REPUBLIC ACT NO.

386
Civil Code of the Philippines
- Obligations and Contracts

CE356 – CE Laws, Ethics and Contracts

REPUBLIC ACT NO. 386
Civil Code of the Philippines

Book I – Persons and Family relations

Book II – Property, Ownership, and its Modifications
Book III – Modes of Acquiring Ownership
Book IV – Obligations and Contracts
Book V - Torts and Damages
• Enacted - June 18, 1949
• Signed - June 18, 1949
• Effective - August 30, 1950
Part I: Obligation

A. Elements of Obligation
B. Sources of Obligation
C. Effects of Obligation
D. Kinds of Obligation
E. Extinguishment of Obligation
OBLIGATION
• An obligation is a juridical necessity to give, to
do or not to do. [Civil Code, Article 1156]
• This definition specifically pertains to civil
obligation in difference to natural obligation.
• A natural obligation is an obligation that has
no legal basis and hence does not give a right
of action to enforce its performance. It is
based on equity, morality, and natural law, and
should be voluntary. [Civil Code, Article 1423]
NATURAL OBLIGATION
EXAMPLE:
Suppose someone goes out of their way to help you in a time of
need, perhaps by offering you a place to stay when you were
homeless or providing emotional support during a difficult
period in your life.

Even if there's no legal contract or expectation for you to repay

them, you may feel a natural obligation to express gratitude
and kindness in return. This obligation arises from a sense of
moral duty and appreciation for the kindness shown to you.
A. Elements of Obligation

• An obligation has the following essential elements:

• Parties - the actors involved in an obligation:
– active subject (creditor/obligee) - one who demands the fulfillment
of an obligation.
– passive subject (debtor/obligor) - one who has the duty to fulfill an
obligation.
• Prestation - the conduct to be performed by the passive subject for the
active subject.
• Juridical Tie (efficient cause) - the relation that binds the parties to an
obligation.
 A. Elements of Obligation

Example:
Under a contract of sale, D agreed to deliver a book to C for Php1000.

• Who is the active subject (creditor/obligee)?

• Who is the passive subject (debtor/obligor)?
• What is the prestation?
• What is the Juridical Tie?
 A. Elements of Obligation

From the previous example, suppose D had already delivered the book but C has
not yet paid for it.

• Who is the active subject (creditor/obligee)?

• Who is the passive subject (debtor/obligor)?
• What is the prestation?
• What is the Juridical Tie?
 A. Elements of Obligation

From the previous example, suppose D had already delivered the book but C has
not yet paid for it.
• Who is the active subject (creditor/obligee)?
• Who is the passive subject (debtor/obligor)?
• What is the prestation?
• What is the Juridical Tie?
In this case, D becomes the active subject and C is the passive subject.
The active subject has the right to go to court in case of non-performance by the
passive subject. The passive subject should hence comply with the obligation to
avoid civil action against him.
 B. Sources of Obligation

An obligation can arise

from: [Civil Code, Article 1157]
• Law • Law - when there is an enforcement of law itself;
• Contract the obligation cannot be presumed, and should be
• Quasi - contract expressly or clearly provided for in the law in order
• Delict to demandable; [Civil Code, Article 1158] such as the
• Quasi - delict
obligation of income earning persons to pay taxes
according to the National Internal Revenue Code.
 B. Sources of Obligation

An obligation can arise

from: [Civil Code, Article 1157]
• Law
• Contract • Contract - when there is a meeting of the
• Quasi - contract minds between the parties; the obligation have
• Delict the force of law and should be complied with in
• Quasi - delict good faith;[Civil Code, Article 1158] such as the contract
of sale of a book for Php1000.
 B. Sources of Obligation

An obligation can arise

from: [Civil Code, Article 1157] • Quasi - contract - when there is no meeting of the minds
between parties, but one party benefited at the expense of the other party;
• Law there is an obligation to pay for compensation so that no one shall be
• Contract unjustly enriched or benefited at the expense of another.[Civil Code, Article 2142]
• Quasi - contract • Negotiorum gestio - if one (the officious manager) voluntarily takes
charge of the agency or management of another person's property on
• Delict his behalf without his consent or authority;[Civil Code, Article 2144]such as the
• Quasi - delict obligation to reimburse the expenses incurred by someone who
voluntarily saved your abandoned house from fire.
• Solutio indebiti - if one received something that does not rightfully and
legally belong to him;[Civil Code, Article 2154]such as the obligation to return a
money received by mistake.
 B. Sources of Obligation

An obligation can arise

from: [Civil Code, Article 1157]
• Law
• Delict - when there is a civil liability resulting from criminal offense;
should be governed by the penal laws; [Civil Code, Article 1161] such as the
• Contract obligation of a thief to return the money he had stolen.
• Quasi - contract
• Delict • Quasi - delict - when there is fault or negligence that causes
• Quasi - delict damage on another, there being no prior meeting of the minds between the
parties; there is an obligation to pay for the damage done; [Civil Code, Article 2176]
such as the obligation of a driver to pay for the damages he caused to
another due to negligence.
 C. Effects of Obligation

What is the difference between a determinate thing and

a generic thing?
In the context of law, a determinate thing refers to a specific, identifiable object or
item. It has clear boundaries and can be individually distinguished. It is distinct
from all others and can individually be classified or determined
On the other hand, a generic thing refers to a general category or class of objects
that share common characteristics but may not be individually identifiable. It
means that a thing cannot be specifically determined from things of the same
class. The thing can be replaced by another thing that is of the same quality.
 C. Effects of Obligation

Examples of determinate thing

✓ Romeo's only horse named Alden
✓ Kawasaki Raider with engine number 12345 and plate
number HX1123
✓ Romeo's one and only Rolex 3310 made in China with
serial number 265747.
 C. Effects of Obligation

Examples of generic thing

✓ a horse
✓ a motorcycle
✓ a sack of rice
✓ a car
✓ USD 100, 000.
 C. Effects of Obligation

Identify whether the thing is determinate or generic

1. A specific car with a unique vehicle identification
number (VIN).
2. House in a specific neighborhood
3. A named piece of artwork, such as the Mona Lisa.
4. A specific bank account with a distinct account number.
5. Android phone
 C. Effects of Obligation

The duties of the debtor

- in the delivery of a determinate thing, which is identified by its individuality:
• deliver the thing itself.
• preserve or take care of the thing due 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. [Civil Code, Article 1163]
• deliver the fruits of the thing from the time the obligation to deliver it arises. [Civil Code, Article 1164]
• deliver the accessions and accessories of the thing, even though they may not have been
mentioned. [Civil Code, Article 1166]
- in the delivery of a generic thing, which is identified by its class/type:
• deliver the thing which is neither superior nor inferior quality. [Civil Code, Article 1246]
The debtor is also liable for damages in case of non-performance or breach of obligation by reason
of delay, fraud, negligence or contravention of the tenor. [Civil Code, Article 1170]
 C. Effects of Obligation

The remedies of the creditor

- in case of breach of obligation in the delivery of a determinate thing:
• demand specific performance or fulfillment of the obligation by the debt (if it is still
possible). [Civil Code, Article 1165 par.1]
• demand rescission or cancellation of the obligation (in certain cases). [Civil Code, Article 1380]
- in case of breach of obligation in the delivery of a generic thing:
• demand the delivery of the thing which is neither superior nor inferior quality[Civil Code,
Article 1246] at the expense of the debtor. [Civil Code, Article 1165 par.2] This can be performed by a

third party.
In either case, the creditor has a right to recover damages.[Civil Code, Article 1170]
The other remedies can be demanded in addition to this right.
 D. Kinds of Obligation

The primary classification of obligations

according to the peculiarities of the prestation:
• Pure obligation - performance is not subject to any condition, and can be
immediately demandable. [Civil Code, Article 1179]
• Conditional obligation - performance is subject to a condition, and can only be
demandable upon the happening of an event. [Civil Code, Article 1181]
• Obligation with a period - performance is subject to a period, and can only be
demandable when that period expires. [Civil Code, Article 1193]
 D. Kinds of Obligation

EXAMPLES:
• Pure obligation : D obliges himself to pay C Php1,000.00.
• Conditional obligation: I will pay you Php 10,000.00 if it will not
rain for one year in the Philippines.
• Obligation with a period: I will give you Php 500.00 a month until
the end of the year.
 D. Kinds of Obligation

The primary classification of obligations

according to the number of prestations:
• Simple obligation - there is only one prestation.
• Compound obligation - there are two or more prestations.
– Conjunctive obligation - there are several prestations and all of them can be
performed separately.
– Disjunctive obligation - only one of the several prestations can be
performed. It may be alternative or facultative.
 D. Kinds of Obligation
EXAMPLES:
• Simple obligation: D obliged himself to deliver to C a piano.
• Compound obligation
– Conjunctive obligation: Party A could agree to oil Party B's deck, wax Party
B's car, and wash Party B's windows. These are three separate obligations
which all must be rendered to satisfy the contract. If Party A only oiled the
deck and washed the windows, Party B could enforce the contract to
demand that the car be waxed because it is a conjunctive obligation.
– Disjunctive obligation: Party A could agree to oil the deck, wax the car, or
wash the windows. Fulfilling any one of these obligations would satisfy the
contract because Party A is only required to perform one of the duties listed
in the contract.
 D. Kinds of Obligation

The primary classification of obligations

according to the number of parties:
• Individual obligation - there is one debtor and one creditor.
• Collective obligation - there are two or more debtors and two or more creditors.
– Joint obligation - the prestation is divided among each debtor and/or the
demand for it is divided among each creditor.[Civil Code, Article 1208]
– Solidary obligation - the prestation may be performed by any one of the
debtors, and/or its entire compliance may be demanded by any one of the
creditors. [Civil Code, Article 1207]
 D. Kinds of Obligation

EXAMPLES:
• Collective obligation
– Joint obligation: A, B, and C borrowed Php 9,000 from D.
The presumption is that A, B, and C are jointly liable. There are three (3)
debts and one (1) credit. D can demand only Php 3,000 each from A, B,
and C or a total of Php 9,000.
– Solidary obligation: A and B are solidary debtors of C in the amount of Php 10,000.
There is only one (1) debt, the debt of A and B in the amount of Php 10,000
and one (1) credit, the credit of C in the amount of Php 10,000 against A and
 D. Kinds of Obligation

The primary classification of obligations

according to divisibility/indivisibility of the prestation:
• Divisible obligation - the prestation can be partially performed.
• Indivisible obligation - the prestation cannot be partially performed.[Civil Code, Article 1125]
according to the value of the prestation:
• Principal obligation - the main/principal prestation that is essential and from which the
accessory obligation/s arise.
• Accessory obligation - the secondary/accessory prestation that should be performed in
connection with the primary obligation.
• Obligation with a penal clause - the accessory prestation imposes a penalty that shall
substitute the indemnity for damages and the payment of interests in case of
noncompliance to the principal prestation.[Civil Code, Article 1226]
 D. Kinds of Obligation

The secondary classification of obligations

according to the involvement of the parties:
• Unilateral obligation - only one party is bound to perform a prestation.
• Bilateral obligation - both parties are bound to each other in performing their
respective prestations.
– Reciprocal obligation - one party is bound to perform a prestation in exchange
for the other party's performance.[Civil Code, Article 1380]
 D. Kinds of Obligation

The secondary classification of obligations

according to the nature of the obligation:
• Civil obligation - has legal basis; give a right of action to compel its performance.[Civil Code,
Article 1423]

– Legal obligation - arises from laws[Civil Code, Article 1158]

– Conventional obligation - arises from contracts with the force of the law.[Civil Code, Article
1159]

– Penal obligation - arises from delicts and criminal offences.[Civil Code, Article 1161] (not to be
confused with the 'obligation with a penal clause' which is an accessory obligation)
• Natural obligation - has no legal basis; does not give a right of action to enforce its
performance but is based on equity and natural law, and should be voluntary.[Civil Code, Article
1423]
 D. Kinds of Obligation

The secondary classification of obligations

according to the nature of the prestation:
• Personal obligation - the prestation is to do or not to do an act:
– Positive obligation - to do an act
– Negative obligation - not to do an act
• Real obligation - the prestations is to give or deliver a thing:
– Determinate obligation - to deliver a determinate thing.
– Generic obligation - to deliver a generic thing.
– Limited generic obligation - to deliver a thing confined to a particular class/kind.

Obligations may have multiple classifications, but not with contradictory characteristics.
 E. Extinguishment of Obligation

An obligation can be extinguished by:[Civil Code, Article 1231]

• payment or performance - the delivery of a thing, or the doing of an act or not doing of an
act for the fulfillment of an obligation.[Civil Code, Article 1232]
• the loss of the thing due - the determinate thing is lost or destroyed without the fault of the
debtor, and before he has incurred in delay.[Civil Code, Article 1262]
• the condonation or remission of the debt - the gratuitous renunciation by the creditor of his
right against the debtor with the latter's acceptance.[Civil Code, Article 1270]
• the confusion or merger of the rights of creditor and debtor - the characters of creditor and
debtor are merged in the same person.[Civil Code, Article 1275]
• compensation - the simultaneous balancing of two obligations wherein two persons are
reciprocally debtors and creditors of each other.[Civil Code, Article 1278, 1279 &1290]
 E. Extinguishment of Obligation

– the confusion or merger of the rights of creditor and debtor

EXAMPLE:
Imagine that Alice owes Bob $1,000, and Bob owes Carol $1,000. However,
neither Alice nor Bob are able to pay their debts to each other, and Carol agrees to forgive
Bob's debt in exchange for Alice paying her directly.
In this situation, the roles of creditor and debtor become confused or merged
because Carol, who was originally a creditor to Bob, now directly receives payment from
Alice, who was originally a debtor to Bob. As a result, the obligation between Alice and
Bob is extinguished because the characters of creditor (Carol) and debtor (Alice) have
effectively merged in the same person. Therefore, Alice no longer owes anything to Bob,
and the debt between them is discharged.
 E. Extinguishment of Obligation

An obligation can be extinguished by:[Civil Code, Article 1231]

• novation - the creation of a new and different obligation through the total or partial
modification of an old obligation that it substituted.[Civil Code, Article 1291 & 1292]
• annulment - the invalidation of a voidable contract by a court action on the grounds of
incapacity to give consent, mistake, violence, intimidation, undue influence, and fraud.[Civil
Code, Article 1390]

• rescission - the revocation, cancellation, or repeal of a contract and the return of the parties
to the positions they would have had if the contract had not been made.[Civil Code, Article 1380]
• fulfillment of resolutory condition. [Civil Code, Article 1271]
• prescription - the loss of certain rights upon the lapse of time.[Civil Code, Article 1106 par.2]
 E. Extinguishment of Obligation

– rescission
EXAMPLE:
Imagine that Alice enters into a lease agreement with Bob to rent an apartment
for one year. However, shortly after moving in, Alice discovers that the apartment has
serious structural issues that make it uninhabitable, such as a leaking roof and mold
infestation. Alice notifies Bob of these issues and requests that he fix them promptly.

After Bob fails to address the problems despite repeated requests, Alice decides
to rescind the lease agreement and move out of the apartment. She notifies Bob in
writing of her intention to rescind the contract due to his failure to provide a habitable
dwelling as promised.
 E. Extinguishment of Obligation

– rescission
EXAMPLE:

In this situation, rescission occurs when Alice cancels the lease agreement due to Bob's
breach of the implied warranty of habitability. Both parties are returned to their original
positions as if the lease had never been made. Alice vacates the apartment, and Bob must
refund any rent paid by Alice and cannot enforce the lease agreement against her. The
obligation created by the lease contract is extinguished through rescission.
E. Extinguishment of Obligation

An obligation can be extinguished by:[Civil Code, Article 1231]

In addition, other causes are:
• happening of a fortuitous event.[Civil Code, Article 1174]
• arrival of resolutory period.[Civil Code, Article 1193, par.2]
• impossibility of fulfillment of the obligation.[Civil Code, Article 1266]
• death of a party in case the obligation is purely personal.[Civil Code, Article 1311, par.1 ]
• compromise, by making reciprocal concessions.[Civil Code, Article 2028]
• mutual desistance or withdrawal (mutuo disenso).
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