Chapter I

GENERAL PROVISIONS
Nature of obligations under the Civil Code
ARTICLE 1156. An obligation is a juridical
necessity to give, to do or not to do. (n) Civil obligations - Obligations which give to
the creditor or obligee a right of action in
Obligation. The term obligation is derived
courts of justice to enforce their performance.
from the Latin word “obligatio” which means
a “tying” or “binding.” Essential requisites of an obligation
(1) It is a tie of law or a juridical bond by Article 1156 is constituted upon the
virtue of which one is bound in favor of concurrence of the four (4) essential elements
another to render something — and this thereof, namely:
may consist in giving a thing, doing a
(1) A passive subject (called debtor or
certain act, or not doing a certain act.
obligor) or the person who is bound to the
Article 1156 gives the Civil Code defi nition fulfi llment of the obligation; he who has a
of obligation, in its passive aspect. Our law duty;
merely stresses the duty of the debtor or
(2) An active subject (called creditor or
obligor (he who has the duty of giving, doing,
obligee) or the person who is entitled to
or not doing) when it speaks of obligation as a
demand the fulfi llment of the obligation; he
juridical necessity.
who has a right;
JURIDICAL NECESSITY.
(3) Object or prestation (subject matter of
Obligation is a juridical necessity because in the obligation) or the conduct required to be
case of non-compliance, the courts of justice observed by the debtor. It may consist in
may be called upon to enforce its fulfi llment giving, doing, or not doing. (see Art. 1232.)
or, in default thereof, the economic value that Without the prestation, there is nothing to
it represents. perform. In bilateral obligations (see Art.
1191.), the parties are reciprocally debtors and
 In a proper case, the debtor may also be
creditors; and
made liable for damages, which
represent the sum of money given as a (4) A juridical or legal tie (also called
compensation for the injury or harm efficient cause) or that which binds or
suffered by the creditor or obligee (he connects the parties to the obligation. The tie
who has the right to the performance of in an obligation can easily be determined by
the obligation) for the violation of his knowing the source of the obligation. (Art.
rights. 1157.)
 The debtor must comply with his Form of Obligation
obligation whether he likes it or not;
otherwise, his failure will be visited Forms can be oral, in writing, or partly oral
with some harmful or undesirable legal and partly in writing.
consequences. If obligations were not (1) As a general rule, the law does not require
made enforceable, then people can any form in obligations arising from contracts
disregard them with impunity. for their validity or binding force. (see Art.
 If an obligation cannot be enforced, it 1356.)
may be only a natural obligation.
 (2) Obligations arising from other sources
(Art. 1157.) do not have any form at all. - It is to be distinguished from right of
action or the right to commence and
Obligation, right, and wrong (cause of action)
maintain an action, in that the former is
distinguished.
governed by the procedural law while the
(1) Obligation is the act or performance latter depends on substantive law. The
which the law will enforce. right of action springs from the cause of
action, but does not accrue until all the
(2) Right, on the other hand, is the power
facts which constitute the cause of action
which a person has under the law, to demand
have occurred.
from another any prestation.
Kinds of obligation according to subject
(3) A wrong (cause of action), according to
matter.
its legal meaning, is an act or omission of one
Obligation may either be real or personal:
party in violation of the legal right or rights of
(1) Real obligation (obligation to give) or that
another, causing injury to the latter;
in which the subject matter is a thing
Essential elements of cause of action. which the obligor must deliver to the
(1) Its essential elements are: obligee; or
(a) a legal right in favor of a person (2) Personal obligation (obligation to do or
(creditor/plaintiff) by whatever means and not to do) or that in which the subject
under whatever law it arises or is created; matter is an act to be done or not to be
(b) a correlative legal obligation on the done.
part of another (debtor/defendant) to There are thus two (2) kinds of personal
respect or not to violate said right; and obligation:
(c) an act or omission in breach or (a) Positive personal obligation or
violation of said right by the defendant obligation to do or to render service.
with consequential injury or damage to the Ex: X binds himself to repair the
plaintiff for which he may maintain an piano of Y.
action for the recovery of damages or (b) Negative personal obligation or
other appropriate relief. obligation not to do (which
- If any of these elements is absent, the naturally includes obligations “not
complaint becomes vulnerable to a motion to give”).
to dismiss on the ground of failure to state Ex: X obliges himself notto build a wide
a cause of action. fence as Y is entitled to a rightto walk by that
- A cause of action only arises when the part of fence.
last element occurs, i.e., at the moment
a right has been transgressed. ART. 1157. Obligations arise from:
(1) Law;
-An obligation on the part of a person
(2) Contracts;
cannot exist without a corresponding
right existing in favor of another, and (3) Quasi-contracts;
vice-versa, for every right enjoyed by a
(4) Acts or omissions punished by law; and
person, there is a corresponding obligation
on the part of another to respect such (5) Quasi-delicts.
right.
 -The obligation of the head of a family that
lives in a building or a part thereof to answer
Sources of Obligations
for damages caused by things thrown or
(1) Law - When they are imposed by law falling from the same.
itself.
- The obligation of the possessor of an animal
Ex. Obligation to pay taxes and support to pay for the damage which it may have
family. caused.
(2) Contracts - When they arise from the Sources classified.
stipulation of the parties. The law enumerates five (5) sources of
obligations. They may beclassified as follows:
Ex. Obligation to repay a loan or
(1) Those emanating from law
indebtedness by virtue of an agreement.
(2) Those emanating from private acts which
(3) Quasi-contracts. — when they arise from may be further subdivided into:
lawful, voluntary and unilateral acts and (a) Those arising from licit acts, in the
which are enforceable to the end that no case of contracts and quasi-contracts;
one shall be unjustly enriched or benefited and
at the expense of another. (b) Those arising from illicit acts,
which may be eitherpunishable by law
Ex. The obligation to return money paid by in the case of delicts, or not punishable
mistake or which is not due. in thecase of quasi-delicts.

In a sense, these obligations may be Actually, there are only two (2) sources: law
considered as arising from law; and contracts, becauseobligations arising from
quasi-contracts, crimes, and quasi-delicts are
(4) Crimes or acts or omissions punished by really imposed by law.
law. — when they arise from civil liability
which is the consequence of a criminal offense  LEGAL OBLIGATIONS
(Art.1161.)
(ART. 1158) - Obligations derived from
Ex. law are notpresumed. Only those
-The obligation of a thief to return the car expresslydetermined in this Code or in
stolen by him. special laware demandable, and shall be
regulated bythe precepts of the law which
-The duty of a killer to indemnify the heirs of establishesthem.
his victim; and
- Article 1158: Refers to legal obligations
(5) Quasi-delicts or torts. — when they arise orobligation arising from law.
from damage caused to another through an act
or omission, there being fault or negligence, - They are not presumed because they are
but no contractual relation exists between the considered a burden upon the obligor.
parties. - They are the exception, not the rule.
Ex. - To be demandable, they must be clearly set
forth in the law.
- Ex. (1) An employer has no obligation to contrary to law, morals, good customs,
furnish free legal assistance to his public order, and public policy.
employees because no law requires this, and
- It is invalid or void if it is contrary to law,
therefore, an employee may not recover
morals, good customs, public order, or
from his employer the amount he may have
public policy.
paid to a lawyer to recover damages
caused to said employee by a stranger - In the eyes of the law, a void contract does
while performing his duty. not exist. Consequently, no obligations will
arise.
- Ex. (2) A private school has no legal
obligation to provide clothing allowance - A contract may be valid but cannot be
to its teachers because there is no law enforced. (Unenforceable contracts)
which imposes this obligation upon
c. Breach of contract:
schools.
- A contract may be breached or violated by a
party in a whole or in part.
 CONTRACTUAL OBLIGATIONS
- It takes place when a party fails or refuse to
(ART. 1159)- Obligations arising from comply, without legal reason or
contracts have the force of law between the justification, with his obligation under the
contracting parties and should be contract promised.
complied with in good faith.
Compliance in Good Faith:
- Obligations arising from contracts or
- It means compliance or performance in
voluntary agreements. It presupposes that the
accordance with the stipulations or terms of
contracts entered into are valid and
the contract or agreement.
enforceable.
- Sincerity and honesty must be observed to
- Contract: Meeting of minds between two(2)
prevent one party from taking unfair
(or more) persons whereby one binds himself,
advantage over the other.
with respect to the other, to give something or
to render some service. - Non-compliance by a party with his
legitimate obligations after receiving the
a. Binding force: - Obligations arising from
benefits of a contract would constitute
contracts have the force of law between the
unjust enrichment on his part.
contracting parties.
- Ex. Buying and selling housing
- They have the same binding effect of
contract between S and B. Neither of them
obligations imposed by law. (Contract is
shall withdraw from contract. It must be
not superior to the law).
complied in good faith.
- As a source of enforceable obligation,
- Ex. Contract will S has to kill is void and
contract must be valid (it cannot be valid if it
non-existent because it is contrary to the law.
is against the law).
b. Requirement of a valid contract:
 QUASI-CONTRACTUAL
- A contract is valid (assuming all the
OBLIGATIONS
essential elements are present) if it is not
(ART.1160)- Article 1160: Treats of c. Other examples of quasi-contracts –
obligations arising from quasi-contracts or Provided in Articles 2164 to 2175 of
contracts implied by law. the Civil Code. Quasi-contracts are of
infinite variety, and when for some reason
- Quasi-contract: Juridical relation resulting
recovery cannot be had on a true contracts,
from lawful, voluntary, and unilateral acts by
recovery may be allowed on the basis of
virtue of which the parties become
a quasi-contract.
bound to each other to the end that no one will
be unjustly enriched or benefited at the Ex. Seller leaves goat milk every day at a
expense of another. house. After 1week, payment is collected. It is
implied thatcontract is understood.
- Not a contract at all: There is no consent but
the same is supplied by fiction of law. In other
words, law considers the parties as having
 CIVIL LIABILITY ARISING
entered into a contract, although they have
FROM CRIMES ORDELICTS
not actually do so, and irrespective if their
intention, to prevent injustice or unjust (ART. 1161)- Civil obligations arising
enrichment of a person at the expense of from criminal offenses shall be governed by
another. the penal laws.
- Article 1161: Deals with civil liability
for damages arising from crimes or delicts.
Principal Kinds of Quasi-contracts:
(1) Civil liability in addition to criminal
a. Negotiorum gestio – the voluntary
liability:
management of the property or affairs
of another without the knowledge or consent - Oftentimes, commission of a crime causes
of the latter. not only moral evil but also material
damage.
(Ex. Putting out the fire of neighbor’s
house because they are on a vacation. - Those who are criminally liable for an actor
Neighbor is obliged to compensate them even omission is also civilly liable
if they did not give consent to the act.); Felt fordamages suffered by aggrieved party.
the responsibility.
(2) Criminal liability without civil liability:- In
b. Solutio indebiti – the juridical relation crimes which cause no material damage,
which is created when something is there is no civil liability to be
received when there is no right to demand enforced.
and it was unduly delivered through mistake;
(3) Civil liability without criminal liability:- A
Based on principle that no one shall enrich person not criminally responsible may still
himself unjustly at the expense of another. be liable civilly, such as failure to pay
contractual debt; causing damage to
Requisites:
another’s property without malicious or
(1) There is no right to receive the thing criminal intent or negligence.
delivered and
Scope of Civil Liability:
(2) The thing was delivered through
- The extent of the civil liability for damages
mistake.
arising from crimes is governed by the
Revised Penal Code and the Civil 3. Crime: Affect public interest.
Code. This civil liability includes: Quasi-delict: Concerns private interest.
(1) Restitution (2) Reparation for the 4. Crime: There are generally two liabilities
damage caused (3) Indemnification for (1) criminal and (2) civil.
consequential damages.
Quasi-delict: Only civil liability.
5. Crime: Liability cannot be
compromised or settled by the parties
themselves.
 OBLIGATIONS ARISING FROM
QUASI-DELICTS Quasi-delict: Liability can be compromised as
any other civil liability.
(ART. 1162)- Quasi-delicts: An act or
omission by a person (tortfeasor) which 6. Crime: The guilt of the accused must be
causes damage to another in his person, prove beyond reasonable doubt.
property, or rights giving rise to an
Quasi-delict: The fault or negligence of
obligation to pay for the damage done, there
the defendant need only be proved by
being fault or negligence but there is no
preponderance of evidence.
pre-existing contractual relation between the
parties.

Requisites of Quasi-delict:
- Before a person can be held liable
for quasi-delict, the following must be
present:
- (1) There must be an act or omission
- (2) There must be fault or negligence
- (3) There must be damaged caused
- (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 parties.
Crime distinguished from quasi-delict:
1. Crime: There is criminal or malicious
intent orcriminal negligence.
Quasi-delict: There is only negligence.
2. Crime: Purpose is punishment.
Quasi-delict: Indemnification of the
offended party.
 (4) a cavan of rice
(5) the sum of P10,000.00.
Duties of the obligor or debtor with respect
to determinate or specific thing:
1. To deliver the thing itself
GR: The debtor of a thing cannot compel the
creditor to receive a different one, although
the latter may be of the same value as, or more
valuable than which is due. (Civil Code, Art.
CHAPTER 2
1244, par.1)
NATURE AND EFFECTS OF
XPNs:
OBLIGATION
a. By agreement or consent, the debtor may
ART. 1163. Every person obliged to give
deliver a different thing or perform a different
something is also obliged to take care of it
prestation in lieu of that stipulated (either a
with the proper diligence of a good father of a
Dation in payment or Objective Novation) b.
family, unless the law or the stipulation of the
Waiver of defect, the creditor with knowledge
parties requires another standard of care.
of defect accepts the thing without protest or
1. REAL OBLIGATION (OBLIGATION disposes it.
TO GIVE)
2. Preserve the Thing with Due Care
Specific or Determinate Thing - one which
GR: Every person obliged to give something
can be particularly designated or physically
is also obliged to take care of it with the
segregated from all others of the same class.
proper diligence of a good father of the
EXAMPLES: family. (Civil Code, Art. 1163)
(1) The watch I am wearing. (2) The car sold XPNS:
by X.
a. The law or stipulations of the parties require
(3) My dog named "Terror." another standard of care.
(4) The house at the corner of Rizal and Del b. Common Carriers - In case of common
Pilar Streets. carriers, which from the nature of their
(5) The Toyota car with Plate No. AAV 344. business and for reasons of public policy, is
bound to observe extraordinary diligence in
Generic or Indeterminate Thing - one which the vigilance over the goods and for the safety
refers only to a class or genus to which it of the passengers transported by them,
pertains and cannot be pointed out with according to all the circumstances of each
particularity. case.
EXAMPLES: c. Banks - In case of banks, wherein the
(1) a Bulova calendar watch degree of diligence required is more than that
of a good of a family, where the fiduciary
(2) a 2006 model Japanese car. nature of their depositors is concerned.
(3) a police dog.
Diligence - the attention and care required of a XPN: Obligations arising from contracts, a
- person in a given situation and is the stipulation as regards the fruits shall govern
opposite of negligence. (CC, Art. 1306)
Kinds of Diligence When an obligation to deliver arises:
1. Simple Diligence a. If obligation is based on law, quasi-delict,
quasi-contract or crime, the specific provisions
2. Extraordinary Diligence
of applicable law shall determine when the
3. Diligence of a Good Father of a Family delivery shall be effected; or
(Bonos Pater Familia) - measure of prudence
b. If obligation is based on contracts.
or activity as is properly expected from, and
ordinarily exercised by a reasonable and GR: All fruits shall pertain to the vendee from
prudent man under particular circumstances. the constitution or perfection of the obligation
(CC, Art. 1187)
3. Deliver the Accessions and Accessories
GR: Obligation to give a determinate thing
includes that of delivering all its accession and XPNS:
accessories, even though they may not have
i. Subject to a suspensive condition, it
been mentioned. (Civil Code, Art. 1166)
arises from the happening of the
XPNs: By contrary intention of the parties. condition;
ii. ii. If there is a contrary stipulation
Accession - is the right by virtue of which the
of the parties with respect to the
owner of a thing becomes the owner of
time when the thing or fruits shall
everything which is produced thereby, or
be delivered.
which is incorporated or attached thereto,
either naturally or artificially.
- the fruits of, or additions to, or KINDS OF FRUITS:
improvements upon, a thing (the principal)
a. Natural Fruits - the spontaneous products
Accessories are things joined to or included of the young and other products of animals
with the principal thing for the latter's produced without intervention of human
embellishment, better use, or completion. labor
Right of Accession - right corollary to b. Industrial Fruits - those produced by lands
ownership of property which gives the owner of any kind through cultivation brought by an
the right to everything produced by the intervention of human labor c. Civil Fruits -
property or which is incorporated or attached those derived by virtue of juridical relation
thereto, either artificially or naturally.
Correlative Rights of the Obligee:
4. To Deliver the Fruits
1. Right to Specific Performance
GR: The creditor has a right to the fruits of
2. Right to Rescission or Resolution
the thing from the time the obligation to
deliver it arises. However, there is no real 3. Right to damages due to the ff:
right until the same has been delivered to him.
i. Fraud
Civil Code, Art. 1164, par 1)
 ii. Negligence in the performance of an 1. Right to ask for the performance of the
obligation obligation
iii. Delay or Default 2. Right to ask that the obligation be complied
with by a third person at the expense of the
iv. Any manner in contravention of the
debtor. CC, Art. 1165)
tenor of the obligation.
3. Right to ask for rescission.
GR: If due to fortuitous event, the obligor is
not liable for failure to deliver. 4. Right to damages due to:
i. Failure to deliver
ii. Fraud
XPNS: iii. Negligence
a Law iv. Delay
b. Stipulation to the contrary v. Any matter in contravention of the
tenor of the obligation
i. Nature if the obligation requires
assumption of risk
ii. Fraud or malice (bad faith) II. PERSONAL OBLIGATION
(OBLIGATION TO DO) - Positive
iii. Debtor was already in delay when
Personal Obligation
the fortuitous event took place.
GR: In obligations to do or not to do, an act or
4. Right to the fruits and interests from the
forbearance cannot be substituted by another
time the obligation to deliver arises.
act or forbearance against the obligee's will
(CC, Art. 1244, par.2)
Duties of the obligor or debtor with respect XPN: In facultative obligations, where the
to generic or indeterminate thing: debtor reserves prestation. the right to
substitute another
1. To deliver the thing of the same quality
intended by the parties, taking into account the Duties of the obligor in an obligation to do:
purpose of the obligation, intent of the parties
1. To do it
and other circumstances; and
2. To shoulder the cost if someone does
2. To be liable for damages in case of breach
it
due to delay, fraud, negligence or
contravention of the tenor thereof. 3. To undo what has been poorly done
GR: To deliver a thing which is neither of 4. To pay damages
superior nor inferior quality
XPN: When the purpose of the obligation and
III. OBLIGATION NOT TO DO - Negative
other circumstances shall have to be taken into
Personal Obligatio
consideration.
Duties of the obligor in an obligation not to
Correlative Rights of the Obligee:
do
1. Not to do what should not be done Waiver of Fraud: Responsibility arising from
fraud is demandable in all obligations. Any
2. To shoulder the cost to undo what should
waiver for future action for fraud is void.
not have been done
Kinds of Fraud:
3. To pay damages
a. Fraud in the performance of the obligation.
(CC, Art. 1171)
Rights of a creditor in personal obligations:
b. Fraud in the execution creation/birth of a
"To Do or Not To Do'
Forms of breach of Obligation
1. Voluntary arises either by fraud,
negligence, delay and in any manner
contravene to the tenor of the obligation.
2. Involuntary - arises due to fortuitous
events
3. Substantial - amount to non-performance
which is the basis for rescission and payment
of damages, and
4. Casual - a part of the obligation has been
performed and gives rise to liability for
damages.
Different Modes of Breach
Those who in the performance of their
obligation are guilty of fraud, negligence or
delay and those who in any manner
contravene the tenor thereof, are liable for
damages. (CC, Art. 1170) contract:
1. FRAUD (Dolo) - the voluntary execution a. Dolo Causante (Causal Fraud)
of a wrongful act, or a willful omission which
prevents the normal presentation of prestation, b. Dolo Incidente (Incidental Fraud)
knowing and intending the effects which Dolo Causante - the fraud employed by one
naturally and necessarily arise from such act party prior to or simultaneous with the
or omission. creation of the contract to secure the consent
- it implies some kind of malice and of the other. It is the fraud used by a party to
induce the other to enter into a contract
dishonesty and cannot cover cases of
without which the latter would not have
mistake and errors in judgement made
agreed to, taking into account the
in good faith.
circumstances of the case.
Incidental Fraud - fraud employed to secure
Effect of Fraud: Liability for damages. the consent of the other party but which only
renders the party who employs it liable for 3. DELAY (MORA) - It refers to the non-
damages. fulfillment of obligation with respect to time.
Civil Code, Art. 1169. Those obliged to
deliver or to do something incur delay from
2. NEGLIGENCE (CULPA) - The fault or
the time the obligee judicially or extra-
negligence of the obligor consists in the
judicially demands from them the fulfillment
omission of the diligence which is required by
of their obligation.
the nature of the obligation and corresponds
with the circumstances of the persons, of the GR: Without demand, judicial or extra-
time and place (CC, Art. 1173, par. 1); any judicial, the effect of default will not arise.
voluntary act or omission, there being no
XPNS:
malice, which prevents the normal fulfillment
of an obligation. a. When the obligation or law expressly so
declares;
In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all b. When from the nature and circumstances of
damages which may be reasonably attributed the obligation it appears that the designation
to the non-performance of the obligation (CC. of the time when the thing to be delivered or
Art. 2201, par. 2) the services to be rendered was a controlling
motive for the establishment of the contract.
c. When demand would be useless:
Effects of Negligence:
i. Caused by some act or fault of the
a. Damages are demandable which the court
debtor
may regulate according to circumstances; and
b. Invalidates defense of fortuitous event. ii. Impossibility caused by fortuitous
event.
Kinds of Negligence:
Delay in Reciprocal Obligations
a. Civil Negligence
In reciprocal obligations, neither party incurs
i. Culpa Contractual - fault or negligence
delay if the other does not comply or is nt
of obligor by virtue of which he is
ready to comply in a proper manner with what
unable to perform his obligation
is incumbent upon him. From the moment one
arising from a pre existing contract;
of the parties, delay by the other begins.
and
ii. ii. Culpa Aquilana/quasi-delict - fault Requisites in order to consider the Obligor
or negligence of a person whose failure in Default
to observe the required diligence to the
a. Obligation is demandable and already
obligation causes damage to another.
liquidated.
b. Culpa Criminal - fault or negligence which
results in the commission of a crime. b. The obligor debtor delay's performance
c. The creditor requires performance
judicially or extra-judicially
Grace Period - it is a period immediately after
the due date for an obligation during which
payment may be made without penalty.
- it is not an obligation of the debtor but a Requisites:
right.
i. Offer of performance by the debtor
Kinds of Delay: who has the required capacity;
ii. Offer must be to comply with the
a. Mora Solvendi
prestation as it should be
b. Mora Accipiendi performed; and
iii. Creditor refuses the performance
c. Compensation Morae
without just cause.
Mora Solvendi - delay on the part of the
Effects of Mora Accipiendi
debtor by not performing his obligation after a
demand or specified time and may either be: a. Responsibility of the debtor for the thing is
reduced and limited to fraud and negligence:
i. Ex Re- obligations to give
gross
ii. Ex Persona – obligations to do.
b. Debtor is exempted from the risks of loss of
Requisites: the thing, which automatically passes to the
a. Prestation is demandable and is already creditor;
liquidated c. All expenses incurred by the debtor for the
b. The debtor is in delay of the performance preservation of the thing after the delay shall
due to causes imputable to him and not by acts be chargeable to the creditor;
such as fortuitous events; and d. The creditor shall become liable for
c. The creditor requires or demands the damages;
performance judicially or extra-judicially. e. The debtor may relieve himself of the
Reckoning time of delay: obligation by consignation of the thing; and

Judicially - date of filing of complaint f. If the obligation bears interest, the debtor
does not have to pay from the moment of the
Extra-judicially - date of demand mora.
Effects of Mora Solvendi: Remedy:
1. Debtor is liable for interest in obligation to i. Consign it in court, and
pay money, or damages.
ii. Keep it to himself (he is not liable for
2. Debtor is liable even for fortuitous event damages)
when the obligation is to deliver a specific
thing. For generic things, debtor may still be
compelled to deliver a thing of the same kind Compensation Morae - delay of the parties in
or be held liable for damages. a reciprocal obligation.
Mora Accipiendi - delay in the performance GR: Parties in a bilateral contract can regulate
based on the omission by the creditor of the the order in which they shall comply with
necessary cooperation, especially acceptance reciprocal prestations. Otherwise, the
on his part fulfillment must be simultaneous and
reciprocal.
XPN: Contrary stipulation. (ex. Installment 3) Action for Rescission
basis)
Effects of Compensation Morae:
II. Subsidiary Remedies
i. Delay of the obligor cancels delay of the
1) Accion Subrogatoria
obligee and vice versa;
2) Accion Pauliana
ii. No actionable default on the part of the 3) Other Specific Remedies
obliges;
I. Primary Remedies
iii. If delay of one party is followed by that of
1. Action for Performance
the other, the liability of the first infractor
shall be equitably balanced by the court. If it a. Action for Specific Performance (in
cannot be determined which of the parties is obligation to give a determinate thing)
guilty of delay, the contract shall be deemed
- when what is to be delivered is a determinate
extinguished and each shall bear his own
thing, the creditor, in addition to his night for
damages.
indemnification of damages, may compel the
Cessation of the Effects of Delay (mora) debtor to make the delivery.

The benefits arising from default or delay may b. Action for Substituted Performance (in
cease upon (1) renunciation by the creditor. obligation to given indeterminate thing)
express or implied and (2) prescription.
- if the thing is indeterminate or generic, he
4. CONTRAVENTION OF TENOR may ask the obligation be complied with at the
expense of the debtor.
Under Art 1170 of the Civil Code, the phrase
"in any manner contravene the tenor" of the
obligation includes not only any illicit act c. Action for Substituted Performance or
which impairs the strict and faithful Undoing of Poor Work (in obligation to do)
fulfillment of the obligation, but also every
- if a person obliged to do something fails to
kind of defective performance, unless excused
do it, the same shall be executed at his cost.
in proper cases by fortuitous event.
This same rule shall be observed if he does it
Note: the following do not excuse fulfillment: on contravention of the tenor of the obligation
furthermore, it may be decreed that what has
a. Increase in cost of performance
been poorly done be undone.
b. Poverty
c. War between the subjects of a neutral d. Action for Undoing (in obligation not to do)
country:
GR: When the obligation consists in not
doing, and the obligor does what has been
Remedies of creditor in case of Breach: forbidden him, it shall be undone at his
expense.
I. Primary Remedies
XPN: When the only feasible remedy is
1) Action for Performance (Specific
indemnification for the damages cause by
Performance or Substituted Performance)
reason that:
2) Action for Damages (exclusively or
addition to action for performance); and
 i. It has become impossible to undo the 1. Extinguishes obligatory relation as if it had
thing physically or legally never been created; extinction has a
ii. If the acts is definite and will not cease retroactive effect.
even if undone.
2. Mutual restitution - rescission creates the
2. Action for Damages obligation to return the thing which were the
object of the contract, together with their
Recoverable damages include any and all
fruits, and the price with its interest,
damages that a human being may suffer
consequently.
Responsibility for damages is indivisible.
II. Subsidiary Remedies
Subsidiary remedy- the exhaustion of all
3. Action for Rescission - The power to
remedies by the prejudiced creditor to collect
rescind obligation is implied in reciprocal
claims due to him before rescission is resorted
obligations, in case one of the obligors should
to.
not comply with what is incumbent upon him
1. To exhaust the property in possession of
Note: The action for rescission is subsidiary; it
the debtor generally by attachment, subject
cannot be instituted except when the party
to exemptions provided by law.
suffering damage has no other legal means to
obtain reparation for the same. Breach by
Both Parties:
2. Accion Subrogaatoria (Subrogatory
Action) - action which the creditor may
exercise in place of the negligent debtor in
a. If first infractor can be determined, his
order to preserve or recover for patrimony of
liability shall be equitably tempered by the
the debtor the product of such action, and then
courts.
obtain therefrom the satisfaction of his own
b. If the first infractor cannot be determined, credit.
the obligation shall be extinguish and each
shall bear his own damages.
Note: The creditor is entitled only to as much
Note: The remedy of rescission is alternative.
as is needed to satisfy his credit and any
Party seeking rescission can only elect one
balance shall pertain to the debtor.
between fulfillment and rescission. There can
be no partial performance and partial Right of the Creditor:
rescission. The remedy only applies to
a Levy by attachment and execution upon all
reciprocal obligations as when there is
the property of the debtor, except such as
reciprocity between the parties.
exempt by law from execution;
b. Exercise all the rights and action of the
Rescission requires judicial approval to debtor, except such as inherently personal to
produce legal effect. him
c. To ask for rescission of the contracts made
by the debtor in fraud of their rights.
Effects of Rescission:
Requisites:
 a. Debtor to whom the right of the property Requisites: which the debtor may have done to
pertains must be indebted tot he creditor, defraud them.
b. Creditor must be prejudiced by the inaction Requisites:
or failure of the debtor to proceed against the
a. Creditor has a credit prior to the alienation
third person;
b the debtor, although demandable later. b.
c. Creditor must have first pursued or
Debtor has made a subsequent contract, giving
exhausted all the properties of the debtor
advantage to a 3rd person;
which are not exempted for execution
Note: In order to exercise the accion
subrogatoria, a previous approval of the court C. Third person who received the property is a
is not necessary. accomplice in the fraud; and d. Act being
impugned is fraudulent.

Exceptions to Accion Subrogatoria:

Note: The following are presumptions of fraud
provided under Civil Code, Art. 1387 as
a. Inherent rights of the debtor follows:
i. Right to existence
ii. Rights or relations of a public character i. Alienation of property by gratuitous title
without reserving sufficient property to pay
iii. Rights of an honorary character
debts prior to donation:
iv. Rights consisting of powers which have
not been used (ie, the power to carry out
an agency or deposit)
ii. Alienation by onerous title when there is
v. Non-patrimonial rights (ie, the action for
judgment or attachment.
legal separation or annulment of
marriage)
vi. Patrimonial rights not subject to
Distinctions between Accion Subrogatoria and
execution (ie, right to a government
Accion Pauliana
gratuity or pension); and vii. Patrimonial
rights inherent in the person of the debtor
(i.e., right to revoke a donation by reason
of ingratitude)

a. Only those who at the time of the donor's

death have a right to the legitime and their
successor's interest may ask for the
reduction or in officious donations. 4. ACCION DIRECTA
3. Accion Pauliana - a person may directly sue another even if
- Creditors have the right to impugn the acts there is no privity of contract between them.
which the debtor may have done to defraud
them.
Transmissibility of Rights acquired by virtue 3. Must be of such a character as to render it
of obligation: GR: Right acquired by virtue of impossible for the obligor to fulfill his
an obligation are transmissible in character. obligation in a normal manner;

XPNS: 4. Obligor must be free from any participation

in the aggravation of the injury resulting to the
a. When prohibited by law which are purely
obligee.
personal in character
Liability in case of Fortuitous Event:
GR: No liability in case of fortuitous event.
b. When prohibited by personal qualification
or circumstances of the transferor which is XPNS:
material ingredient attendant in the
a. When expressly declared by law;
obligation; and c. When prohibited by
stipulation of the parties. b. When expressly declared by stipulation
contract;
c. When the nature of the obligation requires
Fortuitous Event
the assumption of risk;
Extinguishment of Liability in case of
d. When the object of the prestation is generic.
Breach due to Fortuitous Event
Effects of Fortuitous Event:
Except in cases expressly specified by law, or
when it is otherwise declared by stipulation, or a. On determinate obligation the
when the nature of the obligation requires the obligation is extinguished; and
assumption of risk, no person shall be b. On generic obligation - the obligation
responsible for those events which could not is not extinguished (genus nun quam
be foreseen or which, though foreseen, were peruit - genus never perishes)
inevitable.
Forms of Fortuitous Events:
Principle of Assumed or Created Risk
1. By Acts of God or Force Majeure -
Based on the document of volenti non fit
absolutely independent of human will
injuria - no wrong is done to one who
Ex. Earthquakes, storms, flood, etc. consents. As applied to obligations, it refers to
situations in which the obligor, with full
2. By Acts of Man - an event which arises from
knowledge of the risk enters into some
legitimate or illegitimate acts of persons other
relation with the obligee.
than the obligor
Extinguishment Installments of Interest and
Ex. Robbery, war, attacks by bandits
Prior Installments:
- Receipt of the principal (or later
Requisites of Fortuitous Events: installment) without reservation as to
the interest (or prior installment) shall
1. Must be independent of the human will;
give rise to a disputable presumption
2. It must either unforeseeable or inevitable,
 that the interest or prior installment has
been paid. (Art. 1176, Civil Code)
Chapter 3
Instances when presumptions in Art. 1176
Different Kinds of Obligations
of the Civil Code do not apply:
SECTION 2. – Obligations with a Period
a. When there is a reservation made orally or
in Writing Article 1193. Obligation for whose
fulfilment a day certain has been fixed,
b. If the receipt does not recite that it was
shall be demandable only when that day
issued for a particular installment due as when
comes. Obligations with a resolutory period
the receipt is only dated:
take effect at once, but terminate upon arrival
C. To payment of taxes; and d. Where non- of the day certain.
payment of the prior obligations has been
A day certain is understood to be that
proven.
which must necessarily come, although it
may not be known when.
If the uncertainty consists in whether the day
will come or not, the obligation is
conditional, and it shall be regulated by
the rules of the preceding section.
Obligation with a period – one whose effects
or consequences are subjected in one way
or another to the expiration or arrival of
the said period or term.

Period – is a future and certain event upon the

arrival of which the obligation subject to it
either arises or is extinguished.
-A day certain is which must necessarily
come, although it may not be known when.
Period and Condition Distinguished
1. As to fulfillment - A period is a certain
event which must happen sooner or later
while a condition is an uncertain event.
2. As to time – a period refers only to the
future while a condition may refer to a past
unknown event.
3. As to influence on the obligation – the
period fixes the time of efficaciousness of
the obligation while a condition causes an
obligation either to arise or to terminate.
4. As to effect, when left to debtor’s will – give, the following rules shall be observed
period which depends upon the will of in case of the improvement, loss or
debtor empowers the court to fix the duration deterioration of the thing during the
while condition which depends upon the will pendency of the condition:
of the debtor invalidates the obligation.
1. If the thing is lost without the fault of the
5. As to retroactivity of effects – the arrival debtor, the obligation shall be extinguished.
of period does not have any retroactive
2. If the thing is lost through the fault of the
effect, while condition has retroactive effect.
debtor, he shall be obliged to pay damages; it
Kinds of period or term is understood that the thing is lost when it
perishes (ruined), or goes out of commerce,
1. According to Effect
or disappears in such a way that its
a. Suspensive (ex die) – the obligations existence is unknown or it cannot be
begins only from a day certain upon recovered;
arrival of the period.
3. When the thing deteriorates without the
b. Resolutory (in diem) – the obligation is fault of the debtor, the impairment is to be
valid to a day certain and terminates upon the borne by the creditor; (When something
arrival of the period. degrades without the debtor's fault, the
creditor is responsible for paying the
2. According to source
impairment).
a. Legal period – When. – when it is
4. If it deteriorates through the fault of the
provided for by laws.
debtor; the creditor may choose between
b. Conventional/voluntary period – when it is the rescission of the obligation and its
agreed by the parties fulfillment, with indemnity for damages in
c. Judicial period – when it is fixed by the either case;
court. 5. If the thing is improved by its nature, or by
3. According to definiteness time, the improvement shall inure to the
benefit of the creditor;
a. Definite period – when it is fixed or it is
known when it will come. 6. If it is improved at the expense of the
debtor, he shall have no other right than
b. Indefinite – when it is not fixed or it is not that granted to the usufructuary (right to
known when it will come. When it is not fixed enjoy use and fruits)
but a period is intended, the courts are
empowered to fix the same. ARTICLE 1195. Anything paid or delivered
before the arrival of the period, the obligor
ARTICLE 1194. In case of loss, being unaware of the period or believing
deterioration or improvement of the that the obligation has become due and
thing before the arrival of the day demandable, may be recovered, with the
certain, the rules in article 1189 shall be fruits, and interest.
observed.
Payment before Arrival of Period
ART. 1189. When the conditions have
been imposed with the intention of This article which is similar to Article
suspending the efficacy of an obligation to 1188, applies only in an obligation to give, it
allows the recovery of what has been paid by Which means that before the expiration of
mistake before the fulfillment of a suspensive the period, the debtor may not fulfill the
condition. obligation and neither the creditor demand its
fulfillment.

Debtor presumed aware of period.

The presumption is that the debtor knew that
the debt was not yet due. He has the Exceptions to the general rule.
burden of proving that he was unaware of
If the tenor of the obligation or other
the period. Where the duration of the period
circumstances may indicate that a period is
depends upon the will of the debtor payment
have been established for the benefit of
by him amounts, in effect, to his determination
either the creditor or debtor:
of the arrival of the period.
1. Term is for the benefit of the debtor alone.
The obligor may no longer recover the thing
or money once the period has arrived but – Debtor cannot be compelled to pay
he can recover the fruits or interests prematurely.
thereof from the date of premature
2. Term is for the benefit of the creditor.
performance to the date of maturity of the
obligation. – creditor may demand fulfilment even
before the arrival of the term but the
No recovery in personal obligations.
debtor cannot require him to accept
1195 has no application to obligations to do or payment before the expiration of the
not to do because as to the former, it is stipulated period.
physically impossible to recover the service
ARTICLE 1197. If the obligation does not
rendered, and as to latter, as the obligor
fix a period, but its nature and the
performs by not doing, he cannot, of course,
circumstances it can be inferred that a
recover what he has not done.
period was intended, the courts may fix the
ARTICLE 1196. Whenever in an obligation a duration thereof. The courts shall also fix the
period is designated, it is presumes to have duration of the period when it depends upon
been established for the benefit of both the the will of the debtor. In every case, the courts
creditor and the debtor, unless from the shall determine such period as may under
tenor of the same or other circumstances, it the circumstances have been probably
should appear that the period has been contemplated by the parties. Once fixed by
established in favour of one or of the other. the courts, the period cannot be changed by
them.

Presumption as to benefit of period.

Court Generally is Without Power to Fix a
The general rule in an obligation subject
Period
to a period fixed by the parties, the period
is presumed to be for the benefit of both If an obligation does not state a judicial period
creditor and debtor. and no period is intended, the court is not
authorized to fix a period. The courts have
no right to make contracts for the parties. occur after the obligation has been
Exceptions to the general rule. contracted.
1. No period is fixed but a period was 2. When debtor does not furnish guaranties or
intended. - the obligation does not fix a period securities promised:
but it can be inferred from its nature and
Gaya borrowed loan from Tito which loan was
circumstances that a period is intended.
secured by a chattel mortgage of Gaya’s car as
2. Duration of the period depends upon the a guaranty. After obtaining the loan, Gaya
will of the debtor. – fails or does not execute a chattel
mortgage, the loan becomes demandable or
ART. 1198. The debtor shall lose every
the debtor loses her right to make use of the
right to make use of the period:
period.
1. When after the obligation has been
2. When by his own acts he has impaired
contracted, he becomes insolvent, unless he
said guaranties or securities:
gives a guaranty or security for the debt;
Example: Gaya borrowed P50, 000 from Tito
2. When he does not furnish to the creditor
which loan was secured by a chattel mortgage
the guaranties or securities which he has
on Gaya’s car. Later, Gaya’s fault, the car
promised ;
was damaged or she causes the impairment of
3. When by his own acts he has impaired the car, Gaya loses her right to make use of
said guaranties or securities after their the period, unless she gives another one
establishment, and when through a fortuitous equally satisfactory.
event they disappear, unless he immediately
4. When debtor violates an undertaking –
gives new ones equally satisfactory;
Example: Art secured a loan from Arnold on
4. When the debtor violates any condition that Art will paint the house of
undertaking, in consideration of which the Arnold. If after the proceeds of the loan was
creditor agreed to the period; given to Art, he did not paint the house
of Arnold, Art loses his right to make use of
5. When the debtor attempts to abscond.
the period.
When Debtor Loses the Right to Make Use
5. When the debtor attempts to abscond.
of a Period
Abscond means to depart or escape from
The general rule is that the obligation is creditor’s knowledge to avoid payment of his
not demandable before the lapse of the period. debt. Mere attempt on the part of debtor will
The exceptions are based on the fact that the entitle the creditor to demand payment of the
debtor might not be able to comply with his obligation without waiting for the period to
obligation: expire.
1. When debtor becomes insolvent:
The insolvency need not be judicially
declared. It is sufficient that the debtor has
less assets than his liabilities or if debtor is
unable to pay his debts as they mature. It is
noted that the insolvency of the debtor must