OBLIGATIONS

AND
CONTRACT
R.A. No. 386 New Civil
Code of the Philippines
Arts. 1156-1304
(Obligations)
Arts. 1305-1422
(Contracts)
 What is LAW?
Any rule of conduct, just,
obligatory, promulgated by a
legitimate authority, and of
common observance and
benefit.
A private school has no legal
obligation to provide clothing
allowance to its teachers because
there is no law which imposes
this obligation upon schools.
But a person who wins money in
gambling has the duty to return
his winnings to the loser. This
obligation is provided by law.
(Civil Code, Art. 2014.)
What are the SOURCES of LAW?
1. Constitution—fundamental/
supreme law because it is
promulgated by the people
themselves.
2. Legislation– it consists of the
declaration of legal rules by a
competent authority.
3. Administrative rules and
regulations– issued by
4. Judicial decisions of the
Supreme Court-decisions of the
Supreme Court applying or
interpreting the laws or
Constitution
5. Customs- habits and practices
which through long and
uninterrupted usage have become
acknowledged as binding rules of
conduct
What is a RIGHT?
RIGHT is a claim or title to an
interest in anything whatsoever
that is enforceable by law.

For every right enjoyed by any

person, there is a corresponding
obligation on the part of another
person to respect such right.
REAL RIGHT VERSUS PERSONAL
RIGHT (Art. 1164, NCC)

REAL RIGHT is a CLAIM or

ENTITLEMENT over a SPECIFIC
THING which is enforceable against
the world. (over a thing)
Right to possess/ own a property
bought
PERSONAL RIGHT – a CLAIM or
ENTITLEMENT that may be
enforced by one person on
ANOTHER PERSON. (performance
of an obligation)
Example: Right of a creditor to
demand payment of money
borrowed or right to demand
delivery of the thing and its fruits
to from a debtor
WHAT IS OBLIGATION?
Art. 1156. An obligation is a
juridical necessity to give, to do
or not to do.

OBLIGATION came from the word

“OBLIGATIO” means “binding”
Note: Memorize this article
DEFINITION OF OBLIGATION
It is defined as a legal relation
established between one party
(called the creditor) and another
(called the debtor), whereby the
latter is bound to the fulfillment
of a prestation (particular
conduct) the former may demand
of him.
OBLIGATION is something that
one must do, give or not to do
because of law, necessity, duty or
agreement.
It is synonymous to “duty”.
It is a tie which binds us to pay, to
give, to do or not to do
something agreeably to the laws
and customs of the country.
JURIDICAL NECESSITY
A legal relation established
between one party and another
whereby the latter is bound to the
fulfillment of a prestation which
the former may demand of him.
It connotes that in case of non-
compliance, there will be legal
sanctions.
PRESTATION
Not the thing or object, but
the particular conduct of the
debtor which may consist in
giving, doing, or not doing
something.
 TWO KINDS
OF OBLIGATION
A. TO GIVE (REAL OBLIGATION)
– obligation of the debtor or
obligor to deliver a thing,
movable or an immovable,
to the creditor or obligee for
the purpose of ownership or
use.
EXAMPLES:
Obligations to DELIVER the
thing in a CONTRACT OF SALE,
CONTRACT OF LOAN, DEPOSIT,
PLEDGE and DONATION.
B. TO DO – obligation of
debtor/obligor to perform some
work/service in favor of the
creditor/obligee
Examples
a. Contract for professional
services like painting, modelling,
singing;
b. Contract of labor
C. NOT TO DO – obligation not to
do some act in favor of the
creditor/ obligee
It consist in refraining from doing
some acts like producing
deafening noise, offensive odor,
smoking, not doing an act agreed
by the parties in a contract
 ESSENTIAL REQUISITES OF
AN OBLIGATION

1. A passive subject (called

debtor or obligor) or the
person who is bound to the
fulfillment of the obligation;
he who has a duty;
2. An active subject (called
creditor or obligee) or the
person who is entitled to
demand the fulfillment of
the obligation; he who has a
right;
3. Object or prestation (subject
matter of the obligation)
the conduct required to be
observed by the debtor. It may
consist in giving, doing, or not
doing. (see Art. 1232.)

Without the prestation, there is

nothing to perform.
4. A juridical or legal tie (also
called efficient cause)
that which binds or connects the
parties to the obligation. The tie
in an obligation can easily be
determined by knowing the
source of the obligation.
(Art. 1157.)
Under a building contract, X bound
himself to construct a house for Y
for P1,000,000.00.
X is the _________ subject
Y is the _________ subject
the building of the house is
the__________
the agreement or contract, which is
the source of the obligation, is
the________________.
 KINDS OF OBLIGATION
A. ACCORDING TO SUBJECT
MATTER
(1)Real obligation (obligation to
give) or that in which the subject
matter is a thing which the
obligor must deliver to the
obligee;
(2) Personal obligation
(obligation to do or not to do)

that in which the subject matter is

an act to be done or not to be
done.
Two (2) kinds of personal
obligation:
(a)Positive personal obligation or
obligation to do or to render
service
(see Art. 1167.)
 (b)Negative personal obligation or
obligation not to do (which
naturally includes obligations “not
to give”).
(see Art. 1168.)
B. According to judicial
enforceability

(1)Civil obligation– It is when the

debtor/ obligor did not fulfill its
obligation to the creditor/
obligee that can be enforced
through a civil suit or action in
court.
Example:

Obligations arising from law,

contracts, quasi-contracts, delicts,
and quasi-delicts
Specific Example/Situation

When a debtor fails to pay the

loan amount after a demand has
been made by the creditor for the
former to pay the said amount, the
creditor may file a collection of
sum in court.
(2)Natural obligation– It is a
special kind of obligation which
cannot be enforced in court but
which authorizes the retention of
the voluntary payment or
performance made by the debtor.
It depends on the good conscience
of debtor.
Example
Art. 1424. When a right to sue
upon a civil obligation has lapsed
by extinctive prescription, the
obligor who voluntary performs
the contract can not recover what
he has delivered or the value of
the service he has rendered.
Example of Art. 1424
On January 1, 2009, C borrowed
money from D in the amount of
1M payable within one (1) month.
After a month, C failed to pay any.
On March 1, 2009, D sent a
demand letter to pay to C which
he received.
But could not file an action in
court for collection of sum
because he worked abroad. 15
years later when he came back to
the Phil., he filed a collection of
sum against C. The action will not
prosper because of prescription.
The obligation has been
extinguished.
But if C voluntarily paid 1M to D, C
can no longer get back what he
has paid.
Art. 1425. When without the
knowledge or against the will of
the debtor, a third person pays a
debt which the obligor is not
legally bound to pay because the
action has prescribed, but the
debtor later voluntarily reimburses
the third person, the obligor
cannot recover what he has paid.
3. Moral Obligation– It is a duty
which one owes, and which he
ought to perform, but not legally
bound to fulfill.
It deals with the spiritual
obligation of a person in relation
to his God or Church.
 SOURCES OF OBLIGATIONS
(Art. 1157)
(1) Law
Ex. obligation to pay taxes;
obligation to support one’s family
(2) Contracts-- when they arise
from the stipulation of the parties
(Art. 1306)
(3) Quasi-contracts (Art. 2142)
Ex. the obligation to return money
paid by mistake or which is not due
(4) Acts or omissions punished by
law (delict) (Art. 1161.)
Ex. the obligation of a thief to return
the car stolen by him;
duty of a killer to indemnify the
heirs of his victim
(5) Quasi-delicts—(Art. 2176)
when they arise from damage
caused to another through an act
or omission, there being fault or
negligence, but no contractual
relation exists between the
parties.
CONTRACT
ART. 1159. Obligations arising
from contracts have the force
of law between the
contracting parties and
should be complied with in
good faith.
What is a CONTRACT?
It is the meeting of the minds
between two persons whereby
one binds himself, with respect
to the other, to give something
or to render some service.
Once perfected, valid contracts
have the force of law between the
parties who are bound to comply
therewith in good faith, and
neither one may without the
consent of the other, renege
therefrom. (Tiu Peck vs. Court of
Appeals, 221 SCRA 618 [1993].)
Examples of contracts

1.Contract of loan
2.Contract of sale
3.Contract of lease
QUASI-CONTRACTS are LICIT
and PURELY VOLUNTARY and
UNILATERAL acts which
create an obligation on the
part of the actor in favor of
another person;
QUASI-CONTRACTS give rise
to an obligation so that no
one shall be unjustly
benefited or enriched at the
expense of another.
Contracts and quasi-contracts
distinguished:
--in a contract, consent is
essential requirement for its
validity while in quasi-contract,
there is no consent as the
same is implied by law
(IMPLIED CONTRACT)
--contract is a civil obligation
while quasi-contract is a
natural obligation (no prior
obligation to each other)
-- NO TRUE contract but can be
presumed by the Court
KINDS:
1.Negotiorium Gestio-- is the
voluntary management of
the property or affairs of
another without the
knowledge or consent of the
latter. (Art. 2144.)
Example:
Thus, if through the efforts of X, a
neighbor, the house of Y was saved
from being burned, Y has the
obligation to reimburse X for the
expenses X incurred although Y did
not actually give his consent to the
act of X in saving his house on the
principle of quasi-contract.
2. Solutio Indebiti– if
something is RECEIVED when
there is NO RIGHT to DEMAND
it, and it was UNDULY
delivered through MISTAKE,
the OBLIGATION TO RETURN it
arises ( Art. 2154)
ILLUSTRATIVE CASES:
Recovery of taxes paid under a
mistake.
Facts: X, a tax-exempt
cooperative store, paid taxes to
the City of Manila, believing that
it was liable.
Issue: May X recover the
payment?
Held: Yes, as it was made under a
mistake. (UST Cooperative Store
vs. City of Manila, 15 SCRA 656
[1965].)
REMEDY OF THE THIRD PERSON IN
COURT

Sue for DAMAGES either FOR:

A. RESTITUTION (bring back into
existence)– The amount of recovery
is based on the defendant’s gain
(extent to which he was unjustly
enriched) rather than that the
plaintiff’s (one who acted
voluntarily) loss.
B. RECOVERY– to get something
BACK or REGAIN

In both remedies, the basis in

awarding DAMAGES is based on
QUANTUM MERUIT ( as much as
he has deserved)
OTHER QUASI-
CONTRACT EXAMPLES
1.When funeral expenses are borne
by a third person without the
knowledge of those relatives who
were obliged to give support to
the deceased, said relatives shall
reimburse the third person,
should the latter claim
reimbursement
2. When in an accident or
someone is seriously ill and he is
treated or helped when he is not
in a condition to give consent, he
shall be liable to pay for the
services of the physician or other
person aiding him unless such act
is out of pure generosity.
WHAT IS DELICT
Acts or omissions (intentional)
punished by law.

Civil obligations arising from

CRIMINAL OFFENSE shall be
governed by the PENAL LAWS
( Art. 1161 )
Example:
1. the obligation of a thief to
return the car stolen by him
2. the duty of a killer to
indemnify the heirs of his
victim
Every person criminally liable
for a felony is also civilly liable
( Art. 100 RPC )
Scope of Civil liability:
(1)Restitution;
(2)Reparation for the damage
caused; and
(3) Indemnification for
consequential damages. (Art.
104, Revised Penal Code.)
EXAMPLE:
X stole the car of Y. If X is
convicted, the court will order
X:
(1)to return the car (or to pay
its value if it was lost or
destroyed);
(2) to pay for any damage
caused to the car; and
(3) to pay such other damages
suffered by Y as a
consequence of the crime.
WHAT IS QUASI- DELICT
(TORT/CULPA-AQUILIANA)
Art. 2176. Whoever by act or
omission causes damage to
another, there being fault or
negligence, is obliged to pay
for the damage done.
Such fault or negligence, if
there is no preexisting
contractual relation between
the parties, is called a quasi-
delict and is governed by the
provisions of this Chapter.
NEGLIGENCE
It is the failure to observe for the
protection of the interests of
another person that degree of care,
precaution, and vigilance which the
circumstances justly demand,
whereby such other person suffers
injury.
Simply, it is the conduct that creates
undue risk of harm to others.
 Requisites of quasi-delict
(1)There must be an act or
omission by the defendant;
--- the act is NEGLIGENT or
there is FAILURE TO DO
SOMETHING, especially when
he/she has the moral or legal
obligation to do
(2) There must be fault
(defect) or negligence of the
defendant;

(3) There must be damage

caused to the plaintiff;
(4) There must be a direct
relation or connection of cause
and effect between the act or
omission and the damage
(PROXIMATE CAUSE); and
-- the negligent act or omission
must be the proximate cause of
the damage suffered by him
(5) There is no pre-existing
contractual relation between
the parties.
Examples:
1. A, driver, beating the red light,
losses control and hits the car
driven by B. When B avoided the
car driven by A which was coming
fast, hits the car driven by C. C
died as a result and damages to
property (cars) were incurred.
Who is the proximate cause?
Examples:
1. A, driver, beating the red light,
losses control and hits the car
driven by B. When B avoided the
car driven by A which was coming
fast, hits the car driven by C. C
died as a result and damages to
property (cars) were incurred.
Who is the proximate cause?
2. If Pedro drives his car
negligently and because of his
negligence hits Jose, who is
walking on the sidewalk of the
street, inflicting upon him physical
injuries. Then Pedro becomes
liable for damages based on quasi-
delict.
(What if Jose is a passenger of
Pedro, does this fall under Quasi-
delict?)
3. The obligation of the head of a
family that lives in a building or a part
thereof to answer for damages
caused by things thrown or falling
from the same (Art. 2193.)

4. The obligation of the possessor of

an animal to pay for the damage
which it may have caused.
(Art. 2183.)
 CHAPTER 2
NATURE AND EFFECT OF OBLIGATION
 NATURE AND EFFECT OF
OBLIGATIONS
ART. 1163. Every person obliged to
give something is also obliged to
take care of it with the proper
diligence of a good father of a
family, unless the law or the
stipulation of the parties require
another standard of care.
-- THIS REFERS TO AN OBLIGATION TO
GIVE A SPECIFIC OR DETERMINATE
THING
NATURE AND EFFECT OF OBLIGATIONS
SPECIFICTHING GENERIC THING
it is particularly it refers only to
designated or a class or genus
physically to which it
segregated from pertains and
all others of the cannot be
same class pointed out with
particularity.
SPECIFIC THING GENERIC THING

The Toyota car A Toyota car

with Plate No.
AAV 344
This cavan of rice A cavan of rice
The money I The sum of
gave you 1,000
 SPECIFIC GENERIC THING
THING
Obligati 1.To 1.To deliver a
ons of preserve generic or
the or take indeterminat
debtor care of e thing which
in real the thing must be
obligati due; (Art. neither of
on 1163) superior nor
( TO inferior
GIVE) quality.
 SPECIFIC/ DETERMINATE THING GENERIC /
INDETERMINATE THING

Obligatio
ns of the 2. To answer 1.To pay
debtor in for damages in damages
real case of non- in case of
obligation fulfillment or breach of
( TO GIVE) breach of the the
obligation. (Art. obligation
1170.)
 SPECIFIC/ DETERMINATE THING GENERIC /
INDETERMINATE
THING

Obligation 3. To deliver the fruits

s of the of the thing (Art.
debtor in 1164.);
real
obligation 4. To deliver its
( TO GIVE) accessions and
accessories (Art.
1166.)
 SPECIFIC/ GENERIC / INDETERMINATE
DETERMINATE THING THING

Rights of 1.To compel 1.To ask for

the specific performance of
creditor in performance the obligation
real
obligation 2.To recover 2.To ask that the
damages in obligation be
case of complied with at
breach of the the expense of
obligation the debtor
 SPECIFIC/ GENERIC / INDETERMINATE
DETERMINATE THING
THING

Rights of 1.Right to 1.To recover

the rescind damages in case
creditor the of breach of the
in real agreement obligation
obligation
Mr. A bound himself to deliver to Mr. B one
(1) 50-inch 2022 model Samsung TV and one
(1) LG Refrigerator with motor no. SEBC-123,
and to repair Mr. B’s piano. Mr. A did
nothing.
A. May Mr. B compel Mr. A to deliver the TV
and the refrigerator and to repair the
piano?
B. If the objects of the obligation to give (TV
and ref) are destroyed through a
fortuitous event, can the debtor or obligor
still be held liable for damages?
ANSWER: IT DEPENDS.
Obligation is determinate
GR: The obligor or debtor cannot be
held liable for damages provided there is
no delay or fault on the part of the
obligor.
Obligation is indeterminate/Generic
Debtor/obligor can still be liable for
damages
Reason: Genus numquam peruit
(Generic thing can never perish)
WHAT IS DILIGENCE?
It is the care, caution required of a person in
a given situation

KINDS
1. DUE DILIGENCE
The diligence reasonably expected from and
ordinarily exercised by a person
2. EXTRAORDINARY DILIGENCE
It is the extreme care that a person shall
exercise to secure rights and property
GENERAL
DILIGENCERULE: To take
REQUIRED care OBLIGATION
IN REAL of the thing
with the proper diligence of a good
father of a family.

EXCEPTIONS:
1. The law requires another standard of
care.
ex. Art 1755 of NCC –common carrier is
bound to carry passengers with utmost
diligence
EXCEPTIONS:
DILIGENCE REQUIRED IN REAL OBLIGATION
Bank transactions (R.A 8791 or General
Banking Law of 2000) –because of
fiduciary nature of banking that requires
high standards of integrity and
performance

2. The stipulation of the parties requires

another standard of care
ex. When the parties agree on a higher
standard of care
ART. 1164. The creditor has a right to the
fruits of the thing from the time the
obligation to deliver it arises.
However, he shall acquire no real right
over it until the same has been delivered
to him.
 KINDS OF FRUITS

1. Natural Fruits
These are the spontaneous
products of the soil, and the young
and other products of animals

2. Industrial Fruits
Are those produced by lands of
any kind through cultivation or labor
 KINDS OF FRUITS

3. Civil Fruits
These are rents of buildings, the
price of leases of lands and other
property and the amount of life
annuities or other similar income
 DELIVERY

What is ‘delivery’?
The formal act of transferring something
such as deed; the giving possession or
control of something to another.
 KINDS OF DELIVERY
1. ACTUAL DELIVERY
The act of giving real and immediate
possession to the buyer or the buyer’s
agent.

2. CONSTRUCTIVE DELIVERY
An act that amounts to a transfer of
title by operation of law when the actual
transfer is impractical or impossible.
S sold his horse to B for P15,000.00.
No date or condition was stipulated
for the delivery of the horse. While
still in the possession of S, the horse
gave birth to a colt.

1. Who has the right to the colt?

2. If the colt was born before the
delivery, who owns it?
Answer:
1. B has the right to the colt (being
the offspring—fruit of the horse)
only if the obligation to deliver it
arises- that is- the time when the
purchase price is paid

2. S is still the owner since no

delivery that took place yet
Ben leases his house to Mick monthly for
the amount of P10,000 per contract of
lease agreed between them covering one
year period starting February 2022. Both
agreed that the payment of the rent will
be monthly.
During the time that Ben expects payment
from Mick monthly is a PERSONAL RIGHT.
Upon PAYMENT, real right attaches- that
is the right of possession of the rented
house on the part of Mick)
 Obligation to deliver accessions and
accessories of a determinate thing

ART. 1166. The obligation to give a

determinate thing includes that of
delivering all its accessions and
accessories, even though they may not
have been mentioned.
Accessions are the fruits of, or additions
to, or improvements upon a thing (the
principal), e.g., house or trees on a land

Accessories are things joined to, or

included with the principal thing for the
latter’s embellishment, better use, or
completion e.g., key of a house; frame of
a picture
 Positive Personal Obligation
ART. 1167. If a person obliged to do
something fails to do it, the same shall be
executed at his cost. This same rule shall
be observed if he does it in contravention
of the tenor of the obligation.
Furthermore, it may be decreed that
what has been poorly done be undone.
 Remedies of creditor in positive personal obligation
REMEDIES OF CREDITOR IN CASE OF
FAILURE TO DO OR IN CONTRAVENTION
OF TENOR OF THE OBLIGATION

1. Failure to do
a. to have the obligation performed, at
the debtor’s expense
b. to recover damages
 Remedies of creditor in positive personal obligation
REMEDIES OF CREDITOR IN CASE OF
FAILURE TO DO OR IN CONTRAVENTION
OF TENOR OF THE OBLIGATION

2. Done in contravention of the terms of

the obligations
a. be ordered by the Court to be undone
b. To be done at the expense of debtor
c. To recover damages
EXAMPLE
Facts:
A delivered to B, a typewriter
repairer, a portable typewriter for
routine cleaning and servicing. B was
not able to finish the job after some
time despite repeated reminders
made by A. Finally, B returned the
typewriter unrepaired, some of the
parts missing.
A had the typewriter repaired by F
Business Machines, and the repair job
cost him P58.75 for labor or service and
P31.10 for the missing parts or a total of
P89.85. The lower court rendered
judgment ordering B to pay only P31.10.
Is B liable also for P58.75, the cost of the
service expended in the repair?
Yes. B contravened the tenor of his
obligation (see Art. 1170.) because he did
not repair the typewriter and returned it
“in shambles.” For such contravention, he
is liable under Article 1167 for the cost of
executing the obligation in a proper
manner, which in the case should be the
cost of the labor or service expended in
its repair, because the obligation or
contract was to repair it
 Negative Personal Obligation
ART. 1168. When the obligation
consists in not doing, and the obligor
does what has been forbidden him, it
shall also be undone at his expense.

Remedy of the obligee/ creditor:

1. undoing of the forbidden thing
2. an action for damages
Example:
In a contract of lease of a condo unit,
there is an agreement that the lessee
shall not make any substantial
improvement thereon without the
approval of the lessor. If the lessee makes
a porch or veranda without the prior
consent of the lessor, the improvement
(porch) maybe undone or removed at the
expense of the lessee plus damages in
case there are things destroyed because
of such act.
 RIGHT TO DAMAGES
DAMAGES ( civil law )
In law, damages are an award, typically of
money, to be paid to a person as compensation
for loss or injury.
Right to damages due to the ff:
1. Failure to deliver
2. Fraud
3. Negligence
4. Delay
5. In contravention of the tenor of the
obligation
 DIFFERENT MODES OF BREACH

ART. 1170. Those who in the

performance of their obligations are
guilty of fraud, negligence, or delay,
and those who in any manner
contravene the tenor thereof, are
liable for DAMAGES.
 DIFFERENT MODES OF BREACH
Measure of recoverable damages
Fundamental in the law on damages is
that one injured by a breach of a contract,
or by a wrongful or negligent act or
omission shall have a fair and just
compensation commensurate to the loss
sustained as a consequence of the
defendant’s act
 1. FRAUD ( DOLO)
Fraud (deceit or dolo)–It is the voluntary
execution of a wrongful act, or a willful
omission which prevents the normal
realization of the prestation.
As a ground for damages, it implies some
kind of malice, dishonesty or deception
and it cannot cover cases of mistake and
errors of judgment made in good faith.
KINDS OF FRAUD OR DOLO
1. Dolo Causante or Causal Fraud
A deception used by one party
PRIOR TO or SIMULTANEOUS with
execution of the contract, in order
TO SECURE THE CONSENT of the
other party to enter into an
agreement or contract.
Deceit employed must be
SERIOUS.
The contract would not have been
entered into without the fraud.
It renders the contract voidable.
Illustration
1. Ace sold to Kay a parcel
of land representing that
the land was “ absolutely
free from liens and
encumbrances”. Kay gave
her consent on the faith of
Ace’s representation. Then
when the sale was
consummated and is to be
pendens notice was
annotated in the Certificate
of Title of the parcel of land
subject matter of the sale.
In this case, there is bad
faith on the part of the
seller having concealed the
truth and with intent to
deceive in order to
successfully get the consent
2. To sell her rice harvest, Anna
told Bel that the rice harvest is
Jasmine and it is a premium quality
but in reality it is an ordinary
Sinandomeng rice.
2. Dolo Incidente or Incidental
Fraud
refers only to some particular
or accident of the obligation
or that which is not serious in
character and without which the
other party would have entered
into the contract anyway.
Committed in the performance of
pre-existing obligation

Remedy of aggrieved: ask for

DAMAGES
Illustrations
1. Tom enters into a
contract to deliver 500
cavans of rice to Esme with
a price per cavan of 1,300
pesos. Tom delivered 300
cavans but withheld the
delivery of the remaining,
stating that the price went
up and increased the price
of rice that happened.
The fraud here is dolo
incidental because it is
committed during the
performance of the
obligation.

2. Ana orders 10 sacks of

Sinandomeng rice from
Omar, but Omar delivers 10
 2. NEGLIGENCE
Is a conduct that creates undue risk or
harm to another.
It is the failure to observe for the
protection of the interests of another
person, that degree of care, precaution
and vigilance which the circumstances
justly demand, whereby such other person
suffers injury
Kinds of Negligence:
1. Culpa contractual
2. Culpa Aquiliana
3. Culpa Criminal
CULPA CONTRACTUAL
Negligence merely makes the
debtor liable for damages in view
of his negligence in the fulfillment
of a pre-existing obligation
resulting in its breach or non-
fulfillment.
Illustration
1. A (logistics owner) and B (farmer)
entered into a contract for the
carriage of vegetables from Benguet
to Tarlac, scheduled for delivery on
January 10, 2025. After receiving
the vegetables, they were stored in
a tightly sealed van container
without proper ventilation, causing
them to rot and become useless.
Negligence is merely incidental
to the performance of the
obligation already existing
because of a contract

There is always an existing pre-

contractual relation
Illustration
1. A (logistics owner) and B (farmer)
entered into a contract for the
carriage of vegetables from Benguet
to Tarlac, scheduled for delivery on
January 10, 2025. After receiving
the vegetables, they were stored in
a tightly sealed van container
without proper ventilation, causing
them to rot and become useless.
Is A liable for the loss incurred by B?
Yes, A is liable for the loss incurred by B. A
was guilty of negligence in the care of the
vegetables by keeping them in an
enclosed container, which caused them to
rot.
What kind of negligence was committed?
The negligence committed is categorized as culpa
contractual because there was a contractual
agreement or obligation between A and B
concerning the delivery and proper care of the
vegetables.
CULPA AQUILIANA
•Fault or negligence of a person,
whose failure to observe the
required diligence to the
obligation causes damage to
another
•( governed by Art. 2176)
Negligence is direct, substantive
and independent
There may or may not be a pre-
existing contractual relation
Illustration
1. If a professional golfer was
shooting at the pin from 150 yards
out while somebody was preparing
to remove that pin from the hole
It is foreseeable that the person removing the
pin might get hit and injured by the golf ball.
Despite this, the golfer still chose to take the
shot.
Is the professional golfer liable for
the injury sustained by the person
removing the pin?
Yes, A is liable for the injury sustained by the
person removing the pin. A was guilty of
negligence by failing to exercise the necessary
care at that time to prevent injury or damage.
CULPA CRIMINAL
Fault/negligence which results in the
commission of a crime

Negligence is direct, substantive and

independent
No pre-existing contractual relation
Illustration
1. During the New Year
celebration, A, a businessman,
fired his licensed gun into the air,
accidentally hitting a person and
causing their immediate death.
Is A liable for the death of the
person?
Yes, A is liable for the death of the
person. A was guilty of negligence,
which led to the commission of
the crime of homicide. Although
there was no intent to harm, A's
reckless actions caused harm to
another person.
Illustration:
When a passenger in a taxi was
hurt because of alleged negligence
of the driver.
What can you file?
A.Culpa Contractual?
B.Culpa criminal?
C.Culpa Aquilina?
A. Culpa Contractual because
there is a contract of carriage
between the passenger and the
owner of the taxi cab. The
passenger has not reached his
destination safely.
Breach of contract can be filed but
if the owner/operator can prove
that he exercised due diligence in
the selection and supervision of
the driver–
The owner/operator is still liable
because of Respondeat superior
(master-servant rule) although it
can be mitigated.
If the driver was previously sued
for the injury sustained by the
passenger but later was acquitted
in that criminal case ( culpa
criminal), the victim—passenger
can still sue for culpa contractual
( no need to prove negligence).
B. You can file culpa aquilina
against the driver and the owner/
operator for the alleged negligence.
The defense of the owner/operator
to exonerate himself is defense of a
good father of family in the
selection and supervision of
employee
C. You can file culpa criminal
against the driver for the wrong
done.
Sue the driver only but the
owner/operator becomes solidarily
liable once the driver becomes
insolvent.
A pedestrian was hit by a taxi and
suffered physical injuries. The
driver was allegedly negligent.

What action/s can be filed?

Culpa Aquilina because there is
no pre-existing relation between
the driver and the operator and
the victim.
The victim can bring action based
on tort against both hence, if the
owner can prove due diligence, he
could not be responsible for the
injury.
Culpa Criminal against the
negligent driver.
Culpa Contractual ? No because no
contractual relation exists
IF the pedestrian was hurt because
of negligence of a driver and
another vehicle.
The liability is solidary.
 3. DELAY
DELAY (Art. 1169)
The non-fulfillment of obligation
with respect to time.
SIMPLE DELAY arises when one fails
to perform the obligation without
any demand yet but the debt is
already due and demandable.

LEGAL DELAY arises when the

obligee judicially or extrajudicially
demands the fulfillment of the
obligation.
 Kinds of delay (mora)
1. Mora solvendi or the delay on
the part of the debtor to fulfill his
obligation (to give or to do) by
reason of a cause imputable to
him;
2. Mora accipiendi or the delay on
the part of the creditor without
justifiable reason to accept the
performance of the obligation;
and
3. Compensatio morae or the
delay of the obligors in reciprocal
obligations (like in sale), i.e., the
delay of the obligor cancels the
delay of the obligee, and vice
Requisites of delay or default by the debtor
(mora solvendi)
(1)failure of the debtor to perform his (positive)
obligation on the date agreed upon;
(2)demand (not mere reminder or notice) made
by the creditor upon the debtor to fulfill,
perform, or comply with his obligation which
demand, may be either judicial (when a
complaint is filed in court) or extra-judicial
(when made outside of court, orally or in
writing); and
(3) failure of the debtor to comply with such
demand.
Example:
S obliged himself to deliver to B a
specific refrigerator on December
10. If S does not deliver the
refrigerator on December 10, he is
only in ordinary delay in the
absence of any demand from B
although a period has been fixed for
the fulfillment of the obligation.
The law presumes that B is giving S
an extension of time within which
to deliver the refrigerator. Hence,
there is no breach of the obligation
and S is not liable for damages yet.
If a demand is made upon S by B on
December 15 and S fails to deliver
the refrigerator, S is considered in
default only from the date. If an
action for specific performance is
filed by B on December 20, the
payment of damages for the default
must commence on December 15
when he made the extra-judicial
demand and not on December 20.
In the absence of evidence as to
such extra-judicial demand, the
effects of default arise from the
date of the judicial demand, that is,
from the filing of the complaint.
 Effects of delay
(1)Mora solvendi (default by the debtor)
a. The debtor is guilty of breach of the
obligation;
b. He is liable for interest in case of
obligations to pay money (Art. 2209.) or
damages in other obligations. (Art. 1170.)
In the absence of extrajudicial demand,
the interest shall commence from the
filing of the complaint; and
 Effects of delay
c. He is liable even for a fortuitous event
when the obligation is to deliver a
determinate thing. (Arts. 1165, 1170.)
However, if the debtor can prove that the
loss would have resulted just the same
even if he had not been in default, he is
still liable but the court may equitably
mitigate the damages. (Art. 2215[4].)
 (2) Mora accipiendi

a. The creditor is guilty of breach of

obligation;
b. He is liable for damages
suffered, if any, by the debtor;
c. He bears the risk of loss of the
thing due (see Art. 1162.);
 (2) Mora accipiendi
d. Where the obligation is to pay
money, the debtor is not liable for
interest from the time of the
creditor’s delay; and
e. The debtor may release himself
from the obligation by the
consignation of the thing or sum
due.
(3) Compensatio morae.
—
1. The delay of the obligor cancels
out the effects of the delay of
the obligee and vice versa.
2. No actionable default on the
part of both parties, such that
as if neither one is guilty of
delay.
3. If the delay of one party is
followed by that of the other, the
liability of the first infractor shall
be equitably tempered or
balanced by the courts. If it cannot
be determined which of the
parties is guilty of delay, the
contract shall be deemed
extinguished and each shall bear
his own damages. (Art. 1192.)
GENERAL RULE: There must be
DEMAND in order for the debtor to
incur delay.

Exceptions: (instances when no

demand is necessary to incur
delay)
(1)When the obligation or the law
expressly so declares; or
Illustration
A. D promised to pay C the sum
of P20,000.00 on or before
November 30 without the need
of any demand. Therefore, if D
fails to pay on November 30, he is
automatically in default. In this
case, the parties stipulate to
dispense with the demand.
B. Under the law, taxes should be
paid on or before a specific date;
otherwise, penalties and
surcharges are imposed without
the need of demand for payment
by the government.
C. The partner is liable for the fruits
of the thing he may have promised
to contribute to the partnership
from the time they should have
been delivered without the need of
any demand. (Art. 1786; see also
Art. 1788.)
(2). When from the nature and the
circumstances of the obligation it
appears that the designation of the
time when the thing is to be
delivered or the service is to be
rendered was a controlling motive
for the establishment of the
contract; or
Illustrations:
A. The delivery of balloons on a
particular date when a children’s
party will be held;
B. The making of a wedding
dress where the wedding is
scheduled at a certain time;
C. payment of money at a
particular time so that the
creditor could pay off certain
debts due on the same date;
D. the delivery of a car to be used
in a trip at a particular time; etc.
(3). When demand would be
useless, as when the obligor has
rendered it beyond his power to
perform.
Illustration
S obliged himself to deliver a
specific horse to B on December 5.
Through S’s negligence or
deliberate act, or by reason of a
fortuitous event for which S has
expressly bound himself
responsible, the horse died on
December 2.
Under this situation, any demand
for the delivery of the horse on
December 5 would be useless as S
has made it impossible for him to
perform his obligation.
 4. CONTRAVENTION OF
TENOR
This is the violation of the terms
and conditions stipulated in the
obligation. The contravention must
not be due to a fortuitous event or
force majeure. The unilateral act of
terminating a contract without
legal justification by a party makes
him liable for damages suffered by
the other pursuant to Article 1170.

It does not only include illicit act

which impairs the strict and
faithful performance of the
obligation, but also every kind of
defective performance.
 REMEDIES OF CREDITOR IN CASE OF
BREACH OF CONTRACT OR OBLIGATION

A.PRIMARY REMEDIES
1. ACTION FOR PERFORMANCE
A. ACTION FOR SPECIFIC
PERFORMANCE
“When what is to be delivered is a
determinate thing, the creditor, in
addition to the right for
indemnification for damages, may
compel the debtor to make
the delivery. “ ( Art 1165)
B. ACTION FOR SUBSTITUTED
PERFORMANCE
“If the thing is indeterminate or
generic, he may ask that the
obligation be complied with at the
expense of the debtor.” ( Art 1165)
2. ACTION FOR DAMAGES
(EXCLUSIVE OR IN ADDITION TO
PERFORMANCE)
Recoverable damages include
ANY and All damages that a human
being may suffer.
3. ACTION FOR RESCISSION
The power to rescind obligation is
implied in reciprocal obligations, in
case one of the obligors should not
comply with what is incumbent
upon him. ( Art 1191).
BREACH BY BOTH PARTIES
1.If first infractor can be
determined, his liability shall be
equitably tempered by the courts
2.If the first infractor cannot be
determined, the obligation shall
be extinguished and each shall
bear his own damages.
 EFFECTS OF RESCISSION
1. Extinguishes obligatory relation
as if it had never been created;
2.Mutual restitution – means
bringing the parties back to their
original status prior to the
inception (establishment) of the
contract.
 SUBSIDIARY REMEDIES:

1.To exhaust the property in

possession of the debtor
generally by attachment.
Accion Subrogatoria
--an action where the creditor
whose claims had not been fully
satisfied may go after the debtor’s
debtor (3 person)
rd

--once the creditor has exhausted

the property of the debtor,
creditor can step into the shoes of
the debtor and sue the debtor’s
debtor/s
 Rights of the creditor under
Accion Subrogatoria
1.Levy by attachment and
execution upon all the property
of the debtor
A. Attachment– file a motion asking
Court to issue a Writ or order
attaching the property of the
debtor;
It is a PRE-JUDGMENT process in which a Court
orders the attachment or seizure of a property
(prior to outcome of the case) for purposes of
protecting certain rights and interests to realize
the relief sought (satisfaction of a judgment
later on).
B. Execution– an order or a writ
directing the sheriff to begin to
transfer property as a result of
conclusion of a legal judgment.
After-judgment process to satisfy
the judgment award.
 Rights of the creditor under
Accion Subrogatoria
2. Exercise all the rights and action
of the debtor

3. To ask for rescission

Example:
A and B entered into a contract of
loan for the amount of P2M to be
paid on January 30, 2021. B failed
to pay the said loan. A filed a case
for collection of sum and later on,
a favorable judgment was
rendered in favor of A. The Court
ordered B to pay the amount of
P2M as principal, and P50,000.00
A writ of execution was issued.
After enforcement of the
order/writ for the satisfaction of
the judgment award, the sheriff
was only able to collect P1M
having exhausted all the
properties of the debtor. A
learned from B that C owes him
(B) the amount of P1M. A, thru
motion, filed an accion
subrogatoria against C to collect
the debt owing to B for the
satisfaction of B’s debt.
Accion Pauliana
An action where the creditor files
an action in Court for the rescission
of acts or contracts entered into by
the debtor designed to defraud the
creditor
REQUISITES of Accion Pauliana
a.Creditor has a credit prior to the
alienation by the debtor
b.Debtor has made a subsequent
contract giving advantage to a 3rd
person
c. Creditor has no other remedy but
to rescind the debtor’s contract to
the 3rd person
EXTINGUISHMENT OF LIABILITY IN
CASE OF BREACH DUE TO
FORTUITOUS EVENT
ART. 1174. Except in cases
expressly specified by the law, or
when it is otherwise declared by
stipulation, or when the nature of
the obligation requires the
assumption of risk, no person shall
be responsible for those events
which could not be foreseen, or
which, though foreseen, were
inevitable.
 Fortuitous event distinguished
from force majeure.
(1)Acts of man. — Strictly speaking,
fortuitous event is an event
independent of the will of the
obligor but not of other human
wills, e.g., war, fire, robbery,
murder, insurrection, etc.
(2) Acts of God. — They are those
events which are totally
independent of the will of every
human being, e.g., earthquake,
flood, rain, shipwreck, lightning,
eruption of volcano, etc. They are
also called force majeure. The term
generally applies to a natural
accident. In our law, fortuitous
events and force majeure are
identical in so far as they exempt an
obligor from liability. Both are
independent of the will of the
obligor.
 Requisites of a fortuitous event.
(1)The event must be independent
of the human will or at least of
the obligor’s will;
(2)The event could not be foreseen
(unforeseeable), or if it could be
foreseen, must have been
impossible to avoid (unavoidable);
(3) The event must be of such a
character as to render it impossible
for the obligor to comply with his
obligation in a normal manner; and
(4) The obligor must be free from
any participation in the aggravation
of the injury to the obligee.
 Liability in case of fortuitous
event

General Rule: No liability in case

of fortuitous event
Illustrations
1. Gaya obliged herself to deliver a
determinate car to Tito on Dec. 30,
1998. Before the arrival of the
period, the car was struck by
lightning and was totally destroyed.
Gaya cannot be held responsible for
the destruction of the car, hence
her obligation to deliver is
extinguished.
2. A, an employee of B tasked with
delivering goods to B’s merchants,
was robbed and injured by armed
individuals while on his way to
deliver jewelry and money. Despite
taking all necessary precautions to
secure the valuables, the armed
men forcibly took them away.
Is A liable for the loss?
No, A is not liable for the loss of
the jewelry and money. Since A
took all necessary precautions to
safeguard the items and the loss
occurred due to circumstances
beyond his control (a robbery by
armed individuals), he cannot be
held responsible.
His actions do not constitute
negligence, and the loss was
caused by a force majeure or
unavoidable event.
 EXCEPTIONS:
1. When expressly declared by
law
example:
If the obligor delays, or has
promised to deliver the same
thing ( specific thing) to two or
more persons who do not have
the same interest, he shall be
event until he has effected the
delivery.
Example
For the first example, if there is
delay in the delivery or when the
debtor has promised to deliver a
specific thing to different persons,
once there is loss due to
fortuitous event prior to delivery,
there is still liability as provided by
this provision.
2. When expressly declared by
stipulation
Such a stipulation is usually
intended to better protect the
interest of the creditor and
procure greater diligence on the
part of the debtor in the
fulfillment of his obligation.
Example
A and B entered into an agreement
regarding the construction of A’s
farmhouse. They agreed that, even in the
event of a natural calamity or any act of
God that might prevent the completion
of the farmhouse, B would still be held
liable for any losses resulting from such
circumstances.
3. When the nature of obligation
requires the assumption of risk.
Illustration
D insured his house against fire for
P500,000.00 with R, an insurance
company. Later, the house was
destroyed by accidental fire.
Although the cause of the loss is a
fortuitous event, D may recover
the amount of the policy. In a
contract of insurance, the insurer
(R), in consideration of the
premium paid by the insured (D),
undertakes to indemnify the latter
for the loss of the thing insured by
reason of the peril insured against
even if the cause of the loss is a
fortuitous event.
 KINDS OF
OBLIGATIONS
1.Pure Obligations ( not
dependent on condition)
Obligations whose performance
does not depend upon a future
or uncertain event, or upon a
past event unknown to the
parties, is demandable at once.
D obliges to pay C P10,000.00. The
obligation is immediately
demandable if there is no
condition and no date is
mentioned for its fulfillment. Of
course, if the loan has just been
contracted by D, a period must
have been intended by the parties
for performance but the duration
thereof will depend upon the
nature of the obligation and the
circumstances.
2. Conditional Obligations
One whose consequences are
subject in one way or another to
the fulfillment of a condition.
Meaning of Condition
Condition is a future and uncertain
event, upon the happening of
which, the effectivity or
extinguishment of an obligation (or
rights) subject to it depends.
uncertain event which constitutes
the condition.
Kinds of condition
1. Suspensive condition or one the
fulfillment of which will give rise
to an obligation (or right). In other
words, the demandability of the
obligation is suspended until the
happening of a future and
uncertain event which constitutes
the condition.
Example of Suspensive Condition
Maya binds herself to deliver a
determinate car to Tito if he
marries Gaya. The obligation is
only demandable upon the
happening of the condition that is,
if Tito marries Gaya. The obligation
is suspended and not yet
demandable.
2. Resolutory condition (condition
subsequent) or one the
fulfillment/happening of the
condition will extinguish an
obligation (or right) already
existing.
Example:
Arvin binds himself to lend his only
car to Ian until the latter passes the
CPA Board. The obligation to lend is
immediately demandable. Ian’s
right over the car is extinguished
upon his passing the CPA board. Ian
is now obliged to return the car.
3. Potestative – is one the
fulfillment of which depends upon
the sole will of the debtor. This kind
of condition is void.
Example
Arvin Promises to give his only
parcel of land to Maya if he decides
to leave for the United States.
4. Casual – is one the fulfillment of
which depends upon chance.

Example
Mario agrees to give Maria a
determinate car if Maria’s only
racing horse will win the
sweepstake race.
5. Mixed – is one which depends
partly upon the will of third person
and partly upon chance.
Example
Vincent promises to give Victor a
new Toyota Car if Victor will be
able to play with and beat Karpov
in a game of chess. This is mixed
condition, that is Karpov’s
willingness to play chess with
Victor and the latter’s winning
over Karpov.
6. Possible
7. Impossible
A. Physical Impossibility– the
condition imposed is not capable of
being performed physically.
Grace will give Christine a gold
necklace if she swims across the
Pacific Ocean.
B. Illegal Impossibility – when the
condition imposed is contrary to
law, good custom or public policy.
Pedro agrees to give Ernesto
P100,000 if Ernesto will kill Mario.
(law)
Maria agrees to employ Grace in
her company if Grace will not join a
labor union. (public policy)
Santos binds himself to give Maria a
gold wrist watch if she will cohabit
with Mr. Reyes without benefit of
marriage. ( good custom)
8. Positive Condition --- condition
that some event happen at a
determinate time shall extinguish
the obligation as soon as the time
expires or become indubitable that
the event will not take place
9. Negative condition --- one where
some event will not happen at a
determinate time, either a.) the
time indicated has elapsed; or b.) it
has become evident that the event
cannot occur (Art. 1185, NCC)
Example:
Victor will give Jason a car if he
will not marry Helen until Dec. 19,
2001, if Jason has not married
Helen until Dec. 19, 2001 or if
Helen has died within the
prescribed time without having
married to Jason, the obligation
becomes demandable.
If Jason married Helen within the
prescribed time, the obligation of
Victor is extinguished.
Example:
On January 2, 2020, X obliges himself to give his
Vios car 2018 with plate # YAA 2185 to Y if the
latter passes the August 2020 LET exams.
Subsequently, Y passed the LET exams.
By operation of law, as if Y owns the car beginning
January 2, 2020. The obligation of X to give the
determinate thing (VIOS car 2018) becomes
effective and Y can demand the delivery thereof
(specific performance).
Note: Prior to the happening of the condition, X
cannot make contracts alienating or disposing or
encumbering the thing promised to be given.
RULES IN CASE OF LOSS, DETERIORATION, OR
IMPROVEMENT OF THE THING PENDING THE
HAPPENING OF THE CONDITION IN OBLIGATION
TO GIVE (art. 1189)

WHAT IS LOSS? A thing is lost when it:

1. Perishes
2. Goes out of commerce; or
3. Disappears in such a way that its existence is
unknown or it cannot be recovered
RULES IN CASE OF LOSS, DETERIORATION, OR
IMPROVEMENT OF THE THING PENDING THE
HAPPENING OF THE CONDITION IN OBLIGATION TO
GIVE (art. 1189)
1. If the thing is lost without fault of the debtor
Obligation is extinguished.
Example:
X obliged himself to deliver his only bike to Y if the
latter finishes his Doctorate degree. However,
before Y could finish it, said bike was lost through
flood. The lost was through fortuitous event; thus,
X had no fault and the obligation is extinguished.
2. If the thing is lost through the fault of the
debtor
Debtor shall be obliged to pay DAMAGES

X obliged himself to deliver his only motorbike to Y

if the latter finishes his Doctorate degree. However,
before Y could finish it, said motorbike was
destroyed when it fell in the ravine while X was
riding it. Based on police investigation, X was drunk
when the incident happened. X is liable for
damages because drunk-driving is an act of fault or
negligence.
3. When the thing deteriorates without the fault
of the debtor
The impairment is to be borne by the creditor.
Example:
X obliged himself to deliver his only motorbike to Y
if the latter finishes his Doctorate (PHD) degree. Y
successfully finished his PHD degree. Naturally, a
motorbike deteriorates through wear and tear. The
question now is, who will bear the decrease in
value of the motorbike?
Y will bear the decrease in value because the
depreciation is without the fault of X.
4. If it deteriorates through the fault of the debtor
The creditor may choose between the rescission of
the obligation or its fulfillment, with indemnity for
damages in either case.
Example:
X obliged himself to deliver his only motorbike to Y
if the latter finishes his Doctorate (PHD) degree. Y
successfully finished his PHD degree. However,
from February 2020 to April 2020, X used the
motorbike negligently and recklessly. In this case, Y
can choose SPECIFIC PERFORMANCE or, in the
alternative, RESCISSION with indemnity for
DAMAGES in either case.
5. If the thing is improved by its nature or by time
The improvement shall inure to the benefit of the
creditor.
Example:
X obliged himself to deliver his only farmlot to Y if
the latter finishes his Doctorate (PHD) degree. Y
successfully finished his PHD degree. Normally, the
value of land increases through the passage of
time. Thus, the improvement (increase in value)
shall inure to the benefit of Y.
6. If it is improved at the expense of the debtor
The debtor shall have no other right than that
granted to the usufructuary.
Example:
X obliged himself to deliver his only motorbike to Y
if the latter finishes his Doctorate (PHD) degree. Y
successfully finished his PHD degree. However,
from January 1, 2020 up to March 2020, X
introduced improvement on the said motorbike
like repainting of the entire body of the motorbike
because of deterioration, change of the major
parts of its engine because of the leakage of oil,
and putting a pink leather cover in the seats.
In this case, X will exercise the right of
usufructuary; hence, he can remove the leather
cover of the seats. Also, he has the right to be
indemnified on his expenses in the repainting of
the motorbike and the change of the major parts
of the engine as these are necessary expenses.
Corollary, if X made damage to the motobike like
scratches therein, he may set off any of these
damages against the improvements.
C. OBLIGATIONS WITH A PERIOD
(Art. 1193)
an obligation whose effects are
subjected to the arrival or
expiration of a period; Such
period is 'a day certain' which
must necessarily come, although
it may not be known when.
TERM OR PERIOD
A term or period is an interval of
time, which, exerting an influence
on an obligation as a
consequence of a juridical act,
either suspends its demandability
or produces its extinguishments.
REQUISITES:
1.FUTURE; AND
2.CERTAIN
 PERIOD CONDITION
In terms of fulfillment future and certain event uncertain event
SURELY COME MAY OR MAY NOT
HAPPEN
in terms of time refers only to the future may refer also to the
past
in terms of influence on fixes the time for the causes the existence or
the obligation performance of an the extinguishment of an
obligation. It does obligation
prevent its existence
(suspensive) and
conception in due time
(resolutory).
If left exclusively to the The obligation is still The very VALIDITY of the
will of the debtor VALID obligation is affected
Must be POSSIBLE, Must be POSSIBLE,
otherwise, the otherwise, the
obligation is VOID obligation is VOID
Kinds of Period
a. according to effect:
Suspensive period (ex die) - wherein the
obligation begins only from a day certain or
upon the arrival of the period

Example:
X promised to give Php10,000 to Y on February 14,
2021. Take note that X will be liable upon demand by
Y on February 14, 2021.
Kinds of Period
a. according to effect:

Resolutory period (in diem) - wherein the

obligation is performed only up to a day certain
and terminated upon the arrival of the period

Example:

X promised to give Php10,000 to Y until May 30,

2021. Note that the obligation of X is
immediately demandable. However, X’s liability
to Y will be extinguished on May 30, 2021.
Kinds of Period

b. according to source
 Legal period - when it is provided by law.
 Conventional/Voluntary period - when it is agreed upon by
the parties.
 Judicial period - when it is fixed by the court.

c. according to definiteness:
 Definite period - when it is fixed and its exact date or time is
known.
 Indefinite period - when it is not fixed and its exact date or
time is unknown, but surely happen.

c. according to Expression:
Express- When the period is specifically stated.
Implied- When the period is not specifically stated but it can be
deduced that the parties intended a period just like when the
debtor binds himself to pay when his means permit him to do so.
Effect of Payment before the Period
•A thing or money given before the arrival of the
period may be recovered by the debtor:
 if he is unaware of such period.
 if he mistakenly thought that such period has
arrived.
•The debtor shall have the burden of proof of
either such circumstances, otherwise he is
presumed to be knowledgeable of the period.
•The creditor, for his part, has the obligation to
return the thing or money received under such
circumstances. This obligation arises from solutio
indebiti that prevents unjust enrichment.
Examples
 D is obliged to give C a book on June 30, 2020.
D is unaware of the period and prematurely
give it on May 30, 2020. In this case, D may
recover the cellphone from C who has the duty
to return it.

 D is obliged to pay C Php10,000 on June 30,

2020. D paid the amount to C on June 20,
2020, mistakenly believing that it was already
due. If before June 30, 2020, D may recover
the Php10,000 plus interests. If after June 30,
2020, D may only recover the interests.
3. ALTERNATIVE and FACULTATIVE
OBLIGATIONS

A.ALTERNATIVE OBLIGATION
An obligation which involves
multiple prestations (objects) that
are due but the performance of
one is sufficient.
Example:
X obliged himself to give his only
cell phone, or his only laptop, or
his only TV to Y on January 30,
2022. The delivery of either of
these objects will extinguish the
obligation of X.
D. ALTERNATIVE and FACULTATIVE
OBLIGATIONS

B. FACULTATIVE OBLIGATION
An obligation which involves a
principal prestation and a
substitute prestation.
Example:
X promised to give his only parcel of
land to Y. However, as a substitute, he
will deliver his only car.
Take note that the parcel of land is the
principal object and the car is the
substitute object. Delivery of any of
these objects will extinguish his
obligation.
4. JOINT and SOLIDARY OBLIGATIONS

A. JOINT OBLIGATION
where the whole obligation is to be paid
or fulfilled proportionately by the
different debtors and demanded
proportionately by the different
creditors. This is the presumption in all
collective obligation unless solidarity is
expressly stated.
Example:
Tin, Tina, Mau owed Jun P900,0000. There
are 3 debts and 1 credit, In the absence of
any agreement, the liability of Tin, Tina &
Mau is only 300K. (Each debtor is liable
only for a proportionate part of the entire
debt)
(In this example, the law presumes that
they are only jointly liable in the absence
of stipulation that they are solidary liable)
A and B are joint debtors of C, D,
E, and F, who are joint creditors to
the amount of P1,000,000. C may
demand only P500,000
from A, and P500,000 from B. D,
E, and F, have the same rights as C.
EFFECTS OF JOINT OBLIGATION
1.The defect of each obligation
arising from the personal defect
of a particular joint debtor or
joint creditor does not affect the
obligation or right of the other
joint parties.
2. Insolvency of one joint debtor
does not make the other joint
debtor/s responsible for his
proportionate share.
3. The demand by the creditor/s on
one joint debtor puts him in delay
in case of non-payment while the
other joint debtor/s are not liable.
4. The defenses of one joint debtor
are not necessarily available to the
other joint debtor or debtors.
OTHER TERMS INTERCHANGEABLY
USED WITH JOINT OBLIGATIONS
1.Joint or jointly
2.Conjoint
3.Pro rata obligation or
proportionate
B. SOLIDARY OBLIGATION
where each one of the
debtors is bound to render,
and/or each creditor has the
right to demand from any of
the debtors, the entire
compliance with the
prestation.
EFFECTS OF SOLIDARY
OBLIGATION
1.one of the several debtors can
be made liable for the payment
or the performance of the entire
obligation. (full payment by any
of the debtor extinguishes the
obligation)
2. one of the solidary creditors
can demand the payment or
performance of the entire
obligation from the debtor or any
of the debtors. (There is mutual
representation w/ power to
exercise the rights of others in the
same manner as their own rights)
OTHER TERMS INTERCHANGEABLY
USED WITH SOLIDARY
OBLIGATION
1.“JOINT AND SEVERAL or SEVERAL
2.IN SOLIDUM
3.MANCOMUNADA SOLIDARIA
4.INDIVIDUALLY AND
COLLECTIVELY
5. DIVISIBLE and INDIVISIBLE
OBLIGATION
DIVISIBLE OBLIGATION
an obligation the object of which
is capable of partial fulfillment

Example: Obligation to deliver

100 pcs watches of a particular
brand and quality
INDIVISIBLE OBLIGATION
an obligation the object of which is
not capable of partial fulfillment

Example: Obligation to deliver a

particular car
JOINT INDIVISIBLE OBLIGATION
The nature of the rights and
obligations of the parties are JOINT
and the nature of the object of the
obligation is INDIVISIBLE.
Example:
A and B promise to deliver a specific car to
X and Y.
Take note that their agreement is silent as
to whether it is joint or solidary; hence, it
is presumed to be joint. It is worthy to
note also that the object is a car, meaning,
it is an indivisible thing that is why all the
debtors should collectively perform their
respective obligations.
6. OBLIGATION WITH A
PENAL CLAUSE
an obligation which includes
an undertaking to pay a
stipulated indemnity in case
of breach of the principal
obligation
The penalty imposable is a
substitute for the indemnity for
damages and payment of interest
in case of breach of the
obligation, unless there is
contrary stipulation, in which
case, the additional damages may
further be recovered.
Example:
X promised to repair Y’s
building within 3 months.
They agreed that if X fails to
finish the repairs in 3
months, X will pay
P100,000.00 to Y. (penalty
clause)
Note: “ The nullity of the
penal clause does not carry
with it that of the principal
obligation. The nullity of
the principal obligation
carries with it that of the
penal clause.” (Article
1230 of Civil Code)
CHAPTER 4
 EXTINGUISHMENT OF
OBLIGATIONS ( Art. 1231)
(1) By payment or performance
(2) By the loss of the thing due
(3) By the condonation or remission of
the debt
(4) By the confusion or merger of the
rights of creditor and debtor
(5) By compensation
PAYMENT (Art. 1232)
It means not only delivery of MONEY but
also the PERFORMANCE, in any other
manner, of an obligation.
Hence, if the obligation is to give a specific
car, payment is made by delivering the thing.
If the obligation is to repair a computer,
payment is made by performing the service.
PLACE OF PAYMENT
1.At place agreed upon
2.If without agreement
a. Object is indeterminate– paid at
domicile of debtor
b. Object is determinate– place of
thing at the time of constitution of
obligation
Example:
A promised that he would paint
a portrait of B in exchange of
Php 100,000. A did and delivered
the portrait on time. A's
obligation here was extinguished
by performance.
B, in turn, has the obligation
to pay the Php 100,000 fee.
He issued a check in favor of
A. A encashed the same. B's
obligation here was
extinguished by payment.
Principle of Integrity (of
Payment)
General Rule: A debt shall not be
understood to have been paid
unless the thing or service in
which the obligation consists has
been delivered or rendered, as the
case may be. (Art. 1233)
Exceptions:
1. if the obligation has been
substantially performed in good
faith, the obligor (debtor) may
recover as though there had been
a strict and complete fulfillment,
less damages suffered by the
obligee(creditor). (this is referred as
substantial payment doctrine)
In their contract, X obliged himself
to manufacture and deliver 10
chairs for Y at P1,000 per chair.
However, due to lack of lumber
because of the recent ”super”
typhoon, X only manufactured 8
chairs and delivered to Y.
In this case, X is presumed to be in good
faith; Under the law, X can recover as
though there had been complete delivery
less the price of the 2 chairs, hence, he
can recover P8,000 (P1,000 x 8) or
(P10,000 (P1,000 x 10)- P2,000 (P1,000 x
2) only.
2. When the obligee (creditor) ACCEPTS
the performance, knowing its
incompleteness or irregularity, and
without expressing any protest or
objection, the obligation is deemed fully
complied with. (Art. 1235)
Example:
In their contract, X obliged himself
to manufacture and deliver 10
chairs for Y at P1,000 per chair.
However, X delivered only 9 chairs
but it was accepted by Y knowing it
is incomplete. Y paid P9,000. The
obligation of X is extinguished.
Take note:
A creditor is not bound to accept payment from
a third person (not the debtor) who has no
interest in the fulfillment of the obligation unless
there is a contrary stipulation. (Art 1236)
Whoever pays for another may demand from
the debtor what he has paid, EXCEPT that if he
paid WITHOUT the knowledge of the latter.
Example:
X owed Y P10,000. Z, a neighbor,
wants to pay the obligation of X.
In this case, Y is not bound to
accept the payment of Z because
he has no interest in the
fulfillment of the obligation.
(Note: Z is not a guarantor, a
pledgor nor a mortgagor.)
Nonetheless, if Y accepted the
payment of Z, the latter can
recover from X with interest. But
if the payment of Z is without the
knowledge of X or against his will,
then Z can recover only the
P10,000 based on the principle
of “unjust enrichment.”
Take note:
Whoever pays on behalf of the
debtor without the knowledge or
against the will of the latter,
cannot compel the creditor to
subrogate him in his rights, such
as those arising from a mortgage,
guaranty, or penalty. (Art. 1237)
X is the debtor of Y in the amount
of P100,000. This is secured by a
real estate mortgage over X’s
parcel of land. If Z, a third person,
paid the obligation of X without
the latter’s knowledge or against
his will then Z cannot foreclose
the mortgage in case of default of
the obligation by X.
Payment made by a third person
who does not intend to be
reimbursed by the debtor is
deemed a DONATION, which
requires debtor’s consent.
Payment made is valid as to the
creditor who has accepted it. (Art.
1238)
Z, a classmate of X, paid the latter’s
obligation to Y in the amount of
P3,000. Z intends that the payment
will be his gift to X by virtue of the
latter’s birthday two days ago. X
consented to this donation. In this,
the who has accepted it.
To whom payment be
made?
1.Person in whose favor the
obligation has been
constituted (creditor or
obligee)
2.His successor in interest; or
3.Any person authorized to
receive it.
General Rule:
Payment by an
incapacitated person is
not valid. (Art. 1239)
Exception:
A.Payment by minor who has
entered into a contract without
the consent of the parents or
guardian voluntarily pays a sum
of money or delivers a fungible
thing in fulfillment of the
obligation, there shall be no right
to recover the same from the
obligee (creditor) who has spent
or consumed it in good faith. (Art
1427)
B. Payment to a person who is
incapacitated to administer his
property if he has kept the thing
delivered, or insofar as the
payment has been beneficial to
him. (Art. 1241)
 FOUR (4) SPECIAL MODES OF
PAYMENT

A.APPLICATION OF PAYMENT (Art.

1252)
B.DATION IN PAYMENT (Art. 1245)
C.PAYMENT BY CESSION (Art. 1255)
D.TENDER OF PAYMENT &
CONSIGNATION (Art. 1256)
Application of payment is the
designation of the debt to which
should be applied the payment
made by a debtor who has various
debts of the same kind in favor of
one and the same creditor.
Requisites of application of payments.
(1) There must be one debtor and one
creditor;
(2) There must be two or more debts;
(3) The debts must be of the same kind;
(4) The debts to which payment made by
the debtor has been applied must be
due; and
(5) The payment made must not be
sufficient to cover all the debts.
Application as to debts not yet due.
THREE (3) RIGHTS TO MAKE APPLICATION
OF PAYMENT
1. Right belongs to CREDITOR
2. If debtor does not avail, creditor can
give him receipt designating the debt
from which payment will be applied.
3. If debtor accepts the receipt, he cannot
complain unless THERE IS just cause to
invalidate the contract.
DATION IN PAYMENT (Art. 1245)
A property is alienated to the creditor in
satisfaction of a debt in money.
The debtor offers another thing
to the creditor who accepts it as
equivalent of payment of an
outstanding debt. It partakes of
the nature of sale whereby
property is alienated to the
creditor in satisfaction of a debt
in money.
REQUISITES:
1. There must be a performance of the prestation in
lieu of payment which consists in the delivery of a
corporeal thing or real right or a credit against the
third person.
2. There must be some difference between the
prestation due and that which is given in
substitution, and
3. There must be an agreement between the creditor
and debtor that the obligation is immediately
extinguished by reason of the performance of
prestation different from that due.
ELEMENTS:
1. Existence of a money obligation;
2. The alienation to the creditor of a property by
the debtor with the consent of the former; and
3. Satisfaction of the money obligation of the
debtor
PAYMENT BY CESSION (Art.
1255)
It is the assignment
or abandonment of all the
properties of the debtor for the
benefit of his creditors in order
that the latter may sell the same
and apply the proceeds thereof to
the satisfaction of their credits.
Requisites:
a) there is plurality of debts;
b) there must be two or more
creditors;
c) partial or relative insolvency of the
debtor;
d) the assignment must involve all of
debtor's properties;
Example:
Leny is indebted to several creditors in the
total amount of P5 million. Her assets are
not sufficient to pay all her debts.
With the consent of her creditors, Leny
may assign property to them to be sold, to
satisfy their credits. If the net proceeds of
the sale amount only to P3 million, Leny is
still liable for the balance of P2 million
unless there is a stipulation that the
assignment shall be in full satisfaction of all
her debts.
DATION IN PAYMENT versus PAYMENT BY CESSION

1) In dation (see Art. 1245.), there is usually only one creditor,

while in cession, there are several creditors;
(2) Dation does not presuppose the insolvency of the debtor
or a situation of financial difficulties, while in cession, the
debtor is insolvent at the time of assignment;
(3) Dation does not involve all the property of the debtor,
while cession extends to all the property of the debtor
subject to execution;
(4) In dation, the creditor becomes the owner of the thing
given by the debtor, while in cession, the creditors only
acquire the right to sell the thing and apply the proceeds to
their credits pro rata; and
(5) Dation is really an act of novation (replacement of party)
(Art. 1291[1].), while cession is not an act of novation.
4. TENDER OF PAYMENT AND
CONSIGNATION
Tender of Payment
Is the definitive act of OFFERING the
creditor what is due him or her, together
with the demand that the creditor accept
the same.

Consignation is the act of depositing the

thing due with the Court or judicial
authorities whenever the creditor cannot
accept or refuses to accept payment, and
it generally requires a prior tender of
payment.
Requisites of Consignation
1. There was a debt due
2. The consignation of the obligation had been
made because the creditor to whom tender of
payment was made refused to accept it, or
because he/she was absent or incapacitated,
or because several persons claimed to be
entitled to receive the amount due or because
the title to the obligation had been lost;
3. Previous notice of the consignation had been
given to the person interested in the
performance of the obligation;
4. The amount due was placed at the disposal of
the court; and
5. After the consignation had been made, the
person interested was notified of the action.
LOSS OF THING DUE (Art. 1262)
1. Perishes, or
2. Goes out of commerce or
3. The thing disappears in a way that its
existence is unknown or CANNOT be recovered.

Requisites to free the obligor from liability:

•Obligation is a determinate thing
•Loss is w/o fault of the debtor
•Obligor is NOT in delay
•Obligor is NOT in bad faith
CONDONATION/ REMISSION (Art.
1270)
Condonation or remission is an act of
liberality where the creditor gives
up his right against the debtor,
either in whole or in part, resulting
in the extinguishment of the latter's
obligation. It is
essentially gratuitous and requires
the acceptance of the debtor.
REQUISITES OF A VALID
CONDONATION/ REMISSION
a) the debt must be existing and
demandable;
b) it must be gratuitous;
c) the debtor must accept the remission;
d) it must not be inofficious; and
e) if made expressly, it must conform with
the forms of donation.
CONFUSION/ MERGER (Art. 1275)
Confusion or merger is the meeting
in one person of the qualities of
creditor and debtor with respect to
the same obligation. It takes place
between the principal debtor and
creditor and the very same
obligation must be involved.
3 REQUISITES OF A VALID
CONFUSION/MERGER
1. The merger of characters of debtor and
creditor must be in same person.
2. Take place between principal debtor
and creditor
3. Clear and definite
A executed a promissory note
payable to B. B paid his debt to C
using the promissory note
executed by A. Turns out C has an
obligation to pay A. C then paid A
the promissory note executed by
the latter to B. Here the
obligation is extinguished because
it is absurd that A will enforce the
obligation against himself.
COMPENSATION (Art. 1279)
Compensation is defined as a mode
of extinguishing obligations whereby
two persons in their capacity as
principals are mutual debtors and
creditors of each other with respect
to equally liquidated and
demandable obligations to which no
retention or controversy has been
timely commenced and
communicated by third parties.
REQUISITES OF A VALID
COMPENSATION
1. Parties both principal debtors and
creditors of each other
2. Compensation is not prohibited by law.
3. No retention/controversy by 3rd person.
4. 2 debts are due & demandable
5. 2 debts are liquidated
6. 2 debts both in money/consumable
things
Example
A owes B 10M. B on another
occasion owes A 15M pesos.
B is liable to A with 5M.