CONTRACT
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Art. 1394. Ratification may be
effected by the guardian of the
incapacitated person.
Who may ratify:
(1) A contract entered into by
an incapacitated persons
may be ratified by:
(a) The guardian
(b) The injured party himself
provided he is already
capacitated
(2) In case the contract is
voidable on the ground of
mistake, etc., ratification
can be made by the party
whose consent is vitiated.
UNENFORCEABLE CONTRACTS VOIDABLE OR INEXISTENT Instances of void or inexistent
CONTRACTS contracts
Unenforceable contracts are those
that cannot be enforced or given Void contracts are those which, (1) Contracts whose cause,
effect in a court of law or sued upon because of certain defects, object or purpose is contrary
by reason of certain defects generally product no effect at all. to law
provided by law and unless they are (2) Contracts which are
ratified according to law. They are considered as inexistent absolutely simulated or
from its inception or from the very fictitious
Kinds of unenforceable contracts beginning. (3) Contracts without cause or
object – the phrase “did not
(1) Those entered into in the Inexistent contracts refers to exist at the time of the
name of another by one agreement which lack one or some transaction” does not apply to
without, or acting in excess or all of the elements (COC) or do a future which may be legally
of, authority not comply with formalities which be the object of a contract.
(2) Those that do not comply are essential for the existence of a (4) Contracts whose object is
with the statue of frauds contract. outside the commerce of men
(3) Those where both parties (5) Contracts which means
are incapable of giving. Characteristics of a void or
contemplate an impossible
inexistent contract
services
Unauthorized contracts are those
(1) Generally, it produces no force (6) Contracts where the intention
entered into in the name of another
and effect whatsoever; of the parties relative to the
person by one who has been given
(2) It cannot be ratified object cannot be ascertained
no authority or legal representation
(3) The right to set up the defense (7) Contracts expressly
or who has acted beyond his
of illegality cannot be waived prohibited or declared void by
powers.
(4) The action or defense for the law:
When both parties to a contract are declaration of its inexistence
incapable of giving consent, the does not prescribe
contract is unenforceable. However, (5) It cannot give rise to a valid
if the parent or guardian, as the contract.
case may be, of either party, or if
one of the parties after attaining or
regaining capacity, ratifies the
contract, it becomes voidable.
Art. 1408. Unenforceable
contracts cannot be assailed by
third persons.
Strangers to a voidable contract
cannot bring an action to annul the
same.
 CONTRACT
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RESCISSIBLE CONTRACTS
Art. 1380. Contracts validly
agreed upon may be rescinded in
the cases established by law.
Rescissible contracts are those
validly agreed upon because all the
essential elements exist and,
therefore, legally effective, but in the
cases established by law, the
remedy of rescission is granted in
the interest of equity.
Rescission is a remedy granted by
law to the contracting parties and
sometimes even to third person in
order to secure reparation of
damages caused them by a valid
contract, by means of the
restoration of things to their
condition in which they were prior to
the celebration of said contract.
Rescission is not a principal
remedy. It is only subsidiary,
meaning that it can be availed of
only if the injured party proves that
he has no other legal means aside
from rescinding the contract to
obtain redress for the damage
caused.
If the damage is repaired, as in the
case of lesion suffered by the ward
or absentee, rescission cannot take
place.
Persons entitled to bring action
(1) The injured party or the
defrauded creditor.
(2) The heirs, assigns, or
successors in interest
(3) The creditors of the above
entitled to subrogation
Art. 1381. The following contracts
are rescissible:
(1) Those which are entered
into by guardians
whenever the wards whom
they represent suffer
lesion by more than one-
fourth of the value of the
things which are the object
thereof:
(2) Those agreed upon in
representation of
absentees, if the latter
suffer the lesion stated in
the preceding number;
(3) Those undertaken in fraud
of creditors when the latter
cannot in any other
manner collect the claims
due them;
(4) Those which refer to
things under litigation if
they have been entered
into by the defendant
without the knowledge and
approval of the litigants or
of competent judicial
authority.
(5) All other contracts
specially declared by law
to be subject to rescission
VOIDABLE CONTRACTS
Art. 1390. The following contracts
are voidable or annullable, even
though there may have been no
damage to the contracting parties:
(1) Those where one of the
parties is incapable of giving
consent to a contract
(2) Those where the consent is
vitiated by mistake, violence,
intimidation, undue
influence or fraud.
These contracts are binding, unless
they are annulled by a proper
action in court. They are
susceptible of ratification.
Voidable or annullable contracts are
those which possess all the
essential requisites of a valid
contract but one of the parties is
incapable of giving consent, or
consent is vitiated by vices of
consent.
Kinds of voidable contracts
A contract otherwise legal in object
and operation is voidable because
of a defect caused by either:
(1) Legal incapacity to give
consent, where one of the
parties is incapable of
giving consent to the
contract
(2) Violation of consent, where
the vitiation is done by
mistake, violence,
intimidation, undue
influence or fraud
Art. 1391. The action for
annulment shall be brought
within four (4) years
This period shall begin:
In case of intimidation, violence,
undue influence, from the time
the defect of the consent ceases.
In case of mistake or fraud, from
the time of the discovery of the
same.
And when the action refers to
contracts entered into by minors
or other incapacitated persons,
from the time the guardianship
ceases.
Art. 1392. Ratification
extinguishes the action to annul
a voidable contract.
Kinds of ratification
(1) Express – when the
ratification is manifested in
words or writing
(2) Implied or tacit – it may take
diverse forms, such as by
silence or acquiescence; by
acts showing adoption or
approval of contract.
 CONTRACT
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REFORMATION OF
INSTRUMENTS
Art. 1359. When, there having
been a meeting of the minds of
the parties to a contract, their
true intention is not expressed in
the instrument purporting to
embody the agreement, by
reason of mistake, fraud,
inequitable conduct or accident,
one of the parties may ask for the
reformation of the instrument to
the end that such true intention
may be expressed.
If mistake, fraud, inequitable
conduct, or accident has
prevented a meeting of the minds
of the parties, the proper remedy
is not reformation of the
instrument but annulment of the
contract.
Reformation is that remedy allowed
by law by means of which a written
instrument is amended or rectified
so as to express or conform th the
real agreement or intention of the
parties when by reason of mistake,
fraud, inequitable conduct, or
accident, the instrument fails to
express such agreement or
intention.
Reformation is thus not available as
a remedy where no writing exists, or
even where a writing exists, there is
no showing of any defect of consent
therein reformation of contracts,
what is reformed is not the contract
itself, but the written instrument
embodying the contract.
In annulment, there is no meeting of
the minds.
INTERPRETATION OF
CONTRACTS
Art. 1370. If the terms of a
contract are clear and leave no
doubt upon the intention of the
contracting parties, the literal
meaning of its stipulations shall
control.
If the words appear to be
contrary to the evident intention
of the parties, the latter shall
prevail over the former.
Interpretation of a contract is the
determination of the meaning of the
terms or words used by the parties
in their written contract.
(3) Cause is essential element
of a contract, while motive is not.
(4) The illegality of cause
affects the validity of a contract
while illegality of motive does not
render contract void.
Art. 1352. Contracts without
cause, or with unlawful cause,
produce no effect whatever. The
cause is unlawful if it is contrary
to law, morals, good customs,
public order or public policy.
Requisites of cause
(1) It must exist at the time the
contract is entered into
(2) It must be lawful
(3) It must be true or real
Absence or want of cause means The third class, Unenforceable
that there is a total lack of any valid contract, cannot be sued upon or
consideration for the contract. enforced unless they are ratified. As
regards the degree of
By falsity of cause is meant that the defectiveness, voidable contract are
contract states a valid consideration father away from absolute nullity
but such statement is not true. than unenforceable contracts. In
other words, an unenforceable
If the cause is false, the contract is contracts.
rendered void because the same
actually does not exist. In other words, an unenforceable
contract occupies an intermediate
KINDS OF DEFECTIVE ground between a voidable and a
CONTRACTS void contract.
There are 4 kinds of defective Lastly, there are the void or
contracts. They are, in order of their inexistent contracts. They are
defectiveness: absolutely null and void. Void
contracts have no effect at all and
(1) Rescissible contracts cannot be ratified.
(2) Voidable contracts
(3) Unenforaceable contracts
(4) Void or inexistent contracts
The first class, rescissible contracts,
are valid because all the essential
requisites of a contract exist but by
reason of economic injury or
damage to one of the parties or to
third persons, such as creditors, the
contract may be rescinded.
The second clash, Voidable
contracts, are also valid until
annulled unless there has been
ratification. In a voidable contract,
the defect is cause by vice of
consent.
CONTRACT
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Art. 1346. An absolutely
simulated or fictitious contract is
void. A relative simulation, when
it does not prejudice a third
person and is not intended for
any purpose contrary to law,
morals, good customs, public
order or public policy binds the
parties to their real agreement.
Simulation of a contract is the act of
deliberately deceiving others, by
feigning or pretending by
agreement, the appearance of a
contract which is either non existent
or concealed.
Kinds of simulation
Absolute simulation – when the
contract does not really exist and
the parties do not intend to be
bound at all.
Relative simulation – when the
contract entered into by the parties
is different from their true
agreement.
SECTION 2 – OBJECT OF
CONTRACT
Art. 1347. All things which are not
outside the commerce of men,
including future things, may be
the object of a contract. All rights
which are not intransmissible
may also be the object of
contracts.
No contract may be entered into
upon future inheritance except in
case expressly authorized by law
All services which are not
contrary to law, morals, good
customs, public order, or public
policy may likewise be the object
of a contract.
Art. 1348. Impossible tings or
services cannot be the object of
contracts.
SECTION 3 – CAUSE OF
CONTRACTS
Cause – is the essential reason or
purpose which the contracting
parties have in view at the time of
entering into the contract.
Classification of contracts
according to cause
(1) Onerous (exchange) or one
the cause of which, for each
contracting party is the
prestation or promise of a
thing or service by the
other. In other words, in this
contract, the parties are
reciprocally obligated to
each other.
(2) Remuneratory (service) or
one the cause of which is
the service or benefit which
is remunerated.
(3) Gratuitous (donation) or one
the cause of which is the
liberality of the benefactor
or giver.
Motive is the purely personal or
private reason which a party has in
entering into a contract.
Cause distinguished from motive
(1) Cause is the immediate or
direct reason, motive is
remote
(2) Cause is always known to
the other contracting party
While motive may be
unknown.
(3) Cause is essential element
of a contract, while motive is not.
(4) The illegality of cause
affects the validity of a contract
while illegality of motive does not
render contract void.
Art. 1352. Contracts without
cause, or with unlawful cause,
produce no effect whatever. The
cause is unlawful if it is contrary
to law, morals, good customs,
public order or public policy.
Requisites of cause
(1) It must exist at the time the
contract is entered into
(2) It must be lawful
(3) It must be true or real
Absence or want of cause means
that there is a total lack of any valid
consideration for the contract.
By falsity of cause is meant that the
contract states a valid consideration
but such statement is not true.
If the cause is false, the contract is
rendered void because the same
actually does not exist.
. Art. 1355. Except in cases
specified by law, lesion or
inadequacy of cause shall not
invalidate a contract, unless
there has been fraud, mistake or
undue influence.
Lesion is any damage caused by
the fact that the price is unjust or
inadequate.
General rule – Lesion or
inadequacy of cause don’t not of
itself invalidate a contract.
Classification of contacts
according to form
(1) Informal or common or
simple contract or that
which may be entered into
in whatever form provided
all the essential requisites
for their validity are present
(2) Formal or solemn contract
or that which is required by
law for its efficacy to be in a
certain specified form.
CONTRACT
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A contract entered into where one Art. 1331. In order that mistake (a) A donated his car to B. A Undue Influence is influence of a
of the parties is incapable of giving may invalidate consent, it should thought that B was his half- kind that so overpowers the mind of
consent to a contract is voidable. refer to the substance of the brother. It turned out that B a party as to prevent him from
thing which is the object of the is not related to A. the acting understandingly and
Art. 1328. Contracts entered into contract, or to those conditions mistake as to the identity of voluntarily to do what he would
during a lucid interval are valid. which have principally moved B in this case is material have done if he had been left to
Contracts agreed to in a state of one or both parties to enter into because his identity was the exercise freely his own judgment
drunkenness or during a the contract. principal reason or and discretion.
hypnotic spell are voidable. consideration fo the
Mistake as to the identity or donation. The influence must be undue or
Art. 1330. A contract where qualifications of one of the improper to avoid a contract, mere
consent is given through parties will vitiate consent only Art. 1333. There is no mistake if general or reasonable influence is
mistake, violence, intimidation, when such identity or the party alleging it knew the not sufficient. If gained by kindness
undue influence, or fraud is qualifications have been the doubt, contingency or risk and affection or argument and
voidable. principal cause of the contract. affecting the object of the persuasion, the influence will not
contract. vitiate consent.
Vices of consent A simple mistake of account shall
give rise to its correction. Art. 1334. Mutual error as to the Causal fraud is the fraud committed
(1) Error or mistake legal effect of an agreement when by one party before or at the time of
(2) Violence or force Mistake or error is the false notion the real purpose of the parties is the celebration of the contract to
(3) Intimidation or thereat of a thing or a fact material to the frustrated, may vitiate consent. secure the consent of the other.
(4) Undue influence contract.
(5) Fraud or deceit Nature of intimidation or threat Concealment a neglect or failure to
Mistake contemplated by law is communicate or disclose that which
Cause vitiating consent and substantial mistake of fact. Not (1) it must product a a party to a contract knows and
causes of incapacity every mistake will vitiate consent reasonable and well ought to communicate constitutes
distinguished and make a contract voidable. grounded fear of an evil. concealment.
(2) The evil must be imminent
(1) The former are temporary, Mistake regarding object – A is and grave Dealers talk or traders talk are
while the latter are more or buying from B a breeding cow but B (3) The evil must be upon his representation which do not appear
less permanent is selling a barren cow. person or property, or that on the face of the contract and
(2) The first refers to contract of his spouse, descendant, these do not bind either party.
itself, while the second, to Mistake regarding condition of the or ascendants.
the person entering into the contract – A is selling his parcel of (4) It is the reason why he It should be remembered that force
contract. land for 200,000 cash but B is enters into the contract. or intimidation employed by a third
buying the land thinking that the person on one of the parties makes
Both makes a contract “voidable” price is payable in instalments. Intimidation is internal while a contract voidable.
only. violence is external.
Mistake regarding identity or When fraud is employed by both
qualifications – if a contract is signed merely out of parties, neither may ask for
reverential fear or the fear of annulment as the fraud of one
(a) A sold his car to B. A displeasing a person to whom neutralizes that of the other. The
thought that B, who is a respect and obedience are due, the
contract is therefore, considered
lawyer, was a doctor. The contract is valid because reverential
mistake here is not material fear by itself does not annul consent valid.
as to avoid the contract. in the absence of actual threat.
CONTRACT
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(1) In contracts containing a
stipulation in favour of a
third person
(2) In contracts creating real
rights
(3) In contracts entered into to
defraud creditors
(4) In contracts which have
been violated at the
inducement of a third
person
Stipulation pour autrui is a
stipulation in a contract clearly and
deliberately conferring a favour
upon a third person.
Requisites stipulation pour
autrui:
(1) They contracting parties by
their stipulation must have
clearly and deliberately
conferred a favour upon a
third person
(2) The third person must have
communicated his
acceptance to the obligor
before its revocation by the
oblige or the original parties
(3) The stipulation in favour of
the third person should be a
part, not whole of contract.
(4) the favourable stipulation
should not be conditioned or
compensated by any kind of
obligation whatever.
(5) Neither of the contracting
parties bears the legal
representation or
authorization of the third
party.
Art. 1313. Creditors are protected
in case of contracts intended to
defraud them. (Accion Pauliana)
Classification of contracts
according to perfection
(1) Consensual contract or that
which is perfected by mere
consent
(2) Real contract or that which
is perfected by the delivery
of the thing subject matter
of the contract.
(3) Solemn contract or that
which requires compliance
with certain formalities
prescribed by law.
Stages in the life of a contract
Preparation or negotiation – this
includes all the steps taken by the
parties leading to the perfection of
the contract. At this stage, the
parties have not yet arrived at any
definite agreement.
Perfection or birth – this is when the
parties have come to a definite
agreement or meeting of the minds
regarding the subject matter and
cause of the contract.
Consummation or termination – this
is when the parties have perfomed
their respective obligations and the
contract may be said to have been
fully accomplished or executed.
Art. 1317. No one may contract in
the name of another without
being authorized by the latter, or
unless he has by law a right to
represent him. A contract entered
into in the name of another by
one who has no authority or legal
representation, or who has acted
beyond his powers, shall be
unenforceable, unless it is
ratified, expressly or impliedly,
by the person on whose behalf it
has been executed, before it is
revoked by the other contracting
parties.
ESSENTIAL REQUISITES OF
CONTRACTS
Art. 1318. There is no contract
unless the following requisites
concur:
(1) Consent of the
contracting parties
(2) Object certain which is
the subject matter of the
contract
(3) Cause of the obligation
which is established
Consent – is the conformity or
concurrence of wills and with
respect to contracts, it is the
agreement of the will of one
contracting party with that of
another or others, upon the object
and terms of the contract.
Offer – is a proposal made by one
party to another, indicating a
willingness to enter into a contract.
An offer made in jest or in anger, or
wile emotionally upset or in other
ways indicating that the same was
not seriously intended is not a valid
offer.
Acceptance – is the manifestation
by the offeree of his assent to all the
terms of the offer.
Without acceptance, there can be
no meeting of the minds between
the parties. The acceptance of an
offer must not only be clear; it must
be absolute, unconditional, or
unqualified.
Art. 1323. An offer becomes
ineffective upon the death, civil
interdiction, insanity, or
insolvency of either party before
acceptance is conveyed.
Option contract – is one giving a
person for a consideration a certain
period within which to accept the
offer of the offerer.
Option period – is the period given
within which the offeree must
accept the offer.
Option money – is the money paid
or promised to be paid in
consideration for the option.
Art. 1327. The following cannot
give consent to a contract
(1) Unemancipated minors
(2) Insane or demented
persons, and deaf-mutes
who do not know how to
write.
CHAPTER 4
Kinds of personal novation.
1.
(1) Substitution - when the
person of the debtor is substituted.
(2) Subrogation - when a third
person is subrogated in the rights of
the creditor.
Kinds of Substitution
(1) Expromision - or that
which takes place when a third
person of 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. It
logically requires the consent of the
third person and the creditor.
(2) Delegacion - or that which
takes place when the creditor
accepts a third person to take place
of the debtor at the instance of the
latter. The creditor may withhold
approval.
In Delegacion, all the parties,
the old debtor; the new debtor,
and the creditor must agree.
The general rule is that the old
debtor is not liable to the creditor in
Subrogation - Is the substitution of
one (1) person (subrogee) in the the
place of a creditor (subroger) with
reference to a lawful claim or right,
giving the former all the rights of the
latter, including the right to employ
all remedies to enforce payment.
Kinds of Subrogation
(1) Conventional - when it
takes place by express agreement
of the original parties (the debtor
and the original creditor) and the
third person (the new creditor)
(2) Legal - when it takes place
without agreement.
Contracts
GENERAL PROVISION
Art. 1305. A contract is a meeting
of minds between two persons
whereby one binds himself, with
respect to the other, to give
something or to render some
service.
An Agreement is broader than a
Contract because the former may
not have all the elements of a
contract that create legally
enforceable obligations.
So all contracts are agreements but
not all agreements are contracts.
Valid Contracts are those that
meet all the legal requirements and
limitations for the type of agreement
involved and are, therefore, legally
binding and enforceable.
Individual does not have an
absolute right to enter into any kind
of contract.
Classification of contracts
according to its name or
designation
Nominate contract or that which
has a specific name or designation
in law
Innominate contract or that which
has no specific name or designation
in law
Kinds of innominate contract:
Do ut des ( i give that you may give)
do ut facias ( I give that you may
do)
facto ut des ( I do that you may
give)
facto ut facias ( I do that you may
do)
do ut des is however, no longer an
innominate contract. It has already
been given a name of its own.
(Barter)
Art. 1308. The contract must bind
both contracting parties, its
validity or compliance cannot be
left to the will of one of them.
Art. 1309. The determination of
the performance may be left to a
third person, whose decision
shall not be binding until it has
been made known to both
contracting parties.
Persons affected by a contract
As a general rule, a party’s rights
and obligations derived from a
contract are transmissible to the
successors; contracts take effect
only between the parties, their
assigns and heirs.
Exception – the cases when a
contract are effective only between
the parties are when the rights and
obligations arising from the contract
are not transmissible:
 By their nature
 By stipulation
 By provision of law
As a general rule, a third person
has no rights and obligations under
a contract to which he is a stranger.
There are cases, however when
third persons, may be affected by a
contract. Among such cases are:
CHAPTER 4
If the creditor communicated the
cession to him but the debtor did
not consent thereto, the latter may
set up the compensation of debts
2.
previous to the cession, but not of
subsequent ones.
If the assignment is made without
the knowledge of the debtor, he
may set up the compensation of all
credits prior to the same and also
later ones until he had knowledge
of the assignment.
When compensation has taken
place before assignment.
Ex: A owes B 3000 due yesterday
B owes A 1000 dye also yesterday
Both debts are extinguished up to the
amount 1000. Hence, A still owes B
2000 today.
Now if B assigns his right to C, the
latter can collect only 2000 from A.
However, if A gave his consent to the
assignment before it was made or
subsequently, A loses the right to set
up the defense of compensation. So
A will be liable to C for 3000 but he
can still collect the 1000 owned by B.
in other words, the compensation
shall be deemed not to have taken
place.
(1) Assignment with the consent of
debtor
Ex: A owes B 3000 due Nov. 15
B owes A 1000 due Nov. 15
However, if A, while consenting to the
assignment, reserved his right to the
compensation, he would be liable only
for 2000 for C.
(2)Assignment with the knowledge
but without the consent of debtor –
Ex: A owes B 1000 due Nov. 1
B owes A 2000 due Nov. 10
A owes B 1000 due Nov. 15
A assigned his right to C on Nov. 12.
A notified B but the latter did not give
his consent to the assignment,
How much can C collect from B?
B can set up the compensation of
debts on Nov. 10 which was before
the cession on Nov. 12. There, being
partial compensation, the assignment
is valid only up to the amount of 1000.
But B cannot raise the defense of
compensation with respect to the debt
of A due on Nov. 15 which has not yet
matured. So, on Nov. 12, B is liable to
C for 1000. Come Nov. 15, A will be
liable for his debt of 1000 to B.
(3) Assignment without the
knowlege of the debtor –
Deposit is constituted from the
moment a person receives a thing
belonging to another with the
obligation of safely keep it and of
returning the same.
Commodatum is a gratuitous
contract whereby one of the parties
delivers to another something not
consumable so that the latter may
use the same for a certain time and
return it.
Section 6 - Novation
Art. 1291. Obligation may be
modified by:
(1) Changing their object or
principal conditions;
(2) Substituting the person of
the debtor
(3) Subrogating a third
person in the rights of the
creditor.
Novation - Is the total or partial
extinction of an obligation through
the creation of a new one which
substitue it,
Kinds of novation.
According to origin:
a. Legal - which takes place by
According to extent or effect:
(a) Total or extinctive - when
the old obligation is completely
extinguished;
(b) Partial or modificatory -
when the old obligation is merely
modified;
According to the subject:
(a) Real or objective - when the
object (or cause) or principal
conditions of the obligation are
change
(b) Personal or subjective -
when the person of the debtor is
substituted and/or when a third
person is subrogated in the rights of
the creditor.
(c) Mixed - when the object
and/or principal conditions of the
obligation and the debtor or the
credtor, or both the parties, are
changed. It is a combination of real
and personal novations.
Requisites of Novation.
(1) A previous valid obligation
(2) Capacity and intention of
the parties to modify or
extinguish the obligation
CHAPTER 4
desire or cannot receive it, after
complying with the formalities
required by law.
Section
3. 2 - Loss of the thing due
Article 1262. An obligation which
consists in the delivery of a
determinate thing shall be
extinguished if it should be lost or
destroyed without the fault of the
debtor, and before he has incurred
in delay.
When by law or stipulation, the
obligor is liable even for fortuitous
events, the loss of the thing does
not extinguish the obligation, and
he shall be responsible for
damages.
Section 3 - Condonation or
remission of debt
Condonation or remission - is the
gratuitous abandonment by the
creditor of his right againts the debtor.
Kinds of Remission
Complete - when it covers the entire
obligation
Partial - when it does not cover the
entire obligation
Express - when it is made either
verbally or in writing
Implied - when it can only be inferred
from conduct
Inter vivos - When it will take effect
during the lifetime of donor
Mortis causa - when it will become
effective upon the death of the donor.
It must comply with the formalities of
a will.
Section 4 - Confusion or Merger
of Rights (2) That both debts consist in a
There are two There is but sum of money, or if the things
Art. 1275. The obligation is obligations one obligation due are consumable, they be of
extinguished from the time the the same kind, and also of the
There is There is same quality if the latter has been
characters of creditors and
indirect impossibility of stated;
debtor are merged in the same payment payment
person.
(3) That the two debts be due;
Confusion or merger is the meeting
in one person of the qualities of Kinds of Compensation
(4) That they be liquidated and
creditor and debtor with respect to demandable;
By its effect or extent:
the same obligation.
a) Total - when both obligations
Requisites of Confusion: (5) That over neither of them
are of the same amount and there be any retention or
are entirely extinguished
1. It must take place between the controversy
principal b) Partial - when 2 obligations are
of different amounts and a Article 1283. If one of the parties
2. It must be complete. balance remains. to a suit over an obligation has a
claim for damages against the
Section 5 - Compensation By its cause or origin: other, the former may set it off by
proving his right to said damages
a) Legal- when it takes place by
Art. 1278. Compensation shall and the amount thereof.
operation of law even without the
take place when two persons, in
knowledge of the parties
their own right, are creditors and Compensation may also take place
debtors of each other. b) Voluntary - when it takes place when so declared by a final
by agreement of the parties judgement of a court in a suit. A
Compensation is the party may set off his claim for
extinguishment to the concurrent c) Judicial - when it takes place by damages against his obligation to
amount of the debts of two persons order from a court in a litigation. the other party by proving his right
who, in their own right, are debtors to said damages and the amount
d) Facultative - when it can be set thereof.
and creditors of each other. up only by one of the parties,
Compensation vs Confusion Art. 1279. In order that Art. 1285. The debtor who has
compensation may be proper, it consented to the assignment of
There are two There is only is necessary: rights made by a creditor in favor
persons one person of a third person, cannot set up
involved, each who is a (1) That each one of the obligors against the assignee the
be bound principally, and that he compensation which would pertain
of whom is a creditor and to him against the assignor, unless
debtor and a debtor of be at the same time a principal
the assignor was notified by the
creditor of the other;
creditor of each himself debtor at the time he gave his
other consent, that he reserved his right
to the compensation.
CHAPTER 4

Art. 1145. Dation in payment obligation shall be the basis of Subsection 1 - Application of Requisites of payment by cession.
whereby property is alienated to payment, unless there is Payments
the creditor is satisfaction of a debt agreement to the contrary. 1. There must be two or more
in money, shall be governed by the Application of payment - is the creditors
law4.of sales. Inflation - a sharp sudden increase designation of the debt to which
of money or credit or both without a should be applied the payment made 2. The debtor must be (partially)
Special forms of payment by a debtor who has various debts of insolvent
corresponding increase in business
transactions. Inflation causes a drop the same kind in favor of one and the
1. Dation in payment same creditor. 3. The assignment must involve all
in value of money, resulting in the the properties of the debtor
2. Application of payments rise of the general price level. Requisites of application of
payment: 4. The cession must be accepted by
3. Payment by cession Deflation - is the reduction in the creditors
volume and circulation of the 1. There must be one debtor and one
4. Tender of payment and available money or credit, resulting creditor. Dation vs Cession
consignation in a decline of the general price
level; 2. There must be two or more debts Usually one There are
Dation in payment (adjudication or creditor several creditor
dacion en pago) - is the conveyance Place where obligation shall be 3. The debts must be of the same
of ownership of a thing as an paid: kind; Does not Debtor is
accepted equivalent of perfomance. presuppose the insolvent at the
1. If there is a stipulation, the 4. The debts to which payment made insolvency of time of
It is a special form of payment payment shall be made in the place by the debtor has been applied must debtor assignment
because it is not the ordinary way of designated. be due; and
extinguishing an obligation. An Does not Extends all the
existing debt in money is satisfied, not 2. If there is a stipulation and the 5. The payment made must not be involve all the property of the
by payment of money but by the thing to be delivered is specific the sufficient to cover all the debts. property of the debtor subject
alienation of property. debtor to execution
payment shall be made at the place
When a debt more onerous than
where the thing was, at the Creditor Creditors only
Legal tender - is that currency which another.
perfection of the contract. becomes the acquire right to
if offered by the debtor in the right
amount, the creditor must accept in A debt is more onerous than another owner of the sell the thing
3. If there is no stipulation, and the when it is more burdensome to the thing given by and apply the
payment of a debt in money.
thing to be delivered is generic, the debtor. No fixed rule can be laid down the debtor proceeds to
Right of creditor to refuse or accept - place of payment shall be the in determining which debt is more their credits
Promissory notes, checks, bills of domicile of the debtor. In this case, onerous to the debtor since the proportionately
exchange and other commercial the creditor bears the expenses in condition of being more burdensome
documents are not legal tender and, going to the debtor’s place to accept is a matter dependent upon the Really an act of Not an act of
therefore, the creditor cannot be payment. circumstances. novation novation
compelled to accept them. This is true
even though the check is certified or Venue is the place where a court Subsection 2 - Payment by cession Subjection 3 - Tender of payment
is a manager’s check. suit or action must be filed or and Consignation
instituted. Payment by cession - is another
Art. 1250. In case an extraordinary special form of payment. It is the Tender of payment - the act, on the
inflation, or deflation, of the Domicile is the place of a person’s assignment or abandonment of all the part of the debtor, of offering to the
habitual residence. properties of the debtor for the benefit creditor the thing or amount due.
currency, stipulated should
of his creditors in order that the latter
supervene, the value of the may sell the same and apply the Consignation - the act of depositing
Residence is only an element of
currency at the time of the proceeds thereof to the satisfaction of the thing amount due with the proper
domicile.
establishment of the their credits. court when the creditor does
CHAPTER 3
Kinds of penal clause
As to origin:
Legal
5. penal clause - when it is
provided by law
Conventional penal clause - when it
is provided for by stipulation of the
parties
Compensatory penal clause - when
the penalty is imposed merely as
punishment for breach
As to its demandability:
Subsidiary or alternative penal
clause - when only the penalty can
be enforced
Joint or cumulative penal clause -
when both the principal obligation
and the penal clause can be
enforced.
If the obligation cannot be fulfilled
due to a fortuitous event,the penalty
is not demandable. Under article
1229, the penalty may be reduced if
it is iniquitious or unconscionable or
in case, there is partial or irregular
fulfillment.
Art. 1228. Proof of actual
damages suffered by the creditor
is not necessary in order that the
penalty may be demanded.
Art. 1228 applies only where the
penalty is fixed by the parties to
substitute the indemnity for
damages.
Art. 1229. The judge shall
equitably reduce the penalty
when the principal obligation has
been partly or irregularly
complied with by the debtor.
Even if there has been no
performance, the penalty may
also be reduced by the courts if it
is iniquitous or unconscionable.
When there is partial or irregular
performance - the first refers to the
extent of fulfillment, the latter, to the
manner. As a general rule, an
obligation is not deemed performed
unless the thing or service in which
it consists has been completely
delivered or rendered,as the case
may be
When the penalty agreed upon is
iniquitous or unconscionable - here,
the penalty may be reduced even if
there is no performance at all. Even
if iniquitous or unconscionable,
liquidated damages, whether
intended as an indemnity or as a
penalty, are not void, but subject
merely to equitable reduction.
If the principal obligation is void, the
penal clause is likewise void. The
reason is that the clause cannot
stand alone without the principal
obligation to which it
subordinated.
CHAPTER 4
Art. 1231. Obligations are
extinguished:
1. By payment of performance
2. By the loss of the thing due
3. By the condonation or remission
of the debt
4. By the confusion or merger of the
rights of creditor and debtor
5. By compensation
6. By novation
Other causes of extinguishment of
obligations, such as annulment,
rescission, fulfillment of a resolutory
condition, and prescription, are
governed elsewhere in this code.
Section 1 - Payment by performance
Art. 1231. Payment means not only
the delivery of money but also the
performance, in any other manner, of
an obligation.
In law, payment and performance are
synonymous.
Art. 1235. When the obligee accepts
the performance, knowing its
incompleteness or irregularity, and
without expressing any protest or
objection, the obligation is deemed
fully complied with.
is
Persons from whom the creditor
must accept payment.
1. The debtor
2. Any person who has an interest in the
obligation(like guarantor)
3. A third person who has no interest in
the obligation when there is stipulation
that he can make payment.
Subrogation and reimbursement
distinguished:
In Subrogation, the person who pays
for the debtor is put into the shoes of
the creditor. The payor acquires not
only the right to be reimburse for he
has paid but also all other rights
which the creditor could have
exercised pertaining to the credit
either against the debtor or against
third persons, be they guarantors or
possessor of mortgages.
In Reimbursement, the third person
entitled by reason of payment has
merely the bare right to be refunded
to the extent without the right to the
guarantees and securities of the
original obligation. In subrogation,
however, there is no real extinction of
the obligation, but only a change of
creditor.
Free disposal of the thing due means
that the thing to be delivered must not
be subject to any claim or lien or
encumbrance of a third person.
Capacity to alienate means that the
person is not incapacitated to enter
into contracts and for that matter, to
make a disposition of the thing due.
Art. 1240. Payment shall be made
to the person in whose favor the
obligation has been constituted, or
his successor in interest, or any
person authorized to receive it.
Person that can accept payment:
1. The creditor or obligee
2. His successor on interest
3. Any person authorized to receive
CHAPTER 3

According to source: Section 5. Divisible and Conventional indivisibility - where

indivisible obligations the will of the parties makes as
a. Conventional solidarity - where Others are not The others indivisible, obligations which, by
solidarity is agreed upon by the liable in case of debtors are Art. 1223. The divisibility or their nature, are divisible.
parties. i.If nothing is mentioned insolvency of proportionately indivisibility of the things that are
in the contract relating to one debtor the object of obligations in which Nature indivisibility - where the
solidarity, the obligation is only there is only one debtor and only nature of the object or prestation
joint. one creditor does not alter or does not admit of division.
Art. 1213. A Solidary creditor modify the provisions of chapter
b. Legal solidarity - where cannot assign his rights without 2 of this title. Section 6 - Obligation with a
solidarity is imposed by the law the consent of the others. Penal Clause
Divisible obligation - one the object
c. Real solidarity - where Art. 1217. Payment made by one of which, in its delivery or Art. 1226. In obligation with a
solidarity is imposed by the of the solidary debtors performance, is capable of partial penal clause, the penalty shall
nature of the obligation. extinguishes the obligation. If fulfillment. substitute the indemnity for
two or more solidary debtors damages and the payment of
The presumption where there are offer to pay, the creditor may Indivisible obligation - one the interests in case of non -
two (2) or more persons in the same choose which offer to accept. object of which in its delivery or compliance, if there is no
obligation is that it is joint. The performance, is not capable of stipulation to the contrary,
reason is that solidary obligations He who made the payment may partial performance. Nevertheless, damages shall be
are very burdensome for they claim from his co-debtors only paid if the obligor refuses to pay
create unusual rights and liabilities. the share which corresponds to An obligation is presumed the penalty or is guilty of fraud in
each, with the interest for the indivisible where the only one the fulfillment of obligation.
payment already made. If the creditor and only one debtor.
Art. 1210. The indivisibility of an payment is made before the debt The penalty may be enforced
obligation does not necessarily is due, no interest for the Kinds of division only when it is demandable in
give rise to solidarity. Nor does intervening period may be accordance with the provision of
solidarity of itself imply demanded. Qualitative division - one based on this code.
indivisibility quality, not on number or quantity of
When one of the solidary debtors the things which are the object of Principal obligation - is one which
Indivisibility vs Solidarity cannot, because of his the obligation can stand by itself and does not
insolvency, reimburse his share depend for its validity and existence
Refers to Refers to to the debtor paying his Quantitative division - one based on upon another obligation.
prestation juridical or legal obligation, such share shall be quantity rather than on quality
tie borne by all his co-debtors, in Accessory obligation - one which is
Only debtor is proportion to the debt of each. Ideal or intellectual division - one attached to a principal obligation
guilty of breach All debtors are which exists only in the minds of the and,therefore,cannot stand alone.
of obligation is liable for Prescription, one acquires parties.
liable for breach ownership and other rights through Penal clause - is an accessory
damages commited of the laps of time in the manner and Kinds of Indivisibility undertaking attached to an
debtor under the conditions laid down by obligation to assume greater liability
Can exist Legal indivisibility - where a specific in case of breach, the obligation is
law.
although there There must be provision of law declares as not fulfilled, or is partly or irregularly
is only 1 debtor at least 2 indivisible, obligations which, by complied with,
and 1 creditor debtors or two their nature, are divisible.
creditors
CHAPTER 3

Kinds of obligation according to Art. 1203. If through the creditor’s 1. After substitution - If the principal Section 4. - Joint and Solidary
object. act, the debtor cannot make a thing is lost, the debtor is not liable Obligation
choice according to the terms of whatever may be the cause of the
Simple obligation - one where there the obligation, the latter may loss, because it is no longer due. If Kinds of obligation according to
6. one prestatio
is only the number of parties.
rescind the contract with substitute is lost, the liability of the
damages. debtor depends upon whether or
Compound obligation - one where not the loss is due o his fault. 1. Individual obligation - one
there are two or more prestations. It Rescission creates the obligation to where there is only one obligor or
may be: return the things which were the Alternative vs Facultative one obligee
object of the contract together with
a. Conjunctive obligation - one their fruits, and the price with 2. Collective obligation - one
where there are several interests. where there are two or more debtor
prestations and all of them are Several Only one and/or two or more creditors. It may
due Art. 1204. The creditor shall have prestations are prestation is be joint or solidary.
a right to indemnity for damages due but due although
b. Distributive Obligation - one when, through the fault of the compliance the debtor is Joint Obligation - or one where the
where two(2) or more of the debtor, all the things which are with one is allowed to whole obligation is to be paid or
prestations is due. It may be: alternatively the object of the sufficient substitute it fulfilled proportionately by the
obligation have been lost, or the different debtors and/or is to be
1. Alternative obligation - One Right of choice Right to make demanded proportionately by the
compliance of the obligation has
where several prestations are may be given the substitution different creditors.
become impossible.
due but the performance of one to creditor or is given only to
is sufficient. The indemnity shall be fixed third person debtor Solidary Obligation - or one where
taking as a basis the value of the each one of the debtors is bound to
2. Facultative obligation - one The loss of one The loss of the render, and/or each one of the
last thing which disappeared, or
where only one prestation is or more of the thing due creditors has a right to demand from
that of the service which last
due but the debtor may alternatives extinguishes any of the debtors, entire
became impossible.
substitute another. through a the obligation compliance with the prestation.
Damages other than the value of fortuitous event
An Alternative Obligation is one does not Kinds of solidarity:
the last thing or service may also
wherein various prestations are due extinguish the
be awarded. According to the parties bound
but the performance of one of them obligation
is sufficient as determined by the A facultative obligation is one where
choice which, as a general rule, The loss of the a) Passive solidarity - solidarity on
only one prestation has been The loss of one the part of the debtors, where
belongs to the debtor. agreed upon but the obligor may of the thing due
through his any one of them can be made
render another in substitution. alternatives liable for the fulfillment of the
Art. 1200. The right of choice through the fault makes
belongs to the debtor, unless it entire obligation.
Effect of loss fault of the him liable.
has been expressly granted to debtor does b) Active solidarity - solidarity on
the creditor. 2. Before substitution - If the not render him the part of the creditors, where
principal thing is lost through a liable any one of them can demand the
The debtor shall have no right to fortuitous event, the obligation is fulfillment of the entire obligation.
choose those prestations which extinguished; otherwise, the debtor
are impossible, unlawful or which is liable for damages. c) Mixed solidarity - Solidarity on
could not have been the object of the part of the debtors and
the obligation.
creditors.
CHAPTER 3
1. If it detoriates through the fault
of debtor, the creditor may
choose between the rescission of
the 7.obligation and its fulfillment,
with indemnity for damages in
either case;
2. If the thing is improved by its
nature, or by time, the
improvement shall inure to the
benefit of the creditor;
3. If it is improved at the expense
of the debtor, he shall have no
other right than that granted to
the usufructuary.
Requisites of Article 1189
1. The obligation is a real obligation
2. The object is a specific
determinate thing;
3. The obligation is subject to a
suspensive condition
4. The condition is fulfilled
5. There is loss, deterioration, or
improvement of the thing during the
pendency of the condition.
Kinds of Loss
Loss in civil law may be:
1. Physical loss - when a thing
perishes as when a house is burned
and reduced to ashes.
2. Legal loss - when a thing goes
out of commerce or when a thing
heretofore legal becomes illegal
3. Civil loss - when a thing
disappears in such a way that its
existence is unknown or even if Section 2 - Obligation with a Kinds of period or term
known, it cannot be recovered. Period
Suspensive period - obligation
The fulfillment of the resolutory An Obligation with a period is one begins only from a day certain upon
condition converts the creditor into whose effects or consequences are the arrival of period
debtor, and the debtor into creditor. subjected in one way or another to
the expiration or arrival of said Resolutory period - The obligation
Kinds of Obligation according to period or term. is valid up to a day certain and
the person obliged terminates upon arrival of the period
Period vs Condition
1. Unilateral - when only one party Legal period - When it is provided
is obliged to comply with a Certain event Uncertain by law
prestation which must event
happen sooner Conventional or voluntary period -
2. Bilateral - when both parties are or later When it is agreed to by the parties
mutually bound to each other.
Refers only to May refer also Judicial period - When it is fixed by
The general rule is that rescission future to past event the court
will not be granted for slight unknown to
breaches of contract; parties Definite period - When it is fixed or it
is known when it will come
or Art. 1192. In case both parties Merely fixes Obligation
have committed a breach of the the time for the either arises or Indefinite period - When it is not
obligation, the liability of the first efficaciousness to cease fixed or it is not known when it will
infractor shall be equitably of the come.
tempered by the courts. If it obligation
cannot be determined which of If the obligation does not state a
the parties first violated the Depends upon Depends upon period and no period is intended,
contract, the same shall be the will of the the sole will of the court is not authorized to fix a
deemed extinguished, and each debtor the debtor period. The courts have no right to
shall bear his own damages. empowers the invalidates the make contracts for the parties.
court to fix the obligation
1. First infractor known - One party duration Section 3- Alternative Obligations
violated his obligation; subsequently, thereof
the other also violated his part of the Art. 1199. A person alternatively
obligation, in this case, the liability of the Arrival of Happening of bound by different prestations
first infractor should be equitably period does not condition has shall completely perform one of
reduced. retroactive them.
have any
retroactive effect
2. First infractor cannot be determined - The creditor cannot be compelled
effect unless
One party violated his obligation to receive part of one and part of
followed by the other; but it cannot be stipulated
determined which of them was the first
the other undertaking.
infractor. The rule is that the contract
shall be deemed extinguished and each
shall bear his own damages. Like a condition, period must be
possible.
CHAPTER 2 CHAPTER 3

Fraud vs Negligence Section 1 - Pure and Conditional Resolutory Condition - or one the If the condition depends exclusively
Obligations fulfillment of which will extinguish an upon the will of the creditor, the
obligation already existing. obligation is valid.
8. Art.1179. Every obligation whose
Deliberate No intention performance does not depend Suspensive vs Resolutory If the condition is resolutory in
intention to upon a future or uncertain event, nature, like right to repurchase in a
cause damage or upon a past event unknown to if condition is If condition is sale with pacto de retro, the
or injury the parties, is demandable at fulfilled, fulfilled, obligation is valid although its
Such waiver once. Every Obligation which obligation obligation fulfillment depends upon the sole
Waiver of may be allowed contain a resolutory condition arises extinguish will of the debtor (Seller).
future fraud is shall also be demandable without
void prejudice to the effects of the The tie of the The tie of law is Casual Condition - if suspensive
happening of the event. law does not consolidated condition depends upon the will of
Must be clearly Presumed from appear third person, the obligation subject
proved the violation of Pure obligation - one which is not It effects flow to it is valid.
a contractual subject to any condition and no Existence of but over it
obligation specific date is mentioned for its obligation is hovers the Art.1189 When the conditions
fulfillment and is, immediately mere hope possibility of have been imposed with the
1. Contractual Negligence (Culpa termination intention of suspending the
demandable.
Contractual) - negligence in efficacy of an obligation to give,
contract resulting in their breach. Conditional obligation - one the following rules shall be
When obligation is demandable observed in case of the
whose consequences are subject in
2. Civil Negligence (Culpa at once. improvement, loss or
one way or another to the fulfillment
aquilina) - Negligence which by deterioration of the thing during
of a condition. 1. When it is pure
itself is the source of an obligation the pendency of the condition:
between the parties not so related Condition - a future and uncertain
before by any preexisting contract. 2. When it is subject to a resolutory
event, upon the happening of which, 4. If the thing is lost wihout the
It is also called tort or quasi-delict. condition
the effectivity or extinguishment of fault of the debtor, the obligation
an obligation subject to it depends. 3. When it is subject to a resolutory shall be etinguished
3. Criminal Negligence (Culpa
criminal) - negligence resulting in period.
Characteristics of Condition: 5. If the thing is lost through the
the commission of a crime. fault if the debtor, he shall be
Period - Future and certain event
a) Future and Uncertain upon the arrival of which the obliged to pay damages; it is
Fault or negligence is defined by
obligation subject to it either arises understood that the thing is lost
supreme court “ Negligence is the b) Past but Unknown
or is extinguished. when it perishes, or goes out
failure to observe for the protection of without of commerce, or
the interests of another person that A condition must not be impossible. disappears in such a way that its
Potestative Condition - A
degree of care, precaution, and existence is unknown or it cannot
Two principal kinds of condition: condition suspensive in nature and
vigilance which the circumstances justly be recovered;
which depends upon the sole will of
demand, whereby such other person
Suspensive condition (Precedent the contracting parties.
suffers injury.” 6. When the thing detoriates
condition) - fulfillment of which will without the fault of the debtor,
give rise to an obligation is Conditional obligation void -
Fortuitous event - is any event which when the potestative condition the impairment is to be borne by
cannot be foreseen,or inevitable. It is an suspended until the happening of the creditor.
the uncertain event which depends solely upon the will of the
event which is either impossible to debtor, the obligation shall be void.
foresee or avoid. constitutes the condition.
CHAPTER 2
Determinate thing - Identified by its
individuality. The debtor cannot
substitute it with another although
in
the latter is of the same kind and
quality without the consent of the
creditor.(Ex. Dog named terror,
Watch I am wearing.)
Generic thing - is identified only by
its specie. The debtor can give
anything of the same class as long
as it is of the same kind. ( Ex. 1995
Toyota car, A police dog.)
Natural Fruits - Spontaneous
products of the soil, and the young
and other products of animals. (Ex.
Grass, Plants and trees on land.)
Industrial Fruits - are those
produced by lands of any kind
through human effort or labor. (Ex.
Sugar cane, vegetables, rice,)
Civil Fruits - Are those derived by
virtue of a juridical relation. (Ex.
Rents of buildings, life annuities)
The creditor is entitled to the fruits
of the thing to be delivered from the
time the obligation to make delivery
arises.
Personal Right - right or power of a
person (creditor) to demand from
another ((debtor) as a definite
passive subject, the fulfilment of the
latter’s obligation to give, to do, or
not to do.
Real Right - Right or interest of a
person over a specific thing (like
ownership, possession, mortgage)
Without a definite passive subject c, Demand payment of damages Grounds for liability
against whom the right may be only, where it is the only feasible
personally enforced. remedy. 1. Fraud (Deceit or dolo) - is the
deliberate or intentional
Personal Right vs Real Right ART. 1166. The obligation to give evasion of the normal
a determinate thing includes that fulfillment of an obligation.
of delivering all its accessions Synonymous to bad faith.
and accessories, even though
There is definite There is only a they may not have been a) Incidental fraud (Dolo
active subject definite active mentioned. incidente) - Committed in the
and a definite subject without performance of an obligation
passive subject any passive Accessions - are the fruits of a already existing because of
subject. thing or additions to or contract.
improvements upon a thing (the
principal), (Ex. House or trees on b) Causal Fraud (Dolo
Binding or land, Aircon of a car) causante) - Fraud employed in
enforceable only Directed against the execution of a contract
against a the whole world. Accessories - are things joined to which vitiates consent.
particular or included with the principal thing.
person (Ex. Key of house; frame of a 2. Negligence (Fault or Culpa) -
picture; bracelet of a watch; bow of it is voluntary act or omission,
The meaning of phrase “He shall violin) there being no bad faith or
acquire no real right over it until the malice, which prevents the
same has been delivered to him”, is Ordinary Delay - merely the failure normal fulfillment of an
that the creditor does not become to perform an obligation on time. obligation.
the owner until the specific thing
has been delivered to him. Legal Delay or default or mora - is 3. Delay (mora) - already explain
the failure to perform an obligation
In Specific real obligation on time which failure constitutes a 4. Contravention of the terms
(Obligation to deliver a determinate breach of the obligation. of the obligation - violation of
thing), the creditor may exercise the the terms and conditions
following remedies or rights in case Kinds of delay or default stipulated in the obligation. It
the debtor fails to comply with his must not be due to a fortuitous
obligation: Mora Solvendi - delay on the part event or force majeure.
of the debtor to fulfill his obligation
a. Demand specific performance or (to give or to do) A waiver of an action for future
fulfillment (if it still possible) of the fraud is void. (No effect)
obligation with a right to indemnity Mora accipiendi - delay on the part
for damages. of the creditor to accept the A waiver of an action for past fraud
performance of the obligation is valid because it can be
b. Demand rescission or considered as an act of generosity
cancellation (in certain cases) of the Compensatio morae - delay of the and magnanimity on the part of the
obligation also with a right to obligors in reciprocal oblgations party who is the victim of fraud.
recover damages. (like in sale) the delay of the obligor
cancels the delay of the obligee.
CHAPTER 1

The term Obligation is derived from Personal Obligation (Obligation to Kinds of Quasi-Contracts: Crime distinguished from
the latin word Obligatio which do or not to do) is that which the Quasi-Delict
means tying or binding. subject matter is an act to be done Negotiorum Gestio - Is the
or not to be done. voluntary management of the
Crime Quasi-delict
4 requisites of obligation: property or affairs of another
Article 1157: Obligations arise without the knowledge or consent
Passive Subject (called debtor or from: of the latter.
obligor) person who is bound to the There is There is only
fulfillment of the obligation. I. Law Solutio Indebiti - is the juridical criminal or negligence
relation which is created when malicious
Active Subject (called creditor or II. Contacts something is received when there intent or
obligee) person who is entitled to is no right to demand it and it was criminal
demand the fulfillment of the III. Quasi-Contracts unduly delivered through mistake. negligence
obligation.
IV. Acts or omissions punished In crimes, there is no civil liability to
Object or Prestation (subject by law be enforced. But a person not
matter of the obligation) the conduct criminally responsible may still be The purpose is Indemnification
to be observed by the debtor. It may V. Quasi-delicts liable civilly. of the offended
punishment
consist in giving, doing. Or not party
doing. Without prestation, there is Law - when they are imposed by Scope of Civil Liability:
nothing to perform) law itself Affects private
1. Restitution Affects public interest
Juridical or legal tie (also called Contracts - when they arise from
interest
efficient cause) that which binds or the stipulation of the parties 2. Reparation for damage caused
connect the parties to the obligation. Generally two
Quasi Contracts - When they 3. Indemnification for consequence Only civil
liabilities;
Obligation is the act or arise from lawful, voluntary and damages. liability
criminal and
performance which the law will unilateral acts which are
civil
enforce enforceable to the end that no one Requisites of Quasi-delict
shall be unjustly enriched or Cannot be
Right is the power which a person benefited at the expense of the 1. There must be an act or Can be
compromised
has under the law, to demand from another. omission compromised
or settled by
another any prestation. parties as any other
Crimes or acts of omission 2. There must be fault or civil liability
negligence themselves
Wrong is an act or omission of one punished by law - when they arise
party in violation of the legal right or from civil liability which is the
rights of another. consequence of a criminal offense. 3. There must be damaged caused
Guilt of the Fault or
Kinds of obligation: Quasi delicts or torts - When they 4. There must be a direct relation negligence of
or connection of cause and effect accused must
arise from damage caused to be proved the defendant
Real Obligation (Obligation to give) between the act or omission and need only be
another through an act or omission beyond
is that which the subject matter is a damages proved by
reasonable
thing which the obligor must deliver doubt preponderance
to the obligee. 5. There is no pre existing
contractual relation between parties