Obligations

Obligations, Concept

Obligation is a juridical necessity to give, to do, or not to do. (Article 1156, Civil Code of the
Philippines)

Juridical necessity means that the court may be asked to order the performance of an obligation
if the debtor refuses to perform it. If an obligation cannot be enforced through the courts, it may be
disregarded with impunity.

Unless otherwise stated articles of law refer to provisions of the Civil Code of the Philippines.

Requisites of Obligation

1. Active subject (creditor or oblige) – The party who has the right to demand performance of the
obligation.
2. Passive Subject (debtor or obligor) – The party who is obliged to perform an obligation.
3. Prestation – the object or subject matter of the obligation. It may consist of giving, doing or not
doing something.
4. Efficient cause – the viniculum or the legal or juridical tie which binds the parties to an
obligation. The efficient cause of an obligation may be any of the five sources of obligation.

Civil Obligation and Natural Obligation distinguished

Civil Obligation (Art. 1156) is based on positive law; hence, it is enforceable by court action.

Natural Obligation is based on natural law; hence, not enforceable by court action. The
obligation, however, exists in equity and moral justice, such that if the debtor voluntarily performs it, he
can no longer recover what he has given.

Note: Prescription is generally used with reference to acquisition (or loss) of a right by the lapse
of time. The prescriptive period refers to the time within which an action must be brought; otherwise,
such right to file the action is lost.

Sources of Obligation (Art. 1157)

1. Law – a rule of conduct, just and obligatory, laid down by legitimate authority for common
observance and benefit. Obligations derived from law are not presumed. Only those expressly
determined in the Civil 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 on obligations.
2. Contracts – 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. (Article 1305)

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

3. Quasi-contracts – they refer to certain lawful, voluntary and unilateral acts giving rise to a
juridical relation to the end that no one shall be unjustly enriched at the expense of another.
 Examples:
a. Negotiorum Gestio – refers to the voluntary administration of the property, business or
affairs of another without his consent or authority. It creates the obligation to reimburse the
gestor for necessary and useful expenses.
b. Solutio Indebiti – this refers to payment by mistake of an obligation which was not due
when paid. It creates the obligation to return the payment.
c. Other quasi-contracts
a. When, without the knowledge of the person obliged to give support, it is given by a
stranger, the latter shall have the right to claim the same from the former, unless it
appears that he gave it out of piety and without intention of being paid. (Article 2164)
b. When funeral expenses are borne by a third person, without knowledge of those
relatives who were obliged to give support to the deceased, said relatives shall
reimburse the third person, should the latter claim reimbursement. (Article 2165)
c. When the person obliged to support an orphan, or an insane or other indigent person
unjustly refuses to give support to the latter, any third person may furnish support to
the latter, any third person may furnish support to the needy individual, with right of
reimbursement from the person obliged to give support. This provision applies when
the father or mother of a child under eighteen years of age unjustly refuses to support
him. (Article 2166)
4. Acts or omissions punishable by law – these are crimes or felonies. The commission of a crime
makes the offender civilly liable. Such civil liability includes restitution, reparation of the damage
caused, and indemnification (compensation for harm or loss) of consequential damages.

Example: If D steals the carabao of C, D’s civil liability consists of returning the carabao, paying for its
value if he cannot return it, and indemnifying the consequential damages suffered not only by C but also
those of his family or by a third person by reason of the crime. This will be in addition to any prison term
or other penalty that may be imposed upon him by the court.

5. Quasi-delicts (also known as “tort” or “culpa aquiliana”) – these are acts or omissions that cause
damage to another, there being fault or negligence but without any pre-existing contractual
relation between the parties.
For a quasi-delict to prosper, the complainant must establish:
a. Damages to the complainant
b. Negligence, by act or omission of the defendant or by some person for whose act the
defendant must respond, was guilty
c. The connection of cause and effect between such negligence and damages. With respect to
the third element, the negligent act or omission must be the proximate cause of the injury.

Example:

If a person, while cleaning his window, causes a flower pot to fall through his negligence thereby
injuring someone passing by, the former is liable for damages to the latter.
 Nature and Effect of Obligations

Determinate thing and Generic thing

1. Concept
A thing is determinate when it is particularly designated or physically segregated from all
others of the same class.
A thing is indeterminate or generic when it is not particularly designated or physically
segregated from all others of the same class.
2. Importance of knowing whether a thing is determinate or generic
As a rule, the loss of a determinate thing through a fortuitous event extinguishes the
obligation. (Article 1262)

Obligations of one obliged to give a determinate thing

1. To take care of the thing with the diligence of a good father of a family unless the law or
agreement of the parties requires another standard of care. (Article 1163)
Diligence of a good father of a family means the ordinary care that an average person
exercises in taking care of his property.
2. To deliver the thing

This involves placing the thing in the possession or control of the creditor either actually
or constructively.

3. To deliver the fruits of the thing. (Article 1164)

a. Kinds of fruits
1. Natural Fruits – spontaneous products of the soil and the young and other products of
animals. Trees that grow naturally on the soil without the intervention of man and the
colt delivered by a mare are natural fruits. For the young and other products of animals,
they are natural fruits even with the intervention of human labor.
2. Industrial Fruits – those produced by land of any kind through cultivation or labor.
Examples are rice, corn and other crops produced through the intervention of human
labor.
3. Civil Fruits – fruits which are the result of a juridical relation such as the rent of a
building, price of lease of land and other property and the amount of perpetual or life
annuities.
b. When creditor has a right to the fruits of a determinate thing
The creditor has the right to the fruits of a thing from the time the obligation to deliver
it arises. However, he shall acquire no real right over it until the thing has been delivered to
him. (Article 1164)
c. When obligation to deliver the thing arises
1. If the obligation is a pure obligation or one whose performance is not subject to a
suspensive period or suspensive condition. The obligation to deliver arises from
perfection.
2. If the obligation is subject to a suspensive period or suspensive condition, the obligation
to deliver arises upon the arrival of the term or upon fulfillment of the condition.
d. Rights of the creditor
 1. Personal right – (jus in personam or jus ad rem) Right that may be enforced by one
person to another, such as the right of the creditor to demand the delivery of the thing
and its fruits from the debtor.
2. Real right – (jus in re) Right or power over a specific thing, such as possession or
ownership, which is a right enforceable against the whole world. This is the right
acquired by the creditor over the thing and its fruits when they have been delivered to
him.
4. To deliver its accessions and accessories even if they have not been mentioned. (Article 1166)
a. Accessions – everything that is produced by a thing or is incorporated or attached thereto,
either naturally or artificially.
b. Accessories – those joined to or included with the principal thing for the latter’s better use,
perfection or enjoyment (such as the keys to a car or a house, or the bracelet of a
wristwatch) anything that is necessary for the perfection, use, and preservation of a thing (if
wala yung accessory, hindi magagamit yung thing).

Remedies of the Creditor

1. If the debtor fails to perform his obligation to deliver a determinate thing, the creditor may
a. To compel the debtor to make the delivery. (Article 1165)
b. To demand damages to the debtor. (Article 1170)
2. If the debtor fails to perform his obligation to deliver a generic thing, the creditor may
a. To ask that the obligation be complied with at the expense of the debtor. (Article 1165)
b. To demand damages from the debtor. (Article 1170)
Example:
D is obliged to deliver 10 sacks of rice to C. If D does not perform his obligation on due date
upon C’s request, C can obtain 10 sacks of rice from other sources at the expense of D. C can
do so because the thing is generic and thus can be replaced with the same kind.
3. If the debtor fails to perform his obligation in obligations to do
a. If the debtor fails to perform the obligation or performs it but contravenes the tenor
(violation of the terms and conditions or defects in the performance of the obligation)
thereof
1. Creditor may have the obligation executed at the expense of the debtor. (Article 1167)
2. He may also demand damages from the debtor. (Article 1170)
b. If the debtor performs the obligation but does it poorly
1. Creditor may have the same be undone at debtor’s expense. (Article 1167)
2. Creditor may also demand damages from the debtor. (Article 1170)
4. If the debtor does what has been forbidden him
a. The creditor may demand that what has been done be undone.
b. He may also demand damages from the debtor.
Grounds for Liability to pay Damages

1. Fraud
2. Negligence
3. Delay
4. Contravention of the tenor of the obligation

Damages

1. Concept, distinguished from injury

Damages refer to the harm done and the sum of money that may be recovered in
reparation for the harm done.
Injury refers to the wrongful, unlawful or tortuous act which causes loss or harm to
another. It is the legal wrong to be redressed.
2. Kinds of damages
a. Actual or compensatory damages – refers to the pecuniary loss (loss in business or
profession) that may be recovered. It includes the value of the loss suffered and profits not
realized. (Article 2199)
b. Moral damages – include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. (Article 2217)
c. Nominal damages – refer to damages to vindicate (clear) a right. (Article 2221) Minimal
money damages awarded to an individual in an action where the person has not suffered
any substantial injury or loss for which he or she must be compensated.
d. Temperate or moderate damages – more than nominal but less than compensatory
damages, but may be recovered if the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty.
e. Liquidated damages – those agreed upon by the parties to a contract, to be paid in case of
breach.
f. Exemplary or corrective damages – are imposed by way of example or correction for public
good, in addition to the moral, temperate, liquidated or compensatory damages.
3. Proof of pecuniary loss
a. Actual damages – proof is required unless provided by law or stipulation. (Article 2199)
b. Other damages – proof is not required in order that moral, nominal, temperate or
liquidated or exemplary damages may be adjudicated. The assessment of such damages,
except liquidated ones, is left to the discretion of the court, according to the circumstances
of each case. (Article 2216)
Fraud

1. Concept
Fraud is the deliberate or intentional evasion of the debtor of the normal compliance of
his obligation. Under Article 1170, this actually refers to the fraud committed by the debtor at
the time of the performance of his obligation.

Kinds of Fraud in General

a. According to meaning
1. Fraud obtaining consent
a. Causal fraud or dolo causante – refers to fraud without which, consent would not
have been given. It renders the contract voidable. Fraud employed at the time of
the execution of a contract in order to secure consent, remedy is annulment
because of vitiation of consent.
Example:
B bough a ring from S who told him that the ring was embellished with diamond.
However, S knew all along that the embellishment was not diamond but ordinary
glass. B here gave his consent because of the fraud employed by S; hence, the
contract is voidable.
b. Incidental fraud or dolo incidente – refers to fraud without which, consent would
still have been given but the person giving it would have agreed on different terms.
The contract is valid but the party employing it shall be liable for damages.
Committed in the performance of pre-existing obligation, remedy is damages.
Example:
Gono enter into a contract to deliver 500 cavans of rice to Rhea with a price per
cavan of 1,300 pesos, Gono delivered 300 cavans but withheld the delivery of the
remaining, stating that the price went up and priced the rice to 1,600 per cavan. The
fraud here is dolo incidental because it is committed to the existing contract.
2. Fraud in the performance of the obligation
This is the deliberate act of evading fulfillment of an obligation in a normal
manner. This presupposes an existing obligation; hence, the fraud has no effect on the
validity of the contract since it was employed after perfection. However, the party
employing it shall be liable for damages. (Article 1170)
Example:
B ordered 10 bags of powder soap from S who agreed to deliver the same after
2 days. On due date, S delivered 10 bags of powder soap which he mixed with chalk.
This is fraud in the performance of an obligation which entitles B to recover damages.
The fraud, however, does not have any effect on the validity of the contract.
b. According to time of commission
1. Future fraud
A waiver of an action for future fraud cannot be made. If there is an agreement
for its waiver, the same is void.
2. Past fraud
A waiver of an action for past fraud may be made, since the commission of such
fraud can no longer be encouraged. Such waiver is an act of liberality on the
part of the creditor.
NEGLIGENCE

1. Concept
It is the omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the person, of the time, and of the place. It is the failure
to observe, for the protection of the interest of another person, that degree of care, precaution
and vigilance which the circumstances justly demand, whereby such other person suffers injury.
2. Test of Negligence
The test of negligence is whether the defendant in doing the alleged negligent act used
that reasonable care and caution which an ordinary person would have used in the same
situation.
3. Diligence to be observed
If the law or contract does not state the diligence which is to be observed in the
performance of the obligation, the debtor must observe the diligence of a good father of a
family.
4. Kinds
a. Culpa Contractual (contractual negligence)
Negligence on the performance of a contract (such as the negligence committed by the
driver of a bus when a passenger is hurt during a trip because there is a breach of contract
of carriage). Master-servant rule applies.
b. Culpa Aquiliana (civil negligence or tort or quasi-delict or culpa extra-contractual)
These are acts or omissions that cause damage to another, there being no contractual
relation between the parties. Master-servant rule does not apply. If a pedestrian is hit by a
bus through reckless driving of the driver, the latter’s negligence is not the negligence of the
owner. The defense of a good father of a family in the selection and supervision of
employees is a defense on the part of the employer to escape liability.
c. Culpa Criminal (criminal negligence)
This is negligence that results in the commission of a crime. Defense of a good father of
a family is not proper because the employee’s guilt is automatically the employer’s civil guilt
if the former is insolvent.
Passenger to bus owner – culpa contractual
Passenger to bus driver – culpa criminal
Pedestrian to bus owner – culpa aquiliana
Pedestrian to bus driver – culpa criminal
DELAY OR DEFAULT OR MORA
1. Concept
Delay or default or mora is the non-fulfillment of an obligation with respect to time.
2. Kinds
a. Mora Solvendi – delay on the part of the debtor.
1. Ex re – delay in real obligations (obligations to give)
2. Ex persona – delay in personal obligations (obligations to do)
b. Mora Accipiendi – delay on the part of the creditor. This exists when the creditor refuses to
accept the thing due without justifiable reason.
c. Compensatio Morae – delay in reciprocal obligations (both parties are in default). Here, it is
as if there is no delay.
3. Requisites, when debtor incurs delay in obligations to give or to do
General Rule: The debtor incurs delay from the time the creditor demands fulfillment of the
obligation (either judicially or extra-judicially) but the debtor fails to comply with such demand.
(NO DEMAND, NO DELAY, AS A RULE) The following are the requisites of delay:
1. That the obligation be demandable and already liquidated.
2. The debtor does not perform the obligation.
3. The creditor demands the performance either judicially or extra-judicially.
4. The debtor fails to comply with such demand.

Example:

D owes C P5,000.00. The obligation is due on May 15. If D does not pay on May 15, he is not yet
in delay. But if C makes a demand on him to pay on that date or within a reasonable time
thereafter and D does not comply, then D will be in delay.

EXCEPTIONS, delay will exist even without demand in the following cases (Article 1169)

a. When the law so provides.

b. When the obligation expressly so declares.
c. When time is of the essence of the contract.
d. When demand would be useless.
e. In reciprocal obligations, where the obligations arise out of the same cause and must be
fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by
the other begins notwithstanding the absence of demand.

NOTES:

a. In a and b above, it is not sufficient that the law or obligation fixes a date for performance, it
must further state expressly that after the period lapses, default will commence.
b. There is no delay in an obligation not to do as one cannot be in delay for not doing
something.
4. Effects of Delay
a. On the part of the debtor
1. The debtor shall be liable for the payment of damages. (Article 1170)
 2. If the obligation consists in the delivery of a determinate thing, he shall be responsible
for any fortuitous event until he has effected the delivery. (Article 1165)
b. On the part of the creditor
1. He shall bear the risk of loss and shoulder the expenses for the preservation of the
thing.
2. The debtor may resort to the consignation of the thing due. (Article 1258)
FORTUITOUS EVENTS
1. Concept
Fortuitous events are those events that could not be foreseen, or which, though
foreseen, are inevitable. (Article 1174) It is not enough that the event should not been foreseen
or anticipated, but it must be one impossible to foresee or avoid.
Example:
Natural calamities or acts of God such as earthquake, typhoon and lightning; and acts of
man (force majeure) such as war and armed robbery.
2. Elements
a. The cause must be independent of the debtor’s will.
b. There must be impossibility of foreseeing the event or of avoiding it even if it can be
foreseen.
c. The occurrence of the event must be of such character as to render it impossible for the
debtor to perform his obligation in a normal manner.
3. Liability for fortuitous events
General Rule: No person shall be liable for fortuitous events, his obligation will be extinguished.
Exceptions to the rule:
a. When the law expressly provides for liability even in case of fortuitous events
b. When the parties have declared liability even in case of fortuitous event
c. When the nature of the obligation requires the assumption of risk
4. Burden of proving loss due to fortuitous event
The burden of proving that the loss was due to fortuitous event rests on him who
invokes it. In order for a fortuitous event to exempt one from liability, it is necessary that he
must have committed no negligence or misconduct that may have occasioned the loss.
 DIFFERENT KINDS OF OBLIGATIONS
1. Pure Obligation
2. Conditional Obligation
3. Obligation with a period
4. Alternative Obligation
5. Facultative Obligation
6. Joint Obligation
7. Solidary Obligation
8. Divisible Obligation
9. Indivisible Obligation
10. Obligation with a Penal Clause

Pure Obligations, concept

A pure obligation is one without a term or condition and is demandable at one.

Example:

I promise to give you P5,000. This is immediately demandable since there is no term that must
expire or a condition that must happen for the obligation to be demandable.

Conditional Obligations, concept