Obligations Contracts Adobe PDF

MEMORY AID IN CIVIL LAW
SAN BEDA COLLEGE OF LAW 2002 CENTRALIZED BAR OPERATIONS

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OBLIGATIONS AND 1. compel specific

performance;
1.ask for performance
of the obligation
CONTRACTS 2. damages, exclusive
or in addition to
2. ask that the
obligation be complied
specific performance; with at the expense of
I. OBLIGATIONS 3. entitlement to fruits, the debtor
interests from the time 3. damages in case of
OBLIGATION the obligation to breach
a juridical necessity to give, to do, or not to deliver arises.
do.
Requisites: OBLIGATIONS OF THE DEBTOR
1. juridical or legal tie Determinate Generic
2. active subject (obligee or creditor) 1. specific 1. deliver the thing
3. passive subject (obligor or debtor) performance; which is neither of
4. fact, prestation or service constituting the 2. take care of the superior nor inferior
object of the obligation thing with the proper quality;
Requisites: diligence of a good 2. damages in case
1. it must be licit father of a family; of breach of the
2. it must be possible, physically & 3. deliver all obligation by reason of
juridically accessions and delay, fraud,
3. it must be determinate or accessories of the negligence or
determinable thing even though they contravention of the
4. it must have a possible equivalent in may not have been tenor thereof.
money mentioned;
Sources: 4. pay damages in
1) Law case of breach of the
2) Contracts obligation by reason of
3) Quasi-contracts delay, fraud,
4) Delicts negligence or
5) Quasi-delicts contravention of the
tenor thereof.
QUASI-CONTRACTS those juridical
relations arising from lawful, voluntary and EFFECTS OF BREACH
unilateral acts, based on the principle that no Positive Personal Negative Personal
one shall be unjustly enriched or benefited at the Obligations Obligations
expense of another. The creditor can: The creditor can
Principal Kinds of Quasi-contracts: (1) have the obligation (1) have the obligation
1. Negotiorum gestio arises whenever a performed or executed undone at the expense
person voluntarily takes charge of the at the expense of the of the obligor; and
agency or management of the business obligor; (2) ask for
or property of another without any power (2) ask that what has damages.(Art. 1168)
or authority from the latter been poorly done be
2. Solutio indebiti arises whenever a undone;
person unduly delivers a thing through (2) recover damages
mistake to another who has no right to because of breach of
demand it. the obligation (Art.
1167)
NATURE OF OBLIGATIONS
1. Personal Obligations obligations to do
Cases where the remedy granted under Art.
a) Positive
1168 is not available:
b) Negative
1) Where the effects of the act which is
2. Real Obligations obligations to give
forbidden, are definite in character
a) Determinate or specific
2) Where it would be physically or legally
b) Generic
impossible to undo what has been undone
because of the very nature of the act itself or
RIGHTS OF A CREDITOR
because of a provision of law, or because of
Determinate Generic rd
conflicting rights of 3 persons
BREACH OF OBLIGATIONS
1. Voluntary debtor, in the performance of
the obligation, is guilty of:
1
CIVIL LAW MEMORY AID COMMITTEE: Chairperson: OLIVIA B. CORNEJO; EDP: JUDITH Y. RAMOS
Members: Malou Ababa, Jinky Mangantulao, Ana Liza Pural, Roderick Reyes, Ma. Janice Tejano, Anna Leah Y. Tiongson, Alwin Bryan Villaflor
a.
default (mora) 3. Results in the non- Results in the vitiation
b.
fraud (dolo) fulfillment or breach of of consent
c.
negligence (culpa) the obligation
d.
contravention of the tenor of the 4. Gives rise to a right Gives rise to a right of
obligation of the creditor to an innocent party to
debtor is liable for damages recover damages from annul the contract
2. Involuntary debtor is unable to comply the debtor
with his obligation because of fortuitous
event NEGLIGENCE
debtor is not liable for damages omission of that diligence which is required by
the nature of the obligation and corresponds
DEFAULT or DELAY with the circumstances of the persons, of the
non-fulfillment of the obligation with respect to time and of the place
time
Requisites: DILIGENCE REQUIRED
1) Obligation is demandable and already 1. That agreed upon by the parties;
liquidated 2. In the absence of stipulation, that required
2) The debtor delays performance by law in the particular case;
3) The creditor requires performance judicially 3. If both the contract and law are silent,
or extra-judicially diligence of a good father of a family
3 Kinds:
1) Mora solvendi delay of the debtor to FORTUITOUS EVENT
perform his obligation an event w/c could not be foreseen or w/c
2) Mora accipiendi delay of the creditor to though foreseen was inevitable
accept the delivery of the thing w/c is the Requisites:
object of the obligation 1. cause is independent of the will of the debtor
3) Compensatio morae delay of the parties in 2. the event must be unforeseeable or
reciprocal obligation unavoidable
When incurred: 3. occurrence must be such as to render it
GENERAL RULE: There must be a DEMAND impossible for the debtor to fulfill his
(judicial or extra-judicial) before delay may be obligation in a normal manner
incurred. 4. debtor must be free from any participation in
EXCEPTIONS: 5. the aggravation of the injury resulting to the
1. obligation or law expressly so declares creditor
2. time is of the essence
3. demand is useless as when obligor has GENERAL RULE: No liability in case of
rendered beyond his power to perform fortuitous event.
4. there is acknowledgment of default EXCEPTIONS:
1 When expressly declared by law
There can be delay only in positive E.g. Art. 552(2), 1165(3), 1268,
obligations. There can be no delay in negative 1942, 2147, 2148 and 2159 of the
obligations. Civil Code.
In reciprocal obligations one party incurs in 2 When expressly declared by
delay from the moment the other party fulfills his stipulation or contract
obligation, while he himself does not comply or 3 When the nature of the obligation
is not ready to comply in a proper manner with requires the assumption of risk
what is incumbent upon him. 4 When the obligor is in default or has
promised to deliver the same thing to
FRAUD 2 or more persons who do not have
deliberate and intentional evasion of the the same interest (Art. 1165(3)).
fulfillment of an obligation.
EFFECT OF FORTUITOUS EVENT
Incidental Fraud/dolo Causal Fraud/dolo Determinate Generic Obligation
incidente causante Obligation
(Art. 1170) (Art. 1338) obligation is extin- obligation is not
1. Present during the Present during the guished extinguished based on
performance of a pre- time of birth of the the rule that a genus
existing obligation obligation never perishes
2. Purpose is to evade Purpose is to secure
the normal fulfillment the consent of the REMEDIES OF CREDITOR TO PROTECT
of the obligation other to enter into a CREDIT:
contract 1) Exhaustion of debtors property
2
2) Accion subrogatoria to be subrogated to Rule in Potestative Conditions

all the rights and actions of the debtor save a. If the fulfillment of the potestative, the
those which are inherent in his person condition depends upon the will of the
3) Accion pauliana - impugn all the acts w/c the debtor, the condition as well as the
debtor may have done to defraud them. obligation itself is void.
nd
2 & 3rd remedies are subsidiary to the first b. if the fulfillment depends exclusively
upon the will of the creditor, both the
GENERAL RULE: Rights acquired by virtue of condition and obligation is valid.
an obligation are transmissible in character
EXCEPTIONS: Rule in Impossible Conditions
1) When they are not transmissible by their GENERAL RULE: They shall annul the
very nature e.g. purely personal right obligation which depends upon them.
2) When there is a stipulation of the parties that EXCEPTIONS:
they are not transmissible 1. pre-existing obligation
3) Not transmissible by operation of law 2. if obligation is divisible
3. in simple or renumenatory donations
PURE OBLIGATION 4. in testamentary dispositions
one whose effectivity or extinguishment does 5. in case of conditions not to do an impossible
not depend upon the fulfillment or non-fulfillment thing
of a condition or upon the expiration of a term or
period Effects of Suspensive Condition
1. Before fulfillment of the condition, the
CONDITIONAL OBLIGATION demandability as well as the acquisition or
one whose effectivity is subordinated to the effectivity of the rights arising from the
fulfillment or non-fulfillment of a future and obligation.
uncertain fact or event 2. After the fulfillment of the condition, the
obligation arisies or becomes effective.
Kinds of conditions: 3. The effects of a conditional obligation to give
1. Suspensive fulfillment of the condition once the condition has been fulfilled, shall
results in the acquisition of rights arising out retroact to the day of the constitution of the
of the obligation obligation but not as to fruits & interest
2. Resolutory fulfillment of the condition 4. When the obligation imposes reciprocal
results in the extinguishments of rights prestations upon the parties, the fruits &
arising out of the obligation interests shall be deemed to have been mutually
3. Potestative fulfillment of the condition compensated
depends upon the will of a party to the 5. If the obligation is unilateral, the debtor shall
obligation appropriate the fruits & interests received,
4. Casual fulfillment of the condition depends unless from the nature & circumstances it should
upon chance and/or upon the will of a third be inferred that the intention of the persons
person constituting the same was different
5. Mixed fulfillment of the condition depends
partly upon chance and/or the will of a third Constructive fulfillment of Suspensive
person Condition: the condition shall be deemed
6. Impossible condition is not capable of fulfilled when the obligor prevents its fulfillment
realization according to nature, law, public
policy ar good customs Effects of Resolutory Condition
7. Impossible - condition is not capable of 1. Before the fulfillment of the of the condition,
realization according to nature, law, public the right which the creditor has already acquired
policy ar good customs by virtue of the obligation is subject to a threat of
8. Positive condition involves the extinction.
performance of an act 2. Upon fulfillment of the condition, the parties
9. Negative - condition involves the omission of shall return to each other what they received
an act
10. Divisible condition is susceptible of partial EFFECTS OF LOSS, DETERIORATION AND
realization IMPROVEMENT IN REAL OBLIGATIONS
11. Indivisible - condition is not susceptible of 1. Loss
partial realization a. without debtors fault obligation is
12. Conjunctive where there are several extinguished
conditions, all of which must be realized b. with debtors fault debtor pays
13. Alternative where there are several damages
conditions but only one must be realized 2. Deterioration
a. without debtors fault impairment to be
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borne by the creditor 5. when it is left 5.when it is left

b. with debtors fault creditor may choose exclusively to the will exclusively to the will
between the rescission of the obligation of the debtor, the of the debtor, the very
and its fulfillment with indemnity for existence of the existence of the
damages in either case obligation is not obligation is affected
3. Improvement affected
a. by the things nature or by time
improvement shall inure to the benefit of GENERAL RULE: When a period is
the creditor designated for the performance or fulfillment of
b. at the debtors expense debtor shall an obligation, it is presumed to have been
have no other right than that granted to established for the benefit of both creditor and
a usufructuary debtor
EXCEPTION: When it appears from the tenor
RECIPROCAL OBLIGATIONS of the period or other circumstances that it is
Those which are created or established at the established in favor of one or the other
same time, out of the same cause, and which
result in mutual relationships of creditor & debtor When court may fix period:
between the parties 1. if the obligation does not fix a period, but
from its nature and circumstances it can be
TACIT RESOLUTORY CONDITION inferred that a period was intended by the
If one of the parties fails to comply with what parties;
is incumbent upon him, there is a right on the 2. if the duration of the period depends upon
part of the other to rescind the obligation. the will of the debtor; and
3. if the debtor binds himself when his means
RIGHT TO RESCIND permit him to do so.
GENERAL RULE: The right to rescind needs
judicial approval. When debtor loses right to make use of
EXCEPTIONS: period: (IFOVA)
1. If there is an express stipulation of 1. when after the obligation has been
automatic rescission contracted, he becomes insolvent, unless he
2. When the debtor voluntarily returned the gives guaranties or securities for the debt
thing (the insolvency need not be judicially
Rescission will be ordered only where the declared);
breach is substantial as to defeat the object of 2. when he does not furnish to the creditor the
the parties in entering into the agreement guaranties or securities he promised;
The remedy of rescission and fulfillment are 3. when by his own act he has impaired said
alternative, not cumulative guaranties or securities after their
establishment, and when through fortuitous
OBLIGATION WITH A PERIOD event they disappear, unless he gives new
those whose demandability or extinguishment ones equally satisfactory;
is subject to the expiration of a term or period 4. when debtor violates any undertaking, in
consideration of which the creditor agreed to
TERM CONDITION the period; or
1. interval of time w/c 1. fact or event w/c is 5. when debtor attempts to abscond.
is future & certain future and uncertain
2.interval of time w/c 2.future and uncertain FACULTATIVE ALTERNATIVE
must necessarily fact or event w/c may Obligations Obligations
come, although it may or may not happen 1. comprehends se- 1. comprehends only
not be known when veral objects or one object or
3.exerts an influence 3.exerts an influence prestations which are prestation which is
upon the time of upon the very due but may be due, but it may be
demandability or existence of the complied with by the complied with by the
extinguishment of an obligation itself delivery or delivery of another
obligation performance of only object or performance
4. does not have any 4.has retroactive effect one of them of another prestation in
retroactive effect substitution
unless there is an 2. fortuitous loss 2. fortuitous loss of all
agreement to the extinguishes the obli- prestations will extin-
contrary gation guish the obligation
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3. culpable loss 3. culpable loss of any JOINT DIVISIBLE OBLIGATIONS

obliges the debtor to object due will give each creditor can demand for the payment of
deliver substitute pres- rise to liability to debtor his proportionate share of the credit, while each
tation without liability debtor can be held liable only for the payment of
to debtor his proportionate share of the debt
4. choice pertains only 4. choice may pertain
to debtor to creditor or even JOINT INDIVISIBLE OBLIGATIONS
third person 1) If there are 2 or more debtors, the fulfillment
of or compliance with the obligation requires the
In alternative obligations, choice takes effect concurrence of all the debtors, although each for
only upon communication of the choice to the his own share. Consequently, the obligation can
other party and from such time the obligation be enforced only by proceeding against all of the
ceases to be alternative. debtors
The debtor cannot choose those prestations 2) If there are 2 or more creditors, the
or undertakings which are impossible, unlawful concurrence or collective act of all the creditors,
or w/c could not have been the object of the although each for his own share, is also
obligation necessary for the enforcement of the obligation
EFFECT OF LOSS OF OBJECT OF INDIVISIBILITY SOLIDARITY

OBLIGATION: 1. refers to the 1. refers to the legal tie
A. If right of choice belongs to debtor: prestation which or vinculum juris &
1) If through a fortuitous event debtor constitutes the object consequently to the
cannot be held liable for damages of the obligation subjects or parties of
2) If 1 or more but not all of the things are the obligation
lost or one or some but not all of the 2. plurality of subjects 2. plurality of subjects
prestations cannot be performed due to is not required is indispensable
the fault of the debtor, creditor cannot 3. in case of breach, 3. when there is
hold the debtor liable for damages obligation is converted liability on the part of
because the debtor can still comply with into 1 of indemnity for the debtors because of
his obligation damages because of the breach, the
B. If right of choice belongs to the creditor: breach, indivisibility of solidarity among the
1) If 1 of the things is lost through a the obligation is debtors remains
fortuitous event, the debtor shall perform terminated
the obligation by delivering that which
the creditor should choose from among KINDS OF SOLIDARITY
the remainder, or that which remains if 1. Active solidarity
only 1 subsists solidarity of creditors
2) If the loss of 1 of the things occurs each creditor is empowered to exercise
through the fault of the debtor, the against the debtor not only the rights which
creditor may claim any of those correspond to him, but also all the rights which
subsisting, or the price of that which, correspond to the other creditors, with the
through the fault of the former, has consequent obligation to render an accounting
disappeared with a right to damages of his acts to such creditors
3) If all the things are lost through the fault 2. Passive solidarity
of the debtor, the choice by the creditor solidarity of debtors
shall fall upon the price of any 1 of them, liability of each debtor for the payment of the
also with indemnity for damages entire obligation, with the consequent right to
demand reimbursement from the others for their
Note: These rules shall be applied to obligations corresponding shares once payment has been
to do or not to do. made.
JOINT AND SOLIDARY OBLIGATIONS Effect of Novation upon Solidary Obligation

GENERAL RULE: Obligation is presumed joint 1. If the novation is prejudicial, the solidary
if there is concurrence of two or more debtors creditor who effected the novation shall
and/or creditors. reimburse the others for damages incurred by
EXCEPTIONS: them
1. when expressly stated to be solidary 2. If it is beneficial and the creditor who
2. when the law requires solidarity effected the novation is able to secure
3. when the nature of the obligation requires performance of the obligation, such creditor shall
solidarity be liable to the others for the share which
corresponds to them, not only in the obligation,
but also in the benefits
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3. If the novation is effected by substituting 2. When the different prestations

another person in place of the debtor, the constituting the objects of the obligation
solidary creditor who effected the novation is are subject to different terms and
liable for the acts of the new debtor in case the conditions
is deficiency in performance or in case damages 3. When the obligation is in part liquidated
are incurred by the other solidary creditors as a and in part unliquidated
result of the substitution.
4. If the novation is effected by subrogating a OBLIGATIONS WITH A PENAL CLAUSE
third person in the rights of the solidary creditor one to which an accessory undertaking is
responsible for the novation, the relation attached for the purpose of insuring its
between the other creditors not substituted and performance by virtue of which the obligor is
the debtor or debtors is maintained. bound to pay a stipulated indemnity or perform a
stipulated prestation in case of breach
Effect of Compensation and Confusion upon Purpose of Penalty:
Solidary Obligation 1) To insure the performance of the obligation
1. If the confusion or compensation is partial, 2) to liquidate the amount of damages to be
the rules regarding application of payment shall awarded to the injured party in case of
apply. breach of the principal obligation
2. If the confusion or compensation is total, the 3) in certain exceptional cases, to punish the
obligation is extinguished, what is left is the obligor in case of breach of the principal
ensuing liability for reimbursement within each obligation
group:
a. The creditor causing the confusion or GENERAL RULE: The penalty fixed by the
compensation is obliged to reimburse the parties is a compensation or substitute for
other creditors damages in case of breach.
b. The debtors benefited by the EXCEPTIONS:
extinguishments of the obligation is obliged 1. stipulation to the contrary
to reimburse the debtor who made the 1. debtor is sued for refusal to pay the agreed
confusion or compensation possible penalty
2. debtor is guilty of fraud
Effect of Remission upon Solidary
Obligation: The debtor cannot exempt himself from the
1. If the remission covers the entire obligation performance of the principal obligation by paying
,the obligation is totally extinguished and the the stipulated penalty unless when the right has
entire juridical relation among the debtors is been expressly reserved for him
extinguished all together The creditor cannot demand the fulfillment of
2. If the remission is for the benefit of one of the principal obligation and the satisfaction of
the debtors and it covers his entire share in the the stipulated penalty at the same time unless
obligation, he is completely released from the the right has been clearly granted him
creditors but is still bound to his co-debtors
3. If the remission is for the benefit of one of When penalty may be reduced:
the debtors and it covers only a part of his share 1. If the principal obligation has been partly
in the obligation, his character as a solidary complied with
debtor is not affected. 2. If the principal obligation has been
irregularly complied with
Defenses available to a Solidary Debtor: 3. If the penalty is iniquitous or
1. Defenses derived from the very nature unconscionable even if there has been
of the obligation no performance
2. Defenses personal to him or pertaining
to his own share MODES OF EXTINGUISHMENT OF
3 2
3. Defenses personal to the others, but OBLIGATIONS (LFC NARP )
only as regards that part of the debt for 1. Loss of the thing due
w/c the latter are responsible 2. Fulfillment of resolutory condition
3. Compensation
DIVISIBLE AND INDIVISIBLE OBLIGATIONS 4. Condonation or remission of the debt
GENERAL RULE: The creditor cannot be 5. Confusion or merger of rights of the creditor
compelled partially to receive the prestation in and debtor
which the obligation consists; neither may the 6. Novation
debtor be required to make partial payments. 7. Annulment
EXCEPTIONS: 8. Rescission
1. When the obligation expressly stipulates 9. Prescription
the contrary 10. Payment or performance
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PAYMENT OR PERFORMANCE 2. Payment made to the possessor of the

means not only the delivery of money but also credit, provided that it was made in good
the performance in any other manner of an faith.
obligation
Rules in Monetary Obligations:
Integrity of Payment 1. Payment in cash must be made in the
GENERAL RULE: A debt shall not be currency stipulated; if not possible, then in the
understood to have been paid unless the thing legal tender in the Philippines.
or service in which the obligation consists has 2. Payment in check or other negotiable
been completely delivered or rendered, as the instrument not considered payment; not
case may be. considered legal tender and may be refused by
EXCEPTIONS: the creditor. It shall only produce the effect of
1) When the obligation has been substantially payment:
performed in good faith a. when it has been cashed; or
2) When the obligee accepts performance, b. when it has been impaired through the
knowing its incompleteness or irregularity & fault of the creditor
w/out expressing any protest or objection
3) When there is an express stipulation 4 Special Forms of Payment:
4) When the debt is in part liquidated and in a) Application of payment
part unliquidated b) Dation in Payment
c) Payment by Cession
Identity of Payment - requires that the very d) Tender of payment and Consignation
thing, service or forbearance, as the object of
the prestation, must be performed or observed a) Application of Payment
designation of the debt to which the payment
Persons who may pay the obligation: must be applied when the debtor has several
1) the debtor himself or his legal representative obligations of the same kind in favor of the same
2) any third person creditor.
GENERAL RULE: Creditor is not bound Requisites:
to accept payment or performance by a 1. there must be only 1 debtor & only 1 creditor
third person. 2. there must be 2 or more debts of the same
EXCEPTIONS: kind
1. when made by a third person who has 3. all of the debts must be due
an interest in the fulfillment of the 4. amount paid by the debtor must not be
obligation sufficient to cover the total amount of all the
2. stipulation to the contrary debts
rd
Rights of 3 person who paid the GENERAL RULE: The right to designate the
obligation: debt to which the payment shall be applied
1. If payment was with knowledge and primarily belongs to the debtor.
consent of the debtor: EXCEPTION: If the debtor does not avail of
a. can recover entire amount paid such right and he accepts from the creditor a
b. can be subrogated to all the receipt in which the application is made.
rights of the creditor
2. If payment was without knowledge or If the above rule is not applicable:
against the will of the debtor: can recover 1. The debt most onerous to the debtor shall
only insofar as payment has been be deemed satisfied.
beneficial to the debtor 2. If the debts due are of the same nature and
burden, payment shall be applied to all
To whom payment must be made: proportionately.
1. the person in whose favor the obligation has
been constituted b) Dation in Payment (DACION EN PAGO)
2. his successor in interest transmission of ownership of a thing by the
3. any person authorized to receive it. debtor to the creditor as an accepted equivalent
of the performance of the obligation.
GENERAL RULE: If payment is made to a Requisites:
person other than those enumerated, it shall not 1. existence of a money obligation
be valid. 2. alienation to the creditor of a property by the
EXCEPTIONS: debtor with the consent of the former
rd
1. Payment made to a 3 person, provided 3. satisfaction of the money obligation of the
that it has redounded to the benefit of debtor
the creditor.
7
c) Payment by Cession appear at the place of payment

debtor abandons all of his property for the 2. creditor incapacitated to receive payment at
benefit of his creditors in order that from the the time it is due
proceeds thereof, the latter may obtain payment 3. when two or more persons claim the right to
of their credits. collect
Requisites: 4. when the title of the obligation has been lost
1. plurality of debts 5. when without just cause creditor refuses to
2. partial or relative insolvency of the debtor give a receipt
3. acceptance of the cession by the creditors
It is the consignation which constitutes a form
DATION IN PAYMENT BY of payment and must follow, supplement or
PAYMENT CESSION complete the tender of payment in order to
1. one creditor 1. plurality of creditors discharge the obligation
2. not necessarily in 2. debtor must be
state of financial partially or relatively LOSS OF THE THING DUE
difficulty insolvent 1. In Determinate Obligations to Give
GENERAL RULE: Obligation is extinguished.
3. thing delivered is 3. universality of pro-
EXCEPTIONS:
considered as equi- perty of debtor is what
a. when by law, obligor is liable even for
valent of performance is ceded
fortuitous event;
4. payment extin- 4. merely releases b. when by stipulation, obligor is liable
guishes obligation to debtor for net even for fortuitous event;
the extent of the value proceeds of things c. when the nature of the obligation
of the thing delivered ceded or assigned, requires the assumption of risk;
as agreed upon, unless there is d. when the loss of the thing is due partly
proved or implied from contrary intention to the fault of the debtor;
the conduct of the e. when the loss of the thing occurs after
creditor the debtor incurred in delay;
f. when the debtor promised to deliver the
d) Tender of Payment and Consignation same thing to two or more persons who
do not have the same interest; and
Tender of Payment g. when the debt of a certain and
manifestation of he debtor to the creditor of determinate thing proceeds from a
his decision to comply immediately with his criminal offense.
obligation
2. In Generic Obligations to Give
Consignation GENERAL RULE: Obligation is not
deposit of the object of the obligation in a extinguished because the genus of a thing
competent court in accordance with the rules cannot perish.
prescribed by law after refusal or inability of the EXCEPTION: In case of generic obligations
creditor to accept the tender of payment. whose object is a particular class or group with
Special Requisites: specific or determinate qualities (Limited
1. The debt sought to be paid must be due Generic Obligations)
2. There must be a valid and unconditional
tender of payment or any of the causes 3. In Obligations to Do
stated by law for effective consignation GENERAL RULE: Obligation extinguished
without previous tender of payment exists when prestation becomes legally or physically
3. The consignation of the thing due must first impossible.
be announced to the persons interested in
the fulfillment of the obligation CONDONATION OR REMISSION OF THE
4. Consignation shall be made by depositing DEBT
the things due at the disposal of judicial an act of pure liberality by virtue of which the
authority obligee, without receiving any price or
5. The consignation having been made, the equivalent, renounces the enforcement of the
interested parties shall also be notified obligation, as a result of which it is extinguished
thereof in its entirety or in that part or aspect of the
Effect: same to which the remission refers.
GENERAL RULE: Consignation shall produce Requisites:
effects of payment only if there is a valid tender 1. It must be gratuitous
of payment. 2. It must be accepted by the debtor
EXCEPTIONS: 3. The obligation must be demandable
1. creditor is absent or unknown, or does not
8
CONFUSION OR MERGER OF RIGHTS 3. extinguishment of the old obligation

merger of the characters of the creditor and 4. validity of the new obligation
the debtor in one and the same person by virtue Kinds:
of which the obligation is extinguished. 1. As to its essence
Requisites: a) Objective/Real refers to the change
1. that the characters of creditor & debtor must either in the cause, object or principal
be in the same person conditions of the obligations
2. that it must take place in the person of either b) Subjective/Personal refers to the
the principal creditor or the principal debtor substitution of the person of the debtor
rd
3. it must be complete & definite or to the subrogation of a 3 person in
the rights of the creditor
COMPENSATION c) Mixed
extinguishment in the concurrent amount of 2. As to its form/constitution
the obligation of those persons who are a) Express when it is declared in
reciprocally debtors and creditors of each other. unequivocal terms that the old obligation
Requisites: is extinguished by a new one w/c
1. there must be 2 parties, who, in their own substitutes the same
right, are principal creditors & principal b) Implied when the old & new obligation
debtors of each other are incompatible w/ each other on every
2. both debts must consist in money, or if the point
things due are fungibles, they must be of the
same kind & quality 2 Forms of Substitution of Debtors:
3. both debts must be due 1. Expromision effected with the consent of
4. both debts must be liquidated & demandable the creditor at the instance of the new
5. there must be no retention or controversy debtor even without the consent or even
rd
commenced by 3 persons over either of against the will of the old debtor.
the debts & communicated in due time to the 2. Delegacion effected with the consent of
debtor the creditor at the instance of the old debtor,
6. compensation must not be prohibited by law with the concurrence of the new debtor.
Compensation Confusion A change in the incidental elements of, or an

1. two persons who 1. one person where addition of such elements to an obligation,
are mutual debtors qualities of debtor unless otherwise expressed by the parties, will
and creditors of each and creditor are not result in its extinguishment
other merged
2. there must be at 2. only one Conventional Assignment of
least two obligations obligation Subrogation Rights
1. governed by Arts. 1. governed by Arts.
Debts not subject to Compensation: 1300 to 1304 1624 to 1627
1. debts arising from contracts of deposit 2. debtors consent is 2. debtors consent is
2. debts arising from contracts of required not required
commodatum 3. extinguishes the 3. transmission of
3. claims for support due by gratuitous title obligation and gives right of the creditor to
4. obligations arising from criminal offenses rise to a new one third person without
5. certain obligations in favor of government modifying or
extinguishing the
Taxes are not subject to set-off or legal obligation
compensation because the government & 4. defects and vices 4. defects and vices in
taxpayers are not mutually creditors & debtors of in the old obligation the old obligation are
each other (Francia vs. IAC) are cured not cured
5. takes effect upon 5. as far as the debtor
NOVATION moment of novation or is concerned, takes
substitution or change of an obligation by subrogation effect upon notification
another, resulting in its extinguishment or
modification, either by changing its object or GENERAL RULE: Subrogation cannot be
principal conditions, or by substituting another in presumed.
place of the debtor, or by subrogating a third EXCEPTIONS:
person in the rights of the creditor. 1. Creditor pays another creditor who is
Requisites: preferred, without debtors knowledge;
1. a previous valid obligation 2. A third person not interested in the
2. agreement of the parties to the new obligation pays with the express or tacit
obligation
9
approval of the debtor; or b. knowledge of contract by third person

3. Even without debtors knowledge, a person c. interference by third person without
interested in the fulfillment of the obligation justification
pays without prejudice to the effects of 3. Third persons who come into possession of
confusion as to the latters share. the object of the contract creating real rights
4. Contracts entered into in fraud of creditors
II. CONTRACTS
Mutuality
The contract must bind both parties; its
CONTRACT
validity or compliance must not be left to the will
Elements: (COC)
of one of them. (Art. 1308)
1. Consent
2. Object or Subject Matter
Autonomy
3. Cause or Consideration
The parties are free to stipulate anything they
deem convenient provided that they are not
Nominate contracts
contrary to law, morals, good customs, public
those which have their own distinctive
order and public policy.
individuality and are regulated by special
provisions of law.
Consensuality
Contracts are perfected by mere consent and
Innominate contracts
from that moment, the parties are bound not
those which lack individuality and are not
only to the fulfillment of what has been expressly
regulated by special provisions of law.
stipulated but also to all consequences which,
regulated by the stipulations of the parties by
according to their nature may be in keeping with
the general provisions of the Civil Code on
good faith, usage and law.
obligations and contracts, by rule governing the
most analogous nominate contracts and by the
CONSENT
customs of the place
manifested by the meeting of the offer and
4 Kinds:
acceptance upon the thing and the cause which
1. Do ut des I give that you give
are to constitute the contract.
2. Do ut facias I give that you do
Requisites:
3. Facio ut des I do that you give
1. Legal capacity of the contracting parties
4. Facio ut facias I do that you do
2. Manifestation of the conformity of the
contracting parties
Characteristics of Contracts: (ROMA)
3. The parties conformity to the object,
1. Relativity (Art. 1311)
cause, the terms and conditions of the
2. Obligatoriness and Consensuality (Art.
contract must be intelligent,
1315)
spontaneous and free from all vices of
3. Mutuality (Art. 1308)
consent
4. Autonomy (Art. 1306)
4. The said conformity must be real and
not simulated or fictitious
Relativity
GENERAL RULE: Contract is only valid
Offer a proposal made by one party to another
between parties, assigns and heirs.
to enter into a contract
EXCEPTIONS:
1. Stipulation pour atrui - stipulation in favor of a
Acceptance manifestation by the offeree of
third person.
his assent to the terms of the offer
Requisites:
a. the stipulation must be part, not whole
The offer must be certain and the acceptance
of the contract;
absolute
b. the contracting parties must have
clearly and deliberately conferred a
Consensual contracts are perfected from the
favor upon a third person;
moment there is a manifestation of concurrence
c. the third person must have
between the offer and the acceptance regarding
communicated his acceptance; and
the object and the cause.
d. neither of the contracting parties bears
Real contracts like deposit, pledge and
the legal representation of the third
commodatum requires delivery of object for
person.
perfection.
2. When a third person induces a party to
violate contract (Art 1314)
Contracts under the Civil Code generally
Requisites:
adhere to the Cognition Theory, while
a. Existence of a valid contract
transactions under the Code of Commerce use
10
the Manifestation Theory. cause void

4. Falsity of cause the contract is void,
VICES OF CONSENT (MIVUF) unless the parties
1. Mistake should refer to the substance of show that there is
the thing which is the object of the contract, or to another cause which is
those conditions which have principally moved true and lawful
one or both parties to enter into the contact 5. Lesion does not invalidate the
2. Intimidation when 1 of the contracting contract, unless (1)
parties is compelled by a reasonable & well- there is fraud, mistake
grounded fear of an imminent & grave evil upon or undue influence; or
his person or prop of his spouse, descendants (2) when the parties
or ascendants, to give his consent intended a donation or
3. Violence when in order to wrest consent, some other contract
serious or irresistible force is employed
4. Undue influence when a person takes FORM OF CONTRACTS
improper advantage of his power over the will of GENERAL RULE: Contracts shall be
another, depriving the latter of a reasonable obligatory, in whatever form they may have been
freedom of choice entered into, provided all the essential requisites
5. Fraud when, through insidious words or for their validity are present.
machinations of 1 of the contracting parties, the EXCEPTIONS:
other is induced to enter into a contract which, 1. When the law requires that a contract be
without them, he would not have agreed to. in some form in order that it may be
valid
OBJECT 2. When the law requires that a contract
Requisites: be in some form in order that it may be
1. It must be w/in the commerce of man enforceable
2. It must be licit or not contrary law, morals, 3. For the convenience of the parties
good customs, public order or public policy
3. It must be possible Parties may compel each other to comply with
4. It must be determinate as to its kind the form required once the contract has been
perfected. (Art 1357)
CAUSE
the immediate, direct and most proximate RA 8792 (E- COMMERCE ACT) provides that
reason which explains and justifies the creation the formal requirements to make contracts
of obligation. effective as against third persons and to
Requisites establish the existence of a contract are deemed
1. Cause should be in existence at the time of complied with provided that the electronic
the celebration of the contract document is unaltered and can be authenticated
2. Cause should be licit or lawful as to be usable for future reference.
3. Cause should be true
Rules: REFORMATION OF INSTRUMENTS
1. In onerous contracts, the cause is Requisites:
understood to be, for each contracting party, 1. meeting of the minds to the contract
the prestation of promise of a thing or 2. true intention is not expressed in the
service by the other instrument by reason of mistake, accident,
2. In remuneratory contracts, the service or relative simulation, fraud, or inequitable conduct
benefit w/c is remunerated 3. clear and convincing proof of mistake,
3. In contracts of pure beneficience, the mere accident, relative simulation, fraud, or
liberality of the benefactor inequitable conduct
CAUSE EFFECT Instances when there can be no reformation:

1. Absence of the contract confers no 1. Simple unconditional donations inter vivos;
cause right and produces no 2. Wills;
legal effect 3. When the agreement is void;
2. Failure of cause does not render the 4. When one of the parties has brought an
contract void action to enforce the instrument no
3. Illegality of the contract is null and subsequent reformation can be asked.
11
COMPARATIVE TABLE OF DEFECTIVE CONTRACTS

VOID VOIDABLE RESCISSIBLE UNENFORCEABLE
1. Defect is caused by Defect is caused by Defect is caused by Defect is caused by
lack of essential vice of consent injury/ damage either to lack of form, authority,
elements or illegality one of the parties of to a or capacity of both
rd
3 person parties
not cured by
prescription
2. Do not, as a general Valid and enforceable Valid and enforceable Cannot be enforced by
rule produce any legal until they are until they are rescinded a proper action in court
effect annulled by a by a competent court
competent court
3. Action for the Action for annulment Action for rescission may Corresponding action
declaration or nullity or or defense of prescribe for recovery, if there
inexistence or defense annulability may was total or partial
of nullity or inexistence prescribe performance of the
does not prescribe unenforceable contract
under No. 1 or 3 of Art.
1403 may prescribe
4. Not cured by Cured by prescription Cured by prescription Not cured by
prescription prescription
5. Cannot be ratified Can be ratified Need not be ratified Can be ratified
6. Assailed not only by Assailed only by a Assailed not only by a Assailed only by a
a contracting party but contracting party contracting party but even contracting party
even by a third person by a third person who is
whose interest is prejudiced or damaged
directly affected by the contract
7. Assailed directly or Assailed directly or Assailed directly only Assailed directly or
collaterally collaterally collaterally
able to return whatever he may be able to return
RESCISSIBLE CONTRACTS whatever he may be obliged to restore if
Contracts validly agreed upon but, by reason rescission is granted
of lesion or economic prejudice, may be 4. the things w/c are the object of the contract
rescinded in cases established by law must not have passed legally to the possession
rd
What contracts are rescissible: of a 3 person acting in good faith
1. those entered into by guardians where the 5. the action for rescission must be brought
ward suffers lesion of more than of the value w/in the prescriptive period of 4 years
of the things which are objects thereof;
2. those agreed upon in representation of Badges of Fraud:
absentees, if the latter suffer lesion by more 1. consideration of the conveyance is
than of the value of the things which are inadequate or fictitious;
subject thereof; 2. transfer was made by a debtor after a suit
3. those undertaken in fraud of creditors when has been begun and while it is pending
the latter cannot in any manner claim what are against him;
due them; 3. sale upon credit by an insolvent debtor;
4. those which refer to things under litigation if 4. evidence of indebtedness or complete
they have been entered into by the defendant insolvency
without the knowledge and approval of the 5. transfer of all his property by a debtor when
litigants and the court; he is financially embarrassed or insolvent;
5. all other contracts especially declared by 6. transfer made between father & son, where
law to be subject to rescission; and there is present any of the above
6. payments made in a state of insolvency on circumstances
account of obligations not yet enforceable 7. failure of the vendee to take exclusive
Requisites: possession of all the property
1. the contract must be rescissible
2. the party asking for rescission must have no VOIDABLE CONTRACTS
other legal means to obtain reparation for the What contracts are voidable:
damages suffered by him 1. those where one of the parties is incapable
3. the person demanding rescission must be of giving consent to a contract
12
2. those where the consent is vitiated by Ratification of contracts in violation of the

mistake, violence, intimidation, undue Statute of Frauds
influence or fraud. 1. Failure to object to the presentation of
oral evidence to prove the same
Causes of extinction of action to annul: 2. Acceptance of benefits under them
1. Prescription
the action must be commenced within 4 VOID CONTRACTS
years from: What contracts are void:
a. the time the incapacity ends; 1. Those whose cause, object or purpose is
b. the time the violence, intimidation or contrary to law, morals good customs, public
undue influence ends; or order or public policy;
c. the time the mistake or fraud is 2. Those whose object is outside the
discovered. commerce of men;
2. Ratification 3. Those which contemplate an impossible
Requisites: service;
a. there must be knowledge of the 4. Those where the intention of the parties
reason which renders the contract relative to the principal object of the contract
voidable; cannot be ascertained; and
b. such reason must have ceased; and 5. Those expressly prohibited or declared void
c. the injured party must have executed by law.
an act which expressly or impliedly
conveys an intention to waive his INEXISTENT CONTRACTS
right. What contracts are inexistent:
3. By loss of the thing which is the object of the 1. Those which are absolutely simulated or
contract through fraud or fault of the person who fictitious; and
is entitled to annul the contract. 2. Those whose cause or object did not exist at
the time of the transaction.
UNENFORCEABLE CONTRACTS
What contracts are unenforceable: Principle of Pari Delicto
1. those entered into in the name of another by GENERAL RULE: When the defect of a void
one without or acting in excess of authority; contract consists in the illegality of the cause or
2. those where both parties are incapable of object of the contract and both of the parties are
giving consent; and at fault or in pari delicto, the law refuses them
3. those which do not comply with the Statute every remedy and leaves them where they are.
of Frauds. EXCEPTIONS:
1. Payment of usurious interest
Agreements within the scope of the Statute 2. Payment of money or delivery of property for
of Frauds (exclusive list): an illegal purpose, where the party who paid
1. Agreements not to be performed within one or delivered repudiates the contract before
year from the making thereof; the purpose has been accomplished, or
2. Special promise to answer for the debt, before any damage has been caused to a
rd
default or miscarriage of another; 3 person.
3. Agreement in consideration of marriage 3. Payment or delivery made by an
other than a mutual promise to marry; incapacitated person
4. Agreement for the sale of goods, etc. at a 4. Agreement or contract which is not illegal
price not less than P500.00; per se & the prohibition is designed for the
5. Contracts of lease for a period longer than protection of the plaintiff
one year; 5. Payment of any amount in excess of the
6. Agreements for the sale of real property or maximum price of any article or commodity
interest therein; and fixed by law
7. Representation as to the credit of a third 6. Contract whereby a laborer undertakes to
person. work longer than the maximum # of hours
fixed by law
The contracts/agreements under the Statute 7. Contract whereby a laborer accepts a wage
of Frauds require that the same be evidenced by lower than the minimum wage fixed by law.
some note, memorandum or writing, subscribed
by the party charged or by his agent, otherwise, Rules when only one of the parties is at fault:
the said contracts shall be unenforceable A. Executed Contracts:
The statute of frauds applies only to 1. Guilty party is barred from recovering
executory contracts, not to those that are what he has given to the other party is
already partially or completely fulfilled. barred from recovering what he has given
to the other party by reason of the contract.
13
2. Innocent party may demand for the 4. applies in equity 4. applies at law
return for the return of what he has given. 1. not based on a fixed based on a fixed time
time
B. Executory Contracts: Neither of the
contracting parties can demand for the fulfillment
of any obligation from the contract nor may be
compelled to comply with such obligation
NATURAL OBLIGATIONS
They are real obligations to which the law
denies an action, but which the debtor may
perform voluntarily
It is patrimonial, and presupposes a
prestation
The binding tie of these obligations is in the
conscience of man, for under the law, they do
not have the necessary efficacy to give rise to
an action
Examples of natural obligations enumerated
under the Civil Code:
1. Performance after the civil obligation has
prescribed;
2. Reimbursement of a third person for a debt
that has prescribed;
3. Restitution by minor after annulment of
contract;
4. Delivery by minor of money or fungible thing
in fulfillment of obligation;
5. Performance after action to enforce civil
obligation has failed;
6. Payment by heir of debt exceeding value of
property inherited; and
7. Payment of legacy after will has been
declared void.
ESTOPPEL
A condition or state by virtue of which an
admission or representation is rendered
conclusive upon the person making it and
cannot be denied or disproved as against the
person relying thereon.
Kinds:
1. Estoppel in Pais (by conduct)
a. Estoppel by silence
b. Estoppel by acceptance of benefits
2. Technical Estoppel
a. Estoppel by deed
b. Estoppel by record
3. Estoppel by judgment
4. Laches
LACHES PRESCRIPTION
1. concerned with 1. concerned with
effect of delay fact of delay
2. question of 2. question or matter
inequity of permitting of time
the claim to be
enforced
3. not statutory 3. statutory
14

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MEMORY AID IN CIVIL LAW

SAN BEDA COLLEGE OF LAW 2002 CENTRALIZED BAR OPERATIONS

OBLIGATIONS AND 1. compel specific

2) Accion subrogatoria to be subrogated to Rule in Potestative Conditions

borne by the creditor 5. when it is left 5.when it is left

3. culpable loss 3. culpable loss of any JOINT DIVISIBLE OBLIGATIONS

EFFECT OF LOSS OF OBJECT OF INDIVISIBILITY SOLIDARITY

JOINT AND SOLIDARY OBLIGATIONS Effect of Novation upon Solidary Obligation

3. If the novation is effected by substituting 2. When the different prestations

PAYMENT OR PERFORMANCE 2. Payment made to the possessor of the

c) Payment by Cession appear at the place of payment

CONFUSION OR MERGER OF RIGHTS 3. extinguishment of the old obligation

Compensation Confusion A change in the incidental elements of, or an

approval of the debtor; or b. knowledge of contract by third person

the Manifestation Theory. cause void

CAUSE EFFECT Instances when there can be no reformation:

COMPARATIVE TABLE OF DEFECTIVE CONTRACTS

2. those where the consent is vitiated by Ratification of contracts in violation of the

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