a; Woe Book Store THE LAW _ ON OBLIGATIONS _ AND CONTRACTS: HECTOR S. DE LEON HECTOR M. DE LEON, JR. Twelfth EditionThe Law on Obligations and Contracts HECTOR S, DELEON LLB., University of the Philippines Former Associate Professor, Far Easter: University HECTOR M. DE LEON, JR- AB. LL.B, University of the Philippines LLM., University of Michigan Managing Partner, SyCip Salazar Hernandez & Gatmaitan 412th EDITION 2021 Published & Distributed by REX Book Store ‘856 Nicanor Reyes, St. St. Tel. Nos.: 8736-0567/8733-6746 2161-65 Freedom Bidg., C.M. Recto Avenue ‘Tel, Nos.: 8522-4521/8522-4107 Manila, Philippines aie ‘wwvw.rex.com.ph 5 RO wee SISSIES RS i Sd ESLPhilippine Copyright, 2021 by HECTOR S. DE LEON AND HECTOR M, DE LEON, JR. ISBN 978-621-04-0430-2 No portion of this book may be copied or reproduced in books, pamphlets, outlines or notes, whether printed, mimeographed, typewritten, copied in different electronic devices or in any other form, for distribution or sale, without the written permission of either of the authors except brief passages in books, articles, reviews, legal papers, and judicial or other official proceedings with proper citation. Any copy of this book without the corresponding number and the signature of either of the authors on this page either proceeds from an illegitimate source or is in possession of one who has no authority to dispose of the same. ALL RIGHTS RESERVED BY THE AUTHORS No. Printed by: ee {4 P.Fiorentno St, Sia. Meta Heights, Quezon OX Tol No 0857-7778To MARIA FE MANGUERA-DE LEONPREFACE This text, which is now on its twelfth edition, is especially intended for the use of commerce students who, for the first time, will study business law, It can, however, serve as a handy reference for law students, accountants, businessmen, and even law practitioners. The authors have endeavored to Present every aspect of the law clearly and logically so that it may be easily understood. For the convenience of the student, each discussion is preceded by an appropriate heading; and to show the practical application of the different legal provisions in specific cases, numerous examples typical of everyday life are utilized. The reason for the law is also given or otherwise intimated either in the discussion or in the example to further help the student comprehend’ the mattet being explained. Although the sequence of the articles is followed, an attempt has been made to collate not only-the pertinent provisions of the Civil Code, but also those of other elated Statutes, with the end in view of giving the student a more.comprehensive grasp of the subject matter treated in this book. Anintroduction to law hasbeen included as itisnecessary to provide the student, a beginner in the study of law, a background in his study of obligations and contracts, and other business law courses. The introduction begins with a consideration of the general nature of law, and then, systematically, leads the student ina gradual manner to the main subject. ASTUDY GUIDE is provided at the end of every Chapter, or Section where the Chapter is divided into Sections. It has the following features: 1. The questions are designed primarily to test and further increase the understanding by the student of the vprovisions of law, not necessarily to prepare them for the CPA Examinations which are of the objective type requiring the use of much space. While such task properly belongs to CPA reviewers, candidates for CPA examinations will find the book, with the study guide, by reason of its content and scope, very useful for purposes of review. 2. The answers to some questions depend on the presence or absence of certain facts or circumstances which are not mentioned but which the student is supposed to know. Therefore, the answers must be qualified. 3. The book already contains numerous examples not only to assist the student in the proper interpretation of the law by also to train him/her in the Practical application of legal provisions in specific circumstances, The problems given involve new situations to avoid a mere repetition of any of the examples; 4. The numbers of the articles when directly appli- cable to the questions under Discussions and Problems are given at the end of the book for the uidance of the student to help him/her determine the correct answer in case of doubt, or inability to know the answer, * The authors trust that this work will hel ee Ip the student's need for a book on the law on obligations and contracts that is comprehensive yet simplified and understandable. 5 HECTOR S. DE LEON HECTOR M. DE LEON JR. February 2021 viCONTENTS PREFACE... INTRODUCTION TO LAW The General Nature of Law — Meanin, General Divisions of Law; Subjects of Law; Divine Law; Naturad Law; Moral Law: Physical Law; State Law; Concepts of (State) Law; Characteristics of Law; Necessity and Functions of Law; Sources of Law; Rule in Case of Doubt in Interpretati Organs of Social Control; Law Compared Control; Organization of Courts; Obligations and Contracts Defined: Givil Code Provisions on Obligation Presumption of Knowledge of Law 1B of Law in General; ion or Application of Laws; with Other Means of Social Classifications of Law; Law on ; Civil Code of the Philippines; s and Contracts; Conclusive TITLET OBLIGATIONS (Arts. 1156-1304, Civil Code) CHAPTER 1— GENERAL PROVISIONS Arlicle 1156 — Meaning of Obligation; Civil Code Definition; Meaning of Juridical Necessity; Nature of Obligations Under the Civil Code; Essential Requisites ‘of an Obligation; Form of Obligations; Obligation, Right, and Wrong Distinguished; Kinds of Obligation According to the Subject Matter. Article 1157 — Sources of Obligations; Sources Classifi Article 1158 — Legal Obligations. Article 1159 — Contractual Obligations; Faith . Article 1160 — Quasi-contractual Obligations; Kinds of Quasi- Contractual Obligations .. . Article 1161 — Civil Liability Arising from Crimes or Delicts; Scope of Civil Liability. Article 1162 — Obligations Arising from Quasi-delicts; Requisites of Quasi-delict; Crime Distinguished from Quasi-delict Study Guide .. vii 3 26CHATTER 2— NATURE AND EFFECT OF OBLIGATIONS Article 1163 — Mea of Specific or Determinate Thing; Meaning, of Generic or Indeterminate Thing; Specific Thing and Generic Thing Distinguished: Duties of Debtor in Obligation to Give a Determinate Thing: Duties of Debtor in Obligation to Deliver a Generic Thing Scouse enaseneren Article 1164 ~ Different Kinds of Fruits; Right of Creditor to the Fruits; When Obligation to Deliver Fruits Arises; Meaning of Personal Right and Real Right, Personal Right and Real Right Distinguished; Ownership Acquited by Delivery sunsssnsssssuunsnns i" Article 1165 — Remedies of Creditor in Real Obligation; Where Debtor Delays or Has Promised Delivery to Separate Creditors Article 1166 — Meaning of Accessions and Accessories; Right of ions and Accessories — Situations Contemplated in Article 1167; Remedies of Creditor in Positive Personal Obligation; Performance by a Third Person. 2 Article 1168 — Remedies of Creditor in Negative Personal Obligation. Y Article 1169 — Meaning of Delay; Kinds of Delay or Default; No Delay in Negative Personal Obligation; Requisites of Delay or Default by the Debtor; Effects of Delay; When Demand is Not Necessary to Put Debtor in Delay : Article 1170 — Grounds for Liability; Fraud and Negligence Distinguished. < Article 1171 — Responsibility Arising from Fraud Demandable; Waiver of Action for Future Fraud Void; Waiver of Action for Past Fraud Vali . Article 1172 esponsibility Arising from Negligence Demandable; Validity of Waiver of Action Arising from Negligence; Kinds of Negligence According to Source of Obligation; Effect of Negligence on the Part of the Injured Party. i ; Article 1173 — Meaning of Fault or Negligence; Factors to be Considered; Measure of Liability for Damages; Kinds of Diligence Required ; Article 1174 — Meaning of Fortuitous Event; Fortuitous Event Distinguished from Force Majeure; Kinds of Fortuitous Events; Requisites of a Fortuitous Event; Rules as to Liability in Case of Fortuitous Event Article 1175 — Meaning of Simple Loan or Mutuwm; Meaning, of Usury; Requisites for Recovery of Interest . Article 1176 — Meaning of Presumption; Two Kinds of Presumption; When Presumptions in Article 1176 Do Not Apply Article 1177 — Remedies Available to Creditors for the Satisfaction of Their Claims... viiiArticle 1178 — Transmissibility of Rights Study Guide ... CHAPTER 3 — DIFFERENT KINDS OF OBLIGATIONS Classifications of Obligations... Section 1. — Pure and Conditional Obligations. Article 1179 — Meaning of Pure Obligation; Meaning of Conditional Obligation; Meaning of Condition; Characteristics of a Condition; Two Principal Kinds of Condition; Distinctions Between Suspensive and Resolutory Conditions; When Obligation is Demandable at Once; Past Event Unknown to the Parties... Article 1180 — Where Duration of Period Depends Upon the Will of Debtor. : ; Article 1181 — Effect of Happening of Condition - Article 1182 — Classification of Conditions; Potestative Con dition; Where Suspensive Condition Depends Upon Will of Debtor; Where Suspensive Condition Depends Upon Will of Creditor; Where Resolutory Condition Depends Upon Will of Debtor; Casual Condition; Mixed Condition; Where Suspensive Condition Depends Partly Upon Will of Debto ‘ Article 1183 —, When Article 1183 Applies; Two Kinds of Impossible Conditions; Effect of Impossible Condition: ‘ Article 1184 =’ Positive Condit Article 1185 — Negative Condition. Article 1186 — Constructive Fulfillment of Suspensive Condi- tion; Constructive Fulfillment of Resolutory Condition .. i Article 1187 — Retroactive Effects of Fulfillment of Suspensive Condition; Retroactive Effects’ as to. Fruits and Interests in Obligations to Give . Article 1188 — Rights Pending Fulfillment of Suspensive Con- dition. : Article 1189 — Requisites for Application of Article 1189; Kinds of Loss; Rules in Case of Loss, Deterioration, or Improvement bf Thing During Pendency of Suspensive Condition. : Article 1190 — Effects of Fulfillment of Resolutory, Condition; Applicability of Article 1189 to Party with Obligation to Return... Article 1191 — Kinds of Obligation According to the Person Obliged; Remedies in Reciprocal Obligations; Court may Grant Guilty Party Term for Performance; Remedies are Alternative; Limitations on Right to Demand Rescission; Rescission Without Previous Judicial Decree “ Article 1192 — Where Both Parties are Guilty of Breac Study Guide .. 72 76 79 81 SBR 90 101 106 108Section 2. — Obligations with a Period. ‘i eriod; Meaning Article 1193 — Meaning of Obligation with a Period; Me of Period or Term; Period and Condition Distinguished; Kinds of Period or Term Article 1194 — Effect of Loss, Deterioration, Before Arrival of Period ....ovesn : ee Article 1195 — Payment Before Arrival of Period; Debtor Presumed Aware of Period; No Recovery in Personal Obligations. Article 1196 ~ Presumption as to Benefit of Period; Excepti to the General Rule; Computation of Term or Period... Article 1197 — Court Generally Without Power to Fix a a Exceptions to the General Rule; Legal Effect Where epee Period/Condition Depends Upon Will of Debtor; Period Fi: Cannot Be Changed by the Courts. Article 1198 — When Obligation Can Lapse of Period Study Guide ‘or Improvement Period; Be Demanded Before Section 3.— Alternative Obligations. Article 1199 — Kinds of Obligation According to Object; aning of Alternative Obligation . a8 Me “Article 1200 — Right of Choice, as a Rule, Given to Debtor; Right of Choice of Debtor Not Absolute. Article 1201 — Comimunication of Notice that Choice has been Made. Article 1202 — Effect When Only One Prestation is Practicable.. Article 1203 — When Debtor may Rescind Contract Article 1204 — Bffect of Loss of Objects of Obligation; Basis of Indemnity Article 1205 — When Right of Choice Belongs to Creditor; Rules in Case of Loss Before Creditor has Made Choice; Rules Applicable to Personal Obligations Article 1206. — Meaning of Facultative Obligation; Effect of Loss; Alternative and Facultative Obligations Distinguished. Study Guide on Section 4, — Joint and Solidary Obligations. Articles 1207-1208 ~ Kinds of Obligations According to the Number of Parties; Meaning of Joint and Solidary Obligations; Lopeetive Obligation Presumed to be Joint; Presumption Subject fo Rules on Multiplicity of Suits; Words Used to Indicate Joint Liability, When Obligation Solidary; Words Used ta Indicate Solidary Liability; Kinds of Solidarity; Solidarity not Presumed Article 1209 — Joint indivisible Obligation no n2 13 14 7 ly 12 137 44Article 1210 — Indivisibility and Solidarity Distinguishe Article 1211 — Kinds of Solidary Obligation According to the Legal Tie; Solidarity Not Affected by Diverse Stipulation: Article 1212 — Act of Solidary Creditor Useful /Prej Others .. a Article ‘ssignment by Solidary Creditor of His Rights, Article 1214 — Payment to Any of the Solidary Creditors Article 1215 — Liability of Solidary Creditor in Case of Novation, Compensation, Confusion, or Remission; Effect of Novation, etc. Where Obligation Joint. Article 1216 — Right of Creditor to Proceed Against Any Solidary Debtor : Article 1217 — Effects of Payment by a Solidary Debtor .. Article 1218 — Effect of Payment After Obligation Has Prescribed or Become Illegal; Presctiptive Periods of Actions Article 1219 — Effect of Remission of Share After Payment .. Article 1220 — No Right to Reimbursement in Case of Remission. Article 1221 — Rules in Case Thing has been Lost or Prestation Has Become Impossible. Article 1222 — Defenses Available to a Solidary Debto: Study Guide... Section 5. — Divisible and Indivisible Obligations. Article 1223 — Meaning of Divisible and Indivisible Obligations; Test for the Distinction; Applicability of Article 1223; Kinds of Division; Kinds of Indivisibility; Where There is Only One Creditor and One Debto: Article 1224 — Effect of Non-compliance by a Debtor in a Joint Indivisible Obligation. Arlicle 1225 — Obligations Deemed Indivisible; Obligations Deemed Divisible; Divisibility or Indivisibility in Obligations Not to Do Study Guide .. Section 6. — Obligations with a Penal Clause. Article 1226 — Meaning of Principal and Accessory Obligations; Meaning of Obligation with a Penal Clause; Meaning of Penal Clause; Purposes of Penal Clause; Penal Clause and Condition Distinguished; Kinds of Penal Clause; Penalty Substitutes for Damages and Interests; When Creditor may Recover Damages; When Penalty May be Enforced... es Article 1227 — Penalty Not Substitute for Performance; Penal Clause Presumed Subsidiary; When Penal Clause Joint... xi 447 149 149 150 173 176Article 1228 — Penalty Demandable Without Proof of Actual Damages; Damages Recoverable in Addition to Penalty Must be Proved... srt Article 1229 — When Penalty May be Reduced by the Courts... z Article 1230 — Effect of Nullity of the Penal Clause; Effect of Nullity of the Principal Obligation. Study Guide.. CHAPTER 4 — EXTINGUISHMENT OF OBLIGATIONS GENERAL PROVISIONS Article 1231 — Causes of Extinguishment of Obligations..... Section 1. — Payment or Performance. Article 1232 — Meaning of Payment Article 1233 — When Debt is Considere Proving Judgment. Article 1234 — Recovery Allowed in Case of Substantial Performance in Good Faith; Requisites for the Application of Article covery Allowed When Incomplete or Irregular Performance Is Waived; Requisites for the Application of Article 1235. Article 1236 — Persons From Whom the Creditor Must Accept Payment; Creditor May Refuse Payment by a Third Person; Effect of Payment by a Third Person... Article 1237 — Right of Third Person to Subrogation; Subrogation and Reimbursement Distinguished.. Article 1238 — Payment by a Third Person to be Reimbursed. 4 Article 1239 — Meaning of “Free Disposal of Thing Due” and “Capacity to Alienate”; Free Disposal of Thing Due and Capacity to Alienate Required _ Article 1240 — Person to Whom Payment Shall be Made; Meaning of “Any Person Authorized to Receive It” bie Article 1241 — Effect of Payment to an Incapacitated Person; Effect of, Payment to a Third Person; When Benefit to Creditor Need Not be Proved by Debtor. Article 1242 — Paj t to Credit.. a, Article 1243 — When Payment to Creditor Not Valid. ird Person in Possession of xii 181 182 ‘184 190 192 193 194 195 196 198 199Article 1244°— Very Prestation Due Mi lied Wi When Prestation May be Sutethited ra ie Complied Wi Article 1245 — Special Forms of Payment; Meaning of Dation in Payment; Governing Law Article 1246 — Rule of the Medium Quality. Article 1247 — Debtor Pays for Extrajudicial Expenses; Losing Party Generally Pays Judicial Costs . Article 1248 — Performance of Obligation Should be Complet When Partial Performance Allowed .. Article 1249 — Meaning of Legal Tender; Leg Philippines; Payment by Means of Instruments of Credit Article 1250 — Meaning of Inflation and Deflation; Basis of Payment in Case of Extraordinary Inflation or Deflation . Article 1251 — Place Where Obligation Shall be Pai Subsection 1. — Application of Payments Article 1252 — Meaning of Application of Payments; Requisites of Application of Payments; Application as to Debts Not Yet Due; Rules on Application of Payments : Article 1253 — Interest Eamed Paid Ahead of Princip. Article 1254 — Application of Payment to Most Onerous Debt; When a Debt More Onerous Than Another; Where Debts Subject to Different Burdens .. Subsection 2, — Payment by Cession Article 1255 — Meaning of Payment by Cession; Requisiies of Payment by Cession; Effect of Payment by Cession; Dation in Payment and Cession Distinguished Subsection 3. — Tender of Payment and Consignation Article 1256 ~ Meaning of "Tender of Payment” and “Consignation”; Requisites of a Valid Consignation; When: Tender of Payment Not Required; Requirements for Valid Tender of Paymen ‘Article 1257 — Prior Notice to Persons Interested Required; ~ Consignation Must Comply with Provisions on Payment Article 1258 — Consignation Must be With Proper Judicial Authority; Notice to be Given to Interested Parties of the Consig- nation Made Article 1259 — Creditor Bears Expenses of Consignation; When Consignation Deemed Properly Made Article 1260 — Withdrawal by Debtor of Thing or Sum Deposited xiii 215 217 219Article 1261 — Effect of Withdrawal with Authority of Creditor .. Study Guide .. Section 2. — Loss of the Thing Due. fered Lost; When Loss of Article 1262 — When a Thing is Considt Thing Will Extinguish an Obligation to Give: Will Not Extinguish Liability . se Article 1263 — Effect of Loss of a Generic Thin Article 1264 — Effect of Partial Loss of a Specific Thing . t Article 1265 — Presumption of Fault in Case of Loss of Thing in Possession of Debtor; When Presumption Not Applicable Article 1266 — Effect of Impossibility of Per Impossibility . Article 1267 — Effect of Difficulty of Performance Article 1268 — Effect of Fortuitous vent Where Obligation When Loss of Thing formance; Kinds of Proceeds from a Criminal Offens: - “ Article 1269 — Right of Creditor to Proceed Against Third Persons, e Section 3. — Condonation or Remission of Debt. ‘Article 1270 — Meaning of Condonation or Remission; Requisites of Condonation or Remission; Kinds of Remission; Effect of Inofficious Remissior ; Article 1271 — Presumption in Case of Voluntary Delivery of Document of Indebtedness by Creditor; Payment, Not Remission of Debt ernrsnensne ‘Artie 1272 — Presumption in Case Document Possession of Debtor. Article 1273 — Effect of Renunciation of the Principal Debt of the Accessory Obligation ‘Article 1274 — Presumption in Case Possession of Debtor Study Guide .. Section 4. — Confusion or Merger of Rights. Article 1275 — Meaning-of Confusion or Merger; Reason or Basis for Confusion; Requisites of Confusion Article 1276 — Effect of Merger in the Person of Principal or Creditor; Effect of Merger in the Person of Guarantor... Article 1277 — Confusion in a Joint Obligation; Confusion i Solidary Obligation. - site Study Guide .. xiv 2 2 226 27 228 20 21 232 232 235, 236 238 239 239 240 2a 243 24 +246Section 5. — Compensation, Article 1278 — Meaning of Compensation; Object of C ensation; Compensation and jon Distinguished; Kinds of pesstion Com Pel Confusion Distinguished; Kinds of Article 1279 — Requisites of Legal Compensatior Article 1280 — Compensation Benefits Guarantor y Article 1281 — Total and Partial Compensations Article 1282 — Voluntary Compensation. Article 1283 — Judicial Compensatio Article 1284 — Compensation of Rescissible or Voidable Debts. Article 1285 — Where Compensation has Taken Place Before Assignment; Where Compensation has Taken Place After Assignment .. Article 1286 — Compensation Where Debts Payable at Different Places Articles 1287-1288 — Instances When Legal Compensa Allowed by Law .. faces Article 1289 — Rules on Application of Payments Apply to Order of Compensatio Article 1290. — Consent of Parties Not Required in Legal Compensation. Study Guide Section 6. — Novation. Article 1291 — Meaning of Novation; Dual Function of Novation; Kinds of Novatior : Article 1292— Requisites of Novation; Novation is Not Présumed; Test of Incompatibility Between Two Obligations of Contracts .. Article 1293 — Kinds of Personal Novation; Kinds of Substitutio Consent of Creditor Necessary; Right of New Debtor Who Pays Article 1294 — Effect. of New Debtor‘s Insolvency or Non- fulfillment of the Obligation in Expromision Article 1295 — Effect of New ‘Debtor's Insolvency: or Non- fulfillment of the Obligation in Delegacio Article 1296 — Effect of Novation on Accessory Obligations ‘Article 1297 — Effect Where the New Obligation Void; Effect Where the New Obligation Voidable Article 1298 — Effect Where the Old Obligation Void or Voidable Arficle 1299 — Presumption Where Original Obligation Subject toa Condition. Article 1300 — Meaning of Subrogation; Kinds of Subroga- tion ‘Article 1301 — Consent of All Parties Required in Conventional Subrogation.. Article 1302 — Cases of Legal Subrogation xv, 262 263 265 267 268 270 271 272 272 273. 274 275 275 276brogation ticle 1303 — Effect of Legal Subroga foe 1304 — Bffect of Partial Subrogation. Study Guide TITLE CONTRACTS (Arts, 1305-1422, Civil Code.) CHAPTER 1 — GENERAL PROVISIONS i f Parties to a rticle 1305 — Meaning of Contract; Number ol Contract, Contract and Obligation Distinguished; Contract and ment Distinguished; Classifications of Contract : Aer rile 1306 ‘Meaning of Valid Contracts; Freedom to Contract Guaranteed; Limitations on Contractual Stipulations; Contract Must Not be Contrary to Law; Contract Must Not be Contrary to Morals; Contract Must Not be Contrary to Good Customs; Contract Must Not be Contrary to Public Order; Contract Must Not be Contrary to Public Policy . ois Article 1307 — Classification of Contracts According to Its Name or Designation; Kinds of Innominate Contract; Reasons for Innominate Contracts; Rules Governing Innominate Contracts .. Article 1308 — Contract Binds Both Contracting Parties. Article 1309 — Determination of Performance by a Third Person... Article 1310 ~ Effect Where Determination Inequitable... Article 1311 — Persons Affected by a Contract; Cases When Strangers or Third Persons Affected by a- Contract; Meaning: of Stipulation Pour Autrui; Classes of Stipulations Pour Autrui: Requisites of Stipulation Pour Autrut .. i Article 1312 — Third Persons are Bound by Contrac Real Rights... . Article 1313 ~ Right of Creditors to Impugn Contracts Intended to Defraud Them.. Article 1314 — Liabili Contract Articles 1315-1316 — Classification of Contracts According to Perfection; Stages in the Life of a Contract; How Contracts Are Perfected; Effect of Perfection of the Contract. Article 1317 — Unauthorized Contracts are Unenforceable; Unauthorized Contracts Can be Cured Only by Ratification; When a Person is Bound by the Contract of Another Study Guide ...... of Third Person Responsible For Breach of xvi 280 283, 287 288 289 289 290 293 294 295 296 299CHAPTER 2 — ESSENTIAL REQUISITES. OF CONTRACTS GENERAL PROVISIONS Article 1318 — Classes of Elements of a Contract... Section 1. — Consent Article 1319 — Meaning of Consent; Meaning of Offer; Offer must be Certain and Seriously Intended; Meaning of Acceptance; Acceptance of Offer must be Clear and Absolute. Article 1320 — Form of Acceptance of Offer Article 1321 — Matters that May be Fixed by the Offerer; Communication of the Offer... Article 1322 — Communication of Acceptance Article 1323 — When Offer Becomes Ineffective; Other Grounds Which Render Offer Ineffective Article 1324 — Meaning of Contract of Option; Option Period Option Money; Withdrawal of Offer Where Period Stipulated for Acceptance; Articles 1324 and 1479 Compared Article 1325 — Business Advertisements Generally Not Definite Offers.. Article 1326 — Advertisements for Bidders Generally Not Definite fers Article 1327 — Capacity to Give Consent Presumed; Persons Who Cannot Give Consent; Reason for Disqualification. Article 1328 — Contracts Entered into During a Lucid Interval: Effect of Drunkenness and Hypnotic Spell. Article 1329 — Incapacity Declared in Article 1327 Subject to Modifications; Other Special ‘Disqualifications May be Provided by Law .. cit Article 1330 — Characteristics of Consent; Vices of Consent; Causes Vitiating Consent and Causes of Incapacity Distinguished... Article 1331 ~ Meaning of Mistake or Error; Nature of Mistake; Mistake of Fact to Which Law Refers; Mistake of Fact Which Does Not Vitiate Consent; Effect of Mistake of Account Article 1332 — Burden of Proof in Case of Mistake or Fraud. Article 1333 + Effect of Knowledge of Risk. Arlicle 1334 — Meaning of Mistake of Law; Effect of Mistake of Law; When Mistake of Law Vitiates Consent; Requisites for the Application of Article 1334 Article 1335-— Nature of Violence or Force; Nature of Intimidation or Threat; Factors to Determine Degree of Intimidation; ‘Threat to Enforce Just or Legal Claim Article 1336 — Violence or Intimidation by a Third Persor Article 1337 — Meaning of Undue Influence; Nature of Undue Influence; Circumstarices to Be Considered. xvii 304 306 308: 310 310 31 313 314 314 315 316. 318Article 1338 — Meaning of Causal Fraud; How Causal Fraud Committed; Requisites of Causal Fraud. ~ Article 1339 — Fraud by Concealment Article 1340 — Usual Exaggerations in Trade. Article 1341 — Expression of Opinion. Article 1342 — Fraud by a Third Person Article 1343 — Effect of Misrepresentation -_ he Making of Contract; jade in Good Hicle 1344 — Two Kinds of Fraud in t Requisites of Causal Fraud... *“ articles 1345-1346 — Meaning of Simulation of a Contract; Kinds of Simulatio1 Study Guide Section 2, — Object of Contracts. Articles 1347-1348 — Concept of Object of a Contract; Kinds of Object of Contract; Requisites of Things as Object of Contract; Requisites of Services as Object of Contract; Rights as Object ‘of Contract; Definition of Future Inheritance; Validity of Contracts Upon Future Inheritance; Kinds of Impossibility Article 1349 — Quantity of Object of Determinate.. Study Guide contract Need Not be Section 3. — Cause of Contracts. Article 1350 — Meaning of Cause; Cause Distinguished from Object; Classification of Contracts According to Cause... 5 Article 1351 — Meaning of Motive; Cause Distinguished from Motiv Articles 1: ‘equisites of Cause; Effect of Absence of Cause; Effect of Failure of Cause; Effect of Illegality of Cause; Effect of Falsity of Cause. Article 1354 — Cause Presumed to Exist and Law! Article 1355 — Meaning of Lesion; Effect of Lesion or Inadequacy of Cause. é Study Guide CHAPTER 3— FORM OF CONTRACTS Article 1356 — Meaning of Form of Contract; Fo / f ; Forms of Con- tract; When Contract Considered in Written Form; Classification of Coates Acsoriing to Form; Rules. Regarding Form of 3; For id 3 Contract: Porm for alidity of Contract; Form for Enforceability Article 1357 — ss Form for the Convenience of the Parties, xviii 333Article 1358 ~ Contracts Which Must Appear in a Public Document Study Guide .. CHAPTER 4 — REFORMATION OF INSTRUMENTS (n) Article 1359 — Meaning of Reformation; Reason for Reformation; Requisites of Reformation; Reformation Distinguished’ from Annulment... “ Article 1360 — Principles of the General Law on Reformation "Article 1361 — Mutual Mistake as Basis for Reformation Article 1362. — Mistake on One Side, Fraud or Inequitable Conduct on the Other Article 1363 — Concealment of Mistake by the Other Party Arlicle 1364 — Ignorance, etc. on the Part of Thitd Person Article 1365 — Mortgage or Pledge Stated as a Sale Articles 1366-1367 — Cases When Reformation Not Allowed. Article 1368 — Party Entitled.to Reformation. Article 1369 — Procedure for Reformation: Study Guide ... CHAPTER 5 — INTERPRETATION OF CONTRACTS Artide 1370 — Meaning of Interpretation of Contracts; Literal Meaning Controls When Language Clear; Evident Intention of Parties Prevails Over Terms of Contract... Article 1371 — Contemporaneous and Subsequent Acts Relevant in the Determination of Intention “Article 1372 — Special Intent Prevails Over a Cara Intent. Article 1373 — Interpretation of Stipulation with Several Mean- ings Article 1374 — Interpretation of Various Stipulations of a Contract .. Article 1375 — Interpretation of Words with Different Significations.. Article 1376 — Resort to Usage-or Custom as pretation Article 1377 — Interpretation of Obscure Word: Article 1378 — Rules in Case Doubts Absolutely Impessibe to to Settle Arlicle 1379 — Principles of Interpretation in the Rules of Court Applicabl Study Guide . xix 360 362 371 373 374 375 375 376 376 377 378 379 380INTRODUCTION TO Chapters 6, 7,8, and 9 Kinds of Defective Contracts. CHAPTER 6 — RESCISSIBLE CONTRACTS sible Contracts; Binding Article 1380 — Meaning of Rescit Bir Re tracts f Rescission; Requisites of Force of Rescissible Contracts; Meaning of Article 1381 — Cas Rescissible Contracts. Article 1382 — Payments Made in a State of Insolvency Article 1383 — Nature of Action for Rescission .. Article 1384 — Extent of Rescission ... Article 1385 — Rescission Creates Obligation of Mutual Res- titution; Obligation of Third Person to Restore; When Rescission Not Allowe Article 1386 — Contracts Approved by the “Article 1387 — When Alienation Presumed in Fraud Circumstances Denominated as Badges of Fraud... Article 1388 — Liabi of Purchaser in Bad Faith.. . Article 1389 — Period for Filing Action for Rescission; Persons Entitled to Bring Action. Study Guide CHAPTER 7 — VOIDABLE CONTRACTS Article 1390 — Meaning of Voidable Contracts; Binding Force of Voidable Contracts; Kinds of Voidable Contracts; Meaning of Annulment... Article 1391 — Period for Filing Action for Annulment Article 1392 — Meaning and Effect of Ratificatior ; Article 1393 — Kinds of Ratification; Requisites of Ratification... Article 1394 — Who May Ratify : Article 1395 — Conformity of Guilty Party to Ratification Not Required : Article 1396 — Effect of Ratification Retroactive . ; Article 1397 — Partly Entitled to Bring an Action to Annul; Right et Strangers to Bring Action; Guilty Party Without Right to Bring ctior Article 1398 — Duty of Mutual Restitution Upon Annulment..... Article 1399 — Restitution by an Incapacitated Person Article 1400 — Effect of Loss of Thing to be Returned. Article 1401 — Extinguishment of Action for Annulment... Article 1402 — Effect Where a Party Cannot Restore What He is Bound to Return. Study Guide .. 381 BS essesCHAPTER 8 — UNENFORCEABLE CONTRACTS (n) Article 1403 — Meaning of Unenforceable Contracts; Binding Force of Unenforceable Contracts; Kinds of Unenforceable Contracts; Meaning of Unauthorized Contracts; Statute of Frauds; Agreements Within the Scope of the Statute of Frauds. Articles 1404-1405 — Modes of Ratification Under the Statute Article 1406 — Right of a Party Where Contract Enforceable au Article1407— When Unenforceable Contract Becomes a Voidable Contract; When Unenforceable Contract Becomes a Valid Contract... Article 1408 — Right of Third Persons to Assail an Unenforceable Contract Study Guide .. CHAPTER 9 — VOID OR INEXISTENT CONTRACTS Article 1409 — Meaning of Void Contracts; Meaning of Inexistent Contracts; Characteristics of a Void or Inexistent Contract; Instances of Void or Inexistent Contracts. Article 1410 — Action or Defense is Imprescriptible. Article 1411 — Rules Where Contract is Illegal and the Act Constitutes a Criminal Offense “Article 1412 — Rules Where Contract is Ilegal But the Act Does Not Constitute a Criminal Offen: Article 1413 — Recovery of Usurious interest. Article 1414 — Recovery Where Contract Entered into for Illegal Purpose Article 1415 — Recovery by an Incapacitated Person Article‘1416. — Recovery Where Contract Not Illegal per se; Prohibited Sale of Land. Article 1417 — Recovery of Amount Paid in Excess of Ceiling - Rendered Beyond Time Limit .. Article 1419 — Recovery of Amount of Wage Less Than Minimum Fixed.. Article 1420 — ity Divisible; Divisible Conk. Distinguished from Divisible Obli- ation Article 1421 — Persons Entitled to Raise Defense of Illegality or Nullit Article 1422 — Void Contract Cannot be Novated. Study Guide 407 415 415 416 416 417 426 47 429 429 430 430 431 432 433,TITLE IIT NATURAL OBLIGATIONS (Arts. 1423-1430, Civil Code) Article 1423. — Concept of Natural Obligations; Civil Obligations and Natural Obligations Distinguished; Enumeration Not Exclusiv , Arlicle 1424 — Performance After Civil Obligation Has Prescribed .. “Article 1425 — Reimbursement of Third Person for Debt Has Prescribed Article 1426 — Restitution by Minor A! ‘Contract Article 1427 — Delivery by Minor of Money or Fungible in Fulfillment of Obligation: ‘Article 1428 — Performance Afte Obligation Has Failed.. : : “article 1429 —.Payment by Heir of Debt Exceeding Value of rty Inherited. Article 1430 — Payment of Legacy Void fter Annulment of r Action to Enforce Civil After Will Has Been Declared xxii g 8 436INTRODUCTION TO LAW THE GENERAL NATURE OF LAW Meaning of law in general. In its widest and most comprehensive sense, the term law means any rule of action or any system of uniformity. Thus, law, in general, determines not only the activities of men as rational beings but also the movements or muviions of all objects of creation, whether animate or inanimate. General divisions of law. Law, as above defined, may be divided into two (2) general groups: (1) Law (in the strict legal sense) which is promulgated and enforced by the state; and (2) Law (in the non-legal sense) which is not promulgated and enforced by the state. ‘The first refers to what is known as the state law while the second includes divine law, natural law, moral law, and physical law. (see M.J. Gamboa, Introduction to Philippine Law, 6th ed., p. 3.) Subjects of law. State law, divine law, natural law, and moral law are comprised in the definition of law as a rule of action. They apply to men as rational beings only. On the other hand, physical law operates on all things, including men, without regard to the latter’s use of their will power and intelligence. It is called law only figuratively speaking. :‘THE LAW ON OBLIGATIONS AND CONTRACTS i i i ion of state law, let y, Before proceeding with the discussion a Jet us first dispose of those laws with which the state is not directly concerned. Divine law. : Divine law is the law of religion and faith which concerns itself with the concept of sin (as contrasted with crime) ang salvation. 4 i d by God ay 1) Source. — It is formally promulgated by and revedied or divulged to mankind by means of direct revelation, (a) Under the Old Testament, divine law is embodied in ah me Commandments. It is believed by Christians that these laws were formally given by God through Moses, the great Hebrew prophet and leader. (see C. Pascual, Legal Method, 2nd ed., pp. 7-8.) (b) Of course, divine law differs according to what one believes to have been established and communicated to mankind by revelation. Thus, to the Mohammedans, divine law is embodied in the Muslim Quoran. (2) Sanction. — The sanction of divine law lies in the assurance of certain rewards and punishments in the present life or in the life to come. (Clark, Elementary Law, p. 5.) Natural law. Natural law may then be defined as the divine inspiration in man of the sense of justice, fairness, and righteousness, not by divine revelation or formal promulgation, but by internal dictates of reason alone. (1) Binding force, — Natural law is ever present and binding on all men everywhere and at all times, There is in every man a basic understanding of right and wrong based on an understanding of the fundamental standard or criterion of good and evil. In other words, there are some acts or conduct which man knows in his heart and his conscience, not by theorizing, but by the dictates of his moral nature, are simply good or bad or evil.INTRODUCTION TO LAW Thus, we know that killing for the sake of killing or stealing. for the sake of stealing is bad or evil because it is contrary to what we believe is just, fair or righteous. When we speak of this inward instinct of justice, fairness and righteousness in man as divinely inspired by the dictates of his higher nature, we are talking about natural law or the law of nature. (see C. Pascual, The Nature and Elements of the Law, 1954 ed., pp. 9-10.) (2) Compared to divine law. — While natural law and divine law are very similar, they are not, however, the same. Divine law, as the law of religious-faith, is made known to man by means of direct revelation. On the other hand, natural law is said to be impressed in man as the core of his higher self at the very moment of being or, perhaps, even before that. (see C. Pascual, Legal Method, 2nd ed., p. 111.) (3) Place in state law. — Natural law has been regarded as the reasonable basis of state law. Moral law. When we talk of moral law, we are speaking of the totality of the norms of good and right conduct growing out of the collective sense of right and wrong of every community, (1) Determination of what is right and wrong. — “At a comparatively early stage of their existence human beings learned that it was good for the welfare of the group that the privilege to determine what is right and what is wrong was not left to each member of the group. The mores or ways of life were then evolved which were always considered right and correct, and obedience to them was demanded by the group.” (2) Sanction. — As distinguished from state law, there is no definite legal sanction (punishment imposed by law like imprisonment and / or payment of fines or damages) for violation of purely moral law. “If a member of the community disregards the mioral norms, a spontaneous social reaction is produced in the form of public displeasure, contempt or even indignation. If, on the other hand, there is conformity to the moral norms, there is created spontaneous-social response which may be in the formTHE LAW ON O91 GATIONS AND CONTRACTS Pascual, The on joy.” € of public pleasure, appre even joy” (see Nature and Elements of Low, ed, p16.) Moral law is not absolute. Tt varies (3) Binding force. ~~ at a with the changing times, conditions or convictions of the people, amy is considered immoral (it is also a crime) For example, poly; 1 in the Piulippines, whereas, it is allowed in some parts of the ’s fashions in women’s dress are socially alloweg world. Today’s fashions in women’s d but at different times, they would have been morally condemned, (4) Place in state law. -— Moral law, to a great extent, influences or shapes state law. Physical law. “In the operation or course of nature, there are uniformities of actions and orders of sequence which are the physical phenomena that we sense and feel. They are known as the laws of physical science or physical law.” (Ibid.; p. 19.) (1) Order or regularity in. nature. — A law of physical science, being addressed to objects which have no power to disobey, is in reality nothing more than an order or regularity in nature by which certain results follow certain causes. (Clark, Elementary Law, p. 34.) (2) Called law only by analogy. —- In other words, this order or regularity is called law only by analogy. “Examples of physical Jaw are many. The more conspicuous ones are the law of gravitation and the law of chemical combination.” (see .C. Pascual, Legal Method, 2nd ed., p. 13.) State law. The kind of law, however, which particularly concerns us in this work is the state law or the law that is promulgated and enforced by the state. (1) Other terms used, — This law is also called positive law, municipal law, civil law, or imperative law. It is the law that we refer to when we speak of law in connection with obligations and contracts, marriage, the administration of justice, the conduct of - elections, and the entire governmental Process itself.INTRODUCTION TO LAW 5 (2) Binding force. -~ As a tule of action, only state law is enforced by the state, with the aid of its physical force, if necessary. (3) Concern of state law, — The fields of state law are dif- ferent from those of divine law, natural law, and moral law. State law does not concern itself with violations of the latter tules of action unless they also constitute violations of its com- mands. A full examination of divine law properly belongs to the fields of philosophical theology; of natural law, to metaphysics; of moral law, to ethics; and of physical law, to physical science or physics. (M.J. Gamboa, op. cit., p. 5.) Leaving aside these topics, we proceed now with the consideration of state law. Concepts of (state) law. The term Jaw may be understood in two (2) concepts: in the general or abstract sense, and in the specific or material sense. (1) Inits general sense, the term refers to all the laws taken together. It may be defined as “the mass of obligatory rules established for the purpose of governing the relations of persons in society.” (see A. Tolentino, Civil Code of the Philippines, 1953 ed., Vol. 1, p. 1.) Examples of the use of law in this sense are: “law of the land,” “rule of law and not of men,” “equality before the law,” “enforcement of the law,” etc. (2) Inits specific sense, the term has been defined as “a rule of conduct, just, obligatory, promulgated by legitimate au! thority, and of common observance and benefit.” (I Sanchez Roman 3.) It has this second connotation when we refer to a particular statute or legal rule, e.g., the law on obligations and contracts. Characteristics of law. The characteristics of law (in its specific sense) are: (1) It isa rule of conduct. — Law tells us what shall be done and what shall not be done, As a rule of human conduct, law takes cognizance of external acts only;Ts THE LAW ON OBLIGATIONS AND CONTRA‘ is oblis is idered a positive com. bligatory. — Law is conside if 1 Etaoin a da to obey and involving a sanction which — forces obedience; . hort ; is itimate authority. — In a 3) It is promulgated by legitima G ca aan like the Philippines, the legitimate or competent authority is the legislature. Under the Constitution, laws called “statutes” are enacted by Congress which is the name of the legislative branch of our government; local ‘government units are also empowered to enact ordinances which have the binding force of laws; and (4) It is of common observance and benefit. — Law is intended by man toserve man. It regulates the relations of men to maintain harmony in society and to make order and co-existence possible, Law must, therefore, be observed by all for the benefit of all. Necessity and functions of law. (1) What would life be without law? If we can answer this question, we can answer the more basic question of whether law is necessary, If life without law would be the same as it is now, obviously law is not necessary. Society comes into existence because its members could not live without it. The need for internal order is as constant as the need for external defense. No society can be stable in which either of these requirements fails to be provided for. (see F. Pollack, A First Book on Jurisprudence, 5th ed., p. 6.) (2) What does ‘law do? It has been said that law secures justice, resolves social conflict, orders society, protects interests, controls social relations. Life without basic laws against theft, violence, and destruction would be solitary, nasty, brutish, and short. Life without other laws such as those regulating traffic, sanitation, employment, business, redress of harm or of broken agreements, etc. — would be less orderly, less healthful, less wholesome, etc. (see Howard and Summers, Law, Its Functions, | and Its Limits, 1965 ed., pp. 35-37.) | (3) What is our duty as’ members of society? No society can last and continue without means of social control, without eedINTRODUCTION TO LAW rules of social order binding on its members, The sum of such tules as existing in a given society, under whatever particular forms, is what, in common speech, we understand by law or is also referred to as the legal system. Since we find law necessary, every citizen should have some understanding of law and observe it for the common good. Sources of law. The principal sources of law in the Philippines are the Constitution, legislation, administrative rules and regulations, judicial decisions, and customs. (1) Constitution. — With particular reference to the Consti- tution of the Philippines, it may be defined as “the written instrument by which the fundamental powers of the government are established, limited, and defined, and by which these powers are distributed among the several departments for their safe and useful exercise for the benefit of the people.” (see Malcolm & Laurel, Phil. Constitutional Law, 1936 ed., p.6.) It is often referred to as the fundamental law or supreme law or highest law of the land because it is promulgated by the people themselves, binding on all individual citizens and ‘all agencies of the government. It is the law to which all other laws enacted by the legislature (as well as administrative or executive acts, orders and regulations having the force of law) must conform. This means that Jaws which are declared by the courts to be inconsistent with the Constitution shall be void and the latter shall govern. (see Art. 7, Civil Code.) : (2) Legislation. — It consists in the declaration of legal rules by a competent authority. (Salmond, Jurisprudence, 9th ed., p. 209.) It is the preponderant source of law in the Philippines. Acts passed by the legislature are so-called enacted law or statute law. Legislation includes ordinances enacted by Jocal governments units, (3) Administrative or executive orders, regulations, and rulings. — They are those issued by administrative officials under legislative authority. Administrative rules and regulations‘ RACTS THE LAW ON OBLIGATIONS AND CONT! i into effect it, ain the law and carry In! its a tive acts are valid only when they d the Constitution. (Art. 7, Civiy are intended to clarify 01 general provisions. Administra are not contrary to the laws an Code.) (4) Judicial decisions or jurisprudence. — The eo of the courts, particularly the Supreme Court, applying it ' Preting the laws or the Constitution form part of the legal system of the Philippines. (Art. 8, Ibid.) The decisions ofa eo court ona point of law are binding on all subordinate courts. This is called the doctrine of precedent or stare decisis. The Supreme Court, however, may reverse or modify any of its previous rulings. Until then, the decisions of the Supreme Court applying or interpreting the laws or the Constitution are “laws” by their own right because they declare what the laws say or mean. Unlike rulings of the lower courts, which bind the parties to specific cases alone, its judgments are applied to all. (Phil. Veterans Affairs Office vs. Segundo, 164 SCRA 365.) (5) Custom. — “It consists of those habits and practices which through long and uninterrupted usage have become acknowledged and approved by society as binding rules of conduct.” It has the force of law when recognized and enforced by the state. (MJ: Gamboa, op. cit., p. 15.) For instance, in a contract for services rendered where no definite compensation is stipulated, the compensation to be paid may be ascertained from customs and usages of the place. (see Smith vs. Lopez, 5 Phil. 78.) A custom must be proved as a fact according to the rules of evidence. (infra.) (Art. 12, Civil Code.) It may be applied by the courts in the absence of law or statute exactly applicable to the point in controversy. But customs which are contrary to law, public order or public policy are not countenanced. (Art. 11, Ibid.) (6) Other sources. — To the above inci 6 wives, — may be added principles Of justice and equity, decisions of foreign tribunals, opinions of ee) and religion. They are, however, only supplementary, it is, they are resorted to by the courts in the absence of all the other sources. They are, h indi (lid, peste ta) PY Me however, not binding on the court.INTRODUCTION TO LAW Rule in case of doubt in interpretation or application of laws. Our Civil Code provides that “no judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws.” (Art. 9, Civil Code.) “In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail.” (Art. 10, Ibid.) In our country, courts are not only courts of law but also of justice. Faced with a choice between a decision that will serve justice and another that will deny it because of a too strict interpretation of the law, courts must resolve in favor of the former, for the ultimate end of the-law is justice. (Pangan. vs. Court of Appeals, 166 SCRA 375.) This is particularly true where what is at stake is the life, liberty, or property of an individual, and more so if he is poor or disadvantaged. Organs of social control. Law is not an end in itself. It may be viewed as a means of social control — the control of social behavior that affects others.‘ (Howards and Summers, op. cit., p. 38.) In modern pluralistic societies, there aré many. organs of social control. For instance, in the Philippines, in addition to legal institutions — national and local — there are churches, corporations, political parties, trade associations, schools, labor unions, professional organizations, social clubs, families, and host of others. Such organizations, through rules, regulations and orders, control some of the behavior of their members. Law compared with other means of social control. There are several basic differences between social control through law and control through other methods, to.wit: (1) Laws are made and administered by the only institutions in society authorized to act in behalf of the entire citizenry. Churches, for example, act only for their members;THE LAW ON OBLIGATIONS AND CONTRACTS instituti ithin the society can m, 0) One el at ete can ma ay The rules, etc., of social and eee organizations, fo, example, govern only limited numbers; (3) People associated with an organization Ge ordinari} terminate their relationship and thereby free themselves from the impact of its rules and regulations. Citizens of a state, however, cannot do this unless they choose to leave the geographical area in which the state is sovereign; (4) The sanctions or techniques of control through law are more varied and complex than the techniques available to organizations such .as churches, Iabor unions, and political parties. Expulsion is usually the most powerful technique available to such organizations to secure compliance with their rules, etc. For the employee, it is the loss of his job. Aside from imprisonment and deportation, there are many other sanctions available to the law, including denial or revocation of license, confiscation of property, imposition of civil liability for certain kind of conduct, dissolution of organizations, and denial of privileges. A sanction is remedial if the object is the indemnification of the person who has suffered damages or injury from a violation of law, and penal if the object is the punishment of the violator; and (5) Before the law “operates” against an individual, various procedural steps are required. Thus, the individual must ordinarily be given a hearing and a fair opportunity to show why he should not, for example, be ordered to pay money to a claimant, or be deprived of his liberty. Such steps are commonly referred to as “due process” of law. : Organs of social control other than those, provided by law are generally not required to comply with such procedures in acting against individuals except when their rules provide therefor. (Ibid., pp. 43-44.) Organization of courts. acsastens the Constitution, the judicial power or the power to actual cases and controversies involving the interpretationINTRODUCTION TO LAW ut and application of laws, is “vested in one Supreme Court and in such lower courts as may be established by laws.” (Art. VIII, See. 1 thereof.) The judiciary, composed of the courts, is one of the three (3) main divisions of power in our system of government, (1) Regular courts. — The Philippine judicial system consists of a hierarchy of courts resembling a pyramid with the Supreme Court at the apex. Under present legislation, the other courts are: (a) one Court of Appeals, (b) Regional Trial Courts sitting in the different provinces and cities, and (c) Metropolitan Trial Courts in Metropolitan areas established by law; Municipal Trial Courts in cities not forming part of a metropolitan area, and in municipalities; and Municipal Circuit Trial Courts in areas defined as municipal circuits. Circuit courts exercise jurisdiction over two (2) or more cities and/or municipalities. The Supreme Court, the Court of Appeals, and the Regional Trial Courts are considered courts of general or superior jurisdiction. (2). Special courts. — Aside from these courts, there is, under the Constitution, a special anti-graft court, the Sandiganbayan. (Art. XI, Sec. 4 thereof.) It forms part of the judicial hierarchy together with the Court of Tax Appeals, a special tax court created by law, on the same level as the Court of Appeals. (3) Quasi-judicial agencies. — Administrative bodies under the executive branch performing quasi-judicial functions, like the National Labor Relations Commission, the Securities and Exchange Commission, Land Transportation Franchising, and Regulatory Board, Insurance Commission, etc., and the independent. Constitutional Commissions (Civil Service Commission, Commission on Elections and Commission on Audit) do not form part of the integrated judicial system. Their functions are described as “quasi-judicial” because they also involve the settlement or adjudication of controversies or disputes,THE LAW ON OBLIGATIONS AND CONTRACTS Classifications of law. The methods for classifying Jaw are many. For our pur. poses, it would be best to consider the main classifications of law, first, as to its purpose, and second, as to its nature. (1) As to its purpose: it ion of the body of law (a) Substantive Inw or that portion o ‘ ; creating, defining, and regulating rights and duties which may either be public or private in character. An example of substantive private law is the law on obligations ang contracts; and . (b) Adjective law or that portion of the body of law prescribing the manner or procedure by which rights may be enforced or their violations redressed. Sometimes this is called remedial law or procedural law. The provision of law which says that actions for the recovery of real property shall be. filed with the Regional Trial Court of the region where the property or any part thereof lies, is an example of private adjective law. Rights and duties are useless unless they can be enforced. It is not enough, therefore, that the state regulates the rights and duties of all who are subject to the law; it must also provide legal remedies by which substantive law may be administered. Hence, the need for adjective law. The adjective law in the Philippines is governed by the Rules of Court promulgated by the Supreme Court and by special laws. (2) As to its subject matter: (a) Public law or the body of legal rules. which regulates the rights and duties arising from the relationship of the state to the people. An example of public law is criminal Taw, the law which defines crimes and provides for their punishment. In legal theory, when a Person commits a crime, he violates not only the right of the individual victim but primarily that of the state because the crime disturbs the Peace and order of the State.INTRODUCTION TO LAW 13 Also included are: international law or that law which governs the relations among nations or states; constitutional law or that which governs the relations between the state and its citizens; it establishes the fundamental powers of the government; administrative law or that which governs the methods by which the functions of administrative authorities are to be performed; and criminal procedure or that branch of private law which governs the methods of trial and punishment in criminal cases; and (b) Private law or the body of rules which regulates the relations of individuals with one another for purely private ends. The law on obligations and contracts comes under this heading because it deals with the rights and obligations of the contracting parties only. The state, however, is also involved in private law; it enforces private law but simply as an arbiter and not as a party. (see MJ. Gamboa, op. cit,, Pp. 98.) Included in private law are civil law, commercial or mercantile law, and civil procedure. Civil procedure is that branch of private law which provides for the means by which private rights may be enforced. Law on obligations and contracts defined: “The law of obligations and contracts is the body of rules which deals with the nature and sources of obligations and the tights and duties arising from agreements and the particular contracts.” (Ibid; see Art. 1307.) Civil Code of the Philippines. The law on obligations and contracts is found in Republic Act No. 386, otherwise known as the Civil Code of the Philippines. When we speak of civil Inw, we refer to the law found primarily in our Civil Code. The Civil Code of the Philippines is based mainly on the Civil Code of Spain which took effect in the Philippines onTHE LAW ON OBLIGATIONS AND CONTRACTS: December 7, 1889. (Mijares vs. Neri, 3 Phil. 196.) It was approveg as Republic Act No, 386 on June 18, 1949 and took effect on August 30, 1950. (Lara vs. Del Rosario, 94 Phil. 778.) It is divided into four (4) books. Civil Code provisions on obligations and contracts. Book IV of the Civil Code deals with obligations ang contracts. The general provisions on obligations are contained in Title I, Articles 1156-1304, while those on contracts, in Title I], Articles 1305-1422. The general rules of law governing contracts, are also applicable to the particular kinds of contracts (like sale, agency, partnership, barter, etc.) in addition to the special provisions of law governing each type of contract. Book IV also contains new provisions dealing with natural obligations which are found in Title III, Articles 1423-1430, Conclusive presumption of knowledge of law. ra it Ignorance of law excuses no one from compliance therewith. (Art. 3, Civil Code.) “Everyone, therefore, is conclusively presumed to know the law.” This presumption is far from reality but it has been established because of the obligatory force of law. The following reasons have been advanced for this presumption: (1) If Jaws will not be binding until they are actually known, then social life will be impossible, because most laws cannot be enforced due to their being unknown to many; (2) It is almost impossible to prove the contrary when a person claims ignorance of the law; (3) It is absurd to absolve those who do not know the law and increase the obligations of those who know it; and (4) Inour conscience, we carry norms of right and wrong, and a sense of duty, so that our reason indicates many times whatry p f INTRODUCTION TO LAW 15 we have to do and in more complicated juridical telations, there are lawyers who should be consulted (A. Tolentino, op. cit., pp. 18-19.); and (5) “Evasion of the law would be facilitated and the administration of justice would be defeated if persons could successfully plead ignorance of the law to escape the legal consequences of their acts, or to excuse non-performance of their legal duties. The rule, therefore, is dictated not only by expediency but also by necessity.” (Ibid., p. 7; Zulueta vs. Zulueta, 1 Phil. 254.) Thus, ignorance of the provisions of the law imposing a penalty for illegal possession of firearms, or punishing the possession of prohibited drugs, does not constitute a valid excuse for their violation. ~000—TITLE I OBLIGATIONS (Arts. 1156-1304, Civil Code.) Chapter 1 GENERAL PROVISIONS ARTICLE 1156. An obligation is a juridical necessity to give, to do or not to do. (n) Meaning of obligation. The term obligation is derived from the Latin word obligatio which means tying or binding. It isa tie or bond recognized by law by virtue of which one is bound in favor of another to render something — and this may consist in giving a thing, doing a certain act, or not doing a certain act. Civil Code definition. Article 1156 gives the Civil Code definition of obligation, in its passive aspect. It merely stresses the duty under the law of the debtor or obligor (he who has the duty of giving, doing, or not doing) when it speaks of obligation as a juridical necessity. Meaning of juridical necessity. Obligation is a juridical necessity because in case of noncompliance, the courts of justice may be called upon by the aggrieved party to enforce its fulfillment or, in default thereof, 16Art, 1156 GENERAL PROVISIONS. v the economic value that it represents. In a Proper case, the debtor or obligor may also be made liable for damages, which represents the sum of money given as a compensation for thie injury or harm suffered by the creditor or obligee (he who has the Tight to the performance of the obligation) for the violation of his tights. In other words, the debtor must comply with his obligation whether he likes it or not; otherwise, his failure will be visited with some harmful or undesirable consequences. If obligations were not made enforceable, then people can disregard them with impunity. There are, however, obligations that cannot be enforced because they are not recognized by law as binding Nature of obligations under the Civil Code. Obligations which give'to the:creditor or obligee a right ues: the|fayggto‘enforeeithei performance in courts of justice e known as civil obligations. They are to be distinguished from natural obligations, which, not being based on positive law but on _ " equity-arid natural law, do not grant’a'righ ion to e ance although in case of vol yy reason thereof. (Art.' 1423.) Natural obligations are discussed under the Title dealing with “Natural Obligations.” (Title II, Arts, 1423-1430.) Essential requisites of an obligation. Every obligation has four (4) essential requisites, namely: (1) * Apassive subject (called debtor or obligor). — the person who is bound to the fulfillment of the obligation; he who has a duty; (2) An active subject (called creditor or obligee). — the person whois entitled to demand the fulfillment of the obligation; he who has a right; — @ "Unless otherwise indicated. refers to article in the Civil Code.THE LAW ON OBLIGATIONS AND CONTRACTS Art. 1156 3) iect or prestation (subject matter of the obligation). ~ the el negate Tote observed by the debtor. It may consist in giving, doing, or not doing, Without the Pee tts a nothing to perform. In bilateral obligations (see Art. .), the parties are reciprocally debtors and creditors; and (4) A juridical or legal tie (also called efficient cause). — that which binds or connects the parties to the obligation. The tie in an obligation can easily be determined by knowing the source of the obligation, (Art. 1157.) EXAMPLE: Under a building contract, X bound himself to build a house for Y for P1,000,000. Here, X is the passive subject, Y is the acti building of the house is the object or prestation, and or contract, which is the source of the obligation, tie. ve subject, the the agreement is the juridical Suppose X had already constructed the house and it was the” agreement that Y would pay X after the construction is finished, X —@ then becomes the active subject and Y, the passive subject. Form of obligations. : - The form of an obligation refers to the manner in which an obligation is manifested or incurred. It may be oral, or in writing, or partly oral and partly in writing. — (1) As a general rule, the law does not require any form for obligations arising from contracts for their validity or binding force. (see Art. 1356.) (2) Obligations arising from other sources (Art. 1157.) do not have any form at all. ‘ Obligation, right, and wrong distinguished. (1) (Obligation is the act or performance which the law will enforce. (2) n the other hand, is the power which a person has under the law, to demand from another any prestation.Art. 1156 GENERAL PROVISIONS 19 (3) 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.e., recognized by law) of another. In law, the term injury is also used to refer to the wrongful Violation of the legal right of another, tatnins The essential elements of a legal wrong or injury are: (a) alegal right in favor of a person (creditor / obligee/ plaintiff); (b) acorrelative legal obligation on the part of another (debtor/ obligor / defendant); to respect or not to violate said right; and (c)_anact or omission by the latter in violation of said right with resulting injury or damage to the former. An obligation on the part of a person cannot exist without a corresponding right in favor of another, and vice-versa. A wrong or cause of action only arises at the moment a right has been transgressed or violated. EXAMPLE: 4 In the preceding example, Y has the legal right;to have his house constructed by X who has the correlative legal obligation to build the house of ¥ undet their contract. X has the right to be paid the agreed compensation provided the house is built according to the terms and conditions of the contract. . The failure of either party to comply with such terms and conditions gives the other a cause of action for the enforcement of his right and/or recovery of indemnity for the loss or damage caused to him for the violation of his right. ‘! Kinds of obligation according to the subject matter. From the viewpoint of the subject mattergobligation may either be real or personal. (1) ) is that in which the subject matter is a thing w! e obligor must deliver to the obligee.20 ‘THE LAW ON OBLIGATIONS AND CONTRACTS Att ttsy EXAMPLE: Cat X (e.g. seller) binds himself to deliver a piano to Y (buyer), (2) «Personal obligation (obligation to do or not to do) is that in which the subject matter is an act to be done or not to be dong. There are two (2) kinds of personal obligation: (a) Positive personal obligation or obligation to do or tg render service. (see Art. 1167.) EXAMPLE: X binds himself to repair the piano of Y. (b) Negative personal obligation is obligation not to do (which naturally includes obligations “not to give”). (se. Art. 1168.) EXAMPLE: X obliges himself not to build a fence on a certain portion of his lot in favor of Y who is entitled to a right of way over said lot, /ART. 1157. Obligations arise from: (1) Law; (2) Contracts; _ @) Quasi-contracts; _ (@). Acts or omissions punished by law; and (5) ” Quasi-delicts. (1089a) Sources of obligations. © The sources of obligations are eriumerated below: (1) Caw when they are imposed by law itself. EXAMPLES: a t Obligation to pay taxes; obligation to support one’s family. (Art. 291.)Art. 1157 GENERAL PROVISIONS n (2) Contracts. — when they arise from the stipulation of the parties. (Art. 1306.) EXAMPLE: ‘The obligation to repay a loan or indebtedness by virtue of an agreement. (3) (Quasi-contracts. — when they arise from ‘lawful, voluntary and unilateral acts which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another. (Art. 2142.) In a sense, these obligations may be considered as arising from law. EXAMPLE: The obligation to return money paid by mistake or which is not due. (Art. 2154.) (4) Crimes or acts or omissions punished by Jaw. — when they arise from civil liability which is the consequence of a criminal offense. (Art. 1161.) EXAMPLE: The obligation of a thief to return the car stolen by him; the _ duty of a killer to indemnify the heirs of his victim. (5) (Quasi-delicts or torts. — when they arise from dainagl caused to another through an act or omission, there being fault or negligence, but no contractual relationexistsb istsjbetween the parties. (Art. 2176.) 3 ee z EXAMPLES: The obligation of the head of a family that lives in a building or a part thereof to answer for damages caused by things thrown or falling from the same (Art. 2193.); the obligation of the possessor of an animal to pay for the damage which it may have caused. (Art, 2183.) There is no obligation as defined in Article 1156, if its source is not any of those enumerated in Article 1157.| THE LAW ON OBLIGATIONS AND CONTRACTS: Att ugg Sources classified. a The law enumerates five (5) sources of obligations, They | may be classified as follows: (1) «Those emanating from aw; and (2) Those emanating from private acts which may be further subdivided into: (a) Those arising from licit acts, in the case of contracts _and quasi-contracts (infra.); and (b) Those arising from illicit acts, which may be either punishable in the case of delicts or crimes, or not punishable _. in the case of quasi-delicts or torts. (infra.) a Actually, there are only two (2) sources: law and contracts, because obligations arising from quasi-contracts, delicts, and quasi-delicts are really imposed by law. (see Leung Ben vs, OBrien, 38 Phil. 182.) “ART. 1158) Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book. (1090) (Legal obligations. : Article 1168 refers to legal obligations or obligations arising from law. They are because they are considered a i . They are the exception, not the rule. To be demandable, they must be clearly set forth in the law, i., the Civil Code or special laws. Thus: (1) An employer has no obligation to furnish free legal assistance to his employees because no law requires this, and therefore, an employee may not recover from his employer the amount he may have paid a lawyer hired by him to recover damages caused to said employee by a stranger or strangers while in the performance of his duties. (De la Cruz vs, Northern Theatrical Enterprises, 95 Phil. 739.)Art 1159 GENERAL PROVISIONS, a (2) A private school has no legal obligation to provide clothing allowance to its teachers because there is no law which imposes this obligation upon schools, But a person who wins money in gambling has the duty to return his winnings to: the loser. This obligation is provided by law. (Art. 2014.) Under Article 1158, Special laws refer to all other laws not contained in the Civil CodeExamples of such laws are Corporation Code, Negotiable Instruments Law, Insurance Code, National Internal Revenue Code, Revised Penal Code, Labor Code, ete. : ,ART. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. (1091a) ¢Contractual obligations. The above article speaks of contractual obligations or obligations arising from contracts or voluntary agreements. It presupposes that the contracts entered into aregvalid’ and enforceable. _ A Contract is a meeting of minds between two (2) (or more) persons whereby one binds himself, with respect to the other, to give something or to render some service. (Art. 1305:) (1) Binding force. — Obligations arising from contracts have the force of law between the contracting parties, ie., they have the same binding effect of obligations imposed by laws. This does not mean, however, that contract is superior to the law. Asa source of enforceable obligation, contract must be valid and it cannot be valid if it is against the law. (2) Requirenieit of a Walia contract. —.A contract is valid (assuming all the essential elements are present; Art. 1318.) if it is not contrary to law, morals, good customs, public order, and public policy. It is invalid or void if it is contrary to law, morals, good customs, public order, or public policy. (Art. 1306.) In the eyes of the law, a void contract does not exist. (Art. 1409.) Consequently, no obligations will arise. A contract mayTHE LAW ON OBLIGATIONS AND CONTRACTS Art 1155 be valid but cannot be enforced. This is A in the case of unenforceable contracts. (see Arts. 1317, 1403.) (3) (Breach of contract. — A contract may be breached , i i i t. A breach of contra violated by a party in whole or in part * ; ct takes pla when a party fails or refuses to comply, without legay reason or justification, with his obligation under the contract ag promised. 7 Compliance in good faith. Compliance in good faith means compliance or performance he stipulations or terms of the contract or in accordance with th agreement. Sincerity and honesty must be ee to prevent one party from taking unfair advantage over the other. Non-compliance by a party with his legitimate obligations after receiving the benefits of a contract would constitute unjust enrichment on his part. Although a contract provides no penalty 4 for its violation, a party cannot breach it with impunity. The oppressed party is afforded remedies to protect his rights. (see Art. 1191.) 5 EXAMPLES: 4 (1) _IfS agrees to sell his house to B and B agrees to buy the house of S, voluntarily and willingly, then they are bound by the terms of their contract and neither party may, upon his own will, and without any justifiable reason, withdraw from the contract or - escape from his obligations thereunder. That which is agreed upon in the contracts the law between S and B and must be complied with in good faith. (2) A contract whereby $ will kill B in consideration of - P1,000 to-be paid by C, is void and non-existent because killing a person is contrary to law. Likewise, an agreement whereby $ will render domestic service gratuitously until his loan to B is paid, is void as being contrary to law and morals. (see Art. 1689; De los Reyes vs. Alejado, 16 Phil. 499.) - In both cases, § has no obligation to comply with his agreements, 2Art. 1160 GENERAL PROVISIONS 5 “ART. 1160. Obligations derived from quasi- contracts shall be subject to the provisions of Chapter 1, Title XVII of this Book. (n) ¢Quasi-contractual obligations. Article 1160 treats of obligations arising from quasi-con- tracts or contracts implied in law. A. quasi-contract is that juridical relation resulting from lawful, voluntary and unilateral acts by virtue of which the parties become bound to each other to the end that no one will be unjustly enriched or benefited at the expense of another. (Art. 2142:) It is not, properly, a contract at all. In contract, there is a meeting of the minds or consent (see Arts. 1318, 1319:); the parties must have deliberately entered into a formal agreement. In a quasi-contract, there is noggapsen tdoutthe: same is supplied @by fiction of law. In other words, e law considers the parties as having entered into a contract, Although they ave not actually done so, and irrespective of their intention, to prevent injustice _ & the unjust enrichment of a person at the expense ofanother. é Kinds of quasi-contracts. The principal kinds of quasi-contracts are negotiorum gestio and solutio indebiti. (1) gNegotiorum gestio is the voluntary management of the property or affairs of another without the knowledge or consent of the latter. (Art. 2144.) EXAMPLE: ei X went to Baguio with his family without leaving somebody to look after his house in Manila. While in Baguio, a big fire broke out near the house of X. Through the effort of Y, a neighbor, the house of X was saved from being burned. Y, however, incurred expenses. ' In this case, X has the obligation to reimburse Y for said - expenses, although he did not actually give his consent to the act of Y in saving his house, on the principle of quasi-contract.26 THE LAW ON OBLIGATIONS (AND CONTRACTS Art. 1161 dical relation which is created when something is received when there is no right to demand it i i through mistake. (Art. 2154.) It is and it was unduly delivered thr en Hat: self emjuaily based on the principle that no one 5 A at the expense of another. (2) ‘Solutio indebiti is the juri The requisites are: (a) There is no right to receive the thing delivered; and (b) The thing was delivered through mistake. EXAMPLE: Dowes C P1,000. IfD paid T believing that T was authorized to receive payment for C, the obligation to return on the part of T arises. If D paid C P2,000 by thistake, C must return the excess of 1,000. The presumption (see Art. 1176,), however, is that “money _ paid by one to another was due to the latter,” unless the payor proves otherwise. ae (3) Other examples of quasi-contracts. — They are provided in Articles 2164 to 2175 of the Civil Code. The cases that have been classified as quasi-contracts are of infinite variety, and when for some reason recovery cannot be had on a true contract, recovery may be allowed on the basis of a quasi-contract. EXAMPLE: ae S, seller of goat’s milk Jeaves milk at the house of B each morning. B uses the milk and places the empty bottles on the Porch. After one (1) week, S asks payment for the milk delivered. Here, an implied contract is understood to have been entered into by the very acts of S and B, creating an obligation on the part of B to pay the reasonable value of the milk, otherwise, B would be unjustly benefited at the expense of S. - Civil obligations arising from Criminal offenses shall be governed by the penal laws, subject to the provisions of Article 2177, and heArt. 1161 GENERAL PROVISIONS 2” of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of this Book, regulating damages. (1092a) Civil Ilability arising from crimes or delicts. This atticle deals with civil liability for damages arising from crimes or delicts. (Art. 1157[4].) (1) Civil liability in addition to criminal’ liability. — Oftentimes, the commission of a crime causes not only moral evil but also material damage. From this principle, the rule has been established that every person criminally liable for an act or omission is also civilly liable for damages suffered by the aggrieved party. (see Art. 100, Revised Penal Code.) (2) (Criminal liability without civil liability. — In, crimes, however, which cause no material damage (like contempt, insults to persons in authority, gambling, violations of traffic regulations, etc.), there is no civil liability to be enforced. (3) (Civil liability without criminal liability. — A person not criminally responsible may still be liable civilly (Art. 29; Sec. 2{c], Rule 111, Rules of Court.), such as failure to pay a contractual debt; causing damage to another’s property without malicious or criminal intent or negligence, etc., or when the obligation arises from quasi-delict (Art. 1162.), not alleged and proved as a criminal offense. Scope of civil liability. ant The extent of the civil liability for damages’ arising from crimes is governed by the Revised Penal Code and the Civil Code. This civil liability includes: (1) (2) (3) Revised Penal Code.)oN JATIONS AND CONTRACTS Artng 2 THE LAW ON OBLIG! EXAMPLE: + of Y, If X is convicted, the court will order y, pay its value if it was lost or destroyeg: caused to the car; and (3) to pay suc’ quence of the crime," X stole the ca (1) to return the car or to (2) to pay for any damage other damages suffered by Y as. a conse “ART. 1162. Obligations derived from quasi- delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws. (1093a) Obligations arising from quasi-delicts. The above provision treats of obligations arising from quagj. delicts or torts. (see Arts. 2176 to 2194.) rtfe A quasi-delict is an act or omission by a person. which causes damage to another in his person, property, or rights giving rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-existing contractual relation between the parties. (Art. 2176.) 4 Requisites of quasi-delict. Before a person can be held liable for quasi-delict, the following requisites must be present: (1) ‘There must be anact or omissio: (2) «There must be fault or negligence; ren a : aut i (4) just be a ‘relation or connection of cause gand effect between the act or omission and the damage; and (5) There is no pre e While playing softball with his fri i playir iends, X broke the window glass of ¥, his neighbor. The accident would not rayon yy egprisyed alittle ‘aahge from the house of Y.‘Art. 162 GENERAL PROVISIONS In this case, X is under obligation to pay the damage caused to Yby his act although there is no pre-existing contractual relation between them because he is guilty of mere fault or negligence without any criminal intent. Crime distinguished from quasi-delict. The following are the distinctions: (1) Ancrime, there is criminal gr malicious intent or criminal enegligence, while in quasi-delict, there is only negligence; (2) Jn crime, the purpose is Punishmentgwhilednigdasi- edelict, indemnification of the offended party; (3) Crime affects public interest, while quasi-delict con: cerns private interest; (4) dn crime, there are generally two liabilities: criminal © ,and civil, while in quasi-delict, there is only civil liability; (5) Criminal liability can not be compromised or settled by the parties themselves, while the liabili si-deli cbe compromised as any othe lity; 2 (6) Ancrime, the guilt of the accused mustbe proved beyond onable doubt? while in qua’ lt oF negligence Eeieietenaantnes 1 only be proved by preponderance (ie., superior or greater weight) of evidence. aa! — 000 — STUDY GUIDE lL Definitions 7 Define or give the meaning of the following: 1. _ obligation 2. quasi-contract *The evidence must be very clear and convincing as will engender belief in an unprejudiced mind that the accused is really guilty.is TRACTS THE LAW ON OBLIGATIONS AND CO! 3. compliance in good faith 4. wrong 5. solutio indebiti Il. Discussions a 1. What are the essential requisites of an obligation? Give examples to illustrate them. ’ 2. Why are obligations under the Civil Code a . juridical necessity? Explain. 3. _Whatare the elements or requisites in order thata _ person may acquire a right of action in court against another to enforce the performance of the Jatter’s obligation? * 4. May a person incur obligations even without entering into any contract or voluntary agreement? Explain, UI. Problems . Explain or state briefly the rule or reason for your _ answers. i - = 1. X saw at about one (1:00 p.m.) in the afternoon a child alone in a shopping mall. The child who strayed from vA Y, his mother, was in tears and appeared very hungry. Out of pity, X took him to a restaurant to eat for which he spent P150. Y did not give her consent to the good deed of X. Furthermore, they were on their way home before the child got lost. Is X entitled to be reimbursed by Y for the amount _ of P150? 2. While the car of X was parked by the roadside, it was bumped at the rear by a Jeep belonging to Y. Only the car of X suffered damage, Under the circumstances, does it follow that Y is liable to X for the damage? ; 3. ? In the same problem, has X the right to ask indemnity from R, employer of X, on the ground that when the accident Occurred X was then on his way to transact” business with a client of R?GENERAL PROVISIONS 3t 4. _D (debtor) borrowed P10,000 from C (creditor). On the due date of the loan, D could not pay C because he lost to a robber the P10,000 intended for C. In addition, he suffered financial reverses, and he was short of cash even for his current family’s needs. Is D legally justified to refuse to pay C? —000—Chapter 2 NATURE AND EFFECT OF OBLIGATIONS “ART. 1163. Every person obliged to give something is also obliged to take care ofit with the proper diligence of a good father ofa family, unless the law or the stipulation of the parties requires another standard of care. (1094a) Meaning of specific or determinate thing. The above provision refers to an obligation specific or determinate thing. A thing is said to be: specific or determinate particularly designated or physically segregated from others of the same class. (Art. 1459.) EXAMPLES: (1) the watch I am wearing. (2) the car sold by X. (3) my dog named “Terror.” (4) _ the house at the corner of Rizal and del Pilar Streets. (5) the Toyota car with Plate No. AAV 316 (2008). (6) this cavan of rice, (7) the money I gave you." Meaning of generic or indeterminate thing. which it pertains and cannot} i i! seca t be pointed out with 32Art. 1163 NATURE AND EFFECT OF OBLIGATIONS: 33 EXAMPLES: (1) a Bulova calendar watch, (2) the sum of P1,000. ; (3) 2016 Toyota car, (4) acavan of rice, (5) apolice dog. Specific thing and generic thing distinguished. (1) A determinate thing is identified by its individuality. The debtor cannot substitute it with another although the latter is of the same kind and quality without the consent of the creditor. (Art, 1244.) (2) A generic thing is identified only by its specie. The debtor can give anything of the same class as long as it is of the same kind. EXAMPLES: (Q)__ IfS's obligation is to deliver toBa Rolex calendar watch, Scan deliver any watch as long as it is a Rolex with calendar. But if S's obligation is to deliver to B a particular watch, the one Sis wearing, S. cannot substitute it with another watch without B’s consent nor can B require $ to deliver another watch without S's consent although it may be of the same kind and value. (see Arts, 1244, 1246.) (2) If S's obligation is to deliver to Bone of his cars, the object refers to a class which in itself is determinate. Here, the particular thing to be delivered is determinable without the need of a new contract between the parties (see Art. 1349,); it becomes determinate upon its delivery. Duties of debtor in obligation to give a determinate thing. They are: qq) —liagipegpiotenmnisietiingeesc obligations to give (real obligations), the obligor has the incidental duty to take care