CIVIL LAW REVIEW

II - OBLIGATIONS
&

CONTRACTS

Atty. Crisostomo Uribe-
Course Outline (Dec.
2009)





QUESTION:
A filed an action to compel B to
fulfill the latters obligation to the former, will
the action prosper?
ANSWER:
Not necessarily.
Because in natural actions no court
action can compel performance because it is
an action 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.

QUESTION:
What are the conditions necessary
for the existence of natural obligation?
ANSWER:
1. That there be a juridical tie
between two persons.

2. This tie is not given effect by
law.

QUESTION:
What is the distinction between a
moral obligation and a natural obligation?

ANSWER:
Moral
Obligation
Natural
Obligation
There is no juridical
tie.
There is a juridical
tie.
It is an act of pure
liberality which
springs from blood,
affection, or
benevolence.
It is a legal
fulfillment of an
obligation.
It is within the
domain of morals.
It is within the
domain of law.

QUESTION:
X died, his heirs are ABC, ABC
paid to Y 10 million 2 days after Xs death,
after 6 months thereafter the heirs are trying to
recover the excess because the estate is only 3
million. Can the heirs recover the excess of 7
million from Y?
ANSWER:
The heirs can recover the excess
from Y. This is because the payment is not
voluntary.
In natural obligation, if the payer
voluntarily paid, the creditor has the right to
retain what he has paid. The test on whether
an act is voluntary is whether the person knew
that they cannot be compelled to pay but
nonetheless they pay.
In this case, it could not be said
that the payment is voluntary because when
the heirs paid the amount of 10 million, it was
only 2 days after the death of X, and by that
time normally, the heirs still dont know the
estate of the decedent and that they would
receive less.

QUESTION:
When is an act voluntary with
respect to performance of a natural obligation?
ANSWER:
It is voluntary when the payer paid
without fraud, threat, or any vitiation being
employed.

Most importantly, the payer knew that he is
not compelled to pay but the payer nonetheless
paid.

The reason why a person who is not legally
obligated to pay, voluntary pays because of
CONSCIENCE.

QUESTION:
A executed a promissory note date
Feb. 1, 1994 stating that I promise to pay X
the amount of 1 million, and signed by him.
To this day December 6, 2009, more than 10
years had lapsed, may X still recover from A?
ANSWER:
It may be inferred that the
obligation is a pure obligation demandable at
once, and as such it is due and demandable on
Feb. 1 1994. Therefore the action had already
prescribed because more than 10 years had
lapsed from Feb. 2, 1994. This scenario may
be applicable in a contract of sale.
When if ever A paid to X the
amount of 1 million to Y despite its
prescription, A cannot recover from X because
such is his natural obligation, provided it has
been made voluntarily which means he knew
that he is not compelled to pay but nonetheless
paid it.
However, when the contract is one
of loan as an example. The period of
prescription cannot set in because a contract of
loan is intended to be paid at some future time,
and not demandable at once. In this instance,
resort to what is intended by the parties to be
the due date is controlling to
determine whether or not the action had
prescribed, and any payment thereafter
converts it from civil obligation to a natural
obligation.

QUESTION:
For a natural obligation to arise
does it require that that there is an agreement?
ANSWER:
Not necessarily. It may either be a
with or without an agreement. Why? go figure.

When shall natural obligation be converted
into civil obligation?

The signing of a document has generally the
effect of converting a natural obligation to a
civil
obligation. The signer renounces the defense
which prevents enforcement of the obligation,
which can thereafter be the basis of a judicial
action.

The promise to perform a natural obligation is
as effective as performance itself, and converts
the obligation into a civil obligation.

A prescribed debt of the deceased mother of
the debtor was held to be a sufficient
consideration to make a valid and effective the
promise of the son to pay the same ( Villaroel
vs. Estrada 71 Phil 140)

Note however, that promise to perform must
be voluntary. Therefore, payment by mistake
is not voluntary and may be recovered.

One who pays a natural obligation believing it
to be civil, does not thereby recognize the
natural obligation; and there being no civil
obligation either, he can recover what he has
paid.

Note: Partial payment of an obligation does
not generally convert such into a civil
obligation, the
part paid cannot be recovered but, the part not
paid cannot be enforced, except when such
natural obligation is one that is subject to
ratification or confirmation, the partial
payment converts it into a civil obligation
(novation or natural obligation by
prescription), except when the same is
contrary to law, morals or public order.

Guaranty of natural obligation; when
considered a civil obligation:
Generally, in principle, a natural
obligation cannot
be guaranteed because the liability of the
guarantor presupposes that there must be a
prior exhaustion of the property of the
principal debtor, and that the debtor after
paying can recover from the principal debtor-
and both of this cannot legally be done
when the obligation is natural.

However, because of Art. 2052 A natural
obligation may be guaranteed. What really
happens is that the guaranty of the natural
obligation changes its character. When the
debtor offers a guarantor for his natural
obligation, he impliedly accepts the coercive
remedies to enforce the guaranty, and

therefore, the transformation of the natural
obligation into a civil obligation.

Illicit obligations:

Obligations which are contrary to morals and
good customs do not constitute natural
obligations, as such any payment can be
recovered except when both are in pari delicto,
or when one was at fault (see arts. 1411 and
1412).


Art. 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.

Art. 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.

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

Note: When a contract is annulled the parties
are bound to make mutual restitution.
However, when the ground of annulment is
the incapacity of a person to enter into
contract, such as minority, he is not bound to
make restitution except to the extent that he
was benefited. If there is no benefit he
likewise not bound to make restitution.
However, he has a natural obligation to do so,
and he make a restitution (voluntarily) he
cannot recover what he has delivered.

Note: The minor cannot recover what he has
voluntarily returned whether or not the other
party still has it in his possession.

Art. 1427 When a minor (between 18 and 21
years of age), who has entered into a contract
(annulable but not yet annulled) without the
consent of the parent or guardian, voluntarily
pays a sum of
money or delivers a fungible thing (means
consumable) 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.

Generally when a contract is annulled, there
will be mutual restitution, except when the
party who enters into a contract is a minor, he
is not bound to

make restitution of the thing received by him
except to the extent he was benefited. If he is
not obliged
to make restitution, but he nevertheless returns
the same, he can no longer recover because
such is a natural obligation.

Under this article however, there is no natural
obligation contemplated but a case of a civil
obligation under an annullable contract.
Compared to Art. 1426 the contract was
already annulled, but Art. 1427, the contract is
not yet annulled. Hence, the same is valid and
is enforceable unless it is set aside by
competent court in an action for that purpose.
Any return made by the minor can be
recovered, except when the creditor or obligee
has spent or consumed it in good faith.

How good faith of creditor established:

Belief of the creditor that the debtor has
capacity to deliver the object of the contract.

Note: If the thing delivered is non-
consumable, the debtor cannot recover if the
thing delivered is no longer in the possession
of the creditor who has acted in good faith,
either because he has alienated it or it has been
lost.

Art. 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.

Art. 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
shall be valid and cannot be rescinded by the
payer.

Art. 1430 When a will is declared void
because it has not been executed, 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 and irrevocable.


PRESCRIPTION OF ACTIONS

Art. 1139. Actions prescribe by the mere lapse
of time fixed by law. (1961)

Note: The mere delay in the enforcement of a
claim does not result in any reduction or loss
of right, unless the period required by law for
prescription has expired.

Prescription is only a defense and not a basis
of right of action. It must be defensively
pleaded otherwise it is deemed waived if not
timely raised or pleaded before or during the
hearing of the case.

Art. 1140. Actions to recover movables shall
prescribe eight years from the time the
possession thereof is lost, unless the possessor
has acquired the ownership by prescription for
a less period, according to Articles 1132, and
without prejudice to the provisions of Articles
559, 1505, and 1133. (1962a)

Art. 1132. The ownership of movables
prescribes through uninterrupted possession
for four years in good faith.

The ownership of personal property also
prescribes through uninterrupted possession
for eight 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 Articles 559 and 1505 of this
Code shall be observed. (1955a)

Art. 559. The possession of movable property
acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable
or has been unlawfully deprived thereof may
recover it from the person in possession of the
same.

If the possessor of a movable lost or which the
owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the
owner cannot obtain its return without
reimbursing the price paid therefor. (464a)

Art. 1595. Where, under a contract of sale, the
ownership of the goods has passed to the
buyer and he wrongfully neglects or refuses to
pay for the goods according to the terms of the
contract of sale, the seller may maintain an
action against him for the price of the goods.

Where, under a contract of sale, the price is
payable on a certain day, irrespective of
delivery or of transfer of title and the buyer
wrongfully neglects or refuses to pay such
price, the seller may maintain an action for the
price although the ownership in the goods has
not passed. But it shall be a defense to such an
action that the seller at any time before the
judgment in such action has manifested an
inability to perform the contract of sale on his
part or an intention not to perform it.

Although the ownership in the goods has not
passed, if they cannot readily be resold for a
reasonable price, and if the provisions of
article 1596, fourth paragraph, are not
applicable, the seller may offer to deliver the
goods to the buyer, and, if the buyer refuses to
receive them, may notify the buyer that the
goods are thereafter held by the seller as bailee
for the buyer. Thereafter the seller may treat
the goods as the buyer's and may maintain an
action for the price. (n)

Art. 1133. Movables possessed through a
crime can never be acquired through
prescription by the offender. (1956a)

Art. 1141. Real actions over immovables
prescribe after thirty years.

This provision is without prejudice to what is
established for the acquisition of ownership
and other real rights by prescription. (1963)

Art. 1142. A mortgage action prescribes after
ten years. (1964a)

If the action to recover the mortgage debt
itself has prescribed, the action to recover the
interest must also prescribed.

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

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

(2) To bring an action to abate a public or
private nuisance. (n)

No prescription shall run in favor of a co-
owner or
co heir against his co-owners or co-heirs so
long as he expressly or impliedly recognize
the co- ownership, otherwise acquisitive
prescription may set in.

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

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment. (n)

When property is registered in anothers name,
an implied or constructive trust is created by
law in favor of the true owner. The action for
reconveyance of the title to the rightful owner
prescribes in ten years from the issuance of the
title. But if fraud has been committed, and this
is the basis of action, not implied trust, the
action will be barred after 4 years.

Art. 1145. The following actions must be
commenced within six years:

(1) Upon an oral contract;

(2) Upon a quasi-contract. (n)

Art. 1146. The following actions must be
instituted within four years:

(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;

However, when the action arises from or out
of any act, activity, or conduct of any public
officer involving the exercise of powers or
authority arising from Martial Law including
the arrest, detention and/or trial of the
plaintiff, the same must be
brought within one (1) year. (As amended by
PD No. 1755, Dec. 24, 1980.)

Note: A petition for quo warranto prescribes in
1 year from the date of ouster but when the
plaintiff was separated from his employment
for unjustifiable cause it prescribes in 4 years
due to an injury to the rights of the plaintiff.

An action base on fraud prescribe in 4 years
from discovery of the fraud.


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

(1) For forcible entry and detainer; (2) For
defamation. (n)
Art. 1148. The limitations of action mentioned
in Articles 1140 to 1142, and 1144 to 1147 are
without prejudice to those specified in other
parts of this Code, in the Code of Commerce,
and in special laws. (n)

Art. 1149. All other actions whose periods are
not fixed in this Code or in other laws must be
brought within five years from the time the
right of action accrues. (n)

Note: Limitations upon the right of the
government to assess and collect taxes will not
be presumed in the absence of clear legislation
to the contrary, and where the government has
not by express statutory provision provided a
limitation upon its right to assess unpaid taxes,
such right is imprescriptible.

Art. 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.
(1969)

The moment the right or duty occurs, then the
right of action accrues, and the action can be
legally instituted; from that moment, therefore,
the period of prescription of action begins to
run.

When an obligation is subject to a suspensive
condition, prescription runs only from the
happening of the condition.

Where the obligation is without date of
maturity, or a note is payable on demand,
prescription begins to run from the date the
note or obligation and not from demand,
except when the liability for the unpaid
balance of a subscription to shares of a
corporation, here the liability of the subscriber
does not arise until call or demand for
payment by the board of directors, and
therefore, prescription
would run only from such demand.

Art. 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.
(1970a)

Note: The period of prescription in obligations
with interest runs only from the last payment
of interest, is applicable only to cases where
the principal debt is already due.

When principal obligation is not yet due,
payment
of interest at stipulated intervals does not
cause the running of period of prescription,
which will commence only after the maturity
of debt.

Art. 1152. The period for prescription of
actions to demand the fulfillment of obligation
declared by a judgment commences from the
time the judgment became final. (1971)

Art. 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. (1972)

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

Art. 1155. The prescription of actions is
interrupted when they are filed before the
court, when there is
a written extrajudicial demand by the
creditors, and when there is any written
acknowledgment of the debt by the debtor.

Note: The extinctive prescription is interrupted
when the creditor made a demand before the
lapse of the period fixed by law. A verbal
demand upon the debtor is not sufficient to
interrupt or renew the prescriptive period.



What is an obligation?

Obligation is a juridical necessity to give, to
do, or not to do (Art. 1156).

Is it correct to say that the definition is not
accurate, in the sense that there must be
another prestation which is not to give aside
from to give, to do or not to do?

The definition is accurate. The obligation not
to give includes not to do.

Is the definition defective because it only
pertains to the debtor side and it lacks the
juridical relation in its entirety?

The definition is not defective. The word
obligation itself pertains to the debtor side,
hence it is proper. The obligation pertains to
the debtor and right pertains to the creditor. A
person who has a right can compel the other,
but he cannot be compelled to perform his
right. An obligation may not be waived; but a
right may be exercised or not. Rights and
obligations are different matters.

What is the determining factor that the
definition under Art. 1156 is a civil
obligation?

Because of the phrase juridical necessity


What are the essential elements of obligation?

1. Active subject
2. Passive subject
3. Juridical tie (vinculum juris)
4. Prestation

Who are the subjects of an obligation?

1. Active subject (creditor)
2. Passive subject (debtor)

In a contract of lease, who is the active
subject;
the passive subject?

Since it is considered a reciprocal obligation
(bilateral contract), both the lessee and the
lessor may be considered the passive or active
subjects, depending on the aspects of delivery
of the property or payment of rent.

In the delivery of the property to the lessor is
the passive subject and the lessee is the active
subject. The former is obliged to deliver the
property subject of the lease to the lessee.

In the case of payment, the lessee is the
passive subject, and the lessor is the active
subject. The lessee is obliged to pay the
amount of rent to the lessor.

In a contract of sale, who is the active and the
passive subject?

In a contract of sale, since it is a reciprocal
obligation (bilateral contract) both the seller
and the buyer may be considered the passive
and the
active subject depending on whether it is for
payment of the amount of the thing sold, and
on the obligation to deliver the thing subject of
the sale.

What is the reason why a debtor considered a
passive subject?

He is considered a passive subject because in
the absence of demand from the creditor the
debtor could just wait, and let the prescription
run in favor of the debtor. If the creditor does
not demand for the performance of the
obligation, there will be no compulsion.

There must be proof of demand in writing.

Is there an instance in case of consignation a
right may be exercised?

None. Consignation is a legal obligation. An
obligation and a right are two different
concepts.

Should an obligation and a right co-exist?

Yes. If someone has an obligation somebody
is going to have a right.

Is there an instance where a right and an
obligation pertain to the same person?

Yes there are is an instance where an
obligation and a right pertain to the same
person, such that the person acquired such
right as in the case of confusion.

What is the object (prestation) of an
obligation?

The object of an obligation is nothing but a
particular conduct of the debtor. The thing is
not the object of the obligation; it is his
conduct necessary to produce the effects of the
obligation whether it is an obligation to give,
to do or not to do.

It may involve a thing in an obligation to give.

What are the requisites of prestation or object?

1. It must be possible, physically and
juridically

2. It must be determinate, or at least
determinable according to pre-established
elements or criteria; and
3. it must have a possible equivalent in money.

Note: The prestation need not actually be of
pecuniary value. The criterion to determine
whether an 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.

Therefore, the creditors interest need not be
economic or patrimonial; it may be
sentimental, moral 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.

What is a juridical tie or vinculum juris?

It is the efficient cause, juridical tie, or legal
tie which binds the parties established either
by (any source of an obligation):

a. law
b. bilateral acts
c. unilateral acts (crimes or quasi-delicts)

What obligation has no juridical tie?

Moral obligations has no juridical tie because
it is an act of pure liberality which springs
from blood, affection or benevolence. It is
within the domain of morals.

of A (their father) to B is void under sec. 118
of the Public Land Law. B contends however,
that the heirs of A cannot recover the
homestead from him because their action has
prescribed, and furthermore, A was in pari
delicto. Decide.

As to prescription, it is not a good defense
because the sale made within 3 years from the
grant under the Public Land Law is a void
sale. Any alienation of the land under this law
within the 5 year prohibitory period is a void
alienation. A contract which is null and void
and an action to recover from such void
contract does not prescribe.

However, into the second defense that the
heirs cannot recover under the in pari delicto
rule, as provided in Art.
1416, that when a law declares a contract null
and void but there is no inherent illegality (not
illegal per se) in the contract and the
declaration of nullity by law is intended or
designed to protect one of the parties to that
contract, that person in whose favor the law
would so provide its nullity may recover what
he sold to the other party. The prohibition
under the Public Land Law is intended to
protect the grantee and his family because if
he sell or alienate the property within that
period he would have nothing more to
cultivate himself and his family. That is why
he would still have the right to recover the
property as the contract is a void contract and
the in pari delicto rule is not applicable under
the facts.