LESSON 1: UNIT 1 – Introduction to Law and the If it is a generic thing:

Philippine Legal System

1. To ask for performance of the obligation.
Law is a rule of conduct, just, obligatory, promulgated by 2. To ask that the obligation be complied with at the
legitimate authority, and of common observance and benefit. expense of the debtor. A determinate thing is one that is
particularly designated or physically segregated from all
The Philippine legal system is a mixture of customary usage, others of the same class.
Roman (civil law) and Anglo-American (common law)
systems, and Islamic law. The legal system is the result of A generic thing is one whose determination is confined to
the immigration of Muslim Malays in the fourteenth century that of its nature, to the genus to which it pertains such as a
and the subsequent colonization of the islands by Spain and horse, a chair.
the United States. The civil law operates in areas such as
family relations, property, succession, contract and criminal (e.g.) A contract of sale uses a determinate thing, while a
law while statutes and principles of common law origin are contract of loan uses a generic thing. The following are the
evident in such areas as constitutional law, procedure, obligations of the passive subject in: (-- Article 1460, Civil
corporations’ law, taxation, insurance, labor relations, Code of the Philippines -- De Leon vs. Soriano, 87 Phil. 196.)
banking and currency. a) Obligations to give a determinate thing:
The MAIN SOURCES OF PHILIPPINE LAW are: 1. To deliver the thing which he has obligated himself to
➢ The 1987 Philippine Constitution – the give.
fundamental and supreme law of the land 2. To take care of the thing with the proper diligence of a
➢ Statutes – including Acts of Congress, municipal good father of a family.
charters, municipal legislation, court rules, 3. To deliver all its accessories and accessions.
administrative rules and orders, legislative rules and 4. To pay damages in case of breach of obligation.
presidential issuances. b) Obligations to do:
➢ Treaties and conventions – these have the same
force of authority as statutes. 1. If the debtor fails to do what he is obliged to do, it will be
➢ Judicial decisions – Art 8 of the Civil Code done at his expense.
provides that ‘judicial decisions applying to or 2. If the work is done in contravention of the tenor of the
interpreting the laws or the Constitution shall form a obligation, it will be re-done at debtor ‘s expense.
part of the legal system of the Philippines’. Only 3. If the work is poorly done, it will be redone at debtor ‘s
decisions of its Supreme Court establish expense.
jurisprudence and are binding on all other courts.
In obligations to do, you will note that you cannot compel the
To some extent, customary law also forms part of the Filipino passive subject to perform, otherwise, it will constitute
legal system. Art 6, paragraph 2 of the Constitution provides involuntary servitude which is in violation of the Constitution.
that ‘the State shall recognize, respect, and protect the rights However, the passive subject may be held liable for
of indigenous cultural communities to preserve and develop damages.
their cultures, traditions and institutions’.
The SOURCES OF LIABILITY (for damages) OF A PARTY
The primary sources of Muslim law / Shariah are the Quran, IN AN OBLIGATION are as follows:
Sunnaqh, Ijma and Qiyas.
(1) Fraud.
UNIT 2 – General Provisions on Obligations
a. The fraud is incidental fraud (dolo incidente) which is fraud
The Law on Obligations and Contracts is a body of rules incident to the performance of an obligation. In fraud, there is
which deals with the nature and sources of obligations and an intent to evade the normal fulfillment of the obligation and
the rights and duties arising from agreements and the to cause damage. (Refer to Articles 2199-2201 of the Civil
particular contracts. Code of the Philippines.)

ART. 1156. An obligation is a juridical necessity to give, to do b. The fraud is causal (dolo causante) or when fraud used to
or not to do. _ Civil Code of the Philippines induce a person to agree to a contract. This kind of fraud is a
ground for annulment of the contract plus damages;
An obligation is a juridical necessity because in case of
noncompliance therewith, the aggrieve party may ask for the (2) Negligence.
intervention of the courts to enforce the fulfillment of the
The negligence referred here, in the case of contracts (i.e.,
obligation, or in default thereof, the economic value that it
common carrier) is culpa contractual, the lack of diligence or
represents.
carelessness. Negligence consists in the omission of that
Nature and Effects of Obligations diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, or the
The following are the rights available to a creditor in time and of the place.
obligations to give:

If it is a determinate thing:

1. To compel specific performance

2. To recover damages in case of breach
3. Acquires personal right to the fruits of the thing from the
time the obligation to deliver arises
4. Acquires real right over the thing once the thing has been
delivered to him
5. Rights over the accessories and accessions.
 LESSON 2: UNIT 1 – Elements of Obligations LEGAL OPINION:

An obligation is a juridical necessity to give, to do or not to Yes, Anabel may sue the driver and the hotel for damages
do. (Art. 1156 of the New Civil Code of the Philippines) An on the ground of culpa-aquiliana. The pedestrian may also
obligation is a legal bond (vinculum juris) by which one or sue the driver and the owner of the hotel for damages for
more parties (obligants) are bound to act or refrain from reckless imprudence arising from a crime under the Revised
acting. Thus, an obligation imposes on the obligor a duty to Penal Code.
perform, and simultaneously creates a corresponding right to
demand performance by the obligee to whom performance is KINDS OF DAMAGES
to be tendered. 1. Actual/ Compensatory Damages
Justinian first defines an obligation (obligatio) in his Purpose: Actual or compensatory damages simply make
Institutiones, Book 3, section 13 as "a legal bond, with which good or replace the loss caused by the wrong.
we are bound by necessity of performing some act according
to the laws of our State." He further separates the law of Manner of Determination: Claimant must produce competent
obligations into contracts, delicts, quasi-contracts, and quasi- proof or the best evidence obtainable such as receipts to
delicts. justify an award therefore. Actual or compensatory damages
cannot be presumed but must be proved with reasonable
Every OBLIGATION HAS FOUR ESSENTIAL ELEMENTS: certainty. (People v. Ereno, Feb. 22, 2000)
The active subject is the person who has the right or power Special/Ordinary: Ordinary
to demand the performance or payment of the obligation. He
is also called the obligee or the creditor. NOTE: Ordinary Damages are those generally inherent in a
breach of a typical contract.
The passive subject is the person bound to perform or to
pay. He is the one against whom the obligation can be 2. Moral Damages
demanded. He is also called the obligor or the debtor.
Purpose: Awarded only to enable the injured party to obtain
The prestation is the object of the contract. It is the conduct means, diversion or amusement that will alleviate the moral
required to be observed by the debtor or the obligor. It may suffering he has undergone, by reason of defendants
be an obligation to give, to do, or not to do. culpable action. (Robleza v. CA, 174 SCRA 354)

The vinculum juris is also known as the juridical or legal Tie. Manner of Determination: No proof of pecuniary loss is
Other authors call it the efficient cause. It is that which binds necessary. The assessment is left to the discretion of the
or connects the parties to the obligation. (De Leon) In other court according to the circumstances of each case. However,
words, it is the legal relation between the debtor and the there must be proof that the defendant caused physical
creditor (or obligor and obligee). suffering etc. (Compania Maritima v. Allied Free Worker’s
Union, G.R. No. L-31379, Aug. 29, 1988). GR: Factual basis
UNIT 2: Sources of Obligation must be alleged. Aside from the need for the claimant to
Obligations may arise from different sources. The satisfactorily prove the existence of the factual basis of the
determination of these sources is primodial for the purpose damages, it is also necessary to prove its causal relation to
of ensuring that there is actually an existing legal obligation. the defendant’s act (Raagas v. Trava, G.R. No. L-20081,
Feb. 27,1968; People v. Manero, G.R. Nos. 86883-85, Jan.
Sources of Obligations 29, 1993).

a) Law Exception: Criminal cases. Moral damages may be awarded

b) Contracts to the victim in criminal proceedings in such amount as the
c) Quasi-contracts court deems just without need for pleading or proof of the
d) Crimes/delicts basis thereof (People v. Paredes, July 30, 1998).
e) Quasi-delicts
Special/Ordinary: Special
a) Law – are not presumed; only those expressly determined
in this code or in special laws are demandable (Art. 1158). NOTE: Special Damages are those which exist because of
special circumstances and for which a debtor in good faith
b) Contracts – stipulation of parties; law between the parties; can be held liable if he had been previously informed of such.
characteristic of compellability (Art. 1159). circumstances.

c) Quasi-contracts – lawful, voluntary and unilateral acts 3. Nominal Damages

which are enforceable to the end that “no one shall be
unjustly enriched at the expense of another” - solutio Purpose: Vindicating or recognizing the injured party’s right
indebiti and negotiorum gestio. to a property that has been violated or invaded. (Tan v.
Bantegui, 473 SCRA 663)
d) Crimes/Delicts – “every person criminally liable is also
civilly liable”. Manner of Determination: No proof of pecuniary loss is
necessary. Proof that a legal right has been violated is what
e) Quasi Delicts – damages cause by act or omission (fault is only required. Usually awarded in the absence of proof of
or negligence); no contractual relationship between the actual damages.
parties.
Special/Ordinary: Special
APPLICATION OF THE LAW CASE:
NOTE: Special Damages are those which exist because of
Anabel was crossing the street coming from the hotel to the special circumstances and for which a debtor in good faith
nearby shopping mall. She was accidentally hit by a hotel car can be held liable if he had been previously informed of such
driven by Leandro, a driver employed by the hotel. Can circumstances.
Anabel sue to driver? Can she sue the hotel?
4. Temperate Damages LESSON 3: Nature and Effect of Obligations

Purpose: When the court is convinced that there has been Art. 1163 to 1166 – obligation to give.
such a loss, the judge is empowered to calculate moderate
damages rather than let the complainant suffer without 2 KINDS OF OBJECT IN AN OBLIGATION TO GIVE
redress. (GSIS v. Labung-Deang, 365 SCRA 341) a) Specific or determinate - Particularly designated or
Manner of Determination: May be recovered when the court physically segregated from others of the same class
finds that some pecuniary loss has been suffered but its b) Generic or indeterminate - Cannot be pointed out with
amount cannot, from the nature of the case, be proved with particularity.
certainty. No proof of pecuniary loss is necessary.
Duties of debtor in obligation to give a determinate thing:
Special/Ordinary: Special
1) Preserve the thing – only ordinary care or diligence of a
NOTE: Special Damages are those which exist because of good father of a family unless another standard of care is
special circumstances and for which a debtor in good faith stipulated.
can be held liable if he had been previously informed of such.
circumstances. 2) Deliver the fruits of the thing (Art. 1164)

5. Liquidated Damages ✓ Creditor has a personal right to the fruits at the time
obligation of debtor arises.
Purpose: Liquidated damages are frequently agreed upon by ✓ Creditor acquires real rights only upon delivery;
the parties, either by way of penalty or in order to avoid Delivery transfers ownership.
controversy on the amount of damages.
3 KINDS OF FRUITS
Manner of Determination: If intended as a penalty in
obligations with a penal cause, proof of actual damages a) Natural fruits – spontaneous products of the soil,
suffered by the creditor is not necessary in order that the and products of animals.
penalty may be demanded (Art. 1228, NCC). No proof of b) Industrial fruits – produced by lands through labor.
pecuniary loss is necessary. c) Civil fruits – derived by virtue of a juridical relation
i.e., rentals.
Special/Ordinary: Special
3) Deliver the accessions and accessories even not
NOTE: Special Damages are those which exist because of mentioned (Art. 1166)
special circumstances and for which a debtor in good faith
can be held liable if he had been previously informed of such. ✓ Accessions are the fruits of a thing or improvements
circumstances. upon a thing i.e., trees on land.
✓ Accessories are things joined to the thing for
6. Exemplary/Corrective Damages embellishment, better use or completion i.e., car
Purpose: Exemplary or corrective damages are intended to sound system.
serve as a deterrent to serious wrongdoings. (People v. 4) Deliver the thing itself
Orilla, 422 SCRA 620)
✓ Creditor can compel debtor to make delivery or
Manner of Determination: specific performance. (Art. 1165)
1. That the claimant is entitled to moral, temperate or ✓ Debtor is liable for damages if there is (a) delay and
compensatory damages; and (b) double promise to deliver, even if a fortuitous
2. That the crime was committed with 1 or more event caused the damage.
aggravating circumstances, or the quasi--‐delict was Fortuitous event – an event which cannot be foreseen, or
committed with gross negligence, or in contracts and though foreseen is inevitable i.e., Acts of man like robbery
quasi-contracts the act must be accompanied by bad and Acts of God like earthquake.
faith or done in wanton, fraudulent, oppressive or
malevolent manner. No proof of pecuniary loss is No person is responsible for fortuitous event (Art. 1174)
necessary. except:

Special/Ordinary: Special a) Specified by law

b) Stipulated
NOTE: Special Damages are those which exist because of c) Nature of the obligation requires assumption of risk.
special circumstances and for which a debtor in good faith
can be held liable if he had been previously informed of such. Duties of debtor in obligation to deliver a generic thing:
circumstances.
1) Deliver a thing which is of the quality intended

✓ Not necessary to compel delivery of specific

performance as creditor can ask another to person
to perform the obligation.
✓ However, creditor may ask the performance of the
obligation.

OBLIGATION TO DELIVER

The obligation of the seller to deliver is absolutely necessary

to the performance of his obligation to transfer ownership.
The ownership of the thing sold is transferred to the vendee
upon the actual or constructive delivery thereof. The thing
sold shall be understood as delivered when it is placed in the
control and possession of the vendee.
 FOUR KINDS OF DELIVERY OR TRADITION special attention because despite delivery, ownership does
not pass to the vendee. This are the following:
1) Real Delivery (Real Tradition) – takes place by the
delivery or transfer of a thing from hand to hand (movable) or 1. When goods are delivered to the buyer “on sale or
processory acts by the vendee (immovable). return.”
✓ The buyer has an option to return the goods
2) Constructive Delivery – exist when delivery of movable instead of paying the price.
and immovable things is not actual or material but ✓ The ownership passes to the buyer on
represented by other signs or acts indicative thereof. delivery, but the buyer has the right to revert
a) Legal – as when the sale is made through a public the ownership in the seller by returning or
instrument. The execution thereof shall be offering to return the goods.
equivalent to the delivery of the thing which is the ✓ The return or offer to return the goods must
object of the contract it from the deed the contrary be made within the time fixed in the contract
does not appear or is not clearly inferred. or within a reasonable time if no time has
b) Symbolic Traditio – with respect to movable been specified.
property, its delivery may also be made by the 2. When the goods are delivered to the buyer on
delivery of the keys of the place or depository where approval or on trial, or on satisfaction.
it is stored or kept. ✓ The ownership passes to the buyer when he
signifies his approval or acceptance to the
Example: A sold his car to B. A handed over the keys to B to seller or does any other act of adopting the
symbolize that he is handing over the car. transaction.
✓ Ownership does not pass to the buyer
c) Traditio Longa Manu (delivery with long hand) –
unless and until the buyer signifies his
which is effected by the vendor pointing out to the
acceptance by words or conduct.
vendee the thing which is being transferred, and
which at the same time must be in sight. If, however, he does not signify his approval or acceptance
to the seller, but retains the goods without giving notice of
Example: Farmer D is selling a flock of sheep may point out
rejection, ownership thereby passes to the buyer.
the sheep to buyer E and make them available for him. The
property is too heavy or big to be physically handed over. a. After the expiration of the time fixed for the return of
goods; or
d) Traditio Brevi Manu (delivery with short hand) –
b. If no time has been fixed, on the expiration of a
takes place when a person in possession under a
reasonable time, though is a question of fact. (Art.
title that is not of ownership, such when a lessee
1502)
purchases the thing leased and continues thereafter
3. Where the parties have stipulated that ownership in
to hold it as owner and no longer as lessee.
the thing shall not pass to the purchaser until he has
Example: A is renting B’s house and lot. Later, A bought the fully paid the price. (Art. 1478)
house and lot. There is no need for B to deliver it to A
Those who in the performance of obligation shall be liable for
because the thing sold is already in the possession of the
damages if any of the following is present: (Art. 1170)
owner at the time of the perfection of the sale. Therefore, the
house and lot will continue to be in possession of A after the 1) Fraud (Dolo)
sale, no longer as a lessee but this time as the owner.
✓ incidental fraud or fraud in the performance
e) Tradicio Constitutum Possessorium (continues (damages).
possession) – it is the opposite of tradition brevi ✓ Not causal fraud or fraud employed in getting one’s
manu. The seller remains in possession of the thing consent (voidable).
sold after the sale but in concept other than the ✓ any waiver of an action for future fraud is void (Art.
owner but under another capacity like that of a 1171) based on law and public policy.
lessee, pledge, depository, etc. ✓ a past fraud can be subject of a valid waiver of action.
3) Quasi-tradition TYPES
✓ Used to indicate the transfer of rights or incorporeal 1. Dolo Causante (Causal Fraud) – this affects the
property. validity of the contract + damages.
✓ Defined as the exercise of the right by the grantee 2. Dolo Incidente (Incidental Fraud) – there is
with acquiescence of the vendor, or the placing of the already an existing valid contract, no effect on the
title of ownership in the possession of the vendee validity of the contract + damages.
✓ Used to designate that a person is in the use of the
property of another, which the latter offers and does 2) Negligence
not oppose. ✓ voluntary act or omission, there being no malice,
✓ The right of property is ceded in a thing to a person which prevents the normal fulfilment of the
who is in possession of it. obligation.
Example: If I loan a boat to Paul, and deliver it to him, and ✓ either contractual negligence (culpa contractual),
afterwards I sell him the boat, it is not requisite that he should civil negligence (culpa aquiliana/quasi-delict), or
deliver the boat to me, to be again delivered to him there is a criminal negligence (culpa criminal).
quasi-tradition or delivery. ✓ waiver of action for future negligence is valid except
those which requires extraordinary care (common
4) Tradition by operation of law – this covers all other carrier)
cases not already enumerated and in which the delivery is ✓ waiver of action for past negligence is also valid.
affected solely by virtue of an express provision of law. ✓ when negligence shows bad faith or deliberate,
Although most transfers of ownership are accomplished by considered fraud. (Art. 1173)
the foregoing modes of delivery, some transactions require
3) Delay DISCUSSION OF THE LAW

4) Contravention or violation of the terms of the A pure obligation – is one which is not subject to any
obligation. condition and no specific date is mentioned for its fulfillment
and is, therefore, immediately demandable.
Other provisions
Example: Ariel promises to pay Brenda P1,000.
Art. 1175 – usurious transactions (legally non-existent).
A conditional obligation is one whose consequences are
Art. 1176 – disputable presumption as to the payment of subject in one way or another to the fulfillment of a condition.
interest and the payment of a prior installment.
Example: Carol promises to pay B P1,000.00 if Darren
✓ Interest is presumed paid if the principal is paid remains to become an outstanding employee of the hotel for
unless reserved. the month of May.
✓ Later installment is presumed paid if prior installment
is paid unless indicated that prior installment is not A condition is defined as future and uncertain event which
paid. may or may not happen.
✓ Presumption does not apply to the payment of taxes.
The following are the DIFFERENT KINDS OF CONDITION:
Art. 1177 – remedies of the creditor to satisfy their claims
(damages). Suspensive Condition – the happening of which gives rise
to an obligation.
1) Levy the property of the debtor (except those
exempts from attachment). Resolutory Condition – the happening of which
2) Redeem the property of the debtor which is extinguishes the obligation.
mortgaged. Potestative condition – where the fulfillment depends upon
3) Collect from the debtor of the debtor. one ‘s will (either the debtor, creditor or a third person).
4) Ask for cancellation of the contracts that defraud the
creditor. Casual condition – when the fulfillment of the condition
depends upon chance.
Art. 1178 – transmissibility of rights acquired in an obligation
Mixed condition – when the fulfillment of the condition
✓ All rights acquired by virtue of an obligation is depends partly upon one ‘s will and partly upon chance.
transmissible except:
a) Prohibited by law i.e., partnership, agency, Impossible Condition – that which is not capable of
and commodatum. fulfillment because it is contrary to the law of nature or
➢ Contract of partnership contrary to law, morals, public order or public policy.
➢ Contract of agency
An obligation with a period – is one whose consequences
b) Prohibited by stipulation of parties.
are subject in one way or another to the expiration of the said
------------------------------------------------------------------------------- period or term.

LESSON 4: Classification of Obligations

CLASSIFICATION OF OBLIGATIONS Joint obligations – are those where, although there concur
two or more creditors and debtors, in one and the same
1) Pure obligation, there is no right to demand nor a duty on the part
2) Conditional of each of the latter to render entire compliance of the entire
3) With a period obligation.
4) Alternative
5) Joint Solidary obligations – are those in which concur several
6) Solidary debtors or creditors or both, and where each creditor has the
7) Divisible right to demand, and each debtor is bound to perform, in its
8) Indivisible entirety, the prestation constituting the object of the
9) With a penal clause obligation.

Primary classification of obligations under the Civil Code: The contract is presumed to be joint unless the obligation
expressly states for its solidarity; or when the law expressly
(a) Pure and conditional obligations (Articles 1179-1192); provides for its solidarity. The term ―joint and severalǁ used
(b) Obligations with a period (Articles 1193-1198); in contracts is applied to liability in an obligation made by
(c) Alternative (Articles 1199-1205) and facultative several obligors when the obligee may at his option hold one
obligations (Article 1206); or all liable together. Situations where the law expressly
(d) Joint and solidary obligations (Articles 1207-1222); states solidarity are as follows:
(e) Divisible and indivisible obligations (Articles 1223-
1225); ✓ When by any wrongful act or omission caused by a
(f) Obligations with a penal clause (Articles 1226-1230) partner acting in the course of the business of the
partnership against a third person, the partnership
Secondary classification of obligations under the Civil Code: and the partner so acting is liable.
(a) Unilateral and bilateral obligations (Articles 1169-1191); ✓ When a partner acting within the scope of his
(b) Real and personal obligations (Articles 1163-1168); authority receives money and misapplies it, or
(c) Civil and natural obligations (Articles 1423); and misapplies the money received by the partnership,
(d) Legal, conventional, and penal obligations (Articles the partnership is solidarily liable with the partner.
1157, 1159, 1161). ✓ Solidary liability of the directors and trustees of
corporation who are guilty of gross negligence or bad
faith in directing the affairs of the corporation.
✓ Solidary liability of a labor-only contracting and the
indirect employer.
APPLICATION OF THE LAW CASE

Mr. Danny Ramos, owner of Danny ‘s Grill (a fine dining

restaurant), entered into a contract with Chona Romulo and
Michael Aldeguer (proprietors of CM Wine Company) with
the following stipulation:

― In case of failure to deliver the agreed 150 bottles of

Emperor ‘s White Wine on or before December 30, 2007,
Chona Romulo and Michael Aldeguer shall be liable to Dan
Ramos, joint and severally, for damages in the total amount
of P100,000.00.

CM Wine Company was not able to fulfill their obligation to

Mr. Ramos. For three days that the wines were not delivered,
many complaints arose from dining customers for wines
ordered that were out of stock. Can Mr. Ramos only hold Mr.
Aldeguer liable for damages?

LEGAL OPINION:

In this situation, Mr. Danny Ramos may at his option hold

either Chona Romulo or Michael Aldeguer, or both liable
when filing a case in court for damages incurred.

An obligation with a penal clause is an obligation which

contains an accessory obligation imposing upon the obligor
added burdens or which operates as a previously stipulated
indemnity, for the purpose of securing the performance of the
principal obligation. It substitutes the indemnity for damages
and, therefore, it does away with proof of damages suffered
in case of breach of the obligation.

Obligations with a penal clause may be seen from contracts

of loan with mortgage, and service contracts.