OBLIGATIONS & CONTRACTS

Chapter 1-

Art. 1156.

GENERAL PROVISIONS

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

An incomplete definition because it only refers to the debt side; it only refers to the conduct to be observed by the obligor; there is no debt without credit.
o

Complete definition: A juridical relation between two persons, known as the creditor and debtor, whereby the former can demand from the latter
the observance of a determinate conduct and in case of breach, may obtain satisfaction from the assets of the latter.

Why is it a juridical necessity? Because the term, juridical necessity connotes that in case of noncompliance, there will be legal sanction.
Note: It covers only civil obligations, not natural obligations.
Characteristics of an Obligation:
1. It represents an exclusively private interest
2. It creates ties that are by nature transitory
3. It involves the power to make the juridical tie effective in case of non-fulfillment through an economic equivalent obtained from the debtor's
patrimony.
Types of obligations:
a.

Civil obligations - those which derive their binding force from positive law, and can be enforced by court action or the coercive power of
public authority.
b.
Natural obligations - refer to those which derive their binding force from equity and natural justice, and its fulfillment cannot be
compelled by court action but depends exclusively on the conscience of the debtor.
c.
Moral obligations - are those which arise from moral law developed by the church and not enforceable in court. It deals with the spiritual
obligation of a person in relation to his God and church

ELEMENTS of an OBLIGATION CODE: A P O E

A. Active subject (creditor, obligee)Has the power to demand the prestation; it is he who in his favor the obligation is constituted, established or created; it is he who has the right
to demand.

B. Passive subject (debtor, obligor)

One who is bound to perform the prestation; passive because without the demand, there will be no action, he has to wait for the demand from
the creditor.
Has the juridical necessity of adjusting his conduct to the demand of the creditor pursuant to the obligatory tie.
NB: It is not necessary that the active/passive subject (also known as the personal elements of the obligation) be determinate at the time of
the constitution, but they must at least be determinable. When the subject cannot be determined, the obligatory tie can have no effect.
C. The object or the prestation
The object is not a thing but a particular conduct of the debtor. It is the subject matter of the obligation which has an economic value or
susceptible to pecuniary substitution in case of noncompliance.
D. Efficient cause or juridical tie between the two subjects
The vinculum by which the debtor is bound to in favor of the creditor to perform the prestation. It is determined by knowing the sources of the
obligation (Art. 1157)
5. Causa debendi/ obligationes (Castan).-- This is what makes the obligation demandable. This is the proximate why of an obligation.

6. Form.-- This is controversial. This is acceptable only if form means some manifestation of the intent of the parties.

KINDS OF PRESTATION:
a. to give consists of the delivery of a movable or immovable thing which is either determinate (specific) or indeterminate (generic). This is in order to
create a real right, or for the use of the creditor, or for its simple possession, or in order to return to its owner.
b. to do involves all kinds of work or services whether physical or mental, but in most cases the essence of the act man not be such, but merely the
necessity of concluding a juridical operation, such as, when a person promises to give a bond.
c.

not to do is a negative obligation which consists of abstaining from some act, it includes not to give.

REQUISITES OF PRESTATION
1. it must be physically and juridically possible;
2. it must be determinate or at least determinable according to pre-established elements or criteria;
3. it must have a possible equivalent in money or a pecuniary value. (why: so in case of breach, one can demand damages)
Article 1157 Sources of obligation
a. Law;
b. Contracts;
c. Quasi-Contracts;

d. Crimes;
e. Quasi-delicts;

CASES:
People vs. bayotas
Facts: In Criminal Case No. C-3217 filed before Branch 16, RTC Roxas City, Rogelio Bayotas y Cordova was charged with Rape and eventually convicted thereof
on June 19, 1991 in a decision penned by Judge Manuel E. Autajay. Pending appeal of his conviction, Bayotas died on February 4, 1992 at the National Bilibid
Hospital due to cardio respiratory arrest secondary to hepatic encephalopathy secondary to hipato carcinoma gastric malingering. Consequently, the Supreme
Court in its Resolution of May 20, 1992 dismissed the criminal aspect of the appeal. However, it required the Solicitor General to file its comment with regard to
Bayotas' civil liability arising from his commission of the offense charged.
Ruling: From this lengthy disquisition, we summarize our ruling herein:
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. As opined by Justice
Regalado, in this regard, "the death of the accused prior to final judgment terminates his criminal liability and only the civil liability directly arising from and based
solely on the offense committed, i.e., civil liability ex delicto in senso strictiore."
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated on a source of obligation other than
delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or omission:
a) Law 20
b) Contracts
c) Quasi-contracts
d) . . .
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but only by way of filing a separate civil
action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may be enforced either against the
executor/administrator or the estate of the accused, depending on the source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where during the prosecution of
the criminal action and prior to its extinction, the private-offended party instituted together therewith the civil action. In such case, the statute of limitations on the
civil liability is deemed interrupted during the pendency of the criminal case, conformably with provisions of Article 1155 of the Civil Code, that should thereby
avoid any apprehension on a possible privation of right by prescription.

Villegas vs. Ca
Facts: This case originated from a libel suit filed by then Assemblyman Antonio V. Raquiza against then Manila Mayor Antonio J. Villegas, who allegedly publicly
imputed to him acts constituting violations of the Anti-Graft and Corrupt Practices Act. He did this on several occasions in August 1968 through (a) a speech
before the Lion's Club of Malasiqui, Pangasinan on August 10; (b) public statements in Manila on August 13 and in Davao on August 17, which was coupled with a
radio-TV interview; and (c) a public statement shortly prior to his appearance before the Senate Committee on Public Works (the Committee) on August 20 to
formally submit a letter-complaint implicating Raquiza, among other government officials.
Ruling: The source of Villegas' civil liability in the present case is the felonious act of libel he allegedly committed. Yet, this act could also be deemed a quasi-delict
within the purview of Article 33 in relation to Article 1157 of the Civil Code. If the Court ruled in Bayotas that the death of an accused during the pendency of his
appeal extinguishes not only his criminal but also his civil liability unless the latter can be predicated on a source of obligation other than the act or omission
complained of, with more reason should it apply to the case at bar where the accused died shortly after the prosecution had rested its case and before he was
able to submit his memorandum and all this before any decision could even be reached by the trial court.
The Bayotas ruling, however, makes the enforcement of a deceased accused's civil liability dependent on two factors, namely, that it be pursued by filing a
separate civil action and that it be made subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure, as amended. Obviously, in the case at bar, the
civil action was deemed instituted with the criminal. There was no waiver of the civil action and no reservation of the right to institute the same, nor was it instituted
prior to the criminal action. What then is the recourse of the private offended party in a criminal case such as this which must be dismissed in accordance with
the Bayotas doctrine, where the civil action was impliedly instituted with it?
The answer is likewise provided in Bayatas, thus:
Assuming that for lack of express reservation, Belamala's civil civil for damages was to be considered instituted together with the crinimal action still, since both
proceedings were terminated without finals adjudication the civil action of the offended party under Article 33 may yet be enforced separately (Emphasis supplied)
Hence, logically, the court a quo should have dismissed both actions against Vilegas which dismissal will not, however, bar Raquiza as the private offended party
from pursuing his claim for damages against the executor or administrator of the former's estate, notwithstanding the fact that he did not reserve the right to
institute a civil separate civil action based on Article 33 of the Civil Code.

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.
CASES:
People vs. Lauron
Facts: On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu, filed a complaint against Marcelo Lauron and Juana Abella setting forth that
on or about the 13th of October of said year, at night, the plaintiff was called to the house of the defendants, situated in San Nicolas, and that upon arrival he was
requested by them to render medical assistance to their daughter-in-law who was about to give birth to a child; that therefore, and after consultation with the
attending physician, Dr. Escao, it was found necessary, on account of the difficult birth, to remove the fetus by means of forceps which operation was performed
by the plaintiff, who also had to remove the afterbirth, in which services he was occupied until the following morning, and that afterwards, on the same day, he
visited the patient several times; that the just and equitable value of the services rendered by him was P500, which the defendants refuse to pay without alleging

any good reason therefor; that for said reason he prayed that the judgment be entered in his favor as against the defendants, or any of them, for the sum of P500
and costs, together with any other relief that might be deemed proper.

Ruling: Obligations arising from law are not presumed. Those expressly determined in the code or in special laws, etc., are the only demandable ones.
Obligations arising from contracts have legal force between the contracting parties and must be fulfilled in accordance with their stipulations. (Arts. 1090 and
1091.)
The rendering of medical assistance in case of illness is comprised among the mutual obligations to which the spouses are bound by way of mutual support. (Arts.
142 and 143.)
If every obligation consists in giving, doing or not doing something (art. 1088), and spouses are mutually bound to support each other, there can be no question
but that, when either of them by reason of illness should be in need of medical assistance, the other is under the unavoidable obligation to furnish the necessary
services of a physician in order that health may be restored, and he or she may be freed from the sickness by which life is jeopardized; the party bound to furnish
such support is therefore liable for all expenses, including the fees of the medical expert for his professional services. This liability originates from the above-cited
mutual obligation which the law has expressly established between the married couple.
In the face of the above legal precepts it is unquestionable that the person bound to pay the fees due to the plaintiff for the professional services that he rendered
to the daughter-in-law of the defendants during her childbirth, is the husband of the patient and not her father and mother- in-law, the defendants herein. The fact
that it was not the husband who called the plaintiff and requested his assistance for his wife is no bar to the fulfillment of the said obligation, as the defendants, in
view of the imminent danger, to which the life of the patient was at that moment exposed, considered that medical assistance was urgently needed, and the
obligation of the husband to furnish his wife in the indispensable services of a physician at such critical moments is specially established by the law, as has been
seen, and compliance therewith is unavoidable; therefore, the plaintiff, who believes that he is entitled to recover his fees, must direct his action against the
husband who is under obligation to furnish medical assistance to his lawful wife in such an emergency.
Leung Ben vs. Obrien
w/n leung ben could recover the money he paid as a result for his lose in the gambling? What is the source of obligation in returning the money lose? Article 2014
is the basis of the obligation.

Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good
faith.
Contract- a meeting of the minds between two persons where one binds himself with respect to another to render some service;
There is that autonomy in short to enter a contract you could put there any stipulations that you want but those stipulations must be valid and should not be
contrary to law , morals , good customs , public order or public policy.
Ex. If you enter into a contract to deliver a drug that is not valid because that is contrary to law , that act will not be a source of obligation.
So under the labor law the maximum working hours of an employee is 8 hours then you let your employee work for 10 hours that can be valid if the 10 hours
working time is stipulated in a contract, so the source of obligation here is not from a law but from a contract.
Nominate contracts and Innominate Contract

Nominate- obligations that has a name ; Innominate - do ut facias, do ut des

example magkita ta sa starbucks you brought me to this places but you back out on our agreement; is the person who back out liable?
It depends if the backing out has a valid ground then pre-contractual situation however if there is bad faith it would seek for damages the basis of which will be
article 19 of the NCC; if nagbackout without any reason then there is abuse of rights but if there is fault or negligence to the part of the person backing then the
aggrieved party could claim damages under quasi-delict against the party.
CASES :
Roman Catholic vs. IAC
Ruling: Art. 1159 of the Civil Code of the Philippines provides that obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith. And unless the stipulations in said contract are contrary to law, morals, good customs, public order, or public policy, the
same are binding as between the parties.23
What the private respondent should have done if it was indeed desirous of complying with its obligations would have been to pay the petitioner within the grace
period and obtain a receipt of such payment duly issued by the latter. Thereafter, or, allowing a reasonable time, the private respondent could have demanded
from the petitioner the execution of the necessary documents. In case the petitioner refused, the private respondent could have had always resorted to judicial
action for the legitimate enforcement of its right. For the failure of the private respondent to undertake this more judicious course of action, it alone shall suffer the
consequences.
With regard to the third issue, granting arguendo that we would rule affirmatively on the two preceding issues, the case of the private respondent still can not
succeed in view of the fact that the latter used a certified personal check which is not legal tender nor the currency stipulated, and therefore, can not constitute
valid tender of payment. The first paragraph of Art. 1249 of the Civil Code provides that the payment of debts in money shall be made in the currency stipulated,
and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines.
The Court en banc in the recent case of Philippine Airlines v. Court of Appeals,24 G.R. No. L-49188, stated thus:
Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment (citing Sec.
189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan London Co. v. American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check,
whether a managers check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be
refused receipt by the obligee or creditor.
Hence, where the tender of payment by the private respondent was not valid for failure to comply with the requisite payment in legal tender or currency stipulated
within the grace period and as such, was validly refused receipt by the petitioner, the subsequent consignation did not operate to discharge the former from its
obligation to the latter.
Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII,of this book.

Juridical relation resulting from lawful, voluntary and unilateral act which means it is one sided (one party benefited from another party) and it has for its purposes
the payment of indemnity to the intent that no one shall be justly enriched at the expenses of another.
THREE parties in a quasi-contract:

1. NEGOTIORUM GESTIO (art. 2144-2153)(unauthorized management )

2. SOLUTION INDEBITI(art.2154-2163)-(UNDUE PAYMENT)
3. Other QUASI-CONTRACTS 2164-2175

Art. 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the provisions of Article 2177,
and of the pertinent provisions of Chapter 2, Preliminary Title on Human Relations, and of Title XVIII of this Book, regulating damages.

why is this is a source of penal obligation?

Kung naay kawatan na tindahan nganung naa man kay obligation ? Because under article 100 of the RPC any person criminally liable is also civilly liable.
As a general rule : Civil liability is a necessary consequence when you commit those offense enumerated under the PRC.
Article 12 of the PRC states that not all felonies are civilly liable; so if you are insane you are not criminally liable however you are civilly liable if you have enough
properties however if you don't have enough properties it would run against the guardian or anyone taking care of you. Person below 15 exempt from criminal
liability but if you are 18 below 15 it depends if minor have acted with discernment (the minor is liable) or not. So if you are acting against an irresistible force ex.
Pataya si juan kung dili kulatahon tika, so there is no irrestible force kay physical lang pero kung hangtod words lang then it could not be an exempting
circumstance.
If you are a student human nag field trip ka tapos nakasala ka didto who will be liable?
If you are a student gitusok nimo og lapis imong klasmyt who would be liable for expenses that's an actual case under torts and damages.So whats the extent is
your civil liability when you are going to commit a crime? Under art.104 of RPC there should be RESTITUTION (balik nimo unsa imong gikawat kung mabalik pa
nimo )
if not REPARATION OF DAMAGE CAUSE- if you are not able to return what you have stolen (recompense or compensation)

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.

FAULT OR NEGLIGENCE ex. When you kill someone it could either be homicide or murder kung naka bangga ka og tao ; gituyo diay nimo kung wala nimo
gituyo but there is quasi-delict arising from the incident there is fault of negligence. When you kill someone intent is presumed; kung naka bangga ka dira
negligence lang kay wala man nimo gituyo so you are still civilly liable so you could not prejudice another because of your fault of negligence.
FAULT OR NEGLIGENCE is a obligatory relation thereby a party cause damage to another
REQUISITES : 1. There must be fault or negligence
2. there must be damage

3. there must be a direct relationship between the negligent act and the damage or injury to another person
we will discuss culpa aquiliana , culpa contractual will be discuss in article 1172.
Ex. If you are a driver and you have 50 passenger tapos nahulog ang bus sa bangin you cause damage your negligence will cause specifically culpa-contractual
there is a violation base on your contract , a vehicle is a common carrier there is that contract between and the operator to deliver you safely from the point of
origin to the point destination so when you violate that one kung wala nimo na deliver imong passenger safely so there is culpa-contractual on the other there
should be a quasi-delict because it is not you intention to meet that accidents but there is negligence kay basig wala nimo na check imong brake; because of that
another obligation arises out from quasi-delict.
What if under 2180 kung maguba imong anak og vase sa mall then you are responsible; guardians are liable for damages;
Chapter 2- NATURE AND EFFECT OF OBLIGATIONS
Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family,
unless the law or the stipulation of the parties requires another standard of care.
Cases:
Bishop Jaro vs. dela pena
Ruling: By placing the money in the bank and mixing it with his personal funds De la Pea did not thereby assume an obligation different from that under which he
would have lain if such deposit had not been made, nor did he thereby make himself liable to repay the money at all hazards. If the had been forcibly taken from
his pocket or from his house by the military forces of one of the combatants during a state of war, it is clear that under the provisions of the Civil Code he would
have been exempt from responsibility. The fact that he placed the trust fund in the bank in his personal account does not add to his responsibility. Such deposit did
not make him a debtor who must respond at all hazards. that said money was forcibly taken from the bank by the armed forces of the United States during the war
of the insurrection; and that said Father De la Pea was not responsible for its loss.
Obejera va. Iga SY
Ruling: The document was executed the consideration was with force and intimidation, under the law when you execute a document under duress then that is not
valid in relation to our topic , this is like the case of bishop vs. jaro it is the observation of the diligence of a good father but the war was beyond their control .
Art. 1164.The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right
over it until the same has been delivered to him.
Delivery is essential to acquire real right.
REAL right- is the power belonging to a person over a specific thing, without a passive subject individually determined, against whom such right may be personally
exercised. It gives to a person a direct and immediate juridical power over a thing, which is susceptible of being exercised against the whole world. There is a
need for tradition or delivery since from the time the obligation to deliver a determinate thing arises, the creditor has only a personal right. He can only demand
that the debtor deliver such thing and its fruit. The delivery or tradition of a thing constitutes a necessary and indispensable requisite for the purpose of acquiring
ownership. The ownership of things is transferred not by mere agreements but by delivery.
WHEN DOES OBLIGATION TO DELIVER ARISE?

a. Perfection of contract if no term/condition;

b. From the moment the term/condition arrives if there is a term
The creditor has a right to the fruits of the thing from the time to deliver it arises. The fruits referred involve only determinate things.
Kinds of fruits: (cf: Property)
1) Natural
2) Civil
3) Industrial
The moment when the obligation to deliver arises varies in different types of obligations:
In obligations arising form law, quasi-delicts, quasi-contracts and crimes, the specific provisions of law applicable to the obligation determine when the delivery
should be made.
Suspensive conditions attached to an obligation to deliver arises only form the moment the condition happens.
Suspensive periods agreed upon for the performance of the obligation gives rise to its delivery only upon the expiration of the term.
Pure obligations are immediately demandable
The right to the fruits of the thing shall only be personal, and only upon the delivery of the thing, its fruits, accessory and accession shall the creditor acquire a real
right over it.
Classes of Delivery or Tradition:
REAL or ACTUAL tradition- This contemplates the actual delivery of the thing from the hand of the grantor to the hand of the grantee , if it is a personal property.
If it is a real property, it is manifested by certain possessory acts executed by the grantee with the consent of the grantor such as by taking over the property;
occupying the property.
CONSTRUCTIVE tradition- when the delivery of the thing is not actual but representative or symbolical in essence. But there must be intention to deliver the
ownership.
Kinds of CONSTRUCTIVE TRADITION:
i.

Tradicion Symbolica- delivery of certain symbols or things representing the thing to be delivered such as keys, titles.

ii.

Tradicion Instrumental consists in the delivery of the instrument of conveyance to the grantee by the grantor.

iii.

Tradicion Longa Manu consists in the pointing to a movable property within sight by the grantor to the grantee but which at the time of
the transaction, the thing could not be placed yet in the possession of the grantee.

iv.

Tradicion Brevi Manu consists in the grantees continuation of his possession over the thing delivered but now under a title of
ownership as in case of a lessee who had purchased the property leased to him. (Jovellanos)

v.

Tradicion Constitutum Possessorium consists in the owners continuous possession of the property he had sold to another person
and his present possession thereof is no longer that of the owner but of a lessee.

vi.

Tradicion by operation of law consists in the delivery of the thing by operation of law such as intestate succession

vii.

Quasi-Tradicion- consists in the delivery of incorporeal property.

Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted to him by article 1170, may compel the debtor
to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to 2 or more persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery.

RULES:

OBLIGATION TO DELIVER

REMEDY

1. Determinate thing

Creditor may compel debtor to deliver

2. Indeterminate or generic thing

Creditor may ask for compliance at the expense of the debtor

REMEDIES OF CREDITOR

a. Demand for specific performance - This action presupposes that it is based on a contractual relationship between the contending parties. Specific
performance is available even if the thing to be delivered is indeterminate.
b. Rescission of the obligation which is under Art. 1380.
c.

Resolution of the contract under Art. 1191 if it is a reciprocal obligation.

d. Damages exclusively or in addition to either of the first actions.

General Rule:

Obligation to deliver a specific thing is extinguished by fortuitous event; Indeterminate thing is however not extinguished.

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Exceptions:
1.

If obligor delays or in default;

2.

Obligor is guilty of bad faith;

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.

Art. 1167. If a person obliged to do something fails to do it, the shall be executed at his cost.
This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be
undone.

Remedies:
1.

have obligation executed at debtors expense;

2.

obtain damages.

Thing may be ordered undone if done poorly or obligation is a negative one

This article presupposes that the thing can be done by the creditor himself or a third person. However, if the prestation can be done
only by the debtor, the only recourse available to the creditor is a claim for damages since it is against the constitution to force the
debtor to perform the obligation.
Coverage:
a. the obligor failed to fulfill a positive personal obligation, that is TO DO something;
b. he fulfilled the obligation but in contravention of the agreement;
c.

There was fulfillment but the same was poor or inadequate.

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Note: if any of the above happens, the creditor is entitled to have the thing done in a proper manner, by himself or by a third person, at the expense of the
debtor. The court has no discretion to merely award damages to the creditor when the act can be done in spite of the refusal or failure of the debtor to do
so
CASE:
Palma Gil vs. CA
Ruling: So this is an example of art. 1167 if a person fails to do something shall be executed at his cost. Under this case, it is just fortunate that there was still
remaining amount to be paid , so anything that is incurred by the buyer should be subject to reimbursement in accordance with 1167. In this case there was
an offsetting of the expenses in the last installment for the purchase of the property.

Art. 1168. When the obligation consists in not doing and the obligor does what has been forbidden him, it shall also be undone at his
expense.
CASE:
Juan Perez vs. CA
Ruling : Art. 1168 of the Civil Code provides that when an obligation "consists in not doing and the obligor does what has been forbidden him, it shall also be
undone at his expense." The lease contract prohibited petitioner Luis Keh, as lessee, from subleasing the fishpond. In entering into the agreement for pakiaobuwis with private respondent, not to mention the apparent artifice that was his written agreement with petitioner Lee on January 9, 1978, petitioner Keh did
exactly what was prohibited of him under the contract to sublease the fishpond to a third party. That the agreement for pakiao-buwis was actually a sublease is
borne out by the fact that private respondent paid petitioners Luis Keh and Juan Perez, through petitioner Tansinsin the amount of annual rental agreed upon in
the lease contract between the usufructuaries and petitioner Keh. Petitioner Keh led private respondent to unwittingly incur expenses to improve the operation of
the fishpond. By operation of law, therefore, petitioner Keh shall be liable to private respondent for the value of the improvements he had made in the fishpond or
for P486,562.65 with interest of six percent (6%) per annum from the rendition of the decision of the trial court on September 6, 1989.
The law supports the awards of moral and exemplary damages in favor of private respondent and against the petitioners. Their conspiratorial scheme to utilize
private respondent's expertise in the operation of fishponds to bail themselves out of financial losses has been satisfactorily established to warrant a ruling that
they violated Article 21 of the Civil Code and therefore private respondent should be entitled to an award of moral damages. Article 21 states that "(a)ny person
who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage."
Exemplary damages shall likewise be awarded pursuant to Article 2229 of the Civil Code. Because private respondent was compelled to litigate to protect his
interest, attorney's fees shall also be awarded.

Article 1169 Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extra judicially demands from them the fulfilment of
their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declares; or (2) When
from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment of the contract; or (3) when demand would be useless, as when the obligor has rendered it beyond his
power to perform.

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

Those obliged to deliver or do something refers to real and personal obligations.

Incur in delay debtor is already in default because of either judicial or extra judicial demand.

When is there delay and when is there default?

Example:
You obtained a loan and obliged yourself to pay on November 30. However no actual payment was made on November 30. On December 15 a demand for
payment was made. Actual payment was made on December 30.

From November 30 up to December 14 there was just mere delay. On December 15 where the demand was made either orally or in writing, there was already
default.

What is the difference between the delay and default?

Mere delay or simple non payment- does not give the creditor a cause of action to collect payment from the debtor
and the creditor cannot also
claim interest.
Default the cause of action ripens. Debtor is considered in default by making a demand. Interest starts to take place from the time the debtor is in
default.

What are the instances where you can forego demand?

(1) When the obligation or the law expressly so declares (e.g. payment of taxes Without judicial or extra judicial demand, you can be in default for not
paying taxes because it is provided by law)
(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the
service is to be rendered was a controlling motive for the establishment of the contract (e.g. catering services if the cater fails to deliver the food on the
designated time, you dont have to make a demand because time is of the essence.)
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform (e.g. when he can no longer be found, when you
try your try your best efforts to send a demand letter but the letter always comes back to you)
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is
incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins . (e.g. when seller and buyers agrees to meet
on Friday. The buyer obliges himself to pay the purchase price while the seller obliges to deliver the title. There exists an exchange of obligation. If on Friday,

13

neither the buyer nor the seller comes to the venue then neither of them is in default. Default starts when the other party performs his obligation because this is
considered as a reciprocal obligation.

Kinds of default:

1. Mora solvendi - default on the part of the debtor. It is the debtors failure to pay obligation after the demand is made.
Effects:

Debtor is liable for interest or even damages.

Debtor bears the risk of loss. (e.g. if the obligation is to deliver gas range on wednesday. come wednesday, I failed to deliver the said item then I
would bear the risk of loss when that item will be lost, or incur physical damage then I am liable. In addition of delivering the thing to you, I also have
to pay for damages.)
Debtor is also liable for fortuitous events. (e.g. on wed I will deliver the gas range, However on Tuesday there was a typhoon and the item was
lost, you have no liability. However, if the typhoon takes place on Thursday , then debtor cannot invoke fortuitous event because there is already
default. It only can invoke fortuitous event if there is no delay on the part of the debtor.)

2. Mora accipiendi - delay on the part of the creditor. Creditor refuses to accept for no valid reason. The creditor is in default at that stage.
Requisites:
1. There is an offer of performance by the debtor who has the required capacity;
2. The offer must be to comply with the prestation as it should be performed. (the obligation must be due and demandable);
3. The creditor refuses the performance without just cause.

Effects:
Creditor bears the risk of loss.
(e.g. if on a Wednesday, the creditor refuses to accept the gas range. And on a Thursday it will be lost because of a typhoon. Then the debtor is excused.
The creditor bears the risk of loss. All expenses incurred by debtor shall be subject to reimbursement by the creditor. Like the debtor wrapped the item
with expensive paper for the preservation of the property then that is subject to reimbursement)

Creditor cannot claim interests.

14

(e.g. if debtor pays a debt on December 15, naturally it will incur interest in this time. but if on 15 th the creditor refuses the payment, then he is already in
default. Then the creditor receives the payment on December 30, then there will be no interest at this time because the creditor is already in default)

Creditor is liable if there is damages

2. compensatio morae - default of both parties in reciprocal obligations.

Effect:

as if neither party is in default because default will not start unless the other party will perform his obligation.

Cetus Development, Inc. vs. CA

Held: for the purpose of bringing an ejectment suit, two requisites must concur, namely: (1) there must be failure to
pay rent or comply with the conditions of the lease and (2) there must be demand both to pay or to comply and vacate
within the periods specified in Section 2, Rule 70, namely 15 days in case of lands and 5 days in case of buildings.
The first requisite refers to the existence of the cause of action for unlawful detainer while the second refers to the
jurisdictional requirement of demand in order that said cause of action may be pursued.
It is very clear that in the case at bar, no cause of action for ejectment has accrued. There was no failure yet on the
part of respondents to pay rents for three consecutive months. the general rule on necessity of demand applies, to wit:
there is default in the fulfillment of an obligation when the creditor demands payment at the maturity of the obligation
or at anytime thereafter. This is explicit in Article 1169, New Civil Code which provides that "(t)hose obliged to deliver
or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation." Petitioner has not shown that its case falls on any of the following exceptions where
demand is not required: (a) when the obligation or the law so declares; (b) when from the nature and circumstances of
the obligation it can be inferred that time is of the essence of the contract; and (c) when demand would be useless, as
when the obligor has rendered it beyond his power to perform. The demand required in Article 1169 of the Civil
Code may be in any form, provided that it can be proved. The proof of this demand lies upon the creditor.
Without such demand, oral or written, the effects of default do not arise. This demand is different from the
demand required under Section 2, Rule 70, which is merely a jurisdictional requirement before an existing cause of
action may be pursued. The facts on record fail to show proof that petitioner demanded the payment of the rentals
when the obligation matured. Coupled with the fact that no collector was sent as previously done in the past, the
private respondents cannot be held guilty of mora solvendi or delay in the payment of rentals. Thus, when petitioner
first demanded the payment of the 3-month arrearages and private respondents lost no time in making tender and
payment, which petitioner accepted, no cause of action for ejectment accrued. Hence, its demand to vacate was
premature as it was an exercise of a non-existing right to rescind.

Coronel vs. Court of Appeals

Held: Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full purchase price is

15

concerned. Petitioners who are precluded from setting up the defense of the physical absence of Ramona P. Alcaraz
as they offered no proof whatsoever to show that they actually presented the new transfer certificate of title in their
names and signified their willingness and readiness to execute the deed of absolute sale in accordance with their
agreement. Ramonas corresponding obligation to pay the balance of the purchase price in the amount
of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot be deemed to have been
in default.
Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be
considered in default, to wit: Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their obligation. x x x In reciprocal obligations,
neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what
is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. There is
thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents

AEROSPACE CHEMICAL INDUSTRIES, INC., petitioner, vs.

COURT OF APPEALS, PHILIPPINE PHOSPHATE FERTILIZER, CORP., respondents.
HELD:. In order that the debtor may be in default, it is necessary that the following requisites be present: (1) that the
obligation be demandable and already liquidated; (2) that the debtor delays performance; and (3) that the creditor
requires the performance judicially or extrajudicially. In the present case, private respondent required petitioner to ship
out or lift the sulfuric acid as agreed, otherwise petitioner would be charged for the consequential damages owing to
any delay. As stated in private respondent's letter to petitioner, dated December 12, 1986:
Subject: M/T "KAYUMANGGI"
Gentlemen:
This is to reiterate our telephone advice and our letter HJR-8612-031 dated 2 December 1986
regarding your sulfuric acid vessel, M/T "KAYUMANGGI".
As we have, in various instances, advised you, our Basay wharf will have to be vacated 15th
December 1986 as we are expecting the arrival of our chartered vessel purportedly to haul our
equipments and all other remaining assets in Basay. This includes our sulfuric acid tanks. We
regret,therefore, that if these tanks are not emptied on or before the 15th of December, we either
have to charge you for the tanks waiting time at Basay and its consequential costs (i.e. chartering of
another vessel for its second pick-up at Basay, handling, etc.) as well as all other incremental costs
on account of the protracted loading delay. 28 (Emphasis supplied)
Indeed the above demand, which was unheeded, justifies the finding of delay. But when did such delay begin? The
above letter constitutes private respondent's extrajudicial demand for the petitioner to fulfill its obligation, and its
dateline is significant. Given its date, however, we cannot sustain the finding of the respondent court that petitioner's
delay started on August 6, 1986. The Court of Appeals had relied on private respondent's earlier letter to petitioner of
that date for computing the commencement of delay. But as averred by petitioner, said letter of August 6th is not a

16

categorical demand. What it showed was a mere statement of fact, that "[F]for your information any delay in Sulfuric
Acid withdrawal shall cost us incremental expenses of P2,000.00 per day." Noteworthy, private respondent accepted
the full payment by petitioner for purchases on October 3, 1986, without qualification, long after the August 6th letter.
In contrast to the August 6th letter, that of December 12th was a categorical demand.

DESAMPARADOS M. SOLIVA, Substituted by Sole Heir PERLITA SOLIVA GALDO, petitioner, vs.
The INTESTATE ESTATE of MARCELO M. VILLALBA and VALENTA BALICUA VILLALBA, respondents.
HELD:. Petitioner complied with her obligation to deliver the property in 1966. However, respondents husband failed to
comply with his reciprocal obligation to pay, when the money he had been expecting from Manila never
materialized.He also failed to make further installments after May 13, 1966. As early as 1966, therefore, petitioner
already had the right to compel payment or to ask for rescission, pursuant to Article 1169 of the Civil Code, which
reads:
"Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of their obligation.
"However, the demand by the creditor shall not be necessary in order that delay may exist:
xxx

xxx

xxx

"In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins." (Italics supplied)
Nonetheless, petitioner failed to sue for collection or rescission. Due to insufficiency of evidence, the lower courts
brushed aside her assertions that she had availed herself of extrajudicial remedies to collect the balance or to serve
an extrajudicial demand on Villalba, prior to her legal action in 1982. Meanwhile, respondent had spent a considerable
sum in renovating the house and introducing improvements on the premises.
In view thereof, the appellate court aptly ruled that petitioners claim was already barred by laches. It has been
consistently held that laches does not concern itself with the character of the defendants title, but only with the issue
of whether or not the plaintiff -- by reason of long inaction or inexcusable neglect -- should be barred entirely from
asserting the claim, because to allow such action would be inequitable and unjust to the defendant.Likewise, it must
be stressed that unlike prescription, laches is not concerned merely with the fact of delay, but even more with the
effect of unreasonable delay.The contention of petitioner that her right to recover is imprescriptible because the

17

property was registered under the Torrens system also fails to convince us. It was the finding of the trial court that the
property was not yet covered by a free patent on January 4, 1966, when Captain Villalba acquired possession thereof.
Indeed, the evidence shows that as of that date, the documents relating to the property were still in the name of Pilar
Castrence, from whom petitioner purchased the property on April 27, 1966; that she applied for a free patent therefor
between January 4 and April 27, 1966; and that the original certificate of title over the lot was issued to her under Free
Patent only on August 16, 1974.It is apparent, then, that petitioner sold the house and lot to respondent on January 4,
1966, before she had even acquired the title to convey it. Moreover, she applied for a free patent after she lost, by
operation of law, the title she had belatedly acquired from Castrence. These circumstances raise serious questions
over the formers good faith in delaying the assertion of her rights to the property. They bar her from seeking relief
under the principle that "one who comes to court must come with clean hands."

POLO S. PANTALEON, Petitioner, vs. AMERICAN EXPRESS INTERNATIONAL, INC., Respondent.

HELD: Amex is not guilty of culpable delay
i.
Use of credit card a mere offer to enter into loan agreements
Although we recognize the existence of a relationship between the credit card issuer and the credit card
holder upon the acceptance by the cardholder of the terms of the card membership agreement (customarily
signified by the act of the cardholder in signing the back of the credit card), we have to distinguish this
contractual relationship from the creditor-debtor relationship which only arises after the credit card issuer
has approved the cardholders purchase request. The first relates merely to an agreement providing for credit
facility to the cardholder. The latter involves the actual credit on loan agreement involving three contracts, namely:
the sales contract between the credit card holder and the merchant or the business establishment which
accepted the credit card; the loan agreement between the credit card issuer and the credit card holder; and
the promise to pay between the credit card issuer and the merchant or business establishment.
From the loan agreement perspective, the contractual relationship begins to exist only upon the meeting of the
offer[25] and acceptance of the parties involved. In more concrete terms, when cardholders use their credit cards to pay
for their purchases, they merely offer to enter into loan agreements with the credit card company. Only after the latter
approves the purchase requests that the parties enter into binding loan contracts, in keeping with Article 1319 of the
Civil Code, which provides:

Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer.

18

This view finds support in the reservation found in the card membership agreement itself, particularly paragraph
10, which clearly states that AMEX reserve[s] the right to deny authorization for any requested Charge. By so
providing, AMEX made its position clear that it has no obligation to approve any and all charge requests made by its
card holders.

ii. AMEX not guilty of culpable delay

Since AMEX has no obligation to approve the purchase requests of its credit cardholders, Pantaleon cannot
claim that AMEX defaulted in its obligation. Article 1169 of the Civil Code, which provides the requisites to hold a
debtor guilty of culpable delay, states:

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

The three requisites for a finding of default are: (a) that the obligation is demandable and liquidated; (b) the
debtor delays performance; and (c) the creditor judicially or extrajudicially requires the debtors performance. [26]

Based on the above, the first requisite is no longer met because AMEX, by the express terms of the credit
card agreement, is not obligated to approve Pantaleons purchase request. Without a demandable obligation, there
can be no finding of default.

Apart from the lack of any demandable obligation, we also find that Pantaleon failed to make the demand
required by Article 1169 of the Civil Code.

As previously established, the use of a credit card to pay for a purchase is only an offer to the credit card
company to enter a loan agreement with the credit card holder. Before the credit card issuer accepts this offer, no
obligation relating to the loan agreement exists between them. On the other hand, a demand is defined as the
assertion of a legal right; xxx an asking with authority, claiming or challenging as due. [27] A demand presupposes
the existence of an obligation between the parties.

19

Thus, every time that Pantaleon used his AMEX credit card to pay for his purchases, what the stores
transmitted to AMEX were his offers to execute loan contracts. These obviously could not be classified as the demand
required by law to make the debtor in default, given that no obligation could arise on the part of AMEX until after AMEX
transmitted its acceptance of Pantaleons offers. Pantaleons act of insisting on and waiting for the charge purchases
to be approved by AMEX[28] is not the demand contemplated by Article 1169 of the Civil Code.

For failing to comply with the requisites of Article 1169, Pantaleons charge that AMEX is guilty of culpable delay in
approving his purchase requests must fail.

Twin towers Condominium vs. CA

Held: Petitioners Master Deed provides that a member of the Condominium corporation shall share in the
common expenses of the condominium project.[31] This obligation does not depend on the use or non-use by the
member of the common areas and facilities of the Condominium. Whether or not a member uses the common
areas or facilities, these areas and facilities will have to be maintained. Expenditures must be made to maintain
the common areas and facilities whether a member uses them frequently, infrequently or never at all.
ALS asserts that the denial by petitioner to ALS and Litonjua of the use of the Condominium facilities deprived
petitioner of any right to demand from ALS payment of any condominium assessments and dues. ALS contends
that the right to demand payment of assessments and dues carries with it the correlative obligation to allow the
use of the Condominium facilities. ALS is correct if it had not defaulted on its assessment and dues before the
denial of the use of the facilities. However, the records clearly show that petitioner denied ALS and Litonjua the
use of the facilities only after ALS had defaulted on its obligation to pay the assessments and dues. The denial of
the use of the facilities was the sanction for the prior default incurred by ALS.
In essence, what ALS wants is to use its own prior non-payment as a justification for its future non-payment of its
assessments and dues. Stated another way, ALS advances the argument that a contracting party who is guilty of
first breaching his obligation is excused from such breach if the other party retaliates by refusing to comply with his
own obligation.
This obviously is not the law. In reciprocal obligations, when one party fulfills his obligation, and the other does
not, delay by the other begins. Moreover, when one party does not comply with his obligation, the other party does
not incur delay if he does not perform his own reciprocal obligation because of the first partys non-compliance.
This is embodied in Article 1169 of the Civil Code, the relevant provision of which reads:
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay
by the other begins.
Thus, before ALS incurred its arrearages, petitioner allowed ALS to use the facilities. However, ALS
subsequently defaulted and thus incurred delay. It was only then that petitioner disallowed ALS and Litonjua
from using the facilities. Clearly, petitioners denial to ALS of the Condominium facilities, after ALS had

20

defaulted, does not constitute a valid ground on the part of ALS to refuse paying its assessments and dues.

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

Grounds for liability:

1. Fraud (deceit/dolo) - Willful intent to not perform obligation or cause damage to another.
2. Negligence - mere want of care/diligence.
3. Default (mora)
4. Violations of terms of obligations.

Damages that may be awarded: (MENTAL)

Moral
Exemplary
Nominal
Temperate
Actual
Liquidated

December 5, 2013

Article 1171 Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.

21

NOTE: Liability due to fraud cannot be mitigated by the courts. Past fraud may be waived except for future fraud.
Kinds of Fraud:

Fraud in Article 1171

Dolo causante (Article 1338)

Incidental fraud (Article1344)

-committed during performance of

pre existing obligation

-there is fraud during perfection of

contract

- there is fraud during perfection of

contract

Example:

Example:

Example:

We have a contract and I avoid

payment.

I want to buy a piece of land. Then

you show all documents. However
your name is not the one in the title,
then there is fraud because it is
because of you misrepresentation
that I entered into a deed of absolute
sale

I want to buy a parcel of land. It is tru

that you are the owner of the property
but you are giving addition that there
is a fish pond there, koi fishes there
but in fact there is none. Aside from
my desire to buy the parcel of land, I
was convinced all the more because
of you additional informations which
are not true.

Purpose:

Purpose:

Purpose:

to secure the consent

Secure of the consent and obtain a

contract but fraud was the principal
inducement in obtaining the contract.
There was 99% truth to your
representation. The fraud there is
merely 5% which is merely incidental.

to evade
obligation

the

fulfilment of

your

22

Effects: Breach of obligation

Effects:

Effects:

Consent is vitiated by fraud

Not result in vitiation of consent. The

consent is still there however the
fraud is just incidental.

The fraud is principal.

Consequences: The creditor may

have the right to recover damages.
(eg. Collect the principal)

Consequences: has the right to annul

the contract. Voidable contract

Consequences: right is only to claim

for damages. you cannot annul the
contract because your consent is not
vitiated.

PNCC vs. NLRC

Held: The legal basis of the NLRC's award of "stand-by" pay to Saceda during the period that he was made to wait
while his employer worked for the ticketing, booking and processing of his exit visa and travel documents for his return
trip to the Philippines, is the employment contract. Under the contract, the PNCC was obliged to notify the employee
"two months before the end of the term of the contract" whether his contract would be extended or he would be
repatriated. Within that two-month period, the employer, which keeps in its possession the employee's passport and
travel documents for the duration of his employment, is supposed to work for the ticketing and processing of the
employee's travel documents so that he may immediately return to the Philippines upon the expiration of his contract.
Petitioner alleged that it takes at least one month to have travel papers processed by the Saudi Arabian authorities.
Clearly, the two-month period stipulated in the contract is more than enough for the purpose. Hence, petitioner alone is
to blame for its failure to obtain Saceda's travel papers within the two-month period before his contract came to an
end. Since it was through its fault that Saceda's departure was delayed, it must give him stand-by pay.
The stand-by compensation which the employer is required to pay the employee while the latter waits for his travel
papers, is actually the damages caused to him by the employer's delay in getting his travel papers ready. As correctly
pointed out by the Solicitor General in his Comment, the basis of the employer's liability for such damages is Article
1170 of the Civil Code which provides:
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.
As it was the petitioners obligation to get Saceda's travel documents ready for his repatriation to the Philippines upon
the termination of his overseas contract, the petitioner must answer in damages for the delay in Saceda's departure
which compelled him to "stand-by," idle and jobless in a foreign land, while waiting for his employer to hand him his
ticket and travel papers for his trip home. The measure of those damages is the income he could have earned if he
were repatriated promptly in order that he could work again in his country.

23

Syquia vs. CA

Held: There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and in the Rules and Regulations
of the Manila Memorial Park Cemetery, Inc. that the vault would be waterproof. Private respondent's witness, Mr.
Dexter Heuschkel, explained that the term "sealed" meant "closed." 9 On the other hand, the word "seal" is defined as .
. . any of various closures or fastenings . . . that cannot be opened without rupture and that serve as a check against
tampering or unauthorized opening." 10 The meaning that has been given by private respondent to the word conforms
with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be equated with "waterproof".
Well settled is the rule that when the terms of the contract are clear and leave no doubt as to the intention of the
contracting parties, then the literal meaning of the stipulation shall control. 11 Contracts should be interpreted according
to their literal meaning and should not be interpreted beyond their obvious intendment. Therefore, that private
respondent did not breach the tenor of its obligation to the Syquias.
The law defines negligence as the "omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the place." 14 In the absence of stipulation or
legal provision providing the contrary, the diligence to be observed in the performance of the obligation is that which is
expected of a good father of a family.
Except for the foreman's opinion that the concrete vault may float should there be a heavy rainfall if there is no hole ,
private respondent has exercised the diligence of a good father of a family in preventing the accumulation of water
inside the vault which would have resulted in the caving in of earth around the grave filling the same with earth.Thus,
finding no evidence of negligence on the part of private respondent,

Article 1172 Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the
courts, according to the circumstance.

Fraud - willful or intentional. Cannot be regulated by the courts because waiver of future fraud is void (Art. 1171)
Negligence - Mere want of diligence. May be regulated by the courts

Kinds/Distinctions of negligence:
Culpa contractual
-

there is a preexisting obligation

Culpa aquiliana

Culpa criminal

-there is no pre existing

-there is no pre existing

24

obligation

Negligence
that
would result to a
breach of contract.
(ex.
Catering
services- there is a
catering contract, if
you fail to deliver the
food, then there is a
breach of contract.)

obligation.

Tort or quasi delict

(ex. Nakabangga ka
ug tao while driving,
there is negligence
however there is no
pre existing contract)

Negligence
incidental

is

-although you did not intend

however negligence is direct,
substantive and independent.

Preponderance
evidence

of

- preponderance of evidence

The defense of a
good father of family
is not applicable.
Required to exercise
extraordinary
diligence.

- The defense of a good

father of a family is
applicable.

Delict
(ex. If you killed
someone there is
no contract. There is
criminal intent.)

-same-

guilt
reasonable doubt

beyond

Complete
innocence is required by
law.

Example: (between a driver of a jeepney, jeepney passenger and operator-common carrier)

Passenger - Operator
While on board, there is a contract of carriage between the operator and the passenger because the operator is the owner. If during the journey, an accident
happened, there is now a breach of contract between the passenger and operator because of failure to transport the passenger safely from point of departure
to point of destination. You can file damages against the operator on the basis of negligence based on culpa contractual.

25

Passenger-driver- operator
As to the fault of the person causing the injury, this act is personal, you cannot fault the operator. It is the fault of the driver since he was the one causing
injury. The driver can be liable for quasi-delict under culpa aquiliana (civil action). He is also liable for damages.
However, if someone died because of the accident, the driver is liable. An action can be filed under culpa criminal. Jurisprudence also states that the
operator can also be held civilly liable under culpa aquiliana.

Liability of the driver: Culpa aquiliana & culpa criminal

Liability of the operator: Culpa aquiliana & culpa contractual

(guys, dili na klaro ang second example ni sir kay naka drawing man toh pero same lang ang meaning sa taas. Im sorry )

NOTE: In contracts of common carriage, operators can prove that they have exercised the diligence of a good father of a family, exempting themselves from
liability, by asking for the license, certificate of seminar from LTO, etc.
Del Prado vs. Manila Electric
Held: The relation between a carrier of passengers for hire and its patrons is of a contractual nature; and in failure on
the part of the carrier to use due care in carrying its passengers safely is a breach of duty (culpa contructual) under
articles 1101, 1103 and 1104 of the Civil Code. Furthermore, the duty that the carrier of passengers owes to its patrons
extends to persons boarding the cars as well as to those alighting therefrom.
The case of Cangco vs. Manila Railroad Co.supplies an instance of the violation of this duty with respect to a
passenger who was getting off of a train. In that case the plaintiff stepped off of a moving train, while it was slowing
down in a station, and at the time when it was too dark for him to see clearly where he was putting his feet. The
employees of the company had carelessly left watermelons on the platform at the place where the plaintiff alighted,
with the result that his feet slipped and he fell under the car, where his right arm badly injured. This court held that the
railroad company was liable for breach positive duty (culpa contractual), and the plaintiff was awarded damages in the
amount of P2,500 for the loss of his arm. In the opinion in that case the distinction is clearly drawn between a liability
for negligence arising from breach of contructual duty and that arising articles 1902 and 1903 of the Civil Code (culpa
aquiliana).
The distiction between these two sorts of negligence is important in this jurisdiction, for the reason that where liability
arises from a mere tort (culpa aquiliana), not involving a breach of positive obligation, an employer, or master, may
exculpate himself, under the last paragraph of article 1903 of the Civil Code, by providing that he had exercised due
degligence to prevent the damage; whereas this defense is not available if the liability of the master arises from a

26

breach of contrauctual duty (culpa contractual). In the case bfore us the company pleaded as a special defense that it
had used all the deligence of a good father of a family to prevent the damage suffered by the plaintiff; and to establish
this contention the company introduced testimony showing that due care had been used in training and instructing the
motorman in charge of this car in his art. But this proof is irrelevant in view of the fact that the liability involved was
derived from a breach of obligation under article 1101 of the Civil Code and related provisions.
Another practical difference between liability for negligence arising under 1902 of the Civil Code and liability arising
from negligence in the performance of a positive duty, under article 1101 and related provisions of the Civil Code, is
that, in dealing with the latter form of negligence, the court is given a discretion to mitigate liability according to the
circumstances of the case (art 1103). No such general discretion is given by the Code in dealing with liability arising
under article 1902; although possibly the same end is reached by courts in dealing with the latter form of liability
because of the latitude of the considerations pertinent to cases arising under this article.
As to the contributory negligence of the plaintiff, we are of the opinion that it should be treated as a mitigating
circumstance under article 1103 of the Civil Code. It is obvious that the plaintiff's negligence in attempting to board the
moving car was not the proximate cause of the injury. The direct and proximate cause of the injury was the act of
appellant's motorman in putting on the power prematurely. A person boarding a moving car must be taken to assume
the risk of injury from boarding the car under the conditions open to his view, but he cannot fairly be held to assume
the risk that the motorman, having the situation in view, will increase his peril by accelerating the speed of the car
before he is planted safely on the platform. Again, the situation before us is one where the negligent act of the
company's servant succeeded the negligent act of the plaintiff, and the negligence of the company must be considered
the proximate cause of the injury. The rule here applicable seems to be analogous to, if not identical with that which is
sometimes referred to as the doctrine of "the last clear chance." In accordance with this doctrine, the contributory
negligence of the party injured will not defeat the action if it be shown that the defendant might, by the exercise of
reasonable care and prudence, have avoided the consequences of the negligence of the injured The negligence of the
plaintiff was, however, contributory to the accident and must be considered as a mitigating circumstance.

San pedro bus lines vs. navaro

Held: It is contended for the herein petitioners that they cannot be held civilly liable to respondents Nicolas Navarro,
for the reason that the Court of First Instance of Rizal had dismissed the criminal charge against petitioner Paulino de
la Cruz, driver of the bus involved in the accident, citing the case of Martinez vs. Barredo,* Off. Gaz., 4922. In answer
to this contention, it is enough to advert to the conclusion of the Court of Appeals which is correct that the action
was not based on tort or quasi delict, but was one for breach of a carrier's contract, there being a clear distinction
between culpa as a source and creator of obligations (aquiliana) and culpa in the performance of an already existing
obligation (contractual).
(According to atty. Panales: Basis of negligence based on culpa contractual of the operator prospered after the
acquittal of the drivers criminal case)

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Consolidated bank vs. CA

Held: The law imposes on banks high standards in view of the fiduciary nature of banking. This fiduciary relationship
means that the banks obligation to observe high standards of integrity and performance is deemed written into every
deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a
degree of diligence higher than that of a good father of a family. Article 1172 of the Civil Code states that the degree of
diligence required of an obligor is that prescribed by law or contract, and absent such stipulation then the diligence of
a good father of a family..
Article 1172 of the Civil Code provides that responsibility arising from negligence in the performance of every kind of
obligation is demandable. For breach of the savings deposit agreement due to negligence, or culpa contractual, the
bank is liable to its depositor.
In culpa contractual, once the plaintiff proves a breach of contract, there is a presumption that the defendant was at
fault or negligent. The burden is on the defendant to prove that he was not at fault or negligent. In contrast, in culpa
aquiliana the plaintiff has the burden of proving that the defendant was negligent. In the present case, L.C. Diaz has
established that Solidbank breached its contractual obligation to return the passbook only to the authorized
representative of L.C. Diaz. There is thus a presumption that Solidbank was at fault and its teller was negligent in not
returning the passbook to Calapre. The burden was on Solidbank to prove that there was no negligence on its part or
its employees.
Solidbank failed to discharge its burden.Solidbank is bound by the negligence of its employees under the principle of
respondeat superior or command responsibility. The defense of exercising the required diligence in the selection and
supervision of employees is not a complete defense in culpa contractual, unlike in culpa aquiliana.
The bank must not only exercise high standards of integrity and performance, it must also insure that its employees do
likewise because this is the only way to insure that the bank will comply with its fiduciary duty. Solidbank failed to
present the teller who had the duty to return to Calapre the passbook, and thus failed to prove that this teller exercised
the high standards of integrity and performance required of Solidbanks employees.

Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is requied by the
nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When the
negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.

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Diligence Required of the Obligor:

GEN. RULE: Diligence of a good father of a family. (the diligence that an ordinary/prudent man exercises)
EXCEPTION: Extraordinary diligence is required when the law states so or it is stipulated by the parties.

RCBC vs. CA

Held: This issue has been laid to rest in the case of City of Manila v. Teotico (22 SCRA 269-272 [1968]) where the
Supreme Court squarely ruled that Republic Act No. 409 establishes a general rule regulating the liability of the City of
Manila for "damages or injury to persons or property arising from the failure of city officers" to enforce the provisions of
said Act, "or any other law or ordinance or from negligence" of the City "Mayor, Municipal Board, or other officers while
enforcing or attempting to enforce said provisions."
Upon the other hand, Article 2189 of the Civil Code of the Philippines which provides that:
Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by any
person by reason of defective conditions of roads, streets, bridges, public buildings and other public works
under their control or supervision.
constitutes a particular prescription making "provinces, cities and municipalities ... liable for damages for the death of,
or injury suffered by any person by reason" specifically "of the defective condition of roads, streets, bridges,
public buildings, and other public works under their control or supervision." In other words, Art. 1, sec. 4, R.A. No. 409
refers to liability arising from negligence, in general, regardless of the object, thereof, while Article 2189 of the Civil
Code governs liability due to "defective streets, public buildings and other public works" in particular and is therefore
decisive on this specific case. In the case at bar, there is no question that the Sta. Ana Public Market, despite the
Management and Operating Contract between respondent City and Asiatic Integrated Corporation remained under the
control of the city. There is no argument that it is the duty of the City of Manila to exercise reasonable care to keep the
public market reasonably safe for people frequenting the place for their marketing needs. While it may be conceded
that the fulfillment of such duties is extremely difficult during storms and floods, it must however, be admitted that
ordinary precautions could have been taken during good weather to minimize the dangers to life and limb under those
difficult circumstances. To recapitulate, it appears evident that the City of Manila is likewise liable for damages under
Article 2189 of the Civil Code, respondent City having retained control and supervision over the Sta. Ana Public
Market and as tort-feasor under Article 2176 of the Civil Code on quasi-delicts Respondent City of Manila and Asiatic
Integrated Corporation being joint tort-feasors are solidarily liable under Article 2194 of the Civil Code.

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Canals vs. CA
Held: The degree of diligence required of banks is more than that of a good father of a family; 12 in keeping with their
responsibility to exercise the necessary care and prudence in dealing even on a registered or titled property. The
business of a bank is affected with public interest, holding in trust the money of the depositors, which bank deposits
the bank should guard against loss due to negligence or bad faith, by reason of which the bank would be denied the
protective mantle of the land registration law, accorded only to purchasers or mortgagees for value and in good faith. 13
In the case under consideration, from the evidence on hand it can be gleaned unerringly that respondent bank did not
observe the requisite diligence in ascertaining or verifying the real identity of the couple who introduced themselves as
the spouses Osmundo Canlas and Angelina Canlas. It is worthy to note that not even a single identification card was
exhibited by the said impostors to show their true identity; and yet, the bank acted on their representations simply on
the basis of the residence certificates bearing signatures which tended to match the signatures affixed on a previous
deed of mortgage to a certain Atty. Magno, covering the same parcels of land in question.
Under the doctrine of last clear chance, which is applicable here, the respondent bank must suffer the resulting loss. In
essence, the doctrine of last clear chance is to the effect that where both parties are negligent but the negligent act of
one is appreciably later in point of time than that of the other, or where it is impossible to determine whose fault or
negligence brought about the occurrence of the incident, the one who had the last clear opportunity to avoid the
impending harm but failed to do so, is chargeable with the consequences arising therefrom. Stated differently, the rule
is that the antecedent negligence of a person does not preclude recovery of damages caused by the supervening
negligence of the latter, who had the last fair chance to prevent the impending harm by the exercise of due
diligence.17Assuming that Osmundo Canlas was negligent in giving Vicente Maosca the opportunity to perpetrate the
fraud, by entrusting to latter the owner's copy of the transfer certificates of title of subject parcels of land, it cannot be
denied that the bank had the last clear chance to prevent the fraud, by the simple expedient of faithfully complying with
the requirements for banks to ascertain the identity of the persons transacting with them.For not observing the degree
of diligence required of banking institutions, whose business is impressed with public interest, respondent Asian
Savings Bank has to bear the loss sued upon.

Mercury Drug vs. De Leon

Held:Mercury Drug and Ganzon can not exculpate themselves from any liability. As active players in the field of
dispensing medicines to the public, the highest degree of care and diligence is expected of them. Profession of
pharmacy demands care and skill, and druggists must exercise care of a specially high degree, the highest degree of
care known to practical men. In other words, druggists must exercise the highest practicable degree of prudence and
vigilance, and the most exact and reliable safeguards consistent with the reasonable conduct of the business, so that
human life may not constantly be exposed to the danger flowing from the substitution of deadly poisons for harmless
medicines.

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In cases where an injury is caused by the negligence of an employee, there instantly arises a presumption of
law that there has been negligence on the part of the employer, either in the selection or supervision of ones
employees. This presumption may be rebutted by a clear showing that the employer has exercised the care
and diligence of a good father of the family.90 Mercury Drug failed to overcome such presumption.91
Petitioners Mercury Drug and Ganzon have similarly failed to live up to high standard of diligence expected of them as
pharmacy professionals. They were grossly negligent in dispensing ear drops instead of the prescribed eye drops to
De Leon. Worse, they have once again attempted to shift the blame to their victim by underscoring his own failure to
read the label.

Cruz vs. Gangan

Facts : On Friday afternoon of January 15, 1999, petitioner went to the Regional Office of the Technological Education and Skills Development Authority (TESDA)
in Taguig, Metro Manila for consultation with the regional director. 3 After the meeting, petitioner went back to her official station in Caloocan City, where she was
the then Camanava district director of the TESDA, by boarding the Light Railway Transit (LRT) from Sen. Gil Puyat Avenue to Monumento. On board the LRT, her
handbag was slashed and its contents stolen by an unidentified person. Among the items taken from her were her wallet and the government-issued cellular
phone, which is the subject of the instant case. That same day, she reported the incident to police authorities who immediately conducted an investigation.
However, all efforts to locate the thief and to recover the phone proved futile.

Issue:W/N she liable for the loss?

Ruling : Extra-ordinary measures are not called for in taking care of a cellular phone while in transit. Placing it in a bag away from covetous eyes and holding on
to that bag, as done by petitioner, is ordinarily sufficient care of a cellular phone while travelling on board the LRT. The records do not show any specific act of
negligence on her part. It is a settled rule that negligence cannot be presumed; 12 it has to be proven. In the absence of any shred of evidence thereof, respondents
gravely abused their discretion in finding petitioner negligent.
Within thirty days of the loss,14 petitioner applied for relief from accountability. We hold that such application be deemed as the notification of the loss of the subject
cellular phone. She has also done her part in proving that the loss was due to theft or robbery. The resident auditor 15 concerned and the COA itself have accepted
that the robbery or theft had actually taken place. Necessarily, in the absence of evidence showing negligence on her part, credit for the loss of the cellular phone
is proper under the law.16 It also stands to reason that P4,238 should now be refunded to her. That was the amount she had to pay on June 3, 1999, upon her
retirement from government service at age 65.
Her dogged persistence in pursuing this appeal has not been lost on this Court. We agree that, in fighting for her rights, she must have spent more than the value
of the lost cellular phone.

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FEBTC vs. Querimit

Facts : Respondent Estrella O. Querimit worked as internal auditor of the Philippine Savings Bank (PSB) for 19 years, from 1963 to 1992. 3 On November 24,
1986, she opened a dollar savings account in petitioner's Harrison Plaza branch, 4 for which she was issued four (4) Certificates of Deposit (Nos. 79028, 79029,
79030, and 79031), each certificate representing the amount of $15,000.00, or a total amount of $60,000.00. The certificates were to mature in 60 days, on
January 23, 1987, and were payable to bearer at 4.5% interest per annum. The certificates bore the word "accrued," which meant that if they were not presented
for encashment or pre-terminated prior to maturity, the money deposited with accrued interest would be "rolled over" by the bank and annual interest would
accumulate automatically.5 The petitioner bank's manager assured respondent that her deposit would be renewed and earn interest upon maturity even without
the surrender of the certificates if these were not indorsed and withdrawn. 6 Respondent kept her dollars in the bank so that they would earn interest and so that
she could use the fund after she retired.7
In 1989, respondent accompanied her husband Dominador Querimit to the United States for medical treatment. She used her savings in the Bank of the
Philippine Islands (BPI) to pay for the trip and for her husband's medical expenses. 8 In January 1993, her husband died and Estrella returned to the Philippines.
She went to petitioner FEBTC to withdraw her deposit but, to her dismay, she was told that her husband had withdrawn the money in deposit. 9 Through counsel,
respondent sent a demand letter to petitioner FEBTC
Issue : W/N the bank is liable?
Ruling : A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker
promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank
and the depositor is created. The principles governing other types of bank deposits are applicable to certificates of deposit, 25 as are the rules governing
promissory notes when they contain an unconditional promise to pay a sum certain of money absolutely. 26 The principle that payment, in order to discharge a debt,
must be made to someone authorized to receive it is applicable to the payment of certificates of deposit. Thus, a bank will be protected in making payment to the
holder of a certificate indorsed by the payee, unless it has notice of the invalidity of the indorsement or the holder's want of title. 27 A bank acts at its peril when it
pays deposits evidenced by a certificate of deposit, without its production and surrender after proper indorsement. 28 As a rule, one who pleads payment has the
burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on
the plaintiff to prove payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. 29
In this case, the certificates of deposit were clearly marked payable to "bearer," which means, to "[t]he person in possession of an instrument, document of title or
security payable to bearer or indorsed in blank." 30 Petitioner should not have paid respondent's husband or any third party without requiring the surrender of the
certificates of deposit.
Petitioner claims that it did not demand the surrender of the subject certificates of deposit since respondent's husband, Dominador Querimit, was one of the
bank's senior managers. But even long after respondent's husband had allegedly been paid respondent's deposit and before his retirement from service, the
FEBTC never required him to deliver the certificates of deposit in question. 31 Moreover, the accommodation given to respondent's husband was made in violation
of the bank's policies and procedures.32
Petitioner FEBTC thus failed to exercise that degree of diligence required by the nature of its business. 33 Because the business of banks is impressed with public
interest, the degree of diligence required of banks is more than that of a good father of the family or of an ordinary business firm. The fiduciary nature of their
relationship with their depositors requires them to treat the accounts of their clients with the highest degree of care. 34 A bank is under obligation to treat the
accounts of its depositors with meticulous care whether such accounts consist only of a few hundred pesos or of millions of pesos. Responsibility arising from
negligence in the performance of every kind of obligation is demandable. 35 Petitioner failed to prove payment of the subject certificates of deposit issued to the
respondent and, therefore, remains liable for the value of the dollar deposits indicated thereon with accrued interest.
Second. The equitable principle of laches is not sufficient to defeat the rights of respondent over the subject certificates of deposit.

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Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.

Mallorca vs. Valentin de Jesus

Mariano Beltran and his family rode a bus owned by petitioner. Upon reaching their desired destination, they alighted from the bus. But Mariano returned to get
their baggage. His youngest daughter followed him without his knowledge. When he stepped into the bus again, it suddenly accelerated. Marianos daughter was
found dead. The bus ran over her.
Issue:
Whether the liability of a common carrier extends even after the passenger had alighted
Held:
The relation of carrier and passenger does not cease at the moment the passenger alights from the carriers vehicle at a place selected by the carrier at the point
of destination, but continues until the passenger has had a reasonable time or reasonable opportunity to leave the current premises.

Nakpil & Sons vs. CA

To be exempt from liability due to an act of God, the engineer/architect/contractor must not have been negligent in the construction of the building.

FACTS:
Private respondents Philippine Bar Association (PBA) a non-profit organization formed under the corporation law decided to put up a building in Intramuros,
Manila. Hired to plan the specifications of the building were Juan Nakpil & Sons, while United Construction was hired to construct it. The proposal was approved
by the Board of Directors and signed by the President, Ramon Ozaeta. The building was completed in 1966.
In 1968, there was an unusually strong earthquake which caused the building heavy damage, which led the building to tilt forward, leading the tenants to vacate
the premises. United Construction took remedial measures to sustain the building.

33

PBA filed a suit for damages against United Construction, but United Construction subsequently filed a suit against Nakpil and Sons, alleging defects in the plans
and specifications.
Technical Issues in the case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved for the demolition of the building, but was opposed. PBA
eventually paid for the demolition after the building suffered more damages in 1970 due to previous earthquakes. The Commissioner found that there were
deviations in the specifications and plans, as well as defects in the construction of the building.

ISSUE:
Whether or not an act of God (fortuitous event) exempts from liability parties who would otherwise be due to negligence?

HELD:
Art. 1723 dictates that the engineer/architect and contractor are liable for damages should the building collapse within 15 years from completion.
Art. 1174 of the NCC, however, states that no person shall be responsible for events, which could not be foreseen. But to be exempt from liability due to an act of
God, the ff must occur:
1) cause of breach must be independent of the will of the debtor
2) event must be unforeseeable or unavoidable
3) event must be such that it would render it impossible for the debtor to fulfill the obligation
4) debtor must be free from any participation or aggravation of the industry to the creditor.
In the case at bar, although the damage was ultimately caused by the earthquake which was an act of God, the defects in the construction, as well as the
deviations in the specifications and plans aggravated the damage, and lessened the preventive measures that the building would otherwise have had.

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