The provisions of Law on Obligations & Contracts is found in The Civil Code of the Philippines (Republic Act 386).

It
was approved as RA 386 on June 18, 1949 and took effect on August 30, 1950.

Book IV of the Civil Code deals with obligations and contracts. The general provisions on OBLIGATIONS are
contained in Title I (Articles 1156 – 1304) while those of CONTRACTS are in Title II (Articles 1305 – 1422). Book IV
also contains provisions dealing with NATURAL OBLIGATIONS which are in Title III (Articles 1423 – 1430).

According to Art. 3, Civil Code “Ignorance of law excuses no one from compliance therewith

According to Art. 1156. An obligation is a juridical necessity to give, to do or not to do.

According to Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and (5) Quasi-delicts
According to Art. 1158. Obligations derived from law are not presumed.
According to Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.
According to Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title
XVII, of this Book.
According to Art. 1161. and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of
Title XVII of this book, regulating damages.
According to 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.
According to 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.
According to 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.
According to Art. 1165. (First Paragraph) 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.
According to Art 1165. (2nd Paragraph) If the thing is indeterminate or generic, he may ask that the obligation be
complied with at the expense of the debtor.
According to Art 1165. (3rd paragraph) 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
According to 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.
According to 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.
According to 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.
According to Art. 1169. (first paragraph) Those obliged to deliver or to do something in-cur in delay from the time
the obligee judicially or extra-judicially demands from them the fulfillment of their obligation.
According to Art. 1169. (second paragraph) 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.

According to Art. 1169. (third paragraph) In reciprocal obligations, neither party incures in delay if the other does
not 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.
According to 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.
According to Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for
future fraud is void.
According to 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.
According to Art. 1173. (First Paragraph) 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.
According to Art. 1173. (2nd paragraph) 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 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 before-seen, or which, though foreseen, were inevitable.
According to Art. 1175. Usurious transactions shall be governed by special laws
According to Art. 1176. (First Paragraph) The receipt of the principal by the creditor, with-out reservation with
respect to the interest, shall give rise to the presumption that said interest has been paid.
According to Art. 1176 (2nd paragraph) The receipt of a later installment of a debt without reservation as to prior
installments, shall likewise raise the presumption that such installments have been paid.
According to Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their
claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are
inherent in his person; they may also impugn the acts which the debtor may have done to de-fraud them.
According to Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has
been no stipulation to the contrary.
According to Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or
upon a past event unknown to the parties, is demandable at once.
Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of
the happening of the event.
According to Art. 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation
shall be deemed to be one with a period, subject to the provisions of Article 1197
According to Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the happening of the event which constitutes the condition.
According to Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall
take effect in conformity with the provisions of this Code
According to Art. 1183. Impossible conditions, those contrary to good customs or public policy and those prohibited
by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is
not affected by the impossible or unlawful condition shall be valid. The condition not to do an impossible thing shall
be considered as not having been agreed upon.
According to Art. 1184. The condition that some event happen at a determinate time shall extinguish the obligation
as soon as the time expires or if it has become indubitable that the event will not take place.
According to Art. 1185. The condition that some event will not happen at a determinate time shall render the
obligation effective from the moment the time indicated has elapsed, or if it has become evident that the event
cannot occur.
If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been
contemplated, bearing in mind the nature of the obligation.
According to Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
According to Art. 1187. The effects of a conditional obligation to give, once the condition has been fulfilled, shall
retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal
prestation upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have
been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interest
received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the
per-son constituting the same was different. In obligations to do and not to do, the courts shall deter-mine, in each
case, the retroactive effect of the condition that has been complied with.
According to Art. 1188. The creditor may, before the fulfillment of the condition, bring the appropriate actions for
the preservation of his right. The debtor may recover what during the same time he has paid by mistake in case of a
suspensive condition.
According Art. 1189. When the conditions have been imposed with the intention of suspending the efficacy of an
obligation to give, the following rules shall be observed in case of the improvement, loss or deterioration of the thing
during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the
thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or
it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the
obligation and its fulfilment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.
According to Art. 1190. When the conditions have for their purpose the extinguishment of an obligation to give, the
parties upon the fulfillment of said conditions, shall return to each other what they have received.
In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are
laid down in the preceding article shall be applied to the party who is bound to return.
As for obligations to do and not to do, the provisions of the second paragraph of Article 1187 shall be observed as
regards the effect of the extinguishment of the obligation.
According to Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he
has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance
with Articles 1385 and 1388 and the Mortgage Law
According to Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first
infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the
contract, the same shall be deemed extinguished, and each shall bear his own damages.
According to Art. 1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only
when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.
A day certain is understood to be that 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.
According to Art. 1194. In case of loss, deterioration or improvement of the thing before the arrival of the day
certain, the rules in Article 1189 shall be observed.
According to Art. 1195. Anything paid or delivered before the arrival of the period, the obligor being unaware of the
period or believing that the obligation has become due and demandable, may be recovered, with the fruits and
interests.
According to Art. 1196. Whenever in an obligation a period is designated, it is presumed to have been established for
the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should
appear that the period has been established in favor of one or of the other.
According to Art. 1197. If the obligation does not fi x a period, but from its nature and the circumstances it can be
inferred that a period was intended, the courts may fi x the duration thereof.
The courts shall also fi x the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.
According to Art. 1198. The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he be-comes insolvent, unless he gives a guaranty or security for
the debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has promised;
(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;
5) When the debtor attempts to abscond
According Art. 1199. A person alternatively bound by different prestations shall completely perform one of them.
The creditor cannot be compelled to receive part of one and part of the other undertaking.
According to Art. 1200. The right of choice belongs to the debtor, unless it has been expressly granted to the
creditor.
The debtor shall have no right to choose those prestations which are impossible, unlawful or which could not have
been the object of the obligation