GROUP 1

CHAPTERONE: INTRODUCTION

Many wonder on man-made inventions. The success of space-craft engineering

that led the first landing on the moon and other magnificent works of engineering such
as satelites orbiting a hundred times the earth’s surface could be attributed to the work
of art known as engineering. Engineering is as old as the story of civilization. It was opined
that “The story of engineering is also the story of civilization”.

ENGINEERING
The terms engine, engineer, engineering come from the Latin word ingenium.
(natural capacity, invention) which is derived from gignere (genere), meaning to produce.
As a profession, it is one concerned with the scientific planning , design, creation, and
economical operation of physical structures or “Engine” – stationary or moving, military
and civilian. As a useful and applied art, it involves the application of the factual data
systematized by every branch of science. In its early-uses, engineering is specially referred
to the operations of those who constructed engines of war and executed works intended
to serve military purposes. These military engineers were the ones whom the title
“engineer” was applied. About the middle of the 19th century a new class of engineers
existed. They concerned themselves with road construction and other engineering works,
but not for military purposes. As a way of distinction they came to be known as civil
engineers. Civil Engineering, one of the earliest branches of engineering, was described
as the “art of directing the great sources of power in the nature for the use and
convenience of man, as the means of production and of traffic in states, both for external
and internal trade, as applied in the construction of roads, bridges, aqueducts, canals,
river navigation and docks for internal intercourse and change; and in the construction of
ports, harbors, etc.”

According to the Engineers Council for Professional Development, engineering is

the profession in which a knowledge of the mathematical and natural sciences gained by
study, experience, and practice, is applied with judgement to develop ways to utilize
economically the materials and forces to nature for the benefit of mankind.

Characteristics of Engineering
A dissection of the different definitions of engineering will give us some essential
characteristics of engineering.

• It is a profession. A profession is an occupation requiring and advanced academic

training such as law, medicine, architecture and engineering. Common characteristics
of these professions are: 1) It is associated with a great body of special knowledge, 2)
preparation includes training in applying such knowledge, 3) high standards of the
profession are maintained at high level through close supervision of professional
 association, 4) a member of the profession places responsibilities to the public over and
above clients and other members of profession

• It is an art. Art is creativeness or any specific skill or application of such skill. In other
words, engineering is the application of craftsmanship or creativeness in actualizing
such skill or special knowledge to practical purposes. The ability to solve engineering
problems with the application of such special knowledge is considered and art. And
concededly, almost all engineering activities are concerned with problem-solving.

Also, art is anything concerned with the production of “What is beautiful” with the
application of such knowledge. Engineering and architectural works are products of
beautiful designs to conform with individual taste.

• It is an application of science. Science is a systematic knowledge derived from

observation and study. Sciences such as physics, chemistry, thermodynamics and others
are constantly used by an engineer as they relate to practical problems. Science is
concerned with “to know”. However and engineer is concerned with “to do” this led
one authority to conclude that an engineer is a “man of action”.

• It is concerned with construction economy. The engineer may greatly help his client
through recommendations or suggestions on construction methods and costs without
necessarily affecting the requirements of design and specifications. Thus, in one
instance it was observed that “requirements which increase the cost without producing
commensurate benefits should be eliminated.”

• It involves utilization of natural resources. Admittedly, engineering includes the

development of ways to utilize economically the materials and forces of nature for the
benefit of mankind. Thus, although it involves the utilization of natural resources, an
engineer should also discover ways to conserve and develop such natural resources for
the posterity. Otherwise, time will come when future generations could no more
appreciate the beauty of nature and the patrimony for the same were already depleted
and consumed.

• Its ultimately purpose is for the benefit of man. No doubt, engineering achievements
have directly or indirectly benefited men. The agricultural engineer, for instance , serves
mankind by increasing food production through various farm technologies introduced
by him. Soil and water conservation are his primary concern. His contribution to
maintain the fertility of the soil to enable farm workers and peasants to produce more,
is a great achievement for mankind. There are however engineering works purposely
to annihilate the entire mankind such as atom bomb of the nuclear engineers. If only
and engineering work is created to benefit man, there will be prosperity – be it
economic, political or social. The earth will be a heavenly place to live in.
CAPSULE HISTORY OF ENGINEERING
The profession of engineering is as old as civilization, for it has been said that the
story of engineering is the story of civilization. It can be traced back to the earliest times
when formal education on engineering was not yet introduced. It must be noted that
engineering education was formalized only in 1747 in France when Jean R. Perronet was
charged with the responsibility for “The direction and supervision of surveryors and
designers of plans and maps of the roads and designers and practices needful to fulfilling
with competency the different occupations relating to said bridges and high ways.”

Prehistoric period (3000 B.C. – 600 B.C.) The period before 3000B.C. is oftenly
termed as prehistoric. Prehistoric men especially those living in the valleys of the rivers
Euphrates and Tigris in Mesopotamia have developed the art of writing which had a great
influence on the subsequent history of the world. Activities of these men were reflected
in their tools and artifacts dug up by archeologists. Artistic designs on vases and other
ornaments made of stones are examples of engineering feats of ancient times.

Fire, which gave the prehistoric man warmth and protection was one of the earliest
discoveries in his search to understand the properties of the materials around him. In
cooking his food, he learned to make fire by rubbing two objects such as stones. Tools
such as knife, anvil, saw, scraper and others can be found in the primitive man throughout
the world.

In the history of mechanics, bow and arrow has a special significance. It was first
contrivance made to store energy. Lever and wedge have also great contributions. In the
earliest times, they were used as farming tools such as cultivation of lands.

Period of the Egyptian Empires (3000 B.C. – 600 B.C.) During this period the
Egyptians perfected the stone and wood working. The Great Pyramid (3000 B.C.) was
constructed with two million blocks of limestone. Also, carpentry flourished. Artistic
designs on woods, boxes and others were greatly improved during this period. The first
plywood was invented in Egypt. Important contribution during the period was the
inventions of the windlass and the pulley. Also, the rotary handmill or quern used for
grinding corn first appeared during this period. The quern with its essential characteristics
can still be found in modern flour mills.

Greek and Roman Period (600 B.C. – 400 A.D.) Historians would tell that during this
period, simple theorems of plane geometry were taught by the philosophers of the
Hellenic tradition. Archimedes, for example, was a mathematician who had a great
contribution to the science of warfare. He used his knowledge of mechanics to devise
powerful catapults for use in the siege of Syracuse. His studies on floating bodies led him
to lay the principle which was later on known as “Archimedian principle”. Under this
principle, bodies immersed in a liquid exert an upthrust equal to the weight of liquid
displaced.

Important inventions such as norse mill, fire pump, force pump, water heater, and
screw-cutting device, also characterized this period.

Dark Ages and The Renaissance (400 A.D. - 1500 A.D.) After the fall of the Roman
empire, The Christian Church began to throw its great influence which was responsible
for the development of engineering. It was church that popularized the Arabic numerical
system in almanacs and calendars. Note that arithmetic was used In calculating the dates
of religious observances. Important contibutions during this period include the
mechanical clock, The invention of printing, the use of coins as a medium of exchange and
the invention of the lathe with a fly-wheel. Towards the end of the period, machines were
widely used. Also, the invention of the spindle led the production of fabrics.

Towards the Industrial Revolution (1500 – 1750) Well known personalities of

science such as Gallileo, Torricelli, Pascal, Pierre, Fermat Descartes, Isaac Newton and
others glorified this period. For instance, Torcelli and Pascal were responsible for
developing the barometer. Fermat Descartes, on the other hand, discovered analytic
geometry which had a great influence on engineering.

In the field of mechanical engineering, there were significant achievements such

as the invention of the heat engines. Examples of these were the Savery’s pulsometer
pump and the Newcomen Atmospheric Engine, Which replaced the former for it had been
observed that NAE was safe to operate. During this period The technique of constructing
buildings and bridges was developed. Allegedly, Architech Andrea Plladio first introduced
the truss in modern bridge building. It was so designed without the posts in the water to
avoid the violence of the current. Engineers and architects during the period were also
too much preoccupied with the construction of canals, piers, towns, cities, etc.

Industrial Revolution(1750-1850) The inventions and discoveries during the

preceding period were much improved during the industrial revolution. Bridges were built
with steel and the use of cast iron for machine parts were widely developed. The steam
engine was transformed for use in transportation industry known as Steam locomotive.

Age of Steam Power (1850-1900). Inventions during this era was considered as a
great leap of mankind. The Bicycle which was dubbed as the “Iron Steed” enables a rider
to travel on land with the use of his muscles two or three times as fast as he could go on
foot. Also of significant innovations were the use of the internal combustion engine and
the automobile. The internal combustion engine could be attributed to the work of
professional engineers such as Dr. Otto, Dr. Diesel and Sir Dugald Clerk.
 The establishment of a power station by T.A. Edison in New York City in 1882.
Purposely to supply electricity to the public was a monumental achievement in the field
of mechanical engineering. It mus be noted that the early power stations were equipped
with the steam engines to propel electric generators.

Age of mechanical Road and Air Transport (1900-1940) Airplanes only appeared in
the twentieth century when Wilbur Wright and his brother Orville made the first flight on
December 17, 1903 of their powered biplane. With the first test flight; followed rapid
development of other aircrafts. Next to airplane, the machine that was skillfully develop
was the automobile. The first known cars built during the early part of the twentieth
century were that of Henry Ford’s.

Nuclear Age and Space Travel (1940- to date) One of the engineering feats of the
twentieth century was the development of nuclear reactors that could ably produce
atomic bombs. These war devices could be associated with the original Einstein’s Theory
of energy creation which was confirmed in 1932 by John Cockcroft and E.T.S. Walton. In
1934, Enrico Fermi, an Italian experimented that the bombardment of uranian with
neutrons created a new, heavier, radioactive element. In 1942, Ferni carried out nuclear
fission by using uranium and uranium oxide as the fuel element and graphite as
moderator.

GROUP 2

Branches of Engineering

A concise discussion of the branches of engineering will enable the student to have
at least a panoramic view on these fields of human endeavor.

Civil Engineering - This is one of the earliest branches of engineering. Originally, it

was included in the realm of military engineering until its separation from the latter in
1818. The term “civil engineer” was first defined officially when the Institution of Civil
Engineers in London, England, was organized. It deals with the structural design and
construction of commercial, industrial, public buildings, bridges, dams, aquedects and etc.

Materials Engineering - The process of extracting or tapping the mineral resources of

the earth requires special knowledge. Mining and metallurgical engineering are some of
the oldest sub-branches of this branch. Mining engineering is concerned with the
exploration, development, and working of mines. Metallurgical engineering, on the other
hand, deals with production of metals from ores by mechanical or chemical process. The
study of rocks and soil is the concern of geological engineering which is also a sub-branch
of this branch.
 Mechanical Engineering - The oldest defintion of engineering comes from the root
word “engine”. It is therefore the study of engines. However, this study falls under the
category of mechanical engineering. Thus, anything that is concerned with devising
engines to produce mechanical work from natural energy sources or the use machines to
help mankind, is mechanical engineering. Automotive, locomotive and aircraft industries
are examples associated with the art known as mechanical engineering.

Electrical Engineering - The application of electricity to various fields of human

endeavor is significant to man’s comfort and economy. The growth of a country may also
depend on highly technological achievements precipitated by the use of electricity.
Communication engineering, one of its sub-branches, enables one to listen to a speech or
a song mile away from the comforts of his home.
In the age of computer technology, an electrical engineer is concerned with research
in computer circuitry and material, development of new concepts of storage and
processing, design of faster and more reliable input and output devices and application
of computer to all types of scientific and industrial data-processing problems.

Agricultural Engineering - This branch arose out of man’s desire to have a steady
supply of the basic need -- food. In this attempt to realize this objective, theagricultural
engineer is primarily concerned with soil and water conservation necessary for increased
agricultural productivity. Hydrophonic gardening (growing vegetables without use of soil)
in one of the innovations introduced by agricultural engineers.

Architectural Engineers - The symbiotic relationship between the engineer and

architect is obvious. The architect contributes his knowledge of building design, materials
and structural elements to the engineer. Artistic design of buildingd, houses and the like
are injections of an architect to satisfy aesthetic tastes of owner. However, these
aesthetics designs are implemented by the engineer, for it has been said that the latter is
a “man of action”.

Electronic Enginnering - is a professional engineering discipline that deals with the

behavior and effects of electrons (as in electron tibes and transistors) and with electronic
devices, systems or equipments. The term also now cover a large part of electrical
engineering degree courses as studied at most European universities. Its practitioners are
called electronics engineers in Europe. In the Americas and some other parts of the world,
the term electrical engineer is used to describe a person doing the same work.

Computer Engineering - (also sometimes given the the title “Electronic and Computer
Engineering”) is a discipline that combines elements of both electrical engineering and
computer science. Computer engineers are electrical engineers that have additional
training in the areas of software design and hardware-software investigation. In turn, they
focus less on power electronics and physics. Common computer engineering tasks include
writing embedded software for real-time microcontrollers, designinh VLSI chips working
with analog sensors, designing mixed signal circuit boards and designing operating
systems.

Chemical Engineering - is a branch of engineering that uses principles of chemistry,

physics, mathematics and economics to efficiently use, produce, transform and transport
chemicals, materials and energy. A chemical engineer designas large-scale processes that
convert chemicals, raw materials, living cells, microorganisims and energy into useful
forms and products.

Petroleum Engineering - is a field of engineering concerned with the activities related

to the production of hydrocarbons which can be either crude oil or natural gas.
Exploration and production are deemed to fall within the upstream sector of the oil and
gas industry. Exploration, by earth scientists, and petroleum engineering are the ol and
gas industry’s two main subsurface disciplines, which focus on maximizing economic
recovery of hydrocarbons from sunsurface reservoir.

Aerospace Engineering - is the primary field of engineering concerned with the

development of aircraft and spacecraft. It has two major and overlapping branches:
Aeronautical engineering and Astronautical Engineering.

FUNCTIONS OF ENGINEERING

RESEARCH
-Simply, the term research is a careful and systematic investigation of some field of
knowledge. It therefore involves the study where it requires a mental aptitude on the part
of one who is tasked to do the job. A researcher is the inevitable companion of the
engineer, without him, the engineer may not develop into reality the knowledge provided
by the former. Thus, in some advanced countries, research engineering is lucrative
economic activity. The government also supports scientific research to bolster
engineering, In the private sector, laboratories are purposely established for industrial
research.

DESIGN
-A working plan or pattern necessary for production of construction is design. The design
so made must however be harmonized with some targets such as safety, aesthetics and
economics. It has been observed that “a good design is economical in terms of materials,
fabrication, installation, operation, and maintenance.”
CONSTRUCTION
-Infrastructure construction conducted by the government may be considered as an
index of national development. For in any developing country, one can see various
construction and development projects. The contribution of the private sector in the field
of “construction industry” should also be valued. Construction contractors engaged in
overseas work pump in dollars to the Philippines. Note, that these foreign exchange
strengthens the economy of the nation.

PRODUCTION
-The production engineer is concerned with “how to accomplish” after design is given to
him by the design engineer. His work is likened to that of a construction engineer for he
has to turn a raw material to a finished product. Under industrial concern, he is a
production-management man. He knows fully well whether or not there is surplus of raw
materials necessary for production. In order to save for the company, he has to consider
also production economy. Thus, he has to feed his men with procedures to cut down cost-
production expenses without necessarily affecting the output. The production engineer
advises the design engineers on design for production. Also, he selects tool, processes
and schedules production. These are some of his significant functions.
SALES
-one difficulty that may concern an industrial company is the acceptability of its products
to the market. This is the main concern of any sales engineer. To be effective, however, a
sales engineer should know “by heart” the characteristics and advantages of its products
over others. This is one of the sales techniques to win customers. A sales engineer should
have a “personality”, where he could win the customers quickly through his
characteristics such as the ability to communicate, friendly and courteous. Indifferent and
disrespectful customers should be treated with a smile.
MANAGEMENT
-A young engineer, fresh at that, is usually hired as a technical man. Seldom is he
employed in a managerial position. The reason is simple. He has yet to acquire wider
perspective of experience. A manager superintends or supervises technical men under
him. how could a manager decide on engineering problems or resolve even a simple case
of human relations without an array of experience. It must be noted that as a manager,
he shall always be consulted by his subordinates.

Success in Engineering

Success in any human endeavor depends on many factors such as intelligence,

reputation, preparation and opportunity. Sometimes opportunity plays an important role
for the success of the engineer. One may have had preparation, intelligence, and other
attributes. However, without the opportunity coming in, he may not considered a self-
made professional. Listed below are fundamental characteristics reflected in the survey
conducted by the Engineers Council for Professional Development.

Intelligence and native ability. Intelligence and native ability may serve as good
foundations for success. However, they are not the sole factors. It does not follow that an
intelligent engineer will definitely succeed. It depends on many attributes. There are
those who have an average intelligence but they capitalize this with other factors to
succeed.

Dependability. According to an authority, “dependability requires not only necessary

technical ability to perform the work on which the individual is employed, but also the
characteristics of faithfulness to trusts imposed, honesty of purpose and loyalty to the
service in which the individual is engaged”.

Technical training and ability. An ordinary or ruthless businessman will not employ an
engineer who lacks sufficient technical training or ability. That is only proper. Since the
success of his business may depend primarily on the training and ability necessary to
produce a desired result. It must be emphasized that technical training and ability as
ingredient to success required one to have an advanced or graduate studies. A four or
five-year course is not enough. Sometimes such training is acquired when one is
associated with a firm engaged in an engineering work. This is what we call experience.
And it is a truism that experience is the best tutor.

Related with this attribute to success is the ability to apply principles to practice. It
was observed by Mr. Daniel Mead, that “men of high intellectual attainment, who have
been in school continuously, with no contact with practical life, have great difficulty in
applying their knowledge to engineering work and therefore fail to attain the degree of
success which their intellectual would seem to warrant.

OTHER ATTRIBUTES TO SUCCESS

Other attributes to success; include the following:

a) Character, integrity, responsibility, resourcefulness, initiative;

b) Judgement, common sense, scientific attitude, perspective;

c) Efficiency, thoroughness, accuracy, industry;

d) Understanding of men's executive ability;

e) Knowledge of fundamentals; and

f) Technique of practice and business.

The above characteristics necessary for success in engineering were the results of a
research conducted as early as 1915 by DR. C. R. Mann with 5,000 practicing engineers as
respondents.

PROFESSIONAL QUALIFICATIONS
Legislations regulating the profession of engineering vary in different states. For instance
in the Philippines each branch of engineering is regulated and defined by a particular
enactment. In short, in the exercise of profession an engineer must be professionally
qualified in the field he has to undertake. He should be nurtured by academic training and
practical experience, so that by the time his services are needed he could render fair and
impartial judgement free from the influence of others. Moreover, an engineer
professionally qualified is ready to meet his social responsibility.

EXAMINATION AND REGISTRATION

Usually, applicants for registration for the practice of engineering are required to
pass a technical examination. In many jurisdictions, the qualification for examination vary.
In the Philippines, however, any person applying for admission to an engineering
examination should establish and prove that he has the following usual qualifications,
namely: a) at least 21 years of age (age varies in other branches of engineering); b) a
citizen of the Philippines; c) of good reputation and moral character; d) a graduate of a
course in engineering from a school, institute, college or university recognized by the
Government of the state wherein it is established.
All successful candidates in the examination are required to take a professional
oath before a board of Examiners or other Government officials authorized to administer
oaths. Thereafter, they are issued certificates of registration. However, the Board of
Examiner shall refuse to issue a certificate to any person convicted by a court of
competent jurisdiction of any criminal offense involving moral turpitude, or to any person
guilty of immoral or dishonorable conduct, or to any person of unsound mind. Also, after
due notice and hearing a certificate of registration may be suspended or revoked for
causes mentioned above.
Under Philippine jurisdiction, no person shall practice or offer to practice
engineering without obtaining the proper certificate of registration from the appropriate
Board of Examiners, unless they are exempted from registration such as a) Officers or
enlisted men of the United States and Philippine Armed Forces; b) Engineers or experts
called in by the Philippine Government for consultation; c) Employees and officials of the
Government of the Philippines while engaged in the practice of engineering profession.

PROFESSIONAL REGULATION COMMISSION

Created to effectively enforce the laws regulating the various professions, the
Professional Regulation Commission is a three-man Commission attached to the office of
the President for general direction and coordination.
Composition and qualifications. The Commissions is composed of one full-time
Commissioner and two full-time Associate Commissioners. They are appointed by the
President for a term of (9) years without reappointment. Of the Commissioners
appointed, one shall hold office for (9) years, another for (6) years and the third for (3)
years.
The Chairman and Associate Commissioners must be a) at least 40 years of age; b) familiar
with the principles and methods of professional regulation and/or licensing; and c) at least
five (5) years of executive or managerial experience.
Powers of the Commission. The Commission shall exercise the following powers:
1. To administer, implement and enforce the regulatory policies with respect to regulation
and licensing of various professions under its jurisdiction;
2. To maintain professional and occupational standards and ethics and enforce rules and
regulations relative thereto;
3. To make such rules and regulations and issue orders or issuances necessary for the
effective implementation of its functions;
4. To review, coordinate, integrate and approve the policies, resolutions, rules and
regulations, orders, or decisions promulgated by the various Boards;
5. To administer and conduct the licensure examinations of the various Boards according
to the rules and regulations promulgated by it;
6. To keep and maintain a register of all practitioners of the profession or occupation, and
issue certificates of registration or licenses signed by all members of the Board and
Commissioner with the official seal of the Board so affixed;
7. To have custody of all the records of the various Boards;
8. to determine, fix and collect the amount to be charged for examination, registration
without examination, license, annual registration fees, certification, surcharges and other
fees not specified under the provisions of Republic Act. No. 6511 or amend the rates
provided thereunder subject to the approval by the Office of the President;
9. To appoint officials and employees of the Commission subject to the provisions of
existing laws;
10. To submit and recommend to the President of the Philippines nominees for
appointment as members of the various Boards from among those nominated by the
bona fide professional organizations accredited by the Commission;
11. To approve, upon recommendation of the Board concerned the registration and
authorized the issuance of a certificate of registration with or without examination to a
foreigner who is registered under the laws of his country.

STATE’S REGULATION OF THE PROFESSION, AN EXERCISE OF

POLICE POWER

Police power is the power vested in the lawmaking body by the fundamental charter
(constitution) to make, ordain, and establish all manner of wholesome and reasonable
laws, statutes and ordinances, either with penalties or without, not contrary to the
constitution, as they shall judge to be for the good and welfare of the State and its people.

Pursuant to police power the congress has the power to prescribe the qualification for
the practice of professions or trades which affect the public welfare, public health, public
morals, and the public safety and to the point of revoking such right altogether. In other
words, the state in the exercise of such power may require persons to pass an
examination to pursue a certain calling or profession in order to secure general welfare
of the people, to protect them against the consequences of ignorance and incapacity as
well as deception and fraud. The practice is to exact in any pursuit, profession or trade a
certain degree of skill and learning upon which the public may confidently rely, their
proficiency being ascertained in an examination conducted by competent persons.
To exemplify this inherent power of state, a law was passed mandating that no one could
practice architecture or use the tittle architect without first securing a certificate of
registration. An architect failed to comply with this law and further sought a temporary
injunction in a lower court to restrain the city from interfering with his work.

The Supreme court in its decision, held:

“This brings us to a consideration of the question whether the act is valid as a proper
exercise of what, in its various ramifications, is known as the ‘police power’. This is the
inherent and plenary authority of the state, within constitutional limits, to protect the
lives health, morals, comfort and general welfare of the people, and is paramount to all
rights under any form of contract. XXX The act under consideration expressly declares
that its object is to safeguard life, health, and property. Evidently, it is adopted to
accomplish those purposes. The practice of architecture demands learning, skill, and
integrity. The legislature has the right to prescribe the qualifications if those engaged in
this important work. The object of an examination is to ascertain whether applicants
possess the necessary requirements. Manifestly, the practice of this profession is of vital
concern to the people generally. The layman must place his trust and confidence in the
architect he employs. The very fact that the architect’s qualifications have been examined
and certified by a responsible body is evidence of his fitness and furnishes some safeguard
against unskilled work. In designing, planning, and supervising the erection of large public
and private structures, tragic indeed are the perilous results of incompetence and
ignorance. XXX This enactment should be upheld as legitimate exercise of police power”.

GROUP 3
Chapter Two
The Engineer-At-Law

The study of law is not only the concern of lawyers but to everyone. For without
law, there will be no norms of conduct that would govern the relationship between and
among men, and between men and government. Law tells us our rights, duties and
obligations as members of the body politic. Knowledge of the law will forewarn us
whether or not our action conforms to it or otherwise, thus, avoiding its legal
consequences. Imperatively, law is coterminous with any civil society. Without it, there
will be disturbance and chaos.

MEANING OF LAW
Law consist of the entire body of principles that govern the conduct and the
observance of which can be enforced in courts. It other words, law is a collection of the
rules of conduct promulgated by the supreme authority. In the Philippines it is
promulgated by the congress where the so- called legal sovereignty is vested.

OBJECTIVES OF THE LAW

Why the law has been enacted, is a question that deserves a specific answer. Of
course, there is an object or philosophy behind any law being enacted For instance, why
was the anti-Subversion Law enacted? Is it primarily designed to prohibit the capitalist
from exploiting the working class?

The following objectives are discussed in capsule form to provide the student at
least a bird’s-eye view of different reasons for the enactment of a law.

a) Protection of the State, Laws designed to protect the sovereignty of the Sate are
provided not only in the Revised Penal Code but also in other special laws. Crimes against
national security such as espionage and correspondence with hostile country are example
of those Punishable by the Revised Penal Code.

b) Protection of public health, safely, and morals. Under the police power of the state,
laws may be enacted to promote the welfare of the people. The law inquiring motor
vehicles to be equipped with early warning device purposely to prevent accident was held
constitutional by the highest tribunal.
 c) Protection of one’s self. Law are enacted to protect the life and safety of an
individual. Thus, a person treacherously attached by another resulting in the death of the
former can be charged for the crime of murder.

d) Protection of property. Institution of property is one of the right enshrined and

safeguarded by the constitution. This, private the property cannot be taken for public use
without just compensation. Note that the even the state cannot abuse its governmental
powers to invade property rights. Anti-Fencing law was promulgated to protect property
rights. Also, the anti-carnaping law is preserve the institution of private property.

e) Protection of the right of personal action. Examples of these are a) freedom of

speech and of the press and b) freedom of religion. These are specifically guaranteed
under Article IV, of the New Philippine Constitution.

f) Protection of the right of use of property. There are laws to ensure one’s right of
use of property. A law punishing trespassing of one’s property and anti-squatting law are
the concrete example. It must be noted, however, that one's right of use is not absolute.
Thus, in the exercise of the police power, zoning law or ordinance may be passed to
implement the social justice clause enunciated in this constitution; a law may be passed
regulating acquisition, ownership, and enjoyment of property rights. Emancipation of the
Tenants law regulates the property right of landlords.

ORIGIN OF PHILIPPINE LAW

Ancient laws of the Philippines can be traced to the Sumakwel and Kalantiao
Codes. Provisions of these codes can still be found in modern laws, particularly the Civil
Code and the Penal Code of the Philippines, such as family regulation, property rights,
loans, contracts, criminal offenses. For instance, in the Sumakwel Code laziness is
punishable with slavery. In the Kalantiao Code, modęrn arson, sacrilegę and' sorcery are
punishable with death.

Spanish influence could also be found in our laws. The Philippine Civil and Penal
codes were actually patterned after Codigo Civil and Codigo penal of Spain. Note that in
case of Conflict the provisions of the Spanish Code will prevail.

The Americans also introduced their share in the development of the Philippine
legal system. Significant contributions such as constitutional law, business laws and
procedural laws formed part of the present legal system. In fact, the 1935 Philippine
Constitution was patterned after the American Constitution.

WORLD LEGAL SYSTEM

History, as the sole judge of the world, reveals that there are many legal systems
that have grown and some died with the death of the state which was responsible for
their inception. So far, the remaining existing legal systems are the Roman Law,
Mohammedan law and Anglo- American law.

Roman law. In general sense, Roman law comprehends all the laws which prevailed
among the Romans, without regard to the time of their origin, including the collections of
Justinians. In its restricted sense, the term merely means the law of the Justinians. It must
be noted that the first set of recorded laws, the Digests was published in A.D. 553, under
the advocacy of Emperor Justinian, who commissioned legal experts to codify Roman law.
This is the reason why sometimes Roman law is referred to as Justinian law.

Mohammedan law. One of the great systems of customary law is the Moslem or
Mohammedan law. Its sources are; a) the Koran, the Moslem's bible; b) the sayings of and
stories about the. Great Mohammed; c) writings of Islamic jurists and Muslim scholars
(ulamas). Mohammedan law is the necessary part of the Philippine legal system for one
of the largest regions, Mindanao, is populated with Muslims.

In order to have a working law that would govern the relationship among Muslim
consistent with the Koran Law, a Code of Muslim Personal Laws was enacted by virtue of
Presidential Decree No. 1083. Under this law, an Islamic Court was established known as
the Sharia Court which is tasked to effectively administer and enforce Muslim personal
laws. It will prosecute Muslims violating the Philippine Islamic Code.

Anglo-American law. Anglo-American law is the system popularly known as

Common or customary law. As distinguished from law enacted by the legislature,
common law comprises the body of those principles and rules of action, relating to
government and security of persons and property, which derive their authority solely
from usages and customs of immemorial antiquity, or from the judgments and decrees of
the courts recognizing affirming, and enforcing such usages and customs. Example of this
is the ancient un written law of England.

SOURCES OF LAW
The primary sources of law will includes, a) constitution b) legislation e) executive
orders, regulations and rulings, d) precedents, e) customs and f principles of equity and
justice.

Constitution. It is derived form the Latin word “Constituto" which means fixed or
settled. As defined by Judge Cooley, constitution is a "body of rules and maxim in
accordance with which the powers of sovereignty are habitually exercised". With
particular reference to the Philippines, it is a written instrument by which the
fundamental powers of the government are established; limited, and defined and by
which these powers are distribute among the several departments for their safe and
useful exercise for the benefit of the body politic." I is often referred to as "fundamental
law" or "highest law" of the land. This is so for all laws to be enacted should conform to
it. Otherwise, it is unconstitutional; hence, null and void.

Legislation. Legislation is one that is laid down, established, or ordained by the

lawmaking authority of the state which must be obeyed and followed by citizens, subject
to sanctions or legal consequences, It is a rule or method which defines the relations of
people among themselves or between the people and government.

Law-making is an exercise of legal sovereignty. This is vested in the congress

Executive orders, regulations and rulings. Orders, rules and regulations issued by
administrative officials under legislative authority are designed to clarify or explain the
law and carry into effects its general provisions by providing the details of administration
and procedure.

Precedent. Prior cases which are close in facts or legal principles to the case under
consideration are called precedents. Thus, a rule of law established for the first time by a
court for a particular type of case and thereafter referred to in deciding similar cases is
precedent. The doctrine of precedent is consistent with the civil code which states,
"Judicial decisions applying or interpreting the laws or the constitution shall for part of
the legal system of the Philippines."

Custom or Usage. Customs consist of those habits and practices which through
long and, uninterrupted usage have become acknowledged and approved by society as
binding rules of conduct. When recognized and enforced by the state, customs have the
force of law.

Custom or usage results from a long series of actions, constantly repeated, which
have by such repetition and by uninterrupted acquiescence acquired the force of a tacit
and common consent.

Principles of justice and equity. These principles have to be applied in the absence
of law, precedent, customs and usages. They conform with the mandate of the civil code
on Human Relations which states, "Every person must in the exercise of his rights, act
with justice, give everyone his due and observe honesty and good faith." The provisions
on quasi-contracts such as negotiorum gestio and solutio endebiti bolster the above
principles of equity and justice. Under the law, negotiorum gestio is the voluntary
management of the property or affairs of another without the knowledge or consent of
the latter. Solutio endebiti on the other hand, is the judicial relation which is created when
something is received when there is no right to demand it and it was unduly delivered
through mistake. In other words, under the principles of quasi contract, no one should be
enriched or benefited at the expense of another. This will be discussed extensively under
the topic "Law on Contracts.
 KINDS OF LAW

Knowledge of the different classifications of law will enable a student of law or any
citizen to that effect to understand that every move he makes whether it is concerned
with fellowmen or with the state, he is governed by what we call a norm of conduct which
is law.

Natural law. Natural law or jus naturale was largely used in the philosophical
speculations of the Roman jurists of the Antonine age. It was designed to denote a system
of rules and principle for the guidance of human conduct which might be discovered by
the rational intelligence of man, and would be found to grow out of and conform to his
nature, meaning by that word his whole mental, moral, and physical constitution. Simply,
it is defined as the divine inspiration in man of the sense of justice, fairness, righteousness
and equity, not by divine revelation or formal promulgation, but by internal dictate of
reason alone. It is therefore binding on all men everywhere and at all times.

Divine law. Divine law is the law of religion and faith which concerns itself with the
concept of sin and salvation, of death and life, of the temporal and the eternal. It is
formally promulgated by God and revealed or divulged to mankind through the various
means of divine revelation such as vision, or deep religious experience. Under the Old
Testament, it is embodied in the Ten Commandments received by prophet Moises from
God at Mount Sinai.

Moral law. Moral law is that system of rules of human action which has its origin
in be general sense, on the part of the members of the community, of what is right and
wrong, and which finds its .sanction in the general disapprobation when any act in
violation of it is commitment.

Physical law. Physical law resembles that of divine law but it is not exactly
divine law. It is only divine in the sense that is ordained by God for the operation or course
of the universe. They are the uniformities of action and orders of sequence which human
beings sense and feel. It is characterized by the elements of imperativeness and
regularity; thus, it is fixed and unbreakable. For instance, somebody tosses a coin up in
the air. It is fixed that a coin will naturally land on ground.

Municipal or positive law. Positive law is that system of rules of human action
established by the governmental power in a state. It differs from divine or moral law, for
it is laid down by a determinate authority and enforceable by determinate sanctions. Laws
on murder and theft are examples of positive law. However, they also retain moral
sanctions, for a person who commits these offenses is not only jailed but also socially
ostracized.
 Substantive law. Substantive law is that part of law which creates, defines,
and regulates rights, as opposed to “adjective or remedial law,” which prescribes the
method of enforcing the rights or obtaining redress for their invasion. The Civil and
Revised Penal Codes are substantive laws; while law of pleadings and evidence are
remedial or procedural laws.

JUDICIAL ORGANIZATION

1. Regular courts. At the top of the judicial tree is Supreme Court. Under Batas
Pambansa 129 (Judiciary Reorganization Act) the following regular courts
are created:

A) Intermediate Appellate Court. It operates in 10 divisions each comprising

five members. It sits en banc only to exercise administrative, ceremonial
or other non-adjudicatory functions;

B) Regional Trial Court. It is presided by 720 Regional Trial Judges in each

of the 13 regions of the country.

C) Metropolitan Trial Court. It exists in each metropolitan area established

by law; a Municipal Trial Court in every city not forming part of
Metropolitan area and in each of the municipalities not comprised within
a Metropolitan area; and a Municipal Circuit Trial Court in each area
defined as a Municipal Circuit comprising one or more municipalities
grouped together according to law.

2. Special Courts. Examples of these are:

a) Court of Tax Appeals. It is created by virtue of R.A. No. 1125 as amended;

purposely to exercise excluding appellate jurisdiction to review on appeal
decisions of the Commissioner of Internal Revenue and the
Commissioner of Customs.

b) Under Section 1. Article VIII, of the Philippine Constitution the congress

is mandated to create a specialized court to be known as Sandiganbayan
in the implementation of this constitutional mandate.

3. Quasi-judicial Bodies. They are administrative organs of the government

exercising judicial functions such as the Civil Service Commission, Securities
and Exchange Commission, National Labor Relations Commission,etc.
These bodies usually belong to the executive department except those that
are constitutionally mandated as independent commissions.

JUDICIARY REORGANIZATION ACT (B.P. 129)

This act was conceived to usher a major revamp in the judiciary, which is the
first reorganization of all courts except the Supreme Court and the Sandiganbayan.
 The primary objectives of the reorganization are:

1) To restructure the judicial system;

2) To appoint new judges of integrity and competence;

3) To retain those of magnificent records of dedication to the public service;

and

4) To promote the deserving and eliminate the inefficient.

To sum it all, the primary aim is to preserve the democratic doctrine that “public
office is a public trust.”

COURTS CREATED UNDER BATAS PAMBANSA 129

Under Batas Pambansa No. 129, the present Court of Appeals is renamed
Intermediate Appellate Court with 50 members in 10 divisions of 5 justice each. Four of
ten divisions will concentrate on criminal cases and the two on specialized cases.

The existing Courts of First Instance, Courts of Agrarian Relations, Criminal

Circuit Courts and Juvenile and Domestic Relations Courts are grouped into Regional Trial
Courts. Other courts created are Metropolitan Trial courts, Municipal Trial Courts; and
Municipal Circuit Trial Courts.

LAW ON AGENCY

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 of authority of the
letter. This codal definition was criticized by Justice J. BL. Reyes as defective, for the true
essence of agency lies in that the agent enters or is designed to enter into judicial
(juridical) relations, with or without representation of the principal. In its simplies
definition, agency is a relation based upon an express or implied agreement whereby one
person, the agent, is authorized to act under the control of and for another, his principal,
in making contracts with third persons.

CHARACTERISTICS. The contract of agency can be characterized as follows: a)

principal; b) nominated; c) bilateral; d) preparatory; e) commutative; f) onerous; and f) g)
fiduciary, because it is based on trust and confidence.

AGENCY enables man to increase the range of his individual and corporate activity by
enabling him to be constructively present in many places and to carry on diverse activities
at the same time.

PARTIES TO THE CONTRACT. The parties to the contract of agency are the principal
and the agent, the principal is the on primarily concerned with the contract. It is he whom
the agent represents and from whom he derives authority. On the other hand, the agent
is the one who acts or stands for another.

WHO MAY BE PRINCIPAL? Any person, if he is competent to act for himself, may act
through an agent. He must therefore be capacitated to give consent. The principal maybe
natural (human being) or a juridical person such as corporation lawfully organized. Under
the law, an emancipated minor can be a principal. In other words a minor maybe a
principal; however, his resulting act is voidable.

WHO MAY BE AN AGENT? Under the law, the agent must be able to bind himself, but
only as far his obligations to his principal are concerned. The principal must be
capacitated, for it is immaterial whether or not the agent is capacitated to make a
contract for himself because he (agent) assumes no personal liability.

CRATING THE AGENCY. There are five types of creating agency, namely, a)
Authorization by appointment; b) Authorization by conduct; c) Agency by ratification; d)
Agency by estoppel; and e) Agency by operation of law.

1) AUTHORIZATION BY APPOINTMENT. The usual method of creating

agency is by express authorization. This is one kind of agency according to
the manner of constitution. Observe that there are transaction where the law
requires the contract of agency to be in writing. An example is Article 1874
of the new Civil Code which states that “when a sale of land or any interest
therein is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void” . A written authorization of agency is known
as power of attorney. It is either a general or special power of attorney.

2) AUTHORIZATION BY CONDUCT. According to manner of constitution, an

agency may be implied from (a) acts of the principal such as the principal
such as the principal’s conduct that gives an agent a reasonable belief that
the principal consented to his acting as agent; (b) principal’s silence such as
acquiescence by the principal for failing to object to the acts done by an
alleged agent;(c) principal’s lack of action; and (d) principal’s failure to
repudiate the agency.

3) AGENCY BY RATIFICATION. The principal is not bound if the agent acted

in excess of his authority, unless subsequently ratified by him (principal).
Example: An agent was only authorized to sell principal’s land in
Pangasinan. But what he sold was the principal’s land in Paranaque. The sale
is null and void, unless ratification is obtained by the agent from the
principal.

4) AGENCY BY ESTOPPEL. A person who clothes another with apparent

authority as his agent, and holds him out to the public as such, cannot be
 permitted to deny the authority of such person to act as his agent to the
rejudice of third person dealing with him in good faith.

Example: “A” informs “B” that “X” is “A’s” agent. In this example “A” cannot deny
liability, for what was created is an agency by estoppel.

5) AGENCY BY OPERATION OF LAW. Under Article 165 of the New Civil

Code, the husband as administrator of the conjugal partnership is an agent
who can bind conjugal property subject to legal restrictions. Also, the wife
may be appointed as agent or administrator by the husband over his capital
(exclusive property of the husband)

Termination of agency; The modes of extinguishing agency are as follows:(a) By its

revocation; (b) By withdrawal of the agent (c) By the death , civil interdiction, insanity or
insolvency of the principal or of the agent; (d)By dissolution of the firm or corporation
which entrusted or accepted the agency; (e)By the accomplishment of the object or
purpose of the agency; and (f)By expiration of the period for which the agency was
constituted. Other instances include: a) Termination by mutual consent; b) Novation; and
c) Loss of the subject matter of the agency.

1) Revocation; Agency is generally revocable at the will of the principal because

the trust and confidence may have been lost. Thus, the principal may compel
that agent to return the document evidencing the agency. The revocation so
made may be express or implied.

2) Withdrawal of the agent; the agent may withdraw from the agency by giving due
notice to the principal. If the principal will stand to suffer damages by reason of the
withdrawal or renunciation, the agent is liable for damages that the principal sustains.
However, the agent will not be liable if the renunciation is based upon the impossibility
of continuing the performance of the agency without grave detriment to him, such as
by reasons of health.

3) Death; The death of either the principal or agent terminates the agency, even if a
period had been stipulated and such period has not yet ended. However, anything done
by the agent, without knowledge of the death of the principal or of any other cause which
extinguishes the agency is valid and shall be fully effective with respect to third persons
who may have contracted with in good faith.

4) Insanity; The insanity of either the principal or agent terminates the agency.
However, if the incapacity is temporary, the authority is only suspended not terminated.

5) Dissolution; The dissolution of the firm or corporation whether it be the principal

or agent, extinguishes the agency.
 6) Accomplishment; The accomplishment of the object or purpose of the agency
terminates the contract of agency

7) Expiration; when it is provided in the contract that the agency shall last for a
specified period of time, it terminates upon the expiration of such period.

8) Rescission; the contract of agency may be terminated by rescission to the same

extent that any other contract may also be terminated.

Engineer as agent; as an agent of is client (owner), an engineer has certain duties to

perform under the law. Being considered qualified and competent in his learned skill, it is
implicit that in the exercise of his knowledge he must take proper care and diligence of a
good father.

GROUP 4

LAW ON PROPERTY
(Jade Eunice Masiclat)

Under Article 414 of the New Civil Code, property, considered as an object, is that
which is or may be appropriated. While it is true that property is a thing, not all things are
properties. The term thing is a boarder in scope for it includes appropriable and non-
appropriable objects. The stars and the sun are things but not properties because they
cannot be appropriated.

Kinds of property. Properties may be classified in so many ways, namely:

a.) mobility or non-mobility (such as personal property)
b.) ownership (such as public and private dominion)
c.) alienability (within and outside the commerce of man)
d.) existence (such as present property and future property)

Personal Property (movable). All things which can be transported from place to place
without impairment of the real property to which they are fixed are personal properties.
Under the law, personal property includes:
a.) those movables susceptible of appropriation which are not considered real
properties
b.) real property which by any special provision of law is considered as personal
c.) forces of nature which are brought under control by science

Real property (immovable). Real property refers to anything fixed, permanent and
immovable, such as land, buildings, roads, and constructions of all kinds adhered to the
soil. It is classified according to:
a.) nature (like trees)
b.) incorporations (like buildings)
c.) destination or purpose (like an art work engraved on the wall by the owner with the
intention to attach it permanently)
d.) analogy (like easements, servitude, or contact for public works)

What is ownership? Ownership is independent and general right of a person to control a

thing particularly in his possession, enjoyment, disposition, and recovery, subject to no
restrictions except those imposed by the State or private persons, subject to the
provisions of the law. It may be exercised over things or rights.

Rights of an owner. Under Article 428 of the New Civil Code, the owner has the right:
a.) to enjoy
b.) to dispose
c.) to recover or vindicate his property

The right to enjoy includes the right:

a.) to possess
b.) to use
c.) to the fruits

The right to dispose includes the right:

a.) to consume, destroy, or abuse
b.) to encumber or alienate, that is, he may sell his property.

What is possession? Under Article 523 of the New Civil Code, possession is the holding of
a thing or the enjoyment of a right. It has a dual aspect:
a.) Right to possession is an incident of ownership. Thus, if one owns a house, he has also
the right to possess it.
b.) Right of possession is independent of ownership. If by virtue of a lease contract “A”
leases his house to “B”, “A” owns the house but “B” is entitled to possess the house during
the lease period.

LAW OF PATENT
(Joshua Pamandanan)

A patent is an exclusive right over an invention to sell, use and make the same
whether for commerce or industry. It is a grant by the State or Sovereign to a designated
person or corporation, of a certain rights or privilege , generally in consideration of some
act or service performed by the grantee.
Patentable inventions
Under the law, an invention is patentable if it complies with the following essential
requisites;
It is new
It consist of a useful machine , manufactured product or substance or process or
improvement.

Invention not patentable

Under the law, inventions not patentable include:
a.) those that are immoral and against public policy
b.) those that are mere abstract ideas or theorem
c.) Product of nature are not patentable

Infringement-the unlawful invasion of right to monopoly granted to a patentee.

Patent Office
-In case arising from the violation of the patent right, the same should be filed at
the Patent Office.
-However, the ultimate decision on the merits of all issues and the questions
should be exercised be the Director of Patents.

Law on Copyright
(Clarisse Joy Caisip)

Copyright
Governed by the law on intellectual creation that is , Presidential Decree No. 49
which was promulgated on November 14, 1972.
It is an intangible incorporeal right to certain literary, scholarly, scientific and
artistic productions granted by the law to the author or creator of the work, and giving
him, his heirs and assigns the exclusive privilege to:
Print, reprint, publish, copy, distribute, sell and photo-reproduce the work;
Translate, arrange, adapt, and convert the work from dramatic to non-dramatic and vice
versa;

Exhibit, perform, represent, produce or reproduce the work for profit or

otherwise; and to make any other use or disposition of it.

 Works protected
 Books, manuscripts, directories, gazettes;
  Periodicals;
 Lectures and sermons;
 Letters;
 Dramatic composition and choreographic works;
 Musical compositions;
 Works of drawing, painting, architecture, sculpture and other works of art;
 Reproductions of works of art;
 Ornamental designs;
 Maps, sketches, plans and charts;
 Drawings or plastic works;
 Photographic works;
 Cinematographic works;
 Computer programs;
 Prints, labels, tags, box wraps;
 Dramatizations, translations of the literary, musical, or artistic works or of
works of the government;
 Collections of literary, scholarly or artistic work.

Works not protected

Work of any government officer or employee as a part of his regularly prescribed duties;
Statutes (law) rules and regulations of government offices, and decisions rendered by
court; and
Reports by media of current events.

Infringement and remedies

It is an invasion of a copyrighted work, that is, use without the permission of copyright
holder.

To determine whether or not there is copyright infringement, the factors to be

considered include:

 The purpose and character of the use;

 The nature of the copyrighted works;
The amount and substantiality of the portion used in relation to the copyrighted work as
a whole;
The effect of the use upon the potential market for or value of the copyrighted
work :

To deliver for destruction, all copies, devices and other means use for making the
infringing copies, and;
Other liabilities including moral and exemplary damages.

LAWS ON TRADEMARKS , TRADE NAME , SETVICEMAKS

(Agustin Panaon)

The term trademarks include any word name symbol or device or any combination
there of adopted and used by a manufacture or merchant to identify goods distinguish
them examples : Magnolia ice cream.On the other, trade name is any disignation which is
adopted and used by a person to identify the goodshe markets services. It is desciptive of
manufacture or dealer protection in trade to avoid confusion businesss and to secure the
advantage good reputation and is applied more to the good will of a business than as
identification of the product: Examples: San Miguel Corporation.

Philosopy behind the law regulating the use of trademarks.

The reason for the regulation of the use of trademarks, trade name, and service
marks, lies on the very essence of property right.

Purpose of trademarks, tradename.

The purpose of trademarks is to point out distinctly the origin or ownership of the
goods so as protect the owner against fraud and unfair competition.

Trade marks, names or marks not registrable.

1. Those which are immoral, deceptives and scandalous.
2. Those bearing the philippines flag, coat of arms, or insight.
3. Names of living and names of deceased philippines President.

Infringement and remedies.

The unauthorized use or colorables imitation of the marks already appropriated
by another on goods of a similar class in is infringement.
The remedies in case of infringement includes.
a. injuction.
b. seizure and destruction of all necessary paraphernalia.
c. damages

Criminal law
(Russel Cunanan)

Acts and omissions punishable by law are felonies (delitos). Felonies (crimes) are
committed not only by means of deceit but also by means of fault. Note that there is
deceit when the act is performed by deliberate intent and there is fault when the wrongful
act result from imprudence,negligence,lack of foresight or lack of skill.Engineers in the
practice of their profession are usually charged either criminally or civilly under the
second instance of committing a felony, that is, there is fault resulting from imprudence
negligence, lack of foresight or lack of skill.

Who are criminally liable?

-By any person committing a felony (delicto) although the wrongful act done be different
from that which he intended.
-By any person performing an act which would be an offense against person or property,
were it not for the inherent impossibility of its accomplishment or on account of the
employment of inadequate or ineffectual means.

Stages in the commission of a felony. The following are stages in the commissions of the
felony:
l.) A felony is consummated, when all the requisites necessary for its execution
and accomplishment are present such as a person who booed another resulting in the
latter's death.
2.) By any person performing an act which would be an offense against person or
property, were it not for the inherent impossibility of its accomplishment or on account
of the employment of inadequate or ineffectual means.

Stages in the commission of a felony. The following are stages in the commissions of the
felony:
l) A felony is consummated, when all the requisites necessary for its execution and
accomplishment are present such as a person who booed another resulting in the latter's
death.
2) A felony is frustrated when all the acts of execution have been performed but
the felony is not produced because of a cause independent of the perpetrators will, such
as a person, -with intent to kill, shoots another; but due to the immediate surgical
operation, the latter does not die.
3) A felony is attempted, when the offender commences the commission of a
felony directly by overt acts, and does not perform all the acts of execution which should
produced the felony by reason of some cause or accident other than his own voluntary
desistance, such as the passing by of police patrol car which prevents the continuation of
the overt acts.

Criminal negligence
 Any person who by reckless imprudence shall commit any act which, had it been
intentional would constitute either as a grave felony, less grave felony, or light felony, is
liable under the law. The term reckless imprudence consists in voluntarily, but without
malice (intent), doing or failing to do an act from which materials damages results by
reason of inexcusable lack of precaution on the part of a person performing or failing to
perform an act, taking into consideration his employment or occupation, degree of
intelligence, physical condition and other circumstances regarding persons, time and
place.

LEGAL RESPOSIBILITY OF AN ENGINEER

(Rosepie Martin)

The standard of care. Under Article 1173 the Civil Code, “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 performs, of the time, of the
place. If the law of 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. “The
concept of diligence or standard of care in common law is many. It is variously reffered to
as “a reasonable man.” :a man of ordinary prudence” or “a man using ordinary care and
skill”. In other words, the law imposes on every person an obligation to practice his
profession with a reasonable degree of care and skill. Such obligation applies not only to
engineers or architect s but also to other professions. Thus in one case, it has been held,
“He is in the same position as any order professional or skilled person, and is responsible
if he omits to do it with an ordinary and reasonable degree of care and skill”. Because he
had exercises diligence, there can be no negligence. Henceforth, no damage is done or
injury incurred.

Test to determine the existence of negligence. To determine whether or not an

engineer exercises reasonable and proper degree of care and skill, one has to consider
the practice of the profession. State otherwise, when is the engineer negligent? The test
by which to determine the existence of such negligence in a particular case is: did the
defendant (engineer) in doing the alleged negligent act use that reasonable care and
caution which an ordinary prudent person would have used in the same situation? If not,
then he is guilty of negligence. Or, could a prudent man in the case under consideration,
foresee harm as a result of the course actually pursued? If so, it was duty of the actor
(engineer) to take the precaution to guard against the harm.
In one case, it had been held, “The question whether the architect or engineer has
used a reasonable and proper amount of care and skill is that appears to rest on the
consideration whether other person exercising the same profession, and being men of
experience and skill therein would or would not have acted in the same way as the
architect in question. It is evidence of ignorance and unskillfulness in any particular act
contrary to the established principles of art or science which are university recognized by
members of the profession.”
Tort as basis of liability. Under Article 2176 of the New Civil Code, “Whoever by act
of commission causes to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called quasi-delict,” The tort of negligence is therefore the
absence of the exercise of the acre of a reasonable and prudent man where a duty to
exercise such care exists, with regard to the circumstances of any act omission or its
consequences, which results in damage to another. For instance, injury sustained by third
parties resulting from the defective construction of scaffoldings which fell to the ground
caused by engineer’s negligence is caused of action. Similarly, an architect (engineer) may
be held for damages as a result of improper drainage of sewage water from construction
site under his control and supervision.

Contract as basis of liability. Obligation arising from contracts have the force of law
between the contracting parties and should be complied with in good faith. The contract
contemplated here is either express or implied. Thus, failure on the part of engineer to
exercise the required standard of care and skill as stipulated, he will be liable to his client.

Damages. A pecuniary compensation or indemnity, which may be recovered in the

courts by any person who has suffered loss, detriment or injury, whether to his person,
property, or rights, through the unlawful act or omission or negligence of another
damages. Similarity, damages is a sum of money awarded to a person injured by the tort
of another.

(Allan Ong)

Under existing jurisprudence, engineers or architects are liable to the owner

(client) for negligence in the preparation of plans and specifications. Thus, constructions
made out of substantially defective plans and specufications can be ordered destroyed by
the owner. The damages has to be borne by the engineer/architect. Similarly, under
Article 1723 of the New Civil Code the engineer or architect who drew up the plans and
specifications for a building is liable for damages if within fifteen years from the
completion of the structure, the same should collapse by reason of defects in those plans
and specifications, or due to the defects in the ground. Moreover, the contractor is
likewise responsible for the damages if the edifice collapse, within the same period, on
account of defects in the construction or if the materials used is of inferior quality, or due
to any violation of the terms of the contract. If the engineer or architect supervised the
construction work, he shall be solitarily liable with the contractor. Also, it is provided that
acceptance of the building, after completion, does not imply waiver of any of the causes
of action by reason of any defect mentioned. Observe that the action must be brought
within ten years following the collapse of the building.
Under the law, damages may be:
Actual
Moral
Nominal
Temperate or Moderate
Liquidated; or
Exemplary or Corrective

The engineer as technical adviser

The engineer may be invited or employed as a technical adviser in areas where his
services are needed. In investigations or inquiries being conducted by judicial or quasi-
judicial bodies on a particular question of science, art, or trade, the engineer may assist
in several ways:
a) He may assist in the preparation of evidence, be it testimonial or
documentary, in cases where he is called upon to testify;
b) He may conduct technical investigations and make proper reports to
strengthen the evidence to be presented;
c) He may prepare evidence in the form of exhibits for presentation in the
proper investigating body; and
d) He should make himself always available as the need arises in cases where
his opinion is sought. It should be noted, however, that the function of an
engineer is only to assist the lawyer. He must not usurp the powers that
rightfully belong to the lawyer.
The engineer as an expert witness
In the practice of his profession, the engineer may unavoidably by dragged to
court litigation. In other words, he may be called upon to testify on a stand or position as
an expert. The opinion of a witnes is not admissible except when it is an expert evidence.
Under the Rules of Court, expert evidence is the opinion of a witness regarding a question
of science, art, or trade, when he is skilled therein.
a) Training and education
b) Particular first-hand familiarity with the facts of the present case; and
c) Presentation of the authorities or standards on which his opinions are
based.

GROUP 5
Chapter Three
Law On Contracts
The law of contracts is actually an integrated subject with the law of obligations. Thus, in
order for one to have a complete framework of study on this particular business law
subject, it is only proper that the law of obligations will be discussed ahead of the law of
contracts.

MEANING OF OBLIGATION
The term “obligation” comes from the latin word “obligare”, meaning to bind. The
civil code defines obligation as a juridical necessity to give, to do or not to do. Under this
definition, an obligation consists either in (a) giving, (b) doing, or (c) not doing something.

EXAMPLE
Obligation to give. “A” entered into a contract with “B” whereby the former bound
himself to deliver to “B” a specific car on June 5, 2006.
Obligation to do. “A” and “B” entered into an agreement whereby the former
obliged himself to fix the car of “B”.
Obligation not to do. “A” and “B” signed a contract whereby the former bound
himself with “B” not to construct a fence on a land belonging to the latter for the period
of (5) years.

ESSENTIAL REQUISITES OF OBLIGATION

1. PASSIVE SUBJECT – THE DEBTOR OR OBLIGOR
2. ACTIVE SUBJECT – THE CREDITOR OR OBLIGE
3. OBJECT OR PRESENTATION – SUBJECT MATTER
4. JURIDICAL TIE, LEGAL TIE OF THE VINCULUM – EFFICIENT CAUSE

EXAMPLE
“X” promised to construct a condominium for “Y” for one million pesos by virtue of
contract signed by them.
- “X” is the passive subject who has the obligation/duty to construct.
- “Y” is the active subject who has the right to demand the fulfillment.
- “the construction of the condominium” is the object or the presentation.
- “the contract” is the juridical or legal tie that binds the parties to the obligation.

SOURCES OF OBLIGATIONS
Article 1157 of the New Civil Code provides that obligations arise from: Law, Contracts,
Quasi-contract, Acts or omissions punished by law, Quasi-delicts.

I. OBLIGATIONS DERIVED FROM LAW:

Obligations derived from law are not presumed. Only those expressly determined in this
code or in special laws are demandable and shall be regulated by the precepts of the law
which establishes them, and as to what has not foreseen by the provisions of the civil
code.
EXAMPLES: The obligation mandating every person to act with justice, give everyone his
due and observe honesty and good faith in the exercise of his rights and in the
performance of his duties.
II. OBLIGATIONS DERIVED FROM CONTRACTS:
Obligation arising from contracts have the force of law between the contracting parties
and should be complied with in good faith. While it is a truism that an agreement between
the parties has the force of law, the contract must however be valid and enforceable and
must not be contrary to law, morals, good customs, public order or public policy.
EXAMPLES: “X” agrees to sell his car to “Y” and the latter agrees to buy the car of “X”
voluntarily. The agreement has the force of law. Thus, neither parties should violate the
terms and conditions of the contract for it is required by the law that the same must be
complied with in good faith.

III. OBLIGATIONS DERIVED FROM QUASI-CONTRACTS:

TWO KINDS OF QUASI-CONTRACTS
(a) Negotiorum gestio
(b) Solutio indebiti

(a) Negotiorum gestio- It is the voluntary management of the property or affairs of

another without the knowledge or consent of the other.
EXAMPLE: “A” went abroad with his family without leaving anybody to look after his
house. While abroad, a strong earthquake occurred resulting in the destruction of “A’s”
house. Because of the magnanimity of “B”, “A’s” neighbor, the house was repaired.
However, “B”, incurred some expenses. In this case, “A” is obliged to reimburse the
expenses of “B” in a legal relationship known as negotiorum gestio.

(b) Solutio indebiti- It is a juridical relation which takes place when something is received
when there is no right to demand and was unduly delivered through mistake. The
obligation to return it arises.
EXAMPLE: “A” owes “B” the sum of P2,000.00. “A” paid “B” the sum of P3,000.00 not
knowing that the former incurred only a debt amounting to P2,000.00. In this example,
“B” is duty-bound to return the excess of P1,000.00 based on the principle of solution
indebiti.

IV. OBLIGATIONS DERIVED FROM DELICTS OR CRIMES:

- Acts or omissions punished by the law are crimes or delicts. Under the law a person who
commits a criminal offense, such as murder, is obliged to pay for the injury thus inflicted.
EXAMPLE: “A” boloed “B” resulting in the latter’s death. If “A” is found guilty thereof, he
is liable to indemnify the heirs of the deceased. This indemnification constitutes the civil
liability of the culprit.

V. OBLIGATIONS DERIVED FROM QUASI-DELICTS:

- Is an act or omission by one person which causes damage to another giving rise to the
obligation to pay for the damage done, there being fault, and there is no pre-existing
contractual relation between the parties.
EXAMPLE: A pedestrian who was hit by a speeding jeepney due to negligence may claim
damages by reason of quasi-delict or culpa aquiliana.

SCOPE OF QUASI-DELICTS
v Whether punishable by law or not
v Whether criminal or not criminal in character
v Whether intentional or voluntary
v Or negligent, which result in damage to another

PERSON LIABLE FOR DAMAGES ARISING FROM QUASI-DELICTS:

(a) The father and in case of his death or incapacity the mother, with respect to
damages caused by the minor children who live in their company.
(b) Guardians with respect to damages caused by the minor or incapacitated persons
who are under their authority and who live in their company.
(c) The owners and managers of an establishment or enterprise, with respect to
damage caused by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
(d) Employers, with respect to damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.
(e) The state when it acts through a special agent; but not when the damages has been
caused by their pupils and students or apprentices, so long as they remain in their
custody.

NATURE AND EFFECTS OF OBLIGATION

Article 1163 of the New Civil Code provides that, “Every person obliged to give
something is also obliged to take care of it with the proper diligence of a good father of
the family, unless the law or the stipulation of the parties requires another standard of
care”.
OBLIGATION TO GIVE A DETERMINATE THING
Under Article 1166 of the New Civil Code, the obligation to give a determinate thing
includes that of delivering all its accessions and accessories even though they may not
have been mentioned.
Accession pertains to the fruits of a thing or addition to or improvements upon a thing
(the principal) such as trees planted on land and rents on buildings.
Accessories, on the other hand, pertain to things joined to or included with the principal
thing for the latter’s embellishment, better use, or perfection.

OBLIGATION TO DO
Article 1167 of the New Civil Code states that if a person obliged to do something
fails to do it, the same shall be executed at his cost. The same rule shall apply if he does
it in contravention of the tenor of the obligation. Moreover, if he performs his obligation
in a poor manner, it can be ordered undone.

OBLIGATION NOT TO DO
This is a negative obligation. It is the mandate of Article 1168 of the New Civil Code
that when the obligation consists in not doing, and the obligor does what has been
forbidden him, it shall be undone at his expense.

OBLIGATION TO DELIVER
The obligor may bind himself to deliver either a specific (determinate) or generic
(indeterminate) thing. It is generic or indeterminate when it refers only to a class or genius
and cannot be pointed out with particularly, such as a dog, a car, a calendar watch.
RIGHT TO THE FRUITS
The creditor has a right to the fruits of the thing from the time the obligation to
deliver it arises. However, he acquires no real right over it until the same has been
delivered to him.

KINDS OF FRUITS CONTEMPLATED UNDER ARTICLE 1164 OF THE NEW CIVIL CODE ARE
THE FOLLOWING:

NATURAL FRUITS- They are the spontaneous products of the soil, and the young and other
products of animals.
INDUSTRIAL FRUITS- They are produced through cultivation; thus, with intervention of
labor such as vegetables planted in the garden.
CIVIL FRUITS- They pertain to those derived by virtue of juridical or legal relations such as
rents on houses or buildings by virtue of a lease contract.

WHEN ONE INCURS DELAY

 A person obliged to deliver or to do something incurs in delay from the time the
obligee (creditor) judicially demands from him the fulfillment of his obligation.

DEMAND NOT NECESSARY TO PUT DEBTOR IN DELAY

The general rule is “No demand, no delay”. However, under the following
instances, demand is not necessary to put debtor in delay.

OBLIGOR NOT LIABLE FOR FORTUITOUS EVENT

Generally, the obligor is not liable for fortuitous event, that is, any event which
cannot be foreseen, or which, though foreseen is inevitable, except in cases expressly
specified by the law, or when it is otherwise declared by stipulation or when it is otherwise
declared by stipulation or when the nature of the obligation requires the assumption of
risk.

RESPONSIBILITY ARISING FROM FRAUD

There is fraud when a party to the contract intentionally evades the performance
of his obligation through deceit thereby causing injury or damage to other.

RESPONSIBILITY ARISING FROM NEGLIGENCE

Negligence is the failure to use such care as a reasonably prudent and careful
person would use under similar circumstances. The term refers also to that legal
delinquency which results whenever a man fails to exhibit care whether it be slight,
ordinary or great.
Negligence is the result of failure to observe diligence. It is characterized chiefly by
inadvertence, thoughtlessness, inattention and the like.

KINDS OF OBLIGATION
The primary classifications of obligation under the Civil Code are: (a) Pure and conditional,
(b) Obligations with a period, (c) Alternative and facultative obligations, (d) Joint and
solidary obligations, (e) Divisible and indivisible obligations, and (f) Obligations with a
penal clause.
The secondary classifications of obligations includes: (a) Unilateral and bilateral
obligations, (b) Real and personal obligations, (c) Determinate and generic obligations, (d)
Civil and natural obligations, and (e) Legal, conventional, and penal obligations.

PURE OBLIGATION
An obligation which is not subject to any condition or burden and whose performance
does not depend upon a future or uncertain event or upon a past event unknown to the
parties and immediately demandable.
Example
“A” promise to give “B” the sum of P1000.00. The obligation to pay is demandable
at once because there is no specific date mentioned for its performance.

CONDITIONAL OBLIGATION
An obligation whose performance is subject to any condition. A condition is classified into
suspensive and resolutory. A suspensive condition is one the fulfillment of which gives
rise to an obligation. Ex. “A” binds himself to give “B” a car as soon as “A’s” mother arrives
from Canada. The obligation is demandable only upon the fulfillment of the condition. A
resolutory condition is one the fulfillment of which extinguishes an obligation already
existing. Ex. I will allow you to use my car until you pass the Bar Examinations. Here, the
obligation is immediately demandable but it will be extinguished upon the happening of
the condition.

OBLIGATION WITH A PERIOD

An obligation whose performance is subject to the expiration of said period or term.
Legally, a period or term is a future and certain event, the arrival of which, either give rise
or terminates the obligation. It is a day certain which must necessarily come although it
may not be known.
The Law classifies period into: (a) Ex die; (b) In diem; (c) Legal; (d) Voluntary; and (e)
Judicial
• Ex die or suspensive period. It is a period having a suspensive effect.
• In diem or resolutory period. It is that which takes effect immediately but is
terminated upon the arrival of the day certain.
• Legal period. If the period for compliance is fixed by the law such as payment of
taxes.
• Conventional or voluntary period. One that is agreed upon by the parties.
• Judicial period. One that is provided or fixed by the courts.

ALTERNATIVE OBLIGATION
An alternative obligation is one wherein various prestations are due, but the performance
of one of them is sufficient. The right to choose belongs to the debtor (obligor) unless it
has been granted expressly to the creditor (obligee).
Example:
“A” binds himself to deliver to “B” either gold ring or gold watch. “A” should deliver
any of the two.

FACULTATIVE OBLIGATION
An obligation where one prestation is due but the obligor (debtor) may substitute
another.
Example:
“A” binds himself to deliver to “B” a Volkswagen car but they mutually agree that
the former may deliver a Toyota car as a substitute.

JOINT OBLIGATION
An obligation where the whole obligation is to be fulfilled proportionately by the different
debtors and each one of the creditors is entitled to a proportionate part of the credit.
Other terms used to indicate joint liability are : (a) mancomunada; mancomunadamente;
pro rata; proportionately; individually; separately. “We promise to pay” signed by two or
more persons.
Example:
“A” and “B” are jointly indebted to “C” in the sum of P2000.00. In this example “C”
can only demand P1000.00 each from “A” and “B”. Thus, “A” is liable for P1000.00 and
“B” is likewise liable for P1000.00.

SOLIDARY OBLIGATION
An obligation where each of the debtors is liable for the whole obligation and each of the
creditors has a right to demand compliance of the entire obligation. Observe that there is
solidary liability when: (a) the obligation expressly so states; (b) the law require solidarity;
or (c) the nature of the obligation requires solidarity. Other terms used to indicate
solidarity are: (a) jointly and/or severally ; solidaria ; in solidum; together and/or
separately; individually and/or collectively; juntos separadamente ; “I promise to pay”
signed by two or more persons.

Example:
“A” and “B” are solidary debtors of “X” and “Y” in the amount of P10000.00. In this
example, either “A” or “B” maybe compelled by either “X” or “Y” to pay the entire
obligation of P10000.00. If “A” pays P10000.00 to “X” the obligation is extinguished, but
he is entitled to be reimbursed by his co-debtor “B”.

DIVISIBLE OBLIGATION
An obligation capable of partial performance.
Example:
If “A” agrees to pay “B” P6000.00 in two installments, the obligation is divisible
because it is capable of partial performance.

INDIVISIBLE OBLIGATION
An obligation not capable of partial performance.
Example:
If “A” agrees to deliver a car to “B”, the car must be delivered as a whole for the
car itself is indivisible.

OBLIGATION WITH A PENAL CLAUSE

An obligation which contains an accessory undertaking to assume greater liability in case
of breach. It is attached to the principal obligation primarily to insure their performance.
Observe that there are two types of penalty to wit: (a) subsidiary; and (b) joint. In
subsidiary penalty, in case of breach, only the penalty ca be demanded. On the other
hand, both the principal obligation and the penalty (accessory obligation ) can be
enforced in joint penalty. It is however provided in one case, that iniquitous, merciless
and shocking to conscience shall not be enforced.

Example:
“A” promised to paint the house of “B” in the amount of P5000.00. An agreement with a
penal clause was signed that in case of breach, “A” would have to pay P500.00. If “A” fails
to perform his principal obligation, he can be compelled to pay the amount of P500.00.

MODES OF EXTINGUISHING OBLIGATIONS

Under the New Civil Code obligations are extinguished by the following
namely:
• Payment or performance
• Loss of the thing due
• Condonation or remission of the debt
• Confusion or merger of the rights of the creditor and debtor
• Compensation and
• Novation
Other causes of extinguishment of obligations include annulment, recession, fulfillment
of a resolutory condition and prescription. Also, the following are the modes of
extinguishing obligations to with:
• Death of a party in personal obligation
• Impossibility of fulfillment
• Happening of fortuitous event
• Arrival of a resolutory period
• Compromise agreement
• Mutual disagreement of parties. This is based on the principle of mutuality of
contracts, that is, the validity or compliance of a contract between the parties
cannot be left to the will of one of them.

PAYMENT OR PERFORMANCE
 • Ordinarily, payment is the delivery of money. As a concept in civil law, the term
payment consists of not only the delivery of money but also the performance, in
any other manner, of an obligation. Thus, a debt is not considered to have been
paid unless the thing or service in which the obligation consists has been
completely delivered or rendered, as the case may be.
Example.
“ A” binds himself to deliver to “B” P5,000.00, but he delivered only P4,500.00. In this
example, there is no payment of “A”.

SUBSTANTIAL PERFORMANCE IN GOOD FAITH.

The law provides that if the obligation has been substantially performed in good faith, the
obligor may recover as though there had been a strict and complete fulfillment less
damages suffered by the obligee (creditor).

Example.
“A” binds himself to paint the house of “B” with the brand name Dutch Boy. Due to
scarcity of such brand in the market the remaining portion of the house , the patio was
not painted with such brand, despite his desire to comply in good faith his obligation . In
this example, “A” can recover less the damages suffered by the obligee (creditor).

INCOMPLETE PERFORMANCE
When the obligee (creditor) accepts the performance knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is deemed
complied with.

Example.
“A” binds himself to deliver to “B” (10) bottles of Carlos Primero on the latter’s birthday.
“A” delivered only (9) bottles and “B” did not make any protest. In this example, the
obligation is deemed complied with because “B” knowing the incompleteness or
irregularity of the delivery did not make any objection and instead accepted the
performance.

WHO MAY MAKE PAYMENT.

Naturally, payment must be made by one having an interest in the performance of an
obligation. Under the law, the creditor is not bound to accept payment or performance
by a third person who has no interest in the fulfillment of the obligation, unless there is
an agreement to the contrary. Whoever pays for another may demand form the debtor
what he has paid, except that if he paid without the knowledge or against the will of the
debtor, he can recover only in so far as the payment has been beneficial to the debtor.
Example.
“A” owes “B” the amount of P5,000.00. Here “A” is the one who has an interest in the
performance of the obligation. “B” the obligee (creditor) cannot be compelled to accept
payment from “X”, a third person. If, however, “B” accepts payment without the
knowledge or against the will of “A”, the latter (debtor “A”), shall be liable to “X” only to
the extent the payment benefited him.

TO WHOM PAYMENT SHALL BE MADE.

Payment shall be made to the person in whose favor the obligation has been constituted,
or his successor-in-interest, or any person authorized to receive it. In other words it shall
be made to: a) the creditor (obligee) b) successor-in-interest, like an heir; and c) any
person authorized to receive it. In one case, it was ruled that “a person authorized to
receive it” is any person authorized by the creditor; a person authorized by law, such as
guardian or executor or administrator of the estate of the deceased; or assignee or
liquidator of a partnership or corporation.

EFFECT OF PAYMENT TO AN INCAPACITATED PERSON.

Payment to a person who is incapacitated to administer his property shall be valid if he
has kept the thing delivered, or insofar as the payment has been beneficial to him.
Payment made to a third person shall also be valid insofar as it has redounded to the
benefit of the creditor.

Example.
“A” owes ”B” in the amount of P5,000.00 which will mature on June 5, 2006. Before the
maturity date, “A” complied with his obligation but payment was made to “X”, a minor
under guardianship. If “X” kept the money or spent it to something beneficial to him, the
payment is valid. However, if “X” lost apart of it, say P2,000.00 through ignorance,
payment should apply only to the extent of P3,000.00.

PLACE OF PAYMENT
The following rules should apply in determining place of payment:
• If there is stipulation, the payment shall be made at the place designated in the
obligation.
• If there is no stipulation and the thing to be delivered is generic, the place of
payment shall be the domicile of the debtor. Note that in this case, the creditor
should bear th expenses in going to debtor’s place for the purpose of accepting
payment.

Example
 • “A” binds himself to deliver to “B” a specific car. In the contract, it shall be to the
place of “B”.
• In the above example, if there is no agreement and the car is located in the place
of “A” at the time of the perfection of the contract, the delivery shall be made at
“A’s” place.
• If “A” binds himself to pay “B” a sum of money, payment shall be made at the place
designated in the agreement. Otherwise, the law mandates “B” the creditor to
accept payment from the place of “A” the domicile of the debtor. However, “A”
would liable for whatever expenses “B” incured in going to “A’s” place.

MANNER OF PAYMENT
The debtor of a thing cannot compel the creditor to receive a different one although the
latter maybe of the same value as, or more valueble than which is due. In obligation to do
or not to do, an act or forbearence cannot be substituted by another act or forbearance
against the obligee’s will. Observe that in faculative obligations, the obligator is given the
right to perform another prestation in suostation. This is by virtue of a valid contract.

Example
“A” binds himself to deliver to “B” a 2006 Toyota Corolla Sedan. In this example, “B”
cannot be compelled to accept another brand, say, a 2006 Lancer Lambda. However, if
“A” delivered another brand, and “B” willingly accepted it, it is valid.

DEBTS IN MONEY PAYABLE IN LEGAL CURRENCY.

Payments of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender in the
Philippines. By the term legal tender is meant that which an obligor (debtor) may compel
an obligee (creditor) to accept payment of debt, public or private. All notes and coins
issued by the Central Bank of the Philippines, being the Central Monetary Authority, are
legal tender. Coins of denominations from P 0.05 or less are valid legal tender for the
amounts not to exceed P 20.00

SPECIAL FORMS OF PAYMENT

A person obliged to make payment may avail of the following special forms which include:
• DATION IN PAYMENT OR DACION EN PAGO.
It simply means giving by the debtor (obligor) and receipt by the creditor (obligee) of
something in payment of debt, instead of a sum of money. Note that under this type of
payment, consent of the parties is needed for it governed by the law on sales.
Example
“A” is indebted to “B” for the sum of P5,000.00. Instead of paying the amount, “A”
delivered a gold watch worth P5,000.00, which “B” willingly accepted.
b) APPLICATION OF PAYMENT
It is the designation of the debt to which payment should be applied made by a debtor
who has various debts of the same kind in favor of one and the same creditor.

Example
“A” owes “B” the amount of P5,000.00 payable june 5, another P5,000.00 with legal in
june 5 or june 21 obligation. However, if “A” chose to apply it to the second obligation, it
is not deemed paid until and unless the legal interest is also paid.

SPECIAL FORM OF PAYMENT

c.) PAYMENT BY CESSION – It is the assignment of all the properties of the debtor to his
creditors in payment of debts.
Example:
“A” binds himself to pay “B” the amount of P10,000.00. However since “A” has no
substantial cash, he may assign properties also valued P10,000.00 to his creditor. After
the sale of such properties, the creditor may apply the net proceeds to his credit.

d.) TENDER OF PAYMENT AND CONSIGNATION – by the term “Tender of Payment” is

means the act by which a debtor (Obligor) offers to the creditor (Obligee) the thing, or
the amount of money which he considers to be due.
NOTE that the consignation may also be made in the following instances:
• When the creditor is absent or unknown, or does not appear at the place of
payment.
• When he/she is incapacitated to receive payment at the time it is due.
• When, without just cause, he refuses to give receipt.
• When two or more persons claim the same right to collect; and
• When the title of the obligation has been lost.

Example:
“A” owes “B” the sum of P5,000.00. When the obligation became due, “A” offered
to pay “B” the sum of P5,000.00 in cash. However, “B” unreasonably refused to accept
payment. In this case, “A” could validly deposit the amount in court of competent
jurisdiction by giving notice to “B” before and after consignation is made. After taking the
formalities required by the law, “A” may then ask the court to issue an order cancelling
the obligation.

LOSS OF THE THING DUE

It is understood that the thing is lost when it perishes, or goes out of commerce, or
disappears in such a way that its existence is unknown or it cannot be recovered.
CONDONATION OR REMISSION OF THE DEBT
Condonation or Remission is Spanish law is the gratuitous abandonment by the creditor
of his right. It is essentially gratuitous for it signifies the liberality of the creditor (obligee).
Thus, it needs acceptance by the obligor. Note the law of donation governs this mode of
extinguishing obligation.
Example:
“A” binds himself to pay “B” the sum of P2,000.00. On maturity date, “B” remitted
the debt of “A”. As a sign of gratitude “A” sends a card of thanks. In this example, there is
complete condonation which extinguishes the obligation.

RENUNCIATION OF THE PRINCIPAL DEBT

Under the law, the renunciation of the debt shall extinguish the accessory obligation, but
the waiver of the latter shall leave the former in force. This is consistent with the legal
maxim, accessory follows the principal.
Example:
“A” owes “B” the sum P5,000.00 with a 10% interest. The remission by “B” of the
principal obligation (P5,000.00) will necessarily extinguish the accessory obligation (10%
interest). However, if what is remitted is the 10% interest, the principal debt remains to
exist.

CONFUSION OR MERGER
It is the union of the qualities of debtor and creditor in the same person, the effect of
which is generally to extinguish the debt.
Example:
“A” owes “B” P5,000.00 for which “A” issued a promissory note in favor of “B”
bearer. “B” indorsed the promissory note to “C”, and then to “D”. “D” indorsed back
promissory note to “A. in this example, the obligation arising from the issuance of
promissory note becomes absurd. “A” cannot enforce the obligation against himself.

MERGER IN THE PERSON OF PRINCIPAL DEBTOR OR CREDITOR

Under the law, merger which takes place in the principal debtor or creditor benefits the
guarantors.
Example:
“A” owes “B” the sum of P5,000.00 guaranteed by “C”. The merger of the qualities
of creditor and debtor in “A” extinguishes the obligation of “C”. The guaranty being an
accessory obligation is extinguished upon the extinguishment of the principal obligation.
Parenthetically, this is based on the legal maxim, accessory follows the principal.

MERGER IN THE PERSON OF GUARANTOR

Merger which takes place in the person of guarantor does not extinguish the principal
obligation although it extinguishes the guaranty. It is settled that the extinguishment of
the guaranty (accessory) does not include the extinguishment of the principal obligation.
Example:
In the former example, “B” may assign his credit to a third party, say “X”. Supposed
“X” assigns his credit to “C” the guaranty is extinguished. However, “C” becomes the
creditor of “A” for the latter’s obligation still subsists.

COMPENSATION
As a concept in civil law, compensation is set-off. Under the law, compensation takes
place when two persons, in their own right are creditors and debtors of each other. In
other words, compensation takes effect by operation of law and extinguishes the
concurrent amount of both debts although the parties (creditors and debtors) are not
aware of the compensation.
Example:
“A” owes “B” P5,000.00. In return, “B” owes “A” the sum of P5,000.00. Both debts
are due and demandable. Compensation takes place because “A” and “B” in their own
right, are creditors and debtors of each other.

KINDS OF COMPENSATION
• LEGAL. It takes place by operation.
• VOLUNTARY OR CONVENTIONAL. It takes place by agreement of the parties.
• JUDICIAL. It takes place with the concurrence of the court of competent
jurisdiction.
• PARTIAL. It takes place when two obligations are of different amounts and a
balance remains unextinguished.
• TOTAL. It takes place when two debts are the same amount.

NOVATION
A novation takes place when it substitutes a new party and discharges one of the original
parties to a contract by agreement of all parties. A new contract is created with the same
terms as the original one, but only the parties are changed.
REQUISITE OF A NOVATION ARE:
• A previous valid obligation;
• The agreement of all the parties to the new contract;
• The extinguishment of the old obligations; and
• The validity of the new one.
KINDS OF SUBSTITUTION
• EXPROMISION. It takes place when a third person at his own initiative and without
the knowledge or against the will of the original debtor assumes the latter’s
obligation with the consent of the creditor.

Example:
“A” owes “B” P5,000.00. A third person, “X” went to “B” and told the latter that he
will be the one to make the payment. If “B” agrees that “X” will take the place of “A” even
without the consent of knowledge of the later, there will be a novation of obligation
known as “expromision”.

• DELEGACION. Takes place when the creditor accepts a third person to the place of
the debtor with the consent of the latter. It is necessary that all the parties, the old
debtor, the new debtor and the creditor must agree to the substitution.

Example:
“A” bind himself to deliver to “B” three (3) sacks of rice. Subsequently, “A” brought
with him his friend “X”, to “B”, and requested the latter to accept “X” as the one who will
undertake the delivery of three (3) sacks of rice. If “B” agreed to the proposal of “A”, “A’s”
obligation will thus be extinguished and substitution by delegacion took place.

GROUP 6
MEANING OF CONTRACT

(Jeffrey G. Peña)

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. According to a civil law
authority, Sanchez Roman, a contract "is a juridical convention manifested in legal form,
by virtue of which one or more persons bind themselves in favor of another or others, or
reciprocally to the fulfillment of a prestation to give, to do or not to do.

As distinguished from and obligation, a contract is one of the sources of obligation, while
the latter is the legal relation itself. Th contract is the very agreement of the parties; while
the obligationis the remedy which the law affords for its enforcement.

EXAMPLE:

1. Contract to give something.

"A" offers to "B" his 2006 Toyota Corolla car for P50, 000.00. "B" accepts the offer for such
amount. Since there is a contract, "A" must deliver the 2006 Toyota Corolla to "B", but
the latter is obliged to pay the sum of P50, 000.00.

2. Contract to render service.

"A" binds himself to construct the house of "B" for P100, 000.00. This is a contract to
render some service.

ELEMENTS OF A CONTRACT
A contract consists of three (3) elements, namely:

a. Essential

b. Natural

c. Accidental

Essential elements are those without which no contract can validly exist. The requisites
of a contract are:

a. Consent of the contracting parties

b. Object certain which is the subject matter of the contract

c. Cause or consideration of the obligation which is established

Natural elements are those that are presumed to exist in certain contracts unless the
contrary is expressly stipulated by the parties, like warranty against hidden defects in a
contract of sale.

Accidental elements are the particular clauses, terms, or conditions established by the
parties in their contract like interests and penalties.

STAGES OF CONTRACT
There are three (3) stages in the life of a contract, namely:

a. Preparation; conception or generation

b. Perfection or birth

c. Consummation or termination

1. Preparation, conception, or generation. Under this stage, the parties are still in the
negotiating preliminaries. The parties have not yet reached any definite agreement,
although steps are being taken up until they will finally agree.
EXAMPLE:

"A" offers to sell his house at Forbes Park to "B" for P500, 000.00. Before accepting the
offer, "B" requested "A" to accompany him to the location. Thereafter, "B" agreed to pay
such amount. This is an example of preparation for the parties are taking the necessary
steps leading to perfection of the contract.

2. Perfection or birth.

At this stage, the parties have already come to a definite agreement or there was
meeting of the minds between them as to the subject matter and cause of the contract.

EXAMPLE:

If "A" finally agreed to sell such house for P500, 000.00, the contract is therefore
perfected for they finally meet on the subject matter and a definite consideration.

3. Consummation or termination.

The parties at this stage have already performed their respective obligations which led
to consummation or termination.

EXAMPLE:

If "A" delivers to "B" the necessary document or transfer the title after the signing of
the agreement and "B" at the same time pays the sum of P500,000.00. The contract is
consummated or terminated by reason of fulfillment or performance.

FREEDOM TO CONTRACT CONSTITUTIONALLY GUARANTEED

The constitution provides, "No law imparing the obligation of contracts shall be passed".
However, the constitutional guarantee against the impairment of contractual obligations
refers only to valid contracts. The contracting parties may thus 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.

The constitutional prohibitataion is intended to protect creditors, to assure the

fulfillment of lawful promises, and to guard the integrity of contractual obligations.

Observe that the constitutional guarantee is not absolute for the obligation of contract
may be legally impaired by:

a. The police power of the state

b. The power of eminent domain

c. The right to impair the obligation is reserved. Moreover, the liberty to contract to
contract associated with with business activities may be subjected, in the interest of the
general welfare and under the police power, to restrictions as long as due process of law
is observed.

INSTANCES OF UNLAWFUL CONTRACTS

The following contracts are unlaw, namely:

a. Contract whereby it provides payment of usurious interest is void.

b. Parties cannot enter into contract that will deprive a court of the jurisdiction conferred
by law, for jurisdiction cannot be the subject-matter of the contract

c. A waiver signed by a student-scholar whereby he relinquishes his right to transfer to

another school unless he refunds to the University the equivalent of his scholarship
grants, is void.

d. A contract whereby services will be rendered without remuneration is contrary to law

and morality.

e. A promise of marriage based on illicit relation such as an agreement to become a

common-law wife, is void.

ESSENTIAL CHARACTERISTICS OF CONTRACTS

The following are essential chatacteristics of contracts, namely;

1. Obligatory force of contracts.

It is based on the principle that once the contract is perfected it is the law between the
parties.

2. Autonomy of contracts.

It is based on the principle that the contracting parties are free to enter into a contract
and establish such terms and conditions provided they are not contrary to law, morals,
good customs, public order, or public policy.

3. Mutuality of contracts.

It is based in the principle that the contract must bind both contracting parties and
necessarily there must be mutual consent.

4. Relativity of contracts.

It is based on the principle that the contract takes effect only between the parties, their
assigns and heirs.
EFFECTS OF CONTRACTS
As discussed earlier, contracts take effect between the parties, their assigns and heirs,
except in cases where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. If a contract contains
some stipulation in favor of a third person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its revocation. The clear and
deliberate conferment of favor upon a third ***** is known as stipulation *pour autrui.

EXAMPLE:

"A" binds himself to pay "B" the sum of P5,000.00. "A" and "B" agree that payment shall
be given to "X", a third person. In this example, the law requires "X" to conmunicate his
acceptance to the parties before its revocation. Otherwise, he may not enforce its
fulfillment.

CLASSIFICATION OF CONTRACTS
(Angeles, Jean Erick P.)

It is significant for a student of engineering to be acquainted with the different classes

of contracts for these will serve as his guides in the exercise of his profession. Contracts
are classified as follows:

1) According to their designation

a. Nominate. Those that can be identified by their individuality and are regulated by
special provision of law, such as contract of agency, lease, sale.

b. Innominate. Those which lack individuality are regulated by the stipulation of

parties. They are not regulated by special provision of law.

2) According to their perfection

a. Consensual. Those which are perfected by mere consent of the parties without the
need of other formalities, such as contracts of sale and partnership.

b. Real. Those which require not only the consent of the parties but also the delivery
of the object of the contract which is necessary such as deposit, commodatum or pledge.

3) According to their form

a. Common of informal. Those which do not require any formality such as loan or lease.
 b. Special or formal. Those for which the law prescribes some formalities, such as
donation or chattel mortgage. It must be in a public document.

4) According to the nature of the obligation they produce

a. Unilateral. Those where only one of the parties has the obligation to perform such
as in the case of gratuitous deposit.

b. Bilateral. Those which can give rise to reciprocal obligations, such as in the case of a
contract of sale.

5) According to their cause of consideration

a. Onerous. Those in which benefit is derived through something which is given or

promised, such as in a contract of sale.

b. Gratuitous. Those in which one of the parties derives benefit without giving any
equivalent or compensation, such as a simple donation.

6) According to risk involved

a. Commutative. Those in which there is an exchange of values, such as in a contract

or lease.

b. Aleatory. Those in which the fulfillment of the obligation depend upon chance the
happening of an uncertain event such as in an insurance contract.

7) According to relations with other contracts

a. Principal. Those that exist independently from other contracts such contracts of
lease and sale.

b. Accessory. Those which cannot exist without another prior contracts of mortgage
and pledge.

ESSENTIAL REQUISITES OF CONTRACTS

There is no contract unless the following essential requisites are presents a) Consent
of the contracting parties; b) Object certain which is the subject matter of the contract,
and c) Cause of the obligation which is established.

MEANING OF CONSENT
Consent is the conformity of wills; and with reference to contracts, it is the agreement
of the will of one contracting party with that of another or others, upon the object and
terms of the contract. Under the law, consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the contract.
The offer must be certain and the acceptance absolute. A qualified acceptance constitutes
a counter-offer.
EXAMPLE:

“A” offers to sell his car to “B” for the sum of P50,000.00. “B” agreed to pay such
amount. In this example, the offer of “A” to sell the car is certain and the acceptance of
“B” is absolute. However, if “B” proposed to pay only P30,000.00, there is no valid
acceptance. If “A” accepts the counter-offer, then the contract is perfected.

PERSONS WHO CANNOT GIVE CONSENT

As a general rule, a person who has capacity to act and not otherwise disqualified may
give consent to a contract. Those who are incapacitated to give consent under Article
1327 of the New Civil Code are the following:

1) Unemancipated minors. Those who have not yet reached the age of majority (21 years)
and have not yet been released from parental authority by marriage. Observe that
concession of the father or the mother who exercises parental authority may emancipate
a minor.

2) Insane or demented persons. The term insanity denotes that degree of mental illness
which negates the individual’s legal responsibility or capacity. The law requires that
insanity must exist at the time of perfection of the contract. Otherwise, he is presumed
sane. Note that a contract entered into by an insane person during lucid interval
(temporary period of sanity) is valid.

3) Deaf mute. Those who are deaf and dumb, and who do not know how to write cannot
give consent. Thus, a deaf, mute who knows how to write could intelligently give consent.

ESSENTIAL CHARACTERISTICS OF CONSENT

(Miranda, Eleen Joy)

There is no valid consent unless:

• It is intelligent. There is capacity to act.

• It is free and voluntary. There is no impairment of consent by reason of violence or

intimidation.

• It is conscious or spontaneous. There is no impairment of consent by reason of mistake

undue influence, or fraud.

VICES OF CONSENT
Aside from incapacity, the following may invalidate consent:
• Error of mistake. In order that mistake may invalidate consent it should refer to the
substance of the thing which is the object of the contract, or to those conditions which
have principally moved one or both parties to enter into the contract.

• Violence or force. The term violence refers to unjust of unwarranted exercise of force,
usually with accompaniment of vehemence, outrage of fury.

• Intimidation threat or duress. There is intimidation when one of the contracting parties
is compelled by a reasonable and well-grounded fear of an imminent and grave evil
upon his person or property, or upon the person or property of his spouse, descendants
or ascendants, to give his consent.

• Undue influence. There is undue influence when a person takes improper advantage of
his power over the will of another, depriving the latter of a reasonable freedom of
choice. To vitiate consent, influence must be undue or improper. Also, undue influence
exists when a person’s mental weakness, ignorance, or financial distress is unduly taken
advantage of by another.

• Fraud or deceit. The fraud contemplated under the law is the causal fraud, that is,
committed through insidious words or machinations or by concealment. It is a fraud
used by a party to induce the other to enter into contract without which the latter
would not have agreed to.

OBJECT OF CONTRACTS
The second essential requisite of a contract is its object or subject matter. The object may
be things, rights, or services. A contract may not be entered into upon future inheritance
except in cases expressly authorized by law. All services which are not contrary to law,
morals, good customs, public order or public policy may likewise be the object of
contracts.

REQUISITES OF THINGS AS OBJECTS OF CONTRACT

The requisites in order that a thing may be the object of contracts are:

• It must not be outside the commerce of men.

• It must not be contrary to law, morals, good customs, public order or public policy.

• It must not be impossible either physically or legally.

• It must be determinate as to its kind.

CAUSE OF CONTRACTS (David, James Harry)

Cause is also one of the essential requisites of a contract. By the term cause, simply
means “the essential or more proximate purpose which the contracting parties have in
view at the time of entering into the contract”. Contracts without cause or with unlawful
cause produce no effect. The cause if unlawful if it is contrary to the law, morals, good
customs, public order or public policy.

FORMS OF CONTRACTS
By the term form simply means the procedure or manner to be adhered to in the
execution of a contract. Under the law, contracts shall be obligatory in whatever form
they may have been entered into, provided all the requisites for their validity are present.
The above rule is consistent with the “spiritual system” concept of the Spanish Civil Code
which looks more at the spirit of the contract rather than its form.

The exceptions to this rule include: a) those contracts for which the law prescribes a
certain form in order to be valid; and b) those contracts for which the law requires a
certain form in order to be enforceable.

FORMALITIES NECESSARY FOR VALIDITY

The formalities which are necessary for the validity of contracts are:

1) Contracts which must appear in writing.

a) Donations of personal property whose value exceed P5, 000.00

b) Sale of a piece of land or any interest therein by an agent. The authority of the
agent must be in writing.

c) In a contract of antichresis, the principal and the interest must be in writing.

2) Contracts which must appear in a public document.

a) Donation of immovable property.

b) In partnership where real property or real rights are contributed to the common fund.

3) Contracts which must be registered.

a) Chattel Mortgage.

b) Sale and transfer of large cattle

REFORMATION OF INSTRUMENTS
Reformation is a remedy in equity by means of which a written instrument is made or
construed so as to express or conform to the real intention of the parties by reason of
mistake or fraud has been committed.

Interpretation of contracts (Barandino, Carlo M. )

The term interpretation refers to the art or process of discovering and ascertaining the
meaning of a statute, will, contract or other written document.
Governing Rules of Interpretation
The following rules shall govern in the interpretation of contracts.

1. Literal meaning controls. Where the terms of contract are clear and leave no doubt as
to the intention of the parties , the literal sense of stipulations shall be observed.

Example.

"A"binds himself to deliver a car to "B"for P50,000.00 by virtue of a "sale of a motor

vehicle", "A" is the vendor , and "B"is the vendee ( buyer). In the contract, all the specific
details are provided such as the model, type , etc and contain no provision that runs
contrary to the law, public moral, etc. In this example, the will of the parties should be
literally applied.

2. Evident intention of parties prevails. Where the words and clauses of a written contract
are in conflict with manifest intention of the partied, the latter shall prevail over such
clauses or words.

Example.

Parties agreed that the purchase price is P10,000.00. However, in the contract itself, the
sum of P100,000.00 appears. Here, the latter is evidently in conflict with the intention of
the parties which is P10,000.00 . Therefore , the intention of the parties shall prevail.

3. Contemporaneous subsequent acts to be principally considered. To determine the

intention of the parties, acts contemporaneous and subsequent to the execution of a
contract; antecedent circumstances under which it was made may also be considered.

Example.

"A"entered into a contract entitled" Pacto de Retro Sale" , "A" requested his lawyer to
prepare the document. Wittingly or unwittingly, the lawyer prepared an "absolute deed
of sale" Knowing that their contract was a"Pacto de Retro Sale" , "B" wrote a letter to "A"
informing him that he "A"could exercise the right to repurchase the property. In this
example, the contract should be interpreted as " sale with right to purchased"

4. Special intent prevails over a general intent. In the interpretation of a contract ,

however general may be the terms of the agreement , the contract cannot be understood
to include things and cases different from those upon which the parties intended to agree.

Example.

"A"binds himself to convey all his properties to "B" , the conveyance should not of course
include properties which do not belong to him.
5. Interpretation of contract with several meanings. A stipulation that admits several
meanings should be understood as bearing that import which is most adequate to render
it effectual. It should be interpreted in the sense most suitable to give its effect. Thus a
contract susceptible of double interpretatio, one for its validity , and one for its nullity ,
the interpretation that would give effect to its validity should prevail.

Example.

A contract susceptible of double interpretation, one for its validity and one for its nullity
, the interpretation that would give effect to its validity should prevail.

6. Interpretation of various stipulations. Inthe interpretation of a contract , the whole

document must be considered. Words , phrases or clauses cannot be segregated and
given a meaning which is contrary to the terms of the entire document. The whole
contract must be interpreted or read together in order to arrive at its true meaning.

Example.

"A" enters into a lease contract with "B" whereby the latter is bound to refrain from doing
something , that is , to sublease without the knowledge of "A". Likewise , in the same
contract, it is agreed upon that if "B" violates the "obligation not to do" , he would be
penalized for a certain sum. Suppose " B" violates the "obligation not to do" , could "A"
file an ejectment case against " B"? In the light of the stipulation providing a penalty (to
pay for a certain sum), the ejectment case will not prosper.

7. Custom or usage as aid in interpretation. The custom or usage of the place shall be
borne in mind in the interpretation of the ambiguities of a contract, and shall fill the
omission of stipulations which are ordinarily established.

Example.

"A" renders services to " B" and the compensation to be paid has not been fixed. In this
example, the court is empowered to fix the reasonable value of such services, taking into
consideration the rate that is customarily paid for such kind of service.

8. Obscure terms construted against one who drafted the contract. The interpretation of
obscure words or stipulations in a contract shall not favor the party who caused the
obscurity. In case of doubt, a contract should be interpreted against the party who has
drawn the contract.

Example.

"A" shipped his goods to "B"a carrier upon he which he was issued a bill of lading.
Supposed there were ambiguous provisions of terms, the contract will be construed
strongly against the carrier and favorably to the consignor. A bill of lading , being a
contract of adhesion, is drafted and prepared by the carrier. Thus, ambiguity or
uncertainty should be construed against the carrier who has drawn it ( bill of lading).

9. If doubts are impossible to settle, the least transmission of rights and interest shall
prevail. Despite the application of the rules of interpretation, still doubts cannot be
resolved and the doubts refer to incidental circumstances of a gratuitous contract, the
least transmission of rights and interest shall prevail.

Example.

"A" executed a deed of donation in favor of "B" whereby he is disposing his land to the
latter. Suppose "A" has two parcels of land with an area of 1,000 sq. meters each. One
parcel is located in Manila, the other is located in Calamba, Laguna. It cannot be
ascertained in the deed which parcel "A" is disposing. In this example "A" by law wanted
to convey the parcel located in calamba, Laguna, because it has smaller value than the
parcel located in Manila. Therefore , there will be lesser transmission of right and
interests.

10. Principles of interpretation in the Rules of Court are applicable. Section 8 to 17, Rule
130 , Rules of Court governing the principles of interpretation of documents are also
applcabe. Examples are the following:

a) The language of writing shall have the legal meaning it bears in the place of execution,
unless the parties intended otherwise;

b) An instrument with several provisions or particulars shall be construed so as to give

effect to all;

c) In case of conflict , the written words prevail over the printed form.

d) Usage may be the basis to determine the true character of an instrument, etc.

DEFECTIVE CONTRACTS
The four kind of defective contracts in the order of theirdefectiveness are as follows:

1) Rescissible contracts;

2) Voidable contracts;

3) Unenforceable contracts ; and

4) Void or inexistent contracts

The following contracts are Rescissible:

1) Those which are entered into by guardian whenever the words whom they represent
suffer damage by more than one-fourth of the values of the things which are the object
thereof;

2) Those agreed upon in representation to absentees, if the latter suffer damage stated
in the preceding number;

3) Those undertaken in fraud of creditors whom the latter cannot in any other manner
collect the claims due to them;

4) Those which are refer to things under litigation if they have been carried into by the
dependant without the knowledge and approval of the litigants or competent judicial
authority.

5) All other contracts specially declared by law to be subject to rescission.

Example:

"A" is the guardian of "B" , a minor, "A" sells to "C" the property of "B"worth ₱40,000.00
for ₱20,000.00. By virtue of the contract of sale, "B" suffered damages by more than one-
fourth the value of his property. "B's remedy is to rescind the sale made by "A" to "C"
before a court of competent jurisdiction upon reaching the age of majority. However, if
"A" sells it for ₱35,000.00 the sale cannot be rescinded because the damage(lesion) is not
more than one-fourth.

Obligation of mutual restitution. Rescission creates the obligation to return the things
which were the object of the contract, together with their fruits, and the prior with its
intersects. Consequently, it can be carried out only when he who demands can return
whatsoever he may be obliged to restore. Note, however , that the remedy of rescission
cannot be availed of if the party property is legally in the possession of a third person who
acted in good faith.

Example:

"A", guardian of "B" sold the latter's land to "C" for ₱10,000.00. Upon reaching the age of
majority. "B" filed an action for rescission against "C". The contract was rescinded,
therefore "C" must return the land with fruits received by him and "B" was obliged to
return the sum of ₱10,000.00 with legal interest. But "B"could not return the ₱10,000.00
with the legal interest.

In this example , if "C" sold the land to "D" a purchaser who acted a good faith. "C"could
not therefore return the land. The remedy of "B" is to file an action for damages against
"A".
Alienation by gratuitous title. All contracts by virtue of which the debtor alienates
property by gratuitous title are presumed to have been entered into fraud of creditor,
whenever the donor did not reserve sufficient property to pay all debts contracted before
the donation.

Example:

"A" donated his two hectares of farm lands to "B". Before rhe donation "A" had already
incurred several debts. "A" did not reserve any property to pay such debts. In this
example, the donation is presumed fraudulent for " a man must be just before his
generous and consequently he will not be permitted to prejudice his creditors by giving
away his property for little of nothing".

Alienation by onerous title. Alienation by onerous title are presumed fraudulent when
made by persons against whom some judgement has been rendered in any instance or
some writ of attachment has been issued. The decision or attachment aced are not refer
to the property alienated , and need not have been obtained by the party seeking the
rescission.

Example:

"A" was ordered by the court to pay "B" the sum of ₱20,000.00 with legal interest. After
the judgement , "A" sold all his properties. In this example, the sale is presumed
fraudulent.