OBLIGATIONS AND CONTRACTS Fernandez, CPA 2022

TITLE I - In case of voluntary fulfillment by the OBLIGATIONS, RIGHT, AND WRONG

OBLIGATIONS debtor, the latter may not recover what has DISTINGUISHED
Articles 1156 – 1304, Civil Code been delivered or rendered by reason there
of 1. Obligation – act or performance which the
law will enforce
CHAPTER ONE: GENERAL PROVISIONS ESSENTIAL REQUISITES OF AN 2. Right – power which a person has under
OBLIGATION the law, to demand from another any
Article 1156: An Obligation is a juridical necessity prestation
to give, to do, or not to do. 1. Passive Subject 3. Wrong (cause of action) - is an act or
- Debtor or Obligor omission of one party in violation of the
Obligation - The person who is bound to the fulfillment legal rights of another
- Derived from the latin word “obligatio” of the obligation - Also called “Injury”
which means tying or binding - He who has a duty
- A tie or bond recognized by law by virtue Essential Elements of a Wrong or an Injury
which one is bound in favor of another to 2. Active Subject (a) Legal right in favor of a person
render something - Creditor or Obligee (creditor/oblige/plaintiff)
- The person entitled to demand the (b) Legal obligation on the part of another
Civil Code definition of Obligation fulfillment of the obligation (debtor/obligor/defendant)
- Article 1156 - He who has the right (c) An act or omission by the debtor
- It merely stressed the duty under the law of
the debtor or obligor when it speaks of 3. Object or Prestation - A wrong or injury only arises at the moment
obligation as a juridical necessity. - Subject matter of the obligation a right has been transgressed or violated
- Conduct required to be observed by the
MEANING OF JURIDICAL NECESSITY debtor
Obligation is a juridical necessity because in case of KINDS OF OBLIGATION ACCORDING TO
non-compliance, the courts of justice may be called Bilateral Obligations – Parties are reciprocally SUBJECT MATTER
upon by the aggrieved party to enforce its fulfillment debtors and creditors
or the economic value it represents. 1. Real Obligation
4. Juridical or Legal Tie - Obligation to give
The debtor must comply with his obligation whether - Efficient Cause - The subject matter is a thing which the
he likes it or not; his failure will be visited with some - That which binds or connects the parties to obligor must deliver to the oblige
harmful or undesirable consequences the obligation
- Easily determined by knowing the source of 2. Personal Obligation
obligation - Obligation to do or not to do
NATURE OF OBLIGATIONS UNDER CIVIL - The subject matter is an act to be done or
CODE not to be done
FORM OF OBLIGATIONS
1. Civil Obligations - Refers to the manner in which an obligation Two types:
- Obligations which give to the creditor or is manifested or incurred (a) Positive Personal Obligation
oblige a right under the law to enforce their - May be oral, writing, party oral, partly - Art 1167
performance in courts of justice writing - Obligation to do or to render service

2. Natural Obligations 1. General rule: law does not require any form in (b) Negative Personal Obligation
- Not based on positive law, but on equity and obligations arising from contracts for their - Art 1168
natural law validity or binding force - Obligation not to do or not to give
- Do not grant a right of action to enforce 2. Obligations arising from other sources do not
their performance have any form at all
OBLIGATIONS AND CONTRACTS Fernandez, CPA 2022

ART. 1157. OBLIGATIONS RISE FROM: b. Illicit Acts – Acts that may be - - Presupposes that contracts entered into
punishable (delicts or crimes), or non- are valid and enforceable
1. Law – when they are imposed by law itself punishable (quasi-delicts or torts)
Ex. Obligation to pay taxes, obligation to Contract - Meeting of minds between two
support one’s family. (Art. 291) Actually, there are only two sources of Obligations: persons whereby one binds himself, to give
1. Law something or to render some service. (Art. 1305)
2. Contracts – when they arise from the - Quasi-contracts
stipulation of the parties (Art. 1306) - Delicts 1. Binding Force – Obligations arising from
Ex. The obligation to repay a loan or - Quasi-delicts contracts have the force of law between the
indebtedness by virtue of agreement contracting parties
2. Contracts - Source must be valid and it cannot be valid if it
3. Quasi-contracts – when they arise from is against the law
lawful, voluntary, and unilateral acts which
are enforceable to the end that no one shall Art. 1158. Obligations derived from law are not 2. Requirement of a valid contract – Not
be unjustly enriched or benefited at the presumed. Only those expressly determined in contrary to law, morals, good customs, public
expense of other. (Art. 2142) this Code or in special laws are demandable, order, and public policy. (Art. 1306)
- May also be considered as arising from law and shall be regulated by the precepts of the
Ex. The obligation to return money paid by law which establishes them; and as to what has - In the eyes of the law, a void contract doesn’t
mistake or which is not due. (Art. 2154) not been foreseen, by the provision of this exist.
Book. (1090) - A contract may be valid but cannot be enforced.
4. Crimes or acts or omissions punished
by law – when they arise from civil liability Legal Obligations 3. Breach of Contract – A contract may be
which is the consequence of a criminal - Article 1168 breached or violated by a party in whole or in
offense. - Obligations arising from Law part.
- They are not presumed because they are - Occurs when a party fails or refuses to comply,
5. Quasi-delicts or torts – when they arise considered a burden upon the obligor without legal reason or justification with his
from damage caused to another through an - Must be set forth in the law (Civil Code or obligation under the contract as promised.
act or omission, there being fault or Special Law)
negligence, but no contractual relation exits Compliance in Good Faith
between the parties. (Art. 2176) Special Laws – laws not contained in the Civil - Means compliance or performance
Ex. Obligation of the head of a family that Code according to the stipulations or terms of the
lives in a building or a part thereof to Examples: contract or agreement.
answer for damages caused by things - Corporation Code - Sincerity/honesty must be observed to
thrown or falling for the same; Obligation of - Negotiable Instruments Law prevent one party from taking advantage
the possessor of an animal to pay for the - Insurance Code over the other
damage it may have caused - National Internal Revenue Code
- Revised Penal Code
- Labor Code, etc. Art. 1160. Obligations derived from quasi-
SOURCES CLASSIFIED contracts shall be subject to the provisions of
(1) Emanating from Law Art. 1159. Obligations arising from contracts Chapter 1, Title XVII of this Book.
(2) Emanating from Private Acts have the force of law between the contracting
parties and should be complied with in good Quasi-contractual Obligations
Arising from: faith. (1091a) - Article 1160
a. Licit Acts – “Licit” means conforming
to the requirements of law; legal. Contractual Obligations Quasi-Contract – a juridical relation resulting
• Contracts and Quasi-contracts - Obligations arising from contracts from lawful, voluntary, and unilateral acts by
- Voluntary agreements virtue of which the parties become bound to
OBLIGATIONS AND CONTRACTS Fernandez, CPA 2022

each other to the end that no one will be unjustly - When there is no material damage The purpose is The purpose is
enriched or benefited at the expense of another. (contempt, insults to authorities, violations punishment indemnification of
- Not properly a contract at all of traffic regulations, etc.) there is no civil the offended party
- There is no consent liability to be enforced. Crime affects public Concerns private
- Supplied by fiction of law - A person not criminally responsible may interest interest
- The Law considers the parties as having still be liable civilly There are two There is only Civil
entered into a contract, even if they haven’t liabilities: Criminal Liability
really done so, to prevent injustice or unjust Scope of civil liability and Civil
enrichment. - Governed by the Revised Penal Code and Cannot be Can be
the Civil Code compromised or compromised as any
Kinds of quasi-contracts settled by parties other civil liability
Civil Liabilities include: themselves
(1) Negotiorum gestio 1. Restitution The guilt of the The fault or
- Voluntary management of the property or 2. Reparation for damage caused accused must be negligence of the
affairs of another without the knowledge or 3. Indemnification for consequential damages proved beyond defendant need only be
consent of the latter reasonable doubt proved by
preponderance of
(2) Solution indebiti Art. 1162. Obligations derived from quasi- evidence
- A juridical relation which is created when delicts shall be governed by the provisions of
something is received when there is no right Chapter 2, Title XVII of this Book, and by
to demand it and it was unduly delivered special laws.
through a mistake
Obligations arising from Quasi-delicts
Prerequisites: - Quasi-delict is an act or omission by a
a. There is no right to receive the thing person (tort-feasor) which causes damage to
delivered another in his person, property, or rights
b. The thing was delivered through a giving rise to an obligation to pay for the
mistake damage done, there being fault or
negligence but there is no pre-existing
(3) Other examples of Quasi-contracts contractual relation between the parties.
- Provided in Article 2164 to 2175
- When recovery cannot be had on a true Requisites of quasi-delict
contract, recovery may be allowed on the (1) There must be an act or omission
basis of quasi-contract (2) There must be a fault or negligence
(3) There must be damaged caused
(4) There must be direct relation or connection
Art 1161. Civil Obligations arising from of cause and effect between the act or
criminal offenses shall be governed by the omission and damage
penal laws, subject to the provisions of article (5) There are no pre-existing contractual
2177, and of the pertinent provisions of relations between the parties
Chapter 2, Preliminary Title, on Human
Relations, and of Title XVII of this Book, Crime distinguished from quasi-delict
regulating damages.
CRIME QUASI-DELICT
Civil Liability arising from crimes or delicts There is criminal or There is only
- Every person criminally liable for an act or malicious intent or negligence
omission is also civilly liable for damages criminal negligence