COURSE SYLLABUS

THE LAW ON OBLIGATIONS AND CONTRACTS 1

Pamantasan ng Lungsod ng Marikina
Reviewer

COURSE OUTLINE

I. Introduction to Law
II. General Provisions on Obligation
III. Nature and Effect of Obligations
IV. Different Kinds of Obligations
V. Extinguishment of Obligations

TEXT
The New Civil Code of the Philippines (Required)

MIDTERMS EXAMS: Obligations [Oral examination]

The exam will consist of problem-solving and short answer questions based on the class
lectures and the assigned reading materials.

COURSE SCHEDULE AND READING MATERIALS

SESSION 1
Preliminary and Administrative Matters

SESSION 2

Introduction to Law
a. Concepts and Definition
- a body of rules of conduct of binding legal force and effect.
- hierarchy of laws
b. Kinds, Classification and Divisions
- Non-state: Customary, moral and divine laws.
c. State Law
d. Definition: Law on Obligations and Contracts
“An obligation is a juridical relation whereby a person (called the creditor) may demand from
another (called the debtor) the observance of a determinative conduct (the giving, doing, or
not doing), and in case of breach, may demand satisfaction from the assets of the latter.

General provisions on Obligations

1. Definition of Obligation (Art. 1156, NCC)

A juridical necessity to give, to do or not to do.

- juridical necessity→ means the court can be asked to order the obligor/debtor to
perform the obligation.

2. Essential Requisites of Obligation

1 Atty. S. C. Madrona, Jr.

Atty. Patrick Sicat
Juris Doctor
1 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 Subject-persons
a. An active subject (called the obligee or creditor) — the possessor of
a right; he in whose favor the obligation is constituted. He has the
power to demand the performance of the obligation
b. A passive subject (called the obligor or debtor) — he who has the duty
of giving, doing, or not doing. He is the one bound to perform the obligation

The object or prestation

the subject matter of the obligation. A prestation is an obligation; more specifically, it
is the subject matter of an obligation and may consist of either —
c. Giving a thing
d. Doing a certain act
e. Not doing a certain act

The efficient cause (the vinculum juris or juridical tie)

— the reason why the obligation exists. The law speaks of an obligation as a
juridical necessity to comply with a prestation. There is a “juridical necessity,” for
non-compliance can result in juridical or legal sanction.

Example — D30 promises to paint VP Leni's picture for VP as a result of an

agreement.
Here A is the obligor; B is the obligee;

the painting of Leni’s picture is the object or prestation;

the agreement or contract is the efficient cause.

3. Natural Obligations (Arts. 1423-1430, NCC)

Kinds of Obligations as to basis and enforceability
Civil Natural
Basis Positive, man-made Equity, natural law
Enforceability Grants a right of action Does not grant.

Except:

If voluntarily fulfilled, creditor can

still retain the benefits.

EXAMPLE: If the action for the payment of a debt has already prescribed, the obligation
is converted from civil to natural (See Art. 1139 to 1155 for Prescription). Note that what
prescribed is the “action” and not the obligation. If still fulfilled after the period has expired,
debtor can no longer demand the return of what has been delivered.

4. Concepts and Sources of Obligations (Arts. 1157-1162, NCC)

4.1 Law (Art. 1158)

4.2 Contracts (Art. 1159)

Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.

Atty. Patrick Sicat

Juris Doctor
2 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
4.3. Quasi-contracts (Art. 1160, NCC) – Definition; kinds

KINDS OF QUASI-CONTRACTS
Negotorium Gestio
‣ This takes place when a person voluntarily takes charge of another’s
abandoned business or property without the owner’s authority. (Art. 2144).
Reimbursement must be made to the gestor for necessary and useful expenses, as a
rule.

(Art. 2150) ‣ Art. 2144 — Whoever voluntarily takes charge of the agency or
management of the business or property of another, without any power from the latter, is
obliged to continue the same until the termination of the affair and its incidents, or to
require the person concerned to substitute him, if the owner is in a position to do so.
‣ BUT — This juridical relation does not arise in either of these instances — a.
When the property or business is not neglected or abandoned b. If in fact the
manager has been tacitly authorised by the owner.

Solutio Indebiti
‣ Art. 2154 — If something is received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it arises.

‣ Example — If I let a storekeeper change my P50.00 bill and by error he gives me

P50.60, I have the duty to return the extra P0.60 3.

Other Quasi-Contracts
‣ Other circumstances involving support, funeral expenses, medical expenses of a
person who cannot give consent to the contract, during fortuitous events, etc.

‣ Such as — a. When during a fire, flood, or other calamity, property is saved

from destruction by another person without the knowledge of the owner, the latter is bound
to pay the former just compensation. (Art. 2168) b. Any person who is constrained
to pay the taxes of another shall be entitled to reimbursement from the latter. (Art. 2175)

PROBLEM: A, resident of an island struck by a storm, found a decaying body and buried
the same without intention for it to be a gratuitous act. Finding C, aunt of the deceased,
demanded reimbursement for the cost of burial.

Is there an obligation to reimburse? Yes. Obligation arose from Art. 2165.

4.4. Crimes or delict (Art.1161, NCC) – Scope of liability

4.5. Quasi-delict (Art. 1162, NCC)—Definition; Crimes vs. Quasi delict

- A quasi-delict is a fault or act of negligence (or omission of care) which causes damages
to another, there being no pre- existing contractual relations between the parties. (Art. 2176)
Negligent acts→ excludes the notion of willfulness or intent

5. Concepts of obligor and obligee

Atty. Patrick Sicat

Juris Doctor
3 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
SESSION 3
Nature and Effect of Obligations

a. Rights of Creditor and Duties of Debtor

a.1 Obligation to give (Arts. 1163-1166, NCC)

DUE DILIGENCE IN THE PERFORMANCE OF OBLIGATIONS

Article 1163. Every person obliged to give something is also obliged to take care of it
with the proper diligence of a good father of a family, unless the law or the stipulation
of the parties requires another standard of care. (1094a)

Article 1173. XXXXX If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good father of a family shall be
required. (1104a)

APPLICABILITY OF ART. 1163

1. It applies only to obligations to give
‣ This is expressed in Art. 1163.
‣ BUT — Even in obligations to do or not to do, proper performance with due
diligence is also required. (See Art. 1173)
2. It applies only when the subject-matter of the obligation is a determinate
thing.
a. Determinate thing
b. Generic thing

Article 1164. The creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it until
the same has been delivered to him. (1095)
▪ 3 types of fruits:
1. Natural- spontaneous products of the soil, young and other
products of animals
2. Industrial- fruits of your own labor
3. Civil- rent, prices of building
Article 1165. When what is to be delivered is a determinate thing, the creditor, in
addition to the right granted him by article 1170, may compel the debtor to make
the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be
complied with at the expense of the debtor. If the obligor delays, or has promised
to deliver the same thing to two or more persons who do not have the same
interest, he shall be responsible for any fortuitous event until he has effected the
delivery. (1096)
Article 1166. The obligation to give a determinate thing includes that of

Atty. Patrick Sicat

Juris Doctor
4 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 delivering all its accessions and accessories, even though they may not have
been mentioned. (1097a)

a.2 Obligation to Do (Art. 1167, NCC)

Article 1167. If a person obliged to do something fails to do it, the same shall be executed
at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be undone.
(1098)

a.3 Obligations not to do (Arts. 1168)

Article 1168. When the obligation consists in not doing, and the obligor does what
has been forbidden him, it shall also be undone at his expense. (1099a)

b. Grounds for liability for damages (art.1170, NCC)

b.1 Delay (Art. 1169, NCC) – Definition; Kinds; Effects; Rule and Exceptions (When
demand is not necessary to put debtor in delay)

Or Mora/Default

Article 1169. Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to
perform.

Article 1165. XXXXXX If the obligor delays, or has promised to deliver the same thing to
twoKINDS
or moreOF DEFAULT
persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery. (1096)
1. MORA SOLVENDI — DEFAULT ON THE PART OF THE DEBTOR

2. MORA
Article 2215. InACCIPIENDI — DEFAULTand
contracts, quasi-contracts, ONquasi-delicts,
THE PART the OF court
THE may
CREDITOR
equitably
mitigate the damages under circumstances other than the case referred to in the preceding
article,‣ as What
in the is the remedy
following of the debtor if the creditor is in mora accipiendi?
instances:
(4) That the Consign
a. loss it in court
would have (expenses
resulted chargeable
in any event; to creditor); or
b. Keep it himself (here he should still exercise diligence and care, but
this time, he would not be liable for loss due to a fortuitous event).
3. COMPENSATIO MORE — WHEN IN A RECIPROCAL OBLIGATION BOTH
PARTIES ARE IN DEFAULT

b.2 Fraud (Art. 1171) – Definition; Kinds

Atty. Patrick Sicat

Juris Doctor
5 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 - Dolo or Deceit

b.3 Negligence (Arts. 1172-1173, NCC) – Definition; kinds; Negligence vs.

Diligence; Kinds of diligence

- Fault or culpa

b.4 Contravention of the tenor of the obligation (Art. 1170, NCC) – Meaning
b.5 Fortuitous event (Art. 1174, NCC) – Definition; kinds; requisites; rule and
Exceptions

c. Presumptions (Art. 1176, NCC) – Definition; Kinds; When not applicable

d. Remedies available to creditors for the satisfaction of their claims (Art. 1177, NCC)

OBLIGATIONS TO OBLIGATIONS TO OBLIGATIONS NOT

GIVE DO TO DO
1. Action for Specific 1. Action for Substitute 1. Action to Compel
Performance Performance the the Debtor to
(Art. 1165) (Art. 1167) Undo what has
2. Action for 2. Action to Compel the been Done (Art.
Substitute the Debtor to Undo 1168)
Performance (Art. Improper 2. Resolution or
1165, 2nd par.) Performance (Art. Cancellation (Art.
3. Resolution or 1167, 2nd par.) 1191)
Cancellation (Art. 3. Action for 3. Action for Damages
1191) Resolution or (Art. 1170)
4. Action for Damages Cancellation
(Art. 1165, 1st par.; (Art. 1191)
1170) 4. Action for Damages
(Art. 1170)

SESSION 4
NATURE AND EFFECTS OF OBLIGATION

Different kinds of obligations

a. Secondary Classifications under the Civil Code
a.1 Unilateral vs. bilateral (Arts. 1168-1169, NCC)

Unilateral- one party is bound to perform an obligation while in a bilateral, both parties
are bound to perform a certain kind of prestation.

(e.g. Donations/ losing something, then you give a reward)

a.2 Real vs. Personal (Arts. 1163-1168, NCC)

Real- obligation to give

Personal- obligation to do or not to do
Atty. Patrick Sicat
Juris Doctor
6 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 a.3 Determinate vs. Generic (art. 1165, NCC)
a.4 Civil vs. Natural (Art. 1423, NCC)
a.5 Legal, Conventional and Penal (Arts. 1157, 1159, 1161, NCC)

b. Primary Classifications under the New Civil Code

b.1 Pure and Conditional (Arts. 1179-1192)

Article 1179. Every obligation whose performance does not depend upon a future or
uncertain event, or upon a past event unknown to the parties, is demandable at once.

Every obligation which contains a resolutory condition shall also be demandable, without
prejudice to the effects of the happening of the event. (1113)

When the obligation contains no term whatever upon which depends the fulfilment of the
obligation, it is considered pure

‣ It is immediately demandable and there is nothing to exempt the debtor from compliance
therewith.

CONDITIONAL OBLIGATIONS
A conditional obligation is one which is subject to a condition.

What is a condition? ‣ It is a future AND uncertain event — upon which the acquisition or
resolution of rights is made to depend by those who execute the juridical act. Is a “a past
event unknown to the parties” a condition?

‣ TOLENTINO — NO. A condition must be uncertain. The uncertainty in this case is only
in the mind of the parties, and not in reality, there is no uncertainty to the event itself, for
it has either already happened or has not happened.

KINDS OF CONDITIONS
As to the effect of the happening of the condition —
1. Suspensive condition — the happening of the condition gives rise to an obligation

condition which suspends rights and obligations (or the validity of the entire contract) until
a certain future event occurs.

[ e.g. I will support you if he wins the lotto]

2. Resolutory condition — the happening of the condition extinguishes rights already

existing. (Art. 1181)

Article 1181. In conditional obligations, the acquisition of rights, as well as the

extinguishment or loss of those already acquired, shall depend upon the happening of the
event which constitutes the condition. (1114)

Article 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon the
will of a third person, the obligation shall take effect in conformity with the provisions of
this Code. (1115)

Atty. Patrick Sicat

Juris Doctor
7 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
Article 1183. Impossible conditions, those contrary to good customs or public
policy and those prohibited by law shall annul the obligation which depends upon
them. If the obligation is divisible, that part thereof which is not affected by the impossible
or unlawful condition shall be valid.

It refers to a situation wherein the fulfillment of a condition extinguishes an obligation

already existing.

also, called “condition subsequent” Conditional Obligation

[I will support you. However, I will stop if you eat a rabbit/ I will always give you P20 every
day. But, if your classmate wins the lotto, I will stop.]

b.2. Obligations with a period (Arts. 1180, 1193-1198, NCC)

Article 1193. Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when that day comes. Obligations with a resolutory period take effect
at once, but terminate upon arrival of the day certain. A day certain is understood to be
that which must necessarily come, although it may not be known when. If the uncertainty
consists in whether the day will come or not, the obligation is conditional, and it shall be
regulated by the rules of the preceding Section.

A period has reference to a “day certain” which is understood to be that which must
necessarily come, although it may not be known when.

REQUISITES
A period must be —
1. Future — It must refer to the future.
2. Certain — It must be certain (sure to come) but can be extended. (If eliminated
subsequently by mutual agreement, the obligation becomes pure and immediately
demandable).
3. Possible — It must be physical and legally possible, otherwise the obligation is void.

b.3. Alternative vs. Facultative Obligations (Arts. 1199-1206, NCC)

Alternative — one where out of the two or more prestations which may be given, only one
is due.

Facultative — one where only one prestation has been agreed upon but the obligor may
render another in substitution.

b.4. Joint and Solidary Obligations (Art. 1207-1222, NCC)

JOINT- one in which each of the debtors is liable only for a proportionate part of the debt,
and each creditor is entitled only to a proportionate part of the credit. Each creditor can
only recover his share of the obligation and each debtor can only be made to pay his part.

Meaning→ In Joint Obligations, the debtor is liable only for the amount in which he is
due. Thus, the Creditor can only demand from that person the amount which he owes. In
Filipino, magkano ang utang mo, yon lang ang babayaran mo.

(a) E.g. 1- A and B are joint debtors of C to the amount of P1,000,000. C can demand
only P500,000 from A, and only P500,000 from.

Atty. Patrick Sicat

Juris Doctor
8 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 (b) E.g.2- A and B are joint debtors of C, D, E, and F, who are joint creditors to the
amount of P1,000,000. C may demand only P125,000 from A, and P125,000 from
B. D, E, and F, have the same rights as C.

SOLIDARY- one in which each debtor is liable for the entire obligation, and each creditor
is entitled to demand the whole obligation. Each creditor may enforce the entire obligation,
and each debtor may be obliged to pay it in full.

Meaning→ Pwede kang maging liable sa full amount. Kahit lagpas pa ito sa utang mo.

b.5. Divisible vs. Indivisible Obligations (Arts. 1223-1225, NCC)

Divisible- One in which partial performance of the obligation is possible.

Indivisible- One in which partial performance of the obligation is not possible.

The difference between indivisibility and solidarity lies in the fact that in solidary
obligations, each creditor may demand the full presentation and each debtor has likewise
the duty to comply with the entire prestation, while in indivisible joint obligations, each
creditor cannot demand more than this share and each debtor is not liable for more than
his share.

Indivisibility refers to the presentation which is not capable of partial performance, while
solidarity refers to the legal tie or vinculum defining the extent of liability.

Examples —

‣ Joint divisible obligation — A and B are jointly liable to X for P1 million.




‣ Joint indivisible obligation — A and B are jointly liable to give X this car.



b.6 Obligations with a Penal Clause (Arts. 1126-1304, NCC)

SESSION 5
Extinguishment of Obligations (Art. 1231, NCC)—Cause of Extinguishment not under Art.
1231.

Article 1231. Obligations are extinguished:


(1) By payment or performance;

(2) By the loss of the thing due;

(3) By the condonation or remission of the debt;

(4) By the confusion or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation.

Other causes of extinguishment of obligations, such as:

annulment,

Atty. Patrick Sicat

Juris Doctor
9 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 rescission,
fulfillment of a resolutory condition,
and prescription,

1. Payment or performance (Art. 1232-1254)

REQUISITES — In order the payment may product all its effects, the series of requisites
pertaining to the following should all concur —
1. The person who pays — payor must have the capacity to pay
2. The person to whom payment should be made — payee must have the capacity to
accept payment
3. The thing to be paid — payment must be made in accordance with the obligation
4. The manner, time, and place of payment, etc. — payment must be made at the right
time and place

GR: The Creditor is not bound to accept payment from a 3 rd person.

EXCEPTION: If:
a. stipulation to the contrary;
b. person making the payment has an interest in the fulfillment of the obligation
(co-debor, guarantor); or
c. If creditor voluntarily accepts payment.

Payment by third person- THIRD PERSON PAYS WITH THE CONSENT OF THE
DEBTOR —

Full reimbursement — Third person may recover from the debtor what he has paid 


Subrogation — Third person can compel the creditor to subrogate him in his rights
(such as those arising from a 
mortgage, guaranty, or penalty) 


THIRD PERSON PAYS WITHOUT THE CONSENT (KNOWLEDGE OR AGAINST THE

WILL) OF THE DEBTOR —

Beneficial reimbursement — Third person may can recover only insofar as the payment
has been beneficial to the debtor

Examples —

If X pays for Y’s transportation fare, without Y’s knowledge, or against Y’s will, and later
discovers that Y was entitled to half-fare, X can recover only said half-fare, even if he had
paid the full-fare. This is clearly the fault of X.

A owes B P1,000,000. Later, A paid B P700,000, leaving a balance of P300,000. C, a

classmate of A, and intending to surprise A, paid B the sum of P1,000,000 thinking that A
still owed B that amount. He did this without knowledge of A. How much can C recover
from A? C can recover only P300,000 from A, because it is only up to this amount that A
has been benefited. C can recover the remaining P700,000 from B who should not have
accepted complete payment for a debt already partially paid. If B incidentally is in bad
faith, B is responsible not only for the return of the P700,000 but also for the interest in
lieu of damages.

Atty. Patrick Sicat

Juris Doctor
10 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
DATION IN PAYMENT (DACION EN PAGO)
RULE — DATION IN PAYMENT IS A VALID FORM OF PAYMENT AND IS GOVERNED
BY THE LAW ON SALES

‣ Dation in payment is that mode of extinguishing an obligation whereby the debtor

alienates in favor of the creditor, property for the satisfaction of monetary debt.

1.a. Payment by Cession (Art. 1255)

DEFINITION OF PAYMENT BY CESSION

Article 1255. The debtor may cede or assign his property to his creditors in payment of
his debts. This cession, unless there is stipulation to the contrary, shall only release the
debtor from responsibility for the net proceeds of the thing assigned. The agreements
which, on the effect of the cession, are made between the debtor and his creditors shall
be governed by special laws. (1175a)

‣ It is the process by which a debtor transfers all the properties not subject to execution
in favor of his creditors so that the latter may sell them, and thus apply the proceeds to
their credits. It is also known as “Voluntary Assignment in Favor of Creditors”.

1.b. Tender of payment and consignation (Arts. 1256-1261, NCC)

Article 1256. If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the consignation
of the thing or sum due. Consignation alone shall produce the same effect in the following
cases:
(1) When the creditor is absent or unknown, or does not appear at the place of payment;
(2) When he is incapacitated to receive the payment at the time it is due;

(3) When, without just cause, he refuses to give a receipt;

(4) When two or more persons claim the same right to collect;
(5) When the title of the obligation has been lost. (1176a)

Article 1257. In order that the consignation of the thing due may release the obligor, it
must first be announced to the persons interested in the fulfillment of the obligation.
The consignation shall be ineffectual if it is not made strictly in consonance with the
provisions which regulate payment.

TENDER OF PAYMENT

‣ It is the act of offering the creditor what is due him together with a demand that the
creditor accepts the same.

CONSIGNATION

‣ It is the act of depositing the thing due with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment. It generally requires a prior tender
of payment. (Limkako v. Teodoro)

‣ Distinguish tender of payment and consignation — The clear meaning of these words
show their difference. Tender is the antecedent of consignation, i.e., an act preparatory
Atty. Patrick Sicat
Juris Doctor
11 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 to the consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain. Tender of payment may be
extrajudicial, while consignation, is necessarily judicial, and the priority of the first is the
attempt to make a private settlement before proceeding to the solemnities of consignation

EFFECT OF TENDER WITHOUT CONSIGNATION

RULE — Tender of payment without consignation does not extinguish the debt;
consignation must follow

WHEN CREDITOR IS JUSTIFIED IN REFUSING TENDER OF PAYMENT

‣ The creditor is justified in refusing to accept the tender of payment if the tender of
payment is not valid. To be valid, the tender of payment must have the following requisites
—

1. It must be made in legal tender (lawful currency).

2. It must include whatever interest is due.
3. Generally, it must be unconditional.
4. The obligation must already be due.

2. Loss of the thing due (arts. 1262-1269, NCC)

OBLIGATIONS TO GIVE A SPECIFIC THING — THE OBLIGATION IS EXTINGUISHED

EXCEPT — In these cases, the obligation is not extinguished but converted into a
monetary obligation (payment of damages) —
a. If the debtor is at fault

b. When the debtor is made liable for a fortuitous event because of— i. A provision
of law — such as in the following cases —
(1) When the debtor is in default (mora) (Art. 1165)
(2) When the debtor has promised to deliver the same thing to two or more
persons (parties) who do not have the same interest (Art. 1165)
(3) When the obligation arises from a crime. (Art. 1268)
(4) When a borrower (of an object) has lent the thing to another who is not a
member of his own household (Art. 1942[4])
(5) When the thing loaned has been delivered with appraisal of the value, unless
there is a stipulation exempting the borrower from responsibility in case of a
fortuitous event (Art. 1942[3])
(6) When the payee in solutio indebiti is in bad faith.

c. (Art. 2159) A contractual stipulation

d. The nature of the obligation requires the assumption of risk on the part of the debtor

OBLIGATIONS TO GIVE A GENERIC THING — THE OBLIGATION IS NOT

EXTINGUISHED.
The obligation continues to exist because a generic thing does not really perish (genus
nunquam perit — “genus never perishes”).

EXCEPT — a. If the generic thing is delimited (like “50 kilos of sugar from my 1999
harvest” when such harvest is completely destroyed) (“delimited generic thing”). b. If the

Atty. Patrick Sicat

Juris Doctor
12 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 generic thing has already been segregated or set aside, in which case, it has become
specific.

3. Condonation or remission of debt (Arts. 1270-1274)

‣ Remission or Condonation is the gratuitous abandonment by the creditor of his right.

4. Confusion or merger of rights (Arts. 1275-1277, NCC)

5. Compensation (Arts. 1278-1304, NCC)

The obligations of those persons who in their own right are reciprocally debtors and
creditors of each other. It is the offsetting of two obligations which are reciprocally
extinguished if they are of equal value, or extinguished to the concurrent amount if of
different values.

REQUISITES:

a. EACH ONE OF THE OBLIGORS BE BOUND PRINCIPALLY, AND THAT HE BE

AT THE SAME TIME A PRINCIPAL CREDITOR OF THE OTHER
b. Both debts must consist in sum of money
c. It must be valid, due, liquidated and demandable
d. Debts must not be encumbered; and
e. Must be in accordance with law

6. Novation (Arts. 1291-1304, NCC)

Novation is the extinguishment of an obligation by the substitution or change of the

obligation by a subsequent one which extinguishes or modifies the first, either by changing
the object or principal conditions, or by substituting the person of the debtor, or by
subrogating a third person in the rights of the creditor.

KINDS:
1. Subjective-→ Active- if there is a substitution in the person of the debtor; or
→ Passive- if there is a substation in the person of the creditor

REQUISITES OF NOVATION IN GENERAL

1. The existence of a valid and existing original obligation
2. The intent to extinguish or to modify the old obligation by a substantial difference
3. The capacity and consent of all the parties
4. The validity of the new obligation

Meaning→ Here in novation pinapalitan/inaalter mo yung obligation either by changing

the obligation itself or mag-iiba kung sino yung debtor.

SESSION 6: MIDTERMS (Obligations)

Atty. Patrick Sicat

Juris Doctor
13 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
x---------------------------------------------------------------------------------------------------------------------x

SESSION 7
Contracts

1. Definition (Art. 1305, NCC), Nature and Concepts

A contract is a meeting of the minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service [Article 1305]

2. General Provisions (Arts. 1306-1317, NCC)

General Characteristics of Contracts:

i. Mutuality
- A contact must bind both contracting parties. Its validity must not be
left on the sole will on one of them.
ii. Autonomy
- Contracting parties are free to stipulate/agree on anything in the
contract so long as it is not against the law.
iii. Relativity
- Contracts only affect the contracting parties as well as their heirs. Hindi
pwedeng makaapekto ng ibang taong hindi naman pumirma sa
contract.
iv. Consensual
- Contracts are perfected by mere consent. Once acceptance to the offer
has been made, there is already a contract, whether such contract be
in written or oral agreement.
v. Obligatory Force
- Obligations arising from contract have the force of law between
contracting parties and should be complied with in good faith.

3. Essential requisites of Contracts (Art. 1318, NCC)

a. Consent (Arts. 1319-1346)
b. Object (Arts. 1347-1349, NCC)
c. Cause (Arts. 1350-1355, NCC)

i. Consent- both of the contracting parties

a. There must be a definite offer; and
b. Definite acceptance that is communicated to the offeror

➢ There must be a meeting of the minds

ii. Object- an object that is certain (This is the subject matter of the contract—
yung napag usapan)
iii. Cause- The essential reason why the parties assume an obligation in the
contract.

Stages of contract:

i. Preparation- when negotiations are in progress;

ii. Perfection- When the parties come to an agreement; and
iii. Consummation- When the contract is fully executed

Atty. Patrick Sicat

Juris Doctor
14 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
Defective Contracts under the Civil Code:

Rescissible Contracts (Arts. 1380-1389, NCC)

Meaning: Rescissible Contract Rescission: Definition, requisites, nature and extent, period
for filing, persons entitled to bring action)

Contracts which are valid until rescinded. All essential requisites of a contract exist but
there is injury or damage to one of the parties or to third persons.

Art. 1381. The following contracts are rescissible:

(1) Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which
are the object thereof; 

(2) Those agreed upon in representation of absentees, if the latter suffer the lesion
stated in the preceding number; 

(3) Those under taken in fraud of creditors when the latter cannot in any other manner
collect the claims due them; 

(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent
judicial authority; 

(5) All other contracts specially declared by law to be subject to rescission. 


CHARACTERISTICS OF RESCISSIBLE CONTRACTS:

(1) The defect consists in injury or damage either to one of the contracting parties or
to third persons; 

(2) Before rescission, they are valid, and therefore, legally effective; 

(3) They can be attacked directly only and not collaterally; 

(4) They can be attacked only by a contracting party or a third person who is injured
or defrauded; and 

(5) They are susceptible of convalidation only by prescription and not ratification 


Voidable Contracts (Arts. 1390-1402, NCC)

Definition, nature and effects Annulment: Meaning and the period for filing action for
annulment; persons entitled and those not entitled to filing such actions; extinguishment of
action for annulment Ratification: definition; requisites; effects; persons who can ratify

Contracts which are valid until annulled, unless ratified. Defect is more or less intrinsic,
as in the case of vitiated consent.
Voidable or annullable contracts are existent, valid and binding, although they can be
annulled because of want of capacity or vitiated consent of one of the parties.
Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
(3) Those where one of the parties is incapable of giving consent to a contract; 

(4) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud. 

These contracts are binding, unless they are annulled by a proper action in court. They
are susceptible of ratification.
Atty. Patrick Sicat
Juris Doctor
15 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 CHARACTERISTICS OF VOIDABLE CONTRACTS:
(1) Its defect consists of the vitiation of consent of one of the contracting parties; 

(2) It is binding until it is annulled; 

(3) It is susceptible of convalidation by 
ratification or prescription; and 

(4) Its defect or voidable character cannot 
be invoked by third persons 


SESSION 10
Unenforceable Contracts (Art. 1403-1408, NCC)
Meaning; kinds Unauthorized contracts: definition Agreements within the scope of the
statute of frauds Modes of ratification under the statute of frauds When unenforceable
contract becomes a voidable contract When unenforceable contract becomes a valid
contract Right of third persons to assail an unenforceable contract

Contracts that by reason of statutory defects do not confer any action to enforce the same
until and unless they are ratified in the manner prescribed by law

CHARACTERISTICS:
Cannot be enforced by a proper action in court 

Susceptible of ratification 

Cannot be assailed by third persons 


KINDS CONTRACTS OF UNENFORCEABLE

Unauthorized contracts – those entered into by one who has no authority or legal
representation, or who has acted beyond his powers [Art. 1403, par.1] 

Those which did not comply with the Statute of Frauds [Art. 1403, par.2] 

Those where both parties are incapable of giving consent to a contract 


Void or Inexistent Contracts (Arts. 1409-1422, NCC)

Meaning, characteristics Instances of void or inexistent contracts Rules where contract is
illegal and the act constitutes a criminal offense Rules where contract is illegal but the act
does not constitute a criminal offense Persons entitled to raise defense or illegality or nullity.
Definition of in pari delicto

Contracts which have no effect at all and cannot be ratified or validated [Paras]
Those which, because of certain defects, generally produce no effect at all. They are
considered as inexistent from its inception or from the very beginning [De Leon]
Includes not only those contracts in which one of the essential requisites is totally wanting,
but also those which are declared void by positive provision of law or statute

Art. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy; 

(2) Those which are absolutely simulated or fictitious; 

(3) Those whose cause or object did not exist at the time of the transaction; 


Atty. Patrick Sicat

Juris Doctor
16 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com
 (4) Those whose object is outside the commerce of men; 

(5) Those which contemplate an impossible service; 

(6) Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained; 

(7) Those expressly prohibited or declared void by law 

These contracts cannot be ratified. Neither can the right to set up the defense of illegality
be waived.

Atty. Patrick Sicat

Juris Doctor
17 College of Law
University of the Philippines
Diliman, Quezon City
pjc.sicat@gmail.com