INTRODUCTION TO LAW
Law is a rule of conduct, just,
obligatory, promulgated by a
legitimate authority, and of
common observance and benefit.
SOCIETY AND LAW
CHARACTERISTICS OF LAW
REVIEWER IN OBLICON
 For a Society to Live in Peace ,free
from chaos and confusion, there has
to be LAW and ORDER.
 The primary function of LAW is to
put SOCIETY IN ORDER.
 Due to complexities and ever
dynamic times, Laws need to adapt;
this resulted to too many, too
technical,
 And too incomprehensible laws in a
civilized society.
 An understanding and knowledge of
the LAW gives one a great deal of
advantage
BUSINESS and LAW:
 Business and Law are
intertwined.
 If one wants to be successful in
business, he either learns the
law or hires the services of one
who knows and
Understands the law, because
ignorance of the law excuses no
one from compliance there with.
 It is a must for businesses to
employ the services of
accountants or lawyers.
 AN ACCOUNTANT with a
VERYGOOD FOUNDATION
AND UNDERSTANDING OF
LAW IS A PRICED
POSSESSION TO ANY
BUSINESSMAN.
DEFINITION OF LAW
1. It is a rule of conduct
Law tells us what shall be done
and what shall not be done. As
a rule of human conduct, law
takes cognizance of external
acts only.
2. It is obligatory
Law is considered a positive
command imposing a duty to
obey and involving sanction
which force so bedience.
3. It is promulgated by
legitimate authority.
Laws are enacted by Congress,
the legislative branch in the
Philippine government. Under
the Constitution, Congress is
clothed with authority to
promulgate laws.
4. It is of common observance
and benefit.
Law is intended by man to
serve man. It regulates the
relations of men to maintain
harmony in society and to
Make order and co-existence
possible. Law must, therefore,
be observed by all for the
benefit to fall. As
Commonly said, no one is
above the law.
NECESSITY AND FUNCTION OF LAW
 No order and stability. Susceptible to
external attack; thus, no external
defense because no order and
stability. Citizens can be likened to
sheep without a shepherd.
 It secures justice, resolves conflict,
orders society, protects interest,
controls social relation.
 Since we find the law necessary,
citizen should have some
understanding of the law and observe
it for a common goods and benefits.
SOURCES OF THE LAW
1. Constitution -Supreme
law, highest law of the land
2.Legislation –Created by Congress
3.Rules and regulations issued by
Administrative Agencies
4.Judicial decisions of the Supreme
Court –Decision of the SC applying or
interpreting the Constitution or the laws
form part of the legal system of the
Philippines.
5.Customs –Habits and practices
through long and uninterrupted usage
have become acknowledged and
approved by the society as “binding
rules of conduct”.
RULEINCASEOFDOUBTININTERP
RETATIONORAPPLICATIONOFL
AW:
 In case of doubt of the
interpretation or application of
the law, it is presumed that the
law making body intended the
right and justice to prevail
(Art.10,IbidCC).
 Under Art. 9of the Civil Code
provides that,“ no judge or court
shall decline to render judgment
by reason of the silence,
obscurity or in sufficiency of the
laws”
OBLIGATION
ART.1156
 A juridical necessity to give, to do,
or not to do (NCC, Art. 1156)
 An obligation is latin word of
obligatio or means tying or
binding. It is tie or bond that the
law
 recognizes, one is bound, in favor of
another, to render something-consist
of giving, doing or not doing.
 An obligation is a juridical relation
whereby a person (called the
creditor) may demand from
another (called the debtor) the
observance of a determinative
conduct ( the giving, doing or not
doing), and in case of breach, may
demand satisfaction from the assets
of the latter
 The obligation is a juridical necessity
because in case of non-performance,
the court of justice may be called
upon to enforce its fulfillment.
 To give pertains to the delivery of
immovable or movable which
creates real rights (Sale, donation,
deposit, and waiver) for purposes of
transferring ownership or
possession, pertains to real
obligations
 To do includes all kinds of personal
services, pertains to a positive
personal obligation
 Not to do consists in abstaining from
doing some act, pertains to negative
personal obligation, it
necessary includes obligation not to
give.
Elements of an Obligations
The juridical tie (Vinculum juris),
Active Subject or obligee/creditor,
Passive Subject or obligor/debtor,
contractual relation exist between the
parties.
LAW (EX-LEGE)
Obligee-The one who has the right to
demand the fulfillment of the obligation
(Creditor/Active Subject)
Obligation arising from law is not
presumed. Only those determined in the
CIVIL CODE and other special laws are
demandable and regulated by the
precepts of the law which establishes
them.(Art. 1158)
Obligor –The one whom obligation is
legally demandable (Debtor/Passive
Subject)
obligations or obligations arising from
law
or the Object or Prestation
Prestation - The object or conduct
required from the parties (Object)
Vinculum Juris –It’s the efficient cause,
establish by different sources of
obligations -law, contract, quasicontract, delicts, and quasi delicts
FORM OF OBLIGATIONS:
It may be oral, or in writing or partly
oral or partly in writing. As a general
rule, the law does not require any form
for obligations arising from a
contracts for their validity or binding
force (Art. 1356)
Obligations arise from: (Art. 1157)
Law –Imposed by law
Contracts –Stipulation of the parties
Quasi-contracts –Unjust enrichments
Delicts –When the obligation arises
from the civil liability which is the
consequence of criminal offense. (Acts
or omissions punished by law)
Quasi-delicts-When obligation arises
from the damaged cause to another,
there being fault or negligence, but pre
law, willfully or negligently causes
damage to another, shall indemnify the
latter for the same ( Art. 1159, NCC).
law: 1. Support, 2. Payment of taxes: 3.
Compliance with the traffic rules
CONTRACT (EX-CONTRACTU)
Obligation arising from the contracts
have the force and effect of law between
the contracting parties and should be
complied in good faith (Art. 1159)
Speaks about contractual obligation.
Contract is the meeting of minds
between two persons, whereby one
binds himself, with respect to the other,
to give something or to render some
service
Hence, the failure of one party with
respect with the
other to give or deliver something,
without justifiable cause or reason, the
other party may be entitled of the award
of damages.
ntract must not be against the law,
good moral, good customs, public
policy, and public order.
consequently no obligation will arise.
QUASI-CONTRACTS (QUASI EXCONTRACTUAL)
Art. 1160 –Obligations derived from
quasi contract shall be subject to the
provisions of Chapter 1, Title XVII of
this boo. (n)
voluntary, and unilateral acts by virtue
of which the parties become bound to
each other, based on the principle that no
one is unjustly enriched or benefited at
the expenses of the another
of another he has legal obligation to
reimburse the other party because the
law considers that parties as having
entered into a contract, irrespective of
their intention, to prevent injustice.
The two kinds of Quasi Contract
are Negotiorum Gestio, and Solutio
Indebiti.
pertains to the
voluntary take charge of the agencyor
management of business or property of
another. The latter is obliged to continue
the same until the termination of the
affairs and its incidents or to require the
person
concerned to substitute him, if the owner
is in the position to do so.
Solutio Indebiti–Something is
received if no right to demand it, and it
was unduly delivered thru mistake, the
obligation to return it arises.
DELICT ( EX-DELICTO OR CULPA
CRIMINAL)
Art. 1161. Civil obligations arising from
criminal offenses shall be governed by
the penal laws, subject to the provisions
of Art. 2177, and of the pertinent
provisions of Chapter 2, Preliminary
Title, on Human Relations, and of Title
XVII of this Book, regulating damages.
This is an obligation arising from
criminal offense and it shall be governed
by the penal laws.; thus, every person
criminally liable is also civilly liable.
The commission of criminal offense
constitute dual character; an offense
against the state because of the
disturbance of social order and an
offense against the private person
injured by the crime.
The civil liability under this obligation
could be a restitution of the property
taken, reparation of the damage caused;
or indemnification of the consequential
damages.
Example : The sum of money
awarded by the court to the family of the
aggrieved as accessory penalty.
The scope of civil liability under this
obligation could be a restitution of the
property taken, reparation of the damage
caused; or indemnification of the
consequential damages.
QUASI-DELICT
Art. 1162. Obligations derived from
quasi delicts shall be governed by the
provisions of Chapter 2, Title VII of this
Book and by special laws.
Whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay the damage
done. Such fault or negligence, if there is
no pre-existing contractual relation
between the parties, is called quasidelict.
In order for a defendant to be liable the
following elements must be present, the
plaintiff must prove that there must be a
an act or omission, fault or negligence,
damage caused, there must be a direct
relation of the damaged cause to the act
or omission and fault or negligence, and
there is no pre existing contractual
relation between the parties.
DELICTS DISTINGUISHED
FROM QUASI-DELICTS
1. In crime, there is criminal or
malicious intent or criminal negligence,
while in quasi delicts, there is only fault
or negligence;
2. In crime the purpose is punishment,
while in quasi delict, indemnification of
the offended party;
3. Crime affects the public interest,
while in quasi delict only affects private
concern;
4. In crime, there are generally two
liabilities: criminal and civil, while in
quasi-delict, there is only civil liability
5. Criminal liability cannot be
compromised or settled by the parties
themselves, while the liability for quasidelict can be compromised;
6. In crime, the guilt of the accused must
be proved beyond reasonable doubt;
while in delict, the fault or negligence
can be proven by preponderance of
evidence
NATURE AND EFFECT
Art. 1163. Every person obliged to give
something is also obliged to take Care of
it with the proper diligence of a good
father of a family, unless the law or the
stipulation of the parties requires another
standard of care.(1094a)
In real obligation, the OBJECT may
either be:
1.Specific or determinate thing –When
its particularly designated or physically
segregated from the others of the same
class. Can be pointed out with
particularity.
2.Generic or indeterminate thing- When
it refers only to a class or genus and
Cannot be pointed out with particularity.
RULES ON THE DELIVERY OF
DETERMINATE OR
INDETERMINATE THING.
Specific:
debtor cannot substitute it with another
although the thing to be delivered is in
the same kind or delivery, without the
creditor consent or vice versa.
Generic:
debtor can give anything of the same
class as long as it is in the same kind.
Genus never perishes.
DUTIES OF THE DEBTOR IN
OBLIGATION TO GIVE THE
DETERMINATE THING.
1. In personal right, there is creditor or
debtor, while in real right there is only
creditor or active subject.
1. Preserve and take care of the thing
with the diligence of a good father of the
family
2. The personal right is binding against
the particular person, while the real
right is binding or enforceable against
the world
2. Deliver the fruits of the thing
3. Deliver the accessions and accessories
4. Deliver the thing itself
5. Answer for damages in case of nonfulfillment or breach
DUTIES OF THE DEBTOR IN
OBLIGATION TO GIVE THE
GENERIC THING.
1. Deliver a thing which is of quality as
agreed by the parties
2. To be liable for damages in case of
fraud, negligence, or delay in the
performance of the obligation, or
contravention with the tenor of the
obligation.
Art. 1164. The creditor has a right to the
fruits of the thing from the time the
obligation to deliver it arises. However,
he shall acquire no real right over it until
the same has been delivered to him.
(1095).
DEFINITION OF PERSONAL
RIGHT AND REAL RIGHT
Personal right –Is a right or power of
the creditor to demand from the debtor
the fulfillment of the latter`s obligation,
to do, or not to do, or to give;
Real right –Is the right or interest of
the person over a specific thing.
DISTINCTION:
DIFFERENT KINDS OF FRUITS:
1.Natural fruits –Produce of the land,
and other products of animal w/0 human
intervention . Like growing trees on the
land; wild animals.
2.Industrial fruits –Produce by lands
thru cultivation or labor. Like vegetables
3.Civil fruits –Derived by virtue of
juridical relation. Like rent on the
Apartment; Interest on the loan
KINDS OF DELIVERY:
1. Actual or Constructive delivery
(tradition) –Transfer of the thing
physically
Example: A buys cake from B. The
delivery made by B is the actual delivery
of the thing due.
2. Constructive Delivery -the physical
transfer of the property is implied.
a. Tradition simbolica(symbolical
tradition) . Symbolical delivery. Ex.
Key of the house
b. Traditio longa manu-delivery by
mere consent or pointing out the object.
Ex. Pointing out the van
c.Tradition brevi manu (delivery by
short hand)
Example: When a tenant already in
possession of a house buys the house h
eis renting.
NOT cumulative, the election of one is
the waiver of another.
d.Traditio constitutum possessorium.
Example: A house owner, who sells his
house, but remains in possession as
tenant of the same house.
Art. 1165. When what is to be delivered
is a determinate thing, the creditor, in
addition to the right granted him by
Article1170,may compel the debtor to
make the delivery. If the thing is in
determinate 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.(1096)
RIGHTS OF CREDITOR IF
DEBTOR FAILED TO DELIVER, IF
THE THING IS SPECIFIC OR
DETERMINATE:
1. Specific performance+Damages,if the
debtor is guilty of fraud, negligence,
delay, in contravention to the tenor of
obligation)OR
2. Demand for recession or cancellation
of the obligation Damages, if the debtor
is guilty of fraud, negligence, delay, in
Contravention to the tenor of
obligation)OR
3 Demand for payment of damages only,
if only the feasible remedy.
DETERMINATE or SPECIFICTHING
is EXTINGUISHED BY FORTUITOUS
EVENT.
RIGHTS OF CREDITOR IF
DEBTOR FAILED TO DELIVER, IF
THE THING IS GENERIC OR
INDETERMINATE:
 Ask for compliance of the
obligation by the debtor himself
or by third person at the debtor’s
expense. Demand a replacement
which is not of inferior or
superior quality.
 Demand damages from the
debtor if the debtor is guilty of
fraud, negligence, delay, or
contravention in the performance
of the obligation. (Article1170)
 An obligation to deliver an
INDETERMINATE or
GENERICTHING is NOT
EXTINGUISHED BYA
FORTUITOUS EVENT for
GENUS NEVER PERISHES
 However, when the debtor incurs
a delay or promised to deliver a
determinate thing to two or more
person she shall be responsible
for the fortuitous event until the
debtor effected the delivery.
Otherwise, An obligation to
deliver a DETERMINATE or
SPECIFIC THING is
EXTINGUISHED BY
FORTUITOUS EVENT.
Art. 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. (1097a)
Distinction between Accession
and Accessories:
Accessions (PRODUCED) – are
the fruits of a thing or additions
to or improvements upon a thing
(the principal).
Examples: House or trees on a
land; rent sofa building; airconditioner in a car; profits or
dividends
Accruing from shares of stocks
Accessories- are things joined to
or included with the principal
thing for the latter’s decoration,
Better use or completion.
ACCESSORIES MUST
ALWAYS GO TOGETHER
WITH THE PRICIPALS.
a. To have the obligation
performed by debtor himself, or
by another (third party), unless
frame of a picture; bracelet of a
watch;
Art. 1167. If a person obliged to
do something fails to do it, the
same shall be executed at
his cost.
b. b. To claim DAMAGES if
with fraud, negligence, delay or
contravention of the terms
(Article 1170)
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. (1098)
1. The debtor fails to perform an
obligation to do, the creditor has
a right:
personal considerations are
involved, at the expense of the
debtor, plus damages if with
fraud,
negligence, delay or
contravention of the terms
(Article 1170) OR.
b. To claim DAMAGES, if
involves personal consideration
2. In case the obligation is done
in contravention of the terms of
the obligation.
a. To have the obligation
fixed/performed or executed by
debtor himself or by a Third
party at Debtor’s expense, and
3. In case the obligation to do is
poorly done
a. To have undone by the debtor
himself or by the third person at
debtor's expense. And
b. To claim DAMAGES if with
fraud, negligence, delay or
contravention of the terms
(Article 1170
Art. 1168. When the obligation
consists in not doing, and the
obligor does what has been
forbidden him, it shall also be
undone at his expense. (1099a)
This Article refers to a personal
negative obligation, not to do.
This means the obligation is
fulfilled in NOT doing what is
forbidden.
REMEDIES OF THE
CREDITOR:
1. To UNDONE WHAT HAS
BEEN DONE
2. To claim DAMAGES if with
fraud, negligence, or with
contravention of the terms
(Article 1170)
Art. 1169. Those obliged to
deliver or to do something incur
in delay from the time the
obligee judicially or
extrajudicially demands from
them the fulfillment of their
obligation.
However, the demand by the
creditor shall not be necessary in
order that delay may exist:
(1) When the obligation or the
law expressly so declare; or
(2) When from the nature and the
circumstances of the obligation it
appears that the designation of
the time when the thing is to be
delivered or the service is to be
rendered was a controlling
motive for the establishment of
the contract; or
(3) When demand would be
useless, as when the obligor has
rendered it beyond his power to
perform.
In reciprocal obligations, neither
party incurs in delay if the other
does not comply or is not ready
to comply in a proper manner
with what is incumbent upon
him. From the moment one of the
parties fulfills his obligation,
delay by the other begins.
(1100a)
REQUISITES OF MORA
SOLVENDI:
1. Failure of the debtor to
perform his obligations
on the date agreed upon;
2. Demand was made by the
creditor to perform the
debtor`s obligations; and
3. Failure of the debtor to
comply with such
demand.
ORDINARYDELAY v.
LEGAL DELAY:
1. Ordinary delay is merely
failure to perform obligation
on time;
2. Legal delay or default or
mora is a failure to perform
the obligation on time Which
constitute breach of
obligation.
KINDS OF MORA:
Mora solvendi–Delay on
the part of the debtor
Mora accipiendi–Delay
on the part of creditor
Compensatio morae–
Delay of the obligors in
reciprocal obligations which
cancel the delay of the
obligee;thus,no actionable
default on the part of both
parties
WHEN DEMAND IS NOT
ESSENTIAL TO PUT THE
OBLIGOR IN DELAY:
1. When the obligations o
stipulates–It must expressly
stipulated in the Agreement
that no demand is necessary
2. When the law so provides–
Like payment of taxes.
3. When the time is the
essence or controlling
motive in the establishment
Of the obligation
4. When demand would be
useless
WHEN IS THE
COMMENCEMENT OF
DELAY IN RECIPROCAL
OBLIGATIONS
When there is a performance
by a party in reciprocal
obligations - In compensation
morae, the non performance
of one party in the reciprocal
obligation cancels the delay
of the other party; thus, there
is no actionable delay.
However, at the moment the
other party is ready to
comply or has complied with
his obligation, DELAY IN
THE OTHER PARTY
BEGINS.
Art. 1170. Those who in the
performance of their
obligations are guilty of
fraud, negligence, or delay,
and those who in any manner
contravene the tenor thereof,
are liable for damages.
(1101)
GROUNDS FOR
LIABILITY
1. Fraud - Also called
DOLO, it implies some
malice of dishonesty; thus,
deliberate or intentional.
Pertains to INCIDENTAL
FRAUD (with pre existing
contractual relations)
2. Negligence - Also called
CULPA, it implies of failure
to observe the degree of care
required in the performance
of the obligation. This is
implied in case of omission.
3. Delay-Also called MORA,
this pertains to breach of
obligations.
4. Contravene to the tenor
of agreement-This is in
violation to the terms and
conditions of the obligation
without valid and justifiable
reasons except due to
fortuitous event or force
majeure
KINDS DAMAGESMENTAL: (BOOK IV
TITLE XVIII OF CC)
1.MORAL (Art 2217 to
2220) - Besmirch reputation,
sleepless nights and moral
anguish.
EX. Due to A false
representation that he is the
owner of the land, B bought
the land from A.
2.ACTUAL or
COMPENSATORY (art
2205) - Like actual price of
the house
2. FRAUD IN THE
PERFORMANCE OF AN
OBLIGATION (DOLO
INCIDENTE).
3.EXEMPLARY OR
CORRECTIVE - to correct
the wrong and to set as
example.
Breach or non-fulfillment of
obligation
4. NOMINAL - sometimes
in absence of actual Damages
5.TEMPERATE or
MODERATE - loss but
amount cannot be determined
6. LIQUIDATED stipulated or agreed upon by
the parties (Based on the
agreement)
Art. 1171. Responsibility
arising from fraud is
demandable in all
obligations. Any waiver of
action for future fraud is
void. (1102a)
1. FRAUD IN THE
CONSTITUTION OF AN
OBLIGATION (DOLO
CAUSANTE)
Leads to vitiated consent
(Voidable - Injured party can
Annul the Contract)
• REMEDY: ANNULMENT
OF AGREEMENT +
DAMAGES
Remedy is not Annulment
but DAMAGES
Originally, injured party
VALIDLY gave his consent
Note: The waiver of fraud
based on past action is valid.
Art. 1172. Responsibility
arising from negligence in the
performance of every kind of
obligation is also
demandable, but such
liability may be regulated by
the courts, according to the
circumstances. (1103)
KINDS OF NEGLIGENCE
1.Contractual negligenceThis is also called as
CULPA CONTRACTUAL.
This pertains to the
negligence of the obligor in
the performance of this
obligation in the pre existing
obligation.
Ex. Failure to deliver the
CAR due to obligor`s
carelessness.
2.Civil negligence-This is
also called CULPA
AQUILIANA or TORT or
Quasi delicts. This pertains
to negligence which causes
damage to another, there
being fault or negligence, and
NO pre existing contractual
relations between the parties.
Ex. Debrifell from the 2nd
floor which cause the injury
of the passers by.
3.Criminal NegligenceThis is also called
CULPA CRIMINAL or
Delicts. Negligence from
the commission of the
crime. The same criminal
liability which caused the
damage may also produce
civil liability.
by the court due to the killing
of a person. The restitution of
the object of theft or robbery
WHAT IS THE EFFECT
OF NEGLIGENCE ON
THE PART OF THE
INJURED PARTY?
1. If the injury of the
aggrieved party is the
PROXIMATE AND
IMMEDIATE cause of
the injury, the injured
party cannot recover the
damages.
jumps outside from the
bus.
2. If the negligence is only
CONTRIBUTORY, the
PROXIMATE AND
3. IMMEDIATE CAUSE
is due to the negligent
party, the injured party
can recover damages but
the court will mitigate the
same.
Ex. While there is a
repeated demand to a
passenger to take his seat
while standing inside the
bus, but the passenger did
not pay attention.
Suddenly, the
bus swerved to avoid
collision and as a result
the passenger thrown off
the bus.
Art. 1173. The fault or
negligence of the obligor
consists in the omission
of that diligence which is
required by the nature of
the obligation and
corresponds with the
circumstances of the
persons, of the time and
of the place. When
negligence shows bad
faith, the provisions of
Articles 1171 and 2201,
paragraph 2, shall apply.
If the law or contract does
not state the diligence
which is to be observed in
the performance, that
which is expected of a
good father of a family
shall be required. (1104a)
KINDS OF
DILIGENCE
REQUIRED:
1. The one agreed by the
parties (less ordinary,
ordinary, or
extraordinary)
2. In the absence on the
agreement by the parties,
the one required by law
on the particular
case (Ex. Common
carrier-Extra ordinary
diligence)
3.In the absence of the
agreement and the law,
the diligence of a good
father of the family.
Art. 1174. Except in
cases expressly specified
by the law, or when it is
otherwise declared by
stipulation, or when the
nature of the obligation
requires the assumption
of risk, no person shall
be responsible for those
events which could not
be foreseen, or
which, though foreseen,
were inevitable. (1105a)
REQUISITES OF
FORTUITOUS
EVENT:
1. The event is
independent to the will of
the obligor
2. The event is could
NOT be foreseen or if it
could be foreseen, its
inevitable
3. The event is of such
character that render the
obligor IMPOSSIBLE to
comply his
obligation
4. The debtor must be
free from any
participation which
causes injury to the
creditor.
Note : The obligor is also
not liable in case of force
majeure.
RULE AS TO THE
LIABILITY IN CASE
OF FORTUITOUS
EVENT:
General Rule –Not
liable; Obligation is
extinguished.
Exception
1. The law so provides.
Ex. Failure to deliver the
car with Plate No. 123
because it was stolen
after the was demand and
delay of the delivery.
2. When the parties stipulate
expressly.
Ex. In a contract, the
parties agreed that despite
of fortuitous event the
parties are liable.
3. The debtor promised to
deliver the same specific
thing to two or more
persons.
4. The obligation to
deliver specific thing
arises from a crime.
Ex. To return the stolen
carabao, if it dies due to
sickness.
4. The thing to be delivered
is generic/indeterminate.
Art. 1175. Usurious
transactions shall be
governed by special laws.
(n)
Requisites for recovery
of interest
1. The payment of
interest must be
expressly stipulated; and
2. The agreement must be
in writing
3. The interest must be
lawful
1. Under BSP Circular
No. 905, the rate of
interest and other charges
on loan or forbearance of
money, goods or credit,
regardless of
maturity and whether
secured or not, shall NOT
be subject to any
ceiling prescribed by
Usury Law.
Art. 1176. The receipt of
the principal by the
creditor without
reservation with respect
to the interest, shall give
rise to the presumption
that said interest has been
paid.
The receipt of a later
installment of a debt
without reservation as to
prior installments,
shall likewise raise the
presumption that such
installments have been
paid. (1110a)
KINDS OF
EVIDENCE.
1.CONCLUSIVE or
ABSOLUTE . Ex.
Ownership of lessee & If
doc is notarized it’s a
public docs.
2.DISPUTABLE or
REBUTTALE
PRESUMPTION.
Note : Section 1176 are
Disputable Presumption
Art. 1177. The creditors,
after having pursued the
property in possession of
the debtor to satisfy their
claims, may exercise all
the 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. (1111)
Remedies available to
creditors for the
satisfaction of their
claims
1. Specific performance
with the right to damages;
2. Pursue the seize or
attach property of the
debtor (Principal
Remedy);
3. Exercise all the rights
and bring all the actions
of the debtor (ACCION
SUBROGATORIA or
subrogation). Ex Collect
the receivable of the
debtor
5. Rescission (ACCION
PAULIANA) –Invalidate
the act of the debtor
which is intended to
defraud him.
Ex. Cancellation of the
donation made to third
person.-Last Remedy.
Art. 1178. Subject to the
laws, all rights acquired in
virtue of an obligation are
transmissible, if there has
been no stipulation to the
contrary. (1112)
General Rule –Rights
acquired by virtue of the
obligation are transmissible.
Ex. Right by the heirs to
continue the installment of
the car
Exception :
1. Prohibited by law.
Ex. Rights in the
partnership by the
partner. Contract of
Agency.
2. Prohibited by
stipulation of the
parties.
Ex. Creditor cannot
assigns his credit to
another.
DIFFERENT KINDS OF
OBLIGATIONS
(The fundamentals)
Art. 1179 . Every obligation whose
performance does not depend upon a Future
or uncertain event, or upon a past event
unknown to the parties, is Demandable at
once. Every obligation which contains a
resolutory condition shall also be
demandable, without prejudice to the
effects of the happening of the event.
PURE OBLIGATION :
do not
depend upon a future or uncertain event or
upon past event unknown to the parties are
demandable at once.
CONDITIONAL OBLIGATION:
already acquired, shall depend upon the
happening of the event or facts.
and uncertain
facts or event, upon the happening of which,
the acquisition or extinguishment of the
obligation or right subject to it depends
CHARACTERISTICS OF
CONDITIONAL OBLIGATION:
uncertain to constitute conditional
obligation, if only future but definite to
happen, it’s merely term rather than
conditional.
TWO PRINCIPAL KINDS OF
CONDITION:
1. Suspensive condition –The
happening or fulfillment of the event
gives rise to the obligation of the
obligor or it will give rise to the
rights of the obligee.
2. Resolutory condition –The
fulfillment of the condition will
extinguish the obligation or right
already existing.
THE OBLIGATION IS
DEMANDABLE AT ONCE IF:
1. When it is pure
2. When it is subject to a resolutory
condition
3. When it is subject to a resolutory
period
4. When its based on past event
unknown to the parties are
demandable at once.
Art. 1193. Obligations for whose
fulfillment a day certain has been
fixed, shall be Demandable only
when that day comes.
 A period is a day certain
which is necessarily come,
like Christmas, New Year,
year 2024
 A period is a day certain
which is necessarily would
come although it may NOT
be known when, like death.
KINDS OF PERIOD OR TERM (view
point on the effect)
1. Suspensive period (Ex die) –Obligation
begins from the arrival of the period
2. Resolutory period ( in diem) –The
obligation is terminated upon arrival of the
period.
For Example
Obligations with a resolutory period
take effect at once,but terminate
upon arrival of The day certain.
Ex die:
1. I will pay you tomorrow
A day certain is understood to be that
which must necessarily come,
although it may Not be known when.
2. I will repair your car at the end of the
month.
If the uncertainty consists in whether
the day will come or not, the
obligation is conditional, and it shall
be regulated by the rules of the
preceding Section. (1125a)
1. I will pay you P1,000 as long as you are a
minor.
 Obligation with a period
whose EFFECT or
CONSEQUENCE is
dependent upon the
EXPIRATION or
ARRIVAL of the said term.
 A period is a FUTURE and
CERTAIN event upon
arrival of the period, the
obligation or right may either
be arisen or terminated.
Ex diem:
2. I will support until you die.
Art. 1199. A person alternatively bound by
different prestations shall completely
perform one of them.
The creditor cannot be compelled to receive
part of one and part of the other undertaking.
(1131)
ALTERNATIVE:
▪ arises when the obligation composes of
several prestations (due) but the
performance of one is sufficient. The choice
which prestation is to be performed
generally belongs to the debtor unless there
is proof to the contrary.
bound to render, entire compliance with the
prestation.
When a person is ALTERNATIVELY
bound to deliver a different prestations, the
delivery or performance of one is enough for
the extinction of the obligation..
There is a solidary liability only when the
obligation expressly so states, or when the
law or the nature of the obligation requires
solidarity. (1137a)
 In alternative obligation, there are
more than one subjects, the
fulfillment of one is sufficient.
 In this kind of obligation the right to
choose belongs to the debtor unless
provided otherwise.
Art. 1206. When only one prestation has
been agreed upon, but the obligor may
render another in substitution, the obligation
is called facultative.
The loss or deterioration of the thing
intended as a substitute, through the
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,
negligence or fraud. (n)
FACULTATIVE:
Only one prestation has been agreed
upon but which may be complied with by
the delivery of another object in substitution.
For Example:

may
pay Php1M

pay you my debt after the 30 days
from the due date.
Art. 1207. The concurrence of two or more
creditors or of two or more debtors in one
and the same obligation does not imply that
each one of the former has a right to
demand, or that each one of the latter is
Art. 1208. If from the law, or the nature or
the wording of the obligations to which the
preceding article refers the contrary does not
appear, the credit or debt shall be presumed
to be divided into as many shares as there
are creditors or debtors, the credits or debts
being considered distinct from one another,
subject to the Rules of Court governing the
multiplicity of suits. (1138a)
JOINT:
 Joint obligation arises when the
WHOLE OBLIGATION is to be
fulfilled proportionately by the
different debtors and to be demanded
proportionately by the different
creditors.
 The debtor is liable for the
proportionate part of the obligation,
and the creditor can only demand
proportionate part of the credit from
each debtor.
 The collective obligation is
presumed to be JOINT in the
absence of proof to the contrary like
express stipulation of the parties; the
law requires solidarity; and the
nature of the obligation requires
solidarity
 The words used for joint
obligations are : mancomunada;
mancomunadamente; pro rata;
proportionately; we promise to pay;
signed (Sgd.) by two or more
persons
SOLIDARY OBLIGATION
 Solidary obligation arises when each
one of the debtors is obliged to
render the ENTIRE compliance of
the obligation or prestation and/or
each one of the creditors has a right
to demand from any of the debtors
the entire compliance of the
obligation.
 There is solidary liability if the
obligation is express, when the law
so provides, or the nature of the
obligation requires solidarity.
 The words used to indicate
solidarity are: jointly and severally,
solidaria; in solidum; together and/or
separately; individually and/or
collectively; juntoso separadamente;
I promise to pay, signed (Sgd.) by
two or more persons.
Art. 1223. The divisibility or indivisibility
of the things that are the object of
obligations in which there is only one debtor
and only one creditor does not alter or
modify the provisions of Chapter 2 of this
Title. (1149)
 Divisible obligation is one the object
of which capable of partial
performance or delivery.

obligation is
presumed to be indivisible if there
is only one obligor and one obligee.

obligation is divisible or indivisible,
the purpose of the obligation or
intent of the parties shall be
paramount consideration, although
the object has possibility of
impossibility of partial performance
of the obligation.
Art. 1225. For the purposes of the
preceding articles, obligations to
give definite things and those which
are not susceptible of partial
performance shall be deemed to be
indivisible.
 When the obligation has for its
object the execution of a certain
number of days of work, the
accomplishment of work by metrical
units, or analogous things which by
their nature are susceptible of partial
performance, it shall be divisible.
 However, even though the object or
service may be physically divisible,
an obligation is indivisible if so
provided by law or intended by the
parties. In obligations not to do,
divisibility or indivisibility shall be
determined by the character of the
prestation in each particular case.
(1151a)
 Indivisible obligation is one the
object of which, in its delivery or
performance, is not capable of partial
fulfillment.
KINDS OF INDIVISIBITY:
1. Legal indivisibility –When by
law declares the object to be
indivisible although by its nature the
object is divisible.
Ex. Payment of taxes.
2. Conventional indivisibility –
When the intent of the parties to
make the object of obligation to be
indivisible although by its nature its
divisible.
Ex. Payment of certain amount of
money.
3. Natural indivisibility –When the
nature and object or prestation does
not admit of the division.
Ex. Delivery of the specific car,
house or to dance or to sing
OBLIGATIONS DEEMED
INDIVISIBLE:
1. Obligation to give definite thing.
Ex. To deliver s specific house or
electric fan.
2.Obligation which are not
susceptible partial performance.
Ex. To sing,
to dance.
3. Obligation provided by law to be
indivisible although the thing or
service is physically indivisible.
Ex. Payment of taxes
4. Obligation intended by parties to
be indivisible even if the thing or
service physically divisible.
Ex. Obligation to pay money on a
certain date.
Art. 1226. In obligations with a
penal clause, the penalty shall
substitute the indemnity for
damages and the payment of
interests in case of noncompliance,
if there is no stipulation to the
contrary. Nevertheless, damages
shall be paid if the obligor refuses to
pay the penalty or is guilty of fraud
in the fulfillment of the obligation.
The penalty may be enforced only
when it is demandable in accordance
with the provisions of this Code.
(1152a)
Obligation with a penal clause
arises when the obligation contains
an accessory provision to pay a
penalty as a substitute for the
payment of damages and interest in
case of non performance of the
obligation.
The penal clause is intended to
induce the fulfillment of the
obligation
Principal obligation is one which
can stand by itself and does not
depend with the other obligation for
its validity.
Ex. Delivery of the specific car.
Accessory obligation arises when
one is attached to a principal
obligation and therefore cannot
stand alone.
Ex. Penalty in case of non delivery,
which is the penal clause.
 The penal clause is accessory
undertaking attached to the principal
to assume greater liability in case of
breach of the obligation.
As a general rule, the obligation
with a penal clause, the penalty takes
the place of the payment for damages
and payment of interest in case of
breach. However, the parties may
stipulate to the contrary.
Thus, the creditor in addition to a
penalty, may recover the damages
and interest under the following
instances:
• When the parties stipulate
• When the obligor refuses to pay the
penalty, in which case the obligee
can recover legal interest thereon
▪ When the obligor is guilty of fraud
in the fulfillment of the obligation.
Proof of actual damages suffered is
not necessary for the payment of
penalty
 The penalty is not a substitute for a
performance unless it is expressly
reserved to him.
 The penal clause is presumed
subsidiary therefore the creditor
cannot demand satisfaction of the
obligation at the same time
payment of the penalty, unless it is
expressly granted to him.
KINDS OF PENAL CLAUSE:
Legal penal clause–Provided by law.
Conventional penal clause–Based on
parties stipulation/agreement.
Compensatory penal clause–When it
takes place in lieu of thedamages.
Punitive penal clause- Imposed
merely as punishment.
Subsidiary or alternative penal
clause – When only the penalty can be
enforced.
Joint or cumulative penal clause–
When both the principal obligation and
Penalty can been forced.