ART 1171- responsibility arising from fraud is demandable in all obligations.

Any waiver of an action for

future fraud is void.

- This provision refers to incidental fraud which is employed in the fulfillment of an obligation

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.

KINDS OF NEGLIGENCE ACCORDING TO THE SOURCE OF OBLIGATION

1. Contractual Negligence (culpa contractual)- negligence in contracts resulting in their breach. It

merely makes the debtor liable for damages in view of his negligence in the fulfillment of pre-
existing obligation.
2. Civil Negligence (culpa aquiliana) or negligence by which itself is the source of an obligation
between the parties not so related before anu pre-existing contracts. It is also called quasi-
delicts or tors.
 Is a negligence that creates liability to a parties who were not previously
bound by contracts.
 Also known as quasi-delicts or torts, this type of negligence arises from
actions that are negligent but not related to any pre-existing contractual
obligations. It refers to civil wrongs where a person’s careless behavior
causes harm to another person or their property, outside of a contractual
context.
3. Criminal negligence (culpa criminal) or negligence resulting in a commission of crime. The same
negligent act causing damages may produce civil liability arising from rime under Article 100 of
the revised penal code, or create an action for quasi-delicts under article 2177, et seq, of the civil
code.

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 person, 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 contracts 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.

- The fault or negligence of the obligor is determined to the failure of exercising the required
amount of diligence in an obligation

Factors Considered: The standard of diligence depends on:

- Nature of the Obligation: What is reasonably expected in terms of care and effort for the
specific type of obligation.
- Circumstances of the Person: The obligor's capacity, expertise, and resources.
- Time: The urgency or time constraints involved.
- Place: The location where the obligation is to be performed, which might affect the standard
of care needed.
MEANING OF FAULT OR NEGLIGENCE

- According to our Supreme Court, “negligence is the failure to observe for the protection of
the interests of another person, that degree of care, precaution and vigilance which
circumstances justly demand, whereby such other person suffers injury.
- Negligence is established when the failure to meet the required standard of care leads to
injury or damage to another person. The harm must be a direct result of the negligent
conduct.

FACTORS TO BE CONSIDERED IN NEGLIGENCE

1. Nature of the obligation- smoking while carrying materials known to be inflammable constitutes
negligence.
2. Circumstances of the person – a guard, man in the prime of life, robust and healthy, sleeping
while on duty is guilty of negligence
3. Circumstances of time- driving a car without headlights at night is gross negligence but it does
not by itself constitute negligence when driving during the day.
4. Circumstances of the place- driving at 100 kilometers per hour on a superhighway is a
permissible but driving at the same rate of speed in Ayala Avenue, Makati us a gross
recklessness.

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 assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which though foreseen, were
inevitable.

ART 1175- usurious transactions shall be governed by special laws.

MEANING OF SIMPLE LOAN OR MUTUUM

- Is a contract whereby one of the parties delivers to another, money or other consumable
thing, upon the condition that the same amount of the same kind and quality shall be paid.

MEANING OF USURY

- Is a contracting for or receiving interest in excess of the amount allowed by the law for the
loan or use of money, goods, chattels or credits.

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 installment of a debt without
reservations to prior installments, shall likewise raise the presumption that such installments have been
paid off.

- Without reservation, the interest and prior installment of debt are presumed paid.

ART 1177- 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.

- Creditors may seek for the debtor’s personal assets or property in case of non-compliance in
obligation

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.

DIFFERENT KINDS OF OBLIGATIONS

PRIMARY CLASSIFICATION OF OBLIGATION UNDER THE CIVIL CODE:

1. Pure and conditional obligations
2. Obligations with period
3. Alternative and facultative obligations
4. Joint and solidary obligations
5. Divisible and indivisible obligations
6. Obligations with penal cause
ART 1179
Pure obligation- refers to the pure obligation where the obligation does not specify when is due (period)
and no condition, and this obligation is demandable at once.
Example: I borrowed money from my friend because I was short cash. This does not specify
when will be the due of my obligation and no condition was stipulated, and therefore, my friend can
demand anytime at once.
Conditional obligations- obligations whose performance depends upon future or uncertain events, or
upon past events unknown to the parties. These are obligations that can be suspensice
Condition- a condition is an event that must happen or not happen for an obligation to start or end. It
will tell when the obligation will start or end.
Characteristics of condition:
Future and uncertain- My sister promised me to buy a new calculator when I passed the qualification
examination. Here, I have the right to demand the new calculator if I passed the qualification
examination.
Past but unknown- I plan to buy a rare painting if it was proven to me that the painting was owned by
Pablo Picasso. Me and the sales agent from the time of agreement does not really know if it is made
from Picasso or not.
- The qualification examination result was already posted but I am not aware about it.
After finishing my exam, I told my friend that I will treat her a meal If the result of
my exam is good. This obligation to treat my friend will only arise until I receive or
see the result from the examination I took.
Two principal kinds of obligation:

Suspensive Condition- this is the condition that must happen first before the obligation or right comes
into effect.
Example: I will buy you a laptop only if my loan is approved.
Resolutory Condition- it a condition in which upon fulfillment, the obligation will end.
 Example: My scholarship is will cover my school expenses until I graduate. After graduation, the
scholarship will no longer available.
Resolutory Condition- this is where the obligation is already in effect but will be extinguished once the
condition has been fulfilled.

ART 1880
- When a debtor binds himself to pay when his means, meaning ability to pay when
they can, so the obligation shall be deemed to be one with a period (time frame
given even not specific)
- When the debtor says that he will pay when his means permit him to do so, it is
considered as having a period, which is depending on the debtor’s financial
situation, there will be an agreement for the duration.
- If the debtor and creditor did not meet or now agree, then the court will fix it.
ART 1881
- In conditional obligations, the acquisition of right will only valid if depending on the
condition.
Effects of happening of condition
- Acquisition of rights- in suspensive condition, the obligatory force will be possible if
the condition is fulfilled.
- Loss of rights already acquired- in resolutory condition, the right is already acquired
but upon fulfillment of the obligation it will be extinguished or lost.
ART 1182-
Potestative: when the fulfillment of the condition is unilateral and only in favor the debtor, the
conditional obligation is void. It the condition is based from the third party, then the obligation is not
void.
- Conditional obligation void: when the debtor makes the condition and only
benefited him is void.
- Only condition is void- when there is already an existing obligation and then the
debtor made a condition in adding the obligation. Here the condition is the only
void, and the obligation must still be fulfilled as it already existed.
o I promised to my friend pay her P50,000 I borrowed last week. After few
days, I told my friend that I will only pay her P50,000 if she will lend me
another P100,000. Heeheh
On the other hand, if the condition depends solely on the creditor, the obligation is valid.
- I will pay my friend P3,000 tomorrow as she says so.
In terms of resolutory condition where the condition depends upon the debtor, it is valid.
o My school expenses are covered by my scholarship until I graduate. After
graduation, I will not be receiving financial assistance anymore. Here, the
debtor is my scholarship, and the condition is valid since he is interested in
the fulfillment of it.
- The situation between suspensive condition based on creditor and resolutory
condition based on debtor is the same.
Causal condition
 - If the suspensive condition is based upon the will of a third party where debtor and
obligor is not related to.
- *I will pay you my debt if the crow turns white. Emz*
- I will pick you up at the airport once the rain stops or once the weather is good.
Mixed condition
- The obligation is valid if the suspensive condition is partly upon chance and partly
upon the will of a third person.
o I will buy a land once the court prove that this land is yours and if there
would be a construction of Jollibee near the area.
ART 1183
- This article refers to suspensive conditions that is void if the condition is impossible
to fulfill and is contrary to good customs pr public policy and those prohibited by
law. If the obligation is divisible, the part thereof not affected by impossible
condition shall be valid.
o I promise to give you money if you jumped from the 10th story building
without bruise.
Two kinds of impossible conditions
- Physically impossible conditions- those who cannot be fulfilled due to limit as a
person and cannot do all things
o I will let you kiss me it you will run 150 kilometers per hour. Hahaha
- Legally impossible conditions- those are legally prohibited and therefore impossible;
is contrary to law, morals, public order, public policy.
o I will buy you mix and match Jollibee meal if you rob a bank for me.
In case of obligation condition to be valid, the impossible condition must be not to do it. Hahaha
o I will buy you a mix and match Jollibee meal if you will not rob a bank for
me.
In case of only the affected obligation is void- the obligation is divisible and the part that is impossible is
void.
o I will give you a deodorant if you will shower properly, and will give you
money if you will shower nonstop for one year.
ART 1184
- The condition that some event happen at a determinate time shall extinguish the
obligation as soon as the time expires o if it has become indubitable that the event
will not take place.
- In the case of positive (suspensive) obligation, the obligation will be extinguished or
not valid if the condition stipulated a time and then the time expires or not possible
to meet.
o Sarah promised to pay Geronimo 1,000 if Geronimo will convince Mateo to
join the organization lead by Sarah until September 12. If Geronimo failed t
convince Mateo before September 12, the obligation or promise to pay of
Sarah will be extinguished.
ART 1185
 - states that if an obligation depends on an event not happening by a specific time,
the obligation becomes valid once that time passes or if it is clear that the event
cannot occur.
o I will give you a deodorant if you will not be smelly tomorrow.
- If no specific time is set, the obligation is considered effective when it is reasonable
to believe the condition has been fulfilled, considering the nature of the obligation.
o Katty binds herself to give Perry a car if Perry will not be coming home late
consecutively until Christmas.
o Katty is not liable before Christmas Perry will come home early. During or
after Christmas that Perry consecutively comes home early, then Katty is
obliged to give the car. However, if Perry failed to go home early and come
back home at late night before Christmas, then Katty’s obligation is
extinguished.
ART 1186
In suspensive condition
- the condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
- The condition is treated as fulfilled of the debtor or obligor voluntarily prevents it’s
fulfillment.
Requisites for application of this:
- The condition is suspensive
- The obligor prevents the fulfillment of condition
- He acts voluntarily
o I planned to sell my phone to B for 15,000 if B will make a payment within
10 days. If within the 10 days and I suddenly changed my mind, I contacted C
to make an excuse for me if B will look for me for his payment.
o I promised my niece to give her 500 pesos on Christmas if she will get a
perfect exam score, but I continue to disturb my niece review time so that
she will not get a perfect score, only one mistake.
In resolutory
- The obligation is extinguished if the condition is deemed to be prevented by the
debtor or obligor. The condition is considered fulfilled and obligation extinguished.
- Honey let Moratalla to borrow her calculator until the latter finishes her
examination. After examination, Moratalla will bring back the calculator but Honey is
nowhere to be found, in which Honey is intentionally hiding from Moratalla.
ART 1187
- “When a condition for something is met, it’s like that thing was always meant to
happen from the start. The law decides how to handle the benefits and duties that
were supposed to be part of that condition, especially if it involves actions or
inactions.”
o Examples:
- Retroactive Pay Increase:
 o Scenario: I will give you a bonus if you will hit the quota by December. If the
quota was achieved before December, the bonus will be treated as if it was
an obligation from the day it was agreed.
o Sarah has a loan from Riz worth 10,000. They agreed that if Sarah will
publish a book and it became famous, then the loan payable to Rizz will be
extinguished. Any interest gain is not payable to Riz if Sarah fulfilled the
obligation.
Retroactive effect as to fruits and interest in obligation to give
- in reciprocal obligations, the fruits and interests received while the condition is
pending are deemed to have been compensated for mutually. This means that once
- the condition is fulfilled, there is no retroactive adjustment to account for benefits
or interests accrued during the pendency of the condition. Instead, these benefits
are treated as settled within the scope of the mutual obligations.
o A, agreed to sell her land to Z if Z will obtain finances for the purchase within
3 months. During the 3 months period, A generated a rental income and Z
obtained financing for the purchase. A is now obligated to sell her land to Z
but the income generated from the rental of land is under the right of A.
- In unilateral obligations, there is usually no retroactive effect because they are
gratuitous (not expecting return)
o Person A agrees to lend Person B 10,000 for free, meaning Person B will not
pay any interest or fees for the loan. This is a unilateral obligation because
only Person A has an obligation (to provide the loan), and Person B does not
owe anything in return.
o Person A provides the loan of 10,000 to Person B. Person B invests the
10,000 and earns 500 in interest during the period before the loan is repaid.
Since the loan was gratuitous and Person A did not expect any return,
Person A is not entitled to any of the interest earned by Person B during the
period the loan was outstanding.
ART 1189
- the creditor may, before the fulfillment of the action, bring the appropriate actions
for the preservation of his right. The debtor may recover what during the same time
has paid by mistake in case of a suspensive condition.
- In a suspensive condition where the obligation will arise upon the fulfillment of the
condition, the creditor may bring appropriate action in the preservation of his right.
In a case of debtor, he is entitled to recover what is given by mistake to the creditor.
ART 1890

Resolutory Condition:
- General Rule: A resolutory condition is a condition that, if it occurs, results in the
extinguishment of an obligation. When such a condition happens:
- The obligation is treated as if it never existed.
- Both parties must return what they received from each other.
Restitution:
 - Mutual Restitution: If the resolutory condition occurs, each party must return to the
other what they received. This includes not only the main object or payment but
also any fruits (benefits) and interests derived from it.

- Loss, Deterioration, Improvement: If the object involved in the obligation was lost,
deteriorated, or improved before the resolutory condition happened, specific rules
apply:
o Loss: The party who owned the object at the time of its loss must bear the
loss.
o Deterioration/Improvement: The rules in Article 1189 are applied to handle
such cases.
Rights of Third Persons:
- Protection of Third Persons: Third persons (those who are not part of the contract)
cannot be sued to return the object during the period when the resolutory condition
is pending.
Fruits and Interests:
- Fruits and Interests: In addition to the main object or payment, any fruits (e.g.,
benefits, income) and interests must also be returned. Expenses for production,
gathering, and preservation of these fruits should be considered in the restitution
process.