-paying tax

• Contracts- written obligations

Obligations
• Quasi-contracts
Legal obligation -Art. 2412, civil code
-presumed contract
an obligation is a juridical necessity
to give, to do or not to do. [Article -involves juridical relation
1156, civil code] -lawful, voluntary and unilateral
some of the obligation, if you will and lawful acts.
not do that kind of obligations as -An obligation imposed by law to
agreed by you and the other prevent unjust enrichment
contracting parties, you will not run • Delict
a risk of being sued in the court if it o Crime
has no juridical necessity. o Includes civil liability
•To Give PR o Acts or omissions punished by
Juridical EST law
• To Do ATI o Civil liability includes:
Necessity ON
• Not to Do ▪Restitution
S - the return or restoration of a
thing or condition back to its
Essential Requisites original status.
▪ Reparation for the damage
• Creditor/ Obligee (active subject) caused
• Debtor/ Obligor (passive subject) -when the court orders the
• Object/ Prestation offender to pay for damages
-object of an obligation for the loss incurred by the
-conduct required by the parties offended party.
to do or not to do, or to give. ▪ Indemnification of
-if there is no compliance, there consequential damages
will be a filing of a civil case. • Quasi-delict
• Juridical Tie/ Vinculum Juris -Article 2176, Civil Code
-legal tie /efficient cause -whoever by act or omission
-binds the parties to the causes damage to another, there
obligation. being fault or negligence, is
-bound by a contract obliged to pay for the damage
• Obligation convertible to monetary done.
value if breached -such fault or negligence, there is
no pre-existing contractual
Sources of Obligations
relation between the parties.
Article 1157, Civil Code

• Law -BIR code

 Kinds of Quasi-Contracts Kinds of Damages (Mental)
1. Negotiorum Gestio Article 2197, Civil Code
-voluntary management of 1. Actual or compensatory
another’s person property -who claims actual damages must
-without knowledge or consent of establish and prove by competent
the owner evidence actual pecuniary loss.
2. Solutio Indebiti 2. Moral
-something is received when -in breach of contract, moral
there is no right to demand. damages may be recovered when
-delivered through mistake. the defendant acted in bad faith or
was guilty of gross negligence
Article 1159, Civil Code (amounting to bad faith) or in
wanton disregard of his contractual
Obligations arising from contracts have
obligation and exceptionally, when
the force of law between the
the act of preach of contract itself
contracting parties and should be
is constitutive of tort resulting in
complied with in good faith.
physical injuries.
✓ The idea of compliance with good faith
3. Nominal
is an agreement/law that should be
-may be awarded to a plaintiff
followed by contracting parties.
whose right has been violated or
✓ Not just on the agreed date but also the
invaded by the defendant, for the
quality as agreed upon by the
purpose of vindicating or
contracting parties must be observe.
recognizing that right, and not
✓ Force of law (meeting of minds)-
indemnifying the plaintiff for any
agreed to the particular object or
loss suffered by him.
performance that will be the subject
-its award thus not for purpose of
matter of the contract or obligation.
indemnification for a loss but for
✓ Breach of Contract(culpa contractual)-
the recognition and vindication of a
one of the parties did not comply with
right.
the obligation stated in the contract.
4. Temperate or moderate
Article 2215, Civil Code -May be recovered when the court
finds that some pecuniary loss as
In contracts, quasi-contracts and quasi-
been suffered but its amount
delicts, the court may equitably
cannot, from the nature of the
mitigate the damages under
case, be provided with certainty.
circumstances other than the cause
5. Liquidated; or
referred to in the preceding article, as
-Article 2226
in the following instances:
-those agreed upon by the parties
1. That the plaintiff (who will files a
to a contract, to be paid in case of
case) himself has contravened the
breach therof.
terms of the contract;
6. Exemplary or corrective
-imposed primarily upon the
wrongdoer as a deterrent in the
 commission of similar acts in the Stages
future. ✓ Preparation / Negotiation
-the objective of this exemplary it ✓ Perfection or birth
will serve as the deterrent of the ✓ Consummation or termination
public that if the acts/similar acts Perfection of Contract
will be done, there will be o Consensual contract
corresponding damages that will – consent
be imposed. -contract of sale
-no particular form to be valid
Natural Obligation o Real contract
- delivery
obligation based on equity and justice
o Solemn contract
– compliance with formalities
o PUBLIC INSTRUMENT
-notary document
Contracts Article 1305, Civil Code
Consent
“A contract is a meeting of minds
between two persons whereby one binds Manifested by the meeting of the OFFER
himself with respect to the other, to give and the ACCEPTANCE.
something or to render some service” Who Cannot Give Consent?
Contract v. Agreement ➢ Minors – below 18 years old
➢ Insane / demented person (Lucid
➢ Contracts are enforceable interval)
through court action ➢ Deaf mute who do not know how to
➢ Moral or social agreement cannot write
be enforced through court action.
Vices of Concepts (VIMFU)
Essential Requisites of Contracts ✓ Violence
-serious or irresistible force is
✓ Consent of the contracting parties; employed
✓ Object certain which is the subject ✓ Intimidation
matter of the contract; - Well-grounded fear of harm
✓ Cause of the obligation which is -Imminent and grave harm
established -Upon himself/family/property
✓ Mistake
Limitations -Article 1331
“Art. 1306. The contracting parties may -on the object of the contract
establish such stipulations, clauses, terms -common to both parties
and conditions as they may deem ✓ Fraud
convenient, provided they are not contrary -Article 1338
to law, morals, good customs, public order, ✓ Undue influence
or public policy.” -Article 1337
 Mistake Grounds for Reformation

Art. 1331. In order that mistake may Failure to express true agreement
invalidate consent, it should refer to the /intention due to:
substance of the thing which is the object of ✓ Mistake
the contract, or to those conditions which ✓ Fraud
have principally moved one or both parties ✓ Inequitable
to enter into the contract. ✓ Accident

Reformation is Not Allowed

Fraud o Donation inter vivos – gratuitous
o Wills – purely personal
Art. 1338.
o Void contract
There is fraud when, through insidious
words or machinations of one of the
contracting parties, the other is induced to
enter into a contract which, without them,
he would not have agreed to. Interpretation of Contracts

Undue Influence • Process of ascertaining the intention

• Written words
Art. 1337. There is undue influence when a
person takes improper advantage of his Cardinal Rule in Interpration of Contracts
power over the will of another, depriving • If the terms are clear, the literal
the latter of a reasonable freedom of meaning of stipulations shall control.
choice. The following circumstances shall be
considered: the confidential, family, Words v. Intention
spiritual and other relations between the
parties, or the fact that the person alleged “If the words appear to be contrary to the
to have been unduly influenced was evident intention of the parties, the latter
suffering from mental weakness, or was shall prevail over the former.” Art. 1370
ignorant or in financial distress.” (2), Civil Code

Reformation Nature and Effect of Obligations

Obligation of the debtor prior to delivery of
✓ Legal remedy specific thing
✓ Amend / rectify
✓ To conform to real A Good Father of a Family- means a person
agreement/intention of ordinary or average diligence. To
determine the prudence and diligence that
must be required of all persons. We must
use as basis the abstract average standard
corresponding to a normal orderly person
 Article 1163 Acts of man- an event independent of
the will of the obligor.
Every person obliged to give something
isa also obliged to take care of it with the Expressly Specified by the Law
proper diligence of a good father of a
Art. 1165 If the obligor delays, or has
family, unless the law or the stipulation
of the parties requires another standard promised to deliver the same thing to two
of care. or
more persons who do not have the same
Generic Thing v. Specific Thing
interest, he shall be responsible for any
Specific or determinate thing- particularly fortuitous event until he has effected the
designated or physically separated from all delivery.
the others of the same class.
Art. 1170. Those who in the performance of
Generic or indeterminate thing- refers to their obligations are guilty of fraud,
only to a class or genus to which it pertains negligence, or delay, and those who in any
and cannot be pointed out with manner contravene the tenor thereof, are
particularity. liable for damages.

Genus Nunquan Perit Delay

“Their obligation subsists as long as that General rule:
commodity is available. A generic obligation
is not extinguished by the loss of a thing Article 1169. Those obliged to deliver or to
belonging to a particular genus. Genus do something incur in delay from the time
nunquan perit.” the obligee judicially (can be suit) or
extrajudicially demands (thru letter) from
-a specific thing that lost from fortuitous them the fulfillment of their obligation.
event cannot be replaced.
-an obligation failure to perform to the
-generic thing will never perish. respected date.
Fortuitous Event Delay - exceptions
Art. 1174. Except in cases expressly However, the demand by the creditor shall
specified not be necessary in order that delay may
exist:
by the law, or when it is otherwise declared
by stipulation, or when the nature of the (1) When the obligation or the law expressly
obligation requires the assumption of risk, so declare; or
no person shall be responsible for those
events which could not be foreseen, or (2) When from the nature and the
which, though foreseen, were inevitable. circumstances of the obligation it appears
that the designation of the time when the
Force Majeure- acts of God. thing is to be delivered or the service is to
be rendered was a controlling motive for
the establishment of the contract; or
(3) When demand would be useless, as ➢ for better use, perfection, or
when the obligor has rendered it beyond his enjoyment of a principal thing.
power to perform. [Art. 1169, Civil Code] ➢ Without these accessories, it will be
difficult for the owner to use that
Delay – reciprocal obligation
particular thing. Ex: keys in car
In reciprocal obligations, neither party ➢ General rule: accessories follow the
incurs in delay if the other does not comply principal.
or is not ready to comply in a proper
Accessions
manner with what is incumbent upon him.
From the moment one of the parties fulfills ➢ Any addition or improvement on
his obligation, delay by the other begins. principal thing.
Art. 1169, Civil Code ➢ Without these accessions, that
particular things can still be used,
Fruits
unlike accessories.
Article 1164. The creditor has a right to the
Article 1166
fruits of the thing from the time the
obligation to deliver it arises. However, he The obligation to give a determinate thing
shall acquire no real right over it until the (specific thing) includes that of delivering all
same has been delivered to him. its accessions and accessories, even though
they may not have been mentioned.
Kinds of Fruits
-Buyer’s POV: not liable to pay the
• Natural fruits- plants
accessions and accessories of a
• Industrial fruits- anything produced by determinate thing
industry
• Civil fruits – i.e. rent/with contract -Seller’s POV: required to deliver the
determinate thing together with the
Personal right v. Real right accessions and accessories.
❖ Personal right - can be asserted Remedies of Creditors
against a particular person.
Example: the right to deliver a Article 1177
parcel of land
The creditors, after having pursued the
❖ Real right – can be asserted against
property in possession of the debtor to
anybody.
satisfy their claims, may exercise all the
Example: right of an owner
rights and bring all the actions of the latter
for the same purpose, save those which are
inherent in his person; they may also
impugn the acts which the debtor may have
done to defraud them.
OBLIGATION to deliver accessions
and accessories ➢ Creditor was not paid properly by the
debtor; the debtor should provide
Accessories remedies or otherwise the creditor(lugi)
1. Specific performance
 -(exact fulfillment) plus damages ✓ Past event but unknown to the
2. Pursue the leviable property of the parties
debtor ✓ Subject to the fulfillment of
-properties of the debtor will levy by condition
the judge and the process will be
Kinds of Condition Obligation
applied to the payment of his
obligation. ✓ Suspensive condition
3. Exercise all the rights (like the right of -condition precedent/condition
redeem) antecedent
-except those inherent in his person -give rise to an obligation
-redeem a property of the debtor by Ex: Mr. Y will give cash to Mr. x
the creditor if he passed the CPALE
-debtor has right to collect from ✓ Resolutory condition
another person -condition subsequent
4. Bring all the actions (to collect from the -will terminate the obligation
debtor) -the happening of condition will
-action: filling a case extinguish an existing obligation
5. Ask for rescission of the fraudulent Ex: Mr. Y will give monthly
contract allowance to Mr. X until he
passes the CPALE.
Pure v. Conditional
Article 1179
Potestative Condition
Every obligation whose performance does
Article 1182
not depend upon a future or uncertain
When the fulfillment of the condition
event, or upon a past event unknown to the
depends upon the sole will of the debtor,
parties, is demandable at once. (Pure
the conditional obligation shall be void. If it
obligation)
depends upon chance or upon the will of a
Every obligation which contains a resolutory third person, the obligation shall take effect
condition shall also be demandable, without in conformity with the provisions of this
prejudice to the effects of the happening of code.
the event. (Conditional obligation) -since it is dependent to the sole will of
the debtor, there will no agreement.
Pure Obligation
Example:
✓ No condition the obligation of a borrower to repay a
✓ No maturity dates loan subject to the willingness of the
✓ Immediately demandable borrower to finish constructing a
house, will be considered to be a purely
Conditional Obligation potestative condition. The borrower
✓ Future and uncertain event (futurity can choose never to finish constructing
and uncertainty) it may or may not the house, and never to repay the loan.
happen
✓ Sole will of the debtor- void (if
suspensive)
✓ Sole will of the creditor- valid If the uncertainty consists in whether the
✓ Sole will of the debtor- valid (of day will come or not, the obligation is
resolutory) conditional, and it shall be regulated by the
Example: the right of the seller rules of the preceding Section.
(debtor) to redeem the property in a
Example: contract of loan 1M to be paid
pacto de retro sale.
on Dec. 1, 2021, the obligation will be
Effect of Invalid Condition demandable.
Article 1183 Kinds of Period
Impossible conditions, those contrary to ✓ Suspensive period (ex die)
good customs or public policy and those -give rise of on obligation
prohibited by law shall annul the obligation ✓ Resolutory period (in diem)
which depend upon them. If the obligation -will distinguish an obligation
is divisible, that part thereof which is not
affected by the impossible or unlawful
Legal Periods
condition shall be valid.
Year- shall be understood to be twelve
The condition not to do an impossible thing
calendar months.
shall be considered as not having been
agreed upon. Month- of thirty days, unless it refers to
a specific calendar month which case it
Example: Mr. Y will give his sports car for
shall be computed according to the
free and Mr. X will deliver 1sack of drugs
number of days the specific month
to him.
contains.
Day- twenty-four hours
Night- from sunset to sunrise
OBLIGATION with a Period
Article 1198
Period
The debtor shall lose every right to make
Article 1193 use of the period:
Obligations for whose fulfillment a day (1) When after the obligation has been
certain has been fixed, shall be demandable contracted, he becomes insolvent, unless
only when that day comes. he gives a guaranty or security for the debt;
Obligations with a resolutory period take (2) When he does not furnish to the creditor
effect at once, but terminate upon arrival of the guaranties or securities which he has
the day certain. promised;
A day certain is understood to be that which (3) When by his own acts he has impaired
must necessarily come, although it may not said guaranties or securities after their
be known when. establishment, and when through a
fortuitous event they disappear, unless he
immediately gives new ones equally When only one prestation has been agreed
satisfactory; upon, but the obligor may render another in
substitution, the obligation is called
(4) When the debtor violates any
facultative.
undertaking, in consideration of which the
creditor agreed to the period; The loss or deterioration of the thing
intended as a substitute, through the
(5) When the debtor attempts to abscond.
negligence of the obligor, does not render
him liable. But once the substitution has
been made, the obligor is liable for the loss
of the substitute on account of his delay,
Alternative OBLIGATION negligence or fraud.

✓ Various prestations are due

✓ Performance of one prestation will
extinguish the obligation. Joint and Solidary OBLIGATION
Article 1199 Solidarity is not Presumed
A person alternatively bound by different Article 1207
prestations shall completely perform one of
The concurrence of two or more creditors
them.
or of two or more debtors in one and the
The creditor cannot be compelled to receive same obligation does not imply that each
part of one and part of the other one of the former has a right to demand, or
undertaking. that each one of the latter is bound to
render, entire compliance with the
Right of choice prestation. There is a solidary liability only
Article 1200 when the obligation expressly so states, or
when the law or the nature of the
The right of choice belongs to the debtor, obligation requires solidarity.
unless it has been expressly granted to the
creditor.
The debtor shall have no right to choose Solidary Obligation
those prestations which are impossible, ✓ Each debtor can be compelled to
unlawful or which could not have been the fulfill the entire obligation
object of obligation. ✓ Passive solidarity
The Choice must be Communicated Example:
there is an obligation to pay 1M and
The choice shall produce no effect except there are 2 debtors, these debtors
from the time it has been communicated. are solidarity liable, the creditor can
ask payment either of them. Liability
Facultative OBLIGATION of one is also liability of the other
Article 1206 solidary debtor, but the compliance
 by any solidary debtors will If the division is impossible, the right of the
extinguish the obligation. creditors may be prejudiced only by their
collective acts, and the debt can be
enforced only by proceeding against all the
debtors. If one of the latter should be
insolvent, the others shall not be liable for
his share.

Presumed Joint Liability

Article 1208
If from the law, or the nature or the
wording of the obligations to which of the
preceding article refers the contrary does
not appear, the credit or debt shall be
Article 1209
presumed to be divided into as many equal
shares as there are creditors or debtors, the ✓ Converted into an obligation to pay
credits or debts being considered distinct damages
from one another, subject to the Rules of ✓ Willing debtors are liable only on
Court governing the multiplicity of suits. their agreed share
-The creditor can only ask payment a ✓ If one of the debtors become
portion of that obligation from the insolvent, the other debtors are not
debtors. liable.
Indivisibility
Article 1210
The indivisibility of an obligation does not
necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.
Indivisibility- refers to an object
Article 1209 Solidarity- refers to an obligation
Article 1211 Article 1215
Solidarity may exist although the creditors Novation, compensation, confusion, or
and the debtors may not be bound in the remission of the debt, made by any solidary
same manner and by the same periods and creditors or with any of the solidary
conditions. debtors, shall extinguish the obligation,
without prejudice to the provisions of
Example: solidarily liable to pay 100,000
Article 1219. The creditor who may have
a- If he wins 1st prize lotto (condition) executed any of these acts, as well as he
b- 10 equal monthly installments who collects the debts, shall be liable to the
starting on December 1, 2020 others for the share in the obligation
(period) corresponding to them.

Article 1212
Each one of the solidary creditors may do
whatever may be useful to the others, but
not anything which maybe prejudicial to the
latter.
-fiduciary relationship between and
among solidary creditors (active
solidary)
Example of Useful Act
• Sending of demand letter – Article
1169
Example of Prejudicial Act
• Remission of debt
Article 1213
A solidary creditor cannot assign his rights
without the consent of the others.

Article 1214
The debtor may pay any one of the solidary
creditors; but if any demand, judicial or
extrajudicial, has been made by one of
them, payment should be made to him.