TITLE I: OBLIGATIONS

(Arts. 1156-1304, Civil Code)

CHAPTER 1: General Provisions

Art. 1156. An obligation is a juridical necessity to give, to do, or not to do. (n)

1) Juridical necessity – enforceable in court in case of non-compliance

(enforceability); if not enforceable, only a natural obligation
2) Essential requisites of a civil obligation:
a. Passive subject – debtor or obligor
b. Active subject – creditor or obligee
c. Object or prestation – subject matter
d. Juridical or legal tie – that which binds the parties or efficient cause
3) Forms – oral, in writing, partly oral or in writing
 General rule – no form is required for validity except for specific contracts i.e.
sale of real property
4) Kinds according to Subject Matter:
a. Real obligation - obligation to give
b. Personal obligation- obligation to do or not to do
b.1. Positive personal obligation – to do/ to render service.
b.2. Negative personal obligation – not to do/ not to give.

Art. 1157. Obligations arise from

a) Law
b) Contracts
c) Quasi-contracts
d) Crimes/delicts
e) Quasi-delicts
5) Sources of Obligations
a. Law – are not presumed; only those expressly determined in this code or in
special laws are demandable (Art. 1158). eg. Payment of taxes
b. Contracts – stipulation of parties; law between the parties; characteristic
of compellability (Art. 1159)
c. Quasi-contracts – lawful, voluntary and unilateral acts which are
enforceable to the end that “no one shall be unjustly enriched at the expense
of another”. 1. Solutio indebiti and 2. negotiorum gestio
d. Crimes/Delicts – “every person criminally liable is also civilly liable”
e. Quasi Delicts – damages cause by act or omission (fault or negligence); no
contractual relationship between the parties
 Art. 1158. Obligations derive 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. (1090)

 An employer has no obligation to furnish free legal assistance to his employees.

 A private school has no legal obligation to provide clothing allowance to its
teachers.
 A person who wins money in gabling has the duty to return his winnings to the
loser (Art. 2014).

Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.

 Contractual obligations- meeting of minds between 2 or more persons.

 (1) Binding force – the same binding effect of obligations imposed by laws.
 (2) Requirement of a valid contract- not contrary to law, morals, good customs,
public order, and public policy.
 In the eyes of law, a void contract does not exist.
 (3) Breach of contract- a party fails or refuses to comply, w/o legal reason or
justification.
 Compliance in good faith- performance in accordance w/ terms of contract w/
sincerity and honesty.

Art. 1160. Obligations derived from quasi- contracts shall be subject to the
provisions of Chapter I, Title XVII of this Book. (n)

 Quasi-contract – lawful, voluntary and unilateral acts by virtue

 (1) Negotiorum gestio – voluntary management of the property or affairs of
another w/o the knowledge of the latter (Art. 2144).
 (2) Solution indebiti – something is received when there is no right to demand
it and was duly delivered through mistake (Art. 2154).

Art. 1161. Civil obligations arising from criminal offenses shall be governed by
the penal laws, subject to the provisions of Art. 2177, and of the pertinent
provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVII of
this book, regulation damages. (1092a)

 Civil liability arising from crimes:

(1) Civil liability in addition to criminal liability
(2) Criminal liability w/o civil liability
(3) Civil liability w/o criminal liability
 Scope of civil liability:
(1) Restitution
(2) Reparation for the damage caused
(3) Indemnification for consequential damages (Art. 104, Revised Penal Code)
 Art. 1162. Obligations derived from quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of this Book, and by special laws. (1093a)

 Quasi-delict – act/omission by a person (tortfeasor) which caused damage to

another in his person, property, or rights

CHAPTER 2: Nature and Effect of Obligations

Art. 1163. Every person obliged to give something is also obliged to take care of it
with the proper diligence of a good father of a family, unless the law or the
stipulation of the parties requires another standard of care. (1094a)

6) 2 Kinds of Object in an obligation to give

a. Specific or determinate - particularly designated or physically segregated
from others of the same class
b. Generic or indeterminate - cannot be pointed out with particularity

7) Duties of debtor in obligation to give determinate things

(1) Preserve the thing – only ordinary care or diligence of a good father of a
family unless another standard of care is stipulated.
a. Diligence of a good father of a family – ordinary care of ordinary person
b. Another standard of care – law/ stipulation provides another, it must prevail.
c. Factors to be considered – diligence required depends on nature of obligation
 General rule – debtor is not liable if his failure to preserve the thing is due to
force majeure (fortuitous event)
 Fortuitous event – an event which cannot be foreseen, or though foreseen is
inevitable i.e. Acts of man like robbery and Acts of God like earthquake
d. Reason for debtor’s obligation – debtor must exercise diligence to insure that
the thing to be delivered would subsist the same condition.

(2) Deliver the fruits of the thing (Art. 1164)

 Creditor has a personal right to the fruits at the time obligation of debtor
arises.
 Creditor acquires real rights only upon delivery; Delivery transfers ownership.

(3) Deliver the accessions and accessories (Art. 1166)

 Accessions are the fruits of a thing or improvements upon a thing i.e.
trees on land
 Accessories are things joined to the thing for embellishment, better
use or completion i.e. car sound system

(4) Deliver the thing itself

 Creditor can compel debtor to make delivery or specific performance
(Art. 1165)
  Debtor is liable for damages if there is (a) delay and (b) double promise
to deliver, even if a fortuitous event caused the damage.

(5) Answer for damages in case of non-fulfillment/breach (Art. 1170)

8) Duties of debtor in obligation to give a generic things

a. To deliver a thing which is of the quality intended by the parties
taking into consideration the purpose of the obligation and other
circumstances (Art. 1246.)
b. To be liable for damages in case of fraud, negligence, or delay,
in the performance of his obligation, or contravention of the tenor thereof.
(Art. 1170.)

Art. 1164. The creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it until
the same has been delivered to him. (1095)

9) 3 Kinds of fruits
a. Natural fruits – spontaneous products of the soil, and products of
animals
b. Industrial fruits – produced by lands through labor
c. Civil fruits – derived by virtue of a juridical relation i.e rentals
 Personal right – power to demand from another, as a definite passive subject.
 Real right – interest over a specific thing w/o definite passive subject.

Personal Real
1. jus ad rem, a right enforceable only 1. jus in re, a right enforceable against the
against a definite person or group of whole world
persons
2. right pertaining to the person to 2. right pertaining to a person over a
demand from another, as a definite specific thing, without a passive subject
passive subject, the fulfillment of a individually determined against whom
prestation to give, to do or not to do. such right may be personally enforced

Art. 1165. When what is to be delivered is a determinate thing, the creditor, in

addition to the right granted him by Article 1170, may compel the debtor to make
the delivery. If the thing is indeterminate or generic, he may ask that the
obligation be complied with at the expense of the debtor. If the obligor delays, or
has promised to deliver the same thing to two or more persons who do not have
the same interest, he shall be responsible for any fortuitous event until he has
effected the delivery. (1096)

10) This provision applies to an obligation to give.

a. DETERMINATE THING
 Something which is susceptible of particular designation or specification;
 Obligation is extinguished if the thing is lost due to fortuitous events.
  Article 1460: a thing is determinate when it is particularly designated and
physically segregated from all others of the same class.
b. INDETERMINATE THING
 something that has reference only to a class or genus;
 obligation to deliver is not so extinguished by fortuitous events.

11) REMEDIES FOR FAILURE OF DELIVERY (determinate thing)

a. Complaint for specific performance – an action to compel the fulfillment of the
obligation.
b. Complaint for rescission of the obligation – action to rescind
c. Complaint for damages – action to claim for compensation of damages suffered
• As a general rule, “no person shall be responsible for those events which
could not be foreseen, or which, though foreseen, are inevitable, except:
1. in cases expressly specified by the law
2. when it is stipulated by the parties
3. when the nature of the obligation requires assumption of risk
• An indeterminate thing cannot be object of destruction by a fortuitous
event because genus never perishes.

Art. 1166. The obligation to give a determinate thing includes that of delivering
all its accessions and accessories, even though they may not have been mentioned.
(1097a)
12) ACCESSIONS – fruits of the thing or additions to or improvements upon the
principal − those which are naturally or artificially attached to the thing

13) ACCESSORIES – things included with the principal for the latter’s
embellishment, better use, or completion
• When does right to fruits arise? – from the time the obligation to deliver
arises
1. Conditional – from the moment the condition happens
2. With a term/period – upon the expiration of the term/period
3. Simple – from the perfection of the contract

Art. 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost. This same rule shall be observed if he does it in contravention
of the tenor of the obligation. Furthermore, it may be decreed that what has been
poorly done be undone. (1098)

14) This provision applies to an obligation to do.

THREE SITUATIONS:
a) Debtor’s failure to perform an obligation
 creditor may do the obligation, or by another, at the expense of the debtor;
 recover damages
b) Performance was contrary to the terms agreed upon
 order of the court to undo the same at the expense of the debtor
c) Performance in a poor manner
 order of the court to undo the same at the expense of the debtor

Art. 1168. When the obligation consists in not doing, and the obligor does what
has been forbidden him, it shall also be undone at his expense. (1099a)

 This provision applies to an obligation not to do.

Art. 1169. Those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demands from them the fulfillment of
their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:
a. When the obligation or the law expressly so declare; or
b. When from the nature and the circumstances of the obligation it
appears that the designation of the time when the thing is to be
delivered or the service is to be rendered was a controlling motive for
the establishment of the contract; or
c. When demand would be useless, as when the obligor has rendered it
beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay by the other
begins. (1100a)

15) ORDINARY DELAY – mere failure to perform an obligation at the appointed

time.
16) LEGAL DELAY (DEFAULT) – tantamount to non-fulfillment of the obligation
and arises after an extrajudicial or judicial demand was made upon the debtor.
Kinds of default :
a. MORA SOLVENDI – delay on the part of the debtor to fulfill his
obligation;
Requisites:
 failure of the obligor to perform obligation on the DATE agreed upon;
 demand (judicial/extrajudicial) by the creditor;
 failure to comply with such demand
Effects:
 debtor – liable for damages and interests
 debtor – liable for the loss of a thing due to a fortuitous event
KINDS:
a1. mora solvendi ex re – default in real obligations (to give)
a2. mora solvendi ex persona – default in personal obligations (to do)

b. MORA ACCIPIENDI – delay on the part of the creditor to accept the

performance of the obligation;
Effects:
 creditor
 o liable for damages
o bears the risk of loss of the thing
 debtor
o not liable for interest from the time of creditor’s delay
o release himself from the obligation

c. COMPENSATIO MORAE – delay of the obligors in reciprocal obligation.

Effect:
 the default of one compensates the default of the other; their respective
liabilities shall be offset equitable.

 Default / Delay in negative obligation is not possible. (In negative

obligation, only fulfillment and violation are possible)

Art. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages. (1101)

17) FRAUD (dolo) – deliberate intentional evasion of the faithful fulfillment of an

obligation;
18) NEGLIGENCE (culpa or fault) – voluntary act or omission of diligence, there
being no malice, which prevents the normal fulfillment of an obligation;
19) DELAY (mora) – default or tardiness in the performance of an obligation after
it has been due and demandable;
20) CONTRAVENTION OF TERMS OF OBLIGATION (violation) – violation of
terms and conditions stipulated in the obligation; this must not be due to a fortuitous
event.

Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for future fraud is void. (1102a)
• To allow such waiver will necessarily render the obligatory force of
contracts illusory.
• The law does not prohibit waiver of an action for damages based on fraud
already committed.
• Any deliberate deviation from the normal way of fulfilling the obligation
may be a proper basis for claim for damages against the guilty party.

21) INCIDENTAL FRAUD (applicable provisions are Arts. 1170 & 1344) – committed in the
performance of an obligation already existing because of a contract; incidental fraud
obliges the person employing it to pay damages.

22) CAUSAL FRAUD – (Art. 1338) employed in the execution of contract in order to
secure consent; remedy is annulment because of vitiation of consent.
Art. 1172. Responsibility arising from negligence in the performance of every kind
of obligation is also demandable, but such liability may be regulated by the courts,
according to the circumstances. (1103)

Court’s discretion because:

(a) negligence depends upon the circumstances of a case – good or bad faith of
the obligor may be considered as well as the conduct or misconduct of the
obligee;
(b) it is not as serious as fraud.

Negligence – lack of foresight or knowledge

Imprudence – lack of skill or precaution

TEST OF NEGLIGENCE
Did the defendant, in doing the alleged negligent act, use the reasonable care and
caution which an ordinary prudent man would have used in the same situation?

2 Types of Negligence
1. Culpa Aquiliana 2. Culpa Contractual
Basis
(Quasi-delict) (Breach of contract)
Negligence between parties not so Negligence in the performance of
DEFINITION
related by pre-existing contract contractual obligation
NATURE OF Incidental to the performance of
Direct, substantive and independent
NEGLIGENCE the obligation
GOOD FATHER OF Complete and proper defense Not complete and proper defense
THE FAMILY DEFENSE (parents, guardian, employers) in the selection of employees

There is presumption – defendant

PRESUMPTION OF No presumption – injured party must must prove that there was no
NEGLIGENCE prove negligence of the defendant. negligence in the carrying out of
the terms of the contract.

Art. 1173. The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the place. When negligence
shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall
apply.
If the law or contract does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family shall be
required. (1104a)

 This provision provides for a negative definition of “proper diligence of a good

father of a family”
 FRAUD NEGLIGENCE
There is deliberate intention to cause damage. There is no deliberate intention to cause damage.
Liability cannot be mitigated. Liability may be mitigated.
Waiver for future negligence may be allowed in
Waiver for future fraud is void.
certain cases:

DILIGENCE – the attention and care required of a person in a given situation and is
opposite of negligence.
Kinds of diligence:
1. DILIGENCE OF A GOOD FATHER – a good father does not abandon his
family, he is always ready to provide and protect his family; ordinary care
which an average and reasonably prudent man would do.
2. Diligence required by the law governing the particular obligation
3. Diligence stipulated by the parties
NEGLIGENCE – consists in the omission of that diligence which is required by the
nature of the particular obligation and corresponds with the circumstances of the
persons, of the time, and of the place.
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which could not
be foreseen, or which, though foreseen, were inevitable. (1105a)

23) FORTUITOUS EVENT – an occurrence or happening which could not be foreseen

or even if foreseen, is inevitable; absolutely independent of human intervention; act of
God.

24) FORCE MAJEURE - an event caused by the legitimate or illegitimate acts of

persons other than the obligor; there is human intervention.

Requisites of fortuitous event: [IU-IF]

1. Independent of the human will (or at least of the obligor’s)
2. Unforeseen or unavoidable
3. Of such character as to render it impossible for the obligor to comply with
his obligation in a normal manner
4. Obligor – free from any participation/aggravation of the injury to the obligee
(no negligence or imprudence)

Exception:
1. When it is expressly stipulated that he shall be liable even if non-performance
of the obligation is due to fortuitous events;
2. When the nature of the obligation requires the assumption of risk;
3. When the obligor is in delay;
 4. When the obligor has promised the same thing to two or more persons who do
not have the same interest;
5. When the possessor is in bad faith and the thing lost or deteriorated due to
fortuitous event;
6. When the obligor contributed to the loss of the thing.

Art. 1175. Usurious transactions shall be governed by special laws. (n)

25) USURY – contracting for or receiving interest in excess of the amount allowed
by law for the loan or use of money, goods, etc.

26) USURY LAW – makes the usurers criminally liable if the interest charged on
loans are more that the limit prescribed by law.
• This law is repealed – Circular No. 905 of the Central Bank has expressly removed
the interest ceilings prescribed by the USURY LAW.

Art. 1176. The receipt of the principal by the creditor without reservation with
respect to the interest, shall give rise to the presumption that said interest has
been paid. The receipt of a later installment of a debt without reservation as to
prior installments, shall likewise raise the presumption that such installments
have been paid. (1110a)
 These are mere presumptions.
 To be sure – write the interest and the dates covered by such payment in the
receipt.

Art. 1177. The creditors, after having pursued the property in possession of the
debtor to satisfy their claims, may exercise all the rights and bring all the actions
of the latter for the same purpose, save those which are inherent in his person;
they may also impugn the acts which the debtor may have done to defraud them.
(1111)

Remedies available to creditors for the satisfaction of their claims:

1. Exact fulfillment with right to damages
2. Exhaustion of the debtor’s properties still in his possession – writ of
attachment (before judgment) or writ of execution (for final judgment not yet
executed)
3. ACCION SUBROGATORIA – an action where the creditor whose claims had
not been fully satisfied, may go after the debtors (3rd person) of the
defendant debtor.
4. ACCION PAULIANA – an action where the creditor files an action in court for
the RESCISSION of acts or contracts entered into by the debtor designed to
defraud the former.
 `Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary. (1112)

Exceptions:

a) Those not transmissible by their nature like purely personal rights;

b) Those not transmissible by provision of law;
c) Those not transmissible by stipulation of parties

CHAPTER 3: DIFFERENT KINDS OF OBLIGATIONS

Section 1 – Pure and Conditional Obligations

Art. 1179. Every obligation whose performance does not depend upon a future or
uncertain event, or upon a past event unknown to the parties, is demandable at
once. Every obligation which contains a resolutory condition shall also be
demandable, without prejudice to the effects of the happening of the event.

27) PURE OBLIGATION

 an obligation which does not contain any condition or term upon which the
fulfillment is made to depend; immediately demandable by the creditors and
the debtor cannot be excused from not complying with his prestation.

28) CONDITIONAL OBLIGATION

 an obligation which depends upon a future or uncertain event, or upon a past
event unknown to the contracting parties.
 an obligation subject to a condition.
a) Suspensive Obligation – its fulfillment gives rise to an obligation; the
demandability of the obligation or the effectivity of the contract can take
place only after the condition has been fulfilled.
b) Resolutory Obligation – its happening extinguishes the obligation which is
already existing;

Art. 1180. When the debtor binds himself to pay when his means permit him to do
so, the obligation shall be deemed to be one with a period, subject to the
provisions of Article 1197.

29) PERIOD – a future and certain event upon the arrival of which, the obligation
subject to it either arises or is extinguished.
Indications of a term or period:
When the debtor binds himself to pay
• when his means permit him to do so
• little by little
• as soon as possible
 • from time to time
• as soon as I have the money
• in partial payment
• when in the position to pay

Art. 1181. In conditional obligations, the acquisition of rights, as well as the

extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition.

30) Suspensive Condition – the acquisition of rights by the creditor depends upon
the happening of the event which constitutes the condition; if such condition does not
take place, it would be as of the conditional obligation had never existed.
(e.g. promise to give a car after graduating from law school as cum laude)

31) Resolutory Condition – the rights and obligations already existing are under
threat of extinction upon the happening or fulfillment of such condition.
(e.g. donation by reason of marriage – the celebration of marriage is a resolutory condition; if the
marriage did not push through, the donation may be revoked)

Art. 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon
the will of a third person, the obligation shall take effect in conformity with the
provisions of this Code.

 Applies only to suspensive conditions.

3 Kinds Of Conditions Under This Article:

1. POTESTATIVE – a suspensive condition which depends upon the will of one of the
contracting parties = if at the sole will of the debtor, it is void; if at the creditor’s, still
valid. this is to prevent the establishment of illusory obligations.

2. CASUAL – the condition depends upon chance or the will of a third person;(e.g.
cellphone warranty)

3. MIXED – the condition depends partly upon the will of the parties and partly upon
chance or the will of a third person; (example ni Atty. De Chavez: passing the bar)

Art. 1183. Impossible conditions, those contrary to good customs or public policy
and those prohibited by law shall annul the obligation which depends upon them.
If the obligation is divisible, that part thereof which is not affected by the
impossible or unlawful condition shall be valid. The condition not to do an
impossible thing shall be considered as not having been agreed upon.

32) POSSIBLE CONDITION – if it is capable of realization or actualization according

to nature, law, public policy or good customs.
33) 2 Kinds of Impossible Conditions:

1. Physically Impossible – cannot exist or cannot be done in its nature;

2. Legally Impossible – contrary to law, good customs, or public policy.

 Only the affected obligation is void, if the obligation is divisible, and the part
thereof not affected by the impossible condition is valid.

 Only the condition is void if there is already a pre-existing obligation and it does
not depend upon the fulfillment of the condition which is impossible.