LAW 101 The Law on Obligations and Contracts

Data Bank

Atty. Paul Ruiz Braga

Faculty
College of Law
Polytechnic University of the Philippines - Manila

Bachelor of Science in Accountancy 1-4 (2223; 1st Sem.)

Department of Accountancy
College of Accountancy and Finance
Polytechnic University of the Philippines - Manila

Group 3
Andales, John Michael
Dela Cruz, Allysha Mae T.
Dimaano, Quiel Cyren L.
Kang, Yu Shim D.
Matawaran, Irish A.
Reyes, Shiela Mae C.
Verdaluza, Justine Dheric A.

As of 20 November 2022
Table of Contents
This table is interactive; you may click on the titles below to jump to the associated page.

FOUR STAGES OF COMPETENCY 3

BLOOM’S TAXONOMY 3

HOW TO BECOME A STRAIGHT-A STUDENT 4

BILL OF RIGHTS 5

INTRODUCTION TO LAW 8

TITLE I 14

CHAPTER 1 14

CHAPTER 2 17

TITLE III 30
 FOUR STAGES OF COMPETENCY
1. Objectives are important to establish in a
- Also known as the four stages of learning pedagogical interchange so that teachers and
- A model based on the premise that before a learning students alike understand the purpose of that
experience begins, learners are unconscious interchange.
incompetence, and as they learn, they move through four 2. Organizing objectives helps to clarify objectives
psychological states until they reach a stage of for themselves and for students.
unconscious competence. 3. Having an organized set of objectives helps
- From unconscious incompetence to unconscious teachers to
competence ○ plan and deliver appropriate instruction;
○ design valid assessment tasks and
strategies; and
1.) Unconscious Incompetence - the learner isn’t ○ ensure that instruction and assessment are
aware that a skill or knowledge gap exists aligned with the objectives.

2.) Conscious Incompetence - the learner is aware Original Taxonomy - From Top to Bottom
of a skill or knowledge gap and understands the
importance of acquiring the new skill. - It’s in this stage Evaluation Judgments about the value
that learning can begin. of material and methods for
given purposes.
3.) Conscious competence - the learner knows how Synthesis Putting together elements
to use the skill or perform the task. - Still requires and parts so as to form a
practice, conscious thought, and hard work. whole

Analysis Breakdown communication

4.) Unconscious competence - The individual has into its constituent elements
enough experience with the skill that he or she can or parts such that the relative
perform it so easily that they do it unconsciously. hierarchy of ideas is made
clear and/or the relations
between ideas expressed are
made explicit.
BLOOM’S TAXONOMY
Application Use of abstractions in
particular and concrete
Background situations.

Comprehension Understanding or
● In 1956, Benjamin Bloom with collaborators Apprehension. The
Max Englehart, Edward Furst, Walter Hill, and individual knows what is
David Krathwohl published a framework for being communicated and
categorizing educational goals: Taxonomy of can make use of the material
or idea being
Educational Objectives. Familiarly known as communicated.
Bloom’s Taxonomy.
● This framework has been applied by generations Knowledge Recall of specifics and
of K-12 teachers and college instructors in their universals, methods,
processes, patterns,
teaching. structures, and settings.

Why use Bloom’s Taxonomy?

Revised Taxonomy - From top to Bottom
HOW TO BECOME A STRAIGHT-A
STUDENT
Create Generating, Planning,
Producing
Introduction
Evaluate Checking, Critiquing
● College is not high school. The material to be
Analyze Differentiating, Organizing, mastered is much more complicated and the professors
Attributing
have higher expectations. The secret is efficiency.
Apply Executing, Implementing
Study Strategies
Understand Interpreting, Exemplifying,
Classifying, Summarizing,
Inferring, Comparing, ● Manage your time and deal with the urge to
Explaining procrastinate.
● Take targeted notes in class
Remember Recognizing, Recalling
● Handle reading assignments and problem sets
with ease
● Prepare efficiently for exams
Types of knowledge used in cognition: ● Master the art of exam-taking
● Write incisive critical analysis essays
● Factual Knowledge ● Conduct through research
❖ Knowledge of terminology ● Write standout term papers
❖ Knowledge of specific details and elements
STEP 1
● Conceptual Knowledge
❖ Knowledge of classifications and categories Manage your time in five minutes a Day
❖ Knowledge of principles and generalizations
❖ Knowledge of theories, models, and Time management is critical – it's a skill that you
structures absolutely must develop. It’s for controlling the schedule
within the day.
● Procedural Knowledge
❖ Knowledge of subject-specific skills and The goal of step 1 - is to present a time management
algorithms system that helps students to achieve a stress-free
❖ Knowledge of subject-specific techniques balance without requiring them to sacrifice the
and methods excitement of being a college student.
❖ Knowledge of criteria for determining when
to use appropriate procedures System tailored to the typical undergraduate lifestyle
● Metacognitive Knowledge that meets the following criteria:
❖ Strategic Knowledge
❖ Knowledge about cognitive tasks, including 1. Requires no more than five to ten minutes of
appropriate contextual and conditional effort in a single twenty-four-hour period.
knowledge 2. Doesn't force an unchangeable minute-by-
❖ Self-knowledge minute schedule on your day.
3. Helps you remember, plan, and complete
important tasks before the very last moment.
 4. Can be quickly restarted after periods of neglect.
What you need STEP 3

1.) Calendar - can be Microsoft outlook or a cheap Choose when, where, and how long
day planner.
- It has to be something that you can reference When - what time should you study?
every morning that has enough space to record ● Early
at least a dozen items for each day.
2.) List - writing material that can update Where - what place should you go to study?
throughout the day. That can carry around. ● In isolation

Basic Idea How - how long should you study before taking a break?
● No more than one hour a time without break
- To record all of your to-dos and deadlines on the
calendar.
- Jot down to-dos and deadlines on a list
whenever they arise during the day. BILL OF RIGHTS
- Transfer these to-dos and deadlines to your
calendar every morning,
Section 1. No person shall be deprived of life, liberty,
- Plan your day each morning by labeling your to-
or property without due process of law, nor shall any
dos with realistic time frames and moving what
person be denied the equal protection of the laws.
you don't have time for to different dates

Right to life, liberty, and property.

STEP 2

Right to Life - free from any type of physical harm.

Declare war on procrastination
Right to Liberty - freedom to do anything as limited by
laws.
Battle Plan
Right to Property - (intangible and tangible) can own,
sell, or use your properties in any manner as limited by
laws.
1.) Keep a work progress journal
● Record every day what you wanted to
Section 2. The right of the people to be secure in their
accomplish and what tasks you didn’t succeed in
persons, houses, papers, and effects against
yet.
unreasonable searches and seizures of whatever
2.) Feed the machine
nature and for any purpose shall be inviolable, and
● Drink water constantly
no search warrant or warrant of arrest shall issue
● Monitor caffeine intake carefully
except upon probable cause to be determined
● Treat food as a source of energy, not
personally by the judge after examination under oath
satisfaction
or affirmation of the complainant and the witnesses
● Don't skip meals
he may produce, and particularly describing the
3.) Make an event out of the worst tasks
place to be searched and the persons or things to be
4.) Build a routine
seized.
5.) Choose your hard days

Right against unreasonable searches and seizures.

Search warrants and arrest warrants are needed. impaired except upon lawful order of the court.
Exceptions: custom searches, checkpoints (non invasive; Neither shall the right to travel be impaired except in
visual), items out in public, consent searches. the interest of national security, public safety, or
public health, as may be provided by law.
Section 3. (1) The privacy of communication and
correspondence shall be inviolable except upon Liberty of abode and travel.
lawful order of the court, or when public safety or
order requires otherwise, as prescribed by law. Limited under state of emergencies and war.

(2) Any evidence obtained in violation of this or the Section 7. The right of the people to information on
preceding section shall be inadmissible for any matters of public concern shall be recognized. Access
purpose in any proceeding. to official records, and to documents and papers
pertaining to official acts, transactions, or decisions,
Privacy of communication and correspondence. as well as to government research data used as basis
for policy development, shall be afforded the citizen,
Fruit of the Poisonous Tree Doctrine - evidence gathered subject to such limitations as may be provided by
through breach of this right is inadmissible law.

Section 4. No law shall be passed abridging the Right to information on matters of public concern.
freedom of speech, of expression, or of the press, or
the right of the people peaceably to assemble and Exceptions: exclusive to Filipino citizens, unless legally
petition the government for redress of grievances. needed by foreign citizens. Excluding sensitive
information, e.g. income tax returns.
Freedom of expression.
Section 8. The right of the people, including those
Free from censorship, free from punishment on the basis employed in the public and private sectors, to form
of what the person expressed unions, associations, or societies for purposes not
contrary to law shall not be abridged.
Exceptions: as limited by laws; no lies.
Right to form associations.
Section 5. No law shall be made respecting an
establishment of religion, or prohibiting the free In conjunction with Section 4. As long as associations
exercise thereof. The free exercise and enjoyment of are legally operating.
religious profession and worship, without
discrimination or preference, shall forever be Section 9. Private property shall not be taken for
allowed. No religious test shall be required for the public use without just compensation.
exercise of civil or political rights.
Right to just compensation.
Freedom of religion.
Power of eminent domain (⅓ powers of the state) -
Right to choose religion and abstain from it; state must exercise of this must be for the good of the public;
not favor a religion; religious practices are however requires just compensation, due process, and prior notice
limited by laws. nonetheless.

Section 6. The liberty of abode and of changing the Section 10. No law impairing the obligation of
same within the limits prescribed by law shall not be contracts shall be passed.
 inadmissible and gives the right to receive
Non-impairment clause. compensation.

No law can be legislated that impairs contracts, unless it Section 13. All persons, except those charged with
strengthens the police power of the state. offenses punishable by reclusion perpetua when
evidence of guilt is strong, shall, before conviction, be
Section 11. Free access to the courts and quasi- bailable by sufficient sureties, or be released on
judicial bodies and adequate legal assistance shall not recognizance as may be provided by law. The right to
be denied to any person by reason of poverty. bail shall not be impaired even when the privilege of
the writ of habeas corpus is suspended. Excessive bail
Free access to courts. shall not be required.

People who cannot afford a lawyer shall be provided a Right to bail.

lawyer by the state.
Bail - temporary release of a person detained in
Section 12. (1) Any person under investigation for the exchange of money which is returned after the case
commission of an offense shall have the right to be process.
informed of his right to remain silent and to have
competent and independent counsel preferably of his Exceptions: offenders with strong evidence of offenses
own choice. If the person cannot afford the services punishable by reclusion perpetua.
of counsel, he must be provided with one. These
rights cannot be waived except in writing and in the Reclusion perpetua - life imprisonment.
presence of counsel.
Section 14. (1) No person shall be held to answer for a
(2) No torture, force, violence, threat, intimidation, or criminal offense without due process of law.
any other means which vitiate the free will shall be
used against him. Secret detention places, solitary, (2) In all criminal prosecutions, the accused shall be
incommunicado, or other similar forms of detention presumed innocent until the contrary is proved, and
are prohibited. shall enjoy the right to be heard by himself and
counsel, to be informed of the nature and cause of the
(3) Any confession or admission obtained in violation accusation against him, to have a speedy, impartial,
of this or Section 17 hereof shall be inadmissible in and public trial, to meet the witnesses face to face,
evidence against him. and to have compulsory process to secure the
attendance of witnesses and the production of
(4) The law shall provide for penal and civil sanctions evidence in his behalf. However, after arraignment,
for violations of this section as well as compensation trial may proceed notwithstanding the absence of the
to and rehabilitation of victims of torture or similar accused provided that he has been duly notified and
practices, and their families. his failure to appear is unjustifiable.

Miranda Rights. Right to due process.

Person must be informed of their right to remain silent. Presumption of innocence; innocent until proven guilty.
No torture, force, violence, threat, intimidation,
detention, and deception shall be used to extract Trial in absentia - trial will proceed if the accused does
information. Evidence gathered through this is not appear after having been duly notified.
Section 15. The privilege of the writ of habeas corpus death penalty already imposed shall be reduced to
shall not be suspended except in cases of invasion or reclusion perpetua.
rebellion when the public safety requires it.
(2) The employment of physical, psychological, or
Writ of habeas corpus. degrading punishment against any prisoner or
detainee or the use of substandard or inadequate
Writ of habeas corpus - protects against unlawful and penal facilities under subhuman conditions shall be
indefinite imprisonment. Suspended under war with dealt with by law.
evidence related to it.
Prohibited punishments.
Section 16. All persons shall have the right to a
speedy disposition of their cases before all judicial, No excessive fines; cruel, degrading, or inhuman
quasi-judicial, or administrative bodies. punishment. No death penalty. Penal facilities must be
up to standards.
Right to speedy disposition of cases.
Section 20. No person shall be imprisoned for debt or
Justice delayed is justice denied. Courts have a non-payment of a poll tax.
maximum time to process their cases.
Non-imprisonment for inability to pay (debts) or for
Supreme Court - 24 months reasons of poverty.
Court of Appeals - 12 months
Lower Courts - 3 months Section 21. No person shall be twice put in jeopardy
of punishment for the same offense. If an act is
Section 17. No person shall be compelled to be a punished by a law and an ordinance, conviction or
witness against himself. acquittal under either shall constitute a bar to
another prosecution for the same act.
Right against self-incrimination.
Right against double jeopardy.
Section 18. (1) No person shall be detained solely by
reason of his political beliefs and aspirations. Same cases shall not be raised or processed again upon
verdict. The Court of Appeals is available to review
(2) No involuntary servitude in any form shall exist decisions and orders of lower courts.
except as a punishment for a crime whereof the party
shall have been duly convicted. Section 22. No ex post facto law or bill of attainder
shall be enacted.
Non-detention by reason of political beliefs and
aspirations. No ex post facto law and bill of attainder.
Ex post facto law - Laws at the time of action apply.
No involuntary servitude except when mandated as a Bill of attainder - punishment without trial.
punishment for a convict.

Section 19. (1) Excessive fines shall not be imposed,

nor cruel, degrading or inhuman punishment
inflicted. Neither shall the death penalty be imposed, INTRODUCTION TO LAW
unless, for compelling reasons involving heinous
crimes, the Congress hereafter provides for it. Any THE GENERAL NATURE OF LAW
Meaning of law in general ● Disregards free will and intelligence
○ Uniformities of action/order of sequence
Law is any rule of action or system of uniformity (widest which are the physical phenomena that
and most comprehensive sense), which determines the we feel
limits of all things, whether animate or inanimate. ○ REGULARITY IN NATURE:
■ Addressed to objects that have no
General divisions of law power to disobey
■ Certain results follow certain causes
5. State Law
Law in the strict legal sense: state law
● Also known as positive law, municipal law, civil
law, or imperative law
Law in the non-legal sense: non-state law—divine law, ● Concerns the people
natural law, moral law, and physical law ● BINDING FORCE
○ Under the rule of action that is enforced by
Only state laws are promulgated and enforced by the the state
state. ○ With the aid of physical force if necessary
● CONCERNS OF STATE LAW:
SUBJECTS OF LAW ○ Doesn’t concern the violations under the
rule of action unless it constitutes a violation
1. Divine Law or Philosophical Theology of its commands
● law of religion and faith
CONCEPTS OF STATE LAW
● the concept of sin (crime) & salvation
● SOURCE: Old Testament; one’s beliefs 1. General or Abstract Sense
● SANCTION: assurance of reward and ● All laws
punishment (present/afterlife) ● The mass obligatory rules established for the
2. Natural Law or Metaphysics purpose of governing the relations of persons in
● Divine inspiration of man (justice, fairness, society
righteousness) ○ EXAMPLES: law or the land; Rule of Law and
● By internal dictates of reasons not of men; Equality before the Law;
● The core of his higher self (during/before) Enforcement of the Law
2. Specific or Material Sense
● BINDING FORCE:
● “a rule of conduct, just, obligatory, promulgated
○ Understanding right & wrong from the
by legitimate authority, and of common
concept of good & evil observance and benefit” (I Sanchez Roman 3)
○ Dictates of his moral nature ● A particular statute or legal rule
○ Ever present and binds all man every ○ EXAMPLE: law on obligations and contracts
day
3. Moral Law or Ethics CHARACTERISTICS OF LAW IN ITS SPECIFIC
● The totality of norms growing out of the SENSE
collective sense of every community
● Mores have evolved and obedience to them 1. It is a rule of conduct
● What shall and shall not be done
is demanded by the group
● Only takes cognizance of external acts
● It helps in shaping the state law
2. It is obligatory
● BINDING FORCE: not absolute; may ● A positive command to obey
change according to people’s conviction ● Comes with sanctions that enforced obedience
(e.g., Polygamy) 3. Promulgated by legitimate authority
4. Physical Law or Law of Physical Science ● Legitimate authority = legislature
● The law “figuratively speaking”
 ● Congress is the legislative branch of our ➢ Issued by administrative officials under legislative
government; enacts the statute laws authority.
● Can also be promulgated by local government ➢ Clarifies or explains the law and carry into effect its
general provisions.
4. It is of common observance and benefit
● Enacted by man to serve man 4. Judicial decisions or jurisprudence
● Regulates harmony is society to make order, and ➢ The decisions of the courts, particularly the Supreme
co-existence possible. Court, applying or interpreting the laws or the
Constitution form is part of the legal system of the
NECESSITY AND FUNCTIONS OF LAW Philippines. (Art. 8, Ibid.)
➢ Doctrine of precedent or stare decisis - decisions of
(1) What would life be without law? a superior court on a point of law binding on all
- No society can be stable. subordinate courts.
- Life without basic laws would be solitary, nasty,
brutish, and short. 5. Custom
- Life without other laws would be less healthful, less ➢ Consists of habits and practices which through long
wholesome, etc. and uninterrupted usage have become acknowledged
and approved by society as binding rules of conduct.
(2) What does law do? ➢ Has the force of law when recognized and enforced
- Secures justice, resolves social conflict, orders by the state.
society, protects interests, controls social relations.
6. Other sources
(3) What is our duty as members of society? ➢ Principles of justice and equity, decisions of foreign
- No society can last and continue without means of tribunals, opinions of textwriters, and religion.
social control, without rules of social order binding on its ➢ Supplementary
members. ➢ Resorted to by the courts in the absence of all other
- Every citizen should have some understanding of law sources.
and observe it for the common good. ➢ Not binding on the courts.

SOURCES OF LAW RULES IN CASE OF DOUBT IN INTERPRETATION

OR APPLICATION OF LAWS
1. Constitution
➢ Written instrument by which the fundamental powers ● The Civil Code provides that “no judge or court shall
of the government are established, limited, and decline to render judgment by reason of the silence, obscurity,
defined. or insufficiency of the laws.” (Art. 9, Civil Code.)
➢ Fundamental law/Supreme law/Highest law of the ● “Incase of doubt in the interpretation or application of
land laws, it is presumed that the lawmaking body intended right
➢ Promulgated by the people themselves and justice to prevail.” (Art. 10, Ibid.)
➢ Law which all other laws enacted by the legislature ● Courts are not only courts of law but also of justice.
and administrative orders must conform.
ORGANS OF SOCIAL CONTROL
2. Legislation
➢ Consists in the declaration of legal rules by a
Law is not an end in itself – it is a means of
competent authority.
social control
➢ Preponderant source of law in the Philippines.
Social Control – control of social behavior that
➢ Enacted law or statute law - acts passed by the
legislature. affects others
Legal Institutions – churches, corporations,
3. Administrative or executive orders, regulations and political parties, trade associations, schools,
rulings
 labor unions, pro organizations, social E. Municipal Trial Courts
clubs, families, and hosts of others. F. Municipal Circuit Trial Courts

LAW COMPARED TO OTHER MEANS OF

SOCIAL CONTROL 2. Special Courts
Sandiganbayan – special anti-graft court
1. Laws are made and administered by the only Court of Tax Appeals – special tax court created by
institutions in society authorized to act on behalf of the law, on the same level as the Court of Appeals
entire citizenry.

2. Only the legal institutions within the society can 3. Quasi-judicial Agencies
make rules, regulations, and orders which the entire - Administrative bodies under the executive
citizenry must comply. branch performing quasi-judicial functions
- Settlement or adjudication of controversies or
3. People associated with an organization can ordinarily
disputes
terminate their relationship / citizens of a state cannot
1. National Labor Relations Commission
do this unless they choose to leave the geographical
2. Securities and Exchange Commission
area.
3. Land Transportation Franchising and
Regulatory Board
4. The sanctions through law are more varied and
4. Insurance Commission
complex than organizations.
5. Constitutional Commissions
● Remedial sanction – if the object is the · Civil Service Commission
indemnification of the person who has suffered · Commission on Elections
damages/injury from a violation of law · Commission on Audit
● Penal sanction – if the object is the punishment
of the violator CLASSIFICATIONS OF LAW

5. Before the law “operates” against an individual, 1. According to purpose

various procedural steps are required (hearing; due a. SUBSTANTIVE LAW
process of law) ● the law creating, defining, and
regulating rights and duties in public
ORGANIZATION OF COURTS and in private character.
● Example of substantive private law is
Judicial Power – power to decide actual cases and the Law on Obligations and Contracts
controversies involving the interpretation and ● Example of substantive public law is the
application of laws criminal law
Judiciary – composed of the courts, one of the three b. ADJECTIVE LAW
main divisions of power in PH government ● The law that prescribes the manner or
procedure by which rights may be
enforced or their violations redressed.
1. Regular Courts
● Sometimes called remedial law or
A. Supreme Court procedural law.
B. Court of Appeals courts of general or ● This provides the legal remedies by
superior jurisdiction which substantive law may be
C. Regional Trial Courts administered.
D. Metropolitan Trial Courts
 ● The adjective law of the Philippines is Civil law is the law found primarily in our Civil
governed by the Rules of Court Code.
promulgated by the Supreme Court and
by the special laws. CIVIL CODE PROVISIONS ON OBLIGATIONS AND
CONTRACTS.
2. As to its subject matter
● Book IV of the Civil Code
a. PUBLIC LAW
- deals with obligations and contracts.
● The law that regulates the rights and
● Title I, Articles 1156-1304
duties arising from the relationship of - contains the general provisions on
the state to the people. obligations.
● Examples are criminal law, ● Title II, Articles 1305-1422
international law, administrative law, - contains the general provisions on contracts.
and criminal procedure. ● Title III, Articles 1423-1430
b. PRIVATE LAW - contains new provisions dealing with
● The law which regulates the relations of natural obligations.
individuals with one another for purely ● The general rules of law governing contracts are also
applicable to the particular kinds of contracts (like
private ends.
sale, agency, partnership, barter, etc).
● Example of this is The law of
●
Obligations and Contracts.
● The state is also involved in private law CONCLUSIVE PRESUMPTION OF
as it enforces private law but simply as KNOWLEDGE OF LAW
an arbiter and not as a party.
● Includes civil law, commercial law and ● Ignorance of law excuses no one from
civil procedure compliance therewith. (Art. 3, Civil Code.)
Civil procedure is a branch or ● “Everyone, therefore, is conclusively presumed
private law which provides for to know the law.”
the means by which private - It has been established because of the
rights may be enforced. obligatory force of law.

LAW ON OBLIGATIONS AND CONTRACTS The following reasons have been advanced for
DEFINED this presumption:

● The body of rules which deals with the nature (1) If laws will not be binding until they are actually
and sources of obligations and the rights and known, then social life will be impossible,
duties arising from agreements and the particular because most laws cannot be enforced due to
contracts. their being unknown to many;
(2) It is almost impossible to prove the contrary
CIVIL CODE OF THE PHILIPPINES when a person claims ignorance of the law;
(3) It is absurd to absolve those who do not know
● Based mainly on the Civil Code of Spain which the law and increase the obligation of those who
took effect in the Philippines on December 7, know it; and
1889. (4) In our conscience, we carry norms of right and
● The law on obligations and Contracts is found in wrong, and a sense of duty, so that our reason
Republic Act No. 386 or known as the Civil indicates many times what we have to do and in
Code of the Philippines which took effect on more complicated juridical relations, there are
August 30, 1950.
 lawyers who should be consulted (A. Tolentino, - One of the presumptions in law, that any and all
op. cit., pp.18-19.); and acts of government including the passage of
(5) “Evasion of the law would be facilitated and the laws pass, or are within, constitutional standards
administration of justice would be defeated if or limitations.
persons could successfully plead ignorance of - is a legal instrument which, among other
the law to escape the legal consequences of their functions, distributes or apportion and limits
acts, or to excuse non-performance of their legal power.
duties. The rule, therefore, is dictated not only ● Congress
by expediency but also by necessity.” (Ibid., p.7; - is given the power to make laws.
Zulueta vs Zulueta, 1 Phil. 254.) ● President
- has the power to enforce the law.
Thus, ignorance of the provisions of the law ● Courts
imposing a penalty for illegal possession of firearms, or - have the power to settle controversies/disputes
punishing the possession of prohibited drugs, does not ● Bill of Rights
constitute a valid excuse for their violation. - The primary limitation to state power.
- a list of rights that traces its origins to the
OVERVIEW OF AND THE LEGAL Magna Carta, the English Bill of Rights in the
FRAMEWORK early 1200s.
- a list of things the state cannot do.
● Obligations and Contracts
- taken from Book IV of the Civil Code of the “No person shall be deprived of life, liberty,
Philippines, Republic Act No. 386. or property without due process of law, nor shall any
● Codification of Laws person be denied the equal protection of the laws.”
- process that countries or even jurisdictions - This is what lawyers refer to as the due process
within a country undertake in order to gather, and equal protection clause.
systematize, and unify all the laws that pertain to - the antidote to unfair, unreasonable, unreasoned,
particular matters like civil law and criminal whimsical, arbitrary, capricious act of
law, thus we have a civil code and a government.
criminal/penal code.
● Civil Law ● Rights are not absolute, just as power is not or
- of which the Civil Code is a major part. cannot be not allowed absolute character.
- governs the relations of persons in respect of - “The right to swing my fist ends where the other
their private affairs purely. man’s nose begins.”
● Criminal/Penal Law ● Article 19 of the Civil Code
- governs between persons and the state. - “Every person must, in the exercise of his rights
and in the performance of his duties, act with
A crime being an offense against the state which justice, give everyone his due, and observe
is the reason all criminal cases in the country are styled honesty and good faith.”
“People of the Philippines vs Juan/a de la Cruz.” ● Judiciary or our Court System
- is given the task and the necessary power “to
● Constitution settle actual controversies involving rights
- the highest or supreme law of the land which are legally demandable and
- any other law, indeed any act of government, enforceable…”
that is contrary to the Constitution is null and ● legal wrong or injury
void. - refer to the wrongful violation of the legal right
of another.
 ESSENTIAL REQUISITES OF AN OBLIGATION
Last topic: clarifies the duty of the court when its power
is invoked. The Civil Code states: 1. Passive subject (debtor or obligor) – person
bound to the fulfillment of the obligation. (Has a duty)
2. Active subject (creditor or obligee) – person
ARTICLE 9. No judge or court shall decline to render
entitled to demand the fulfillment of the obligation. (Has
judgment by reason of the silence, obscurity or a right)
insufficiency of the laws. (6) 3. Object or prestation (subject of the matter) –
ARTICLE 10. In case of doubt in the interpretation or conduct required to be observed by the debtor (i.e.,
application of laws, it is presumed that the lawmaking giving, doing, or not doing)
body intended right and justice to prevail. (n) 4. Juridical tie/Legal tie/Vinculum Juris
(efficient cause) – binds or connects the parties to the
obligation and source of the obligation.

TITLE I Example: Under the contract, JM bounds himself to

construct a house for Pranpriya for P7,500,000.00.
OBLIGATIONS
Passive – JM
CHAPTER 1 Active – Pranpriya
GENERAL PROVISIONS
Prestation – to construct a house

Juridical tie – Contract

ARTICLE 1156. An obligation is a juridical necessity FORM OF OBLIGATIONS
to give, to do or not do.
➔ Manner in which an obligation is manifested or
MEANING OF OBLIGATION incurred. (i.e., oral, writing, partly oral and partly
writing)
● Latin word: obligatio which means tying or (1) As a general rule, the law does not require any
binding. form in obligations arising from contracts for their
● Obligation is a juridical necessity, because in validity or binding force. (Art. 1356.)
case of non-compliance, the courts of justice may be (2) Obligations arising from other sources (Art.
called upon to enforce its fulfillment or, in default, 1157) do not have any form at all.
thereof, the economic value that it represents.
OBLIGATION, RIGHT, AND WRONG
NATURE OF OBLIGATIONS
Obligation – act or performance which the law will
Civil Obligations enforce.
● Based on positive law Right - Power to demand from another any prestation.
● Enforceable in court of justice.
Wrong (cause of action) – an act or omission which
Example: Contract of loan, obliged to pay violates a right.
Natural Obligations Injury – act or omission which causes harm.
● Based on equity, natural law, and conscience. Right of action – commencement of filing a case
● NOT enforceable in court of justice. against a certain party.
Example: Solutio indebiti ESSENTIAL ELEMENTS OF A LEGAL WRONG
OR INJURY
 (a) a legal right in favor of a person 1. Law – imposed by law itself.
(creditor/obligee/plaintiff).
(b) a correlative legal obligation on the part of Example: Tax Code, Family Code
another (debtor/obligor/defendant); to respect or
not to violate said right; and 2. Contracts – arise from the stipulation of the
(c) an act or omission by the latter in violation of parties.
said right with resulting injury or damage to the
former. Example: Contract of loan, contract of sales

Example: Kuroko sold a bottle of wine to Kagami for 3. Quasi-contracts – arise from lawful, voluntary,
P5,000.00. If Kuroko delivered the bottle of wine and and unilateral acts which are enforceable to the end that
Kagami does not pay Kuroko P5,000.00, Kuroko will no one shall be unjustly at the expense of another.
have a right of action.
Example: The obligation to return money paid by
Kuroko – plaintiff mistake or which is not due.

Kagami – defendant 4. Crimes or acts or omissions punished by law

– arise from civil liability which is the consequence of a
Cause of action – omission on Kagami (not paying criminal offense. (Art. 1161.)
P5,000.00)
Example: The obligation of a thief to return the car
KINDS OF OBLIGATION ACCORDING TO stolen by him; the duty of a killer to indemnify the heirs
SUBJECT MATTER of his victim.

1.) Real Obligation – obligation to give 5. Quasi-delicts or torts – arise from damage
caused to another through an act or omission, there being
Example: Rose binds herself to deliver a guitar to Jisoo. negligence, but no contractual relation exists between
the parties.
2.) Personal obligation
a. Positive personal obligation – obligation to do Example: The obligation of the possessor of an
animal to pay for the damage which it may have caused.
Example: Jennie binds herself to repair the piano of Lisa. (Art. 2183.)

b. Negative personal obligation – obligation not SOURCES CLASSIFIED

to do
5 sources of obligations may be classified as
Example: Conan obliges not to put a fence on a piece of
follows:
his property in favor of Ran, who has a right of way over
such property. 1.) Emanating from law
2.) Emanating from private acts
ARTICLE 1157. Obligations arise from: a. Arising from licit acts (not forbidden by law), in
the case of contacts and quasi-contracts
(1) Law b. Arising from illicit acts (forbidden by law), that
are punishable in the case of delicts or crimes, or not
(2) Contracts
punishable in the case of quasi-delicts or torts.
(3) Quasi-contracts
Note:
(4) Acts or omissions punished by law ● There are only 2 sources: Law and Contracts.
● Quasi-contracts, delicts, quasi-delicts are
(5) Quasi-delicts
imposed by Law
SOURCES OF OBLIGATIONS
 1.) Negotiorum Gestio - Voluntary management of
Article 1158. Obligations derived from law are not property or affairs of another without the
presumed. Only those expressly determined in this acknowledgment or consent of the latter.
code or in special laws are demandable, and shall be
regulated by the precepts of the law which establishes Does not arise when:
them; and as to what has been foreseen by the ● Property is not neglected
provisions of this book.
2.) Solutio Indebiti - juridical creation which is created
Note: when something is received when there is no right to
● Obligations refer to legal obligations or demand it and it was unduly delivered through
obligations arising from law. mistake
● Obligations derived from law are not presumed.
They must be clearly set forth in the law. Requisites are:
● There is no right to receive the thing
Article 1159. Obligations arising from contracts have delivered
the force of law between contracting parties and ● The thing was delivered by mistake
should be complied with in good faith.
Article 1161. Civil obligations arising from
Note: criminal offenses shall be governed by the penal laws,
● Obligations refer to contractual obligations or subject to the provisions of article 2177, and of the
obligations arising from contracts or voluntary pertinent provisions of Chapter 2, Preliminary Title,
agreements. on Human Relations, and of Title XVIII of this Book,
● Compliance in good faith means performance in regulating damages. (1092a)
accordance with the terms of the contract or
agreement. Crime or acts or omission punished by law - arise
● They arise from the stipulation of the parties. from civil liability which is a consequence of a criminal
offense
Contract - a meeting of minds between 2 or more
persons, whereby one binds himself, with respect to the Note: It arises from civil liability from damages arising
other, to give something or to render some service from crimes or delicts.

Article 1160. Obligations derived from quasi- 1.) Civil liability in addition to Criminal Liability -
contracts shall be subject to the provisions of every person criminally liable for
Chapter 1, Title XVII, of this book. an act or omission is also civilly liable for
damages.
Quasi-contract - lawful, voluntary, and unilateral acts
by virtue, which the parties become bound to each other 2.) Criminal liability without civil liability - In
to the end that no one will be unjustly enriched or crime, that does not cause material damage.
benefited at the expense of another There is no civil liability to enforce.
- Not a contract, but the law considers the parties
to enter into a contract, to prevent injustice. 3.) Civil liability without criminal liability - If a
person is not criminally liable, they may still be
KINDS OF QUASI-CONTRACTS civilly liable.

SCOPE OF CIVIL LIABILITY

 Criminal and Civil Civil Liability
1.) Restitution - the thing itself must be made Liability
whenever possible.
2.) Reparation for the damage caused - the court Cannot be compromised Can be compromised as
shall determine the amount of damages, taking or settled by the parties any other civil liability
into consideration the price of the thing and its themselves
sentimental value.
3.) Indemnification for consequential damages - Guilt of accused must be Fault or negligence of the
Damages shall include also those suffered by his proved beyond reasonable defendant only be proved
family or by a third person by reason of the doubt by a preponderance of the
crime. evidence

Article 1162. Obligations derived from quasi-delicts

shall be governed by the provisions of Chapter 2,
Title XVII of this Book, and by special laws.
CHAPTER 2
Quasi-Delicts - an act or omission by a person
(tortfeasor) which causes damage to another in his NATURE AND EFFECT OF
person, property, or rights giving rise to an obligation to OBLIGATIONS
pay for the damage done, there being fault or negligence
but there is no pre-existing contractual relation between
the parties ARTICLE 1163

REQUISITES OF QUASI-DELICT: Every person obliged to give something is also

obliged to take care of it with the proper diligence of
● Act or omission a good father of a family, unless the law or the
● fault or negligence (cause) stipulation of the parties requires another standard
of care. (1094a)
● Damage caused (effect)
● Direct relation or connection of cause
and effect Specific or Determinate Thing - one which can be
● No pre-existing contract particularly designated or physically segregated from all
others of the same class.
CRIME DISTINGUISHED FROM QUASI-DELICT - The debtor cannot substitute it with another
unless with the consent of the creditor. (Art.
Crime Quasi-Delict 1244)
EXAMPLES:
Criminal or malicious Negligence (1) The watch I am wearing.
intent (2) The car sold by X.
(3) My dog named “Terror.”
Punishment Indemnification the
(4) The house at the corner of Rizal and Del
offended party
Pilar Streets.
Public Interest Private Interest (5) The Toyota car with Plate No. AAV 344.
(Wrong against the (Wrong against the
individual & State) individual)
Generic or Indeterminate Thing - one which refers only o Reason for debtor’s obligation. — The
to a class or genus to which it pertains and cannot be debtor must exercise diligence to insure that
pointed out with particularity. the thing to be delivered would subsist in the
same condition as it was when the obligation
- The debtor can give anything of the same
was contracted.
class as long as it is of the same kind
EXAMPLES: Diligence - the attention and care required of a person in
(1) a Bulova calendar watch. a given situation and is the opposite of negligence.
(2) a 2006 model Japanese car.
(3) a police dog. 2. To Deliver the Fruits of the thing (see Art. 1164)
(4) A cavan of rice
GR: The creditor has a right to the fruits of the thing
(5) the sum of P10,000.00. from the time the obligation to deliver it arises.
However, there is no real right until the same has been
Duties of the obligor or debtor with respect to delivered to him. Civil Code, Art. 1164, par.1)
determinate or specific thing:
XPN: Obligations arising from contracts, a stipulation as
1. To preserve or take of the thing due; regards the fruits shall govern. (CC, Art. 1306)
o Every person obliged to give something is 3 . To deliver the Accessions and Accessories (see Art.
also obliged to take care of it with the 1166.);
proper diligence of a good father of a
family. (Civil Code, Art. 1163) GR: Obligation to give a determinate thing includes that
- the obligor has the incidental duty to take care of delivering all its accession and accessories, even
though they may not have been mentioned. (Civil Code,
of the thing due
Art. 1166)
o Another standard of care (extraordinary
diligence) - The law or stipulations of the XPNs: By contrary intention of the parties.
parties require another standard of care.
Accession - is the right by virtue of which the owner of a
a. Common Carriers - In case of common carriers, thing becomes the owner of everything incorporated or
attached thereto, either naturally or artificially.
(person or company engaged in the transportation of
persons and/or cargoes) is “bound to carry the - the fruits of, or additions to, or improvements upon, a
passengers safely as far as human care and foresight thing (the principal)
can provide, using utmost (extraordinary) diligence
of very cautious persons, with a due regard for all Accessories - are things joined to or included with the
the circumstances.” (Art. 1755.) principal thing for the latter’s embellishment, better use,
or completion.
b. Banks - In case of banks, re duty bound to treat the
Note: ACCESSION VERSUS ACCESSORY
deposit accounts of their depositors with the highest
degree of care where the fiduciary nature of their
*Accession is anything attached to the principal thing
relationship with their depositors is concerned.
either naturally or artificially (magagamit pa rin ang
principal thing whether or not may accession).
c. It is contrary to public policy (see Art. 1306.) to
stipulate for absolute exemption from liability for any
*Accessory is anything that is necessary for the
fault or negligence.
perfection, use, and preservation of a thing (if wala yung
o Factors to be considered. — The diligence accessory, hindi magagamit yung thing).
required depends upon the nature of the
obligation and corresponds with the 4 . To deliver the the thing itself (see Arts. 1163, 1233,
circumstances of the person, of the time, and 1244; as to kinds of delivery, Arts 1497 to 1501.); and
of the place. (Art. 1173.)
 - ARTICLE 1163.Every person obliged to ARTICLE 1164
give something is also obliged to take care
of it with the proper diligence of a good The creditor has a right to the fruits of the thing
father of a family, unless the law or the from the time the obligation to deliver it arises.
stipulation of the parties requires another However, he shall acquire no real right over it until
standard of care. (1094a) the same has been delivered to him. (1095)
- ARTICLE 1233.A debt shall not be
understood to have been paid unless the KINDS OF FRUITS:
thing or service in which the obligation
consists has been completely delivered or a. Natural Fruits - the spontaneous products of the soil,
rendered, as the case may be. (1157) the young and other products of animals produced
- ARTICLE 1244.The debtor of a thing without intervention of human labor
cannot compel the creditor to receive a
different one, although the latter may be of b. Industrial Fruits - those produced by lands of any
the same value as, or more valuable than kind through cultivation brought by an intervention of
that which is due. human labor

- ARTICLE 1497.The thing sold shall be c. Civil Fruits - those derived by virtue of juridical
understood as delivered, when it is placed in relation.
the control and possession of the vendee.
(1462a) Rights of Creditor to the fruits
- ARTICLE 1501.With respect to incorporeal
property, the provisions of the first - The creditor is entitled to the fruits of the
paragraph of article 1498 shall govern. In thing to be delivered from the time the
any other case wherein said provisions are obligation to make delivery arises.
not applicable, the placing of the titles of
ownership in the possession of the vendee or - The intention of the law is to protect the
the use by the vendee of his rights, with the interest of the obligee should the obligor to
vendor's consent, shall be understood as a commit delay, purposely or otherwise, in the
delivery. (1464) fulfillment of the obligation.

5. To deliver the damages in case of non-fulfillment or When the obligation to deliver fruits arises
breach. (see Art. 1170)
1.Generally, the obligation to deliver the thing due and,
- ARTICLE 1170. Those who in the consequently, the fruits thereof, If any, arises from the
performance of their obligations are guilty time of the "perfection of the contract".
of fraud, negligence, or delay, and those
Perfection- refers to the birth of the contract or to the
who in any manner contravene the tenor
meeting of the minds between the parties.
thereof, are liable for damages. (1101) cd
2. If the obligation is subject to a suspensive condition or
Duties of the obligor or debtor with respect to generic
period, it arises upon the fulfillment of the condition or
or indeterminate thing:
arrival of the term. However, the parties may make a
1.To deliver the thing of the same quality intended by stipulation to the contrary or regard the right of the
the parties, taking into account the purpose of the creditor to the fruits if the thing.
obligation, intent of the parties and other circumstances;
3. In a contract of sale, the obligation arises from the
and
perfection of the contract even if the obligation is subject
2. To be liable for damages in case of breach due to to a suspensive condition or period where the price has
delay, fraud, negligence or contravention of the tenor been paid.
hereof.
4. In obligation to give arising from law, quasi-contracts,
delicts, and quasi-delicts, the time performance is
determined by the specific provisions of the law - Ownership and other real rights over property are
applicable. acquired and transmitted in consequence of certain
contracts by tradition or delivery.
EXAMPLE:
"He shall acquire no real right over it until the same
S sold his horse to B for P15,000.00. No date or has been delivered to him"
condition was stipulated for the delivery of the horse. - The creditor does not become the owner
While still in the possession of S, the horse gave birth to
until the specific thing has been delivered
a colt.
yet.
Who has the right to the colt?
ARTICLE 1165
In a contract of sale “all the fruits shall pertain to the
vendee from the day on which the contract was When what is to be delivered is a determinate thing,
perfected.” (Art. 1537, 2nd par.) Hence, B is entitled to the creditor, in addition to the right granted him by
the colt. This holds true even if the delivery is subject to Article 1170, may compel the debtor to make the
a suspensive condition (see Art. 1179; e.g., upon the delivery.
demand of B) or a suspensive period (see Art. 1193;
e.g., next month) if B has paid the purchase price. If the thing is indeterminate or generic, he
may ask that the obligation be complied with at the
But S has a right to the colt if it was born before the expense of the debtor.
obligation to deliver the horse has arisen (Art. 1164.)
and B has not yet paid the purchase price. In this case, If the obligor delays, or has promised to
upon the fulfillment of the condition or the arrival of the deliver the same thing to two or more persons who do
period, S does not have to give the colt and B is not not have the same inter- est, he shall be responsible
obliged to pay legal interests on the price since the colt for any fortuitous event until he has effected the
and the interests are deemed to have been mutually delivery. (1096)
compensated. (see Art. 1187.)
Remedies of Creditor in Real Obligation
Personal right – the creditor’s right to demand from a
debtor (as a definite passive subject), the fulfillment of 1. Specific Real Obligation (obligation to deliver a
the obligation determinate thing)- the creditor may exercise the
following remedies or rights in case the debtor fails to
o Real right – right or interest of a person over a specific comply with his obligation:
thing (without a definite passive subject) against whom
a) Demand specific performance or
the right may be personally enforced
fulfillment
Personal Rights and Real Right distinguished b) Demand rescission or cancellation
c) Demand payment or damages only
• In personal right-there is a definite active o In an obligation to deliver a determinate thing,
subject and a definite passive subject the very thing itself must be delivered.
o Consequently, only the debtor can comply with
• In real right there is only a definite subject
without any passive subject the obligation. This is the reason why the
creditor is granted the right to compel the
• In personal right - there is a binding or debtor to make the delivery.
enforceable only against a particular person o It should be clear that the law does not mean
that the creditor can use force or violence. upon
• In real right- a directed against the whole
the debtor.
world
o The creditor must bring the matter to court and
Ownership acquired by delivery the court will be the one to order the delivery.
2. Generic Real Obligation (obligation to deliver a Accessions - the fruits of a thing or additions to or
generic thing) - can be performed by a third person improvements upon a thing (the principal).
since the object is expressed only according to its family
Accessories - this joined to or included with the
or genus.
principal thing for the latter's embellishment, better use,
o It is not necessary for the creditor to or completion.
compel the debtor to make the delivery, although
he may ask for performance of the obligation • While accessions are not necessary to the
o In any case, the creditor has the right to principal thing, the accessory and the
recover damages under Article 1170 in case of principal must go together.
breach or
• Both can exist only in relation to the principal
violation of the obligation
o The manner of compliance with an • Accession is also used in the sense of a
obligation to deliver a generic thing is governed right, i.e right to the fruits and/or accessories
by Article 1246 of a thing.

Where the debtor delays or has promised delivery to Right of Creditor to Accessions and Accessories
separate creditors
General Rule: Accessions and accessories are
- Paragraph 3 gives two instances when a fortuitous considered in the obligation to deliver a determinate
event does not exempt the debtor from responsibility. It thing although they may not have been mentioned.
likewise refers to a determinate thing. Indeterminate
thing- cannot be the object of destruction by a fortuitous • This rule is based on the principle of law
event because genus nunquam perit (genus never that the accessory follows the principal.
perishes).
• In order that they will be excluded, there
must be a stipulation to that effect.
Example:
ABC company contracted to deliver a vessel to • Unless stipulated, an obligation to
ZZZ company on January 10, 2019. The former failed to deliver the accessions or accessories of a
deliver on the stipulated period. On January 30, 2019, thing does not include the latter.
the vessel sunk because of a raging storm. ABC
companyis not liable because the obligation was
extinguished. It does not commit legal delay.
ARTICLE 1167
However, if there was a demand for delivery of the
vessel before January 10, 2019, and ABC company Refers to an obligation to do i.e., to perform an act or
failed to deliver and the vessel sunk on January 30, render a service.
2019, by reason of the storm, the company is liable. The
obligation to deliver the vessel is converted into a money It contemplates three situations:
claim for damages. 1) The debtor fails to perform any obligation to do
2) The debtor performs an obligation to do but contrary
to the terms
ARTICLE 1166 3) The debtor performs an obligation to do but in poor
manner
The obligation to give a determinate thing in- cludes
that of delivering all its accessions and accessories, Remedies of Creditor in Positive Personal
even though they may not have been mentioned. Obligations
(1097a)
1) If the debtor fails to comply with his obligation to do,
the creditor has the right:
a. To have the obligation performed by himself or by Those obliged to deliver or to do something incur in
another, unless personal considerations are involved, at delay from the time the obligee judicially or
the debtor's expense extrajudicially demands from them the fulfillment of
their obligation.
b. To cover damages. (ART. 1170)
However, the demand by the creditor shall not be
(2) In case the obligation is done in contravention of the necessary in order that delay may exist:
terms of the same or is poorly done, it may be ordered
by the court upon complaint) that it be undone if it is still (1) When the obligation or the law expressly so declare
possible to undo what was done. (obligation arising from law); or

Performance by a third person (2) When from the nature and the circumstances of the
obligation it appears that the designation of the time
- A personal obligation to do, like a real obligation to when the thing is to be delivered or the service is to be
deliver a generic thing, can be performed by a third rendered was a controlling motive for the establishment
person. While the debtor can be compelled to make the of the contract; or (time is of the essence)
delivery of a specific thing, a specific performance
cannot be ordered in a personal obligation to do because (3) When demand would be useless, as when the obligor
this may amount to involuntary servitude which, as a has rendered it beyond his power to perform. (demand
sake, is prohibited under our Constitution. would be useless)

ART. 1168. When the obligation consists in not In reciprocal obligations, neither party incurs in delay
doing, and the obligor does what has been forbidden if the other does not comply or is not ready to comply in
him, it shall also be undone at his expense. (1099a) a proper manner with what is incumbent upon him. From
the moment one of the parties fulfills his obligation,
delay by the other begins. (1100a)
Remedies of creditor in Negative Personal Obligation
MEANING OF DELAY
- In the obligation not to do, the duty of the
1. Ordinary delay – failure to perform an
obligor is to obtain from an act. Here, there
obligation on time. (late)
is no specific performance.
2. Legal delay or default or mora – failure to
- The very obligation is to fulfilled in not perform if there is a demand constitutes breach
doing what is forbidden . In this kind of of obligation
obligation, the debtor cannot be guilty of
KINDS OF DELAY
delay
1. Mora solvendi – delayon the part of debtor.
- As a rule, the remedy of the oblige is the
● Ex re – delay in real obligations (to
undoing of the forbidden thing plus
give)
damages.
● Ex persona – delay in personal
Example: obligations (to do)
2. Mora Accipiendi – delay on the part of the
Kristia bought a land from Bryan, it is stipulated creditor to accept the performance of the
in the contract that Bryan will not build a fence on a obligation.
certain portion of his land adjoining that sold to Kristia. 3. Compensatio Morae – delay on both debtor and
If Bryan constructs a fence in violation of the agreement, creditor. There’s no actionable default on the
Kristia can bring an action to have the fence removed at part of both parties.
the expense of Bryan.
No delay in negative personal obligation.

● In an obligation not to do, the fulfillment may

ARTICLE 1169 take place but delay is impossible for the debtor
 fulfils by not doing what has been forbidden for instance, “the debtor will be in default” or “I
him. will be liable for the damages.”
● No delay in not to do or One cannot be in delay 2. When the law so provides - the obligation is
for not doing at all. already stated or written under the law.
3. When the time is of the essence - time element is
Requisites of delay or default by the debtor important as performance itself. The debtor
should be fully aware that the performance of
1. Failure to perform his obligation on time the obligation after the designated time would no
2. The creditor demands for the performance of the longer benefit the creditor.
obligation judicially or extra-judicially 4. When demand would be useless - demand is
3. The debtor fails to comply to such demand unnecessary where it is apparent that it would be
unavailing.
The creditor has the burden of proving that demand has 5. When there is performance by a party in
been made. It is incumbent upon the debtor to prove that reciprocal obligations - in case of reciprocal
the delay was not caused by his fault to relieve himself obligations, neither party incurs in delay if the
from liability. other does not comply or is not ready to comply
in a proper manner. However, a party fulfills or
EFFECTS OF DELAY is ready to fulfill his obligation, delay by the
other begins.
1. As to debtor (Mora Solvendi)
a. guilty of breach of obligation.
b. failure to comply = liable for damages
or interest (if loan). ARTICLE 1170
c. He is liable for a fortuitous event when
the obligation to deliver is a determinate Those who in the performance of their obligation are
thing except if the debtor proves that the guilty of fraud, negligence, or delay, and those who in
results would be the same even if he had any manner contravene the tenor thereof, are liable
not been in default. for damages.
2. As a creditor (Mora Accipiendi)
a. guilty of breach of obligation. GROUNDS FOR LIABILITY
b. Liable for damages suffered, if any, by
the debtor. 1. Fraud (deceit or dolo)
c. He bears the risk of loss of the thing ● deliberate or intentional evasion of the
due. normal fulfilment of an obligation.
d. The debtor is not liable for the interest if ● Malice or dishonesty.
the obligation is to pay money. ● Bad faith = design to mislead or deceive
e. The debtor may release himself from another
obligation by consignation or deposit in
court of the thing due. Two types of fraud:
3. Both parties (Compensatio Morae)
● There is no delay. a. Incidental Fraud (Dolo
● If delay on 1 party follows by the other, Incidente) – committed in the
liability of the 1st shall be equitably performance of an obligation
tempered or balanced by the court. already existing.
● If not identified which party is guilty, b. Causal Fraud (Dolo Causante)
the contract shall be extinguished, each – employed in the execution
shall bear their own damages. which vitiates
consent
When demand not necessary to put debtor in delay
The civil code refers to civil fraud. Criminal fraud gives
1. When the obligation so provides - the obligation rise to criminal liability.
must be expressly so declare that the demand is
not necessary or must use words to that effect, as 2. Negligence (fault or culpa)
 ● voluntary act or omission. that which may have been lost or
● No faith or malice suffered.
● Failure to exercise the required amount
of care to prevent injury to others. a. Expectation Interest
3. Delay (Mora)
● failure to perform an obligation on time b. Reliance Interest
which failure constitute a breach
of the obligation. c. Restitution Interest
4. Contravention of the terms of the obligation
● Violation of the terms and condition 3. Excuse from ensuing liability
stipulated in the obligation which is not ● The effect of every infraction is to create a new
due to a fortuitous event. duty, that is, to make recompense to
the one who has been injured by the failure of
Fraud and negligence distinguished another to observe his contractual
obligation.
FRAUD ● The obligor can show extenuating circumstance,
like proof of his exercise of due
● Intentional, with malice diligence or of the attendance of
● Waiver for the future fraud is void fortuitous event, to excuse him from his ensuing
● Must be clearly proved liability.
● Liability for fraud cannot be mitigated 4. Duty of oblige to minimize his damages
● An obligee is duty bound to minimize the
NEGLIGENCE damages for which he intends to hold
any obligor responsible. He cannot recover
● Not intentional damages for any loss which he might have
● Waiver for future negligence in certain sense avoided with ordinary care. If his negligence
may be allowed was contributory to the loss, the court may
● It is presumed from violation of a contractual equitably mitigate the damages.
obligation ●
● Liability for negligence may be reduced
according to circumstances ARTICLE 1171

Recovery of damages for breach of contract and Responsibility arising from fraud is demandable in
obligation all obligations. Any waiver of an action for future
fraud is void.
BREACH OF CONTRACT - a violation of
any of the agreed-upon terms and conditions of a Responsibility arising from fraud demandable
binding contract.
● Refers to incidental fraud
1. Measure of recoverable damages ● The court has no power to mitigate or reduce the
● The provisions under Title XVIII on damages to be awarded
“Damages” of the Civil Code govern in
determining the measure of recoverable Waiver of action for future fraud is void
damages.
● one injured by a breach of a contract, or by a ● No effect as if there’s no waiver (against law
wrongful or negligent act or omission shall and public policy)
have a fair and just compensation commensurate ● A contrary rule would encourage perpetration of
to the loss sustained as a consequences fraud
of the defendant’s act.
2. Contractual interests of obligee or promisee, Waiver of action for past fraud is valid
remedy serves to preserve
● A breach upon the contract confers upon ● To acknowledge thereof by the aggrieved party
the injured party a valid cause for recovering
 ● Waiver of past fraud can be considered as an act 3. Criminal negligence (culpa criminal)
of generosity and magnaminimity on the victim ● fault or negligence which results in the
party. commission of a crime
● Must be expressed in clear language
Importance of distinction between culpa contractual
and culpa aquiliana

ARTICLE 1172 CULPA CONTRACTUAL:

Responsibility arising from negligence in the ● Negligence is merely incidental to the

performance of every kind of obligation is also performance of an obligation already existing
demandable, but such liability may be regulated by because of a contract.
the courts, according to the circumstances. (1103) ● There is always pre-existing contractual relation
● Breach or non-fulfillment of contract
Responsibility arising from negligence demandable ● Requires proof by preponderance of evidence
● Defense of a good father of a family in the
1. Discretion of court to fix amount of changes - selection and supervision of employees is not a
The court has a wide discretion in fixing the proper or complete defense, though it may
measure of damages. Negligence is not as mitigate damages
serious as fraud since there is no deliberate
intention of injury or damages. The court may CULPA AQUILIANA:
increase or decrease the damages recoverable
depends on circumstances. ● Negligence is direct, substantive, and
2. Damages where both parties mutually negligent independent
- When both parties are negligent, the fault of ● There may or may not be a pre-existing
one may cancel or neutralize the negligence of contractual relation
the other. Thus, the rights and obligations of the ● Defendant’s negligent act or omission
parties may be determined in fair principle that ● Requires proof by preponderance of evidence
no one shall enrich himself at the expense of ● Defense of a good father of a family in the
another. selection and supervision of employees is a
proper or complete defense
Validity of waiver of action arising from negligence ● Proof of existence of a contract and breach
thereof gives rise to a presumption of fault
1. Waiver of action for future negligence is valid
except where the nature of the obligation Effect of negligence on the part of the injured party
requires extraordinary diligence
2. Negligence showing bad faith is considered Suppose the creditor is also guilty of negligence, can he
equivalent to fraud (waiver for future negligence recover damages?
of this kind is void)
Article 2179 of the Civil Code provides:
KINDS OF NEGLIGENCE
“When the plaintiff’s own negligence was the
1. Contractual negligence (culpa contractual) immediate and proximate cause of his injury, he
● fault or negligence of obligor by virtue cannot recover damages. But if his negligence
of which he is unable to perform his was only contributory, the immediate and
obligation arising from a pre-existing proximate cause of the injury being the
contract defendant’s lack of due care, the plaintiff may
2. Civil negligence (culpa aquiliana) recover damages, but the courts shall mitigate the
● called “tort” or “quasi-delict” damages to be awarded.”
● fault or negligence of a person whose
failure to observe the required diligence ● to be entitled to damages, the law does not
to the obligation causes damage to require that the negligence of the defendant
another should be the sole cause of the damage.
 ● Plaintiff has to prove negligence of the EXAMPLE: Driving 100 kph in NLEX is
defendant permissible but doing the same in Ayala Avenue, Makati
is gross recklessness

Measure of liability for damages

ARTICLE 1173
Damages – money compensation given to a
The fault or negligence of the obligor consists in the party for loss or injury resulting from breach
omission of that diligence which is required by the of contract or obligation of the other.
nature of the obligation and corresponds with the
circumstances of the person, of the time and of the Article 2201 of the CIvil Code states:
place. When negligence shows bad faith, the
provisions of Articles 1171 and 2201, paragraph 2, “In contracts or quasi-contracts, the damages for
shall apply. which obligor who acted in good faith is liable shall to
those that are the natural and probable consequences of
If the law or contract does not state the diligence the breach of the obligation, and which the parties have
which is to be observed in the performance, that foreseen or could have reasonably foreseen at the time
which is expected of a good father of a family shall be the obligation was constituted
required.
In case of fraud, bad faith, malice or wanton
Meaning of fault or negligence attitude, the obligor shall be responsible for all the
damages which may be reasonably attributed to the non-
● no deliberate intention to cause damage performance of obligation.”
● Failure to observe for the protection of the
interests of another person, that degree of care, Kinds of diligence required
precaution, and vigilance which the
circumstances justly demand whereby such Diligence – attention and care required in a
other person suffers injury given situation
● It is “the want of care required by the
circumstances” Under the 1173, these are the diligence required:

Factors to be considered 1. that agreed upon by the parties, orally or in

writing
1. Nature of an obligation 2. In the absence of stipulation, that required by
law in the particular case (like the extraordinary
EXAMPLE: Smoking while carrying materials diligence18 required of common carriers); and
known to be inflammable constitutes negligence 3. In the absence of any provision in the contract or
law, the diligence required of a good father of a
2. Circumstances of the person family (ordinary diligence)

EXAMPLE: A sleeping security guard while on

duty is guilty of negligence
ARTICLE 1174
3. Circumstances of time
Except in cases expressly specified by law, or when it
EXAMPLE: Driving without headlights at night is otherwise declared by stipulation, or when the
is gross negligence but doing so during the day does not nature of obligation requires the assumption of risk,
constitute negligence no person shall be responsible for those events which
could not be foreseen, or which though for foreseen,
4. Circumstances of the place were inevitable (1105a)

MEANING OF FORTUITOUS EVENT

 ● It is an event that is impossible to see or to ○the obligation to deliver a specific thing
avoid. arises from a crime (Art. 1268)
● In obligation, these events must be independent ○ the thing to be delivered is generic (Art.
to the will of the debtor that makes the normal 1263)
fulfillment of the obligation impossible 2. When declared by a stipulation
● An act of man, or an of God ○ Freedom of contract (Art. 1306)
○ Intention to make the debtor liable must
FURTUITOUS EVEN DISTINGUISHED FROM be clearly expressed.
FORCE MAJEURE 3. When the nature of obligation requires the
assumption of risk
1. Acts of man – an event independent on the will ○ The risk of loss and damage is an
of the obligor but not the human will essential element of an obligation
○ Fire, robbery, murder
2. Acts of God – majeure; events that are totally
independent to the human will
○ Calamities ARTICLE 1175

KIND OF FURTUITOUS EVENTS Usurious transactions shall be governed by special

laws (n)
1. Ordinary fortuitous events – common and
both parties can foresee (e.g., rain) MEANING OF SIMPLE LOAN OR MUTUUM
2. Extra-ordinary fortuitous events – uncommon
and cannot be foreseen (e.g., calamities, war, ● A contract where a party deliver money or a
fire) consumable thing provided that the same
amount of the same kind it to be paid.
REQUISITES OF A FURTUITOUS EVENTS ● It may be with the stipulation to pay interest
(Art. 1933)
1. Must be independent to the obligor’s will or
human will MEANING OF USURY
2. The event must be impossible, if not, cannot be
avoided ● A contract for receiving interest in the excess of
3. The event must result for the obligor to not the amount of law for the loan, money, goods,
comply to the obligation in a normal manner and credits. (Tolentino vs. Gonzales, 50 Phil.
4. Debtor must be free from participating in the 558)
injury caused to the creditor providing that there
is no negligence on his part. REQUISITES FOR RECOVERY OF INTERESTS
● Absence of any of the requisites would exempt
the obligor from liabilities, though, it the event 1. The payment must be expressly demanded (Art.
must be impossible to see or to avoid. 1956)
2. The agreement must be written
RULES AS TO LIABILITY IN CASE OF 3. The interest must be lawful (Art. 1957)
FURTUITOUS EVENTS ● Payment for an interest is void when it is not
demanded. (Art. 1413)
● A person is not liable for the non-compliance of ● The lender may recover the full amount of loan
the obligation due to fortuitous events, except in and compliance with the terms of the contract is
cases of: valid.
1. When expressly specified by law ● See Article 1229
○ the debtor is guilty of negligence, fraud,
delay, or contravention of tenor of the
obligation (Art. 1170, 1165)
○ the debtor promised to deliver the same ARTICLE 1176
thing to two or more persons who do not
have the same interest
The receipt of the principal by the creditor, without The creditors, after having pursued the property in
reservation with respect to the interest, shall give possession of the debtor to satisfy their claims, may
raise to the presumption that said interest has been exercise all rights and bring all the actions of the
paid. latter for the same purpose, save those which are
inherent in his person; they may also impugn the acts
The receipt of latter installment of a debt without which the debtor may have done to defraud them.
reservation as to prior installments, shall likewise (1111)
raise the presumption that such installment has been
paid. (1110) REMEDIES AVAILABLE TO CREDITORS FOR
THE SATISFACTION OF THEIR CLAIMS
MEANING OF PRESUMPTION
1. Fulfillment of the obligation, with the right to
● An interference of a fact that is not known, damages
arising from connection to another that is known 2. Pursue the leviable property of the debtor
or proved. 3. Then exercise all rights and bring all actions of
the debtor except those personal to the latter
TWO KINDS OF PRESUMPTION 4. Ask the court to validate the acts or contracts the
debtor did to defraud him when he cannot
1. Conclusive presumption – cannot be contradicted; recover his claim
presumption that everyone is presumed to know the ○ The debtor is liable with all his property,
law present and future, for the fulfillment of his
2. Disputable (rebuttable) presumption – can be obligations, subject to the exemptions
contradicted in the presence of an evidence to prove provided by law. (Art. 2236)
the contrary (Sec. 69[i], Rules 123, Rules of Court)

WHEN PRESUMPTIONS ON ARTICLE 1176 DO

NOT APPLY ARTICLE 1178

1. With reservation as the interest ● Subject to the laws, all right acquired in virtue of
○ Reservation has been made orally or an obligation are transmissible, if there has been
thru writhing, so there is no presumption no stipulation to the contrary. (1112)
of payment.
2. Receipt without indication of particular TRANSMISSIBILITY OF RIGHTS (exceptions)
installment paid
○ Not applicable if the receipt does not 1. Prohibited by law – personal in character
include the particular installment due as a. Contract of partnership – 2 or more
to when it is dated. person binds himself to contribute money,
3. Receipt for a part of a principal property, or industry to a common fund,
○ if the payment for an interest is not with the intention of dividing the profits
stated, it implies that the creditor waives among themselves (Art. 1767)
the right of the debtor to pay for the b. Contract of agency – a person binds
interest first then the capital (Art. 1253) himself to render services on behalf of the
4. Payment of taxes other with the consent or authority of the
○ There is no presumption that the other (Art. 1868)
previous taxes are paid on the later one. c. Contract of commodatum – a part delivers
5. Non-payment proven something to another that is not consumable
○ a presumption cannot prevail over a so the latter may use it for a certain time and
proven fact. return it; it is gratuitous. (Art. 1933)
d. Prohibited by stipulation of parties – like
upon a stipulation of death, the creditor
cannot assign his credit to another; it must
ARTICLE 1177 be clearly proved or implied on the terms of
the contract.
 ARTICLE 1424

TITLE III When a right to sue upon a civil obligation has lapsed
NATURAL OBLIGATIONS by extinctive prescription, the obligor who
voluntarily performs the contract cannot recover
ARTICLE 1423 what he has delivered or the value of the service he
has rendered.
Obligations are civil or natural. Civil obligations give
a right of action to compel their performance. ● Performance after civil obligation has
Natural obligations, not being based on positive law
prescribed
but on equity and natural law, do not grant a right of
action to enforce their performance, but after Acquisitive prescription - one acquires real rights
voluntary fulfillment by the obligor, they authorize through time under conditions by law
the retention of what has been delivered or rendered
by reason thereof. Some natural obligations are set Extinctive prescription - one may also lose rights in the
forth in the following articles. same way
● Concept of natural obligations.
Rights lost through extinctive prescription are not
demandable, however secured if voluntarily fulfilled.
Natural obligations - from Roman law which had two
kinds of obligations: civil, and natural—which is
unenforceable but has juridical consequences; This is
ARTICLE 1425
also prominent in the old Spanish law.

When without the knowledge or against the will of

Jus civile - means civil law
the debtor, a third person pays a debt which the
obligor is not legally bound to pay because the action
● Civil obligations and natural obligations
thereon has prescribed, but the debtor later
distinguished.
voluntarily reimburses the third person, the obligor
cannot recover what he has paid.
Civil obligations - from law, contracts, quasi-contracts,
delicts, and quasi-delicts (Art. 1157); give rights of
● Reimbursement of third person for debt that
action in court to demand (Art. 1156)
has prescribed
Natural obligations - not from state law but from equity
If A pays for B’s debt, without A’s knowledge, B is not
and natural law; does not give rights of action in court to
bound to reimburse A (par. 2, Art. 1236) nor can B
demand
recover what he reimbursed if he chooses to.
● Enumeration not exclusive

ARTICLE 1426
The last sentence of the article highlights the following
When a minor between eighteen and twenty-one
enumeration in title iii is not exclusive.
years of age who has entered into a contract without
the consent of the parent or guardian, after the
annulment of the contract voluntarily returns the
whole thing or price received, notwithstanding the
fact that he has not been benefited thereby, there is
no right to demand the thing or price thus returned.
 ● Restitution by minor after annulment of the payment of the value of the service he has
contract. rendered.
- He must be deemed to have considered it his
Minors cannot be obliged to make restitutions upon moral duty to fulfill his obligation.
annulment of contract entered without guardian’s
consent, nor can the minor recover what he has returned ARTICLE 1429
if he chooses to.
When a testate or intestate heir voluntarily pays a
ARTICLE 1427 debt of the decedent exceeding the value of the
property which he received by will or by the law of
When a minor between eighteen and twenty-one intestacy from the estate of the deceased, the
years of age, who has entered into a contract without payment is valid and cannot be rescinded by the
the consent of the parent or guardian, voluntarily payer.
pays a sum of money or delivers a fungible thing in
fulfillment of the obligation, there shall be no right to ● Payment by heir of debt exceeding value of
recover the same from the obligee who has spent or property inherited.
consumed it in good faith. (1160a) - The heir is not personally liable beyond the
value of the property he received from the
● Delivery by minor of money or fungible thing decedent. (par. 1, Art. 1311.)
in fulfillment of obligation. - If he voluntarily pays the difference, the
- general rule: by decree annulment, the parties payment is valid and cannot be rescinded by
are obliged to make mutual restitution. (Art. him.
1398.) - An heir has a moral duty to perform or pay
- The obligee who has spent or consumed in good obligation legally contracted by his dead
faith the money or consumable thing voluntarily relatives.
paid or delivered by the minor, is not bound to
make restitution. ARTICLE 1430

When a will is declared void because it has not been

ARTICLE 1428 executed in accordance with the formalities required
by law, but one of the intestate heirs, after the
When, after an action to enforce a civil obligation has settlement of the debts of the deceased, pays a legacy
failed, the defendant voluntarily performs the in compliance with a clause in the defective will, the
obligation, he cannot demand the return of what he payment is effective and irrevocable.
has delivered or the payment of the value of the
service he has rendered. ● Payment of legacy after will has been
declared void.
● Performance after action to enforce civil
obligation has failed. Legacy
- A situation where a debtor, who has failed to - The act of disposition by the testator in
pay his obligation, is sued by the creditor and separating from the inheritance for
instead of losing the case, he has won it. definite purposes, things, rights or a
- If, notwithstanding this fact, the debtor definite portion of his property.
voluntarily performs his obligation, he cannot - It may be viewed as the same portion,
demand the return of what he has delivered or or those things or special rights, which
the testator separates from his
 inheritance for a definite purpose. (6
Manresa 654.)
- Purpose: to reward friends, servants and
others for services they have rendered,
to give alms, etc.

- If a will is disallowed for non-compliance with

the formalities prescribed by law (Arts. 805,
839[1].), the legacy made in the will would also
be void.
- Effect: The same as if the deceased had died
without a will.
Therefore, the intestate heir is not
legally required to pay the legacy.
- If he still pays the legacy, the payment is
effective and irrevocable, subject to the rights of
the creditors of the deceased.
- Since, it was the intention of the testator to give
the legacy, it is the moral duty of the heir to
carry it out.