Article 1156 - 1178

Group No. 4
Chapter 1: General
Provisions
(Article 1156- 1162)
Article 1156. An obligation is a juridical
necessity to give, to do or not to do.
Obligation
O “obligatio” which means a “tying” or
“binding.”
O a tie of law or a juridical bond
O a legal relation established between one
party and another
Juridicial Necessity
O the courts of justice may be called upon
to enforce fulfillment of obligation
Nature of obligations under the Civil Code
O Civil obligations
O Natural obligations
Essential requisites of an obligation
O Passive subject (debtor or obligor)
O Active subject (creditor or obligee)
O Object or Prestation (subject matter)
O Juridical or Legal Tie (efficient cause)
Form of obligation
O No form of obligations arising from contracts
O No form of obligations arising from other sources
 Obligation, right, and wrong
(cause of action) distinguished.

O Obligation – act or performance which the

law will enforce.
O Right – power which a person has under the
law, to demand from another any prestation.
O Wrong (cause of action) – act or omission of
one party in violation of the legal right or
rights of another, causing injury to the latter.
 Essential elements of cause of
action
O Essential elements are:
* Legal right in favor of a person
* Correlative legal obligation on the part of another
to respect or not to violate the said right
* Act or omission in breach or violation
O If any is absent, the complaint becomes vulnerable
to a motion to dismiss on the ground of failure to
state a cause of action.
O A cause of action only arises when the last element
occurs
Cause of action based upon
a written contract
O Actions should be brought within 10 years
from the time the right of action accrues
O The cause of action resulting from breach of
contract is dependent on the facts of each
particular case
Injury, damage, and damages
O Injury
- the illegal invasion of a legal right (1)
- legal wrong to be redressed (2)
O Damage
- loss, hurt, or harm which results from the injury (1)
- compensation awarded or recoverable for the
damage or loss suffered (2)
O Damages
- sum of money recoverable as amends for the
wrongful act or omission
“There may be injury without damage and damage
without injury”
 Kinds of obligation
according to subject matter
O Real obligation (obligation to give) – a thing
the obligor must deliver to the obligee

O Personal obligation (obligation to do or not

to do) - an act to be done or not to be done
 2 kinds of personal obligation
o Positive personal obligation
o Negative personal obligation
ARTICLE 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
O Law — imposed by the law itself
O Contracts — stipulation of the parties
O Quasi-contracts — lawful, voluntary and
unilateral acts
- enforceable to the end that no one shall be
unjustly enriched or benefited at the expense
of another
Sources of obligations
O Crimes or acts or omissions punished by law
O Quasi-delicts or torts

Classification of Sources
O Those emanating from law
O Those emanating from private acts
* those arising from licit acts, in the case of
contracts and quasi-contracts
* those arising from illicit acts, which may be
either punishable by law in the case of delicts, or not
punishable in the case of quasi-delicts
 ARTICLE 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.
 ARTICLE 1159. Obligations
arising from contracts have
the force of law between the
contracting parties and
should be complied with in
good faith.
 Contractual obligations
Contracts - meeting of minds between two persons
- formal expression by the parties of their rights and
obligations
O Binding force
O Requirements of a valid contract
O Contract requires approval by the government
O Compliance in good faith
O Liability for breach of contract
O Preservation of interest of promisee
 ARTICLE 1160.
Obligations derived from
quasi-contracts shall be
subject to the provisions
of Chapter 1, Title XVII, of
the Civil Code of the
Philippines.
 Quasi-Contractual
obligations
― obligations arising from quasi-contracts
― juridical relation resulting from certain
lawful, voluntary and unilateral acts
― acts of which a party is obligated to the
other by unilateral acts of virtue, any of the
two parties involved in any previous
agreements involved in the settling of the
dispute is not to be benefited at the expense
of the other
Kinds of Quasi Contracts
O Negotiorum Gestio - voluntary management of the
property of another without consent of the latter
* Exemption
• Property or business is not neglected
• Manager is authorized by the owner
O Solutio Indebiti - when something is received when
there is no right to demand it
O Other Cases - cases on which a dispute cannot be
settled by a true contract
 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 Title on Human
Relations, and of Title XVIII the
Civil Code of the Philippines,
regulating damages.
 Civil Liability arising from
crimes or delicts
O May be a civil liability against the public or a private
victim
 Quantum Meruit allows recovery of reasonable
value regardless of any agreement as to value
 Responsibility for fault or negligence is entirely
separate and distinct from civil liabilities arising
from negligence under the Penal Code
 Any criminal liability for acts of felony is also
civilly liable but, in crimes which causes no
material damage, there is no civil liability
Reservation of right to recover civil liability
― only the civil liability arising from the offense
charged is deemed instituted with the criminal
action
― only civil liabilities involved with the actions done
by the offender are subject to recovery for the
offended
Scope of Civil Liability
O Restitution
O Reparation for the damage caused
O Indemnification for consequential damages
 ART. 1162. Obligations
derived from quasi-delicts
shall be governed by the
provisions of Chapter 2,
Title XVII of the Civil Code
of the Philippines, and by
special laws.
Quasi-delicts - causes damage to another by fault or
negligence w/o pre-existing contractual relation
between the parties
• Anyone who has done any quasi-delict is obliged
to pay for the damage done
Requisites of Quasi-delict
O An act or omission by the defendant
O A fault or negligence of the defendant
O A damage caused to the plaintiff
O direct relation of cause and effect between the act
or omission and the damage
O No pre-existing contractual relation between the
parties
 Crimes Distinguished from
Quasi-delict
O Any act where there is criminal or malicious intent
O Crime affect public interest
O Criminal liabilities are excluded from quasi delict
actions
O The intention of the plaintiff is to punish the
defendant
O Criminal liabilities cannot be comprised by the
parties involved themselves
O In crime, the guilt of the accused must be proved
beyond reasonable doubt
O The liability of the person responsible is subsidiary
Recovery of damages twice for the
same act or omission is prohibited
O Quasi delict and an act or omission
punishable by law are two different sources
of obligations
O the offended party has the option for
enforcement of civil liability or an action for
recovery of damages
O Ex Delicto or Ex Quasi Delicto may be availed
to caveat that the offended party cannot
recover damages twice for the same act
Chapter 2: Nature &
Effects of
Obligations
(Article 1163 - 1178)
 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.
O Specific (Determinate) thing - particularly
designated from others of the same class
- identified by its individuality
O Generic (Indeterminate) thing - a class or genus to
which cannot be pointed out with particularity
- identified only by its specie
Duties of debtor in obligation to give a determinate
thing
O To preserve or take care of the thing due
O To deliver the fruits of the thing
O To deliver its accessions and accessories
O To deliver the thing itself
O To answer for damages in case of non-fulfillment
Obligation to take care of the thing due
O Diligence of a good father of a family
O Another standard of care (slight or extraordinary
diligence)
O Factors to be considered
O Reason for debtor’s obligation
Duties of debtor in obligation to deliver a generic
thing
O To deliver a thing considering the purpose and
other circumstances
O To be liable for damages in case of fraud,
negligence, or delay
ARTICLE 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
O Natural fruits
O Industrial fruits
O Civil fruits

Right of creditor to the fruits

O Creditor is entitled to the fruits of the thing to be
delivered from the time the obligation arises
O obligation to return the things which were the
object of the contract, together with their fruits
and the price with its interest
Obligation to deliver arises:
O From the time of the perfection of the contract
O Upon fulfillment of the condition or arrival of the period
O When the price has been paid
O Depends on specific law

Personal and Real Right

O Personal right - the right to demand from another as
the fulfillment of the latter’s obligation to give, to do, or
not to do
O Real right – the right or interest of a person over a
specific thing without a definite passive subject
against whom the right may be personally enforced
 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 creditor in real
obligation
O In a specific real obligation, creditor may:
- demand specific performance
- demand rescission or cancellation
- demand the payment of damages
O A generic real obligation can be performed
by a third person
 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.
Accessions and Accessories
O Accessions – the additions to, or improvements
upon a thing
- may not be necessary to the principal thing
- used in the sense of a right including the right to
the fruits and the right to the accessory

O Accessories – things included with, the things for

the latter’s better use or completion
- this and the principal thing must go together
* Both exist only in relation to the principal
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
Article 1167 refers to obligation to do
3 situations:
O The debtor fails to perform an obligation to do; or
O The debtor performs an obligation to do but
contrary to the terms thereof; or
O The debtor performs an obligation to do but in a
poor manner.
Remedies of creditor in positive personal obligation
O If the debtor fails to comply, the creditor has the
right:
• to have the obligation performed by himself
• to recover damages.
O In case the obligation is poorly done, it may be
ordered to undo what was done
 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.
Remedies of creditor in negative personal
obligation

In an obligation not to do, the duty of the

obligor is to abstain from an act.
The very obligation is fulfilled in not doing
what is forbidden.
 ARTICLE 1169. 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.
Delay - not the same as its common understanding
of the word
O Ordinary delay - failure to perform on time.
O Legal delay or default or mora – failure to perform
on time which failure constitutes a breach of the
obligation.
Kinds of delay (mora)
O Mora solvendi - delay on the part of the debtor
O Mora accipiendi - delay on the part of the creditor
O Compensatio morae - delay of the obligors in
reciprocal obligations
Requisites of delay or default by the debtor
O failure of the debtor to perform his obligation on
the date agreed upon;
O demand made by the creditor upon the debtor to
fulfill, perform, or comply with his obligation which
may be either judicial or extra-judicial
O failure of the debtor to comply with such demand
Effects of delay
O Mora solvendi
The debtor is guilty of breach of the obligation which
made him liable for interest to pay money or
damages and even for a fortuitous event when the
obligation is to deliver a determinate thing.
Effects of delay
O Mora accipiendi
The creditor is guilty of breach of obligation which
made him liable for damages suffered by the debtor.
When the obligation is to pay money, the debtor is not
liable for interest. The debtor may release himself
from the obligation.

O Compensatio morae
The delay of the obligor cancels out the effects of the
delay of the obligee and vice versa.
 Time may be of the essence even
without express stipulation
O Applicable in agreements which are executed in
the form of options
O Applicable in all unilateral contracts
O Applicable in mercantile contracts for the
manufacture and sale of goods
O When subject is speculative or fluctuating in
nature, parties must have intended time
O Most applicable in contract to mining property
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
4 Grounds for Liability
O Fraud (deceit or dolo)
• Incidental fraud (dolo incidente)
• Causal fraud (dolo causante)
• Civil fraud
O Negligence (fault or culpa)
O Delay (mora)
O Contravention of the terms of the obligation
Breach of contract
― failure to comply with the terms of a contract
― may be willfully or done unintentionally
― failure to perform any promise which forms the
whole or part of the contract
Recovery of damages for breach of contract or
obligation
O Measure of recoverable damages
O Remedy serves to preserve.
• Expectation interest
• Reliance interest
• Restitution interest
O Excuse from ensuing liability.
O Duty of obligee to minimize his damages.
Damages recoverable where obligation to pay money
O Penalty interest for delay or non-performance –
damage dues is not included in computation of
interest
O Rate of the penalty interest - additional interest
shall be at a rate equal to the regular monetary
interest

Gross Negligence - characterized by want or absence

of or failure to exercise even slight care or diligence
willfully and intentionally
 ARTICLE 1171.
Responsibility arising
from fraud is
demandable in all
obligations. Any waiver of
an action for future fraud
is void.
Responsibility arising from fraud demandable
O An act of fraud occurs due to the false measures
taken in completing a task
O Responsibility results on how they consider the
state of the task
Waiver of action for past and future fraud void
O Future fraud can be void if it is against the law
and public policy
O Past fraud can be subject of a valid waiver since
waiver may provide supportive asset
*effects of the fraud are simply directed towards a
single part wherein it acts as reinforcement to the
ones who is right
 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.
Responsibility arising from negligence demandable
O The debtor is also responsible for any unsuspecting
cases which are simply the result of his negligence
O When both parties have equity of negligence that
they done, then the offense just cancels each other
and develops to a fair relationship

Validity of waiver of action arising from negligence

O An action done for resulting negligence may be
renounced but it is also dependent on the classes
of obligation and how it will affect its nature
Kinds of negligence according to source of obligation
O Contractual negligence (culpa contractual) - there
is the support of certain assets in the jurisdiction
which will determine who will uphold a greater
responsibility for the case
O Civil negligence (culpa aquiliana) - there is the
acknowledgement in the governing parties from
which they shall settle an agreement to end the
further elaboration for the case
O Criminal Negligence (culpa criminal)
Effect of negligence on the part of the injured party
O The role of a person in a particular case measures
on how good or how bad are the effects of
negligence in his position

Presumption of contractual negligence

O For contractual negligence, the mistake must be
properly stated together with its support since that
it is the basis of each action taken
O If in the situation there is some based on contract
of obligations, the position of the person is
acknowledged
 ARTICLE 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.
Fault or Negligence
O is conduct that creates undue risk or harm to
another. It is the failure to observe the protection of
the interests of another person, where the other
person suffers injury
Test for determining whether a person is negligent
O Reasonable care and caution expected of an
ordinary prudent person
O No hard and fast rule for measuring degree of care
Factors to be considered
O Nature of the obligation
O Circumstances of the person
O Circumstances of time
O Circumstances of the place
Measure of liability for damages
O Civil Code provisions (Art. 2201, Art. 2220, Art.
2232, Art. 21)
O Contractual breach committed in good faith/bad
faith
O With respect to moral damages – not punitive in
nature
O Code of Commerce provisions (Art. 587, Art. 590,
Art. 837)
Kinds of diligence required
O that agreed upon by the parties
O that required by law in the absence of stipulation
O good father of a family or ordinary diligence if both
the contract and law are silent
 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.
Fortuitous Event
O any extraordinary event which cannot be foreseen,
or which, though foreseen, is inevitable
O consists of being a happening independent of the
will of the obligor and which happening, makes
the normal fulfillment of the obligation impossible
O event independent of the will of the obligor but not
of other human wills
Force Majeure
O events which are totally independent of the will of
every human being
* In our law, fortuitous events and force majeure
are identical as they exempt an obligor from liability
Kinds of fortuitous events
O Ordinary fortuitous events
O Extraordinary fortuitous events
Requisites of a fortuitous event
O Independent of the human will
O Unforeseeable or unavoidable
O Impossible for the obligor to comply in a normal
manner
O The obligor is free from any participation in the
injury to the obligee
* The absence of any would prevent the obligor from
being exempt from liability
A person is not responsible for loss or damage
resulting from fortuitous events
O The exceptions are:
• When expressly specified by law.
• When declared by stipulation

Effect where risk not one impossible to foresee

O the nature of the obligation is such that a party
could rightfully be deemed to have assumed it
O Mere difficulty to foresee the happening of an event
is different from impossibility to foresee or
anticipate the same
 Effect of obligor’s
negligence upon his liability
O Negligence contributed to the loss or
damage
― not exempted from liability by showing that
the immediate cause of the damage was the
fortuitous event
O Negligence not contributory to the loss or
damage
― the consequences are all a derivation of the
fortuitous event
 ARTICLE 1175. Usurious
transactions shall be
governed by special laws.
Simple Loan or Mutuum
― is a contract where one of the parties delivers to
another money or other consumable thing upon
the condition that the same amount of the same
kind and quality shall be paid
― may be gratuitous or with a stipulation to pay
interest

Usury
― the illegal action or practice of lending money at
unreasonably high rates of interest
― is contracting for or receiving interest in excess of
the amount allowed by law for the loan or use of
money, goods, chattels, or credits
Kinds of interest
O Simple interest
O Compound interest
O Legal interest
O Lawful interest
O Unlawful interest

Different Interests Rules

O Legal rate
O Maximum rate:
O 12% per annum
O 14% per annum
O Prescribed by Monetary Board of the Central Bank
O Monetary Interest – Interest fixed by the parties
O Compensatory Interest – is imposed by law.

Requisites for recovery of monetary interest

(1) The payment of interest must be expressly
stipulated;
(2) The agreement must be in writing; and
(3) The interest must be lawful.

Liability for legal interest

O interest due should be stipulated in writing When
the obligation consists of payment of money
O interest shall be 6% For other than loan or
forbearance of money
O legal rate of interest shall be 12% Where a
judgment become final and executory
 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 installment of a debt without
reservation as to prior installments,
shall likewise raise the presumption
that such installments have been paid.
Presumption
― the inference of a fact not actually known arising from
its usual connection with another which is known or
proved
Two kinds of presumption
O 1. Conclusive presumption
O 2. Disputable (or rebuttable) presumption
Do not apply:
O When there is a reservation as to interest or prior
installments
O When the creditor waives his right to apply the payment
first
O If the receipt does not recite that it was issued for a
particular installment due
O To the payment of taxes
O When non-payment of the prior obligations has been
proven.
 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 defraud them.
Remedies available to creditors for
the satisfaction of their claims
O Exact fulfillment with the right to damages;
O Pursue the leviable property of the debtor;
O Exercise all the rights and bring all the
actions of the debtor except those inherent
in or personal to the person of the latter
O 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.
ARTICLE 1178. Subject to
the laws, all rights
acquired in virtue of an
obligation are
transmissible, if there
has been no stipulation
to the contrary.
 All rights acquired in virtue of an
obligation are generally transmissible
O The exceptions to this rule are the following:
 Prohibited by law
• By the contract of partnership
• By the contract of agency
• By the contract of commodatum
O Prohibited by stipulation of parties
 The obligation shall be extinguished or that
the creditor cannot assign his credit to
another