THE LAW OF OBLIGATION AND CONTRACT

CHAPTER 1 2. Public Law

General Provisions  Under criminal cases
INTRODUCTION TO LAW
LAW IN GENERAL
 Rules of Action Obligation
 Uniformity  The term obligation is derived from Latin word
 Minimize the gap in different sector of the society “obligation” which means “tying” or “binding”
CHARACTERISTIC OF LAW
Philippine Civic Code Article 1156
1.) Rule of Conduct

2.) Obligatory An obligation is a

3.) Promulgated by legitimate authority
juridical necessity to
4.) Common observance & Benefits
give, to
SOURCES OF LAW

1.) Constitution
do, or not to do.
 High law of the land  An obligation is a juridical necessity to give, to
do, or not to do.
2.) Legislation
 Anything that enact laws
JURIDICAL NECESSITY
3.) Administrative/Executive Action
 Juridical tie; connotes that in case of
 Paano iimplement yung law
noncompliance, there will be legal sanctions.
4.) Jurisprudence
 An obligation is nothing more than the duty of a
 The way we interpret the law
person (obligor) to satisfy a specific demandable
claim of another person (obligee) which, if
5.) Custom
breached, is enforceable in court.
 Paniniwala
 A contract necessarily gives rise to an obligation
THREE BRANCHES OF GOVERMENT but an obligation does not always need to have a
1.) Executive contract
 Implement laws (Head of state) The debtor must comply with his obligation whether he
like it or not, otherwise his failure will be visited with
2.) Legislative (enact/create) some harmful or undesirable consequences.
 Gumagawa ng batas (Congress)
DAMAGES
3.) Judiciary  Sum of money given as a compensation for the
 Interpret laws injury or harm suffered by the obligee for the
violation of his right.
As to Purpose of Law
NATURE OF OBLIGATION UNDER CIVIL CODE
1.) Substantive
 Actual law/ mga batas na sinusunod (a) CIVIL OBLIGATION
 that defined in Article 1156; an obligation, if not
2.) Procedural fulfilled when it becomes due and demandable,
 Paano navavalidate yung substantive right ng tao may be enforced in court through action;
 Papaano sila kakasuhan based on law; the sanction is judicial due
process
As to Subject Matter
(b) NATURAL OBLIGATION
1. Private Law  A special kind of obligation which cannot be
 Relationship to 1 person to another enforced in court but which authorizes the
THE LAW OF OBLIGATION AND CONTRACT
retention of the voluntary payment or
performance made by the debtor; based on
equity and natural law. (i.e. when there is
prescription of duty to pay, still, the obligor paid
his dues to the obligee – the obligor cannot
recover his payment even there is prescription)
the sanction is the law, but only conscience had
originally motivated the payment.
ELEMENTS OF AN OBLIGATION
1.) PASSIVE SUBJECT – (Debtor / Obligor)
 The person who bound to the fulfilment of
obligation; he who has obligation or duty
2.) ACTIVE SUBJECT (Creditor / Obligee)
 The person who is entitled to demand the
fulfilment of obligation; who has the right
3.) OBJECT or PRESTATION – (Subject matter of the
obligation)
 It may consist in giving, doing, or not doing;
conduct required to be observed by the debtor;
4.) JURIDICAL or LEGAL TIE (Efficient Cause)
 Which binds or connects the parties to the
obligation; The tie in an obligation can easily
determined by knowing the source of the
obligation.
SOURCES OF OBLIGATION
1.) Law
 They are imposed by law itself.
Ex. Obligation to pay taxes; obligation to support one’s
family
2.) Contracts
 Arise from the stipulation of the parties; meeting
of the minds/ formal agreement.
Ex. The obligation to repay a loan or indebtedness by
virute of an agreement.
3.) Quasi-contract
 When they arise from lawful, voluntary and
unilateral acts which are enforce to the end that
no one shall be unjustified enriched or benefited
at the expense of another.
 These obligation may be consider as arising from
law.
Ex. The obligation to return money paid by mistake or
which is not due.
4.) Crimes or Act or Omissions punished by law
 When they arise from civil liabilities which is the
consequence of a criminal offense.
Ex. The obligation of a thief to return the car stolen by
him; the duty of a killer to indemnify the heirs of his
victim
5.) Quasi-delicts or Torts
 When they arise from damage cause to another
through an act or omission, there being fault or
negligence, but no contractual relation exists
between the parties.
Ex. The obligation of head of a family that lives in a
building or part thereof to answer for damages cause by
the things thrown or falling from the same; the obligation
of the possessor of an animal to pay for the damage which
it may
PRESTATION (Object)
1. TO GIVE
 delivery of a thing to the creditor (in sale, deposit,
pledge, donation);
2. TO DO
 covers all kinds of works or services (contract for
professional services);
3. NOT TO DO
 consists of refraining from doing some acts (in
following rules and regulations)
INJURY – wrongful act or omission which causes loss or
harm to another
DAMAGE – result of injury (loss, hurt, harm
FORM OF OBLIGATION
Form of Obligation
 Refers to the manner in which an obligation is
manifested or incurred. It may be oral or in
writing or partly oral and partly writing.
1.) As a general rule, the law does not require any form in
obligation arising from contracts for their validity or
binding force
2.) Obligations arising from other sources, do not have any
form at all.
Obligation, Right and Wrong Distinguished
THE LAW OF OBLIGATION AND CONTRACT

1.) Obligation is the act or performance which the law

will enforce. Sources Classified
The law enumerates five (5) sources of obligations.
2.) Right is the power which a person has under the law, to
demand from another presentation. 1.) Those emanating from law

3.) Wrong (cause of action) an act or omission of one 2.) Those emanating from privates acts which may be
party in violation of the legal right or rights of another. In further subdivided into:
law, the term injury is also used to refer to the wrongful
violation of the legal right of another. a) Those arising from licit acts, in the case of
contracts and quasi-contracts (infa); and
b) Those arising from illicit acts, which may be
The Essential Elements of legal wrong or injury are: either punishable in the case of delicts or crimes,
or not punishable in the case of quasi-delicts or
(a.) Legal Right in favor of a person torts.
(creditor/obligee/plaintiff) Article 1158

(b.) Correlative legal obligation to respect or not to violate
said right.
(c.) Act or omission by the latter in violation of said right
with resulting injury and damage to the former.
KINDS OF OBLIGATION
From the viewpoint of subject matter may be real or
personal.
(1.) REAL OBLIGATION (obligation to give)
 Is that in which the subject matter is a thing
which the obligor must deliver to the obligee
(2.) PERSONAL OBLIGATION (obligation to do or not
to do
 Which the subject matter is an act to be done or
not to be done.
2 Kind of Personal Obligation
 Obligation derived from law are not presumed.
Only those expressly determined in this Code
or special law 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 provision of this book.
Legal obligations
Article 1158 refers to legal obligation or obligations
arising from the law. They are the exception, not the
rule. To be demandable, they must be clearly set forth in
the law, the Civil Code or special laws.
Special laws
 Refers to all other laws not contained in the Civil
Code.
Ex. Corporation Code, Negotiable Instrument Law,
Insurance Code, National Internal Revenue Code, Revised
Penal Code, Labor Code, Etc.

(a.) Positive Personal Obligation

 Obligation to do or to render service. Article 1159

(b.) Negative Personal Obligation  Obligation arising from contracts have the force
 Obligation not to do (which naturally includes of law between the contracting parties and should
obligations “not to give”) be complied with in good faith.

CONTRACT
Article 1157  Meeting of minds between two persons whereby
one binds himself, with respect to the other, to
 Obligation arises from: give, to do something or to render some service;
(1) Law governed primarily by the agreement of the
(2) Contracts contracting parties
(3) Quasi-contracts;
(4) Acts or omission punish by law; and 1.) BINDING FORCE
(5) Quasi-delicts.  Obligations arising from contracts have the force
of law between the contracting parties, they have
(NASA SOURCES OF OBLIGATION) same binding effect of obligation imposed by the
THE LAW OF OBLIGATION AND CONTRACT
law. This does not mean, however that contracts
is superior to the law. As a source of enforceable
obligation, contract must be valid and it cannot be
valid if it is against the law.
2.) REQUIREMENT OF VALID CONTRACT
 A contract is valid if it is not contrary to law,
morals, good customs, public order, and public
policy. It is invalid or valid if it is contrary to
law, moral, goods customs, public order, or
public policy.
In the eyes of the law, a void contract oes not exist.
Consequently, no obligation will arise. A contract may be
valid but cannot be enforced. This is true in the case of
unenforceable contract.
3.) BREACH OF CONTACT
 A contact may be breached or violated by party in
whole or in a part.
 A breach of contact take place when party fails or
refuses to comply, without legal reason or
justification, with his obligation under the
contract as promised.
COMPLIANCE IN GOOD FAITH
 Compliance or performance mean in accordance
with the stipulations or terms of the contract or
agreement.
 Sincerity and honesty must be observed to
prevent one party from taking unfair advantage
over the other.
Article 1160
 Obligations derived from quasi-contracts shall be
subject to the provisions of chapter 1, title 17 of
the book.
QUASI-CONTRACT
 That juridical relation resulting from lawful,
voluntary and unilateral acts by virtue of which,
both parties become bound to each other, to the
end that no one will be unjustly enriched or
benefited at the expense of the other.
It is not properly a contract at all. In contract, there is a
meeting of the minds or consent; the parties must have
deliberately entered into a formal agreement. In a quasi-
contract, there is no consent but the same is supplied by
fiction of law. In other words, the law considers the parties
as having entered into a contract, although they have not
actually done so, and irrespective of their intention, to
prevent injustice or the unjust enrichment of a person at
the expense of another.
KIND OF QUASI-CONTRACTS
1. NEGOTIORUM GESTIO
 Juridical relation which takes place when
somebody voluntarily manages the property
affairs of another without the knowledge or
consent of the latter.
Ex.
X went to Baguio with his family without leaving
somebody to look after his house in Manila. While in
Baguio, a big fire broke out near the house of X. through
the effort of Y, a neighbor, and the house of X was saved
from being burned. Y, somehow, incurred expenses.
In this case, X has obligation to reimburse Y for said
expenses, although he did not actually give his consent to
the act of Y in saving his house, on the principle of quasi-
contract.
2.) SOLUTIO INDEBIT
 Juridical relation which is created when
something is received when there is no right to
demand it and it was unduly delivered through
mistake.
a) There is no right to receive the thing delivered;
b) The thing was delivered through mistake.
Ex. D owes C P1, 000. If D paid T believing that T was
authorized to receive payment for C, the obligation to
return on the part of T arises. If D paid C P2, 000 by
mistake, C must return the excess of P1, 000.
E.g. If I let a storekeeper change my P500 bill and by error
he gives me P560, I have the duty to return the extra P60
Article 1161
 Civil obligations arising from criminal offenses
shall be governed by the penal laws, subject to the
provisions of Article 2177, and of the pertinent
provisions of Chapter 2, Preliminary in Human
Relations, and of Title 18 of this book, regulating
damages.
Civil Liability arising from crimes or delicts
1.) Oftentimes, the commission of a crime causes not only
moral evil but also material damage. From this principle,
the rule have been established that very person criminally
liable for an act or omission is also civilly liable for
damages.
2.) In crimes, however, which cause no material damage
(like contempt, insults to persons in authority, gambling,
violations of traffic regulations), there is no civil liability
to enforce. But a person not criminally responsible may
THE LAW OF OBLIGATION AND CONTRACT

still be liable civilly, Rules such as failure to pay a
contractual debt: causing damage to another’s property
without malicious or criminal intent or negligence, etc.
Scope of Civil Liability
The extent of the civil liability for damages arising from
crimes is governed by the Revised Penal Code and the
Civil Code. This civil liability includes:
1.) Restitution
2.) Reparation for the damage caused
Crime distinguished from quasi-delict
The following are the distinctions:
1.) In crime, there is criminal or malicious intent or
criminal negligence, while in quasi-delict, there is only
negligence;
2.) In crime, the purpose is punishment, while in quasi-
delict, indemnification of the offended party;
3.) Crime affects public interest, while quasi-delict
concerns private interest;

3.) Indemnification for consequential damages
Ex. X stole the car of Y. If X is convicted, the court will
order X: (1) to return the car or to pay its value if it was
lost or destroyed; (2) to pay for any damage cause to the
car and (3) to pay such other damages suffered by Y as a
consequence of the crime.
Article 1162
 Obligation derived from quasi-delicts shall be
governed by the provisions of chapter 2, title
XVII of this book, and by special laws.
4.) In crime, there are generally 2 liablilities: criminal and
civil, there is only civil liability
5. Criminal liability cannot be compromised or settled by
parties themselves, while the liability fir quasi-delict can
be compromised as any other civil liability and
6.) In crime, the guilt of accused must be proved beyond
reasonable doubt, while in quasi-delict, the fault or
negligence of the defendant need only be proved by
preponderance of evidence.

Obligations arising from quasi-delicts.

A quasi-delict is an act or omission by person which cause

damage to another 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 parties

REQUISITES OF QUISI-DELICT
Before a person can be held liable for quasi-delict, the
following requisites must be present:

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.

5.) There is no pre-existing contractual relation between

the parties

Ex. While playing softball with his friends, X broke the

window glass of Y, his neighbor. The accident would not
have happened had they played little farther from the
house of Y.
In this case, X is under obligation to pay the damage
cause to Y by his act although there is no pre-existing
contractual relation between them because he is guilty of
fault or negligence.
THE LAW OF OBLIGATION AND CONTRACT
CHAPTER 2
Nature and Effect of Obligation
Article 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.
Meaning of specific or determinate thing.
The above provision refers to an obligation specific or
determinate thing.
A thing is said to be specific or determinate
particularly designated or physically segregated others
of the same class.
 Speaks of an obligation to care of a
DETERMINATE THING (that is one which is
specific; a thing identified by its individuality)
which an obligor is supposed to deliver to
another.
 Reason: the obligor cannot take care of the whole
class/genus.
Ex.
1.) The watch I am wearing
2.) The car sold by X
3.) My dog named “Terror”
4.) The house at the corner of Rizal and Del Pilar Street
5.) The toyota car with plate no. A.VV 316 (2008)
6.) This cavan of rice
7.) The money I gave you
Meaning of genetic or indeterminate thing.
A thing is GENETIC OR INDETERMINATE when it
refers only to class or genus to which it pertain and
cannot be pointed out with particularity.
Ex.
1.) A bulova calendar watch.
2.) The sum of P1000.
3.) A 1995 Toyota car.
4.) A cavan of rice.
5.) A police dog.
Specific thing and genetic thing distinguished
1.) A determinate thing, is identified by its
individuality. The debtor cannot substitute it with
another although the latter is of the same kind and quality
without the consent of the creditor.
2.) A genetic thing, is identified only by its specie. The
debtor can give anything of the same class as long as it
is of the same kind.
Ex. If S’s obligation is to deliverer to “B” a Bulova
calendar watch, S can deliver any watch as long as it is a
Bulova with calendar.
But if S obligation is to deliver to B a particular watch, the
one S is wearing, S cannot substitute it with another watch
without B consent nor can B require S to deliver another
watch without S consent although it may be of the same
kind and value.
Duties of debtor in obligation to give a
determinate thing.
(1.) Preserve or take care of the things
 In obligation to give (real obligation), the
obligor has the incidental duty to take care of
the thing due with diligence of a good father of
a family pending delivery.
a.) Diligence of a good father of a family
 The phrase has been equated with ordinary care
or the diligence which an average (a reasonably
prudent) person exercise over his own property.
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.
b.) Another standard of care
 However, if the law or the stipulation of the
parties provides for another standard of care
THE LAW OF OBLIGATION AND CONTRACT

(slight or extraordinary diligence), said law or

stipulation must prevail.
c.) Factors to be considered
 Diligence required necessarily depends upon
the nature of the obligation and corresponds
with the circumstances of the person, of the
time, and of the place.
 It is not necessarily the standard of care one
always uses in the protection of his property.
Diligence depends on the nature of obligation and
corresponds with the circumstances of the person, time,
and place
d.) Reason for debtor’s obligation
 The debtor must exercise diligence to insure that
the thing be delivered would subsist in the same
condition as it was when the obligation was
contracted. Without the accessory duty to take
care of thing.
2.) Deliver the fruits of the thing
 This is discussed under article 1164

3.) Deliver the accessions and accessories
 This is discussed under Article 1166
4.) Deliver the thing itself
5.) Answer for damages in case of non-fulfilment or
breach
Duties of debtor in obligation to deliver a
generic thing
The fruits mentioned by the law refers to natural,
industrial and civil fruits.
(1) Natural fruits
 Are the spontaneous products of the soil, and
the young and other products of animals.
Ex. grass; all trees and plants on lands produced without
the intervention of human labour.
(2) Industrial fruits
 Are those produced by lands of any kind
through cultivation or labour
Ex. e.g., sugar cane; vegetables; rice; and all products of
lands brought about by reason of human labour.
(3) Civil fruits
 are those derived by virtue of a juridical
relation,
Ex. rents of buildings, price of leases of lands and other
property and the amount of perpetual or life annuities or
other similar income
Right of Creditor to the Fruits
The creditor is entitled to the fruits of the thing to
be delivered from the time the obligation to make
delivery arises.
The intention of the law is to protect the interest of
the obligee should the obligor commit delay, purposely
or otherwise, in the fulfillment of his obligation.
When obligation to deliver fruits arises:

(1) Generally, the obligation to deliver the thing due and,

(1) To deliver a thing which is of the quality intended by
consequently, the fruits thereof, if any, arises from the
the parties taking into consideration the purpose of the
time of the perfection of the contract. Perfection in this
obligation and other circumstances.
case refers to the birth of the contract or to the meeting of
the minds between the parties.
(2) To be liable for damages in case of fraud, negligence,
or delay, in the performance of his obligation, or
(2) If the obligation is subject to a suspensive condition or
contravention of the tenor thereof.
period, it arises upon fulfillment of the condition or
arrival of the period. However, the parties may make a
ARTICLE 1164
stipulation to the contrary as regards the right of the
creditor to the fruits of the thing.
 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 (3) In a contract of sale, the obligation arises from the
over it until the same has been delivered to perfection of the contract even if the obligation is
him. (1095) subject to a suspensive condition or a suspensive period
where the price has been paid.
Different Kinds of Fruits
THE LAW OF OBLIGATION AND CONTRACT
(4) In obligations to give arising from law, quasi-
contracts, delicts, and quasi-delicts, the time of
performance is determined by the specific provisions of
law applicable
Meaning of personal right and real right.
1.) PERSONAL RIGHT
 Is the right or power of a person (creditor) to
demand from another (debtor), as a definite
passive subject, the fulfillment of the
latter’s obligation to give, to do, or not to do.
 
2.) REAL RIGHT
 Is the right or interest of a person over a
specific thing (like ownership, possession,
mortgage, lease record) without a definite passive
subject against whom the right may be
personally enforced
Ownership Acquired Delivery
 
Ownership and other rights over property are
acquired and transmitted in consequence of certain
contracts by tradition.
The meaning of the phrase “he shall acquire no real
right over it until the same has been delivered to him,”
is that the creditor does not become the owner until the
specific thing has been delivered to him.
ARTICLE 1165
When what is to be delivered is a determinate
thing, the creditor, in addition to the right granted him by
Article 1170, and 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
Remedies of Creditor in Real Obligation
(1.) In a specific real obligation (obligation to deliver a
determinate thing), the creditor may exercise the
following remedies or rights in case the debtor fails to
comply with his obligation:
(a) Demand specific performance or fulfillment
(if it is still possible) of the obligation with a
right to indemnity for damages; or
(b) Demand rescission or cancellation (in certain
cases) of the obligation also with a right to
recover damages; or
(c) Demand the payment of damages only where
it is the only feasible remedy.
(2.) A generic real obligation (obligation to deliver a
generic thing), on the other hand, can be performed by a
third person since the object is expressed only according
to its family or genus. In any case, the creditor has the
right to recover damages under Article 1170 in case of
breach or violation of the obligation.
Where debtor delays or has promised delivery
to separate creditors.
Paragraph 3 gives two (2) instances when a fortuitous
event does not exempt the debtor from responsibility. It
likewise refers to a determinate thing. An indeterminate
thing cannot be the object of destruction by a fortuitous
event because genus nunquam perit (genus never perishes).
Under the Consitution, no person shall be imprisoned for
non-payment of dept. however, a person may be subject to
subsidiary imprisonment for non-payment of civil liability
adjudged in a criminal case.
ARTICLE. 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)
(1) ACCESSIONS
 Are the fruits of, or additions to, or
improvements upon, a thing (the principal)
Ex. House or trees on a land; rents of a building; air
conditioner in a car; profits or dividends accruing from
shares of stocks; etc.
(2) ACCESSORIES
THE LAW OF OBLIGATION AND CONTRACT
 Are things joined to, or included with, the
principal thing for the latter’s embellishment,
better use, or completion.
Ex., key of a house; frame of a picture; bracelet of a watch;
machinery in a factory; bow of a violin.
Note that while accessions are not necessary to the
principal thing, the accessory and the principal thing must
go together but both accessions and accessories can exist
only in relation to the principal.
Right of creditor to accessions and
accessories.
The general rule is that all accessions and accessories
are considered included in the obligation to deliver a
determinate thing although they may not have been
mentioned. This rule is based on the principle of law that
the accessory follows the principal. In order that they will
be excluded, there must be a stipulation to that effect.
ARTICLE 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)
Situations contemplated in Article 1167
Article 1167 refers to an obligation to do, i.e., to perform
an act or render a service. It contemplates three
situations:
1.) The debtor fails to perform an obligation to do; or
2.) The debtor performs an obligation to do but contrary to
the terms thereof; or
3.) The debtor performs an obligation to do but in a poor
manner.
Remedies of creditor in positive personal
obligation.
1.) If the debtor fails to comply with his obligation to
do, the creditor has the right:
a) To have the obligation performed by himself, or
by another unless personal considerations are
involved, at the debtor’s expense; and
b) To recover damages. (Art. 1170.)
2.) In case the obligation is done in contravention of the
terms of the same or is poorly done, it may be ordered (by
the court) that it be undone if it is still possible to undo
what was done.
Performance by a Third Person
1.) COMPELLING PERFORMANCE BY DEBTOR
PROHIBITED
 A personal obligation to do, like a real
obligation to deliver a generic thing, can be
performed by a third person.
 While the debtor can be compelled to make the
delivery of a specific thing (Art. 1165.), a
specific performance cannot be ordered in a
personal obligation to do because this may
amount to involuntary servitude which, as a rule,
is prohibited under our Constitution.
2.) INDEMNIFICATION OF CREDITOR FOR
DAMAGES
 The person qualifications of the debtor are the
determining motive for the obligation
contracted (to sing in the night club), the
performance of the same by another would be
impossible or would result to be so different
that the obligation could not be consider
performed.
ARTICLE 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)
Remedies of creditor in negative personal
obligation.
In an obligation not to do, the duty of the obligor is
to abstain from an act. Here, there is no specific
performance. The very obligation is fulfilled in not doing
what is forbidden. Hence, in this kind of obligation the
debtor cannot be guilty of delay.
As a rule, the remedy of the obligee is the undoing of
the forbidden thing plus damages. However, if it is not
possible to undo what was done, either physically or
legally, or because of the right acquired by third person
who acted in good faith, or for some reason, his remedy is
THE LAW OF OBLIGATION AND CONTRACT
an action for damages cause by the debtor’s violation
of his obligation.
 EXAMPLE: S sold a land to B. It was stipulated that S
would not construct a fence on a certain portion of his land
adjoining that sold to B. Should S construct a fence in
violation of the agreement, B can have the fence
removed at the expense of S
ARTICLE 1169
NECESSITY TO DEMAND
 Those obliged to deliver or to do something
incur in delay from the time the obligee
judicially or extra judicially demands from
them the fulfillment 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’ fulfills
his obligation, delay by the other begins.
(1100a)
Meaning of Delay
GENERAL RULE: NO DEMAND, NO DELAY
The word “delay”, as used in the law, is not be understood
according to its meaning in common parlance. (Latin word
for MORA)
1.) ORDINARY DELAY
 Is merely the failure to perform an obligation on
time.
2.) LEGAL DELAY OR DEFAULT OR MORA
 Is the failure to perform an obligation on time
which failure, constitutes a breach of the
obligation.
TWO TYPES OF DELAY
1.) JUDICAL
2.) EXTRA JUDICAL
Kinds of delay or default
 
(1) MORA SOLVENDI
 The delay on the part of the debtor to fullfill
his obligation (to give or to do) by reason of a
cause imputable to him;
 
(2) MORA ACCIPIENDI
 The delay on the part of the creditor
without justifiable reason to accept the
performance of the obligation;
(3) COMPENSATIO MORAE
 Or the delay of the obligors in reciprocal
obligations (like in sale),i.e.,the delay of the
obligor cancels the delay of the obligee, and vice
versa.
No delay in negative personal obligation.
In an obligation not to do, non-fulfillment may take place
but delay is impossible for the debtor fulfills by not doing
what has been forbidden him.
Requisites of delay or default by the debtor.
There are three conditions that must be present before
mora solvendi can exist or its effects arise:
1.) Failure of the debtor to perform his (positive)
obligation on the date agreed upon;
2.) Demand (not mere reminder or no tice) made by the
creditor upon the debtor to fulfill, perform, or comply with
his obligation which demand, may be either judicial (when
a complaint is filed in court) or extra judicial (when made
outside of court, orally or in writing); and
3.) Failure of the debtor to comply with such demand
Effects of Delay
1.) MORA SOLVENDI
THE FOLLOWING ARE THE EFFECTS:
THE LAW OF OBLIGATION AND CONTRACT
a) The debtor is guilty of breach or violation
b) He is liable to the creditor for interest (in absence
of extrajudicial demaind, the interest shall
commence from the filing of complaint) or
damages.
c) He is liable even for a fortuitous event when the
obligation is to deliver a determinate thing.
However, if the debtor can prove that the loss
would have resulted just the same even if he had
not been in default, the court may equitably
mitigate or reduce the damages. If generic, he can
be compelled to deliver a thing of the same kind.
2.) MORA ACCIPIENDI
a) The creditor is guilty of breach of obligation;
b) He is liable for damages suffered, if any, by the
debtor;
c) He bears the risk of loss of the thing due;
d) Where the obligation is to pay money, the debtor
is not liable for interest from the time of the
creditor’s delay; and
e) The debtor may release himself from the
obligation by the consignation of the thing or sum
due.
3.) COMPENSATIO MORAE
 The delay of the obligor cancels out the effects
of the delay of the obligee and vice versa. The
net result is that there is no actionable default on
the part of both parties, such that as if neither one
is guilty of delay.
When demand not necessary to put debtor in
delay.
The general rule is that delay begins only from the moment
the creditor demands, judicially or extrajudicially, the
fulfillment of the obligation. The demand for performance
marks the time when the obligor incurs mora or delay and
is deemed to have violated his obligation. Without such
demand, the effect of default will not arise unless any of
the exceptions mentioned below is clearly proved:
ARTICLE 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)
GROUNDS FOR LIABILITY
Provision gives the (4) four grounds for liability which
may entitle the injured party damages, for all kinds of
obligations mention in Article 1157.
1) FRAUD (DECEIT OR DOLO)
 As used in Article 1170, it is the deliberate or
intentional evasion of the normal fulfillment of an
obligation. As a ground for damages, it implies
some kind of malice or dishonesty. And it cannot
cover cases of mere mistake and errors of
judgement made in good faith. Involves a design
to mislead or deceive.
Article 1170 refers to incidental fraud (dolo incidente)
committed in the performance of an obligation a/lready
existing be-cause ofcontract. It is to be differentiated from
causal fraud (dolo causante) or fraud employed in the
execution of a contract
2) NEGLIGENCE (FAULT OR CULPA)
 It is any voluntary act or omission, there being no
malice, which prevents the normal fulfillment of
an obligation. It is failure to exercise that degree
of care required by the circumstances.
3) DELAY (MORA)
 This has already been discussed under Article
1169 which determines the commencement of
delay
4) CONTRAVENTION OF THE TERMS OF
THE OBLIGATION.
 This is the violation of the terms and conditions
stipulated in the obligation. The contravention
must not be due to a fortuitous event or force
majeure.
THE LAW OF OBLIGATION AND CONTRACT
They are similar in that both are voluntary, that is, they are
committed with volition.
ARTICLE 1171
 Responsibility arising from fraud is
demandable in all obligation. Any waiver of an
action for future fraud void.
Waiver of action for future fraud void.
According to the time of commission, fraud may be past
or future.
A waiver of an action for future fraud is void (no
effect, as if there is no waiver) as being against the law and
public policy. A contrary rule would encourage the
perpetration of fraud because the obligor knows that even
if he should commit fraud he would not be liable for it thus
making the obligation illusory.
Waiver of action for past fraud valid.
What the law prohibits is waiver anterior to the fraud
and to the knowledge thereof by the aggrieved party.
A past fraud can be the subject of a valid waiver
because the waiver can be considered as an act of
generosity and magnanimity on the part of the party who
is the victim of the fraud. Here, what is renounced is the
effects of the fraud, that is, the right to indemnity of the
party entitled thereto. The waiver must be expressed in
clear language which leaves no doubt as to the intention of
the oblige to give up his right against the obligor.
ARTICLE 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)
Responsibility arising from negligence
demandable.
In the performance of every kind of obligation, the debtor
is also liable for damages resulting from his negligence.
1.) Discretion of court to fix amount of damages
Validity of waiver of action arising from
negligence.
(1) An action for future negligence (not fraud) may be
renounced except where the nature of the obligation
requires theexercise of extraordinary diligence as in the
case of common carriers.
(2) Where negligence is gross or shows bad faith, it is
considered equivalent to fraud. Any waiver of action for
future negligence of this kind is, therefore, void.
Kinds of negligence according to source of
obligation.
1.) CONTRACTUAL NEGLIGENCE (CULPA
CONTRACTUAL)
 Or negligence in contracts resulting in their
breach Article 1172 refers to “culpa contractual.”
This kind of negligence is not a source of
obligation. It merely makes the debtor liable for
damages in view of his negligence in fulfilment
of a pre-existing obligation.
2.) CIVIL NEGLIGENCE (CULPA AQUILIANA)
 Or negligence which by itself is the source of an
obligation between theparties not formally bound
before by any pre-existing contract. It is also
called “tort” or “quasi_delict.”
3.) CRIMINAL NEGLIGENCE (CULPA CRIMINAL)
 Or negligence resulting in the commission of a
crime. If B wants, he can bring an action for
culpa criminal.
Effect of negligence on the part of the injured
party
Suppose the creditor is also guilty of negligence, can he
recover damages?
Article 2179 of the Civil Code provides:
“When the plaintiff’s own negligence was the immediate
and proximate cause of his injury, he cannot recover
damages. But if his negligence was only contributory, the
immediate and proximate cause of the injury being the
defendant’s lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be
awarded.”
ARTICLE 1173
THE LAW OF OBLIGATION AND CONTRACT
 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)
Meaning of Fault or Negligence
Fault or negligence is defined by the above provision.
According to our Supreme Court, “negligence is conduct
that creates undue risk or harm to another. It is the
failure to observe for the protection of the interests of
another person, that degree of care, precaution and
vigilance which the circumstances justly demand,
whereby such other person suffers injury.”
Factors to be considered
Negligence is a question of facts, that is, its existence
being dependent upon the particular circumstances. There
is no hard and fast rule for measuring degree of care.
In determining the issue of negligence; the following must
be considered:
1. NATURE OF OBLIGATION
Ex. Smoking while carrying materials known to be
inflammable constitutes negligence.
2. CIRCUMSTANCES OF THE PERSON
Ex. A guar, a man in th prime of life, robust an healthy,
sleeping while on duty is guilty of negligence.
3. CIRCUMSTANCES OF TIME
Ex. Driving a car without headlights at night is gross
negligence but it does not by itself constitute negligence
when driving during the day.
4. CIRCUMSTANCES OF THE PLACE
Ex. Driving at 100 kilometres per hour on the
superhighway is permissible but driving at the same rate of
speed in Ayala Avenue, Makati is gross recklessness.
Measure for liability of Damages
Damages signify the money compensation awarded to a
party for loss or injury resulting from breach of contract or
obligation by the other.
Kinds of diligence required.
Diligence is “the attention and care required of a person in
a given situation and is the opposite of negligence.
Whether or not the negligence of the obligor is excusable
will depend on the degree of diligence required of them.’’
Under Article 1173, the following kinds of diligence are
required:
1.) That agreed upon by the parties, orally or in writing;
2.) In the absence of stipulation, that required by law in the
particular case (like the extraordinary diligence required of
common carriers);
3.) If both the contract and law are silent, then the
diligence expected of a good father of a family (par.2.) or
ordinary diligence
ARTICLE 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)
MEANING OF FORTUITOUS EVENT
FORTUITION EVENT
 Is any extraordinary event which cannot be
foreseen, or which, though foreseen, is inevitable.
In other words, it is an event which is either
impossible to foresee or impossible to avoid.
FORUITOUS EVENT DISTINGUISHED FROM
FORCE MAJEURE
1. ACTS OF MAN
 An event independent of the will of the obligor
but not of other human wills.
e.g., war, fire, robbery, murder, insurrection, etc.
2. ACTS OF GOD
 They are those events which are totally
independent of the will of every human being.
e.g., earthquake, flood, rain, shipwreck, lightning, eruption
of volcano, etc. They are also called force majeure.
2 KINDS OF FORTUITOUS EVENTS
(1) ORDINARY FORTUITOUS EVENTS
 Or those events which are common and which the
contracting parties could reasonably foresee
(e.g.,rain);
THE LAW OF OBLIGATION AND CONTRACT

(2) EXTRAORDINARY FORTUITOUS EVENTS 3.) When the nature of the obligation requires the
 or those events which are uncommon and which assumption of risk
the contracting parties could not have reasonably  Risk of loss or damage is an essential element in
foreseen (e.g.,earthquake, fire, war,pestilence, the obligation.
unusual flood)
ARTICLE 1175
 Usurious transactions shall be governed by
REQUISITES OF A FORTUITOUS EVENT special laws.

1) The event must be independent of the human will Meaning of Simple loan or mutuum
or at least of the obligor’s will;
SIMPLE LOAN OR MUTUUM
2) The event could not be foreseen (unforeseeable),
 Is a contract whereby one of the parties
or if it could be foreseen, must have been
delivers to another money or other consumable
impossible to avoid (unavoidable);
thing, upon the condition that the same
amount of the same kind and quality shall be
3) The event must be of such a character as to
paid. It maybe gratuitous or with a stipulation to
render it impossible for the obligor to comply
pay interest. (Art. 1933.)
with his obligation in a normal manner; and
Meaning of Usury
4) The obligor must be free from any participation
in, or the aggravation of, the injury to the
creditor, that is, there is no concurrent negligence USURY
on his part.  Is contracting for or receiving interest in
excess of the amount allowed by law for the
loan or use of money, goods, chattels, or
Rules as to liability in case of fortuitous event credits. (Tolentino vs. Gonzales, 50 Phil. 558
[1927].)
A person is not, as a rule, responsible for loss or damage
resulting from fortuitous events. In other words, his
REQUISITES RECOVERY OF INTEREST
obligation is extinguished. The exceptions are enumerated
In order that interest may be recovered, the following
below:
requisites must be present:
1) When expressly specified by the law.
1) The payment of interest must be expressly
a) When the debtor is guilty of fraud, negligence or
stipulated (Art. 1956.);
delay or contravention of the tenor of the
obligation.
2) The agreement must be in writing; and
b) The debtor has promised to deliver the same
thing to 2 or more persons who do not have the 3) The interest must be lawful.
same interest.
A stipulation for the payment of usurious interest is
void, that is, as if there is no stipulation as to interest.
c) The obligation to deliver a specific thing, arises
from a crime.
DIFFERENT KIND OF INTEREST
d) The thing to be delivered is generic 1.) SIMPE INTEREST
 I= P x R x T
2.) COMPOUND INTEREST
2.) When declared by stipulations
 The basis for this exception rests upon the 3.) LEGAL INTEREST
freedom of contract. Such a stipulation is usually  6%
intended to better protect the interest of the 4.) LAWFUL
creditor and procure greater diligence on the part  Usury
of the debtor in the fulfilment of his obligation.
5.) UNLAWFUL
 Beyond
THE LAW OF OBLIGATION AND CONTRACT
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 a later instalment of a debt without
reservation as to prior instalments, shall likewise raise the
presumption that such instalments have been paid. (1110a)
MEANING OF PRESUMPTION
Presumption is meant the inference of a fact not actually
known arising from its usual connection with another
which is known or proved.
TWO KINDS OF PRESUMPTION.
1) CONCLUSIVE PRESUMPTION.
 One which cannot be contradicted like the
presumption that everyone is conclusively
presumed to know the law; and
2) DISPUTABLE (OR REBUTTABLE)
PRESUMPTION
 One which can be contradicted or rebutted by
presenting proof to the contrary like the
presumption established in Article 1176.
WHEN PRESUMPTIONS IN ARTICLE 1176 DO
NOT APPLY.
1) With reservation as the interest.
 The presumptions established in Article 1176 do
not arise where there is reservation as to interest
or prior instalments, as the case may be. The
reservation may be made in writing or verbally.
2) Receipt without indication of particular
instalment paid.
 The presumption in par 2 of art 1176, is not
applicable if the receipt does not recite that it was
issued for a particular instalment due as when the
receipt isonly dated.
3) Receipt for a part of the principal
 Such a receipt without mentioning the interest
implied that the creditor waives his right to apply
the payment first to the interest and then to the
principal as permitted by article 1253.
4) Payment of taxes.
 Article 1176 does not apply to the payment of
taxes. Taxes payable by the year are not
installments of the same obligation.
5) Non-payment proven.
 Of course, Article 1176 is not applicable where
the non-payment of the prior obligations has
been proven. A presumption cannot prevail over
a proven fact.
ARTICLE 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 de-fraud them. (1111)
Remedies available to creditors for the
satisfaction of their claims
.In case the debtor does not comply with his obligation, the
creditor may avail himself of the following remediesto
satisfy his claim:
1. Exact fulfillment (specific performance) with the
right to damages;
2. Pursue the leviable (not exempt from attachment
under the law) property of the debtor;
3. “After having pursued the property in
possession of the debtor,’’ exercise all the
rights (like the right to redeem) and bring all the
actions of the debtor(like the right to collect from
the debtor of his debtor) except those inherent in
or personal to the person of the latter (such as the
right to vote, to hold office, to receive legal
support, to revoke a donation on the ground of
ingratitude, etc.); and
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.
The debtor is liable with all his property, present and
future, for the fulfillment of his obligations, subject to the
exemptions provided by law.
ARTICLE 1178
THE LAW OF OBLIGATION AND CONTRACT

 Subject to the laws, all rights acquired in

virtue of an obligation are transmissible, if
there has been no stipulation to the contrary.
(1112)

Transmissibility of rights.

All rights acquired in virtue of an obligation are generally

transmissible. (see Art. 1311.) the exceptions to this rule
are the following:

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 inrepresentation 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 sothat the
latter may use the same for a certain time and return it.
Commodatum is essentially gratuitous.

2. Prohibited by stipulation of parties.

 When prohibited by stipulation of the parties,
like the stipulation that upon the death of the
creditor, the obligation shall be extinguished or
that the creditor cannot assign his credit to
another.