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Law on Obligation and Contracts

Article 1156 - 1171

Obligation
- juridical necessity to give, to do, or not to do.
- "obligatio" means tying or binding.

NATURE OF OBLIGATION
Civil Obligation - right of action in courts or justice.

Natural Obligation
- base on equity and natural law.
- voluntary fulfillment of debtor.

Essential requisites
1. Passive Subject (debtor or obligor)
- bound to the fulfillment of obligation; he who has a duty.
2. Active Subject (creditor or obligee)
- entitled to demand the fulfillment of obligation; he who has a right.
3. Object or Prestation (subject matter of obligation)
- conduct required to be observed.
- consist of giving, doing or not doing.
4. Juridical or Legal Tie (efficient cause)
- binds or connects the parties

Obligation - act or performance

Right - power of a person under the law
Wrong (cause of action)
- act or omission
- violation of legal right

Injury - illegal invasion of rights

Damage - loss, hurt or harm
Damages - compensation, in terms of money
Damages - compensation, in terms of money

Kinds of obligation
1. Real Obligation (obligation to give) - thing which the obligor must deliver to the
obligee.
2. Personal Obligation (obligation to do or not to do) - subject matter is an act to
be done or not to be done.
2 personal obligation
a. Positive Personal Obligation - to do or to render service.
b. Negative Personal Obligation - not to do, also includes not to give.

Sources of Obligation
1. Law - imposed by the law itself.
2. Contracts - arise from stipulation of parties.
3. Quasi-contracts - arise from lawful, voluntarily and unilateral acts.
4. Crimes (delicts) - arise from criminal liability, result of criminal offense.
5. Quasi-delicts or torts - arise from damage caused to another; thru an act or
omission.

Sources classified
1. Emanating from law.
2. Emanating from private acts.
a. licit acts - contracts and quasi-contracts
b. illicit acts - punishable by law (delicts), not punishable by law (quasi-delicts).

LEGAL 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.

Article 1158 refers to legal obligation, or obligations arising from the law.
- not presumed, considered burden upon obligor.

CONTRACTUAL OBLIGATIONS
ART. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
Contracts - meeting of minds.

ART. 1160. Obligations derived from quasi-contracts.

Quasi-contracts - resulting from certain lawful, voluntary, unilateral acts.

Kinds of quasi-contracts
1. Negotiorum gestio - voluntary management of property; affairs without
knowledge or consent.
2. Solutio indebiti - something is received when there is no right to demand it;
undully deliver thru mistake.

ART. 1161. Civil obligations arising from criminal offenses shall be governed by
the penal laws.

Scope of civil liability

- Restitution
- Reparation for the damage and caused,
- Indemnification for consequential damages.

ART. 1162. Obligations derived from quasi-delicts.

Quasi-delicts - act or omission by a person (tort feasor) which causes damage to

another.

ART. 1163. Every person obliged to give something is also obliged to take care of
it.

Specific or determinate thing

- indentified by individuality.
- cannot subtstitue with another; it must be same kind and quality.

Generic or inderminate thing

- identified only by its specie.
- can give anything of the same class as long is it the same kind.
ART. 1164. The creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it until
the same has been delivered to him.

Kinds of fruits
1. Natural fruits - products of soil and animals; without intervention of human
labor.
e.g grass and trees
2. Industrial fruits - produced by lands of any kind thru cultivation or labor; all
products of land brought by human labor.
e.g rice and vegetable
3. Civil fruits - derived by virtue of a juridical relation.
e.g properties and buildings

Obligation to deliver arises

1. Arises from time of perfection of contract
2. Arises upon fulfillment of the condition; arrival of the periond (suspensive
condition)
3. Arises from the perfection of contract with suspensive condition.
4. Arises from the law; time of performance is determined by the specific
provisions of law.

Personal right (passive subject) - right or power of a person (creditor) to demand

to another (debtor).

Real right (active subject) - right or interest of a person over a specific thing.

ART. 1165
Specific real obligation - obligation to deliver determinate thing
Generic real obligation - obligation to deliver generic thing.

ART. 1166. The obligation to give a determinate thing includes that of delivering
all its accessions and accessories, even though they may not have been
mentioned.
1. Accessions - fruits of, addition to, improvements upon, a thing (principal)
2. Accessories - things joined to, included with, the principal thing; for better use
or completion.

ART. 1169
Delay (mora)
*Ordinary delay - merely a failure to perform on time.
*Legal delay or default or mora - failure to perform on time which failure,
constitutes a breach of obligation.

Kinds of delay
1. Mora solvendi - delay of debtor; by reason of cause imputable to him.
2. Mora accipiendi - delay of creditor; without justifiable reason to accept the
performance of the obligation.
3. Compensatio morae - delay of obligor in reciprocal obligations (like in sale).

ART. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages.

Fraud (deceit or dolo) - deliberate or intentional.

a. Causal fraud (dolo causante) - voidable
b. Incidental fraud ( dolo incidente) - valid

Negligence (fault or culpa) - voluntary act or omission, no malice.

Delay (mora) - commencement of delay; either malicious or negligent

Contravention of the terms of obligation

- violation of terms and condition
- must not be due to fortuitous events (force majeure)

Breach of contract - failure without justifiable excuse to comply with the terms of
a contract.
a contract.
- maybe willful or unintentionally

Fraud vs Negligence

*fraud-deliberate intentions;
negligence- no intentions.
*fraud- waiver for future fraud is VOID
negligence- waiver is ALLOWED.

ART. 1171. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for future fraud is void.

Waiver of future fraud - VOID (no effect); against the law and public policy.
Waiver of past fraud - VALID; can be considered an act of generosity or
magnanimity.

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