Professional Documents
Culture Documents
Case: Hongkong and Shanghai Banking Corp., Ltd. Staff Retirement Plan
vs. Spouses Bienvenido and Editha Broqueza, November 17, 2012, J.
Carpio.
Facts: Spouses Broqueza, as employees of HSBC and members of Petitioner
HSBC-SRP (purposely for the benefit of the employees), obtained loans
specifically, car and appliance loan which are to be paid through automatic
salary deduction. The promissory note appears to have this period for which the
employees can pay for the loan: on or before until fully paid
Meanwhile, when a labor dispute arose between HSBC and its employees,
majority of the employees of the former were terminated including herein
respondent (with supposed co-respondent Gerong who was eventually
withdrawn through a manifestation because she settled her OBLIGATIONS to the
company). Because of such dismissal, herein respondents were not able to pay
the monthly amortizations of their loans. Thus, the HSBC-SRP considered the
accounts for respondents as delinquent. Demand to pay the obligation were
made upon respondents but failed to pay the same. In a civil suit for
recovery and collection of sum of money against respondents, MeTC ruled that
the nature of HSBC-SRPs demands for payment is civil and has no connection to
the labor dispute and that by reason of the respondents termination from
employment, it resulted in the loss of continued benefits under the retirement
plan. Thus, the loans secured by their future retirement benefits to which they
are no longer entitled are reduced to unsecured and pure civil
OBLIGATIONS. As unsecured and pure OBLIGATIONS, the loans are
immediately demandable. RTC affirmed the MeTC. But CA reversed the same
saying that HSBC-SRPs complaints for recovery of sum of money against
respondents are premature as the loan OBLIGATIONS have not yet matured.
Thus, no cause of action accrued in favor of HSBC-SRP. Hence, this appeal.
Issue: Whether or not the interpretation of the subject promissory note is
correctly classified by MeTC and RTC as being a pure obligation.
Held: YES. In ruling for HSBCL-SRP, we apply the first paragraph of Article 1179
of the Civil Code:
Aright 1179. Every obligation whose performance does not depend
upon a future or uncertain event, or upon a past event unknown to the
parties, is demandable at once.
x x x. (Emphasis supplied.)
We affirm the findings of the MeTC and the RTC that there is no date of
payment indicated in the Promissory Notes. The RTC is correct in ruling
that since the Promissory Notes do not contain a period, HSBCL-SRP
has the right to demand immediate payment. Article 1179 of the Civil Code
applies. The spouses Broquezas obligation to pay HSBCL-SRP is a pure
obligation. The fact that HSBCL-SRP was content with the prior monthly checkoff from Editha Broquezas salary is of no moment. Once Editha Broqueza
defaulted in her monthly payment, HSBCL-SRP made a demand to enforce a
pure obligation.
In their Answer, the spouses Broqueza admitted that prior to Editha Broquezas
dismissal from HSBC in December 1993, she "religiously paid the loan
amortizations, which HSBC collected through payroll check-ofollowing:" A
definite amount is paid to HSBCL-SRP on a specific date. Editha Broqueza
authorized HSBCL-SRP to make deductions from her payroll until her loans are
fully paid. Editha Broqueza, however, defaulted in her monthly loan payment
due to her dismissal. Despite the spouses Broquezas protestations, the
payroll deduction is merely a convenient mode of payment and not the
sole source of payment for the loans. HSBCL-SRP never agreed that the
loans will be paid only through salary deductions. Neither did HSBCL-SRP
agree that if Editha Broqueza ceases to be an employee of HSBC, her obligation
to pay the loans will be suspended. HSBCL-SRP can immediately demand
payment of the loans at anytime because the obligation to pay has no period.
Moreover, the spouses Broqueza have already incurred in default in paying the
monthly installments.
CASE: re Article 1179, par. 1
Case: In the matter of the Intestate Estate of Justo Palanca, deceased,
George Pay vs. Segundina Chua Vda. De Palanca, June 28, 1974, J.
Fernando.
Facts: George Pay as creditor of the late Justo Palanca (who died in Manila on
July 3, 1963) claimed payment from the latter premised from a promissory note
dated January 30, 1952, which has the following details: For value received
Prices
2 steel
tanks
P21,00
0
Delive
ry
date
under
the
promi
ssory
note
to be
shippe
d from
Actual
date
of
delive
ry
April
27,
1919
said goods, with legal interest thereon from July 26, 1919, and costs."
Both parties appeal from this judgment.
Issue: Whether or not under the contract being entered into by the parties, the
plaintiff corporation is held in delay by reason of the period stipulated in the
contract.
Held: NO. Under these stipulations, it cannot be said that any definite date was
fixed for the delivery of the goods. As to the tanks, the agreement was that the
delivery was to be made "within 3 or 4 months," but that period was subject to
the contingencies referred to in a subsequent clause. With regard to the
expellers, the contract says "within the month of September, 1918," but to this
is added "or as soon as possible." And with reference to the motors, the contract
contains this expression, "Approximate delivery within ninety days," but right
after this, it is noted that "this is not guaranteed." The oral evidence falls
short of fixing such period.
From the record it appears that these contracts were executed at the time of the
world war when there existed rigid restrictions on the export from the United
States of articles like the machinery in question, and maritime, as well as
railroad, transportation was difficult, which fact was known to the parties; hence
clauses were inserted in the contracts, regarding "Government regulations,
railroad embargoes, lack of vessel space, the exigencies of the requirements of
the United States Government," in connection with the tanks and "Priority
Certificate, subject to the United State Government requirements," with respect
to the motors. At the time of the execution of the contracts, the parties were not
unmindful of the contingency of the United States Government not allowing the
export of the goods, nor of the fact that the other foreseen circumstances
therein stated might prevent it.
Considering these contracts in the light of the civil law, we cannot but
conclude that the term which the parties attempted to fix is so
uncertain that one cannot tell just whether, as a matter of fact, those
articles could be brought to Manila or not. If that is the case, as we
think it is, the OBLIGATIONS must be regarded as conditional.
OBLIGATIONS for the performance of which a day certain has been fixed shall be
demandable only when the day arrives.
A day certain is understood to be one which must necessarily arrive, even
though its date be unknown.
If the uncertainty should consist in the arrival or non-arrival of the day,
the obligation is conditional and shall be governed by the rules of the
next preceding section. (referring to pure and conditional
OBLIGATIONS). (Aright 1125, Civ. Code.)
And as the export of the machinery in question was, as stated in the contract,
contingent upon the sellers obtaining certificate of priority and permission of the
United States Government, subject to the rules and regulations, as well as to
railroad embargoes, then the delivery was subject to a condition the fulfillment
of which depended not only upon the effort of the herein plaintiff, but upon the
will of third persons who could in no way be compelled to fulfill the condition. In
cases like this, which are not expressly provided for, but impliedly
covered, by the Civil Code, the obligor will be deemed to have
sufficiently performed his part of the obligation, if he has done all that
was in his power, even if the condition has not been fulfilled in reality.
(2) If the thing is lost through the fault of the debtor, he shall be obliged
to pay damages; it is understood that the thing is lost when it perishes,
or goes out of commerce, or disappears in such a way that its existence
is unknown or it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may
choose between the rescission of the obligation and its fulfillment, with
indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other
right than that granted to the usufructuary. (1122)
Balane:
This article refers to suspensive condition. This article sets forth the rule of
retroactivity in an obligation to give. This rule is logical but impractical. Many
modern Civil Codes have discarded it.
No Retroactivity as to the Fruits Notice that there is no retroactivity with
respect to the fruits. The fruits are deemed to cancel out each other. If only one
of the thing produces fruits, there is no obligation to deliver the fruits.
Article 1188. The creditor may, before the fulfillment of the condition, bring the
appropriate actions for the preservation of his right.
The debtor may recover what during the same time he has paid by mistake in
case of a suspensive condition.
Balane: This article refers to suspensive conditions.
Bring the appropriate actions According to JBL Reyes, the phrase "may xxx
bring the appropriate actions" is inaccurate. To bring action is to file a suit.
But the creditor is not restricted to filing a suit.
The proper verb is not "bring" but "take." For example, in a sale of land subject to
suspensive condition, the creditor should have the suspensive condition annotated
on the title of the land. This is not bringing an appropriate action but taking an
appropriate action.
The principle in this article is:
Vigilantibus et non dormientibus jura
subveniunt which means that the laws aid those who are vigilant, not
those who sleep upon their rights.
Q: Why does Article 1188 give the creditor a recourse although technically the
creditor still have no right?
A: Because as a matter of fact, although technically the creditor still have no
right, he is already expecting a right. You cannot let the creditor sit & fold his
arms & wait for his right of expectancy to be rendered illusory.
Article 1189. When the conditions have been imposed with the intention of
suspending the efficacy of an obligation to give, the following rules shall be
observed in case of the improvement, loss or deterioration of the thing during
the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall
be extinguished;
Past event unknown to the parties It is really the knowledge of the event
which constitutes the future. It is the knowledge which is future & uncertain.
EXAMPLE: "I will treat you for lunch if you get the highest score in the Civil
Law Final Exams (on the assumption that Prof. Balane has already finished
checking the papers.)" Here, the event (getting the highest score) is
already a past event, yet the knowledge is future & uncertain.
Condition compared to a term
Conditio
n
Term
\Article 1193. OBLIGATIONS for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes.
OBLIGATIONS with a resolutory period take effect at once, but terminate
upon arrival of the day certain.
A day certain is understood to be that which must necessarily come,
although it may not be known when.
wherein
the
wherein
the
If the uncertainty consists in whether the day will come or not, the
obligation is conditional, and it shall be regulated by the rules of the
preceding Section.
MANRESA: A term or period is an interval of time, which, exerting an influence
on an obligation as a consequence of a juridical act, either suspends its
demandability or produces its extinguishment.
Distinguished from Condition:
CONDI
TERM / PERIOD
TION
As to
uncert an event that
fulfill
ain
must necessarily
ment
event
come, whether
on a date known
before hand or
at a time which
cannot
be
predetermined
As to
a has no effect
influen conditio upon
the
ce on n gives existence
of
the
rise to OBLIGATIONS,
obligat an
but only their
ion
obligati
demandability or
on
or performance
extingui
shes
one
already
existing
Effect
May
NO
retroactive
have
effect,
except
retroact when there is a
ive
special
effect
agreement
As to may
always refer to
time
refer to the future
a past
event
unknow
n to the
parties
Balane:
Mistaken Premature Delivery This article assumes 2 things:
(1) the delivery was by mistake;
(2) the mistake was discovered before the term arrives.
If the term has already arrived, the question is moot & academic. But can he
recover the fruits produced during the meantime? It depends on what school of
thought you follow:
Tolentino: According to one school of thought, the debtor is entitled to the fruits
produced in the meantime.
Caguioa: According to another school of thought, all the fruits received during the
pendency of the term belong to the creditor.
When fruits & interests cannot be recovered notwithstanding premature delivery:
1.
2.
3.
4.
If the term is for the benefit of the creditor The creditor can demand
performance anytime; but the debtor cannot insist on payment before the period.
If the term is for the benefit of the debtor The creditor cannot demand
performance anytime; but the debtor can insist on performance anytime.
EXAMPLE:
"I promise to pay within 60 days." This is a term for the benefit of the debtor.
"I promise to pay Clara the sum of P100, 000 on or before Oct. 31, 1996." This is a
term for the benefit of the debtor.
-In contract of Loan, without interest, term is usually for benefit of debtor, thus he
may pay in advance;
-If there is stipulation as to interest, period is generally for both parties, debtor
cannot pay in advance vs. will of creditor; unless he also pays interest in full.
3. When NO period is fixed
Balane:
Cases where the Court may fix a period
1. Article 1197, par. 1
Article 1197. If the obligation does not fix a period, but from its nature
and the circumstances it can be inferred that a period was intended, the
court may fix the duration thereof.
The court shall also fix the duration of the period when it depends upon
the will of the debtor.
Facts: In the early part of July 1963, Rosendo Chavez delivered to Fructuoso
Gonzales, who is a typewriter repairer, a portable typewriter for routine cleaning
and servicing. Gonzales was not able to finish job after some time despite
repeated reminder. Gonzales merely gave assurances but failed to comply with
the same. In October 1963, Gonzales asked from Chavez the sum of P6.00 for
the purchase of spare parts which amount was duly given to the former. On
October 26, 1963, Chavez asked for the return of the typewriter. Gonzales just
delivered it in a wrapped package. And it was only upon reaching home that
Chavez found out that the typewriter was in shambles, with the interior cover
and some parts and screws missing. On October 29, 1963, Chavez demanded
the return of the missing parts and the P6.00 which was heeded to. Thereafter,
Chavez had the typewriter repaired for P89.85. Chavez sued for damages.
Issue: Whether or not Gonzales is liable for damages for the subsequent repair
of the typewriter of Chavez.
Held: YES. The SC found that both Chavez and Gonzales had a perfected
contract for cleaning and servicing of typewriter intending for Gonzales to finish
the work at some future time although such time was not specified and that
such time had passed without the work having been accomplished, for Gonzales
returned the typewriter cannibalized and unrepaired, which in itself is a breach
of obligation, without demanding that he should be given more time to finish the
job or compensation for the work he had already done. The time for
compliance having evidently expired and there being a breach of
contract by non-compliance, Gonzales cannot invoke Article 1197 for he
admitted non-performance by returning the typewriter that he was
obliged to repair. The fixing of a period would thus be a mere formality
and would serve no purpose than to delay. For such, Gonzales is liable
under Article 1167 for the cost of the execution of the obligation in a proper
manner.
Case: Vicente Singson Encarnacion vs. Jacinta Baldomar, Oct. 4, 1946, J.
Hilado.
Facts: Vicente Singson Encarnacion, owner of the house numbered 589 Legarda
Street, Manila, some six years ago leased said house to Jacinto Baldomar and
her son, Lefrado Fernando, upon a month-to-month basis for the monthly
rental of P35. After Manila was liberated in the last war, specifically on March
16, 1945, and on April 7, of the same year, plaintiff Singson Encarnacion notified
defendants, the said mother and son, to vacate the house above-mentioned on
or before April 15, 1945, because plaintiff needed it for his offices as a
result of the destruction of the building where said plaintiff had said
offices before. Despite this demand, defendants insisted on continuing
their occupancy. When the original action was lodged with the Municipal Court
of Manila on April 20, 1945, defendants were in arrears in the payment of the
rental corresponding to said month, the agrees rental being payable within the
first five days of each month. That rental was paid prior to the hearing of the
case in the municipal court, as a consequence of which said court entered
judgment for restitution and payment of rentals at the rate of P35 a month from
May 1, 1945, until defendants completely vacate the premises. In the Court of
First Instance, the defendants interposed defense that the contract which they
had celebrated with plaintiff since the beginning authorized them to
continue occupying the house indefinitely and while they should
faithfully fulfill their OBLIGATIONS as respects the payment of the
rentals. However, Vicente Singson Encarnacion, jr., contended that the lease
the slightest degree the conditions of this contract, even though the estate be
sold."
It is evident that they had no intention of stipulating that they reserved the right
to give such notice. Clause 3 begins as follows: "Mr. Williamson, or whoever may
succeed him as secretary of said club, may terminate this lease whenever
desired without other formality than that of giving a month's notice. The owners
of the land undertake to maintain the club as tenant as long as the latter shall
see fit."
Although the relief asked for in the complaint, drawn in accordance with the new
form of procedure established by the prevailing Code, is the restitution of the
land to the plaintiffs (a formula common to various actions), nevertheless the
action which is maintained can be no other than that of desahucio, in
accordance with the substantive law governing the contract. The lessor says
article 1569 of the Civil Code may judicially dispossess the lessee upon the
expiration of the conventional term or of the legal term; the conventional term
that is, the one agreed upon by the parties; the legal term, in defect of the
conventional, fixed for leases by articles 1577 and 1581.
Issue: Whether or not the duration of the term of lease can be fixed by the
couright
Held: The Civil Code has made provision for such a case in all kinds of
OBLIGATIONS. In speaking in general of OBLIGATIONS with a term it has supplied
the deficiency of the former law with respect to the "duration of the term when it
has been left to the will of the debtor," and provides that in this case the term
shall be fixed by the court. (Aright 1128, sec. 2.) In every contract, as laid down
by the authorities, there is always a creditor who is entitled to demand the
performance, and a debtor upon whom rests the obligation to perform the
undertaking. In bilateral contracts the contracting parties are mutually creditors
and debtors. Thus, in this contract of lease, the lessee is the creditor with
respect to the rights enumerated in article 1554, and is the debtor with respect
to the OBLIGATIONS imposed by articles 1555 and 1561. The term within which
performance of the latter obligation is due is what has been left to the will of the
debtor. This term it is which must be fixed by the court.
Case: Philippine Banking Corporation representing the estate of Justina
Santos Y Canon Faustino, deceased vs. Lui She in her own behalf and as
administratrix of the intestate estate of Wong Heng, deceased., 21
SCRA 53.
Facts: Justina Santos y Canon Faustino and her sister Lorenzo were the owners
in common of a piece of land in Manila. This parcel, with an area of 2,582.30
square meters, is located on Rizal Avenue and opens into Florentino Torres street
at the back and Katubusan street on one side. In it are two residential houses
with entrance on Florentino Torres street and the Hen Wah Restaurant with
entrance on Rizal Avenue. The sisters lived in one of the houses, while Wong
Heng, a Chinese, lived with his family in the restaurant. Wong had been a longtime lessee of a portion of the property, paying a monthly rental of P2,620.
On September 22, 1957 Justina Santos became the owner of the entire property
as her sister died with no other heir. Then already well advanced in years, being
at the time 90 years old, blind, crippled and an invalid, she was left with no other
relative to live with. Her only companions in the house were her 17 dogs and 8
maids. Her otherwise dreary existence was brightened now and then by the
visits of Wong's four children who had become the joy of her life. Wong himself
was the trusted man to whom she delivered various amounts for safekeeping,
along with the four other contracts (Plff Exhs. 4-7) because it lacks mutuality;
because it included a portion which, at the time, was in custodia legis; because
the contract was obtained in violation of the fiduciary relations of the parties;
because her consent was obtained through undue influence, fraud and
misrepresentation; and because the lease contract, like the rest of the contracts,
is absolutely simulated.
Paragraph 5 of the lease contract states that "The lessee may at any time
withdraw from this agreement." It is claimed that this stipulation offends article
1308 of the Civil Code which provides that "the contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one of
them."
Issue: Whether or not the option given to Wong to buy the property despite him
being an alien is valid.
Held: NO. Taken singly, the contracts show nothing that is necessarily illegal,
but considered collectively, they reveal an insidious pattern to subvert by
indirection what the Constitution directly prohibits. To be sure, a lease to an alien
for a reasonable period is valid. So is an option giving an alien the right to buy
real property on condition that he is granted Philippine citizenship. As this Court
said in Krivenko v. Register of Deeds:20
[A]liens are not completely excluded by the Constitution from the use of
lands for residential purposes. Since their residence in the Philippines is
temporary, they may be granted temporary rights such as a lease
contract which is not forbidden by the Constitution. Should they desire
to remain here forever and share our fortunes and misfortunes, Filipino
citizenship is not impossible to acquire.
But if an alien is given not only a lease of, but also an option to buy, a
piece of land, by virtue of which the Filipino owner cannot sell or otherwise
dispose of his property, 21 this to last for 50 years, then it becomes clear that the
arrangement is a virtual transfer of ownership whereby the owner divests
himself in stages not only of the right to enjoy the land ( jus possidendi, jus
utendi, jus fruendi and jus abutendi) but also of the right to dispose of it ( jus
disponendi) rights the sum total of which make up ownership. It is just as if
today the possession is transferred, tomorrow, the use, the next day, the
disposition, and so on, until ultimately all the rights of which ownership is made
up are consolidated in an alien. And yet this is just exactly what the parties in
this case did within the space of one year, with the result that Justina Santos'
ownership of her property was reduced to a hollow concept. If this can be done,
then the Constitutional ban against alien landholding in the Philippines, as
announced in Krivenko v. Register of Deeds,22 is indeed in grave peril.
Case: Lim vs. People
Facts: Lourdes Lim is a businesswoman who went to Maria Ayroso and proposed
to the latter to sell Ayrosos tobacco. Ayroso agreed to the proposition to sell her
tobacco consisting of 615 kilos at P1.30/kilo. The agreement reads: This is to
certify that I have received from Maria Ayroso of Nueva Ecija, 615 kilos of leaf
tobacco to be sold at P1.30/kilo. The proceed in the amount of P799.50 will be
given to her as soon as it was sold. Of the P799.50, only P240 was paid by
Lim. Lim failed to pay the balance. Ayroso filed an Estafa case against Lim.
Issue: Whether Lims obligation to pay Ayroso is immediately demandable as
soon as the tobacco was disposed of.
Held: YES. The SC ruled that it was clear in the agreement that the proceeds of
the sale of the tobacco should be turned over to the complainant as soon as the
absence of a period in issue by pleading in its answer that the contract with
respondent Philippine Sugar Estates Development Co., Ltd. gave petitioner
Gregorio Araneta, Inc. "reasonable time within which to comply with its
obligation to construct and complete the streets." Neither of the court below
seems to have noticed that, on the hypothesis stated, what the answer put in
issue was not whether the court should fix the time of performance, but whether
or not the parties agreed that the petitioner should have reasonable time to
perform its part of the bargain. If the contract so provided, then there was a
period fixed, a "reasonable time;" and all that the court should have done was to
determine if that reasonable time had already elapsed when suit was filed if it
had passed, then the court should declare that petitioner had breached the
contract, as averred in the complaint, and fix the resulting damages. On the
other hand, if the reasonable time had not yet elapsed, the court perforce was
bound to dismiss the action for being premature. But in no case can it be
logically held that under the plea above quoted, the intervention of the court to
fix the period for performance was warranted, for Article 1197 is precisely
predicated on the absence of any period fixed by the parties.
Even on the assumption that the court should have found that no reasonable
time or no period at all had been fixed (and the trial court's amended decision
nowhere declared any such fact) still, the complaint not having sought that the
Court should set a period, the court could not proceed to do so unless the
complaint in as first amended; for the original decision is clear that the
complaint proceeded on the theory that the period for performance had already
elapsed, that the contract had been breached and defendant was already
answerable in damages.
Granting, however, that it lay within the Court's power to fix the period of
performance, still the amended decision is defective in that no basis is stated to
support the conclusion that the period should be set at two years after finality of
the judgment. The list paragraph of Article 1197 is clear that the period can not
be set arbitrarily. The law expressly prescribes that
the Court shall determine such period as may under the circumstances
been probably contemplated by the parties.
All that the trial court's amended decision (Rec. on Appeal, p. 124) says in this
respect is that "the proven facts precisely warrant the fixing of such a period," a
statement manifestly insufficient to explain how the two period given to
petitioner herein was arrived at.
It must be recalled that Article 1197 of the Civil Code involves a twostep process. The Court must first determine that "the obligation does
not fix a period" (or that the period is made to depend upon the will of
the debtor)," but from the nature and the circumstances it can be
inferred that a period was intended" (Aright 1197, pars. 1 and 2). This
preliminary point settled, the Court must then proceed to the second
step, and decide what period was "probably contemplated by the
parties" (Do., par. 3). So that, ultimately, the Court can not fix a period
merely because in its opinion it is or should be reasonable, but must
set the time that the parties are shown to have intended. As the record
stands, the trial Court appears to have pulled the two-year period set in its
decision out of thin air, since no circumstances are mentioned to support it.
Plainly, this is not warranted by the Civil Code.
Case: Pacifica Millare vs. Hon. Hernando, Antonio Co and Elsa Co., June 30,
1987, J. Feliciano.
Sept. 2004
Oct.04
Apr.05
(without condition/
condition
Pure)
[1544]
Retroactive effect
Article 1188 preserve his interest
PROTECT HIS EXPECTANCY
1. Register with the Registry of Property
2. witness
3. possession in good faith
4. Injunction if the sell was not consummated or not for sale
RESOLUTORY CONDITION
Article 1190 no exception, nothing will be left.
SUSPENSIVE CONDITION upon the happening of the condition, the
OBLIGATION exists (existence of OBLIGATION is affected)
CLASSIFICATION OF CONDITION:
1. POTESTATIVE when the fulfillment of the condition depends upon the
will of the party to the OBLIGATION;
2. CAUSAL depends upon chance 2nd or 3rd person
3. MIXED depends partly upon the will of the party & partly upon chance
or a 3rd person
Article 1182: Potestative sole will of the debtor
Potestative suspensive is VOID.
Example. A will give 5% commission to B, but it depends on the will of A,
void;
All other potestative conditions, valid.
Article 1183 impossible condition
1. physical impossibility
2. legal impossibility
Article 873 impossible testamentary conditions
disregard
Ex. Article 727 donation
CONDITION
1.
future
&
PERIOD
TERM
1.
/
future
uncertain event
2.
suspensive
condition
3.
resolutory
condition
&certain
2.suspensive
period/demand
ability
3.
resolutory
period
executor may deliver a cheaper car like an altis not an evolution. Again sec.
1246 is very much relevant rule as regards obligation to deliver a
generic thing.
4. A obliged himself to deliver a brand new Mitsubishi lancer dlx 2008
black, due October 30, October 25, the B creditor demanded for the
delivery of the car, A did not deliver until Nov. 1, the car he
intended to deliver to B was destroyed probably of earthquake, can
A be compelled to deliver the car? Yes the debtor can be compelled to
deliver the thing. Is A already in default? The demand here is premature;
demand should be made when the obligation is already due for a person to
incur in delay. Having said that can A be compelled to perform the
obligation? Yes because the reason here is the object involved is a generic
thing and when a generic thing is lost because of fortuitous event, the
obligation is not extinguished because generic things do not perish. In
other words, in OBLIGATIONS to give a very important consideration
is whether a thing to be delivered is generic or determinate.
5.
16. Before the happening of the condition, what is the implication, did
the condition happen or not? Not yet. Before the happening of the
condition what if an action was filed by the creditor against the
debtor will that action prosper? Yes it may prosper it will depend on the
action, whether it is xxx even if the right of the creditor is an inchoate right
such right is already protected. Example of this action: Annotation so that
third persons will be bound by their agreement.
17. Obligation to deliver a condo unit, before of the happening of the
condition, the debtor had the condo renovated, the condition
happened, the creditor demanded for the delivery of the condo unit,
the debtor claimed that he can only be compelled to deliver if he is
reimbursed for the expenses of the renovation, until then he has
the right to retain the condo unit, is the contention correct? The
debtor has the right to remove those that may be removed without
damaging the property.
18. A term pertain to an event, correct? Yes. When may a term pertain
to an event? When the event is uncertain, like what? Death. But the
definite term example? Dec. 25, 2009. Now, is it correct to say that
just like a conditional obligation, in obligation with a term,
depending whether the term is suspensive or resolutory the
obligation will arise or the obligation will be extinguished? The error
in the statement is when it provides that upon the arrival of the period the
obligation arises because in an obligation with a term there is already an
obligation, the arrival of the period will result in the demandability of the
obligation, because since this is a term IT IS CERTAIN TO HAPPEN, THE
PERIOD WILL ARRIVE BUT THE TIME OF HAPPENING IS JUST UNCERTAIN.
19. The kinds of periods discussed in the case of Eleizegui: Legal,
voluntary. There will always be a period in contract of sale? No. when
will there be a period in a contract of sale? Period as to payment of the
price which is known as sale on credit, if it is installment sale on installment.
This is correct because even on lease there is a period. Legal a period
fixed by law, Example: Period provided by law like in contracts of lease if the
parties failed to agree as to the period, depends on the manner of payment
if annually 1 year and if monthly 30 days. Judicial period Aright 1180 if
the obligor will pay if his means permits him to do so.
20. BAR EXAM QUESTION: A borrowed money from B in Jan 1 payable at
the end of the year, the same was secured by a real estate
mortgage, they agreed that B can occupy the house and lot during
the period agreed upon, however, by June 30 of that year, A offered
to pay the entire indebtedness and demanded B vacate the house,
can the creditor be compelled to accept the payment? Can the
creditor be compelled to vacate the house? It depends whether the
period is solely for the benefit of the debtor or both the debtor or the
creditor. If the same is for the benefit of the debtor what is the right?
Xxx
* There is a third possibility where the choice may be made by a third person upon
agreement of the parties. (expressed)
Q: What is the technical term of the act of making a choice in alternative
OBLIGATIONS?
A: Concentration.
The right to choose is indivisible debtor cant choose part of one prestation
and part of another;
Article 1201. The choice shall produce no effect except from the time it has
been communicated.
E. Facultative where only one thing is due but the debtor has reserved the
right to substitute it with another (Article 1206)
-election here is never granted to creditor
Balane:
Requirement of Communication of choice If the choice belongs to the
creditor, of course, he has to communicate his choice to the debtor. The debtor is
not a prophet.
c. If all are lost through the debtor's fault, the choice of the creditor shall fall
upon the price of any of them, with indemnity for damages.-- Article 1205 (3),
supra.
Article 1204. The creditor shall have a right to indemnity for damages when,
through the fault of the debtor, all the things which are alternatively the object of
the obligation have been lost, or the compliance of the obligation has become
impossible.
The indemnity shall be fixed taking as a basis the value of the last thing which
disappeared, or that of the service which last became impossible.
Damages other than the value of the last thing or service may also be awarded.
d. If some are lost through the creditor's fault, the creditor may choose from
the remainder.
d. If some things are lost through the debtor's fault, the debtor can still
choose from those remaining.
(1) If one of the things is lost through a fortuitous event, he shall perform the
obligation by delivering that which the creditor should choose from among the
remainder, or that which remains if only one subsists;
(2) If the loss of one 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;
a. If one or some are lost through fortuitous event, the creditor may choose
from those remaining.- Article 1205 (1)
b. If one or some are lost through the debtor's fault, the creditor has
choice from the remainder or the value of the things lost plus damages.- Article
1205 (2), supra.
the
creditor's
fault,
the
obligation
is
As
to
contents
of
the
obligatio
n
Alternati
ve
OBLIGATI
ON
there are
various
prestation
s all of
which
constitute
parts
of
the
obligation
(3) If all the things are lost through the fault of the debtor, the choice by the
creditor shall fall upon the price of any one of them, also with indemnity for
damages.
The same rules shall be applied to OBLIGATIONS to do or not to do in case one,
some or all of the prestations should become impossible.
through
Article 1206. When only one prestation has been agreed upon, but the obligor
may render another in substitution, the obligation is called facultative.
lost
As
to
nullity
the nullity
of
one
prestation
does not
invalidate
the
obligation
, which is
still
in
force with
respect to
Facultati
ve
OBLIGATI
ON
only ONE
principal
prestation
constitute
s
the
obligation,
the
accessory
being only
a means
to
facilitate
payment.
the nullity
of
the
principal
prestation
invalidate
s
the
obligation
&
the
creditor
cannot
demand
a. Joint OBLIGATIONS
Balane: A joint obligation is one in which each of the debtors is liable only for a
proportionate part of the debt or each creditor is entitled only to a proportionate
part of the credit. In joint OBLIGATIONS, there are as many OBLIGATIONS as there
are debtors multiplied by the number of creditors.
There are three kinds of joint OBLIGATIONS:
1) Active joint where the obligation is joint on the creditor's side;
2) Passive joint where the obligation is joint on the debtor's side; &
3) Multiple Joint where there are multiple parties on each side of a joint
obligation.
Tolentino:
The joint obligation has been
mancomunada simple or pro rata;
variously
termed
mancomunada
or
In the PROMISSORY NOTE the phrase "We promise to pay," used by 2 or more
signers, creates a pro rata liability (JOINT);
While I promise to pay followed by signatures of 2 or more persons solidary;
individually and collectively; individually and jointly.
JOINT character is PRESUMED: WHEN no stipulation as to liability of several
debtors, presumption is joint, and each is liable only for his proportionate part of
the OBLIGATION;
J/FO of court as to several defendants when solidarity has not been specified, the
liability of the defendants is joint; court cannot amend.
Article 1208. If from the law, or the nature or the wording of the OBLIGATIONS to
which the preceding article refers the contrary does not appear, the credit or debt
shall be presumed to be divided into as many equal shares as there are creditors
Effe
cts
to
Joint
cred
itors
Effe
cts
INDIVISI
BILITY
Refers
to
the
prestati
on,
which is
not
capable
of
partial
perform
ance
Each
cannot
demand
more
than his
share
Each is
not
to
joint
debt
ors
liable for
more
than his
share
entire prestation
Article 1224. A joint indivisible obligation gives rise to indemnity for damages
from the time anyone of the debtors does not comply with his undertaking. The
debtors who may have been ready to fulfill their promises shall not contribute to
the indemnity beyond the corresponding portion of the price of the thing or of the
value of the service in which the obligation consists.
If there is plurality of creditors to only one debtor, the OBLIGATION can be
performed by delivery of the object to all the creditors jointly;
Delivery to only one creditor makes the debtor liable for damages to the
other debtors for non-performance, unless they have authorized this one
creditor to collect in their behalf;
If only one or some, not all creditors demand fulfillment the debtor may
refuse to deliver and insist that all the creditors together receive the thing,
if not consignation to the court may be had;
SOLIDARITY
Balane:
A solidary obligation is one in which the debtor is liable for the entire obligation
or each creditor is entitled to demand the whole obligation. If there is only one
obligation, it is a solidary obligation.
According to Tolentino:
Solidary OBLIGATIONS may also be referred to as mancomunada solidaria
or joint & several or in solidum.
It has also been held that the terms "juntos o separadamente" in a
promissory note creates a solidary responsibility;
Where there are no words used to indicate the character of a liability, the
phrase "I promise to pay," followed by the signatures of 2 or more persons,
gives rise to an individual or solidary responsibility.
The RTC ordered Calang and Philtranco, jointly and severally, to pay P50,000.00
as death indemnity to the heirs of Armando; P50,000.00 as death indemnity to
the heirs of Mabansag; and P90,083.93 as actual damages to the private
complainants.
The petitioners appealed the RTC decision to the Court of Appeals (CA), docketed
as CA-G.R. CR No. 25522. The CA, in its decision dated November 20, 2009,
affirmed the RTC decision in toto. The CA ruled that petitioner Calang failed to
exercise due care and precaution in driving the Philtranco bus. According to the
CA, various eyewitnesses testified that the bus was traveling fast and
encroached into the opposite lane when it evaded a pushcart that was on the
side of the road. In addition, he failed to slacken his speed, despite admitting
that he had already seen the jeep coming from the opposite direction when it
was still half a kilometer away. The CA further ruled that Calang demonstrated a
reckless attitude when he drove the bus, despite knowing that it was suffering
from loose compression, hence, not roadworthy.
The CA added that the RTC correctly held Philtranco jointly and
severally liable with petitioner Calang, for failing to prove that it had
exercised the diligence of a good father of the family to prevent the
accident.
Issue: Whether or not Calang and Philtranco will be correctly held jointly and
solidarily liable to the victims of the collision.
Held: NO. We, however, hold that the RTC and the CA both erred in holding
Philtranco jointly and severally liable with Calang. We emphasize that Calang
was charged criminally before the RTC. Undisputedly, Philtranco was not a direct
party in this case. Since the cause of action against Calang was based on delict,
both the RTC and the CA erred in holding Philtranco jointly and severally liable
with Calang, based on quasi-delict under Articles 21761 and 21802 of the Civil
Code. Articles 2176 and 2180 of the Civil Code pertain to the vicarious liability of
an employer for quasi-delicts that an employee has committed. Such provision
of law does not apply to civil liability arising from delict.
If at all, Philtrancos liability may only be subsidiary. Article 102 of the
Revised Penal Code states the subsidiary civil liabilities of innkeepers,
tavernkeepers and proprietors of establishments, as follows:
In default of the persons criminally liable, innkeepers, tavernkeepers, and any
other persons or corporations shall be civilly liable for crimes committed in their
establishments, in all cases where a violation of municipal ordinances or some
general or special police regulations shall have been committed by them or their
employees.
Innkeepers are also subsidiary liable for the restitution of goods taken by
robbery or theft within their houses from guests lodging therein, or for the
payment of the value thereof, provided that such guests shall have notified in
advance the innkeeper himself, or the person representing him, of the deposit of
such goods within the inn; and shall furthermore have followed the directions
which such innkeeper or his representative may have given them with respect to
the care of and vigilance over such goods. No liability shall attach in case of
robbery with violence against or intimidation of persons unless committed by the
innkeepers employees.
The foregoing subsidiary liability applies to employers, according to Article 103
of the Revised Penal Code, which reads:
The subsidiary liability established in the next preceding article shall also apply
to employers, teachers, persons, and corporations engaged in any kind of
In solidary obligation, the creditor may enforce the entire obligation against one
of the solidary debtors. On the other hand, insurance is defined as "a contract
whereby one undertakes for a consideration to indemnify another against loss,
damage, or liability arising from an unknown or contingent event."
In the case at bar, the trial court held petitioner together with respondents Sio
Choy and San Leon Rice Mills Inc. solidarily liable to respondent Vallejos for a
total amount of P29,103.00, with the qualification that petitioner's liability is only
up to P20,000.00. In the context of a solidary obligation, petitioner may be
compelled by respondent Vallejos to pay the entire obligation of P29,013.00,
notwithstanding the qualification made by the trial court. But, how can
petitioner be obliged to pay the entire obligation when the amount
stated in its insurance policy with respondent Sio Choy for indemnity
against third party liability is only P20,000.00? Moreover, the qualification
made in the decision of the trial court to the effect that petitioner is sentenced
to pay up to P20,000.00 only when the obligation to pay P29,103.00 is made
solidary, is an evident breach of the concept of a solidary obligation. Thus, we
hold that the trial court, as upheld by the Court of Appeals, erred in holding
petitioner, solidarily liable with respondents Sio Choy and San Leon Rice Mill, Inc.
to respondent Vallejos.
Discussion on Reimbursement in solidary liability.
As to the second issue, the Court of Appeals, in affirming the decision of the trial
court, ruled that petitioner is not entitled to be reimbursed by respondent San
Leon Rice Mill, Inc. on the ground that said respondent is not privy to the
contract of insurance existing between petitioner and respondent Sio Choy. We
disagree.
The appellate court overlooked the principle of subrogation in insurance
contracts. Thus
... Subrogation is a normal incident of indemnity insurance
(Aetna L. Ins. Co. vs. Moses, 287 U.S. 530, 77 L. ed. 477). Upon
payment of the loss, the insurer is entitled to be subrogated pro
tanto to any right of action which the insured may have against
the third person whose negligence or wrongful act caused the
loss (44 Am. Jur. 2nd 745, citing Standard Marine Ins. Co. vs.
Scottish Metropolitan Assurance Co., 283 U.S. 284, 75 L. ed.
1037).
The right of subrogation is of the highest equity. The loss in the
first instance is that of the insured but after reimbursement or
compensation, it becomes the loss of the insurer (44 Am. Jur. 2d,
746, note 16, citing Newcomb vs. Cincinnati Ins. Co., 22 Ohio St.
382).
Although many policies including policies in the standard form,
now provide for subrogation, and thus determine the rights of
the insurer in this respect, the equitable right of subrogation as
the legal effect of payment inures to the insurer without any
formal assignment or any express stipulation to that effect in the
policy" (44 Am. Jur. 2nd 746). Stated otherwise, when the
insurance company pays for the loss, such payment operates as
an equitable assignment to the insurer of the property and all
remedies which the insured may have for the recovery
thereof. That right is not dependent upon , nor does it grow out
of any privity of contract (emphasis supplied) or upon written
interrupt prescription,
Article 1213. A solidary creditor cannot assign his rights without the consent of
the others.
Article 1214. The debtor may pay any one of the solidary creditors; but if any
demand, judicial or extrajudicial, has been made by one of them, payment should
be made to him.
Tolentino: This is in line with the concept of Mutual agency which is the
essence of active solidarity, implies mutual confidence, thus one creditor cannot
assign/transfer his rights to another without consent of the others.
Effects of Unauthorized Transfer: No effect, no rights transferred; assignee
does not become solidary creditor, co-creditors and debtor/s not bound by such
transfer;
Payment made by this assignee will not extinguish OBLIGATION; suit filed
by him may not interrupt the rights.
A solidary creditor who assigns his rights without the consent of his cocreditors shall answer subsidiarily for any prejudice caused by the
assignee in connection with d credit assigned.
A judgment that declares the OBLIGATION does not exist extinguished the
OBLIGATION the defendant-debtor, and such decision inures to the benefit
of co-debtors, unless the cause is personal to the def-debtor.
Extent
Liability
Liability
Effects
Extension
time granted
creditor
of
of
of
by
PASSIVE
SOLIDARITY
Solidary debtors
whole
OBLIGATION
Primary
solidary
OBLIGATION
remains
SURETY
solidary guaranty
only to the extent of
stipulations/as expressed
Subsidiary
releases the surety
contract
the latter, could be entertained to the extent that failure to observe the
same would deprive the court jurisdiction to take cognizance of the
action against the surviving debtors. Upon the other hand, the Civil Code
expressly allows the creditor to proceed against any one of the solidary
debtors or some or all of them simultaneously. There is, therefore,
nothing improper in the creditor's filing of an action against the
surviving solidary debtors alone, instead of instituting a proceeding for
the settlement of the estate of the deceased debtor wherein his claim
could be filed.
Similarly, in PNB vs. Asuncion, 80 SCRA 321 at 323-324, this Court,
speaking thru Mr. Justice Makasiar, reiterated the doctrine.
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court
reveals that nothing therein prevents a creditor from proceeding against
the surviving solidary debtors. Said provision merely sets up the
procedure in enforcing collection in case a creditor chooses to pursue
his claim against the estate of the deceased solidary, debtor.
It is crystal clear that Article 1216 of the New Civil Code is the applicable
provision in this matter. Said provision gives the creditor the right to
'proceed against anyone of the solidary debtors or some or all of them
simultaneously.' The choice is undoubtedly left to the solidary, creditor
to determine against whom he will enforce collection. In case of the
death of one of the solidary debtors, he (the creditor) may, if he so
chooses, proceed against the surviving solidary debtors without
necessity of filing a claim in the estate of the deceased debtors. It is not
mandatory for him to have the case dismissed against the surviving
debtors and file its claim in the estate of the deceased solidary debtor . .
.
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised
Rules of Court were applied literally, Article 1216 of the New Civil Code
would, in effect, be repealed since under the Rules of Court, petitioner
has no choice but to proceed against the estate of Manuel Barredo only.
Obviously, this provision diminishes the Bank's right under the New Civil,
Code to proceed against any one, some or all of the solidary debtors.
Such a construction is not sanctioned by the principle, which is too well
settled to require citation, that a substantive law cannot be amended by
a procedural rule. Otherwise stared, Section 6, Rule 86 of the Revised
Rules of Court cannot be made to prevail over Article 1216 of the New
Civil Code, the former being merely procedural, while the latter,
substantive.
WHEREFORE the appealed order of dismissal of the court a quo in its Civil Case
No. 46741 is hereby set aside in respect of the surviving defendants; and the
case is remanded to the corresponding Regional Trial Court for proceedings.
Tolentino: Passive Solidarity vs. Suretyship
Similarity:
(1) both stands for some other person;
(2) both may require reimbursement
Passive
Solidarity
Suretyship
liable only as
OBLIGATION
to
his
own
Subsidiary liability
releases a solidary guarantor or
surety (extinguishment)
Article 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may choose
which offer to accept.
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the
payment is made before the debt is due, no interest for the intervening period
may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his
share to the debtor paying the obligation, such share shall be borne by all his codebtors, in proportion to the debt of each.
Article 1218.
Payment by a solidary debtor shall not entitle him to
reimbursement from his co-debtors if such payment is made after the obligation
has prescribed or become illegal.
Article 1219. The remission made by the creditor of the share which affects one
of the solidary debtors does not release the latter from his responsibility towards
the co-debtors, in case the debt has been totally paid by anyone of them before
the remission was effected.
Tolentino:
Payment by one solidary debtor in whole extinguishes the
OBLIGATION and releases the credit gives rise to a new OBLIGATION for
reimbursement by the other debtors to this one debtor who paid (JOINT
OBLIGATION); plaintiff creditor may be properly substituted by the debtor who
paid;
EXCEPT: If payment was made after the OBLIGATION prescribed or become
illegal (mistake or not). (Article 1218)
Q: Can Y be sued?
A: Yes, for the P9,000 (P12,000 less P3,000 share of Y) his share was remitted but
not the solidary OBLIGATION.
Q: Supposing X is insolvent?
A: Y can still be made to contribute. Remission will benefit Y only in so far as his
share is concerned. His liability in case of insolvency of one co-creditor is not
affected.
Q: Can A demand the P9,000 from Y?
A: Yes. But he can recover the same from W, X & Z.
Q: If W paid the whole debt before A remits Ys share, may W still demand
reimbursement of Ys share?
A: Yes, Article 1219, Y will not be released from his solidary OBLIGATION. Upon Ws
full payment the entire OBLIGATION was extinguished, theres nothing more to
remit in Ys favor.
Q: After A remits share of Y, W pays in full the remaining 12,000. X then becomes
insolvent. May Y be compelled to contribute to the share of X?
A: Yes (Manresa and Tolentino), gratuitous acts should be construed restrictively as
to permit the least transmission of rights (Article1378). Thus, if W paid 9,000 and
X and Z were suppose to reimburse him 3000 each, Y could be compelled to
contribute 1000 as to the insolvency of X.
Article 1220. The remission of the whole obligation, obtained by one of the
solidary debtors, does not entitle him to reimbursement from his co-debtors.
Article 1221. If the thing has been lost or if the prestation has become
impossible without the fault of the solidary debtors, the obligation shall be
extinguished.
If there was fault on the part of any one of them, all shall be responsible to the
creditor, for the price & the payment of damages & interest, without prejudice to
their action against the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the performance has become
impossible after one of the solidary debtors has incurred in delay through the
judicial or extrajudicial demand upon him by the creditor, the provisions of the
preceding paragraph shall apply.
Article 1895. If solidarity has been agreed upon, each of the agents is
responsible for the non-fulfillment of the agency, & for the fault or negligence of
his fellow agents, except in the latter case when the fellow agents acted beyond
the scope of their authority.
Article 1222. A solidary debtor may, in actions filed by the creditor, avail himself
of all defenses which are derived from the nature of the obligation & of those
which are personal to him, or pertain to his own share. With respect to those which
personally belong to the others, he may avail himself thereof only as regards that
part of the debt for which the latter are responsible.
If another co-debtor pays the whole amount he could recover fr his codebtors;
The thing may be divisible but the OBLIGATION may still be indivisible,
e.g. OBLIGATION to deliver 100 sacks of jasmine rice found in Warehouse
of specific address on a fixed date (determinate OBLIGATION);
IDEAL, when parts are not separated materially, but assigned to several
persons, as in pro-indiviso co-owners;
Three Exceptions to the Rule on Indivisibility:
1. When the parties so provide. (Article 1248, par. 1.)
2. When the nature of the obligation necessarily entails performance
in parts.
3. Where the law provides otherwise.
Divisibility of Obligation distinguished from divisibility of object:
Consideration
contract
single
Prestation/s
When a part is
illegal
One
void
undertaking
Viz. Statute of
Frauds
whole
contract
unenforceable
void contract
must
writing
be
Indivisibility
refers to the prestation or the object of
the OBLIGATION
plurality not required
when OBLIGATION is converted to
liability for damages, the indivisibility
ceases to exist, each debtor becomes
liable for his part of indemnity
indivisibility affects the heirs of a
decedent debtor, they remain to be
bound to perform the same prestation
SEVERABLE contract
in
apportioned
(expressly/implied)
several,
distinct,
items
partly enforceable
separate
b. Indivisible OBLIGATIONS
Article 1209. If the division is impossible, the right of the creditors may be
prejudiced only by their collective acts, & the debt can be enforced only by
proceeding against all the debtors. If one of the latter should be insolvent, the
others shall not be liable for his share.
Article 1210. The indivisibility of an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply indivisibility.
Examples of Indivisible OBLIGATIONS:
(1) By virtue of its object
Article 618. Easements are indivisible. If the servient estate is divided between
two or more persons, the easement is not modified, & each of them must bear it
on the part which corresponds to him.
If it is the dominant estate that is divided between two or more persons, each of
them may use the easement in its entirety, without changing the place of its use,
or making it more burdensome in any other way.
(2) Express provision of law
Article 2089. A pledge or mortgage is indivisible, even though the debt may be
divided among the successors in interest of the debtor or of the creditor.
Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not
completely satisfied.
Neither can the creditor's heir who received his share of the debt return the
pledge or cancel the mortgage, to the prejudice of the other heirs who have not
been paid.
From these provisions, it is expected the case in which, there being several things
given in mortgage or pledge, each one of them guarantees only a determinate
portion of the credit.
2.
Article 1248. Unless there is an express stipulation to that effect, the creditor
cannot be compelled partially to receive the prestations in which the obligation
consists. Neither may the debtor be required to make partial payments.
However, when the debt is in part liquidated & in part unliquidated, the creditor
may demand & the debtor may effect the payment of the former without waiting
for the liquidation of the latter.
Article 1583. Unless otherwise agreed, the buyer of goods is not bound to
accept delivery thereof by installments.
Where there is a contract of sale of goods to be delivered by stated installments,
which are to be separately paid for, & the seller makes defective deliveries in
respect of one or more installments, or the buyer neglects or refuses without just
cause to take delivery of or pay for one or more installments, it depends in each
case on the terms of the contract & the circumstances of the case, whether the
breach of contract is so material as to justify the injured party in refusing to
proceed further & suing for damages for breach of the entire contract, or whether
the breach is severable, giving rise to a claim for compensation but not to a right
to treat the whole contract as broken.
(3) Express agreement
Article 1714. If the contractor agrees to produce the work from material
furnished by him, he shall deliver the thing produced to the employer & transfer
dominion over the thing. This contract shall be governed by the following articles
as well as by the pertinent provisions on warranty of title & against hidden defects
& the payment of price in a contract of sale.
Illustrations:
1. Obligations involving different parties; in other words, in a problem
3.
11. So what if the obligation, aside from their particular rights and
obligations as to their shares, take note again if the obligation is 150k
there 3 creditors, in a joint obligation, each one is entitled to 50k if
there is no designation as to respective shares. This claim is very
wrong: The share is equal because it is joint. As if the debtors will always
share equally because it is joint or the creditors will receive equally
because it is joint. Not true. Rather in Article 1208, if there is no
designation as to the respective shares, they will share equally.
Thats why even if it is joint, they can talk about it and have an
agreement as to the shares each of them will receive it may be
differently or the same. What if one of the debtors became insolvent, will
that result to an increase in liability of the other debtors? Will that
prejudice other debtors? Answer: again, it will depend on whether
the obligation is joint or solidary.
a. If it is a solidary obligation, e.g. A, B, C debtors and C became
insolvent. How much can A be held liable if the debt is 100k? If C
became insolvent, how much will A be liable? B will be liable for
the entire amount because the obligation is solidary. This is not
a proper answer because you just repeated the facts. The
question there is, why would A be held liable for the whole 100k
if one of them is insolvent? Reason here is, this debtor can still
be compelled to pay despite one of the debtors is insolvent
because in solidary obligations the share of the insolvent will
have to be shouldered by the other debtors who are not
insolvent, because each one of them as the law says which
is wrong, because it should be any one of them may be
held liable for the entire amount. So A may still be held liable
despite the insolvency of one of the debtors.
b. If the obligation is joint, if one of them is insolvent would that
result in the increase of liability of the others? NEVER. Because a
very important principle in joint obligations, these debts are
separate and distinct from each other. Thats why even if one of
the debtors is insolvent it will not affect/ prejudice the other
debtors. On the other hand, if one of the debt was condoned,
can there be partial condonation? YES. Can there be even partial
condonation even in solidary obligation? YES. The word
condone does not mean the obligation is extinguished. In
joint, if one of the debts of the debtor was condoned, would that
benefit the other debtors? No, again their debts are separate
and distinct from each other. If the creditor demanded from A
and condoned the share of B. A cannot invoke the condonation
in favour of B to benefit him.
c. In a solidary obligation, if the creditor condoned one of the
share of the debtors, can the condonation benefit the other
debtors? In a way, because the other debtor can only be
compelled to pay less than the share of the debtor whose share
was condoned. In other words, if A, B, and C = 300k. As share
was condoned. But this is a solidary obligation, how much can B
be compelled to pay? Only 200k because he can raise the
condonation of A as a partial defense. If C was insolvent,
it doesnt matter, it is still 200k because it is a solidary
obligation, the share of C will have to be shouldered by
was a minor at the time the contract was entered into. This is an
obligation arising from a contract. Is minority a defense? If it is a
defense, who can invoke such? If he can invoke the defense, is it
a total or partial defense? As to the minor himself, it is
always a defense, it doesnt matter if the obligation is
joint or solidary, it is always a TOTAL defense. Contract is
voidable. If the minor wants the contract to be annulled, he must
return whatever he has received from the other party- Mutual
restitution. He wants to annul then he must return what he has
received. If the one invoking minority is not the minor himself,
can he invoke? It DEPENDS. If it is JOINT, cannot invoke because
it is separate and distinct. If it is Solidary, YES but is it a total or
partial defense? Only PARTIAL. Example: 5 debtors one of
them is a minor. 50k debt. Creditor demanded payment to the
other creditors like to B, how much can B be compelled to pay
despite one of them is a minor? Only 40k because he can only
invoke minority as to the share of the minor.
b. There can be a defense: Total Defense in any kind of obligation
that you can invoke in whether joint or solidary and can be
invoked by anyone. That defense goes into the NATURE OF
THE OBLIGATION. E.g. if an action was filed against one of the
debtors, but the action was dismissed but thereafter the creditor
filed another action against another debtor, is it possible that the
action will not prosper, that it will be dismissed? YES. If the
ground for the dismissal of the first action is because the
contract is void, then yes cause theres no obligation to speak
of.
17. PNB CASE: During the pendency of the action for the recovery of sum of
money, one of the debtors died may this action still be prosecuted
despite the death of one of the debtors? The effect of this rather would
the debt of one of the debtors result in the court losing jurisdiction of the
case? Others claim in this case that the claim should be filed with the
estate of the deceased, is that correct? Regardless if joint or solidary,
xxx if joint, one of the debtors died, the share would be null and void
only with regard to the share of the debtor who died but as to the other
joint debtors they would still be held liable because it is a separate and
distinct obligation. But if this is a solidary obligation, one of them
died, would that result in the court losing jurisdiction over the case? No,
because in solidary obligation, the creditor can demand to any of the
debtors for the fulfilment of the obligation. The trial court can continue
with the proceeding of this case.
18. But a very good case is the CALANG CASE: Negligent act of the driver.
The driver and the owner were held liable. Can they be held solidarily
liable? Yes, they can be held solidarily liable if the source of the
obligation is quasi-delict. In quasi-delict xxxx liability of the employer
is also a direct and primary liability. And persons held liable under quasidelict can be held solidarily liable. In this case, this is a criminal
complaint filed against the driver because he injured and killed someone
and he was convicted. And in the conviction there is a civil liability. If
someone died as a result of a crime or quasi-delict, Article 2206 theres
a so-called indemnity and there is also what you call actual
damage. Even without proof, the minimum that should be given
that this is JIO, and cannot be fulfilled due to the fault of one of the
debtors, law says this obligation would be converted into a
monetary obligation with each debtor only be held liable to each
of his share and only the debtor at fault be the only one liable
for damages. In other words, how much can C be held liable in the
problem? Only 30k. But if this is a Solidary Indivisible Obligation ?
How much will C be held liable? 90k plus damages. But of course C can
seek reimbursement to B for 30k only. But only to A can C seek
reimbursement for the damages as A is the one who was at fault.
21. Maybe for midterms: In a problem, A obliged himself, promise to pay X
or Y. when the obligation was already due, X demanded the payment
from A but thereafter Y also demanded payment from A. A then paid Y
instead of X even though X demanded first. May X have a cause of
action against A? Does A still have a liability to X? First, start with what
kind of obligation is involved. This is neither joint nor solidary because of
the word OR had this been and then maybe it can be a joint or
solidary obligation. Second, conjunctive or alternative, this is also wrong
because there is only one prestation involve, in those kinds of
obligations, there should be two or more prestations involved. In other
words, what kind of obligation is involved here? DISJUNCTIVE
OBLIGATION. The problem with this, in this scenario, there is no express
provision or article which would provide us with this rule in relation to
this problem as to whether X would still have a cause of action against A.
But the answer to the question would be if the intention of the
parties is clear as to who has the right to choose to whom
payment should be made. If A has the right to choose, does it
matter if X demanded the payment first, no it doesnt matter. If
X and Y has the right to choose and it was clear that X has the
right to receive or recover the amount, A should have paid X
instead of Y so X would still have a cause of action against A. So
the problem here would be: That the intentions of the parties were not
clear as to whom payment should be made. Then who has the right to
choose, since no express provision we have to apply other provisions by
analogy. Tolentino would want us to apply rules in SOLIDARY
obligations. So would X have a cause of action against A? YES, because
is solidary obligations, if there are two or more creditors, the debtor
should pay the creditor who has first made the demand. Atty Uribe
cannot agree with Tolentino. Why? Because the three exceptional rules
are not present in the case. Rather I would support the answer that we
should apply the rules on Alternative Obligations. There is a semblance
as there is an alternative subjects. If in alternative obligations, would X
still have a cause of action against A? No more because in alternative,
the law provides that the debtor has the right to choose unless
otherwise expressly granted to the creditor.
5. AS TO THE PRESENCE OF AN ACCESSORY UNDERTAKING IN CASE OF
BREACH
a. OBLIGATIONS with a Penal Clause
Article 1226. In OBLIGATIONS with a penal clause, the penalty shall substitute
the indemnity for damages & the payment of interests in case of non-compliance,
The vendee made a total payment of P5,193.63 including interests and expenses
for registration of title. 3
Thereafter, Lolita Millan made repeated demands upon the corporation for the
execution of the final deed of sale and the issuance to her of the transfer
certificate of title over the lot. On March 2, 1973, the parties executed a deed of
absolute sale of the aforementioned parcel of land. The deed of absolute sale
contained, among others, this particular provision:
That the VENDOR further warrants that the transfer certificate of title of
the above-described parcel of land shall be transferred in the name of
the VENDEE within the period of six (6) months from the date of full
payment and in case the VENDOR fails to issue said transfer certificate
of title, it shall bear the obligation to refund to the VENDEE the total
amount already paid for, plus an interest at the rate of 4% per annum.
(record on appeal, p. 9)
Notwithstanding the lapse of the above-mentioned stipulated period of six (6)
months, the corporation failed to cause the issuance of the corresponding
transfer certificate of title over the lot sold to Millan, hence, the latter filed on
August 14, 1974 a complaint for specific performance and damages against
Robes-Francisco Realty & Development Corporation.
Issue: Whether or not the petitioner is correct in invoking Article 1226 of the
Civil Code which provides that in obligations with a penal clause, the penalty
shall substitute the indemnity for damages and the payment of interests in case
of noncompliance, if there is no stipulation to the contrary.
Held: NO. We would agree with petitioner if the clause in question were to be
considered as a penal clause. Nevertheless, for very obvious reasons, said
clause does not convey any penalty, for even without it, pursuant to Article 2209
of the Civil Code, the vendee would be entitled to recover the amount paid by
her with legal rate of interest which is even more than the 4% provided for in the
clause.
It is therefore inconceivable that the afore-cited provision in the deed of sale is a
penal clause which will preclude an award of damages to the vendee Millan. In
fact the clause is so worded as to work to the advantage of petitioner
corporation.
CASE DOCTRINES: The theory that penal and liquidated damages are the same
cannot be sustained where obligor is guilty of fraud in fulfillment of OBLIGATION;
The penalty clause does not partake of the nature of liquidated damages.
Party to a contract which was breached by the other, may be given the
right to recover actual damages instead of stipulated liquidated damages.
necessity of proving actual damages & both may be reduced when proper.
Xxx
We further hold that justice would be adequately done in this case by
allowing Yu Ping Kun Co., Inc. to recover only the actual damages proven,
& not to award to it the stipulated liquidated damages of P10,000 for any
breach of the contract. The proven damages supersede the stipulated
liquidated damages.
This view finds support in the opinion of Manresa that in cases of fraud the
difference between the proven damages & the stipulated penalty may be
recovered.
GUARANTY
Is a contract by which
virtue,
a
3rd
person
(guarantor)
obliged
himself to fulfill prestation
in lieu of debtors nonperformance
Intended
to
insure
performance of principal
OBLIGATION
Accessory & subsidiary
OBLIGATION
Principal debtor cannot be
guarantor
Subsists
even
when
principal OBLIGATION is
voidable or unenforceable
When from the nature & 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.
Illustration: Bong Baylon is getting married in Valentines '96. Inno Sotto was
supposed to make Ella's (the bride) wedding gown. Feb. 14 comes, no gown was
delivered. Ella gets married in blue jeans & T-shirt. Finally, on Feb. 15, Inno
delivers the gown. xxx Ella sues Inno for breach. Inno says there was no
demand. In this case, demand is not necessary in order that delay may
exist.
When demand would be useless, as when the obligor has rendered it
beyond his power to perform. Example is the case of Chavez v. Gonzales,
infra.
Illustrations:
1. ROBLES-FRANCISCO vs. CFI CASE: This case would tell you the
nature of a penal clause. Spouses bought a parcel of land payable in
instalment and in the contract it was stipulated that if despite full
payment Robles-Francisco the (developer) would not be able to give to
the partners the certificate of title over the land the seller is obliged to
return all the amounts paid plus four percent interest. Now when the
spouses were already paid of the entire amount of the purchase price,
Robles-Francisco could not deliver the certificate of title over such parcel
of land because the mother title was being mortgaged with the GSIS,
hence, the condition cannot be satisfied, and thats why the spouses
filed this case to recover all the amounts paid plus 4% interest plus
damages. Actual amount paid + 4% + nominal damages. But
Robles-Francisco would question this decision claiming that, the 4%
interest stipulation is a penal clause and under the law the
clause shall substitute the indemnity for damages and the
payment of interest. In other words, the court should have not
awarded the nominal damages in addition to the penalty. Is the ruling in
Robles-Francisco correct? WRONG. Because the 4% interest stipulation
said the court cannot be considered as a penal clause; because a
penal clause by its nature should provide for a greater liability
in case of non-performance and even under the law at that time, if a
person fails to pay a sum of money it is already in delay, he will be liable
for interest, if you have any agreement as to the rate it would have to be
6% at that time, now 12%, if by law you will be liable for 6% and by
stipulation only 4%, how could that be considered a penal clause ? When
again a penal clause should provide for a greater liability. So what
happened? The trial court then ruled that Robles-Francisco should return
all the amount received plus 4% penalty plus nominal damages.
However, I said as a rule that penalty shall substitute as indemnity for
damages and payment of interest as this admits exceptions. In other
words, aside from the penalty agreed upon, the debtor may be
held liable for other amounts. 3 reasons:
a. Because it is so stipulated. E.g. Credit cards agreement. In
other words here, penalty shall not be a substitute for indemnity
for damages and the payment of interest. May interest ka na,
may penalty ka pa. Which was in the ruling in the case of
3.
4.
5.
6.
in
all
in all
Article 1165. xxx. If the obligor delays, or has promised to deliver the same
thing to two or more persons who do not have the same interest, he shall be
responsible for any fortuitous event until he has effected the delivery.
Article 1786. Every partner is a debtor of the partnership for whatever
he may have promised to contribute thereto.
He shall also be bound for warranty in case of eviction with regard to
specific and determinate things which he may have contributed to the
partnership, in the same cases and in the same manner as the vendor is
bound with respect to the vendee. He shall also be liable for the fruits
thereof from the time they should have been delivered, without the need
of any demand.
Article 1788. A partner who has undertaken to contribute a sum of
money and fails to do so becomes a debtor for the interest and damages
from the time he should have complied with his obligation.
The same rule applies to any amount he may have taken from the
partnership coffers, and his liability shall begin from the time he
converted the amount to his own use.
Article 1896. The agent owes interest on the sums he has applied to his own use
from the day on which he did so, and on those which he still owes after the
extinguishment of the agency.
Article 1942. The bailee is liable for the loss of the thing, even if it
should be through a fortuitous event:
(1) If he devotes the thing to any purpose different from that for which it
has been loaned;
(2) If he keeps it longer than the period stipulated, or after the
accomplishment of the use for which the commodatum has been
constituted;
(3) If the thing loaned has been delivered with appraisal of its value,
unless there is a stipulation exempting the bailee from responsibility in
case of a fortuitous event;
(4) If he lends or leases the thing to a third person, who is not a member
of his household;
(5) If, being able to save either the thing borrowed or his own thing, he
chose to save the latter. (OBLIGATIONS OF THE BAILEE)
Delay is the non-fulfillment of the obligation with respect to time.
Kinds of Delay:
1. Mora Solvendi- delay in the performance (on the part of the debtor);
2. Mora Accipiendi- delay in the acceptance (on the part of the
creditor);
3. Compensation Morae- mutual delay
Article 2201. xxx
(2) In contracts & quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural & probable consequences of
the breach of the obligation, & which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the nonperformance of the obligation.
(4) ANY OTHER MANNER OF CONTRAVENTION:
ARRIETA VS. NARIC [10 SCRA 79] (PAZ ARRIETA AND VITALIADO ARRIETA
VS. NATIONAL RICE & CORN CORP.)
FACTS: On May 1952, Arrieta took part in public bidding called by NARIC to supply
20K metric tons of Burmese rice, being the lowest bidder she was awarded the
contract. In the contract of sale, Arrietas OBLIGATION was to deliver the rice at
the price of her bid, while NARICs OBLIGATION was to pay her in letter of credit,
irrevocable, confirmed and assignable, in USD in favor of Arrieta and/or supplier in
Burma, immediately.
NARIC knew that it did not have enough deposit in PNB to cover the OBLIGATION,
thus it wrote a letter of request to accommodate the application for Letter Of
Credit despite such fact in lieu of this contract with Arrieta. This application was
made by PNB on July 30, 1952, a month after it entered in the contract with Arrieta
and promised to open the Letter Of Credit immediately. By this time Arrieta has
made a 5% tender to her supplier in Burma, which will be confiscated if the
required Letter Of Credit will not be received before August 4, 1952. Such fact
was apprised by Arrieta to NARIC in a letter through counsel.
PNB required NARIC to make a marginal deposit of 50% of the amount of Letter Of
Credit before such will be released in favor of Arrietas supplier in Burma. Such
condition NARIC is not in any financial position to meet. PNB consequently
approved & released the LOC 2-months in delay. The Burmese supplier had
cancelled the order on Aug. 20, 1952, and forfeited the 5% tender of Arrieta
amounting to P200K. NARIC and PNB did not even make the 15-day grace period
given by the supplier. Arrieta endeavored to restore to no avail. It offered to
substitute with Thailand rice, but NARIC rejected. Thus, Arrieta demanded for
payment of damages of USD 286K representing unrealized profits. Again rejected.
Thus, this case.
ISSUE: WON NARIC was in breach of contract?
HELD: YES. NARICs culpability arises from its willful and deliberate
assumption of contractual OBLIGATIONS even as it was well aware of its
own financial incapacity to undertake the prestation.
Under Article 1170, not only debtors guilty of fraud, negligence or
default but also every debtor, in general, who fails the performance of
his obligation is bound to indemnify for the losses & damages caused
thereby.
Meaning of phrase "in any manner contravene the tenor" of the
obligation in Article 1170 The phrase includes any illicit task which impairs the
strict & faithful fulfillment of the obligation, or every kind of defective
performance.
Balane: This phrase is a catch-all provision. At worst, it is a superfluity. At
best, there is a safety net just in case there is a culpable irregularity of
performance which is not covered by fraud, negligence or delay. In this case, the
SC was apparently not sure as to what category the breach fell. This phrase is not
really an independent ground.
TIME IS OF THE ESSENCE
3.
When the nature of the obligation requires the assumption of risk, e.g., an
insurance contract.
Bailee in Commodatum
Article 1942. The bailee is liable for the loss of the thing, even if it should be
through a fortuitous event:
(1) If he devotes the thing to any purpose different from that for which it has been
loaned;
(2) If he keeps it longer than the period stipulated, or after the accomplishment of
the use for which the commodatum has been constituted;
If the thing loaned has been delivered with appraisal of its value, unless there is a
stipulation exempting the bailee from responsibility in case of a fortuitous event;
If he lends or leases the thing to a third person, who is not a member of his
household;
(5) If, being able to save either the thing borrowed or his own thing, he chooses to
save the latter.
In Negotiorum Gestio
Article 2147. The officious manager shall be liable for any fortuitous event:
(1) If he undertakes risky operations which the owner was not accustomed to
embark upon;
(2) If he has preferred his own interest to that of the owner;
(3) If he fails to return the property or business after demand by the owner;
(4) If he assumed the management in bad faith.
are not contrary to law, morals, good customs, public order, or public
policy.
(3) when the nature of the OBLIGATION requires the assumption of
risks
Aleatory Contract
Article 2010. By an aleatory contract, one of the parties or both reciprocally bind
themselves to give or to do something in consideration of what the other shall
give or do upon the happening of an event which is uncertain, or which is to occur
at an indeterminate time.
Article 1175. Usurious transactions shall be governed by special laws.
Tolentino:
Usury is the contracting for or receiving something in excess of the amount
allowed by law for the loan or forbearance or money, goods or chattels.
Special law on usury
-The Usury Law was Act No. 2655. This law was repealed during the period of
martial law, leaving parties free to stipulate higher rates.
______________________________________________________
CASES:
Balane: Some of the elements were present in this case. What was absent was
the last element.
National Power Corporation vs. CA and Engineering Construction Inc.
[161 SCRA 334] NPC cannot escape liability because its negligence was
the proximate cause of the loss & damage even though the typhoon was
an act of God.
FACTS:
Typhoon Welming
Plaintiff ECI entered contract with NAWASA on Aug.1964, to construct Ipo-Bicti
Tunnel, Intake and Outlet Structures at Norzagaray, Bulacan within 800 days from
receipt of notice to proceed. It has finished 1 st stage of the excavation works and
was already on the Ipo site phase when typhoon Welming came in November 4,
1967 and hit Central Luzon passing through Angat Dam. Consequent to the heavy
downpour, the dam reached danger height of 212 m. above sea level causing the
NPC to decide to open spillway gates at that point. Thus, the extraordinary large
volume of water rushed out of the gates and hit the installations and construction
work of ECI at Ipo Site with terrific impact washing away and/or destroying
supplies and equipment of ECI.
ECI then sued NPC for damages.
ISSUE: Whether or not NPC is liable for damages.
HELD: It is clear from the appellate court's decision that based on its findings of
fact & that of the trial court's, petitioner NPC was undoubtedly negligent because
it opened the spillway gates of the Angat Dam only at the height of typhoon
"Welming" when it knew very well that it was safer to have opened the same
gradually & earlier, as it was also undeniable that NPC knew of the coming of the
typhoon at least 4 days before it actually struck. And even though the typhoon
was already uncovered, & 5 mos. after the incident happened, the
opening was still uncovered. Moreover, while there are findings that
during floods the vendors remove the iron grills to hasten the flow of
water, there is no showing that such practice has ever been prohibited,
much less penalized by the City of Manila. Neither was it shown that
any sign had been placed thereabouts to warn passers-by of the
impending danger.
For liability under Article 2189 NCC to attach, it is not necessary that the defective
public works belong to the LGU concerned. What is required is control or
supervision.
CASE: Requisites for exemption from liability due to an "act of God."
Juan F. NAKPIL & SONS vs. CA [144 SCRA 596]- October 3, 1986
To exempt the obligor from liability under Article 1174, for a breach of an
obligation due to an "act of God," the following must concur:
1. the cause of the breach of the obligation must be independent of the will
of the debtor;
2. the event must be either unforeseeable or unavoidable; (c) the event
must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner; &
3. the debtor must be fee from any participation in, or aggravation of the
injury to the creditor.
FACTS: Construction of the office building of Plaintiff Phil. Bar Assoc. (PBA) in
Intramuros, Manila was undertaken by United Construction Inc. on an
administration basis on suggestion of United President Juan Carlos. Such was
approved by PBA Board, & Pres. Roman Ozaeta. Plans and specifications were
done by Juan Nakpil & Sons. The Bldg. was completed on June 1966.
On August 2, 1968 an unusually strong earthquake hit Manila. The PBA bldg.
sustained major damage, in which tenants had to vacate. The building was
shored up by UCI at the cost of P13,661.28.
Hence, PBA filed action to recover damages against UCI while the latter sued
Nakpil for damages due to defects on the plans and specifications.
ISSUE: WON AN ACT OF GOD WHICH CAUSED DAMAGE TO THIS BLDG, EXEMPTS
FROM LIABILITY, PARTIES WHO ARE OTHERWISE LIABLE BECAUSE OF
NEGLIGENCE?
HELD:
ARTICLE 1723
To exempt obligor from liability under Article 1174, fortuitous events; or
for a breach of OBLIGATION due to an act of God, the following: must
concur:
1. cause of the breach of OBLIGATION must be independent of the will of the
debtor;
2. the event must be either unforeseeable or unavoidable
respondent to the effect that the incident was not due to its fault. A
police report of an alleged crime, to which only private respondent is
privy, does not suffice to establish the carnapping. Neither does it prove
that there was no fault on the part of private respondent
notwithstanding the parties' agreement at the pre-trial that the car was
carnapped. Carnapping does not foreclose the possibility of fault or
negligence on the part of private respondent.28
Just like in Co, petitioners merely presented the police report of the Paraaque
Police Station on the robbery committed based on the report of petitioners'
employees which is not sufficient to establish robbery. Such report also does not
prove that petitioners were not at fault.
On the contrary, by the very evidence of petitioners, the CA did not err in finding
that petitioners are guilty of concurrent or contributory negligence as provided
in Article 1170 of the Civil Code, to wit:
Art. 1170. Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene
the tenor thereof, are liable for damages.29
Article 2123 of the Civil Code provides that with regard to pawnshops and other
establishments which are engaged in making loans secured by pledges, the
special laws and regulations concerning them shall be observed, and
subsidiarily, the provisions on pledge, mortgage and antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code, provides that
the creditor shall take care of the thing pledged with the diligence of a good
father of a family. This means that petitioners must take care of the pawns the
way a prudent person would as to his own property.
In this connection, Article 1173 of the Civil Code further provides:
Art. 1173. The fault or negligence of the obligor consists in the omission
of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of time and of the
place. When negligence shows bad faith, the provisions of Articles 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.
We expounded in Cruz v. Gangan30 that negligence is the omission to do
something which a reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do; or the doing of
something which a prudent and reasonable man would not do.31 It is want of
care required by the circumstances.
A review of the records clearly shows that petitioners failed to exercise
reasonable care and caution that an ordinarily prudent person would have used
in the same situation.
Case: Manila Electric Company vs. Matilde Ramoy, March 4, 2008.
Facts: In 1987, NPC filed with MTC of Quezon City a case for ejectment against
several persons allegedly illegally occupying its properties in Baesa, QC. Among
the defendants were the Ramoys. The MTC ordered the demolition of the
buildings and structures. On June 20, 1990, NPC wrote Meralco requesting the
latter to immediately disconnect electric power supply to all residential and
commercial establishments in the subject land. Hence, Meralco comply with the
same. In due time, the electric service connection of the plaintiffs was
disconnected. Upon the conduct of disconnection, respondents herein were
The Court agrees with the CA that under the factual milieu of the
present case, MERALCO failed to exercise the utmost degree of care
and diligence required of it. To repeat, it was not enough for MERALCO
to merely rely on the Decision of the MTC without ascertaining whether
it had become final and executory. Verily, only upon finality of said
Decision can it be said with conclusiveness that respondents have no
right or proper interest over the subject property, thus, are not entitled
to the services of MERALCO.
Case: Solar Harvest, Inc. vs. Davao Corrugated Carton Corporation, July
26, 2010.
Facts: In the first quarter of 1998, Petitioner entered into an agreement with
Davao Corp. for the purchase of corrugated carton boxes specifically designed
for petitioners business of exporting fresh bananas at US1.10 each. The
agreement was not reduced into writing. To get the production underway, the
petitioner deposited to respondents dollar account with Westmont Bank, as full
payment. However, despite payment, petitioner did not receiver any boxes.
Petitioner wrote demand letter for reimbursement from respondent. On February
19, 2001, respondent replied that the boxes had been completed as early as
April 3, 1998 and that petitioner failed to pick them up from the formers
warehouse 30 days from completion, as agreed upon. Respondent mentioned
that petitioner even placed an additional order of 24,000 boxes, out of which,
14,000 had been manufactured without any advanced payment from petitioner.
Respondent then demanded petitioner to remove the boxes from the factory and
to pay the balance of US$15,400.00 for the additional boxes and P132,000.00 as
storage fee. On August 17, 2001, petitioner filed a Complaint for sum of money
and damages against respondent. RTC ruled that respondents did not commit
any breach of faith that would justify rescission of the contract and the
consequent reimbursement. CA denied the appeal of petitioner.
Issue: Whether or not the respondent is liable for reimbursement of the
payment made by petitioner.
Held: NO. Petitioners claim for reimbursement is actually one for rescission (or
resolution) of contract under Article 1191 of the Civil Code, which reads:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who
have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.
The right to rescind a contract arises once the other party defaults in the
performance of his obligation. In determining when default occurs, Art. 1191
should be taken in conjunction with Art. 1169 of the same law, which provides:
Art. 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:
Facts: Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao
Terminal and Brokerage Service, Inc. (Mindanao Terminal), a stevedoring
company, to load and stow a shipment of 146,288 cartons of fresh green
Philippine bananas and 15,202 cartons of fresh pineapples belonging to Del
Monte Fresh Produce International, Inc. (Del Monte Produce) into the cargo hold
of the vessel M/V Mistrau. The vessel was docked at the port of Davao City and
the goods were to be transported by it to the port of Inchon, Korea in favor of
consignee Taegu Industries, Inc. Del Monte Produce insured the shipment under
an "open cargo policy" with private respondent Phoenix Assurance Company of
New York (Phoenix), a non-life insurance company, and private respondent
McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix.
Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The
vessel set sail from the port of Davao City and arrived at the port of Inchon,
Korea. It was then discovered upon discharge that some of the cargo was in bad
condition. Del Monte Produce filed a claim under the open cargo policy for the
damages to its shipment. RTC dismissed the complaint. CA reversed. The same
court ordered Mindanao Terminal to pay Phoenix and McGee "the total amount of
$210,265.45 plus legal interest from the filing of the complaint until fully paid
and attorneys fees of 20% of the claim."11 It sustained Phoenixs and McGees
argument that the damage in the cargoes was the result of improper stowage by
Mindanao Terminal. It imposed on Mindanao Terminal, as the stevedore of the
cargo, the duty to exercise extraordinary diligence in loading and stowing the
cargoes. It further held that even with the absence of a contractual relationship
between Mindanao Terminal and Del Monte Produce, the cause of action of
Phoenix and McGee could be based on quasi-delict under Article 2176 of the
Civil Code.
Issue: Whether or not Mindanao Terminal is liable for damages for its failure to
exercise extraordinary diligence in loading and stowing the cargoes.
Held: NO. We adopt the findings of the RTC, which are not disputed by Phoenix
and McGee. The only participation of Mindanao Terminal was to load the cargoes
on board M/V Mistrau. It was not disputed by Phoenix and McGee that the
materials, such as ropes, pallets, and cardboards, used in lashing and rigging the
cargoes were all provided by M/V Mistrau and these materials meets industry
standard.
The resolution of the two remaining issues is determinative of the
ultimate result of this case.
Article 1173 of the Civil Code is very clear that if the law or contract
does not state the degree of diligence which is to be observed in the
performance of an obligation then that which is expected of a good
father of a family or ordinary diligence shall be required. Mindanao
Terminal, a stevedoring company which was charged with the loading and
stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely
as a labor provider in the case at bar. There is no specific provision of law
that imposes a higher degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with the loading and
stowing of cargoes. It was neither alleged nor proven by Phoenix and McGee
that Mindanao Terminal was bound by contractual stipulation to observe a higher
degree of diligence than that required of a good father of a family. We therefore
conclude that following Article 1173, Mindanao Terminal was required to observe
ordinary diligence only in loading and stowing the cargoes of Del Monte Produce
aboard M/V Mistrau. The case of Summa Insurance Corporation v. CA, which
involved the issue of whether an arrastre operator is legally liable for the loss of
It was further established that Mindanao Terminal loaded and stowed the
cargoes of Del Monte Produce aboard the M/V Mistrau in accordance with the
stowage plan, a guide for the area assignments of the goods in the vessels hold,
prepared by Del Monte Produce and the officers of M/V Mistrau.
Illustrations:
1. Why would a party to an obligation be liable? If there was FRAUD,
NEGLIGENCE, DELAY or ANY OTHER MATTER OF CONTRAVENTION.
a. ARRIETA vs. NARIC: As long as there is contravention of
the tenor even there was no fraud, negligence or delay
there is liability. But is it correct to say that only debtors may
be held liable for damages? No, even creditors may be held
liable. In Article 1170, the law says that those who are
guilty of fraud. It did not say that debtors who are guilty
of fraud. In fact, in the past bar exams, there was a problem
where the creditor was in delay and this is known as mora
accipiende. How could the creditor be in delay? He is not the
one to perform the obligation? Because if he refuses to accept
without just cause this can be considered in delay. So what
would the damages be suffered by the debtor? Plenty of reasons.
In keeping the thing, in preserving the thing, in the transport of
the thing if it needs to be delivered.
b. FRAUD A sold to B bottles of liquor which appears to be
Fundador but in reality it is originally a Matador Brandy inside
the bottle of Fundador. Was there fraud? YES. But is this fraud
under under Article 1171? NO. This is not, because the fraud
here speaks of in the performance of the obligation. In the
contract there is no fraud, but in the performance of the
obligation there is fraud. In this problem, this is what you call
CAUSAL FRAUD. Dolo Causante under Article 1338. Article
1344 incidental fraud. As to the nature of this fraud- Article
1170, I would not use dolo here, because DOLO is fraud in on
obtaining consent, that pertains to deceit. Article 1170 bad
faith/ malice.
i. The EFFECT OF FRAUD:
1. Article 1170 would result in liability for
damages.
2. Article 1338 would result in the contract being
considered to be VOIDABLE because theres
vitiation of consent but the injured party may be
entitle to damages as well.
3. Article 1334 would not result into a voidable
contract but would only result in the entitlement
of the injured party to damages.
ii. Another example for fraud:
4. If A filed an action against B for damages,
claiming that B committed fraud upon him
causing damaged upon him, however, if B was
able to prove to the court that A executed this
document where he basically would say that I
will not hold B liable for whatever damage may
be cause to me by B waiver. If there is such a
c.
vii.
viii.
Exceptions:
5. If so stipulated. E.g. credit card agreement.
Without need of demand. For a demand to be
valid the demand must be made when the
obligation is already due. If you demand when
the obligation is not yet due not a proper
demand because the obligation is not yet
due and demandable. No particular form as to
how to make a demand. But lawyers will never
make a demand verbally because of evidentiary
purposes. Follow-up is it a valid demand? NO.
Demand is where you require the performance
not just a follow-up. Request not a demand as
well.
6. The law so provides. E.g. Agency. Like if the
agent misappropriated a sum of money, will he
be liable already for interest? From the time he
misappropriated or from the time the demand
was
made?
From
the
time
he
misappropriated because the law so
provides. Even there was not yet any demand.
7. Demand will be useless due to the fault of the
debtor. Due to the fault of the debtor, in order
for the demand not necessary so that delay will
not set in.
8. In reciprocal obligations, the last paragraph
Article 1169, one of the parties had already
complied and the other had not complied, and
the one who had not complied will already be
considered in delay even if there was no
demand having said that, do not read it literally.
SC has held that, this is subject to the
stipulation of the parties.
a. Like in a sale, obligations of the parties
are reciprocal, the seller has already
delivered and the buyer has not yet paid,
does it mean that the buyer is already in
delay? Not necessarily, they may have
agreed that the buyer will only pay after
the period of one year. So before that,
you cannot be considered in delay. This
is one of the exceptions in the rule to
demand under Article 1169.