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MEMORY AID IN CIVIL LAW
OBLIGATIONS AND CONTRACTS
I. OBLIGATIONS
OBLIGATION
 A juridical necessity to give, to do,
or not to do (Article 1156), one
impressed with the character of
enforceability.
 Requisites:
a. juridical or legal tie or efficient
cause
b. active subject (obligee or
creditor)
c. passive subject (obligor or
debtor)
d. fact, prestation or service
constituting the object of the
obligation
 Requisites:
i) it must be licit
ii) it
must
be
possible,
physically & juridically
iii) it must be determinate or
determinable
iv) it must have a possible
equivalent in money
1.
2.
3.
4.
5.
Law
Contracts
Quasi-contracts
Delicts
Quasi-delicts
QUASI-CONTRACTS
 Those juridical relations arising from
lawful, voluntary and unilateral acts,
by virtue of which the parties
become bound to each other, based
on the principle that no one shall be
unjustly enriched or benefited at the
expense of another.
Principal Kinds of Quasi-contracts:
1. Negotiorum gestio - arises whenever
a person voluntarily takes charge of
the agency or management of the
business or property of another
without any power or authority from
the latter.
2. Solutio indebiti - arises whenever a
person unduly delivers a thing
CIVIL LAW COMMITTEE
through mistake to another who has no
right to demand it.
QUASI-DELICTS
 An act or omission by a person
(tortfeasor) which causes damage to
another giving rise to an obligation
to pay for the damage done, there
being fault or negligence but there is
no pre-existing contractual relation
between the parties (Article 2176).
 Requisites:
1. There must be an act or
omission;
2. There
must
be
fault
or
negligence;
3. There must be damage caused to
the plaintiff;
4. There must be a direct relation
of cause and effect between the
act or omission and the damage;
and
5. There
is
no
pre-existing
contractual relation between the
parties.
NOTES:
 The same negligent act or omission
causing damage may produce civil
liability arising from crime under
Art. 100 of the RPC or create an
action for quasi-delict under Article
2176.
 While it is true that in order that a
person may be liable for quasidelicts, there must be no preexisting contractual relationship
between the parties, yet, “the act
that breaks the contract may also
be a tort.” (Air France vs.
Carrascoso, 18 SCRA 155).
Nature of Obligations
1. Personal Obligations - obligations to
do
a. Positive – obligation to do
b. Negative – obligation not to do
2. Real Obligations - obligations to give
a. Determinate or specific – object
is particularly designated or
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflict of Laws)
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physically segregated from all
other of the same class
b. Generic – object is designated
merely by its class or genus
c. Limited generic thing – when the
generic objects are confined to a
particular
class,
e.g.
an
obligation to deliver one of my
horses (Tolentino, Volume IV, p.
91).
PERSONAL vs. REAL RIGHT
Personal
Real
1. jus ad rem, a
right enforceable
only against a
definite person or
group of persons
2. right pertaining
to the person to
demand from
another, as a
definite passive
subject, the
fulfillment of a
prestation to give,
to do or not to do.
1. jus in re, a right
enforceable
against the whole
world
2. right pertaining
to a person over a
specific thing,
without a passive
subject individually
determined against
whom such right
may be personally
enforced
RIGHTS OF A CREDITOR
Determinate
1. compel specific
performance
2. recover
damages in case of
breach of the
obligation,
exclusive or in
addition to
specific
performance
3. entitlement to
fruits, interests
from the time the
obligation to
deliver arises.
Generic
1. ask for
performance of the
obligation
2. ask that the
obligation be
complied with at
the expense of the
debtor
3. recover
damages in case of
breach of the
obligation
Principle of Balancing of Equities as
Applied in Actions for Specific
Performance
 In decreeing specific performance,
equity requires not only that the
contract be just and equitable in its
provisions,
but
that
the
consequences
of
specific
performance likewise be equitable
and just. The general rule is that this
equitable relief will not be granted
if, under the circumstances of the
case, the result of the specific
performance of the contract would
be harsh, inequitable, oppressive or
result
in
an
unconscionable
advantage to the plaintiff. The
courts may adjust the rights of the
parties in accordance with the
circumstances obtaining at the time
of rendition of judgment, when
these are significantly different from
those existing at the time of
generation of those rights. (Agcaoili
vs. GSIS, G.R. No. 30056, August 30,
1988)
OBLIGATIONS OF THE DEBTOR
Determinate
Generic
1. deliver the thing
which he has
obligated himself to
give
2. take care of the
thing with the
proper diligence of
a good father of a
family
3. deliver all
accessions and
accessories of the
thing even though
they may not have
been mentioned
4. pay damages in
case of breach of
the obligation by
reason of delay,
fraud, negligence or
contravention of the
tenor thereof
1. deliver the thing
which is neither of
superior nor inferior
quality
2. pay damages in
case of breach of
the obligation by
reason of delay,
fraud, negligence or
contravention of the
tenor thereof
EFFECTS OF BREACH
Positive Personal
Negative Personal
Obligations
Obligations
The creditor can:
1.
have
the
obligation performed
or executed at the
expense
of
the
obligor (except in
cases
where
the
personal
qualifications of the
debtor are taken into
account in which
case the only remedy
is an action for
damages)
2. ask that what has
If the obligor does
what has been
forbidden him, the
creditor can:
1. have it undone at
the expense of the
obligor; and
2. ask for damages
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MEMORY AID IN CIVIL LAW
been poorly done be
undone
3. recover damages
because of breach of
the obligation
Cases where the remedy granted under
Article 1168 is not available:
1. Where the effects of the act which is
forbidden, are definite in character,
in which case, even if it is possible
for the obligee to ask that the act be
undone at the expense of the
obligor, consequences contrary to
the object of the obligation will have
been produced which are permanent
in character
2. Where it would be physically or
legally impossible to undo what has
been undone because of the very
nature of the act itself or because of
a provision of law, or because of
conflicting rights of 3rd persons
NOTE: In either case, the remedy is to
ask for damages.
BREACH OF OBLIGATIONS
1. Voluntary
debtor,
in
the
performance of the obligation, is
guilty of:
a. default (mora)
b. fraud (dolo)
c. negligence (culpa)
d. contravention of the tenor of
the obligation
NOTE: debtor is liable for damages
2.
Involuntary - debtor is unable to
comply with his obligation because
of fortuitous event
NOTE: debtor is not liable for
damages
DEFAULT or DELAY
 Non-fulfillment of the obligation
with respect to time
 Requisites:
1. Obligation is demandable and
already liquidated
2. The debtor delays performance
3. The creditor requires performance
judicially or extra-judicially
CIVIL LAW COMMITTEE
 3 Kinds:
1. Mora solvendi - delay of the debtor
to perform his obligation. It may be:
a. Ex re – obligation is to give
b. Ex persona – obligation is to do
2. Mora accipiendi - delay of the
creditor to accept the delivery of
the thing w/c is the object of the
obligation
3. Compensatio morae - delay of the
parties or obligors in reciprocal
obligation
There must be a demand
(judicial or extra-judicial) before delay
may be incurred.
1. obligation or law expressly so
declares
2. time is of the essence of the
contract
3. demand is useless as when
obligor has rendered beyond his
power to perform
4. there is acknowledgment of
default
NOTES:
 There can be delay only in positive
obligations (to give/to do). There
can be no delay in negative
obligations (not to give/not to do).
 In reciprocal obligations one party
incurs in delay from the moment the
other party fulfills his obligation,
while he himself does not comply or
is not ready to comply in a proper
manner with what is incumbent upon
him. The general rule is that
fulfillment by both parties should be
simultaneous except when different
dates for the performance of
obligation is fixed by the parties.
 Demand is still necessary if their
respective obligations are to be
performed on separate dates
FRAUD
 Deliberate and intentional evasion of
the fulfillment of an obligation
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
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NOTE: Future fraud cannot be waived
because it would result to illusory
obligation.
Incidental
Fraud/dolo
incidente
(Article 1170)
Causal Fraud/dolo
causante
(Article 1338)
1. Present during
the performance
of a pre-existing
obligation
1. Present during the
time of birth or
perfection of the
obligation
2. Purpose is to
evade the normal
fulfillment of the
obligation
2. Purpose is to
secure the consent of
the other to enter
into a contract
3. Results in the
non-fulfillment or
breach of the
obligation
3. Results in the
vitiation of consent
4. Gives rise to a
right of the creditor
to recover damages
from the debtor
4. Gives rise to a
right of an innocent
party to annul the
contract
NEGLIGENCE
 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
NOTE: Negligence can be waived unless
the nature of the obligation or public
policy requires extraordinary diligence as
in common carrier.
Diligence Required
1. That agreed upon by the parties
2. In the absence of stipulation, that
required by law in the particular
case
3. If both the contract and law are
silent, diligence of a good father of a
family
Concept of Diligence of Good Father of
a Family
 That reasonable diligence which an
ordinary prudent person would have
done under the same circumstances
Test of Negligence
 The test of negligence can be
determined by this standard: If the
defendant, in committing or causing
the negligent act, had used
reasonable care and vigilance which
a man of ordinary prudence would
have employed under the same
situation, he is not guilty of
negligence. Otherwise, he is guilty.
Doctrine of Res Ipsa Loquitur as
Applied in Negligence Cases
 The thing or transaction speaks for
 When the thing which caused injury,
itself
without fault of the injured person,
is under the exclusive control of the
defendant and the injury is such as
in the ordinary course of things does
not occur if he having such control
use
proper
care,
it
affords
reasonable evidence, in the absence
of explanation from the defendant,
that
the
injury
arose
from
defendant’s want of care (Africa vs.
Caltex, 16 SCRA 448 and Republic vs.
Luzon Stevedoring, 21 SCRA 279).
FORTUITOUS EVENT
 An event which could not be
foreseen or which though foreseen
was inevitable.
 Requisites:
1. cause is independent of the will of
the debtor
2. the event must be unforeseeable or
unavoidable
3. occurrence must be such as to
render it impossible for the debtor
to fulfill his obligation in a normal
manner
4. debtor must be free from any
participation in
5. the aggravation of the injury
resulting to the creditor (Lasam vs.
Smith, 45 Phil. 657)
NOTE: It must not only be the
proximate cause but it must be the
ONLY and SOLE CAUSE.
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Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)
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MEMORY AID IN CIVIL LAW
GENERAL RULE: No liability in case of
fortuitous event.
EXCEPTIONS:
1 When expressly declared by law
NOTE: e.g. Article 552(2),
1165(3), 1268, 1942, 2147, 2148
and 2159 of the Civil Code.
2 When expressly declared by
stipulation or contract
3 When the nature of the
obligation
requires
the
assumption of risk
4 When the obligor is in default or
has promised to deliver the same
thing to 2 or more persons who
do not have the same interest
[Article 1165(3)].
EFFECT OF FORTUITOUS EVENT
Determinate
Generic
Obligation
Obligation
obligation is
extinguished
obligation is not
extinguished based
on the rule that a
genus never perishes
(genus nunquam
peruit)
PRINCIPLE UNDER ARTICLE 1176
 Before the presumption that a prior
installment had been paid may arise,
the receipt must specify the
installment for which payment is
made.
 REMEDIES
OF
CREDITOR
TO
PROTECT CREDIT:
1. Exhaustion of debtor’s property
2. Accion subrogatoria - to be
subrogated to all the rights and
actions of the debtor save those
which are inherent in his person.
3. Accion pauliana - impugn all the acts
w/c the debtor may have done to
defraud them.
NOTE: 2nd & 3rd remedies are
subsidiary to the first
Rights acquired by
virtue of an obligation are transmissible
in character
CIVIL LAW COMMITTEE
1. When they are not transmissible
by their very nature e.g. purely
personal right
2. When there is a stipulation of
the parties that they are not
transmissible
3. Not transmissible by operation of
law
PURE OBLIGATION
 One
whose
effectivity
or
extinguishment does not depend
upon the fulfillment or nonfulfillment of a condition or upon the
expiration of a term or period and is
demandable at once.
CONDITIONAL OBLIGATION
 One
whose
effectivity
is
subordinated to the fulfillment or
non-fulfillment of a future AND
uncertain fact or event
Kinds of conditions:
1. Suspensive - fulfillment of the
condition results in the acquisition of
rights arising out of the obligation
2. Resolutory - fulfillment of the
condition
results
in
the
extinguishments of rights arising out
of the obligation
3. Potestative - fulfillment of the
condition depends upon the will of a
party to the obligation
4. Casual - fulfillment of the condition
depends upon chance and/or upon
the will of a third person
5. Mixed - fulfillment of the condition
depends partly upon chance and/or
the will of a third person
6. Possible - condition is capable of
realization according to nature, law,
public policy and good customs
7. Impossible - condition is not capable
of realization according to nature,
law, public policy and good customs
8. Positive - condition involves the
performance of an act
9. Negative - condition involves the
omission of an act
10. Divisible - condition is susceptible of
partial realization
11. Indivisible - condition is not
susceptible of partial realization
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
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12. Conjunctive - where there are
several conditions, all of which must
be realized
13. Alternative - where there are several
conditions but only one must be
realized
Rule in Potestative Conditions
a. If
the
fulfillment
of
the
potestative condition depends
upon the sole will of the debtor,
the condition as well as the
obligation itself is void. It renders
the
obligation
illusory.
(Applicable only to a suspensive
condition and to an obligation
which depends for its perfection
upon the fulfillment of the
potestative condition and not to a
pre-existing obligation.)
b. If
the
fulfillment
depends
exclusively upon the will of the
creditor, both the condition and
obligation is valid.
NOTE: In case of simple potestative
condition, e.g. right of first refusal,
such condition is valid.
Rule in Impossible Conditions
They shall annul the
obligation which depends upon them.
1.
2.
3.
4.
5.
pre-existing obligation
if obligation is divisible
in simple or renumeratory donations
in testamentary dispositions
in case of conditions not to do an
impossible thing
Effects of Suspensive Condition
1. Before fulfillment of the condition,
the demandability as well as the
acquisition or effectivity of the
rights arising from the obligation is
suspended
2. After the fulfillment of the
condition, the obligation arises or
becomes effective
3. The effects of a conditional
obligation to give, once the
condition has been fulfilled, shall
retroact to the day of the
constitution of the obligation
4. When
the
obligation
imposes
reciprocal prestations upon the
parties, the fruits & interests shall
be deemed to have been mutually
compensated
5. If the obligation is unilateral, the
debtor shall appropriate the fruits &
interests received, unless from the
nature & circumstances it should be
inferred that the intention of the
persons constituting the same was
different
6. In obligations to do or not to do, the
court shall determine the retroactive
effect or the conditions that has
been complied with
Constructive fulfillment of Suspensive
Condition
 The condition shall be deemed
fulfilled when the obligor actually
prevented
the
obligee
from
complying with the condition and
such prevention must have been
voluntary and willful in character.
Effects of Resolutory Condition
1. Before the fulfillment of the
condition, the right which the
creditor has already acquired by
virtue of the obligation is subject to
a threat of extinction.
2. If condition is not fulfilled, rights are
consolidated; they become absolute.
3. Upon fulfillment of the condition,
the parties shall return to each other
what they received including the
fruits
SUMMARY:
SUSPENSIVE
CONDITION
1. if fulfilled,
obligation arises
or becomes
effective
2. if not fulfilled,
no juridical
relation is created
3. rights are not yet
acquired, but
there is hope or
expectancy that
they will soon be
acquired
RESOLUTORY
CONDITION
1. if fulfilled,
obligation is
extinguished
2. if not fulfilled,
juridical
relation is
consolidated
3. rights are
already
acquired, but
subject to the
threat or danger
of extinction
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)
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MEMORY AID IN CIVIL LAW
Effects of Loss, Deterioration and
Improvement in real obligations (during
the pendency of the condition)
RIGHT TO RESCIND (ART 1191)
The right to rescind
needs judicial approval.
1. Loss
a. without
debtor’s
fault
obligation is extinguished
b. with debtor’s fault - debtor pays
damages
1. If there is an express stipulation
of automatic rescission
2. When the debtor voluntarily
returned the thing
2. Deterioration
a. without
debtor’s
fault
impairment to be borne by the
creditor
b. with debtor’s fault - creditor
may
choose
between
the
rescission of the obligation and
its fulfillment with indemnity for
damages in either case
3. Improvement
a. by the thing’s nature or by time
- improvement shall inure to the
benefit of the creditor
b. at the debtor’s expense - debtor
shall have no other right than
that granted to a usufructuary
NOTE:
things
Applies
only
to
determinate
A Thing is Lost when it:
1. perishes
2. goes out of commerce
3. disappears in such a way that its
existence is unknown or it cannot be
recovered
RECIPROCAL OBLIGATIONS
Those which are created or established
at the same time, out of the same
cause, and which result in mutual
relationships of creditor & debtor
between the parties
TACIT RESOLUTORY CONDITION
with what is incumbent upon him, there
is a right on the part of the other to
rescind the obligation.
CIVIL LAW COMMITTEE
NOTES:
 Article 1191 refers to judicial
rescission. It does not apply if there
is an express stipulation to rescind,
in which case such stipulation must
prevail. There is nothing in the law
which prohibits the parties from
entering into an agreement that
violation of the terms of the
contract would cause its cancellation
without court intervention. Said
stipulation is in the nature of
facultative
resolutory
condition
(Angeles vs. Calasanz, 135 SCRA
323).
 Rescission will be ordered only
where the breach is substantial as to
defeat the object of the parties in
entering into the agreement.
 The injured party may choose
between fulfillment and rescission of
the obligations, with the payment of
damages in either case. These
remedies are alternative, not
cumulative.
However,
should
fulfillment become impossible, the
injured party may also seek
rescission.
 The right to rescind belongs
exclusively to the injured party.
OBLIGATION WITH A PERIOD
 Those whose demandability or
extinguishment is subject to the
expiration of a term or period
 Requisites:
1. future
2. certain
3. possible, legally and physically
CLASSIFICATION OF TERM OR PERIOD
1. a. suspensive (ex die) – obligation
becomes demandable only upon
arrival of a day certain
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
2005 CENTRALIZED BAR OPERATIONS
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b. resolutory (in diem) – arrival of
day certain terminates the obligation
2. a. legal – granted by law
b. conventional – stipulated by
parties
c. judicial – fixed by courts
3. a. definite – date/time is know
beforehand
b. indefinite – the date/time of day
certain is unknown
TERM
1. interval of time
w/c is future &
certain
2. interval of time
w/c must
necessarily come,
although it may
not be known when
3.exerts an
influence upon the
time of
demandability or
extinguishment of
an obligation
4. does not have
any retroactive
effect unless there
is an agreement to
the contrary
5. when it is left
exclusively to the
will of the debtor,
the existence of
the obligation is
not affected
CONDITION
1. fact or event w/c
is future and
uncertain
2. future and
uncertain fact or
event w/c may or
may not happen
3. exerts an
influence upon the
very existence of the
obligation itself
4. has retroactive
effect
5. when it is left
exclusively to the
will of the debtor,
the very existence of
the obligation is
affected
When a period is
designated for the performance or
fulfillment of an obligation, it is
presumed to have been established for
the benefit of both creditor and debtor.
When it appears from the
tenor of the obligation or other
circumstances that the period has been
established in favor of one or of the
other.
When court may fix period:
1. if the obligation does not fix a
period, but from its nature and
circumstances it can be inferred that
a period was intended by the parties
2. if the duration of the period depends
upon the will of the debtor; and
3. If the debtor binds himself when his
means permit him to do so (Article
1180)
NOTE: The only action that can be
maintained is an action to ask the court
to fix the duration of the term or period.
The fulfillment of the obligation itself
cannot be demanded until after the
court has fixed the period for
compliance therewith, and such period
has arrived. However, such technicality
need not be adhered to when a prior and
separate action would be a mere
formality and would serve no other
purpose than to delay (Borromeo vs. CA,
47 SCRA 65).
Reason for Fixing the Period (ART 1197)
 There can be no possibility of any
breach of contract or failure to
perform the obligation unless the
period is fixed by courts.
When debtor loses right to make use of
period: (IGIVA)
1. when after the obligation has been
contracted, he becomes insolvent,
unless he gives guaranties or
securities for the debt
(the
insolvency need not be judicially
declared)
2. when he does not furnish to the
creditor the guaranties or securities
he promised
3. when by his own act he has
impaired
said
guaranties
or
securities after their establishment,
and when through fortuitous event
they disappear, unless he gives new
ones equally satisfactory when
debtor violates any undertaking, in
consideration of which the creditor
agreed to the period or
4. when debtor attempts to abscond
FACULTATIVE
Obligations
1. comprehends
only one object or
prestation which is
due, but it may be
complied with by
the delivery of
another object or
performance of
ALTERNATIVE
Obligations
1. comprehends
several objects or
prestations which are
due but may be
complied with by the
delivery or
performance of only
one of them
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
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MEMORY AID IN CIVIL LAW
another prestation
in substitution
2. fortuitous loss
extinguishes the
obligation
2. fortuitous loss of
all prestations will
extinguish the
obligation
3. culpable loss
obliges the debtor
to deliver
substitute
prestation without
liability to debtor
3. culpable loss of any
object due will give
rise to liability to
debtor
4. choice pertains
only to debtor
4. choice may pertain
to creditor or even
third person
NOTES:
 In alternative obligations, choice

takes
effect
only
upon
communication of the choice to the
other party and from such time the
obligation ceases to be alternative.
The debtor cannot choose those
prestations or undertakings which
are impossible, unlawful or w/c
could not have been the object of
the obligation.
EFFECT OF LOSS OF OBJECT OF
OBLIGATION:
1. If right of choice belongs to debtor
a. If through a fortuitous event debtor cannot be held liable for
damages
b. If 1 or more but not all of the
things are lost or one or some
but not all of the prestations
cannot be performed due to the
fault of the debtor, creditor
cannot hold the debtor liable for
damages because the debtor can
still comply with his obligation.
2. If right of choice belongs to the
creditor
a. If 1 of the things is lost through
a fortuitous event, the debtor
shall perform the obligation by
delivering that which the
creditor should choose from
among the remainder, or that
which remains if only 1 subsists
CIVIL LAW COMMITTEE
b. If the loss of 1 of the things
occurs through the fault of the
debtor, the creditor may claim
any of those subsisting, or the
price of that which, through the
fault of the former, has
disappeared with a right to
damages
c. If all the things are lost through
the fault of the debtor, the
choice by the creditor shall fall
upon the price of any 1 of them,
also with indemnity for damages
JOINT AND SOLIDARY OBLIGATIONS
Obligation is presumed
joint if there is concurrence of two or
more debtors and/or creditors.
1.
2.
3.
when expressly stated that
there is solidarity
when the law requires solidarity
when the nature of the
obligation requires solidarity
JOINT DIVISIBLE OBLIGATIONS
 Each creditor can demand for the
payment of his proportionate share
of the credit, while each debtor can
be held liable only for the payment
of his proportionate share of the
debt.
 A joint creditor cannot act in
representation of the other creditors
while a joint debtor cannot be
compelled to answer for the acts or
liability of the other debtors.
JOINT INDIVISIBLE OBLIGATIONS
1. If there are 2 or more debtors, the
fulfillment of or compliance with the
obligation requires the concurrence
of all the debtors, although each for
his own share. Consequently, the
obligation can be enforced only by
proceeding against all of the
debtors.
2. If there are 2 or more creditors, the
concurrence or collective act of all
the creditors, although each for his
own share, is also necessary for the
enforcement of the obligation.
Effect of breach – If one of the joint
debtors fails to comply with his
undertaking, the obligation can no
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
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Ma. Ricasion Tugadi (Conflicts of Law)
2005 CENTRALIZED BAR OPERATIONS
94
longer be fulfilled or performed.
Consequently, it is converted into one of
indemnity for damages. Innocent joint
debtors shall not contribute to the
indemnity beyond their corresponding
share of the obligation.
Effect of insolvency of a debtor – If one
of the joint debtors should be insolvent,
the others shall not be liable for his
share.
INDIVISIBILITY
1. refers to the
prestation which
constitutes the
object of the
obligation
2. plurality of
subjects is not
required
3. in case of breach,
obligation is
converted into 1 of
indemnity for
damages because of
breach, indivisibility
of the obligation is
terminated
SOLIDARITY
1. refers to the
legal tie or vinculum
juris & consequently
to the subjects or
parties of the
obligation
2. plurality of
subjects is
indispensable
3. when there is
liability on the part
of the debtors
because of the
breach, the
solidarity among the
debtors remains
KINDS OF SOLIDARITY
1. Active solidarity
 solidarity of creditors
 each creditor is empowered to
exercise against the debtor not only
the rights which correspond to him,
but also all the rights which
correspond to the other creditors,
with the consequent obligation to
render an accounting of his acts to
such creditors
 creates a relationship of mutual
agency among solidary creditors
2. Passive solidarity
 solidarity of debtors
 liability of each debtor for the
payment of the entire obligation,
with the consequent right to demand
reimbursement from the others for
their corresponding shares once
payment has been made
3. Mixed solidarity
 solidarity among creditors and
debtors
Effect of Assignment by Solidary
Creditor Without Consent of Others
1. assignee is co-creditor – no violation
of Article 1213 because there can be
no invasion of the personal or
confidential relationship
2. assignee is third person – cocreditors and debtors are not bound
by the assignment
Effect of Novation upon Solidary
Obligation
1. If the novation is prejudicial, the
solidary creditor who effected the
novation shall reimburse the others
for damages incurred by them
2. If it is beneficial and the creditor
who effected the novation is able to
secure
performance
of
the
obligation, such creditor shall be
liable to the others for the share
which corresponds to them, not only
in the obligation, but also in the
benefits
3. If the novation is effected by
substituting another person in place
of the debtor, the solidary creditor
who effected the novation is liable
for the acts of the new debtor in
case
the
is
deficiency
in
performance or in case damages are
incurred by the
other solidary
creditors as a result of the
substitution.
4. If the novation is effected by
subrogating a third person in the
rights of the solidary creditor
responsible for the novation, the
relation between the other creditors
not substituted and the debtor or
debtors is maintained.
Effect of Compensation and Confusion
upon Solidary Obligation
1. If the confusion or compensation is
partial,
the
rules
regarding
application of payment shall apply.
This is without prejudice to the
right of other creditors who have
not caused the confusion or
compensation to be reimbursed to
the extent that their rights are
diminished or affected.
2. If the confusion or compensation is
total, the obligation is extinguished,
what is left is the ensuing liability
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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95
MEMORY AID IN CIVIL LAW
for reimbursement within each
group:
a. The
creditor
causing
the
confusion or compensation is
obliged to reimburse the other
creditors
b. The debtors benefited by the
extinguishments
of
the
obligation
are
obliged
to
reimburse the debtor who made
the confusion or compensation
possible.
Effect of Remission upon Solidary
Obligation
1. If the remission covers the entire
obligation, the obligation is totally
extinguished and the entire juridical
relation among the debtors is
extinguished all together.
2. If the remission is for the benefit of
one of the debtors and it covers his
entire share in the obligation, he is
completely released from the
creditors but is still bound to his codebtors.
3. If the remission is for the benefit of
one of the debtors and it covers only
a part of his share in the obligation,
his character as a solidary debtor is
not affected.
Effect of Payment by Solidary Debtor
1. Whole or partial extinguishment of
debt
2. Right to recover against co-debtor
3. Right to recover interest from time
the obligation becomes due
Effect of Loss or Impossibility of
Performance
1. If it is not due to the fault of the
solidary debtors, the obligation is
extinguished.
2. If the loss or impossibility is due to
the fault of one of the solidary
debtors or due to a fortuitous event
after one of the solidary debtors had
already incurred in delay, the
obligation is converted into an
obligation of indemnity for damages
but the solidary character of the
obligation remains.
CIVIL LAW COMMITTEE
Defenses available to a Solidary Debtor
1. Defenses derived from the very
nature of the obligation
2. Defenses personal to him or
pertaining to his own share
3. Defenses personal to the others, but
only as regards that part of the debt
for w/c the latter are responsible
DIVISIBLE OBLIGATIONS
 Those which have as their object a
prestation which is susceptible of
partial performance without the
essence of obligation changed.
INDIVISIBLE OBLIGATIONS
 Prestation is not susceptible of
partial performance, otherwise, the
essence of the obligation will be
changed
NOTES:
 Divisibility or indivisibility of the
obligation refers to the performance
of the prestation and not to the
thing which is the object thereof.
 Intention of parties should be taken
into account to determine whether
obligation is divisible or not.
The creditor cannot be
compelled partially to receive the
prestation in which the obligation
consists; neither may the debtor be
required to make partial payments.
1. When the obligation expressly
stipulates the contrary;
2. When the different prestations
constituting the objects of the
obligation
are
subject
to
different terms and conditions;
and
3. When the obligation is in part
liquidated
and
in
part
unliquidated.
OBLIGATIONS WITH A PENAL CLAUSE
 One
to
which
an
accessory
undertaking is attached for the
purpose of insuring its performance
by virtue of which the obligor is
bound to pay a stipulated indemnity
or perform a stipulated prestation in
case of breach.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
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2005 CENTRALIZED BAR OPERATIONS
 Purpose of Penalty:
1. To insure the performance of the
obligation;
2. to liquidate the amount of
damages to be awarded to the
injured party in case of breach
of the principal obligation
(compensatory); and
3. in certain exceptional cases, to
punish the obligor in case of
breach
of
the
principal
obligation (punitive).
ULE: The penalty fixed by
the parties is a compensation or
substitute for damages in case of breach.
1. when there is a stipulation to
the contrary;
2. when the debtor is sued for
refusal to pay the agreed
penalty; and
3. when debtor is guilty of fraud
NOTE: Article 1228 does not apply to
these exceptions; there must be
proof of actual damages.
NOTES:
 The debtor cannot exempt himself
from the performance of the
principal obligation by paying the
stipulated penalty unless when the
right has been expressly reserved for
him.
 The creditor cannot demand the
fulfillment of the principal obligation
and the satisfaction of the stipulated
penalty at the same time unless the
right has been clearly granted him.
When penalty may be reduced
1. If the principal obligation has been
partly complied with;
2. If the principal obligation has been
irregularly complied with; and
3. If the penalty is iniquitous or
unconscionable even if there has been
no performance.
MODES
OF
EXTINGUISHMENT
OF
OBLIGATIONS (LFC3NARP2)
1. loss of the thing due
2. fulfillment of resolutory condition
3. compensation
4. condonation or remission of the debt
5. confusion or merger of rights of the
creditor and debtor
6. novation
7. annulment
8. rescission
9. prescription
10. payment or performance
Payment or Performance
 Means not only the delivery of
money but also the performance, in
any other manner, of an obligation.
Integrity of Payment
A debt shall not
be understood to have been paid unless
the thing or service in which the
obligation consists has been completely
delivered or rendered, as the case may
be.
1. When the obligation has been
substantially performed in good
faith;
2. When
the
obligee
accepts
performance,
knowing
its
incompleteness or irregularity &
w/out expressing any protest or
objection;
3. When there is an express stipulation;
and
4. When the debt is in part liquidated
and in part unliquidated.
Identity of Payment
 requires that the very thing, service
or forbearance, as the object of the
prestation, must be performed or
observed
Persons who may pay the obligation:
1. the debtor himself or his legal
representative
2. any third person
Creditor is not bound to
accept payment or performance by a
third person.
1. when made by a third person
who has an interest in the
fulfillment of the obligation;
2. when there is a stipulation to
the contrary.
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
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97
MEMORY AID IN CIVIL LAW
Rights of 3rd person who paid the
obligation:
1. If payment was made with
knowledge and consent of the
debtor:
a. can
recover
entire
amount paid
b. can be subrogated to all
the
rights
of
the
creditor.
2. If payment was made without
knowledge or against the will of
the debtor, he can recover only
insofar as the payment has been
beneficial to the debtor.
To whom payment must be made:
1. The person in whose favor the
obligation has been constituted;
2. His successor in interest; or
3. Any person authorized to receive it.
If payment is made to a
person other than those enumerated, it
shall not be valid.
1. Payment made to a 3rd person,
provided that it has redounded
to the benefit of the creditor.
Such benefit to the creditor is
presumed in the following cases:
 If after the payment, the
third person acquires the
creditor’s rights;
 If the creditor ratifies the
payment to the third
person;
 If by the creditor’s conduct,
the debtor has been led to
believe that the third
person had authority to
receive the payment.
2. Payment made to the possessor
of the credit, provided that it
was made in good faith.
Obligation to Deliver a Generic Thing
 If the quality and circumstances
have not been stated, the creditor
cannot demand a thing of superior
quality; neither can the debtor
deliver a thing of inferior quality.
CIVIL LAW COMMITTEE
Rules in Monetary Obligations:
1. Payment in cash - must be made in
the currency stipulated; if it is not
possible to deliver such currency,
then in the currency which is legal
tender in the Philippines.
2. Payment
in
check
or
other
negotiable
instrument
not
considered payment; not considered
legal tender and may be refused by
the creditor. It shall only produce
the effect of payment:
a. when it has been cashed or
b. when it has been impaired
through the fault of the creditor.
LEGAL TENDER
 Such currency which may be used for
the payment of all debts, whether
private or public. The kind of
currency which a debtor can legally
compel a creditor to accept in
payment of a debt in money when
tendered by the debtor in the right
amount.
 Legal tender of the Philippines would
be all notes and coins issued by the
Central Bank.
 Section 52, R.A. No. 7653
1. 25c and above, legal tender up
to P50
2. 10c and below, legal tender up
to P20
Extraordinary inflation or deflation
 unusual or beyond the common
fluctuation in the value of currency,
which the parties could not have
reasonably foreseen or which was
manifestly
beyond
their
contemplation
at the time the
obligation was established.
 Applies
only
to
contractual
obligations
 Requisites:
a. The decrease in the value of the
currency could not have been
reasonably foreseen by the
parties
or
beyond
their
contemplation at the time the
obligation was established ;
b. There must be a declaration of
such extraordinary inflation or
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
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2005 CENTRALIZED BAR OPERATIONS
deflation by the Bangko Sentral.
Without such declaration, the
creditors cannot demand an
increase,
and
debtors
a
decrease, of what is due to or
from them. (Ramos vs. CA, 275
SCRA 167 and Mobil Oil Phils. vs.
CA, 180 SCRA 651)
Place of payment
1. Place stipulated by the parties.
2. No stipulation and the obligation is
to deliver a determinate thing,
payment shall be made at the place
where the thing might be at the time
the obligation was constituted.
3. In any other case, the payment shall
be made at the domicile of the
debtor.
Special Forms of Payment:
a. Application of payment
b. Dation in Payment
c. Payment by Cession
d. Tender
of
payment
Consignation
and
a. Application of Payment
 Designation of the debt to which the
payment must be applied when the
debtor has several obligations of the
same kind in favor of the same
creditor.
 Requisites:
a. there must be only 1 debtor &
only 1 creditor;
b. there must be 2 or more debts of
the same kind;
c. all of the debts must be due;
except: if there’s stipulation to
the contrary; or application of
payment is made by the party
for whose benefit the term has
been constituted; and
d. amount paid by the debtor must
not be sufficient to cover the
total amount of all the debts.
The right to designate
the debt to which the payment shall be
applied primarily belongs to the debtor.
If the debtor does not avail
of such right and he accepts from the
creditor a receipt in which the
application is made.
Legal Application of Payment (ART1254)
1. If neither the debtor nor the creditor
makes any application of payment,
or if it cannot be inferred from other
circumstances, the debt which is
most onerous to the debtor, among
those which are due, shall be
deemed to have been satisfied.
2. If the debts due are of the same
nature and burden, payment shall be
applied
to
all
of
them
proportionately.
b. Dation in Payment (DACION EN
PAGO)
 Delivery
and
transmission
of
ownership of a thing by the debtor
to the creditor as an accepted
equivalent of the performance of the
obligation.
 Requisites:
a. existence of a money obligation
b. alienation to the creditor of a
property by the debtor with the
consent of the former
c. satisfaction of the money
obligation of the debtor
c. Payment by Cession
 Debtor abandons all of his property
for the benefit of his creditors in
order that from the proceeds
thereof, the latter may obtain
payment of their credits.
 Requisites:
a. plurality of debts
b. partial or relative insolvency of
the debtor
c. acceptance of the cession by the
creditors
DATION IN
PAYMENT
PAYMENT BY
CESSION
1. one creditor
1.
plurality
creditors
2. not necessarily
in state of financial
difficulty
2. debtor must be
partially
or
relatively insolvent
3. thing delivered
is considered as
equivalent
of
performance
3. universality of
property of debtor is
what is ceded
of
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
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MEMORY AID IN CIVIL LAW
4.
payment
extinguishes
obligation to the
extent of the value
of
the
thing
delivered as agreed
upon, proved or
implied from the
conduct
of
the
creditor
d. Tender of Payment and Consignation
Tender of Payment
 Manifestation of he debtor to the
creditor of his decision to comply
immediately with his obligation.
 It is the preparatory act and
extrajudicial in character.
Consignation
 Deposit of the object of the
obligation in a competent court in
accordance with the rules prescribed
by law, after the tender of payment
has been refused or because of
circumstances which render direct
payment to the creditor impossible
or inadvisable.
 It is the principal act and judicial in
character.
 Special Requisites:
a. The debt sought to be paid must
be due;
b. There must be a valid and
unconditional tender of payment
or any of the causes stated by
law for effective consignation
without previous tender of
payment exists;
c. The consignation of the thing
due must first be announced to
the persons interested in the
fulfillment of the obligation;
d. Consignation shall be made by
depositing the things due at the
disposal of judicial authority;
and
e. The consignation having been
made, the interested parties
shall also be notified thereof.
 Effects of consignation:
1. If the creditor accepts the thing
or amount deposited without
contesting
the
validity
or
CIVIL LAW COMMITTEE
efficacy of the consignation, the
obligation is extinguished.
2. If the creditor contests the
validity or efficacy of the
consignation or if the creditor is
not interested or unknown or is
absent, the result is a litigation.
If the debtor complied with all
the requisites, the obligation is
extinguished.
4. merely releases
debtor
for
net
proceeds of things
ceded or assigned,
unless
there
is
contrary intention
Consignation shall
produce effects of payment only if there
is a valid tender of payment.
1. creditor is absent or unknown, or
does not appear at the place of
payment
2. creditor incapacitated to receive
payment at the time it is due
3. when two or more persons claim the
right to collect
4. when the title of the obligation has
been lost
5. when without just cause creditor
refuses to give a receipt
NOTES:
 It


is the consignation which
constitutes a form of payment and
must
follow,
supplement
or
complete the tender of payment in
order to discharge the obligation.
A valid tender of payment has the
effect of exempting the debtor from
payment
of
interest
and/or
damages.
If tender is made by means of a
check, such tender is valid because
it is an exercise of a right. Article
1249 is not applicable.
LOSS OF THE THING DUE
In Determinate Obligations to Give
Obligation
is
extinguished.
 Requisites:
1. The thing which is lost is
determinate;
2. The thing is lost without the
fault of the debtor; and
3. The thing is lost before the
debtor has incurred in delay.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
2005 CENTRALIZED BAR OPERATIONS
100
1. when by law, obligor is liable
even for fortuitous event;
2. when by stipulation, obligor is
liable even for fortuitous event;
3. when the nature of the
obligation
requires
the
assumption of risk;
4. when the loss of the thing is due
partly to the fault of the debtor;
5. when the loss of the thing occurs
after the debtor incurred in
delay;
6. when the debtor promised to
deliver the same thing to two or
more persons who do not have
the same interest; and
7. when the debt of a certain and
determinate thing proceeds from
a criminal offense
In Generic Obligations to Give
Obligation is not
extinguished because the genus of a
thing cannot perish.
In case of generic
obligations whose object is a particular
class or group with specific or
determinate qualities (Limited Generic
Obligations)
In Obligations to Do
Obligation
is
extinguished
when
prestation becomes legally or physically
impossible.
Effect of Relative Impossibility or
Doctrine of Unforeseen Events (ART
1267)
 When the service has become
difficult as to be manifestly beyond
the contemplation of the parties,
the obligor may also be released
therefrom, in whole or in part.
 Requisites:
1. The event or change in
circumstances could not have
been foreseen at the time of the
execution of the contract;
2. It makes the performance of the
contract extremely difficult but
not impossible;
3. The event must not be due to
the act of any of the parties; and
4. The contract is for a future
prestation.
Principle of Subjective Impossibility
 When there is no physical or legal
loss but the thing object of the
obligation belongs to another, the
performance by the debtor of the
obligation undoubtedly becomes
impossible. Failure of performance is
imputable to the debtor. Thus, the
debtor must indemnify the creditor
for the damages suffered by the
latter. (Tolentino, Volume IV, p.
336)
Effect of Loss on Reciprocal Obligations
 First view (Tolentino, Volume IV, pp.
337-338) – If an obligation is
extinguished by the loss of the thing
or impossibility of performance
through fortuitous events, the
counter-prestation
is
also
extinguished. The debtor is released
from liability but he cannot demand
the prestation which has been
stipulated for his benefit. He who
gives nothing has no reason to
demand anything.
 Second View (JBL Reyes) – The loss
or impossibility of performance must
be due to the fault of the debtor. In
this case, the injured party may ask
for rescission under Article 1191 plus
damages. If the loss or impossibility
was due to a fortuitous event, the
other party is still obliged to give the
prestation due to the other.
CONDONATION OR REMISSION OF THE
DEBT
 An act of pure liberality by virtue of
which the obligee, without receiving
any price or equivalent, renounces
the enforcement of the obligation,
as a result of which it is extinguished
in its entirety or in that part or
aspect of the same to which the
remission refers.
 It is the gratuitous abandonment by
the creditor of his right.
 Requisites:
a. It must be gratuitous
b. It must be accepted by the
debtor
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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101
MEMORY AID IN CIVIL LAW
c. The
obligation
demandable
must
be
NOTE: Express condonation or remission
must comply with the formalities of
donation.
CONFUSION OR MERGER OF RIGHTS
 Merger of the characters of the
creditor and the debtor in one and
the same person by virtue of which
the obligation is extinguished.
 Requisites:
a. that the characters of creditor &
debtor must be in the same
person;
b. that it must take place in the
person of either the principal
creditor or the principal debtor;
and
c. it must be complete & definite
COMPENSATION
 Extinguishment in the concurrent
amount of the obligation of those
persons who are reciprocally debtors
and creditors of each other.
 Requisites:
a. there must be 2 parties, who, in
their own right, are principal
creditors & principal debtors of
each other (except in case of
guarantor, Article 1280);
b. both debts must consist in
money, or if the things due are
fungibles, they must be of the
same kind & quality;
c. both debts must be due;
d. both debts must be liquidated &
demandable;
e. there must be no retention or
controversy commenced by 3rd
persons over either of the debts
& communicated in due time to
the debtor; and
f. compensation must not be
prohibited by law.
Compensation
1. two persons
who are mutual
debtors and
creditors of each
other
CIVIL LAW COMMITTEE
Confusion
1. one person
where qualities of
debtor and creditor
are merged
2. there must be
at least two
obligations
Compensation
2. only one
obligation
Payment
1. The requisites prescribe by law for
compensation are different from those
prescribed by law for payment.
2. Takes effect by 2. Takes effect by
operation of law
act of the parties
3. Capacity to
3. Capacity to give
give and to
and to acquire is
acquire is not
essential
necessary
4. As a rule, it is
4. As a rule,
partial
complete and
indivisible
Compensation
Counterclaim
1. Requires 2
debts must consist
in money or if
fungibles, same
kind and quality
1. Not necessary
2. Both debts
must be
liquidated
2. Does not require
that debts be
liquidated
3. Need not be
pleaded
3. Must be pleaded
to be effectual
Kinds of Compensation
1. Legal – takes effect by operation
of law
2. Voluntary – agreed upon by the
parties
3. Judicial – takes effect by judicial
decree
4. Facultative – when it can be
claimed by one of the parties
who, however, has the right to
object to it
Debts not subject to Compensation:
1. debts arising from contracts of
deposit
2. debts arising from contracts of
commodatum
3. claims for support due by
gratuitous title
4. obligations arising from criminal
offenses
5. certain obligations in favor of
government
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
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102
2005 CENTRALIZED BAR OPERATIONS
NOTE: Taxes are not subject to set-off
or legal compensation because the
government & taxpayers are not
mutually creditors & debtors of each
other (Francia vs. IAC, 162 SCRA 753).
Facultative Compensation
 This is compensation which can be
set up only at the option of a
creditor, when legal compensation
cannot take place because of want
of some legal requisites for the
benefit of the creditor. The latter
can renounce his right to oppose the
compensation and he himself can set
it up. It differs from conventional
compensation because it is unilateral
while the latter depends upon the
agreement
of
both
parties.
(Tolentino, Volume IV, p. 367)
NOVATION
 Substitution or change of an
obligation by another, resulting in its
extinguishment
or
modification,
either by changing its object or
principal
conditions,
or
by
substituting another in place of the
debtor, or by subrogating a third
person in the rights of the creditor.
 Requisites:
a. a previous valid obligation;
b. agreement of the parties to the
new obligation;
c. extinguishment of the old
obligation; and
d. validity of the new obligation.
Kinds:
As to its essence
a. Objective/Real - refers to the
change either in the cause,
object or principal conditions of
the obligations
b. Subjective/Personal - refers to
the substitution of the person of
the debtor or to the subrogation
of a 3rd person in the rights of
the creditor
c. Mixed
2. As to its form/constitution
a. Express - when it is declared in
unequivocal terms that the old
obligation is extinguished by a
new one w/c substitutes the
same.
1.
b. Implied - when the old & new
obligation are incompatible w/
each other on every point.
Test of Incompatibility
 Whether or not the old and new
obligations can stand together, each
having
its
own
independent
existence. If they can stand
together, there is no incompatibility;
consequently, there is no novation.
If they cannot stand together, there
is incompatibility; consequently,
there is novation.
Forms of Substitution of Debtors:
1. Expromision - effected with the
consent of the creditor at the
instance of the new debtor even
without the consent or even
against the will of the old
debtor.
Requisites:
a. Initiative for substitution must
emanate from the new debtor
b. Consent of the creditor to the
substitution
2. Delegacion - effected with the
consent of the creditor at the
instance of the old debtor, with
the concurrence of the new
debtor.
Requisites:
a. Initiative for substitution must
emanate from the old debtor
b. Consent of the new debtor
c. Acceptance by the creditor
Effect of insolvency of new debtor
1. Expromision – the new debtor’s
insolvency or nonfulfillment of
the obligation shall not revive
the original debtor’s liability to
the
creditor
whether
the
substitution is effected with or
without the knowledge or
against the will of the original
debtor.
2. Delegacion – the creditor can sue the
old debtor only when the
insolvency was prior to the
delegation and publicly known or
when the old debtor knew of
such insolvency at the time he
delegated the obligation.
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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Ethics)
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103
MEMORY AID IN CIVIL LAW
NOTE: A change in the incidental
elements of, or an addition of such
elements to an obligation, unless
otherwise expressed by the parties, will
not result in its extinguishment.
CONVENTIONAL
SUBROGATION
ASSIGNMENT OF
RIGHTS
1. governed by Arts.
1300 to 1304
1. governed by Arts.
1624 to 1627
2. debtor’s consent
is required
2. debtor’s consent
is not required
3. extinguishes the
obligation and gives
rise to a new one
3. transmission of
right of the creditor
to third person
without modifying or
extinguishing the
obligation
4. defects and
vices in the old
obligation are cured
5. takes effect
upon moment of
novation or
subrogation
4. defects and vices
in the old obligation
are not cured
5. as far as the
debtor is concerned,
takes effect upon
notification
 Kinds of Subrogation
1. Conventional – takes place by
agreement of the parties; this kind
of
subrogation
requires
the
intervention and consent of 3
persons: the original creditor, the
new creditor and the debtor.
2. Legal – takes place without
agreement but by operation of law
because of certain acts (Article
1302).
Legal subrogation
cannot be presumed.
1. Creditor pays another creditor who is
preferred,
without
debtor’s
knowledge;
2. A third person not interested in the
obligation pays with the express or
tacit approval of the debtor; or
3. Even without debtor’s knowledge, a
person interested in the fulfillment
of the obligation pays without
prejudice to the effects of confusion
as to the latter’s share.
CIVIL LAW COMMITTEE
II. CONTRACTS
CONTRACT
 A contract is a meeting of minds
between two persons whereby one
binds himself, with respect to the
other, to give something or to render
some service (Article 1305).
 Elements
1. Essential – those without which
there can be no contract.
a. Consent
b. Object or Subject Matter
c. Cause or Consideration
2. Natural – those derived from the
nature of the contract and ordinarily
accompany the same.
3. Accidental – those which exist only
when the parties expressly provide
for them for the purpose of limiting
or modifying the normal effects of
the contract.
Nominate contracts
 Those which have their own
distinctive individuality and are
regulated by special provisions of
law.
Innominate contracts
 Those which lack individuality and
are not regulated by special
provisions of law.
 Regulated by the stipulations of the
parties, by the general provisions of
the Civil Code on obligations and
contracts, by rule governing the
most analogous nominate contracts
and by the customs of the place.
 Kinds:
a. Do ut des - I give that you give
b. Do ut facias - I give that you do
c. Facio ut des - I do that you give
d. Facio ut facias - I do that you do
NOTE:
According
to
some
authorities. do ut des in no longer an
innominate contract. It has already
been given a name of its own, i.e.
barter or exchange (Article 1638).
Characteristics of Contracts: (ROMA)
1. Relativity (ART 1311)
2. Obligatory Force and Consensuality
(ART 1315)
3. Mutuality (ART 1308)
4. Autonomy (ART 1306)
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
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2005 CENTRALIZED BAR OPERATIONS
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Relativity
Contracts take effect
only between parties, their assigns and
heirs.
1. Stipulation pour atrui stipulation in favor of a third
person.
 Requisites:
a. the stipulation must be a
part, not the whole of
the contract;
b. the contracting parties
must have clearly and
deliberately conferred a
favor upon a third
person, not a mere
incidental benefit or
interest;
c. the third person must
have communicated his
acceptance
to
the
obligor
before
its
revocation;
d. the favorable stipulation
should
not
be
conditioned
or
compensated by any kind
of obligation whatever;
and
e. neither
of
the
contracting parties bears
the legal representative
or authorization of the
third person.
Test of Beneficial Stipulation – the
fairest test to determine whether the
interest of a 3rd person in a contract is a
stipulation pour atrui or merely an
incidental interest is to rely upon the
intention of the parties as disclosed by
their contract. Determine whether the
contracting parties desired to tender him
such an interest (Uy Tam vs. Leonard, 30
Phil. 471).
2. When a third person induces a
party
to
violate
contract
(ART1314)
 Requisites:
a. Existence of a valid contract;
b. knowledge of contract by
third person; and
c. interference by third person
without legal justification or
excuse.
3. Third persons who come into
possession of the object of the
contract creating real rights
4. Contracts entered into in fraud
of creditors
Mutuality
 The contract must bind both parties;
its validity or compliance must not
be left to the will of one of them.
(ART 1308)
 The contract cannot have any
stipulation authorizing one of the
contracting parties (a) to determine
whether or not the contract shall be
valid, or (b) to determine whether
or not the contract shall be fulfilled.
Autonomy
 The parties are free to stipulate
anything they deem convenient
provided that they are not contrary
to law, morals, good customs, public
order and public policy. (ART 1306)
Consensuality
 Contracts are perfected by mere
consent and from that moment, the
parties are bound not only to the
fulfillment of what has been
expressly stipulated but also to all
consequences which, according to
their nature may be in keeping with
good faith, usage and law.
CONSENT
 Manifested by the concurrence of
the offer and acceptance upon the
thing and the cause which are to
constitute the contract.
 Requisites:
a. Legal capacity of the contracting
parties
b. Manifestation of the conformity
of the contracting parties
c. The parties’ conformity to the
object, cause, the terms and
conditions of the contract must
be intelligent, spontaneous and
free from all vices of consent
d. The said conformity must be real
and not simulated or fictitious
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
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Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
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MEMORY AID IN CIVIL LAW
Offer
 A proposal made by one party to
another to enter into a contract.
 It must be certain or definite,
complete and intentional.
NOTE: Offer/proposal may be withdrawn
so long as the offeror has no knowledge
of acceptance by offeree.
Acceptance
 Manifestation by the offeree of his
assent to the terms of the offer.
 It must me absolute.
 A qualified acceptance constitutes
counter-offer.
NOTE: Acceptance may be revoked
before it comes to the knowledge of the
offeror.
Amplified Acceptance
 Under certain circumstances, a mere
amplification on the offer must be
understood as an acceptance of the
original offer, plus a new offer which
is contained in the amplification.
(Tolentino, Volume IV, p. 452)
Rule on Complex offers
1. Offers are interrelated – contract is
perfected if all the offers are
accepted.
2. Offers are not interrelated – single
acceptance of each offer results in a
perfected contract unless the offeror
has made it clear that one is
dependent upon the other and
acceptance of both is necessary.
NOTES:
 Consensual contracts are perfected
from the moment there is a
manifestation
of
concurrence
between
the
offer
and
the
acceptance regarding the object and
the cause.
 Real contracts like deposit, pledge
and commodatum requires delivery
of object for perfection.
 Solemn contracts are those which
requires compliance with certain
formalities prescribed by law, such
prescribed form being an essential
element (i.e., donation of real
property).
 An offer made inter praesentes must
be accepted IMMEDIATELY. If the
CIVIL LAW COMMITTEE
parties intended that there should
be an express acceptance, the
contract will be perfected only upon
knowledge by the offeror of the
express acceptance by the offeree of
the offer. An acceptance which is
not made in the manner prescribed
by the offeror is NOT EFFECTIVE BUT
A COUNTER-OFFER which the offeror
may accept or reject. (Malbarosa vs.
CA, et al., G.R. # 125761, April 30,
2003)
 Contracts under the Civil Code
generally adhere to the Cognition
Theory (contract is perfected from
the moment the acceptance comes
to the knowledge of the offeror),
while transactions under the Code of
Commerce use the Manifestation
Theory (it is perfected from the
moment the acceptance is declared
or made).
PERSONS INCAPACITATED TO GIVE
CONSENT:
1. Minors
EXCEPTIONS:
 Contracts where the minor is
estopped to raise minority as a
defense
through
his
own
misrepresentation
 Contracts for necessaries
 Contracts by guardians or legal
representatives
 Voluntary fulfillment of a natural
obligation provided that the
minor is between 18-21 years of
age
 Contracts of life, health or
accident insurance taken on the
life of the minor
2. Insane or demented persons, unless
the contract was entered into during
a lucid interval
3. Deaf-mutes who do not know how to
read and write
Effect of Misrepresentation of Age by
the Minor
 Misrepresentation by minors with
regard to their age when entering
into a contract shall bind them in
the sense that they are estopped
subsequently from impugning the
validity of the contract on the
ground of minority. It is necessary
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
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106
2005 CENTRALIZED BAR OPERATIONS
that the misrepresentation must be
active (e.g. when minors specifically
stated in a contract that they were
of age), not merely constructive.
VICES OF CONSENT (VIMFU)
1. Violence - when in order to wrest
consent, serious or irresistible force
is employed.
2. Intimidation - when 1 of the
contracting parties is compelled by
a reasonable & well-grounded fear
of an imminent & grave evil upon his
person or property, or upon the
person or property of his spouse,
descendants or ascendants, to give
his consent.
3. Mistake - should refer to the
substance of the thing which is the
object of the contract, or to those
conditions which have principally
moved one or both parties to enter
into the contact.
 Must be mistake of fact and not of
law, except under Article 1334.
 Requisites under Article 1334:
a. Mistake must be with respect
to the legal effect of an
agreement
b. Mistake must be mutual
c. Real purpose of the parties
must have been frustrated.
4. Fraud - when, through insidious
words or machinations of 1 of the
contracting parties, the other is
induced to enter into a contract
which, without them, he would not
have agreed to.
5. Undue influence - when a person
takes improper advantage of his
power over the will of another,
depriving the latter of a reasonable
freedom of choice.
Reluctant Consent
 A contract is valid even though one
of the parties entered into it against
his wishes and desires or even
against
his
better
judgment.
Contracts are also valid even though
they are entered into by one of the
parties without hope of advantage or
profit. (Martinez vs. Hongkong and
Shanghai Bank, 15 Phil. 252)
Simulation of Contracts
1. Absolute – when the contracting
parties do not intend to be bound by
the contract at all. Thus, an
absolutely simulated contract is
VOID.
2. Relative – when the contracting
parties
conceal
their
true
agreement. A relatively simulate
contract binds the parties to their
real agreement, when it does not
prejudice a 3rd person and is not
intended for any purpose contrary to
law, morals, good customs, public
order or public policy.
OBJECT
 The thing, right or service which is
the subject matter of the obligation
arising from the contract.
 Requisites:
a. It must be w/in the commerce of
man
b. It must be licit or not contrary
law, morals, good customs,
public order or public policy
c. It must be possible
d. It must be determinate as to its
kind
Things which Cannot be the Object of
Contract
1. Things which are outside the
commerce of men
2. Intransmissible rights
3. Future inheritance, except in
cases expressly authorized by
law
4. Services which are contrary to
law, morals, good customs,
public order or public policy
5. Impossible things or services
6. Objects which are not possible of
determination as to their kind
CAUSE
 The immediate, direct and most
proximate reason which explains and
justifies the creation of obligation.
 Requisites
a. Cause should be in existence at
the time of the celebration of
the contract
b. Cause should be licit or lawful
c. Cause should be true
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer
Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)
San Beda College of Law
107
MEMORY AID IN CIVIL LAW
 Rules:
1. In onerous contracts, the cause is
understood
to
be, for
each
contracting party, the prestation of
promise of a thing or service by the
other.
2. In remuneratory contracts, the
service
or
benefit
w/c
is
remunerated.
3. In contracts of pure beneficence,
the mere liberality of the donor or
benefactor.
4. In accessory contracts (mortgage or
pledge), the cause is identical with
the cause of the principal contract,
that is, the loan from which it
derives its life and existence.
CAUSE
1. Absence of cause
2. Failure of cause
3. Illegality of cause
4. Falsity of cause
5. Lesion
EFFECT
the contract confers
no right and produces
no legal effect
does not render the
contract void
the contract is null
and void
the contract is void,
unless the parties
show that there is
another cause which
is true and lawful
does not invalidate
the contract, unless
(a) there is fraud,
mistake or undue
influence; or (b)
when the parties
intended a donation
or some other
contract
FORM OF CONTRACTS
Contracts shall be
obligatory, in whatever form they may
have been entered into, provided all the
essential requisites for their validity are
present.
1. When the law requires that a
contract be in some form in order
that it may be valid
CIVIL LAW COMMITTEE
2. When the law requires that a
contract be in some form in order
that it may be enforceable
NOTES:
 Parties may compel each other to

comply with the form required once
the contract has been perfected.
(Article 1357)
Contracts under Art 1358 which are
required to be in some specific form
is only for the convenience of parties
and does not affect its validity and
enforceability as between them.
RA 8792 (E- COMMERCE ACT) provides
that the formal requirements to make
contracts effective as against third
persons and to establish the existence of
a contract are deemed complied with
provided that the electronic document is
unaltered and can be authenticated as
to be usable for future reference.
REFORMATION OF INSTRUMENTS
 Requisites:
a. meeting of the minds to the
contract
b. true intention is not expressed in
the instrument by reason of
mistake,
accident,
relative
simulation, fraud, or inequitable
conduct
c. clear and convincing proof of
mistake,
accident,
relative
simulation, fraud, or inequitable
conduct
Instances when there can be no
reformation:
1. Simple unconditional donations
inter vivos;
2. Wills;
3. When the agreement is void;
When one of the parties has brought an
action to enforce the instrument, no
subsequent reformation can be asked.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
2005 CENTRALIZED BAR OPERATIONS
108
COMPARATIVE TABLE OF DEFECTIVE CONTRACTS
VOID
VOIDABLE
RESCISSIBLE
UNENFORCEABLE
1. Defect is caused
by lack of essential
elements or illegality
Defect is caused by vice
of consent
Defect is caused by
injury/ damage either
to one of the parties of
to a 3rd person
Defect is caused by
lack
of
form,
authority, or capacity
of both parties not
cured by prescription
2. Do not, as a
general rule produce
any legal effect
Valid and enforceable
until they are annulled
by a competent court
Valid and enforceable
until they are rescinded
by a competent court
Cannot be enforced
by a proper action in
court
3. Action for the
declaration or nullity
or inexistence or
defense of nullity or
inexistence does not
prescribe
Action for annulment or
defense of annulability
may prescribe
Action for rescission
may prescribe
Corresponding action
for recovery, if there
was total or partial
performance of the
unenforceable
contract under No. 1
or 3 of Article 1403
may prescribe
4. Not cured
prescription
Cured by prescription
Cured by prescription
Not
cured
prescription
5. Cannot be ratified
Can be ratified
Need not be ratified
Can be ratified
6. Assailed not only
by a contracting
party but even by a
third person whose
interest is directly
affected
Assailed only by
contracting party
a
Assailed not only by a
contracting party but
even by a third person
who is prejudiced or
damaged
by
the
contract
Assailed only by a
contracting party
7. Assailed directly
or collaterally
Assailed directly
collaterally
or
Assailed directly only
Assailed directly or
collaterally
by
RESCISSIBLE CONTRACTS
 Contracts validly agreed upon but,
by reason of lesion or economic
prejudice may be rescinded in cases
established by law.
What contracts are rescissible
1. those entered into by guardians
where the ward suffers lesion of
more than ¼ of the value of the
things which are objects thereof;
2. those agreed upon in representation
of absentees, if the latter suffer
lesion by more than ¼ of the value
of the things which are subject
thereof;
3. those undertaken in fraud of
creditors when the latter cannot in
any manner claim what are due
them;
by
4. those which refer to things under
litigation if they have been entered
into by the defendant without the
knowledge and approval of the
litigants and the court;
5. all
other
contracts
especially
declared by law to be subject to
rescission; and
6. payments made in a state of
insolvency on account of obligations
not yet enforceable
 Requisites:
a. the contract must be rescissible
b. the party asking for rescission
must have no other legal means
c. to obtain reparation for the
damages suffered by him
d. the person demanding rescission
must be able to return whatever
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer
Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)
San Beda College of Law
109
MEMORY AID IN CIVIL LAW
he may be obliged to restore if
rescission is granted
e. the things w/c are the object of
the contract must not have
passed legally to the possession
of a 3rd person acting in good
faith
f. the action for rescission must be
brought w/in the prescriptive
period of 4 years
BADGES OF FRAUD:
1. Consideration of the conveyance
is inadequate or fictitious;
2. Transfer was made by a debtor
after a suit has been begun and
while it is pending against him;
3. Sale upon credit by an insolvent
debtor;
4. Evidence of indebtedness or
complete insolvency
5. Transfer of all his property by a
debtor when he is financially
embarrassed or insolvent;
6. Transfer made between father &
son, where there is present any
of the above circumstances
7. Failure of the vendee to take
exclusive possession of all the
property
Rescission in
Article 1191
1. It is a principal
action retaliatory in
character.
2. The only ground is
non-performance of
one’s obligation/s or
what is incumbent
upon him.
3. It applies only to
reciprocal obligation
4. Only a party to the
contract may demand
fulfillment or seek
the rescission of the
contract.
5. Court may fix a
period or grant
extension of time for
the fulfillment of the
obligation.
CIVIL LAW COMMITTEE
Rescission Proper
in Article 1381
1. It is a subsidiary
remedy.
2. There are 5
grounds to rescind.
Non-performance by
the other party is not
important.
3. It applies to both
unilateral and
reciprocal
obligations.
4. Even a 3rd person
who is prejudiced by
the contract may
demand the
rescission of the
contract.
5. Court cannot grant
extension of time for
fulfillment of the
obligation.
6. Its purpose is to
cancel the contract.
6. Its purpose is to
seek reparation for
the damage or injury
caused, thus allowing
partial rescission of
the contract.
VOIDABLE CONTRACTS
 Those in which all of the essential
elements for validity are present,
although the element of consent is
vitiated either by lack of capacity of
one of the contracting parties or by
VIMFU.
What contracts are voidable
1. Those where one of the parties is
incapable of giving consent to a
contract
2. Those where the consent is vitiated
by mistake, violence, intimidation,
undue influence or fraud
Causes of extinction of action to annul:
1. PRESCRIPTION
 the action must be commenced
within 4 years from:
a. the time the incapacity
ends;
b. the time the violence,
intimidation
or
undue
influence ends; or
c. the time the mistake or
fraud is discovered.
NOTE: Discovery of fraud must be
reckoned to have taken place from
the time the document was
registered in the office of the
register of deeds. Registration
constitutes constructive notice to
the whole world. (Carantes vs. CA,
76 SCRA 514)
2. RATIFICATION
 Requisites:
a. there must be knowledge of
the reason which renders
the contract voidable
b. such reason must have
ceased and
c. the injured party must have
executed an act which
expressly
or
impliedly
conveys an intention to
waive his right
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
2005 CENTRALIZED BAR OPERATIONS
110
3. By loss of the thing which is the
object of the contract through fraud
or fault of the person who is entitled
to annul the contract.
NOTE: If the object is lost through
fortuitous event, the contract can still
be annulled, but the person obliged to
return the same can be held liable only
for the value of the thing at the time of
the loss, but without interest thereon.
UNENFORCEABLE CONTRACTS
 Those which cannot be enforced by
proper action in court unless they
are ratified
What contracts are unenforceable
1. those entered into in the name of
another by one without or acting in
excess of authority;
2. those where both parties are
incapable of giving consent; and
3. those which do not comply with the
Statute of Frauds
Agreements within the scope of the
Statute of Frauds (EXCLUSIVE LIST):
1. Agreements not to be performed
within one year from the making
thereof;
2. Special promise to answer for the
debt, default or miscarriage of
another;
NOTE: This does not refer to the original
or independent promise of the
debtor to his own creditor. It refers
rather to a collateral promise.
3. Agreement in consideration of
marriage other than a mutual
promise to marry;
4. Agreement for the sale of goods,
etc. at a price not less than P500.00;
5. Contracts of lease for a period
longer than one year;
6. Agreements for the sale of real
property or interest therein; and
7. Representation as to the credit of a
third person.
NOTES:
 The contracts/agreements under the
Statute of Frauds require that the
same be evidenced by some note,
memorandum or writing, subscribed

by the party charged or by his agent,
otherwise, the said contracts shall
be unenforceable.
The statute of frauds applies only to
executory contracts, not to those
that are partially or completely
fulfilled.
Ratification of contracts in violation of
the Statute of Frauds
1. Failure to object to the presentation
of oral evidence to prove such
contracts
2. Acceptance of benefits under these
contracts
VOID CONTRACTS
 Those where all of the requisites of a
contract are present but the cause,
object or purpose is contrary to law,
morals, good customs, public order
or public policy, or contract itself is
prohibited or declared void by law.
What contracts are void
1. Those whose cause, object or
purpose is contrary to law, morals
good customs, public order or public
policy;
2. Those whose object is outside the
commerce of men;
3. Those
which
contemplate
an
impossible service;
4. Those where the intention of the
parties relative to the principal
object of the contract cannot be
ascertained; and
5. Those
expressly
prohibited
or
declared void by law.
INEXISTENT CONTRACTS
 Those where one or some or all of
the requisites essential for the
validity of a contract are absolutely
lacking.
What contracts are inexistent
1. Those
which
are
absolutely
simulated or fictitious; and
2. Those whose cause or object did not
exist at the time of the transaction.
NOTE: The principle of In Pari Delicto is
applicable only to void contracts and not
as to inexistent contracts.
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer
Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)
San Beda College of Law
111
MEMORY AID IN CIVIL LAW
Principle of In Pari Delicto
RAL RULE: When the defect of a
void contract consists in the illegality of
the cause or object of the contract and
both of the parties are at fault or in pari
delicto, the law refuses them every
remedy and leaves them where they are.
1. Payment of usurious interest
2. Payment of money or delivery of
property for an illegal purpose,
where the party who paid or
delivered
repudiates
the
contract before the purpose has
been accomplished, or before
any damage has been caused to
a 3rd person.
3. Payment of money or delivery of
property
made
by
an
incapacitated person
4. Agreement or contract which is
not illegal per se & the
prohibition is designed for the
protection of the plaintiff
5. Payment of any amount in excess
of the maximum price of any
article or commodity fixed by
law or regulation by competent
authority.
6. Contract whereby a laborer
undertakes to work longer than
the maximum # of hours fixed by
law.
7. Contract whereby a laborer
accepts a wage lower than the
minimum wage fixed by law.
8. One who lost in gambling
because of fraudulent schemes
practiced on him is allowed to
recover his losses [(Art. 315, 3
(b), RPC] even if gambling is a
prohibited one.
Rules when only one of the parties is at
fault:
1. Executed Contracts:
a. Guilty party is barred from
recovering what he has given to
the other party is barred from
recovering what he has given to
the other party by reason of the
contract.
b. Innocent party may demand for
the return for the return of
what he has given.
CIVIL LAW COMMITTEE
2.
Executory Contracts - Neither of the
contracting parties can demand for
the fulfillment of any obligation
from the contract nor may be
compelled to comply with such
obligation
NATURAL OBLIGATIONS
 They are real obligations to which
the law denies an action, but which
the debtor may perform voluntarily.
 It is patrimonial, and presupposes a
prestation.
 The binding tie of these obligations
is in the conscience of man, for
under the law, they do not have the
necessary efficacy to give rise to an
action.
Examples
of
natural
obligations
enumerated under the Civil Code:
1. Performance
after
the
civil
obligation has prescribed;
2. Reimbursement of a third person for
a debt that has prescribed;
3. Restitution by minor after annulment
of contract;
4. Delivery by minor of money or
fungible thing in fulfillment of
obligation;
5. Performance after action to enforce
civil obligation has failed;
6. Payment by heir of debt exceeding
value of property inherited; and
7. Payment of legacy after will have
been declared void.
ESTOPPEL
 A condition or state by virtue of
which an admission or representation
is rendered conclusive upon the
person making it and cannot be
denied or disproved as against the
person relying thereon.
 Kinds:
1. Estoppel in Pais (by conduct)
a. Estoppel by silence
b. Estoppel by acceptance of
benefits
2. Technical Estoppel
a. Estoppel by deed
b. Estoppel by record
c. Estoppel by judgment
d. Estoppel by laches
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
112
2005 CENTRALIZED BAR OPERATIONS
LACHES or “STALE DEMANDS”
 Failure
or
neglect,
for
an
unreasonable and unexplained length
of time, to do that which, by
exercising due diligence, could or
should have been done earlier; it is
negligence or omission to assert a
right
within
reasonable
time,
warranting a presumption that the
party entitled to assert it either has
abandoned it or declined to assert it.
 Elements:
a. Conduct
on
part
of
the
defendant, or of one under
whom he claims, giving rise to
the situation of which complaint
is made and for which the
complaint seeks a remedy
b. Delay
in
asserting
the
complainant’s
rights,
the
complainant having knowledge
or notice, of the defendant’s
conduct
and
having
been
afforded the opportunity to
institute a suit
c. Lack of knowledge or notice on
the part of the defendant that
the complainant would assert
the right on which he bases his
suit
d. Injury to the defendant in the
event relief is accorded tot the
complainant, or the suit in not
held to be barred
LACHES
PRESCRIPTION
1. concerned with
effect of delay
1. concerned with
fact of delay
2.
question of
inequity
of
permitting the claim
to be enforced
2.
question
matter of time
3. not statutory
3. statutory
4. applies in equity
4. applies at law
5. not based on a
fixed time
5. based on a fixed
time
or
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads), Jennifer
Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics). Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law),
Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal
Ethics)