Disclaimer: This article is for general informational and educational purposes only. It does not constitute legal advice. For specific concerns or questions regarding contracts and obligations, consult a qualified Philippine attorney.

Everything You Need to Know About Article 1159 of the Civil Code of the Philippines

1. Text and Location in the Civil Code

Article 1159 of the Civil Code of the Philippines falls under Book IV (Obligations and Contracts), Title I (Obligations). The text of Article 1159 reads:

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

This provision succinctly expresses the fundamental principle of pacta sunt servanda (“agreements must be kept”): once parties enter into a valid contract, they are bound by its terms just as if these terms were legal provisions.

2. Scope and Coverage

Article 1159 specifically addresses obligations from contracts, meaning it deals only with civil obligations that arise when two or more parties validly agree on something. It does not cover:

Obligations created by law (these are governed by other provisions).
Obligations arising from quasi-delicts, quasi-contracts, or delicts (these are found in different sections of the Civil Code or the Revised Penal Code).

Hence, when Article 1159 refers to obligations, it is focused on contractual obligations that are established by the mutual consent of the parties.

3. “Force of Law” Between the Parties

The phrase “have the force of law between the contracting parties” is critical. It is often paraphrased as: “a contract is the law between the parties.” This reflects two main principles:

Binding Effect: Once the parties have validly executed a contract, they must treat the stipulations as law. In effect, they cannot unilaterally alter it, disregard it, or decide it does not apply.
Autonomy of Contracts (Freedom to Contract): The Civil Code recognizes that parties may enter into any agreement they deem fit, provided it is not contrary to:
- Law
- Morals
- Public policy
- Public order
- Good customs

When the parties have entered into a valid agreement, the courts typically refrain from interfering with that agreement (absent any vitiating circumstances, illegality, or unconscionable terms). The court’s role is generally to interpret and enforce the contract as written.

4. Good Faith Compliance

Article 1159 also highlights that obligations from contracts must be complied with “in good faith.” In Philippine jurisprudence, good faith entails:

Honesty in Performance: Each party must perform its obligations honestly and without intention to defraud or evade.
Observance of Fair Dealing: Parties must not do anything to undermine the contract’s benefits to the other party, nor impose unreasonable conditions or hidden defects in their performance.

Good faith is a broad concept that the courts interpret on a case-by-case basis. It underscores integrity, fairness, and candor in contractual relations.

5. Relation to Other Provisions in the Civil Code

Article 1159 does not exist in isolation; it must be read in light of other provisions on obligations and contracts:

Article 1156: Defines an obligation as a juridical necessity to give, to do, or not to do.
Article 1157: Enumerates the sources of obligations: law, contracts, quasi-contracts, delicts, and quasi-delicts.
Articles 1318 to 1355: Outline the requisites for a valid contract (consent of the contracting parties, object certain, and cause of the obligation).
Article 1306: Expresses the autonomy of contracts, allowing parties to establish stipulations, clauses, terms, and conditions as long as these are not contrary to law, morals, good customs, public order, or public policy.
Article 1165–1178: Delve deeper into the performance, breach, and remedies in case of non-compliance.

Taken together, these provisions build the core legal framework within which Article 1159 operates.

6. Essential Requisites for Valid Contracts (Brief Overview)

Since Article 1159 applies to obligations arising from contracts, the contract itself must be valid. The essential requisites of a valid contract under Philippine law are stated in Article 1318 of the Civil Code:

Consent of the parties.
Object certain which is the subject matter of the contract.
Cause of the obligation which is established.

Only when a contract meets these requisites does Article 1159’s directive to treat contractual obligations “as law” and to observe them “in good faith” become fully binding on the parties.

7. Legal Effects of Violations or Breaches

When one party to a contract fails to comply with its obligations in good faith, the other party or parties may resort to judicial action. Typical remedies include:

Specific Performance: The court can compel the breaching party to fulfill its obligations according to the contract’s terms.
Rescission or Resolution: In some circumstances, a court may order the rescission (cancellation) of the contract and return the parties to their original positions prior to the agreement.
Damages: The innocent party may claim damages for losses sustained due to non-performance or misperformance by the breaching party.

Because Article 1159 gives the contract the “force of law,” courts generally base judgments on what the contract stipulates, unless those stipulations run afoul of mandatory laws or public policy.

8. Jurisprudence and Illustrative Cases

Philippine Supreme Court decisions frequently cite Article 1159, reaffirming that contractual obligations must be performed:

In accordance with the literal meaning of the contract’s stipulations if they are clear and leave no doubt as to the parties’ intention. (Article 1370)
In line with the parties’ intent if the wording is ambiguous, resorting to the rules of contract interpretation set out in Articles 1370 to 1379.
In good faith, without ulterior or malicious intent to renege, evade, or act oppressively.

Over time, the Supreme Court has applied Article 1159 in various contexts—lease contracts, loan agreements, employment contracts, construction contracts, joint ventures, etc. In each instance, the guiding principle is that the contract’s provisions bind the parties and should be executed faithfully unless such provisions are declared void or unlawful.

9. Significance in Philippine Contract Law

Article 1159 serves as one of the cornerstones of Philippine contract law by crystallizing the idea that valid agreements will be respected and enforced. Key reasons for its importance:

Predictability and Stability: Without this principle, contracts would be uncertain, and business dealings would suffer. Parties rely on Article 1159 to ensure that their agreements are not arbitrarily breached.
Legal Security: It reassures parties that their investments, responsibilities, and expectations are anchored in law.
Promotion of Ethical Dealings: The emphasis on good faith ensures an ethical dimension in fulfilling contractual duties.

10. Practical Tips for Contracting Parties

Draft Contracts Clearly: Use precise language to avoid ambiguity. Courts will first look at the plain meaning of the contract’s terms.
Confirm Essential Requisites: Ensure you have valid consent, a lawful object, and a valid cause.
Document Agreements: Put important terms in writing and keep records; written evidence greatly assists in enforcing obligations.
Comply in Good Faith: Act honestly and perform contract duties to the best of your ability. Avoid deceptive or manipulative behaviors.
Seek Legal Counsel: For complex or high-value contracts, consult a lawyer for drafting, review, or negotiation to ensure compliance with Article 1159 and other relevant laws.

Conclusion

Article 1159 of the Civil Code of the Philippines underpins the entire structure of obligations arising from contracts by declaring that such obligations “have the force of law” and must be complied with in good faith. This principle safeguards the sanctity of contracts, ensuring predictability and fairness in commercial and personal transactions alike.

When parties voluntarily consent to a valid agreement, Philippine law respects their autonomy and enforces their obligations as though they were legal mandates. By adhering to the requirements of good faith, clarity, and legality, contracting parties can rest assured that the courts will protect their rights and uphold the integrity of their agreements.