CHAPTER 1 Gen.

Provisions
ARTICLE 1156. An obligation is a juridical necessity to give, to do or not to do.
`obligation (obligatio in Latin) tying / binding. a tie of law or a juridical bond by virtue of which one is bound in favor of another to render something
and this may consist in giving a thing, doing a certain act, or not doing a certain act.
`Obligation is a juridical necessity because in case of non-compliance, the courts of justice may be called upon to enforce its fulfillment or, in default
thereof, the economic value that it represents.
2 nature of obligations under Civil Code
a. Civil Obligations - give to the creditor or obligee a right of action in courts of justice to enforce their performance
b. Natural Obligations - not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance
although in case of voluntary fulfillment by the debtor, the latter may not recover what has been delivered or rendered by reason thereof
Essential requisites / elements of an obligation
1. Passive subject(debtor or obligor) - the person who is bound to the fulfillment of the obligation; he who has a duty
2. Active subject(creditor or obligee) - person who is entitled to demand the fulfillment of the obligation; he who has a right
3. Object or prestation (subject matter of the obligation) - the conduct required to be observed by the debtor. It may consist in giving, doing, or not
doing. Without the prestation, there is nothing to perform.
4. juridical or legal tie (efficient cause)- that which binds or connects the parties to the obligation.
Form of obligation.
1. general rule, the law does not require any form in obligations arising from contracts for their validity or binding force.
2. Obligations arising from other sources do not have any form at all.
`Obligation - the act or performance which the law will enforce
`Right - the power which a person has under the law, to demand from another any prestation
`Wrong (cause of action) an act or omission of one party in violation of the legal right or rights of another, causing injury
Essential elements of cause of action.
1. legal right in favor of a person
2. correlative legal obligation on the part of another (debtor/defendant) to respect or not to violate said right
3. act or omission in breach or violation of said right by the defendant with consequential injury or damage to the plaintiff for which he may maintain an
action for the recovery of damages
Kinds of obligation according to subject matter.
1. Real obligation (obligation to give) - the subject matter is a thing which the obligor must deliver to the obligee
2. Personal obligation (obligation to do or not to do)- the subject matter is an act to be done or not to be done.
There are two (2) kinds of personal obligation:
(a) Positive personal obligation or obligation to do or to render service
(b) Negative personal obligation or obligation not to do (which naturally includes obligations not to give)
ART. 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-
delicts.
Sources classified.
1. Those emanating from law
2. Those emanating from private acts which may be further subdivided into:
(a) those arising from licit acts, in the case of contracts and quasi-contracts; and
(b) 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.
! Actually, there are only two (2) sources: law and contracts
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.
! They are not presumed because they are considered a burden upon the obligor. They are the exception, not the rule. To be demandable, they must be
clearly set forth in the law
! Special laws refer to all other laws not contained in the Civil Code.
ART. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.
`contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some
service.
! contract is the law between the contracting parties, the provisions of positive law which regulate such contracts are deemed included and shall limit
and govern the relations between the parties.
! A compromise agreement is immediately executory and not appealable, except for vices of consent or forgery.
! A contract is valid (with cause, consent, object) if it is not contrary to law, morals, good customs, public order, and public policy.
`Compliance in good faith compliance or performance in accordance with the stipulations or terms of the contract or agreement
ART. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book.
`quasi-contract is that juridical relation resulting from certain lawful, voluntary and unilateral acts by virtue of which the parties become bound to each
other to the end that no one will be unjustly enriched or benefited at the expense of another.
! the law considers the parties as having entered into a contract, irrespective of their intention, to prevent injustice.
Kinds of quasi-contracts. (principal kinds)
1. Negotiorum gestio - the voluntary management of the property or affairs of another without the knowledge or consent of the latter.
! This juridical relation does not arise in either of these instances:
(a) When the property or business is not neglected or abandoned, in which case the provisions of the Civil Code regarding unauthorized contracts shall
govern;
(b) If, in fact, the manager has been tacitly authorized by the owner, in which case the rules on agency shall govern
2. Solutio indebiti - the juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered
through mistake. REQUISITES:
(a) payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment;
(b) the payment is made through mistake11 and not through liberality or some other cause.
ART. 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws,14 subject to the provisions of Article 2177,15 and of the
pertinent provisions of Chapter 2, Preliminary Title on Human Relations,16 and of Title XVIII of this Book, regulating damages.
! the rule has been established that every person criminally liable for a felony is also civilly liable. In crimes, however, which cause no material
damage there is no civil liability to be enforced. But a person not criminally responsible may still be liable civilly.
Scope of civil liability.
(1) Restitution
(2) Reparation for the damage caused
(3) Indemnification for consequential damages.
ART. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws.
`quasi-delict (culpa aquiliana)- an act or omission by a person (tort feasor) which causes damage to another in his person, property, or rights giving
rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-existing contractual relation between the parties
! includes not only injuries to persons but also damage to property.
! A contractual obligation can be breached by tort, and when the same act or omission causes the injury, one resulting in culpa contractual and the
other in culpa aquiliana, Article 2194 which imposes solidary responsibility on two or more persons who are liable for a quasi-delict, can well apply.
Requisites of quasi-delict.
(1) There must be an act or omission by the defendant;
(2) There must be fault or negligence of the defendant;
(3) There must be damage caused to the plaintiff;
(4) There must be a direct relation or connection of cause and effect between the act or omission and the damage;
(5) There is no pre-existing contractual relation between the parties.
Crime distinguished from quasi-delict.
(1) In crime or delict, there is criminal or malicious intent or criminal
negligence, while in quasi-delict, there is only negligence
(2) Crime affects public interest, while quasi-delict concerns private interest
(3) In crime, there are generally two liabilities: criminal and civil, while in quasi-delict, there is only civil liability;
(4) In crime or delict, the purpose is punishment, while in quasidelict, indemnification of the offended party;
(5) Criminal liability cannot be compromised or settled by the parties themselves, while the liability for quasi-delict can be compromised as any
other civil liability;
(6) In crime, the guilt of the accused must be proved beyond reasonable doubt, while in quasi-delict, the fault or negligence of the defendant need
only be proved by preponderance of evidence; and
(7) In crime, the liability of the person responsible for the author of the negligent act or omission is subsidiary, while in quasi-delict, it is direct and
primary.
! These two causes of action (ex delicto or ex quasi delicto) may be availed of subject to the caveat that the offended party cannot recover damages
twice for the same act or omission or under both causes.

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.
! Provision for specific / determinate thing ONLY.
`specific or determinate particularly designated or physically segregated from all others of the same class. INDIVIDUALITY. Cannot be substituted to
another without the consent of the creditor
`generic or indeterminate - a class or genus to which it pertains and cannot be pointed out with particularity. SPECIE. As long as it is the same kind.
Duties of debtor in obligation to give a determinate thing.
(1) To preserve or take care of the thing due;
(2) To deliver the fruits of the thing
(3) To deliver its accessions and accessories
(4) To deliver the thing itself
(5) To answer for damages in case of non-fulfillment or breach.
`Diligence of a good father of a family - has been equated with ordinary care or that diligence which an average (a reasonably prudent) person
exercises over his own property.
! Another standard of care:
a. a common carrier (person or company engaged in the transportation of persons and/or cargoes) is bound to carry the passengers safely as far as
human care and foresight can provide, using utmost (extraordinary) diligence of very cautious persons, with a due regard for all the circumstances.
b. Banks are duty bound to treat the deposit accounts of their depositors with the highest degree of care where the fiduciary nature of their relationship
with their depositors is concerned.
c. according to stipulation
! As a general rule, the debtor is not liable if his failure to preserve the thing is not due to his fault or negligence but to fortuitous events or force
majeure.
! The debtor must exercise diligence to insure that the thing to be delivered would subsist in the same condition as it was when the obligation was
contracted
Duties of debtor in obligation to deliver a generic thing.
(1) To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other
(2) To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor thereof.
ART. 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire
no real right over it until the same has been delivered to him.
Different kinds of fruits.
(1) Natural fruits - spontaneous products of the soil, and the young and other products of animals, without the intervention of human labor.
(2) Industrial fruits - produced by lands of any kind through cultivation or labor, and all products of lands brought about by reason of human labor.
(3) Civil fruits - derived by virtue of a juridical relation, e.g., rents of buildings, price of leases of lands and other property
! By law, the creditor is entitled to the fruits of the thing to be delivered from the time the obligation to make delivery of the thing arises.
! In case of rescission, the parties are under obligation to return the things which were the object of the contract, together with their fruits and the price
with its interest. (Art. 1385.)
When obligation to deliver arises.
(1) Generally, arises from the time of the perfection of the contract. Perfection in this case refers to the birth of the contract or to the meeting of the
minds between the parties.
(2) If the obligation is subject to a suspensive condition or period it arises upon fulfillment of the condition or arrival of the period. However, the parties
may make a stipulation to the contrary as regards the right of the creditor to the fruits of the thing.
(3) In a contract of sale, the obligation arises from the perfection of the contract even if the obligation is subject to a suspensive condition or a
suspensive period where the price has been paid.
(4) In obligations to give arising from law, quasi-contracts, delicts, and quasi-delicts, the time of performance is determined by the specific provisions of
law applicable.
`Personal right / jud in personam / jus ad rem - right or power of a person (creditor) to demand from another (debtor), as a defi nite passive
subject, the fulfillment of the latters obligation to give, to do, or not to do.
`Real right /jus in re - right or interest of a person over a specific thing (like ownership, possession, mortgage, lease record) 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. (specific)
(a) demand specific performance or fulfillment (if it is still possible) of the obligation with a right to indemnity for damages
(b) demand rescission or cancellation (in certain cases) of the obligation also with a right to recover damages
(c) demand the payment of damages only where it is the only feasible remedy.
! A generic real obligation (obligation to deliver a generic thing), on the other hand, can be performed by a third person since the object is expressed
only according to its family or genus.
! genus nunquam perit (genus never perishes)
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.
`Accessions are the fruits of, or additions to, or improvements upon, a thing
`Accessories are things joined to, or included with, the principal thing for the latters embellishment, better use, or completion
! accessions are not necessary to the principal thing, the accessory and the principal thing must go together but both accessions and accessories can
exist only in relation to the principal.
! principle of law that the accessory follows the principal. In order that they will be excluded, there must be a stipulation to that effect.
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.
three situations:
(1) The debtor fails to perform an obligation to do; or
(2) The debtor performs an obligation to do but contrary to the terms thereof; or
(3) The debtor performs an obligation to do but in a poor manner.
Remedies of creditor in positive personal obligation.
(1) If the debtor fails to comply with his obligation to do, the creditor has the right:
(a) to have the obligation performed by himself, or by another unless personal considerations are involved, at the debtors expense
(b) to recover damages.
(2) In case the obligation is done in contravention of the terms of the same or is poorly done, it may be ordered (by the court) that it be undone if it is
still possible to undo what was done.
! A personal obligation to do, like a real obligation to deliver a generic thing, can be performed by a third person.
! a specific performance cannot be ordered in a personal obligation to do because this may amount to involuntary servitude which, as a rule, is
prohibited under our Constitution and the personal qualifications of the debtor are the determining motive for the obligation contracted, the only feasible
remedy of the creditor is indemnification for damages
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.
! in this kind of obligation the debtor cannot be guilty of delay
! the remedy of the obligee is the undoing of the forbidden thing plus damages. However, if it is not possible to undo what was done, either physically or
legally, or because of the rights acquired by third persons who acted in good faith, or for some other reason, his remedy is an action for damages caused
by the debtors violation of his obligation.
ART. 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 fulfi llment 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 / mora / legal delay / default
2 distinctions of delay
(1) Ordinary delay is merely the failure to perform an obligation on time.
(2) Legal delay or default or mora is the failure to perform an obligation on time which failure, constitutes a breach of the obligation
Kinds of delay (mora).
(1) Mora solvendi or the delay on the part of the debtor to fulfill his obligation (to give or to do) by reason of a cause imputable to him;
(2) Mora accipiendi or the delay on the part of the creditor without justifiable reason to accept the performance of the obligation; and
(3) Compensatio morae or the delay of the obligors in reciprocal obligations (like in sale), i.e., the delay of the obligor cancels the delay of the obligee,
and vice versa.
Requisites of delay or default by the debtor / Mora solvendi
(1) failure of the debtor to perform his (positive) obligation on the date agreed upon
(2) demand (not mere reminder or notice) made by the creditor upon the debtor to fulfill, perform, or comply with his obligation which demand, may be
either judicial (when a complaint is filed in court) or extra-judicial (when made outside of court, orally or in writing
(3) failure of the debtor to comply with such demand.
! There is no delay if the obligation is not yet due or demandable. A demand is only necessary in order to put an obligor in a due and demandable
obligation in delay. An extrajudicial demand is not required before a judicial demand.
! The creditor has the burden of proving that demand has been made.
! grace period is a right, not an obligation, of the debtor. It must not be likened to an obligation the non-payment of which under Article 1169 would
generally still require judicial or extra-judicial demand before default can be said to arise.
Effects of delay.
(1) Mora solvendi.
(a) The debtor is guilty of breach of the obligation;
(b) He is liable for interest in case of obligations to pay money In the absence of extrajudicial demand, the interest shall commence from the filing of the
complaint
(c) He is liable even for a fortuitous event when the obligation is to deliver a determinate thing. However, if the debtor can prove that the loss would
have resulted just the same even if he had not been in default, the court may equitably
mitigate the damages.
(2) Mora accipiendi
(a) The creditor is guilty of breach of obligation;
(b) He is liable for damages suffered, if any, by the debtor;
(c) He bears the risk of loss of the thing due
(d) Where the obligation is to pay money, the debtor is not liable for interest from the time of the creditors delay; and
(e) The debtor may release himself from the obligation by the consignation of the thing or sum due.
(3) Compensatio morae. The delay of the obligor cancels out the effects of the delay of the obligee and vice versa. The net result is that there is no
actionable default on the part of both parties, such that as if neither one is guilty of delay.
! The general rule is that delay begins only from the moment the creditor demands, judicially or extrajudicially, the fulfillment of the obligation.
EXCEPTIONS:
(1) When the obligation so provides
! The mere fixing of the period is not enough. The arrival of the period merely makes the obligation demandable.
(2) When the law so provides
(3) When time is of the essence
! It is not necessary for the contract to categorically state that time is of the essence; intent is sufficient. It is not necessary, in order to make time of
the essence of a contract, that the contract should expressly so declare.
(4) When demand would be useless
! Demand is also unnecessary where it is apparent that it would be unavailing, as where there has been a prior absolute refusal by the debtor or has
manifested an intention not to comply with his obligation.
(5) When there is performance by a party in reciprocal obligations
! From the moment a party in reciprocal obligations fulfills or is ready to fulfill his obligation, delay by the other begins.
! Obligations under an option to buy are reciprocal obligations, i.e., the payment of the purchase price by the would-be buyer is contingent upon the
execution of the deed of sale by the owner of the property; hence, notice to the latter of the formers decision to exercise his option to buy and readiness
to pay the price need not be coupled with actual payment thereof and since the obligation is not yet due, consignation in court of the purchase price is
not required.
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.
`Fraud / deceit / dolo / bad faith- As a ground for damages, it implies some kind of malice or dishonesty and it cannot cover cases of mistake and
errors of judgment made in good faith. it involves a design to mislead or deceive another
! the fraud is employed for the purpose of evading the normal fulfi llment of an obligation and its existence merely results in breach thereof giving rise to
a right by the innocent party to recover damages.
! This article refers to incidental fraud (dolo incidente)(committed in the performance of an obligation already existing because of contract) to be
differentiated from causal fraud (dolo causante)( fraud employed in the execution of a contract which vitiates consent and makes the contract voidable
and to incidental fraud for the purpose of securing the consent of the other party to enter into the contract but such fraud was not the principal
inducement to the making of the contract.)
! The Civil Code refers to civil fraud. Criminal fraud gives rise to criminal liability.
`Negligence (fault or culpa) - any voluntary act or omission, there being no malice, which prevents the normal fulfillment of an obligation
`Delay / mora / legal delay / default
`Contravention of the terms of the obligation
`Breach of contract - the failure without justifiable excuse to comply with the terms of a contract. The breach may be willful or done unintentionally. It
has been defined as the failure, without legal excuse, to perform any promise which forms the whole or part of the contract.
Fraud and negligence distinguished.
(1) In fraud, there is deliberate intention to cause damage or injury, while in negligence, there is no such intention;
(2) Waiver of the liability for future fraud is void, while such waiver may, in a certain sense, be allowed in negligence;
(3) Fraud must be clearly proved, mere preponderance of evidence not being sufficient, while negligence is presumed from the breach of a
contractual obligation;
(4) Lastly, liability for fraud cannot be mitigated by the courts, while liability for negligence may be reduced according to the circumstances.
`Gross negligence is negligence characterized by want or absence of or failure to exercise even slight care or diligence, or the entire absence of care,
acting or omitting to act on a situation where there is a duty to act, not inadvertently but willfully and intentionally.
ART. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.
! According to the time of commission, fraud may be past or future.
! A waiver of an action for future fraud is void (no effect, as if there is no waiver) as being against the law and public policy.
! A past fraud can be the subject of a valid waiver because the waiver can be considered as an act of generosity and magnanimity on the part of the
party who is the victim of the fraud. Here, what is renounced is the effects of the fraud, that is, the right to indemnity of the party entitled thereto.
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.
! The courts, however, are given wide discretion in fixing the measure of damages. The reason is because negligence is a question which must
necessarily depend upon the circumstances of each particular case. Moreover, negligence is not as serious as fraud because in the case of the former,
there is no bad faith or deliberate intention to cause injury or damages. The courts, however, may increase the damages.
! When both parties to a transaction are mutually negligent in the performance of their obligations, the fault of one cancels the negligence of the other.
Thus, their rights and obligations may be determined equitably under the law prescribing unjust enrichment.
! An action for future negligence (not fraud) may be renounced except where the nature of the obligation requires the exercise of extraordinary diligence
as in the case of common carriers.
! Where negligence is gross or shows bad faith, it is considered equivalent to fraud. Bad faith does not simply connote negligence or bad judgment
causing damages to another. Any waiver of an action for future negligence of this kind is, therefore, void.
Kinds of negligence according to source of obligation.
(1) Contractual negligence (culpa contractual) or negligence in contracts resulting in their breach Article 1172 refers to culpa contractual. not a source
of obligation. It merely makes the debtor liable for damages in view of his negligence
in the fulfillment of a pre-existing obligation resulting in its breach or non-fulfillment It is a kind of civil negligence if it does not amount to a crime;
(2) Civil negligence (culpa aquiliana / tort / quasidelict) or negligence which by itself is the source of an obligation between the parties not formally
bound before by any pre-existing contract.
(3) Criminal negligence (culpa criminal . delict) or negligence resulting in the commission of a crime. The same negligent act causing damages may
produce civil liability
! When the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the defendants lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded. the law does not require that the negligence of the defendant should be the sole cause of the damage.
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.
According to our Supreme Court, negligence is conduct that creates undue risk or harm to another. It is the failure to observe for the protection of the
interests of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers
injury.
Factors to be considered.
(1) Nature of the obligation.
(2) Circumstances of the person
(3) Circumstances of time.
(4) Circumstances of the place
Kinds of diligence required
(1) that agreed upon by the parties, orally or in writing;
(2) in the absence of stipulation, that required by law in the particular case (like the extraordinary diligence18 required of common carriers)
(3) if both the contract and law are silent, then the diligence expected of a good father of a family or ordinary diligence.
! Diligence is the attention and care required of a person in a given situation and is the opposite of negligence
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.