THE LAW ON OBLIGATIONS AND CONTRACTS

Introduction to law
THE GENERAL NATURE OF LAW
Meaning of law in General

• Any rule of action or any system of uniformity

• Law in general determines not only the activities of men as rational being but also the
movements or motions of all objects of creation, whether animate or inanimate

THE GENERAL DIVISIONS OF LAW

1.Law which is promulgated and enforced by the state (state law)

2.Law which is not promulgated and enforced by the state

a.Divine law
b.Natural law
c. Moral law
d.Physical law

SUBJECTS OF LAW

1.State law, divine law, natural law and moral law > comprised the definition of law as a rule
of action. They apply to men as a rational being only.

2. Physical law > operates on all things, including men, without regard to the latter's use of their
will power and intelligence
Law which the state is not directly concerned

1.DIVINE LAW

a.Meaning- Is the law of religion and faith which concern itself with the concept of sin and
salvation

b.Source- promulgated by God through the ten commandments or by Allah through Quoran

c.Sanction- lies in the assurance of certain reward and punishment in the present life or in the
life to come

2. NATURAL LAW

a. Meaning- divine inspiration in man of the sense of justice, fairness and righteousness, not by
divine revelation but by internal dictate of reason alone

b. Binding force- ever present and binding on all men everywhere and at all times. There is in
every man a basic understanding of right and wrong based on an understanding of the
fundamental standard or criterion of good and evil.

In other words, there are some acts or conducts which man knows in his heart and his conscience,
not by theorizing, but by the dictates of his moral nature, are simply good and evil

Ex. We know that killing for the sake of stealing is bad or evil. It is contrary to what we believe is
just, fair or righteous

c. Compared to divine law Divine law as the law of religious faith, is made known to man
by means of direct revelation.

Natural law is said to be impressed in man as the core of his higher self at the very moment of
being or even before that.
d. Place in state law- natural law has been regarded as the reasonable basis of state law

3. MORAL LAW

a. Meaning- as the totality of the norms of good and right conduct growing out of the collective
sense of right and wrong of every community

b. Determination of what is right and wrong- human being learned that it was for the welfare
of the group that the privilege to determine what is right and what is wrong was not left to each
member of the group

c. Sanction- as distinguished from state law, there is no definite legal sanction for violation of
purely moral law. If a member of the community disregards the moral norms, a spontaneous social
reaction is produced in the form of public displeasure, contempt or even indignation.

d. Binding force- moral not is not absolute. It varies with the changing times,
conditions or convictions of the people. ex. Polygamy is considered immoral in the Phil but it is
allowed in some parts of the world especially in middle east

e. Place in state law- moral law to a great extent, influences or shapes state law

4. PHYSICAL LAW/ LAW ON PHYSICAL SCIENCE

a. Meaning- in the operation or course of nature, there are uniformities of actions and orders of
sequence which are the physical phenomena that we sense and feel

b. Order or Regularity in Nature of physical science being addressed to a law objects which have
no power to disobey, is in reality nothing more than an order or regularity in nature by which
certain results follow certain causes

c. Called Law only by Analogy - in other words, this order or regularity is called law only by
analogy.

Ex. Law on gravity and the law on chemical combination

5. STATE LAW

a. Meaning the law that is promulgated and enforced by the state

b. Other term used

1.positive law,

2.municipal law

3.civil law

4.imperative law

> it is the law that we refer to when we speak of law in connection with obligation and contracts,
marriage, administration of justice

c. Binding force as a rule of action, only state law is enforced by the state, with the aid of its
physical force, if necessary

d. Concern of state law the field of state law are different from those of divine law, natural law and
moral law.

State law does not concern itself with violations of the latter rules of action unless they also
constitute violations of its commands.

CONCEPTS OF (STATE) LAW

1.In general sense, the term refers to all laws taken together.It may be defined as the mass
of obligatory rules established for the purpose of governing the relations of persons in
society.

Ex. Law of the land, rule of law and not of men, equality before the law, enforcement of the
law, etc.,

2. In specific sense, the term law has been defined as a rule of conduct, just and obligatory,
promulgated by legitimate authority, and of common observance and benefit

Ex. The Law on Obligations and Contracts

CHARACTERISTICS OF LAW

a. Rule of conduct

the law tells us what shall be done and what shall not be done. As a rule of human
conduct, law takes cognizance of external acts only

b. Obligatory

law is considered a positive command imposing duty to obey and involving sanction which
forces obedience

c. Promulgated by legitimate authority

- in the Phil, the legitimate authority is the legislature which is the Congress composing the
House of Representative and Senate. LGU are also empowered to enact ordinances which
have a binding force of laws. d. It is of common observance and benefit

- law is intended by man to serve man. It regulates the relations of men to have maintain
harmony in society and to make order and co-existence possible. Law must be observe by
all for the benefit of all.

WHAT WOULD LIFE WITHOUT LAW?

> Society come into existence because its members could not live without it. The need for internal
order is as constant as the need for external defense. No society can be stable in which either of
these requirements fails to be provided for.
WHAT DOES LAW DO?
• 1.secures justice,
• 2.resolves social conflict,
• 3.orders society,
• 4. protects interest
• 5. Control social relations

WHAT IS OUR DUTY AS MEMBERS OF SOCIETY?

• > No society can last and continue without means of social control, without rules of
social order binding on its members.

• > since we find law necessary, every citizen should have some understanding of law
and observe it for the common good

WHAT ARE THE SOURCES OF LAW?

• 1.Constitution
• 2.Legislation
• 3.Administrative or executive orders, regulations and rulings
• 4.Judicial decisions or jurisprudence
• 5.Custom
• 6. Other sources

1.Constitution > the written instrument by which the fundamental powers of the government
are
• a. established
• b. limited
• c. defined
• d. and by which this powers are distributed among the several departments for their safe
and useful exercise for the benefit of the people

> it is often referred to as the fundamental law or supreme law or highest law of the land,
promulgated by the people themselves, binding on all individual citizen and all agencies of
the government.

> it is the law to which all other laws (enacted by legislature, administrative or executive
acts) must conform.
> this means that laws which are declared by the courts to be inconsistent with the
Constitution shall govern.

2. LEGISLATION
• > It consist in the declaration of legal rules by a competent authority.

• > acts passed by the legislature are so called "enacted law" or "statute law".

• > legislation includes ordinances enacted by LGU.

3. ADMINISTRATIVE OR EXECUTIVE ORDERS, REGULATIONS AND

RULINGS
> they are those issued by administrative officials under legislative authority

Administrative rules and regulation

• > are intended to clarify or explain the law and carry into effect its general provisions

4. JUDICIAL DECISIONS OR JURISPRUDENCE

> the decision of the court particularly the Supreme Court, applying or interpreting the laws
or the Constitution forms part of the legal system of the Philippines.

DOCTRINE OF PRECEDENT OR STARE DECISIS

> the decision of superior court on a point of law are binding on all subordinate courts.

The SC may reverse, modify any of its previous rulings.

Until then, the decision of the SC applying or interpreting the laws or the Constitution are
"laws" by their own right because they declare what the law says or mean

5. CUSTOMS

> It consist of those habits and practices which through long and uninterrupted usage have
become acknowledged and approved by society as binding rules of conduct.
> it has the force of the law when recognized and enforced by the state Ex. A contract for
services rendered where no definite compensation is stipulated. The compensation to be
paid may be ascertained from custom and usage of the said place

> Custom must be proved as a fact according to the rules of evidence.

> Custom may be applied by the court in the absence of law or statute exactly applicable
to the point of controversy.

> But customs which are contrary to law, public order or public policy are not
countenanced

6. OTHER SOURCES
> it may be added

• 1. principle of justice and equity.

• 2.Decision of foreign tribunals
• 3. Opinions of textwrites
• 4. Religion

> they are however, ONLY supplemental, that is that they are resorted to by the courts in
the absence of all the other sources.

> they are however NOT binding on the courts

WHAT IS THE RULE IN CASE OF DOUBT IN INTERPRETATION OR APPLICATION OF

LAWS?

> The Civil Code provides that " no judge or court shall decline to render judgment by
reason of silence, obscurity, or insufficiency of laws

> in case of doubt, in the interpretation or application laws, it is presumed that the law
making body intended right and justice to prevail

> In our country, courts are not only courts of law but also of justice.

> faced with between a decision that will serve justice and another that will deny it
because of too strict interpretation of the law, court must resolve in favor of former, for the
ultimate end of the law is justice
ORGANS OF SOCIAL CONTROL

> law is not an end in itself. It may be viewed as a means of social control - the control of
social behaviour that affects others.

1.Legal institution, national and local

2. Churches, corporation, political parties, school

LAW COMPARED WITH OTHER MEANS OF SOCIAL CONTROL

1.Act in Behalf - Laws are made and

administered by the only institutions in society authorized to act in behalf of the entire
citizenry. While, churches for example, act only for their members.

2. People Govern- Only the legal institutions within the society can make rules, regulations
and orders with which the entire citizenry must comply. While rules of social and economic
organization for example, govern only limited numbers

3. Termination- People associated with an organization can ordinarily terminate their

relationship and thereby free themselves from the impact of its rules and regulations.
While citizen of the state cannot do this unless they choose to leave the geographical area
in which the state is sovereign.

4. Sanctions- The sanctions or techniques through law are more varied and complex than
the techniques available to organizations such as churches, labor union and political
parties such as expulsion

5. Procedures - before the law operates against an individual, various procedural steps are
required such as hearing and fair opportunity to be show his evidence. While Organ of
social control other than those provided by law are generally not required to comply with
such procedures.

ORGANIZATION OF COURTS
Art. VIII, Sec. 1, provides that "judicial power or the power to decide actual cases and
controversies involving the interpretation and application of laws is vested in one SC and in such
other lower courts as may be established by laws.

The judiciary composed of courts, is one of the 3 main divisions of power in our system of
government
1.REGULAR COURTS
the Phil judicial system consist of hierarchy of courts are:
• Supreme Court (SC)
• Court of Appeal (CA)
• Regional Trial Court (RTC) d.Metropolitan Trial Court/Municipal Trial Court (MTC)

2. SPECIAL COURTS
a. Sandiganbayan special
anti-graft court (same hierarchy as CA)

b.Court of Tax Appeal

special tax court (same level as CA)

3. QUASI-JUDICIAL AGENCIES
> administrative bodies under the executive branch performing quasi-judicial functions like:

• NLRC
• LTFRB
• IC

THE INDEPENDENT CONSITUTIONAL COMMISSIONS

• CSC

• COA

• COMELEC

> Their function are described as quasi-judicial because they involve also the settlement or
adjudication of controversies or disputes.

CLASSIFICATION OF LAW

1. AS TO ITS PURPOSE

A. Substantive law or that portion of the body of law creating and defining rights and duties
which may be either public or private in character.

Ex. The law on obligations and contracts.

B. Adjective law or that portion of the body of law prescribing the manner or procedure by
which rights may be enforced or their violation may be redressed (Remedial or Procedural
Law)

2. AS TO ITS SUBJECT MATTER

A. Public law or the body of legal rules which regulates the rights and duties arising from the
relationship of the state to people

Ex. Criminal law, International law, Constitutional law

B. Private law the body of rules which regulate the relations of individual with one another for
purely private ends.

Ex. The law on obligations and contracts

The law on Obligations and Contracts

> is the body of rules which deals with the nature and sources of obligations and the rights
and duties arising from agreements and the particular contracts

> RA 386, otherwise known as the Civil Code of the Philippinnes

Conclusive presumptions of Law

> ignorance of the law excuse no one from compliance therewith (Art.3 NCC)

> everyone therefore, is conclusively presumed to know the law

THE LAW ON OBLIGATIONS AND CONTRACTS

CHAPTER 1: GENERAL PROVISIONS

Art. 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

JURIDICAL NECESSITY

> in case of non-compliance, the courts of justice may be called upon by the aggrefund
party to enforce its fulfillment, or represents.

> in other words, the debtor must comply with his obligation whether he likes it or not,
Otherwise, there will be sanctions imposed by law

NATURE OF OBLIGATION UNDER THE NCC

1.CIVIL OBLIGATION

> obligations which give to the creditor or obligee a right under the law to enforce their
performance in courts of justice

2. NATURAL OBLIGATIONS

> not being based on positive law but on equity and natural law, do not grant a right of
action to enforce their performance

ESSENTIAL REQUISITES OF AN OBLIGATION

1.PASSIVE SUBJECT (debtor or obligor)
> the person who is bound to the fulfillment of the obligation

2. ACTIVE SUBJECT (creditor or obligee)

> the person who is entitled to demand the fulfillment of the obligation

3. OBJECT OR PRESTATION (subject matter)

> the conduct required to be observed by the debtor. It may consist in giving, doing, or not doing

4. JURIDICAL TIE (efficient cause)

> that which binds or connects the parties to the obligation.

Example: Under a building contract, X bound himself to build a house for Y for P1M

Passive subject - X
Active subject - Y
Prestation - building the house
Juridical tie - building contract

FORM OF OBLIGATIONS

1.as a general rule, the law does not require any form in obligation arising from contracts
for their validity or binding force

2.Obligation arising from other sources do not have any form at all

OBLIGATION, RIGHT AND WRONG, distinguished:

1.OBLIGATION is the act or performance

which the law will enforce

2.RIGHT on the other hand, is the power which a person has under the law, to demand
from another any prestation

3.WRONG, according to its legal meaning, is an act or omission of one party in violation of
the legal rights of another

ESSENTIAL ELEMENTS OF A LEGAL WRONG or INJURY

1.A legal right in favor of a person
2.A correlative legal obligation on the part of another
3. An act or omission by the latter in violation of said right with resulting injury or damage to
the former.
KINDS OF OBLIGATION ACCORDING TO THE SUBJECT MATTER

1.REAL OBLIGATION
> is that which the subject matter is a thing which the obligor must deliver to the obligee
ex. X binds himself to deliver a car to Y

2. PERSONAL OBLIGATION
> is that in which the subject matter is an act to be done or not to be done
a. Positive- obligation to do
b. Negative- obligation not to do

Art. 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)

SOURCES OF OBLIGATIONS
1.LAW - when imposed by law itself

ex. Taxes, support

2. CONTRACTS when they arise by stipulation by parties.

ex. Obligation to pay loan

3. QUASI CONTRACTS - when they arise from lawful, voluntary and unilateral acts which
are enforceable to the end that no one shall be unjustly enriched or benefited at the
expense of another

4. CRIMES (DELICT) or ACTS PUNISHABLE BY LAW

> when they arise from civil liability which is the consequence of a criminal offense

ex. The obligation of a thief to return the car stolen or indemnify in case destroyed.

5. QUASI-DELICT OR TORTS
> when they arise from damage caused to another through an act or omission there being fault
or negligence, but not contractual relation exist between the parties

ex. Obligation by owner for damaged caused by things thrown or falling from his apartment.
Art. 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)
LEGAL OBLIGATION

> to be demandable, they must be clearly set forth in the law example

1. Employer has no obligation to furnish

legal assistance to his employees
2.A private school has no legal obligation to provide clothing to its teacher

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 OBLIGATION

> it presupposes that the contracts entered into are valid and enforceable

CONTRACT

> is a meeting of minds between 2 persons whereby one binds himself, with respect to the
other, to give something or to render some service

BINDINGFORCE OBLIGATION arising from contracts have the force of law between
contracting parties. They have the same binding effect of obligation imposed by law

REQUIREMENT OF A VALID CONTRACT

> a contract is valid (assuming all the essential elements are present) if it is not contrary to
law, morals, good custom, public order and public policy.

COMPLIANCE IN GOOD FAITH

> means compliance or performance in accordance with the stipulations or terms of the
contract or agreement
> non compliance by a party with his legitimate obligations after receiving the benefits of a
contract would constitute unjust enrichment on his part

Example S agree to sell his house to B and B agrees to buy the house of S. Both parties are
bound by the terms of contracts and neither party may withdraw from the contract without any
justifiable reason

Example S agree to B to kill X for P100,000.

Art. 1160. Obligations derived from quasi- contracts shall be subject to the provisions of
Chapter 1, Title XVII, of this Book. (n)

QUASI CONTRACT

> is that juridical relation resulting from 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

KINDS OF QUASI CONTRACT

1.NEGOTIORUM GESTIO

> is the voluntary management of the property or affairs of another without the knowledge
or consent of the latter

Ex. X went to Baguio without leaving somebody to look for his house in Manila.

While in Baguio, a generofout near the house of X. Through the effort buincurr was saved
from being burned. But Y incurred expenses

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
Ex. D owes C P1,000. If D paid T believing T was authorized to received payment for C, the
obligation to return of T arise.

Art. 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws,
subject to the provisions of Article 2177, and of the pertinent provisions of Chapter 2, Preliminary
Title, on Human Relations, and of Title XVIII of this Book, regulating damages. (1092a)
CIVIL OBLIGATION ARISING FROM CRIMES
> oftentimes, the commission of a crime causes not only moral evil but also material
damage. Fromm this principle, the rule has been established that "every person criminally
liable is also civilly liable for damages".

> however, there are crimes which cause no material damage such as contempt, insult to
person in authority, gambling, traffic violation, etc.

SCOPE OF CIVIL LIABILITY

> the extent of civil liability includes:

• 1.Restitution
• 2. Reparation for the damage
• 3.Indemnification for consequential damages

Ex. X stole the car of Y. If X is convicted, the court will order X

• 1. To return the car or pay its value it was lost or destroyed

• 2.To for any damages caused to the car
• 3. To pay other damages suffered by Y as consequences of the crime

Art. 1162. Obligations derived from quasi- delicts shall be governed by the provisions of
Chapter 2, Title XVII of this Book, and by special laws. (1093a)

QUASI-DELICT

> is an act or omission by a person which 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 is no pre existing contractual relation between 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 between the act or omission and the damage
5. There is no pre- existing contractual relation between the parties

Ex. While playing softball with his friends, X broke the window glass of Y, his neighbor.

CHAPTER 2: NATURE AND EFFECT OF OBLIGATIONS

Art. 1163. Every person obliged to give something is also obliged to take care of it with the
proper diligence of a good father of a family, unless the law or the stipulation of the parties requires
another standard of care. (1094a)

> this article refers to an obligation specific or determinate thing.

A THING IS SPECIFIC or DETERMINATE

> when it is particularly designated or physically segregated others of the same class

Example: 1.The watch I am wearing 2. The Toyota car with plate NO.XYZ123 3. The dog name
"brownie" 4. This cavan of rice 5. The money I gave you

A THING IS GENERIC OR INDETERMINATE

> when it refers only to a class or genus to which it pertains and cannot be pointed out with
particularity

Example:
1.A 2012 Toyota car
2.A cavan of rice
3.A police dog
SPECIFIC THING (ST) and GENERIC THING(GT) DISTINGUISHED

1.ST is identified by its individuality. The

debtor cannot substitute it with another although the latter is of the same kind and quality
without the consent of the creditor

2.GT is identified only by its specie. The debtor can give anything of the same class as long
as it is of the same kind

SPECIFIC THING and GENERIC THING

Example:

1.If S obligation is to deliver to B one his cars, the object refers to a class which in itself is
determinable

> Here the particular thing to be delivered is determinate without the need of a new
contract.

2. If S obligation is to deliver to B a swiss watch

> S can deliver any watch as long as it a swiss watch

OBLIGATION OF DEBTOR IN OBLIGATION TO GIVE A DETERMINATE THING

• 1.PRESERVE THE THING

• 2.DELIVER THE FRUITS
• 3. DELIVER THE ACCESSION AND ACCESSORIES
• 4.DELIVER THE THING ITSELF 5.ANSWER FOR DAMAGES IN CASE OF NON-
FULFILMENT OR BREACH

OBLIGATION OF DEBTOR IN OBLIGATION TO GIVE A DETERMINATE THING

1.PRESERVE THE THING

> in obligation to give (real obligation), the obligor has the incidental duty to take care of the
thing due with the diligence of a good father of a family

a. DILIGENCE OF A GOOD FATHER OF A FAMILY

> or that diligence which an average (reasonably prudent) person exercise over his own
property

Example:S binds himself to deliver a specific horse to B on certain date.

> pending delivery, S has the additional or accessory duty to take of the horse regularly,
keeping it in safe place, etc.,

> in other words, S must exercise that diligence which he would exercise over another
horse belonging to him.

> the accessory obligation of S to take care of the horse is demandable even if no mention
thereof is made in the contract

DUTY OF DEBTOR IN OBLIGATION TO DELIVER A GENERIC THING

1. To deliver a thing which 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.

b. ANOTHER STANDARD OF CARE

> however, if the law or the stipulation of the parties provides for another standard of care
(slight or extra-ordinary diligence) said law or stipulation must prevail.

c. FACTORS TO BE CONSIDERED
> the diligence required necessarily depends upon the nature of the obligation and
corresponds with the circumstances of the person, of the time and place

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.
(1095)

DIFFERENT KINDS OF FRUITS

1.NATURAL FRUITS
are the spontaneous products of the soil and the young and other products of animals
ex. grass, all trees and plants on lands produced without the intervention of human labor

2. INDUSTRIAL FRUITS
are those produced by lands of any kind through cultivation or labor

ex. Sugar cane, vegetable, rice

3. CIVIL FRUITS
are those derived by virtue of a juridical relation ex. Rents of buildings, price of leases of
lands

RIGHT OF CREDITOR TO THE FRUITS

> the creditor is entitled to the fruits of the thing to be delivered from the time the obligation to
make delivery arises

WHEN OBLIGATION TO DELIVER FRUITS ARISES?

1.the thing due and consequently the fruits, if any, arises from the time of the perfection of
the contract. Perfectigerrerfælily, tich eheblbiigtition the dedinte act or to the meeting of
the minds between the parties.
2. suspensive condition or period, it arises upon the fulfillment of the condition or arrival of
the term. However if the pattigestiorajsnsabjeatstopalation to the contrary as regards the
right of the creditor to the fruits of the thing
3.arises from the perfection of the contract
> in a contract of sale,the obligation even if the obligation is subject to suspensive
condition or period where the price has been paid

4.quasi-contracts delicts and quasi-delicts > in obligation to give arising from the law,the
time of performance is determined by the specific provisions of the law applicable
Example:

S sold his horse to B for P20,000. No date or condition was stipulated for the delivery of the
horse, While still in the possession of S, the horse gave birth to a colt.

WHO HAS THE RIGHT TO THE COLT?

Example:

B is entitled to the colt. This hold true even if the delivery is subject to suspensive condition
or period, if B has paid the price

But S has the right to the colt if it was born before the obligation to deliver the horse has
arisen and B has not yet paid the price

PERSONAL RIGHT

> is the right or power of a person (creditor) to demand to another (debtor), as a definite passive
subject, the fulfillment of the latter's obligation to give, to do or not to do.

REAL RIGHT

> is the right or interest of a person over a specific thing (like ownership possession, mortgage)
without a definite passive subject against whom the right may be personally enforced

PERSONAL RIGHT (PR) vs. REAL RIGHT (RR)

1.In PR, there is a definite active subject and a definite passive subject;
while RR, there is only a definite active subject without any definite passive subject

2. In PR, binding and enforceable only against a particular person, while a RR is directed
against the whole world

Example:

X is the owner of a parcel of land under the torrens title registered in his name in the
Registry of Property.

> his ownership is a real right directed against anybody. There is no definite passive
subject.
> if the land is claimed by Y who takes possession, X has a personal right to recover from Y,
as a definite passive subject, the property

> if the same land is mortgaged by X to Z, the mortgage if duly registered, is binding against
third persons, a real right

OWNERSHIP ACQUIRED BY DELIVERY:

> ownership and other real rights over property are acquired and transmitted in consequence of
certain contracts by tradition or delivery

Ex. In sale, mere agreement on the terms thereof does not effect transfer of ownership of the
thing sold in the absence of delivery, actual or constructive of the thing.

HE SHALL ACQUIRE NO REAL RIGHT OVER IT UNTIL THE SAME HAS BEEN DELIVERED
TO HIM

> is that the creditor does not become the owner until the specific thing has been delivered
to him

> hence, when there has been no delivery yet, the proper action of the creditor is not one of
recovery of possession and ownership but one of specific performance or rescission of the
obligation

Example:

S is obliged to give to B on Dec.2, 2014 a particular horse. Before Dec. 2, B has no right over
the horse. B will acquire a personal right against S to fulfill his obligation only from Dec. 2

if the horse is delivered on Dec.30, В acquires ownership or real right only from that date

but if on Dec. 1, S sold and delivered the same horse to C, a third person in good faith. C
acquires ownership and S shall be liable to B for damages

Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the
right granted him by Article 1170, may compel the debtor to make the delivery. If the thing is
indeterminate or generic, he may ask that the obligation be complied with at the expense of the
debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons
who do not have the same interest, he shall be responsible for any fortuitous event until he has
effected the delivery. (1096)

REMEDIES OF CREDITOR IN REAL OBLIGATION

A.In a specific real obligation (obligation to

deliver a determinate thing)

B.A generic real obligation (obligation to deliver a generic thing)

REMEDIES OF CREDITOR IN REAL OBLIGATION

A.In a specific real obligation (obligation todeliver a determinate thing), the creditor may exercise
the following remedies or rights in case the debtor fails to comply with his obligation

1.Demand specific performance or fulfillment of the obligation with a right to indemnity for
damages; or

2.Demand rescission or cancellation of the obligation also with right to recover damages

3.Demand payment of damages only, where it is the only feasible remedy

Example

S sells his piano to B for 20,000. If S refuses to comply with his obligation to deliver the
piano, what is the remedy of B?

> B can bring an action for fulfillment or rescission of the obligation with the payment of
damages in either case. In case of rescission, the parties must return to each other what
they have received

> the right to demand fulfillment and rescission with damages are alternative not
cumulative

2. A GENERIC REAL OBLIGATION

(obligation to deliver a generic thing) on the other hand can be performed by a third person
since the object is expressed only according to its family or genus.
> it is thus not necessary for the creditor to compel the debtor to make the delivery,
although he may ask for performance of the obligation.

> in any case, the creditor has the right to recover damages in case of breach or violation of
the obligation

Example

S obliges himself to deliver to B 100 sacks of rice on December 4, 2014 for P50,000. If S
does not comply with his obligation, what is the remedy of B?

> B may buy rice from C, a third person. If B paid C P55,000, he may recover P5,000 from S.
Furthermore, B can also hold S liable for damages

WHEN DEBTOR DELAYS OR HAS PROMISED DELIVERY TO SEPARATE CREDITORS

> this is an exception to a fortuitous event.

> it likewise refers to a determinate thing.

> an indeterminate thing cannot be the object of destruction by a fortuitous event because
GENUS NUNQUAM PERIT (genus never perishes)

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)

ACCESSION vs. ACCESSORIES ACCESSION

• are the fruits of a thing or addition to or improvements upon a thing (the principal)

ex. Trees on a land; air-conditioner in a car; rent of a building

ACCESSORIES are things joined to or included with the principal thing for the latter
embellishment

ex. Key of a house, frame of a picture; bracelet of a watch

RIGHT OF CREDITOR TO ACCESSIONS AND ACCESSORIES

> the general rule is that all accessions and accessories are considered included in the
obligation to deliver a determinate thing although they may not have been mentioned

> this rule is based on the principle of law that the "accessory follows the principal" >
unless otherwise stipulated, an obligation to deliver the accessions or accessories of a
thing does not include the latter.

Example: the sale on improvement (house) is not sufficient to convey title or any right to the land.

Art. 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. (1098)

Situations contemplated in Art. 1167

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 but in poor manner

REMEDIES OF CREDITOR IN POSITIVE

PERSONAL OBLIGATION

1.If the debtor fails to compartiwintnohito, the creditor has the right

a. to have the obligation performed by himself, or by another, unless personal

considerations involved at the debtor expense

b. to recover damages

2. In case the obligation is done in contravention of the terms of the same or is poorly done,
it may be ordered that it be undone if it is still possible to undo what was done

PERFORMANCE BY A THIRD PERSON

> a personal obligation to do, like a real obligation to deliver a generic thing, can be
performed by a third person.

> while the debtor can be compelled to make the delivery of a specific thing, a specific
performance cannot be ordered in personal obligation to do because this may amount to
involuntary servitude

> where however, the personal qualification of the debtor are the determining motive for
the obligation contracted (ex.to sing in a night club), the performance of the same by
another would be impossible, hence, the only remedy is indemnification for damages

Example:

1.X binds himself to construct a house for B. Among other things, it was stipulated that the
house shall have 3 bedrooms, each of which to have an area of 5 meters by 4 meters and
that the kitchen shall be painted all white.

if X does not construct the house, B may ask C to contract the house at the expense of X

Example:

2. Suppose X constructed the house but the size of the bedroom is not 5 meters by 4 meters or
the kitchen is not painted all white > In this case, B can ask to have it done according to the specif
cations. If X refuses, the obligation may be performed by C at the expense of X

Example:

3. Now, if the kitchen was painted white but the painting was poorly done, B may ask X that it be
undone or in case of X's refusal, he may ask C to paint the kitchen at the expense of X > in no
case however, can X be compelled against his will to comply with his obligation should he refuse
to do so.

Example:

4.If the obligation contracted by X is to sing in the night club of B and he fails to comply with his
obligation, the performance by the same by another would be impossible or would result to be so
different that the obligation could not be considered performed.
> here the personal qualification of X is the determining motive for the contract. In this case, the
only practical remedy of B is indemnification for damages

Art. 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. (1099a)

REMEDIES OF CREDITOR IN NEGATIVE PERSONAL OBLIGATION

> in an obligation not to do, the duty of the obligor is to abstain from an act
> as a rule, the remedy of the obligee is the undoing of the forbidden thing plus damages.
However, if it is not possible to undo what was done, his remedy is an action for damages
caused by the debtor's violation of his obligation

Example B bought a land from S. It was stipulated that S would not construct a fence on a
certain portion of his land adjoining that

> should S construct a fence in violation of the agreement, B can bring an action to have
the fence removed at the have expense of S.

Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extra-judicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist: (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. (1100a)

DELAY
1.0RDINARY DELAY
> is merely the failure to perform an obligation on time

2. LEGAL DELAY or DEFAULT or MORA

> is the failure to perform an obligation on time which failure constitutes a breach of the obligation
KIND OF DELAY or DEFAULT

1.MORA SOLVENDI or the delay on the

part of the debtor to fulfill his obligation

2.MORA ACCIPIENDI or the delay on the

part of the creditor to accept the performance of the obligation

3.COMPENSATIO MORAE or the delay of the obligors in reciprocal obligations. The delay of the
obligor cancels the delay of the obligee and vice versa. There is no actionable default on the part
of both parties

NO DELAY IN NEGATIVE PERSONAL OBLIGATION

> in an obligation not to do, non- fulfilment may take place, but delay is impossible for the debtor
fulf Ils by not doing what has been forbiden him

> in an obligation not to do, non- fulfillment may take place, but delay is impossible for the debtor
fulfill by not doing what has been forbidden him

REQUISITES OF DELAY OR DEFAULT BY THE DEBTOR

1.Failure of the debtor to perform his (positive) obligation on the date agreed upon

2.Demand (not mere reminder or notice) made by the creditor upon the debtor with his
obligation, either judicial or extra-judicial

3. Failure of the debtor to comply with such demand

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

GROUNDS FOR LIABILITY

> which may entitle the injured party to damages

1.Fraud (deceit or dolo) - deliberate or intentional evasion of the normal fulfillment of an

obligation

2. Negligence (fault or culpa) - any voluntary act or omission, there being no bad faith or malice,
which prevents the normal fulfillment of an obligation

3. Delay (Mora)

4. Contravention of the terms of the obligation - violation of the terms and condition stipulated
in the obligation

Example

1.Fraud (deceit or dolo) - S obliged himself to deliver to B 20 bottles of wine, of a particular

brand, Subsequently, S delivered 20 bottles knowing that they contain cheaper price wine.
Hence, S is guilty of fraud and is liable for damages to B

2.Negligence (fault or culpa) - P is a passenger in a taxi. Hence, there is considered a

contract of carriage between P and the owner of the taxi company. If through recklessness
of the driver, an accident occurs, as a result P was injured. > hence there is negligence
which would make the owner of taxi liable for damages

4. Contravention of the terms of the obligation

E leased the apartment of R for P10,000 monthly. If E violates his obligation as lessee, R is
entitled to eject him from the premises and recover damages

FRAUD vs. NEGLIGENCE

1.In fraud, there is deliberate intention to
cause damage or injury, while in negligence, there is no such intention

2. Waiver of the liability for future fraud is void, while such waiver may be allowed in
negligence

3.Fraud must be clearly proved, while negligence is presumed from violation of a

contractual obligation

4.Liability for fraud cannot mitigated or reduced by courts, while liability of negligence may
be reduced by the court

Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of
an action for future fraud is void. (1102a)

RESPONSIBILITY ARISING FROM FRAUD DEMANDABLE

> this provision refers to incidental fraud which is employed in the fulfillment of an obligation. This
is because fraud is deemed serious and evil that its employment to avoid the fulfillment of one's
obligation should be discouraged

WAIVER OF ACTION FOR FUTURE FRAUD IS VOID

> according to the time of commission, fraud may be past or future. A waiver of an action for future
fraud as being against the law and public

> a contrary rule would encourage the perpetration of fraud

WAIVER OF ACTION FOR PAST FRAUD IS VALID

> because the waiver can be considered as an act of generosity and magnanimity on the victim
of the the fraud part of the party who is

Example
S promised to deliver 120 cavans of rice of a particular brand and quality to B at the rate of
10 cavans a month

S cannot make an agreement with B, whereby B will not file an action in court against S
should S commit fraud in the performance of obligation

Art. 1172. Responsibility arising from negligence in the performance of every kind of
obligation is also demandable, but such liability may be regulated by the courts, according
to the circumstances. (1103)

RESPONSIBILITY ARISING FROM NEGLIGENCE DEMANDABLE

> in the performance of every kind of obligation, the debtor is also liable for damages
resulting from his negligence.

> the courts however are given wide discretion in fixing the measure of damages

VALIDITY OF WAIVER OF ACTION ARISING FROM NEGLIGENCE

1.An action for future negligence may be renounced except where the nature of obligation
requires the exercise of extra- ordinary diligence as in the case of common carrier

2. Where the negligence shows bad faith, it is considered equivalent to fraud

KINDS OF NEGLIGENCE ACCORDING TO SOURCE OF OBLIGATION

1.Contractual negligence (culpa contractual)

• negligence in contracts resulting in their breach

2.Civil negligence (culpa aquilina)

• which by itself is the source of an obligation between the parties not so related before by
any pre-existing contract

3. Criminal negligence (culpa criminal)

 • or negligence resulting in the commission of a crime

EFFECT OF NEGLIGENCE ON THE PART OF THE INJURED PARTY

> when the plaintiff's own negligence was the immediate and proximate cause of his injury,
he cannot recover damages.

> but if his negligence was only contributory, the immediate and proximate 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

Example

P is a passenger in a carefully driven bus. Without any warning, he jumped off the bus, as a
result of which, he suffered injuries

> the bus company is not liable for damage because the cause of P's injuries is his own
negligence