THE LAW ON OBLIGATIONS

A. LAW GOVERNING OBLIGATIONS IN THE PHILIPPINES IN

GENERAL
Articles 1156 - 1304 of Republic Act No. 386 (The
New Civil Code of the Philippines).
The New Civil Code became effective on August 30,
1950.
The said law did not undergo any changes since
1950.

B. MEANING OF OBLIGATION AND ITS ESSENTIAL ELEMENTS
1. Definition of OBLIGATION
- Latin word obligatio or obligare meaning to tie or to
bind
- A juridical necessity to give, to do or not to do (Article
1156)

2. Significance of the term Juridical Necessity
- It means enforceable in court". It signifies that the
creditor can sue in court if the obligation is not performed
by the debtor.

3. Difference between Civil Obligation and Natural Obligation

CIVIL OBLIGATION
- based on positive law
- the creditor can sue in court if the obligation is not
performed (enforceable in court)

NATURAL OBLIGATION
- based on natural law
- the creditor is not given the right to sue in court if the
obligation is not performed (not enforceable in court)

4. Essential Requisites/Elements of an Obligation (PALO)

a) P-assive Subject
- debtor or obligor (has the duty)
-has the duty/obligation to perform
-party to be sued in case the obligation is not
performed


b) A-ctive Subject
-creditor or obligee (has the right)
- party given by law the right to sue if the obligation
is not performed by the debtor or obligor.

c) L-egal
-also referred to as "juridical tie" or "vinculum juris"
or efficient cause
-it is what should bind or tie the passive subject to
the active subject in the performance of the
obligation
-the source of obligation. It may be derived from
law, contract, quasi-contract, delict or quasi-delict
(Article 1157)

d) O-bject - or prestation is the subject matter of the
obligation
-it can be in the form of obligation to give, obligation
to do or obligation not to do

ILLUSTRATIONS:
An income earner is liable to pay income taxes to the
Government. Here the passive subject is the income
earner o taxpayer whereas the active subject is the
Government. The legal tie is the law and the object
is to pay taxes which is an obligation to give.

A thief is liable to return to his victim the property
which he has stolen from him. In this case, the
passive subject is the thief, the active subject is his
victim, the legal tie is delict or crime and the object
is to return stolen property which is a prestation to
give.

The owner of a public vehicle is liable to bring their
passenger to their places of destination safely. The
passive subject is the owner o the public vehicle and
the active subjects are the passengers. The legal tie
is contract (contract of transportation) while the
object is an obligation to do (to bring passengers to
their places of destination safely).

C. SOURCES OF OBLIGATIONS

1. Law (the principal source of obligations. Most obligations
are derived from law.)
Meaning of Law
-It means, in its generic sense, a body or rules of
action or conduct prescribed by controlling authority,
and having binding legal force or that which must be
obeyed and followed by citizens subject to sanctions or
legal consequences.

- It is a rule of civil conduct prescribed by the supreme
power in the state commanding what is right and
prohibiting what is wrong (Bouviers Law dictionary. Vol
II, p. 1876).

Kinds of Law
(1) State Law - promulgated by the State
(a) The Constitution
(the highest law of the land)
-directly made by the sovereign people of the
state
(b) Statutes - made by the representatives elected
by the sovereign people (by Congress in case
of presidential type of government or
Parliament in case of parliamentary type of
government)

i. Civil Law (Principally derived from the New Civil
Code)
(a) Law on Obligations and Contracts
(b) Law on Partnerships
(c) Law on Sales
(d) Law on Agency
(e) Law on Credit Transactions

ii. Commercial Law
(a) Law on Private Corporations (B.P. Blg.68)
(b) Negotiable Instruments Law (Act No. 2031)

iii. Criminal Law

iv. Remedial Law
- Political law, labor law, international law

(2) Non-State Law - not promulgated by the State
(a) Divine Law - law of religion, the principal
subject of which is "sin" and "salvation"
(b) Natural Law - sense of right and wrong inherent
in the system of every individual
(c) Moral Law - norms of right and wrong which
varies from one community to another and changes
with the passage of time
(d) Physical Law - the law of nature which cannot
be violated such as the law of gravity and the law
of buoyancy

General Principles and Concepts
(1) Ignorance of the Law is Not an Excuse (IGNORANTIA
LEGIS NON EXCUSAT) every individual is conclusively
presumed to know the law. Article 3 of the New Civil
Code states Ignorance of the law excuses no one from
compliance therewith.

(2) Obligations derived from law are not presumed (Article
1158)

(3) The Law Looks FORWARD and NOT BACKWARD (Lex
Prospicit Non Respicit) generally, laws have
prospective effects meaning they affect only things
which happen after their effectivity and not before.
Article 4 of the New Civil Code provides "Laws shall have
no retroactive effect, unless the contrary is provided.
(NOTE: The opposite of prospective is the term
retroactive).

(4) The Constitution, being the highest law of the land, any
statute which violates the Constitution can be judicially
declared as unconstitutional and therefore, void.

Examples of Obligations Arising from Law
(1) Income earners obligation to pay income taxes to the
Government.

(2) Doctors obligation to indicate the generic name of the
medicine he is prescribing to his patients.

(3) Employers obligation to pay minimum wages, holiday
pay and overtime pay.

(4) Businessmens obligations to secure business permits.

(5) Construction companies obligation to secure a building
permit before constructing a building.

(6) Parents obligation to support their children.

2. Contract
Meaning of Contract
- "a meeting of minds between two persons whereby
one binds himself with respect to the other to give
something or to render some service (Article 1305).

Kinds of Contracts
(1) As to Perfection
(a) Consensual - perfected by mere consent
(b) Formal - perfected by observing certain
formalities required by law
(C) Real - perfected by the delivery of the object

(2) As to Independent Existence
(a) Principal - can exist independently of other
contracts
(b) Accessory - existence depends on the existence
of another contract

(3) As to Existence of Consideration
(a) Onerous - for a consideration
(b) Gratuitous - without any consideration


(4) As to Whether It Has a Name or Designation
(a) Nominate - with a specific designation which
differentiates it from other contracts
(b) Innominate - without any special name to
distinguish from other contracts
i Do ut des (I give that you may give)
ii Do ut facias (I give that you may do)
iii Facio ut des (I do that you may give): and
iv Facio ut facias (I do that you may do)
(NOTE: Do ut des is now called barter and
thus, no longer an innominate Contract)

(5) As to the Number of Obligations Created
(a) Bilateral both parties have obligations
(b) Unilateral only one party is obliged

(6) As to Existence of Defect
(a) Perfectly Valid - no defect at all
(b) Defective
i. Imperfectly Valid - defective but capable of
producing legal effects
a. Rescissible - valid until rescinded and its
defect is economic in nature
b. Voidable - valid until annulled and its defect
has to do with consent
c. Unenforceable - valid but cannot be sued
upon in court
ii. Void - non-existing and thus, cannot produce
any effect

General Principles and Concepts
(1) The three essential elements of a contract are consent,
object (or subject matter) and cause (or
consideration). In the absence of any of these 3
elements, there will be no existing contract.
(2) Most contracts are perfected by mere consent
(consensual in kind or in nature)
(3) A void contract does not exist and cannot produce any
legal effect whatsoever.
(4) The contract is the law between the contracting parties
and thus must be complied with in good faith.

Examples of Obligation Arising from Contract
(1) Debtor's obligation to pay a debt (Contract of Loan)
(2) Buyer's obligation to pay the price of what he bought
(Contract of Sale)
(3) Tenant's obligation to pay rentals (Contract of Lease)
(4) Employer's obligation to pay wages (Contract of
Employment)
(5) Passenger's obligation to pay his fares (Contract of
Transportation)
(6) Banks obligation to pay interest on bank deposits
(Contract of Loan)

3. Quasi-Contract
Meaning of Quasi-Contract
- A juridical relation arising from certain lawful,
voluntary and unilateral acts to the end that no one
shall be unjustly enriched or benefited at the expense
of another (Article 2142).
- A concept in law intended to prevent unjust
enrichment.
- There is no consent.

Kinds of Quasi-Contract
(1) Negotiorum gestio - the voluntary management of an
abandoned or neglected business or property of another
without its owners consent (Article 2144)

(2) Solutio Indebiti ("Mistake in the Payment") - such as
when the seller erroneously overpaid the buyer his change
or when a taxpayer mistakenly pays the Government taxes
which he is not obliged by law to pay (Article 2154).

(3) Other Kinds of Quasi-Contract
(a) Obligation to return a lost property (Art 2171).
(b) "When during fire, flood, storm or other calamity,
property is saved from destruction by another person
without the knowledge of the owner, the latter is
bound to pay the former just compensation" (Article
2168)
(c) "Any person who is constrained to pay the taxes
of another shall be entitled to reimbursement from
the latter" (Article 2175)

Difference from Contract
- Consent is absent in quasi-contract unlike in contract

General Principles and Concepts
(1) The purpose of quasi-contract is to prevent unjust
enrichment
(2) For an obligation arising from quasi-contract to exist,
the act done must be lawful, voluntary and unilateral

Examples of Obligations Arising from Quasi- Contract
(1) Obligation of patient who was brought to the hospital
unconscious to pay his medical bills for the treatment given
to him by the said hospital.
(2) Government's obligation to refund overpayment of
taxes.
(3) Obligation to refund the amount paid together with its
fruits and interest by an obligor who paid before the arrival
of the period of the said debt unaware of the said period or
under the belief that the obligation had become due and
demandable already (Article 1195).
(4) Obligation to return a lost property.

4. Delict (also called Felony or Crime)
Meaning of Delict
- An act or omission punishable by law (Article 3,
Revised Penal Code).

Kinds of Delict
(1) Mala En Se (Wrong by itself) - inherently wrong. It is
still bad even if we remove the law penalizing the act as a
crime. (Examples: rape, robbery, murder)

(2) Mala Prohibita (Wrong Because Prohibited by Law) - it is
bad or evil only because there is a law punishing it as a
crime.
(Examples: drinking liquor or carrying firearms during
election period, jaywalking, carrying an unlicensed firearm)

General Principles and Concepts
(1) For a delict to be a source of an obligation there must
be an overt act done and the said act must be punishable
by law as a crime.
(2) Delict gives rise to 2 kinds of obligations (1) Civil
Obligations (To pay damages to the victim) and (2)
Criminal Obligation (To go to jail)
(3) If the act is justified by law, there will be no civil nor
criminal liability (Example: Act of self- defence in killing a
person).
(4) If an act is merely exempted by law from criminal
liability, civil liability may still be recovered .
(Examples: Offenses committed by an insane person or a
child under 9 years old).

Examples of Obligations Arising from Delict
(1)Thief's obligation to return the cellphone she stole.
(2) Murder's obligation to die by lethal injection.
(3)Rapists obligation to pay damages to his victim.

5. Quasi-Delict (or Torts in American Law)
Meaning of Quasi-Delict
- A legal wrong committed through fault or
negligence on the person or property of another
independent of contract.

Kinds of Quasi-Delict
(1)Single-tortfeasor - only one is liable.
(2) Joint-tortfeasor - more than 1 is liable

Difference of Delict
-Quasi-delict or torts is unintentional unlike delict which is
intentionally committed

Concepts and General Principles
(1) PROXIMATE CAUSE DOCTRINE
- No damages can be recovered if the immediate and
proximate cause of the victims injury is his very own
negligence (Article 2179).

(2) CONTRIBUTORY NEGLIENCE DOCTRINE
- If the victim's negligence is not the proximate cause of his
injury but is merely contributory to it he can still recover
damages but it will be reduced.

(3) DOCTRNE OF LAST CLEAR CHANCE
- The one who has the last opportunity to prevent the harm
done but fails to do so is the one liable for damages.

(4) If there is a contract existing between the party causing
the injury and the injured party, the source of the
obligation is not quasi-delict but contract.

(5) Another word for quasi-delict is culpa aquiliana or civil
negligence.

Examples of Obligations Arising from Quasi-Delict
(1) Governments obligation to pay damages to a passerby
who fell into an open manhole (City of Manila vs.
Teotico, L-23052, January 29, 1968).
(2) Driver's obligation to pay damages to a pedestrian who
was injured by his reckless driving.
(3) Dog owners' obligation to pay for the medical bills of
persons bitten by his dog.
(4) Manufacturer's obligation to pay damages to
consumers injured by its harmful product.