laboratory facilities of the latter. Under the terms of the
contract, AB Corp. agreed to complete the facility in 18 months, at the total contract price
of P10 million. XY Corp. paid 50% of the total contract price, the balance to be paid
upon completion of the work. The work stated immediately, but AB Corp. later
experienced work slippage because of labor unrest in his company. AB Corp.'s
employees claimed that they are not being paid on time; hence, the work slowdown. As
of the 17th month, work was only 45% completed. AB Corp. asked for extension of time,
claiming that its labor problems are a case of fortuitous event, but this was denied by XY
Corp. When it became certain that the construction could not be finished on time, XY
Corp. sent written notice cancelling the contract, and requiring AB Corp. to immediately
vacate the premises. Can the labor unrest be considered a fortuitous event? (2008 Bar)
A: Labor unrest is not a fortuitous event that will excuse AB Corporation from complying
with its obligation of constructing the research and laboratory facilities of XY
Corporation. The labor unrest, which may even be attributed in large part to AB
Corporation itself, is not the direct cause of non-compliance by AB Corporation. It is
independent of its obligation. It is similar to the failure of a DBP borrower to pay her loan
just because her plantation suffered losses due to the cadang-cadang disease. It does not
excuse compliance with the obligation. (DBP v. Vda. de Moll, G.R. No. L- 25802,
January 31, 1972)
Q: Are the following obligations valid, why, and if they are valid, when is the obligation
demandable in each case? a. If the debtor promises to pay as soon as he has the means
topay; b. If the debtor promises to pay when he likes; c. If the debtor promises to pay
when he becomes a lawyer; d. If the debtor promises to pay if his son, who is sick with
cancer, does not die within one year. (2003 Bar)
A:
a. The obligation is valid. It is an obligation subject to an indefinite period because the
debtor binds himself to pay when his means permit him to do so (Art. 1180). When the
creditor knows that the debtor already has the means to pay, he must file an action in
court to fix the period, and when the definite period as set by the court arrives, the
obligation to pay becomes demandable (Art. 1197).
b. The obligation to pay when he likes is a suspensive condition the fulfillment of which
is subject to the sole will of the debtor and therefore the conditional obligation is void
(Art.1182).
c. The obligation is valid. It is subject to a suspensive condition, i.e. the future and
uncertain event of his becoming a lawyer. The performance of this obligation does not
depend solely on the will of the debtor but also on other factors outside the debtor‘s
control.
d. The obligation is valid. The death of the son of cancer within one year is made a
negative suspensive condition to his making the payment. The obligation is demandable
if the son does not die within one year (Art. 1185).
Q: Pedro promised to give his grandson a car if the latter will pass the bar examinations.
When his grandson passed the said examinations, Pedro refused to give the car on the
ground that the condition was a purely potestative one. Is he correct or not? (2000Bar)
A: No, he is not correct. First of all, the condition is not purely potestative, because it
does not depend on the sole will of one of the parties. Secondly, even if it were, it would
be valid because it depends on the sole will of the creditor (the donee) and not of the
debtor (the donor).
Q: In 1997, Manuel bound himself to sell Eva a house and lot which is being rented by
another person, if Eva passes the 1998 bar examinations. Luckily for Eva, she passed said
examinations. a. Suppose Manuel had sold the same house and lot to another before Eva
passed the 1998 bar examinations, is such sale valid?Why?
b. Assuming that it is Eva who is entitled to buy said house and lot, is she entitled to the
rentals collected by Manuel before she passed the 1998 bar examinations? Why?
(1999Bar)
A:
a) Yes, the sale to the other person is valid. However, the buyer acquired the property
subject to a resolutory condition of Eva passing the 1998 Bar Examinations. Hence, upon
Eva's passing the Bar, the rights of the other buyer terminated, and Eva acquired
ownership of the property.
ALTERNATIVE ANSWER: Yes, the sale to the other person is valid, as the contract
between Manuel and Eva is a mere promise to sell and Eva has not acquired a real right
over the land assuming that there is a price stipulated in the contract for the contract to be
considered a sale and there was delivery or tradition of the thing sold.
b) No, she is not entitled to the rentals collected by Manuel because at the time they
accrued and were collected, Eva was not yetthe owner of the property.
Q: In a deed of sale of realty, it was stipulated that the buyer would construct a
commercial building on the lot while the seller would construct a private passageway
bordering the lot. The building was eventually finished but the seller failed to complete
the passageway as some of the squatters, who were already known to be there at the time
they entered into the contract, refused to vacate the premises. In fact, prior to its
execution, the seller filed ejectment cases against the squatters. The buyer now sues the
seller for specific performance with damages. The defense is that the obligation to
construct the passageway should be with a period which, incidentally, had not been fixed
by them, hence, the need for fixing a judicial period. Will the action for specific
performance of the buyer against the seller prosper? (1991 Bar)
A: No, the action for specific performance filed by the buyer is premature under Art.
1197 of the Civil Code. If a period has not been fixed although contemplated by the
parties, the parties themselves should fix that period, failing in which, the Court may be
asked to fix it taking into consideration the probable contemplation of the parties. Before
the period is fixed, an action for specific performanceis premature.
7
Q: In June 1988, X obtained a loan from A and executed with Y as solidary co-maker a
promissory note in favor of A for the sum of P200,000.00. The loan was payable at
P20,000.00 with interest monthly within the first week of each month beginning July
1988 until maturity in April 1989. To secure the payment of the loan, X put up as security
a chattel mortgage on his car, a Toyota Corolla sedan. Because of failure of X and Y to
pay the principal amount of the loan, the car was extrajudicially foreclosed. A acquired
the car at A‘s highest bid of P120,000.00 during the auctionsale. After several fruitless
letters of demand against X and Y, A sued Y for the discovery of P80,000.00 constituting
the deficiency. Y resisted the suit raising the following defenses:
a) That Y should not be liable at all because X was not sued together withY.
b) That the obligation has been paid completely by A‘s acquisition of the car through
―dacion en pago‖ or payment by cession.
c) That Y should not be held liable for the deficiency of P80,000.00 because he was not a
co-mortgagor in the chattel mortgage of the car, which contract was executed by X alone
as owner and mortgagor.
d) That assuming he is liable, he should only pay the proportionate sum of P40,000.00.
Decide the defense with reasons. (1992 Bar)
A:
a) The first defense of Y is untenable. Y is still liable as solidary debtor. The creditor may
proceed against any one of the solidary debtors. The demand against one does not
preclude further demand against the others so longas the debtis notfully paid.
b) The second defense of Y is untenable. Y is still liable. The chattel mortgage is only
given as security and not as payment for the debt in case of failure to pay. Y as a solidary
co-maker is not relieved of further liability on the promissory note as a result of the
foreclosureofthe chattel mortgage.
c) The third defense of Y is untenable. Y is a surety of X and the extrajudicial demand
against the principal debtor is not inconsistent with a judicial demand against the surety.
A suretyship may co-exist with a mortgage.
d) The fourth defense is untenable. Y is liable for the entire prestation since Y incurred a
solidary obligation with X.
Q: Four foreign medical students rented the apartment of Thelma for a period of one year.
After one semester, three of them returned to their home country and the fourth
transferred to a boarding house. Thelma discovered that they left unpaid telephone bills in
the total amount of P80,000.00. The lease contract provided that the lessees shall pay for
the telephone services in the leased premises. Thelma demanded that the fourth student
pay the entire amount of the unpaid telephone bills, but the latter is willing to pay only
one fourth of it. Who is correct? Why? (2001 Bar)
A: The fourth student is correct. His liability is only joint, hence, pro rata. There is
solidary liability only when the obligation expressly so states or when the law or nature
of the obligation requires solidarity (Art. 1207). The contract of lease in the problem does
not, in any way, stipulate solidarity.
Q: Joey, Jovy and Jojo are solidary debtors under a loan obligation of P300,000.00 which
has fallen due. The creditor has, however, condoned Jojo's entire share in the debt. Since
Jovy has become insolvent, the creditor makes a demand on Joey to pay the debt. 1. How
much, if any, may Joey be compelled to pay? 2. To what extent, if at all, can Jojo be
compelled by Joey to contribute to such payment? (1998, 2001, 2017Bar)
A:
1. Joey can be compelled to pay only the remaining balance of P200.000, in view of the
remission of Jojo's share by the creditor. (Art. 1219)
2. Jojo can be compelled by Joey to contribute P50.000 Art. 1217. par. 3, Civil Code
provides. "When one of the solidary debtors cannot, because of his insolvency, reimburse
his share to the debtor paying the obligation, such share shall be borne by all his co-
debtors, in proportion to the debt of each."
Since the insolvent debtor's share which Joey paid was P100,000, and there are only two
remaining debtors - namely Joey and Jojo- these two shall share equally the burden of
reimbursement. Jojo may thus be compelled by Joey to contribute P50.000.00.
Q: Zeny and Nolan were best friends for a long time already. Zeny borrowed P10,000.00
from Nolan, evidenced by a promissory note whereby Zeny promised to pay the loan
―once his means permit.‖ Two months later, they had a quarrel that broke their long-
standing friendship. Nolan seeks your advice on how to collect from Zeny despite the
tenor of the promissory note. What will your advice be? Explain your answer. (2012,
2017 Bar)
A: The remedy of Nolan is to go to court and ask that a period be fixed for the payment
of debt. Article 1180 of the New Civil Code provides that when a debtor binds himself to
pay when his means permit him to do so, the obligation shall be deemed to be one with a
period (suspensive). Article 1197 provides that the courts may fix a period if such was
intended from the nature of the obligation and may also fix the duration of the period
when such depends on the will of the debtor.