OBLIGATIONS AND

CONTRACTS
(CIVIL CODE OF THE PHILIPPINES)
Mark Eriel B. Lunario
CE Laws, Ethics, and Contracts
 OBLIGATIONS
• Article 1156. An obligation is a juridical necessity to give, to do, or not to do.

• JURIDICAL NECESSITY – juridical tie; connotes that in case of noncompliance, there will be legal sanctions.

• An obligation is nothing more than the duty of a person (obligor) to satisfy a specific demandable
claim of another person (obligee) which, if breached, is enforceable in court.

• A contract necessarily gives rise to an obligation but an obligation does not always need to have a
contract.

• DAMAGES – sum of money given as a compensation for the injury or harm suffered by the obligee for the
violation of his right.
 KINDS OF OBLIGATION

A. From the viewpoint of “sanction”

B. From the viewpoint of subject matter

C. From the affirmativeness and negativeness of the obligation

D. From the viewpoint of persons obliged - “sanction”

 A. FROM THE VIEWPOINT OF
“SANCTION”

a) CIVIL OBLIGATION – that defined in Article 1156; an obligation, if not fulfilled when it becomes due and
demandable, may be enforced in court through action; based on law; the sanction is judicial due process

b) NATURAL OBLIGATION – a special kind of obligation which cannot be enforced in court but which authorizes
the retention of the voluntary payment or performance made by the debtor; based on equity and natural
law. (i.e. when there is prescription of duty to pay, still, the obligor paid his dues to the obligee – the obligor
cannot recover his payment even there is prescription) the sanction is the law, but only conscience had
originally motivated the payment.

c) MORAL OBLIGATION – the sanction is conscience or morality, or the law of the church. (Note: If a Catholic
promises to hear mass for 10 consecutive Sundays in order to receive P1,000, this obligation becomes a civil
one.)
 B. FROM THE VIEWPOINT OF
SUBJECT MATTER
a) REAL OBLIGATION – the obligation to give

b) PERSONAL OBLIGATION – the obligation to do or not to do (e.g. the duty to

paint a house, or to refrain from committing a nuisance)
 C. FROM THE AFFIRMATIVENESS AND
NEGATIVENESS OF THE OBLIGATION
• POSITIVE OR AFFIRMATIVE OBLIGATION – the obligation to give or to do

• NEGATIVE OBLIGATION – the obligation not to do (which naturally inludes not

to give)
 D. FROM THE VIEWPOINT OF
PERSONS OBLIGED - “SANCTION”
• UNILATERAL – where only one of the parties is bound (e.g. Plato owes
Socrates P1,000. Plato must pay Socrates.)

• BILATERAL – where both parties are bound (e.g. In a contract of sale, the
buyer is obliged to deliver)
• may be:
(b.1) reciprocal
(b.2) non-reciprocal – where performance by one is non-dependent upon
performance by the other
 ELEMENTS OF OBLIGATION
a) ACTIVE SUBJECT – (Creditor / Obligee) the person who is demanding the performance
of the obligation;

b) PASSIVE SUBJECT – (Debtor / Obligor) the one bound to perform the prestation or to
fulfill the obligation or duty;

c) PRESTATION – (to give, to do, or not to do) object; subject matter of the obligation;
conduct required to be observed by the debtor;

d) EFFICIENT CAUSE – the JURIDICAL TIE which binds the parties to the obligation; source of
the obligation.

e) CAUSA (causa debendi/causa obligationes) - why obligation exists

 PRESTATION

1. TO GIVE – delivery of a thing to the creditor (in sale, deposit, pledge,

donation);

2. TO DO – covers all kinds of works or services (contract for professional

services);

3. NOT TO DO – consists of refraining from doing some acts (in following rules
and regulations).
 REQUISITES OF PRESTATION /
OBJECT
1. licit (if illicit, it is void)

2. possible (if impossible, it is void)

3. determinate or determinable (or else, void)

4. pecuniary value
 OBLIGATIONS

• Article 1157. Obligation arises from – (1) law; (2) contracts; (3) quasi-
contracts; (4) acts or omissions punished by law; (5) quasi-delicts.
 OBLIGATIONS ARISES FROM:
• (1) LAW (Obligation ex lege) – imposed by law itself; must be expressly or impliedly set forth and
cannot be presumed - [See Article 1158]

• (2) CONTRACTS (Obligation ex contractu) – arise from stipulations of the parties: meeting of the
minds / formal agreement - must be complied with in good faith because it is the “law” between
parties; neither party may unilaterally evade his obligation in the contract, unless:
a) contract authorizes it
b) other party assents

Note: Parties may freely enter into any stipulations, provided they are not contrary to law, morals,
good customs, public order or public policy - [See Article 1159]
 OBLIGATIONS ARISES FROM:
• (3) QUASI-CONTRACTS (Obligation ex quasi-contractu) – arise from lawful, voluntary and
unilateral acts and which are enforceable to the end that no one shall be unjustly enriched or
benefited at the expense of another

- 2 kinds:
a. Negotiorum gestio - unauthorized management; This takes place when a person voluntarily takes
charge of another’s abandoned business or property without the owner’s authority

b. Solutio indebiti - undue payment; This takes place when something is received when there is no
right to demand it, and it was unduly delivered thru mistake
 OBLIGATIONS ARISES FROM:
• (4) DELICTS (Obligation ex maleficio or ex delicto) – arise from civil liability which is the consequence of a
criminal offense

- Governing rules:
1. Pertinent provisions of the RPC and other penal laws subject to Art 2177 Civil Code [Art 100, RPC – Every person
criminally liable for a felony is also civilly liable]

2. Chapter 2, Preliminary title, on Human Relations ( Civil Code ) 3. Title 18 of Book IV of the Civil Code – on
damages

• (5) QUASI-DELICTS / TORTS (Obligation ex quasi-delicto or ex quasi-maleficio) – arise from damage caused
to another through an act or omission, there being no fault or negligence, but no contractual relation
exists between the parties
 OBLIGATIONS AND CONTRACTS
• Article 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.

• CONTRACT – meeting of minds between two persons whereby one binds himself,
with respect to the other, to give, to do something or to render some service;
governed primarily by the agreement of the contracting parties.

• VALID CONTRACT – it should not be against the law, contrary to morals, good
customs, public order, and public policy.
• In the eyes of law, a void contract does not exist and no obligation will arise from it.
 OBLIGATIONS AND CONTRACTS

• OBLIGATIONS ARISING FROM CONTRACTS – primarily governed by the

stipulations, clauses, terms and conditions of their agreements.
• If a contract’s prestation is unconscionable (unfair) or unreasonable, even if it
does not violate morals, law, etc., it may not be enforced totally.

• Interpretation of contract involves a question of law.

 OBLIGATIONS AND CONTRACTS

• COMPLIANCE IN GOOD FAITH – compliance or performance in accordance

with the stipulations or terms of the contract or agreement.

• FALSIFICATION OF A VALID CONTRACT – only the unauthorized insertions will

be disregarded; the original terms and stipulations should be considered
valid and subsisting for the partied to fulfill.
 NATURE AND EFFECT OF
OBLIGATIONS
• 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.
• Speaks of an obligation to care of a thing (that is one which is specific; a thing
identified by its individuality) which an obligor is supposed to deliver to another.

• Reason: the obligor cannot take care of the whole class/genus

 NATURE AND EFFECT OF
OBLIGATIONS
• DUTIES OF DEBTOR:

• Preserve or take care of the things due.

• DILIGENCE OF A GOOD FATHER – a good father does not abandon his family, he is
always ready to provide and protect his family; ordinary care which an average and
reasonably prudent man would do.
• ANOTHER STANDARD OF CARE – extraordinary diligence provided in the stipulation of
parties.
• FACTORS TO BE CONSIDERED – diligence depends on the nature of obligation and
corresponds with the circumstances of the person, time, and place.
 NATURE AND EFFECT OF
OBLIGATIONS
• ** Debtor is not liable if his failure to deliver the thing is due to fortuitous
events or force majeure… without negligence or fault in his part.

• Deliver the fruits of a thing

• Deliver the accessions/accessories

• Deliver the thing itself

• Answer for damages in case of non-fulfillment or breach

 NATURE AND EFFECT OF
OBLIGATIONS
• 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.
 NATURE AND EFFECT OF
OBLIGATIONS
• REAL RIGHT (jus in re) – right pertaining to person over a specific thing, without a
passive subject individually determined against whom such right may be personally
enforced.

• a right enforceable against the whole world

• PERSONAL RIGHT (jus ad rem) – a right pertaining to a person to demand from

another, as a definite passive subject, the fulfillment of a prestation to give, to do or
not to do.
• a right enforceable only against a definite person or group of persons.
 NATURE AND EFFECT OF
OBLIGATIONS
• Before the delivery, the creditor, in obligations to give, has merely a personal right
against the debtor – a right to ask for delivery of the thing and the fruits thereof.

• Once the thing and the fruits are delivered, then he acquires a real right over them.

• Ownership is transferred by delivery which could be either actual or constructive.

(Art. 1477)

• The remedy of the buyer when there is no delivery despite demand is to file a
complaint for “SPECIFIC PERFORMANCE AND DELIVERY” because he is not yet the
owner of the property before the delivery.
 NATURE AND EFFECT OF
OBLIGATIONS
• ACTUAL DELIVERY – actual delivery of a thing from the hand of the grantor to the hand
of the grantee (personally), or manifested by certain possessory acts executed by the
grantee with the consent of the grantor (realty).

• CONSTRUCTIVE TRADITION – representative of symbolical in essence and with intention to

deliver the ownership.

FRUITS:
1. NATURAL – spontaneous products of the soil, the young and other products of animals;
2. INDUSTRIAL – produced by lands of any cultivation or labor;
3. CIVIL – those derived by virtue of juridical relation.
 NATURE AND EFFECT OF
OBLIGATIONS
• Article 1165. When what is to be delivered is a determinate thing, the creditor
… may compel the debtor to make 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 ting 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.
 NATURE AND EFFECT OF
OBLIGATIONS
DETERMINATE THING

• something which is susceptible of particular designation or specification;

• obligation is extinguished if the thing is lost due to fortuitous events.

INDETERMINATE THING

• something that has reference only to a class or genus;

• obligation to deliver is not so extinguished by fortuitous events.

 NATURE AND EFFECT OF
OBLIGATIONS
REMEDIES FOR FAILURE OF DELIVERY (determinate thing)

1. Complaint for specific performance – an action to compel the fulfillment of the obligation.

2. Complaint for rescission of the obligation – action to rescind

3. Complaint for damages – action to claim for compensation of damages suffered

• As a general rule, “no person shall be responsible for those events which could not be foreseen, or which, though
foreseen, are inevitable, except:
1. in cases expressly specified by the law
2. when it is stipulated by the parties
3. when the nature of the obligation requires assumption of risk

• An indeterminate thing cannot be object of destruction by a fortuitous event because genus never perishes.
 NATURE AND EFFECT OF
OBLIGATIONS
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 – fruits of the thing or additions to or improvements upon the principal

• those which are naturally or artificially attached to the thing

ACCESSORIES – things included with the principal for the latter’s embellishment, better use, or
completion

When does right to fruits arise? – from the time the obligation to deliver arises
1. Conditional – from the moment the condition happens
2. With a term/period – upon the expiration of the term/period
3. Simple – from the perfection of the contract
 NATURE AND EFFECT OF
OBLIGATIONS
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 … it may
be decreed that what has been poorly done be undone.
THREE SITUATIONS:
a) Debtor’s failure to perform an obligation
• creditor may do the obligation, or by another, at the expense of the debtor;
• recover damages
b) Performance was contrary to the terms agreed upon
• order of the court to undo the same at the expense of the debtor
c) Performance in a poor manner
• order of the court to undo the same at the expense of the debtor
 NATURE AND EFFECT OF
OBLIGATIONS
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.
 NATURE AND EFFECT OF
OBLIGATIONS
Article 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 exists:

• When the law or obligation so expressly declares;

• When from the nature of the contract, time us the essence and motivating factor for its
establishment;

• When demand would be useless (prestation is impossible);

• In reciprocal obligations, from the moment one of the parties fulfills his obligation;

• When the debtor admits he is in default

 NATURE AND EFFECT OF
OBLIGATIONS
ORDINARY DELAY – mere failure to perform an obligation at the appointed
time.

LEGAL DELAY (DEFAULT) – tantamount to non-fulfillment of the obligation and

arises after an extrajudicial or judicial demand was made upon the debtor.
 NATURE AND EFFECT OF
OBLIGATIONS
KINDS OF DEFAULT:
a) MORA SOLVENDI – delay on the part of the debtor to fulfill his obligation;
REQUISITES:
1. failure of the obligor to perform obligation on the DATE agreed upon;
2. demand (j/ej) by the creditor;
3. failure to comply with such demand
EFFECTS:
1) debtor – liable for damages and interests
2) debtor – liable for the loss of a thing due to a fortuitous event
KINDS:
1) mora solvendi ex re – default in real obligations (to give)
2) mora solvendi ex persona – default in personal obligations (to do)
 NATURE AND EFFECT OF
OBLIGATIONS
KINDS OF DEFAULT:

b) MORA ACCIPIENDI – delay on the part of the creditor to accept the

performance of the obligation;
Effects:
1. creditor – liable for damages
2. creditor – bears the risk of loss of the thing
3. debtor – not liable for interest from the time of creditor’s delay
4. debtor – release himself from the obligation
 NATURE AND EFFECT OF
OBLIGATIONS
KINDS OF DEFAULT:

c) COMPENSATIO MORAE – delay of the obligors in reciprocal obligation.

Effect: the default of one compensates the default of the other; their
respective liabilities shall be offset equitable.

• Default / Delay in negative obligation is not possible. (In negative obligation,

only fulfillment and violation are possible)
THANK YOU FOR LISTENING!

Mark Eriel B. Lunario

CE Laws, Ethics, and Contracts