Amen | Compiled Notes
Civil Law Review 2
NOTES
I. OBLIGATIONS
A. In General
1. Definition
Art. 1156. An obligation is a juridical necessity to give, to do or not to do. Notes:
What is the definition of an obligation? It is best defined by Arias Ramos which reads as follows, “an OBLIGATION is a juridical relation whereby a person (called the creditor) may demand from another (called the debtor) the observance of a determinate conduct, and, in case of breach, may obtain satisfaction from the assets of the latter”. This means that where there is a right or power to demand, there is a correlative obligation or an imposition upon a person of a definite conduct.
What are the elements of obligation? It has four definite elements as follows:
1. an active subject, who has the power to demand the prestation, known as the oblige or creditor;
2. a passive subject, who is bound to perform the prestation, known as the obligor or debtor;
a. These two, the active and passive subjects are considered as the personal elements of an obligation.
b. They could be an individual person or juridical persons.
c. They must be determinable in some manner. Exceptions are the following examples: (1) negotiable instrument payable to bearer, (2) promise of a prize or a reward for anyone performing a certain act.
3. an object or the prestation;
a. This may pertain not to a thing but to a particular conduct of the debtor; hence, a prestation which may consist in giving (prestation consists in the delivery of a movable or immovable thing) or doing (all kinds of services) or not doing (abstaining from some act, may include not to give) something, e.g. it is not the thing which the vendor must deliver, but the necessary conduct to produce the effects of the sale that is the object. 4. the efficient cause or the juridical tie (vinculum juris) between the two subjects by
reason of which the debtor is bound in favor of the creditor to perform the prestation.
a. This pertains to the juridical or legal tie, which is the vinculum, that may either be a relation established by the following:
i. Law (relation to give support)
ii. Bilateral acts (contracts giving rise to obligation) iii. Unilateral acts (crimes and quasi-delict)
** All the above 4 elements are agreed upon by commentators as essential elements. The following two are being debated.
(i) Causa debendi/ obligationes (Castan) – This is what makes the obligation demandable. This is the proximate why of an obligation.
(ii) Form - This is controversial. This is acceptable only if form means some manifestation of the intent of the parties.
What are the requisites of a prestation?
1. must be possible, physically and juridically;
2. must be determinable or at least determinable according to pre-established elements or criteria; and
3. must have a possible equivalent in money (need not be for one of the parties because it could be for the benefit of third persons; the criterion to determine whether the 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; this is differentiated with creditor’s interest because the latter need not be economic or patrimonial since it may be sentimental 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)
How will you distinguish an obligation from natural obligations? Since the definition above only refers to the civil obligation or those which give a right of action to compel their performance, the same will not include the natural obligation, which are those which cannot be enforced by court action but which are binding on the party who makes them, in conscience and according to equity and natural justice. The differences between the two include the following:
1. Civil obligations derive their binding force from positive law while Natural obligations derive their binding effect from equity and natural justice;
2. Civil obligations can be enforced by court action or the coercive power of public authority while the fulfillment of Natural obligations cannot be compelled by court action but depends exclusively from conscience.
According to Balane: Book IV starts w/ an inaccuracy. It gives the impression that obligations & contracts are of the same status, w/c they are not. A contract is only one of the sources of obligations. Book IV should have been simply titled "Obligations."
Etymology – two Latin words, ligare, meaning "to bind" & ob w/c is a proposition used to intensify a verb. Literally obligare means "to bind securely."
Hence, a better definition would be that, An obligation is a juridical relation (because there are 2 parties) whereby a person should engage or refrain fr. engaging in a certain activity for the satisfaction of the private interests of another, who in case of non-fulfillment of such duty may obtain from the patrimony of the former through proper judicial proceedings the very prestation due or in default thereof, the economic equivalent (damages) that it represents. (Diaz Piero) Characteristics of an Obligation:
1. It represents an exclusively private interest 2. It creates ties that are by nature transitory
3. It involves the power to make the juridical tie effective in case of non-fulfillment through an economic equivalent obtained from the debtor's patrimony.
Essential Elements of an Obligation:
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A creditor generally used in an obligation to give while obligee is used in an obligation to do (2) Passive Subject – This refers to the debtor or the obligor.
debtor is used in an obligation to give while obligor is used in an obligation to do
The first two elements must be determinate or determinable. The following are possible combinations:
Both parties are determined at the time of the execution of the obligation. one party is determined at the constitution of the obligation & the other to be
determined subsequently in accordance with a criteria that is previously established.
the subject is determined in accordance with his relation to a thing & therefore it changes where the thing passes from one person to another. This is a property-linked obligation.
(3) Object of the obligation - the conduct or activity that must be observed by the debtor, this is always an activity or conduct, the prestation.
Requisites of an object: It must be licit. It must be possible.
It must be determinate or determinable.
It must have pecuniary value so that if not performed it is converted into damages. (4) Vinculum juris- the legal tie, whereby upon default or refusal of the debtor to perform, the creditor can go to court.
When a person says "I promise to pay you when I like to," there is no obligation here because there is no vinculum juris.
Juridical tie, the efficient cause established by the various sources of OBLIGATIONS
> by virtue of which the debtor is bound in favor of the creditor to perform the prestation.
Efficient cause / vinculum may either be relation established by:
1. Law (e.g. marital relation giving rise to OBLIGATION for support; 2. Bilateral acts (e.g. contracts give rise to the OBLIGATIONs stipulated
therein)
3. Unilateral acts (e.g. crimes and quasi-delicts)
** All the above 3/4 elements are agreed upon by commentators as essential elements. The following two are being debated.
(i) Causa debendi/ obligationes (Castan) – This is what makes the obligation demandable. This is the proximate why of an obligation.
(ii) Form - This is controversial. This is acceptable only if form means some manifestation of the intent of the parties.
TOLENTINO:
OBLIGATION “to give” prestation consists in the delivery of a movable or an immovable thing in order to create a real right, or for the use of the recipient, or for possession, or to return to its owner; e.g. OBLIGATION to deliver the thing in a contract of sale, deposit, lease, antichresis, pledge and donation.
OBLIGATION “to do” including all kinds of work or services. E.g. contract of employment or professional services.
OBLIGATION “not to do” consists in abstaining from some act, e.g. duty not to create a nuisance;
Requisites of a prestation:
1. it must be possible, physically and juridically 2. it must be determinate, or at least determinable; and
3. it must have a positive equivalent in money. (susceptible of pecuniary appreciation) Positive Law – valid legal laws enacted by the legislative department;
Natural OBLIGATION – not sanctioned by any action but have a relative juridical effect;
do not grant the right of action to enforce their performance but after voluntary fulfillment by their obligor, they authorize the retention of what has been delivered or rendered by reason thereof (Article 1423);
2. KINDS OF OBLIGATIONS AS TO BASIS & ENFORCEABILITY (a) NATURAL OBLIGATIONS
(Arts. 1423 – 1430 not exclusive enumeration; some others can be) H. NATURAL OBLIGATIONS – ARTS. 1423-1430. 1155
Article 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 & natural law, do not grant a right of action to enforce their 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.
Article 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.
Article 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 volun -tarily reimburses the third person, the obligor cannot recover what he has paid.
Article 1426. When a minor between 18 and 21 years of age who has entered into a contract without the consent of the parents 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 the ground for annulment is the incapacity of the plaintiff, he is not bound to make restitution except to the extent that he was benefited. However, he has natural obligation to still deliver, and he cannot thereby recover what he has delivered.
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Ratio: Because a minor at such age is deemed to have sufficient mental and moral development to be aware of his debt of conscience. This is basically independent on the next provision on Article 1427 below.
Illustrations:
1. A filed an action to compel B to fulfill the latter’s obligation to the former, will the action prosper? Not necessarily because in natural obligations 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.
Article 1427. When a minor between 18 and 21 years of age, who has entered into a contract without the consent of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing 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.
Note: It is not the voluntary payment that prevents recovery under this article, but the fact that the obligee has consumed or spent the thing or money in GOOD FAITH. Although it is true that the contract can be annulled, but until it is so annulled, it exists as a civil obligation.
General rule: Upon the annulment of the contract, the party who contracted with the minor must return whatever he may have received under the contract.
Exception: If the payment was made although by the minor, but the thing or money paid was consumed or spent in good faith (belief that the debtor has the capacity to deliver the object; must exist at the time that the thing was consumed or money was spent; can be recovered still by the debtor if the good faith, even if it existed at the time of the delivery, has ceased to exist at the time of consumption or spending).
Is the thing here always have to be consummable? No, because although non-consummable, the debtor cannot recover, if the think is no longer in the possession of the creditor who has acted in good faith, either he has alienated it or it has been lost, without his fault.
Article 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.
Article 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 is valid & cannot be rescinded by the payer.
Article 1430. When a will is declared void because it has not been executed in accordance with the formali-ties required by law, 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 & irrevocable.
Note: This article includes ever licit obligation which is unenforceable because of the lack of proper formalities.
Article 1960. If the borrower pays interest when there has been no stipulation therefor, the provisions of this Code concerning solutio indebiti, or natural obligations, shall be applied, as the case may be.
Article 1956. No interest shall be due unless it has been expressly stipulated in writing.
Why would this Natural Obligation be allowed in our jurisdiction? Itr It is because equality, morality and natural justice as the foundations of a positive law makes wisdom to this obligation so as the so-called moral obligation.
What is the basis of natural obligation? It is from the nature of man and of things, as well as from law and reason, there arises a natural law, which is immutable and independent of all human regulations; as sometimes called as rational law.
What are the types of obligations?
In juridical science, four types of which include the following:
1. Moral obligation- duties of conscience completely outside of the field of law 2. Natural obligation- not sanctioned by any action but have relative juridical effect 3. Civil obligation- juridical obligations which apparently in conformity with positive
law but are contrary to juridical principles and susceptible of being annulled 4. Mixed obligation- have full juridical effect
However, jurisprudence makes only two classifications, as follows: 1. Natural obligation
2. Civil obligation
Requisites of Natural OBLIGATION:
1. there is a juridical tie between two persons (distinguishes it from moral obligation) 2. the tie is not given effect by law (distinguishes it from civil obligation)
an OBLIGATION without a sanction, susceptible of voluntary performance, but not through compulsion by legal means.
Voluntary fulfillment – may be understood as spontaneous, free from fraud or coercion or it may be understood as meaning without knowledge or free from error;
-with knowledge that he cannot be compelled to pay OBLIGATION; RATIO: “reputation” (clan)
-this is being distinguished from payment by mistake (solution indebiti) which constitutes quasi-contract because payment by mistake is not voluntary and hence may be recovered.
-payment here is voluntary when the debtor knew of the obligation to be a natural one. Case: Ansay vs. National Development Company
Facts: On July 25, 1956, appellants filed against appellees in the Court of First Instance of Manila a complaint praying for a 20% Christmas bonus for the years 1954 and 1955. The court a quo does not see how petitioners may have a cause of action to secure such bonus because:(a) A bonus is an act of liberality and the court takes it that it is not within its judicial powers to command respondents to be liberal; (b) Petitioners admit that respondents are not under legal duty to give such bonus but that they had only ask that such bonus be given to them because it is a moral obligation of respondents to give that but as this Court understands, it has no power to compel a party to comply with a moral obligation (Art. 142, New Civil Code.).
Issue: Whether the appellees have the legal obligation to give the claimed bonus despite the fact that the same has been granted arising from a moral obligation or the natural obligation to do the same.
Held: No. Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations are a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof".
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It is thus readily seen that an element of natural obligation before it can be cognizable by the court is voluntary fulfillment by the obligor. Certainly retention can be ordered but only after there has been voluntary performance. But here there has been no voluntary performance. In fact, the court cannot order the performance.
At this point, we would like to reiterate what we said in the case of Philippine Education Co. vs. CIR and the Union of Philippine Education Co., Employees (NUL) (92 Phil., 381; 48 Off. Gaz., 5278) —
x x x x x x x x x
From the legal point of view a bonus is not a demandable and enforceable obligation. It is so when it is made a part of the wage or salary compensation.
And while it is true that the subsequent case of H. E. Heacock vs. National Labor Union, et al., 95 Phil., 553; 50 Off. Gaz., 4253, we stated that:
Even if a bonus is not demandable for not forming part of the wage, salary or compensation of an employee, the same may nevertheless, be granted on equitable consideration as when it was given in the past, though withheld in succeeding two years from low salaried employees due to salary increases. still the facts in said Heacock case are not the same as in the instant one, and hence the ruling applied in said case cannot be considered in the present action.
What are imperfect and perfect obligations? Perfect obligation is one where there is a determination of the creditor, debtor and the nature and value of the obligation while imperfect obligation has no determination of those above.
What is its implication to natural obligation? Perfect obligation is natural obligation in a sense that all those elements have been determined and it is only the performance that is left to the will of the debtor.
Natural OBLIGATION vs. Moral OBLIGATION:
Natural OBLIGATION
Moral
OBLIGATION
Juridical tie Exists None
Performance by
debtor legal fulfillment ofan OBLIGATION act of pureliberality which springs from blood,
affection or
benevolence Basis of existence
of OBLIGATION
Within the domain of law
entirely domain of morals
Enforceability The juridical tie itself produces
certain civil
effects; True
OBLIGATION but for certain causes cannot be enforced by law moral duty is inexistent in the juridical point of view
Examples of natural OBLIGATIONS: Support of a natural child
Indemnification of a woman seduced
Support of relatives, by consanguinity or affinity Case: Villaroel vs. Estrada
Facts: On May 9, 1912, Alexandra F. Callao, mother of defendant John F. Villarroel, obtained from the spouses Mariano Estrada and Severina a loan of P1, 000 payable after seven years. Alexandra died, leaving as the only heir to the defendant. Spouses Mariano Estrada and Severina died too, leaving as the only heir to the plaintiff Bernardino Estrada. On August 9, 1930, the defendant signed a document which
states in duty to the plaintiff the amount of P1, 000, with an interest of 12 percent per year. This action relates to the collection of this amount. The Court of First Instance of Laguna, which was filed this action, condemn the defendant to pay the claimed amount of P1, 000 with legal interest of 12 percent per year from the August 9, 1930 until fully pay.
Issue: Whether the obligation arising from the original contract of loan, being prescribed would still be demandable from the only heir of the original debtor.
Held: Yes because the prescribed debt of the deceased mother of the debtor was held to be a sufficient consideration to make valid and effective the promise of the son to pay the same. Although the action to recover the original debt has prescribed and when the lawsuit was filed in this case, the question that arises in this appeal is primarily whether, notwithstanding such prescription is from the action filed. However, this action is based on the original obligation contracted by the mother of the defendant, who has prescribed, but in which the defendant contracted on August 9, 1930 to assume the fulfillment of that obligation, as prescribed. Being the only defendant of the primitive heir debtor entitled to succeed him in his inheritance, that debt legally brought by his mother, but lost its effectiveness by prescription, is now, however, for him a moral obligation, which is consideration enough to create and effective and enforceable his obligation voluntarily contracted the August 9, 1930.
CIVIL OBLIGATIONS
NATURAL OBLIGATIONS Source of binding
force & effect From positive law
from equity and natural justice Enforceability
can be enforced by court action or the coercive power of public authority
cannot be compelled by court action but depends upon good conscience of the debtor
When can you convert a natural obligation to civil one? This can made through; (1) novation: (2) confirmation or ratification unless contrary to law, morals or public order.
Can you guarantee a natural obligation? In principle, no. because the liability of the guarantor presupposes that there must be a prior exhaustion of the property of the principal debtor, and that the guarantor after paying can recover from the principal debtor—and both of these cannot be legally done when the obligation is natural. The legal consequence of having a guaranty for a natural obligation is to convert the same to a civil obligation because that guaranty will now be subject to some coercive remedies to be enforced against it.
Illicit OBLIGATIONS OBLIGATIONS which are contrary to morals and good customs do not constitute natural OBLIGATIONS, whatever is paid under such OBLIGATIONS can be recovered, without prejudice to the provisions of Articles 1411 and 1412, but Article 1414 may apply.
Illustrations:
1. Differentiate civil obligation from natural obligation: In civil action, the obligation can be enforced by court action; natural obligations cannot be enforced by court action. Civil obligations are based on positive law and natural obligations are based on equity. 2. Example: The debt is 10M, the value of the estate 3M, the
natural obligation is? To pay 7M. The basis of 7M? Under the law, the heir is liable to the extent of the value which they actually received from the decedent, therefore, if they received 3M, they will only be liable for 3M, the 7M will be a natural obligation.
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3. Example: Dated feb.1, 1994, I promise to pay X the amount of 1M, signed by Y. To this day, not a single centavo has been paid. What kind of obligation is the promissory note? It may be considered as a civil obligation when X demanded in writing the payment from Y before the action prescribes because written demand will toll the running of prescription of the obligation. However, if there was no demand, since the obligation is a pure obligation, therefore, demandable at once, the prescriptive period begins to run on feb.2, 1994, 10 years has already lapsed, the action already prescribed, the obligation becomes a natural obligation. Is this promissory note a pure obligation? Yes. Why? Because there is no period stated in the promissory note. Because no period is stated in the promissory note, it is a pure obligation? By express provision of the law, just because the parties failed to state the period in the promissory note, does not necessarily mean that it pertains to a pure obligation, because from the circumstances it can be inferred that the parties shall fix the period, if this is promissory note is a contract of loan it is possible that there is a period. What possible contract may the promissory note be that indeed this may pertain to a pure obligation? A contract of sale. Now having said that, if this promissory note pertains to an obligation with a period, therefore today the obligation in this promissory note, if no demand was made, a natural obligation? Not necessarily, the period of prescription shall be counted from the due date where the obligation must be paid. Because if this is with a period, and the agreement is that the obligation should be paid after five years, today this is still a civil obligation, the prescriptive period shall commence to run from the time the cause of action accrues. 4. IN RELATION TO THE EXAMPLE OF THE HEIR WHO PAID THE
DEBT OF THE FATHER: X died, his heirs are ABC, ABC paid to Y 10M five days after X’s death, after 6 months thereafter the heirs are trying to recover claiming that the estate is only 3M, can the heirs recover the value from Y? They cannot recover if the payment is voluntary. In natural obligation, if the payer voluntarily paid, the creditor has the right to retain what has been paid. The question here is that whether or not the payment is voluntary? Incidentally, in natural obligation if the payer paid without fraud, threat, or any vitiation being employed upon the heirs, the payment is voluntary payment, correct? Not necessarily. When will there be payment without vitiation, yet the payment is not voluntary? What constitutes voluntary payment in natural obligation? The payer knew that he is not compelled to pay but the payer paid, it is a voluntary payment. The more reasonable question here is that is there such a person who is crazy enough to pay even if he has no obligation to pay? Yes, why would he do that? Conscience. Precisely because the obligation is based on justice (but this is not possible here in the Philippines). The more reasonable answer is reputation. But under the facts the payment is voluntary? Not really, because when they paid it was only 5 days after the death of X, by that time normally, they do not know the estate of the decedent.
5. Obligation is defined under Art. 1156 as an obligation to give, to do, or not to do. Is it correct to say that the definition is not accurate; there must be another prestation which is not to give? No, the prestation not to give is included in not to do. Obviously in this definition, there are only three obligations as to prestations, which are? 1. Obligation to give; 2. Obligation to do; and 3. Obligation not to do. Briefly, this definition is criticized because it is incomplete, why is it incomplete? It pertains only to the part of the debtor. To the critics, obligation is a concept that would include both the debt side and the credit side. And you agree to that? Yes sir. The credit side and the debt side are two aspects of an obligation, do you agree to that? Yes. So a credit is an obligation? No, they are actually opposite of each other. The difference is that a person who has a right can compel the other; he cannot be compelled to perform his right. Thus, in Philippine law, rights and obligations are different matters. An obligation therefore may not be waived but a right may be exercised or not.
6. What are obligations without agreement, and 5 situations giving rise to this obligation? These are obligations arising from all other sources besides contract. Thus, in answering the second question, you must cite examples: 1. Payment of damages to the person who was injured by negligence xxx. This is because agreement is required only in contracts, it is not required in all other obligations, is only an essential element of a contract.
7. Therefore considered as essential elements of obligations are? 1. Active subject (creditor or obligee); 2. Passive Subject (debtor or obligor); 3. Juridical tie; and 4. Prestation. Therefore, in a contract of lease, who is active subject and who is the passive subject? The obligation is a reciprocal contract, hence, the passive subject is the lessor in the aspect of delivering the property leased to the lessor, and the active subject is the lessee in the aspect of demanding for the delivery of the thing leased. In a contract of sale, who is the passive subject? It depends, the contract of sale is a bilateral contract, hence as to payment the buyer is the passive subject and the vendor is the active subject, while as to the delivery of the thing sold, the buyer is the active subject while the vendor is the passive subject. Contract resulting to a reciprocal obligation is called? A bilateral contract. The question here is, how come the debtor is considered as the passive subject? He can be compelled to perform the obligation. He is the one to be compelled therefore passive? Under Philippine law, the creditor is the active subject, because if the creditor does not demand for the performance of the obligation there will be no compulsion because if there is no demand, there will be no delay. The debtor is actually favored by law for instance: 1. In an obligation to pay a sum of money without a stipulation as to the place of payment, the place of payment will be where? The place of domicile of debtor.
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8. Mentioned as one of the essential requisites is the prestation, also known as what? The object. Therefore it pertains to a thing? No. Because? The object pertains to conduct.
9. Another essential requisite is the juridical tie, also known as, ad vinculum juris or legal tie or efficient cause. When would there be a juridical tie, what is its purpose? It binds the party to the obligation; there is a juridical tie when one of the sources of obligation is present. These sources of obligations, anyone of them binds the parties. Like for instance, law, it is the law that will bind the parties. What obligation has no juridical tie? Moral obligations.
PRESCRIPTION OF ACTIONS
What is “prescription of actions” means? It is also known as the limitation of actions which refers to the time within which an action may be brought, or some act done, to preserve a right.
What are “Statutes of Limitation”? These are the acts limiting the time within which actions shall be brought. They do not confer any right of action but are enacted to restrict the period within which the right might be asserted. They can be available as defenses but not matters of substantive right. The purpose is to protect the diligent and vigilant not those who sleep on their rights. They are statutes of repose, the object of which is to suppress fraudulent and stale claims from springing up at great distances of time and surprising the parties or their representatives when all the proper vouchers and evidence are lost or the facts have become obscure from the lapse of time or the defect memory or death or removal of witnesses. These contemplate civil actions not criminal actions.
What is the difference between laches and prescription? Laches is concerned with the effect of delay while prescription is concerned with the fact of delay. Laches is principally the question of inequity of permitting a claim to be enforced while prescription is a matter of time. Laches applies to equity while prescription is statutory/law.
Article 1139. Actions prescribed by the mere lapse of time fixed by law.
Note: For example, in computing the prescriptive period if it is a leap year, February 28 and 29 are two separate days.
What is the effect of lapse of time? It has the effect of extinguishing the action. However, this to be availed of as a defense should be pleaded in the answer. The right of prescription however can be waived or renounced. It is deemed waived if not timely raised or pleaded before or during trial. Exception if it is apparent in the pleading itself.
Case: Development Bank of the Philippines vs. Spouses Patricio Confessor
Facts: On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural loan from the Agricultural and Industrial Bank (AIB), now the Development of the Philippines (DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by a promissory note of said date whereby they bound themselves jointly and severally to pay the account in ten (10) equal yearly amortizations. As the obligation remained outstanding and unpaid even after the lapse of the aforesaid ten-year period, Confesor, who was by then a member of the Congress of the Philippines, executed a second promissory note on April 11, 1961 expressly acknowledging said loan and promising to pay the same on or before June 15, 1961. Said spouses not having paid the obligation on the specified date, the DBP filed a complaint dated September 11, 1970 in the City Court of Iloilo City against the spouses for the payment of the loan.
Issue: Whether the validity of a promissory note which was executed in consideration of a previous promissory note, the enforcement of which is barred by prescription may still be demandable.
Held: Yes. The right to prescription may be waived or renounced. Article 1112 of Civil Code provides: Art. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right acquired.
There is no doubt that prescription has set in as to the first promissory note of February 10, 1940. However, when respondent Confesor executed the second promissory note on April 11, 1961 whereby he promised to pay the amount covered by the previous promissory note on or before June 15, 1961, and upon failure to do so, agreed to the foreclosure of the mortgage, said respondent thereby effectively and expressly renounced and waived his right to the prescription of the action covering the first promissory note.
This Court had ruled in a similar case that –
... when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new contract recognizing and assuming the prescribed debt would be valid and enforceable ... .
Thus, it has been held —
Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after the same has prescribed and with full knowledge of the prescription he thereby waives the benefit of prescription. This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to pay the debt. The consideration of the new promissory note is the pre-existing obligation under the first promissory note. The statutory limitation bars the remedy but does not discharge the debt.
A new express promise to pay a debt barred ... will take the case from the operation of the statute of limitations as this proceeds upon the ground that as a statutory limitation merely bars the remedy and does not discharge the debt, there is something more than a mere moral obligation to support a promise, to wit a – pre-existing debt which is a sufficient consideration for the new the new promise; upon this sufficient consideration constitutes, in fact, a new cause of action.
... It is this new promise, either made in express terms or deduced from an acknowledgement as a legal implication, which is to be regarded as reanimating the old promise, or as imparting vitality to the remedy (which by lapse of time had become extinct) and thus enabling the creditor to recover upon his original contract.
Under Article 165 of the Civil Code, the husband is the administrator of the conjugal partnership. As such administrator, all debts and obligations contracted by the husband for the benefit of the conjugal partnership, are chargeable to the conjugal partnership. 5No doubt, in this case, respondent Confesor signed the second promissory note for the benefit of the conjugal partnership. Hence the conjugal partnership is liable for this obligation.
Article 1140. Actions to recover movables shall prescribe 8 years from the time the possession thereof is lost, unless the possessor has acquired the ownership by prescription for a less period, according to Article 1132 and without prejudice to Articles 559, 1505 and 1133.
Article 1132. The ownership of movables prescribes through uninterrupted possession for four years in good faith.
The ownership of personal property also prescribed through uninterrupted possession for 8 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 Article 559 and 1505 shall be observed.
Article 1141. Real actions over immovables prescribe after 30 years. This provision is without prejudice to what is established for the acquisition of ownership and other real rights by prescription.
Note: While an action for reformation of instrument, such as a contract of sale with pacto de retro alleged to be merely an equitable mortgage, is an action based upon a written contract which must be brought within 10 years form the time the right of action accrues (Article 1144), where however, the accrual of such right could not be established it is more logical to apply this provision, Article 1141 because in reality the action seeks to reassert one’s title of ownership over the real property, not to recover the same.
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Note: The fact that the mortgage is registered does not make its action to foreclose imprescriptible.
Article 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 action to abate a public or private nuisance.
Note: Also included in the list is that provided for in Article 494 of the Civil Code which allows no prescription to run in favor of a co-owner or co-heir against co-owners or co-heirs so long as he expressly or impliedly recognize the co-ownership because the possession of each of the co-owner or co-heir is in the nature of a subsisting trust and considered to be in the name of the other.
Exception: It will prescribe if the co-owner or co-heir has possessed the property as exclusive owner for a period sufficient to acquire the property by prescription.
Other imprescriptible actions:
1. Action by the government or a governmental entity; 2. Action for mandamus;
3. Action to enforce an express trust as long as the trustee does not repudiate the trust; 4. Action to quiet title of the property in one’s possession;
5. Action or defense to declare a contract or judgment void ab initio; 6. Action of the registered owner to recover his land.
Article 1144. The following actions must be brought within 10 years from the time the right of action accrues:
1. Upon a written contract;
2. Upon an obligation created by law; and 3. Upon a judgment.
Note: Remember that the action for reconveyance of the title to the rightful owner prescribes in 10 years from the issuance of the title. But is fraud has been committed, and this is the basis of action, not implied trust, the action will be barred after four years from the discovery of the fraudulent act.
Article 1145. The following actions must be commenced within 6 years: 1. Upon an oral contract;
2. Upon a quasi-contract.
Article 1146. The following actions must be instituted within 4 years: 1. Upon an injury to the rights of the plaintiff;
2. Upon a tort or quasi-delict. *An action based on fraud.
Note: Example of injury to the rights of the plaintiff is when there is an unjustified separation from employment. Example of actions of tort or quasi-delict is; where real property belongs in ownership to D and over which he was and has always been in possession but by mistake of the cadastral clerk came to be titled in 1935 in the name of L, who had never claimed it and knew all along that he was not the owner but only had a paper title thereto, never bothered to disturb the possession of D until 1948 when he sought to do so, thereafter filing his reinvindicatory action to recover the land from D in 1949, the counterclaim for reconveyance contained in the answer of D has been filed within the period to recover on a quasi-delict.
Article 1147. The following actions must be filed within one year: 1. For forcible entry and detainer;
2. For defamation.
Article 1148. The limitations of actions mentioned in Articles 1140 to 1142 and 1144 and 1147 are without prejudice to those specified in other parts of this Code, in the Code of Commerce, and in special laws. Article 1149. All other actions whose periods are not fixed in this Code or in other laws must be brought within 5 years from the time the right of action accrues.
Note: The right to collect taxes is imprescriptible.
Article 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.
Note: It is to be computed from the day on which the corresponding action could have been instituted. It is the legal possibility of bringing the action which determined the starting point for the computation of the period. The period should not be made to retroact to the date of execution of contract.
The commencement of cause of actions:
1. Closing of windows- the period of prescription for the action to close must be counted from the day they were opened.
2. Obligation to pay upon receipt of an inheritance by the debtor- from the date of such receipt because when the obligation is subject to a suspensive condition, prescription begins to run from the happening of the condition.
3. Obligation without maturity date or note payable on demand- from the date of the note or obligation NOT from demand.
4. Unpaid balance of a subscription to shares of a corporation- from the date of call or demand.
5. Payment of money within a year but with privilege of extension- from the end of the first year.
6. Action based on fraud- from the discovery of fraud.
7. Quasi-delict- from the day the quasi-delict accrued or was committed.
8. Action for partition and reconveyance based on implied or constructive trust- from the date of issuance of the original certificate of title because registration is notice to the world.
9. Period to claim inheritance- until a 3rd person claims a right under such instrument. 10. To set aside simulated written deed of pacto de retro sale- when the alleged vendees
made known their intention by overt acts not to abide by the true agreement NOT from the date of execution of contract.
Article 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.
Note: This is applicable only when the principal debt is already due. But where there exist a past due mortgage which was recognized by payments of interest, prescription ran only from the past payment of interest.
Article 1152. The period for prescription of actions to demand the fulfillment of obligations declared by a judgment commences from the time the judgment became final.
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Note: Judgment will only become final upon the expiration of the period for appeal in the trial court. But in the SC or CA, the true judgment is that entered by the Clerk of that Court pursuant to the dispositive portion of its decision. The period is 10 years from such entry or period under Article 1144.
Article 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.
Note: The period of prescription begins to run in an action to compel an accounting by a joint account partner, from the date of the retirement of the members. For accounts, the following rules apply:
1. For mutual current accounts, it begins to run on the date of the last item, no matter how far back the account commenced.
2. For simple current open accounts, it begins to run from the date of each particular item.
3. Current account guaranteed by mortgage executed in a public instrument, it begins to run from the date of the last payment.
4. When the accounting has been made between the parties in their current account dealings, the right of action, and prescription begins to run on the date when the last balance of prescription was struck and NOT when the business relations terminated. Article 1154. The period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him.
Note: There is only interruption of the running of prescription when the courts cannot be kept open and are not within the reach of the people. The Statute of Limitations does not operate against the Government. An example of interruption is the destruction of records of the case. Article 1155. The prescription of actions is interrupted (1) when they are filed before the court, (2) when there is written extra-judicial demand by the creditors, and (3) when there is any written acknowledgment of the debt by the debtor.
Note: For the first interruption, it lasts during the pendency of the action and runs anew after the dismissal of the first action to revive judgment. When interruption of action is legally commenced? It is from the time the complaint is docketed in Court. How about if the prescription is interrupted by a judicial demand? The full period for the prescription must be reckoned from the cessation of the interruption.
When there is no suspension in filing of action in court? 1. When the plaintiff desist
2. Amendment of the complaint with new or different cause of action 3. New or additional defendants
For the second interruption, it is so because since the extinctive prescription is based on presumed abandonment of a right, it is obvious that the running of the period should be interrupted when a demand is made by the creditor upon the debtor before the lapse of the period fixed by law, with the burden of proof on the former. It must also be written.
For the third interruption, it is so if the acknowledgment is in writing. Does it always have to be express? Not so because it can be implied therein, provided it is written and must apply to a particular or specific debt. Examples are the following:
1. A promise to pay a debt.
2. Listing of mortgage indebtedness by the debtor in his schedule of liabilities filed in insolvency proceedings.
3. Statement by one of the maker of a PN that he supposed he would have to pay it, if the amount could not be gotten out of the estate of other drawer.
4. Notation in the handwriting of the maker to the effect that such note was renewed. * Can be made even by a legal representative.
Instances that there is no acknowledgment of debt
1. Mere offer to compromise a suit upon a supposed debt.
2. Debtor acknowledging receipt of a statement of account but declines to recognize the correctness of the account being exorbitant.
3. Acknowledgment of the obligation after it has already prescribed. There must be a new and positive promise to pay in order to nullify prescription.
4. Part payment of debt. 5. The death of the debtor. 6. The transfer of right to another.
7. The institution of criminal action cannot have the effect of interruption the institution of civil action based on quasi-delict.
8. Order to stay execution of judgment. 9. Confinement in jail.
What is the effect of acknowledgment? It will renew the obligation of the debtor and interrupts the prescription and make it run only from such acknowledgment. Example, if the decedent makes a will but invalid as to its form but in there he acknowledge the debt in favor of A, the prescription runs against the claim from the date of the making of invalid will and NOT from the date of death.
(b) CIVIL OBLIGATIONS:
Article 1157. Obligations arise from: (1) Law; (OBLIGATIONS ex lege) (2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and (5) Quasi-delicts.
SOURCES OF OBLIGATIONS: 1. LAW:
Article 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book.
an agreement is not necessary in order that a party may demand from another the fulfillment of an OBLIGATION arising from the application of a law in the circumstances;
Balane: Law as a source of obligation – It is my opinion that there is an overlap in the enumeration because all obligations arise from law. Law is the only source of obligation, in the ultimate sense. But, as a proximate source, there are five sources of obligations. Law is both the ultimate & a proximate source of obligations.
Sources of Obligations according to Sanchez Roman. Law & Acts. The latter are further classified, as follows:
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(1) licit acts created by concurrence of wills (contracts);
(2) licit acts either voluntary or involuntary without concurrence of wills (quasi-contract); (3) illicit acts of civil character which are not punishable, voluntary or involuntary (torts & all damages arising from delay);
(4) illicit acts which are voluntary & are punishable by law (crimes)
Baviera: When the source of the obligation is Law, there is no need for an act or omission for the obligation to arise.
CASE: Sagrada Orden De Predicadores Del Santismo Rosario De Filipinas vs. National Coconut Corporation, June 30, 1952, J. Labrador.
Facts: Plaintiff owned disputed property in Pandacan, Manila which was acquired during the Japanese occupation by Taiwan Tekkosho with TCT. When the Philippines was ceded to USA, the same was entrusted to Alien Property Custodian, APC by the US government. APC took possession, control and custody under the Trading with the Enemy Act. APC allowed Copra Export Management Co. to occupy the property for a fee. RP (Republic of the Philippines) later made representation with APC to use the same property with warehouse which was repaired by NACOCO (National Coconut Corp.) and was leased to Dioscoro Sarile. The latter failed to pay rentals on the property. In an action to recover possession of the property, the court nullified the sale to Taiwan Tekkosho and cancelled its TCT and ordered reversion of title to plaintiff, and right of recovery from NACOCO of rentals to the property.
ISSUE: WON NACOCO is liable to pay back rentals?
HELD: If defendant-appellant is liable at all, its obligations must arise from any of the 4 sources of obligations, namely, law, contract or quasi contract, crime, or negligence. (Article 1089, Old Civil Code.) To determine such, the following must be understood:
As to crimes: Defendant-appellant is not guilty of any offense at all, because it entered into the premises & occupied it with the permission of the entity which had the legal control & administration thereof, the Alien Property Administration (APA).
As to Quasi-Delict: Neither was there any negligence on its part.
As to Contract: There was also no privity (of contract or obligation) between the APA & Taiwan Tekkosho, which had secured the possession of the property from the plaintiff-appellee by the use of duress, such that the Alien Property Custodian or its permittee (defendant-appellant) may be held responsible for the supposed illegality of the occupation of the property by said Tekkosho.
The APA had the control & administration of the property not as successor to the interests of the enemy holder of the title, the Taiwan Tekkosho, but by express provision of law.
Neither is it a trustee of the former owner, the plaintiff-appellee herein, but a trustee of the US Govt., in its own right, to the exclusion of, & against the claim or title of, the enemy owner. From Aug. 1946, when def.-appellant took possession, to the date of the judgment on 2/28/48, the APA had the absolute control of the property as trustee of the US Govt., with power to dispose of it by sale or otherwise, as though it were the absolute owner.
Therefore, even if defendant were liable to the APA for rentals, these would not accrue to the benefit of the plaintiff the old owner, but the US Govt.
Balane: Is the enumeration in Article 1157 exclusive or merely illustrative?
Doctrine: The sense that the case of Sagrada Orden tells us is that the enumeration is exclusive.
In resolving the issue of whether the defendant should be liable to pay rentals, the SC used the process of exclusion. For there to be an obligation to pay rentals, that obligation must arise from any of the five (5) sources of obligations. If it does not, then there is no obligation. The clear implication of this ruling is that, these five (5) are the only sources of obligations.
The problem with Article 1157 is that it might not cover all situations. For example: Carale uses Dove as his soap. He then hears an advertisement from Proctor & Gamble that it is offering a nice tumbler for those who can collect 30 wrappers of Tide before Feb. 29, 1996. So, Carale stopped using Dove & started using Tide. He was able to consume all 30 wrappers on Feb. 29, 1996. He then went to Proctor & Gamble (P & G) to exchange the 30 Tide wrappers for a
tumbler. But P & G told Carale that their tumblers run out of stock. Carale contracted a skin allergy as a result of using Tide in taking a bath. The question is: Does P & G have any obligation to Carale. If we look at Article 1157, this situation does not fall in any of the five sources. So, we know have a problem. The German Civil Code (BGB) covers this situation. The BGB has a sixth source of obligation, the Auslobung, which means a unilateral offer.
2. CONTRACTS:
Article 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.
Article 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
Negotiation of contract is initiated by an OFFER;
Autonomy of Contract supposing the contract is valid and enforceable, the terms of contract not contrary to law, morals, GC, PP or PO, the stipulations therewith should be given effect. (One of fundamental principles of contracts)
Balane: There are two parts in Article 1159.
Obligations derived from contract has the force of law between the contracting parties (jus civili )
There must be compliance in good faith (jus gentium.)
CASE: People’s Car Inc. vs. Commando Security Service Agency, May 22, 1973, J. Teehankee.
Facts: On April 5, 1970, Commando Security Service Agency’s security guard on duty at the premises of People’s Car Inc., without authority, consent, approval, knowledge or orders from People’s Car and/or Commando Security brought out from the compound a car belonging to a customer and drove said car for a place or places unknown, abandoning his post as such security guard, and while so driving, lost control of said car, causing the same to fall into a ditch. The customer, Joseph Luy had to rent another car. People’s Car incurred actual damages of P8, 489.10. People’s Car sued Commando Security for reimbursement.
Issue: WON Commando security is liable to damages in accordance with provisions of contract
Held: YES. Plaintiff was in law liable to its customer for the damages caused the customer's car, which had been entrusted into its custody. Plaintiff therefore was in law justified in making good such damages and relying in turn on defendant to honor its contract and indemnify it for such undisputed damages, which had been caused directly by the unlawful and wrongful acts of defendant's security guard in breach of their contract. As ordained in Article 1159, Civil Code, "obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith."
Plaintiff in law could not tell its customer, as per the trial court's view, that "under the Guard Service Contract it was not liable for the damage but the defendant" — since the customer could not hold defendant to account for the damages as he had no privity of contract with defendant. Such an approach of telling the adverse party to go to court, notwithstanding his plainly valid claim, aside from its ethical deficiency among others, could hardly create any goodwill for plaintiff's business, in the same way that defendant's baseless attempt to evade fully discharging its contractual liability to plaintiff cannot be expected to have brought it more business. Worse, the administration of justice is prejudiced, since the court dockets are unduly burdened with unnecessary litigation.
Paragraph 4 of the contract, which limits defendant's liability for the amount of loss or damage to any property of plaintiff to "P1,000.00 per guard post," is by its own terms applicable only for loss or damage 'through the negligence of its guards ... during the watch hours" provided that the same is duly reported by plaintiff within 24 hours of the occurrence and the guard's negligence is verified after proper investigation with the attendance of both contracting parties. Said paragraph is manifestly inapplicable to the stipulated facts of record, which involve neither property of plaintiff that has been lost or damaged at its premises nor mere negligence of defendant's security guard on duty.
Here, instead of defendant, through its assigned security guards, complying with its contractual undertaking 'to safeguard and protect the business premises of (plaintiff) from theft, robbery, vandalism and all other unlawful acts of any person or persons," defendant's own guard on duty unlawfully and wrongfully drove