Professional Documents
Culture Documents
LECTURE NOTES
this article apply when the father or mother of a when acquittal is due to exempting
child under eighteen years of age unjustly circumstances – there is civil liability
refuses to support him. when there is preponderance of evidence – there
Art. 2167. When through an accident or other is civil liability
cause a person is injured or becomes seriously
ill, and he is treated or helped while he is not in d. Quasi delict (obligation ex quasi maleficio or quasi
a condition to give consent to a contract, he shall delicto) (Chapter 2, Title XVII and special law) – Act
be liable to pay for the services of the physician or omission causes damage to another, there being
or other person aiding him, unless the service fault or negligence, is obliged to pay for the damage
has been rendered out of pure generosity. done there being no pre existing contractual relation
Art. 2168. When during a fire, flood, storm, or between the parties.
other calamity, property is saved from Elements:
destruction by another person without the a) There must be fault or negligence attributable to
knowledge of the owner, the latter is bound to the person charged
pay the former just compensation. b) There must be damage or injury
Art. 2169. When the government, upon the c) There must be a direct relation of cause and
failure of any person to comply with health or effect between the fault or negligence on the one
safety regulations concerning property, hand and the damage or injury on the other
undertakes to do the necessary work, even over hand ( proximate cause )
his objection, he shall be liable to pay the
expenses. Culpa aquiliana (not synonymous with tort)
Art. 2170. When by accident or other fortuitous Obligation expressly arising from Quasi delict
event, movables separately pertaining to two or 1. The father and, in case of his death or
more persons are commingled or confused, the incapacity, the mother, are responsible for the
rules on co-ownership shall be applicable. damages caused by the minor children who live
Art. 2171. The rights and obligations of the in their company.
finder of lost personal property shall be governed 2. Guardians are liable for damages caused by the
by articles 719 and 720. minors or incapacitated persons who are under
Art. 2172. The right of every possessor in good their authority and live in their company.
faith to reimbursement for necessary and useful 3. The owners and managers of an establishment or
expenses is governed by article 546. enterprise are likewise responsible for damages
Art. 2173. When a third person, without the caused by their employees in the service of the
knowledge of the debtor, pays the debt, the branches in which the latter are employed or on
rights of the former are governed by articles the occasion of their functions.
1236 and 1237. 4. Employers shall be liable for the damages caused
Art. 2174. When in a small community a by their employees and household helpers acting
nationality of the inhabitants of age decide upon within the scope of their assigned tasks, even
a measure for protection against lawlessness, though the former are not engaged in any
fire, flood, storm or other calamity, anyone who business or industry.
objects to the plan and refuses to contribute to 5. The State is responsible when it acts through a
the expenses but is benefited by the project as special agent; but not when the damage has
executed shall be liable to pay his share of said been caused by the official to whom the task
expenses. done properly pertains.
Art. 2175. Any person who is constrained to pay 6. Teachers or heads of establishments of arts and
the taxes of another shall be entitled to trades shall be liable for damages caused by
reimbursement from the latter. their pupils and students or apprentices, so long
as they remain in their custody.
c. Delict (obligation ex maleficio or delicto) The possessor of an animal or whoever may
Governing rules: make use of the same is responsible for the
1. Pertinent provisions of the RPC and other penal damage which it may cause, although it may
laws subject to Art 2177 Civil Code. escape or be lost. This responsibility shall cease
Art 100, RPC – Every person criminally liable only in case the damage should come from force
for a felony is also civilly liable majeure or from the fault of the person who has
2. Chapter 2, Preliminary title, on Human Relations suffered damage. (2183)
( Civil Code )
3. Title 18 of Book IV of the Civil Code – on 2. Contract (obligation ex contractus) – Meeting of mind
damages between two (2) person whereby one binds himself with
respect to another to give something or render some
Civil liability arising from crime includes: service. (1306) It has a force of law between the
1. Restitution – The thing itself must be returned or contracting party and must be complied with n good faith
restored. (1159)
2. Reparation - The court shall determine the
amount of damage, taking into consideration the Kinds of obligation according to subject matter
price of the thing, whenever possible, and its 1. Real obligation
special sentimental value to the injured party a. Specific or determinate object – particularly
3. Indemnification - Indemnification for designated or physically segregated from all
consequential damages shall include not only others of the same class.
those caused the injured party, but also those Loss of the object without fault of debtor –
suffered by his family or by a third person by obligation extinguish
reason of the crime. b. Generic or indeterminate – Thing refers to a
class, to a genus and cannot be pointed out with
Effect of acquittal in criminal case: particularity.
when acquittal is due to reasonable doubt – no Loss of the object without fault of the debtor –
civil liability Obligation remain. Genus nunquam perit
(Generic never perishes)
Immediately demandable
2. Conditional Nature or Time Expense of the
a.) effect debtor
Suspensive – give rise to obligation Improvemen Benefit of the Right only of a
Resolutory – extinguish the obligation t creditor usufruct
b.) Form
Express – clearly stated Condition for purpose of extinguishing obligation
Implied – merely inferred (resolutory) – return to each other what they have
c.) Possibility received. In case of loss, deterioration or
Possible – capable of fulfillment improvement – same rule above to the party bound
Impossible (1183) to return (1190)
a. Physically impossible – Nature of the thing Power to rescind is implied in reciprocal obligation in
b. Legally impossible – contrary to law, moral, good case one of the obligor should not comply with what
customs, public order or public policy is incumbent upon him. (1191)
d.) Cause or origin a. Injured party may choose fulfillment or
Potestatiive - depend upon will of one of the Rescission + damages.
contracting parties (debtor/creditor) (1182) b. Court decree the rescission unless there is just
Casual – depend upon chance or will of a third cause authorizing the fixing of a period.
person Both parties committed a breach(1192)
Mixed – partly upon chance and partly upon will a. First infractor shall be equitably tempered.
of third person b. If cannot determined the first infractor –
e.) Mode Obligation extinguish and each shall bear own
Positive – performance damages.
Negative – omission
f.) Numbers Art. 1189. When the conditions have been imposed
Conjunctive – several conditions, all must be with the intention of suspending the efficacy of an
complied with obligation to give, the following rules shall be
Disjunctive – several conditions, one or some observed in case of the improvement, loss or
must be complied with deterioration of the thing during the pendency of the
g.) Divisibility condition:
Divisible – susceptible of partial performance (1) If the thing is lost without the fault of the
Indivisible – not susceptible of partial debtor, the obligation shall be extinguished;
performance (2) If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages; it is
Conditional obligation understood that the thing is lost when it perishes, or
Future and uncertain event or past event unknown to goes out of commerce, or disappears in such a way
parties (1179) that its existence is unknown or it cannot be
Resolutory condition immediately demandable recovered;
When the debtor binds himself to pay when his (3) When the thing deteriorates without the fault
means permit him to do so, the obligation shall be of the debtor, the impairment is to be borne by the
deemed to be one with a period. (1180) creditor;
Acquisition or extinguishment of obligation depend (4) If it deteriorates through the fault of the
upon the happening of the condition (1181) debtor, the creditor may choose between the
Positive condition + determinate time = extinguish rescission of the obligation and its fulfillment, with
as soon as the time expire or become indubitable indemnity for damages in either case;
that the event will not take place (1184) (5) If the thing is improved by its nature, or by
Negative condition + determinate time = Effective time, the improvement shall inure to the benefit of
form the time indicated elapsed or evident that event the creditor;
cannot occur. (1185) (6) If it is improved at the expense of the
Constructive fulfillment - The condition shall be debtor, he shall have no other right than that
deemed fulfilled when the obligor voluntarily granted to the usufructuary.
prevents its fulfillment. (1186)
Retroactivity of the conditional obligation. (1187) 3. With a period - Future and certain. If uncertain it is
a. Reciprocal – fruit and interest deemed mutually conditional. (1193)
compensated a.) Effect
b. Unilateral – Debtor appropriate the fruits an 1. Suspensive (Ex die) – arrival- give rise to
interest except Nature and circumstances of obligation. Before arrival of the period no right to
obligation the intention of the person constituting demand. (1193)
the same was different. Payment before arrival of the period
c. Obligation to do or not to do – court shall (Payment made by mistake), the debtor is
determine the retroactivity. unaware of the period – may recover with
Before condition is fulfilled (1188) the fruits and interests. (1195)
c. Creditor bring action for the preservation of Loss, deterioration, improvement before
his right arrival of the period. Apply Art 1189.
d. Debtor may recover payment by mistake. 2. Resolutory (In diem) – arrival- extinguish the
Loss, deterioration, improvement before condition is obligation. The obligation is immediately
fulfilled demandable.
b.) Source
Without fault With fault 1. Legal – provided by law
(Debtor) (Debtor) 2. Conventional/voluntary – by agreement
Loss Extinguish Damages 3. Judicial – fixed by the court
Deterioration Impairment borne Rescission or c.) Definiteness
by the creditor fulfillment + 1. Definite – fixed or known when it will come
damages
2. Indefinite – not fixed or not known when it will (1) If only 1 is left either because of fortuitous
come. events or due to debtor's acts, perform what is
left. The effect is that the debtor loses the right
General Rule: The court is not authorized to fix a period: of choice
(Reason: The court cannot make a contract for the (2) if the choice is limited because of the creditor's
parties) acts, the debtor has the right of resolution and
Exception: Court authorizes to fix the period. (1197) damages
a.) No period fixed but period was intended (nature and (3) if all are lost due to debtor, the creditor is
circumstances) entitled to damages
b.) Period depend upon the sole will of the debtor. (4) if some are lost, the debtor can choose from the
remaining
Court shall determine such period as probably
contemplated by the parties. Once fixed by the b. The choice is with creditor
courts, the period cannot change by them. (by the (1) if one or some are lost due to fortuitous event,
court not party) the creditor chooses the remainder
(2) if one or some is lost because of the fault of
General Rule: debtor, the creditor may choose either the
Whenever period is designated, it is presumed for the remainder or the value of any which
benefit of both creditor and debtor except when disappeared, and damages in either case
expressly provided otherwise. (1196) (3) if all is lost due to the debtor's fault, the creditor
Hence, neither the creditor can demand performance nor may choose the value of any if some is lost due
the debtor pay before arrival of the period. to debtor's fault, the creditor chooses the
remainder
Exception: (4) if all is lost due to fortuitous event, obligation is
The debtor shall lose every right to make use of the extinguished
period: (1198) Hence, immediately demandable. (5) if all is lost due to creditor's fault, the obligation
1. When after the obligation has been contracted, he is extinguished
becomes insolvent, unless he gives a guaranty or
security for the debt; Summary: Rule on loss
2. When he does not furnish to the creditor the 1. Debtor choice – Last item lost
guaranties or securities which he has promised; 2. Creditor’s choice - Any item lost through the fault of the
3. When by his own acts he has impaired said debtor
guaranties or securities after their establishment,
and when through a fortuitous event they disappear, Art. 1205. When the choice has been expressly given to the
unless he immediately gives new ones equally creditor, the obligation shall cease to be alternative from the
satisfactory; day when the selection has been communicated to the
4. When the debtor violates any undertaking, in debtor.
consideration of which the creditor agreed to the Until then the responsibility of the debtor shall be governed
period; by the following rules:
5. When the debtor attempts to abscond. (1) If one of the things is lost through a fortuitous event,
he shall perform the obligation by delivering that which
4. Alternative obligation the creditor should choose from among the remainder,
a. Simple – only one prestation is due or that which remains if only one subsists;
b. Compound (2) If the loss of one of the things occurs through the fault
1. Conjunctive – Several prestation and all are due of the debtor, the creditor may claim any of those
2. Distributive – 2 or more prestation is due subsisting, or the price of that which, through the fault
a. Alternative – several prestation are due but of the former, has disappeared, with a right to
performance of one is sufficient. damages;
b. Facultative – Only one is due but debtor may (3) If all the things are lost through the fault of the debtor,
substitute the choice by the creditor shall fall upon the price of
any one of them, also with indemnity for damages.
Gen rule: Right of choice belong to the debtor (1200) The same rules shall be applied to obligations to do or not to
except when expressly grated to the creditor. do in case one, some or all of the prestations should become
impossible. (1136a)
Limitation on the right of choice:
a. Impossible 5. Facultative - When only one prestation has been agreed
b. Unlawful upon, but the obligor may render another in substitution
c. Not the object of obligation (1206)
d. Only one is practicable (1202). In this case the Before substitution
debtor loss the right of choice and the alternative Loss of the object without fault – not liable
obligation is converted into a simple obligation. Loss of the object with fault of the debtor - Liable
Choice produces no effect except from the time it Loss/deterioration of the substitute with or without
has been communicated. (1201) fault of the debtor – Not liable
Communication of choice convert alternative
obligation to a simple obligation. (1205) After substitution
Creditor fault , the debtor cannot make a choice = Loss of the object with or without fault – not liable
rescind the contract + damages (1203) Loss of the substitute with fault – liable
All object loss – Debtor is liable for damages (last Loss of the substitute without fault – not liable
object)
Rule:
Right of choice: General rule: right of choice belongs to Right of choice always to debtor
debtor Only one prestation is due but the debtor may
a. The choice is with debtor substitute
when not yet due, no interest for intervening 9. Obligation with a penal clause – Penalty shall substitute
period) the indemnity for damages and the payment of interests
Insolvency of one of solidary debtor – to be borne by in case of non-compliance (absence of agreement).
all his co-debtor in proportion to the debt of each. a. Principal
Payment by solidary debtor after the obligation has b. Accessory
prescribed or become illegal – Not entitled to
reimbursement. Kinds of penal clause
Remission made by the creditor of the share of one a. Origin
of the solidary debtor – Does not release such 1.) Legal penal clause - by law
solidary debtor toward other co-debtor when the 2.) Conventional penal clause – by agreement
debt was totally paid before remission. b. Purpose
Remission of whole obligation obtained by one of the 1.) Compensatory penal clause – take the place of
solidary debtors – not entitled for reimbursement damages (1226)
Loss without fault of any debtor– obligation 2.) Punitive penal clause – imposed as punishment for
extinguished breach
Loss with fault of any debtor – All debtor are liable c. Demandability or effect
without prejudice to the action against guilty or 1.) Subsidiary or alternative penal clause - only penal
negligent debtor. clause can be enforce.
Loss due to fortuitous event after delay by any of 2.) Joint or cumulative – both principal and penal clause
the solidary debtor – same all debtor are liable. can be enforce
Claim for Compensation under Workmen’s
compensation law. (Sec 2, workmen compensation 1. The penal clause shall substitute the indemnity for
law) damages and the payment of interest in case of non
Article 19, 20, 21, 22 of the Civil code (Human compliance. (1226) However, Penalty may be
relations) enforced only when it is demandable.
2. Proof of actual damages suffered by the creditor not
Defense of solidary debtor necessary to enforce the penalty. (1228)
a. Nature of the obligation – payment , fraud, However damages shall be paid
prescription, remission, illegality, absence of a. There is stipulation
consideration, res judicata, non performance of b. Obligor refuses to pay the penalty
suspensive condition c. Guilty of fraud in the fulfillment of the obligation.
b. Those personal to him - incapacity, mistake, 3. Debtor cannot exempt himself from performance and
violence, minority. (personal or complete defense) to pay only the penalty (except when expressly
c. Those personal to the other. granted to him). Neither can the creditor demand the
fulfillment of the obligation and the satisfaction of
7. Divisible – Capable of partial fulfillment the penalty at the same time, unless this right has
8. Indivisible – Not capable of partial fulfillment been clearly granted him. (1227) However, if
Kinds of division creditor choose performance but become impossible
a. Qualitative division – based on quality without his fault, the penalty may be imposed.
b. Quantitative division – based on quantity
c. Ideal or intellectual division – exist only in mind of Causes for reduction of penalty:
the parties a. Principal obligation has been partly or irregularly
complied with;
Kinds of indivisibility b. Penalty is iniquitous or unconscionable
a. Legal indivisibility – by law
b. Conventional indivisibility - by agreement Nullity of the penal clause does not carry of the
c. Absolute or natural indivisibility – nature of the principal obligation but the nullity of the principal
object/prestation carries with that of the penal clause. (Rule:
Accessory follows the principal)
Divisibility or indivisibility is determined by the
purpose or intention of the parties not the possibility Extinguishment of Obligation
or impossibility of partial performance. (except of Art. 1231. Obligations are extinguished:
nature indivisibility) (1) By payment or performance:
Divisible or indivisible refer to the object of he (2) By the loss of the thing due:
obligation not on the cause or legal tie. (3) By the condonation or remission of the debt;
Joint indivisible obligation give rise to indemnity for (4) By the confusion or merger of the rights of creditor and
damages – one debtor does not comply with his debtor;
undertaking. (5) By compensation;
a. Effect – Obligation is converted into one for (6) By novation.
damages. Specific performance or rescission is
not a remedy because the other debtors are Other causes of extinguishing an obligation
willing to fulfill. a. Annulment
Obligation to give definite thing and not susceptible b. Rescission
of partial performance – Indivisible c. Fulfillment of a resolutory condition
Object the execution of a certain number of days of d. Prescription
work – Divisible e. Arrival of resolutory period
Accomplishment of work by metrical units or f. Death of the party
analogous things g. Mutual desistance/withdrawal
Nature are susceptible of partial performance – h. Compromise
Divisible i. Impossibility of performance
Obligation not to do – Determined by the character j. Happening of a fortuitous event
of the prestation in each particular case.
1. Payment or performance – not only delivery of money c. Creditors' led to believe that the 3 rd person had
but also the performance in any other manner of an authority to receive the payment (Estoppels)
obligation. (1232)
Gen rule: There must be total performance. Partial or
irregular performance does not extinguish obligation.
(1233)
Exception:
a. Substantial performance in good faith. (1234)
Requisites of Substantial Performance
1. Attempt in Good Faith to perform without willful
or intentional departure
2. Deviation is slight
3. Omission/Defect is technical or unimportant
4. Must not be so material that intention of parties
is not attained
Effect of Substantial performance in good faith
1. Obligor may recover as though there has been
strict and complete fulfillment, less damages
suffered by the obligee
2. Right to rescind cannot be used for slight breach
b. Creditor accepts performance knowing its
incompleteness or irregularity without expression of
protest. (principle of estoppels)(1235)
Hence, Philippine currency notes have no limit to their legal When tender of payment not required
tender power. However, pursuant to BSP Circular No. 537, 1. Creditor is absent or unknown or does not
Series 2006 (Dated: July 18, 2006), coins in denomination of appear in the place of payment
1-,5- and 10-piso shall be legal tender in amounts not 2. Creditor is incapacitated at the time of payment
exceeding P1,000.00 while coins in denomination of 1-,5- 3. Creditor refuse to give receipt without just cause
and 10- and 25 sentimo shall be legal tender in amounts 4. Two or more person claim the same right to
not exceeding P100.00. collect
5. Title of the obligation has been lost
Special forms of payment
a. Dation in payment / Adjudication or dacion en pago Dation in payment vs. Payment by cession
– governed by law on sales 1. One creditor vs. several creditor
Property is alienated to the creditor in 2. Debtor not insolvent vs. debtor insolvent
satisfaction of debt in money 3. Not all property of the debtor vs. all property of
b. Application of payment the debtor
1. One debtor and one creditor 4. Creditor become the owner vs. creditor acquire
2. Two or more debts only the right to dispose the thing and apply the
3. Debt must be of the same kind proceeds to their credit proportionately.
4. The payment for the debt applied must be due 5. Act of novation vs. not act of novation
5. Payment must not sufficient to cover all the
debts 2. Loss of determinate thing
Note: Not really a special form of payment Kinds of loss
a. Physical loss – perishes
Debtor has the 1st choice – must indicate at the b. Legal loss – goes out of commerce
time of payment c. Civil loss – thing disappears in a such way that its
If the debtor does not apply, the creditor may existence is unknown.
make the designation. Specify in the receipt
which debt is being paid Loss of a thing due
In the absence of above, debt which is most 1. Obligation to give specific thing
onerous to the debtor a. Total loss
If the same nature and burden – applied to all of 1. Loss with the fault of the debtor – (Liable)
them proportionately. 2. Loss without the fault of the debtor -
Payment applies to interest, then to principal. Fortuitous event (not liable)
Exception:
1. Law
may be compensated against each other before they are obligation. (all parties, old debtor, new
judicially rescinded or avoided. (1284) debtor and the creditor must agree)
The debtor who has consented to the assignment of 2. Subrogation – Third person is subrogated in
rights made by a creditor in favor of a third person, the rights of the creditor.
cannot set up against the assignee the compensation c. Mixed – Combination of real and personal
which would pertain to him against the assignor, unless novation.
the assignor was notified by the debtor at the time he
gave his consent, that he reserved his right to the Novation is never presumed.
compensation. (1285) Test: Is the old and new obligation having an
If the creditor communicated the cession to him but the independent existence. Positive - compatible (No
debtor did not consent thereto, the latter may set up the novation); Negative – incompatible - Novation.
compensation of debts previous to the cession, but not Conventional subrogation be clearly establish (1300)
of subsequent ones. and it requires the consent of the original parties and
If the assignment is made without the knowledge of the of the third person. (1301)
debtor, he may set up the compensation of all credits Legal subrogation is not presumed except in cases
prior to the same and also later ones until he had provided for by law. (1300)
knowledge of the assignment. (1198a) When the principal obligation is extinguished in
Compensation takes place by operation of law, even consequence of a novation, accessory obligations
though the debts may be payable at different places, but may subsist only insofar as they may benefit third
there shall be an indemnity for expenses of exchange or persons who did not give their consent. (1296)
transportation to the place of payment. (1286) If the new obligation is void, the original one shall
If a person should have against him several debts which subsist, unless the parties intended that the former
are susceptible of compensation, the rules on the relation should be extinguished in any event. (1297)
application of payments shall apply to the order of the The novation is void if the original obligation was
compensation. (1289) void, except when annulment may be claimed only
by the debtor or when ratification validates acts
Art. 1287. Compensation shall not be proper when one of which are voidable. (1298)
the debts arises from a depositum or from the obligations of If the original obligation was subject to a suspensive
a depositary or of a bailee in commodatum. or resolutory condition, the new obligation shall be
Neither can compensation be set up against a creditor who under the same condition, unless it is otherwise
has a claim for support due by gratuitous title, without stipulated. (1299)
prejudice to the provisions of paragraph 2 of article 301. Subrogation transfers to the persons subrogated the
(1200a) credit with all the rights thereto appertaining, either
Art. 1288. Neither shall there be compensation if one of the against the debtor or against third person, be they
debts consists in civil liability arising from a penal offense. guarantors or possessors of mortgages, subject to
(n) stipulation in a conventional subrogation. (1303)
A creditor, to whom partial payment has been made,
6. Novation – Obligations may be modified by: (1) may exercise his right for the remainder, and he
Changing their object or principal conditions; (2) shall be preferred to the person who has been
Substituting the person of the debtor; (3) Subrogating a subrogated in his place in virtue of the partial
third person in the rights of the creditor. (1291) payment of the same credit. (1304)
Kinds of novation
1. Origin
a. Legal – operation of law
b. Conventional – agreement of the parties
2. How it s constituted
a. Express – Declared in unequivocal term
b. Implied – Old and new obligation are essentially
incompatible with each other
3. Extent or effect
a. Total or extinctive – Old obligation is completely
extinguished
b. Partial or modificatory – Old obligation is merely
modified
4. Subject
a. Real or objective – Object or principal condition
are changed
b. Personal or subjective – person of the debtor is
substituted/ or when a third person is
subrogated in the right of the creditor.
1. Substitution – Person of the debtor is
substituted
1.1. Expromision – 3rd person on his own
initiative and without the knowledge or
against the will of the original debtor
assumes the latter’s obligation with the
consent of the creditor. (Only the
consent of the creditor and 3 rd person is
made)
1.2. Delegacion – Creditor accepts a third
person to take the place of the debtor at
the instance of the latter. It requires that
the old debtor be release from the old
4. Parties obligated
a. Unilateral – only one party has obligation
b. Bilateral – both party has obligation
5. Name or designation
a. Nominate – has a name given by law
b. Innominate – no name given by law
1. Do ut des (I give that you may give) no longer
innominate. This is now called Barter
2. Do ut facias (I give that you may do)
3. Facio ut des (I do that you may give)
4. Facio ut facias (I do that you may do)
6. Risk of fulfillment
a. Commutative – real fulfillment, equivalent value are
given
b. Aleatory – fulfillment depend upon chance.
7. Time of performance or fulfillment
a. Executed – prestation are already complied with
b. Executory – prestations are to be complied with in
the future
8. According to number of person who participated in the
drafting of the contract
a. Ordinary -
b. Contract of adhesion – Where the terms and
condition of the contract is already drafted by one
party. The other party only signifies his consent by
signing the contract.
Stages of contract
1. Preparation (Negotiation, conception or Generacion)
– steps taken by the parties leading to the perfection
of the contract.
2. Perfection (or birth) – Come to a definite agreement
or meeting of the mind upon the object and the
cause.
Art. 1302. It is presumed that there is legal 3. Consummation (death or termination) – parties have
subrogation: performed their respective obiigation
(1) When a creditor pays another creditor who is
preferred, even without the debtor's knowledge; Characteristics of contract
(2) When a third person, not interested in the obligation, 1. Freedom of contract - contracting parties may establish
pays with the express or tacit approval of the debtor; such stipulations, clauses, terms and conditions as they
(3) When, even without the knowledge of the debtor, a may deem convenient (1306)
person interested in the fulfillment of the obligation Limitation:
pays, without prejudice to the effects of confusion as to a. Law
the latter's share. (1210a) b. Moral
c. Good custom
CONTRACTS d. Public order
e. Public policy
Contract - meeting of minds between two persons whereby 2. Mutuality of contract - contract must bind both
one binds himself, with respect to the other, to give contracting parties; its validity or compliance cannot be
something or to render some service. left to the will of one of them (1308). The principle is
based on the essential equality of the parties.
Kinds of contract The determination of the performance may be left to
1. Formation or perfection a third person, whose decision shall not be binding
a. Consensual – perfected by mere consent (1315) until it has been made known to both contracting
b. Real – perfected by delivery (i.e. depositum, pledge, parties. (1309)
commodatum) (1316) The determination shall not be obligatory if it is
c. Formal or solemn (i.e. Interest must be in writing evidently inequitable. In such case, the courts shall
(1956); Contribution of immovable property must be decide what is equitable under the circumstances
in a public instrument, donation of personal property (1310)
where the value exceed P5,000 must be in writing; 3. Relativity of contract - Contracts take effect only
Donation of immovable property must be in a public between the parties, their assigns and heirs (1311)
instrument, Sale of land or interest therein, the Exception:
authority of the agent must be in writing) a. Where the obligations arising from contract are not
2. Cause or equivalence of value of prestation transmissible by nature (personal qualification is
a. Onerous – equivalent value of prestation involved), by stipulation or by provision of law
b. Gratuitous or lucrative – no equivalent prestation (Agency, partnership, commodatum).
c. Remunerative - the prestation is the benefit or b. Stipulation in favor of third person (stipulation pour
service that had been rendered previously. autrui) (1311 par 2)
3. Importance or dependence of one upon another: If a contract should contain some stipulation in favor
a. Principal – can stand alone of a third person, he may demand its fulfillment
b. Accessory – depend upon the existence of another provided he communicated his acceptance to the
contract obligor before its revocation. A mere incidental
c. Preparatory – not considered the contract as an end benefit or interest of a person is not sufficient. The
by itself but as a mean for entering in future contracting parties must have clearly and
transaction or contract. deliberately conferred a favor upon a third person
c. Contract creating real right (1312) 2. Theory of manifestation – The contract is perfected at
d. Contact entered into to defraud the creditors. (1313) the moment when the acceptance is declared or made by
e. Contract which have been violated thru the the offeree. (Code of commerce)
inducement of 3rd person (1314)
Art. 1320. An acceptance may be express or implied.
Elements of a Contract Art. 1321. The person making the offer may fix the time,
1. Essential elements place, and manner of acceptance, all of which must be
a. Common (Consent, Object, Cause) complied with.
b. Special Art. 1322. An offer made through an agent is accepted from
1.) Form – formalities in solemn contract, deliver in the time acceptance is communicated to him. (n)
real contract, registration to bind third person Art. 1323. An offer becomes ineffective upon the death, civil
(Real estate mortgage, chattel mortgage) interdiction, insanity, or insolvency of either party before
acceptance is conveyed.
Solemn contract Art. 1325. Unless it appears otherwise, business
(Consent, Object, Cause + Execution of advertisements of things for sale are not definite offers, but
formalities) mere invitations to make an offer.
a. Stipulation of interest = writing. Art. 1326. Advertisements for bidders are simply invitations
b. Contribution of immovable property in to make proposals, and the advertiser is not bound to accept
partnership = inventory of such property + the highest or lowest bidder, unless the contrary appears.
public instrument Art. 1327. The following cannot give consent to a contract:
c. Donation of personal property where the (1) Unemancipated minors;
value exceed P5,000 = in writing (2) Insane or demented persons, and deaf-mutes who do
d. Donation as well as acceptance of real not know how to write. (1263a)
property = Public instrument. Art. 1328. Contracts entered into during a lucid interval are
e. Will = writing + formalities prescribed by valid. Contracts agreed to in a state of drunkenness or
law. during a hypnotic spell are voidable. (n)
f. Agent authority in case of sale of immovable
property in behalf of the principal = writing
Real Contract
(Consent, Object, Cause + Delivery)
a. Deposit
b. Pledge
c. Commodatum
2.) Subject matter
Real estate Real property No delivery
mortgage
Chattel mortgage Personal No delivery
property
Pledge Personal Delivery
property
Antichresis Real property Delivery
3.) Consideration or cause – Sale (price);
Commodatum (liberality)
2. Natural elements – presumed to exist in certain
contracts
a. Warranty against eviction
b. Warranty against hidden defect
3. Accidental elements (by stipulation) – Exist only when
they are expressly provide by the parties. (i.e.
Conditions, period, interest, penalty, place of payment)
CONSENT (1319)
Art. 1319. Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are
to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a OPTION PERIOD (1324)
counter-offer. Art. 1324. When the offerer has allowed the offeree a certain
Acceptance made by letter or telegram does not bind the period to accept, the offer may be withdrawn at any time
offerer except from the time it came to his knowledge. The before acceptance by communicating such withdrawal,
contract, in such a case, is presumed to have been entered except when the option is founded upon a consideration, as
into in the place where the offer was made. something paid or promised. (n)
1. Theory of cognition – The acceptance is considered to
effectively bind the offeror only from the time it came to
his knowledge. (Civil code)
Whenever the person obliged by the decree of 4. Void contract – contract that never exist in the eyes of
annulment to return the thing can not do so because it law. It has no effect at all and cannot be ratified.
has been lost through his fault, he shall return the fruits
received and the value of the thing at the time of the The following contracts are inexistent and void from the
loss, with interest from the same date. (1400) beginning: (1409)
The action for annulment of contracts shall be (1) Those whose cause, object or purpose is contrary to
extinguished when the thing which is the object thereof law, morals, good customs, public order or public
is lost through the fraud or fault of the person who has a policy;
right to institute the proceedings. (2) Those which are absolutely simulated or fictitious;
If the right of action is based upon the incapacity of any (3) Those whose cause or object did not exist at the
one of the contracting parties, the loss of the thing shall time of the transaction;
not be an obstacle to the success of the action, unless (4) Those whose object is outside the commerce of men;
said loss took place through the fraud or fault of the (5) Those which contemplate an impossible service;
plaintiff (1401) (6) Those where the intention of the parties relative to
As long as one of the contracting parties does not the principal object of the contract cannot be
restore what in virtue of the decree of annulment he is ascertained;
bound to return, the other cannot be compelled to (7) Those expressly prohibited or declared void by law.
comply with what is incumbent upon him.(1402) These contracts cannot be ratified. Neither can the
right to set up the defense of illegality be waived.
3. Unenforceable contract – Contract that cannot be
enforce unless ratified.
The following contracts are unenforceable, unless they
are ratified: (1403)
(1) Those entered into in the name of another person by
one who has been given no authority or legal
representation, or who has acted beyond his
powers;
(2) Those that do not comply with the Statute of
Frauds as set forth in this number. In the following
cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some
note or memorandum, thereof, be in writing, and
subscribed by the party charged, or by his agent; Rules in determining contracts void
evidence, therefore, of the agreement cannot be 1. Absence of any of essential requites of contract
received without the writing, or a secondary (Consent, Object or Cause)
evidence of its contents: 2. Contract that are prohibited by law. (i.e Sale
(a) An agreement that by its terms is not to be between husband and wife, donation between
performed within a year from the making husband and wife)
thereof;
(b) A special promise to answer for the debt, The action or defense for the declaration of the
default, or miscarriage of another; inexistence of a contract does not prescribe. (1410)
(c) An agreement made in consideration of Interest paid in excess of the interest allowed by the
marriage, other than a mutual promise to usury laws may be recovered by the debtor, with
marry; interest thereon from the date of the payment.
(d) An agreement for the sale of goods, chattels (1413)
or things in action (personal property), at Where one of the parties to an illegal contract is
a price not less than five hundred pesos, incapable of giving consent, the courts may, if the
unless the buyer accept and receive part of interest of justice so demands allows recovery of
such goods and chattels, or the evidences, or money or property delivered by the incapacitated
some of them, of such things in action or pay at person. (1415)
the time some part of the purchase money; but When the agreement is not illegal per se but is
when a sale is made by auction and entry is merely prohibited, and the prohibition by the law is
made by the auctioneer in his sales book, at the designated for the protection of the plaintiff, he may,
time of the sale, of the amount and kind of if public policy is thereby enhanced, recover what he
property sold, terms of sale, price, names of the has paid or delivered. (1416)
purchasers and person on whose account the When the price of any article or commodity is
sale is made, it is a sufficient memorandum; determined by statute, or by authority of law, any
(e) An agreement of the leasing for a longer person paying any amount in excess of the
period than one year, or for the sale of (real maximum price allowed may recover such excess.
property) or of an interest therein; (1417)
(f) A representation as to the credit of a third When the law fixes, or authorizes the fixing of the
person. maximum number of hours of labor, and a contract
(3) Those where both parties are incapable of giving is entered into whereby a laborer undertakes to work
consent to a contract. longer than the maximum thus fixed, he may
demand additional compensation for service
Statutes of fraud is no longer applicable when: rendered beyond the time limit. (1418)
a. There is total or partial performance (Partially or When the law sets, or authorizes the setting of a
totally executed) minimum wage for laborers, and a contract is agreed
b. Failure to object to the presentation of oral upon by which a laborer accepts a lower wage, he
evidence to prove the contract. shall be entitled to recover the deficiency. (1419)
Cannot be assailed by third person (1408) In case of a divisible contract, if the illegal terms can
Effect of ratification by parents or guardian (1407) be separated from the legal ones, the latter may be
a. Only one party – Voidable contract enforced. (1420)
b. Both parties- valid The defense of illegality of contract is not available to
third persons whose interests are not directly
affected. (1421)
A contract which is the direct result of a previous
illegal contract is also void and inexistent. (1422)