Documente Academic
Documente Profesional
Documente Cultură
General rule – no form is required for validity except for specific contracts i.e. sale of real
property
4) Sources of Obligations
a) Law
b) Contracts
c) Quasi-contracts
d) Crimes/delicts
e) Quasi-delicts
a) Law – are not presumed; only those expressly determined in this code or in special
laws are demandable (Art. 1158)
- Payment of taxes
c) Quasi-contracts – lawful, voluntary and unilateral acts which are enforceable to the
end that “no one shall be unjustly enriched at the expense of another”
- Solutio indebiti and negotiorum gestio
d) Crimes/Delicts – “every person criminally liable is also civilly liable”
a) Specific or determinate
- Particularly designated or physically segregated from others of the same class
b) Generic or indeterminate
- Cannot be pointed out with particularity
3 Kinds of fruits
a) Natural fruits – spontaneous products of the soil, and products of animals
b) Industrial fruits – produced by lands through labor
c) Civil fruits – derived by virtue of a juridical relation i.e rentals
3) Deliver the accessions and accessories even not mentioned (Art. 1166)
- Accessions are the fruits of a thing or improvements upon a thing i.e. trees on land
- Accessories are things joined to the thing for embellishment, better use or completion
i.e. car sound system
Fortuitous event – an event which cannot be foreseen, or though foreseen is inevitable i.e. Acts
of man like robbery and Acts of God like earthquake
- No person is responsible for fortuitous event (Art. 1174) except
a) Specified by law
b) Stipulated
c) Nature of the obligation requires assumption of risk.
2) Negligence
- voluntary act or omission, there being no malice, which prevents the normal fulfilment
of the obligation
- either contractual negligence (culpa contractual), civil negligence (culpa
aquiliana/quasi-delict), or criminal negligence (culpa criminal)
- waiver of action for future negligence is valid except those which requires extraordinary
care (common carrier)
- waiver of action for past negligence is also valid
- when negligence shows bad faith or deliberate, considered fraud (Art. 1173)
Other provisions
Art. 1176 – disputable presumption as to the payment of interest and the payment of a prior
installment
1) Levy the property of the debtor (except those exempt from attachment)
2) Redeem the property of the debtor which is mortgaged.
3) Collect from the debtor of the debtor
4) Ask for cancellation of the contracts that defraud the creditor.
SECTION 1
Kinds of Obligations
1. Pure
2. Conditional
3. With a period
4. Alternative
5. Joint
6. Solidary
7. Divisible
8. Indivisible
9. With a penal clause
Art. 1179
Pure Obligation
Conditional Obligation
Condition – future or uncertain event, or a past event unknown to the parties
Art. 1180 – Promise to pay when the means permit is not a conditional obligation but a one with
a period
Art. 1181
2 Principal Kinds of Condition
a) Suspensive condition (precedent or antecedent)
- Obligation is suspended
- Happening of the condition will give rise to the obligation
- Ex. A bonus is given to a Salesman who reach his quota.
Art. 1182 – Potestative condition – happening of the condition depends on one party
a) Suspensive potestative condition depending on the sole will of the debtor
- VOID
- Ex. I will pay my tuition if I pass this course.
e) Casual condition - Suspensive condition depending upon chance or will of a third person
- VALID
- Ex. Contractor’s warranty
- Ex. I will let you occupy the room if the present occupant would leave.
a) Obligation to give
- retroacts to the day the obligation is constituted not from the time condition is fulfilled
- Ex. Teachers are promised a salary increase at the start of the school year provided the
CHED approves the application for salary increase. CHED approved the application in
December. Increase in salary is effective from June.
- No retroactive effect as to fruits and interests in reciprocal obligations; deemed mutually
compensated.
- Ex. Sale of taxi. Interest on the selling price and income from rentals of taxi is deemed
set-off
- No retroactive effect also as to fruits and interests in unilateral obligations unless there is a
clear intention to give the fruits and interest; gratuitous in nature.
- Ex. Reimbursement of tuition fee if student tops the board exam. Student cannot ask for
interest on the tuition fee paid as the intention to return only the tuition fees paid.
b) obligation to do or not to do
- no fixed rule, discretionary on the courts to apply retroactive effect of suspensive condition
- intention of the parties is taken into consideration
- Ex. A week before, a contractor submitted a quotation for the repair of the wall of the house
on the condition it will not rain on the coming weekend. On weekend, it did not rain but
the prices of materials increase. Quoted price prevails despite the increase.
Art. 1188 – Creditor’s rights pending the happening of the suspensive condition.
Art. 1189 – Rules in case of loss (before the happening of the suspensive condition)
Kinds of loss
a) Physical loss – thing perishes i.e. house gutted by fire
b) Legal loss – goes out of commerce i.e. sale of firearms when a law is pass declaring it
illegal.
c) Civil loss – disappears or cannot be recovered i.e. a ship that sank in the bottom of the sea.
Rules:
1) Lost without debtor’s fault – obligation is extinguished
2) Lost through debtor’s fault – debtor liable to pay damages
3) Deteriorates without debtor’s fault – borne by the creditor
4) Deteriorate with debtor’s fault – creditor may choose between rescission or fulfillment of
the obligation, with damages in either case.
5) Improve by nature, inure to the benefit of the creditor
6) Improve at debtor’s expense – debtor shall have usufructuary rights (remove the
improvements without destroying the principal thing; not subject to reimbursement)
a) Obligation to give
- Return to each other what they have received including the fruits and interest. Except when
it is with a third person in good faith, the remedy is restitution.
- Ex. A scholar who violates the scholarship contract shall return the school fees paid plus
interest.
b) Obligation to do or not to do
- The courts shall determine the retroactive effect of the fulfillment of the resolutory
condition.
- Ex. Salesman is allowed to use company car provided he reached the quota. If quota is not
reached, salesman must return the car but is not required to pay rental because the intention
is to use the car for company’s business.
Alternative remedies in reciprocal obligations if one party fails to perform his obligation (needs
time and not refusal to perform):
Ex. Sale of taxi – the buyer is ready with the payment but the seller needs time to deliver the
car as it is not returned by the taxi driver.
CHAPTER 3 SECTION 2
- A future or day certain has been fixed for the fulfilment of the obligation.
- Day certain means it must necessarily come although it may not be known when. Ex.
Death
- If it is uncertain whether the day will come or not, then it is a conditional obligation. Ex.
Graduation.
- Obligation is demandable when the day comes
- ex. “30 days from the signing of the agreement”
KINDS OF PERIOD
1) Suspensive period – obligation begins only from a day certain upon arrival of the
period. Ex. Pay the tuition fee when the student reached college.
2) Resolutory period – obligation is valid up to a day certain and terminates upon arrival
of the period. Ex. Giving of financial support until reaching majority age.
3) Legal period – provided by law. Ex. payment of taxes.
4) Conventional period – agreed by the parties. Ex. payment of loan.
5) Judicial period – fixed by the court. Ex. when to move out of the leased premises.
6) Definite period – fixed period
7) Indefinite period – not fixed period.
Art. 1194 – same rules in Art. 1189 for loss, deterioration or improvement of the thing.
Art. 1195 – payment by mistake as the period has not yet arrived.
- Debtor is entitled to recover the payment plus fruits and interest. But debtor is presumed
to know the period and must prove that he was unaware of the period.
- NO RECOVERY in personal obligation (obligation to do) as it is physically impossible to
recover services rendered.
Art. 1198 – when debtor losses right to make use of the period.
1) Debtor becomes insolvent unless he gives guaranty or security for the debt
2) Debtor does not furnish the promised guaranty or security
3) Debtor impairs the guaranty or security unless he gives a new one
4) Breach of contract
5) Attempts to abscond
CHAPTER 3 SECTION 3
- Obligation with several prestations which are due but the performance of one is sufficient
as determined by the choice of the debtor in general.
- Requires complete performance of one prestation. No partial performance of all
prestations.
- Ex. Trip to Paris or car.
Art. 1203 – Debtor can rescind contract if through creditor’s fault, debtor cannot make a choice.
Ex. Car or cash. Creditor sold the car to another person. Debtor may choose car plus damages.
Art. 1204 & 1205 - Effects of loss of objects of obligation (right of choice belongs to debtor)
a) All are lost – indemnity for damages; basis of indemnity is the value of the last thing
which is disappeared plus other damages
b) Some are lost – no liability since the debtor can still performed the obligation.
Art. 1205 – Rules in case of loss when the right of choice belongs to the creditor.
a) Lost through fortuitous event – creditor can choose from the remaining. If all are lost,
obligation is extinguished (determinate thing)
- Lost through debtor’s fault – choose the lost item or the existing items plus damages in
either case.
- Only one prestation is agreed upon, but the obligor may render another in substitution.
- Ex. Trip to Paris or convert to cash.
- No liability in case of loss of the substitute except when substitution is made prior to the
loss.
CHAPTER 3 SECTION 4
1) Joint obligation – pro rata demanded (creditor) or fulfilled (debtor). Ex. bed spacer rental
2) Solidary obligation – one debtor is bound to pay or one creditor may demand fulfilment
the whole obligation. Ex. Co-maker
3) Solidarity exists only when (a) agreed, (b) law, (c) nature of the obligation requires
solidarity
4) If not clear, presume joint obligation as it imposes lesser burden.
5) Words to indicate joint obligation: pro rata, proportionately, “we promise to pay” signed
by 2 or more persons.
6) Words to indicate solidary obligation: jointly and/or severally, solidaria, in solidum,
together and/or separately, individually and/or collectively, “I promise to pay” signed by
2 or more persons.
1) Solidary debtors may not be bound in the same manner, same period or same conditions
2) Ex. One debtor pays on instalment while another pays outright; one debtor pay in 1 year
while another pays in 2 years.
Art. 1212 – Solidary creditors may do acts that are useful and not prejudicial to the other
creditors
Art. 1213 – Solidary creditors cannot assign his rights without the consent of the others.
Ex. A is indebted to solidary creditors B and C, C, cannot assign his rights to D, without
the consent of B. the reason rest on the extra ordinary mutual trust and confidence among
solidary creditors and it may happen that the other creditor may not want dealings with the
person to whom the debts will be assigned.
1) Solidary creditor is liable to the others to give their share in the credit corresponding to
them.
1) If one solidary debtor has not paid in full, creditor can still proceed against the other
solidary debtor.
Art. 1217 – Effect of payment by a solidary debtor
Art. 1219 – Effect of remission of obligation of one solidary debtor made by the solidary creditor
1) If payment is made first by the other solidary debtor, the remission has no effect. Paying
debtor is entitled to reimbursement.
Art. 1220 – Remission of the whole obligation through one solidary debtor
1) Solidary debtor is not entitled to ask for reimbursement from his co-debtors.
1) Defenses derived from the nature of the obligation – Ex. payment by a co-debtor
2) Defenses personal to the solidary debtor – Ex. his minority or incapacity
3) Defenses personal to the other solidary debtors – Ex. minority or incapacity of the other
debtor regarding the latter’s share of the obligation.
CHAPTER 3 SECTION 5
CHAPTER 3 SECTION 6
14) A penal clause is an accessory undertaking to pay indemnity in case of breach of the
obligation.
15) The penalty shall substitute the indemnity for damages and interest.
16) The debtor is liable for damages and interest aside from the penalty in the following:
a) Agreement
b) Refusal to pay the penalty
c) Fraud.
17) Ex. Failure of the contractor to complete a government project on time, a penalty per day
of delay is imposed on the contractor.
18) Penalty cannot be imposed if obligation was not performed due to fortuitous event.
19) Penalty maybe reduced if unconscionable or there is partial performance.
4) Debtor cannot pay penalty as a substitute for performance except when reserved for him.
Ex. Remove the garbage after vacating the leased premises or pay penalty taken from the
security deposit.
5) Creditor cannot demand fulfilment and penalty at the same time unless it is clearly
granted to him. Ex. construction of a house with penalty for delay.
Art. 1228 – Penalty can be demanded even without proof of actual damages.
SECTION 1
1) Payment or performance
2) Loss
3) Condonation or remission
4) Confusion or merger
5) Compensation
6) Novation
7) Other causes i.e. annulment, rescission, fulfilment of a resolutory condition, &
prescription
1. Delivery of money or
2. performance of the obligation
a) giving of a thing
b) doing an act
c) not doing an act
1. Obligor can recover as if completely performed less damages suffered by the obligee.
2. Justification: Based on fairness.
3. 1st requisite: There is substantial performance.
4. 2nd requisite: Obligor is in good faith.
5. Ex. seller was able to deliver only 400 sacks of rice out of 500 due to government
restriction (good faith). Seller can demand payment of the price for 400 sacks.
Art. 1235 – Effect of acceptance (or without protest or objection) despite incomplete or irregular
performance
1. Based on estoppel.
2. Obligation is deemed fully complied with.
3. Ex. Delivery of a car without tire jack. Buyer accepted as he has an extra tire jack.
2. If a third person pays without the knowledge or against debtor’s will – he can recover
only the amount paid (right of reimbursement). No right of subrogation.
3. If a third person pays with the knowledge of the debtor – he can recover the amount paid
plus right of subrogation or acquires the rights of a creditor, i.e. mortgage, guaranty or
penalty (Art. 1237)
Art. 1239 – payment by a person who has no right to freely dispose of the thing or capacity to
alienate is VOID
1. Free disposal – not subject to any claim, lien or encumbrance. Ex. mortgage or pledge.
2. Capacity to alienate – incapacitated to contract. Ex. minor.
3. Payment can be recovered.
Art. 1240 – to whom payment is made.
1. Creditor
2. Successor in interest. Ex. heirs.
3. Authorized representative
Art. 1241 – Effect of payment to an incapacitated person (minor) and effect of payment to a third
person.
Art. 1242 – Effect of payment in good faith to third person in possession of credit
1. NOT VALID.
2. Ex. two persons claim ownership of the thing leased. The court ordered the lessee not to
pay the lessor. If the lessee pays, his payment is not valid. If the other person (not the
lessor) is declared the owner, the lessee must again make payment to him.
Art. 1244 – Creditor cannot be forced to accept another object even if it is more valuable.
(determinate thing)
1. Ex. obliged to deliver a Kia vehicle. Debtor cannot be compel creditor to accept a
Ferrari.
Art. 1246 – Creditor cannot demand a superior quality or debtor deliver an inferior quality
than agreed (generic thing)
1. Creditor cannot be forced to accept partial payment. Ex. Debtor begs creditor that he
pays on installment.
2. Debtor cannot be required to make partial payments. Ex. Due one year after and creditor
demands payment every month.
1. Payment shall be based on the value of the currency at the time of the establishment of
the obligation
2. Payment is based on the current value of the currency if there is an agreement.
3. Ex. loan by the corp. in US dollars and payable in US dollars.
1. Place designated.
2. Where the thing is situated.
3. Domicile of the debtor.
Art. 1257 – Requirement of Notice to persons interested in the fulfilment of the obligation.
1. Persons interested in the fulfilment of the obligation are: guarantors, mortgagees, solidary
debtors, solidary creditors.
2. Absence of notice – consignation is void.
Art. 1261 – Effect of withdrawal of thing consigned with authority from creditor.
1. Obligation is extinguished:
a) Loss is without fault of the debtor
b) Debtor is not guilty of delay
c) Loss due to fortuitous event
2. Obligation is not extinguished (even w/o fault or delay):
a) Provided by law
b) Agreed by parties
c) Nature requires assumption of risk
d) Arises from a crime. Ex. return of stolen item (Art. 1268)
1. Obligation is extinguished.
2. Legal or physical impossibility takes place after the obligation is agreed.
3. If impossible from the beginning, VOID.
4. Ex. of legal impossibility - Delivery of full face helmets after being banned by law.
5. Ex. of physical impossibility – To perform (sing) at a wedding after operated in the
throat.
1. Against third persons who cause the loss or destruction. Ex. To sue for damages.
7. A person becomes creditor and debtor at the same time over the same obligation.
3. Affects the co-debtor only whom the two characters of creditor and debtor are merged.
4. While in solidary obligation, extinguishes the entire obligation.
CHAPTER 4 SECTION 5 COMPENSATION
1. The party claiming compensation must prove his right to damages and amount thereof.
1. Depositum
2. Commodatum
3. Claim for support
4. Civil liability arising from penal offense
12. Requisites
a) Valid obligation
b) Capacity and intention to modify the obligation
c) Extinguishment of old obligation and Creation of new obligation (every point
incompatible)
d) Old and new obligation be incompatible
13. Ex. To deliver a truck instead of a car.
3. Change in the person of the debtor without knowledge or consent of the latter.
4. New debtor’s insolvency or non-fulfillment of the obligation will not revive the liability
of the original debtor.
2. Change in the person of the debtor with the knowledge and consent of the creditor, old
and new debtor.
3. New debtor’s insolvency or non-fulfillment of the obligation will not revive the liability
of the original debtor EXCEPT insolvency is (a) public knowledge or (b) known to the
old debtor when the debt was delegated.
2. The original obligation subsists unless the parties agreed that it is extinguished in any
event.
3. If the new obligation is voidable, there can be novation. But if new obligation is
annulled, same effect as void obligation.
3. When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge.
4. When a third person, not interested in the obligation, pays with the express or tacit
approval of the debtor.
5. When, even without the knowledge of the debtor, a person interested in the
fulfilment of the obligation pays, without prejudice to the effects of confusion as
to the latter’s share. (guarantor)
1. Transfer all the rights of the old creditor to the new creditor against the debtor or
guarantors.
2. If conventional subrogation – depends on the agreement of the parties.