FINALS

THE LAW ON
OBLIGATIONS AND
CONTRACTS

PRINCESS MICHAELLA SACLET

BSA-3A

2019-2020
LOSS OF THE THING DUE (2) The event could not be foreseen, or if foreseen, is inevitable;
(3) It becomes impossible in the part of the debtor to comply his obligation to
Article 1189
that ordinary mind.
(1) If the thing is lost without the fault of the debtor, the obligation sall be (4) There must be no contributory negligence or act on the part of the debtor.
extinguished;
EXCEPTIONS
(2) If the thing is lost through the fault the fault of the debtor, he shall be
obliged to pay for the damages;  Law
(3) When the thing deteriorates without the fault of the debtor, the  Stipulation of the parties
impairment is to be borne by the creditor;  The object is a generic thing
(4) If it deteriorates through the fault of the debtor, the creditor may choose  The object is a proceed of a criminal act
between the rescission of the obligation and its fulfilment, with indemnity  It involves mandatory contract
to pay for the damages in either case.  It promises the same object to 2 or more person having different
(5) If the thing is improved by its nature, or by time, the improvement shall interest.
inure to the benefit of the creditor; …………………………………………………….…………………………………………………………………….
(6) If it is improved at the expense of the debtor, he shall have no other right
than that granted to the usufructuary. DONATION
- (condonation/remission) is the gratuitous abandonment by the
 LOST- when it perishes, or goes out of commerce, or disappears in such a creditor of his right against the debtor.
way that its existence is unknown or it cannot be recovered.
 DETERIORATES- when its value is reduced or impaired with or without 2 ELEMENTS
the fault of the debtor. 1. Act of liberality
 IMPROVEMENT- when its value is increased or enhanced by nature or by 2. It must be accepted by the debtor.
time or at the expense of the debtor or the creditor.
ELEMENTS OF GRATUTOUS

Article 1190 1. Pure beneficience

2. Remuneratory
When the conditions have for their purpose the extinguishment of an
obligation to give, the parties, upon the fulfillment of said conditions, shall return to KINDS OF DONATION
each other what they have received. 1. Inter-vivos – when it will take effect during the lifetime of the donor.
In case of loss, deterioration or improvement of the thing, the provisions 2. Mortis causa – when it will become effective upon the death of the donor. It
which, with respect to the debtor, are laid down in the preceding article shall be must comply with the formalities of a will.
applied to the party who is bound to return. ……………………………………………………………….……………………………………………………………
As for the obligations to do and not to do, the provisions of the second COMPENSATION
paragraph of article 1187 shall be observed as regards the effect of the - Is the extinguishment to the concurrent amount of the debts of two
extinguishment of the obligation. persons who, in their own right, are debtors and creditors of each
other.

Article 1174 CONTRACTS NOT SUBJECT TO COMPENSATION

Except in cases expressly specified by the law, or when it is otherwise 1. Contract of DEPOSIT
declared by the stipulation, or when the nature of the obligation requires the -is constituted from the moment a person receives a thing belonging to
assumption of risk, no person shall be responsible for those events which could not another with the obligation of safely keeping it and of returning the
be foreseen, or which though foreseen, were inevitable. same.

REQUISITES OF A FORTUITOUS EVENT Example (Cruz, 2019)

(1) The event must be independent of the human will or at least of the Si B1 sumakay sa barko ni B2. Pinatago ni B2 kay B1 yung Php200,000 na
debtor’s will’ dala-dala nya for safe keeping. Kapag nagpatago ka for safe keeping at kinuha mo
yun, yung identical object yung dapat na ibalik sayo (the same serial number ng
pera). At yung depositary, yung pinaglagakan mo, as a rule ay hindi pwedeng
gamitin yung pinatago maliban nalang kung for preservation.
Yung dineposit mo na pera sa bangko ay hindi contarct of deposit, ang
kontratang pinasok mo ay mutuum/simple loan. Kaya not the same serial number
ng pera ang bumabalik sayo.
*di pwede ang compensation pa gang isa sa obligation ay galing sa deposit.
2. Contract of COMMODATUM
-is a gratuitous contract whereby one of the parties delivers to another
something not consumable so that the latter may use the same for a
certain tie and return it.
*when a contract arises from a commodatum, di pwede ang compensation.
3. Contract of SUPPORT
-it comprises everything that is indispensable for sustenance, dwelling,
clothing, medical attendance, education and transportation, in keeping
with the financial capacity of the family.
-it depends on the provider and the need to provide.
…………………………………………………………………………………………..………………………………….
MERGER OR CONFUSION
- Kailangan mag-exist sa principal parties, hindi sa accessory parties.
- Is the meeting in one person of the qualities of creditor and debtor
with respect to the same obligation.
REQUISITES
(1) It must take place between the principal debt and the creditor;
(2) It must be complete.
ARTICLE 1276
Merger which takes place in the person of the principal debtor or creditor
benefits the guarantors.
Confusion which takes place in the person of any of the latter does not
extinguish the obligation.
……………………………………………………………………………………………………………………………
NOVATION
- is the total or partial extinction of an obligation through the creation
of a new one which substitutes it.
Article 1291. Obligations may be modified by:
(1) Changing their object or principal conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the rights of the creditor.
*SUBSTITUTION - when the person of the debtor is substituted.
(1) Expromision – or that takes place when a third person of his own
initiative and without the knowledge or aganst the will of the
original debtor assumes the latter’s obligation with the consent of
the third person.
- It logically requires the consent of the third person and the creditor.
(2) Delegacion – or that which takes place when the creditor accepts a
third person to take place of the debtor at the instance of the latter.
The creditor may withhold approval.
- In delegacion, all the parties, the old debtor, the new debtor, and the
creditor must agree.
*SUBROGATION – when a third person is subrogated in the rights of the creditor.
(1) Conventional – when it takes place by express agreement of the
original parties and the third person.
- All consent are present.
(2) Legal – when it takes place without the agreement but by operation
of law.
…………………………………………….………………………………………………………………………………
CONTRACT
Article 1305.
A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
Example: (Cruz, 2019)
Papano kung yung principal kinausap si agent. “Agent hanap ka
mauutangan isang daang libo with interest na Php 10,000 per month (bayad ng
principal, bayad ng interest), bigyan kita ng commission limang libo”. Pumayag si A,
therefore si P at si A ay iisang person. Nagkatawang tao si A para kay P, at sya ang
tatayong debtor. May isang person, may isang party na debtor. Naghanap si A, nakita
si X at pumayag si X. therefore si X ay another person, si X ay another party called
creditor. Sa example nayun ay, 2 persons and 2 parties.
But what if the following day si A mismo ang nagpautang kay P? So si A ay
1 person acting as the debtor- acting as the creditor. Auto-contract exist.
*art.1305 defect
-it must be 2 or more parties, not person.
…………….……………………………………………………………………………………………………………….
*meeting of minds is equivalent to consent.
CONSENT
- is an essential requisite of a contract.
- It exist if there is a definite offer and absolute unconditional
acceptance.
*if offer and acceptance meet, there is already a meeting of mind.
2 ELEMENTS/REQUISITES Binili ni S ng Jan.5, sabi nito I am offering to sell my only car plate number
blaah blaah blaah for Php300,000. It was mail on Jan.5 and was receive on Jan.9 by
 OFFER- certain and definite and must be with acceptance.
the buyer. On Jan.10 the buyer wrote a reply letter accepting the offer, it was mailed
-is the proposal made by one party to another, indicating
on Jan10 and was receive on Jan14 by that letter. It was on Jan14 that the offer and
wiliness to enter into a contract.
the acceptance meet. Therefore, it was on Jan14 when the contract is perfected.
 ACCEPTANCE- absolute or unconditional.
- is the manifestation by the offeree of his assent to all *pwede mo pa iback-out ang offer, provide that the withdrawal be made before the
the terms of the offer. Without acceptance, there can no knowledge of the acceptance.. OKAY LANG BASTA BAWIIN MO BAGO MO MALAMAN
be meeting of the minds between the parties. NA TINANGGAP ANG INOOFFER MO.
*kailangan magkita ang offer and acceptance upon a thing. *pag winithdraw mo yan ,at alam mo ng tinanggap, hindi na valid withdrawal at
liable ka for damages.
Example: (Cruz, 2019)
Example: (Cruz, 2019)
S: ”Binebenta ko tong relo ko sayo”.
When the seller mailed it on Jan5. He changes his mind on Jan6, therefore
B: “Sir bibilhin ko yan”.
on Jan6 nag-mail sya for withdrawal of offer. Yung kanyang letter of offer was
(no contract of sale yet) receive on Jan9 nung Jan 10 nag-mail ng letter of acceptance, Jan11 natanggap ng
- not a certain offer  no price buyer yung letter of withdrawal, Jan14 natanggap ng seller yung letter of
acceptance.
S: “Binebenta ko tong relos ko sayo ng isang libo”.
*the withdrawal is VALID, the seller make his withdrawal before learned about the
B: “Sir bilhin ko yan Php800”. acceptance.
(still has no contract of sale) Example: (Cruz, 2019)
- I’ll buy it for Php800  acceptance still has a condition or qualification. Yung seller taga Caloocan, may binebentang property sa Laguna
2 KINDS OF ACCEPTANCE magkadikit (joint lots; lot A, lot B). Binebenta nya yung lot B sa halagang isang
million mahigit 200 sqm. Si buyer pumunta sa Caloocan, willing to buy, binigay ni
Acceptance through intermediary seller yung address. Pinuntahna ng buyer sa Laguna, pero ang lot A ang akala ni
- Somebody intermediate or somebody acted in the middle (agent) buyer na lot B. binayaran ng buyer, after a week he started to put a fence. Nalaman
ng seller, ipinahinto. Sabi ni buyer “hello lot A yan”.
Acceptance through correspondence
*not a perfected contract of sale dahil yung offer ay sa lot B at ang acceptance ay s
- Acceptance through letters, telegrams, e-mails. lot A. kailngan magkita ang offer at acceptance upon a thing. The contract is VOID
COUNTER- OFFER dahil walang consent.

- an acceptance subject to a condition. ……………………………………………………………………….………………………………..……………………

- a qualified acceptance. CONSENSUAL CONTRACT- perfected by mere meeting of minds.
............................................................................................................................................................................... REAL CONTRACT- is perfected by delivery.
ESSENTIAL REQUISITES OF A CONTRACT -need to deliver the object (the following).
-Consent  contract of pledge
- means delivery of goods as security for the payment of debt or
-Object performance of a promise.
-Consideration  contract of deposit
-deposit is constituted from the moment a person receives a
*according to article 1409 if wala ang isa dyan, the contract is VOID! thing belonging to another, with the obligation of safely keeping it and
*the consent and the offer must meet upon a thing. of returning the same.
 contract of commodatum
Example: (Cruz, 2019) -refers to a gratuitous loan of a movable property which is to be
returned undamaged to the lender
 *kapag may kulang dyan sa tatlo, di sya real contract. Magiging *inheritance starts at the point of death
consensual nalang sya.
*a future fruits can be a valid object of a contract (magbababoy)
……………………………………………………………………………………………………………………………...
PERFECTION OF CONTRACT
INCAPABLE PERSON
- you must deliver the contract
1. minor
……………………………………………………………………………..…………………………………………… 2. insane
3. deaf-mute who doesn’t know how to write.
CLASSES OF CONTRACT
*1 incapable = the contract is VOIDABLE (remedy: annulment)
PRINCIPAL – it can stand alone.
*2 incapable = the contract is UNENFORCEABLE
ACCESSORY – it must be dependent upon a principal contract to exist.
*if the contract is OUTSIDE THE COMMERCE OF MAN = the contract is VOID
PREPARATORY – contract to enter ________ in preparation to enter another
contract. *if one of the essential requisite of contract is not present = the contract is VOID
GRATUITOUS – there is a ______ from value-to-value. *if the third person acted without authority = the contract is UNENFOREABLE.
ONEROUS- there is a ______ like contract of sale. *if the third person do the obligation in excess of authority = the contract is
UNENFORCEABLE.
ALEATORY – there is an assumption of risk.
*if there is a mistake, violence, intimidation, undue influence, or fraud = the contract
CONTRACT OF ADHESION – to adhere or not to adhere.
is VOIDABLE.
UNILATERAL- dependent upon the will of one party.
* if the contract rises from bad acts = the contract is VOID
BILATERAL – two parties
Example: (Cruz, 2019)
TRIPARTITE- three parties
1 illiterate + 1 minor = VOIDABLE
MULTILATERAL – multi-parties.
1 illiterate + 1 deaf-mute = VALID?
____________ ___________ ___________ ___________ ___________ ___________ ___________ ____________
……………………………………………………………………………………………………………………………
REAL – is perfected by delivery
ARTICLE 1306
CONSENSUAL
The contracting parties may establish such stipulations, clauses, tems and
PERSONAL conditions as they may deem convenient, provided that they are not contrary to law,
NOMINATE- with designated name. morals, good customs, public order, or public policy.

INNOMINATE- without designated name AUTONOMOUS – there is an independence.

The parties can stipulate whatever they want to stipulate. Basta di
……………………………………………………………………………………………………………………………
contradict sa law, morals, good custom, public order or public policy.
*cadavers can only be sold for scientific purposes.
This is called “THE FREEDOM TO STIPULATE AUTONOMY OF CONTRACT”.
OBJECT
…………………………………………………………………………………………………………………………..
- things …within the commerce of man. ARTICLE 1307
- rights …not transferable or non-transmissible
- services ...must not be contrary to law. Innominate contracts shall be regulated by the stipulations of the parties,
by the provisions if Titles I and II of this book, by the rules governing the most
(outside the commerce of man, VOID)…Art.1409 analogous nominate contracts and by the customs of the place.
*a human person is considered a thing, BUT YOU CANNOT BE AN OBJECT OF A KINDS OF INNOMINATE CONTRACT
CONTRACT. But can be a valid object of services.
 1. DO UT DES – I give that you may give *real rights
2. DO UT FACIAS – I give that you may do.
……………………………………………………………………………………………………………………………...
3. FACTO UT DES – I do that you may give.
4. FACTO UT FACIAS - I do that you may do. ARTICLE 1313
*DO- I give *DES – give Creditors are protected in cases of contacts intended to defraud them.
*FACTO – I do *FACIAS – do *recission
……………………………………………………………………………………………………………………………... ……………………………………………………………………………………………………………………………...
ARTICLE 1308 ARTICLE 1314
The contract must bind both contracting parties, its validity or compliance Any third person who induces another to violate shall be liable for
cannot be left to the will of one of them. damages to the other contracting party.
*is called the “MUTUALITY OF CONTRACT”. *induces- nanghihikayat.
A N D ……………………………………………………………………………………………………………………………...
ARTICLE 1309 ARTICLE 1317
The determination of the performance may be left to a third person, whose No one may contract in the name of another without being authorized by
decision shall not be binding until it has been made known to both contracting the latter, or unless he has by law a right to represent him.
parties. A contract entered into the name of another by one who has no authority
*if di magkasundo, the parties can refer to another person. or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is on whose behalf it has been executed, before it is
……………………………………………………………………………………………………………………..............
revoked by the other contracting party.
ARTICLE 1311
……………………………………………………………………………………………………………………………...
Contracts take effect only between the parties, their assigns and heirs,
ARTICLE 1321
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is The person making the offer may fix the time, place, and the manner of
not liable beyond the value of the property he received from the decedent. acceptance, all of which must be complied with.
If a contract should contain some stipulation in favor of a third person, he ……………………………………………………………………………………………………………………………...
may demand it fulfillment provided he communicated his acceptance to the obligor ARTICLE 1323
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred a An offer becomes ineffective upon the death, civil interdiction, insanity, or
favor upon a third person. insolvency of either party before acceptance is conveyed.
WHO BINDS THE CONTRACT #wala tayong usapan
1. PARTIES CIVIL INTERDICTION – accessory penalty ng mga nakulong.
2. HEIRS ……………………………………………………………………………………………………………………………
3. ASIGNEE
ARTICLE 1324
…can also be “ STIPULATION IN FAVOR OF 3RD PERSON”. (basta inilaan sa kanya)
When the offerer has allowed the offeree a certain period to accept, the
…………………………………………………………………………………………………………………………. offer may be withdrawn at any time before acceptance by communicating such
ARTICLE 1312 withdrawal, except when the option is founded upon a consideration, as something
paid or promised.
In contracts creating real rights, third person who come into possession of
the object of the contract are bound thereby, subject to the provisions of the OPTION MONEY- is the money paid or promised to be paid in consideration for the
Mortgage Law and the land Registration Law. option.
EARNEST MONEY – which is actually a partial payment of the purchased price and There is INTIMIDATION when one of the contracting parties is compelled
is considered as proof of the perfection of the contract. by a reasonable and well-grounded fear of an imminent and grave evil upon his
person or property, or upon the person or property of his spouse, descendants or
……………………………………………………………………………………………………………………………
ascendants, to give his consent.
ARTICLE 1325
To determine the degree of the intimidation, the age, sex and condition of
Unless it appears otherwise, business advertisements of things for sale are the person shall be borne in mind.
not definite offers, but mere invitations to make an offer.
A THREAT to enforce one’s claim through competent authority, if the
…………………………………………………………………………………………………………………………...... claim is just or legal, does not vitiate consent.
ARTICLE 1328 *intimidation – mental na pamimilit. (mental coercion)
Contracts entered into during a lucid interval are valid. Contracts agreed to *violence – pisikal na pamimilit (physical coercion)
in a state of drunkenness or during a hypnotic spell are voidable.
*if ang violence and intimidation ginawa ng goons, it can vitiate consent.
……………………………………………………………………………………………………………………………..
……………………………………………………………………………………………………………………………...
INCOMPETENT
ARTICLE 1337
1. Persons suffering the accessory penalty civil interdiction.
There is an undue influence when a person takes improper advantage of
2. Hospitalized lepers
his power over the will of another, depriving the latter of a reasonable freedom of
3. Prodigals
choice. The following circumstances shall be considered: the confidential, family,
4. Deaf and dumb who are unable to read and write
spiritual and other relations between the parties, or the fact that the person alleged
5. Those who are unsound mind even though they have lucid intervals
to have been unduly influenced was suffering from metal weakness, or was ignorant
6. Those who, by reason of age, disease, weak mind and other similar causes,
or in financial distress.
cannot without outside aid, take care of themselves and manage their
property, becoming thereby an easy prey for deceit and exploitation. ……………………………………………………………………………………………………………………………...
……………………………………………………………………………………………………………...………… ARTICLE 1338
ARTICLE 1330 There is a fraud when, through insidious words or machinations of one of
the contracting parties, the other is induced to enter a contract which, without them,
A contract where consent is given through mistake, violence, intimidation,
he would not have agreed to.
undue influence, or fraud is voidable.
……………………………………………………………………………………………………………………………...
……………………………………………………………………………………………………………………………...
ARTICLE 1339
MISTAKE- (error) is the false notion of a thing or a fact material to the contract.
Failure to disclose facts, when there is duty to reveal them, as when the
-unintentional
parties are bound by confidential relations, constitutes fraud.
3 INSTANCES na nakakasira ng consent
*natural sa atin nap pag tayo ay gumalaw, kelangan kumita.
1. MISTAKE AS TO THE SUBSTANCE OF A THING
………………………………………………………………………………………………………………………….
2. MISTAKE AS TO QUALITY/QUANTITY
3. MISTAKE AS TO THE QUALIFICATION OF ONE OF THE CONTRACTING ARTICLE 1340
PARTIES
The usual exaggerations in trade, when the other party had an opportunity
............................................................................................................................................................................... to know the facts, are not in themselves fraudulent.
ARTICLE 1335 *seller’s talk
There is VIOLENCE when in order to wrest consent, serious or irresistible *pwede, and not to be considered as a fraud.
force is employed.
……………………………………………………………………………………………………………………………...
Article1341 end
A mere expression of an opinion does not signify fraud, unless made by an
expert and the other party has relied on the former’s special knowledge.
*there is a fraud
……………………………………………………………………………………………………………………………
ARTICLE 1345
Simulation of a contract may be absolute or relative. The former takes
place when the parties do not intend to be bound at all; the latter, when the parties
conceal their true agreement.
ARTICLE 1346
An absolutely simulated or fictitious contract is void. A relative simulation,
when it does not prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public policy binds the
parties to their real agreement.
FICTITIOUS CONTRACT
1. Absolute simulated - void
-isa lang ang contract and the parties do not intend to be bound by it.
2. Relative simulated – valid
-dalawa ang contract, yung totoo na tinago nila sa pangalawang contract.
*if there is no fraud and does not prejudice a third person… its valid!
……………………………………………………………………………………………………………………………