Chapter 1: General Provisions
prestation. It is the legal tie which constitutes the
Art. 1156. An obligation is a juridical necessity to give,
to do or not to do.
The definition of obligations establishes the
unilateral act of the debtor either to give, to do
or not to do as a patrimonial obligation. It
means that the debtor has the obligation while
the creditor has its rights.
The obligations referred to is a patrimonial obligations
that is, those obligations with pecuniary value or
assessable in terms of money.
1. Characteristics of patrimonial obligations:
They represent an exclusively private interest.
They create ties that are by nature transitory.
They exist a power to make effective in case of
non-fulfillment, the economic equivalent
obtained at the patrimony of a debtor.
2. Juridical Necessity it means the rights and duties
arising from obligation are legally demandable and the
courts of justice may be called upon through proper
action to order the performance.
Action means an ordinary suit in court of justice
by which one party prosecutes another for the
enforceable or protection for a right or a
prevention or redress of a wrong ( Sec. 1.
Rules of court ).
Example : Gaya bought a refrigerator from Tito but Gaya
did not pay the refrigerator. If after demand, Gaya still
did not pay, Tito can sue Gaya in Court either to
demand payment or for recovery of the refrigerator.
3. Essential requisites of an obligation
a) An active subject, who has the power to demand
the prestation(payment in money), known as the
creditor or oblige;
b) A passive subject, who is bound to perform the
prestation, known as debtor or obligor.
c) An object or the prestation which may consist in
the act of giving, doing or not doing something.
d) The vinculum juris or the juridical tie between the
two subjects by reason of which the debtor is
bound in favor of the creditor to perform the
source of obligationthe coercive force which
makes the obligation demandable. It is the legal tie
which constitutes the devise of obligation the
coercive force which makes the obligation
demandable.
JURIDICAL TIE
Debtor Or Obligor To give, to do or not to do
Creditor or Obligee
Example: Gaya enters into a contract of sale with Tito
who paid the purchase of a GE refrigerator. Gaya did
not deliver the refrigerator. Gaya is the passive subject
or debtor and Tito is the active subject or creditor. The
object or prestation is the GE refrigerator and the
obligation to deliver is the legal tie or the vinculum juris
which binds Gaya and Tito.
This is also known as a unilateral obligation,
that is, the obligation of the debtor to fulfill or
comply his commitment, in this case, the
delivery of the refrigerator.
On the other hand, if Gaya, delivered the refrigerator
and Tito did not pay, then Tito becomes the debtor who
is bound to pay while Gaya is the creditor who has the
right to demand the prestation.
4. Distinctions between Obligations and Contracts:
Contract is the only one of the sources of obligation,
while obligations have other sources like law,
quasi-contracts, delicts or quasi-delicts;
Contract is a bilateral obligation while obligation is a
unilateral obligation;
All contracts are obligations while not all obligations
are contracts.
5. Civil obligations as distinguished from Natural
obligations
Civil obligations derive their binding force from
positive law; Natural Obligation derives their
binding effect from equity and natural justice.
Civil can enforced by court action of the
coercive power of public authority;
Natural the fulfillment cannot be compelled by court
action but depends on the good conscience of debtor.
ART. 1157. Obligations arise from:
Law;
Contracts;
Quasi-contracts;
Acts or omissions punished by law; and
Quasi-delicts. (1089a)
On the sources of obligation, the main sources are really
Law and Contracts. The other sources are also
established by law.
Source of Obligations
1. LAW as a source of obligations
The provisions of Art. 1158 refers to the legal
obligations or obligations imposed by specific provisions
of law, which means that obligations arising form law
are not presumed and that to be demandable must be
clearly provided for, expressly or impliedly in the law.
Examples:
1. It is the duty of the Spouses to support each
other. (Art. 291, New Civil Code)
2. And under the National Internal Revenue Code,
it is the duty of every person having an income
to pay taxes.
CONTRACT as a source of obligations
Contract as defined in Art. 1305, NCC is the meeting of
minds between two person whereby one binds himself
with respect to the other,
Obligations arising from contracts have the force of law
between the contracting parties because that which is
agreed upon in the contract by the parties is the law
between them, thus, the agreement should be
complied with in good faith. (Art. 1159).
For examples:
A contract of lease was executed between Gaya as the
lessee and Tito as the lessor for the rent of an
apartment.
Although contracts have the force of law, it
does not mean that contract are over and
above the law. Contracts are with the
limitations imposed by law in Art. 1306, NCC, it
states that the contracting parties may establish
such stipulations, clauses terms and conditions
as, they may deem convenient, provided that
are not contrary to law, morals, good custom,
public order or public policy.
3. QUASI-CONTRACTS as a source of obligations
The quasi literally means as if.
Quasi-contract is the juridical relation resulting
from a lawful, voluntary and unilateral act
which has for its purpose the payment of
indemnity to the end that no one shall unjustly
enrich or benefited at the expense of another.
(Art. 2142, NCC)
Contracts and quasi-contracts distinguished:
in a contract, consent is essential requirement
for its validity while in quasi-contract, there is no
consent as the same is implied by law;
contract is a civil obligation while quasi-contract
is a natural obligation.
2 Kinds of Quasi-contracts
1. Solutio Indebiti (Payment by mistake)
It is the juridical relation which arises when a person is
obliged to return something received by him through
error or mistake.
Example: Arvin owed Ian the sum of P1, 000.00. By
mistake, Arvin paid P2, 000.00. Ian has the obligation to
return the P1, 000.00 excess because there was
payment by mistake.
2. Negotiorum gestio (management of anothers
property)
It is the voluntary management or administration by a
person of the abandoned business or property of
another without any authority or power from the latter.
(Art. 2144, NCC)
Example: Victor, a wealthy landowner suddenly left for
abroad leaving his livestock farm unattended. Ramon, a
neighbor of Victor managed the farm thereby incurring
expenses. When Victor returns, he has the obligation to
reimburse Ramon for the expenses incurred by him and
to pay him for his services. It is bases on the principle
that no one shall enrich himself at the expense of
another.
4. DELICTS or acts or omissions punished by law
as a source of obligations
Acts or omission punished by law is known as Delict or
Felony or Crime.
While an act or omission is felonious because it
is punished by law, the criminal act gives rise to
civil liability as it caused damage to another.
Civil liability arising from delicts:
Restitution which is the restoration of or
returning the object of the crime to the injured
party.
Reparation which is the payment by the offender
of the value of the object of the crime, when
such object cannot be returned to the injured
party.
Indemnification the consequential damages
which includes the payment of other damages
that may have been caused to the injures party.
Illustration:
Mario was convicted and sentenced to
imprisonment by the Court for the crime of
theft, the gold wrist watch, of Rito. In addition
to whatever penalty that the Court may impose,
Mario may also be ordered to return
(restitution) the gold wrist watch to Rito. If
restitution is no longer possible, for Mario to
pay the value (reparation) of the gold wrist
watch. In addition to either restitution or
reparation, Mario shall also pay for damages
(indemnification) suffered by Rito.
5. QUASI-DELICTS as a source of obligations
Concepts of Quasi-Delict
Quasi-delict is one where whoever by act or
omission causes damage to another, there being fault of
negligence, is obliged to pay for the damage done. Such
fault of negligence, if there is no pre-existing
contractual relation between the parties. (Art. 2176)
Example: If Pedro drives his car negligently and because
of his negligence hits Jose, who is walking on the
sidewalk of the street, inflicting upon him physical
injuries. Then Pedro becomes liable for damages based
on quasi-delict.
Requisites of a quasi-delicts
There must be fault of negligence attributable
to the offended;
There must be damage or injury caused to
another;
There is no pre-existing contract.
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.(1090)
ART. 1159. Obligations arising from contracts have the
force of law between the contracting parties and
should be complied with in good faith. (1091a)
ART. 1160. Obligations derived from quasi-contracts
shall be subject to provisions.
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 regulating damages. (1092a)
ART. 1162. Obligations derived from quasi-delicts shall
be governed by the provisions of Chapter 2, Title XVIII
of this Book, and by special law. (1093a)
Chapter 2: NATURE AND EFFECT OF OBLIGATIONS
ART. 1163. Every person obliged to give something is
also obliged to take care of it with the proper diligence
of a good father of a family, unless the law or the
 stipulation of the parties requires another standard of
care. (1904a)
ART. 1664. 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. (1905)
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 deliver. (1906)
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. (1097a)
Obligations of the Debtor To Give a determinate thing:
1. To preserve or take care of the thing with the proper
diligence of a good father of a family. It means the
ordinary diligence that a prudent man would
exercise in taking care of his own property taking
into consideration the nature of the obligation, of
the time and of the place, like a person who is
obliged to deliver a determinate horse to another
should, pending its delivery, preserve it by taking
care of the same as if the horse is his own.
2. Accessions and accessories.
Accession is the right pertaining to the owner of
a thing over its products and whatever is attached
thereto either naturally or artificially.
Example:
Accretion which refers to the gradual and
addition of sediment to the shore by action of
water.
Accessories are those things which are joined
attached to the principal object as ornament or
to render it perfect.
Example: Radio attached to a car; or key to a car.
3. To be liable for damages in case of breach of
obligation (Art. 1170, NCC)
When creditor acquire a right to the thing to be
delivered and its fruits-
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 have been delivered to him. (Art. 1164,
NCC)
Example a binds himself to sell his horse to B for
fro P10, 000. No date nor condition is stipulated for
delivery of the horse. Later, the horse gave birth to
a colt. A has right to the colt, if B has not paid the
horse. Before delivery, B does not acquire
ownership over it.
Definition of terms:
1. Determinate thing a thing is determinate
when it is particularly designated or physically
segregated from all others from the same class.
(Art. 1460, NCC)
2. Indeterminate or generic thing A thing is
generic when it refers to a class or thing or
genus and cannot be designated with
particularity. (Art. 1460, NCC)
3. Fortuitous Events those events which could
not be foreseen or which though foreseen were
inevitable. (Art. 1174, NCC)
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. ( 1098 )
Obligation of the debtor To Do:
Being a personal positive obligation, The creditor has
the right to secure the services of third person to
perform the obligation at the expense of the debtor
under the following instances:
When the debtor fails to do the obligation;
When the debtor performs the obligation but
contrary to the tenor; or
When the obligor poorly performs the obligation.
ART. 1168. When the obligation consists in not doing,
and the obligor does has been forbidden him, it shall
also be undone at his expense, (1099a)
Obligation of the Debtor NOT To Do :
This is negative personal obligation which is consisting
of an obligation, of not doing something. If the debtor
does what has been forbidden him to do, the obligee
can ask the debtor to have it undone. If it is impossible
to undo what was done, the remedy of the injured party
is for an action of damages.
Example: A bought a land from B. It was stipulated that
A would not construct a fence in a certain portion of his
land adjoining that land sold by B. Should A construct a
fence in violation of the agreement, B. can bring an
action to have the fence remove at the expense of A.
ART. 1169. Those oblige to deliver or to do something
incur in delay from the time the obligee judicially or
extra - judicially demands from theme 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 declares;
or
2. When from the nature and the circumstances of the
obligation it appears that the destination of the time
when the thing is to be delivered or the service is to
rendered was 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 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 )
Delay (Mora) means a legal delay or default and it
consists of failure discharge a duty resulting to ones
own disadvantaged.
The debtor incurred delay if:
The debtor fails to perform his obligation when it
falls due; and
A demand has been made by the creditor
judicially or extra judicially.
Example : Gaya obliged herself to deliver a determinate
horse to Tito on June 20. this year. Gaya failed to
delivered on the agreed date, Is Gaya already on delay
on June 20, only when Tito makes a judicial or extra-
judicial demand and from such date of demand when
Gaya is on default or delay.
However, there are instances when the demand by the
Creditor is not necessary to place the debtor on delay:
1. When the obligation expressly so provides
The mere fixing of the period is not sufficient to
constitute a delay. An agreement to the effect that
fulfillment or performance is not made when the
obligation becomes due, default or delay by the debtor
will automatically arise.
2. When the law so provides
The express provision of law that a debtor is in default.
For instance, taxes must be paid on the date prescribed
by law, and demand is not necessary in order that the
taxpayer is liable for penalties.
3. When time is of the essence
Because time is the essential factor in the fulfillment of
the obligation. Example, Gaya binds herself to sew the
wedding gown of Maya to be used by the latter on her
wedding date. Gaya did not deliver the wedding gown
on the date agreed upon. Even without demand, Gaya
will be in delay because time of the essence.
4. When demand would be useless
When the debtor cannot comply his obligation as when
it is beyond his power to perform. Like when the object
of the obligation is lost or destroyed through the fault
of the debtor, demand is not necessary.
5. In a reciprocal obligation, from the moment
one of the parties fulfills his obligation, delay
to the other begins
For instance, in a contract of sale, if the seller delivers
the object to the buyer and the buyer does not pay,
then delay by the buyer begins and vice versa, if the
buyer pays and the seller did not deliver the object,
then the seller is on delay.
Kinds of Delay:
Mora solvendi delay on the part of the debtor.
Mora accipiendi delay on the part of the
creditor, like when the creditor unjustifiably
refused to accept payment at the time it was
due, is in delay.
Compensatio morae delay both parties in a
reciprocal obligation.
ART. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or
delay, and those whoin any manner contravene
the tenor thereof, are liable for damages. (1101)
ART. 1171. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an
action for future fraud is void. (1120a)
ART. 1172. Responsibility arising from negligence
in the performance of every king of obligation is
also demandable, but such liability may be
regulated by the courts, according to the
circumstances. (1130)
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
of which is to be observed in the performance,
that which is expected of a good father of a family
shall be required. (1104a)
Sources of liability for damages:
1. Fraud (dolo) is the intentional deception made
by one person resulting in the injury of another.
The fraud referred to is incidental
fraud, that is, fraud incident to the
performance of a pre-existing
obligation.
2. Negligence (culpa) consists in the omission by
the obligor of that diligence which is required
by the nature of the obligation and corresponds
with the circumstances of the person, of the
time and of the place. (Art. 1173, NCC)
3. Delay (Mora) like when there has been judicial
or extra-judicial demand and the debtor does
not comply his obligation, delay will occur.
4. In contravention of the tenor of the obligation
refers to the violation of the terms and
conditions or defects in the performance of the
obligation, like when a landlord fails to maintain
a legal and peaceful possession of a tenant
being leased by the latter because the landlord
was not the owner and the real owner wants to
occupy the land, there is contravention of the
tenor of the obligation.
5. Loss of the thing with the fault of debtor.
6. Deterioration with the fault of debtor. (Art.
1189)
Kinds of Damages
1. Moral damages include physical sufferings,
mental anguish, fright, serious anxiety,
besmirched reputation, wounded feeling, moral
shock, social humiliation and similar injury.
 2. Exemplary damages imposed by way of
example or correction for the public good.
Like in quasi-delicts, if the defendant acted
with gross negligence. (Art. 2231, NCC)
3. Nominal damages are adjudicated in order
that a right of the plaintiff, which has been
violated by the defendant, may be vindicated or
recognized and not for the purpose of
indemnifying the plaintiff for any loss suffered
by him. (Art. 2221, NCC)
4. Temperate or moderate damages are more
than nominal but less than compensatory
damages may be recovered when the courts
finds that its amount cannot, from the nature of
the case, be proved with certainty. Pecuniary
loss means loss of money, or of something by
which money or something of money value may
be acquired. (Black Law Dict. P. 1131)
5. Actual or compensatory damages except as
provided by law, or a stipulation, one is entitled
to an adequate compensation only for such
pecuniary loss suffered by him as he has duly
proved. (Art. 2199, NCC)
Damages may be recovered:
1. For loss or impairment of earning capacity in
cases of temporary or permanent personal
injury;
2. For injury, to the plaintiffs business standing or
commercial credit.
6. Liquidated damages are those agreed upon
by parties to a contract to be paid in case of
breach thereof. (Art. 2226, NCC)
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 (1105a)
Fortuitous even is an event which cannot be
foreseen which though foreseen is inevitable.
Fortuitous event proper are acts of God such as volcanic
eruption, earthquake, lightning, etc. is now similar with
force majuere or acts of man such as conflagration, war,
robbery, etc.
1. Requisite necessary to constitute fortuitous
event
The failure of the debtor to comply with the
obligation must be independent from the human
will;
The occurrence makes it impossible for the
debtor to fulfill the obligation on a normal
manner, and the obligor did not take part as to
aggravate the injury of the creditor. (Vasquez
v.C.A. G.R. 42926)
2. As a general rule, no person shall be held
responsible for fortuitous events
Example : Gaya obliged herself to deliver a determine
car to Tito on Dec. 30, 1998. Before the arrival of the
period, the car was struck by lightning and was totally
destroyed. Gaya cannot be held responsible for the
destruction of the car, hence her obligation to deliver is
extinguished.
Exceptions (when the person is responsible despite the
fortuitous even):
a. When the law expressly so provides, such as:
The debtor is guilty of fraud, negligence or in
contravention of the tenor of the obligation.
(Art, 1170, NCC)
The debtor has proved to deliver the same thing
to two or more persons who do not have the
same interest. ( Art. 1165,NCC )
The thing to delivered is generic.
The debtor is guilty of default or delay. ( Art.
1169,NCC )
The debtor is guilty of concurrent negligence.
b. When declared by stipulation;
 c. When the nature of obligation requires the
assumption of risk. An example of this is a
contract of insurance.
ART. 1175. Usurious transaction shall be governed by
special laws.
Note: C.B. Circular No. 905 suspends the ceilings in the
usury law. Hence, parties can agree as to the rate of
interest.
Kinds of interest:
1. Conventional- The rate which is agreed upon by the
parties.
2. Legal Interest-The rate which is prescribed by law.
3. Lawful Interest- The rate which is agreed upon by the
parties but which rate is within the rate authorized by
law.
4. Usurious Interest-The rate which is in excess of the
maximum rate of interest allowed by law.
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. (1110a)
Presumption means the inference as to the
existence of a certain fact which if not contradicted is
considered as true.
The presumption in the above article is a disputable
presumption, whereby one which can be contradicted
by presenting proof to the contrary while a conclusive
presumption does not admit any evidence or proof,
hence, it is considered as a fact.
Presumption under this article:
1. Receipt of the principal, without reservation as to
the interest, shall give rise to the presumption that
the said interest has been paid.
2. When the creditor issues a receipt of a later
installment of a debt without reservation as to
prior installment is presumed to 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. (1111)
Rights of Creditors::
In order to satisfy their claims against the debtor,
creditors have the following successive rights:
1. to levy by attachment and execution upon all
the property of the debtor, except such as are
exempt by law from execution;
2. to exercise all the rights and actions of the
debtor, except, such as are inherently personal
to him; and
3. to ask for the rescission of the contracts made
by the debtor in fraud of their rights.
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. (1112)
1. As a rule, all rights acquired in virtue of an
obligation are transmissible, except in the
following cases:
2. When the law so provides.
3. When the parties stipulate otherwise by
agreement of parties that the rights acquired by
them will not be transmitted to any other
person.
4. When the obligation is purely personal in nature.