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INTRODUCTION TO LAW
The General Nature of Law
Meaning of law in general

Law - any rule of action; any system of uniformity

General divisions of law

1. Law (in the strict legal sense) - promulgated and enforced by the state

2. Law (in the non-legal sense) - not promulgated and enforced by the state

Subjects of Law
Divine Law - law of religion and faith
Natural Law - sense of justice, fairness, and righteousness by internal dictates of
reason alone
Moral Law - good and right conduct; sense of right and wrong

Physical Law - law of physics

State Law - promulgated and enforced by the state

Concepts of Law
a. General Sense - mass of obligatory rules for governing the relations of people in
the society

b. Specific Sense - rule of conduct, just, obligatory, promulgated by legitimate

authority, and of common observance and benefit

Characteristics of a Law
Rule of conduct

Obligatory

Promulgated by legitimate authority

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 Common observance and benefit

Sources of Law
1. Constitution - supreme law, promulgated by the people themselves

2. Legislation - declaration of legal rules by a competent authority

3. Administrative or executive orders, regulations, and rulings - issued by

administrative officials under legislative authority

4. Judicial decisions or jurisprudence - decisions of the courts, i.e., Supreme

Court

5. Customs - habits and practices (norms) approved by the society through long
uninterrupted usage

Rule in case of doubt in interpretation or application of laws

Article 9. No judge or court shall decline to render judgment by reason of silence,
obscurity, or insufficiency of the laws.
Article 10. In case of doubt in the interpretation or application of laws, it is
presumed that the lawmaking body intended right and justice to prevail.

Classifications of Laws
As to its purpose:

a. Substantive Law - creating, defining, and regulating rights and duties; may be
public or private, e.g., law on obligations and contracts

b. Adjective Law - prescribes the manner or procedure by which rights may be

enforced or violations redressed; a.k.a. remedial law or procedural law

As to its subject matter:

a. Public Law - relationship of the state to the people

b. Private Law - relations of individuals with one another; state acts as an arbiter,
not as a party

TITLE I: Obligations
CHAPTER 1: General Provisions

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 Article 1156. An obligation is a juridical necessity to give, to do,
or not to do (n)
Obligation - derived from the Latin word obligatio meaning tying or binding; tie
or bond recognized by law by virtue which one is bound in favor of another to
render something (to give, to do, or not to do); the Civil Code defines obligation
as the duty under the law of the debtor or obligor when it speaks of obligation as
a juridical necessity.

Juridical Necessity - in case of noncompliance, the courts of justice may be

called upon the aggrieved party to enforce its fulfillment.

Nature of Obligations under the Civil Code

a. Civil Obligations - obligations which give to the creditor or obligee a right under
the law to enforce their performance in courts of justice

b. Natural Obligations - based on natural law; do not grant a right of action to

enforce performance

Essential Requisites of an Obligation

1. Passive Subject (Debtor / Obligor) - bound to the fulfillment of the obligation; he
who has a duty

2. Active Subject (Creditor / Obligee) - entitled to the demand fulfillment; he who

has a right

3. Object or Prestation (Subject Matter) - the conduct required to be observed by

the debtor (what to give, to do, or not to do); in bilateral obligations, both parties
are reciprocally debtors and creditors (Art. 1191)

4. Juridical or Legal Tie (Efficient Cause) - binds or connects the parties to the
obligation; the tie can be determined by the source of obligation (Art. 1157.)

Form of Obligation
It refers to the manner in which an obligation is manifested or incurred. It may be
oral, written, or partly oral and partly written.

As a general rule, the law does not require any form for obligations arising from
contracts for their validity or binding force (Art. 1356.)

Obligations arising from other sources (Art. 1157.) do not have any form at all.

Obligation, right, and wrong

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 a. Obligation - act or performance which the law will enforce

b. Right - power to demand from another any prestation

c. Wrong - act or omission of one party in violation of the legal right/s of another;
the term injury is also used referring to the violation of the legal right of another.

Essential elements of a legal wrong or injury:

1. legal right in favor of a person (creditor/obligee/plaintiff)

2. correlative legal obligation on the part of another (debtor/obligor/defendant);

to respect or not to violate said right; and

3. act of omission by the debtor in violation of said right with resulting injury or
damage to the former

Kinds of Obligation according to Subject Matter

1. Real Obligation - obligation to give; the obligor must deliver a thing to the
obligee.

2. Personal Obligation - obligation to do or not to do; the subject is an act to be

done or not to be done

a. Positive Personal Obligation - to do or to render a service

b. Negative Personal Obligation - not to do

Article 1157. Obligations arise from: (1) Law; (2) Contracts; (3)
Quasi-contracts; (4) Acts or omissions punished by law; and (5)
Quasi-delicts. (1089a)

Sources of Obligations
1. Law - imposed by the law itself, e.g., to pay taxes

2. Contracts - stipulation (condition) of the parties, e.g., to repay a loan

3. Quasi-contracts - lawful, voluntary, and unilateral acts which are enforceable to

the end that no one shall be unjustly enriched or benefited at the expense of
another; may be considered as arising from law, e.g., to return money paid
(received) by mistake

4. Crimes or acts or omissions punished by law - civil liability, the consequence

of a criminal offense, e.g., a thief to return the car stolen, a killer to indemnify the
heirs of the victim

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 5. Quasi-delicts or torts - damage caused to another through act or omission,
there being fault or negligence, but no contractual relation exists between
parties, e.g., a dog-owner to pay for the damage which the dog may have
caused

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. (1090)
Legal obligations arise from law, they are not presumed for they are considered a
burden upon the obligor. They are the exception, not the rule. To be demandable,
they must be clearly set forth in the law, i.e., the Civil Code or special laws.
A private school has no legal obligation to provide clothing allowance to its
teachers because there is no law which imposes this obligation upon schools.
But a person who wins money in gambling has the duty to return his winnings to
the loser. This obligation is provided by law. (Art. 2014.)
Special laws refer to all other laws not contained in the Civil Code such as
Corporation Code, Negotiable Instruments Law, Insurance Code, National Internal
Revenue Code, Revised Penal Code, Labor Code, etc.

Article 1159. Obligations arising from contracts have the force

of law between the contracting parties and should be complied
with in good faith. (1091a)
Contractual obligations arise from contracts or voluntary agreements. It
presupposes that the contracts entered into are valid and enforceable.

A contract is a meeting of minds between two (2) (or more) persons whereby one
binds himself, with respect to the other, to give something or to render some service.
(Art. 1305.)

1. Binding Force - force of law between the contracting parties, i.e., they have
the same binding effect of obligations imposed by laws; does not mean that
the contract is superior to the law, but a contract must be valid and cannot be
valid if it is against the law.

2. Requirement of a Valid Contract - a contract is valid if it is not contrary to

law, morals, good customs, public order, and public policy.

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 3. Breach of Contract - takes place when a party fails or refuses to comply,
without legal reason or justification, with his obligation under the contract as
promised.

Compliance in good faith means compliance or performance in accordance with

the stipulations or terms of the contract or agreement.

Although a contract provides no penalty for its violation, a party cannot breach it with
impunity. The oppressed party is afforded remedies to protect its rights. (see Art.
1191.)

Article 1160. Obligations derived from quasi-contracts shall be

subject to the provisions of Chapter 1, Title XVII of this Book. (n)
Quasi-contractual obligations arise from quasi-contracts or contracts implied in
law.
A quasi-contract is that juridical relation resulting from lawful, voluntary, and
unilateral acts which are enforceable to the end that no one shall be unjustly
enriched or benefited at the expense of another. (Art. 2142.)

It is not a contract since there is no formal agreement, but the same is supplied by
fiction of law. The law considers the parties as having entered into a contract to
prevent injustice (unjust enrichment of a person at the expense of another).

Kinds of Quasi-contracts
1. Negotiorium gestio - voluntary management of the property or affairs of
another without the knowledge or consent of the latter. (Art. 2144.)

EX. Obligation of X to reimburse Y for expenses incurred in saving the house of

X from being burned in a fire.

2. Solutio indebiti - juridical relation created when something is received when

there is no right to demand it and it was unduly delivered by mistake (Art. 2154.);
based on the principle that no one shall enrich himself unjustly at the expense of
another

Requisites for solutio indebiti:

a. There is no right to receive the thing delivered; and

b. The thing was delivered through mistake

EX. Obligation of T to return money received from D that was supposed to be

paid to C.

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 3. Other examples of quasi-contracts - provided in Articles 2164 to 2175 of the Civil
Code; the cases that have been classified as quasi-contracts are of infinite
variety; recovery may be allowed on the basis of a quasi-contract

EX. Obligation of B to pay S for leaving milk on B’s porch every morning.

Article 1161. Civil obligations rising 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. (1092a)

Civil Liability arising from Crimes or Delicts

1. Civil liability in addition to criminal liability - every person criminally liable for
an act or omission is also civilly liable for damages suffered by the aggrieved
party (Art. 100, Revised Penal Code).

2. Criminal liability without civil liability - crimes not causing material damage,
e.g., violation of traffic regulations, there is no civil liability to be enforced.

3. Civil liability without criminal liability - a person not criminally responsible

may still be liable civilly (Art. 29; Sec 2[c], Rule 111, Rules of Court), e.g., failure
to pay contractual debt, or when obligation arises from quasi-delict, not alleged
and proved as criminal offense.

Scope of Civil Liability

1. Restitution (restoration, replacement)

2. Reparation for the damage caused (remedy)

3. Indemnification for consequential damages (Art. 104, Revised Penal Code)

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. (1093a)
A quasi-delict is an act or omission by a person which causes damage to another in
his person, property, or rights giving rise to an obligation to pay for the damage done,
there being fault or negligence but there is no pre-existing contractual relation
between the parties. (Art. 2176.)

Requisites of a quasi-delict:

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 a. There must be an act or omission

b. There must be fault or negligence

c. There must be damage caused

d. There must be a direct relation or connection of cause and effect between

the act or omission and the damage

e. There is no pre-existing contractual relation between parties.

EX. Obligation of X to pay the damage caused to Y after accidentally breaking Y’s
window while playing softball with his friends.

CHAPTER 2: Nature and Effect of Obligations

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. (1094a)
Specific or Determinate Thing - particularly designated or physically segregated
from others of the same class (Art. 1459.), e.g., the car with plate no. AAV-316
(2008)

Generic or Indeterminate Thing - refers only to a class or genus to which it

pertains; cannot be pointed out with particularity, e.g., a 2016 Toyota car

Duties of Debtor to Give a Determinate Thing

1. Preserve and take care of the thing

a. Diligence of a good father of a family - ordinary care; diligence which an

average person exercises over his own property

b. Another standard of care - if the law or stipulation of parties provides

another standard of care (slight or extraordinary diligence), said law or
stipulation must prevail (Art. 1163.)

c. Factors to be considered - diligence required depends upon the nature of

the obligation and corresponds with the circumstances of the person, time,
and place; debtor is not liable if failure to preserve is not due to his
fault/negligence but to fortuitous events or force majeure

d. Reason for debtor’s obligation - debtor must exercise diligence to insure

that the thing to be delivered would subsist in the same condition as it was

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 when the obligation was contracted

2. Deliver the fruits of the thing

3. Deliver the accessions and accessories

4. Deliver the thing itself

5. Answer for damages in case of non-fulfillment or breach

Duties of Debtor to Deliver a Generic Thing

(1) To deliver a thing which is of the quality intended by the parties; and

(2) To be liable for damages in case of fraud, negligence, or delay…

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. (1095)

Different Kinds of Fruits

1. Natural Fruits - spontaneous products of the soil, and the young, and other
products of animals, e.g., grass, all trees and plants produced w/o labor

2. Industrial Fruits - produced through cultivation or labor, e.g., sugar cane,

vegetables, rice

3. Civil Fruits - derived by virtue of a juridical relation, e.g., rents of buildings,

prices of leases of lands, amount of life annuities, etc.

Right of Creditor to the Fruits

The creditor is entitled to the fruits of the thing to be delivered from when the
obligation to make delivery arises.

The intention of the law is to protect the interest of the obligee should the obligor
commit delay, purposely or otherwise, in the fulfillment of his obligation.

When obligation to deliver fruits arises

(1) Generally, the obligation to deliver the thing due arises from the time of the
perfection of the contract, wherein perfection refers to the meeting of minds
between parties.

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 (2) If the obligation is subject to a suspensive condition/period, it arises upon the
fulfillment of the condition or the arrival of the term; however, parties may
stipulate to the contrary as regards the right of the creditor to the fruits of the thing.

(3) In a contract of sale, obligation arises from the perfection of the contract even if
it is subject to a suspensive condition 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 specific provisions of the law
applicable.

Personal Right and Real Right

1. Personal Right - right of a person (creditor) to demand from another (debtor)
the fulfillment of the latter’s obligation

2. Real Right - right of a person over a specific thing, e.g., ownership, possession,
without a definite passive subject

Ownership Acquired by Delivery

“He shall acquire no real right over it until the same has been delivered to him,”
means that the creditor does not become the owner until the specific thing has been
delivered to him.

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 fortuitous event until he has effected
the delivery. (1096)

Remedies of Creditor in Real Obligation

1. In a specific real obligation, if the debtor fails to comply, the creditor may:

a. demand specific performance or fulfillment of the obligation with a right to

indemnity for damages; or

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 b. demand rescission or cancellation of the obligation also with a right to
recover damages; or

c. demand payment for damages only, where it is the only feasible remedy

2. A generic real obligation can be performed by a third person, making it

unnecessary for the creditor to compel the debtor to make the delivery.

In any case, the creditor has the right to recover damages under Article 1170 in
case of breach or violation of the obligation.

When debtor delays or has promised delivery to separate

creditors
Paragraph 3 gives two instances when a fortuitous event does not exempt the debtor
from responsibility. It likewise refers to a determinate thing.

An indeterminate thing cannot be the object of destruction by a fortuitous event

because genus nunquam perit (genus never perishes), (Arts. 1174, 1263.)

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. (1097a)
Accessions - fruits of a thing, additions or improvements

e.g., house or trees on a land, rents of a building, air conditioner in a car,

profits accruing from stocks

Accessories - things joined to or included with the principal thing for

embellishment, better use, or completion

e.g., key of a house, frame of a picture, bracelet of a watch, bow of a violin.

Right of Creditor to Accessions and Accessories

All accessions and accessories are considered included in the obligation to deliver
a determinate thing. This is based on the principle of law that the accessory follows
the principal. In order that they will be excluded, there must be a stipulation to that
effect.

Article 1167. If a person obliged to do something fails to do it,

the same shall be executed at his cost.

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 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. (1098)

Situations contemplated in Art. 1167

1. The debtor fails to perform an obligation to do;

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 poor manner.

Remedies of Creditor in Positive Personal Obligation

1. If debtor fails to comply, the creditor has the right:

a. to have the obligation performed by himself, or another, unless personal

considerations are involved, at the debtor’s expense; and

b. to recover damages (Art. 1170.)

2. In case the obligation is done in contravention of the terms or is poorly done, it

may be ordered (by the court upon complaint) that it be undone if it is still
possible.

Performance by a Third Person

1. Compelling performance by debtor prohibited - a personal obligation to do
can be performed by a third person; while the debtor can be compelled to make
a delivery of a specific thing, a specific performance (to do) cannot be ordered to
be done because it may amount to involuntary servitude which is prohibited
under the Constitution.

2. Indemnification of creditor for damages - if personal qualifications are the

motive for the obligation, e.g., to sing in a night club, performance of the same
by another would be impossible; the only feasible remedy would be
indemnification for damages.

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. (1099a)

Remedies of Creditor in Negative Personal Obligation

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 The remedy of the obligee is the undoing of the forbidden thing plus damages.
However, if it is not possible to undo what was done, his remedy is an action for
damages cause by the debtor’s violation of the obligation.

Article 1169. Those obliged to deliver or to do something incur

in delay from the time the obligee 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 declares; 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. (1100a)

Definition and Kinds of Delay

Delay - not to be understood in common parlance; classified into ordinary delay and
legal delay

1. Ordinary Delay - mere failure to perform an obligation on time

2. Legal Delay or Default or Mora - failure to perform obligation on time which

failure constitutes a breach of the obligation

a. Mora Solvendi - delay on the part of the debtor to fulfill his obligation

b. Mora Accipiendi - delay on the part of the creditor to accept the

performance of the obligation

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 c. Compensatio Morae - delay of obligors in reciprocal obligations, e.g.,
sale; delay of obligor cancels delay of obligee, and vice-versa

Delay is impossible for negative personal obligations.

Requisites of Delay or Default by Debtor

1. Failure of debtor to perform his (positive) obligation on the date agreed upon

2. Demand made by creditor upon the debtor to comply with his obligation; may be
judicial or extrajudicial

3. Failure of debtor to comply with such demand

Effects of Delay
1. Mora Solvendi

a. Debtor is guilty of breach of obligation.

b. He is liable to the creditor for interest or damages. In the absence of

extrajudicial demand, the interest shall commence from the filing of the
complaint.

c. He is liable even for a fortuitous event when the obligation is to deliver a

determinate thing. However, if debtor can prove that the loss would have
been the same even if he had not been in default, the court may
mitigate/reduce the damages.

2. Mora Accipiendi

a. Creditor is guilty of breach of obligation.

b. He is liable for damages suffered, if any, by the debtor.

c. He bears the risk of loss of the thing due.

d. Where the obligation is to pay money, the debtor is not liable for interest
from the time of the creditor’s delay.

e. The debtor may release himself from the obligation by the consignation
or deposit in court of the thing or sum due.

3. Compensatio Morae - there is no default or delay on the part of both parties;

the liability of the first infractor shall be equitably tempered or balanced by the
courts; inability to determine parties guilty of delay, contract shall be deemed
extinguished and each shall bear his own damages (Art. 1192.)

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 When demand is not necessary to put debtor in delay
Delay by the debtor begins only from the moment a demand is made by the creditor.
Without such amount, the effect of default will not rise. The exceptions are:

1. When the obligation so provides —

e.g., If D fails to pay C the sum of P20,000 he promised to pay on or before
November 30, he is automatically in default.

2. When the law so provides —

e.g., Taxes should be paid on or before a specific date; otherwise, penalties are
imposed.

3. When time is of the essence —

e.g., The delivery of balloons on a particular date when a children’s party will be
held.

4. When demand would be useless —

e.g., S obliged himself to deliver a specific horse to B, but due to negligence, the
horse died — any demand would be useless as S has made the obligation of
delivering a specific horse impossible.

5. When there is performance by a party in reciprocal obligations —

From the moment a party fulfills his obligation, delay by the other begins.

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.
(1101)

Grounds for Liability

1. Fraud (deceit or dolo) - deliberate or intentional evasion of the normal
fulfillment of an obligation
e.g., S delivering 20 bottles of cheaper wine to B who ordered wine of a
particular brand.
Art. 1170 refers to incidental fraud (dolo incidente) committed in the performance
of an obligation already existing because of contract.

2. Negligence (fault or culpa) - voluntary act or omission, with no bad faith or

malice, preventing the normal fulfillment of an obligation

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 e.g., A driver of a taxi company being caught in an accident while driving a
passenger to his destination.

3. Delay (mora) - Article 1169

4. Contravention of the terms of the obligation - violation of terms and

conditions without justifiable reason; must not be due to fortuitous events

Article 1171. Responsibility arising from fraud is demandable in

all obligations. Any waiver of an action for future fraud is void.
(1102a)

Responsibility arising from fraud demandable

Refers to incidental fraud which is employed in the fulfillment of an obligation
(Art. 1170.)

The court cannot mitigate or reduce damages as fraud is deemed serious and
evil.

Waiver of action for future fraud void

Against the law and public policy (Art. 1409[1].)

It would encourage the perpetration of fraud as obligor knows that even if he

commits fraud, he will not be liable — making the obligation illusory.

Waiver of action for past fraud valid

Valid because waiver can be considered as act of generosity on the part of the
victim.

Effect of fraud renounced — the right to indemnity of the party entitled thereto.

Must be expressed in clear language leaving no doubt to the intention of the

obligee to give up his right against the obligor.

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. (1103)

Responsibility arising from negligence demandable

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 In every performance of obligation, the debtor is also liable for damages resulting
from his negligence.

(1) Discretion of court to fix amount of damages - negligence is a question which

necessarily depends upon circumstances; negligence is not as serious as fraud as
there is no deliberate intention to cause damages; when justified by circumstances,
the court may increase or decrease the damages recoverable.

(2) Damages where both parties mutually negligent - the fault of one may cancel
or neutralize the negligence of the other; obligations and rights are determined under
the principle no one shall enrich himself at the expense of another.

Validity of waiver of action arising from negligence

(1) An action for future negligence may be renounced except where the nature of
obligation requires extraordinary diligence, i.e., common carriers.
(2) When negligence is gross or shows bad faith, it is considered equivalent to fraud;
therefore, waiver is void.

Kinds of Negligence according to Source of Obligation

1. Contractual negligence (culpa contractual) - results in breach of contract; not
a source of obligation; merely makes the debtor liable for damages in view of his
negligence in the fulfillment of a pre-existing obligation.

2. Civil negligence (culpa aquiliana) - the negligence itself is the source of

obligation between parties not so related before by any pre-existing contract;
tort or quasi-delict.

3. Criminal negligence (culpa criminal) - results in commission of crime; the

same negligent act causing damages may produce civil liability arising from a
crime or create an action for quasi-delict.

In negligence cases, the aggrieved party may choose between criminal

action (Article 100 of RPC) or civil action for damages (Article 2176 CC).
What is prohibited (Article 2177 of CC) is to recover twice for the same
negligent act.

Effect of Negligence on the part of the Injured Party

Article 2179 - If the plaintiff’s negligence was the main cause of his injury, he
cannot recover damages. But if his negligence was only contributory and the main

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 cause of injury being the defendant’s lack of due care, plaintiff may recover damages
but courts shall mitigate damages to be awarded.

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
person, of the time and of the place. When negligence shows
bad faith, the provisions of Article 1171 and 2201, paragraph 2,
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.

Fault or Negligence
The Supreme Court defines negligence as 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.

Factors to be considered (negligence)

1. Nature of the obligation

e.g., Smoking while carrying inflammable materials

2. Circumstances of the person

e.g., A security guard, robust and healthy, sleeping while on duty.

3. Circumstances of time

e.g., Driving without headlights at night. (but on daytime)

4. Circumstances of the place

e.g., Driving 100kph in Ayala Avenue, Makati. (but on superhighways)

Measure of liability for Damages

Damages - money compensation rewarded to a party for loss of injury

It’s purpose is to place the innocent party in the same position he would have
occupied if the contract or obligation had been performed according to its terms.

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 Kinds of Diligence required
Diligence - attention and care

(1) that agreed upon by the parties, orally or in writing

(2) in the absence of stipulation, that required by law in the particular case (i.e.,
extraordinary care for common carriers)

(3) if both law and contract are silent, then the diligence of a good father of a
family

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. (1105a)

Fortuitous Event
It is any event which cannot be foreseen, or which, though foreseen, is inevitable;
either impossible to foresee or impossible to avoid.

Fortuitous Event and Force Majeure

(1) Acts of Man - independent of the will of the obligor but not of other human wills
e.g., war, robbery, murder
(2) Acts of God - majeure; independent of the will of every human being

e.g., earthquake, rain, volcanic eruption

Kinds of Fortuitous Events

1. Ordinary Fortuitous Events - common; can be reasonably foreseen, e.g., rain

2. Extra-ordinary Fortuitous Events - uncommon; could not be reasonably

foreseen, e.g., earthquake

Requisites of a Fortuitous Event

1. The event must be independent of the human will or at least of the debtor’s
will

2. The event could not be foreseen, or if foreseen, is inevitable

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 3. The event must be of such character as to render it impossible for the debtor
to comply with his obligation in a normal manner

4. The debtor must be free from any participation in, or the aggravation of, the
injury to the creditor, that is, there is no concurrent negligence on his part.

Rules as to Liability in case of Fortuitous Event

A person is not responsible for loss of damage due to fortuitous events. The
exceptions are as follows:

1. When expressly specified by law — special strictness of law

a. the debtor is guilty of fraud, negligence, or delay, or contravention of the

tenor of the obligation

b. the debtor has promised to deliver the same thing to two or more persons
who do not have the same interest.

c. the obligation to deliver a specific thing arises from a crime

d. the thing to be delivered is generic

2. When declared by stipulation — freedom of contract

But, the intention to make the debtor liable even in case of a fortuitous event
should be clearly expressed.

3. When the nature of the obligation requires the assumption of risk, e.g.,
insurance

Article 1175. Usurious transactions shall be governed by special

laws. (n)

Simple Loan or Mutuum

One of the parties delivers to another, money or other consumable, upon the
condition that the same kind and quality shall be paid. It may be gratuitous or with a
stipulation to pay interest.

Usury
It is the act of receiving interest in excess of the amount allowed by law.

Requisites for Recovery of Interest

1. The payment of interest must be expressly stipulated

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 2. The agreement must be in writing

3. The interest must be lawful

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. (1110a)

Presumption
It is the inference of a fact not actually known arising from its usual connection with
another which is known or proved.

1. Conclusive Presumption - cannot be contradicted

2. Disputable (or Rebuttable) Presumption - can be contradicted or rebutted

by presenting proof to the contrary

Where presumptions in Article 1176 do not apply

1. With reservation as the interest - there is a reservation that no payment has
been made as to interest or prior installments; the reservation may be made in
writing or verbally

2. Receipt without indication of particular installment paid - the receipt does

not recite that it was issued for a particular installment due, but only dated

3. Receipt for a part of the principal - such receipt implies that the creditor
waives his right to apply the payment first to the interest and then to the principal
(Art. 1253.)

4. Payment of taxes - there is no presumption that previous taxes have been paid
by payment of later ones

5. Non-payment proven - non-payment of prior obligations has been proven;

proven fact over presumption

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

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 also impugn the acts which the debtor may have done to
defraud them. (1111)

Remedies available to Creditors for the satisfaction of their

claims.
1. Exact fulfillment (specific performance) with the right to damages

2. Pursue the leviable property of the debtor

3. Exercise all rights and bring all the actions of the debtor except those
inherent/personal

4. Ask the court to rescind or impugn acts or contracts which the debtor may have
done to defraud him when he cannot recover his claim

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. (1112)

Transmissibility of Rights
All rights acquired in virtue of an obligation are generally transmissible, except if:

1. Prohibited by the law - e.g., rights in partnership, agency, and commodatum,

which are personal in character

a. By the contract of partnership - two or more persons bind themselves to

contribute assets to a common fund with the intention of dividing the profits
among themselves

b. By the contract of agency - a person binds himself to render some service or

to do something in representation or on behalf of another with consent

c. By the contract of commodatum - one of the parties delivers to another

something not consumable (e.g., car) for the latter to use for a certain time
and return; essentially gratuitous

2. Prohibited by stipulation of the parties - such stipulation being contrary to the

general rule must be clearly proved; or at least be clearly implied from the terms
of the contract itself.

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