LAW on OBLIGATIONS and CONTRACTS 2023

Article 1156. An obligation is a juridical necessity to

give, to do or not to do. (n)

Article 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.

Article 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.

Article 1159. Obligations arising from contracts have the

force of law between the contracting parties and should
be complied with in good faith.

Article 1160. Obligations derived from quasi-contracts

shall be subject to the provisions of Chapter 1, Title
XVII, of this Book. (n)

Article 1161. Civil obligations arising from criminal

offenses shall be governed by the penal laws, subject to
the provisions of article 2177, and of the pertinent
provisions of Chapter 2, Preliminary Title, on Human
Relations, and of Title XVIII of this Book, regulating
damages.

Article 1162. Obligations derived from quasi-delicts

shall be governed by the provisions of Chapter 2, Title
XVII of this Book, and by special laws.
 CHAPTER 2
Nature and Effect of Obligations
Article 1163. Every person obliged to give something is
also obliged to take care of it with the proper diligence
of a good father of a family, unless the law or the
stipulation of the parties requires another standard of
care.

Article 1164. The creditor has a right to the fruits of

the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it
until the same has been delivered to him.

Article 1165. 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.

If the thing is indeterminate or generic, he may ask that

the obligation be complied with at the expense of the
debtor.

If the obligor delays, or has promised to deliver the

same 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.

Article 1166. The obligation to give a determinate thing

includes that of delivering all its accessions and
accessories, even though they may not have been
mentioned.

Article 1167. If a person obliged to do something fails

to do it, the same shall be executed at his cost.
This same rule shall be observed if he does it in
contravention of the tenor of the obligation.
Furthermore, it may be decreed that what has been poorly
done be undone.

Article 1168. When the obligation consists in not doing,

and the obligor does what has been forbidden him, it
shall also be undone at his expense.

Article 1169. Those obliged to deliver or to do something

incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of
their obligation.

However, the demand by the creditor shall not be

necessary in order that delay may exist:

(1) When the obligation or the law expressly so declare;

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.

In reciprocal obligations, neither party incurs in delay

if the other does not comply or is not ready to 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.

Article 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.
Article 1171. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an action
for future fraud is void.

Article 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.

Article 1173. 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.

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.

Article 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 be foreseen, or which, though foreseen,
were inevitable.

Article 1175. Usurious transactions shall be governed by

special laws. (n)

Article 1176. The receipt of the principal by the

creditor without reservation with respect to the
interest, shall give rise to the presumption that said
interest has been paid.

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.
Article 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 defraud them.

Article 1178. Subject to the laws, all rights acquired

in virtue of an obligation are transmissible, if there
has been no stipulation to the contrary.

CHAPTER 3 Different Kinds of

Obligations

SECTION 1
Pure and Conditional Obligations
Article 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.

Article 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. (n)

Article 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.
Article 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.

Article 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. (1116a)

Article 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. (1

Article 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.

Article 1186. The condition shall be deemed fulfilled

when the obligor voluntarily prevents its fulfillment.

Article 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 prestations 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 interests received, unless from the nature
and circumstances of the obligation it should be inferred
that the intention of the person constituting the same
was different.

In obligations to do and not to do, the courts shall

determine, in each case, the retroactive effect of the
condition that has been complied with.

Article 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.

Article 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 fulfillment, 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. (1122)

Article 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 the 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.

Article 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.

Article 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. (n)