Oblicon San Beda College

San Beda College of Law 85
MEMORY AID IN CIVIL LAW
OBLIGATIONS AND CONTRACTS
I. OBLIGATIONS through mistake to another who has no

right to demand it.
OBLIGATION
 QUASI-DELICTS
A juridical necessity to give, to do, 
or not to do (Article 1156), one An act or omission by a person
impressed with the character of (tortfeasor) which causes damage to
enforceability. another giving rise to an obligation
 to pay for the damage done, there
Requisites: being fault or negligence but there is
a. juridical or legal tie or efficient no pre-existing contractual relation
cause between the parties (Article 2176).
b. active subject (obligee 
or creditor) Requisites:
c. passive subject (obligor 1. There must be an act or omission;
or debtor) 2. There must be fault or
d. fact, prestation or service negligence;
constituting the object of the 3. There must be damage caused to
obligation the plaintiff;
 4. There must be a direct relation
Requisites:
i) it must be licit of cause and effect between the
ii) it must be possible, act or omission and the damage;
physically & juridically and
iii) it must be determinate or 5. There is no pre-existing
determinable contractual relation between the
iv) it must have a possible parties.
equivalent in money
NOTES:

1. Law The same negligent act or omission
causing damage may produce civil
2. Contracts liability arising from crime under Art.
3. Quasi-contracts 100 of the RPC or create an action
4. Delicts for quasi-delict under Article 2176.
5. Quasi-delicts 
While it is true that in order that a
QUASI-CONTRACTS person may be liable for quasi-
 delicts, there must be no pre-
Those juridical relations arising from existing contractual relationship
lawful, voluntary and unilateral acts, between the parties, yet, “the act
by virtue of which the parties that breaks the contract may also
become bound to each other, based be a tort.” (Air France vs.
on the principle that no one shall be Carrascoso, 18 SCRA 155).
unjustly enriched or benefited at the
expense of another. Nature of Obligations
1. Personal Obligations - obligations to
Principal Kinds of Quasi-contracts: do
1. Negotiorum gestio - arises whenever a. Positive – obligation to do
a person voluntarily takes charge of b. Negative – obligation not to do
the agency or management of the 2. Real Obligations - obligations to give
business or property of another a. Determinate or specific – object
without any power or authority from is particularly designated or
the latter.
2. Solutio indebiti - arises whenever a
person unduly delivers a thing
CIVIL LAW COMMITTEE
  
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon

SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills
and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT),
Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflict
of Laws)
86 2005 CENTRALIZED BAR OPERATIONS
physically segregated from all if, under the circumstances of the

other of the same class case, the result of the specific
b. Generic – object is designated performance of the contract would
merely by its class or genus be harsh, inequitable, oppressive or
c. Limited generic thing – when the result in an unconscionable
generic objects are confined to a advantage to the plaintiff. The
particular class, e.g. an courts may adjust the rights of the
obligation to deliver one of my parties in accordance with the
horses (Tolentino, Volume IV, p. circumstances obtaining at the time
91). of rendition of judgment, when
these are significantly different from
PERSONAL vs. REAL RIGHT those existing at the time of
Personal Real generation of those rights. (Agcaoili
1. jus ad rem, a1. jus in re, a right vs. GSIS, G.R. No. 30056, August 30,
right enforceable enforceable 1988)
only against a against the whole
definite person or world OBLIGATIONS OF THE DEBTOR
group of persons
Determinate Generic
2. right pertaining 2. right pertaining
1. deliver the thing 1. deliver the thing
to the person to to a person over a
which he has which is neither of
demand from specific thing,
obligated himself to superior nor inferior
another, as a without a passive
give quality
definite passive subject individually
2. take care of the 2. pay damages in
subject, the determined against
thing with the case of breach of
fulfillment of a whom such right
proper diligence of the obligation by
prestation to give, may be personally
a good father of a reason of delay,
to do or not to do. enforced
family fraud, negligence or
3. deliver all contravention of the
RIGHTS OF A CREDITOR accessions and tenor thereof
Determinate Generic accessories of the
1. compel specific 1. ask for thing even though
performance performance of the they may not have
obligation been mentioned
2. recover 2. ask that the 4. pay damages in
damages in case of obligation be case of breach of
breach of the complied with at the obligation by
obligation, the expense of the reason of delay,
exclusive or in debtor fraud, negligence or
addition to contravention of the
specific tenor thereof
performance
3. entitlement to 3. recover EFFECTS OF BREACH
fruits, interests damages in case of Positive Personal Negative Personal
from the time the breach of the
Obligations Obligations
obligation to obligation
The creditor can: If the obligor does
deliver arises.
1. have the what has been
obligation performed forbidden him, the
Principle of Balancing of Equities or executed at the creditor can:
as Applied in Actions for Specific expense of the 1. have it undone at
Performance obligor (except in the expense of the
 cases where the obligor; and
In decreeing specific performance, personal 2. ask for damages
equity requires not only that the qualifications of the
contract be just and equitable in its
debtor are taken into
provisions,butthatthe
account in which
consequences of specific case the only remedy
performance likewise be equitable is an action for
and just. The general rule is that damages)
this equitable relief will not be 2. ask that what has
granted
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)
been poorly done be  3 Kinds:

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

  

Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts
of Law)
NOTE: Future fraud cannot be waived Test of Negligence

because it would result to illusory
obligation. 
The test of negligence can be
determined by this standard: If the
Incidental Causal Fraud/dolo defendant, in committing or causing
Fraud/dolo causante the negligent act, had used
incidente (Article 1338) reasonable care and vigilance which
(Article 1170) a man of ordinary prudence would
have employed under the same
situation, he is not guilty of
1. Present during 1. Present during the
negligence. Otherwise, he is guilty.
the performance time of birth or
of a pre-existing perfection of the
obligation obligation Doctrine of Res Ipsa Loquitur
as Applied in Negligence Cases
2. Purpose is to 2. Purpose is to
evade the normal secure the consent of

The thing or transaction speaks for itself
fulfillment of the the other to enter
obligation into a contract 
When the thing which caused injury,
without fault of the injured person,
3. Results in the 3. Results in the
is under the exclusive control of the
non-fulfillment or vitiation of consent
defendant and the injury is such as
breach of the
in the ordinary course of things does
obligation
not occur if he having such control
use proper care, it affords
4. Gives rise to a 4. Gives rise to a
reasonable evidence, in the absence
right of the creditor right of an innocent
of explanation from the defendant,
to recover damages party to annul the
that the injury arose from
from the debtor contract
defendant’s want of care (Africa vs.
Caltex, 16 SCRA 448 and Republic vs.
Luzon Stevedoring, 21 SCRA 279).
NEGLIGENCE
 FORTUITOUS EVENT
Omission of that diligence which is
required by the nature of the 
An event which could not be foreseen
obligation and corresponds with the or which though foreseen was
circumstances of the persons, of the inevitable.
time and of the place
NOTE: Negligence can be waived unless

Requisites:
the nature of the obligation or public 1. cause is independent of the will of
policy requires extraordinary diligence as the debtor
in common carrier. 2. the event must be unforeseeable or
unavoidable
Diligence Required 3. occurrence must be such as to
1. That agreed upon by the parties render it impossible for the debtor
2. In the absence of stipulation, that to fulfill his obligation in a normal
required by law in the particular manner
case 4. debtor must be free from any
3. If both the contract and law are participation in
silent, diligence of a good father of a 5. the aggravation of the injury
family resulting to the creditor (Lasam vs.
Smith, 45 Phil. 657)
Concept of Diligence of Good Father
of a Family NOTE: It must not only be the
 proximate cause but it must be the
That reasonable diligence which an ONLY and SOLE CAUSE.
ordinary prudent person would have
done under the same circumstances

Ethics)
GENERAL RULE: No liability in case of

fortuitous event. 1. When they are not transmissible
EXCEPTIONS: by their very nature e.g. purely
1 When expressly declared by law personal right
NOTE: e.g. Article 552(2), 2. When there is a stipulation of
1165(3), 1268, 1942, 2147, 2148 the parties that they are not
and 2159 of the Civil Code. transmissible
2 When expressly declared by 3. Not transmissible by operation of
stipulation or contract law
3 When the nature of the
obligation requires the PURE OBLIGATION
assumption of risk 
4 When the obligor is in default or One whose effectivity or
has promised to deliver the same extinguishment does not depend
thing to 2 or more persons who upon the fulfillment or non-
do not have the same interest fulfillment of a condition or upon the
[Article 1165(3)]. expiration of a term or period and is
demandable at once.
EFFECT OF FORTUITOUS EVENT
Determinate Generic CONDITIONAL OBLIGATION
Obligation Obligation 
One whose effectivity is
obligation is obligation is not
extinguished extinguished based subordinated to the fulfillment or
on the rule that a non-fulfillment of a future AND
genus never perishes uncertain fact or event
(genus nunquam
peruit) Kinds of conditions:
1. Suspensive - fulfillment of the
condition results in the acquisition of
rights arising out of the obligation
PRINCIPLE UNDER ARTICLE 1176 2. Resolutory - fulfillment of the
 condition results in the
Before the presumption that a prior extinguishments of rights arising out
installment had been paid may arise, of the obligation
the receipt must specify the
installment for which payment is 3. Potestative - fulfillment of the
made. condition depends upon the will of a
party to the obligation
 4. Casual - fulfillment of the condition
REMEDIES OF CREDITOR TO PROTECT
CREDIT: depends upon chance and/or upon
1. Exhaustion of debtor’s property the will of a third person
2. Accion subrogatoria - to be 5. Mixed - fulfillment of the condition
subrogated to all the rights and depends partly upon chance and/or
actions of the debtor save those the will of a third person
which are inherent in his person. 6. Possible - condition is capable of
3. Accion pauliana - impugn all the acts realization according to nature, law,
w/c the debtor may have done to public policy and good customs
defraud them. 7. Impossible - condition is not capable
NOTE: 2nd & 3rd remedies are of realization according to nature,
subsidiary to the first law, public policy and good customs
8. Positive - condition involves the
Rights acquired by performance of an act
virtue of an obligation are transmissible 9. Negative - condition involves the
in character omission of an act
10. Divisible - condition is susceptible of
partial realization
11. Indivisible - condition is not
susceptible of partial realization
CIVIL LAW COMMITTEE

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of Law)
12. Conjunctive - where there are be deemed to have been mutually

several conditions, all of which must compensated
be realized 5. If the obligation is unilateral, the
13. Alternative - where there are several debtor shall appropriate the fruits &
conditions but only one must be interests received, unless from the
realized nature & circumstances it should be
inferred that the intention of the
Rule in Potestative Conditions persons constituting the same was
a. If the fulfillment of the different
potestative condition depends 6. In obligations to do or not to do, the
upon the sole will of the debtor, court shall determine the retroactive
the condition as well as the effect or the conditions that has
obligation itself is void. It renders been complied with
the obligation illusory.
(Applicable only to a suspensive Constructive fulfillment of
condition and to an obligation Suspensive Condition
which depends for its perfection
upon the fulfillment of the

The condition shall be deemed
potestative condition and not to a fulfilled when the obligor actually
pre-existing obligation.) prevented the obligee from
b. If the fulfillment depends complying with the condition and
exclusively upon the will of the such prevention must have been
voluntary and willful in character.
creditor, both the condition and
obligation is valid.
Effects of Resolutory Condition
NOTE: In case of simple potestative
1. Before the fulfillment of the
condition, e.g. right of first refusal,
condition, the right which the
such condition is valid.
creditor has already acquired by
virtue of the obligation is subject to
Rule in Impossible Conditions
a threat of extinction.
They shall annul the
2. If condition is not fulfilled, rights are
obligation which depends upon them.
consolidated; they become absolute.
3. Upon fulfillment of the condition,
1. pre-existing obligation
the parties shall return to each other
2. if obligation is divisible
what they received including the
3. in simple or renumeratory donations
fruits
4. in testamentary dispositions
5. in case of conditions not to do an
SUMMARY:
impossible thing
SUSPENSIVE RESOLUTORY
Effects of Suspensive Condition CONDITION CONDITION
1. if fulfilled, 1. if fulfilled,
1. Before fulfillment of the condition, obligation arises obligation is
the demandability as well as the or becomes extinguished
acquisition or effectivity of the effective
rights arising from the obligation is 2. if not fulfilled, 2. if not fulfilled,
suspended no juridical juridical
2. After the fulfillment of the condition, relation is created relation is
the obligation arises or becomes 3. rights are not yet consolidated
effective acquired, but 3. rights are
there is hope or already
3. The effects of a conditional
expectancy that acquired, but
obligation to give, once the they will soon be subject to the
condition has been fulfilled, shall acquired threat or danger
retroact to the day of the of extinction
constitution of the obligation
4. When the obligation imposes
reciprocal prestations upon the
parties, the fruits & interests shall

Ethics)
Effects of Loss, Deterioration and RIGHT TO RESCIND (ART 1191)

Improvement in real obligations (during The right to rescind
the pendency of the condition) needs judicial approval.
1. Loss 1. If there is an express stipulation

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

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

Ethics)
another prestation b. If the loss of 1 of the things

in substitution occurs through the fault of the
debtor, the creditor may claim
2. fortuitous loss 2. fortuitous loss of any of those subsisting, or the
extinguishes the all prestations will price of that which, through the
obligation extinguish the
fault of the former, has
obligation
disappeared with a right to
3. culpable loss 3. culpable loss of any damages
obliges the debtor object due will give c. If all the things are lost through
to deliver rise to liability to the fault of the debtor, the
substitute debtor choice by the creditor shall fall
prestation without upon the price of any 1 of them,
liability to debtor also with indemnity for damages
JOINT AND SOLIDARY OBLIGATIONS

4. choice pertains 4. choice may pertain
only to debtor to creditor or even Obligation is presumed
third person joint if there is concurrence of two or
more debtors and/or creditors.
NOTES: 1. when expressly stated that

 there is solidarity
In alternative obligations, choice
2. when the law requires solidarity
takes effect only upon 3. when the nature of the
communication of the choice to the obligation requires solidarity
other party and from such time the
obligation ceases to be alternative. JOINT DIVISIBLE OBLIGATIONS
 
The debtor cannot choose those Each creditor can demand for the
prestations or undertakings which payment of his proportionate share
are impossible, unlawful or w/c of the credit, while each debtor can
could not have been the object of be held liable only for the payment
the obligation. of his proportionate share of the
debt.
EFFECT OF LOSS OF OBJECT OF 
A joint creditor cannot act in
OBLIGATION: representation of the other creditors
1. If right of choice belongs to debtor while a joint debtor cannot be
a. If through a fortuitous event - compelled to answer for the acts or
debtor cannot be held liable for liability of the other debtors.
damages
b. If 1 or more but not all of the JOINT INDIVISIBLE OBLIGATIONS
things are lost or one or some 1. If there are 2 or more debtors, the
but not all of the prestations fulfillment of or compliance with the
cannot be performed due to the obligation requires the concurrence
fault of the debtor, creditor of all the debtors, although each for
cannot hold the debtor liable for his own share. Consequently, the
damages because the debtor can obligation can be enforced only by
still comply with his obligation. proceeding against all of the
2. If right of choice belongs to the debtors.
creditor 2. If there are 2 or more creditors, the
a. If 1 of the things is lost through concurrence or collective act of all
a fortuitous event, the debtor the creditors, although each for his
shall perform the obligation by own share, is also necessary for the
delivering that which the enforcement of the obligation.
creditor should choose from
among the remainder, or that Effect of breach – If one of the joint
which remains if only 1 subsists debtors fails to comply with his
undertaking, the obligation can no
CIVIL LAW COMMITTEE

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of Law)
longer be fulfilled or performed. Effect of Assignment by Solidary

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

Ethics)
for reimbursement within each Defenses available to a Solidary Debtor

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

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
Purpose of Penalty: 4. condonation or remission of the debt
1. To insure the performance of 5. confusion or merger of rights of the
the obligation; creditor and debtor
2. to liquidate the amount of 6. novation
damages to be awarded to the 7. annulment
injured party in case of breach 8. rescission
of the principal obligation 9. prescription
(compensatory); and 10. payment or performance
3. in certain exceptional cases, to
punish the obligor in case of Payment or Performance
breach of the principal 
obligation (punitive). Means not only the delivery of
money but also the performance, in
any other manner, of an obligation.
ULE: The penalty fixed by the
parties is a compensation or substitute for Integrity of Payment
damages in case of breach. A debt shall not be
understood to have been paid unless the
1. when there is a stipulation thing or service in which the obligation
to the contrary; consists has been completely delivered
2. when the debtor is sued for or rendered, as the case may be.
refusal to pay the agreed
penalty; and
3. when debtor is guilty of fraud 1. When the obligation has been
substantially performed in good faith;
NOTE: Article 1228 does not apply to 2. Whentheobligeeaccepts
these exceptions; there must be performance, knowing its
proof of actual damages. incompleteness or irregularity &
w/out expressing any protest or
NOTES: objection;
 3. When there is an express stipulation;
The debtor cannot exempt himself and
from the performance of the 4. When the debt is in part liquidated
principal obligation by paying the
stipulated penalty unless when the and in part unliquidated.
right has been expressly reserved for
him. Identity of Payment
 
The creditor cannot demand the requires that the very thing, service
fulfillment of the principal obligation or forbearance, as the object of the
and the satisfaction of the stipulated prestation, must be performed or
penalty at the same time unless the observed
right has been clearly granted him.
Persons who may pay the obligation:
When penalty may be reduced 1. the debtor himself or his legal
1. If the principal obligation has been representative
partly complied with; 2. any third person
2. If the principal obligation has been
irregularly complied with; and Creditor is not bound to
3. If the penalty is iniquitous or accept payment or performance by a
unconscionable even if there has been third person.
no performance.
1. when made by a third person
who has an interest in the
MODES OF EXTINGUISHMENT OF
fulfillment of the obligation;
OBLIGATIONS (LFC3NARP2)
2. when there is a stipulation to
1. loss of the thing due
the contrary.
2. fulfillment of resolutory condition
3. compensation

Ethics)
Rights of 3rd person who paid the Rules in Monetary Obligations:

obligation: 1. Payment in cash - must be made in
the currency stipulated; if it is not
1. If payment was made with
possible to deliver such currency,
knowledge and consent of the
then in the currency which is legal
debtor:
tender in the Philippines.
a. can recover entire
2. Payment in check or other
amount paid
negotiable instrument - not
b. can be subrogated to all
considered payment; not considered
the rights of the
legal tender and may be refused by
creditor.
the creditor. It shall only produce
2. If payment was made without
the effect of payment:
knowledge or against the will of
a. when it has been cashed or
the debtor, he can recover only
b. when it has been impaired
insofar as the payment has been
through the fault of the creditor.
beneficial to the debtor.
LEGAL TENDER
To whom payment must be made: 
Such currency which may be used for
1. The person in whose favor the
the payment of all debts, whether
obligation has been constituted;
private or public. The kind of
2. His successor in interest; or
currency which a debtor can legally
3. Any person authorized to receive it.
compel a creditor to accept in
payment of a debt in money when
If payment is made to a
tendered by the debtor in the right
person other than those enumerated, it
amount.
shall not be valid. 
Legal tender of the Philippines would
be all notes and coins issued by the
1. Payment made to a 3rd person,
Central Bank.
provided that it has redounded
 Section 52, R.A. No. 7653
to the benefit of the creditor.
1. 25c and above, legal tender up
Such benefit to the creditor is
to P50
presumed in the following cases:
2. 10c and below, legal tender up
 If after the payment, the to P20
third person acquires the
creditor’s rights; Extraordinary inflation or deflation
 If the creditor ratifies the
 unusual or beyond the common
payment to the third fluctuation in the value of currency,
person; which the parties could not have
 If by the creditor’s conduct, reasonably foreseen or which was
the debtor has been led to manifestly beyond their
believe that the third contemplation at the time the
person had authority to obligation was established.
receive the payment.  Applies only to contractual
2. Payment made to the possessor obligations
of the credit, provided that it  Requisites:
was made in good faith. a. The decrease in the value of the
currency could not have been
Obligation to Deliver a Generic Thing reasonably foreseen by the

If the quality and circumstances parties or beyond their
have not been stated, the creditor contemplation at the time the
cannot demand a thing of superior obligation was established ;
quality; neither can the debtor b. There must be a declaration of
deliver a thing of inferior quality. such extraordinary inflation or
CIVIL LAW COMMITTEE

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deflation by the Bangko Sentral. Legal Application of Payment (ART1254)

Without such declaration, the 1. If neither the debtor nor the creditor
creditors cannot demand an makes any application of payment,
increase, and debtors a decrease, or if it cannot be inferred from other
of what is due to or from them. circumstances, the debt which is
(Ramos vs. CA, 275 SCRA 167 and most onerous to the debtor, among
Mobil Oil Phils. vs. CA, 180 SCRA those which are due, shall be
651) deemed to have been satisfied.
2. If the debts due are of the same
Place of payment nature and burden, payment shall be
1. Place stipulated by the parties. applied to all of them
2. No stipulation and the obligation is proportionately.
to deliver a determinate thing,
payment shall be made at the place b. Dation in Payment (DACION EN PAGO)
where the thing might be at the time 
Delivery and transmission of
the obligation was constituted.
3. In any other case, the payment shall ownership of a thing by the debtor
be made at the domicile of the to the creditor as an accepted
debtor. equivalent of the performance of the
obligation.

Special Forms of Payment: Requisites:
a. Application of payment a. existence of a money obligation
b. Dation in Payment b. alienation to the creditor of a
c. Payment by Cession property by the debtor with the
d. Tender of payment and consent of the former
Consignation c. satisfaction of the money
obligation of the debtor
a. Application of Payment
 c. Payment by Cession
Designation of the debt to which the 
payment must be applied when the Debtor abandons all of his property
debtor has several obligations of the for the benefit of his creditors in
same kind in favor of the same order that from the proceeds thereof,
creditor. the latter may obtain payment of

Requisites:
their credits.

a. there must be only 1 debtor & Requisites:
only 1 creditor; a. plurality of debts
b. there must be 2 or more debts of b. partial or relative insolvency of
the same kind; the debtor
c. all of the debts must be due; c. acceptance of the cession by the
except: if there’s stipulation to creditors
the contrary; or application of
payment is made by the party DATION IN PAYMENT BY
for whose benefit the term has PAYMENT CESSION
been constituted; and 1. one creditor 1. plurality of
d. amount paid by the debtor must creditors
not be sufficient to cover the
total amount of all the debts. 2. not necessarily 2. debtor must be
in state of financial partially or
The right to designate difficulty relatively insolvent
the debt to which the payment shall be
applied primarily belongs to the debtor. 3. thing delivered 3. universality of
If the debtor does not avail is considered as property of debtor is
equivalent of what is ceded
of such right and he accepts from the
performance
creditor a receipt in which the
application is made.

Ethics)
efficacy of the consignation, the

4. payment 4. merely releases obligation is extinguished.
extinguishes debtor for net 2. If the creditor contests the
obligation to the proceeds of things validity or efficacy of the
extent of the value ceded or assigned,
consignation or if the creditor is
of the thing unless there is
delivered as agreed contrary intention not interested or unknown or is
upon, proved or absent, the result is a litigation.
implied from the If the debtor complied with all
conduct of the the requisites, the obligation is
creditor extinguished.
d. Tender of Payment and Consignation shall

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

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4. The contract is for a future

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

demandable at least two obligation
obligations
NOTE: Express condonation or remission
must comply with the formalities of Compensation Payment
donation. 1. The requisites prescribe by law for
compensation are different from those
CONFUSION OR MERGER OF RIGHTS prescribed by law for payment.
 2. Takes effect by 2. Takes effect by
Merger of the characters of the operation of law act of the parties
creditor and the debtor in one and 3. Capacity to 3. Capacity to give
the same person by virtue of which give and to and to acquire is
the obligation is extinguished.
 acquire is not essential
Requisites: necessary
a. that the characters of creditor & 4. As a rule, it is 4. As a rule,
debtor must be in the same partial complete and
person; indivisible
b. that it must take place in the
person of either the principal
creditor or the principal debtor; Compensation Counterclaim
and
c. it must be complete & definite 1. Requires 2 1. Not necessary
debts must consist
COMPENSATION in money or if
fungibles, same
 kind and quality
Extinguishment in the concurrent
amount of the obligation of those
persons who are reciprocally debtors 2. Both debts 2. Does not require
and creditors of each other. must be that debts be
 liquidated liquidated
Requisites:
a. there must be 2 parties, who, in
their own right, are principal 3. Need not be 3. Must be pleaded
creditors & principal debtors of pleaded to be effectual
each other (except in case of
guarantor, Article 1280);
b. both debts must consist in Kinds of Compensation
money, or if the things due are 1. Legal – takes effect by
fungibles, they must be of the operation of law
same kind & quality; 2. Voluntary – agreed upon by
c. both debts must be due; the parties
d. both debts must be liquidated & 3. Judicial – takes effect by
demandable; judicial decree
e. there must be no retention or 4. Facultative – when it can be
controversy commenced by 3rd claimed by one of the parties
persons over either of the debts who, however, has the right
& communicated in due time to to object to it
the debtor; and
f. compensation must not be Debts not subject to Compensation:
prohibited by law. 1. debts arising from contracts of
deposit
2. debts arising from contracts of
Compensation Confusion
commodatum
1. two persons 1. one person
who are mutual where qualities of
3. claims for support due by
debtors and debtor and creditor gratuitous title
creditors of each are merged 4. obligations arising from criminal
other offenses
5. certain obligations in favor of
government
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NOTE: Taxes are not subject to set-off b. Implied - when the old & new
or legal compensation because the obligation are incompatible w/
government & taxpayers are not each other on every point.
mutually creditors & debtors of each
other (Francia vs. IAC, 162 SCRA 753). Test of Incompatibility

Facultative Compensation Whether or not the old and new
obligations can stand together, each
 having its own independent
This is compensation which can be
set up only at the option of a existence. If they can stand together,
creditor, when legal compensation there is no incompatibility;
cannot take place because of want consequently, there is no novation.
of some legal requisites for the If they cannot stand together, there
benefit of the creditor. The latter is incompatibility; consequently,
can renounce his right to oppose the there is novation.
compensation and he himself can set
it up. It differs from conventional Forms of Substitution of Debtors:
compensation because it is unilateral 1. Expromision - effected with the
while the latter depends upon the consent of the creditor at the
agreement of both parties. instance of the new debtor even
(Tolentino, Volume IV, p. 367) without the consent or even
against the will of the old
NOVATION debtor.
 Requisites:
Substitution or change of an a. Initiative for substitution must
obligation by another, resulting in its
extinguishment or modification, emanate from the new debtor
either by changing its object or b. Consent of the creditor to the
principal conditions, or by substitution
substituting another in place of the 2. Delegacion - effected with the
debtor, or by subrogating a third consent of the creditor at the
person in the rights of the creditor. instance of the old debtor, with
 the concurrence of the new
Requisites:
a. a previous valid obligation; debtor.
b. agreement of the parties to the Requisites:
new obligation; a. Initiative for substitution
c. extinguishment of the old must
obligation; and emanate from the old debtor
d. validity of the new obligation. b. Consent of the new debtor
c. Acceptance by the creditor
Kinds:
1. As to its essence Effect of insolvency of new debtor
a. Objective/Real - refers to the 1. Expromision – the new debtor’s
change either in the cause, insolvency or nonfulfillment of
object or principal conditions of the obligation shall not revive
the obligations the original debtor’s liability to
b. Subjective/Personal - refers to the creditor whether the
the substitution of the person of substitution is effected with or
the debtor or to the subrogation without the knowledge or
of a 3rd person in the rights of against the will of the original
the creditor debtor.
c. Mixed 2. Delegacion – the creditor can sue the
2. As to its form/constitution old debtor only when the
a. Express - when it is declared in insolvency was prior to the
unequivocal terms that the old delegation and publicly known or
obligation is extinguished by a when the old debtor knew of
new one w/c substitutes the such insolvency at the time he
same. delegated the obligation.

Ethics)
NOTE: A change in the incidental II. CONTRACTS

elements of, or an addition of such
elements to an obligation, unless CONTRACT
otherwise expressed by the parties, will  A contract is a meeting of minds
not result in its extinguishment. between two persons whereby one
binds himself, with respect to the
CONVENTIONAL ASSIGNMENT OF other, to give something or to render
SUBROGATION RIGHTS some service (Article 1305).

1. governed by Arts. 1. governed by Arts. Elements
1300 to 1304 1624 to 1627 1. Essential – those without which
there can be no contract.
2. debtor’s consent 2. debtor’s consent
is required is not required a. Consent
b. Object or Subject Matter
3. extinguishes the 3. transmission of c. Cause or Consideration
obligation and gives right of the creditor 2. Natural – those derived from the
rise to a new one to third person nature of the contract and ordinarily
without modifying or accompany the same.
extinguishing the 3. Accidental – those which exist only
obligation when the parties expressly provide
for them for the purpose of limiting
4. defects and 4. defects and vices
or modifying the normal effects of
vices in the old in the old obligation
obligation are cured are not cured the contract.
5. takes effect 5. as far as the
upon moment of debtor is concerned, Nominate contracts

novation or takes effect upon Those which have their own
subrogation notification distinctive individuality and are
regulated by special provisions of

Kinds of Subrogation law.
1. Conventional – takes place by Innominate contracts

agreement of the parties; this kind Those which lack individuality and
of subrogation requires the are not regulated by special
intervention and consent of 3 provisions of law.

persons: the original creditor, the Regulated by the stipulations of the
new creditor and the debtor. parties, by the general provisions of
2. Legal – takes place without the Civil Code on obligations and
agreement but by operation of law contracts, by rule governing the
because of certain acts (Article most analogous nominate contracts
1302). and by the customs of the place.

Kinds:
Legal subrogation a. Do ut des - I give that you give
cannot be presumed. b. Do ut facias - I give that you do
c. Facio ut des - I do that you give
1. Creditor pays another creditor who is d. Facio ut facias - I do that you do
preferred, without debtor’s NOTE: According to some
knowledge; authorities. do ut des in no longer an
2. A third person not interested in the innominate contract. It has already
obligation pays with the express or been given a name of its own, i.e.
tacit approval of the debtor; or barter or exchange (Article 1638).
3. Even without debtor’s knowledge, a
person interested in the fulfillment Characteristics of Contracts: (ROMA)
of the obligation pays without 1. Relativity (ART 1311)
prejudice to the effects of confusion 2. Obligatory Force and Consensuality
as to the latter’s share. (ART 1315)
3. Mutuality (ART 1308)
4. Autonomy (ART 1306)
CIVIL LAW COMMITTEE

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Relativity c. interference by third person

Contracts take effect without legal justification or
only between parties, their assigns and excuse.
heirs. 3. Third persons who come into
possession of the object of the
1. Stipulation pour atrui - contract creating real rights
stipulation in favor of a 4. Contracts entered into in fraud
third person. of creditors

Requisites:
a. the stipulation must be a Mutuality
part, not the whole of 
The contract must bind both parties;
the contract; its validity or compliance must not
b. the contracting parties be left to the will of one of them.
must have clearly and (ART 1308)
deliberately conferred a 
The contract cannot have any
favor upon a third person,
stipulation authorizing one of the
not a mere incidental contracting parties (a) to determine
benefit or interest; whether or not the contract shall be
c. the third person must valid, or (b) to determine whether
have communicated his or not the contract shall be fulfilled.
acceptancetothe
obligor before its Autonomy
revocation; 
The parties are free to stipulate
d. the favorable stipulation anything they deem convenient
shouldnotbe provided that they are not contrary
conditioned or to law, morals, good customs, public
compensated by any kind order and public policy. (ART 1306)
of obligation whatever;
and Consensuality
e. neither of the 
Contracts are perfected by mere
contracting parties bears consent and from that moment, the
the legal representative parties are bound not only to the
or authorization of the fulfillment of what has been
third person. expressly stipulated but also to all
consequences which, according to
Test of Beneficial Stipulation – the their nature may be in keeping with
fairest test to determine whether the good faith, usage and law.
interest of a 3rd person in a contract is a
stipulation pour atrui or merely an CONSENT
incidental interest is to rely upon the 
Manifested by the concurrence of
intention of the parties as disclosed by the offer and acceptance upon the
their contract. Determine whether the thing and the cause which are to
contracting parties desired to tender him constitute the contract.

such an interest (Uy Tam vs. Leonard, 30 Requisites:
Phil. 471). a. Legal capacity of the
contracting parties
b. Manifestation of the conformity
2. When a third person induces a
of the contracting parties
party to violate contract
c. The parties’ conformity to the
(ART1314)
 object, cause, the terms and
Requisites:
conditions of the contract must
a. Existence of a valid contract;
be intelligent, spontaneous and
b. knowledge of contract free from all vices of consent
by third person; and
d. The said conformity must be real
and not simulated or fictitious

Ethics)
Offer parties intended that there should

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

  

of Law)
that the misrepresentation must be Simulation of Contracts

active (e.g. when minors specifically 1. Absolute – when the contracting
stated in a contract that they were parties do not intend to be bound by
of age), 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 agreement.
is employed. A relatively simulate contract binds
2. Intimidation - when 1 of the the parties to their real agreement,
contracting parties is compelled by when it does not prejudice a 3rd
a reasonable & well-grounded fear person and is not intended for any
of an imminent & grave evil upon his purpose contrary to law, morals,
person or property, or upon the good customs, public order or public
person or property of his spouse, 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. man
 b. It must be licit or not contrary
Must be mistake of fact and not of
law, except under 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
have agreed to. law
5. Undue influence - when a person 4. Services which are contrary to
takes improper advantage of his law, morals, good customs,
power over the will of another, public order or public policy
depriving the latter of a reasonable 5. Impossible things or services
freedom of choice. 6. Objects which are not possible of
determination as to their kind
Reluctant Consent
CAUSE
 
A contract is valid even though one The immediate, direct and most
of the parties entered into it against proximate reason which explains and
his wishes and desires or even justifies the creation of obligation.
against his better judgment. 
Requisites
Contracts are also valid even though a. Cause should be in existence at
they are entered into by one of the the time of the celebration of
parties without hope of advantage or
profit. (Martinez vs. Hongkong and the contract
Shanghai Bank, 15 Phil. 252) b. Cause should be licit or lawful
c. Cause should be true

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

FORM OF CONTRACTS reformation:
Contracts shall be 1. Simple unconditional donations
obligatory, in whatever form they may inter vivos;
have been entered into, provided all the 2. Wills;
essential requisites for their validity are 3. When the agreement is void;
present.
When one of the parties has brought an
1. When the law requires that a action to enforce the instrument, no
contract be in some form in order subsequent reformation can be asked.
that it may be valid
CIVIL LAW COMMITTEE

  

of Law)
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 Corresponding action
declaration or nullity defense of annulability may prescribe for recovery, if there
or inexistence or may prescribe was total or partial
defense of nullity or performance of the
inexistence does not unenforceable
prescribe contract under No. 1
or 3 of Article 1403
may prescribe
4. Not cured by Cured by prescription Cured by prescription Not cured by

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

or collaterally collaterally collaterally
RESCISSIBLE CONTRACTS 4. those which refer to things under

 litigation if they have been entered
Contracts validly agreed upon but, into by the defendant without the
by reason of lesion or economic
prejudice may be rescinded in cases knowledge and approval of the
established by law. litigants and the court;
5. all other contracts especially
What contracts are rescissible declared by law to be subject to
1. those entered into by guardians rescission; and
where the ward suffers lesion of 6. payments made in a state of
more than ¼ of the value of the insolvency on account of obligations
things which are objects thereof; not yet enforceable
2. those agreed upon in representation 
Requisites:
of absentees, if the latter suffer
a. the contract must be rescissible
lesion by more than ¼ of the value
b. the party asking for rescission
of the things which are subject
must have no other legal means
thereof;
c. to obtain reparation for the
3. those undertaken in fraud of
damages suffered by him
creditors when the latter cannot in
d. the person demanding rescission
any manner claim what are due
must be able to return whatever
them;

Ethics)
he may be obliged to restore if 6. Its purpose is to 6. Its purpose is to

rescission is granted cancel the contract. seek reparation for
e. the things w/c are the object of the damage or injury
the contract must not have caused, thus allowing
partial rescission of
passed legally to the possession
the contract.
of a 3rd person acting in good
faith
VOIDABLE CONTRACTS
f. the action for rescission must be
brought w/in the prescriptive

Those in which all of the essential
period of 4 years elements for validity are present,
although the element of consent is
vitiated either by lack of capacity of
one of the contracting parties or by
BADGES OF FRAUD:
VIMFU.
1. Consideration of the conveyance
is inadequate or fictitious;
What contracts are voidable
2. Transfer was made by a debtor
after a suit has been begun and 1. Those where one of the parties is
while it is pending against him; incapable of giving consent to a
3. Sale upon credit by an insolvent contract
debtor; 2. Those where the consent is vitiated
4. Evidence of indebtedness or by mistake, violence, intimidation,
complete insolvency undue influence or fraud
5. Transfer of all his property by a
debtor when he is financially Causes of extinction of action to annul:
embarrassed or insolvent; 1. PRESCRIPTION
6. Transfer made between father & 
the action must be commenced within 4
son, where there is present any years from:
of the above circumstances a. the time the incapacity ends;
7. Failure of the vendee to take b. the time the violence,
exclusive possession of all the intimidation or undue
property influence ends; or
c. the time the mistake or
fraud is discovered.
Rescission in Rescission Proper NOTE: Discovery of fraud must be
Article 1191 in Article 1381 reckoned to have taken place from
1. It is a principal 1. It is a subsidiary the time the document was
action retaliatory in remedy. registered in the office of the
character. register of deeds. Registration
2. The only ground is 2. There are 5 constitutes constructive notice to
non-performance of grounds to rescind. the whole world. (Carantes vs. CA,
one’s obligation/s or Non-performance by 76 SCRA 514)
what is incumbent the other party is not
upon him. important.
2. RATIFICATION
3. It applies only to 3. It applies to both 
Requisites:
reciprocal obligation unilateral and
reciprocal a. there must be knowledge of
obligations. the reason which renders the
4. Only a party to the 4. Even a 3rd person contract voidable
contract may demand who is prejudiced by b. such reason must have
fulfillment or seek the contract may ceased and
the rescission of the demand the c. the injured party must have
contract. rescission of the executed an act which
contract. expressly or impliedly
5. Court may fix a 5. Court cannot grant
conveys an intention to
period or grant extension of time for
extension of time for fulfillment of the
waive his right
the fulfillment of the obligation.
obligation.
CIVIL LAW COMMITTEE
  

of Law)
3. By loss of the thing which is the by the party charged or by his agent,
object of the contract through fraud otherwise, the said contracts shall
or fault of the person who is entitled be unenforceable.
to annul the contract. 
The statute of frauds applies only to
NOTE: If the object is lost through executory contracts, not to those
that are partially or completely
fortuitous event, the contract can still fulfilled.
be annulled, but the person obliged to
return the same can be held liable only Ratification of contracts in violation of
for the value of the thing at the time of the Statute of Frauds
the loss, but without interest thereon. 1. Failure to object to the presentation
of oral evidence to prove such
UNENFORCEABLE CONTRACTS contracts
 2. Acceptance of benefits under these
Those which cannot be enforced by
proper action in court unless they contracts
are ratified
VOID CONTRACTS
What contracts are unenforceable 
Those where all of the requisites of a
1. those entered into in the name of contract are present but the cause,
another by one without or acting in object or purpose is contrary to law,
excess of authority; morals, good customs, public order
2. those where both parties are or public policy, or contract itself is
incapable of giving consent; and prohibited or declared void by law.
3. those which do not comply with the
Statute of Frauds What contracts are void
1. Those whose cause, object or
Agreements within the scope of the purpose is contrary to law, morals
Statute of Frauds (EXCLUSIVE LIST): good customs, public order or public
1. Agreements not to be performed policy;
within one year from the making 2. Those whose object is outside the
thereof; commerce of men;
2. Special promise to answer for the 3. Those which contemplate an
debt, default or miscarriage of impossible service;
another; 4. Those where the intention of the
NOTE: This does not refer to the original parties relative to the principal
or independent promise of the object of the contract cannot be
debtor to his own creditor. It refers ascertained; and
rather to a collateral promise. 5. Those expressly prohibited or
3. Agreement in consideration of declared void by law.
marriage other than a mutual
promise to marry; INEXISTENT CONTRACTS
4. Agreement for the sale of goods, etc. 
at a price not less than P500.00; Those where one or some or all of
the requisites essential for the
5. Contracts of lease for a period validity of a contract are absolutely
longer than one year; lacking.
6. Agreements for the sale of real
property or interest therein; and What contracts are inexistent
7. Representation as to the credit of a 1. Those which are absolutely simulated
third person. or fictitious; and
2. Those whose cause or object did not
NOTES: exist at the time of the transaction.

The contracts/agreements under the NOTE: The principle of In Pari Delicto is
Statute of Frauds require that the applicable only to void contracts and not
same be evidenced by some note, as to inexistent contracts.
memorandum or writing, subscribed

Ethics)
Principle of In Pari Delicto 2. Executory Contracts - Neither of the

RAL RULE: When the defect of a contracting parties can demand for
void contract consists in the illegality of the fulfillment of any obligation
the cause or object of the contract and from the contract nor may be
both of the parties are at fault or in pari compelled to comply with such
delicto, the law refuses them every obligation
remedy and leaves them where they are.
NATURAL OBLIGATIONS

1. Payment of usurious interest They are real obligations to which
2. Payment of money or delivery of the law denies an action, but which
property for an illegal purpose, the debtor may perform voluntarily.

where the party who paid or It is patrimonial, and presupposes a
delivered repudiates the prestation.

contract before the purpose has The binding tie of these obligations
been accomplished, or before is in the conscience of man, for
any damage has been caused to under the law, they do not have the
a 3rd person. necessary efficacy to give rise to an
3. Payment of money or delivery of action.
property made by an
incapacitated person Examples of natural obligations
4. Agreement or contract which is enumerated under the Civil Code:
not illegal per se & the 1. Performance after the civil
prohibition is designed for the obligation has prescribed;
protection of the plaintiff 2. Reimbursement of a third person for
5. Payment of any amount in excess a debt that has prescribed;
of the maximum price of any 3. Restitution by minor after annulment
article or commodity fixed by of contract;
law or regulation by competent 4. Delivery by minor of money or
authority. fungible thing in fulfillment of
6. Contract whereby a laborer obligation;
undertakes to work longer than 5. Performance after action to enforce
the maximum # of hours fixed by civil obligation has failed;
law. 6. Payment by heir of debt exceeding
7. Contract whereby a laborer value of property inherited; and
accepts a wage lower than the 7. Payment of legacy after will have
minimum wage fixed by law. been declared void.
8. One who lost in gambling
because of fraudulent schemes ESTOPPEL
practiced on him is allowed to  A condition or state by virtue of
recover his losses [(Art. 315, 3 which an admission or representation
(b), RPC] even if gambling is a is rendered conclusive upon the
prohibited one. person making it and cannot be
denied or disproved as against the
Rules when only one of the parties is at person relying thereon.

fault: Kinds:
1. Executed Contracts: 1. Estoppel in Pais (by conduct)
a. Guilty party is barred from a. Estoppel by silence
recovering what he has given to b. Estoppel by acceptance of
the other party is barred from benefits
recovering what he has given to 2. Technical Estoppel
the other party by reason of the a. Estoppel by deed
contract. b. Estoppel by record
b. Innocent party may demand for c. Estoppel by judgment
the return for the return of d. Estoppel by laches
what he has given.
CIVIL LAW COMMITTEE

  

of Law)
LACHES or “STALE DEMANDS” LACHES PRESCRIPTION


Failure or neglect, for an
1. concerned with 1. concerned with
unreasonable and unexplained length effect of delay fact of delay
of time, to do that which, by
exercising due diligence, could or
2. question of 2. question or
should have been done earlier; it is inequity of matter of time
negligence or omission to assert a permitting the claim
right within reasonable time, to be enforced
warranting a presumption that the
party entitled to assert it either has
3. not statutory 3. statutory
abandoned it or declined to assert it.
 4. applies in equity 4. applies at law
Elements:
a. Conduct on part of the
5. not based on a 5. based on a fixed
defendant, or of one under 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. Delayinassertingthe
complainant’s rights, the
complainant having knowledge
or notice, of the defendant’s
conduct and having been
afforded the opportunity to
institute a suit
c. Lack of knowledge or notice on
the part of the defendant that
the complainant would assert
the right on which he bases his
suit
d. Injury to the defendant in the
event relief is accorded tot the
complainant, or the suit in not
held to be barred

Ethics)

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San Beda College of Law 85

MEMORY AID IN CIVIL LAW

OBLIGATIONS AND CONTRACTS

I. OBLIGATIONS through mistake to another who has no

physically segregated from all if, under the circumstances of the

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

been poorly done be  3 Kinds:

CIVIL LAW COMMITTEE

NOTE: Future fraud cannot be waived Test of Negligence

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

GENERAL RULE: No liability in case of

CIVIL LAW COMMITTEE

12. Conjunctive - where there are be deemed to have been mutually

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

Effects of Loss, Deterioration and RIGHT TO RESCIND (ART 1191)

1. Loss 1. If there is an express stipulation

CIVIL LAW COMMITTEE

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

another prestation b. If the loss of 1 of the things

JOINT AND SOLIDARY OBLIGATIONS

NOTES: 1. when expressly stated that

CIVIL LAW COMMITTEE

longer be fulfilled or performed. Effect of Assignment by Solidary

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

for reimbursement within each Defenses available to a Solidary Debtor

CIVIL LAW COMMITTEE

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

Rights of 3rd person who paid the Rules in Monetary Obligations:

CIVIL LAW COMMITTEE

deflation by the Bangko Sentral. Legal Application of Payment (ART1254)

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

efficacy of the consignation, the

d. Tender of Payment and Consignation shall

CIVIL LAW COMMITTEE

4. The contract is for a future

MEMORY AID IN CIVIL LAW

c. The obligation must be 2. there must be 2. only one

CIVIL LAW COMMITTEE

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

NOTE: A change in the incidental II. CONTRACTS

CIVIL LAW COMMITTEE

Relativity c. interference by third person

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

Offer parties intended that there should

CIVIL LAW COMMITTEE

that the misrepresentation must be Simulation of Contracts

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS

MEMORY AID IN CIVIL LAW

Instances when there can be no

CIVIL LAW COMMITTEE

COMPARATIVE TABLE OF DEFECTIVE CONTRACTS

VOID VOIDABLE RESCISSIBLE UNENFORCEABLE

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

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