TITLE I - OBLIGATIONS 

CHAPTER 1: GENERAL PROVISIONS 

Arts. 1156-1162 

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

-   ​It  is  a  juridical  necessity  ​because  in  case  of  noncompliance,  the  courts  of  justice  may  be 
called upon by the aggrieved party to enforce the fulfillment of the obligation. 
- Article  1156  defines  civil  obligations  because  it  gives the creditor/obligee a right under the 
law to enforce their performance in courts of justice. 

Civil obligation and natural obligation distinguished 

Civil Obligation  Natural Obligation 

- based on positive law  - based on natural law 

- enforceable by court action  - not enforceable by court action 

 
Essential Requisites of Obligation 
1. Passive  subject  -  ​(debtor/obligor)  the  person  who  is  bound  to  the  fulfillment  of  the 
obligation 
2. Active  subject  -  ​(creditor/obligee)  the  person  who  is  entitled  to  demand  the  fulfillment  of 
the obligation 
3. Object/Prestation  -  ​(subject  matter  of  the  obligation)  it  may  consist of giving, doing, or not 
doing something 
4. A juridical tie or legal tie -​ (efficient cause) binds or connects the parties to the obligation 

Sources of obligations (Art. 1157) 

1. Law  -  ​is  any  rule  of  conduct,  or  system  of  uniformity,  just  and  obligatory, promulgated by a 
competent authority, for common good and observance 
● Legal  Obligations  (Art.  1158)  -  obligations  arising  from  law  which  are  not  presumed 
because they are considered a burden upon the obligor. 
- These are the exceptions not the rule 
2. 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 (Art. 1305) 
● Contractual  Obligations  (Art.  1159)  -  obligations arising from contracts or voluntary 
agreements 
- A  ​contract  is  valid  if  it  is  not  contrary  to  law  morals,  good  customs,  public 
order, and public policy. 
 - A  ​breach  of  contract  takes  place  when  a  party  fails  or  refuses  to  comply, 
without  legal reason or justification, with his obligation under the contract as 
promised 
- Compliance  in  good  faith  is  a  compliance  or  performance  in  accordance 
with the stipulation or terms of the contract or agreement 
*Stipulation  -  agreement  that  is  specified  by  the  parties  involved  in  the 
contract 
3. Quasi-Contract  -  ​refers  to  certain  lawful,  voluntary  and  unilateral  acts  which  are 
enforceable  to  the  end  that  no  one  shall  be  unjustly  enriched or benefited at the expense of 
another (Art. 2124) 
- May be considered as arising from law 
Kinds of Quasi-contracts 
a. Negotiorum  gestio  (management  of  business)  ​-  ​is  the  voluntary  management  of the 
property  or  affairs  of  another  without  the  knowledge  or  consent  of  the  latter  (Art. 
2144) 
b. Solutio  indebiti  ​(payment  of  what  is  not  owing)  -  is  the  juridical  relation  which  is 
created  when  something  is  received  when  there  is  no  right  to  demand  it  and  it  was 
unduly delivered through mistake (Art. 2154) 
*Requisites 
a. There is no right to receive the thing delivered 
b. The thing was delivered through mistake 
● Quasi-contractual  Obligations  (Art.  1160)  -  ​obligations  arising  from quasi-contracts 
or ​contracts implied by law 
- There  is no consent from the parties involved because the law considers the 
parties as having entered into a contract 
4. Acts or omissions punishable by law (Art. 1161)​ -crimes or felonies 
- The  commission  of  a  crime  makes  the  offender  civilly  liable  (Art.  100,  Revised  Penal 
Code) 
- Such  ​civil  liability  includes  restitution,  reparation  for  the  damage  caused,  and 
indemnification of consequential damages ​(Art. 104, R.P.C.) 
5. Quasi-delicts  -  ​(also  known  as  ​torts  ​or  ​culpa  aquiliana)​   is  an  act  or  omission  by  a  person 
which causes damage to another in his person, property, or rights giving rise to an obligation 
to  pay  for  the  damage  done,  there  being  fault  or  negligence  but  there  is  no  pre-existing 
contractual relation between the parties (Art. 2176). 
*Requisites of quasi-delict 
1. There must be an act or omission; 
 2. There must be fault or negligence; 
3. There must be damage caused; 
4. There  must  be  a direct relation or connection of cause and effect between the act or 
omission and the damage; and 
5. There is no pre-existing contractual relation between the parties. 

Crime distinguished from quasi-delict 

Crime  Quasi-delict 

- There  is  a  criminal  or  malicious  intent  - There is only negligence 

or criminal negligence 

- The purpose is punishment  - Indemnification of the offended party 

- Affects public interest  - Concerned private interest 

- There  are  two  liabilities  which  are  - There is only civil liability 
criminal and civil 

- Criminal  liability  cannot  be  - Can  be  compromised  as  any  other  civil 
compromised  or  settled  by  the  parties  liability 
themselves 

- The  guilt of the accused must be proved  - The fault or negligence of the defendant 

beyond reasonable doubt   need  only  be  proved  by  preponderance 
of evidence 
 
CHAPTER 2: NATURE AND EFFECT OF OBLIGATIONS 
Arts. 1163-1178 

Kinds of Obligation according to Subject Matter 

1. Real Obligation - ​to give or to deliver a thing 
2. Personal Obligation 
a. Positive Personal Obligation - ​to do or to render service 
b. Negative Personal Obligation -​ not to do or not to give 

Specific and Generic Thing  

● Specific thing - (determinate) identified by its individuality and the debtor cannot substitute 
it 
● Generic  thing  -  (indeterminate)  identified  by  its  specie  and the debtor can give anything of 
the same class   

- GENERAL RULE: Genus never perishes 

Obligations of one obliged to give a determinate thing 
1. Preserve the thing (Art. 1163) 
GENERAL  RULE:  Every  obligation  to  give  a  determinate  thing  is  required  to  have  a 
standard of care 
a. Diligence of a good father of a family -​ ordinary care; if the contract is silent 
b. Another  standard  of  care  -  ​if  the  law  or  the  stipulation  of  the  parties  provides 
another standard of care 
● Extraordinary  diligence  -  diligence  required  by  law  ex.  Banks  and  common 
carriers 
● The parties cannot stipulate no standard of care 
2. Deliver  the  thing  itself  (Art.  1163)  -  ​this  involves  placing  the  thing  in  the  possession  or 
control of the creditor either actually or constructively. 
3. Deliver the fruits of the thing (Art. 1164) 
a. Kinds of fruits 
1. Natural  Fruits  -  are  the  spontaneous  products  of the soil and the young and 
other products of animals (Art. 442) 
- The  products  of  soil  must  be  produced  without  the  intervention  of 
human labor 
- For  the  young  and  other  products  of  animals,  it  can  be  produced 
even with the intervention of human labor 
2. Industrial  Fruits  -  ​refer  to  those  produced  by  land  of  any  kind  through 
cultivation of labor (Art 442) 
3. Civil  Fruits  -  ​refer to fruits which are the result of a juridical relation such as 
a  rent  of  a  building, price of lease of land and other property and the amount 
of perpetual or life annuities (Art. 442) 
b. When creditor has a right to the fruits of a determinate thing 
- The  creditor  has  the  right  to  the  fruits  of  the  thing  from  the  time  of  the 
obligation  to  deliver  it  arises.  However,  he  shall  acquire  no  real  right  over  it 
until the thing has been delivered to him (Art. 1164) 
- If  the  fruit  of  the  determinate  thing  is  a  natural  fruit,  the  transfer  of 
ownership is on the perfection of the contract 
- The personal right is only attained when the contract is perfected 
- The real right os only attained when the object is received by the creditor 
● If there is non-delivery - the creditor has a personal right to enforce  
c. Rights of the creditor 
 1. Personal  right  -  (jus  in  personam/jus  ad  rem)  ​the  right  to  demand 
the fulfillment of the obligation to give, to do or not to do (Art. 1177) 
2. Real  right  -  ​(jus  in  re)  t​ he  right  over  a  specific  thing  against  whom 
the right may be personally enforced (Art. 1177) 
4. Deliver the accessions and accessories (Art. 1166) 
● GENERAL RULE : The accessory follows the principal 
- All  accessions  and  accessories  are  considered  included  in  the 
obligation to deliver a determinate thing 
- EXCEPT:  if  it  is  stipulated  by  the  parties  to  not  include  the 
accessions/accessories  
a. Accessions  -  ​the  fruits  of  the  thing  or  additions  to  or  improvements  upon  the 
principal thing 
b. Accessories  -  ​things  joined  to  or  include  with  the  principal  thing  for  the  latter’s 
embellishment, better use, or completion. 

Remedies of the creditor (Art. 1165, 1167, 1168, 1170) 

1. If the debtor fails to perform the obligation to deliver a determinate thing 
a. Demand  the  specific performance or fulfillment (if it is still possible) of the obligation 
with a right to indemnity for damages (Art. 1165); or 
b. Demand  rescission  or  cancellation  (in  certain  cases)  of  the  obligation  also  with  the 
right to recover the damages (Art. 1170) 
c. Demand payment of damages only, where it is the only feasible remedy 
2. If the debtor fails to perform his obligation to deliver a generic thing 
a. To ask that the obligation be complied with at the expense of the debtor (Art. 1165) 
b. Demand  rescission  or  cancellation  (in  certain  cases)  of  the  obligation  also  with  the 
right to recover the damages (Art. 1170) 
c. Demand payment of damages only, where it is the only feasible remedy 
3. 1) If the debtor fails to perform his obligation in obligations to do 
- The  creditor  has  the  right  to  have  the  obligation  performed  by  himself,  or  by 
another, at the debtor’s expense (Art. 1167) and to recover damages (Art. 1170) 
2)  If  the  debtor  performs  the  obligation  to  do  but  contrary  to  the  terms  thereof  or  in  a 
poor manner 
- The  creditor  may  submit  a  complaint  to the court and the court may order that it be 
undone at the expense of the debtor, if it is possible to be undone (Art. 1167) 
- The creditor may also demand damages from the debtor (Art. 1170) 
4. If the debtor does what has been forbidden him 
 - The debtor is liable to undo what he has done at his expense, if it is possible 
- Or if not, the creditor has the right to recover damages (Art. 1168) 

Damage and Injury, distinguished 

a. Damages  -  ​refer  to  the  harm  done  and  the  sum  of  money  that  may  be  recovered  in 
reparation for the harm done 
b. Injury  -  refers  to  the  wrongful,  unlawful  or  tortuous  act  which  causes  loss  or  harm  to 
another. It is the legal wrong to be addressed. 

Grounds for liability to pay damages 

1. Fraud  ​(dolo)  -​   ​is  the  deliberate  or  unintentional  evasion  by  the  debtor  of  the  normal 
compliance of his obligation 
- Under  Art.  1170,  this  actually  refers  to the fraud committed by the debtor at the time 
of the performance of his obligation (incidental fraud) 
Kinds of Fraud 
a. Incidental fraud ​(dolo incidente) -​ ​fraud in the performance of obligation 
- Effect: payment of damages 
- The  court  is  not  given  the  power  to  mitigate  or  reduce  the  damages  to 
awarded 
b. Causal fraud ​(dolo causante) ​- ​the fraud is upon the perfection of contract 
- Effect: cancellation of contract  
Waiver  for  future  fraud is void (Art. 1171) - ​because if it is allowed, it will only encourage the 
obligor to commit fraud that will make him not liable for the damages 
Waiver  for  past  fraud  is  valid  -  ​because  it  is  an  act  of  generosity  and  magnanimity  on  the 
part of party who is the victim of the fraud 
2. Negligence  ​(fault/culpa)  -  ​any  voluntary  act  or omission, there being no bad faith or malice, 
which prevents the normal fulfillment of an obligation 
Kinds of Negligence 
a. Contractual  negligence  ​(culpa  contractual)  ​-  ​negligence  in  contracts  resulting  in 
their breach (Art. 1172) 
- The courts are given a wide discretion in fixing the measure damages 
b. Civil  Negligence  ​(culpa  aquiliana)  ​-  ​negligence  is  the  source  of  obligation  between 
parties  not  so  related  before  by  any  pre-existing  contract  (quasi-delict/tort  -  Art. 
2176) 
c. Criminal  Negligence  ​(culpa  criminal)  -​   ​negligence  resulting  in  the  commission  of  a 
crime which produces civil liability 
 - Lies  between  the  crime  and  civil  liability  and  the  punishable  act  is  his 
negligence 
Validity  of  Waiver  of  action  arising  from  negligence  -  ​an  action  arising  from  a  negligence 
can be waived 
● EXCEPT: 
(1) if the nature of obligation requires the exercise of extraordinary diligence   
(2) if it the thing is generic 
(3)  If  negligence  shows bad faith, it is equivalent to fraud and any waiver of action for 
future negligence if this kind is void 
Effects  of  negligence  on  the  part  of  the  injured  party  -  ​the  creditor  cannot  recover  the 
damages if his negligence is the sole reason for his injury 
● EXCEPT:  ​if  his  negligence  was  only  contributory, and the main cause for his injury is 
the debtor’s negligence, he has the chance to recover the damages to be awarded 
*Principle: There is no crime when there is no law punishing it. 
- An act no matter how wrongful, without violating any law, it is not a come 
● Punishment of; 
- Crime - imprisonment 
- Culpa criminal - imprisonment with payment of damages 
- Civil liability - payment for damages 
3. Delay  ​(mora)  -​   ​is  the  failure  to  perform  an  obligation  on  time  which  failure  constitutes  a 
breach of the obligation 
GENERAL RULE: No demand, no delay 
EXCEPT (Art. 1169) : 1) when the law so provides 
3) when the obligation expressly so declares 
2) when the time is of the essence 
3) when demand would be useless 
4) when there is performance by a party in reciprocal obligations 
Kinds of delay and its effects 
1. Mora solvendi ​- ​delay on the part of the debtor to fulfill his obligation 
Effects: ​1) debtor is guilty of breach of obligation 
2) the debtor is liable to the creditor for interest or damages 
` 3) the debtor is liable even for fortuitous event when the thing to be deliver
is a determinate thing   
Requisites of delay by the debtor 
1. Failure  of  the  debtor  to  perform  his  (positive)  obligation  on  the  date  agreed 
upon 
 2. Demand  made  by  the  creditor  upon  the  debtor  comply  with  his  obligation 
which demand may be either judicial or extrajudicial 
3. Failure of the debtor to comply with such demand 
*there is no delay on a negative personal obligation 
2. Mora  accipiendi  -​   ​delay  on  the  part  of the creditor to accept the performance of the 
obligation 
Effects: ​1) The creditor is guilty of breach of obligation 
2) he is liable for damages suffered (if any) by the debtor 
3) he bears the risk of loss of the thing due 
3. Compensatio morae ​- ​delay of obligors in reciprocal obligations 
- There is no default or delay on the part of both parties 
Effects: ​The delay of one party is followed by that of the other. 
- The  liability  of  the  first  infractor  shall  be  equitably  tempered  or  balanced by 
the courts 
- If cannot be determined, the contract shall be deemed extinguished and each 
shall bear his own damages (Art. 1192) 
4. Contravention of the tenor of the obligation 

Fortuitous  events  -  ​are  those  events  that  could  not  be  foreseen  (extraordinary),  or  which  though 
foreseen, are inevitable (ordinary). 
- Can be either dependent or independent upon human intervention 
1. Acts of Man​ - independent upon the will of the obligor but not of the other human will 
2. Acts of God ​(majeure) -​ ​events that are totally independent upon the will of every being 
● Force majeure - fortuitous events that are dependent upon human intervention 
GENERAL RULE: If there is a loss or damage caused to another party resulting to nonperformance 
of his obligation is due to a fortuitous event therefore the obligation is extinguished 
EXCEPT (Art. 1174): (1) when expressly specified by law 
a. The  debtor  is  guilty  of  fraud,  negligence,  delay,  or  contravention  of  the 
tenor of the obligation (Art. 1170) 
b. The  debtor  has  promised  to  deliver  the  same  determinate  thing  to  two  or 
more persons who do not have the same interest (Art. 1165) 
c. The obligation to deliver a specific thing arises from a crime (Art. 1268) 
d. The thing to be delivered is generic (Art. 1263) 
(2) Declared by the stipulation of the contractual parties 
(3) When the nature of obligation requires the assumption of risk 
Requisites of a fortuitous event 
 1. The event must be independent of the human will or at least of the debtor’s will; 
2. The event could not be foreseen, or if foreseen, is inevitable; 
3. The  event must be of such character as to render it impossible for the debtor to comply with 
his obligation in a normal manner; and 
4. The  debtor  must  be  free  from  any  participation  in,  or  the  aggravation  of,  the  injury  to  the 
creditor, that is, there is no concurrent negligence on his part. 
● Burden  if  proving loss due to fortuitous event - ​the burden of proving that the loss was due 
to fortuitous event rests on him who invokes it. 

Article 1175. Usurious transactions shall be governed by special laws. 

a. Simple  Loan  (mutuum)  -  ​a  contract  whereby  one  of  the  parties  delivers  to  another,  money 
or  other  consumable  thing,  upon  the  condition  that  the  same  amount  of  the  same kind and 
quality shall be paid 
b. Usury  -  ​contracting  for  or  receiving  interest  in  excess  of  the amount allowed by law for the 
loan or use of money, goods, chattels or credits 
c. Requisites for recovery of interest 
1. The payment of interest must be expressly stipulated 
2. The agreement must be in writing 
3. The interest must be lawful 
*stipulation for the payment of usurious interest is void 
d. Central  Bank  Circular  No.  799  -  ​effective  in  2013  when  there  is  no  stipulated  interest  in  a 
contract of loan, the legal interest shall be 6% 
e. Central  Bank  Circular  No.  905  -  ​the  parties  are  free  to  stipulate  any  amount  of  interest 
however  it  does  not  give absolute right to the creditor to change the debtor’s interest that is 
“iniquitous or unconscionable” - Article 1229 

Presumptions on receipt of principal or later installment 

Article  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  the  later  installment  of  a  debt  without  reservation  as  to  prior 
installments, shall likewise raise the presumption that such installments have been paid. 
a. Presumption  -  ​the  inference  of  a  fact  not  actually  known  arising  from  its  usual  connection 
with another which is known or proved 
Kinds of Presumption 
1. Conclusive Presumption - ​one which cannot be contradicted 
 2. Disputable  Presumption  -  ​one  which can be contradicted or rebutted by presenting 
proof to the contrary which this article refers 
b. Presumption in this article does not apply 
1. With reservation as the interest 
2. Receipt without indication of particular installment 
3. Receipt for a part of the principal 
4. Payment of taxes 
5. Non-payment proven 
● Presumption does not apply if the receipt does not indicate when the payment was for 
● The presumption will only applied if; 
1. The prior installments have been paid 
2. Only if the receipt indicates which month the payment is being made for 
- It  is presumed that the prior installments are already paid even without its 
receipts even there is later installments 

Remedies available to creditors for the satisfaction of their claims (Art. 1177) 
1. Exact fulfillment with right to damages 
2. Pursue the leviable property of the debtor 
3. “After  having  pursued  the  property  in  possession  of  the  debtor”  exercise  all  the  rights  and 
bring  all  the  actions  of  the  debtor  except  those  inherent  in  or  personal to the person of the 
latter 
*Right  to  subrogation  -  the  right  of  the  creditor  to  collect  the  debtor’s  debt  to  his  own 
debtor 
4. Ask  the  court  to  rescind  or  impugn  acts  or  contracts  which  the  debtor  may  have  done  to 
defraud him when he cannot in any other manner recover his claim. 

Rule on transmissibility of rights and exceptions thereto (Art. 1178) 

GENERAL RULE: All rights are transmissible 
EXCEPT:  
1. Prohibited by law 
a. Contract  of  partnership  -  ​two  or  more  persons  bind  themselves  to  contribute 
money,  property  or industry to a common fund, with the intention of dividing profits 
among themselves (Art. 1767) 
b. Contract  of  agency  -  ​a  person  binds  himself  to  render  some  service  or  to  do 
something  in  representation  or  on  behalf  of  another,  with  the  consent  or  authority 
of the latter (Art. 1863) 
 c. Contract  of  commodatum  -  ​one  of  the  parties  delivers  to  another  something  not 
consumable so that the latter may use the same for a certain time and return it. 
2. Prohibited by the stipulation of the parties