LAW ON OBLIGATIONS (GENERAL PROVISIONS; NATURE AND EFFECT OF OBLIGATIONS)

Definition of Obligation

 It is a juridical necessity to give, to do or not to do.

 For every right enjoyed by the person, there is a corresponding obligation on the part of
person to respect such right.

Civil Obligations vs. Natural Obligation

 Civil Obligation involves the concept of credit, debt, and responsibility. It is enforceable in
court.
 Natural obligation can be enforced in court; it is directed against a person’s conscience and
is based on equity and natural law.

Requisites of Obligations

1. Prestation – it is a conduct to be observed which includes to give, to do, or not to do.

2. Passive subject (debtor) – one who will perform the prestation.
3. Active subject (creditor) – one who can demand the performance of the prestation.
4. Vinculum juris or juridical tie – refers to the sources of the obligations.

Sources of Obligation

1. Law
 Obligations arising from law are not presumed; only those provided for by law are
demandable.

2. Contracts
 Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.

3. Quasi-contracts
 Certain lawful, unilateral, and voluntary acts give rise to the juridical relation of
quasi contract to the end that no one shall be unjustly enrich or benefited at the
expense of another.

4. Delicts
 Governed by penal laws subject to the provisions of Art. 2177 of NCC, Pertinent
Provisions of Chapter 2, Preliminary Title on Human Relations, and Title XVIII –
Damages.

 Art. 2177 of NCC – Responsibility for fault or negligence under the preceding article
(referring to Art. 2176, Quasi-Delicts) is entirely separate and distinct from civil
liability arising from negligence under the Penal Code. But the plaintiff cannot
recover damages twice for the same act or omission of the defendant.

5. Quasi-delicts
 Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called quasi delict.

Real Obligation vs. Personal Obligation

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 Real Obligation – to give generic or specific thing

o Generic Thing – the thing or property involved is referred to only to its class or
genus.
o Specific Thing – the thing or property involved is particularly designated or physically
segregated from the members of its class.

 Personal obligation – to do or not to do.

Main Obligation in an Obligation to Give (Specific and Generic Thing)

 Purpose is to transfer ownership or to transfer possession or right.

Included in the Obligation to Give Specific Thing

 Take care of the thing with a diligence of a good father of a family.

 Delivery of accession and accessories.
 Delivery of the fruits from the moment the obligation arises.

Diligence of Good Father of a Family (Standard Care)

 Sometimes called a reasonable man or a man of ordinary diligence or prudence.

 To determine diligence which must be required of all persons, basis is the abstract average
standard corresponding to a normal orderly person.
 Exception:
(1) When the law requires a difference degree of diligence (e.g., common carrier – extra
diligence of good father of family);
(2) stipulations by the parties.

Effects of Failure to Observe Due Diligence

1. The debtor is liable for damages; and

2. The debtor is liable even there is fortuitous event.

Obligation to Deliver Accession and Accessories

 Applies even if not stipulated.

Obligation to Deliver Fruits

 Real right is acquired by the creditor upon delivery; while personal right is acquired by the
creditor from the time the contract is entered by the parties.
 Real right is enforceable against the whole world while personal right is enforceable only to
the debtor.

Principal Remedies in Case of Breach of Obligation to Give

A. Specific Thing

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1. Specific Performance – action to compel the debtor to give or to make delivery.
2. Action to Preserve – creditor may file an action for the preservation of the thing.
3. Action for Damages (Equivalent Performance) – arising from fraud, negligence, delay, or
contravention of the tenor.

B. Generic Thing

1. Specific Performance
 The creditor cannot demand delivery of superior or inferior quality unless the parties
agree on the quality and circumstances.

2. Substitute Performance
 Obligation may be performed at the expense of the debtor.

3. Action for Damages (Equivalent Performance) - arising from fraud, negligence, delay, or
contravention of the tenor.

Obligation To Do and its Remedies

 If the debtor fails to do what is required to do, the activity shall be performed at his
expense.
 If impossible to do by the others, for instance, the activity requires skills and personal
qualifications of the debtor, the creditor may ask for damages instead of performance.

Obligation No to Do and its Remedies

 If the debtor done what should not be done, the activity shall be undone at the debtor’
expense.
 If impossible to undone, the creditor may ask for damages.

Breach of Obligations

 There is breach of obligation if compliance is without identity or integrity.

Modes of Breaching the Obligations

1. Fraud
2. Negligence
3. Delay
4. Contravention of the tenor of the obligations.

Note: Incurrence of any of the modes mentioned, the debtor is liable for damages.

Requisites of Action for Damages

1. There must be a perfected contract; and

2. There must be a breach on the part of the debtor; and
3. There must be damage which the creditor sustained due to the breach.

Other Effects of Breach

 The debtor is liable even there is fortuitous event.

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 The debtor may be liable to pay interest.

Breach Through Delay (Mora)

 Delay refers to the non-fulfillment of the obligation which the time agreed upon or within
the time contemplated by the nature of the obligation.

 Kinds of Delay:
(1) Mora Solvendi – delay on the part of the debtor
(2) Mora Accipiendi – delay on the part of the creditor
(3) Compensation Morae – both parties are in delay (e.g., reciprocal obligation – contract of
sale).

Requisites of Breach Through Delay

1. The obligation is positive – to give or to do (meaning there is no delay in the obligation not
to do;
2. The obligation is demandable and liquidated;
3. The obligator delays for reasons imputable to him;
4. There must be demand whether judicial or extrajudicial and the debtor failed to comply.

When No Demand is Necessary

 When the obligation so declares (agreement of the parties);

 When the law expressly so declares;
 Time is of the essence of the contract;
 When demand would be useless;
 In case of reciprocal obligations, one of the parties failed to comply.

Breach Through Fraud

 Fraud is the deliberate and intentional evasion of the normal fulfillment of the obligation;
this also amounts to bad faith or malice.
 Responsibility airing from fraud is demandable in all obligations.
 Fraud may also be the basis of an independent civil action under Art. 33 of the NCC.
 Any waiver of an action for future fraud is void. Past fraud may be mitigated.

Necessary Elements of Bad Faith or Malice (Fraud)

1. That the actor knew or should have known that a particular course of action is wrong or
illegal; and
2. That despite such actual or imputable knowledge, the actor, voluntarily, consciously and out
of his own free will, proceeds with such course of action.

Breach Through Negligence (Culpa)

 Fault or negligence of the debtor 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.

 Kinds of negligence:
(1) Culpa contractual – negligence in the performance of the contract,

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(2) Culpa Aquiliana – negligence itself is the independent source of obligations.
(3) Culpa Criminal – negligence that results to criminal liability.

Fortuitous Event

 Events which could not be foreseen or which, through foreseen, is inevitable.

 Debtor is not liable.

Requisites of Fortuitous Event

1. The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to
comply with his obligation, must be independent of the human will;
2. It must be impossible to foresee the event which the constitutes the “caso fortuito,” or if it
can be foreseen, it must be impossible to avoid;
3. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation
in a normal manner.
4. The obligor must be free from any participation in the aggravation of the injury resulting to
the creditor.

Debtor is Liable Even in Case of Fortuitous Event

1. Delay
2. Agreement
3. Law
4. Assumption of risk
5. Nature of obligation
6. Liability from Delict (Art. 1268, NCC)
7. Generic thing
8. Debtor is at fault
9. When the debtor promises to deliver the same thing to the different persons not having the
same interest.

Liability to Pay Interest (Other Effect of Breach), Requisites:

1. There is an agreement that the interest shall be earned; and

2. Agreement to pay interest shall be stipulated in writing; and
3. Rate of interest must not be usurious or excessive or unconscionable.

Kinds of Interest

1. Monetary interest – interest in using the money,

2. Compensatory interest – interest in the form of damages.

Presumptions on Principal and Interest

 When the creditor receives the principal without reservation with respect to the interest,
said interest has been paid.
 When the creditor receives installment of a debt without reservation as to prior
installments, such prior installments have been paid.

Legal Interest When to Pay

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 When there is an agreement that interest will be paid but there is no agreement as to the
rate thereof.
 When there is a delay, counted from time of judicial demand.
 When the court decided in favor of the creditor, counted from the time the judgement
become final and executory.
 Interest due shall also earn legal interest from the time it has been judicially or
extrajudicially demanded.

Subsidiary Remedies of the Creditor

1. Accion Subrogatoria
2. Accion Pauliana
3. Accion Directa – NCC allows direct action against the third person (e.g., Action against
sublessee; action against possessor; and action against the substitute of an agent).

Note: The above remedies like principal remedies are mainly judicial in nature.

Requisites of Accion Subrogatoria

1. The creditor has a right of credit against the debtor although at the moment is not
liquidated.
2. The credit must be due and demandable.
3. There must be failure of the debtor to collect from third person whether willfully or through
negligence.
4. The assets in the hands of the debtor are insufficient.
5. The right and actions are not purely personal or inherent in the person of the debtor.

Requisites of Accion Pauliana

1. That the plaintiff asking for rescission, has a credit prior to the alienation, although
demandable later.
2. That the debtor has made a subsequent contract conveying a patrimonial benefit to a third
person.
3. That the creditor has no other legal remedy to satisfy his claim but would benefit by
rescission of the conveyance to the third person.
4. That the act being impugned is fraudulent.
5. That the third person who received the property conveyed, if by onerous title, has been an
accomplice in the fraud.

Transmissible Rights, Exceptions

1. Agreement
2. Law
3. Rights are purely personal.

References:
1. Reviewer in Civil Law, 2018 Edition, Aquino Timoteo B.
2. New Civil Code of the Philippines

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