OBLIGATIONS AND CONTRACTS

ORIGIN OF LAW

3 MAIN BRANCHES OF THE GOVERNMENT SUPREME LAWS

PHILIPPINE CONSTITUTION — created “for the people, by the people” — all laws are according to the
1. LEGISLATIVE - creates/makes the law ; DECLARATION of the Law Philippine Constitution.
2. EXECUTIVE - carries out the law ; “EXECUTES” the Law >> Unconstitutional — it will not be
3. JUDICIAL - evaluates the law ; SUPREME COURT - interprets the Law effective.

EXECUTIVE JUDICIAL
1. PRESIDENT (HIERARCHY OF COURTS)
— VP - absence of the President 1. SUPREME COURT - Chief Justice
2. CABINET - different agencies • JURIS PRUDENCE
3. GOVERNOR - Provincial ordinance > the decision of the supreme court will be imparted to
4. MAYOR - Municipal ordinance the lower courts
5. BRGY. CAPTAIN - Brgy. ordinance 2. REGIONAL TRIAL COURT / CFI
— CFI > Court of First Instance
LEGISLATIVE 3. COURT OF APPEALS
1. CONGRESS 4. MUNICIPAL TRIAL COURT
• Senate — SHARAIA COURT > Muslims
• House of Representatives 5. SPECIAL COURTS
2. VICE GOVERNOR > Sandigang Bayan - cases about Public Officials
- Sangguniang Panlalawigan > Court of Tax Appeals - cases on taxes
3. VICE MAYOR
- Sangguniang Panglungsod QUASI- JUDICIAL AGENCIES
4. Sangguniang Barangay > not totally included in judiciary but with JUDICIAL
FUNCTIONS
SENATE (Upper House) >> DOLE, DHSUD, LTFRB, COMELEC, Civil Service
• Senate President Commission (CSC), NLRC, SEC
HOUSE OF REPRESENTATIVES (Lower House) >> the government is the one responsible to assign their
• House Speaker positions in the department.
> Partylists / Board Members
REPUBLIC OF THE PHILIPPINES
Sangguniang Panlalawigan 1987 CONSTITUTION PREAMBLE
— Board Members
APPROVED: February 02, 1987
Sangguniang Bayan/Panglungsod
We, the sovereign Filipino people, imploring the aid of Almighty God,
— Councilors
Sangguniang Barangay in order to build a just and humane society, and establish a
— Kagawad Government that shall embody our ideals and aspirations, promote
the common good, conserve and develop our patrimony, and secure
to ourselves and our posterity, the blessings of independence and
democracy under the rule of law and a regime of truth, justice,
freedom, love, equality, and peace, do ordain and promulgate this
Constitution.
 HOW DOES A BILL BECOME A LAW

BILL (House / Senate Bills) — “PANUKALANG BATAS”

— if the BILL is from the Senate, it will still be brought to the HOUSE OF REPRESENTATIVES
— READINGS (1st to 3rd Readings)
— Approve ; Disapprove ; Prescription

1st READING : Titles, Votings

1. APPROVE
— “YES” >> proceed to 2nd Reading
— 15 DAYS to take effect
2nd READING : Reports; Readings
2. DISAPPROVE
— Committee on Appreciation — VETOPOWER - through writing, the
— Committee on Health President will write the reasons then give it
— Committee on Social Service back to the originating party.
3rd READING : Reading the whole bill / law — OVERRIDING VETO - when 2/3 of the votes
— 2/3 of votes in order to pass were covered, THE LAW WILL TAKE EFFECT
3. PRESCRIPTION
— Concurrence of the Senate / House of Representatives
— After 30 Days, the law will take effect.
— 15 days after approval >> Official Gazette >> Take Effect

TYPES OF CITIES 3 INHERENT POWERS OF THE GOVERNMENT

1. COMPONENT CITIES - Cities within a province
2. HIGHLY URBANIZED CITIES - Cities without a
province
1. POLICE POWER - peace and order
2. POWER OF TAXATION
3. EMINENT DOMAIN - all the lands inside the country
are from the Republic of the Philippines
>> EXPROPRIATION POWER - government projects.

INTRODUCTION TO LAW

— any rule of action / system of uniformity

“BLACK LAW” — rule of conduct, just, and obligatory promulgated (laid down) by legitimate authority for
common observance and benefit.
> as a rule of conduct, it commands “what is right” and prohibits “what is wrong”.

ORIGIN OF LAW - comes from the latin word “LEX” which is derived from the verb “LIGARE”, meaning “to bind”

“IGNORANTIA LEGIS NON ESCUSAT” - IGNORANCE OF THE LAW, EXCUSES NO ONE

— from compliance therewith
— purpose of learning and knowing the law.
— it is our obligation

• If someone breaks the law, he/she is still liable even if they had no knowledge of the law being broken
• thus, evasion of the law will be facilitated, and the administration of justice would be defeated.
• it is our OBLIGATION to study the law of the state you are going to.
ORDINANCE and RESOLUTION:
1. ORDINANCE - local law
>> Territorial Jurisdiction - Hierarchy of Law
>> Funds
2. RESOLUTION - LGUs; Temporary in nature
GENERAL DIVISIONS OF LAW:
a. IN STRICT LEGAL SENSE - promulgated and enforced by
the state
b. NON-LEGAL SENSE - natural law, moral law, divine law.

GENERAL DIVISIONS OF LAW

1. LAW IN NON-LEGAL SENSE - these are not promulgated and enforced by the state
— Natural Law, Moral Law, Divine Law, Physical Law

2. LAW IN STRICT LEGAL SENSE - legislations / statutes — these are state laws or legislations that is consists of
declaration of legal rules by a competent authority (executive)

LAWS IN NON LEGAL SENSE

• DIVINE LAW - law of religion and faith — sin as crime
> all of us have DIFFERENT RELIGION AND BELIEFS.
> separation of CHURCH and the STATE — they cannot interfere with each other
> RELIGION cannot be mandated by the government.
> Salvation

• NATURAL LAW - divide inspiration in man in the sense of JUSTICE, FAIRNESS, and RIGHTEOUSNESS and
not by divine regulation / promulgation, but by INTERNAL dictates of reason alone.
> Characteristics, instincts, beliefs
> knowing what is WRONG and RIGHT
> inhibited or inborn skills

• MORAL LAW - affected by the environment

> ethics / norms
> totality of the norms of GOOD and RIGHT CONDUCT growing out the collective
sense of RIGHT and WRONG of every community.

• PHYSICAL LAW - Physical Science

> kinds of law that cannot be used in the court
> in operation of force and nature that there are uniformities of actions and order of
sequence which are the physical phenomena that we sense and feel.

CHARACTERISTICS OF LAW

1. RULE OF CONDUCT - it tells us WHAT SHALL BE DONE and WHAT SHALL NOT BE DONE. As a RULE OF
HUMAN CONDUCT, Law takes cognizance of external acts only.

2. OBLIGATORY - you have NO CHOICE but TO DO IT. Law is considered a positive command imposing a duty
to OBEY and involving a sanction which forces obedience.
3. PROMULGATED BY LEGITIMATE AUTHORITY - a law will never be a law if it will not undergo the process
that is provided by the PHILIPPINE CONSTITUTION. DEMOCRATIC COUNTRY — the legitimate or competent
authority is the legislature.

4. FOR COMMON OBSERVANCE and BENEFIT - “law is intended by man to serve man”
> it regulates the relation of man to maintain harmony in society to make order and co-existence possible.
> LAW must therefore observed for the benefit of all.

JUDICIAL SYSTEM IN THE PHILIPPINES

CRIMINAL CASE vs. CIVIL CASE

• CRIMINAL CASE
— PROSECUTOR / FISCAL - against the criminal
i.e. PEOPLE OF THE PHILIPPINES / REPUBLIC OF THE PHILIPPINES vs. VHEA KIHARA
ATTORNEY and PROSECUTOR - PROBABLE CAUSE
ATTORNEY & PROSECUTOR - EXECUTIVE BRANCH (DOJ)

PROBABLE CAUSE - only for Criminal Case ; Reasonable grounds

PROSECUTOR — also called as the FISCAL; you will be asked what the purpose of your action is.

Cause of Action: FILING A CASE > FISCAL > Judge > Warrant of Arrest > Convict / Trial
> direct to the FISCAL ATTORNEY

> presented as PEOPLE / REPUBLIC OF THE PHILIPPINES vs. “NAME of the PERSON”
> because when you file a case and has an obligation to the country as well
> he/she can be convicted and must pay for damages
> the attorney and the prosecutor will defend you against the other party

NEGLIGENCE - damaged due to your own doing.

APPEAL - after a judgement in rendered, the defeated party may appeal from the judge of the higher court.

• CIVIL CASE
— ATTORNEY vs. ATTORNEY > direct to JUDGE
— Judge > can be resolved by paying damages
— person to person > the attorney of both parties will talk about the condition of the case.
i.e. MIGUI vs. SUNSHINE

COURT
> it is the nature and purpose of court.
> organized tribunals for the trial of cases and the
hearing of appeals
> it is precided over by a judge
> created for administration of justice
ACTION
> it is an ordinary suit of a court of justice; by which
the party prosecutes another for the enforcement or
protection of a right, or prevention or redress of a
wrong.
 COMMENCEMENT OF THE ACTION
> a civil action is commenced by filing a complaint with the court. A CRIMINAL ACTION must be commenced in
the name of the PEOPLE OF THE PHILIPPINES, this is because a crime is a wrong against the STATE which it
must itself redress.

ORGANIZATION OF COURTS

1. REGULAR COURTS 2. SPECIAL COURTS

Supreme Court 3. QUASI-JUDICIAL COURTS - NLRC, SEC, CSC
Court of Appeals
Regional Trial Court APPEAL
Municipal Trial Court > after a judgment is rendered, the defeated party
may appeal from this judgment to a higher court.

INTERPRETATION OF THE LAW

DOCTRINE OF VERBA LEGIS — literal meaning or plain meaning rule

> if the state is CLEAR, PLAIN, and FREE from ambiguity, it must be given its literal meaning and applied
without attempted interpretation.

OBLIGATIONS AND CONTRACTS: A BUSINESS IMPERATIVE

TITLE I. Obligations (Article 1156-1304, Civil Code)

CHAPTER 1 : General Provisions

WHY IS IT IMPORTANT?
> it is a necessity to secure and protect the rights of the contracting parties so that each may rely on the
purpose / performance of the other.
> the course is concerning the agreement being true bargain and that should not violate certain economic and
social principles.

ARTICLE 1156
• AN OBLIGATION IS A JURIDICAL NECESSITY TO GIVE, TO DO, OR NOT TO DO.

OBLIGATION TO GIVE, TO DO, OR NOT TO DO

> ORIGIN : derived from the LATIN word “OBLIGARE” / > PRESTATIONS - Subject Matter of the Obligation ;
“OBLIGATIO”, meaning “to bind” Conduct to be observed by the debtor which may
> you bind yourself or you are being bound by the law consist of:
to give or to do a specific thing. 1. GIVING
2. DOING
3. NOT DOING
JURIDICAL NECESSITY
> the RIGHTS and DUTIES arising from obligations are legally enforceable and the courts of justice may be called
upon to order their performance.
> can be FILE FOR A CASE, in order to have right to get WHAT IS RIGHT FOR YOU.
> in case of non-compliance, the courts of justice may be called upon by the aggrieved party to enforce its
fulfillment.
 2 KINDS OF OBLIGATIONS WITHOUT JURIDICAL NECESSITY

1. NATURAL OBLIGATIONS - to pay back debt or gratitude (UTANG NA LOOB)

2. MORAL OBLIGATIONS - a duty which one owes, and which he ought to perform, but which he is nor legally
bound to fulfill.

PRESTATIONS

OBLIGATION TO GIVE
> consist in the delivery of a movable or immovable thing to the creditor.
> real obligation because a physical thing is involved and delivery of the same discharges the obligation.
> ie. Money, Properties, Things

OBLIGATION TO DO OBLIGATION NOT TO DO

> covers all kinds of works or services whether > consist in refraining from doing some acts
physical or mental > personal but negative obligation ; act not be done
> personal but positive obligation ; act to be done
> ie. Services

ESSENTIAL REQUISITES OF AN OBLIGATION

EXAMPLE: Franco entered into a contract with Jana whereby Franco agreed to deliver to Jana 10 sacks of
potato on December 25, 2021.

PASSIVE SUBJECT (DEBTOR or OBLIGOR) – FRANCO

— the person who is bound to the fulfillment of the obligation.
— he who has a duty ; responsible to perform the obligation

ACTIVE SUBJECT (CREDITOR or OBLIGEE) – JANA

— the person who is entitled to demand the fulfillment of the obligation.
— he who has a right.

JURIDICAL TIE / LEGAL TIE (EFFICIENT CAUSE) – A CONTRACT

— which binds or connects the parties to the obligation.
— the tie in an obligation can easily be determined by knowing the source of the obligation. (ARTICLE 1157)

OBJECT / PRESTATION (SUBJECT MATTER) – TO DELIVER

— the conduct required to be observed by the debtor.
— without the prestation, there is nothing to perform.

SOURCES OF OBLIGATION: ARTICLE 1157

OBLIGATIONS ARISE FROM: Laws; Contracts; Quasi-Contracts; Delicts; Quasi-Delicts

LAW - a rule of conduct, just, and obligatory laid down by legitimate authority for common observance and
benefit.
LAW
— Imposed by the law itself.
— Obligations derived from law are not presumed. Only those expressly determined in the Civil Code or in
Special Laws are demandable, and shall be regulated by the precepts of law which establishes them; and as to
what has not been foreseen, by the provision of the Civil Code. (ARTICLE 1158)

CONTRACT
— When they arise the stipulation of the parties. (ARTICLE 1306)
— It is the meeting of minds between two (2) persons whereby one binds himself with respect to the other to
give something or to render some service. (ARTICLE 1305) Obligations arising from contracts must be
complied with in good faith. (ARTICLE 1159)

QUASI-CONTRACT
— NO MEETING OF MINDS ; WITHOUT CONSENT
— Contracts implied by law; that juridical relation resulting from LAWFUL, VOLUNTARY, and UNILATERAL ACTS by
virtue of which the parties become bound to each other to the end that no one will be unjustly enriched or
benefited at the expense of another. (ARTICLE 2142)

2 TYPES OF QUASI-CONTRACTS:
NEGOTIORUM GESTIO
— refers to voluntary management of the property or affairs of another without knowledge or consent of the
latter. (ARTICLE 2144)
— UNAUTHORIZED MANAGEMENT

EXAMPLE:
>> Jana, the owner of the farm, went to Boracay for a vacation, leaving no one to take care of her farm.
During her absence, a strong earthquake hit Luzon, causing her (2) two cows to break out. Paul, a neighbor of
Jana, gathered the cows and took care of them until Jana returns. Paul incurred expenses.

— In this case, Paul acted as an officious manager of the cows of Jana without Jana’s consent. Thus, Jana
became liable to pay Paul the expenses incurred for the voluntary administration of Jana’s property for the
reason that no one shall be unjustly enriched or benefited at the expense of another.

SOLUTIO INDEBITI
— the juridical relation which is created when something is received when there is no right to demand it and it
was unduly delivered through mistake. (ARTICLE 2154)
— PAYMENT BY MISTAKE / UNDUE PAYMENT

EXAMPLE:
>> Evelyn owes Ralph PHP1,000. Evelyn paid Edwin, the secretary of Ralph, believing that Edwin was
authorized to receive payment from Ralph.

Edwin has the obligation to return the PHP1,000 payment to Evelyn.

DELICTS (ACTS OR OMISSIONS PUNISHABLE BY LAW)
— Crimes or Felonies ; Civil liability arising from damages arising from crimes.
— Under the law, “EVERY PERSON CRIMINALLY LIABLE FOR A FELONY (Crime) IS ALSO CIVILLY LIABLE.”
(Article 100, Revised Penal Code)
The civil liability arising out of the commission of a crime includes: (1) RESTITUTION; (2) REPARATION OF
DAMAGES CAUSED; and (3) INDEMNIFICATION OF CONSEQUENTIAL DAMAGES.

CRIME = Civilly Liable CRIMINALLY LIABLE ARE CIVILLY LIABLE, HOWEVER, NOT ALL CIVILLY
LIABLE ARE CRIMINALLY LIABLE.
PRESUMPTION (assumed)
INTENT (intention to do the crime) SELF-DEFENSE is NOT Criminally Liable

RETALIATE - revenge is done

COMMENSURATE - fair

EXAMPLE:
>> Franco is found guilty by the court of theft of a cellphone belonging to Alexa. Aside from sentencing him to
-

imprisonment, the court also orders Franco to:

1. Return the cellphone (Restitution)

2. If disposed of the same, pay its value (Reparation)
3. Damages suffered by Alexa (Indemnification)

QUASI-DELICT (TORT / CULPA AQUILIANA)

— NO INTENT ; NEGLIGENCE - Accidents
— It is legally wrong, committed through fault or negligence, on a person or property, independent of a contract.

INDEPENDENT CIVIL ACTION - it can stand alone. CIVIL ACTION and CRIMINAL ACTION

ELEMENTS:
1. Act or Omission
2. Fault or Negligence
3. Damage Caused
4. Direct Relation or Connection of Cause and Effect between the Act or Omission and the damage
5. No Pre-Existing Contractual Relation between the parties.

EXAMPLE:
>> Andrea was dancing while watering her flower pot in her house (located at 2nd floor). As a result, she
accidentally caused the flower pot to fall, hitting Sonny who suffered injuries.

Therefore, Andrea is obliged to pay for the damages sustained by Sonny.

 CLASSIFICATIONS OF OBLIGATION

Real and Personal Obligations (as to Subject Matter)

REAL OBLIGATION - (obligation to give) ; is that in which subject matter is a thing which the obligor must
deliver to the obligee. Delivery of the thing discharges the obligation.

PERSONAL OBLIGATION - (obligation to do or not to do) ; is that in which the subject matter is an act to be
done or not to be done. — Positive and Negative.

NATURE OF OBLIGATIONS UNDER THE CIVIL CODE

CIVIL OBLIGATIONS
> GENERAL RULE : Obligations under the CIVIL CODE; that is, they are legally demandable and the courts of
justice may compel their performance.

EXCEPTION : Chapter dealing with Natural Obligations

NATURAL OBLIGATIONS
> GENERAL RULE : Based on morality; natural law or conscience. They are not legally demandable. Primary
precept of moral law is “DO GOOD AND AVOID EVIL”

EXCEPTION : Provided by law

UNILATERAL & BILATERAL

UNILATERAL OBLIGATION
— It imposes a legal obligation on only one person. It is an obligation undertaken voluntarily, when a person
promises in definite terms to do something to benefit or favor another, and may therefore be under a legal
obligation to keep their promise.

BILATERAL OBLIGATION
— An obligation where both parties exchange promises to perform. One party’s promise serves a consideration
for the promise of the other. As a result, each party is an obligor on that party’s own promise and an obligee on
the other’s promise.

CIRCUMSTANCES AFFECTING OBLIGATIONS

DUTIES OF OBLIGOR AND OBLIGEE — FRAUD, NEGLIGENCE, DELAY, BREACH OR OBLIGATIONS,
FORTUITOUS EVENTS
REMEDIES IN CASE OF BREACH OF OBLIGATIONS (ARTICLES 1163-1178)
ARTICLE 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.

SPECIFIC or DETERMINATE THING

> particularly designated or physically segregated from others of the same class. The debtor cannot substitute
it with another although the latter is of the same kind and quality without consent of the creditor.
> IRREPLACEABLE

GENERIC or INDETERMINATE THING

> refers only to class or genus to which it pertains and cannot be pointed out with particularity. The debtor can
give anything of the same class as long as it is of the same kind.
> REPLACEABLE

ARTICLE 1164
> The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he
shall acquire no real right over it until the same has been delivered to him.

Different Kinds of Fruits

1. NATURAL FRUITS - are the spontaneous products of the soil and the young and other products of animals
2. INDUSTRIAL FRUITS - are those produced by lands of any kind through cultivation or labor.
3. CIVIL FRUITS - are those derived by virtue of a juridical relation.

Personal Right vs. Real Right

PERSONAL RIGHT
— is the right or power of a person (creditor) to demand from another (debtor) the fulfillment of the latter’s
obligation to give, to do, or not to do

REAL RIGHT
— is the right or interest of a person over a specific thing (like ownership, possession, mortgage)
— against the world; powerful

REQUISITES

— requirements to become obligations

Article 2 of the Civil Code. “The law shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided”.

Article 3 of the Civil Code. “IGNORANTIA LEGIS NON EXCUSAT” — Ignorance of the Law, Excuses No One
from compliance therewith.

— existence of a law, not to mistakes regarding its application or interpretation.

VERBA LEGIS RULE — literal meaning or plain meaning rule
> if the state is CLEAR, PLAIN, and FREE from ambiguity, it must be given its literal meaning and applied
without attempted interpretation.

Article 1156. An obligation is a juridical necessity to give, to do, or not to do.

JURIDICAL NECESSITY — non-compliance can result in legal sanction

TO GIVE, TO DO, OR NOT TO DO — subject matter of obligation

COViD

CREDITOR (Active / Obligee) - the possessor of a right ; he in whose favor the obligation is constituted.
OBJECT (Prestation) - the subject matter of the obligation
VINCULUM JURIS (Juridical / Legal Tie) - efficient cause ; the reason why the obligation exists
DEBTOR (Passive / Obligor ) - he who has the duty of giving, doing, or not doing

JURIDICAL NECESSITY — in case of non-compliance, it is legally demandable by the court.

• the CREDITOR can file an action
• the DEBTOR has to do the obligation

KINDS OF OBLIGATIONS

• NATURAL OBLIGATION — the duty not to recover what has voluntarily been paid although payment was no
longer required.
• MORAL OBLIGATION — the sanction here is conscience or morality.
• CIVIL OBLIGATION — article 1156
— Extinction of Right
PRESCRIPTIONS - period to exercise the right — Acquisition of Right

CIVIL OBLIGATIONS

• CREDITOR — demand the fulfillment of the obligation CONTRACTS

REGALIAN DOCTRINE — all lands are owned by the Republic of the Philippines. VERBAL - 6 Years
WRITTEN - 10 Years

BASED ON CIVIL CODE OF THE PHILIPPINES : BOOK III, TITLE V, PRESCRIPTION

CHAPTER 1 : GENERAL PROVISIONS

ARTICLE 1106. By prescription, one acquires ownership and other real rights through the lapse of time in the
manner and under the condition laid down by law.

In the same way, rights and conditions are lost by prescription

 ARTICLE 1107. Persons who are capable of acquiring property or rights by the other legal modes may acquire
the same means of prescription.

Minors and other incapacitated persons may acquire property or rights by prescription, either personally or
through their parents, guardians, or legal representatives.

ARTICLE 1108. Prescription, both acquisitive and extinctive, runs against:

Persons who are both disqualified from administering their property have a right to claim damages from their
legal representatives whose negligence has been the cause of prescription.

ARTICLE 1157. OBLIGATIONS ARISE FROM LAW, CONTRACTS, QUASI-CONTRACTS, DELICTS, and QUASI-DELICTS

ARTICLE 1158. OBLIGATIONS DERIVED FROM LAW ARE NOT PRESUMED.

— Only those expressly [LAW] determined in this Code or in special law 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 the
book.

OBLIGATIONS DERIVED FROM THE LAW ARE NOT PRESUMED — the obligation must be clearly set forth in
the law.

EXAMPLE : Obligation to pay taxes ; Obligation of husband and wife to support each other.

ARTICLE 1159. Obligations arising from CONTRACTS have the FORCE OF LAW between the contracting parties
and should be complied with GOOD FAITH.

CONTRACTS — before a contract can be enforced, it must first be valid. ; must be accordance to the law.
FORCE OF LAW — obligatory / mandatory
GOOD FAITH — no intention to defraud another

STIPULATION STIPULATION OF PARTIES

• terms and conditions — in accordance with the law. — yes, they can stipulation but it must still be
— provisions of the law. accordance to the law.
TERM AND CONDITIONS ARE MANDATORY

CONTRACT VIS-À-VIS OBLIGATION

— a contract always presupposes a meeting of minds, this is not necessarily true for all kinds of obligations.
— a contract, if valid, always results in obligations, while not all obligations come from contracts.
 PERSON A entered into a contract of service with PERSON B, wherein the latter is required to deliver the goods
of the former to his customers. Further it was stipulated in their contract that PERSON B is NOT ALLOWED to
transfer his rights and liabilities to any person without the consent of PERSON A. After sometime, PERSON C,
a friend of PERSON B, contacted PERSON A telling him that PERSON B has assigned to him the right to collect
all his compensation. Is PERSON A bound by the agreement between PERSON B and PERSON C?

QUESTION: IS PERSON A BOUND BY THE AGREEMENT BETWEEN PERSON B AND PERSON C?

ANSWER, BASIS, CONCLUSION: NO, PERSON A is not bound by the contract. ARTICLE 1159 of the CIVIL
CODE OF THE PHILIPPINES provides obligations arising from contracts have the force of law between the
contracting parties and should be complied with good faith. Here PERSON B did not comply with stipulation
in the contract that before an agreement may be made by PERSON B must get the approval of PERSON A.
Hence, PERSON A is not bound by the agreement of PERSON B and PERSON C.

ARTICLE 1160. Obligations derived from QUASI-CONTRACTS shall be subject to the provisions of Chapter 1, Title
XVII, of this Book.

QUASI-CONTRACTS — it is a juridical relation relating 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 benefited at
the expense of another.

NO PRIOR AGREEMENT OR NO MEETING OF MINDS BETWEEN PARTIES.

PRE-EXISTING CONTRACTUAL RELATION — there is an existing contract before the damage.

ARTICLE 1161. CIVIL OBLIGATIONS ARISING FROM CRIME OFFENSES shall be governed by the penal laws, subject
to the provisions of Article 2177, and the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations,
and of Title XVIII of this Book, regulating damages.

EVERY PERSON CRIMINALLY LIABLE FOR A FELONY IS ALSO CIVILLY LIABLE.

• The commission of crime cause not only moral evil but also Civil Liability arising from crime:
material damage. • Restitution
• CIVIL LIABILITY - private complaint • Reparation
• NO CIVIL LIABILITY if there is no private complainant • Indemnification

CRIMINALLY LIABLE is a liable to the state and there is no

certain punishment such as imprisonment or fine
ARTICLE 1162. Obligations derived from QUASI-DELICTS shall be governed by the provisions of Chapter 2, Title
XVII of this Book, and by Special Laws.

ELEMENTS OF QUASI-DELICTS (TORT):

1. Act or Omission
2. Fault or Negligence
3. Damaged caused
4. Direct relation or connection of cause and effect between the act or omission and the damage; and
5. NO PRE-EXISTING CONTRACTUAL RELATION BETWEEN THE PARTIES

EXAMPLE FOR QUASI-DELICTS : PUBLIC TRANSPO EXAMPLE

NATURE AND EFFECT OF OBLIGATIONS

ARTICLE 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.

GENERAL RULE : Ordinary Diligence

EXEMPTION TO THE RULE : When the law or the stipulation of the parties requires another standard of care.

DELIVERY OF DETERMINATE THING. this article deals with the first effect of an obligation to deliver a
determinate thing.

DETERMINATE THING — specific ; can be segregated to different classes

ARTICLE 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises.
However, he shall acquire no real right over it until the same has been delivered to him.

DIFFERENT KINDS OF FRUITS:

1. NATURAL FRUITS — the spontaneous products of the soil and the young and the other products of animals.
2. INDUSTRIAL FRUITS — those produced by lands of any kind through cultivation or labor.
3. CIVIL FRUITS — those derived virtue of a juridical relation.

PERSONAL RIGHT VIS-À-VIS REAL RIGHT

• PERSONAL RIGHT — is the right or power of a person to demand from another the fulfillment of the latter’s
obligation TO GIVE, TO DO, or NOT TO DO.

• REAL RIGHT — is the right or interest of a person over a specific thing. It is enforceable against the whole
world.
EXAMPLE:
A obliged to give B on November 17, 2022, a particular parcel of land.

— What is the right of B before November 17, 2022? - NO PERSONAL or REAL RIGHT
— How about on November 17, 2022? - PERSONAL RIGHT
— What if the land was only delivered on December 1, 2022? - REAL RIGHT
— What is the right of B after December 1, 2022? - REAL RIGHT

ADDITIONAL INFORMATION

ARTICLE 1163 : Every person obliged to give something is also obliged to take care of with the proper
DILIGENCE OF THE GOOD FATHER, unless the law or stipulation of the parties requires another standard of
care.

YOUR OBLIGATION TO GIVE = STANDARD CARE / Kailangan alagaan. (SANA ALL)

TAKE NOTE: THE OBLIGOR SUFFERS THE LOSS UNTIL THE OBLIGATION IS NOT YET BEING DONE NOR
DELIVERED TO ITS OBLIGEE.

ORDINARY DILIGENCE — COMMON CARRIER

COMMON CARRIER : the one responsible to deliver the goods.
Article Summary:

Article 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

Article 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law (Crime/Delicts); and
(5) Quasi-delicts.

Article 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.

Article 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.

Article 1160. Obligations derived from quasi-contracts shall be subject to the provisions of

Article 1161. Civil obligations arising from criminal offenses shall be governed by the penal
Laws; An individual who is criminally liable is also civilly liable

Article 1162. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damages done. Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict.

Article 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.

Article 1164. The creditor has a right to the fruits of the thing from the time the obligation to
deliver it arises. However, he shall acquire no real right over it until the same has been delivered
to him.
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Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence International Legal Resources AUSL Exclusive

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-16570 March 9, 1922

SMITH, BELL & CO., LTD., plaintiff-appellant,

vs.
VICENTE SOTELO MATTI, defendant-appellant.

Ross and Lawrence and Ewald E. Selph for plaintiff-appellant.

Ramon Sotelo for defendant-appellant.

ROMUALDEZ, J.:

In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into contracts
whereby the former obligated itself to sell, and the latter to purchase from it, two steel tanks, for the
total price of twenty-one thousand pesos (P21,000), the same to be shipped from New York and
delivered at Manila "within three or four months;" two expellers at the price of twenty five thousand
pesos (P25,000) each, which were to be shipped from San Francisco in the month of September,
1918, or as soon as possible; and two electric motors at the price of two thousand pesos (P2,000)
each, as to the delivery of which stipulation was made, couched in these words: "Approximate
delivery within ninety days. — This is not guaranteed."

The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October, 1918; and
the motors on the 27th of February, 1919.

The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr.
Sotelo refused to receive them and to pay the prices stipulated.

The plaintiff brought suit against the defendant, based on four separate causes of action, alleging,
among other facts, that it immediately notified the defendant of the arrival of the goods, and asked
instructions from him as to the delivery thereof, and that the defendant refused to receive any of them
and to pay their price. The plaintiff, further, alleged that the expellers and the motors were in good
condition. (Amended complaint, pages 16-30, Bill of Exceptions.)

In their answer, the defendant, Mr. Sotelo, and the intervenor, the Manila Oil Refining and By-
Products Co., Inc., denied the plaintiff's allegations as to the shipment of these goods and their arrival
at Manila, the notification to the defendant, Mr. Sotelo, the latter's refusal to receive them and pay
their price, and the good condition of the expellers and the motors, alleging as special defense that
Mr. Sotelo had made the contracts in question as manager of the intervenor, the Manila Oil Refining
and By-Products Co., Inc which fact was known to the plaintiff, and that "it was only in May, 1919, that
it notified the intervenor that said tanks had arrived, the motors and the expellers having arrived
incomplete and long after the date stipulated." As a counterclaim or set-off, they also allege that, as a
consequence of the plaintiff's delay in making delivery of the goods, which the intervenor intended to
use in the manufacture of cocoanut oil, the intervenor suffered damages in the sums of one hundred
sixteen thousand seven hundred eighty-three pesos and ninety-one centavos (P116,783.91) for the
nondelivery of the tanks, and twenty-one thousand two hundred and fifty pesos (P21,250) on account
of the expellers and the motors not having arrived in due time.

The case having been tried, the court below absolved the defendants from the complaint insofar as
the tanks and the electric motors were concerned, but rendered judgment against them, ordering
them to "receive the aforesaid expellers and pay the plaintiff the sum of fifty thousand pesos (P50,00),
the price of the said goods, with legal interest thereon from July 26, 1919, and costs."

Both parties appeal from this judgment, each assigning several errors in the findings of the lower
court.

The principal point at issue in this case is whether or not, under the contracts entered into and the
circumstances established in the record, the plaintiff has fulfilled, in due time, its obligation to bring
the goods in question to Manila. If it has, then it is entitled to the relief prayed for; otherwise, it must
be held guilty of delay and liable for the consequences thereof.

To solve this question, it is necessary to determine what period was fixed for the delivery of the
goods.

As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar, and in both of
them we find this clause:

To be delivered within 3 or 4 months — The promise or indication of shipment carries with it

absolutely no obligation on our part — Government regulations, railroad embargoes, lack of
vessel space, the exigencies of the requirement of the United States Government, or a number
of causes may act to entirely vitiate the indication of shipment as stated. In other words, the
order is accepted on the basis of shipment at Mill's convenience, time of shipment being merely
an indication of what we hope to accomplish.

In the contract Exhibit C (page 63 of the record), with reference to the expellers, the following
stipulation appears:

The following articles, hereinbelow more particularly described, to be shipped at San Francisco
within the month of September /18, or as soon as possible. — Two Anderson oil expellers . . . .

And in the contract relative to the motors (Exhibit D, page 64, rec.) the following appears:

Approximate delivery within ninety days. — This is not guaranteed. — This sale is subject to our
being able to obtain Priority Certificate, subject to the United States Government requirements
and also subject to confirmation of manufactures.

In all these contracts, there is a final clause as follows:

The sellers are not responsible for delays caused by fires, riots on land or on the sea, strikes or
other causes known as "Force Majeure" entirely beyond the control of the sellers or their
representatives.

Under these stipulations, it cannot be said that any definite date was fixed for the delivery of the
goods. As to the tanks, the agreement was that the delivery was to be made "within 3 or 4 months,"
but that period was subject to the contingencies referred to in a subsequent clause. With regard to the
expellers, the contract says "within the month of September, 1918," but to this is added "or as soon as
possible." And with reference to the motors, the contract contains this expression, "Approximate
delivery within ninety days," but right after this, it is noted that "this is not guaranteed."

The oral evidence falls short of fixing such period.

From the record it appears that these contracts were executed at the time of the world war when
there existed rigid restrictions on the export from the United States of articles like the machinery in
question, and maritime, as well as railroad, transportation was difficult, which fact was known to the
parties; hence clauses were inserted in the contracts, regarding "Government regulations, railroad
embargoes, lack of vessel space, the exigencies of the requirements of the United States
Government," in connection with the tanks and "Priority Certificate, subject to the United State
Government requirements," with respect to the motors. At the time of the execution of the contracts,
the parties were not unmindful of the contingency of the United States Government not allowing the
export of the goods, nor of the fact that the other foreseen circumstances therein stated might prevent
it.

Considering these contracts in the light of the civil law, we cannot but conclude that the term which
the parties attempted to fix is so uncertain that one cannot tell just whether, as a matter of fact, those
articles could be brought to Manila or not. If that is the case, as we think it is, the obligations must be
regarded as conditional.

Obligations for the performance of which a day certain has been fixed shall be demandable only
when the day arrives.

A day certain is understood to be one which must necessarily arrive, even though its date be
unknown.

If the uncertainty should consist in the arrival or non-arrival of the day, the obligation is
conditional and shall be governed by the rules of the next preceding section. (referring to pure
and conditional obligations). (Art. 1125, Civ. Code.)

And as the export of the machinery in question was, as stated in the contract, contingent upon the
sellers obtaining certificate of priority and permission of the United States Government, subject to the
rules and regulations, as well as to railroad embargoes, then the delivery was subject to a condition
the fulfillment of which depended not only upon the effort of the herein plaintiff, but upon the will of
third persons who could in no way be compelled to fulfill the condition. In cases like this, which are
not expressly provided for, but impliedly covered, by the Civil Code, the obligor will be deemed to
have sufficiently performed his part of the obligation, if he has done all that was in his power, even if
the condition has not been fulfilled in reality.

In such cases, the decisions prior to the Civil Code have held that the obligee having done all
that was in his power, was entitled to enforce performance of the obligation. This performance,
which is fictitious — not real — is not expressly authorized by the Code, which limits itself only
to declare valid those conditions and the obligation thereby affected; but it is neither disallowed,
and the Code being thus silent, the old view can be maintained as a doctrine. (Manresa's
commentaries on the Civil Code [1907], vol. 8, page 132.)

The decisions referred to by Mr. Manresa are those rendered by the supreme court of Spain on
November 19, 1896, and February 23, 1871.

In the former it is held:

First. That when the fulfillment of the conditions does not depend on the will of the obligor, but
on that of a third person who can in no way be compelled to carry it out, and it is found by the
lower court that the obligor has done all in his power to comply with the obligation, the judgment
of the said court, ordering the other party to comply with his part of the contract, is not contrary
to the law of contracts, or to Law 1, Tit. I, Book 10, of the "Novísima Recopilación," or Law 12,
Tit. 11, of Partida 5, when in the said finding of the lower court, no law or precedent is alleged to
have been violated. (Jurisprudencia Civil published by the directors of the Revista General de
Legislacion y Jurisprudencia [1866], vol. 14, page 656.)

In the second decision, the following doctrine is laid down:

Second. That when the fulfillment of the condition does not depend on the will of the obligor, but
on that of a third person, who can in no way be compelled to carry it out, the obligor's part of the
contract is complied withalf Belisario not having exercised his right of repurchase reserved in
the sale of Basilio Borja mentioned in paragraph (13) hereof, the affidavit of Basilio Borja for the
consolidacion de dominio was presented for record in the registry of deeds and recorded in the
registry on the same date.

(32) The Maximo Belisario left a widow, the opponent Adelina Ferrer and three minor children,
Vitaliana, Eugenio, and Aureno Belisario as his only heirs.

(33) That in the execution and sales thereunder, in which C. H. McClure appears as the
judgment creditor, he was represented by the opponent Peter W. Addison, who prepared and
had charge of publication of the notices of the various sales and that in none of the sales was
the notice published more than twice in a newspaper.

The claims of the opponent-appellant Addison have been very fully and ably argued by his
counsel but may, we think, be disposed of in comparatively few words. As will be seen from the
foregoing statement of facts, he rest his title (1) on the sales under the executions issued in
cases Nos. 435, 450, 454, and 499 of the court of the justice of the peace of Dagupan with the
priority of inscription of the last two sales in the registry of deeds, and (2) on a purchase from
the Director of Lands after the land in question had been forfeited to the Government for non-
payment of taxes under Act No. 1791.

The sheriff's sales under the execution mentioned are fatally defective for what of sufficient
publication of the notice of sale. Section 454 of the Code of civil Procedure reads in part as
follows:

SEC. 454. Before the sale of property on execution, notice thereof must be given, as follows:

1. In case of perishable property, by posing written notice of the time and place of the sale in
three public places of the municipality or city where the sale is to take place, for such time as
may be reasonable, considering the character and condition of the property;

2. * * * * * * *

3. In cases of real property, by posting a similar notice particularly describing the property, for
twenty days in three public places of the municipality or city where the property is situated, and
also where the property is to be sold, and publishing a copy thereof once a week, for the same
period, in some newspaper published or having general circulation in the province, if there be
one. If there are newspaper published in the province in both the Spanish and English
languages, then a like publication for a like period shall be made in one newspaper published in
the Spanish language, and in one published in the English language: Provided, however, That
such publication in a newspaper will not be required when the assessed valuation of the
property does not exceed four hundred pesos;

4. * * * * * * *

Examining the record, we find that in cases Nos. 435 and 450 the sales took place on October 14,
1916; the notice first published gave the date of the sale as October 15th, but upon discovering that
October 15th was a Sunday, the date was changed to October 14th. The correct notice was published
twice in a local newspaper, the first publication was made on October 7th and the second and last on
October 14th, the date of the sale itself. The newspaper is a weekly periodical published every
Saturday afternoon.

In case No. 454 there were only two publications of the notice in a newspaper, the first publication
being made only fourteen days before the date of the sale. In case No. 499, there were also only two
publications, the first of which was made thirteen days before the sale. In the last case the sale was
advertised for the hours of from 8:30 in the morning until 4:30 in the afternoon, in violation of section
457 of the Code of Civil Procedure. In cases Nos. 435 and 450 the hours advertised were from 9:00
in the morning until 4.30 in the afternoon. In all of the cases the notices of the sale were prepared by
the judgment creditor or his agent, who also took charged of the publication of such notices.

In the case of Campomanes vs. Bartolome and Germann & Co. (38 Phil., 808), this court held that if a
sheriff sells without the notice prescribe by the Code of Civil Procedure induced thereto by the
judgment creditor and the purchaser at the sale is the judgment creditor, the sale is absolutely void
and not title passes. This must now be regarded as the settled doctrine in this jurisdiction whatever
the rule may be elsewhere.

It appears affirmatively from the evidence in the present case that there is a newspaper published in
the province where the sale in question took place and that the assessed valuation of the property
disposed of at each sale exceeded P400. Comparing the requirements of section 454, supra, with
what was actually done, it is self-evident that notices of the sales mentioned were not given as
prescribed by the statute and taking into consideration that in connection with these sales the
appellant Addison was either the judgment creditor or else occupied a position analogous to that of a
judgment creditor, the sales must be held invalid.

The conveyance or reconveyance of the land from the Director of Lands is equally invalid. The
provisions of Act No. 1791 pertinent to the purchase or repurchase of land confiscated for non-
payment of taxes are found in section 19 of the Act and read:

. . . In case such redemption be not made within the time above specified the Government of
the Philippine Islands shall have an absolute, indefeasible title to said real property. Upon the
expiration of the said ninety days, if redemption be not made, the provincial treasurer shall
immediately notify the Director of Lands of the forfeiture and furnish him with a description of the
property, and said Director of Lands shall have full control and custody thereof to lease or sell
the same or any portion thereof in the same manner as other public lands are leased or sold:
Provided, That the original owner, or his legal representative, shall have the right to repurchase
the entire amount of his said real property, at any time before a sale or contract of sale has
been made by the director of Lands to a third party, by paying therefore the whole sum due
thereon at the time of ejectment together with a penalty of ten per centum . . . .

The appellant Addison repurchased under the final proviso of the section quoted and was allowed to
do so as the successor in interest of the original owner under the execution sale above discussed. As
we have seen, he acquired no rights under these sales, was therefore not the successor of the
original owner and could only have obtained a valid conveyance of such titles as the Government
might have by following the procedure prescribed by the Public Land Act for the sale of public lands.
he is entitled to reimbursement for the money paid for the redemption of the land, with interest, but
has acquired no title through the redemption.

The question of the priority of the record of the sheriff's sales over that of the sale from Belisario to
Borja is extensively argued in the briefs, but from our point of view is of no importance; void sheriff's
or execution sales cannot be validated through inscription in the Mortgage Law registry.

The opposition of Adelina Ferrer must also be overruled. She maintained that the land in question
was community property of the marriage of Eulalio Belisario and Paula Ira: that upon the death of
Paula Ira inealed from is modified, and the defendant Mr. Vicente Sotelo Matti, sentenced to accept
and receive from the plaintiff the tanks, the expellers and the motors in question, and to pay the
plaintiff the sum of ninety-six thousand pesos (P96,000), with legal interest thereon from July 17,
1919, the date of the filing of the complaint, until fully paid, and the costs of both instances. So
ordered.

Araullo, C.J., Johnson, Street, Malcolm, Avanceña, Villamor, Ostrand, and Johns, JJ., concur.

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PRESUMED BENEFIT OF BOTH PARTIES

CREDITOR and DEBTOR

- they should respect the period