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Obligation and Contracts ECE PDF
Obligation and Contracts ECE PDF
TITLE I
OBLIGATION
(Arts 1156 – 1304, Civil Code.)
Chapter 1
GENERAL PROVISIONS
Art.1156.An obligation is a juridical necessity to give,
to do or not to do. (n)
Meaning of obligation.
The term obligation is derived from the Latin word obligation which means
tying or bonding.
It is a tie or bond recognized by law by virtue of which one is bound in favor
of another to render something--- and thus may consist of giving a thing, doing a
certain act or not doing a certain act.
Natural obligations are discussed under the Title dealing with “Natural
Obigations”. (Title III, Arts. 1423-1430)
It may consist in giving, doing, or not doing. Without the prestation, there
is nothing to perform. In bilateral obligations (see Art. 1191), the parties
are reciprocally debtors and creditors; and
4.) A juridical or legal tie (also called efficient cause). --- that which binds or
connects the parties to the obligation. The tie in an obligation an easily be
determined by knowing the source of the obligation. (Art. 1157)
EXAMPLE:
Under a building contract, X bound himself to build a house for Y for
P1,000,000.00.
Here, X is the passive subject, Y is the active subject, the building of the
house is the object or prestation, and the agreement or contract, which is source
of the obligation, is the juridical tie.
Suppose X had already constructed the house and it was the agreement
that Y would pay X after the construction is finished, X then becomes the active
subject and Y, the passive subject.
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Forms of Obligations.
The form of an obligation refers to the manner in which an obligation is
manifested or incurred. It may be oral, or in writing, or partly oral and partly in
writing. ---
(1) As a general rule, the law does not require any form in obligations arising
from contacts for their validity or binding force. (see Art. 1356)
(2) Obligations arising from other sources. (Art. 1157.) do not have any form
at.
EXAMPLE:
X (e.g., seller) binds himself to deliver a piano to Y (buyer).
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EXAMPLE:
X binds himself to repair the piano of Y.
EXAMPLE:
X obliges himself not to build a fence on a certain portion of his lot in
favor of Y who is entitled to a right of way over said lot.
Sources of obligations.
The sources of obligations are enumerated below:
(1) Law. --- where they are imposed by law itself.
EXAMPLES:
Obligation to pay taxes. Obligation to support one’s family.
(2) Contracts. --- when they arise from the stipulation of the parties. (Art.
1306b)
EXAMPLE:
The obligation to repay a loan or indebtedness by virtue of an
agreement.
(3) Quasi- contracts. --- when they arise from lawful, voluntary and
unilateral acts which are enforceable to the end that no one shall be
5
EXAMPLE:
The obligation to return money paid by mistake or which is not due.
(Art. 2154)
(4) Crimes or acts or omissions punished by law. --- when they arise from
civil liability which is the consequence of a criminal offense. (Art. 1161)
EXAMPLE:
The obligation of a thief to return the car stolen by him; the duty of a
killer to indemnify the heirs of his victim.
(5) Quasi- delicts or torts. --- when they arise from damage caused to another
through an act or omission, there being fault or negligence, but no
contractual relation exists between the parties. (Art. 2176)
EXAMPLE:
The obligation of the head of a family that lives in a building or a part
thereof to answer for damages caused by things thrown or falling from the same
(Art. 2193); the obligation of the possessor of an animal to pay for the damage
which it may have caused. (Art. 2183)
Sources classified.
The law enumerates five (5) sources of obligations. They may be classified as
follows:
(1) Those emanating from law; and
(2) Those emanating from private acts which may be further subdivided into:
(a) Those arising from licit acts, in the case of contracts and quasi-
contracts (infra.); and
(b) Those arising from illicit acts, which may be either punishable in
the case of delicts or crimes, or not punishable in the case of quasi-
delicts or torts. (infra.)
Actually, there are only two (2) sources: law and contracts, because
obligations arising from quasi- contracts, delicts, and quasi- delicts are really
imposed by law. (see Leung Ben vs. O’Brien, 38 Phil. 182)
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Art. 1158. Obligations derived from law are not presumed. Only
those expressly determined in this Code or in special laws are
demandable, and shall be regulated by the precepts of the law
which establishes them; and as to what has not been foreseen,
by the provisions of this book. (1090)
Legal obligations.
Article 1158 refers to legal obligations or obligations arising from law. They
are not presumed because they are considered a burden upon the obligor. They
are the exception, not the rule. To be demandable, they must be clearly set forth
in the law, i.e., the Civil Code or special laws.
Thus, an employer has no obligation to furnish free legal assistance to his
employees because no law requires this, and therefore, an employee may not
recover from his employer the amount he may have paid a lawyer hired by him
to recover damages caused to said employee by a stranger or strangers while in
the performance of his duties. (De la Cruz vs. Northern Theatre Enterprises, 95
Phil. 739). But a person who wins money in gambling has the duty to return his
winnings to the loser. This obligation is provided by law. (Art. 2014)
Under Article 1158, special laws refer to all other laws not contained in the
Civil Code. Examples of such laws are Corporation Code, Negotiable
Instruments Law, Insurance Code, National Internal Revenue Code, Revised
Penal Code, Labor code, etc.
Contractual obligations.
The above article speaks of contractual obligations or obligations arising from
contracts or voluntary agreements. It presupposes that the contracts entered into
are valid and enforceable.
A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
(Art. 1305)
(1) Binding force. --- Obligations arising from contracts have the force of law
between the contracting parties, i.e. they have same binding effect of
obligations imposed by laws. This does not mean, however, that contract
is superior to the law. As a source of enforceable obligations, contract
must be valid and it cannot be valid if it is against the law.
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(2) Requirement of a valid contract. --- A contract is valid (assuming all the
essential elements are present; Art. 1318) if it is not contrary to law,
morals, good customs, public order, and public policy. It is invalid or
void if it is contrary to law, morals, good customs, public order, or public
policy. (Art. 1306)
In the eyes of the law, a void contract does not exist (Art. 1409).
Consequently, no obligations will arise. A contract may be valid but cannot be
enforced. (see Art. 1403)
Example:
(1) If S agrees to sell his house to B and B agrees to buy the house of S,
voluntarily and willingly, then they are bound by the terms of their contract and
neither party may, upon his own will, and without any justifiable reason,
withdraw from the contract or escape from his obligations there under.
That which is agreed upon in the contract is the law between S and B and
must be complied with in good faith.
A quasi- contract is 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.
(Art. 2142)
It is not properly a contact at all. In contract, there is a meeting of minds or
consent (see Arts. 1318, 1319.); the parties must have deliberately entered into a
formal agreement. In a quasi- contract, there is no consent but the same is
supplied by fiction of law. In other words, the law considers the parties having
entered into a contract, although they have not actually did so, and irrespective
of their intention, to prevent injustice.
Example:
X went to Baguio with his family without leaving somebody to look after
his house in Manila. While in Baguio, a big fire broke near the house of X.
Through the effort of Y, a neighbour, the house of X was saved from being
burned. Y, however, incurred expenses.
In this case, X has the obligation to reimburse Y for said expenses,
although he did not actually give his consent to the act of Y in saving his house,
on the principle of quasi- contract.
(2) Solutio Indebiti is the juridical relation with is created when something is
received when there is no right to demand it and it was unduly delivered
through mistake. (Art. 2154.) The requisites are:
(a) There is no right to receive the thing delivered; and
(b) The thing was delivered through mistake.
Example:
D owes C P1,000.00. If D paid T believing that T was authorized to
receive payment for C, the obligation to return on the part of T arises. If D paid C
P2,000.00 by mistake, C must return the excess of P1,000.00.
of infinite variety; and when for some reason recovery cannot be had on a true
contract, recovery may be allowed on the basis of a quasi- contract.
Example:
X stole the car of Y. If X is convicted, the court will order X: (1) to return
the car (or to pay its value if it was lost or destroyed); (2) to pay for any damage
caused to the car; and (3) to pay such other damages suffered by Y as a
consequence of the crime.
Example:
While playing softball with his friends, X broke the window glass of Y,
his neighbour. The accident would not have happened had they played a little
farther from the house of Y.
In this case, X is under obligation to pay the damage caused to Y by his
act although there is no pre-existing contractual relation between them because
he is guilty of fault or negligence.
STUDY GUIDE
I. Definitions
Define or give the meaning of the following:
1. Obligation
2. Quasi- contract
3. Compliance in good faith
4. Wrong
5. Solutio indebiti
II. Discussions
1. What are the essential requisites of an obligation? Give an
example to illustrate them.
2. Why are the obligations under the civil Code a juridical necessity?
Explain.
3. What are the elements or requisites in order that a person may
acquire right of action in court against another to enforce the
performance of the latter’s obligation?
4. May a person incur obligations even without entering into any
contract or voluntary agreement? Explain.
III. Problems
1. X saw at about one (1:00 p.m.) in the afternoon a child alone in a
shopping mall. The child who strayed from Y, his mother, was in
tears and appeared very hungry. Out of pity, X took him to a
restaurant to eat for which is spent P150.00. Y did not give her
consent to the good deed of X. Furthermore, they were on their
way home before the child got lost. Is X entitled to be reimbursed
by Y for the amount of P150?
2. While the car of X was parked by the roadside, it was bumped at
the rear by a jeep belonging to Y. only the car of X suffered
damage. Under the circumstances, does it follow that Y is liable to
X for the damage?
3. In the same problem, has X the right to ask indemnity from R,
employer of X was then on his way to transact business with a
client of R?
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Chapter 2
Examples:
(1) The watch I am wearing.
(2) The car sold by X.
(3) My dog named “Terror.”
(4) The house at the corner of Rizal and del Pilar Streets.
(5) The Toyota car with Plate No. AAV 316 (1995)
(6) This caravan of rice
(7) The money I gave you
Examples:
(1) A Bulova calendar watch
(2) The sum of P1,000.00
(3) A 1995 Toyota car.
(4) A cavan of rice
(5) A police dog
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Examples:
(1) If S’s obligation is to deliver to B a Bulova calendar watch, S can deliver
any watch as long as it is a Bulova with calendar.
But if S’s obligation is to deliver to B a particular watch, the one S is
wearing, S cannot substitute it with another watch without B’s consent nor can B
require S to deliver another watch without S’s consent although it may be of the
same kind and value. (see Arts. 1244, 1246)
(2) If S’s obligation is to deliver to B one of his cars, the object refers to
a class which in itself is determinate.
Here, the particular thing to be delivered is determinable without
the need of a new contract between the parties (see Art. 1349.); it becomes
determinate upon its delivery.
The parties may agree upon diligence which is more or less than
that of a good father of a family but it is contrary to public policy (see
Art. 1306) to stipulate for absolute exemption from liability of the
obligor for any fault or negligence on his part. (see Art. 1173, 1174)
(c) Factors to be considered. --- The diligence required necessarily depends
upon the nature of the obligation and corresponds with the
circumstances of the person, of the time, and of the place. (Art. 1173)
It is not necessarily the standard of care one always uses in the
protection of his property. As a general rule, the debtor is not liable if
his failure to preserve the thing is not due to his fault or negligence
but to fortuitous events or force majeure. (Art. 1174)
Example:
S binds himself to deliver a specific horse to B on a certain date.
Pending delivery, S has the additional or accessory duty to take care of
the horse with the diligence of a good father of a family, like feeding the horse
regularly, keeping it in a safe place, etc. In other words, S must exercise that
diligence which he would exercise over another horse belonging to him and
which he is not under obligation to deliver to B.
But S cannot retrieve himself from liability in case of loss by claiming
that he exercised the same degree of care toward the horse as he would toward
his own, if such care is less than that required by the circumstances. If the horse
dies or is lost or becomes sick as a consequence of S’s failure to exercise proper
diligence, he shall be liable to B for damages.
The accessory obligation of S to take care of the horse is demandable
even if no mention thereof is made is made in the contract.
(d) Reason for debtor’s obligation. --- The debtor must exercise diligence to
insure that the thing to be delivered would subsist in the same
condition as it was when the obligation was contracted. Without the
accessory duty to take care of the thing, the debtor would be able to
afford being negligent and he would not be liable even if the property
is lost or destroyed, thus rendering illusory the obligation to give (8
Manresa, 35-37.);
(2) Deliver the fruits of the thing. --- This is discussed under Article 1164;
(3) Deliver the accessions and accessories. --- This is discussed under Article
1166;
(4) Deliver the thing itself. --- (Art. 1163, 1233, 1244; as to kinds of delivery, see
Arts. 1497 to 1501.); and
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(5) Answer for damages in case for non- fulfilment or breach. --- This is discussed
under Article 1170.
Art. 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 ha been delivered to
him. (1095)
Example:
Grass; all trees and plants on lands produced without the intervention of
human labor.
(2) Industrial fruits are those produced by lands of any kind through
cultivation or labor.
Example:
Sugar cane; vegetables; rice; and all products of lands brought about by
reason of human labor.
Example:
Rents of buildings, price of leases of lands and other property and the
amount of perpetual or life annuities or other similar income. (Art. 442)
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Example:
S sold his horse to B for P15,000.00. No date or condition was stipulated
for the delivery of the horse. While still in the possession of S, the horse gave
birth to a colt.
Who has a right to the colt?
In a contract of sale “all the fruits shall pertain to the vendee from the
day on which the contract was perfected.” (Art. 1537, 2nd par.) Hence, B is
entitled to the colt. This holds true even if the delivery is subject to a suspensive
condition (e.g., upon the demand of B) or a suspensive period (e.g., next month)
if B has paid the price.
But S has a right to the colt if it was born before the obligation to deliver
the horse has risen (Art. 1164) and B has not yet paid the purchase price. In this
case, upon the fulfilment of the condition or the arrival of the period, S does not
have to give the colt and B is not obliged to pay legal interest on the price since
the colt and the interest are deemed to have been mutually compensated. (see
Art. 1187)
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Example:
X is the owner of a parcel of land under a torrens title registered in his
name in the Registry of Property. His ownership is a real right directed against
everybody. There is no definite passive subject.
If the land is claimed by Y who takes possession, X has a personal right
to recover from Y, as a definite passive subject, the property.
If the same land is mortgaged by X to Z, the mortgage, if duly registered,
is binding against third persons. A purchaser buys the land subject to mortgage
which is a real right.
Example:
S is obliged to give to B on July 25 a particular horse. Before July 25, B
has no right over the horse. B will acquire a personal right against S to fulfill his
obligation only from July 25.
If the horse is delivered on July 30, B acquires ownership or real right
only from that date. But if on July 20, S sold and delivered the same horse to C, a
third person (meaning that he is not a party to the contract between S and B) who
acted in good faith (without knowledge of the said contract), C acquires
ownership over the horse and he shall be entitled to it against B. S shall be liable
to B for damages. (Art. 1170)
Example:
S sells his piano to B for P10,000.00. If S refuses to comply with his
obligation to deliver the piano, B can bring an action for fulfilment or rescission
of the obligation with the payment of damages in either case. (Art. 1191.) In case
of rescission, the parties must return to each other what they have received. (Art.
1385.)
The rights to demand fulfilment and rescission with damages (see Art.
1170) are alternative, not cumulative, i.e. the election of one is a waiver of the
right to resort to the other. (see Art. 1191) B may bring an action for damages
only if this is not expressly mentioned by Article 1165. (see Art. 1170)
20 thereof) However, a person may be subject to subsidiary imprisonment for non- payment of civil
liability adjudged in a criminal case. (see Art. 1161) The constitutional prohibition refers to purely
civil debt or one arising from contractual obligations only.
Example:
S obliges himself to deliver to B 100 sacks of rice on December 4 for
P50,000.00.
If S does not comply with his obligation, B may buy rice from C, a third
person. If B paid C P55,000.00, he may recover (assuming B has not yet paid S)
P5,000.00 from S. furthermore, B can also hold S liable for damages in view of
Article 1170 as in the case of the delivery of a determinate thing. (par. 1)
Examples:
House or trees on a land; rents of a building; air- conditioner in a car;
profits or dividends accruing from shares of stocks, etc.
(2) Accessories are things joined to or included with the principal thing for
the latter’s embellishment, better use, or completion.
Examples:
Key of a house; frame of a picture; bracelet of a watch; machinery in a
factory; bow of a violin.
Note that while accessions are not necessary to the principal thing, the
accessory and the principal thing must go together. Both can exist only in
relation to the principal.
Examples:
(1) X binds himself to construct a house for B. Among other things, it was
stipulated that the house shall have 3 bedrooms, each of which to have an area of
5 meters by 4 meters and that the kitchen shall be painted all white.
If X does not construct the house, B may ask C to construct the house at
the expense of X.
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(2) Suppose X constructed the house but the size of the bedroom is not 5
meters by 4 meters or the kitchen is not painted all white.
In this case, B can ask it to have it done according to the specifications. If
X refuses, the obligation may be performed by C at the expense of X.
(3) Now, if the kitchen was painted white but the painting was poorly done,
B may ask X that it be undone or, in case of X’s refusal, he may ask C to paint the
kitchen at the expense of X.
In no case, however, can X be compelled against his will to comply with
his obligation should he refuse to do so.
(4) If the obligation contracted by X is to sing in the night club of B and he
fails to comply his obligation, the performance of the same by another would be
impossible or would result to be so different that the obligation could not be
considered performed.
Here, the personal qualification of X is the determinate motive for the
contract. In this case, the only practical remedy of B is indemnification for
damages.
Art. 1168. When the obligation consists in not doing, and the
obligor does what has been forbidden him, it shall also be
undone at his expense.(1099a)
Example:
B bought a land from S. it was stipulated that S would not construct a
fence on a certain portion of his land adjoining that sold to B.
Should S construct a fence in violation of the agreement, B can bring an
action to have the fence removed at the expense of S.
23
Meaning of delay.
The word delay, as used in the law, is not to be understood according to its
meaning in common parlance. A distinction, therefore, should be made between
ordinary delay and legal delay (default or mora) in the performance of an
obligation.
(1) Ordinary delay is merely the failure to perform an obligation on time.
(2) Legal delay or default is the failure to perform an obligation on time which
failure constitutes a breach of the obligation.
Example:
S obliged himself to deliver to B a specific refrigerator on December 10.
If S does not deliver the refrigerator on December 10, he is only in
ordinary delay in the absence of any demand from B although a period had been
fixed for the fulfilment of the obligation. The law presumes that B is giving S an
extension of time within which to deliver the refrigerator. Hence, there is no
breach of the obligation and S is not liable for damages.
If a demand is made upon S by B on December 15 and S fails to deliver
the refrigerator, S is considered in default only from the date.
If an action for specific performance is filed by B on December 20, the
payment of damages for the default must commence on December 15 when he
made the extrajudicial demand and not on December 20. In the absence of
evidence; as to such extra judicial demand, the effects of default arise from the
date of the judicial demand, that is, from the filing of the complaint.
Effects of delay.
(1) The following are the effects of mora solvendi:
(a) The debtor is guilty of breach or violation of the obligation;
(b) He is liable to the creditor for interest (in case of obligations to pay
money) (Art. 2209) or damages (in other obligations). (Art. 1170) In
25
Example:
D promised to pay C the sum of P2,000.00 on or before November 30
without the need of any demand. Therefore, if D fails to pay on November 30, he is
automatically in default.
In this case, the parties stipulate to dispense with the demand.
26
The mere fixing of the period is not enough. The arrival of the period merely
makes the obligation demandable. Before its arrival, the creditor cannot demand
performance. The obligation must expressly so declare that demand is not
necessary or must use words to that effect, as for instance, “the debtor will be in
default” or “I will be liable for damages.”
Example:
The contract of loan between D and C provides that failure of D to pay
any instalment therein stipulated would mature the entire obligation. It does not
state that in such an event, D shall thereafter be in default.
Demand is still necessary to hold D in default upon failure to pay any
such instalments. He is not liable for any interest for default for the whole debt
except from the time that judicial or extra- judicial demand for payment is made
upon him.
Examples:
(1) Under the law, taxes should be paid on or before a specific date;
otherwise, penalties and surcharges are imposed without the need of demand for
payment by the government.
(2) The partner is liable for the fruits of the thing he may have promised to
contribute to the partnership from the time they should have been delivered
without the need of any demand. (Art. 1786; see Art. 1788)
Examples:
The delivery of balloons on a particular date when a children’s party will
be held; the making of a wedding dress where the wedding is scheduled at a
certain time; payment of money at a particular time so that the creditor could pay
off certain debts due on the same date; the delivery of a car to be used in a trip at
a particular time; etc.
In all the foregoing cases, the debtor is fully aware that the performance of
the obligation after the designated time would no longer benefit the creditor.
It is not necessary for the contract to categorically state that time is of the
essence; intent is sufficient. (Hanlon vs. Hauserman, 40 Phil. 766, infra.)
Example:
27
Examples:
(1) S agreed to sell B his television set for P8,000.00. The obligation of S is to
deliver the television set while that of B, to pay P8,000.00.
Since no date is set for performance of their respective obligations, it is
understood that it must be simultaneous. S cannot demand payment if he
himself cannot deliver the television set. From the moment S delivers the
television set, B is in default if he does not pay S without the need of any
demand.
(2) If the agreement is that the delivery and payment shall be made on
December 10, the delivery (payment) by S(B) on December 5 does not give him
the right to demand payment (delivery) from B(S). Neither party will incur in
delay before December 10 notwithstanding that the other has already complied
with his obligation.
Here, performance is set on the same date.
(3) Suppose in the same example, the delivery is to be made on December 10
and the payment, on December 15.
In this case, a demand on December 10 by B is necessary to put S in delay
following the general rule. (Art. 1169, par. 1) Similarly, the delivery of the
television set by S does not put B in delay until a demand is made upon him on
December 15, or subsequently. In this case, performance is set on different dates.
28
Example:
S obliged himself to deliver to B 20 bottles of wine, of a particular brand.
Subsequently, SS delivered 20 bottles knowing that they contain cheaper wine. S
is guilty of fraud and is liable for damages to B.
(2) Negligence (fault of culpa). --- It is any voluntary act or omission, there
being no malice, which prevents the normal fulfilment of the obligation.
(see Arts. 1173, 1174)
29
Example:
P is a passenger in a taxi. Here, there is a considered a contract of
carriage between P and the owner of the taxi company. In consideration of the
fare to be paid by P, the owner of the taxi company, through the driver, agrees to
safely bring P to his destination. (Lasam vs Smith, 48 Phil. 657)
If, through the recklessness of the driver, like for example, driving at an
unjustified rate of speed or entering a one-way street, an accident occurs, as a
result of which P is injured, there is negligence which would make the owner
liable for damages. If the taxi contained defective parts, the failure to repair the
same constitutes also negligence on the part of the owner. (Ibid.)
(3) Delay (mora). --- This has already been discussed under Article 1169.
(4) Contravention of the terms of the obligation. --- This is the violation of the
terms and conditions stipulated in the obligation. The contravention must
not be due to a fortuitous event or force majeure. (Art. 1174)
Example:
E leased the apartment of R for PP8,000.00 a month to be paid in advance
during the first week of every month. The obligation of E, a lessee, is to pay the
stipulated rent. The obligation of R, as lessor, is to maintain E in the peaceful
possession of the apartment leased.
If E violates his obligation, R is entitled to eject him from the premises
and recover damages. If R does not maintain E in the peaceful possession of the
apartment (as when R is not the owner), and E is ejected, R may be held liable for
damages for violation of the terms of his obligation.
The measure of damages to be awarded to E or to R, as the case may be,
is left to the sound discretion of the court in accordance with the provisions of
the Civil Code on Damages. (Title XVIII.)
They are similar in that both are voluntary, that is, they are committed with
volition. Where, however, the negligence shows bad faith; or is so gross that it
amounts to malice or wanton attitude on the part of the defendant, the rules on
fraud shall apply. In such case, no more distinction exists between the two, at
least as to effects.
Example:
S promised to deliver 120 cavans of rice of a particular brand and quality
to B at the rate of 10 cavans a month.
S cannot make an agreement with B, whereby B will not file an action in
court against S, should S commit fraud in the performance of his obligation. This
31
waiver of an action for future fraud is void. Hence, B can still bring an action
against S for damages arising from the fraud.
But once fraud is committed, B, with full knowledge thereof, can waive
his right to indemnity as an act of forgiveness on his part.
(2) Civil negligence (culpa aquiliana) or negligence which by itself is the source
of obligation between the parties not so related before by any pre-existing
contract. It is also called tort or quasi-delict (Art. 2176); and
(3) Criminal negligence (culpa criminal) or negligence resulting in the
commission of a crime. (Arts. 3, 365, Revised Penal Code.) The same
negligent act causing damages may produce civil liability arising from a
crime under Article 100 of the Revised Penal Code (supra.), or create an
action for quasi-delict under Article 2176, et seq., of the Civil Code.
In negligence cases, the aggrieved party may choose between a criminal
action under Article 100 of the Revised Penal Code or a civil action for damages
under Article 2176 of the Civil Code. What is prohibited under Article 2177 of the
Civil Code is to recover twice for the same negligent act.
EXAMPLES:
(1) If S entered into a contract with B to deliver a specific horse on a certain day
and the horse died through the negligence of S before delivery, S is liable for
damages to B for having failed to fulfil a pre-existing obligation because of
his negligence. This is culpa contractual.
(2) Assume now, that the horse belongs to and is in the possession of B. The
negligence of S which results in the death of a horse is culpa aquiliana. In this
case, there is no pre-existing contractual relation between S and B. The
negligence itself is the source of liability. (Art. 1157[5].)
(3) A crime may be committed by negligence. If B wants, he can bring an action
for culpa criminal (damage to property through simple or reckless
imprudence). Hence, the crime is the source of the obligation of S to pay
damages. (Arts. 1157[4];1161.)
But B cannot recover damages twice for the same act or omission of S. I other
words, responsibility for quasi-delict is not demandable together with the civil
liability arising from a criminal offense. (Art. 2177)
Examples:
(1) P is a passenger in a carefully driven bus. Without any warning, he jumped
off the bus, as a result of which, he suffered injuries.
The bus company is not liable for damages because the cause of P’s
injuries is his own negligence.
(2) Now suppose P was standing on the running board of the bus and was
repeatedly told by the conductor to go inside but he did not pay any
attention. Suddenly, the bus swerved to the left to avoid collision with
another vehicle, as a result of which, P was thrown off the bus. At the time of
the mishap, the driver was intoxicated and was driving recklessly at a very
high rate of speed.
In this case, P did not observe the diligence of a good father of a family
to avoid injury to himself. (Art. 1761) But his contributory negligence does
not bar recovery for damages for his death or injuries since the proximate or
direct cause thereof is the negligence of the common carrier. However, the
amount of damages shall be equitably reduced. (Art. 1762)
(3) Suppose in the second example, the bus rounded a curve causing P to lose
his balance and fall off the platform, sustaining injuries. The bus at the time
of the accident was travelling at a moderate rate of speed and there was no
infraction of law and regulations, and P was exposed to no greater danger
than that inherent in that particular mode of travel.
Here, P cannot recover. He should have been on his guard against a
contingency as natural as that of losing his balance to a greater or lesser
extent when the bus rounded the curve. (see Lasam vs. Smith, 45 Phil. 657.)
interests of another person, that degree of care, precaution and vigilance which
the circumstances justly demand, whereby such other person suffers injury.”
(United States vs. Barrias, 23 Phil. 434)
Factors to be considered.
Negligence is a question of fact, its existence being dependent upon the
particular circumstances of each case. In determining the issue of negligence, the
following factors must be considered:
(1) Nature of the obligation.
Example:
Smoking while carrying materials known to be inflammable constitutes
negligence.
Example:
A guard, a man in the prime of life, robust and healthy, sleeping while
on duty is guilty of negligence.
Example:
Driving a car without headlights at night is gross negligence but it does
not by itself constitute negligence when driving during the day.
Example:
Driving at 80 kilometers per hour on the superhighway is permissible
but driving at the same rate of speed in Rizal Avenue, Manila is gross
recklessness.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation.”
Example:
S agreed to sell and deliver to B on a certain date 1,000 kilos of sugar of a
certain quality of P30,000.00. Then, B agreed to sell the sugar to be received from
S to C for P35,000.00. This contract with C was made known to S. On the date
designated, S did not deliver the sugar so that C bought sugar from another.
The breach of the obligation by S, resulting in the loss of the amount of
P5,000.00 as expected profit, so angered B that he suffered a heart attack for
which he was hospitalized for five (5) days.
In this case, if S acted in good faith, the damage which B ought to receive
should be the amount of P5,000.00, the profit which B failed to realize. (par. 1;
Art. 2200.)
But, if S acted in bad faith, he is also liable to pay for the hospitalization
expenses incurred by B which clearly originated from the breach although they
might not have been reasonably contemplated by the parties at the time they
entered into the contract. (par. 2.)
Examples:
War, fire, robbery, murder, insurrection, etc.
(2) Acts of God. --- they refer to what is called majeure or those events which
are totally independent will of every human being.
Examples:
Earthquake, flood, rain, shipwreck, lightning, eruption of volcano, etc.
In our law, fortuitous events and force majeure are identical in so far as they
exempt an obligor from liability. Both are independent of the will of the obligor.
Example:
S is obliged to deliver a specific horse to B on August 10. S did not
deliver the horse o said date. If, on August 11 the horse died because it was hit
by lightning, S is not liable if no demand was made by B. his obligation is
distinguished.
If the horse died after a demand was made by B, S is liable for damages
because he is guilty of (legal) delay. In this case, the obligation of S to deliver the
horse is also extinguished (see, however, Art. 1262.) but it is converter into
monetary obligation to pay damages. (Art. 1165, par. 3)
If the horse would have died in any event even if no demand has been
made by B, S would still be liable even for loss due to a fortuitous event. (see Art.
1165) however, the court may reduce the amount of damages. (see Art. 2215[4])
(b) The debtor has promised to deliver the same (specific) thing or two or more
persons who do not have the same interest. (Ibid.)
Example:
If S promised to deliver the same car to B and C separately, S is liable
even for a fortuitous event. The reason is because it would be impossible for S to
comply with his obligation to both B and C even without any fortuitous event
taking place.
(c) the obligation to deliver a specific thing arises from a crime. (Art. 1268)
Example:
S stole the carabao of B. S has the obligation, arising from the crime, to
return the carabao. Even if the carabao dies or is lost through a fortuitous event,
S is still liable for damages unless B is in mora accipiendi. A person is responsible
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for the results of whatever cause which flow from his criminal act. (see U.S. vs.
Mambang, 36 Phil. 348.)
Example:
The loss or destruction of a generic thing like rice, corn, sugar, etc. does
not produce the extinction of the obligation because the debtor can still comply
with his obligation by delivering another thing of the same kind in accordance
with the principle that “genus never perishes” (Genus nunquam perit)
(2) When declared by stipulation. --- the basis for this exception rests upon the
freedom of contract. (see Art. 1306.) Such a stipulation is usually intended
to better protect the interest of the creditor and procure greater diligence
on the part of the debtor in the fulfilment of his obligation. But the
intention to make the debtor liable even in case of a fortuitous event
should be clearly expressed.
(3) When the nature of the obligation requires the assumption of risk. --- Here, risk
or loss of damage is an essential element in the obligation.
Example:
B insured his house against fire for P100,000.00 with C, an insurance
company. Later, the house was destroyed by accident fire. Although the cause of
the loss is a fortuitous event, B may recover the amount of the policy.
In a contract of insurance, the insurer (C), in consideration of the
premium paid by the insured (B), undertakes to indemnify the latter for the loss
of the thing insured by reason of the peril insured against even if the cause of the
loss is a fortuitous event.
Meaning of usury.
Usury is contracting for or receiving interest in excess of the amount allowed
by law for the loan or use of money, goods, chattels, or credits. (Tolentino vs.
Gonzales, 50 Phil. 558.)
Note: By virtue, however, of Central Bank Circular No.905 (Dec. 10, 1982)
issued by the Monetary Board under the authority granted to it by the Usury
Law, the rate of interest and other charges on a loan or forbearance of money,
goods, or credit, regardless of maturity and whether secured or unsecured, that
may be charged or collected shall not be subject to any ceiling prescribed under
the Usury Law. Usury is now legally non-existent. Parties are now free to
stipulate any amount of interest.
Meaning of presumption.
By presumption is meant the interference of a fact not actually known arising
from its usual connection with another which is known.
Examples:
(1) X was shot dead. Nobody witnessed the shooting. Y, however, was seen
at the scene of the crime just after its commission holding the fatal gun. The fact
not actually known is the person who fired the gun. The fact known is the
presence of Y at the scene of the crime holding the fatal gun.
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Examples:
(1) D owes C the amount of P10,000.00 with interest at 18% a year. C issued a
receipt for the principal. The interest was not referred to in the payment
whether or not it has been paid.
It is presumed that the interest has been previously paid by D because
normally, the payment of interest precedes that of the principal. (Art. 1253)
This, however, is only a disputable presumption and may be overcome by
sufficient evidence that such interest had not really been paid. (Art. 1176,
par. 1; see Hill vs. Veloso, 31 Phil. 160)
The debtor is liable with all his property, present, and future, for the
fulfilment of his obligations, subject to the exemptions provided by law. (see Art.
2236)
Example:
On the due date, D could not pay C his obligation in the amount of
P400,000.00. However, D owns a car worth about P280,000.00 and X is indebted
to him for P40,000.00. Before the due date of the obligation, D sold his land worth
P200,000.00 to Y.
Under the circumstances, the rights granted to C under the law are as
follows:
(a) He may bring an action for the collection of the amount of P40,000.00 with a
right to damages.
(b) If, in spite of the judgment rendered, D fails to pay the amount due, C can
ask for the attachment of D’s car so that the car may be sold and payment
made from the proceeds of the sale.
(c) He may ask the court to order X not to pay D so that payment may be made
to him (C).
(d) He may ask the court to rescind or cancel the sale made by D to Y on the
ground that the transaction is fraudulent in case he (C) cannot recover in any
other manner his credit. Note that this last remedy can be resorted to only if
C could not collect in full his credit. (see Art. 1381[3], 1387.) He must first
exhaust the properties of the debtor or subrogate himself in the latter’s
transmissible rights.
Transmissibility of rights.
All rights acquired in virtue of an obligation are generally transmissible. (see
Art. 1311) The exceptions to this rule are the following:
(1) Prohibited by law. --- When prohibited by law like the rights in
partnership, agency, and commodatum which are purely personal in
character.
(a) By the contract of partnership, two or more persons bind themselves to
contribute money, property or industry to a common fund, with the
intention of dividing the profits among themselves. (Art. 1767)
(b) By the contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another,
with the consent or authority of the latter. (Art. 1868)
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STUDY GUIDE
I. Definitions
Define or give the meaning of the following:
1. Generic or indeterminate thing
2. Personal right
3. Legal delay or default
4. Fortuitous event
5. Diligence of a good father of a family
II. Discussions
1. Give the rules as to the liability of a person for loss or damage
resulting from a fortuitous event.
2. What rights are given by law to the creditor in case the debtor fails
to comply with his obligation to deliver a specific thing?
3. What are included to be delivered in an obligation to give a
definite thing? Explain them.
4. Suppose the obligation of the debtor is to do something and he
fails to do it or performs it in contravention of the agreement, what
are the remedies available to the creditor?
5. Can a debtor be put in delay and consequently, incur liability even
without demand from creditor? Explain.
6. May an action arising from fraud be waived? Explain.
7. May an action arising from negligence be waived? Explain.
III. Problems
Explain or state briefly the rule or reason for your answer.
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Chapter 3
Chapter 4
EXTINGUISHMENT OF OBLIGATIONS
GENERAL PROVISIONS
ART. 1231. Obligations are extinguished:
(1) By payment or performance;
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and
debtor;
(5) By novation;
Other causes of extinguishment of obligations such as
annulment, rescission, fulfilment of a resolutory condition, and
prescription, are governed elsewhere in this Code. (1156a)