Unformatted text preview: BOOK IV
OBLIGATIONS AND CONTRACTS
TITLE I — OBLIGATIONS
GENERAL PROVISIONS Article 1156. An obligation is a juridical necessity to
give, to do or not to do.1
Concept of Obligations. — Evidently, the above definition of
an obligation is adopted from Sanchez Roman’s classic definition of
an obligation as “the juridical necessity to comply with a prestation.”2
Manresa, on the other hand, defines it as a “legal relation established
between one person and another, whereby the latter is bound to the
fulfillment of a prestation which the former may demand of him.’’3
It must be observed, however, that obligations may be either
civil or natural.4 A civil obligation is one which has a binding force in
law, and which gives to the obligee or creditor the right of enforcing it
against the obligor or debtor in a court of justice. This is the obligation
which is defined in Art. 1156 of the Code. A natural obligation, on
the other hand, is one which cannot be enforced by action, but which
is binding on the party who makes it in conscience and according to New provision.
4 Sanchez Roman 53.
8 Manresa, 5th Ed., Bk. 1, p. 21.
Art. 1423, Civil Code.
2 1 Art. 1156 OBLIGATIONS the natural law.5 Thus, when an action has prescribed in accordance
with the statute of limitations, a natural obligation still subsists,
although the civil obligation is extinguished. This may be illustrated
by the following example: If A has a right of action, evidenced by
a promissory note, to collect one thousand pesos from B, and such
promissory note prescribes after the expiration of ten years from
the time it accrues,6 although the latter is no longer bound to pay
the obligation in accordance with the statute of limitations, he is
still bound to pay in accordance with equity and natural law.7 It is,
therefore, clear that a civil obligation and a natural obligation may
be distinguished from each other as follows:
(1) A civil obligation is based on positive law, while a natural
obligation is based on equity and natural law; and
(2) The former is enforceable in courts of justice, while the
latter is not.8
Requisites of Obligations. — An obligation has four essential
requisites. They are:
(1) A juridical or legal tie, which binds the parties to the
obligation, and which may arise from either bilateral or unilateral
acts of persons;
(2) An active subject known as the obligee or creditor, who
can demand the fulfillment of the obligation;
(3) A passive subject known as the obligor or debtor, against
whom the obligation is juridically demandable; and
(4) The fact, prestation or service which constitutes the object
of the obligation.9
The form in which the obligation is manifested is sometimes
added as a fifth requisite. As a general rule, however, it cannot be
considered as essential. Obligations arising from law, quasi-contracts, acts or omissions punished by law, and quasi-delicts do not
require any form whatsoever, yet there can be no question regard- 3 Bouvier’s Law Dictionary, 2394-2395.
Art. 1144, Civil Code.
Agoncillo vs. Javier, 38 Phil. 424; Villaroel vs. Estrada, 71 Phil. 40.
Art. 1423, Civil Code.
Giorgi, Teoria de las Obligaciones, Vol. 1, p. 13; 3 Castan, 7th Ed., p. 20.
6 2 GENERAL PROVISIONS Art. 1156 ing their validity or binding force. It is only in obligations arising
from certain contracts that it becomes essential. Thus, in a contract involving a donation of personal property whose value exceeds
P5,000.00, the law requires that the donation and the acceptance
shall be made in writing;10 in a contract of sale of a piece of land or
any interest therein through an agent, the law requires that the
authority of the latter shall be in writing;11 in a contract of simple
loan or mutuum, the law requires that any agreement with respect
to interest shall be expressly stipulated in writing;12 in a contract of
antichresis, the law requires that the amount of the principal and
of the interest shall be specified in writing;13 in a contract involving
a donation of immovable property, the law requires that the donation shall be made in a public document, while the acceptance shall
be made either in the same deed of donation or in a separate public
document;14 in a contract of partnership where immovable property
or real rights are contributed to the common fund, the law requires
that the contract shall be in a public instrument to which an inventory of the property or real rights, signed by the partners, must be
attached;15 in a contract of chattel mortgage, the law requires that
the personal property which is the subject matter of the contract
shall be recorded in the Chattel Mortgage Register as a security
for the performance of an obligation;16 and in a contract involving
the sale or transfer of large cattle, the law requires that the sale or
transfer shall be registered.17 Non-compliance with such formalities
would have the effect of rendering the contract or agreement void or
Classification of Obligations. — The following is the primary
classification of obligations under the Civil Code:
(1) Pure and conditional (Arts. 1179-1192). (2) With a period (Arts. 1193-1198). (3) Alternative and facultative (Arts. 1199-1206). Art. 748, Civil Code.
Art. 1874, Civil Code.
Art. 1956, Civil Code.
Art. 2134, Civil Code.
Art. 749, Civil Code.
Arts. 1771, 1773, Civil Code.
Art. 2140, Civil Code.
Sec. 22, Act No. 1147; Art. 1581, Civil Code.
11 3 Art. 1156 OBLIGATIONS (4) Joint and solidary (Arts. 1207-1222). (5) Divisible and indivisible (Arts. 1223-1225). (6) With a penal clause (Arts. 1226-1230). There are, however, other classifications of a secondary character which can be gathered from scattered provisions of the Civil
Code, such as:
(1) Legal, conventional and penal;18 (2) Real and personal;19 (3) Determinate and generic;20 (4) Positive and negative;21 (5) Unilateral and bilateral;22 (6) Individual and collective;23 (7) Accessory and principal.24 The following, on the other hand, is the classification of
obligations according to Sanchez Roman:25
(1) As to juridical quality: (a) Natural — when the obligation is in accordance with
(b) Civil — when the obligation is in accordance with
(c) Mixed — when the obligation is in accordance with
both natural and positive law. Arts. 1158-1162, Civil Code.
Arts. 1163-1168, Civil Code.
Arts. 1163-1166, Civil Code.
Arts. 1167-1168, Civil Code.
Arts. 1169-1191, Civil Code.
Arts. 1207, 1223, Civil Code.
Arts. 1166, 1226, et seq., Civil Code.
8 Sanchez Roman 20-40.
19 4 GENERAL PROVISIONS 2. Art. 1156 As to parties: (a) Unilateral and bilateral — unilateral, where only
one party is bound, and bilateral, where both parties are mutually or reciprocally bound.
(b) Individual and collective — individual, where there
is only one obligor, and collective, where there are several obligors. The latter may be joint, when each obligor is liable only
for his proportionate share of the obligation, or solidary, when
each obligor may be held liable for the entire obligation.
3. As to object: (a) Determinate and generic — determinate, when the
object is specific; generic, when the object is designated by its
class or genus.
(b) Simple and multiple — simple, when there is only
one undertaking; multiple, when there are several undertakings. Multiple obligations may be conjunctive, when all of the
undertakings are demandable at the same time, or distributive, when only one undertaking out of several is demandable.
Distributive obligations, on the other hand, may be alternative, when the obligor is allowed to choose one out of several
obligations which may be due and demandable, or facultative,
when the obligor is allowed to substitute another obligation for
one which is due and demandable.
(c) Positive and negative — positive, when the obligor
is obliged to give or do something; negative, when the obligor
must refrain from giving or doing something.
(d) Real and personal — real, when the obligation consists in giving something; personal, when the obligation consists in doing or not doing something.
(e) Possible and impossible — possible, when the obligation is capable of fulfillment in nature as well as in law;
impossible, when the obligation is not capable of fulfillment
either in nature or in law.
(f) Divisible and indivisible — divisible, when the obligation is susceptible of partial performance; indivisible, when
the obligation is not susceptible of partial performance.
5 Art. 1157 OBLIGATIONS (g) Principal and accessory — principal, when it is the
main undertaking; accessory, when it is merely an undertaking
to guarantee the fulfillment of the principal obligation.
4. As to perfection and extinguishment: (a) Pure — when the obligation is not subject to any
condition or term and is immediately demandable.
(b) Conditional — when the obligation is subject to a
condition which may be suspensive, in which case the happening or fulfillment of the condition results in the birth of the
obligation, or resolutory, in which case the happening or fulfillment of the condition results in the extinguishment of the
(c) With a term or period (a plazo) — when the obligation
is subject to a term or period which may be suspensive or from
a day certain, in which case the obligation is demandable only
upon the expiration of the term, or resolutory or to a day certain,
in which case the obligation terminates upon the expiration of
Art. 1157. Obligations arise from:
1. Law; 2. Contracts; 3. Quasi-contracts; 4. Acts or omissions punished by law; and 5. Quasi-delicts.26 Sources of Obligations. — In Roman law, the sources of
obligations are: (1) contractu; (2) quasi-contractu; (3) maleficio;
and (4) quasi-maleficio.27 These sources are preserved in the Civil
Code with the addition of law or lege.28 The addition of lege as an
independent source of obligations, however, has been criticized as
theoretically erroneous. Thus, according to the Supreme Court: Art. 1089, Spanish Civil Code, in amended form.
8 Manresa, 5th Ed., Bk. 1, p. 35.
Art. 1157, Civil Code.
27 6 GENERAL PROVISIONS Art. 1158 “This enumeration of the sources of obligations supposes that
the quasi-contractual obligation and the obligation imposed by
law are of different types. The learned Italian jurist, Jorge Giorgi,
criticizes this assumption and says that the classification embodied
in the Code is theoretically erroneous. His conclusion is that one
or the other of these categories should have been suppressed and
merged in the other. (Giorgi, Teoria de las Obligaciones, Spanish
Ed., Vol. 5, Arts. 5, 7, 9) The validity of the criticism is, we think,
self-evident and it is of interest to note that the common law makes
no distinction between the two sources of liability. The obligations
which in the Code are indicated as quasi-contracts, as well as those
arising ex lege, are in the common law system merged into the
category of obligations imposed by law, and all are denominated
Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in
special laws are demandable, and shall be regulated by the
precepts of the law which establishes them; and as to what
has not been foreseen, by the provisions of this Book.30
Obligations Arising from Law. — Unlike other obligations,
those derived from law can never be presumed. Consequently, only
those expressly determined in the Civil Code or in special laws are
demandable. These obligations shall be regulated by the precepts
of the law which establishes them, and as to what has not been
foreseen, by the provisions of Book IV of the Civil Code.31
How can we determine whether an obligation arises from
law or from some other source, such as a contract, quasi-contract,
criminal offense or quasi-delict? It must be noted that in the birth or
generation of an obligation, there is always a concurrence between
the law which establishes or recognizes it and an act or condition
upon which the obligation is based or predicated. According to
Manresa, when the law establishes the obligation and the act or
condition upon which it is based is nothing more than a factor for
determining the moment when it becomes demandable, then the law Leung Ben vs. O’Brien, 38 Phil. 182.
Art. 1090, Spanish Civil Code.
Art. 1158, Civil Code.
30 7 Art. 1159 OBLIGATIONS itself is the source of the obligation; however, when the law merely
recognizes or acknowledges the existence of an obligation generated
by an act which may constitute a contract, quasi-contract, criminal
offense or quasi-delict and its only purpose is to regulate such
obligation, then the act itself is the source of the obligation and not
the law.32 Thus, if A loses a certain amount to B in a game of chance,
according to Art. 2014 of the Civil Code, the former may recover his
loss from the latter, with legal interest from the time he paid the
amount lost. It is evident that in this particular case the source of
the obligation of B to refund to A the amount which he had won from
the latter is not a contract, quasi-contract, criminal offense or quasidelict, but the law itself.33 The same can also be said with regard to
the obligation of the spouses to support each other,34 the obligations
of employers under the Labor Code,35 the obligations of the owners of
the dominant and servient estates in legal easements,36 and others
scattered in the Civil Code and in special laws.
Art. 1159. Obligations arising from contracts have the
force of law between the contracting parties and should be
complied with in good faith.37
Obligations Arising from Contracts. — A contract is a
meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.38
As a rule, contracts are perfected by mere consent, and from that
moment the parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all of the consequences
which according to their nature may be in keeping with good faith,
usage and law.39 These contracts are commonly called consensual
contracts. Once the contract is perfected, the valid contract has the
force of law binding the parties to comply therewith in good faith,
where neither one may renege therefrom without the consent of the
other. (Tiu Peck vs. CA 221 SCRA 618 ) There are certain
8 Manresa, 5th Ed., Bk. 1, p. 48.
Leung Ben vs. O’Brien, 38 Phil. 182.
Art. 291, Civil Code; Pelayo vs. Lauron, 12 Phil. 453.
Bautista vs. Borromeo, 35 SCRA 119.
Arts. 634, 687, Civil Code.
Art. 1091, Spanish Civil Code, in modified form.
Art. 1305, Civil Code.
Art. 1315, Civil Code.
33 8 GENERAL PROVISIONS Art. 1160 contracts, however, called real contracts, such as deposit, pledge
and commodatum, which are not perfected until the delivery of the
object of the obligation.40 Whether the contract is consensual or real,
the rule is that from the moment it is perfected, obligations which
may be either reciprocal or unilateral arise. Reciprocal obligations
are those where the parties are mutually or reciprocally obliged to
do or to give something; unilateral obligations, on the other hand,
are those where only one of the parties, the obligor, is obliged to do
or to give something.
Unlike other kinds of obligations, those arising from contracts
are governed primarily by the agreement of the contracting parties.
This is clearly deducible not only from the nature of contracts, but
also from Art. 1169 of the Code which declares that such obligations
have the force of law between the contracting parties and should
be complied with in good faith. “Compliance in good faith’’ means
performance in accordance with the stipulations, clauses, terms
and conditions of the contract. Consequently, the Code recognizes
the right of such contracting parties to establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order or
public policy.41 Good faith must, therefore, be observed to prevent
one party from taking unfair advantage over the other party. In
the case of Royal Lines, Inc. vs. Court of Appeals, 143 SCRA 608
(1986), it was ruled that evasion by a party of legitimate obligations
after receiving the benefits under the contract would constitute
unjust enrichment on his part. However, in default of an agreement,
the rules found in the Civil Code regulating such obligations are
Art. 1160. Obligations derived from quasi-contracts
shall be subject to the provisions of Chapter 1, Title XVII, of
Obligations Arising from Quasi-Contracts. — Quasicontracts are those juridical relations arising from lawful, voluntary
Art. 1316, Civil Code.
Art. 1306, Civil Code.
Art. 1305, et seq., Civil Code.
41 9 Art. 1161 OBLIGATIONS and unilateral acts, by virtue of which the parties become bound
to each other, based on the principle that no one shall be unjustly
enriched or benefited at the expense of another.44 The most important
of these juridical relations which are recognized and regulated
by the Civil Code are negotiorum gestio45 and solutio indebiti.46
Negotiorum gestio is the juridical relation which arises whenever a
person voluntarily takes charge of the agency or management of the
business or property of another without any power or authority from
the latter.47 In this type of quasi-contract, once the gestor or officious
manager has assumed the agency or management of the business or
property, he shall be obliged to continue such agency or management
until the termination of the affair and its incidents,48 exercising such
rights and complying with such obligations as provided for in the
Code.49 Solutio indebiti, on the other hand, is the juridical relation
which arises whenever a person unduly delivers a thing through
mistake to another who has no right to demand it.50 In this type of
quasi-contract, once the delivery has been made, the person to whom
the delivery is unduly made shall have the obligation to return the
property delivered or the money paid.51
The Civil Code provides other instances of quasi-contract.
Examples are those found in Articles 2159, 2164 to 2175.
In the case of Perez vs. Palomar, 2 Phil. 682, it was significantly
noted that in a quasi contract where no express consent is given by
the other party, the consent needed in a contract is provided by law
through presumption (presumptive consent). Presumptive consent
gives rise to multiple juridical relations resulting in obligations for
delivery of the thing and rendering of service.
Art. 1161. Civil obligations arising from offenses shall
be governed by the penal laws, subject to the provisions of
Article 2177, and of the pertinent provisions of Chapter 2, Art. 2142, Civil Code.
Art. 2144, Civil Code.
Art. 2154, Civil Code.
Art. 2144, Civil Code.
Arts. 2144-2152, Civil Code.
Art. 2154, Civil Code.
45 10 GENERAL PROVISIONS Art. 1161 Preliminary Title, on Human Relations, and of Title XVIII of
this Book, regulating damages.52
Obligations Arising from Criminal Offenses. — As a rule,
every person liable for a felony is also civilly liable.53 This principle
is based on the fact that, generally, a crime has a dual aspect — the
criminal aspect and the civil aspect. Although these two aspects are
separate and distinct from each other in the sense that one affects
the social order and the other, private rights, so that the purpose of
the first is to punish or correct the offender, while the purpose of the
second is to repair the damages suffered by the aggrieved party, it
is evident that the basis of the civil liability is the criminal liability
Please note, however, that there are offenses and special crimes
without civil liability. Examples are crimes of treason, rebellion,
illegal possession of firearm and gambling....
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