OBLICON Reviewer

OBLICON Compilation (Lectures of Atty. Daryl Bretch M.
Largo with excerpt from Paras)

By: Migz Variacion
OBLIGATIONS AND CONTRACTS
CHAPTER 1
General Provisions
CONCEPT AND BIRTH OF OBLIGATIONS

Article 1156. An obligation is a juridical necessity to give, to do or not to do.
Art.1156 is a definition of civil obligation.
Four Elements of an OBLIGATION:

1. Active Subject – called the obligee or creditor; the possessor of a right; he in whose favour the
obligation is constituted.
2. Passive Subject – called the obligor or the debtor; he who has the duty of giving, doing, or not doing.
3. Object or Prestation – the subject matter of the obligation.
4. Efficient Cause / Juridical tie – the vinculum or the juridical tie; the reason why the obligation exists;
that which binds or connects the parties to obligation.
A prestation is an obligation; more specifically, it is the subject matter of an obligation – and may consist of
giving a thing, doing or not doing a certain act. In prestation, you cannot compel the obligor if he refuses to do
the obligation. Specific performance is not a remedy.
NOTE: The law speaks of an obligation as a juridical necessity to comply with a prestation. There is a juridical
necessity for non-compliance can result in juridical or legal sanction.
KINDS of OBLIGATIONS:
From the viewpoint of “sanction”:
1. Civil Obligation – the sanction is judicial process
2. Natural Obligation – the duty not to recover what has voluntarily been paid although payment was no
longer required. The essential element is ‘voluntariness”.
3. Moral Obligation – the sanction here is conscience or morality; or the law of the church.
Distinction between a Civil and Natural Obligation

Obligations which give to the creditor or oblige a right of action in courts of justice to enforce their
performance are known as civil obligations. They are to be distinguished from natural obligations which,
not being based on positive law but on equity and natural law, do not grant a right of action to enforce
their performance although in case of voluntary fulfillment by the debtor, the latter may not recover what
has been delivered or rendered by reason thereof.
From the viewpoint of “subject matter”:

1. Real Obligation – the obligation to give
2. Personal Obligation – the obligation to do or not do.
From the “affirmativeness and negativeness of the obligation”:

1. Positive or Affirmative Obligation – the obligation to give or to do
2. Negative Obligation – the obligation not do (which naturally includes “not to give”)
From the viewpoint of “persons obliged”:

1. Unilateral Obligation – where only one of the parties is bound. (NOTE: Every obligation has two
parties; if only one of them is bound, we have a unilateral obligation.)
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OBLICON Compilation (Lectures of Atty. Daryl Bretch M. Largo with excerpt from Paras)
By: Migz Variacion
2. Bilateral Obligation – where both parties are bound.
Two Kinds of Bilateral Obligation:
a. Reciprocal Obligation – the performance of an obligation is conditioned on the simultaneous
fulfillment of the other obligation.
b. Non-Reciprocal Obligation – where the performance by one is not dependent on the
performance by the other.
Form of obligation
1. As a general rule, the law does not require any form in obligation arising from contracts for their validity
or binding force.
2. Obligations arising from other sources do not have any form at all.
Obligation – is the act or performance which the law will enforce.

Right – is the power which a person has under the law, to demand from another any prestation.
Cause of Action (wrong) – an act or omission of one party in violation of the legal right or rights of another,
causing injury to the latter.
Essential elements of cause of action. Its essential elements are:

(a) a legal right in favor of a person (creditor/plaintiff) by whatever means and under whatever law it arises
or is created;
(b) a correlative legal obligation on the part of another (debtor/defendant) to respect of not to violate said
right; and
(c) an act or omission in breach or violation of said right by the defendant with consequential injury or
damage to the plaintiff for which he may maintain an action for the recovery of damages or other
appropriate relief.
Actions based upon a written contract should be brought within 10 years from the time the right of action
accrues. The period of prescription commences, not from the ate of execution of the contract but from the
occurrence of the breach.
Injury – is the illegal invasion of a legal right; it is the wrongful act or omission which causes loss or harm to
another; the legal wrong to be redressed.
Damage – is the loss, hurt, or harm which results from the injury; the recompenses or compensation awarded
or recoverable for the damage or loss suffered.
Damages – denote the sum of money recoverable as amends for the wrongful act or omission
SOURCES OF OBLIGATIONS
Article 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
FIVE SOURCES OF OBLIGATION:

1. Law – when they are imposed by the law itself, like the duty to pay taxes and to support one’s family.
2. Contracts – when they arise from the stipulation of the parties, like the duty to repay loan by virtue of
an agreement.
3. Quasi-Contracts – when they arise from lawful, voluntary and unilateral acts and which are
enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another,
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like the duty to refund an over change of money because of the quasi-contract of solutio indebiti or
undue payment.
4. Crimes or acts or omissions punished by law – when they arise from civil liability which is the
consequence of a criminal offense, like the duty to return a stolen carabao.
5. Quasi-Delicts or TORTS – 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, like the
duty to repair damage due to negligence.
Actually, there are only two (2) sources: law and contracts, because obligations arising from quasi-
contracts, crimes and quasi-delicts are really imposed by law.
NOTE: The enumeration by the law is exclusive; hence, no obligation exists if its source is not one of those
enumerated under Article 1157 of the New Civil Code of the Philippines.
I. LAW
Article 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in
special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to
what has not been foreseen, by the provisions of this Book.
OBLIGATION EX LEGE
Examples: 1) the duty to support (spousal support, 2) the duty to pay taxes
No agreement is necessary before obligation ex lege can arise, but of course the law steps in only because of
human actuations.
The law says “obligations derived from law are not presumed”. This means that the obligation must be clearly
(expressly or impliedly) set forth in the law (the Civil Code or Special Laws).
Civil Code versus Special Laws

If regarding an obligation ex lege, there is a conflict between the new Civil Code and a special law, the latter prevails
unless the contrary has been expressly stipulated in the new Civil Code.
Characteristics of Law as a source of obligation

1. It is independent of contract/agreement
2. It is not presumed (Pelayo vs Lauron)
Modes of acquiring ownership

1. Donations
2. Inheritance
3. Contracts
II. CONTRACTS
Article 1159. Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith.
and
Article 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service
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OBLIGATION EX-CONTRACTU
While obligations arising from contract have the force of law between the parties, this does not mean that
the law is inferior to contracts. This is because before a contract can be enforced, it must first be valid, and it cannot
be valid if it is against the law. Moreover, the right of the parties to stipulate is limited by law. Hence, Article 1306.
The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
As long as Article 1306 is complied with, the contract should be given effect, even if at the time it was
entered into, no legal provision exists governing it.
Art.1159 Obligations arising from contracts have the force of law and should be complied in good faith. A
law is deemed written in every contract (Maritime vs. Reparations)
NOTE: Neither party may unilaterally and upon his own exclusive volition, escape his obligation under the contrast,
unless the other party assented thereto, or unless for causes sufficient in law and pronounced adequate by a
competent tribunal.
“Compliance in Good Faith” – means that we must interpret “not by the letter that killeth but by the spirit that
giveth life.”
NOTE: In contracts where public interest is involved (as in the case of labor agreements), the government has a
right to intervene for the protection of the whole.
Obligation versus Contract

Obligation is the result of a contract or some other source. Hence, while a contract, if valid, always results in
obligation, not all obligations come from contracts.
A contract always presupposes a meeting of the minds; this is not necessarily true for all kinds of obligations.
Consensual contracts – contracts perfected by mere consent

Innominate Contracts – contracts that doesn’t have name (anchored on unjust enrichment)
a. Do ut des – I give that you may give
b. Do ut facias – I give that you may do
c. Facio ut des – I do that you may give
d. Facio ut facias – I do that you may do
III. QUASI-CONTRACTS
Article 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of
this Book.
Article 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the
end that no one shall be unjustly enriched or benefited at the expense of another. (n)
Article 2144. Whoever voluntarily takes charge of the agency or management of the business or property of
another, without any power from the latter, is obliged to continue the same until the termination of the affair and its
incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical
relation does not arise in either of these instances:
(1) When the property or business is not neglected or abandoned;
2) If in fact the manager has been tacitly authorized by the owner.
In the first case, the provisions of articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts
shall govern.
In the second case, the rules on agency in Title X of this Book shall be applicable.
Article 2154. If something is received when there is no right to demand it, and it was unduly delivered through
mistake, the obligation to return it arises.
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QUASI-CONTRACTS
A quasi-contract is that juridical relation resulting from a lawful, voluntary and unilateral act, and which has
for its purpose the payment of indemnity to the end that “no one shall be unjustly enriched or benefited at the
expense of another”. (Article 2142, NCC)
There is no ‘contract’ in quasi-contract.
Two Kinds of Quasi-Contract

1. Negotiorium Gestio (Unauthorized Management) – This takes place when a person voluntarily takes
charge of another’s abandoned business or property without the owner’s authority. Reimbursement must be
made to the gestor for necessary and useful expenses, as a rule.
Elements: Good faith and mistake
2. Solutio Indebiti (Undue Payment) – This takes place when something is received when there is no right to
demand it and it was unduly delivered thru mistake. The recipient has the duty to return it.
Elements: Mistake
Requisites for Solutio Indebiti:
a. He who paid was NOT under obligation to do so;
b. The payment was made by reason of an essential mistake of fact.
NOTE: A quasi-contract is NOT considered an implied contract because there is NO meeting of the minds in quasi-
contracts.
IV. DELICT
Article 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the
provisions of article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and
of Title XVIII of this Book, regulating damages.
Article 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from
the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the
same act or omission of the defendant.
Article 100 of RPC. Civil liability of a person guilty of felony. — Every person criminally liable for a felony is also
civilly liable.
Article 104 of RPC. What is included in civil liability. — The civil liability established in Articles 100, 101, 102, and
103 of this Code includes:
1. Restitution;
2. Reparation of the damage caused;
3. Indemnification for consequential damages.
A person who incurs a crime may incur 2 liabilities:

1. Criminal Liability – may be imprisonment, fine or both; and/or
2. Civil Liability – restitution, reparation, or indemnification
OBLIGATIONS EX DELICTO/EX MALEFICIO

Governing Rules:
1. Pertinent provisions of the Revised Penal Code and other penal laws, subject to the provisions of Article
2177 of the Civil Code;
2. Chapter 2, Preliminary Title, on Human Relations of the Civil Code;
3. Title 18 of Book VI of the Civil Code on Damages
BASIS:
Article 100 of the RPC states that, “Every person criminally liable for a felony is also civilly liable.” The
reason lies in the fact that oftentimes the commission of a crime causes not only moral evil but also material
damage. If no material damage is done, civil liability cannot be enforced.
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What Civil Liability Arising from a Crime Includes:
1. Restitution
2. Reparation of the damage caused
3. Indemnification for consequential damages
NOTE: Civil liability arising from a crime is not governed by the Civil Code but by Articles 100-111 of the Revised
Penal Code.
Effect of Acquittal in Criminal case to his Civil Liability:

1. If the reason why there was an acquittal was because the accused could not have committed the act, no civil
action can later on be brought.
2. If the reason for the acquittal was because of an exempting circumstance, he would still be civilly liable.
3. If there is an independent civil action allowed by the law, civil liability will arise if the action is instituted and
the defendant’s civil liability is proved by mere preponderance of evidence.
NOTE: Affidavits of Desistance such as an express pardon in private crimes after filing of the criminal case, do not
justify the dismissal of a criminal complaint.
NOTE: In criminal case, civil liability may be claimed even if there is no specific allegation of damages in the
information or complaint that has been filed.
A crime causes not only moral evil but also material damage.
A crime can cause social injury because a crime violates (1) peace and order, and (2) the law enacted by
the state.
Art.104 doesn’t apply to crimes such as gambling and traffic violations.
In the crime of estafa, the civil liability includes returning of the money (restitution) and indemnification.
V. QUASI-DELICT
Article 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of
this Book, and by special laws.
Article 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 pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this Chapter.
QUASI-DELICTS (Tort or Culpa Acquiliana)

A quasi-delict is a fault or act of negligence (or omission of care) which causes damages to another, there
being no pre-existing contractual relations between the parties.
Culpa Acquiliana (Quasi-Delicts) can refer to acts which are criminal in character, whether the same be
voluntary or negligent.
Negligence Defined
Negligence 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.
As defined in the Civil Code, negligence is the omission of the diligence which is required by the circumstances of
person, place, and time. Thus, negligence is a question of fact.
Requirement before a Person can be held Liable for Quasi-Delict (3):

1. There must be fault or negligence attributable to the person charged;
2. There must be damage or injury;
3. There must be a direct relation of cause and effect between the fault or negligence on the one hand and the
damage or injury on the other hand (proximate cause).
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PROXIMATE CAUSE – is that adequate and efficient cause, which in the natural order of events necessarily
produces the damages or injury complained of.
NOTE: There are instances when “although there is damage, there is no legal injury or wrong –
damage without legal injury.
When civil action is instituted: Elements of Forum shopping:

1. Waiver of institution of civil action 1. Same cause of action
2. Reservation to a separate civil action 2. Same parties
3. Filed ahead from criminal case 3. Same ‘damages’
4. When independent civil action is allowed
What to prove by prosecutors in a criminal case

1. Civil liability
2. Restitution, damages, whenever possible
Quantum of proof in relation to acquittal of a crime

1. Proof of guilt beyond reasonable doubt (criminal)
2. Clear and convincing evidence (extradition for special acts)
3. Preponderance of evidence (civil) – it requires weighing of evidence involve(which is heavier)
4. Substantial evidence (for administrative case) – can logically support a conclusion
In a case if there is NO strong evidence of proof beyond reasonable doubt, the basis for awarding of damages to
private complainant should be (if civil action is instituted) based on preponderance of evidence.
Instances where the extinction of criminal liability does not dissolve civil liability
1. Where acquittal is based on reasonable doubt
2. Court declares liability of the accused is only civil
3. Does not arise in the crime if the act is not committed, so civil liability is extinguished
CHAPTER 2
Nature and Effect of Obligations
I. COMPLIANCE WITH OBLIGATIONS
i. IN OBLIGATIONS TO GIVE
a. Specific Thing
Article 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be
of the same value as, or more valuable than that which is due.
Article 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by
article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that
the obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same
interest, he shall be responsible for any fortuitous event until he has effected the delivery.
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SPECIFIC OR DETERMINATE THINGS
A thing is said to be specific or determinate when it is capable of a particular designation.
GENERIC OR INDETERMINATE THINGS

A thing is generic or indeterminate when it refers only to a class, to a genus, and cannot be pointed out with
particularity.
Effect of Fortuitous Events

a. A specific obligation, that is, an obligation to deliver a specific thing is, as a rule, extinguished by a fortuitous
event or act of God.
b. Upon the other hand, generic obligations are never extinguished by fortuitous events.
Two Instances where Fortuitous Event does not exempt:

1. If the obligor delays
2. If the obligor is guilty of bad faith
Two obligations in Art.1165

1. Do not delay
2. Not to promise to 2 or more persons who do not have the same interest (there must be no bad faith)
ORDINARY DELAY versus DEFAULT (Legal Delay):

Ordinary Delay – this is merely non-performance at the stipulated time.
Default – is that delay which amounts to a virtual non-fulfillment of the obligation.
As a rule, to put a debtor in default, there must be a demand for fulfillment, the demand being either
judicial or extrajudicial.
Remedies of the Creditor when the Debtor Fails to Comply with his Obligation:
1. Demand specific performance or compliance of the obligation. This is true whether the obligation be generic
or specific.
2. Demand rescission or cancellation (in some cases).
3. Demand damages either with or without either of the first two (1 or 2).
NOTE: Mere pecuniary inability to pay does not discharge an obligation to pay, nor does it constitute any defense to
a decree for specific performance.
Article 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a
good father of a family, unless the law or the stipulation of the parties requires another standard of care.
Duty to Exercise Diligence

This Article deals with the first effect of an obligation to deliver a determinate thing (as distinguished from a
generic thing — or one of a class) — namely — the duty to exercise proper diligence. Unless diligence is exercised,
there is a danger that the property would be lost or destroyed, thus rendering illusory the obligation.
Diligence Needed
a. That which is required by the nature of the obligation and corresponds with the circumstances of person,
time, and place. (Art. 1173, Civil Code). This is really diligence of a good father of a family.
b. However, if the law or contract provides for a different standard of care, said law or stipulation must prevail.
(Art. 1163, Civil Code).
[Example of a case where the law requires extraordinary care (not merely that of a prudent man):
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“A common carrier is bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.”
(Art. 1755, Civil Code).]
Specific thing and generic thing distinguished.

(1) A determinate thing is identified with its individuality. The debtor cannot substitute it with another although
the latter is of the same kind and quality without the consent of the creditor.
(2) A generic thing is identified only by its specie. The debtor can give anything of the same class as long as it
is of the same kind.
Duties of debtor in obligation to give a determinate thing.

(1) To preserve or take care of the thing due;
(2) To deliver the fruits of the thing
(3) To deliver its accessions and accessories
(4) To deliver the thing itself
(5) To answer for damages in case of non-fulfillment or breach
Obligation to take care of the thing due

(1) Diligence of a good father of a family – ordinary care or that diligence which an average person exercises
over his own property
(2) Another standard of care – Example: A common carrier company engaged in the transportation of persons
and/or cargoes to carry them safely as far as human care and foresight can provide using extraordinary
diligence of very cautious persons. Another is the obligations of banks to treat the deposit accounts of their
depositors with the highest degree of care where the fiduciary nature of their relationship with their
depositors is concerned.
(3) Factors to be considered – as a general rule, the debtor is not liable if his failure to preserve the thing is not
due to his fault or negligence but to fortuitous events or force majeure.
(4) Reason for debtor’s obligation – without the accessory duty to take care of the thing, the debtor would be
able to afford being negligent and he could not be liable even if the property is lost or destroyed, thus
rendering illusory the obligation to give.
Duties of debtor in obligation to deliver a generic thing

(1) To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the
obligation and other circumstances
(2) To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation, or
contravention of the tenor
DUTY TO EXERCISE DILIGENCE

This is the first effect of an obligation – to deliver a determinate thing (as distinguished from a generic thing – or one
of a class) – namely – the duty to exercise proper diligence. Diligence Needed:
1. That which is required by the nature of the obligation and corresponds with the circumstances of person,
time, and place. This is really diligence of a good father of a family.
2. However, if the law or contract provides for a different standard of care, said law or stipulation must prevail.
Article 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.
WHAT THE OBLIGATION TO GIVE A DETERMINATE THING INCLUDES:

If I am obliged to deliver a determinate or particular thing, I must also give the accessories. If I am obliged
to deliver a land, I must give also the accessions (like the building constructed thereon). This true even if no
mention of them was made in the contract.
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ACCESSORIES – those joined to or included with the principal for the latter’s better use, perfection, or enjoyment.
Example: the keys to a house, the dishes in restaurant, machinery in a factory.
ACCESSIONS – additions or improvements upon a thing. These include alluvium and whatever is built, planted, or
sown on a person’s parcel of land. Examples are rents of a building, airconditioner in a car, profits accruing from
shares of stocks. The concept includes accession in its three forms of building, planting, and sowing, and accessuin
natural, such as alluvion, avulsion, change of course of rivers, and formation of islands.
NOTE: Accession is also used in the sense of a right. It includes the rights to the fruits and the right to the
accessory. It is one of the rights which go to make up dominion or ownership.
EFFECT OF STIPULATION:
Of course, if there is a stipulation to said effect, accessions and accessories do not have to be included.
Article 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises.
However, he shall acquire no real right over it until the same has been delivered to him.
Different kinds of fruits.

The fruits mentioned by the law refer to natural, industrial, and civil fruits.
Natural fruits – spontaneous products of the soil and animals, i.e. grass, all trees and plants without the
intervention of human labor
Industrial fruits – those produced by lands of any kind through cultivation or labor, i.e. rice, sugar cane, vegetables
Civil fruits – derived by virtue of juridical relations, i.e. rent of buildings, price of lease of land
WHEN CREDITOR IS ENTITLED TO THE FRUITS

Personal Right – is called “jus in personam” or “jus ad rem”; a personal right is power demandable by one person
of another – to give, to do, or not to do.
Real Right – is a “jus in re”; a real right is a power over a specific thing (as in ownership or possession) and is
binding on the whole world. It is the right or interest of a person over a specific thing (like ownership, possession)
without a definite passive subject against whom the right may be personally enforced.
NOTE: In the case of a purchase of land, for example, before the land is delivered, the proper remedy of the buyer
(since he is not yet the owner) is to compel specific performance and delivery and not an accion reivindicatoria (for
the latter presupposes ownership).
Kinds of Delivery
1. Actual Delivery (Tradition or Material Delivery) – where physically, the property changes hands.
2. Constructive Delivery – that where the physical transfer is implied. This is done by;
a. Symbolical Tradition – as when the keys of a bodega are given.
b. Delivery by Mere Consent or the Pointing Out of an Object
c. Delivery by Short Hand (Traditio Brevi Manu) – that kind of delivery whereby a possessor of a thing, not
as an owner, becomes the possessor as owner.
d. Opposite of Traditio Brevi Manu – the delivery, whereby a possessor of thing as an owner, retains
possession of the thing no longer as an owner, but in some other capacity.
e. Tradition by the Execution of Legal Forms and Solemnization – like the execution of a public instrument
selling land.
NOTE: The meaning of the phrase “he shall acquire no real right over it until the same has been delivered to him,” is
that the creditor does not become the owner until the specific thing has been delivered to him. Hence when there
has been no delivery yet, the proper action of the creditor is not one for recovery of possession and ownership but
one for specific performance or rescission of the obligation.
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When Does the Obligation to Deliver Arise?(Paras)
Answer: It depends.
a. If there is no term or condition, then from the perfection of the contract.
b. If there is a term or condition, then from the moment the term arrives or the condition happens.
When obligation to deliver arises (De Leon)

(1) Generally, the obligation to deliver the thing due and the fruits, if any, arises from the time of the perfection
of the contract. Perfection refers to the birth of the contract or to the meeting of the minds between the
parties
(2) If the obligation is subject to a suspensive condition or period, it arises upon fulfillment of the condition or
arrival of the period. However, parties may make a stipulation to the contrary as regards the right of the
creditor to the fruits of the thing
(3) In a contract of sale, the obligation arises from the perfection of the contract even if the obligation is subject
to a suspensive condition or a suspensive period where the price has been paid.
(4) In obligations to give arising from law, quasi-contracts, delicts and quasi-delicts, the time of performance is
determined by the specific provisions of law applicable
b. Generic Thing
Article 1246. When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and
circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the debtor
deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into
consideration.


particularity.

c. A specific obligation, that is, an obligation to deliver a specific thing is, as a rule, extinguished by a fortuitous
d. Upon the other hand, generic obligations are never extinguished by fortuitous events.


1. Do not delay
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or specific.
a decree for specific performance.
ii. IN OBLIGATIONS TO DO
Article 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be
of the same value as, or more valuable than that which is due.
Article 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost. (Positive
Personal Obligation – to do) 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.
Situations Contemplated in Art. 1167

1. The debtor fails to perform an obligation to do; or
2. The debtor performs an obligation to do but contrary to the terms thereof; or
3. The debtor performs an obligation to do but in a poor manner.
REMEDIES OF THE CREDITOR IF DEBTOR FAILS TO DO

1. To have the obligation performed (by himself or another) at the debtor’s expense (only if another can do the
performance;
2. Also to obtain damages. Damages alone cannot substitute for performance if owners can do it; if purely
personal or special, only damages may be asked, unless substitution is permitted.
When Thing may be Ordered Undone:

1. If made poorly – here performance by another and damages may be demanded.
2. If the obligation is a negative one – provided the undoing is possible.
Obligation to take care of the thing due

1. Diligence of a good father
2. Another standard of care
3. Factors to be considered
4. Reason for debtor’s obligation
Forms of Obligations
1. Obligation to deliver the same
2. Obligation not to delay
3. Obligation not to promise to 2 or more persons who don’t have the same interest
4. Obligation deliver the accessories and accessions
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5. Obligations to apply diligence of a good father
6. Obligation to pay damages in cause of delay/default
7. Obligation to deliver fruits starting from when the demand is made
8. Obligation to deliver a generic thing that is not superior nor inferior quality
9. Obligation to do
In case of a purchase of car and no delivery was made on the day of delivery and a demand is made, the proper
remedy is to compel specific performance as you don’t have yet the real right since it’s not in your possession.
Real right is binding to the whole world.
In civil law, DELIVERY is EQUIVALENT to transfer of ownership
Bar Question:
On November 20, 2013, S and B agreed to buy and sell the house and lot for $10M. Buyer said his lawyer
is not yet around. They agreed that the Deed of Absolute Sale will be done on November 26, 2013 (when lawyer
returns). But on November 23, 2013, there was a fire and House and lot was destroyed.
Question: Was the contract perfected? YES

Can seller ask for payment of $10M? No. Under the “Res Perit Domino” (the thing perishes with the owner), the
seller still owns the house and lot when there was a fire.
Public documents are documents duly notarized.

Real contracts must appear in a public document.
Delivery should be made when the demand arises.
iii. IN OBLIGATIONS NOT TO DO
Article 1168. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall
also be undone at his expense. (Negative Personal Obligation)
Remedies of the Creditor when the Debtor Violates Negative Personal Obligation:
1. The creditor can demand that the act be undone at the expense of the debtor if poorly made.
2. Plus Damages.
3. Demand that the act be undone if the act was contrary to the terms.
BREACH OF OBLIGATIONS AND GROUNDS FOR LIABILITY

Article 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.
GROUNDS FOR LIABILITY in the PERFORMANCE OF OBLIGATIONS:

1. Fraud (deceit or dolo) (intentional evasion of fulfillment)
a. Imply some kind of malice or dishonesty
b. Art.1170 refers to incidental fraud committed in the performance of an obligation already existing
because of a contract
c. Fraud is employed for the purpose of evading the normal fulfillment of an obligation and its existence
merely results in breach thereof giving rise to a right by the innocent party to recover damages
2. Negligence (fault or culpa) – voluntary act or omission, there being no malice, which prevents the normal
fulfillment of an obligation
3. Delay/ Default (or Mora) (if imputable to debtor)
4. Violation of the terms of the obligation (unless excused in proper cases by fortuitous events)
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NOTE: The following do not excuse fulfillment:
1. Increase in cost of performance;
2. Poverty;
3. War between the subject of neutral country and the subject of a country at war, as long as substantial
compliance can still be done.
Recovery of damages for breach of contract or obligation

Breach of contract – the failure without justifiable excuse to comply with the terms of a contract
The remedy serves to preserve the interests of the promisee that may include:
a. Expectation interest – which is interest in having the benefit of his bargain by being put in as good a position
as he would have been had the contract been performed
b. Reliance interest – which is his interest in being reimbursed for loss caused by reliance on the contract by
being put in as good a position as he would have been had the contract not been made
c. Restitution interest – which is his interest in having restored to him any benefit that he has conferred on the
other party
LABILITY FOR DAMAGES:

Those liable under Article 1170 should pay damages, but generally only if from the breach of contract, prejudice or
damage was caused. Damages should be paid by those responsible for them.
KINDS of DAMAGES: (M.E.N.T.A.L)

1. Moral Damages – for mental and physical anguish
2. Exemplary Damages – corrective or to set an example
3. Nominal Damages – to vindicate a right; when no other kind of damages may be recovered; the assessment
of which is left to the discretion of the court.
4. Temperate Damages – when the exact amount of damages cannot be determined
5. Actual Damages – actual losses as well as unrealized profit
6. Liquidated Damages – predetermined beforehand; by agreement
Damages in Monetary Obligation:

1. That agreed upon;
2. In the absence of agreement, the legal rate of interest. If a contract of simple loan stipulates the time when
the interest will be counted, said stipulated time controls.
Fraud and Negligence distinguished

1. In fraud, there is deliberate intention to cause damage or injury, while in negligence, there is no such
intention
2. Waiver of the liability for future fraud is void, while such waiver may, in a certain sense, be allowed in
negligence
3. Fraud must be clearly proved, mere preponderance of evidence not being sufficient, while negligence is
presumed from the breach of a contractual obligation
4. Liability for fraud cannot be mitigated by the courts, while liability for negligence may be reduced according
to circumstances
NOTE: Where the negligence shows bad faith or is so gross that it amounts to malice or wanton attitude on the part
of the defendant, the rules on fraud shall apply
WON after default, obligor still resolved to deliver obligation, is the obligor still liable for damages?
FACTS: X and Y entered into a contract where Y would deliver to X certain raw rattan materials for P200,000.00. X
is a manufacturer of rattan made furniture and has as his major customer, Sungold Furniture. X would deliver to
Sungold an average of 5 sets of furniture per month. The raw materials were to be delivered on March 10, 2013.
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However, Y failed to deliver on time and was only able to deliver on June 10, 2013 after X threatened to sue him in
court. Is Y still liable for damages?
Q: In case of breach and the obligor ‘fulfills’ the obligation after the breach, will the obligor be held liable for
damages just the same?
A: YES. For as long as there was ‘breach’. The injured party is entitled to ‘damages’ (nominal damages only
because there was no actual or substantial damages)
In relation to good faith, the damages shall be those that are the natural and probable consequences of the
breach of obligation and which parties have…
i. FRAUD
Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future
fraud is void.
Fraud – intentional perversion of truth in order to induce another

Kinds of Fraud
1. Fraud in obtaining consent
2. Fraud in performing an obligation (either causal fraud or incidental fraud)
3.
NOTE: This article refers to incidental fraud which is employed in the fulfillment of an obligation.
Fraud in obtaining a consent is covered by Art.1390 (Grounds for annulment of contract)
Distinction between Fraud Obtaining Consent and Fraud in Performing an Obligation

In obtaining consent, fraud makes the contract VOIDABLE. In performing an obligation, the contract is still
valid but is oblige to pay damages and continuation of the contract.
LIABILITY FOR FRAUD OR DOLO

According to time of commission, fraud may be:
1. PAST FRAUD – which may be waived
2. FUTURE FRAUD – which cannot be void; any stipulation thereto is void.
According to meaning, fraud may be:
a. FRAUD IN OBTAINING CONSENT – may be causal or merely incidental
b. FRAUD IN PERFORMING A CONTRACT –
(a) Causal Fraud
(b) Incidental fraud
NOTE: While causal fraud is so important, a fraud that vitiates consent (allowing therefore annulment), incidental
fraud is not important.
NOTE: Waiver of action for past fraud valid. What the law prohibits is waiver anterior to the fraud and to the
knowledge thereof by the aggrieved party.
Some Rules on Fraud

 Any waiver of an action for future fraud is void. Reason: Public Policy.
 Fraud is never presumed and must be established clear and convincing evidence
 Fraud, being a state of mind only, is ‘factual issue” (ergo, finding of facts of trial courts deserve respect if not
finality)
Bad faith (Samson vs. CA) – imports a dishonest purpose or some moral obliquity and conscious doing of wrong.
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Contract of Adhesion – a contract where one party asks the other party to sign the contract without negotiation or
option on forms and conditions.
ii. NEGLIGENCE
Article 1172. Responsibility arising from negligence in the performance of every kind of obligation is also
demandable, but such liability may be regulated by the courts, according to the circumstances.
Article 2201 (2). In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.
 As in fraud, it is demandable in any obligation

 But, it may be regulated by the courts according to the circumstances (Art.1172)
 Negligence consists in the “omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the person, of the time, and of the place (Art.1173)
 If there is bad faith, Art.1171 and Art.2201
Degrees of Negligence
1. Slight Negligence – failure to exercise great or extraordinary care
2. Ordinary Negligence – want of ordinary care and diligence
3. Gross Negligence – total absence of care or an absence of even slight care or diligence
What degree of diligence is required?

 That agreed upon by the parties (provided it is a valid agreement)
 If no stipulation, then that which is provided for by law
 If no provision of law governs, then that which is expected of a good father of the family (bonum pater familia
or ordinary diligence)
What is the diligence required of ‘common carriers’?

A common carrier is bound to carry the passengers safely as foremost care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the circumstances (EXTRAORDINARY
DILIGENCE).
Illustration 1: It has been recognized as a rule that the relation of carrier and passenger does not cease at the
moment the passenger alights from the carrier’s vehicle at a place selected by the carrier at the point of destination,
but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier’s
premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the
circumstances. (LA MALLORCA vs. CA)
Illustration 2: Duty to observe extraordinary diligence even extends to common carrier’s own employees. The duty
to exercise the utmost diligence on the part of common carriers is for the safety of the passengers as well as for the
members of the crew or the complement operating carrier, the airplane in the case at bar. And this must be so for
any omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to
all aboard the plane, passengers and crew members alike. (PHILIPPINE AIRLINES vs. CA)
Problem: You are a high-ranking official of Metrobank who handles the account of X. The cashier has approached
you because X’s wife wanted to encash a P10,000.00 personal check of X which is issued to “Cash” and purportedly
signed by X. This will leave a balance of P99,890,000.00 in X’s personal account if the check will be honored.
What is/are your bank’s obligation/s in this case? Why?
What is the diligence required of banks?

A bank is under obligation to treat the accounts of its depositors with meticulous care whether such account
consists only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the
performance of every kind of obligation is demandable. (PNB vs. CA)
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With banks, the degree of diligence required, contrary to the position of petitioner PNB, is more than that of a
good father of a family considering that the business of banking is imbued with public interest due to the nature of
their functions. The stability of banks largely depends on the confidence of the people in the honesty and efficiency
of banks. Thus, the law imposes on banks a high degree of obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of banking. (PNB vs. PIKE)
Contract of Carriage requires extraordinary diligence. Banks require meticulous care, that is more than that of a
good father of a family.
How is “negligence” determined?

The test in which to determine the existence of negligence in a particular case may be stated as follows: Did
the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence. (PICART vs. SMITH)
The test could a prudent man, in the position of the person to whom negligence is attributed, foresee harm
to the person injured as a reasonable consequence of the course actually pursued? If so, the law imposes a duty
on the actor to refrain from that course or to take precautions to guard against its mischievous results, and the
failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition
born of this provision, is always necessary before negligence can be held to exist. (PHILIPPINE NATIONAL
CONSTRUCTION CORP. vs.CA)
How is “diligence” or “prudence” determined?

The question as to what would constitute the conduct of a prudent man in a given situation must of course
be always determined in the (1) light of human experience and (2) in view of the facts involved in the particular case.
Is the personal judgment of the actor at the time of the situation being given a factor?
NO, The circumstance of negligence in a given case is not determined by reference to the personal
judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or
negligent in the man of ordinary intelligence and prudence and determines liability by that.
What should be considered?

Circumstances of the:
1. Person (common carrier, banks, professional driver or not, electric co., child of tender age, etc.)
2. Time (night time, daytime, rush hour, etc.)
3. Place (downhill, wet road, curve road, blind curve, school zone, populated, etc.)
4. Others (size of vehicle, appearance, speed, etc.)
But, negligence per se does not ipso facto make the actor liable
To be liable for negligence, it must be the PROXIMATE CAUSE of the damage cause!
Proximate cause is “that cause, which, in the natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have occurred.”
The rule is the same even if there are other efficient causes (say, negligence of the other party0, for as long
as the obligor’s act is the proximate cause!
Some Doctrines in Negligence Cases

Doctrine of Last Clear Chance
 The person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with
the consequences, without reference to the prior negligence of the other party. This applies when the
negligent acts of the two parties were not contemporaneous, but the negligence of one party succeeded that
of the other party by an appreciable interval. (PICART vs. SMITH)
Doctrine of Res Ipsa Loquitur

 “The thing speaks for itself”
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 “Where the thing which causes injury is shown to be under the management of the defendant, and the
accidents such as in the ordinary course of things does not happen if those who have the management use
proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the
accident arose from want of care.” (LAYUGAN vs. IAC)
 It is applied where there is no direct proof of negligence
Validity of waiver of action arising from negligence

1. An action for future negligence (not fraud) may be renounced except where the nature of the obligation
requires the exercise of extraordinary diligence as in he case of common carriers
2. Where negligence is gross or shows bad faith, it is considered equivalent to fraud. Bad faith does not
simply connoted negligence or bad judgment causing damages to another. Any waiver of an action for future
negligence of this kind, is therefore, void.
STIPULATIONS REGARDING NEGLIGENCE (Future Negligence)

RULE #1: GROSS Negligence can never be excused in advance for this would be contrary to public policy.
RULE #2: SIMPLE Negligence may in certain cases be excused or mitigated.
FRAUD versus NEGLIGENCE

FRAUD (DOLO) NEGLIGENCE (CULPA)
1. There is DELIBERATE intention 1. Although VOLUNTARY (that is, not done thru force),
to cause damage or prejudice. still there is NO deliberate intent to cause damage.
2. Liability arising from fraud or dolo 2. Liability due to negligence or culpa may
cannot be mitigated or reduced by courts. be reduced in certain cases.
3. Waiver of an action to enforce liability 3. Waiver of an action to enforce liability

due to future fraud is void. due to future culpa or negligence may in a certain sense
b be allowed.
Rule in Contracts of Adhesion:

There is greater freedom to stipulate on negligence if the parties are on equal plane, not where they are
obviously in unequal positions (CONTRACTS of ADHESION) such as in the case of employment or transportation
contracts.
NOTE: STIPULATIONS ON NEGLIGENCE must be strictly construed against the party stipulated in a higher or
more advantageous position.
KINDS of NEGLIGENCE (CULPA) – According to Source of Obligation

1. CULPA CONTRACTUAL – contractual negligence; or that which results in a breach of contract. It is not a source
of obligation but 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.
2. CULPA AQUILIANA – civil negligence; or tort; or quasi-delict. It is negligence by which itself is the source of an
obligation between the parties not formally bound before by ay pre-existing contract. A quasi-delict can be the
cause for breaching a contract that might thereby permit the application of governing principles of tort even when
there is a pre-existing contract between the parties.
3. CULPA CRIMINAL – criminal negligence; or that which results in the commission of a crime or delict. The same
negligent act causing damages may produce civil liability arising from a crime under Art.100 of the RPC or a civil
action for quasi-delict under Art.2176 of the Civil Code.
Nature of Liability of Employers

In Culpa Contractual – Primary
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In Culpa Aquiliana – Primary and Solidary
In Culpa Criminal - Subsidiary
Indispensable Allegations in Culpa Contractual for the Defendant:

CULPA CONTRACTUAL CULPA AQUILIANA CULPA CRIMINAL
1. Establish if there’s a contract 1. Establish no pre-existing con- 1. Establish negligence or malice by
between parties tractual obligation by the accused by proving of guilt
2. Establish if there’s a breach of 2. Establish omission of diligence beyond reasonable doubt
contract by (a) checking the dili- required(ordinary diligence)
gence and (b) check resulting 3. Check resulting damages
injury/damage (negligence is the proximate cause)
Defense of Principal (Employers)

1. That the agent(employee) was 1. That the agent was not performing 1. That agent is not negligent
not negligent an assigned task (ultra vires act) 2. That agent is not insolvent
2. The defense of due diligence 2. That the agent (employee) was not
In the selection and supervision negligent (Note: Contributory negligence on the
of employee (agent) is not a 3. If there was negligence, that part of the victim is not a defense!)
defense. It may only mitigate agent’s negligence was not the
but not avoid liability. We follow proximate cause
Respondent Superior or Com- 4. Assuming that the agent was neg-
mand Responsibility (the negli- ligent, that employer observed due
gence of the agent is presumably diligence in the selection and super-
the negligence of the principal vision of theagent
(proximate cause is not applicable
To culpa contractual)
Note in Culpa Aquiliana (Defense of Employer)

1. That when an injury is caused by the negligence of a servant or employee, there instantly arises a
presumption of law that there was negligence on the part of the master or employer, either in the selection of
the servant or employee, or in supervision over him after the selection or both; and
2. The presumption is juris tantum and not jure etde juris, and consequently may be rebutted. It follows
necessarily that if the employer shows to the satisfaction of the court that in selection and supervision, he
has exercised the care and diligence of a good father of a family. The presumption is overcome and he is
relieved from liability (RAMOS vs. PEPSI; BALIWAG TRANSIT vs. CA)
ISSUE 1: May an employer invoke the contributory negligence of another person (negligence of another as
proximate cause) in culpa contractual? NO.
CALALAS vs. CA. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions
involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation
between him and another party. In such a case, the obligation is created by law itself.
But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create
the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of
carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of
common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death
or injury to passengers.
ISSUE 2: Does a pre-existing contractual relation between the parties absolutely bar a cause of action for quasi-
delict? NO.
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VILUAN vs CA. it does not make any difference that the liability of petitioner springs from contract while that of
respondents arises from quasi-delict. As early as 1931, we already ruled in Gutierrez vs Gutierrez, 56 Phil 177, that
in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the
driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for
damages.
AIR FRANCE vs. CARRASCOSO. Although the relation of passenger and carrier is “contractual both in origin and
nature” nevertheless the act that breacks the contract may be also a tort.
ISSUE 3: May there be more than two (2) causes of actions arising from the same singular negligent act? YES.
ELCANO vs. HILL. Here is therefore a clear instance of the same act of negligence being a roper subject matter
either of a criminal action with its consequent civil liability arising from a crime or of an entirely separate and
independent civil action for fault or negligence under the Civil Code (see also: SANTOS vs. PIZARRO and VIRATA
vs. OCHOA)
ISSUE 4: Since the nature of negligence in culpa contractual is different from the negligence in culpa aquiliana
(quasi-delict), can one institute a civil case against different sets of defendants, one based on culpa contractual and
the other based on culpa aquiliana? YES.
METRO MANILA TRANSIT CORP. vs. CA. The owner of the other vehicle which collided with a common carrier is
solidarily liable to the injured passenger of the same. The same rule of liability was applied in situations where the
negligence of the driver of the bus on which plaintiff was riding concurred with the negligence of a third party who
was the driver of the another vehicle that caused the injuries/death.
ISSUE 5: Considering that determination of negligence is a factual issue, may negligence be established if there is
no direct evidence supporting this claim? YES.
MACALINAO vs.ONG. Res Ipsa Loquitur recognizes that parties may establish prima facie negligence without
direct proof, thus, it allows the principle to substitute for specific proof of negligence.
The doctrine can be invoked only when under the circumstances, direct evidence is absent and not readily
available.
ISSUE 6: Is it always the burden of the plaintiff to prove the allegations in culpa contractual? NO.
PHIL. RABBIT vs. IAC. In culpa contractual, the moment a passenger dies or injured, the carrier is presumed to
have been at fault or to have acted negligently, and this disputable presumption may only be overcome by evidence
that he had observed extraordinary diligence.

Negligence is merely incidental, Negligence here is direct, Negligence here is direct,
incident to the performance of substantive, and independent. substantive, and independent
an obligation already existing of a contract.
because of a contract.
There is a pre-existing There is NO pre-existing There is NO pre-existing

obligation (a contract, either obligation (except of course the obligation (except the duty not
express or implied). duty to be careful in all human to harm others).
actuations).
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Proof Needed – preponderance Proof Needed – preponderance Proof Needed in a Crime –
of evidence of evidence proof of guilt beyond
reasonable doubt
DEFENSE of GOOD Father of DEFENSE of GOOD Father of DEFENSE of GOOD Father of

a Family in the selection and a Family, etc., is a proper and a Family is not a proper
supervision of employees is complete defense (in so far as defense in culpa criminal. Here
NOT a proper complete employers or guardians are the employee’s guilt is
defense in culpa contractual concerned) in culpa aquiliana. automatically the employer’s
(though this may mitigate civil guilt, if the former is
damages). Here we follow the insolvent.
RULE of RESPONDEAT
SUPERIOR or Command
Responsibility or the Master
and Servant Rule.
As long as it is proved that Ordinarily, the victim has to Accused is presumed to be

there was a contract and that it prove the negligence of the innocent until the contrary is
was carried out, it is defendant. This is because his proved, so the prosecution has
PRESUMED that the debtor is action is based on alleged the burden of proving the
at fault, and it his duty to prove negligence on the part of the negligence of the accused.
that there was no negligence in contract.
carrying out the terms of the
defendant.
Under the MASTER and SERVANT RULE, the liability of the owner-operators is not subsidiary but direct
and immediate. The negligence of the servant in contractual obligations is the negligence of the master. The
MASTER and SERVANT RULE is also known as the DOCTRINE OF “RESPONDEAT SUPERIOR”. Under this rule,
the master, to escape liability, cannot put up the defense of a good father of a family in the selection and supervision
of employees (except to mitigate said liability, if this defense is duly proved).
NOTE: Negligence is a question depending upon the facts of each particular case; indeed, it is a question of fact.
Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When
negligence shows bad faith, the provisions of Articles 1171 (making the obligation demandable at once) and 2201,
paragraph 2 (the obligor shall be responsible for all damages which may be reasonably attributed to the non-
performance of the obligation) shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is expected
of a good father of a family shall be required.
Factors to be considered in Negligence

1. Nature of Obligation
2. Circumstances of the person
3. Circumstances of time
4. Circumstances of the place
DEGREES OF CULPA (Negligence) Under Roman Law:

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1. CULPA LATA – grave negligence
2. CULPA LEVIS – ordinary negligence
3. CULPA LEVISSIMA – slight negligence
Under the Roman Law:
a) If slight diligence is required, it is only grave negligence that will make the debtor liable.
b) If ordinary diligence is required, it is ordinary negligence that will make the debtor liable.
c) If great diligence is required, even slightest negligence will make the debtor liable.
NOTE: The classification above has not been followed in the Civil Code because today there are very many kinds or
degrees of diligence required.
KINDS OF DILIGENCE Under the CIVIL CODE:

1. That agreed upon by the parties
2. In the absence of any agreement, that required by law (particular provision)
3. In the absence of any law imposing the diligence required, that expected of a good father of a family (bonum
pater familia)
iii. DELAY
Article 1169. Those obliged to deliver or to do something incur in delay from the time the oblige judicially or
extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not
be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when
the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the
contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal
obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other
begins.
RULES TO PUT DEBTOR IN DEFAULT

General Rule:
To put a debtor in default, as a rule, DEMAND is needed.
Two Kinds of Demand:
1. Judicial Demand – as when a complaint for specific performance is filed.
2. Extrajudicial Demand – without court proceedings.
Exceptions:
When demand is not necessary to put debtor in demand:
1. When the law so provides
2. When the obligation expressly so provides
NOTE: The mere fixing of a period is not enough. There must be a provision that if payment is not made
when due, default or liability for damages or interests automatically arises.
3. When time is of the essence of the contract or when the fixing of time was the controlling motive for the
establishment of the contract.
NOTE: It is not necessary for the contract to categorically state that time is of the essence;
the intent is sufficient as long as that it is implied.
4. When demand would be useless, as when the obligor has rendered it beyond his power to perform.
5. When the obligor has expressly acknowledged that he really is in default.
NOTE: His mere asking of an extension of time is not an express acknowledgement of the
existence of default on his part.
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Ordinary delay – is merely the failure to perform an obligation on time
Legal delay or default or mora – is the failure to perform an obligation on time which failure, constitutes a breach
of obligation
Ordinary delay vs. Legal Delay (Default)

 The first refers to con-compliance of the obligation at the time the obligation becomes due and demandable;
while the latter requires not just ordinary delay, but DEMAND (judicial or extrajudicial) as well (as a general
rule).
Form of Demand
AEROSPACE CHEMICAL INDUSTRIES INC. vs. CA: …said letter of August 6th is not a categorical demand.
What is showed was a mere statement of fact, that “for your information any delay in Sulfuric acid withdrawal shall
cost us incremental expense of P2,000.00 per day.”… in contrast to the August letter, that of December 12 th was a
categorical demand.
When Demand is not Necessary Elements of Categorical Demand

1. Law 1. There should be a categorical declaration that demand is
2. Stipulation not necessary (i.e. “without need of prior demand”)
3. Time is of the essence 2. There should be a declaration that which demand, debtor is
4. Demand would be useless at default (i.e. “failure to pay this amount on this date..”)
5. Admitted by the party
PROBLEM: B bought a car from S on installment. In the contract, it was stipulated that in case of failure to pay at
least two (2) successive monthly installments, the buyer shall be liable to pay default charges of 25% of the balance
and shall entitle the seller to recover the car without need of court order. May S lawfully recover the car
extrajudicially in the event that B failed to pay two successive monthly installments?
BAYALA vs. SILANG TRAFFIC CO. The contract did not expressly provide that the failure of the purchaser to pay
any installment would give rise to forfeiture and cancellation without the necessity of any demand from the seller;
and under Art.1100 of the Civil Code persons obliged to deliver or do something are not in default until the moment
the creditor demands of them, judicially or extrajudicially the fulfillment of their obligation.
BRICKTOWN DEV’T. CORP. VS AMORTIERRA DEV’T. CORP. A grace period is a right, not an obligation, of the
debtor. When conditionally conferred, such as in this case, the grace period is effective without further need of
demand either calling for the payment of the obligation or for honoring the right. The grace period must not be
likened to an obligation, the non-payment of which, under Art.1169 of the Civil Code, would generally still require
judicial or extrajudicial demand before “default” can be said to arise.
Difference between BAYALA and BRICKTOWN

1. In BAYALA, demand was necessary. In BRICKTOWN, demand was not necessary.
2. In BRICKTOWN, there was a grace period given and still there was a non-performance of an obligation.
The grace period is given the nature of a demand in this case.
Requisites of Default
1. Obligation is DUE, ENFORCEABLE, and already determinate in amount (LIQUIDATED)
2. Non-performance
3. Demand has been made (General rule) which refers to the same obligation that is already due and
demandable
Certain contracts should be in writing (i.e. promise to perform an obligation to be done a year after)
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Effects of Default
1. Interest and Damages (compensatory)
2. Fortuitous event is not anymore a defense (Note: but if the obligation is ex-delicto, even fortuitous event is
not a defense in any case. It is the creditor’s default that may be considered a defense)
3. He bears the risk of loss (see. Aerospace Chemical industries, Inc. vs CA)
 Consider that in “reciprocal obligations” where there is no stipulation of the dates of performance of the
respective obligations, and the other party already performs the obligation incumbent upon him, the other
party becomes bound to perform his own obligation, otherwise, he becomes in default
 There is no default in negative obligations!
 Recession is one of the remedies in terms of non-performance
 In reciprocal obligations, it must be that the other party is (1) Ready, (2) Willing, and (3) Able to perform an
obligation
BINALBAGAN TECH, INC. vs. CA. A party to a contract cannot demand performance of the other party’s
obligations unless he is in a position to comply with his own obligations. Similarly, the right to rescind a contract can
be demanded only if a party thereto is ready, willing and able to comply with his own obligations thereunder. (See
also Tanguilig vs. CA & Vermen Realty vs. CA)
AGCAOILI vs. GSIS. An agreement for the sale of a house and lot on installments stipulating that the buyer must
occupy the house within a specified period under pain of cancellation if he failed to do so, must be construed as
imposing on the seller the obligation to deliver a reasonably habitable dwelling place. The seller’s delivery of a mere
shell of a house consisting of four walls, openings and a roof is a breach of said obligation which prevents him from
cancelling the sale on the ground of the purchaser’s suspension of payment of the amortizations that the latter had
undertaken to pay, it being axiomatic that “in reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner which is incumbent upon him.” (Art.1169 last paragraph)
Different Kinds of MORA (Default);
1. Mora Solvendi – default or the delay on the part of the debtor to fulfill his obligation by reason of a cause
imputable to him
a. Mora Solvendi Ex Re – debtor’s default in real obligations
b. Mora Solvendi Ex Persona – debtor’s default in personal obligations
2. Mora Accipiendi – default or the delay on the part of the creditor without justifiable reason to accept the
performance of the obligation
3. Compensatio Mora – when in reciprocal obligation both parties are in default; here it is as if neither is in
default. It is also the delay of the obligors in reciprocal obligations
Mora Solvendi (Default on the Part of the Debtor)

NOTE: There is no Mora Solvendi in negative obligations and in natural obligations. In an obligation not to do, non-
fulfillment may take place but delay is impossible for the debtor to fulfill by not doing what has been forbidden him.
Requisites:
1. The obligation must be due, enforceable, and already liquidated or determinate in amount.
2. There must be non-performance.
3. There must be a demand, unless the demand is not required.
NOTE: When demand is necessary, proof of it must be shown by the creditor.
4. The demand must be for the obligation that is due.
Effects of Mora Solvendi:

1. If the debtor is in default, he may be liable for interest or damages since he is guilty of breach of the
obligation.
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2. He may also have to bear the risk of loss. He is liable for interest in case of obligations to pay money or
damages in other obligations.
NOTE: In both cases (1 and 2), it is, however, essential that his being in default is attributable to his own fault.
3. He is liable even for a fortuitous event when the obligation is to deliver a determinate thing, although
damages here may be mitigated if he can prove that even if he had not been in default, loss would have
occurred just the same.
In an obligation to deliver a generic thing, the debtor is not relieved from liability for loss due to a fortuitous event.
He can still be compelled to deliver a thing of the same kind.
NOTE: In purchase by installments, default in the payment of one installment does not mean default in the whole
amount. If there is an acceleration clause, all that happens will be that the whole amount becomes due. And
demand is still necessary to put the debtor in default.
Mora Accipiendi (Default on the Part of the Creditor)

 Creditor may also be considered in default if he UNJUSTIFIABLY REFUSED TO ACCEPT THE PAYMENT
 This in effect releases the debtor of any adverse effects of his being declared in default
The effects are as follows:

1. The creditor is guilty of breach of obligation;
2. He is liable for damages suffered, if any, by the debtor;
3. He bears the risk of loss of the thing due;
4. Where the obligation is to pay money, the debtor is not liable for interest from the time of the creditor’s delay;
5. The debtor may release himself from the obligation by the consignation of the thing or sum due.
The creditor is guilty of default when he unjustifiably refuses to accept payment or performance at the time said
payment or performance can be done.
If an obligation arises ex delicto (as the result of a crime), the debtor-criminal is responsible for loss even though
this be through a fortuitous event, unless the creditor is in mora accipiendi. “When the debt of a thing certain and
determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price,
whatever may be the cause for the loss, unless the thing having been offered by him to the person who should
receive it, the latter refused without justification to accept it.”
Remedies of the Debtor-Criminal if Creditor is in Mora Accipiendi:

1. He must consign the thing to the court (expenses chargeable to the creditor; or
2. He can keep the thing to himself. In this instance, he should still exercise diligence and care, but this time, he
would not be liable for loss due to fortuitous event.
When demand not necessary to put debtor in delay

1. When the obligation so provides
2. When the law so provides
3. When time is of the essence, such as wedding gown for the wedding
4. When demand would be useless, such as when a specific thing is loss either by negligence or fortuitous
event
5. When there is performance by a party in reciprocal obligation
Reciprocal Obligations:
Reciprocal obligations depend upon each other for performance. For example, in SALE, the buyer must pay and
the seller must deliver. In here, performance may be set on different dates. If the performance is not set on different
dates, either by law, or contract, or custom, it is understood that performance must be simultaneous.
Hence, one party cannot demand performance by the other, if the former himself cannot perform. And when
neither has performed, there is compensation morae (default on the part of both parties, so it is as if no one is in
default). If one party performs, and the other does not, the latter world be in default.
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NOTE: In reciprocal obligations, default on the part of one begins only from the moment the other party fulfills what
is incumbent upon him or her.
When Damages or Interest May Be Lost:

A creditor entitled to damages or interest because of MORA may lose the same:
1. If the principal obligation is allowed to lapse by prescription;
2. If the damages or interest are allowed to prescribe;
3. If the damages or interest are condoned (waived or remitted).
NOTE: If a debt is not paid at the stipulated period, INTEREST (as damages) should be charged not from the date
of maturity but from the time the judicial action is filed, in case no extrajudicial demand was made.
NOTE: A debtor who incurs in delay or default is liable for damages plus interest, generally from extrajudicial
demand or judicial demand in the form of interest.


particularity.

e. A specific obligation, that is, an obligation to deliver a specific thing is, as a rule, extinguished by a fortuitous
f. Upon the other hand, generic obligations are never extinguished by fortuitous events.


3. Do not delay

or specific.
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a decree for specific performance
iv. CONTRAVENTION OF TENOR OF OBLIGATIONS

Article 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.
GROUNDS FOR LIABILITY in the PERFORMANCE OF OBLIGATIONS:

2. Fraud (deceit or dolo) (intentional evasion of fulfillment)
d. Imply some kind of malice or dishonesty
e. Art.1170 refers to incidental fraud committed in the performance of an obligation already existing
because of a contract
f. Fraud is employed for the purpose of evading the normal fulfillment of an obligation and its existence
merely results in breach thereof giving rise to a right by the innocent party to recover damages
2. Negligence (fault or culpa) – voluntary act or omission, there being no malice, which prevents the normal
fulfillment of an obligation
3. Delay/ Default (or Mora) (if imputable to debtor)
4. Violation of the terms of the obligation (unless excused in proper cases by fortuitous events)
NOTE: The following do not excuse fulfillment:

4. Increase in cost of performance;
5. Poverty;
6. War between the subject of neutral country and the subject of a country at war, as long as substantial
compliance can still be done.
Recovery of damages for breach of contract or obligation

Breach of contract – the failure without justifiable excuse to comply with the terms of a contract
The remedy serves to preserve the interests of the promisee that may include:
d. Expectation interest – which is interest in having the benefit of his bargain by being put in as good a position
as he would have been had the contract been performed
e. Reliance interest – which is his interest in being reimbursed for loss caused by reliance on the contract by
being put in as good a position as he would have been had the contract not been made
f. Restitution interest – which is his interest in having restored to him any benefit that he has conferred on the
other party
LABILITY FOR DAMAGES:

Those liable under Article 1170 should pay damages, but generally only if from the breach of contract, prejudice or
damage was caused. Damages should be paid by those responsible for them.
KINDS of DAMAGES: (M.E.N.T.A.L)

7. Moral Damages – for mental and physical anguish
8. Exemplary Damages – corrective or to set an example
9. Nominal Damages – to vindicate a right; when no other kind of damages may be recovered; the assessment
of which is left to the discretion of the court.
10. Temperate Damages – when the exact amount of damages cannot be determined
11. Actual Damages – actual losses as well as unrealized profit
12. Liquidated Damages – predetermined beforehand; by agreement
Damages in Monetary Obligation:

3. That agreed upon;
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4. In the absence of agreement, the legal rate of interest. If a contract of simple loan stipulates the time when
the interest will be counted, said stipulated time controls.
Fraud and Negligence distinguished

5. In fraud, there is deliberate intention to cause damage or injury, while in negligence, there is no such
intention
6. Waiver of the liability for future fraud is void, while such waiver may, in a certain sense, be allowed in
negligence
7. Fraud must be clearly proved, mere preponderance of evidence not being sufficient, while negligence is
presumed from the breach of a contractual obligation
8. Liability for fraud cannot be mitigated by the courts, while liability for negligence may be reduced according
to circumstances
NOTE: Where the negligence shows bad faith or is so gross that it amounts to malice or wanton attitude on the part
of the defendant, the rules on fraud shall apply
WON after default, obligor still resolved to deliver obligation, is the obligor still liable for damages?
FACTS: X and Y entered into a contract where Y would deliver to X certain raw rattan materials for P200,000.00. X
is a manufacturer of rattan made furniture and has as his major customer, Sungold Furniture. X would deliver to
Sungold an average of 5 sets of furniture per month. The raw materials were to be delivered on March 10, 2013.
However, Y failed to deliver on time and was only able to deliver on June 10, 2013 after X threatened to sue him in
court. Is Y still liable for damages?
Q: In case of breach and the obligor ‘fulfills’ the obligation after the breach, will the obligor be held liable for
damages just the same?
A: YES. For as long as there was ‘breach’. The injured party is entitled to ‘damages’ (nominal damages only
because there was no actual or substantial damages)
In relation to good faith, the damages shall be those that are the natural and probable consequences of the
breach of obligation and which parties have…
3. EFFECTS OF FORTUITOUS EVENTS IN OBLIGATIONS

Article 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 - any extraordinary event which cannot be foreseen, or which, though foreseen, is inevitable. It is
an event which is either impossible to foresee or impossible to avoid. The essence of a fortuitous event consists of
being a happening independent of the will of the obligor and which happening, makes the normal fulfillment of the
obligation impossible.
Acts of Man – fortuitous event is an event independent of the will of the obligor but not of other human wills like war,
fire, robbery, murder, insurrection, etc.
Acts of God (force majeure) – They are those events which are totally independent of the will of every human
being like earthquake, flood, rain, shipwreck, lightning, eruption of volcano. The term generally applies to a natural
accident.
ELEMENTS (Largo):
(1) The cause of the unforeseen and unexpected occurrence or of the failure of the debtor to comply with his
obligation, must be independent of the human will
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(2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must
be impossible to avoid
(3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal
manner
(4) The obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the
creditor
NOTE: In order for a fortuitous event to exempt one from liability, it is necessary that one has committed no
negligence or misconduct that may have occasioned the loss. An act of God cannot be invoked to protect a
person who has failed to take steps to forestall the possible adverse consequences of such a loss. One’s
negligence may have concurred with an act of God in producing damage and injury to another; nonetheless,
showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt
one from liability.
In our law, fortuitous events and force majeure are identical in so far as they exempt an obligor from liability.
FORCE MAJEURE
Like war or armed robbery; but if the war had already broken out before the contract was entered into, the
war cannot be considered unforeseen.
Kinds of Fortuitous events

1. Ordinary fortuitous events – those events which are common and which the contracting parties could
reasonably foresee (e.g. rain)
2. Extraordinary fortuitous events – those events which are uncommon and which the contracting parties
could not have reasonably foreseen (e.g. earthquake, fire, war, pestilence, unusual flood)
Essential Characteristics / Requisites of a fortuitous event. Whether an act of man or an act of God, to
constitute 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 character as to render it impossible for the obligor to comply with his obligation in
a normal manner
4. The obligor must be free from any participation in, or the aggravation of the injury of the obligee.
There must be no concurrent or previous negligence or imprudence on the part of the obligor by which the loss
or injury may have been occasioned. When the effect is found to be in part the result of the participation of man,
whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and
removed from the rules applicable to the acts of God.
In other words, in order to exempt from liability arising from a fortuitous event, there should have been no human
participation amounting to a negligent act.
RULES AS TO LIABILITY IN CASE OF FORTUITOUS EVENTS

General Rule: No liability for fortuitous event (caso fortuito) (that which could not be foreseen, or that which even if
foreseen, was inevitable). Obligor is not liable!
Exceptions: The debtor is responsible for fortuitous event in the following cases:
1. When expressly declared by law (such as when the possessor is in bad faith (Art. 552 of the Civil Code or is
in default Art. 1165 of the Civil Code) – In exceptions (a), (b), and (c) below, the special strictness of the law
is justified
(a) The debtor is guilty of fraud, negligence, or delay, or contravention of the tenor of the obligation
(Art.1170, Art.1165.par.3)
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(b) The debtor has promised to deliver the same (specific0 thing to two or more persons who do not
have the same interest for it would be impossible for the debtor to comply with his obligation to two
or more creditors even without any fortuitous event taking place
(c) The debt of a thing rtain and determinate proceeds from a criminal offense, unless the thing having
been offered by the debtor to the person who should receive it, the latter refused without justification
to accept it (Art.1268)
(d) The thing to be delivered is generic (Art.1263) for the debtor can still comply with his obligation by
delivering another thing of the same kind in accordance with the principle that “genus never perishes
“ (genus nunquam perit)
2. When expressly declared by stipulation or contract – (Art.1306) 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. But the intention to make the debtor liable even in ase of a fortuitous event
should be clearly expressed.
3. When the nature of the obligation requires the assumption of risk. (DOCTRINE OF CREATED RISK)
4. Generic Thing
Impossibility of performance must result from occurrence of fortuitous event.

It should be pointed out that for the purpose of releasing the debtor from his obligation, the occurrence of the
fortuitous event does not suffi ce. The impossibility of fulfi lling the obligation must be the direct consequence of the
event. If notwithstanding its occurrence, the obligation can be fulfilled, it will subsist even if only in part.
In order to see whether or not the fortuitous event produces the impossibility of fulfilling the obligation, the
nature of the obligation must be considered, and according to whether it be specific or general, etc., it will or will not
be extinguished.
Effect of obligor’s negligence upon his liability.

1. Negligence contributed to the loss or damage. — In order that fortuitous event may release a debtor from his
obligation, it is necessary that he be free from previous negligence or misconduct by which the loss or
damage may have been occasioned. When the negligence of a person concurs with a fortuitous event in
producing a loss, he is not exempted from liability by showing that the immediate cause of the damage was
the fortuitous event.
a) Otherwise stated, in order to completely exonerate the debtor by reason of a fortuitous event, such
debtor must, in addition to the casus itself, be free of any concurrent or contributory fault or
negligence. This is apparent from Article 1170. Thus, one who has placed property of another,
entrusted to his care, in an unseaworthy vessel, upon dangerous waters, cannot absolve himself by
crying, “an act of God” when every effect which a typhoon produced upon that property could have
been avoided by the exercise of common care and prudence.
b) (b) Where the loss is caused by an “act of God,” “if the negligence of the [defendant] mingles with it
as an active and cooperative cause, he is still responsible.” (Ibid.) Stated differently, one who
negligently creates a dangerous condition cannot escape liability for the natural and probable
consequences thereof, although the act of a third person, or an act of God for which he is not
responsible, intervenes to precipitate the loss.
2. Negligence not contributory to the loss or damage. — But where both fortuitous event and lack of due
diligence are present under conditions that the loss would have happened with or without the negligence of
the obligor — hence, the consequences are all a derivation of the fortuitous event — it cannot be said that
responsibility arises therefrom. (Ibid.; see 8 Manresa 94-95.) In such a case, however, the courts are not
bound to discharge the obligor from all liability. Under the law (Art. 2215[4].), where “the loss would have
resulted in any event,” they “may equitably mitigate the damages” which in view of the circumstances the
obligor should pay.
Concept of FORTUITOUS EVENT (as an ACT of GOD)

To exempt the obligor from liability for a breach of an obligation due to “ACT of GOD’, the following must concur:
(ESSENTIAL CHARACTERISTICS OF FORTUITOUS EVENT)
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1. The cause of the breach of the obligation must be independent of the will of the debtor;
2. The event must be either unforeseeable or unavoidable;
3. The event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner;
4. The debtor must be free from any participation in, or aggravation of, the injury to the creditor. An ACT OF
GOD is an accident, due directly and exclusively to natural causes without human intervention, which by no
amount of foresight, pains of care, reasonably to have been expected, could have prevented.
Effects where risk not one impossible to foresee

1. Where the risk is quite evident such that the possibility of danger is not only foreseeable, but actually
foreseen, then it could be said that the nature of the obligation in such that a party could rightfully be
deemed to have assumed it. The event must be one impossible to foresee or to avoid in order that a party
may not be said to have assumed the risk resulting from the nature of the obligation itself
2. Mere difficulty to foresee the happening of an event is different from impossibility to foresee or anticipate the
same
NOTE: One who negligently creates a dangerous condition cannot escape liability for the natural and probable
consequence thereof, although the act of a third person, or an act of God for which he is not responsible, intervenes
to precipitate the loss.
RULES IN CASE OF COMBINATION OF FORTUITOUS EVENT AND NEGLIGENCE (on the part
of the debtor):
Rule #1: If the fortuitous event was the proximate cause, the obligation is extinguished.
Rule #2: If the negligence was the proximate cause, the obligation is NOT extinguished. It is converted into a
monetary obligation for damages.
Examples of Fortuitous events

Floods, Torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections, destruction of buildings by
unforeseen accidents and other occurrences of a similar nature (Escriche)
(1) by nature: such as earthquakes, storms, floods, epidemics, fires, etc., and (2) by the act of man: such as
an armed invasion, attack by bandits, governmental prohibitions, robbery, etc.” (Tolentino)
Instances where there is Fortuitous Event

1. Robbery. Where it can be established that it was indeed unforeseen)
AUSTRIA vs. CA. The Supreme Court said: the emphasis of the provision (Art.1174) is on the events, not
on the agents or factors responsible for them. To avail of the exemption granted in the law, it is not
necessary that the persons responsible for the occurrence should be found or punished.
2. Typhoon. Where it wasn’t established by clear evidence by plaintiff that the school building’s structure was
really defective (Southwestern College, Inc. vs. CA)
3. Burning of thing by unidentified person (Mindex Resources vs. Morillo)
Instances where there is NO FORTUITOUS EVENT

1. Mechanical defect of vehicle: defective breaks; negligence of driver (Lasam; Tugade)
2. Knowing and appreciating the perils posed by the swollen stream and its swift current, voluntarily entered
into a situation involving obvious danger (if therefore assumed the risk, and can not shed responsibility
merely because the precautions if adopted turned out to be insufficient.) “The mere difficulty to foresee the
same” (Republic vs. Luzon Stevedoring)
3. Mechanical defect in Video Tape Recorder (Herbosa vs. CA)
4. Operator of a tugboat immediately left the barge (without engine of its own) at the wharf despite the looming
bad weather. (FGU Insurance vs. CA)
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5. Leaving a heavily loaded barge floating for a considerable number of hours, at such a precarious time, and
in the open sea, knowing that the barge does not have any power of its own and is totally defenseless from
the ravages of the sea (Schmitz)
4. USURIOUS TRANSACTIONS: INTERESTS
Article 1175. Usurious transactions shall be governed by special laws.
Article 1956. No interest shall be due unless it has been expressly stipulated in writing. (1755a)
Article 1957. Contracts and stipulations, under any cloak or device whatever, intended to circumvent the laws
against usury shall be void. The borrower may recover in accordance with the laws on usury. (n)
Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
(1255a)
USURY, defined:
It is contracting for or receiving something in excess of the amount allowed by law for the loan or use of money,
goods, chattels, or credits. In other words, usury is the exaction excessive interest.
TWO KINDS OF INTEREST:

1. Moratory Interest – for the use of money
2. Compensatory Interest – interest given by way of damages; it compensates the damage caused.
NOTE; Interest will now depend on the mutual agreement of the borrower and lender.
5. PRESUMPTIONS
Article 1176. The receipt of the principal by the creditor without reservation with respect to the interest, shall give
rise to the presumption that said interest has been paid.
The receipt of a later installment of a debt without reservation as to prior installments, shall likewise
raise the presumption that such installments have been paid.
Receipt of Principal without Reservation as to Interest:

It shall give rise to the presumption that said interest has been paid already. This is because under Article 1253 of
the Civil Code, payment of the interest as a rule precedes payment of the principal. Of course, Article 1176
establishes merely rebuttable, not a conclusive presumption.
Receipt of a Later Installment:

It shall give rise to the presumption that earlier installments have already been paid. For example, if a creditor
receives the fourth installment of a debt, it is under stood that the first three installments have been paid.
For the presumption to apply, it is not enough that the receipt for the installment paid be dated; it
must also specify that the receipt is for the payment of a particular installment due, for example, for a
certain month.
6. REMEDIES OF CREDITORS FOR BREACH OF OBLIGATIONS
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Article 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims,
may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent
in his person; they may also impugn the acts which the debtor may have done to defraud them.
RIGHTS OF CREDITORS:
1. Exact payment
2. Exhaust debtor’s property, generally by attachment (except properties exempted by the law)
3. Subrogatory Action – to exercise all rights and actions except those inherent in the person
Examples of Rights Inherent in the person of the Debtor which therefore cannot be exercised by the Creditors:
a. The right to existence (thereby, exempting from the reach of creditors, whatever he may be receiving as support)
b. Rights or Relations of a Public Character (like positions in the government)
c. Rights of an Honorary Character like a doctor’s degree.
d. Rights pertaining to the affairs of the home and of the family
e. Rights granted by law only to the debtor such as the action to revoke a donation on the ground of ingratitude
f. Right to appear in court proceedings.
4. Accion Pauliana – impugn or rescind acts or contracts done by the debtor to defraud creditors.
Extent of Debtor’s Liability:

The debtor is liable with all his property, present and future, for the fulfilment of his obligations subject to exemptions
provided by law.
Article 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no
stipulation to the contrary.
RULES ON TRANSMISSIBLITY OF RIGHTS:

General Rule: Rights are transmissible.
Exceptions: When rights are not transmissible:
1. If the law provides otherwise;
2. If the contract provides otherwise;
3. If the obligation is purely personal.
NOTE: Instransmissibility by contractual stipulation, being the exception to the rule, must be clearly proved.
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OBLICON Compilation (Lectures of Atty. Daryl Bretch M.

Largo with excerpt from Paras)

CONCEPT AND BIRTH OF OBLIGATIONS

Art.1156 is a definition of civil obligation.

Four Elements of an OBLIGATION:

Distinction between a Civil and Natural Obligation

From the viewpoint of “subject matter”:

From the “affirmativeness and negativeness of the obligation”:

From the viewpoint of “persons obliged”:

Obligation – is the act or performance which the law will enforce.

Essential elements of cause of action. Its essential elements are:

FIVE SOURCES OF OBLIGATION:

Civil Code versus Special Laws

Characteristics of Law as a source of obligation

Modes of acquiring ownership

Obligation versus Contract

Consensual contracts – contracts perfected by mere consent

Two Kinds of Quasi-Contract

A person who incurs a crime may incur 2 liabilities:

OBLIGATIONS EX DELICTO/EX MALEFICIO

Effect of Acquittal in Criminal case to his Civil Liability:

QUASI-DELICTS (Tort or Culpa Acquiliana)

Requirement before a Person can be held Liable for Quasi-Delict (3):

When civil action is instituted: Elements of Forum shopping:

What to prove by prosecutors in a criminal case

Quantum of proof in relation to acquittal of a crime

I. COMPLIANCE WITH OBLIGATIONS

GENERIC OR INDETERMINATE THINGS

Effect of Fortuitous Events

Two Instances where Fortuitous Event does not exempt:

Two obligations in Art.1165

ORDINARY DELAY versus DEFAULT (Legal Delay):

Duty to Exercise Diligence

Specific thing and generic thing distinguished.

Duties of debtor in obligation to give a determinate thing.

Obligation to take care of the thing due

Duties of debtor in obligation to deliver a generic thing

DUTY TO EXERCISE DILIGENCE

WHAT THE OBLIGATION TO GIVE A DETERMINATE THING INCLUDES:

Different kinds of fruits.

WHEN CREDITOR IS ENTITLED TO THE FRUITS

When obligation to deliver arises (De Leon)

SPECIFIC OR DETERMINATE THINGS

GENERIC OR INDETERMINATE THINGS

Effect of Fortuitous Events

Two Instances where Fortuitous Event does not exempt:

Two obligations in Art.1165

Situations Contemplated in Art. 1167

REMEDIES OF THE CREDITOR IF DEBTOR FAILS TO DO

When Thing may be Ordered Undone:

Obligation to take care of the thing due

Question: Was the contract perfected? YES

Public documents are documents duly notarized.

iii. IN OBLIGATIONS NOT TO DO

BREACH OF OBLIGATIONS AND GROUNDS FOR LIABILITY

GROUNDS FOR LIABILITY in the PERFORMANCE OF OBLIGATIONS:

Recovery of damages for breach of contract or obligation

LABILITY FOR DAMAGES:

KINDS of DAMAGES: (M.E.N.T.A.L)

Damages in Monetary Obligation:

Fraud and Negligence distinguished

Fraud – intentional perversion of truth in order to induce another

Fraud in obtaining a consent is covered by Art.1390 (Grounds for annulment of contract)