TITLE 1 - OBLIGATIONS

CHAPTER 1
General Provisions

Art. 1156. An obligation is a juridical necessity to give, to do or not to do.

OBLIGATIONS is a juridical relation whereby a creditor may demand from the debtor the
observance of a determinate conduct, and, in case of breach, may obtain satisfaction from
the assets of the debtor.

Essential requisites of an obligation -

An active subject, who has the power to demand the prestation, known as the creditor or obligee;

A passive subject, who is bound to perform the prestation, known as debtor or obligor.

An object or the prestation which may consist in the act of giving, doing or not doing something.

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 prestation. It is the legal tie which constitutes the
source of obligation—the 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.

Example:

Thonyx enters into a contract of sale with Skaei who paid the purchase of a Yamaha Mio. Thonyx did not
deliver the Yamaha Mio. Thonyx is the passive subject or debtor and Skaei is the active subject or
creditor. The object or prestation is the Yamaha Mio and the obligation to deliver is the legal tie or the
vinculum juris which binds Thonyx and Skaei.

Art. 1157. Obligations arise from:

Law;
Law: Example is the duty to pay taxes and to support one’s family. Refer to Art. 1158.

Contracts;
Contracts: Example is the duty to pay a loan by virtue of an agreement. Refer to Art. 1159.

Quasi-contracts;
Quasi-contracts: Example is the duty to refund an “over charge” of money because of solutio
indebiti or negtiorum gestio. Refer to Art. 1160.

Acts or omissions punished by law;

Acts or omissions punished by law or Delict: Example is the duty to return a stolen carabao.
Refer to Art. 1161.

Quasi-delicts
Quasi-delicts: Example is the duty to repair damages due to negligence. Refer to Art. 1162.
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.

Example: It is the duty of the Spouses to support each other. (Art. 291, New Civil Code)
And under the National Internal Revenue Code, it is the duty of every person having an
income to pay taxes.

Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.

Example:
Tonix borrowed from Sky P1,000,000 and agreed that in case of non-payment on the date
stipulated, Tonix’s house and lot would be sold to Sky for the amount of P1,000,000. Is the
stipulation valid? Yes. If Tonix does not pay, he should sell the house and lot for P1,000,000
to Sky. The agreement is not contrary to law.

Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title
XVII, of this Book.

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)

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-
Sky owed Tonix the sum of P1, 000.00. By mistake, Sky paid P2, 000.00. Tonix has the obligation
to return the P1, 000.00 excess because there was payment by mistake.

Negotiorum gestio (management of another’s 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-
Clint, a wealthy landowner suddenly left for abroad leaving his livestock farm unattended. John,
a neighbor of Clint managed the farm thereby incurring expenses. When Clint returns, he has
the obligation to reimburse John 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.

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.
 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.

Example: Bowser was convicted and sentenced to imprisonment by the Court for the crime of theft,
the gold necklace, of Luigi. In addition to whatever penalty that the Court may impose, Bowser may
also be ordered to return (restitution) the gold necklace to Luigi. If restitution is no longer possible,
for Bowser to pay the value (reparation) of the gold wrist watch. In addition to either restitution or
reparation, Bowser shall also pay for damages (indemnification) suffered by Luigi.

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 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 Andrew drives his car negligently and because of his negligence hits Soriano, who is walking
on the sidewalk of the street, inflicting upon him physical injuries. Then Andrew becomes liable
for damages based on quasi-delict.

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. (1094a)

To preserve or take care of the thing, with proper diligence of a good father to 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.

Example:
Richard obliged to give to Laila a wedding ring five days from now. When the promise was due,
Richard, for being too busy, lost the wedding ring he promised to Laila. Richard is liable to Laila for
being negligent in loosing the ring he promised. He should have properly taken care of it with proper
diligence of a good father of a family.
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. (1095)

Kinds of Rights:
Personal right - is power demandable by one person of another.
Real right - is a power over a specific thing and is binding on the whole world only when the
thing is actually delivered to him.

Example:
Leo obliged to give to Escorido a certain parcel of land on December 25. Before December 25,
Escorido do not have the right to the fruits of the parcel of land Leo promised. After December
25, Escorido poseses the right to the fruits from the parcel of Land. Upon actual delivery of the
property to Escorido, only then he becomes the owner of said fruit and land on the day of
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.
(1096)

Determinate thing - a thing is determinate when it is particularly designated or physically segregated

from all others from the same class. (Art. 1460, NCC)

Example:
Patrick promised to give to Ivy a Gucci Necklace Emperador model five days from now. If after 6
days, Patrick has not yet delivered the said necklace because he was robbed early in the
morning on the 6th day, even after consistent demand of Ivy for the necklace since the day
before, Ivy can compel Patrick to deliver the item since the object was determinate or specific.

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)

Example:
Amy promised to give to Andrew a gun, five days from now. If after five days, Amy has not yet
delivered the gun since she lost it on her way home, Andrew can ask Amy to comply with her
obligation at her own expense.

Fortuitous Events - those events which could not be foreseen or which though foreseen were
inevitable. (Art. 1174, NCC)
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)

Accessories - those joined to or included with the principal object for the latter’s better use,
perfection, or enjoyment. (like the keys to a house and the dishes in the restaurant)

Example:
Lleina promised to give Jack a particular pickup truck. Lleina should also deliver the tools and
the spare tire of the said pickup truck.

Accessions - additions to or improvements upon a thing.

Example:
Jack obliged to give Lleina a certain piece of land. Jack should also deliver including the
accessions in the said piece of land, like the building attached to it and all other infrastructure
constructed.

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)

This provision mainly focuses on Positive Personal Obligation, or an obligation to do. Remedies if
the debtor fails to do
To have the obligation performed at his expense and to demand damages.

If a thing may be ordered undone

If poorly made and if requires a negative obligation (not to do) for the debtor.

Example:
Antonio promised to construct a two-storey house for Comique. Few hours after constructing
the house of Comique, the roofing system of the garage fell down. Comique can demand
Antonio to undo the defect and reconstruct the garage roof at his expense since it was made
poorly.

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. (1099a)

This provision mainly focuses on Negative Personal Obligation or an obligation not to do.

Remedies if the debtor fails to do > Is the undoing of the

prohibited thing plus damages.

Example:
Roniel promised to Inot not to use 丨 not’s money for gambling in Casinos but only for
schooling, if in case Roniel does what he promised not to do, he will be liable to return the
money he used in gambling in the Casino and to pay Inot the same amount as penalty. If in case
 Roniel goes to the Casino and use Inofs money in gambling, he will be liable for the return of the
money, the penalty and damages.

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:

When the obligation or the law expressly so declare; or

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

When demand would be useless, as when the obligor has rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. From the moment one of the parties
fulfills his obligation, delay by the other begins. (1100a)

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 -

Ria obliged herself to deliver a Siberian Husky Puppy to Lleina on June 20, this year. Ria failed to
delivered on the agreed date, is Ria already on delay on June 20? Only when Lleina makes a
judicial or extra-judicial demand and from such date of demand when Ria still fails to deliver the
said puppy, she is on default or delay.

Exceptions for the requirement of demand

When the obligation expressly so provides - 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.

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.

When time is of the essence - Because time is the essential factor in the fulfillment of the obligation.
Example, Vicky binds herself to sew the wedding gown of Laila to be used by the latter on her
wedding date. Vicky did not deliver the wedding gown on the date agreed upon. Even without
demand, Vicky will be in delay because time of the essence.
 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.

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 between Jack and Jamero, if Jack, the seller, delivers
the object to Jamero, the buyer, and Jamero does not pay, then delay by Jamero begins and vice
versa, if Jamero pays and Jack did not deliver the object, then Jack is on delay.

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. (1101)

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. Refer to Article 1171.

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. Refer to Article 1173.

Delay (Mora) - like when there has been judicial or extra-judicial demand and the debtor does not
comply his obligation, delay will occur. Also refer to Article 1169.

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.

Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for
future fraud is void. (1102a)

Fraud may be either past or future. Meaning of fraud may be classified as

Fraud in obtaining consent

Example:
Jack violently forced Jamero to sign a gratuitous contract in favor of Jack which he also accepted.
The means employed in order to obtain consent was vitiated, thus the contract is considered
void and inexistent.

Fraud in performing the contract.

Dolo causante (causal fraud)
Dolo incidental (incidental fraud)

Example:
Lleina and Canoy entered into a contract of sale wherein Lleina will buy a certain scooter of
Canoy and in turn deliver the scooter upon payment of Lleina which is five days after the birth of
 the contract. It is also stipulated in their contract that if ever Canoy cannot deliver for any
reason, she will not be responsible for it. Canoy sold and delivered the scooter to Jack, thus
never delivered the scooter to Lleina. Canoy is still liable for damages since the stipulation in the
contract waiving any act of future fraud is deemed void, so Lleina can still claim damages against
Canoy.
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. (1103)

Kinds of Culpa classified as to source of obligations

Culpa Contractual - that which results in a breach of a contract.

Example: Emi, proprietor of Emi Taxi Company, hired Parekoy as one of her driver of her taxi
units. Tonix was able to chance upon Emi’s taxi, Parekoy being the driver. Parekoy drove
negligently fast on a barangay road and accidentally hit a lamp post while turning a curb.
The accident resulted to some bruises on Tonix. However, Emi is liable for the negligence
acted by Parekoy, and is subject for damages for breach of contract of carriage.

Culpa Aquiliana - also referred to as civil negligence or tort or quasi-delict

Example: Referring to the same problem stated above. If Parekoy while driving Tonix to his
place, drove negligently fast and accidentally hit a lamp post while turning a curb, and at the
same time caused physical injuries to a Sky, a bystander in the curb. Sky can file a case
against Emi, the owner of Emi Taxi Company and her driver parekoy.

Culpa Criminal - also called as criminal negligence, or that which results in the
commission of a crime or a delict.

Example: Referring to the same problem stated above. Sky can also file an criminal action
against Parekoy for reckless imprudence resulting to physical injuries.

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. (1104a)

Degrees of Culpa
Grave Negligence is required - slight negligence will make the debtor liable.

Ordinary Negligence is required - ordinary negligence will make the debtor liable.

Slight Negligence is required - grave negligence will make the debtor liable
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.

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)

As a general rule, no person shall be held responsible for fortuitous events

Example — Lyka obliged herself to deliver a determinate car to Dockie on Dec. 30, 2012.
Before the arrival of the period, the car was struck by lightning and was totally destroyed.
Lyka 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).

When the law expressly so provides, such as:

The debtor is guilty of fraud, negligence or in contravention of the tenor of the obligation.
Refer to Article 1170.
The debtor has proved to deliver the same thing to two or more persons who do not have
the same interest. Refer to Article 1165.
The thing to be delivered is generic.
The debtor is guilty of default or delay. Refer to Article 1169.
The debtor is guilty of concurrent negligence.

When declared by stipulation;

When the nature of obligation requires the assumption of risk. An example of this is a contract of
insurance.
Art. 1175. Usurious transactions shall be governed by special laws. (n)

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)

Example: Dong Juan, creditor of P 1M, 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. This is because under Article 1253 of this code, payment of the interest as a rule
precedes payment of the principal.

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:

to levy by attachment and execution upon all the property of the debtor, except such as are exempt
by law from execution;

to exercise all the rights and actions of the debtor, except, such as are inherently personal to him;
and

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)
As a rule, all rights acquired in virtue of an obligation are transmissible, except in the following
cases:

When the law so provides.

When the parties stipulate otherwise - by agreement of parties that the rights acquired by them will
not be transmitted to any other person.

When the obligation is purely personal in nature.