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Law on Obligations | General Provisions, Nature and Effects of Obligations 01

voluntarily reimburses the third person, the obligor

GENERAL PROVISIONS cannot recover what he has paid.

1. Natural Obligation #3. When a minor between eighteen and twenty-

one years of age who has entered into a contract
Natural Obligation - not being based on positive
without the consent of the parent or guardian,
law* but on equity and natural law, do not grant a
after the annulment of the contract
right of action to enforce their performance, but
after voluntary fulfillment by the obligor, they
#4. When a minor between eighteen and twenty-
authorize the retention of what has been delivered
one years of age, who has entered into a contract
or rendered by reason thereof. *enacted by Congress
without the consent of the parent or guardian,
e.g. voluntarily pays a sum of money or delivers a
fungible thing in fulfillment of the obligation, there
#1. When a right to sue upon a civil obligation has
shall be no right to recover the same from the
lapsed by extinctive prescription, the obligor who
obligee who has spent or consumed it in good
voluntarily performs the contract cannot recover
faith.
what he has delivered or the value of the service he
has rendered. #5. When, after an action to enforce a civil
obligation has failed the defendant voluntarily
The following actions must be brought within ten
performs the obligation, he cannot demand the
(10) YEARS from the time the right of action
return of what he has delivered or the payment of
accrues:
the value of the service he has rendered.
a. Upon a written contract;
#6. When a testate or intestate heir voluntarily
b. Upon an obligation created by law;
pays a debt of the decedent exceeding the value
c. Upon a judgment.
of the property which he received by will or by the
law of intestacy from the estate of the deceased,
The following actions must be commenced within
the payment is valid and cannot be rescinded by
six (6) YEARS:
the payer.
a. Upon an oral contract
#7. When a will is declared void because it has not
b. Upon a quasi-contract.
been executed in accordance with the formalities
required by law, but one of the intestate heirs, after
** A borrowed 5k from B – May 1, 2015; oral contract
A → B (Date of payment: June 1, 2015) → Civil (Date of
the settlement of the debts of the deceased, pays
prescription: June 1, 2021) → Natural (After prescription) a legacy in compliance with a clause in the
defective will, the payment is effective and
Note: irrevocable.
✓ pag voluntarily nagbayad si A to B, B has right to
2. Civil Obligation – a juridical necessity to give,
retain
✓ if by mistake (e.g. hindi alam na tapos na ang to do, or not to do. *(Art. 1156)
prescription) nagbayad si A, pwede pa mabawi ni A *Art. 1156 refers only to civil obligations which are
enforceable in court when breached. It does not
#2. When without the knowledge or against the cover natural obligations (Arts. 1423 -1430)
will of the debtor, a third person pays a debt which because the latter are obligations that cannot be
the obligor is not legally bound to pay because the enforced in court on equity and natural law and not
action thereon has prescribed, but the debtor later on positive law (Pineda, 2000)
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 Natural Civil *SOURCES OF OBLIGATIONS
Obligation Obligation
As to Not by court Court action or a. Law (obligation ex lege) - imposed by law,
enforceability actions, but by the coercive obligations derived from law are not presumed. If
good conscience power of public
the law does not include, therefore it excludes.
of debtor authority
As to basis Equity and Positive law Only those which the law clearly stipulate or
natural law express are demandable.
GR: The law does not require any form in
obligations arising from contracts for their validity NOTE: Actually, there are only two sources (i.e.,
or binding force (Art. 1356) law and contracts) because obligations arising
from quasi-contracts, delicts, and quasi-delicts are
ELEMENTS OF AN OBLIGATION imposed by

1. Juridical tie or vinculum juris or efficient b. Contracts (obligation ex contractu) –

cause – sources* of civil obligation governed by stipulations, clauses, terms, and
2. Active subject [creditor or obligee] - the conditions of the parties’ agreements.
person demanding the performance of the “IN GOOD FAITH” — principle obligatory force of
obligation contracts “may consent unlike quasi-contract”
3. Passive subject [debtor or obligor] - the It must not be contrary to law, morals, good
person bound to perform the prestation to customs, public order, and public policy (NCC, Art.
give, to do, or not to do 1306)
4. Object or Prestation – the subject matter of
obligation c. Quasi-contracts (ex quasi – contractu)-
juridical relation arising from *lawful,
voluntary, and unilateral* acts based on the
NOTE: In order to be valid, the object or prestation
principle that no one shall be unjustly enriched
must be: 1. Licit or lawful; 2. Possible, physically, &
or benefited at the expense of another (NCC,
judicially; 3. Determinate or determinable; and 4.
Art. 2142).
Pecuniary value or possible equivalent in money.
Absence of any of the first three makes the object void *characteristics of a quasi-contract (LUV)

When there is a right, there is a corresponding PRINCIPAL FORMS OF QUASI-CONTRACTS

obligation. Right is the active aspect while obligation
is the passive aspect. Thus, the concepts of credit Negotiorum gestio (inofficious manager) - arises
and debt are two distinct aspects of unitary concept
when a person voluntarily takes charge of the
of obligation (Pineda, 2000).
management of the business or property of
DIFFERENT KINDS OF PRESTATION another without any power or WITHOUT
BASIS TO GIVE TO DO NOT TO DO CONSENT from the latter – liability is SOLIDARY
As to Consists in the Covers the Refraining
what the delivery of a rendering of from doing
obligation thing to the works or certain acts Solutio indebiti (unjust enrichment) - when a
consists creditor services person received something from another without
of whether any right to demand for it, and the thing was
physical or
mental
unduly delivered to him through MISTAKE
Examples Sale, deposit, Contract for Negative
pledge, profession al easement, e.g. If the payment of interest is made out of mistake, solutio
donation, services like restraining indebiti applies; hence, the amount must be returned to the
antichresis painting, order or
debtor. If the payment was made after the obligation to pay
modeling, injunction
interest has already prescribed, natural obligation applies;
singing, etc. (Pineda,
hence, the creditor is authorized to retain the amount paid.
2000)

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 CONTRACT QUASI CONTRACT that some pecuniary loss has been suffered but its
There is a meeting of the There is no consent, but the
amount cannot be provided with certainty.
minds or consent; the same is supplied by fiction
parties must have of law; to prevent injustice
Actual - adequate compensation only of such
deliberately entered into a
formal agreement pecuniary loss suffered by a person as duly
proved.
d. Delicts (obligation ex delicto/ crimes) – acts
Liquidated - agreed upon by the parties to a
or omission punishable under the law
contract to be paid in case of breach thereof.

GR: Art. 100 of the RPC provides: “Every person

e. Quasi-delicts (culpa aquiliana/tort) - act or
criminally liable for a felony is also civilly
omission arising from fault or negligence which
liable.”
causes damage to another, there being no pre-
Special penal laws, separate from RPC – e.g anti-
existing contractual relations between the
terrorism law, anti-trafficking law, plunder law,
parties (NCC, Art. 2176)
anti-wiretapping law
di sinasadya na damage but no malice

Criminal liability = imprisonment BASIS DELICT QUASI DELICT

Proof necessary: beyond reasonable doubt Presence of
criminal or
Civil liability = damages payment (IRR) As to the kind
malicious
indemnification, restitution, reparation of intent Only negligence
intent or
Proof necessary: preponderance of evidence present
criminal
negligence.
Note: Restitution is the restoring to the rightful owner As to the
what has been lost or taken away. Reparation is the whether
Concerned with Concerned with
restoring to good condition of something that has been private or
public interest. private interest.
damaged. public interest
is concerned
Generally, the
Employer’s subsidiary liability:
act or omission The act or
employer is subsidiarity LIABLE for felonies As to the kind
gives rise to omission gives
of liability
committed by their employees in the discharge of two liabilities: rise only to a
arises
their duties criminal and civil liability.
civil liability.
Criminal
Kinds of Damages (MENTAL) As to The civil liability
liability is not
Moral - includes physical suffering, mental availability of can be
subject to a
anguish, fright, serious anxiety, besmirched a compromise compromised.
compromise
reputation, wounded feelings, moral shock, social As to the Guilt must be Guilt may be
humiliation, and similar injury. quantum of proved beyond proved by
evidence is reasonable preponderance
Exemplary - corrective damages are imposed, by require doubt. of evidence.
way of example or correction for the public good.
CLASSIFICATION OF OBLIGATIONS
Nominal - adjudicated in order that a right of a
person, which has been violated or invaded by
From the viewpoint of:
another, may be vindicated or organized.
1. Creation
Temperate - moderate damages, which are more a. Legal – imposed by law (Art. 1158);
than nominal but less than compensatory b. Conventional – established by the
damages, may be recovered when the court finds agreement of the parties (eg. Contracts).

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2. Nature a. Divisible – obligation is susceptible of partial
a. Personal – to do; not to do; performance (NCC. 1223; and 1224);
b. Real – to give. b. Indivisible – obligation is not susceptible of
partial performance (NCC. 1225).
3. Object
a. Determinate / specific – particularly 9. Right to choose and substitution
designated or physically segregated from all others a. Alternative – obligor may choose to
of the same class; completely perform one out of the several
b. Generic – designated merely by its class or prestation (NCC. 1199);
genus; b. Facultative – only one prestation has been
c. Limited generic – generic objects confined agreed upon, but the obligor may render one in
to a particular class or source (Tolentino, 2002). substitution of the first one (NCC. 1206).
(e.g. An obligation to deliver one of my horses).
10. Imposition of penalty
4. Performance a. Simple – there is no penalty imposed for
a. Positive - to give; to do; violation of the terms thereof (NCC. 1226);
b. Negative – not to do (ex. an obligation not b. Obligations with a penal clause – obligation
to run for an elective post). which imposes a penalty for violation of the terms
thereof (NCC. 1226; Pineda, 2000)
5. Person obliged
a. Unilateral – only one party is bound;
b. Bilateral – both parties are bound 11. Sanction
a. Civil – gives a right of action to compel their
NOTE: A bilateral obligation may be reciprocal or non- performance;
reciprocal. Reciprocal obligations are those which arise from
b. Natural – not based on positive law, but on
the same cause, wherein each party is a debtor and a creditor
of the other, such that the performance of one is conditioned
equity and natural law; does not grant a right of
upon the simultaneous fulfillment of the other. action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize
6. Existence of burden or condition retention of what has been delivered rendered by
a. Pure – not burdened with any condition or reason thereof.
term. It is immediately demandable (Art. 1179);
b. Conditional – subject to a condition which NATURE AND EFFECTS OF OBLIGATIONS
may be suspensive (happening of which shall give
rise to the obligation) or resolutory (happening of ★ tip: determine first what kind of obligation
which terminates the obligation) (NCC. 1181).
terms to remember:
7. Character of responsibility or liability determinate or specific thing - a thing which is
a. Joint – each debtor is liable only for a part of particularly designated or physically segregated
the whole liability and to each creditor shall belong from all other things of the same class
only a part of the correlative rights (8 Manresa 194;
NCC. 1207); generic or indeterminate thing - a thing which
refers only to a class or genus to which it pertains
b. Solidary – debtor is answerable for the whole
of the obligation without prejudice to his right to and cannot be pointed out with particularity
collect from his co-debtors the latter’s shares in the accessories - things joined to the principal thing
obligation (NCC. 1207). for its better use, embellishment or completion
8. Susceptibility of partial fulfillment

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accessions - fruits of a thing or anything produced fraud, negligence, contravention
by it, attached or incorporated thereto as an of the tenor thereof (NCC, Art. 1170).
Obligation is
addition or improvement.
not
Fortuitous
Fruits: Effect of extinguished
event
Natural → spontaneous product of soil/animals fortuitous (genus
extinguishes
event nunquam
Industrial → human intervention/labor the obligation.
peruit – genus
(e.g. palay, kambing) never perishes).
Civil → arises from juridical relation
(e.g. rent/loans interest) THE OBLIGATION ARISES UPON …
GR: from the time of the perfection of the
REAL OBLIGATION contracts; creditor has right to fruits (on/after)
Obligations of a debtor in an obligation to EXCEPTION: fulfillment of the condition or arrival
deliver of the term (if obligation is subj. to suspensive
BASIS SPECIFIC GENERIC condition/period) creditor has right to fruits (o/a)
Deliver the
EXCEPTION TO THE EXCEPTION: IN CONTRACT
thing which is
neither of
OF SALE, from the perfection of the contract even if
obligation is subj. to suspensive condition/period
superior nor
Deliver the Rights/Remedies of the creditor in an
What the inferior quality
thing agreed obligation to deliver
obligation if quality and
upon
consists of circumstances SPECIFIC GENERIC
(NCC, Art. 1165)
have not been Specific performance Specific performance
stated by the +D (delivery of anything
parties.
belonging to the same
(NCC, Art. 1246).
to preserve the species) + D
thing with Rescission (action to Ask that (third person)
“proper rescind under NCC, the obligation be
If the object is
diligence of a
generic, but the
Art. 1380). + D complied with at the
GOOD FATHER or debtor’s expense with
source is
Required of a FAMILY” Resolution (action for a right to recover
specified or
diligence to unless the law
delimited, the cancellation under damages
be observed requires or
obligation is to NCC, Art. 1191). + D
parties stipulate
preserve the To hold the obligor Resolution or specific
another
source responsible for any performance, with
standard of
care fortuitous event or if damages in either
(NCC, Art.1163) debtor delays / case (NCC, Art. 1191).
Delivery of promise to deliver to 2
Deliver all another thing or more person
accessions, within the Damages, in both cases (NCC, Art. 1170).
accessories, same genus as
and fruits of the thing NOTE: May be exclusive or in addition to the above-
What delivery the thing even promised if mentioned remedies
comprises of though they such thing is
may not have damaged due NOTE!!! In an obligation to deliver a specific thing, the
been to lack of care creditor has the right to demand preservation of the
mentioned or a general
thing, its accessions, accessories, and the fruits. The
(NCC, Art. 1166). breach is
creditor is entitled to the fruits and interests from the
committed.
time the obligation to deliver the thing arise.
Effect of
Pay damages in case of breach of
breach of
obligation by reason of delay,
obligation
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The creditor has a right to the fruits of the thing from BREACHES OF OBLIGATIONS
the time the obligation to deliver it arises. However,
he shall acquire no real right over it until the same has Degree of diligence required
been delivered to him (NCC, Art. 1164).
1. That agreed upon;
2. In the absence of such, that which is required by
Nature of the right of the creditor with respect
the law;
to fruits
1. Before delivery – Personal right;
GR: Diligence of a good father of a family
2. After delivery – Real right That reasonable diligence which an ordinary
prudent person would have done under the same
PERSONAL RIGHT REAL RIGHT
circumstances.
The right or power of a The right or interest of a
XPNs:
person (creditor) to person over a specific
a. Common carriers requiring extraordinary diligence (NCC,
demand from another thing (i.e. ownership,
Arts. 1998-2002);
(debtor), as a definite possession, mortgage), b. Banks require the highest degree of diligence, being
passive subject, the without a definite imbued with public interest.
fulfillment of the latter’s subject against whom
obligation to give, to do, the right may be
FORMS (VOLUNTARY & INVOLUNTARY)
or not to do. personally enforced.
There is a definite active There is only a definite
Voluntary - Debtor is liable for damages if he is
subject and a definite active subject without guilty of:
passive subject. any passive subject. a. Delay (mora) / default
Binding and enforceable Directed against the b. Fraud (dolo)
only against a particular whole world c. Negligence (culpa)
person.
d. Breach of the tenor of the obligation

PERSONAL OBLIGATION
Involuntary - Debtor is not liable for damages
(unable to perform the obligation due to fortuitous
TO DO (+) NOT TO DO (-)
event).
Obligations To perform the To perform the
of Debtor obligation (ex. To obligation (ex.
sing) Not to sing) Ordinary delay: no breach
Rights of 1. third person 1. what has been Legal delay: ✓ demand
the Creditor to perform the poorly done, be
Delay
Failure to perform an obligation after
obligation @ undone @ demand
debtor’s expense debtor’s expense
+D +D GR: Demand is necessary before debtor incurs
2. what has been 2. to recover
delay. It should be made ON OR AFTER the due
poorly done, be damages
undone + D date.
3. to recover Judicial demand– within the court
damages Extrajudicial – outside the court (written/oral)
*specific performance is not a remedy in + personal Exceptions: (demand is not necessary to incur
obligation (bawal slavery! di mo pwede ipilit) delay)
Circumstances affecting obligations (breach!) 1. The law expressly declares; ex. tax dues
A person in the performance of his obligation will be
2. The obligation itself so stipulates;
liable to pay damages in case he will be guilty of delay,
3. Time is of the essence; ex. bday cake deliver
fraud, negligence or contravention of the tenor of the
4. Demand is useless as when obligor has rendered
obligation.
it beyond his power to perform;
5. When there is performance by a party in bilateral
obligations. (simultaneous dapat)

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3 KINDS OF DELAY present, the
contracting party
1. Mora solvendi - delay on the part of the
would have still
debtor / obligor agreed to the
*Mora solvendi ex re - to give contract.
*Mora solvendi ex persona - to do Effect It renders the It does not affect the
contract voidable. validity of the
2. Mora accipiendi - delay on the part of the contract.
creditor / obligee Remedy Annulment Contract remains
3. Compensatio morae -delay on the part of with damages valid. Remedy is claim
for damages only.
both parties in bilateral obligations
*The mere expiration of the period fixed by the parties is not
enough in order that the debtor may incur in delay. Those Failure to observe diligence, there
obliged to deliver or to do something incur in delay from the is no deliberate intention to cause
Negligence
time the oblige judicially or extra-judicially demands from damage or injury even if the act
them the fulfillment of their obligation. was done voluntarily

refers to dolo incidente, there’s an waive of future negligence = valid (in certain
Fraud intentional evasion of the faithful
cases), liabilities may be mitigated
performance of the obligation
waive of past negligence = valid

1. Dolo causante (causal fraud) – employ fraud at

in good faith = DR responsible for natural and
time of perfection = VOIDABLE “consent”
probable consequences
2. Dolo incidente – (incidental fraud) – at time of
in bad faith = DR responsible for all damages
performance = VALID liable for damages

NOTE: When negligence is so gross that it

Fraud in the Fraud in the
BASIS amounts to wanton attitude on the part of the
perfection performance
Time of It occurs BEFORE or It occurs AFTER debtor or such negligence shows bad faith, the
occurrence simultaneous with the valid execution laws in case of fraud shall apply.
the creation or of the contract. It is
perfection of the employed in the
obligation. performance of a 3 KINDS OF NEGLIGENCE
pre-existing 1. Culpa contractual (contractual negligence) -
obligation.
Consent Consent is vitiated Consent is free and
negligence which results from the breach of
by serious not vitiated. contract.
deception or 2. Culpa criminal (criminal negligence) -
misrepresentation
negligence which results in the commission of a
Effect It is a ground for It is not a ground
annulment of the for annulment of the crime or delict.
contract contract 3. Culpa aquiliana (civil negligence/tort/quasi-
Remedy Action for Action for damages
delict)- fault or negligence of a person, whose
annulment with only.
damages. failure to observe the required diligence to the
waive of future fraud = not valid/void obligation causes damage to another.
waive of past fraud = valid
*In culpa aquiliana, defense of “good father of a
BASIS Dolo Causante Dolo Incidente
Nature This is the essential This is the kind of
family” in the selection and supervision of the
cause of the consent fraud which is not the employees is a proper and complete defense.
without which the efficient cause for the
party would not giving of the consent
have agreed to enter to the contract, as it
into the contract refers merely to an
(NCC, Art. incident therein and,
1338). which even if not
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 An occurrence or happening which Effects of fortuitous events
BREACH OF
could not be foreseen, or even if 1. On determinate obligation – The obligation is
TENOR OF
foreseen, is inevitable (NCC, Art. extinguished.
OBLIGATION
1174).
2. On generic obligation – The obligation is not
extinguished (genus nun quam peruit – genus
GR: There is no liability for loss in case of
never perishes)
fortuitous event.

REMEDIES
Exceptions:
1. When expressly declared by stipulation
PRIMARY:
2. When the nature of the obligation requires the
1. Specific performance plus damages
assumption of risk
2. Rescission or resolution in reciprocal obligation
3. When expressly declared by law, such as:
plus damages
a. When the debtor has incurred delay or is
3. Damages
guilty of fraud, negligence or contravention of the
tenor of the obligation
SUBSIDIARY:
b. When the debtor has promised to deliver the
1. Accion subrogatoria- to be subrogated to all
same thing to 2 or more different persons who do
the rights and actions of the debtor except purely
not have the same interest
personal rights. An action whereby the creditor,
c. When the thing to be delivered is an
whose claim has not been fully satisfied, may go
indeterminate/generic (never perishes)
after the defendant debtor’s debtor (third person)
d. When the obligation to deliver a specific thing
2. Accion pauliana- to impugn all the act which
arises from a crime
the debtor may have done to defraud the creditor
e. When the bailee in commodatum allowed a
(to cancel)
third person to use the thing borrowed
3. Accion directa- the right of the lessor to go
directly against the sublessee for unpaid rents of
Requisites: (CODE)
the lessee
1. Cause of breach is independent of the will of the
debtor; Ex. A umutang kay B ng 1M pesos. (Due date, Nov 1, 2020)
2. The Event is unforeseeable or unavoidable; A has FMV of 1M pesos na lupa. But A donated the land to C
3. Occurrence renders it absolutely impossible for on Oct. 25 = B may impugn this donation para mahabol nya
parin ung 1M thru A’s land.
the debtor to fulfill his obligation in a normal
A may utang kay B and C may utang kay A. Instead of si A
manner - impossibility must be absolute not mangolekta kay C, pwede na si B dumiretso kay C. (Accion
partial, otherwise not force majeure; and subgratoria)
4. Debtor is free from any participation in the
aggravation of the injury to the creditor.

ACTS OF GOD ACTS OF MAN

Fortuitous event Force majeure
Event which is absolutely Event caused by the
independent of human legitimate or illegitimate
intervention acts of persons other than
the obligor
e.g. Earthquakes, storms, e.g. Armed invasion,
floods, epidemics robbery, war