UST Golden Notes in Obligations and Cont

OBLIGATIONS ACTIVE SUBJECT
OBLIGATIONS
I. DEFINITION Q: How is vinculum juris established?
Q: What is an obligation? A: By:

1. law (i.e. – relation of
A: It is a juridical necessity to husband and wife
give, to do, or not to do. for support)
(Art. 1156, NCC) 2. bilateral acts (i.e. – contracts)
3. unilateral acts (i.e. –
It is a juridical relation crimes and quasi‐
whereby a person (creditor) delicts)(Tolentino,
may demand from another Civil Code Vol. IV,
(debtor) the observance of a p.
determinative conduct 59, 1999 ed)
(giving, doing, or not doing),
and in case of breach, may
demand satisfaction from
the assets of the latter.
(Arias Ramos)
Note: Art. 1156 refers only

to civil obligations which are ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
enforceable in court when VICE CHAIRS FOR ACADEMICS: KAREN JOY G.
breached. It does not cover SABUGO & JOHN HENRY C. MENDOZA VICE
CHAIR FOR ADMINISTRATION AND FINANCE:
natural obligations (Arts.
JEANELLE C. LEE
1423‐1430, NCC) because
Q: Who is an active subject?
these are obligations that
cannot be enforced in court
A: One who is demanding
being based merely on
the performance of the
equity and natural law and
obligation. It is he who in his
not on positive law. (Pineda,
favor the obligation is
Obligations and Contracts,
constituted, established or
2000 ed, p. 3)
created. He is called the
creditor (CR) or obligee.
II. ELEMENTS OF AN
OBLIGATION
PASSIVE SUBJECT
Q: What are the elements of an
Q: Who is a passive subject?
obligation?
A: One bound to perform
A: JAPOC
the prestation to give, to do,
1. Juridical or legal tie – vinculum
or not to do. He is called the
juris;
debtor (DR) or obligor.
2. Active subject – obligee or
(Pineda, Obligations and
creditor;
Contracts, p. 2, 2000 ed)
3. Passive subject – obligor or
debtor;
Note: When there is a right
4. Object – prestation; and
there is a corresponding
5. Cause – efficient
obligation. Right is the active
cause is the same
aspect while obligation is the
with vinculum
passive aspect. Thus, it is
juris.
said that the concepts of
credit and debt are two
VINCULUM JURIS distinct aspects of unitary
concept of obligation.
Q: What is vinculum juris? (Pineda, Obligations and
Contracts, p. 2, 2000 ed)
A: It is the efficient cause or
juridical tie by virtue of OBJECT
which the debtor has
become bound to perform Q: What are the requisites of a valid
the prestation. object?
A: The object must be: III. DIFFERENT KINDS OF
1. licit or lawful; PRESTATION
2. possible, physically & judicially;
3. determinate or determinable; Q: What is prestation?
and
4. pecuniary value or A: It is a conduct that may
possible consist of giving, doing, or
equivalent in not doing something.
money.
Note: It is the conduct that
Note: Absence of either of must be observed by the
the first three (licit, possible debtor/obligor.
and/or determinate) makes
the object void.
Form is not generally

considered essential, though
sometimes it is added as the
5threquisite.There is no
particular form to make
obligations binding, except
in certain rare cases.
173 U N I V E R S I T Y O F S A N
T O T O M A S
(Tolentino, Civil Code of the Facultad de
Philippines, Vol. IV, 2002 Derecho Civil
ed. p. 57)
VICE CHAIRS FOR LAY‐OUT AND DESIGN: EARL LOUIE M. MASACAYAN& THEENA
C. MARTINEZ
UST GOLDEN NOTES
2011
Q: What are the different kinds of

prestation? Distinguish.
Q: What are the requisites of a valid
A:
prestation?
OBLIGATION OBLIGATION
TO GIVE TO DOA:
1. Possible, physically and
Consists in Covers all juridically;
the kinds of 2. Determinate, or at least
delivery of works or
determinable
a services
according to pre‐established
movable or whether
elements
immovable physical or
or criteria; and
thing to the mental
creditor 3. Has a possible equivalent in money
(Tolentino, Civil Code Vol. IV, p. 58,
i.e. – Sale, i.e. –1999
deposit, Contracted).
for
pledge, professional
donation, services IV.
likeCLASSIFICATION OF
antichresis OBLIGATIONS
painting,
modeling,
Q: What are the kinds of obligation?
singing, etc.
A: From the viewpoint of:

1. Sanction
a. Civil – gives a right of action to
compel their performance
b. Natural– not based on positive law
but on equity and natural law;
does not grant a right of action to
enforce their performance, but
after voluntary fulfillment by the
obligor, they authorize retention of
what has been delivered/ rendered
by reason thereof. b. Bilateral – both parties are bound
c. Moral– cannot be enforced by
action but are binding on the party 6. Creation
who makes it in conscience and a. Legal – imposed by law (Art. 1158,
natural law. NCC)
b. Conventional – established by the
agreement of the parties like
174 CIVIL LAW TEAM:

contracts
2. Performance 7. Susceptibility of partial fulfillment

a. Positive – to give; to do a. Divisible – obligation is susceptible
b. Negative – not to do of partial performance b.
Indivisible – obligation is not
3. Subject matter susceptible
a. Personal – to do; not to do
b. Real – to give 8. Existence of burden or condition a.
Pure – is not burdened with any
4. Object condition or term. It is immediately
a. Determinate / specific – demandable.
particularly designated or b. Conditional – is subject to a
physically segregated from all condition which may be suspensive
(happening of which shall give rise to
others of the same class.
the obligation) or resolutory
b. Generic– is designated merely by
(happening terminates the
its class or genus.
obligation).
c. Limited generic– generic objects
confined to a particular class (e.g. an
9. Character of responsibility or
obligation to deliver one of my
liability a. Joint – each debtor is liable
horses) (Tolentino, Civil Code of the
only for a part of the whole liability
Philippines, Vol. IV, 2002 ed, p. 91)
and to each creditor shall belong only
a part of the correlative rights
5. Person obliged
b. Solidary – a debtor is answerable
a. Unilateral – only one party is
for the whole of the obligation
bound
without prejudice to his right to
ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

ALFREDO B. DIMAFELIX II;
ASST. SUBJECT HEADS: KAREN FELIZ
G. SUPNAD, LAMBERTO L. SANTOS
III; MEMBERS: PAUL ELBERT E.
AMON, ALSTON ANARNA, OZAN J.
FULLEROS, CECILIO M. JIMENO, JR.,
ISMAEL SARANGAYA, JR.;
CONTRIBUTORS: LOISE RAE G.
NAVAL, MONICA JUCOM
OBLIGATIONS prestations(Art. 1199,
NCC)
b. Facultative – only one
prestation has been
collect from his co‐debtors the
agreed upon, but the
latter’s shares in the obligation
obligor may render
(Art. 1207, NCC) one in
11. Imposition of penalty a.
Simple – there is no
penalty imposed for
substitution of the first one (Art. 1206, violation of the terms
NCC) thereof
b. Obligation with penalty
– obligation which
10. Right to choose and imposes a penalty
substitution a. Alternative for violation (Art.
– obligor may choose to 1226, NCC) (Pineda,
completely perform one Obligations and
out of the several Contracts, 2000 ed,
p. 5‐7)
V. SOURCES OF
OBLIGATIONS
Q: What are the sources of obligations? Distinguish.
A: LCQ‐DQ
Sources Obligations Perfection
Law ex lege From the time designated by the law creating or regul
Contracts ex contractu GR: From the time of the perfection of the contract (i.e
the minds)
XPNs:
1. When the parties made stipulation on the right of the
the fruits of the thing
2. When the obligation is subject to a suspensive conditi
arises upon fulfillment of the condition or expi
period.
Quasi‐ ex quasi‐contractu From the time designated by the law creating or regul
contracts
Delicts ex maleficio or ex
delicto
Quasi‐ ex quasi maleficio or

delict ex quasi‐ delicto
Note: The enumeration is exclusive.
A. OBLIGATION EX LEGE VICE CHAIRS FOR ACADEMICS: KAREN JOY G.

SABUGO & JOHN HENRY C. MENDOZA VICE
Q: What are the JEANELLE C. LEE
characteristics of a legal B. OBLIGATION EX
obligation or an obligation CONTRACTU
ex lege?
Q: What are the requisites
A: for a contract to give rise to
1. Does not need the obligations ex contractu?
consent of the
obligor; A:
2. Must be expressly 1. It must contain all the essential
set forth in the requisites of a contract
law creating it and 2. It must not be
not merely contrary to law,
presumed; morals, good
and customs, public
3. In order that the law order, and public
may be a source policy
of obligation, it
should be the Q: What is “compliance in good faith”?
creator of
the obligation itself.
A: It is performance in
accordance with the
Q: What governs obligations arising stipulation, clauses, terms
from law? and conditions of the
contract.
A: These obligations shall be
regulated by the provisions Note: The contract is the “law”
of the law which establishes between the parties.
them. The Civil Code is
applicable suppletorily.
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II

T O T O M A S Derecho Civil
Facultad de
VICE CHAIRS FOR LAY‐OUT AND DESIGN: EARL LOUIE M. MASACAYAN&
THEENA C. MARTINEZ
UST GOLDEN NOTES

2011
Q: May a party unilaterally C. OBLIGATION EX

evade his obligation in the QUASI ‐ CONTRACTU
contract?
Q: What is quasi‐contract?
A:
GR:Neither party may A: It is a juridical relation
unilaterally evade his arising from lawful,
obligation in the voluntary and unilateral
contract. acts based on the principle
that no one should unjustly
XPNs:Unilateral evasion is allowed enrich himself at the
when the: expense of another.
1. contract authorizes such
evasion Q: What is presumptive
2. other party assents consent?
thereto
A: Since a quasi‐contract is
Q: Is there a limitation on a unilateral contract
the right of the parties to created by the sole act or
freely enter into acts of the gestor, there is
stipulations? no express consent given
by the other party. The
A: Yes. Parties may freely consent needed in a
enter into any stipulations contract is provided by law
provided such are not through presumption.
contrary to law, morals, (Pineda, Obligations and
good customs, public order Contracts, p. 15, 2000 ed)
or public policy
Q: What are the principal
Q: What governs forms of quasi‐ contracts?
obligations arising from
contracts? A:
A:
GR:These obligations 176 CIVIL LAW TEAM:
shall be governed 1. Negotiorium gestio

primarily by the (inofficious
stipulations, clauses, manager) – arises
terms and conditions of when a person
the parties’ voluntarily takes
agreements. charge of the
management of
XPN: Contracts with the business or
prestations that are property of
unconscionable or another without
unreasonable. any power from
the latter.
Note: In case of 2. Solutio indebiti
unconscionable penalty (unjust
for breach of contract enrichment)–
(Art. 1229, NCC), or takes place when
liquidated damages (Art. a person receives
2226, NCC), the same something from
may be reduced by the another without
court. (Pineda, any right to
Obligations and
demand for it,
Contracts, p.13, 2000 ed)
and the thing was
unduly delivered EDSA revolution in
to him through February 1986, X and his
mistake. family returned from the
United States where they
Note: The delivery must not took refuge in 1972.
be through liberality or some
other cause. Upon learning of what
happened to his house, X
NEGOTIORUM GESTIO sued Y for damages. Y
pleaded as a defense that
Q: Upon the declaration of he merely took charge of
martial rule in the his house under the
Philippines, X, together principle of negotiorum
with his wife and children, gestio. He was not liable
disappeared from his as the burning of the
residence along Ermita, house is a fortuitous
Manila. Years passed event.
without Y hearing from X
and his family. Y continued Is Y liable to X for damages
taking care of X’s house, under the foregoing
even causing minor repairs circumstance?
to be done at his house to
preserve it. In 1976, when A: No. Y is not liable for
business began to perk up damages, because he is a
in the area, Z, approached gestor in negotiorum
Y and proposed that they gestio(Art. 2144,
build stores at the ground NCC).Furthermore, B is not
floor of the house and liable to A for any
convert its second floor fortuitous event because
into a pension house. Y he did not commit any of
agreed to Z’s proposal and the instances provided
together they spent for under Art. 2147 of the Civil
the construction of stores Code:
at the ground floor and 1. He did not undertake
the conversion of the risky operation
second floor into a which the owner
pension house. While was not
construction was going on, accustomed to
fire occurred at a nearby embark upon;
house. The houses at the 2. He has not preferred
entire block, including X’s, his own interest to
were burned. After the that of the owner;

NAVAL, MONICA JUCOM
OBLIGATIONS
3. He has not failed to his fishpond, fled to Manila

return the property or and left for Europe. Seeking
business after demand of that the fish in the fishpond
the owner; and were ready for harvest, Y,
4. He has not assumed who is in the business of
the management in bad managing fishponds on a
faith. (1993 Bar Question) commission basis, took
possession of the property,
Q: In fear of reprisals from harvested the fish and sold
lawless elements besieging the entire harvest to Z.
his barangay, X abandoned
Thereafter, Y borrowed X received his full
money from W and used the retirement benefits
money to buy new supplies including those monetary
of fish fry and to prepare benefits that were properly
the fishpond for the next disallowed by COA to be
crop. granted to public
1. What is the juridical

relation between X
VICE CHAIRS FOR ACADEMICS: KAREN JOY G.
and Y during X's SABUGO & JOHN HENRY C. MENDOZA VICE
absence? CHAIR FOR ADMINISTRATION AND FINANCE:
2. Upon the return of X JEANELLE C. LEE
to the barangay, officers. GSIS sought the
what are the restoration of the said
obligations of Y to disallowed benefits but the
X as court ruled that such
regards the contract with Z? restoration cannot be
3. Upon X's return, enforced against X’s
what are the retirement benefits as this
obligations of X as is expressly prohibited by
regards Y's law under R.A. 8291. Is X
contract obliged to return the
with W? benefits improperly
4. What legal effects received by him under the
will result if X principle of solutio indebiti?
expressly ratifies
Y's management A: Yes. It cannot be denied
and that X was a recipient of
what would be the obligations of X in benefits that were properly
favor of Y? disallowed by the COA.
These COA disallowances
would otherwise have been
Explain all your answers.
deducted from his salaries.
The GSIS can no longer
A:
recover these amounts by
1. The juridical relation
any administrative means
is that of the
due to the specific
quasi‐contract of
exemption of retirement
"negotiorum
benefits from COA
gestio". Y
disallowances. X resultantly
is the "gestor" or "officious” manager"
retained benefits to which
and X is the "owner" (Art. he was not legally entitled
2144, NCC). which, in turn, gave rise to
2. Y must render an an obligation on his part to
account of his return the amounts under
operations and the principle of solutio
deliver to X the indebiti. (GSIS v. COA, G.R.
price he No. 138381, Nov. 10, 2004;
received for the sale of the harvested GSIS v. Pineda, et. al., G.R.
fish. (Art. 2145, NCC). No. 141625, Nov. 10, 2004).
3. X must pay the loan
obtained by Y D. OBLIGATIONS EX
from W because X DELICTO
must answer for
obligations contracted with third Q: What is the basis for civil
persons in the interest of the owner liability arising from delicts
(Art. 2150, NCC). as according to the penal
4. Express ratification code?
by X provides the
effects of an A: Art. 100 of the Revised
express agency Penal Code provides that:
and X is “Every person criminally
liable to pay the commissions liable for a felony is also
habitually civilly liable.”
received by the gestor as manager (Art.
2149, NCC). (1992 Bar Q: What is delict?
Question)
A: It is an act or omission punished by
SOLUTION INDEBITI
law. 2. Fault or negligence attributable
to the
E. OBLIGATIONS EX QUASI – person charged;
DELICTO 3. Damage or injury;
4. Direct relation of
Q: What is quasi‐delict or tort? cause and effect
between the act
A: It is an act or omission arising from
arising from fault or fault/negligence and the damage or
negligence which causes injury (proximate cause); and
damage to another, there 5. No pre‐existing contractual
being no pre‐existing relation
contractual relations between the parties.
between the parties.
Q: What are the elements of a quasi‐

delict? 177 U N I V E R S I T Y O F S A N
T O T O M A S
A: Facultad de
1. Act or omission; Derecho Civil
C. MARTINEZ
UST GOLDEN NOTES
2011
Q: What is the scope of obligation;

civil liability? 5. Performance after action to
enforce
A: RRI civil obligation has
1. Restitution; failed;
2. Reparation for damage 6. Payment by heir of debt
caused; and exceeding
3. Indemnity for consequential value of property
damages. inherited; and
7. Payment of legacy after will
F. NATURAL has been
OBLIGATIONS declared void.
Q: What are natural Q: Distinguish natural from

obligations? civil obligation.
A: They are real A:

obligations to which the
NATURAL OBLIGATION CIVIL OBLIGATION
law denies an action, but
which the debtor may
Based on equity and Based from law,
perform voluntarily.
natural law contracts, quasi‐
contracts, delicts, and
Q: What are the instances of quasi‐delicts
natural obligations?
Cannot be Can be enforced in
A: enforced in court court because the
1. Performance after the civil because the obligee has a right of
obligation obligee has no action
has prescribed; right of action to (Pineda,Obligations
2. Reimbursement of a third person compel its and Contracts, 2000
for a performance ed, p.
debt that has 636)
prescribed;
3. Restitution by minor after
annulment of
contract; Q: May natural
4. Delivery by minor of money or obligations be converted
fungible into civil obligations?
thing in fulfillment of
A: Yes, by way of novation.
1165, NCC) superior nor inferior
The natural obligation
quality
becomes a valid cause for
a civil obligation after it Take care of the thing Specific performance
has been affirmed or with the proper i.e. delivery of
ratified anew by the diligence of a good another thing within
debtor. (Pineda, father of a the same genus as
Obligations and Contracts, family unless the the thing promised
2000 ed, p. 634) law requires or if such thing is
parties damaged due to
stipulate another lack of care or a
standard of care general breach is
(Art. 1163, NCC) committed
178 CIVIL LAW TEAM:

Deliver all accessions,
accessories and fruits
If the object is
generic, but the
VI. NATURE AND
of the thing (Art. source is
1166, NCC) specified or
EFFECTS OF
delimited, the
obligation is to
OBLIGATIONS A. preserve the source
OBLIGATION TO Pay damages in Pay damages in

case of breach of case of breach of
GIVE obligation by obligation by
reason of delay, reason of delay,
Q: In an obligation to fraud, negligence, fraud, negligence,
deliver a thing, what are contravention of the contravention of the
the obligations of the tenor thereof tenor thereof (Art.
debtor? 1170)
Fortuitous event Obligation is not

A: It depends upon the kind of
extinguishes the extinguished (genus
obligation.
obligation nunquamperuit –
SPECIFIC genus never
perishes)
Deliver the thing
agreed upon (Art.

NAVAL, MONICA JUCOM
OBLIGATIONS
Q: In failing to deliver a
1380, NCC) complied with at
thing, what are the
the debtor’s
remedies of the creditor?
expense
A:
Resolution (action Resolution or
SPECIFIC OBLIGATION for cancellation
GENERIC OBLIGATION specific
under Art. 1191, performance,
Specific performance Specific NCC) with
performance damages in either
(delivery of any case (Art. 1191,
thing belonging to NCC)
the same species)
Damages, in both cases (Art. 1170, NCC)
Rescission (action to Ask that the
rescind under Art. Note:May be exclusive or in addition to the
obligation be
“balancing of equities” as
applied in actions for
above‐ mentioned remedies(Pineda,
specific performance?
Obligations and Contracts, 2000 ed, p. 37)
A: In decreeing specific
performance, equity
requires not only that the
Note: In obligation to contract be just and
deliver a specific thing, the equitable in its provisions,
creditor has the right to but that the consequences
demand preservation of the of specific performance, is
thing, its accessions, likewise be just and
accessories, and the fruits. equitable. The general rule
The creditor is entitled to is that this equitable relief
the fruits and interests from will not be granted if, under
the time the obligation to the circumstances of the
deliver the thing arise. case, the result of the
Q: What is the nature of specific performance of the
the right of the creditor contract would be harsh,
with respect to the fruits? inequitable, and oppressive
or result in an
A: unconscionable advantage
1. Before delivery – personal to the plaintiff (Agcaoili v.
right GSIS, G.R. No. 30056, Aug.
2. After delivery – real right 30, 1988).
Note: The creditor has a B. OBLIGATION TO DO OR NOT

right to the fruits of the TO DO
thing from the time the
obligation to deliver it Q: What are the types of personal
arises. However, he shall obligations?
acquire no real right over it
until the same has been A:
delivered to him (Art. 1164, 1. positive‐ to do
NCC). 2. negative‐ not to do
Q: Distinguish personal right from Q: What are the remedies in personal

real right. obligations?
A:
A: 1. positive personal obligations
PERSONAL REAL a. not purely personal act‐ to
have obligation executed
Jus ad rem Jus in re at
debtor's expense plus
Enforceable only Enforceable against damages
against a definite the whole world b. purely personal
person/group of act‐ damages
persons only.
Right to demand Note; same rule applies if

Right over a specific
from another, as a obligation
thing, without a is done in
definite passive contravention
definite passive of the terms of the
subject, the obligation.
subject against
fulfillment of the whom the right may
prestation to give, 2. Negative personal obligation‐
be personally
to do or not to do. enforced.to have
the prohibited thing undone plus
Has a definite No definite passive However, if thing cannot be
damages.
passive subject physically or legally undone, only
subject
damages may be demanded.
Q: Is specific performance a
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II remedy in personal
VICE CHAIRS FOR ACADEMICS: KAREN JOY G. obligations?
JEANELLE C. LEE
A: No. Otherwise this may
Q: What is the principle of amount to involuntary
servitude which is
prohibited by the
Constitution. 179 U N I V E R S I T Y O F S A N
Q: When may a thing be ordered T O T O M A S

Facultad de
undone?
A:
Derecho Civil
1. if made poorly
2. negative personal obligations
VICE CHAIRS FOR LAY‐OUT AND DESIGN: EARL LOUIE M.
MASACAYAN& THEENA C. MARTINEZ
UST GOLDEN NOTES

2011
C. BREACHES OF something fails to do it, or

OBLIGATIONS if he does it in
contravention of the tenor
Q: What are the forms of breach of of the obligation, the same
obligations? shall be executed at his
cost. And what has been
A: poorly done, be undone.
1. Voluntary –debtor is liable for (Art. 1167, NCC)
damages
if he is guilty of: When the obligation
a. default (mora) consists in not doing, and
b. fraud (dolo) the obligor does what has
c. negligence been forbidden him, it shall
(culpa) also be undone at his
d. breach through contravention of expense. (Art.1168, NCC)
the tenor thereof
Q: What are the instances
2. Involuntary – debtor is unable to where the remedy under
perform the obligation due to Art. 1168 is not available?
fortuitous
event thus not liable for A:
damages 1. Where the effects of the act which
is
Q: What is the concept of forbidden are definite in character –
a good father of the even if it is possible for the creditor
family? to
ask that the act be undone at the
A: The Supreme Court expense of the debtor, consequences
described a good father of contrary to the object of the
a family by first stating obligation
who is not. He is not and is will have been produced which are
not supposed to be permanent in
omniscient of the future; character.
rather, he is one who takes
precautions against any
harm when there is
something before him to
suggest or warn him of the
danger or to foresee
180 CIVIL LAW TEAM:
it(Picart v. Smith, G.R. No. 2. Where it would be

L‐12406, Mar. 15, 1918). physically or
legally
1. COMPLETE FAILURE TO impossible to
PERFORM undo what has
been undone –
Q: What are the effects of breach because of:
of obligation? a. the very nature of the act
itself;
A: If a person obliged to do b. a provision of law;
or judicial demand
c. conflicting rights of third made by the
persons. creditor upon the
debtor to fulfill,
Note: In either case, the perform or
remedy is to seek recovery comply with his
for damages. obligation; and
4. Failure of the
DEFAULT (MORA)) debtor to comply
with such
Q: When does delay or demand.
default arise?
Note: In reciprocal
A: Those obliged to deliver obligations, the moment one
or to do something incur in party is ready to comply with
delay from the time the his obligation, delay by the
obligee judicially or other begins. There is no
extrajudicially demands need for demand from
from them the fulfillment either party.
of their obligation.
2. DELAY
In reciprocal obligations,
neither party incurs in Q: What are the kinds of
delay if the other does not delay or default?
comply in a proper manner
with what is incumbent A:
upon him. From the 1. Mora solvendi –
moment one of the parties default on the
fulfills his obligations, delay part of the
by the other begins. (Art. debtor/obligor
1169, NCC) a. Ex re – default
in real
Q: What are the requisites obligations
of delay? (to give)
b. Ex personae –
A: default in
1. Obligation must be personal
due, demandable obligations
and liquidated; (to do)
2. Debtor fails to
perform his positive 2. Mora accipiendi –
obligation on the date default on the
agreed upon; part of the
3. A judicial or extra‐ creditor/obligee

NAVAL, MONICA JUCOM
OBLIGATIONS MORA SOLVENDI
Q: What are the requisites of mora

solvendi?
3. Compensatio morae – default on the
part of both the debtor and creditor in
A:
1. Obligation pertains to the
debtor; 2. Obligation is
determinate, due and
MORA ACCIPIENDI demandable, and
liquidated;
reciprocal obligations 3. Obligation has not been
performed on its Q: What are the effects of mora
maturity date; accipiendi?
4. There is judicial or
extrajudicial demand A:
by the creditor; 1. Responsibility of DR is
5. Failure of the debtor to limited to fraud and
comply with such gross negligence
demand 2. DR is exempted from risk
of loss of thing; CR bears risk
Q: Does mora solvendi apply in of loss
natural obligations? 3. Expenses by DR for
preservation of thing after
A: No (Art. 1423, NCC), because delay is chargeable to CR
performance is optional or 4. If the obligation bears
voluntary on the debtor’s part. interest, DR does not have to
pay from time of delay
Q: Does mora solvendi apply in 5. CR liable for damages
negative obligations? 6. DR may relieve himself of
obligation by
A: No because one can never be consigning the thing
late in not giving or doing
something. Q: What are the rules on default?
Q: What are the effects of mora A:

solvendi? 1. Unilateral obligations
GR: Default or delay
A: begins from
1. Debtor may be liable for extrajudicial or judicial
damages or interests; demand – mere
and expiration of the period
2. When it has for its object fixed is not enough in
a determinate thing, order that DR may
debtor may bear the incur delay.
risk of loss of the thing
even if the loss is due XPNs:
to fortuitous event a. The obligation or the
(Art. 1165, NCC). law expressly so
dictates;
Q: May the debtor’s liability be b. Time is of the essence;
mitigated even if he is guilty of c. Demand would be
delay? useless, as DR has
rendered it
A: Yes. If the debtor can prove beyond his power
that loss would nevertheless to perform; or
transpire even if he had not been d. DR has
in default, the court may acknowledged
equitably mitigate his liability. that he is in
(Art. 2215 (4), NCC; Pineda, default.
Obligations and Contracts, 2000
ed., p. 47) 2. Reciprocal obligations
Q: What are the requisites of mora GR: Fulfillment by both
accipiendi? parties should be
simultaneous.
A:
1. Offer of performance by a XPN: When different
capacitated debtor; dates for the
2. Offer must be to comply performance of
prestation as it should be obligation is fixed by
performed; and the parties.
3. Refusal of the creditor
without just cause.
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II VICE CHAIRS FOR ACADEMICS: KAREN
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C. MARTINEZ
UST GOLDEN NOTES
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Q: What are reciprocal 2. Prescription.

obligations?
3. FRAUD
A: These are obligations
created and established at Q: What is fraud?
the same time, out of the
same cause and which A: It is an intentional
results in the mutual evasion of the faithful
relationship between the performance of the
parties. obligation (8 Manresa 72).
Q: In reciprocal Q: What type of fraud

obligations, when does must be present in order
a party incur in delay? that the obligor may be
held liable for damages?
A: In reciprocal obligations
one party incurs in delay A: The fraud must be
from the moment the incidental fraud, or that
other party fulfills his which is present during
obligation, while he the performance of the
himself does not comply obligation, and not causal
or is not ready to comply fraud, or fraud employed
in a proper manner with in the execution of a
what is incumbent upon contract, which vitiates
him. consent.
Q: In reciprocal
obligations, when is
demand necessary in
order for a party to incur
in delay?
A: Only when the

respective obligations are
to be performed on 182 CIVIL LAW TEAM:
separate dates. WAIVER OF FUTURE

FRAUD
Q: What is the effect of
non‐compliance of both Q: May an action arising from
parties in reciprocal fraud be waived?
obligations?
A: With respect to fraud
A: If neither party that has already been
complies with his committed, the law does
prestation, default of one not prohibit renunciation
compensates for the of the action for damages
default of the other. based on the same.
However, the law does
Q: What may cause the prohibit any waiver of an
cessation of the effects of action for future fraud
mora? since the same is contrary
to law and public policy.
A:
1. Renunciation Note: Waiver of past fraud
(express/implied); or is valid since such can be
deemed an act of
Resultant Effect
generosity. What is
renounced is the effect of
fraud, particularly the right Vitiation of consent Breach of an obligation
to indemnity.
Status of the Contract
Q: What are the kinds of
fraud? Distinguish. Voidable Valid
A: Right or Remedy of Aggrieved Party
FRAUD DURING THE Right of innocent Right of innocent

PERFECTION OF THE party to annul the party/creditor to
CONTRACT OR contract claim for damages
CAUSAL FRAUD with damages
(ART. 1338)
When Employed
Q: What are the remedies
of the defrauded party?
Before or during the
perfection of a contract
A:
1. Specific
Purpose of Execution performance (Art.
1233, NCC) 2.
To secure the Resolution of the
consent of another to contract (Art. 1191,
enter into the NCC)
contract 3. Damages, in either
case


NAVAL, MONICA JUCOM
4. NEGLIGENCE
breach or non‐
fulfillment of the
Q: Distinguish fraud from negligence.
contract
A:
Proof of the The negligence of
existence of the the defendant
OBLIGATIONS contract and of its must be
breach or non‐ proved
relation contractual relation
fulfillment is
sufficient prima
The source of The source of
facie to warrant
obligation of obligation is
recovery
defendant to pay defendant’s
damages is the negligence itself
complained of, he
Proof of diligence Proof of diligence in
cannot recover.
in the selection & the selection &
supervision of the supervision of the
Q: Distinguish culpa
employees is not employees is a
contractual from culpa
an available
aquiliana.
defense
A:
CULPA CULPA
CONTRACTUAL AQUILIANA(QUASI‐
Fraud Negligence
(CONTRACT) DELICT)
There is deliberate There is no

Negligence is Negligence is
intention to cause deliberate intention
merely an incident substantive and
damage to cause in the independent
damage or injury even of an
performance
if the act was done
obligation
voluntarily
There is always a There may or may not
Liability cannot be Liability maypre‐
be existing be a pre‐existing
mitigated mitigatedcontractual
Waiver for future GR:

fraud is void future negligence
allowed in certain cases
VICE CHAIRS FOR ACADEMICS: KAREN JOY G.
CHAIRof
XPN:Nature ADMINISTRATION AND FINANCE:
FORthe
JEANELLE C. LEE
obligation or public
policy requires
extraordinary
diligence (
common carrier)
Note: When negligence is

so gross that it amounts to
wanton attitude on the part
of the debtor, the laws in
case of fraud shall apply.
Where negligence shows

bad faith (i.e., deliberately Q: What is the degree of diligence
committed) it is considered required?
equivalent to fraud. Any
waiver of an action for A:
future negligence of this 1. That agreed upon
kind is therefore void. (De 2. In the absence of
Leon, Obligations and such, that which
Contract, 2003 ed., p. 57) is required by
the law
Q: What are the effects of 3. In the absence of
contributory negligence of the foregoing,
the creditor? diligence of a
good father of a
A: family –
GR:It reduces or that reasonable diligence which an
mitigates the damages ordinary prudent person would have
which he can recover. done under the same circumstances.
XPN:Common carriers requiring
XPN:If the negligent act extraordinary diligence (Arts. 1998‐
or omission of the 2002)
creditor is the
proximate cause of the 5. CONTRAVENTION OF
event which led to the TENOR OF OBLIGATION
damage or injury (VIOLATIO)
Q: What is violation of the impairs the strict and
terms of the contract? faithful fulfillment of the
obligation, or every kind of
A: It is the act of defective performance.
contravening the tenor or
terms or conditions of the
contract. It is also known as
“violatio,”i.e. failure of
common carrier to take its
passenger to their
destination.(Pineda,
2000 ed, p. 50)
Note: Under Art. 1170,

NCC, the phrase “in any
183 U N I V E R S I T Y O F S A
N T O T O M A S
manner contravene the Facultad de
tenor” of the obligation Derecho Civil
includes any illicit act which
C. MARTINEZ
UST GOLDEN NOTES
2011
6. FORTUITOUS EVENT Q: If the happening of an

event is difficult to
Q: What is fortuitous foresee, is it a fortuitous
event? event?
A: It is an occurrence or A: No. The mere difficulty

happening which could not to foresee the happening is
be foreseen, or even if not impossibility to foresee
foreseen, is inevitable (Art. the same. (Republic v.
1174, NCC). Luzon Stevedoring Corp.,
G.R. No. L‐21749, Sept. 29,
Q: What are the requisites of a 1967)
fortuitous event?
Q: Distinguish Act of God from
A: Act of Man
1. Cause is independent of the will of
the A:
debtor;
ACT OF GOD ACT OF MAN
2. The event is unforeseeable or
unavoidable; Fortuitous event Force majeure
3. Occurrence renders it absolutely
impossible for the debtor to fulfill his Event which is Event caused by the
obligation in a normal manner; absolutely legitimate or
impossibility must be absolute not independent of illegitimate acts of
partial, otherwise not force majeure; human intervention persons other
and than the obligor
4. Debtor is free from any
participation in i.e. – earthquakes, i.e. – armed invasion,
the aggravation of the injury to the storms, floods, robbery, war(Pineda,
creditor. epidemics Obligations and
Contract, 2000 ed, p. 60)
Note: The fortuitous event
must not only be the
proximate cause but it must
also be the only and sole Note: There is no essential
cause. Contributory difference between
negligence of the debtor fortuitous event and force
renders him liable despite majuere; they both refer to
the fortuitous event. causes independent of the
(Pineda, Obligations and will of the obligor.
Contracts, 2000 ed, p. 62) (Tolentino, Civil Code of the
Philippines, Vol. IV, 2002 ed, not a fortuitous event.
p. 127) Decide.
A: No. The requisites for

fortuitous events are
184 CIVIL LAW TEAM: present in the instant case.
Philcomsat and Globe had
Q: Is there liability for loss
no control over the non‐
due to fortuitous event?
renewal of the term of the
RP‐US Military Bases
A:
Agreement when the same
GR: There is no liability expired in 1991, because
for loss in case of the prerogative to ratify
fortuitous event. the treaty belonged to the
Senate. Neither did the
XPNs: LaNS‐PCBaG parties have control over
1. Law the subsequent withdrawal
2. Nature of the of the US military forces
obligation and personnel from Cubi
requires the Point. The events made
assumption of impossible the
risk continuation of the
3. Stipulation agreement without fault on
4. The debtor is guilty the part of either party.
of dolo, malice or Such fortuitous events
bad faith, has rendered Globe exempt
Promised the from payment of rentals
same thing to for the remainder of the
two or more term of the agreement.
persons who (Philippine
does not have Communications Satellite
the same Corp.v.Globe Telecom,
interest Inc.,G.R. No. 147324, May
5. The debtor 25, 2004)
Contributed to
the loss (Tan v. Q: MIAA entered into a
Inchausti & Co., compromise agreement
G.R. No. L‐6472, with ALA. MIAA failed to
Mar. 7, 1912) pay within the period
6. The possessor is in stipulated. Thus, ALA filed
Bad faith (Art. 552) 7. a motion for execution to
The obligor is Guilty of enforce its claim. MIAA
fraud, negligence or filed a comment and
delay or if he attributed the delays to its
contravened the tenor being a government
of the obligation (Juan agency and the Christmas
Nakpil v. United rush. Is the delay of
Construction Co., Inc. payment a fortuitous
v. CA, G.R. No. L‐ event?
47851, Apr. 15, 1988)
A: No. The act‐of‐God
Q: Philcomsat contends doctrine requires all
that expiration of the RP‐ human agencies to be
US Military Bases excluded from creating the
Agreement and non‐ cause
ratification of the treaty is

NAVAL, MONICA JUCOM
OBLIGATIONS
of the mischief. Such doctrine damages in the form of hotel and

cannot be invoked to protect a meal expenses the stranded
person who has failed to take passengers incurred, cannot be
steps to forestall the possible charged to JAL. Indeed, in the
adverse consequences of loss or absence of bad faith or
injury. Since the delay in payment negligence, JAL cannot be liable
in the present case was partly a for the amenities of its stranded
result of human participation ‐ passengers by reason of a
whether from active intervention fortuitous event. (Japan Airlines
or neglect ‐ the whole occurrence v. CA, G.R. No. 118664, Aug. 7,
was humanized and was therefore 1998).
outside the ambit of a caso
fortuito. Q: What are the effects of fortuitous
event?
First, processing claims against
the government are certainly not A:
only foreseeable and expectable, 1. On determinate
but also dependent upon the obligation – the obligation is
human will. Second, the extinguished
Christmas season is not a 2. On generic obligation –
casofortuito, but a regularly the obligation is not
occurring event. Third, the extinguished (genus
occurrence of the Christmas nun quam peruit –
season did not at all render genus never perishes)
impossible the normal fulfillment
of the obligation. Fourth, MIAA Q: AB Corp. entered into a
cannot argue that it is free from contract with XY Corp. whereby
any participation in the delay. It the former agreed to construct
should have laid out on the the research and laboratory
compromise table the problems facilities of the latter. Under the
that would be caused by a terms of the contract, AB Corp.
deadline falling during the agreed to complete the facility in
Christmas season. Furthermore, it 18 months, at the total contract
should have explained to ALA the price of P10 million. XY Corp.
process involved for the payment paid 50% of the total contract
of AL’s claim. (MIAA v. Ala price, the balance to be paid
Industries Corp., G.R. No. 147349, upon completion of the work.
Feb. 13, 2004) The work started immediately,
but AB Corp. later experienced
Q: JAL cancelled all its flight to work slippage because of labor
Manila due to the Mt. Pinatubo unrest in his company. AB Corp.’s
eruption and NAIA's indefinite employees claimed that they are
closure. The passengers were not being paid on time; hence,
then forced to pay for their the work slowdown. As of the
accommodations and meal 17th month, work was only 45%
expenses from their personal completed. AB Corp. asked for
funds. Thus, they filed an action extension of time, claiming that
for damages against JAL. Can JAL its labor problems is a case of
avoid liability by invoking that fortuitous event, but this was
delays were caused by force denied by XY Corp. When it
majeure? became certain that the
construction could not be
A: Yes. The Mt. Pinatubo eruption finished on time, XY Corp. sent
prevented JAL from proceeding to written notice cancelling the
Manila on schedule. Such event contract and requiring AB Corp.
can be considered as "force to immediately vacate the
majeure" since the delayed arrival premises.
in Manila was not imputable to
JAL. Can the labor unrest be
considered a fortuitous event?
When JAL was prevented from
resuming its flight to Manila due A: Labor unrest is not a fortuitous
to the effects of Mt. Pinatubo event that will excuse AB Corp.
eruption, whatever losses or from complying with its
obligation of constructing the fortuitous event are: (1) the event
research and laboratory facilities must be independent of human
of XY Corp. The labor unrest, will or at least of the debtor’s will;
which may even be attributed in (2) the event could not be
large part to AB Corp. itself, is not foreseen, or if foreseen is
the direct cause of non‐ inevitable; (3) the event must
compliance by AB Corp. It is have rendered impossible
independent of its obligation. It is debtor’s compliance of the
similar to the failure of a DBP obligation in a proper manner;
borrower to pay her loan just and (4) the debtor must not be
because her plantation suffered guilty of concurrent negligence.
losses due to the cadang‐ cadang All the requisites are absent in
disease. It does not excuse this case. AB Corp. could have
compliance with the obligation anticipated the labor unrest
(DBP v. Vda. De Moll). which was caused by delays in
paying the laborer’s wages. The
Additional Answer: The labor company could have hired
unrest in this case is not a additional laborers to make up for
fortuitous event. The requisites of the work slowdown.
ACADEMICS CHAIR: LESTER JAY ALAN ADMINISTRATION AND FINANCE: Derecho Civil
E. FLORES II JEANELLE C. LEE
VICE CHAIRS FOR ACADEMICS: KAREN
JOY G. SABUGO & JOHN HENRY C. U N I V E R S I T Y O F S A N
MENDOZA VICE CHAIR FOR T O T O M A S Facultad de
185
C. MARTINEZ
UST GOLDEN NOTES
2011
Can XY Corp. unilaterally retain payment

and immediately cancel corresponding to his
the contract? percentage of
accomplishment less the
A: No. XY Corp. cannot amount of damages
unilaterally and suffered by XY Corp.
immediately cancel the because of the delay or
contract because there is default. (2008 Bar
need for a judicial action of Question)
rescission. The provisions
of Art. 1191 of the Civil D. REMEDIES
Code providing for
rescission in reciprocal Q: What are the remedies
obligations can only be that may be availed of in
invoked judicially. case of breach?
Alternative Answer: Yes, A:

XY Corp. may unilaterally 1. Specific performance, or
cancel the obligation but substituted
this is subject to the risk performance by a third person in
that the cancellation of the case
reciprocal obligation being of an obligation to deliver a generic
challenged in court and if thing, and in obligations to do, unless
AB Corp. succeeds, then XY it
Corp. will be declared in is a purely personal act;
default and be liable for or
damages. 2. Rescission (or resolution in
reciprocal
Must AB Corp. return the 50% obligations);
down payment? 3. Damages, in any
case;
A: No, under the principle 4. Subsidiary remedies of
of quantum meruit, AB creditors:
Corp. had the right to
a. Accion subrogatoria the judgment and
b. Accion pauliana the failure of the
c. Accion directa Sheriff to enforce
and satisfy the
1. SPECIFIC judgment of the
court.
PERFORMANCE
Note: Resort to the
Q: What are the remedies
remedies must be in the
in connection with specific
order stated above. (Art.
performance? 1177, NCC)
A: Q: Saturnino was the

1. Exhaustion of the properties of the registered owner of two
debtor (not exempt from attachment parcels of land. The
under the law) Adorables were lessees of
2. Accion subrogatoria (subrogatory a portion of Lot No. 1.
action) – an indirect action brought Saturnino and his son,
in Francisco, obtained a loan
the name of the debtor by the from Salvador, in
creditor consideration of which
to enforce the former’s rights they promised to transfer
except: the possession and
enjoyment of the fruits of
Lot No. 2. Saturnino sold
186 CIVIL LAW TEAM: to Francisco part of Lot No.
1, which Francisco sold to
a. personal rights of the Jose Ramos. The portion of
debtor land being rented by
b. rights inherent Salvador was included in
in the the portion sold to Ramos.
person of The deeds of sale
the debtor evidencing the
c. properties conveyances were not
exempt registered in the office of
from the register of deeds.
execution When Saturnino and
(e.g.family Francisco failed to pay
home) their loan, a demand letter
was sent to Francisco, but
3. Accion pauliana he refused to pay.
(rescissory
action) – an When Salvador learned of
action to impugn the sale made by Francisco
or assail the acts to Ramos, Salvador filed a
done or contracts complaint for the
entered into by annulment or rescission of
the debtor in the sale on the ground
fraud of his that the sale was
creditor; fraudulently prepared and
executed. Can Salvador file
Note: Must be a
an action for the rescission
remedy of last
or annulment of the sale?
resort, availed of
only after all other
legal remedies A: No. As creditor, Salvador
have been does not have such
exhausted and material interest as to
have been proven allow him to sue for
futile. rescission of the contract
of sale. At the outset,
Presupposes a Salvador’s right against
judgment and the Francisco and Ramos is
issuance by the only a personal right to
trial court of a writ receive payment for the
of execution for loan; it is not a real right
the satisfaction of
over the lot subject of the The sale was not made in
deed of sale. fraud of creditors. Art.
1177 of the Civil Code
provides for successive

NAVAL, MONICA JUCOM
OBLIGATIONS
measures that must be prescription has to run from

taken by a creditor before he the date of registration. Has
may bring an action for the action filed by Philam
rescission of an allegedly prescribed?
fraudulent sale. Without
availing of the first and A: No. Philam only learned
second remedies, Salvador about the unlawful
simply undertook the third conveyances made by Felix
measure and filed an action more than four years after
for annulment of the sale. the donations were effected,
This cannot be done. when its counsel
accompanied the sheriff to
An action for rescission is a Butuan City to attach the
subsidiary remedy; it cannot properties. There they found
be instituted except when that he no longer had any
the party suffering damage properties in his name. It
has no other legal means to was only then that Philam's
obtain reparation for the action for rescission of the
same. Considering Article deeds of donation accrued
1380 of the Civil Code, which because then it could be said
states that contract validly that Philam had exhausted
agreed upon may be all legal means to satisfy the
rescinded in the cases trial court's judgment in its
established by law, Salvador, favor. Since Philam filed its
et al. have not shown that complaint for accion
they have no other means of pauliana against petitioners
enforcing their credit. barely a month from its
(Adorable, et. al. v.CA, G.R. discovery that Felix had no
No. 119466, Nov. 25, 1999) other property to satisfy the
judgment award against him,
Q: While the case was its action for rescission of
pending, Felix donated his the subject deeds clearly had
of parcels of land in favor of not yet prescribed.(Khe
his children. Judgment was Hong Cheng v. CA,G.R. No.
rendered against Felix. 144169, Mar. 28, 2000)
When the sheriff,
accompanied by counsel of Note: The debtor is liable
Philam, sought to enforce with all his property, present
the alias writ of execution, and future, for the
they discovered that Felix fulfillment of his obligations,
no longer had any property subject to the exemptions
and that he had conveyed provided by law (De Leon,
the subject properties to his Obligations and Contracts,
children. Thus, Philam filed 2003 ed, p.71)
an accionpauliana for
rescission of the donations.
Felix countered that an
action for rescission of the
donation had already ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
prescribed since the time of Q: What is substitute performance?
A: It is a remedy of the b. Specific thing‐ specific
creditor in case of non‐ performance may be
performance by the debtor; demanded, that is, the
where another party creditor may compel the
performs the obligation or debtor to make the
the same is performed at the delivery.
expense of the debtor.
2. RESCISSION
Q: When may there be
substitute performance? Q: What is rescission under Article
A: 1191?
1. Positive personal obligation:
a. If not purely personal‐ A: It refers to the
substitute performance; the cancellation of the contract
obligation shall be executed or reciprocal obligation in
at debtor’s cost if he fails to case of breach on the part of
do it. (Art. 1167, NCC) one, which breach is
b. Purely personal‐ no violative of the reciprocity
substitute between the parties. This is
performance may be properly called resolution.
demanded because of the
personal qualifications taken Note: The rescission under
into consideration. The only Art. 1380 is rescission based
remedy is on lesion or fraud upon
damages. creditors.
2. Real obligation:
a. Generic thing‐ substitute Q: To what kind of
performance; delivery may obligation is resolution
be available?
made by a person other
than A: Reciprocal obligation,
the debtor since the object since resolution is implied
is therein.
merely designated by its
class
or genus. The creditor may
ask that the obligation be
complied with at the
expense
of the debtor. 187 U N I V E R S I T Y O F S A N
(1165,NCC) T O T O M A S

JOY G. SABUGO & JOHN HENRY C.
ADMINISTRATION AND FINANCE:
JEANELLE C. LEE
VICE CHAIRS FOR LAY‐OUT AND
DESIGN: EARL LOUIE M.
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Q: Who may demand exercised must be indebted to the

resolution? creditor.
A: Injured party. Q: What are the requisites of

accion pauliana?
Q: May the injured party
demand resolution after A:
he elects specific 1. Defendant must be indebted to
performance? plaintiff
A: 2. The fraudulent act performed by
GR: No. His right is not the
conjunctive, thus, he may debtorsubsequent to the
not choose both remedies contractgives
of resolution and specific advantage to another
performance. 3. The creditor is prejudiced by
XPN: Yes, if specific such act.
performance should 4. The creditor must have
become impossible pursued all
properties of the debtor
Q: When does liability for subject to
damages arise? execution
5. The creditor has no other legal
A: Those liable under Art. remedy.
1170 shall pay damages
only if aside from the
breach of contract,
prejudice or damage
was caused. (Berg v.
Teus, G.R. No. L‐6450,
188 CIVIL LAW TEAM:
Oct 30, 1954) Q: What is accion directa?
Q: What are the kinds of A: It is the right of the

damages? lessor to go directly
A: against the sublessee for
1. Moral unpaid rents of the lessee.
2. Exemplary
3. Nominal Note: Under Art. 1652 of
the Civil Code, the
4. Temperate
sublessee is subsidiarily
5. Actual
liable to the lessor for any
6. Liquidated4. SUBSIDIARY rent due from the lessee.
DEMEDIES
VII. KINDS OF CIVIL
Q: What are the OBLIGATIONS
requisites of accion
subrogatoria? Q: What are the kinds of civil
obligations?
A:
1. The debtor’s assets must be A:
insufficient 1. Pure obligations;
to satisfy claims against 2. Conditional
him obligations;
2. The creditor must have pursued 3. Obligations with
all a period or term;
properties of the debtor subject to and 4. Alternative
execution or Facultative
3. The right of action must not be obligations
purely
personal Q: Differentiate a civil
4. The debtor whose right of action obligation from a natural
is
obligation. A: One whose effectivity
or extinguishment does
A: not depend upon the
fulfillment or non‐
CIVIL OBLIGATION
fulfillment of a condition
or upon the expiration of
As to binding force
a period and is
Arises from positive law demandable at once. (Art.
1179, NCC)
As to enforcement in courtB. CONDITIONAL

OBLIGATIONS
Can be enforced by
court action Q: What is conditional
obligation?
A: It is an obligation
subject to a condition and
the effectivity of which is
subordinated to the
fulfillment or non‐
A. PURE fulfillment of a future and
OBLIGATIONS uncertain event, or upon
a past event unknown to
Q: What is pure obligation? the parties.

NAVAL, MONICA JUCOM
OBLIGATIONS
Q: Ramon, the judicial conditional one?

administrator of the estate
of Juan, found out that A: No. The stipulation that
Rodriguez had enlarged the "payment of the full
the area of the land which consideration based on a
he purchased from Juan survey shall be due and
before his death. Thus, payable in 5 years from the
Ramon demanded execution of a formal deed
Rodriguez to vacate the of sale" is not a condition
portion allegedly which affects the efficacy of
encroached by him. the contract of sale. It
Rodriguez refused and merely provides the
contested there was manner by which the full
indeed a conditional sale consideration is to be
with the balance of the computed and the time
purchase price payable within which the same is to
within five years from the be paid. But it does not
execution of the deed of affect in any manner the
sale. Ramon then filed an effectivity of the contract.
action for recovery of (Heirs of San
possession of the disputed Andresv.Rodriguez, G.R.
lot. Is the contract of sale a No. 135634, May 31, 2000)
Q: Distinguish period from
created consolidated
condition.
A: When Rights are Acquired
PERIOD CONDITIONRights are not yet Rights are already

acquired, but there is acquired, but
As to Time hope or expectancy subject to the threat
that they will soon or danger of
Refers to the future May refer to past be extinction
event unknown acquired
to
the parties
As to Fulfillment
Q: In cases of obligations
It will happen at an May or may not happen
with a suspensive
exact date or at an condition, what are the
indefinite time, but is effects of loss,
sure to arrive deterioration, and
improvements in real
As to its Influence on the Obligation to be
obligations?
Fulfilled or Performed
A:
No effect or influence May give rise to an
upon the existence of WITH DR’S FAULT
obligation WITHOUT DR’S FAULT
the obligation but (suspensive) or the
only in its cessation of one Loss
demandability or already existing
performance DR pays damages
(resolutory) Obligation extinguished
Deterioration
1. SUSPENSIVE CR‐ choose b/w Impairment borne by CR

CONDITION rescission of
obligation or
fulfillment (with
Q: What is a suspensive condition?
indemnity for
damages in either
A: A condition the
case)
fulfillment of which will
give rise to the acquisition
Improvement
of a right.
1. By the thing’s nature or by time – inure to the

benefit of the CR
2. At the debtor’s expense – DR shall have no right
other than that granted to a usufructuary
Q: What are the requisites for

Art.1189 to apply?
Q: Distinguish suspensive
from resolutory conditions.
A:
1. Must be a real obligation;
A:
2. Object is a
SUSPENSIVE CONDITION specific/determinate thing;
RESOLUTORY
3. Obligation is subject to a
CONDITION
suspensive
Effect of Fulfillment condition;
4. The condition is fulfilled; and
Obligation arises or 5.isThere is loss, deterioration or
Obligation
becomes effective improvement of the thing during the
extinguished
pendency of the happening of the
Effect of Non‐fulfillment condition.
If not fulfilled, no If notNote:

fulfilled,
The same conditions
juridical relation is juridicalapply
relation is of an obligor
in case
in obligations with a
resolutory condition. In
such cases, the third
requisite must read,
“subject to a resolutory T O T O M A S

condition.”
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Q: GSIS approved the 2. RESOLUTORY

application of Agcaoili for CONDITION
the purchase of a house
and lot in the GSIS Housing Q: What is a resolutory
Project; it is subject to the condition?
condition that he should
immediately occupy the A: A condition where the
house. But he could not rights already acquired
because the house was are lost upon fulfillment
uninhabitable. He paid the of the condition.
first installment and other
fees but refused to make Q: What are the effects of
further payment until GSIS fulfillment of
had made the house resolutory condition?
habitable. GSIS refused A:
and opted to cancel the 1. Real obligations:
award and demand the a. The parties shall return to
vacation by Agcaoili of the each
premises. Can GSIS cancel other what they have received.
the contract? b. Obligation is
extinguished.
A: No. There was ac. In case of the loss, deterioration or
perfected contract of sale improvement of the thing, Art.
between the parties; there
1189, with respect to the debtor,
had been a meeting of the
shall be applied to the party who is
minds upon the purchase
bound to return.
by Agcaoili of a
determinate house and lot
2. Personal obligations‐ the
at a definite price and from
courts shall
that moment, the parties
determine, in each case, the
acquired the right to
retroactive
reciprocally demand
effect of the condition that has
performance. Based on
been
their contact, it can only be
complied with.
understood as imposing on
GSIS an obligation to
deliver to Agcaoili a
reasonably habitable
dwelling in return for his
190 CIVIL LAW TEAM:
Q: X donated a parcel of
undertaking to pay the
land to the municipality of
stipulated price. Since GSIS
Tarlac under a condition
did not fulfill that
that a public school shall
obligation, and was not
be erected and a public
willing to put the house in
park be made within 6
habitable state, it cannot
months from the date of
invoke Agcaoili's
the ratification of the
suspension of payment of
donation by the parties.
amortizations as cause to
After the registration of
cancel the contract
the said donation, X sold
between them.
the same land to Y.
Thereafter, Y brought an
Note: In reciprocal
obligations, neither party action against the Province
incurs in delay if the other of Tarlac, alleging that the
does not comply or is not conditions of the donation
ready to comply in a proper is a condition precedent,
manner with what is thus, the municipality of
incumbent upon him. Tarlac did not acquire
(Agcaoili v. GSIS, G.R. No. L‐ ownership over the land
30056, Aug. 30, 1988) when it failed to comply
with the said condition. Is
the contention of Y donation, reconveyance
correct? and damages against CPU
alleging that CPU had not
A: No. In this case, the complied with the
condition could not be conditions of the
complied with except after donation.
giving effect to the
donation. The Municipality Are the conditions
of Tarlac could not do any imposed resolutory or
work on the donated land suspensive?
if the donation had not
really been effected, A: Under Art. 1181 of the
because it would be an Civil Code, on conditional
invasion of another's title, obligations, the acquisition
for the land would have of rights, as well as the
continued to belong to the extinguishment or loss of
donor so long as the those already acquired,
condition imposed was not shall depend upon the
complied with. Thus, happening of the event
considering that the which constitutes the
condition itself was for a condition. Thus, when a
public school to be built person donates land to
means that ownership of another on the condition
the land was already with that the latter would build
the Municipality. (Parks v. upon the land a school, the
Province of Tarlac, G.R. No. condition imposed was not
L‐24190, July 13, 1926) a condition precedent or a
suspensive condition but a
Q: The late Don Lopez, Sr., resolutory one. It is not
who was then a member correct to say that the
of the Board of Trustees of schoolhouse had to be
CPU, executed a deed of constructed before the
donation in favor of the donation became effective,
latter of a parcel of land that is, before the donee
subject to the condition could become the owner of
that it shall be utilized for the land, otherwise, it
the establishment and use would be invading the
of a medical college. property rights of the
However, the heirs of Don donor. The donation had to
Lopez, Sr., filed an action be valid before the
for annulment of the fulfillment of

NAVAL, MONICA JUCOM
OBLIGATIONS
the condition. If there was 1995)

no fulfillment or compliance
with the condition, the Q: What does a constructive
donation may now be fulfillment of a condition
revoked and all rights which entail?
the donee may have
acquired under it shall be A:When the debtor actually
deemed lost and prevents the fulfillment of
extinguished. (Central the condition, then said
Philippine University v. CA, condition shall be deemed
G.R. No. 112127, July 17, fulfilled.
2. POTESTATIVE effect of the
CONDITION condition fulfilled.
Q: When is a condition said to be

potestative?
Q: What are the effects of
the fulfillment of a
A: When the condition
resolutory condition?
depends upon the will of one
A:
of the contracting parties.
1. Real obligations:
a. obligation is extinguished
Q: Does a condition which
b. Parties shall return to each other
depends upon the will of
what they have
the debtor invalidate both
received.
the condition and the
2. Personal
obligation? What about a
obligations‐ the
condition which depends
court determines
upon the will of the
the retroactive
creditor?
effect of the
condition fulfilled.
A: Yes. This is because its
validity and compliance is
left to the will of the debtor, Q: What are the other types of
and cannot therefore be conditions?
easily demanded. But if the
condition is a pre‐existing A: CaMP‐NID‐CAPI
one, only the condition is 1. Casual – the
void, leaving the obligation performance or
itself valid. Further, if the fulfillment of the
condition is resolutory, it is condition depends
valid because what is left to upon chance
the sole will of the debtor is and/or the will of a third
not the existence or the person
fulfillment of the obligation 2. Mixed – the
but merely its performance or
extinguishment. fulfillment of the
condition depends
If the fulfillment depends partly upon
upon the will of the creditor, the will of a party to the obligation and
in any case, both the partly upon chance and/or the will of a
condition and the obligation third person
are valid. 3. Positive – involves the doing of
an act
Q: What are the effects of 4. Negative – involves
the fulfillment of a the omission of an
suspensive condition? act
A: 5. Divisible – is susceptible of
1. Real obligations: partial
GR: Effects performance
retroact to the 6. Indivisible – is not susceptible of
day of constitution partial
of the obligation. performance
XPN: No retroactivity as to; 7. Conjunctive – there
a. fruits are several
b. interests conditions in an
obligation all of
XPN to the XPN: which
There may be must be performed
retroactivity as to 8. Alternative – there
the fruits and are several
interests in conditions in an
unilateral obligation but
obligations if such only one
intention appears must be performed
9. Possible – is capable
2. Personal of fulfillment
obligations‐ the according to the
court determines nature, law, public
the retroactive policy or good customs
10. Impossible – is not parties but not of a third
capable of person.
fulfillment
according to XPNs: PD‐DoNT.
nature, law, public 1. Pre‐existing obligation
policy 2. Obligation is Divisible
or good customs (Art. 1183, 3. In simple or remuneratory
NCC) Donations
4. In case of conditions
Q: What is the effect of an Not to do an
impossible or unlawful impossible thing
condition? 5. In Testamentary dispositions
A:
GR: Impossible
conditions annul the
obligation which 191 U N I V E R S I T Y O F S A N
depends upon the T O T O M A S

JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Note: In the foregoing, the obligations debtor?

remain
valid, only the condition is void and A: When the debtor binds
deemed to himself to pay when his
have not been imposed. It is applicable means permit him to do
only to so, the obligation is
obligations not to do and gratuitous deemed with a period or
obligations. term. This is valid because
it is not the payment itself
Q: When will the effect of that is dependent upon
fulfillment of a condition the will of the debtor, but
retroact? the moment of payment.
A: As the time of payment is

1. In an obligation to give – it not fixed, the court must
retroacts to fix the same before any
the day of the constitution of the action for collection may
obligation be entertained, unless, the
2. In an obligation to do or not to do prior action of fixing the
– the term or period will only be
court may determine to what date a formality and will serve
retroactivity shall be allowed, or it no purpose but delay.
may
even refuse to permit retroactivity
(Tolentino, Civil Code of the
Philippines,
Vol. IV, 2002 ed,
p.166)
192 CIVIL LAW TEAM:
Q: For whose benefit is the

C. OBLIGATIONS WITH A period constituted?
PERIOD
A:
Q: What is an obligation with a GR: When a period has
period or a term? been agreed upon for
the performance or
A: It is an obligation whose fulfillment of an
demandability or obligation, it is
extinguishment is subject presumed to have
to the expiration of a been established for
period or a term. (Art. the benefit of both the
1193, NCC) creditor and the
debtor.
of a valid period or term? XPN: When it appears
from the tenor of the
A: period or other
1. Future circumstances that it
2. Certain was established for the
3. Possible, legally and benefit of one of the
physically parties.
Q: Is the statement of a Q: What is the effect of

debtor that he will pay the term being for the
when his means permit benefit of either the CR or
him to do so relate to a the DR?
period or a condition? Is
such a statement valid A:
considering that the same 1. When it is for the
is left to the will of the benefit of the
Creditor – A: It only relieves the
Creditor may contracting parties from
demand the the fulfillment of their
performance of respective obligation
the obligation at during the term or period.
any time but the
DR cannot Q: When may the court fix
compel him to the period?
accept payment
before the A:
expiration of the 1. If the obligation
period (e.g. “on does not fix a
demand”) period, but from
2. When it is for the its nature and
benefit of the circumstances it
Debtor – can be inferred
Debtor may that a period
oppose any was intended by
premature the parties
demand on the 2. If the duration of
part of the CR the period
for performance depends upon
of the obligation, the will of the
or if he so DR
desires, he may 3. In case of
renounce the reciprocal obligations,
benefit of the when there is a just
period by cause for fixing the
performing his period 4. If the DR
obligation in binds himself when
advance. his means permit him
(Manresa) to do so
Q: What is the effect of a

fortuitous event in an
obligation with a period?

NAVAL, MONICA JUCOM
OBLIGATIONS
Q: When may a debtor acts or through

lose his right to make use fortuitous event,
of the period? unless he
gives a new security equally
A: satisfactory
1. Insolvency of the (if impairment is without the
DR, unless fault of
security is DR, he shall retain the
provided right)
2. Did not deliver security 4. Violates
promised undertaking in
3. Impaired security consideration of
through his own extension of
period
5. DR attempts to ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
abscond (Art. Q: In alternative
1198, NCC) obligations, when does
the choice made take
D. ALTERNATIVE effect?
OBLIGATION
A: The choice made takes
Q: Distinguish facultative effect only upon
from alternative communication of the
obligations. choice to the other party
and from such time the
A: obligation ceases to be
alternative (Art. 1205,
FACULTATIVE ALTERNATIVE
NCC).
OBLIGATIONS OBLIGATIONS
Note: The notice of
Fortuitous loss Fortuitous loss of
selection or all
choice may be
extinguishes the prestation will
in any form provided it is
obligation extinguish the obligation
sufficient to make the
other party know that the
Culpable loss obliges Culpable loss has
election of been made.
the debtor to deliver any object
(Tolentino,will
due Civil Code of the
substitute prestation give rise to liability2002 ed, p.
Philippines,
without liability to 205)
debtor
Q: Does the choice
Choice pertains only to GR: Choice
made by the DR require
debtor pertainthe
to debtor
concurrence of the
CR? What happens
XPN: when through the CR’s
grantedfault,
to creditor
selection is
or thirddeemed
personimpossible?
Only one object is due Several objects are due

A: No. To hold otherwise
May be complied with Maywould
be complied
destroy the very
by substitution of one with by fulfilling
nature ofany
the right to
that is due of those alternately
select given to the DR.
Once a choice is made, it
can no longer be
If principal obligation is If onerenounced
prestation and
is the parties
void, the creditor void, the
are others
bound free
thereto.
cannot compel
delivery of the vicesWhen
preserve the is rendered
choice
substitute validity of the obligation
impossible through the
CR’s fault, the DR may
If there is impossibility to If various
bringprestations
an action to rescind
deliver the principal are impossible
the contractto with damages
thing or prestation, the perform except
(Art. 1203,one,
NCC).
obligation is
extinguished, even if the must Q: beWhat
delivered.
are the
substitute obligation is If all prestations
limitationsare
on the right of
valid impossible
choice oftothe debtor?
perform, the
obligation
A: Debtoriscannot
extinguished
choose prestations
which are: 1.
Loss of substitute before Where the Impossible;
choice is
the substitution through given to the2.creditor,
Unlawful; and
the fault of the debtor the loss 3.
of could
the not have
doesn’t make him liable alternative through been the object
the fault of the of the
debtor renders him obligation.
liable for damages
Q: When is an alternative
obligation converted to a
simple obligation?
A: When:
1. the person who has a right of T O T O M A S

choice has
communicated his choice;
or
2. only one is practicable. (Art.
1202, NCC)

JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Q: What are the effects of Q: What are joint

loss of objects of obligations?
alternative obligations?
A: It is where the entire
A: obligation is to be paid or
performed
DUE TO
proportionately by the
FORTUITOUS
debtors (Art. 1208, NCC).
EVENT
Q: What are solidary

Choice Belongs to Debtor
obligations?
All are DR released
lost from the A: It is where each of the
obligation debtors obliges to pay the
entire obligation, and
where each one of the
creditors has the right to
demand from any of the
debtors, the payment or
fulfillment of the entire
obligation (Art. 1207,
NCC; Pineda, Obligations
Some DR shall and Contracts, 2000 ed, p.
but not deliver that 139).
all are which he
lost shall choose
from among
the remainder
Only
one
194
Deliver that which remains
CIVIL LAW TEAM:
remain Q: Distinguish joint from

s solidary obligation.
A:
Choice Belongs to Creditor
JOINT OBLIGATION SOLIDARY OBLIGATION
All are DR released
Presumed by law Not presumed. Must
lost from the
be expressly
obligation
stipulated by the
parties, or when the
law or the nature of
the obligation
Some DR shall
requires
but not deliver that
solidarity. (Art. 1207,
all are which he
NCC)
lost shall choose
from among
Each debtor is liable Each debtor is
the remainder
only for a obliged to pay the
proportionate part of entire obligation
the entire debt
Each creditor, if there Each creditor has the

Only Deliver that which remains. In case
are several, is entitled right to demand from
one of fault of DR, CR has a right to
only to a any of the debtors,
remain indemnity for damages
proportionate part of the payment or
s
the credit fulfillment of the
entire obligation
(Tolentino, Civil
CodeVol IV, 1999
VIII. JOINT AND SOLIDARY ed. p. 217)
OBLIGATIONS
expressly
makes the charge or condition in
solidum
Q: What is the rule as
(Manresa); or
regards the joint or
5. solidary
solidary character of an
responsibility is
obligation?
imputed by a
final Judgment
A:
upon several
GR: When two or
defendants.(Gutierrez v. Gutierrez,
more creditors or two
56
or more debtors
Phil 177)
concur in one and the
same obligation, the
Q: Chua bought and
presumption is that
imported to the
the obligation is joint.
Philippines dicalcium
phosphate. When the
XPNs: The obligation
cargo arrived at the Port
shall be solidary
of Manila, it was
when: ELN‐CJ
discovered that some
1. Expressly
were in apparent bad
stipulated that
condition. Thus, Chua
there is
filed with Smith, Bell, and
solidarity;
Co., Inc., the claim agent
2. Law requires
of First Insurance Co., a
solidarity;
formal statement of claim
3. Nature of the for the loss. No
obligation settlement of the claim
requires having been made, Chua
solidarity; then filed an action. Is
4. Charge or Smith, Bell, and Co.,
condition is solidarily liable upon a
imposed upon marine insurance policy
heirs or legatees with its disclosed foreign
and the will principal?

NAVAL, MONICA JUCOM
OBLIGATIONS
A: No. Article 1207 of the Q: The labor arbiter

Civil Code clearly provides rendered a decision, the
that "there is a solidary fallo of which states that the
liability only when the following respondents as
obligation expressly so liable, namely: FCMC, Sicat,
states, or when the law or Gonzales, Chiu Chin Gin, Lo
the nature of the obligation Kuan Chin, and INIMACO.
requires solidarity." The INIMACO questions the
well‐entrenched rule is that execution, alleging that the
solidary obligation cannot alias writ of execution
lightly be inferred. It must be altered and changed the
positively and clearly tenor of the decision by
expressed. (Smith, Bell & changing their liability from
Co., Inc. v. CA, G.R. No. joint to solidary, by the
110668, Feb. 6, 1997) insertion of the words
"AND/OR". Is the liability of
INIMACO pursuant to the debtor will not increase
decision of the labor arbiter the liability of his co‐
solidary or not? debtors;
6. Vices of each
A: INIMACO's liability is not obligation
solidary but merely joint. emanating from a
Well‐entrenched is the rule particular debtor
that solidary obligation or creditor will not
cannot lightly be inferred. affect the others; and
There is a solidary liability 7. In indivisible or joint
only when the obligation obligation, the
expressly so states, when the defense of res
law so provides or when the judicata of one
nature of the obligation so does not
requires. In the dispositive extend to the others.
portion of the labor arbiter,
the word "solidary" does not B. JOINT INDIVISIBLE
appear. The said fallo OBLIGATIONS
expressly states the
following respondents Q: What are the different
therein as liable, namely: permutations of joint
Filipinas Carbon Mining indivisible obligations?
Corporation, Sicat, Gonzales, What are their effects?
Chiu Chin Gin, Lo Kuan Chin,
and INIMACO. Nor can it be A:
inferred therefrom that the 1. If there are two or more
liability of the six debtors,
respondents in the case compliance with the obligation requires
below is solidary, thus their the concurrence of all the debtors,
liability should merely be
although each for his own share. The
joint.(INIMACO v. NLRC,G.R.
obligation can be enforced only by
No. 101723, May 11, 2000)
preceding against all of the
debtors.
A. JOINT OBLIGATIONS
2. If there are two or
more creditors,
Q: What are the legal the concurrence
consequences if the or collective act of
obligation is joint? all the
creditors, although each of his own
A: share, is also necessary for the
1. Each debtor is liable enforcement of the
only for a obligation.
proportionate part of 3. Each credit is distinct from one
the entire debt; another;
2. Each creditor, if therefore a joint debtor cannot be
there are several, required to pay for the share of
is entitled only to another
a proportionate
with debtor, although he may pay if he
part of the credit;
wants to.
3. The demand made
4. In case of insolvency
by one creditor
of one of the
upon one debtor,
debtors, the
produces effects
others shall not be
of default only as
liable
between them;
for his shares. To hold otherwise would
4. Interruption of
destroy the joint character of the
prescription
obligation.
caused by the
demand made by
one creditor upon
breach of a joint indivisible
one debtor, will
obligation by one debtor?
NOT benefit the
co‐ creditors or
the co‐debtors; A: If one of the joint debtors
fails to comply with his
undertaking, the obligation
can no longer be fulfilled or
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II performed. It is the
5. Insolvency of a converted into one of
indemnity for damages. the creditors has the right to
Innocent joint DR shall not demand from any of the
contribute to the indemnity debtors the payment or
beyond their corresponding fulfillment of the entire
share of the obligation. obligation
C. SOLIDARY OBLIGATIONS
Q: What is the effect of solidary

obligation?
A: Each one of the debtors is

obliged to pay the entire T O T O M A S

obligation, and each one of
VICE CHAIRS FOR ACADEMICS: KAREN VICE CHAIRS FOR LAY‐OUT AND Facultad de Derecho
JOY G. SABUGO & JOHN HENRY C. DESIGN: EARL LOUIE M. Civil
MENDOZA VICE CHAIR FOR MASACAYAN& THEENA C. MARTINEZ
JEANELLE C. LEE
UST GOLDEN NOTES

2011
Q: Joey, Jovy and Jojo are Art. 1217, NCC)

solidary debtors under a Since the insolvent debtor's share
loan obligation of P300, which Joey
000.00 which has fallen paid was Pl00,000, and there are
due. The creditor has, only two
however, condoned Jojo's remaining debtors ‐ namely Joey
entire share in the debt. and Jojo ‐
Since Jovy has become these two shall share equally the
insolvent, the creditor burden of
makes a demand on Joey reimbursement. Jojo may thus be
to pay the debt. compelled
by Joey to contribute P50,000. (1998
1. How much, if any, may Joey be Bar
compelled to Question)
pay?
2. To what extent, if at all, can Jojo Q: What are the kinds of solidary
be obligation?
compelled by Joey to contribute to
such payment? A:
1. Passive – solidarity on the part of
A: the
1. Joey can be compelled to pay only debtors
the 2. Active – solidarity on the part of
remaining balance of P200,000, in the
view creditors
of the remission of Jojo’s share by 3. Mixed – solidarity on
the both sides
creditor. (Art. 1219,
NCC) Q: Distinguish solidarity from
2. Jojo can be compelled by Joey to indivisibility.
contribute P50,000. When one of
the A:
solidary debtors cannot, because of
INDIVISIBILITY SOLIDARITY
his
insolvency, reimburse his share to
Refers to the Refers to the
the prestation or object vinculum existing
debtor paying the obligation, such of the contract between the
share subjects or parties
shall be borne by all his co‐debtors,
in Does not require Requires the
proportion to the debt of each.(par. plurality of plurality of parties
3,
obligation without
subjects or parties
prejudice to his
liability for the shares
In case of breach, it is
of the other solidary
converted to one of
creditors.
indemnity for
damages and the
indivisibility of the Q: In cases of solidary
obligation is creditors, may one act for
terminated all? What are the
limitations?
A: Yes. However, while

each one of the solidary
196 CIVIL LAW TEAM: creditors may execute acts
which may be useful or
Q: What are the rules
beneficial to the others, he
may not do anything
in a solidary
which may be prejudicial
to them. (Art. 1212, NCC)
obligation? A:
Note: Prejudicial acts may
1. Anyone of the still have valid legal effects,
solidary creditors but the performing creditor
may collect or shall be liable to his co‐
demand payment of creditors. (Pineda,
whole obligation; Obligations and Contracts,
2000 ed, p. 157)
there is mutual
agency among
solidary debtors Q: What are the effects of
(Arts. 1214, 1215) assignment of rights in a
solidary obligation?
2. Any of the solidary A:

debtor may be GR: Solidary creditor
required to pay the cannot assign his right
whole obligation; because it is
there is mutual predicated upon
guaranty among mutual confidence,
solidary debtors meaning personal
(Arts. 1216, 1217, qualification of each
1222) creditor had been
taken into
3. Each one of solidary consideration when
creditors may do the obligation was
whatever maybe constituted. (Art.
useful to the others, 1213, NCC)
but not anything
prejudicial to them XPNs:
(Art. 1212); however, 1. Assignment to co‐
any novation, creditor; or
compensation, 2. Assignment is with
confusion or remission consent of co‐
of debt executed by creditor.
any solidary creditor
shall extinguish the

NAVAL, MONICA JUCOM
OBLIGATIONS
Q: To whom must payment A:

be made in a solidary 1. When the law so provides; or
obligation? 2. By stipulation of the
parties.(3rd par.,
A: Art. 1255, NCC)
GR: To any of the solidary
creditors. Q: What is the effect of
illegality of a part of a
XPN: If demand, judicial contract?
or extra‐judicial, has
been made by one of A:
them, payment should 1. Divisible contract –
be made to him.(Art. illegal part is void
1214, NCC) and
unenforceable.
D. DIVISIBLE AND INDIVISIBLE Legal part is valid
OBLIGATIONS and enforceable.
(Art. 1420, NCC)
Q: What is the primary 2. Indivisible contract –
distinction between entire contract is
divisible and indivisible indivisible and
obligations? unenforceable.
A: Q: What is the effect of

partial performance in
DIVISIBLE INDIVISIBLE
indivisible obligation?
Susceptibility of an Non‐susceptibility
obligation to be to be performed
partially
performed partially
A: It is tantamount to non‐
Partial
performance.
performance is (Pineda,
Obligations
tantamount to and Contracts,
2000
non‐ ed, p. 179)
performance
E. OBLIGATIONS WITH A PENAL
CLAUSE
Q: What is a penal clause?

Q: What is the true test in
determining divisibility?
A: It is an accessory
obligation attached to the
A: Whether or not the
principal obligation to
prestation is susceptible of
assure greater responsibility
partial performance, not in
in case of breach.
the sense of performance in
separate or divided parts,
Note: Proof of actual
but in the sense of the
damages suffered by the
possibility of realizing the
creditor is not necessary in
purpose which the
order that the penalty may
obligation seeks to obtain. If
be demanded. (Art. 1228,
a thing could be divided into
NCC)
parts and as divided, its
value is impaired
disproportionately, that
incorporating a penal
thing is indivisible. (Pineda,
clause in an obligation?
2000 ed, p. 174)
A:
GR: The penalty fixed by
Q: When may an obligation
the parties is a
to deliver a divisible thing
compensation or
be considered indivisible?
substitute for damages
in case of breach. A: PIU
1. Partial performance of the
XPNs: Damages shall obligation;
still be paid even if 2. Irregular performance of the
there is a penal clause obligation;
if: or
1. there is a stipulation to the 3. Penalty is Unconscionable even
contrary if there
2. the debtor refuses to pay the has been no performance.
agreed
penalty
3. the debtor is guilty of fraud in
the
fulfillment of the obligation. (Art. 1126,
NCC)
Note:The nullity of the

penal clause does not
carry with it that of the
principal obligation.
The nullity of the principal

obligation carries with it
that of the penal clause.
(Art. 1230, NCC)
T O T O M A S
Q: When may penalty be reduced by
the courts?
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
IX. EXTINGUISHMENT OF of a thing (other than

OBLIGATIONS money), the doing of an
act, or not doing of an act.
Q: What are the modes of
extinguishment of an Q: What is tender of
obligation? payment?
A: A: Tender of payment is the

1. Payment or performance definitive act of offering
2. Loss of the thing the creditor what is due
due him or her, together with
3. Condonation or remission of the demand that the
debt creditor accept the same.
4. Confusion or
merger Note: There must be a
5. Compensation fusion of intent, ability and
6. Novation capability to make good
such offer, which must be
7. Annulment
absolute and must cover the
8. Rescission
amount due. (FEBTC v. Diaz
9. Fulfillment of a resolutory Realty Inc., G.R. No. 138588,
condition Aug. 23, 2001)
10. Prescription(Art.
1231, NCC)
Note: The enumeration is

not exclusive.
MUTUAL DESISTANCE
Q: If the parties mutually

198 CIVIL LAW TEAM:
Q: Is the creditor bound to

disagree as regards the accept payment or
obligation, may it be performance by a third
cancelled? person?
A:
A: Yes. That is in the nature
GR: No, the creditor is
of “mutual desistance” –
not.
which is a mode of
extinguishing obligations. It
XPNs:
is a concept that derives
1. When made by a
from the principle that
third person who
since mutual agreement
has interest in
can create a contract,
the fulfillment of
mutual disagreement by
the obligation
the parties can cause its
2. Contrary
extinguishment.(Saura v.
stipulation
Development Bank of the
Phils., G.R. No. 24968, Apr.
Q: What are the rights of a
27, 1972)
third person who paid the
debt?
A. PAYMENT OR
PERFORMANCE
A:
1. With knowledge
Q: Is the term “payment,”
and consent of
as used in the Code,
the debtor:
limited to appreciable
a. can recover
sums of money?
entire amount
paid (absolute
A:No. Payment may consist
reimbursement
not only in the delivery of
)
money but also the giving
b. can be Q: State the requisites of a
subrogated valid payment.
to all rights
of the A: CCPAD
creditor 1. Capacity of the
2. Without knowledge payor
or against the 2. Capacity of the
will of the debtor payee
– can recover 3. Propriety of the
only insofar as time, place,
payment has manner of
been beneficial payment
to the debtor 4. Acceptance by the
(right of creditor
conditional 5. Delivery of the full
reimbursement amount or the full
) performance of the
prestation
NOTE: Payment made by a
third person who does not Q: What are the characteristics
intend to be reimbursed by of payment?
the debtor is deemed to be a
donation, which requires the
A:
debtor's consent. But the
1. Integrity;
payment is in any case valid
as to the creditor who has 2. Identity; and
accepted it. (Art. 1238, NCC) 3. Indivisibility.


NAVAL, MONICA JUCOM
INTEGRITY XPNs:
1. Substantial performance
Q: How should performance be made? performed in good
faith
A: 2. Creditor accepts the
performance knowing
OBLIGATIONS its incompleteness or
irregularity without
protest or objection
3. Debt is partly liquidated
and partly unliquidated,
Q: Is the acceptance by a creditor of a but the liquidated part
partial payment an abandonment of of the debt must be
its demand for full payment? paid in full
A: No. When creditors receive partial IDENTITY

payment,
GR: Performance should always be Q: What should be given as
in full.
payment of an obligation? their intention to consider the
performance complete and to
A: renounce their claim arising from
GR: Thing paid must be the the defect.
very thing due and cannot be
another thing even if of same Note: While Article 1248 of the
quality and value. Civil Code states that creditors
cannot be compelled to accept
XPNs: partial payments, it does not
1. Dation in payment prohibit them from accepting
2. Novation of the obligation such payments. (Selegna
3. Obligation is facultative Management and Development
Corp. v. UCPB, G.R. No. 165662,
May 30, 2006)
INDIVISIBILITY
Q: Can the debtor or creditor be Q: To whom payment should be

compelled to perform/accept made?
partial prestations?
A: Payment shall be made to the
A: person in whose favor the
GR: Debtor cannot be obligation has been constituted,
compelled by the creditor to or his successor in interest, or any
perform obligation in parts person authorized to receive it.
and neither can the debtor (Art. 1240)
compel the creditor to accept
obligation in parts. Q: Is payment to an unauthorized
person a valid payment?
XPNs: When:
1. partial performance has A:
been agreed upon GR: Payment to an
2. part of the obligation is unauthorized person is not a
liquidated and part is valid payment.
unliquidated
3. to require the debtor to XPNs:
perform in full is 1. Payment to an
impractical incapacitated person if: a.
they are not ipso facto deemed to he kept the thing
have abandoned their prior delivered, or
demand for full payment. b. it has been beneficial to him
2. Payment to a third person
To imply that creditors accept insofar as it redounded to
partial payment as complete the benefit of the CR
performance of their obligation, 3. Payment in good faith to
their acceptance must be made the possessor of credit
under circumstances that indicate
ACADEMICS CHAIR: LESTER ADMINISTRATION AND S Facultad de

JAY ALAN E. FLORES II FINANCE: JEANELLE C. LEE
VICE CHAIRS FOR
Derecho Civil
ACADEMICS: KAREN JOY G. U N I V E R S I T Y O
SABUGO & JOHN HENRY C. F S A N T O T O M A
MENDOZA VICE CHAIR FOR 199
VICE CHAIRS FOR LAY‐OUT AND DESIGN: EARL LOUIE M. MASACAYAN& THEENA C.
MARTINEZ
UST GOLDEN NOTES
2011
SPECIAL FORMS OF given may consist not only

PAYMENT of a thing but also of a real
right. (Tolentino, Civil Code
Q: What are the special forms of the Philippines, Vol. IV,
of payment? 2002 ed, p. 293)
A: Note: The consent of the

creditor is essential.
CONCEPT
It is a special mode of
Dation in Payment payment where the debtor
offers another thing to the
Alienation by the DR of a particular creditor
property who
in accepts it as
favor of his CR, with the latter’s consent, for theof payment of an
equivalent
satisfaction of the former’s money obligation
outstandingto debt.
the latter, with the effect of extinguishing the
said money obligation (Pineda, Obligations and
The undertaking partakes of
Contracts, 2000 ed, p. 212)the nature of sale, that is,
the creditor is really buying
Application of Payment the thing or property of the
debtor, payment for which is
Designation of the particular debt being
to bepaid by
charged against the
the DR who has two or more debts ordebtor’s
obligations
debt.
of the same kind in favor of the same CR to
whom the payment is made (
and Contracts, 2000 ed, p. 229
Payment by Cession
200 CIVIL LAW TEAM:
DR cedes his property to his CRs so the latter
may sell the same and the proceedsAs realized
such, the essential
applied to the debts of theelements
DR of a contract of
sale, namely, consent,
Tender of Payment object certain, and cause or
consideration must be
Voluntary act of the DR whereby he present.
offers to the
CR for acceptance the immediate performance
of the former’s obligation to theIn latter
its modern concept, what
actually takes place in
Consignation dacion en pago is an
objective novation of the
obligationwith
Act of depositing the object of the obligation where the thing
the court or competent authority after offered as an accepted
the CR has
equivalent
unjustifiably refused to accept the same or is not of the
performance
in a position to accept it due to certain reasons or of an
circumstances obligation is considered as
the object of the contract of
sale, while the debt is
considered as the purchase
price. In any case, common
1. DATION IN PAYMENT consent is an essential
prerequisite, be it sale or
Q: What does dation in novation, to have the effect
payment or dacion en of totally extinguishing the
pago entail? debt or obligation.
A: Dacion en pago is the Q: Lopez obtained a loan

delivery and transmission in the amount of
of ownership of a thing by P20,000.00 from the
the debtor to the creditor Prudential Bank. He
as an accepted equivalent executed a surety bond in
of the performance of the which he, as principal, and
obligation. The property PHILAMGEN as surety,
bound themselves jointly doubt as to whether a
and severally for the transaction is a pledge or a
payment of the sum. He dation in payment, the
also executed a deed of presumption is in favor of
assignment of 4,000 pledge, the latter being the
shares of the Baguio lesser transmission of
Military Institution in rights and interests. (Lopez
favor of PHILAMGEN. Is v. CA,G.R. No. L‐33157,
the stock assignment June 29, 1982)
made by Lopez dation in
payment or pledge? Q: Cebu Asiancars Inc.,
with the conformity of the
A: The stock assignment lessor, used the leased
constitutes a pledge and premises as a collateral to
not a dacion en pago. secure payment of a loan
Dation in payment is the which Asiancars may
delivery and transmission obtain from any bank,
of ownership of a thing by provided that the
the debtor to the creditor proceeds of the loan shall
as an accepted equivalent be used solely for the
of the performance of the construction of a building
obligation. Lopez’s loan which, upon the
has not yet matured when termination of the lease or
he "alienated" his 4,000 the voluntary surrender of
shares of stock to the leased premises
Philamgen. Lopez's before the expiration of
obligation would arise only the contract, shall
when he would default in automatically become the
the payment of the property of the lessor.
principal obligation which Meeting financial
is the loan and Philamgen difficulties and incurring
had to pay for it. Since it is an outstanding balance on
contrary to the nature and the loan, Asiancars
concept of dation in conveyed ownership of
payment, the same could the building on the leased
not have been constituted premises to MBTC, by way
when the stock assignment of "dacion en
was executed. In case of

NAVAL, MONICA JUCOM
OBLIGATIONS
pago."Is the dacion en pago lease of the land and not of

by Asiancars in favor of the specific provision
MBTC valid? stipulating transfer of
ownership of the building to
A: Yes. MBTC was a the Jaymes upon
purchaser in good faith. termination of the lease.
MBTC had no knowledge of While the alienation was in
the stipulation in the lease violation of the stipulation in
contract. Although the same the lease contract between
lease was registered and the Jaymes and Asiancars,
duly annotated, MBTC was MBTC’s own rights could not
charged with constructive be prejudiced by Asiancars’
knowledge only of the fact of actions unknown to MBTC.
Thus, the transfer of the with CF Sharp, authorizing
building in favor of MBTC the latter to sell its air
was valid and binding. transport tickets. CF Sharp
(Jayme v. CA, G.R. No. failed to remit the proceeds
128669, Oct. 4, 2002) of the ticket sales, thus,
Northwest Airlines filed a
2. FORM OF PAYMENT collection suit before the
Tokyo District Court which
Q: What are the rules as rendered judgment ordering
regards payment in CF Sharp to pay 83,158,195
monetary obligations?
A: Yen and damages for the

delay at the rate of 6% per
1. Payment in cash– all
annum. Unable to execute
monetary
the decision in Japan,
obligations shall
Northwest Airlines filed a
be settled in the
case to enforce said foreign
Philippine
judgment with the RTC of
currency which is
Manila. What is the rate of
legal tender in the
exchange that should be
Philippines.
applied for the payment of
However, the
the amount?
parties may agree
that the
obligations or A: The repeal of R.A. 529 by
transactions shall R.A. 8183 has the effect of
be settled in any removing the prohibition on
other currency at the stipulation of currency
the time of other than Philippine
payment. (Sec. 1, currency, such that
R.A. 8183) obligations or transactions
may now be paid in the
currency agreed upon by the
Note: R.A. 8183
parties. Just like R.A. 529,
amended the first
however, the new law does
paragraph of Art.
not provide for the applicable
1249 of the Civil
rate of exchange for the
Code, but the rest
conversion of foreign
of the article
currency‐ incurred
remain subsisting.
obligations in their peso
(Pineda,
equivalent. It follows,
Obligations and
therefore, that the
Contracts, 2000
jurisprudence established in
ed, p. 221)
R.A. 529 regarding the rate of
conversion remains
2. Payment in check or
applicable. Thus, in Asia
other negotiable
World Recruitment, Inc. v.
instrument – not
National Labor Relations
considered
Commission, the SC, applying
payment, they are
R.A. 8183, sustained the
not considered
ruling of the NLRC that
legal tender and
obligations in foreign
may be refused by
currency may be discharged
the creditor
in Philippine currency based
except when:
on the prevailing rate at the
a. the document
time of payment. It is just and
has been cashed;
fair to preserve the real value
or b. it had been
of the foreign exchange‐
impaired through
incurred obligation to the
the fault of the
date of its payment.
creditor.
If the rate of interest is not
PAYMENT IN CASH
stipulated, what should be
the rate of interest that
Q: Northwest Airlines, should apply? When should
through its Japan Branch, the interest begin to run?
entered into an
International Passenger
A: In Eastern Shipping Lines,
Sales Agency Agreement
Inc. v. CA, it was held that
absent any stipulation, the building constructed on the
legal rate of interest in properties covered by the
obligations which consists in mortgage contract. The
the payment of a sum of parties then agreed that the
money is 12% per annum to monthly rentals shall be
be reckoned from the time paid directly to the
of filing of the complaint mortgagee for the lessor's
therein until the said foreign account, either to partly or
judgment is fully satisfied. fully pay off the aforesaid
(C.F. Sharp & Co., Inc. v. mortgage indebtedness.
Northwest Airlines, Inc., G.R. Thereafter, FEBTC
No. 133498, Apr. 18, 2002) purchased the credit of Diaz
& Company in favor of
PAYMENT BY NEGOTIABLE PaBC, but it was only after 2
INSTRUMENT years that Diaz was
informed about it. Diaz
Q: Diaz & Company asked the FEBTC to make an
obtained a loan from Pacific accounting of the monthly
Banking Corp which was
secured by a real estate
mortgage over two parcels
of land owned by the
plaintiff Diaz Realty. ABC T O T O M A S

rented an office space in the
JEANELLE C. LEE
UST GOLDEN NOTES

2011
rental payments made by Q: Who has the burden of

Allied Bank. Diaz tendered proving payment in an
to FEBTC the amount of action for sum of money?
P1,450,000.00 through an
Interbank check, in order A: The party who pleads
to prevent the imposition payment as a defense has
of additional interests, the burden of proving that
penalties and surcharges such payment has, in fact,
on its loan but FEBTC did been made.
not accept it as payment,
instead, Diaz was asked to Q: Are receipts the only
deposit the amount with evidence that can be
the FEBTC’s Davao City presented to prove
Branch Office. Was there a payment?
valid tender of payment?
A: No. Receipts of
A: Yes. True, jurisprudence payment, although not
holds that, in general, a exclusive, are deemed the
check does not constitute best evidence of the fact of
legal tender, and that a payment. (Dela Peña and
creditor may validly refuse Villareal v. CA and Rural
it. It must be emphasized, Bank of Bolinao, Inc., G.R.
however, that this dictum No. 177828, Feb. 13, 2009
does not prevent a creditor
from accepting a check as EXTRAORDINARY INFALTION OR
payment. In other words, DEFLATION
the creditor has the option
and the discretion of Q: What is the rule in
refusing or accepting it. payment in case of an
(FEBTC v. Diaz Realty Inc., extraordinary inflation or
G.R. No. 138588, Aug. 23, deflation?
2001)
A: In case an extraordinary
inflation or deflation of the previously on the
currency stipulated should application
supervene, the value of
the currency at the time of Q: What is the governing
the establishment of the rule in case the debtor
obligation shall be the fails to ascertain which
basis of payment, unless debt his payment is to be
there is an agreement to applied?
the contrary. (Art. 1250,
NCC) A: The choice may be
transferred to the creditor
Q: Does the exchange rate as when the debtor makes
at the time of the payment and does not
establishment of the make application and
obligation apply in all debtor accepts a receipt in
cases? which the application is
made. In such a case, the
A: No. The rule that the debtor cannot complain of
value of the currency at the application the
the time of the creditor has made unless
establishment of the there be a cause for
obligation shall be the invalidating the contract.
basis of payment finds
application only when
there is an official Q: If both the creditor and
pronouncement or the debtor fail to apply
declaration of the payments, what rule
existence of an governs?
extraordinary inflation or
deflation. A: Legal application of
payment governs wherein
the law makes the
202 CIVIL LAW TEAM: application.
4. APPLICATION OF The payment should be

PAYMENTS applied to the more
onerous debts:
Q: What does the concept 1. When a person is
of application of bound as
payments mean? principal in one
obligation and as
A: It is the designation of surety in
the debt to which the another, the
payment must be applied former is more
when the debtor has onerous.
several obligations of the 2. When there are
same kind in favor of the various debts, the
same creditor. oldest ones are more
burdensome.
Q: What are the requisites 3. Where one bears
of application of interest and the
payments? other does not,
even if the latter
A: is the older
1. One debtor and one obligation, the
creditor former is
2. Two or more debts considered more
of the same kind 3. onerous.
Amount paid by the 4. Where there is an
debtor must not be encumbrance,
sufficient to cover all the debt with a
debts guaranty is more
4. Debts are all due onerous than
5. Parties have not that without
agreed security.
5. With respect to subject to the
indemnity for general rules on
damages, the damages is less
debt which is burdensome

NAVAL, MONICA JUCOM
OBLIGATIONS
than that in A:
which there is a
DATION IN PAYMENT PAYMENT IN CESSION
penal clause.
6. The liquidated debt
Maybe one creditor Plurality of creditors
is more
burdensome
than the Not necessarily in Debtor must be
unliquidated one. state of financial partially or relatively
difficulty insolvent
7. An obligation in
which the debtor
is in default is Thing delivered is Universality or
more onerous considered as property of debtor
than one in which equivalent of is what is
he is not. performance ceded
(Tolentino, Civil
Code of the Payment Merely releases
Philippines, Vol. extinguishes debtor for net
IV, 2002 ed, p. obligation to the proceeds of
314‐ 315) extent of the value things ceded or
of the thing assigned, unless
Note: If the debts happen delivered as agreed there is contrary
to be of same nature and upon, proved or intention
burden, the payment shall implied from the
be applied proportionately. conduct of the
creditor
PAYMENT BY CESSION
Ownership is Ownership is not
transferred to CR transferred
Q: What are the
upon delivery
circumstances evidencing
payment by cession?
An act of novation Not an act of novation
A: Debtor abandons all of
Does not presuppose Presupposes insolvency
his property for the benefit
insolvency
of his creditors in order that
from the proceeds thereof,
the latter may obtain
payment of credits.
5. TENDER OF
Note: It presupposes PAYMENT
insolvency of the debtor. All
the debtor’s creditors must Q: What constitutes a valid tender of
be involved and the consent payment?
of the latter must be
obtained. A: Voluntary act of the
debtor whereby he offers to
Q: What are the difference the creditor for acceptance
between Dation in the immediate performance
Payment and Payment in of the former’s obligation to
Cession? the
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II Benosv.Sps.Lawilao, G.R.
latter.(Pineda, Obligations No. 172259, Dec. 5, 2006)
and Contracts, 2000 ed, p.
241) Note: Once the
consignation has been duly
Tender of payment is the made, the debtor may ask
manifestation by debtors of the judge to order the
their desire to comply with cancellation of the
or to pay their obligation. obligation.
(Sps. Benosv.Sps.Lawilao,
G.R. No. 172259, Dec. 5, Q: When will consignation
2006) produce effects of
payment?
Note: If the creditor refuses
the tender of payment A:
without just cause, the GR: Consignation shall
debtors are discharged produce effects of
from the obligation by the payment only if there is
consignation of the sum a valid tender of
due. (Sps. payment.
Benosv.Sps.Lawilao, G.R.
No. 172259, Dec. 5, 2006) XPNs: When: ARTIT
1. Creditor is Absent or unknown,
CONSIGNATION or doesn’t appear at place
of payment
Q: What is consignation? 2. Creditor Refuses to
issue a receipt
A: Act of depositing the without just
object of the obligation with cause
the court or competent 3. Title of the obligation has been
authority after the CR has lost
unjustifiably refused to 4. Creditor is
accept the same or is not in Incapacitated to
a position to accept it due receive payment at
to certain reasons or the time it is due
circumstances. (Pineda, 5. Two or more
Obligations and Contracts, persons claim the
2000 ed, p. 241) right to collect
Q: When and where is consignation Note: The expenses of

made? consignation, when
properly made, shall be
A: Consignation is made by charged against the
depositing the proper creditor.
amount to the judicial
authority, before whom the
tender of payment and the
announcement of the 203 U N I V E R S I T Y O F S A N
consignation shall be T O T O M A S

proved. (Sps.
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Q: What are the requisites of

TENDER OF PAYMENT CONSIGNATION
consignation?
A: VP‐CPAS
1. Valid existing debt which is
already due;
2. Prior valid tender except when
prior
tender of payment is
dispensable;
3. Creditor unjustly refuses the
tender of
payment;
4. Prior notice of consignation given
to
persons interested in the fulfillment
of
the obligation;
5. Amount or thing is deposited at
the
disposal of judicial authority;
and
6. Subsequent notice of the fact of
consignation to persons interested in
the fulfillment of the
obligation.
Q: Can the debtor

withdraw the thing
deposited?
A:Before the creditor has

accepted the consignation,
or before a judicial
declaration that the
consignation has been
properly made, the debtor
may withdraw the thing or
the sum deposited,
allowing the obligation to
remain in force. (Art. 1260,
NCC)
NOTE: If, the consignation

having been made, the
creditor should authorize
the debtor to withdraw the
same, he shall lose every
preference which he may
have over the thing. The co‐
debtors, guarantors and
sureties shall be released.
(Art. 1261, NCC)
Q: Distinguish tender of
payment from
consignation.
A:
Rodriguez deposited the
Nature
amount in court, no formal
deed of sale had yet been
Antecedent of
consignation or
executed by the parties,
preliminary act to and, therefore, the 5‐ year
consignation period during which the
purchase price should be
paid had not commenced.
Effect In short, the purchase
price was not yet due and
It does not by itself payable. (Heirs of San
extinguish the Andresv.Rodriguez, G.R.
obligation No. 135634, May 31, 2000)
Character Q: Under a pacto de retro

sale, X sold to Y his lot and
Extrajudicial the building erected
thereon. They agreed that
half of the consideration
shall be paid to the bank
to pay off the loan of X.
After paying the first
installment, Y, instead of
paying the loan to the
bank, restructured it
twice. Eventually, the loan
204 CIVIL LAW TEAM:

became due
demandable. Thus, X paid
the bank. On the same
and
Q: In an ejectment case, X
refused to vacate the land day, Y also went to the
alleging that Y had sold to bank and offered to pay
him the additional area, the loan, but the bank
the payment of which refused to accept the
would be effected five payment.
years after the execution
of a formal deed of sale. Y then filed an action for
However, the parties consignation without
failed to execute a deed of notifying X. Is there a valid
sale. During the pendency consignation by Y of the
of the action, X deposited balance of the contract
the payment for the price?
addition to the lot with
the court. Is there a valid A: No. Y filed the petition
consignation? for consignation against
the bank without notifying
A: No. Under Art. 1257 of the X, resulting to the
this Civil Code, former’s failure to prove
consignation is proper only the payment of the
in cases where an existing balance of the purchase
obligation is due. In this price and consignation. In
case, the contracting fact, even before the filing
parties agreed that full of the consignation case, Y
payment of purchase price never notified the X of
shall be due and payable their offer to pay.(Sps.
within 5 years from the Benosv. Sps.Lawilao, G.R.
execution of a formal deed No. 172259, Dec. 5, 2006)
of sale. At the time

NAVAL, MONICA JUCOM
OBLIGATIONS A: When: DOPE

1. It Disappears in such
a way that its
existence is
Q: Because of Ligaya’s refusal to
unknown;
accept several tenders of payment and
2. It goes Out of commerce;
notices of consignation given by OSSA
3. It Perishes; or
in its desire to comply with its
4. Its Existence is
obligation to pay on installments,
unknown or if
OSSA brought a complaint for
known, it cannot
consignation against Ligaya before the
be recovered.
RTC. The RTC allowed OSSA, among
others, to deposit with it,by way of
consignation, all future quarterly Q: What is the effect of loss
installments without need of formal of the thing which is the
tenders of payment and service of object of the obligation?
notices
A: If the obligation is a:
1. Determinate obligation to give:
GR:The obligation
f. When debtor Promised to deliver the is extinguished
same thing to two or more persons when the object
who do not have the same interest of the obligation is
g. When the debt of a certain and lost.
determinate thing proceeds from a
Criminal offense XPNs: LAS‐CD‐PCG
h. When the obligation is Generic a. Law provides otherwise
b. Nature of the
of consignation. obligation
requires the
Ligaya assails the validity of Assumption of
the consignation on the risk
ground that there was no c. Stipulation to the contrary
notice to her regarding d. Debtor Contributed to the
OSSA's consignation of the loss
amounts corresponding to e. Loss the of the
certain installments. Is thing occurs after
Ligaya correct? the debtor
incurred in Delay
A: No. The motion and the
subsequent court order
served on Ligaya in the
consignation proceedings ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
sufficiently served as notice 2. Generic obligation to give:
to Ligaya of OSSA's
willingness to pay the GR: The obligation is not extinguished
quarterly installments and because a generic thing
the consignation of such never perishes.
payments with the court. For
reasons of equity, the XPN:In case of generic obligations
procedural requirements of whose object is a particular class or
consignation are deemed group with specific or determinate
substantially complied with qualities (limited generic
in the present case (De obligation)
Mesa v. CA, G.R. Nos.
106467‐ 68, Oct. 19, 1999). 3. An obligation to do –
the obligation is
B. LOSS OF THE THING DUE extinguished
when the
Q: When is a thing considered lost? prestation
becomes legally or physically negligence of the
impossible. debtor – Creditor
has the right to
Q: Differentiate legal from demand the rescission of the obligation
physical impossibility to or to demand specific performance,
perform an obligation to do. plus damages, in either case.
2. Due to fortuitous event:
A: a. Substantial loss – obligation is
1. Legal impossibility – act extinguished.
stipulated to be b. Unsubstantial loss – the CR shall
performed is subsequently prohibited deliver the thing promised in
by law. its
2. Physical impossibility – act impaired condition.
stipulated
could not be physically performed by
the obligor due to reasons subsequent
to the execution of the contract.
(Pineda, Obligations and Contracts,
2000 ed, p. 261)
Q: What is the effect of partial loss?
A:
1. Due to the fault or T O T O M A S

JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Q: What is the effect A:

when the thing is lost in 1. Event or change in circumstance
the possession of the could
debtor? not have been foreseen at the time
of
A: the execution of the
GR: It is presumed that contract;
loss is due to DR’s 2. Such event makes the
fault. performance
extremely difficult but not
XPN: Presumption shall impossible;
not apply in case loss is 3. The event must not be due to the
due to earthquake, act of
flood, storm or other any of the parties;
natural calamity. and
4. The contract is for a future
XPN to the XPN: prestation.
Debtor still liable even (Tolentino, Civil Code of the
if loss is due to Philippines,
fortuitous event when: Vol. IV, 2002 ed, p.
1. Debtor incurred in 347)
delay; or
2. Debtor promised to deliver the C. CONDONATION
thing to
two or more persons with different Q: What is condonation?
interests (par. 3, Art. 1165,
NCC) A: It is an act of liberality
by virtue of which the
Q: What does rebus sic creditor, without receiving
stantibus mean? any price or equivalent,
renounces the
A: A principle in enforcement of the
international law which obligation, as a result of
means that an agreement which it is extinguished in
is valid only if the same its entirety or in that part
conditions prevailing at or aspect of the same to
time of contracting which the condonation or
continue to exist at the remission refers.
time of performance. It is
the basis of the principle of
unforeseen difficulty of 206 CIVIL LAW TEAM:
service. (Pineda, Obligations and

Contracts, 2000 ed, p. 267)
Note: However, this EXPRESS
principle cannot be applied CONDONATION
absolutely in contractual
relations since parties are Q: What are the requisites of
presumed to have assumed
condonation?
the risk of unfavorable
developments. (Pineda,
A: GAIDE
2000 ed, p. 264) 1. Must be Gratuitous;
2. Acceptance by the debtor;
Q: What are the requisites 3. Must not be
in order to relieve the Inofficious;
debtor from his 4. Formalities
obligation, in whole or in provided by law
part, based on unforeseen on Donations
difficulty of service? must be
complied with if
condonation is
express; and contrary is proved. (Art.
5. An Existing demandable 1272, NCC)
debt.
It is presumed that the
IMPLIED accessory obligation of
CONDONATION pledge has been remitted
when the thing pledged,
after its delivery to the
creditor, is found in the
the delivery of a private
possession of the debtor, or
document evidencing a
of a third person who owns
credit? the thing. (Art. 1274, NCC)
A:The delivery of a private Q: What is the effect of inofficious

document evidencing a condonation?
credit, made voluntarily by
the creditor to the debtor, A: It may be totally
implies the renunciation of revoked or reduced
the action which the depending on whether or
former had against the not it is totally or only
latter. partly inofficious. (Pineda,
If in order to nullify this 2000 ed, p. 268)
waiver it should be
claimed to be inofficious, Q: Can there be a unilateral
the debtor and his heirs condonation?
may uphold it by proving
that the delivery of the A: No. Since it is a donation
document was made in of an existing credit,
virtue of payment of the considered a property
debt. (Art. 1271, NCC) right, in favor of the
debtor, it is required that
NOTE: Whenever the the DR gives his consent
private document in which thereto by making an
the debt appears is found in acceptance. If there is no
the possession of the acceptance, there is no
debtor, it shall be presumed condonation. (Pineda,
that the creditor delivered it Obligations and Contracts,
voluntarily, unless the 2000 ed, p. 267)

NAVAL, MONICA JUCOM
OBLIGATIONS person of the qualities of a
creditor and debtor of the
same obligation.
D. CONFUSION OR MERGER
of confusion of rights?
Q: When is there a confusion or
merger of
A:
1. Merger in the same
person of the
characters of both
not extinguish the obligation. (Art. a creditor and d
1276, NCC) debtor;
2. Must take place in
rights? the persons of a
principal creditor
A: The meeting in one and a principal
debtor; and ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
3. Merger is definite and Q: In a joint obligation,
complete. what is the effect of
confusion or merger in one
Q: What is the effect of debtor or creditor?
confusion or merger of
rights? A:
GR: Joint obligation is
A: The creditor and debtor not extinguished since
becomes the same person confusion is not definite
involving the same and complete with
obligation. Hence, the regard to the entire
obligation is extinguished. obligation. A part of the
(Art. 1275, NCC) obligation still remains
outstanding.
Q: Can there be partial confusion?
XPN: Obligation is
A: Yes. It will be definite and extinguished with
complete up to the extent of respect only to the share
the concurrent amount or corresponding to the DR
value, but the remaining or CR concerned. In
obligation subsists. (Pineda, effect, there is only
Obligations and Contracts, partial extinguishment of
2000 ed, p. 278) the entire obligation.
(Pineda, Obligations and
Q: What is the effect when Contracts, 2000 ed, p.
confusion or merger is 281)
revoked?
E. COMPENSATION.
A: If the act which created
the confusion is revoked for Q: What is compensation?
some causes such as
rescission of contracts, or A: It is a mode of
nullity of the will or contract, extinguishing to the
the confusion or merger is concurrent amount, the
also revoked. The subject obligations of those persons
obligation is revived in the who in their own right are
same condition as it was reciprocally debtors and
before the confusion. creditors of each other (Art.
1232, NCC). It involves the
Note: During such simultaneous balancing of
interregnum, the running of two obligations in order to
the period of prescription of extinguish them to the
the obligation is suspended. extent in which the amount
(Pineda, Obligations and of one is covered by that of
Contracts, 2000 ed, p. 279) the other.
Q: What is the effect of Q: What are the requisites of

confusion or merger in compensation?
relation to the
guarantors? A:
1. Both parties must be mutually
A: creditors
1. Merger which takes and debtors in their own right and as
place in the principals;
person of the 2. Both debts must
principal debtor consist in sum of
or principal money or if
creditor benefits consumable, of
the guarantors. the same
The contract of kind or quality;
guaranty is 3. Both debts are due;
extinguished. 4. Both debts are liquidated and
2. Confusion which demandable;
takes place in the 5. Neither debt must be retained
person of any of in a
the guarantors controversy commenced by third
does person and communicated with debtor
(neither debt is garnished); knowledge of the creditors
and and debtors.
6. Compensation must not be
prohibited
by law.
Note: When all the

requisites mentioned in Art.
1279 of the Civil Code are
present, compensation takes
T O T O M A S
effect by operation of law,
even without the consent or
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
1. KINDS OF commission that Silahis

COMPENSATION should have received
from De Leon. Was there
Q: What are the kinds of legal compensation?
compensation?
A: Silahis admits the
A: validity of its outstanding
1. Legal compensation – by accounts with De Leon.
operation of But whether De Leon is
law liable to pay Silahis a
2. Conventional – by agreement of commission on the
the subject sale to Dole is
parties disputed. This
3. Judicial – by judgment of the circumstance prevents
court legal compensation from
when there is a counterclaim duly taking place. (Silahis
pleaded, and the compensation Marketing Corp. v. IAC, G.
decreed R. No. L‐74027, Dec. 7,
1989)
LEGAL
COMPENSATION Note: Compensation is not
proper where the claim of
Q: What are the debts the person asserting the
set‐off against the other is
not subject to
not clear nor liquidated;
compensation?
compensation cannot
extend to unliquidated,
A: disputed claim existing from
1. Debts arising from contracts of breach of contract. (Silahis
deposit Marketing Corp. v. IAC, G.
2. Debts arising from contracts of R. No. L‐74027, Dec. 7,
commodatum 1989)
3. Claims for support due by
title
gratuitous
208 CIVIL LAW TEAM:
4. Obligations arising from criminal CONVENTIONAL

offenses
5. Certain obligations in favor of Q: What is conventional
government (e.g. taxes, fees, duties, compensation?
and others of a similar
nature) A: It is one that takes
place by agreement of the
parties.
Note: If a person should
have against him several
debts which are susceptible JUDICIAL
of compensation, the rules COMPENSATION
on the application of
payments shall apply to the Q: What is judicial
order of the compensation. compensation?
(Art. 1289, NCC)
A: One made by order of a
Q: De Leon sold and court based on a
delivered to Silahis permissive counterclaim.
various merchandise. Due Pleading and proof of the
to Silahis' default, De counterclaim must be
Leon filed a complaint for made.
the collection of said
accounts. Silahis asserts, FACULTATIVE
as affirmative defense, a COMPENSATION
debit memo as unrealized
profit for a supposed Q: What is facultative
compensation?
other and creditors of each
other
A: One of the parties has a
choice of claiming or
opposing the
compensation.
Q: What are the

obligations subject to
facultative
compensation?
A: When one of the debts

arises from:
1. Depositum
2. Obligations of a
depositary
3. Obligations in
commudatum
4. Claim of support
due to
gratuitous title
XPN: Future
support.
5. Civil liability from a crime
Q: Distinguish
compensation from
payment. A:
COMPENSATION
A mode of
extinguishing to the
concurrent
amount, the
obligations of those
persons who in their
own right are
reciprocally debtors
and creditors of
each other
Capacity of parties
not necessary
Reason:
Compensation
operates by law,
not by the act of the
parties
There can be partial

extinguishment of
the obligation
Legal compensation
takes place by
operation of law
without
simultaneous delivery
Parties must be
mutually debtors and
creditors of each
NAVAL, MONICA JUCOM
OBLIGATIONS
Q: Distinguish compensation from Code for automatic

confusion. compensation "even
though the creditors and
A: debtors are not aware of
the compensation" were
COMPENSATION CONFUSION
present. (Mindanao
(Arts. 1278‐1279) (Arts. 1275‐1277)
Portland Cement Corp. v.
CA,G.R. No. L‐62169, Feb.
Two persons who are One person where
28, 1983)
mutual debtors and qualities of debtor
creditors of each other and creditor
Q: X,are
who has a savings
merged
deposit with Y Bank in the
sum of PI,000,000.00,
At least two obligations One obligation
incurs a loan obligation
with the said bank in the
sum of P800,000.00 which
has become due. When X
Q: Atty. Laquihon, in behalf tries to withdraw his
of Pacweld, filed a pleading deposit, Y Bank allows only
addressed to MPCC titled P200,000.00 to be
“motion to direct payment withdrawn, less service
of attorney's fee”, invoking charges, claiming that
a decision wherein MPCC compensation has
was adjudged to pay extinguished its obligation
Pacweld the sum of under the savings account
P10,000.00 as attorney's to the concurrent amount
fees. MPCC filed an of X's debt. X contends that
opposition stating that the compensation is improper
said amount is set‐off by a when one of the debts, as
like sum of P10,000.00, here, arises from a contract
collectible in its favor from of deposit. Assuming that
Pacweld also by way of the promissory note signed
attorney's fees which by X to evidence the loan
MPCC recovered from the does not provide for
same CFI of Manila in compensation between
another civil case. Was said loan and his savings
there legal compensation? deposit, who is correct?
A: MPCC and Pacweld were A: Y bank is correct. All the

creditors and debtors of requisites of Art. 1279, Civil
each other, their debts to Code are present.
each other consisting in Compensation shall take
final and executory place when two persons
judgments of the CFI in two are reciprocally creditor
separate cases. The two and debtor of each other.
obligations, therefore, In this connection, it
respectively offset each
other, compensation having ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
taken effect by operation of has been held that the
law and extinguished both relation existing between a
debts to the concurrent depositor and a bank is that
amount of P10,000.00, of creditor and debtor. As a
pursuant to the provisions general rule, a bank has a
of Arts. 1278, 1279 and right of set off of the
1290 of the Civil Code, since deposits in its hands for the
all the requisites provided payment of any
in Art. 1279 of the said indebtedness to it on the
part of a depositor" (Gullas new contract or novation,
v. PNB, GR No. L‐43191, and had the effect of
November 13, 1935). extinguishing the security
Hence, compensation took since he did not give his
place between the mutual consent (as owner of the
obligations of X and Y bank. property under the real
(1998 Bar Question) estate mortgage) thereto.

Q: Eduardo was granted a Can XYZ Bank validly assert legal
loan by XYZ Bank for the compensation?
purpose of improving a
building which XYZ leased A: XYZ Bank may validly
from him. Eduardo assert the partial
executed the promissory compensation of both
note in favor of the bank, debts, but is should be
with his friend Ricardo as facultative compensation
cosignatory. In the PN, because not all of the five
they both acknowledged requisites of legal
that they are “individually compensation are present
and collectively” liable and (Art. 1279, NCC). The
waived the need for prior payment of the rentals by
demand. To secure the PN, XYZ Bank is not yet due, but
Ricardo executed a real the principal obligation of
estate mortgage on his loan where both Eduardo
own property. When and Ricardo are bound
Eduardo defaulted on the solidarily and therefore any
PN, XYZ stopped payment of them is bound principally
of rentals on the building to pay the entire loan, is
on the ground that legal due and demandable
compensation had set in. without need of demand.
Since there was still a XYZ Bank may declare its
balance due on the PN obligation to pay rentals as
after applying the rentals, already due and demand
XYZ foreclosed the real payment from any of the
estate mortgage over two debtors.
Ricardo’s property. Ricardo
opposed the foreclosure Alternative Answer: Legal
on the ground that he is compensation can be
only a co‐signatory; that no validly asserted between
demand was made upon the bank, Eduardo and
him for payment, and Ricardo. This is a case of
assuming he is liable, his facultative obligation, thus,
liability should not go the bank can assert partial
beyond half of the balance compensation.
of the loan. Further,
Ricardo said that when the
bank invoked
compensation between the 209 U N I V E R S I T Y O F S A N
rentals and the amount of T O T O M A S

the loan, it amounted to a
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Banks have an inherent estate mortgage, there is a

right to set off where both need of notice and
obligations are due and demand.
demandable (Art. 1279,
NCC). Alternative Answer 2: Yes.
Ricardo’s property can be
Can Ricardo’s property be foreclosed to pay the full
foreclosed to pay the full balance of the loan. He is
balance of the loan? admittedly “individually
and collectively” liable. His
A: No, because there was liability is solidary. He and
no prior demand on Eduardo have waived
Ricardo, depriving him of notice for a prior demand
the right to reasonably as provided in the
block the foreclosure by promissory note.
payment. The waiver of
prior demand in the PN is Does Ricardo have basis
against public policy and under the Civil Code for
violates the right to due claiming that the original
process. Without demand, contract was novated?
there is no default and the
foreclosure is null and A: None of the three kinds
void. Since the mortgage, of novation is applicable.
insofar as Ricardo is There is no objective
concerned is not violated, novation, whether express
a requirement under Act or implied, because there
3135 for a valid foreclosure is no change in the object
of real estate mortgage is or principal conditions of
absent. the obligation. There is no
substitution of debtors,
In the case of DBP v. either. Compensation is
Licuanan, it was held that: considered as abbreviated
“the issue of whether or simplified payment and
demand was made before since Ricardo bound
the foreclosure was himself solidarily with
effected is essential. If Eduardo, any facultative
demand was made and compensation which
duly received by the occurs does not result in
respondents and the latter partial legal subrogation.
still did not pay, then they Neither Eduardo nor
were already in default Ricardo is a third person
and foreclosure was interested
proper. However, if
demand was not made,
then the loans had not yet
become due
demandable. This meant
and
210 CIVIL LAW TEAM:
that the respondents had in the obligation under Art.

not defaulted in their 1302, NCC. (2008 Bar
payment and the Question)
foreclosure was
premature.” F. NOVATION
Alternative Answer 1:No. Q: What is novation?

Although the principal
obligation of loan is due A: It is the change of an
and demandable without obligation by another,
need of further demand resulting in its
the foreclosure of the extinguishment or
accessory contract of real modification, either by
changing the object or (Art. 1293, NCC)
principal conditions, or by
substituting another in the Q: SDIC issued to Danilo a
place of the debtor or by Diners Card (credit card)
subrogating a third person with Jeannete as his
to the rights of the surety. Danilo used this
creditor. (Pineda, card and initially paid his
Obligations and Contracts, obligations to SDIC.
2000 ed, p. 298) Thereafter, Danilo wrote
SDIC a letter requesting it
Q: What are the requisites of to upgrade his Regular
novation? Diners Club Card to a
Diamond (Edition) one. As
A: a requirement of SDIC,
1. Previous valid obligation; Danilo secured from
2. An agreement by Jeanette her approval and
the parties to create a the latter obliged. Danilo's
new one or a request was granted and
modified version; he was issued a Diamond
3. Extinguishment or (Edition) Diners Club Card.
modification of Danilo had incurred credit
the old charged plus appropriate
obligation; and interest and service
4. Valid new charge. However, he
obligation. defaulted in the payment
of this obligation. Was the
Q: Is novation presumed? upgrading a novation of
the original agreement
A: No. Novation is never governing the use of
presumed, it must be Danilo Alto's first credit
proven as a fact either by: card, as to extinguish that
1. Explicit declaration obligation?
– if it be so
declared in A: Yes. Novation, as a
unequivocal mode of extinguishing
terms; or obligations, may be done
2. Material in two ways: by explicit
incompatibility – declaration, or by material
that the old and incompatibility.
the new
obligations be on There is no doubt that the
every point upgrading was a novation
incompatible of the original agreement
with each other. covering the

NAVAL, MONICA JUCOM
OBLIGATIONS is as if there is no obligation; thus,

there is nothing to novate
the novation did not serve to
release Jeanette from her
first credit card issued to Danilo Alto,
surety obligations because in
basically since it was committed with
the surety undertaking she
the intent of cancelling and replacing
expressly waived discharge
the said card. However,
in case of change or
novation in the agreement
governing the use of the first
credit card.(Molino v.
b. if suspensive and it did not occur – it Security Diners International
Corp.,G.R. No. 136780, Aug. condition
16, 2001) ii. if suspensive and did
not materialize– no
Q: What are the effects of novation? novation, old obligation
is enforced
A:
1. Extinguishment of 3. If old obligation is
principal also conditional and
extinguishes the the new
accessory, except: obligation is pure:
a. Mortgagor, a. if resolutoryand
pledgor, it occurred –
surety or old
guarantor obligation
agrees to be already
bound by extinguished;
the new obligation no
(Tolentino, Civil new obligation since nothing
Code of the Philippines, Vol. to
IV, novate
1999 ed, p. 395)
b. Stipulation
made in
favor of a
Did the assignment amount
third person
to payment by cession?
such as
stipulation
pour A:No.There was only one
atrui(Art. 1311, NCC), unless creditor, the DBP. Article
beneficiary consents to the 1255 contemplates the
existence of two or more
novation.
creditors and involves the
2. If the new obligation is:
assignment of all the
a. Void – old
debtor's property.
obligation
shall subsist
Did the assignment
since there is
constitute dation in
nothing to
payment:
novate,
except when the parties
intended A: No. The assignment,
that the old obligation be being in its essence a
mortgage, was but a security
extinguished in any
and not a satisfaction of
event.
indebtedness. (DBP v. CA,
b. Voidable –
G.R. No. 118342, Jan. 5,
novation can
1998)
take place,
exceptwhen
such new
obligation is annulled. In
such case,
old obligation shall
subsist.
c. Pure obligation
– conditions
of old
obligation
deemed
attached to
the
new, unless otherwise
stipulated
(Tolentino, Civil Code of the
Philippines, Vol. IV, 1999 ed,
p.
399)
d. Conditional obligation:
i. if resolutory– valid until
the happening of the
T O T O M A S
JEANELLE C. LEE
CONTRACTS Q: State the essential elements

of contracts.
Q: What is a contract?
UST GOLDEN NOTES A: COC
1. Consent;
2011 2. Object or subject
matter; and
3. Cause or
consideration.
Note: We follow the theory of
cognition and not the Q: State the characteristics
theory of manifestation. Under our Civil of a contract.
Law, the
offer & acceptance concur only when A: ROMA
the offeror 1. Relativity (Art. 1311, NCC)
comes to know, and not when the
2. Obligatoriness and
offeree merely
consensuality(Art.
A: It is a meeting of the 1315, NCC)
minds between two or 3. Mutuality (Art. 1308, NCC)
more persons whereby 4. Autonomy (Art.
one binds himself, with 1306, NCC)
respect to the other, or
where both parties bind CONSENT
themselves reciprocally in
favor of one another, to Q: What are the elements of
fulfill a prestation to give, consent?
to do, or not to do.
(Pineda, Obligations and A: LM‐CR
Contracts, 2000 ed, p. 328) 1. Legal capacity of the contracting
parties;
Q: What is the difference
2. Manifestation of the conformity of
between an obligation
the
and a contract?
contracting parties;
3. Parties’ Conformity to the object,
A: While a contract is one
cause,
of the sources of
terms and condition of the contract
obligations, an obligation is
must be intelligent, spontaneous and
the legal tie or relations
free from all vices of consent;
itself that exists after a
and
contract has been entered
4. The conformity must be
into.
Real.
Hence, there can be no
contract if there is no
obligation.
obligation
But
may
without a contract. (De
an
exist 212 CIVIL LAW TEAM:
manifests his acceptance.

Leon, Obligations and
Contracts, 2003 ed, p. 283‐ Q: What are the
284)
requisites of a valid
I. ESSENTIAL REQUISITES OF A
CONTRACT consent? A: It should

be: thus the contract
is void.
1. Intelligent, or with
an exact notion of the 2. Relative – the real
matter to which it transaction is
refers; hidden; the
contracting
Note: Intelligence parties conceal
in consent is their true
vitiated by error; agreement;
freedom by binds the parties
violence, to their real
intimidation or agreement when
undue influence; it does not
and spontaneity prejudice third
by fraud. persons or is not
intended for any
2. Free; and purpose contrary
3. Spontaneous. to law, morals,
etc. If the
Q: What is the effect on concealed
the validity of a contract if contract is
consent is reluctant? lawful, it is
absolutely
A: A contract is valid even enforceable,
though one of the parties provided it has
entered into it against his all the essential
wishes and desires or even requisites:
against his better consent, object,
judgment. Contracts are and cause.
also valid even though they
are entered into by one of As to third
the parties without hope persons without
of advantage or profit notice, the
(Martinez v. Hongkong and apparent
Shanghai Banking Corp., contract is valid
GR No. L‐5496, Feb. 19, for purposes
1910). beneficial to
them. As to third
Q: What are the kinds of persons with
simulation of contract? notice of the
simulation, they
A: acquire no better
1. Absolute – the right to the
contracting simulated
parties do not contract than the
intend to be original parties
bound by the to the same.
contract at all,

NAVAL, MONICA JUCOM
CONTRACTS
Q: Tiro is a holder of an ordinary a deed of assignment in favor of

timber license issued by the the Javiers. At the time the said
Bureau of Forestry. He executed deed of assignment was
executed, Tiro had a pending A:
application for an additional 1. Definite – unequivocal
forest concession. Hence, they 2. Intentional
entered into another agreement. 3. Complete – unconditional
Q: What are the requisites of a
Afterwards, the Javiers, now valid offer?
acting as timber license holders
by virtue of the deed of A:
assignment entered into a forest 1. Must be certain
consolidation agreement with 2. May be made orally or in
other ordinary timber license writing, unless the law
holders. For failure of the Javiers prescribes a particular form
to pay the balance due under the
two deeds of assignment, Tiro Q: When does offer become
filed an action against them. Are ineffective?
the deeds of assignment null and
void for total absence of A:
consideration and non‐fulfillment 1. Death, civil interdiction,
of the conditions? insanity or insolvency
of either party before
A: The contemporaneous and acceptance is conveyed
subsequent acts of Tiro and the
Javiers reveal that the cause 2. Express or implied
stated in the first deed of revocation of the offer
assignment is false. It is settled by the offeree
that the previous and
simultaneous and subsequent acts
3. Qualified or conditional
of the parties are properly
acceptance of the offer,
cognizable indicia of their true
which becomes
intention. Where the parties to a
counter‐offer
contract have given it a practical
construction by their conduct as
4. Subject matter becomes
by acts in partial performance,
illegal or impossible
such construction may be
before acceptance is
considered by the court in
communicated
construing the contract,
determining its meaning and
ascertaining the mutual intention Q: What is the rule on complex
of the parties at the time of offer?
contracting. The first deed of
A:
assignment is a relatively
simulated contract which states a 1. Offers are interrelated –
false cause or consideration, or contract is perfected if all
one where the parties conceal the offers are accepted 2.
their true agreement. A contract Offers are not interrelated –
with a false consideration is not single acceptance of each
null and void per se. Under Article offer results in a perfected
1346 of the Civil Code, a relatively contract unless the offeror
simulated contract, when it does has made it clear that one is
not prejudice a third person and is dependent upon the other
not intended for any purpose and acceptance of both is
contrary to law, morals, good necessary.
customs, public order or public
policy binds the parties to their Q: What is the rule on
real agreement. (Javier v. CA, G.R. advertisements as offers?
No. L‐48194, Mar. 15, 1990)
A:
Q: What are contracts of adhesion? 1. Business advertisements –
not a definite offer, but
A: One party has already a mere invitation to
prepared form of a contract, make an offer, unless it
containing the stipulations he appears otherwise
desires, and he simply asks the 2. Advertisement for bidders
other party to agree to them if he – onlyinvitation to
wants to enter into the contract. make proposals and
advertiser is not bound
Q: What are the elements of a to accept the highest or
valid offer and acceptance? lowest bidder, unless it
appears otherwise.
Q: What are the effects of an supported by a consideration
option? other than purchase price –
option money.
A: Option may be withdrawn
anytime before acceptance is
communicated but not when

VICE CHAIRS FOR
Derecho Civil
MARTINEZ
UST GOLDEN NOTES

2011
Q: What are the requisites of a valid a. Offer is made to a

acceptance? person present –
acceptance must
A: be made
1. Must be absolute; a immediately
qualified acceptance b. Offer is made to a
constitutes a counter‐offer person absent –
2. No specified form but acceptance may
when the offeror specifies be made within
a particular form, such such time that, under normal
must be complied with circumstances, an answer can
be
Note: Offer or acceptance, or received from him
both, expressed in electronic
form, is valid, unless otherwise Note: Acceptance may be
agreed by the parties (electronic revoked before it comes to the
contracts). knowledge of the offeror
Q: What is the period for (withdrawal of offer)
acceptance?
OBJECT
A:
1. Stated fixed period in the Q: What are the requisites of an
offer object?
a. Must be made
within the period A:
given by the 1. Determinate as to kind
offeror (even if not
i. As to withdrawal of the determinate, provided
offer: it is possible to
determine the same
GR: It can be made at any time without the need of a
before acceptance is made, by new contract);
communicating such 2. Existing or the
withdrawal potentiality to exist
subsequent to the
XPN: When the option is founded
contract;
upon a consideration, as
3. Must be licit;
something
paid or promised since partial 4. Within the
payment of the purchase price is commerce of man;
considered as proof of the and 5. Transmissible.
perfection Note: The most evident and
of the contract fundamental requisite in order
that a thing, right or service may
be the object of a contract, it
2. No stated fixed period
should be in existence at the the efficacy of the contract of
moment of the celebration of the sale. It merely provides the
contract, or at least, it can exist manner by which the full
subsequently or in the future. consideration is to be computed
and the time within which the
Q: What are the things which same is to be paid. But it does
can be the object of contracts? not affect in any manner the
effectivity of the contract.
A: (Heirs of San
GR: All things or services Andresv.Rodriguez, G.R. No.
may be the object of 135634, May 31, 2000)
contracts.
CAUSE
XPNs:
1. Things outside the Q: What are the requisites of a
commerce of men; 2. cause?
Intransmissible rights;
3. Future inheritance, A: It must:
except in cases expressly 1. exist
authorized by law; 2. be true
4. Services which are 3. be licit
contrary to law,
morals, good Q: What are the two
customs, public order presumptions in contracts as to
or public policy; cause?
5. Impossible things or
services; and 6. Objects A:
which are not possible of 1. Every contract is
determination as to their presumed to have a
kind. cause; and
2. The cause is valid.
Q: A contract of sale of a lot
stipulates that the "payment of
the full consideration based on
a survey shall be due and
payable in 5 years from the
execution of a formal deed of
214
sale". Is this a conditional CIVIL LAW TEAM:
contract of sale? ALFREDO B. DIMAFELIX II;
ASST. SUBJECT HEADS: KAREN FELIZ G. SUPNAD,
LAMBERTO L. SANTOS III; MEMBERS: PAUL ELBERT E.
A: No, it is not. The stipulation is AMON, ALSTON ANARNA, OZAN J. FULLEROS, CECILIO M.
JIMENO, JR., ISMAEL SARANGAYA, JR.; CONTRIBUTORS:
not a condition which affects LOISE RAE G. NAVAL, MONICA JUCOM
CONTRACTS remunerated
3. Cause of gratuitous
contracts – the
mere liberality of
Q: What are the kinds of causes?
the donor or
benefactor
A:
4. Accessory –
1. Cause of onerous contracts – the identical with
prestation or promise of a thing or cause of principal
service by the other contract, the
loan which it
derived its life and existence
(e.g.:
c. in cases specified by law mortgage or pledge)
(e.g.contracts entered when ward
suffers lesion of more than 25%) Q: Distinguish cause from motive.
II. KINDS OF CONTRACT A:

CAUSE MOTIVE
2. Cause of
remuneratory
Direct and most Indirect or remote
contracts– the service
proximate reason reasons
or benefit
A:
of a contract
1. Consensual contracts which
are
Objective and Psychological or
perfected by the mere meeting of the
juridical reason of purely personal
minds of the parties
contract reason
2. Real contracts that
Legality or Legality or illegality
require delivery
illegality of cause of motive does not
for perfection –
affects the affect the existence
creation of real
existence or or validity of
rights over
validity of the contract
immovable property must
contract
be written
Cause is always the Motive differs for
3. Solemn contracts– contracts
same for each each contracting
which
contracting
must appear in writing, such
party
as:
a. Donations of real estate or of

movables if the value
Q: What is the effect of the exceeding
error of cause on P5,000;
contracts? b. Transfer of large cattle;
c. Stipulation to pay interest in loans;
A: d. Sale of land through an
1. Absence of cause agent;
(want of cause; e. Partnership to which immovables
there is total lack are contributed;
or absence of
f. Stipulation limiting carrier’s liability
cause) –
to less than extra‐ordinary
Confers no right and
diligence; or
produces no legal
g. Contracts of antichresis and sale of
effect
vessels.
2. Failure of cause ‐
Does not render
the contract void
Q: What is the principle of
3. Illegality of cause
relativity of contracts?
(the cause is
contrary to law,
morals, good A:
customs, public GR: A contract is
order and public policy)– binding not only
Contract is null between parties but
and void extends to the heirs,
successors in interest,
4. Falsity of cause (the
and assignees of the
cause is stated
parties, provided that
but the cause is
the contract involves
not true)–
transmissible rights by
Contract is void,
their nature, or by
unless the parties show that
stipulation or by
there is
provision of law.
another cause which is true and lawful
5. Lesion or
XPNs:
inadequacy of cause –
Does not invalidate 1. Stipulation pour autrui
(stipulation in
the contract, unless:
favor of a third person) – benefits
a. there is fraud, mistake, or
undue deliberately conferred by parties to a
influence; contract upon third
persons.
b. when the parties intended
a
donation or some other Requisites:
contract;or a. The stipulation must be part, not
whole of the contract;
b. Contracting parties must have
clearly and deliberately
Q: What are the kinds of contracts? conferred
a favor upon third
person; 215 U N I V E R S I T Y O F S A N
T O T O M A S

JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
c. Third person must have consideration is typical of

communicated his acceptance; and contracts pour autrui, this
d. Neither of the contracting parties character being made
bears the legal representation of more manifest by the fact
the third person. that the deceased driver
paid 50% of the premiums.
2. When a third person induces a (Coquia v. Fieldmen’s
party to Insurance Co., Inc.,G.R. No.
violate the contract L‐23276, Nov. 29, 1968)
Requisites: Q: What is the obligatory force

a. Existence of a valid of contracts?
contract
b. Third person has knowledge of A: The parties are bound
such contract not only by what has been
c. Third person interferes without expressly provided for in
justification the contract but also to the
3. Third persons coming into natural consequences that
possession of flow out of such
the object of the contract creating agreement. (Art. 1315,
real NCC)
rights
Q: Villamor borrowed a
large amount from
4. Contracts entered into in fraud of
Borromeo, for which he
creditors
mortgaged his property
but defaulted.Borromeo
Q: Fieldmen's Insurance
pressed him for
issued, in favor of MYT, a
settlement. The latter
common carrier, accident
instead offered to execute
insurance policy. 50% of
a promissory note
the premium was paid by
containing a promise to
the driver. The policy
pay
indicated that the
Company will indemnify
the driver of the vehicle or
his representatives upon
his death. While the policy
216 CIVIL LAW TEAM:
his debt as soon as he is

was in force, the taxicab able, even after 10 years
driven by Carlito, met with and that he waives his
an accident. Carlito died. right to prescription. What
MYT and Carlito's parents are the effects of said
filed a complaint against stipulation to the action
the company to collect the for collection filed by
proceeds of the policy. Borromeo?
Fieldmen’s admitted the
existence thereof, but A: None. The rule is that a
pleaded lack of cause of lawful promise made for a
action on the part of the lawful consideration is not
parents. Decide. invalid merely because an
unlawful promise was
A: Yes. Carlito’s made at the same time
parents‐ who, admittedly, and for the same
are his sole heirs have a consideration. This rule
direct cause of action applies although the
against the Company. This invalidity is due to
is so because pursuant to violation of a statutory
the stipulations, the provision, unless the
Company will also statute expressly or by
indemnify third parties. necessary implication
The policy under
declares the entire Q: What is the
contract void. Thus, even principle of
with such waiver of autonomy of
prescription, considering contracts?
that it was the intent of
the parties to effectuate A: It is the freedom of the
the terms of the parties to contract and
promissory note, there is includes the freedom to
no legal obstacle to the stipulate provided the
action for collection filed stipulations are not
by Borromeo. (Borromeo contrary to law, morals,
v. CA,G.R. No. L‐22962, good customs, public
Sept. 28, 1972) order or public policy. (Art.
1306, NCC)
Note: Where an agreement
founded on a legal A. CONSENSUAL
consideration contains CONTRACTS
several promises, or a
promise to do several Q: What are consensual
things, and a part only of the contracts?
things to be done are illegal,
the promises which can be A: They are contracts
separated, or the promise,
so far as it can be separated, perfected by mere
from the illegality, may be
valid.(Borromeo v. CA,G.R.
consent. Note: This is only
No. L‐22962, Sept. 28, 1972)
the general rule.
Q: What is the principle of
mutuality of contracts?
B. REAL CONTRACTS
A: Contract must be
Q: What are real
binding to both parties and
contracts?
its validity and effectivity
can never be left to the
A: They are contracts
will of one of the parties.
perfected by delivery
(Art. 1308, NCC)

NAVAL, MONICA JUCOM
C. FORMAL CONTRACTS Q: What are the formalities

required in the following
Q: What are formal contracts? contracts?
CONTRACTS A:
1. Donations:
a. personal property‐ if
value
exceeds 5000, the donation
7. Chattel mortgage‐ personal and acceptance must both
property be
must be recorded in the Chattel written.
Mortgage Register b. b. real property:
i. donation must
A: Contracts which require a be in a public
special form for perfection. instrument,
specifying i. must be in
therein the writing, signed
property donated and value by shipper or
of owner
charges which donee must satisfy. ii. supported by
ii. acceptance valuable
must be consideration
written, either other than the
in the same service
deed of rendered by
donation or in the comon carrier
a iii.reasonable,
separate instrument. just and not
iii.If acceptance contrary to
is in a public policy.
separate
instrument, ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
the donor III. FORM OF CONTRACTS
shall be
notified therof in authentic Q: What are rules on the form of
form, contracts?
and this step must be noted
in both A:
instruments. 1. Contracts shall be obligatory, in
Note: The whatever form they may have been
acceptance in a entered into, provided all essential
separate requisites for their validity
document must are present.
be a public
instrument. 2. Contracts must be in
a certain form –
2. Partnership where when the law
real property requires that a
contributed: contract
i. there must be a be in some form to be:
public instrument a. valid;
regarding the b. enforceable; or
partnership. c. for the convenience of the
ii. the inventory of parties.
the realty must be
made, signed by 3. The parties may compel each
the parties and other to
attached to the reduce the verbal agreement into
public instrument. writing.
3. Antichresis‐ the Note:
amount of the principal GR: Form is not required in
and interest must be in consensual contracts.
writing.
XPNs: When the law
4. Agency to sell real requires a contract be in
property or an certain for its:
interest 1. validity (formal contracts); or
therein‐ authority 2. enforceability (under Statute of
of the agent must Frauds).
be in writing.
Q: What are the acts which
5. Stipulation to charge must appear in a public
interest‐ interest must document?
be stipulated in writing.
A:
6. Stipulation limiting 1. Donation of real properties
common carrier's (Art. 719);
duty of 2. Partnership where immoveable
extraordinary property or real rights are contributed
diligence to to the common fund (Arts. 1171 &
ordinary 1773);
diligence: 3. Acts and contracts
which have for 5. The power to
their object the administer
creation, property or any
transmission, other power
modification or extinguishment of real which has for its
rights over immovable property; sales object
of real property or of an interest an act appearing or which should
therein appear in a public document or should
is governed by Arts. 1403, No. 2, and prejudice a third person [Art.
1405 [Art. 1358 (1)]; 1358 (3)];
4. The cession,
repudiation or
renunciation of
hereditary rights
or of
T O T O M A S
those of the conjugal partnership of
gains [Art. 1358 (2)]
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
6. The cession of actions or rights allowed?

proceeding from an act appearing in
a A:
public document [Art. 1358 1. Simple, unconditional donations
(4)]. inter
vivos
Q: What are contracts that must 2. Wills
be registered? 3. When the agreement
is void
A: 4. When an action to enforce the
1. Chattel mortgages (Art. instrument is filed
2140) (estoppel)
2. Sale or transfer of large cattle
(Cattle Q: What is the
Registration Act) prescriptive period in
reformation of
REFORMATION instruments?
Q: What is reformation of A: 10 years from the date

instruments? of the execution of the
instrument.
A: It is a remedy to
conform to the real Q: Who may ask for the
intention of the parties reformation of an
due to mistake, fraud, instrument?
inequitable conduct,
accident. (Art. 1359)
Note: Reformation is based on 218 CIVIL LAW TEAM:
justice and equity. A: It may be ordered at the

instance of: 1. if the
Q: What are the requisites mistake is mutual – either
in reformation of party or his successors in
instruments? interest; otherwise;
2. upon petition of
A: the injured party;
1. Meeting of the minds to the or 3. his heirs and
contract assigns.
2. True intention is not expressed in
the Note: When one of the
instrument parties has brought an
3. By reason of action to enforce the
MARFI: instrument, no subsequent
a. Mistake, reformation can be asked
(estoppel).
b. Accident,
c. Relative simulation,
Q: In case of reformation
d. Fraud, or
of contracts, is the
e. Inequitable conduct
prescription period in
4. Clear and convincing proof of
bringing an action for
MARFI
reformation run from the
time the contract became
Note: When there is no
disadvantageous to one
meeting of the minds, the
party?
proper remedy is
annulment and not
reformation. A: In reformation of
contracts, what is
Q: In what cases is reformed is not the
reformation of contract itself, but the
instruments not instrument embodying the
contract. It follows that to one of the parties or to
whether the contract is a third person and which
disadvantageous or not is may be set aside even if
irrelevant to reformation valid. It may be set aside in
and therefore, cannot be whole or in part, to the
an element in the extent of the damage
determination of the caused. (Art. 1381, NCC)
period for prescription of
the action to reform. Q: Which contracts are
rescissible?
IV. DEFECTIVE
CONTRACTS A:
1. Entered into by
Q: What may be the status of persons
contracts? exercising
fiduciary
A: capacity:
1. Valid a. Entered into
2. Void by guardian
3. Voidable whenever
4. Rescissible ward suffers
5. Unenforceable damage
6. Inexistent more than
¼
A. RESCISSIBLE of value of property.
CONTRACTS b. Agreed upon
in
Q: What are rescissible representati
contracts? on of
absentees,
A: Those which have if absentee
caused a particular suffers
economic damage either lesion by more than ¼ of value of
property.

NAVAL, MONICA JUCOM
CONTRACTS
c. Contracts e. Payment by an
where insolvent –
rescission is on debts
based on which are
fraud not yet due;
committed prejudices claim of
on creditor others
(accionpauliana) f. Provided for by
d. Objects of law (Arts.
litigation; 1526, 1534,
contract 1538, 1539,
entered into 1542, 1556,
by 1560, 1567 & 1659,
defendant NCC)
without
knowledge or approval of 2. Payments made in
litigants state of insolvency: a.
or judicial authority Plaintiff has no other
means to maintain
Grounds for Rescission
reparation
b. Plaintiff must
Only ground is non‐ 5 grounds under Art.
be able to
return performance of 1381. (lesions or
whatever he obligation fraud of creditors)
may be Non‐performance is
obliged to not important
return due to
rescission
c. The things
must not ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
have been Applicability
passed to
third Applies only to Applies to both
persons in reciprocal obligations unilateral and
good reciprocal
faith obligations
d. It must be made within 4
yrs. Person who can Initiate the Action
Q: What are the requisites Only the injured Even third persons
before a contract entered party who is a prejudiced by the
into in fraud of creditors party to the contract may bring
may be rescinded? contract the action
A: Fixing of Period by the Court

1. There must be
credit existing prior to Court may fix a Court cannot grant
the celebration of the period or grant extension of time
contract; extension of time for
2. There must be the fulfillment of the
fraud, or at least, obligation when
the intent to there is sufficient
commit fraud to reason to
the prejudice of justify such extension
the creditor
seeking Purpose
rescission;
3. The creditor cannot Cancellation of the Reparation for
in any legal contract damage or injury,
manner collect allowing partial
his credit rescission of contract
(subsidiary
character of
rescission); and
4. The object of the
contract must not Note: While Article 1191
be legally in uses the term “rescission,”
possession of a the original term which was
third person in used in the old Civil Code,
good faith. from which the article was
based, was “resolution.”
(Ongv.CA,G.R. No. 97347,
July 6, 1999)
Q: Distinguish rescission from
resolution.
Q: What is the obligation
RESOLUTION RESCISSION
created by the rescission of
(ART. 1191) (ARTICLE
the1381)
contract?
Both presuppose contracts validly entered into restitution of

A: Mutual
and subsisting and both require mutual
things which are the objects
restitution when proper of the contract and their
fruits and of the price with
Nature interest.
Principal action. Subsidiary

Q: remedy
When is mutual restitution not
retaliatory in character applicable?
A: Q: Reyes (seller) and Lim
1. Creditor did not receive (buyer) entered into a
anything from contract to sell of a parcel
contract; or of land. Harrison Lumber
2. Thing already in possession of occupied the property as
third lessee. Reyes offered to
persons in good faith; subject to return the P10 million
indemnity only, if there are two or down payment to Lim
more because Reyes was having
alienations – liability of first problems in removing the
infractor. lessee from the property.
Lim rejected Reyes’ offer.
Note: Rescission is possible Lim learned that Reyes had
only when the person already sold the property to
demanding rescission can another.
return whatever he may be
obliged to restore. A court
of equity will not rescind a
contract unless there is
restitution, that is, the
parties are restored to the T O T O M A S

status quo ante.(Article
1385)
JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
Trial court, in this case, directed presence of evidence of

Reyes to deposit the P10 large indebtedness or
million downpayment with the complete insolvency of the
clerk of court but Reyes debtor;
refused. Does Reyes have the 5. Transfer of all his
obligation to deposit the P10 property by a DR
million downpayment in the when he is financially
court? embarrassed or
insolvent;
A: Yes. There is also no plausible 6. Transfer is made
or justifiable reason for Reyes to between father and
object to the deposit of the P10 son, where there are
million down payment in court. present some or any
The contract to sell can no of the above
longer be enforced because circumstances; and
Reyes himself subsequently sold 7. Failure of the vendee to
the property. Both Lim and take exclusive possession
Reyes are seeking for rescission of the property.
of the contract. Q: What are the characteristics
of the right to rescind?
By seeking rescission, a seller
necessarily offers to return what A:
he has received from the buyer. 1. Can be demanded only if
Such a seller may not take back plaintiff is ready, willing
his offer if the court deems it and able to comply with
equitable, to prevent unjust his own obligation and
enrichment and ensure defendant is not; 2. Not
restitution, to put the money in absolute;
judicial deposit. 3. Needs judicial approval
in the absence of a
Note: In this case, it was just, stipulation allowing
equitable and proper for the trial for extra‐ judicial
court to order the deposit of the rescission, in cases of
down payment to prevent unjust non‐ reciprocal
enrichment by Reyes at the obligations;
expense of Lim. Depositing the
4. Subject to judicial review
down payment in court ensure its
if availed of extra‐
restitution to its rightful owner.
Lim, on the other hand, has
judicially;
nothing to refund, as he has not 5. May be waived expressly
received anything under the or impliedly; and
contract to sell. (Reyes v. Lim, 6. Implied to exist in
Keng and Harrison Lumber, Inc., reciprocal obligations
G.R. No. 134241, Aug. 11, 2003) therefore need not be
expressly stipulated
Q: What are the badges of upon.
fraud attending sales, as
determined by the courts? Q: May an injured party avail of
both fulfillment and rescission
A: as remedy?
1. Consideration of the
conveyance is A:
inadequate or GR:The injured party
fictitious; can only choose
2. Transfer was made by a between fulfillment
DR after a suit has and rescission of the
been begun and while obligation, and cannot
it is pending against have both.
him
3. Sale upon credit by an Note: This applies only
insolvent DR; 4. The when the obligation is
possible of fulfillment. materials without valid reason,
thus resulting in the stoppage
XPN: If fulfillment has of deliveries of construction
become impossible, materials on its part, in
Article 1191, NCC violation of the Offsetting
allows the injured Agreement. Can the agreement
party to seek be rescinded?
rescission even after
he has chosen A: Yes, because the provisions
fulfillment. (Ayson‐ of the offsetting agreement are
Simon v. Adamos,G.R. reciprocal in nature. Article
No. L‐39378, Aug. 28 1191 of the Civil Code provides
1984) the remedy of rescission (more
appropriately, the term is
Q: Vermen and Seneca entered "resolution") in case of
into an "offsetting agreement", reciprocal obligations, where
where Seneca is obliged to one of the obligors fails to
deliver construction materials comply with that is incumbent
to Vermen, who is obliged to upon him.
pay Seneca and to deliver
possession of 2 condominium
units to Seneca upon its 220
completion. Seneca filed a CIVIL LAW TEAM:
complaint for rescission of the ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:
offsetting against Vermen ALFREDO B. DIMAFELIX II;
alleging that the latter had ASST. SUBJECT HEADS: KAREN FELIZ G. SUPNAD,
LAMBERTO L. SANTOS III; MEMBERS: PAUL ELBERT E.
stopped issuing purchase AMON, ALSTON ANARNA, OZAN J. FULLEROS, CECILIO M.
orders of construction JIMENO, JR., ISMAEL SARANGAYA, JR.; CONTRIBUTORS:
LOISE RAE G. NAVAL, MONICA JUCOM
CONTRACTS
The question of whether a breach the spouses the by depositing it

of contract is substantial depends with the bank. Subsequently,
upon the attendant Ong deposited sums of money
circumstances. Seneca did not fail with the BPI in accordance with
to fulfill its obligation in the their stipulation that Ong pay the
offsetting agreement. The loan of the spouse with BPI. To
discontinuance of delivery of answer for Ong’s balance, he
construction materials to Vermen issued 4 post‐dated checks which
stemmed from the failure of were dishonored. Ong failed to
Vermen to send purchase orders replace the checks and to pay the
to Seneca. Vermen would never loan in full. Can the contract
have been able to fulfill its entered into by Ong and the
obligation in allowing Seneca to spouses be rescinded?
exercise the option to transfer
from Phase I to Phase II, as the A: No. The agreement of the
construction of Phase II has parties in this case may be set
ceased and the subject aside, but not because of a breach
condominium units will never be on the part of Ong for failure to
available. The impossibility of complete payment of the
fulfillment of the obligation on the purchase price. Rather, his failure
part of Vermen necessitates to do so brought about a situation
resolution of the contract, for which prevented the obligation of
indeed, the non‐ fulfillment of the the spouses to convey title from
obligation aforementioned acquiring an obligatory force.
constitutes substantial breach of
the agreement. (Vermen Realty The agreement of purchase and
Development Corp. v. CA and sale shows that it is in the nature
Seneca Hardware Co., Inc., G.R. of a contract to sell. Ong’s failure
No. 101762, July 6, 1993) to complete payment of the
purchase price is a non‐fulfillment
Q: Ong and spouses Robles of the condition of full payment
executed an "agreement of which rendered the contract to
purchase and sale" of 2 parcels of sell ineffective and without force
land. Pursuant to the contract and effect. The breach
they executed, Ong partially paid contemplated in Article 1191, NCC
is the obligor’s failure to comply estate unilaterally rescind the
with an obligation. In this case, contract and as a consequence
Ong’s failure to pay is not even a keep the earnest money to
breach but merely an event which answer for damages in the event
prevents the vendor’s obligation the sale fails due to the fault of
to convey title from acquiring the prospective buyer?
binding force.
A: No. Goldenrod and Barretto
Note: The contract entered into Realty did not intend that the
by the parties in the case at bar earnest money or advance
does not fall under any of those payment would be forfeited when
mentioned by Article 1381. the buyer should fail to pay the
Consequently, Article 1383 is balance of the price, especially in
inapplicable. the absence of a clear and express
In a contract to sell, the payment agreement thereon.
of the purchase price is a positive
suspensive condition, the failure Moreover, Goldenrod resorted to
of which is not a breach, casual or extrajudicial rescission of its
serious, but a situation that agreement with Barretto Realty.
prevents the obligation of the Under Article 1385, NCC,
vendor to convey title from rescission creates the obligation
acquiring an obligatory force. to return the things which were
(Ongv.CA, G.R. No. 97347, July 6, the object of the contract
1999) together with their fruits and
interest. Therefore, by virtue of
Q: Goldenrod offered to buy a the extrajudicial rescission of the
mortgaged property owned by contract to sell by Goldenrod
Barreto Realty to which it paid an without opposition from Barretto
earnest money amounting to P1 Realty, which in turn, sold the
million. It was agreed upon that property to other persons,
Goldenrod would pay the Barretto Realty, had the
outstanding obligations of obligation to return the earnest
Barreto Realty with UCPB. money which formed part of the
However, Goldenrod did not pay purchase price plus legal interest
UCPB because of the banks from the date it received notice of
denial of its request for the rescission. It would be most
extension to pay the obligation. inequitable if Barretto Realty
Thereafter, Goldenrod, through would be allowed to retain the
its brocker, informed Barreto money at the same time
Realty that it could not go appropriate the proceeds of the
through with the purchase of the second sale made to another.
property and also demanded the (Goldenrod, Inc. v. CA, G.R. No.
refund of the earnest money it 126812, Nov. 24, 1998)
paid. In the absence of a specific
stipulation, may the seller of real

VICE CHAIRS FOR
Derecho Civil
MARTINEZ
UST GOLDEN NOTES
2011
Q: What is the A:
prescriptive period of 1. Under Art. 1381, no.1 – within 4
action for rescission? years
from the time the termination of the
incapacity of the misrepresentation on the part of
ward; the minor (minor is estopped)
2. Under Art. 1381, no. 2‐ within 4 d. Contracts of deposit with the
years Postal Savings Bank provided that
from the time the domicile of the the minor is over 7 years of age
absentee is e. Upon reaching age of majority –
known; or they ratify the same
3. Under Art. 1381, nos. 3 & 4 & Art.
1382
– within 4 years from the time of the
discovery of
fraud.
222 CIVIL LAW TEAM:
B. VOIDABLE Q: What are the vices of

CONTRACTS consent?
Q: What are the A: MIVUF

characteristics of a 1. Mistake –
voidable contract? substantial
A: mistake and not
1. Effective until set merely an
aside; accidental
2. May be assailed or attacked only mistake; must
in an refer to the:
action for that a. substance of
purpose; the thing which
3. Can be confirmed; is the subject of
and the contract; or
4. Can be assailed only by the party b. to those
whose conditions
consent was defective or his heirs or which have
assigns. principally
moved one
Q: When is there a or both
voidable contract? parties to enter the contract.
A: When: Note: Mistake as to identity or

qualifications of one of the parties
1. one of the parties is incapacitated
will vitiate consent only when such
to
identity or qualifications have been
give consent; or
the principal cause of the contract.
2. consent was
vitiated.
2. Intimidation – An
internal moral
Q: Who are the persons
force operating
incapacitated to give
in the will and
consent?
inducing
performance of
A: DIM
an act.
1. Deaf‐mutes who do not know how
3. Violence – An
to
external, serious
read and write or irresistible
(illiterates) physical force
2. Insane or demented persons, exerted upon a
unless the person to
contract was entered into during a prevent him
lucid from doing
interval something or to
3. Minors except: compel him to
a. Contracts for do an act.
necessaries 4. Undue influence –
b. Contracts by guardians or legal Any means
representatives & the court having employed upon a
jurisdiction had approved the same party which,
c. When there is active under the
circumstances 1. Mistake of fact–
could not be When one or
resisted and has both of the
the effect of contracting
controlling his parties believe
volition and that a fact exists
inducing him to when in reality it
give his consent does not, or that
to the contract, such fact does
which otherwise, not exist when in
he would not reality it does.
have entered
into. 2. Mistake of law–
5. Fraud – Use of When 1 or both
insidious words parties arrive at
or machinations erroneous
in inducing conclusion or
another party to interpretation of
enter into the a question of law
contract, which or legal effects of
without them, he a certain act or
would not have transaction.
agreed.
Note:
Q: What are the kinds of GR: Mistake as a vice
mistake? of consent refers to
mistake of facts and
A: not of law.

NAVAL, MONICA JUCOM
CONTRACTS
XPN: When mistake of law parties to enter into the contract.

involves error as to the (Leonardo v. CA, G.R. No. 125485,
effect of an agreement when Sept. 13, 2004)
the real purpose of the
parties is frustrated (Art. Q: Leonardo is the only
1334, NCC). legitimate child of the late
spouses Tomasina and Balbino.
To determine the effect of an She only finished Grade three
alleged error, both the objective and did not understand English.
and subjective aspects of the case The Sebastians, on the other
which is the intellectual capacity hand, are illegitimate children.
of the person who committed the She filed an action to declare the
mistake. nullity of the extrajudicial
settlement of the estate of her
Q: When will mistake invalidate parents, which she was made to
consent? sign without the contents
thereof, which were in English,
A: Mistake, in order to invalidate explained to her. She claims that
consent, should refer to the her consent was vitiated because
substance of the thing which is she was deceived into signing the
the object of the contract, or to extrajudicial settlement. Is the
those conditions which have extra‐judicial settlement of
principally moved one or both estate of Tomasina valid?
A: No. When one of the parties is parties must have been
unable to read, or if the contract frustrated.
is in a language not understood
by him, and mistake or fraud is Q: What are the requisites of
alleged, the person enforcing the intimidation?
contract must show that the
terms thereof have been fully A:
explained to the former. (Art. 1. One of the parties is
1332, NCC) Leonardo was not in a compelled to give his
position to give her free, consent by a
voluntary and spontaneous reasonable and well‐
consent without having the grounded fear of an
document, which was in English, evil;
explained to her. Therefore, the 2. The evil must be
consent of Leonardo was imminent and grave; 3.
invalidated by a substantial It must be unjust; and
mistake or error, rendering the 4. The evil must be the
agreement voidable. The determining cause for
extrajudicial partition between the party upon whom it
the Sebastians and Leonardo is employed in entering
should be annulled and set aside into the contract.
on the ground of mistake.
(Leonardo v. CA, G.R. No. 125485, Q: What are the requisites of
Sept. 13, 2004) violence?
Note: Contracts where consent is A: It must be:

given by mistake or because of
1. serious or irresistible; and
violence, intimidation, undue
2. the determining cause for
influence or fraud are voidable.
the party upon whom it
These circumstances are defects
is employed in entering
of the will, the existence of which
into the contract.
impairs the freedom, intelligence,
spontaneity and voluntariness of
Q: What are the kinds of fraud?
the party in giving consent to the
agreement.
A:
Art. 1332 was intended to protect 1. Fraud in the perfection
a party to a contract of the contract a. Causal
disadvantaged by illiteracy, fraud (dolo causante)
ignorance, b. Incidental fraud (dolo incidente)
mental weakness or some other
handicap. It contemplates a 2. Fraud in the performance
situation wherein a contract is of an obligation (Art. 1170,
entered into but the consent of NCC)
one of the contracting parties is
vitiated by mistake or fraud Requisites:
committed by the other. a. Fraud, insidious
(Leonardo v. CA, G.R. No. 125485, words or
Sept. 13, 2004) machinations
must have been
Q: What are the requisites that employed by one of the
ignorance of or erroneous contracting parties;
interpretation of law (mistake of b. It must have been serious;
law) may vitiate consent? c. It induced the other
party to enter into
A: a contract; and
1. Mistake must be with d. Should not have
respect to the legal effect of been employed by
the agreement; both contracting
2. It must be mutual; and parties or by third
3. Real purpose of the persons.

VICE CHAIRS FOR
Derecho Civil
MARTINEZ
UST GOLDEN NOTES

2011
Q: Distinguish dolo given by the lessor. When

causante from dolo Samson occupied the
incidente. premises, he was forced
to vacate for Santos’
A: failure to renew his lease.
He filed an action for
DOLOCAUSANTE
damages against Santos
(ART. 1338)
for fraud and bad faith
claiming that the
Refers to fraud
which is serious in misrepresentation
character induced him to purchase
the store and the
It is the cause which leasehold right. Decide.
induces the party to
enter into a contract A: No, Santos was not
guilty of fraud nor bad
faith in claiming that there
Renders the contract was implied renewal of his
voidable contract of lease with his
lessor. The letter given by
the lessor led Santos to
believe and conclude that
Note: In contracts, the kind his lease contract was
of fraud that will vitiate impliedly renewed and
consent is one where, that formal renewal
through insidious words or thereof would be made
machinations of one of the upon the arrival of Tanya
contracting parties, the Madrigal. Thus, from the
other is induced to enter start, it was known to both
into a contract which, parties that, insofar as the
without them, he would not agreement regarding the
have agreed to. This is
transfer of Santos’
known as dolo causante or
leasehold right to Samson
causal fraud which is
was concerned, the object
basically a deception
employed by one party thereof relates to a future
prior to or simultaneous to right. It is a conditional
the contract in order to contract, the efficacy of
secure the consent of the which depends upon an
other. (Samson v. CA, G.R. expectancy the formal
No. 108245, Nov. 25, 1994) renewal of the lease
contract between Santos
Q: Santos’ lease contract and lessor. The efficacy of
was about to expire but it the contract between the
was extended and he parties was thus made
continued to occupy the dependent upon the
leased premises beyond happening of
the extended term.
Samson offered to buy
Santos’ store and his right
to the lease. Santos
stated that the lease
224 CIVIL LAW TEAM:
this suspensive condition.

contract between him
(Samson v. CA, G.R. No.
and the lessor was
108245, Nov. 25, 1994)
impliedly renewed and
that formal renewal
Q: What are the causes of
thereof would be made
extinction of action to
upon the arrival of a
annul?
certain Tanya Madrigal,
based on the letter to him
A:
1. Prescription – the which is the
action must be object of the
commenced contract through
within 4 years fraud or fault of
from the time the person who
the: is entitled to
a. incapacity annul the
ends; contract
guardianshi
p ceases; Q: Who may institute action
b. violence, for annulment?
intimidatio
n or undue A: By all who are thereby
influence obliged principally or
ends; or subsidiarily.
c. mistake or fraud is Note: He who has capacity
discovered to contract may not invoke
the incapacity of the party
2. Ratification– with whom he has
cleanses the contracted.
contract of its
defects from the A third person who is a
stranger to the contract
moment it was
cannot institute an action
constituted
for annulment.
Requisites:
Q: What are the effects of
a. there must be
annulment?
knowledge
of the
A:
reason
1. If contract not yet
which
consummated –
renders the
parties shall be
contract
released from
voidable;
the obligations
b. such reason
arising
must have
therefrom.
ceased; and c.
2. If contract has
the injured party
already been
must have
consummated –
executed an act
rules provided in
which expressly
Arts. 1398‐1402,
or
NCC, shall
impliedly conveys an intention to
govern.
waive his right

3. By loss of the thing

NAVAL, MONICA JUCOM
Q: What is confirmation? involved, but merely regulates the

CONTRACTS formalities of the contract necessary to
render it enforceable.
A: It is an act by which a
voidable contract is cured of 3. Those where both
its vice or defect. contracting parties are
incapable of giving
Q: What is recognition? consent.
A: It is an act whereby a Q: What is Statute of Frauds?

defect of proof is cured such
as when an oral contract is A: The Statute of Frauds
put into writing or when a [Article 1403, (2)] requires
private instrument is certain contracts
converted into a public enumerated therein to be
instrument. evidenced by some note or
memorandum in order to be
Q: What is ratification? enforceable. The term
"Statute of Frauds" is
A:It is an act by which a descriptive of statutes which
contract entered into in require certain classes of
behalf of another without or contracts to be in writing.
in excess of authority is The Statute does not deprive
cured of its defect. the parties of the right to
contract with respect to the
Q: What are the modes of ratification? matters therein
A: ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II

1. For contracts Evidence of the agreement
infringing the cannot be received without
Statute of Frauds: the writing or a secondary
a. expressly evidence of its contents.
b. impliedly– by (Swedish Match, AB v. CA,
failure to G.R. No. 128120, Oct. 20,
object to the 2004)
presentation
of oral Note: The Statute of Frauds
evidence applies only to executory
to prove the contract, or by contracts, not to those that
the are partially or completely
acceptance of benefits under fulfilled. Where a contract of
the sale is alleged to be
contract. consummated, it matters not
2. If both parties are that neither the receipt for
incapacitated, the consideration nor the
ratification by sale itself was in writing. Oral
their parents or evidence of the alleged
guardian shall consummated sale is not
validate the forbidden by the Statute of
contract Frauds and may not be
retroactively excluded in court.
(Victoriano v. CA, G.R. No.
C. UNENFORCEABLE 87550, Feb. 11, 1991)
CONTRACTS
Q: What is the purpose of the Statute
Q: What are unenforceable contracts? of Frauds?
A: The following contracts A: It is to prevent fraud and

are unenforceable unless perjury in the enforcement
they are ratified: of obligations depending for
1. Those entered into their evidence on the
without or in unassisted memory of
excess of witnesses, by requiring
authority; certain enumerated
2. Those that do not contracts and transactions to
comply with the be evidenced by a writing
Statute of Frauds signed by the party to be
i.e., are not in charged. (Swedish Match,
writing nor AB v. CA, G.R. No. 128120,
subscribed by the Oct. 20, 2004)
party charged or
by his agent; or Q: What are the contracts
or agreements covered by not lower that 500 pesos, unless the
the Statute of Frauds? buyer accepts and receives part of such
goods and chattels, or the evidences, or
some of them, of such things in action,
A: or pay at the time some part of the
1. An agreement that by its terms entry is made by the auctioneer in his
is not to sales book, at the time of the sale, of
be performed within a year from the the amount and kind of property sold,
making thereof; terms of sale, price, names of the
2. A special promise to purchasers and person on whose
answer for the account the sale is made, it is a
debt, default or sufficient memorandum
miscarriage of 5. An agreement for
another the leasing for a
3. An agreement made longer period
in consideration of than one year, or
marriage, other for the
than a mutual sale of real property or of an interest
promise therein;
to marry;
4. An agreement for
the sale of goods,
chattels or things
in action, at a
price T O T O M A S

JEANELLE C. LEE
Facultad de Derecho
Civil
UST GOLDEN NOTES
2011
6. A representation to the between Aparato and the

credit of a third spouses. (Cenidov.Spouses
person Apacionado, G.R. No. 132474,
Nov. 19, 1999)
Q: Cenido, as an heir of
Aparato and claiming to be the Q: What are the two ways of
owner of a house and lot, filed ratifying contracts which
a complaint for ejectment infringe the Statute of Frauds?
against spouses Apacionado.
On the other hand, spouses A:
Apacionado allege that they 1. Failure to object during
are the owners which are the trial to the
unregistered purchased by admissibility of parol
them from its previous owner, evidence to support a
Aparato. Their claim is contract covered by
anchored on a 1‐page the Statute of Frauds.
typewritten document entitled 2. Acceptance of benefits –
"Pagpapatunay," executed by when the contract has
Aparato. Is the “Pagpapatunay” been partly executed
entered into by Bonifacio and because estoppel sets
spouse Apacionado valid and in by accepting
enforceable? performance.
D. VOID CONTRACTS
A: It is valid but unenforceable.
Generally, contracts are Q: What are the kinds of void
obligatory, in whatever form contracts?
such contracts may have been
entered into, provided all the A:
essential requisites for their 1. Those lacking in essential
validity are present. When, elements: No consent, no
however, the law requires that object, no cause – some or all
a contract be in some form for it elements of a valid contract
to be valid or enforceable, that are absent a. Those which are
requirement must be complied absolutely simulated or
with. fictitious: no cause
b. Those whose cause or
The sale of real property should object did not exist
be in writing and subscribed by at the time of the
the party charged for it to be transaction: no
enforceable. The cause or object
"Pagpapatunay" is in writing c. Those whose object is
and subscribed by Aparato, outside the commerce
hence, it is enforceable under of man: no object
the Statute of Frauds. Not d. Those which
having been subscribed and contemplate an
sworn to before a notary public, impossible service: no
however, the "Pagpapatunay" is object
not a public document, and e. Those where the
therefore does not comply with intention of parties
par. 1, Art. 1358, NCC. relative to principal
Moreover, the requirement of a object of the
public document in Article 1358 contract cannot be
is not for the validity of the ascertained
instrument but for its efficacy.
Although a conveyance of land 2. Contracts prohibited by
is not made in a public law
document, it does not affect the a. Pactum commisorium
validity of such conveyance. The – the creditor
private conveyance of the appropriates to
house and lot is therefore valid himself the things
given by way of Honorio’s wife. Is the deed of
pledge or mortgage exchange null and void?
to fulfill the debt
b. Pactum de non A: The deed is valid until and
alienando – an unless annulled. The deed was
agreement entered into on July 6, 1976,
prohibiting the while the Family Code took
owner from effect only on August 3, 1998.
alienating the Laws should be applied
mortgaged prospectively only, unless a
immovable legislative intent to give them
c. Pactum leonina – a retroactive effect is expressly
stipulation in a declared or is necessarily
partnership implied from the language used.
agreement which Hence, the provisions of the
excludes one or more partners from Civil Code, not the Family Code
any share in the profits or are applicable. According to
losses Article 166 of the Civil Code, the
husband cannot alienate or
3. Illegal or illicit encumber any real property of
contracts(e.g. the conjugal partnership
contract to sell without the wife’s consent. This
marijuana) provision, however, must be
Q: On July 6, 1976, Honorio and

Vicente executed a deed of
exchange. Under this 226
instrument, Vicente agreed to CIVIL LAW TEAM:
convey his 64.22‐ square‐meter ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:
lot to Honorio, in exchange for ASST. SUBJECT HEADS: KAREN FELIZ G. SUPNAD,
a 500‐square‐meter property. LAMBERTO L. SANTOS III; MEMBERS: PAUL ELBERT E.
The contract was entered into AMON, ALSTON ANARNA, OZAN J. FULLEROS, CECILIO M.
without the consent of JLIMENO , JR., ISMAEL SARANGAYA, JR.; CONTRIBUTORS:
OISE RAE G. NAVAL, MONICA JUCOM
CONTRACTS
read in conjunction with their house. She then

Article 173 of the same gathered her other
Code. The latter states that children, Joji and Harriet
an action to annul an and went to stay in their
alienation or encumbrance house. For staying in their
may be instituted by the alleged property, the
wife during the marriage spouses Guiang
and within ten years from complained before the
the transaction questioned. barangay authorities for
Hence, the lack of consent trespassing.
on her part will not make
the husband’s alienation or Is the deed of transfer of
encumbrance of real rights executed by Judie
property of the conjugal Corpuz and the spouses
partnership void, but Guiang void or voidable?
merely voidable.
(Villarandav. Villaranda, A:
G.R. No. 153447, Feb. 23, It is void. Gilda’s consent to
2004) the contract of sale of their
conjugal property was
Q: Judie sold one‐half of totally inexistent or absent.
their lot to Guiang under a Thus, said contract properly
deed of transfer of rights falls within the ambit of
without the consent and Article 124 of the FC.
over the objection of his
wife, Gilda and just after The particular provision in
the latter left for abroad. the old Civil Code which
When Gilda returned home provides a remedy for the
and found that only her wife within 10 years during
son, Junie, was staying in
the marriage to annul the
and public
encumbrance made by the
interest
husband was not carried
over to the Family Code. It
is thus clear that any No legal effects Produces legal effects
alienation or encumbrance even if no and remains valid if no
made after the Family Code action is filed action is filed
took effect by the husband to set it aside
of the conjugal partnership
property without the Action to Action to rescind
consent of the wife is null declare its prescribes within 4 years
and void. (Spouses nullity does (Art. 1389, NCC; Pineda,
Guiangv.CA, G.R. No. not prescribe Obligations and
125172, June 26, 1998) (Art. Contracts, 2000 ed, p. 605)
1410, NCC)
Q: Distinguish void contract
from voidable contract.
A: Q: Distinguish void contract

from inexistent contract.
VOID VOIDABLE
A:
Absence of essential Consent is
element/s of a contract VOID CONTRACT
vitiated or there INEXISTENT CONTRACT
is incapacity to
Those where all the
give consent Those where one or
requisites of a some of the
No effect even if not contract are
Valid contract until requisites which
set aside set asidepresent, but the are essential for
cause, object or validity are
Cannot be ratified purpose is contrary
Can be ratified absolutely lacking
to law,
Nullity can be set up Nullity can bemorals,
set up good
against any person only against customs,
a party public
asserting right arising order or public
thereto
from it, and his successors policy or the
contract itself is
prohibited or
declared prohibited.
Principle of in pari Principle of in pari
in interest not delicto is applicable. delicto
protected by law isnot applicable.
Action to declare Action to annul

nullity does not contract prescribes
prescribe in 4 years
V. EFFECT OF CONTRACTS
Obligations and
Contracts, 2000
Q: Between whom do contracts take
ed, p. 606)
effect?
A: Contracts take effect only

between the parties, and
Q: Distinguish void contract from their assigns and heirs, the
rescissible latter being liable only to
contract. the extent of the property
received from the
A: decedent.
VOID RESCISSIBLE
Q: What are the instances
Defect is when
Defect is in its the heirs may be
effects,
inherent in either againstliable
one offor
the the obligation
the contract contracted
parties or a third person by the
itself decedent?
Nullity is a Based on equity and

matter of law
227
matter of private interest U N I V E R S I T Y O F S A N
T O T O M A S
JEANELLE C. LEE
UST GOLDEN NOTES

2011
A: When the rights and obligations arising from

the contract are transmissible:
1. By their nature; or
2. By stipulation; or
3. By provision of law.
Q: What are the requisites in order that a third

person may demand the fulfillment of the
contract?
A:
1. The contracting parties must have
clearly and deliberately conferred a
favor upon the third person;
2. The third person’s interest or benefit in
such fulfillment must not be merely
incidental; and
3. Such third person communicated his
acceptance to the obligor before the
stipulations in his favor are revoke.
228 CIVIL LAW TEAM:

ASST. SUBJECT HEADS: KAREN FELIZ G. SUPNAD, LAMBERTO L. SANTOS III; MEMBERS: PAUL
ELBERT E. AMON, ALSTON ANARNA, OZAN J.
FULLEROS, CECILIO M. JIMENO, JR., ISMAEL SARANGAYA, JR.;
CONTRIBUTORS: LOISE RAE G. NAVAL, MONICA JUCOM

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OBLIGATIONS ACTIVE SUBJECT

I. DEFINITION Q: How is vinculum juris established?

Q: What is an obligation? A: By:

Note: Art. 1156 refers only

Form is not generally

Q: What are the different kinds of

A: From the viewpoint of:

174 CIVIL LAW TEAM:

2. Performance 7. Susceptibility of partial fulfillment

ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

Q: What are the sources of obligations? Distinguish.

Quasi‐ ex quasi maleficio or

Note: The enumeration is exclusive.

A. OBLIGATION EX LEGE VICE CHAIRS FOR ACADEMICS: KAREN JOY G.

ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II

UST GOLDEN NOTES

Q: May a party unilaterally C. OBLIGATION EX

shall be governed 1. Negotiorium gestio

ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

3. He has not failed to his fishpond, fled to Manila

1. What is the juridical

Q: What are the elements of a quasi‐

Q: What is the scope of obligation;

Q: What are natural Q: Distinguish natural from

A: They are real A:

178 CIVIL LAW TEAM:

OBLIGATION TO Pay damages in Pay damages in

Fortuitous event Obligation is not

ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

Note: The creditor has a B. OBLIGATION TO DO OR NOT

Q: Distinguish personal right from Q: What are the remedies in personal

Right to demand Note; same rule applies if

Q: When may a thing be ordered T O T O M A S

UST GOLDEN NOTES

C. BREACHES OF something fails to do it, or

it(Picart v. Smith, G.R. No. 2. Where it would be

ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

Q: What are the requisites of mora

Q: What are the effects of mora A:

Q: What are reciprocal 2. Prescription.

Q: In reciprocal Q: What type of fraud

A: Only when the

separate dates. WAIVER OF FUTURE

A: Right or Remedy of Aggrieved Party

FRAUD DURING THE Right of innocent Right of innocent

ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

There is deliberate There is no

Waiver for future GR:

Note: When negligence is

Where negligence shows

Note: Under Art. 1170,

6. FORTUITOUS EVENT Q: If the happening of an

A: It is an occurrence or A: No. The mere difficulty

A: No. The requisites for

ADVISER: ATTY. ELMER T. RABUYA; SUBJECT HEAD:

of the mischief. Such doctrine damages in the form of hotel and

Can XY Corp. unilaterally retain payment

Alternative Answer: Yes, A:

A: Q: Saturnino was the