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First Meeting: December 10, 2015 c. Juridical Tie – efficient cause

1. What is the purpose of studying the General
Provisions on Obligations / Arts. 1156 – 1162 of the
NCC?
To know the existence of an obligation and in case of breach
or non-fulfillment, to know the possible remedial measure for
compensation.
d. Object or Prestation – subject matter of the obligation
7. What is a contract?
1305. A contract is a meeting of minds between two persons
whereby one binds himself, with the respect to the other, to
give something or to render some service.

2. What is an obligation? 8. What are the essential elements of a contract?

1156. An obligation is a juridical necessity to give, to do or a. Consent of the Contracting Parties

not to do. b. Object of the Contract
c. Cause of the Obligation

3. What are the kinds of obligations? 9. When does consent exist?

a. Civil Obligations – those that give a right of action to

compel their performance.
b. Natural Obligations – those not being based on positive
law but on equity and natural law, do not grant a right of
action to enforce their performance by the obligor,
authorize the retention of what has been delivered or
rendered. (1423)
4. Does the definition of an obligation in Art. 1156
covers the two kinds of obligations?
No, the definition of an obligation in Art. 1156 does not cover
the two kinds of obligations. An obligation according to Art.
1156 is a juridical necessity, only Civil Obligations has
juridical necessity.
1319. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer.
10. What is an agreement?
An agreement is an informal arrangement between two or
more parties that is not enforceable by law.
11. A and B are lovers. They decided to go on a date this
Sunday at 11am. B was late. Can A sue B for breach
of contract?
Option 1: It shall depend whether or not the agreement really
resulted into a contract.

5. What are the sources of obligation? Option 2: Since there is no law in this particular case, there
is no cause of action.

1157. Obligations arise from: 12. What is a Quasi-Contract?

(1) Law; 2142. Certain lawful, voluntary and unilateral acts give rise to
the juridical relation of a quasi-contract to the end that no one
(2) Contracts; shall be unjustly enriched or benefitted at the expense of
another.
(3) Quasi-Contracts;
13. Distinguish a Quasi-Contract from a Contract.
(4) Acts or Omissions punished by law;
Quasi-Contract Contract
(5) Quasi-Delicts
Created by law to avoid Created by the meeting of
unjust enrichment minds of two or more
6. What are the essential requisites of an Obligation? persons
Unilateral Acts Bilateral Acts
a. Passive Subject – debtor or obligor No meeting of minds Meeting of minds is required
b. Active Subject – creditor or obligee

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14. What are the 3 General Concepts on Quasi-
Contracts?
a. Negotiorum Gestio (Officious Management) 2144
b. Solutio Indebiti (Payment not Due) 2154
c. Other Quasi-Contracts (Support given by Strangers)
15. What are Acts and Omissions punished by law?
These are felonies / crimes defined and punished in the
Revised Penal Code or in Special Penal Laws.
16. What is the Dual Character of Crimes?
a. Offense against the State because of the disturbance of
social order.
b. Offense against a Private Person injured by the crime.
Concept: It is one single act resulting to two separate
obligations. (Civil and Criminal Obligations)
Criminal Obligation – To pay fine or serve imprisonment or
other sanctions
Ex. A city ordinance prohibiting all persons from urinating
along the streets of Pasig. In case of a violation, there will be
fine.
Penal – There is a fine in case of violation.
Civil Obligation – To restitute the thing or property / to repair
damaged thing or property / to indemnify damages to the
victim and to his family.
17. What is the concept of Civil Liability?
GR: Every person criminally liable for a felony is also civilly
liable. (Art. 100, RPC)
ER:
1. Victimless Crimes
2. Flight to Enemy Country
18. When is a person criminally liable only?
Treason, Rebellion, Espionage, Contempt, Gambling, Illegal
Possession of Firearms and others, either because there is
no thing to be restituted, no damage to be compensated or
there is no private person injured by the crime.
19. When is a person civilly liable only?
The following do not incur criminal liability. (Art. 11, RPC)
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a. Self-defense
b. Defense of Relatives
c. Defense of Stranger
d. Avoidance of Greater Evil
e. Fulfillment of Duty
f. Obedience to a Lawful Order
The presence of exempting circumstances will exempt the
perpetrator from criminal liability but not from civil liability.
(Art. 12, RPC)
a. When the offender is an imbecile or an insane person;
b. When the offender is under 15 years of age;
c. When the offender acts under the compulsion of an
irresistible force;
d. When the offender acts under the impulse of an
uncontrollable fear;
e. When the offender in order to avoid an evil or injury does
not act;
Others:
f. Quasi-Delicts
g. Accessories who are exempt from criminal liability. —
The penalties prescribed for accessories shall not be
imposed upon those who are such with respect to their
spouses, ascendants, descendants, legitimate, natural,
and adopted brothers and sisters, or relatives by affinity
within the same degrees, with the single exception of
accessories falling within the provisions of paragraph 1
of the next preceding. (Art. 20, RPC)
20. What are included in the Civil Liability of Crimes?
Restitution – of the thing itself must be made whenever
possible even when found in the possession of a third person
except when acquired by such person in any manner and
under the requirements which by law, bar an action for its
recovery. (Art. 105, RPC)
Ex. In carnapping, the carnapper has a civil liability to return
the carnapped car to the victim.
Reparation – the Court shall determine the amount of
damage, taking into consideration the price of the thing, and
its special sentimental value to the injured party. (Art. 106,
RPC)
Ex. In reckless imprudence resulting to damage to property,
the accused’s civil liability includes the payment for its repair.
Indemnification – includes not only those caused to the
injured party but also those suffered by his family or by a third
person by reason of the crime. (Art. 107, RPC)
Ex. In Homicide, the accused must indemnify the victim’s
family.
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21. What is quasi-delict? Natural Civil Obligation
Obligation
2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for Source Equity and Positive Law
the damage done. Such fault or negligence, if there is no pre- Natural Law
existing contractual relation between the parties is called a Enforceability Not enforceable Enforceable in
quasi-delict. in COL COL
Similarity Based on Natural Law
22. What are the elements to make a person liable for a
Quasi-Delict? 4. When is Natural Law considered as Positive Law?
When the natural law is formalized into a legislative
a. There is an act or omission;
enactment. When it can be considered as a basis for any right
b. Such act or omission causes damage or injury;
or obligation of any member of the community.
c. There is no contributory negligence on the part of the
injured party; Ex. Constituion, Eos, Administrative Orders
d. The act or omission is the proximate cause of the
damage or injury to the injured party; 5. Why is it important to determine whether the wrong
e. There is no pre-existing contract between the parties. committed is based on positive law?

23. Distinguish a Quasi-delict from a Delict. To know if there is a cause of action based on a violation of
an obligation required or unrequired of a positive law.
Quasi-Delict Delict
6. Illustrate the Similarities and Differences of Civil,
There is only negligence. There is intent or Natural and Moral Obligations.
negligence.
The purpose is The purpose is Civil Obligation Natural Moral
indemnification. punishment. Obligation Obligation
Affects private interest. Affects public interest. Based on Natural Law
Presence of a Absence of a Positive Law
Positive Law
Civil Liability Criminal and Civil Liability

Can Compromise Cannot Compromise 7. Illustrate the Differences of Natural and Moral
Obligations
Fault or negligence is Guilt must be proved
proved by preponderance beyond reasonable doubt. Natural Obligation Moral Obligation
of evidence. In case of voluntary In case of voluntary
fulfillment, it creates a civil fulfillment, it remains as
obligation that would be moral obligation
Second Meeting: January 7, 2016 based on PL and
enforceable at COL
1. What is the concept of OBLICON as a law subject?
It is a supplemental law to all other laws regarding how an 8. Give an example of a moral obligation.
obligation can be fulfilled.
Kim gave $20 to Kanye, a mendicant. Kanye accepted it and
2. What is the etymology of the word “obligation”? insulted Kim by saying, your so cheap. Kim cannot ask Kanye
for the return of the $20.
Oble – Latin for around
It is a purely, moral and voluntary act which does not give any
Ex. Orbit, Oblong
cause of action.
To – Latin to bind
9. What is Prescription?
3. Illustrate the Similarities and Differences of a Natural
It is a mode of acquiring or losing ownership and or rights of
Obligation and a Civil Obligation
action through lapse of time.
10. What are the types of Prescription?
a. Acquisitive – You acquire ownership or rights of action
through the lapse of time.

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b. Extinctive – You lose ownership or rights of action
through the lapse of time.
11. What is the concept of Voluntary Fulfillment in
Natural Obligations?
In NO, the debtor cannot be compelled thru Court Action but
if Debtor voluntary fulfills the obligation, it creates a CO. The
creditor has now a legal right to retain it and the debtor cannot
get it back.
12. What are the requisites of VF?
According to Tolentino, the requisites of VF are the ff:
1. Payment or fulfillment of the obligation is based on
debtor’s own volition and that he was not forced or
intimidated.
2. Debtor must have knowledge that he has performed an
obligation not enforceable in COL.
13. Give an example of the obligation expressed Art.
1424.
D owes C the sum of $10,000.00 under written contract. After
10 years, the debt of D prescribes for failure of C to file the
necessary action for the recovery of the same.
If D, knowing of the prescription, voluntarily pays C, he
cannot recover anymore what he has paid. He has the moral
duty to pay his debt.
14. Give an example of the obligation expressed Art.
1425.
D owes C the sum of $10,000.00 under written contract. After
10 years, the debt of D prescribes for failure of C to file the
necessary action for the recovery of the same.
T pays C after the debt has prescribed without the knowledge
or consent of D, but D nevertheless reimburses T, D cannot
recover what he has paid.
15. In the above example, what if D does not reimburse
T?
D should reimburse T as provided by Art. 1236: Whoever
pays for another may demand from the debtor what he has
paid, except that if he paid without the knowledge or against
the will of the debtor, he can recover insofar as the payment
has been beneficial to the debtor.
16. Are the provisions in 1427 to 1430 still applicable?
No, the age of majority is now at the age of 18 years. All laws
in conflict with such are repealed by RA 6809.
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17. What are the requirements for a party to be creditor?
A. Civil / Juridical Personality
B. Legal Capacity and Capacity to Act
18. What are the kinds of Objects of Obligation /
Prestations?
A. To give
B. To do
C. Not to do
19. What are the requirements of a valid prestation?
A. It must not be contrary to Law, morals, good
customs, public order and public policy.
B. It must be determinate or at least determinable.
C. It must be possible.
D. ****It must be subject to pecuniary / monetary value.
There are prestations that cannot be equated of
monetary value. (ex. Restoring an object, life of
persons.. etc)
E. There must be a Juridical or Legal tie.
20. Enumerate the Juridical or Legal ties of obligations?
Obligations arise from:
Law;
Contracts;
Quasi-Contracts;
Acts or Omissions punished by law; and
Quasi-Delicts.
***According to the Sagrado Orden v. NACOCO Doctrine, the
list in Art. 1157 is exclusive.***
Note: If the obligation do arise from this enumeration, then it
must be a Natural or Moral Obligation.
THIRD MEETING: January 14, 2016
1. How can one conceive an obligation?
A person can conceive an obligation by fulfilling its
requisites which include a passive subject, an active
subject, an object and the most important which is a
juridical tie.
2. When does a law create an obligation?
The law creates an obligation when it is a Mandatory
Statute. Mandatory statute is a statute which commands
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either positively that something be done, or performed in Obligations arising from Obligations arising from
a particular way, or negatively that something be not Law Contracts
done, leaving the person concerned no choice on the
matter except to obey. Expressed Expressed or Implied

The test generally employed to determine whether a

statute is mandatory or directory is to ascertain the a. The Parent’s a. Contract of Carriage
consequences that will follow in case what the statute obligation to support their b. Contract of Sale
requires is not done or what it forbids is performed. Children c. Contract of Lease
b. A worker’s
3. When is a law ambiguous? obligation to pay taxes to
the Government
A law is ambiguous if it is susceptible to two or more
c. The Police’s
interpretations.
obligation to render aid or
4. In case of doubt, how do can one interpret whether protection to any person in
a law establishes an obligation? case of danger to life or
property
It is resolved against the existence of the obligation.
Obligations derived from law are not presumed.
9. When is an agreement a contract?
5. If a law was passed requiring older brothers to
support their younger brothers. Can a younger Only agreements that complies with the requisites of a
sister ask support from her older brother? contract (Consent, Object & Cause) and that can be
enforced in Courts of Law are considered as a contract
No, there is no cause of action. The law cannot be
presumed, it has to be expressed. 10. When is there Consent?
There is consent when there is a meeting of minds between
the parties as when the offeror makes an offer and such
6. If a law clearly creates an obligation, it maybe offer is accepted by the offeree.
possible that it did not provide a manner on how it
is to be fulfilled. Can there be an obligation arising a. Offer – The offeror makes an offer
from law? b. Acceptance – The Offeree makes an acceptance

Yes. OBLICON principles are of supplementary nature in
innominate contracts / laws.
7. What are the concepts of Obligations arising from
Contracts?
 The stipulations in the contracts are considered as
the Law between the parties which must be complied
in good faith. (Vinculum)
 The Meeting of Minds of the parties can be in writing
or orally done.
8. Illustrate the Differences between Obligations
arising from Law and Obligations arising from
Contracts.
11. What are the vices in consent?
 Force
 Intimidation
 Violence
 Undue Influence
12. What are the requisites of a valid offer?
a. The offer must be definite. The prestation is clear.
b. The offer must be complete in all aspects that the
offeree does not need to know any more essential
information regarding it.
Example:
Do you want to buy this car?
The offer is definite but it is not complete in all other aspects
(price, color, engine number, location, brand, etc). There is
no juridical tie establish, the law required completeness for a
valid offer.
13. What are the requisites of a valid acceptance?

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a. It must be unconditional
b. It must be free from qualifications
 There must be no deviation from the offer, otherwise it
will constitute a counter offer.
Example of a counter offer:
Kimmy offered Kanye to buy her brand new HUMMER 2016
model with plate number: MSL 644, color HOT PINK, engine
number: 0929123456, etc., for Php 5, 000, 000. 00 cash to
be paid tomorrow. Kanye accepted the offer but with a
condition that he will pay it next month.
14. Kumares Toni, Mariel and Bianca stipulated in a
contract that they would exchange husbands every
weekend. Bianca breached their agreement
because she said that Toni’s husband was not good
in bed. Is there a cause of action for breach of
contract?
No, while the law allows the contracting parties the freedom
to stipulate the terms and conditions of their contracts, it is
not without limitations. The contracting parties may
establish such stipulations, clauses, terms and conditions
as they may convenient provided they are not contrary to
law, morals, good customs, public order or public policy.
15. Illustrate the Similarities and Differences of a
Contract and a Quasi-Contract?
Quasi-Contract Contract
Similarities
These are Lawful and Voluntary Acts
Differences
Created by law to avoid Created by the meeting of
unjust enrichment minds of two or more
persons
Unilateral Acts Bilateral Acts
No meeting of minds Meeting of minds is required
16. Discuss the concept of Negotiorum Gestio.
In this case, a property is neglected or abandoned by the
owner and is taken care by an unauthorized person.
Gestor / Officious Manager – “Pakilamero” / excessively
informal
Passive Subject – Gestor / OM
Active Subject – Owner / Beneficiary
Prestation – To do / to give
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***The law creates the cause of action where the beneficiary
pays the gestor the necessary expenses and just
compensation for the NG. ***
17. Requisites of Negotiorum Gestio
a. There is a Property / Business;
b. Which is abandoned / neglected;
c. There is taking of possession in order to manage or
administer such;
d. Which is unauthorized either expressly or impliedly;
e. It is a voluntary act and that the OM has knowledge that
it is for the benefit of the owner.
18. Bruno owns a farm that he has not seen for 10
years. He realizes that it needed cultivation to
improve its productivity. Bruno did not know about
the boundary of his property, he extended his
cultivation work to the property of Mars, his
neighbor. Both properties increased its cost /
selling price because of Bruno’s cultivation work.
Bruno realized that he extended his cultivation work
to Mars. Can Bruno institute an action against Mars
to pay him the necessary expenses incurred in
cultivating his land?
Yes, the Cause of Action would be that of Solutio Indebiti.
Unlike in NG, there is no voluntariness and that Bruno was
unaware that he was performing the cultivation work for
Mars.
19. Give the requisites of Solutio Indebiti.
a. Something is delivered;
b. The Recipient has no right to receive it;
c. The delivery is through mistake.
Fourth Meeting: January 21, 2016
1. What are Other Quasi-Contracts?
These are specific peculiar circumstances which give rise to
a juridical relation between the parties on the ground that no
one shall be unjustly enriched or benefitted at the expense of
another.
Ex. Giving Support to a child because his parents are
neglectful of his needs. Once a person gives support to the
neglected child, he can ask for reimbursement of the support
given from the neglectful parents.
2. What is the purpose of studying the Nature and
Effect of Obligations / Arts. 1163 – 1178 of the NCC?
To know how to fulfill an obligation according to law.
3. What happens if the debtor fulfills the obligation?
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The creditor must accept it and he must release the debtor Supplemet The law does not Art. 1163. Every
from the juridical tie. If fails to accept it, the creditor is guilty al require the debtor to person obliged to give
of delay (Mora Accipiendi). Thus, debtor can ask him for Obligation exercise something is also
damages. DOAGFOAF obliged to take care of
because the genus it with the proper
4. What are the kinds of Obligations based on their of the thing never diligence of a good
prestations? perishes. father of a family,
unless the law or the
A. Real Obligation – to give stipulation of the
a.1. Specific – Real obligation to give a specific thing. parties requires
another standard of
a.2. Generic – Real obligation to give a generic thing. care.
Grounds for Default, Fraud, Default, Fraud,
**This is based on the nature of the thing delivered*** Damages Negligence and Any Negligence, Any other
B. Personal Obligation – To do or not to do other manner that manner that
Contravenes the Contravenes the
b.1. Positive – Personal Obligation to do. Tenor of the Tenor of the
Obligations Obligations and
b.2. Negative – Personal Obligation not to do. Fortuitous Events
(Genus of the thing
never perishes)
5. Differentiate a Generic thing from a Specific thing. Delivery of Substitution is The obligation to give
its allowed. a determinate thing
Generic Thing Specific Thing Accessions includes that of
Meaning Referred based on Separated from its and delivering all of its
its class or genus Accessorie accessions and
class or genus Distinctively Unique s accessories, even
Example Ex. To deliver a Ex. To deliver a 500 though they may not
bottle of ml Nature Spring have been
water Green Mineral Water, mentioned.
touched and drank by
Dean Ulan last
January 21, 2016 6. What is the criterion to determine if a thing is generic
Principal 1246. When the 1244. The debtor of a or specific?
Obligation obligation consists in thing cannot compel What is the result if you separate it from its class?
the delivery of a the creditor to receive
generic a different one, If the thing that is intended to be delivered is lost before the
thing, whose quality although the latter delivery then it is specific. The obligation is thus extinguished.
and circumstances may be of the same
have value as or more If not, then it is generic, because genus never perishes.
not been stated, the valuable that which is
7. How many ways can a debtor fulfill his obligation to
creditor cannot due.
deliver a determinate thing?
demand
a thing of superior One. To deliver exactly what was agreed upon by the parties.
quality. Neither can
the 8. Coco owes Martin Php 50, 000 which he must pay on
debtor deliver a thing December 25, 2015. On Christmas Eve, Coco was
of about to pay Martin, when Paloma, a thief, stole the
inferior quality. The money from Coco. Can Coco use the defense that he
purpose of the was robbed by a thief in order not to be in default of
obligation and other payment?
circumstances shall
be No. Money is a generic thing. Genus never perishes.
taken into
consideration.

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9. Iggy owes Azalea Php 50,000.
a.) Can Azalea accept only Php 25, 000 from Iggy?
No. A part of Art. 1246 provides “ …. Neither can the debtor
deliver a thing of inferior quality……” In this case, Azalea
cannot accept Php 25, 000 from Iggy.
b.) Can Azalea accept Php 100, 000 from Iggy?
Yes. A part of Art. 1246 provides “….the creditor cannot
demand a thing of superior quality…” The law is clear, it does
not prohibit the creditor from accepting payment / delivery of
superior quality.
Note: There three ways in which the creditor can accept a
generic thing as to its quality: of superior quality, agreed
quality or lawful quality (not inferior, not superior).
Fifth Meeting: January 23, 2016
1. What is the concept of Standard of Care?
We are all performed to adopt a standard of care in all acts.
Care as not to cause damage or injury to others.
If the obligor fails to exercise the required standard of care in
his obligation, then he risks the obligation and may lead to its
extinguishment. He is thus also liable to pay for damages.
In order to retain that standard of care expected of the debtor
the law requires DOAGFOAF pending delivery.
Purpose: To ensure the efficacy of the performance of the
obligation.
Ex. Selena and Demi entered into a contract wherein Selena
would deliver to Demi her Hermes bag for $ 50, 000 on
February 14, 2016. Selena is obliged to take care of that bag
with DOAGFOAF pending the delivery of the object of the
obligation, otherwise, she will be liable for damages.
2. What are the kinds of Standards of Care?
a. Extra-ordinary care / Utmost Diligence
It is that extreme care and caution which very prudent and
thoughtful persons use in securing and preserving their own
property.
Ex. Common Carrier and Banks
b. Diligence of a Good Father of a Family
 Standard of care that is expected of a prudent man in the
exercise of his own property.
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Ex. Liza and Bart entered into a contract wherein she
would deliver 100 pcs. of Marge’s Donuts to Homer on
his Birthday on July 14, 2016 for $ 5, 000. No standard
of care was agreed upon by the parties.
According to 1173, “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.”
c. Simple Diligence
Slight Care which every prudent man takes of his own
property of a similar nature.
Ex. Watch your car boy
Basis of these Standards of Care: Absence of the duty of
the obligor to take care of the thing, the obligation to delivery
would be illusory.
3. What is Negligence?
The absence of diligence required by virtue of the time, place,
person and circumstances.
4. What is the Principle of Accession?
GR: The presumption is that whoever is the owner of the
principal thing, is also the owner of its accessions and
accessories.
ER: (1) When the parties expressly provided for its exclusion
(2) When before the birth of the contract, the seller detaches
its accessories and / or accessions.
5. When is there ownership?
When the object of the obligation together with its accessions
and accessories is physically delivered to the creditor by the
debtor.
6. What are Accessions?
Fruits that are attached artificially or naturally to the principal
object of the obligation.
Kinds of Fruits
a. Natural – Those spontaneous products of the soil, the
young and other products of animals produced without
intervention of human labor.
Ex. Grass, trees, flowers, 101 Dalmatians
Note: A human baby is not a natural fruit.
b. Industrial – Those produced by lands of any kind through
cultivation or labor.
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Ex. Rice, Corn, Garlic
c. Civil – Those derived by virtue of juridical relation.
Ex. Rents of building, Price of Leases of Land, Life
annuities, Savings
7. What are Accessories?
Things attached to the principal for embellishment, full use or
enhancement of its value.
Ex. Mugs, whoopers, stereo, microwave and sauna in a car.
8. Peeta told Katniss that he is selling his only sports
car for $ 500, 000. Katniss saw the bargain, thus she
bought it. Peeta did not stipulate nor inform Katniss
that the selling price did not include the sports car’s
accessories and accessions. At the time of the
delivery, Rue, a car mechanic, will remove the sports
car’s accessories and accessions. Can Katniss go to
Court and demand that the accessions and
accessories be not remove from the sports car?
Yes. Katniss can go to Court and demand that the
accessions and accessories of the sports car be not
removed from it because the law provides that the
obligation to deliver a determinate thing include that of
delivering all its accessions and accessories, even
though they may not have been mentioned.
9. When does the obligation to deliver the thing and its
fruits arise?
 Depends upon the nature of the obligation.
a.) Law, quasi-contracts, delicts and quasi-delicts
 The obligation to deliver arises from the time designated
by the provisions of the NCC, RPC, or special laws
creating or regulating them.
b.) Contracts
 The obligation to deliver arises from the time of the
perfection of the contract or stipulation of parties.
As to its fruits.
GR: All the fruits shall pertain to the creditor / buyer
from the constitution or perfection of the obligation.
ERS:
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i. Subject to a suspensive condition, it arises from
the happening of the condition;
ii. Subject to a suspensive term or period, it arises
upon the lapse of the term;
iii. If there is a contrary stipulation of the parties
with respect to the time when the thing or fruits
shall be delivered.
Note: It is concluded that the Perfection of a
Contract is not simultaneous to delivery.
10. Pia and Atom entered into a contract wherein Pia
would deliver her only female 11 – month old
Dalmatian named Tigra to Atom on Valentine’s Day
next year. Pending the delivery, Tigra gave birth to
101 puppies. Who is the owner of the puppies?
Pia has a right to own the puppies. According to Art.
1164, “the creditor has a right to the fruits of the thing
from the time the obligation to deliver arises. However,
he shall acquire no real right over it until the same has
been delivered to him.” Since the delivery will be on
February 14 next year, then Pia has still a right to own all
of the fruits of Tigra pending its delivery to Atom.
Sixth Meeting: February 18, 2016
1. In an obligation to deliver a generic thing, what is the
remedy available to the creditor in case of non-
fulfillment of the obligation by debtor? (Art. 1165 (2))
The creditor can ask a third person to fulfill the obligation at
the expense of the debtor.
For instance, Mariah and Carey entered into a contract,
wherein Carey would deliver to Mariah 100 cavans of
mangoes on February 20, 2016.On that date, Carey failed to
deliver such. Mariah can ask Fantasia, a supplier of mango,
to deliver the same to her at the expense of Carey.
NOTES:
 In the case above, Mariah has a cause of action for
damages and performance. In the meantime, she can go
to another supplier for the fulfillment of the said
obligation.
 This provision is not applicable to the delivery of a
determinate thing.
 Requisites for application of Art. 1165 (2):
a.) There is proof of demand; and that
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b.) The debtor can no longer performs the obligation.
2. What are the instances when the debtor is liable for
damages? Discuss each.
a.) Delay – there is default in the fulfillment of an obligation
with regard to time.
Kinds of Delay:
4. When demand would be useless as when the debtor
has expressed his inability to perform such.
Ex. Insolvency of the debtor in a contract of loan
NOTE: The SC said that it must be expressly stated in the
law or in the contract stipulations of the parties that demand
is NOT necessary.
Why does the law still need a demand, when there is a
clear stipulation when the obligation is to be fulfilled?

1. Mora Solvendi – Delay of Debtor to perform the There is a presumption that the debtor in good faith, cannot
obligation comply due to a fortuitous event which he cannot control.
2. Mora Accipiendi – Delay of the Creditor to accept the When does the FE defense can no longer be applicable?
delivery of the thing which is the object of the obligation
3. Compensatio Morae – Delay of the parties in reciprocal In obligations to deliver a generic thing like money.
obligations
b.) Fraud – It is the conscious proposition to evade the
Ex. Contract of Sale performance of an obligation. It cannot cover cases of
mistake or error of judgment in good faith.
When is it possible for one of the parties to incur in delay
in CM?
Fraud in 1338 & 1344 Fraud in 1171
When an obligation is due and demandable and one of the Dependent of Fraud Independent of Fraud
parties performs the obligation. There is no longer need for a Obligation is created Obligation is performed
demand, the other party is automatically at default. because of fraud with fraud
Legal Delay Requisites No pre-existing obligation There is a pre-existing
(Thru fraud, the obligation obligation
Requisites: becomes existent)
No COA for performance, There is a COA for
1.) The obligation is already due and demandable; just damages damages and fraud and
creditor can still ask for
2.) The debtor does not perform the obligation;
performance
3.) The creditor makes a judicial or an extra-judicial
demand.
Dolo Causante Dolo Incidente
NOTE: According to the SC, demand should be made after Art. 1338 Art. 1344
the obligation had been due and demandable, otherwise, it is Those deceptions or Those which are not
just a reminder. misrepresentations of a serious in character and
serious character without which the other
Ex. Peter owed Pan P 1,000 payable tomorrow. If Pan employed by one party party would still have
demands for the payment today, it will just constitute a and without which the entered into the contract.
reminder for Peter to pay his debt tomorrow. other party would not
Instances in order for a Debtor to incur delay without have entered into the
Demand: contract.
Fraud is essential in Fraud is accidentally
1. When it is provided by the law. consent employed
Ex. Payment of income taxes should be made on or Nullifies the contract Does not nullify the
before April 15. Creditor can ask for contract
damages Creditor can ask for
2. When it is stipulated by the parties. damages
Ex. Credit Card Bills

3. When time is an important motive. c.) Negligence – The failure of the debtor to care for the
Ex. The making and the delivery of a Wedding Gown object of the obligation with the standard of care required
for a Wedding by the parties or by law.

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Kinds of Negligence 1. Discuss Art. 1176.
Culpa Culpa Aquiliana
Contractual This law embraces two concepts of disputable presumptions.
Nature Incident to the Substantive and 1.) The presumption that payment of principal includes that
performance of Independent of the payment of the interest.
the obligation
Parties There is a pre- No contractual
existing relation
contractual 2.) The presumption that the payment of latest debt results
relation to the payment of the arrears.
 Applicable to payment of rentals.
Source Breach of Negligent act or
Contract omission Can the creditor still change his mind?
Proof for Existence of a Negligence of the
Recovery contract and defendant Yes, because it is disputable. However, he must show that
evidence of its such payment did not cover the interest of the principal or the
breach arrears of the other debts.
Due Diligence in the Diligence in the
Three provisions related to Art. 1176:
diligence selection and selection and
as supervision of supervision of a. Art.1431. Estoppel – Through estoppel an admission or
Defense employees is not employees is representation is rendered conclusive upon the person
available available making it, and cannot be denied or disproved as against
the person relying thereon.
Ex. In a vehicular accident involving a taxi, the passenger
and a pedestrian was injured. What is the liability of the taxi Ex. Dean Ulan told his class that there would be no classes
driver and the operator? Assuming this is a case of on Saturday. On Saturday, he asked Kuya Jerome to proctor
negligence. and facilitate a quiz for the class, however, the students of
that class was not in the classroom. Dean Ulan cannot hold
Passenger - Since there exists a contract of carriage, then it
them liable for boycott, he is estopped since he did not inform
is culpa contractual.
anyone from the class of the change.
Pedestrian – Since there is no existing contract, then it is
culpa aquiliana.
b. Art. 1956. No interest shall be due unless it has been
expressly stipulated in writing.
d.) Contravention of the Tenor of the Obligation
Ex. Bonnie entered into a loan agreement with Tyler. It is
3. Discuss the concept of a Fortuitous Event.
stipulated that Bonnie shall pay Php 100,000 to Tyler on June
It is an event which could not have been foreseen or which 4, 2016. Tyler orally asked that Bonnie also pay 10% interest
though foreseen was inevitable. and was heard by people around them. On June 4, 2016,
Bonnie only paid Php 100,000 to Tyler. Can Tyler go to court
Kinds of FE bringing witnesses of their loan agreement to enforce the
Acts of God Acts of Man 10% interest?
Absolutely independent Events which arise from
from human intervention legitimate or illegitimate
acts of persons other than No, Art. 1956 is a mandatory law.
the obligor
Rains, Typhoons, Floods Riots, Wars, Robbery

c. Art. 1235. When the obligee accepts the

performance, knowing its incompleteness or
irregularity and without expressing any protest or
objection, the obligation is deemed fully complied
Seventh Meeting: February 20, 2016 with.

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It creates a conclusive presumption based on estoppel that  Divisible
an incomplete payment / performance of an obligation which  Indivisible
is accepted by the creditor is satisfied. The creditor cannot
ask any more for its rectification. e. With a Penal Clause
2. Gigi borrowed from Kendall $ 1,000, 000 at 10% 2. What is a Pure Obligation?
interest. Gigi only paid $ 500, 000 when the
obligation became due. Kendall accepted it without An obligation that is immediately demandable.
reservation of such right to ask Gigi for the balance.
After one week, Kendall demands Gigi the balance of Ex. I will give you $ 50, 000.
the debt. Decide. 3. What do you mean by “immediately demandable”?
Since Kendall accepted it, the law under Art. 1235 of the The debtor is given a reasonable period / opportunity to fulfill
NCC, considers it that she waived her right to ask for the the obligation which depends upon the character of the
payment of the balance. Thus, the whole obligation is obligation.
extinguished.
4. What are obligations immediately demandable?
a. Pure Obligations (1179 (1))
3. Art. 1178. Rights are generally transmissible, except: b. Obligations with Resolutory Conditions (1179 (2))
c. Obligations with Resolutory Periods (1193 (2))
a. Where they are not transmissible by nature d. Obligations to do an Impossible Thing (1183 (2))
Ex. It is not possible that a married man transfers his
right to sexual intercourse with his wife to another 5. Differentiate a Term from a Condition
person.
Term Condition
b. Where there is a stipulation that they are not It is the interval time which It is an event which is future
transmissible future and certain and uncertain
Ex. Miriam allowed Santiago to lease her condo unit Necessarily comes, The condition may or may
with a prohibition that the latter cannot sublease although it may not be not happen
such. known when
Influences the time of the Influences the very
c. Where they are not transmissible by operation of law demandability or existence of the obligation
Ex. The right of a compulsory heir to his legitime extinguishment of an itself
cannot be transferred to another person. obligation
Does not have a retroactive Has retroactive effects
FINAL TERM effect unless otherwise
provided
Eighth Meeting: March 10, 2016 When it is left exclusively When it is left to the
upon the will of the debtor, exclusive will of the debtor,
Topic: Chapter 3 (Different Kinds of Obligations) the existence of the the very existence of the
1. What are the different kinds of obligations? Discuss obligation is not affected obligation is affected
each. Ex. Death of man Ex. Winning a case
a. As to Event Arrival of a particular day Adjudication of a Property
 Pure
 Conditional 6. Differentiate a Suspensive Term from a Suspensive
 Period / Term Condition.
b. As to Prestation Suspensive Term Suspensive Condition
 Alternative Juridical tie is created on Juridical tie is suspended
 Faculative the constitution of the on the constitution of the
obligation obligation
c. As to the Relationship of Parties There is a personal right There is no personal right
 Joint pending the fulfillment of pending the fulfillment of
 Solidary the obligation the obligation
Ex. D promises C to deliver Ex. D promises to deliver $
d. As to Divisibility $ 50, 000 on Mar 15, 2017 50,000 to C, if C marries X

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If I win the lotto, I will give $50,000.
7. Differentiate a Resolutory Term from a Resolutory c.) Mixed Condition – One whose fulfillment depends
Condition. jointly upon the will of either one of the parties to the
Resolutory Term Resolutory Condition obligation and upon the chance / will of a third
person.
Obligation is demandable at A future and uncertain
once, although it is event upon the happening
Ex. I will give you $50,000, if I sing you a song, if
terminated upon the arrival or fulfillment of which rights
Dean Ulan sings me a song and if I win the lotto.
of a day certain are already acquired by
virtue of the obligation are
11. Why are potestative conditions that depends solely
extinguished or lost.
upon the will of the debtor VOID?
Ex. A grants B the use and Ex. A grants B the use of his
enjoyment of his house for house until he finishes This is because to allow conditions whose fulfillment depends
10 years studying law. exclusively upon the will of the debtor would be equivalent to
sanctioning obligations which are illusory. A debtor would not
fulfill a condition that will create an obligation for him.
8. What is the remedy of the creditor when the debtor
binds himself to pay when his means permit him to Ex. I will give you $50,00, if I sing you a song. Even if I did
do so? sing a song to you, there is no COA since the law declares it
as void.
The obligation shall be deemed to be one with a period. The
creditor can ask the Courts to determine such period as may Exceptions:
under circumstances be contemplated by the parties.
a. If the condition is resolutory and potestative the
9. Can a condition be for a past event? obligation is valid even if the fulfillment of the condition
is made to depend upon the sole will of the debtor.
No, a condition must be a future and uncertain fact or event
upon which an obligation is subordinated or made to depend Ex. I will give you $50,000 every day until I sing a
on. song to you.
Ex. Sarah will give Geronimo $50, 000, if the latter can prove b. If there is a pre-existing obligation/
that Jose Rizal went back to the Catholic Church before he
was executed in Luneta Park. The event is future and Ex. I borrowed from you $50, 000. The condition is
uncertain because if Geronimo can prove such fact through dependent upon me. I will pay you back if I decide to
his research then he can get the money. sing a song.

10. What are the kinds of Conditional Obligations based 12. What are the kinds of Potestative Conditions?
on how they are fulfilled?
a. Simple – presupposes not only a manifestation of will
a.) Postestive Condition – One whose fulfillment but also the realization of an external act of a 3rd party.
depends upon the will of either one of the parties to
the obligation. Ex. I will give $50,000, if Mr. Roboto eats a live octopus.
b. Pure – if it depends solely and exclusively upon the will
 Fulfillment is dependent upon the will of the debtor of the debtor, it is void for debtor cannot fulfill an
obligation arising from his own choice. But it is valid if it
Ex. I will give you $50, 000 if I sing you a
depends on the will of the creditor.
song.
Ex. I will you give $50,000, if I decide to eat a live octopus.
 Fulfillment is dependent upon the will of the creditor
13. Differentiate the two below:
Ex. I will you $50,000 if you sing me a song.
a. I will give you $50,000 if I decide to sell my house.
b.) Casual Condition – One whose fulfillment depends
exclusively upon chance and / or upon the will of a  This is a Pure Potestative Condition which is void
third person. because the condition is fulfilled when the debtor
Ex. If Dean Jara sings me a song, I will give you $ decides to sell his house.
50,000.

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b. I will give you $50,000 if I sell my house. Condition Term
In conditional obligations In obligations with a term,
 This is a Simple Potestative Condition which is valid there is no juridical tie there is already a juridical
because it partially dependent upon the will of a (1188). tie (1164). Thus, C has a
third person who will buy the house. personal right over the lot.
Remedy: Annotation – Remedy: Legal Action and
14. Differentiate a Possible Condition from an Public notice to anybody those provided by law.
Impossible Condition. who acquires the said lot
pending the condition is
Possible Condition Impossible Condition considered as a person
When an obligation is When an obligation is not who acted in bad faith.
capable of realization capable of realization either
according to law, good to its nature or according to NOTE: D may be allowed to
customs and public policy. law, good customs or public remove the annotation if it is
policy. certain that the condition
Ex. Dayang will sell her only Ex. Ipin will give $50,000 to will not happen (1184).
car to Dayang-Dayang. Upin, if the latter will jump
over the moon. Ex. X died or after 2016 the
condition was not fulfilled
15. What are the instances when an Impossible
Condition is valid and capable of fulfillment? 2. On March 10, 2016, Bangus promised to deliver his
only car to Tilapia, if Tilapia marries Imelda on or
a. If there is a pre-existing obligation. before March 10, 2017. On March 15, 2016, Bangus
promised to deliver his only car to Pompano, if
Ex. I will pay you my debt if hell freezes over. The Pompano marries Imelda on or before March 15,
condition is void but the obligation is valid. 2016. On June 1, 2016, Pompano married Imelda.
Who has a better right Pompano or Tilapia?
b. If it is a divisible obligation.
Tilapia has a better right as provided for under Art. 1187
Ex. I will give you this car if you kill VP Vinay (invalid) because he has the oldest right.
and marry Pres. Penoy.
3. Discuss the effects of Loss, Deterioration or
c. If it is a Donation. Improvement under Art. 1189.
Ex. I will donate to you my house and lot, if you jump A. When Applicable?
over the moon.
Ninth Meeting: March 17, 2016  Obligations to Give a Determinate Thing
 Obligations subject to a Resolutory Term /
1. Discuss Positive and Negative Conditions. Condition
 Obligations subject to a Suspensive Term /
Positive Conditions – Condition is fulfilled by doing an act as Condition
provided under Art. 1184.
B. When is a thing LOST?
Ex. D promise to deliver to C his car, if C marries X by 2016.
Negative Conditions – Condition is fulfilled by avoiding to act  When it perishes
as provided under Art. 1185.
Ex. When a powerful lightning stroke at the object
Ex. D promise to deliver to C his car, if C does not marry X of the obligation
by 2016.
 When it goes out of commerce
NOTE: If the condition is fulfilled and the promisor does not
fulfill his promise, there is a COA to file a case against the
Ex. When it involves a public property (Mayon
promisor.
Volcano)

D promise to deliver to C his lot, if he marries X this 2016.

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 When it disappears in such a way that its existence
is unknown or cannot be recovered
Ex. The object of the obligation was thrown
accidentally to the sea.
C. Situations
1.) Blue promised to deliver his horse to Red, if the
latter marries Green. Pending the delivery, the
horse got injured.
a. If with fault of Blue – He cannot compel Red to
accept the horse. However, Red can rescind the
obligation and ask for damages or he can still
ask for its fulfillment and ask for damages.
b. If without the fault of Blue – He can compel
Red to accept the horse.
2.) In same example, what if the Horse grown wings
and was able to fly.
 It inures to the benefit of Red.
 Blue grants usufructuary to Red.
4. What is a Tacit Resolutory Condition? Discuss.
 It is based on equity and fair play and applied to
reciprocal obligations.
Tacit – Implied as part of all Reciprocal Obligations;
Condition – Not being able to perform the obligation
incumbent upon a party is the event;
Resolutory – It results to the extinguishment of the
obligation of the debtor and creditor.
Ex. Peter sold to Piper his only van for P 500, 000. If
Piper does not deliver P 500, 000 to Peter, then Peter will
not deliver his car to him. Thus, the obligation is
cancelled.
Can the injured party automatically cancel the
obligation?
No, there must be a judicial decree to rescind the
contract provided that the breach is substantial.
However, if the breach is partial, the courts may fix a
period for its performance.
5. To whom does the period be established for?
There is a presumption under Art. 1196 that the period is
established for the benefit of both parties.
Ex.
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Agpalo lend money to Cruz payable on Feb 16, 2017.
Yesterday, Cruz won the lotto, can Agpalo compel Cruz to
pay today? No. The period must be followed.
Ponce de Leon v. Syjuco
Other benefits of the period to the creditor includes interest
and tax avoidance.
6. Differentiate the following:
Gemini promised to pay Gemini promised to pay
Libra, P 500, 000 on Feb Libra, P 500, 000 on or
17, 2017. before Feb 17, 2017.
Favorable to both parties. Favorable to debtor.
7. When does the debtor loses right to make a period?
a. When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
security for the debt;
b. When he does not furnish to the creditor the
guaranties or securities which he has promised;
c. When by his own acts he has impaired said
guaranties or securities after the establishment and
when through a FE the disappear unless he
immediately give new ones equally satisfactory;
d. When the debtor violates any undertaking in
consideration of which the creditor agreed to the
period;
e. When the debtor attempts to abscond.
8. Discuss Sec. 3.
a.) Alternative Obligations – there are several
prestations but you do not need to perform all of it.
a.1. Simple – there is only one prestation.
Ex. I will give you this.
a.2. Complex – there are several prestations.
Ex. I will give you this, that, and those.
b.) Faculative Obligations – there is one prestation but it
can substituted.
To whom does the right to choose the prestation
belong?
GR: Debtor
ERS: Creditor or a third person
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Limitations of the Right of Choice:
1. It must not be Impossible.
Ex. To give Mayon Volcano
2. It must not be unlawful.
Ex. To give a dog, horse, cat, my husband
3. It must not have been the object of the obligation
Those undertaking which are not included among those from
the debtor may select or to those which are not yet due and
demandable at the time the selection is made or to those
which by reason of accident or some other cause, have
acquired a new character distinct or different from that
contemplated by the parties when the obligation was
constituted.
Ex. The horse became d & d on Feb 15, the dog
became d & d on Feb 16, the cat became d & d on Feb 17
and the mouse will be d & d on Dec 31, next year. Thus,
debtor can only deliver the horse, dog or cat.
4. He cannot choose part of one and part of another.
Ex. Half mouse, Half horse
5. Those which are due and demandable as whose
period is dependent upon the choice of the creditor.
Ex. Although, it is not due and demandable, the
creditor can ask for the delivery of the mouse.
When the choice is made, does it have to be
communicated?
Yes, otherwise the obligation will not be d & d. Once
communicated, the alternative obligation turns into a simple
obligation.
Can you incur delay in alternative obligations?
No, since alternative obligations are not d & d.
9. Do you incur delay on the following:
a.) Personal Negative Obligation – No
Ex. You cannot be delayed on an obligation not to
smoke
b.) Obligation with a Negative Condition – Yes
Ex. I promise to give you P 50,000, if you do not sing
a song.
c.) Alternative Obligation – No. Since the choice is not
yet communicated.
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d.) Obligations to do – No, the law recognizes the right
of the person to do or not to do an act. The creditor
can nevertheless, ask for its performance and
damages under Art. 1167.
Tenth Meeting: April 7, 2016
1.) What is the presumption in collective obligations?
GR: Presumed to be Joint Obligations
ERS:
a.) When stipulated by the parties
Ex. Jointly and Severally liable, in solidum and liable
solidary
b.) When the law required solidarity
Ex. Mother and Father to support Children
Liability of Principals, Accomplices and Accessories
In a felony
c.) When the nature of the obligation requires solidarity
Ex. Liability of ER to EE in Quasi-Delicts
2.) What is a joint obligation?
 Each of the creditors is entitled to demand the payment
of only a proportionate part of the credit, while each of
the debtors is liable for the payment of only a
proportionate part of the debt.
 Several obligations are reduced into one document.
3.) What are the kinds of joint obligations?
a.) Joint Divisible Obligations
 Each creditor can demand only for the payment of his
proportionate share of credit, while each debtor can be
held liable only for the payment of his proportionate share
of the debt.
Ex.
 If there is a breach of the obligation by reason of the act
of one of the debtors, the damages due to its breach
must be borne by him alone.
Ex.
 Prestation can be divided among the parties
Ex. Sum of Money
b.) Joint Indivisible Obligations
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 If there are two or more debtors, the fulfillment of or 2D X dies 2C
compliance with the obligation requires the concurrence 3D Y marries 3C
of all of the debtors, although each for his own share.
Ex. On January 15, 2017, how much can the creditors compel
the debtors to pay?
1D’s share can only be collected for P 300, 000.
 If there are two or more creditors, the concurrence of
collective act of all the creditors, although each for his Against whom can the creditors enforced the obligation.
own share is also necessary for the enforcement of the
obligation. Answer 1: Since Solidarity exists amongst the debtors, any
of them can pay the P 300, 000.
Ex.
Answer 2: Enforcement may be made to 1D and 2D only
since it is subject to period and there already existed a legal
tie between the parties. 3D’s obligation, on the other hand, is
 Prestation cannot be divided among the parties.
subject to a condition, thus, there is no legal tie created.
Ex. A live horse. 7.) In solidary obligations, what are the effects of the
NOTE: The failure to accept by one of the creditors JIO creditor’s acts and the debtor’s acts within their
becomes JDO. Parties will then settle the value of the respective parties? (1212 & 1215)
prestation equally. If beneficial, it is valid.
If Jhong is to deliver P 900, If Ryan and Bang are to Ex. Effort of 1C to collect the whole debt.
000 to Kong. deliver P 900, 000 to Vice
Ganda. If prejudicial, it is void.
Joint Indivisible Obligation Joint Divisible Obligation
Ex. 1C condones the debt of 2D, it is void. 1C must now
reimburse the parts of 2C and 3C’s debt from 2D.
4.) What is a Solidary Obligation?
 Each debtor may be liable for the debt of other debtors. 8.) What is the effect of assignment of rights in solidary
 Each creditor can ask for the payment of debts for other obligations? (1213)
creditors. GR: A solidary creditor CANNOT assign his rights without the
consent of others solidary creditors.
5.) What are the kinds of Solidary Obligation?
a.) Passive – the concurrence of two or more debtors liable ER: If the assignment would be made to another solidary
to one creditor. creditor.
Ex.
Rationale: Solidarity is based on trust and confidence since
b.) Active – the concurrence of two or more creditors to one the solidary creditors know each other.
debtor.
9.) What is the effect of demand by a creditor? (1214 &
Ex.
1216)
c.) Mixed – Among debtors and creditors. GR: Payment shall be made only to the creditor who made
Ex. the demand and no other.

6.) What is the effect of various conditions or periods in ER: In the absence of any judicial or extra-judicial demand,
solidary obligations? Discuss and give an example. payment may be made by the debtor to any one of the
solidary creditors.
 The relationship of solidarity is not destroyed by the
fact that the obligation of one debtor is conditional,
with a term or pure, debtors are still bound. Ex. Debt of P 900, 000
Debtors Requirement to be Creditors 1D 1C – On Jan 1, 17, 1C demanded the payment
subjected to the
obligation of P 900,000 2D 2C
1D Jan 15, 2017 1C

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3D 3C – On the evening of Jan 1, 17, 3C received 2.) When different prestations constituting the objects of
the obligation are subject to different terms and
the payment of P 900, 000 from 3D and runaway conditions;
3.) When the obligation is in part liquidated and part un
liquidated.
Wrong payment does not extinguish the obligation, the
debtors are still liable for their obligation. 15.) What are Obligations with a Penal Clause? (1226)

10.) In solidary obligations, what is the effect of insolvency of The Penal Clause or the Penalty is an accessory obligation
one of the debtors? (1219) attached to the principal obligation by virtue of which the
debtor is bound to pay a stipulated indemnity or to perform a
1D, 2D and 3D are indebted in the amount of P 900, 000 to stipulated prestation in case of breach of obligation.
1C, 2C and 3C. 3D is insolvent, what is the recourse of
action? 16.) What are the functions of a Penal Clause?
a. To insure the performance of the obligation;
In case of insolvency, the other debtors shall shoulder b. To liquidate the amount of the damages to be
proportionately the part of the insolvent debtor. Thus. 1D and awarded to the injured party in case of breach of the
2D must pay P 450, 000 each to the creditors. principal obligation;
c. To punish the obligor in case of breach of the
11.) What are the defenses available to a solidary debtor?
principal obligation.
(1222)
A. Personal Defenses – relative to him or to his own Tenth Meeting: April 14, 2016
share
Ex. Minority and Insanity 1.) What are the MAJOR modes of Extinguishing
Obligations?
B. Real Defenses – derived from the very nature of the a. Payment / Performance Contracting parties intend
obligation to extinguish the obligation
Ex. Fraud, Mistake and Prescription b. Loss of the thing due Modes that cause the
c. Condonation / extinguishment of the
12.) What are Divisible and Indivisible obligations? Remission of debt obligation after its
d. Confusion or Merger of constitution and not
Divisible Obligations – those which have as their object a Rights intended by the contracting
prestation which is susceptible of partial performance without e. Compensation parties.
the essence of the obligation being changed. f. Novation
Indivisible Obligations – those which have their object a
prestation which is not susceptible of partial performance. Note: The enumeration is not exclusive.
13.) What is the presumption of law? (1248) 2.) Questions on payment. (What, How, Who, to Whom and
GR: Obligations are presumed to be INDIVISIBLE Where)

ER: What is payment?

a.) When stipulated by the parties;
b.) When the law requires;
c.) When the nature of the obligation requires.
14.) What are the effects of Divisible and Indivisible
Obligations? (1223 – 1224)
GR: Debtor may not be required to make partial payments
Creditor cannot be compelled partially to receive prestation
ERS:
1.) When the obligation expressly stipulates the
contrary;
Payment is not only the delivery of money but also the
performance, in any other manner of an obligation.
How is payment effected?
a.) To give – when the debtor has completely delivered the
thing which he has obligated himself to deliver.
b.) To do – when the debtor has completely rendered the
service which he has obligated himself to render.
c.) Not to do – when the debtor has completely refrained
from doing that which he has obligated himself not to do.

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EXS:
 When the obligation has been substantially performed in
good faith. (1234)
Deficiency is Insignificant Example
A will buy 10,000 pcs of dressed chickens worth Php 500,000
from B. B only delivered 9,000 pcs of dressed chickens to A
due to a chicken epidemic. A may refuse to accept the
performance of B but if B proves such is due to a legal excuse
then he can compel A to receive it.
Requisites of Substantial Performance
a. Debtor is in good faith;
b. There is deficiency in the performance of the obligation;
c. The deficiency is insignificant / not substantial.
 When the debtor accepts the performance, knowing of its
incompleteness or irregularity and without expressing
any protest or objection. (1235 & 1176)
Effect of Estoppel – once accepted, the obligation is
extinguished. However, the creditor must know of such
defect or irregularity.
How is payment effected PROPERLY?
a. Identity – only the prestation agreed upon must be
complied with.
Exception to Identity: Facultative Obligation and Dacion
en Pago
b. Integrity – the thing or service in which the obligation
consists must be completely delivered or rendered.
Ex. If debtor gives 30K for 50K debt, creditor may not
accept the payment of his obligation. The legal tie is not
yet extinguish.
c. Indivisibility – Payment or performance must be
indivisible. (Presumption of indivisibility as provided in
1248)
Who should pay / perform the obligation?
a. Debtor
b. Debtor’s legal representative
c. Any third person constituted / identified by the parties
d. A third person who has an interest in the obligation
Test: WON the continued existence of the obligation is
troublesome for him?
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Ex. Compulsory heirs – if parents do not pay their
debts, their successional rights are decreased.
Guarantor – guarantees the capacity of the principal
party to pay.
Note: Solidary debtors and sureties are not included since
they are principal debtors. However, a joint debtor may be
included.
e. All other persons not enumerated
Rules on Payment / Performance by a Third person
GR: The creditor is not bound to accept payment or
performance by a third person.
EXS:
 When there a stipulation to the contrary.
 When it is made by a third person, who has an interest in
the fulfillment of the obligation.
A.) With knowledge and consent of debtor – third person
can recover the whole amount.
B.) Without the knowledge and consent of debtor or
against the will of the debtor – third person can
recover only insofar as the payment had been
beneficial to debtor.
To whom payment should be made?
1. Creditor
2. Creditor’s successor / interest
Ex. Debtor paid 50K to Creditor’s son. It is considered as
improper payment.
3. Any person authorized to receive it
Ex. Payment of MERALCO bills is done through bayad
centers not to MVP.
4. Payment made to possessor in credit provided that is
was made in good faith
 A person appears to have the right to assert the payment
5. Payment made to a third person, provided that is has
redounded to the benefit of the creditor.
Ex. A owes B 50K. B owes C 50K. With the consent of B,
A paid 50K to C.
Note: Payment made to an incapacitated person is voidable.
Where payment should be made?
GR: Place designated in the obligation
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No designation / determinate thing – wherever the thing
might be at the time the obligation was constituted.
Other cases – Domicile of Debtor
3.) What is dation in payment?
When debtor presents to creditor a thing in lieu of payment
of a sum of money. The law considers it a Contract of Sale.
Ex. Alea owes Kim P5,000. Alea offers her brand new air-
conditioner unit as payment of her debt to Kim. Kim agrees.
4.) What is the rule on monetary obligations?
GR: Pay using legal tender of the Philippines. (RA 529)
EXS: (RA 4100)
 Loans and investments made by foreign
governments
 High priority economic projects
 Foregin exchange transactions by banks
 Import-Export and International Banking
Investments
Legal Tender – It includes all notes and coins issued by the
BSP to which a debtor may compel creditor to accept
payment using Philippine Peso no matter what the obligation
may be.
11th Meeting: Make-up Class on April 22, 2016
Absent si Alea Kim
Quiz questions:
a. What are the requisites of novation?
b. What are the requisites of novation according to the
SC?
c. Clark and Kent entered into an obligation which is
voidable, they created a new one, is the old obligation
extinguished by way of novation?
d. Is an extension of time in a contract of loan considered
as a novation, what are the presumptions?
12th Meeting: April 22, 2016
1.) How is a contract defined in Art. 1308?
A contract is a meeting of minds between two parties
whereby one binds himself with respect to the other to give
something or to render some service.
Why is this definition defective?
a. It only overs consensual contracts, it does not cover
formal and real contracts.
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 Consensual Contracts – perfected by consent
 Formal Contracts – Those that require a particular
form aside from the COC.
 Real Contracts – Those whose validity depends
upon the delivery of the object of the contract aside
from the COC.
Ex. Deposit (Contract of Loan) – Warehouse
Receipts Contracts
b. It does not cover reciprocal contracts, only unilateral
ones.
c. It may be entered upon to extinguish an existing
obligation.
d. It is applicable to two persons only, however, it can be
made applicable to two parties in one person.
Parties to a Contract:
GR: 2 parties are required in a contract
EXS:
a. When a person in his capacity as representative of
another contracts with himself;
b. When as a representative of a different persons, he
brings his principals by contracting with himself,
unless there is conflict of interests or when the law
expressly prohibits it in specific cases.
2.) What are the stages of the life of a contract?
a. Conception Stage (Preparatory)
 The period of negotiation and bargaining ending at the
moment of the agreement of the parties. There is no
juridical tie yet.
b. Executory Stage (Perfection / Birth)
 The moment when the parties come to agree on the
terms of the contract. Juridical tie is created.
 A contract is executory when there is a concurrence
of the offer and acceptance.
c. Executed Stage (Consummation / Death)
 Fulfillment or performance of the terms agreed upon
in the contract.
Note: In MIAA v. Verayo, it was held that a provision in
the lease contract that gave the tenant the option to
renew the contract which should be asserted expressly
and communicated to the landlord before the
expiration of the contract of lease is valid.
4. How can an agreement result into a contract?
Conditions:
a. COC is present;
b. Characteristics of a contract are present.
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Characteristics of a Contract (AMOR)
a. Autonomy (1306)
GR: Contracting parties may establish such agreements as
they may convenient.
ER:
Contract of Adhesion – Where only one of the contracting
parties has the right to stipulate the conditions of the contract,
the other party accepts or rejects it. There is no proposal.
Limitations:
i. It must not be contrary to law, morals, good customs,
public order and public policy.
ii. Police Power – Constitutional policies based on the
non-impairment clause and Parens Patriae.
b. Mutuality (1308 & 1182)
 The validity of the contract cannot be left to the will of
one of the contracting parties.
 It is agreed by both parties.
When is mutuality required?
1.) To determine whether the contract should be valid?
2.) To determine whether the contract should be
enforced?
Ex. Potestative Obligations dependent upon the debtor
are VOID.
EXS: If the parties delegates such rights to a third
person / such is unfair to the other party.
Note: In Cabangkalan Sugar Estates v. Pacheco, it was held
that when there is a provision in a contract of lease that
allows the tenant to determine when he wants to continue or
stop the lease agreement is void and is contrary to public
policy and is unfair to the landlord. Unlike MIAA v. Verayo,
there is no period, there is no original term.
c. Obligatory Force
 Once a contract is perfected, it shall be of obligatory
force upon both of the contracting parties.
d. Relativity
GR: Contracts take effect only between the parties, their
assignees and heirs.
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EXS:
a. When rights are not transmissible by law, as agreed
by the parties and by nature.
b. Successional Rights – The heirs’ liability would only
be limited to a certain portion in the “mana.”
Instances when the scope of relativity of contracts are
expanded:
1. When the parties transfer to a third person the rights they
acquire under the contract either favorably (acquire new
rights) or unfavorable (incur debt).
Ex. Spongebob is indebted to Patrick in the amount
of $ 10, 000 with interest at 6% per annum provided
that Spongebob will give 50% of his debt to Mr.
Crabs, as the beneficiary of Patrick.
2. When it is stipulated by the parties.
3. When the third person exercises the subrogatory action
/ accion pauliana (rescission of a contract entered
because of Fraud)
Remedies of Creditor (Chronological Order)
a. Payment by Cession
b. Rescissible Action
c. Subrogatory Action
4. In Suspension of Payments and Composition under the
Insolvency Law
5. In Labor Contract of CBAs
NOTE: In CBAs, the union can require the company to
pay for its union dues.
6. Contracts creating Real Rights (1312)
7. Negotiorum Gestio (2150 – 2151)
8. Interference on Contracts by Third Parties (1314)
 Applies in executory contracts where one of the parties
do not perform his obligation because of a tortious
interferer.
As held in Bingbang v. CA the requisites are the ff:
1. The existence of a valid contract;
2. Knowledge on the part of the third person of the
existence of the contract;
3. Inference by the third person without legal
justification or excuse.
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Example: S (Seller) and B (Buyer) entered into a contract of
Sale. A influences S not to proceed with the sale. S agrees.
There is thus a breach of contract.
What is the cause of action of B?
A. If with legal justification such as when A has a financial /
economic interest in the sale, then S is only liable for the
damages incurred by B.
B. If without legal justification such as to annoy and anger
B, then S and A are liable for the damages incurred by
B.
What is the relationship / division of liability between S and
A?
A. If a Civil Contract – it is JOINT.
B. If a Commercial Contract – it is SOLIDARY.
How do you know that a contract is civil or commercial?
Civil – WON the single transaction precipitated by the parties
is not into an activity requiring profit?
Commercial – WON one or both of the parties are into an
activity regularly for profit?
9. Art. 1336: Violence and Intimidation
 Third party who cause such is liable for damages.
10. Art. 1652
Art. 1652. The sublessee is subsidiarily liable to the lessor for
any rent due from the lessee. However, the sublessee shall
not be responsible beyond the amount of rent due from him,
in accordance with the terms of the sublease, at the time of
the extrajudicial demand by the lessor.
Payments of rent in advance by the sublessee shall be
deemed not to have been made, so far as the lessor's claim
is concerned, unless said payments were effected in virtue of
the custom of the place
11. Art. 1179
Art. 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.
Every obligation which contains a resolutory condition shall
also be demandable, without prejudice to the effects of the
happening of the event
12. Art. 1893
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the
preceding article, the principal may furthermore bring an
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action against the substitute with respect to the obligations
which the latter has contracted under the substitution.
13. Art. 1608
Art. 1608. The vendor may bring his action against every
possessor whose right is derived from the vendee, even if in
the second contract no mention should have been made of
the right to repurchase, without prejudice to the provisions of
the Mortgage Law and the Land Registration Law with
respect to third persons. (1510)
14. Art. 1729
Art. 1729. Those who put their labor upon or furnish materials
for a piece of work undertaken by the contractor have an
action against the owner up to the amount owing from the
latter to the contractor at the time the claim is made.
However, the following shall not prejudice the laborers,
employees and furnishers of materials:
(1) Payments made by the owner to the contractor before
they are due;
(2) Renunciation by the contractor of any amount due him
from the owner.
This article is subject to the provisions of special laws.
13th Meeting: April 23, 2016
1. What are the essential elements of a contract?
a. Cause of the Contracting Parties;
b. Object of the Contract;
c. Cause of the Obligation.
Note: Absence of any one of the elements results into an
invalid / inexistent contract.
2. Discuss Consent.
 It is the concurrence of the wills of the contracting parties
with respect to the object and cause which will constitute
the contract.
When is there Consent?
There is consent when there is a meeting of minds between
the parties as when the offeror makes an offer and such
offer is accepted by the offeree.
a. Offer – The offeror makes an offer
What are the requisites of a valid offer?
 The offer must be definite. The prestation is clear.
It sufficiently describes the object in order that
offerree knows what type of contract it is.
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 The offer must be complete in all aspects that the
offeree does not need to know any more essential
information regarding it.
 It must be directed to the offeree or to the public.
 There must be an intention to bind the parties
once the offer is accepted.
Note: When the offeree is led to believe that there
is seriousness to be bound, there will exist a
juridical tie. However, if the offer is made in jest,
there is no juridical tie.
b. Acceptance – The Offeree makes an acceptance
What are the requisites of a valid acceptance?
 It must be unconditional
 It must be free from qualifications
 It must be absolute
 It is directed to the offeror
 It is made with the intention to be bound
 It made within a reasonable time
NOTE: There must be no deviation from the offer, otherwise
it will constitute a counter offer.
Requisites of Consent
1. The concurrence must be manifested by the
concurrence of the offer and the acceptance;
2. The contracting parties must possess the necessary
legal capacity;
3. The consent must be intelligent, free, spontaneous and
real.
3. What is a complex offer?
An offer to enter into several contracts at the same time.
WON the establishment of a Juridical Tie requires
acceptance?
It will depend upon the agreement of the parties (take all or
leave it) or the nature of the offer (If you buy a house, you
also buy its lot).
4. What is an Amplified Acceptance?
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Acceptance where there is a deviation from the original
tenor. It will not prevent the perfection of the contract with
regards the original stipulation of the parties. In this case,
the offeree accepts the offer but proposes to an additional
contract.
Ex. Nina proposes to Kyla her feeding lot. Kyla agrees, if
she can have all of the cattles in the said lot.
5. Seller offered to buyer his lot.
S: I am willing to entertain the purchase of the lot
subject to conditions, A, B, and C.
B: I am willing to entertain the purchase of the lot
subject to conditions, A, B, C and D.
--- S accepted the amplified acceptance of B ---
S’s contention: There is a JT.
B’s contention: There is no JT.
Decide.
The SC ruled in favor of B, the tenor of acceptance did not
make an unconditional offer. It was merely a manifestation
of the possibility of considering the acceptance as shown
expressly by the word “entertain.”
6. How do you determine the moment of the perfection
of the contract?
a. Face to Face / Telephone / CP – agreement of parties
(shake hands, signature.. etc)
b. Social Media
REPUBLIC ACT NO. 8792 June 14, 2000
AN ACT PROVIDING FOR THE RECOGNITION AND USE
OF ELECTRONIC COMMERCIAL AND NON-
COMMERCIAL TRANSACTIONS AND DOCUMENTS,
PENALTIES FOR UNLAWFUL USE THEREOF, AND FOR
OTHER PURPOSES
CHAPTER III.
COMMUNICATION OF ELECTRONIC DATA MESSAGES
OR ELECTRONIC DOCUMENTS
Section 16. Formation of Validity of Electronic Contracts.
 San Beda College - Manila
(1) Except as otherwise agreed by the parties, an offer, the Art. 1321. The person making the offer may fix the time,
acceptance of an offer and such other elements required place, and manner of acceptance, all of which must be
under existing laws for the formation of contracts may be complied with.
expressed in, demonstrated and proved by means of
electronic data messages or electronic documents and no Art. 1323. An offer becomes ineffective upon the death, civil
contract shall be denied validity or enforceability on the sole interdiction, insanity, or insolvency of either party before
ground that it is in the form of an electronic data message or acceptance is conveyed.
electronic document, or that any or all of the elements Art. 1324. When the offerer has allowed the offeree a certain
required under existing laws for the formation of contracts is period to accept, the offer may be withdrawn at any time
expressed, demonstrated and proved by means of electronic before acceptance by communicating such withdrawal,
data messages or electronic documents. except when the option is founded upon a consideration, as
(2) Electronic transactions made through networking among something paid or promised.
banks, or linkages thereof with other entities or networks, and Art. 1262. An obligation which consists in the delivery of a
vice versa, shall be deemed consummated upon the actual determinate thing shall be extinguished if it should be lost or
dispensing of cash or the debit of one account and the destroyed without the fault of the debtor, and before he has
corresponding credit to another, whether such transaction is incurred in delay.
initiated by the depositor or by an authorized collecting party:
Provided, that the obligation of one bank, entity, or person When by law or stipulation, the obligor is liable even for
similarly situated to another arising therefrom shall be fortuitous events, the loss of the thing does not extinguish
considered absolute and shall not be subjected to the the obligation, and he shall be responsible for damages. The
process of preference of credits. same rule applies when the nature of the obligation requires
the assumption of risk.
c. Correspondence (1319) 9. What is the rule on the withdrawal of offer by the
offeror?
Manifestatio Expedition Reception Cognition
n Theory Theory Theory GR: The offeror may withdraw the offer as long as he has
Theory no knowledge of the acceptance of the offeree.
Perfection is Perfection is Perfection is Perfection is
at the at the at the at the ERS: 1.) Option Contract – Buyer pays for a consideration
moment the moment the moment the moment the of a period whether to accept an object or not.
offeree offeree offeror have offeror has 2.) Art. 19. Abuse of Rights
manifests his transmits the in his hands knowledge of
intention to notification the the Option Contract Contract of Sale
accept. of acceptance acceptance It is only the seller who is Both parties are required to
acceptance of the of the required to sell. sell and buy.
to offeror. offeree. offeree. No Juridical Tie. There is a juridical tie.
One Step: Two Steps: Three Steps: Four Steps:
Manifestation Manifestatio Manifestatio Manifestatio
n & n, Expedition n, Option Money Earnest Money
Expedition & Reception Expedition, Not a partial payment of a Partial Payment of
(Letter is (Letter is Reception & purchase price purchase price
placed in received by Cognition No juridical tie. There is a juridical tie.
mail box) Offeror)
Applicable in US Courts German Applicable in
Commercial Courts Civil Quiz:
Contracts Contracts
1. What are complex offers? When is there partial
acceptance in complex offers? (3)
7. How is acceptance made?
2. A in QC offered B in Davao, through a letter his house
An acceptance may be express or implied (1320). and lot. B received the letter and manifested his
acceptance, when he was about to send the his letter of
8. What are the modes to extinguish the offer made? acceptance. A sold his house to C. Is A liable for B? (6)

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3. What are the requisites of Pour Atrui? 4. What are the causes of rescission? Discuss.

a. The contracting parties by their stipulation must have A. Those entered by guardian / representative wherein
clearly and deliberately conferred a favor upon a third the ward / absentee suffers lesion by more then 1 / 4 of
person; the value of the property. In case of an heir he must
suffer at 1/ 4 of the value of the property.
b. The third person must have communicated his - Rescission cannot take place however when the
acceptance to the obligor, before its revocation by the contract has been judicially approved
obligee or the original parties;
Ex. Marvin, guardian of minor Gaye, sold Gaye’s house and
lot worth 2M for 1M to Charlie.
c. The stipulation in favor of the third person should be a
part, not the whole of the contract; Remedies of Gaye:
A
a. Enforcement of his right (If Marvin is solvent enough, he
d. The favorable stipulation should not be conditioned or
can pay for the lesion)
compensated by any kind of obligation whatever;
b. Payment by Cession (Immovable first)
c. Rescission (Accion Pauliana)
e. Neither of the contracting parties bears the legal Acts of Ownership Acts of Management &
representation or authorization of the third party for Administration
otherwise, the rules on agency will apply. Disposition of immovable Disposition of personal and
th
14 Meeting: April 28, 2016 (Last Meeting) properties of ward with movable properties of ward
judicial approval for his support
1. What are Rescissible Contracts?
 Valid contracts that can be terminated on legal
grounds Can an heir suffer lesion?
 Rescission is principally based on some economic Yes, lesion must be equal to or more than ¼ of his legitime.
damage (lesion) as a result of the inequitable conduct If his legitime is lessened because of lesion, he can ask for
by one party a rescission.
2. What is Lesion? B. Contracts of Fraud
Lesion refers to a loss from another’s failure to perform a Types of Frauds:
contract. It is the injury suffered by one who did not receive
the equivalent value of what was bargained for. i. Contracts in Fraud of Creditors
- Rescission is a subsidiary remedy

3. Differentiate Rescission from Resolution. ii. Contracts referring to Things under Litigation
- Rescission is a primary remedy
Rescission Resolution
Action may be instituted by Action may only be iii. Contracts by an Insolvent Debtor
a contracting Party or a instituted by a contracting - Rescission is a subsidiary remedy
Third Person party
There are several causes Only one ground – failure of Ex. On Jan 13, 2015, Alea Kim owed P 5, 000 to
for rescission one of the parties to comply Michelle payable on June 5, 2015. On Jan 15, 2015,
with what is incumbent Alea Kim owed P 5, 000 to Bona payable on May 5,
upon him 2016. On June 10, 2015, Alea Kim paid her undue
Courts cannot grant an Courts can grant an debt to Bona. Alea Kim is now insolvent. What is
extension of time for extension of time for Michelle’s remedy?
performance of the performance of the
obligation obligation provided that According to Dean Ulan, the creditor who has a
there is just cause better right is the one who FIRST claims the
Any contract whether Only bilateral contracts may obligation or files the action.
unilateral or bilateral may be resolved
be rescinded

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 San Beda College - Manila
Note: Art. 1381 (3) in relation to Art. 1198 (2) is
applicable only when such obligation is subject to a
condition.
C. Special Cases of Rescission
Art. 1198 (4)
Art. 1526 (4)
Art. 1534
Art. 1539
Art. 1556
5. What are the Limitations in Actions of Rescission?
a.) It must not cover acts of ownership;
b.) It is a supplemental action;
c.) Thing which is the object of the contract must be in the
possession of a third person who did not act in bad faith;
d.) He must be able to return thing or property.
Note: Rescissible Contracts are not subject to Ratification.
The intrinsic defect may be waived by a 3rd person or the
contracting parties.
6. What are Badges of Fraud?
A. Alienation by gratuitous title
1. Debts are contracted prior to the donation or
alienation by onerous title. Maturity of debts is not a
requirement
2. There is no reservation of sufficient property to pay
all debts contracted before the donation or alienation
Ex. Debtor Sheldon sold his last car of land to Amy, his
girlfriend, in order to make it appear to his creditor that he
is already insolvent.
B. Alienation by onerous title
1. The alienation made during the pendency of a suit
presupposes a judgment, or a writ of attachment
2. The attachment need not refer to the property
alienated
3. The attachment need not to have been obtained by
the party seeking rescission
Ex. Drake, vendee, knew at the time of conveyance, that it
was Rihanna’s last property pending in court.
7. What is the Prescriptive Period in Rescission?
• The action to rescind prescribes in four years
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• The period begins to run after the aggrieved party
has unsuccessfully exhausted all possible legal remedies to
enforce the obligation or recover losses, and from the time—
1. The incapacity of persons under guardianship
terminates, in cases of persons under guardianship
2. The absentee learns of the contract, in cases of
absentees
3. The fraud is discovered, for contracts entered in
fraud of creditors
4. Of the knowledge of the transaction, for contracts
entered with respect to things under litigation without
approval
8. What is a voidable contract?
It is a contract which possesses all the essential requisites of
a valid contract, but one of the parties is incapable of giving
consent, or consent is vitiated by mistake, violence,
intimidation, undue influence, or fraud.
9. What are the kinds of Voidable Contracts?
a. Those where one of the parties is incapable of
giving consent to the contract;
b. Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
10. When should an action for annulment be filed?
WITHIN the prescriptive period of four (4) years counted from
the time:
(a) the defect of the consent ceases in case of
intimidation, violence or undue influence
(b) it is discovered in case of mistake or fraud
(c) the guardianship ceases in case of contracts
entered into by incapacitated persons
11. Who may ask for annulment?
 Only the principal or subsidiary party to the contract
 The incapacitated; or
 The victim whose consent was vitiated
(Annulment is a remedy granted by law, for reason of public
interest, for the declaration of the inefficacy of a contract
based on a defect or vice in the consent of one of the
contracting parties in order to restore them to their original
position before the contract was executed)
12. What are the effects of Annulment?
(a) IN EXECUTORY CONTRACTS - the parties are
excused from their obligations.
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(b) IN EXECUTED CONTRACTS - mutual restitution
real obligation = property + fruits, and money + interest
personal obligation = value of the service + interest
Note: Special rule on restitution when the annulment is
grounded on incapacity – The incapacitated party is
required to restore only to the extent of his beneficial
interest. In other words, if he did not derive any benefit from
the thing or price received by him, he is NOT obliged to
restore.
13. What is the effect of the loss of the object of the
contract on the action for annulment?
(a) If with FAULT on the part of the DEFENDANT his
obligation is converted into an indemnity for damages.
Indemnity = (value of the thing at the time of the loss) +
(interest on said value also computed from the time of the
loss) + (fruits received from the thing reckoned from the time
the thing was given to him to the time of its loss). (Art. 1400)
(b) If with FAULT on the part of the PLAINTIFF the right to
annul is extinguished.
Note: the same rule applies even if the action for annulment
is grounded on incapacity. (Art. 1401, par. 2)
(c) If due to a FORTUITOUS EVENT
DEFENDANT the same rule applies when the loss is with
his fault.
Rationale: The defendant is considered a possessor in bad
faith who bears the loss even in case of a fortuitous event.
PLAINTIFF the right to annul can be maintained, BUT the
defendant cannot be compelled to restore what he had
received if the plaintiff can himself no longer restore what he
is bound to return after the contract is annulled.
Exception : But if the plaintiff was incapacitated at the time
the contract was perfected, the defendant must restore what
he has received despite the plaintiff’s inability to restore what
he is bound to return under the annulled contract.
14. What are Unenforceable Contracts?
 An unenforceable contract is one which cannot be
enforced in court or sued upon unless it is first ratified.
Once ratified, it can have the effect of a valid contract. In
one sense, therefore, it may be called a “validable”
contract.
 Unlike voidable and rescissible contracts, which are
valid and binding until annulled or rescinded, an
unenforceable contract is not enforceable, or cannot take
effect even as between the parties to the contract unless
it is ratified.
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15. What are the kinds of unenforceable contracts?
 Unauthorized or disauthorized contracts. [Art. 1317 &
1403(1)]
 Those that fail to comply with the Statute of Frauds.
[Art. 1403(2)]
 Those where both parties are incapable of giving
consent.
16. What is the nature and purpose of the Statute of
Frauds?
The Statute of Frauds, found in Article 1403, No. 2 of the
New Civil Code, is a law which requires that all the
agreements enumerated therein [letters (a) to (f)] must be in
writing, and signed by the party obliged under the contract
(passive subject) against whom the contract will be enforced.
Hence, if there is no note or memorandum (i.e., writing as
evidence of the agreement) of the specified agreements, said
agreements cannot be enforced by the other party (active
subject) in court. This is because the court will not receive
evidence of the existence of the agreement without the
writing, or a secondary evidence of its contents.
Note: The failure to execute the contract in writing does NOT
render the contract VOID. The contract is VALID, but it is
UNENFORCEABLE, unless ratified.
 The Statute of Frauds seeks to prevent the
commission of injustice due to faulty memory, and to guard
against intentional misrepresentation.
Illustrative Example: Marian verbally agreed to sell her car
to Dingdong for P950,000.00. The parties agreed that
delivery of the car as well as payment of the purchase price
will be effected on October 21, 2015. On October 21, 2015,
Marian refused to honor the verbal agreement, and turned
down Dingdong’s demands for her to deliver the car nor his
tender of the P950,000.00 purchase price. Dingdong then
filed an action in court for specific performance to enforce
their verbal contract of sale.
In this case, if the lawyer of Marian objects, Dingdong will not
be allowed by the court to present oral or testimonial
evidence to prove the existence of their verbal contract of
sale. This is because a verbal contract of sale of personal
property where the consideration exceeds P500.00 must be
in writing in order to be enforceable even between the parties
[Art. 1403(2)(d)].
17. What are the contracts covered by the Statute of
Frauds which are required to appear in writing in
order to be enforceable:
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 An agreement which is to be executed after
one (1) year from the date of perfection of the contract.
 Example: On October 1, 2014, Sally entered into a
contract with Brian for the sale of her car to him. Delivery of
the car and payment of the purchase price was set on
October 5, 2015. This contract must be in writing to be
enforceable because the execution or consummation of the
contract is set on a date more than a year from the perfection
of the contract.
 A special promise to answer for the debt,
default or miscarriage of another.
 Example: Dennis borrowed money from Carina with
Gorio as guarantor. As guarantor, Gorio obliges himself to
answer for the obligation to Carina, if Dennis is not able to
pay the debt on maturity date. This promise of Gorio to
answer for the default of Dennis must be in writing, so that
Gorio can be held liable by Carina if Dennis fails to pay his
obligation on due date.
 An agreement made by reason of marriage
other than a mutual promise to marry.
 Example: Martin agrees to build a house for Wilma
worth P10M if she will marry him. If Wilma subsequently
marries Martin, she cannot oblige Martin to make good his
promise to build a house for her if their agreement was not
made in writing.
NOTE : However, a mutual promise to marry is enforceable
even if merely orally entered into. At any rate, enforceability
will be limited only to claiming damages for non-performance
of the promise, but NOT to compel the other party to proceed
with the marriage. This is because nobody can be compelled
to marry against his will. It will make the consent defective,
and the marriage voidable.
 An agreement for the sale of personal property
where the consideration is P500 or more, unless there
has been partial delivery or payment. [Art. 1403(2)(d)]
 Example: Sylvia and Barry entered into a verbal
contract for the sale of a pair of silver earrings for P500.00.
Delivery and payment was set on October 30, 2015.
 IF on due date Sylvia does not deliver, Barry
cannot compel her to do so even if he is willing to pay
because the contract falls under the Statute of Frauds, and
must be in writing to be enforceable between the parties.
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 ASSUME THAT on due date Sylvia makes, and
Barry accepts, delivery of the silver earrings. Later, Sylvia
files an action to compel Barry to pay the purchase price of
P500.00. This time, Barry will be obliged to pay. Barry
cannot set up the defense that Sylvia cannot enforce their
agreement for not having been made in writing. This is
because there has already been delivery of the object of the
contract, and by accepting the earrings, Barry in effect admits
the existence of the agreement.
 An agreement for the lease of real property
where the term is more than one year. [Art. 1403(2)(e)]
 Example: On January 15, 2015, Orly agreed to lease
his building to Tirso for a period of two (2) years starting
February 15, 2015, until February 14, 2017. On February 15,
2015, if Orly does not allow Tirso to take possession of the
leased property as agreed upon, Tirso cannot legally compel
Orly to do so if their lease contract is not in writing.
 An agreement for the sale of real property or
of an interest therein. [Art. 1403(2)(e)]
 Example: Isko and Bernie entered into a verbal
contract for the sale of a parcel of land. Delivery and payment
was set on October 30, 2015. On October 30, if Isko changes
his mind about the sale, Bernie cannot sue Isko to compel
the latter to perform his obligation under the contract of sale
which was not put in writing; hence, unenforceable.
 NOTE, however, that under Article 1874 of
the Civil Code, “when the sale of a piece of land or
any interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the sale
shall be void.”
 A representation as to the credit of a third
person.
 Example: Delfino is applying for a loan with Cielo.
Before she releases the money, Cielo asks Ramiro about the
credit standing of Delfino. Ramiro orally assures Cielo that
Delfino is solvent, and has good credit reputation. On the
basis of this representation, Cielo extends a loan to Delfino.
However, it turns out that Ramiro made a false
representation as to Delfino’s credit standing because
Delfino defaulted in his obligation to Cielo on due date. In
this case, if the representation of Ramiro as to Delfino’s credit
standing was not made in writing, Cielo cannot hold Ramiro
liable for damages for such misrepresentation.
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18. What are some basic principles governing the
Statute of Frauds?
a) It applies only to executory contracts. It does
not apply to totally or partially executed contracts.
b) The defense under the Statute of Frauds may be
waived by ratification. (Art. 1405)
c) It is exclusive. It applies only to the agreements
or contracts enumerated under Article 1403 (2).
d) The Statute of Frauds is a personal defense
(Art. 1408). Just as strangers cannot attack the
validity of voidable contracts, so also can they not
attack a contract because of its unenforceability.
The defense that a contract does not comply with
the Statute of Frauds can be set up and is available
only to the contracting parties and their heirs.
Examples of the Principles :
a. & b.  Soledad verbally sells to Basilio a parcel of land
for P2M. The contract is unenforceable under Article
1403(2)(e), which requires that the sale of real property
must be in writing. However, if Basilio pays the price of
the sale, and Soledad accepts it, she cannot refuse to
deliver the land because there was already partial
performance of the contract. Since Soledad has
accepted benefits under the contract, the contract is no
longer executory (but is now partially executed or
consummated); hence, the Statute of Frauds will not
apply. Soleded is deemed to have ratified the contract
under Article 1405. With the ratification, the contract now
becomes enforceable. In the same manner, if Soledad
delivers the land to Basilio, and he accepts delivery, the
contract becomes enforceable, because there is already
partial execution (or consummation) of the contract.
(c)  A loan of P1,000.00 does not have to be in writing
to be enforceable because the contract of loan is not one of
those enumerated in the Statute. Hence, an oral loan for
P1,000.00 is valid and enforceable. (See the last paragraph
of Article 1358)
(d)  Olivia is the owner of a house leased by Tiago.
During the term of the lease, Olivia verbally sold the house to
Braulio. Braulio had not yet occupied the house nor given
the purchase price for the sale. Now, despite Braulio’s
demand as new owner of the house, Tiago refuses to remit
his monthly rental payments to Braulio. Tiago argues that
the contract of sale between Olivia and Braulio, having been
verbally made, is not enforceable under Article 1403(2)(e).
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This argument of Tiago is not valid. The defense under the
Statute of Frauds is a personal defense, and can be raised
or set up only by the parties to the contract contended to be
unenforceable for not having been made in writing.
Therefore, Tiago who is not a party to the contract of sale
cannot set up the defense under the Statute of Frauds.
NOTE: In this case, Braulio may set up the defense under
the Statute of Frauds. It becomes apparent, however, that
instead of assailing the unenforceability of the contract of
sale, Braulio has executed acts of ratification by exercising
acts of ownership over the house as manifested by his
collection of the rentals from its tenant. The same can be
said of Olivia who, under the facts, has offered no objection
to Braulio’s acts of dominion by demanding rents on the
property from the tenant Tiago.
19. What are Void and Inexistent Contracts?
These are the contracts which have absolutely no force and
effect, and are inexistent from the beginning. It is as if they
have never been entered into, and they cannot be validated
either by time or ratification. The maxim is “NO CONTRACT
AT ALL”.
a. Void Contracts – Those where all of the requisites of a
contract are present but the cause, object or purpose is
contrary to law, morals, good customs, public order or
public policy or the contract itself is prohibited or declared
void by law.
b. Inexistent Contracts – Those where one or some or all
of those requisites which are essential for the validity of
a contract are absolutely lacking.
20. What is Pari Delicto?
Pari delicto defined.  Pari delicto simply means equal fault.
 The term is used with reference to the general rule
that illegal transactions or contracts are not legally
enforceable. It is a universal doctrine which holds that no
action arises, in equity or in law, from an illegal contract.
Where the parties are in pari delicto, no suit can be
maintained for specific performance under the contract, or to
recover the property agreed to be sold or delivered, or the
money agreed to be paid, or damages for its violation. No
affirmative relief of any kind will be given to one against the
other.
Exceptions; where pari delicto may not apply:
The Court may allow a party to recover money or property in
the following cases, when the interest of justice or public
interest demands:
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1. If an agreement has been repudiated before it has • Valid until annulled, unless any defect is cured by
accomplished its purpose or before it causes damage to a ratification, which can be claimed within four years
third person
1. Incapacitated in giving consent - From the
2. If the party who gave consent is proven to be time guardianship ceases
incapacitated
2. Vitiated consent (by mistake, violence, intimidation,
3. If the agreement is not illegal per se but merely violence or undue influence, from the time such defects
prohibited, and the prohibition is designed for the protection cease intimidation, influence, or fraud undue - For mistake
of the plaintiff of fraud, upon discovery of the same.
Quiz -------------------------------E N D-------------------------------------
1.) What are requisites for Rescission based on Lesion
and Fraud?
In case of Lesion:
a. The contract must have been entered into by a guardian
in behalf of his ward or by a legal representative in
behalf of the absentee;

b. The ward or absentee must have suffered lesion of

more than ¼ of the value of the property which is the
object of the contract;

c. The contract must have been entered into without

judicial approval;

d. There must be no other legal means / remedy for

obtaining reparation for lesion;

e. The person bringing the action must be able to return

whatever he may be obliged to restore;

f. The object of the contract must not be legally in the

possession of a third person who did not act in bad faith.
In case of Fraud:
a. There must be a contract between the creditor and the
debtor. It must have been inexistent before a new
contract;

b. It was sold with fraud / with the intention to commit fraud;

c. The creditor cannot in any legal manner collect the

credit;

d. The object of the contract must not be in possession of

a third person who did not act in bad faith.

2.) What is the Prescriptive Period in Voidable

Contracts?

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