IMPORTANT CONTENTS IN RECITATION

1. Meaning of the article

2. What arises the article
3. Problem and solution of a case relating to the article
4. Cause and effect
5. No loophole during recitation
6. Can be confidently recited
7. Should know each term that’s said during recitation

TERMINOLOGIES

ART. 1171. Responsibility arising from fraud is demandable

in all obligations. Any waiver of an action for future fraud is
void. (1102a)

Discussion on Article 1171: Responsibility and Waivers for Fraud

Overview: Article 1171 addresses how responsibility arising from fraud is handled under
the law. It establishes that fraud is a serious offense and lays out the rules for waivers
related to fraud.

Key Points of Article 1171

1. Responsibility for Fraud:

◦ Demandable Across Obligations: The article specifies that responsibility

for fraud can be demanded in any type of obligation. This means that if
fraud is involved, the wrongdoer is accountable regardless of the nature of
the obligation they are supposed to fulfill.
◦ No Mitigation of Damages: Unlike negligence, where a court might
reduce the amount of damages based on the severity of the negligence,
fraud is treated more severely. The law does not allow courts to mitigate or
reduce damages for fraud because it is seen as a serious wrongdoing
meant to avoid fulfilling one’s obligations.
2. Quantitative Example:

◦ Scenario: A contractor lies about using high-quality materials and uses

cheaper, substandard ones instead. The project costs $100,000. The
actual repair and replacement of materials cost $30,000.
◦ Court’s Decision: The contractor must pay the full $100,000 for the
contract and $30,000 for repairs, totaling $130,000 in damages, reflecting
the seriousness of the fraud.
3. Waivers of Fraud Claims:

◦ Future Fraud: A waiver of future fraud claims is considered void. This

means that even if the parties agree to forgive potential future fraud, such
 a waiver is invalid and cannot be enforced. This rule is in place to prevent
fraudsters from escaping liability for future dishonest actions, thus
discouraging fraud.
4. Quantitative Example:

◦ Scenario: A business agrees to a contract with a clause stating that it will

not pursue any future fraud claims. This agreement is invalid. If the
business later discovers that the supplier committed fraud in a new
transaction, they can still pursue legal action.

◦ Past Fraud: A waiver for past fraud can be valid if the creditor chooses to
forgive the fraud after becoming aware of it. This waiver is seen as an act
of generosity, allowing the victim to renounce their right to compensation
for that specific instance of fraud.

5. Quantitative Example:

◦ Scenario: A customer discovers that a seller committed fraud in a

previous transaction and decides to forgive the seller, choosing not to
seek $15,000 in damages. This waiver is valid because it is made with
knowledge of the fraud and is a voluntary decision to forego compensation
for that particular instance.
Summary

Article 1171 underscores the severity of fraud by making the responsible party liable for
the full amount of damages without reduction. It also establishes that waivers for future
fraud are invalid to ensure that fraudsters remain accountable for any future deceitful
actions. However, waivers for past fraud are allowed if made knowingly and voluntarily,
reflecting the victim’s choice to forgive and not pursue compensation.

TERMINOLOGIES

FRAUD - Fraud is a serious offense

DEMANDABLE - its responsibility includes full compensation of the damage, regardless
of the type of the obligation
COURT’S DISCRETION - courts can’t reduce the damages for fraud, unlike negligence
cases where damage can be lessened.
WAIVER - forgiveness of the act of fraud where the fraudster will not be responsible for
the damages.
FUTURE FRAUD - Waivers for future fraud are invalid. This means that future fraud
claims should be enforceable, ensuring fraudsters remains accountable.
PAST FRAUD - Waivers for past fraud is valid because the act of fraud has been done
and the creditor should be aware of the occurence of the fraud in filing a waiver.
ARTICLE 1171 - ensures full responsibility for fraud and filing waivers for future fraud
are invalid while allowing forgiveness for past fraud when done knowingly.
Discussion on Article 1171

Overview: Article 1171 addresses how responsibility arising from fraud is handled under
the law. It establishes that fraud is a serious offense and lays out the rules for waivers
related to fraud.

1. Responsibility for Fraud:

• Demandable: If fraud occurs, the wrongdoer is fully responsible, regardless of

the type of obligation.
• Full Damages: Courts cannot reduce the damages for fraud, unlike negligence
cases where damages might be lessened.
Example: If a contractor fraudulently uses cheap materials in a $100,000 project, they
must pay the full $100,000 plus $30,000 in repair costs, totaling $130,000.

2. Waivers of Fraud Claims:

• Future Fraud: Waivers for future fraud are invalid. This means agreements to
not pursue future fraud claims are not enforceable, ensuring fraudsters remain
accountable.
Example: A business that agrees not to sue for future fraud cannot avoid legal action if
future fraud occurs.

• Past Fraud: Waivers for past fraud can be valid if the creditor is aware of the
fraud and chooses to forgive it.
Example: A customer decides to forgive a seller for $15,000 in fraud-related damages,
which is valid if done knowingly.

Summary: Article 1171 ensures full responsibility and damages for fraud and
invalidates future fraud waivers while allowing forgiveness for past fraud when done
knowingly.

Article 1172: Explanation

Overview: Article 1172 deals with the responsibility for negligence in fulfilling
obligations. If a person fails to meet their obligation due to negligence, they can be
required to pay damages. The court has the discretion to determine the amount of
damages based on the specific circumstances of the case. Negligence is less serious
than fraud but still warrants compensation for the injured party.

Key Points:

1. Responsibility for Negligence:

 ◦ Demandable: A person who fails to meet their obligation because of
negligence can be sued for damages.
◦ Court's Discretion: The court can decide how much damage should be
paid, taking into account the situation. Unlike fraud, which is seen as more
serious, negligence allows for more flexibility in determining damages.

2. Types of Negligence:

◦ Contractual Negligence (Culpa Contractual): This occurs when a

person fails to fulfill a contractual obligation due to negligence. For
example, if a contractor fails to deliver a product on time due to
negligence, they must compensate the client for the loss.
◦ Civil Negligence (Culpa Aquiliana): This involves negligence that does
not stem from a contract but still results in harm. For example, if a
person’s carelessness causes damage to someone else's property, they
are liable even without a prior contract.
◦ Criminal Negligence (Culpa Criminal): This is negligence that leads to a
crime. For instance, if a driver’s recklessness causes an accident, they
may face criminal charges and have to pay damages for the harm caused.
3. Waivers:

◦ Future Negligence: You can waive claims for future negligence, except in
cases requiring high levels of diligence, like common carriers.
◦ Gross Negligence: If negligence is extreme or involves bad faith, waiving
future claims is not allowed.
Examples:

• Contractual Negligence: If a supplier fails to deliver goods worth $50,000 on

time due to negligence, they must pay $50,000 in damages.
• Civil Negligence: If someone’s carelessness causes the death of a horse worth
$10,000, they must pay $10,000 in damages.
• Criminal Negligence: If a driver’s recklessness causes $20,000 in property
damage, they must pay $20,000 in damages.

Summary: Article 1172 establishes that negligence in fulfilling obligations is liable for
damages, with courts having the flexibility to adjust the amount based on the case. It
covers different types of negligence (contractual, civil, criminal) and explains that future
claims for negligence can be waived, except in cases of gross negligence.

TERMINOLOGIES

ARTICLE 1172 - addresses negligence in fulfilling obligations in which someone is

negligent, they must pay for the damages.

DEMANDABLE - If a person is negligent, they are liable for the damage

COURT’S DISCRETION - damages from negligence can be reduced by the court
based on the situation.

CONTRACTUAL NEGLIGENCE - Negligence in fulfilling the contract itself.

CIVIL NEGLIGENCE - Negligence that causes harm outside the contract.

CRIMINAL NEGLIGENCE - Negligence leading to a crime.

WAIVER for FUTURE NEGLIGENCE - can be valid, except in cases requiring high
deligence which is also considered as gross negligence.

GROSS NEGLIGENCE - Extreme negligence which cannot be waived for future claims.

Article 1172: Explanation

Overview: Article 1172 deals with negligence in fulfilling obligations. It states that if
someone is negligent, they must pay for the resulting damages. Unlike fraud, which is
severe and has fixed consequences, negligence allows courts to adjust the damages
based on the situation.

Key Points:

1. Responsibility for Negligence:

◦ Demandable: If a person is negligent, they are liable for damages.
◦ Court's Discretion: Courts can adjust the amount of damages based on
circumstances. This flexibility is different from fraud, where damages are
not reduced.
2. Types of Negligence:

◦ Contractual Negligence (Culpa Contractual): Negligence in fulfilling a

contract. Example: A supplier fails to deliver goods worth $50,000 and
must pay that amount in damages.
◦ Civil Negligence (Culpa Aquiliana): Negligence that causes harm
outside a contract. Example: Someone's carelessness results in the death
of a $10,000 horse, and they must pay $10,000 in damages.
◦ Criminal Negligence (Culpa Criminal): Negligence leading to a crime.
Example: A reckless driver causes $20,000 in property damage and must
pay that amount in damages.
3. Waivers:

◦ Future Negligence: Claims for future negligence can be waived, except in

cases requiring high diligence.
◦ Gross Negligence: Extreme negligence cannot be waived for future
claims.
Summary: Article 1172 establishes that negligence in fulfilling obligations is liable for
damages, with courts having the flexibility to adjust the amount based on the case. It
covers different types of negligence (contractual, civil, criminal) and explains that future
claims for negligence can be waived, except in cases of gross negligence.

Discussion on Article 1173: Fault or Negligence of the Obligor

Article 1173 of the Civil Code outlines the concept of negligence in the context of
fulfilling obligations. It specifies the nature of fault or negligence and the degree of
diligence required by the obligor (the party responsible for fulfilling the obligation).

Key Points of Article 1173:

1. Nature of Fault or Negligence:

◦ Negligence is defined as the failure to exercise the degree of care
required by the nature of the obligation, taking into account the
circumstances related to the person, time, and place.
◦ If negligence is accompanied by bad faith, it is treated more severely
according to Articles 1171 and 2201, paragraph 2.
2. Degree of Diligence:

◦ If a law or contract does not specify the required diligence, the standard
expected is that of a "good father of a family" (a reasonable person).
Examples and Discussion:

1. Example of Negligence and Required Diligence:

Imagine a company, Company A, agrees to transport perishable goods, such as fruits,

for a client, Company B. The contract does not specify how the goods should be
handled, but it is generally understood that perishable goods require careful handling.

• Scenario: Company A leaves the goods in an unventilated, hot warehouse for

two days.

• Analysis: Company A's failure to provide proper ventilation shows a lack of the
necessary care. The goods spoil, causing a financial loss to Company B.

◦ Degree of Care Expected: In this case, the "good father of a family"

standard would require Company A to ensure proper storage conditions
for perishable goods. Leaving them in unsuitable conditions demonstrates
gross negligence.
 ◦ Consequence: Company A would be liable for the loss of the goods due
to this negligence, and if it were found that the negligence was done in
bad faith (for instance, to cut costs deliberately), Company B might also be
entitled to additional damages.

2. Example of Different Circumstances Affecting Diligence:

Consider a situation where a delivery driver is transporting fragile items during the day
versus at night.

• Scenario A (Daytime): The driver is transporting fragile items at a normal speed

with good road conditions.

• Scenario B (Nighttime): The driver is speeding at night without headlights on,

leading to a minor accident.

◦ Analysis:

▪ Daytime: The driver's actions might be considered reasonable

under normal conditions.
▪ Nighttime: Driving without headlights and at high speed would
likely be deemed gross negligence due to the increased risk and
the lack of safety precautions.
◦ Consequence: In Scenario A, there may be no liability if no harm
occurred. In Scenario B, the driver would be liable for damages resulting
from the accident due to the negligence in handling the fragile items.

3. Example of Fault Due to Lack of Specific Instructions:

A contractor is hired to perform a construction job but is given no specific guidelines on

safety measures.

• Scenario: The contractor fails to follow general safety practices, leading to an

accident on the site.

◦ Analysis:
▪ Contractor's Responsibility: Even without specific instructions,
the contractor is expected to adhere to general safety standards.
The failure to do so can be seen as negligence.
▪ Consequence: If the negligence leads to injury or damage, the
contractor would be liable for the resulting damages.
Conclusion
Article 1173 emphasizes that the degree of diligence required depends on the nature of
the obligation and the circumstances involved. When a specific standard is not defined
by law or contract, the general expectation is that of a reasonable and prudent person.
The analysis of negligence involves assessing whether the obligor acted with the care
expected under the circumstances, and failure to do so can result in liability for
damages.

By understanding these principles, we can see how negligence is evaluated based on

the expected standard of care in various situations and how it influences legal
responsibility.

TERMINOLOGIES

NEGLIGENCE - not doing enough to avoid harm. negligence happens when someone
doesn’t act with the care expected under the circumstances

DEGREE OF CARE REQUIRED - there are contracts that would state the care required
for the obligation. If it’s not stated in the agreement, the obligor must act like a good
father of a family in handling their obligation.

Understanding Article 1173: Fault or Negligence

Article 1173 of the Civil Code talks about what constitutes negligence when someone
fails to meet their obligations. Here's a simple breakdown:

1. What is Negligence?

◦ Negligence means not doing enough to avoid harm. It’s when someone
doesn’t use the care they should, considering the situation, to prevent
causing damage or injury.
2. Degree of Care Required:

◦ If a law or contract doesn’t specify how careful someone should be, they
must act like a "good father of a family" — meaning, they should use
reasonable care and caution.
Examples:

1. Handling Goods:

◦ Scenario: A company leaves perishable goods in a hot, closed warehouse

for two days.
◦ Why It’s Negligence: Proper care for perishable goods requires
ventilation and timely handling. The company’s failure to do this is gross
negligence.
2. Driving Conditions:

◦ Scenario: A driver speeds at night without headlights.

 ◦ Why It’s Negligence: Driving without headlights at night is highly
dangerous and shows gross negligence due to the risk involved.
3. Safety Measures:

◦ Scenario: A contractor doesn’t follow general safety practices at a

construction site.
◦ Why It’s Negligence: Even without specific instructions, general safety is
expected. Not following it can lead to liability if an accident happens.

In short, article 1173 addresses negligence happens when someone doesn’t act with
the care expected under the circumstances, and the law holds them responsible for any
harm that results.

Article 1174 - Fortuitous Events

A fortuitous event is an extraordinary occurrence that is either unforeseeable or

unavoidable, and which makes it impossible to fulfill an obligation. Such events are
outside the control of the obligor and exempt them from liability if they prevent normal
performance of their duties.

Types of Fortuitous Events:

1. Acts of Man: These are unforeseen but possible due to human actions, like war
or theft.
2. Acts of Nature: These are natural disasters, such as earthquakes or floods,
completely beyond human control.
Requisites for a Fortuitous Event:

1. The event must be beyond human control or at least beyond the obligor's control.
2. It must be unforeseeable or, if foreseeable, unavoidable.
3. It must make fulfilling the obligation impossible.
4. The obligor must not have contributed to or worsened the situation.
Exceptions Where Liability Remains:

1. By Law: In cases of fraud or negligence, or specific legal provisions.

2. By Agreement: If the contract clearly states responsibility despite a fortuitous
event.
3. Assumption of Risk: When the nature of the obligation involves accepting risk.
Examples:

By Law: A company sells defective products. Even if a natural disaster affects their
operations, they’re still liable for the fraud and negligence.

By Agreement: A contractor's contract says they must finish a project by a certain date,
even if a hurricane causes delays. They remain responsible for meeting the deadline.
Assumption of Risk: A skydiving company has clients sign a waiver acknowledging the
risks. If a client gets injured, the company isn’t liable because the client accepted the
risk of skydiving.

In summary, Article 1174 provides that obligations are generally not enforceable if a
fortuitous event occurs, but exceptions apply based on legal agreements or risk
assumption.

Article 1175 of the Civil Code covers the topic of usurious transactions and the kinds
of interest that can be applied to loans. Here’s a simplified discussion:

Understanding Usurious Transactions and Interest

1. What is a Usurious Transaction?

Usurious transactions involve charging or receiving interest that exceeds the limit
set by law. If someone lends money and demands more interest than allowed, it’s
considered usury. This is regulated by special laws to prevent exploitation.

2. Simple Loan or Mutuum

A simple loan, or "mutuum," is when one person gives money or consumable
goods to another, expecting to get the same amount back in the same condition.
This can be either without any interest or with agreed-upon interest.
Example: If Alex lends Maria $100 with the agreement that Maria will return $100
after a month, that’s a simple loan. If they agree that Maria will pay $105, the
extra $5 is the interest.

3. Types of Interest
There are several types of interest:

◦ Simple Interest: Interest calculated only on the principal amount.

▪ Example: If you borrow $100 at a simple interest rate of 5% per

year, you’ll owe $5 per year in interest.
◦ Compound Interest: Interest on the principal plus the interest that has
already been added.

▪ Example: If you borrow $100 at a 5% annual compound interest

rate, after the first year, you owe $105. In the second year, interest
is calculated on $105, so you owe $110.25, and so on.
◦ Legal Interest: The standard interest rate set by law if no rate is specified
in the contract.
 ▪ Example: If your contract doesn’t specify an interest rate, the legal
interest rate might be 12% per annum.
◦ Lawful Interest: Interest that is within the legal maximum rate allowed by
law.

▪ Example: If the maximum allowed by law is 14% per annum, and

you charge 13%, this is lawful.
◦ Unlawful Interest: Interest that exceeds the legal maximum.

▪ Example: If the legal maximum is 14% per annum, and you charge
16%, this is unlawful.
4. Interest Rules

◦ Legal Rate: The standard interest rate is 12% per annum for loans or
credit.

▪ Example: If you default on a $1,000 loan, the interest you owe,

calculated at 12% per year, is $120.
◦ Maximum Rate:

▪ Secured Loan: 12% per annum if the loan is backed by real estate
or government securities.
▪ Unsecured Loan: 14% per annum if the loan is not backed by
collateral.
▪ Example: If you have a secured loan of $1,000, the interest will be
up to $120 per year. For an unsecured loan, it could be up to $140
per year.
◦ Legal and Usurious Interest Penalties:

▪ Charging usurious interest (more than the legal maximum) is

penalized. The lender, not the borrower, is liable for this penalty.
5. Requisites for Recovering Interest

◦ Express Stipulation: The interest must be clearly stated in the contract.

◦ Written Agreement: The agreement should be in writing.
◦ Lawful Interest: The interest must be within the legal limits.
6. Example: If you lend $1,000 and the contract states an interest rate of 5%, you
must have this agreement in writing, and the 5% rate should not exceed legal
limits.

7. Current Legal Status of Usury Law

◦ Circular No. 905: This suspended the ceiling on interest rates set by the
Usury Law, allowing lenders and borrowers to agree on interest rates
freely.
 ◦ Example: Before the circular, if you agreed to an interest rate of 20% for a
loan, it would be considered usurious. Now, interest rates can be
negotiated between the lender and borrower without the old usury limits,
but they must still be reasonable.
8. Liability and Judgment

◦ Legal Interest in Case of Default: If a debtor fails to pay, they may be

liable for 12% interest per annum from the time of default until payment.

▪ Example: If a debtor owes $1,000 and defaults, they would owe an

additional $120 per year in interest until the debt is paid.
◦ Interest on Other Obligations: For non-loan obligations, such as
damages, the interest rate might be 6% per annum.

▪ Example: If a court awards $5,000 in damages and interest is

imposed, the interest might be $300 per year.
◦ Final Judgment Interest: Once a court judgment becomes final, interest
at 12% per annum is applied to the amount due.

▪ Example: If a court orders a debtor to pay $10,000, and the

judgment is final, interest of $1,200 per year will accrue until the
amount is fully paid.

In summary, Article 1175 sets the rules for what kind of interest can be charged on loans
and outlines the consequences of exceeding legal limits. It’s important for both lenders
and borrowers to understand these rules to ensure that their transactions comply with
the law and avoid penalties.

Article 1175 Simplified:

1. What is Usury?

◦ Usury means charging more interest on a loan than the law allows.
Special laws govern this to prevent exploitation.
2. Simple Loan (Mutuum):

◦ A simple loan is when you give money or goods to someone and they
return the same amount. It can be with or without interest.
3. Example: If you lend $100 and they return $100, that's a simple loan. If they
return $105, the $5 is interest.

4. Types of Interest:

◦ Simple Interest: Interest on just the original amount.

▪ Example: Borrow $100 at 5% interest means $5 interest.
 ◦ Compound Interest: Interest on the original amount plus previous
interest.
▪ Example: $100 at 5% compound interest grows to $105 in the first
year and more in subsequent years.
◦ Legal Interest: Standard rate set by law if not specified in the contract
(usually 12% per year).
◦ Lawful Interest: Interest within legal limits.
◦ Unlawful Interest: Interest above legal limits.
5. Interest Rules:

◦ Legal Rate: 12% per year for loans or credits.

◦ Maximum Rates:
▪ 12% per year for loans secured by real estate.
▪ 14% per year for unsecured loans.
6. Recovering Interest:

◦ Interest must be stated in writing and be lawful.

7. Current Law Status:

◦ The old limit on interest rates was lifted. Rates can now be freely agreed
upon, but must still be fair.
8. Judgment Interest:

◦ If a court orders payment, interest at 12% per year applies from the time
the judgment is final until paid.

Summary: Article 1175 deals with rules on interest for loans. It defines what usury is,
explains different types of interest, and outlines the rules for lawful and unlawful interest
rates.

Understanding Article 1176: Presumptions in Obligations

The core aspect of Article 1176 lies in establishing a presumption that when a creditor
receives a payment, it suggests that not only the principal amount has been settled, but
also any interests or prior installments associated with that debt have likely been paid.
This provision acts as a protective measure for debtors, ensuring they are not
continuously burdened by the possibility of unpaid obligations if payments are received
without reservations.

Key Concepts of Presumption

 1. Nature of Presumption: Presumption, in this context, is defined as an inference
drawn from the known fact to deduce unknown facts. For instance, the
possession of a signed receipt implies payment.

◦ Example 1: Consider a scenario where D borrows PHP 10,000 from C.

After some time, D presents a receipt signed by C to prove that he has
made a payment. Although the actual payment by D is not known, the fact
that he has a receipt suggests that he fulfilled his obligation. If C claims
that he was forced to sign and thus D's debt remains unpaid, it becomes
C's duty to prove this contention.
2. Types of Presumption:

◦ Conclusive Presumption: This is a presumption that stands firm and

cannot be contradicted. An example is the notion that everyone is
presumed to know the law.

◦ Disputable Presumption: This presumption, as applicable in Article 1176,

can be countered with clear evidence to the contrary.

◦ Example 2: Let’s say B owes C PHP 10,000 with an interest rate of 14%
per year. If C issues a receipt only for the principal amount and does not
mention the interest, it is presumed that the interest has been settled
previously because typically, interest payments occur before or alongside
the principal payments. However, this presumption can be disputed if B
can provide evidence showing that the interest was not paid.

Practical Applications of the Article

• The article also addresses situations like rentals. For instance, if E, a tenant, fails
to pay rent for two months (February and March) and pays PHP 5,000 in April
with a receipt stating the payment is for that month, it’s presumed that rent for
February and March has already been paid. This is based on the common
practice that prior dues are typically settled before newer payments are
accounted.
Limitations of the Presumption

While Article 1176 provides these beneficial presumptions, there are specific caveats:

1. Reservation of Interest: If a receipt explicitly states that interest or prior

payments remain reserved, the presumption does not apply.
 2. Partial Payments: If a receipt is for only a part of the principal, it does not imply
that interest has been paid. The presumption only applies when the entire
principal is receipted for.

3. Indeterminate Receipts: If a receipt does not specify which installment it

pertains to, it cannot be presumed that earlier obligations have been fulfilled.

4. Tax Payments: Payments related to taxes do not fall under this presumption as
taxes are not considered installments of the same obligation.

5. Proven Non-Payment: If it can be demonstrated that prior obligations have not

been settled, the presumptions established in Article 1176 cannot be invoked.

Conclusion

Article 1176 serves to establish a framework where creditors are presumed to have
received all due payments when they issue receipts, favoring the debtor by
safeguarding them from claims of unpaid debts. The article also details essential
exceptions and context in which these presumptive rights can be enforced or contested,
illustrating a balanced approach to managing obligations and protecting the interests of
both parties involved in financial transactions.

Understanding Article 1176: Presumptions in Obligations

Article 1176 establishes that when a creditor receives a payment without mentioning
any reservations about interest or prior installments, it is presumed that those amounts
have been paid. This helps protect debtors from ongoing claims of unpaid debts.

Key Points:

1. What is Presumption?

◦ Presumption means inferring something not directly known based on

related facts. For example, if D shows a receipt signed by C, it suggests D
has paid the debt, even if C later claims otherwise.

2. Types of Presumption:
 ◦ Conclusive Presumption: Cannot be contradicted (e.g., everyone knows
the law).

- (Initial Assumption: When a creditor demands payment, the debtor is

automatically assumed to be not paying on time. This is the starting
point.)

◦ Disputable Presumption: Can be challenged with evidence (e.g., if B

owes C PHP 10,000 and C gives a receipt for the principal only, it’s
presumed the interest is paid, but B can prove otherwise).

(Providing Evidence: If the debtor believes they have paid or have a

valid reason for not paying, they can present proof.)

3. Practical Example:

◦ If E owes rent for February and March but pays PHP 5,000 in April with a
receipt for April's rent, it’s presumed that the earlier months' rent has been
paid.
Limitations:

• Reservation of Interest: If a receipt states that interest is reserved, the

presumption doesn’t apply.
• Partial Payments: Presumption only applies when the entire principal is paid,
not just part of it.
• Indeterminate Receipts: If a receipt doesn’t specify which payment it covers,
the presumption doesn’t hold.
• Tax Payments: Article 1176 does not apply to tax payments.
• Proven Non-Payment: If it’s proven that prior payments weren’t made, the
presumption is invalid.

Conclusion

Article 1176 helps clarify that when payments are received without reservations, it’s
assumed all dues are settled, benefiting debtors while also outlining specific exceptions
to this rule.

NOTE: All receipts for loans, installments, or any forms of debt, Creditors should use
clear language in receipts to specify any unpaid amounts, include a summary of
payment history, and review the receipt before issuing it to avoid misunderstandings.
Article 1177 of the Civil Code outlines the remedies available to creditors when a
debtor fails to fulfill their obligations. It provides several actions creditors can take to
recover what is owed to them. Let’s discuss each of these remedies in detail:

Remedies Available to Creditors:

1. Exact Fulfillment (Specific Performance) with Damages:

◦ If a debtor does not fulfill their obligation, the creditor can demand specific
performance. This means the creditor can ask the court to compel the
debtor to perform the obligation exactly as agreed.
◦ Additionally, the creditor may seek damages for any harm suffered due to
the debtor's failure to perform.
2. Pursue the Leviable Property of the Debtor:

◦ The creditor can go after the debtor's property that is not exempt from
attachment or execution by law. This means seizing and selling the
debtor's assets to satisfy the debt.
3. Exercise the Rights and Actions of the Debtor:

◦ After trying to collect from the debtor's property, if there isn't enough to
cover what is owed, the creditor can take over some of the debtor's rights
to get what they are owed. This means the creditor can, for example,
collect money that other people owe to the debtor. However, the creditor
cannot take over rights that are personal to the debtor, like the right to vote
or have a specific job.
◦ This remedy is known as accion subrogatoria in Spanish law.

4. Impugn(challenge) Fraudulent Acts by the Debtor:

◦ If a debtor sells their property for less than it's worth or gives it away to
avoid paying their debt, the creditor can ask the court to cancel those
transactions. This way, the creditor can get back the property that was
unfairly moved away.
◦ This is known as accion pauliana in Spanish law.

Quantitative Examples:

• Example 1:
Let’s assume Debtor D owes Creditor C ₱300,000. D fails to pay this amount by
the due date. Here’s how each remedy might apply:
◦ Specific Performance and Damages: C can sue D for the ₱300,000
owed and any additional damages caused by D’s failure to pay on time.
◦ Pursue Leviable Property: D owns a car worth ₱160,000. C can request
that the court seize and sell this car. The ₱160,000 from the sale would be
used to partially satisfy the debt.
 ◦ Exercise Debtor’s Rights: D has a right to collect ₱40,000 from X, who
owes D money. C can take legal action to collect this ₱40,000 directly from
X to further reduce the debt.
◦ Impugn Fraudulent Acts: Before the debt became due, D sold land worth
₱200,000 to Y. If C proves the sale was made to defraud creditors (e.g.,
sold for much less than its value), the court can void the sale, allowing C
to access this property to satisfy the remaining debt.

In all these remedies, the goal is to provide creditors with means to recover their due
amounts, while also balancing the rights of debtors. The law ensures that the debtor’s
personal rights remain protected and that any remedy pursued by the creditor must be
justified and lawful.

Article 1178 Discussion: Transmissibility of Rights

Article 1178 of the Civil Code addresses whether rights acquired from an obligation can
be transferred or assigned to others. Here’s a breakdown of its key points:

General Rule

Rights Acquired Are Transmissible

In general, if someone acquires a right through an obligation, they can transfer that right
to another person. For example, if a person has a right to collect a debt, they can sell or
transfer that right to someone else unless there is a specific agreement or law that
prohibits this.

Exceptions

1. Prohibited by Law:
When prohibited by law, like the rights in partnership, agency, and commodatum which
are purely personal in character. example:

• Partnership Rights: If you're part of a business partnership, you can't transfer

your share or rights to someone else without permission.

2. Prohibited by Agreement:
Sometimes, parties involved in an obligation might agree that rights cannot be
transferred. For example:

• A contract might specify that the right to collect a debt cannot be assigned to
another person.
• Another example could be an agreement that if the creditor dies, their right to the
obligation ends, which prevents the right from being transferred to heirs or
others.
Practical Example

Let’s apply this with numbers:

1. Debt Collection: If A has a right to collect $10,000 from B and A wants to

transfer this right to C, A can do so unless the contract or law says otherwise. If
there’s no prohibition, C can now collect $10,000 from B.
2. Lease Option: If E is given a $50,000 option to buy a property and E transfers
this option to X, X can buy the property for $50,000 if there are no restrictions.

Article 1178 ensures that rights obtained from obligations are generally
transmissible, except when prohibited by law or explicitly stated in the
agreement. This rule supports the flexibility and continuity of rights in legal
relationships, while still allowing for limitations when necessary.

In essence, Article 1178 means that rights acquired through obligations are usually
transferable, but there are exceptions based on legal restrictions or specific
agreements between parties.

Discussion on Article 1179: Types of Obligations and Their Demandability

Article 1179 of the Civil Code explains when obligations can be demanded immediately.
It covers both pure obligations and conditional obligations, and their respective
characteristics.

1. Pure Obligations

A pure obligation is one that is not subject to any condition or specific date for
performance. This means that the obligation can be demanded immediately.

Example 1:
D agrees to pay C $10,000. If there is no condition or specific date mentioned for this
payment, C can demand the $10,000 from D right away.

Example 2:
D promises to pay C $26,900 "upon demand." This means C can ask for the payment
whenever they choose, and D must comply immediately.

In both cases, the obligations are considered immediately demandable because they
are pure and not subject to any conditions.

2. Conditional Obligations
A conditional obligation depends on a future and uncertain event. The obligation’s
existence or fulfillment is conditional on whether this condition happens.

Types of Conditions:

1. Suspensive Condition:
The obligation only arises if the condition is fulfilled. Until the condition happens,
the obligation is not enforceable.
Example 3:
D agrees to give C $10,000 if C wins a specific lawsuit. If C does not win the
lawsuit, D has no obligation to pay. The obligation to pay only arises if C wins.

(In summary, a bet can be an example of a suspensive condition if the outcome

determines whether an obligation arises. If the condition is fulfilled but the obligor
cannot pay or perform, the non-defaulting party can seek remedies such as damages,
specific performance, rescission, or termination of the contract, depending on the
situation and the nature of the obligation.)

2. Resolutory Condition:
The obligation is valid now, but it will be terminated if the condition is fulfilled.
Example 4:
D donates a piece of land to C, with the condition that C must build a public park
on it within six months. If C fails to build the park, D can cancel the donation, and
the land will return to D.

Quantitative Examples

1. Pure Obligation:

◦ Scenario: D owes C $5,000 with no conditions attached.

◦ Outcome: C can demand the $5,000 immediately, and D must pay it.
2. Suspensive Condition:

◦ Scenario: D will give C $2,000 if C passes an exam by the end of the

year.
◦ Outcome: C cannot demand the $2,000 until the exam results are known.
If C fails the exam, D is not required to pay.
3. Resolutory Condition:

◦ Scenario: D sells a car to C with the condition that if C fails to pay a

$1,000 debt owed to a third party by the end of the month, the sale will be
void.
◦ Outcome: If C does not pay the $1,000, the sale is canceled, and D can
reclaim the car.
In summary, Article 1179 helps determine when an obligation can be immediately
demanded based on whether it is pure or conditional. Pure obligations are immediately
demandable, while conditional obligations depend on the fulfillment of specific
conditions.

Article 1180: Obligations with a Period

Overview:

Article 1180 of the Civil Code deals with obligations that are contingent upon the
debtor's financial ability. It essentially addresses cases where the debtor commits to
fulfilling an obligation when their financial situation allows. This situation is classified as
an obligation with a period.

Key Points:

1. Nature of the Obligation:

◦ When a debtor promises to pay "when his means permit him to do so,"
this creates an obligation with a period. This means the obligation is
subject to a time frame that hinges on the debtor's ability to pay, which is
not strictly defined at the outset.
2. Court’s Role:

◦ If the debtor and creditor cannot agree on the specific time for payment,
the court has the authority to determine it. This is because the obligation is
inherently flexible regarding the payment timeline but still requires
eventual resolution.
Example 2:

• Scenario: A company, XYZ Corp., promises to pay its supplier, ABC Ltd., in
partial payments "as soon as the company has the funds available."
• Explanation: XYZ Corp.’s obligation to pay is structured around its financial
capacity. The payments will be made in installments based on the company's
cash flow. If the company faces difficulties and cannot make payments on time,
the supplier might request the court to set a definitive schedule for payments.

Article 1180 outlines how obligations are considered to have a period when the payment
is dependent on the debtor's financial condition. The flexibility of these obligations
means that the exact timing of payment is Conditional upon the debtor's ability to pay,
and if disagreements arise, the court may intervene to establish a timeline.

Article 1181: Conditional Obligations

Overview: Article 1181 explains how conditional obligations work, focusing on two types
of conditions: suspensive and resolutory. These conditions affect the acquisition or loss
of rights.

Key Points:

1. Suspensive Condition:
◦ Definition: The obligation depends on a future event happening. The
obligation is effective only if this event occurs.
◦ Acquisition of Rights: The creditor gets rights only when the condition is
fulfilled. If the condition does not happen, the obligation doesn’t take
effect.
◦ Example: Alice will give Bob a property if Bob passes an exam. If Bob
doesn’t pass, Alice doesn’t have to give the property.
2. Resolutory Condition:

◦ Definition: The obligation ends or rights are lost when a future event
occurs.
◦ Loss of Rights: Rights previously established are terminated if this event
happens.
◦ Example: David sells land to Eva but can repurchase it within two years. If
David repurchases it, Eva loses ownership.

Effect of Non-Compliance:

• Suspensive Conditions: If the condition doesn't happen, the obligation is never

in effect.
• Resolutory Conditions: If the condition is met, the obligation or rights are
automatically terminated.
Illustrative Cases:

1. Suspensive Condition Example: A business promises a bonus if it hits a

revenue target. If the target isn’t met, no bonus is given.

2. Resolutory Condition Example: A property donation is valid only if used for

educational purposes. If not used as required, the donor can reclaim it.

Summary:

Article 1181 differentiates between suspensive and resolutory conditions in obligations.

Suspensive conditions delay the effectiveness of an obligation until a specific event
occurs, while resolutory conditions extinguish existing rights upon the occurrence of a
future event. Understanding these conditions helps clarify how and when rights and
obligations come into effect or are terminated.
Article 1182 outlines the rules for conditional obligations where the fulfillment of the
condition impacts the obligation's validity.

Key Points:

1. Void Conditional Obligation (Condition Depending on Sole Will of Debtor): If

the fulfillment of a condition is dependent solely on the will of the debtor, the
conditional obligation is considered void. This is because the obligation’s validity
and performance cannot be ensured as it is left to the debtor’s discretion, which
makes it legally non-enforceable.

2. Valid Conditional Obligation (Condition Depending on Chance or a Third

Person): If the condition depends on chance or the will of a third person, the
obligation will take effect in accordance with the provisions of the Civil Code.

Classifications of Conditions:

1. As to Effect:

◦ Suspensive: The condition gives rise to the obligation when it happens.

◦ Resolutory: The condition extinguishes the obligation when it happens.
2. As to Form:

◦ Express: The condition is clearly stated.

◦ Implied: The condition is inferred from circumstances.
3. As to Possibility:

◦ Possible: The condition is capable of being fulfilled, legally and physically.

◦ Impossible: The condition cannot be fulfilled, legally or physically.
4. As to Cause or Origin:

◦ Potestative: The condition depends on the will of one of the contracting

parties.
◦ Casual: The condition depends on chance or the will of a third person.
◦ Mixed: The condition depends partly on chance and partly on the will of a
third person.
5. As to Mode:

◦ Positive: The condition involves the performance of an act.

◦ Negative: The condition involves the omission of an act.
6. As to Number:

◦ Conjunctive: Several conditions must all be fulfilled.

◦ Disjunctive: Only one or some of the several conditions must be fulfilled.
 7. As to Divisibility:

◦ Divisible: The condition can be partially performed.

◦ Indivisible: The condition cannot be partially performed.
Potestative Condition:

• Nature: A potestative condition is suspensive and depends solely on one of the

contracting parties' will. If the condition is potestative and suspensive, it is void
because it leaves the obligation’s fulfillment to the debtor's discretion.
Examples of Invalid Potestative Conditions:

1. “I will pay you if I want.”

2. “I will pay you after I receive a loan from a bank.”
Illustrative Cases:

1. Payment upon Sale: Payment dependent upon the sale of property is void if the
sale depends solely on the debtor's will.

Resolutory Conditions:

• If a resolutory condition depends on the debtor's will, the obligation remains valid.
The condition only affects the extinguishment or loss of the rights already
acquired.
Example:

• A contract for employment that can be canceled if machinery is not delivered

within a specified period is valid as it is resolutory in nature and depends on an
external event rather than solely on the employer's discretion.

In a suspensive condition, the obligation only arises when the condition is

fulfilled. If the condition depends solely on the debtor's will, it’s void under
Article 1182 because it gives the debtor too much control over whether the
obligation will ever start.
In a resolutory condition, the obligation is in effect from the beginning, and
the condition only determines when the obligation ends. The obligation is
valid because it is already in force, and the debtor's control over the condition
only impacts its termination.

If the condition is based on chance or the decision of a third person, the

obligation will take effect as per the Civil Code.
These conditions are valid because neither party can manipulate the outcome,
and it introduces fairness into the contractual relationship.

In summary, Article 1182 emphasizes that conditions dependent solely on the will of
the debtor render the obligation void, while those dependent on chance or third
parties are valid if they align with the Civil Code's provisions.

Article 1183 of the Civil Code addresses the impact of impossible conditions on
contractual obligations. Here's a simplified overview:

Types of Impossible Conditions:

1. Physically Impossible Conditions: Tasks that are naturally impossible to

complete (e.g., flying unaided).
2. Legally Impossible Conditions: Actions that are illegal or against public policy
(e.g., committing a crime).
Effects on Obligations:

1. Void Obligation: If a contract's obligation depends on an impossible condition,

the obligation is void because it can't be fulfilled.

◦ Example: "I will give you a car if you walk on water." This is impossible, so
the obligation is void.
2. Valid Obligation (Negative Condition): If the condition is not to do something
impossible, the condition is ignored, and the obligation is valid.

◦ Example: "I will give you $5,000 if you do not fly unaided." Since flying
unaided is impossible, the condition is ignored, and the promise is
unconditional.
3. Divisible Obligations: If part of an obligation depends on an impossible
condition, only that part is void, while the rest remains valid.

◦ Example: "I will give you $10,000 if you sell my land, and a car if you kill
someone." The first part is valid, but the second is void due to its illegality.
4. Pre-existing Obligations: If a valid obligation already exists, adding an
impossible condition later does not void the original obligation.

◦ Example: "You owe me $1,000, and you only need to pay if I fly unaided."
The flying condition is void, but the original $1,000 debt remains.
Key Point:
Article 1183 ensures fairness by voiding obligations that are based on impossible
conditions, but it keeps valid obligations intact when only part of them is impossible or
when they existed before the impossible condition was added.

(If an obligor fails to fulfill their obligation in a valid conditional obligation (negative
condition), they may face legal consequences, including:

1. Civil Liability: The obligor may be required to pay damages to the obligee (the
person they promised to fulfill the obligation). This compensation is meant to
cover any losses or harm caused by the obligor's failure to meet their obligation.

2. Specific Performance: The court may order the obligor to fulfill their original
obligation if it is still possible and appropriate. This means the obligor is legally
compelled to do what they promised to do.)

Discussion on Article 1184

Article 1184 deals with obligations that depend on an event happening within a set
timeframe. If the event does not occur by the deadline or it becomes clear that it will not
occur, the obligation is extinguished.

Key Points:

1. Positive (Suspensive) Conditions: These obligations are on hold until a

specific event happens within a set period.

2. Extinguishment of the Obligation:

◦ Time Expiry: If the deadline passes without the event occurring, the
obligation is extinguished.
◦ Indubitable Non-occurrence: If it becomes clear that the event will not
happen before the deadline, the obligation is extinguished.
Examples:

• By Time Expiry:

◦ Scenario: A promises B $5,000 if B completes a project by December 31,

2024.
◦ Outcome: If B does not complete the project by December 31, 2024, A’s
obligation to pay $5,000 is extinguished because the time has expired.
• By Indubitable Non-occurrence:

◦ Scenario: X promises Y $10,000 if Y marries Z before turning 30.

◦ Outcome: If Y dies at age 28 without marrying Z, X’s obligation to pay
$10,000 is extinguished immediately, even though Y has not yet turned 30.
Application: Article 1184 applies to obligations that depend on the occurrence of an
event within a specific timeframe. It ensures obligations are only valid if the conditions
are met within the agreed period or if it becomes clear they will not be met.

Conclusion: Article 1184 ensures fairness by extinguishing obligations when the event
is not met within the specified time or becomes clear it won’t happen.

Discussion on Article 1185

Article 1185 deals with obligations dependent on a negative condition—that an event

will not happen within a specific timeframe. If the event does not occur by the deadline
or if it becomes clear that the event cannot happen, the obligation becomes effective.

Key Points:

1. Negative Condition:
◦ Deadline Elapsed: If the time set for the event to occur passes and the
event has not happened, the obligation is triggered.
◦ Event Evident: If it becomes clear before the deadline that the event
cannot happen, the obligation is triggered immediately.
2. No Fixed Time: If no specific time is set, the obligation becomes effective when
it is reasonably expected, considering the nature of the obligation.

Examples:

• Fixed Time:

◦ Scenario: X promises to give Y $10,000 if Y is not married to W by

December 30.
◦ Outcome:
▪ If Y marries W on or before December 30, X is not liable.
▪ If Y is not married to W by December 30, or if Y marries W after
December 30, X must pay $10,000.
▪ If W dies before December 30 and Y is not married to W, the
obligation becomes effective immediately upon W’s death.
• No Fixed Time:

◦ Scenario: X promises to pay Y if Y does not get a specific job (let’s say a
job at a particular company) within a reasonable period.
◦ Outcome: If it becomes clear Y will not get that job within a reasonable
time frame, the obligation is triggered.

Application: Article 1185 applies to obligations dependent on whether something does

not happen within a given time or becomes clear it will not happen. It ensures
obligations are enforced when the condition is met or when it’s obvious that the
condition cannot be fulfilled.