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San Beda College of Law
85
MEMORY AID IN CIVIL LAW
OBLIGATIONS AND CONTRACTS

2. Solutio indebiti - arises whenever a
I. OBLIGATIONS person unduly delivers a thing
OBLIGATION through mistake to another who has no

 A juridical necessity to give, to do, or right to demand it.
not to do (Article 1156), one
impressed with the character of QUASI-DELICTS
enforceability.  An act or omission by a person
(tortfeasor) which causes damage to
 Requisites: another giving rise to an obligation to
a. juridical or legal tie or efficient pay for the damage done, there being
cause fault or negligence but there is no
b. active subject (obligee or pre-existing contractual relation
creditor) between the parties (Article 2176).
c. passive subject (obligor or
debtor)  Requisites:
d. fact, prestation or service 1. There must be an act or
constituting the object of the omission;
obligation 2. There must be fault or
 Requisites: negligence;
i) it must be licit 3. There must be damage
ii) it must be possible, caused to the plaintiff;
physically & juridically 4. There must be a direct
iii) it must be determinate or relation of cause and effect
determinable between the act or omission and
iv) it must have a possible the damage; and
equivalent in money 5. There is no pre-existing
contractual relation between the
 Sources (Article 1157): parties.
1. Law
2. Contracts NOTES:
3. Quasi-contracts  The same negligent act or omission
4. Delicts causing damage may produce civil
5. Quasi-delicts liability arising from crime under Art.
100 of the RPC or create an action for
QUASI-CONTRACTS quasi-delict under Article 2176.
 Those juridical relations arising from  While it is true that in order that a
lawful, voluntary and unilateral acts, person may be liable for quasi-
by virtue of which the parties become delicts, there must be no pre-existing
bound to each other, based on the contractual relationship between the
principle that no one shall be unjustly parties, yet, “the act that breaks
enriched or benefited at the expense the contract may also be a tort.”
of another. (Air France vs. Carrascoso, 18 SCRA
155).
Principal Kinds of Quasi-contracts:
1. Negotiorum gestio - arises whenever Nature of Obligations
a person voluntarily takes charge of 1. Personal Obligations - obligations
the agency or management of the to do
business or property of another a. Positive – obligation to do
without any power or authority from b. Negative – obligation not to do
the latter. 2. Real Obligations - obligations to give
CIVIL LAW COMMITTEE

 CHAIRPERSON: Romuald Padilla  ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad  EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John
Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflict of Laws)
86 2005 CENTRALIZED BAR OPERATIONS
a. Determinate or specific – object granted if, under the circumstances

is particularly designated or of the case, the result of the specific
physically segregated from all performance of the contract would
other of the same class be harsh, inequitable, oppressive or
b. Generic – object is designated result in an unconscionable advantage
merely by its class or genus to the plaintiff. The courts may
c. Limited generic thing – when the adjust the rights of the parties in
generic objects are confined to a accordance with the circumstances
particular class, e.g. an obtaining at the time of rendition of
obligation to deliver one of my judgment, when these are
horses (Tolentino, Volume IV, p. significantly different from those
91). existing at the time of generation of
those rights. (Agcaoili vs. GSIS, G.R.
PERSONAL vs. REAL RIGHT No. 30056, August 30, 1988)
Personal Real
1. jus ad rem, a 1. jus in re, a right OBLIGATIONS OF THE DEBTOR
right enforceable enforceable against Determinate Generic
only against a the whole world 1. deliver the thing 1. deliver the thing
definite person or which he has which is neither of
group of persons obligated himself to superior nor inferior
2. right pertaining 2. right pertaining give quality
to the person to to a person over a 2. take care of the 2. pay damages in
demand from specific thing, thing with the case of breach of the
another, as a without a passive proper diligence of a obligation by reason
definite passive subject individually good father of a of delay, fraud,
subject, the determined against family negligence or
fulfillment of a whom such right 3. deliver all contravention of the
prestation to give, may be personally accessions and tenor thereof
to do or not to do. enforced accessories of the
thing even though
RIGHTS OF A CREDITOR they may not have
Determinate Generic been mentioned
1. compel specific 1. ask for 4. pay damages in
performance performance of the case of breach of
obligation the obligation by
2. recover 2. ask that the reason of delay,
damages in case of obligation be fraud, negligence or
breach of the complied with at contravention of the
obligation, the expense of the tenor thereof
exclusive or in debtor
addition to specific EFFECTS OF BREACH
performance Positive Personal Negative Personal
3. entitlement to 3. recover damages Obligations Obligations
fruits, interests in case of breach of The creditor can: If the obligor does
from the time the the obligation 1. have the what has been
obligation to obligation performed forbidden him, the
deliver arises. or executed at the creditor can:
expense of the 1. have it undone at
Principle of Balancing of Equities as obligor (except in the expense of the
Applied in Actions for Specific cases where the obligor; and
Performance personal 2. ask for damages
qualifications of the
 In decreeing specific performance,
debtor are taken into
equity requires not only that the account in which
contract be just and equitable in its case the only remedy
provisions, but that the consequences is an action for
of specific performance likewise be damages)
equitable and just. The general rule 2. ask that what has
is that this equitable relief will not be been poorly done be
undone
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda
Tolentino(VC-Acads), Jennifer Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-
EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine
Torres (Taxation Law), Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann
Uy (Remedial Law), Jackie Lou Bautista (Legal Ethics)
85
3. recover damages 1. Mora solvendi - delay of the debtor to

because of breach of perform his obligation. It may be:
the obligation a. Ex re – obligation is to
give
Cases where the remedy granted under b. Ex persona – obligation is
Article 1168 is not available: to do
1. Where the effects of the act which is 2. Mora accipiendi - delay of the
forbidden, are definite in character, creditor to accept the delivery of the
in which case, even if it is possible thing w/c is the object of the
for the obligee to ask that the act be obligation
undone at the expense of the obligor, 3. Compensatio morae - delay of the
consequences contrary to the object parties or obligors in reciprocal
of the obligation will have been obligation
produced which are permanent in
character  When incurred:
2. Where it would be physically or  General Rule: There must be a demand
legally impossible to undo what has (judicial or extra-judicial) before delay
been undone because of the very may be incurred.
nature of the act itself or because of Exceptions:
a provision of law, or because of 1. obligation or law expressly so
conflicting rights of 3rd persons declares
NOTE: In either case, the remedy is to 2. time is of the essence of the
ask for damages. contract
3. demand is useless as when obligor
BREACH OF OBLIGATIONS has rendered beyond his power to
1. Voluntary - debtor, in the perform
performance of the obligation, is 4. there is acknowledgment of
guilty of: default
a. default (mora)
b. fraud (dolo) NOTES:
c. negligence (culpa)
 There can be delay only in positive
d. contravention of the tenor of the
obligations (to give/to do). There can
obligation
be no delay in negative obligations
NOTE: debtor is liable for damages
(not to give/not to do).
2. Involuntary - debtor is unable to  In reciprocal obligations one party
comply with his obligation because of incurs in delay from the moment the
fortuitous event other party fulfills his obligation,
NOTE: debtor is not liable for while he himself does not comply or
damages is not ready to comply in a proper
manner with what is incumbent upon
DEFAULT or DELAY him. The general rule is that
 Non-fulfillment of the obligation with fulfillment by both parties should be
respect to time simultaneous except when different
 Requisites: dates for the performance of
1. Obligation is demandable and already obligation is fixed by the parties.
liquidated  Demand is still necessary if their
2. The debtor delays performance respective obligations are to be
3. The creditor requires performance performed on separate dates
judicially or extra-judicially
FRAUD
 Deliberate and intentional evasion of
the fulfillment of an obligation
 3 Kinds:
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
Test of Negligence
NOTE: Future fraud cannot be waived
because it would result to illusory
 The test of negligence can be
determined by this standard: If the
obligation.
defendant, in committing or causing
the negligent act, had used
Incidental Causal Fraud/dolo
reasonable care and vigilance which a
Fraud/dolo causante
man of ordinary prudence would have
incidente (Article 1338)
employed under the same situation,
(Article 1170)
he is not guilty of negligence.
1. Present during 1. Present during the Otherwise, he is guilty.
the performance of time of birth or
a pre-existing perfection of the Doctrine of Res Ipsa Loquitur as Applied
obligation obligation in Negligence Cases
2. Purpose is to 2. Purpose is to  The thing or transaction speaks for

evade the normal secure the consent of itself
fulfillment of the the other to enter  When the thing which caused injury,
obligation into a contract without fault of the injured person, is
under the exclusive control of the
3. Results in the 3. Results in the defendant and the injury is such as in
non-fulfillment or vitiation of consent
the ordinary course of things does not
breach of the
obligation occur if he having such control use
proper care, it affords reasonable
4. Gives rise to a 4. Gives rise to a right evidence, in the absence of
right of the creditor of an innocent party explanation from the defendant, that
to recover damages to annul the contract the injury arose from defendant’s
from the debtor want of care (Africa vs. Caltex, 16
SCRA 448 and Republic vs. Luzon
NEGLIGENCE Stevedoring, 21 SCRA 279).
 Omission of that diligence which is
required by the nature of the FORTUITOUS EVENT
obligation and corresponds with the  An event which could not be foreseen
circumstances of the persons, of the or which though foreseen was
time and of the place inevitable.
NOTE: Negligence can be waived unless
the nature of the obligation or public  Requisites:
policy requires extraordinary diligence as 1. cause is independent of the will of
in common carrier. the debtor
2. the event must be unforeseeable or
Diligence Required unavoidable
1. That agreed upon by the parties 3. occurrence must be such as to render
2. In the absence of stipulation, that it impossible for the debtor to fulfill
required by law in the particular case his obligation in a normal manner
3. If both the contract and law are 4. debtor must be free from any
silent, diligence of a good father of a participation in
family 5. the aggravation of the injury resulting
to the creditor (Lasam vs. Smith, 45
Concept of Diligence of Good Father of Phil. 657)
a Family
 That reasonable diligence which an NOTE: It must not only be the
ordinary prudent person would have proximate cause but it must be the
done under the same circumstances ONLY and SOLE CAUSE.

85
 GENERAL RULE: No liability in case of 1. When they are not transmissible

fortuitous event. by their very nature e.g. purely
EXCEPTIONS: personal right
1 When expressly declared by law 2. When there is a stipulation of the
NOTE: e.g. Article 552(2), parties that they are not
1165(3), 1268, 1942, 2147, 2148 transmissible
and 2159 of the Civil Code. 3. Not transmissible by operation of
2 When expressly declared by law
stipulation or contract
3 When the nature of the obligation PURE OBLIGATION
requires the assumption of risk  One whose effectivity or
4 When the obligor is in default or extinguishment does not depend upon
has promised to deliver the same the fulfillment or non-fulfillment of a
thing to 2 or more persons who condition or upon the expiration of a
do not have the same interest term or period and is demandable at
[Article 1165(3)]. once.
EFFECT OF FORTUITOUS EVENT CONDITIONAL OBLIGATION

Determinate Generic Obligation  One whose effectivity is subordinated
Obligation to the fulfillment or non-fulfillment
obligation is obligation is not of a future AND uncertain fact or
extinguished extinguished based event
on the rule that a
genus never perishes
Kinds of conditions:
(genus nunquam
peruit) 1. Suspensive - fulfillment of the
condition results in the acquisition of
rights arising out of the obligation
2. Resolutory - fulfillment of the
PRINCIPLE UNDER ARTICLE 1176 condition results in the
extinguishments of rights arising out
 Before the presumption that a prior of the obligation
installment had been paid may arise,
3. Potestative - fulfillment of the
the receipt must specify the
condition depends upon the will of a
installment for which payment is
party to the obligation
made.
4. Casual - fulfillment of the condition
depends upon chance and/or upon
 REMEDIES OF CREDITOR TO the will of a third person
PROTECT CREDIT: 5. Mixed - fulfillment of the condition
1. Exhaustion of debtor’s property depends partly upon chance and/or
2. Accion subrogatoria - to be the will of a third person
subrogated to all the rights and 6. Possible - condition is capable of
actions of the debtor save those realization according to nature, law,
which are inherent in his person. public policy and good customs
3. Accion pauliana - impugn all the acts 7. Impossible - condition is not capable
w/c the debtor may have done to of realization according to nature,
defraud them. law, public policy and good customs
NOTE: 2nd & 3rd remedies are subsidiary 8. Positive - condition involves the
to the first performance of an act
9. Negative - condition involves the
GENERAL RULE: Rights acquired by omission of an act
virtue of an obligation are transmissible 10. Divisible - condition is susceptible of
in character partial realization
11. Indivisible - condition is not
susceptible of partial realization
EXCEPTIONS:
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
12. Conjunctive - where there are several deemed to have been mutually
conditions, all of which must be compensated
realized 5. If the obligation is unilateral, the
13. Alternative - where there are several debtor shall appropriate the fruits &
conditions but only one must be interests received, unless from the
realized nature & circumstances it should be
inferred that the intention of the
Rule in Potestative Conditions persons constituting the same was
a. If the fulfillment of the different
potestative condition depends 6. In obligations to do or not to do, the
upon the sole will of the debtor, court shall determine the retroactive
the condition as well as the effect or the conditions that has been
obligation itself is void. It renders complied with
the obligation illusory. (Applicable
only to a suspensive condition and Constructive fulfillment of Suspensive
to an obligation which depends for Condition
its perfection upon the fulfillment
of the potestative condition and  The condition shall be deemed
not to a pre-existing obligation.) fulfilled when the obligor actually
b. If the fulfillment depends prevented the obligee from
exclusively upon the will of the complying with the condition and
creditor, both the condition and such prevention must have been
obligation is valid. voluntary and willful in character.
NOTE: In case of simple potestative
condition, e.g. right of first refusal, Effects of Resolutory Condition
such condition is valid. 1. Before the fulfillment of the
condition, the right which the
Rule in Impossible Conditions creditor has already acquired by
 GENERAL RULE: They shall annul the virtue of the obligation is subject to a
obligation which depends upon them. threat of extinction.
EXCEPTIONS: 2. If condition is not fulfilled, rights are
1. pre-existing obligation consolidated; they become absolute.
2. if obligation is divisible 3. Upon fulfillment of the condition, the
3. in simple or renumeratory donations parties shall return to each other
4. in testamentary dispositions what they received including the
5. in case of conditions not to do an fruits
impossible thing
SUMMARY:
Effects of Suspensive Condition SUSPENSIVE RESOLUTORY
1. Before fulfillment of the condition, CONDITION CONDITION
1. if fulfilled, 1. if fulfilled,
the demandability as well as the
obligation arises obligation is
acquisition or effectivity of the rights or becomes extinguished
arising from the obligation is effective
suspended 2. if not fulfilled, no 2. if not fulfilled,
2. After the fulfillment of the condition, juridical relation juridical relation
the obligation arises or becomes is created is consolidated
effective 3. rights are not yet 3. rights are
3. The effects of a conditional acquired, but already
obligation to give, once the condition there is hope or acquired, but
expectancy that subject to the
has been fulfilled, shall retroact to
they will soon be threat or danger
the day of the constitution of the acquired of extinction
obligation
4. When the obligation imposes
reciprocal prestations upon the
Effects of Loss, Deterioration and
parties, the fruits & interests shall be
Improvement in real obligations (during
the pendency of the condition)
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1. If there is an express stipulation

1. Loss of automatic rescission
a. without debtor’s fault - 2. When the debtor voluntarily
obligation is extinguished returned the thing
b. with debtor’s fault - debtor pays
damages NOTES:
 Article 1191 refers to judicial
2. Deterioration rescission. It does not apply if there is
a. without debtor’s fault - an express stipulation to rescind, in
impairment to be borne by the which case such stipulation must
creditor prevail. There is nothing in the law
b. with debtor’s fault - creditor may which prohibits the parties from
choose between the rescission of entering into an agreement that
the obligation and its fulfillment violation of the terms of the contract
with indemnity for damages in would cause its cancellation without
either case court intervention. Said stipulation is
in the nature of facultative resolutory
3. Improvement condition (Angeles vs. Calasanz, 135
a. by the thing’s nature or by time - SCRA 323).
improvement shall inure to the
benefit of the creditor
 Rescission will be ordered only where
the breach is substantial as to defeat
b. at the debtor’s expense - debtor
the object of the parties in entering
shall have no other right than
into the agreement.
that granted to a usufructuary
 The injured party may choose
NOTE: Applies only to determinate things between fulfillment and rescission of
the obligations, with the payment of
A Thing is Lost when it: damages in either case. These
1. perishes remedies are alternative, not
2. goes out of commerce cumulative. However, should
3. disappears in such a way that its fulfillment become impossible, the
existence is unknown or it cannot be injured party may also seek
recovered rescission.
 The right to rescind belongs
RECIPROCAL OBLIGATIONS exclusively to the injured party.
 Those which are created or established
at the same time, out of the same cause, OBLIGATION WITH A PERIOD
and which result in mutual relationships  Those whose demandability or
of creditor & debtor between the parties extinguishment is subject to the
expiration of a term or period
TACIT RESOLUTORY CONDITION  Requisites:
If one of the parties fails to comply
1. future
with what is incumbent upon him, there
2. certain
is a right on the part of the other to
3. possible,
rescind the obligation.
legally and physically
CLASSIFICATION OF TERM OR PERIOD

1. a. suspensive (ex die) – obligation
becomes demandable only upon
arrival of a day certain
RIGHT TO RESCIND (ART 1191)
b. resolutory (in diem) – arrival of day
 GENERAL RULE: The right to rescind
certain terminates the obligation
needs judicial approval.
2. a. legal – granted by law
EXCEPTIONS:
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
b. conventional –stipulated by NOTE: The only action that can be

parties maintained is an action to ask the court
c. judicial – fixed by courts to fix the duration of the term or period.
3. a. definite – date/time is know The fulfillment of the obligation itself
beforehand cannot be demanded until after the court
b. indefinite – the date/time of day has fixed the period for compliance
certain is unknown therewith, and such period has arrived.
However, such technicality need not be
TERM CONDITION adhered to when a prior and separate
1. interval of time 1. fact or event w/c action would be a mere formality and
w/c is future & is future and would serve no other purpose than to
certain uncertain delay (Borromeo vs. CA, 47 SCRA 65).
2. interval of time 2. future and
w/c must uncertain fact or Reason for Fixing the Period (ART 1197)
necessarily come, event w/c may or
although it may not may not happen  There can be no possibility of any
be known when breach of contract or failure to
3.exerts an 3. exerts an influence perform the obligation unless the
influence upon the upon the very period is fixed by courts.
time of existence of the
demandability or obligation itself When debtor loses right to make use of
extinguishment of period: (IGIVA)
an obligation 1. when after the obligation has
4. does not have 4. has retroactive been contracted, he becomes
any retroactive effect
insolvent, unless he gives guaranties
effect unless there
is an agreement to or securities for the debt (the
the contrary insolvency need not be judicially
5. when it is left 5. when it is left declared)
exclusively to the exclusively to the will 2. when he does not furnish to the
will of the debtor, of the debtor, the creditor the guaranties or securities
the existence of very existence of the he promised
the obligation is obligation is affected 3. when by his own act he has
not affected impaired said guaranties or
securities after their establishment,
 GENERAL RULE: When a period is and when through fortuitous event
designated for the performance or they disappear, unless he gives new
fulfillment of an obligation, it is ones equally satisfactory when
presumed to have been established for debtor violates any undertaking, in
the benefit of both creditor and debtor. consideration of which the creditor
EXCEPTION: When it appears from the agreed to the period or
tenor of the obligation or other 4. when debtor attempts to abscond
circumstances that the period has been
established in favor of one or of the FACULTATIVE ALTERNATIVE
other. Obligations Obligations
When court may fix period: 1. comprehends 1. comprehends
1. if the obligation does not fix a period, only one object or several objects or
but from its nature and circumstances prestation which is prestations which are
it can be inferred that a period was due, but it may be due but may be
intended by the parties complied with by complied with by the
2. if the duration of the period depends the delivery of delivery or
another object or performance of only
upon the will of the debtor; and
performance of one of them
3. If the debtor binds himself when his another prestation
means permit him to do so (Article in substitution
1180)
2. fortuitous loss 2. fortuitous loss of
extinguishes the all prestations will

85
obligation extinguish the fault of the former, has

obligation disappeared with a right to
damages
3. culpable loss 3. culpable loss of any c. If all the things are lost through
obliges the debtor object due will give the fault of the debtor, the
to deliver rise to liability to
substitute debtor
choice by the creditor shall fall
prestation without upon the price of any 1 of them,
liability to debtor also with indemnity for damages
JOINT AND SOLIDARY OBLIGATIONS

4. choice pertains 4. choice may pertain GENERAL RULE: Obligation is presumed
only to debtor to creditor or even joint if there is concurrence of two or
third person more debtors and/or creditors.
EXCEPTIONS:
1. when expressly stated
NOTES:
that there is solidarity
 In alternative obligations, choice 2. when the law requires
takes effect only upon solidarity
communication of the choice to the 3. when the nature of the
other party and from such time the obligation requires solidarity
obligation ceases to be alternative.
JOINT DIVISIBLE OBLIGATIONS
 The debtor cannot choose those
 Each creditor can demand for the
prestations or undertakings which are
payment of his proportionate share of
impossible, unlawful or w/c could not
the credit, while each debtor can be
have been the object of the
held liable only for the payment of
obligation.
his proportionate share of the debt.
EFFECT OF LOSS OF OBJECT OF  A joint creditor cannot act in
OBLIGATION: representation of the other creditors
1. If right of choice belongs to debtor while a joint debtor cannot be
a. If through a fortuitous event - compelled to answer for the acts or
debtor cannot be held liable for liability of the other debtors.
damages
b. If 1 or more but not all of the JOINT INDIVISIBLE OBLIGATIONS
things are lost or one or some 1. If there are 2 or more debtors,
but not all of the prestations the fulfillment of or compliance with
cannot be performed due to the the obligation requires the
fault of the debtor, creditor concurrence of all the debtors,
cannot hold the debtor liable for although each for his own share.
damages because the debtor can Consequently, the obligation can be
still comply with his obligation. enforced only by proceeding against
2. If right of choice belongs to the all of the debtors.
creditor 2. If there are 2 or more creditors,
a. If 1 of the things is lost through a the concurrence or collective act of
fortuitous event, the debtor shall all the creditors, although each for
perform the obligation by his own share, is also necessary for
delivering that which the the enforcement of the obligation.
creditor should choose from
among the remainder, or that Effect of breach – If one of the joint
which remains if only 1 subsists debtors fails to comply with his
b. If the loss of 1 of the things undertaking, the obligation can no longer
occurs through the fault of the be fulfilled or performed. Consequently,
debtor, the creditor may claim it is converted into one of indemnity for
any of those subsisting, or the damages. Innocent joint debtors shall not
price of that which, through the
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
contribute to the indemnity beyond their no invasion of the personal or

corresponding share of the obligation. confidential relationship
2. assignee is third person – co-creditors
Effect of insolvency of a debtor – If one and debtors are not bound by the
of the joint debtors should be insolvent, assignment
the others shall not be liable for his
share. Effect of Novation upon Solidary
Obligation
INDIVISIBILITY SOLIDARITY 1. If the novation is prejudicial, the
1. refers to the 1. refers to the legal solidary creditor who effected the
prestation which tie or vinculum juris novation shall reimburse the others
constitutes the & consequently to for damages incurred by them
object of the the subjects or 2. If it is beneficial and the creditor who
obligation parties of the effected the novation is able to
obligation
secure performance of the obligation,
2. plurality of 2. plurality of
subjects is not subjects is such creditor shall be liable to the
required indispensable others for the share which
3. in case of breach, 3. when there is corresponds to them, not only in the
obligation is liability on the part obligation, but also in the benefits
converted into 1 of of the debtors 3. If the novation is effected by
indemnity for because of the substituting another person in place
damages because of breach, the of the debtor, the solidary creditor
breach, indivisibility solidarity among the who effected the novation is liable
of the obligation is debtors remains
for the acts of the new debtor in case
terminated
the is deficiency in performance or in
case damages are incurred by the
other solidary creditors as a result of
KINDS OF SOLIDARITY
the substitution.
1. Active solidarity
4. If the novation is effected by
 solidarity of creditors subrogating a third person in the
 each creditor is empowered to rights of the solidary creditor
exercise against the debtor not only responsible for the novation, the
the rights which correspond to him, relation between the other creditors
but also all the rights which not substituted and the debtor or
correspond to the other creditors, debtors is maintained.
with the consequent obligation to
render an accounting of his acts to Effect of Compensation and Confusion
such creditors upon Solidary Obligation
 creates a relationship of mutual 1. If the confusion or compensation is
agency among solidary creditors partial, the rules regarding
2. Passive solidarity application of payment shall apply.
 solidarity of debtors This is without prejudice to the right
 liability of each debtor for the of other creditors who have not
payment of the entire obligation, caused the confusion or
with the consequent right to demand compensation to be reimbursed to
reimbursement from the others for the extent that their rights are
their corresponding shares once diminished or affected.
payment has been made 2. If the confusion or compensation is
3. Mixed solidarity total, the obligation is extinguished,
 solidarity among creditors and what is left is the ensuing liability for
debtors reimbursement within each group:
Effect of Assignment by Solidary a. The creditor causing the
Creditor Without Consent of Others confusion or compensation is
1. assignee is co-creditor – no violation obliged to reimburse the other
of Article 1213 because there can be creditors

85
b. The debtors benefited by the debt for w/c the latter are
extinguishments of the obligation responsible
are obliged to reimburse the
debtor who made the confusion DIVISIBLE OBLIGATIONS
or compensation possible.  Those which have as their object a
prestation which is susceptible of
Effect of Remission upon Solidary partial performance without the
Obligation essence of obligation changed.
1. If the remission covers the entire
obligation, the obligation is totally INDIVISIBLE OBLIGATIONS
extinguished and the entire juridical  Prestation is not susceptible of partial
relation among the debtors is performance, otherwise, the essence
extinguished all together. of the obligation will be changed
2. If the remission is for the benefit of
one of the debtors and it covers his NOTES:
entire share in the obligation, he is  Divisibility or indivisibility of the
completely released from the obligation refers to the performance
creditors but is still bound to his co- of the prestation and not to the thing
debtors. which is the object thereof.
3. If the remission is for the benefit of  Intention of parties should be taken
one of the debtors and it covers only into account to determine whether
a part of his share in the obligation, obligation is divisible or not.
his character as a solidary debtor is
not affected.  GENERAL RULE: The creditor cannot be
compelled partially to receive the
Effect of Payment by Solidary Debtor prestation in which the obligation
1. Whole or partial extinguishment of consists; neither may the debtor be
debt required to make partial payments.
2. Right to recover against co-debtor EXCEPTIONS:
3. Right to recover interest from time 1. When the obligation expressly
the obligation becomes due stipulates the contrary;
2. When the different prestations
Effect of Loss or Impossibility of
constituting the objects of the
Performance
obligation are subject to
1. If it is not due to the fault of the
different terms and conditions;
solidary debtors, the obligation is
and
extinguished.
3. When the obligation is in part
2. If the loss or impossibility is due to
liquidated and in part
the fault of one of the solidary
unliquidated.
debtors or due to a fortuitous event
after one of the solidary debtors had
OBLIGATIONS WITH A PENAL CLAUSE
already incurred in delay, the
obligation is converted into an  One to which an accessory
obligation of indemnity for damages undertaking is attached for the
but the solidary character of the purpose of insuring its performance
obligation remains. by virtue of which the obligor is
bound to pay a stipulated indemnity
or perform a stipulated prestation in
case of breach.
Defenses available to a Solidary Debtor
1. Defenses derived from the very  Purpose of Penalty:
nature of the obligation 1. To insure the performance of the
2. Defenses personal to him or obligation;
pertaining to his own share 2. to liquidate the amount of
3. Defenses personal to the others, damages to be awarded to the
but only as regards that part of the injured party in case of breach of
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
the principal obligation payment or performance

(compensatory); and
3. in certain exceptional cases, to Payment or Performance
punish the obligor in case of  Means not only the delivery of money
breach of the principal obligation but also the performance, in any
(punitive). other manner, of an obligation.
 GENERAL RULE: The penalty fixed by Integrity of Payment

the parties is a compensation or GENERAL RULE: A debt shall not
substitute for damages in case of breach. be understood to have been paid unless
 EXCEPTIONS: the thing or service in which the
1. when there is a stipulation to the obligation consists has been completely
contrary; delivered or rendered, as the case may
2. when the debtor is sued for be.
refusal to pay the agreed EXCEPTIONS:
penalty; and 1. When the obligation has been
3. when debtor is guilty of fraud substantially performed in good faith;
2. When the obligee accepts
NOTE: Article 1228 does not apply to performance, knowing its
these exceptions; there must be incompleteness or irregularity &
proof of actual damages. w/out expressing any protest or
objection;
NOTES: 3. When there is an express
 The debtor cannot exempt himself stipulation; and
from the performance of the principal 4. When the debt is in part
obligation by paying the stipulated liquidated and in part unliquidated.
penalty unless when the right has
been expressly reserved for him. Identity of Payment
 The creditor cannot demand the  requires that the very thing, service
fulfillment of the principal obligation or forbearance, as the object of the
and the satisfaction of the stipulated prestation, must be performed or
penalty at the same time unless the observed
right has been clearly granted him.
Persons who may pay the obligation:
When penalty may be reduced 1. the debtor himself or his legal
1. If the principal obligation has been representative
partly complied with; 2. any third person
2. If the principal obligation has been
irregularly complied with; and GENERAL RULE: Creditor is not bound
3. If the penalty is iniquitous or to accept payment or performance by a
unconscionable even if there has been no third person.
performance. EXCEPTIONS:
1. when made by a third person who
has an interest in the fulfillment
MODES OF EXTINGUISHMENT OF of the obligation;
OBLIGATIONS (LFC3NARP2) 2. when there is a stipulation to the
1. loss of the thing due contrary.
2. fulfillment of resolutory condition
3. compensation Rights of 3rd person who paid the
4. condonation or remission of the debt obligation:
5. confusion or merger of rights of the
creditor and debtor 1. If payment was made with
6. novation knowledge and consent of the
7. annulment debtor:
8. rescission a. can recover entire
9. prescription amount paid

85
b. can be subrogated to all considered payment; not considered

the rights of the creditor. legal tender and may be refused by
2. If payment was made without the creditor. It shall only produce the
knowledge or against the will of effect of payment:
the debtor, he can recover only a. when it has been cashed or
insofar as the payment has been b. when it has been impaired
beneficial to the debtor. through the fault of the creditor.
To whom payment must be made: LEGAL TENDER

1. The person in whose favor the  Such currency which may
obligation has been constituted; be used for the payment of all debts,
2. His successor in interest; or whether private or public. The kind
3. Any person authorized to receive it. of currency which a debtor can
legally compel a creditor to accept in
 GENERAL RULE: If payment is made to a payment of a debt in money when
person other than those enumerated, it tendered by the debtor in the right
shall not be valid. amount.
EXCEPTIONS:  Legal tender of the
1. Payment made to a 3rd person, Philippines would be all notes and
provided that it has redounded to coins issued by the Central Bank.
the benefit of the creditor. Such  Section 52, R.A. No. 7653
benefit to the creditor is 1. 25c and above, legal tender up to
presumed in the following cases: P50
• If after the payment, the 2. 10c and below, legal tender up to
third person acquires the P20
creditor’s rights;
• If the creditor ratifies the Extraordinary inflation or deflation
payment to the third person;  unusual or beyond the
• If by the creditor’s conduct, common fluctuation in the value of
the debtor has been led to currency, which the parties could not
believe that the third person have reasonably foreseen or which
had authority to receive the was manifestly beyond their
payment. contemplation at the time the
2. Payment made to the possessor obligation was established.
of the credit, provided that it  Applies only to
was made in good faith. contractual obligations
 Requisites:
Obligation to Deliver a Generic Thing a. The decrease in the value of the
 If the quality and currency could not have been
circumstances have not been stated, reasonably foreseen by the
the creditor cannot demand a thing parties or beyond their
of superior quality; neither can the contemplation at the time the
debtor deliver a thing of inferior obligation was established ;
quality. b. There must be a declaration of
such extraordinary inflation or
Rules in Monetary Obligations:

1. Payment in cash - must be made deflation by the Bangko Sentral.
in the currency stipulated; if it is not Without such declaration, the
possible to deliver such currency, creditors cannot demand an
then in the currency which is legal increase, and debtors a decrease,
tender in the Philippines. of what is due to or from them.
2. Payment in check or other (Ramos vs. CA, 275 SCRA 167 and
negotiable instrument - not
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
Mobil Oil Phils. vs. CA, 180 SCRA most onerous to the debtor, among
651) those which are due, shall be deemed
to have been satisfied.
Place of payment 2. If the debts due are of the same
1. Place stipulated by the nature and burden, payment shall be
parties. applied to all of them
2. No stipulation and the proportionately.
obligation is to deliver a determinate
thing, payment shall be made at the b. Dation in Payment (DACION EN PAGO)
place where the thing might be at the  Delivery and transmission of
time the obligation was constituted. ownership of a thing by the debtor to
3. In any other case, the the creditor as an accepted
payment shall be made at the equivalent of the performance of the
domicile of the debtor. obligation.
 Requisites:
Special Forms of Payment: a. existence of a money obligation
a. Application of payment b. alienation to the creditor of a
b. Dation in Payment property by the debtor with the
c. Payment by Cession consent of the former
d. Tender of payment and c. satisfaction of the money
Consignation obligation of the debtor
a. Application of Payment c. Payment by Cession

 Designation of the debt to  Debtor abandons all of his property
which the payment must be applied for the benefit of his creditors in
when the debtor has several order that from the proceeds thereof,
obligations of the same kind in favor the latter may obtain payment of
of the same creditor. their credits.
 Requisites:  Requisites:
a. there must be only 1 debtor & a. plurality of debts
only 1 creditor; b. partial or relative insolvency of
b. there must be 2 or more debts of the debtor
the same kind; c. acceptance of the cession by the
c. all of the debts must be due; creditors
except: if there’s stipulation to
the contrary; or application of DATION IN PAYMENT BY
payment is made by the party for PAYMENT CESSION
whose benefit the term has been
constituted; and 1. one creditor 1. plurality of
creditors
d. amount paid by the debtor must
not be sufficient to cover the 2. not necessarily 2. debtor must be
total amount of all the debts. in state of financial partially or relatively
difficulty insolvent
 GENERAL RULE: The right to designate
the debt to which the payment shall be 3. thing delivered is 3. universality of
applied primarily belongs to the debtor. considered as property of debtor is
EXCEPTION: If the debtor does not avail equivalent of what is ceded
of such right and he accepts from the performance
creditor a receipt in which the
4. payment 4. merely releases
application is made.
extinguishes debtor for net
obligation to the proceeds of things
Legal Application of Payment (ART1254) extent of the value ceded or assigned,
1. If neither the debtor nor the creditor of the thing unless there is
makes any application of payment, or delivered as agreed contrary intention
if it cannot be inferred from other upon, proved or
circumstances, the debt which is implied from the

85
conduct of the unknown or is absent, the result

creditor is a litigation. If the debtor
complied with all the requisites,
the obligation is extinguished.
d. Tender of Payment and Consignation
Tender of Payment GENERAL RULE: Consignation shall
 Manifestation of he debtor to the produce effects of payment only if there
creditor of his decision to comply is a valid tender of payment.
immediately with his obligation. EXCEPTIONS: (TIRAT or TRAIT)
 It is the preparatory act and 1. creditor is absent or unknown, or
extrajudicial in character. does not appear at the place of
payment
Consignation 2. creditor incapacitated to receive
 Deposit of the object of the payment at the time it is due
obligation in a competent court in 3. when two or more persons claim the
accordance with the rules prescribed right to collect
by law, after the tender of payment 4. when the title of the obligation has
has been refused or because of been lost
circumstances which render direct 5. when without just cause creditor
payment to the creditor impossible or refuses to give a receipt
inadvisable.
 It is the principal act and judicial in NOTES:
character.
 It is the consignation which
 Special Requisites: constitutes a form of payment and
a. The debt sought to be paid must must follow, supplement or complete
be due; the tender of payment in order to
b. There must be a valid and discharge the obligation.
unconditional tender of payment  A valid tender of payment has the
or any of the causes stated by effect of exempting the debtor from
law for effective consignation payment of interest and/or damages.
without previous tender of  If tender is made by means of a
payment exists; check, such tender is valid because it
c. The consignation of the thing due is an exercise of a right. Article 1249
must first be announced to the is not applicable.
persons interested in the
fulfillment of the obligation; LOSS OF THE THING DUE
d. Consignation shall be made by In Determinate Obligations to Give
depositing the things due at the
disposal of judicial authority; and GENERAL RULE: Obligation is
e. The consignation having been extinguished.
made, the interested parties shall
 Requisites:
also be notified thereof.
1. The thing
which is lost is determinate;
 Effects of consignation: 2. The thing is
1. If the creditor lost without the fault of the
accepts the thing or amount debtor; and
deposited without contesting the 3. The thing is
validity or efficacy of the lost before the debtor has
consignation, the obligation is incurred in delay.
extinguished.
2. If the creditor EXCEPTIONS:
contests the validity or efficacy 1. when by law, obligor is liable
of the consignation or if the even for fortuitous event;
creditor is not interested or
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
2. when by stipulation, obligor is Principle of Subjective Impossibility

liable even for fortuitous event;  When there is no physical or legal loss
3. when the nature of the obligation but the thing object of the obligation
requires the assumption of risk; belongs to another, the performance
4. when the loss of the thing is due by the debtor of the obligation
partly to the fault of the debtor; undoubtedly becomes impossible.
5. when the loss of the thing occurs Failure of performance is imputable
after the debtor incurred in to the debtor. Thus, the debtor must
delay; indemnify the creditor for the
6. when the debtor promised to damages suffered by the latter.
deliver the same thing to two or (Tolentino, Volume IV, p. 336)
more persons who do not have
the same interest; and Effect of Loss on Reciprocal Obligations
7. when the debt of a certain and  First view (Tolentino, Volume IV, pp.
determinate thing proceeds from 337-338) – If an obligation is
a criminal offense extinguished by the loss of the thing
or impossibility of performance
In Generic Obligations to Give through fortuitous events, the
counter-prestation is also
 GENERAL RULE: Obligation is not extinguished. The debtor is released
extinguished because the genus of a thing from liability but he cannot demand
cannot perish. the prestation which has been
EXCEPTION: In case of generic stipulated for his benefit. He who
obligations whose object is a particular gives nothing has no reason to
class or group with specific or demand anything.
determinate qualities (Limited Generic
Obligations)  Second View (JBL Reyes) – The loss or
impossibility of performance must be
In Obligations to Do due to the fault of the debtor. In this
case, the injured party may ask for
Obligation is extinguished when rescission under Article 1191 plus
prestation becomes legally or physically damages. If the loss or impossibility
impossible. was due to a fortuitous event, the
other party is still obliged to give the
Effect of Relative Impossibility or prestation due to the other.
Doctrine of Unforeseen Events (ART
1267) CONDONATION OR REMISSION OF THE
 When the service has become DEBT
difficult as to be manifestly beyond  An act of pure liberality by virtue of
the contemplation of the parties, the which the obligee, without receiving
obligor may also be released any price or equivalent, renounces
therefrom, in whole or in part. the enforcement of the obligation, as
 Requisites: a result of which it is extinguished in
1. The event or change in its entirety or in that part or aspect
circumstances could not have of the same to which the remission
been foreseen at the time of the refers.
execution of the contract;  It is the gratuitous abandonment by
2. It makes the performance the creditor of his right.
of the contract extremely  Requisites:
difficult but not impossible; a. It must be gratuitous
3. The event must not be b. It must be accepted by the
due to the act of any of the debtor
parties; and c. The obligation must be
4. The contract is for a demandable
future prestation.

85
NOTE: Express condonation or remission 1. The requisites prescribe by law for

must comply with the formalities of compensation are different from those
donation. prescribed by law for payment.
2. Takes effect by 2. Takes effect by
operation of law act of the parties
CONFUSION OR MERGER OF RIGHTS
3. Capacity to give 3. Capacity to give
 Merger of the characters of the and to acquire is and to acquire is
creditor and the debtor in one and not necessary essential
the same person by virtue of which 4. As a rule, it is 4. As a rule,
the obligation is extinguished. partial complete and
 Requisites: indivisible
a. that the characters of creditor &
debtor must be in the same
person; Compensation Counterclaim
b. that it must take place in the
person of either the principal 1. Requires 2 1. Not necessary
creditor or the principal debtor; debts must consist
in money or if
and
fungibles, same
c. it must be complete & definite kind and quality
COMPENSATION 2. Both debts must 2. Does not require

 Extinguishment in the concurrent be liquidated that debts be
amount of the obligation of those liquidated
persons who are reciprocally debtors
3. Need not be 3. Must be pleaded
and creditors of each other. pleaded to be effectual
 Requisites:
a. there must be 2 parties, who, in
their own right, are principal Kinds of Compensation
creditors & principal debtors of 1. Legal – takes effect by operation
each other (except in case of of law
guarantor, Article 1280); 2. Voluntary – agreed upon by the
b. both debts must consist in parties
money, or if the things due are 3. Judicial – takes effect by judicial
fungibles, they must be of the decree
same kind & quality; 4. Facultative – when it can be
c. both debts must be due; claimed by one of the parties
d. both debts must be liquidated & who, however, has the right to
demandable; object to it
e. there must be no retention or
controversy commenced by 3rd Debts not subject to Compensation:
persons over either of the debts 1. debts arising from contracts of
& communicated in due time to deposit
the debtor; and 2. debts arising from contracts of
f. compensation must not be commodatum
prohibited by law. 3. claims for support due by
gratuitous title
Compensation Confusion 4. obligations arising from criminal
1. two persons who 1. one person where offenses
are mutual debtors qualities of debtor 5. certain obligations in favor of
and creditors of and creditor are government
each other merged
NOTE: Taxes are not subject to set-off or
2. there must be 2. only one legal compensation because the
at least two obligation
government & taxpayers are not mutually
obligations
creditors & debtors of each other
(Francia vs. IAC, 162 SCRA 753).
Compensation Payment
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
Facultative Compensation  Whether or not the old and new

 This is compensation which can be set obligations can stand together, each
up only at the option of a creditor, having its own independent
when legal compensation cannot take existence. If they can stand together,
place because of want of some legal there is no incompatibility;
requisites for the benefit of the consequently, there is no novation. If
creditor. The latter can renounce his they cannot stand together, there is
right to oppose the compensation and incompatibility; consequently, there
he himself can set it up. It differs is novation.
from conventional compensation
because it is unilateral while the Forms of Substitution of Debtors:
latter depends upon the agreement of Expromision - effected with the consent
both parties. (Tolentino, Volume IV, of the creditor at the instance of the new
p. 367) debtor even without the consent or even
against the will of the old debtor.
NOVATION Requisites:
 Substitution or change of an a. Initiative for substitution must
obligation by another, resulting in its emanate from the new debtor
extinguishment or modification, b. Consent of the creditor to the
either by changing its object or substitution
principal conditions, or by Delegacion - effected with the consent of
substituting another in place of the the creditor at the instance of the old
debtor, or by subrogating a third debtor, with the concurrence of the new
person in the rights of the creditor. debtor.
 Requisites: Requisites:
a. a previous valid obligation; a. Initiative for substitution must
b. agreement of the parties to the emanate from the old debtor
new obligation; b. Consent of the new debtor
c. extinguishment of the old c. Acceptance by the creditor
obligation; and
d. validity of the new obligation. Effect of insolvency of new debtor
Expromision – the new debtor’s
Kinds: insolvency or nonfulfillment of the
1. As to its essence obligation shall not revive the original
a. Objective/Real - refers to the debtor’s liability to the creditor whether
change either in the cause, the substitution is effected with or
object or principal conditions of without the knowledge or against the will
the obligations of the original debtor.
b. Subjective/Personal - refers to Delegacion – the creditor can sue the old
the substitution of the person of debtor only when the insolvency was prior
the debtor or to the subrogation to the delegation and publicly known or
of a 3rd person in the rights of when the old debtor knew of such
the creditor insolvency at the time he delegated the
c. Mixed obligation.
2. As to its form/constitution
a. Express - when it is declared in NOTE: A change in the incidental
unequivocal terms that the old elements of, or an addition of such
obligation is extinguished by a elements to an obligation, unless
new one w/c substitutes the otherwise expressed by the parties, will
same. not result in its extinguishment.
b. Implied - when the old & new
obligation are incompatible w/ CONVENTIONAL ASSIGNMENT OF
each other on every point. SUBROGATION RIGHTS
Test of Incompatibility 1. governed by Arts. 1. governed by Arts.

1300 to 1304 1624 to 1627

85
1. Essential – those without which there

2. debtor’s consent 2. debtor’s consent is can be no contract.
is required not required a. Consent
b. Object or Subject Matter
3. extinguishes the 3. transmission of c. Cause or Consideration
obligation and gives right of the creditor
rise to a new one to third person
2. Natural – those derived from the
without modifying or nature of the contract and ordinarily
extinguishing the accompany the same.
obligation 3. Accidental – those which exist only
when the parties expressly provide
4. defects and 4. defects and vices for them for the purpose of limiting
vices in the old in the old obligation or modifying the normal effects of
obligation are cured are not cured the contract.
5. takes effect 5. as far as the
upon moment of debtor is concerned,
Nominate contracts
novation or takes effect upon
subrogation notification  Those which have their own
distinctive individuality and are
regulated by special provisions of
 Kinds of Subrogation
law.
1. Conventional – takes place by
Innominate contracts
agreement of the parties; this kind of
subrogation requires the intervention  Those which lack individuality and
and consent of 3 persons: the original are not regulated by special
creditor, the new creditor and the provisions of law.
debtor.  Regulated by the stipulations of the
2. Legal – takes place without parties, by the general provisions of
agreement but by operation of law the Civil Code on obligations and
because of certain acts (Article contracts, by rule governing the most
1302). analogous nominate contracts and by
the customs of the place.
GENERAL RULE: Legal subrogation  Kinds:
cannot be presumed. a. Do ut des - I give that you
EXCEPTIONS: give
1. Creditor pays another creditor b. Do ut facias - I give that you
who is preferred, without debtor’s do
knowledge; c. Facio ut des - I do that you
2. A third person not interested in give
the obligation pays with the express d. Facio ut facias - I do that you
or tacit approval of the debtor; or do
3. Even without debtor’s NOTE: According to some authorities.
knowledge, a person interested in the do ut des in no longer an innominate
fulfillment of the obligation pays contract. It has already been given a
without prejudice to the effects of name of its own, i.e. barter or
confusion as to the latter’s share. exchange (Article 1638).
II. CONTRACTS Characteristics of Contracts: (ROMA)

1. Relativity (ART 1311)
CONTRACT 2. Obligatory Force and Consensuality
(ART 1315)
 A contract is a meeting of minds
3. Mutuality (ART 1308)
between two persons whereby one
4. Autonomy (ART 1306)
binds himself, with respect to the
Relativity
other, to give something or to render
GENERAL RULE: Contracts take effect
some service (Article 1305).
only between parties, their assigns and
heirs.
 Elements
EXCEPTIONS:
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
1. Stipulation pour atrui - 4. Contracts entered into in fraud of

stipulation in favor of a third creditors
person.
 Requisites: Mutuality
a. the stipulation  The contract must bind both parties;
must be a part, not the its validity or compliance must not be
whole of the contract; left to the will of one of them. (ART
b. the contracting 1308)
parties must have clearly  The contract cannot have any
and deliberately stipulation authorizing one of the
conferred a favor upon a contracting parties (a) to determine
third person, not a mere whether or not the contract shall be
incidental benefit or valid, or (b) to determine whether or
interest; not the contract shall be fulfilled.
c. the third
person must have Autonomy
communicated his  The parties are free to stipulate
acceptance to the obligor anything they deem convenient
before its revocation; provided that they are not contrary
d. the favorable to law, morals, good customs, public
stipulation should not be order and public policy. (ART 1306)
conditioned or
compensated by any kind Consensuality
of obligation whatever;  Contracts are perfected by mere
and consent and from that moment, the
e. neither of the parties are bound not only to the
contracting parties bears fulfillment of what has been
the legal representative expressly stipulated but also to all
or authorization of the consequences which, according to
third person. their nature may be in keeping with
good faith, usage and law.
Test of Beneficial Stipulation – the
fairest test to determine whether the CONSENT
interest of a 3rd person in a contract is a  Manifested by the concurrence of the
stipulation pour atrui or merely an offer and acceptance upon the thing
incidental interest is to rely upon the and the cause which are to constitute
intention of the parties as disclosed by the contract.
their contract. Determine whether the  Requisites:
contracting parties desired to tender him a. Legal capacity of the
such an interest (Uy Tam vs. Leonard, 30 contracting parties
Phil. 471). b. Manifestation of the
conformity of the contracting
2. When a third person induces a parties
party to violate contract c. The parties’ conformity
(ART1314) to the object, cause, the terms
 Requisites: and conditions of the contract
a. Existence of a valid contract; must be intelligent, spontaneous
b. knowledge of contract by and free from all vices of consent
third person; and d. The said conformity must
c. interference by third person be real and not simulated or
without legal justification or fictitious
excuse.
3. Third persons who come into Offer
possession of the object of the  A proposal made by one party to
contract creating real rights another to enter into a contract.

85
 It must be certain or definite, an express acceptance, the contract

complete and intentional. will be perfected only upon
knowledge by the offeror of the
NOTE: Offer/proposal may be withdrawn express acceptance by the offeree of
so long as the offeror has no knowledge the offer. An acceptance which is
of acceptance by offeree. not made in the manner prescribed
Acceptance by the offeror is NOT EFFECTIVE BUT
 Manifestation by the offeree of his A COUNTER-OFFER which the offeror
assent to the terms of the offer. may accept or reject. (Malbarosa vs.
 It must me absolute. CA, et al., G.R. # 125761, April 30,
 A qualified acceptance constitutes 2003)
counter-offer.  Contracts under the Civil Code
generally adhere to the Cognition
NOTE: Acceptance may be revoked Theory (contract is perfected from
before it comes to the knowledge of the the moment the acceptance comes to
offeror. the knowledge of the offeror), while
transactions under the Code of
Amplified Acceptance Commerce use the Manifestation
 Under certain circumstances, a mere Theory (it is perfected from the
amplification on the offer must be moment the acceptance is declared
understood as an acceptance of the or made).
original offer, plus a new offer which
is contained in the amplification. PERSONS INCAPACITATED TO GIVE
(Tolentino, Volume IV, p. 452) CONSENT:
Rule on Complex offers 1. Minors
1. Offers are interrelated –  EXCEPTIONS:
contract is perfected if all the offers • Contracts where the
are accepted. minor is estopped to raise
2. Offers are not minority as a defense through his
interrelated – single acceptance of own misrepresentation
each offer results in a perfected • Contracts for necessaries
contract unless the offeror has made • Contracts by guardians or
it clear that one is dependent upon legal representatives
the other and acceptance of both is
• Voluntary fulfillment of a
necessary.
natural obligation provided that
the minor is between 18-21 years
NOTES:
of age
 Consensual contracts are perfected • Contracts of life, health
from the moment there is a or accident insurance taken on
manifestation of concurrence the life of the minor
between the offer and the 2. Insane or demented persons, unless
acceptance regarding the object and the contract was entered into during
the cause. a lucid interval
 Real contracts like deposit, pledge 3. Deaf-mutes who do not know how to
and commodatum requires delivery of read and write
object for perfection.
 Solemn contracts are those which Effect of Misrepresentation of Age by
requires compliance with certain the Minor
formalities prescribed by law, such  Misrepresentation by minors with
prescribed form being an essential regard to their age when entering
element (i.e., donation of real into a contract shall bind them in the
property). sense that they are estopped
 An offer made inter praesentes must subsequently from impugning the
be accepted IMMEDIATELY. If the validity of the contract on the ground
parties intended that there should be of minority. It is necessary that the
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
misrepresentation must be active (Martinez vs. Hongkong and Shanghai

(e.g. when minors specifically stated Bank, 15 Phil. 252)
in a contract that they were of age),
not merely constructive.
Simulation of Contracts
VICES OF CONSENT (VIMFU) 1. Absolute – when the contracting
1. Violence - when in order to wrest parties do not intend to be bound by
consent, serious or irresistible force the contract at all. Thus, an
is employed. absolutely simulated contract is VOID.
2. Intimidation - when 1 of the 2. Relative – when the contracting
contracting parties is compelled by a parties conceal their true agreement.
reasonable & well-grounded fear of A relatively simulate contract binds
an imminent & grave evil upon his the parties to their real agreement,
person or property, or upon the when it does not prejudice a 3rd
person or property of his spouse, person and is not intended for any
descendants or ascendants, to give purpose contrary to law, morals, good
his consent. customs, public order or public
3. Mistake - should refer to the policy.
substance of the thing which is the
object of the contract, or to those OBJECT
conditions which have principally  The thing, right or service which is
moved one or both parties to enter the subject matter of the obligation
into the contact. arising from the contract.
 Must be mistake of fact and not of  Requisites:
law, except under Article 1334. a. It must be w/in the commerce of
 Requisites under Article man
1334: b. It must be licit or not contrary
a. Mistake must be law, morals, good customs, public
with respect to the legal order or public policy
effect of an agreement c. It must be possible
b. Mistake must be d. It must be determinate as to its
mutual kind
c. Real purpose of the
parties must have been Things which Cannot be the Object of
frustrated. Contract
4. Fraud - when, through insidious 1. Things which are outside
words or machinations of 1 of the the commerce of men
contracting parties, the other is 2. Intransmissible rights
induced to enter into a contract 3. Future inheritance,
which, without them, he would not except in cases expressly
have agreed to. authorized by law
5. Undue influence - when a person 4. Services which are
takes improper advantage of his contrary to law, morals, good
power over the will of another, customs, public order or public
depriving the latter of a reasonable policy
freedom of choice. 5. Impossible things or
services
Reluctant Consent 6. Objects which are not
 A contract is valid even though one of possible of determination as to
the parties entered into it against his their kind
wishes and desires or even against his CAUSE
better judgment. Contracts are also
 The immediate,
valid even though they are entered
direct and most proximate reason
into by one of the parties without
which explains and justifies the
hope of advantage or profit.
creation of obligation.

85
 Requisites 1. When the law requires that a

a. Cause should be in existence at contract be in some form in order
the time of the celebration of the that it may be valid
contract 2. When the law requires that a
b. Cause should be licit or lawful contract be in some form in order
c. Cause should be true that it may be enforceable
 Rules: NOTES:
1. In onerous contracts, the cause is
understood to be, for each  Parties may compel each other to
contracting party, the prestation of comply with the form required once
promise of a thing or service by the the contract has been perfected.
other. (Article 1357)
2. In remuneratory contracts, the  Contracts under Art 1358 which are
service or benefit w/c is required to be in some specific form
remunerated. is only for the convenience of parties
3. In contracts of pure beneficence, and does not affect its validity and
the mere liberality of the donor or enforceability as between them.
benefactor.
4. In accessory contracts (mortgage or RA 8792 (E- COMMERCE ACT) provides
pledge), the cause is identical with that the formal requirements to make
the cause of the principal contract, contracts effective as against third
that is, the loan from which it derives persons and to establish the existence of
its life and existence. a contract are deemed complied with
provided that the electronic document is
CAUSE EFFECT unaltered and can be authenticated as to
the contract confers be usable for future reference.
1. Absence of cause no right and produces
no legal effect REFORMATION OF INSTRUMENTS
does not render the
 Requisites:
2. Failure of cause contract void
the contract is null
a. meeting of the minds to the
3. Illegality of cause and void contract
the contract is void, b. true intention is not expressed in
4. Falsity of cause unless the parties the instrument by reason of
show that there is mistake, accident, relative
another cause which simulation, fraud, or inequitable
is true and lawful conduct
does not invalidate c. clear and convincing proof of
5. Lesion the contract, unless mistake, accident, relative
(a) there is fraud, simulation, fraud, or inequitable
mistake or undue
influence; or (b) when
conduct
the parties intended a
donation or some Instances when there can be no
other contract reformation:
1. Simple unconditional donations
inter vivos;
FORM OF CONTRACTS 2. Wills;
GENERAL RULE: Contracts shall be 3. When the agreement is void;
obligatory, in whatever form they may
have been entered into, provided all the When one of the parties has brought an
essential requisites for their validity are action to enforce the instrument, no
present. subsequent reformation can be asked.
EXCEPTIONS:
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
COMPARATIVE TABLE OF DEFECTIVE CONTRACTS
VOID VOIDABLE RESCISSIBLE UNENFORCEABLE
1. Defect is caused Defect is caused by vice Defect is caused by Defect is caused by

by lack of essential of consent injury/ damage either lack of form,
elements or illegality to one of the parties of authority, or capacity
to a 3rd person of both parties not
cured by prescription
2. Do not, as a Valid and enforceable Valid and enforceable Cannot be enforced by

general rule produce until they are annulled until they are rescinded a proper action in
any legal effect by a competent court by a competent court court
3. Action for the Action for annulment or Action for rescission Corresponding action
declaration or nullity defense of annulability may prescribe for recovery, if there
or inexistence or may prescribe was total or partial
defense of nullity or performance of the
inexistence does not unenforceable
prescribe contract under No. 1
or 3 of Article 1403
may prescribe
4. Not cured by Cured by prescription Cured by prescription Not cured by

prescription prescription
5. Cannot be ratified Can be ratified Need not be ratified Can be ratified
6. Assailed not only Assailed only by a Assailed not only by a Assailed only by a
by a contracting contracting party contracting party but contracting party
party but even by a even by a third person
third person whose who is prejudiced or
interest is directly damaged by the
affected contract
7. Assailed directly or Assailed directly or Assailed directly only Assailed directly or

collaterally collaterally collaterally
3. those undertaken in fraud of creditors

RESCISSIBLE CONTRACTS when the latter cannot in any manner
 Contracts validly agreed upon but, by claim what are due them;
reason of lesion or economic
prejudice may be rescinded in cases 4. those which refer to things under
established by law. litigation if they have been entered
into by the defendant without the
What contracts are rescissible knowledge and approval of the
1. those entered into by guardians litigants and the court;
where the ward suffers lesion of more 5. all other contracts especially
than ¼ of the value of the things declared by law to be subject to
which are objects thereof; rescission; and
2. those agreed upon in representation 6. payments made in a state of
of absentees, if the latter suffer insolvency on account of obligations
lesion by more than ¼ of the value of not yet enforceable
the things which are subject thereof;
 Requisites:
a. the contract must be rescissible

85
b. the party asking for rescission 5. Court may fix a 5. Court cannot grant
must have no other legal means period or grant extension of time for
c. to obtain reparation for the extension of time for fulfillment of the
damages suffered by him the fulfillment of the obligation.
obligation.
d. the person demanding rescission
6. Its purpose is to 6. Its purpose is to
must be able to return whatever cancel the contract. seek reparation for
he may be obliged to restore if the damage or injury
rescission is granted caused, thus allowing
e. the things w/c are the object of partial rescission of
the contract must not have the contract.
passed legally to the possession
of a 3rd person acting in good VOIDABLE CONTRACTS
faith  Those in which all of the essential
f. the action for rescission must be elements for validity are present,
brought w/in the prescriptive although the element of consent is
period of 4 years vitiated either by lack of capacity of
one of the contracting parties or by
VIMFU.
BADGES OF FRAUD:
1. Consideration of the conveyance What contracts are voidable
is inadequate or fictitious; 1. Those where one of the parties is
2. Transfer was made by a debtor incapable of giving consent to a
after a suit has been begun and contract
while it is pending against him; 2. Those where the consent is vitiated
3. Sale upon credit by an insolvent by mistake, violence, intimidation,
debtor; undue influence or fraud
4. Evidence of indebtedness or
complete insolvency Causes of extinction of action to annul:
5. Transfer of all his property by a 1. PRESCRIPTION
debtor when he is financially
 the action must be commenced
embarrassed or insolvent;
within 4 years from:
6. Transfer made between father &
a. the time the incapacity ends;
son, where there is present any
b. the time the violence,
of the above circumstances
intimidation or undue
7. Failure of the vendee to take
influence ends; or
exclusive possession of all the
c. the time the mistake or fraud
property
is discovered.
NOTE: Discovery of fraud must be
reckoned to have taken place from
Rescission in Rescission Proper
the time the document was
Article 1191 in Article 1381
registered in the office of the register
1. It is a principal 1. It is a subsidiary
action retaliatory in remedy.
of deeds. Registration constitutes
character. constructive notice to the whole
2. The only ground is 2. There are 5 world. (Carantes vs. CA, 76 SCRA
non-performance of grounds to rescind. 514)
one’s obligation/s or Non-performance by
what is incumbent the other party is not 2. RATIFICATION
upon him. important.  Requisites:
3. It applies only to 3. It applies to both a. there must be knowledge of
reciprocal obligation unilateral and the reason which renders the
reciprocal obligations.
contract voidable
4. Only a party to the 4. Even a 3rd person
contract may demand who is prejudiced by b. such reason must have ceased
fulfillment or seek the contract may and
the rescission of the demand the rescission c. the injured party must have
contract. of the contract. executed an act which
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
expressly or impliedly  The contracts/agreements under the

conveys an intention to waive Statute of Frauds require that the
his right same be evidenced by some note,
3. By loss of the thing which is the memorandum or writing, subscribed
object of the contract through fraud by the party charged or by his agent,
or fault of the person who is entitled otherwise, the said contracts shall be
to annul the contract. unenforceable.
NOTE: If the object is lost through

 The statute of frauds applies only to
executory contracts, not to those
fortuitous event, the contract can still be
that are partially or completely
annulled, but the person obliged to
fulfilled.
return the same can be held liable only
for the value of the thing at the time of
Ratification of contracts in violation of
the loss, but without interest thereon.
the Statute of Frauds
1. Failure to object to the presentation
UNENFORCEABLE CONTRACTS
of oral evidence to prove such
 Those which cannot be enforced by
contracts
proper action in court unless they are
2. Acceptance of benefits under these
ratified
contracts
What contracts are unenforceable VOID CONTRACTS
1. those entered into  Those where all of the requisites of a
in the name of another by one contract are present but the cause,
without or acting in excess of object or purpose is contrary to law,
authority; morals, good customs, public order or
2. those where both public policy, or contract itself is
parties are incapable of giving prohibited or declared void by law.
consent; and
3. those which do not What contracts are void
comply with the Statute of Frauds
1. Those whose cause, object or purpose
is contrary to law, morals good
Agreements within the scope of the
customs, public order or public
Statute of Frauds (EXCLUSIVE LIST):
policy;
1. Agreements not to be performed
2. Those whose object is outside the
within one year from the making
commerce of men;
thereof;
3. Those which contemplate an
2. Special promise to answer for the
impossible service;
debt, default or miscarriage of
4. Those where the intention of the
another;
parties relative to the principal
NOTE: This does not refer to the original
object of the contract cannot be
or independent promise of the debtor
ascertained; and
to his own creditor. It refers rather to
5. Those expressly prohibited or
a collateral promise.
declared void by law.
3. Agreement in consideration of
marriage other than a mutual promise
INEXISTENT CONTRACTS
to marry;
4. Agreement for the sale of goods, etc.  Those where one or some or all of the
at a price not less than P500.00; requisites essential for the validity of
5. Contracts of lease for a period longer a contract are absolutely lacking.
than one year;
6. Agreements for the sale of real What contracts are inexistent
property or interest therein; and 1. Those
7. Representation as to the credit of a which are absolutely simulated or
third person. fictitious; and
NOTES:
85
2. Those recovering what he has given to

whose cause or object did not exist at the other party by reason of the
the time of the transaction. contract.
b. Innocent party may demand for
NOTE: The principle of In Pari Delicto is the return for the return of what
applicable only to void contracts and not he has given.
as to inexistent contracts. 2. Executory Contracts - Neither of the
Principle of In Pari Delicto contracting parties can demand for
 GENERAL RULE: When the defect of a the fulfillment of any obligation from
void contract consists in the illegality of the contract nor may be compelled
the cause or object of the contract and to comply with such obligation
both of the parties are at fault or in pari
delicto, the law refuses them every NATURAL OBLIGATIONS
remedy and leaves them where they are.  They are real obligations to which the
EXCEPTIONS: law denies an action, but which the
1. Payment of usurious interest debtor may perform voluntarily.
2. Payment of money or delivery of  It is patrimonial, and presupposes a
property for an illegal purpose, prestation.
where the party who paid or  The binding tie of these obligations is
delivered repudiates the contract in the conscience of man, for under
before the purpose has been the law, they do not have the
accomplished, or before any necessary efficacy to give rise to an
damage has been caused to a 3rd action.
person.
3. Payment of money or delivery of Examples of natural obligations
property made by an enumerated under the Civil Code:
incapacitated person 1. Performance after the civil obligation
4. Agreement or contract which is has prescribed;
not illegal per se & the 2. Reimbursement of a third person for
prohibition is designed for the a debt that has prescribed;
protection of the plaintiff 3. Restitution by minor after annulment
5. Payment of any amount in excess of contract;
of the maximum price of any 4. Delivery by minor of money or
article or commodity fixed by law fungible thing in fulfillment of
or regulation by competent obligation;
authority. 5. Performance after action to enforce
6. Contract whereby a laborer civil obligation has failed;
undertakes to work longer than 6. Payment by heir of debt exceeding
the maximum # of hours fixed by value of property inherited; and
law. 7. Payment of legacy after will have been
7. Contract whereby a laborer declared void.
accepts a wage lower than the
minimum wage fixed by law. ESTOPPEL
8. One who lost in gambling because  A condition or state by virtue of
of fraudulent schemes practiced which an admission or representation
on him is allowed to recover his is rendered conclusive upon the
losses [(Art. 315, 3 (b), RPC] even person making it and cannot be
if gambling is a prohibited one. denied or disproved as against the
person relying thereon.
Rules when only one of the parties is at  Kinds:
fault: 1. Estoppel in Pais (by conduct)
1. Executed Contracts: a. Estoppel by silence
a. Guilty party is barred from b. Estoppel by acceptance of
recovering what he has given to benefits
the other party is barred from 2. Technical Estoppel
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
a. Estoppel by deed
b. Estoppel by record
c. Estoppel by judgment
d. Estoppel by laches
LACHES PRESCRIPTION
LACHES or “STALE DEMANDS”
 Failure or neglect, for an 1. concerned with 1. concerned with
unreasonable and unexplained length effect of delay fact of delay
of time, to do that which, by
exercising due diligence, could or 2. question of 2. question or matter
should have been done earlier; it is inequity of of time
negligence or omission to assert a permitting the claim
right within reasonable time, to be enforced
warranting a presumption that the
party entitled to assert it either has 3. not statutory 3. statutory
abandoned it or declined to assert it.
4. applies in equity 4. applies at law
 Elements:
a. Conduct on part of the 5. not based on a 5. based on a fixed
defendant, or of one under whom fixed time time
he claims, giving rise to the
situation of which complaint is
made and for which the
complaint seeks a remedy
b. Delay in asserting the
complainant’s rights, the
complainant having knowledge or
notice, of the defendant’s
conduct and having been
afforded the opportunity to
institute a suit
c. Lack of knowledge or notice on
the part of the defendant that
the complainant would assert the
right on which he bases his suit
d. Injury to the defendant in the
event relief is accorded tot the
complainant, or the suit in not
held to be barred


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San Beda College of Law

MEMORY AID IN CIVIL LAW

OBLIGATIONS AND CONTRACTS

OBLIGATION through mistake to another who has no

CIVIL LAW COMMITTEE

a. Determinate or specific – object granted if, under the circumstances

MEMORY AID IN CIVIL LAW

3. recover damages 1. Mora solvendi - delay of the debtor to

CIVIL LAW COMMITTEE

2. Purpose is to 2. Purpose is to  The thing or transaction speaks for

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

 GENERAL RULE: No liability in case of 1. When they are not transmissible

EFFECT OF FORTUITOUS EVENT CONDITIONAL OBLIGATION

MEMORY AID IN CIVIL LAW

1. If there is an express stipulation

CLASSIFICATION OF TERM OR PERIOD

CIVIL LAW COMMITTEE

b. conventional –stipulated by NOTE: The only action that can be

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

obligation extinguish the fault of the former, has

JOINT AND SOLIDARY OBLIGATIONS

contribute to the indemnity beyond their no invasion of the personal or

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

the principal obligation payment or performance

 GENERAL RULE: The penalty fixed by Integrity of Payment

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

b. can be subrogated to all considered payment; not considered

To whom payment must be made: LEGAL TENDER

Rules in Monetary Obligations:

a. Application of Payment c. Payment by Cession

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

conduct of the unknown or is absent, the result

CIVIL LAW COMMITTEE

2. when by stipulation, obligor is Principle of Subjective Impossibility

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

NOTE: Express condonation or remission 1. The requisites prescribe by law for

COMPENSATION 2. Both debts must 2. Does not require

Facultative Compensation  Whether or not the old and new

Test of Incompatibility 1. governed by Arts. 1. governed by Arts.

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

1. Essential – those without which there

II. CONTRACTS Characteristics of Contracts: (ROMA)

1. Stipulation pour atrui - 4. Contracts entered into in fraud of

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

 It must be certain or definite, an express acceptance, the contract

misrepresentation must be active (Martinez vs. Hongkong and Shanghai

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

 Requisites 1. When the law requires that a

CIVIL LAW COMMITTEE

COMPARATIVE TABLE OF DEFECTIVE CONTRACTS

VOID VOIDABLE RESCISSIBLE UNENFORCEABLE

1. Defect is caused Defect is caused by vice Defect is caused by Defect is caused by

2. Do not, as a Valid and enforceable Valid and enforceable Cannot be enforced by

4. Not cured by Cured by prescription Cured by prescription Not cured by