A.

Preliminaries

o Definition of Civil Law

 Civil law governs the relations of the members of a community with one another
 Branch of law that generally treats of the personal and family relations of an individual, his
property and successional rights, and the effects of his obligations and contracts

o Recall of pertinent provisions under Persons (Arts. 3, 9 & 10 NCC)

 ARTICLE 3. Ignorance of the law excuses no one from compliance therewith.
o Before compliance is required, there must be due promulgation of the law
o Applies to all kinds of domestic laws (civil, penal, substantive, remedial)
o Applies only to mandatory or prohibitive laws, not to permissive or suppletory laws
 ARTICLE 9. No judge or court shall decline to render judgment by reason of the silence,
obscurity or insufficiency of the laws.
o Judge must give decision and may apply any rule he desires as long as the rule is in
harmony with general interest, order, morals, and public policy (IMOP).
 Customs, Decisions of foreign and local courts, Opinions of highly qualified
writers and professors, Rules of statutory construction, principles in analogous
instances (CDO-PR)
 ARTICLE 10. In case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail. (n)
o If provision is clear
 Dura lex sed lex
o In case of doubt
 Presumption that lawmaking body’s intention was for right and justice to prevail
 Congressional debates (although Courts not bound by legislators’
opinions)
 Comments of Code Commission
 Rules of Statutory Construction

o Type of Rights (Art. 6 NCC)

 General Rule: Rights may be waived
 Exceptions:
o Contrary to law, Public Order, Public Policy, Morals, or Good Customs (LP OPMG)
o Prejudicial to third person

o History of the Civil Code

 Civil Code of Spain

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B. In General
o Nature
 Obligations which give to the creditor or obligee a right under the law to enforce their
performance in courts of justice are known as civil obligations.
 They are to be distinguished from natural obligations, which, not being based on positive
law but on equity and natural law, do not grant a right of action to enforce their performance
although in case of voluntary fulfillment by the debtor, the latter may not recover what has been
delivered or rendered by reason thereof.

i. Definition: 1156
 Obligation
o Juridical necessity to give, to do, or not to do.
o Juridical necessity to comply with a prestation
 Elements
1. Active subject (obligee / creditor) – possessor of right
2. Passive subject (obligor / debtor ) – has the duty to comply with a prestation
3. Object for Prestation – subject matter of obligation which is to give, to do, or not to
do
4. Object – the consideration
5. Efficient cause – juridical tie or reason why obligation exists which binds or connects
the parties (law, contract, etc)
 Juridical Necessity
o Non-compliance can result in juridical or legal sanction

ii. Sources: 1157-1161, 2142, 2144-2175 NCC; 2176-2184 NCC; 100 RPC
218-219; Rule 111 Revised Rules of Court

CASES
Ang Yu Asuncion v. CA 238 SCRA 602 (1994)
Barredo v. Garcia, 73 Phil 607 (1942)
Mendoza v. Arrieta, 91 SCRA 113 (1975)
PSBA v. CA, 205 SCRA 729 (1992)
Amadora v. CA, 160 SCRA 315 (1988)
Sagrada Orden v. National Coconut Corporation 91 Phil 504 (1952)
OSG v. Ayala Land, Inc. G.R. No. 177056, September 18, 2009

iii. Difference between an obligation, right and wrong

 Obligation is the act or performance which the law will enforce.
 Right, on the other hand, is the power which a person has under the law, to demand from
another any prestation
 A wrong (cause of action), according to its legal meaning, is an act or omission of one party
in violation of the legal right or rights (i., recognized by law) of another.
o It only arises at the moment a right has been violated

iv. Transmissibility: 1178

 General Rule: Rights are Transmissible.
 Exceptions (LCO)
o Law provides otherwise

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 o Contract provides otherwise
o Obligation purely personal

CASE: Stronghold Insurance Co. v. Republic-Asahi G.R. No. 147561 June 22, 2006
o Classifications of Obligations

CASES
§ Villaroel v. Estrada, 71 Phil 140 (1940)
§ Fisher v. Robb, 69 Phil 101 (1939)

C. Nature and Effects of Obligations

o Obligations to give:
- Specific or determinate thing (1163; 1164; 1165 pars. 1&3; 1166)
1. Obliged to take care of it with the proper diligence of a good father of a family
o Law provides only the minimum diligence needed; parties may stipulate different
standard of care
2. Obliged to deliver the fruits to creditor
o Natural fruits are the spontaneous products of the soil, and the young and other
products of animals. (NO HUMAN LABOR INTERVENED)
i. Spontaneous products of the soil
ii. Young and other products of animals
o Industrial fruits are those produced by lands of any kind through cultivation or labor.
i. Elements
1. Produced by lands of any kind
2. Produced through cultivation or labor
o Civil fruits are the rents of buildings, the price of leases of lands and other property
and the amount of perpetual or life annuities or other similar income.
3. Obliged to deliver the accessories and accessions
o Accessories – joined or included with the principal for better use, protection, or
enjoyment
o Accessions – additions or improvements upon a thing (includes alluvium and
whatever is built, planted, or sown on a person’s parcel of land)
4. Obliged not to delay
o NOT ORDINARY DELAY
 MUST BE DEFAULT OR LEGAL DELAY which requires first a
DEMAND
o Creditor may demand.
1. specific performance
2. specific performance with damages
3. rescission or cancellation (in some cases)
4. rescission or cancellation with damages
o In case of fortuitous event:
i. In case of ordinary delay, obligation is extinguished.
ii. In case of default or legal delay, debtor is liable.

- Generic or indeterminate thing (1165, par. 2)

1. Creditor may demand specific performance
a. Obligation is to be complied with at the expense of debtor

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o Obligations to do (1167)
- Applies to FAILURE TO DO and IN CONTRAVENTION OF OBLIGATION
- Creditor may have (PERFORMANCE BY ANOTHER + DAMAGES)
1. (a) Obligation performed (by himself or another) at debtor’s expense WITH (b) damages
2. Damages only when purely personal unless substitution is permitted
3. No substitution of damages when owners or others can perform
- Creditor may order undoing.
o If made poorly (performance by another + damages)

o Obligations not to do (1168)

- Doing what is forbidden, creditor may demand:
o Undoing of another + damages

E. Kinds of Obligations under NCC

o Pure obligations, 1179

- Without condition or term and therefore demandable at once
- Instant performance not necessity, otherwise absurd consequences will arise

CASE
Pay v. Palanca 57 SCRA 618
- “UPON DEMAND” is pure obligation
o The obligation being due and demandable, it would appear that the filing of the suit after
fifteen years was much too late.
HSBC v. Spouses Broqueza GR No. 178610 November 17, 2010
- NO DATE/PERIOD in promissory note means it is pure obligation and demandable at once
o there is no date of payment indicated in the Promissory Notes
Villanueva v. St. Martin GR No. 156746 July 23, 2014
- OBLIGATION ALREADY MATURED is pure obligation and demandable at once
o Although the promissory note was not offered, Villanueva admitted that his obligation
already matured. Even where no date of payment was indicated either in the promissory
note or chattel mortgage, his obligation should be immediately demandable.

o Conditional obligations, 1181-1192

i. Definition, 1181, 1193

1. SUSPENSIVE / CONDITIONS PRECEDENT OR ANTECEDENT
o SUSPENSIVE CONDITION
 Give rise to acquisition of right (of creditor) when condition is fulfilled
 Happening of condition gives rise to obligation (of debtor)
o SUSPENSIVE TERM
 Demandable only when day certain comes
2. RESOLUTORY / CONDITIONS SUBSEQUENT
o RESOLUTORY CONDITION
 Rights (expectancy) already acquired (by creditor for return) are lost once
condition is fulfilled

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  Happening of condition extinguishes the obligation (by debtor to return)
o RESOLUTORY TERM
 Obligations take effect at once but terminate upon arrival of day certain

CASES
Gaite v. Fonacier, 2 SCRA 830 (1961)
- SUSPENSIVE CONDITION IS SUBORDINATED TO HAPPENING OF FUTURE AND
UNCERTAIN EVENT
o What characterizes a conditional obligation is the fact that its efficacy or obligatory force
(as distinguished from its demandability) is subordinated to the happening of a future and
uncertain event; so that if the suspensive condition does not take place, the parties
would stand as if the conditional obligation had never existed.
- SUSPENSIVE TERM IS TO SET THE DEMANDABILITY
o The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to
the payment of the balance of P65,000.00, but was only a suspensive period or term.
o To subordinate the obligation to pay the remaining P65,000.00 to the sale or shipment of
the ore as a condition precedent, would be tantamount to leaving the payment at the
discretion of the debtor, for the sale or shipment could not be made unless the appellants
took steps to sell the ore. Appellants would thus be able to postpone payment
indefinitely.

Gonzales v. Heirs of Thomas, 314 SCRA 585 (1999)

- CANNOT ENFORCE OBLIGATION WHEN SUSPENSIVE CONDITION IS NOT YET
COMPLIED WITH
o The obligation of the petitioner to buy the land cannot be enforced unless respondents
comply with the suspensive condition that they acquire first a separate and distinct TCT
in their names. The suspensive condition not having been fulfilled, then the obligation of
the petitioner to purchase the land has not arisen
- NO RESCISSION WHEN SUSPENSIVE CONDITION HAS NOT HAPPENED
o There can be no rescission (or more properly, resolution) of an obligation as yet non-
existent, because the suspensive condition has not happened.

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ii. When effective/demandable, 1181-1182, 1185-86
1. Upon fulfilment of suspensive condition
2. Demandable at once
a. When it is resolutory condition (but the right for return of property is lost upon fulfilment
of resolutory condition)
b. When it is pure obligation
3. From the moment time indicated has elapsed
a. Ex. No marriage until January 1, 2023. Demandable on January 2, 2023.
4. From the moment it has become evident that event cannot occur
a. Ex. No marriage until January 1, 2023 but died before the date. Demandable on time of
death.
5. Debtor voluntarily prevents fulfilment (Constructive Fulfilment of a Suspensive Conditional
Obligation)

iii. Effects when condition fulfilled, 1187

- TO GIVE: Retroacts to the day of constitution of obligation (SUSPENSIVE)
a. No retroactivity
i. Fruits and interests (FOR DEBTOR in unilateral obligations, COMPENSATE
ONE ANOTHER in reciprocal obligation)
ii. Period of prescription (runs from the day of fulfillment)
- TO DO/NOT TO DO: Court shall determine the retroactive effect

iv. Types of conditions

• As to effect
a. Suspensive (condition precedent), 1188-89; 1184
- During interim: What can be done by parties?
o Creditor: Bring appropriate action
o Debtor: Recover payment by mistake
 If condition is fulfilled, no recovery
 If condition is not fulfilled,
- During interim: Who benefits?
o Loss, Deterioration, Improvement (OBLIGATION TO GIVE)


CASES
1. Gonzales v. Heir of Thomas, 314 SCRA 585(1999)
o The obligation of the petitioner to buy the land cannot be enforced unless respondents
comply with the suspensive condition that they acquire first a separate and distinct TCT
in their names.
2. Colonel v. CA, 253 SCRA 15 (1996)
o What the seller agrees or obliges himself to do is to fulfill is promise to sell the subject
property when the entire amount of the purchase price is delivered to him. In other words
the full payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell from arising and thus, ownership is
retained by the prospective seller without further remedies by the prospective buyer.

b. resolutory (condition subsequent), 1188-89

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CASES
Parks v. Province of Tarlac, 49 Phil 142 (1927
- The characteristic of a condition precedent is that the acquisition of the right is not effected while
said condition is not complied with or is not deemed complied with. Meanwhile nothing is
acquired and there is only an expectancy of right. Consequently, when a condition is imposed, the
compliance of which cannot be effected except when the right is deemed acquired, such condition
cannot be a condition precedent. In the present case the condition that a public school be erected
and a public park made of the donated land, work on the same to commence within six months
from the date of the ratification of the donation by the parties, could not be complied with except
after giving effect to the donation. The donee could not do any work on the donated land if the
donation had not really been effected, because it would be an invasion of another's title, for the
land would have continued to belong to the donor so long as the condition imposed was not
complied with.
Central Philippines University v. CA, 246 SCRA 511 (1995)
- Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as
the extinguishment or loss of those already acquired, shall depend upon the happening of the
event which constitutes the condition. Thus, when a person donates land to another on the
condition that the latter would build upon the land a school, the condition imposed was not a
condition precedent or a suspensive condition but a resolutory one. It is not correct to say that the
schoolhouse had to be constructed before the donation became effective, that is, before the donee
could become the owner of the land, otherwise, it would be invading the property rights of the
donor. The donation had to be valid before the fulfillment of the condition. If there was no
fulfillment or compliance with the condition, such as what obtains in the instant case, the
donation may now be revoked and all rights which the donee may have acquired under it shall be
deemed lost and extinguished.
Quijada v. CA, 299 SCRA 695 (1998)
- The donor may have an inchoate interest in the donated property during the time that ownership
of the land has not reverted to her. Such inchoate interest may be the subject of contracts
including a contract of sale.
- That resolutory condition is the construction of the school. It has been ruled that when a person
donates land to another on the condition that the latter would build upon the land a school, the
condition imposed is not a condition precedent or a suspensive condition but a resolutory one.

• As to cause / origin
a. potestative 1180, 1182, 1197
- When his means permit him to do is potestative and subject to judicial intervention for fixing of
date
- Depends upon sole will of one of the parties
o Debtor (suspensive) – void
o Debtor (resolutory) – valid
o Creditor – valid

CASES
Lim v. CA, 191 SCRA 156 (1990)
- SUSPENSIVE AND POTESTATIVE (Condition and Obligation are VOID)
o Contrary to the ruling of respondent court, the disputed stipulation "for as long as the
defendant needed the premises and can meet and pay said increases" is a purely
potestative condition because it leaves the effectivity and enjoyment of leasehold rights to

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 the sole and exclusive will of the lessee. It is likewise a suspensive condition because the
renewal of the lease, which gives rise to a new lease, depends upon said condition.

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Rustan Pulp v. IAC GR No. 70789 October 19, 1992
- POTESTATIVE AND RESOLUTORY, VALID
o A purely potestative imposition of this character must be obliterated from the face
of the contract without affecting the rest of the stipulations considering that the
condition relates to the fulfillment of an already existing obligation and not to its
inception

b. casual
- Depends on chance OR will of third person
- VALID

CASE: Naga Telephone v. CA, 230 SCRA 351 (1990)

-

c. mixed
- Depends upon sole will of one of the parties and on chance or will of third persons

CASES:
§ Osmena v. Rama, 14 Phil 99 (1909)
§ Hermosa v. Longora, 93 Phil 971 (1953)
§ Taylor v. Uy Tieng Piao, 43 Phil 873 (1922)
§ Smith Bell v. Sotelo Matti, 44 Phil 875 (1922)
§ Rustan Pulp and Paper v. IAC, 214 SCRA 665 (1992)
Romero v. CA, 250 SCRA 223 (1995)

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• As to possibility
a. impossible conditions, 1183

Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall
annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is not
affected by the impossible or unlawful condition shall be valid.

1. Physically Impossible
 They, in the nature of things, cannot exist or cannot be done
 Example: Making a circle that is at the same time square
2. Legally Impossible
 Contrary to law, morals, good customs, public order, or public policy.
 Example: Killing a friend

Personal (Positive) Obligation (TO DO) with POSITIVE CONDITION:

- Condition void
- Obligation void
o Example: I will sell you the land if you can make a dead man alive.

Personal (Positive) Obligation (TO DO) with NEGATIVE CONDITION (PHYSICAL

IMPOSSIBILITY):
- Condition disregarded.
- Obligation valid.
- Becomes pure obligation.
o Example: I will sell you the land if you cannot make a circle that is at the same time a
square

Personal (Positive) Obligation (TO DO) with NEGATIVE CONDITION (ILLEGAL):

- Condition valid.
- Obligation valid.
o Example: I will sell you my land if you do not kill him.

TESTAMENTARY DISPOSITION / DONATIONS with IMPOSSIBLE CONDITION:

- Condition disregarded.
- Disposition/Donation valid.
o Example: I will donate you my land if you can make a dead man alive.

Considerations:
(1) If it is PERSONAL or REAL
(2) If the condition is PHYSICAL or LEGAL
(3) If the condition is positive or negative

CASES
Roman Catholic Archbishop of Manila v. CA, 198 SCRA 300 (1991)
Heirs of San Miguel v CA G.R. No. 136054 September 01, 2001

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• As to move

a. Positive, 1184

Article 1184. The condition that some event happen at a determinate time shall extinguish the obligation
as soon as the time expires or if it has become indubitable that the event will not take place.

1. SUSPENSIVE POSITIVE CONDITION: NOT MET, EXTINGUISHED

o Example: I will sell you the land if you will marry X this year.
o Event: Marriage
o Determinate time: This year
o Condition expires: Did not marry X this year.
o Obligation to sell is extinguished.
o It becomes indubitable that the event will not take place: X died.
o Obligation to sell is extinguished.
o Example: I will hire you if you train within six months.
o Event: Training
o Determinate time: Within 6 months
o Condition expires: Did not train within 6 months
o Obligation to hire is extinguished.
o It becomes indubitable that the event will not take place: You died.
o Obligation to hire is extinguished.
2. RESOLUTORY POSITIVE CONDITION: NOT MET, NOT EXTINGUISHED
o Example: I donate the car on condition that within 1 year from donation, you take the
exam.
o Condition: No taking of the exam
o Determinate time: Within 1 year from donation
o Condition expires: Exam taken within 1 year from donation.
o Obligation to donate is effective.
o It becomes indubitable that the event will not take place: You died.
o Obligation to donate is effective on time of death.

b. Negative, 1185

Article 1185. The condition that some event will not happen at a determinate time shall render the
obligation effective from the moment the time indicated has elapsed, or if it has become evident that the
event cannot occur.

1. SUSPENSIVE NEGATIVE CONDITION: NOT MET, EXTINGUISHED

o Example: I will sell you the land if you do not marry X this year.
o Event: No Marriage to X
o Determinate time: This year
o Time has elapsed: Did not marry X this year.
o Obligation to sell is effective from end of this year.
o It becomes evident that the event can not occur : X died.
o Obligation to sell is effective from death of X.
o Example: I will hire you if you do not train within six months.

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 o
Event: No Training
o
Determinate time: Within 6 months
o
Time has elapsed: Did not train within 6 months
o Obligation to hire is effective from the end of 6 months.
o It becomes evident that the event can not occur : Exam had PRO.
o Obligation to hire is effective from date of PRO.
2. RESOLUTORY NEGATIVE CONDITION: NOT MET, NOT EXTINGUISHED
o Example: I donate the car on condition that within 1 year from donation, you don’t take
the exam.
o Condition: Taking the exam
o Determinate time: Within 1 year from donation
o Time has elapsed: Exam is taken after 1 year.
o Obligation to donate is effective.
o It becomes evident that the event can not occur : You died.
o Obligation to effective from time of death.

v. When obligation ineffective (POSITIVE UNMET, SOLE WILL OF DEBTOR, IMPOSSIBLE)

• when condition is not fulfilled, 1184
1. POSITIVE CONDITION NOT MET
• when condition is void ab initio, 1182-1183
1. SOLE WILL OF DEBTOR (POTESTATIVE SUSPENSIVE)
2. IMPOSSIBLE

Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional
obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall
take effect in conformity with the provisions of this Code.

3 kinds of conditions:
1. Potestative (depends on sole will of one of the parties)
a. Debtor:
i. SUSPENSIVE: Obligation and Condition are VOID.
ii. RESOLUTORY: Obligation and Condition are VALID
b. Creditor: Obligation and Condition are VALID.
2. Casual (depends on chance or will of third person)
a. ALWAYS VALID
3. Mixed (depends upon the will of one of the parties and a chance)
a. ALWAYS VALID

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vi. Events pending happening of condition (PA, LDI, CFSCO)

• Protective action, 1188

Art. 1188. The creditor may, before the fulfillment of the condition, bring the appropriate actions for the
preservation of his right.
The debtor may recover what during the same time he has paid by mistake in case of a suspensive
condition.
- Recording with Register of Deeds
- Ask for Security if debtor is about to be insolvent
- Ask the court to prevent alienation or concealment pendente conditionae

Right of Debtor to Recover Payment by Mistake

o BAD FAITH (Creditor knew payment was being made prior the fulfilment of obligation)
 Debtor entitled also to fruits or legal interests
o IF NOT BY MISTAKE
 Condition fulfilled, no recovery
 Condition not fulfilled, recovery
 Pure donation, no recovery
- Once the condition is fulfilled, it is as if pure obligation (retroacts to the day the obligation is
constituted)
- If not by mistake, then check intention
-

• Loss, deterioration, improvement of the thing, 1190, 1189

 Requisites
1. Suspensive condition is fulfilled
2. Object is specific (not generic)
 Loss
a. Without debtor’s fault: OBLIGATION EXTINGUISHED (DEBTOR)
b. With debtor’s fault: PAY DAMAGES (DEBTOR)
c. Partly with and without debtor’s fault
 Deterioration
a. Without debtor’s fault: IMPAIRMENT BORNE BY CREDITOR
b. With debtor’s fault:
i. RESCISSION plus DAMAGES
ii. FULFILMENT plus DAMAGES
c. Partly with and without debtor’s fault
 Improvement
a. By Nature or by Time (TO THE BENEFIT OF CREDITOR)
b. Through the expense of the debtor (USE AND FRUITS FOR DEBTOR)
c. Partly through nature or time and partly by debtor
i. Creditor gets benefit of improvement by time / nature
ii. Debtor gets rights of usufructuary (use and fruits) for his improvements.
- Loss
a. Perishes (House burned to ashes)
b. Goes out of commerce (unprohibited becomes prohibited)
c. Disappears in such a way that its existence is unknown (car missing for some time)
d. Disappears in such a way that it cannot be recovered (diamond ring dropped in the ocean)

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• Prevention of fulfillment of the condition by obligator, 1186
Doctrine of Constructive Fulfilment of a Suspensive Conditional Obligation
1. Condition is suspensive
2. Obligor ACTUALLY prevents the condition to happen
3. He acts voluntarily, no external factors
CASES
Taylor v. Uy Tieng Piao, 43 Phil 873 (1922)
Herrera v. Leviste, GR 55744, 28 Feb 1985

o Obligations with a Period (1193-1198)

i. In General
• Definition, 1193, 1197

Period – certain length of time which determines the effectivity or the extinguishment of
obligations

Period vs Condition
o Condition is uncertain event; Period is certain event which MUST HAPPEN sooner or
later
o Condition may refer even to the past. Period ALWAYS REFERS TO FUTURE.
o Condition causes obligation to arise or cease. Period fixes the TIME OF OBLIGATION.

1. From time X marries (Condition, uncertain if X will marry)

2. If your father dies (Period, death is certain)
3. From time X dies of malaria (Condition, uncertain if X will die of
malaria)
4. If permit me to do so (Period)
Day Certain – that which must necessarily come, although unknown when

CASE: Solante v. COA G.R. No. 207348 August 19, 2014

• When considered with a period, 1180

- PAY WHEN PERMITS HIM TO DO SO

• For whose benefit, 1196, 1198

- (PRESUMPTION) BENEFIT OF BOTH CREDITOR AND DEBTOR
o Not pay prematurely nor demand payment prematurely
- (EXCEPTION) unless from tenor of the same or other circumstances it should appear that the
period has been established in favor of one or of the other
o There be such intent.

CASES
Lachina v. Araneta, 47 OG No. 11, 5699, 04 Aug 1949
- Payment (capital plus interest) can be made before the specified date in the contract because
o It is for the benefit of the vendor and vendee
o Acceleration clause stating that in case of default, whole balance is due and demandable
o There is no denial to the creditor of benefits

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Ponce de Leon v. Syjuco, 90 Phil 311 (1951)
- Presumption is for the benefit of both creditor and debtor
o It may be argued that

Buce v. CA, 332 SCRA 151 (2000)

LL and Co. v. Huang Chao G.R. No. 142378 March 07, 2002

ii. Kinds of period

• Effect
a. suspensive
b. resolutory

• expression
a. express
b. implied

• definiteness
a. definite – exact date or time is known and given (ex. May 3, 2022)
b. indefinite – will surely happen but date is unknown (ex. Death)

• source
a. voluntary – period agreed upon by parties
b. legal – period granted by law
c. judicial – period fixed by courts for performance or termination of obligations.

iii. Types
• with a suspensive period (ex die), 1193 – Obligation begins from a day certain
Example: Beginning the first day of next year.
• with a resolutory period (in diem), 1193 – Obligation terminates at a time certain
Example: Until first day of next year.

iv. When courts may fix the duration, 1197

1. Depends upon will of debtor
a. When means permit me to do so
b. Little by little
c. As soon as possible
d. As soon as I have money
e. In partial payments
f. Debtor is in possession to discharge his obligation
2. Inferred that a period was intended
a. Construction
b. Obligation with indefinite period

CASES
Araneta v. Philippine Sugar Estate Development Co., 20 SCRA 330 (1967)
- Until all squatters are evicted (fixed by court)

Central Philippine University v. CA, 246 SCRA 511 (1998)

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 - More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of
the opportunity to comply with the condition even if it be burdensome, to make the donation in its
favor forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the
duration of a term of the obligation when such procedure would be a mere technicality and
formality and would serve no purpose than to delay or lead to an unnecessary and
expensive multiplication of suits.

v. Incidents before arrival of period

• Loss, deterioration, or improvement of thing, 1194, 1189

• Payment in advance, 1195, 1197

- Payment or Delivery before Arrival of Period:
o Recovery with Interest (6%)
 Unaware of the period
 Believed that obligation has become due and demandable
o No Recovery (if aware)
- Recovery can be made before the debt mature
- Presumption: He knew
o Joint and Solidary Obligations (1207-22)
i. Joint obligations

• General rule, 1207

• Presumption, 1208

CASE: PH Credit v. CA G.R. No. 155173 November 23, 2004

• In case indivisible, 1209

ii. Solidary obligations

• When solidary, 1207

CASE: Inciong v. CA G.R. No. 96405 June 26, 1996

• Kinds
a. legal, 1915, 1945, 2194, RPC 119
b. conventional
c. real

• parties
a. active
b. passive
c. mixed

• uniformity
a. uniform
b. varied, 1211

CASES
Ynchausti v. Yulo, 34 Phil 978 (1961)
Lafarge Cement Phil. v. Continental Cement, 443 SCRA 522 (2004)

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• Options for solidary creditor 1212-1213; 1216
CASES:
Quisumbing v CA G.R. No. 93010 August 30, 1990
PNB v. Independent Planters Ass’n. G.R. No. L-28046 May 16, 1983

• Options for solidary debtor

a. pay any one of the solidary creditors, 1214
b. avail of defenses, 1222

CASES
Ouano Arrastre Service, Inc. v. Aleonar G.R. No. 97664 October 10, 1991
Alipio v. CA, 341 SCRA 441 (2000)

• Extinguishment of solidary obligation (1215)

a. Change in obligation, 1215, 1219
b. Payment, 1217-1220
c. Loss/impossibility, 1221

CASES
Jauclan v. Querol, 38 Phil 718 (1918)
RFC v. CA, O.G. No. 6, 2457
Quisumbing v. CA, 189 SCRA 325 (1990)
Inciong v. CA, 257 SCRA 578 (1996)

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o Divisible / Indivisible Obligations (1223-1225)
i. Object not material, 1223
ii. How determined, 1225
iii. Right to damages, 1224
iv. Partial invalidation, 1183
CASE: Velasco Sep. Op. in Capilla v. COMELEC G.R. No. 201112, 201121, 201127, 201413 October
23, 2012

1187

Conditional sale signed Nov 15, 2022. Nov 15, 2022 the seller is still the owner even if there is already
signing, until the condition of payment in full of purchase price being February 28. 2023.
- Seller remains to be the owner until full payment in February 28. 2023
- Seller offered the same property to another full in March 2022.
- It retroacts to the date in Nov 15, 2022.

Reciprocal obligations
- Building for rent, seller-debtor still the owner of the rents until condition is fulfilled unless the
nature/agreement says that it is for the buyer
o General rule on fruits, included in the delivery of the subject matter

1189
- Applies only to retroactive effect (when the condition happens)
- Specifically states obligation to give
- Specific and determinative thing

If for the benefit of debtor only, he can pay anytime. If for benefit of creditor only, demand performance
any time. But can not compel the debtor to pay.

1198

Just cause for fixing the period

Rescission cannot be done
In lease of urban lands
Art 1180
Will of debtor
Inferred that period was intended

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Spouses MARIANO Z. VELARDE and AVELINA D. VELARDE vs. COURT OF APPEALS, DAVID
A. RAYMUNDO and GEORGE RAYMUNDO

 David Raymundo, private respondent in this case, is the absolute and registered owner of a parcel
of land
 This land is mortgaged to BPI
 He executed a Deed of Sale with Assumption of Mortgage in favor of plaintiff
 In the Deed of Sale, it stated that
o VENDEE assumed to pay the mortgage obligations on the property in the amount of
1.8M
o VENDEE agrees to strictly and faithfully comply with all the terms and conditions
appearing in the Real Estate Mortgage signed and executed by the VENDOR in favor of
BPI, including interests and other charges for late payment levied by the Bank, as if the
same were originally signed and executed by the VENDEE.
 Plaintiff also executed an undertaking, which states that:
o That until such time as my assumption of the mortgage obligations on the property
purchased is approved by the mortgagee bank, the Bank of the Philippine Islands, I shall
continue to pay the said loan in accordance with the terms and conditions of the Deed of
Real Estate Mortgage in the name of Mr. David A. Raymundo, the original Mortgagor
o That in the event I violate any of the terms and conditions of the said Deed of Real Estate
Mortgage, I hereby agree that my downpayment of P800,000.00, plus all payments made
with the Bank of the Philippine Islands on the mortgage loan, shall be forfeited in favor
of Mr. David A. Raymundo, as and by way of liquidated damages, without necessity of
notice or any judicial declaration to that effect, and Mr. David A. Raymundo shall resume
total and complete ownership and possession of the property sold by way of Deed of Sale
with Assumption of Mortgage, and the same shall be deemed automatically cancelled
 Plaintiff paid mortgage to BPI
 Plaintiffs were advised that the Application for Assumption of Mortgage with BPI, was not
approved. They did not make any further payment
 Defendants, thru counsel, wrote plaintiffs informing the latter that their non-payment to the
mortgage bank constitute[d] non-performance of their obligation
 Plaintiff responded with additional conditions:
o (a) you deliver actual possession of the property to her not later than January 15, 1987 for
her immediate occupancy;
o (b) you cause the re- lease of title and mortgage from the Bank of P.I. and make the title
available and free from any liens and encumbrances; and
o (c) you execute an absolute deed of sale in her favor free from any liens or encumbrances
not later than January 21, 1987.
 The respondents filed for rescission.

SC RULING:
 Breach committed was the nonperformance of reciprocal obligation: However, petitioners
did not merely stop paying the mortgage obligations; they also failed to pay the balance of the
purchase price. Agreement mandated that petitioners should pay the purchase price balance of
P1.8 million to private respondents in case the request to assume the mortgage would be
disapproved. When petitioners received notice of the bank's disapproval of their application to
assume respondents' mortgage, they should have paid the balance of the P1.8 million loan.
 Right of rescission in reciprocal obligation: The right of rescission of a party to an obligation
under Article 1191 of the Civil Code is predicated on a breach of faith by the other party who
violates the reciprocity between them. The breach contemplated in the said provision is the

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 obligor's failure to comply with an existing obligation. When the obligor cannot comply with
what is incumbent upon it, the obligee may seek rescission and, in the absence of any just cause
for the court to determine the period of compliance, the court shall decree the rescission.
 The breach in this case gave rise to the right to rescind: In the present case, private
respondents validly exercised their right to rescind the contract, because of the failure of
petitioners to comply with their obligation to pay the balance of the purchase price. Indubitably,
the latter violated the very essence of reciprocity in the contract of sale, a violation that
consequently gave rise to private respondent's right to rescind the same in accordance with law.
 Automatic rescission and forfeiture of payment does not apply: The breach committed by
petitioners was the nonperformance of a reciprocal obligation, not a violation of the terms and
conditions of the mortgage contract. Therefore, the automatic rescission and forfeiture of
payment clauses stipulated in the contract does not apply. Instead, Civil Code provisions shall
govern and regulate the resolution of this controversy.
 Mutual restitution is required in rescission: Considering that the rescission of the contract is
based on Article 1191 of the Civil Code, mutual restitution is required to bring back the parties to
their original situation prior to the inception of the contract. Accordingly, the initial payment of
P800,000 and the corresponding mortgage payments in the amounts of P27,225, P23,000 and
P23,925 (totaling P874,150.00) advanced by petitioners should be returned by private
respondents, lest the latter unjustly enrich themselves at the expense of the former.
 Meaning of Rescission: Rescission creates the obligation to return the object of the contract. It
can be carried out only when the one who demands rescission can return whatever he may be
obliged to restore.20 To rescind is to declare a contract void at its inception and to put an end to it
as though it never was. It is not merely to terminate it and release the parties from further
obligations to each other, but to abrogate it from the beginning and restore the parties to
their relative positions as if no contract has been made.

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JESUS V. OCCENA and EFIGENIA C. OCCENA vs. HON. RAMON V. JABSON

 Private respondent Tropical Homes, Inc. filed a complaint for modification of the terms and
conditions of its subdivision contract with petitioners (landowners of a 55,330 square meter
parcel of land in Davao City
o Due to the increase in price of oil and its derivatives and the concomitant worldwide
spiralling of prices, which are not within the control of plaintiff, of all commodities
including basis raw materials required for such development work, the cost of
development has risen to levels which are unanticipated, unimagined and not within the
remotest contemplation of the parties at the time said agreement was entered into
 Under the subdivision contract, respondent "guaranteed (petitioners as landowners) as the latter's
fixed and sole share and participation an amount equivalent to forty (40%) percent of all cash
receipts from the sale of the subdivision lots"
 Prayer is to render judgment modifying the terms and conditions of the contract ... by fixing the
proper shares

Issue:
Whether or not the court is authorized to fix the proper shares that should pertain to each party

Held:

No.
Courts have no right to modify the contract: The Civil Code authorizes the release of an
obligor when the service has become so difficult as to be manifestly beyond the contemplation of the
parties but does not authorize the courts to modify or revise the subdivision contract between the parties
or fix a different sharing ratio from that contractually stipulated with the force of law between the parties.

Rationale of Article 1267: Code Commission's report giving the rationale for Article 1267 of the
Civil Code, to wit: The general rule is that impossibility of performance releases the obligor.
However, it is submitted that when the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the court should be authorized to release the obligor in whole or in
part. The intention of the parties should govern and if it appears that the service turns out to be so
difficult as have been beyond their contemplation, it would be doing violence to that intention to hold the
obligor still responsible

Prayer is not to be released from compliance but modification of the contract: If

respondent's complaint were to be released from having to comply with the subdivision contract,
assuming it could show at the trial that the service undertaken contractually by it had "become so difficult
as to be manifestly beyond the contemplation of the parties", then respondent court's upholding of
respondent's complaint and dismissal of the petition would be justifiable under the cited codal article.

Prevailing doctrine without Article 1267: Without said article, respondent would remain bound
by its contract under the theretofore prevailing doctrine that performance therewith is not excused "by the
fact that the contract turns out to be hard and improvident, unprofitable, or unexpectedly burdensome",
since in case a party desires to be excuse from performance in the event of such contingencies arising, it
is his duty to provide therefore in the contract.

Article 1267 does not grant the court the right to modify the contract: The cited article does
not grant the courts this authority to remake, modify or revise the contract or to fix the division of shares
between the parties as contractually stipulated with the force of law between the parties, so as to
substitute its own terms for those covenanted by the parties themselves.

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ALBERTA YOBIDO and CRESENCIO YOBIDO vs. COURT OF APPEALS

Facts
Spouses Tumboy and their minor children named Ardee and Jasmin, boarded a Yobido Liner bus
bound for Davao City. Along the road, the left front tire of the bus exploded. The bus fell into a ravine
around three (3) feet from the road and struck a tree. The incident resulted in the death of 28-year-old Tito
Tumboy and physical injuries to other passengers.

Complaint for breach of contract of carriage, damages and attorney's fees was filed by Leny and
her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver, before the
Regional Trial Court of Davao City.

They raised the affirmative defense of caso fortuito.

Plaintiff contends violation of contract of carriage. The winding road it traversed was not
cemented and was wet due to the rain; it was rough with crushed rocks. The bus which was full of
passengers had cargoes on top. Since it was "running fast," she cautioned the driver to slow down but he
merely stared at her through the mirror.

Lower court found that "the falling of the bus to the cliff was a result of no other outside factor
than the tire blow-out.

CA held that the explosion of the tire is not in itself a fortuitous event. The cause of the blow-out,
if due to a factory defect, improper mounting, excessive tire pressure, is not an unavoidable event. On the
other hand, there may have been adverse conditions on the road that were unforeseeable and/or inevitable,
which could make the blow-out a caso fortuito

Issue:

Whether or not the explosion of a newly installed tire of a passenger vehicle is a fortuitous event
that exempts the carrier from liability for the death of a passenger

Held:
COMMON CARRIER PRESUMED NEGLIGENT: As a rule, when a passenger boards a
common carrier, he takes the risks incidental to the mode of travel he has taken. After all, a carrier is not
an insurer of the safety of its passengers and is not bound absolutely and at all events to carry them
safely and without injury. However, when a passenger is injured or dies while travelling, the law
presumes that the common carrier is negligent. Thus, the Civil Code provides: Art. 1756. In case of
death or injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733
and 1755. Article 1755 provides that "(a) common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances."

EXTRAORDINARY DILIGENCE MAY DISPUTE THE PRESUMPTION: Accordingly, in

culpa contractual, once a passenger dies or is injured, the carrier is presumed to have been at fault or to
have acted negligently. This disputable presumption may only be overcome by evidence that the carrier
had observed extraordinary diligence as prescribed by Articles 1733, 1755 and 1756 of the Civil Code or
that the death or injury of the passenger was due to a fortuitous event. Consequently, the court need not
make an express finding of fault or negligence on the part of the carrier to hold it responsible for
damages sought by the passenger.

22 | P a g e
 CHARACTERISTICS OF FORTUITOUS EVENT: A fortuitous event is possessed of the
following characteristics:
(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply
with his obligations, must be independent of human will;
(b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid;
(c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner; and
(d) the obliger must be free from any participation in the aggravation of the injury resulting to the
creditor. As Article 1174 provides, no person shall be responsible for a fortuitous event which could not
be foreseen, or which, though foreseen, was inevitable. In other words, there must be an entire exclusion
of human agency from the cause of injury or loss.

EXPLOSION OF NEW TIRE NOT FORTUITOUS EVENT: Under the circumstances of this
case, the explosion of the new tire may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply that it was entirely free from
manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tire
bought and used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it
could not explode within five days' use. Be that as it may, it is settled that an accident caused either by
defects in the automobile or through the negligence of its driver is not a caso fortuito that would
exempt the carrier from liability for damages.

COMMON CARRIER NOT ABSOLVED EVEN IN FORTUITOUS EVENT: Moreover, a

common carrier may not be absolved from liability in case of force majeure or fortuitous event
alone. The common carrier must still prove that it was not negligent in causing the death or injury
resulting from an accident.

It is interesting to note that petitioners proved through the bus conductor, Salce, that the bus was running
at "60-50" kilometers per hour only or within the prescribed lawful speed limit. However, they failed to
rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the driver
to slow down. These contradictory facts must, therefore, be resolved in favor of liability in view of
the presumption of negligence of the carrier in the law. Coupled with this is the established
condition of the road — rough, winding and wet due to the rain. It was incumbent upon the defense to
establish that it took precautionary measures considering partially dangerous condition of the road. As
stated above, proof that the tire was new and of good quality is not sufficient proof that it was not
negligent. Petitioners should have shown that it undertook extraordinary diligence in the care of its
carrier, such as conducting daily routinary check-ups of the vehicle's parts. As the late Justice J.B.L.
Reyes said:

DUE REGARD FOR THE CARRIER’S OBLIGATION DEMANDS ADEQUATE

PERIODICAL TESTS: It may be impracticable, as appellee argues, to require of carriers to test the
strength of each and every part of its vehicles before each trip; but we are of the opinion that a due
regard for the carrier's obligations toward the traveling public demands adequate periodical tests
to determine the condition and strength of those vehicle portions the failure of which may endanger
the safety of the passengers.

MORAL DAMAGES IN CULPA CONTRACTUAL WHEN RESULTED TO DEATH:

Moral damages are generally not recoverable in culpa contractual except when bad faith had been
proven. However, the same damages may be recovered when breach of contract of carriage results in
the death of a passenger, as in this case.

23 | P a g e
 EXEMPLARY DAMAGES IN CULPA CONTRACTUAL WHEN DEFENDANT ACTED
IN RECKLESS MANNER: Exemplary damages, awarded by way of example or correction for the
public good when moral damages are awarded, may likewise be recovered in contractual obligations if
the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. Because
petitioners failed to exercise the extraordinary diligence required of a common carrier, which resulted in
the death of Tito Tumboy, it is deemed to have acted recklessly. As such, private respondents shall be
entitled to exemplary damages.

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KENG HUA PAPER PRODUCTS CO. INC vs. COURT OF APPEALS

 SEA-LAND SERVICE, INC (respondent) is a shipping company, received at its Hong Kong
terminal a sealed container, containing 76 bales of "unsorted waste paper" for shipment to Keng
Hua Paper Products, Co. in Manila.
 A bill of lading to cover the shipment was issued by the plaintiff.
 Shipment was discharged at the Manila International Container Port.
 Notices of arrival were transmitted to the KENG HUA PAPER PRODUCTS but the latter failed
to discharge the shipment from the container during the "free time" period or grace period.
 The said shipment remained inside the SEA-LAND SERVICE container from the moment the
free time period expired on July 29, 1982 until the time when the shipment was unloaded from
the container on November 22, 1983, or a total of four hundred eighty-one (481) days. During
the 481-day period, demurrage charges accrued.
 Letters demanding payment sent by the SEA-LAND to the KENG HUA were refused:
P67,340.00.
 SEA LAND filed civil action for collection and damages.
 KENG HUA, alleged that
o that it purchased fifty (50) tons of waste paper from the shipper in Hong Kong, Ho Kee
Waste Paper, as manifested in Letter of Credit No. 824858 issued by Equitable Banking
Corporation, with partial shipment permitted;
o that under the letter of credit, the remaining balance of the shipment was only ten (10)
metric tons;
o that the shipment was asking KENG HUA to accept was twenty (20) metric tons which is
ten (10) metric tons more than the remaining balance;
o that if KENG HUA were to accept the shipment, it would be violating Central Bank rules
and regulations and custom and tariff laws;
o that SEA LAND had no cause of action against the KENG HUA because they did not
hire them to carry the merchandise;
o that the cause of action should be against the shipper which contracted the SEA LAND
services and not against KENG HUA; and
o that KENG HUA duly notified the SEA LAND about the wrong shipment through a letter
 RTC held KENG HUA liable for demurrage

ISSUE: Whether or not KENG HUA is bound by the bill of lading

Held
 BILL OF LADING IS A CONTRACT: A bill of lading serves two functions. First, it is a
receipt for the goods shipped. Second, it is a contract by which three parties, namely, the
shipper, the carrier, and the consignee undertake specific responsibilities and assume
stipulated obligations. A "bill of lading delivered and accepted constitutes the contract of
carriage even though not signed," because the "(a)cceptance of a paper containing the terms of
a proposed contract generally constitutes an acceptance of the contract and of all of its terms and
conditions of which the acceptor has actual or constructive notice." In a nutshell, the acceptance
of a bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise
to the presumption that the same was a perfected and binding contract.

 Petitioner Bound by the Bill of Lading: Petitioner admits that it "received the bill of lading
immediately after the arrival of the shipment" Having been afforded an opportunity to examine
the said document, petitioner did not immediately object to or dissent from any term or
stipulation therein. It was only six months later, on January 24, 1983, that petitioner sent a

25 | P a g e
 letter to private respondent saying that it could not accept the shipment. Petitioner's inaction
for such a long period conveys the clear inference that it accepted the terms and conditions of
the bill of lading. Moreover, said letter spoke only of petitioner's inability to use the delivery
permit, i.e. to pick up the cargo, due to the shipper's failure to comply with the terms and
conditions of the letter of credit, for which reason the bill of lading and other shipping documents
were returned by the "banks" to the shipper. The letter merely proved petitioner's refusal to
pick up the cargo, not its rejection of the bill of lading.

 IMPLIED ACCEPTANCE BY PETITIONER: Notice of Refusal was also four months after
petitioner received the bill of lading. If the notice has any legal significance at all, it is to
highlight petitioner's prolonged failure to object to the bill of lading. Contrary to petitioner's
contention, the notice and the letter support — not belie — the findings of the two lower courts
that the bill of lading was impliedly accepted by petitioner.

 MERE APPREHENSION OF VIOLATING THE LAW WITHOUT CLEAR

DEMONSTRATION NOT SUFFICIENT: Petitioner's attempt to evade its obligation to
receive the shipment on the pretext that this may cause it to violate customs, tariff and central
bank laws must likewise fail. Mere apprehension of violating said laws, without a clear
demonstration that taking delivery of the shipment has become legally impossible, 20 cannot
defeat the petitioner's contractual obligation and liability under the bill of lading.

Payment of Interest

Petitioner posits that it "first knew" of the demurrage claim of P67,340 only when it received, by
summons, private respondent's complaint. Hence, interest may not be allowed to run from the date of
private respondent's extrajudicial demands on March 8, 1983 for P50,260 or on April 24, 1983 for
P37,800, considering that, in both cases, "there was no demand for interest." We agree.

Jurisprudence teaches us:

 When an obligation, not constituting a loan or forbearance of money, is breached, an interest on

the amount of damages awarded may be imposed at the discretion of the court at the rate of 6%
per annum. No interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual base
for the computation of legal interest shall, in any case, be on the amount finally adjudged.

 When the judgment of the court awarding a sum of money becomes final and executory, the rate
of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.

The case before us involves an obligation not arising from a loan or forbearance of money; thus, pursuant
to Article 2209 of the Civil Code, the applicable interest rate is six percent per annum. Since the bill of
lading did not specify the amount of demurrage, and the sum claimed by private respondent increased as
the days went by, the total amount demanded cannot be deemed to have been established with reasonable

26 | P a g e
certainty until the trial court rendered its judgment. Indeed, "(u)nliquidated damages or claims, it is said,
are those which are not or cannot be known until definitely ascertained, assessed and determined by the
courts after presentation of proof. " Consequently, the legal interest rate is six percent, to be computed
from September 28, 1990, the date of the trial court's decision. And in accordance with Philippine
National Bank 33 and Eastern Shipping, 34 the rate of twelve percent per annum shall be charged on the
total then outstanding, from the time the judgment becomes final and executory until its satisfaction.

27 | P a g e