LAW ON OBLIGATIONS AND CONTRACTS

Article 1156-1162

Article 1156. An obligation is a juridical necessity to give, to do or not to do.

The term obligation is derived from the word “obligatio” which means tying or binding. It is a tie
which binds a person to render something to another that may consist in giving a thing, doing an
act, or not doing an act. While juridical necessity connotes that in case of non-compliance, there
will be legal sanction. It is duty of a person (debtor) to satisfy a specific and demandable claim
of another person (creditor) which if breached is enforced in court.
There are four Essential requisites of an obligation namely:
1. A passive subject- also known as debtor or obligor; he who has a duty of giving, doing or
not doing and the one who is bound to the fulfillment of the obligation.
2. An active subject- also known as creditor or obligee; possessor of the right and the one
who has the power to demand the fulfillment of the obligation.
3. Object or prestation- the subject matter of the obligation; it is the conduct in which the
debtor should act upon and without the prestation, there is nothing to perform.
4. A juridical or legal tie- also called efficient cause, which binds the parties to the
obligation and the reason why the obligation exists.
EXAMPLE: Lily and Lala has a contract where Lala is bound to build a house for Lily for
P2,000,000. In this case, Lala is the passive subject or the debtor, she has a duty to build a house
for Lily. While Lily is the active subject or creditor and has the right to demand for fulfillment.
The building of the house is the object or prestation and the contract is the juridical tie which is
the source of the obligation.
Kinds of obligation according to the subject matter.
1. Real obligation- It is an obligation to give which the subject matter is a thing and the
debtor must deliver to the creditor. For instance, A binds himself to deliver cabinet to B.
2. Personal obligation- It is an obligation to do or not to do which the subject matter is an
act to be done or not to be done. There are two kinds of personal obligation namely:
a. Positive personal obligation- obligation to do and it includes all kinds of work or
services. For instance, A binds himself to assemble the cabinet of B.
b. Negative personal obligation- obligation not to do and it includes obligation not to
give, it is ceasing from doing acts. For instance, C obliges himself not to barricade a
portion of his lot in favor for D who is entitled to a right of way.
Article 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts
or omissions punished by law; and (5) Quasi-delicts.

There are five sources of obligation namely:

1. Law- There is obligation when it was imposed by the law. For instance, the obligation of
both husband and wife to support their family.

2. Contracts- When both parties arise from stipulation. For instance, Selena borrowed
money from Barbie, Selena has the obligation to pay by virtue of agreement.

3. Quasi-Contract- This are judicial relation arising from certain lawful, voluntary, and
unilateral acts by virtue of which the parties become bound to each other based on the
principle that no one shall be unjustly enriched or benefited at the expenses of another.
For instance, Teddy is the co-worker of Mr. Bean. In the absence of Mr. Bean, Teddy
received the amount of 5000 for the payment of Mr. Bean’s labor. Teddy has the
obligation to give the amount to Mr. Bean.

4. Crimes or acts or omissions punished by - Civil liability is arise and it is the

consequences of the criminal offense committed. For instance, Buttercup inflicted serious
physical injury to Blossom, so Buttercup will be liable for the payment of all medical
expenses and damages to Blossom.

5. Quasi-delicts or torts– When they arise from damages caused to another, there being
fault or negligence, giving rise to the obligation to pay for the damage done. There must
be no pre-existing contractual relation between the parties. For instance, Jomari got bitten
by his neighbor's dog, the possessor of that dog is liable for Jomari's injury caused by that
dog.

Article1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi contracts; (4) Acts or
omissions punished by law; and (5) Quasi-delicts.

There are five sources of obligation namely:

1. Law- There is obligation when it was imposed by the law. For instance, the obligation of
both husband and wife to support their family.

2. Contracts- When both parties arise from stipulation. For instance, Selena borrowed
money from Barbie, Selena has the obligation to pay by virtue of agreement.
 3. Quasi-Contract- This are judicial relation arising from certain lawful, voluntary, and
unilateral acts by virtue of which the parties become bound to each other based on the
principle that no one shall be unjustly enriched or benefited at the expenses of another.
For instance, Teddy is the coworker of Mr.Bean. In the absence of Mr.Bean, Teddy
received the amount of 5000 for the payment of Mr.Bean’s labor. Teddy has the
obligation to give the amount to Mr.Bean.

4. Crimes or acts or omissions punished by law- Civil liability is arise and it is the
consequences of the criminal offense committed. For instance, Buttercup inflicted serious
physical injury to Blossom, so Buttercup will be liable for the payment of all medical
expenses and damages to Blossom.

5. Quasi-delicts or torts- When they arise from damages caused to another, there being
fault or negligence, giving rise to the obligation to pay for the damage done. There must
be no pre-existing contractual relation between the parties. For instance, Jomari got bitten
by his neighbor's dog, the possessor of that dog is liable for Jomari's injury caused by that
dog.

Article1158. 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. (1090)
An obligation derived from law are not presumed which means that obligation must be clearly
set forth in law. For example an obligation to pay taxes is one type of obligation derived from
law And you promise to the BIR that if you cannot pay your tax that year, you agreed to render
free-service in exchange of the payment of the taxes.

Article 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
A contract is a meeting of minds between two persons whereby one binds himself, with respect
to the other, to give something, or to render some service. Moreover, an obligation arising from
contracts presupposes that the contracts entered into are valid and enforceable. Thus, compliance
or performance in accordance with the stipulations or terms of the contractor agreement.
Sincerity and honesty must be observed to prevent one party from taking unfair advantage over
the other. For instance, Liza contract whereby Enrique will kill Barbie in consideration of 10,000
to be paid by Liza, is void and non-existent since killing a person is contrary to law.
Article 1160. Obligations derived from quasi-contracts shall be subject to the provisions of
Chapter1, Title XVII of this Book.
Quasi-contracts are not properly a contract at all. In contract, there is a meeting of minds or
consent. While in quasi-contract, there is no consent but the same is supplied by fiction of law. In
other sense, the law considers the parties as having entered into a contract, although they have
not actually done so, and irrespective of their intention, to prevent injustice at the expense of
another.
There are two principal kinds of quasi-contracts namely, negotiorum gestio and solution indebiti.
Example of negotiorum gestio is that when A went to Manila with his family without leaving
somebody to look after his house. While away, a big fire broke near the house of A. Through the
effort of B, his neighbor, the house of A was saved from being burned. However, B incurred
expenses. Moreover, an example of solution indebiti is when X owes Y 1,000. If X paid Z
believing that Z was authorized to receive payment for Y, the obligation to return the part of Z
arises. It is a payment by mistake.

Article 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 Chapter2,
Preliminary Title, on Human Relations, and of Title XVII of this Book, regulating
damages.
A person is not criminally responsible may still be liable civilly, such as failure to pay a
contractual debt, causing damage to another's property without malicious or criminal intent or
negligence. Civil liability includes restitution, reparation for the damages caused, and
indemnification for consequential damages.
For instance, Phineas stole the car of Ferbs. If Phineas is convicted, the court will order Phineas:
to return the car or to pay its value if it was lost or destroyed, to pay for any damage caused to
the car, and to pay such other damages suffered by Ferbs as a consequence of the crime.

Article 1162. Obligations derived from quasi-delicts shall be governed by the provisions of
Chapter2, Title XVII of this Book, and by special laws.
Obligations arising from quasi-delicts. There are five requisites namely, there must be an act or
omission, there must be fault or negligence, there must be damage caused, there must be a direct
relation or connection of cause and effect between the act or omission and the damage, and there
is no pre-existing contractual relation between the parties.
For example, while playing soft ball with his friends, Lolo broke the window glass of Lili, his
neighbor. The accident would not have happened if they played a little farther from the house of
Lili. In this case, Lolo is liable to pay the damage caused to Lili by his act even so there is no
pre-existing contractual relation between them for he is guilty of fault or negligence.