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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
SUPPORT TOOL NO. 1 (2ND OF 5 – CIVIL LAW SUBJECTS)
Ang BAR LAWS FOR DUMMIES 2020 (BLD2020) OBLIGATIONS AND CONTRACTS na may 236
na pahina ay dinesenyo upang umangkop sa kakayanan ng mga ordinaryong tao (layman) at mga pasimulang
mag-aaral ng batas. Higit sa lahat, ang BLD2020 ay may adhikaing tulungan ang mga “nth” time bar examinees
na mapagtagumpayan na ang hamon ng napakahirap bar examination sa pamamagitan ng pag-gamit ng mga
estratehiyang pang-elementarya at highschool na pagtuturo hanggang sila ay magkaroon ng sariling technique
na kanilang magagamit sa kanilang patuloy pag-aaral.
Ang mga manunulat ay pauna na nang humihingi ng pang-unawa sapagkat may mga pagkakataon na
hindi maiiwasan na gumamit ng mga salitang bulgar upang higit na maitanim sa isipan ng mga mambabasa ang
nais ipaunawa nito. Bukod dito, ang mga katagang ginamit ay mga salitang pang-araw-araw nating gamitin, kaya’t
hindi maiiwasan ang mga maling gramatiko at pag-gamit ng lengwahe sa kaka-ibang paraan.
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TEKNOLOHIYA
BAR LAW FOR DUMMIES 2020
OBLIGATION AND CONTRACTS
FIRST EDITION
JANUARY 25, 2020 UPDATED WITH 2019 BQA ON JULY 14, 2020
MANILA, PHILIPPINES
ALL RIGHTS RESERVED BY THE AUTHORS
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 1
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
FREQUENTLY ASKED TOPICS FROM
OBLIGATIONS AND CONTRACTS
1975-2019 BAR EXAMINATION
INTRODUCTION… 3
HOW TO STUDY OBLICON…3
OBLIGATION, CONCEPT…5
NATURE AND EFFECT OF OBLIGATION…19
DIFFERENT KINDS OF OBLIGATION….47
PURE AND CONDITIONAL OBLIGATION…48
OBLIGATION WITH A PERIOD…72
ALTERNATIVE AND FACULTATIVE OBLIGATION…79
JOINT AND SOLIDARY OBLIGATION…83
DIVISIBLE AND INDIVISIBLE OBLIGATION…96
OBLIGATION WITH A PENAL CLAUSE….98
EXTINGUISHEMNT OF OBLIGATION…100
PAYMENT OR PERFORMANCE…102
APPLICATION OF PAYMENT… 109
CESSION…111
TENDER OF PAYMENT AND CONSIGNATION…111
LOSS OF THE THING DUE….119
RES PERIT DOMINO….120
BY CONDONATION OR REMISSION OF DEBT…124
BY CONFUSION OR MERGER…128
BY COMPENSATION…129
BY NOVATION…136
SUBROGATION…142
CONTRACTS, CONCEPT…149
ESSENTIAL REQUISITES…166
CAUSE…167
OBJECT…172
CONSENT…175
VOID OR INEXISTENT CONTRACTS…193
PARI DELICTO…195
RESCISSIBLE CONTRACTS…203
VOIDABLE CONTRACTS…211
UNENFOREABLE CONTRACTS…220
STATUS OF FRAUD…223
FORM OF CONTRACTS…226
REFORMATION OF CONTRACTS…228
INTERPRETATION OF CONTRACTS…230
2019 BQA OBLICON ...233
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 2
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
The BAR LAW FOR DUMMIES 2020 (BLD2020) is designed for self-study/self-review and primarily aimed to help the nth
time examinees to pass the bar exams and for average law students to fully understand difficult concepts of law as illustrated in our dayto-day activities. The technique is spoon-feeding and we did much of all the thinking for you to save time. We included all the topics asked
in past 20 years of bar examinations, the bar answers to that bar questions, the relevant jurisprudence as well as the important codal
provisions. And because we believe that no one has the monopoly of knowledge we plan to make BLD as a “COMMUNITY REVIEWER”
where readers are encourage to email BLD2020 for any correction, addition and suggestion to come up with an ultimate law reviewer.
Those who will participate shall be acknowledged as part of the community.
Initially, BLD2020 shall be available in hard copies to cope up with the initial expenses entailed. In the future, when all the
reviewers are complete and as the circumstances may warrant, a board of trustees shall be formed to guard the integrity of the “community
reviewer” and it shall be available via online subscription for a minimal fee just to keep the system afloat. On that note, we ask for a lot
of prayers for the people who would become part of the community to have good health and a focused mind to finish the work in time for
2020 bar examination.
You will find that we used Tagalog language and Filipino culture most of the time in explaining the law. Firstly, it is because
we are more equipped in our own native tongue when expressing our feelings and thoughts, and according to psychology of learning,
students learn better in their native language. Secondly, different concepts of laws are best illustrated with our day-to-day experiences.
And thirdly, we want the readers to laugh and stay awake by using colorful words and hilarious situations.
By the way, when you avail of BLD2020 you will be added to a Facebook group exclusive for BLD users. Take note that only
veriafiable accounts with email address shall be accepted and retained as member. We will do all the sharing and updates in that group.
HOW TO UNDERSTAND OBLIGATION AND CONTRACTS
Of all subjects ng law courses, ang Obligation ang pinaka-boring. Dahil ito yung mga stipulations inside a contract or stated
in law. Yung mga obligations stated sa law madali ng makita yun – thou shall not kill. Oh di ba – wag kang papatay. Madaling intindihin.
Eh paano yung mga stipulations...let say I promise to give you P5,000. Valid ba yun? Syempre hinde. I will give you my car tomorrow –
not valid. I will give you P1000 today – not valid. Bakit hindi valid? Those promises or words spoken are not obligations. You cannot got
to court and sue me to fulfill my promise. You got no cause of action. Bakit walang kang cause of action? Kasi when I promise to give
you P1,000 and I “kyeme” lang....there was no acceptance from you.
But if i said “ I will give you my car if you climb that tree”. You climb that tree. Ayan....may cause of action na. Kasi may
equivalent act ka na ginawa. Kaya dapat tumbasan ko yun. I am now obligated to give you my car. If did not give you the car –
magmumukha kang tanga hahahaha. Kasi umasa ka na at you already did your part. So there is damages – hindi ka makatulog, nahihiya
ka sa mga kaibigan....may moral damages na. So there, the promise I made to you has become a juridical necessity. It means that the
court can compel me to give the car plus damages.
I promise to marry you. So sinuko mo na ang “divisoria”. Then i did not marry you. There was no cuase of action – kasi mutual
consent of love making yun. But if I said I promise to marry you – and then bigla kang umalis – ikinalat mo na ikakasal ka na....namili ka
ng mga gamit pang-kasal, nag-order ka na ng litson at nangutang ka na ng pambayad sa reception venue....ayan may damages na. You
have a cause of action. But can i be compelled by the court to marry you? No. It is immoral to compel a person to marry someone he
does not love. That is slavery hahahahaha. Biro mo araw-araw kong makikita mukha mo pag-gising ko sa umaga. So, you have a cause
of action for damages. Babayaran kong lahat ang mga nagastos mo plus moral damages.
What are the sources of obligation? Dalawa lang – acts and law. Law – madaling makita yan kasi nakasulat na. We will learn
about it sa lahat ng law subjects. Examples – no person shall be deprive of life, liberty and property without due process of lawXXX, sa
political law yan and the obligation is addressed to the State (the active subject). Yung buong Revised Penal Code Book 2 is all obligations
where the people is the active subject. The Labor Code is addressed to the workers and employers (they are the active subjects). Hindi
pwedeng ticket ng sinehan ang ibayad mo sa mga workers mo – dapat pera. Commercial laws like insurance – as long na nagbabayad
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 3
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
ng premium si insured, the insurer has the obligation to assume the risk. Yung buong Civil Code is full obligation based on law. So,
therefore, the law set the standard. It means if the acts contradict or transgress the law – the act is invalid. The act cannot be an obligation.
It is void.
Example: I will give you my friend’s car if you passed the bar exam. That is valid. I have to buy that car or any equivalent of
such when you passed the bar. But If I said, I will go naked (wag naman!) and walk in the street if you passed the bar exam. The act is
immoral, it is void, hence, it is not an obligation. When you pass the bar you cannot compel me to do such hahahahahaha....
You see the technique in undertanding oblicon? The act (the source of obligation) must be lawful and carries a reciprocal act
(to pass the bar exam). Absence of any of the requirement – the act cannot be a source of the obligation.
So if i said – bro, ipahiram ko sa iyo yung car ko sa kasal mo bukas. That is not an obligation. “kyeme” lang yung, charot lang.
But if I said, pahiram ko sa iyo yung car ko bukas sa kasal mo pero pahiram ng P5,000 ipapa-car polish ko para makintab....ayan...that
is an obligation. Bakit naging obligation na? Kasi po, ako ay naging debtor ng P5000 at ikaw naman ay naging creditor ng P5,000. So,
at the same time – nagkaroon ng commodatum or hiraman ng movable property which is the bridal car. So may dalawang posible
CONTRACTS na nangyari sa simple statement na sinabi ko.
“pahiram ko sa iyo yung car ko bukas sa kasal mo pero pahiram ng P5,000 ipapa-car polish ko para makintab.”
We are either bailor-bailee or debtor-creditor. Ang tawag sa relationship natin now ay hindi na “bro”. We call it LEGAL TIE OR
THE VINCULUM.
Question. Ang contract ba ay source of obligation. Yes! Because it is the evidence of our acts to be accomplished. Yung
promise ko na ipapahiram ko sa iyo yung car and the promise of giving the P5000 as rent. Yan ang source of obligation.
But can a unilateral promise alone be a source of obligation?
Let say nawawala yung medyas ko. Ang sabi ko in national television.....kung sino man ang maghahanap at makakakuha ng
medyas kong butas ay bibigyan ko ng P1 MILYON. Si A and B naghanap but C, who have not watched the announcement, naisuot pala
niya yung medyas kong butas. Binigay niya sa akin. Am I obligated to give P1M to C even without his acceptance of the challenge to
look for it? No. Walang acceptance eh – walang consent.
Alam ninyo yung “Tambiyolo”? Nowadays puro automated na. Pero 20 years ago...ang Eat BuLaga may pa-raffle. They will
announce a raffle contest - ang maglakip sa sobre ng limang sachet ng Kopiko at sa isang papel ay isulat ang inyong pangalang, tirahan
at edad – ang mabububot ay bibigyan ng P10M. So Lahat ng 104 milyon Filipinos raised the flag hahahaha....sumali sa pa-raffle ng Eat
Bulaga... the management of Eat Bulaga rented the 2 hectares of land para doon ilagay ang lahat ng envelop entries.
Question? Was there a contract between Eat Bulaga and 104 Milyon Filipinos? Wala. (i dont know nowadays if may special
law on raffle, if there is, the obligation is based on law, not based on contract. Pero noon wala. So let assume na walang special law
today regulating raffle contests). If Eat Bulaga decided not to pursue with the raffle, we cannot sue the company because there was no
source of obligation – neither in law nor act.
E di eto na. Bunutan na. Nabunot ang pangalan mo. Eh di tuwang-tuwa ka. They announce that all winners must see the
office on a certain day. Then dumating ka on that date to claim your prize. Does Eat Bulaga have an obligation to give you P10M? This
time yes. What is the source of the obligation? Contract ba? What type of contract? Debtor-creditor na ba kayo ng Eat Bulaga? Yes. So,
the sources stated in Article 1157 are exclusive. Meron pa bang ibang sources of obligation? Wala na.
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 4
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
In summary, the sources of obligation are law and acts. Contracts are the written acts for our convenience. Yung quasicontracts, acts or omissions punished by law and quasi-delicts are all under law.
OBLIGATIONS
WHAT ARE THE SOURCES OF OBLIGATION?
Art. 1157. Obligations arise from:
1. Law
2. Contracts
3. Quasi-contracts
4. Acts or omissions punished by law; and
5. Quasi-delicts
Sa bar exams at law course exams ng kahit na anong subjects (Crim, poli, comm, tax etc) ang laging tanong ay “Is X liable”
or “what are the crime or crimes committed”....it means na babalikan mo yung Article 1157. Ano ba ang source of liability or obligation?
X inserted his finger to A’s vagina. Is X liable?
Yes (direct answer). Pero anong source of obligation or liability? Article 1157 (1), the source of obigation is law. Anong law?
Criminal law on Rape - Article 266-A.
X sells his house and lot for P25M. Is the sale taxable? Yes (direct answer). Anong source of obligation? Law. What law?
NIRC.
X borrowed from Y P10thou plus interest of 5% monthy interest. Is X bound to pay Y P10thou tomorrow? What is the source
obligation? Contract. So babasahin mo yung contract kung kelan ang due. The contract is the law between X and Y. If the contract of
that loan is payable 60 days from today, Y cannot demand payment tomorrow. Can X refuse to pay interest? No. The source is the
contract. Sa contract ay may stipulated interest na 5% interest per month. Can X ask for the reduction of the interest? Based on the
contract, the answer is negative. Hindi pwede. Meron pa bang ibang source of obligation na favorable kay X for Y to reduce the interest.
Yes there is. Based on jurisprudence, when the the interest is void, magiging 6% per annum (yearly) lang ang interest ng mga loan. Here,
5% interest per month or 60% interest per annum interest is unconcionable. So X may refuse to pay the interest at 5% per month. The
court will reduce it to 6% per annum.
X was riding a bicycle at nasagasaan niya si Y na naglalaro ng piko sa kalye. Is X liable to pay for damages. Yes. What is the
source of obligation? Quasi-delict.
X left home. Depressed. Pasado sa Civil Law (ito pa lang kasi ang available na BLD as of now) pero bagsak over-all sa bar.
Iniwan niya yung iyong Sari-sari Store without any indication that he was going back soon. Y, who was his assistant continued managing
the business. After a year, naging mall na yung sari-sari store. Is Y obligated to keep accounting of the business? Yes. What is the source
of the obligation? Quasi-contracts on negotiorum gestio article 2144 to 2153. So, by law obligated si Y to account for the fruits and capital
of the business to X. What about X? Ano naman ang source of obligation for him to pay wages and management ng kanyang business?
By law is labor code and by equity – unjust enrichment. Dapat may extra-payment siya kay Y for keeping the business afloat while he
was depressed and indispose to handle the business.
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 5
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
So nakita ninyo yung secreto ng subject? Anong source ng obligation? Titingin ka sa Article 1157. Pag nandun ang source of
obligation, then the person aggrieved has cause of action dahil the obligation is a juridical necessity to give, to do or not to do.
Art. 1156. An obigation is a juridical necessity to give, to do or not to do.
That is the reason why the framers of the Civil Code ay hindi law and acts ang nilagay nila na sources. For our convenience,
hinimay-himay na nila para madali nating maintindihan ang mga sources of obligation which are ff:
Law – quasi delict, quasi contracts, acts or omission punishable by law and quasi-delicts
Acts – contracts, quasi contracts not covered by law, equity (mababasa ito sa jurisprudence)
By now, madali na ninyong maiintindihan ang Obligation kahit codal na lang basahin ninyo. Just always ask yourself whenever
confronted ng isang tanong. Ano ang source ng obligation for damages may be awarded? Titignan mo lang ang Article 1157 and look
for the particular law or particular stipulation in the contract. If you found it in one of the stipulations in the contract, the next question is
“Is the stipulation valid?”.... ayan... hahanap ka uli ng basis sa law to invalidate that stipulation or set aside the contract, and apply the
available remedy for the aggrieved party like recission or annulment of contracts plus damages. Hoy, tandaan mo the remedy available
lang under the Civil Code is either specific performance plus damages or rescission plus damages.
Ok, for now let us discuss the provisions in the Civil Code.
---------xxx--------Obligation, concept
An obligation is a juridical necessity to give, to do or not do. (Art. 1156, Civil Code of the Philippines) Juridical necessity that
the court may be asked to order the performance of an obligation if the debtor refuses to perform it. If an obligation cannot be enforced
through the courts, it may be disregarded with impunity.
Requisites of obligation
1.
2.
3.
4.
Active subject (creditor or obligee) – The party who has the right to demand performance of the obligation.
Passive subject (debtor or obligor) – The party who is obliged to perform the obligation.
Prestation – The object or subject matter of the obligation. it may consist of giving, doing or not doing something.
Efficient cause – The vinculum or the legal or juridical tie which binds the parties to an obligation. The efficient cause of an
obligation may be any any of the five sources of obligation.
Examples
1)
A secured from B a loan of P50,000 with interest at 12% per annum payable on December 30, 2020 pursuant to a contract of
loan.

A is the passive subject

B is the active subject

The act of giving P50thou plus 12% interest per annum on December 30, 2020 is the prestation

The contract of loan is the efficient cause
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 6
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
2)
A is obliged to transport goods of B from Manila to Cebu, and B is obliged to pay A P10,000 as transport costs, under a
contract of carriage.
As regards to the prestation to transport the goods from Manila to Cebu
A is the passive subject
B is the active subject
Contract of Carriage is the efficient cause
As regards to the prestation to pay the transport costs;
A is the active subject
B is the passive subject
Contract of Carriage is the efficient cause
Civil obligation and natural obligation distinguished
A civil obligation (as defined in Art, 1156) is based on positive law; hence, it is enforceable by court action. A natural obligation,
on the other hand, is based on natural law; hence, it is not enforceable by court action. The obligation, however, exists in equity and
moral justice, such that if the debtor voluntarily performs it, he can no longer recover what he has given.
X made a promissory note with Y as payee for P10,000 payable today. Hanggang kelan pwedeng maningil si Y? From now
to 10 years thereafter. The prescription to enforce a written contract in 10 years. If Y did not make “singil” X, after 10 years hindi na siya
pwedeng maningil. Y’s right to file a court action has already prescribed. But, under natural law, x is still indebted to Y for P10thou. If
after 10 years, X paid Y, and then he had a change of mind to get it back dahil prescribed na naman na utang niya, X cannot get back
what he has paid for. He cannot go to court to file recovery of payment because under natural law he is still indebted to Y.
But let say X executed a promissory note admitting the loan 10 years ago. Yung new promissory note will stand as an
admission of the loan at na-revived ang old loan with the issuance of the new one.
What are the sources of obligation?
So, uulitin natin yung Article 1157.

LAW – rule of conduct, just and obligatory, laid down by legitimate authority for common observance and benefit. (Sanchez
Roman). Obligations derived from law are not presumed. Only those expressly determined in the Civil Code or in special laws
are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been
foreseen, by the provisions on Obligations. (Art 1158)
X and Y have a contract or agreement. The stipulations in the contract/agreement are the law between them. Ano
ang limitations? The stipulations must not be contrary to law, morals, good customs, public order or public policy (Art. 1306).
X was a doctor and contacted by Y to attend to an unconscious child who happened to be passing the house of Y
when suddenly struck by lightning. The child survived and X asked for his professional fee. Who is liable to pay for the services
rendered by X. Was it Y or the parents of the child? So here, magbabanggaan ang contract (agreement) and the law on
support under the Family Code. Sino mananalo? Syempre yung law. The parents are liable under the Family Code. Yung
agreement between X and Y can be set-aside.
If out of the good heart ni Y at binyaran niya si X, Y has the right of action for reimbursement against the parents
of the child. Ultimately, it is the parents who are liable.
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
to your name. He believes that no one has the monopoly of knowledge so you may email him for any correction,
modification and suggestion at [email protected]. Other law subjects will soon be available for 2020
Bar Exams. For orders visit FB Page: Law Reviewers, Books and Bookstand for Sale/OR TEXT 09325293595
Page | 7
From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Law is not presumed. X is the guard in a pawnshop. In an occasion of robbery, X wounded a pedestrian who
happened to be near to the place where the guard and the robbers exchanged gun shots. X paid for the hospitalization of the
pedestrian and asked for reimbursement from his employer. Who is liable for the hospital expenses? The ultimate liable are
the robbers. X can direct his action against the robbers. If the robbers did not pay, X can go after the family of the pedestrian
for reimbursement under the Family Code. If walang pambayad ang mga robbers and family, X cannot go after his employer
kasi hindi naman legally obligated yung employer to pay for the hospitalization ng wounded pedestrian – walang source of
obligation under Article 1157.
The law is not presumed. Maghahanap dapat si X ng batas na nagsasaad na ang employer ay liable for any
damages incurred during the circumstances of robbery. If walang law, walang liability. Hindi pwedeng i-assume ni X na dahil
empleyado siya, dapat sagutin ang lahat ng damages he may cause sa pagtatanggol ng kumpanya.
So ang laging tanong ay “ano ang source ng obligation para magkaroon ng liablity?”

Contracts – A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to
give something or to render some service (Art. 1305).
Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith.
o
Article expresses the principle of autonomy of will. It presupposes, however, that the contract is valid and
enforceable. The terms of the contract should, therefore, not be contrary to law, morals, good customs, public
policy, or public order. If the contract does not violate any of these limitations, it should be given effect,
notwithstanding the absence of any legal provision at the time it was entered into which governs it.
o
The falsification of a contract by the unauthorized insertion of additional stipulations does not avoid the whole
contract, which must still be enforced, disregarding only the additional stipulations.
o
Can damages suffered by a party during the period of negotiations be recovered, if the contract is not finally
perfected?
o
When an offer is made, the offeree may incur expenses for trips, inspections, testing, plans, technical
opinions, etc., and such expenses would be a total loss if the offeror suddenly withdraws his offer. The
prevailing view among writers admits the possibility of pre-contractual obligations in such cases. The
offer, however, must be clear and definite, thus leading the offeree in good faith to incur expenses in
the expectation of entering into the contract; and the withdrawal of the offer must be without any
legitimate caused. If the offeror, in so acting, is guilty of fault or negligence, his liability would be based
an article 2176 (quasi-delicts). But if there is no fault or negligence, and the withdrawal was in abuse of
right, then the basis of his liability would be article 19.
X offered a 10-hectare land for sale to Y who accepted the offer. Y hired a geodetic engineer to visit
and to plot the area if it really is adjacent to his farm. Afterwards, Y informed X that he is willing to buy
the land at the stipulated price. The latter, without any valid reason, refuse to sell the property. He,
therefore, is liable to pay the cost for visiting and plotting of the land under Article 19.
The author is a humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney” title
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In the same example, X sold the land to a third person. X is guilty of fault, his liability would be based
on quasi-delict.
--------xxxx-------Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied
with in good faith.
Ano lang ang limitation for the enforceability of the contract? Article 1306.
Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
X sold his car to Y for P200,000 to be delivered in a week to the residence of the buyer. X has the obligation to deliver the car
to the residence of the Y in a week.
X sold his friend’s car to Y. The contract of sale is valid. X has to deliver the car to Y. If X failed to deliver the car to Y, X shall
be liable for damages.
(Is there a law prohibiting you to sell your neighbor’s house? None. Kaya pwede mong ibenta ang mga houses and lots sa
subdivision ninyo. Ang problema ay ang delivery. You cannot deliver the house unless you have an authority from the owner)
(Is the sale void? No. The sale is only unenforceable (Art. 1403) na pwedeng i-ratify ng neighbor mo. Let say you were able
to sell the house for P20M at tinanggap ni neighbor ang pera – the then unenforceable contract of sale is now ratified)
X mortgaged his friend’s car to Y. The contract of mortgage is void. Under the law, the mortgagor must be the absolute owner
and has the free disposal of the thing to mortgage (Art. 2085).
---------xxx---------
QUASI-CONTRACTS – They refer to certain lawful, voluntary and unilateral acts giving rise to a juridical relation to the end
that no one shall be unjustly enriched at the expense of another (Art. 2142). There is unjust enrichment “when a person
unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience.” (Locsin II vs. Mekeni Food Corporation, G.R. No. 192105, December 9,
2013; Loria vs. Munoz, G.R. No. 187240, October 15, 2014).
The act giving rise to quasi-contract must be lawful, thereby distinguishing it from crime in which the act or omission
is unlawful; it must be voluntary, thus differentiating it from quasi-delict, which is based on fault or negligence or mere lack of
foresight; and it must be unilateral, to distinguish it from contract in which there are two parties who come to an agreement.
Quasi – contracts. Tinawag yan na quasi dahil walang meeting of minds. Let say yung manok mo ay laging
natutulog sa bubong ko. Eh gutum ako...gusto kong gawing tinola. Pag niluto ko yun..i will be liable criminally. So kailangan
magpa-alam ako sa iyo, at magkaroon tayo ng agreement (contract) na pag niluto ko yun – bibigyan kita ng ulam kasi sagot
ko na yung rekado. Paano nagiging quasi-contract. Ganito yun. Let say wala ka at nagbabakasyon. Nakita ko yung manok
mo at may sipon...at tingin ko may sakit. Ginamot ko on my own volition. O di ba hindi naman ako nagpaalam sa iyo pero you
have to pay me sa mga gamot na binili ko para gumaling yung manok mo. You are liable to pay me for the necessary expenses
based on QUASI-CONTRACT.
Let say dahil na naiingayan ako sa manok mo. Hinuli ko at in the pretext na gagamutin ko dahil may sipon –
pinakain ko ng lason. That is not qausi-contract – that is a crime. I am obligated to pay you damages based ON LAW.
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Let say dahil may sipon ang manok mo – Nilagay ko sa sako at pinausukan ko ng 30 minutes because I thought
nakakagaling ang usok. Kaso the chick died. That is not quasi-contract – that is quasi-delict. The death s caused by lack of
foresight. I am liable to pay you damages based on QUASI-DELICT.
Let say pumayag ka na gamutin ko yung manok mo. So may agreement na tayo. We have a relationship. Kaso
pareho tayong tanga na pag-ginilitan pala manok namamatay…hahahaha. I am liable based on CONTRACT (agreement).
Hahaha tinola na lang natin si sarimanok at nagugutum na rin ako hahahahaha
These are simple examples para hindi ninyo malimutan.
o
Negotiorum gestio – Art. 2144. Whoever voluntarily takes charge of the agency or management of the business or
property of another, without any power from the latter, is obliged to continue the same until the termination of the
affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so.
This juridical relation does not arise in either of these instances:
(1) When the property or business is not neglected or abandoned;
(2) If in fact the manager has been tacitly authorized by the owner.
X and Y are owners of piggery farm. One day Y was not able to tend the farm due to pneumonia. When X noticed
that the pigs needed to be fed, he himself bought extra feeds and take good care of them. When one of the pigs
got sick, he called on a vet to have them immunized. Y incurred necessary and useful expenses in the process. X
must reimbursed Y for such expenses. Otherwise, he will be unjustly himself at Y’s expense.
Hindi pwedeng maging katwiran ni X na hindi naman niya sinabi na alagaan ang mga baboy niya while he was
away.
Art. 2150. Although the officious management may not have been expressly ratified, the owner of the property or
business who enjoys the advantages of the same shall be liable for obligations incurred in his interest, and shall
reimburse the officious manager for the necessary and useful expenses and for the damages which the latter may
have suffered in the performance of his duties.
The same obligation shall be incumbent upon him when the management had for its purpose the prevention of an
imminent and manifest loss, although no benefit may have been derived.
Let say Y had to gather all the pigs to a safe place due to an incoming storm. Nilagay niya sa farm niya ang mga
baboy ni X and consequently, some of the plants where trampled. X must pay for the damages.
o
Solution indebiti – Article 2154-2163
Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake,
the obligation to return it arises.
Simpleng-simple. Sobrang sukli na binigay sa iyo ng tindera. Dapat mong isauli.
Sobrang bill ng meralco. Dapat isauli.
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X had a loan payable next month. X thought it is due today, and paid it. He may recover the undue payment (Art
2156).
Y accepted X payment knowing that it was not yet due, and he did not inform X about it. He must return it with legal
interest. If it was a thing, let say a cellphone, Y is also liable for any loss or impairment. If in good faith si Y, he shall
not be liable for interest if it was money, or to any loss or impairment if the it was a thing except when he used it
for his own benefit. Let say, ginamit niya yung cellphone, then, nasira screen. He must restore it. Kung naibenta
na niya, he must reimburse the price to the person who delivered the cellphone or assign the right to collect (Art.
2159-60).
UST Cooperative vs. City of Manila L-17133, December 31,1965
UST Cooperative paid municipal taxes and license fees to the city government unaware that under a new law it
was exempt “from all taxes and government fees” Later, it learned of its exemption and sought to recover from the
city government the taxes it had paid to the latter. The city government refused to refund said taxes.
UST Cooperative can recover such taxes from the city government which has a duty to return what has been paid
by mistake under the principle of solution indebiti
Commissioner of Internal Revenue vs. Fortune Tobacco Corporation G.R. No.167274-75, July 21,2008
The Government is not exempt from the application of solution indebiti. Indeed, the taxpayer expects fair dealing
from the Government, and the latter has the duty to refund without any unreasonable delay what it has erroneously
collected. If the State expects its taxpayers to observe fairness and honesty in paying taxes, it must hold itself
against the same standard in refunding excess (or erroneous) payments of such taxes. It should not unjustly enrich
itself at the expense of the taxpayers, x x x Under the Tax Code itself, apparently in recognition of the pervasive
quasi-contract principle, a claim for tax refund may be based on the following; (a) erroneously or illegally assessed
or ‘collected internal revenue taxes; (b) penalties imposed without authority; and (c) any sum alleged to have been
excessive or in any manner wrongfully collected.
o

Other Quasi-contracts
Article 2164 to 2175 are self-explanatory.
Acts or omissions punishable by law – These are crimes or felonies. The commission of a crime makes the offender civilly
liable. (Art. 100, Revised Penal Code.) Such liability includes restitution, reparation of the damage caused, and indemnification
of consequential damages. (Art. 104, R.P.C.)
o
o
o
o
Under article 100 of the Revised Penal Code, “every person criminally liable for a felony is also civilly liable.”
The plain inference from this provision is that the civil liability springs out of and is dependent upon facts which, if
true, would constitute a crime.
Such civil liability is a necessary consequence of criminal responsibility, and is to be declared and enforced in the
criminal proceeding except where the in cases where an independent civil action is allowed by the law.
Under article 12 of the Revised Penal Code, the following persons are exempt from criminal liability, even if they
have committed acts which constitute a crime: (1) An imbecile or an insane person, unless the latter has acted
during a lucid interval; (2) A person under 15 years of age; (3) A person over 15 years of age and under 18, unless
he has acted with discernment; (4) Any person who acts under the compulsion of an irresistible force; and (5) Any
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person who acts under the impulse of an uncontrollable fear of an equal or greater injury. (Parag 2 and 3 as
amended by Sec 6 of RA 9344).
o
Art. 104. What is included in civil liability.—The civil liability established in articles 100,101,102, and 103, of this
(Penal) Code includes:

Restitution;

Reparation of the damage caused;

Indemnification for consequential damages.
X stole Y’s car. Let say it is a simple theft, not carnapping. X is civilly liable by returning the car (or its value) plus actual
damages if may nasira sa kotse plus damages for the anxiety na naranasan ni X sa pagkawala ng kotse niya. Kaya di ba sa
dispositive portion may damages plus kulong.
Kapag murder, may kaukulang presyo ang buhay ng tao, plus damages plus possible income ng victim. Kapag rape, may
kaukulang presyo rin ang pagkawasak ng puri, plus damages. Although priceless ang buhay ng tao at ang puri, the law
provides for certain amount. As I recall, pag rape or murder the civil liablity is P100,000 plus damages. Pero alam ko tumaas
na ito. The law is constrained to assign price although we know that life and chastity are priceless, but for the sake of penalizing
the accused, indemnification in the form of money must be awarded.
o
Subsidiary liability for a crime

In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or
corporations shall be civilly liable for crimes committed in their establishment, in all cases where a
violation of municipal ordinances or some general or special police regulation shall have been
committed by them or their employees.
Sa St. Lukes Hospital may mga deposit boxes that you can avail of to deposit your valuable items like
cell phones, money etc. Kasi nga madalas ang nakawan sa rooms ng hospital. If one of its employees
stole your items, St. Lukes shall be obliged to pay for the value of the item plus damages.

Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their
houses from guests lodging therein, or for the payment of the value thereof, provided that such guests
shall have notified in advance the innkeeper himself, or the person representing him, of the deposit of
such goods within the inn; and shall furthermore have followed the directions which such innkeeper or
his representative may have given them with respect to the care of and vigilance over such goods. No
liability shall attach in case of robbery with violence against or intimidation of persons unless committed
by the innkeeper’s employees.
Nag-SOGO ka hahahahaa...dapat lahat ng items mo ay well accounted for at sabihin mo sa inn-keeper
para maging liable sila in cases of robbery. Wag masyadong mainit hahahaha...pero maiisip mo pa ba
yun hahahahahahha..eh pang short time ka lang naman...hahahahhaha

The subsidiaiy liability established above also applies to employers, teachers, persons, and
corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen,
apprentices, or employees in the discharge of their duties. (We will discuss this pag-dating natin sa
subject na quasi-delict or torts sa BLD TORTS)
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o
To hold employers subsidiarily liable for the crime of an employee, however, it must be committed in the
performance of the functions or duties of the employee.
X, a teacher, during a parent-teacher conference ay naka-murahan niya si Y (a parent). Nagtalo sila sa
isang issue at lumala ng lumala ang usapan. Umabot hanggang sa kung sinong lahi ang mas mayaman
at walang bahid dungis hahahahahaha...Ay yun na nga – nagkasampalan hahahaha...The employer of
X is not subsidiary liable.
o
Criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action
has been commenced the civil action cannot be instituted until final judgment has been rendered in. The criminal
action, except when an independent civil action is allowed by the law (Art. 31-34 of the Civil Code).
Let say X robbed Y. X should told the court to reserve the civil aspect of the criminal case or he can file ahead of
time a civil action before the police can file the criminal action. If there was no reservation, X cannot file a separate
civil action.
ORBETA vs. SOTTO, 58 PhiL 506: Orbeta was convicted in the Court of First Instance of arson, and in addition
to the sentence was ordered to indemnify the offended party, Sotto, in the sum of P40.000. Orbeta appealed to the
Supreme Court. Pending the appeal in the criminal case, Sotto filed a civil action in the Court of First Instance to
recover P40,000 as value of the property burned, based on the same acts which formed the basis of the criminal
prosecution, and secured an attachment of the properties of Orbeta. Was the attachment valid? HELD: The civil
liability of Orbeta to Sotto will be decided in the criminal proceedings. Civil proceedings instituted separately while
a criminal action is pending, when there has been no reservation of a separate civil action, are without force and
effect. An attachment issued in the course of Buch an improper proceeding must be vacated.

Quasi-delicts (also known as “tort” or “culpa aquiliana) – These are acts or omissions that cause damage to another,
there being fault or negligence but without any preexisting contractual relation between the parties. (Art. 2176) (See Equitable
Banking Corporation vs. Special Steel Products, Inc., G.R. No. 175350, June 3, 2012.) For a quasi-delict case to prosper, the
complainant must establish:
(a) damages to the complainant;
(b) negligence, by act or omission of the defendant or by some person for whose act the defendant must respond, was
guilty; and
(c) the connection of cause and effect between such negligence and damages.
With respect to the third element, the negligent act or omission must be the proximate cause of the injury. (Josefa vs.
Meralco, G.R. No. 182705, July 18,2014)
Kung maglakad ka ay para kang karetelang dumadaan sa lubak-lubak na kalsada, kaya lahat ng lalaki
napapalingon sa iyo. Si X nagbabatak (driving) ng motor niya, nabangga niya si Y. Yung parehong ugok ay
nakatingin sa bewang mong luma-lava walk. Sino may kasalanan (proximate cause) sa pagkakabundol ni Y?
Si Y ba na hindi nakatingin sa kalsada?
Si X ba na hindi nakatingin sa mga natawid?
O ikaw na kumekendeng?
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Ang proximate cause of the accident ay yung pagkakabundol ng motorbike kay Y na minamaneho ni X. Yung negligent
driving ni X ang proximate cause at hindi ang bewang mo. Hence, X is liable to pay damages under quasi-delict.
o
If a person, while cleaning his window, causes a flower pot to fall through his negligence thereby injuring someone
passing by, the former is liable for damages to the latter.
National Power Corporation vs. Heirs of Noble Casionan G.R. No. 165969, November 27,2008
Casionan was traversing the trail underneath the transmission lines of the National Power Corporation (NPC) when
he was electrocuted. The high tension wires were sagging around 8 to 10 feet in violation of the required distance of 18
to 20 feet. His heirs brought a claim for damages against NPC for his death. In its defense, NPC claimed that Casionan
was negligent because he was carrying a bamboo pole when he was electrocuted, and that he was not supposed to be
around the area working as pocket miner since the Department of Environment and Natural Resources had not issued
permit to operate at such place; hence, any award for damages should be mitigated by reason of the victim’s contributory
negligence.
NPC is liable for damages arising from negligence. The sagging high tensions wires were an accident waiting to happen.
If they were properly maintained by NPC, the bamboo pole which Casionan was carrying would not have touched the
wires. That the pocket miners in the area were unlicensed was not a justification for NPC to leave the transmission line’s
dangling. The pocket miners in the area, although they have ho permit to do so, are also human beings who have to eke
out a living in the only way they know how. The victim should not therefore be faulted for simply doing what was ordinary
routine to other workers in the area. The trail was only the viable way that was regularly used by the residents in the
community. In sum, the victim was not guilty of contributory negligence; hence, NPC is not entitled to a mitigation of its
liability for damages.
(may separate subject ang torts – we will discuss more about it sa BLD TORTS)
What are the provisions asked in the bar?
Take note that only Article 1157 and 1159 in relation to Article 19 ang mga tinanong sa bar exams.
-----------BAR QUESTIONS-------2018 BAR EXAMS
IX. Newlyweds Sam and Sienna had contracted with Sangria Hotel for their wedding reception. The couple was so unhappy with the
service, claiming, among other things, that there was an unreasonable delay in the service of dinner and that certain items promised
were unavailable. The hotel claimed that, while there was a delay in the service of the meals, the same was occasioned by the sudden
increase of guests to 450 from the guaranteed expected number of 350, as stated in the Banquet and Meeting Services Contract. In the
action for damages for breach of contract instituted by the couple, they claimed that the Banquet and Meeting Services Contract was a
contract of adhesion since they only provided the number of guests and chose the menu. On the other hand, the hotel’s defense was
that the proximate cause of the complainant’s injury was the unexpected increase in their guests, and this was what set the chain of
events that resulted in the alleged inconveniences.
Does the doctrine of proximate cause apply in this case?
No, the doctrine does not apply. In the case of Spouses Guanio v. Makati Shangri-la Hotel (G.R. Nso. 190601, September 7, 2011), the
doctrine of proximate cause, was made applicable only in actions for quasia delicts not in actions involving breach of contract. The
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doctrine is a device for imputing liability to a person where there is no relation between him and another party. Where, however, there is
a pre-existing contractual relation between the parties, it is the parties themselves who make the law between them.
Here, there is a contract; the terms and conditions of such contract will govern the rights and obligations between the contracting parties
in case of breach thereof, not the doctrine of proximate cause.
Was the Banquet and Meeting Services Contract a contact of adhesion? If yes, is the contract void?
Yes, it is a contract of adhesion, but the same is not void. A contract of adhesion is defined as one in which one of the parties imposes a
ready-made form of contract, which the other party may accept or reject, but which the latter cannot modify. Here, the contract is readymade by Shangrila, as the spouses only chose the menu and provided the number of guests but they cannot modify the terms thereof;
hence, a contract of adhesion. Although a contract of adhesion, it is not entirely against the law and is as binding as ordinary contracts,
the reason being that the party who adheres to the contract is free to reject it entirely, but the effect, as ruled in Orient Air v. CA G.R. No.
76931, May 29,1991), is that in case of ambiguity it is construed against the party who caused it to be drafted and could have avoided it
by the exercise of a little more care. – UPLC Answer
XII. Saachi opened a savings bank account with Shanghainese Bank. He made an initial deposit of PhP 100,000. Part of the bank opening
forms that he was required to sign when he opened the account was a Holdout Agreement which provided that should he incur any
liability or obligation to the bank, the bank shall have the right to immediately and automatically take over his savings account deposit.
After he opened his deposit account, the Shanghainese Bank discovered a scam wherein the fund in the account of another depositor in
the bank was withdrawn by an impostor. Shanghainese Bank suspected Saachi to be the impostor, and filed a criminal case of estafa
against him. While the case was still pending with the Prosecutor’s office, the bank took over Saachi’s savings deposit on the basis of
the Holdout Agreement.
(a) What kind of contract is created when a depositor opens a deposit account with a bank?
A Contract of simple loan is created when a depositor opens a deposit account with a bank. Fixed, savings and current deposits of money
in banks and similar institutions shall be governed by the provisions concerning simple loan (Article 1980, Civil Code). The creditor is the
depositor, while the debtor is the bank. – UPLC Answer
(b) In this case, did the bank have the right to take over Saachi’s bank deposit?
No, the bank did not have the right to take over Saachi’s bank deposit. In the case ot Metropolitan Bank & Trust Co. v. Rosales (G.R. No.
183204, January 13,2014), it was held that the “Hold Out” clause, which was similar to the Holdout Agreement in the instant case, can
be invoked only if there was a valid and existing obligation arising from any of the sources of obligation enumerated in Article 1157 of the
Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi- delict. The only possible source of obligation of Saachi to
Shanghainese Bank based on the given facts is delict. As the criminal case filed by the bank against Saachi was still pending and no
final judgment of conviction had been rendered, Saachi had no valid and existing obligation to the bank; thus, the bank had no right to
take over the deposits of Saachi. – UPLC Answer
XVIII. Shasha purchased an airline ticket from Sea Airlines (SAL) covering Manila-Bangkok-Hanoi-Manila. The ticket was exclusively
endorsable to Siam Airlines (SMA). The contract of air transportation was between Shasha and SAL, with the latter endorsing to SMA
the Hanoi-Manila segment of the journey. All her flights were confirmed by SAL before she left Manila. Shasha took the flight from Manila
to Bangkok on board SAL using the ticket. When she arrived in Bangkok, she went to the SAL ticket counter and confined her return trip
from Hanoi to Manila on board SMA Flight No. SA 888. On the date of her return trip, she checked in for SMA Flight No. SA 888, boarded
the plane, and before she could even settle in on her assigned seat, she was off-loaded and treated rudely by the crew. She lost her
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luggage and missed an important business meeting. She thereafter filed a complaint solely against SAL and argued that it was solidarily
liable with SMA for the damages she suffered since the latter was only an agent of the former.
(a) Should either, or both, SAL and SMA be held liable for damages that Shasha suffered?
As the principal in the contract of carriage, the petitioner (SAL) was held liable even when the breach of contract had occurred not on its
own flight, but on that of another airline. It also cited Lufthansa German Airlines vs. Court of Appeals (G.R. No. 83612, November 24,
1994), in which the Court held that the obligation of the ticket-issuing airline remained and did not cease regardless of the fact that another
airline had undertaken to carry the passengers to one of their destinations. – UPLC Answer
(Take note of the ruling. When your flight was endorsed to another airline, the liability under the contract of carriage continues. Applicable
ang principle let say nasira yung bus you are boarding, isinalin kayo sa ibang bus owed by different company. In this case, both bus
companies can be sued in alternative kasi the Philippine court has jurisdiction over the two bus companies. Unlike in cases involving
airlines, maaring yung local airlines lang idemanda because our court may not have jurisdiction over the foreign airline company.)
In this case, since the contract of air transportation is between Shasha and SAL, the latter as principal remains liable as the principal
despite the fact that the breach occurred in SMA. SMA cannot be held liable in this case, because the court has no jurisdiction over it. It
is imperative and in accordance with due process and fair play that SMA should have been impleaded as a party in the present
proceedings before this Court can make a final ruling on this matter. – UPLC Answer
ALTERNATIVE ANSWER
SAL and SMA may be held solidarity liable to Shasha. SAL is liable to Shasha for breach of the contract of carriage, because it failed to
bring Shasha to the latter’s destination as agreed upon in the contract. SAM, on the other hand, is liable to Shasha for tort under the
provisions of Article 2176, in relation to Article 2180 of the Civil Code. While SAM is an independent contractor, and not an agent of SAL,
both SAL and SAM are solidarity liable to Shasha, because a contractual obligation can be breached by tort and when the same act or
omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, article 2194 of the Civil Code can well
apply. In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract. Stated differently, when
an act which constitutes a breach of contract would have itself constituted the source of a quasi-delictual liability had no contract existed
between the parties, the contract can be said to have been breached by tort, thereby allowing the rules on tort to apply (LRTA v. Navidad,
G.R. No. 145804, February 6, 2003) – UPLC Answer
(A board XYZ bus from Manila to Baguio. Pag dating sa Bulacan, pinatayo siya at naka-reserve na
pala yung seat niya to another passenger. Well, nakarating naman siya sa Baguio after three hours na nakatayo. May breach ba sa
contract of carriage? Yes. Dahil dapat naka-upo siya. Pero pinatayo siya na conductor di ba? Ano pang liablity ng bus company? Well,
the bus company is liable also under Tort. Yan yung ibig sabihin ng ruling “a liability for tort may arise even under a contract, where tort
is that which breaches the contract”.)
2013 BAR EXAMS
VI.1. Gary is a tobacco trader and also a lending investor. He sold tobacco leaves to Homer for delivery within a month, although the
period for delivery was not guaranteed. Despite Gary’s efforts to deliver on time, transportation problems and government red tape
hindered his efforts and he could only deliver after 30 days. Homer refused to accept the late delivery and to pay on the ground that the
agreed term had not been complied with. As lending investor, Gary granted a P1,000,000.00 loan to Isaac to be paid within two years
from execution of the contract. As security for the loan, Isaac promised to deliver to Gary his Toyota Innova within seven days, but Isaac
failed to do so. Gary was thus compeled to demand payment for the loan before the end of the agreed two-year term.
Was Homer justified in refusing to accept the tobacco leaves?
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
No. Under Article 1159 of the Civil Code, obligations arising from contract have the force of the law between the contracting
parties and should be complied in good faith. Here, there was an agreement between the Gary and Homer that the delivery of tobacco
leaves within a month is not guarateed. Gary anticipated that some factors such as transportation problems and government redtape
may delay the delivery. Homer agreed and consented with the terms and conditions of the contract. Hence, he is bound and must comply
in good faith.
1998 BAR EXAMS
X. In a 20-year lease contract over a building, the lessee is expressly granted a right of first refusal should the lessor decide
to sell both the land and building. However, the lessor sold the property to a third person who knew about the lease in fact agreed to
respect it. Consequently, the lessee brings an action against both the lessor-seller and the buyer (a) to rescind the sale and (b) to compel
specific performance of his right of first refusal in the sense that the lessor should ordered to execute a deed of absolute sale in favor of
the lessee at the same price. The defendants contend that the plaintiff can neither seek rescission of the sale nor compel specific
performance of a “mere” right of first refusal. Decide the case.
The action filed by the lessee, for both rescission of the offending sale and specific performance of the right of first refusal which was
violated, should prosper. The ruling fn Equatorial Realty Development, Inc. Vs. Mayfair Theater, Inc. (264 SCRA 483). A case with similar
facts, sustains both rights of action because the buyer in the subsequent sale knew the existence of right of first refusal, hence in bad
faith.
(This is an alternative answer under UPLC)
The action to rescind the sale shall not prosper. The principle of right of first refusal is not founded on contracts but on a quasidelictual relationship covered by the principles of human relations and unjust enrichment. Under Art 19 of the Civil Code, every person
in the exercise of his rights must give everyone his due. Here, the lessor did not give due regard to the right of the lessee when it sold
the building which the latter is renting notwithstanding the provision of the “right of refusal” in the contract. Hence, the lessor is liable for
damages under quasi-delict. – UPLC Answer
Note: The right of right refusal is not contractual kahit nasa sitpulation ng contract. The violation of that stipulation is a tortious act under
qausi-delict. Hence, the proper action is not recission of the sale but an action for damages.
Lecture
Ok makinig this is important. Napansin ninyo sa bar question above that the right of first refusal ay one of the stipulations of
the contract of lease. It means that the lessor has a duty to FIRST sell the property to the lessee, and if the latter REFUSED to buy it,
then saka pa lang pwedeng ibenta ni lessor sa third party ang property.
If the lessor sold it to the third party without the knowledge of the lessee, the proper action is not rescission of the sale but an
action for damages under quasi-delict. Bakit ganoon? Di ba ang source of obligation ay ang contract? Yes, but you are wrong hahahaha.
Kasi the act of violating the lessee’s right of first refusal is a tortious act. It means there was a right under the LAW that was abused which
is Article 19 of the Civil Code. So kahit na ang violation ay contractual, the act could be a tortious act. So there, ang obligation to indemnify
the lessee is under quasi-delict, not contractual.
It seems that there is a hierarchy of sources of obligation. If there was a contractual violation, check mo muna if there is a
special law na na-violate din – if there was, then the spource of obligation is the law. Example – the contract to pay the worker of below
minimum wage. Although may contract of employment – but the source of obligation shall be the Labor Code and its issuances (special
law). If none, check the general law. Article 19 is a general law. The employer in the above example is abusing his right – so violation din
yun ng Art 19. Hence, the soure of violation could be quasi-delict. If hindi pasok sa law and quasi-delict – saka pa lamang nagiging
contract ang source of obligation.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Napansin ninyo that if the stipulation to pay the worker below minimum wage - that stipulation is voided. Yun lang ang void
not the whole contract. So if that was voided, the source of obligation is the law.
1997 BAR EXAMS
XIV. In two separate documents signed by him, Juan Valentino “obligated” himself each to Maria and to Perla, thus –
‘To Maria, my true love, I obligate myself to give you my one and only horse when I feel like it.’
-andTo Perla, my true sweetheart, I obligate myself to pay you the P500.00, I owe you when I feel like it.”
Months passed but Juan never bothered to make good fris promises. Maria and Perla came to consult you on whether or not
they could recover on the basis of the foregoing settings.
I would advise Maria not to bother running after Juan for the latter to make good his promise. This ts because a promise is
not an actionable wrong that allows a party to recover especially when she has not suffered damages resulting from such
promise. A promise does not create an obligation on the part of Juan because it is not something which arises from a contract,
law, quasi-contracts or quasi-delicts (Art. 1157)]. Under Art. 1182, Juan’s promise to Maria is void because a conditional
obligation depends upon the sole will of the obligor.
As regards Perla, the document is an express acknowledgment of a debt, and the promise to pay what he owes her when he
feels like it is equivalent to a promise to pay when his means permits him to do so. And is deemed to be one with an indefinite
period under Art. 1180. Hence the amount is recoverable after Perla asks the court to set the period as provided by Art. 1197,
par. 2. – UPLC ANSWER
1991 BAR EXAMS
IX. Roland, a basketball star, was under contract for one year to play-for-play exclusively for Lady Love, Inc. However, even before the
basketball season could open, he was offered a more attractive pay plus fringes benefits by Sweet Taste, Inc. Roland accepted the offer
and transferred to Sweet Taste. Lady Love sues Roland and Sweet Taste for breach of contract. Defendants claim that the restriction to
play for Lady Love alone is void, hence, unenforceable, as it constitutes an undue interference with the right of Roland to enter into
contracts and the impairment of his freedom to play and enjoy basketball.
Can Roland be bound by the contract he entered into with Lady Love or can he disregard the same? Is he liable at all? How about Sweet
Taste? Is it liable to Lady Love?
Yes. Under Article 1159 of the Civil Code, obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. Here, Roland was under contract for one year to play exclusively for Lady Love, Inc.,
and while that contract was still in force, he entered into another contract with Sweet Taste and transferred. Hence, Roland is liable under
the contract as far as Lady Love is concerned under Article 1170 which provides liablity to pay damages for those who contravene the
tenor of the contract.
For the second question, and assuming that Sweet Taste is aware of the existing contract between Roland and Lady Love,
they can be held liable under quasi-delict under Article 1314 which provides that any third person who induces another to violate his
contract shall be liable for damages to the other contracting party.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
NATURE AND EFFECTS OF OBLIGATION
(Article 1163 to 1178)
Art 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father
of a family, unless the law or the stipulation of the parties requires another standard of care.
To give or to deliver – iisa yun. I bought one kilo of rice. Saan mo ibubuhos, sa palad ko? Eh di tumapon. Pabili ng Coke –
pakilagay sa plastic na may straw. Dapat yung bagong plastic – hindi yung pinaglagayan ng tilapia or straw na gamit na..
Pagbili ng isang kilong bigas. Pwede na yun sa isang plastic. Eh dalawang kilo? Dapat i-double bag mo na. – yan yung
tinatawag na diligence of a good father. Kung ako bibili at ipapadala ko sa anak kong 9 years old ang isang kilong bigas – ipapa-double
bag ko kahit isang kilo kasi bata yung bibili. Ilalagay ko pa sa supot at itatali ko pa para kahit bumagsak – hindi tatapon.
Pagbili ng 10 kilong bigas. Aba ang bumibili 9 years old na bata tapos payat pa. Hindi ko ibibigay. Hoy! Tawagin mo Kuya
mong batugan....siya ang kumuha ng bigas. – yan yung diligence of a good father on the part of the seller.
In all instances above if the seller did not observe proper diligence of good father of a family, at natapon ang bigas – he is
liable to replace it. Pero if naka-double bag na at natapon pa rin – hindi na siya liable to replace the rice becaause he has already observe
the dikigence as required by the circumstances.
xxxx unless the law or the stipulation of the parties requires another standard of care.
X sends a box of goods to Y via Lbc express. Inter-island ang delivery from Manila to Cebu tapos tatawid pa ng isla - the point
of destination. So mag-eeroplano from Manila to Cebu tapos isasakay ng barko. Under the law on carriage, LBC is required to observe
extra-ordinary diligence in transporting good kung sa barko ilalagay ang cargo. Kaya LBC will cover the box with plastic sheath na
makapal. Para kahit maampyasan ng alon o umulan – hindi mababasa ang box ni X. Tapos, may-insurance din yun na in case masira o
mawala, the owner of the cargo (X) can be indemnified. That is part of the extra-ordinary diligence by law.
X sends a cellphone to Y via Lbc Express. Di ba may matigas na kahon n yung cellphone? Y told X na ilagay pa sa isang box
yung cellphone para naka-double box. So the agreement between x and Y was to double-box the phone – that is the required diligence
as stipulated by the parties.
Nang dumating si X sa LBC, the staff required him to buy a plastic lunch box to place therein the cellphone – that is the
required diligence by law (extra-ordinary diligence).
So in the end, the cellphone in its own box is placed inside a lunch box and inside another box na provided din ng LBC.
If X did not double-box the phone and eventually it got damage, he shall be held liable. The source of obligation is the contract.
If LBC had not required X to place the cellphone in a lunch box and it got damage in the course of shipment, LBC shall be held
liable for damages. The source of obligation is the law.
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
The obligation to deliver a thing would be illusory if the debtor were not also obliged to preserve it.
Preserving the thing, the law requires the debtor to exercise the diligence of a good father of a family. This is the legal standard
or model of diligence, and its meaning is more clearly expressed in article 1173.
Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the
provisions of Articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good
father of a family shall be required.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
LBC as the person who will deliver the cellphone is an expert in the field of shipping items all over the Philippines. So, mataas ang
standard of diligence ang required sa kanila. The law presumes na alam ng LBC ang mga perils in delivering cargo inter-islands kaya
they cannot faulted the shipper in case the cargo got destroyed. Sila na mismo ang may obligation according to their circumstances on
how to wrap the boxes, when to ship and how to ship – by land, by air, door to door or to personally pick up the items sa mga branches
nila.
Let say X bought a second hand car from Y to be delivered in a week. If the car got damaged, Y shall not be held liable if he
exercised due diligence of a good father in preserving the car. Alam ni Y na babagyo at hinayaan niya yung car s labas ng bahay –
nabagsakan ng bubong. He should make necessary repair.
If let say nilagay na niya sa garage, but the wind was really so strong at nilipad ang bubong ng garage at na-damaged ang car. He
cannot be held liable. The cause is a fortuitous event.
In the first case, although fortuitous event ang bagyo but the circumstances was humanized – it means naiwasan sana ang damage
had Y parked the car in the garage.
So according to Article 1173, second paragraph, the diligence of a good father of a family ang pinaka-mababang requirement of
diligence. May mas bababa pa ba? Wala na. Ordinary diligence is the same as diligence of a good father.
Let say umorder ka sa aking ng BLD Oblicon – loose paper lang ito to keep the cost low. Pag ako nag pa-ring bind…tataas ang
shipping fee. So nilalagay ko sa isang envelop para hindi magusot at sa plastic pouch para hindi mabasa. But if you want it ring bind and
to be wrapped in a box – pwede rin but you have to pay an extra-cost.
Obligation to preserve the thing to be delivered has its sanction in the liability for damages imposed upon the debtor who fails to
exercise the diligence of a good father of a family in preserving the thing. But if the failure of the debtor to preserve the thing is due to no
fault or negligence of his, but to fortuitous events or force majeure, he is exempted from responsibility.
BISHOP OF JARO vs. DE LA PENA, 26 Phil. 144: Plaintiff is the trustee of a charitable bequest made for the construction of a
leper hospital, and A. de la Pena was the authorized representative to receive the legacy. In 1898 De la Pena collected P6,641.50
for such charitable purposes. In the same year, he deposited in his personal account P19,000 in a bank at Ilo-ilo. Shortly thereafter
and during the revolution, he was arrested as a political prisoner by the U.S. Army and his deposit in the Bank was confiscated as
funds collected for revolutionary purposes. It was found that the trust fund of P6,641.50 was a part of the fund deposited which were
confiscated.
Is he liable for the loss of money collected for charitable purposes which he deposited in the bank with his personal funds and which
confiscated as funds for revolutionary purposes?
He is not liable, because he was not negligent by depositing the trust fund in the bank and mixing it with his personal funds, nor did
he incur additional responsibility by such deposit. Although he was obliged to take care of it with the diligence of a good father of a
family, yet he should not be responsible for any unforeseen event, such as the confiscation of such funds during the war. It is the
same as if the money had been forcibly taken from his pocket or from his house by the military forces, in which case it is clear the
he would have been exempted from responsibility.
OBEJERA, ET AL vs IGA SY, 76 Phil. 580: On Dec. 13,1941. Plaintiffs, who are husband and wife, and defendant sought refuge
in the house of Villena, a barrio lieutenant of Dalig, Batangas, Batangas, on account of the Japanese invasion. When the Japanese
were nearing their place, plaintiffs and defendant hid their things and valuables m a dugout belonging to Villena after consultation
with the latter. In February 1942, when both plaintiffs and defendant went to the dugout to take out their valuables, they found to
their surprise that their money and valuables werewere missing. Thereafter the plaintiffs acknowledged liability for the loss suffered
by the defendant and executed a document, Exhibit Y whereby they agreed to transfer their land to the defendant in case they fail
to pay for the loss. Plaintiffs filed this action to annul Exhibit Y.
ISSUE: Is Exhibit Y valid?
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
HELD: There was no deposit proven. Even if the defendant’s theory of deposit were sustained, any obligation arising therefrom was
extinguished upon the loss of the things, without the fault of the depositee and under circumstances which at the time were
inevitable. The evidence shows that the plaintiffs were not in any way responsible for the loss of defendant’s money and valuables.
Hence, Exhibit Y is null and void for lack of consideration. It was found out also that Exhibit Y was executed through force and
intimidation.
Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall
acquire no real right over it until the same has been delivered to him.
Let us have a very simple example. I sold you a land with 10 mango trees for P100,000 to be paid today, and to be delivered
on the third day (to deliver – meaning pwede ka ng pumasok and to occupy the land).
Who owns the land and the trees today? Ako o ikaw? Ako. Eh bukas? Ako. Sa makalawa? Ako pa rin ang may ari ng lupa at
puno from today.
Eh yung mga fruits today, bukas at sa maka-lawa na i-haharvest ko? Akin pa rinyun.
Bakit ako pa rin ang may-ari, eh binayaran mo na? Personal rights lang ang meron ka ng magkaroon tayo ng agreement.
Hanggat hindi dumadating yung period to deliver the land, akin pa rin yun.
Your ownership to the fruits and land commenced only upon delivery of the land.
On the third day, I am obligated to deliver to you the land. If I did not, the proper action is not accion revindicacion (an action
to determine who owns between us is the owner) but an action for specific performance or to deliver the thing sold.
So ang prayer mo sa complaint are specific performance to deliver the land, accounting of the fruits and damages. Lahat ng
prutas ng manga from the third day up to the finality of judgment shall be accounted for you plus damages.
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Creditor or obligee, in an obligation to deliver a determinate thing, is entitled to the fruits from the time the obligation to deliver
arises.
In obligations arising from law, quasi-delicts, quasi-contracts, and crimes, the specific provisions of law applicable to the
obligation determine when the delivery should be made.
In obligations which are subject to a suspensive condition, the obligation to deliver arises from the moment the condition
happens.
o I promise to give you my car if you pass the 2020 Bar Exams. To pass the bar is the suspensive condition. If you
passed the bar, then the obligation to deliver the car arises.
When there is a suspensive term or period for the performance of the obligation, the obligation to deliver arises upon the
expiration of the term or period.
o I promise to give you my car on your 25th Birthday. Your 25th birthday is the period.
When there is neither term nor condition, the obligation to deliver arises from the perfection of the contract or the constitution
or creation of the obligation.
o I promise to give you my car. There is no term or condition. The obligation to deliver to you my car is upon your
demand.
The time the obligation to deliver a determinate thing arises, the creditor has only a personal right to the thing itself and to the
fruits thereof. He can only demand that the debtor deliver such thing and its fruits.
o The ownership of things is transferred not by mere agreements but delivery. The delivery or tradition of a thing
constitutes a necessary and indispensable requisite for the purpose of acquiring the ownership of the same by
virtue of a contracts.
o The creditor, therefore, does not acquire any real right over the thing except from the time it is delivered to him.
CRUZAD0 vs. BUSTOS & ESCALER, 34 Phil. 17: This is an action to recover the possession and ownership over a piece
of land from the defendants. Plaintiffs claim of ownership was based on a deed of sale executed by Bustos in favor of plaintiffs
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
father of the land in question with P2,200.00 as considerstion on Sept. 7, 1875, Exhibit A. Escaler was included as defendant
because Bustos sold the land in question to him in Sept., 1891. Plaintiff and his predecessor in interest were never in
possession of the land in question. The land in question remained in the possession of Bustos from the date of sale until long
after, when Bustos sold it to Escaler who took possession. It was found out that Exhibit A was simulated and for the sole
purpose of making it appear that the plaintiffs father was a property owner, in order to enable the latter to hold office as
procurator, for this was an indispensable requisite for his appointment. Plaintiffs father held such office for many years due to
the liberality of the pretended vendor.
ISSUE: Will the plaintiff’s action for recovery of possession and ownership prosper?
HELD: No. The deed of sale, Exhibit A, though it had the appearance of truth, aside from being simulated was not
consummated. Although it is not necessary that the thing sold or its price should have been delivered in order that the sale be
deemed perfected, yet there is no transmission of ownership until the land sold has been delivered, and the moment such
delivery is made the sale is regarded as consummated.
Under Article 1095 of the old Civil Code (art. 1164, New Civil Code), the plaintiff does not acquire a property right in the
land purchased until it has been delivered to him or he has taken possession of it, and because neither the plaintiff nor his
predecessor in interest ever took possession of the land in question, neither of them acquired any property right therein and
consequentfy could not bring an action for the recovery of the land, which arises out of a real right over such land in question.
---------xxx--------Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170,
may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he
shall be responsible for fortuitous event until he has effected the delivery.
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
A thing is determinate when it is particularly designated or physically segregated from all others of the same class. (Art. 1460).
o 2019 Toyota Altis with engine no. 123456, body no. 546611, and plate no. DRA 840; my only wristwatch; the house
located at 222 Faura Street, Manila; my dog named Douglas.
A thing is indeterminate or generic when it is not particularly designated or physically segregated from all others of the same
class, i.e., one of a class. Examples: A horse, a car, P10,000.00.
As a rule, the loss of a determinate thing through a fortuitous event extinguishes the obligation. (Art. 1262)
X sold his 2019 Toyota Altis with Plate No. DRA 637 to Y, and as he was going down from Baguio to deliver the
car to Manila nahulog ang kotse sa bangin dahil biglang lumindol at swerteng jumijingle si X sa labas. The obligation to deliver
the car is extinguished.
X has 10 Ferrari sportscars. Y bought any of them to be delivered to Manila. Nahulog ang kotse dahil biglang
lumindol at swerteng jumijingle si X sa labas. The obligation to deliver the car is not extinguished. X has to get any of the
sportscar to deliver to Y.
X extended a loan of P100,000 to Y. Y got robbed. Y still have to pay X. Money is generic.
Y borrowed P100,000 from X in multiples of P1,000 bills, and they write down all the serial number of money. The
money is for exhibit purposes only so Y has to return the same money to X after the exhibit. Y got robbed. The obligation to
return the earmarked money has been extinguished. This time the money is a determinate thing.
XXX If the obligor delaysxxxx
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Y borrowed P100,000 from X in multiples of P1,000 bills, and they write down all the serial number of money. The
money is for exhibit purposes only so Y has to return the same money to X after the exhibit tonight at 8PM. Y got robbed
tomorrow. The obligation to return the earmarked money has not been extinguished although the earmarked moany is a
determinate thing.
Why? Dahil may delay na si Y to return the money.
xxx has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be
responsible for fortuitous event until he has effected the delivery.
A and B co-owned a car. A lent the car to X. X must deliver the car to either A or B on due date.
A (owner) leased out a house and lot to B (lessor). B subleased it to X. X must return the house to A or B on due date.
Obligations of one obliged to give a determinate thing
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To take good care of the thing with the diligence of a good father of a family unless the law or agreement of the parties requires
another standard of care. (Art. 1163)
o Diligence of a good father of a family means the ordinary care that an average person exercises in taking care of
his property.
To deliver the thing. (Art. 1163) This involves placing the thing in the possession or control of the creditor either actually or
constructively.
To deliver the fruits of the thing. (Art. 1164)
What are the kinds of fruits?
o Natural fruits – They are the spontaneous products of the soil and the young and other products of animals. (Art.
442) Thus, the trees that grow naturally on the soil without the intervention of man and the colt delivered by a mare
are natural fruits. For the young and other products of animals, they are natural fruits even with the intervention of
human labor.
o Industrial fruits – They refer to those produced by land of any kind through cultivation or labor. (Art. 442) Examples
are rice, corn and other crops produced through the intervention of human labor.
o Civil fruits – They refer to fruits which are the result of a juridical relation such as the rent of a building, price of
lease of land and other property and the amount of perpetual or life annuities. (Art. 442)
o The creditor has the right to the fruits of a thing from the time the obligation to deliver it arises. However, he shall
acquire no real right over it until the thing has been delivered to him. (Art. 1164)
To deliver its accessions and accessories even if they have not been mentioned. (Art. 1166)
o Accessions – They include everything that is produced by a thing or is incorporated or attached thereto, either
naturally or artificially, (Art. 440) such as alluvium, the soil gradually deposited by the current of a river on a river
bank, or whatever is built, planted or sown on a parcel of land.
o Accessories – Those joined to or included with the principal thing for the latter’s better use, perfection or enjoyment
(such as the keys to a car or a house, or the bracelet of a wristwatch).
Remedies of the Creditor

If the debtor fails to perform his obligation to deliver a determinate thing, the creditor has the remedy to compel the debtor
to make the delivery (1165) and to demand damages. (Art. 1170) – that is specific performance and prayer for damages.
o X is obliged to give Y a specific car. On due date, Y demanded for its delivery but X failed to deliver. In this case,
Y can compel X to deliver the car because there is no other person in possession or control of it. Y can also demand
payment of damages from him.

If the debtor fails to perform his obligation to deliver a generic thing, the creditor has the remedy to ask that the obligation be
complied with at the expense of the debtor. (Art. 1165) and to demand damages.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
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o

X is obliged to deliver 10 sacks of rice to Y. If X does not perform his obligation on due date upon Y’s demand, he
can obtain 10 sacks of rice from other sources at the expense of X. He can do so because the thing is generic and
thus can be replaced with the same kind, he can also ask for damages from X.
If the debtor fails to perform his obligation in obligation to do
o
The debtor fails to perform the obligation or performs it but contravenes the tenor thereof


Creditor may have the obligation executed at the expense of the debtor. (Art. 1167)
He may also demand damages from the debtor. {Art. 1170)
Nagpagawa ng lamesa si A kay X. Tatatlo paa. A must demand for a back-job. If X refused or delayed, A
may hire another to do the job right and demand reimbursement of the cost plus damages.
Pwede bang pilitin ni A na gawin ni X ang lamesa. Hindi. That’s involuntary servitude.
o
If the debtor performs the obligation but does it poorly


Creditor may have the same be undone at debtor’s expense. (Art. 1167)
Creditor may also demand damages from the debtor. (Art. 1170)
Yung barnish ng lamesa ay isang pahid lang at hindi pa makinis. A must demand first for a back-job. If X
delayed or refused, A may hire another to have the job done right at the expense of X plus damages.
Bakit kailangang mag-demand muna ng back-job si A? Para mag karoon ng delay. Let say sinabi A dapat
gawin mo na yung lamesa at gagamitin yan sa makalawa sa kasal. Sabi ni X– sige po bukas po gagawin ko yan.
Hindi sumipot si X. There is delay.

If the debtor does what has been forbidden him
o The creditor may demand that what has been done be undone.
o He may also demand damages from the debtor. (Art. 1168)
X has a right of way over the lot of A. A cannot put up any construction on the right of way. X may have it remove
at the expense of A plus damages.
So uuitin ko. Dapat laging magdemand muna si X to remove the construction para magkaroon ng delay. If walng demand –
walang delay. That the general rule.
--------xxx-------So far the na-discussed na natin up to Article 1170. But let still have some more of them.
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170,
may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may that the obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver same thing to two or more persons who do not have the same interest, he
shall be responsible for fortuitous event until he has effected the delivery.
Remedies of Creditor—When a debtor fails to comply with his obligation, the creditor may avail himself of the followmg remedies:
(1) an action for specific performance, to obtain compliance of the prestation;
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OBLIGATIONS AND CONTRACTS
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(2) an action, in some cases, to rescind or resolve the obligation, and
(3) an action for damages, exclusively or in addition to either of the first actions.
--------xxx-------Art 1166. The obligation to give a determinate thing ineludes that of delivering all its accessions and accessories, even though
they may not have been mentioned.
Nasaan ang charger ng phone? Ay nakaw yan.... dapat kasama ang charger ng phone lalo na kung ang nagbebenta ay
stranger. Let say naglalakad at may nag-alok ng cell phone. Dapat kasama ang charger.
Sa house and lot, dapat kasama ang mga ilaw. Exception kung chandellier. Pero dapat palitan ng ilaw kahit bombilya para
may ilaw naman ang bahay sa gabi at maging habitable.
--------xxx------Art, 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declares; or
(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is
to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
So there sa 1st paragraph dapat may demand muna para magkaroon ng delay.
The demand may be judicial or extra-judicial. Dapat in written form for convenience – para ba may evidence ka. Pwede ring
oral – kaso baka itanggi na nag-usap kayo. Pwede bang judicial demand – wag naman! – masyado ng OA yun – eh lamesang tatlo paa
lang naman ang ipapa-ayos mo.
Mageklamo ka muna sa Barangay Lupon. Then, get a certificate to file action saka ka pa lang pwedeng mag file ng action.
Ang damages start from the extra-judicial demand.
What is delay?
X is obligated to deliver the car today to A. Kinabukasan delay na ba si X? Yes, pero delayed on time of delivery lang. Liable
na b for damages si X? No. Kasi wala pang demand. Yan ang tinatawag na ordinary delay.
A demanded the delivery upon receipt of this notice to deliver the car. In three days, X failed to deliver the car. Delayed na ba
X? Yes and he liable for damages from the receipt of the notice. Yan ang tinatawag an legal delay or default due to breach of contract.
Let say hindi na nagpadala ng notice of demand si A. Instead, he files an action of specific performance. Yan...judicial demand
na yan. Damages starts to count from the time of the filing of the action.

Mora solvendi – Delay on the part of the debtor.
o Ex re- Delay in real obligations (obligations to give).
o Ex persona – Delay in personal obligation (obligations to do).
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
Mora accipiendi - Delay on the part of the creditor.
o This exists when the creditor refuses, to accept the thing due without justifiable reason.
X was hired to paint the picture of A to be performed anytime this week. Ayaw pa ni A at magpapatangos pa ng ilong next
week. X may rescind the contract dahil may iba pa siyang ipipinta na kliyente na gaya ni B na kahit pango ok lang.
A sold the car for P300,000 to B to be paid today. B tendered payment but A was nowhere to be found. A is in delay.

Compensatio morae – Delay in reciprocal obligations, i.e., both parties are in default. Here, it is as if there is no delay.
Anu-ano yung mga exception where we demand is not necessary.
(1) When the obligation....
So you have to read the contract.


X promised to pay A the sum of P2,000.00 on or before December 30 without the need of any demand. Therefore, if X fails to
pay on December 30 he is automatically in default. In this case, the parties stipulate to dispense with the demand.
Hence, no demand is necessary such as when a lease contract provides that “The rental shall be paid by the lessee within
the first five days of the month in advance without need of demand.
SIULIONG AND CO., us.YLAGAN, 43 Phil. 393: The defendant entered into a contract with plaintiff, by which defendant
promised to deliver 1,000 piculs of muscovado sugar of the class and at the price stipulated in the contract. Such delivery was
to be made during the months of February and March, 1920. The plaintiff made a demand upon the defendant for the delivery
of the sugar according to the contract, but the defendant failed to deliver the same: HELD: The contract clearly fixes the time
for the delivery of the sugar, and, therefore, no further demand or notice by the plaintiff on the defendant was necessary. The
plaintiff, nevertheless, made such demand on defendant. The plaintiff suffered damages represented by the difference
between the contract price and the amount for which the sugar would have been sold in the market during the months of
February and March, 1920.
....by law
Taxes are to be paid on time. Capital gains are to be paid in 30 days. Doc stamps tax in 7 days. Hay naku! Lahat ng taxes
may time to pay if not magkakaroon ng charges and penalties. At hindi na kailangan ng demand from the BIR at Customs.

Thus, where the law provides for the payment of penalty if the obligation is not performed on due date (such as in the case of
taxes), then demand shall not be necessary.
(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is
to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or xxxx
Time is the essence. Ikakasal ka in a week. Tapos ng puntahan mo si Mananahi yung gown mo ay tela pa rin...yan may delay
na yan...Asan ang litson! Ngayon na ang reception. Kinakatay pa lang ang baboy. Yan...may delay na yan.

Thus, where a rent-a-car company is obliged to provide for the bridal car during a wedding at a particular date, time and place,
the said company is liable if it failed to perform the said obligation notwithstanding the absence of demand since time was a
controlling motive for the establishment of the contract.
DE LA ROSA vs. BANK OF THE P.I., 51 Phil 926: The defendant bank started a contest of designs and plans for the
construction of a building. Announcing that the prizes would be awarded not later than November 30, 1921. The plaintiff took
part in the contest, performing work and incurring expenses for that purpose. The bank did not name judges and failed to
award the prizes on the date specified. The question is whether the bank was in default in not awarding the prizes on November
30, 1921. The plaintiff contends that the said date was the principal inducement in the creation of the obligation because the
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current cost of concrete buildings at that time was fixed. HELD: The fixing of said price cannot be considered as the principal
inducement of the contract for the contestants; neither was it for the bank, which could not be certain that said price would
continue to be the current price when it desired to construct the building designed. There is no sufficient reason for considering
that the date set for the award of the prizes was principal inducement to the creation of the obligation. The bank cannot be
held in default through the mere lapse of time. There must be a demand, judicial or extra-judicial.
(3) When demand would be useless, as when the obligor has rendered it beyond his power to performxxxx
Where performance has become impossible, demand will be useless and will not be necessary to constitute the debtor in
delay, such as:
(a) when the impossibility is caused by some act or fault of the debtor, such as when he is absent or is in hiding, or has already
disposed of the thing which is to be delivered, and
(b) when the impossibility is caused by fortuitous event, but the debtor has bound himself to be liable in cases of such events.
X learned that his car was rammed while it was driven by A. In this case, useless na magdemand pa si X for the
return of the car – eh durog na nga.
(4) In reciprocal obligations,xxxx
The parties in a bilateral contract can regulate the order in which they shall comply with their reciprocal prestations. Thus, in
sales, it frequently happens that the thing is delivered and then the buyer is given a term to pay the price.
Bibili ka ng isang kilong kamatis...bayad ka muna or pag abot ni tindera ang kamatis dapat i-abot mo rin yung bayad.
Bibili ka ng lote sa subdivision. Wala kang pang cash. Deposit ka muna ng P5,000 to reserve the lot na gusto mo. After 30
days you pay for the down payment and start with the monthy amortization. Then, sa contract nakalagay na pwede ka ng magpagawa
ng bahay upon payment of the required downpayment (this is equivalent to delivery of the specific lot).
MARTINEZ us. CAVIVES, 25 Phil. 581: The plaintiff seeks to recover from Matias Cavives and Severino Cavives the amounts
of some promissory notes, one of which was signed jointly by them with their brother Carlos Cavives, now deceased. It appears that
some time after the execution of these original notes, Carlos Cavives entered into a contract with plaintiff, in which all the indebtedness
of the three brothers were consolidated, including interests due. Plaintiff agreed to accept this in substitution of the original notes, and
Carlos in turn agreed to secure the signatures of his brothers to the new contract. These signatures were never obtained. Now, the
plaintiff brings his action based on the original notes; defendants claim that sole responsibility for the obligations had been assumed by
Carlos in the new contract. HELD: Until Carlos obtained the signatures of his brothers to the new instrument, it cannot be said that the
plaintiff was in any way bound to acknowledge it as anything more than an executory contract containing a condition precedent which
was to be performed by Carlos. Mere silence on his part could signify nothing until the signatures of his brothers had been secured.
CAUSING us. BENCER, 37 Phil. 417: The plaintiff, being one of the co-owners of a piece of land, made a contract for the
sale of the property to defendant, binding herself to convey the interests of her co-owners or procure them to convey such interests. She
subsequently acquired the interests of the other co-owners. Instead of conveying the property, she now brings an action to rescind on
the ground that defendant has failed to pay the purchase price. HELD: There is no reason why the plaintiff should be permitted to rescind
this contract. It is evidently a case where the contract involved mutual obligations, and if either party can be said to have been in default
it was the plaintiff, Rufina Causing, rather than the defendant, Bencer. The contract contemplated a conveyance of the entire interest in
the land; and the plaintiff clearly obligated herself to that extent. She was therefore not in a position to compel the defendant to pay until
she could offer to him a deed sufficient to pass the whole legal estate; and for the same reason, she cannot now be permitted to rescind
the contract on the ground that the defendant has heretofore failed to pay the purchase price.
Effects of delay

On the part of the debtor
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
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o
o

The debtor shall be liable for the payment of damages. (Art. 1170)
If the obligation consists in the delivery of a. determinate thing, he shall be responsible for any fortuitous event until
he has effected the delivery. (Art 1165)
On the part of the creditor
o He shall bear the risk of loss and shoulder the expenses for the preservation of the thing.
o The debtor may resort to the consignation of the thing due. (Art. 1258)
X nanghiram ng kotse kay A at sinosoli niya ito on due date. Wala si X at sarado gate ng bahay. X decide to go
back home. It happens that he lives in a condominium where parking space is for rent. A must pay for the rental of
the car space.
If the car got damage or got lost, X cannot be held liable even if the contract of lease he assumes such risks.
--------xxx--------Art 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who m any
manner contravene the tenor thereof, are liable for damages.
Grounds for liability to pay damages
1. Fraud
2. Negligence
3. Delay
4. Contravention of the tenor of the obligation.
Damages Concept, distinguished from injury
Damages refer to the harm done and the sum of money that may be recovered in reparation for the harm done. (Cinco vs.
Canonoy, 50 SCRA 377}
Injury refers to the wrongful, unlawful or tortuous act which causes loss or harm to another. It is the legal wrong to be redressed.
(See Zulueta vs. Pan American World Airways, Inc., L-28589, January 8,1973)
Kinds of damages
a. Actual or compensator damages – These refer to the pecuniaiy loss, (such as loss in business or profession) that may be
recovered. It includes the value of the loss suffered and profits not realized. (Art. 2199)
b. Moral damages – They include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury. (Art. 2217)
c. Nominal damages – They refer to damages to vindicate a right. (Art. 2221)
d. Temperate or moderate damages – They are more than nominal but less than compensatory damages, but may be
recovered if the court finds that some pecuniaiy loss has been suffered but its amount cannot, from the nature of the case, be
proved with certainty. (Art. 2224)
e. Liquidated damages - Those agreed upon by the parties to a contract, to be paid in case of breach. (Art. 2226)
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f. Exemplary or corrective damages —These are imposed by way of example or correction for public good, in addition to the
moral, temperate, liquidated or compensatory damages. (Art. 2229)
GIVE EXAMPLE FOR EACH
Proof of pecuniary loss
Actual damages – Proof is required unless provided by law or stipulation. (Art. 2199)
Other damages – Proof is not required in order that moral, nominal, temperate or liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the
circumstances of each case. (Art. 2216)
FRAUD
Fraud is the deliberate or intentional evasion by the debtor of the normal compliance of his obligation. Under Art. 1170, this
actually refers to the fraud committed by the debtor AT THE TIME OF THE PERFORMANCE of his obligation.
This is the deliberate act of evading fulfillment of an obligation in a normal manner. This presupposes an existing obligation;
hence, the fraud has no effect on the validity of the contract since it was employed after perfection. However, the party employing it
shall be liable damages.
X promised to deliver a specific car. Pudpud na pala ang preno. After a week dumudulas na preno. The sale is valid but X is
liable for damages and restoration of the car.
Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.
A waiver of an action for future fraud cannot be made. If there is an agreement for its waiver, the same is void. Thus, the
debtor will still be liable for damages if he commits fraud in the performance of his obligation despite any waiver made by his creditor.
What about waiver of the past fraud committed if there is? Valid.
A waiver of an action for past fraud may be made, since the commission of fraud can no longer be encouraged. Such waiver
is an act of liberality on the creditor.
Fraud in obtaining consent


Causal fraud or dolo causante – This refers to fraud without which consent would not have been given. It renders the contract
voidable.
X ordered roast pig at P9,000. A told him that 40 kilo sa buhay ang pig na ililitson. A cooked a smaller one and delivered it to
X. The contract is voidable.
Incidental fraud or dolo incidente – This refers to fraud without which consent would have still been given but the person
giving it woud have I agreed on different terms. The contract is valid but the party employing it shall be liable for damages.
ABC College hires teachers with or with incomplete Master’s degree. X placed in this application form that he had a full
master’s degree where in fact he has not completed his thesis. If ABC would have hired X even he did not complete the said
units, but that he would have given a lower salary to X, the fraud committed was only incidental but it would entitle ABC to
recover damages.
NEGLIGENCE
It is the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of
the person, of the time, and of the place. (Art. 1173).
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It is the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance
which the circumstances justly demand, whereby such other person suffers injury. It is the omission to do something which a reasonable
man, guided ty those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a
prudent and reasonable man, would not do. (Perena vs. Zarate, G.R. No. 157917, August 29, 2012)
The test of negligence is whether the defendant in doing the alleged negligent act used that reasonable care and caution
which an ordinary person would have used in the same situation. If the law or contract does not state the diligence which is to be observed
in the performance of the obligation, the debtor must observe the diligence of a good father of a family, as required by the nature of the
obligation, and which corresponds with the circumstances of the person, of the time or of the place.
Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of
the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith,
the provisions of Articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence is to be observed in the performance, that which is expected of a good father
of a family shall be required.

The determination of the fault or negligence contemplated in this article, there is no fixed standard of diligence applicable to
each and every obligation.
o
o
Negligence is simply the absence of due care required by obligation.
It is in each case practically a question of fact vhether the proper degree of care has been exercised, taking into
consideration what a reasonable and prudent man would have done under the circumstances.
Na-discussed na natin ito. This is all about diligence of a good father of a family.

If the obligation is to deliver a specific window glass, the debtor must ensure that the glass, considering its fragility, is wellprotected, say with cushions, when he transports it as required by the nature of the obligation. Otherwise, he will be negligent.

A baby-sitter, 21 years old, strong and healthy, will be negligent if she slept while on duty considering that the circumstances
of her person were considered when she was hired for the job.

If the driver of a car drove at night without any headlight, he will be considered negligent considering that the circumstances
of nighttime require such light.

If the same car driver sped off at 50 kilometers per hour along a busy street where many people crossing, he will be negligent
because the circumstances of the place require that he should drive slowly.
So if you notice – the diligence of a good father of a family (DOGFOF) is a defense to avoid liability.
Yung example no.1. Let say the glass window suffers cracks in spite of all the precaution na ginawa ni delivery boy (debtor)
– hindi na siya liable for damages. Baka yung manufacturer na ang liable at mahinang klase talaga yung glass window.
We will discuss more about that defense sa TORTS.
BAER, SENIOR & CO. Os. COMPANIA MARITIMA, 6 Phil. 215: Defendant agreed to tow the launch of plaintiff from Apari
to Manila. Defendant’s steamer, with the launch in tow, arrived safely in Vigan; but a few hours after leaving Vigan, the wind
increased in violence, and the sea became rough. The speed of the steamer was reduced so that the two might travel more
easily. At almost midnight, it was noticed that the launch had disappeared. The steamer was stopped, and a search for the
launch was made until morning, but to no avail. It was shown that the towing lines were strong, and were fastened to a post
in the bow of the launch, which post was used for towing purposes. At the time of the loss, the towing lines did not break, but
it was the post to which they were tied that had broken. In this action, the plaintiff seeks to recover damages for the loss of its
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launch. HELD: By the terms of article 1173 of the Civil Code, the defendant was bound to exercise what is known in American
law as ordinary diligence, taking into consideration the nature of the obligation and the circumstances of persons, time, and
place. The defendant exercised such diligence, and it cannot be held liable for damages.
Here, ang nasira ay yung poste ng launch. Yung mismong pinagtatalian ng towing lines. Naging maingat din si defendant by
reducing the speed when the the wind gets stronger. He exercised ordinary diligence (DOGOF), hence, he is not liable for
damages.
GUZMAN us. X AND BEHN, MEYER & CO., 9 Phil 112: Plaintiff entered into a contract with defendant Behn, Meyer & Co.
Under which defendant was to tow plaintiffs lorcha from Manila to Iloilo. The captain of defendant’s steamer took charge of
the lorcha, which was manned by a master and four sailors. On the night of the first day out, the port tow line broke, and
thereupon the captain of the steamer ordered the crew of the lorcha to come on board the steamer and abandon the locha.
The master of the latter protested, but the captain of the steamer threatened to cut the other tow line; in consequence of this
attitude, the crew of the lorcha boarded the steamer, and the captain of the latter then ordered the abandonment of the lorcha
and cast her adrift by having the tow line cut. At the time this was done, the sea was calm, the moon was bright, and the
steamer and its tow were close to the islands of Mindoro, Cabras and Luban, at any of which places the lorcha might have
been left in safety. HELD: The act of the captain of defendant’s steamer, in abandoning the lorcha in mid-sea, with knowledge
that it would disappear and become a loss, constitutes marked negligence. There was no force majeure or other such casualty
to cause the loss of the lorcha in tow. The defendant must therefore indemnify the plaintiff for the damages suffered by the
latter for the loss of the lorcha.
TAMAYO vs. GSELL, 35 Phil 953: The plaintiffs ward, a young ignorant boy was employed, by the defendant to do ordinary
work in the performance of which he did not come in contact with the machinery; but without any previous warning, and over
the objections of the boy, he was ordered to assist in the cleaning of a dangerous machine. In the course of the work, his
fingers were caught in the machine, severing the ring finger at the third joint. HELD: The defendant is liable for damages,
because it was negligence on his part not to warn the boy and give him instructions how to avoid accidents in the cleaning of
a machine with which the boy was unfamiliar.
HASHIM & CO. vs. ROCHA & CO, 18 Phil. 315: The defendant company discharged a large shipment of potatoes into a
lorcha, which was then left for two days in the sun, tightly closed and without ventilation. At the same time several thousand
crates of potatoes from the same shipment were discharged into numerous cascoes. The latter were delivered in the usual
condition, but those in the lorcha rotted and became useless and of no value. HELD: The defendant was guilty of gross
negligence with respect to the care of the potatoes on board the lorcha and is liable for the loss resulting therefrom.
-------------xxxx--------Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature
of the obligation requires the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which,
though foreseen, were inevitable.

Fortuitous events are those events that could not be foreseen, or which, though foreseen, are inevitable. (Art. 1174). It is not
enough that the event should not been foreseen or anticipated, but it must be one impossible to foresee or avoid. (Sicam vs.
Jorge, G.R. No. 159617, August 8, 2007)
o Natural calamities or acts of God such as earthquake, typhoon and lightning; and acts of man [“force majeure”)
such as war and armed robbery.

The cause must be independent of the debtor’s will.
Dapat the event is not humanized. Let say nabagyo na. Nag strolling ka pa rin using your friend’s car.
The car got hit by a flying bubong. You are liable and you cannot put up the defense of Act of GOD ang
bagyo. Humanized means hinaluan mo ng kapabayaan or ignorance.
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
There must be impossibility of foreseeing the event or of avoiding it even if it can be foreseen.
Bukas uulan. Madaling alamin yan manood ng TV or mag-subscribe sa DOST page for current weather
forecast. So yung mga bangkang maliliit ay di pinapayagang pumalaot. Eh di wag ka ng lalaot.

The occurrence of the event must be of such character as to render it impossible for the debtor to
perform his obligation in a normal manner.
You are about to ship materials abroad but war in the West Philippine Sea breakout. So mag-aantay ka
muna ng other cargo ship na hindi dadaan sa warzone. In that case maaring magkaroon ng delay but
you will not be liable because of the war implication.

Fortuitous events may be produced by two general causes:
o
o
(1) by Nature, such as earthquakes, storms, floods, epidemics, fires, etc., and
(2) by the act of man, such as anl armed invasion, attack by bandits, governmental prohibitions, robbery, etc.


In order that acts of man may constitute fortuitous event, it is necessary that they have the force of an
imposition which the debtor could not have resisted.
Fortuitous event includes unavoidable accidents, even if there has been an intervention of human element, provided fault or
negligence cannot be imputed to the debtor.
o
The act of a train guard of the Manila Railroad Company in shooting a passenger because of an old personal
grudge, must be considered a “caso fortuito” because the railroad company had no means to ascertain or anticipate
that the two would meet, nor could it possibly foresee every personal rancor between each one of its many
employees and every one of its eventual passengers.

There is no essential difference between fortuitous event and force majeure; they both refer to causes independent of the will
of the obligor.

For the defense of force majeur to prosper, the accident must be due to natural causes, and absolutely without human
intervention.
o
o
A mishap caused by faulty brakes of a car is not fortuitous in character.
A tire blow-out was considered an inevitable accident where there was no misconduct or negligence imputable to
the operator, in a Court of Appeals decision, but in a later case the Supreme Court held that a tire blow-out is not
fortuitous.
LIABILITY FOR FORTUITOUS EVENTS

No person shall be liable for fortuitous events, i.e., his obligation will be extinguished.
o
o
Damages were not allowed against the defendants, where under a bond conditioned upon the delivery
to the sheriff of certain carabaos, the said carabaos could not be delivered because they died of natural
causes
Where during the operation of discharging a case of machinery weighing 25 tons from the hold of a
steamer to a lorcha, using for this purpose the vessel’s main mast which had before sustained much
greater weight, the pulleys or links of the chain fastening said main broke, allowing the case to fall upon
the lorcha and thereby injuring it
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o
o
o
o
o
o
o
Where a vessel during a voyage was blown ashore by a typhoon and lost
Where defendant’s firearm was lost in a storm at sea
Where funds in the hands of the defendant were lost through confiscation by army
Where leaks in a newly constructed building passed by the city authorities were caused by a violent
torrential rain
Where a lorcha which was well anchored was the force of a storm against the shore and completely
destroyed, together with the merchandise on board
Where inadequacy of means of transportation, the floods and draughts, caused the failure of rice crops,
making it impossible for the debtor in good faith to fulfill the obligation created
The non-compliance with the terms of a lease contract is due to enemy occupation during war;
EXCEPTIONS:
o
When the law expressly provides for liability even in case of fortuitous events (such as that provided in Art. 1165
where the obligor is liable for fortuitous events if he delays or has promised to deliver the same thing to two or more
persons who do not have the same interest. We have already discussed this.
o
When the parties have declared liability even in case of fortuitous event.
Under the contract, X assumes the risk.
o
When the nature of the obligation requires the assumption of risk (such as the obligation of an insurer who must
pay the policy holder even if the loss is caused by a fortuitous event if the cause thereof is the risk insured against).
Sa mga car insurance policies you have to read the fine print kasi may nakalagay doon na mga disclaimer. Acts of
God are included in the risks except….etc etc ang dami dami exceptions… lahat na lang ng fortuitous events
kasama hahahaha
THE ACT OF GOD MUST NOT BE HUMANIZED.
ROBERTO C. SICAM, ET AL., VS. SPOUSES JORGE G.R. NO. 159617, AUGUST 2007: LJ pawned several pieces of
jewelry with Agenda de R. C. Sicam to secure a loan. Armed robbers entered the pawnshop and took away the jewelry of LJ
and other clients of the pawnshop from the vault which was left open since it was a Saturday. There was no showing that a
security guard was stationed at the pawnshop. When LJ demanded the return of the jewelry she had pawned, the pawnshop
failed to do so because it was lost in the robbery, and raised, among other defenses, non-liability due to fortuitous event. Is
the defense tenable? HELD: No. In order for a fortuitous event to exempt one from liability, it is necessary that he has
committed no negligence or misconduct that may have occasioned the loss. When the event is found to be partly the result of
a person’s participation – whether by active intervention, neglect or failure to act – the whole occurrence is humanized and
removed from the applicable to acts of God. The pawnshop failed to show that it was free from any negligence by which
the loss of the pawned jewelry may have been occasioned. Its failure to provide a station a security guard at the pawnshop
and its leaving the vault open constitute acts of negligence which made the loss no longer independent of its will.
INSULAR GOVERNMENT vs. BINGHAM, 18 Phil. 558: Defendant Bingham obtained permission from the Insular
Government to purchase and keep one revolver and 100 rounds of ammunition, with the condition that he would deliver the
same to the Government on demand. Prior to the time when the demand was made for the return of said revolver and
ammunition, Bingham was engaged in the business of pearl fishing and while engaged a severe storm overtook him, and his
boat was sunk in eighty fathoms of water through no fault of his crew, and the revolver and ammunition, being on board, were
lost, The violence of the storm was such that neither Bingham nor any member of his crew had time to save the revolver and
ammunition, and it was impossible to recover the same on account of the depth of the sea where they were lost. The
Government seeks to hold Bingham and his sureties upon the bond. HELD; They are not liable. An obligation, consisting of
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the delivery of a specified titling, shall be extinguished when the said thing shall be lost or destroyed without the fault of the
obligor and before he is in default. No one shall be liable for fortuitous events.
YAP KIM CHUAN us. TIAOQUI, 31 Phil. 433: Plaintiff leased a building from the defendant; the building had been recently
finished, the construction having been under the supervision of an engineer, and opened for use only after approval by the
departments of engineering and sanitation of the City of Manila. One day a heavy torrential rain fell, and because of the large
amount of water and the extraordinary violence of the downpour, the roof leaked and some merchandise belonging to the
plaintiff got wet in the building. Neither plaintiff nor defendant knew that the roof was defective. HELD: The occurrence was
undoubtedly due to force majeure, being a fortuitous event which could not have been foreseen by the owner tenant; hence,
the losses and damages suffered by plaintiff by reason thereof cannot be chargeable against the defendant.
LIMPANGO SONS vs. YANGCQ STEAMSHIP CO., 34 Phil. 597: One day in the month of August, plaintiff employed
defendant to tow from Guagua to Manila two cascos loaded with sugar. On the same date, the cascos left Guagua, towed by
two launches of the defendant. When the launches, together with their tows, arrived off the Malabon river, the patron of the
launch Matulin, decided to leave the cascos in the Malabon River. The cascos were towed into the Malabon River, the excuse
given being that the weather was threatening and it was dangerous for the cascos to continue the voyage to Manila. A couple
of days later, the patron of the Matulin talked with the men in charge of the cascos, which were at the time tied up in the river,
and told them that following day, he would wait for them off the mouth of the Malabon River, outside the bar, and that if the
weather was then favorable, he would tow them to Manila. It was agreed between the patron of the Matulin and those in
charge of the cascos that the latter should move out of the river by means of their poles to the place where the Matulin would
be waiting for them. This was done, but after the cascos had passed the shallows, they were met with high seas and strong
wind, against which the bamboo poles were unavailing, and they were driven ashore or on the shoals and their cargoes lost.
HELD: It was negligence to leave two heavily loaded cascos in Manila Bay at the mercy of weather likely to exist in the month
of August with no other motive power than bamboo poles. It was negligence of the patron of the launch to ask the cascos to
move out into the open sea under such circumstances. While the captain of the Matulin wold not have been responsible for
an act of God by which the cascos were lost, it was his duty to foresee what the weather was likely to be, and to take such
precautions as were necessary to protect his tow. To be exempt from liability because of an act of God, the tug must be free
from any previous negligence or misconduct by which that loss or damage may have been occasioned. For, although the
immediate or proximate cause of the loss in any given instance may have been what is termed an act of God, yet if the tug
unnecessary exposed the cascos to such accident by any culpable act or omission of its own, it is not excused.
PARTIES MAY EXPRESSLY STIPULATE IN THEIR CONTRACT THAT THE DEBTOR SHALL BE LIABLE TO THE
CREDITOR, EVEN IF PERFORMANCE IS RENDERED IMPOSSIBLE BY FORTUITOUS EVENT OF FORCE MAJEURE.
GOVERNMENT vs. AMECHAZURRA, 10 Phil. 647: The defendant obtained a license to have in his possession three rifles
and one revolver, for each of which he gave a bond, with two sureties, containing the following condition: “It is agreed that he
shall safely keep the arms and each of them, and shall deliver them to the Government of the Philippines on demand.” He
lived in an outlying barrio, and one day his house was attacked by a band of robbers known as babaylanes, more than eighty
in number. His brother-in-law was killed, and three of the arms were carried away by the robbers. After demand by the
Goverment to deliver the arms, and the defendant having been able to deliver only one, the Government sued upon the bond
for the three arms. HELD: The bond expressly imposes an obligation even in case of a loss by force majeure. Hence, the
Government is entitled to recover upon said bond. But since two of the firearms were recovered by the Constabulary, the
liability was reduced by the court. “It may be said that this is a harsh rule when applied to a case like the present, but it must
be remembered that no private person is bound to keep arms. Whether he does so or not is entirely optional with himself, but
if, for his own convenience or pleasure, he desires to possess arms, he must do so upon such terms as the Government sees
fit to impose, for the right to keep and bear arms is not secured to him by law.”
WHEN THE NATURE OF THE OBLIGATION REQUIRES THE ASSUMPTION OF RISK
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
Accidents have frequently occurred in the operation of the industrial properties used in the further production of wealth for
their owners, and it is but just that those owners who benefit from the operation of such properties should also bear the risks
arising therefrom;
Yung mga workers or laborers when they suffer injury in the performance of their duties, the employers are
obligated to pay for their hospitalization. Kaya nga nakuha sila ng mga group insurance for their employees to pass
on the burden.
WHEN THE CREDITOR IS NEGLIGENT

The debtor is released from liability not only when the non-performance of the obligation is due to fortuitous event of force
majeure, but also when it is due to the act of the creditor himself.
X orders pizza from XYZ pizza hut. Di ba mga naka-motorbike lang ang mga delivery. If the package got wet, X is
not obligated to pay. He may ask for replacement or refund of he has paid for.
-----------xxxx-------Art. 1175. Usurious transactions shall be governed by special laws.
We will discuss more about this when get to the topic of MUTUUM.
Art. 1176. The receipt of the principal by the creditor, without reservation with respect to the interest, shall give rise to the
presumption that said interest has been paid.
X secured a loan of P100,000 from Y payable after one year with 12% interest per annum. So sa unang tingin ang utang ni X
ay 100,000 pesos plus 12,000 pesos representing interest or a total of P112,000 di ba? Mali. P100,000 lang ang utang ni X. The
presumption is the 12% interest in tacked in na. So when X paid P100,000 after one year and accepted by Y without reservation of the
interest, the presumption is bayad na si X. Y has the burden of proof na may outstanding interest pa na dapat bayaran.
Kasi maaring inawas na ni Y yung interest at the time when the loan was released. Kaya nga tayo may Truth of Lending Act.
The law requires ful disclosure of all penalities, charges and interests and they must not be inconscionable.
The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the presumption that
such installments have been paid.
X secured a P100,000 loan from Y payable in 10 monthly equal installments. Failure to pay any of the installment, an additional
2% of the unpaid installment shall be imposed.
X failed to pay for two months. The next payment should be accounted for the penalty muna at interest, at yung natira sa mga
unpaid balances ng installment. If Y received the next installment without applying part of it sa mga penalties and charges, the
presumption is that X has no arrears.

Under article 1253 of the Code, if a debt produces interest, payment of the principal shall not be deemed to have been made
until the interests have been covered.

Where a bank issued receipts for the payment of part of an obligation, without any reservation with respect to the interest, it
was held that the interest due up to such part payment was extinguished; but the balance shall continue to bear interest from
the date of such payment.
----------xxx----------
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Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all
the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn
the acts which the debtor may have done to defraud them.
X failed to pay the P100,000 loan he secured from Y. What are the remedies available for Y?
First, dapat maningil muna si Y. He has to demand payment para magkaroon ng legal delay. He can do this by sending a
demand letter. Then, an action for collection of sum of money. Nowadays, meron na tayong small claims. So Y will just go to the nearest
MTC and file an action small claim. Kung favorable ang judgment, Y may levy some of X’s property to be sold in the public auction to
satisfy the obligation.
Thereafter, Y learned that X donated all of his property to a third person, Z. Y may bring an action to reduce or revoke totally
that donation.
Art. 2236. The debtor is liable with all his property, present and future, for the fulfillment obligations, subject to the exemptions
provided by law.
Paano kung walang property? Eh di magaantay si Y kung magkakaroon ng future properties pa si X.
xxxsubject to the exemptions provided by law. Xxx
May mga property na hindi pwedeng i-levy gaya ng gintong pustiso. Kahit na P1M ang halaga ng pustiso at P100,000 ang
utang, you cannot compel X to auction it para ibayad sa iyo hahahaha. That property (pustiso) ay personal sa kanya. Gaya ng
pacemaker…hahahaha or yung mga silicon sa katawan hahahahaha
For the properties exempt from levy (execution) refer to Rules of Court Art 39 Sec 12 and don’t forget yung Family Home is
exempt also from execution under special circumstances. Also, support is exempted from execution.
IN RE ESTATE OF CEBALLOS, 12 Phil 271 After the dissolution of the partnership of Sanchez-Ceballos, the heirs of Ceballos were
given two haciendas. The share of Ceballos, however, was sold by the shefiff at public auction on a judgment against the widow in favor
of one Ortiz. The certificate of the sheriffs sale purport to transfer to the buyer not only the real estate, but also all the interest which
the widow had in such estate of her deceased husband, including her usufructuary and conjugal rights. The purchaser claims
that by virtue of this sale, the widow had no more right to appear in the proceedings for the settlement of the estate of her deceased
husband and should he excluded therefrom. HELD: Tne widow is entitled to remain, because even if the real estate had been sold, she
still had the right of redemption within one year. Moreover, even under the Civil Code, the creditor is not clothed with such rights as
were inherent in the person of the debtor, and in this case the strictly personal rights of the widow would alone be sufficient to entitle her
to a representation in the estate proceedings.
Xxxthey (creditor) may also impugn the acts which the debtor may have done to defraud them.
X ordered construction materials from XYZ. Ginamit ni X yung mga materials to build a house in a lot and sold the property to
A. How can XYZ collect from X?
Art. 1380. Contracts validly agreed upon may be rescinded in the cases established by law. (1290)
Art. 1381. The following contracts are rescissible:
XXX3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; XXX
XYZ may rescind the contract of sale entered by X and A? NOT YET.. XYZ has to prove muna if X and A entered into that
contract to defraud them (XYZ). Dapat maningil muna si XYZ, if walang pambayad si X, they can attach the receivables ni X from A.
Pwede rin na mag pray sa court si XYZ for A not to pay X hanggat hindi pa tapos ang kaso para in case na manalo siya sa
kaso, siya na lang ang maniningil kay A. We call it accion suborogatoria.
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If there was fraud, like X donated the property to A to remove it from his patrimony at para hindi makasingil si XYZ. In that
case, XYZ may file an action to reduced or revoke the deed of donation.
WHAT ARE THE REMEDIES OF THE CREDITOR UNDER ART 1177?
1. Pursue the property in the possession of the debtor except those exempt by law.
It is usually by attachment where the creditor files a court action to exact fulfillment with a prayer that the court set aside a
property belonging to the debtor. If the court decided in favor of the creditor and the debtor does not pay, the property attached will be
ordered sold and the proceeds thereof applied to the payment of the obligation.
2. Exercise all the rights and bring all the actions of the debtor except those personal to him (action subrogatoria).
Example: A owes D. D owes C. If C filed a court action against D to collect, he may ask the court to order A not to pay D so
that in the event that the court rules in favor of C, A will be required to pay C. In effect, C is exercising the right to collect from A which is
a right that belongs to D.
3. Impugn the acts which the debtor may have done to defraud his creditors (action pauliana).
This remedy must be of last resort. The creditor must have taken successively the foregoing measures (Nos. 1 and 2) before
he can bring this action. (Metrobank vs. International Exchange Bank, G.R. No. 176008, August 10, 2011)
X has many overdue monetary duties to pay for in favor of A, B and C. He is now selling his only property to Y. May the
creditors impugn the sale at this stage. No, kasi kaya nga binebenta ni X ang property ay bayaran sila.
X has many overdue monetary duties to pay in favor of A, B and C. He is now donating his only property to Y. May the creditors
impugn the act at this stage. Yes. Eh, ano na ibabayad niya hahaha. The act is simply to defraud his creditors.
---------xxx-------Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the
contrary.
Instrument evidencing a credit may be transferred or assigned by the creditor to another, and the transferee would be considered
in lawful possession of the same as well as of the credit, unless the contrary is shown.
X issued a promissory note to P, as payee. P may endorsed the instrument to A for monetary consideration. Here, A is the tranferee.
Exceptions
1. If the law prohibits the transmission of the right.
Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits among themselves.
X, Y and Z form a partnership. Kaya pinili nila ang isat-isa kasi may tiwala sa sila. X cannot assign his right as partner to a
stranger. Bukas pala A, Y and Z na yung magkaka-partner eh di magugulat na lang si Y and Z. Hence, the right of a partner cannot be
assigned.
Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or
on behalf of another, with the consent or authority of the latter.
X appoints A as Attorney-in-Fact to represent him sa isang business contract. Kinuha ni X si A as representative because
may tiwala siya sa kakayanan ni A. A cannot assign that right to a stranger.
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Art. 1933. Commodatum.
X borrows A’s car. A cannot lend the car to a stranger. Siyampre, magugulat si X kasi pinahiram niya yung kotse dahil may
tiwala siya kay A.
2. If the parties agreed against transmission.
Facts: R (owner) leased his factory to E (lessee) for two (2) years, giving the latter an option to buy said factory within the
same period. E assigned his right to X who communicated in writing his desire to exercise the option to R who, however, refused to
execute the corresponding deed of sale alleging as his reason the fact that the option was given to E and not to any other person and E
could not make the assignment without his (R’s) consent and when E did it, he (R) withheld his approval.
Issue: Under the contract and the law, was there any impediment on the part of E to transfer his right under the option?
Held: None. The contract does not contain any stipulation forbidding E from assigning the option or requiring R’s consent for
the assignment. Nor was the option given to E in consideration of his personal qualifications. Article 1178 is applicable. (Bastida and
Ysmael & Co., Inc. vs. Dy Buncio & Co., Inc., 95 Phil. 195 [1953].)
3. If the right is by nature not transmissible.
You asked Picasso (nung buhay pa) to paint a picture of you. Picasso was so good in hand painting. He cannot assign the
task to me kasi i-googoogle ko lang ang mukha sabay print hahahahaha Obviously, you got his services because of his expertise or
personal qualification.
Support. Hindi pwedeng yung asawa ng kapitbahay mo yung suportahan mo kahit pa pumayag ang asawa mo.
Skills. You cannot assign your job as a teacher sa iba lalo na if highly trechnical yung subject matter.
------------JURISPRUDENCE---------The Court cannot generalize, the 1997 Asian financial crisis to be unforeseeable and beyond the control of a business corporation. A
real estate enterprise engaged.in the pre-selling of condominium units is concededly a master in projections on commodities and currency
movements, as well as business risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday
occurrence, hence, not an instance of caso fortuito. Megaworld’s excuse for its delay does not thus lie.
(Megaworld Globus Asia, Inc. vs, Tanseco, G.R. No. 181206, October 9, 2009)
In July 1995, T purchased a condominium unit from Megaworl at a pre-sellling project. T paid up the installment until 1998 leaving a
balance of P2M pending the delivery of the unit. Megaworld failed to deliver the unit on the agreed date due to 1997 Asian financial crisis.
In 2002, they notified T that the unit was ready for turn over which the latter refused to accept but demanded the return of the P14M
representing the installment he has paid for. In its Answer, Megaworld contended that the delay was due to the 1997 Asian financial crisis
which is beyond its control and lack of demand from T to set delay in motion. Will the complaint for rescission prosper?
Yes. Under Article 1169 of the Civil Code;
Art. 1169. Those obliged to deliver or to do something incur in delay from the time the oblige judicially or extra-judicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:
Xxxxx(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
The Contract to Buy and Sell of the parties contains reciprocal obligations, i.e., to complete and deliver the condominium unit
on October 31, 1998 or six months thereafter on the part of Megaworld, and to pay the balance of the purchase price at or about the time
of delivery on the part of T. Compliance by Megaworld with its obligation is determinative of compliance by T with his obligation to pay
the balance of the purchase price. Megaworld having failed to comply with its obligation under the contract, it is liable therefor. That
Megaworld’s sending of a notice of turnover preceded T’s demand for refund does not abate his cause. For demand would have been
useless Megaworld admittedly having failed in its obligation to deliver the unit on the agreed date.
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature
of the obligation requires the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which,
though foreseen, were inevitable.
The Court cannot generalize, the 1997 Asian financial crisis to be unforeseeable and beyond the control of a business
corporation. A real estate enterprise engaged.in the pre-selling of condominium units is concededly a master in projections on
commodities and currency movements, as well as business risks. The fluctuating movement of the Philippine peso in the foreign
exchange market is an everyday occurrence, hence, not an instance of caso fortuito. Megaworld’s excuse for its delay does not thus lie.
----------BAR EXAMINATIONS-------2018 BAR EXAMS
XIX. Sebastian, who has a pending assessment from the Bureau of Internal Revenue (BIR), was required to post a bond. He entered
into an agreement with Solid Surety Comply (SSC) for SSC to issue a bond in favor of the BIR to secure payment of his taxes, if found
to be due. In consideration of the issuance of the bond, he executed an Indemnity Agreement with SSC whereby he agreed to indemnify
the latter in the event that he was found liable to pay the tax. The BIR eventually decided against Sebastian, and judicially commenced
action against both Sebastian and SSC to recover Sebastian’s unpaid taxes. Simultaneously, BIR also initiated action to foreclose on the
bond. Even before paying the BIR, SSC sought indemnity from Sebastian on the basis of the Indemnity Agreement. Sebastian refused
to pay since SSC had not paid the BIR anything yet, and alleged that the provision in the Indemnity Agreement which allowed SSC to
recover from him, by mere demand, even if it (SSC) had not yet paid the creditor, was void for being contrary to law and public policy
Can Sebastian legally refuse to pay SSC?
No, Sebastian cannot legally refuse to pay. A stipulation in an indemnity agreement providing that the indemnitor shall pay the surety as
soon as the latter becomes liable to make payment to the creditor under the terms of the bond, regardless of whether the surety has
made payment actually or not, is valid and enforceable; in accordance therewith, the surety may demand from the indemnitor even before
the creditor has paid (Security Bank and Trust Co., Inc. v. Globe Assurance Co. Inc. (G.R No- L-13708, April 27, 1960). Under the terms
of the contract, Sebastian’s obligation to indemnify became due and demandable from the moment he incurred liability and not from the
moment of payment. – UPLC ANSWER
2016 BAR EXAMS
XI. Ellen entrusted her title over the lot where she is residing to Patrick, her nephew, for safekeeping because of her poor eyesight.
Patrick, a gambler, prepared a Special Power of Attorney empowering him to mortgage the lot. Ellen’s signature was forged. With the
help of Julia who represented herself as Ellen, Mega Bank granted a loan to Patrick secured by a mortgage on Ellen’s lot. Due to nonpayment, Mega Bank foreclosed the mortgage and was declared the highest bidder. Title was later registered in the name of the bank.
When Ellen was notified that she should vacate the premises, she fifed a complaint to nullify the loan with mortgage, the auction sale
and the title of Mega Bank on the ground that the bank is not a mortgagee in good faith. Decide the case with reasons.
I will decide in favor of Ellen. Banks, their business being impressed with public interest, are expected to exercise more care and
prudence than private individuals in their dealings, even those involving registered lands. The highest degree of diligence is expected,
and high standards of integrity arid performance are even required of it. – UPLC ANSWER
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
A mortgagee can rely on what appears on the certificate of title presented by the mortgagor and an innocent mortgagee is not expected
to conduct an exhaustive investigation on the history of the mortgagor’s title. This rule is, however, strictly applied against banking
institutions. Mega Bank cannot be considered a mortgagee in good faith as it failed to inspect the disputed property when offered to it as
security for the loan, which could have led it to discover the forged Special Power of Attorney.
XV. Peter and Paul entered into a Contract to Sell whereby Peter, the lot owner, agreed to sell to Paul his lot on November 6, 2016 for
the price of P1,000,000.00 to be paid at the residence of Peter in Makati City at 1:00 p.m. If the full price is paid in cash at the specified
time and place, then Peter will execute a Deed of Absolute Sale and deliver the title to Paul. On November 6, 2016, Paul did not show
up and was not heard of from that date on. In view of the non-performance by Paul of his obligation, Peter sent a letter to Paul that he is
expressly and extra-judicially declaring the Contract to Sell rescinded and of no legal and binding effect. Peter further stated that failure
on the part of Paul to contest the rescission within thirty (30) days from receipt of said letter shall mean that the latter agreed to the
rescission.
Paul did not reply to this letter for five (5) years. Thus, Peter decided to sell his lot to Henry in 2021. After hearing that Henry bought the
lot, Paul now questions the ssale of the lot to Henry and files a complaint for nullification of the sale.
Is the exercise by Peter of his power to rescind extra-judicially the Contract to Sell the proper and legal way of rescinding said contract?
Explain.
As a general rule, the power to rescind an obligation must be invoked judicially and cannot be exercised solely on a party’s own judgment
that the other has committed a breach of the obligation. This is so because rescission of a contract will not be permitted for a slight or
casual breach, but only for such substantial and fundamental violations as would defeat the very object of the parties in making the
agreement. However, rescission as a remedy for breach is applicable only to an obligation which is extant. Be it noted that the contract
between the parties is a contract to se1l and not a contract of sale, and in a contract to sell, there is a reservation of ownership on the
part of the seller and his obligation to convey title will only arise upon full payment of the purchase price. Nonetheless, Peter may validly
cancel the contract to sell (Olivarez vs. Castiilo, G.R. No. 196251, July 9,2014).
ALTERNATIVE ANSWER
Yes, Peter validly rescinded the contract to sell his lot to Paul for the latter’s failure to comply with his prestation to pay P1,000,000.00
on November 6,2016 at 1:00 p.m. at the residence Peter so that Peter will execute the Deed of Absolute Sale. The rescission is actually
the resolution of the reciprocal obligation.
In UP v. De Los Angeles (G.R. No. L-28602, September 29,1970, 35 SCRA 102), the Supreme Court ruled that the injured party may
consider the contract as rescinded and act accordingly even without prior court action. His unliatera1 determination however, is
provisional since the other party may challenge it by suing him in court. It is then the court which will finally determine if the rescission
should be set aside or affirmed. – UPLC ANSWER
In case Paul made a down payment pursuant to a stipulation Contract to Sell, what is the legal remedy of Peter?
If Paul made a down payment, Peter may still cancel the contract because in a contract to sell, the seller does not yet agree to transfer
ownership to the buyer. The non-payment of the price in a contract to sell is not a breach for which the remedy of rescission maybe
availed of, but rather it is considered as a failure to comply with a positive suspensive condition which will prevent the obligation of the
seller to convey title from acquiring obligatory force (Ursal vs. Court of Appeals. G.R. No 142411, October 14, 2005, 473 SCRA 52, citing
Chua v. Court of Appeals, G.R. No. 144881, October 16, 2003, 401SCRA 54) – UPLC ANSWER
2015 BAR
X. X, a dressmaker, accepted clothing materials from Karla to make two dresses for her. On the day X was supposed to deliver Karla’s
dresses, X called up Karla to say that she had an urgent matter to attend to and will deliver them the next day. That night, however, a
robber broke into her shop and took everything including Karla’s two dresses. X claims she is not liable to deliver Karla’s dresses or to
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
pay for the clothing materials considering she herself was a victim of the robbery which was a fortuitous event and over which she had
no control. Do you agree? Why?
Yes, I agree that X is not liable. The contract between the parties is a contract for a piece of work wherein the contractor, X, bound herself
to execute a piece of work forthe employer, Karla, in consideration of a certain price or compensation (Art. 1713, Civil Code). Article 1717
of the Civil Code provides that if the contractor bound himself to furnish the material, he shall suffer the loss if the work should be
destroyed before its delivery, save when there has been delay in receiving it. Since the contractor X did not furnish the material she shall
not suffer the loss of the work which took place before its delivery. There was no delay in the receipt of the work since the parties agreed
to the delivery of the dresses on the day after the original date of delivery. Hence, X is not bound to suffer the loss, and is liable for neither
the delivery of the dresses nor the cost of the materials.
Yes, I agree that X is not liable. Article 1174 of the Civil Code provides:
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature
of the obligation requires the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which,
though foreseen, were inevitable.
Here, there was no delay in the receipt of the work since the parties agreed to the delivery of the dresses on the day after the
original date of delivery. Unfortunately, robbers, on that night, took some of X’s merchandise including those dresses. It is a force majeur
that the law considers as fortuitous event. Hence, X cannot be held civilly liable for the lost.
XIII. (A) X and Y are partners in a shop offering portrait painting. Y provided the capital and the marketing while X was the portrait artist.
They accepted the 50,000.00 payment of Kyla to do her portrait, but X passed away without being able to do it. Can Kyla demand that Y
deliver the portrait she had paid for because she was dealing with the business establishment and not with the artist personally? Why or
Why not?
No, Kyla cannot validly demand that Y deliver the portrait. Although she may be correct that it is the partnership that she contracted with,
Kyla cannot demand that Y deliver the portrait if the intention parties were that the portrait should be done by X and this is precisely why
the obligation was constituted. With the death of X, the obligation was extinguished because it is a purely personal obligation which is
extinguished upon the death of the obligor. Finally, the obligation is an obligation to do. To oblige the surviving partner, Y, to deliver the
painting (do the painting) would be tantamount to an involuntary servitude, which is against the law. - – UPLC ANSWER
Here, it can be alternatively argued that Kayla can still demand from the partnership to deliver the portrait sha had paid for. She dealt
with the partnership which has a distinct personality from its members. Hence, the death of X did not extinguish the obligation. The
remaining partner may hire another artist to do the job.
XV. Sara borrowed P50,000.00 from Julia and orally promised to pay it within six months. When Sara tried to pay her debt on the 8th
month, Julia demanded the payment of interest of 12% per annum because of Sara’s delay in payment. Sara paid her debt and the
interest claimed by Julia. After rethinking, Sara demanded back from Julia the amount she had paid as interest. Julia claims she has no
obligation to return the interest paid by Sara because it was a natural obligation which Sara voluntarily performed and can no longer
recover. Do you agree? Explain.
No, I do not agree with Julia. For a creditor to be entitled to compensatory interest, the debtor must be in delay. As a rule, in order for
delay to exist, demand must have been made. In this case, there was no demand made upon the expiration of the 6-month period;
thus, Sara cannot be considered in delay, and is not liable to pay compensatory interest. There being no obligation to pay compensatory
interest, Julia must return the interest mistakenly paid since she was not entitled thereto, and delivery was made through mistake, if
something were received when there was no right to demand it, and it was unduly delivered through mistake, the obligation to return it
arises (Art. 2154, Civil Code). – UPLC ANSWER
Distinguish civil and natural obligations.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on
equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or rendered by reason thereof (Art. 1423, Civil Code).
1970 BAR EXAMS
What is the rule regarding fortuitous events?
Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though
foreseen, were inevitable. (Art. 1174 NCC)
A review of the records in the case of Mindex Resources Devt. vs. Morillo (G.R. No. 138123, March 12, 2002) shows that
petitioner failed to exercise reasonable care and caution that an ordinarily prudent person would have used in the same situation.
Petitioner failed to employ reasonable foresight, diligence and care that would have exempted it from liability resulting from the burning
of the truck. Negligence is that conduct that naturally or reasonably creates undue risk or harm to others. It may be a failure to observe
that degree of care, precaution or vigilance that the circumstances justly demand, or to do any other act that would be done by a prudent
and reasonable person, who is guided by consideration that ordinarily regulate the conduct of human affairs.
In other words, there must be an entire exclusion of human agency from the cause of injury or loss. (Real vs. Belo, G.R. No.
146224, January 26,2007) The Court held that it is established by evidence that the fire originated from leaking fumes from the LPG
stove and tank installed at petitioner’s fastfood stall and her employees failed to prevent the fire from spreading and destroying the other
fastfood stalls. Such circumstances do not support the petitioner’s theory of fortuitous event.
1977 BAR EXAMS
Taxi driver D, driving recklessly, killed pedestrian P and his passenger Y. Discuss the source of the obligation of D and of his employer
to P and to Y, and the defense available to the employer.
(1) Under the Reuised Penal Code. The heirs of P and Y may proceed against D and his employer under the Penal Code. In this case,
the source of liability of D and of his employer is the crime committed by D (culpa criminal). The liability of D is direct and primary (Art.
100, RPC), the liability of his employer is subsidiary. (Art. 103, RPC) The latter cannot relieve himself of liability by proving due diligence
of a good father of a family. This is so because of the very nature of his obligation.
(2) Under the NCC. The heirs of the pedestrian P may proceed against both D and his employer, or against the latter only. In this case,
the source of the liability of D and his employer is the quasi-delict (culpa aquiliana) committed by D. (Arts. 2176, 2180, NCC) The liability
of both is direct and primary. D’s employer can relieve himself of liability by proving due diligence of a good father of a family in the
selection and supervision of his drivers. (Art. 2180, NCC)
On the other hand, the heirs of Y may proceed against D’s employer only. The source of the liability of D’s employer, is this
case, is the breach of his contract of carriage with Y (culpa contractual). His liability is direct and primary. He cannot relieve himself of
liability by proving due diligence of a good father of a family. (Art. 1759, NCC) This is so because under our law on common carriers, we
do not adhere to the principle of respondeat superior, we adhere to the principle that there is always an implied duty of a common carrier
to carry the passenger safely to his place of destination. However, although not available as a defense, such proof of due diligence may
serve to mitigate the employer’s liability. – UPLC ANSWER
2002 BAR
XA. Printado is engaged in the printing business. Suplico supplies printing paper to Printado pursuant to an order agreement under which
Suplico binds himself to deliver the same volume of paper every month for a period of 18 months, with Printado in turn agreeing to pay
within 60 days after each delivery. Suplico has been faithfully delivering under the order agreement for 10 months but thereafter stopped
doing so, because Printado has not made any payment at all. Printado has also a standing contract with publisher Publico for the printing
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
of 10,000 volumes of school textbooks. Suplico was aware of said printing contract. After printing 1,000 volumes, Printado also fails to
perform under its printing contract with Publico. Suplico sues Printado for the value of the unpaid deliveries under their order agreement.
At the same time Publico sues Printado for damages for breach of contract with respect to their own printing agreement. In the suit filed
by Suplico, Printado counters that: (a) Suplico cannot demand payment for deliveries made under their order agreement until Suplico
has completed performance under said contract; (b) Suplico should pay damages for breach of contract; and (c ) Suplico should be liable
for Printado’s breach of his contract with Publico because the order agreement between Suplico and Prlntado was for the benefit of
Publico. Are the contentions of Printado tenable? Explain your answer as to each contention.
No, the contentions of Prinadoo are untenable.
Printado having failed to pay for the printing paper covers by the delivery invoices on time, Suplico has the right to stop making further
delivery. And the latter did not violate the order agreement. Neither Suplico cannot be held liable for damages, for breach of contract, as
it was not he who violated the order agreement but Printado.
Suplico cannot be held liable for Printado’s breach of contract with Publico. He is not a party to the agreement entered into by and
between Printado and Publico. Theirs is not a stipulation pour autrui. [Aforesaid] such ontracts could not affect third persons like Suplico
because of the basic civil law principle of relativity of contracts which provides that contracts can only bind the parties who entered into
it, and it cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof. – UPLC
ANSWER
Reciprocal obligation ang dapat na answer dito. Ng tumigil ng magbayad si Publico sa mga dues niya for Suplico, the latter
has the right to withold the next delivery. Kasi walang reciprocal act from Publico which is the act of paying for the delivered supplies.
Art. 1169. xxxIn reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.xxx
No, the contentions of Printado are untenable. Under Article 1169 of the Civil Code, xxxIn reciprocal obligations, neither party
incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the other begins.xxx
Here, Suplico bounds himself to deliver printing paper to Printado and the latter’s reciprocal obligation is to pay 60 days after
each delivery. Printado failed to pay and Suplico withhold further deliveries. Hence, Suplico cannot be faulted for breach of contract and
cannot be held liable for damages. He has the right to withhold further deliveries until Printado pays its due. He cannot also be held liable
under the contract entered into between Printado and Publico for basic civil law principle of relativity of contracts which provides that
contracts can only bind the parties who entered into it, and it cannot favor or prejudice a third person, even if he is aware of such contract
and has acted with knowledge thereof.
XVIIA. A van owned ty Orlando and driven by Diego while negotiating downhill slope of a city road, suddenly gained speed, obviously
beyond the authorized limit in the area, and bumped a car in front of it, causing severed damage to the car and serious injuries to its
passengers. Orlando was not in the car at the time of the incident. The car owner and the injured passengers sued Orlando and Diego
for damages caused by Diego’s negligence. In their defense, Diego claims that the downhill slope caused the van to gain speed and that,
as he stepped on the brakes to check the acceleration, the brakes locked, causing van to go even faster and eventually to hit the car in
front of it. Orlando and Diego contend that the sudden malfunction of the van’s brake system is a fortuitous event and that, therefore,
they are exempt from any liability
Is this contention tenable? Explain.
No. Mechanical defects of a motor vehicle do not constitute fortuitous event since the presence of such defects would have
been readily detected by maintenance check. The failure to maintain the vehicle in safe running condition constitutes negligence. – UPLC
Explain the concept of vicarious liability in quasi-delicts.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Doctrine of vicarious liability is that which renders a person liable for the negligence of others for whose acts or omission the
law makes him responsible on the theory that they are under his control and supervision. - UPLC
Does the presence of the owner inside the vehicle causing damage to a third party affect his liability for his driver’s negligence? Explain.
In motor vehicle mishaps, the owner is made solidarity liable with his driver if he (the owner) was in the vehicle and could
have, by the use of due diligence, prevented the mishap. (Caedo v. Yu Kho Thai, 26 SCRA 410 [1968]). However, this question has no
factual basis in the problem given, in view of the express given fact that “Orlando was not in the car at the time of the incident” – UPLC
ANSWER
This doctrine should be scrapped. Let say you have a driver para makapag-pahinga ka during the run di ba? This doctrine
requires the owner to be like a co-driver. Eh paano kung hindi ka marunong mag-drive? Kaya ka nga kumuha ng driver di ba? Dapat ba
lagi ka ring gising hahahaha at nag cocoach sa driver mo kung paano mag twist and turn. Baka masuya yung driver at lumayas dahil sa
doctrine na ito.
1983 BAR EXAMS
A bound himself to deliver to B a 21-inch 1983 model TV set, and the 13 cubic feet White Westinghouse refrigerator, with Motor No.
WERT-385, which B saw in A’s store, and to repair B’s piano. A did none of these things.
May the court compel A to deliver the TV set and the refrigerator and repair the piano? Why? If not, what relief may the court grant B?
Why?
B cannot compel A to deliver the 21-inch 1983 model TV get. The reason is obvious. The obligation is a generic obligation because the
object is designated merely by its class or genus without any particular designation or physical segregation from others of the same class.
An action for specific performance is, therefore, legally and physically impossible. Consequently, the remedy of B is to ask for the delivery
of a 21-inch 1983 model TV set which must be neither of superior nor inferior quality. This is explicitly recognized by the NCC. As a matter
of fact, he can even ask that the obligation be complied with at the expense of A. Additionally, he can ask for damages. These remedies
are also explicitly recognized by the NCC.
The case of the refrigerator, the situation is different. The court may compel A to comply with the obligation specifically. The reason is
obvious. The obligation is determinate. Under the NCC, if the debtor or obligor refuses or is unable to comply with his obligation, assuming
that the obligation is a determinate obligation to give, the remedy of the creditor or oblige is to bring an action against the debtor or obligor
for specific performance. Additionally, he can recover damages.
On the other hand, the court cannot compel A to repair the piano. The reason is also obvious. The obligation of A is an obligation to do.
In this type of obligation, the law recognizes the individual’s freedom to choose between doing that which he has promised to do and not
doing it. It falls within what commentators call a personal act, of which courts may not compel compliance as it is an act of violence to do
so. The remedy, therefore, of B is to have the obligation be done by another person at the ecpense of A.
NOTE: The aboue answer is based on Arts. 1165, paragraph. 1, 1167 and 1170, NCC.
1991 BAR
IX. Roland, a basketball star, was under contract for one year to play-for-play exclusively for Lady Love, Inc. However, even before the
basketball season could open, he was offered a more attractive pay plus fringes benefits by Sweet Taste, Inc. Roland accepted the offer
and transferred to Sweet Taste. Lady Love sues Roland and Sweet Taste for breach of contract. Defendants claim that the restriction to
play for Lady Love alone is void, hence, unenforceable, as it constitutes an undue interference with the right of Roland to enter into
contracts and the impairment of his freedom to play and enjoy basketball.
Can Roland be bound by the contract he entered into with Lady Love or can he disregard the same? Is he liable at all? How about Sweet
Taste? Is it liable to Lady Love?
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Yes. Under Article 1159 of the Civil Code, obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. Here, Roland was under contract for one year to play exclusively for Lady Love, Inc.,
and while that contract was still in force, he entered into another contract with Sweet Taste and transferred. Hence, Roland is liable under
the contract as far as Lady Love is concerned under Article 1170 which provides liablity to pay damages for those who contravene the
tenor of the contract.
For the second question, and assuming that Sweet Taste is aware of the existing contract between Roland and Lady Love,
they can be held liable under quasi-delict under Article 1314 which provides that any third person who induces another to violate his
contract shall be liable for damages to the other contracting party.
2013 BAR
IIIA. Sergio is the registered owner of a 500-square meter land. His friend, Marcelo, who has long been interested in the property,
succeeded in persuading Sergio to sell it to him.
On June 2, 2012, they agreed on the purchase price of P600,000 and that Sergio would give Marcelo up to June 30, 2012
within which to raise the amount. Marcelo, in a light tone usual between them, said that they should seal their agreement through a case
of Jack Daniels Black and P5,000 “pulutan* money which he immediately handed to Sergio and which the latter accepted. The friends
then sat down and the first bottle from the case of bourbon.
On June 15, 2013, Sergio learned of another buyer, Roberto, who was offering P800,000 in ready cash for the land. When Roberto
confirmed that he could pay in cash as soon as Sergio could get the documentation ready, Sergio decided to withdraw his offer to Marcelo,
hoping to just explain matters to his friend. Marcelo, however, objected when the withdrawal was communicated to him, taking the position
that they have a firm and binding agreement that Sergio cannot simply walk away from because he has an option to buy that is duly
supported by a duly accepted valuable consideration.
(A) Does Marcelo have a cause of action against Sergio?
Yes. Marcelo has a cause of action against Sergio.
There is a perfected contract of sale between Sergio and Marcelo. Sergio agreed to sell the 500 sq.m. parcel of land to Marcelo
for a valuable consideration of P600,000. By giving Marcelo time to raise money, Sergio had agreed to consummate the sale on June
30, 2012. The value of the case of Jack Daniel’s Black and the P5,000 “pulutan” money is considered the earnest money to seal the
bargain and shall form part of the purchase price, and shall be deductible from the price of P600,000. Sergio has breached the obligation
arising from the contract and is liable for damages under Article 1170 of the Civil Code of the Philippines. Being a consensual contract,
a sale is perfected by both parties giving their consent to the thing to be sold and the price to be paid therefor. – UPLC ANSWER
Yes, Marcelo can file an action for damages against Sergio. Under Article 1170 of the Civil Code, to wit;
Art 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay and those who in any
manner contravene the tenor thereof, are liable for damages.
Here, there was a perfected oral contract of sale of the 500 sq. m. of land, and the agreement has already been executed by
the acceptance of P5,000 as part of the contract price. However, Sergio offered the property to another in contravention of the tenor of
the contract he entered into with Marcelo. It is tantamount to fraud in the performance of his obligation to sell the property. Hence, the
latter may file cause of action for damages for breach of contract under Article 1170 of the Civil Code.
Can Sergio claim that whatever they might have agreed upon cannot be enforced because any agreement relating to the sale of real
property must be supported by evidence in writing and they never reduced their agreement to writing?
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
No, Sergio’s claim has so legal basis. The contract at issue in the present case is the option contract, not the contract of sale for the real
property. Therefore, Article 1403 does not apply. The Statute of Frauds coven an agreement for the of real property or of an interest
therein. Such agreement is unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing (Art. 1403,
Civil Code). Here, Marcelo and Sergio merely entered into an option contract, which refers to a unilateral promise to buy or sell, which
need not be in writing to be enforceable. – UPLC ANSWER
No. Sergio’s claim is untenable. The contract of sale has been partially executed when he received the P5,000 as part of the
purchased price. Hence, the principle of Statute of Fraud is inapplicable.
Statute of Frauds of Article 1403. Let say bumili ka ng lupa. Hindi ka muna nagbayad pero nakipagsunduan ka na with the
seller. Yung oral contract ninyo ay valid pero paano kung may third party na dumating and he claims na hindi mo pa nabibili yung lupa.
Wala kang ebidensiya. Kaya hindi enforceable ang oral agreement ninyo. Ang Status of Fraud requires you to put the oral agreement
into writing para maging enforceable kahit hindi ka pa bayad.
Dapat may contract kayo na like contract to sell kahit sa dahon ng saging or sa tissue paper para maging enforceable yung
agreement. But let say wala kayong written agreement, pero nagbigay ka ng singkong duling o pisong pudpod sa seller. Yung oral
agreement ninyo is enforceable na kahit hindi in writing kasi executed na – tumanggap na kasi ng pera yung seller.
2008 BAR
XVIIIA. AB Corp. entered into a contract with XY Corp. whereby the former agreed to construct the research and laboratory facilities of
the latter. Under the terms of the contract, AB Corp. agreed to complete the facility in 18 months, at the total contract price of P10 million.
XY Corp. paid 50% of the total contract price, the balance to be paid upon completion of the work. The work started immediately, but AB
Corp. later experienced work slippage because of labor unrest in his company. AB Corp.’s employees claimed that they are not being
paid on time; hence, the work slowdown. As of the 17th month, work was only 45% completed. AB Corp. asked for extension of time,
claiming that its labor problems is a case of fortuitous event, but this was denied by XY Corp. When it became certain that the construction
could not be finished on time, XY Corp. sent written notice canceling the contract, and requiring AB Corp. to immediately vacate the
premises.
Can the labor unrest be considered a fortuitous vent?
Labor unrest is not a fortuitous event that will excuse AB Corp. from complying with its obligation of constructing the research
and laboratory facilities of XY Corp. The labor unrest, which may even be attributed in large part to AB Corp. itself, is not the direct cause
of noncompliance by AB Corp. It is independent of its obligation. It is similar to the failure of a DBP borrower to pay her loan just because
her plantation suffered losses due to the cadang-cadang disease. It does not excuse compliance with the obligation [DBP vs. Vda. De
Moll, 43 SCRA 82) – UPLC ANSWER
Labor unrest in this case is not a fortuitous event. The requisites of fortuitous event are:
(1) the event must be independent of human will or at least of the debtor’s will;
(2) the event could not be foreseen, or if foreseen, is inevitable;
(3) the event must have rendered impossible debtor’s compliance of the obligation in a proper manner; and
(4) the debtor must not be guilty of concurrent negligence (Lasam v Smith, 45 Phils. 657 [1924]).
All the requisites are absent in this case.
Can XY Corp. unilaterally and immediately cancel the contract?
XY Corp cannot unilaterally and immediately cancel the contract because there is a need for judicial action of rescission. The
provisions of Art. 1191 of the Civil Code providing for rescission in reciprocal obligations can only be invoked judicially.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Alternative Answer
Yes, XY Corp. may unilaterally cancel the obligation but this is subject to the risk that the cancellation of the reciprocal
obligation being challenged in court and if AB Corp. succeeds, then XY Corp. will be declared in default and be liable for damages. –
UPLC ANSWER
Must AB Corp. return the 50% downpayment?
No, under the principle of quantum meruit, AB Corp. has the right to retain payment corresponding to his percentage of
accomplishment less the amount of damages suffered by XY Corp. because of the delay or default. – UPLC ANSWER
XV A. Eduardo was granted a loan by XYZ Bank for the purpose of improving a building which XYZ leased from him. Eduardo, executed
the promissory note (“PN”) in favor of the bank, with his friend Recardo as co-signatory. In the PN, they both acknowledged that they are
“individually and collectively” liable and waived the need for prior demand. To secure the PN, Recardo executed a real estate mortgage
on his own property. When Eduardo defaulted on the PN, XYZ stopped payment of rentals on the building on the ground that legal
compensation had set in. Since there was still a balance due on the PN after applying the rentals, XYZ foreclosed the real estate mortgage
over Recardo’s property. Recardo opposed the foreclosure on the ground that he is only a co-signatory; that no demand was made upon
him for payment, and assuming he is liable, his liability should not go beyond half the balance of the loan. Further, Recardo said that
when the bank invoked compensation between the rentals and the amount of the loan, it amounted to a new contract or novation, and
had the effect of extinguishing the security since he did not give his consent (as owner of the property under the real estate mortgage)
thereto.
Can Recardo’s property be foreclosed to pay the full balance of the loan?
No, because there was no prior demand to Ricardo, depriving him of the right to reasonably block the foreclosure by payment. The waiver
of prior demand in the PN is against public policy and violates the right to due process. Without demand, there is no default and the
foreclosure is null and void. Since the mortgage, insofar as Recardo is concerned is not violated, a requirement under Act 3135 for a
valid foreclosure of real estate mortgage is absent. – UPLC ANSWER
In the case of DBP vs. Ucuanan. (516 SCRA 644 [2007]), it was held that: “the issue of whether demand wis made before the foreclosure
was effected is essential. If demand was made and duly received by the respondents and the latter still did not pay, then they were
already in default and foreclosure was proper. However, if demand was not made, then the loan had not yet become due and demandable.
This meant that respondents had not defaulted in their payment and the foreclosure was premature.
DIFFERENT KINDS OF OBLIGATIONS
SECTION 1: PURE AND CONDITIONAL OBLIGATION
The happening of the event makes the obligation demndable. It answers the question when the obligation is
demandable.
SECTION 2: OBLIGATION WITH A PERIOD
The arrival of the event makes the obligation demandable. It answers the question when the obligation is
demandable.
SECTION 3: ALTERNATIVE OBLIGATION
The obligor will choose which obligation to fulfill. It answers the question which obligation is demandable.
SECTION 4: JOINT AND SOLIDARY OBLIGATION
The creditor chooses who shall be liable. It answers the question who shall fulfill the obligation.
SECTION 5: DIVISIBLE AND INDIVISIBLE OBLIGATION
It answers the question how the obligations are to be performed. One after another or altogether.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
SECTION 6: OBLIGATION WITH A PENAL CLAUSE
The penalty is already stiulated in the contract in case of breach of contract or non-compliance of the conditions.
SECTION 1: PURE AND CONDITIONAL OBLIGATION
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.
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.
I promise to give you P500,000. Kelan? If the obligation has no date or not subject to any condition, then it is demandable
now na.
EVERY OBLIGATION IS DEMANDABLE AT ONCE! Yan ang general rule. What are the exceptions?
1. Conditional obligation
May dapat ka pang gawin or may dapat pang mangyari para maging demandable ang obligation.
I promise to give you P500,000 when you pass the 2020 bar exams.
I promise to give you P500,000 when you become a lawyer.
I promise to give you P500,000 when you top 2020 bar exams.
2. Obligation with a period
May dapat pang dumating na okasyon or petsa para maging demandable ang obligation.
I promise to give you P500,000 before the first Sunday of the November 2020.
----------xxx--------xxxxwhose performance does not depend upon a future or uncertain event, or upon a past event unknown to the partiesxxxx
xxxFuture and Uncertain Eventxxxx (IT SHOULD BE “AND” NOT “OR”)
I PROMISE TO GIVE YOU P500,000 WHEN YOU PASS THE 2020 BAR EXAM.
Here, the 2020 Bar Exam is the future event and to pass the bar exam is the uncertain event. Hence, to pass the 2020 bar
exam is a future and uncetain event.
It is future kasi obviously hindi pa nangyayari. Mag-aantay pa tayo ng 2020. It is also uncertain kasi baka naman hindi mangyari
yung 2020 bar exams like nagkaroon ng giyera or baka naman hindi ka pumasa – so it is uncertain.
I PROMISE TO GIVE YOU P500,000 AFTER THE 2020 BAR EXAMS.
This is conditional obligation. The demandability of the obligation depends on the arrival of the 2020 bar exams which is
uncertain. Kasi pwedeng hindi matuloy ang bar exams – dahil pwede ngang magka-giyera at hindi magkaroon ng bar sa 2020 at sa 2021
na lang. So the conduct of bar exams is uncerain.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
I PROMISE TO GIVE YOU P500,000 ON THE FIRST SUNDAY OF NOVEMBER 2020 OF THE BAR EXAM.
This is not an obligation with a condition. This is one with a period. Kahit walang bar exam ng 2020 Nov, the obligation is
demandable on the first Sunday of November 2020.
Let say nabiyak ang mundo noong Sabado ng November 2020 at mga buhay pa tayo hahahaha Bukas ba hindi Linggo? Di
ba Linggo pa rin. Kaya yung statement above is not conditional but an obligation with a period. Kasi CERTAIN EVENT ang pag-dating
ng Linggo.
XXXUPON A PAST EVENT UNKNOWN TO THE PARTIESXXXX
Napanood ba ninyo yung Titanic? Kung lumubog yan ngayon, lahat ng pasahero niyan ay may selfie na sa FB at real time
mong makikita ang paglubog. Ngayon, at this very minute na lumulubog ang titanic alam na natin. Pinapanood na natin.
If lumubog ang Titianic noon 1990’s. Mga 3 days pa bago mailagay sa dyrayo or a day bago pa ma-confirm ng radyo o TV
kung totoo ngang lumubog.
Kaya imagine ng lumubog ang Titanic noong 1914, one week pa bago nalaman ng mga kamag-anak ng mga pasahero,
insurer, shippers or consignees na nawala na pala ang barko kasama ang mga cargo nila.
Between the actual na paglubog at ng mailagay sa newspaper ang balita (let say 5 days ang interval), the sinking of titanic is
a PAST EVENT UNKNOWN TO THE PARTIES!
ABC INSURES THE CARGO OF X NA NASA SA TITANIC ON VOYAGE FOR P200.
At the time of the transaction Titanic was already 3 days under the Atlantc Ocean. ABC is liable to pay P200. Kasi hindi alam
ng mga parties na lumubog na Titanic.
Applicable pa rin ba ito ngayon? Oo!
X sold his car to Y and they already executed a deed of sale. The car was on the way to Baguio, but an hour before the
transaction the car fell off in a cliff. Who shall bear the loss? Y, kasi siya na ang may-ari ng car.
Why? Because the accident is a PAST EVENT UNKNOWN TO THE PARTIES!
XXXA RESOLUTORY CONDITION SHALL ALSO BE DEMANDABLEXXXX
Aba ibig sabihin ng “resolve the issue”. It means tapusin mo na. So the obligation is demandable now na pero matatapos ang
obligasyon if the condition happened. It means that the obligation is also pure and demandable at once.
I PROMISE TO GIVE YOU P5,000 MONTHLY HANGGAT AKIN KA.
So hanggat akin ka, may P5,000 monthly kang sustento. Pag hindi na tayo, wala ka ng P5,000. The condition is resolutory.
TAPOS NA ANG PANGHUHUTHUT MO SA AKIN if we broke up.
I PROMISE TO GIVE YOU P5,000 MONTHLY PAG NAGING AKIN KA.
The condition is suspensive. Suspense ba? Mangyayari ba na magiging akin ka? O ako ang magiging iyo hahahaha...If naging
akin ka, you can demand P5,000 monthly allowance. PWEDE MO NA AKONG HUTHUTAN.
----------xxxx---------Two principal kinds of condition.
1. SUSPENSIVE CONDITION (CONDITION PRECEDENT OR CONDITION ANTECEDENT)
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
The fulfillment of which will give rise to an obligation (or right). In other words, the demandability of the obligation is suspended
until the happening of a future and uncertain event which constitutes the condition.

The birth, perfection or effectivity of the contract subject to a condition can take place only if and when the condition is fulfilled.
If the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.
I PROMISE TO SELL MY SPORTs CAR FOR ONLY P500,000 WHEN YOU PASS THE 2020 BAR EXAM.
Here, the effectivity of our contract to sell the sports car for only P500thou shall only happen when you pass the
bar.
If you did not pass, as if there was no contract. The obligation had never existed.

It must appear that the performance of an act or the happening of an event was intended by the parties as a suspensive
condition, otherwise, its non-fulfillment will not prevent the perfection of a contract.
There contract must show the intention of the parties the perfection of the contract is dependent on the fulfillment
of the suspensive obligation.
I WILL HIRE YOU AS JR ASSOCIATE WHEN YOU PASS THE 2020 BAR EXAM.
You got 73%. Bagsak dapat but the SC lowered the passing rate to 72, swerte at nahagip ka. Our contract is
perfected. I cannot insist na bagsak kasi 75 ang original passing rate. Wala sa contract natin na dapat 75% up ang
makuha mong grado. The condition is only for you to pass the bar.

There can be no rescission (see Art. 1191) of an obligation that is still non-existent, the suspensive condition not having been
fulfilled.
IMMATURE ang remedy na rescission of contract kasi nga hindi pa perfected ang contract. Reformation of contract
ang correct remedy.
Acknowledgment signed by one of the debtors of a document is conditioned upon the same being signed by all the debtors.
(Martinez vs. Cavives, 25 Phil. 581 (1913.)
FACTS: A B and C had several promissory notes in favor of D. Si B entered into a contract with D to consolidate all their debts into one
joint obligation which D agreed provided B could secure the signatures of A and C. B never secured the signatures until his death. In an
action against A and B by D to recover their respective shares in the indebtedness, A and B contended that since their signatures were
not affixed to the document, D was bound to acknowledge it as a credit only against C who signed it. Is the contention correct? HELD:
The contract contained reciprocal obligations (see Art. 1169, last par.) which were to be fulfilled by each of the signers, that is, on the
part of C to secure signatures of A and B to the instrument, and then on the part of D, to recognize it as a joint obligation of A, B, and C
covering their indebtedness to him. Until C obtained the signatures of A and B, D was not in any way bound to acknowledge it as anything
more than an executory contract containing a condition precedent which was be performed by C before D’s obligation was due. Mere
continued silence on his part could signify nothing until the signatures of A and B had been secured.
Sale of vessel is conditioned upon proof that seller is, in fact, owner of property. (Roman vs. Grimalt, 6 Phil. 96 [1906];
FACTS; B agreed to buy S’s vessel. Yung title papers ng vessel is still under the name of the previous owner. Hence, the sale is
conditioned that the title papers be first transferred under the name of S. The vessel sank. Who shall bear the loss? HELD: S shall bear
the loss. The sale of the vessel was not perfected, because of the non-compliance by S of a condition precedent to its perfection, to wit:
the production of the proper papers showing that he was, in fact, the owner of the vessel in question. Consequently, the loss of the vessel
must be borne by S, the owner, and not by B who only intended to purchase it and was unable to do so because of failure of S to comply
with the said condition. Article 1262 is not applicable.
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From Nth BAR CHALLENGER TO ATTORNEY
OBLIGATIONS AND CONTRACTS
BAR LAW FOR DUMMIES TRAINING PROGRAM
WITH 1975-2019 BAR QUESTIONS AND ANSWERS
Condition claimed was not contemplated by the parties. (Enriquez vs. Ramos, 73 SCRA 116 [1976].)
FACTS: B bought a subdivision lot from S in installment basis. To secure the payment of the property, S accepted the property as
collateral in a deed of mortgage. The sale is conditioned that the balance after two years of installment shall be paid in full after S has
completed the construction of the road therein. Thereafter, S brought suit to foreclose the real estate mortgage executed by B to secure
the payment of the unpaid price, for failure of B to pay the mortgage indebtedness notwithstanding the completion of the roads, a condition
for the payment of the same. B contends that the roads are not yet completed in the technical, legal sense, because the final say or
acceptance by the Capital City Planning Commission of Quezon City had not vet been secured. Is this contention of B tenable? HELD:
No. This contention is inordinately technical and also devoid of merit. There is nothing at all in the ordinance (No. 2969 of Quezon City)
which makes the acceptance by the said agency a condition precedent before a street may be considered constructed. Such condition
was not within the contemplation of the parties.
2. RESOLUTORY CONDITION (CONDITION SUBSEQUENT)
The fulfillment of which will extinguish an obligation (or right) already existing.
Donation subject to resolutory condition transfers title but revocable for non-compliance with condition. (Parks us.
Prov. Of Tarlac, 49 Phil. 142 [1926].)
FACTS: X donated a piece of land to Y, the province of Tarlac subject to the condition that it was to be used for the erection
of a central school and a public park, the work to commence within the period of six (6) months from the date of the ratification by the
parties of the deed of donation. The donation was accepted by Y and title to the property was transferred to Y. Subsequently, X sold the
land to A. Is the condition suspensive or subsequent? HELD: It is a condition subsequent. The characteristic of a condition precedent is
that the acquisition of right is not effected while said condition is not complied with or is not deemed complied with. Meanwhile, nothing
is acquired and there is only an expectancy of right. Consequently, when a condition is imposed, the compliance of which cannot be
effected except when the right is deemed acquired, such condition cannot be deemed a condition precedent. In the present case, the
condition could not be complied with except after giving effect to the donation. The donee could not do any work on the donated land if
the donation had not really been effected because it would be an invasion of another’s title, for the land would have continued to belong
to the donor so long as the condition imposed was not complied with. The non-compliance with the condition is, however, a sufficient
cause for revocation.
So let us say X donated a land to you subject to a condition that you will build a half-way home for street children and the work
is to be commenced one year after the acceptance of donation. A year passed and you have not started the work. Hence, the obligation
of X is extinguished kasi you did not fulfill the condition. The proper remedy is revocation of donation. Can X sell it? Yes. Kasi sa law of
sale any property even those you dont own ay pwedeng ibenta. The problem arises when you cannot deliver kasi may nag-ooppose.
Like in this case, X will not be able to deliver the property on time to the buyer kasi syempre mag-ooppose ka. You will insist that the
donation is still effective.
Transfer of ownership of property sold shall become absolute upon payment by vendee of vendor’s debt to third
parties; void, if paid by the vendor himself. (Rillo vs. Court of Appeals, 83 SCAD 905, 274 SCRA 461 [1997].)
FACTS: X sold a parcel of land to Y in consideration of the obligation assumed by Y to pay what the vendor (X) owed to
several parties mentioned in the deed; if X paid his debts, the sale shall become inoperative and void, but that if Y paid the same debts
by reason of B’s failure to do so, the sale made shall become absolute and irrevocable automatically, without the need of executing any
other deed of conveyance. Y paid the debts of X. Upon presentation of the corresponding instruments, the certificate of title issued in the
name of X was cancelled and a transfer certificate of title was issued in Y’s name. ISSUE: Is the contract one of equitable mortgage or a
sale subject to a resolutory condition? HELD: The contract is obviously a perfected contract of sale and subject to a resolutory condition.
The property is not given as a mere security for a loan — which is the manifest purpose of a contract of mortgage — but instead it makes
a conditional transfer of ownership which becomes automatically absolute and final upon performance of the condition agreed upon,
namely payment by Y of what x owed the parties mentioned in the deed of conveyance.
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