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Art. 1156.

An obligation is a juridical necessity to give,

to do or not to do.

An obligation is a juridical relation whereby a person

(called the creditor) may demand from another (called
the debtor) the observance of a determinative conduct
(the giving, doing or not doing), and in case of breach,
may demand satisfaction from the assets of the latter.

GR 138814, 2009
Q: Why are obligations under Civil Code a
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; obligor
may also be made liable for the damages suffered by
the creditor or obligee.
Q: What is meant by damages in the preceding

Damages are which represents the sum of money given

as compensation for the injury or harm suffered by the
creditor or obligee.
Q: Distinguish civil obligations from natural obligations.

Civil obligations are those which give to the creditor or

oblige a right under the law to enforce their performance
in courts of justice.

Natural obligations do not grant a right of action to

enforce their performance.
Q: Where are civil obligations based?

Civil obligations are based on positive law.

Q: Where are natural obligations being based?

Based on equity and natural law.

Q: Distinguish Obligation, Right and a Wrong or Injury

Obligation is the act or performance which the law will


Right is the power which a person has under the law, to

demand from another any prestation.

A wrong or injury is an act or omission of one party in

violation of the legal right or rights of another.
Q: What are the requisites in order that a person may
acquire a right of action in court against another to
enforce the performance of the latter’s obligation?

(1) a legal right in favor of a person (creditor)

(2) a correlative legal obligation on the part of another


(3) an act or omission by the latter in violation of said

right resulting to injury

Q: When does a wrong or cause of action arises?

The moment a right has been transgressed or violated.
Elements of an Obligation

(1) ACTIVE SUBJECT (Obligee/Creditor): The person

who has the right or power to demand the prestation.

(2) PASSIVE SUBJECT (Obligor/Debtor): The person

bound to perform the prestation.

(3) PRESTATION (Object): The conduct required to be

observed by the debtor/obligor (to give, to do, or not to

(4) VINCULUM JURIS (Juridical or Legal Tie; Efficient

Cause): That which binds or connects the parties to the
obligation. (De Leon)
Different Kinds of Prestations

(1) TO GIVE: real obligation; to deliver either (a) a

specific or determinate thing, or (b) a generic or
indeterminate thing.

(2) TO DO: positive personal obligation; includes all

kinds of work or service.

(3) NOT TO DO: negative personal obligation; to

abstain from doing an act; includes the obligation not to
Requisites of a Prestation:
(1) Must be possible, physically and juridically;
(2) Must be determinate, or at least, determinable;
(3) Must have a possible equivalent in money.
Art. 1156 provides the definition of civil obligations only;
it does not cover natural obligations.
Classification of Obligations

(1) CIVIL OBLIGATION (or perfect obligation) – give a

right of action to compel their performance; the sanction
is judicial process

(2) NATURAL OBLIGATION – midway between civil

and purely moral obligations; there is a juridical tie, but
performance is left to the will of the debtor; after
voluntary fulfillment by the obligor, the sanction is the

(3) MORAL OBLIGATION (or imperfect obligation) – the

sanction is conscience or morality
Natural Obligations

Art. 1423. Obligations are civil or natural. Civil

obligations give a right of action to compel their
performance. Natural obligations, not being based on
positive law but on equity and natural law, do not grant
a right of action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize the
retention of what has been delivered or rendered by
reason thereof. Some natural obligations are set forth in
the following articles.
Natural obligations are midway between civil obligations
and purely moral obligations. It is distinguished from
moral in that it produces some juridical effects (ex. Right
to retention), but is distinguished from moral in that it
does not give rise to an action to compel its
performance [Tolentino].

Payment is voluntary when the debtor knows that

the obligation is a natural one.

“Fulfillment” does not refer only to the delivery of things,

but also to the performance of an act, the giving of
security, and the execution of a document.
(1) The promise to perform a natural obligation is as
effective as performance itself, and converts the natural
obligation to a civil obligation.
(2) Partial payment of a natural obligation does not
make it civil; the part paid cannot be recovered, but
payment of the balance cannot be enforced. The
exception would be if the natural obligation is
susceptible of ratification.
(3) Guaranties for the performance of a natural
obligation are valid.
(4) Payment of a natural obligation is not subject to
reduction by reason of inofficiousness, appearance of
children or ingratitude.
The contractor builds additional works, but is paid the
additional cost of such works. Payor characterizes the
payment as a "mistake," and not a "voluntary" fulfillment
under Art. 1423 of the Civil Code. Hence, it urges the
application of the principle of solution indebiti. However,
it is not enough to prove that the payments made by
payor to contractor were "not due" because there was
no prior authorization or agreement with respect to
additional works. There is a further requirement that the
payment by the debtor was made either through
mistake or under a cloud of doubt. In short, for the
provisions on solution indebiti to apply, there has to be
evidence establishing the frame of mind of the payor at
the time the payment was made [Uniwide v Titan-Ikeda,
Examples of Natural Obligations

Art. 1424. When a right to sue upon a civil obligation

has lapsed by extinctive prescription, the obligor who
voluntarily performs the contract cannot recover what
he has delivered or the value of the service he has

Requisites under Art 1424

(1) There is a civil obligation
(2) The right to sue upon it has already lapsed by
extinctive prescription
(3) Obligor performs contract voluntarily

Consequence: Obligor cannot recover what he has

delivered or value of the service he rendered.
Art. 1425. When without the knowledge or against the
will of the debtor, a third person pays a debt which the
obligor is not legally bound to pay because the action
thereon has prescribed, but the debtor later voluntarily
reimburses the third person, the obligor cannot recover
what he has paid.
Requisites under Art 1425

(1) There is a debt

(2) Action upon the debt has prescribed
(3) A third person, without the knowledge or against the
will of the debtor, pays the debt
(4) Debtor voluntarily reimburses the third person

Consequence: Obligor cannot recover what he has

Art. 1428. When, after an action to enforce a civil
obligation has failed the defendant voluntarily performs
the obligation, he cannot demand the return of what he
has delivered or the payment of the value of the service
he has rendered.

Requisites under Art 1428

(1) There is a civil obligation

(2) An action to enforce such has failed
(3) Defendant voluntarily performs the obligation

Consequence: Defendant cannot demand return of

what he has delivered or the payment of the value of
the service
Art. 1429. When a testate or intestate heir voluntarily
pays a debt of the decedent exceeding the value of the
property which he received by will or by the law of
intestacy from the estate of the deceased, the payment
is valid and cannot be rescinded by the payer.

Requisites under Art 1429

(1) Decedent incurred in debt during his lifetime

(2) Heir voluntarily pays debt
(3) Value of debt exceeds value of heir’s inheritance
Consequence: Payment is valid and heir cannot rescind
Art. 1430. When a will is declared void because it has
not been executed in accordance with the formalities
required bylaw, but one of the intestate heirs, after the
settlement of the debts of the deceased, pays a legacy
in compliance with a clause in the defective will, the
payment is effective and irrevocable.

Requisites under Art 1430

(1) There is a will providing for a legacy
(2) The will is declared void because it was not
executed in accordance with the formalities required by
(3) Heir pays legacy

Consequence: Payment is effective and irrevocable.

Classification of Obligations - As to Subject Matter
(1) REAL – obligation to give
(2) PERSONAL – obligation to do or not to do

Classification of Obligations - As to the Affirmativeness or

Negativeness of the Obligation
(1) POSITIVE/AFFIRMATIVE – obligation to give or to do
(2) NEGATIVE: obligation not to give or not to do

Classification of Obligations - As to Persons Obliged

(1) UNILATERAL – only one of the parties is bound
(2) BILATERAL – both parties are bound
a. Reciprocal – performance by one is dependent on the
performance by the other
b. Non-reciprocal – performance by one is independent of the
other [Paras]
Sources of Obligations Art. 1157. Obligations arise
1. LAW
3. QUASI-CONTRACTS – arise from lawful, voluntary acts;
no one shall be unjustly enriched... (examples)
a. Solutio indebiti – something received (delivered on a
mistake), no right to demand it
b. Negotiorum gestio – voluntary mgt of property/affairs
of another w/o his knowledge/consent
damage; fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law – arise from
civil liability that is a consequence of a criminal offense
A single act or omission may give rise to different
causes of action.

A concurrence of scope in regard to negligent acts does

not destroy the distinction between the civil liability
arising from a crime and the responsibility for cuasi-
delitos or culpa extra-contractual. The same negligent
act causing damages may produce civil liability arising
from a crime... or create an action for cuasi-delito or
culpa extra-contractual. [Barredo vs. Garcia, 1942]
Therefore, an obligation imposed on a person, and the corresponding right
granted to another, must be rooted in at least one of these five sources.
The mere assertion of a right and claim of an obligation in an initiatory
pleading, whether a Complaint or Petition, without identifying the basis or
source thereof, is merely a conclusion of fact and law.

A pleading should state the ultimate facts essential to the rights of action
or defense asserted, as distinguished from mere conclusions of fact or
conclusions of law.

Thus, a Complaint or Petition filed by a person claiming a right to the

Office of the President of this Republic, but without stating the source of
his purported right, cannot be said to have sufficiently stated a cause of
action. Also, a person claiming to be the owner of a parcel of land cannot
merely state that he has a right to the ownership thereof, but must
likewise assert in the Complaint either a mode of acquisition of ownership
or at least a certificate of title in his name. GR 138814, 2009

Obligations derived from law are not presumed. Only

those expressly determined in the Civil 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 forseen, by the provisions of Book
IV of the Civil Code, Art. 1158

When the law merely acknowledges the existence of an

obligation generated by an act which may constitute a
contract, quasi-contract, criminal offense or quasi-delict
and its only purpose is to regulate such obligation, then
the act itself is the source of the obligation and not the
law. (JURADO)
Note: Statutory construction has it that if a statute is
clear and unequivocal, it must be given its literal
meaning and applied without any attempot at
interpretation (The Office of the Solicitor General v.
Ayala Land Inc., GR 177056, 2009)
Contracts (Ex-Contractu)
Contract is the law between the parties

Obligations arising arising from contracts have the force

of law between the contracting parties and should be
complied with in good faith (Civil Code, Art. 1159).

Hence, a contracting party's failure, without legal reason

to comply with contract stipulations breachers their
contract and can be the basis for the award of damages
of the other contracting party (Angel V. Talampas, Jr. V.
Moldex Realty, Inc., GR 170134, 2015)
Meaning of Contract

Contract is the meeting of the minds between two

persons whereby one binds himself, with respect to the
other, to give something or to render some service (Art.
1305 CC)

Binding Force of a Contract

Generally, contracts are perfected by mere consent,

and from that moment the parties are bound not only to
the fulfillment of what has been expressly stipulated but
also to all of the consequences which, according to their
nature may be in keeping with good faith, usage, and
law (Art. 1315 CC)
The form in which a contract is executed has no effect,
as a general rule, upon its obligatory force, provided all
of the essential requisites for its validity are present.
(Art. 1356)

Note: the mere proof of the existence of the contract

and the failure of its compliance justify, prima facie, a
corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be
set free from liability for any kind of misperformance of
the contractual undertaking or a contravention of the
tenor thereof. (GR 189563)
Good Faith

Good faith is an intangible and abstract quality with no

technical meaning or statutory definition, and it
encompasses, among other things, an honest belief, the
absence of malice and the absence of design to defraud
or to seek an unconscionable advantage.
(Ochoa v Mauro, GR 146259)
Compliance in Good Faith

Compliance or performance in accordance with the

stipulations or terms of the contract or agreement (DE

Note: In contractual relations, the law allows the parties

leeway and considers their agreement as the law
between them.39 Contract stipulations that are not
contrary to law, morals, good customs, public order or
public policy shall be binding40 and should be complied
with in good faith.41 No party is permitted to change his
mind or disavow and go back upon his own acts, or to
proceed contrary thereto, to the prejudice of the other
Well-settled is the rule that in case of doubt the intention
of the contracting parties prevails. If the terms of a
contract are clear and leave no doubt upon the
contracting parties intention, such terms should be
applied in the literal meaning. (GR 131491)

Article 2142. Certain lawful, voluntary and unilateral

acts give rise to the juridical relation of quasi-contract to
the end that no one shall be unjustly enriched or
benefited at the expense of another.
Article 2143. The provisions for quasi-contracts in this
Chapter do not exclude other quasi-contracts which
may come within the purview of the preceding article.
Quasi Contracts are based on the principles that:

- No one must unjustly enrich himself at another's


- If one benefits, he must reimburse; and

- Justice and equity (PARAS)

A quasi-contract is unilateral contract created by the
sole act or acts of the gestor; no express consent given
by the other party. The consent needed is provided by
law through presumption (PINEDA)

This consent referred to is a presumptive consent. It

gives rise to multiple juridical relations which result in
obligations for the delivery of the thing or rendition of
service (Perez v. Pomar, 1903)

In other words, the law considers the parties as having

entered into a contract, irrespective of their intention, to
prevent injustice (DE LEON)
Kinds of Quasi-Contracts:


– takes place when a person voluntarily takes charge of
another’s abandoned business or property without the owner’s
authority [Art. 2144]. Reimbursement must be made to the
gestor (i.e., one who carried out the business) for necessary
and useful expenses, as a rule.

The obligation does not arise:

(1) When the property or business is not neglected or
(2) If in fact the manager has been tacitly authorized by the

In the first case, the provisions of Articles 1317, 1403, No. 1,

and 1404 regarding unauthorized contracts shall govern.
In the second case, the rules on agency in Title X of this Book
shall be applicable. [Art. 2144]
Essential Requisites of Negotiorum Gestio

1) No meeting of the minds

2) Taking Charge of another's business or property
3) Property or business must have been Abandoned or
4) The officious manager must not have been expressly
or implicitly authorized
5) the officious manager (gestor) must have Voluntarily
taken charge – there must be no vitiated consent, such
as errror in thinking that he owned the property or the
business. (PARAS)

(1) Perform his duties with all the diligence of a good

father of a family

(2) Pay the damages which through his fault and

negligence may be suffered by the owner of the
property/business under his management [Art. 2145]

(3) Be liable for the acts of the persons to whom he

delegated all or some of his duties. This is without
prejudice to the direct obligation of the delegate to the
owner of the business. [Art. 2146]
(4) Be liable for any fortuitous event under the following
(a) If he undertakes risky operations which the owner was not
accustomed to embark upon
(b) If he has preferred his own interest to that of the owner
(c) If he fails to return the property or business after demand of
the owner
(d) If he assumed management in bad faith [Art. 2147]
(e) If he is manifestly unfit to carry on the management
(f) If by his intervention he prevented a more competent person
from taking up the management. [Art. 2148]

Note: The gestor shall not be liable for (e) and (f) if the
management was assumed to save the property or business
from imminent danger.
(5) Be personally liable for contracts which he entered
into with third persons, even though he acted in the
name of the owner, and there shall be no right of action
between the owner and third persons.
The gestor shall not be personally liable for such
contracts, provided:
(a) The owner has expressly or tacitly ratified the
management, or
(b) When the contract refers to things pertaining to the
owner of the business. [Art. 2152]

Note: The responsibility of two or more gestors shall be

solidary, unless the management was assumed to save
the thing or business from imminent danger.

Although the management was not expressly ratified,

the owner who enjoys the advantages of the same

(a) Be liable for the obligations incurred in his interest

(b) Reimburse the gestor for the necessary and useful
expenses and for the damages the latter may have
suffered in the performance of his duties
The above obligations shall be incumbent upon the
owner if the management had for its purpose the
prevention of an imminent and manifest loss, although
no benefit may have been derived. [Art. 2150]

If the owner did not derive any benefit and there was no
imminent and manifest danger to the property or
business, the owner would still be liable for the
abovementioned obligations and expenses, provided:
(5) The gestor has acted in good faith; and
(6) The property or business is intact, ready to be
returned to the owner. [Art. 2151]
The ratification of the management by the owner of the
business produces the effects of an express agency,
even if the business may not have been successful.
[Art. 2149]

(1) When the owner repudiates or puts an end thereto
(2) When the gestor withdraws from the management,
subject to Art. 2144
(3) By the death, civil interdiction, insanity or insolvency
of the owner or the gestor. [Art. 2153]

Solution indebiti – takes place when something is

received when there is no right to demand it, and it was
unduly delivered through mistake. The recipient has the
duty to return it [Art. 2154].

This situation covers payment by reason of a mistake in

the construction or application of a doubtful or difficult
question of law [Art. 2155]
Elements of Solutio Indebiti

1) Payment is made when there exists no binding

relation between the payor, who has no duty to pay,
and the person who received the payment

2) Payment is made through mistake and not through

liberality or some other cause. (GR 195166, 2015)

If the payer was in doubt whether the debt was due, he

may recover if he proves that it was not due. [Art. 2156]


When there has been payment of what is not due, their

responsibility is solidary.

The payee cannot demand that the payor prove his

ownership of the thing delivered. Nevertheless, should
he discover that the thing has been stolen and who its
true owner is, he must advise the latter.

If the owner, in spite of such information, does not claim

it within the period of one month, the payee shall be
relieved of all responsibility by returning the thing
deposited to the payor. If the payee has reasonable
grounds to believe that the thing has not been lawfully
acquired by the payor, the former may return the same.
[Art. 2158]
Article 2159. Whoever in bad faith accepts an undue
payment, shall pay legal interest if a sum of money is
involved, or shall be liable for fruits received or which
should have been received if the thing produces fruits.
He shall furthermore be answerable for any loss or
impairment of the thing from any cause, and for
damages to the person who delivered the thing, until it
is recovered. (Civil Code)

If in bad faith, he shall be liable:

(1) For legal interest if a sum of money is involved, or
(2) For the fruits received or which should have been
received if the thing produces fruits, and
(3) For any loss or impairment of the thing for any
cause, and
(4) For damages to the person who delivered the thing,
until it is recovered. [Art. 2159]
If in good faith, he shall be liable:

(1) For the impairment or loss of the thing certain and

determinable or its accessories and accessions insofar
as he has thereby been benefited.

(2) For the return of the price or assign the action to

collect the sum if he has alienated the same. [Art. 2160]

A person who, believing in good faith that the payment

was being made of a legitimate and subsisting claim,
(1) destroyed the document, or
(2) allowed the action to prescribe, or
(3) gave up the pledges, or
(4) cancelled the guaranties for his right shall be exempt
from the obligation to restore.

The person who paid unduly may proceed only against

the true debtor or the guarantors with regard to whom
the action is still effective. [Art. 2162]

The presumption arises if something which had never

been due or had already been paid was delivered; but
he from whom the return is claimed may prove that the
delivery was made out of liberality or for any other just
(1) When, without the knowledge of the person obliged
to give support, it is given by a stranger, the latter shall
have a right to claim the same from the former, unless it
appears that he gave it out of piety and without intention
of being repaid. [Art. 2164]
(2) When funeral expenses are borne by a third person,
without the knowledge of those relatives who were
obliged to give support to the deceased, said relatives
shall reimburse the third person, should the latter claim
reimbursement. [Art. 2165]
(3) When the person obliged to support an orphan, or
an insane or other indigent person unjustly refuses to
give support to the latter, any third person may furnish
support to the needy individual, with right of
reimbursement from the person obliged to give support.
The provisions of this article apply when the father or
mother of a child under eighteen years of age unjustly
refuses to support him. [Art. 2166]
(4) When through an accident or other cause a person
is injured or becomes seriously ill, and he is treated or
helped while he is not in a condition to give consent to a
contract, he shall be liable to pay for the services of the
physician or other person aiding him, unless the service
has been rendered out of pure generosity. [Art. 2167]
(5) When during a fire, flood, storm, or other calamity,
property is saved from destruction by another person
without the knowledge of the owner, the latter is bound
to pay the former just compensation. [Art. 2168]
(6) When the government, upon the failure of any
person to comply with health or safety regulations
concerning property, undertakes to do the necessary
work, even over his objection, he shall be liable to pay
the expenses. [Art. 2169]
(7) When by accident or other fortuitous event,
movables separately pertaining to two or more persons
are commingled or confused, the rules on co-ownership
shall be applicable. [Art. 2170]
(8) The rights and obligations of the finder of lost
personal property shall be governed by Articles 719 and
720. [Art. 2171]
(9) The right of every possessor in good faith to
reimbursement for necessary and useful expenses is
governed by Article 546. [Art. 2172]
(10) When a third person, without the knowledge of the
debtor, pays the debt, the rights of the former are
governed by Articles 1236 and 1237. [Art. 2173]
(11) When in a small community a nationality of the
inhabitants of age decide upon a measure for protection
against lawlessness, fire, flood, storm or other calamity,
any one who objects to the plan and refuses to
contribute to the expenses but is benefited by the
project as executed shall be liable to pay his share of
said expenses. [Art. 2174]
(12) Any person who is constrained to pay the taxes of
another shall be entitled to reimbursement from the
latter. [Art. 2175]

Civil Obligations arising from criminal offense shall

be governed by the penal laws. (1161)

General Rule: Civil liability is a necessary

consequence of criminal liability. Every person
criminally liable for a felony is also civilly liable.
(RPC 100)
Scope of Civil Liability:

A) Restitution
B) Reparation of damage caused
C) Indemnification for consequential damages (RPC
Every Crime gives rise to:

1) A criminal action for the punishment of the guilty

2) A civil action for the restitution of the thing, repair of
the damage, and indemnification for the losses
(Sonny Romero v. People of the Philippines, 2009)

Reason: A crime has dual character: 1) as an offense

against the state because of the disturbance of the
social order, and 2) as offense against the private
person injured by the crime UNLESS it involves the
crime of (T.R.E.C.O.):
Treason Contempt
Rebellion Others where no civil liability arises*
NOTE: Art. 12 of the Revised Penal Code provides for
exempting circumstances and as such the perpetrator
does not incur criminal liability but is NOT EXEMPT
from civil liability.

a) Imbicile or insane person (unless lucid interval)

b) Person below eighteen years old
c) Acting under compulsion of an irresistible force
d) Acting under the impulse of an uncontrollable fear of
an equal or greater injury
Enforcement of Civil Liability

When a criminal action is institututed, the civil action for

the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal
action, unless the offnded party:

A) Waives the civil action

B) Reserves the right to institute it separately
C) Institutes the civil action prior to the criminal action
(RoC 111)
The civil liability for crimes is extinguished by the same
causes provided by the Civil Code for the
extinguishment of other obligations. Such liability
continues notwithstanding the fact that the offender
has served his sentence or has not been required to
serve the same by reason of amnesty, pardon,
commutation of sentence, or any other reason.
Note: The civil action based on delict may be deemed
extinguished if there is a finding on the final judgment
in the criminal action that the act or omission from
which the civil liability may arise did not exist or where
the accused did not commit the acts or omission
imputed to him. (GR 177960, 2009)

Article 2176. Whoever by act or omission causes

damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
Requisites of Quasi-delict:

1) Damage suffered by the plaintiff

2) Fault or negligence of the defendant, or some other
person for whose acts he must respond
3) The connection of cause and effect between the fault
or negligence of the defendant and the damages
incurred by the plaintiff
(Huang v. Philippines Hoteliers, Inc. GR 180440, 2012)


In Culpa Aquiliana or non-contractual obligation, it is the

wrongful or negligent act or omission itself which
creates the vinculum juris, whereas in contractual
relations, the vinculum exists independently of the
breach of voluntary duty assumed by the parties when
entering into the contractual relation [Cangco v.
Manila Railroad (1918)].

When the source of the obligation upon which the

plaintiff’s cause of action depends is a negligent act or
omission, the burden of proof rests upon the plaintiff
to prove the negligence—if he does not his action
fails. But when the facts averred show a contractual
undertaking by defendant for the benefit of the
plaintiff, and it is alleged that the plaintiff has failed or
refused to perform the contract, it is not necessary for
the plaintiff to specify in his pleadings whether the
breach of the contract is due to willful fault or to
negligence on the part of the defendant, or of his
servants or agents. Proof of the contract and of its
nonperformance is sufficient prima facie to warrant a
recovery. [Cangco v. Manila Railroad (1918)].

The doctrine of proximate cause [to establish the fault

or negligence of the defendant] is applicable only in
actions for quasi-delict, not in actions involving breach
of contract [Calalas v. CA (2000)].

As it is not necessary for the plaintiff in an action for

breach of contract to show that the breach was due to
the negligent conduct of the defendant or his
servants, proof on the part of the defendant that the
negligence or omission of his servants or agents
caused the breach of contract would not constitute a
defense to the action [Cangco v. Manila Railroad
Presence of Contactual Relations

The Supreme Court held there may instances where

there can be a quasi-delict even when there is a
contract between the parties. The test (whether a
quasi-delict can be deemed to underlie the breach of
a contract) can be stated thusly: Where, without a
pre-existing contract between two parties, an act or
omission can nonetheless amount to an actionable
tort by itself, the fact that the parties are contractually
bound is no bar to the application of quasi-delict
provisions to the case [Far East v. CA (1995)].
A perusal of Article 2176 [of the Civil Code] shows that obligations arising from quasi-
delicts or tort, also known as extra-contractual obligations, arise only between parties
not otherwise bound by contract, whether express or implied. However, this
impression has not prevented this Court from determining the existence of a tort even
when there obtains a contract.

In Air France v. Carrascoso (124 Phil. 722), the private respondent was awarded
damages for his unwarranted expulsion from a first-class seat aboard the petitioner
airline. It is noted, however, that the Court referred to the petitioner-airline's liability as
one arising from tort, not one arising form a contract of carriage. In effect, Air France is
authority for the view that liability from tort may exist even if there is a contract, for
the act that breaks the contract may be also a tort. This view was not all that
revolutionary, for even as early as 1918, this Court was already of a similar mind. In
Cangco v. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus: “When
such a contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes a breach of the contract would have
constituted the source of an extra-contractual obligation had no contract existed
between the parties.”
(Regino v. Pangasinan College, GR 156109, 2004)
Quasi-delict, known in Spanish legal treatises as culpa
aquiliana, is a civil law concept while torts is an Anglo-
American or common law concept. Torts is much broader
than culpa aquiliana because it includes not only
negligennce, but intentional criminal acts such as assualt and
battery, false imprisonment and deceit. In the general
scheme of the Philippine legal system envisioned by the
Commission responsible for drafting the New Civil Code,
intentional and malicious acts with certain exceptopms, are to
be governed by the Revised Penal Code while negligent acts
or omissions are to be covered by Article 2176 of the Civil
Code. In between these opposite spectrums are injurious
acts which, in the absence of Article 21, would have been
beyond redress. Thus, Article 21 fills that vacuum [Baksh v.
CA (1993)].
Cangco v. Manila Railroad (1918): The concept of
quasi-delict does not cover intentional acts. The
liability arising from from extra-contractual culpa is
always based upon a voluntary act or omission,
which, without willful intent, but by mere negligence or
inattention, has caused damage to another.

Cinco v. Canonoy (1979): The concept of quasi-delict is

so broad that it includes not only injuries to persons
but also damage to property.

A quasi-delict is a separate source of obligation under

Article 1157.

Art. 2177. Responsibility for fault or negligence under

the preceding article is entirely separate and distinct
from the civil liability arising from negligence under
the Penal Code. But the plaintiff cannot recover
damages twice for the same act or omission of the

RPC, Art. 100. Every person criminally liable for a

felony is also civilly liable.
Barredo v. Garcia (1942): A quasi-delict or culpa
aquiliana is a separate legal institution under the Civil
Code, with a substantivity all its own, and individuality
that is entirely apart and independent from a delict or
crime. However, the same negligent act causing
damage may produce civil liability arising from a crime
under Article 100 of the Revised Penal Code, or
create an action for quasi-delict.

L.G. Foods v. Philadelfa (2006): An act or omission

causing damage to another may give rise to two
separate civil liabilities on the part of the offender—for
civil liability ex delicto, and independent civil liabilities.
The choice is with the plaintiff who makes known his
cause of action in his initiatory pleading or complaint.

Art. 1173. The fault or negligence of the obligor consists

in the omission of that diligence which is required by
the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the
provisions of Articles 1171 and 2201, paragraph 2,
shall apply.

If the law or contract does not state the diligence which

is to be observed in the performance, that which is
expected of a good father of a family shall be
Negligence is the omission to do something which a
reasonable man, guided by those considerations
which ordinarily regulate the conduct of human affairs,
would do, or the doing of something which a prudent
and reasonable man would not do [Layugan v. IAC

Jorge v. Sicam (2007): The diligence with which the law

requires the individual to at all times govern his
conduct varies with the nature of the situation in which
he is placed and the importance of the act which he is
to perform.

To determine whether there has been negligence by the

defendant, this 2-step analysis may be used: 1)
determine the diligence required of the actor under
the circumstances, and 2) determine whether the
actor has performed the diligence required. Failing the
second step would lead to the conclusion that the
defendant has been negligent.
Amedo v. Rio (1954): By jumping into the sea, the
employee failed to exercise even slight care and
diligence and displayed a reckless disregard of the
safety of his person. His death was caused by his
notorious negligence. Notorious negligence has been
held to be tantamount to gross negligence which is
want of even slight care and diligence.
Picart v. Smith (1918):
Test: Did the defendant in doing the alleged negligent
act use that reasonable care and caution which an
ordinarily prudent man would have used in the same
situation? If not, then he is negligent. Negligence in a
given case is not determined by reference to the
personal judgment of the actor in the situation before
him, but is determined in the light of human
experience and the facts involved in the particular
case. Conduct is said to be negligent when a
prudent man in the position of the tortfeasor
would have foreseen that an effect harmful to
another was sufficiently probable to warrant his
foregoing the conduct or guarding against its

(1) Operators of Motor Vehicles

Anonuevo v CA (2004): Because of inherent differences
between motorists and cyclists, the former being
capable of greater speed and destruction, operators
of motor vehicles have a higher standard in his duty of
(2) Banks Consolidated Bank v CA (2003): The law
imposes on banks high standards in view of the
fiduciary nature of banking. Section 2 of Republic Act
No. 8791 (RA 8791), which took effect on 13 June
2000, declares that the State recognizes the ‘fiduciary
nature of banking that requires high standards of
integrity and performance.’ This fiduciary relationship
means that the bank’s obligation to observe high
standards of integrity and performance is deemed
written into every deposit agreement between a bank
and its depositor. The fiduciary nature of banking
requires banks to assume a degree of diligence
higher than that of a good father of a family.
(3) Experts (In General)
Far Eastern Shipping v CA (1998): Those who undertake any
work calling for special skills are required not only to exercise
reasonable care in what they do but also possess a standard
minimum of special knowledge and ability. In all employments
where peculiar skill is requisite, one who offers his services is
understood as holding himself out to the public as possessing
the degree of skill commonly possessed by others in the
same employment.

Culion v Philippine Motors (1930): When a person holds himself

out as being competent to do things requiring professional
skill, he will be held liable for negligence if he fails to exhibit
the care and skill of one ordinarily skilled in the particular
work which he attempts to do.
(4) Doctors Cruz v. CA (1997): Whether or not a
physician has committed an ‘inexcusable lack of
precaution’ in the treatment of his patient is to be
determined according to the standard of care
observed by other members of the profession in good
standing under similar circumstances bearing in mind
the advanced state of the profession at the time of
treatment of present state of medical science. It is in
this aspect of medical malpractice that expert
testimony is essential to establish not only the
standard of care of the profession but also that the
physician’s conduct in the treatment and care falls
below such standard.
(5) Pharmacists US v. Pineda (1918): The profession of
pharmacy, it has been said again and again, is one
demanding care and skill. Even under the first
conservative expression, "ordinary care" with
reference to the business of a druggist…must be held
to signify "the highest practicable degree of prudence,
thoughtfulness, and vigilance, and most exact and
reliable safeguards consistent with the reasonable
conduct of the business in order that human life may
not constantly be exposed to the danger flowing from
the substitution of deadly poisons for harmless

Mercury Drug v De Leon (2008): Mistake is negligence

and care is no defense.
(6) Possessor of Extremely Dangerous Instrumentalities
Pacis v Morales (2010): Indeed, a higher degree of care
is required of someone who has in his possession or
under his control an instrumentality extremely
dangerous in character, such as dangerous weapons
or substances. Such person in possession or control
of dangerous instrumentalities has the duty to take
exceptional precautions to prevent any injury being
done thereby. Unlike the ordinary affairs of life or
business which involve little or no risk, a business
dealing with dangerous weapons requires the
exercise of a higher degree of care.
(7) Children
Taylor v. Manila Railroad (1910): The conduct of an infant of
tender years is not to be judged by the same rule, which
governs that of an adult. …The care and caution required of a
child is according to his maturity and capacity only, and this is
to be determined in each case by the circumstances of the

Jarco Marketing v. CA (1999): No contributory negligence can

be imputed to children below 9 years old.

Ylarde v. Aquino (1988): The degree of care required to be

exercised must vary with the capacity of the person
endangered to care for himself. …The standard of conduct to
which a child must conform for his own protection is that
degree of care ordinarily exercised by children of the same
age, capacity, discretion, knowledge and experience under
the same or similar circumstances.
(8) In case of insane persons

US v. Baggay (1911): A lunatic or insane person who,

in spite of his irresponsibility on account of the
deplorable condition of his deranged mind, is still
reasonably and justly liable with his property for the
consequences of his acts.


(1) Liability of the owner

Art. 2184. In motor vehicle mishaps, the owner is solidarily
liable with his driver, if the former, who was in the vehicle,
could have, by the use of the due diligence, prevented the
misfortune. If the owner was not in the motor vehicle, the
provisions of article 2180 are applicable.

Art. 2186. Every owner of a motor vehicle shall file with the
proper government office a bond executed by a government-
controlled corporation or office, to answer for damages to
third persons. The amount of the bond and other terms shall
be fixed by the competent public official.
“Owner” shall mean the actual legal owner of the motor
vehicle, in whose name such vehicle is duly
registered with the LTO. Registration of motor
vehicles is required not because it is the operative act
which transfers ownership in“Owner” shall mean the
actual legal owner of the motor vehicle, in whose
name such vehicle is duly registered with the LTO.

Registration of motor vehicles is required not because it

is the operative act which transfers ownership in
vehicles, but because it is the means by which the
owner can be identified so that if any accident occurs,
or damage or injury is caused in the operation of the
vehicle, responsibility can be fixed.
The owner is solidarily liable with the driver for motor
vehicle mishaps when:
(a) The owner was IN the vehicle at the time, AND
(b) The owner could have, by the use of due diligence,
prevented the misfortune.

Note: If the owner was NOT inside the vehicle, Art.

2180 applies.
Article 2180. The obligation imposed by article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible.
The father and, in case of his death or incapacity, the mother, are responsible for
the damages caused by the minor children who live in their company.
Guardians are liable for damages caused by the minors or incapacitated persons
who are under their authority and live in their company.
The owners and managers of an establishment or enterprise are likewise responsible
for damages caused by their employees in the service of the branches in which
the latter are employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though the
former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent; but not
when the damage has been caused by the official to whom the task done properly
pertains, in which case what is provided in article 2176 shall be applicable.
Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they
remain in their custody.
The responsibility treated of in this article shall cease when the persons herein mentioned
prove that they observed all the diligence of a good father of a family to prevent
The presumption is against the owner of the motor
vehicle. He has the burden of proving due diligence.
Thus, once a driver is proven negligent in causing
damage, the law presumes the vehicle owner equally
negligent and imposes upon the latter the burden of
proving proper selection and supervision of employee
as a defense.
As held in Vargas v. Langcay (1962), “the registered
owner/operator of a passenger vehicle is jointly and
severally liable with the driver for damages incurred
by passengers or third persons as a consequence of
injuries or death sustained in the operation of said

Regardless of who the actual owner of a vehicle is, the

operator of record continues to be the operator of the
vehicle as regards the public and third persons and as
such is directly and primarily responsible for the
consequences incident to its operation, so that in
contemplation of law, such owner/operator of record
is the employer of the driver, the actual operator and
employer being considered merely as his agent.”
Tamayo v. Aquino (1959): The registered owner of a
motor vehicle is primarily liable for the damage or
injury caused to another, but he has a right to be
indemnified by the real owner of the amount he was
required to pay. This rule applies both to private and
to common carriers with respect to their passengers.
Caedo v. Yu Khe Tai (1968): The law does not require that a
person must possess a certain measure of skill or proficiency
either in the mechanics of driving or in the observance of
traffic rules before he may own a motor vehicle.

The test of his negligence, within the meaning of Article 2184, is

his omission to do that which the evidence of his own senses
tells him he should do in order to avoid the accident. And as
far as perception is concerned, absent a minimum level
imposed by law, a maneuver that appears to be fraught with
danger to one passenger may appear to be entirely safe and
commonplace to another.

Were the law to require a uniform standard of perceptiveness,

employment of professional drivers by car owners who, by
their very inadequacies, have real need of drivers' services,
would be effectively proscribed.
Duavit v. CA (1989): An owner of a vehicle cannot be
held liable for an accident involving the said vehicle if
the same was driven without his consent or
knowledge and by a person not employed by him.

Chapman v. Underwood (1914): The owner of the motor

vehicle is not liable for the misfortune unless the
negligent acts of the driver are continued for such a
length of time as to give the owner a reasonable
opportunity to observe them and to direct his driver to
desist therefrom. The act complained of must be
continued in the presence of the owner for such a
length of time that the owner, by his acquiescence,
makes his driver’s act his own.
(2) Liability of the driver
Art. 2184. xxx It is disputably presumed that a driver
was negligent, if he had been found guilty of reckless
driving or violating traffic regulations at least twice
within the next preceding two months.

Art. 2185. Unless there is proof to the contrary, it is

presumed that a person driving a motor vehicle has
been negligent if at the time of the mishap, he was
violating any traffic regulation.

Article 2184 establishes a presumption of negligence on

the part of the driver based on previous violations of
traffic regulations. Article 2185 establishes a
presumption of negligence on the basis of
simultaneous violations.
Sanitary Steam v. CA (1998): Despite the presumption
of negligence arising from the traffic regulation
violation, the claimant must still prove that such
negligence was the proximate cause in order to
successfully claim for damages.

Añonuevo v. CA (2004): Article 2185 was not

formulated to compel or ensure obeisance by all to
traffic rules and regulations. It does not apply to non-
motorized vehicles, in recognition of the unequal
footing of standards applicable to motor vehicles as
opposed to other types of vehicles.
Diligence Required [De Leon]
(1) By stipulation of the parties
(2) By law, in the absence of stipulation
(3) Diligence of a good father of a family, if both the
contract and law are silent. (1173 par 2)
(4) Future negligence may be waived except in cases
where the nature of the obligation or the public requires
another standard of care (i.e. common carriers)

Note: Only future simple negligence may be waived.

Future gross negligence may not be waived since such
negligence amounts to fraud.
Exceptions: (Future Negligence cannot be waived)

Common Carriers Art. 1733. Common carriers, from the

nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance over the
goods is further expressed in articles 1734, 1735, and
1745, Nos. 5, 6, and 7, while the extraordinary diligence
for the safety of the passengers is further set forth in
articles 1755 and 1756.
Hotel and Inn-keepers

Art. 1998. The deposit of effects made by travellers in

hotels or inns shall also be regarded as necessary. The
keepers of hotels or inns shall be responsible for them
as depositaries, provided that notice was given to them,
or to their employees, of the effects brought by the
guests and that, on the part of the latter, they take the
precautions which said hotel-keepers or their
substitutes advised relative to the care and vigilance of
their effects.
Art. 1999. The hotel-keeper is liable for the vehicles,
animals and articles which have been introduced or
placed in the annexes of the hotel.

Art. 2000. The responsibility referred to in the two

preceding articles shall include the loss of, or injury to
the personal property of the guests caused by the
servants or employees of the keepers of hotels or inns
as well as strangers; but not that which may proceed
from any force majeure. The fact that travellers are
constrained to rely on the vigilance of the keeper of the
hotels or inns shall be considered in determining the
degree of care required of him.
Art. 2001. The act of a thief or robber, who has entered
the hotel is not deemed force majeure, unless it is done
with the use of arms or through an irresistible force.

Art. 2002. The hotel-keeper is not liable for

compensation if the loss is due to the acts of the guest,
his family, servants or visitors, or if the loss arises from
the character of the things brought into the hotel.
Test of Negligence

Did the defendant in doing the alleged negligent act use

the reasonable care and caution, which an ordinary and
prudent person would have used in the same situation?
If not, then he is guilty of negligence. [Mandarin Villa
Inc. vs. CA, 1996]

This refers to a violation of the terms and conditions

stipulated in the obligation, which must not be due to a
fortuitous event or force majeure. [De Leon]

“In any manner contravenes the tenor” means any illicit

act, which impairs the strict and faithful fulfillment of the
obligation, or every kind of defective performance.
Except in cases expressly specified by the law, or when
it is otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of risk,
no person shall be responsible for those events which
could not be foreseen, or which, though foreseen, were
Fortuitous Event - a happening independent of the will
of the debtor and which makes the normal fulfillment of
the obligation impossible. [De Leon]

(1) Act of God: An accident, due directly or exclusively

to natural causes without human intervention, which by
no amount of foresight, pains or care, reasonably to
have been expected, could have been prevented.

(2) Act of Man: Force majeure is a superior or

irresistible force, which is essentially an act of man;
includes unavoidable accidents, even if there has been
an intervention of human element, provided that no fault
or negligence can be imputed to the debtor.
Liability in case of Fortuitous Event

No person shall be responsible for fortuitous events, UNLESS:

(1) expressly specified by law [Arts. 552 (2); 1942, 2147, 2148,
(2) liability specified by stipulation
(3) the nature of the obligations requires assumption of risk [Art.
(4) debtor is guilty of concurrent or contributory negligence
(5) debtor has promised to deliver the same thing to two or more
persons who do not have the same interest [Art. 1165 par. 3]
(6) the thing is lost due to the obligor’s fraud, negligence, delay or
contravention of the tenor of the obligation [Art. 1170]
(7) the obligation to deliver a specific thing arises from a crime [Art.
(8) the object is a generic thing, i.e. the genus never perishes

Note: ‘Genus nunquam perit’ only pertains to physical perishing. The

genus may still perish legally. [Labitag notes]
Requisites of Exemption Based on Force Majeure

(1) The event must be independent of the debtor’s will

(fraud or negligence).
(2) The event must be unforeseeable or inevitable.
(3) The event renders it impossible for debtor to fulfill
his obligation in a normal manner.
(4) The debtor must be free from any negligence or
participation in the aggravation of the injury to the
creditor [Tolentino, 1987; De Leon, 2003]
(5) It must be the sole cause, not merely a proximate
Act of Creditor: The debtor is also released from liability
when the non-performance of the obligation is due to
the act of the creditor himself. [Tolentino]

The creditor has a right to compel the debtor to perform
the prestation.

A third person may perform another’s obligation to
deliver a generic thing or an obligation to do, unless it is
a purely personal act, at the expense of the debtor.
OBLIGATIONS) Art. 1191. The power to rescind
obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent
upon him.
The injured party may choose between the fulfillment
and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission,
even after he has chosen fulfilment, if the latter should
become impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights
of third persons who have acquired the thing, in
accordance with articles 1385 and 1388 and the
Mortgage Law.
Rescission – the unmaking of a contract, or its undoing
from the beginning, and not merely its termination
[Pryce Corp v Pagcor, 2005]

Rescission may take place extrajudicially, by

declaration of the injured party. But if the debtor
impugns the declaration of rescission, it shall be subject
to judicial determination. If the debtor does not oppose
the extrajudicial declaration of rescission, such
declaration will produce legal effect.
The party who deems the contract violated may
consider it resolved or rescinded, and act accordingly,
without previous court action, but it proceeds at its own
risk. For it is only the final judgment of the
corresponding court that will conclusively and finally
settle whether the action taken was or was not correct
in law. But the law definitely does not require that the
contracting party who believes itself injured must first
file suit and wait for a judgment before taking
extrajudicial steps to protect its interest. [UP v Delos
Angeles, 1970]
Effect of Rescission under Art 1191: Extinguishes the
obligatory relation as if it had never been created, the
extinction having a retroactive effect. Both parties must
surrender what they have respectively received and
return each other as far as practicable to their original
situation. [Tolentino]

Art. 1170. Those who in the performance of their

obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof,
are liable for damages.

(a) Accion Subrogatoria

Right of the creditor to exercise all of the rights and

bring all the actions which his debtor may have against
third persons.

The creditors, after having pursued the property in

possession of the debtor to satisfy their claims, may
exercise all the rights and bring all the actions of the
latter for the same purpose, save those which are
inherent in his person. [Art.1177]
In order to satisfy their claims against the debtor,
creditors have the ff. successive rights:

(1) To levy by attachment and execution upon all the

property of the debtor, except those exempt from

(2) To exercise all the rights and actions of the debtor,

except such are inherently personal to him; and

(3) To ask for the rescission of the contracts made by

the debtor in fraud of their rights.

(1) The person to whom the right of action pertains must

be indebted to the creditor
(2) The debt is due and demandable
(3) The creditor must be prejudiced by the failure of the
debtor to collect his debts due him from third persons,
either through malice or negligence
(4) The debtors assets are insufficient ( debtor is
(5) The right of action is not purely personal to the
Previous approval of the court is not necessary to
exercise the accion subrogatoria.
(b) Accion Pauliana

Rescission, which involves the right of the creditor to

attack or impugn by means of rescissory action any act
of the debtor which is in fraud and to the prejudice of his
rights as creditor.

Creditors may also impugn the acts which the debtor

may have done to defraud them. [Art. 1177]
Requisites [Cheng v CA, 2001]

(1) There is a credit in favour of the plaintiff prior to the

alienation by the debtor
(2) The debtor has performed a subsequent contract
conveying patrimonial benefit to third person/s.
(3) The debtor’s acts are fraudulent to the prejudice of
the creditor.
(4) The creditor has no other legal remedy to satisfy his
(5) The third person who received the property is an
accomplice to the fraud.
An accion pauliana thus presupposes the following:

1) A judgment; 2) the issuance by the trial court of a

writ of execution for the satisfaction of the judgment,
and 3) the failure of the sheriff to enforce and satisfy the
judgment of the court. It requires that the creditor has
exhausted the property of the debtor. The date of the
decision of the trial court is immaterial. What is
important is that the credit of the plaintiff antedates that
of the fraudulent alienation by the debtor of his property.
After all, the decision of the trial court against the debtor
will retroact to the time when the debtor became
indebted to the creditor. [Cheng v CA, 2001]
(c) Other Specific Remedies

Accion Directa
Subsidiary liability of sublessee to the lessor for rent
due from the lessee
Art. 1652. The sublessee is subsidiarily liable to the
lessor for any rent due from the lessee. However, the
sublessee shall not be responsible beyond the amount
of rent due from him, in accordance with the terms of
the sublease, at the time of the extra-judicial demand by
the lessor.

Payments of rent in advance by the sublessee shall be

deemed not to have been made, so far as the lessor's
claim is concerned, unless said payments were effected
in virtue of the custom of the place.

Vendor has right of action against possessor whose

right is derived from the vendee
Art. 1608. The vendor may bring his action against
every possessor whose right is derived from the
vendee, even if in the second contract no mention
should have been made of the right to repurchase,
without prejudice to the provisions of the Mortgage Law
and the Land Registration Law with respect to third
Art. 1729. Those who put their labor upon or furnish
materials for a piece of work undertaken by the
contractor have an action against the owner up to the
amount owing from the owner to the contractor at the
time the claim is made. However, the following shall not
prejudice the laborers, employees and furnishers of

(1) Payments made by the owner to the contractor

before they are due;

(2) Renunciation by the contractor of any amount due

him from the owner.
This article is subject to the provisions of special laws.
(1597a) Article 1730. If it is agreed that the work shall
be accomplished to the satisfaction of the proprietor, it
is understood that in case of disagreement the question
shall be subject to expert judgment.

If the work is subject to the approval of a third person,

his decision shall be final, except in case of fraud or
manifest error.
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the
preceding article, the principal may furthermore bring an
action against the substitute with respect to the
obligations which the latter has contracted under the

Petitioner cannot invoke the credit of a different creditor

to justify the rescission of the subject deed of donation,
because the only creditor who may benefit from the
rescission is the creditor who brought the action; those
who are strangers to the action cannot benefit from its
effects. (Siguan vs. Lim, 1999)
Rights and Duties of Parties

Art. 1170. Those who in the performance of their

obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof,
are liable for damages.
Art. 1234. If the obligation has been substantially
performed in good faith, the obligor may recover as
though there had been a strict and complete fulfillment,
less damages suffered by the obligee.
In order that there may be substantial performance of an
obligation, there must have been an attempt in good faith to
perform, without any willful or intentional departure therefrom.
The deviation from the obligation must be slight, and the
omission or defect must be technical and unimportant, and
must not pervade the whole or be so material that the object
which the parties intended to accomplish in a particular manner
is not attained. The non-performance of a material part of a
contract will prevent the performance from amounting to a
substantial compliance… The compulsion of payment is
predicated on the substantial benefit derived by the obligee
from the partial performance. Although compelled to pay, the
obligee is nonetheless entitled to an allowance for the sum
required to remedy omissions or defects and to complete the
work agreed upon. [International Hotel Corp v Joaquin, 2013]
The question of whether a breach of contract is
substantial depends upon the attending circumstances
and not merely on the percentage of the amount not
paid. [Cannu v Galang, 2005]

Failure to perform an obligation on time which

constitutes breach of the obligation. [De Leon]
When demand is not necessary in order that delay may
exist (Art. 1169 par 2)

(1) When the obligation or the law expressly so declare;

Note: It is insufficient that the law or obligation fixes a
date for performance. It must further state expressly
that after the period lapses, default will commence; OR
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time
when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment
of the contract; OR
(3) When demand would be useless, as when the
obligor has rendered it beyond his power to perform.
Kinds of Delay; Requisites and Effects
(1) Mora Solvendi
(2) Mora Accipiendi
(3) Compensatio Morae
Mora solvendi – Delay on the part of the debtor to fulfil
his obligation either to give (ex re) or to do (ex persona).

1. Obligation must be liquidated, due and demandable
2. Non-performance by the debtor within the period
agreed upon
3. Demand, judicial or extra-judicial, by the creditor,
unless demand is not necessary under the
circumstances enumerated in Art 1169 par (2).
There is no mora solvendi in:

a) Negative obligations because delay is impossible [De

b) Natural obligations [Tolentino]

1. The debtor is liable for damages. [Art. 1170]
2. For determinate objects, the debtor shall bear the risk
of loss, even if the loss is due to fortuitous events.
Mora accipiendi – Delay on the part of the creditor to
accept the performance of the obligation

(1) Debtor offers performance.
(2) Offer must be in compliance with the prestation as it
should be performed.
(3) Creditor refuses performance without just cause.
Mora Accipendi:

(1) The responsibility of the debtor is reduced to fraud
and gross negligence.
(2) The debtor is exempted from risk of loss of the thing,
which is borne by the creditor.
(3) The expenses incurred by the debtor for the
preservation of the thing after the mora shall be
chargeable to the creditor.
(4) If the obligation bears interest, the debtor does not
have to pay from the time of delay.
(5) The creditor is liable for damages.
(6) The debtor may relieve himself of the obligation by
consigning the thing.
Compensatio morae – Delay of both parties in
reciprocal obligations.

1. Delay of the obligor cancels delay of obligee (and
vice versa) hence it is as if there is no default.
2. The liability of the first infractor shall be equitably
tempered by the courts. If it cannot be determined
which of the parties first violated the contract, the same
shall be deemed extinguished, and each shall bear his
own damages. [Art. 1192]

Cessation of the Effects of Mora:

(1) Express or implied renunciation by the creditor;
(2) Prescription.
Equitable Tempering under Art. 1192 vs. Under Art.
2215 [Ong v Bognalbal, 2006]
Articles 1192 and 2215 are not irreconcilably conflicting.
The plaintiff referred to in Article 2215(1) should be
deemed to be the second infractor, while the one whose
liability for damages may be mitigated is the first
infractor. Furthermore, the directions to equitably
temper the liability of the first infractor in Articles 1192
and 2215 are both subject to the discretion of the court,
despite the word "shall" in Article 1192, in the sense
that it is for the courts to decide what is equitable under
the circumstances. (Ong v Bognalbal, 2006)

Art. 1171. Responsibility arising from fraud is

demandable in all obligations. Any waiver of an action
for future fraud is void.

Fraud (dolo) is the deliberate or intentional evasion of

the normal fulfilment of an obligation. [De Leon]

A waiver of future fraud is void but past fraud may be

subject of a valid waiver by the aggrieved party. [De
1171. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an
action for future fraud is void.

To allow such waiver will necessarily render the

obligatory force of contracts illusory.

The law does not prohibit waiver of an action for

damages based on fraud already committed.

Any deliberate deviation from the normal way of fulfilling

the obligation may be a proper basis for claim for
damages against the guilty party.
INCIDENTAL FRAUD – committed in the performance
of an obligation already existing because of a contract.

CAUSAL FRAUD – employed in the execution of

contract in order to secure consent; remedy is
annulment bec of vitiation of consent.
Dolo Causante – that which determines or is the
essential cause of the contract

Dolo Incidente–refers only to some particular or

accident of the obligation

In order that fraud may vitiate consent, it must be the

dolo causante and not merely the dolo incidente,
inducement to the making of the contract. The false
representation was used by plaintiff to get from
defendant a bigger share of net profits. This is just
incidental to the matter in agreement... because despite
plaintiff’s deceit, respondent would have still entered
into the contract. [Woodhouse vs. Halili, 1953]
Requisites for Fraud to Vitiate a Contract:

(1) It must have been employed by one contracting

party upon the other;
(2) It must have induced the other party to enter into the
(3) It must have been serious; and
(4) It must have resulted in damage or injury to the party
seeking annulment. [Tolentino]

Art. 1179. Every obligation whose performance does

not depend upon a future or uncertain event, or upon a
past event unknown to the parties, is demandable at

Every obligation which contains a resolutory condition

shall also be demandable, without prejudice to the
effects of the happening of the event.

Its effectivity or extinguishment does not depend upon

the fulfillment or non-fulfillment of a condition or upon
the expiration of a term or period. A pure obligation is
CONDITIONAL OBLIGATIONS - obligations subject to
a condition.

Art. 1181. In conditional obligations, the acquisition of

rights, as well as the extinguishment or loss of those
already acquired, shall depend upon the happening of
the event which constitutes the condition.

CONDITION – an event which is both future and

uncertain upon which the existence or extinguishment
of an obligation is made to depend.
a) Suspensive Obligation –
Kinds of conditions

1) As to effect on the obligation:

A) Suspensive - its fulfillment gives rise to an obligation;

the demandability of the obligation or the effectivity of
the contract can take place only after the condition has
been fulfilled.

B) Resolutory – its happening extinguishes the

obligation which is already existing;

2) As to cause/ origin
a. Potestative
b. Casual
c. Mixed
(1)As to effect:

(a) Suspensive – Obligation shall only

be effective upon the fulfillment of the
condition [1181]. The obligee acquires a
mere hope or expectancy, protected by
law, upon the constitution of the
1180. When the debtor binds himself to pay when
his means permit him to do so, the obligation shall
be deemed to be one with a period, subject to the
provisions of Article 1197.

Speaks of a period depending on the will of the

DEBTOR. If its purpose is to delay, immediate action is
allowed. The court fixes the terms.

PERIOD – a future and certain event upon the arrival of

which, the obligation subject to it either arises or is

When the debtor binds himself to pay:

- when his means permit him to do so

- little by little
- as soon as possible
- from time to time
- as soon as I have the money
- in partial payment
- when in the position to pay
1181. In conditional obligations, the acquisition of rights,
as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event
which constitutes the condition.

Suspensive Condition – the acquisition of rights by the creditor

depends upon the happening of the event which constitutes the
condition; if such condition does not take place, it would be as
of the conditional obligation had never existed. (e.g. promise to
give a car after graduating from law school as cum laude)

Resolutory Condition – the rights and obligations already

existing are under threat of extinction upon the happening or
fulfillment of such condition. (e.g. donation by reason of
marriage – the celebration of marriage is a resolutory condition;
if the marriage did not push through, the donation may be
1182. When the fulfillment of the
condition depends upon the sole will
of the debtor, the conditional
obligation shall be void. If it depends
upon chance or upon the will of a
third person, the obligation shall take
effect in conformity with the
provisions of this Code.

*Applies only to suspensive conditions.


1)POTESTATIVE – a suspensive condition which

depends upon the will of one of the contracting parties:
if at the sole will of the debtor, it is void; if at the
creditor’s, still valid. this is to prevent the establishment
of illusory obligations.

2)CASUAL – the condition depends upon chance or the

will of a third person;(i.e. cellphone warranty)

3)MIXED – the condition depends partly upon the will of

the parties and partly upon chance or the will of a third
person; (example: passing the bar)
1183. Impossible conditions, those contrary to good
customs or public policy and those prohibited by
law shall annul the obligation which depends upon
them. If the obligation is divisible, that part thereof
which is not affected by the impossible or unlawful
condition shall be valid.

The condition not to do an impossible thing shall be

considered as not having been agreed upon.
POSSIBLE CONDITION – if it is capable of realization
or actualization according to nature, law, public policy or
good customs.


Physically Impossible – cannot exist or cannot be done

in its nature;

Legally Impossible – contrary to law, good customs, or

public policy.
When a conditional obligation is VOID – impossible conditions
annul the obligation which depends upon them; the obligor
knows his obligation cannot be fulfilled, he has no intention to
comply with his obligation.

When a conditional obligation is VALID – if the condition is

negative (not to do an impossible thing), it is disregarded and
the obligation is rendered pure and valid.

Only the affected obligation is void, if the obligation is divisible,

and the part thereof not affected by the impossible condition is

Only the condition is void if there is already a pre-existing

obligation and it does not depend upon the fulfillment of the
condition which is impossible.
1184. The condition that some event happen at a
determinate time shall extinguish the obligation as
soon as the time expires or if it has become
indubitable that the event will not take place.

Positive condition – refers to the fulfillment of an event

or performance of an act

Negative condition – refers to the non-fulfillment or non-

performance of an act.
The obligation is extinguished:

As soon as the TIME EXPIRES without the event taking


As soon as it has become certain that the EVENT WILL

NOT TAKE PLACE although the time specified has not
yet expired.

** TIME is the condition – should happen for the

obligation to extinguish.
1185. The condition that some event will not happen at a
determinate time shall render the obligation effective from
the moment the time indicated has elapsed, or if it has
become evident that the event cannot occur.
If no time has been fixed, the condition shall be deemed
fulfilled at such time as may have probably been
contemplated, bearing in mind the nature of the obligation.

** This is a condition of non-happening of a future event.

The obligation shall become effective and binding:

From the moment the time indicated has elapsed without the
event taking place;

From the moment it has become evident that the event cannot
occur, although the time indicated has not yet elapsed.
Doctrine of Constructive Fulfillment of Suspensive

Art. 1186. The condition shall be deemed fulfilled when

the obligor voluntarily prevents its fulfillment.
Suspensive condition deemed fulfilled when:
(1) Obligor intends to prevent obligee from complying
with the condition
(2) Obligor actually prevents obligee from complying
with the condition
Doctrine does not apply to:
(1) Resolutory conditions
(2) External contingency that is lawfully within the
control of the obligor [Taylor v Uy Tieng, 1922]
(3) Obligor, in preventing the fulfilment of the
condition, acts pursuant to a right
1. The condition is SUSPENSIVE;
2. The obligor ACTUALLY PREVENTS the fulfillment of
the condition;

• Malice or fraud is not required, as long as his

purpose is to prevent the fulfillment of the condition.

• No person shall profit by his own wrong.

Principle of Retroactivity in Suspensive Conditions

1187. The effects of a conditional obligation to give, once the

condition has been fulfilled, shall retroact to the day of the
constitution of the obligation. Nevertheless, when the obligation
imposes reciprocal prestations upon the parties, the fruits and
interests during the pendency of the condition shall be deemed
to have been mutually compensated. If the obligation is
unilateral, the debtor shall appropriate the fruits and interests
received, unless from the nature and circumstances of the
obligation it should be inferred that the intention of the person
constituting the same was different.

In obligations to do and not to do, the courts shall determine, in

each case, the retroactive effect of the condition that has been
complied with.
Applies only to fulfilled suspensive conditions.

Retroactive statute

The effects of the obligation is deemed to commence not from

the fulfillment of the obligation but from the day of its
constitution (similar to the legitimation of a natural child)

The article does not require the delivery of fruits or payment of

interests accruing (accumulating) before the fulfillment of the
suspensive condition.

Obligations to do or not to do – the retroactive effect shall be

determined by the court using its sound discretion without
disregarding the intentions of the parties.
Rationale: Obligation is constituted
when its essential elements concur. The
condition imposed is only an accidental

This applies to consensual contracts

only. This does not apply to real
contracts which can only be perfected
by delivery.
1188. The creditor may, before the fulfillment of the
condition, bring the appropriate actions for the
preservation of his right.
The debtor may recover what during the same time
he has paid by mistake in case of a suspensive
Preservation of the rights of CREDITOR – the debtor may
render nugatory (not serious, ignore) the obligation upon the
happening of the obligation.

-Action for prohibition restraining the alienation of the thing

pending the happening of the suspensive condition;
-Action to demand security if the debtor has become insolvent;
-Action to set aside alienations made by the debtor in fraud of
-Actions against adverse possessors to interrupt the running
prescriptive period.
-To have his rights annotated in the registry.

Rights of the DEBTOR – entitled to recover what has been paid

by mistake prior to the happening of the suspensive condition.
1189. When the conditions have been imposed with the
intention of suspending the efficacy of an obligation to
give, the following rules shall be observed in case of the
improvement, loss or deterioration of the thing during the
pendency of the condition:

debtor without fault – obligation is extinguished
debtor with fault – obligation to pay damages

debtor without fault – impairment is to be borne by the creditor
debtor with fault – creditor chooses: rescission of obligation,
fulfillment, indemnity

by nature or time – improvement: inure to the benefit of the
at the expense of the debtor – granted to the usufructuary