TITLEI (4)Ajuri

dicalorl
egalti
e( al
socal l
edeff
ici
entcause)orthat
OBLI
GATIONS whichbindsorconnectsthepar ti
estotheobl
igat
ion.Thet i
e
i
nanobl i
gationcaneasi lybedet er
minedbyknowi ngt he
(
Arts.1156-
1304.) sourceoftheobli
gat
ion.(Art.1157.
)
ChapterI
GENERALPROVISIONS
ARTICLE1156.Anobl
i
gationisajuri
dical
necessi
tyt
ogi
ve, EXAMPLE:Undera bui
ldi
ng cont
ract
,X bound hi
msel
fto
todoornottodo.(
n) const
ructahousef
orYf
orP1,
000,000.
00.

Meani
ngofobl
i
gat
ion. Her
e,X isthepassivesubject
,Yi stheacti
vesubject,t
he
bui
l
dingoft hehousei stheobjectorprestati
on,andthe
Theter
m obl
i
gat
ioni sderi
vedfr
om t
heLat
inwor
d“obl
i
gat
io” agr
eementorcontract
,whi
chi sthesour
ceoft heobli
gati
on,
whi
chmeansa“t
ying”or“
bindi
ng.
” i
sthejur
idi
calt
ie.

(1)I
ti satieoflaw orajuri
dicalbondbyv i
rt
ueofwhichonei
s SupposeXhadal r
eadyconst
ruct
edt hehouseanditwasthe
boundi nf
avorofanothert
orendersomet hi
ng—andt hi
smay agreementthatY woul
dpayX af tertheconstr
ucti
onisf i
consistingivi
ngat hi
ng,doingacer tainact,ornotdoi
nga ni
shed.X,then,
becomestheacti
vesubjectandY,
thepassi
ve
cert
ainact. subject
.

(2)Manresadefi
nestheterm as“alegalrel
ati
onest
abl
i
shed For
m ofobl
i
gat
ion.
betweenonepart
yandanother,wher
ebythelatt
eri
sboundto
theful
fi
ll
mentofaprest
ati
onwhichtheformermaydemandof (1)Asagener alrul
e,t
hel aw doesnotr
equi
reanyf
ormin
him.” obl
igat
ionsar
isingfr
om contr
actsfort
hei
rval
i
dit
yorbi
ndi
ng
(8Manresa13.
) for
ce.(
seeArt.1356.
)

(3)Ar
ti
cle1156givestheCi
v i
lCodedef ini
ti
onofobl i
gat
ion,
in (2)Obli
gati
onsari
singf
rom ot
hersour
ces(
Art
.1157.
)donot
i
tspassiv
easpect.Ourlawmer elystr
essesthedutyofthedebtor haveanyfor
m atal
l.
orobli
gor(hewhohast hedut yofgi vi
ng,doing,ornotdoing)
when Obl
i
gat
ion,
right
,andwr
ong(
causeofact
ion)di
sti
ngui
shed.
i
tspeaksofobli
gationasajuri
dicalnecessi
ty.
(1)Obli
gat
ioni
stheactorper
for
mancewhi
cht
hel
aw wi
l
l
Meani
ngofj
uri
dical
necessi
ty. enfor
ce.
Obligati
on isaj uri
dicalnecessi ty because i n case ofnon- (2)Ri
ght,ontheotherhand,i
st hepowerwhi
chapersonhas
compl i
ance,t hecour t
sofj usticemaybecal ledupont oenf or ce undert
hel aw,t
odemandf rom anot
heranypr
est
ati
on.
i
tsf ulf
illmentor ,indef aultther eof ,theeconomi cvaluet hati t
represents.Inapr opercase,t hedebt ormayal sobemadel iable (3)Awrong(
causeofaction)
,accordi
ngt oit
slegalmeaning,
fordamages,whi chr epr esentt hesum ofmoneygi venasa i
sanactoromissi
onofonepar t
yinv i
olat
ionofthelegalr
ight
compensat i
onf ort hei njuryorhar m sufferedbyt hecr editoror orri
ght
sofanot
her,causi
nginj
urytothelatt
er;
obli
gee ( he who has t he rightt ot he per formance oft he
obli
gation)f ort hev i
olationofhi sr ights.I not herwor ds,t he *Inabr eachofcont ract,thecont r
actvi
olatedist hesubjectmat t
er,
debtormustcompl ywi t
hhi sobl i
gationwhet herhel i
kesi tornot ; whil
et hebreacht hereofbyt heobl i
gorist hecauseofact ion.The
otherwise,hi sf ai l
ure wi llbe v isi
ted wi th some har mf ulor subjectmatteristhei t
em wi t
hr especttowhi chthecontroversyhas
undesirablelegalconsequences.I fobligati
onswer enotmade ari
senorconcer ni
ngwhi cht hewr onghasbeendone, andisordinar
ily
enforceable,thenpeopl ecandi sregardt hem wi thimpuni ty.Ifan the right
,t he thing or t he contract under dispute.(Bachrach
obli
gationcannotbeenf orced,itmaybeonl yanat uralobligation. Corporati
onv s.CourtofAppeal s,296SCRA487[ 1998];DelaRosav s.
Mendi ol
a,401SCRA704[ 2003].
Nat
ureofobl
i
gat
ionsundert
heCi
vi
lCode.
Essent
ial
element
sofcauseofact
ion.
Obligati
onswhi chgivetothecr edit
ororobli
geear ightofacti
on (
1)I
tsessent
ial
element
sar
e:
i
ncour t
sofj usticetoenf or
cet heirperf
ormancear eknownas
civi
lobl i
gati
ons.They ar et o be disti
nguished from natural
obli
gationswhich,notbei ngbasedonposi t
ivelawbutonequi ty (
a)alegalr
ightinfav
orofaperson( cr
edit
or/pl
aint
if
f)bywhat
ever
andnat urall
aw,donotgr antar i
ghtofactiont oenforcetheir meansandunderwhatev
erl
awi
tarisesoriscreat
ed;
performanceal thoughi ncaseofv ol
untar
yf ulf
illmentbyt he
debtor,thelattermaynotr ecov erwhathasbeendel i
veredor (
b) a corr
elat
ive legal obli
gati
on on t he part of anot
her
renderedbyreasont hereof.(
Art.*1423.) (
debt
or/
def
endant)t
or espectornott
ovi
olat
esaidri
ght;
and
Naturalobli
gati
onsar ediscussedundert heTitl
edeal i
ngwith
“NaturalObli
gations.
”(Tit
leII
I,Arts.1423-
1430.) (c)anactoromi ssioni nbreachorv iol
ati
onofsai dr ightbyt he
defendantwi t
hconsequent ialinjur
yordamaget ot hepl ai
nti
fffor
whichhemaymai ntainanact ionfortherecover
yofdamagesor
Essent
ial
requi
sit
esofanobl
i
gat
ion. otherappropri
at ereli
ef .(seeMa- aoSugarCentr
alCo.v s.Barrios,79
Phil
.66[ 1948];Tev esv s.People’sHomesiteandHousi ngCor p.,23
Anobligati
onasdefinedinArti
cle1156i
sconsti
tut
eduponthe SCRA1141[ 1968] ;Dev elopmentBankoft hePhil
s.vs.Pundogar ,218
concur
renceoft
hefour(4)essent
ialel
ement
sther
eof,namel
y: SCRA118[ 1993] ;Par añaqueKi ngEnterpri
sesvs.Cour tofAppeal s,
269SCRA727[ 1997]; Nadelav s.Cit
yofCebu,411SCRA315[ 2003].)
(1)A passi
vesubj
ect(cal
leddebt
ororobli
gor
)ortheperson ( 2)I fanyoft hese element sis absent ,the compl aintbecomes
whoisboundtotheful
fill
mentoftheobl
i
gati
on;hewhohasa vulnerabl et oamot iontodi smi ssont hegr oundoff ailuretost atea
dut
y; cause ofact ion.(San Lor enzo Vi l
l
age Assoc. ,Inc.v s.Cour tof
Appeal s,288SCRA 115[ 1998] ;Uyv s.Ev angelist
a,361SCRA 95
(2)Anacti
vesubj
ect(
cal
l
edcredi
tororobli
gee)ortheper
son [2001] .
)Thepr esenceofacauseofact ionr estsont hesuf f
iciency ,
andnotont heveracit
y,oft heal l
egat
ionsi nthecompl aint,whichwi ll
who hav et o be exami ned dur ing t he trialon t he mer i
ts.( Pioneer
i
senti
tl
edtodemandtheful
fil
l
mentoft heobli
gat
ion;hewho Internat i
onal,Ltd.vs.Guadi z,Jr.,535SCRA584[ 2007].)Thet estis
hasar
ight
; whet hert hemat eri
alallegat ionsoft hecompl aint,assumi ngt obe
true,st ateulti
mat efactswhi chconst i
tut espl ai
nti
ff’
scauseofact i
on
(3)Objectorpr estat
ion(subjectmatteroftheobli
gation)orthe sucht hatpl ai
ntif
fisentitledt oaf av
or abl ejudgmentasamat terof
conductr equi
redtobeobser vedbyt hedebtor.I
tmayconsi stin l
aw.( Rov elsEnterpr
ises,Inc.v s.Ocampo, 391SCRA176[ 2002].
)
givi
ng,doi ng,or not doi ng.( see Art.1232.) Without the
prestat
ion,thereisnothingt oper f
orm.Inbi l
ater
alobl i
gat
ions (
3)Acauseofacti
ononlyari
seswhenthelastel
ementoccur
s,i
.e.
,
at
(see Ar t
.1191. ),the parti
es ar er eci
procal
ly debtors and t
hemomentarighthasbeentr
ansgr
essed.
credi
tors;and
(a)I
tisto bedi
sti
ngui
shed f
rom ri
ghtofact
ion ortherightt
o
commenceandmai
ntai
nanacti
on,i
nthatt
hef
ormerisgover
ned
bytheprocedurallawwhi lethel att
erdependsonsubst anti
ve (3)Inacont ractofloanwithrealestatemortgage, wherebythe
l
aw.Ther ightofact i
onspr i
ngsf rom thecauseofact ion, but creditorcouldunilat
eral
l
yi ncreasetheinter
estr ate,wherethe
doesnotaccr ueunt i
lallt
hef actswhi chconsti
tutet hecause creditorfor
eclosedthemor tgagewhent hedebt orf ai
l
edt opay
ofacti
onhav eoccur red.(
Mul ti
-RealtyDev.Corp.v s.Makat i the loan,t he cause ofact ion f
ort he annul mentoft he
TuscanyCondomi ni
um Cor p.,491SCRA9[ 2006]; Bor bev s. foreclosuresaleshouldbecount edfrom thedat et hedebtor
Calal
o,535SCRA89[ 2007].)Theact ionshall
bebr oughti nthe discov er
edtheincreasedinter
estrate(BancoFil
ipinoSav i
ngs&
nameoft hepar t
ywhobyl awi sent i
tledtotherightt obe Mor tgageBankv s.CourtofAppeal s,388Phi l
.27,332SCRA
enfor
ced. 241[ 2000].
)
(b)Anobl i
gat
ionont hepartofapersoncannotexistwit
houta (4)Wheretheagreementt obuyandsel lwascondit
ionedupon
correspondi
ngrightexi
sti
nginf av
orofanother,andvi
ce- the conductofa pr el
iminar
ysur veyoft he l
and tov er
ify,
versa,f
orever
yrightenjoy
edbyaper son,
thereisa whetheritcont
ainedt heareast at
edint hetaxdecl
arati
on,the
correspondi
ngobligati
onont hepartofanothertor
espect ri
ghtofact i
onforspeci fi
cperf or
mancear oseonlywhent he
suchr i
ght. plai
nti
ffdiscov
ered thecompl eti
on oft hesurvey
.( Col
ev s.
Gregori
o,202Phil.226,116SCRA670[ 1982].)
I
LLUSTRATIVECASE:Sreject
edorcancell
edacontractt
osell
hi
spropert
yevenbef
orethearriv
aloftheper
iodi
ntheexerci
se (5)Withrespectt omoneycl aimsarisingf r
om acont ractof
oft
heoptiont
obuybythepur chaserwhohasalr
eadymadea employment ,whi
chwoul dpr escri
beinthree( 3)yearsfrom the
downpayment
. ti
met hecauseofact i
onaccr ued,t
hecauseofact ionwoul d
ari
sefrom thedatet heempl oyermadeadef init
edeni alofthe
Fact s:SandBent eredintoacont racttosell,
wher ebyB, af
ter employee’
scl ai
m, forpri
ortosuchdeni al,
itisdeemedt hatthe
maki ngadownpay ment ,wasgi vent heopt i
ont opayt he i
ssueshadnoty etbeenj oinedbecauset heempl oyeecoul d
balanceoft hepur
chasepr iceofapar celofl
and.Lat er,
S havestil
lbeenr einstat
ed( Serranovs.Cour tofAppeal s,415
“rej
ectedthecontracttosell’
’evenbef orethearriv
aloft he Phil
.447,363SCRA223[ 2001].
)
periodfortheexerci
seofsai dopt ionont hegroundt hatthe
termsandcondi ti
onsoft hecont ractar egrossly (6)Inanactionforrefor
mat i
onofacontr
act,wherethepl ai
nti
ff
disadvantageousandhi ghl
ypr ej
udi cialtohisinter
est.Ssent all
eged,amongot hers,t
hatthecontr
actwasone- si
dedi nfavor
two( 2)checkstoBi nanappar entef f
orttoreturnthe oft he defendant,and thatcertai
n events had made t he
downpay ment . arrangementinequitabl
e,thecauseofact i
onf orreformati
on
woul dari
seonlywhent hecontr
actappeareddi
sadv antageous.
Scont endsthatthecomplai
ntwasprematurel
yfil
edbecause (Naga TelephoneCo.v s.CourtofAppeals,230 SCRA 351
atthet i
meoft heinst
it
uti
onofthecomplai
nt,Bhasyett
o [1994].
)
exercisehisopti
onunderthe“Opt
ionofBuyer’
’cl
auseofthe
contract. (7)The nat ure oft he productsol di s a maj orf actori n
determi ning when t he cause ofact i
on has accr ued.For
I
ssue:
HasBacauseofact
ionagai
nstSf
orpr
emat
uri
ty? exampl e,whenf ueloilisdeliv
eredi ndr ums,abuy erreadi l
y
assumes t hatt he agreed vol
ume can be and act uallyi s,
Held: Yes.( 1)Alltheelementsofacauseofact i
onar epr esent
. contained i nthose drums.He i s notexpect ed to make a
—Fi rst,
therei salegal ri
ghti
nfavorofB, i
.e.,
therightt o met i
culousmeasur ementofeachandev erydeli
very
.Incaseof
compl etet hepay mentoft hepurchasepriceshoul dhechoose shortdel iver
ies,thecauseofact ionwi llari
seonlyf rom t he
todoso; ther eisanobl i
gati
onont hepartofSt osel lthe discover yofthesamewi thcert
ainty.(Pi
l
ipinasShellPetroleum
subjectpr oper t
yexclusivel
ytoBuponf ul
lpaymentoft he Corpor ationvs.JohnBor dment,Ltd.,
supra.)
purchasepr ice;andther ewasabreachofS’ sobligationtosell
thepr operty ,whenSr eject
edthecontracttosellev enbef or
eB I
njur
y,damage,
anddamagesdi
sti
ngui
shed.
couldexer ci sehisoptiontobuynot wi
thstandingthathehad
alr
eadymadeadownpay ment. Thewor
ds“
inj
ury
,”“
damage,
’
’and“
damages’
’ar
esomet
imes
( 2)Sr ej
ect edcont ractt osell innouncer taint erms.—Thef act used sy
nony
mousl
y,al
thought
her
eisamat
eri
aldi
ff
erence
thatther ejectionorcancel l
at ionoft hecont ractbySwasnot amongthem.
madej udiciall
yorbynot ari
al act( seeArt.1592. )isofno
moment .Iti senoughf orpur posesofdet ermi ningthe (1)Injuryistheil
legali
nvasi
onofalegalr
ight
;iti
sthewrongful
existenceofacauseofact iont hatShasdecl aredinno actoromi ssionwhichcauseslossorhar mtoanother,whil
e
uncer t
aint ermshi sr efusal tobeboundbyt hecont racttosell
. damagei stheloss,hurt
,orhar
m whichresul
tsfr
om theinj
ury.
Suchdecl arati
on, coupl edwi thS’ sactofr eturningB’ sdown On the ot herhand,damages denot ethe sum ofmoney
pay ment ,clearlyi
ndi catesS’ sr ejecti
onoft hecont racttosell. recoverableasamendsf orthewrongf
ulactoromissi
on;and
(LebermanReal tyCor por at
ionv s.Typingco, 293SCRA316
[1998].) (2)Inj
uryisthelegalwrongtober edressed,whi
ledamages
aretherecompenseorcompensationawar dedorrecov
erabl
e
Causeofact
ionbaseduponawr
it
tencont
ract
. forthe damage orl oss suf
fer
ed.( Custodi
ov s.Courtof
Appeal
s,253SCRA483[ 1996].
)
Actionsbaseduponawr it
tencont r
actshouldbebrought
within10y earsf r
om t heti
met her i
ghtofacti
onaccrues.(Art. Exi
stenceofonewi
thoutt
heot
her
1144. )Theaccr ualreferstothecauseofact i
on.Accordingl
y,
anact ionbasedonacont ractaccruesonlywhenanact ual Ther
e maybe i
njur
ywi
thoutdamage and damage wi
thout
breachorv iol
ationt hereofoccurs.(Chi
naBankingCorp.v s. i
njur
y.
Cour tofAppeal s,461SCRA162[ 2005];
seeArt.1169.
)
Theref or
e,theper i
odofpr escript
ioncommences, notfrom the
dateofexecut ionoft hecont r
actbutf r
om theoccurr
enceof (1)Proofofl ossforinjur
y.— Awr ongfulviol
ati
onofhi sl egal
thebr each. ri
ghtisnotsuf f
icienttoenti
tleaper sontosueanot heri na
courtofjusticefortheenfor
cementorpr otecti
onofsai dright.
Thecauseofact i
onresult
ingfr
om breachofcontr
actis Asar ule,theremustbe,inadditi
on,lossordamagecausedt o
dependentonthefactsofeachpar
ticul
arcase.(
Pil
ipi
nasShel
l him byt he v i
olat
ion ofhisr i
ght.Butexceptf oractualor
Petr
oleum Cor
por ati
onvs.JohnBordmanLt d.
,473SCRA151 compensat orydamages ( Art
.2199. ),no pecuniaryproofi s
[
2006].) necessaryi norderthatmoral,nominal,temperate,l
iquidated,
orexempl arydamagesmaybeawar ded.(Art.2216)
(1)I
nanactiontoresci
ndacontractofsaleoninstal
l
ment (2)Liabil
it
yfordamagesofaper sonf orexerci
singhislegal
basi
s,f
ornon-payment,t
hecauseofactionarisesattheti
me ri
ghts.— A per sonhasther ightt otakeal llegalstepst o
thel
asti
nstall
mentisnotpai
d.(Nabusv s.CourtofAppeal
s, enforcehislegaland/
orequi
tabler i
ghts.Onewhomakesuse
193SCRA732[ 1991].
) ofhisl egalri
ghtdoesnoinj ury.Quij uresuout it
urmul l
um
damnum f aci
t.Ifdamager
esultsfrom aperson’sexerci
singhis
(2)Whereanov erdraf
tagreementstipul
atest
hatt
heobli
gat
ion l
egalr i
ghts,itisdamnum absquei njuri
a( dam agewi t
hout
i
spayableondemand, thebreachstart
sonlywhendemandis i
njury).
made.(El
idov s.CourtofAppeals,
216SCRA637[ 1992]
;Chi
na
Banki
ngCor porati
on
Thepl aint
iffmustest
abli
shthatthedamaget ohimresult
ed (2)Contracts.— whentheyar
isefr
om t
hesti
pulat
ionofthe
from abr eachorviol
ati
onoflegaldutywhichthedef
endant part
ies(
Ar t
.1306.
),e.
g.,t
heobl
i
gati
ontor
epayaloanbyvir
tue
ownedt ohim;ot
herwi
se,theconsequencesmustbeborneby ofanagreement;
theplainti
ffal
one.
(3)Quasi -contr
acts.— whent heyar i
sef rom lawful
,vol
untar
y
Inotherwor ds,
inorderthatthel
awwillgi
ver
edressforanact andunilateralactsandwhi chareenforceabletotheendthatno
(oromi ssion)causingdamage,t hatactmustbenotonl y oneshal lbeunj ustl
yenr i
chedorbenef itedatt heexpenseof
hurt
ful,butwr ongful.
(Cust
odiovs.CourtofAppeals,supr
a; another(Ar t
.2142.),e.
g.,t
heobligat
iont oreturnmoneypaidby
seePhi l
ippineNati
onalBankv s.Cour
tofAppeals,367SCRA mistakeorwhi chi snotdue.( Art
.2154. )I nasense,these
198[2001] .
) obl
igati
onsmaybeconsi deredasari
singf r
om law;

I
LLUSTRATI
VECASE:Actsofimport
ercontest
ingf
orf
eit
ure, (4)Cri
mesoract soromi ssi
onspuni
shedbylaw.— whenthey
del
ayi
nthedel
i
ver
yofgoodst
ohighestbi
dder. ari
sefrom civ
ill
iabil
itywhichist
heconsequenceofacrimi
nal
off
ense(Art.1161.),e.g.
,theobl
i
gati
onofat hi
eftoret
urnthe
Facts:Xi mpor
tedcertaingoods.TheCol l
ect
orofCustoms carst
olenbyhim; thedutyofakil
l
ertoindemni
fyt
heheir
sofhis
declaredt hegoodsforfei
tedi
nf avorofthegover
nmentand vi
cti
m;and
orderedt hesalether
eofatpublicaucti
on.ThebidofYwas
approv edandthegoodswer eawardedtohim. (5)Quasi -del
ictsort ort
s.— when t heyar i
sef r
om damage
causedt oanot herthroughanactoromi ssi
on,ther
ebeingfault
Undert helaw,X hast herighttohav et hedecisionoft he ornegligence,butnocont r
actualrelati
onexi stsbetweent he
Coll
ectorofCust oms revi
ewed by t he Commi ssi
onerof parti
es( Ar
t.2176. )
,e. g.
,t
heobligati
onoft heheadofaf ami l
y
Customs,andf r
om thedecisionofthelatter
,toappealt othe thatli
vesinabui l
dingorapar tt her
eoft oanswerf ordamages
CourtofTaxAppeal s(Secs.2313,402,Tar i
ffandCust oms causedbyt hi
ngst hrownorf all
ingfrom t hesame( Ar
t.2193.);
Code.)
, andfr
om thelat
ter’
sdecisi
on,totheSupr emeCour t
.X theobligationoft hepossessorofanani maltopayf ort he
wil
lbepr ej
udi
cedifthesaleisnotsetaside.(
seeAr t.1397.
) damagewhi chitmayhav ecaused.(Art.2183.)

I
ssue:I
sXl i
abl
etoYfordamagesf
rom t
heconsequentdel
ay Theenumer ati
onbyt hel
aw i
sexclusi
ve;hence,ther
eisno
i
nthedeli
ver
yofthegoods? obli
gati
onasdef inedi
nAr
ti
cl
e1156,ifi
tssourceisnotanyof
thoseenumerated.
3
Held:Suchdelayisanincidentt
ot heexercisebyXofhisr
ight
to contestthe for
fei
ture and the sale ofhisgoods.(
see Sour
cescl
assi
fi
ed.
AuyongHi anvs.CourtofAppeals,supra.
)
Thelawenumeratesfi
vve(
5)sour
cesofobl
i
gat
ions.Theymay
*Art
.19.Ever
yper sonmust,i
ntheexerci
seofhisri
ght
sandi nthe becl
assi
fiedasfol
lows:
perf
ormanceofhisduti
es,
actwithj
ust
ice,gi
veev
ery
onehisdue,and
observ
ehonestyandgoodfait
h. (
1)Thoseemanat
ingf
rom l
aw;
and
Thepr incipl
eofdamnum absquei njur i
adoesnotappl ywhenthereis (
2)Thoseemanat
ingf
rom pr
ivat
eact
swhi
chmaybef
urt
her
an abuse ofa per son’sr i
ght.Ar t
icle 19 pr
escribesa “pr
imordi
al
l
imitati
ononal lright
s’’byset t
ingcer tainstandar dsthatmustbe
observedi ntheexerci
set hereof
.Itdoesnotper mi tanabuseofri
ghts subdi
vi
dedi
nto:
whichi scommi t
tedwhent hedefendantact swithbadf ai
thori
ntent
toprejudicetheplaint
if
fintheexer ci
seofar i
ght.Suchabusewil
lgive (a)thoseari
singfr
om l
i
citact
s,i
nthecaseofcont
ract
sand
ri
set oliabil
i
tyfordamages.Goodf aith,however
, i
spresumed. quasi-
cont
ract
s;and
Ki
ndsofobl
i
gat
ionaccor
dingt
osubj
ectmat
ter
.
(b)thosear isingfrom il
l
icitacts,whichmaybeei therpunishable
Fr
om t
hev
iewpoi
ntoft
hesubj
ectmat
ter
,obl
i
gat
ionmayei
therbe:
bylaw i nthecaseofdel i
cts,ornotpuni shabl
ei nthecaseof
quasi-deli
cts.Act ual
ly,therear eonlyt wo(2)sources:law and
contracts,because obl igati
ons arising f
rom quasi -
contracts,
(
1)Realobl
igati
on(
obl
igat
iontogi
ve)orthatinwhichthesubj
ect cri
mes,andquasi -del
ictsar ereall
yi mposedbyl aw.Wher et he
mat
teri
sathingwhi
cht
heobli
gormustdel
i
vertotheobl
i
gee;or source oft he obli
gation is a pr i
v at
e act,the law mer el
y
recognizesoracknowl edgest heexistenceoftheobligati
on.
(
2)Personalobl
i
gat
ion(
obli
gat
iont
odoornottodo)ort
hati
nwhi
ch
t
hesubjectmatt
eri
sanactt
obedoneornott
obedone.
* The pr i
nci
plet hatno per son may unj ustly enri
ch himsel fatt he
expenseofanot herisembodi edi nAr ticle22oft heCi vi
lCode.Thi s
Ther
ear
ethust
wo(
2)ki
ndsofper
sonal
obl
i
gat
ion: principleappliesnotonl yt osubst antiver ightsbutal sot opr ocedur al
remedi es.Onecondi ti
onforinvokingt hispr inciplei
st hattheaggr ieved
(
a)Posi
ti
veper
sonalobl
i
gat
ionorobl
i
gat
iont
odoort
orenderser
vice par t
yhasnoot heracti
onbasedoncont ract ,quasicontract,cr
ime, quasi
(
seeArt
.1167.
);and -delictoranyot herprovi
sionofl aw.( Rey esv s.Lim,408SCRA 560
[2003] ;A.Tol entino,Civi
lCodeoft hePhi li
ppines,1990,pp.77, 82.)
(b)Negat i
ve personalobli
gati
on orobl
igati
on notto do (
whi
ch Ar t
icle22pr ovides:“Ever
ypersonwhot hroughanactofper formanceby
natur
all
yincludesobli
gat
ions“nott
ogiv
e”)
.(seeArt
.1168.
) anot her,oranyot hermeans,acqui r
esorcomesi nt
opossessi onof
somet hingattheexpenseoft helatterwi thoutjustorl egalground, shall
returnt hesamet ohim.”
ART.1157.
Obl
i
gat
ionsar
isef
rom:
A pr
acti
ceorcust
om is,asageneralr
ule,notasourceofal egal
ly
(
1)Law; demandabl
eorenforceableri
ght
.(MakatiStockExchange,I
nc.vs.
Campos(585SCRA120[2009]
.)
(
2)Cont
ract
s;
I
LLUSTRATI
VE CASE:Li
abil
i
tyofsher
if
flawf
ull
yenf
orci
ng a
(
3)Quasi
-cont
ract
s; j
udgmenti
naneject
mentsui
t.
(
4)Act
soromi
ssi
onspuni
shedbyl
aw;
and Facts:Aj udgmentwasr enderedbyaj ust
iceoft hepeacecour
t
(now muni ci
palcour
t)i
nf avorofXwhobr oughtanej ect
ment
(
5)Quasi
-del
i
cts.(
1089a) suitagai
nstY,t heowneroft hehousebuiltont helandofX.Z,
thedeputysher if
fwhoexecut edthejudgment ,wasobl i
gedto
Sour
cesofobl
i
gat
ions. remov ethehouseofYf rom thelandaccor di
ngt otheusual
procedur
ei ntheacti
onforejectment.
An obl i
gat
ion i
mposed on a person and t
he cor
respondi
ng ri
ght
grantedtoanothermustber ootedinatleastanyoft hefoll
owing Issue:I
sYent
it
ledt
oindemni
tyar
isi
ngf
rom t
hedest
ruct
ionof
sources: hishouse?
(1)Law.—whentheyarei
mposedbyt hel
awitsel
f,e.g.
,obli
gat
iont
o Held:Nopr oofhasbeensubmittedt
hatacont
racthadbeen
paytaxes;
obl
i
gat
iontosuppor
tone’
sfamil
y(seeArt.195,Famil
y
ent
eredint
obet weenpl
aint
if
f(Y)andt
hedef
endants(XandZ)
ort
hatthelatt
er
hadcommi tt
edill
egalactsoromi ssi
onsori ncur
redinanyki nd Note:IfX wereami nor
,thev esselswouldbel
ongtoC i n
off aul
tornegl i
gence,from anyofwhi chanobl igat
ionmi ght ownershipandusufr
uctunderArti
cle161oftheol
dCivi
lCode.
havear i
senont hepar tofXandZt oi ndemnifyY.Fort his (nowAr t
.324.
5)UnderArti
cle1448,thepaymentmaygi
verise
reason,theclaimforindemni ty
,onaccountofact sperformed toagiftorani
mpliedtr
ust
.
byt hesher i
ff
,whileenf orci
ngaj udgment,cannotunderany
considerat
ion be sustained.(Navales v
s.Ri as,8 Phil.508 ART.1159.Obl
igat
ionsari
singf
rom cont
ract
shavet
hefor
ceof
[1907].
) l
aw betweenthecontract
ingpart
iesandshouldbecompli
ed
wit
hingoodfai
th.(
1091a)
ART.1158.Obl i
gati
onsder i
vedf r
om law arenotpresumed.
Onlyt
hoseexpressl
ydeterminedinthisCodeorinspeci
all
aws Cont
ract
ual
obl
i
gat
ions.
aredemandabl
e,andshal lberegul
atedbyt hepr
eceptsofthe
l
aw which est
abli
shest hem;and ast o whathasnotbeen The above ar
ti
cle speaks of cont
ractual obli
gat
ions or
for
eseen,
bytheprovi
sionsofthisBook.(1090) obl
i
gat
ionsar
isi
ngfrom cont
ract
sorvol
untaryagreements.
Legal
obl
i
gat
ions. A cont r
acti s a meeti
ng ofmi nds between two persons
wherebyonebi ndshimself,wi t
hrespecttot heother
,togive
Ar t
icl
e1158r eferstolegalobli
gationsorobli
gationsari
sing something ortor endersomeser vi
ce.(Art
.1305. )Itisthe
from law.Theyarenotpr esumedbecausetheyareconsidered formalexpr
essionbyt hepar t
iesofthei
rri
ghtsandobl i
gati
ons
abur denupontheobligor.Theyaretheexcept
ion,nottherule. theyhaveagreeduponwi t
hr espectt
oeachot her.
Tobedemandabl e,
theymustbecl earl
ysetfor
thinthelaw,i.
e.,
theCiv i
lCodeorspeci
allaws.Thus: ( 1)Bi nding force.— Obl i
gati
onsar i
sing fr
om cont ractsar e
gov ernedpr i
mar i
lybyt heagreementoft hecont r
actingpar ti
es.
(1)An empl oyerhas no obl i
gation tof urnish free legal Onceper f ect
ed,v ali
dcont r
actshav et heforceofl aw bet ween
assi
stancetohisemployeesbecausenol awr equiresthis,and, thepar t
ieswhoar eboundt ocompl ytherewithingoodf aith,
ther
efore,anemployeemaynotr ecoverf r
om hi sempl oyerthe andnei t
heronemaywi t
houttheconsentoft heot her,renege
amounthemayhav epaidal awy erhiredbyhi mt or ecover therefrom.( Tiu Peck v s.Cour tofAppeal s,221 SCRA 618
damagescausedt osai
dempl oy
eebyast rangerorst rangers [1993] .
)Inchar acteri
zingcontractsashav i
ngt hef orceofl aw
whil
eint heperf
ormanceofhisduties.(DelaCr uzv s.Nor t
hern betweent hepar t
ies,thelawstressest heobligatorynat ureofa
Theatr
icalEnt
erpri
ses,
95Phil
.739[ 1954].) bindingandv al
idagr eement( Willi
am Gol angcoConst r
uction
Corpor ationv s.Phi l
.Commer cialInter
nat i
onalBank,485SCRA
(2)Aprivateschoolhasnol egalobl
igati
ont oprov i
declothi
ng 293[ 2006] .
),absentanyal l
egationt hatitiscont r
aryt ol aw,
all
owance toi tst eachers because thereis no l aw which mor als,goodcust oms, publ
icorder,orpubl i
cpolicy.(Art.1306. )
i
mposest hi
sobligati
onuponschool s.Butaper sonwhowi ns
moneyi ngambl i
nghast hedut ytoreturnhiswi nningstothe *
Thi
spr
ovi
sioni
snotcont
ainedi
ntheFami
l
yCode.
l
oser.Thisobl i
gationispr ov i
dedbyl aw.( Ar
t.2014. )Under
Arti
cl
e1158, speciall
awsr ef
ertoallotherlawsnotcont ai
nedin *Art.1448.Ther eisani mpli
edtrustwhenpr opertyissold,andt hel egal
theCiv
ilCode. estateisgrantedtoonepar tybutthepriceispaidbyanot herf
orthepur pose
ofhav i
ngt hebeneficialinter
estoft heproperty.Theformeristhet rustee,
whilethelatt
eristhebenef ici
ary
.Howev er
,ifthepersontowhom t het i
tlei
s
ILLUSTRATI
VE CASES:1.Li
abi
li
ty ofhusband f
ormedical conv ey
edi sachild,l
egitimateorill
egit
imate,oft heonepay i
ngthepr iceof
assist
ancer
ender
edtohi
swif
ebutcont
ract
edbyhispar
ent
s. thesale,notrustisimpliedbylaw,itbeingdisputablypr
esumedt hatther ei
s
agiftinfavorofthechild.
Facts:X,byv
irt
ueofhavingbeensentf orbyBandC, att
ended
asphysici
anandrender
edprofessionalserv
icest
oadaught er
- (a)Thel aw,recognizi
ngtheobl i
gatoryforceofcont r
acts( Arts.
i
n-l
awofBandCdur i
ngadiff
icultandlabori
ouschil
dbir
th. 1139,1308,1315,1356. ),wil
lnotper mi
tapar tytobesetf ree
from l
iabili
tyforanykindofmi sperformanceoft hecontractual
I
ssue:Whoisboundtopayt hebil
l
:BandC,t
hepar
ent
s-i
n-l
aw undertakingoracont raventi
onoft het enorthereof .(
Art
.1170. )
oft
hepati
ent
,orthehusbandofthelat
ter
? Themer epr oofoftheexi st
enceoft hecontractandt hef ail
ure
ofitscompl i
ancejustif
y,primaf acie,acor respondingrightof
Held:Ther enderi
ngofmedi calassistancei ncaseofi l
lnessis reli
ef.
(FGUI nsuranceCor p.v s.G.P.Sarmi entoTr ucki
ngCor p.,
compr i
sedamongt hemut ualobligati
onst owhi chspousesar e G.R.No.141910, Aug.6,2002. )
boundbywayofmut ualsuppor t
.Ifspousesar emutual
lybound
tosupporteachot her,therecanbenoquest i
onthatwhen (b)I nlaw,what ev erfairl
yput saper sononi nquir
yissufficient
eit
herofthem byr easonofi llnessshoul dbei nneedofmedi cal not i
ce,wher et hemeansofknowl edgear eathand,whi chi f
assist
ance,theot heristor endert heunav oidableobli
gationto pur sued by pr operi nquiry,the fullt r
uth mi ghthav e been
fur
nishtheser vi
cesofaphy sicianandi sliableforal
lexpenses, ascer t
ained.Thus,wher eapur chaserofamemor iallot,on
i
ncludingthefeesf orprofessional ser
v i
ces. i
nst all
ment basi s,had f ullknowl edge of t he terms and
condi t
ions oft he sal e,including the rules and regulati
ons
Thisl i
abil
i
ty origi
nates f
rom the above-menti
oned mut ual i
ssuedbyt hesel lergov erningthememor ialpark,towhichshe
obli
gat
ionwhi chthelawhasexpressl
yestabl
ishedbetweenthe obligedher selft oabi de,cannotl aterf ei
gni gnoranceofsai d
marri
ed coupl e. B and C not hav i
ng per sonal
ly bound rules.(Diov s.St.Ferdi nandMemor ialPark,Inc.,509SCRA453
themselv
est opayarenotli
able.
(Pel
ayovs.Lauron,12Phil
.453 [2006].)
[
1909].
)
(c)I fitoccurstooneoft hecont r actingpar tiest oallegesome
2.Tit
letopropert
ypur
chasedbyaper
sonf
orhi
sownbenef
it defecti nacont ractasar easonf ori nvalidati
ngi t
,suchal l
eged
butpaidbyanother
. defectmustbepr ovedbyhi m byconv i
nci ngev idencesincei ts
validityorcompl i
ancecannotbel efttowi l
lofoneoft hem.(see
Art.1308. )“Anexper i
encedbusi nessmanwhosi gnsi mportant
Fact s:X,oflegalage,boughtt
wov essel
sfrom B,t
hepurchase l
egalpaper scannotdisclaimt heconsequentl i
abil
it
iestherefor
price thereof being paid by C,X’sf ather
.Subsequently
, afterbei ngasi gnat
oryther eon.’
’(Bl adeI nternat i
onalMar keting
differ
encesar osebetweenXandC.Thel att
erbroughtact
ionto Cor p.v s.CourtofAppeal s,372SCRA333[ 2001] .)I
tbehoov es
recoverthev essel
s,hehavingpai
dthepurchasepri
ce. ever ycont ract
ingpartytol earnandt oknowt hecont ent
sofan
i
nst rumentbef ore si
gning and agr eeing t oi t.(Diov s.St .
I
ssue:Isther
eanyobli
gat
ionont
hepar
tofXt
otr
ansf
ert
he Ferdi nandMemor i
alPark,Inc.,supr a.)
ownershi
pofthev
essel
toC?
(
d)Cour
tshav
enoalter
nativ
ebuttoenfor
cecontr
act
sast hey
Held:None.I fanysuchobl i
gat
ionwasev ercreat
edont hepar t wer
eagr
eeduponandwrit
tenwhenthet
ermsther
eofarecl
ear
ofX,sai d obligat
ion mustar i
se fr
om l aw.Butobl igat i
ons
deri
ved f r
om l aw ar e notpr esumed.Onl yt hose expr essly Theruleoflexl
ocicontr
actus( t
helaw oft heplacewher ethecontr
actis
deter
mi nedint heCiv i
lCodeori nspeci
allawsar edemandabl e. made)governsincasesofFi l
ipinoworkerswhoseempl oymentcontract
s
What ev
err i
ghtCmayhav eagainstXeitherfortherecov eryof were appr
oved by t
he Phil
ippine Overseas EmploymentAdmi nist
rati
on
themoneypai dorf ordamages,i ti
scl earthatsuchpay ment (POEA)andwereent
eredint
oandper fect
edi nthePhil
i
ppines.
gavehim not it
le,ei
therlegalorequit
able,tothesevessels.
Ithasbeenconsi st
entl
yr ul
edthatabonusi snotademandableand fai
l
ureofapar t
yt orespondtoademandl etteri
nt heabsence
enforceableobli
gation,unlessthegivingofsuchbonushasbeent he ofotherci
rcumstancesmaki ngananswerr equi
sit
eornat ural
company ’
slongandregularpractice,
i.
e.,t
hegi v
ingofthebonusshould
doesnotconsti
tuteanimpli
edadmi ssi
onofl i
abi
li
ty.(
Phil
.Fir
st
I
nsuranceCo.,Inc.vs.WallenPhi
ls.Shipping,Inc.
,582SCRA
havebeendoneov eralongper iodoftime,andmustbeshownt ohavebeen 457[2009]
.)
consistentanddeli
berat
e.(Phil.Appli
anceCor p.vs.Cour
tofAppeals,
430
SCRA525[ 2004].
) (6)Pr eser vationofi nter
estofpr omi see.— Abr eachupont he
contractconf ers upon the inj ured par tya v ali
d cause f or
recovering t hatwhi ch mayhav ebeen l ostorsuf fer
ed.The
andleavenor oom forinterpr
etati
on.(Art
.1370. ).Thi
sdoesnot remedyser ves t o preserv
et he i nter estoft he pr omisee of
mean,howev er,t
hatcont ractissuperi
ortot helaw.Al t
hougha havingt hebenef itofhisbargain, orinbei ngr ei
mbur sedforloss
contr
acti st he law bet ween t he contracti
ng par t
ies,the causedbyr elianceont hecont ract,ori nhav ingrest oredtohim
provi
sionsofposi ti
vel aw whichr egul
atesuchcont ractsare anybenef itt hathehasconf er
redont heot herpar ty.Theef f
ect
deemed i ncl
uded and shal llimitand gov er
nt he r
elati
ons ofev eryi nfract i
oni st ocreateanew dut y,thati s,tomake
betweenthepar t
ies.(AsiaWor ldRecruit
ment ,Inc.vs.National recompenset otheonewhohasbeeni njuredbyt hef ai
lureof
LaborRelati
onsCommi ssion,313SCRA1[ 1999].) anothert o obser vehi scont r
act ualobl i
gationunl esshecan
showext enuat i
ngcircumstances.( FGUI nsuranceCor porati
on
( e)Acompr omiseagr eementi simmediat elyexecutoryandnot vs.G.P.Sar mi entoTruckingCor poration,386SCRA312[ 2002];
appeal abl
e,exceptf orv i
cesofconsent( Ar t
.1330.)orf orgery
. seeAr t.1170. )
Upont hepar ti
es,ithast heef fectandt heaut horit
yofr es
j
udi cata,onceent i
redi nto.Tohav et hef orceofl aw between I
LLUSTRATIVECASES:1.Bindi
ngforceofanor
alagr
eement
thepar ti
es,i
tmustcompl ywiththerequisitesofcont r
acts.(Art
. i
nconsi
stentwi
thapr
iorwr
it
tenone.
1318. )Itmaybeei therext r
ajudi
cial(t
opr eventlit
igati
on)or
j
udi ci
al( t
oendal i
tigation).(Magbanuav s.Uy ,458SCRA184
[2005].) Facts:Xv
erbal
lyagreestopayYthebal
anceofanaccountin
adv
ance,notwi
thstandi
ng t
hedif
fer
entsti
pul
ati
on ofa pr
ior
wri
tt
enagr
eement .
(2)Requi r
ements ofa v ali
d cont r
act.— As a sour ce of
obli
gati
on,acontr
actmustbev al
idandenf orceabl
e.( seeAr t
.
1403.)Acontr
actisvali
d( assumingalltheessent i
alelement s I
ssue:
IsXboundt
oper
for
m sai
dobl
i
gat
ion?
arepresent
,Art
.1318.)i
fitisnotcont rar
yt ol
aw,mor als,good
customs,publ
i
corder,andpubl i
cpol i
cy.Iti
sinvali
dorv oidi
fit Held:Yes.Si
nceheagreedt opayYt hebalanceoft heaccount
i
scont r
arytol
aw,morals,goodcust oms, publ
i
cor der,orpublic i
ndependentl
yoft hetermsoft hewritt
encont ract,hemust
poli
cy.(Art
.1306;seePhoeni xAssur anceCo. ,Ltd.v s.U.S. per
form hisobli
gati
ont o payaccording tothet enorofhi s
Li
nes,22SCRA675[ 1968].
) ver
balagreementwhichhast heforceofl aw betweent hem.
(Hi
josdeI.delaRamav s.I
nventor,
12Phil.45[1908].
)
I
nt heeyesoft helaw,av oi
dcontr
actdoesnotexi
st.(
Art
.
1409.
)Consequent
ly,noobl
i
gati
onswil
lar
ise. —-
——-
——-
—

(3)Wher econt r
actr equi
resapprovalbyt hegovernment .— 2.Vali
dit
yofcontr
actsti
pul
ati
ng t
hatin caseoff ai
lureof
Wher eacont r
actisrequiredtobeverif
iedandapprov edbyt he debt
ortopayamountofl
oan,hi
sproper
tyshallbeconsider
ed
government bef orei t can take eff
ect (e.
g.,cont r
act f or sol
dtocr
edit
or.
overseas empl oymentmustbe appr oved byt he Philippine
OverseasEmpl oymentAdmi nist
rat
ion[POEA]underAr t
.21[ c] Fact s:Dborr
owedf rom Cmoneyt obepaidwi thi
nacer tai
n
oftheLaborCode) ,suchcontractl
awbet weenthecont racting period,underthe agreementt hat
,ifD fai
lsto payatt he
parti
esonlywhenappr oved,andwher ethereisnothingi ni t expirati
onofsaidperiod,t hehouseandl otdescri
bedi nthe
whichi scontrarytol aw,etc.
,itsvali
dit
ymustbesust ained. cont r
actwoul
dbeconsi deredsoldfort
heamountoft heloan.D
(I
ntetr
od Mar iti
me, I nc. vs. Nat i
onal Labor Rel ati
ons fai
ledt opayaspromi sed.Cbr oughtact
ionforthedeli
veryof
Com mi ssion,198SCRA318[ 1991]
.) thehouseandlot.

(4)Compl iance i n good f ait

h.— I tmeans compl iance or Issue:Arebot hcontr
actsvali
dand,t heref
ore,shouldbegi v
en
perf ormancei naccor dancewi t
ht hest ipulati
onsort ermsof effect?Held:Yes.Thefactthatthepar t
ieshav eagreedatthe
thecont ractoragr eement .Goodf aithandf airdealingmustbe samet i
me,insuchamannert hatthef ul
fil
l
mentoft hepr omise
obser vedt opr eventbecomest hel awbet weent hecont r
acti
ng ofsal ewoul ddependupont henon- paymentorr eturnofthe
part i
esonl ywhenappr ov ed,andwher et hereisnot hingi nit amountl oanedhasnotpr oducedanychangei nthenat ur
eand
whi chi scont r
aryt olaw,et c.
,itsv ali
dit
ymustbesust ained. l
egalcondi t
ionsofeit
hercontr
act,oranyessent i
aldefectwhi
ch
(Intetr
od Mar i
ti
me, I nc. v s. Nat i
onal Labor Rel ati
ons woul dnull
i
fythem.
Com mi ssion,198SCRA318[ 1991] .
)(4)Compl iancei ngood
fait
h.— I tmeanscompl ianceorper f
ormancei naccor dance Ast heamountl oaned hasnotbeen pai d and continuesin
wi t
ht hest ipul
ationsort ermsoft hecont ractoragr eement . possessionofthedebt or,itisonlyj
ustthatthepr omiseofsal e
Goodf ai t
handf airdeal ingmustbeobser vedt opr eventone be carried i
nto eff
ect ,and t he necessaryi nstruments be
part yfr
om t aki
ngunf airadv antageov ertheot her.Ev asionbya executed.Thatwhichisagr eedtoinacont ractislawbet ween
part yofl egiti
mat e obligations af terreceiv i
ng the benef it s theparti
es,andmustbeenf or
ced.(
Alcantaravs.Alinea,8Phi l
.
undert hecont r
actwoul dconst i
tuteunj ustenr i
chmentonhi s 111[ 1907].
)Not
e:Int heabov ecase,t hecourtf oundt hatno
part contr
actofmor tgage,pl edge,orantichresi
swasent eredinto.
(seeArts.2088,
2137.)
*Ar t
.19.Ev eryper
son must,int
he exer
cise ofhi
sr i
ght
sand inthe
perf
ormanceofhi sduti
es,actwit
hjusti
ce,giveever
yonehisdue,and
observehonest
yandgoodfai
th. —-
——-
——-
—

(5)Liabil
ityf orbreachofcont ract .— Al thought hecont ract 3.Validi
ty of cont
ractforat
tor
ney
’sf
ees wher
e amount
i
mposesnopenal t
yf orit
sv i
olation,apar tycannotbr eachi t st
ipul
atedisunr
easonabl
e.
withimpuni ty
.Ourl aw oncont ractsr ecognizest heprinciple
thatactionabl einjuryinheres i n ev ery contractualbr each. Facts:D execut
ed a promissor
ynoteinf av
orofC f ort he
(Boysaw v s.Int
erphilPromot i
ons,I nc.,148SCRA635[ 1987]; purchasepri
ceofat r
ucksoldbythel
att
er.I
nthenote,Dbound
seeAr t
s.1170,1191. )Interestmay ,int hedi scr
etionoft he hi
msel ft
opayanaddi ti
onal25%asatt
orney
’sfeesintheev ent
court,on equi t
able grounds,be al l
owed upon damages ofbecomingitnecessar
yforCt oempl
oycounseltoenforceits
awardedf orbreachofcont ract.(seeAr t.2210.) col
lecti
on.

Thef ailureofei t
herpartytoacont r
acttodemandper formance Issue:Hasthecour tthepowertoi gnorethecontr
actasto
oftheobl i
gat i
onoftheot herforanunreasonablelengthofti
me attor
ney’
sfees,consi
deri
ngthatacontracthast
heforceofl
aw
mayr endert hecontractineff
ecti
vewher ethecontractdoesnot betweenthecontract
ingpar
ti
es?
providef ortheper i
odwi t
hinwhichthepar ti
esmaydemandt he
performanceoft heirrespecti
veundertakingsbuttheparti
esdid Hel
d:Yes.Wherenospeci
alagreementismadebythepar
ti
es
notcont empl atethatt hesamecoul dbemadei ndefinit
ely
. wit
href
erencet
her
eto,
thecour
tsareauthor
izedt
odet
ermi
ne
(Vil
l
amorv s.CourtofAppeal s,202SCRA607[ 1991].
)Themer e
the amount t o be paid to an attorney as reasonabl
e Quasi
-cont
ract
ual
obl
i
gat
ions.
compensat i
onforhisprofessi
onalser
vices;andev enwhere
parti
eshav emadeawr i
tt
enagreementast othef
ee,thecourt
s Arti
cle1160treatsofobl
i
gat
ionsar
isi
ngf
rom quasi
-cont
ract
s
havet hepowertoignorethei
rcontr
act
,iftheamountf i
xedis orcontr
actsi
mpl i
edinl
aw.
unconscionabl
e orunreasonabl
e,and tol i
mitthe fee t
oa
reasonableamount
. Aquasi -
contr
actisthatj
uri
dicalrel
ati
onresul
ti
ngfrom cer
tai
n
l
awful,volunt
aryand unil
ateralacts byvir
tue ofwhich t
he
4.Abi gcorporat
ion,t
oav oi
dcancell
ati
onofcont
racti
thas par
tiesbecomeboundt oeachot hertotheendthatnoonewill
br
eached,
pleadedconsider
ati
onsofequi
ty. beunjustl
yenr i
chedorbenef i
tedatt heexpenseofanother.
(Ar
t.2142.)
Facts:Thecont ractbet
weent hepar t
ies( t
wobi gr ealest
ate
corporati
ons)wasacont r
acttosel lorcondi ti
onalwi t
ht i
tl
e Itisnot ,properly,acont r
actatal l
.Inacont r
act ,thereisa
expresslyreservedinS(sel
ler
)unti
lthesuspensi vecondit
ionof meet i
ng oft he mi nds orconsent ;the par t
ies musthav e
ful
landpunct ualpaymentoft hefullpricebyB( buyer)shall deli
ber atel
y entered intoaf ormalagr eement .I n a quasi -
have been meton pai n ofautomat ic cancell
ati
on oft he contract,thereisnoconsentbutt hesamei ssuppl i
edbyf i
contractuponf ail
uret
opayanyoft hemont hlyinst
all
ment s. cti
onofl aw.Inot herwords,t hel aw consider st hepar ti
esas
havingent eredintoacont r
act,i r
respectiveoft heirintenti
on,to
B failed t o pay t he P5,000.
00 mont hl
y inst
all
ments preventi nj
usti
ce.Cor ol
lar
il
y,ifonewhocl aimshav ingenriched
not
withstandingthatitwaspunctual
l
ycol l
ecti
ngP10,000.
00 somebodyhasdonesopur suantt oacont ractwithat hirdparty,
monthlyrentalsf
rom t
heles-
seeoft
hepropert
y. hiscauseofact i
onshoul dbeagai nstthel at
ter,who,i nt urn,
may ,ifthereisanygr oundtherefor ,
seekr eli
efagai nstthepar ty
Issue:Themai nissueposedbyBi st hattherehasbeenno benef ited.(Cruzv s.J.M.Tuason&Co. ,Inc.,76SCRA 543
breachofcont r
actbyit;andassumingt her
ewas,Swasnot [1977].)
entitl
edtoresci
ndorresol
vethecont
ractwi t
houtr
ecour
singt
o
j
udi ci
alpr
ocess. Quasi-
contr
act
s are gover
ned by the Civi
l Code, mor
e
par
ti
cular
ly,
byArt
icl
es2142-
2175,
ChapterI
,Ti
tl
eXVII
.
Held:Bonlypleadst
hatitbegi
venspeci
alt
reatmentandthat
the cancel
lati
on of it
s contr
act be somehow r ej
ected ILLUSTRATI
VE CASES:1.When a part
y benef
ited att
he
notwit
hst
andingS’scl
earri
ghtundert
hecontr
actandthelaw expenseofanot
hernotl
i
abl
etot
hel
atter
.
todoso.
Facts:Byvi
rt
ueofanagr eementbet
weenXandY, Xassi
stedY
ThecontractbetweenSandB, enter
edintowit
ht heassist
ance i
ni mprovi
ngal ar
get r
actoflandwhichwasl
aterdecl
aredby
ofcounselandwi t
hf ul
lawarenessoft heimportofi t
sterms thecourtasbel
ongingtoC.
andcondi t
ions,ist hebindi
nglaw betweent hem andequi t
y
cannotbepl eadedbyonewhohasnotcomewi thcleanhands Issue:HasXtheri
ghtt
obereimbur
sedbyZf orX’sser
vices
norcompl ied therewit
hi n good fai
th butinstead wil
lf
ull
y andexpensesonthegr
oundt
hattheimpr
ovementsarebeing
breachedthecontract. usedandenjoy
edbyZ?
“ I
tstimet oputanendt ot heficti
ont hatcorporati
onsare Hel d:No.From thelanguageofAr ti
cle2142, i
tisobviousthata
people. The business of bi g corporati
ons such as t he presumedquasi -contractcannotemer geasagai nstonepar ty
protagoni
stsatbari sbusi ness.Theyar eboundbyt helawful when t he subj
ectmat tert her
eofis alreadycov ered byan
contract
st hatt
heyent erintoandt heydonotaskf ornorare existi
ngcontractwithanot herpart
y.X’scauseofact ionshould
theyentit
ledtoconsiderat
ionsofequi ty.
”(LuzonBrokerageCo., beagai nstYwho,i nturn,mayseekr eli
efagainstZ.(Cruzv s.
Inc.vs.Marit
imeBldg.Co.,Inc.,86SCRA305[ 1978]
.) J.M.TuazonCo. ,Inc.,
supra.)
Thev ali
dityofconti
ngentfeeagr eementi nl
argemeasur edependsont he —-
——-
——-
—
reasonablenessoft hesti
pulatedf eesundert hecircumst ancesofeach
case.Ther educti
onofunreasonableat tor
ney
’sfeesiswi thi
nt heregulat
or y
power soft hecourt
st oprot
ectcl i
entsf r
om unjustcharges.( Taganasv s. 2.Bankpai dthesellerofgoodsunderanex pir
edlett
erof
NationalLaborRelati
onsCommi ssion,248SCRA133[ 1995];seeSec.13, credi
tbutthegoodssubj ectt
hereofwer
ev ol
untari
lyr
eceiv
ed
CanonsofPr of
essi
onalEt
hics;Sec.24, Rul
e138,RulesofCour t.) andkeptbythebuyerwhichref
usedtopaythebank.
—-
——-
——-
— Fact s:Xopenedwi t
hB( bank)adomesticlett
erofcr edit(LC)
i
nf avorofY f orthepurchasef r
om thel at
terofhy drauli
c
5.Corpor
ati
onuncondi
ti
onal
l
yunder
tookt
oredeem pr
efer
red l
oader s.BpaidYf ortheequipmentaf
tertheexpi r
ati
onoft he
shar
esatspeci
fi
eddat
es. l
etterofcr edi
t.X ref
usedt opayB claimingt hattherewas
breachofcont r
actbyBwhi chactedi
nbadf aithinpay ingY
Facts:Theter msandcondi t
ionsoft hePur chaseAgreement knowi ngt
hatYdel i
veredtheloader
stoXaf tertheexpirydat e
showsthatthepar ti
esint
endedt her epurchaseoftheprefer
red ofthesubjectLC.
sharesinquest i
onont her especti
vedat estobeanabsol ute
obli
gati
onmademani festbythef actthatasur etywasrequi
red X offeredtoret
urnt heloaderst
oB whi chr
efusedtotake
toseet oitthatt heobligat
ionisf ulfi
ll
edi nt heeventofthe possessiont
hree(3)y ear
safterXaccept
eddeli
very
,whenB
corpor
ati
on’
si nabil
it
ytodoso. madeademandf orpayment.
Defendantcor
por
ati
oncontendsthati
tisbey
ondit
spowerand I
ssue:Wasitproperf
orBt
opayt
heLCwhi
chhadl
ongexpi
red
competencetoredeem t
hepr ef
err
edsharesduetofinanci
al orbeencancel
l
ed?
rev
erses.
Held:Bshoul dnothavepaidt heLCwhi chhadbecomei nvali
d
I
ssue:Canthi
scontent
ionser
veasal egalj
ust
if
icat
ionf
ori
ts upont hel
apseoftheperi
odf ixedtherein.Bet hatasitmay,X
f
ail
uretoper
for
mitsobli
gat
ionundert
heagreement
? should pay B the amountB expended f ort he equi
pment
belatedlydel
iv
eredbyYandv olunt
ari
lyreceivedandkeptbyX.
Held:No.The uncondi ti
onalundertaking oft he corporati
on B’srightt oseekrecover
yf r
om X i sanchor ed,notupont he
doesnotdependuponi t
sfinancialabil
ity:i
tconstit
utesadebt i
nef f
i caci
ousLC,butonArti
cle2142oft heCi vi
lCode.
whichisdef i
ned“ asanobligati
ontopaymoneyatsomef ixed
fut
uretime,oratat i
mewhi chbecomesdef init
eandf ixedby X wasnotwi t
houtf aul
ti nthetransacti
onsinv iew ofit
s
actsofeitherpartyandwhi chtheyexpresslyori mpli
edlyagree unexplainedinact
ionforalmostfour(4)year
swithregardtot
he
to perform i n t he contract.
” The Pur chase Agr eement statusoft heowner shi
porpossessionoft heloadersandthe
consti
tutesthelawbet weent hepart
ies.(Lir
agText i
l
esMi l
l
,Inc. factthati tformali
zedi t
sof f
ertoreturntheequipmentonly
vs.SocialSecur
itySystem,153SCRA338[ 1987].) afterB’sdemandf orpay ment,whi
chcamemor ethanthree(
3)
yearsafterXaccepteddel i
very
.
ART.1160.Obli
gati
onsder
ivedfr
om quasi-
cont
ract
sshal
lbe
subj
ectt
ot heprov
isi
onsofChapt
er1,Ti
tleXVII
,ofthi
sBook.
(n)