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OBLICON Jurado Reviewerpdf PDF
OBLICON Jurado Reviewerpdf PDF
Pelayo vs Llauron-obligation of support between Art. 1160. Obligations derived from quasi-
spouses. contracts shall be subject to the provisions of
Art. 2014 obligation of the winner in a gambling to Chapter 1, Title XVII, of this Book. (n)
return the money to the one who lost.
is voluntary in character and not to one which is ◦ effects of the act are definite in
involuntary (fortuitous event) character.
◦ physical and legal impossibility
**Only a determinate thing can be destroyed by a • to ask for damages (Art. 1170)
fortuitous event, generic things can never perish. ◦ mora is not applicable
(genus nunquam peruit)
**In obligation not to do, the obligation is either
Art. 1167. fulfilled or not fulfilled
Obligation to Do
(positive personal obligation)
Art. 1169.
**If the obligor fails to do what he has obligated Delay in the fulfillment of obligation
himself to do, the obligee can have the obligation
performed or executed at the expense of the latter
Voluntary Involuntary
and recover damages .
Default (mora), Inability to comply
**This type of obligation recognizes individual deceit/fraud (dolo), because of an
freedom, the obligor cannot be compelled to do negligence (culpa), or in unforeseen event, or
what he has obligated himself to do. manner that which though foreseen
Remedy for obligee/creditor: performance of the contravenes the tenor is inevitable.
obligation at the expense of the obligor thereof
Obligor is liable for Obligor has no liability
**If the object of the prestation is the personal and
damages for damages
special qualification (i.e. artist) of the obligor, the
remedy for the obligee is to recover damages
under Art. 1170 of the Civil Code. General Rule: Unless there is no demand there is
no delay.
Rights available to the obligee
(in case there has been a performance of the ***In reciprocal obligation, the moment the other
obligation but in contravention of the tenor thereof) party complied with his obligation failure to comply
• to have the obligation performed at the will cause the other party to be in delay
expense of the obligor
Default(mora)- signifies delay in the fulfillment of
• to ask that what has been poorly done be
an obligation with respect to time.
undone
• to recover damages for breach of
***The mere stipulation of a date when the
obligation
obligation is due does not by itself dispense with
Case:
the necessity of a demand, unless there is an
Chavez vs Gonzales
express stipulation (either by law or contract) that
Tanguilig vs Court of Appeals
the debtor will incur delay without need of a
demand.
Article 1168.
Kinds of mora
Obligation NOT to Do
• mora solvendi- default on the part of the
(negative personal obligation)
debtor
-fulfilled or realized so long the obligor does not do
kinds of mora solvendi
what is forbidden
◦ ex re-refers to obligation to give
Remedy for obligee in case of breach: ◦ ex persona- refers to obligation to do
• to have it undone at the expense of the • mora accipiendi- default on the part of the
obligor (Art. 1168) creditor to accept the delivery of the object
exception (cannot be undone): of the obligation
The moment the other party has complied with his ***What is renounced is the effect of fraud or the
obligation, delay on the other begins. right of the party to indemnity.
Exception: If there are different dates for the
performance of the obligation, apply the general Extent of recoverable damages:
rule in 1169 (demand is needed). • all damages which may be attributable to
the breach or non-fulfillment of the
(Art. 1170-1173) obligation, regardless of whether such
consequences are natural or unnatural,
Fraud (dolo)- consist in the conscious and probable or improbable, foreseeable or
intentional proposition to evade the normal unforeseeable.
fulfillment of an obligation • Moral and exemplary damages
***res ipsa loquitur ***12% interest per annum from the time the
judgment has become final if t.
***The caso fortuito must me the SOLE and
proximate cause of the incident, to avail of it as a (Art. 1176)
defense. ***There is a presumption that the interests has
been paid if on the face of the receipt that the
***Co-mingling negligence on the part of the creditor issued to the obligor that the principal has
obligor forfeits the defense of caso fortuito. been paid without reservation with respect to the
interest. (in accordance with Art. 1253)
Essential conditions for Art. 1174 to apply:
1. that the event must be independent of the ***If the debtor is issued a receipt by the creditor
will of the obligor; acknowledging payment of a latter installment
2. that the event must be either foreseeable without reservation to prior installments, there is
or inevitable; also a presumption that such prior installments
3. that the event must be of such a character have already been paid.
as to render it impossible for the obligor to
fulfill his obligation in a normal manner; ***For the presumption to arise, the receipt should
4. that the obligor must be free from any clearly state that the payment is for the installment
participation in the aggravation of the injury for a latter installment or as payment for the
to the obligee.
***The precept in the first sentence of Art. 182 is ***If the impossible condition is attached to a
applicable only to a suspensive condition. Hence, simple donation or testamentary disposition, the
Resolutory + Potestative = VALID obligation and condition is not imposed, although the donation
condition (explanation at pp.114, Jurado) or testamentary disposition itself is valid.
***to avoid illusory obligation- Reason for the ***Total Absence of seriousness- reason why the
invalidity of potestative condition dependent on the law invalidate the impossible condition & the
debtor. dependent obligation.
EXCEPTION: gratuitous disposition/donation;
***Payment for previous indebtedness/pre-existing because the moving force here is the generosity of
obligation although the condition is purely the donor.
potestative, affects the validity of the condition but
keeps the validity of the obligation because the ***The impossibility of the condition should be
obligation is not dependent upon the condition. determined at the time the obligation is made or
constituted.
4. Positive vs Negative
Simple potestative - valid; presupposes not just (Art. 1185)
the manifestation of the will but also the realization Positive Negative
of an external act.
condition involves the condition involves the
pure potestative – void; envisioned by Art. 1182 performance of an act omission of an act.
The event will happen The event will NOT
3. Possible vs Impossible
Right of rescission- belongs to the injured party ***The injured party can still seek the rescission or
alone. resolution of the obligation even if he has opted to
-must be invoked judicially by filing the choose the fulfillment of such obligation if
proper action of rescission. fulfillment should become impossible.
– not absolute; the court is given the Case: Ayson-Simon vs Adamos
discretionary power to fix a period
within which the obligor in default may ***In awarding damages...
be permitted to comply with what is In case or only those elements of
incumbent upon him. rescission damages can be admitted that
– implied in reciprocal obligations(Art. are compatible with the idea of
1191, par. 1) rescission.
In case of specific Only the elements of damages
***If the contract contains a resolutory provision by
performance can be admitted which are
virtue of which the obligation may be canceled or
compatible with the idea of
extinguished by the injured party in case of breach
specific performance.
of obligation, judicial permission to cancel or
rescind the contract is no longer necessary. But the
Court may confirm such extra judicial rescission. Effects of Rescission:
• it is the duty of the court to require the
***If there is no express provision of rescission in parties to surrender whatever they may
the contract, rescission should be invoked have received from the other (without
judicially. prejudice to the obligation of the party who
was not able to comply with what is
***The termination of a contract must not be incumbent upon him).
contrary to law, morals, good customs, public • Rescission can no longer be demanded
order, or public policy. when he who demands is no longer in the
position to return whatever he may be
***Notice is always important in rescission so the obliged to restore; neither can it be
alleged infractor can question the propriety of the demanded when the thing which is the
rescission. object of the contract is already in the
possession of a 3rd party who obtained it in
***Art. 1191 is not applicable to contracts of good faith.
partnership. There are special provisions that ◦ Remedy for the latter will be an action
govern the latter, thus the general provision will not for the transfer or conveyance for
prevail. The same applies to sales of real property damages.
(Recto Law) and sales of personal property by rd
• If 3 person obtained the property in bad
installment (Maceda Law). faith, the injured party can still go after the
***It is not necessary that the creditor will expressly immediately gives new ones equally
ask in the complaint for the court to fix the period, satisfactory;
such may be granted although the complaint does (a) there is a difference between effects of
not ask for such relief. impairment and effects of
disappearance
***Two ultimate facts that need to be alleged in the 1. if the guaranty or security is
complaint to describe an obligation with an impaired through the fault of the
indefinite period. debtor, he shall lose his right to the
1. Facts showing that the contract was benefit of the period;
entered imposing on one of the parties an 2. if it is impaired without his fault, he
obligation in favor of the other shall retain his right;
2. facts showing that the performance of the 3. if the guaranty or security
obligation was left to the will of the obligor, disappears through any cause,
or clearly showing, or from which an even without the fault of the debtor,
inference can be reasonably drawn that a he shall lose his right to the benefit
period was intended. of the period
4. in either case of impairment or
***The action recognized by Art. 1197 may also disappearance, the debtor will not
prescribe like any ordinary civil action. (Gonzales lose his right to period if he gives a
vs Jose) new guaranty or security which is
equally satisfactory.
Extinguishment of Debtor's right to Period (4) When the debtor violates any undertaking,
(Art. 1198) in consideration of which the creditor
agreed to the period;
(1) When after the obligation has been
contracted, he becomes insolvent, unless (5) When the debtor attempts to abscond.
he gives a guaranty or security for the debt; (a) Mere attempt of the debtor disappear
(a) insolvency needs no judicial declaration or run away from his obligation.
(b) includes any case in which it would be
impossible financially for the debtor to Sec. 3. - Alternative and Facultative Obligations
comply with his obligations
(c) such insolvency must not be pre- 5. Conjunctive vs Alternative
existing; arose after the constitution of Conjunctive Alternative
the obligation
(d) if there is a guaranty or security for the there are several there are several
debt, the debtor, in spite of insolvency, conditions, all of which conditions but only one
does not lose his right to the period. must be realized must be realized.
General rule: The right of choice belongs or ***Debatable: Can the creditor to whom the
pertains to the debtor. selection has been duly communicated impugn
such selection?
***Once the debtor has made the choice, and such
choice is duly communicated to the creditor, the
obligation becomes simple. ***Once the choice is made by the debtor (or
creditor, or 3rd person) and such selection has been
communicated, the obligation ceases to be
Exceptions: alternative. The loss of the object of prestation
• when the right of choice belongs or chosen and communicated extinguishes the
pertains to the creditor liability.
• when it has been expressly granted to a
third person. (Art. 1202)
Limitation to the right of choice: ***When only one prestation is practicable, the
• debtor cannot choose those prestations or debtor loses his right of choice altogether. The
undertakings that are impossible, unlawful, obligation becomes simple.
or which could not have been the object of
the obligation. Art. 1202 Art. 1200, par. 2
Only one prestation There are still two or
“Prestations which could not have been the object which can be performed more prestations that
of prestation” can be performed.
• undertakings that are not included among
others those from which the obligor may Obligation is converted The obligation is still
select, or to a simple one alternative because the
• those which are not yet due and because the debtor debtor can still exercise
demandable at the time the selection is loses his right of his right of election.
made, or election
• those by reason of accident or some other
cause, have acquired a new character
distinct or different from that contemplated ***When the debtor's right of choice is rendered
by the parties when the obligation was ineffective through the creditor's fault, the only
constituted. possible remedy for the debtor is to bring an action
for the rescission of the contract with damages.
***Par. 2 of Art. 1200 contemplates a case in which (Art. 1203)
the right to choose or select is NOT lost or
extinguished altogether. Art. 1204 Art. 1205
Right of choice of Right of choice of
debtor Creditor
(Art. 1201)
***Applicable to cases in which the choice is General rule exception
dependent on the debtor, creditor, or third person.
claim from his co-debtors the share which the creditor or creditors:
corresponds to them, with interest for the payment
already made. Defenses available to a solidary debtor
• defenses derived from the very nature of
***the right is not available to a debtor who makes the obligation
the payment after the obligation has prescribed or ◦ payment or performance; res judicata;
has become illegal. prescription; those which invalidate the
contract such as mistake, violence,
***The interest shall be computed not from the time undue influence, fraud, etc...
payment was made, but from the time the debt • defenses personal to him or pertaining to
became due. his own share
◦ minority; insanity, etc..
If one of the solidary debtors become insolvent, his • defenses personal to the others, but only
share shall be borne by all his co-debtors, in as regards that part of the debt for which
proportion to the debt of each. (par. 3, Art. 1217) the latter are responsible.
◦ Merely a partial defense
(Art. 1219 – 1221)
Sec. 5 – Divisible and Indivisible Obligations
Effect of Loss or Impossibility of Performance
1. NOT due to the fault of the solidary
6. Divisible vs Indivisible
debtors
• Obligation is extinguished Divisible Indivisible
2. Due to the fault of one of the solidary condition is susceptible condition is not
debtors of partial realization or susceptible to partial
• the obligation is converted into an performance without the realization or
obligation of indemnity for damages, obligation in essence performance because,
but the solidary character of the being changed. otherwise, the essence
obligation remains of the obligation will be
3. Fortuitous event changed.
• the obligation is converted into an If separated into parts, If separated into parts,
obligation of indemnity for damages, its essence is not its essence is changed
but the solidary character of the changed or its value is or its value decreased
obligation remains not decreased disproportionately.
disproportionately,
unjust enrichment – reason or philosophy behind because each of the
Art. 1220 parts into which it is
divided are
***a solidary debtor who paid the entire amount of homogeneous and
the obligation does not step into the shoes analogous to each
(subrogation) of the creditors because he does not other as well as the
acquire the same right to collect the entire amount thing itself.
of the obligation from his co-debtors. He is only
entitled to the proportionate share of each of the
co-debtors. The divisibility of the [performance] obligation IS
NOT divisibility of the thing or the prestation which
(Art. 1222) constitutes the object of the obligation.
***The creditor/s may proceed against any of the
solidary debtors or all of them simultaneously for ***The divisibility or indivisibility of the object itself
the payment of the obligation, but whether only one is a very important factor, probably the most
or all of the solidary debtors are sued jointly, any important, in determining whether the prestation
soliadary debtor may interpose against the claim of which constitutes the object of the obligation is
susceptible to partial performance, or not.
(Art. 1226)
Sec. 6 – Obligations with Penal Clause ***Penalty may be considered as reparation or
– one in which an accessory undertaking is substitute for damages or as a punishment in case
attached for the purpose of insuring its of breach of the obligation.
performance by virtue of which the obligor
bound to pay a stipulated indemnity or Reparation – the question of damage is resolved,
perform a stipulated prestation in case of since the stipulated indemnity or prestation
breach. represents a legitimate estimate made by the
– Penalty or penal clause is an accessory contracting parties of the damages caused by the
obligation attached to the principal breach of the obligation.
obligation – proof of actual damage is not needed
– general rule
Purposes of penalty:
• insure the performance of the obligation Punishment – the question of damage is not yet
(funcion coercitiva o de garantia); general resolved
purpose – the right to damages, aside from
• liquidate the amount of damages to be penalty, still subsists
awarded to the injured party in case of – if the injured party desires to recover the
breach of the principal obligation (funcion damages actually suffered by him in
liquidatoria); compensatory; pre-agreed addition to the penalty, he must prove such
amount for the damages damages.
• to punish the obligor in case of breach of – Exception to the general rule
the principal obligation (funcion
estrictamente penal); punitive General Rule: the penalty is fixed by the parties as
a compensation or substitute for damages in case
Kinds of penalty of breach.
As to origin Except:
1. when there is a stipulation to the contrary
Legal Conventional 2. when the obligor is sued for refusal to pay
Constituted by law Constituted by the agreed penalty
3. when the obligor is guilty of fraud
expenses shall be borne by him. Rule: the debtor cannot compel the creditor to
accept a check or draft. Except:
(Art. 1248) • when the document has been cashed
3 conditions or characteristics of payment: • when it had been impaired through the fault
• identity – only the prestation agreed upon of the creditor.
and no other must be complied with
• completeness – the thing or service in (Art. 1250)
which the obligation consists must be ***In case of extraordinary inflation or deflation, the
completely delivered or rendered value of the currency at the time of the
• indivisibility – the payment or performance establishment of the obligation would be the basis
must be indivisible of payment.
Legal tender – currency which may be used for the Subsection 1. - Application of Payment
payment of all debts, whether public or private
– in the Phil., legal tender would be notes (Art. 1252)
and coins issued by the Central Bank. application of payment- designation of the debt
– Promissory notes payable to order or bills to which the payment must be applied when the
of exchange, checks, etc. are not legal debtor has several obligations of the same kind in
tender favor of the same creditor.
Manresa: the rule is obligatory because it is more ***If the debtor makes a proper AP, but the creditor
in consonance with justice. refuses to accept it because he wants to apply it to
another debt, such creditor incurs in delay (mora
Supreme Court: such rule is only directory and not accipiendi)- Tolentino
mandatory. Applies only in the absence of a verbal – pro rata rule is applied
or written contract.
Case: Paculdo vs Regalado
guarantor or a solidary co-debtor...not just creditor that he will not accept any tender of
to the creditor) in the fulfillment of the payment.
obligation – a formal act
- to allow the creditor to reconsider his #4 protection to the debtor, to avoid tender of
refusal; to show the debtor's serious payment to the wrong individual
desire to extinguish his obligation
4. that the thing or amount due has been ***When valid tender of payment is made, the
placed at the disposal of judicial authority obligation is not extinguished unless it is completed
– deposited with the Clerk of Court by consignation.
usually accompanied by the filing of the Effect: exemption of the debtor from payment of
complaint for action for interest and/or damages
consignation/action for specific ***Consignation is applicable to both movable and
performance/action for cancellation of immovable objects.
the obligation.
5. after consignation has been made, the Effect of tender of payment:
persons interested in the fulfillment of the • stops the accrual of interest
obligation had been notified thereof. • release the debtor from liability over the
– reason: to enable the creditor to thing due
withdraw the goods or money • ask the judge to order the cancellation of
deposited. the obligation
– Effects: see Art. 1260-1261 • preserve the right of the debtor (Francisco
Case: (Ponce de Leon vs Syjuco, Inc.) vs Bautista)
• made before the creditor has accepted the effect of fortuitous event: extinguishment of the
consignation or before judicial declaration, obligation, Exceptions:
the obligation remains in force • when by law, the debtor is still liable even
• made with the consent of the creditor, the for fortuitous events
creditor loses every preference which he • when stipulated by the parties
may have over the thing. Solidary co- • when the nature of the obligation requires
debtors, guarantors and sureties, shall be the assumption of risk
released. • when the loss of the thing is due partly to
◦ The solidary co-debtors are released the fault of the debtor
only with regard to their solidarity but • when the loss of the thing occurs after the
not with their respective share in the debtor has incurred in delay
obligation • when the debtor promised to deliver the
◦ the guarantors and sureties are same thing to 2 or more persons who do
released from the obligation since the not have the same interest
obligation could have been • when the obligation arises from a criminal
extinguished if not for the consent of offense
the creditor to withdraw the thing from • when the obligation is generic
consignation;
(Art. 1263)
Prayer of the creditor that the thing be adjudicated loss of a generic thing does not extinguish the
in his favor is already an acceptance on the part of obligation because generic things do not perish
the creditor, the debtor cannot withdraw the thing (genus nunquam peruit)
anymore.
effect of loss in reciprocal obligation: if one of
***For immovable objects or other real properties, the reciprocal obligation is extinguished the other
the court will assign a receiver to consider the must also be extinguished. (Tolentino)
object consigned or deposited.
(Art. 1264)
Section 2. – Loss of the Thing Due court granted discretion to determine whether a
Loss of the thing due- impossibility of compliance partial loss or destruction of the thing is important
with the obligation through any cause as to extinguish the obligation
– impossibility of performance
• perishes (Art. 1265)
• goes out of commerce presumption of fault on the part of the debtor if the
• disappears thing is lost while in his possession. In such case,
the obligation is NOT extinguished.
(Art. 1262) Such presumption does not apply in case of
effect of loss in obligation to give a determinate earthquake, flood, storm, or other calamity.
thing: extinguishment of the obligation
requisites: (Art. 1266)
• thing lost must be determinate impossibility of performance in obligations to do
• the thing was lost without the fault of the extinguishes the obligation.
debtor (if it is lost through the fault of the
debtor, the obligation is converted into an ***Same requisites provided in Art. 1262
obligation to indemnify the creditor for
damages.) ***Legal and physical impossibility must have
• the thing lost before the debtor has occurred AFTER the constitution of the obligation.
incurred in delay (if it is lost after the debtor 2 causes of impossibility
has incurred in delay, the debtor will be • legal impossibility- (direct) when the law
held liable for indemnity for damages) prohibits the performance or execution of
the work agreed upon (immoral or
dangerous) justification.
- (indirect) the law imposes duties of a
superior character upon the obligor which Offer Consignation
are incompatible with the work agreed (Art. 1268) (Art. 1256-1261)
upon.
• Physical impossibility – arises principally Extinguishment of the Payment of the
from the death of the obligor, when the act obligation through loss obligation.
to be performed requires his personal by a fortuitous event
qualifications, or from the death of the Necessary that the Offer is just a step to the
obligee, when the act can be of possible creditor refused to payment.
benefit only to him. accept the offer of the
- it can also arise from mere accident, or debtor without just
from the acts of the debtor himself in which cause to release the
there is no fault, or from the acts of 3rd latter from liability
person affecting the debtor's capacity
Effect of creditor's refusal without just cause:
***Seldom that impossibility of performance may • debtor may make a consignation of the
arise in obligation not to do. in rare exceptional thing and thereby relieve himself of further
cases, Art. 1266 is also applied. liability
• keep the thing in his possession, in which
***Cannot be applied to obligations to give
case, the obligation still subsists, but if the
(Case: PNCC vs CA)
thing is lost through fortuitous event, Arts.
(Art. 1267)
1262-1265 shall govern.
relative impossibility- service has become so
difficult as to be manifestly beyond the
Art. 1268 is not applicable to cases where an offer
contemplation of the parties, the court should be
is not possible, since offer by the debtor is an
authorized to release the obligor in whole or in
essential requisite.
part.
(Art. 1269)
Service = performance
***All the rights of action which the debtor may
have against 3rd persons by reason of the loss of
rebus sic stantibus – the parties stipulate in the
the thing are transmitted by operation of law to the
light of certain prevailing conditions and once these
creditor.
condition cease to exist, the contract also ceases
Transmission made from the moment the
to exist.
obligation is extinguished.
Case: Naga Telephone Co. et al. vs. CA
Example:
• insured object which is lost or destroyed,
(Art. 1268)
creditor may collect from the insurer.
Applicability:
• Expropriated land, the creditor may collect
– obligation of restitution of a certain
the compensation due by reason of the
determinate thing on the part of the person
expropriation.
criminally liable
– cases where such obligation arises by
virtue of reparation or indemnification
– persons who are principally and
subsidiarily liable
***the debtor shall not be exempted from the
payment of the price of the thing, whatever may be
the cause of the loss. except:
– when he offered the thing to the obligee
and the latter refused to accept it without
agreement whereby the obligation to pay is effect in obligation with a term or period:
converted into a loan made to the vendee • postponement of term or period – there is
or lessee, the result is real or objective no novation
novation ◦ reason: there is no incompatibility
• change in object – e. g. certain amount is • reduction of the duration of the term – there
due or any change whereby the obligation is a novation
to pay is converted into an obligation to ◦ reason: clear case of incompatibility
render a personal service. Similar with and change of the principal condition of
dation in payment. the old obligation.
• change in principal conditions of the
obligation – only those changes of an (Art. 1293)
essential character can effect a novation of novation by substitution of the debtor – personal
the previous or original obligation. novation
• effected with the consent of the creditor
(Art. 1292) ◦ expromision – effected with the
***refers to forms of novation consent of the creditor at the instance
of the new debtor even without the
novation by presumption has never been favored knowledge or against the will of the old
debtor
animus novandi – intent to substitute a new ▪ substitution with the knowledge and
obligation for the old one; must be clearly consent of the old debtor
established before we can say that there is a
▪ substitution without the knowledge
novation resulting in the extinguishment of the old
and consent of the old debtor
obligation and in the creation of a new one.
◦ delegacion - effected with the consent
(Delegatus debitor est odiosus in lege)
of the creditor at the instance of the old
debtor with the concurrence of the new
Express novation- declared in unequivocal terms:
debtor; refers to the substitution of
• clearly results from the agreement, or
debtors effected when the original
• shown by full discharge of the original debt debtor offers and the creditor accepts a
otherwise the old contract remains in force and the 3rd person who consents to the
new one is added to it substitution
▪ requisites: initiative of the
Implied novation – test of incompatibility
substitution must emanate from the
***WON the 2 obligations can stand together, each
original debtor
having its own independent existence.
▪ consent of the new debtor
No incompatibiliy = No novation ▪ acceptance by the creditor
• reiteration or ratification of the old contract
difference according to Manresa
with slight modifications or alterations
• 2nd contract provides for another method of Expromision Delegacion
payment Initiative for the change Initiative for the change
• 2nd contract provides for additional security does not emanate from emanates from the
• 2nd contract provides for postponement of the debtor debtor
the date of payment
may be made without Must be made with the
• creditor receives another guaranty or the consent of the concurrence of the
accepts payment from 3rd person, so long debtor since it consists original debtor since it is
as there is no agreement that the principal in a 3rd person he who offers the
debtor shall be released from the assuming his obligation substitution
obligations
• filing of a surety bond Substitution may be consent of the debtor
effected even without (delegante), creditor
the consent of the (delegatorio), and 3rd ◦ new debtor can demand the
original debtor person (delegado) to be reimbursement of the entire amount
substituted is necessary which he has paid, and at the same
time be subrogated in all of the rights of
difference according to the case Quinto vs People: the creditor
Expromision Delegacion (Art. 1294-1295)
Initiative does not come The debtor offers, the Effect of non-payment of the new debtor:
from the debtor and creditor accepts a 3rd general rule: novation by substitution of the debtor
may be made without person who consents to whether by expromision or delegacion has the
his knowledge the substitution and effect of releasing the original debtor from his
assumes the obligation obligation to the creditor, and the same time of
substituting the new debtor thereto.
***In either mode of substitution, the consent of
the creditor is INDISPENSABLE. ***Art. 1294 is applicable only to expromision.
- no time nor form prescribed when such consent • If the substitution is without the knowledge
must be given and ow it must be given. or against the will of the original debtor, the
new debtor's insolvency SHALL NOT
Effect of payment by new debtor: REVIVE the original debtor's liability to the
• old debtor must reimburse to the new creditor
debtor whatever benefits he may have • if the substitution is with the knowledge and
derived therefrom. consent of the original debtor, the new
• Expromision- relationship shall be debtor's insolvency SHALL REVIVE the
regulated by the rules regarding payment original debtor's liability to the creditor
of a debt by a 3rd person
◦ with debtor' consent – new debtor can ***Art. 1295 is applicable only to delegacion.
demand the reimbursement of the Right of action of the creditor against the original
entire amount which he has paid, and debtor can no longer be revived EXCEPT in the
at the same time be subrogated in all of ffg. cases:
the rights of the creditor • when the insolvency of the delegado was
◦ without the knowledge and consent of already existing and of public knowledge at
the debtor (payment without knowledge the time the delegante delegated his debts
and consent)– new debtor can demand • when such insolvency was already existing
reimbursement from the old debtor only and known to the original debtor when he
insofar as the payment has been delegated his debt.
beneficial to such debtor, no
subrogation (Art. 1296)
◦ without the knowledge and consent of applicable to:
the debtor (payment with knowledge • objective novation
and consent) – new debtor can • novation by substituting the person of the
demand the reimbursement of the debtor
entire amount which he has paid, and
at the same time be subrogated in all of effect upon accessory obligations:
the rights of the creditor • it may subsist if there is a stipulation
• Delegacion – relationship between the constituted in favor of a 3rd person which
parties shall be regulated by their may be demanded separately from the
agreement; in the absence thereof, the principal obligation, although subordinated
relationship shall be governed by the rules to the latter
regarding payment of a debto by a 3rd ◦ pour autrui – beneficial stipulation;
person with the debtor's consent. stipulation in a contract, clearly and
deliberately conferred by the
General rule: Perfection of a contract is produced Unenforceable contracts are susceptible of either
by mere consent. express or implied ratification by the one in whose
Exception: behalf it was executed before it is revoked by the
• contracts of commodatum, pledge, and other contracting party.
deposit are perfected upon delivery of the
object by one of the contracting parties. CHAPTER 2
ESSENTIAL REQUISITES OF CONTRACTS
consensuality – some submit that this is one of
the fundamental characteristic of a contract But (Art. 1318)
this does not hold water in those Real contracts bases of contract:
which requires delivery before its perfection. elements law will of the
contracting
Consensual contracts – perfected by mere parties
consent of the parties
real contracts – perfected after delivery of the Essential are... Imposed Conformed to.
object (pledge, commodatum, depositum, mutuum) Natural are... presumed Accepted or
repudiated
It is only when there is a complete manifestation of
Accidental are... Authorized established
the meeting of the offer and the acceptance upon
the thing and the cause which are to constitute the
contract. Sec. 1. – Consent
3. the consent must be intelligent, free, If it is founded upon a consideration, the offeror
spontaneous and real (Art. 1330-1346) cannot withdraw his offer
3. deaf-mutes who do not know how to Based upon Based upon public policy
write – there is no way that the stipulations subjective and morality
in the contract be explained to them to circumstances of
insure that they understand what they are certain persons which
entering into. compel the law to
4. other incapacitated persons suspend the person's
◦ married woman in cases specified by right to contract
law
incompetent (Sec. 2 of Rule 92 of the New Rules Effect is a Voidable Effect is a void contract
of Court) includes: contract (Art. 1390) (Art. 5 & Art. 1409 No. 7
of the Civil Code)
• persons suffering from civil interdiction
• hospitalized lepers
• prodigals (Art. 1330)
vices which may vitiate consent:
• deaf and dumb who are unable to read
vices of the will (vicios de la formacion de la
• who are of unsound mind
voluntad)
• those who by reason of age, weak mind or
• mistake
other similar cases, cannot, without aid
• violence
from other, take care of themselves and
manage their property becoming thereby • intimidation
easy prey fro deceit and exploitation. • undue influence
• fraud
these incapacitated persons can enter into a vices of declaration (vicios de la declaracion)
contract only through a parent or guardian. • simulation of contracts
Unenforceable contracts – when both parties are ***in the absence of the 1st 3 requisites, the
incapacitated to give consent.. contract is voidable.
(Art. 1328-1329) ***in the absence of the 4th requisite, the contract
contracts entered into during a lucid interval are may be either void ab initio or valid as far as the
valid. real agreement is concerned, depending upon
whether the simulation is absolute or relative.
***Those referred to in Art. 1329 are those who are
prohibited from entering into a contract with certain (Art. 1331)
persons with regard to certain property under mistake – wrong conception of a thing and the
certain circumstances. lack of knowledge with respect to a thing.
2 kinds:
Incapacity to give Disqualification/prohibit • mistake of fact – when one or both of the
consent to a ion to contract contracting parties believe that a fact exist
contract when in fact it does not
Restrains the right to Restrains the very thing ◦ mistake as to object
contract itself ▪ identity of the thing (error in
corpore)
▪ substance of the thing (error in • the real purpose of the parties must
substantia) have been frustrated.
▪ conditions of the thing (provided
such condition principally moved (Art. 1335-1336)
one or both of the parties to enter violence – use of irresistible force
into the contract) requisites:
▪ quantity of the thing (error in • force employed to wrest consent must be
quantitate) serious or irresistible
◦ mistake as to person • it must be the determining cause for the
▪ name of a person. party upon whom it is employed in entering
▪ Identity of a person – effect is into the contract.
voidable contract
▪ qualification of a person intimidation – compelling by reasonable and well
requisites: grounded fear of an imminent or grave evil upon
• the mistake must be either with regard his person, property, or upon the person or
to the identity or with regard to the property of his spouse, descendants, or
qualification of the person ascendants
• such identity or qualification must have
violence and intimidation are sometimes called
been the principal consideration for the
duress.
celebration of the contract
*Usually, these mistakes occur in
Requisites:
obligations to do.
• one of the contracting parties is compelled
• mistake of law – when one or both f the
to give consent by a reasonable and well
contracting parties arrive at an erroneous
grounded fear of an evil
conclusion regarding the interpretation of a
question of law or the legal effects of a • the evil must be imminent and grave
certain act or transaction. • the evil must be unjust
General rule: only mistake of fact which will vitiate • the evil must be the determining cause for
consent renders the contract voidable. A mistake of the party upon whom it is employed in
law does not render the contract voidable entering into the contract.
(ignorantia legis non excusat) Character of intimidation:
• actual
Case: Asiain vs Jalandoni • serious
(Art. 1332) • possible of realization
intended for the protection of a party to a contract • and that the actor can and still carry out his
who is at a disadvantage due to his illiteracy, threat
ignorance, mental weakness, or handicap.
determination of the degree of intimidation:
Fraud is present when there is an insidious words • age
or machinations of one of the contracting parties, • sex
the other is induced to enter into the contract which • condition of the person
without them, he would not have agreed to it.
effect of just or legal threat:
(Art. 1333-1334) -it does not vitiate consent
General rule: mistake of law will not vitiate consent. the contract would still be perfectly valid and not
Exception: mutual error voidable.
requisites:
Violence intimidation
• mistake must be with respect to the
legal effect of the agreement External Internal
• mistake must be mutual (physical compulsion - (moral compulsion-
form the circumstances or qualifications will affect the validity of will not affect the
of the obligor rendering him incapable the contract existence of the
of executing the act or service, allows contract
the perfection of the contract, although
the fulfillment thereof is hardly
***The motives of the contracting parties are as
probable.
different or complex and as capable of infinite
▪ If impossibility may permanent in variety as the individual circumstances which may
character, contract is void move men to acquire things or make money.
• objects which are not of possible
determination as to its kind ***The motives may be regarded as the causa
when the contract is conditioned upon the
Sec. 3. – Cause of Contracts attainment of the motive of either contracting
(Art. 1350-1351) parties.
Cause – the why of the contract Cases: Liguez vs CA, Rodriguez vs Rodriguez,
– juridical reason why the parties entered Phil. Banking Corp. vs Lui She
into the contract
– essential reason which moves the ***The cause of the accessory contract is identical
contracting parties to enter into a contract. with that of the principal contract.
– Immediate, direct, or most proximate
reason which explains & justifies the ***When a moral obligation arises wholly from
creation of the obligation through the will of ethical considerations, unconnected with any civil
the contracting parties. obligation and as such, is not demandable in law
Onerous contracts The prestation or but only in conscience, it can not constitute a
promise of a thing or sufficient cause or consideration supporting an
service by the other onerous contract.
Cases: Fisher vs Robb, Villaroel vs Estrada
Remunetory contracts Service or the benefit
which is remunerated or Remunetory contracts – one in which one of the
compensated contracting parties compensates the service or
Pure beneficence Liberality or generosity benefit rendered by the other party, although such
of the benefactor service or benefit does not constitute a
demandable debt.
In onerous contracts, even a mere promise is a
sufficient causa or consideration. (Art. 1352-1355)
Remedy: rescission or specific performance. essential requisites of cause: (elt)
• the cause should be in existence at the
***the object of an onerous contracts is the same time of the celebration of the contract.
as to both parties, although the cause is different. - • The cause should be licit or lawful
Tolentino • the cause should be true.
Presupposes a valid Based on a defective – the one who adheres to the contract is in
contract in which there contract in which there reality free to reject it entirely, if he
has already been a has been no meeting of adheres, he gives his consent. (Ong Yiu vs
meeting of the mind the minds because the CA)
consent of one or both – its enforceability will have to be determined
of the contracting by the peculiar circumstances obtaining in
parties has been each case and the situation of the parties
vitiated. concerned
– in case of conflict, the contract will be
Not a remedy when Remedy when there has
interpreted against the one who drafted the
there has been fraud, been no meeting of the
contract.
mistake, inequitable minds because of
2steps needed to follow(contracts of credit cards)
conduct or accident. mistake, fraud,
to absolve a card holder from liability for
inequitable conduct, or
unauthorized purchase made through lost or stolen
accident
card
1. the card holder must give a written notice
(Art. 1360-1369) to the credit card company
when can one party ask for the reformation of 2. credit company must give notice to all its
the contract: member establishments of such lost or
• mutual mistake of the parties (Art. 1361) theft
• one party was mistaken and the other party
acted fraudulently(Art. 1362)
• one party mistaken, the other knew or CHAPTER 5
believed that the instrument does not show INTERPRETATION OF CONTRACTS
their real intent but concealed that fact to
the former (Art. 1363) (Art. 1370-1371)
• through the ignorance, lack of skill, ***Intention of the contracting parties always
negligence or bad faith on the part of the prevail because their will has the force of law
person drafting the instrument or the clerk between them.
or typist. (Art. 1364)
• Parties agree upon the mortgage or pledge ***Literal sense of the stipulations shall be
of a real or personal property, but the followed.
instrument states that the property is sold
absolutely or with a right of repurchase ***Once the intention has been ascertained, it
(Art. 1365) becomes an integral part of the contract as though
it had been originally expressed therein in
when there can be no reformation: unequivocal terms.
• simple donation inter vivos wherein no
condition is imposed The character of the transaction between the
• wills parties is not determined by the language used in
• when the real agreement is void (Art. 1366) the document but by their intention. (Manila
• when one of the parties brought an action Banking Corp. vs Teodoro, Jr.)
to enforce the instrument (Art. 1367)
contemporaneous and subsequent acts of the
contract of adhesion – one in which one of the parties must be considered in order to judge the
parties imposes a ready made form of contract, intention of the contracting parties.
which the other party may accept or reject, but Case: Tanguilig vs CA
which the latter cannot modify
(Art. 1372-1379)
– as binding as a mutually executed
ARTICLE 1372. However general the terms
transaction (Ayala Corp. vs Ray Burton
of a contract may be, they shall not be understood
Dev't. Corp.)
affected.
Rescission of Rescission by mutual
As to how contracts may be assailed
contracts consent
Directly Directly or Directly or Directly or
Causes mentioned in Agreement of the
collaterally collaterally collaterally
Arts. 1381 and 1382 parties to rescind the
contract.
(Art. 1380)
rescissible contracts – all of the essential Restoration to the Effects should be
elements of a contract are present; contract is condition of the parties determined by the
valid, but by reason of injury or damage to either of prior to the constitution agreement made by the
the contracting parties or to 3rd persons, it may be of the contract parties, or by the
rescinded. application of other
Characteristics: legal provisions except
• defects consists in injury or damage to Art. 1385
either of one of the contracting parties or to Case: Aquino vs Tanedo
3rd persons.
• Before rescission, they are valid and (Art. 1381-1382)
therefore legally effective rescissible contracts are:
• can only be attacked directly 1. contracts in behalf of ward
• can be attacked by I of the contracting • entered into by guardians whenever their
parties or the 3rd person injured or wards suffer lesion or damages by more
defrauded. than ¼ of the value of the thing which are
• Susceptible of convalidation only by the object thereof.
prescription and not by ratification • Rules of Court: judicial guardian entering
into a contract with respect to the property
rescission – remedy to secure the reparation of of his ward must ordinarily secure the
damages caused to the contracting party or 3rd approval of a competent court.
person by a contract; by means of restoration of • Apply Arts 326, CC; Rules 95-96 New
things to their condition prior to the celebration of Rules of Court
the contract. 2. contracts in behalf of absentees
Rescission of Resolution of • rescissible if the absentee suffer the lesion
contracts reciprocal obligations or damage by more than ¼ of the value of
(Art. 1380-1389) (Art. 1191) the thing which are the object thereof.
• principles applicable in Art. 1381, par 1 are
May be instituted by a May be instituted only applicable to this provision since the
party to the contract by a party to the powers and duties of representatives are
and/or even 3rd person contract the same as that of the guardian.
Several causes or Ground: failure of one Requisites for par. 1 & 2 of Arts. 1381
grounds: lesion, fraud, the contracting parties • contract must have been entered into by
and other expressly to comply with what is the guardian in behalf of his ward or a legal
specified by law incumbent upon him. representative in behalf of an absentee
• ward or absentee must have suffered
Court has no power to The court has
lesion of more than ¼ of the value of the
grant an extension of discretionary power to
property which is the object of the contract.
time for performance of grant an extension for
the obligation performance provided • Contract must have been entered into
that there is just cause. without court approval
• there must be no other means for obtaining
May apply to Unilateral Applies only to reparation for the lesion
and reciprocal contracts reciprocal contracts • the person asking for the rescission must
be able to return whatever he may be
law
Characteristics of void and inexistent – rule of in pari delicto is applicable because
contracts: there is an illegal cause
• produce no legal effect (quod nullum est
nullum producit effectum) only 1 party is at fault:
◦ Except: Art. 1411-1412 – nullity is • executed contract
based on the illegality of the cause; any ◦ guilty party is barred from recovering
action by a guilty party to recover what he has given to the other party by
whatever he has already given under reason of the contract
the contract is barred ◦ innocent party may demand the return
• not susceptible of ratification of what it has given
• right to set up the defense of inexistence or • executory contract
absolute nullity cannot be waived ◦ contract cannot produce any legal
• action or defense for the declaration of effect whatsoever
their inexistence or nullity is imprescriptible ◦ parties cannot demand for the
(Art. 1410) fulfillment of any obligation arising from
• inexistence or absolute nullity cannot be the contact nor be compelled to comply
invoked by a person whose interests are with such obligation
not directly affected.
Exceptions in applicability of in pari delicto:
(Art. 1410) • payment in usurious interest (Art. 1413)
action or defense of declaration of nullity is ◦ “interest paid in excess of the interest
imprescriptible – because the defects are more or allowed by the usury law” - means the
less permanent, thus cannot be cured by whole usurious interest; with interest
prescription thereon from the date of payment
Case: Castillo vs Galvan • payment of money or delivery of property
for an illegal purpose (Art. 1414)
***An action to declare the nullity of a void • payment of money or delivery of property
judgment does not prescribe (Paluwagan ng by an incapacitated person (Art. 1415)
Bayan Bank vs King)
• agreement that is not illegal per se but is
prohibited by law (Art. 1416)
Case: Aznar Brothers Realty vs Heirs of
◦ “in pari delicto is not applicable to a
Augusto – no unreasonable delay in asserting
homestead; the purpose of the law is to
their rights
give land to a family for home and
– in spite the imprescriptibility, laches may
cultivation, consequently, the law
bar the action of a party in asserting the
allows the homesteader to reacquire
nullity of the contract
the land even if it has been sold.”
(Angeles vs CA, 102 Phil. 1006)
(Art. 1411-1422)
◦ rule of in pari delicto is inapplicable
in pari delicto – equally at fault
where the same violates a well-
– the law will not aid either party to an illegal
established public policy (Angeles vs
agreement, it leaves them where they are.
CA, 102 Phil. 1006) and Phil. Banking
– Applies only to cases of existing contracts vs Lui She
with an illegal cause or object and not to
• payment of any amount in excess of the
simulated or fictitious contracts nor to those
maximum price of any article or commodity
which are inexistent
fixed by law. (Art. 1417)
Case: Rodriguez vs Rodriguez
• Contract where by a laborer undertakes to
– circumvention of provision on prohibited
work longer than the maximum number of
donation between spouses
hours fixed by law (Art. 1418)
– appellant is clearly as guilty as her
• contract whereby a laborer accepts a wage
husband in the attempt to circumvent the
lower than the minimum wage fixed by law – such principle will afford solution to many
(Art. 1419) questions which are not foreseen in our
legislation
ARTICLE 1421 – person is not allowed to take inconsistent
The defense of illegality of contract is not available positions
to third persons whose interests are not directly
affected. Kinds of Estoppel
ARTICLE 1422 • estoppel in pais (equitable estoppel)
A contract which is the direct result of a previous ◦ arises by acts, representations, or
illegal contract, is also void and inexistent. admissions, or by his silence induces
another to believe certain acts to exist
TITLE III and such other rightfully relies and acts
NATURAL OBLIGATIONS on such belief, as a consequence of
which he will be prejudiced if the former
(Art. 1423-1430) is permitted to deny the existence of
Natural obligations – obligations without a such facts
sanction; susceptible of voluntary performance ▪ estoppel by silence – inaction;
– once there is voluntary performance or ▪ estopel by acceptance of benefits
fulfillment, one cannot recover what he has
• estoppel by deed or by record (technical
delivered.
estoppel)
◦ estoppel by deed – type of technical
Natural obligations Civil obligations estoppel by virtue of which a party to a
based on equity and Based on positive law deed and his privies are precluded from
natural law asserting as against the other party or
his privies any right or title in
do not grant a right of enforceable by court derogation of the deed or from denying
action to enforce their action any material fact therein.
performance
◦ Estoppel by record – parties are
precluded from denying the truth of
Natural obligations Moral obligations matters set forth in a record whether
There is a juridical tie No juridical tie judicial or legislative.
between the parties whatsoever ▪ Estoppel by judgment – bars the
which is not enforceable party from raising any question that
by court action might have put in issue and
decided in the previous litigation
Voluntary performance Voluntary fulfillment • estoppel by laches
by the obligor produces does not produce legal
◦ failure or neglect, for an unreasonable
legal effect which the effect which courts will
and unexplained length of time, to do
courts will recognize recognize and protect
that which, by exercising due diligence,
and protect
could or should have been done earlier
◦ presumption that the party entitled to
TITLE IV assert it either has abandoned it or
ESTOPPEL declined to assert it.
◦ Stale demands
(Art. 1431-1439)
◦ not a mere question of time but is
Estoppel – a condition or state by virtue of which
principally a question of the inequity or
an admission or representation is rendered
unfairness of permitting a right or claim
conclusive upon the person making it and cannot
to be enforced or asserted
be denied or disproved as against the person
Elements of laches:
relying thereon.
• conduct on the part of the defendant, or of
-end-