OBLIGATIONS

Nature and Effect of Obligations

ART. 1156 – AN OBLIGATION IS A
JURIDICAL NECESSITY TO GIVE, TO
DO OR NOT TO DO.
 
• an obligation is a legal bond whereby constraint is
laid upon a person or group of persons to act or
forbear on behalf of another person or group of
persons.
• obligation arises from the concurrence of:
a) the vinculum juris or juridical tie;
b) the object which is the prestation;
c) subject-persons (Ang Yu Asuncion v. CA)
ART. 1157 - OBLIGATIONS ARISE FROM:
1)LAW;
2)CONTRACTS;
3)QUASI-CONTRACTS;
4)ACTS OR OMISSIONS PUNISHED BY LAW;
5)QUASI-DELICTS.

• obligations are civil or natural. Civil obligations give a

right of action to compel performance. Natural obligations,
not being based on positive law but on equity and natural
law, do not grant a right of action to enforce performance,
but after their voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or
rendered by reason thereof.
ART. 1158 - OBLIGATIONS DERIVED FROM
LAW ARE NOT PRESUMED. ONLY THOSE
EXPRESSLY DETERMINED IN THIS CODE OR
IN SPECIAL LAWS ARE DEMANDABLE, AND
SHALL BE REGULATED BY THE PRECEPTS
OF THE LAW WHICH ESTABLISHES THEM;
AND AS TO WHAT HAS NOT BEEN FORSEEN,
BY THE PROVISIONS OF THIS BOOK.
• among sources of obligation, the law is the most
important one. It does not depend upon the will of the
parties. It is imposed by the state and is generally
imbued with some public policy considerations.
• It cannot be presumed.
• Hence, the payment of taxes must be specifically
directed by our tax statutes. Also, parents and
children are obliged to support each other as
mandated by the provisions of the Family Code.
ART. 1159 - OBLIGATIONS ARISING FROM
CONTRACTS HAVE THE FORCE OF LAW
BETWEEN THE CONTRACTING PARTIES
AND SHOULD BE COMPLIED WITH IN
GOOD FAITH.

• a contract is a meeting of minds between 2 or more

persons whereby a person (or a group of persons)
binds himself, with respect to the other (or others) to
give something or to render some service.

• a contract may likewise involve mutual and reciprocal

obligations and duties between and among the parties.
• Whatever stipulations, clauses, terms and conditions
are included in a contract, as long as they are not
contrary to law, morals, good customs, public policy or
public order, such contract is the law between the
parties (Gaw v. IAC)
• Contracts which are the private laws of the
contracting parties should be fulfilled according to the
literal sense of their stipulations, if their terms are
clear and leave no room for doubt as to their intention
of the contracting parties, for contracts are obligatory,
no matter what form they may be, whenever essential
requirements for their validity are present (PAGICO v.
Mutuc)
ART. 1160 - OBLIGATIONS DERIVED FROM
QUASI-CONTRACTS SHALL BE SUBJECT TO
THE PROVISIONS OF CHAPTER 1 TITLE XVII
OF THIS BOOK.

• certain lawful, voluntary and unilateral acts give rise

to the juridical relation of quasi-contract to the end
that no one shall be unjustly enriched or benefited at
the expense of the other.
• A good example of an obligation arising from a quasi-
contract is the obligation to return what has been
obtained by mistake (solutio indebiti)
ART. 1161 - CIVIL OBLIGATIONS ARISING
FROM CRIMINAL OFFENSES SHALL BE
GOVERNED BY THE PENAL LAWS, SUBJECT
TO THE PROVISIONS OF ART 2177, AND
OF THE PERTINENT PROVISIONS OF
CHAPTER 2, PRELIMINARY TITLE, ON
HUMAN RELATIONS, AND OF TITLE XVIII
OF THIS BOOK, REGULATING DAMAGES.
• Scope of Civil Liability:
1) Restitution;
2) Reparation for the damage caused; and
 3) Indemnification for consequential damages.

ART. 1162 - OBLIGATIONS DERIVED FROM

QUASI-DELICTS SHALL BE GOVERNED BY
THE PROVISIONS OF CHAPTER 2, TITLE
XVII OF THIS BOOK AND BY SPECIAL LAWS.
• quasi-delict: whoever by act or omission causes damage
to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault, if there is no pre-
existing contractual relation between the parties, is
called quasi-delict.
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.

• this article involves the prestation “to give.” The word

“something” connotes a determinate object which is
definite, known, and has already been distinctly decided
and particularly specified as the matter to be given from
among the same things belonging to the same kind.
• “diligence of a good father of a family” because it is a
commonly-accepted notion that a father will always do
everything to take care of his concerns.
• If the law does not state the diligence which is supposed to
be observed in the performance of an obligation, that
which is expected of a good father of a family is required.
• In case of a contrary stipulation of the parties, such
stipulation is should not be one contemplating a
relinquishment or waiver of the most ordinary diligence.
• An example where the law requires another standard of
care is that which involves common carriers (persons or
firms engaged in the business of carrying, transporting
passengers or goods of both, by land, water, air for
 compensation, offering their service to the public)-
they are bound to observe extraordinary diligence

ART. 1164 - THE CREDITOR HAS THE

RIGHTS TO THE FRUITS OF THE THING
FROM THE TIME THE OBLIGATION TO
DELIVER IT ARISES. HOWEVER, HE
SHALL ACQUIRE NO REAL RIGHT OIVER
IT UNTIL THE SAME HAS BEEN
DELIVERED TO HIM.
• after the right to deliver the object of the prestation has
arisen in favor of the creditor but prior to the delivery of
the same, there is no real right enforceable or binding
against the whole over the object and its fruits in favor
of the person to whom the same should be given.
• The acquisition of a real right means that such right can
be enforceable against the whole world and will
prejudice anybody claiming the same object of the
prestation.
• The real right only accrues when the thing or object of
the prestation is delivered to the creditor.
• He only has a personal right over the same if it is
enforceable only against the debtor who is under an
obligation to give. This means that the personal right
of the creditor can be defeated by a third party in good
faith who has innocently acquired the property prior
to the scheduled delivery regardless of whether or not
such third party acquired the property after the right
to the delivery of the thing has accrued in favor of the
creditor. In this case, however, the aggrieved creditor
can go against the debtor for damages as the debtor
should have known that the fruits should have been
delivered to the creditor alone.
ART. 1165 - WHEN WHAT IS TO BE
DELIVERED IS A DETERMINATE THING,
THE CREDITOR, IN ADDITION TO THE
RIGHT GRANTED HIM BY ART 1170, MAY
COMPEL THE DEBTOR TO MAKE 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
REPSONSIBLE FOR FORTUITOUS EVENT
UNTIL HE HAS EFFECTED DELIVERY.

• In the event that there is non-delivery of a generic

thing, the creditor may have it accomplished or
delivered in any reasonable and legal way charging all
expenses in connection with such fulfillment to the
debtor. The same creditor can ask a third party to
deliver the same thing of the same kind with all the
expense charged to the debtor.
• In case of non-delivery of a determinable thing, the
remedy is to file an action to compel the debtor to make
the delivery. This action is called specific performance.
• If the debtor is guilty of fraud, negligence, delay or
contravention in the performance of the obligation, the
creditor can likewise seek damages against the debtor.
• A fortuitous event – is an event which could not be
foreseen, or which though foreseen, were inevitable.
• The last paragraph of art 1165 however provides that a
fortuitous event will not excuse the obligor from his
obligation in 2 cases namely: 1) if the obligor delays; and
2) if he has promised to deliver the same thing to 2 or
 more persons who do not have the same interest. In
both cases, the obligor will be liable for damages or will
be bound to replace the lost object of the prestation in
cases when the obligee agrees to the replacement.

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.
• Accessions are the fruits of a thing 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)
• Accessories 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; bow of a
violin)
• Accessions are not necessary to the principal thing,
but the accessory and the principal thing must go
together.
ART. 1167 - IF THE 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.
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.
• the debtor can ask any third person to perform the
obligation due from the debtor should the latter fail to
do the same.
• The debtor will be liable for all the expenses in
connection with the performance or fulfillment of the
obligation undertaken by the third person.
• The words “at his cost” imply both the right to have
somebody else perform the obligation and the right to
charge the expenses thereof to the debtor.
• With respect to the situation wherein the debtor
poorly undertook the obligation, the creditor has the
right to have everything be undone at the expense of
the debtor. The reason for this rule is to prevent the
debtor from taking his obligation lightly.
• In case the prestation is for the debtor not to do a
particular act or service and he nevertheless performs
it, it shall likewise be undone at his own expense.
• In Chaves v. Gonzales, the Supreme Court ruled that the
original repairer can be held liable not only for the missing
parts but also for the cost of the execution of the obligation
for repairing the typewriter by another company.

ART. 1169 - THOSE OBLIGED TO DELIVER

OR TO DO SOMETHING INCUR IN DELAY
FROM THE TIME THE OBLIGEE
JUDICIALLY OR EXTRAJUDICIALLY
DEMANDS FROM THEM THE
FULFILLMENT OF THEIR OBLIGATION.
HOWEVER, THE DEMAND BY THE
CREDITOR SHALL NOT BE NECESSARY IN
ORDER
THAT DELAY MAY EXIST:
1) WHEN THE OBLIGATION OR THE LAW
EXPRESSLY SO DECLARES; OR
2) WHEN FROM THE NATURE AND
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.

• Delay or default can be committed by the debtor in which

case it is known as mora solvendi.
• If it is committed by the creditor, it is known as mora
accipiendi.
• Delay in the performance of the obligation, however,
must be either malicious or negligent. Hence, if the
delay was only due to inadvertence without any malice
or negligence, the obligor will no be held liable under
Art 1170.
• Default generally begins from the moment the creditor
demands the performance of the obligation. Without
such demand, judicial or extra-judicial, the effects of
default will not arise.
• Commencement of suit is a sufficient demand.
• Art 1169 is only applicable when the obligation is to do
something other than the payment of money (Picson v.
Picson).
• If the contract involving a sum of money does not
stipulate any interest and/or the time when it will be
counted, interest will run only from the time of
judicial or extra-judicial demand.
• However, damages or interest shall start to run only
after judicial or extra-judicial demand. Hence, if the
obligation were due on March 1, 2011, the aggrieved
party can file suit for specific performance
immediately after March 1, 2011. If extra-judicial
demand however was made on March 5, 2011,
damages shall be counted not from March 1, 1998 but
from March 5, 2011.
• The 2 cases where an extra-judicial demand
should first be made prior to the filing of a civil
suit are: ejectment cases and consignment cases.
If there is no extra-judicial demand made prior to the
filing of the civil suit, the ejectment case will be
dismissed. In consignment cases, the debtor must first
make an extra-judicial demand for the creditor to
accept payment of the obligation. If the creditor
unjustifiably refuses to accept payment, the debtor
can now consign the amount in court for purposes of
extinguishing the obligation.
• Demand not necessary in 3 cases: 1) when the
obligation or the law expressly so declares (ex.
Promissory note providing for payment on a particular
date without necessity of demand; Also the law
expressly declares that taxes should be paid on a
particular date); 2) when time is of the essence in a
particular contract (ex. Stock market transactions;
delivery for a one-day car exhibit); 3) when it would be
useless, as when the obligor has rendered it beyond his
power to perform (ex. A debtor promised to constitute
his house as a collateral for a particular loan which is
payable at a particular date but before he can make the
mortgage, he donates the house to his friend, demand
from the creditor to constitute the house as a collateral is
useless. In this case, his obligation becomes immediately
demandable considering that he loses his right to the
period within which to pay the loan).
• Reciprocal obligations are those created and
established at the same time, out of the same cause
and which results in a mutual relationship of creditor
and debtor between parties. In reciprocal obligations,
the performance of one is conditioned upon the
simultaneous fulfillment of the other.
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.

• The law specifically provides that damages can be

awarded to any person who may have been prejudiced in
the performance of the obligation as a result of fraud,
negligence, delay or contravention of the tenor of the
obligation.
• Significantly, if any of these 4 bases of liability co-exist
with a fortuitous event or aggravates the loss caused
by a fortuitous event, the obligor cannot be excused
from being liable on his obligation.

ART. 1171 - RESPONSIBILITY ARISING

FROM FRAUD IS DEMANDABLE IN ALL
OBLIGATIONS. ANY WAIVER OF AN
ACTION FOR FUTURE FRAUD IS VOID.

• When a party complies with or performs his

obligation fraudulently, he is liable for damages.
• If, in the contract of sale, A and B stipulated that any
fraudulent act by another in the performance of his
obligation shall not be a ground for the aggrieved party
to file a suit against the other for fraud is a void
stipulation. By express provision of law, such waiver is
void.
• The dolo or fraud which is committed to induce a party
to enter into a contract, thereby making the agreement
annullable is not the one contemplated by Art 1171.
• The dolo or fraud under Art 1171 necessarily involves a
valid agreement but, in the performance of the same,
fraud is committed.
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.
• Kinds of Negligence according to source of obligation:
1) Contractual Negligence (culpa contractual),
negligence in contracts resulting in their breach. This
kind of negligence is not a source of obligation, it
 merely makes the debtor liable for damages in view
of his negligence in the fulfillment of a pre-existing
obligation.
2) Civil Negligence (culpa Aquiliana), negligence
which by itself is the source of an obligation
between the parties not so related before any pre-
existing contract. It is also called tort or quasi-delict.
3) Criminal Negligence (culpa criminal), negligence
resulting in the commission of a crime, the same
negligent act causing damages may produce civil
liability arising from a crime under Art. 100 of the
RPC, or create an action for quasi-delict under Art.
2176 of the Civil Code.
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 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.
• In essence, negligence is that want of care required by
the circumstances.
• As a general rule, negligence must be proven.
• In Syquia v. CA, the law defines negligence as 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.” In the absence of stipulation or legal
provision providing the contrary, the diligence to be
observed in the performance of the obligation is that
which is expected of a good father of a family.
• In PNB v. CA, where the bank negligently dishonored
the check of its depositor, the SC said, “This court has
ruled that a bank is under the obligation to treat the
accounts of its depositors with meticulous care
whether such account consists only of a few hundred
pesos or of millions of pesos. Responsibility arising
 from negligence in the performance of every kind of
obligation is demandable. While petitioner’s
negligence in this case may not have been attended
with malice and bad faith, nevertheless, it caused
serious anxiety, embarrassment and humiliation to
private respondent for which she is entitled to recover
reasonable moral damages.
• The law likewise provides that when negligence
shows bad faith, the provisions of Articles 1171 and
2201, par 2 shall apply.
• In Samson v. CA, the SC discussing bad faith said: “Bad
faith is essentially a state of mind affirmatively
 operating with furtive design or with some motive of
ill-will. It does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of wrong. Bad
faith is thus synonymous with fraud and involves a
design to mislead or deceive another, not prompted by
an honest mistake as to one’s rights or duties, but by
some interested or sinister motive.”
• Pursuant to Art 2201, par 2, the obligor shall be
responsible for all damages which may be reasonably
attributed to the non-performance of the obligation.
ART. 1174 - EXCEPT IN CASES EXPRESSLY
SPECIFIED BY THE LAW, OR WHEN IT IS
OTHERWISE DECLARED BY STIPULATION,
OR WHEN THE NATURE OF THE
OBLIGATION REQUIRES THE ASSUMPTION
OF RISK, NO PERSON SHALL BE
RESPONSIBLE FOR THOSE EVENTS WHICH,
COULD NOT BE FORESEEN, OR WHICH,
THOUGH FORESEEN, WERE INEVITABLE.
• The general rule is that “no one should be held to account
for fortuitous cases” which are those situations that could
not be foreseen, or which though foreseen,
 were inevitable. An act of God has been defined as an
accident, due directly and exclusively to natural
causes without human intervention, which by no
amount of foresight, pains or care, reasonably to have
expected, could have been prevented.
• In Nakpil v. CA, the SC said, “To exempt the obligor
from liability under Art 1174 of the Civil Code, for a
breach of an obligation due to an “act of God,” the ff.
must concur: a) the cause of the breach of the
obligation must be independent of the will of the
debtor;
b) the event must either be unforeseeable or
unavoidable; c) the event must be such as to render it
impossible for the debtor to fulfill his obligation in a
normal manner; and d) the debtor must be free from
any participation in, or aggravation of the injury.
Thus, it has been held that when the negligence of a
person concurs with an act of God in producing a loss,
such person is not exempt from liability by showing
that the immediate cause of the damage was the act of
God. To be exempt from liability for loss because of an
act of God, he must be free from any previous
negligence or misconduct by which that loss or
damage may have been occasioned.”
• In Sia v. CA, where the bank failed to notify its client of
the flooding of its safety deposit box containing the
said client’s valuable stamp collection resulting in the
destruction of the said collection, and where the said
bank already had two previous experiences of the
flooding of the said safety deposit box located inside
the bank that was guarded 24 hrs a day, the SC
reversed the ruling of the CA in not holding the bank
for damages on the basis of fortuitous event and held
that the bank was negligent.
• In Dioquino v. Laureano, the SC considered the sudden
and unexpected throwing of stone directed at the
 car of the plaintiff causing damage to the said car a
fortuitous event.
• When the object of the prestation is generic, like the
payment of a sum of money as a consequence of a loan
contract, the debtor cannot avail of the benefit of a
fortuitous event even if the object for which the
loaned money is used, such as the construction of a
factory, is wiped out by a typhoon. Also, even if there
is a fortuitous event, a person can still be held
responsible for the performance of his obligation if the
law, or the stipulation of the parties, or when the
nature of the obligation so requires.
• The law can provide that, even if there is a fortuitous
event, the obligor can still liable. An example of this is
par. 3 of Art 1165 which provides that 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 delivery. Also Art 1268 provides that when the
debt of a thing certain and determinate proceeds from a
criminal offense, the debtor shall not be exempted from
the payment of its price, whatever may be the cause for
the loss, unless the thing having been offered by him to
the person who should receive it, the latter refused
without justification to accept it.
• When the parties declare that they shall be liable
even for loss due to a fortuitous event, they shall
be so liable.
• When the nature of the obligation requires the
assumption of risk, the person obliged to perform the
obligation shall likewise not be excused should a
fortuitous event occur.
ART. 1175 - USURIOUS TRANSACTIONS
SHALL BE GOVERNED BY SPECIAL LAWS.
• Usury is contracting for or receiving interest in excess of
the amount allowed by law for the loan or use of money,
goods, chattels or credit (Tolentino vs. Gonzales)
• Requisites for recovery of Interest:
1) The payment of interest must be expressly stipulated;
2) The agreement must be in writing; and
3) The interest must be lawful.
• A stipulation for the payment of usurious interest is void,
that is, as if there is no stipulation as to interest.
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.
• Presumption is the inference of a fact not actually
known arising from its usual connection with another
which is known.
• 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 Art. 1176.
ART. 1177 - THE CREDITORS, AFTER
HAVING PURSUED THE PROPERTY IN
THE POSSESSION OF THE DEBTOR TO
SATISFY THEIR CLAIMS, MAY EXERCISE
ALL THE RIGHTS AND BRING ALL THE
ACTIONS OF THE LATTER FOR THE SAME
PURPOSE, SAVE THOSE WHICH ARE
INHERENT IN HIS PERSON; THEY MAY
ALSO IMPUGN THE ACTS WHICH THE
DEBTOR MAY HAVE DONE TO DEFRAUD
THEM.
• The law protects the creditors. The creditor is given
by law all possible remedies to enforce such
obligations.
• The ff. successive measures must be taken by a
creditor before he may bring an action for rescission
of an allegedly fraudulent sale: 1) exhaust the
properties of the debtor through levying by
attachment and execution upon all the property of the
debtor, except such as are exempt by law from
execution; 2) exercise all the rights and actions of the
debtor, save those personal to him (accion subrogata);
and 3) seek rescission of the contracts executed by the
debtor in fraud of their rights (accion pauliana).
• In Adorable v. CA, it was held that unless a debtor
acted in fraud of his creditor, the creditor has no right
to rescind a sale made by the debtor to someone on
the mere ground that such sale will prejudice the
creditor’s rights in collecting later on from the debtor.
The creditor’s right against the debtor is only a
personal right to receive payment for the loan; it is not
a real right over the lot subject of the deed of sale
transferring the debtor’s property.
ART. 1178 - SUBJECT TO THE LAWS, ALL
RIGHTS ACQUIRED IN VIRTUE OF AN
OBLIGATION ARE TRANSMISSIBLE, IF
THERE HAS BEEN NO STIPULATION TO
THE CONTRARY.

• However, the person who transmits the right cannot

transfer greater rights than he himself has by virtue of
the obligation. Conversely, the person to whom the
rights are transmitted can have no greater interest than
that possessed by the transmitter at the time of
transmission of the rights.
• The transmissibility of rights may be limited, or
altogether prohibited by stipulation of the parties.
Thus, it can be stipulated in a contract that the
assignment of any or all the rights provided by such
contract is prohibited.
• Likewise, no transmission can be made of a particular
right if the personal qualifications or circumstances of
the transferor is a material ingredient attendant in the
obligation. Hence, an author who specializes in horror
stories written in a very distinct and peculiar style and
who has been engaged by a publisher to write his (the
author’s) kind of horror stories for his magazine cannot
transmit his rights arising from such obligation to
 anybody else.
• Transmission must likewise be subject to pertinent laws.

SOURCES:
1)OBLIGATIONS and CONTRACTS (Text and Cases) of
STA. MARIA (2006 Edition)
2)The LAW on OBLIGATIONS and CONTRACTS of
Hector S. De Leon (2003 Edition)

BY: Benchie B. Gonzales