Obli Blue Notes PDF

DEAN ULAN NOTES ON OBLICON 2015 - 2016
San Beda College - Manila

First Meeting: December 10, 2015 c. Juridical Tie – efficient cause
d. Object or Prestation – subject matter of the obligation
1. What is the purpose of studying the General
Provisions on Obligations / Arts. 1156 – 1162 of the 7. What is a contract?
NCC?
To know the existence of an obligation and in case of 1305. A contract is a meeting of minds between two
breach or non-fulfillment, to know the possible remedial persons whereby one binds himself, with the respect to the
measure for compensation. other, to give something or to render some service.
2. What is an obligation? 8. What are the essential elements of a contract?
1156. An obligation is a juridical necessity to give, to do or a. Consent of the Contracting Parties

not to do. b. Object of the Contract
c. Cause of the Obligation
3. What are the kinds of obligations? 9. When does consent exist?
a. Civil Obligations – those that give a right of action to

compel their performance. 1319. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to
b. Natural Obligations – those not being based on positive constitute the contract. The offer must be certain and the
law but on equity and natural law, do not grant a right of acceptance absolute. A qualified acceptance constitutes a
action to enforce their performance by the obligor, counter-offer.
authorize the retention of what has been delivered or
rendered. (1423) 10. What is an agreement?
An agreement is an informal arrangement between two or
4. Does the definition of an obligation in Art. 1156 more parties that is not enforceable by law.
covers the two kinds of obligations?
11. A and B are lovers. They decided to go on a date
this Sunday at 11am. B was late. Can A sue B for
No, the definition of an obligation in Art. 1156 does not breach of contract?
cover the two kinds of obligations. An obligation according
to Art. 1156 is a juridical necessity, only Civil Obligations
has juridical necessity. Option 1: It shall depend whether or not the agreement
really resulted into a contract.
5. What are the sources of obligation? Option 2: Since there is no law in this particular case, there
is no cause of action.
1157. Obligations arise from: 12. What is a Quasi-Contract?
(1) Law; 2142. Certain lawful, voluntary and unilateral acts give rise
to the juridical relation of a quasi-contract to the end that no
(2) Contracts; one shall be unjustly enriched or benefitted at the expense
of another.
(3) Quasi-Contracts;
13. Distinguish a Quasi-Contract from a Contract.
(4) Acts or Omissions punished by law;
Quasi-Contract Contract
(5) Quasi-Delicts Created by law to avoid Created by the meeting of
unjust enrichment minds of two or more
6. What are the essential requisites of an Obligation? persons
Unilateral Acts Bilateral Acts
a. Passive Subject – debtor or obligor No meeting of minds Meeting of minds is required
b. Active Subject – creditor or obligee
1 |R e v i e w e r b y M i c h e l l e S A N D I E G O L a v i s t a
14. What are the 3 General Concepts on Quasi- a. Self-defense
Contracts? b. Defense of Relatives
c. Defense of Stranger
a. Negotiorum Gestio (Officious Management) 2144 d. Avoidance of Greater Evil
b. Solutio Indebiti (Payment not Due) 2154 e. Fulfillment of Duty
c. Other Quasi-Contracts (Support given by Strangers) f. Obedience to a Lawful Order
15. What are Acts and Omissions punished by law? The presence of exempting circumstances will exempt the
perpetrator from criminal liability but not from civil liability.
These are felonies / crimes defined and punished in the (Art. 12, RPC)
Revised Penal Code or in Special Penal Laws.
a. When the offender is an imbecile or an insane person;
16. What is the Dual Character of Crimes? b. When the offender is under 15 years of age;
c. When the offender acts under the compulsion of an
a. Offense against the State because of the disturbance of irresistible force;
social order. d. When the offender acts under the impulse of an
uncontrollable fear;
b. Offense against a Private Person injured by the crime. e. When the offender in order to avoid an evil or injury
does not act;
Concept: It is one single act resulting to two separate Others:
obligations. (Civil and Criminal Obligations)
f. Quasi-Delicts
Criminal Obligation – To pay fine or serve imprisonment or g. Accessories who are exempt from criminal liability. —
other sanctions The penalties prescribed for accessories shall not be
imposed upon those who are such with respect to their
Ex. A city ordinance prohibiting all persons from urinating spouses, ascendants, descendants, legitimate, natural,
along the streets of Pasig. In case of a violation, there will and adopted brothers and sisters, or relatives by affinity
be fine. within the same degrees, with the single exception of
Penal – There is a fine in case of violation. accessories falling within the provisions of paragraph 1
of the next preceding. (Art. 20, RPC)
Civil Obligation – To restitute the thing or property / to
repair damaged thing or property / to indemnify damages to 20. What are included in the Civil Liability of Crimes?
the victim and to his family.
17. What is the concept of Civil Liability? Restitution – of the thing itself must be made whenever
possible even when found in the possession of a third
GR: Every person criminally liable for a felony is also civilly person except when acquired by such person in any
liable. (Art. 100, RPC) manner and under the requirements which by law, bar an
action for its recovery. (Art. 105, RPC)
ER:
Ex. In carnapping, the carnapper has a civil liability to return
1. Victimless Crimes
the carnapped car to the victim.
2. Flight to Enemy Country
Reparation – the Court shall determine the amount of
18. When is a person criminally liable only? damage, taking into consideration the price of the thing, and
its special sentimental value to the injured party. (Art. 106,
RPC)
Treason, Rebellion, Espionage, Contempt, Gambling, Illegal
Possession of Firearms and others, either because there is Ex. In reckless imprudence resulting to damage to property,
no thing to be restituted, no damage to be compensated or the accused’s civil liability includes the payment for its
there is no private person injured by the crime. repair.
Indemnification – includes not only those caused to the
19. When is a person civilly liable only? injured party but also those suffered by his family or by a
third person by reason of the crime. (Art. 107, RPC)
The following do not incur criminal liability. (Art. 11, RPC)
Ex. In Homicide, the accused must indemnify the victim’s Natural Civil
family. Obligation Obligation
21. What is quasi-delict? Source Equity and Positive Law
Natural Law
2176. Whoever by act or omission causes damage to Enforceability Not enforceable Enforceable in
another, there being fault or negligence, is obliged to pay for in COL COL
the damage done. Such fault or negligence, if there is no
Similarity Based on Natural Law
pre-existing contractual relation between the parties is
called a quasi-delict. 4. When is Natural Law considered as Positive Law?
22. What are the elements to make a person liable for a When the natural law is formalized into a legislative
Quasi-Delict? enactment. When it can be considered as a basis for any
right or obligation of any member of the community.
a. There is an act or omission; Ex. Constituion, Eos, Administrative Orders
b. Such act or omission causes damage or injury;
c. There is no contributory negligence on the part of the 5. Why is it important to determine whether the wrong
injured party; committed is based on positive law?
d. The act or omission is the proximate cause of the
damage or injury to the injured party; To know if there is a cause of action based on a violation of
e. There is no pre-existing contract between the parties. an obligation required or unrequired of a positive law.
6. Illustrate the Similarities and Differences of Civil,
23. Distinguish a Quasi-delict from a Delict.
Natural and Moral Obligations.
Quasi-Delict Delict
Civil Natural Moral
There is only negligence. There is intent or Obligation Obligation Obligation
negligence. Based on Natural Law
The purpose is The purpose is Presence of a Absence of a Positive Law
indemnification. punishment. Positive Law
Affects private interest. Affects public interest.
7. Illustrate the Differences of Natural and Moral
Civil Liability Criminal and Civil Liability Obligations
Can Compromise Cannot Compromise Natural Obligation Moral Obligation

In case of voluntary In case of voluntary
Fault or negligence is Guilt must be proved fulfillment, it creates a fulfillment, it remains as
proved by preponderance beyond reasonable civil obligation that would moral obligation
of evidence. doubt. be based on PL and
enforceable at COL
Second Meeting: January 7, 2016

8. Give an example of a moral obligation.
1. What is the concept of OBLICON as a law subject?
Kim gave $20 to Kanye, a mendicant. Kanye accepted it
It is a supplemental law to all other laws regarding how an and insulted Kim by saying, your so cheap. Kim cannot ask
obligation can be fulfilled. Kanye for the return of the $20.
2. What is the etymology of the word “obligation”? It is a purely, moral and voluntary act which does not give
any cause of action.
Oble – Latin for around
9. What is Prescription?
Ex. Orbit, Oblong
It is a mode of acquiring or losing ownership and or rights of
To – Latin to bind
action through lapse of time.
3. Illustrate the Similarities and Differences of a
10. What are the types of Prescription?
Natural Obligation and a Civil Obligation
a. Acquisitive – You acquire ownership or rights of action
through the lapse of time.
17. What are the requirements for a party to be
b. Extinctive – You lose ownership or rights of action creditor?
through the lapse of time.
A. Civil / Juridical Personality
11. What is the concept of Voluntary Fulfillment in B. Legal Capacity and Capacity to Act
Natural Obligations?
18. What are the kinds of Objects of Obligation /
In NO, the debtor cannot be compelled thru Court Action but Prestations?
if Debtor voluntary fulfills the obligation, it creates a CO. The
creditor has now a legal right to retain it and the debtor A. To give
cannot get it back. B. To do
12. What are the requisites of VF? C. Not to do
19. What are the requirements of a valid prestation?
According to Tolentino, the requisites of VF are the ff:
A. It must not be contrary to Law, morals, good
1. Payment or fulfillment of the obligation is based on customs, public order and public policy.
debtor’s own volition and that he was not forced or B. It must be determinate or at least determinable.
intimidated. C. It must be possible.
2. Debtor must have knowledge that he has performed an D. ****It must be subject to pecuniary / monetary
obligation not enforceable in COL. value.
13. Give an example of the obligation expressed Art. There are prestations that cannot be equated of
1424. monetary value. (ex. Restoring an object, life of
persons.. etc)
D owes C the sum of $10,000.00 under written contract.
After 10 years, the debt of D prescribes for failure of C to file
E. There must be a Juridical or Legal tie.
the necessary action for the recovery of the same.
20. Enumerate the Juridical or Legal ties of
If D, knowing of the prescription, voluntarily pays C, he obligations?
cannot recover anymore what he has paid. He has the
Obligations arise from:
moral duty to pay his debt.
Law;
14. Give an example of the obligation expressed Art.
1425. Contracts;
D owes C the sum of $10,000.00 under written contract. Quasi-Contracts;
After 10 years, the debt of D prescribes for failure of C to file
the necessary action for the recovery of the same. Acts or Omissions punished by law; and
T pays C after the debt has prescribed without the Quasi-Delicts.

knowledge or consent of D, but D nevertheless reimburses
T, D cannot recover what he has paid. ***According to the Sagrado Orden v. NACOCO Doctrine,
the list in Art. 1157 is exclusive.***
15. In the above example, what if D does not reimburse
T? Note: If the obligation do arise from this enumeration, then it
must be a Natural or Moral Obligation.
D should reimburse T as provided by Art. 1236: Whoever
pays for another may demand from the debtor what he has
paid, except that if he paid without the knowledge or against THIRD MEETING: January 14, 2016
the will of the debtor, he can recover insofar as the payment
has been beneficial to the debtor. 1. How can one conceive an obligation?
16. Are the provisions in 1427 to 1430 still applicable? A person can conceive an obligation by fulfilling its
requisites which include a passive subject, an active
No, the age of majority is now at the age of 18 years. All subject, an object and the most important which is a
laws in conflict with such are repealed by RA 6809. juridical tie.
2. When does a law create an obligation?
The law creates an obligation when it is a Mandatory Obligations arising Obligations arising from
Statute. Mandatory statute is a statute which from Law Contracts
commands either positively that something be done, or
performed in a particular way, or negatively that Expressed Expressed or Implied
something be not done, leaving the person concerned
no choice on the matter except to obey.
a. The Parent’s a. Contract of Carriage
The test generally employed to determine whether a obligation to support their b. Contract of Sale
statute is mandatory or directory is to ascertain the Children c. Contract of Lease
consequences that will follow in case what the statute b. A worker’s
requires is not done or what it forbids is performed. obligation to pay taxes to
the Government
3. When is a law ambiguous? c. The Police’s
obligation to render aid or
A law is ambiguous if it is susceptible to two or more
protection to any person
interpretations.
in case of danger to life
4. In case of doubt, how do can one interpret whether or property
a law establishes an obligation?
It is resolved against the existence of the obligation. 9. When is an agreement a contract?
Obligations derived from law are not presumed.
Only agreements that complies with the requisites of a
5. If a law was passed requiring older brothers to contract (Consent, Object & Cause) and that can be
support their younger brothers. Can a younger enforced in Courts of Law are considered as a contract
sister ask support from her older brother?
10. When is there Consent?
No, there is no cause of action. The law cannot be
There is consent when there is a meeting of minds
presumed, it has to be expressed.
between the parties as when the offeror makes an offer
and such offer is accepted by the offeree.
6. If a law clearly creates an obligation, it maybe a. Offer – The offeror makes an offer
possible that it did not provide a manner on how it b. Acceptance – The Offeree makes an acceptance
is to be fulfilled. Can there be an obligation arising
from law? 11. What are the vices in consent?
 Force
Yes. OBLICON principles are of supplementary nature  Intimidation
in innominate contracts / laws.  Violence
 Undue Influence
7. What are the concepts of Obligations arising from 12. What are the requisites of a valid offer?
Contracts? a. The offer must be definite. The prestation is clear.
 The stipulations in the contracts are considered as b. The offer must be complete in all aspects that the
the Law between the parties which must be offeree does not need to know any more essential
complied in good faith. (Vinculum) information regarding it.
Example:
 The Meeting of Minds of the parties can be in
writing or orally done. Do you want to buy this car?
The offer is definite but it is not complete in all other aspects
8. Illustrate the Differences between Obligations (price, color, engine number, location, brand, etc). There is
arising from Law and Obligations arising from no juridical tie establish, the law required completeness for
Contracts. a valid offer.
13. What are the requisites of a valid acceptance?
a. It must be unconditional ***The law creates the cause of action where the
b. It must be free from qualifications beneficiary pays the gestor the necessary expenses and
just compensation for the NG. ***
 There must be no deviation from the offer, otherwise it
will constitute a counter offer. 17. Requisites of Negotiorum Gestio
Example of a counter offer: a. There is a Property / Business;

b. Which is abandoned / neglected;
Kimmy offered Kanye to buy her brand new HUMMER 2016 c. There is taking of possession in order to manage or
model with plate number: MSL 644, color HOT PINK, administer such;
engine number: 0929123456, etc., for Php 5, 000, 000. 00 d. Which is unauthorized either expressly or impliedly;
cash to be paid tomorrow. Kanye accepted the offer but with e. It is a voluntary act and that the OM has knowledge
a condition that he will pay it next month. that it is for the benefit of the owner.
14. Kumares Toni, Mariel and Bianca stipulated in a
contract that they would exchange husbands every
weekend. Bianca breached their agreement 18. Bruno owns a farm that he has not seen for 10
because she said that Toni’s husband was not years. He realizes that it needed cultivation to
good in bed. Is there a cause of action for breach improve its productivity. Bruno did not know about
of contract? the boundary of his property, he extended his
cultivation work to the property of Mars, his
No, while the law allows the contracting parties the neighbor. Both properties increased its cost /
freedom to stipulate the terms and conditions of their selling price because of Bruno’s cultivation work.
contracts, it is not without limitations. The contracting Bruno realized that he extended his cultivation
parties may establish such stipulations, clauses, terms and work to Mars. Can Bruno institute an action
conditions as they may convenient provided they are not against Mars to pay him the necessary expenses
contrary to law, morals, good customs, public order or incurred in cultivating his land?
public policy.
Yes, the Cause of Action would be that of Solutio Indebiti.
Unlike in NG, there is no voluntariness and that Bruno was
15. Illustrate the Similarities and Differences of a unaware that he was performing the cultivation work for
Contract and a Quasi-Contract? Mars.
Quasi-Contract Contract 19. Give the requisites of Solutio Indebiti.

Similarities a. Something is delivered;
These are Lawful and Voluntary Acts b. The Recipient has no right to receive it;
Differences c. The delivery is through mistake.
Created by law to avoid Created by the meeting of Fourth Meeting: January 21, 2016
unjust enrichment minds of two or more
persons 1. What are Other Quasi-Contracts?
Unilateral Acts Bilateral Acts
No meeting of minds Meeting of minds is required These are specific peculiar circumstances which give rise to
a juridical relation between the parties on the ground that no
one shall be unjustly enriched or benefitted at the expense
16. Discuss the concept of Negotiorum Gestio. of another.
In this case, a property is neglected or abandoned by the Ex. Giving Support to a child because his parents are
owner and is taken care by an unauthorized person. neglectful of his needs. Once a person gives support to the
neglected child, he can ask for reimbursement of the
Gestor / Officious Manager – “Pakilamero” / excessively support given from the neglectful parents.
informal
2. What is the purpose of studying the Nature and
Passive Subject – Gestor / OM Effect of Obligations / Arts. 1163 – 1178 of the NCC?
Active Subject – Owner / Beneficiary To know how to fulfill an obligation according to law.
Prestation – To do / to give 3. What happens if the debtor fulfills the obligation?
The creditor must accept it and he must release the debtor Supplemet The law does not Art. 1163. Every
from the juridical tie. If fails to accept it, the creditor is guilty al require the debtor to person obliged to
of delay (Mora Accipiendi). Thus, debtor can ask him for Obligation exercise give something is
damages. DOAGFOAF also obliged to take
because the genus care of it with the
4. What are the kinds of Obligations based on their of the thing never proper diligence of a
prestations? perishes. good father of a
family, unless the law
A. Real Obligation – to give or the stipulation of
a.1. Specific – Real obligation to give a specific thing. the parties requires
another standard of
a.2. Generic – Real obligation to give a generic thing. care.
Grounds Default, Fraud, Default, Fraud,
**This is based on the nature of the thing delivered*** for Negligence and Any Negligence, Any
B. Personal Obligation – To do or not to do Damages other manner that other manner that
Contravenes the Contravenes the
b.1. Positive – Personal Obligation to do. Tenor of the Tenor of the
Obligations Obligations and
b.2. Negative – Personal Obligation not to do. Fortuitous Events
(Genus of the thing
never perishes)
5. Differentiate a Generic thing from a Specific thing. Delivery of Substitution is The obligation to give
its allowed. a determinate thing
Generic Thing Specific Thing Accessions includes that of
Meaning Referred based on Separated from its and delivering all of its
its class or genus Accessorie accessions and
class or genus Distinctively Unique s accessories, even
Example Ex. To deliver a Ex. To deliver a 500 though they may not
bottle of ml Nature Spring have been
water Green Mineral Water, mentioned.
touched and drank by
Dean Ulan last
January 21, 2016 6. What is the criterion to determine if a thing is
Principal 1246. When the 1244. The debtor of a generic or specific?
Obligation obligation consists thing cannot compel What is the result if you separate it from its class?
in the creditor to receive
the delivery of a a different one, If the thing that is intended to be delivered is lost before the
generic although the latter delivery then it is specific. The obligation is thus
thing, whose quality may be of the same extinguished.
and circumstances value as or more
have valuable that which is If not, then it is generic, because genus never perishes.
not been stated, the due.
7. How many ways can a debtor fulfill his obligation to
creditor cannot
deliver a determinate thing?
demand
a thing of superior One. To deliver exactly what was agreed upon by the
quality. Neither can parties.
the
debtor deliver a 8. Coco owes Martin Php 50, 000 which he must pay
thing of on December 25, 2015. On Christmas Eve, Coco
inferior quality. The was about to pay Martin, when Paloma, a thief, stole
purpose of the the money from Coco. Can Coco use the defense
obligation and other that he was robbed by a thief in order not to be in
circumstances shall default of payment?
be
taken into No. Money is a generic thing. Genus never perishes.
consideration.
b. Diligence of a Good Father of a Family
 Standard of care that is expected of a prudent man in

9. Iggy owes Azalea Php 50,000. the exercise of his own property.
Ex. Liza and Bart entered into a contract wherein she
a.) Can Azalea accept only Php 25, 000 from Iggy? would deliver 100 pcs. of Marge’s Donuts to Homer on
his Birthday on July 14, 2016 for $ 5, 000. No standard
No. A part of Art. 1246 provides “ …. Neither can the debtor of care was agreed upon by the parties.
deliver a thing of inferior quality……” In this case, Azalea According to 1173, “If the law or contract does not state
cannot accept Php 25, 000 from Iggy. the diligence which is to be observed in the
performance, that which is expected of a good father of
b.) Can Azalea accept Php 100, 000 from Iggy? a family shall be required.”
Yes. A part of Art. 1246 provides “….the creditor cannot

demand a thing of superior quality…” The law is clear, it c. Simple Diligence
does not prohibit the creditor from accepting payment / Slight Care which every prudent man takes of his own
delivery of superior quality. property of a similar nature.
Note: There three ways in which the creditor can accept a Ex. Watch your car boy
generic thing as to its quality: of superior quality, agreed
quality or lawful quality (not inferior, not superior). Basis of these Standards of Care: Absence of the duty of
the obligor to take care of the thing, the obligation to
Fifth Meeting: January 23, 2016 delivery would be illusory.
1. What is the concept of Standard of Care? 3. What is Negligence?
We are all performed to adopt a standard of care in all acts. The absence of diligence required by virtue of the time,
Care as not to cause damage or injury to others. place, person and circumstances.
If the obligor fails to exercise the required standard of care 4. What is the Principle of Accession?
in his obligation, then he risks the obligation and may lead
to its extinguishment. He is thus also liable to pay for GR: The presumption is that whoever is the owner of the
damages. principal thing, is also the owner of its accessions and
accessories.
In order to retain that standard of care expected of the
debtor the law requires DOAGFOAF pending delivery. ER: (1) When the parties expressly provided for its
exclusion
Purpose: To ensure the efficacy of the performance of the
obligation. (2) When before the birth of the contract, the seller
detaches its accessories and / or accessions.
Ex. Selena and Demi entered into a contract wherein
Selena would deliver to Demi her Hermes bag for $ 50, 000 5. When is there ownership?
on February 14, 2016. Selena is obliged to take care of that
bag with DOAGFOAF pending the delivery of the object of When the object of the obligation together with its
the obligation, otherwise, she will be liable for damages. accessions and accessories is physically delivered to the
creditor by the debtor.
2. What are the kinds of Standards of Care?
6. What are Accessions?
a. Extra-ordinary care / Utmost Diligence Fruits that are attached artificially or naturally to the
It is that extreme care and caution which very prudent and principal object of the obligation.
thoughtful persons use in securing and preserving their own Kinds of Fruits
property.
a. Natural – Those spontaneous products of the soil, the
Ex. Common Carrier and Banks young and other products of animals produced without
intervention of human labor.
Ex. Grass, trees, flowers, 101 Dalmatians
GR: All the fruits shall pertain to the creditor / buyer
Note: A human baby is not a natural fruit. from the constitution or perfection of the obligation.
b. Industrial – Those produced by lands of any kind ERS:

through cultivation or labor.
i. Subject to a suspensive condition, it arises
Ex. Rice, Corn, Garlic from the happening of the condition;
c. Civil – Those derived by virtue of juridical relation. ii. Subject to a suspensive term or period, it
arises upon the lapse of the term;
Ex. Rents of building, Price of Leases of Land, Life
annuities, Savings
iii. If there is a contrary stipulation of the parties
with respect to the time when the thing or fruits
7. What are Accessories? shall be delivered.
Things attached to the principal for embellishment, full use Note: It is concluded that the Perfection of a
or enhancement of its value. Contract is not simultaneous to delivery.
Ex. Mugs, whoopers, stereo, microwave and sauna in a car.
10. Pia and Atom entered into a contract wherein Pia
8. Peeta told Katniss that he is selling his only sports would deliver her only female 11 – month old
car for $ 500, 000. Katniss saw the bargain, thus she Dalmatian named Tigra to Atom on Valentine’s Day
bought it. Peeta did not stipulate nor inform Katniss next year. Pending the delivery, Tigra gave birth to
that the selling price did not include the sports car’s 101 puppies. Who is the owner of the puppies?
accessories and accessions. At the time of the
delivery, Rue, a car mechanic, will remove the Pia has a right to own the puppies. According to Art.
sports car’s accessories and accessions. Can 1164, “the creditor has a right to the fruits of the thing
Katniss go to Court and demand that the from the time the obligation to deliver arises. However,
accessions and accessories be not remove from he shall acquire no real right over it until the same has
the sports car? been delivered to him.” Since the delivery will be on
February 14 next year, then Pia has still a right to own
all of the fruits of Tigra pending its delivery to Atom.
Yes. Katniss can go to Court and demand that the
accessions and accessories of the sports car be not Sixth Meeting: February 18, 2016
removed from it because the law provides that the 1. In an obligation to deliver a generic thing, what is
obligation to deliver a determinate thing include that of the remedy available to the creditor in case of non-
delivering all its accessions and accessories, even fulfillment of the obligation by debtor? (Art. 1165
though they may not have been mentioned. (2))
9. When does the obligation to deliver the thing and The creditor can ask a third person to fulfill the obligation at
its fruits arise? the expense of the debtor.
 Depends upon the nature of the obligation. For instance, Mariah and Carey entered into a contract,
wherein Carey would deliver to Mariah 100 cavans of
a.) Law, quasi-contracts, delicts and quasi-delicts mangoes on February 20, 2016.On that date, Carey failed
 The obligation to deliver arises from the time to deliver such. Mariah can ask Fantasia, a supplier of
designated by the provisions of the NCC, RPC, or mango, to deliver the same to her at the expense of Carey.
special laws creating or regulating them.
b.) Contracts NOTES:

 The obligation to deliver arises from the time of the
perfection of the contract or stipulation of parties.  In the case above, Mariah has a cause of action for
damages and performance. In the meantime, she can
As to its fruits. go to another supplier for the fulfillment of the said
obligation.
 This provision is not applicable to the delivery of a 2. When it is stipulated by the parties.
determinate thing. Ex. Credit Card Bills
3. When time is an important motive.

 Requisites for application of Art. 1165 (2): Ex. The making and the delivery of a Wedding
a.) There is proof of demand; and that Gown for a Wedding
b.) The debtor can no longer performs the obligation.
4. When demand would be useless as when the debtor
2. What are the instances when the debtor is liable for has expressed his inability to perform such.
damages? Discuss each. Ex. Insolvency of the debtor in a contract of loan
a.) Delay – there is default in the fulfillment of an obligation NOTE: The SC said that it must be expressly stated in the
with regard to time. law or in the contract stipulations of the parties that demand
is NOT necessary.
Kinds of Delay: Why does the law still need a demand, when there is a
clear stipulation when the obligation is to be fulfilled?
1. Mora Solvendi – Delay of Debtor to perform the
obligation There is a presumption that the debtor in good faith, cannot
2. Mora Accipiendi – Delay of the Creditor to accept the comply due to a fortuitous event which he cannot control.
delivery of the thing which is the object of the When does the FE defense can no longer be
obligation applicable?
3. Compensatio Morae – Delay of the parties in
reciprocal obligations In obligations to deliver a generic thing like money.
Ex. Contract of Sale b.) Fraud – It is the conscious proposition to evade the
performance of an obligation. It cannot cover cases of
When is it possible for one of the parties to incur in mistake or error of judgment in good faith.
delay in CM?
When an obligation is due and demandable and one of the Fraud in 1338 & 1344 Fraud in 1171
parties performs the obligation. There is no longer need for Dependent of Fraud Independent of Fraud
a demand, the other party is automatically at default. Obligation is created Obligation is performed
because of fraud with fraud
Legal Delay Requisites
No pre-existing obligation There is a pre-existing
Requisites: (Thru fraud, the obligation
obligation becomes
1.) The obligation is already due and demandable; existent)
No COA for performance, There is a COA for
2.) The debtor does not perform the obligation;
just damages damages and fraud and
3.) The creditor makes a judicial or an extra-judicial creditor can still ask for
demand. performance
NOTE: According to the SC, demand should be made after

the obligation had been due and demandable, otherwise, it Dolo Causante Dolo Incidente
is just a reminder. Art. 1338 Art. 1344
Those deceptions or Those which are not
Ex. Peter owed Pan P 1,000 payable tomorrow. If Pan misrepresentations of a serious in character and
demands for the payment today, it will just constitute a serious character without which the other
reminder for Peter to pay his debt tomorrow. employed by one party party would still have
Instances in order for a Debtor to incur delay without and without which the entered into the contract.
Demand: other party would not
have entered into the
1. When it is provided by the law. contract.
Ex. Payment of income taxes should be made on or Fraud is essential in Fraud is accidentally
before April 15. consent employed
Nullifies the contract Does not nullify the Rains, Typhoons, Floods Riots, Wars, Robbery
Creditor can ask for contract
damages Creditor can ask for
damages
c.) Negligence – The failure of the debtor to care for the Seventh Meeting: February 20, 2016
object of the obligation with the standard of care
required by the parties or by law.
Kinds of Negligence 1. Discuss Art. 1176.
Culpa Culpa Aquiliana
Contractual This law embraces two concepts of disputable
Nature Incident to the Substantive and presumptions.
performance of Independent 1.) The presumption that payment of principal includes that
the obligation of the payment of the interest.
Parties There is a pre- No contractual
existing relation
contractual
relation 2.) The presumption that the payment of latest debt results
Source Breach of Negligent act or to the payment of the arrears.
Contract omission  Applicable to payment of rentals.
Proof for Existence of a Negligence of the Can the creditor still change his mind?
Recovery contract and defendant
evidence of its Yes, because it is disputable. However, he must show that
breach such payment did not cover the interest of the principal or
Due Diligence in the Diligence in the the arrears of the other debts.
diligence selection and selection and
as supervision of supervision of Three provisions related to Art. 1176:
Defense employees is not employees is a. Art.1431. Estoppel – Through estoppel an admission
available available or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as
Ex. In a vehicular accident involving a taxi, the passenger against the person relying thereon.
and a pedestrian was injured. What is the liability of the taxi
driver and the operator? Assuming this is a case of Ex. Dean Ulan told his class that there would be no classes
negligence. on Saturday. On Saturday, he asked Kuya Jerome to
Passenger - Since there exists a contract of carriage, then it proctor and facilitate a quiz for the class, however, the
is culpa contractual. students of that class was not in the classroom. Dean Ulan
cannot hold them liable for boycott, he is estopped since he
Pedestrian – Since there is no existing contract, then it is did not inform anyone from the class of the change.
culpa aquiliana.
b. Art. 1956. No interest shall be due unless it has
d.) Contravention of the Tenor of the Obligation been expressly stipulated in writing.
3. Discuss the concept of a Fortuitous Event.

Ex. Bonnie entered into a loan agreement with Tyler. It is
It is an event which could not have been foreseen or which stipulated that Bonnie shall pay Php 100,000 to Tyler on
though foreseen was inevitable. June 4, 2016. Tyler orally asked that Bonnie also pay 10%
interest and was heard by people around them. On June 4,
Kinds of FE 2016, Bonnie only paid Php 100,000 to Tyler. Can Tyler go
Acts of God Acts of Man to court bringing witnesses of their loan agreement to
Absolutely independent Events which arise from enforce the 10% interest?
from human intervention legitimate or illegitimate
acts of persons other
than the obligor
No, Art. 1956 is a mandatory law.  Period / Term
b. As to Prestation
 Alternative
c. Art. 1235. When the obligee accepts the  Faculative
performance, knowing its incompleteness or
irregularity and without expressing any protest or c. As to the Relationship of Parties
objection, the obligation is deemed fully complied  Joint
with.  Solidary
It creates a conclusive presumption based on estoppel that
an incomplete payment / performance of an obligation d. As to Divisibility
which is accepted by the creditor is satisfied. The creditor  Divisible
cannot ask any more for its rectification.  Indivisible
2. Gigi borrowed from Kendall $ 1,000, 000 at 10% e. With a Penal Clause
interest. Gigi only paid $ 500, 000 when the
obligation became due. Kendall accepted it without 2. What is a Pure Obligation?
reservation of such right to ask Gigi for the balance.
After one week, Kendall demands Gigi the balance An obligation that is immediately demandable.
of the debt. Decide. Ex. I will give you $ 50, 000.
Since Kendall accepted it, the law under Art. 1235 of the 3. What do you mean by “immediately demandable”?
NCC, considers it that she waived her right to ask for the
payment of the balance. Thus, the whole obligation is The debtor is given a reasonable period / opportunity to
extinguished. fulfill the obligation which depends upon the character of
the obligation.
3. Art. 1178. Rights are generally transmissible, 4. What are obligations immediately demandable?
except: a. Pure Obligations (1179 (1))
b. Obligations with Resolutory Conditions (1179 (2))
a. Where they are not transmissible by nature c. Obligations with Resolutory Periods (1193 (2))
Ex. It is not possible that a married man transfers d. Obligations to do an Impossible Thing (1183 (2))
his right to sexual intercourse with his wife to
another person. 5. Differentiate a Term from a Condition
b. Where there is a stipulation that they are not Term Condition

transmissible It is the interval time which It is an event which is
Ex. Miriam allowed Santiago to lease her condo unit future and certain future and uncertain
with a prohibition that the latter cannot sublease Necessarily comes, The condition may or may
such. although it may not be not happen
known when
c. Where they are not transmissible by operation of Influences the time of the Influences the very
law demandability or existence of the obligation
Ex. The right of a compulsory heir to his legitime extinguishment of an itself
cannot be transferred to another person. obligation
Does not have a Has retroactive effects
retroactive effect unless
FINAL TERM otherwise provided
Eighth Meeting: March 10, 2016 When it is left exclusively When it is left to the
upon the will of the debtor, exclusive will of the debtor,
Topic: Chapter 3 (Different Kinds of Obligations) the existence of the the very existence of the
obligation is not affected obligation is affected
1. What are the different kinds of obligations? Ex. Death of man Ex. Winning a case
Discuss each. Arrival of a particular day Adjudication of a Property
a. As to Event
 Pure
 Conditional
6. Differentiate a Suspensive Term from a Suspensive
Condition. Ex. I will give you $50, 000 if I sing you a
song.
Suspensive Term Suspensive Condition
Juridical tie is created on Juridical tie is suspended  Fulfillment is dependent upon the will of the
the constitution of the on the constitution of the creditor
obligation obligation
There is a personal right There is no personal right Ex. I will you $50,000 if you sing me a song.
pending the fulfillment of pending the fulfillment of
the obligation the obligation b.) Casual Condition – One whose fulfillment
Ex. D promises C to deliver Ex. D promises to deliver $ depends exclusively upon chance and / or upon
$ 50, 000 on Mar 15, 2017 50,000 to C, if C marries X the will of a third person.
Ex. If Dean Jara sings me a song, I will give you $
50,000.
7. Differentiate a Resolutory Term from a Resolutory If I win the lotto, I will give $50,000.
Condition.
Resolutory Term Resolutory Condition c.) Mixed Condition – One whose fulfillment depends
Obligation is demandable A future and uncertain jointly upon the will of either one of the parties to
at once, although it is event upon the happening the obligation and upon the chance / will of a third
terminated upon the arrival or fulfillment of which rights person.
of a day certain are already acquired by
virtue of the obligation are Ex. I will give you $50,000, if I sing you a song, if
extinguished or lost. Dean Ulan sings me a song and if I win the lotto.
Ex. A grants B the use and Ex. A grants B the use of
11. Why are potestative conditions that depends solely
enjoyment of his house for his house until he finishes
upon the will of the debtor VOID?
10 years studying law.
This is because to allow conditions whose fulfillment
depends exclusively upon the will of the debtor would be
8. What is the remedy of the creditor when the debtor
equivalent to sanctioning obligations which are illusory. A
binds himself to pay when his means permit him to
debtor would not fulfill a condition that will create an
do so?
obligation for him.
The obligation shall be deemed to be one with a period.
Ex. I will give you $50,00, if I sing you a song. Even if I did
The creditor can ask the Courts to determine such period
sing a song to you, there is no COA since the law declares
as may under circumstances be contemplated by the
it as void.
parties.
Exceptions:
9. Can a condition be for a past event?
a. If the condition is resolutory and potestative the
No, a condition must be a future and uncertain fact or event
obligation is valid even if the fulfillment of the
upon which an obligation is subordinated or made to
condition is made to depend upon the sole will of the
depend on.
debtor.
Ex. Sarah will give Geronimo $50, 000, if the latter can
prove that Jose Rizal went back to the Catholic Church Ex. I will give you $50,000 every day until I sing a
before he was executed in Luneta Park. The event is future song to you.
and uncertain because if Geronimo can prove such fact b. If there is a pre-existing obligation/
through his research then he can get the money.
Ex. I borrowed from you $50, 000. The condition is
10. What are the kinds of Conditional Obligations dependent upon me. I will pay you back if I decide
based on how they are fulfilled? to sing a song.
a.) Postestive Condition – One whose fulfillment 12. What are the kinds of Potestative Conditions?
depends upon the will of either one of the parties to
the obligation. a. Simple – presupposes not only a manifestation of will
but also the realization of an external act of a 3rd party.
 Fulfillment is dependent upon the will of the debtor
Ex. I will give $50,000, if Mr. Roboto eats a live octopus. Positive Conditions – Condition is fulfilled by doing an act as
provided under Art. 1184.
b. Pure – if it depends solely and exclusively upon the will
of the debtor, it is void for debtor cannot fulfill an Ex. D promise to deliver to C his car, if C marries X by
obligation arising from his own choice. But it is valid if it 2016.
depends on the will of the creditor.
Negative Conditions – Condition is fulfilled by avoiding to
Ex. I will you give $50,000, if I decide to eat a live octopus. act as provided under Art. 1185.
13. Differentiate the two below: Ex. D promise to deliver to C his car, if C does not marry X
by 2016.
a. I will give you $50,000 if I decide to sell my house.
NOTE: If the condition is fulfilled and the promisor does not
 This is a Pure Potestative Condition which is void fulfill his promise, there is a COA to file a case against the
because the condition is fulfilled when the debtor promisor.
decides to sell his house.
b. I will give you $50,000 if I sell my house. D promise to deliver to C his lot, if he marries X this
2016.
 This is a Simple Potestative Condition which is Condition Term
valid because it partially dependent upon the will of In conditional obligations In obligations with a term,
a third person who will buy the house. there is no juridical tie there is already a juridical
(1188). tie (1164). Thus, C has a
14. Differentiate a Possible Condition from an personal right over the lot.
Impossible Condition. Remedy: Annotation – Remedy: Legal Action and
Public notice to anybody those provided by law.
Possible Condition Impossible Condition
who acquires the said lot
When an obligation is When an obligation is not
pending the condition is
capable of realization capable of realization
considered as a person
according to law, good either to its nature or
who acted in bad faith.
customs and public policy. according to law, good
customs or public policy.
NOTE: D may be allowed
Ex. Dayang will sell her Ex. Ipin will give $50,000 to
to remove the annotation if
only car to Dayang- Upin, if the latter will jump
it is certain that the
Dayang. over the moon.
condition will not happen
(1184).
15. What are the instances when an Impossible
Condition is valid and capable of fulfillment? Ex. X died or after 2016
the condition was not
a. If there is a pre-existing obligation. fulfilled
Ex. I will pay you my debt if hell freezes over. The

2. On March 10, 2016, Bangus promised to deliver his
condition is void but the obligation is valid.
only car to Tilapia, if Tilapia marries Imelda on or
before March 10, 2017. On March 15, 2016, Bangus
b. If it is a divisible obligation.
promised to deliver his only car to Pompano, if
Ex. I will give you this car if you kill VP Vinay (invalid) Pompano marries Imelda on or before March 15,
and marry Pres. Penoy. 2016. On June 1, 2016, Pompano married Imelda.
Who has a better right Pompano or Tilapia?
c. If it is a Donation.
Tilapia has a better right as provided for under Art. 1187
Ex. I will donate to you my house and lot, if you jump because he has the oldest right.
over the moon.
3. Discuss the effects of Loss, Deterioration or
Ninth Meeting: March 17, 2016 Improvement under Art. 1189.
1. Discuss Positive and Negative Conditions. A. When Applicable?
Resolutory – It results to the extinguishment of the
 Obligations to Give a Determinate Thing obligation of the debtor and creditor.
 Obligations subject to a Resolutory Term /
Condition Ex. Peter sold to Piper his only van for P 500, 000. If
 Obligations subject to a Suspensive Term / Piper does not deliver P 500, 000 to Peter, then Peter
Condition will not deliver his car to him. Thus, the obligation is
cancelled.
B. When is a thing LOST? Can the injured party automatically cancel the
obligation?
 When it perishes
No, there must be a judicial decree to rescind the
Ex. When a powerful lightning stroke at the object contract provided that the breach is substantial.
of the obligation However, if the breach is partial, the courts may fix a
period for its performance.
 When it goes out of commerce
5. To whom does the period be established for?
Ex. When it involves a public property (Mayon
There is a presumption under Art. 1196 that the period is
Volcano)
established for the benefit of both parties.
Ex.
 When it disappears in such a way that its
Agpalo lend money to Cruz payable on Feb 16, 2017.
existence is unknown or cannot be recovered
Yesterday, Cruz won the lotto, can Agpalo compel Cruz to
pay today? No. The period must be followed.
Ex. The object of the obligation was thrown
accidentally to the sea. Ponce de Leon v. Syjuco
C. Situations Other benefits of the period to the creditor includes interest

and tax avoidance.
1.) Blue promised to deliver his horse to Red, if the
latter marries Green. Pending the delivery, the 6. Differentiate the following:
horse got injured. Gemini promised to pay Gemini promised to pay
Libra, P 500, 000 on Feb Libra, P 500, 000 on or
a. If with fault of Blue – He cannot compel Red 17, 2017. before Feb 17, 2017.
to accept the horse. However, Red can rescind Favorable to both parties. Favorable to debtor.
the obligation and ask for damages or he can
still ask for its fulfillment and ask for damages.
7. When does the debtor loses right to make a period?
b. If without the fault of Blue – He can compel
Red to accept the horse. a. When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
2.) In same example, what if the Horse grown wings security for the debt;
and was able to fly.
b. When he does not furnish to the creditor the
 It inures to the benefit of Red. guaranties or securities which he has promised;
 Blue grants usufructuary to Red.
4. What is a Tacit Resolutory Condition? Discuss. c. When by his own acts he has impaired said
guaranties or securities after the establishment and
 It is based on equity and fair play and applied to when through a FE the disappear unless he
reciprocal obligations. immediately give new ones equally satisfactory;
Tacit – Implied as part of all Reciprocal Obligations; d. When the debtor violates any undertaking in
Condition – Not being able to perform the obligation consideration of which the creditor agreed to the
incumbent upon a party is the event; period;
When the choice is made, does it have to be
e. When the debtor attempts to abscond. communicated?
8. Discuss Sec. 3. Yes, otherwise the obligation will not be d & d. Once
a.) Alternative Obligations – there are several communicated, the alternative obligation turns into a simple
prestations but you do not need to perform all of it. obligation.
Can you incur delay in alternative obligations?
a.1. Simple – there is only one prestation.
Ex. I will give you this. No, since alternative obligations are not d & d.
a.2. Complex – there are several prestations. 9. Do you incur delay on the following:
Ex. I will give you this, that, and those. a.) Personal Negative Obligation – No
Ex. You cannot be delayed on an obligation not to
b.) Faculative Obligations – there is one prestation but smoke
it can substituted.
b.) Obligation with a Negative Condition – Yes
To whom does the right to choose the prestation Ex. I promise to give you P 50,000, if you do not
belong? sing a song.
GR: Debtor c.) Alternative Obligation – No. Since the choice is not
ERS: Creditor or a third person yet communicated.
d.) Obligations to do – No, the law recognizes the right
Limitations of the Right of Choice: of the person to do or not to do an act. The creditor
can nevertheless, ask for its performance and
1. It must not be Impossible. damages under Art. 1167.
Ex. To give Mayon Volcano
Tenth Meeting: April 7, 2016
2. It must not be unlawful.
Ex. To give a dog, horse, cat, my husband 1.) What is the presumption in collective obligations?
GR: Presumed to be Joint Obligations
3. It must not have been the object of the obligation ERS:

a.) When stipulated by the parties
Those undertaking which are not included among those Ex. Jointly and Severally liable, in solidum and liable
from the debtor may select or to those which are not yet due solidary
and demandable at the time the selection is made or to
those which by reason of accident or some other cause, b.) When the law required solidarity
have acquired a new character distinct or different from that Ex. Mother and Father to support Children
contemplated by the parties when the obligation was Liability of Principals, Accomplices and
constituted. Accessories
In a felony
Ex. The horse became d & d on Feb 15, the dog c.) When the nature of the obligation requires solidarity
became d & d on Feb 16, the cat became d & d on Feb 17 Ex. Liability of ER to EE in Quasi-Delicts
and the mouse will be d & d on Dec 31, next year. Thus,
debtor can only deliver the horse, dog or cat. 2.) What is a joint obligation?
 Each of the creditors is entitled to demand the

4. He cannot choose part of one and part of another. payment of only a proportionate part of the credit,
Ex. Half mouse, Half horse while each of the debtors is liable for the payment of
only a proportionate part of the debt.
 Several obligations are reduced into one document.

5. Those which are due and demandable as whose
period is dependent upon the choice of the creditor. 3.) What are the kinds of joint obligations?
Ex. Although, it is not due and demandable, the
creditor can ask for the delivery of the mouse. a.) Joint Divisible Obligations
 Each creditor can demand only for the payment of his a.) Passive – the concurrence of two or more debtors
proportionate share of credit, while each debtor can be liable to one creditor.
held liable only for the payment of his proportionate Ex.
share of the debt.
b.) Active – the concurrence of two or more creditors to
Ex. one debtor.
Ex.
 If there is a breach of the obligation by reason of the act c.) Mixed – Among debtors and creditors.
of one of the debtors, the damages due to its breach Ex.
must be borne by him alone.
6.) What is the effect of various conditions or periods in
Ex. solidary obligations? Discuss and give an example.
 The relationship of solidarity is not destroyed by the

fact that the obligation of one debtor is conditional,
 Prestation can be divided among the parties with a term or pure, debtors are still bound.
Ex. Sum of Money Debtors Requirement to be Creditors

subjected to the
b.) Joint Indivisible Obligations obligation of P 900,000
 If there are two or more debtors, the fulfillment of or 1D Jan 15, 2017 1C
compliance with the obligation requires the concurrence 2D X dies 2C
of all of the debtors, although each for his own share. 3D Y marries 3C
Ex.
On January 15, 2017, how much can the creditors compel
the debtors to pay?
 If there are two or more creditors, the concurrence of 1D’s share can only be collected for P 300, 000.
collective act of all the creditors, although each for his
own share is also necessary for the enforcement of the Against whom can the creditors enforced the obligation.
obligation.
Answer 1: Since Solidarity exists amongst the debtors, any
Ex. of them can pay the P 300, 000.
Answer 2: Enforcement may be made to 1D and 2D only
since it is subject to period and there already existed a legal
 Prestation cannot be divided among the parties. tie between the parties. 3D’s obligation, on the other hand,
is subject to a condition, thus, there is no legal tie created.
Ex. A live horse.
7.) In solidary obligations, what are the effects of the
NOTE: The failure to accept by one of the creditors JIO creditor’s acts and the debtor’s acts within their
becomes JDO. Parties will then settle the value of the respective parties? (1212 & 1215)
prestation equally.
If beneficial, it is valid.
If Jhong is to deliver P If Ryan and Bang are to
900, 000 to Kong. deliver P 900, 000 to Vice Ex. Effort of 1C to collect the whole debt.
Ganda.
Joint Indivisible Obligation Joint Divisible Obligation If prejudicial, it is void.
Ex. 1C condones the debt of 2D, it is void. 1C must now
4.) What is a Solidary Obligation? reimburse the parts of 2C and 3C’s debt from 2D.
 Each debtor may be liable for the debt of other debtors. 8.) What is the effect of assignment of rights in solidary
 Each creditor can ask for the payment of debts for other obligations? (1213)
creditors.
GR: A solidary creditor CANNOT assign his rights without
5.) What are the kinds of Solidary Obligation? the consent of others solidary creditors.
ER: If the assignment would be made to another solidary Indivisible Obligations – those which have their object a
creditor. prestation which is not susceptible of partial performance.
Rationale: Solidarity is based on trust and confidence since 13.)What is the presumption of law? (1248)
the solidary creditors know each other.
GR: Obligations are presumed to be INDIVISIBLE
9.) What is the effect of demand by a creditor? (1214 &
1216) ER:
GR: Payment shall be made only to the creditor who made a.) When stipulated by the parties;
the demand and no other. b.) When the law requires;
c.) When the nature of the obligation requires.
ER: In the absence of any judicial or extra-judicial demand,
payment may be made by the debtor to any one of the 14.)What are the effects of Divisible and Indivisible
solidary creditors. Obligations? (1223 – 1224)
GR: Debtor may not be required to make partial payments
Creditor cannot be compelled partially to receive prestation
Ex. Debt of P 900, 000
ERS:
1D 1C – On Jan 1, 17, 1C demanded the payment
1.) When the obligation expressly stipulates the
2D 2C contrary;
3D 3C – On the evening of Jan 1, 17, 3C received 2.) When different prestations constituting the objects
of the obligation are subject to different terms and
the payment of P 900, 000 from 3D and conditions;
runaway 3.) When the obligation is in part liquidated and part
un liquidated.
15.)What are Obligations with a Penal Clause? (1226)

Wrong payment does not extinguish the obligation, the
debtors are still liable for their obligation. The Penal Clause or the Penalty is an accessory obligation
attached to the principal obligation by virtue of which the
10.) In solidary obligations, what is the effect of insolvency
debtor is bound to pay a stipulated indemnity or to perform
of one of the debtors? (1219)
a stipulated prestation in case of breach of obligation.
1D, 2D and 3D are indebted in the amount of P 900, 000 to
16.)What are the functions of a Penal Clause?
1C, 2C and 3C. 3D is insolvent, what is the recourse of
a. To insure the performance of the obligation;
action?
b. To liquidate the amount of the damages to be
In case of insolvency, the other debtors shall shoulder awarded to the injured party in case of breach of
proportionately the part of the insolvent debtor. Thus. 1D the principal obligation;
and 2D must pay P 450, 000 each to the creditors. c. To punish the obligor in case of breach of the
principal obligation.
11.) What are the defenses available to a solidary debtor?
(1222) Tenth Meeting: April 14, 2016
A. Personal Defenses – relative to him or to his own
1.) What are the MAJOR modes of Extinguishing
share
Obligations?
Ex. Minority and Insanity
a. Payment / Contracting parties intend
B. Real Defenses – derived from the very nature of the Performance to extinguish the obligation
obligation b. Loss of the thing due Modes that cause the
Ex. Fraud, Mistake and Prescription c. Condonation / extinguishment of the
Remission of debt obligation after its
12.)What are Divisible and Indivisible obligations? d. Confusion or Merger of constitution and not
Divisible Obligations – those which have as their object a Rights intended by the contracting
prestation which is susceptible of partial performance e. Compensation parties.
without the essence of the obligation being changed. f. Novation
Note: The enumeration is not exclusive. b. Integrity – the thing or service in which the obligation
consists must be completely delivered or rendered.
2.) Questions on payment. (What, How, Who, to Whom
and Where) Ex. If debtor gives 30K for 50K debt, creditor may not
What is payment? accept the payment of his obligation. The legal tie is not
yet extinguish.
Payment is not only the delivery of money but also the
performance, in any other manner of an obligation. c. Indivisibility – Payment or performance must be
indivisible. (Presumption of indivisibility as provided in
How is payment effected? 1248)
a.) To give – when the debtor has completely delivered the Who should pay / perform the obligation?
thing which he has obligated himself to deliver.
a. Debtor
b.) To do – when the debtor has completely rendered the
service which he has obligated himself to render. b. Debtor’s legal representative
c.) Not to do – when the debtor has completely refrained c. Any third person constituted / identified by the parties
from doing that which he has obligated himself not to
do. d. A third person who has an interest in the obligation
Test: WON the continued existence of the obligation is
troublesome for him?
EXS:
Ex. Compulsory heirs – if parents do not pay their
 When the obligation has been substantially performed debts, their successional rights are decreased.
in good faith. (1234) Guarantor – guarantees the capacity of the principal
party to pay.
Deficiency is Insignificant Example
Note: Solidary debtors and sureties are not included since
A will buy 10,000 pcs of dressed chickens worth Php
they are principal debtors. However, a joint debtor may be
500,000 from B. B only delivered 9,000 pcs of dressed
included.
chickens to A due to a chicken epidemic. A may refuse to
accept the performance of B but if B proves such is due to a
legal excuse then he can compel A to receive it. e. All other persons not enumerated
Requisites of Substantial Performance Rules on Payment / Performance by a Third person
a. Debtor is in good faith; GR: The creditor is not bound to accept payment or
b. There is deficiency in the performance of the obligation; performance by a third person.
c. The deficiency is insignificant / not substantial.
EXS:
 When the debtor accepts the performance, knowing of
its incompleteness or irregularity and without  When there a stipulation to the contrary.
expressing any protest or objection. (1235 & 1176)
 When it is made by a third person, who has an interest
Effect of Estoppel – once accepted, the obligation is in the fulfillment of the obligation.
extinguished. However, the creditor must know of such
defect or irregularity. A.) With knowledge and consent of debtor – third
person can recover the whole amount.
How is payment effected PROPERLY?
B.) Without the knowledge and consent of debtor or
a. Identity – only the prestation agreed upon must be
against the will of the debtor – third person can
complied with.
recover only insofar as the payment had been
beneficial to debtor.
Exception to Identity: Facultative Obligation and Dacion
en Pago To whom payment should be made?
1. Creditor
Absent si Alea Kim
2. Creditor’s successor / interest
Ex. Debtor paid 50K to Creditor’s son. It is considered Quiz questions:
as improper payment. a. What are the requisites of novation?
b. What are the requisites of novation according to the
3. Any person authorized to receive it SC?
Ex. Payment of MERALCO bills is done through bayad c. Clark and Kent entered into an obligation which is
centers not to MVP. voidable, they created a new one, is the old obligation
extinguished by way of novation?
4. Payment made to possessor in credit provided that is d. Is an extension of time in a contract of loan considered
was made in good faith as a novation, what are the presumptions?
 A person appears to have the right to assert the
payment
CONTRACTS
5. Payment made to a third person, provided that is has
redounded to the benefit of the creditor.
Ex. A owes B 50K. B owes C 50K. With the consent of
1.) How is a contract defined in Art. 1308?
B, A paid 50K to C.
A contract is a meeting of minds between two parties
Note: Payment made to an incapacitated person is
whereby one binds himself with respect to the other to give
voidable.
something or to render some service.
Where payment should be made?
Why is this definition defective?
GR: Place designated in the obligation
a. It only overs consensual contracts, it does not cover
No designation / determinate thing – wherever the thing formal and real contracts.
might be at the time the obligation was constituted.
 Consensual Contracts – perfected by consent
Other cases – Domicile of Debtor  Formal Contracts – Those that require a particular
form aside from the COC.
 Real Contracts – Those whose validity depends
3.) What is dation in payment? upon the delivery of the object of the contract aside
from the COC.
When debtor presents to creditor a thing in lieu of payment Ex. Deposit (Contract of Loan) – Warehouse
of a sum of money. The law considers it a Contract of Sale. Receipts Contracts
b. It does not cover reciprocal contracts, only unilateral
Ex. Alea owes Kim P5,000. Alea offers her brand new air- ones.
conditioner unit as payment of her debt to Kim. Kim agrees. c. It may be entered upon to extinguish an existing
4.) What is the rule on monetary obligations? obligation.
d. It is applicable to two persons only, however, it can be
GR: Pay using legal tender of the Philippines. (RA 529) made applicable to two parties in one person.
EXS: (RA 4100) Parties to a Contract:
 Loans and investments made by foreign GR: 2 parties are required in a contract
governments
 High priority economic projects EXS:
 Foregin exchange transactions by banks a. When a person in his capacity as representative of
 Import-Export and International Banking another contracts with himself;
Investments
Legal Tender – It includes all notes and coins issued by the b. When as a representative of a different persons, he
BSP to which a debtor may compel creditor to accept brings his principals by contracting with himself,
payment using Philippine Peso no matter what the unless there is conflict of interests or when the law
obligation may be. expressly prohibits it in specific cases.
11th Meeting: Make-up Class on April 22, 2016 2.) What are the stages of the life of a contract?
a. Conception Stage (Preparatory)

 The period of negotiation and bargaining ending at 2.) To determine whether the contract should be
the moment of the agreement of the parties. There is enforced?
no juridical tie yet.
Ex. Potestative Obligations dependent upon the
b. Executory Stage (Perfection / Birth) debtor are VOID.
 The moment when the parties come to agree on the
terms of the contract. Juridical tie is created. EXS: If the parties delegates such rights to a third
 A contract is executory when there is a concurrence person / such is unfair to the other party.
of the offer and acceptance.
Note: In Cabangkalan Sugar Estates v. Pacheco, it was
c. Executed Stage (Consummation / Death) held that when there is a provision in a contract of lease
 Fulfillment or performance of the terms agreed upon that allows the tenant to determine when he wants to
in the contract. continue or stop the lease agreement is void and is contrary
to public policy and is unfair to the landlord. Unlike MIAA v.
Note: In MIAA v. Verayo, it was held that a provision Verayo, there is no period, there is no original term.
in the lease contract that gave the tenant the option to
renew the contract which should be asserted c. Obligatory Force
expressly and communicated to the landlord before  Once a contract is perfected, it shall be of obligatory
the expiration of the contract of lease is valid. force upon both of the contracting parties.
4. How can an agreement result into a contract? d. Relativity

Conditions: GR: Contracts take effect only between the parties, their
assignees and heirs.
a. COC is present;
b. Characteristics of a contract are present.
Characteristics of a Contract (AMOR)
a. Autonomy (1306) EXS:
GR: Contracting parties may establish such agreements as a. When rights are not transmissible by law, as agreed
they may convenient. by the parties and by nature.
ER: b. Successional Rights – The heirs’ liability would only
Contract of Adhesion – Where only one of the contracting be limited to a certain portion in the “mana.”
parties has the right to stipulate the conditions of the Instances when the scope of relativity of contracts are
contract, the other party accepts or rejects it. There is no expanded:
proposal.
1. When the parties transfer to a third person the rights
Limitations: they acquire under the contract either favorably (acquire
i. It must not be contrary to law, morals, good customs, new rights) or unfavorable (incur debt).
public order and public policy.
Ex. Spongebob is indebted to Patrick in the amount
ii. Police Power – Constitutional policies based on the of $ 10, 000 with interest at 6% per annum provided
non-impairment clause and Parens Patriae. that Spongebob will give 50% of his debt to Mr.
Crabs, as the beneficiary of Patrick.
b. Mutuality (1308 & 1182) 2. When it is stipulated by the parties.

 The validity of the contract cannot be left to the will
of one of the contracting parties. 3. When the third person exercises the subrogatory action
/ accion pauliana (rescission of a contract entered
 It is agreed by both parties. because of Fraud)
When is mutuality required? Remedies of Creditor (Chronological Order)

a. Payment by Cession
1.) To determine whether the contract should be valid? b. Rescissible Action
c. Subrogatory Action
 Third party who cause such is liable for damages.
4. In Suspension of Payments and Composition under the
Insolvency Law 10. Art. 1652
5. In Labor Contract of CBAs Art. 1652. The sublessee is subsidiarily liable to the lessor
for any rent due from the lessee. However, the sublessee
NOTE: In CBAs, the union can require the company to shall not be responsible beyond the amount of rent due
pay for its union dues. from him, in accordance with the terms of the sublease, at
the time of the extrajudicial demand by the lessor.
6. Contracts creating Real Rights (1312) Payments of rent in advance by the sublessee shall be
deemed not to have been made, so far as the lessor's claim
7. Negotiorum Gestio (2150 – 2151) is concerned, unless said payments were effected in virtue
of the custom of the place
8. Interference on Contracts by Third Parties (1314) 11. Art. 1179
 Applies in executory contracts where one of the parties Art. 1179. Every obligation whose performance does not
do not perform his obligation because of a tortious depend upon a future or uncertain event, or upon a past
interferer. event unknown to the parties, is demandable at once.
As held in Bingbang v. CA the requisites are the ff: Every obligation which contains a resolutory condition shall
also be demandable, without prejudice to the effects of the
1. The existence of a valid contract; happening of the event
2. Knowledge on the part of the third person of the
existence of the contract; 12. Art. 1893
3. Inference by the third person without legal
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the
justification or excuse.
preceding article, the principal may furthermore bring an
Example: S (Seller) and B (Buyer) entered into a contract of action against the substitute with respect to the obligations
Sale. A influences S not to proceed with the sale. S agrees. which the latter has contracted under the substitution.
There is thus a breach of contract.
What is the cause of action of B? 13. Art. 1608
A. If with legal justification such as when A has a financial / Art. 1608. The vendor may bring his action against every
economic interest in the sale, then S is only liable for possessor whose right is derived from the vendee, even if in
the damages incurred by B. the second contract no mention should have been made of
the right to repurchase, without prejudice to the provisions
B. If without legal justification such as to annoy and anger of the Mortgage Law and the Land Registration Law with
B, then S and A are liable for the damages incurred by respect to third persons. (1510)
B.
14. Art. 1729
What is the relationship / division of liability between S and
Art. 1729. Those who put their labor upon or furnish
A?
materials for a piece of work undertaken by the contractor
A. If a Civil Contract – it is JOINT. have an action against the owner up to the amount owing
from the latter to the contractor at the time the claim is
B. If a Commercial Contract – it is SOLIDARY. made. However, the following shall not prejudice the
laborers, employees and furnishers of materials:
How do you know that a contract is civil or commercial? (1) Payments made by the owner to the contractor before
they are due;
Civil – WON the single transaction precipitated by the
parties is not into an activity requiring profit? (2) Renunciation by the contractor of any amount due him
from the owner.
Commercial – WON one or both of the parties are into an
activity regularly for profit? This article is subject to the provisions of special laws.
9. Art. 1336: Violence and Intimidation 13th Meeting: April 23, 2016
1. What are the essential elements of a contract?  It made within a reasonable time
a. Cause of the Contracting Parties;

b. Object of the Contract; NOTE: There must be no deviation from the offer, otherwise
c. Cause of the Obligation. it will constitute a counter offer.
Note: Absence of any one of the elements results into an Requisites of Consent
invalid / inexistent contract. 1. The concurrence must be manifested by the
2. Discuss Consent. concurrence of the offer and the acceptance;
 It is the concurrence of the wills of the contracting
parties with respect to the object and cause which will 2. The contracting parties must possess the necessary
constitute the contract. legal capacity;
3. The consent must be intelligent, free, spontaneous
When is there Consent? and real.
There is consent when there is a meeting of minds 3. What is a complex offer?
between the parties as when the offeror makes an offer
and such offer is accepted by the offeree. An offer to enter into several contracts at the same time.
a. Offer – The offeror makes an offer WON the establishment of a Juridical Tie requires
acceptance?
What are the requisites of a valid offer?
It will depend upon the agreement of the parties (take all
 The offer must be definite. The prestation is or leave it) or the nature of the offer (If you buy a house,
clear. It sufficiently describes the object in order you also buy its lot).
that offerree knows what type of contract it is. 4. What is an Amplified Acceptance?
 The offer must be complete in all aspects that Acceptance where there is a deviation from the original
the offeree does not need to know any more tenor. It will not prevent the perfection of the contract with
essential information regarding it. regards the original stipulation of the parties. In this case,
the offeree accepts the offer but proposes to an additional
 It must be directed to the offeree or to the public. contract.
Ex. Nina proposes to Kyla her feeding lot. Kyla agrees, if
 There must be an intention to bind the parties she can have all of the cattles in the said lot.
once the offer is accepted.
5. Seller offered to buyer his lot.
Note: When the offeree is led to believe that S: I am willing to entertain the purchase of the lot
there is seriousness to be bound, there will exist subject to conditions, A, B, and C.
a juridical tie. However, if the offer is made in
jest, there is no juridical tie. B: I am willing to entertain the purchase of the lot
subject to conditions, A, B, C and D.
--- S accepted the amplified acceptance of B ---
b. Acceptance – The Offeree makes an acceptance
S’s contention: There is a JT.
What are the requisites of a valid acceptance?
B’s contention: There is no JT.
 It must be unconditional
Decide.
 It must be free from qualifications
The SC ruled in favor of B, the tenor of acceptance did not
make an unconditional offer. It was merely a manifestation
 It must be absolute
of the possibility of considering the acceptance as shown
expressly by the word “entertain.”
 It is directed to the offeror
6. How do you determine the moment of the
 It is made with the intention to be bound perfection of the contract?
at the at the at the at the
a. Face to Face / Telephone / CP – agreement of parties moment the moment the moment the moment the
(shake hands, signature.. etc) offeree offeree offeror have offeror has
manifests his transmits in his hands knowledge
b. Social Media intention to the the of the
accept. notification acceptance acceptance
of of the of the
REPUBLIC ACT NO. 8792 June 14, 2000 acceptance offeree. offeree.
to offeror.
One Step: Two Steps: Three Steps: Four Steps:
AN ACT PROVIDING FOR THE RECOGNITION AND USE Manifestation Manifestatio Manifestatio Manifestatio
OF ELECTRONIC COMMERCIAL AND NON- n & n, Expedition n,
COMMERCIAL TRANSACTIONS AND DOCUMENTS, Expedition & Reception Expedition,
PENALTIES FOR UNLAWFUL USE THEREOF, AND FOR (Letter is (Letter is Reception &
OTHER PURPOSES placed in received by Cognition
mail box) Offeror)
Applicable in US Courts German Applicable in
CHAPTER III. Commercial Courts Civil
Contracts Contracts
COMMUNICATION OF ELECTRONIC DATA MESSAGES
OR ELECTRONIC DOCUMENTS
7. How is acceptance made?
An acceptance may be express or implied (1320).
Section 16. Formation of Validity of Electronic Contracts.
8. What are the modes to extinguish the offer made?
Art. 1321. The person making the offer may fix the time,
(1) Except as otherwise agreed by the parties, an offer, the place, and manner of acceptance, all of which must be
acceptance of an offer and such other elements required complied with.
under existing laws for the formation of contracts may be
expressed in, demonstrated and proved by means of Art. 1323. An offer becomes ineffective upon the death,
electronic data messages or electronic documents and no civil interdiction, insanity, or insolvency of either party
contract shall be denied validity or enforceability on the sole before acceptance is conveyed.
ground that it is in the form of an electronic data message or Art. 1324. When the offerer has allowed the offeree a
electronic document, or that any or all of the elements certain period to accept, the offer may be withdrawn at any
required under existing laws for the formation of contracts is time before acceptance by communicating such
expressed, demonstrated and proved by means of withdrawal, except when the option is founded upon a
electronic data messages or electronic documents. consideration, as something paid or promised.
(2) Electronic transactions made through networking among Art. 1262. An obligation which consists in the delivery of a
banks, or linkages thereof with other entities or networks, determinate thing shall be extinguished if it should be lost
and vice versa, shall be deemed consummated upon the or destroyed without the fault of the debtor, and before he
actual dispensing of cash or the debit of one account and has incurred in delay.
the corresponding credit to another, whether such
transaction is initiated by the depositor or by an authorized When by law or stipulation, the obligor is liable even for
collecting party: Provided, that the obligation of one bank, fortuitous events, the loss of the thing does not extinguish
entity, or person similarly situated to another arising the obligation, and he shall be responsible for damages.
therefrom shall be considered absolute and shall not be The same rule applies when the nature of the obligation
subjected to the process of preference of credits. requires the assumption of risk.
9. What is the rule on the withdrawal of offer by the
c. Correspondence (1319) offeror?
Manifestatio Expedition Reception Cognition GR: The offeror may withdraw the offer as long as he has
n Theory Theory Theory no knowledge of the acceptance of the offeree.
Theory
Perfection is Perfection is Perfection is Perfection is
ERS: 1.) Option Contract – Buyer pays for a consideration  Rescission is principally based on some economic
of a period whether to accept an object or not. damage (lesion) as a result of the inequitable
conduct by one party
2.) Art. 19. Abuse of Rights
2. What is Lesion?
Option Contract Contract of Sale
It is only the seller who is Both parties are required to Lesion refers to a loss from another’s failure to perform a
required to sell. sell and buy. contract. It is the injury suffered by one who did not
No Juridical Tie. There is a juridical tie. receive the equivalent value of what was bargained for.
Option Money Earnest Money 3. Differentiate Rescission from Resolution.

Not a partial payment of a Partial Payment of
purchase price purchase price Rescission Resolution
No juridical tie. There is a juridical tie. Action may be instituted by Action may only be
a contracting Party or a instituted by a contracting
Third Person party
Quiz: There are several causes Only one ground – failure
for rescission of one of the parties to
1. What are complex offers? When is there partial comply with what is
acceptance in complex offers? (3) incumbent upon him
Courts cannot grant an Courts can grant an
2. A in QC offered B in Davao, through a letter his house extension of time for extension of time for
and lot. B received the letter and manifested his performance of the performance of the
acceptance, when he was about to send the his letter obligation obligation provided that
of acceptance. A sold his house to C. Is A liable for B? there is just cause
(6)
Any contract whether Only bilateral contracts
unilateral or bilateral may may be resolved
be rescinded
3. What are the requisites of Pour Atrui?
a. The contracting parties by their stipulation must have 4. What are the causes of rescission? Discuss.
clearly and deliberately conferred a favor upon a third
person; A. Those entered by guardian / representative wherein
the ward / absentee suffers lesion by more then 1 / 4 of
b. The third person must have communicated his the value of the property. In case of an heir he must
acceptance to the obligor, before its revocation by the suffer at 1/ 4 of the value of the property.
obligee or the original parties;
- Rescission cannot take place however when the
contract has been judicially approved
c. The stipulation in favor of the third person should be a Ex. Marvin, guardian of minor Gaye, sold Gaye’s house
part, not the whole of the contract; and lot worth 2M for 1M to Charlie.
A
d. The favorable stipulation should not be conditioned or Remedies of Gaye:
compensated by any kind of obligation whatever;
a. Enforcement of his right (If Marvin is solvent enough,
he can pay for the lesion)
e. Neither of the contracting parties bears the legal b. Payment by Cession (Immovable first)
representation or authorization of the third party for c. Rescission (Accion Pauliana)
otherwise, the rules on agency will apply.
Acts of Ownership Acts of Management &
14th Meeting: April 28, 2016 (Last Meeting) Administration
Disposition of immovable Disposition of personal and
1. What are Rescissible Contracts? properties of ward with movable properties of ward
 Valid contracts that can be terminated on legal judicial approval for his support
grounds
Can an heir suffer lesion?
Yes, lesion must be equal to or more than ¼ of his 1. Debts are contracted prior to the donation or
legitime. If his legitime is lessened because of lesion, he alienation by onerous title. Maturity of debts is not a
can ask for a rescission. requirement
B. Contracts of Fraud 2. There is no reservation of sufficient property to pay
all debts contracted before the donation or alienation
Types of Frauds:
Ex. Debtor Sheldon sold his last car of land to Amy, his
i. Contracts in Fraud of Creditors girlfriend, in order to make it appear to his creditor that he
- Rescission is a subsidiary remedy is already insolvent.
ii. Contracts referring to Things under Litigation B. Alienation by onerous title
- Rescission is a primary remedy
1. The alienation made during the pendency of a suit
iii. Contracts by an Insolvent Debtor presupposes a judgment, or a writ of attachment
- Rescission is a subsidiary remedy 2. The attachment need not refer to the property
alienated
Ex. On Jan 13, 2015, Alea Kim owed P 5, 000 to
Michelle payable on June 5, 2015. On Jan 15, 3. The attachment need not to have been obtained by
2015, Alea Kim owed P 5, 000 to Bona payable on the party seeking rescission
May 5, 2016. On June 10, 2015, Alea Kim paid her
undue debt to Bona. Alea Kim is now insolvent. Ex. Drake, vendee, knew at the time of conveyance, that it
What is Michelle’s remedy? was Rihanna’s last property pending in court.
7. What is the Prescriptive Period in Rescission?
According to Dean Ulan, the creditor who has a
better right is the one who FIRST claims the • The action to rescind prescribes in four years
obligation or files the action.
• The period begins to run after the aggrieved party
Note: Art. 1381 (3) in relation to Art. 1198 (2) is has unsuccessfully exhausted all possible legal remedies
applicable only when such obligation is subject to a to enforce the obligation or recover losses, and from the
condition. time—
C. Special Cases of Rescission 1. The incapacity of persons under guardianship

terminates, in cases of persons under guardianship
Art. 1198 (4)
2. The absentee learns of the contract, in cases of
Art. 1526 (4) absentees
Art. 1534 3. The fraud is discovered, for contracts entered in

fraud of creditors
Art. 1539
4. Of the knowledge of the transaction, for contracts
Art. 1556 entered with respect to things under litigation without
approval
5. What are the Limitations in Actions of Rescission?
a.) It must not cover acts of ownership; 8. What is a voidable contract?
b.) It is a supplemental action;
c.) Thing which is the object of the contract must be in the It is a contract which possesses all the essential requisites
possession of a third person who did not act in bad of a valid contract, but one of the parties is incapable of
faith; giving consent, or consent is vitiated by mistake, violence,
d.) He must be able to return thing or property. intimidation, undue influence, or fraud.
Note: Rescissible Contracts are not subject to Ratification. 9. What are the kinds of Voidable Contracts?
The intrinsic defect may be waived by a 3rd person or the
contracting parties. a. Those where one of the parties is incapable of
giving consent to the contract;
6. What are Badges of Fraud?
b. Those where the consent is vitiated by mistake,
A. Alienation by gratuitous title
violence, intimidation, undue influence or fraud.
Note: the same rule applies even if the action for
10. When should an action for annulment be filed? annulment is grounded on incapacity. (Art. 1401, par.
2)
WITHIN the prescriptive period of four (4) years counted
from the time: (c) If due to a FORTUITOUS EVENT
(a) the defect of the consent ceases in case of DEFENDANT the same rule applies when the loss is
intimidation, violence or undue influence with his fault.
(b) it is discovered in case of mistake or fraud Rationale: The defendant is considered a possessor in bad
faith who bears the loss even in case of a fortuitous event.
(c) the guardianship ceases in case of contracts
entered into by incapacitated persons PLAINTIFF the right to annul can be maintained, BUT
the defendant cannot be compelled to restore what he had
11. Who may ask for annulment? received if the plaintiff can himself no longer restore what he
 Only the principal or subsidiary party to the is bound to return after the contract is annulled.
contract Exception : But if the plaintiff was incapacitated at the time
 The incapacitated; or the contract was perfected, the defendant must restore what
 The victim whose consent was vitiated he has received despite the plaintiff’s inability to restore
(Annulment is a remedy granted by law, for reason of what he is bound to return under the annulled contract.
public interest, for the declaration of the inefficacy of a 14. What are Unenforceable Contracts?
contract based on a defect or vice in the consent of one of  An unenforceable contract is one which cannot be
the contracting parties in order to restore them to their enforced in court or sued upon unless it is first ratified.
original position before the contract was executed) Once ratified, it can have the effect of a valid contract.
12. What are the effects of Annulment? In one sense, therefore, it may be called a “validable”
contract.
(a) IN EXECUTORY CONTRACTS - the parties are  Unlike voidable and rescissible contracts, which are
excused from their obligations. valid and binding until annulled or rescinded, an
unenforceable contract is not enforceable, or cannot
take effect even as between the parties to the contract
unless it is ratified.
(b) IN EXECUTED CONTRACTS - mutual restitution
15. What are the kinds of unenforceable contracts?
real obligation = property + fruits, and money + interest
personal obligation = value of the service + interest  Unauthorized or disauthorized contracts. [Art. 1317 &
1403(1)]
Note: Special rule on restitution when the annulment is
grounded on incapacity – The incapacitated party is  Those that fail to comply with the Statute of Frauds.
required to restore only to the extent of his beneficial [Art. 1403(2)]
interest. In other words, if he did not derive any benefit
from the thing or price received by him, he is NOT obliged
to restore.  Those where both parties are incapable of giving
consent.
13. What is the effect of the loss of the object of the
contract on the action for annulment? 16. What is the nature and purpose of the Statute of
(a) If with FAULT on the part of the DEFENDANT Frauds?
his obligation is converted into an indemnity for damages.
Indemnity = (value of the thing at the time of the loss) + The Statute of Frauds, found in Article 1403, No. 2 of the
(interest on said value also computed from the time of the New Civil Code, is a law which requires that all the
loss) + (fruits received from the thing reckoned from the agreements enumerated therein [letters (a) to (f)] must be
time the thing was given to him to the time of its loss). (Art. in writing, and signed by the party obliged under the
1400) contract (passive subject) against whom the contract will be
enforced. Hence, if there is no note or memorandum (i.e.,
(b) If with FAULT on the part of the PLAINTIFF the right writing as evidence of the agreement) of the specified
to annul is extinguished. agreements, said agreements cannot be enforced by the
other party (active subject) in court. This is because the
court will not receive evidence of the existence of the
agreement without the writing, or a secondary evidence of
its contents.  An agreement made by reason of marriage
other than a mutual promise to marry.
Note: The failure to execute the contract in writing does
NOT render the contract VOID. The contract is VALID, but  Example: Martin agrees to build a house for Wilma
it is UNENFORCEABLE, unless ratified. worth P10M if she will marry him. If Wilma subsequently
marries Martin, she cannot oblige Martin to make good his
 The Statute of Frauds seeks to prevent the promise to build a house for her if their agreement was not
commission of injustice due to faulty memory, and to guard made in writing.
against intentional misrepresentation.
NOTE : However, a mutual promise to marry is
Illustrative Example: Marian verbally agreed to sell her enforceable even if merely orally entered into. At any rate,
car to Dingdong for P950,000.00. The parties agreed that enforceability will be limited only to claiming damages for
delivery of the car as well as payment of the purchase price non-performance of the promise, but NOT to compel the
will be effected on October 21, 2015. On October 21, 2015, other party to proceed with the marriage. This is because
Marian refused to honor the verbal agreement, and turned nobody can be compelled to marry against his will. It will
down Dingdong’s demands for her to deliver the car nor his make the consent defective, and the marriage voidable.
tender of the P950,000.00 purchase price. Dingdong then
filed an action in court for specific performance to enforce
their verbal contract of sale.  An agreement for the sale of personal
In this case, if the lawyer of Marian objects, Dingdong will property where the consideration is P500 or more,
not be allowed by the court to present oral or testimonial unless there has been partial delivery or payment. [Art.
evidence to prove the existence of their verbal contract of 1403(2)(d)]
sale. This is because a verbal contract of sale of personal
property where the consideration exceeds P500.00 must be
in writing in order to be enforceable even between the  Example: Sylvia and Barry entered into a verbal
parties [Art. 1403(2)(d)]. contract for the sale of a pair of silver earrings for P500.00.
Delivery and payment was set on October 30, 2015.
17. What are the contracts covered by the Statute of  IF on due date Sylvia does not deliver, Barry
Frauds which are required to appear in writing in cannot compel her to do so even if he is willing to pay
order to be enforceable: because the contract falls under the Statute of Frauds, and
must be in writing to be enforceable between the parties.
 An agreement which is to be executed after
one (1) year from the date of perfection of the contract.
 ASSUME THAT on due date Sylvia makes, and
 Example: On October 1, 2014, Sally entered into a
Barry accepts, delivery of the silver earrings. Later, Sylvia
contract with Brian for the sale of her car to him. Delivery of
files an action to compel Barry to pay the purchase price of
the car and payment of the purchase price was set on
P500.00. This time, Barry will be obliged to pay. Barry
October 5, 2015. This contract must be in writing to be
cannot set up the defense that Sylvia cannot enforce their
enforceable because the execution or consummation of the
agreement for not having been made in writing. This is
contract is set on a date more than a year from the
because there has already been delivery of the object of the
perfection of the contract.
contract, and by accepting the earrings, Barry in effect
admits the existence of the agreement.
 A special promise to answer for the debt,

default or miscarriage of another.
 An agreement for the lease of real property
 Example: Dennis borrowed money from Carina where the term is more than one year. [Art. 1403(2)(e)]
with Gorio as guarantor. As guarantor, Gorio obliges
 Example: On January 15, 2015, Orly agreed to
himself to answer for the obligation to Carina, if Dennis is
lease his building to Tirso for a period of two (2) years
not able to pay the debt on maturity date. This promise of
starting February 15, 2015, until February 14, 2017. On
Gorio to answer for the default of Dennis must be in writing,
February 15, 2015, if Orly does not allow Tirso to take
so that Gorio can be held liable by Carina if Dennis fails to
possession of the leased property as agreed upon, Tirso
pay his obligation on due date.
cannot legally compel Orly to do so if their lease contract is available only to the contracting parties and their
not in writing. heirs.
Examples of the Principles :

 An agreement for the sale of real property or
of an interest therein. [Art. 1403(2)(e)]
a. & b.  Soledad verbally sells to Basilio a parcel of land
 Example: Isko and Bernie entered into a verbal for P2M. The contract is unenforceable under Article
contract for the sale of a parcel of land. Delivery and 1403(2)(e), which requires that the sale of real property
payment was set on October 30, 2015. On October 30, if must be in writing. However, if Basilio pays the price of
Isko changes his mind about the sale, Bernie cannot sue the sale, and Soledad accepts it, she cannot refuse to
Isko to compel the latter to perform his obligation under the deliver the land because there was already partial
contract of sale which was not put in writing; hence, performance of the contract. Since Soledad has
unenforceable. accepted benefits under the contract, the contract is no
longer executory (but is now partially executed or
consummated); hence, the Statute of Frauds will not
 NOTE, however, that under Article 1874 of apply. Soleded is deemed to have ratified the contract
the Civil Code, “when the sale of a piece of land or under Article 1405. With the ratification, the contract
any interest therein is through an agent, the now becomes enforceable. In the same manner, if
authority of the latter shall be in writing; otherwise, Soledad delivers the land to Basilio, and he accepts
the sale shall be void.” delivery, the contract becomes enforceable, because
there is already partial execution (or consummation) of
the contract.
 A representation as to the credit of a third
person. (c)  A loan of P1,000.00 does not have to be in
 Example: Delfino is applying for a loan with Cielo. writing to be enforceable because the contract of loan is not
Before she releases the money, Cielo asks Ramiro about one of those enumerated in the Statute. Hence, an oral
the credit standing of Delfino. Ramiro orally assures Cielo loan for P1,000.00 is valid and enforceable. (See the last
that Delfino is solvent, and has good credit reputation. On paragraph of Article 1358)
the basis of this representation, Cielo extends a loan to
Delfino. However, it turns out that Ramiro made a false
representation as to Delfino’s credit standing because (d)  Olivia is the owner of a house leased by Tiago.
Delfino defaulted in his obligation to Cielo on due date. In During the term of the lease, Olivia verbally sold the house
this case, if the representation of Ramiro as to Delfino’s to Braulio. Braulio had not yet occupied the house nor
credit standing was not made in writing, Cielo cannot hold given the purchase price for the sale. Now, despite
Ramiro liable for damages for such misrepresentation. Braulio’s demand as new owner of the house, Tiago refuses
to remit his monthly rental payments to Braulio. Tiago
18. What are some basic principles governing the argues that the contract of sale between Olivia and Braulio,
Statute of Frauds? having been verbally made, is not enforceable under Article
1403(2)(e). This argument of Tiago is not valid. The
a) It applies only to executory contracts. It does defense under the Statute of Frauds is a personal defense,
not apply to totally or partially executed contracts. and can be raised or set up only by the parties to the
contract contended to be unenforceable for not having been
b) The defense under the Statute of Frauds may be made in writing. Therefore, Tiago who is not a party to the
waived by ratification. (Art. 1405) contract of sale cannot set up the defense under the Statute
of Frauds.
c) It is exclusive. It applies only to the agreements
or contracts enumerated under Article 1403 (2). NOTE: In this case, Braulio may set up the defense under
the Statute of Frauds. It becomes apparent, however, that
d) The Statute of Frauds is a personal defense instead of assailing the unenforceability of the contract of
(Art. 1408). Just as strangers cannot attack the sale, Braulio has executed acts of ratification by exercising
validity of voidable contracts, so also can they not acts of ownership over the house as manifested by his
attack a contract because of its unenforceability. collection of the rentals from its tenant. The same can be
The defense that a contract does not comply with said of Olivia who, under the facts, has offered no objection
the Statute of Frauds can be set up and is
to Braulio’s acts of dominion by demanding rents on the In case of Lesion:
property from the tenant Tiago.
a. The contract must have been entered into by a
19. What are Void and Inexistent Contracts? guardian in behalf of his ward or by a legal
representative in behalf of the absentee;
These are the contracts which have absolutely no force and
effect, and are inexistent from the beginning. It is as if they b. The ward or absentee must have suffered lesion of
have never been entered into, and they cannot be validated more than ¼ of the value of the property which is the
either by time or ratification. The maxim is “NO object of the contract;
CONTRACT AT ALL”.
a. Void Contracts – Those where all of the requisites of a
contract are present but the cause, object or purpose is c. The contract must have been entered into without
contrary to law, morals, good customs, public order or judicial approval;
public policy or the contract itself is prohibited or
declared void by law. d. There must be no other legal means / remedy for
obtaining reparation for lesion;
b. Inexistent Contracts – Those where one or some or all
of those requisites which are essential for the validity of
a contract are absolutely lacking. e. The person bringing the action must be able to return
whatever he may be obliged to restore;
20. What is Pari Delicto?
f. The object of the contract must not be legally in the
Pari delicto defined.  Pari delicto simply means equal possession of a third person who did not act in bad
fault. faith.
 The term is used with reference to the general In case of Fraud:

rule that illegal transactions or contracts are not legally
enforceable. It is a universal doctrine which holds that no a. There must be a contract between the creditor and the
action arises, in equity or in law, from an illegal contract. debtor. It must have been inexistent before a new
Where the parties are in pari delicto, no suit can be contract;
maintained for specific performance under the contract, or
to recover the property agreed to be sold or delivered, or b. It was sold with fraud / with the intention to commit
the money agreed to be paid, or damages for its violation. fraud;
No affirmative relief of any kind will be given to one against
the other.
c. The creditor cannot in any legal manner collect the
credit;
Exceptions; where pari delicto may not apply:
d. The object of the contract must not be in possession of
The Court may allow a party to recover money or property a third person who did not act in bad faith.
in the following cases, when the interest of justice or public
interest demands: 2.) What is the Prescriptive Period in Voidable
Contracts?
1. If an agreement has been repudiated before it has
accomplished its purpose or before it causes damage to a • Valid until annulled, unless any defect is cured by
third person ratification, which can be claimed within four years
2. If the party who gave consent is proven to be 1. Incapacitated in giving consent - From the
incapacitated time guardianship ceases
3. If the agreement is not illegal per se but merely 2. Vitiated consent (by mistake, violence, intimidation,
prohibited, and the prohibition is designed for the protection violence or undue influence, from the time such defects
of the plaintiff cease intimidation, influence, or fraud undue - For mistake
Quiz of fraud, upon discovery of the same.
1.) What are requisites for Rescission based on -------------------------------E N D-------------------------------------

Lesion and Fraud?

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DEAN ULAN NOTES ON OBLICON 2015 - 2016

San Beda College - Manila

2. What is an obligation? 8. What are the essential elements of a contract?

1156. An obligation is a juridical necessity to give, to do or a. Consent of the Contracting Parties

3. What are the kinds of obligations? 9. When does consent exist?

a. Civil Obligations – those that give a right of action to

1157. Obligations arise from: 12. What is a Quasi-Contract?

Can Compromise Cannot Compromise Natural Obligation Moral Obligation

Second Meeting: January 7, 2016

T pays C after the debt has prescribed without the Quasi-Delicts.

Example of a counter offer: a. There is a Property / Business;

Quasi-Contract Contract 19. Give the requisites of Solutio Indebiti.

 Standard of care that is expected of a prudent man in

Yes. A part of Art. 1246 provides “….the creditor cannot

b. Industrial – Those produced by lands of any kind ERS:

b.) Contracts NOTES:

3. When time is an important motive.

NOTE: According to the SC, demand should be made after

3. Discuss the concept of a Fortuitous Event.

b. Where there is a stipulation that they are not Term Condition

Ex. I will pay you my debt if hell freezes over. The

1. Discuss Positive and Negative Conditions. A. When Applicable?

C. Situations Other benefits of the period to the creditor includes interest

3. It must not have been the object of the obligation ERS:

 Each of the creditors is entitled to demand the

 Several obligations are reduced into one document.

 The relationship of solidarity is not destroyed by the

Ex. Sum of Money Debtors Requirement to be Creditors

15.)What are Obligations with a Penal Clause? (1226)

EXS: (RA 4100) Parties to a Contract:

a. Conception Stage (Preparatory)

4. How can an agreement result into a contract? d. Relativity

b. Mutuality (1308 & 1182) 2. When it is stipulated by the parties.

When is mutuality required? Remedies of Creditor (Chronological Order)

a. Cause of the Contracting Parties;

Option Money Earnest Money 3. Differentiate Rescission from Resolution.

Can an heir suffer lesion?

C. Special Cases of Rescission 1. The incapacity of persons under guardianship

Art. 1534 3. The fraud is discovered, for contracts entered in

 A special promise to answer for the debt,

Examples of the Principles :

 The term is used with reference to the general In case of Fraud:

1.) What are requisites for Rescission based on -------------------------------E N D-------------------------------------

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