THE LAW ON OBLIGATIONS AND CONTRACTS (AE1) REVIEWER
Nature of obligations under the Civil Code
Obligations which give to the creditor or obligee a right under the law to enforce their performance
in courts of justice are known as civil obligations. They are to be distinguished from natural obligations,
which, not being used on positive law but on equity and natural law, do not grant a right of action to enforce
their performance although in case of voluntary fulfillment by the debtor, the latter may not recover what
has been delivered or rendered by reason thereof. (Art. 1423)
Kinds of obligation according to the subject matter
1. Real obligation (obligation to give) is that in which the subject matter is a thing which the obligator must
deliver to the obligee.
2. Personal obligation (obligation to do or not to do) is that in which the subject matter is an act to be done
or not to be done. There are two kinds of personal obligation:
a. Positive personal obligation or obligation to do or to render service. (Art. 1167)
b. Negative personal obligation is obligation not to do (which naturally includes obligations “not to
give”). (Art. 1168)
Sources of obligation
Obligations arise from (Art. 1157):
1. Law – imposed by the law itself
2. Contracts – is a meeting of minds between two or more persons whereby one binds himself, with respect
to the other, to give something or to render some service. (Art. 1305)
3. Quasi-contracts – is that juridical relation resulting from lawful, voluntary, and unilateral acts by virtue
of which the parties become bound to each other to the end that no one will be unjustly enriched or
benefited at the expense of another. (Art. 2142)
4. Crimes or acts or omissions punished by law
5. Quasi-delicts or torts – is an act or omission by a person (tortfeasor) which causes damage to another in
his person, property, or rights giving rise to an obligation to pay for the damage done, there being fault
or negligence but there is no pre-existing contractual relation between the parties. (Art. 2176)
Sources classified
1. Those emanating from law; and
2. Those emanating from private acts which may be further subdivided into:
a. Those arising from licit acts, in the case of contracts and quasi-contacts; and
b. Those arising from illicit acts, which may be either punishable in the case of delicts or crimes, or
not punishable in the case of quasi-delicts or torts.
Actually, there are only two sources: law and contracts, because obligations arising from quasi-contracts,
delicts, and quasi-delicts are really imposed by law.
Kinds of quasi-contracts
1. Negotiorum gestio (unauthorized management) – is the voluntary management of the property or affairs
of another without the knowledge or consent of the latter. (Art. 2144)
2. Solutio indebiti – is the juridical relation which is created when something is received when there is no
right to demand it and it was unduly delivered through mistake. (Art. 2154)
3. Other examples of quasi-contracts – provided in Articles 2164 and 2175 of the Civil Code.
Requisites of quasi-delict
1. There must be an act or omission;
2. There must be fault or negligence;
3. There must be damage caused;
4. There must be a direct relation or connection of cause and effect between the act or omission and the
damage; and
5. There is no pre-existing contractual relation between the parties.
Kinds of delay or default
1. Mora solvendi or the delay on the part of the debtor to fulfill his obligation (to give or to do);
2. Mora accipiendi or the delay on the part of the creditor to accept the performance of the obligation; and
3. Compensatio morae or the delay of the obligors in reciprocal obligations (like in sale), i.e., the delay of
the obligor cancels the delay of the obligee, and vice-versa. The net result is that there is no actionable
default on the part of both parties.
Requisites of delay or default
1. Failure of the debtor to perform his (positive) obligation on the agreed date upon;
2. Demand (not mere reminder or notice) made by the creditor upon the debtor to comply with his
obligation which demand may either be judicial (when complaint is filed in court) or extrajudicial (when
made outside of court, orally or in writing); and
3. Failure of the debtor to comply with such demand.
Fortuitous event
A fortuitous event is any event which cannot be foreseen, or which, though foreseen, is inevitable. It may
either be an act of man or an act of God.
1. Acts of man
2. Acts of God – majeure
Kinds of fortuitous event`
1. Ordinary fortuitous events – common events
2. Extra-ordinary fortuitous events – uncommon events
Requisites of fortuitous event
1. The event must be independent of the human will or at least of the debtor’s will;
2. The event could not be foreseen, or if foreseen, is inevitable;
3. The event must be of such a character as to render it impossible for the debtor to comply with his
obligation in a normal manner; and
4. The debtor must be free from any participation in, or the aggravation of, the injury to the creditor, that is,
there is no noncurrent negligence on his part.
Pure obligation and conditional obligation
A pure obligation is one which is not subject to any condition and no specific date is mentioned for its
fulfillment and is, therefore, immediately demandable.
A conditional obligation is one whose consequences are subject in one way or another to the fulfillment of a
condition.
Two principal kinds of condition
1. Suspensive condition (condition precedent or condition antecedent) or one the fulfillment of which will
give rise to an obligation (or right). In other words, the demandability of the obligation is suspended
until the happening of the uncertain event which constitutes the condition
2. Resolutory condition (condition subsequent) or one the fulfillment of which will extinguish an obligation
(or right) already existing.
Kinds of obligation according to the person obliged
1. Unilateral – when only one party is obliged to comply with a prestation.
2. Bilateral – when both parties are mutually bound to each other. In other words, both parties are debtors
and creditors of each other. Bilateral obligations may be reciprocal or non-reciprocal.
a. Reciprocal obligations are those which arise from the same cause and in which each party is a
debtor and creditor of the other, such that the performance of one is designed to be the equivalent
and the condition for the performance of the other of his own obligation.
b. Non-reciprocal obligations are those which do not impose simultaneous and correlative
performance on both parties. In other words, the performance of one party is not dependent upon
the simultaneous performance by the other of his own obligation.
Period and condition distinguished
1. As to fulfillment – a period is a certain event in which must happen sooner or later at a date known
beforehand, or at a time which cannot be determined, while condition is an uncertain event;
2. As to time – a period refers only to the future, while a condition may refer also to a past event unknown
to the parties;
3. As to influence on the obligation – a period merely fixes the time for the efficaciousness of the
obligation. If suspensive, it cannot prevent the birth of the obligation in due time; if resolutory, it does
not invalidate the fact that the obligation existed. On the other hand, a condition causes either to arise or
to cease;
4. As to effect, when left to debtor’s will – a period which depends upon the will of the debtor empowers
the court to fix the duration thereof, while a condition which depends upon the sole will of the debtor
invalidates the obligation (Art. 1182); and
5. As to retroactivity of effects – unless there is an agreement to the contrary, the arrival of a period does
not have any retroactive effect, while the happening of a condition has retroactive effect.
Kinds of period or term
1. According to effect:
a. Suspensive period (ex die) – the obligation begins only from a day certain upon the arrival of
period; and
b. Resolutory period (in diem) – the obligation is valid up to a day certain and terminates upon
arrival of the period.
2. According to source:
a. Legal period – when it is provided for by laws;
b. Conventional or voluntary period – when it is agreed to by the parties (Art. 1196); and
c. Judicial period – when it is fixed by the court. (Art. 1197)
3. According to definiteness:
a. Definite period – when it is fixed or it is known when it will come (Art. 1193); and
b. Indefinite period – when it is not fixed or it is not known when it will come. Where the period is
not fixed but a period is intended, the courts are usually empowered by law to fix the same. (Art.
1197)
ART. 1156. An obligation is a juridical necessity to give, to do or not to do. (n)
ART. 1157. Obligations arise from:
1. Law;
2. Contracts;
3. Quasi-contracts;
4. Acts or omissions punished by law; and
5. Quasi-delicts. (1089a)
ART. 1158. Obligations derived from law are not presumed. Only those expressly determined in the
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. (1090)
ART. 1159. Obligations arising from contracts have the force of law between the contracting parties
should be complied with a good faith. (1091a)
ART. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1,
Title XVII of this book. (n)
ART. 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 XVII of this Book, regulating damages. (1092a)
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. (1093a)
