Oblicon

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

2. Solutio indebiti - arises whenever a person
unduly delivers a thing
I. OBLIGATIONS
through mistake to another who has no right to
OBLIGATION demand it.
 A juridical necessity to give, to do, or not to do
(Article 1156), one impressed with the QUASI-DELICTS
character of enforceability.  An act or omission by a person (tortfeasor) which
causes damage to another giving rise to an
 Requisites: obligation to pay for the damage done, there
being fault or negligence but there is no pre-
a. juridical or legal tie or efficient
existing contractual relation between the parties
cause (Article 2176).
b. active subject (obligee or creditor)
c. passive subject (obligor or  Requisites:
debtor)
1. There must be an act or omission;
d. fact, prestation or service constituting the
2. There must be fault or negligence;
object of the
3. There must be damage caused to the
obligation 
plaintiff;
Requisites:
4. There must be a direct relation of cause and
i) it must be licit effect between the act or omission and the
ii) it must be possible, physically & damage; and
juridically 5. There is no pre-existing contractual relation
iii) it must be determinate or between the parties.
determinable
iv) it must have a possible NOTES:
equivalent in money
 The same negligent act or omission causing
damage may produce civil liability arising from
crime under Art. 100 of the RPC or create an
1. Law action for quasi-delict under Article 2176.
2. Contracts
3. Quasi-contracts  While it is true that in order that a person may be
4. Delicts liable for quasidelicts, there must be no
5. Quasi-delicts preexisting contractual relationship between the
parties, yet, “the act that breaks the contract
may also be a tort.” (Air France vs.
QUASI-CONTRACTS Carrascoso, 18 SCRA 155).
 Those juridical relations arising from lawful,
voluntary and unilateral acts, by virtue of Nature of Obligations
which the parties become bound to each 1. Personal Obligations - obligations to do
other, based on the principle that no one a. Positive – obligation to do
shall be unjustly enriched or benefited at the b. Negative – obligation not to do
expense of another. 2. Real Obligations - obligations to give
Principal Kinds of Quasi-contracts:

1. Negotiorum gestio - arises whenever a person
voluntarily takes charge of the agency or
management of the business or property of
another without any power or authority from
the latter.
86 2005 CENTRALIZED BAR OPERATIONS
a. its
Determinate or specific – object is particularly provisions, but that the consequences of specific
designated or performance likewise be equitable and just. The
physically segregated from all other of the same class general rule is that this equitable relief will not
be granted
CIVIL LAW COMMITTEE if, under the
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon circumstances of the
 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 case, the result of
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), the specific
Ma. Ricasion Tugadi (Conflict of Laws) performance of the
b. Generic – object is designated merely by its contract would be harsh, inequitable, oppressive
class or genus or result in an unconscionable advantage to the
c. Limited generic thing – when the generic plaintiff. The courts may adjust the rights of the
objects are confined to a particular class, e.g. parties in accordance with the circumstances
an obligation to deliver one of my horses obtaining at the time of rendition of judgment,
(Tolentino, Volume IV, p. when these are significantly different from those
91). existing at the time of generation of those rights.
(Agcaoili vs. GSIS, G.R. No. 30056, August 30,
PERSONAL vs. REAL RIGHT 1988)
Personal Real
1. jus ad rem, a 1. jus in re, a right OBLIGATIONS OF THE DEBTOR
right enforceable enforceable Determinate Generic
only against a against the whole 1. deliver the 1. deliver the
definite person or world thing which he has thing which is
group of persons obligated himself to neither of
2. right pertaining 2. right pertaining give superior nor
2. take care inferior quality
to the person to to a person over a
of the thing with the 2. pay
demand from specific thing, proper diligence of damages in case
another, as a without a passive a good father of a of breach of the
definite passive subject individually family obligation by
subject, the determined against 3. deliver all reason of delay,
fulfillment of a whom such right accessions and fraud,
prestation to give, may be personally accessories of the negligence or
to do or not to do. enforced thing even though contravention of
they may not have the tenor
thereof
RIGHTS OF A CREDITOR been mentioned 4.
Determinate Generic pay damages in case
of breach of the
1. compel specific 1. ask for
obligation by reason
performance performance of the
of delay, fraud,
obligation
negligence or
2. recover 2. ask that the contravention of the
damages in case of obligation be tenor thereof
breach of the complied with at
obligation, the expense of the
EFFECTS OF BREACH
exclusive or in debtor
addition to Positive Personal Negative Personal
specific Obligations Obligations
performance The creditor can: If the obligor does
3. entitlement to 3. recover damages 1. have the what has been
fruits, interests in case of breach obligation forbidden him, the
from the time the of the performed or creditor can:
obligation to obligation executed at the 1. have it undone
deliver arises. expense of the at the expense of
obligor (except the obligor; and 2.
in cases where ask for damages
Principle of Balancing of Equities as the
Applied in Actions for Specific personal
Performance qualifications of the
debtor are taken
 In decreeing specific performance, equity requires into account in
not only that the contract be just and equitable in which case the only
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)

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

obligation because of fortuitous event
NOTE: debtor is not liable for damages  Deliberate and intentional evasion of the
fulfillment of an obligation
DEFAULT or DELAY
 Non-fulfillment of the obligation with respect to NOTE: Future fraud cannot be waived because it
time  Requisites: would result to illusory obligation.
1. Obligation is demandable and already liquidated
2. The debtor delays performance Incidental Causal Fraud/dolo
3. The creditor requires performance judicially or Fraud/dolo causante
extra-judicially incidente (Article 1338)
(Article 1170)
1. Present during 1. Present during the

the performance time of birth or
 3 Kinds: of a pre-existing perfection of the
obligation obligation
1. Mora solvendi - delay of the debtor to perform his
obligation. It may be:
a. Ex re – obligation is to give 2. Purpose is to 2. Purpose is to
evade the normal secure the consent of
b. Ex persona – obligation is to do
fulfillment of the the other to enter
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
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 (Conflicts of Law)
obligation
into a contract FORTUITOUS EVENT  An event which could not be
foreseen or which though foreseen was inevitable.
3. Results in the 3. Results in the
non-fulfillment or vitiation of consent
breach of the
 Requisites:
obligation 1. cause is independent of the will of the debtor
2. the event must be unforeseeable or unavoidable
4. Gives rise to a 4. Gives rise to a 3. occurrence must be such as to render it
right of the creditor right of an innocent impossible for the debtor to fulfill his obligation
to recover damages party to annul the in a normal manner
from the debtor contract 4. debtor must be free from any participation in
5. the aggravation of the injury resulting to the
creditor (Lasam vs. Smith, 45 Phil. 657)
NEGLIGENCE
 Omission of that diligence which is required by NOTE: It must not only be the proximate cause
the nature of the obligation and corresponds with but it must be the ONLY and SOLE CAUSE.
the circumstances of the persons, of the time and
of the place
NOTE: Negligence can be waived unless the nature of
the obligation or public policy requires extraordinary GENERAL RULE: No liability in case of fortuitous
diligence as in common carrier. event.
EXCEPTIONS:
Diligence Required 1 When expressly declared by law NOTE: e.g.
1. That agreed upon by the parties Article 552(2), 1165(3), 1268, 1942,
2. In the absence of stipulation, that required by law 2147, 2148 and 2159 of the Civil Code.
in the particular case 2 When expressly declared by stipulation or
3. If both the contract and law are silent, diligence contract
of a good father of a family 3 When the nature of the obligation requires
the
Concept of Diligence of Good Father of a Family assumption of risk
4 When the obligor is in default or has promised
 That reasonable diligence which an ordinary to deliver the same thing to 2 or more persons
prudent person would have done under the same who do not have the same interest [Article
circumstances 1165(3)].
Test of Negligence  The test of negligence can be
determined by this standard: If the defendant, in EFFECT OF FORTUITOUS EVENT
committing or causing the negligent act,
Determinate Generic
had used reasonable care and vigilance
Obligation Obligation
which a man of ordinary prudence would have
obligation is obligation is not
employed under the same situation, he is not guilty
extinguished extinguished based
of negligence. Otherwise, he is guilty. on the rule that a
genus never perishes
Doctrine of Res Ipsa Loquitur as Applied in (genus nunquam
Negligence Cases  The thing or transaction speaks peruit)
for itself
 When the thing which caused injury, without fault
of the injured person, is under the exclusive
control of the defendant and the injury is such as PRINCIPLE UNDER ARTICLE 1176  Before the
in the ordinary course of things does not occur if presumption that a prior installment had been paid
he having such control use proper care, it affords may arise, the receipt must specify the installment
reasonable evidence, in the absence of for which payment is made.
explanation from the defendant, that the injury
arose from defendant’s want of care (Africa vs.  REMEDIES OF CREDITOR TO
Caltex, 16 SCRA 448 and Republic vs. PROTECT CREDIT:
Luzon Stevedoring, 21 SCRA 279). 1. Exhaustion of debtor’s property

Ethics)

2. Accion subrogatoria - to be subrogated to all the 10. Divisible - condition is susceptible of partial
rights and actions of the debtor save those which realization
are inherent in his person. 11. Indivisible - condition is not susceptible of partial
3. Accion pauliana - impugn all the acts w/c the realization
debtor may have done to defraud them. 12. Conjunctive - where there are several conditions,
NOTE: 2nd & 3rd remedies are subsidiary to the first all of which must be realized
13. Alternative - where there are several conditions
Rights acquired by virtue of an but only one must be realized
obligation are transmissible in character
Rule in Potestative Conditions
a. If the fulfillment of the potestative condition
depends upon the sole will of the debtor, the
condition as well as the obligation itself is
void. It renders the obligation illusory.
1. When they are not transmissible by their very
(Applicable only to a suspensive condition and
nature e.g. purely personal right
to an obligation which depends for its
2. When there is a stipulation of the parties that perfection upon the fulfillment of the
they are not transmissible potestative condition and not to a pre-existing
3. Not transmissible by operation of law obligation.)
b. If the fulfillment depends exclusively upon the
PURE OBLIGATION will of the creditor, both the condition and
 One whose effectivity or extinguishment does not obligation is valid.
depend upon the fulfillment or nonfulfillment of a NOTE: In case of simple potestative condition,
condition or upon the expiration of a term or e.g. right of first refusal, such condition is valid.
period and is demandable at once.
Rule in Impossible Conditions
CONDITIONAL OBLIGATION
They shall annul the obligation
 One whose effectivity is subordinated to the
which depends upon them.
fulfillment or non-fulfillment of a future AND
uncertain fact or event
1. pre-existing obligation
Kinds of conditions: 2. if obligation is divisible
1. Suspensive - fulfillment of the condition results in 3. in simple or renumeratory donations
the acquisition of rights arising out of the 4. in testamentary dispositions
obligation 5. in case of conditions not to do an impossible thing
2. Resolutory - fulfillment of the condition results in
the extinguishments of rights arising out of the Effects of Suspensive Condition
obligation 1. Before fulfillment of the condition, the
3. Potestative - fulfillment of the condition depends demandability as well as the acquisition or
upon the will of a party to the obligation effectivity of the rights arising from the obligation
4. Casual - fulfillment of the condition depends upon is suspended
chance and/or upon the will of a third person 2. After the fulfillment of the condition, the
5. Mixed - fulfillment of the condition depends obligation arises or becomes effective
partly upon chance and/or the will of a third 3. The effects of a conditional obligation to give,
person once the condition has been fulfilled, shall
6. Possible - condition is capable of realization retroact to the day of the constitution of the
according to nature, law, public policy and good obligation
customs 4. When the obligation imposes reciprocal
7. Impossible - condition is not capable of prestations upon the parties, the fruits &
realization according to nature, law, public policy interests shall
and good customs be deemed to have been mutually compensated
8. Positive - condition involves the performance of 5. If the obligation is unilateral, the debtor shall
an act appropriate the fruits & interests received, unless
9. Negative - condition involves the omission of an from the nature & circumstances it should be
act inferred that the intention of the persons
constituting the same was different
CIVIL LAW COMMITTEE
6. In its
obligations to do or not to do, the court shall fulfillment with indemnity for
determine the retroactive effect or the conditions damages in either case
that has
been complied with 3. Improvement
a. by the thing’s nature or by time -
Constructive fulfillment of Suspensive Condition improvement shall inure to the benefit of the
creditor
 The condition shall be deemed fulfilled when the
b. at the debtor’s expense - debtor shall have no
obligor actually prevented the obligee from
other right than
complying with the condition and such prevention
that granted to a usufructuary
must have been voluntary and willful in character.
NOTE: Applies only to determinate
Effects of Resolutory Condition
things
1. Before the fulfillment of the condition, the right
which the creditor has already acquired by virtue
A Thing is Lost when it:
of the obligation is subject to a threat of
extinction. 1. perishes
2. If condition is not fulfilled, rights are 2. goes out of commerce
consolidated; they become absolute. 3. disappears in such a way that its existence is
unknown or it cannot be recovered
3. Upon fulfillment of the condition, the parties
shall return to each other what they received
RECIPROCAL OBLIGATIONS
including the
fruits Those which are created or established at the same
time, out of the same cause, and which result in
mutual relationships of creditor & debtor
SUMMARY:
between the parties
SUSPENSIVE RESOLUTORY
CONDITION CONDITION TACIT RESOLUTORY CONDITION
1.if fulfilled, 1. if fulfilled,
obligation arises obligation is
or becomes extinguished with what is incumbent upon him, there is a right on
effective the part of the other to rescind the obligation.
2.if not fulfilled, no 2. if not fulfilled,
juridical relation juridical
is created relation is
3.rights are not yet consolidated
acquired, but 3. rights are
there is hope or already
expectancy that acquired, but
they will soon be subject to the RIGHT TO RESCIND (ART 1191)
acquired threat or danger The right to rescind needs judicial
of extinction approval.
1. If there is an express stipulation of automatic

Effects of Loss, Deterioration and Improvement in rescission
real obligations (during 2. When the debtor voluntarily returned the
the pendency of the condition) thing
1. Loss NOTES:
a. without debtor’s fault - obligation is
extinguished  Article 1191 refers to judicial rescission. It does
b. with debtor’s fault - debtor pays not apply if there is an express stipulation to
damages rescind, in which case such stipulation must
prevail. There is nothing in the law which
prohibits the parties from entering into an
2. Deterioration
agreement that violation of the terms of the
a. without debtor’s fault - impairment to be contract would cause its cancellation without
borne by the creditor court intervention. Said stipulation is in the
b. with debtor’s fault - creditor may choose nature of facultative resolutory condition
between the rescission of the obligation and (Angeles vs. Calasanz, 135 SCRA 323).
Ethics)

 Rescission will be ordered only where the breach 5. when it is left 5. when it is left
is substantial as to defeat the object of the exclusively to the exclusively to the will
parties in entering into the agreement. will of the debtor, of the debtor, the
the existence of very existence of the
 The injured party may choose between fulfillment the obligation is obligation is affected
and rescission of the obligations, with the not affected
payment of damages in either case. These
remedies are alternative, not cumulative.
However, should fulfillment become impossible, When a period is designated for
the injured party may also seek rescission. the performance or fulfillment of an obligation, it is
presumed to have been established for the benefit of
 The right to rescind belongs exclusively to the both creditor and debtor.
injured party.
When it appears from the tenor of the
obligation or other circumstances that the period has
OBLIGATION WITH A PERIOD
been established in favor of one or of the other.
 Those whose demandability or extinguishment is
subject to the expiration of a term or period  When court may fix period:
Requisites: 1. if the obligation does not fix a period, but from
1. future its nature and circumstances it can be inferred
2. certain that a period was intended by the parties
3. possible, legally and physically 2. if the duration of the period depends upon the
will of the debtor; and
CLASSIFICATION OF TERM OR PERIOD 3. If the debtor binds himself when his means permit
1. a. suspensive (ex die) – obligation becomes him to do so (Article
demandable only upon 1180)
arrival of a day certain
NOTE: The only action that can be maintained is an
b.resolutory (in diem) – arrival of day certain action to ask the court to fix the duration of the term
terminates the obligation or period. The fulfillment of the obligation itself
2. a. legal – granted by law cannot be demanded until after the court has fixed
b. conventional – stipulated by parties the period for compliance therewith, and such period
c. judicial – fixed by courts has arrived. However, such technicality need not be
3. a. definite – date/time is know beforehand adhered to when a prior and separate action would be
b. indefinite – the date/time of day a mere formality and would serve no other purpose
certain is unknown than to delay (Borromeo vs. CA, 47 SCRA 65).
TERM CONDITION Reason for Fixing the Period (ART 1197)

1. interval of time 1. fact or event w/c  There can be no possibility of any breach of
w/c is future & is future and contract or failure to perform the obligation
certain uncertain unless the period is fixed by courts.
2. interval of time 2. future and
w/c must uncertain fact or When debtor loses right to make use of period:
necessarily come, event w/c may or (IGIVA)
although it may may not happen 1. when after the obligation has been contracted,
not be known when he becomes insolvent, unless he gives guaranties
3.exerts an 3. exerts an or securities for the debt (the insolvency need
influence upon the influence upon the not be judicially declared)
time of very existence of the 2. when he does not furnish to the creditor the
demandability or obligation itself guaranties or securities he promised
extinguishment of 3. when by his own act he has impaired said
an obligation guaranties or securities after their
4. does not have 4. has retroactive establishment, and when through fortuitous
any retroactive effect event they disappear, unless he gives new ones
effect unless there equally satisfactory when debtor violates any
is an agreement to
undertaking, in consideration of which the
the contrary
creditor agreed to the period or
CIVIL LAW COMMITTEE
4. when
debtor attempts to abscond creditor should choose from among the
remainder, or that which remains if only 1
FACULTATIVE ALTERNATIVE subsists
Obligations Obligations b. If the loss of 1 of the things occurs through
the fault of the debtor, the creditor may
1. comprehends 1. comprehends claim any of those subsisting, or the price of
only one object or several objects or that which, through the fault of the former,
prestation which is prestations which are has disappeared with a right to damages
due, but it may be due but may be c. If all the things are lost through the fault of
complied with by complied with by the the debtor, the choice by the creditor shall
the delivery of delivery or fall upon the price of any 1 of them,
another object or performance of only also with indemnity for damages
performance of one of them
another prestation JOINT AND SOLIDARY OBLIGATIONS
in substitution
Obligation is presumed joint if
there is concurrence of two or more debtors and/or
2. fortuitous loss 2. fortuitous loss of creditors.
extinguishes the all prestations will
obligation extinguish the
obligation 1. when expressly stated that there is solidarity
2. when the law requires solidarity
3. culpable loss 3. culpable loss of 3. when the nature of the obligation
obliges the debtor any object due will requires solidarity
to deliver give
substitute rise to liability to JOINT DIVISIBLE OBLIGATIONS
prestation without debtor
liability to debtor  Each creditor can demand for the payment of his
proportionate share of the credit, while each
debtor can be held liable only for the payment of
his proportionate share of the debt.
4. choice pertains 4. choice may pertain
 A joint creditor cannot act in representation of
only to debtor to creditor or even
the other creditors while a joint debtor cannot be
third person
compelled to answer for the acts or liability of
the other debtors.
NOTES:
JOINT INDIVISIBLE OBLIGATIONS
 In alternative obligations, choice takes effect only 1. If there are 2 or more debtors, the fulfillment of
upon communication of the choice to the other party or compliance with the obligation requires the
and from such time the obligation ceases to be concurrence of all the debtors, although each for
alternative.  The debtor cannot choose those his own share. Consequently, the obligation can
prestations or undertakings which are impossible, be enforced only by proceeding against all of the
unlawful or w/c could not have been the object of the debtors.
obligation. 2. If there are 2 or more creditors, the concurrence
or collective act of all the creditors, although
EFFECT OF LOSS OF OBJECT OF each for his own share, is also necessary for the
OBLIGATION: enforcement of the obligation.
1. If right of choice belongs to debtor
a. If through a fortuitous event - debtor cannot Effect of breach – If one of the joint debtors fails to
be held liable for damages comply with his undertaking, the obligation can no
b. If 1 or more but not all of the things are lost longer be fulfilled or performed. Consequently, it is
or one or some but not all of the prestations converted into one of indemnity for damages.
cannot be performed due to the fault of the Innocent joint debtors shall not contribute to the
debtor, creditor cannot hold the debtor indemnity beyond their corresponding share of the
liable for damages because the debtor can obligation.
still comply with his obligation.
2. If right of choice belongs to the creditor Effect of insolvency of a debtor – If one of the joint
a. If 1 of the things is lost through a fortuitous debtors should be insolvent, the others shall not be
event, the debtor shall perform the liable for his share.
obligation by delivering that which the
Ethics)

INDIVISIBILITY SOLIDARITY 2. If it is beneficial and the creditor who effected
1. refers to the 1. refers to the the novation is able to secure performance of the
prestation which legal tie or vinculum obligation, such creditor shall be liable to the
constitutes the juris & consequently others for the share which corresponds to them,
object of the to the subjects or not only in the obligation, but also in the benefits
obligation parties of the 3. If the novation is effected by substituting another
obligation person in place of the debtor, the solidary
2. plurality of 2. plurality of creditor who effected the novation is liable for
subjects is not subjects is the acts of the new debtor in case the is
required indispensable deficiency in performance or in case damages are
3. in case of breach, 3. when there is incurred by the other solidary creditors as a
obligation is liability on the part result of the substitution.
converted into 1 of of the debtors 4. If the novation is effected by subrogating a third
indemnity for because of the person in the rights of the solidary creditor
damages because of breach, the
solidarity among the responsible for the novation, the relation
breach, indivisibility between the other creditors not substituted and
debtors remains
of the obligation is the debtor or debtors is maintained.
terminated
Effect of Compensation and Confusion upon Solidary
Obligation
KINDS OF SOLIDARITY 1. If the confusion or compensation is partial, the
1. Active solidarity rules regarding application of payment shall
 solidarity of creditors apply. This is without prejudice to the right of
 each creditor is empowered to exercise against other creditors who have not caused the
the debtor not only the rights which correspond confusion or compensation to be reimbursed to
to him, but also all the rights which correspond to the extent that their rights are diminished or
the other creditors, with the consequent affected.
obligation to render an accounting of his acts to 2. If the confusion or compensation is total, the
such creditors obligation is extinguished, what is left is the
 creates a relationship of mutual agency among ensuing liability
solidary creditors for reimbursement within each group:
2. Passive solidarity a. The creditor causing the confusion or
 solidarity of debtors compensation is obliged to reimburse the
 liability of each debtor for the payment of the other creditors
entire obligation, with the consequent right to b. The debtors benefited by the
demand reimbursement from the others for their extinguishments of the obligation are obliged
corresponding shares once payment has been to reimburse the debtor who made the
made confusion or compensation possible.
3. Mixed solidarity
 solidarity among creditors and debtors Effect of Remission upon Solidary Obligation
Effect of Assignment by Solidary Creditor Without 1. If the remission covers the entire obligation, the
Consent of Others obligation is totally extinguished and the entire
1. assignee is co-creditor – no violation of Article juridical relation among the debtors is
1213 because there can be no invasion of the extinguished all together.
personal or 2. If the remission is for the benefit of one of the
confidential relationship debtors and it covers his entire share in the
2. assignee is third person – cocreditors and debtors obligation, he is completely released from the
are not bound creditors but is still bound to his codebtors.
by the assignment 3. If the remission is for the benefit of one of the
debtors and it covers only a part of his share in
Effect of Novation upon Solidary the obligation, his character as a solidary debtor
Obligation is not affected.
1. If the novation is prejudicial, the solidary creditor
who effected the novation shall reimburse the Effect of Payment by Solidary Debtor
others for damages incurred by them 1. Whole or partial extinguishment of debt
CIVIL LAW COMMITTEE
2. Right
to
OBLIGATIONS WITH A PENAL CLAUSE
recover against co-debtor
3. Right to recover interest from time the obligation  One to which an accessory undertaking is
becomes due attached for the purpose of insuring its
performance by virtue of which the obligor is
bound to pay a stipulated indemnity or perform a
Effect of Loss or Impossibility of Performance
stipulated prestation in case of breach.
1. If it is not due to the fault of the solidary debtors,
the obligation is extinguished.
 Purpose of Penalty:
2. If the loss or impossibility is due to the fault of
1. To insure the performance of the obligation;
one of the solidary debtors or due to a fortuitous
2. to liquidate the amount of damages to be
event after one of the solidary debtors had
awarded to the injured party in case of
already incurred in delay, the obligation is
breach of the principal obligation
converted into an obligation of indemnity for
(compensatory); and
damages but the solidary character of the
obligation remains. 3. in certain exceptional cases, to punish the
obligor in case of breach of the principal
obligation (punitive).
Defenses available to a Solidary Debtor ULE: The penalty fixed by the parties is
a compensation or substitute for damages in case of
1. Defenses derived from the very nature of the
breach.
obligation
2. Defenses personal to him or pertaining to his own
share 1. when there is a stipulation to the contrary;
3. Defenses personal to the others, but only as 2. when the debtor is sued for refusal to pay the
regards that part of the debt agreed
for w/c the latter are responsible penalty; and
3. when debtor is guilty of fraud
DIVISIBLE OBLIGATIONS
 Those which have as their object a prestation NOTE: Article 1228 does not apply to these
which is susceptible of partial performance exceptions; there must be proof of actual
without the essence of obligation changed. damages.
INDIVISIBLE OBLIGATIONS NOTES:

 Prestation is not susceptible of partial  The debtor cannot exempt himself from the
performance, otherwise, the essence of the performance of the principal obligation by paying
obligation will be changed the stipulated penalty unless when the right has
been expressly reserved for him.
NOTES:
 The creditor cannot demand the fulfillment of the
 Divisibility or indivisibility of the obligation refers principal obligation and the satisfaction of the
to the performance of the prestation and not to stipulated penalty at the same time unless the
the thing which is the object thereof. right has been clearly granted him.
 Intention of parties should be taken into account
to determine whether obligation is divisible or When penalty may be reduced
not.
1. If the principal obligation has been partly
complied with;
The creditor cannot be compelled 2. If the principal obligation has been irregularly
partially to receive the prestation in which the complied with; and 3. If the penalty is iniquitous
obligation consists; neither may the debtor be or unconscionable even if there has been no
required to make partial payments. performance.
1. When the obligation expressly stipulates the

contrary; MODES OF EXTINGUISHMENT OF
2. When the different prestations constituting
3
OBLIGATION (LFC NARP ) 2
the objects of the obligation are subject to S

different terms and conditions; and 1. loss of the thing due
3. When the obligation is in part liquidated and 2. fulfillment of resolutory condition
in part unliquidated. 3. compensation
Ethics)

4. condonation or remission of the debt 2. If payment was made without knowledge or
5. confusion or merger of rights of the creditor and against the will of the debtor, he can recover
debtor only insofar as the payment has been
6. novation beneficial to the debtor.
7. annulment
8. rescission To whom payment must be made:
9. prescription 1. The person in whose favor the obligation has
10. payment or performance been constituted;
2. His successor in interest; or 3. Any person
Payment or Performance authorized to receive it.
 Means not only the delivery of money but also the
performance, in any other manner, of an If payment is made to a person
obligation. other than those enumerated, it shall not be valid.
Integrity of Payment 1. Payment made to a 3rd person, provided that

A debt shall not be understood to it has redounded to the benefit of the
have been paid unless the thing or service in which creditor. Such benefit to the creditor is
the obligation consists has been completely delivered presumed in the following cases:
or rendered, as the case may be. • If after the payment, the third person
acquires the creditor’s rights;
1. When the obligation has been substantially • If the creditor ratifies the payment to
performed in good the third person;
faith; • If by the creditor’s conduct, the debtor
2. When the obligee accepts performance, knowing has been led to believe that the third
its incompleteness or irregularity & w/out person had authority to receive the
expressing any protest or objection; payment.
3. When there is an express stipulation; and 2. Payment made to the possessor of the credit,
4. When the debt is in part liquidated and in part provided that it was made in good faith.
unliquidated.
Obligation to Deliver a Generic Thing
Identity of Payment  If the quality and circumstances have not been
 requires that the very thing, service or stated, the creditor cannot demand a thing of
forbearance, as the object of the prestation, superior quality; neither can the debtor deliver a
must be performed or thing of inferior quality.
observed
Persons who may pay the obligation:

1. the debtor himself or his legal representative Rules in Monetary Obligations:
2. any third person 1. Payment in cash - must be made in the currency
stipulated; if it is not possible to deliver such
Creditor is not bound to accept currency, then in the currency which is legal
payment or performance by a third person. tender in the Philippines.
2. Payment in check or other negotiable instrument
1. when made by a third person who has an - not considered payment; not considered legal
interest in the fulfillment of the obligation; tender and may be refused by the creditor. It
2. when there is a stipulation to the contrary. shall only produce the effect of payment:
a. when it has been cashed or
Rights of 3rd person who paid the obligation: b. when it has been impaired through the fault
of the creditor.
1. If payment was made with knowledge and
consent of the debtor: LEGAL TENDER
a. can recover entire amount paid  Such currency which may be used for the payment
b. can be subrogated to all the rights of of all debts, whether private or public. The kind
the creditor. of currency which a debtor can legally compel a
CIVIL LAW COMMITTEE
a. th
creditor to accept in payment of a debt in money er
when tendered by the debtor in the right amount. e must be only 1 debtor & only 1 creditor;
b. there must be 2 or more debts of the same
 Legal tender of the Philippines would be all notes
kind;
and coins issued by the Central Bank.
 Section 52, R.A. No. 7653 c. all of the debts must be due; except: if
there’s stipulation to the contrary; or
1. 25c and above, legal tender up to P50
application of payment is made by the party
2. 10c and below, legal tender up to P20
for whose benefit the term has been
constituted; and
Extraordinary inflation or deflation d. amount paid by the debtor must not be
 unusual or beyond the common fluctuation in the sufficient to cover the total amount of all the
value of currency, which the parties could not debts.
have reasonably foreseen or which was manifestly
beyond their contemplation at the time the
The right to designate the debt to
obligation was established.
which the payment shall be applied primarily belongs
 Applies only to contractual
to the debtor.
obligations
If the debtor does not avail of such
 Requisites:
right and he accepts from the creditor a
a. The decrease in the value of the currency could
receipt in which the application is made.
not have been reasonably foreseen
by the parties or beyond their
Legal Application of Payment (ART1254)
contemplation at the time the obligation was
1. If neither the debtor nor the creditor makes any
established ;
application of payment, or if it cannot be inferred
b. There must be a declaration of
from other circumstances, the debt which is most
such extraordinary inflation or
onerous to the debtor, among those which are
due, shall be deemed to have been satisfied.
2. If the debts due are of the same nature and
burden, payment shall be applied to all of them
deflation by the Bangko Sentral. Without such
proportionately.
declaration, the creditors cannot demand an
increase, and debtors a decrease, of what is
due to or from them. (Ramos vs. CA, 275 b. Dation in Payment (DACION EN PAGO)
SCRA 167 and Mobil Oil Phils. vs.  Delivery and transmission of ownership of a thing
CA, 180 SCRA 651) by the debtor to the creditor as an accepted
equivalent of the performance of the obligation.
Place of payment  Requisites:
1. Place stipulated by the parties. a. existence of a money obligation
2. No stipulation and the obligation is to deliver a b. alienation to the creditor of a property by
determinate thing, payment shall be made at the the debtor with the consent of the former
place where the thing might be at the time the c. satisfaction of the money obligation of the
obligation was constituted. debtor
3. In any other case, the payment shall be made at
the domicile of the debtor. c. Payment by Cession
 Debtor abandons all of his property for the
Special Forms of Payment: benefit of his creditors in order that from the
a. Application of payment proceeds thereof, the latter may obtain payment
b. Dation in Payment of their credits.
c. Payment by Cession  Requisites:
d. Tender of payment and a. plurality of debts
Consignation b. partial or relative insolvency of the debtor
c. acceptance of the cession by the
a. Application of Payment creditors
 Designation of the debt to which the payment
must be applied when the debtor has several
obligations of the same kind in favor of the same
creditor.
 Requisites:

Ethics)

DATION IN PAYMENT BY
PAYMENT CESSION
1. one creditor 1. plurality of

creditors
2. not necessarily 2. debtor must be

in state of financial partially or
difficulty relatively insolvent
3. thing delivered 3. universality of

is considered as property of debtor is
equivalent of what is ceded
performance
CIVIL LAW COMMITTEE

4. payment 4. merely releases  Effects of consignation:

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

CMaricel
IVIL LAW COMMITTEE
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)
 Requisites: obligor may also be released

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

which the obligee, without receiving demandable;
any price or equivalent, renounces e. there must be no retention or
the enforcement of the obligation, as controversy commenced by 3rd
a result of which it is extinguished in persons over either of the debts
its entirety or in that part or aspect & communicated in due time to
of the same to which the remission the debtor; and
refers. f. compensation must not be
 It is the gratuitous abandonment by prohibited by law.
the creditor of his right. 
Requisites: Compensation Confusion
a. It must be gratuitous 1. two persons 1. one person
b. It must be accepted by the who are mutual where qualities of
debtor debtors and debtor and creditor
c. The obligation must creditors of each are merged
be demandable other
2. there must be 2. only one
NOTE: Express condonation or at least two obligation
remission must comply with the obligations
formalities of donation.
Compensation Payment
CONFUSION OR MERGER OF RIGHTS 1. The requisites prescribe by law for
 Merger of the characters of the compensation are different from those
creditor and the debtor in one and prescribed by law for payment.
the same person by virtue of which 2. Takes effect by 2. Takes effect by
the obligation is extinguished. operation of law act of the parties
 Requisites: 3. Capacity to 3. Capacity to give
a. that the characters of creditor & give and to and to acquire is
debtor must be in the same acquire is not essential
person; necessary
b. that it must take place in the 4. As a rule, it is 4. As a rule,
person of either the principal partial complete and
creditor or the principal debtor; indivisible
and
c. it must be complete & definite
Compensation Counterclaim
COMPENSATION
 Extinguishment in the concurrent 1. Requires 2 1. Not necessary
amount of the obligation of those debts must consist
persons who are reciprocally debtors in money or if
and creditors of each other. fungibles, same
kind and quality
 Requisites:
a. there must be 2 parties, who, in
their own right, are principal 2. Both debts 2. Does not require
creditors & principal debtors of must be that debts be
liquidated liquidated
each other (except in case of
guarantor, Article 1280);
b. both debts must consist in 3. Need not be 3. Must be pleaded
money, or if the things due are pleaded to be effectual
fungibles, they must be of the
same kind & quality;
c. both debts must be due; Kinds of Compensation

CMaricel
IVIL LAW COMMITTEE
Ethics)
1. Legal – takes effect by operation a. a previous valid obligation;

of law b. agreement of the parties to the
2. Voluntary – agreed upon by the new obligation;
parties c. extinguishment of the old
3. Judicial – takes effect by judicial obligation; and
decree d. validity of the new obligation.
4. Facultative – when it can be
claimed by one of the parties Kinds:
who, however, has the right to 1. As to its essence
object to it a. Objective/Real - refers to the
change either in the cause,
Debts not subject to Compensation: object or principal conditions of
1. debts arising from contracts of the obligations
deposit b. Subjective/Personal - refers to
2. debts arising from contracts of the substitution of the person of
commodatum the debtor or to the subrogation
3. claims for support due by of a 3rd person in the rights of
gratuitous title the creditor
4. obligations arising from criminal c. Mixed
offenses 2. As to its form/constitution
5. certain obligations in favor of a. Express - when it is declared in
government unequivocal terms that the old
NOTE: Taxes are not subject to set-off or obligation is extinguished by a
legal compensation because the new one w/c substitutes the
government & taxpayers are not mutually same.
creditors & debtors of each other b. Implied - when the old & new
(Francia vs. IAC, 162 SCRA 753). obligation are incompatible w/
each other on every point.
Facultative Compensation
 This is compensation which can be Test of Incompatibility
set up only at the option of a  Whether or not the old and new
creditor, when legal compensation obligations can stand together, each
cannot take place because of want of having its own independent
some legal requisites for the benefit existence. If they can stand together,
of the creditor. The latter can there is no incompatibility;
renounce his right to oppose the consequently, there is no novation. If
compensation and he himself can set they cannot stand together, there is
it up. It differs from conventional incompatibility; consequently, there
compensation because it is unilateral is novation.
while the latter depends upon the
agreement of both parties. Forms of Substitution of Debtors:
(Tolentino, Volume IV, p. 367) 1. Expromision - effected with the
consent of the creditor at the
NOVATION instance of the new debtor even
 Substitution or change of an without the consent or even against
obligation by another, resulting in its the will of the old debtor.
extinguishment or modification, Requisites:
either by changing its object or a. Initiative for substitution must
principal conditions, or by emanate from the new debtor
substituting another in place of the b. Consent of the creditor to the
debtor, or by subrogating a third substitution
person in the rights of the creditor. 2. Delegacion - effected with the
 Requisites: consent of the creditor at the
instance of the old debtor, with the

concurrence of the new debtor.  Kinds of Subrogation
Requisites: 1. Conventional – takes place by
a. Initiative for substitution must agreement of the parties; this kind of
emanate from the old debtor subrogation requires the intervention
b. Consent of the new debtor and consent of 3 persons: the original
c. Acceptance by the creditor creditor, the new creditor and the
debtor.
Effect of insolvency of new debtor 2. Legal – takes place without
1. Expromision – the new debtor’s agreement but by operation of law
insolvency or nonfulfillment of the because of certain acts (Article
obligation shall not revive the 1302).
original debtor’s liability to the
creditor whether the substitution is Legal subrogation
effected with or without the cannot be presumed.
knowledge or against the will of the
original debtor. 1. Creditor pays another creditor who is
2. Delegacion – the creditor can sue the preferred, without debtor’s
old debtor only when the knowledge;
insolvency was prior to the
2. A third person not interested in the
delegation and publicly known or
obligation pays with the express or
when the old debtor knew of such
tacit approval of the debtor; or
insolvency at the time he delegated
the obligation. 3. Even without debtor’s knowledge, a
person interested in the fulfillment
NOTE: A change in the incidental of the obligation pays without
elements of, or an addition of such prejudice to the effects of confusion
elements to an obligation, unless as to the latter’s share.
otherwise expressed by the parties, will
not result in its extinguishment. II. CONTRACTS
CONVENTIONAL ASSIGNMENT OF CONTRACT

SUBROGATION RIGHTS  A contract is a meeting of minds
between two persons whereby one
1. governed by Arts. 1. governed by Arts. binds himself, with respect to the
1300 to 1304 1624 to 1627 other, to give something or to render
some service (Article 1305).
2. debtor’s consent 2. debtor’s consent
is required is not required  Elements
1. Essential – those without which there
3. extinguishes 3. transmission of can be no contract. a. Consent
the obligation and right of the creditor b. Object or Subject Matter
gives rise to a new to third person c. Cause or Consideration
one without modifying 2. Natural – those derived from the
or extinguishing the nature of the contract and ordinarily
obligation accompany the same.
3. Accidental – those which exist only
4. defects and 4. defects and vices when the parties expressly provide
vices in the old in the old obligation for them for the purpose of limiting
obligation are cured are not cured or modifying the normal effects of
5. takes effect 5. as far as the the contract.
upon moment of debtor is concerned,
novation or takes effect upon Nominate contracts
subrogation notification

CMaricel
IVIL LAW COMMITTEE
Ethics)
 Those which have their own the obligor

distinctive individuality and are before its
regulated by special provisions of revocation;
law. d. the favorable stipulation
Innominate contracts should not be
 Those which lack individuality and conditioned or
are not regulated by special compensated by any kind
provisions of law. of obligation whatever;
 Regulated by the stipulations of the and
parties, by the general provisions of e. neither of the
the Civil Code on obligations and contracting parties bears
contracts, by rule governing the most the legal representative
analogous nominate contracts and by or authorization of the
the customs of the place. third person.
 Kinds:
a. Do ut des - I give that you give Test of Beneficial Stipulation – the
b. Do ut facias - I give that you do fairest test to determine whether the
c. Facio ut des - I do that you give interest of a 3rd person in a contract is a
d. Facio ut facias - I do that you do stipulation pour atrui or merely an
NOTE: According to some incidental interest is to rely upon the
authorities. do ut des in no longer an intention of the parties as disclosed by
innominate contract. It has already their contract. Determine whether the
been given a name of its own, i.e. contracting parties desired to tender him
barter or exchange (Article 1638). such an interest (Uy Tam vs. Leonard, 30
Phil. 471).
Characteristics of Contracts: (ROMA)
1. Relativity (ART 1311)
2. When a third person induces a
2. Obligatory Force and Consensuality
party to violate contract
(ART 1315)
(ART1314)
3. Mutuality (ART 1308)
 Requisites:
4. Autonomy (ART 1306)
a. Existence of a valid contract;
Relativity
b. knowledge of contract by
Contracts take effect third person; and
only between parties, their assigns and c. interference by third person
heirs. without legal justification or
excuse.
1. Stipulation pour atrui - 3. Third persons who come into
stipulation in favor of a third possession of the object of the
person. contract creating real rights
 Requisites: 4. Contracts entered into in fraud
a. the stipulation must be a of creditors
part, not the whole of
the contract; Mutuality
b. the contracting parties  The contract must bind both parties;
must have clearly and its validity or compliance must not
deliberately conferred a be left to the will of one of them.
favor upon a third (ART 1308)
person, not a mere  The contract cannot have any
incidental benefit or stipulation authorizing one of the
interest; contracting parties (a) to determine
c. the third person must whether or not the contract shall be
have communicated his valid, or (b) to determine whether or
acceptance to not the contract shall be fulfilled.
Autonomy
 The parties are free to stipulate
anything they deem convenient
provided that they are not contrary
to law, morals, good customs, public
order and public policy. (ART 1306)
Consensuality
 Contracts are perfected by mere
consent and from that moment, the
parties are bound not only to the
fulfillment of what has been
expressly stipulated but also to all
consequences which, according to
their nature may be in keeping with
good faith, usage and law.
CONSENT
 Manifested by the concurrence of the
offer and acceptance upon the thing
and the cause which are to
constitute the contract.
 Requisites:
a. Legal capacity of the contracting
parties
b. Manifestation of the conformity
of the contracting parties
c. The parties’ conformity to the
object, cause, the terms and
conditions of the contract must
be intelligent, spontaneous and
free from all vices of consent
d. The said conformity must be real
and not simulated or fictitious

Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer Ang(VC-
Ethics)
Offer element (i.e., donation of real

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

 Misrepresentation by minors with into it against his wishes and desires or

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

even though one of the parties entered

Ethics)
 The immediate, direct and most FORM OF CONTRACTS

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

prejudice may be rescinded in cases

Instances when there can be no established by law.
reformation:
1. Simple unconditional donations What contracts are rescissible
inter vivos; 1. those entered into by guardians
2. Wills; where the ward suffers lesion of
3. When the agreement is void; more than ¼ of the value of the
things which are objects thereof;
When one of the parties has brought an 2. those agreed upon in representation
action to enforce the instrument, no of absentees, if the latter suffer
subsequent reformation can be asked.
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

general rule produce until they are annulled until they are rescinded by 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 may Corresponding action
declaration or nullity defense of annulability 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
contract
affected
7. Assailed directly or Assailed directly or Assailed directly only Assailed directly or

collaterally collaterally collaterally
lesion by more than ¼ of the value of

RESCISSIBLE CONTRACTS the things which are subject thereof;
 Contracts validly agreed upon but, by 3. those undertaken in fraud of
reason of lesion or economic creditors when the latter cannot in

Ethics)
any manner claim what are due 7. Failure of the vendee to take
them; exclusive possession of all the
property
4. those which refer to things under
litigation if they have been entered
into by the defendant without the Rescission in Rescission Proper
knowledge and approval of the Article 1191 in Article 1381
litigants and the court; 1. It is a principal 1. It is a subsidiary
5. all other contracts especially action retaliatory in remedy.
declared by law to be subject to character.
rescission; and 2. The only ground is 2. There are 5
6. payments made in a state of non-performance of grounds to rescind.
insolvency on account of obligations one’s obligation/s or Non-performance by
not yet enforceable what is incumbent the other party is not
upon him. important.
 Requisites: 3. It applies only to 3. It applies to both
a. the contract must be rescissible reciprocal obligation unilateral and
reciprocal
b. the party asking for rescission
obligations.
must have no other legal means
4. Only a party to the 4. Even a 3rd person
c. to obtain reparation for the
contract may demand who is prejudiced by
damages suffered by him the contract may
fulfillment or seek
d. the person demanding rescission the rescission of the demand the
must be able to return whatever contract. rescission of the
he may be obliged to restore if contract.
rescission is granted 5. Court may fix a 5. Court cannot grant
e. the things w/c are the object of period or grant extension of time for
extension of time for fulfillment of the
the contract must not have
the fulfillment of the obligation.
passed legally to the possession
of a 3rd person acting in good obligation.
faith 6. Its purpose is to 6. Its purpose is to
f. the action for rescission must be cancel the contract. seek reparation for
brought w/in the prescriptive the damage or injury
caused, thus allowing
period of 4 years
partial rescission of
the contract.
BADGES OF FRAUD:
VOIDABLE CONTRACTS
1. Consideration of the conveyance
 Those in which all of the essential
is inadequate or fictitious;
elements for validity are present,
2. Transfer was made by a debtor
although the element of consent is
after a suit has been begun and
vitiated either by lack of capacity of
while it is pending against him;
one of the contracting parties or by
3. Sale upon credit by an insolvent
VIMFU.
debtor;
4. Evidence of indebtedness or What contracts are voidable
complete insolvency
1. Those where one of the parties is
5. Transfer of all his property by a
incapable of giving consent to a
debtor when he is financially
contract
embarrassed or insolvent;
2. Those where the consent is vitiated
6. Transfer made between father &
by mistake, violence, intimidation,
son, where there is present any
of the above circumstances undue influence or fraud
CIVIL LAW COMMITTEE

Causes of extinction of action to annul: 1. those entered into in the name of

1. PRESCRIPTION another by one without or acting in
 the action must be commenced within excess of authority;
4 years from: 2. those where both parties are
a. the time the incapacity ends; incapable of giving consent; and
b. the time the violence, 3. those which do not comply with the
intimidation or undue Statute of Frauds
influence ends; or
c. the time the mistake or fraud Agreements within the scope of the
is discovered. Statute of Frauds (EXCLUSIVE LIST):
NOTE: Discovery of fraud must be 1. Agreements not to be performed
reckoned to have taken place from within one year from the making
the time the document was thereof;
registered in the office of the 2. Special promise to answer for the
register of deeds. Registration debt, default or miscarriage of
constitutes constructive notice to the another;
whole world. (Carantes vs. CA, NOTE: This does not refer to the original
76 SCRA 514) or independent promise of the debtor
to his own creditor. It refers rather
2. RATIFICATION  to a collateral promise.
Requisites: 3. Agreement in consideration of
a. there must be knowledge of marriage other than a mutual
the reason which renders promise to marry;
the contract voidable 4. Agreement for the sale of goods, etc.
b. such reason must have at a price not less than P500.00;
ceased and 5. Contracts of lease for a period longer
than one year;
c. the injured party must have
6. Agreements for the sale of real
executed an act
property or interest therein; and
which expressly
7. Representation as to the credit of a
or impliedly conveys
third person.
an intention to
waive his right
NOTES:
3. By loss of the thing which
is the object of the
contract through fraud or
 The contracts/agreements under the
Statute of Frauds require that the
fault of the person who is
same be evidenced by some note,
entitled to annul the
memorandum or writing, subscribed
contract.
by the party charged or by his agent,
otherwise, the said contracts shall be
NOTE: If the object is lost through
fortuitous event, the contract can still unenforceable.  The statute of frauds
be annulled, but the person obliged to applies only to executory contracts, not
return the same can be held liable only to those that are partially or completely
for the value of the thing at the time of fulfilled.
the loss, but without interest thereon.
Ratification of contracts in violation of
UNENFORCEABLE CONTRACTS the Statute of Frauds
 Those which cannot be enforced by 1. Failure to object to the presentation
proper action in court unless they are of oral evidence to prove such
ratified contracts
2. Acceptance of benefits under these
What contracts are unenforceable contracts

Ethics)
VOID CONTRACTS accomplished, or before any

 Those where all of the requisites of a damage has been caused to a 3rd
contract are present but the cause, person.
object or purpose is contrary to law, 3. Payment of money or delivery of
morals, good customs, public order property made by an
or public policy, or contract itself is incapacitated person
prohibited or declared void by law. 4. Agreement or contract which is
not illegal per se & the
What contracts are void prohibition is designed for the
1. Those whose cause, object or protection of the plaintiff
purpose is contrary to law, morals 5. Payment of any amount in excess
good customs, public order or public of the maximum price of any
policy; article or commodity fixed by
law or regulation by competent
2. Those whose object is outside the
authority.
commerce of men;
6. Contract whereby a laborer
3. Those which contemplate an
undertakes to work longer than
impossible service;
the maximum # of hours fixed by
4. Those where the intention of the
law.
parties relative to the principal
7. Contract whereby a laborer
object of the contract cannot be
accepts a wage lower than the
ascertained; and
minimum wage fixed by law.
5. Those expressly prohibited or 8. One who lost in gambling
declared void by law. because of fraudulent schemes
practiced on him is allowed to
INEXISTENT CONTRACTS recover his losses [(Art. 315, 3
 Those where one or some or all of the (b), RPC] even if gambling is a
requisites essential for the validity of prohibited one.
a contract are absolutely lacking.
Rules when only one of the parties is at
What contracts are inexistent fault:
1. Those which are 1. Executed Contracts:
absolutely simulated or a. Guilty party is barred from
fictitious; and recovering what he has given to
2. Those whose cause or object did not the other party is barred from
exist at the time of the transaction. recovering what he has given to
the other party by reason of the
NOTE: The principle of In Pari Delicto is contract.
applicable only to void contracts and not b. Innocent party may demand for
as to inexistent contracts. the return for the return of what
Principle of In Pari Delicto he has given.
RAL RULE: When the defect of a 2. Executory Contracts - Neither of the
void contract consists in the illegality of contracting parties can demand for
the cause or object of the contract and the fulfillment of any obligation
both of the parties are at fault or in pari from the contract nor may be
delicto, the law refuses them every compelled to comply with such
remedy and leaves them where they are. obligation
1. Payment of usurious interest NATURAL OBLIGATIONS

2. Payment of money or delivery of  They are real obligations to which
property for an illegal purpose, the law denies an action, but which
where the party who paid or the debtor may perform voluntarily.
delivered repudiates the contract  It is patrimonial, and presupposes a
before the purpose has been prestation.
CIVIL LAW COMMITTEE

 The binding tie of these obligations is 7. Payment of legacy after will have
in the conscience of man, for under been declared void.
the law, they do not have the
necessary efficacy to give rise to an ESTOPPEL
action.  A condition or state by virtue of
which an admission or representation
Examples of natural is rendered conclusive upon the
obligations enumerated under the Civil person making it and cannot be
Code: denied or disproved as against the
1. Performance after the civil obligation person relying thereon.
has prescribed;  Kinds:
2. Reimbursement of a third person for 1. Estoppel in Pais (by conduct)
a debt that has prescribed; a. Estoppel by silence
3. Restitution by minor after annulment b. Estoppel by
of contract; acceptance of
4. Delivery by minor of money or benefits
fungible thing in fulfillment of 2. Technical Estoppel
obligation; a. Estoppel by deed
5. Performance after action to enforce b. Estoppel by record
civil obligation has failed; c. Estoppel by judgment
6. Payment by heir of debt exceeding d. Estoppel by laches
value of property inherited; and
LACHES or “STALE DEMANDS” LACHES PRESCRIPTION

 Failure or neglect, for
an unreasonable and unexplained 1. concerned with 1. concerned with
length of time, to do that which, by effect of delay fact of delay
exercising due diligence, could or should
have been done earlier; it is negligence or 2. question of 2. question or
omission to assert a right within inequity of matter of time
reasonable time, warranting a permitting the claim
presumption that the party entitled to to be enforced
assert it either has abandoned it or
declined to assert it.
3. not statutory 3. statutory
 Elements:
4. applies in equity 4. applies at law
a. Conduct on part
of the
defendant, or of one under 5. not based on a 5. based on a fixed
fixed time time
whom 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

Ethics)
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
CIVIL LAW COMMITTEE


Oblicon

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Oblicon

Uploaded by

Copyright:

Available Formats

San Beda College of Law 85

MEMORY AID IN CIVIL LAW

OBLIGATIONS AND CONTRACTS

Principal Kinds of Quasi-contracts:

MEMORY AID IN CIVIL LAW

2. Involuntary - debtor is unable to comply with his FRAUD

1. Present during 1. Present during the

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

1. If there is an express stipulation of automatic

MEMORY AID IN CIVIL LAW

TERM CONDITION Reason for Fixing the Period (ART 1197)

MEMORY AID IN CIVIL LAW

INDIVISIBLE OBLIGATIONS NOTES:

1. When the obligation expressly stipulates the

the objects of the obligation are subject to S

MEMORY AID IN CIVIL LAW

Integrity of Payment 1. Payment made to a 3rd person, provided that

Persons who may pay the obligation:

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

1. one creditor 1. plurality of

2. not necessarily 2. debtor must be

3. thing delivered 3. universality of

CIVIL LAW COMMITTEE

4. payment 4. merely releases  Effects of consignation:

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

 Requisites: obligor may also be released

 An act of pure liberality by virtue of d. both debts must be liquidated &

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

1. Legal – takes effect by operation a. a previous valid obligation;

instance of the old debtor, with the

CONVENTIONAL ASSIGNMENT OF CONTRACT

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

 Those which have their own the obligor

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

Offer element (i.e., donation of real

CIVIL LAW COMMITTEE

 Misrepresentation by minors with into it against his wishes and desires or

Reluctant Consent  A contract is valid CAUSE

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

 The immediate, direct and most FORM OF CONTRACTS

CIVIL LAW COMMITTEE

prejudice may be rescinded in cases

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

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

5. Cannot be ratified Can be ratified Need not be ratified Can be ratified

7. Assailed directly or Assailed directly or Assailed directly only Assailed directly or

lesion by more than ¼ of the value of

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

CIVIL LAW COMMITTEE

Causes of extinction of action to annul: 1. those entered into in the name of

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

VOID CONTRACTS accomplished, or before any