INTRODUCTION TO LAW

 NON-LEGAL SENSE
- not promulgated and enforced by state.

Examples:
Divine Law - differs to what one's belief. Example, 10 commandments in Christian.
Muslims-quran.
Natural Law- nature of law or metaphysics. A basis for the state law.
Moral Law - (law about what is right or wrong. Might be moral in the Phil but not in
the other country). Not absolute, it may change by time, period.
-same sex marriage
-polygamy (pagaasawa ng mahigit isa)
-women's fashion (like girls are not allowed to wear skirts, shorts
and revealing dress)

Physical Law - law of physics.

Example: Law of gravity- whatever comes up will fall. Law of Inertia.

 STRICT LEGAL SENSE - law in strict legal sense which promulgated and
enforced by state. -promulgated by state law ( ipinapahayag ng government).
Also called.
• Positive Law
• Municipal Law
• Imperative Law
• Civil Law

Example:
STATE LAW - only promulgated and enforced by the state.
1. Law in Obligations and contract
2. Civil code of the Phil
3. Republic Act. 9262 (Violations again women and children.
4. Conducts of election.

Pano pinopromulgate o pinapatupad ang batas?.

3 MAIN BRANCHES OF THE GOVERNMENT

1. Article 6 of the constitution (LEGISLATIVE DEPARTMENT) - Compose of

congress subdivided by lower house and upper house.
• Promulgate or enact laws
Lower house - HOUSE OF REPRESENTATIVE
Example: Congressman, Representative of legislative District (DISTRICT
AND PARTYLIST)
Upper House - Compose of 24 SENATORS
2. Article 7 (EXECUTIVE DEPARTMENT) - President, Cabinet Members, Law
enforcement agency.
• Nage-execute ng Batas or nagi-implement or enforced

3. Article 8 of the 1987 constitution (JUDICIARY) - Supreme Court, other lower

courts
• Interpretation of the law. Pag may pagtatalo.

Example: BAYANIHAN TO RECOVER AS ONE ACT.

Note: Ang batas bago maging batas ang tawag dito ay BILL. If this law
ay nanggaling sa upper house
ay hindi ito magiging batas agad dahil accrdng sa constitution ito ay dapat may con
currence of pagsangayon ng dalawang houses..sa lower house. After
this kailangan ang batas na nanggaling sa legislative
ay kailangang dumaan sa executive department or sa president.

CHARACTERISTICS OF LAW

1. Rule of Conduct
- sinasabi ng batas kung ano yung dapat nating gawin at hindi dapat gawin.
Example: Wearing of facemask, social distancing.
2. Obligatory - ito yung batas na dapat gawin at pag lumabag ay mga sanctions or
penalty.
3. Promulgated by legitimate authority - legislator who promulgate the law.

LOCAL LEGISLATIVE BODIES.

Province - (BOARD MEMBERS) Sangguniang panlalawigan.
Sa city ay - Sangguniang Panglungsod (SILA YUNG PWEDENG
GUMAWA NG MGA ORDINANCE).
Municipality- SANGGUNIANG BAYAN.
Barangay- Kagawad.

LOCAL EXECUTIVE BODIES.

Province - Governor.
City/Municipality - Mayor.
Barangay - Kapitan

4. Common observance and benefit - to maintain peace and harmonies. It

is chaotic pag walang law.
 SOURCES OF LAW

PRIMARY SOURCES OF LAW

1. CONSTITUTION - Supreme law or highest law of the land. Promulgated by the

people themselves.

"Anything against the constitution shall be declared null and void. Laws,
procedure, or acts directly violate the constitution are unconstitutional."

Judiciary - will be the one who declare, who have the power of authority for
that law. In case of actual controversies.

2. LEGISLATION - declaration of legal rules by competent authority. Ordinances

enacted by LGU's.

• ADMINISTRATIVE OR EXECUTIVE ORDERS AND

IMPLEMENTING RULES AND REGULATIONS (IRR) - If legislation
coming from the legistrature. Orders, now pwede itong mangaling sa executive
through various agencies.
Example: DILG, DSWD, DOH- They are the ones who implement rules
and reg. About the sap for example, DSWD are inuutusan para magbigay ng
SAP sa mga affected areas. Now DSWD will promote IRR. regarding to the
distribution of SAP.

• JUDICIAL DECISIONS OR JURISPRUDENCE - Kapag nagdecide ang

supreme court sa isang controvercies, issues and case considered as law unless
the supreme will modify, revise, abandon those decisions. Yung decision ng
supreme court resolving that issue will be part of Legal system of the Phil.
Called Doctor of precedent or stari decisis.

• CUSTOM - Kailangan mapatunayan na for

the prolonged period yun na yung kaugalian ng mga tao dun. Kung may
law na hindi na kailangan mag-apply ng
customs pero kung wlang batas na naggogovern dun sa issue pwedeng iapply ng
court yung customs with the condition na kailangan ito ay recognized and
proved.
For example: Contract of service.
Wala namang pinagusapan sa pasahod. Kunyari naggamas ako sa harap ng bah
ay niyo pero hindi natin napagusapan yung bayad abt dun pero umoo lang ako.
Pano yun di nako babayaran kasi wala namang sinabi abt dun? given dito na w
alang law na applicable
meaning wala namang batas na nagsasabi na pag naggamas ako in that
area kailangan bayaran moko ng 500 ganun. In that
case, titingnan natin kung magkano ba talaga ang binabayad sa lugar na yun in
regards with the service tas, that would be the compensation for that service.
SECONDARY SOURCES OF LAW
- supplementary (karagdagan). Kung may primarily sources of law na no need of
secondary. (BACK UP)

Are they binding in the court?

They are not, they only have persuasive effect meaning they have
the persuasive. authority that the court consults in deciding a case.

OTHER SOURCES:
1. Principle of Justice in Equity
2. Decision of foreign tribunal
Example: Our commercial law is derived from the US,
dun sa specific na controversies walang law naggogovern na Ph. Law. Our courts
may apply. yung decisions of US courts regards with that issue.
3. Opinions of text writers - legal nominaries like Sanches roman
4. Religion - Use in court like reproductive health, same sex.

CLASSIFICATIONS OF LAW

1. According to Purpose
SUBSTANTIVE LAW- (mga rights mo) Law creating, defining,
and regulating rights of duties Example: Law in Obligations and Contract is a
private law. meaning this is an interaction between private ind. To private ind.
Criminal Law is considered as Public Law, when it comes to criminal cases
there is a private offended parties. Pursuing the case because the state
wants peace and order kasi yung accused consider as a threat in society.
Kaya pagdating sa criminal cases makikita niyo yung title na "PEOPLE
OF THE PHILIPPINES VS (The accused).
ADJECTIVE LAW- perscribe the manner or procedure which rights 
enforced or violation be regress. NANGUTANG MEANS
(OBLIGOR) and INUTANGAN/creditor (OBLIGEE).

NOTE:
Sa Substantive ito yung rights and duties na nakapaloob sa pagutang (let
us say). Ang duties ni obligor ay magbayad ng utang while si creditor
ay maningil upon due date.
Sa Adjective (PROCEDURE) "Pano ko makokolekta ang
utang na yun as obligee? nakalagay sa revised rules, civil procedure. You can
make a demand. letter pag di parin nagbayad dun kana pwwde magfile ng case.
2. According to Subject Matter - involve private and public law.
• Public Law- body of legal rules which regulates rights and duties arising from
the relationship of state to the people.
Example:
1. Criminal Law
2. International
3. Administrative
4. Constitutional
5. Criminal Procedure

• Private Law - for purely private ends. State is not a party but merely an arbiter.
Like courts, they are part of state, but it is not part of the case in private law.
Example:
1. Law in obligations and contract
2. Civil law
3. Commercial
4. Civil procedure

LAW ON OBLIGATIONS AND CONTRACT

Body of rules deals with the nature and sources of obligations. FOUND IN REP. ACT
386 CIVIL CODE OF THE PHIL. took effect on AUGUST 30, 1950.

CONCLUSIVE PRESUMPTION OF THE KNOWLEDGE OF LAW.

Article 3, Civil code of the phil.

• Ignorance of the law excuses no one. All of us are conclusively presumed to
know the law. Meaning tayo ay ipinapalagay na naintindihan at alam natin yung
batas even dimo naman nabasa kasi pinapublish naman sya.

Obligations- promises of two parties.

3 PARTS OF OBLIGATIONS:
ELEMENTS
SOURCES
EFFECTS

Elements
SUBJECT
• Active- creditor, recieves and benefits from the obligations
• Passive- debtor, doer of obligations. To do what he promises to do.
OBJECT
• What is the promise?
 To do
 To give
 Not to do
JURIDICAL TIE
• Binds the 2 parties together the creditor and debtor
• Essence of trust how the debtor performs of what he promises to do.

CAUSE
• Why the obligations created?
• What are the reasons for obligations created?
• Why cause is important? When there is dispute, we can find out
Why this. person entered in this kind of obligations.

SOURCES OF OBLIGATIONS
• Where the obligations come from?

A CONTRACT IS A MEETING OF MINDS BETWEEN TWO OR MORE

PEOPLE WHERE ONE OBLIGATES OR UNDERTAKES PROMISES TO
ANOTHER. TO DELIVER SOMETHING, TO GIVE, TO DO AND NOT TO DO
SOMETHING.

NATURE AND EFFECT OF OBLIGATIONS

(Article 1156-1178)

(Philippine Civil Code Article 1156) defines obligation as a juridical necessity to give,
to do, or not to do. Although, the civil code did not mention the specific type of
obligation, the specific type of obligation being defined by Art. 1156 is a civil
obligation.

Examples of Civil Obligations:

1. Obligation to pay your tuition fee at school (to give)
2. Obligation of a parent to take care of their children (to do)
3. Obligation of anyone not to steal (not to do)

Why civil obligation is a juridical necessity?

In case of non-compliance, the courts of justice may be called upon to enforce its
fulfillment or, in default thereof, the economic value that it represents.
a. NOT a juridical necessity (therefore NOT civil obligations)
b. Your obligation to attend masses (moral obligation)
c. To pay back your debt of gratitude (natural obligation)

Essential Requisites

I. Passive subject (Obligor) – person who is bound to the fulfillment of

the obligation.
II. Active subject (Oblige) – person who is entitled to demand the
fulfillment of the obligation.
III. Prestation/Object/Subject Matter – conduct required to be observed
by the debtor (It may consist in giving, doing, or not doing)
IV. Juridical tie/Vinculum/Vinculum juris – binds or connects the parties
to the obligation.
 V. Obligations, Right, Cause of Action (Wrong)
VI. Obligation – juridical necessity to give, to do, or not to do.
VII. Right – the power which a person has under the law, to demand from
another any presentation.
VIII. Cause of Action – act or omission which violates a right.

IX. Injury – act or omission which causes harm.

X. Damage – the harm done to a party.
XI. Damages – the sum of money recoverable by reason of damage done.

Kinds of Obligation according to the subject matter.

1.Real obligation – obligation to give
2.Personal obligation – obligation to do or not to do.
Two kinds:
a) Positive personal obligation- to do or to rendered service.
b) Negative personal obligation- obligation not to do or not to give.

5 SOURCES OF OBLIGATIONS
(ARTICLE 1157)

1. (ARTICLE 1158) LAW- What is incumbent on us. One of the bases of the
obligation provided or mandated by law is taxation.
Article 1158. Obligations derived from law are not presumed. Only those
expressly determined in this Code or in special laws are demandable and shall be
regulated by the precepts of the law which establishes them; and as to what has not
been foreseen, by the provisions of this Book. (1090)
TAXATION- We must pay our fair share to the government without any contract
or agreement.

2. (ARTICLE 1159) CONTRACT- Agreement of two parties filled with

obligations to do or to give something.
3. (ARTICLE 1160) QUASI-CONTRACT- Obligations not based on agreement
but based on the law that you must do. One of this is unjust enrichment -
you cannot get rich or take advantage of somebody the law provides through a
contact you must return what is not yours or what you gain unjustly.

4. (ARTICLE 1161) CRIMES OR DELICTS - If you found guilty of a crime you

have an obligation to restitution, pay for damages, pay fine, or go to jail.
5. (ARTICLE 1162) QUASI-DELICTS OR NEGLIGENCE - If there’s
negligence on one debtor, he then owes to that creditor at this restitution but is to
repair the damage cause by that negligence.

Scope of Civil Liabilities in Delicts

a. Restitution – the restitution of the thing itself must be made whenever possible,
with allowance for any deterioration, or diminution of value as determined by
the court.
b. Reparation for the damage caused – court shall determine the amount of
damage, taking into consideration the price of the thing, whenever possible, and
 its special sentimental value to the injured party and reparation shall be made
accordingly.
c. Indemnification for consequential damages – Indemnification for
consequential damages shall include not only those caused the injured party, but
also those suffered by his family or by a third person by reason of the crime.

Legal Obligations
1. Agreement Unnecessary. – The law cannot exist as a source of obligations
unless the acts to which its principles may be applied exist. But once those acts or
facts exist, the obligations arising therefrom by virtue of express provisions of the
law are entirely independent of the of the parties. Such obligations and their
correlative rights are governing by the law by which they are created.

2. Obligation Not Presumed. – Under the terms of this article, obligations derived
from law are not to be presumed. Only those expressly provided for in this code
or in special laws are enforceable.

ART. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. (1091a)
Contractual obligations.
The above article speaks of contractual obligations or obligations
arising from contracts or voluntary agreements. A contract is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give
something or to render some service. (Art. 1305.) It is the formal expression by the
parties of their rights and obligations they have agreed upon with respect to
each other.

Binding force.
Obligations arising from contracts are governed primarily by the agreement
of the contracting parties. Once perfected, valid contracts have the force of law
between the parties who are bound to comply therewith in good faith, and
neither one may without the consent of the other, renege therefrom. (Tiu Peck vs.
Court of Appeals, 221 SCRA 618 [1993].) In characterizing contracts as having
the force of law between the parties, the law stresses the obligatory nature of a
binding and valid agreement (William Golangco Construction Corporation vs.
Phil. Commercial International Bank,485 SCRA 293 [2006].), absent any
allegation that it is contrary to law, morals, good customs, public order, or public
policy. (Art. 1306.)

(a) The law, 7 recognizing the obligatory force of contracts (Arts. 1139,
1308, 1315, 1356.), will not permit a party to be set free from liability for any
kind of mis performance of the contractual undertaking or a contravention of the
tenor thereof. (Art. 1170.) The mere proof of the existence of the contract and the
failure of its compliance justifies, prima facie, a corresponding right of relief. 8
(FGU Insurance Corp. vs. G.P. Sarmiento Trucking Corp., G.R. No.141910, Aug.
6, 2002.)

(b) In law, whatever fairly puts a person on inquiry is sufficient notice,

where the means of knowledge are at hand, which if pursued by proper inquiry,
 the full truth might have been ascertained. Thus, where a purchaser of a memorial
lot, on installment basis, had full knowledge of the terms and conditions of the
sale, including the rules and regulations issued by the seller governing
the memorial park, to which she obliged herself to abide, cannot later feign
ignorance of said rules. (Dio vs. St. Ferdinand Memorial Park, Inc.,509 SCRA
453 [2006].)

(c) If it occurs to one of the contracting parties to allege some defect in a

contract as a reason for invalidating it, such alleged defect must be proved by him
by convincing evidence since its validity or compliance cannot be left to will of
one of them. (See Art. 1308.) “An experienced businessperson who signs
important le-gal papers cannot refuse the consequent liabilities therefor after
being a signatory thereon.’’ (Blade International Marketing Corp vs. Court of
Appeals, 372 SCRA 333 [2001].) It behooves every contracting party to learn and
to know the contents of an instrument before signing and agreeing to it. (Dio vs.
St. Ferdinand Memorial Park, Inc., supra.)

(d) Courts have no alternative but to enforce contracts as they were agreed
upon and written when the terms thereof are clear and leave no room for
interpretation. (Art. 1370.). This does not mean, however, that contract is superior
to the law. Although a contract is the law between the contracting parties,
the provisions of positive law which regulate such contracts are deemed included
and shall limit and govern the relations between the parties. (Asia
World Recruitment, Inc. vs. National Labor Relations Commission,313 SCRA 1
[1999].)

(e) A compromise agreement is immediately executory and not appealable,

except for vices of consent (Art. 1330.) or forgery. Upon the parties, it has the
effect and the authority of res judicata, once entered. To have the force of law
between the parties, it must comply with the requisites of contracts. (Art. 1318.) It
may be either extrajudicial (to prevent litigation) or judicial (to end alitigation).
(Magbanua vs. Uy, 458 SCRA 184 [2005].)

(2) Requirements of a valid contract. — As a source of obligation, a contract must

be valid and enforceable. (See Art. 1403.) A contract is valid (assuming all the
essential elements are present, Art. 1318.) if itis not contrary to law, morals, good
customs, public order, and public policy. It is invalid or void if it is contrary to law,
morals, good customs, public order, or public policy. (Art. 1306; see Phoenix
Assurance Co.,Ltd. vs. U.S. Lines, 22 SCRA 675 [1968].) In the eyes of the law, a
void contract does not exist. (Art. 1409.) Consequently, no obligations will arise.

(3) Where contract requires approval by the government. — Where a

contract is required to be verified and approved by the government before it can take
effect (e.g., contract for overseas employment must be approved by the Philippine
Overseas Employment Administration [POEA] under Art. 21[c] of the Labor Code),
such contract becomes the law between the contracting parties only when approved,
and where there is nothing in it which is contrary to law, etc., its validity must be
sustained. (Intetrod Maritime, Inc. vs. National Labor Relations Commission, 198
SCRA 318 [1991].)
(4) Compliance in good faith. — It means compliance or performance in accordance
with the stipulations or terms of the contract or agreement. 9 Good faith and fair
dealing must be observed to prevent one party from taking unfair advantage over the
other. Evasion by a party of legitimate obligations after receiving the benefits
under the contract would constitute unjust enrichment on his part. (See Royal Lines,
Inc. vs. Court of Appeals, 143 SCRA 608 [1986].)

(5) Liability for breach of contract. — Although the contract imposes no penalty
for its violation, a party cannot breach it with impunity. Our law on contracts
recognizes the principle that actionable injury in here is in every contractual breach.
(Boysaw vs. Interphil Promotions, Inc., 148SCRA 635 [1987]; see Arts. 1170, 1191.)
Interest may, in the discretion of the court, on equitable grounds, be allowed upon
damages awarded for breach of contract. (See Art. 2210.) The failure of either party to
a contract to demand performance of the obligation of the other for an unreasonable
length of time may render the contract ineffective where the contract does not provide
for the period within which the parties may demand the performance of their
respective undertakings, but the parties did not contemplate that the same could be
made indefinitely. (Villamor vs. Court of Appeals, 202 SCRA 607 [1991].) The mere
failure of a party to responds a demand letter in the absence of other circumstances
making an answer requisite or natural does not constitute an implied admission
of liability. (Phil. First Insurance Co., Inc. vs. Wallen Phils. Shipping, NC., 582
SCRA 457 [2009].)

(6) Preservation of interest of promise. — A breach upon the contract confers upon
the injured party a valid cause for recovering that which may have been lost or
suffered. The remedy serves to preserve the interest of the promise of having the
benefit of his bargain, or in being reimbursed for loss caused by reliance on the
contract, or in having restored to him any benefit that he has conferred on the other
party. The effect of every infraction is to create a new duty, that is, to
make recompense to the one who has been injured by the failure of an-other
to observe his contractual obligation unless he can show extenuating circumstances.
(FGU Insurance Corporation vs. G.P. Sarmiento Trucking Corporation, 386 SCRA
312 [2002]; see Art. 1170.)

ILLUSTRATIVE CASES:

1. Binding force of an oral agreement inconsistent with a prior written one.

Facts: X verbally agrees to pay Y the balance of an account in advance,
notwithstanding the different stipulation of a prior written agreement.

Facts: X verbally agrees to pay Y the balance of an account in advance,

notwithstanding the different stipulation of a prior written agreement.

Issue: Is X bound to perform said obligation? Held: Yes. Since he

agreed to pay Y the balance of the account independently of the terms of the
written contract, he must perform his obligation to pay according to the tenor
of his verbal agreement which has the force of law between them. (Hijos de I.
de la Rama vs. Inventor, 12 Phil. 45 [1908].)
2. Validity of contract stipulating that in case of failure of debtor to pay
amount of loan, his property shall be considered sold to creditor.
Facts: D borrowed from C money to be paid within a certain period, under
the agreement that, if D fails to pay at the expiration of said period, the house and
lot described in the contract would be considered sold for the loan. D failed
to pay as promised. C brought action for the delivery of the house and lot.
Issue: Are both contracts valid and, therefore, should be given effect? Held:
Yes. The fact that the parties have agreed at the same time, in such a manner that
the fulfillment of the promise of sale would depend upon the non-payment or
return of the amount loaned has not produced any change in the nature and legal
conditions of either contract, or any essential defect which would nullify them.
As the amount loaned has not been paid and continues in possession of the debtor,
it is only just that the promise of sale be carried into effect, and the necessary
instruments be executed. That which is agreed to in a contract is law between
the parties and must be enforced. (Alcantara vs. Alinea, 8 Phil. 111 [1907].)
Note: In the above case, the court found that no contract of mortgage, pledge,
or antichrists was entered. (See Arts. 2088, 2137.)

3. Validity of contract for attorney’s fees where amount stipulated

is unreasonable. Facts: D executed a promissory note in favor of C for the purchase
price of a truck sold by the latter. In the note, D bound himself to pay
an additional 25% as attorney’s fees in the event of becoming it necessary for C to
employ counsel to enforce its collection.
Issue: Has the court the power to ignore the contract as to attorney’s fees,
considering that a contract has the force of law between the contracting parties?
Held: Yes. Where no special agreement is made by the parties with reference
thereto, the courts are authorized to determine the amount to be paid to an
attorney as reasonable compensation for his professional services; and even
where parties have made a written agreement as to the fee, the courts have the
power to ignore their contract, if the amount fixed is unconscionable or
unreasonable, and to limit the fee to a reasonable amount.10 (Bachrach vs. Golino,
35 Phil. 138 [1916].)

4. A big corporation, to avoid cancellation of contract it has breached, pleaded

considerations of equity.
Facts: The contract between the parties (two big real estate corporations)
was a contract to sell or conditional with title expressly reserved in S (seller) until
the suspensive condition of full and punctual payment of the full price by B
(buyer) shall have been met on pain of automatic cancellation of the contract
upon failure to pay any of the monthly installments. B failed to pay the P5,000.00
monthly installments notwithstanding that it was punctually collecting
P10,000.00 monthly rentals from the les- see of the property.
Issue: The main issue posed by B is that there has been no breach of contract
by it; and assuming there was, S was not entitled to rescind or resolve the contract
without resourcing to judicial process.
Held: B only pleads that it be given special treatment and that the
cancellation of its contract be somehow rejected notwithstanding S’s clear right
under the contract and the law to do so. The contract between S and
B, entered with the assistance of counsel and with full awareness of the import of
its terms and conditions, is the binding law between them and equity cannot be
 pleaded by one who has not come with clean hands nor complied therewith in
good faith but instead willfully breached the contract.
“It's time to put an end to the fiction that corporations are people. The
business of big corporations such as the protagonist at bar is business. They are
bound by the lawful contracts that they enter into, and they do not ask for nor are
they entitled to considerations of equity.” (Luzon Brokerage Co., Inc. vs.
Maritime Bldg. Co., Inc., 86 SCRA 305 [1978].)
The validity of contingent fee agreement in large measure depends on the
reasonableness of the stipulated fees under the circumstances of each case. The
reduction of unreason- able attorney’s fees is within the regulatory powers of the
courts to protect clients from unjust charges. (Taganas vs. National Labor
Relations Commission, 248 SCRA 133 [1995]; see Sec. 13, Canons of
Professional Ethics; Sec. 24, Rule 138, Rules of Court.)
5. Corporation unconditionally undertook to redeem preferred shares at
specified dates.
Facts: The terms and conditions of the Purchase Agreement shows that the
parties intended the repurchase of the preferred shares in question on the
respective dates to be an absolute obligation made manifest by the fact that a
surety was required to see to it that the obligation is fulfilled in the event of the
corporation’s inability to do so. Defendant corporation contends that it is beyond
its power and competence to redeem the preferred shares due to financial
reverses.
Issue: Can this contention serve as a legal justification for its failure to
perform its obligation under the agreement?
Held: No. The unconditional undertaking of the corporation does not depend
upon its financial ability: it constitutes a debt which is defined “as an obligation
to pay money at some fixed future time, or at a time which becomes definite and
fixed by acts of either party and which they expressly or impliedly agree to
perform in the contract.” The Purchase Agreement constitutes the law between
the parties. (Lirag Textiles Mill, Inc. vs. Social Security System, 153 SCRA 338
[1987].)

ART. 1160. Obligations derived from quasi-contracts shall be subject to the

provisions of Chapter 1, Title XVII, of this Book. (n)
Quasi-contractual obligations. Article 1160 treats of obligations arising from
quasi-contracts or contracts implied in law.

A quasi-contract is that juridical relation resulting from certain

lawful, voluntary, and unilateral acts by virtue of which the parties become bound
to each other to the end that no one will be unjustly enriched or benefited at the
expense of another. (Art. 2142.) It is not, properly, a contract at all. In a contract,
there is a meeting of the minds or consent; the parties must have deliberately
entered into a formal agreement. In a quasi-contract, there is no consent but the
same is supplied by fiction of law. In other words, the law considers the parties as
having entered a contract, irrespective of their intention, to prevent
injustice. Corollary, if one who claims having enriched somebody has done
so pursuant to a contract with a third party, his cause of action should be against
the latter, who, in turn, may, if there is any ground therefor, seek relief against the
party ben- edited. (Cruz vs. J.M. Tuason & Co., Inc., 76 SCRA 543 [1977].)
 Quasi-contracts are governed by the Civil Code, more particularly, by
Articles 2142-2175, Chapter I, Title XVII.

ILLUSTRATIVE CASES:
1. When a party benefited at the expense of another not liable to the latter.
Facts: By virtue of an agreement between X and Y, X assisted Y in
improving a large tract of land which was later declared by the court as belonging
to C.
Issue: Has X the right to be reimbursed by Z for X’s services and expenses
on the ground that the improvements are being used and enjoyed by Z
Held: No. From the language of Article 2142, it is obvious that a presumed
quasi-contract cannot emerge as against one party when the subject matter thereof
is already covered by an existing contract with another party. X’s cause of action
should be against Y who, in turn, may seek relief against Z. (Cruz vs. J.M.
Tuazon Co., Inc., supra.)
2. Bank paid the seller of goods under an expired letter of credit, but the goods
subject thereof was voluntarily received and kept by the buyer which refused to
pay the bank.
Facts: X opened with B (bank) a domestic letter of credit (LC) in favor of Y
for the purchase from the latter of hydraulic loaders. B paid Y for the equipment
after the expiration of the letter of credit. X refused to pay B claiming that there
was breach of contract by B which acted in bad faith in paying Y knowing that Y
delivered the loaders to X after the expiry date of the subject LC. X offered to
return the loaders to B which refused to take possession three (3) years after X
accepted delivery, when B made a demand for payment.
Issue: Was it proper for B to pay the LC which had long expired or been
cancelled?
Held: B should not have paid the LC which had become invalid upon the
lapse of the period fixed therein. Nevertheless, X should pay B the amount
B expended for the equipment belatedly delivered by Y and voluntarily received
and kept by X. B’s right to seek recovery from X is anchored, not upon the
inefficacious LC, but on Article 2142 of the Civil Code.

X was not without fault in the transactions in view of its unexplained inaction
for four (4) years about the status of the ownership or possession of the loaders
and the fact that it formalized its offer to return the equipment only after B’s
demand for payment, which came more than three (3) years after X
accepted delivery. When both parties to a transaction are mutually negligent in
the performance of their obligations, the fault of one cancels the negligence of the
other and as in this case, their rights and obligations may
be determined equitably under the law proscribing unjust enrichment.
(Rodzssen Supply, Inc. vs. Far East Bank & Trust Co., 357 SCRA 618 [2001].)
Kinds of quasi-contracts. The principal kinds of quasi-contracts
are negotiorum gestio and solutio indebiti.

(1) Negotiorum gestio is the voluntary management of the property or affairs of

another without the knowledge or consent of the latter. (Art. 2144.) Thus, if through
the efforts of X, a neighbor, the house of Y was saved from being burned, Y has the
obligation to reimburse X for the expenses X incurred although Y did not actually
give his consent to the act of X in saving his house on the principle of quasi-contract.
This juridical relation does not arise in either of these instances:
a. When the property or business is not neglected or abandoned, in which
case the provisions of the Civil Code regarding unauthorized contracts
(Arts. 1317, 1403[1], 1404.) shall govern; or
b. If, in fact, the manager has been tacitly authorized by the owner, in
which case the rules on agency shall govern. (Art. 2144.)

(2) Solutio indebiti is the juridical relation which is created when something is
received when there is no right to demand it and it was unduly delivered through
mistake. (Art. 2154.) The obligation to pay money mistakenly paid arises from the
moment said payment was made, and not from the time the payee admits the
obligation to reimburse. (Comm. of Internal Revenue vs. Esso Standard Eastern, Inc.,
172 SCRA 364 [1989].) Under the principle, the government must restore (credit or
refund) to the taxpayer the amounts representing erroneous payments of taxes. (Phil.
Geothermal, Inc. vs. Comm. of Internal Revenue, 465 SCRA 308 [2005].) The
quasi-contract of solutio indebiti is based on the ancient principle that no one shall
enrich himself unjustly at the expense of another.Solutio indebiti applies where:
i. payment is made when there exists no binding relation between the
payor, who has no duty to pay, and the person who received the payment;
and
ii. the payment is made through mistake11 and not through liberality or
some other cause. (Power Commercial and Industrial Corp. vs. Court of
Appeals, 274 SCRA 597 [1997]; National Commercial Bank of Saudi
Arabia vs. Court of Appeals, 396 SCRA 541 [2003]; Moreño-Lenifer vs.
Wolf, 144 SCRA 584 [2004]; Bank of the Phil. Islands vs. Sarmiento,
484 SCRA 261 [2006].)

ILLUSTRATIVE CASES:
1. Recovery of taxes paid under a mistake.
Facts: X, a tax-exempt cooperative store, paid taxes to the City of Manila,
believing that it was liable. Issue: May X recover the payment? Held: Yes, as it
was made under a mistake. (UST Cooperative Store vs. City of Manila, 15 SCRA
656 [1965].)
2. Recovery of back wages paid which are legally due.
Facts: X, an employee of Cebu City, sued certain officials of the City for
claim of back wages.Issue: May the City of Cebu successfully recover the
payment later made by it to X on the ground that it was not had a party to the
case?
Held: No because a judgment against a municipal officer in his
official capacity binds the city. The city was under obligation to make the
 payment. It cannot, therefore, be said that the payment was made by reason of
mistake. (City of Cebu vs. Piccio and Caballero, 110 Phil. 870 [1969].)

Art. 2163. It is presumed that there was a mistake in the payment if something
which had never been due or had already been paid was delivered; but he from
whom the return is claimed may prove that the delivery was made
from liberality or for any other just cause. (1901)

(3) Other cases. — Other examples of quasi-contracts are provided in Article

2164 to Article 2175 of the Civil Code.12 The cases that have been classified as
quasi-contracts are of infinite variety, and when for some reason recovery cannot be
had on a true contract, recovery may be allowed on the basis of a quasi- contract in
view of the peculiar circumstances or factual environment to the end that a recipient
of benefits or favors resulting from lawful, voluntary and unilateral acts of another
may not be unjustly enriched at the expense of the latter.13 (Phil. National Bank vs.
Court of Appeals, 217 SCRA 347 [1993].)

ART. 1161. Civil obligations arising from criminal offenses shall be governed by
the penal laws,14 subject to the provisions of Article 2177,15 and of the pertinent
provisions of Chapter 2, Preliminary Title on Human Relations,16 and of Title
XVIII of this Book, regulating damages. (1092a)
Civil liability arising from crimes or delicts.

This article deals with civil liability arising from crimes or delicts.
(1) The commission of an offense has a two-pronged effect: one, on the
public as it breaches the social order and the other, upon the private victim as it
causes personal sufferings or injury, each of which is addressed, respectively, by
the imposition of heavier punishment on the accused and by an award of
additional damages to the victim. (People vs. Catubig, 363 SCRA 621 [2001].)

Art. 2143. The provisions for quasi-contracts in this Chapter do not exclude
other quas contracts which may come within the purview of the preceding article.

Quantum meruit allows recovery of the reasonable value regardless of any

agreement as to value. It entitles the party to “as much as he reasonably deserves,’’ as
distinguished from quantum valebant or to “as much as what is worth.’’ Recovery
based on quantum meruit presents a justiciable question because its settlement
requires the application of judgment and discretion and cannot be adjusted by simple
arithmetical processes. (F.F. Mañacop Construction Co., Inc. vs. Court of Appeals,
266 SCRA 235 [1997].) The doctrine of quantum meruit prevents undue enrichment
based on the equitable postulate that it is unjust for a per- son to retain benefit without
paying for it. (Philippine National Bank vs. Shellink Planners, Inc., 473 SCRA 552
[2006].) The pertinent provisions are Articles 100 to 113 of the Revised Penal Code.
Art. 2177. Responsibility for fault or negligence under the preceding article [Art.
2176, Note 19.] is entirely separate and distinct from the civil liability arising from
negligence under the Penal Code. But the plaintiff cannot recover damages twice for
the same act or omission of the defendant. (n) 16Among the pertinent provisions are
Articles 29 to 35 of the Civil Code.
 (2) Oftentimes, the commission of a crime causes not only moral evil but
also material damage. From this principle, the rule has been established that
every person criminally liable for a felony17 is also civilly liable. (Art. 100,
Revised Penal Code; see Albert, the Revised Penal Code Annotated, p. 276.) In
crimes, however, which cause no material damage (like contempt, insults to
person in authority, gambling, violations of traffic regulations, etc.), there is no
civil liability to be enforced. But a person not criminally responsible may still be
liable civilly. (Art. 29; Rules of Court, Rule 111, Sec. 2[c].)

Reservation of right to recover civil liability. Under the present rule, only
the civil liability arising from the offense charged is deemed instituted with the
criminal action unless the offended party waives the civil action, reserves his
right to institute it separately, or institutes the civil action prior to the criminal
action. There is no more need for a reservation of the right to file the independent
civil actions under Articles 32, 33, 34 and 2176 of the Civil Code.

The reservation and waiver referred to refer only to the civil action for the
recovery of the civil liability arising from the offense charged. This does not
include recovery of civil liability under Articles 32, 33, 34 and 2176 of the Civil
Code of the Philippines arising from the same act or omission which may be
prosecuted separately even without a reservation. (DMPI Employees Credit
Cooperative, Inc. vs. Velez, 371 SCRA 72 [2001]; Hambon vs. Court of Appeals,
399 SCRA 255 [2003]; see Secs. 1, 2, 3, Rule 111, Revised Rules of Criminal
Procedure; see Notes 19, 25.)

Scope of civil liability.

The extent of the civil liability arising from crimes is governed by the Revised
Penal Code and the Civil Code.18
This civil liability includes:
(1) Restitution.
(2) Reparation for the damage caused; and
(3) Indemnification for consequential damages. (Art. 104, Revised Penal
Code.)

A felony is an act or omission punishable by law. It is committed with criminal intent

or by means of negligence. (Arts. 3, 365, Revised Penal Code.) 18Articles 2202,
2204-2206, 2208, 2211, 2219-2220, 2222, and 2230 of the Civil Code govern
the number of damages recoverable by reason of crime.

EXAMPLE:X stole the car of Y. If X is convicted, the court will order X: (1)
to return the car (or to pay its value if it was lost or destroyed); (2) to pay for any
damage caused to the car; and (3) to pay such other damages suffered by
Y because of the crime. Where the trial court convicts an accused of a crime,
without, however, ordering payment of any indemnity, it has been held that the
Supreme Court, on appeal, may modify the decision by ordering indemnification of
the offended party pursuant to Articles 100, 104(3), and 107 of the Revised Penal
Code. (People vs. Peña, 80 SCRA 589 [1977]; see Note 2.)
The reservation and waiver referred to refer only to the civil action for the recovery of
the civil liability arising from the offense charged. This does not include recovery of
civil liability under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines
arising from the same act or omission which may be prosecuted separately even
without a reservation. (DMPI Employees Credit Cooperative, Inc. vs. Velez, 371
SCRA 72 [2001]; Hambon vs. Court of Appeals, 399 SCRA 255 [2003]; see Secs. 1,
2, 3, Rule 111, Revised Rules of Criminal Procedure; see Notes 19, 25.)

Art. 1162 Obligations derived from Quasi-delicts shall be governed by the

Provisions of Chap. 2, Title XVII of this book, and by special laws.
-treats of obligations arising from quasi-delicts/torts

Quasi-delicts – act or omission by a person (tortfeasor) w/c causes damage to another

in his person, property or rights giving rise to an obligation to pay for the damage
done, there being fault or negligence but there are no pre-existing contractual relation
bet parties.
Requisites of quasi-delict:
(1) There must be an act or omission
(2) There must be fault or negligence
(3) There must be damage caused
(4) There must be a direct relation or connection of cause and effect bet the
act or omission and the damage; and
(5) There is no pre-existing contractual relation bet the parties

Crime vs quasi-delict
(1) Crime = criminal or malicious intent or criminal negligence
while quasi-delict = only negligence
(2) Crime = purpose is punishment, while quasi-delict = indemnification of
the offended party
(3) Crime = affects public interest: quasi-delict = concerns private interest
(4) Crime = 2 liabilities: criminal and civil: quasi-delict = only civil
(5) Criminal liability cannot be compromised or settled by the parties
themselves; quasi-delict can be compromised
(6) Crime = guilt of the accused must be proven beyond reasonable
doubt; quasi-delict = fault or negligence need only be proved by the
preponderance (superior/weight) of evidence.

Art. 1163 Every person obliged to give something is also obliged to take care of
with proper diligence of a good father of a family unless the law or the
stipulation of the parties requires another standard of care.
- refers to an obligation specific or determinate thing

1. Specific/determinate thing – particularly designated or physically

segregated others of the same class.
2. Generic/indeterminate thing – refers only to a class/genus to w/c it
pertains and cannot be pointed out with particularity.
3. Determinate thing – identified by its individuality. The
debtor cannot substitute it with another although the latter is of the same
kind and quality w/o the consent of the creditor.
4. Generic thing – identified only by its specie. The debtor can give
anything of the same class if it is of the same kind.
Duties of debtor in obligation to give a determinate thing.
(1) Preserve the thing – in obligations to give (real oblige.) the obligor has
the incidental duty to take care of the thing due w/ the diligence of a good
father of a family pending delivery.
(2) Diligence of a good father – equated w/ ordinary care or average (a
reasonable prudent) person.
(3) Another standard care – exception: if the law or the stipulation of the
parties provides for another standard of care (slight/extraordinary diligence),
said law or stipulation must prevail.

Factors to be considered – diligence required necessarily depends upon the nature of

the obligation & corresponds w/ the circumstances of the person, time, and place.

GR: the debtor is not liable of his failure to preserve the thing is not due to his fault
or negligence but to fortuitous events or force majeure.

Reason for debtor’s obligation – debtor must exercise diligence to ensure that the
thing to be delivered would subsist in the same condition as it was when the
obligation was contracted.
a. Deliver the fruits of the thing – Art. 1164
b. Deliver the accessions and accessories – Art. 1165
c. Deliver the thing itself
d. Answer for damages in case of non-fulfillment or breach Art.
1170

Duties of debtor in obligation to deliver generic thing.

1. To deliver a thing w/c is of the quality intended by the parties taking into
consideration the purpose of the obligation and other circumstances.
2. To be liable for damages in case of fraud, negligence, or delay in the
performance of his obligation or contravention of the tenor thereof.

Art. 1164 The creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it until
the same has been delivered to him.

Various kinds of Fruits

(1) Natural Fruits – spontaneous products of the soil, and the young and
other products of animals. (No human intervention)
(2) Industrial Fruits – produced by lands of any kind through cultivation or
labor.
(3) Civil Fruits – derived by virtue of a juridical relation.

When is the creditor entitled to the fruit?

From the time the obligation to deliver arises.
When will the obligation to deliver arise?
GR: on obligation to deliver – upon perfection of the contract.
(Perfection – birth of the contract, meeting of the minds bet the parties)
Art. 1164 refers to the real obligation to deliver.
a. Real obligation – obligation to give.
b. Real right - binding against the entire world.
c. Personal obligation – obligation to do or not to do.
d. Personal right – right you can assert to an individual.

(Article 1165). When what is to be delivered is a determinate thing, the creditor,

in addition to the right granted him by article 1170, may compel the debtor to
make a delivery.
If the thing is indeterminate or generic, he may ask the obligation to be complied
with the expense of the debtor.
if the obligor delays or has promised to deliver the thing to two or more persons
who do not have the same interest, he shall be responsible for fortuitous events
until he has affected the delivery.

Classification of Obligation from the viewpoint of subject matter

1. Real Obligations (to give) a specific thing a generic or indeterminate
thing
2. Personal obligations (to do or not to do)
Remedies of the creditor when the debtor fails to deliver a determinate thing.
a. Action for specific performance
b. Action to rescind or resolve the obligation.
c. Complaint for damages

Liability of the debtor for loss of the thing due to a fortuitous event
General Rule: “No person shall be responsible for those events which could not be
foreseen, or which, though foreseen, were inevitable.”

Question:
If the oblige delays the performance of the obligation and
a fortuitous event occurs, the specific prestation is lost, is the obligation
extinguished?
Answer:
No. the oblige has incurred delay before the specific prestation is lost so therefore he
must bear the damages.

Exceptions:
1) If the obligor delays
2) if the obligor is guilty in bad faith

Kinds of delay:
a. Ordinary Delay – Failure to perform an obligation in a specific time.
b. Extraordinary Delay/Legal delay/default – non-fulfillment of obligation
that arises after extrajudicial or judicial demand.
(Art. 1166). The obligation to give a determinate thing includes that of delivering
all its accessions and accessories, even though they may not have been mentioned.
(1097a)
General Rule: Obligation to deliver the object includes with it the accessories and
accessions.
Exception to the Rule:
a. Required by law.
b. Exclusion is expressly stipulated by the parties.

ACCESSORIES
Those things which are used for the preservation of another thing or more important,
have for their object the completion of the latter for which they are indispensable or
convenient.
ACCESSIONS
Includes everything which is produced by a thing, or which is incorporated or
attached thereto, either naturally or artificially.

Article 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost. This same rule shall be observed if he does it in
contravention of the tenor of the obligation. Furthermore, it may be decreed that
what has been poorly done be undone.
Article 1167 refers to an obligation to do, that is, to perform an act or render a
service. It contemplates three situations:
1. The debtor fails to perform an obligation to do.
2. The debtor performs an obligation to do but contrary to the terms
thereof.
3. The debtor performs an obligation to do in poor manner.

Performance at debtor’s cost. 

If the debtor fails to comply with his obligation to do, the creditor has the right:
a. to have the obligation performed by himself, or by another, at the
debtor’s expense.
b. to recover damages.
c. In case the obligation is done in contravention of the terms or is poorly
done, it may be ordered (by the court) that it shall be reversed if still
possible.
d.
Personal Compulsion.
If no law was implemented that regards to the cause of action. Then the only sanction
of civil obligations is compensation for the damages.
Indemnification for Damages.
If the obligation to do cannot be done by another, in case of non-performance the only
feasible remedy of the creditor is indemnification for damages.
Article 1168. When the obligation consists in not doing, and the obligor does
what has been forbidden him, it shall also be undone at his expense.

Discussions:
Doing Prohibited Thing
-this article also known as negative obligation of prestation, that is not to do a certain
thing or act. The thing done or act performed shall be undone at the expense of the
obligor. Damages may be claimed against him.

Example:
In a contract of lease of house, the lessee obligated himself not to make any
improvements without the consent of the lessor. In making improvements unilaterally,
the improvements may be undone at his expense in addition to damages.

Article 1169. Those obliged to deliver or to do something incur in delay from the
time the oblige judicially or extrajudicially demands from them the fulfillment of
their obligation.

However, the demand by the creditor shall not be necessary in order that delay
may exist:

(1) When the obligation or the law expressly so declare; or

(2) When from the nature and the circumstances of the obligation it appears
that the designation of the time when the thing is to be delivered or the service is
to be rendered was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it
beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by the
other begins.

Ang mga obligadong mag hatid o magsagawa ng isang bagay ay mababalam mula sa
oras na ang obligee ay judicially o extra judicially na hiningi na maisagawa o
maihatid ang bagay na ito.

Ngunit, ang paghingi o pag demand ng obligee o ng nagpautang ay hindi

kinakailangan upang masabi na mayroon nang balam sa mga sitwasyon na ito:

Kapag nakasaad ito sa obligasyon o sa batas.

Kapag ayon sa kallikasan ng obligasyon na ang pag tatakda ng oras ay ang nag
cocontrol na motibo ng pagtatala ng kontrata.
Kapag ang demand o paghingi ay walang bisa. Katulad ng pagkakataon na
naisakatuparan na ng obligor ang bagay na ito ng higit pa sa kakayahan nyang
maikumpleto o maisakatuparan ito.
Sa reciprocal obligations, wala sa sino mang piging ay mababalam kung ang isa ay
hindi isasakatuparan o hindi handa na isagawa ang bagay na ito sa tamang paraan.
Kapag nagawa na ng isang piging ang kanyang obligasyon, ang balam ng isa ay
magsisimula.

The delay contemplated in the article is legal delay or default and not ordinary delay.
To put an obligor in default (or mora), there must be demand made upon him for the
performance of the obligation either judicially or extrajudicially.

Demand is not necessary to place the obligor in default under the following
circumstances:
1. When the law or obligation expressly declares.
2. When from the nature of the contract, it appears that the time is of
the essence, and this is the motivating factor in the establishment of
the contract.
3. When demand would be useless.
4. When the debtor admits, he is in default.
Classes of Default
a. Mora solvendi – the default on the part of the debtor/obligor.
b. Mora accipiendi – the default on the part of the creditor/oblige.
c. Compensatio morae – the default on the part of both the debtor/obligor
and creditor/oblige which arises in reciprocal obligations the effect is the
default of one party neutralizes the default of the other.

(Article 1170). Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene the tenor
thereof, are liable for damages. (1101)

Ang mga nagsasagawa ng kanilang obligasyon na may kasalanan ng fraud,

nagligence, o delay o balam at sa mga nagsasagawa ng kanilang obligasyon na hindi
ayon sa napagkasunduan ay mananagot sa mga danyos.

Discussion:
Fraud – A false representation of a matter of fact—whether by words or by conduct,
by false or misleading allegations, or by concealment of what should have been
disclosed—that deceives and is intended to deceive another so that the individual will
act upon it to her or his legal injury.
Negligence – Conduct that falls below the standards of behavior established by law
for the protection of others against unreasonable risk of harm. A person has acted
negligently if he or she has departed from the conduct expected of a prudent person
acting under similar circumstances.
(Art. 1171). Responsibility arising from fraud is demandable in all obligations.
Any waiver of an action for future fraud is void. Refers to incidental fraud w/c is
employed in the fulfillment of an obligation. Incidental fraud at the time of the
performance of the obligation.

Responsibility is demandable all-in obligations arising from fraud, you can demand
for payment for damages. If the basis for damages is fraud, the court is not given the
power to mitigate or reduce the damages because in fraud there is bad faith.

Unlike negligence. Waiver – renunciation of right

Waiver of an action for future fraud is void. It encourages commission of fraud. To

commit acts of bad faith.

Waiver of action for past fraud is valid. Because it already happened. Considered as
an act of generosity. Renounced: the effect of the fraud, the right to Indemnity of the
party entitled.

Note: Waiver should be voluntarily signed to be valid. The signee should understand
what he/she enters.

(Art. 1172). Responsibility arising from negligence in the performance of every

kind on obligation is also demandable, but such liability may be regulated by the
courts, according to the circumstance.

Unlike fraud. If there is negligence, the court may reduce the damages depending
upon the circumstances of each case because there is no bad faith, no intent to commit
this act.

Negligence is not as serious as fraud because there is no deliberate intention to cause

injury or damages, Past negligence, can be subject to waiver.

An action for future negligence may be renounced, if it is not considered fraud,

reckless that would cause damage to other person, not covered by those requiring
extraordinary diligence, may be subject to:

1. Fraud. If there is bad faith, considered equivalent to fraud. Waiver is

void. Kinds of negligence accdg to source of obligation.
2. Contractual negligence (culpa contractual) negligence in contracts
resulting in their breach. Negligence is not a source of obligation
but the contract that was entered bet the parties.
3. Civil negligence (culpa aquiliana) – negligence itself is the source of
the obligation. Also called “tort or quasi-delict.” (3) Criminal negligence
(culpa criminal) – negligence resulting in the commission of a crime.
The negligent act causing damages may produce civil liability or create
an action for quasi-delict.
Example:
Driver of a taxi. (Reckless imprudence – criminal act) You can have all three
as basis if they are connected in the same act, but you can claim. Only once.
Under Art. 2177 of Civil code, it is prohibited to recover twice for the same
negligent act.

When the plaintiff’s own negligence was the immediate and proximate cause of his
injury. He cannot recover damages. If his negligence is contributory, the Immediate
and proximately cause of the injury being the defendant’s lack of due care, the
plaintiff may recover damages, but the court shall mitigate the damages to be
awarded.

To be entitled to damages. It is not required that the negligence of the defendant

should be the sole cause of the damage.

(Art. 1173). The fault or negligence of the obligor consists in the omission of that
diligence w/c is req’d by the nature of the obligation and corresponds w/ the
circumstances of the person, of the time and of the place. When negligence shows
bad faith, the provisions of arts. 1171 and 2201, par 2, shall apply.

If the law or contract does not state the diligence w/c is to be observed in the
performance, that w/c is expected of a good father of a family shall be.

(Article 1174). Except in cases expressly specified by the law, or when it is

otherwise declared by stipulation, or when the nature of the obligation requires
the assumption of risk, no person shall be responsible for those events which
could not be foreseen, or which, though foreseen, were inevitable. 


Maliban sa mga kasong nasasaad sa batas, o ayon sa mga napagusapan, o kung ang
kalikasan ng pananagutan ay nangangailangan ng nakikinitang panganib, walang
sinumang tao ang may pananagutan ukol sa mga pangyayaring hindi inaasahan o
kung ito man ray inaasahan ay hindi mapipigilan o maiiwasan. 


Discussion:

This article is a continuance to ART. 1173. ART. 1174 explains a fortuitous event that
may have arisen during the event of doing the obligation. It is an event which cannot
be foreseen such as sudden coming of a storm which considered an Acts of God or
known as majeure or any other unexpected event such as robbery, insurrection which
is considered Acts of man.

The Philippine Civil Code distinguishes between two kinds of fortuitous events
namely:

1. Ordinary fortuitous events or those which are common and which the
contracting parties could foresee e.g., rain.
 2. Extra-ordinary fortuitous events which are uncommon and which the
contracting parties could not have foreseen e.g., earthquake, fire, unusual flood.

To be declared that such circumstances are fortuitous events the following must
be considered:

1. The event must be independent of the human will or the debtor

2. The event could not be foreseen, or if foreseen, is inevitable

3. The event must be of such a character as to render it impossible for the debtor
to comply with his obligation in a normal manner

4. The debtor must be free from any participation in, or the aggravation of, the
injury to the creditor, that is, there is no concurrent negligence on his part.

In case of fortuitous event there are still rules to be observed: 
When expressly
specified by law.: a) the debtor is guilty of fraud, negligence, or delay,
or contravention of the tenor of the obligation. (Arts. 1170. 1165, par.3)

Example: S is obliged to deliver a specific horse to B on August 10. S did not deliver
the horse on said date. If, on August 11, the horse died because it was hit by lightning,
S is not liable if no demand was made by B. His obligation was extinguished. If the
horse died after a demand was made by B, S is liable for damages because he is guilty
of (legal) delay. In this case the obligation of S to deliver the horse is also
extinguished but it is converted into monetary obligation to pay damages. (Art.1165).
b) the debtor has promised to deliver the same (specific)thing to two or more persons
who do not have the same interest. Example: If S sold and promised to deliver.

(Art. 1175). Usurious transactions shall be governing by special laws.

Interest. Interest is the charge for the privilege of borrowing money or the income
from lending the money to the borrower. It can either be MORATORY, one which is
a result from the delay of payment or performance of an obligation or
COMPENSATORY, a) penalty or indemnity for damages imposed by law or by the
courts and b) giving money or its equivalent in return for something.

Usury Defined. Usury is the practice of making unethical/illegal monetary loans that
unfairly enrich the lender.

Special Law on Usury. The Usury Law, also known as Act. 2655, too effect on the 1st
day of May 1916. This law provided a legal rate of interest of 6% annually and a
contractual rate of not more than 12% annually if the loan is secured and 14% if not
so secured. The Usury Law was legally ineffective during the Martial Law under the
Res. No. 224 on December 3, 1982, and justified thru Central Bank Circular. No. 905
dated January 1, 1983.
SEVERINO TOLENTINO and POTENCIANA MANIO, plaintiffs-appellants, vs.
BENITO GONZALEZ SY CHIAM, defendants-appellee. Araneta and Zaragoza for
appellants. Eusebio Orense for appelle. JOHNSON, J.:

FACTS: Before November 28, 1922, Severino Tolentino and Potenciana Manio
purchased a parcel of land in Tarlac owned by Luzon Rice Mills, Inc., amounting to
P25,000.00. Both parties agreed to settle full payments in three installments.

First installment of P2, 000.00 was duly paid on or before May 2, 1921.
Second installment of P8, 000.00 was duly paid on or before May 31, 1921.
Third installment of P15,000 at 12% interest due on or before Nov 30,1922
One of the conditions of the contract of purchase was that if Tolentino and Manio
failed to pay the balance of any of the installments on the date agreed upon, the
property bought would revert to the original owner.

On Nov 7, 1922, a representative of vendor of said property wrote Manio, notifying

her that if the balance of said indebtedness was not paid, they would recover the
property with damages for non-compliance with the condition of the contract of
purchase. Tolentino and Manio borrowed money from Benito Gonzales Sy Chiam to
satisfy their indebtedness to the vendor. Gonzales agreed to lend the P17,500 upon
condition that they execute and deliver to him a pacto de retro of the property. The
contract includes a contract of lease on the property whereby the lessees as
vendors bound themselves to pay rent at the rate of P375 per month and whereby
“Default in the payment of the rent agreed for two consecutive months will terminate
this lease and will forfeit our right of repurchase, as though the term had expired
naturally”. Upon maturation of loan, Tolentino defaulted payment and Gonzales
demanded recovery of land. Tolentino’s argument: that the pacto de retro sale is a
mortgage and not an absolute sale and that the rental price paid during the period of
the existence of the right to repurchase, or the sum of P375 per month, based upon the
value of the property, amounted to usury.

ISSUE: Whether a tenant may charge his property owner with a Usury Law upon the
ground that the amount of rent he pays, based upon the real value of the property,
amount to a usurious rate of interest.

HELD: A tenant cannot charge his property owner, upon the ground that the amount
of rent he pays, based upon the real value of the property, amounts to a usurious
interest. Also, the said law was for loan and not for renting a place/property.

(Article 1176). The receipt of the principal by the creditor without reservation
with respect to the interest, shall give rise to the presumption that said interest
has been paid.

The receipt of a later installment of a debt without reservation as to prior installments,

shall likewise raise the presumption that such installments have been paid.

Ang pagtanggap ng prinsipal ng pinagkautangan nang walang reserbasyon sa

interest ay magbibigay ng pag-aakala na na ang nabanggit na interes ay bayad na.
Ang pagtanggap ng pabaha-bahagyang kabayaran nang walang reserbasyon sa
 naunang installment ay magbibigay rin ng pag-aakala na ang installment ay bayad
na.

Discussion:

A receipt issued by the lessor dated June 1, 1904, to the lessee convering the rent for
the month, shows that the rent for the prior month (May) had already been paid. The
presumption is rebuttle and not conclusive.

GROUP EVALUATION
(INTRODUCTION TO LAW AND ARTICLE 1156-1178)
GROUP 1

Leader Member 1 Member 2 Member 3 Member 4 Member 5 Member 6 Member 7

Name Pabon, Jommel Danica, Joyceanne, Zhyrelle Kristel Laydee, May Wayne, Trisha,
Falcon Rafol Reyes, Valencia, Del Mark Nakpil
Berroya Mundo Lumague

 INTRODUCTION  ARTICLE  ARTICLE  ARTICLE  ARTICLE  ARTICLE  ARTICLE  ARTICLE

(Explain here the activities done

TO LAW. 1156-11 1159-11 1162-11 1165-11 1167-11 1170-11 1174-11

58 61 64 66 69 73 76
by the team member)

 ARTICLE
1177-1178

GROUP 1:
Pabon, Jommel
Danica, Falcon
Joyceanne, Rafol
Zhyrelle Reyes, Berroya
Kristel Valencia, Del Mundo
Laydee, May
Wayne, Mark
Trisha, Nakpil Lumague