Law on

Obligations
Arts. 1156 – 1304 of the Civil Code of the Philippines
01
General Provisions
Art. 1156.
An obligation is a juridical necessity to
give, to do or not to do.
Essential Elements of an Obligation:
1. Active Subject (Creditor or the Obligee) - the possessor of a
right; he in whose favor the obligation is constituted.

2. Passive Subject (Debtor or the Obligor) - he who has the duty

of giving, doing, or not doing.

3. Object or the Prestation - the subject matter of the obligation

4. Efficient Cause (the vinculum or juridical tie) — the reason

why the obligation exists.
Example:

By virtue of a contract, X is obliged to paint the house

of Y.

1. Who is the Active Subject?

2. Who is the Passive Subject?
3. What is the object or prestation?
4. What is the efficient cause of the obligation?
Different Kinds of Obligations

A. From the viewpoint of sanction

1. Civil obligation (or perfect obligation) - that defined in Art. 1156. The
sanction is judicial process.
Example: A promises to pay B his (A’s) debt of P1 million.

2. Natural obligation — the duty not to recover what has voluntarily been paid
although payment was no longer required.
Example: A owes B P1 million. But the debt has already prescribed. If A,
knowing that it has prescribed, nevertheless still pays B, he (A) cannot later on
get back what he voluntarily paid.

3. Moral obligation — the duty of a Catholic to hear mass on Sundays and holy
days of obligation. The sanction here is conscience or morality, or the law of the
church.
Different Kinds of Obligations

B. From the viewpoint of Subject Matter

1. Real obligation — the obligation to give

2. Personal obligation — the obligation to do or not to do

C. From the viewpoint of affirmativeness and negativeness of the

obligation

1. Positive or affirmative obligation — the obligation to give or to do

2. Negative obligation — the obligation not to do (which naturally includes

“not to give”)
Different Kinds of Obligations

D. From the viewpoint of Persons Obliged

1. Unilateral obligation — only one person is bound

2. Bilateral obligation — both parties are bound

Art. 1157
Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts.
Sources of Obligations

(a) Law (obligations ex lege) — like the duty to pay taxes and to support one’s
family.

(b) Contracts (obligations ex contractu) — like the duty to repay a loan by

virtue of an agreement.

(c) Quasi-contracts (obligations ex quasi-contractu) — like the duty to

refund an “over change” of money because of the quasi-contract of solutio
indebiti or “undue payment.”

(d) Crimes or Acts or Omissions Punished by Law (obligations ex maleficio

or ex delicto) — like the duty to return a stolen carabao.

(e) Quasi-delicts or Torts (obligation ex quasi-delicto or ex quasi-maleficio)

— like the duty to repair damage due to negligence.
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 foreseen, by the provisions of this
Book.
Examples:

1) the duty to support. (Art. 291, Civil Code)

2) the duty to pay taxes. (National Internal Revenue Code)

3) the obligation of the employer to give overtime pay when an employee

renders overtime (Labor Code of the Philippines)
Art. 1159
Obligations arising from contracts have
the force of law between the contracting
parties and should be complied with in
good faith.
Art. 1160
Obligations derived from quasi-contracts
shall be subject to the provisions of
Chapter 1, Title XVII, of this Book.
‘Quasi-Contract’ Defined
A quasi-contract is a juridical relation resulting from
a lawful, voluntary, and unilateral act, and which has for its
purpose the payment of indemnity to the end that no one shall
be unjustly enriched or benefited at the expense of another.
(Art. 2142, Civil Code)
The 2 Principal Kinds

Negotiorum Gestio (unauthorized management)

This takes place when a person voluntarily takes charge of
another’s abandoned business or property without the owner’s authority. (Art.
2144, Civil Code). Reimbursement must be made to the gestor for necessary
and useful expenses, as a rule. (See Art. 2150, Civil Code)

Solutio Indebiti (undue payment)

This takes place when something is received when there is no
right to demand it, and it was unduly delivered through mistake. The recipient
has the duty to return it. (Example: If I let a storekeeper change my P50.00 bill
and by error he gives me P50.60, I have the duty to return the extra P0.60).
(See Art. 2154, Civil Code).
Art. 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 Title, on Human
Relations, and of Title XVIII of this
Book, regulating 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.
02
Nature and Effects 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.
Kinds of Things:

Determinate or Specific Thing

A thing is determinate or specific when it is particularly
designated or physically segregated from all others of the same class.

Example: Toyota Vios with Plate No. ABC 1234 and Engine No. 875639

Indeterminate or Generic Thing

A thing is indeterminate or generic when it is not particularly
designated or physically segregated from all others of the same class. It means
that a thing cannot be specifically determined from things of the same class.

Example: A car
Art. 1163 refers to an obligation to give a Determinate or Specific thing.

Example:

I will give you my car with Plate No. ABC 1234 and Engine No. 09876.

Under Art. 1163, what are the obligations of the debtor?

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.
Different Kinds of Fruits:

1. Natural Fruits – those produced without cultivation or labor

2. Industrial Fruits - those produced by lands of any kind through

cultivation or labor

3. Civil Fruits - the rents of buildings, the price of leases of lands and other
property and the amount of perpetual or life annuities or other similar
income.
When is the creditor entitled to the fruits of the specific thing?

Example:
A is obliged to give B a specific dog on August 31, 2023.

Under Art. 1164, B is entitled to the dog and fruits of the dog on
August 31, 2023. B’s right however is merely a personal right (right to demand
the delivery of the dog and the fruits if any).

When will B become the owner of the dog and the fruits if any?

Only upon delivery.

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.
Remedies of the Creditor under Art. 1165 if the Debtor fails to Comply
with his/her Obligation:

1. If the obligation is to give a Specific Thing - the creditor, in addition to the

right granted him by Article 1170, may compel the debtor to make the delivery.

2. If the obligation is to give a Generic Thing - he may ask that the obligation
be complied with at the expense of the debtor.
Example:
X promised to give Y his car on August 29, 2023. If after August
29, 2023 X has not given the car to Y, what can Y do?
Effect of Fortuitous Event

A fortuitous event is an event which cannot be foreseen, or

which, although foreseeable, cannot be avoided.

Examples:
Earthquake
Floods
Robbery
When the Debtor is liable even in case of a Fortuitous event:

1. When the debtor is in delay

2. When the debtor promised to deliver the same thing to two or more
persons who do not have the same interest

Example:
A is obliged to give B a specific horse on August 29, 2023.
Because A was not able to deliver the horse, on August 30, B demanded the
delivery of the horse. A stilled failed to deliver the horse despite the demand.
On August 31, a strong earthquake struck, killing the horse.

Q: Is A still liable for the value of the horse even if it was lost due to a
fortuitous event?
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.
Obligation to give a Specific or Determinate thing includes:

1. Accessories — those joined to or included with the principal for the

latter’s better use, perfection, or enjoyment. (Examples: the keys to a
house, the dishes in a restaurant)

2. Accessions— additions to or improvements upon a thing. These include

alluvium (soil gradually deposited by the current of a river on a river
bank) and whatever is built, planted, or sown on a person’s parcel of land.
Art. 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.
Remedies of the Creditor in Obligations “To Do”

1. If the debtor fails to do his obligation – the creditor can have the
obligation performed (by himself or by another) at debtor’s expense (only if
another can do the performance).

2. If the debtor does his obligation but contravenes their agreement – still
the creditor can have the obligation performed at the debtor’s expense

3. If the debtor does his obligation poorly – the creditor may demand that
what has been poorly done be undone.
Example:

D promised to paint the house of C white.

Q1: If D does not paint the house of C, what are the remedies of C?

Q2: If D paints the house of C orange, what are the remedies of C?

Q3: If D paints the house of C white but does it poorly, what are the remedies
of C?
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.
Example:

Because the only access road to B’s lot is through the lot of D, B
entered into a contract with D for a right of way. Part of the agreement was that
D would not construct a fence between his lot and that of B’s. After one year, D
built a fence in violation of the agreement.

Q: What is the remedy of B?

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.
Art. 1169
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

declare; 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.
Art. 1169
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.
What is Delay?
Delay or default or mora is the non-fulfillment of an
obligation with respect to time.

Kinds of Delay:
1. Mora Solvendi – delay on the part of the debtor
2. Mora Accipiende – delay on the part of the creditor
3. Compensatio Morae – delay in reciprocal obligations or when
both parties are in default
GENERAL RULE:

NO DEMAND, NO DELAY

Example:

J is obliged to pay M P50,000.00 on August 29,

2023. If J was not able to pay on August 29 and today is
August 30, is J considered already in delay?
When delay exists even without prior demand:

1. When the obligation or the law expressly so declares that prior

demand is not required

Example:

Law – the duty to pay taxes. If the taxpayer fails to pay taxes on time,
the taxpayer will pay penalties for the late payment even if the BIR
does not make a prior demand.

Stipulation – the agreement itself states that no prior demand is

required
X is obliged to pay Y P20,000.00 on or before September
1, 2023 without need of prior demand.
When delay exists even without prior demand:

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 (When time is of the essence)

Example:
X ordered a cake from Y for his birthday this Saturday. If
Y is not able to bake the cake on Saturday, he will be liable for delay
even if no prior demand is made by X.
When delay exists even without prior demand:

3. When demand would be useless, as when the obligor has rendered

it beyond his power to perform.

Example:
E is obliged to deliver a specific car to F on Sunday. The
night before he was supposed to deliver the car to F, E, drunk, drove
the car recklessly, causing it to collide with another car. The car was
totally damaged. E is in delay even if F did not make a prior demand
because demand will be useless considering that the car was already
totally damaged because of the fault of E.
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..
Kinds of Damages: (MENTAL)

1. Moral Damages – for mental anguish, sleepless nights;

2. Exemplary Damages – to set an example;

3. Nominal Damages – to vindicate a right - when no other kind of

damage is demandable;

4. Temperate Damages – when the exact amount cannot be

determined;

5. Actual Damages – actual losses or damages suffered; and

6. Liquidated Damages – agreed amount beforehand

Art. 1171
Responsibility arising from fraud is
demandable in all obligations. Any waiver
of an action for future fraud is void.
What is Fraud?
• Causal Fraud (Dolo Causante)
– fraud without which consent would not have been given
- makes the contract voidable
- annulment is a remedy

Example:
X told Y that he is selling his diamond ring. Believing that
the ring was indeed embellished with diamond, Y bought the ring.
Turns out, the ring was only embellished with glass.
What is Fraud?
• Incidental Fraud (Dolo Incidente)
- fraud in the performance of an obligation
- annulment is not a remedy, only damages

Example:
X ordered from Y 10 sacks of powdered soap. X delivered
to Y the 10 sacks if powdered soap which he mixed with chalk.
What is Fraud?
• Future Fraud – CANNOT be waived
• Past Fraud – may be waived
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.
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.
What is Negligence?
Negligence or Culpa is 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.
Kinds of Negligence?
1. Culpa Contractual (Contractual Negligence)
- Negligence in the performance of a contract

2. Culpa Aquiliana (Civil Negligence)

- Acts or omissions that cause damage to another, there being
NO contractual relation between the parties

3. Culpa Criminal (Criminal Negligence)

- When the negligence results in the commission of a crime
Kinds of Negligence?
Example:
X is the owner and driver of a passenger bus. Y bought a
ticket and rode the bus of X to travel home to Ozamiz from Pagadian.

Because X paid mahjong all night, he fell asleep while

driving. The bus then hit another vehicle and a by stander, causing the
death of the bystander.
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.
General Rule:
No person shall be liable for fortuitous events.

Exceptions:
1. When expressly declared by law;
2. When expressly declared by stipulation;
3. When the nature of the obligation requires the assumption
of risk;
Art. 1175
Usurious transactions shall be governed
by special laws.
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.
Example:
A creditor of P1,000,000, with 8% interest, received
P1,000,000 in payment of the principal. Interest was not referred to in
the payment. It is presumed that the 8% interest had already been
previously paid.

If a creditor receives the fourth installment of a debt, it is

understood that the first three installments have been paid.
Art. 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 defraud them.
Rights of the Creditor:

1. Exact payment;

2. Exhaust debtor’s properties, generally by attachment (except

properties exempted by the law)

3. Accion subrogatoria (subrogatory action) — i.e., exercise all

rights and actions except those inherent in the person

4. Accion pauliana - impugn or rescind acts or contracts done by the

debtor to defraud the creditors
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.
Transmissibility of Rights

General Rule:
Rights are transmissible.

Exceptions:
1. If the law provides that the right is not transmissible;
2. If it is stipulated that the right shall not be transmissible;
3. If the obligation is purely personal.