LAW is a rule of conduct or a system of uniformity.
Law on obligations and contracts is the body of
Divisions of Law:
1. Law in the strict legal sense – those promulgated
and enforced by the state.
2. Law in a non-legal sense – those that are not
promulgated and enforced by the state.
 Divine Law - comprises anybody of law that
is perceived as deriving from a transcendent
source, such as the will of God or gods.
 Natural Law - is a theory in ethics and
philosophy that says that human beings
possess intrinsic values that govern our
reasoning and behavior. 
 Moral Law - is nothing other than rational
will -- the will which is entirely "devoted"
to, or guided by impartiality and universality
of reason.
 Physical Law - a theoretical principle
deduced from particular facts, applicable to
a defined group or class of phenomena, and
expressible by the statement that a particular
phenomenon always occurs if certain
conditions be present.
State Law – a rule of conduct, just, obligatory,
promulgated by legitimate authority, and of
common observance and benefit.
Characteristics of Law:
1. It is a rule of conduct
2. It is obligatory
3. It is promulgated by legitimate authority
4. It is of common observance and benefit.
Sources of Law:
1. Constitution
2. Legislation
3. Administrative /Executive Order
4. Judicial decisions or jurisprudence
5. Custom
rules which deals with the nature and sources of
obligations and the rights and duties arising from
agreements and the particular contracts.
Article 1156. Obligation is a juridical necessity to
give, to do, or not to do.
Why “juridical necessity”?
because in case of non-compliance, the courts of
law may be called upon by the aggrieved party to
enforce its fulfillment, or in default thereof, the
economic value that it represents.
Kinds of Obligation according to subject matter:
Real Obligation - TO GIVE
Positive Obligation (TO DO OR NOT TO DO)
• positive personal obligation – to do or to
render service
• negative personal obligation - not to do
(includes, not to give)
Essential Requisites of an Obligation:
Passive subject (debtor or obligor) - the person
who is bound to the fulfillment of the obligation; he
who has the duty
Active subject (creditor or obligee) - the person
who is entitled to demand the fulfillment of the
obligation; he who has the right.
Object or prestation (subject matter of the
obligation) - the conduct required to be observed
(giving, doing, not doing)
Juridical or legal tie (efficient cause or vinculum
juris) - tie that binds or connects the parties to the
obligation.
Article 1157. Sources of Obligations
LAW - when they are imposed by law itself.
 Obligations derived from law cannot be
presumed. (Article 1158)
CONTRACTS -- when they arise from stipulation
of the parties.
 Contract is defined in Article 1305
  have the force of law and must be complied
with in good faith. (Article 1159)
QUASI-CONTRACTS - when they arise from
lawful, voluntary and unilateral acts which are
enforceable to the end that no one shall be unjustly
enriched or benefited at the expense of another.
(Article 2124)
2 KINDS:
Negotiorum Gestio – voluntary management of the
property or affairs of another without the knowledge
and consent of the latter.
Solutio Indebiti – juridical relation which is created
when something is received when there is no right
to demand it or if it was delivered through mistake.
DELICT (crimes) – when they arise from civil
liability which is the consequence of a criminal
offense.
 Art. 100 (RPC). Every person criminally
liable for an act or omission is also civilly
liable for damages.
QUASI-DELICT (tort) – when they arise from
damages caused to another through an act or
omission, there being fault or negligence, but no
contractual relation exists between the parties.
 also known as Culpa Aquiliana (vs. culpa
criminal and culpa contractual)
Nature and Effects of Obligations:
Duties of the debtor in an obligation to give specific
or generic thing
 A thing is specific if it is particularly
designated or physically segregated from the
other things of the same class.
 A thing is generic if it belongs to a genus or
class and cannot be pointed out with
particularity.
Duties of the debtor in an obligation to give a
specific or determinate thing:
1. To preserve the thing. (Art. 1163) - ordinary
care: diligence of a good father of a family
2. To deliver the fruits of the thing. (Art. 1164)
3. To Deliver the accessions and accessories.
(Art. 1166)
Accessions – fruits of the things or additions to or
improvements upon a thing (principal)
Accessories – things joined to or included with the
principal thing for the latter’s embellishment, better
use, or completion.
4. To Deliver the thing itself. (Art. 1163)
5. To answer for damages in case of non-
fulfillment or breach. (Art. 1170)
Why the need to preserve the thing and to deliver
the thing?
Because if the thing to be delivered is a specific or
determinate thing, it is not capable of substitution or
replacement.
Duties of the debtor in an obligation to deliver a
generic or indeterminate thing:
to deliver a thing of the same quality as intended by
the parties
Why of the same or similar quality only?
because the thing or object to be delivered is
capable of substitution or replacement, it being
generic.
Article 1170. Grounds for Damages
1. FRAUD (deceit or dolo)
 it is the deliberate or intentional evasion of
the normal fulfillment of the obligation.
 as a ground for damages, there must be
malice or dishonesty.
 Art. 1170 refers to incidental fraud (dolo
incidente) vs. causal fraud (dolo causante) in
Art. 1338 which vitiates consent.
 Responsibility arising from fraud is
demandable in all obligations. (Art. 1172)
 waiver of future fraud is void. (Id.)
 2. NEGLIGENCE (culpa)
 Any voluntary act or omission, there being
no bad faith or malice, which prevents the
normal fulfillment of the obligation.
 In negligence, there is no deliberate
intention to cause damage or injury
 Responsibility arising from negligence in the
performance of every obligation is
demandable, but liability may be reduced by
the courts. (Art. 1172)
Kinds of Negligence:
1. Contractual negligence (culpa contractual)
- breach of contract and professional
negligence. 
2. Civil negligence (culpa aquiliana)
- occurs when a person fails to exercise
ordinary care, sometimes referred to as “due
diligence”.
3. Criminal Negligence (culpa criminal)
- is conduct where a person ignores an
obvious risk or disregards the life and safety
of those around him.  delivery.
Waiver of future action arising from negligence is
valid.
3. DELAY (mora) – Art. 1169
3 Kinds of Delay:
1. Mora Solvendi - debtor
2. Mora Accipiendi - creditor
3. Compensatio Morae – both parties
General Rule: Delay begins only from the time
demand (judicial or extra-judicial) is made.
(There is no (legal) delay when there is no demand)
Exceptions to the General Rule that there is no
delay when there is no demand (Meaning: demand
is not necessary to put the debtor in delay):
1. When the obligation so provides
2. When the law so provides
3. When time is of the essence
4. When demand would be useless
5. When there is performance by a party in
reciprocal obligations
4. CONTRAVENTION OF THE TENOR
(terms)
 refers to the violation of the terms and
conditions stipulated in the agreement.
 the contravention must not be due to
fortuitous event.
Remedies of Creditor:
 In real obligation (to give) (Art. 1165)
"ART 1165: When what is to be delivered is
a determinate (specific) thing, the creditor,
in addition to the right granted him by Art
1170, may compel the debtor to make the
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 fortuitous event
until he has effected the delivery." 
 In positive personal obligation (to do) (Art.
1167)
"ART. 1167: If a person obliged to do
someting 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 1170 (F, N, D, C) - damages

The article contemplates three situations: - Article 1165, 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
1. The debtor fails to perform an obligation to
be responsible for any fortuitous event until effected
do
of the delivery.
2. The debtor performs an obligation to do but
contrary to the terms thereof - the obligation to deliver arises from a crime
3. The debtor performs an obligation to do but - the thing to be delivered is generic.
in a poor manner.
2. When declared by stipulation.(principle of
The debtor fails to comply with his obligation, the
freedom of contract)
creditor has the right:
1. To have the obligation done at the debtor's 3. When the nature of the obligation requires the
expense assumption of risk.
2. To recover damages
In case the obligation is poorly done, it may be
ordered to be undone if it is still possible to undo
what was done.

 In negative personal obligation (not to do)

(Art. 1168)
"ART. 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."
The remedy is the undoing of the forbidden thing
plus damages.

FORTUITOUS EVENT (Art. 1174)

 Any event which could not be foreseen or
which, though foreseen, is inevitable.
 An event which is either impossible to
foresee or impossible to avoid.
 Either be acts of man or acts of God (force
majeure)
Rules as to liability in case of fortuitous event:
General rule: If a thing is lost or destroyed due to
fortuitous event, the obligation is extinguished; the
debtor is not liable.
Exceptions:
1. When expressly specified by law