SEARCH FOR THE FOLLOWING

1. Obligation meaning
2. Elements of obligation
3. Prestation
4. Efficient Cause
5. Contract
6. Quasi-contract
7. Delict
8. Quasi-delict
OBLIGATIONS & CONTRACTS
CLASSROOM RULES
1. READ. READ. READ.
2. No gadgets during class recitations or discussions
3. Don’t take photos of the slides. WRITE.
4. Don’t be late.
5. You are only given 3 allowable absences.
REFERENCES:

(a) Obligations and Contracts by Hector de Leon

(b) Civil Code
(c) Cases to be provided by the teacher
X saw at about 1pm in the afternoon a child alone in a shopping
mall. The child who strayed from Y, his mother, was on tears and
appeared very hungry. Out of pity, X took him to a restaurant to eat
for which he spent P150. 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?
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 o X suffered
damage. Under the circumstances, does it follow that Y is liable to
X for the damage?
In the same problem, has X the right to ask indemnity from R,
employer of X, on the ground that when the accident occured, X
was then on his way to transact business with a client of R?
D (debtor) borrowed P10,000 from C (creditor). On the due date of
the loan, D could not pay C because he lost to a robber the P10,000
intended for C. In addition, he suffered financial reverses and he
was short of cash even for his current family’s needs. Is D legally
justified to refuse to pay C?
What is an obligation?
 An obligation is a juridical necessity to
ART 1156 give, to do or not to do.

“An obligation is a juridical relation whereby a person (called the

creditor) may demand from another (called the debtor) the
observance of a determinate conduct, and in case of breach, may
obtain satisfaction from the assets of the latter.” -Manresa

CREDIT:
DEBT:
 An obligation is a juridical necessity to
ART 1156 give, to do or not to do.

“An obligation is a juridical relation whereby a person (called the

creditor) may demand from another (called the debtor) the
observance of a determinate conduct, and in case of breach, may
obtain satisfaction from the assets of the latter.” -Manresa

CREDIT: The right to demand the object of the obligation

DEBT: The duty to give, to do or not to do it
ELEMENTS OF OBLIGATION
1. an ACTIVE SUBJECT, who has the power to demand the prestation,
known as the obligee or creditor
2. a PASSIVE SUBJECT, who is bound to perform the prestation, known
as the obligor or debtor
3. an OBJECT or the PRESTATION
4. efficient CAUSE or the juridical tie between the two subjects by
reason of which the debtor is bound in favor of the creditor to
perform the prestation
PRESTATIONS
TO GIVE: one which the prestation consists in the delivery of a movable or
an immovable thing, in order to create a real right, or for the use
of the recipient, or for its simple possession, or in order to return
it to its owner.

TO DO: includes all kinds of work or services

NOT TO DO: consists in abstaining from some act, such as the duty of a
person not to create a nuisance on his property.
EFFICIENT CAUSE (the vinculum)
1. Law
2. Bilateral acts
3. Unilateral acts
IDENTIFY THE ELEMENTS OF OBLIGATION PRESENT IN THE SITUATION.
(a) A promises to paint B’s picture for B as a result of an agreement
(b) B agrees to pay X the amount of P500.00 as payment for the service
rendered by X to the former.
(c) John agrees to do the assignment of Phoebe in exchange of a box of
pizza from Phoebe.
IDENTIFY THE ELEMENTS OF OBLIGATION PRESENT IN THE SITUATION.
"Mike, the manager of an electric company offered to buy a one-square meter lot
from Scarlette for P15,000. Mike showed Scarlette his power of attorney
executed by the electric company and duly signed by the board of directors.
Mike informed Scarlette that the lot would be the site of an electric post which
the electric company would build. Scarlette agreed to Mike. Mike agreed to
come back the following day to give the company check for the purchase price
as well as the written contract. When Mike returned to the place of Scarlette,
Scarlette refused to sign the contract and accept the check. Scarlette told Mike
that at any rate, Mike or the electric company could not enforce the contract
since it was not in writing.

*The contract must be in writing for it to be enforceable against Scarlette. This

is a sale of real property."
CIVIL OBLIGATION v NATURAL OBLIGATION
1. Civil obligations derive their binding force from positive law, while natural
obligations derive their binding effect from equity and natural justice
2. Civil obligations can be enforced by court action or the coercive power of
public authority, while the fulfillment of natural obligations cannot be
compelled by court action but depends exclusively upon the good
conscience of the debtor.
ART 1157 Obligations arise from:
(a) law;
(b) contracts;
(c) quasi-contracts;
(d) acts or omissions punished by law
(e) quasi-delicts
(a) Facts:
A wife was about to deliver a child. Her parents-in-law called the
doctor.

(b) Issue:
Who should pay the doctor: the husband or the parents?
(a) Facts:
A wife was about to deliver a child. Her parents-in-law called the
doctor.

(b) Issue:
Who should pay the doctor: the husband or the parents?

(c) Held:
The husband should pay, even if he was not the one who called t
the doctor. It is his duty to support the wife,
 A contract is a meeting of minds between two persons
ART 1305 whereby one binds himself, with respect to the other, to
give something or to render some service.
 A contract is a meeting of minds between two persons
ART 1305 whereby one binds himself, with respect to the other, to
give something or to render some service.

“A juridical convention manifested in legal form, by virtue of which

one or more persons bind themselves in favor of another or others,
or reciprocally, to the fulfillment of a prestation to give, to do, or not
to do.” -Sanchez Roman

Obligations arising from contracts have the force of law

ART 1159 between the contracting parties and should be complied
with in good faith.
 A quasi-contract is a juridical relation which arises
QUASI- from certain lawful, voluntary, and unilateral acts, to

CONTRACT the end that no one may be unjustly enriched or

benefited at the expense of another. -Art. 2142, Civil Code

(a) NEGOTIORUM GESTIO

(b) SOLUTIO INDEBITI
 This takes place when a person voluntarily takes
NEGOTIORUM charge of another’s abandoned business or
property without the owner’s authority.
DESTIO (Art. 2144, Civil Code).

Reimbursement must be made to the gestor for

necessary and useful expenses, as a rule.
(Art. 2150, Civil Code).
 a juridical relation which takes place
SOLUTIO when somebody received something
INDEBITI from another without any right to
demand for it, and the thing was unduly
delivered through mistake.
 “Every person criminally liable for a
ACTS OR OMISSIONS felony is also civilly liable.” - Art 100,
PUNISHABLE BY LAW
Revised Penal Code.

What about those who are exempted from

criminal liability?
QUASI- A quasi-delict is an act or omission by
a person which causes damage to
DELICT another in his person, property, or
rights giving rise to an obligation to
pay for the damage done, there being
fault or negligence but there is no
pre-existing contractual relation
between the parties. (Art. 2176)

CULPA AQUILINA
REQUISITES OF QUASI-DELICT
1. There must be an act or omission;
2. There must be a fault or negligence;
3. There must be damage caused;
4. There must be a direct relation or connection of cause and effect between
the act or omission and the damage; and
5. There is no pre-existing contractual relation between the parties.
EXAMPLES (a) While driving a car recklessly, I
injured a pedestrian.

(b) While cleaning my window sill, my

negligence caused a flower pot to
fall on the street, breaking the arms
of my neighbor
ART 1157 Obligations arise from:
(a) law;
(b) contracts;
(c) quasi-contracts;
(d) acts or omissions punished by law
(e) quasi-delicts

IS THE LIST EXCLUSIVE? NO.

ART 1157 Obligations arise from:
(a) law;
(b) contracts;
(c) quasi-contracts;
(d) acts or omissions punished by law
(e) quasi-delicts

IS THE LIST EXCLUSIVE? NO.

EXERCISE.
 Nature and Effect of Obligations
ASSIGNMENT 2.1 Prestations/Objects
2.2 Things required to be delivered
2.3 Accessory obligations
2.4 Compliance with obligations
2.5 Breach of obligations
(a) Delay
(b) Fraud
(c) Negligence
2.6 Fortuitous event
2.7 Remedies

RESEARCH ON THE FF.

NATURE AND EFFECT OF OBLIGATIONS
PRESTATIONS
1 to give
2 to do
The obligation to give may
refer either to (1) a specific or
determinate object or thing,

3 not to do
or (2) to an indeterminate or
generic thing.
 GENERIC THING DETERMINATE THING
A generic thing is one that is indicated only by A determinate or specific thing is one that is
its kinds, without being designated and individualized and can be identified or
distinguished from others of the same kind. distinguished from others of its kind.

When the generic objects are, however,

confined to a particular class, we have a
LIMITED GENERIC OBLIGATION.

In an obligation to deliver a determinate thing,

there are 3 INCIDENTAL OR ACCESSORY
OBLIGATIONS.
 (a) ART 1163
INCIDENTAL The obligation to preserve the thing
with due care
OBLIGATIONS
(b) ART 1164
The obligation to deliver the fruits

(c) ART 1166

The obligation to deliver the
accessions and accessories
 Every person obliged to give something is also obliged to
ART 1163 take care of it with the proper diligence of a good father
of a family, unless the law OR the stipulation of the
parties requires another standard of care.

A good father of a family, or bonos paterfamilias, means a person

of ordinary or average diligence. Anyone who uses diligence
below this standard is guilty of negligence.
What happens when there is failure to
preserve the thing to be delivered?
 The obligation to preserve the thing to be delivered has
GENERAL its sanction in the liability for damages imposed upon
RULE the debtor who fails to exercise the diligence of a good
father of a family in preserving the thing.

If the failure of the debtor to preserve the thing is due to

EXCEPTION no fault or negligence of his, but to fortuitous events or
force majeure (exempted from responsibility)
 EXERCISE.
on diligence and negligence
 DECIDE THE QUESTION OF LIABILITY
FACTS: During the Japanese occupation, A and B sought refuge in the house of
a certain Villena in Batangas, Batangas. When the Japanese neared the place, A
and B hid their valuables in Villena’s dugout. Later, the valuables were lost. A
claimed that he had given his things to B as a deposit, and that therefore B
should be liable for the loss. B denied the existence of such deposit.
 IS HE LIABLE FOR THE LOSS OF THE TRUST FUNDS?
FACTS: A priest, A. de la Peña, was the custodian of certain charity funds (P6,641)
which he deposited together with his personal account of (P19,000) in an Iloilo
Bank shortly before the American invasion of the Philippines. During the
revolution, dela Peña became a political prisoner and his bank deposit was
confiscated on the ground that they were being used for revolutionary purposes.
 IS THE PERSON WHO ORDERED HIM LIABLE?
FACTS: A man ordered a ten-year-old boy, Jose Ronquillo, to climb a high and
rather slippery santol tree, with a promise to give him part of the fruits. The boy
was killed in the act of climbing.
 Issue: Whether or not the mechanical defect constitutes a fortuitous
event which would exempt the carrier from liability
Facts: Herein private respondents purchased first-class tickets from petitioner at
the latter’s office in Cebu City. They were to board M/V Sweet Grace bound for
Catbalogan, Western Samar. Instead of departing at the scheduled hour of
about midnight on July 8, 1972, the vessel set sail at 3:00 am of July 9, 1972 only
to be towed back to Cebu due to engine trouble, arriving there on the same day
at about 4:00 pm. The vessel lifted anchor again on July 10, 1972 at around 8:00
am. Instead of docking at Catbalogan (the first port of call), the vessel proceeded
direct to Tacloban. Private respondents had no recourse but to disembark and
board a ferry boat to Catbalogan. Hence, the suit for breach of contract of
carriage.
 Issue: Whether or not the tire blow-out is a fortuitous event?

Facts: Herein plaintiff was a passenger of the public utility jeepney on course
from Danao City to Cebu City. The jeepney was driven by driven by defendant
Berfol Camoro and registered under the franchise of Clemente Fontanar. When
the jeepney reached Mandaue City, the right rear tire exploded causing the
vehicle to turn turtle. In the process, the plaintiff who was sitting at the front seat
was thrown out of the vehicle. Plaintiff suffered a lacerated wound on his right
palm aside from the injuries he suffered on his left arm, right thigh, and on his
back.

Plaintiff filed a case for breach of contract with damages before the City Court of
Cebu City. Defendants, in their answer, alleged that the tire blow out was beyond
their control, taking into account that the tire that exploded was newly bought
and was only slightly used at the time it blew up.
 The creditor has a right to the fruits of the thing from the
ART 1164 time the obligation to deliver it arises. However, he shall
acquire no real right over it until the same has been
delivered to him

From the time the obligation to deliver a determinate thing arises,

the creditor has only a personal right to the thing itself and to the
fruits thereof. He can only demand that the debtor deliver such
thing and its fruits.
 The obligation to give a determinate thing includes that
ART 1166 of delivering all its accessions and accessories, even
though they may not have been mentioned.

ACCESSORIES: Those things which are used for the preservation

of another thing or more important, have for their object the
completion of the latter for which they are indispensable or
convenient

ACCESSION: includes everything which is produced by a thing or

which is incorporated or attached thereto, either naturally or
artificially.
KINDS OF DELIVERY

1 actual
2 constructive
BREACH OF OBLIGATIONS
 What are the remedies of the creditor
when the debtor fails to comply with his
obligation?
1. demand specific performance (or compliance) of the
obligation. (This is true whether the obligation be generic
or specific)
2. demand rescission or cancellation (in some cases)
3. demand damages either with or without either of the first
two, (a) or (b).
 If a person obliged to do something fails to do it, the same shall be
executed at his cost.
ART 1167 This same rule shall be observed if he does it in contravention of the
tenor of the obligation. Furthermore, it may be decreed that what has
been poorly done be undone.

(a) The court has not discretion to merely award damages to the
creditor when the act can be done in spite of the refusal or
failure of the debtor to do so.
(b) This only applies when the act can be done by other people.
 Can the defendant be held liable for damages?
FACTS: A typewriter owner delivered the same to a repairman for repairs agreed
upon orally. Despite repeated demands, no work was done thereon. Eventually
the repairman returned the machine, unrepaired and worse, several parts were
missing, thus the description “cannibalized and unrepaired.” The owner was
then constrained to have the typewriter repaired in another shop. Owner now
claims damages from the first repairman (for the cost of the repairs and the cost
of the missing parts). Defendant repairman, however, alleges that owner should
have first filed a petition for the court to fix the period within which the job of
repairing was to be finished.
 When the obligation consists in not doing, and the
ART 1168 obligor does what has been forbidden him, it shall
also be undone at his expense.

(a) When it can still be undone: UNDO + DAMAGES

(b) When it can no longer be undone: DAMAGES
 Those obliged to deliver or to do something incur in
ART 1169 delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of
their obligation.

GENERAL RULE
 However, the demand by the creditor shall not
be necessary in order that delay may exist:

EXCEPTIONS 1. When the obligation or the law expressly so

declare; or
2. Where the obligation expressly so provides
3. When time is of the essence of the contract
4. When demand would be useless
3 CLASSES OF
MORA (a) Mora solvendi
(b) Mora accipiendi
(c) Compensatio Morae
 The effects of mora arises only when the delay
is due to causes imputable to the debtor; hence
there is legally no delay if this is caused by
factors not imputable to the debtor.
 (a) That the obligation be
demandable and already
REQUISITES liquidated

(b) That the debtor delays

performance

(c) That the creditor requires the

performance judicially or
extrajudicially
 (a) When the impossibility is caused
DEMAND by some act or fault of the debtor
(b) When the impossibility is caused
USELESS by a fortuitous event, but the
debtor has bound himself to be
liable in cases of such.
 (a) When it has for its object a
EFFECTS OF determinate thing, the delay
places the risks of the thing on
MORA the debtor
SOLVENDI (b) He becomes liable for damages
for the delay
REQUISITES (a) An offer of performance by the
debtor who has the required
OF MORA capacity
ACCIPIENDI (b) The offer must be to comply with
the prestation as it should be
performed
(c) The creditor refuses the
performance without just cause.
 COMPENSATIO MORAE
(a) Neither party incurs in default if the other does
not comply or is not ready to comply in a proper
manner with what is incumbent upon him.
(b) The fulfillment must be simultaneous.
 FROM WHAT TIME SHOULD THE 70-DAY PERIOD BEGIN?
FACTS: Rodriguez and Belgica were co-owners of land in the proportion of 86%
and 14%, respectively. Belgica owed Rodriguez P30,000. To enable Belgica to
pay it, it was mutually agreed that Rodriguez would grant authority to Belgica to
sell or mortgage within 70 days 36% of the land, so that Belgica would be able to
raise the money for payment of the loan.
 CAN THE LANDLORD SUE?
FACTS: A tenant leased a land on the landlord’s promise that the latter would
make improvements on the property leased. When the landlord did not make the
improvements, the tenant sued for specific performance, that is, to make the
landlord do the improvements. Three days later, the landlord sued for unlawful
detainer for non-payment of rent.
CONTRACTS
 A contract is a meeting of minds between two persons
ART 1305 whereby one binds himself, with respect to the other, to
give something or to render some service.

“A juridical convention manifested in legal form, by virtue of which

one or more persons bind themselves in favor of another or others,
or reciprocally, to the fulfillment of a prestation to give, to do, or not
to do.” -Sanchez Roman
 CAN PEREZ ASK FOR COMPENSATION?
FACTS: Perez on various occasions rendered services as interpreter of English to
Pomar. Perez obtained passes and accompanied Pomar upon his journeys to
some of the towns in Laguna. Pomar then denied having solicited the services of
the Perez but the latter contends that such services were solicited by the former.
Perez now asks for reasonable compensation for said services.
 CAN PEREZ ASK FOR COMPENSATION?
Held: Whether the services were solicited or offered, the fact remains that the
plaintiff rendered to the defendant services as interpreter. As it does not appear
that he did this gratuitously, the duty is imposed upon the defendant, he having
accepted the benefit of the service, to pay just compensation therefor, by virtue
of the innominate contract of facio ut des impliedly established.
 CAN PEREZ ASK FOR COMPENSATION?
Held: Whether the services were solicited or offered, the fact remains that the
plaintiff rendered to the defendant services as interpreter. As it does not appear
that he did this gratuitously, the duty is imposed upon the defendant, he having
accepted the benefit of the service, to pay just compensation therefor, by virtue
of the innominate contract of facio ut des impliedly established.

A CONTRACT CAN EXIST BY IMPLICATION.

A contract is a convention or agreement of
wills but not every convention is a contract;
a contract is limited to agreements
which produce patrimonial liabilities.
Contracts of Adhesion.
 Contracts of Adhesion:
There are cases in which one party has
already a prepared form of contract,
containing the stipulations he desires, and
he simply asks the other party to agree to
them if he wants to enter into the contract.

IS THIS VALID?
CHARACTERISTICS
OF CONTRACTS:
1. Obligatory Force
2. Mutuality
3. Relativity
Sample cases for relativity
FACTS: A was a stockholder in a mutual building and loan association.
Her shares matured in 1940, and from that time, she ceased to be a
stockholder, and instead became its creditor for the value of her shares.
At this point, the officers and members of the Board of Directors entered
into an agreement with the Central Bank concerning the revaluation of
the shares.

Issue: Is A bound by the act of the Corporation (Association)?

FACTS: A shipped his cargo in B’s vessel. B and C’s company entered
into a contract for C’s company to unload the cargo from the ship’s hold.
In the lifting operations, A’s cargo was damaged.

Issue: May A successfully sue C’s company for damages?

FACTS: A leased his property to B. B subleased part of the premises to C.
B violated the conditions of the lease, so A wanted to rescind the lease
contract. C objected because if the lease is cancelled, the sublease
would naturally be affected.

Issue: Will C’s objection prosper?

 The contracting parties may establish such stipulations, clauses, terms
ART 1306 and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.

(a) To enter into contracts freely and without restraints, is one of

the liberties guaranteed to the people of the state
MORALS
Morals may be considered as meaning good
customs; or those generally accepted principles of
morality which have received some kind of social
and practical confirmation.

Any contract which has an immoral purpose is

contrary to good customs.
 IS THE REMEDY PRAYED FOR BY A VALID?
CAN B DEMAND FOR REMUNERATION?

B borrowed some money from A, and entered the service of A as a

servant, promising to remain as such without remuneration until she
could find money with which to pay what she had borrowed. A seeks to
receive the amount of the loan, because B left the house of A without
having paid the loan borrowed, praying that until the amount of the loan
is paid, B be obliged to render services as servant without
remuneration. B, on the other hand, demanded payment of wages for the
services rendered.
 RESEARCH:
(a) Rescissible contracts: 1 and 2
(b) Voidable contracts
(c) Unenforceable Contracts
(d) Void and inexistent Contracts

EXPLAIN AND PROVIDE AN EXAMPLE FOR EACH

ELEMENTS OF A
CONTRACT Art. 1318. There is no contract unless the following
requisites concur:

1. Consent of the contracting parties;

2. Object certain which is the subject matter of
the contract;
3. Cause of the obligation which is
established. (1261)
 (a) It is the manifestation of the
meeting of the offer and the
CONSENT acceptance upon the thing and
the cause which are to constitute
the contract. (Art. 1319, 1st par.)
(a) Facts: A offered to sell B a particular car for P2,000,000. Before
B could consent, A withdrew the offer.

(b) Issue: Was A allowed to do so?

 (a) An offer that must be CERTAIN.
MEETING OF (b) An acceptance that must be
unqualified and absolute
THE MINDS
DEFECTIVE CONTRACTS
Rescissible.
A contract that has caused a particular
damage to one of the parties or to a third
person, and which for equitable reasons may
be set aside even if it is valid.
Voidable or Annullable.
A contract in which the consent of one party is
defective either because of want of capacity
or because it is vitiated, but which contract is
valid until set aside by a competent court.
Unenforceable.
A contract that for some reason cannot be
enforced, unless it is ratified in the manner
provided by law.
Void.
A contract which is an absolute nullity and
produces no effect, as if it had never been
executed or entered into.
More on Rescissible
Contracts
 Contracts validly agreed upon may be rescinded in the
ART 1380 cases established by law.

Rescission is a remedy granted by law to the contracting parties

and even to third persons, to secure the reparation of damages
caused to them by a contract, even if this should be valid, by
means of the restoration of things to their condition at the moment
prior to the celebration of said contract.

NOTE: A VOIDABLE CONTRACT MAY ALSO BE

RESCINDED
RESCISSION OF RECIPROCAL RESCISSION OF CONTRACTS
OBLIGATION
Both presuppose contracts validly entered into and existing
Both require mutual restitution when declared proper.
 RESCISSION OF RECIPROCAL RESCISSION OF CONTRACTS
OBLIGATION
May be demanded only by a party to the May only be demanded by a third party
contract prejudiced by the contract

May be denied by the court when there Such reason does not affect the right to
is sufficient reason to justify exrension ask for rescission of contracts
of time to the defendant in which to
perform

Non-performance is the only ground There may be a lot of grounds

Applies only to reciprocal obligations Applies whether the contract produces

unilateral or reciprocal obligations and
even when the contract has been fully
fulfilled
REQUISITES OF RESCISSION
(1) The contract must be a rescissible contract
(2) THe party asking for rescission must have no other
legal means to obtain reparation for the damages
(3) The person demanding rescission must be able to
return whatever he may be obliged to restore.
(4) The thing which are the object of the contract must not
have passed legally to the possession of a third person
acting in good faith
(5) The action for rescission must be brought within the
prescriptive period of 4 years.
 Rescindible contracts are not void, and
until set aside in a rescissory action they
are legally effective.
RESCISSIBLE CONTRACTS:
(1) When there is lesion of more than ¼ of the value of the
things which are object thereof (guardians &
absentees).
(2) Those undertaken in fraud of the creditors
(3) Things under litigation if entered without the knowledge
and approval of the litigants or of a competent judicial
authority
(4) All other contracts specially declared by law to be
subject to rescission
NOTE: A VALID CONTRACT CAN BE RESCINDED ONLY
FOR LEGAL CAUSE.
 To give rise to rescission, the lesion must
be known or could have been known at the
time of making the contract, and not due to
circumstances subsequent thereto or
unknown to the parties.
A guardian is authorized only to manage the estate
of his ward; hence, he has no power to dispose of
any portion thereof without approval of the court.
 Rescission creates the obligation to return the things
which were the object of the contract (with fruits and
ART 1385 interest). It can only be carried out when he who demands
rescission can return whatever he may be obliged to
restore.

Rescission will not take place when the things which are the object
of the contract are legally in the possession of third persons who
did not act in bad faith.

What action can be taken then by the person who

suffered the damages?
 The action to claim rescission must be commence within
ART 1389 4 years.