Chapter 1: General Provisions bound in favor of the creditor to perform the

prestation. It is the legal tie which constitutes the

Art. 1156. An obligation is a juridical necessity to give, source of obligationthe coercive force which
to do or not to do. makes the obligation demandable. It is the legal tie
The definition of obligations establishes the which constitutes the devise of obligation the
unilateral act of the debtor either to give, to do coercive force which makes the obligation
or not to do as a patrimonial obligation. It demandable.
means that the debtor has the obligation while JURIDICAL TIE
the creditor has its rights. Debtor Or Obligor To give, to do or not to do
The obligations referred to is a patrimonial obligations Creditor or Obligee
that is, those obligations with pecuniary value or Example: Gaya enters into a contract of sale with Tito
assessable in terms of money. who paid the purchase of a GE refrigerator. Gaya did
1. Characteristics of patrimonial obligations: not deliver the refrigerator. Gaya is the passive subject
or debtor and Tito is the active subject or creditor. The
They represent an exclusively private interest. object or prestation is the GE refrigerator and the
They create ties that are by nature transitory. obligation to deliver is the legal tie or the vinculum juris
They exist a power to make effective in case of which binds Gaya and Tito.
non-fulfillment, the economic equivalent
obtained at the patrimony of a debtor. This is also known as a unilateral obligation,
that is, the obligation of the debtor to fulfill or
2. Juridical Necessity it means the rights and duties comply his commitment, in this case, the
arising from obligation are legally demandable and the delivery of the refrigerator.
courts of justice may be called upon through proper
action to order the performance. On the other hand, if Gaya, delivered the refrigerator
and Tito did not pay, then Tito becomes the debtor who
Action means an ordinary suit in court of justice is bound to pay while Gaya is the creditor who has the
by which one party prosecutes another for the right to demand the prestation.
enforceable or protection for a right or a
prevention or redress of a wrong ( Sec. 1. 4. Distinctions between Obligations and Contracts:
Rules of court ). Contract is the only one of the sources of obligation,
Example : Gaya bought a refrigerator from Tito but Gaya while obligations have other sources like law,
did not pay the refrigerator. If after demand, Gaya still quasi-contracts, delicts or quasi-delicts;
did not pay, Tito can sue Gaya in Court either to Contract is a bilateral obligation while obligation is a
demand payment or for recovery of the refrigerator. unilateral obligation;
All contracts are obligations while not all obligations
3. Essential requisites of an obligation are contracts.

a) An active subject, who has the power to demand 5. Civil obligations as distinguished from Natural
the prestation(payment in money), known as the obligations
creditor or oblige;
b) A passive subject, who is bound to perform the Civil obligations derive their binding force from
prestation, known as debtor or obligor. positive law; Natural Obligation derives their
c) An object or the prestation which may consist in binding effect from equity and natural justice.
the act of giving, doing or not doing something. Civil can enforced by court action of the
d) The vinculum juris or the juridical tie between the
coercive power of public authority;
two subjects by reason of which the debtor is
Natural the fulfillment cannot be compelled by court Although contracts have the force of law, it
action but depends on the good conscience of debtor. does not mean that contract are over and
above the law. Contracts are with the
ART. 1157. Obligations arise from: limitations imposed by law in Art. 1306, NCC, it
Law; states that the contracting parties may establish
Contracts; such stipulations, clauses terms and conditions
Quasi-contracts; as, they may deem convenient, provided that
Acts or omissions punished by law; and are not contrary to law, morals, good custom,
Quasi-delicts. (1089a) public order or public policy.

On the sources of obligation, the main sources are really 3. QUASI-CONTRACTS as a source of obligations
Law and Contracts. The other sources are also The quasi literally means as if.
established by law. Quasi-contract is the juridical relation resulting
Source of Obligations from a lawful, voluntary and unilateral act
which has for its purpose the payment of
1. LAW as a source of obligations indemnity to the end that no one shall unjustly
enrich or benefited at the expense of another.
The provisions of Art. 1158 refers to the legal
(Art. 2142, NCC)
obligations or obligations imposed by specific provisions
of law, which means that obligations arising form law Contracts and quasi-contracts distinguished:
are not presumed and that to be demandable must be
clearly provided for, expressly or impliedly in the law. in a contract, consent is essential requirement
for its validity while in quasi-contract, there is no
Examples: consent as the same is implied by law;
contract is a civil obligation while quasi-contract
1. It is the duty of the Spouses to support each
is a natural obligation.
other. (Art. 291, New Civil Code)
2. And under the National Internal Revenue Code, 2 Kinds of Quasi-contracts
it is the duty of every person having an income
to pay taxes. 1. Solutio Indebiti (Payment by mistake)

CONTRACT as a source of obligations It is the juridical relation which arises when a person is
obliged to return something received by him through
Contract as defined in Art. 1305, NCC is the meeting of error or mistake.
minds between two person whereby one binds himself
with respect to the other, Example: Arvin owed Ian the sum of P1, 000.00. By
mistake, Arvin paid P2, 000.00. Ian has the obligation to
Obligations arising from contracts have the force of law return the P1, 000.00 excess because there was
between the contracting parties because that which is payment by mistake.
agreed upon in the contract by the parties is the law
between them, thus, the agreement should be 2. Negotiorum gestio (management of anothers
complied with in good faith. (Art. 1159). property)

For examples: It is the voluntary management or administration by a

person of the abandoned business or property of
A contract of lease was executed between Gaya as the another without any authority or power from the latter.
lessee and Tito as the lessor for the rent of an (Art. 2144, NCC)
apartment.
Example: Victor, a wealthy landowner suddenly left for Quasi-delict is one where whoever by act or
abroad leaving his livestock farm unattended. Ramon, a omission causes damage to another, there being fault of
neighbor of Victor managed the farm thereby incurring negligence, is obliged to pay for the damage done. Such
expenses. When Victor returns, he has the obligation to fault of negligence, if there is no pre-existing
reimburse Ramon for the expenses incurred by him and contractual relation between the parties. (Art. 2176)
to pay him for his services. It is bases on the principle
that no one shall enrich himself at the expense of Example: If Pedro drives his car negligently and because
of his negligence hits Jose, who is walking on the
another.
sidewalk of the street, inflicting upon him physical
4. DELICTS or acts or omissions punished by law injuries. Then Pedro becomes liable for damages based
as a source of obligations on quasi-delict.

Acts or omission punished by law is known as Delict or Requisites of a quasi-delicts

Felony or Crime.
There must be fault of negligence attributable
While an act or omission is felonious because it to the offended;
is punished by law, the criminal act gives rise to There must be damage or injury caused to
civil liability as it caused damage to another. another;
There is no pre-existing contract.
Civil liability arising from delicts:
ART. 1158. Obligations derived from law are not
Restitution which is the restoration of or presumed. Only those expressly determined in this
returning the object of the crime to the injured
Code or in special laws are demandable, and shall be
party. regulated by the precepts of the law which establishes
Reparation which is the payment by the offender them; and as to what has not been foreseen, by the
of the value of the object of the crime, when provisions.(1090)
such object cannot be returned to the injured ART. 1159. Obligations arising from contracts have the
party. force of law between the contracting parties and
Indemnification the consequential damages should be complied with in good faith. (1091a)
which includes the payment of other damages ART. 1160. Obligations derived from quasi-contracts
that may have been caused to the injures party. shall be subject to provisions.
Illustration: ART. 1161. Civil obligations arising from criminal
Mario was convicted and sentenced to offenses shall be governed by the penal laws, subject
imprisonment by the Court for the crime of to the provisions of article 2177, and of the pertinent
theft, the gold wrist watch, of Rito. In addition provisions of Chapter 2, Preliminary Title, on Human
to whatever penalty that the Court may impose, Relations, and of regulating damages. (1092a)
Mario may also be ordered to return
(restitution) the gold wrist watch to Rito. If ART. 1162. Obligations derived from quasi-delicts shall
restitution is no longer possible, for Mario to be governed by the provisions of Chapter 2, Title XVIII
pay the value (reparation) of the gold wrist of this Book, and by special law. (1093a)
watch. In addition to either restitution or
reparation, Mario shall also pay for damages Chapter 2: NATURE AND EFFECT OF OBLIGATIONS
(indemnification) suffered by Rito. ART. 1163. Every person obliged to give something is
5. QUASI-DELICTS as a source of obligations also obliged to take care of it with the proper diligence
of a good father of a family, unless the law or the
Concepts of Quasi-Delict
 stipulation of the parties requires another standard of Accretion which refers to the gradual and
care. (1904a) addition of sediment to the shore by action of
water.
ART. 1664. The creditor has a right to the fruits of the Accessories are those things which are joined
thing from the time the obligation to deliver it arises.
attached to the principal object as ornament or
However, he shall acquire no real right over it until the to render it perfect.
same has been delivered to him. (1905) Example: Radio attached to a car; or key to a car.
ART. 1165. When what is to be delivered is a 3. To be liable for damages in case of breach of
determinate thing, the creditor, in addition to the right
obligation (Art. 1170, NCC)
granted him by article 1170, may compel the debtor to
make the delivery. When creditor acquire a right to the thing to be
delivered and its fruits-
If the thing is indeterminate or generic, he may
ask that the obligation be complied with at the The creditor has a right to the fruits of the thing
expense of the debtor. from the time the obligation to deliver it arises.
However, he shall acquire no real right over it until
If the obligor delays, or has promised to deliver the same have been delivered to him. (Art. 1164,
the same thing to two or more persons who do NCC)
not have the same interest, he shall be
responsible for any fortuitous event until he has Example a binds himself to sell his horse to B for
effected the deliver. (1906) fro P10, 000. No date nor condition is stipulated for
delivery of the horse. Later, the horse gave birth to
ART. 1166. The obligation to give a determinate thing a colt. A has right to the colt, if B has not paid the
includes that of delivering all its accessions and horse. Before delivery, B does not acquire
accessories, even though they may not have been
ownership over it.
mentioned. (1097a)
Definition of terms:
Obligations of the Debtor To Give a determinate thing:
1. Determinate thing a thing is determinate
1. To preserve or take care of the thing with the proper when it is particularly designated or physically
diligence of a good father of a family. It means the segregated from all others from the same class.
ordinary diligence that a prudent man would
(Art. 1460, NCC)
exercise in taking care of his own property taking 2. Indeterminate or generic thing A thing is
into consideration the nature of the obligation, of generic when it refers to a class or thing or
the time and of the place, like a person who is genus and cannot be designated with
obliged to deliver a determinate horse to another particularity. (Art. 1460, NCC)
should, pending its delivery, preserve it by taking 3. Fortuitous Events those events which could
care of the same as if the horse is his own. not be foreseen or which though foreseen were
2. Accessions and accessories. inevitable. (Art. 1174, NCC)

Accession is the right pertaining to the owner of Art. 1167. If a person obliged to do something fails to
a thing over its products and whatever is attached do it, the same shall be executed at his cost.
thereto either naturally or artificially. This same rule shall be observed if he does it in
Example: 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: perform.In reciprocal obligations, neither party incurs
in delay if the other does not comply in a proper
Being a personal positive obligation, The creditor has manner with what is incumbent upon him. From the
the right to secure the services of third person to moment one of the parties fulfills his obligation, delay
perform the obligation at the expense of the debtor
by the other begins. ( 1100a )
under the following instances:
Delay (Mora) means a legal delay or default and it
When the debtor fails to do the obligation; consists of failure discharge a duty resulting to ones
When the debtor performs the obligation but
own disadvantaged.
contrary to the tenor; or
When the obligor poorly performs the obligation. The debtor incurred delay if:

ART. 1168. When the obligation consists in not doing, The debtor fails to perform his obligation when it
and the obligor does has been forbidden him, it shall falls due; and
also be undone at his expense, (1099a)
A demand has been made by the creditor
Obligation of the Debtor NOT To Do : judicially or extra judicially.

This is negative personal obligation which is consisting Example : Gaya obliged herself to deliver a determinate
of an obligation, of not doing something. If the debtor horse to Tito on June 20. this year. Gaya failed to
does what has been forbidden him to do, the obligee delivered on the agreed date, Is Gaya already on delay
can ask the debtor to have it undone. If it is impossible on June 20, only when Tito makes a judicial or extra-
to undo what was done, the remedy of the injured party judicial demand and from such date of demand when
is for an action of damages. Gaya is on default or delay.

Example: A bought a land from B. It was stipulated that However, there are instances when the demand by the
A would not construct a fence in a certain portion of his Creditor is not necessary to place the debtor on delay:
land adjoining that land sold by B. Should A construct a
fence in violation of the agreement, B. can bring an 1. When the obligation expressly so provides
action to have the fence remove at the expense of A. The mere fixing of the period is not sufficient to
ART. 1169. Those oblige to deliver or to do something constitute a delay. An agreement to the effect that
incur in delay from the time the obligee judicially or fulfillment or performance is not made when the
extra - judicially demands from theme the fulfillment obligation becomes due, default or delay by the debtor
of their obligation. will automatically arise.

However, the demand by the creditor shall not be 2. When the law so provides
necessary in order that delay may exist: The express provision of law that a debtor is in default.
1.. When the obligation or the law expressly declares; For instance, taxes must be paid on the date prescribed
or by law, and demand is not necessary in order that the
taxpayer is liable for penalties.
2. When from the nature and the circumstances of the
obligation it appears that the destination of the time 3. When time is of the essence
when the thing is to be delivered or the service is to Because time is the essential factor in the fulfillment of
rendered was controlling motive for the establishment the obligation. Example, Gaya binds herself to sew the
of the contract; or wedding gown of Maya to be used by the latter on her
3. When demand would be useless, as when the wedding date. Gaya did not deliver the wedding gown
obligor has rendered it beyond his power to
on the date agreed upon. Even without demand, Gaya negligence shows bad faith, the provisions of
will be in delay because time of the essence. articles 1171 and 2201, paragraph 2, shall apply.

4. When demand would be useless If the law or contract does not state the diligence
of which is to be observed in the performance,
When the debtor cannot comply his obligation as when that which is expected of a good father of a family
it is beyond his power to perform. Like when the object
shall be required. (1104a)
of the obligation is lost or destroyed through the fault
of the debtor, demand is not necessary. Sources of liability for damages:

5. In a reciprocal obligation, from the moment 1. Fraud (dolo) is the intentional deception made
one of the parties fulfills his obligation, delay by one person resulting in the injury of another.
to the other begins
The fraud referred to is incidental
For instance, in a contract of sale, if the seller delivers fraud, that is, fraud incident to the
the object to the buyer and the buyer does not pay, performance of a pre-existing
then delay by the buyer begins and vice versa, if the obligation.
buyer pays and the seller did not deliver the object,
then the seller is on delay. 2. Negligence (culpa) consists in the omission by
the obligor of that diligence which is required
Kinds of Delay: by the nature of the obligation and corresponds
with the circumstances of the person, of the
Mora solvendi delay on the part of the debtor.
time and of the place. (Art. 1173, NCC)
Mora accipiendi delay on the part of the
creditor, like when the creditor unjustifiably 3. Delay (Mora) like when there has been judicial
refused to accept payment at the time it was or extra-judicial demand and the debtor does
due, is in delay. not comply his obligation, delay will occur.
Compensatio morae delay both parties in a
reciprocal obligation. 4. In contravention of the tenor of the obligation
refers to the violation of the terms and
ART. 1170. Those who in the performance of their conditions or defects in the performance of the
obligations are guilty of fraud, negligence, or obligation, like when a landlord fails to maintain
delay, and those whoin any manner contravene a legal and peaceful possession of a tenant
the tenor thereof, are liable for damages. (1101) being leased by the latter because the landlord
was not the owner and the real owner wants to
ART. 1171. Responsibility arising from fraud is occupy the land, there is contravention of the
demandable in all obligations. Any waiver of an tenor of the obligation.
action for future fraud is void. (1120a)
5. Loss of the thing with the fault of debtor.
ART. 1172. Responsibility arising from negligence
in the performance of every king of obligation is 6. Deterioration with the fault of debtor. (Art.
also demandable, but such liability may be 1189)
regulated by the courts, according to the
circumstances. (1130) Kinds of Damages

ART. 1173. The fault or negligence of the obligor 1. Moral damages include physical sufferings,
consists in the omission of that diligence which is mental anguish, fright, serious anxiety,
required by the nature of the obligation and besmirched reputation, wounded feeling, moral
corresponds with the circumstances of the shock, social humiliation and similar injury.
persons, of the time and of the place. When
 2. Exemplary damages imposed by way of Fortuitous even is an event which cannot be
example or correction for the public good. foreseen which though foreseen is inevitable.

Like in quasi-delicts, if the defendant acted Fortuitous event proper are acts of God such as volcanic
with gross negligence. (Art. 2231, NCC) eruption, earthquake, lightning, etc. is now similar with
force majuere or acts of man such as conflagration, war,
3. Nominal damages are adjudicated in order
robbery, etc.
that a right of the plaintiff, which has been
violated by the defendant, may be vindicated or 1. Requisite necessary to constitute fortuitous
recognized and not for the purpose of event
indemnifying the plaintiff for any loss suffered The failure of the debtor to comply with the
by him. (Art. 2221, NCC) obligation must be independent from the human
will;
4. Temperate or moderate damages are more The occurrence makes it impossible for the
than nominal but less than compensatory debtor to fulfill the obligation on a normal
damages may be recovered when the courts manner, and the obligor did not take part as to
finds that its amount cannot, from the nature of aggravate the injury of the creditor. (Vasquez
the case, be proved with certainty. Pecuniary v.C.A. G.R. 42926)
loss means loss of money, or of something by
which money or something of money value may 2. As a general rule, no person shall be held
be acquired. (Black Law Dict. P. 1131) responsible for fortuitous events

5. Actual or compensatory damages except as Example : Gaya obliged herself to deliver a determine
provided by law, or a stipulation, one is entitled car to Tito on Dec. 30, 1998. Before the arrival of the
to an adequate compensation only for such period, the car was struck by lightning and was totally
pecuniary loss suffered by him as he has duly destroyed. Gaya cannot be held responsible for the
proved. (Art. 2199, NCC) destruction of the car, hence her obligation to deliver is
extinguished.
Damages may be recovered:
Exceptions (when the person is responsible despite the
1. For loss or impairment of earning capacity in
fortuitous even):
cases of temporary or permanent personal
injury; a. When the law expressly so provides, such as:
2. For injury, to the plaintiffs business standing or
The debtor is guilty of fraud, negligence or in
commercial credit.
contravention of the tenor of the obligation.
6. Liquidated damages are those agreed upon (Art, 1170, NCC)
by parties to a contract to be paid in case of The debtor has proved to deliver the same thing
breach thereof. (Art. 2226, NCC) to two or more persons who do not have the
same interest. ( Art. 1165,NCC )
ART. 1174. Except in cases expressly specified by The thing to delivered is generic.
the law, or when it is otherwise declared by The debtor is guilty of default or delay. ( Art.
stipulation, or when the nature of the obligation 1169,NCC )
requires the assumption of risk, no person shall be The debtor is guilty of concurrent negligence.
responsible for those events which could not be
foreseen, or which, though foreseen, were b. When declared by stipulation;
inevitable (1105a)
 c. When the nature of obligation requires the 2. When the creditor issues a receipt of a later
assumption of risk. An example of this is a installment of a debt without reservation as to
contract of insurance. prior installment is presumed to have been paid.

ART. 1175. Usurious transaction shall be governed by ART. 1177. The creditors, after having pursued the
special laws. property in possession of the debtor to satisfy their
claims, may exercise all the rights and bring all the
Note: C.B. Circular No. 905 suspends the ceilings in the actions of the latter for the same purpose, save those
usury law. Hence, parties can agree as to the rate of which are inherent in his person; they may also
interest. impugn the acts which the debtor may have done to
Kinds of interest: defraud them. (1111)

1. Conventional- The rate which is agreed upon by the Rights of Creditors::

parties. In order to satisfy their claims against the debtor,
2. Legal Interest-The rate which is prescribed by law. creditors have the following successive rights:

3. Lawful Interest- The rate which is agreed upon by the 1. to levy by attachment and execution upon all
parties but which rate is within the rate authorized by the property of the debtor, except such as are
law. exempt by law from execution;
2. to exercise all the rights and actions of the
4. Usurious Interest-The rate which is in excess of the debtor, except, such as are inherently personal
maximum rate of interest allowed by law. to him; and
3. to ask for the rescission of the contracts made
ART. 1176. The receipt of the principal by the creditor
by the debtor in fraud of their rights.
without reservation with respect to the interest, shall
give rise to the presumption that said interest has ART. 1178. Subject to the laws, all rights acquired
been paid. in virtue of an obligation are transmissible, if there
has been no stipulation to the contrary. (1112)
The receipt of a later installment of a debt without
1. As a rule, all rights acquired in virtue of an
reservation as to prior installments, shall likewise raise
obligation are transmissible, except in the
the presumption that such installments have been
following cases:
paid. (1110a)
2. When the law so provides.
Presumption means the inference as to the 3. When the parties stipulate otherwise by
existence of a certain fact which if not contradicted is agreement of parties that the rights acquired by
considered as true. them will not be transmitted to any other
person.
The presumption in the above article is a disputable 4. When the obligation is purely personal in nature.
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.