Obligations and Contracts: San Beda College of Law

San Beda College of Law
85
MEMORY AID IN CIVIL LAW
OBLIGATIONS AND CONTRACTS
I. OBLIGATIONS
OBLIGATION
A juridical necessity to give, to do,
or not to do (Article 1156), one
impressed with the character of
enforceability.
Requisites:
a. juridical or legal tie or efficient
cause
b. active subject (obligee or
creditor)
c. passive subject (obligor or
debtor)
d. fact, prestation or service
constituting the object of the
obligation
Requisites:
i) it must be licit
ii) it must be possible,
physically juridically
iii) it must be determinate or
determinable
iv) it must have a possible
e!uivalent in money
Sources (Article 1157):
1. "aw
#. $ontracts
%. &uasi'contracts
(. )elicts
5. &uasi'delicts
QASI!CONTRACTS
*hose juridical relations arising from
lawful, voluntary and unilateral acts,
by virtue of which the parties
become bound to each other, based
on the principle that no one shall be
unjustly enriched or benefited at the
e+pense of another.
"ri#ci$%l &i#'s o( Qu%si!co#tr%cts:
1. Negotiorum gestio ' arises whenever
a person voluntarily ta,es charge of
the agency or management of the
business or property of another
without any power or authority from
the latter.
#. Solutio indebiti ' arises whenever a
person unduly delivers a thing
through mista,e to another who has no
right to demand it.
QASI!D)LICTS
An act or omission by a person
(tortfeasor) which causes damage to
another giving rise to an obligation
to pay for the damage done, there
being fault or negligence but there is
no pre'e+isting contractual relation
between the parties (Article #1-6).
Requisites:
1. *here must be an act or
omission.
2. *here must be fault or
negligence.
3. *here must be damage caused to
the plaintiff.
4. *here must be a direct relation
of cause and effect between the
act or omission and the damage.
and
5. *here is no pre'e+isting
contractual relation between the
parties.
NOT)S:
*he same negligent act or omission
causing damage may produce civil
liability arising from crime under Art.
1// of the 01$ or create an action
for !uasi'delict under Article #1-6.
2hile it is true that in order that a
person may be liable for !uasi'
delicts, there must be no pre'
e+isting contractual relationship
between the parties, yet, 3t*e %ct
t*%t +re%,s t*e co#tr%ct -%. %lso
+e % tort.4 (Air France vs.
Carrascoso, 18 SCRA 155).
N%ture o( O+li/%tio#s
1. Personal Obligations ' obligations to
do
a. 1ositive 5 obligation to do
b. 6egative 5 obligation not to do
#. Real Obligations ! obligations to give
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON : Vida Bocar, Joyce Vidad EDP : Alnaia Ha!!iman, Doro"#y $ayon
S%BJECT HEADS: C#ri!"o&#er Rey 'ara!i(an )Per!on! and *amily Rela"ion!+, Ale,andro Ca!a-ar)Pro&er"y+, 'a.
R#odora
*errer).ill! and Succe!!ion+, Ian Dominic Pua)O-li(a"ion! and Con"rac"!+, S#a Eli,a# Dumama)Sale! and /ea!e+,
Jo#n S"e&#en
0uiam-ao)PAT+, C#ri!"o&#er Ca-i(ao)Credi" Tran!ac"ion!+, /i(aya Ali&ao)Tor"! and Dama(e!+, An"#ony
Pur(anan)/TD+,
'a. Rica!ion Tu(adi )Con1ic" o2 /a3!+
45 2005 CENTRALIZED BAR OPERATIONS
a. )eterminate or specific 5 object
is particularly designated or
physically segregated from all
other of the same class
b. 7eneric 5 object is designated
merely by its class or genus
c. "imited generic thing 5 when the
generic objects are confined to a
particular class, e.g. an
obligation to deliver one o m!
"orses (*olentino, 8olume 98, p.
:1).
")RSONAL 0s. R)AL RIG1T
"erso#%l Re%l
1. #us ad rem, a
right enforceable
only against a
definite person or
group of persons
1. #us in re, a right
enforceable against
the whole world
2. right pertaining
to the person to
demand from
another, as a
definite passive
subject, the
fulfillment of a
prestation to give,
to do or not to do.
2. right pertaining
to a person over a
specific thing,
without a passive
subject individually
determined against
whom such right
may be personally
enforced
RIG1TS O3 A CR)DITOR
Deter-i#%te Ge#eric
1. compel specific
performance
1. as, for
performance of the
obligation
2. recover
damages in case of
breach of the
obligation,
e+clusive or in
addition to
specific
performance
2. as, that the
obligation be
complied with at
the e+pense of the
debtor
4. entitlement to
fruits, interests
from the time the
obligation to
deliver arises.
4. recover damages
in case of breach
of the obligation
"ri#ci$le o( B%l%#ci#/ o( )quities %s
A$$lie' i# Actio#s (or S$eci(ic
"er(or-%#ce
9n decreeing specific performance,
e!uity re!uires not only that the
contract be just and e!uitable in its
provisions, but that the
conse!uences of specific
performance li,ewise be e!uitable
and just. *he general rule is that this
e!uitable relief will not be granted
if, under the circumstances of the
case, the result of the specific
performance of the contract would
be harsh, ine!uitable, oppressive or
result in an unconscionable
advantage to the plaintiff. *he
courts may adjust the rights of the
parties in accordance with the
circumstances obtaining at the time
of rendition of judgment, when
these are significantly different from
those e+isting at the time of
generation of those rights. $Agcaoili
vs. %S&S, %.R. No. '((5), August '(,
1*88)
OBLIGATIONS O3 T1) D)BTOR
Deter-i#%te Ge#eric
1. deliver the thing
which he has
obligated himself to
give
2. ta,e care of the
thing with the
proper diligence of
a good father of a
family
4. deliver all
accessions and
accessories of the
thing even though
they may not have
been mentioned
5. pay damages in
case of breach of
the obligation by
reason of delay,
fraud, negligence or
contravention of the
tenor thereof
1. deliver the thing
which is neither of
superior nor inferior
!uality
2. pay damages in
case of breach of
the obligation by
reason of delay,
fraud, negligence or
contravention of the
tenor thereof
)33)CTS O3 BR)AC1
"ositi0e "erso#%l
O+li/%tio#s
Ne/%ti0e "erso#%l
O+li/%tio#s
*he creditor can;
1. have the
obligation performed
or e+ecuted at the
e+pense of the
obligor (e+cept in
cases where the
personal
!ualifications of the
debtor are ta,en into
account in which
case the only remedy
is an action for
9f the obligor does
what has been
forbidden him, the
creditor can;
1. have it undone at
the e+pense of the
obligor. and
2. as, for damages
2005 CENTRALIZED BAR OERATIONS E!EC"TIVE COMMITTEE AND S"B#ECT
C$AIRERSONS
Ma%&'el A(a%en)o* )O6er7all C#air&er!on+, Ronald #al+an,a% )O6er7all Vice C#air+, Yolanda
Tolen)&no)VC7Acad!+, Jenn&fe% Ang)VC7 Secre"aria"+, #o- Ind.')&/o )VC7*inance+, Ela&ne Ma*.0a) )VC7
EDP+, Anna Ma%ga%&)a E%e* )VC7/o(i!"ic!+. #ona)1an
Mang.nda-ao )Poli"ical /a3+, 2%an'&* Bened&') Reo).)a% )/a-or /a3+, Ro+.ald ad&lla )Ci6il /a3+,
C1a%+a&ne To%%e* )Ta8a"ion /a3+, Ma%0 Da/&d Ma%)&ne, )Criminal /a3+, 3a%n- L.&*a Aleg%e )Commercial
/a3+, #&n0- Ann "- )Remedial /a3+, #a'0&e Lo. Ba.)&*)a )/e(al E"#ic!+
85
damages)
2. as, that what has
been poorly done be
undone
4. recover damages
because of breach of
the obligation
C%ses 6*ere t*e re-e'. /r%#te' u#'er
Article 1178 is #ot %0%il%+le:
1. 2here the effects of the act which is
forbidden, are definite in character,
in which case, even if it is possible
for the obligee to as, that the act be
undone at the e+pense of the
obligor, conse!uences contrary to
the object of the obligation will have
been produced which are permanent
in character
#. 2here it would be physically or
legally impossible to undo what has
been undone because of the very
nature of the act itself or because of
a provision of law, or because of
conflicting rights of %rd persons
NOT): 9n either case, the remedy is to
as, for damages.
BR)AC1 O3 OBLIGATIONS
1. 9olu#t%r. ' debtor, in the
performance of the obligation, is
guilty of;
a. default $mora)
b. fraud $dolo)
c. negligence $cul+a)
d. contravention of the tenor of
the obligation
NOT): debtor is liable for damages
#. I#0olu#t%r. ' debtor is unable to
comply with his obligation because
of fortuitous event
NOT): debtor is not liable for
damages
D)3ALT or D)LA:
6on'fulfillment of the obligation
with respect to time
Requisites:
1. <bligation is demandable and
already li!uidated
#. *he debtor delays performance
%. *he creditor re!uires performance
judicially or e+tra'judicially
4 &i#'s:
1. ,ora solvendi ' delay of the debtor
to perform his obligation. 9t may be;
a. -. re 5 obligation is to
give
b. -. +ersona 5 obligation is
to do
#. ,ora acci+iendi ' delay of the
creditor to accept the delivery of
the thing w=c is the object of the
obligation
%. Com+ensatio morae ' delay of the
parties or obligors in reciprocal
obligation
;*e# i#curre':
%eneral Rule/ *here must be a
demand (judicial or e+tra'judicial)
before delay may be incurred.
-.ce+tions/
1. obligation or law e+pressly so
declares
#. time is of the essence of the
contract
%. demand is useless as when
obligor has rendered beyond his
power to perform
(. there is ac,nowledgment of
default
NOT)S:
*here can be delay only in positive
obligations (to give=to do). *here
can be no delay in negative
obligations (not to give=not to do).
9n reci+rocal obligations one party
incurs in delay from the moment the
other party fulfills his obligation,
while he himself does not comply or
is not ready to comply in a proper
manner with what is incumbent upon
him. *he general rule is that
fulfillment by both parties should be
simultaneous e<ce$t when different
dates for the performance of
obligation is fi+ed by the parties.
)emand is still necessary if their
respective obligations are to be
performed on separate dates
3RAD
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
)eliberate and intentional evasion of
the fulfillment of an obligation
NOT): Future raud cannot be waived
because it would result to illusory
obligation.
I#ci'e#t%l
3r%u'=dolo
incidente
(Article 11-/)
C%us%l 3r%u'=dolo
causante
(Article 1%%>)
1. 1resent during
the $er(or-%#ce
of a pre'e+isting
obligation
1. 1resent during the
time of birth or
$er(ectio# of the
obligation
2. 1urpose is to
evade the normal
fulfillment of the
obligation
2. 1urpose is to
secure the consent of
the other to enter
into a contract
4. 0esults in the
non'fulfillment or
breach of the
obligation
4. 0esults in the
vitiation of consent
5. 7ives rise to a
right of the creditor
to recover damages
from the debtor
5. 7ives rise to a
right of an innocent
party to annul the
contract
N)GLIG)NC)
<mission of that diligence which is
re!uired by the nature of the
obligation and corresponds with the
circumstances of the persons, of the
time and of the place
NOT): 6egligence can be waived unless
the nature of the obligation or public
policy re!uires e+traordinary diligence as
in common carrier.
Dili/e#ce Require'
1. *hat agreed upon by the parties
#. 9n the absence of stipulation, that
re!uired by law in the particular
case
%. 9f both the contract and law are
silent, diligence of a good father of a
family
Co#ce$t o( Dili/e#ce o( Goo' 3%t*er o(
% 3%-il.
*hat reasonable diligence which an
ordinary prudent person would have
done under the same circumstances
Test o( Ne/li/e#ce
*he test of negligence can be
determined by this standard; 9f the
defendant, in committing or causing
the negligent act, had used
reasonable care and vigilance which
a man of ordinary prudence would
have employed under the same
situation, he is not guilty of
negligence. <therwise, he is guilty.
Doctri#e o( Res I$s% Loquitur %s
A$$lie' i# Ne/li/e#ce C%ses
*he thing or transaction spea,s for
itself
2hen the thing which caused injury,
without fault of the injured person,
is under the e+clusive control of the
defendant and the injury is such as
in the ordinary course of things does
not occur if he having such control
use proper care, it affords
reasonable evidence, in the absence
of e+planation from the defendant,
that the injury arose from
defendant?s want of care $Arica vs.
Calte., 1) SCRA 008 and Re+ublic vs.
1u2on Stevedoring, 31 SCRA 34*).
3ORTITOS )9)NT
An event which could not be
foreseen or which though foreseen
was inevitable.
Requisites:
1. cause is independent of the will of
the debtor
#. the event must be unforeseeable or
unavoidable
%. occurrence must be such as to
render it impossible for the debtor
to fulfill his obligation in a normal
manner
(. debtor must be free from any
participation in
C$AIRERSONS
85
5. the aggravation of the injury
resulting to the creditor $1asam vs.
Smit", 05 P"il. )54)
NOT): 9t must not only be the
pro+imate cause but it must be the
<6"@ and A<"B $ACAB.
%-N-RA1 R51-/ 6o liability in case of
fortuitous event.
-6C-P7&ONS/
1 2hen e+pressly declared by law
NOT): e.g. Article 55#(#),
1165(%), 1#6>, 1:(#, #1(-, #1(>
and #15: of the $ivil $ode.
# 2hen e+pressly declared by
stipulation or contract
% 2hen the nature of the
obligation re!uires the
assumption of ris,
( 2hen the obligor is in default or
has promised to deliver the same
thing to # or more persons who
do not have the same interest
DArticle 1165(%)E.
)33)CT O3 3ORTITOS )9)NT
Deter-i#%te
O+li/%tio#
Ge#eric O+li/%tio#
obligation is
e+tinguished
obligation is not
e+tinguished based
on the rule that a
genus never perishes
(genus nun8uam
+eruit)
"RINCI"L) ND)R ARTICL) 1177
Fefore the presumption that a prior
installment had been paid may arise,
t*e recei$t -ust s$eci(. t*e
i#st%ll-e#t (or 6*ic* $%.-e#t is
-%'e.
R)>)DI)S O3 CR)DITOR TO
"ROT)CT CR)DIT:
1. B+haustion of debtor?s property
2. Accion subrogatoria ' to be
subrogated to all the rights and
actions of the debtor save those
which are inherent in his person.
3. Accion +auliana ' impugn all the acts
w=c the debtor may have done to
defraud them.
NOT): #nd %rd remedies are
subsidiar! to the first
%-N-RA1 R51-/ 0ights ac!uired by
virtue of an obligation are transmissible
in character
-6C-P7&ONS/
1. 2hen they are not transmissible
by their very nature e.g. purely
personal right
#. 2hen there is a stipulation of
the parties that they are not
transmissible
%. 6ot transmissible by operation of
law
"R) OBLIGATION
<ne whose effectivity or
e+tinguishment does not depend
upon the fulfillment or non'
fulfillment of a condition or upon the
e+piration of a term or period and is
demandable at once.
CONDITIONAL OBLIGATION
<ne whose effectivity is
subordinated to the fulfillment or
non'fulfillment of a future A6)
uncertain fact or event
&i#'s o( co#'itio#s:
1. Auspensive ' fulfillment of the
condition results in the ac!uisition of
rights arising out of the obligation
#. 0esolutory ' fulfillment of the
condition results in the
e+tinguishments of rights arising out
of the obligation
%. 1otestative ' fulfillment of the
condition depends upon the will of a
party to the obligation
(. $asual ' fulfillment of the condition
depends upon chance and=or upon
the will of a third person
5. Gi+ed ' fulfillment of the condition
depends partly upon chance and=or
the will of a third person
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
9: 2005 CENTRALIZED BAR OPERATIONS
6. 1ossible ' condition is capable of
realiHation according to nature, law,
public policy and good customs
-. 9mpossible ' condition is not capable
of realiHation according to nature,
law, public policy and good customs
>. 1ositive ' condition involves the
performance of an act
:. 6egative ' condition involves the
omission of an act
1/. )ivisible ' condition is susceptible of
partial realiHation
11. 9ndivisible ' condition is not
susceptible of partial realiHation
1#. $onjunctive ' where there are
several conditions, all of which must
be realiHed
1%. Alternative ' where there are several
conditions but only one must be
realiHed
Rule i# "otest%ti0e Co#'itio#s
a. 9f the fulfillment of the
potestative condition depends
upon the sole will of the debtor,
the condition as well as the
obligation itself is void. 9t renders
the obligation illusory. (Applicable
only to a suspensive condition and
to an obligation which depends
for its perfection upon the
fulfillment of the potestative
condition and not to a pre'
e+isting obligation.)
b. 9f the fulfillment depends
e+clusively upon the will of the
creditor, both the condition and
obligation is valid.
NOT): 9n case of si-$le potestative
condition, e.g. right of first refusal,
such condition is valid.
Rule i# I-$ossi+le Co#'itio#s
%-N-RA1 R51-/ *hey shall annul the
obligation which depends upon them.
-6C-P7&ONS/
1. pre'e+isting obligation
#. if obligation is divisible
%. in simple or renumeratory donations
(. in testamentary dispositions
5. in case of conditions not to do an
impossible thing
)((ects o( Sus$e#si0e Co#'itio#
1. Fefore fulfillment of the condition,
the demandability as well as the
ac!uisition or effectivity of the
rights arising from the obligation is
suspended
#. After the fulfillment of the
condition, the obligation arises or
becomes effective
%. *he effects of a conditional
obligation to give, once the
condition has been fulfilled, shall
retroact to the day of the
constitution of the obligation
(. 2hen the obligation imposes
reciprocal prestations upon the
parties, the fruits interests shall
be deemed to have been mutually
compensated
5. 9f the obligation is unilateral, the
debtor shall appropriate the fruits
interests received, unless from the
nature circumstances it should be
inferred that the intention of the
persons constituting the same was
different
6. 9n obligations to do or not to do, the
court shall determine the retroactive
effect or the conditions that has
been complied with
Co#structi0e (ul(ill-e#t o( Sus$e#si0e
Co#'itio#
*he condition shall be deemed
fulfilled when the obligor actually
prevented the obligee from
complying with the condition and
such prevention must have been
voluntary and willful in character.
)((ects o( Resolutor. Co#'itio#
1. Fefore the fulfillment of the
condition, the right which the
creditor has already ac!uired by
virtue of the obligation is subject to
a threat of e+tinction.
#. 9f condition is not fulfilled, rights are
consolidated. they become absolute.
%. Cpon fulfillment of the condition,
the parties shall return to each other
what they received including the
fruits
S>>AR::
SS")NSI9)
CONDITION
R)SOLTOR:
CONDITION
1. if fulfilled,
obligation arises
1. if fulfilled,
obligation is
C$AIRERSONS
85
or becomes
effective
2. if not fulfilled,
no juridical
relation is created
4. rights are not yet
ac!uired, but
there is hope or
e+pectancy that
they will soon be
ac!uired
e+tinguished
2. if not fulfilled,
juridical
relation is
consolidated
4. rights are
already
ac!uired, but
subject to the
threat or danger
of e+tinction
)((ects o( Loss? Deterior%tio# %#'
I-$ro0e-e#t i# re%l o+li/%tio#s (during
the pendency of the condition)
1. Loss
a. without debtor?s fault '
obligation is e+tinguished
b. with debtor?s fault ' debtor pays
damages
2. Deterior%tio#
a. without debtor?s fault '
impairment to be borne by the
creditor
b. with debtor?s fault ' creditor
may choose between the
rescission of the obligation and
its fulfillment with indemnity for
damages in either case
4. I-$ro0e-e#t
a. by the thing?s nature or by time '
improvement shall inure to the
benefit of the creditor
b. at the debtor?s e+pense ' debtor
shall have no other right than
that granted to a usufructuary
NOT): Applies only to determinate
things
A T*i#/ is Lost 6*e# it:
1. perishes
#. goes out of commerce
%. disappears in such a way that its
e+istence is un,nown or it cannot be
recovered
R)CI"ROCAL OBLIGATIONS
I *hose which are created or established
at the same time, out of the same
cause, and which result in mutual
relationships of creditor debtor
between the parties
TACIT R)SOLTOR: CONDITION
I9f one of the parties fails to comply
with what is incumbent upon him, there
is a right on the part of the other to
rescind the obligation.
RIG1T TO R)SCIND (A0* 11:1)
%-N-RA1 R51-/ *he right to rescind
needs judicial approval.
-6C-P7&ONS/
1. 9f there is an e+press stipulation
of automatic rescission
#. 2hen the debtor voluntarily
returned the thing
NOT)S:
Article 11:1 refers to judicial
rescission. 9t does not apply if there
is an e+press stipulation to rescind,
in which case such stipulation must
prevail. *here is nothing in the law
which prohibits the parties from
entering into an agreement that
violation of the terms of the
contract would cause its cancellation
without court intervention. Aaid
stipulation is in the nature of
facultative resolutory condition
$Angeles vs. Calasan2, 1'5 SCRA
'3').
0escission will be ordered only
where the breach is substantial as to
defeat the object of the parties in
entering into the agreement.
*he injured party may choose
between fulfillment and rescission of
the obligations, with the payment of
damages in either case. *hese
remedies are alternative, not
cumulative. Jowever, should
fulfillment become impossible, the
injured party may also see,
rescission.
*he right to rescind belongs
e+clusively to the injured party.
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
9; 2005 CENTRALIZED BAR OPERATIONS
OBLIGATION ;IT1 A ")RIOD
*hose whose demandability or
e+tinguishment is subject to the
e+piration of a term or period
Requisites:
1. future
#. certain
%. possible, legally and physically
CLASSI3ICATION O3 T)R> OR ")RIOD
1. a. suspensive (e. die) 5 obligation
becomes demandable only upon
arrival of a day certain
b. resolutory (in diem) 5 arrival of
day certain terminates the obligation
#. a. legal 5 granted by law
b. conventional 5 stipulated by
parties
c. judicial 5 fi+ed by courts
%. a. definite 5 date=time is ,now
beforehand
b. indefinite 5 the date=time of day
certain is un,nown
T)R> CONDITION
1. interval of time
w=c is future
certain
1. fact or event w=c
is future and
uncertain
2. interval of time
w=c must
necessarily come,
although it may
not be ,nown when
2. future and
uncertain fact or
event w=c may or
may not happen
4.e+erts an
influence upon the
time of
demandability or
e+tinguishment of
an obligation
4. e+erts an
influence upon the
very e+istence of the
obligation itself
5. does not have
any retroactive
effect unless there
is an agreement to
the contrary
5. has retroactive
effect
5. when it is left
e+clusively to the
will of the debtor,
the e+istence of
the obligation is
not affected
5. when it is left
e+clusively to the will
of the debtor, the
very e+istence of the
obligation is affected
%-N-RA1 R51-/ 2hen a period is
designated for the performance or
fulfillment of an obligation, it is
presumed to have been established for
the benefit of both creditor and debtor.
-6C-P7&ON/ 2hen it appears from the
tenor of the obligation or other
circumstances that the period has been
established in favor of one or of the
other.
;*e# court -%. (i< $erio':
1. if the obligation does not fi+ a
period, but from its nature and
circumstances it can be inferred that
a period was intended by the parties
#. if the duration of the period depends
upon the will of the debtor. and
%. 9f the debtor binds himself when his
means permit him to do so (Article
11>/)
NOT): *he only action that can be
maintained is an action to as, the court
to fi+ the duration of the term or period.
*he fulfillment of the obligation itself
cannot be demanded until after the
court has fi+ed the period for
compliance therewith, and such period
has arrived. Jowever, such technicality
need not be adhered to when a prior and
separate action would be a mere
formality and would serve no other
purpose than to delay $9orromeo vs. CA,
04 SCRA )5).
Re%so# (or 3i<i#/ t*e "erio' (A0* 11:-)
*here can be no possibility of any
breach of contract or failure to
perform the obligation unless the
period is fi+ed by courts.
;*e# 'e+tor loses ri/*t to -%,e use o(
$erio': (9798A)
1. when after the obligation has
been contracted, he becomes
insolvent, unless he gives
guaranties or securities for the debt
(the insolvency need not be
judicially declared)
#. when he does not furnish to the
creditor the /uaranties or securities
he promised
%. when by his own act he has
impaired said guaranties or
securities after their establishment,
and when through fortuitous event
they disappear, unless he gives new
ones e!ually satisfactory when
debtor 0iolates any underta,ing, in
C$AIRERSONS
85
consideration of which the creditor
agreed to the period or
(. when debtor attempts to
%bscond
3ACLTATI9)
O+li/%tio#s
ALT)RNATI9)
O+li/%tio#s
1. comprehends
only one object or
prestation which is
due, but it may be
complied with by
the delivery of
another object or
performance of
another prestation
in substitution
1. comprehends
several objects or
prestations which are
due but may be
complied with by the
delivery or
performance of only
one of them
2. fortuitous loss
e+tinguishes the
obligation
2. fortuitous loss of
all prestations will
e+tinguish the
obligation
4. culpable loss
obliges the debtor
to deliver
substitute
prestation without
liability to debtor
4. culpable loss of any
object due will give
rise to liability to
debtor
5. choice pertains
only to debtor
5. choice may pertain
to creditor or even
third person
NOT)S:
9n alternative obligations, choice
ta,es effect only upon
communication of the choice to the
other party and from such time the
obligation ceases to be alternative.
*he debtor cannot choose those
prestations or underta,ings which
are impossible, unlawful or w=c
could not have been the object of
the obligation.
)33)CT O3 LOSS O3 OB@)CT O3
OBLIGATION:
1. & rig"t o c"oice belongs to debtor
a. 9f through a fortuitous event '
debtor cannot be held liable for
damages
b. 9f 1 or more but not all of the
things are lost or one or some
but not all of the prestations
cannot be performed due to the
fault of the debtor, creditor
cannot hold the debtor liable for
damages because the debtor can
still comply with his obligation.
3. & rig"t o c"oice belongs to t"e
creditor
a. 9f 1 of the things is lost through
a fortuitous event, the debtor
shall perform the obligation by
delivering that which the
creditor should choose from
among the remainder, or that
which remains if only 1 subsists
b. 9f the loss of 1 of the things
occurs through the fault of the
debtor, the creditor may claim
any of those subsisting, or the
price of that which, through the
fault of the former, has
disappeared with a right to
damages
c. 9f all the things are lost through
the fault of the debtor, the
choice by the creditor shall fall
upon the price of any 1 of them,
also with indemnity for damages
@OINT AND SOLIDAR: OBLIGATIONS
%-N-RA1 R51-/ <bligation is presumed
joint if there is concurrence of two or
more debtors and=or creditors.
-6C-P7&ONS/
1. when e+pressly stated that
there is solidarity
#. when the law re!uires solidarity
%. when the nature of the
obligation re!uires solidarity
@OINT DI9ISIBL) OBLIGATIONS
Bach creditor can demand for the
payment of his proportionate share
of the credit, while each debtor can
be held liable only for the payment
of his proportionate share of the
debt.
A joint creditor cannot act in
representation of the other creditors
while a joint debtor cannot be
compelled to answer for the acts or
liability of the other debtors.
@OINT INDI9ISIBL) OBLIGATIONS
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
9< 2005 CENTRALIZED BAR OPERATIONS
1. 9f there are # or more debtors, the
fulfillment of or compliance with the
obligation re!uires the concurrence
of all the debtors, although each for
his own share. $onse!uently, the
obligation can be enforced only by
proceeding against all of the
debtors.
#. 9f there are # or more creditors, the
concurrence or collective act of all
the creditors, although each for his
own share, is also necessary for the
enforcement of the obligation.
)((ect o( +re%c* A 9f one of the joint
debtors fails to comply with his
underta,ing, the obligation can no
longer be fulfilled or performed.
$onse!uently, it is converted into one of
indemnity for damages. 9nnocent joint
debtors shall not contribute to the
indemnity beyond their corresponding
share of the obligation.
)((ect o( i#sol0e#c. o( % 'e+tor A 9f one
of the joint debtors should be insolvent,
the others shall not be liable for his
share.
INDI9ISIBILIT: SOLIDARIT:
1. refers to the
prestation which
constitutes the
object of the
obligation
1. refers to the
legal tie or vinculum
juris conse!uently
to the subjects or
parties of the
obligation
2. plurality of
subjects is not
re!uired
2. plurality of
subjects is
indispensable
4. in case of breach,
obligation is
converted into 1 of
indemnity for
damages because of
breach, indivisibility
of the obligation is
terminated
4. when there is
liability on the part
of the debtors
because of the
breach, the
solidarity among the
debtors remains
&INDS O3 SOLIDARIT:
1. Active solidarity
solidarity of creditors
each creditor is empowered to
e+ercise against the debtor not only
the rights which correspond to him,
but also all the rights which
correspond to the other creditors,
with the conse!uent obligation to
render an accounting of his acts to
such creditors
creates a relationship of mutual
agency among solidary creditors
2. Passive solidarity
solidarity of debtors
liability of each debtor for the
payment of the entire obligation,
with the conse!uent right to demand
reimbursement from the others for
their corresponding shares once
payment has been made
3. Mixed solidarity
solidarity among creditors and
debtors
)((ect o( Assi/#-e#t +. Soli'%r.
Cre'itor ;it*out Co#se#t o( Ot*ers
1. assignee is co'creditor 5 no violation
of Article 1#1% because there can be
no invasion of the personal or
confidential relationship
#. assignee is third person 5 co'
creditors and debtors are not bound
by the assignment
)((ect o( No0%tio# u$o# Soli'%r.
O+li/%tio#
1. 9f the novation is prejudicial, the
solidary creditor who effected the
novation shall reimburse the others
for damages incurred by them
#. 9f it is beneficial and the creditor
who effected the novation is able to
secure performance of the
obligation, such creditor shall be
liable to the others for the share
which corresponds to them, not only
in the obligation, but also in the
benefits
%. 9f the novation is effected by
substituting another person in place
of the debtor, the solidary creditor
who effected the novation is liable
for the acts of the new debtor in
case the is deficiency in
performance or in case damages are
incurred by the other solidary
creditors as a result of the
substitution.
(. 9f the novation is effected by
subrogating a third person in the
rights of the solidary creditor
responsible for the novation, the
relation between the other creditors
C$AIRERSONS
85
not substituted and the debtor or
debtors is maintained.
)((ect o( Co-$e#s%tio# %#' Co#(usio#
u$o# Soli'%r. O+li/%tio#
1. 9f the confusion or compensation is
partial, the rules regarding
application of payment shall apply.
*his is without prejudice to the
right of other creditors who have
not caused the confusion or
compensation to be reimbursed to
the e+tent that their rights are
diminished or affected.
#. 9f the confusion or compensation is
total, the obligation is e+tinguished,
what is left is the ensuing liability
for reimbursement within each
group;
a. *he creditor causing the
confusion or compensation is
obliged to reimburse the other
creditors
b. *he debtors benefited by the
e+tinguishments of the
obligation are obliged to
reimburse the debtor who made
the confusion or compensation
possible.
)((ect o( Re-issio# u$o# Soli'%r.
O+li/%tio#
1. 9f the remission covers the entire
obligation, the obligation is totally
e+tinguished and the entire juridical
relation among the debtors is
e+tinguished all together.
#. 9f the remission is for the benefit of
one of the debtors and it covers his
entire share in the obligation, he is
completely released from the
creditors but is still bound to his co'
debtors.
%. 9f the remission is for the benefit of
one of the debtors and it covers only
a part of his share in the obligation,
his character as a solidary debtor is
not affected.
)((ect o( "%.-e#t +. Soli'%r. De+tor
1. 2hole or partial e+tinguishment of
debt
#. 0ight to recover against co'debtor
%. 0ight to recover interest from time
the obligation becomes due
)((ect o( Loss or I-$ossi+ilit. o(
"er(or-%#ce
1. 9f it is not due to the fault of the
solidary debtors, the obligation is
e+tinguished.
#. 9f the loss or impossibility is due to
the fault of one of the solidary
debtors or due to a fortuitous event
after one of the solidary debtors had
already incurred in delay, the
obligation is converted into an
obligation of indemnity for damages
but the solidary character of the
obligation remains.
De(e#ses %0%il%+le to % Soli'%r. De+tor
1. )efenses derived from the very
nature of the obligation
#. )efenses personal to him or
pertaining to his own share
%. )efenses personal to the others, but
only as regards that part of the debt
for w=c the latter are responsible
DI9ISIBL) OBLIGATIONS
*hose which have as their object a
prestation which is susceptible of
partial performance without the
essence of obligation changed.
INDI9ISIBL) OBLIGATIONS
1restation is not susceptible of
partial performance, otherwise, the
essence of the obligation will be
changed
NOT)S:
)ivisibility or indivisibility of the
obligation refers to the performance
of the prestation and not to the
thing which is the object thereof.
9ntention of parties should be ta,en
into account to determine whether
obligation is divisible or not.
%-N-RA1 R51-/ *he creditor cannot
be compelled partially to receive the
prestation in which the obligation
consists. neither may the debtor be
re!uired to ma,e partial payments.
-6C-P7&ONS/
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
1. 2hen the obligation e+pressly
stipulates the contrary.
#. 2hen the different prestations
constituting the objects of the
obligation are subject to
different terms and conditions.
and
%. 2hen the obligation is in part
li!uidated and in part
unli!uidated.
OBLIGATIONS ;IT1 A ")NAL CLAS)
<ne to which an accessory
underta,ing is attached for the
purpose of insuring its performance
by virtue of which the obligor is
bound to pay a stipulated indemnity
or perform a stipulated prestation in
case of breach.
"ur$ose o( "e#%lt.:
1. *o insure the performance of the
obligation.
#. to li!uidate the amount of
damages to be awarded to the
injured party in case of breach
of the principal obligation
(compensatory). and
%. in certain e+ceptional cases, to
punish the obligor in case of
breach of the principal
obligation (punitive).
%-N-RA1 R51-/ *he penalty fi+ed by
the parties is a compensation or
substitute for damages in case of
breach.
-6C-P7&ONS/
1. when there is a stipulation to
the contrary.
#. when the debtor is sued for
refusal to pay the agreed
penalty. and
%. when debtor is guilty of fraud
NOT): Article 1##> does not apply to
these e+ceptions. there must be
proof of actual damages.
NOT)S:
*he debtor cannot e+empt himself
from the performance of the
principal obligation by paying the
stipulated penalty unless when the
right has been e+pressly reserved for
him.
*he creditor cannot demand the
fulfillment of the principal obligation
and the satisfaction of the stipulated
penalty at the same time unless the
right has been clearly granted him.
;*e# $e#%lt. -%. +e re'uce'
1. 9f the principal obligation has been
partly complied with.
#. 9f the principal obligation has been
irregularly complied with. and
%. 9f the penalty is ini!uitous or
unconscionable even if there has been
no performance.
>OD)S O3 )BTINGIS1>)NT O3
OBLIGATIONS ("K$
%
6A01
#
)
1. loss of the thing due
2. (ulfillment of resolutory condition
3. compensation
4. condonation or remission of the debt
5. confusion or merger of rights of the
creditor and debtor
6. #ovation
7. %nnulment
8. rescission
9. $rescription
10. $ayment or performance
"%.-e#t or "er(or-%#ce
Geans not only the delivery of
money but also the performance, in
any other manner, of an obligation.
I#te/rit. o( "%.-e#t
%-N-RA1 R51-/ A debt shall not
be understood to have been paid unless
the thing or service in which the
obligation consists has been completely
delivered or rendered, as the case may
be.
-6C-P7&ONS/
1. 2hen the obligation has been
substantially performed in good
faith.
#. 2hen the obligee accepts
performance, ,nowing its
incompleteness or irregularity
w=out e+pressing any protest or
objection.
%. 2hen there is an e+press stipulation.
and
C$AIRERSONS
85
(. 2hen the debt is in part li!uidated
and in part unli!uidated.
I'e#tit. o( "%.-e#t
re!uires that the very thing, service
or forbearance, as the object of the
prestation, must be performed or
observed
"erso#s 6*o -%. $%. t*e o+li/%tio#:
1. the debtor himself or his legal
representative
#. any third person
%-N-RA1 R51-/ $reditor is not bound
to accept payment or performance by a
third person.
-6C-P7&ONS/
1. when made by a third person
who has an interest in the
fulfillment of the obligation.
#. when there is a stipulation to
the contrary.
0ights of %rd person who paid the
obligation;
1. 9f payment was made with
,nowledge and consent of the
debtor;
a. can recover entire
amount paid
b. can be subrogated to all
the rights of the
creditor.
#. 9f payment was made without
,nowledge or against the will of
the debtor, he can recover only
insofar as the payment has been
beneficial to the debtor.
To 6*o- $%.-e#t -ust +e -%'e:
1. *he person in whose favor the
obligation has been constituted.
#. Jis successor in interest. or
%. Any person authoriHed to receive it.
%-N-RA1 R51-/ 9f payment is made to
a person other than those enumerated,
it shall not be valid.
-6C-P7&ONS/
1. 1ayment made to a %rd person,
provided that it has redounded
to the benefit of the creditor.
Auch benefit to the creditor is
presumed in the following cases;
9f after the payment, the
third person ac!uires the
creditor?s rights.
9f the creditor ratifies the
payment to the third
person.
9f by the creditor?s conduct,
the debtor has been led to
believe that the third
person had authority to
receive the payment.
#. 1ayment made to the possessor
of the credit, provided that it
was made in good faith.
O+li/%tio# to Deli0er % Ge#eric T*i#/
9f the !uality and circumstances
have not been stated, the creditor
cannot demand a thing of superior
!uality. neither can the debtor
deliver a thing of inferior !uality.
Rules i# >o#et%r. O+li/%tio#s:
1. 1ayment in cash ' must be made in
the currency stipulated. if it is not
possible to deliver such currency,
then in the currency which is legal
tender in the 1hilippines.
#. 1ayment in chec, or other
negotiable instrument ' not
considered payment. not considered
legal tender and may be refused by
the creditor. 9t shall only produce
the effect of payment;
a. when it has been cashed or
b. when it has been impaired
through the fault of the creditor.
L)GAL T)ND)R
Auch currency which may be used for
the payment of all debts, whether
private or public. *he ,ind of
currency which a debtor can legally
compel a creditor to accept in
payment of a debt in money when
tendered by the debtor in the right
amount.
"egal tender of the 1hilippines would
be all notes and coins issued by the
$entral Fan,.
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
Aection 5#, 0.A. 6o. -65%
1. #5c and above, legal tender up
to 15/
#. 1/c and below, legal tender up
to 1#/
)<tr%or'i#%r. i#(l%tio# or 'e(l%tio#
unusual or beyond the common
fluctuation in the value of currency,
which the parties could not have
reasonably foreseen or which was
manifestly beyond their
contemplation at the time the
obligation was established.
Applies only to co#tr%ctu%l
o+li/%tio#s
Requisites:
a. *he decrease in the value of the
currency could not have been
reasonably foreseen by the
parties or beyond their
contemplation at the time the
obligation was established .
b. *here must be a declaration of
such e+traordinary inflation or
deflation by the Fang,o Aentral.
2ithout such declaration, the
creditors cannot demand an
increase, and debtors a
decrease, of what is due to or
from them. $Ramos vs. CA, 345
SCRA 1)4 and ,obil Oil P"ils. vs.
CA, 18( SCRA )51)
"l%ce o( $%.-e#t
1. 1lace stipulated by the parties.
2. 6o stipulation and the obligation is
to deliver a determinate thing,
payment shall be made at the place
where the thing might be at the time
the obligation was constituted.
4. 9n any other case, the payment shall
be made at the domicile of the
debtor.
S$eci%l 3or-s o( "%.-e#t:
a. Application of payment
b. )ation in 1ayment
c. 1ayment by $ession
d. *ender of payment and
$onsignation

%. A$$lic%tio# o( "%.-e#t
)esignation of the debt to which the
payment must be applied when the
debtor has several obligations of the
same ,ind in favor of the same
creditor.
Requisites:
a. there must be only 1 debtor
only 1 creditor.
b. there must be # or more debts of
the same ,ind.
c. all of the debts must be due.
e+cept; if there?s stipulation to
the contrary. or application of
payment is made by the party
for whose benefit the term has
been constituted. and
d. amount paid by the debtor must
not be sufficient to cover the
total amount of all the debts.
%-N-RA1 R51-/ *he right to designate
the debt to which the payment shall be
applied primarily belongs to the debtor.
-6C-P7&ON/ 9f the debtor does not
avail of such right and he accepts from
the creditor a receipt in which the
application is made.
Le/%l A$$lic%tio# o( "%.-e#t (A0*1#5()
1. 9f neither the debtor nor the creditor
ma,es any application of payment,
or if it cannot be inferred from other
circumstances, the debt which is
most onerous to the debtor, among
those which are due, shall be
deemed to have been satisfied.
#. 9f the debts due are of the same
nature and burden, payment shall be
applied to all of them
proportionately.
+. D%tio# i# "%.-e#t (DACION )N
"AGO)
)elivery and transmission of
ownership of a thing by the debtor
to the creditor as an accepted
e!uivalent of the performance of the
obligation.
Requisites:
a. e+istence of a money obligation
b. alienation to the creditor of a
property by the debtor with the
consent of the former
C$AIRERSONS
85
c. satisfaction of the money
obligation of the debtor
c. "%.-e#t +. Cessio#
)ebtor abandons all of his property
for the benefit of his creditors in
order that from the proceeds
thereof, the latter may obtain
payment of their credits.
Requisites:
a. plurality of debts
b. partial or relative insolvency of
the debtor
c. acceptance of the cession by
the creditors
DATION IN
"A:>)NT
"A:>)NT B:
C)SSION
1. one creditor 1. plurality of
creditors
2. not necessarily
in state of financial
difficulty
2. debtor must be
partially or
relatively insolvent
4. thing delivered
is considered as
e!uivalent of
performance
4. universality of
property of debtor is
what is ceded
(. payment
e+tinguishes
obligation to the
e+tent of the value
of the thing
delivered as agreed
upon, proved or
implied from the
conduct of the
creditor
(. merely releases
debtor for net
proceeds of things
ceded or assigned,
unless there is
contrary intention
'. Te#'er o( "%.-e#t %#' Co#si/#%tio#
Te#'er o( "%.-e#t
Ganifestation of he debtor to the
creditor of his decision to comply
immediately with his obligation.
9t is the preparatory act and
e+trajudicial in character.
Co#si/#%tio#
)eposit of the object of the
obligation in a competent court in
accordance with the rules prescribed
by law, after the tender of payment
has been refused or because of
circumstances which render direct
payment to the creditor impossible
or inadvisable.
9t is the principal act and judicial in
character.
S$eci%l Requisites:
a. *he debt sought to be paid must
be due.
b. *here must be a valid and
unconditional tender of payment
or any of the causes stated by
law for effective consignation
without previous tender of
payment e+ists.
c. *he consignation of the thing
due must first be announced to
the persons interested in the
fulfillment of the obligation.
d. $onsignation shall be made by
depositing the things due at the
disposal of judicial authority.
and
e. *he consignation having been
made, the interested parties
shall also be notified thereof.
)((ects o( co#si/#%tio#:
1. 9f the creditor accepts the thing
or amount deposited without
contesting the validity or
efficacy of the consignation, the
obligation is e+tinguished.
2. 9f the creditor contests the
validity or efficacy of the
consignation or if the creditor is
not interested or un,nown or is
absent, the result is a litigation.
9f the debtor complied with all
the re!uisites, the obligation is
e+tinguished.
%-N-RA1 R51-/ $onsignation shall
produce effects of payment only if there
is a valid tender of payment.
-6C-P7&ONS/ $7&RA7 or 7RA&7)
1. creditor is %bsent or un,nown, or
does not appear at the place of
payment
#. creditor incapacitated to receive
payment at the time it is due
%. when two or more persons claim the
right to collect
(. when the title of the obligation has
been lost
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
=:: 2005 CENTRALIZED BAR OPERATIONS
5. when without just cause creditor
refuses to give a receipt
NOT)S:
9t is the consignation which
constitutes a form of payment and
must follow, supplement or complete
the tender of payment in order to
discharge the obligation.
A valid tender of payment has the
effect of e+empting the debtor from
payment of interest and=or
damages.
9f tender is made by means of a
chec,, such tender is valid because
it is an e+ercise of a right. Article
1#(: is not applicable.
LOSS O3 T1) T1ING D)
In Determinate Obligations to Give
%-N-RA1 R51-/ <bligation is
e+tinguished.
Requisites:
1. *he thing which is lost is
determinate.
2. *he thing is lost without the
fault of the debtor. and
3. *he thing is lost before the
debtor has incurred in delay.
-6C-P7&ONS/
1. when by law, obligor is liable
even for fortuitous event.
#. when by stipulation, obligor is
liable even for fortuitous event.
%. when the nature of the
obligation re!uires the
assumption of ris,.
(. when the loss of the thing is due
partly to the fault of the debtor.
5. when the loss of the thing occurs
after the debtor incurred in
delay.
6. when the debtor promised to
deliver the same thing to two or
more persons who do not have
the same interest. and
-. when the debt of a certain and
determinate thing proceeds from
a criminal offense
In Generic Obligations to Give
%-N-RA1 R51-/ <bligation is not
e+tinguished because the genus of a
thing cannot perish.
-6C-P7&ON/ 9n case of generic
obligations whose object is a particular
class or group with specific or
determinate !ualities $1imited %eneric
Obligations)
In Obligations to Do
<bligation is e+tinguished when
prestation becomes legally or physically
impossible.
)((ect o( Rel%ti0e I-$ossi+ilit. or
Doctri#e o( #(oresee# )0e#ts (A0*
1#6-)
2hen the service has become
difficult as to be manifestly beyond
the contemplation of the parties,
the obligor may also be released
therefrom, in whole or in part.
Requisites:
1. *he event or change in
circumstances could not have
been foreseen at the time of the
e+ecution of the contract.
2. 9t ma,es the
performance of the contract
e+tremely difficult but not
impossible.
3. *he event must not be
due to the act of any of the
parties. and
4. *he contract is for a
future prestation.
"ri#ci$le o( Su+Cecti0e I-$ossi+ilit.
2hen there is no physical or legal
loss but the thing object of the
obligation belongs to another, the
performance by the debtor of the
obligation undoubtedly becomes
impossible. Kailure of performance is
imputable to the debtor. *hus, the
debtor must indemnify the creditor
for the damages suffered by the
latter. (*olentino, 8olume 98, p. %%6)
)((ect o( Loss o# Reci$roc%l O+li/%tio#s
Kirst view (*olentino, 8olume 98, pp.
%%-'%%>) 5 9f an obligation is
e+tinguished by the loss of the thing
or impossibility of performance
C$AIRERSONS
85
through fortuitous events, the
counter'prestation is also
e+tinguished. *he debtor is released
from liability but he cannot demand
the prestation which has been
stipulated for his benefit. :e ;"o
gives not"ing "as no reason to
demand an!t"ing.
Aecond 8iew (LF" 0eyes) 5 *he loss or
impossibility of performance must be
due to the fault of the debtor. 9n this
case, the injured party may as, for
rescission under Article 11:1 plus
damages. 9f the loss or impossibility
was due to a fortuitous event, the
other party is still obliged to give the
prestation due to the other.
CONDONATION OR R)>ISSION O3 T1)
D)BT
An act of pure liberality by virtue of
which the obligee, without receiving
any price or e!uivalent, renounces
the enforcement of the obligation,
as a result of which it is e+tinguished
in its entirety or in that part or
aspect of the same to which the
remission refers.
9t is the gratuitous abandonment by
the creditor of his right.
Requisites:
a. 9t must be gratuitous
b. 9t must be accepted by the
debtor
c. *he obligation must be
demandable
NOT): B+press condonation or remission
must comply with the formalities of
donation.
CON3SION OR >)RG)R O3 RIG1TS
Gerger of the characters of the
creditor and the debtor in one and
the same person by virtue of which
the obligation is e+tinguished.
Requisites:
a. that the characters of creditor
debtor must be in the same
person.
b. that it must ta,e place in the
person of either the principal
creditor or the principal debtor.
and
c. it must be complete definite
CO>")NSATION
B+tinguishment in the concurrent
amount of the obligation of those
persons who are reciprocally debtors
and creditors of each other.
Requisites:
a. there must be # parties, who, in
their own right, are principal
creditors principal debtors of
each other (e.ce+t in case o
guarantor, Article 1#>/).
b. both debts must consist in
money, or if the things due are
fungibles, they must be of the
same ,ind !uality.
c. both debts must be due.
d. both debts must be li!uidated
demandable.
e. there must be no retention or
controversy commenced by %rd
persons over either of the debts
communicated in due time to
the debtor. and
f. compensation must not be
prohibited by law.
Co-$e#s%tio# Co#(usio#
1. two persons
who are mutual
debtors and
creditors of each
other
1. one person
where !ualities of
debtor and creditor
are merged
2. there must be
at least two
obligations
2. only one
obligation
Co-$e#s%tio# "%.-e#t
1. *he re!uisites prescribe by law for
compensation are different from those
prescribed by law for payment.
#. *a,es effect by
operation of law
#. *a,es effect by
act of the parties
%. $apacity to
give and to
ac!uire is not
necessary
%. $apacity to give
and to ac!uire is
essential
(. As a rule, it is
partial
(. As a rule,
complete and
indivisible
Co-$e#s%tio# Cou#tercl%i-
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1. 0e!uires #
debts must consist
in money or if
fungibles, same
,ind and !uality
1. 6ot necessary
#. Foth debts
must be
li!uidated
#. )oes not re!uire
that debts be
li!uidated
%. 6eed not be
pleaded
%. Gust be pleaded
to be effectual
&i#'s o( Co-$e#s%tio#
1. "egal 5 ta,es effect by operation
of law
#. 8oluntary 5 agreed upon by the
parties
%. Ludicial 5 ta,es effect by judicial
decree
(. Kacultative 5 when it can be
claimed by one of the parties
who, however, has the right to
object to it
De+ts #ot su+Cect to Co-$e#s%tio#:
1. debts arising from contracts of
deposit
#. debts arising from contracts of
commodatum
%. claims for support due by
gratuitous title
(. obligations arising from criminal
offenses
5. certain obligations in favor of
government
NOT): *a+es are not subject to set'off or
legal compensation because the
government ta+payers are not
mutually creditors debtors of each
other $Francia vs. &AC, 1)3 SCRA 45').
3%cult%ti0e Co-$e#s%tio#
*his is compensation which can be
set up only at the option of a
creditor, when legal compensation
cannot ta,e place because of want
of some legal re!uisites for the
benefit of the creditor. *he latter
can renounce his right to oppose the
compensation and he himself can set
it up. 9t differs from conventional
compensation because it is unilateral
while the latter depends upon the
agreement of both parties.
(*olentino, 8olume 98, p. %6-)
NO9ATION
Aubstitution or change of an
obligation by another, resulting in its
e+tinguishment or modification,
either by changing its object or
principal conditions, or by
substituting another in place of the
debtor, or by subrogating a third
person in the rights of the creditor.
Requisites:
a. a previous valid obligation.
b. agreement of the parties to the
new obligation.
c. e+tinguishment of the old
obligation. and
d. validity of the new obligation.
&i#'s:
1. As to its essence
a. <bjective=0eal ' refers to the
change either in the cause,
object or principal conditions of
the obligations
b. Aubjective=1ersonal ' refers to
the substitution of the person of
the debtor or to the subrogation
of a %rd person in the rights of
the creditor
c. Gi+ed
2. As to its formconstitution
a. B+press ' when it is declared in
une!uivocal terms that the old
obligation is e+tinguished by a
new one w=c substitutes the
same.
b. 9mplied ' when the old new
obligation are incompatible w=
each other on every point.
Test o( I#co-$%ti+ilit.
2hether or not the old and new
obligations can stand together, each
having its own independent
e+istence. 9f they can stand
together, there is no incompatibility.
conse!uently, there is no novation. 9f
they cannot stand together, there is
incompatibility. conse!uently, there
is novation.
3or-s o( Su+stitutio# o( De+tors:
C$AIRERSONS
85
1. -.+romision ' effected with the
consent of the creditor at the
instance of the new debtor even
without the consent or even
against the will of the old
debtor.
Requisites:
a. 9nitiative for substitution must
emanate from the new debtor
b. $onsent of the creditor to the
substitution
2. <elegacion ' effected with the
consent of the creditor at the
instance of the old debtor, with
the concurrence of the new
debtor.
Requisites:
a. 9nitiative for substitution must
emanate from the old debtor
b. $onsent of the new debtor
c. Acceptance by the creditor
)((ect o( i#sol0e#c. o( #e6 'e+tor
1. -.+romision 5 the new debtor?s
insolvency or nonfulfillment of
the obligation shall not revive
the original debtor?s liability to
the creditor whether the
substitution is effected with or
without the ,nowledge or
against the will of the original
debtor.
#. <elegacion 5 the creditor can sue the
old debtor only when the
insolvency was prior to the
delegation and publicly ,nown or
when the old debtor ,new of
such insolvency at the time he
delegated the obligation.
NOT): A change in the incidental
elements of, or an addition of such
elements to an obligation, unless
otherwise e+pressed by the parties, will
not result in its e+tinguishment.
CON9)NTIONAL
SBROGATION
ASSIGN>)NT O3
RIG1TS
1. governed by Arts.
1%// to 1%/(
1. governed by Arts.
16#( to 16#-
#. debtor?s consent
is re!uired
#. debtor?s consent
is not re!uired
%. e+tinguishes the
obligation and gives
rise to a new one
%. transmission of
right of the creditor
to third person
without modifying or
e+tinguishing the
obligation
(. defects and
vices in the old
obligation are cured
(. defects and vices
in the old obligation
are not cured
5. ta,es effect
upon moment of
novation or
subrogation
5. as far as the
debtor is concerned,
ta,es effect upon
notification
&i#'s o( Su+ro/%tio#
1. $onventional 5 ta,es place by
agreement of the parties. this ,ind
of subrogation re!uires the
intervention and consent of %
persons; the original creditor, the
new creditor and the debtor.
2. "egal 5 ta,es place without
agreement but by operation of law
because of certain acts (Article
1%/#).
%-N-RA1 R51-/ "egal subrogation
cannot be presumed.
-6C-P7&ONS/
1. $reditor pays another creditor who is
preferred, without debtor?s
,nowledge.
#. A third person not interested in the
obligation pays with the e+press or
tacit approval of the debtor. or
%. Bven without debtor?s ,nowledge, a
person interested in the fulfillment
of the obligation pays without
prejudice to the effects of confusion
as to the latter?s share.
II. CONTRACTS
CONTRACT
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 (Article 1%/5).
)le-e#ts
1. -ssential 5 those without which
there can be no contract.
a. $onsent
b. <bject or Aubject Gatter
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c. $ause or $onsideration
#. Natural 5 those derived from the
nature of the contract and ordinarily
accompany the same.
%. Accidental 5 those which e+ist only
when the parties e+pressly provide
for them for the purpose of limiting
or modifying the normal effects of
the contract.
No-i#%te co#tr%cts
*hose which have their own
distinctive individuality and are
regulated by special provisions of
law.
I##o-i#%te co#tr%cts
*hose which lac, individuality and
are not regulated by special
provisions of law.
0egulated by the stipulations of the
parties, by the general provisions of
the $ivil $ode on obligations and
contracts, by rule governing the
most analogous nominate contracts
and by the customs of the place.
&i#'s:
a. <o ut des ' 9 give that you give
b. <o ut acias ' 9 give that you do
c. Facio ut des ' 9 do that you give
d. Facio ut acias ' 9 do that you do
NOT): According to some
authorities. do ut des in no longer an
innominate contract. 9t has already
been given a name of its own, i.e.
+%rter or e<c*%#/e (Article 16%>).
C*%r%cteristics o( Co#tr%cts: (0<GA)
1. Relativity (A0* 1%11)
#. Obligatory Korce and $onsensuality
(A0* 1%15)
%. >utuality (A0* 1%/>)
(. Autonomy (A0* 1%/6)
Rel%ti0it.
%-N-RA1 R51-/ $ontracts ta,e effect
only between parties, their assigns and
heirs.
-6C-P7&ONS/
1. Atipulation +our atrui '
stipulation in favor of a third
person.
Requisites:
a. the stipulation must be a
part, not the whole of
the contract.
b. the contracting parties
must have clearly and
deliberately conferred a
favor upon a third
person, not a mere
incidental benefit or
interest.
c. the third person must
have communicated his
acceptance to the
obligor before its
revocation.
d. the favorable stipulation
should not be
conditioned or
compensated by any ,ind
of obligation whatever.
and
e. neither of the
contracting parties bears
the legal representative
or authoriHation of the
third person.
Test o( Be#e(ici%l Sti$ul%tio# 5 the
fairest test to determine whether the
interest of a %rd person in a contract is a
stipulation pour atrui or merely an
incidental interest is to rely upon the
intention of the parties as disclosed by
their contract. )etermine whether the
contracting parties desired to tender him
such an interest $5! 7am vs. 1eonard, '(
P"il. 041).
#. 2hen a third person induces a
party to violate contract
(A0*1%1()
Requisites:
a. B+istence of a valid contract.
b. ,nowledge of contract by
third person. and
c. interference by third person
without legal justification or
e+cuse.
%. *hird persons who come into
possession of the object of the
contract creating real rights
(. $ontracts entered into in fraud
of creditors
>utu%lit.
*he contract must bind both parties.
its validity or compliance must not
C$AIRERSONS
85
be left to the will of one of them.
(A0* 1%/>)
*he contract cannot have any
stipulation authoriHing one of the
contracting parties (a) to determine
whether or not the contract shall be
0%li', or (b) to determine whether
or not the contract shall be (ul(ille'.
Auto#o-.
*he parties are free to stipulate
anything they deem convenient
provided that they are not contrary
to law, morals, good customs, public
order and public policy. (A0* 1%/6)
Co#se#su%lit.
$ontracts are perfected by mere
consent and from that moment, the
parties are bound not only to the
fulfillment of what has been
e+pressly stipulated but also to all
conse!uences which, according to
their nature may be in ,eeping with
good faith, usage and law.

CONS)NT
Ganifested by the concurrence of
the offer and acceptance upon the
thing and the cause which are to
constitute the contract.
Requisites:
a. "egal capacity of the contracting
parties
b. Ganifestation of the conformity
of the contracting parties
c. *he parties? conformity to the
object, cause, the terms and
conditions of the contract must
be intelligent, spontaneous and
free from all vices of consent
d. *he said conformity must be real
and not simulated or fictitious
O((er
A proposal made by one party to
another to enter into a contract.
9t must be certain or definite,
complete and intentional.
NOT): <ffer=proposal may be withdrawn
so long as the offeror has no ,nowledge
of acceptance by offeree.
Acce$t%#ce
Ganifestation by the offeree of his
assent to the terms of the offer.
9t must me absolute.
A !ualified acceptance constitutes
counter'offer.
NOT): Acceptance may be revo,ed
before it comes to the ,nowledge of the
offeror.
A-$li(ie' Acce$t%#ce
Cnder certain circumstances, a mere
amplification on the offer must be
understood as an acceptance of the
original offer, plus a new offer which
is contained in the amplification.
(*olentino, 8olume 98, p. (5#)
Rule o# Co-$le< o((ers
1. <ffers are interrelated 5 contract is
perfected if %ll the offers are
accepted.
#. <ffers are not interrelated 5 single
acceptance of each offer results in a
perfected contract unless the offeror
has made it clear that one is
dependent upon the other and
acceptance of both is necessary.
NOT)S:
Consensual contracts are perfected
from the moment there is a
manifestation of concurrence
between the offer and the
acceptance regarding the object and
the cause.
Real contracts li,e deposit, pledge
and commodatum re!uires delivery
of object for perfection.
Solemn contracts are those which
re!uires compliance with certain
formalities prescribed by law, such
prescribed form being an essential
element (i.e., donation of real
property).
An offer made inter +raesentes must
be accepted 9GGB)9A*B"@. 9f the
parties intended that there should
be an e+press acceptance, the
contract will be perfected only upon
,nowledge by the offeror of the
e+press acceptance by the offeree of
the offer. An acceptance which is
not made in the manner prescribed
by the offeror is 6<* BKKB$*98B FC*
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A $<C6*B0'<KKB0 which the offeror
may accept or reject. $,albarosa vs.
CA, et al., %.R. = 1354)1, A+ril '(,
3((')
$ontracts under the $ivil $ode
generally adhere to the Co/#itio#
T*eor. (contract is perfected from
the moment the acceptance comes
to the ,nowledge of the offeror),
while transactions under the $ode of
$ommerce use the >%#i(est%tio#
T*eor. (it is perfected from the
moment the acceptance is declared
or made).
")RSONS INCA"ACITAT)D TO GI9)
CONS)NT:
1. Ginors
)BC)"TIONS:
$ontracts where the minor is
estopped to raise minority as a
defense through his own
misrepresentation
$ontracts for necessaries
$ontracts by guardians or legal
representatives
8oluntary fulfillment of a natural
obligation provided that the
minor is between 1>'#1 years of
age
$ontracts of life, health or
accident insurance ta,en on the
life of the minor
2. 9nsane or demented persons, unless
the contract was entered into during
a lucid interval
3. )eaf'mutes who do not ,now how to
read and write
)((ect o( >isre$rese#t%tio# o( A/e +.
t*e >i#or
Gisrepresentation by minors with
regard to their age when entering
into a contract shall bind them in
the sense that they are estopped
subse!uently from impugning the
validity of the contract on the
ground of minority. 9t is necessary
that the misrepresentation must be
%cti0e (e.g. when minors specifically
stated in a contract that they were
of age), not merely constructive.
9IC)S O3 CONS)NT (89GKC)
1. !iolence ' when in order to wrest
consent, serious or irresistible force
is employed.
2. Intimidation ' when 1 of the
contracting parties is compelled by
a reasonable well'grounded fear
of an imminent grave evil upon his
person or property, or upon the
person or property of his spouse,
descendants or ascendants, to give
his consent.
3. Mista>e ' should refer to the
substance of the thing which is the
object of the contract, or to those
conditions which have principally
moved one or both parties to enter
into the contact.
Gust be mista,e of fact and not of
law, e<ce$t under Article 1%%(.
0e!uisites under Article 1%%(;
a. Gista,e must be with respect
to the legal effect of an
agreement
b. Gista,e must be mutual
c. 0eal purpose of the parties
must have been frustrated.
4. "raud ' when, through insidious
words or machinations of 1 of the
contracting parties, the other is
induced to enter into a contract
which, without them, he would not
have agreed to.
5. #ndue inluence ' when a person
ta,es improper advantage of his
power over the will of another,
depriving the latter of a reasonable
freedom of choice.
Reluct%#t Co#se#t
A contract is valid even though one
of the parties entered into it against
his wishes and desires or even
against his better judgment.
$ontracts are also valid even though
they are entered into by one of the
parties without hope of advantage or
profit. $,artine2 vs. :ong>ong and
S"ang"ai 9an>, 15 P"il. 353)
Si-ul%tio# o( Co#tr%cts
1. Absolute 5 when the contracting
parties do not intend to be bound by
the contract at all. *hus, an
C$AIRERSONS
85
absolutely simulated contract is
8<9).
2. 0elative 5 when the contracting
parties conceal their true
agreement. A relatively simulate
contract binds the parties to their
real agreement, when it does not
prejudice a %rd person and is not
intended for any purpose contrary to
law, morals, good customs, public
order or public policy.
OB@)CT
*he thing, right or service which is
the subject matter of the obligation
arising from the contract.
Requisites:
a. 9t must be w=in the commerce of
man
b. 9t must be licit or not contrary
law, morals, good customs,
public order or public policy
c. 9t must be possible
d. 9t must be determinate as to its
,ind
T*i#/s 6*ic* C%##ot +e t*e O+Cect o(
Co#tr%ct
1. *hings which are outside the
commerce of men
#. 9ntransmissible rights
%. Kuture inheritance, e+cept in
cases e+pressly authoriHed by
law
(. Aervices which are contrary to
law, morals, good customs,
public order or public policy
5. 9mpossible things or services
6. <bjects which are not possible of
determination as to their ,ind
CAS)
*he immediate, direct and most
pro+imate reason which e+plains and
justifies the creation of obligation.
Requisites
a. $ause should be in e+istence at
the time of the celebration of
the contract
b. $ause should be licit or lawful
c. $ause should be true
Rules:
1. 9n o#erous co#tr%cts, the cause is
understood to be, for each
contracting party, the prestation of
promise of a thing or service by the
other.
#. 9n re-u#er%tor. co#tr%cts, the
service or benefit w=c is
remunerated.
%. 9n contracts of $ure +e#e(ice#ce,
the mere liberality of the donor or
benefactor.
(. 9n %ccessor. co#tr%cts (mortgage or
pledge), the cause is identical with
the cause of the principal contract,
that is, the loan from which it
derives its life and e+istence.
CAS) )33)CT
1. Absence of cause
the contract confers
no right and produces
no legal effect
#. Kailure of cause
does not render the
contract void
%. 9llegality of cause
the contract is null
and void
(. Kalsity of cause
the contract is void,
unless the parties
show that there is
another cause which
is true and lawful
5. "esion
does not invalidate
the contract, unless
(a) there is fraud,
mista,e or undue
influence. or (b)
when the parties
intended a donation
or some other
contract
3OR> O3 CONTRACTS
%-N-RA1 R51-/ $ontracts shall be
obligatory, in whatever form they may
have been entered into, provided all the
essential re!uisites for their validity are
present.
-6C-P7&ONS/
1. 2hen the law re!uires that a
contract be in some form in order
that it may be 0%li'
2. 2hen the law re!uires that a
contract be in some form in order
that it may be e#(orce%+le
NOT)S:
1arties may compel each other to
comply with the form re!uired once
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the contract has been perfected.
(Article 1%5-)
$ontracts under Art 1%5> which are
re!uired to be in some specific form
is only for the convenience of parties
and does not affect its validity and
enforceability as between them.
RA 87D2 ()! CO>>)RC) ACT) provides
that the formal re!uirements to ma,e
contracts effective as against third
persons and to establish the e+istence of
a contract are deemed complied with
provided that the electronic document is
unaltered and can be authenticated as
to be usable for future reference.
R)3OR>ATION O3 INSTR>)NTS
Requisites:
a. meeting of the minds to the
contract
b. true intention is not e+pressed in
the instrument by reason of
mista,e, accident, relative
simulation, fraud, or ine!uitable
conduct
c. clear and convincing proof of
mista,e, accident, relative
simulation, fraud, or ine!uitable
conduct
I#st%#ces 6*e# t*ere c%# +e #o
re(or-%tio#:
1. Aimple unconditional donations
inter vivos.
#. 2ills.
%. 2hen the agreement is void.
2hen one of the parties has brought an
action to enforce the instrument, no
subse!uent reformation can be as,ed.
CO>"ARATI9) TABL) O3 D)3)CTI9) CONTRACTS
9OID 9OIDABL) R)SCISSIBL) N)N3ORC)ABL)
1. )efect is caused
by lac, of essential
elements or illegality
)efect is caused by vice
of consent
)efect is caused by
injury= damage either
to one of the parties of
to a %rd person
)efect is caused by
lac, of form,
authority, or capacity
of both parties not
cured by prescription
#. )o not, as a
general rule produce
any legal effect
8alid and enforceable
until they are annulled
by a competent court
8alid and enforceable
until they are rescinded
by a competent court
$annot be enforced
by a proper action in
court
%. Action for the
declaration or nullity
or ine+istence or
defense of nullity or
ine+istence does not
prescribe
Action for annulment or
defense of annulability
may prescribe
Action for rescission
may prescribe
$orresponding action
for recovery, if there
was total or partial
performance of the
unenforceable
contract under 6o. 1
or % of Article 1(/%
may prescribe
(. 6ot cured by
prescription
$ured by prescription $ured by prescription 6ot cured by
prescription
5. $annot be ratified $an be ratified 6eed not be ratified $an be ratified
6. Assailed not only
by a contracting
party but even by a
Assailed only by a
contracting party
Assailed not only by a
contracting party but
even by a third person
Assailed only by a
contracting party
C$AIRERSONS
85
third person whose
interest is directly
affected
who is prejudiced or
damaged by the
contract
-. Assailed directly
or collaterally
Assailed directly or
collaterally
Assailed directly only Assailed directly or
collaterally
R)SCISSIBL) CONTRACTS
$ontracts validly agreed upon but,
by reason of lesion or economic
prejudice may be rescinded in cases
established by law.
;*%t co#tr%cts %re rescissi+le
1. those entered into by /uardians
where the ward suffers lesion of
more than M of the value of the
things which are objects thereof.
#. those agreed upon in representation
of %bsentees, if the latter suffer
lesion by more than M of the value
of the things which are subject
thereof.
%. those underta,en in fraud of
creditors when the latter cannot in
any manner claim what are due
them.
(. those which refer to things under
litigation if they have been entered
into by the defendant without the
,nowledge and approval of the
litigants and the court.
5. all other contracts especially
declared by law to be subject to
rescission. and
6. payments made in a state of
insolvency on account of obligations
not yet enforceable
Requisites:
a. the contract must be rescissible
b. the party as,ing for rescission
must have no other legal means
c. to obtain reparation for the
damages suffered by him
d. the person demanding rescission
must be able to return whatever
he may be obliged to restore if
rescission is granted
e. the things w=c are the object of
the contract must not have
passed legally to the possession
of a %rd person acting in good
faith
f. the action for rescission must be
brought w=in the prescriptive
period of ( years
BADG)S O3 3RAD:
1. $onsideration of the conveyance
is inade!uate or fictitious.
#. *ransfer was made by a debtor
after a suit has been begun and
while it is pending against him.
%. Aale upon credit by an insolvent
debtor.
(. Bvidence of indebtedness or
complete insolvency
5. *ransfer of all his property by a
debtor when he is financially
embarrassed or insolvent.
6. *ransfer made between father
son, where there is present any
of the above circumstances
-. Kailure of the vendee to ta,e
e+clusive possession of all the
property
Rescissio# i#
Article 11D1
Rescissio# "ro$er
i# Article 1481
1. 9t is a principal
action retaliatory in
character.
1. 9t is a subsidiary
remedy.
#. *he only ground is
non'performance of
one?s obligation=s or
what is incumbent
upon him.
#. *here are 5
grounds to rescind.
6on'performance by
the other party is not
important.
%. 9t applies only to
reciprocal obligation
%. 9t applies to both
unilateral and
reciprocal
obligations.
(. <nly a party to the
contract may demand
fulfillment or see,
the rescission of the
contract.
(. Bven a %rd person
who is prejudiced by
the contract may
demand the
rescission of the
contract.
5. $ourt may fi+ a
period or grant
5. $ourt cannot grant
e+tension of time for
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
==: 2005 CENTRALIZED BAR OPERATIONS
e+tension of time for
the fulfillment of the
obligation.
fulfillment of the
obligation.
6. 9ts purpose is to
cancel the contract.
6. 9ts purpose is to
see, reparation for
the damage or injury
caused, thus allowing
partial rescission of
the contract.
9OIDABL) CONTRACTS
*hose in which all of the essential
elements for validity are present,
although the element of consent is
vitiated either by lac, of capacity of
one of the contracting parties or by
89GKC.
;*%t co#tr%cts %re 0oi'%+le
1. *hose where one of the parties is
incapable of giving consent to a
contract
#. *hose where the consent is vitiated
by mista,e, violence, intimidation,
undue influence or fraud
C%uses o( e<ti#ctio# o( %ctio# to %##ul:
1. 10BA$091*9<6
the action must be commenced
within ( years from;
a. the time the incapacity
ends.
b. the time the violence,
intimidation or undue
influence ends. or
c. the time the mista,e or
fraud is discovered.
NOT): )iscovery of fraud must be
rec,oned to have ta,en place from
the time the document was
registered in the office of the
register of deeds. 0egistration
constitutes constructive notice to
the whole world. $Carantes vs. CA,
4) SCRA 510)
#. 0A*9K9$A*9<6
Requisites:
a. there must be ,nowledge of
the reason which renders
the contract voidable
b. such reason must have
ceased and
c. the injured party must have
e+ecuted an act which
e+pressly or impliedly
conveys an intention to
waive his right
%. Fy loss of the thing which is the
object of the contract through fraud
or fault of the person who is entitled
to annul the contract.
NOT): 9f the object is lost through
ortuitous event, the contract can still
be annulled, but the person obliged to
return the same can be held liable only
for the value of the thing at the time of
the loss, but without interest thereon.
N)N3ORC)ABL) CONTRACTS
*hose which cannot be enforced by
proper action in court unless they
are ratified
;*%t co#tr%cts %re u#e#(orce%+le
1. those entered into in the name of
another by one without or acting in
e+cess of authority.
#. those where both parties are
incapable of giving consent. and
%. those which do not comply with the
Atatute of Krauds
A/ree-e#ts 6it*i# t*e sco$e o( t*e
St%tute o( 3r%u's (BN$"CA98B "9A*):
1. Agreements not to be performed
within one year from the ma,ing
thereof.
#. Apecial promise to answer for the
debt, default or miscarriage of
another.
NOT): *his does not refer to the original
or independent promise of the
debtor to his own creditor. 9t refers
rather to a coll%ter%l $ro-ise.
%. Agreement in consideration of
marriage other than a mutual
promise to marry.
(. Agreement for the sale of goods,
etc. at a price not less than 15//.//.
5. $ontracts of lease for a period
longer than one year.
6. Agreements for the sale of real
property or interest therein. and
-. 0epresentation as to the credit of a
third person.
NOT)S:
C$AIRERSONS
85
*he contracts=agreements under the
Atatute of Krauds re!uire that the
same be evidenced by some note,
memorandum or writing, subscribed
by the party charged or by his agent,
otherwise, the said contracts shall
be unenforceable.
*he statute of frauds applies only to
e+ecutory contracts, not to those
that are partially or completely
fulfilled.
R%ti(ic%tio# o( co#tr%cts i# 0iol%tio# o(
t*e St%tute o( 3r%u's
1. Kailure to object to the presentation
of oral evidence to prove such
contracts
#. Acceptance of benefits under these
contracts
9OID CONTRACTS
*hose where all of the re!uisites of a
contract are present but the cause,
object or purpose is contrary to law,
morals, good customs, public order
or public policy, or contract itself is
prohibited or declared void by law.
$%at contracts are void
1. *hose whose cause, object or
purpose is contrary to law, morals
good customs, public order or public
policy.
#. *hose whose object is outside the
commerce of men.
%. *hose which contemplate an
impossible service.
(. *hose where the intention of the
parties relative to the principal
object of the contract cannot be
ascertained. and
5. *hose e+pressly prohibited or
declared void by law.
IN)BIST)NT CONTRACTS
*hose where one or some or all of
the re!uisites essential for the
validity of a contract are absolutely
lac,ing.
;*%t co#tr%cts %re i#e<iste#t
1. *hose which are absolutely
simulated or fictitious. and
#. *hose whose cause or object did not
e+ist at the time of the transaction.
NOT): *he principle of &n Pari <elicto is
applicable only to void contracts and not
as to ine+istent contracts.
"ri#ci$le o( In Pari Delicto
%-N-RA1 R51-/ 2hen the defect of a
void contract consists in the illegality of
the cause or object of the contract and
both of the parties are at fault or in +ari
delicto, the law refuses them every
remedy and leaves them where they are.
-6C-P7&ONS/
1. 1ayment of usurious interest
#. 1ayment of money or delivery of
property for an illegal purpose,
where the party who paid or
delivered repudiates the
contract before the purpose has
been accomplished, or before
any damage has been caused to
a %rd person.
%. 1ayment of money or delivery of
property made by an
incapacitated person
(. Agreement or contract which is
not illegal +er se the
prohibition is designed for the
protection of the plaintiff
5. 1ayment of any amount in e+cess
of the ma+imum price of any
article or commodity fi+ed by
law or regulation by competent
authority.
6. $ontract whereby a laborer
underta,es to wor, longer than
the ma+imum O of hours fi+ed by
law.
-. $ontract whereby a laborer
accepts a wage lower than the
minimum wage fi+ed by law.
>. <ne who lost in gambling
because of fraudulent schemes
practiced on him is allowed to
recover his losses D(Art. %15, %
(b), 01$E even if gambling is a
prohibited one.
Rules 6*e# o#l. o#e o( t*e $%rties is %t
(%ult:
1. -.ecuted Contracts/
a. 7uilty party is barred from
recovering what he has given to
the other party is barred from
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,
==; 2005 CENTRALIZED BAR OPERATIONS
recovering what he has given to
the other party by reason of the
contract.
b. 9nnocent party may demand for
the return for the return of
what he has given.
#. -.ecutor! Contracts ? 6either of the
contracting parties can demand for
the fulfillment of any obligation
from the contract nor may be
compelled to comply with such
obligation
NATRAL OBLIGATIONS
*hey are real obligations to which
the law denies an action, but which
the debtor may perform voluntarily.
9t is patrimonial, and presupposes a
prestation.
*he binding tie of these obligations
is in the conscience of man, for
under the law, they do not have the
necessary efficacy to give rise to an
action.
)<%-$les o( #%tur%l o+li/%tio#s
e#u-er%te' u#'er t*e Ci0il Co'e:
1. 1erformance after the civil
obligation has prescribed.
#. 0eimbursement of a third person for
a debt that has prescribed.
%. 0estitution by minor after annulment
of contract.
(. )elivery by minor of money or
fungible thing in fulfillment of
obligation.
5. 1erformance after action to enforce
civil obligation has failed.
6. 1ayment by heir of debt e+ceeding
value of property inherited. and
-. 1ayment of legacy after will have
been declared void.
)STO"")L
A condition or state by virtue of
which an admission or
representation is rendered
conclusive upon the person ma,ing it
and cannot be denied or disproved
as against the person relying
thereon.
&i#'s:
1. Bstoppel in 1ais (by conduct)
a. Bstoppel by silence
b. Bstoppel by acceptance of
benefits
#. *echnical Bstoppel
a. Bstoppel by deed
b. Bstoppel by record
c. Bstoppel by judgment
d. Bstoppel by laches
LAC1)S or ESTAL) D)>ANDSF
Kailure or neglect, for an
unreasonable and une+plained length
of time, to do that which, by
e+ercising due diligence, could or
should have been done earlier. it is
negligence or omission to assert a
right within reasonable time,
warranting a presumption that the
party entitled to assert it either has
abandoned it or declined to assert it.
)le-e#ts:
a. $onduct on part of the
defendant, or of one under
whom he claims, giving rise to
the situation of which complaint
is made and for which the
complaint see,s a remedy
b. )elay in asserting the
complainant?s rights, the
complainant having ,nowledge
or notice, of the defendant?s
conduct and having been
afforded the opportunity to
institute a suit
c. "ac, of ,nowledge or notice on
the part of the defendant that
the complainant would assert
the right on which he bases his
suit
d. 9njury to the defendant in the
event relief is accorded tot the
complainant, or the suit in not
held to be barred
C$AIRERSONS
85
LAC1)S "R)SCRI"TION
1. concerned with
effect of delay
1. concerned with
fact of delay
2. !uestion of
ine!uity of
permitting the claim
to be enforced
2. !uestion or
matter of time
4. not statutory 4. statutory
5. applies in e!uity 5. applies at law
5. not based on a
fi+ed time
5. based on a fi+ed
time
CIVIL LAW COMMITTEE
R#odora
Jo#n S"e&#en
Pur(anan)/TD+,

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