TITLE I.

OBLIGATIONS
CHAPTER 1:
GENERAL PROVISIONS
I. Concept of Obligations
A. Definition

Art. 1156. An obligation is a juridical necessity to give to do or not

to do.
OBLIGATION
From the Latin word obligare, which means tying, or
binding.
Tie or bond recognized by law by virtue of which one is
bound in favor of another to render something
This may consist in giving a thing, doing a certain act or not
doing a certain act.
JURIDICAL NECESSITY
In case of noncompliance, the courts of justice may be
called upon by the aggrieved party to enforce its
fulfillment, or in default thereof, the economic value that
it represents.
The debtor may be made liable for damages which
represents the sum of money given as a compensation for
the injury or harm suffered by the creditor or oblige
The debtor must comply with his obligation whether he
likes it or not; failure will have harmful consequences
NATURE OF OBLIGATIONS UNDER THE CIVIL CODE
Civil obligations are obligations which give the creditor or
oblige a right under the law to enforce their performance
in courts of justice
Natural obligations are not based on positive law but on
equity and natural law, do not grant a right of action to
enforce their performance although in case of voluntary
fulfillment by the debtor, the latter may not recover what
has been delivered or rendered by reason thereof article
1423)
OBLIGATORY RELATION IN ITS TOTALITY: The juridical relation,
created by virtue of certain facts, between two or more persons,
whereby the creditor or obligee, may demand of the debtor or
obligor, a definite prestation.

PASSIVE SIDE: Where there is a right or power to demand, there is a

correlative obligation or an imposition upon a person of a definite
conduct.
CRITICISM OF DEFINITION
It is one sided, reflects only the debtors side of the
agreement Sanchez Roman
Article 1156 gives the Civil Code definition of obligation in
its passive aspect.
Our law merely stresses the duty of the debtor or obligor
when it speaks of an obligation as a juridical necessity. De
Leon)

B. Elements
1. ACTIVE SUBJECT
Has the power to demand the prestation
Also known as the obligee or creditor

2. PASSIVE SUBJECT

Has the duty to perform the prestation

Also known as the obligor,or debtor,

3. PRESTATION OR OBJECT
May consist in giving, doing, or not doing.
Must be a) possible, b) determinable, and c) capable of
pecuniary estimation
KINDS OF PRESTATION
TO GIVE consists in the delivery of a movable or an
immovable thing, in order to create a real right or for
the use of the recipient or for its simple possession
or in order to return to its owner
TO DO all kinds of work or services, whether
mental or physical
NOT TO DO consists in abstaining from some act,
includes not to give, both being negative
obligations
REQUISITES OF PRESTATION
Is physically and juridically possible
Is determinate or at least determinable according to
pre established elements or criteria
Has a possible equivalent in money
o Pecuniary interest need not be for one of the
parties, it maybe for the benefit of 3rd person/s
distinct from the parties to the contract
o Prestation need not be of economic character
to have pecuniary value, if it does not have

value the law attributes to it economic value

e.g. moral and nominal damages

4. JURIDICAL OR LEGAL TIE

That which binds or connects the parties to the obligation

Established by a) law, b) bilateral acts contracts), and c)
unilateral acts crimes and quasi delicts)
Also called efficient,cause,or vinculum
Form in which the obligation is manifested cannot be
considered essential
NOTE: The form in which an obligation is manifested cannot be
considered essential.

C. Distinction between Natural and Civil

see table.

II. Sources of Obligations

A. LAW [ExJLege]

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.
Is an independent sources of obligations
Governed by the law itself
Agreement of the parties is not necessary e.g. tax
collection, Art 448 and Art 488)
Is not presumed; only those expressly provided are
enforceable
To be demandable, they must clearly be set forth in the
law i.e., Civil Code or special laws.)
Special laws refer to all other laws not contained in the
Civil Code.

B. CONTRACTS [ExJContractu, Culpa Contractual]

Art. 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in
good faith.
Expresses principle of autonomy of will, presupposes that
contract is valid and enforceable
PRE CONTRACTUAL OBLIGATION: Damages can be
recovered when contract is not perfected if:
o Offer is clear and definite, leaving offeree in good
faith to incur expenses in expectation of entering
into a contract
o Withdrawal of the offer must be without any
illegitimate cause. If offeror is
Guilty,of,fault,or,negligence, liability would be
based on Art 2176
Not,guilt,fault,nor,negligence, withdrawal was in
abuse of right, liability would be based on Art 19
e.g. breach of promise to marry,
Art. 1305. 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.
Binding force obligations arising from contracts have the
force of law between the contracting parties
o Contracts are not superior to law.
o Must be valid and cannot be valid if it is against the
law.
o Compliance in good faith in accordance with the
stipulations or terms of the contract or agreement.
o There is sincerity and honesty

C. QUASIJCONTRACTS or DELICTS [Quasi ExJ

Contractu]
Art. 1160. Obligations derived from quasi contracts shall be
subject to the provisions of Chapter 1, Title XVII.
Art. 2142. Certain lawful, voluntary and unilateral acts give rise
to the juridical relation of quasi contract to the end that no one
shall be unjustly enriched or benefited at the expense of
another.
Juridical relation which arises from certain acts that are:
o LAWFUL against crime
o VOLUNTARY against quasi delict; based on
negligence or mere lack of foresight
o UNILATERAL against contract in which there are

two parties
o E.g. Art 2144, Art 2150, Art 2154, Art 2164, Art 2167,
Art 2168, Art 2174, and Art 2175

1. KINDS OF QUASI[CONTRACTS
a. NEGOTIORUM GESTIO OFFICIOUS
MANAGEMENT)
Art. 2144. Whoever voluntarily takes charge of the agency or
management of the business or property of another, without
any power from the latter, is obliged to continue the same
until the termination of the affair and its incidents, or to
require the person concerned to substitute him, if the owner
is in a position to do so. This juridical relation does not,arise in
either of these instances:
1) When the property or business is not neglected or
abandoned
2) If in fact the manager has been tacitly authorized by the
owner

b. SOLUTIO INDEBITI PAYMENT NOT DUE)

Art. 2154. If something is received when there is no right to
demand it, and it was unduly delivered through mistake, the
obligation to return it arises.
The juridical relation which is created when something is
received when there is no right to demand it and it was
unduly delivered by mistake Article 2154)
Requisites:
o No right to receive the thing delivered
o The thing was delivered through mistake.

c. OTHER QUASI=CONTRACTS SUPPORT GIVEN

BY STRANGERS AND OTHER GOOD
SAMARITANS)
Art. 2164. When, without the knowledge of the person obliged to
give support, it is given by a stranger, the latter shall have a right to
claim the same from the former, UNLESS it appears that he gave it
out of piety and without intention of being repaid.
Art. 2165. When funeral expenses are borne by a third person,

without the knowledge of those relatives who were obliged to give

support to the deceased, said relatives shall reimburse, the, third,
person, should the latter claim reimbursement.
Art. 2166. When the person obliged to support an orphan, or an
insane or other indigent person unjustly refuses to give support to
the latter, any third person may furnish support to the needy
individual, with right of reimbursement from the person obliged to
give support. The provisions of this article apply when the father or
mother of a child under eighteen years of age unjustly refuses to
support him.
Art. 2167. When through an accident or other cause a person is
injured or becomes seriously ill, and he is treated or helped while he
is not in a condition to give consent to a contract, he shall be liable
to pay for the services of the physician or other person aiding him,
unless the service has been rendered out of pure generosity.
Art. 2168. When during a fire, flood, storm, or other calamity,
property is saved from destruction by another person without the
knowledge of the owner, the latter is bound to pay the former just
compensation.
Art. 2169. When the government, upon the failure of any person to
comply with health or safety regulations concerning property,
undertakes to do the necessary work, even over his objection, he
shall be liable to pay the expenses.
Art. 2171. The rights and obligations of the finder of lost personal
property shall be governed by Articles 719 and 720.
Art. 2172. The right of every possessor, in, good, faith to
reimbursement for necessary and useful expenses is governed by
Article 546.
Art. 2173. When a third person, without the knowledge of the
debtor, pays the debt, the rights of the former are governed by
Articles 1236 recover what has been beneficial to debtor) and 1237
cannot compel creditor to subrogate payor in his rights).
Art. 2174. When in a small community a nationality of the
inhabitants of age decide upon a measure for protection against
lawlessness, fire, flood, storm or other calamity, any one who
objects to the plan and refuses to contribute to the expenses but is
benefited by the project as executed shall be liable to pay his share
of said expenses.
Art. 2175. Any person who is constrained to pay the taxes of
another shall be entitled to reimbursement from the latter.

D. ACTS or OMISSIONS PUNISHED BY LAW [ExJ

Delictu, ExJMaleficio, Culpa Criminal]
Art. 1611. Civil obligations arising from criminal offense shall be
governed by the penal laws, subject to the provisions of Art
2177, and of the pertinent provisions of Chapter 2, Preliminary
Title on Human Relations and of Title XVIII of this Book,
regulating damages.
Art. 100, RPC. Every person criminally liable for a felony is also
civilly liable.
GENERAL RULE "Civil liability is a necessary consequence
of criminal liability
o Reason " Commission of crime causes not only
moral evil but also material damage.
o Art 12, RPC Exempting circumstances; do not incur
liability but are NOT EXEMPT from civil liability
Imbecile,or,insane,person,,unless,acting,in,a,lucid,
interval,
Person,under,9,years,of,age,
Person,over,9,years,of,age,and,under,15,,unless,
acting,with,discernment,
Acting,under,compulsion,of,an,irresistible,force,
Acting,under,impulse,of,an,uncontrollable,fear,of,
an,equal,or,greater,injury,
EXCEPTION " Certain crimes without civil liability
o Criminal contempt
o Gambling
o Traffic violations
SUBSIDIARY LIABILITY FOR CRIME
Innkeepers, tavern keepers and any other persons or
corporations shall be civilly liable for crimes committed in
their establishment, in all cases where a violation of
municipal ordinances or some general or special police
regulation shall have been committed by them or their
employees.
Also applicable to employers, teachers, persons and
corporations engaged in any kind of industry for felonies
committed by their servants, pupils, apprentices or
employees in discharge of their duties.
o To hold employers subsidiarily liable for CRIME of an
employee: committed in the performance of the
functions or duties of the employee.
o But if action is based on CONTRACT, and not upon
previous conviction of employee for a crime:
employers liability is PRIMARY and INDEPENDENT,
not merely subsidiary.

CIVIL LIABILITY ARISING FROM CRIME

Rules on Criminal Procedure Rule 111. When a criminal action
is instituted, the civil action for the recovery of civil liability
arising from the offense charged shall be deemed, instituted,
with,the,criminal,action UNLESS the offended party waives the,
civil, action, reserves, the, right, to, institute, it, separately or
institutes the civil action prior to the criminal action.
EXTENT OF CIVIL LIABILITY
Art. 104, RPC What, is, included, in, civil, liability, The civil liability
establish in Articles 100, 101, 102 and 103 include:
1) Restitution
2) Reparation of the damage caused
3) Indemnification for consequential damages
RESTITUTION " thing itself is restored Art 105, RPC)
REPARATION OF DAMAGE CAUSED " court determines
amount of damage Art 106, RPC)
INDEMNIFICATION FOR CONSEQUENTIAL DAMAGES " not
only caused the 3rd party but also those suffered by his
family or by a 3rd person by reason of the crime Art 107,
RPC)
Civil liability for crimes is extinguished the same causes
provided in the CC for the extinguishment of other
obligations.
GENERAL RULE: Criminal action bars civil action for the same
offense
o Civil action for recovery of civil liability arising from the
offense is impliedly instituted with the criminal action
EXCEPTIONS:
o Offended party reserves the right to institute it
separately
o The law provides for an independent civil action i.e. civil
action may proceed to final judgment irrespective of
result of the criminal action and filing of the criminal
action does not suspend the civil action)
Obligations arising from the act or omission claimed
to be criminal Art 31)
Violations of constitutional rights and liberties of
individuals Art 32)
Defamation, fraud or physical injuries Art 33)
Refusal or failure of members of police force to
render protection to life or property Art 34)

E. QUASIJDELICTS [Quasi ExJDelicto, Quasi ExJ

Maleficio, Culpa Aquilana, Tort common

law)]
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.
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence when there is no
pre existing contractual relation between the parties, is called
quasiMdelict and is governed by the provisions of this Chapter.
BASIS " Undisputable principle of equity; fault or
negligence cannot prejudice anyone else besides its author
and in no case should its consequences be borne by him
who suffers the harm produced by such fault or
negligence.
o Man is responsible not only for his voluntary willful
acts, executed consciously and intentionally but also
for those acts performed with lack of foresight, care
and diligence, which cause material harm to society
or to other individuals.
NEW SOURCES OF OBLIGATION " generally recognized
by law although not included in the code
1. Unjust enrichment CC categorized under quasi
contract)
2. Unilateral declaration of will
3. Abuse of rights CC categorized under quasi delict)
TEST OF NEGLIGENCE " Would a prudent man, in the
position of the person to whom negligence is attributed,
foresee harm to the person injured as a reasonable
consequence of the course about to be pursued
ELEMENTS OF NEGLIGENCE
Duty on the part of the defendant to protect the plaintiff
from injury of which the latter complains
Failure to perform such duty
An injury to the plaintiff through such failure
KINDS OF NEGLIGENCE

a. CULPA AQUILANA or culpa extra contractual;

negligence as a source of obligation, a quasi delict

b. CULPA CONTRACTUAL negligence in the

performance of a contract

c. CULPA CRIMINAL criminal negligence

DISTINCTION BETWEEN CULPA AQUILANA AND CULPA

CONTRACTUAL
see table.

1. DISTINCTION BETWEEN QUASI[DELICTS AND CRIMES

see table.
REQUISITES OF LIABILITY UNDER QUASI=DELICTS
There exists a wrongful act or omission imputable to the
defendant by reason of his fault or negligence
There exists a damage or injury
Direct causal connection or relation of cause and effect between
the fault or negligence and the damage or injury OR that the
fault or negligence be the cause of damage or injury
o DOCTRINE OF PROXIMATE CAUSE: such adequate and
efficient cause as, in the natural order of events, and under
the particular circumstance surrounding the cause, would
necessarily produce the event
o NATURAL AND PROBABLE CAUSE: either when it acts
directly producing the injury, or sets in motion other causes
so producing it and forming a continuous chain in natural
sequence down to the injury
o CONCURRENT CAUSE: if two causes operate at the same
time to produce a result which might be produced by either
independently of the other, each of them is a proximate
cause
o When the plaintiffs own negligence was the immediate and
proximate cause of his injury, he cannot recover damages.
o BUT if negligence is only contributory, the immediate and
proximate cause of the injury is defendants lack of due
care, the plaintiff may recover damages, the courts shall
mitigate the damages to be awarded Art 2179)

2. LIABILITY FOR FAULT OF OTHERS

Obligation arising from quasi delict is demandable not only

for ones own acts or omissions, but also for those of
persons for whom one is responsible.
Art. 2180. The obligation imposed by Article 2176 is
demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
The father and, in case of his death or incapacity, the mother,
are responsible for the damages caused by the minor children
who live in their company.
Guardians are liable for damages caused by the minors or
incapacitated persons who are under their authority and live in

their company.
The owners and managers of an establishment or enterprise
are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of
their assigned tasks, even though the former are not engaged
in any business or industry.
The State is responsible in like manner when it acts through a
special agent; but not when the damage has been caused by
the official to whom the task done properly pertains, in which
case what is provided in Article 2176 shall be applicable.
Lastly, teachers or heads of establishments of arts and trades
shall be liable for damages caused by their pupils and students
or apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.
Art. 218, FC. The school, its administrators and teachers, or the
individual, entity or institution engaged in child are shall have
special parental authority and responsibility over the minor
child while under their supervision, instruction or custody.
Authority and responsibility shall apply to all authorized
activities whether inside or outside the premises of the school,
entity or institution.
Art. 219, FC. Those given the authority and responsibility under
the preceding Article shall be principally and solidarily liable for
damages caused by the acts or omissions of the unemancipated
minor. The parents, judicial guardians or the persons exercising
substitute parental authority over said minor shall be
subsidiarily liable.
The respective liabilities of those referred to in the preceding
paragraph shall not apply if it is proved that they exercised the
proper diligence required under the particular circumstances.
All other cases not covered by this and the preceding articles
shall be governed by the provisions of the Civil Code on quasi
delicts.
DILIGENCE OF EMPLOYERS
An employer may be held civilly liable for the quasi delict

or crime of his employee

see table.c

III. Classification of Obligations

A. Primary Classification under the Civil Code

1. PURE AND CONDITIONAL
PURE " not subject to any condition; no specific date is
mentioned; demandable at once

CONDITIONAL " fulfillment or extinguishment depends

upon a future and uncertain event
Pure and Conditional obligations deal with when the
obligation is enforceable.

CONDITION " future AND uncertain event, upon the

happening of which, the effectivity or extinguishment of an
obligation or right) subject to it depends
Characteristics of a condition
o Future and uncertain the word or should be
and.
o Past but unknown Both future and past events
must be UNCERTAIN.
Two principal kinds of condition
o Suspensive Condition precedent or condition
antecedent) gives rise to an obligation or right
o Resolutory Condition subsequent) fulfillment will
extinguish an obligation
Effects of Happening of Condition
o Acquisition of Rights
o Loss of rights already acquired

2. WITH A PERIOD OR TERM

Obligations with a Period or Term deal with when an
obligation is demandable

PERIOD " a future and certain event; an event that must

necessarily come
see table.

3. ALTERNATIVE AND FACULTATIVE

Alternative and Facultative focus on classifiying

obligations with multiple objects.

ALTERNATIVE
# An obligation with multiple prestations but debtor will
perform one,or,some,but,not,all, depending on whose
choice it is
# Performance of one of them is sufficient as
determined by the choice of the DEBTOR, but may be
exercised by the creditor when EXPRESSLY granted to
him article 1205), or by a third person when a
COMMON AGREEMENT gives the right to him.

FACULTATIVE

# An obligation with multiple prestations with a principal

obligation and substitute prestation.
# The choice is generally given to the DEBTOR
# Only one prestation is agreed upon but the obligor
may render another in substitution.
# Examples:
I will give you my piano but I may give my
television set as a substitute.
I will mortgage my land to secure my debt which
shall be payable within 90 days upon my failure to
pay my debt within 30 days.
see table.

4. JOINT AND SOLIDARY

Classifies obligation according to the subjects of the
obligation, their number and the ties that bind them

JOINT

# each can be made to pay only his share in the

obligation
# the whole obligation is to be paid or fulfilled
proportionately by the different debtors and/or is to
be demanded proportionately by the different
creditors.

SOLIDARY
# one can be made to pay for the whole obligation
subject to reimbursement
# one where each one of the debtors is bound to render,
and / or each one of the creditors has a right to
demand from any of the debtors, entire compliance
with the prestation
# Solidary liability only when Article 1207):
The obligation expressly so states

 Law requires solidarity

The nature of the obligation requires solidarity

5. DIVISIBLE AND INDIVISIBLE

Focuses on whether the performance of the obligation

must be done as whole or capable of being done in parts

DIVISIBLE " one the object of which, in its delivery or

performance, is capable of PARTIAL FULFILLMENT.

INDIVISIBLE " one the object of which, in its delivery or

performance, is NOT capable of partial fulfillment.

6. WITH A PENAL CLAUSE

Deals with obligations containing an accessory obligation

to assume a greater liability in case of a breach of the
principal obligation
Purpose of a Penal Clause
o To insure their performance by creating an effective
deterrent against breach, making the consequences
of such breach as onerous as it may possibly be
general purpose)
o To substitute a penalty for the indemnity for
damages and the payment of interests in case of
non compliance Article 1226); or to punish the
debtor for the non fulfillment or violation of his
obligation.
see table.

B. Secondary Classification
1. LEGAL, CONVENTIONAL AND PENAL
Legal " derived from law and is not presumed; expressly
determined in the Civil Code.

Conventional " from contracts/stipulation of parties;

should be complied with in good faith

Penal " from commission of a crime

2. REAL AND PERSONAL
Real" an obligation to give

Personal " an obligation to do or not to do

3. DETERMINATE AND GENERIC
Determinate " an obligation to give a unique, specific
thing; capable of perishing

Generic " an obligation to give a generic thing; generally

does not perish

4. POSITIVE AND NEGATIVE

Positive " an obligation requiring a positive act to give or
to do)

Negative " an obligation requiring an omission not to

give or not to do)

5. UNILATERAL AND BILATERAL

Unilateral " an obligation with a prestation incumbent
only on one of the parties

Bilateral " an obligation with reciprocal prestations

6. INDIVIDUAL AND COLLECTIVE
Individual " Only has one creditor and one debtor
Collective " May have multiple creditors and/or debtors
7. PRINCIPAL AND ACCESSORY
Principal " independent and capable of standing on its
own

Accessory " depends on another obligation for its

existence

8. AS TO OBJECT OR PRESTATION
Simple " an obligation with only one prestation

Multiple " an obligation with two or more prestations

Conjunctive all must be performed
Distributive one or some must be performed
o Alternative more than one prestation but one
party may choose which one; several are due but
only one must be fulfilled at the election of the
debtor
o Facultative main prestation and a substitute
prestation and it is the debtor who chooses; only one
thing is due but the debtor has reserved the right to
substitute it with another

9. POSSIBLE AND IMPOSSIBLE

Possible " an obligation capable of being
performed/complied with

Impossible " an obligation incapable of being

performed, either physically or legally

CHAPTER 2: NATURE AND

EFFECTS OF OBLIGATIONS
I. Kinds of Prestation

A. Obligation to Give Real Obligation)

1. A SPECIFIC THING
REAL OBLIGATION the subject matter is a thing which the obligor
must deliver to the obligee
see table. SPECIFIC THING DETERMINATE)

a. DUTIES OF THE OBLIGOR/DEBTOR Letters B=D

are the accessory/incidental obligations)
i. To deliver thing itself
Art. 1244, Par. 1. The debtor of a thing cannot compel the creditor

to receive a,different one, although the latter may be of the same

value as, or more valuable than which is due.
He shall acquire no real right over it until the same has been
delivered to him the creditor does not become the owner
until the specific thing has been delivered to him
Though upon, agreement, or, consent, of, the, creditor, the
debtor may deliver a different thing or perform a different
prestation in lieu of that stipulated " DATION in payment
Art 1245) or OBJECTIVE NOVATION Art 1291)
Generally, arises from the perfection of the contract Art.
1305, 1315, 1319)
If it is subject to a suspensive condition or period Art. 1179,
1189, 1193), it arises upon fulfillment of the condition or
arrival of the period; OR parties make stipulate otherwise
In a sale, obligation arises from the perfection of the contract
even if the obligation is subject to a suspensive condition or a
suspensive period where the price has been paid
In obligations arising from law, quasi?contracts, delicts, and
quasi?delicts, time of the performance is determined by the
provisions of law applicable
Defects of the thing may be waived by the creditor IF
o Expressly declares
o With knowledge thereof, he accepts the thing without
protest or disposes or consumes it
defect

" waiver of

ii. To preserve thing

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.
Why: the obligation to deliver would be illusory, so the
debtor has the incidental duty to take care of the thing
due
What kind of diligence: DILIGENCE OF GOOD FATHER OF
FAMILY; elaborated in Art 1173
It is the ordinary,care or that diligence which an average a
reasonably prudent) person exercises over his own
property
o Failure to preserve the thing " Liability for
damages
o BUT if due to FORTUITOUS EVENTS or FORCE
MAJEURE " Exempted from responsibility Art.
1174)
Factors to consider: Nature of the obligation, the

circumstances of the person, of the time, and of the place

Art. 1173)
Exception: When the law or the stipulation provides for
another standard of care slight or extraordinary
diligence), said law or stipulation must prevail Art. 1163
UNLESS clause)
o Art. 1755 a common carrier should use utmost
extraordinary) diligence of very cautious
persons, with a due regard for all the
circumstances
o Reyes, v, CA banks are duty bound to treat
deposit accounts with the highest degree of care
where the fiduciary nature of relationship is
concerned
o Exception: It is contrary to public policy to
stipulate for absolute exemption from liability
for any fault or negligence Art. 1173, 1174)

iii. To deliver the accessions and accessories

Art. 1166. Obligation to give a determinate thing includes that of
delivering all its accessions and accessories, even though they may
not have been mentioned.
General rule: all accessions and accessories are
considered included in the obligation; principal of law
that the accessory follows the principal
May be qualified by contrary intentions of the parties,
e.g. exclude delivery of accession or accessory of the
thing.
ACCESSIONS AND ACCESSORIES DISTINGUISHED:
ACCESSIONS
Can exist only in relation to
the principal
Fruits of, or additions to, or
improvements upon, a thing the
principal); not necessary to the
principal thing
Includes everything which is
produced by a thing, or which is
incorporated or attached thereto,
either naturally or artificially.
Does not include fruits because
Art 1164 mentioned it already
Accesion continua which
includes:

1. Accesion,natural
e.g. alluvion
2. Accesion,industrial
e.g. building, planting,
sowing
ACCESSORIES
Can exist only in relation
to the principal
Those things which,
destined for embellishment,
use or preservation of
another thing or more
important, have for their
object the completion of the
latter for which they are
indispensable or convenient.
The things joined to, or
included with, the principal
thing for the latters
embellishment, use, or
completion; accessory and
principal thing must go
together

iv. To deliver the fruits

Art. 1164, Par. 1. The creditor has a right to the fruits of the thing
from the time the obligation to deliver it arises. However, there is
no real right until the same has been delivered to him.
Non, nudis, pactis,, sed, traditione, domina, rerum,
trasferentur," the ownership of things is transferred
not only by mere agreements but by delivery
By law, the creditor is entitled to the fruits of the
thing to be delivered from the time the obligation to
make delivery of the thing arises the intention of
the law is to protect the interest of the oblige should
the obligor commit delay, purposely or otherwise, in
the fulfillment of his obligation
,
REAL RIGHT power or right or interest belonging to a person over
a specific thing, without a definite passive subject individually
determined, against whom such right may be personally exercised
Gives to a person a direct and immediate power over
a thing, which is susceptible of being exercised, not
only against a determinate person but against the
whole world

 E.g. rights of ownership and possession

,
PERSONAL RIGHT, power belonging to one person creditor) to
demand of another debtor), as a definite passive subject, the
fulfillment of a prestation to give, to do or not to do
PERSONAL RIGHT AND REAL RIGHT DISTINGUISHED:
PERSONAL RIGHT
There is a definite active
subject and a definite passive
subject
Binding or enforceable only
against a particular person
REAL RIGHT
There is only a definite active
subject without any definite
passive subject
Directed against the whole
world
TYPES OF FRUITS Art. 442):
1. Natural Fruits spontaneous products of the soil, and the
young and other products of animals; without the
intervention of human labor
2. Industrial Fruits those produced by lands of any kind
through cultivation or labor; by reason of human labor
3. Civil Fruits those derived by virtue of juridical relation
CORRELATIVE RIGHTS OF THE OBLIGEE/CREDITOR Sir Labitags
diagrammatical outline)
1. Right to compel delivery
a. Fruits both industrial and natural from the time obligation
to deliver arises), accessions and accessories
b. No real right until delivery " personal action against
debtor, no right against the world
2. Right to rescission or resolution
3. Right to damages
a. Failure to deliver
Legal excuse for breach of obligation or delay
FORTUITOUS EVENT unless there is
o Law e.g. possession in bad faith Art 552)
o Stipulation to the contrary
o Nature of obligation requires assumption of
risk
FE APPLICABLE TO:
o Nonperformance
o Delay

o Loss/deterioration of specific thing

Art 1189 Before happening of
suspensive condition
Art 1190 Before happening of
resolutory condition
Debtor still liable despite FE:
o Expressly specified by law
Art 1942 Bailee liable for loss
commodatum)
Art 2001 Act of a thief
Art 2147 Negotiorum gestio
Art 1993 Loss of deposit
o Stipulation e.g. debtor becomes insurer of
the obligation
o Assumption of risk
o Fraud or malice bad faith)
Art 1165 Par 3 Delivers to two or more
persons having different interest
o Debtor in delay already when FE happened
Art 1165 Par 3)
o Debtor guilty of concurrent negligence " in
this case, no long FE
o Liability arises from criminal act except if
debtor tenders thing and creditor
unjustifiably refuses to receive Art 1268)
b. Fraud
c. Negligence in performance
d. Delay or default
e. Any manner in contravention of the tenor of obligation

2. A GENERIC THING

,
GENERIC THING INDETERMINATE)
Art. 1246. When the obligation consists in the delivery of an
indeterminate or generic thing, whose quality and circumstances
have not been stated, the creditor cannot demand a thing of
superior, quality. Neither can the debtor deliver a thing of inferior,
quality. The purpose of the obligation and other circumstances shall
be taken into consideration.
Creditor may ask for compliance by, 3rd, person, at, debtors,
expense; action for substituted performance Art 1165)
LIMITED GENERIC THING generic objects confined to a particular
class, the class is considered in itself a determinate object
DUTIES OF THE OBLIGOR/DEBTOR
To deliver a thing which is of the quality intended by the
parties taking into consideration the purpose of the

obligation and other circumstances see Art. 1246)

To be liable for damages in case of fraud, negligence, or
delay, in the performance of his obligation, or
contravention of the tenor thereof see Art. 1170)
,
CORRELATIVE RIGHTS OF THE OBLIGEE/CREDITOR, from Sir
Labitags diagrammatical outline)
1. Right to ask for rescission or damages
2. Right to damages
a. Failure to deliver
b. Fraud malice or bad faith)
c. Negligence
d. Delay
e. Any manner contravene the tenor of obligation
RIGHTS OF A CREDITOR,
see table.

B. Obligation to Do Positive Personal

Obligation)
POSITIVE PERSONAL OBLIGATION the subject matter is an act to
do or to render service
Art. 1244, Par. 2. In obligations to do or not to do, an act or
forbearance cannot be substituted by another act or forbearance
against,the,obligees,will.
If the prestation is a personal one, and specific to the
debtor, only he can do it; no substitution of the debtor can
be done
Exception: FACULTATIVE OBLIGATION wherein the debtor,
reserves,the,right,to,substitute another prestation
Art. 1167. If a person is obliged to do something fails to do it, the
same shall be executed,at,his,cost.
The same rule may 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.
DUTIES OF OBLIGOR, from BarOps Reviewer 2008)
1. To do it Art 1167)
2. To shoulder the cost if someone else does it Art 1167)
3. To undo what has been poorly done Art 1167)
4. To pay damages Art 1170?1172, 2201?2202)
No action for compliance because that would be
involuntary servitude which is prohibited by the
constitution.

C. Obligation Not to Do Negative Personal

Obligation)
NEGATIVE PERSONAL OBLIGATION the subject matter is an act not
to do which naturally includes obligations not to give
Art. 1244, Par. 2. In obligations to do or not to do, an act or
forbearance cannot be substituted by another act or forbearance
against,the,obligees,will.
Performance cannot be by a delegate or an agent
No legal accessory obligations arise as compared to
obligation to give)
This is the MOST STRICT type of obligation, no substitution
of the prestation
Art 1268 When the obligation consists in not doing, and the obligor
does what has been forbidden him, it shall also be undone, at, his,
expense.
DUTIES OF OBLIGOR from BarOps Reviewer 2008)
1. Not to do what should not be done
2. To should the cost to undo what should not have been
done Art 1168)
3. To pay damages Art 1170, 2201?2202)

II. Breach of Obligation

A. Concept

VOLUNTARY breach of obligation arises from the modes provided in

Art. 1170
INVOLUNTARY breach of obligation arises because of fortuitous
events provided in Art. 1174
SUBSTANTIAL AND CASUAL/SLIGHT BREACH DISTINGUISHED
see table.
GENERAL RULE: Rescission will not be permitted for a slight or
casual breach of the contract, but only for such breaches as are so
substantial and fundamental as to defeat the object of the parties
in making the agreement.
Cases:
SONG FO v. HAWAIIAN PHIL CO
Facts: Hawaiian Phil agreed to deliver 300k gallons of molasses but

Song Fo requested for another 100k gallons to which Hawaiian said

that, we believe that this is possible and we will do our best to let
you have these extra 100k gallons. Song Fo defaulted in the
payment for the molasses the defendant delivered to it so the latter
was compelled to cancel and rescind the said contract.
Held: The court ruled that the agreement was for 300k gallons of
molasses only, and that there is only slight breach and therefore
Hawaiian had no right to rescind the sale. General rule is that
rescission will not be permitted for a slight or casual breach of the
contract and will only be allowed when such breaches are so
substantial and fundamental as to defeat the object of the parties in
making the agreement. A delay in payment for a small quantity of
molasses for about 20 days isnt such a grave violation of an
essential condition of the contract that would warrant rescission for
non?performance.
VELARDE v. CA
Facts: Raymundo sold a parcel of land to Velarde with the condition
of assuming the mortgage amounting to P1.8M. Assumption of
mortgage was not approved and Valerde stopped paying to BPI.
Held: Court held that Raymundos act of rescinding the contract, is
justified, but ordered the restitution to Velarde of P874,150, which
the latter paid as a consequence of the contract until it was
rescinded. In a contract of sale, the seller obligates itself to transfer
the ownership of and deliver a determinate thing, and the buyer to
pay therefor a price certain in money or its equivalent. Petitioners
did not perform their correlative obligation of paying the contract
price in the manner agreed upon.

B. Modes of Breach
1. FRAUD Dolo)
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.

a. Concept of Fraud
Fraud is the voluntary execution of a wrongful act, or a
willful omission, knowing and intending the effects which
naturally and necessarily arise from such act or omission.
Deliberate and intentional evasion of the normal
fulfillment of obligations
Any voluntary and willful act or omission which prevents
the normal realization of the prestation, knowing and
intending the effects which naturally and necessarily arise
from such act

 Fraud contemplated in this article is in the performance of

a pre=existing obligation
Here, the breach of the obligation is voluntary; in Article
1174, it is involuntary.
Cannot cover mistake and errors of judgment made in
good faith, ergo synonymous to bad faith dishonest
purpose or some moral obliquity and conscious doing of
wrong)
The element of INTENT and NOT the harm done is the test
there must be malice/bad faith)
Moral damages may be recovered in addition to other
damages.
The fraud is employed for the purpose of evading the
normal fulfillment of an obligation and its existence merely
results in breach thereof giving rise to a right by the
innocent party to recover damages.
KINDS OF FRAUD
1. Fraud in the performance Art 1171)
2. Fraud in the execution/creation/birth of the contract
a. Dolo,causante Art 1344)
b. Dolo,incidente, Art 1338)
FRAUD, DOLO CAUSANTE, AND DOLO INCIDENTE DISTINGUISHED:
see table.
Case:
WOODHOUSE v. HALILI
Facts: Woodhouse and Halili had an agreement to organize a
partnership for the bottling and distribution of Mission soft drinks
Woodhouse to act as industrial partner/manager and Halili as
capitalist). Woodhouse secured an option for exclusive franchise but
it expired without him availing of such franchise. Upon signing of the
contract, Woodhouse got a 30 cut on the profits. Halili only knew
that Woodhouse all along was not able to secure the exclusive
franchise when they went to US for signing of contract with Mision.
Held: There is false misrepresentation by Woodhouse but it does not
annul the agreement to form a partnership. In order that fraud may
vitiate consent, and thus annul a contract, it must be the causal and
not merely the incidental inducement to the making of the contract.
In Woodhouses acts of pretending that he had the exclusive
franchise and promising to transfer it to Halili, he obtained the
consent of the latter to give him Woodhouse) a 30 share in the
net profits. This is the dolo incidente defined in Art 1270 of the
Spanish Civil Code, because it was used to get the other party's
consent to a big share in the profits, a matter that is only incidental
to the main agreement to form a partnership.

b. Non=waiver of Future Fraud

Art. 1171. Responsibility arising from fraud is demandable in ALL

OBLIGATIONS. Any waiver of action for future fraud is VOID.
To permit such advance renunciations would practically
leave the obligation without effect.
The law does not prohibit the renunciation of the action
for damages on the ground of fraud already committed.

c. Effects of Fraud
Liability for damages, a crime or a quasi?delict Art
1170)

2. NEGLIGENCE CULPA CONTRACTUAL)

a. Concept of Negligence
Art. 1172. Responsibility arising from negligence in the performance
of EVERY KIND OF OBLIGATION is also demandable, but such liability
may be REGULATED,BY,COURTS, according to the circumstances.
Negligence or Culpa is any voluntary act or omission, there
being no malice, which prevents the normal fulfillment of
an obligation.
It is the absence of due diligence required
Art. 1173, Par. 1. The fault or negligence of the obligor consists in
the omission of that diligence which is required by the nature of
obligation and corresponds with the circumstances of the persons,
of the time and the place. When negligence shows BAD FAITH, the
provisions of Art 1171 and Art 2201 Par 2 shall apply.
Art 2201 Par 2 In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all damages
which may be REASONABLY ATTRIBUTED to the non?
performance of obligation.
CULPA AND DOLO DISTINGUISHED:
see table.
CULPA AQUILANA AND CULPA CONTRACTUAL DISTINGUISHED:
Different provisions that apply to the two concepts, hence
different legal effects
see table.
Cases:
GUTIERREZ v. GUTIERREZ
Facts: Private car driven by a minor), a truck, and a bus collided
which resulted to a fractured leg of the bus passenger, Narciso

Gutierrez. Narciso seeks to recover damages from both the drivers

and owners of the private car and the truck.
Held: Father is liable for the act of his minor son, whose civil law
liability for obligations which arise from fault or negligence. The
truck driver and owner are also liable, but on the basis of contract.
VASQUEZ v BORJA
Facts: Vasquez and Busuego obligated themselves to sell to De Borja
4,000 cavans of palay at P2.10 per cavan, but upon receiving P8,
400, they delivered only 2,488 cavans of palay and refused to deliver
the balance of 1,512 cavans.
Held: The party liable on the contract is Natividad?Vazquez Sabani
Development Co., Inc., and not Vazquez himselfbecause a
corporation is an artificial being invested by law with a personality of
its own, separate and distinct from that of its stockholders and from
that of its officers who manage and run its affairs. Since it was the
corporations contract, its nonfulfillment, whether due to negligence
or fault or to any other cause, made the corporation and not its
agent liable. Since the corporation was not a party in the case, the
complaint should be dismissed.

b. Standard of care required

.
Art. 1173. Par 2. If law or contract does not state diligence which is
to be observed in the performance, that which is expected of a
GOOD FATHER OF FAMILY is required
DILIGENCE,? the attention and care required of a person in a given
situation and is the opposite of negligence
DILIGENCE REQUIRED:
1. that agreed upon by the parties, orally or in writing
2. in the absence of stipulation, that required by law in the
particular case
3. if both the contract and law are silent, then the diligence
expected of a good father of a family or ordinary diligence.
EXTRA=ORDINARY DILIGENCE REQUIRED IN:
Art 1733 Common carriers
Art 1744 Lesser than extraordinary
Art 1998?2002 Inn keepers, hotel keepers
,
TEST FOR DETERMINING WHETHER A PERSON IS NEGLIGENT
Would, a, prudent, man,, in, the, position, of, the, person, to,
whom,negligence,is,attributed,,foresee,harm,to,the,person,
injured, as, a, reasonable, consequence, of, the, course, about,
to,the,pursued?,
Negligence is a question of fact, its existence being

dependent upon the particular circumstances of each

case. ,
It is never presumed but must be proven by the party who
alleges it.,
FACTORS TO CONSIDER IN DETERMINING NEGLIGENCE:
1. Nature of obligation
2. Circumstance of the person
3. Circumstance of time
4. Circumstance of the place
EXEMPTION FROM LIABILITY FOR NEGLIGENCE:
1. INSURANCE: A party to a contract is relieved from the
effects of his fault or negligence by a 3rd person
2. Party to a contract renounces in advance the right to
enforce liability arising from the fault or negligence of the
other
a. VOID if gross negligence " Stipulations exempting
from liability for that amount to a fraud
b. VALID if simple negligence only
Cases:
DE GUIA v. MANILA ELECTRIC CO
Facts: Train where De Guia boarded was derailed. De Guia received
bruises and possibly certain internal injuries. Trial court found the
motorman of the derailed car negligent for having maintained too
rapid speed, but defendant company claimed the derailment was
due to a goose?egg?sized stone, thus the derailment of the car was
due to a fortuitous event.
Held: If the law or contract does not state the diligence which is to
be observed in the performance of an obligation, that which is
expected of a good father of a family shall be required. When De
Guia boarded the train, the company undertook to convey him to
Manila. The relation between plaintiff and defendant was a of a
contractual nature with the defendant bound to carry the plaintiff
safely to destination with a degree of care. Failure to carry out this
obligation incurs liability.
SARMIENTO v. SPS CABRIDO
FACTS: Sarmiento had her pair of diamond earrings reset into two
gold rings through Dingdings Jewelry Shop, owned by Cabrido. The
goldsmith used pliers to remove the diamond by twisting the
setting, breaking the gem in the process.
HELD: Goldsmith acted negligently in dismounting the diamond.
Being a goldsmith of 40 years, he should have been aware of the
practice to use a miniature wire saw in dismounting gems from their
settings.

CRISOSTOMO v. CA
Facts: Crisostomo bought Jewels of Europe tour package offered
by Caravan Travel and Tours. Crisostomo claimed that when the
documents were delivered, she when he flight will be. She did not
check her travel documents and on the day of the supposed flight,
she found out that the flight had already left the day before. She
was advised by the travel agency to avail of a different tour which is
cheaper than the Jewels of Europe. Upon arrival, she asked for
reimbursement of the difference between the sum she paid.
Held: The petitioner is not entitled to a refund because she was
negligent. Common carriers are required to observe extraordinary
diligence. However, in accordance to Art. 1732, respondent is not a
common carrier since it is only engaged in making the travel
arrangements for customers, acting merely as an agent for the
airlines.

c. Effects of Negligence

1. Damages are demandable, which the courts may

regulate according to circumstances
2. Invalidates defense of fortuitous event

Chapter 3

DIFFERENT KINDS
OF OBLIGATIONS
Classifi cations of obligations.
(1) Primary classifi cation of obligations under the Civil Code:
(a) Pure and conditional obligations (Arts. 1179-1192.);
(b) Obligations with a period (Arts. 1193-1198.);
(c) Alternative (Arts. 1199-1205.) and facultative obligations
(Art. 1206.);
(d) Joint and solidary obligations (Arts. 1207-1222.);
(e) Divisible and indivisible obligations (Arts. 1223-1225.);
and
(f) Obligations with a penal clause. (Arts. 1226-1230.)
(2) Secondary classifi cation of obligations under the Civil Code:
(a) Unilateral and bilateral obligations (Arts. 1169-1191.);
(b) Real and personal obligations (Arts. 1163-1168.);
(c) Determinate and generic obligations (Art. 1165.);
(d) Civil and natural obligations (Art. 1423.); and
(e) Legal, conventional, and penal obligations. (Arts. 1157,

1159, 1161.)
(3) Classification of obligations according to Sanchez Roman:
(a) By their juridical quality and effi caciousness:
1) Natural. according to natural law;
2) Civil. according to civil law; and
3) Mixed. according to both natural and civil law.
(b) By the parties or subject:
1) unilateral or bilateral;
2) individual or collective (see Arts. 1207, 1208.); and
3) joint or solidary.
(c) By the object of the obligation or prestation:
1) specifi c or generic;
2) positive or negative (see Art. 1168.);
3) real or personal;
4) possible or impossible (see Arts. 1183, 1306.);
5) divisible or indivisible;
6) principal or accessory (see Art. 1226.); and
7) simple or compound (see Art. 1199.); if compound, it
may be:
a) conjunctive. demandable at the same time; or
b) distributive. either alternative or facultative.
(d) By their juridical perfection and extinguishment:
1) Pure or conditional; and
2) With a period. (Vol. 8, pp. 20-24.)

SECTION 1. Pure and Conditional

Obligations
ART. 1179. Every obligation whose performance does not
depend upon a future or uncertain event, or upon a past event
unknown to the parties, is demandable at once.
Every obligation which contains a resolutory condition
shall also be demandable, without prejudice to the effects of
the happening of the event. (1113)

Meaning of pure obligation.

A pure obligation is one which is not subject to any condition and
no specifi c date is mentioned for its fulfi llment and is, therefore,
immediately demandable.
EXAMPLES:
(1) D obliges to pay C P10,000.00. The obligation is immediately

demandable if there is no condition and no date is mentioned for its

fulfi llment. Of course, if the loan has just been contracted by D, a period
must have been intended by the parties for performance (see Floriano vs.
Delgado, 11 Phil. 154 [1908].) but the duration thereof will depend upon
the nature of the obligation and the circumstances. (Art. 1197.)
A distinction must be made between the immediate demandability
of a pure obligation and its fulfi llment by the obligor who may be granted
by the court a reasonable period for performance. The period remains
pure even where such period is fi xed by the court.
(2) D promises to pay C P26,900.00 upon receipt by D of his share
from the estate of X or upon demand of C. The obligation of D is
immediately due and demandable, for C may rely on the wording upon
demand. (Pay vs. Vda. de Palanca, 57 SCRA 18 [1974].)

Meaning of conditional obligation.

A conditional obligation is one whose consequences are subject in
one way or another to the fulfi llment of a condition.
Meaning of condition.
Condition is a future and uncertain event, upon the happening of
which, the effectivity or extinguishment of an obligation (or rights)
subject to it depends.
Characteristics of a condition.
(1) Future and uncertain. In order to constitute an event a
condition, it is not enough that it be future; it must also be uncertain.
The fi rst paragraph of Article 1179 obviously uses the disjunctive or
between future and uncertain to distinguish pure obligation from
both the conditional obligation and one with a period. Be that as it
may, the word or should be and.
(2) Past but unknown. A condition may refer to a past event
unknown to the parties. (infra.) If it refers to a future event, both its
very occurrence and the time of such occurrence must be uncertain;
otherwise, it is not a condition.
A condition must not be impossible. (see Art. 1183.)
Two principal kinds of condition.
They are:
(1) Suspensive condition (condition precedent or condition antecedent)
or one the fulfi llment of which will give rise to an obligation (or right).
In other words, the demandability of the obligation is suspended until
the happening of a future and uncertain event which constitutes the
condition.
(a) Actually, the birth, perfection or effectivity of the contract
subject to a condition can take place only if and when the condition

happens or is fulfi lled. If the suspensive condition does not take

place, the parties would stand as if the conditional obligation had
never existed. (Gaite vs. Fonacier, 2 SCRA 830 [1961]; Joven vs.
Court of Appeals, 183 SCRA 171 [1990]; Cheng vs. Genato, 300
SCRA 722 [1998]; Gonzales vs. Heirs of Thomas and Paula Cruz,
314 SCRA 585 [1999]; Insular Life Assurance Co., Ltd. vs. Toyota
Bel-Air, Inc., 550 SCRA 70 [2008].)
(b) It must appear that the performance of an act or the
happening of an event was intended by the parties as a suspensive
condition, otherwise, its non-fulfi llment will not prevent the
perfection of a contract. (see Arts. 1305, 1315, 1319.) Thus, where
there is no provision in a contract of sale declaring it without
effect until after the opening of a letter of credit by the buyer as
required by the seller, the omission to so open does not prevent
the perfection of the contract, such opening being only a mode of
payment and is not among the essential requirement of a contract
of sale enumerated in Articles 1305 and 1475.1 (Johannes Schuback
& Sons vs. Court of Appeals,2 227 SCRA 717 [1993].)
(c) There can be no rescission (see Art. 1191.) of an obligation
that is still non-existent, the suspensive condition not having been
fulfi lled. (Luzon Brokerage Co., Inc. vs. Maritime Building Co.,
Inc., 46 SCRA 381 [1972]; Rillo vs. Court of Appeals, 274 SCRA 461
[1997]; Gonzales vs. Heirs of Thomas and Paul Cruz, supra; Padilla
vs. Paredes, 328 SCRA 434 [2000].)
ILLUSTRATIVE CASES:
1. Acknowledgment signed by one of the debtors of a document is
conditioned upon the same being signed by all the debtors.
Facts: By agreement of C and D, the separate debts of the brothers A,
B, and C to D were liquidated and consolidated into only one obligation
in a promissory note signed by C who acknowledged his indebtedness. D
signed the note on condition that C would obtain the signatures of A and
B thereby creating a joint obligation against the three. C never secured
their signatures until his death.
In an action against A and B by D to recover their respective shares in
the indebtedness, A and B contended that since their signatures were not
affi xed to the document, D was bound to acknowledge it as a credit only
against C who signed it.
Issue: Is D bound to acknowledge the document as a credit only
against C?
Held: No. The contract contained reciprocal obligations (see Art.
1169, last par.) which were to be fulfi lled by each of the signers, that is,

on the part of C to secure signatures of A and B to the instrument, and

then on the part of D, to recognize it as a joint obligation of A, B, and C
covering their indebtedness to him.
Until C obtained the signatures of A and B, D was not in any way
bound to acknowledge it as anything more than an executory contract
containing a condition precedent which was to be performed by C before
Ds obligation was due. Mere continued silence on his part could signify
nothing until the signatures of A and B had been secured. (Martinez vs.
Cavives, 25 Phil. 581 [1913].)
- - -
2. Sale of vessel is conditioned upon proof that seller is, in fact, owner of
property.
Facts: S, owner, and B, purchaser, agreed upon the sale of a vessel
provided that the title papers to the same were in proper form. The title
was in the name of another and S promised to perfect his title to the
vessel. Before compliance by S with the condition exacted by B, and
while the vessel was in Ss possession, it sank due to a severe storm.
Issue: Is B under obligation to pay the price of the vessel?
Held: No. The sale of the vessel was not perfected, because of the
non-compliance by S of a condition precedent to its perfection, to wit:
the production of the proper papers showing that he was, in fact, the
owner of the vessel in question. Consequently, the loss of the vessel must
be borne by S, the owner, and not by B who only intended to purchase it
and was unable to do so because of failure of S to comply with the said
condition. Article 1262 is not applicable. (Roman vs. Grimalt, 6 Phil. 96
[1906] ; see Borromeo vs. Franco, 5 Phil. 49 [1905], infra.)
- - -
3. Condition claimed was not contemplated by the parties.
Facts: B obliged himself to pay S the balance of the purchase price of
a subdivision lot within two years from the completion by S of the roads
therein. S brought suit to foreclose the real estate mortgage executed by
B to secure the payment of the unpaid price, for failure of B to pay the
mortgage indebtedness notwithstanding the completion of the roads, a
condition for the payment of the same.
B contends that the roads are not yet completed in the technical, legal
sense, because the fi nal say or acceptance by the Capital City Planning
Commission of Quezon City had not yet been secured.
Issue: Is this contention of B tenable?
Held: No. This contention is inordinately technical and also devoid of
merit. There is nothing at all in the ordinance (No. 2969 of Quezon City)
which makes the acceptance by the said agency a condition precedent
before a street may be considered constructed. Such condition was not
within the contemplation of the parties. (Enriquez vs. Ramos, 73 SCRA 116
[1976].)

(2) Resolutory condition (condition subsequent) or one the fulfi llment

of which will extinguish an obligation (or right) already existing.

ILLUSTRATIVE CASES:
1. Donation subject to resolutory condition transfers title but revocable
for non-compliance with condition.
Facts: R donated to T (Province of Tarlac) a parcel of land subject to
the condition that it was to be used for the erection of a central school and
a public park, the work to commence within the period of six (6) months
from the date of the ratifi cation by the parties of the deed of donation.
The donation was accepted by T and title to the property was transferred
to it. Subsequently, R sold the land to C.
C claimed that since the condition imposed was not complied with,
there was no donation.
Issue: Is the condition suspensive or subsequent?
Held: It is a condition subsequent. The characteristic of a condition
precedent is that the acquisition of right is not effected while said
condition is not complied with or is not deemed complied with.
Meanwhile, nothing is acquired and there is only an expectancy of right.
Consequently, when a condition is imposed, the compliance of which
cannot be effected except when the right is deemed acquired, such
condition cannot be deemed a condition precedent.
In the present case, the condition could not be complied with except
after giving effect to the donation. The donee could not do any work on
the donated land if the donation had not really been effected because it
would be an invasion of anothers title, for the land would have continued
to belong to the donor so long as the condition imposed was not
complied with. The non-compliance with the condition is, however, a
suffi cient cause for revocation. (Parks vs. Prov. of Tarlac, 49 Phil. 142 [1926].)
- - -
2. Transfer of ownership of property sold shall become absolute upon
payment by vendee of vendors debt to third parties; void, if paid by the vendor
himself.
Facts: S sold to B a parcel of land in consideration of the obligation
assumed by B to pay what the vendor (S) owed to several parties mentioned
in the deed; if S paid his debts, the sale shall become inoperative
and void, but that if B paid the same debts by reason of Ss failure to do
so, the sale made shall become absolute and irrevocable automatically,
without the need of executing any other deed of conveyance. B paid the
debts of S.
Upon presentation of the corresponding instruments, the certifi cate
of title issued in the name of S was cancelled and a transfer certifi cate of
title was issued in Bs name.
Issue: Is the contract one of equitable mortgage or a sale subject to a
resolutory condition?
Held: The contract is obviously a perfected contract of sale and subject
to a resolutory condition. The property is not given as a mere security

for a loan which is the manifest purpose of a contract of mortgage

but instead it makes a conditional transfer of ownership which becomes
automatically absolute and fi nal upon performance of the condition
agreed upon, namely, payment by B of what S owed the parties
mentioned in the deed of conveyance. (Rodriguez, Sr. vs. Francisco, 2 SCRA
648 [1961].)
Note : In a contract to sell on installments, upon the fulfi llment of the
positive suspensive condition which is the full payment of the purchase
price, ownership will not automatically transfer to the buyer although
the property may have been previously delivered to him. The prospective
seller still has to convey title to the prospective buyer by entering into a
contract of absolute sale. (see Coronel vs. Court of Appeals, 263 SCRA
15 [1996].) The failure to fulfi ll the condition is not considered a breach,
casual or serious, but simply an event which prevents the obligation of
the seller to convey title from acquiring any obligatory force. (Rillo vs.
Court of Appeals, 274 SCRA 461 [1997].)
- - -
3. Vendor seeks rescission of sale for violation by vendee of restriction
imposed in contract of sale between vendor and previous owner (fi rst vendor).
Facts: The contract of sale of three (3) lots between S (PHHC) and B
provided that only construction exclusively for residential purposes
shall be built on the property, terms thereof to be binding upon the
successors and assignees of the respective parties. Subsequently, B
sold two (2) lots to Meralco which established a sub-station within the
property.
Because of the severe noise from the sub-station, B fi led a complaint
for the rescission of the sale.
Issue: Has B the right of action against Meralco for violation of the
restriction imposed in the contract between S and B?
Held: No. It is S which has the right of action against any assignee of
B. S cannot rescind the contract between B and Meralco because it was
not a party to it. Ss redress would be to directly seek cancellation of
the title of Meralco, and to repossess the property as provided in its
contract with B. (Manila Electric Company vs. Court of Appeals, 114 SCRA
173 [1982].)

Distinctions between suspensive

and resolutory conditions.
The difference between the two conditions is very clear; both bear
an infl uence on the existence of the obligation, but in diametrically
opposed manner.
(1) If the suspensive condition is fulfi lled, the obligation arises,
while if it is the resolutory condition that is fulfi lled, the obligation is
extinguished;

(2) If the fi rst does not take place, the tie of law (juridical or legal
tie) does not appear, while if it is the other, the tie of law is consolidated;
and
(3) Until the fi rst takes place, the existence of the obligation is a
mere hope, while in the second, its effects fl ow, but over it, hovers the
possibility of termination. (see 8 Manresa 130-131.)
Note: A distinction must be made between a condition imposed
on the perfection of a contract and that imposed on the performance
of an obligation. Failure to comply with the fi rst condition results in
the failure of a contract, while failure to comply with the second (e.g.,
condition that the seller shall eject the squatters on the property sold
within a certain period), only gives the other party the option either
to refuse to proceed with the sale or to waive the condition. (Lim vs.
Court of Appeals, 263 SCRA 569 [1996]; see Art. 1545; Babasa vs. Court
of Appeals, 290 SCRA 532 [1998]; Jardine Davies, Inc. vs. Court of
Appeals, 333 SCRA 684 [2000].)
When obligation demandable at once.
An obligation is demandable at once
(1) when it is pure (Art. 1179, par. 1.);
(2) when it is subject to a resolutory condition (Ibid., par. 2.); or
(3) when it is subject to a resolutory period. (Art. 1193, par. 2.)
Past event unknown to the parties.
A condition really refers only to an uncertain and future event. A
past event cannot be said to be a condition since the demandability of
an obligation subject to a condition depends upon whether the event
will happen or will not happen.
What is really contemplated by the law is the knowledge to be
acquired in the future of a past event which at the moment is unknown
to the parties interested, for it is only in that sense that the event can be
deemed uncertain. This knowledge determines whether the obligation
will arise or not. (see 8 Manresa 120-121.)
EXAMPLE:
S is the owner of a parcel of land which is being claimed by X. Last
week, the Supreme Court has rendered a fi nal decision upholding the
right of S. However, S has not yet received the notice that he had won
the case. Now, S obliged himself to sell the land to B for a defi nite price,
should he win the case against X.
Under the facts, S would be bound to sell the land to B upon receipt
of the notice that he had won the case against X.