OBLIGATIONS AND CONTRACTS

ATTY. BYRON FERNANDEZ

Article 1156. An obligation is a juridical necessity to give, to do or not to do.

1. Concept of Obligation
a) Esential Elements/Requisites of Obligation:
i. Ang Yu Asuncion vs. CA, GR No. 109125 December 2, 1994
An obligation is constituted upon the concurrence of the essential elements
thereof,viz (a) The vinculum uris or judicial tie which is the efficient cause
established by the various sources of obligations; (b) the object which is the
prestation or conduct, required to be observed (to give, to do or not to do); and (c)
the subject-persons who viewed from the demandability of the obligation, are the
active (obligee) and the passive (obligor) subjects.
b) Civil Obligation distinguished from Natural Obligation
i. Agoncillo vs. Javier 38 Phil 424
Facts: Petitioners and respondents signed a contract that if the respondent will not
able to pay before the maturity the house shall be transferred to the petitioner. A
partial payment was made before the death of the respondent.
Issue: May the petitioner avail the transfer of property to her
Ruling: The contract now under consideration is not suspectible of the
interpretation that the title to the house and lot in question was to be transferred to
the creditor ipso facto upon the mere failure of the debtors to pay the debt at its
maturity. The obligation assumed by the debtors were alternative, and they had the
right to elect which they would perform (civil code, art. 1132). The conduct of the
parties (Civil Code, art. 1782) shows that it was not their understanding that the
right to discharge the obligation by the payment of money was lost to the debtors
by their failure to pay debt at its maturity. The plaintiff accepted a partial payment
from Anastasio Alano in 1908, several years after the debt matured. The prayer of
the complaint is that the defendants be required to execute a conveyance of the
house and lot, after its appraisal, unless the defendants pay the plaintiff the debt
which is the subject of this action.

ii. Villaroel vs. Estrada 71 Phil 140

Facts: The sole heir/ son of the debtor assumed a debt of his mother from the
respondents. After learning that the debt is payable only in 7 years and the debt has
prescribed he petition for the desolution of assumed obligation.
Issue: Is the petition meritorious?
Ruling: No action is based on the present obligation arises, contracted by the
mother of the defendant-petitioner, but there are already prescribed in which the
defendant contracted on 9th of August 1930 which is to take their compliance with
those obligations, a prescribed. Being a sole heir of the original debtor, with a right
to suceed her inheritance in it, not that debt incurred legally but lost his mothers
now lost their effectiveness by prescription. However for a moral obligation it is
considerable enough to create and make effective and enforceable if obligation is
voluntarily contracted on 9th of August 1930.

c) Classification of Obligations:
a. As to juridical quality
 b. As to parties
c. As to objects
d. As to perfection and extinguishment

Article 1157. Obligations arise from:

1) Law
2) Contracts
3) Quasi-Contracts
4) Acts or Omissions punished by law; and
5) Quasi-delicts

1. Sources of Obligation
a) Leung vs. OBrien, 38 Phil 182
It will be observed that according to the Civil Code (article 1089) obligations are supposed to
be derived either from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts and
ommissions, or (4) acts in which some sort of blame or negligence is present.

Article 1158. Obligations derived from law are not presumed. Only those expressly determined in this
Code or in special laws are demandable, and shall be regulated by the precepts of the law which
establishes them; and as to what has not been foreseen, by the provisions of this Book.

1. LAW
a) Leung vs. OBrien, 38 Phil 182
It will be observed that according to the Civil Code (article 1089) obligations are supposed to
be derived either from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts and
ommissions, or (4) acts in which some sort of blame or negligence is present. This
enumeration of the sources of obligations supposes that the quasi-contractual obligation
and the obligations imposed by law are of different types. The learned Italian jurist, Jorge
Giorgi, criticises this assumption and says that the classification embodied in the code is
theoretically erroneous. His conclusion is that one or the other of these categories should
have been suppressed and merged in the other. The validity of this critism is, we think self-
evident; and it is of interest to note that the commonlaw makes no distinction between the
two sources of liablity. The obligations which in the Code are indicated as quasi-contracts, as
well as those arising ex lege, are in the common law system merged into the category of
obligations imposed by law, and all are denominated implied contracts.

b) Pelayo vs. Lauron 12 Phil 453

According to article, 1089 of the Civil Code, law, creates obligations by contracts, by quasi-
contracts, and by illicit acts and ommissions or by those in which any kind of fault or
negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in the code or in
special laws, etc., are the only demandable ones. Obligations arising from contracts have
legal force between the contracting parties and must be fulfilled in accordance with their
stipulations (arts. 1090 and 1091).
The rendering of medical assistance in case of illness is comprised among the mutual
obligations to which spouses are bound by way of mutual support. (Arts. 142 and 143).

c) Bautista vs. Borromeo 35 SCRA 119

 Issue: In a vehicular accident, one of the respondents employee died. The petitioner paid
the funeral expenses of his employee and since it is the petitioners fault the respondent ask
for reimbursement of cost.
Issue: May the respondent have the action to reimburse the said funeral cost to the
petitioner?
Ruling: Borromeo paid the widow of its employee, Quintin delgado, compensation and
funeral expenses for the latters death while in the course of employment. This obligation
arises from law-Section 2 of the Workmens Compensation Act. The same law in its Section 6
also provides that in case an employee suffers an injury for which compensation is due
under this Act by any other person for damages, accordance with law; and in case
compensation is claimed and allowed in accordance with this Act, the employer who paid
such compensation or was found liable to pay the same, shall succeed the inured employee
to the right of recovering from such person what he paid: xxx.
It is evident from the foregoing that if compensation is claimed and awarded and the
employer becomes subrogated to and acquires, by operation of law, the workers rights
against the tortfeasor.
No need then there is to establish any contractial relationship between the deceased and
the petitioner. Indeed, there is none. The cause of action of respondent corporation is one
which does not spring from a creditor-debtor relationship. It arises by virtue of its
subrogation to the right of the deceased to sue the guilty party. Such subrogation is
sanctioned by the Workmens Compensation Law aforesaid. It is as a subrogee tot eh rights
of is deceased employee, that the Respondent filed a suit against Petitioners.

Article 1159. Obligations arising from contracts have the force of the law between the contracting
parties and should be complied with in good faith.

1. CONTRACTS
a) Tiu Peck vs. CA 221 SCRA 618
There is no question that petitioners and the private respondents voluntarily entered into
the agrreement to apportion or divide their businesses, whether as partners or co-owners.
That agreement is the law between them. Contracts shall be obligatory in whatever form
they may have been entered into, provided all the essential requisites for their validity are
present. The fact that after signing the agreement both parties immediately took possession
of their respective shares is the most compelling evidence that there was indeed a binding
partition of the properties. Contacts, once perfected, have the force of law between the
parties who are bound to comply therewith in good faith, and neither one may, without the
consent of the other, renege therefrom.

b) Royal Lines, Inc. vs. CA 143 SCRA 608

Issue: May a second contract be considered as stipulated if it is not reduced to writing but
merely only verbal?
Ruling: A contract is a meeting of minds between the parties and is perfected by mere
consent except in the case of certain agreement like deposit, pledge and commodatum. It
may be entered into in whatever form save where the law requires a document or other
special form as in the contracts enumerated in Article 1388 of the Civil Code. As a general
rule, therefore, the contract may be oral or written.
In stipulating that any modification, change and/or extra work shall besubject of another
contract. The contracting parties did not necessarily or explicitly agree that the second
 contract should be in writing. The second contract could be merely verbal, as in fact it was,
and was binding on the parties as long as it represented as meeting of minds between them.
We are satisfied with the finding of the Court of Appeals that Victorino Estrella and Steve
Pierre were sent by petitioner to the NASSCO shipyard in Mariveles while the M/V Sea Belle
was being repaired and that they represented said petitioner when they requested the extra
work that was subsequently done on the vessel. This second contract was not reduced to
writing, but it was nonethless as binding between the parties as the first written contract.

Article 1160. Obligations derived from quasi-contracts shall be sunjects to the provisions of Chapter 1,
Title XVII, of this Book.

1. QUASI CONTRACTS
a) Philippine National Bank vs. CA, Gr No. 97995, January 21, 1993
Originally, under the Spanish Civil Code, there were only two kinds of quasi contracts:
Negotiorum gestio and solutio indebiti. But the Code Commission, mindful of the position of
the eminent Spanish jurist, Manresa, that the number of quasi-contracts may be
indefinite, added Section 3 entitled Other Quasi-Contracts.
Moreover, even as Article 2142 of the Civil Code defines as quasi-contract, the succeeding
article provides that: The Provisions for quasi-contracts in this Chapter do not exlude other
quasi-contracts which may come within the purview of the preceding article.
Indubitably, the Civil Code does not confine itself exclusively tot eh quasi-contracts
enumerated from Articles 2144 to 2175 but is open to the possibility that, absent a pre-
existing relationship, there being neither crime nor quasi-delict, a quasi-contractual relation
may be forced upon the parties to avoid a case of unjust enrichement. There being no
express consent, in the sense of a meeting minds between the parties, there is no contract
to speak of. However, in view of the peculiar circumstances or factual environment, consent
is presumed to the end that a recipient of benefits or favors resulting from lawful, voluntary
and unilateral acts of another may not be unjustly enriched at the expense of another.

b) Negotiorum Gestio
i. Adille vs. CA 157 SCRA 455
The original owner sold her property retro de pacto, however she died before she
repurchase her property. Her first child assumed the obligation of buying back their
property, however he also assumed all the ownership of the land.
Issue: May he be considered as the sole owner in respect that there are also other
heirs?
Ruling: The Petitioner must then be said to be a trustee of the property on behalf of
the private respondents. We agree with the respondent Court of Appeals that fraud
attended the registration of the property. The Petitioners pretension that he was
the sole of the land in the affidavit of extrajudicial settlement he executed
preliminary to the registration thereof betrays a clear effort on his part to defraud
his brothers and sisters and to exercise sole dominion over the property. It is the
view of the respondent Court that the petitioner in taking over the property, did so
either on behalf of his co-heirs, in which event, he had constituted himself a
negotiorum gestor under Article 2144 of the Civil code, or for his exclusive benefit,
in which case, he is guilty of fraud, and must act as trustee, the private respondents
being the beneficiaries, under the Article 1456. The evidence, of course, points to
the second alternative, the petitioner having asserted claims of exclusive ownership
 over the property abondoned by his co-heirs, the situation Article 2144 of the Code
contemplates. In any case, as the respondent Court itself affirms, the result would
be the same whether it is one or the other. The petitioner would remain liable to
the private respondents, his co-heirs.

c) Solutio Indebiti
i. Power Commercial Industrial vs. CA 274 SCRA 597
Solutio Indebiti applies where:
[1] a payment is made when there exists no binding relation between the payor,
who has no duty to pay, and the person who received the payment, and
[2] the payment is made through mistake, and not through liberality or some other
cause.
Quasi-contract of solutio indebiti is one of the concrete manifestations of the
ancient principle that no one shall enrich himself unjustly at the expense of another.

ii. Andres vs. Manufacturers Trust Corp. 177 SCRA 618

Facts: The petitioner received 2 remittance of $10,000 out from a mistake. The
respondent tries to retrieved one of the $10,000 remmittance but the petitioner
contends that it is negligence of the employees thus the second remmitance is valid.
Issue: Whether the private respondent has a right to recover the second remittance
that was mistakenly delivered to the petitioner?
Ruling: The resolution of this issue would hinge on the applicability of Art. 2154 of
the New Civil Code. Xxx for this article to apply the following requisites must concur:
(1) that he who paid was not under obligation to do so; and, (2) that payment was
made by reason of an essential mistake of fact.
The contract of petitoner,as regards the sale of garments and other textile products,
was with FACETS. It was the latter and not the private respondent which was
indebted to petitioner. On the other hand, the contract for the transmittal of dollars
from the United States to petitioner was entered into private respondent with
FNSB. Petitioner, although named as the payee was not privy to the contract of
remmittance of dollars. Neither was private respondent to a party to the contract of
sale between them, petitioner has no right to apply the second $10,000 remittance
delivered by mistake by private respondent to the outstanding accounts FACETS.
On mistake, It is evident that the claim of petitioner is anchored on the appreciation
of the attendant facts which petitioner would have this Court Review. The Court
holds that the finding by the Court of Appeals that the second $10,000 remittance
was made by mistake. The rule on substantial evidence, is final and conclusive.

iii. Globe Mackay Cable vs. NLRC 163 SCRA 71

Issue: Whether a monthly paid worker is entitled to all days of the month ECOLA?
Ruling: The labot arbiter in determining the hourly rate of monthly paid employees
for purposes of computing overtime pay, the monthly wage is divided by the numer
of actual days in a month and then, by eight working hours. If a monthly-paid
employee renders overtime work, he is paid his basic salary rate plus on-half
thereof. For example, after examining the specimen payroll of employee Jesus
Santos, the Labor arbiter found: the employee Jesus Santos, who worked on
Saturdays and Sunday was paid base plus 10% premium. This is over and above his
monthly basic pay as supported by the fact that base pay was paid. If the 6th and 7th
 days of the week are deemed paid even if unworked and included in the monthly
salary, Santos should not have been paid his base pay for Saturday and Sunday but
should received only the 50% premium.

Article 1161. Civil obligatioons arising from offenses shall be governed by the penal laws, sunject to the
provisions of Article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human
Relations, and of Title XVIII of this Book, regulating damages.

1. DELICTS
a) Civil Liability arising from Criminal Offense
i. Article 100-103 RPC
b) Basis of Civil Liability
i. Banal vs. Tadeo Jr. 156 SCRA 325
Generally, the basis of civil liability arising from crime is the fundamental postulate
of our law that Every man criminally liable is also civilly liable (Art. 100, The
revised Penal Code). Underlyng this legal principe is the traditional theory that when
a man commits a crime he offends two entities namely (1) the society in which he
lives in or the political entity called the state whose law he had violated; and (2) the
individual member of that society whose person, right, honor, chastity or property
was actually or directly injured or damaged by the same punishable act or
ommission. However, this rather broad and general provision is among the most
complex and controversial topics in criminal procedure. It can be misleading in its
implications especially where the same act or ommission may be treated as a crime
in one instance and as a tort in another or where the law allows a separate civil
action to proceed independently of the course of the criminal prosecution with
which it is intimately intercourse of the criminal prosecution with which it is
intimately intertwined. Many legal scholars treat as misconception or fallacy the
generally accepted notion that the civil liability actually arises from the crime when,
in the ultimate analysis, it does not. While an act or omission is felonious because it
is punishable by law, it gives rise to civil liability not so much, because it is a crime
but because it cause damage to another. Viewing things pragmatically, we can
readily see that what gives rise to the civil liability is really the obligation and the
moral duty of everyone to repair or make whole the damage caused to another by
reason of his own act or omission, done intentianally or negligently, whether or not
the same be punishable by law. In other words, criminal liability will give rise to civil
liability only if the same felonious act or ommission results in damage or injury to
another and is the direct and proximate cause thereof. Damage or injury to another
is evidently the foundation of the civil action. Such is not the case in criminal
actions for, to be criminally liable, it is enough that the act or omission complained
of is punishable, regardless of whether or not it also causes material damage to
another.

ii. Occena vs. Icamina 181 SCRA 328

Facts: The petitioner filed a civil damage against the private respondent for uttering
in public malicious and defamatory statements against him. The trial court renders
judgement of sentencing the private respondent of only a fine of 50 pesos. In the
appeal, the RTC denied the motion.
Issue: Whether the petitioner deserve a payment for civil damage
 Ruling: In the case at bar, private respondent is found guilty of slight oral
defamation and sentenced to a fine of P50.00 with subsidiary imprisonment in case
of insolvency, but no civil liability arising from the felonious act of the accused was
adjudged. This is erroneous. As a General rule, a person found to be criminally liable
offends two (2) entities: The state or society in which he lives and the individual
member of the society or private person who was injured or damaged by the
punishable act or ommission. The offense of which private respondent was found
guilty is not one of those felonies where no civil liability results because either there
is no offended party or no damage was caused to a private person. There is here an
offended party, whose main contention precisely is that he suffered damages in
view of the defamatory words and statements utttered by private respondent, in
the amount of P 10,000 as moral damages and the further sum of P 10,000 as
exemplary damages.

c) Implied Institution of Civil Action

i. Sec. 1, Rule 111, 2000 Rules of Criminal Procedure
When a criminal action is instituted, the civil action for the recovery of civil
liability is impliedly instituted with the criminal action, unless the offended party
waives the civil acion, reserves his right to institutes the civil action prior to the
criminal action.
Such civil action includes recovery of indemnity uner the RPC, and damages
uncer Article 32, 33, 32 and 2176 of the Civil Code of the Philippines arising from the
same act or omissionof the accused.
A waiver of any of the civil actions extinguishes the others. The institution of, or
the reservation of the right to file, any of said civil actions separately waives the
others.
The reservation of the right to institute the separate civil actions shall be made
before the prosecution starts to present its evidence and under circumstances
affording the offended party a reasonable opportunity to make such reservation.
In no case may the offended party recover damages twice for the same act or
omission of the accused.
When the offended party seeks to enforce civil liability against the accsed by
way of moral, nominal, temperate or exemplary damages the filing fees for such civil
action as provided in these Rules shall constitute lien on the judgement except in an
award for actual damages.
In cases wherein the amount of damages, other then actual, is alleged in the
complaint or information, the corresponding filing fees shall be paid by the offended
party upon the filing thereof in court for trial.
d) Dual Concept of Civil Liability
i. Elcano vs. Hill 77 SCRA 98
Facts the respondent an unemancipated minor was aquitted in killing the
petitioners son after finding out that he has no intent.
Issue: Wether the respondent is still civilly liable after his aquittal
Ruling: Alhough, again this article 2177 does seem to literally refer to only acts of
negligence, the same argument of Justice Bocobo about construction that upholds
The spirit that giveth life rather than that which is literal that killeth te intent of
the lawmaker should be observed in applying the same. And considering that the
preliminary chapter on human relations of the new Civil Code definitely establishes
 the seperability and independence of liability in a civil responsibility arising from
crime fixed by Article 100 of the revised penal code, and, in a sese, the Rules of
Court, under Sections 2 and 3 (c), Rule 111, contelmplate also the same separability,
it is more congruent with the law, equity and justice, and more in harmony with
modern progress, to borrow the felicitous relevant language in Rakes vs Atlantic.
Gulf and Pacific Co., 7 phil 359, to hold, as We do hold, that Article 2176, where it
refers It fault or negligence, covers not only acts not punishable by law but also
acts criminal in character, whether intentional and voluntary or negligent.
Consequently, a separate civil action lies against the offender in a criminal act,
whether or not he is criminally prosecuted and found guilty or acquitted, provided
that the offended party is not allowed, if he is actually charged also criminally, to
recover damages on both scores, and would be entitled in such eventuality only to
the bigger award of the two, assuming the awards mede in the two cases vary. In
other words, the extinction of civil liability referred to in Par. (e) of Section 2, rule
111, referes exclusively to civil liability founded on Article 100 of the Revised Penal
Code, whereas the civil liability for the same act charged has not happened or has
not been committed by the accused. Briefly stated, We here hold, in reiteration of
Garcia, that culpa aquiliana includes voluntary and negligent acts which may be
punishable by law.
It results, therefore, that the acquittal of Reginal Hill in the criminal case has not
extinguished his liability for quasi-delict, hence that acquittal is not a bar to the
instant action against him.

ii. Jarantilla vs. CA 171 SCRA 429

Issue: Whether the private respondent, who was the complainant in the criminal
action for Physical injuries thru reckless imprudence and who participated in the
prosecution thereof without reserving the civil action arising from the act or
omission complained of, can file a separate action for civil liabiliyt arisin from the
same act or omission where the herein petitioner was acquitted in the criminal
action on reasonable doubt and no civil liability was adjudicated or awarded in the
judgement of acquittal.
Ruling: Apropos to such resolution is the settled rule that the same act or omission
(in the case, the negligent sideswiping of private respondent) can create two kinds
of civil liability on the part of the offender, that is, civil liability ex delicto and civil
liability ex quasi delicto. Sonce the same negligence can giver rise either t a delict or
crime or to a quasi-delict or tort, either of these two types of civil liability may be
inforced against the culprit, subjet to the caveat under Article 2177 of the Civil Code
that the offended party cannot recover damages under both types of liability.
Another consideration in favor of private respondent is the doctrine that the failure
of the court to make any pronouncement, favorable or unfavorable, as to the civil
liablity of the accused amounts to a reservation of the right to have the civil liability
litigated and determined in a separate action. The rules nowhere provide that if the
court fails to determine the civil liability it becomes no longer enforceable.

e) Two kinds of Aquittal

i. Manantan vs. CA 350 SCRA 387
Our law recognizes two kinds of aquittal, with different effects on the civil liability of
the accused- (a) first is an aquittal on the ground that the accused is not the author
 of the act or omission complained of and this instance closes the door to civil
liability, and (b) second is an aquittal based on reasonable doubt on the guilt of the
accused, in which case even if the guilt of the accused has not been satisfactorily
established, he is not exempt from civil liability which may be proved by
preponderance of evidence only.

ii. Aquittal based on reasonable ground

a. Castillo vs. CA 176 SCRA 591
Facts: A collision between the petitioner and private respondent occur which
resulted to damage and Physical Injury. The petitioner filed complaint and seek
for damages. The court finds out that the proximate cause is the negligent
driving of the petitoner.
Issue: May the petitioner still ask for damage
Ruling: But where the judgement of aquittal contained in a declaration that no
negligence can be attributed to the accused and that the fact from which the
civil action might arise did not exist, such aquittal in the criminal action carried it
extinction of civil responsibility arising therefrom. But this rule is not without
exception. Thus, Section 2 (c) of Rule 111 of the Rules of Court provides
Extinction of the penal codes does not carry with it extinction of the civil,
unless the extinction proceeds from a declaration from a final judgement that
the fact from which the civil action might arise did not exist. Xxx Negligence,
being the source and foundation of actions of quasi-delicts is the basis of
recovery of damages. In the case at bar, the Court of Appeals, find out that the
defendant to warrant an award of damages to the petitioners committed no
negligence. Respondent Appellate Court states: In aquitting defendant-appellee,
this court held that the collission was not due to the negligence of the Appellee
but it was petitioners own act of driving the jeep to the shoulder of the
collision. With this finding, this court actually exoneraed appellee from civil
liability. Since Plaintiffs civil action is predicated upon defendants alleged
negligence which does not exist, it follows that his acquittal in the criminal
action, which is already final, carried with it the exinction of civil responsibility
arising therefrom.

iii. Aquittal based on reasonable ground that Accused is not the Author of Act or
Ommission
a. (Sec. 2, Rule 111, 2000 Rules of Crim. Pro.) Institution of separate civil action.-
Except in the cases provided for in Section 3 hereof, after the criminal action
been commenced, the civil action which has been reserved connot be instituted
until final judgement has been rendered in the final action.
(a) Whenever the offended party shall have instituted the civil action as
provided for in the first paragraph of Section 1 hereof before the filing of
the criminal action and the criminal action is subsequently commenced, the
pending civil action shall be suspended, in whatever stage before final
judement it may be found until final judgement in the criminal action. If the
applicactio if granted, the evidence presented and admitted in the civil
action shall be deemed automatically reproduced in the criminal action,
without prejudice to the admission of additional evidence that any party
 may wish to present. In case of consolidation, both the criminal and the civil
actions shall be tried and decided jointly.
(b) Extinction of the penal action does not carry with it extinction of the civil
unless the extinction proceeds from a declaration in final judgement that
the fact from which the civil might arise did not exist.
b. Ching vs. Nicdao 522 SCRA 316
In sapiera v CA, 314 SCRA 370, the court enunciated that the civil liability is not
extinguished by aquittal: (a) where the aquittal is based in reasonable doubt; (b)
where the court expressly declares that the liability of the accused is not crimnal
but only civil in nature; and (c) where the civil liability is not derived from or
based on the criminal act of which the accused is acquitted. Thus, under Article
29 of the Civil Code when the accused in a criminal prosecution is aquitted on
the ground that his guilt has not been proved beyond reasonable doubt, a civil
action for damages for the same act or ommission may be instituted. Such
action requires only a preponderance of evidence. Upon motion of defendant,
the court may require the plaintiff to file a bond to be malicious. If in a criminal
case the judgement of acquittal is based upon reasonable doubt, the court shall
so declare. In the absense of any declaration to that effect, it may be inferred
from the text of the decision whether or not the acquittal is due to that ground.

iv. Independent Civil Action

a. Madeja vs. Caro
Facts: The husband of the petitioner died after the alleged negligence of the
respondent who is the attending doctor on the apendectomy of the deceased.
The petitioner demand damages. The respondent judge dismiss the criminal
case against the respondent.
Issue: May the petitioner file a separate Civil action
Ruling: Section 2, Rule 111 of the Rules of Court in relation to Article 33 of the
Civil Code is the applicable provision. The two enactments are quoted herein
below:
Sec. 2. Independent civil action.- In the cases provided for in Articles
31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil
action entirely separate and distinct from the criminal action, may be brought
by the injured party during the pendency of the criminal case, provided the right
is reserved as required in the preceding section. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a
preponderance of evidence.
Article 33. In cases of defamation, fraud and physical injuries, a civil
action for damages, entirely separate and distinct from the criminal action for
damages, entirely separate and distinct from the criminal action may be brought
by the injured party. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of evidence. (civil
code)

Tolentino:
The general rule is that when a criminal action is intituted, the civil
action for recovery of civil liability arising from the offense charged is impliedy
instituted with the criminal action, unless the offended party reserves his right
 to institute it separately; and after a criminal action has been commenced, no
civil action arising from same offense can be prosecuted. The present articles
creates an exception to this rule when the offense is defamation, fraud, or
physical injuries. In these cases, a civil action may be filed independently of the
criminal action, even of there has been no reservation made by the injured
party; the law itself in this article makes such reservation; but the claimant is
not given the right to determine whether the civil action should be scheduled or
suspended until the criminal action has been terminated. The result of the civil
action is thus independent of the result of the criminal action.

Article 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2,
Title XVII of the Book and by Special laws.
1. QUASI-DELICT
a) Barredo vs. Garcia and Almario 73 Phil 607
A head on collision between a taxi and a carretela resulted in the death of a 16 year old boy,
one of the passengers of the caretela. A criminal action was filed against the taxi driver and
he was convicted and sentenced accordingly. The court in criminal case granted the petition
that the right to bring a separate civil action has been reserved. Thereafter the parents of
the deceased brought suit for damages against the propietor of the taxi, the employer of the
taxi driver, under article 1903 of the civil code.
Issue: Whether the employer is the direct liable in the give case.
Ruling: That this separate civil action lies, the employer being primarily and directly
responsible in damages under articles 1902 and 1903 of the Civil code.

A quasi delict or Culpa aquiliana is a separate legal institution under the civil code, with a
substantivity all its own, and individuality that is entirely apart and independent from a
delict or crime. Upon this principle, and on the wording and spirit of article 1903 of the Civil
Code the primary and direct responsibility of employers may be safely anchored.

b) Phil. Bank of Commerce vs. CA 269 SCRA 695

Facts: The private respondents secretary fraudulently deposit the companys money in the
name of her husband. She use a trick of filling two receipts which is negligently signed by the
banks counter.
Issue: Who held the liability for damage
There are three element of quasi-delict: (a) damages suffered by the plaintiff; (b) fault or
negligence of the defendant, or some other person for whose acts he must respond; and (c)
the connection of cause and effect between the fault or negligence of the defendant and
the damages incurre by the plaintiff.
The proximate cause which is determined on the facts of each case upon mixed
considerations of logic, common sense, policy and pecedent. In this case, absent the act of
Ms. Mabayad in negligently validating the incomplete duplicate copy of the deposit slp. Ms.
Irene Yabut would not have the facility with which to perpetrate her fraudelent scheme with
impunity.

c) Janssen Pharmaceutica vs. Silayro, G.R. No. 1725528, February 26, 2008
Employers prerogative in discplining its employee as a guideline of being a good father to
his employee.
 The employers prerogative to discipline its employee must be exercised without abuse of
discretion. Its implementation should be tempered with compassion and understanding.
While an employer has the inherent right to discipline its employees, we have always held
that this right must be held that this tight must be always exercised humanely, and the
penalty it must impose should be commensurate to the offese involved and to the degree of
its infraction. The employer should bear in mind that, in the exercise of such right, what is at
stake is not the employees position but her livelihood as well. The law regards the wrokers
with compassion. Even where a worker has committed an infracton, a penalty less punitive
may suffice, whatever missteps may be committed by labor ought not to be visited with a
consequence so severe. This is not only the laws concern for workingman. There is, in
addition, his or her family to consider. Unemplyemnt brings untold hardships and sorrows
upon those dependent on the wage-earner.

d) First Philippine International Bank vs. CA, GR No. 115849, January 24, 1996
The authority of a corporate officer in dealing with third persons may be actual or apparent.
The doctrine of apparent authority, with special reference to banks, was laid out in
prudential bank vs. CA, where it was held that Conformably, we have declared in countless
decisions that the principal is liable for obligations contracted by the agent. The agents
apparent representation yields to the principals true representation and the contract is
considered as entered into between the principal and the third person. A bank is liable for
wrongful acts of its officers done in the interests of the bank or in the course of dealings of
the officers in their representative capacity but not for acts outside the scope of their
authority. A bank holding out its officers and agents as worthy of confidence will not be
permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent
scope of their employement; not will it be permitted to shirk its responsibility for such
frauds, even though no benefit may accrue to the bank therefrom. Accordingly, a banking
corporation is liable to innocent third persons where the representation is made in the
course if its business by an agent acting within the general scope of his authority even
though, in the particular case, the agent is secretly abusing his authority and attempting to
perpetrate fraud upon his principal or some other person, for his own ultimate benefit.

e) Sps. Batal vs. Sps. Tominaga, GR No. 164601, September 27, 2006
Culpa or negligence, may be understood in two different senses: either as culpa aquiliana,
which is the wrongful or negligent act or omission which creates a vinculum juris and gives
rise to an obligation between persons not formally bound by any other obligation, or as
culpa contractual, which is the fault or negligence incident in the performance of an
obligation which already existed, and which increases the liability form such already existing
obligation.

f) Culpa Contractual
a. Air France vs. Carrascoso, 18 SCRA 155
Passengers do not contract merely for transportation. They have right to be treated by
the carriers employees with kindness, respect, courtesy and due consideration. They
are entitiled to be protected against personal misconduct, injurious language, indignities
and abuses from such employees. So its os, that any rule or discourteous conduct on the
part of employees towards a passenger gives the latter an action for damages against
the carrier.
 Thus, where a steamship company ad accepted a passengers check, it was a breach of
contract or tort, giving a righ t of action for its agent in the presence of third persons to
falsely notify her that the check was worthless and demand payment under threat of
ejection, though the language used was not insulting and she was not ejected. And
this, because, although the relation of passenger and carrier is Contractual in both
origin and nature neverthless the act that breaks the contract may be also a tort. And
in another case, Where a passenger on a railroad train, when the conductor came to
collect his fare tendered him the cash fare to a point where the train was scheduled not
to stop, and told him that as soon as the train reached such point he would pay the cash
fare from that point to destination, there was nothing in the conduct of the passenger
which justified the conduct or in using insulting language to him, as by calling him a
lunatic, and the Supreme court of South Carolina there held that carrier liable for the
mental suffering of said passenger.

b. Manlilic vs. Calaunan, GR No. 150157, January 25, 2007

Vicarious liability; Under Article 2180 of the New Civil Code, when an ijury is caused by
the negligence of the employee, there instantly arises a presumption of law that there
was negligence on the part of the master or employer either in the selection of the
servat or employee, or in the supervision over him after selection or both.

Nature and Effects of OBLIGATIONS

I. Obligation to give
A. Obligation TO GIVE A DETERMINATE THING
Article. 1163-1166
Art. 1163. Every person obliged to give something is also obliged to take care of it with
proper diligence of a good father of a family, unless the law or the stipulation of the
parties requires another standard of care.
Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation
to deliver it arises. However, he shall acuire no real right over it until the same has been
delivered to him.
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition,
to the right granted him by Article 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be
complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest he shall be responsible for any fortuitous
event until he has effected the delivery.
Article. 1166. The Obligation to give a determinate thing includes that of delivering all its
accessories, even though they may not have been mentioned.

a. Seven Brothers Shipping Corp. vs CA, Gr No. 109573, July 13, 1995
What will happen to a tort in a determinate judicial sale?
When a judicial sale is voided without fault of the purchaser, the later is entitled to
reimbursement of the purchase money paid by him sunject to setoffs for benefits
enyoyed while he had possession of the property. The party, who questions the
sale, will not ordinarily be permitted to retain any benefit therefrom at the expense
of the bona fide purchaser.
 As a General Rule, a judicial sale can only be set aside upon the return to the buyer
of the purchase price with simple interes, together with all sums paid out by him in
improvements introduced on the property, taxes, and other expenses incurred by
him.
Where a purchaser at a judicial sale is entitled to reimbursement of his purchase
money and other sums that he has expended because of a void or ineffectial sale,
he is ordinarily entitiled to alien on the property until he is repaid whatever may be
due to him. If the property purchased has disappeared or is brought out of the
territiorial jurisdiction of the Philippines, the purchase price should be returned.

b. Spouses Adorable vs. CA GR No. 119466, November 25, 1999

Facts: The petitioner lessee of the private respondent file a motion to annul a sale
between the respondent and a third person. Contending that the sale is void due to
the fact that the Private respondent owes them a loan. They further contend that
the land they lease must be only sold in their favor.
Issue: Whether their contention is meritourrous
A personal right is the power of one person to demand of another, as a definite
passive subject, the fulfillment of a prestation to give, to do, or not to do. On the
other hand, a real right is the power belonging to a person belonging to a person
over a specific thing, without a passive subject individually determined, against
whom such right may be personally exercised. In this case while petitioners have an
interest in securing payment of loan they extended, their right to seek payment
does not in any manner attach to a particular portion of the patrimony of their
debtor, Francisco Bareng.

B. OBLIGATION TO GIVE AN INDETERMINATE THING

Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition,
to the right granted him by Article 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be
complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest he shall be responsible for any fortuitous
event until he has effected the delivery.

II. Obligation to do and not to do

Article 1167-1168
Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at his
cost.
The same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be undone.
Art. 1168. When the obligation consists in not doing, and the obligor does what has been
forbidden him, it shall also be undone at his expense.

A. Fajardo Jr. vs Freedom to build, Inc., GR No. 134692, August 1, 2000

Facts: The petitioner buy a house and lot to the respondent. The contract stipulated an
express limitation on the construction of any extension. The petitioner did not follow
the given guidelines and proceed on constructing their extension. The respondents file a
petition, which the court granted. On appeal the petitioner contends that the
 enforcement of prohibition does not rest now on the developers but on the
Homeowners association even though there is a conract.
Issue: Whether the contract stipulated is still enforceable even thought the regulation
is now transmitted to the homeowners association
Ruling: Petitioners rais the issue of the personality of the respondent to enforce the
provisions of the covenant. Broadly speaking, a suit for equitable enforcement of a
restrictive covenant can only be made by one for whose benefit it is intended. It is not
thus normally enforceable by one who has no right or interest in the land for the benefit
of which the restriction has been imposed. Thus, a developer of a subdivision can
enforce restrictions, even as agasint remote grantees of lots, only if he retains part of
the land. There would have been merit in the argument of the petitioners-that
respondent, having relingquished ownership of the subdivision to the hom-owners, is
precluded from claiming any right or interest on the same property- had not the
homeowners association, confirmed by its board of directors, allowed respondent to
enforce the provisions of the restrictive covenant.

III. Transmissibility of obligations

A. General Rule
Article 1178. Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary.

B. Exceptions
Article 1311
a. Estate of Hemady vs. Luzo Surety Co., Inc. 100 phil 388
Issue: Whether a death of a loan garantor, his liability also terminated and therefore
in the absence of a showing that a loss or damage was suffered the claim cannot be
considered contingent
The binding effect of contracts upon the heirs of the deceased party is not altered
by the provision in our rules of court that money debts of a deceased must be
liquidated and paid from his estate before the residue is distributed among said
heirs (Rule 89). The reason is that whatever payment is thus made from the estate is
ultimateky a payment by the heirs and distributees, since the amount of the paid
claim in fact diminishes or reduces the shares that the hiers would have been
entitled ro receive.
Under our law, therefore, the general rule is that a partys contractial rights and
obligations are transmissible tot eh successors. The rule is a consequence of the
progressive depersonalization of patrimonial rights and duties that, as observed
by Victoria Polacco, has characterized the history of these institutions. From the
Roman concept of a relation from person to person, the obligations has evolved into
a relation from patrimony to patrimony, with the persons occupying only a
representative position, barring those rare cases whre the obligation is strictly
personal, i.e., is contracted intuitu personae, in consideration of its performance by
a specific person and by no other. The transition is marked by the disappearance of
the imprisonment for debt.

IV. Perfomance of Obligations

A. General Rule
Article 1233
B. Receipt of Principal
Article 1176
The receipt of the principal by the creditor, without reservation with the respect to the
interest, shall giverise to the presumption that said interest has been paid.
The receipt of a later installment of a debt without reservation as to prior installments,
shall likewise raise that presumption that such installments have been paid.
C. Receipt of later installement
Article 1176
The receipt of the principal by the creditor, without reservation with the respect to the
interest, shall giverise to the presumption that said interest has been paid.
The receipt of a later installment of a debt without reservation as to prior
installments, shall likewise raise that presumption that such installments have been
paid.
D. Usurious Transactions
Article 1175. Usurious transaction shall be governed by Special laws.
a. Circular No. 905 of the Central Bank
b. Medel vs. CA, GR. No. 131622
Issue: Whether or not the stipulated rate of interest at 5.5% per month on the loan
on the sum of P500,000 that plaintiffs extended to the defendant is usurious. In
other words is the usury law still effective, or has it been repealed by Central Bank
Circular No. 905?
Ruling: We agree with petitioners that the stipulard rate of interst at 5.5% per
month on the P500,000.00 loan is excessive, iniquitous, unconscionable and
exorbitant. However, we can not consider the reat usurious because this Court as
consistently held that Circular No. 905 of the Central Bank, adopted on December
22, 1982, has expressly removed the interest ceilings prescribed by the Usury Law
and that the Usury Law is now Legally inexistent
In Security Bank and Trust Company vs. RTC of Makati, Branch 61 the Court held
that CB Circular No. 905 did not repeal nor in any way amed the Usury Law but
simply suspended the latters effectivity. Indeed, we have held that a Cetral Bank
Circular can not repeal a law. Only a law can repeal another law. In the recent case
of Florend vs. Court of appeals the cort reiterated the ruling that by virtue of CB
Circuler 905, the usury law has been rendered ineffective. Usury has been legally
non-existent in our jurisdiction. Interest can now be carged as lender and borror
may agree upon.
Neverthless, we fin the interest at 5.5% per month, or 66% per annum, stipulated
upon by the parties in the promisory note iniquitous or unconscionable, and, hence,
contrary to morals (conta bonus mores), if not against the law. The stipulation is
void. The courts shall reduce equitably liquidated damages, whether intended as an
indemnity or a penalty of they are iniquitous or unconscionable.

c. Dino vs. Jardines G.R. No. 145871

Facts: Petitioner and respondent enter into a pacto de retro contract of a P1.5
million property located in Baguio for a loan total of P165,000 at 9% interest
payable within six months. The respondent did pay a total of P55,000 and agreed to
settle the remaining unpaid. The petitioner filed for consolidation of ownership at
RTC Baguio for the said property contending that the period of redemption has
already expired.
 Issue: Whether the consolidation of ownership is warranted
Ruling: Applying the afore-cited rulings to the instantt case, the inescapable
conclusion is that the agreed interest rate of 9% per month or 108% per annum, as
claimed by respondent; or 10% per month or 120% per annum, as claimed by
petitioner, is clearly excessive, iniquitous, unconscionable and exorbitant. Although
respindent admitted that, she agreed to the interest rate of 9% which she believed
was exorbitant, she explained that the time. As declared in the Medel case, 299
SCRA 481, and Imperial vs. Juacion, 427 SCRA 517, iniquitous and unconscionable
stipulations on interest rates, penalties and attorneys fees are contrary to morals.
Thus, in the present case, the rate of interest being charged on the principal loan of
P165,000.00, be it 9% or 10% per month, is void. The CA correctly reduced the
exhorbitant rate to legal interest

V. Non performance fo Obligaton (Breach or Default)

Article 1170
Arrieta vs. National Rice and Corn Corp., 10 SCRA 79
Facts: Appellee entered into a contract with the appellant for the importation of rice. The
appellant delayed in presenting a letter of credit securing the funds for importation in effect
the appelle lost the secured rice from its supplier causing a lost in realized profit.
Issue: Whether the obligee may held liable for the lost of appellees realized profit
Ruling: One who assumes a contractual obligation and fails to perform the same on account
of his inability he knew and was aware of when he entered into the contract, should be held
liable in damages for breach of contract.
Under Article 1170 of The Civil Code not only debtors guilty of fraud, negligence or
default but also every debtor, in general, who fails in the performance of his obligations is
bound to infemnify for the losses and damages caused thereby.

A. Delay or Mora
Article. 116, 1165, 2209
a. Requisites; In order that the debtor may be in default it is necessary that the following
requisites be present:
i. That the obligation be demandable and already liquidated
ii. That the debtor delays performance and;
iii. That the creditor requires the performance judicially and extra judicially.
b. Exceptions; There are only threee instances when demand is not necessary to render
the obligor in default. These are the following:
i. When the Obligation or the law expressly so declares;
ii. When from the nature and circumstances of the obligation it appears that
the designation of the time when the thing is to be delivered or the
service is to be rendered was a controlling motive for the establishment of
the contract; or
iii. When the demand would be useless, as when the obligor has rendered it
beyond his power to perform.

c. Demand, when necessary

i. SSS vs. Moonwalk Development and Housing Corporation GR. No. 73345,
April 7, 1993
 Issue: Is the penalty demandable even after the extinguishment of
principal obligation?
Ruling: To be in default, xxx is different from mere delay in grammatical
sense, because it involves the beginning of a special condition or status
which has its own peculiar effects or results. In order that the debtor
may be in default it is necessary that the following requisites be present:
(1)That the obligation be demandable and already liquidated; (2)That the
debtor delays performance and; (3)That the creditor requires the
performance judicially and extra judicially. Default generally begins from
the moment the creditor demands the perfromance of the obligation.
Nowhere in this case did it appear that SSS demanded from Moonwalk
the payment of its monthly amortizations. Neither did it show that
petitioner demaded the payment of the stipulated penalty upon the
failure of Moonwalk to meet its monthly amortization. What the
complaint itself showed was that SSS tried to enforce the obligation
sometime in September 1977 by foreclosing the real estate mortgages
executed by Moonwalk in favor of SSS. But this foreclosure did not push
though upon Moonwalks requests and promises to pay in full. The next
demand for payment happened on October 1979 when SSS issued a
Statement of Account to Moonwalk. And in accordance with said
statement, Moonwalk paid its loan in full. What is clear, therefore, is that
Moonwalk was never in default, because SSS never compelled
performance.

ii. Malayan Insurance Co. Inc. vs. CA, GR No. L-59919, November 26, 1986
Facts: Plaintiffs car were in a machanic shop when the shops employees
drives out the vehicle one night and involve it in an accident. The plaintiff
ask for the release of insurance, but the insurance company decline as the
case is not under their insurance policy. On the Court of Appeals the court
made a decision in favor of the plaintiff, and award damages with interest
starting from the start of filing by the petitioner to the company. The
petitioner contends that the interest due must start from the finality of
the courts decision.
Issue: Whether the interest due must start from the finality of Courts
decision.
Ruling: Respondent has sufficiently established his demand for the award
and damages plus interest as sanctioned under Arts. 1169, 1170 and 2209
of the Civil Code. Thus, a debtor who is in delay (default) is liable for
damages (Art. 1170) generally from extrajudicial and judicial demand (Art.
1169) in the form of interest. (Art. 2209, Civil Code).

iii. United Coconut Planters Bank vs Spouses Beluso, GR No. 159912, August
17, 2007
As regards the attorneys fees, the spouses Beluso can actually be liable
therefor even if there had been no demand. Filing a case in court is the
judicial demand referred to in Article 1169 of the Civil Code which would
put the obligor in delay. The RTC, however, also held UCPB liable for
attorneys fees inthis case as the spouses Beluso were forced to litigate
 the issue on the illegality of the interest rate provision of the promissory
notes. The award of attorneys fees, it must be recalled, falls under the
sound discretion of the court. Since both parties were forced to litigate to
protect to protect their respective rights, and both are entitled to the
award of attorneys fees. Therefore, instead of awarding attorneys fees in
favor of petitioner, we shall merely affirm the deletion of the award of
attorneys fees to the spouses Beluso.

iv. Maersk Line vs. CA, GR No. 94761, May 17, 1993
Issue: Whether the absence in the bill of lading of a stipulation on the
period of delivery would result to damages resulting from a delay.
While it is true tha common carriers are not obligated by law to carry ad
to deliver merchandise, and persons are not vested with the right to
prompt delivery, unless such common carriers previously assume the
obligation to deliver at a given date or time, delivery of shpment or cargo
shoul at least be made within a reasonable time.

d. Creditors default
i. Vda. De Villaruel vs. Manila Motors Co. Inc. 104 Phil 926
Facts: The lessee was ousted from the building they are renting during the
war. After the war the lessee went back to the building. The lessor
demand that the lessee should pay the rent during the years when they
are ousted, contending in pursuance of their contract. The lessee decline
stated that they did not enjoy or use the property during those years. The
lessor further damands a raise in rent, declining the payment given by the
lessee. A fire wreck havoc to the property during a pendancy of the case
complained by the lessor.
Issue: Who must held in default?
Ruling: Since the lessee was exempt from paying the rents for the period
of its ouster, the insistence of the lessors to collect the rental
corresponding to said period was unwarranted and their refusal to accept
the current rents tendered by the lessee was unjustified. Such refusal
places the lessors in default and they must shoulder the subsequent
accidental loss of the premises leased.

e. Reciprocal Obligations, Concept of Delay

i. Boysaw vs. Interphil Promotions Inc. 148 SCRA 643
There is no doubt that the contract in question gave rise to reciprocl
obligations. Reciprocal obligations are those which arise from the same
cause, and in which each party is a debtor and a creditor of the other,
such that the obligation of one is dependent upon the obligation of the
other. They are to be conditioned upon the simultaneous fulfillment of
the other
The power to rescind is given to the injured party. Where the plaintiff is
the party who did not perform the undertaking which he was bound by
the terms of the agreement to perform, he is not entitled to insist upon
the performance of the contract by the defendant, or recover damages by
reason of his own breach.
 On the validity of fight postponement, the violations of the terms of the
original contract by the appellants vested the appelless with the right to
rescind and repudiate such contract altogether. That they sought to seek
an adjustment of one particular covenant of the contract, is under the
circumstances, within the appellees right.
B. Fraud
Article 1170. Those who are in the performance of their obligations are guilty of fraud,
negligence or delay, and those who are in any manner contravene the tenor thereof, are liable
for damages.
Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an
action for future fraud is void.
Phil. Commercial Bank vs. CA, GR No. 97785, March 29, 1996
Having established that petitioner acted fraudelently and in bad faith, we find it implausible to
absolve petitioner from its wrongful acts on account of the assailed provision exempting it from
any liability. In Geraldez vs. Court of Appeals, it was unequivocally declared that
notwithstanding the enforceability of a contractual limitation, responsibility arising from a
fraudulent act cannot be exculpated because the same is contrary to public policy. Indeed,
Article 2 of the Civil Code is quite explicit in providing that any person who willfully causes loss
or injury to another in a manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage. Freedom of contact is subject to the limitation that the
agreement must not be against public policy and any agreement or contract made in violation of
this rule is not binding and will not be enforced.

C. Negligence
Article 1172. Responsibility arising from negligencein the performance of every kind of
obligation is also demandable, but such liability ma be regulated byt the courts, according to the
circumstances.
Article 1173. The fault or negligence of the obligaor consists in the ommission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad faith, the provisions of
Articles 1171 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.
a. Spouses Batal vs. Spouses Tominaga, GR No. 164601, September 27, 2006
Culpa or Negligence, may be understood in two different senses: either as culpa
aquiliana, which is the wrongful or negligent act or ommission which creates a vinculum
juris and give rise to an obligaton between two persons not formally bound by any other
obligation, or as culpa contractual, which is the fault or negligence incident in the
performance of an obligation which already existed, and which increases the liability
from sch already existing obligation. Culpa aquiliana is governed by Article 2176 of the
Civil Code and the immediately following articles; while culpa contractual is governed by
Articles 1170 to 1174 of the same Code.

b. Nakpil & Sons vs. CA, GR No. L-47851, October 3, 1986

Issue: Whether or not an act of God,- an unusually strng earthquake-which caused the
failure of the building, exempts from liability, parties who are otherwise liable because
of their negligence.
 Ruling: The negligence of the defendant and the third-party defendants petitioner was
established beyond dispute both in the lower court and in the Intermediate Appellate
court. Defendant United Constructions C., Inc. was found to have a substantial
deviations from the plans and specifications, and to have failed to observe the requisite
workmanship in the construction as well as to exercise the requisite degree of
supervision; while the third party defendants were found to be have inadequacies or
defects in theplans and specifications prepared by them. As correctly assessed by both
courts, the defects in the construction and in the plans and specifications were the
proximate causes that rendered the PBA building unable to withstand the earthquake of
August 2, 1968. For this reason, the defendant and third party defendants cannot claim
exemption from liability.
Thus, it has been held that when the negligence of a person concurs with an act of God
in producing a loss, such person is not exempt from liability by showing that the
immediate cause of the damage was the act of God. To be exempt from liability for loss
because of an act of God, he must be free from any previous negligence or misconduct
by which that loss or damage may have been occasioned.

c. Jarco Marketing Corp. vs CA, GR No. 129792, December 21, 1999

The test in determining negligence is enunciated in the landmark case of picart vs.
Smith, thus: Did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person would have used in the same
situation? If no, then he is guilty of negligence.

D. Other Violations of the Obligation

VI. Excude for Non-performance:
A. Fortuitous event article 1174. Except in cases expressly specified by the law, or when it
is otherwise declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which , could not be
foreseen, or which, thoug foreseen, were inevitable.
a. Act of God & Act of Man
i. Requisites: Nakpil & Sons vs. CA
Requisites for exemption from liability due to an act of God
To exempt the obligor from liability under Article 1174 of the Civil Code, for a breach of an
obligation due to an act of God, the following must concur: (a) the cause of breach of the
obligation must be independent of the will of the debtor; (b) the event must be either
unforceable or unavoidable; (c) the evebt must be such as to render it impossible for the debtor
to fullfill his obligation in normal manner; and (d) the debtor must be free from any participation
in, or aggravation of the injury to the creditor.

ii. Exceptions
a) Austria vs. CA, GR No. L-29640, June 10, 1971
Petitioner entrusted a diamond jewellry to the private respondent, the
private respondent was robbed while walking home, taking away his
belongings plus the said jewellry.
Issue: Whether the private respondent must not be held liable since it is
a fortuitous event.
 Ruling: It may be noted the reform that the emphais of the provision is
on the events, not on the against or factors responsible for them. To
avail of the exemption granted in the law, it is not necessary that the
persons responsible for the occurrence should be found or punished; it
would onlybe sufficient to establish that the unforseeable event, the
robbery in this case did take place without any concurrent fault on the
debtors part, and this can be done by preponderant evidence. To
require in the present action for recovery the prior conviction of the
culprits in the criminal case, in order tho establish the robery as a fact,
would be to demand proof beyond reasonable doubt to prove a fact in a
civil case.
It is undeniable that in order to completely exonerate the debtor for
reason of a fortuitous event, such debtor must, in addition to the casus
itself, be free of any concurrent or contrinbutory fault or neglligence.

b) Nakpil & Sons vs. CA

Thus, it has been held that when the negligence of a person concurs
with an act of God in producing a loss, such person is not exempt from
liability by showing that the immediate cause of the damage was the act
of God. To be exempt from liability for loss because of an act of God, he
must be free from any previous negligence or misconduct by which that
loss or damage may have been occasioned.

c) Co vs. CA, GR NO. 12922, June 22, 1998

Facts: Petitioner entrusted his car to a car repairshop. The repairshop
got delayed on delivering his car. When the petitioner sought to reclaim
his car the private respondent told him that the car was carnapped
during its test drive.
Issue: May the Private respondent be held liable for this fortuitous
event?
Ruling: it must likewise be emphasized that pursuant to Article 1174 and
1262 of the New Civil code, liability attaches event of the loss was due
to a fortuitous event if the nature of the obligation requires the
assumption of risk Carnapping is a normal business risk for those
engaged in the repair of motor vehicles. For just as the owner of the car
is exposed so is the repair shop since the car was entrusted to it. That is
why, repair shops are required to first register with DTO and to secure
an insurance policy for the shop covering the property entrusted by its
customer for repair, service or maintenance as a prerequisite for such
registration/accreditation. Violation of this statutory duty constitutes
negligence per se.
B. Remedies
a. Principal Remedies
i. Performance
ii. Damages
b. Satisfaction of claims
i. Adorable vs. CA, GR No. 119466, November 25, 1999
 Indeed, an action for rescission is a subsidiary remedy; it cannot be institutd
except when the party suffering damage has no other legal means to obtain
reparation for the same. Thus, Art. 1380 of the Civil Code provides: The
following contracts are rescissible: . (3) Those undertaken in fraud of
creditors when the latter cannot in any other manner collect the claims due
to them.
c. Remedies in Breach of Reciprocal Obligations
i. Recission (Resolution)
Article 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 part may choose between the fulfillment and the rescission of
the obligation, with payment of damages in either case. He may also seek
rescission, even after he has chosen fullfillment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there bu 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.

Leonardo vs. Maravilla

Since in this jurisdiction it is a fundamental and elementary principle
that ownership does not pass by mere stipulation but only by delivery (Civil
Code, Art. 1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51), and the execution
of a public document does not constitute sufficient delivery where the property
involved is in the actual and adverse possession of third persons (Addison v.
Felix, 38 Phil. 404; Masallo v. Cesar, 39 Phil. 134), it becomes incontestable that
even if included in the contract, the ownership of the property in dispute did
not pass... Not having become the owner for lack of delivery, [one] cannot
presume to recover the property from its present possessors. [The] action,
therefore, is not one of revindicacion, but one against [the] vendor for specific
performance of the sale.

Universal Food Corporation vs. CA

Cruz vs. IAC

ii. Specific Performance
a) Leonardo vs. Maravilla
b) Universal Food Corporation vs. CA
c) Cruz vs. IAC

iii. Damages
a) Ong vs. Bognalbal
KINDS OF Obligation
A. Pure and Conditional
Kinds of Conditional Obligation
i. Postetative
 ii. Suspensive
B. Obligations with period