Hizon Notes - Obligations and Contracts (Seña Civil Law Review II)

NOTES ON CIVL LAW REVIEW 2
Kenneth Hizon, King Hizon, and Marjorie Perez________________________________________________________________________________________________
UNIVERSITY OF SANTO TOMAS

Faculty of Civil Law
A.Y. 2013-2014
Second Semester
CIVIL LAW REVIEW II:

OBLIGATIONS AND CONTRACTS
From Lectures of Atty. Carla Santamaria-Seña
he has not discharged the same. However, the debtor is

BOOK IV denied of right of action.
OBLIGATIONS AND CONTRACTS
Elements of a civil obligation
Title I. - OBLIGATIONS
Q: What are the Elements of a civil obligation?
Chapter 1. General Provisions
A:
November 16, 2013
1. A passive subject (called debtor or obligor) – the
Art. 1156. An obligation is a juridical necessity to give, to do person who is bound to the fulfillment of the
or not to do. obligation; he who has a duty
2. An active subject (called creditor or obligee) – the
NOTE: This is not an accurate definition. It only pertains to person who is entitled to demand the fulfillment of
the passive subject of the obligation—debtor to comply with the obligation; he who has a right
the obligation. In civil law, it requires a more encompassing 3. Object or prestation (subject matter of the
definition: obligation) – the conduct required to be observed by
the debtor; has an economic value or susceptible of
Complete definition: A juridical relation whereby a person pecuniary substitution in case of non-compliance
known as the creditor may demand from another known as 4. A juridical or legal tie (also called efficient cause) –
the debtor, the observance of a determinate conduct, and in that which binds or connects the parties to the
case of breach, may obtain satisfaction from the assets of the obligation. The tie in an obligation can easily be
latter. determined by knowing the source of the obligation
NOTE: When we speak of “compel,” not every obligation can Q: Is form an essential element?
be compelled of by the debtor. The proper word is “demand.”
In obligations to do, the obligation cannot be compelled. A: It may be in any form. There are obligations which do not
need to be in any prescribed form to be valid.
Q: In case there is breach, there is always remedy of
obtaining sanctions. Is this significant? Q: Must your active and passive subjects be determined at
the time the obligation is created?
A: Without such, the obligation useless. In case of non-
compliance, you cannot go after the assets of the debtor, A: No, it is enough that they are identifiable by some
hence, the creditor will not have any recourse. It gives the circumstances or criteria.
obligation the “obligatory force”. This also tells us that we are
dealing here with civil obligations or those obligations which Ex: In case of testamentary disposition, the testator may
can be enforced in the courts as distinguished from natural designate the bar top-notcher for the 2014 bar exams to
obligations which cannot be enforced in courts but solely receive P1M from the estate of the decedent. This is an
dependent on the conscience of the debtor—the creditor in example of an active subject which is determinable.
case of natural obligations is denied of right of action.
For a passive subject, the identity of the debtor is not always
A promissory note that has prescribed is a natural obligation. known at the outset. For example, A is a victim of theft.
The debtor of such promissory note is still obligated because Someone stole her cell phone. A went to the police station,
later on when the thief is known, he can ask for the recovery
Facultad de Derecho Civil 1

of the phone. It is not a requirement that there is physical least determinable. Otherwise, the parties cannot come to an
basis. What is important is a “sufficient basis”—the agreement. At the very least, it should be determinable.
description that the thief stole the cell phone of A. This is
what makes it determinable. Ex: A wants to go to Hong Kong. A wants to exchange his P50
for a Hong Kong dollar of B. They have not agreed on the
Q: Prestation. How many kinds of prestations can we have? rate. A simply suggest that they will use the exchange rate as
indicated on the newspaper. This is ok. This agreement makes
A: it determinable—based on prevalent exchange rate.
1. To give Q: Why is it important for a prestation to have an equivalent

2. To do in money?
3. Not to do (includes not to give)
A: In case of breach of contract or non-performance, there
Q: What are the requisites of a valid prestation? will be damages which must be based on a pecuniary value.
When you enter into an obligation, the ultimate end is the
A: performance of the obligation but in case of breach, your
creditor will have to go after the assets of the debtor. Going
1. It must be possible, physically or legally after the assets will mean that you need to have some
2. It must be determinate or determinable equivalence of the performance in money.
3. It must have equivalent in money or pecuniary
valuation. Q: Should every prestation be monetary in character?
Q: Explain: Physical and legal possibility. A: No. You can have prestations which have no pecuniary
character.
A:
Ex: Obligations of the husband and wife to love one another
1. Physical- the act does not go against the laws of which is not pecuniary in character. In case of breach, you can
nature or physics. If it is impossible, the obligation is convert it to an action. But mere not loving a person is not an
void. Absoluteness is not required, it may be actionable wrong. However, should you commit acts borne
impossible due to the circumstances of the parties. out of lack of love, you can seek for damages. You can have
Relative impossibility is enough. annulment, legal separation or declaration of nullity.
2. Legal- must not be prohibited by law such as
commission of crimes Ex: You have a teddy bear, you call him “Fluffy”. As time goes
by, your bear is no longer “Fluffy”. The former pink ears
Q: If the obligation states that D will pay C P5M if X is turned beige. In any event, “Fluffy” is still important to you. B
murdered. How will you characterize this obligation? borrows the bear. It was bitten by B’s dog. The bear no longer
has any value but you can still assign some kind of monetary
A: In the practical point of view, this is valid, otherwise, equivalence—moral damages. The hurt, sleepless nights,
majority of insurance policies are void. The circumstance anxiety you had may be given monetary value depending on
relating to the murder does not constitute the prestation of what you had experience. You will try to approximate the
the obligation. Whether or not valid, it has no effect on the value to the feelings.
obligation which is simply to pay a sum of money. Moreover,
if we approach this from the point of view of the condition, Q: What is “efficient cause”?
this is still valid because the person is not required to perform
the murder himself. It is simply a condition which may be A: It is the reason why the obligation exists.
committed by some other third person.
Q: What are the sources of the obligation?
Q: Essentially, when is the prestation not determined at the
onset? A:
A: Look at the sources of the obligation. Essentially, we only Art. 1157. Obligations arise from:
have 2: the law and the contracts. If the obligation is set by 1. Law;
the law, there is no problem since the law is complete in 2. Contracts;
itself. It will spell the obligation. The problem may only arise if 3. Quasi-contracts;
the source is the contract. It is in this context that we will 4. Acts or omissions punished by law; and
appreciate why the prestation should be determinate or at 5. Quasi-delicts

Pelayo v. Lauron: This is a case about obligation to pay the

a. Ex-lege or Law – when they are imposed by law itself professional fees of the doctor who attended to a woman in
(i.e. Obligation to pay taxes) labor summoned by the parents of the husband. The doctor is
b. Ex-contractu or Contracts – when they arise from the trying to collect from the parents of the husband. The doctor
stipulation of the parties (i.e. payment of loan with cannot collect from the husband. The parents of the husband
interest as agreed upon) cannot be obliged to shoulder the expenses. The expenses
c. Quasi-contractu or Quasi-contracts – when they constitute support.
arise from lawful, voluntary and unilateral acts which
are enforceable to the end that no one shall be In case of parents of the woman, they are also not obliged to
unjustly enriched or benefited at the expense of shoulder. The one obligated to give support is the husband.
another. In a sense, these obligations may be There is a hierarchy. The spouses are the first in the
considered as arising from law (i.e. solutio indebiti) hierarchy, followed by the children and descendants, then
d. Ex-maleficio or Crimes (acts or omissions punished parents and ascendants.
by law) – when they arise from civil liability which is
the consequence of a criminal offense (i.e. duty of If there was an agreement between the parents of the
the culprit to pay actual damages for causing the husband and the doctor, the former are obliged based on the
death of a person) contract which is a source of obligation.
e. Quasi-maleficio or Quasi-delicts (tort) – when they
arise from damage caused to another through an act Q: How potent is contract as a source of obligation?
or omission, there being fault or negligence, but no
contractual relation exists between the parties (i.e. A: It is the law between the parties: known as the principle of
duty of the tortfeasor to pay damages for injuries or “autonomy of wills”. They are bound by the terms of the
damages due to his fault, omission or negligence) contract.
LAW AS A SOURCE OF OBLIGATION: those expressly stated QUASI-CONTRACT AS A SOURCE OF OBLIGATION: A quasi-
by the law. They are never presumed. It is not enough that contract is a juridical relation whcih arises from lawful,
there is a provision in the law. It is also required that there voluntary and unilateral acts which are enforceable to the
must be acts existing to which the law applies. end that no one shall be unjustly enriched or benefited at the
expense of another. In a sense, these obligations may be
Ex: Obligation to give support considered as arising from law (i.e. solutio indebiti)
Payment of taxes- there must be act of purchasing goods or
services. Q: Is quasi-contract the same from implied contracts?
The law need not always be expressed but you cannot A: They are not the same. In quasi-contract, it is unilateral. In
presume an obligation arising from law. The law may be fact, it may not even be known to the other party. Here, there
clearly implied. is only a presumption based on the law that there is no
intention on the part of the other party to unjustly enrich
th th
Ex: Payment of 14 month pay—it is impossible to have a 14 himself at the expense of another. It is only one party which
th
month pay without paying 13 month pay. performs. Implied contracts are bilateral. There are 2 parties
involved but no express agreement. Example, you are taking
Q: A security guard in a movie house killed a gate crasher. an exam and your ball pen runs out of ink. You did not ask for
He incurred monetary expenses to the case. He was permission from B that you will borrow his pen. There is an
eventually acquitted. He sued his employer for agreement that B will have to give it back. There is no express
reimbursement of the expenses. agreement but there is an implied agreement. Here, there is
still an agreement.
A: The employer acted in the interest of his employer but the
employer is not obligated to provide the employee with a
legal assistance. There is nothing in the law which provides
that the employer is required to shoulder the legal expenses
of his employee for the actions against the latter in the
exercise of his duties. There is only moral obligation.
It would have been a different case if the employer is also

sued—subsidiary liability.

2. The officious manager must not have been

authorized by the owner
November 18, 2013 3. His taking over must not be due to any desire for
profit
Q: What is a quasi-contract? 4. He must not be acting under the impression that the
property belongs to him
A: A quasi-contract is a juridical relation which arises from
lawful, voluntary and unilateral acts which are enforceable to Q: Who shall be obligated here?
the end that no one shall be unjustly enriched or benefited at
the expense of another. In a sense, these obligations may be A: The obligation to reimburse belongs to the owner of the
considered as arising from law. property.
This is premised on the presumed intention that no one NOTE: It is not necessary that some benefit has been given.
wants to be unjustly benefited at the expense of another. There may be no actual benefit actually as long as benefit
could have possibly accrued.
Q: Suppose you suffered an accident. You became
unconscious. You were brought into a hospital which Q: What are the rules provided for by the rules for the
happened to be one of the most expensive hospitals in the officious manager?
country. You were also attended by renowned doctors in
their field. You don’t want to pay the bill because according A: There must be no ratification, otherwise, it may fall under
to you, you don’t have any hand in selecting the doctor. Can the contract of agency. If there was no ratification, the owner
you refuse? must reimburse the inofficious of the useful and necessary
expenses as well as damages he suffered in the discharge of
A: No, it cannot be resisted. Art. 2167 is among the forms of his functions.
quasi-contract.
Q: Suppose no benefit accrued?
Q: What are the 2 well-known forms of quasi-contracts?
A: The same obligation to reimburse for necessary and
A: expenses and damages even though no benefit have accrued,
provided that the taking over is impelled by the desire to
1. Negotiorum gestio prevent manifest and imminent loss to the danger. Even no
2. Solutio indebiti ratification or benefit, there is still obligation to reimburse
under the second paragraph of Art. 2150:
Q: What is negotiorum gestio?
Art. 2150. Although the officious management may not have
A: been expressly ratified, the owner of the property or
business who enjoys the advantages of the same shall be
Art. 2144. Whoever voluntarily takes charge of the agency liable for obligations incurred in his interest, and shall
or management of the business or property of another, reimburse the officious manager for the necessary and
without any power from the latter, is obliged to continue useful expenses and for the damages which the latter may
the same until the termination of the affair and its incidents, have suffered in the performance of his duties.
or to require the person concerned to substitute him, if the
owner is in a position to do so. This juridical relation does The same obligation shall be incumbent upon him when the
not arise in either of these instances: management had for its purpose the prevention of an
(1) When the property or business is not neglected or imminent and manifest loss, although no benefit may have
abandoned; been derived.
(2) If in fact the manager has been tacitly owner.
In the first case, the provisions of Articles 1317, 1403, No. 1, NOTE: The property must be preserved and remained intact.
and 1404 regarding unauthorized contracts shall govern.
Q: What is solutio indebiti?
Q: What are the other requisites for negotiorum gestio?
A: Juridical relation which takes place when somebody
A: received something from another w/o any right to demand
for it, and the thing was unduly delivered to him through
1. That the business or property must be abandoned or mistake.
neglected

Art. 2154. If something is received when there is no right to called a quasi-delict and is governed by the provisions of this
demand it, and it was unduly delivered obligation to return Chapter.
it arises.
Q: What will be the requisites for quasi-delicts?
NOTE: Solutio indebit presupposes that the person received
payment by mistake. It is not applicable when there is a A:
motivation by an act of liberality—becomes a donation.
1. there is fault or negligence on the part of the
Q: A is indebted to B. Then A delivered the money to C. Is defendant resulting to a wrongful act or omission,
there solution indebiti? whether voluntary or not, and whether criminal or
not
A: No. It is possible that A borrowed to B so that he can pay C. 2. There is damage and injury suffered by another
There was no allegation that the payment was made by (plaintiff)
mistake. 3. There is a direct causal relation between the fault or
negligence and the resulting damage and injury
Q: Does mistake include mistake of law? (PROXIMATE CAUSE)
A: If payment by mistake includes mistake of law, then we are Q: What is “fault”?
deviating from the provisions of Art. 3. Art 3 tells us that
ignorance of the law excuses no one. Which means that no A: Acts contrary to what a reasonable person should have
one can ever claim a mistake of law as a defense. Then here done based on the circumstances.
we have a provision that payment by a mistaken
interpretation of a difficult question of law, it qualifies as a Q: What is “negligence”?
mistake that can justify an act of recovery of what have been
paid under the principle of solution indebiti. For us to deviate A: It is the failure to perform such degree of care or vigilance
of what art 3 says, we need a solid basis, the basis is Art. as the circumstances would require.
2155.
Q: Who has the burden of proving the cause and the
Art. 2155: Payment by reason of a mistake in the connection to the damage suffered by the plaintiff?
construction or application of a doubtful or difficult
question of law may come within the scope of the preceding A:
article.
GR: The plaintiff
Q:
XPN: Res ipsa loquitur
Q: Will it matter if the payee acted in good faith or in bad
faith? Q: What is Res Ipsa Loquitor?
A: He must act in good faith. If he acted in good faith, he is A: Literally means “the thing speaks for itself.” There is no
exempted from liability in case of loss or damage on account other explanation why the injury occurred. This can be
of fortuitous event will be applicable. applied when an injury takes place or when an injury
incurred. And when we take occurrence of the injury w/ the
Art. 2160. He who in good faith accepts an undue payment surrounding circumstances, you are allowed by law, by virtue
of a thing certain and determinate shall only be responsible of this principle to make an inference that negligence may
for the impairment or loss of the same or its accessories and have been committed by the defendant. This inference
accessions insofar as he has thereby been benefited. If he requires the defendant to come up with an explanation as to
has alienated it, he shall return the price or assign the action why the injury is committed. And failure to come up without
to collect the sum. an acceptable explanation would dispense with any further
proof of negligence.
QUASI-DELICT AS A SOURCE OF OBLIGATION:
Ex: A patient was being operated in a hospital. Scissors were
Art. 2176. Whoever by act or omission causes damage to left on the stomach of the patient. There is negligence here
another, there being fault or negligence, is obliged to pay obviously. The principle of res ipsa loquitur applies. In the
for the damage done. Such fault or negligence, if there is no ordinary course of human experience, such would not have
pre-existing contractual relation between the parties, is happened.

November 19, 2013 Q: So, can we really say that there is the identity of the
parties in these two cases?
QUASI DELICTS
A: There is none. So, what we’re trying to find out is whether
Article 2176: Whoever by act or omission causes damage to it’s possible to have a quasi-delict in a situation where the
another, there being fault or negligence, is obliged to pay for parties are backed by a contract.
the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a We recall how a single act can give rise to a cause of action
quasi-delict and is governed by the provisions of this Chapter. under both the Revised Penal Code and also either the Civil
code to regard to quasi-delict. A bus driver hitting a
Q: So, what are the elements of quasi-delict? pedestrian because he was imprudent or he was negligent
can be sued both for criminal negligence reckless imprudence
A: resulting in homicide as well as for a quasi-delict that arises
from a single act. So, in the same manner, if you have a
1. Act or omission done by a person contract and that contract is breached, ‘no, that contract is
2. Act or omission causes damage breached and the breach itself constitutes a quasi-delict then
3. There must be fault or negligence in the act or the option should also be available to the agreed party either
omission to sue for simple breach of contract or a quasi-delict. And this
4. No pre-existing contractual relations is usually illustrated by the complaints or the actions brought
by passengers of airlines where their contract of carriage is
Q: Would that rule be absolute? Would the presence of the breached by the employees of the airline
contractual relationship between the parties preclude the
presence of quasi-delict as a source of obligation? There are cases where the passengers were treated badly,
where they’re being embarrassed, and they sued for damages
A: No based on a quasi-delict, And it has been argued that quasi-
delict will not lie because of the presence of the contract of
Q: Why? carriage and this was rejected by the Supreme Court because
the breach here, the maltreatment committed by the
A: Because, there are instances where there is a quasi- employee who of course is acting on behalf of the airline
delict—even if there are existing contractual relations company also constitutes a quasi-delict. So, by the same
token or the same principle that we allow a single act to give
Q: Explain that last requirement –that there should not be rise to both a criminal action and single action for a quasi-
any contractual relations between the parties in a quasi delict, which should also allow the option to sue for quasi-
delict. delict notwithstanding the presence of contractual relations.
But that holds true as a matter of exception. The general rule
A: If there is existing contractual relations, the liability of the will still be that there should be no contractual relations
parties would arise from the violation of that contract. So, if between the parties in a quasi-delict.
there’s fault or negligence committed by one of the parties, it
will more likely give rise to contractual breach which itself is Q: Who is liable for the damages committed in a quasi
also a source of obligation. delict?
Q: But do you agree that the presence of the contractual A:

relationship between the parties could not necessarily
preclude the existence a quasi-delict? GR: The actor is liable for his actions – direct personal liability
but by way of exception we also recognize vicarious liability
A: Yes. and this is set out in article 2180.
Q: So, how can this happen? How can you have a quasi- These exceptions which comprise vicarious liability
delict even though if there is contracting relationship established in Article 2180.
between the parties?
Article 2180: The obligation imposed by article 2176 is
A: If it’s a contractual breach, it is a breach of contract then demandable not only for one's own acts or omissions, but
the cause of the action of the passenger would be against the also for those of persons for whom one is responsible.
bus company and if it is a quasi delict – the cause of action
would be against the bus driver.

1. The father and, in case of his death or incapacity, the Q: How should we interpret this provision? Are we really
mother, are responsible for the damages caused by limited to establishments of arts and trades? This applies to
the minor children who live in their company. all kinds of schools.
2. Guardians are liable for damages caused by the
minors or incapacitated persons who are under their A: As to minors or incapacitated persons.
authority and live in their company.
3. The owners and managers of an establishment or Q: What happens if they don’t have any parents anymore?
enterprise are likewise responsible for damages What happens if there are there’s no other person who
caused by their employees in the service of the would be responsible for them?
branches in which the latter are employed or on the
occasion of their functions. A: Incapacitated persons should be liable with his personal
4. Employers shall be liable for the damages caused by properties.
their employees and household helpers acting within
the scope of their assigned tasks, even though the Q: And how would he be liable? How can you relate
former are not engaged in any business or industry. liability?
5. The State is responsible in like manner when it acts
through a special agent; but not when the damage A: The court may appoint a guardian ad litem. So, a lawsuit
has been caused by the official to whom the task will be the brought against him and once the lawsuit has been
done properly pertains, in which case what is brough against them and then the court should appoint a
provided in article 2176 shall be applicable. guardian ad litem
6. Lastly, teachers or heads of establishments of arts
and trades shall be liable for damages caused by Res Ipsa Loquitor in relation to the topic that when it comes
their pupils and students or apprentices, so long as to quasi delict, it is the burden of the plaintiff to prove the
they remain in their custody. existence the elements of a quasi-delict.
The responsibility treated of in this article shall cease Q: So, how will Res Ipsa Loquitor affect the burden of proof
when the persons herein mentioned prove that they that has been placed upon the plaintiff?
observed all the diligence of a good father of a family to
prevent damage. A: It makes things easier for the plaintiff. The fact itself that
there was an injury committed would suffice to presume that
Q: But what if the state is not acting through a special the defendant acted negligently.
agent?
A woman was operated upon and gauze bandages were
A: There’s no vicarious liability. found inside.,Upon discovery the woman was sued for
damages.
Q: So, if the employee who committed the negligent act was
performing his regular functions who shall be liable for the Q: How would the principle of res ipsa loquitor makes it
damage that he causes? easier for the woman? If you were the lawyer of the
woman, what do you need to do?
A: Personal liability of the employee.
A: So, you need to prove that:
Q: How would you differentiate a special agent from a 1. the surgeon was the one—was the person who
regular government officer or employee, as to their act of operated on your wife.
negligence that would cause damage in the exercise of their 2. That a foreign object was left inside your wife’s
functions? body
3. And resulting injury.
A: The point trying to be made is that there is vicarious 4. The causal connection between the presence of the
liability attaching the case of special agent, in the case of a foreign object and the injury suffered by the wife.
regular officer or employee- He alone shall be liable under
Article 2176. We still need to prove the circumstance surrounding the
injuries because it is on a basis of the circumstances that we
Q: Anyone else? will draw the inference that there was negligence committed.
But you’re not required to prove the negligence per se
A: The teachers as well as the heads of institutions for arts because you infer that from the circumstances.
and trade should be liable for the acts, for any damage
caused by the pupil or an apprentice or a student.

We apply the principle of res ipsa loquitor if there is no other hindi siya iyung immediate cause of the damage to you, he is
plausible explanation as to why the damage occurred. Except nonetheless the proximate cause.
for the fact that the actor was negligent. So, look at the
circumstances and you can now make that inference. Once an Q: What is a proximate cause?
inference is made then a presumption of negligence is
created shifting the burden to the defendant. The defendant A: Adequate and efficient cause which by natural order of
would now have to prove that he was not negligent. events undisturbed by other independent cause produced
the result complained of.
Compare this to an ordinary situation. Let’s say there was an
operation conducted to remove gallstones. Supposed to that The accident that met by the bus, in a far flung province and
it was a plain operation. But as in some cases complications that time there was no electricity yet so, the bus turned turtle
arise, a mistake may have been committed and the unwanted and and the gas leaked out of the bus and people came out
outcome results, the person operated dies. How do you and since it was in a province so they brought out torch.
prove negligence? How do you prove that the doctor who Torch and gas = magliliyab
conducted the operation committed the mistake? Papasok
ngayon dito yung need for expert testimony. You’ll be getting Q: What’s the direct cause, immediate and direct cause? The
another doctor who would say, that is not how it should have fire. Doon sila namatay eh. So, kung ikaw ‘yung may ari
been done or that was standard procedure but they deviated nung bus, sasabihin mo nakasurvive naman doon sa
and that deviation constitutes negligence and that would be aksidente sa atin. Hindi ko na kasalanan ‘yun kung nasunog
very difficult because somehow doctors are reluctant to sila. Would that be a valid defense?
testify against other doctors. And even though you may prove
or that you may get someone to testify on your behalf there’s A: No. Because you can see that the proximate cause of the
no assurance that your expert witness would be chosen by death of those people was the negligence of the bus driver
the judge over the defendant. which cause the bus to turn turtle which called the attention
So, that would be an ordinary operation where there is no of the people in their houses to go out and act like and to be
application of res ipsa loquitor. able to see they brought torches. The torches caused the fire
to spread in the bus killing the people who have survived.
On Whether there is res ipsa loquitor or not, it is important That would be an example of a proximate cause.
that there is causal connection. Meaning to say the damage
was caused by the fault or negligence of the actor or the Q: How 2184 may have modified by the motor/vehicle
defendant. In this regard, it’s a direct cause, the cause is registration law? Supposing the driver of a vehicle acts
direct, it’s immediate, no problem. negligently would there be any liability that the law would
impose on the owner of the vehicle?
If you are a standstill on the road and someone boxed you
from behind, would there be an assertion as to who was A: Under Article 2184 the owner would be liable if the
negligent or who liable? None. Kasi direct eh. You can incident takes place while he was inside the vehicle and that
immediately see the connection within the cause and the he could have otherwise prevented the damage from taking
injury. Kaya nga ‘pag halimbawa nagkaroon nang banggaan place.
involving several vehicles, the car A, car B, car C. You are car
A, who do you sue? Will you sue car B, or car C? Sa kuwento Q: Supposing that he was not in the vehicle?
lalabas na kaya nabunggo ni car B si car A ay dahil binangga
siya ni car C. So, who do you sue? You sue B. You sue B and A: He can still be liable under article 2180 – vicarious liability
you let B raise the defense that it was not his fault and it was Q: Now supposing that a car was being driven by Mr. Punay
car C who was negligent because it’s easier for you to sue car and Mr. Punay is your driver, and that car is not registered in
B. Wala ng duda, siya ang bumangga sa ‘yo. And yet, car B your name. It’s registered under the name of Hizon
filed third party complaint against car C. Kasi maliwanag eh. Corporation of which you are the corporate secretary.
Wala nang negligence. You were at the standstill, you were at
the front. You were bumped from behind. All the indications Q: Mr. Punay is a reckless driver and he hit the vehicle of
are in your favor. Why complicate your life? Mr. De Alban. If Mr. De Alban would want to sue who can
he sue? Should it be Hizon Corporation or should it be Ms.
If you want to complicate your life, go against car C, because Binay as the employer of Mr. Punay.
the first option given is the most practical option. If you’re
one of those few people who believe in absolute justice. Kung A: He can sue Mr. Punay because he is directly liable and he
gusto mo lang papanagutin na tao talagang may kasalanan sa can also sue Hizon Corporation
iyo, can you still go after car C? The answer is, yes. Although

Q: Supposing Hizon Corporation through its president, registered owner? Of course not. But the Supreme Court said
corporate secretary and lawyer says that he should not be that the higher interest of the public is at stake, so therefore
liable because he is not the employer of Mr. Punay? what every inconvenience that may be suffered by the
registered owner must ___ to this higher interest.
A: When one speaks of the vicarious liability of the employer.
An employer for the actions of his employees and it is November 23, 2013
submitted that Hizon Corporation is not the employer Mr.
Punay. Prestations:
1. To give
Q: Can Mr. De Alban sue Hizon Corporation even though he 2. To do
is not the actual employer of Mr. Punay and simply the 3. Not to do
registered owner of the vehicle? (If he wants to sue Hizon
Corporation only in this example) Q: How do we distinguish between an obligation to give and
obligation to do?
A: The fact that the car is registered in the name of Hizon
Corporation makes him liable for the damages because A: If the obligation involves a transfer of ownership, it is an
insofar as third persons are concerned the registered owner obligation to give. All other obligations or prestations are
is the employer of the driver of the vehicle, and it can be obligations to do.
made liable for the damages caused by the driver. This is by
reason of public policy because if an accident committed with Q: What about an obligation not to do?
the use of vehicle, we usually can only identify the vehicle
through its plate number. The plate number would lead as to A: An obligation of not doing something, which otherwise you
the registered owner. Beyond that the public would be at a are allowed to do.
loss.
Ex: Obligation under a restraining order under a petition for
Q: How would the victim know who was driving at that VAWC prohibiting a person from going near his wife. Without
time? How would he know that there was special the restraining order, there is nothing prohibiting the
arrangement between the actual employer and the owner? husband from going near his wife.
So, by reason of the public policy in we need to recognize,
we need to consider the registered owner as the employer Q: When it comes to obligations to give, can this be further
of the driver and be made liable. His liability be direct and classified?
primary. Now, under 2180 with the law recognizes the
defenses available to an employer or to any person who is A: Yes
given vicarious liability. You can show that maybe the act
was committed outside the scope of the functions of the 1. Generic Obligation to give
employee or that he exercised due negligence in the 2. Specific Obligation to give
selection and supervision of the employee. Would these
defenses be available to the registered owner of the Q: What is a specific thing?
vehicle?
A: A specific thing is one which is specifically designated and
A: The Supreme Court in the case of Philcar versus Espina? particularly segregated from others of the same class.
said no, these defenses are not available to the registered
owner of the motor vehicle. Q: What is a generic thing?
Q: Would this mean that all is lost for that registered A: A generic thing is one which is indicated only by its class or
owner,? What can he do to recover whatever payment he genus.
made? Can he sue the actual employer and the driver?
Yes and what would be his cause of action? If he wants be Q: If the obligation is to give a specific object, how will you
reimbursed for his expenses for the payment he had to perform it?
make by reason of the damage caused by the driver, what
would be his cause of action? Under what provision of law A: By delivering the very thing due.
can he bring the suit?
Q: If generic?
A: In the same case of Philcar the SC said that the cause of
action of the registered owner would be to bring an action A: To deliver an object belonging to the same class, of the
based on unjust enrichment .Is this convenient for the same kind, quantity and quality if the latter is specified.

a. If the source of the obligation is the law, quasi-

Q: What if the quality is not specified? contract, delict, or quasi-delict we can always
consult the provision of the law as to when his
A: The debtor must not deliver an object of inferior quality. obligation is created.
The creditor may not also demand the delivery of an object of b. In case of contracts, it can either be pure,
superior quality. conditional or one with a period.
1. Pure-demandable immediately; it arises at once
Q: When it comes to obligations to give specific thing, there simultaneous with the creation of the
are accessory obligations. What are these? obligation.
2. Conditional- this is limited to suspensive
A: condition because we are interested with the
creation of the obligation. The obligation to
1. Duty to preserve the thing that is due deliver arises when the condition has happened,
prior to such, no obligation yet. The twists here
Art. 1163. Every person obliged to give something is also are:
obliged to take care of it with the proper diligence of a good Although in reality, the obligation will only arise
father of a family, unless the law or the stipulation of the once the condition happens, by legal fiction, the
parties requires another standard of care. obligation is deemed to exist as of the time of
the constitution of the obligation. There is
NOTE: This is only applicable to specific obligations to give. retroactive effect as to the happening of the
condition. Yet this is subject to another twist,
Q: Why is the father used as the standard? under Art. 1187, in case of reciprocal
obligations, the fruits that may have been
A: Because the basis of Civil Code is patriarchal. We can trace produced in the interim period (between the
this in Roman Law where only the father has standing in the constitution of the obligation and the happening
society such that anything he does will bind the family. If he is of the suspensive condition) will be considered
not participating, it cannot bind the family. With this comes as mututally compensated. There is mutual off-
the presumption that he will take care of his family. setting. In other words, the parties will keep
whatever fruits they received during the interim
Q: What are the exceptions? period. If the obligation is unilateral, whatever
fruits received by the debtor in the interim
A: period will pertain to him. The creditor has no
rights to the fruits.
a. Law provides
Ex: Contracts of carriage which requires extra- To sum, the creditor is entitled to the fruits only
ordinary diligence; by jurisprudence, banking from the time of the happening of the condition.
institutions are required to exercise extra-ordinary By that time, we are already rid of Art. 1187.
diligence in their dealings with the money deposited Essentially, this rule will also apply to obligations
by their clients. They have to do more than title subject to a suspensive period (the obligation to
checking give is already existing but the demandability is
b. Stipulation in the contract subject to the limitation suspended until the lapse of the period).
that they cannot stipulate a diligence below than
ordinary diligence. This will render the obligation Q: If the existence of the obligation to give entitles the
inutile. It is a license for the debtor to be negligent. creditor to the fruits existing at that time, what does the law
mean then when it states “the creditor will have no real
2. Duty to deliver the fruits right to the fruits”?
Art. 1164. The creditor has a right to the fruits of the thing A: He is entitled but he has no real right (right of ownership)
from the time the obligation to deliver it arises. However, before the obligation to deliver arises. In fact, this even
he shall acquire no real right over it until the same has been extends to the principal thing.
delivered to him.
Q: Distinguish real right and personal right.
Q: When does the obligation to deliver arise?
A:
A: It depends on the source of obligation.

1. Personal right is the power belonging to one person b. Constitution of a public instrument subject to
to demand of another, as a definite passive subject, certain conditions: the thing must be in the
the fulfillment of the prestation to give, to do or not actual possession of the transferor
to do c. Tradition longa manu-by pointing out what
2. Real right is the power belonging to a person over a needs to be delivered.
specific thing, without a passive subject individually d. Tradition brevi manu- when the thing is already
determined against whom such right may be in the possession of the transferee. Instead of
personally exercised returning the property to the transferor, they
simply agree that he be allowed to continue in
Q: When you say fruits, what fruits are we referring to? possession
e. Constitutum possessorium- the transferor is in
A: possession, he is allowed to stay in possession
but no longer in the capacity as an owner but in
1. Natural- spontaneous products of the soil and the some other capacity such as a lessee or a
young and other products of animals without the usfructuary
intervention of labor
2. Civil – rents, interests and the like 3. To deliver accessions, and accessories
3. Industrial –these are products of lands acquired
through the intervention of human labor Art. 1166. The obligation to give a determinate thing
includes that of delivering all its accessions and accessories,
Q: It goes without saying that the creditor will only be even though they may not have been mentioned.
entitled to the fruits if the fruits are existing at the time the
obligation to give arises. When do we consider these fruits Q: What are accessions?
to be existing?
A: Those which are attached or incorporated to the principal
A:
a. Natural
1. Civil fruits accrue daily. They accrue periodically b. Contigua
2. Natural fruits are deemed to exist when they are c. Industrial
manifest. In case of animals, even though they are
not yet born, so long as they are in their mother’s Q: What are accessories?
womb, they are considered existing.
A: They are embellishment. They are not attached or
Q: Give an example that would illustrate both real rights and incorporated on the principal thing.
personal rights over the fruits of a specific object due under
an obligation. Q: If you have a land where a house is standing. The deed of
sale does not mention of the house. Can the transferee
A: A agreed to deliver a horse to B. Before delivery, B has a demand the delivery of both the house and the land?
personal right. After delivery to B, B already has a real right. If
C files a case against B, that case will have to be dismissed A: Yes.
because C does not have real right over the horse. He only
has personal right against A. No delivery was made to C, Q: What if the deed of sale only mentions of the house but
hence, this prevented C from acquiring real right. not of the land? Can the transferee demand the delivery of
both the house and the land?
Q: How is delivery effected if this is so important?
A: No.
A:
Difference: The house is an accession to the land because it is
1. Actual- physically placing the thing in the possession constructed on the land. Whatever is planted, sown or built
of the transferee. on the land is an accessory of the land.
2. Constructive:
a. Tradition symbolica- in lieu of placing him in Q: Give an example of an accessory?
physical possession, a symbol is given to
symbolize the transfer of ownership. Ex: key of a A: A bought a cell phone. You don’t need to tell the seller that
house he has to deliver the charger. It is an accessory. Without the
charger, you cannot use the phone.

NOTE: It cannot apply to give a specific object because in

Q: When an obligation is incurred, in an ideal world, the such case the thing which must be delivered is already
parties are expected to comply. However, most people will determined, it cannot be substituted by something. It applies
find a way to get out of the obligation. There will be a to obligations to give generic objects because here, the object
breach. What are the remedies in case of breach? is merely described of quality, quantity and kind. So long as
you comply, you are fulfilling the obligation. In other words,
A: so long as these parameters are met, it does not matter who
performs the obligation. The identity of the debtor under this
1. Specific performance which includes substitute obligation is will not be a factor. It is only in specific
performance obligations to give that such debtor must himself deliver only
2. Rescission under Art. 1191 because he has possession of the property to be delivered
3. Damages which can either be in conjunction or and nothing else will do.
independent of specific performance and rescission
under Art. 1191. The answer “genus never perishes” is an appropriate answer
only in case of fortuitous events.
NOTE: What cannot be combined is rescission and specific
performance because they are contradictory. Q: In obligations to give generic object, both specific and
substitute performance are available. But what will you
Accion subrogatoria and accion pauliana are extreme advice your client to avail of?
remedies. You only avail of them if all other remedies have
failed. There is a hierarchy. Also, you can only avail of accion A: Substitute performance because you go to court no longer
pauliana if you can prove that accion subrogatoria is not to secure the delivery of what should have been delivered to
available. you. You already have it because of substitute performance.
You only go the court to acquire reimbursement or
SPECIFIC PERFORMANCE indemnification for your expenses.
-It means exact fulfillment of the obligation. The judgment of Q: How will this be more practical to you? In the meantime
the court directs the obligor to fulfill the obligation you can do what you need to do using the object which
should have been delivered to you.
Q: In what obligations can we ask for specific performance?
A: For example cement for the construction of your house.
A: Obligations to give (both specific obligation to give and The construction will not be delayed. Unlike in specific
generic obligation to give) performance, you go to court…even after 5 years you still
don’t have a writ of execution because you are still on trial
NOTE: When the obligation involves an obligation to do stage. In the meantime your house remains unfinished and
whether such involves personal qualifications, you cannot the materials deteriorated even before the construction.
avail of specific performance. You cannot go to court and
obtain a judgment forcing someone to do a specific thing. You Q: In case of obligations to do? What is the remedy?
cannot do so because it would amount to involuntary
servitude. A: Only substitute performance. However, the availability of
substitute performance must be qualified:
In obligations to give, the constitutional prohibition against a. If the personal qualifications of the debtor are
involuntary servitude does not apply because he is not being considered, there can be no substitute performance.
compelled to do something. He is only required to give No one else can perform the obligation.
something—to transfer title. Ex: Martin Nievera’s concert- Jhong Hilario cannot
substitute him. If Martin does not perform the
SUBSTITUTE PERFORMANCE obligation, the only remedy is for the creditor to sue
for damages.
Q: When is substitute performance available? b. If not, there can be substitute performance
A: Q: If substitute performance is availed of, what does it do?

Does it transform the obligation somehow?
1. Obligations to give generic object
2. Obligations to do A: Yes, it transforms the obligation. When you file an action
for substitute performance, you still file it against the original
debtor. However, the change will pertain to the manner of

performing the obligation. The obligation now becomes a A: It is dolo incidente—fraud in the performance of
monetary obligation. Substitute performance essentially obligation. There is already an obligation.
entails reimbursement.
Q: Suppose X holding a bottle of “Etermity”. He tells you
Q: In obligations to do, will substitute performance apply that this is true. That it came from U.S. Simultaneous to the
only in case of non-performance? sales talk, you agreed to take the perfume. You paid him.
What fraud is committed?
A: No. It can also be availed of in cases where the
performance is done contrary to the agreement, the creditor A: If the fraud employed is in the perfection of the contract,
may ask what has been done to be undone and further, it can the contract is voidable. If it is fraud in the performance,
be done consistent with the obligation at the expense of the rescission will be the remedy under Art. 1191 and damages
debtor. Also, what has been poorly done be undone at the under Art. 1190.
expense of the debtor.
In the given example, you choose whatever is easy to
Q: The law speaks of damages. In case of breach, damages prosecute. If there are no witnesses, it will be a battle of
will be due. What will be the basis for seeking damages? words. The creditor may have difficulty in obtaining
annulment because fraud is a state of mind. Whereas, in case
A: of rescission, you only need to prove that what you agreed
was the delivery of “Eternity” but what was delivered was
Art. 1170. Those who in the performance of their obligations “Etermity”. This is obvious in this case.
are guilty of fraud, negligence, or delay, and those who in
any manner contravene the tenor thereof, are liable for Annulment and rescission here is not contradictory. The
damages. contract here is valid until annulled. The contract will be
ratified only to rescind it afterwards.
The basis of a claim for damages can be any of the following:
NEGLIGENCE
1. Fraud
2. Delay Q: What is negligence?
3. Negligence
4. Contravention of the tenor of the obligation A: Negligence is the omission of that diligence required by the
nature of the obligation which corresponds to the
Q: What fraud is contemplated under Art. 1170? circumstances of the parties, the time and the place.
A: Fraud in the performance of the obligation known as fraud Q: What happens if the omission is coupled with bad faith?
causante. Fraud is simply a deliberate and intentional evasion
of the normal fulfillment of an obligation. It implies the A: It amounts to fraud. There will be liability for damages.
existence of malice and dishonesty.
Q: What discretion is given to courts?
Q: Can you waive your action for future fraud?
A: The court may mitigate the liability of the person for
A: No. Such waiver will make the obligation nugatory. damages.
Q: What is dolo causante? DELAY
A: It is the fraud employed at the inception of the contract What is contemplated here is legal delay or default. Ordinary
where deceit is employed or insidious words or machinations delay is the failure of the obligor to perform the obligation
are employed by one party without which the other party with respect to time. Legal delay, on the other hand, is the
would not have considered entering into the obligation. basis for the damages. Legal delay is a status which has its
own consequences. Demand must be present, except when
Q: Both dolo causante and dolo incidente may be employed demand may be dispensed with.
in contractual obligation. How do we know of our cause of
action? For instance, we have a contract of sale for a Q: Delay must be culpable delay. What do you understand
perfume. The seller delivers a counterfeit “Etermity” instead by “culpable delay”?
of “Etermity” and the buyer did not notice it. What fraud is
committed?

A: There is culpable delay when the delay will not prevent the properties of the debtor which constitute the guaranty of his
fulfillment of the obligation notwithstanding the delay in the debts. It is also known as rescission of contracts.
performance.
Q: Does Art. 1191 refer to accion pauliana?
Ex: Obligation to deliver a wedding cake at the reception of
the wedding. The reception finished at 10pm. The cake was A: No. Art. 1191 refers to breach of contract while the ground
delivered only at 11 pm. Is this delay or non-performance? under accion pauliana is fraud—there is damage or economic
Notwithstanding the delivery, the same is of no use anymore. prejudice.
There is no mire reception. There is non-performance here
not just delay. Q: What are the requisites for accion pauliana?
If the wedding cake arrived just minutes before the time A:

where the groom and bride are supposed to feed each other
of spoonfuls of cake, there is damage. There is anxiety 1. There must be an unsatisfied writ of execution
present. In all probability, they have to revise the program. 2. Accion subrogatoria is not available
There is still performance. There is defective fulfillment. 3. There are transactions by the debtor entered into to
defraud the creditors.
Q: There must be a demand. When can creditor make a 4. The obligation to the creditor who seeks the
demand? rescission must ante-date the transactions sought to
be rescinded
A: Demand may be made when the obligation becomes due. 5. The obligation due to the creditor must be affirmed
in the judgment which is not satisfied
a. Pure- immediately due and demandable: but the law 6. The judgment may or may not ante-date the
means that it must be within a reasonable time. transactions sought to be rescinded
Allow the debtor to enjoy whatever he got from you.
b. Condition- happening of the condition NOTE: It is important that the transaction with the
c. Period-arrival of the period creditor must precede the transactions by the
debtor sought to be rescinded. This action is based
Q: How is demand made? on fraud: intention of the debtor to defraud his
creditor. Such intention can only exist if the
A: obligation with the creditor is already in place, or
established. Otherwise, no motivation for him to
1. Judicial-go to court and file a complaint commit fraud.
2. Extra-judicial:
a. Oral The judgment needs not ante-date the transactions
b. Written sought to be rescinded. There is no intention to
defraud if at the time he entered into the
Q: Where and when should the Extra-judicial demand be transactions sought to be rescinded before there
made? was a judgment against him. The judgment does not
add anything on the right of the creditor. It merely
A: The law does not say. We should be guided by principles of declares the existence of such right. It is declaratory
whatever is reasonable under the circumstances. in nature but with retroactive effect. Even if the
judgment comes after the transactions sought to be
November 26, 2013 rescinded, it does not matter.
rd
Art. 1177. The creditors, after having pursued the property Q: Will it matter if the other(3 ) party to the transaction
in possession of the debtor to satisfy their claims, may acted in good faith?
exercise all the rights and bring all the actions of the latter
for the same purpose, save those which are inherent in his A:
person; they may also impugn the acts which the debtor
may have done to defraud them. If the transaction with the 3rd person is onerous in nature,
then we look into the good faith or of the other party.
ACCION PAULIANA- creditors have the right to set side or
revoke the acts which the debtor may have done to defraud If the other party is in good faith then we have to respect his
them; creditors may rescind fraudulent reductions of the rights because he has legally acquired rights in good faith. If

he is in bad faith then accion pauliana will have to prosper

and any transaction will have to be set aside. A: In reciprocal obligations, the parties are debtor and
creditor of each other. To be reciprocal, it must be noted that
rd
However, if the transaction with the 3 person is gratuitous the obligations must arise out of the same cause—one party’s
in nature, you only have to look at the side of the debtor as to obligation is the consideration for another party’s
whether or not he is in good faith or in bad faith. corresponding obligation so that the performance of a party’s
obligation will be dependent on the performance of the other
If he is in bad faith then the accion pauliana should prosper party’s obligation.
and in this regard the law has provided us with a
presumption. Ex: X sells his car to Y. Y should pay. The delivery of the car is
premised on the buyer’s payment and the buyer’s act of
NOTE: If gratuitous, it is immaterial because if you dispose by payment is premised on the creditor’s delivery of the car.
rd
gratuitous title, the 3 person did not give anything. He
should not be placed in the better position who stands to lose Q: Why rescission under Art. 1191 inherent in reciprocal
something, otherwise it will amount to unjust enrichment on obligation?
rd
the part of the 3 person at the expense of the creditor. But
this is not the case when the obligation is onerous where the A: The element of breach is crucial under Art. 1191. Tacit
creditor and the third person would be on equal footing. If resolutory condition is relevant here.
rd
the 3 person acted in good faith, he is entitled to protection
because there is no possibility of unjust enrichment. Q: Discuss this with the tacit resolutory condition.
Q: What is the prescriptive period in case of accion pauliana A: In reciprocal obligation, the non-fulfillment of the
under Art. 1381? obligation is a tacit resolutory condition. The non-
performance will extinguish the obligation. If the other party
A: It must be commenced within 4 years from the time the does not perform his obligation, it has an effect on the
cause of action accrues. obligation of the other party. It will extinguish the other
party’s obligation. Hence, rescission is implied in reciprocal
Q: Suppose the judgment creditor found out that the only obligations.
remaining properties of the debtor have long been
transferred through a deed of donation. And this deed of Q: Who has the power to rescind?
donation is entered into during the pendency of his action
against the debtor. From the time the deed was executed up A: The one who is ready to perform
to the time he obtained writ of execution, 4 years have
lapsed. Can he still bring action under Art. 1381? Q: How can rescission be effected?
A: The reckoning period should be counted from the time it A: The default mode is judicial. Extra-judicial rescission can
was legally possible to bring an action pauliana. When the only be availed of when there an express stipulation to this
deed of donation was executed, the Trial court has no effect.
judgment yet. The fact that the properties have been
subsequently donated during the pendency of the action, will Q: How do we carry out this extra-judicial rescission?
not matter.
A: By effecting notice to the other party.
Q: Under Art. 1191, there is rescission. This is different
under Art. 1391. Rescission under Art. 1391 is an ordinary Q: Can notice be dispensed with?
remedy, not a remedy of last resort. Under Art. 1191, the
premise is the presence of breach. Rescission under Art. A: No. Notice is mandatory so that the other party can know
1391 is premised on fraud. Art. 1191 may be availed of that the obligation is rescinded and to give him the
under what circumstances. Should this be specifically agreed opportunity to question the rescission by going to court. His
by the parties? Or is it inherent in the obligation? purpose is to question whether rescission is warranted or
not.
A: Under Art. 1191, the power to rescind is implied in
reciprocal obligations. In unilateral obligations, it is not NOTE: The court will declare whether or not there is a ground
inherent. The same must be provided for by the parties to be for rescission. If the court finds that there is no ground for
available. rescission, the court will set aside the extra-judicial rescission.
Q: Why is it inherent in reciprocal obligations? Q: What will this extra-judicial party mean to the party?

A: It is essentially temporary. It is subject to court review. A: It is not available because it only an executory contract. In
contract to sell, the payment of the purchase price is a
Q: So why avail of extra-judicial rescission if it is subject to positive suspensive condition. Failure to pay the price agreed
court review? upon is not a mere breach, casual or serious, but a situation
that prevents the obligation of the vendor to convey title
A: He can be immediately freed from the performance of the from acquiring an obligatory force (Tolentino, 1991). It never
contract although it is subject to judicial review. You don’t existed, hence, there is nothing to rescind.
have to wait for the court’s final judgment to relieve yourself
with the obligation. Q: What will be the consequence of rescission under Art.
1191?
Q: Is this remedy available for any kind of breach?
A: Mutual restitution will take place (Art. 1385).
A: No, it is only available in case of substantial breach. It is
not available when the breach is casual
Q: How will you know if the breach is substantial?
A: If it already avoids the purpose for which the obligation is

constituted.
Ex: In a contract of sale to deliver jasmine rice to the buyer.

What was delivered was sinandomeng rice. There is
substantial breach. Basically, there is non-performance.
Q: Give an example of causal?
A: For instance, there is an obligation to deliver a cell phone

worth P5,000.00. However, the buyer only has P4,000.00. The
breach is only casual.
Q: What is the prescriptive period under Art. 1191?
A: 10 years from the time the breach is committed.
Q: Suppose the contract to be rescinded is a contract of sale

to deliver an immovable property because of failure of the
buyer to pay. In what form should be rescission be made?
A: The rescission should be by judicial action or notarial

rescission.
Q: Can contract to sell be the object of rescission under Art.

1191?
A: No, it is not available in a contract to sell.
Q: What is a contract to sell?
A: One where the seller will retain full ownership of the

property pending the full payment of the purchase price.
Contract to sell will not preclude delivery. It only precludes
transfer of title.
Q: Why is rescission under Art. 1191 inapplicable in a

contract to sell?

In case of suspensive condition, it affects the birth of the

obligation itself. Prior to the happening of the suspensive
December 2, 2013 condition, there is no obligation to speak of. A suspensive
period, on the other hand, only affects the demandability of
Different kinds of obligations: the obligation. The obligation already exists but its
demandability is suspended before the arrival of the period.
Art. 1179. Every obligation whose performance does not
depend upon a future or uncertain event, or upon a past Q: What happens if the event upon which the obligation is
event unknown to the parties, is demandable at once. made to depend is a combination of a condition and a
period? How should this be treated?
Every obligation which contains a resolutory condition shall
also be demandable, without prejudice to the effects of the A:
happening of the event.
Ex: I will give A P10K if he gets married within 1 year: we are
Q: What are pure obligations? making the obligation subject to a period. it is treated as a
condition.
A: These are obligations which are not subject to a condition
or term and are immediately demandable. The condition will prevail over the period. if the condition
happens before the expiration of the period, no need for the
Q: Would it be correct to say that all immediately period to lapse. This is based on Arts. 1184 and 1185.
demandable obligations are pure obligations?
If we are to relate Art. 1184 to a contract to sell, rescission
A: No. Obligations subject to a resolutory condition or will not apply precisely because, the non-payment of the
resolutory period are also immediately demandable. purchase price does not constitute as a tacit resolutory
condition. Rather, it will constitute as an extinguishment of
Q: What is the concept of being immediately demandable? the obligation under Art. 1184.
A: The creditor can demand the performance of an obligation Art. 1184. The condition that some event happen at a
at any time. determinate time shall extinguish the obligation as soon as
the time expires or if it has become indubitable that the
Q: What is a “condition”? event will not take place.
A: A condition is something which is in the future and is NOTE: The obligation is deemed to have never arisen.
uncertain the happening of which can either give rise or
extinguish the obligation. Q: If the debtor binds himself to pay when his means permit
him to do so, how will this be considered?
NOTE: A past event can also be a condition. It is not really the
happening of the event, but it is the acquisition of knowledge A: It is one with a period because there is an undertaking on
by the parties. the part of the debtor that he will pay when his means to do
so. The law is providing for this because otherwise it will be
It is the acquisition of knowledge because it must be future anathema to the obligatory force of the obligation if we will
and uncertain or unknown event to the parties. not permit the debtor to pay when his means permit himself
to do so. The payment must be a certainty, it cannot be left
Q: What is a “period”? on the will of the debtor or to a condition.
A: A period is a future and certain event. Q: What is the difference between a purely potestative
condition and a simple potestative condition?
Q: Where lies the difference in the effects of condition and
period? A:
A: The difference only lies between a suspensive period and a Simple potestative- is not just a manifestation of the will but
suspensive condition. In case of resolutory condition and also an initiation from an external
period, the effect is the same—it extinguishes the obligation.
However, in case of resolutory condition, there is no certainty Purely potestative- depends solely on the will. This can be
that the obligation will be extinguished. detrimental to an obligation

Q: When we speak of a purely potestative obligation and

how can this be detrimental to an obligation, which person 1. Intention of the parties
are we referring to? 2. Real contracts,
3. As to fruits, in reciprocal obligations, there is mutual
A: The same pertains to the parties. setting-off
a. Both debtor and creditor 4. If unilateral, the debtor shall appropriate the fruits
b. Creditor and interests received. He is allowed to keep
c. Debtor- Will make the obligation null and void 5. As for obligations to do or not to do, the courts shall
determine
If we have a conition that is suspensive and purely
potestative on the part of the debtor, a distinction must be Q: Suppose the debtor pays the creditor pending the
made: fulfillment of the suspensive condition. Obviously, there is
a. The obligation is only void if the suspensive purely no obligation to pay yet. What is the remedy of the debtor?
potestative condition affects the birth of the
obligation. A: The debtor can recover. He can also ask for payment of
b. Not when what is affected is the performance of the fruits and interests.
obligation but the contract is already existing.
Q: What is your basis?
Q: If the condition is of such nature that it is within the
power of the debtor to prevent its fulfillment, does it make A: Art. 1195 applies to payment by mistake when the
the condition purely potestative? obligation is subject to a suspensive period. In fact, this is one
of the differences between a suspensive period and
A: No. Even though it condition is not potestative, it may be suspensive condition. If the obligation is subject to a
mixed or casual, it may still be within the powers of the suspensive period, and there was payment by mistake, the
debtor to prevent its fulfillment. When such happens, we law expressly allows the debtor to recover not only what he
apply the principle of constructive fulfillment. has paid but also with the fruits and interests.
Q: It is enough that we show that the debtor voluntarily Art. 1195. Anything paid or delivered before the arrival of
prevented the fulfillment of the condition for the principle the period, the obligor being unaware of the period or
of constructive fulfillment to apply? believing that the obligation has become due and
demandable, may be recovered, with the fruits and
A: No. The intention matters. The intention must be that to interests.
prevent the obligation from arising. Absent such intention,
we cannot apply the principle. In an obligation is subject to a suspensive condition and the
condition is not yet fulfilled yet, and the debtor makes
Q: Once the condition is fulfilled it will have retroactive payment, the law is silent. However, he may still recover
effect on the day the obligation is constituted. Give fruits and interests under solutio indebiti.
exceptions to this.
The law is silent with regard to the recovery of the fruits and
A: interests insofar as the debtor in an obligation subject to a
suspensive condition concerned. Although authorities believe
Art. 1187. The effects of a conditional obligation to give, that notwithstanding the silence of the law, debtor who pays
once the condition has been fulfilled, shall retroact to the ahead in an obligation subject to a suspensive condition may
day of the constitution of the obligation. Nevertheless, still recover fruits and interests on what he has paid under
when the obligation imposes reciprocal prestations upon the principle of solutio indebiti (Art. 2195).
the parties, the fruits and interests during the pendency of
the condition shall be deemed to have been mutually Q: What would be the rules regarding the ownership or the
compensated. If the obligation is unilateral, the debtor shall burden for these changes in the meantime the condition is
appropriate the fruits and interests received, unless from pending fulfillment?
the nature and circumstances of the obligation it should be
inferred that the intention of the person constituting the A:
same was different.
Art. 1189. When the conditions have been imposed with the
In obligations to do and not to do, the courts shall intention of suspending the efficacy of an obligation to give,
determine, in each case, the retroactive effect of the the following rules shall be observed in case of the
condition that has been complied with.

improvement, loss or deterioration of the thing during the Art. 1196. Whenever in an obligation a period is designated,
pendency of the condition: it is presumed to have been established for the benefit of
both the creditor and the debtor, unless from the tenor of
1. If the thing is lost without the fault of the debtor, the same or other circumstances it should appear that the
the obligation shall be extinguished; period has been established in favor of one or of the other.
2. If the thing is lost through the fault of the debtor,
he shall be obliged to pay damages; it is understood XPN: From the tenor of the obligation or circumstances
that the thing is lost when it perishes, or goes out surrounding the obligation it can be inferred that it was
of commerce, or disappears in such a way that its constituted to favor one of the parties, then, such party can
existence is unknown or it cannot be recovered disregard the period.
3. When the thing deteriorates without the fault of
the debtor, the impairment is to be borne by the “Payment within 6 months”- for the benefit of the debtor
creditor;
4. If it deteriorates through the fault of the debtor, “Payment with interest”- for the benefit of the creditor
the creditor may choose between the rescission of
the obligation and its fulfillment, with indemnity Q: When do we apply Art. 1197?
for damages in either case;
5. If the thing is improved by its nature, or by time, A: Art. 1197. If the obligation does not fix a period, but from
the improvement shall inure to the benefit of the its nature and the circumstances it can be inferred that a
creditor; period was intended, the courts may fix the duration
6. If it is improved at the expense of the debtor, he thereof.
shall have no other right than that granted to the
usufructuary. The courts shall also fix the duration of the period when it
depends upon the will of the debtor.
Q: What are the rights of a usufructuctuary?
In every case, the courts shall determine such period as may
A: Limited right of removal and should removal not be under the circumstances have been probably contemplated
feasible because damages will cause to the property, then he by the parties. Once fixed by the courts, the period cannot
shall have the right to off-set the cost of the improvement be changed by them.
against whatever damage he may have caused.
Q: Suppose A contracted B to build his dream house, with a
Q: Give an example of a loss which takes place on an gym, den, and a rose garden. Suppose, a month later he
obligation subject to a suspensive condition? comes to you, he demands the house already? Will be in
delay?
A: I will give to X my black horse which won at a race if X gets
the highest score in the quiz. X gets the highest score in the A: No, the obligation is obviously subject to a period. If the
quiz. The horse died without the fault of the debtor. The parties failed to agree, the court will fix the period and should
death of the horse will extinguish the obligation because the B still fail, he can now go to court asking for specific
horse died without the fault of the debtor. performance or rescission. The court must fix the period as
may have contemplated by the parties.
Q: How about in resolutory conditions? What will be the
effect of the happening of such? Q: How can the obligor/debtor lose the right to make use of
the period?
A: The primary effect is mutual restitution on the parties. Art.
1189 will also apply, only that there will be reversal of roles. A:
OBLIGATIONS SUBJECT TO A PERIOD Art. 1198. The debtor shall lose every right to make use of
the period:
Q: What is the important presumption when it comes to (1) When after the obligation has been contracted, he
obligations with a period? becomes insolvent, unless he gives a guaranty or security
(2) When he does not furnish to the creditor the guaranties
A: The presumption in the law is that both parties are or securities which he has promised;
intended to be benefited. This is important because neither (3) When by his own acts he has impaired said guaranties or
of the parties can either compel the performance of the securities after their establishment, and when through a
obligation or compel the acceptance. fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory;

(4) When the debtor violates any undertaking, in NOTE: We apply these provisions on alternative obligation if
consideration of which the creditor agreed to the period; the impossibility or the illegality comes after the constitution
(5) When the debtor attempts to abscond. of the obligation. if it comes before, it becomes a pure
obligation.
December 3, 2010
Q: Is consent of the creditor required by the debtor?
Q: Obligation may either be simple (only 1 prestation) or
multiple. Discuss these multiple obligations. A: No.
A: Q: What has to be done for the choice to take place?
Conjunctive Obligation-one where the debtor has to perform A: Notice to the creditor must be given. And from that
several prestation; it is extinguished only by the performance moment on, the alternative obligation shall become simple
of all of them obligation.
Alternative Obligation: there are several prestations but only Q: Discuss the effects of the thing due or the resulting
one is needed to be performed to extinguished the obligation impossibility before the choice is communicated.
Facultative Obligation: When only one prestation has been A:

agreed upon, but the obligor may render another in
substitution 1. If the choice is given to the debtor and all the
prestations are lost or rendered impossible:
ALTERNATIVE OBLIGATION a. Fortuitous event- obligation is extinguished
b. Fault of debtor- creditor is entitled to damages
Q: For us to say that there are several prestation due, is it which consist of the value of the thing which
required that these prestations be entirely different from was lost or becomes impossible.
one another? That they, for instance involve different c. Acts of creditor- debtor may avail of rescission
objects? under Art. 1203
A: No, it suffices that there be some variance with the terms NOTE: If some but not all is lost and the choice
and conditions of the obligation. belongs to the debtor, it would not matter if it
was due to the choice of the creditor
Ex: The object of the obligation is to deliver: 10 sacks of
sinandomeng rice, 10 sacks of jasmine rice, 10 sacks of NFA 2. If the creditor is given the choice:
rice. a. Not due to fortuitous event- all of the
prestations remain available for the creditor to
Q: Who has the power to choose as to which prestation will choose from. The value of the thing lost or
be performed? rendered impossible may be chosen.
A: Q: What if the last one was loss through fortuitous event

while the others are lost previously by the fault of the
GR: Debtor debtor (first three were lost due to the fault of the debtor?
XPN: Express grant in favor of the creditor of the right to A: The obligation is extinguished because the loss of the first
make a choice. three prestations implies that he simply did not choose them.
Since the last was lost due to fortuitous event, the obligation
Q: What will be the limitation on the right of the debtor? is extinguished.
A: He cannot choose that which is unlawful, impossible or

that which could have been the object of the obligation. FINAL NOTE ON ACCION PAULIANA
Q: What if only one is possible? NOTE: In accion pauliana, it must be shown that there was
unsatisfied writ of execution and that accion subrogatoria is
A: It will become a pure obligation. not applicable. This presupposes that it was a real transaction
(an honest to goodness transaction) as opposed to one which
is simulated. It may happen that the debtor in his desire to

defeat the rights of the creditor will ask someone to Lastly, you need not show that the credit in your favor was
cooperate with him and make it appear on paper that his contracted prior to the absolutely simulated contract.
properties are transferred to the person through a simulated
contract of sale. Among other things which the court used in declaring the
contract void are the following:
MBC vs. SILVERIO 1. The notarized document was not properly filed with
the clerk of court. Usually, a notary, at the end of the
Q: In case of absolutely simulated contracts, do we still year, will submit this to the clerk of court. This must
apply the requisites of accion pauliana? Do we need to show be properly bound to avoid any insertions of
that the debtor has no other properties against which the antedated notarized document. The proof of the sale
writ of execution may be used? was a loosely filed notarized contract
2. When Edmundo testified in the witness stand, he
A: This was answered in the case of Manila Banking cannot relay to the court how he paid the substantial
Corporation (MBC) vs. SIlverio. The MBC levied on a parcel of amount of the purchase price of the land. He cannot
land which belongs to Ricardo Silverio, the debtor. It was even describe how payment was made or how he
claimed by the nephew of Ricardo, Edmundo was in fact had the capacity to purchase the land. It was
already sold to him. Only the land was never registered absolutely simulated.
neither in the name of Ricardo nor in the name of Edmundo.
There was only a deed of sale. Edmundo, the nephew, JOINT AND SOLIDARY OBLIGATION
wanted to have the writ of execution cancelled. The MBC (Plurality of subjects)
opposed this. The MBC opposed this on the theory that the
contract of sale is absolutely simulated, hence, null and void. Q: When do we have plurality of subjects?
In effect, the MBC is asking for the court to set aside the
contract of sale which supposedly took place between A: If there are two or more debtors or two or more creditor.
Ricardo and Edmundo. The problem is the MBC never laid the
basis for this cancellation on the context of accion pauliana. Q: How will you describe the liability of the debtor and the
The MBC never alleged that its credit came before the rights of the creditor?
transaction. The MBC did not allege that Ricardo did not have
any other properties. So, if we will apply Adorable and A: Each one of the debtors would be proportionately liable
another case, perhaps, accion pauliana will not apply. It is for his share of the obligation and in the same manner, each
supposedly a remedy of last resort. one of the creditors would only be entitled to a proportionate
share of the obligation.
SC: There are at least 2 ways by which a creditor may be
defrauded by the debtor through contracting a fraudulent Q: What is the default?
transaction:
A: Joint obligation.
1. By contracting a transaction that is real, transferring
the property to a third person to defeat the right of XPNs:
the creditor
2. Simply, simulating transfer. 1. Express agreement
2. Law provides
The case here involves a simulated transaction. The 3. Nature of the obligations
distinction is very significant. Unlike a case where you are
trying set aside an honest to goodness transaction (Computation part)
fraudulently entered into by the debtor to defraud the
creditor, there is no need to show compliance with the
requirements for accion pauliana. You need not have to
comply with the prescriptive period of 4 years. You only need
to bring it in a timely manner. There is no prescriptive period
to bring an action against a void contract. Just don’t allow
yourself to be guilty of laches or estoppel.
Secondly, you need not show that you exhausted all the
properties of the debtor. No need for that.

DECEMBER 7, 2013 Q: Is there a difference between a penalty and liquidated

damages?
NOTE: We can have a divisible obligation that is at the same
time solidary and an indivisible obligation that is at the time A: If there is a penal clause and at the same time provision for
joint. In fact, the complication will arise if we have a joint liquidated damages, they are practically the same. In both
obligation which involves a subject matter that is indivisible. cases, you don’t need to prove the amount of damages you
are claiming.
Q: What is the rule in case of a joint obligation with an
indivisible subject matter? But if the creditor will be allowed to collect damages on top
of the stipulated penalty or stipulation on liquidated
A: The joint debtors must perform the obligation collectively. damages, damages per se under the provisions of the Civil
Code, then you will have to do so under the provisions of the
Q: What if there is default on the obligation or breach law. In other words, you need to prove these damages you
committed? suffered in relation to these additional damages that you are
seeking on top of the stipulation on liquidated damages and
A: The joint obligation is transformed to an obligation to penalty clause.
indemnify for damages due to the creditor. The debtors who
are not responsible for the delay or breach will not be Q: What are the instances when creditor can seek additional
responsible beyond the value of the contribution with damages on top of the penalty clause?
reference to the actual damages which was the value of the
obligation that they failed to perform. With regard A: Exceptions:
consequential damages, the debtor responsible for the
breach shall be solely responsible. 1. Parties stipulated
2. Obligor refuses to pay the penalty
In case of insolvency on the part of one of the debtors, the 3. Obligor is guilty of fraud in the fulfillment of the
co-debtors will not be liable obligation
OBLIGATION WITH A PENAL CLAUSE Art. 1226. In obligations with a penal clause, the penalty
shall substitute the indemnity for damages and the payment
Q: What is a penal clause? of interests in case of noncompliance, if there is no
stipulation to the contrary. Nevertheless, damages shall be
A: An accessory obligation to assume greater liability in case paid if the obligor refuses to pay the penalty or guilty of
of breach. By its term alone “accessory” it means that it fraud in the fulfillment of the obligation.
requires a principal obligation in order to validly exist.
The penalty may be enforced only when it is demandable in
Q: How does a penal clause act as a reparation and as a accordance with the provisions of this Code.
penalty on the other hand?
NOTE: If there is a penal clause that will take the place of
A: As reparation, it takes the place of damages in case the damages and interest, he can no longer claim except if there
principal obligation is not fulfilled. It is punitive when it seeks is a stipulation to the contrary or if the debtor is guilty of
to punish the obligor for the non-fulfillment of the principal fraud in the performance of the obligation or if there is
obligation. refusal on the part of the debtor to pay the penalty.
Q: In what instance can one seek for damages on top of the Ex: In an obligation to deliver X’s pride, if the debtor fails to
penalty provided in the penal clause? deliver, he will pay P100,000.00. The parties also stipulated
allowing creditor to seek additional damages on top of the
A: Penalty in the punitive aspect. penal clause.
Q: This can also be used as a compulsion to perform the Credit cards- if you fail to pay on due date, you will pay
obligation. How? interests and there is also a provision on payment of
surcharges (penalty).
A: It increases the coercive force of the obligation. In case of
non-performance, the obligation becomes more onerous on Q: Do you only impose the penalty only in case of non-
the part of the debtor. performance? If there is other kind of performance, can you
impose?

A: No. (1) By payment or performance:

(2) By the loss of the thing due:
Art. 1227. The debtor cannot exempt himself from the (3) By the condonation or remission of the debt;
performance of the obligation by paying the penalty, save in (4) By the confusion or merger of the rights of creditor and
the case where this right has been expressly reserved for debtor;
him. Neither can the creditor demand the fulfillment of the (5) By compensation;
obligation and the satisfaction of the penalty at the same (6) By novation.
time, unless this right has been clearly granted him. Other causes of extinguishment of obligations, such as
However, if after the creditor has decided to require the annulment, rescission, fulfillment of a resolutory condition,
fulfillment of the obligation, the performance thereof and prescription, are governed elsewhere in this Code.
should become impossible without his fault, the penalty
may be enforced. Q: Would these be exclusive such that if there is a mode
that is not included in the list, it cannot be said that it also
In case of incomplete or irregular performance, damages may extinguishes an obligation?
still be imposed. Under Art. 1227, in case of incomplete or
irregular performance, the penalty may still be enforced. The A: It is not exclusive.
courts can equitable reduced the debts due.
Q: Does prescription extinguish the obligation?
NOTE: On the part of the creditor who can demand the
fulfillment of the obligation and the satisfaction of the A: Only the right of action, not the cause of action.
penalty at the same time, the same may be express or
implied. Q: What can be an example of a caused that is not included
in the list that will cause the extinguishment of an
On the other hand, for the debtor to exempt himself from the obligation?
performance of the obligation by paying the penalty, this
right must be expressly reserved to him. A:
Q: Give an example of an obligation with a penal clause 1. Renunciation by the creditor in favor of the debtor
where the penalty is null and void. 2. Compromise of the parties
A: Penal clause where there is a stipulation that failure on the PAYMENT

part of the obligor to perform his obligation will give the
creditor the right to kill the debtor. Q: What does payment mean?
Art. 1230. The nullity of the penal clause does not carry with A: It means the fulfillment of the prestation due, a fulfillment
it that of the principal obligation. that extinguishes the obligation by the realization of the
purposes for which it was constituted
The nullity of the principal obligation carries with it that of
the penal clause. Q: Payment is commonly perceived as something that which
involved delivery of money, would this be understanding of
Q: Why is an accessory obligation cannot stand on its own? payment?
A: There prestation here but there is no consideration. The A: No.

consideration that supports the accessory is the same Art. 1232. Payment means not only the delivery of money
consideration that supports the principal. Hence, the nullity but also the performance, in any other manner, of an
of the principal obligation carries with it that of the penal obligation.
clause.
Essentially, payment can refer to any manner of performance
EXTINGUISHMENT OF OBLIGATION of the obligation. It may include the delivery of money but it
is not limited to the delivery of money.
Q: What are the different modes of extinguishing an
obligation? Q: Distinguish normal and abnormal payment.
A: A:
Art. 1231. Obligations are extinguished: NORMAL ABNORMAL

When the debtor When he is forced by means

voluntarily performs of a judicial proceeding, Q: What do we need to allege further to determine which
the prestation either to comply with the characteristic is unsatisfied?
stipulated prestation or to pay
indemnity A: The point in making a distinction is why is the law making a
Voluntary payment Involuntary payment distinction on these requisites? If it is a matter of intention,
we are depriving the creditor of his right. Integrity refers to
CHARACTERISTICS OF PAYMENT: the completeness of the obligation. For example, I will pay
you P5,000.00 but to the mind of the debtor, he is already
1. Integrity (Art. 1233) discharged with the obligation. To the debtor, that is already
a complete performance. Of course, the creditor will not
Art. 1233. A debt shall not be understood to have been paid agree. The creditor will be correct. There is violation of the
unless the thing or service in which the obligation consists integrity characteristic of the obligation. it is incomplete. But
has been completely delivered or rendered, as the case may if the debtor pays P5,000.00 and he’ll say, I will just give you
be. the other P5,000.00 when I come back, he is acknowledging
that he is not yet complete but he cannot perform it right
2. Identity (Art. 1244) away but he is performing it in partial payment. This is an
invalid payment because it violates the characteristic of not
Art. 1244. The debtor of a thing cannot compel the creditor integrity, but indivisibility of the obligation.
to receive a different one, although the latter may be of the
same value as, or more valuable than that which is due. With regard integrity of payment, there are exceptions:
In obligations to do or not to do, an act or forbearance 1. Substantial compliance:

cannot be substituted by another act or forbearance against a. The debtor must be in good faith, meaning he
the obligee's will fails to comply due to oversight, excusable
negligence or misunderstanding.
3. Indivisibility (Art. 1248) b. The nature of the deviation must be a slight
deviation. In other words, it is something which
Art. 1248. Unless there is an express stipulation to that is not substantial.
effect, the creditor cannot be compelled partially to receive
the prestations in which the obligation consists. Neither IDENTITY:
may the debtor be required to make partial payments.
a. Obligation to give specific thing- the very thing due
However, when the debt is in part liquidated and in part must be delivered
unliquidated, the creditor may demand and the debtor may b. Obligation to give generic thing –a thing which is of
effect the payment of the former without waiting for the the same kinds, quantity and quality must be
liquidation of the latter. delivered
c. Obligation to do or not to do-
Q: Integrity is somehow the same as indivisibility of
payment. How do we know which characteristic is XPNs:
applicable? How do we distinguish them?
1. Dacion en pago
A: In case of integrity, the debtor must comply with the 2. Facultative obligation
obligation completely. While in indivisibility, there are
instances when the obligor may fulfill the obligation partially Q: Why dacion en pago is an exception?
or on installment, as long as there is intention to fulfill at
some other time the obligation. The intention of the debtor is A: The obligation is payment of sum of money but the parties
material. agreed that instead of paying in sum of money what is
delivered is a property belonging to a debtor. The sanction is
A is indebted to B. The amount of loan obligation is that it will govern by the law on sales
P10,000.00. A went to B’s place to pay P5,000.00. What
characteristic of payment is satisfied? Art. 1245. Dation in payment, whereby property is alienated
to the creditor in satisfaction of a debt in money, shall be
A: Both integrity and indivisibility are complied. A merely governed by the law of sales.
gave P5,000 without any statement on whether he will still
give the other half to the obligee. Q: Wouldn’t this constitute pactum commisorium?

NOTE: They are those who can compel the creditor to accept
A: No. In dacion en pago, there is no mortgage involved. the payment. The physical act of paying can be made by
anyone who is not even interested in the obligation. It will up
Q: What law will now govern dacion en pago? to the creditor to accept the payment.
A: The law on sales Q: What if payment is made by a third person. Will this have
rd
the effect of extinguishing the obligation and the 3 person
Q: To what extent is the liability is extinguished? is one not interested in the onligation and made without the
consent of the debtor?
A: The entire obligation is extinguished based on the
agreement of the parties, which may be expressed or implied, A: No, the creditor cannot be compelled to accept payment.
in the same manner that they agree that the obligation is not
yet extinguished. If from their actions, they intended the Q: The creditor cannot be compelled to accept payment. But
rd
entire obligation be extinguished, then, it is extinguished. he can be compelled by a 3 person who is interested in the
obligation. Suppose A is the mother of B. B is very
Q: What happens if the original obligation is not payable in irresponsible and is known as someone who does not pay
sum of money? Can there be dation en pago? his obligation. Because of his reputation, his prospect of
getting married is getting dimmer by the day. You decided
A: Yes. Dacion en pago is essentially a specie of novation. In to take matters on your own hand. You want to pay B’s
fact, it is when the obligation is not payable in sum of money creditor, like C. Your reason is because A’s reputation is also
where dacion en pago as a specie of novation is applicable. In affected. Can A compel C to receive?
this case, there will only be a bit of deviation, we will have to
place this under the auspices of novation. A: No, such is not the interest contemplated by law. An
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example is a 3 party mortgagor. For instance, in case of non-
INDIVISIBILITY performance of the obligation, it will minimize his exposure.
Also, if you will allow the foreclosure proceedings to proceed,
XPNs: chances are you will lose your property. Usually, the value of
the mortgaged property is much higher than the obligation it
1. Stipulation of the parties secures.
2. when the debt is in part liquidated and in part
unliquidated, the creditor may demand and the
debtor may effect the payment of the former
without waiting for the liquidation of the latter
3. in solidary obligations, where the debtors are not
bound by the same terms and conditions
4. in case of compensation of unequal amounts
(extinguishment is only to the extent of the equal
amounts)
5. in case there are several guarantors for the same
obligation and they or one of them demands the
benefit of division
6. when the work is to be done by parts
7. when the debtor dies and he has several heirs and
the obligation is divisible
8. in joint obligations where each debtor is bound to
pay only his proportionate share
Q: Who can make payment?
A:
1. debtor
2. heirs and assigns
3. agents and representatives
4. third person interested in the obligation.

rd
Ex: A’s indebtedness is secured by a mortgage. Is the 3
person mortgagor subrogated to the right of the creditor?
December 10, 2013 Yes. But if you pay the obligation, what happens to the
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mortgage? If a 3 person pays the obligation, how will that
Material interest- economic prejudice affect the mortgage? The mortgage will be extinguished also.
rd rd
ex: 3 party mortgagor, guarantor, surety So to what rights will the 3 person be subrogated?
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Q: Supposing the payment is made by a 3 person, what IMPORTANT NOTE:
rights does such person acquire?
Art. 1237. Whoever pays on behalf of the debtor without
A: He will acquire right of reimbursement. the knowledge or against the will of the latter, cannot
compel the creditor to subrogate him in his rights, such as
Art. 1236. The creditor is not bound to accept payment or those arising from a mortgage, guaranty, or penalty.
performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to Art 1237 seems to imply that although the creditor cannot be
the contrary. compelled, he actually has the option to effect the
subrogation. This is not correct after discussing the effect of
Whoever pays for another may demand from the debtor the payment of the principal obligation on the accessory
what he has paid, except that if he paid without the obligation. This is the point. In case of an obligation of a
knowledge or against the will of the debtor, he can recover mortgage, the payment of the obligation, the mortgage is
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only insofar as the payment has been beneficial to the also extinguished. So, what rights of the creditor will the 3
debtor. person take in his place? What will be the subject of
subrogation? Nothing. If you were the creditor and you want
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Art. 1237. Whoever pays on behalf of the debtor without to subrogate the 3 person in your rights, what should you
the knowledge or against the will of the latter, cannot do? Instead of allowing him to make payment on the
compel the creditor to subrogate him in his rights, such as principal obligation, what should you do so that you will
those arising from a mortgage, guaranty, or penalty. subrogate him? You assign your credit together with a host of
all other rights accompanying such credit.
However, if the consent of the debtor is not given or if
payment is made against the will of the debtor, then the basis Q: How come in assignment you are able to subrogate the
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of recovery is the extent that the debtor is benefited. For 3 person into your rights?
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example, a debtor has a valid defense, if the 3 person pays
despite the obligation having expired, then there is no benefit A: In assignment, the principal obligation remains. It is not
or advantage on the part of the debtor by reason of the extinguished.
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payment. But the payment is valid nonetheless. It is the 3
person who is taking the risk here. Of course, this is subject to the nuances of the agreement
between the debtor and the creditor and the agreement
Q: Another instance when there is no right of between the creditor and the mortgagor or the guarantor. It
reimbursement? may be provided, in these accessory contracts that no
assignment of rights is allowed. Without this prohibition, the
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A: If the 3 person does not intend to be reimbursed. In transfer of these rights may be affected by way of a deed of
other words, he is donating the payment. To effect the assignment.
donation, obviously, the consent of the debtor is required.
But should the debtor withhold his consent to the donation, Q: Will the creditor also obtain payment of the obligation
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this will not affect the validity of the payment made by the 3 due to him if the vehicle is assignment?
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person. It is only a question of whether the 3 person has a
right to be benefited. A: Yes. The consideration for the assignment will now
constitute payment. But this will not be outrightly labeled as
The debtor’s consent is still necessary because no one can be payment but a consideration for payment. However, the
made a done against his will. effect is the same because if you were the creditor, you will
not receive something which is less than the amount due
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Q: Aside from reimbursement, what other rights will the 3 from the debtor.
person acquire?
Q: To whom should payment be made?
A:.
A:

1. creditor Example of document evidencing credit: promissory note

2. successors in interest payable to the order of A. In the absence of an indorsement
3. assigns making the instrument payable to C, C cannot claim on the
4. any person authorized to receive payment by law or instrument.
by stipulation
If the instrument is payable to the order of A, in the absence
Art. 1240. Payment shall be made to the person in whose of any indorsement by A in favor of C, we can say that C is
favor the obligation has been constituted, or his successor in merely in possession of the document evidencing the credit.
interest or any person authorized to receive it. He is not in possession of the credit. Payment to C will not
extinguish the obligation to pay A. The obligation subsists.
Q: What will be the effect if you pay to some random
person? Q: Give me an example when C is in possession of the credit
itself.
A: The payment is invalid and the obligation is not
extinguished. A: If the instrument is payable to bearer. The possession of
the instrument also means possession of the credit. Payment
XPNs: to C will now extinguish the obligation.
1. Payment to a third person is valid provided that it In case of universal heir who succeeded in the estate of the
redounded to the benefit of the creditor deceased which includes obligations owing to the deceased,
2. Payment made in good faith to any person in any payment made to the universal heir immediately after
possession of the credit shall release the debtor. the death of the deceased is valid notwithstanding the fact
that subsequently, that universal heir is declared
Art. 1241. Payment to a person who is incapacitated to incapacitated to succeed by reason of unworthiness. Payment
administer his property shall be valid if he has kept the thing made to him at that time when he is in possession of the
delivered, or insofar as the payment has been beneficial to credit remains valid. It will extinguish the obligation. it will
him. now be his obligation to return to the estate whatever he has
received. It is no longer the problem of the debtor.
Payment made to a third person shall also be valid insofar
as it has redounded to the benefit of the creditor. Q: What will be the effect of any incapacity on the part of
xxxx the payee?
Art. 1242. Payment made in good faith to any person in A: If the payee is incapacitated, it shall be valid to the extent
possession of the credit shall release the debtor. that he has kept the thing delivered, or insofar as the
payment has been beneficial to him.
Q: The law tells us the instances when we presume that the
benefit has redounded to the creditor, what are these Art. 1241. Payment to a person who is incapacitated to
instances? administer his property shall be valid if he has kept the thing
delivered, or insofar as the payment has been beneficial to
A: Art. 1241. x x x x him.
x x x x Such benefit to the creditor need not be proved in the Q: What kind of benefit do we speak of here?
following cases:
A: If he devoted the payment to things necessary to him, it is
a. If after the payment, the third person acquires the tantamount to a benefit which will make payment valid.
creditor's rights;
b. If the creditor ratifies the payment to the third Q: Aside from incapacity inherent on the part of the payee,
person; what other kinds of incapacity will prevent the payee from
c. If by the creditor's conduct, the debtor has been led extinguishing the obligation?
to believe that the third person had authority to
receive the payment. A:
NOTE: The third instance is different from payment to a JUDICIAL INCAPACITY- Incapacity that arises from judicial
person who is in possession of the document evidencing the acts.
credit.

Ex: Garnishment or order from the court to the debtor to 2. To give specific thing
retain the debt. An example of this is bank accounts which -He must deliver the very thing that has been agreed
can be the subject of the garnishment. The bank is the debtor upon as well as it accessions, accessories, fruits and
and the depositor is the creditor. income
Q: What if the bank released? Art. 1166. The obligation to give a determinate
thing includes that of delivering all its accessions
A: Such payment is void. The bank remains liable under the and accessories, even though they may not have
order of garnishment. It is as if no withdrawal is made. been mentioned.
Q: On the part of the payor, will incapacity be a factor? 3. To give a generic thing
- He must deliver the thing that belong to the same
A: genus or kind as that agreed upon. As to quality, the
debtor is required to delivery something of superior
a. In obligation to do, it does not matter because by quality but he cannot also delivery a thing of inferior
performing, he effects payment and the obligation is quality
extinguished.
b. In obligations to give, the debtor must deliver the Art. 1246. When the obligation consists in the
thing or to make a payment of sum of money but not delivery of an indeterminate or generic thing,
just physical delivery, there must be transfer of title. whose quality and circumstances have not been
He cannot transfer title unless he has capacity to act stated, the creditor cannot demand a thing of
because capacity to act is the power to do acts with superior quality. Neither can the debtor deliver a
legal effects thing of inferior quality. The purpose of the
obligation and other circumstances shall be taken
Art. 1239. In obligations to give, payment made by one who into consideration.
does not have the free disposal of the thing due and
capacity to alienate it shall not be valid, without prejudice 4. Obligation involves a sum of money
to the provisions of Article 1427 (payments made by the Art. 1249. The payment of debts in money shall be
minor) under the Title on "Natural Obligations." made in the currency stipulated, and if it is not
possible to deliver the currency, then in the
NOTE: There will be no right to recover if the obligee has currency which is legal tender in the Philippines.
otherwise spent the money or has transferred in good faith
NOTE: There was a time when we had this law that is the
Q: Where should payment be made? Uniform currency act (RA 529). That law actually prohibited
the parties from stipulating on the payment of monetary
A: obligation in currencies other than the Philippine Peso. But
now, the parties are now allowed to stipulate.
GR: Domicile of the debtor
Q: Suppose parties agree that payment shall be made in U.S.
XPNs: dollar, what rate will apply?
1. Stipulation to the contrary
2. Obligation to deliver a determinate thing and there A: The rate of exchange at the time of the performance of the
is no stipulation as to where should payment be obligation, if the parties had not stipulate.
made, then, the place where the thing is found at
the time of the constitution of the obligation, unless Q: Must payment always be in cash?
the same is transient or temporary.
A: No, payment in checks, other bills of exchange are
Q: How should payment be made? allowed. But these will not be as good as cash.
A: Q: If it is a cashier’s order/check? This is treated as good as
cash because they are guaranteed by the banks themselves?
1. To do or not to do
- the debtor performs the obligation by doing the A: In Philippine Airlines v. CA, the court held that any check
specified task or prestation or refraining from the for that matter will not produce the effect of payment unless
prohibited prestation or act they have been encashed or they have been destroyed on
account of the fault of the creditor.

A: The designation of the debt to which should be applied the

Q: What is inflation? Are monetary obligation affected by payment made by a debt several debt to the same creditor
the inflation or deflation in the market?
Q: Requisites?
A: It is decrease of the actual purchasing power of the
currency because there is more money than the goods A:
available in the market.
1. Several debts are due
This becomes relevant if the parties agree to a currency other 2. The same debtor and the same creditor
than the peso. Because in case of inflation, the peso is 3. The debts are all of the same kind
actually shrinking. Its value is getting lower. 4. The debts are all due
5. The payment made is not sufficient to cover all debts
2013: P2: $1 (Constitution of the obligation) 6. The parties have not agreed previously on the
2023: P50: $1 EXTRA-ORDINARY INFLATION: but there application
must be a declaration from the BSP that there is extra-
ordinary inflation or deflation. There must be a contract In simple terms, it is the designation of the debts which will
between the parties and the contract between the parties be extinguished by the payment
must have stipulated in the contract that the inflation or
deflation in the currency will be considered a factor in the Art. 1252. He who has various debts of the same kind in
performance of the obligation. favor of one and the same creditor, may declare at the time
of making the payment, to which of them the same must be
Art. 1250. In case an extraordinary inflation or deflation of applied. Unless the parties so stipulate, or when the
the currency stipulated should supervene, the value of the application of payment is made by the party for whose
currency at the time of the establishment of the obligation benefit the term has been constituted, application shall not
shall be the basis of payment, unless there is an agreement be made as to debts which are not yet due.
to the contrary.
GR: Debtor exercises the power
Q: Liability as to interest?
XPN: The creditor can actually preempt the debtor by issuing
A: a receipt to which the payment is applied. The debtor can
however contest this
MONETARY INTEREST COMPENSATORY
INTEREST Q: What are the parameters on the selection by the debtor?
Governed by the
provisions of Art. 1956 A: He cannot select that which is due, unless there is a
The interest due for the Interest as a penalty stipulation to the contrary or unless a period has been
simple use of the money; provided for his benefit.
no breach or delay yet
Requisites: No need for an express Q: Suppose the indebtedness is worth P80,000.00 and the
1. There must be an written agreement; it is other indebtedness is worth P20,000.00; the other
express agreement provided by the law as indebtedness is worth P40,000.00. The debtor only has
for the payment of penalty for breach or P60,000.00 in his hands but he wants to apply the payment
interest delay. to the P80,000.00 debt. Can he do that?
2. Such agreement
must be reduced in A: He cannot because even though he is given the option, the
writing debtor must still observe the basic requisites of a valid
payment. One of which is indivisibility of payment. There can
BSP Circular 799 effective July 1, 2013: Reduces the interest be no partial payment, unless the creditor agrees.
for loans, forbearance of money from 12% to 6%. It is uniform
now. PAYMENT BY CESSION
APPLICATION OF PAYMENTS DATION IN PAYMENT PAYMENT BY CESSION

Only 1 creditor There is more than 1
Q: What is application of payments? creditor
A transfer of property It calls for the transfer of
belonging to the debtor patrimony; all properties

Does not presuppose when the debtor’s entire

insolvency or illiquidity patrimony is being called Q: Discuss the process of consignation.
upon for the satisfaction
of your indebtedness, it A:
implies that the debtor
has difficulty in paying 1. There must be tender of payment unless it is
the obligation. exempted
Essentially, insolvent. If 2. There must be notice of the intention to consign to
not insolvent, illiquid, the creditor. The notice must already indicate where
that the debtor is the debtor intends to make the consignation (first
suffering from liquidity notice)
problems 3. Filing of the complaint against creditor coupled with
There is transfer of There is no transfer of judicial deposit of the thing due with proof of tender
ownership over the ownership but the and notice
property that the debtor debtor gives the 4. Notice to the creditor (second notice) and Notice to
is giving in lieu of money. authority to sell the all person interested
properties (only 5. There will be proceeding, the debtor must establish
administration is that consignation is proper:
transferred) a. The obligation is existing
Gives the debtor total Gives the debtor b. The obligation is due
extinguishment of the extinguishment of the c. The debtor made a tender
obligation if the parties obligation to the extent d. The tender was refused without a justified
agreed, but generally of what may be covered reason
only to the extent of the by the net proceeds of 6. After presentation of evidence of the debtor and
value of the property the sale (deduct creditor, the debtor may call upon the court to make
expenses for the sale a declaration
and expenses of
st
administration Q: When should the 1 notice be given?
CONSIGNATION A: Upon the filing of the complaint.
GR: Must be preceded with tender of payment Q: Can it be done upon the making of tender of payment?
Q: What is tender of payment? A: Yes. The tender of payment can be effected with
statement that should the creditor refuse payment, he will be
A: It must be intention of the debtor to pay his debt to the consignation of the subject of the obligation.
creditor coupled with the readiness to effect payment.
nd
Q: What is the purpose of the 2 notice (upon effecting
Q: Tender of payment alone will not extinguish payment. It consignation)?
must be coupled with consignation. But there are instances
when consignation alone will suffice. You can do away with A: For the creditor to be given the opportunity to question to
tender of payment. What are these? the validity of the consignation
A: NOTE: It is not the physical delivery of the object which will

extinguish the obligation. What will actually extinguish the
Art. 1256. x x x x obligation is the declaration of the court that consignation
Consignation alone shall produce the same effect in the has been valid.
following cases:
(1) When the creditor is absent or unknown, or does not Q: Suppose the obligation involved is subject to interest.
appear at the place of payment; Will it be suspended upon tender of payment or the
(2) When he is incapacitated to receive the payment at the consignation?
time it is due;
(3) When, without just cause, he refuses to give a receipt A: In case of monetary interest, the interest will continue
(4) When two or more persons claim the same right to accruing until payment is made. What will stop is the
collect; consignation of the amount to the court even before the
(5) When the title of the obligation has been lost. judicial declaration of the validity of consignation.

Condonation - an act of liberality whereby the creditor

LOSS OF THE THING DUE waives the enforcement of the obligation contracted in his
favor
Q: What is the principle of unforeseen events/ doctrine of
rebus sic stantibus? Art. 1270. Condonation or remission is essentially
gratuitous, and requires the acceptance by the obligor. It
A: When the parties entered into a contract they are may be made expressly or impliedly.
presumed to have taken into consideration the circumstances
prevailing at the time so that in case later on the One and the other kind shall be subject to the rules which
circumstances so materially change, making it difficult, but govern inofficious donations. Express condonation shall,
not impossible for the debtor to perform, the debtor may furthermore, comply with the forms of donation.
rescind the same.
Q: Is this similar to donation?
Art 1267 speaks of difficulty only, not impossibility. What is
involved in art 1267 is that there is a change of circumstances A: Yes, it is essentially donation, but a donation of credit
of the parties as to make the service difficult in such a way
that is manifestly beyond what was earlier contemplated by NOTE: The provisions on inofficiousness on donations apply.
the parties. This is an embodiment of the doctrine of And if we make an express donation, it is required that it
unforeseen events, on the theory that, when a debtor enters must follow the form for donations.
into transaction, he entered into a transaction based on the
prevailing circumstances. So that if the circumstances CONFUSION OR MERGER
drastically changed as to make it so difficult as to manifestly
beyond what was earlier contemplated, then the obligation Q: What is confusion or merger?
should be considered extinguished and the debtor is freed
from the obligation either in full or in part A: The character of debtor and creditor is merged into the
same person.
This is an extreme exceptional circumstance, we are not to
apply art 1267 liberally. Applying liberally would impair the Ex: Promissory note issued by A B C D E A
security of contracts.
Q: Suppose there are accessory obligations attached to the
Q: What are the requisites? principal obligation?
A: A: It will also apply to the accessory obligation but not the

other way around.
1. The performance must not be impossible
2. The circumstances affecting the performance of the Q: Is it possible to have confusion if we have plurality in the
obligation are beyond the what were contemplated passive side (ABC)? Y is also happens to be the debtor of A?
by the parties
3. The cause must be not due to the fault of the debtor A: Only A’s obligation is extinguished
Art. 1267. When the service (performance of the obligation)

has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be
released therefrom, in whole or in part.
Ex: A owns a repair shop. He orders parts from abroad from

B. Say the price is P100.00 per tire Suddenly, the government
imposes high taxes on the importation. Now, each tire is
taxed P150.00 which is supposed to be on the account of
seller, B. B will be having difficulty in the performance. This
cannot be a fortuitous event. What prevents is that there is
no impossibility. It is still doable, but it is only extreme
difficult which is beyond their intention.
CONDONATION OR REMISSION OF DEBT

governed by law and not subject to stipulation, except that

marriage settlements may fix the property relations during
JANUARY 6, 2014 HAPPY NEW YEAR! the marriage within the limits provided by this Code. (Family
Code)
CONTRACTS
Q: Who are bound by the contract?
Q: What is a contract?
A:
A:
1. Parties
Art. 1305. A contract is a meeting of minds between two persons 2. Their heirs and assigns
whereby one binds himself, with respect to the other, to give Qualification: The heir is not liable beyond the value
something or to render some service. (1254a) of the property he received from the decedent.
Q: What are the characteristics of contracts? Q: Is there any instance when the heirs and the assigns will
not be bound by such contract?
A:
A: Except in case where the rights and obligations arising
1. Autonomy of the will of the parties from the contract are not transmissible by their nature, or by
stipulation or by provision of law.
Art. 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may Q: Supposing Pedro has acted as a guarantor and then Pedro
deem convenient, provided they are not contrary to law, died living A behind as heir. Will A step into the shoes as the
morals, good customs, public order, or public policy. debtor?
2. Obligatory force A: No. It will fall under the exception. It is non-transmissible.

The obligation of the guarantor is monetary in nature. He
Art. 1315. Contracts are perfected by mere consent and pays if the principal debtor does not pay. It is intransmissible
from that moment the parties are bound not only to the not because of its nature. Neither the law provides for such.
fulfillment of what has been expressly stipulated but also to He can still be bound by the contract of guaranty as stated in
all the consequences which, according to their nature, may the case of Estate of K.H Hemady vs. Luzon Surety Co.: “The
be in keeping with good faith, usage and law. contracts of suretyship entered into by K. H. Hemady in favor
of Luzon Surety Co. not being rendered intransmissible due to
3. Mutuality of contracts the nature of the undertaking, nor by the stipulations of the
contracts themselves, nor by provision of law, his eventual
Art. 1308. The contract must bind both contracting parties; liability thereunder necessarily passed upon his death to his
its validity or compliance cannot be left to the will of one of heirs.”
them.
Q: What are the exceptions to the principle of relativity?
4. Relativity of contracts
A:
Art. 1311. Contracts take effect only between the parties,
their assigns and heirs 1. Stipulation pour atrui
2. Persons coming into possession of property involved
NOTE: If you are not a party to the contract, then you are not in contracts creating real rights
bound by its terms and conditions and you cannot be sued 3. Contractual interference
under its terms and conditions. 4. Whenever a contract is entered into to defraud a
creditor or accion pauliana
Q: Where do we find public policy?
A. stipulation pour atrui
A: It is usually indicated in the definition provided in the law.
Q: What are contracts with a stipulation pour atrui?
Ex: Art. 1. Marriage is a special contract of permanent union
between a man and a woman entered into in accordance
A: If a contract should contain some stipulation in favor of a
with law for the establishment of conjugal and family life. It
third person, he may demand its fulfillment provided he
is the foundation of the family and an inviolable social
communicated his acceptance to the obligor before its
institution whose nature, consequences, and incidents are
revocation. A mere incidental benefit or interest of a person Here, the creditor who is not a party to the fraudulent
is not sufficient. The contracting parties must have clearly and transaction is allowed not to enforce, but to set it aside on
deliberately conferred a favor upon a third person. the theory that it was entered into to defraud the creditors.
Q: What are the requisites? D. Contractual interference
A: Requisites:
1. That the contracting parties must have clearly and a. The existence of a valid contract
deliberately conferred a favor upon the third person b. Knowledge of the third person of the existence of
2. That there should be no compensation for the the contract
stipulation in favor of the third person c. Interference by the third person in the contractual
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3. That the stipulation in favor of the 3 person should relation without legal justification or excuse
not be the entire contract but merely a part thereof
4. That neither of the contracting parties bear the legal NOTE: The law requires knowledge of the interferor to have
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representation or authorization of the 3 person knowledge of the contract. Can we expect a third person to
that is, there is no agency have actual knowledge of the contract between 2 people?
5. That the 3rd person (beneficiary) communicated his How can this be possible? Does the law require actual or
acceptance to the obligor before its revocation by constructive knowledge? No, but at least knowledge of facts
the original parties. from which if followed by a reasonable inquiry will lead to
disclosure of the contractual relation between the parties to
NOTE: Jurisprudence recognizes that acceptance may also be the contract.
made by suing in court to enforce the stipulation in his favor.
It does not have to be an independent acceptance ahead of Q: If you want to pirate Ted Failon and you offer him a job,
the enforcement of the stipulation. Enforcement itself may can you say you have no knowledge of the contract?
constitute acceptance.
A: No, although you may have no knowledge of the actual
Examples: contract between ABS-CBN and Ted Failon, you have
knowledge of facts from which if followed by a reasonable
1. The agreement between the credit card companies inquiry will lead to disclosure of the contractual relation
and merchants like retail stores or department between the parties to the contract.
stores. They will have an agreement involving an
undertaking of the merchant that they will accept Q: Suppose, you are MVP, the head of TV5 and you feel you
credit cards issued by the credit card companies. can only become competitive if you have Marc Logan and
This means benefit in favor of the holders. This you can only attain credibility if you will have him in your
means that they can enter into transactions without nightly newscast. You succeed. Will you be liable if it turns
using cash. This is an example of stipulation pour out that Marc Logan is under contract with ABS-CBN?
atrui. Whenever the holder will use their credit card
this would mean acceptance of the stipulation in A: TV5 is allowed to pirate talent to further their business
their favor. interests. In this case, there is contractual interest but this is a
2. Third party insurance liability- which is mandatory case of damnum absque injuria. There may be damage, but
for every motor vehicle. The provision is in favor of there is no injury.
the public—anyone which the motor vehicle owner
may injure. Q: What will be the liability of Marc Logan?
B. Persons who has come into possession of property A: He is independently liable for breaching his own contract.
which happened to be the object of a contract
creating real rights Q: What are the Stages in the life of the contract?
Ex: Mortgage is a real right. Whenever you constitute a A:

mortgage in your real property, it will follow the property
wherever it goes. The third person stands to lose something 1. Preparation, conception, or generation.
when the property is foreclosed. 2. Perfection or birth of the contract
3. Consummation or death
C. Contract in fraud of creditors
Q: How contracts are perfected?

Q: What should characterize offer and acceptance?

A: Contracts are perfected upon the meeting of the offer and
the acceptance. A: The offer must be certain and the acceptance absolute.
Art. 1315. Contracts are perfected by mere consent, and A qualified acceptance constitutes a counter-offer.
from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to Ex: Gusto mo ba ng juice?
all the consequences which, according to their nature, may Counter-offer: Pwede bang iced tea na lang?
be in keeping with good faith, usage and law. (1258)
Q: Must the offer and the acceptance be made face to face?
Art. 1316. Real contracts, such as deposit, pledge and
Commodatum, are not perfected until the delivery of the A: No. It can be through a letter or a telegram.
object of the obligation. (n)
Q: In case of letter, there is a lag. How do we deal with it?
Classification of contracts according to perfection:
A: We follow the “cognition theory”. Acceptance made by
1. Consensual or that which is perfected by mere letter or telegram does not bind the offerer except from the
consent; time it came to his knowledge. The contract, in such a case, is
2. Real contract or that which is perfected by the presumed to have been entered into in the place where the
delivery of the thing subject matter of the contract offer was made.
(depositum, commodatum, pledge) (Art. 1316).
3. Solem contracts or that which requires compliance Q: What is the significance of this theory on the part of the
with certain formalities prescribed by law which is an offeror?
essential element thereof (donations of real
property which must be in a public instrument) (De A: Until he learns of the acceptance of the offer, he can still
Leon, 2008). withdraw the offer because there is no contract to speak of
yet.
Q: A is in a bank to deposit money. A hold-upper suddenly
bumped you and get your money. Is the Bank bound to Q: What are the elements of consent?
reimburse you of the money you deposited? Suppose, you
already signaled to the teller? Shouldn’t the amount taken A:
be credited from you?
1. capacity to give consent,
A: No. The money should be turned over to the teller first 2. intelligent and free,
because a bank deposit is a contract of loan. Contract of loan 3. express or tacit manifestation of the will, and
is a real contract which is not perfected until the delivery. 4. concurrence of the internal will and the
manifestation (otherwise, there is danger of vitiation
REQUISITES OF CONTRACT of consent)
Q: How many kinds of requisites do we have? Q: Who are the people who cannot give consent?
A: A:
1. Essential Art. 1327. The following cannot give consent to a contract:

a. Consent (1) Unemancipated minors;
b. Object (2) Insane or demented persons, and deaf-mutes who do
c. Cause not know how to write. (1263a)
2. Natural
3. Accidental Others:
1. those under hypnotic spell
Q: What is consent? 2. those under state of drunkenness
A: Consent is manifested by the concurrence of offer and Q: What are the vices of consent and its effects?
acceptance with respect to the object and the cause of the
contract. A:

1. mistake
2. fraud NOTE: Art. 1340. The usual exaggerations in trade, when the
3. violence other party had an opportunity to know the facts, are not in
4. intimidation themselves fraudulent. (n)
5. undue influence
We have the rule: “Buyer be fair”. Buyer must always be on
Q: What kind of mistake is contemplated by law which will your toes.
make the contract voidable?
January 11, 2014
A: There must be substantial mistake as to the cause or the
conditions which principally moved one of the contracting Forms of Contract
parties to enter into the contract.
Article 1356. Contracts shall be obligatory, in whatever form
Q: What is the rule in case of mistake as to the qualities of they may have been entered into, provided all the essential
the parties? requisites for their validity are present. However, when the
law requires that a contract be in some form in order that it
A: may be valid or enforceable, or that a contract be proved in
a certain way, that requirement is absolute and
GR: No. indispensable. In such cases, the right of the parties stated
in the following article cannot be exercised.
XPN: Error as to person is a cause vitiating consent if such
qualifications have been principal cause of the contract. GR: A contract is valid in all forms
Q: Should it be a mutual mistake? XPN: When the law requires a contract to be in a specific
form for it to be:
A: It is sufficient that there is mistake as to one of the parties. a. valid
b. enforceable
Q: What is the rule in case of mutual mistake? c. to prove it before the courts of law
A: It must pertain to the real intent, in such a way that it Q: Supposing that the contract is orally made and one of the
defeats the real intention of the parties. parties would want to enforce it, it would be difficult to go
to court without any written document on hand, how could
Q: In case of violence, does it matter who employed the we resolve this problem, if we want to enforce a contract
violence or intimidation? which is not written?
A: No, even a third person may employ such. A: Remedy to compel the other party to have it reduce in
writing is applicable to the interested party.
Q: In case of fraud, does it matter? .
Article 1357. If the law requires a document or other special
A: Yes, machinations or insidious words must have been form, as in the acts and contracts enumerated in the
employed by one party. following article, the contracting parties may compel each
other to observe that form, once the contract has been
Q: What kind of fraud will vitiate consent? perfected. This right may be exercised simultaneously with
the action upon the contract
A: Dolo causante
Q: Oral contract of sale and you wish to enforce the sale, are
Q: What kind of representation is required? you saying that you as a buyer can enforce to compel the
seller to reduce the document in writing?
A: Active representation.
A: Article 1357 which gives the parties the power to compel
In case of passive representation, you are allowing the other one another to observe the proper form would not be able
party to assume incorrectly: and the reason being is that ----
Art. 1339. Failure to disclose facts, when there is a duty to Q: What is now the rule when can we impose article 1357?
reveal them, as when the parties are bound by confidential When will it not apply?
relations, constitutes fraud. (n)

A: Oral contract of sale is a valid. A: No need to reduce it into public instrument because the
contract of lease does not create real rights, only enforceable
Q: Why cannot we allow the buyer to invoke Article 1357? rights against the lessor.
A: Article 1357 cannot apply if the form is necessary to make Be that as it may, if it exceeds 1 year- it must be in writing,
the contract valid or to make it enforceable or allow its proof. this time for purposes of making it enforceable.
Q: Supposing what we have is a written contract of sale of Q: Re #2 : Supposing you are very rich, you have a falling out
real property, only not notarized, not reduced into a public with your husband, “pakawalan mo lang ako, isusuko ko ang
instrument, will Article 1357 apply? lahat ng ari-arian natin”. You go to court and filed for
separation of property and now you are separating from
A: Yes, we have a valid contract which is enforceable under me, I am now executing a waiver of my rights and interests
rd
statute of frauds but to bind 3 persons specifically to be over the community properties. Would that be sufficient?
reigistrable, it has to be in a public instrument. We can
observe now Article 1357. A: It should be in a public instrument because it falls under
Article 1358 (2)
Law will also be applicable with regard to contracts under
article 1358. 1358 requires that contracts be in the proper Q: What if your husband does not want to execute a public
form not for validity nor enforceability but for convenience. instrument because that is his plan all along?
Q: What are these contracts? A: Then your recourse is Article 1357.
A: NOTE: You cannot invoke Article 1357 if the contract is

unenforceable in the first place
Article 1358. The following must appear in a public
document: REFORMATION OF INSTRUMENTS
(1)Acts and contracts which have for their object the
creation, transmission, modification or extinguishment of Q: What is the most important thing to remember when we
real rights over immovable property; sales of real property deal with this topic of reformation of instruments, what
or of an interest therein are governed by articles 1403, No. does it presuppose?
2, and 1405;
(2) The cession, repudiation or renunciation of hereditary A: That there is a valid and existing contract but the real
rights or of those of the conjugal partnership of gains; intention of the parties has not been expressed in the
(3) The power to administer property, or any other power instrument embodying their agreement.
which has for its object an act appearing or which should
appear in a public document, or should prejudice a third Q: Why is it important to bear this in mind?
person;
(4) The cession of actions or rights proceeding from an act A: Because the grounds of reformation of an instrument is so
appearing in a public document. similar to annulment of contract.
All other contracts where the amount involved exceeds five But the very important distinction between reformation of
hundred pesos must appear in writing, even a private one. contracts and annulment of contracts is that there is a
But sales of goods, chattels or things in action are governed meeting of the minds in reformation of instrument whereas
by articles, 1403, No. 2 and 1405. in annulment by mistake, fraud, inequitable conduct or
accident prevented the meeting of the minds or perfection of
Q: A contract of lease over a parcel of land, should this be in consent.
a public instrument under article 1358?
Q: One of the grounds for reformation of instrument is
A: If it is for more than 1 year it should be in writing to be mistake, what kind of mistake will be sufficient to give rise
enforceable to mistake?
Q: Let us saying you are renting out one of the condominium A: Mistake of fact or mistake as to the contents of the written
towers in UST you will stay there for 10 months, is it instrument.
required that your contract with the building owner be in a
public instrument? Q: Should it be mutual mistake or is it enough that there be
mistake on the part of one of the parties?

A: 10 years. However if the petition for the reformation of

A: If we are to rely on mistake standing by itself, it should be instrument has for its object a contract which purports to be
mistake on the part of both of the parties but if it is a mistake a contract of sale with right of repurchase when in fact it is
is unilateral, then mistake alone will not be sufficient. It must only a contract of mortgage, it does not prescribe so long as
be coupled with fraud and inequitable conduct on the part of the seller remains to be in possession of the property.
the other party.
Q: Aside from prescription, when else will the petition for
Q: Example of mutual mistake the reformation of the contract be impossible?
A: S is seller A: Even if the period has not prescribed yet, if anyone of the
B is buyer parties should have filed an action for specific performance
on the instrument then we cannot subsequently ask for its
There is meeting of the minds of the sale of the land of S reformation.
including improvement on the land, in reducing it into writing
the word was turned from “including” to “excluding” Reason: When you try to enforce an instrument in court you
improvements, both of them did not read the contract and are basically affirming the correctness of its contents. You
both of them just signed the contract. cannot later on go back to court and say ‘hey this does not
reflect our agreement’.
This usually occurs when there is a mistake in the manual
drafting of the instrument such as when they delegate this to Q: The law singled out contract with right to repurchase as
one of the parties’ secretary. particularly susceptible to this action for reformation, why is
that? There are a lot of contracts which do not express the
Q: Unilateral mistake as a ground for reformation? true agreement of the parties, day in and day out, so why
does the law pay particular attention with this contract of
A: Only one of the parties is made to believe that the sale with right of repurchase as particularly to set the
instrument embodies the real agreement of the parties and it ground for reformation?
is attended by fraud, inequitable conduct.
A:
Wrong example: Sale of land, what was embodied in the
instrument was a car and there was fraud. Q: Who will be prejudiced by the failure of the instrument
to express real agreement is a mortgage or a pledge?
Q: Why was the example wrong?
A: The debtor mortgagor.
A: Mistake should pertain to the contents of the instrument
and not to the principal conditions of the contract as in this Q: Why would the creditor be interested in camouflaging
case where the mistake refers to the very object of the their real agreement as with this sale with right of
contract – sale of land =immovable ; car- movable. repurchase? Why cannot they stipulate that the contract
will be automatically his? Why not just provide that the
This has nothing to do with agreement of the parties with property will automatically become that of the creditor’s?
respect to the sale of land.
A: It is contrary to public policy because this amounts to
Q: When will the reformation of instrument will not be pactum commissarium.
available?
Contract of sale with right to repurchase can become a
A: vehicle to circumvent against the prohibition against pactum
commissorium. Instead of mortgage, deed of sale tayo with
Article 1366. There shall be no reformation in the following right of repurchase and if you are not able to pay me, the
cases: property becomes mine.
1. Simple donations inter vivos wherein no condition is
imposed;
2. Wills;
3. When the real agreement is void.
Q: Does this action for reformation of instrument prescribe?

RESCISSIBLE CONTRACTS VOIDABLE CONTRACTS UNENFORCEABLE VOID CONTRACTS

CONTRACTS
Premise/Basis Damage to contracting a. Incapacity to a. Absence or excess Generally, if we

rd give consent
parties or to 3 persons of authority on the lack the essential
b. Consent is part of the person requisites of a
vitiated by
representing the valid contract.
vices of
consent principal party
mistake,
-it is unenforceable
violence,
intimidation, as to the party
undue represented
influence or
fraud b. Non- compliance
with the statute of
frauds
c. incapacity of both
contracting parties
Character- is It is valid and enforceable Valid and enforceable Valid but cannot be Non existent
it valid, is it but susceptible to enforced in court
enforceable Q: Where lies the defect? annulment
A: It is susceptible of
rescission and until it is
rescinded, it will be treated
just like any valid and
enforceable contract
Prescription It prescribes It prescribes Not susceptible to Action to Declare it

prescription. There void
is no remedy to
declare a contract does not prescribe
unenforceable.
Q: Supposing you
They are simply do not want to go
unenforceable. to court to declare
it void, is that an
They cannot be the option?
basis of a successful
court action A: Yes, a party to a
contract can
simply not do
anything. He may
just wait for the
contract to be
enforced against
him at which time
he may raise the

defense of nullity
and no matter
how long will it
take him
Ratification Susceptible of ratification Susceptible of Susceptible of

ratification ratification
If incapacitated person
becomes capacitated and
guardianship ceases, he
may choose later on to
ratify or the absentee
rd rd
Who has the 3 person can assail Only the parties Only the parties 3 person can
right to assail assail.
these
contracts? Is Q: If third person is
the remedy allowed to assail,
available to what must be
rd
3 parties shown?
also?
A: Damages (same
thing with
rescission)
What kind of Direct and collateral Attack Direct only Direct only Direct and
attack may be collateral
lodged Q: How do you
against it attack an
unenforceable
contract
collaterally?
A: By objecting to
the presentation of
oral evidence
Q: How about a
direct attack? You
constituted Mr.
Luna to mortgage
your land but
instead of
mortgage, he sold
it? What action
would you file?
A: Quieting of title

As to Premise/Basis
Re: Voidable Contracts 1. 1.Rescissible contracts
2. 2.Voidable contracts
Of only one of the incapacitated- emphasis on this one 3. 3.Unenforceable contracts
because if both of them are incapacitated then the contract is 4. 4.Void contracts
unenforceable
Accion Pauliana
Q: Is vitiation of consent the same as absence of consent?
One of the remedies under 1381 under subpar. (a)
A: No. Absence of consent- contract is void not just voidable
Q: Supposing that the contract entered into in fraud of
Re: Unenforceable Contracts creditor is absolutely simulated, is that possible?
Q: Mali sagot: When it is not in writing when it is required A: Yes.

by law, so are you saying that donation of personal property Q: Would the fact that it is absolutely simulated be more
worth 10k if done orally is not enforceable because it is favorable to the creditor who is seeking to set this
required by law to be in writing and its not? fraudulent contract aside?
A: Yes.
A: The requirement that it is to be in some form does not
necessarily render it unenforceable, if there is non Q: Why?
compliance, it can be a formal contract – non compliance
with the formalities of the contract will render it null and A: If the fraudulent contract happens to be simulated at the
void, not just unenforceable. What we meant really is that if same time, it is void and inexistent in which case it can be
there is non compliance with the statute of frauds. safe to say that it can be disregarded without proof of the
other requisites had you proved accion pauliana, you do not
As to character need to prove that the debtor is insolvent, or that you have
Re: Unenforceable exhaustive all your remedies and that you have an unsatisfied
writ of execution, just to get this fraudulent contract which is
Q: What does it mean that it is unenforceable in contract? absolutely simulated set aside.
Let’s say Ms. S entered into a contract of sale of a parcel of
land with Ms. B, can he not file a complaint? If S want to Silverio vs. Metropolitan Bank
collect, S cannot go to court at all?
There was a transfer of property from the uncle
A: S can go to court Silverio to the nephew Silverio. Nephew Silverio did
not really have the means to pay for such a valuable
Q: Why is it unenforceable then? property so apparently sale was made to insulate
the property from the creditor of the uncle Silverio,
A: But your action is not dismissible on the ground that it is the creditor being Metrobank. Although the creditor
unenforceable. On the assumption that there is no other here, transfer remained in the nephew, still
evidence and only parole evidence is available to prove your Metrobank caused its attachment and the theory
case and if you are not allowed to present parole evidence, being the transfer to nephew is fraudulent and
then your case will be dismissed on your failure to prove your resorted to only to defraud Metrobank, that it is
case. In that case it is unenforceable absolutely simulated.
a. The nephew wanted the writ of attachment
Q: When do you raise this? to be lifted- I am the real owner, my
property should not be levied by the bank.
A: upon the presentation of oral evidence b. Court refused to lift the attachment and
sided with the bank.
Classes of defective contracts c. When it refused to lift the attachment, it
also effectively sustain the position of the
We have an entire spectrum of contracts varying as to bank that the transfer was fraudulent. That
effectiveness, we have a perfectly valid contract then we go is the necessary implication that the bank
to rescissible contract then voidable contract, unenforceable thinks that the property is still owned by
contract and at the other end- void contract. Those between the elder Silverio.
valid and void are valid but somehow defective.

Can the court do that given that there is no some part of the purchase money; but when a sale is
unsatisfied writ of execution or elder Silverio is made by auction and entry is made by the
insolvent. Kasi nga Accion Pauliana primarily auctioneer in his sales book, at the time of the sale,
subsidiary in nature aside from proving the of the amount and kind of property sold, terms of
insolvency, you show that you tried to avail of accion sale, price, names of the purchasers and person on
subrogatoria but the same failed. Dito nilevy, pina whose account the sale is made, it is a sufficient
attach without all of these requisites being proven. memorandum;
e. An agreement for the leasing for a longer period
SC said court was correct. What we have here is not than one year, or for the sale of real property or of
an honest to goodness transaction entered into to an interest therein;
defraud the creditor. This is an absolutely simulated f. A representation as to the credit of a third person.
contract which can be set aside or disregarded
without having to prove the requisites attending the (3) Those where both parties are incapable of giving
availability of accion pauliana. consent to a contract.
It is more advantageous to the creditor if the Statute of Frauds

contract used to defraud him is absolutely
simulated. Q: Why is it called the statute of Frauds?
Substance of Rescission is accion pauliana and discussed it in A: It is to prevent a situation where the parties would have to
relation to article 1191. rely on the memory of witnesses who in the course of their
testimony would be committing perjury or falsification
Voidable contract in relation to consent whether by intention or not? It is also a reason that if there is
execution (whole or partial) it takes the contract out of the
UNENFORCEABLE CONTRACTS ambit of the Statute of Frauds because the execution is the
affirmation of what the true intention of the parties. If
Q: What are the contracts which are considered as execution has been made then the possibility of fraud is
unenforceable? either reduced at almost nothing or at the very least minimal.
A: Q: What does the statute of fraud require?
Article 1403. The following contracts are unenforceable, A: It requires that the agreement should be in writing or if
unless they are ratified: you don’t’ have the entire agreement in writing, you should
have some notes or memorandum of the agreement in
(1) Those entered into in the name of another person by one writing.
who has been given no authority or legal representation, or
who has acted beyond his powers; Q: What exactly does that mean?
(2) Those that do not comply with the Statute of Frauds as set A: You should have the principal condition, the parties, their
forth in this number. In the following cases an agreement name, their details appearing in writing- to say at the very
hereafter made shall be unenforceable by action, unless the least that there was compliance with the STATUTE OF
same, or some note or memorandum, thereof, be in writing, FRAUDS.
and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received Q: Does the statute of frauds require that all these
without the writing, or a secondary evidence of its contents: memorandum or notes appear in 1 legal document?
a. An agreement that by its terms is not to be
performed within a year from the making thereof; A: No. It can be a series, it can be several notes, several
b. A special promise to answer for the debt, default, or pieces of memorandum. So if you are going to exchange
miscarriage of another; letters and there you made mention of conditions, terms
c. An agreement made in consideration of marriage, relating to the agreement you are trying to negotiate then all
other than a mutual promise to marry; these letters taken together may be considered compliant
d. An agreement for the sale of goods, chattels or with the Statute of Frauds. However times are changing,
things in action, at a price not less than five hundred people send now email, they communicate thru email. What
pesos, unless the buyer accept and receive part of if one has are not letters, not handwritten notes, will these
such goods and chattels, or the evidences, or some be considered compliant with Statute of Frauds?
of them, of such things in action or pay at the time
A: When the Civil Code was enacted, our forefathers did not
imagine that this time will come that they can communicate
thru email.
Basis:
E-Commerce Act Section 6. Emails are considered functional

equivalent of any written document
Contracts under Statute of Fraud:
#1 Q: Impossibility of completing the contract within 1 year

or should this be also by stipulation of the parties?
A: Both
Q: From what point do we reckon 1 year? From making of

contract or from performance?
A: From making of the contract
#2 Q: How do we know that it is a special promise and not

an act of expromission? Special promise to answer in case of
default of another vs. just paying outright, or by
representing yourself as the new debtor- latter need to be
compliant with the Statute of Fraud. How do we know if it
falls under the Statute of Frauds?
A: The promise must be collateral in a sense that, the other

remains to be a principal debtor because the promise
enumerated under the statute of frauds pertain to answer for
the default of another. Principal Debtor remains in the
picture, only this time you are providing for a security in case
the credit will not be delivered but it is a different thing if you
will substitute yourself for the debtor and assume the
obligation directly, which makes the promise independent.
Should creditor decide to accept payment from you – It will
be a case of payment made by third person, you are not
simply guaranteeing or acting as a surety.
---END---

CIV 2 Prelim exams Answer: reformation (remedy)

17. Debtors A.B.C. and D owed creditors E and F the
1. Reformation of contract is not available in the amount of 145k (?); how much can E collect from A?
following cases except: Answer: This is a joint on both sides. 5k
Answer: C (contract of sale with right of repurchase) 18.
2. Debtor can never be in delay in: Answer: Upon extra-judicial demand. (although
Answer: C- Obligation not to do judicial demand is also an option) Best answer is
3. Husband’s marriage to his wife has been governed extra-judicial demand because you do not have to go
by an oral agreement providing for the regime of to court to place your debtor in delay.
complete separation of property since their wedding 19. An obligation guaranteed by A under PN… signed by
on February 23, 1986. X,Y and Z.
Answer: C (can compel his wife to reduce it in writing Answer: Anyone of X, Y or Z alone as this is a case of
…because it is not governed by the statute of frauds: passive solidarity involving an indivisible obligation
there has been performance and this is stricken out 20. The remedy of accion pauliana is available:
of the coverage of the Statute of Frauds) Answer: judgment CR because the remedy requires
4. Subsequent negotiation between…. that there must be unsatisfied writ of execution
Answer: B. Extinguishment of the entire obligation 21. The consent of DR is not required except:
due to foreclosure Answer: C. Novation of indebtedness through
5. An obligation to do arise… subrogation. Here you will need the consent of all
Answer: D. Suspensive period the parties. This is what differentiates subrogation
6. The remedy of specific performance derived from assignment. In subrogation, since you are
Answer: C effecting a novation, you need the consent of the
7. The condition which requires DR.
Answer: Mixed 22. A passenger which alighted from a bus.
8. The following will be recognized (even if valid where Answer: quasi-delict. Keyword here is that you want
they were executed)…except: the employer to be directly liable for the act of the
Answer: Joint will EE. In criminal actions you cannot do that, the
9. Absence of express stipulation in writing: liability is with the driver. The ER is only subsidiarily
Answer: (A) solutio indebiti liable. For quasi-delicts, the ER will be directly suid
10. The following may be ratified except: with the EE subject to the defense of exercising due
Answer: Void contracts diligence and supervision.
11. X is a passenger in a bus. It was owned by C. criminal 23. An obligation subject to a purely potestative….
action for reckless imprudence.. This can refer to either DR or CR (always interested
Answer: an action for damages arising from criminal in creating the obli.)
negligence. This is different from quasi-delict under Answer: dependent on the debtor’s will and the
Art. 2176 which is an independent civil action. condition is suspensive in nature
12. There was a watch…. 24. Oral sale of__
Answer: the exception to the rule exempting for loss Answer: VOID (illegal object)- outside the commerce
due to a fortuitous event; XPN to XPN: If the loss of man. It is part of the public domain.
occurred after there has been unjustifiable refusal 25. (17:20)
on part of CR the payment; R refuses to accept the Answer: parties are in pari delicto. The buyer here is
watch without just reason not an innocent party. The prohibition is provided
13. Concert…. for by the law.
Answer: Only damages. Neither specific nor 26. Condition: If he is killed by criminals
substitute performance will apply. Answer: This is similar to an insurance policy. If you
14. A, B, C and D are solidary debtors. A paid the entire got killed, the insurance company will be liable. This
obligation amounting to P110. how much can A is an obligation subject to a suspensive condition. Sa
collect…. (there is insolvency) discussion natin, valid ito. The circumstance relating
Answer: C (P40.00) to murder does not constitute the prestation. The
15. Miguel is indebted to Juan in the amount of 80k. obligation is simply to pay a sum of money. From the
Miguel offered to give his omega watch (amounting point of view of the condition, it is still valid as the
to 65k) to Juan by way of dacion en pago. upon person is not required to perform the murder
delivery, Miguel’s debt is: himself. The condition is if he is killed by criminals.
Answer: completely extinguished 27. The following are valid and enforceable except:
16. A and B entered into a contract of loan….there’s Answer: Oral partition of real property
contract of sale with right of repurchase, etc. 28. (20:25)

Answer: Against the law. There is a specific provision the signing of the agreement and the balance of 65k
under the Family Code. from the first amount derived from the local sale of
29. Absolutely simulated contract iron ore… To secure the payment of the balance of
Answer: Null and void. It has to do with the intention P65,00, F delivered to D __ bond dated December 8,
by which it was entered into. 2009 and set to expire upon a period of 1 year. Up to
30. BONUS December 8, 2010 when the bond expired, no sale of
31. “I Promise to pay” the 24,000 tons of iron ore had been made nor the
Answer: passive solidarity P65,000 balance of the price had been paid to D. D
Active solidarity can only arise by stipulation and then went to court to collect the balance of P65,000.
there’s no showing in the question that there is such In his defense, F states that his obligation is not yet
stipulation due because it is subject to a condition of the sale of
32. (23:00) the said iron ore and the said condition has not yet
Answer: (B or D?) the creditors are joint not solidary been fulfilled. If you were the court you would?
33. Contract of sale by Jess 18 yrs. old, (1986) Answer: A. Reject his defense because a sale is an
Answer: Voidable. At that time, Jess is still a minor. onerous and a commutative contract.
34. Civil liability of parents (24:00) 42. The sale of the iron ore is…
Answer:____ Answer: () the obligation is void. That is why we
35. cannot say that it is potestative condition because
Answer: A. What right is given to DR in an obligation otherwise the obligation will be void. We would
subject to a suspensive condition with respect to need to adopt the interpretation that will allow the
improvements…Right of a usufructuary: right of greatest reciprocity of rights.
limited right of removal (1189) 43. If you were the lawyer of D, will you be filing an
36. A is obligated to pay B in the amount of 45k, 1 year action for specific performance?
after Feb_2010. Believing that the obligation has Answer: C . The obligation is subject to a period and
become due, A paid B the amount of 45k after 6 the debtor has lost the right to make use of the
months. What is B’s obligation to A? period because of his failure to replace the security
Answer: C. To give back the entire 45k plus interest which is the surety bond (Gaite vs. Fonacier)
as this is an obligation subject to a suspensive 44. If D goes to you to represent him in court that you
period. A distinction should be made between take action on September 2010, what complaint will
premature payment made under a suspensive you file then?
period and a suspensive condition must be made. In Answer: C. Action to fix the period (obviously the
the former, there is an express provision for the right parties intended a period to govern their obligations
to recover interest. In case of suspensive condition, but they failed to specify. Without fixing the period,
the law is silent as to the right to recover interest. you will not know if there is already a delay or if
37. The 4year period within which accion pauliana must there is cause to make a demand)
be brought to rescind transactions made by the 45. B is building his house and C is his contractor.
debtor to defraud his creditor is counted from Unfortunately, C has no commercial credit because
Answer: D. From the time the writ of execution of his low standing in the community and D, who
obtained by the creditor is returned unsatisfied. An owns a local lumber refuses to extend C commercial
unsatisfied writ of execution is indispensable in credit. Having no money and credit, C was unable to
accion pauliana. purchase the materials…. B entered into an oral
38. B’s express condonation of the obligation of A to agreement with D whereby D agreed to deliver
deliver a parcel of land must be embodied in? 10,000 worth of lumber to c construct B’s house. The
Answer: A: if condonation is express, it must be in contract entered into by B with D is
the form of a donation and a donation of land must Answer: A. A contract of guaranty. The lumber is to
appear in a public instrument. be delivered to the contractor, C, and there was an
39. …..X’s employer has to prove the following except? assurance on the part of the owner that he was good
Answer: C. liquidated damages…. for the amount to be delivered. This is a special
40. Based on the same facts, you will advise X’s undertaking to answer for the indebtedness of B.
employer that it has no cause of action against the 46. The status of B’s contract with D is?
company B based on? Answer: B, unenforceable because it falls under the
Answer: B coverage of Statute of Frauds.
41. D Executed a deed of Assignment where he 47. Renato, a judgment creditor, purchase the right to
transferred to F all his rights and interests over the repurchase under a pacto de retro sale, the land of
24,000 tons of iron ore in consideration of the sum his judgment Debtor, ___, at an execution sale. The
of P75,000, P10,000 of which have been paid upon

period of redemption of the right to repurchase that

was sold to Renato under execution…
Answer: C. No effect insofar as the title to the land is
concerned
48. The effect of payment or the lack of effect of the
payment on the preceding number is premised on?
Answer: B. The fact that Renato is not indebted
(Renato is not the obligor, what he has is the right to
repurchase. We cannot apply here the rules on
payment made by a third person)
49.


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NOTES ON CIVL LAW REVIEW 2

Kenneth Hizon, King Hizon, and Marjorie Perez________________________________________________________________________________________________

UNIVERSITY OF SANTO TOMAS

CIVIL LAW REVIEW II:

he has not discharged the same. However, the debtor is

Facultad de Derecho Civil 1

1. To give Q: Why is it important for a prestation to have an equivalent

Facultad de Derecho Civil 2

Pelayo v. Lauron: This is a case about obligation to pay the

It would have been a different case if the employer is also

Facultad de Derecho Civil 3

2. The officious manager must not have been

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Q: But do you agree that the presence of the contractual A:

Facultad de Derecho Civil 6

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a. If the source of the obligation is the law, quasi-

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NOTE: It cannot apply to give a specific object because in

A: Q: If substitute performance is availed of, what does it do?

Facultad de Derecho Civil 12

Q: What is dolo causante? DELAY

Facultad de Derecho Civil 13

If the wedding cake arrived just minutes before the time A:

Facultad de Derecho Civil 14

he is in bad faith then accion pauliana will have to prosper

Facultad de Derecho Civil 15

Q: How will you know if the breach is substantial?

A: If it already avoids the purpose for which the obligation is

Ex: In a contract of sale to deliver jasmine rice to the buyer.

Q: Give an example of causal?

A: For instance, there is an obligation to deliver a cell phone

Q: What is the prescriptive period under Art. 1191?

A: 10 years from the time the breach is committed.

Q: Suppose the contract to be rescinded is a contract of sale

A: The rescission should be by judicial action or notarial

Q: Can contract to sell be the object of rescission under Art.

A: No, it is not available in a contract to sell.

Q: What is a contract to sell?

A: One where the seller will retain full ownership of the

Q: Why is rescission under Art. 1191 inapplicable in a

Facultad de Derecho Civil 16

In case of suspensive condition, it affects the birth of the

Facultad de Derecho Civil 17

Q: When we speak of a purely potestative obligation and

Facultad de Derecho Civil 18

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A: Q: What has to be done for the choice to take place?

Facultative Obligation: When only one prestation has been A:

A: Q: What if the last one was loss through fortuitous event

A: He cannot choose that which is unlawful, impossible or

Facultad de Derecho Civil 20

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DECEMBER 7, 2013 Q: Is there a difference between a penalty and liquidated

Facultad de Derecho Civil 22

A: No. (1) By payment or performance:

A: Penal clause where there is a stipulation that failure on the PAYMENT

A: There prestation here but there is no consideration. The A: No.

Art. 1231. Obligations are extinguished: NORMAL ABNORMAL

Facultad de Derecho Civil 23