OBLIGATIONS AND

CONTRACTS

Chapter 1: General Provisions

Art. 1156.
An obligation is a juridical necessity to give,
to do or not to do.
Example:
A bought a refrigerator from B but A did not pay the
refrigerator. If after demand, A still did not pay, B
can sue A in Court either to demand payment or for
recovery of the refrigerator.

Elements of an Obligation
1. Active subject (creditor/oblige) - who has the
power to demand the prestation
2. Passive subject (debtor/obligor) - who is bound
to perform the prestation
3. Object or Prestation - may consist in the act of
giving, doing or not doing something.
4. Vinculum juris - the juridical tie between the two
subjects by reason of which the debtor is bound
in favor of the creditor to perform the
prestation.

Example:

A enters into a contract of sale with B who paid the

purchase of a refrigerator. A did not deliver the
refrigerator.
A is the passive subject or debtor.
B is the active subject or creditor.
The refrigerator is the object or prestation.
The obligation to deliver is the vinculum juris which binds
A and B.

On the other hand, if A, delivered the

refrigerator and B did not pay, then B becomes
the debtor who is bound to pay while A is the
creditor who has the right to demand the
prestation.

Kinds of Obligations
From the viewpoint of sanctions
1. Civil Obligations the sanction is judicial process; the fulfillment of
the obligation can be enforced by court action
eg. A promises to pay B his debt of P1 million.

2. Natural Obligations the fulfillment cannot be compelled by court

action but depends on the good conscience of debtor; the sanction is
the law, but only because of conscience had originally motivated the
payment.
eg. A owes B P1 million. But the debt has already prescribed. If A, knowing
that it has prescribed, nevertheless still pays B, A cannot later on get back
what he voluntarily paid.

3. Moral Obligations the sanction is conscience or morality, or the law

of the church

Kinds of Obligations
From the viewpoint of subject matter
1. Real Obligation the obligation to give
2. Personal Obligation the obligation to do or not to do
From the affirmativeness and negativeness of the
obligation
1. Positive or affirmative obligation the obligation to
give or to do
2. Negative obligation the obligation not to do (which
naturally includes not to give)

Kinds of Obligations
From the viewpoint of persons obliged
1. Unilateral where only one of the parties is bound
2. Bilateral where both parties are bound

ART. 1157. Obligations arise from:

(1)Law;
(2)Contracts;
(3)Quasi-contracts;
(4)Acts or omissions punished by law; and
(5)Quasi-delicts.

Law as a Source of Obligations

ART. 1158. Obligations derived from law are not presumed. 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.
That obligations arising form law are not presumed and that to be
demandable must be clearly provided for, expressly or impliedly in the law.
Examples:
It is the duty of the Spouses to support each other. (Art. 291, New Civil Code)
And under the National Internal Revenue Code, it is the duty of every person having an
income to pay taxes.

Contract as a Source of Obligation

ART. 1159. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
Contract as defined in Art. 1305, NCC is the meeting of minds between two
person whereby one binds himself with respect to the other.
Obligations arising from contracts have the force of law between the parties.
Neither party may unilaterally evade his obligation in the contract, unless:
a.

The contract authorizes it

b.

Other party assents

Parties may freely enter into any stipulations provided that they are not
contrary to law, morals, good customs, public order or public policy.
eg. A contract of lease was executed between A as the lessee and B as the
lessor for the rent of an apartment.

Quasi-Contracts as
a Source of Obligations
ART. 1160. Obligations derived from quasi-contracts shall
be subject to provisions of Chapter 1, Title XVII, of this
Book.
Quasi-contract is the juridical relation resulting from a
lawful, voluntary and unilateral act which has for its
purpose the payment of indemnity to the end that no one
shall unjustly enrich or benefited at the expense of
another. (Art. 2142, NCC)

2 Kinds of Quasi-contracts:
1. Solutio Indebiti (Payment by mistake)
It is the juridical relation which arises when a person is obliged to return
something received by him through error or mistake.
eg. A owed B the sum of P1, 000.00. By mistake, A paid P2, 000.00. A has the
obligation to return the P1, 000.00 excess because there was payment by
mistake.
2. Negotiorum gestio (management of anothers property)
It is the voluntary management or administration by a person of the
abandoned business or property of another without any authority or power
from the latter. (Art. 2144, NCC)
eg. Victor, a wealthy landowner suddenly left for abroad leaving his livestock
farm unattended. Ramon, a neighbor of Victor managed the farm thereby
incurring expenses. When Victor returns, he has the obligation to reimburse
Ramon for the expenses incurred by him and to pay him for his services. It is
bases on the principle that no one shall enrich himself at the expense of another.

Delicts/Acts or Omissions punished

by law as a Source of Obligations
ART. 1161. Civil obligations arising from criminal offenses shall be
governed by the penal laws, subject to the provisions of article 2177,
and of the pertinent provisions of Chapter 2, Preliminary Title, on Human
Relations, and of regulating damages.
Art. 100 (RPC) states that every person criminally liable for a felony is
also civilly liable.
Art. 104 (RPC) states that civil liability arising from delicts are:
Restitution which is the restoration of or returning the object of
the crime to the injured party.
Reparation which is the payment by the offender of the value of
the object of the crime, when such object cannot be returned to
the injured party.
Indemnification the consequential damages which includes the
payment of other damages that may have been caused to the
injures party.

Delicts/Acts or Omissions punished

by law as a Source of Obligations
Illustration:
Mario was convicted and sentenced to imprisonment by
the Court for the crime of theft, the gold wrist watch,
of Rito. In addition to whatever penalty that the Court
may impose, Mario may also be ordered to return
(restitution) the gold wrist watch to Rito. If restitution
is no longer possible, for Mario to pay the value
(reparation) of the gold wrist watch. In addition to
either restitution or reparation, Mario shall also pay for
damages (indemnification) suffered by Rito.

Delicts/Acts or Omissions punished

by law as a Source of Obligations
General Rule: Whenever a criminal action is instituted,
the civil action for the civil liability is also impliedly
instituted together with the criminal action.
Effects of Acquittal in Criminal Case:
(1) When due to reasonable doubt no civil liability
(2) When due to exempting circumstances there is CL
(3) When there is preponderance of evidence there is CV

Quasi-delict as
a Source of Obligations
tort or culpa aquiliana
Quasi-delict is one where whoever by act or omission causes
damage to another, there being fault of negligence, is obliged
to pay for the damage done. Such fault of negligence, if there
is no pre-existing contractual relation between the parties.
(Art. 2176)
eg. If Pedro drives his car negligently and because of his
negligence hits Jose, who is walking on the sidewalk of the
street, inflicting upon him physical injuries. Then Pedro

Requisites of a quasi-delicts
There must be fault of negligence attributable
to the offended;
There must be damage or injury caused to
another;
There is no pre-existing contract.