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Civ 2 I. OBLIGATIONS

A. In General

1. Definition

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

Notes:

What is the definition of an obligation? It is best defined by Arias Ramos which reads as follows, “an OBLIGATION is a juridical relation whereby a person (called the creditor) may demand from another (called the debtor) the observance of a determinate conduct, and, in case of breach, may obtain satisfaction from the assets of the latter”. This means that where there is a right or power to demand, there is a correlative obligation or an imposition upon a person of a definite conduct.

What are the elements of obligation? APPE It has four definite elements as follows:

1. an active subject, who has the power to demand the prestation, known as the oblige or creditor;

2. a passive subject, who is bound to perform the prestation, known as the obligor or debtor;

a. These two, the active and passive subjects are considered as the personal elements of an obligation.

b. They could be an individual person or juridical persons.

c. They must be determinable in some manner. Exceptions are the following examples:

(1) negotiable instrument payable to bearer,

(2) promise of a prize or a reward for anyone performing a certain act.

3. an object or the prestation;

a. This may pertain not to a thing but to a particular

conduct of the debtor; hence, a prestation which may consist in

giving (prestation consists in the delivery of a movable or immovable thing)

or doing (all kinds of services)

or not doing (abstaining from some act, may include not to give) something, e.g. it is not the thing which the vendor must deliver, but the necessary conduct to produce the effects of the sale that is the object.

4. the efficient cause or the juridical tie (vinculum juris) between the two subjects by reason of which the debtor is bound in favor of the creditor to perform the prestation.

a. This pertains to the juridical or legal tie, which is the vinculum, that may either be a relation established LBU

i. Law (relation to give support)

ii. Bilateral acts (contracts giving rise to obligation)

iii. Unilateral acts (crimes and quasi-delict, quasi contract)

**Meaning the 5 sources of obligation

** All the above 4 elements are agreed upon by commentators as essential elements. The following two are being debated.

(i) Causa debendi/ obligationes (Castan) – This is what makes the obligation demandable. This is the proximate why of an obligation.

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

What are the requisites of a prestation? PLED

1. must be possible, physically and juridically- licit;

2. must be determinable or at least determinable according to pre-established elements or criteria; and

3. must have a possible equivalent in money (need not be for one of the parties because it could be for the benefit of third persons; the criterion to determine whether the obligation has a pecuniary value is not limited to the object or prestation thereof, but extends to the sanction which corresponds to the juridical duty; this is differentiated with creditor’s interest because the latter need not be economic or patrimonial since it may be sentimental or ideal but the object of prestation must have an economic value or in case of nonfulfillment, be susceptible of substitution in money or something of patrimonial value)

How will you distinguish an obligation from natural obligations? Since the definition above only refers to the civil obligation or those which give a right of action to compel their performance, the same will not include the natural obligation, which are those which cannot be enforced by court action but which are binding on the party who makes them, in conscience and according to equity and natural justice. The differences between the two include the following:

1. Civil obligations derive their binding force from positive law (manmade law) while Natural obligations derive their binding effect from equity and natural justice;

2. Civil obligations can be enforced by court action or the coercive power of public authority while the fulfillment of Natural obligations cannot be compelled by court action but depends exclusively from conscience.

According to Balane: Book IV starts w/ an inaccuracy. It gives the impression that obligations & contracts are of the same status, w/c they are not. A contract is only one of the sources of obligations. Book IV should have been simply titled "Obligations."

Etymology – two Latin words, ligare, meaning "to bind"

& ob w/c is a proposition used to intensify a verb.

Literally obligare means "to bind securely."

Hence, a better definition would be that, An obligation is a juridical relation (because there are 2 parties) whereby a person should engage or refrain fr. engaging in a certain activity for the satisfaction of the private interests of another, who in case of non-fulfillment of such

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duty may obtain from the patrimony of the former through proper judicial proceedings the very prestation due or in default thereof, the economic equivalent (damages) that it represents. (Diaz Piero)

Characteristics of an Obligation: TEE

1. It represents an Exclusively private interest

2. It creates ties that are by nature transitory

3. It involves the power to make the juridical tie effective in case of non-fulfillment through an economic equivalent obtained from the debtor's patrimony.

Essential Elements of an Obligation:

(1) Active Subject – This refers to the creditor or the obligee.

A creditor generally used in an obligation to give

while obligee is used in an obligation to do

(2) Passive Subject – This refers to the debtor or the obligor.

debtor is used in an obligation to give

while obligor is used in an obligation to do

The first two elements must be determinate or determinable. The following are possible COMBINATION:

Both parties are determined at the time of the execution of the obligation.

one party is determined at the constitution of the obligation & the other to be determined subsequently in accordance with a criteria that is previously established.

the subject is determined in accordance with his relation to a thing & therefore it changes where the thing passes from one person to another. This is a property-linked obligation.

(3) Object of the obligation - the conduct or activity that must be observed by the debtor, this is always an activity or conduct, the prestation.

Requisites of an object/prestation: PLED

It must be licit. It must be possible. It must be determinate or

determinable. It must have pecuniary value so that if

not performed it is converted into damages.

(4) Vinculum juris- the legal tie or efficient cause, whereby upon default or refusal of the debtor to perform, the creditor can go to court.

When a person says "I promise to pay you when I like to," there is no obligation here because there is no vinculum juris.

Juridical tie, the efficient cause established by the various sources of OBLIGATIONS

> by virtue of which the debtor is bound in favor of the creditor to perform the prestation.

Efficient cause / vinculum may either be relation established by:

1. Law (e.g. marital relation giving rise to OBLIGATION for support;

2. Bilateral acts (e.g. contracts give rise to the OBLIGATIONs stipulated therein)

3. Unilateral acts (e.g. crimes and quasi-delicts, quasi- contracts)

** All the above 3/4 elements are agreed upon by commentators as essential elements. The following two are being debated.

(i) Causa debendi/ obligationes (Castan) – This is what makes the obligation demandable. This is the proximate why of an obligation.

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

TOLENTINO:

OBLIGATION “to give” prestation consists in the delivery of a movable or an immovable thing in order to create a real right, or for the use of the recipient, or for possession, or to return to its owner;

e.g. OBLIGATION to deliver the thing in a contract of sale, deposit, lease, antichresis, pledge and donation.

OBLIGATION “to do” including all kinds of work or services.

e.g. contract of employment or professional services.

OBLIGATION “not to do” consists in abstaining from some act,

e.g. duty not to create a nuisance;

Requisites of a prestation: PLED

1. it must be possible, physically and juridically- licit

2. it must be determinate, or at least determinable; and

3. it must have a positive equivalent in money. (susceptible of pecuniary appreciation)

Positive Law – valid legal laws enacted by the legislative department;

Natural OBLIGATION – not sanctioned by any action but have a relative juridical effect;

do not grant the right of action to enforce their performance but after voluntary fulfillment by their obligor, they authorize the retention of what has been delivered or rendered by reason thereof (Article 1423);

2. KINDS OF OBLIGATIONS AS TO BASIS & ENFORCEABILITY

(a) NATURAL OBLIGATIONS

(Arts. 1423 – 1430 not exclusive enumeration; some others can be)

H. NATURAL OBLIGATIONS – ARTS. 1423-1430. 1155

Article 1423. Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity & natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles.

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Article 1424. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who voluntarily performs the contract cannot recover what he has delivered or the value of the service he has rendered.

Article 1425. When without the knowledge or against the will of the debtor, a third person pays a debt which the obligor is not legally bound to pay because the action thereon has prescribed, but the debtor later voluntarily reimburses the third person, the obligor cannot recover what he has paid.

Article 1426. When a minor between 18 and 21 years of age who has entered into a contract without the consent of the parents or guardian, AFTER THE ANNULMENT of the contract voluntarily returns the whole thing or price received, notwithstanding the fact that he (minor) has not been benefited thereby, there is no right to demand the thing or price thus returned.

- Minor has no right to demand the thing or the price thus return

Note: generally: When the ground for annulment is the incapacity of the plaintiff, he (MINOR) is not bound to make restitution

except to the extent that he (MINOR) was benefited- so eto kelangan ibalik.

**In natural obligations, however, he (MINOR) has natural obligation to still deliver- although he is not bound to deliver (that extent/part which he benefited). But once he makes a delivery, he cannot thereby recover what he has delivered- by reason of the binding effect of natural obligation. (1426)

Ratio: Because a minor at such age is deemed to have sufficient mental and moral development to be aware of his debt of conscience. This is basically independent on the next provision on Article 1427 below.

Illustrations: 1. A filed an action to compel B to fulfill the latter’s obligation to the former, will the action prosper? Not necessarily because in natural obligations no court action can compel performance because it is an obligation based on equity, conscience and natural justice. Natural obligations are midway between civil obligations and the purely moral obligations. In order that there may be a natural obligation, there must exist a juridical tie (vinculum juris) which is not prohibited by law and which in itself could give a cause of action, but because of some special circumstances is actually without such legal sanction or means of enforcing compliance by invoking the intervention of

the court.

Basis: Art. 1423 Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles.

Article 1427. When a minor between 18 and 21 years of age, who has ENTERED INTO A CONTRACT without the consent of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the obligation, there shall be no right to recover the same from the obligee who has spent or consumed it in good faith.

- Minor can no longer recover the same from the obligee (capacitated) who has spent the same in good faith.

Note: It is not the voluntary payment that prevents recovery under this article, but the fact that the obligee has consumed or spent the thing or money in GOOD FAITH. Although it is true that the contract can be annulled, but until it is so annulled, it exists as a civil obligation.

General rule: Upon the annulment of the contract, the party who contracted with the minor must return whatever he may have received under the contract.

Exception: If the payment was made although by the minor, but the thing or money paid was consumed or spent in good faith

(belief that the debtor has the capacity to deliver the object- must exist at the time that the thing was consumed or money was spent; can be recovered still by the debtor(minor) if the good faith, even if it existed at the time of the delivery, has ceased to exist at the time of consumption or spending).

Is the thing here always have to be consummable? No, because although non-consummable, the debtor cannot recover, if the thing is no longer in the possession of the creditor who has acted in good faith, either he has alienated it or it has been lost, without his fault.

Article 1428. When, after an action to enforce a civil obligation has failed, the defendant voluntarily performs the obligation, he cannot demand the return of what he has delivered or the payment of the value of the service he has rendered.

Article 1429. When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the property which he received by will or by the law of intestacy from the estate of the deceased, the payment is valid & cannot be rescinded by the payer.

Article 1430. When a will is declared void because it has not been executed in accordance with the formalities required by law, but one of the intestate heirs, after the settlement of the debts of the deceased, pays a legacy in compliance with a clause in the defective will, the payment is effective & irrevocable.

Note: This article includes every licit obligation which is unenforceable because of the lack of proper formalities.

Article 1960. If the borrower pays interest when there has been no stipulation therefor, the provisions of this Code concerning solutio indebiti, or natural obligations, shall be applied, as the case may be.

Article 1956. No interest shall be due unless it has been expressly stipulated in writing.

Why would this Natural Obligation be allowed in our jurisdiction? It is because equality, morality and natural justice as the foundations of a positive law makes wisdom to this obligation so as the so-called moral obligation.

What is the basis of natural obligation? It is from the nature of man and of things, as well as from law and reason, there arises a natural law, which is immutable and independent of all human regulations; as sometimes called as rational law.

What are the types of obligations?

In juridical science, four types of which include the following:

1. Moral obligation- duties of conscience completely outside of the field of law

2. Natural obligation- not sanctioned by any action but have relative juridical effect

3. Civil obligation- juridical obligations which apparently in conformity with positive law but are contrary to juridical principles and susceptible of being annulled

4. Mixed obligation- have full juridical effect

However, jurisprudence makes only two classifications, as follows:

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1. Natural obligation

2. Civil obligation

Requisites/ Elements of Natural OBLIGATION:

1. there is a juridical tie between two persons (distinguishes it from moral obligation)

2. the tie is not given effect by law (distinguishes it from civil obligation)

susceptible of VOLUNTARY performance,

but NOT THROUGH COMPULSION by legal means.

an obligation WITHOUT SANCTION

Voluntary fulfillment – may be understood as spontaneous, free from fraud or coercion or it may be understood as meaning without knowledge or free from error;

-with knowledge that he cannot be compelled to pay OBLIGATION;

RATIO: “reputation” (clan)

-this is being distinguished from payment by mistake (solution indebiti) which constitutes quasi-contract because payment by mistake is not voluntary and hence may be recovered.

-payment here is voluntary when the debtor knew of the obligation to be a natural one.

Case: Ansay vs. National Development Company

Facts: On July 25, 1956, appellants filed against appellees in the Court of First Instance of Manila a complaint praying for a 20% Christmas bonus for the years 1954 and 1955. The court a quo does not see how petitioners may have a cause of action to secure such bonus because:(a) A bonus is an act of liberality and the court takes it that it is not within its judicial powers to command respondents to be liberal;

(b) Petitioners admit that respondents are not under legal duty to give such bonus but that they had only ask that such bonus be given to them because it is a moral obligation of respondents to give that but as this Court understands, it has no power to compel a party to comply with a moral obligation (Art. 142, New Civil Code.).

Issue: Whether the appellees have the legal obligation to give the claimed bonus despite the fact that the same has been granted arising from a moral obligation or the natural obligation to do the same.

Held: No. Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations are a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof".-

SABI KO: meaning, although there is juridical tie, the same has no binding force, but once performed there is a binding effect

It is thus readily seen that an element of natural obligation before it can be cognizable by the court is voluntary fulfillment by the obligor. Certainly retention can be ordered but only after there has been voluntary performance. But here there has been no voluntary performance. In fact, the court cannot order the performance.

At this point, we would like to reiterate what we said in the case of Philippine Education Co. vs. CIR and the Union of Philippine Education Co., Employees (NUL) (92 Phil., 381; 48 Off. Gaz., 5278) —

x x x x x x x x x

From the legal point of view a bonus is not a demandable and enforceable obligation . It is so when it is made a part of the wage or salary compensation.

And while it is true that the subsequent case of H. E. Heacock vs. National Labor Union, et al., 95 Phil., 553; 50 Off. Gaz., 4253, we stated that:

Even if a bonus is not demandable for not forming part of the wage, salary or compensation of an employee, the same may nevertheless, be granted on equitable consideration as when it was given in the past, though withheld in succeeding two years from low salaried employees due to salary increases.

still the facts in said Heacock case are not the same as in the instant one, and hence the ruling applied in said case cannot be considered in the present action.

What are imperfect and perfect obligations? Perfect obligation is one where there is a determination of the creditor, debtor and the nature and value of the obligation;

Imperfect obligation has no determination of those above.

What is its implication to natural obligation? Perfect obligation is natural obligation in a sense that all those elements have been determined and it is only the performance that is left to the will of the debtor.

Natural OBLIGATION vs. Moral OBLIGATION: ------ JFEL

Natural OBLIGATION

Moral OBLIGATION

Juridical tie Exists None

Fulfillment or Performance by debtor

legal fulfillment of an OBLIGATION

act of pure liberality which springs from blood, affection or benevolence

Law/Basis of existence of OBLIGATION

Within the domain of law

entirely domain of morals

Enforceability The juridical tie itself produces certain civil effects; True OBLIGATION but for certain causes cannot be enforced by law

moral duty is inexistent in the juridical point of view

Examples of natural OBLIGATIONS:

Support of a natural child (illegitimate)

Indemnification of a woman seduced

Support of relatives, by consanguinity or affinity

Case: Villaroel vs. Estrada

Facts: On May 9, 1912, Alexandra F. Callao, mother of defendant John F. Villarroel, obtained from the spouses Mariano Estrada and Severina a loan of P1, 000 payable after seven years. Alexandra died, leaving as the only heir to the defendant. Spouses Mariano Estrada and Severina died too, leaving as the only heir to the plaintiff Bernardino Estrada. On August 9, 1930, the defendant signed a document which states in duty to the plaintiff the amount of P1, 000, with an interest of 12 percent per year. This action relates to the collection of this amount. The Court of First Instance of Laguna, which was filed this action, condemn the defendant to pay the claimed amount of P1, 000 with legal interest of 12

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percent per year from the August 9, 1930 until fully pay.

Issue: Whether the obligation arising from the original contract of loan, being prescribed would still be demandable from the only heir of the original debtor.

Held: Yes because the prescribed debt of the deceased mother of the debtor was held to be a sufficient consideration to make valid and effective the promise of the son to pay the same. Although the action to recover the original debt has prescribed and when the lawsuit was filed in this case, the question that arises in this appeal is primarily whether, notwithstanding such prescription is from the action filed. However, this action is based on the original obligation contracted by the mother of the defendant, who has prescribed, but in which the defendant contracted on August 9, 1930 to assume the fulfillment of that obligation, as prescribed. Being the only defendant of the primitive heir debtor entitled to succeed him in his inheritance, that debt legally brought by his mother, but lost its effectiveness by prescription, is now, however, for him a moral obligation, which is consideration enough to create and effective and enforceable his obligation voluntarily contracted the August 9, 1930.

*a PROMISE TO PERFORM A NATURAL OBLIGATION is as effective as performance itself and converts the obligation into a civil obligation. The natural obligation is a valid cause for a civil obligation

Sabi ko: there is already a retention of that promise- he can no longer retract it.

CIVIL OBLIGATIONS

NATURAL OBLIGATIONS

Source of binding force & effect

From positive law

from equity and natural justice

Enforceability

can be enforced by court action or the coercive power of public authority

cannot be compelled by court action but depends upon good conscience of the debtor

When can you convert a natural obligation to civil one? This can made through;

(1) Novation- DBP vs. Confessor:

(2) Confirmation or ratification of the natural obligation-- unless contrary to law, morals or public order.

Can you guarantee a natural obligation? In principle, NO. because the liability of the guarantor presupposes that there must be a prior exhaustion of the property of the principal debtor, and that the guarantor after paying can recover from the principal debtor—and both of these cannot be legally done when the obligation is natural.

The legal consequence of having a guaranty for a natural obligation is to convert the same to a civil obligation because that guaranty will now be subject to some coercive remedies to be enforced against it.

Illicit OBLIGATIONS OBLIGATIONS which are contrary to morals and good customs do not constitute natural OBLIGATIONS; whatever is paid under such OBLIGATIONS can be recovered, without prejudice to the provisions of Articles 1411-void contracts- illegal obligation constituting crimes.. and 1412- void contracts- illegal but not criminal, but Article 1414 may apply.

Illustrations:1. Differentiate civil obligation from natural

obligation: In civil action, the obligation can be enforced by court action; natural obligations cannot be enforced by court action. Civil obligations are based on positive law and natural obligations are based on equity.

2. Example: The debt is 10M, the value of the estate 3M, the natural obligation is? To pay 7M. The basis of 7M? Under the law, the heir is liable to the extent of the value which they actually received from the decedent, therefore, if they received 3M, they will only be liable for 3M, the 7M will be a natural obligation.

3. Example: Dated feb.1, 2000, I promise to pay X the amount of 1M, signed by Y. To this day, not a single centavo has been paid. What kind of obligation is the promissory note? It may be considered as a civil obligation when X demanded in writing the payment from Y before the action prescribes because written demand will stop the running of prescription of the obligation. However, if there was no demand, since the obligation is a pure obligation, therefore, demandable at once, the prescriptive period begins to run on feb.2, 1994, 10 years has already lapsed, the action already prescribed, the obligation becomes a natural obligation.

Is this promissory note a pure obligation? Yes. Why? Because there is no period stated in the promissory note.

Because no period is stated in the promissory note, it is a pure obligation? Not necessarily, because by express provision of the law (1197), just because the parties failed to state the period in the promissory note, does not necessarily mean that it pertains to a pure obligation, because from the nature and circumstances it can be inferred that the parties may have intended to fix the period, if this is promissory note is a contract of loan it is possible that there is a period.

What possible contract may the promissory note be that indeed this may pertain to a pure obligation? A contract of sale- because in contract of sale it is reciprocal, both are creditors and debtors of each other- such that once a party performs his part of obligation, it becomes incumbent upon the other to perform his part of obligation- he may demand at once.

Now having said that, if this promissory note pertains to an obligation with a period, therefore today the obligation in this promissory note, if no demand was made, a natural obligation? Not necessarily, the period of prescription shall be counted from the due date where the obligation must be paid, and if this is with a period- the demandability arise from the moment such period expires, and the agreement is that the obligation should be paid after five years, today this is still a civil obligation- because the right of action is not yet barred by prescription. the prescriptive period shall commence to run from the time the cause of action accrues.

4. IN RELATION TO THE EXAMPLE OF THE HEIR WHO PAID THE DEBT OF THE FATHER: X died, his heirs are ABC, ABC paid to Y 10M five days after X’s death, after 6 months thereafter the heirs are trying to recover claiming that the estate is only 3M, can the heirs recover the value from Y? They cannot recover if the payment is voluntary. In natural obligation, if the payer voluntarily paid, the creditor has the right to retain what has been paid. The question here is that whether or not the payment is voluntary? Incidentally, in natural obligation if the payer paid without fraud, threat, or any vitiation being employed upon the heirs, the payment is voluntary payment, correct? Not necessarily. When will there be payment without vitiation, yet the payment is not voluntary? What constitutes voluntary payment in natural obligation? The payer knew that he is not compelled to pay but

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the payer still paid, it is a voluntary payment. The more reasonable question here is that is there such a person who is crazy enough to pay even if he has no obligation to pay? Yes, why would he do that? Conscience. Precisely because the obligation is based on justice (but this is not possible here in the Philippines). The more reasonable answer is reputation. But under the facts the payment is voluntary? Not really, because when they paid it was only 5 days after the death of X, by that time normally, they do not know the estate of the decedent. – had they known the amount of the estate, they would not have paid

5. Obligation is defined under Art. 1156 as an obligation to give, to do, or not to do. Is it correct to say that the definition is not accurate; there must be another prestation which is not to give? No, the prestation not to give is included in not to do. Obviously in this definition, there are only three obligations as to prestations, which are? 1. Obligation to give; 2. Obligation to do; and 3. Obligation not to do. Briefly, this definition is criticized because it is incomplete, why is it incomplete? It pertains only to the part of the debtor. To the critics, obligation is a concept that would include both the debt side and the credit side. And you agree to that? Yes sir. The credit side and the debt side are two aspects of an obligation, do you agree to that? Yes. So a credit is an obligation? No, they are actually opposite of each other. The difference is that a person who has a right can compel the other; he cannot be compelled to perform his right. Thus, in Philippine law, rights and obligations are different matters. An obligation therefore may not be waived but a right may be exercised or not.

6. What are obligations without agreement, and 5 situations giving rise to this obligation? These are obligations arising from all other sources besides contract.- delict, quasi delit, quasi-contract, law. Thus, in answering the second question, you must cite examples:

1. Payment of damages to the person who was injured by negligence –quasi delict

2. Payment of damages to a victim of a crime.- delict

3. Obligation to return thing in a solution indebiti- quasi contract

4. Obligation to give support to spouse.- law

This is because agreement is required only in contracts, it is not required in all other obligations, is only an essential element of a contract.

7. Therefore considered as essential elements of obligations are? 1. Active subject (creditor or obligee); 2. Passive Subject (debtor or obligor); 3. Juridical tie; and 4. Prestation.

Therefore, in a contract of lease, who is active subject and who is the passive subject? The obligation is a reciprocal contract, hence, the passive subject is the lessor in the aspect of delivering the property leased to the lessee, and the active subject is the lessee in the aspect of demanding for the delivery of the thing leased.

In a contract of sale, who is the passive subject? It depends, the contract of sale is a bilateral contract, hence as to payment the buyer is the passive subject and the vendor is the active subject, while as to the delivery of the thing sold, the buyer is the active subject while the vendor is the passive subject.

Contract resulting to a reciprocal obligation is called? A bilateral contract.

The question here is, how come the debtor is considered as the passive subject? He can be compelled to perform the obligation. He is the one to be compelled therefore passive? Under Philippine law, the creditor is the active subject, because if the creditor does not demand for the performance of the obligation there will be no compulsion because if there is no demand, there will be no delay.

The debtor is actually favored by law for instance: 1. In an obligation to pay a sum of money without a stipulation as to the place of payment, the place of payment will be where? The place of domicile of debtor.

8. Mentioned as one of the essential requisites is the prestation, also known as what? The object. Therefore it pertains to a thing? No. Because? The object pertains to conduct.

9. Another essential requisite is the juridical tie, also known as, ad vinculum juris or legal tie or efficient cause. When would there be a juridical tie, what is its purpose? It binds the party to the obligation; there is a juridical tie when one of the sources of obligation is present. These sources of obligations,

anyone of them binds the parties. Like for instance, law, it is the law that will bind the parties. What obligation has no juridical tie? Moral obligations.

PRESCRIPTION OF ACTIONS

What is “prescription of actions” means? It is also known as the limitation of actions which refers to the time within which an action may be brought, or some act done, to preserve a right.

What are “Statutes of Limitation”? These are the acts limiting the time within which actions shall be brought. They do not confer any right of action but are enacted to restrict the period within which the right might be asserted. They can be available as defenses but not matters of substantive right. The purpose is to protect the diligent and vigilant not those who sleep on their rights. They are statutes of repose, the object of which is to suppress fraudulent and stale claims from springing up at great distances of time and surprising the parties or their representatives when all the proper vouchers and evidence are lost or the facts have become obscure from the lapse of time or the defect memory or death or removal of witnesses. These contemplate civil actions not criminal actions.

What is the difference between laches and prescription? Laches is concerned with the effect of delay while prescription is concerned with the fact of delay. Laches is principally the question of inequity of permitting a claim to be enforced while prescription is a matter of time. Laches applies to equity while prescription is statutory/law.

Article 1139. Actions prescribed by the mere lapse of time fixed by law.

Note: For example, in computing the prescriptive period if it is a leap year, February 28 and 29 are two separate days.

What is the effect of lapse of time? It has the effect of extinguishing the action. However, this to be availed of as a defense should be pleaded in the answer.

The right of prescription however can be waived or renounced. It is deemed waived if not timely raised or pleaded before or during trial. Exception if it is apparent in the pleading itself.

Case: Development Bank of the Philippines vs. Spouses Patricio Confessor

Facts: On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural loan from the Agricultural and

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Industrial Bank (AIB), now the Development of the Philippines (DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by a promissory note of said date whereby they bound themselves jointly and severally to pay the account in ten (10) equal yearly amortizations. As the obligation remained outstanding and unpaid even after the lapse of the aforesaid ten-year period, Confesor, who was by then a member of the Congress of the Philippines, executed a second promissory note on April 11, 1961 expressly acknowledging said loan and promising to pay the same on or before June 15, 1961. Said spouses not having paid the obligation on the specified date, the DBP filed a complaint dated September 11, 1970 in the City Court of Iloilo City against the spouses for the payment of the loan.

Issue: Whether the validity of a promissory note which was executed in consideration of a previous promissory note, the enforcement of which is barred by prescription may still be demandable.

Held: Yes. The right to prescription may be waived or renounced. Article 1112 of Civil Code provides:

Art. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future.

Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right acquired.

There is no doubt that prescription has set in as to the first promissory note of February 10, 1940. However, when respondent Confesor executed the second promissory note on April 11, 1961 whereby he promised to pay the amount covered by the previous promissory note on or before June 15, 1961, and upon failure to do so, agreed to the foreclosure of the mortgage, said respondent thereby effectively and expressly renounced and waived his right to the prescription of the action covering the first promissory note.

This Court had ruled in a similar case that –

... when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new contract recognizing and assuming the prescribed debt would be valid and enforceable—NOVATION ... .

Thus, it has been held —

Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after the same has prescribed and with full

knowledge of the prescription he thereby waives the benefit of prescription.

This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to pay the debt. The consideration of the new promissory note is the pre-existing obligation under the first promissory note. The statutory limitation bars the remedy but does not discharge the debt.

A new express promise to pay a debt barred ... will take the case from the operation of the statute of limitations as this proceeds upon the ground that as a statutory limitation merely bars the remedy and does not discharge the debt, there is something more than a mere moral obligation to support a promise, to wit a – pre-existing debt which is a sufficient consideration for the new the new promise; upon this sufficient consideration constitutes, in fact, a new cause of action.

... It is this new promise, either made in express terms or deduced from an acknowledgement as a legal implication, which is to be regarded as reanimating the old promise, or as imparting vitality to the remedy (which by lapse of time had become extinct) and thus enabling the creditor to recover upon his original contract.

Under Article 165 of the Civil Code, the husband is the administrator of the conjugal partnership. As such administrator, all debts and obligations contracted by the husband for the benefit of the conjugal partnership, are chargeable to the conjugal partnership. 5No doubt, in this case, respondent Confesor signed the second promissory note for the benefit of the conjugal partnership. Hence the conjugal partnership is liable for this obligation.

Article 1140. Actions to recover movables shall prescribe 8 years from the time the possession thereof is lost, unless the possessor has acquired the ownership by prescription for a less period, according to Article 1132 and without prejudice to Articles 559, 1505 and 1133.

Article 1132. The ownership of movables prescribes through uninterrupted possession for 4 years in good faith. The ownership of personal property also prescribed through uninterrupted possession for 8 years, without need of any other condition.With regard to the right of the owner to recover personal property lost or of which he has been illegally deprived, as well as with respect to movables acquired in a public sale, fair, or market, or from a merchant’s store, the

provisions of Article 559 and 1505 shall be observed.

Article 1141. Real actions over immovables prescribe after 30 years. This provision is without prejudice to what is established for the acquisition of ownership and other real rights by prescription.

Note: While an action for reformation of instrument, such as a contract of sale with pacto de retro alleged to be merely an equitable mortgage, is an action based upon a written contract which must be brought within 10 years from the time the right of action accrues (Article 1144), where however, the accrual of such right could not be established it is more logical to apply this provision, Article 1141 because in reality the action seeks to reassert one’s title of ownership over the real property, not to recover the same.

Article 1142. A mortgage action prescribes after 10 years.

Note: The fact that the mortgage is registered does not make its action to foreclose imprescriptible.

Article 1143. The following rights, among others specified elsewhere in this Code, are not extinguished by prescription: imprescriptible

1. To demand a right of way, regulated in Article 649;

2. To bring action to abate a public or private nuisance.

Note: Also included in the list is that provided for in Article 494 of the Civil Code which allows no prescription to run in favor of a co-owner or co-heir against co-owners or co-heirs so long as he expressly or impliedly recognize the co-ownership because the possession of each of the co-owner or co-heir is in the nature of a subsisting trust and considered to be in the name of the other.

Exception : It will prescribe if the co-owner or co-heir has possessed the property as exclusive owner for (30 yrs-ocen) a period sufficient to acquire the property by prescription.

Other imprescriptible actions: 1. Action by the government or a

governmental entity;2. Action for mandamus;3. Action to enforce an express trust as

long as the trustee does not repudiate the trust;

4. Action to quiet title of the property in one’s possession;

5. Action or defense to declare a contract or judgment void ab initio;

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6. Action of the registered owner to recover his land.

Article 1144. The following actions must be brought within 10 years from the time the right of action accrues:

1. Upon a written contract;2. Upon an obligation created by law;

and 3. Upon a judgment.

Note: Remember that the action for reconveyance of the title to the rightful owner prescribes in 10 years from the issuance of the title. But is fraud has been committed, and this is the basis of action, not implied trust, the action will be barred after 4 years from the discovery of the fraudulent act.

Article 1145. The following actions must be commenced within 6 years:

1. Upon an oral contract; 2. Upon a quasi-contract.

Article 1146. The following actions must be instituted within 4 years:

1. Upon an injury to the rights of the plaintiff;

2. Upon a tort or quasi-delict.

*An action based on fraud.

Note: Example of injury to the rights of the plaintiff is when there is an unjustified separation from employment. Example of actions of tort or quasi-delict is; where real property belongs in ownership to D and over which he was and has always been in possession but by mistake of the cadastral clerk came to be titled in 1935 in the name of L, who had never claimed it and knew all along that he was not the owner but only had a paper title thereto, never bothered to disturb the possession of D until 1948 when he sought to do so, thereafter filing his reinvindicatory action to recover the land from D in 1949, the counterclaim for reconveyance contained in the answer of D has been filed within the period to recover on a quasi-delict.

Article 1147. The following actions must be filed within one year:

1. For forcible entry and detainer;2. For defamation.

Article 1148. The limitations of actions mentioned in Articles 1140 to 1142 and 1144 and 1147 are without prejudice to those specified in other parts of this Code, in the Code of Commerce, and in special laws.

Article 1149. All other actions whose periods are not fixed in this Code or in other laws must be brought within 5 years from the time the right of action accrues.

Note: The right to collect taxes is imprescriptible.

Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought.

Note: It is to be computed from the day on which the corresponding action could have been instituted. It is the legal possibility of bringing the action which determined the starting point for the computation of the period. The period should not be made to retroact to the date of execution of contract.

The commencement of cause of actions:1. Closing of windows- the period of

prescription for the action to close must be counted from the day they were opened.

2. Obligation to pay upon receipt of an inheritance by the debtor- from the date of such receipt because when the obligation is subject to a suspensive condition, prescription begins to run from the happening of the condition.

3. Obligation without maturity date or note payable on demand- from the date of the note or obligation NOT from demand.

4. Unpaid balance of a subscription to shares of a corporation- from the date of call or demand.

5. Payment of money within a year but with privilege of extension- from the end of the first year.

6. Action based on fraud- from the discovery of fraud.

7. Quasi-delict- from the day the quasi-delict accrued or was committed.

8. Action for partition and reconveyance based on implied or constructive trust- from the date of issuance of the original certificate of title because registration is notice to the world.

9. Period to claim inheritance- until a 3rd person claims a right under such instrument.

10. To set aside simulated written deed of pacto de retro sale- when the alleged vendees made known their intention by overt acts not to abide by the true agreement NOT from the date of execution of contract.

Article 1151. The time for the prescription of actions which have for their object the enforcement of obligations to pay principal with interest or annuity runs from the last payment of the annuity or of the interest.

Note: This is applicable only when the principal debt is already due. But where there exist a past due mortgage which was recognized by payments of interest, prescription ran only from the past payment of interest.

Article 1152. The period for prescription of actions to demand the fulfillment of obligations declared by a judgment commences from the time the judgment became final.

Note: Judgment will only become final upon the expiration of the period for appeal in the trial court. But in the SC or CA, the true judgment is that entered by the Clerk of that Court pursuant to the dispositive portion of its decision. The period is 10 years from such entry or period under Article 1144.

Article 1153. The period for prescription of actions to demand accounting runs from the day the persons who should render the same cease in their functions . The period for the action arising from the result of the accounting runs from the date when said result was recognized by agreement of the interested parties.

Note: The period of prescription begins to run in an action to compel an accounting by a joint account partner, from the date of the retirement of the members. For accounts, the following rules apply:

1. For mutual current accounts, it begins to run on the date of the last item, no matter how far back the account commenced.

2. For simple current open accounts, it begins to run from the date of each particular item.

3. Current account guaranteed by mortgage executed in a public instrument, it begins to run from the date of the last payment.

4. When the accounting has been made between the parties in their current account dealings, the right of action, and prescription begins to run on the date when the last balance of prescription was struck and NOT when the business relations terminated.

Article 1154. The period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him.

Note: There is only interruption of the running of prescription when the courts cannot be kept open and are not within the reach of the people. The Statute of Limitations does not operate against the Government. An

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example of interruption is the destruction of records of the case.

Article 1155. The prescription of actions is interrupted – (prescription do not run)(1) when they are filed before the court, (2) when there is written extra-judicial demand by the creditors, and(3) when there is any written acknowledgment of the debt by the debtor.

Note: For the first interruption, it lasts during the pendency of the action and runs anew after the dismissal of the first action to revive judgment.

When interruption of action is legally commenced? It is from the time the complaint is docketed in Court.

How about if the prescription is interrupted by a judicial demand? The full period for the prescription must be reckoned from the cessation of the interruption.

When there is no suspension in filing of action in court?

1. When the plaintiff desist2. Amendment of the complaint with

new or different cause of action3. New or additional defendants

For the second interruption, it is so because since the extinctive prescription is based on presumed abandonment of a right, it is obvious that the running of the period should be interrupted when a demand is made by the creditor upon the debtor before the lapse of the period fixed by law, with the burden of proof on the former. It must also be written.

For the third interruption, it is so if the acknowledgment is in writing. Does it always have to be express? Not so because it can be implied therein, provided it is written and must apply to a particular or specific debt. Examples are the following:

1. A promise to pay a debt.2. Listing of mortgage indebtedness by

the debtor in his schedule of liabilities filed in insolvency proceedings.

3. Statement by one of the maker of a PN that he supposed he would have to pay it, if the amount could not be gotten out of the estate of other drawer.

4. Notation in the handwriting of the maker to the effect that such note was renewed.

* Can be made even by a legal representative.

Instances that there is NO acknowledgment of debt

1. Mere offer to compromise a suit upon a supposed debt.

2. Debtor acknowledging receipt of a statement of account but declines to recognize the correctness of the account being exorbitant.

3. Acknowledgment of the obligation after it has already prescribed. There must be a new and positive promise to pay in order to nullify prescription.

4. Part payment of debt.5. The death of the debtor.6. The transfer of right to another.7. The institution of criminal action

cannot have the effect of interruption the institution of civil action based on quasi-delict.

8. Order to stay execution of judgment.9. Confinement in jail.

What is the effect of acknowledgment? It will renew the obligation of the debtor and interrupts the prescription and make it run only from such acknowledgment.

Example, if the decedent makes a will but invalid as to its form but in there he acknowledge the debt in favor of A, the prescription runs against the claim from the date of the making of invalid will and NOT from the date of death.

(b) CIVIL OBLIGATIONS:

Article 1157. Obligations arise from: (1) Law; (OBLIGATIONS ex lege)(2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts.

SOURCES OF OBLIGATIONS:

1. LAW:Article 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book.

an agreement is not necessary in order that a party may demand from another the fulfillment of an OBLIGATION arising from the application of a law in the circumstances;

Balane: Law as a source of obligation – It is my opinion that there is an overlap in the enumeration because all obligations arise from law. Law is the only source of obligation, in the ultimate sense. But, as a proximate source, there are five sources of obligations. Law is both the ultimate & a proximate source of obligations.

Sources of Obligations according to Sanchez Roman.

Law & Acts. The latter are further classified, as follows:

(1) licit acts created by concurrence of wills (contracts);

(2) licit acts either voluntary or involuntary without concurrence of wills (quasi-contract);

(3) illicit acts of civil character which are not punishable, voluntary or involuntary (torts & all damages arising from delay);

(4) illicit acts which are voluntary & are punishable by law (crimes)

Baviera: When the source of the obligation is Law, there is no need for an act or omission for the obligation to arise.

CASE: Sagrada Orden De Predicadores Del Santismo Rosario De Filipinas vs. National Coconut Corporation, June 30, 1952, J. Labrador.

Facts: Plaintiff owned disputed property in Pandacan, Manila which was acquired during the Japanese occupation by Taiwan Tekkosho with TCT. When the Philippines was ceded to USA, the same was entrusted to Alien Property Custodian, APC by the US government. APC took possession, control and custody under the Trading with the Enemy Act. APC allowed Copra Export Management Co. to occupy the property for a fee. RP (Republic of the Philippines) later made representation with APC to use the same property with warehouse which was repaired by NACOCO (National Coconut Corp.) and was leased to Dioscoro Sarile. The latter failed to pay rentals on the property. In an action to recover possession of the property, the court nullified the sale to Taiwan Tekkosho and cancelled its TCT and ordered reversion of title to plaintiff, and right of recovery from NACOCO of rentals to the property.

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ISSUE: WON NACOCO is liable to pay back rentals?

HELD: If defendant-appellant is liable at all, its obligations must arise from any of the 4 sources of obligations, namely, law, contract or quasi contract, crime, or negligence. (Article 1089, Old Civil Code.) To determine such, the following must be understood:

As to crimes: Defendant-appellant is not guilty of any offense at all, because it entered into the premises & occupied it with the permission of the entity which had the legal control & administration thereof, the Alien Property Administration (APA).

As to Quasi-Delict: Neither was there any negligence on its part.

As to Contract: There was also no privity (of contract or obligation) between the APA & Taiwan Tekkosho, which had secured the possession of the property from the plaintiff-appellee by the use of duress, such that the Alien Property Custodian or its permittee (defendant-appellant) may be held responsible for the supposed illegality of the occupation of the property by said Tekkosho.

The APA had the control & administration of the property not as successor to the interests of the enemy holder of the title, the Taiwan Tekkosho, but by express provision of law.

Neither is it a trustee of the former owner, the plaintiff-appellee herein, but a trustee of the US Govt., in its own right, to the exclusion of, & against the claim or title of, the enemy owner. From Aug. 1946, when def.-appellant took possession, to the date of the judgment on 2/28/48, the APA had the absolute control of the property as trustee of the US Govt., with power to dispose of it by sale or otherwise, as though it were the absolute owner.

Therefore, even if defendant were liable to the APA for rentals, these would not accrue to the benefit of the plaintiff the old owner, but the US Govt.

Balane: Is the enumeration in Article 1157 exclusive or merely illustrative?

Doctrine: The sense that the case of Sagrada Orden tells us is that the enumeration is exclusive.

In resolving the issue of whether the defendant should be liable to pay rentals, the SC used the process of exclusion. For there to be an obligation to pay rentals, that obligation must arise from any of the five (5) sources of obligations. If it does not, then there is no

obligation. The clear implication of this ruling is that, these five (5) are the only sources of obligations.

The problem with Article 1157 is that it might not cover all situations. For example: Carale uses Dove as his soap. He then hears an advertisement from Proctor & Gamble that it is offering a nice tumbler for those who can collect 30 wrappers of Tide before Feb. 29, 1996. So, Carale stopped using Dove & started using Tide. He was able to consume all 30 wrappers on Feb. 29, 1996. He then went to Proctor & Gamble (P & G) to exchange the 30 Tide wrappers for a tumbler. But P & G told Carale that their tumblers run out of stock. Carale contracted a skin allergy as a result of using Tide in taking a bath. The question is: Does P & G have any obligation to Carale. If we look at Article 1157, this situation does not fall in any of the five sources. So, we know have a problem. The German Civil Code (BGB) covers this situation. The BGB has a sixth source of obligation, the Auslobung, which means a unilateral offer.

2. CONTRACTS:

Article 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

Article 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.

Negotiation of contract is initiated by an OFFER;Autonomy of Contract supposing the contract is valid and enforceable, the terms of contract not contrary to law, morals, GC, PP or PO, the stipulations therewith should be given effect. (One of fundamental principles of contracts)

Balane: There are two parts in Article 1159.

Obligations derived from contract has the force of law between the contracting parties (jus civili )

There must be compliance in good faith (jus gentium.)

CASE: People’s Car Inc. vs. Commando Security Service Agency, May 22, 1973, J. Teehankee.

Facts: On April 5, 1970, Commando Security Service Agency’s security guard on duty at the premises of People’s Car Inc., without authority, consent, approval, knowledge or orders from People’s Car and/or Commando Security brought out from the compound a car belonging to a customer and drove said car for a place or places unknown, abandoning his post as such security guard, and while so driving, lost control of said car, causing the same to fall into a ditch. The customer, Joseph Luy had to rent another car. People’s Car incurred actual damages of P8, 489.10. People’s Car sued Commando Security for reimbursement.

Issue: WON Commando security is liable to damages in accordance with provisions of contract

Held: YES. Plaintiff was in law liable to its customer for the damages caused the customer's car, which had been entrusted into its custody. Plaintiff therefore was in law justified in making good such damages and relying in turn on defendant to honor its contract and indemnify it for such undisputed damages, which had been caused directly by the unlawful and wrongful acts of defendant's security guard in breach of their contract. As ordained in Article 1159, Civil Code, "obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith."Plaintiff in law could not tell its customer, as per the trial court's view, that "under the Guard Service Contract it was not liable for the damage but the defendant" — since the customer could not hold defendant to account for the damages as he had no privity of contract with defendant. Such an approach of telling the adverse party to go to court, notwithstanding his plainly valid claim, aside from its ethical deficiency among others, could hardly create any goodwill for plaintiff's business, in the same way that defendant's baseless attempt to evade fully discharging its contractual liability to plaintiff cannot be expected to have brought it more business. Worse, the administration of justice is prejudiced, since the court dockets are unduly burdened with unnecessary litigation.Paragraph 4 of the contract, which limits defendant's liability for the amount of loss or damage to any property of plaintiff to "P1,000.00 per guard post," is by its own terms applicable only for loss or damage 'through the negligence of its guards ... during the watch hours" provided that the same is duly reported by plaintiff within 24 hours of the occurrence and the guard's negligence is verified after proper investigation with the attendance of both contracting parties. Said paragraph is manifestly

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inapplicable to the stipulated facts of record, which involve neither property of plaintiff that has been lost or damaged at its premises nor mere negligence of defendant's security guard on duty.Here, instead of defendant, through its assigned security guards, complying with its contractual undertaking 'to safeguard and protect the business premises of (plaintiff) from theft, robbery, vandalism and all other unlawful acts of any person or persons," defendant's own guard on duty unlawfully and wrongfully drove out of plaintiffs premises a customer's car, lost control of it on the highway causing it to fall into a ditch, thereby directly causing plaintiff to incur actual damages in the total amount of P8,489.10.Defendant is therefore undoubtedly liable to indemnify plaintiff for the entire damages thus incurred, since under paragraph 5 of their contract it "assumed the responsibility for the proper performance by the guards employed of their duties and (contracted to) be solely responsible for the acts done during their watch hours" and "specifically released (plaintiff) from any and all liabilities ... to the third parties arising from the acts or omissions done by the guards during their tour of duty." As plaintiff had duly discharged its liability to the third party, its customer, Joseph Luy, for the undisputed damages of P8,489.10 caused said customer, due to the wanton and unlawful act of defendant's guard, defendant in turn was clearly liable under the terms of paragraph 5 of their contract to indemnify plaintiff in the same amount.

Case: Joseph Saludaga vs. far Eastern University and Edilberto De Jesus (President of FEU), April 30, 2008, J. Ynares-Santiago.

Facts: Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern University when he was shot by Alejandro Rosete, one of the security guards on duty at the school premises on August 18, 1996. Rosete was brought to the police station where he explained that the shooting was accidental. He was eventually released considering that no formal complaint was filed against him.Respondents, in turn, filed a Third-Party Complaint against Galaxy Development and Management Corporation (Galaxy), the agency contracted by respondent FEU to provide security services within its premises and Mariano D. Imperial (Galaxy’s President), to indemnify them for whatever would be adjudged in favor of petitioner.Petitioner is suing respondents for damages based on the alleged breach of student-school contract for a safe and secure environment and an atmosphere conducive to learning.Issue: Whether or not FEU could be held liable.

Held: YES. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school’s academic requirements and observe its rules and regulations.Respondent FEU failed to discharge the burden of proving that they exercised due diligence in providing a safe learning environment for their students. It failed to show that they undertook steps to ascertain and confirm that the security guards assigned to them actually possess the qualifications required in the Security Service Agreement. It was not proven that they examined the clearances, psychiatric test results, 201 files, and other vital documents enumerated in its contract with Galaxy. Total reliance on the security agency about these matters or failure to check the papers stating the qualifications of the guards is negligence on the part of respondents. A learning institution should not be allowed to completely relinquish or abdicate security matters in its premises to the security agency it hired. To do so would result to contracting away its inherent obligation to ensure a safe learning environment for its students.Respondent FEU is liable to petitioner for damages.FEU cannot be held liable for damages under Art. 2180 of the Civil Code because respondents are not the employers of Rosete. The latter was employed by Galaxy. The instructions issued by respondents Security Consultant to Galaxy and its security guards are ordinarily no more than requests commonly envisaged in the contract for services entered into by a principal and a security agency. They cannot be construed as the element of control as to treat respondents as the employers of Rosete. It had no hand in selecting thesecurity guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said clientFALLO“For these acts of negligence and for having supplied respondent FEU with an unqualified security guard, which resulted to the latters breach of obligation to petitioner, it is proper to hold Galaxy liable to respondent FEU for such damages equivalent to the above-mentioned amounts awarded to petitioner. Unlike respondent De Jesus, we deem Imperial to be solidarily liable with Galaxy for being grossly negligent in directing the affairs of the security agency.”

Case: Faustino Cruz vs. J.M. Tuason & Company, Inc. and Gregorio Araneta, Inc., April 29, 1977, J. Barredo.

Facts: Plaintiff-appellant's complaint below shows that he alleged two separate causes of action, namely: (1) that upon request of the Deudors (the family of Telesforo Deudor who laid claim on the land in question on the strength of an "informacion posesoria") plaintiff made permanent improvements valued at P30,400.00 on said land having an area of more or less 20 quinones and for which he also incurred expenses in the amount of P7,781.74, and since defendants-appellees are being benefited by said improvements, he is entitled to reimbursement from them of said amounts and (2) that in 1952, defendants availed of plaintiff's services as an intermediary with the Deudors to work for the amicable settlement of Civil Case No. Q-135, then pending also in the Court of First Instance of Quezon City, and involving 50 quinones of land, of Which the 20 quinones aforementioned form part, and notwithstanding his having performed his services, as in fact, a compromise agreement entered into on March 16, 1963 between the Deudors and the defendants was approved by the court, the latter have refused to convey to him the 3,000 square meters of land occupied by him, (a part of the 20 quinones above) which said defendants had promised to do "within ten years from and after date of signing of the compromise agreement", as consideration for his services. Issue: Whether or not Faustino Cruz can claim reimbursement for the expenses and services rendered.

Held: NO. We hold that the allegations in his complaint do not sufficiently Appellants' reliance on Article 2142 of Civil Code is misplaced. Said article provides:Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.From the very language of this provision, it is obvious that a presumed qauasi-contract cannot emerge as against one party when the subject mater thereof is already covered by an existing contract with another party. Predicated on the principle that no one should be allowed to unjustly enrich himself at the expense of another, Article 2124 creates the legal fiction of a quasi-contract precisely because of the absence of any actual agreement between the parties concerned. Corollarily, if the one who claims having enriched somebody has done so pursuant to a contract with a third party, his cause of action

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should be against the latter, who in turn may, if there is any ground therefor, seek relief against the party benefited. It is essential that the act by which the defendant is benefited must have been voluntary and unilateral on the part of the plaintiff. As one distinguished civilian puts it, "The act is voluntary because the actor in quasi-contracts is not bound by any pre-existing obligation to act. It is unilateral, because it arises from the sole will of the actor who is not previously bound by any reciprocal or bilateral agreement. The reason why the law creates a juridical relations and imposes certain obligation is to prevent a situation where a person is able to benefit or take advantage of such lawful, voluntary and unilateral acts at the expense of said actor." (Ambrosio Padilla, Civil Law, Vol. VI, p. 748, 1969 ed.) In the case at bar, since appellant has a clearer and more direct recourse against the Deudors with whom he had entered into an agreement regarding the improvements and expenditures made by him on the land of appellees it Cannot be said, in the sense contemplated in Article 2142, that appellees have been enriched at the expense of appellant.

Case: Gutierrez Hermanos vs. Engracio Orense, December 4, 1914, J. Torres.

Facts: Engracio Orense is the owner of a parcel of land situated in Albay. On February 14, 1907, Jose Duran, Orense’s nephew, with the latter’s knowledge and consent, sold and conveyed to Hermanos’ company for P1,500 the aforementioned land with the reservation of the former the right to repurchase it for the same price within a period of 4 years. But the same land was not repurchased by Jose Duran, being insolvent, which correspondingly caused damage to the firm of Hermanos. Despite repeated demand upon Jose Duran, the latter never vacated nor transferred ownership to Hermanos’s firm, the said land. His refusal was based on the allegations that he had been and was then the owner of the said property, which was registered in his name in the property registry; that he had not executed any written power of attorney to Jose Duran, nor had he given the latter any verbal authorization to sell the said property to the plaintiff firm in his name; and that, prior to the execution of the deed of sale, the defendant performed no act such as might have induced the plaintiff to believe that Jose Duran was empowered and authorized by the defendant to effect the said sale.The plaintiff firm, therefore, charged Jose Duran, in the Court of First Instance of the said province, with estafa, for having represented himself in the said deed of sale to be the absolute owner of the aforesaid land and improvements, whereas in reality they did

not belong to him, but to the defendant Orense. However, at the trial of the case Engracio Orense, called as a witness, being interrogated by the fiscal as to whether he and consented to Duran's selling the said property under right of redemption to the firm of Gutierrez Hermanos, replied that he had. In view of this statement by the defendant, the court acquitted Jose Duran of the charge of estafa.As a result of the acquittal of Jose Duran, based on the explicit testimony of his uncle, Engacio Orense, the owner of the property, to the effect that he had consented to his nephew Duran's selling the property under right of repurchase to Gutierrez Hermanos, counsel for this firm filed a complainant praying, among other remedies, that the defendant Orense be compelled to execute a deed for the transfer and conveyance to the plaintiff company of all the right, title and interest with Orense had in the property sold, and to pay to the same the rental of the property due from February 14, 1911.

Issue: Whether or not Orense can be compelled to deliver the property to Hermanos as premised above.

Held: YES. It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least implied, power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore fulfill all the obligations contracted by the agent, who acted within the scope of his authority. (Civil Code, arts. 1709, 1710 and 1727.)Even should it be held that the said consent was granted subsequently to the sale, it is unquestionable that the defendant, the owner of the property, approved the action of his nephew, who in this case acted as the manager of his uncle's business, and Orense'r ratification produced the effect of an express authorization to make the said sale. (Civil Code, arts. 1888 and 1892.)Article 1259 of the Civil Code prescribes: "No one can contract in the name of another without being authorized by him or without his legal representation according to law.

A contract executed in the name of another by one who has neither his authorization nor legal representation shall be void, unless it should be ratified by the person in whose name it was executed before being revoked by the other contracting party.

The sworn statement made by the defendant, Orense, while testifying as a witness at the trial of Duran for estafa, virtually confirms and ratifies the sale of his property effected by his nephew, Duran, and, pursuant to

article 1313 of the Civil Code, remedies all defects which the contract may have contained from the moment of its execution.The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and void in the beginning, but afterwards became perfectly valid and cured of the defect of nullity it bore at its execution by the confirmation solemnly made by the said owner upon his stating under oath to the judge that he himself consented to his nephew Jose Duran's making the said sale. Moreover, pursuant to article 1309 of the Code, the right of action for nullification that could have been brought became legally extinguished from the moment the contract was validly confirmed and ratified, and, in the present case, it is unquestionable that the defendant did confirm the said contract of sale and consent to its execution.If the defendant Orense acknowledged and admitted under oath that he had consented to Jose Duran's selling the property in litigation to Gutierrez Hermanos, it is not just nor is it permissible for him afterward to deny that admission, to the prejudice of the purchaser, who gave P1,500 for the said property.The contract of sale of the said property contained in the notarial instrument of February 14, 1907, is alleged to be invalid, null and void under the provisions of paragraph 5 of section 335 of the Code of Civil Procedure, because the authority which Orense may have given to Duran to make the said contract of sale is not shown to have been in writing and signed by Orense, but the record discloses satisfactory and conclusive proof that the defendant Orense gave his consent to the contract of sale executed in a public instrument by his nephew Jose Duran. Such consent was proven in a criminal action by the sworn testimony of the principal and presented in this civil suit by other sworn testimony of the same principal and by other evidence to which the defendant made no objection. Therefore the principal is bound to abide by the consequences of his agency as though it had actually been given in writing (Conlu vs. Araneta and Guanko, 15 Phil. Rep., 387; Gallemit vs. Tabiliran, 20 Phil. Rep., 241; Kuenzle & Streiff vs. Jiongco, 22 Phil. Rep., 110.)The repeated and successive statements made by the defendant Orense in two actions, wherein he affirmed that he had given his consent to the sale of his property, meet the requirements of the law and legally excuse the lack of written authority, and, as they are a full ratification of the acts executed by his nephew Jose Duran, they produce the effects of an express power of agency.

3. QUASI-CONTRACTS:

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

QUASI-CONTRACT is a juridical relation which arises from certain unlawful, voluntary and unilateral acts to the end that no one may be unjustly enriched or benefited at the expense of another.

The act must be:(1) Lawful – thus different from

delict which is unlawful;(2) Voluntary – thus different from

quasi-delict which is based on fault or negligence or lack of foresight;

(3) Unilateral – thus different from contract, in which parties agree.

e.g. in Negotiorum Gestio: Benefits Conferred

Voluntarily

For preservation of Property or Business

EXTRA-CONTRACTUAL OBLIGATIONS (OBLIGATIONS without an agreement / based in IMPLIED CONSENT)Q: HOW MANY?A: In NCC, 2, nominate and “some” innominate Quasi Contract.

a. Quasi-contractsArticle 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.

Article 2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article.

b. Negotiorum Gestio

Article 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so.

This juridical relation does not arise in either of these instances: ELEMENTS –

(1) When the property or business is not neglected or abandoned;

(2) If in fact the manager has been tacitly authorized by the owner.

In the first case, the provisions of articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.

In the second case, the rules on agency in Title X of this Book shall be applicable.

NEGOTIORUM GESTIO – juridical relation which arises whenever a person voluntarily takes charge of an agency or management of the business or property of another without any power or authority from the latter.

Illustration:

1. Scenario: Lumubog na barko, what if this one of the missing persons landed on a remote island and only one resident is present there or only one family is living there in the island. Anyway this resident found the dead body of the missing person, and he found it necessary to bury the dead and he spent a sum of money of 400php. At any rate this resident, met the aunt of the decease, and demanded reimbursement for the burial, is the resident’s demand valid? Well if you read the provisions of the quasi-contract, there is an obligation to reimburse the person. In other words, you have the obligation to reimburse. But back to the question, is there a valid demand? NO. if you know, because the law on quasi-contract would tell you that he has the right to seek reimbursement from anyone who is oblige to give support and an aunt Is not oblige under the law to give support. There’s no civil obligation to give support.

Case: Rustico Adille vs. CA, Asejo’s, January 29, 1988, J. Sarmiento.

Facts: Feliza Azul owns a parcel of land. She married twice in her lifetime; the first, with one Bernabe Adille with whom she had as an only child, herein defendant Rustico Adille; in her second marriage with one Procopio Asejo, her children were herein plaintiffs. Sometime in 1939, said Felisa sold the property in pacto de retro to certain 3rd persons, period of repurchase being 3 years, but she died in 1942 without being able to redeem and after her death, but during the period of redemption, herein defendant repurchased, by himself

alone, and after that, he executed a deed of extra-judicial partition representing himself to be the only heir and child of his mother Felisa with the consequence that he was able to secure title in his name alone also, so that OCT. No. 21137 in the name of his mother was transferred to his name, that was in 1955; that was why after some efforts of compromise had failed, his half-brothers and sisters, herein plaintiffs (The Asejo siblings), filed present case for partition with accounting on the position that he was only a trustee on an implied trust when he redeemed,-and this is the evidence, but as it also turned out that one of plaintiffs, Emeteria Asejo was occupying a portion, defendant counterclaimed for her to vacate that.

Issue: Whether or not Adille can acquire exclusive ownership over the land.

Held: NO. It is the view of the respondent Court that the petitioner, in taking over the property, did so either on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the private respondents being the beneficiaries, under the Article 1456. The evidence, of course, points to the second alternative the petitioner having asserted claims of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot therefore be said to have assume the mere management of the property abandoned by his co-heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court itself affirms, the result would be the same whether it is one or the other. The petitioner would remain liable to the Private respondents, his co-heirs.

c. Solutio indebiti

Article 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.

SOLUTIO INDEBITI – juridical relation which arise whenever person unduly delivers a thing through or by mistake of another who has no right to demand it.

Case: Dometila Andres, doing business under the name and style “IRENE’S WEARING APPAREL” vs. Manufacturers Hanover & Trust Corporation, CA, September 15, 1989, J. Cortes.

Facts: Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the

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manufacture of ladies garments, children's wear, men's apparel and linens for local and foreign buyers. Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as FACETS) of the United States. In the course of the business transaction between the two, FACETS from time to time remitted certain amounts of money to petitioner in payment for the items it had purchased. Sometime in August 1980, FACETS instructed the First National State Bank of New Jersey, Newark, New Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to petitioner via Philippine National Bank, Sta. Cruz Branch, Manila (hereinafter referred to as PNB).

Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and Trust Corporation to effect the above- mentioned transfer through its facilities and to charge the amount to the account of FNSB with private respondent. Although private respondent was able to send a telex to PNB to pay petitioner $10,000.00 through the Pilipinas Bank, where petitioner had an account, the payment was not effected immediately because the payee designated in the telex was only "Wearing Apparel." Upon query by PNB, private respondent sent PNB another telex dated August 27, 1980 stating that the payment was to be made to "Irene's Wearing Apparel." On August 28, 1980, petitioner received the remittance of $10,000.00 through Demand Draft No. 225654 of the PNB.

Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to petitioner, FACETS informed FNSB about the situation. On September 8, 1980, unaware that petitioner had already received the remittance, FACETS informed private respondent about the delay and at the same time amended its instruction by asking it to effect the payment through the Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB) instead of PNB.

Accordingly, private respondent, which was also unaware that petitioner had already received the remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 to petitioner. Hence, on September 11, 1980, petitioner received a second $10,000.00 remittance.

Private respondent asked petitioner for the return of the second remittance of $10,000.00 but the latter refused to pay.

Issue: Whether or not Mantrust can recover the second remittance worth $10,000.

Held: YES. The contract of petitioner, as regards the sale of garments and other textile

products, was with FACETS. It was the latter and not private respondent which was indebted to petitioner. On the other hand, the contract for the transmittal of dollars from the United States to petitioner was entered into by private respondent with FNSB. Petitioner, although named as the payee was not privy to the contract of remittance of dollars. Neither was private respondent a party to the contract of sale between petitioner and FACETS. There being no contractual relation between them, petitioner has no right to apply the second $10,000.00 remittance delivered by mistake by private respondent to the outstanding account of FACETS.

Art. 2154. If something received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.

This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:

Art. 1895. If a thing is received when there was no right to claim it and which, through an error, has been unduly delivered, an obligation to restore it arises.

In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo explained the nature of this article thus:

Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable. This legal provision, which determines the quasi-contract of solution indebiti, is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the expense of another. In the Roman Law Digest the maxim was formulated thus: "Jure naturae acquum est, neminem cum alterius detrimento et injuria fieri locupletiorem." And the Partidas declared: "Ninguno non deue enriquecerse tortizeramente con dano de otro." Such axiom has grown through the centuries in legislation, in the science of law and in court decisions. The lawmaker has found it one of the helpful guides in framing statutes and codes. Thus, it is unfolded in many articles scattered in the Spanish Civil Code. (See for example, articles, 360, 361, 464, 647, 648, 797, 1158, 1163, 1295, 1303, 1304, 1893 and 1895, Civil Code.) This time-honored aphorism has also been adopted by jurists in their study of the conflict

of rights. It has been accepted by the courts, which have not hesitated to apply it when the exigencies of right and equity demanded its assertion. It is a part of that affluent reservoir of justice upon which judicial discretion draws whenever the statutory laws are inadequate because they do not speak or do so with a confused voice. [at p. 632.]

For this article to apply the following requisites must concur: "(1) that he who paid was not under obligation to do so; and, (2) that payment was made by reason of an essential mistake of fact" [City of Cebu v. Piccio, 110 Phil. 558, 563 (1960)].

It is undisputed that private respondent delivered the second $10,000.00 remittance. However, petitioner contends that the doctrine of solutio indebiti, does not apply because its requisites are absent.

First, it is argued that petitioner had the right to demand and therefore to retain the second $10,000.00 remittance. It is alleged that even after the two $10,000.00 remittances are credited to petitioner's receivables from FACETS, the latter allegedly still had a balance of $49,324.00. Hence, it is argued that the last $10,000.00 remittance being in payment of a pre-existing debt, petitioner was not thereby unjustly enriched.

Petitioner invokes the equitable principle that when one of two innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause of the loss.

The rule is that principles of equity cannot be applied if there is a provision of law specifically applicable to a case. ... The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction. [at p. 135.]

Having shown that Art. 2154 of the Civil Code, which embodies the doctrine of solutio

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indebiti, applies in the case at bar, the Court must reject the common law principle invoked by petitioner.

Case: Gonzalo Puyat & Sons, Inc. vs. City of Manila and Marcelo Sarmiento, as City Treasurer, April 30, 1963, J. Paredes.

Facts: Gonzalo Puyat & Sons, Inc. is engaged in the business of manufacturing and selling all kinds of furniture at its factory in Manila. Pursuant to Ordinance No. 3364, Manila assessed from Puyat retail dealer’s tax which the latter paid without protest in the erroneous belief that it was liable therefore. Puyat subsequently found that it was exempt from said taxes as provided under Ordinance No. 3816, Puyat claimed for refund.

Issue: Whether the taxes paid without protest are refundable.

Held: YES. Appellants do not dispute the fact that appellee-companyis exempted from the payment of the tax in question.This is manifest from the reply of appellant City Treasurer stating that sales of manufactured products at the factory site are not taxable either under the Wholesalers Ordinance or under the Retailers' Ordinance. With this admission, it would seem clear that the taxes collected from appellee were paid, thru an error or mistake, which places said act of payment within the pale of the new Civil Code provision on solutio indebiti. The appellant City of Manila, at the very start, notwithstanding the Ordinance imposing the Retailer's Tax, had no right to demand payment thereof.."If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligationto retun it arises" (Art. 2154, NCC)..Appelle categorically stated that the payment was not voluntarily made, (a fact found also by the lower court),but on the erronoues belief, that they were due. Under this circumstance, the amount paid, even without protest is recoverable. "If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due" (Art. 2156, NCC). Appellee had duly proved that taxes were not lawfully due. There is, therefore, no doubt that the provisions of solutio indebtiti, the new Civil Code, apply to the admitted facts of the case.With all, appellant quoted Manresa as saying: "x x x De la misma opinion son el Sr. Sanchez Roman y el Sr. Galcon, et cual afirma que si la paga se hizo por error de derecho, ni existe el cuasi-contrato ni esta obligado a la restitucion el que cobro, aunque no se debiera lo que se pago" (Manresa, Tomo 12, paginas 611-612). This opinion, however, has already lost its persuasiveness, in view of the provisions of the

Civil Code, recognizing "error de derecho" as a basis for the quasi-contract, of solutio indebiti. ."Payment by reason of a mistake in the contruction or application of a doubtful or difficult question of law may come within the scope of the preceding article" (Art. 21555)..There is no gainsaying the fact that the payments made by appellee was due to a mistake in the construction of a doubtful question of law.

4. ACTS OR OMISSIONS PUNISHED BY LAW (DELICT or CRIMES but not Felony which is limited only to those punished under RPC)

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

Balane: Crime as a source of obligation – There are many crimes from which, civil liability arises in their commission, in addition to the criminal penalty attached to them. This underlines the two aspects in a crime: one, as an offense against the state, & two as an offense against the victim. It is in the latter case that civil liability is recoverable.

As far as crime is concerned, civil law is not concerned with the penal liability but only with the civil liability.

Performance at debtor’s cost non-compliance with OBLIGATION to do, creditor may do it himself or get a 3rd person at the expense of the debtor;

when OBLIGATION to do can only be performed by debtor he cannot compelled to do so by force, the only remedy is damages;

Article 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant.

TITLE V - Civil Liability, RPC: CHAPTER ONE - Persons Civilly Liable for Felonies

Article 100. Civil liability of a person guilty of felony. - Every person criminally liable for a felony is also civilly liable.

[CHAPTER 2, RPC: What Civil Liability Includes]

Article 104. What is included in civil liability. – The civil liability established in articles 100, 101, 102, and 103 of this Code includes:

1. Restitution; 2. Reparation of the damage caused; 3. Indemnification for consequential damages.

Baviera: Requisites of enforcing the subsidiary obligation of the employer under the RPC:

-criminal case was filed against the employee

-the act or negligence arose during or in connection with the performance of the latter’s employment

-the employee is found guilty of criminal negligence

-a writ of execution has been returned unsatisfied, i.e. employee has been found to be insolvent.

There is no res judicata as regards the Employer as there is a difference in the Cause of Action. Quasi-delict (QD) differs from an action based on delict on the following grounds:

QUASI DELICT DELICT

it is subsidiary (imputed)

ER’s liability is primary in RPC

Diligence of good father of the family may be set up by the ER as a defense

In RPC, such defense of GFF is not available

A person while not criminally liable may still be civilly liable Failure of the plaintiff to reserve in the criminal case his right to file a separate civil action is not fatal to the civil action after the acquittal of the accused.

When the acquittal is based on ground that the guilt of the accused has not been proved beyond reasonable doubt, plaintiff has the right to institute a civil action for damages (culpa aquiliana).

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Q: Is it possible that even if there is a contract between the parties, a quasi-delict can still be committed by one against the other regarding the area covered by the contract?

A: Yes, according to the case of Araneta v. de Joya, 57 SCRA 59. The same act can give rise to obligations arising from different sources. For example, Alinea is the owner of a bus co., the Alinea Bus Co., Molina is a driver of one of the buses of Alinea Bus Co. Lagdameo rode the bus being driven by Molina. As a result of the reckless driving of Molina, Lagdameo suffered injuries. In this case, Lagdameo has a choice-- he can sue on either contract, quasi-delict or on crime. If he decided to sue on the breach of the contract of carriage, all he has to prove is the (existence of the contract) & that it was not performed. In this case, he can sue the common carrier but not the driver because he has no contract with the driver. If he sues on quasi-delict, he can sue both the common carrier & the driver. The defense of the driver would be diligence in driving (or fortuitous event.) The defense of the common carrier would be diligence in the selection & supervision of employees. If he sues under crime, he has to sue the driver. In case the driver is convicted & has been sentenced to pay civil liability, the employer (Alinea Bus Co.) is subsidiarily liable. If Molina is insolvent, Alinea Bus Co. will pay.

Notice that the choice of cause of action will determine three things: the theory of the plaintiff, the defense of the defendant & the question of whom to sue.

Again, remember that in this case, the victim has a choice. Provided that he is consistent with his theory & provided, further, that he cannot recover damages twice for the same injury.

Baviera: The terms of the contract cannot be against mandatory & prohibitive laws. And if the contract is valid, it shall have the force of law between the contracting parties.

5. QUASI-DELICTS: (culpa aquiliana / negligence / torts*)

[NCC, CHAPTER 2 - Quasi-delicts]

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is

obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. (memorize!)

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

* Torts is seldom used by SC in this jurisdiction, it is broader term for actionable wrong which may not be negligence, may be malicious tortuous act which is not anymore Quasi Delict.

QUASI-DELICTS – the fault or negligence of a person who, by his act or omission connected or not with, but independent from any contractual relation, causes damage to another person;

The omission to do something which ordinarily reasonable men guided by those considerations which ordinarily regulate the conduct of human affairs, would do; or doing something which prudent and reasonable men would not do.

Liability on Quasi Delict is based on equity, man is responsible not only for acts conscious and intentional acts but also for his lack of foresight, care and diligence which may cause harm to another.

ELEMENTS:(1) A duty on the part of the

defendant to protect the plaintiff from the injury of which the latter complains;

(2) A failure to perform that duty, and

(3) An injury to the plaintiff through such failure.

TEST OF NEGLIGENCE: Would a prudent man, in the position of the person on who negligence is attributed, foresee harm to the person injured as a reasonable consequence of the course about to be pursued?

KINDS OF NEGLIGENCE:(1) Culpa aquiliana, also

known as culpa extra-contractual, or negligence as a source of OBLIGATION, QUASI-DELICT;

Governed by Arts. 2176-2194

NO contractual relation at all

(2) Culpa contractual, or negligence in the performance of a contractual OBLIGATION. Governed by Article

1179 (common carrier), & all on contracts

PERSONS LIABLE: (IMPUTED/vicarious LIABILITY, 2180)

1. father / mother

2. guardians

3. owners/managers

4. employers

5. the State

6. teachers

The responsibility shall cease if they can prove that they have observed diligence of good father of the family to prevent damage;

REQUISITES OF LIABILITY (IMPUTED):

1. the fault of negligence of the defendant

2. the damage suffered or incurred by the plaintiff

3. the relation of the fault or negligence and damage incurred by the plaintiff

Balane:

The Code Commission did not choose to use tort. This is because tort does not exactly have the same meaning as quasi-delict. Tort [BROADER] covers intentional torts which in quasi-delict is considered as civil liability arising from acts or omissions punishable by law. There are some QD which are not covered by tort. Dean Bocobo suggested the ancient term culpa aquiliana. But this did not merit the approval of the Code Commission.

A TORT is a civil wrong (an actionable wrong) consisting of a violation of a right or a breach

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of duty for which the law grants a remedy in damages or other relief. The right is created by law in favor of a person called a creditor to compel another called a debtor to observe duty or a prestation either to render what is due him or to refrain from causing him injury.

Classes of Torts According to Manner of Commission

1. Intentional Torts

a. tortfeasor desires to cause the consequences of his act, or

b. tortfeasor believes that the consequences are substantially certain to result from it

c. ex. Article 26, 32 & 33 (CC)

2. Negligent Torts:

d. tortfeasor’s conduct merely creates a forseeable risk of harm which may or may not occur

e. Article 2176 (CC)

3. Strict Liability Torts:

f. Ex. Article 2183 & 2187 (CC)

Q: If there is a contract between the parties, can there be a quasi-delict committed by one against the other regarding the area covered by the contract?

A: If you look at Article 2176, you get the impression that if there is a contract between the parties, they cannot be liable for quasi-delict on an area covered by the contract. The case of Cangco has not really resolve this controversy.

Case: Jose Cangco vs. Manila Railroad Co., October 14, 1918, J. Fisher.

Facts: Cangco was an employee of Manila Railroad Co. He takes the train going home from work. That day he alighted from the train while it was still slightly in motion. He landed on the elevated platform on top of some sacks of watermelon which made him fall violently,

rolled away from the platform under the moving train where he badly crashed and lacerated his right arm. It happened at night between 7-8pm and the station was poorly lit. Resulting from such incident, Cangco’s arm was amputated twice. The seriousness of his injury made him file a case for damages against MRR Co. The latter then interposed the defense that the direct and proximate cause of the injury suffered by the plaintiff was his own contributory negligence in failing to wait until the train had come to a complete stop before alighting.

Issue: Whether or not the conduct of Cangco was characterized by imprudence so as to hold him liable because of his contributory negligence.

Held: NO. can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the platform in the manner above stated; that their presence caused the plaintiff to fall as he alighted from the train; and that they therefore constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant company is liable for the damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence.

It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of defendant to exercise due care in its performance. That is to say, its liability is direct and immediate, differing essentially, in legal viewpoint from that presumptive responsibility for the negligence of its servants, [RESPONDEAT SUPERIOR], which can be rebutted by proof of the exercise of due care in their selection and supervision. (presumption juris tantum, rebuttable). Imputed liability in NCC is not applicable to obligations arising ex contractu, but only to extra-contractual obligations, or to use the technical form of expression, that article relates only to culpa aquiliana and not to culpa contractual.

Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation has its source in the breach or omission of those mutual duties which civilized society imposes upon it members, or which arise from these relations, other than contractual, of certain members of society to others, generally embraced in the concept of status.

The fundamental distinction between obligations of this character and those which arise from contract, rests upon the fact that in

cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when entering into the contractual relation.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe means of entering and leaving its trains (contract of carriage). That duty, being contractual, was direct and immediate, and its non-performance could not be excused by proof that the fault was morally imputable to defendant's servants.

The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing an obstruction upon the platform was a breach of its contractual obligation to maintain safe means of approaching and leaving its trains, the direct and proximate cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until the train had come to a complete stop before alighting (Doctrine of comparative negligence, Rakes doctrine). If the accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's negligence and plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It is, therefore, important to ascertain if defendant was in fact guilty of negligence.

The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving railway train, is that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex and condition of the passenger, would have acted as the passenger acted under the circumstances disclosed by the evidence. This care has been defined to be, not the care which may or should be used by the prudent man generally, but the care which a man of ordinary prudence would use under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)

RULING: …that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop within six meters from the place where he stepped from it. Thousands of person alight from trains under these conditions every day of the year, and sustain no injury where the company has kept its platform free from dangerous

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obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it not been for defendant's negligent failure to perform its duty to provide a safe alighting place.

Balane: There are two important principles that we learn from this case:

The difference in concept between contract & quasi-delict is that in a contract, there is a pre-existing juridical tie between the parties. Violation of the contract gives rise to liability but not to the juridical tie. Juridical tie is not borne by a violation. In quasi-delict, it is precisely the wrongful act which gives rise to the juridical tie. Liability & juridical tie are simultaneous.

Contracts & quasi-delicts create two concentric circles with quasi-delict as the bigger circle.

[Note: There is a little mistake in Cangco. The SC said that the driver can be sued under culpa contractual. This is wrong. The driver cannot be sued as he has no privity of contract with the passenger.]

CASE DOCTRINE: Where there could still be Quasi Delict even when there is contract of carriage.

CASE: Narciso Gutierrez vs. Bonifacio Gutierrez, et al., September 23, 1931, J. Malcolm. FACTS: On February 2, 1930, a passenger truck and an automobile of private ownership collided while attempting to pass each other on the Talon bridge on the Manila South Road in the municipality of Las Piñas, Province of Rizal. The truck was driven by the chauffeur Abelardo Velasco, and was owned by Saturnino Cortez. The automobile was being operated by Bonifacio Gutierrez, a lad 18 years of age, and was owned by Bonifacio's father and mother, Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father was not in the car, but the mother, together will several other members of the Gutierrez family, seven in all, were accommodated therein. A passenger in the autobus, by the name of Narciso Gutierrez, was en route from San Pablo, Laguna, to Manila. The collision between the bus and the automobile resulted in Narciso Gutierrez suffering a fracture right

leg which required medical attendance for a considerable period of time, and which even at the date of the trial appears not to have healed properly.Issue: Whether or not Bonifacio’s father, not present during the incident could be held liable for damages to Narciso.

HELD: The court found both drivers negligent. The owner of the truck was made liable for culpa contractual, under the contract of carriage. The owner of the car was made liable under Article 2180, imputed liability for culpa aquiliana. In amplification of so much of the above pronouncement as concerns the Gutierrez family, it may be explained that the youth Bonifacio was in incompetent chauffeur, that he was driving at an excessive rate of speed, and that, on approaching the bridge and the truck, he lost his head and so contributed by his negligence to the accident. The guaranty given by the father at the time the son was granted a license to operate motor vehicles made the father responsible for the acts of his son. Based on these facts, pursuant to the provisions of article 1903 of the Civil Code, the father alone and not the minor or the mother, would be liable for the damages caused by the minor.The liability of Saturnino Cortez, the owner of the truck, and of his chauffeur Abelardo Velasco rests on a different basis, namely, that of contract which, we think, has been sufficiently demonstrated by the allegations of the complaint, not controverted, and the evidence. The reason for this conclusion reaches to the findings of the trial court concerning the position of the truck on the bridge, the speed in operating the machine, and the lack of care employed by the chauffeur. While these facts are not as clearly evidenced as are those which convict the other defendant, we nevertheless hesitate to disregard the points emphasized by the trial judge. In its broader aspects, the case is one of two drivers approaching a narrow bridge from opposite directions, with neither being willing to slow up and give the right of way to the other, with the inevitable result of a collision and an accident.The defendants Velasco and Cortez further contend that there existed contributory negligence on the part of the plaintiff, consisting principally of his keeping his foot outside the truck, which occasioned his injury. In this connection, it is sufficient to state that, aside from the fact that the defense of contributory negligence was not pleaded, the evidence bearing out this theory of the case is contradictory in the extreme and leads us far afield into speculative matters.

FRAUD NEGLIGENCEdolo Culpa

Nature of Act involves willfulness or deliberate intent to cause damage or injury to another

mere want of care or diligence, not voluntary act or omission

Gives rise to OBLIGATION

the act itself the want or care or diligence

A single act may be a crime and a QD at the same time; (Article 100, RPC)

Injured party cannot recover damages twice for the same act or omission of defendant; (must choose 1 Remedy)

QUASI-DELICT CRIMEAs to nature of Right violated

private right public right

Is a Wrong against

the individual the State

Criminal Intent

not needed Necessary

Legal Basis for liability

Broad penal law necessary

Liability for Damages

every QD gives rise to liability for damages

there are crimes without civil liability

Form of Redress

reparation for injury suffered/indemnification/compensation

punishment/fine/imprisonment

Quantum of Evidence

Preponderance Beyond reasonable doubt

Compromise

can be compromised

criminal liability can never be compromised

REQUISITES FOR LIABILITY: (onus)(1) Wrongful act or omission imputable

to the defendant by reason of his fault or negligence;

(2) Damage or injury proven by the person claiming recovery;

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(3) A direct causal connection between the negligent act and the injury.

DOCTRINE OF PROXIMATE CAUSE is that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury and without which the result would not have occurred.

The exemplification by the Court in one case is simple and explicit; viz: "(T)he proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately affecting the injury as a natural and probable result of the cause which first acted under such circumstances that the person responsible for the first event should, as an ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom."

Illustrations:1. Sources of obligations: 1157: Are there

other sources of obligations aside from those provided by law? No. Art. 1157 is exclusive based on the case of Sagrada.

2. Who may be considered privy to the contract? Heirs, successors in interest.

3. There are certain facts which need not be proven, there is no need to allege such facts because the law presumes the existence of a right and presumes the existence of a fact, hence, it is not always true that whoever alleges the fact must prove the existence of such fact.

4. Contracts: How would you know if there are obligations arising from a contract? By considering the terms and conditions of contract, by reading the terms and conditions of the contract, you will determine whether or not there is an obligation arising from such contract. Incidentally, does it mean that there is no stipulation, therefore an agreement is not part of the contract? Not necessarily, an obligation may arise even without a stipulation like warranty against eviction. A limitation provided by law as to terms

and conditions? It must not be contrary to law, morals, public policy. But before an obligation arises, what transpires? Negotiation. Negotiation is initiated by what? Offer. During the negotiation, the offeror withdrew the offer, will there be an obligation? Yes. What source? It depends if there is bad faith, if there is negligence on the part of the offeror in not communicating as soon as possible the same is quasi-delict. If bad faith, Art. 19, 20, and 21 I which is law, but the SC generally would consider the source of obligation as tort.

5. People’s car Case: Issue: Whether or not commando is liable for the entire amount of damages instead of only 1,000.00

6. The owner of the house left the house for a short vacation, the very night, they left, their house was burned, the neighbors saved some of their appliances, what is the relationship? Negotiorum gestio, do you agree? No, these appliances are not managed; this will fall under quasi-delict because in negotiorum gestio there must be abandonment or neglect of the property. Another reason why this is not negotiorum gestio, this falls under the other quasi-contracts. An obligation arising from quasi-contract, even if the obligor was not unjustly enriched, or is it required that he must be unjustly enriched if he will not perform an obligation under quasi-contract? Despite 2142, is it possible that in a quasi-contract there will be no unjust enrichment? Yes, read the provisions on negotiorum gestio, expressly provided by law, even if the owner is not enriched or unjustly enriched, if he has an obligation. It will appear therefore that the principles behind quasi-contracts are not really the principle of unjust enrichment. Thus, in other countries, the principle behind this obligations is, like in the U.S. law and quasi-contracts are considered to fall under one source only implied contracts, from that alone the basis is consent given by the obligor.

7. A bought a sack of rice from B, P625, A gave 1K to B, B gave the sack of rice to A, B gave 475 to A, what relationship was created? Solutio indebiti. What is the obligation? To return the excess P100.

8. The quasi-contracts are provided for in article 2165-2175, is this exclusive? No. it is not exclusive as provided for in article 2143.

9. Act or omission punishable by law? These are crimes or delicts. As to this source, once a person in criminally liable, he is also civilly liable? Not necessarily, because are crimes that does not make the criminal civilly liable such as treason and rebellion. The kinds of civil liability arising from this source? Restitution, reparation, and indemnification. Every time there is this civil liability, all of these are present? Not necessarily. Example: what will be lacking? Restitution is lacking in rape. When is restitution present? Theft. But even in murder or homicide, restitution is not possible. If a person committed an act punished by law and there is sufficient evidence to prove such fact beyond reasonable doubt, nonetheless, is it possible for him not to be committed? Yes, if the law exempts him from liability, when there is an exempting circumstance, such as minority, so if there is exempting circumstance there is civil liability? Yes. Of those enumerated, generally, is there civil liability? Yes, when will there be no civil liability, and what will be the basis thereof? Quasi-delict, why not delict? Because there is no conviction. If there is no conviction, there is no civil liability under delict. In justifying circumstance, can there be civil liability? As a rule no civil liability, except paragraph 4.

10. Torts, culpa acquiliana, culpa extra contractual, quasi delict: Under 2176 is simply, Fault or Negligence, is there a difference? Yes. Culpa extra contractual is a good name for quasi delict? This is outside of the contract, if CEC, quasi delict? This does not seem right, culpa extra contractual, outside of the contract, outside of the contract there are how many sources of obligations, four, necessarily quasi delict? No. Can there be negligence in the performance of an obligation arising from law, Yes, can a gestor be negligent, Yes, but is that negligence quasi delict? NO because it will fall under quasi-contract. The use of the word torts is criticized because? torts is not the same as quasi-delict, torts is a much broader term that quasi delict, because torts include intentional, malicious, while quasi-delict includes negligence only, is this correct? 2176 first article in quasi-delict, it provides for fault

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or negligence, it did not mention negligence only. The next article 2177, from this article, may an act be the basis of liability under two sources of obligation, Yes. the only obligation provided by law is? He cannot recover twice. So if A was able to recover from one case, he will not have the right to recover in any other case, correct? Yes The Supreme Court held that he can recover the difference if the second award is greater for instance in case 1 100K Case 2 150K, he has the right to recover 50K, but not 250K. Ultimately, the claim of the author that quasi delict should be limited to negligent act, has not been supported by the justices of the SC, the SC would always claim, that a single act may be a basis of an action under delict, under quasi delict, may be even under contract if there is a pre-existing contract, it is up to the aggrieved party to choose his cause of action, however, if he chooses one cause of action, he must comply to the requirements of the cause of action, for example he chose delict, then he has to have the accused convicted. But if contract, the law already presumes that there is negligence in case of non performance. This recommendation that quasi delict should be limited to negligent act has no basis under the law, and has no application here in our country, the best arguments to this issue is this, if the act is punished by law, you should have the right to recover civil liability only be ensuring that the accused will be convicted, otherwise, that will encourage the people to commit crime, people will think that it is okay to commit a crime because they can pay their way out of it, however, in the situation where the husband is killed the mother is the only one left with five kids, will you fault them by accepting the damages? I think not.

11. A man buried a victim of princess of the stars, the relative of the victim appeared the man demanded payment, from the relative P300, can he demand from the relative payment for burying the victim? The obligation created here is quasi delict, however, the man cannot demand payment from the relative because the persons who may be compelled is the persons who is liable to give the victim support.

C. COMPLIANCE WITH OBLIGATIONS:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

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

Article 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him.

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

Article 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned.

According to Balane:

Three types of obligations- (1) obligation to give; (2) obligation to do; & (3) obligation not to do.

I. Obligation to give

A. Specific thing

B. Generic thing

II. To do

III. Not to do (this includes all negative obligations like obligation not to give.)

Kinds of performance.--

1. specific performance - performance by the debtor himself (applies only to OBLIGATION to give )

2. substitute performance - performance at the expense of the debtor

3. equivalent performance - grant of damages

Articles 1163 - 1166 cover obligation to give.

Three Accessory Obligations:

1. Article 1163- To take care of the thing with the diligence of a good father of a family until actual delivery.

2. Article 1164- To deliver the fruits to the creditor (fruits produced after obligation to deliver arises.)

3. Article 1166- To deliver accessions & accessories.

Balane:

From the time the obligation arises, the creditor has a personal right against the debtor as to the fruits. But he has no real right over them until actual delivery.

Real right is a right which is enforceable against the whole world. He has only the personal right against the debtor with regard to the undelivered fruits.

This is because of the principle Non nudis pactis, sed traditione, dominia rerum transferentur (It is not by mere agreement, but by delivery, is ownership transferred.)

Personal right arises from the time the obligation to deliver arises whereas the real right does not arise until actual delivery.

Articles 1165 – 1167- Remedies Available to the Creditor (specific performance, substitute performance, equivalent performance.)

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A. In obligations to give

1. A determinate thing

a. Specific performance

b. Equivalent performance

2. A generic thing, all remedies are available

B. In an obligation to do , make a distinction:

In obligation to do, which is purely personal only equivalent performance is available

In an obligation to do which is not personal:

a. substitute performance

b. equivalent performance

Note: In obligations to do, specific performance is not available. The reason for this is that specific performance will give rise to involuntary servitude.

C. Obligation not to do

1. substitute performance

2. equivalent performance.

In all these cases, the creditor has the option of resolution or rescission under Article 1191. In addition, he can also claim damages.

Article 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable than that which is due. In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the obligee's will. Article 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law of sales. Article 1246. When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot

demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into consideration. Article 1460. A thing is determinate when it is particularly designated or physical segregated from all others of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the partiesArticle 442. Natural fruits are the spontaneous products of the soil, and the young and other products of animals. Industrial fruits are those produced by lands of any kind through cultivation or labor. Civil fruits are the rents of buildings, the price of leases of lands and other property and the amount of perpetual or life annuities or other similar income

NATURE AND EFFECTS OF OBLIGATIONS

OBJECT OF THE OBLIGATION:

1. to give real OBLIGATION determinate (specific) or indeterminate (generic)

2. to do

3. not to do personal OBLIGATION positive (to do) or negative (not to do)

REAL OBLIGATION:

a. DETERMINATE OBLIGATION – particularly designated from a particular class;

PRINCIPAL OBLIGATION – to give (to deliver) a determinate thing;

ACCESSORY OBLIGATION – exists even when not expressly stipulated;

(1) Article 1163 – to take care of the thing with proper diligence of a good father of the family;

(2) Article 1164 – to deliver the fruits;

(441) natural / industrial / civil

the OBLIGATION to deliver arises only if the

creditor is entitled;

(3) Article 1166 – delivery of the accessions and of the accessories (Art 440);

b. GENERIC THING is one that is indicated only by its kinds, without being distinguished from others of the same kind. (indeterminate)

In an OBLIGATION to deliver a generic thing, the object is determinable; when delivered it becomes determinate.

DELIMITED GENERIC not totally generic nor specific; obligation to deliver one of SEVERAL things; does not have designation nor physical segregation; Rule re Fortuitous Events still apply.

DETERMINATION OF DILIGENCE REQUIRED:(1) LAW e.g. extra ordinary diligence required in Common carriers(2) Stipulation of Parties(3) Presumed: diligence of a Good father of the Family if none is specified/expressed by law or agreement.

REAL RIGHT is the power by a person over a specific thing, susceptible of being exercised against the whole world.PERSONAL RIGHT belongs to a person who may demand from another, as a definite passive subject, the fulfillment of a prestation.

From the moment the OBLIGATION to deliver a determinate thing arises, the creditors earns a personal right over the thing and its fruits, but only delivery or tradition transfers ownership that is a real right over the thing against the whole world.

For failure to deliver, the creditor’s remedy is not reivindicacion but specific performance.

[CHAPTER 2: Right of Accession – GENERAL PROVISIONS]

Article 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially.

Kinds of Fruits;1) CIVIL – derived by virtue of juridical relation2) Natural – spontaneous products of the soil and the young and other products of animals;

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3) Industrial – produced by lands of any kind through cultivation or labor or by reason of human labor.

Illustrations:1. Which article is enshrined with the

compliance of the obligation? Article 19 of the Civil Code.

2. How should an obligation be complied with? To answer, I would ask you after reading Article 19, to know what is the source of the obligation. Because if you know the source then you will know how such obligation should be complied with. If the source of obligation is a contract, then may be the party has already stipulated as to how the obligation should be complied with.

3. Obligation arising from law, the law itself will provide the manner of compliance of the obligation. But in recent years, thus the common law specially on economic matters, is that congress will just set the policies, and the IRR will have to be formulated by the executive dept., and as a rule you should know the IRR. Even if we know the source of the obligation, we may still not know on how to comply the obligation, because the parties did not stipulate or the law did not provide, so how should we perform? Finally, the civil code will tell us on how to comply in relation to the kind of obligation as to prestation. But most of the provision is on the prestation to give so I will focus on that. In relation to this obligations, how should this obligations be complied with, first you should know as to what kind of thing is to be delivered. If it is a determinate thing or a generic thing.

4. Generic Thing : How should this obligation be complied with? There is a rule that should be followed. What a debtor cannot compel the creditor to accept a thing that is inferior of quality. A thing of such kind the debtor also cannot demand which is of superior quality. In other words, the thing that is to be delivered to the creditor is not of inferior nor superior quality. What should be delivered depends on the purpose of the constitution of the obligation.

5. Determinate Thing : if A has an obligation to deliver to B, KIA PRIDE 1996, but instead of delivering that

car, the creditor offered to deliver a brand new BMW, series 9 black convertible. May the obligation be extinguished? Yes. If the creditor accepts the BMW. Why? Because when the law said that the creditor cannot be compelled to accept but he may want to accept. In fact if the creditor accepts, what is the mode of extinguishment? The mode of extinguishment is Dacion En Pago, an act of thing was delivered by the debtor to the creditor in satisfaction of his death.

6. Last question, why would anyone refuse to accept the BMW? Maybe there are gems in the old car.

7. The accessory obligations, the debtor should preserve the thing. This obligation starts from the constitution of the obligation until the delivery of the thing. Not all obligations have this accessory the obligations. E.g. to deliver a generic thing.

8. As to the fruits of the thing . Who is entitled to the fruits of the thing accrued after the constitution of the obligation? The Code provides: he will be entitled to the fruits of the thing from the time the obligation to deliver arises. Art 1164