I.

Introduction to obligation

A.Obligation in General

1.Definition: 1156
Article 1156. An obligation is a juridical necessity to give, to do or not to do.
a “legal relation established between one person and another, whereby the
latter is bound to the fulfillment of a prestation which the former may
demand of him.’’3

2.Concept:
Obligations may be either civil or natural.4 A civil obligation is one which has
a binding force in law, and which gives to the obligee or creditor the right of
enforcing it against the obligor or debtor in a court of justice. This is the
obligation which is defined in Art. 1156 of the Code. A natural obligation, on
the other hand, is one which cannot be enforced by action, but which is
binding on the party who makes it in conscience and according the natural
law.5

(1) A civil obligation is based on positive law, while a natural obligation is

based on equity and natural law; and (2) The former is enforceable in
courts of justice, while the latter is not.8

3.Elements:
Requisites of Obligations. — An obligation has four essential requisites.
They are: (1) A juridical or legal tie, which binds the parties to the obligation,
and which may arise from either bilateral or unilateral acts of persons; (2) An
active subject known as the obligee or creditor, who can demand the fulfi
llment of the obligation; (3) A passive subject known as the obligor or
debtor, against whom the obligation is juridically demandable; and (4) The
fact, prestation or service which constitutes the object of the obligation.

B. Sources of Law Article 1157

Obligations arise from:
1. Law - 1158
2. Contracts 1159
3. Quasi-contracts 1160
4. Acts or omissions punished by law 1161
5. Quasi-delicts 1162
Mendoza vs Arrieta Page 34

Quasi-delicts and criminal offenses are sometimes difficult to distinguish

from each other. However, they may be distinguished from each other in the
following ways: (1) Crimes affect the public interest, while quasi-delicts are
only of private concern; (2) The Penal Code punishes or corrects the
criminal act, while the Civil Code, by means of indemnification, merely
repairs the damages incurred; (3) Generally, there are two liabilities in
crime: criminal and civil. In quasi-delict, there is only civil liability; and (4)
Crimes are not as broad as quasi-delicts, because the former are punished
only if there is a law clearly covering them, while the latter include all acts in
which any kind of fault or negligence intervenes.

II. 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.1

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.2

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.3

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.4

A. Obligations To Give page 43

Determinate- specific
Indeterminate- general
An obligation to give a thing may be either determinate or generic. It is
determinate when the object is particularly designated or physically
segregated from all others of the same class.5 It is generic or
indeterminate when the object is designated merely by its class or genus
without any particular designation or physical segregation from all others of
the same class. In other words, in the fi rst the object is a concrete,
particularized thing, indicated by its own individuality, while in the second
the object is one whose determination is confi ned to that of its nature— to
the genus to which it pertains, such as a horse or a chair.

Art. 1167. If a person obliged to do something fails to do it, the same shall
be executed at his cost.
The 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.

B. Obligations To Do and not to do page 52

1. Obligations To Do
In obligation to do (positive personal obligations), if the obligor fails to do
that which he has obligated himself to do, the obligee can have the
obligation performed or executed at the expense of the former,32 and, at
the same time, demand for damages by reason of the breach.

, page 53 if there has been a performance of the obligation, but in

contravention of the tenor thereof, the following rights are available to the
obligee: (1) To have the obligation performed or executed at the expense of
the obligor;37 (2) to ask that what has been poorly done be undone;38 and
(3) to recover damages because of breach of the obligation.

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.

2. Obligations To Do page 52
In obligations not to do (negative personal obligations), the object of the
obligation is fulfi lled or realized so long as that which is forbidden is not
done by the obligor. If the obligor does what has been forbidden him, two
remedies are available to the obligee — to have it undone at the expense of
the obligor in accordance with Art. 1168 and to ask for damages in
accordance with Art. 1170.
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 fulfi
llment of their obligation.
However, the demand by the creditor shall not be necessary in order that
delay may exist:
(1) When the obligation or the law expressly so declares; or
(2) 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
(3) 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 fulfi lls his obligation, delay by the other begins.43

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.44

Art. 1171. Responsibility arising from fraud is demandable in all obligations.

Any waiver of an action for future fraud is void.45

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.46

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.
C. Transmissibility of Obigations

General Rule:
All rights that are acquired by virtue of an obligation are transmissible. 
Subject to such laws, all rights acquired by virtue of an obligation are
transmissible. Heirs shall be liable only to the extent of what they stand to
inherit.
Transmissibility is that character whereby an act, a deed or a title
whereby it passes on to one’s heirs or assigns.

Intransmissible rights are rights that do not pass on to one’s heirs or

assigns. 

Exceptions:
(1) Prohibited by law. — When prohibited by law, like the rights in
partnership, agency, and commodatum which are purely personal
in character.
(a) By the contract of partnership, two or more persons bind
themselves to contribute money, property or industry to a common
fund, with the intention of dividing the profits among themselves.
(Art. 1767.)
(b) By the 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. 1868.)
(c) By the 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.

D.Performance of Obligation page 70-74

Voluntary Breach Through Contravention of Tenor of Obligation. —
Under Art. 1170 of the Civil Code, not only debtors guilty of fraud,
negligence or default in the performance of obligations are decreed liable; in
general, every debtor who fails in the performance of his obligations is
bound to indemnify the creditor for the damages caused thereby. The
phrase “in any manner contravene the tenor” of the obligation includes not
only any illicit act which impairs the strict and faithful fulfi llment of the
obligation, but also every kind of defective performance.

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.

Extinguishment of Interests and Prior Installments. — According to the fi

rst paragraph of Art. 1176, if the debtor is issued a receipt by the creditor
and on the face of the receipt it is shown that the principal has been paid
without any reservation with respect to the interest, there arises a disputable
presumption that the interest has also been paid. This is in conformity with
the rule that if the debt produces interest, payment of the principal shall not
be deemed to have been made until the interests have been covered.143
According to the second paragraph, if the debtor is issued a receipt by the
creditor acknowledging payment of a latter installment of a specifi ed debt
without any reservation with respect.

Art. 1175. Usurious transactions shall be governed by special laws.139

Usurious Transactions. — Usury may be defi ned as contracting for or
receiving something in excess of the amount allowed by law for the loan or
forbearance of money, goods or chattels. It is the taking of more interest for
the use of money, goods or chattels or credit than the law allows.

The special laws referred to in Art. 1175 are the Usury Law (Act No. 2655)
and the different laws amending it

E. Breach of Obligations
In general, the breach of an obligation may be either voluntary or
involuntary. It is voluntary if the debtor or obligor in the performance of his
obligation is guilty of default (mora), or fraud (dolo), or negligence (culpa), or
in any manner contravenes the tenor thereof.48 It is involuntary if he is
unable to comply with his obligation because of an event which cannot be
foreseen, or which, though foreseen, was inevitable.49 In the fi rst he is
liable for damages, in the second he is not.

1. Voluntary Breach Through Default or Mora page 57

The fi rst kind of voluntary breach of an obligation regulated by the Civil
Code is that which takes place by reason of default or mora. Default or mora
signifi es the idea of delay in the fulfi llment of an obligation with respect to
time.

There are three kinds of default or mora. They are:

(1) Mora solvendi or the delay of the obligor or debtor to perform his
obligation. This delay is called mora solvendi ex re when the obligation is an
obligation to give or mora solvendi ex persona when the obligation is an
obligation to do.
 (2) Mora accipiendi or the delay of the obligee or creditor to accept the
delivery of the thing which is the object of the obligation.
(3) Compensatio morae or the delay of the parties or obligors in reciprocal
obligations.50 There are three requisites which should be present in order
that the obligor or debtor may be considered in default. They are:
(1) The obligation is demandable and already liquidated;
(2) The obligor or debtor delays performance; and
(3) The creditor requires the performance judicially or extrajudicially

2. Voluntary Breach Through Fraud or Dolo page 62

The second kind of voluntary breach of an obligation regulated by the Civil
Code is that which takes place by reason of fraud or dolo. According to
Manresa, fraud or dolo consists in the conscious and intentional proposition
to evade the normal fulfi llment of an obligation.67 This type of fraud, which
is present during the performance of an obligation, must not be confused
with the causal or incidental fraud, which is present at the time of the birth of
an obligation. Under our legal system, fraud in general may be classifi ed
into civil and criminal fraud. Civil fraud, in turn, may be classifi ed into the
following: fi rst, the fraud or dolo in the performance of an obligation;68 and
second, the fraud or dolo in the constitution or establishment of an
obligation.69 The two may be distinguished from each other as follows:
(1) The fi rst is present only during the performance of a preexisting
obligation, while the second is present only at the time of the birth of the
obligation.
(2) The fi rst is employed for the purpose of evading the normal fulfi llment of
an obligation, while the second is employed for the purpose of securing the
consent of the other party to enter into the contract.
(3) The fi rst results in the nonfulfi llment or breach of the obligation, while
the second, if it is the reason for the other party upon whom it is employed
for entering into the contract, results in the vitiation of his consent.
(4) The fi rst gives rise to a right of the creditor or obligee to recover
damages from the debtor or obligor, while the second gives rise to a right of
the innocent party to ask for the annulment of the contract if the fraud is
causal or to recover damages if it is incidental.

3. Voluntary Breach Through Negligence or Culpa page 64

The third kind of voluntary breach of an obligation regulated by the Civil
Code is that which takes place by reason of the negligence or culpa of the
debtor or obligor. It 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.
F. Excuse for non-performance of obligation
Art. 1174. Except in cases expressly specifi ed 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.
Concept of Fortuitous Event. Page 74 — According to the above article,
fortuitous event may be defined as an event which could not be foreseen, or
which, though foreseen, was inevitable.

Austria vs. Court of Appeals 39 SCRA 527 page 90

General Rule. Fortuitous events may be classifi ed into fortuitous event

proper (act of God) and force majeure (fuerza mayor) depending upon
whether there is human intervention or not. The fi rst refers to an event
which is absolutely independent of human intervention, while the second
refers to an event which arises from legitimate or illegitimate acts of persons
other than the obligor.94 The distinction, however, is merely technical.
Essentially, there is no substantial difference between the two; both refer to
an event or cause which is independent of the will of the obligor.

As to foreseeability, fortuitous events may also be classifi ed into ordinary

and extraordinary fortuitous event. The fi rst refers to an event which usually
happens or which could have been reasonably foreseen, while the second
refers to an event which does not usually happen and which could not have
been reasonably foreseen, such as fi re, war, pestilence, unusual fl ood,
locust, earthquake, and others of a similar nature.

Exceptions. — There are, however, exceptions to the rule that the obligor
or debtor cannot be held liable in case of his inability to comply with his
obligation by reason of a fortuitous event. They are: fi rst, where such
liability is expressly specifi ed by law; second, where it is declared by
stipulation of the parties; and third, where the nature of the obligation
requires the assumption of risk