BOOK IV

OBLIGATIONS AND CONTRACTS

TITLE I — OBLIGATIONS

CHAPTER 1

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 defi nition of

an obligation is adopted from Sanchez Roman’s classic defi nition of

an obligation as “the juridical necessity to comply with a prestation.” 2

Manresa, on the other hand, defi nes it as a “legal relation established

between one person and another, whereby the latter is bound to the

fulfi llment of a prestation which the former may demand of him.’’ 3

It must be observed, however, that obligations may be either

civil or natural. A civil obligation is one which has a binding force in

4

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 defi ned 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

1New provision.

2 4 Sanchez Roman 53.

3 8 Manresa, 5th Ed., Bk. 1, p. 21.

4Art. 1423, Civil Code.

1
 OBLIGATIONS

Art. 1156

the natural law. Thus, when an action has prescribed in accordance

5

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, although the latter is no longer bound to pay

6

the obligation in accordance with the statute of limitations, he is

still bound to pay in accordance with equity and natural law. It is,
7

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 fulfi llment 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 fi fth requisite. As a general rule, however, it cannot be

considered as essential. Obligations arising from law, quasi-con-

tracts, acts or omissions punished by law, and quasi-delicts do not

require any form whatsoever, yet there can be no question regard-

5 3 Bouvier’s Law Dictionary, 2394-2395.

Art. 1144, Civil Code.

6

Agoncillo vs. Javier, 38 Phil. 424; Villaroel vs. Estrada, 71 Phil. 40.
7

Art. 1423, Civil Code.

8

Giorgi, Teoria de las Obligaciones, Vol. 1, p. 13; 3 Castan, 7th Ed., p. 20.
9

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 con-

tract 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; in a contract of sale of a piece of land or

10

any interest therein through an agent, the law requires that the
authority of the latter shall be in writing; in a contract of simple
11

loan or mutuum, the law requires that any agreement with respect

to interest shall be expressly stipulated in writing; in a contract of

12

antichresis, the law requires that the amount of the principal and

of the interest shall be specifi ed in writing; in a contract involving

13

a donation of immovable property, the law requires that the dona-

tion 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; in a contract of partnership where immovable property

14

or real rights are contributed to the common fund, the law requires

that the contract shall be in a public instrument to which an inven-

tory of the property or real rights, signed by the partners, must be

attached; in a contract of chattel mortgage, the law requires that

15

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; and in a contract involving
16

the sale or transfer of large cattle, the law requires that the sale or

transfer shall be registered. Non-compliance with such formalities

17

would have the effect of rendering the contract or agreement void or

inexistent.

Classifi cation of Obligations. — The following is the primary

classifi cation 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).

10 Art. 748, Civil Code.

11 Art. 1874, Civil Code.

12 Art. 1956, Civil Code.

13 Art. 2134, Civil Code.

14 Art. 749, Civil Code.

15 Arts. 1771, 1773, Civil Code.

16 Art. 2140, Civil Code.

Sec. 22, Act No. 1147; Art. 1581, Civil Code.

17

3
 OBLIGATIONS

Art. 1156

(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 classifi cations of a secondary char-

acter 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 classifi cation of

obligations according to Sanchez Roman: 25

(1) As to juridical quality:

(a) Natural — when the obligation is in accordance with

natural law.

(b) Civil — when the obligation is in accordance with

positive law.

(c) Mixed — when the obligation is in accordance with

both natural and positive law.

18 Arts. 1158-1162, Civil Code.

19 Arts. 1163-1168, Civil Code.

20 Arts. 1163-1166, Civil Code.

21 Arts. 1167-1168, Civil Code.

22 Arts. 1169-1191, Civil Code.

23 Arts. 1207, 1223, Civil Code.

24 Arts. 1166, 1226, et seq., Civil Code.

25 8 Sanchez Roman 20-40.

4
GENERAL PROVISIONS Art. 1156

2. As to parties:

(a) Unilateral and bilateral — unilateral, where only

one party is bound, and bilateral, where both parties are mu-

tually or reciprocally bound.

(b) Individual and collective — individual, where there

is only one obligor, and collective, where there are several ob-

ligors. 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 specifi c; 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 undertak-

ings. Multiple obligations may be conjunctive, when all of the

undertakings are demandable at the same time, or distribu-

tive, when only one undertaking out of several is demandable.

Distributive obligations, on the other hand, may be alterna-

tive, 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 con-

sists in giving something; personal, when the obligation con-

sists in doing or not doing something.

(e) Possible and impossible — possible, when the ob-

ligation is capable of fulfi llment in nature as well as in law;

impossible, when the obligation is not capable of fulfi llment

either in nature or in law.

(f) Divisible and indivisible — divisible, when the obli-

gation is susceptible of partial performance; indivisible, when

the obligation is not susceptible of partial performance.

5
 OBLIGATIONS

Art. 1157

(g) Principal and accessory — principal, when it is the

main undertaking; accessory, when it is merely an undertaking

to guarantee the fulfi llment 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 happen-

ing or fulfi llment of the condition results in the birth of the

obligation, or resolutory, in which case the happening or ful-

fi llment of the condition results in the extinguishment of the

obligation.

(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

the term.

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) malefi cio;

and (4) quasi-malefi cio. These sources are preserved in the Civil
27

Code with the addition of law or lege. The addition of lege as an

28

independent source of obligations, however, has been criticized as

theoretically erroneous. Thus, according to the Supreme Court:

26 Art. 1089, Spanish Civil Code, in amended form.

27 8 Manresa, 5th Ed., Bk. 1, p. 35.

28 Art. 1157, Civil Code.

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 classifi cation 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

implied contracts.’’ 29

Art. 1158. Obligations derived from law are not pre-

sumed. 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.

29

30 Art. 1090, Spanish Civil Code.

31 Art. 1158, Civil Code.

7
 OBLIGATIONS

Art. 1159

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. Thus, if A loses a certain amount to B in a game of chance,

32

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 quasi-

delict, but the law itself. The same can also be said with regard to
33

the obligation of the spouses to support each other, the obligations

34

of employers under the Labor Code, the obligations of the owners of

35

the dominant and servient estates in legal easements, and others

36

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 fulfi llment 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. These contracts are commonly called consensual

39

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 [1993]) There are certain

32 8 Manresa, 5th Ed., Bk. 1, p. 48.

Leung Ben vs. O’Brien, 38 Phil. 182.

33

34 Art. 291, Civil Code; Pelayo vs. Lauron, 12 Phil. 453.

35 Bautista vs. Borromeo, 35 SCRA 119.

36 Arts. 634, 687, Civil Code.

37 Art. 1091, Spanish Civil Code, in modifi ed form.

38 Art. 1305, Civil Code.

39 Art. 1315, Civil Code.

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. Whether the contract is consensual or real,

40

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. Good faith must, therefore, be observed to prevent

41

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 benefi ts 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
applicable. 42

Art. 1160. Obligations derived from quasi-contracts

shall be subject to the provisions of Chapter 1, Title XVII, of

this Book. 43

Obligations Arising from Quasi-Contracts. — Quasi-

contracts are those juridical relations arising from lawful, voluntary

40 Art. 1316, Civil Code.

41 Art. 1306, Civil Code.

42 Art. 1305, et seq., Civil Code.

43 New provision.

9
 OBLIGATIONS

Art. 1161

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 benefi ted at the expense of another. The most important

44

of these juridical relations which are recognized and regulated

by the Civil Code are negotiorum gestio and solutio indebiti.

45 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. In this type of quasi-contract, once the gestor or offi cious
47

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, exercising such
48

rights and complying with such obligations as provided for in the

Code. Solutio indebiti, on the other hand, is the juridical relation

49

which arises whenever a person unduly delivers a thing through

mistake to another who has no right to demand it. In this type of

50

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 signifi cantly

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,

44 Art. 2142, Civil Code.

45 Art. 2144, Civil Code.

46 Art. 2154, Civil Code.

47 Art. 2144, Civil Code.

48 Ibid.

49 Arts. 2144-2152, Civil Code.

50 Art. 2154, Civil Code.

51 Ibid.

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. This principle
53

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 fi rst 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

itself.

Please note, however, that there are offenses and special crimes

without civil liability. Examples are crimes of treason, rebellion,

illegal possession of fi rearm and gambling. But a person who is not

criminally liable may still be civilly liable.

Idem; Enforcement of civil liability. — In general and

prior to the Revised Rules of Criminal Procedure 2000, the following

rules are observed in the enforcement or prosecution of civil liability

arising from criminal offenses:

(1) Institution of criminal and civil actions. — When a

criminal action is instituted, the civil action for recovery of civil

liability arising from the offense charged is impliedly instituted with

the criminal action, unless the offended party (i) expressly waives

the civil action, or (ii) reserves his right to institute it separately, or

(iii) institutes the civil action prior to the criminal action.

(2) Independent civil action. — In the cases provided in

Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines,

an independent civil action entirely separate and distinct from the

criminal action, may be brought by the injured party during the

pendency of the criminal case, provided the right is reserved. Such

civil action shall proceed independently of the criminal prosecution,

and shall require only a preponderance of evidence.

52 Art. 1092, Spanish Civil Code, in amended form.

53 Art. 100, Revised Penal Code. This rule, however, is subject to the rules stated

in Arts. 101, 102 and 103, Revised Penal Code.

11