OBLIGATIONS
Ramos.
Article 1156. An obligation is a juridical
necessity to give, to do or not to do.
● A juridical relation between 2
persons, known as the creditor and
debtor, whereby the former can
demand from the latter the
observance of a determinate
conduct and in case of breach, may
obtain satisfaction from the assets
of the latter.
● Definition covers only civil
obligations, because of the
characteristic that it is a juridical
necessity.
*We now officially proceed with
obligations and contracts which as we
earlier said is the backbone of a lot of your
civil law subjects. We begin with 1156
which describes what an obligation is.
Article 1156 is simple enough in a sense
that you're able to form a vague picture
that there is someone who needs to do
something which is whether to give, to do
or not to do. But the question then
becomes who is the subject or object of
that act?
This was the comment of Justice JPL REYES
of the Supreme Court. He said that this
definition is taken from Sanchez Roman is
incomplete as it views obligation only
from the debit side. But there is no debt
without credit and the credit is just an
asset in the patrimony of the creditor, just
as the debt is a liability of the obligor.
He says the better definition by Arias
So the definition above gives you a more
complete picture. There are 2 actors in an
obligation known as the debtor and the
creditor and one is bound to do
something which the other may demand
from him and if the one who is bound to
do something fails to do so then the
creditor can go ahead and demand its
satisfaction by seeking help from the
courts.
What do we mean by an obligation being
a juridical necessity? It means that in case
of non-compliance there is a legal
sanction. Meaning you can go to court to
ask for that obligation to be done or if
they refused to do it then there is an
equivalent sanction. This is why 1156 only
covers CIVIL OBLIGATIONS because that is
the characteristic of juridical necessity.
Kinds of Obligations as to Sanction
Types of Obligations:
1. Civil Obligations - those which
derive their binding force from
positive law, and can be enforced
by court action or the coercive
power of public authority.
2. Natural Obligations - refer to those
which derive their binding force
from equity and natural justice,
and its fulfillment cannot be
compelled by court action but
depends exclusively on the
conscience of the debtor.
 3. Moral Obligations - those which
arise from moral law developed by
the church and not enforceable in
court. It deals with the spiritual
obligation of a person in relation to
his God and Church.
*What are the types of obligations
according to their sanction? We have 3
types of obligations according to their
sanctions.
1. Civil Obligations Example: When A has
to pay back B his debt of 1 Million.
2. Natural Obligations Example: When A
owes B 1 Million but the debt has already
prescribed. If A knowing that it has
prescribed nevertheless still pays B, A
cannot letter on get back what he
voluntarily paid.
The sanction is the law of course but only
because conscience had originally
motivated the payment. Meaning yung
utang nya base pa rin sa law but under the
law hindi na sya compelled to pay pero
binayaran nya because of his conscience.
In which case the law will no longer allow
you to recover what you paid. so parang
sinasabi ng law na naging mabait kana
hayaan mo na wag mo nang bawiin ang
pagiging mabait mo.
3. Moral Obligations Example: Going to
mass which is considered an obligation for
Catholics.
Kinds of Obligation According to
Prestation
1. Real - obligation to give
2. Personal - obligation to do and not
to do
● Important to know the distinction
because the remedies for either
will also differ. A person cannot be
compelled to do something against
his will because we have a
constitutional prescription against
involuntary servitude.
*Example: You are an employee at an
office and you want to resign. Can your
employer say no(you cannot resign, you
have to work for me until you die)?
No, because that is tantamount to
involuntary servitude.
Remedy of the employer because of your
resignation several deadlines were
missed, which deadlines you knew of
weeks prior.
He can file an action for damages instead.
He still have to prove his entitlement to
the damages but that is his remedy.
On the other hand, the performance of a
real obligation can be compelled through
specific performance.
EXAMPLE: An obligation to pay the debt is
a real obligation. So when the debtor
refuses to pay the remedy of the creditor
is to ask relief from the court for the
performance of a certain obligation.
Kinds of Obligations as to Affirmativeness
and Negativeness
1. Positive - obligation to give or to
do
2. Negative - obligation not to do
*Example of Positive Obligation: You
deliver a car or you have to deliver a car.
Example of Negative Obligation: You because without the demand from
cannot sell or neither you can purchase the creditor, there will be no action
liquor during the liquor ban which is ● Object/Prestation - the subject
practically the entire quarantine period. matter of the obligation; not a
thing but a particular conduct on
Kinds of Obligations as to Persons the part of the debtor
Obliged ● Efficient cause/Juridical tie - the
reason why the obligation exists
1. Unilateral - only one person is
*When it comes to the object you have to
obliged to do something
remember that this is the subject matter
2. Bilateral - both parties are bound
of the obligation and it has an economic
to do something
value or it is susceptible to pecuniary
substitution in case of non-compliance.
*Unilateral Contract Example:
Meaning it has a monetary equivalent
Commodatum, wherein your classmate
which will later on make it easier for the
has several ballpens and you want to
court to determine what is the monetary
borrow one. Your classmate does not have
equivalent if in case there is failure to
an obligation to lend you his/her pen but
perform such or there is failure to deliver
they do it anyway out of the goodness of
such object or prestation.
their heart. So the obligation to return the
pen arises when the pen is already with
For the efficient cause or juridical tie, this
you.
is the vinculum, the legal tie by which the
debtor is bound to in favor of the creditor
Bilateral Contract Example: A contract of
to perform the prestation. It is determined
loan where the creditor has the obligation
by knowing the sources of obligation.
to lend the money while the debtor has
the obligation to return the money. Even a
Kinds of Prestation
contract of Sale where the seller has the
obligation to deliver the property while a. To give - consists of the delivery of
the buyer has the obligation to pay the a movable or immovable thing
consideration. which is either determinate
(specific) or indeterminate
Elements of an Obligation (generic). This is in order to create
a real right or for the use of the
● Active Subject (creditor,obligee) -
creditor, or for its simple
the possessor of the right; he in
possession, or in order to return it
whose favor of the obligation is
to its owner.
constituted; he who has the right
b. To do - involves all kinds of work or
to demand
services, whether physical or
● Passive Subject (obligor,debtor) -
mental, but in most cases the
he who has the duty of giving,
essence of the act may not be
doing, or not doing; passive
 such, but merely the necessity of
concluding a juridical operation,
such as when a person promises to
give a bond (as security for
another act)
c. Not to do - negative obligation
which consists of abstaining from
some act, and includes the act
“not to give”
*Example of prestation to give: Your
parents will give you a car if you become a
lawyer.
Example of prestation to do: Your parents
will take you to Japan, if you become a
lawyer.
Example of prestation not to do: You'll
refrain from eating chilimansi pansit
canton so long as your parents promise to
give you an allowance of 300 a day. Before
a more serious example you will refrain
from selling your property to another
person to give your lessee a chance to
purchase it from 3 months from now. So
parang right of first refusal yung tawag
natin jan.
Requisites of a Prestation
1. It must be physically and juridically
possible
2. It must determine or at least
determinate according to
pre-established elements or
criteria
3. It must have a possible equivalent
in money or a pecuniary value (so
that in case of breach, damages
can be demanded)
*Why must it be physically or juridically
possible?
Because if it is impossible the obligations
become void and hence it is as if the
obligations never existed in the first place.
The law will not impose nor will it allow
the imposition of anything impossible
because that will be unfair to the debtor.
It must be determinate or at least
determinable because if you cannot
determine what needs to be done or given
how will you have an obligation. At the
very least you must have an idea of what
it is you need to give, to do or not to do in
order for an obligation to arise.
Even services have a value. Like your
economic employment has a value which
is your salary. Your act of going to law
school has a value which is your tuition,
your travel expenses, and your books. So
prestation must have a monetary value so
that when it is not performed and ill intent
and the refusal or failure to perform the
court can assess how much the creditor is
entitled to in the form of damages.
Article 1157. Obligations arise from:
1. Law
2. Contracts
3. Quasi-contracts
4. Acts or omissions punished by law;
and
5. Quasi-delicts
*1157 which enumerates the sources of
obligations.
It's important to remember that this
enumeration of the sources of obligations
is exclusive. No obligation exists if its
source is not one of those enumerated on
the slide.
Note: There is a commentary that the
enumeration here is not actually signed
effect because in reality there are only 2
sources of obligations the law and
contracts because obligations arising from
quasi-contracts, crimes, and quasi-delicts
are actually sourced from the law because
theses are found from the law.
Article 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.
● The law must be clearly (expressly
or impliedly) set forth in the law
(the Civil Code or special laws).
● If regarding an obligation founded
on law, there is a conflict between
the New Civil Code and a special
law, the latter prevails unless the
contrary has been expressly
stipulated in the New Civil Code.
*1158 is clear that the obligation must be
set forth clearly in the law whether it be
expressly or impliedly.
What is law? It is a rule of conduct, just,
and obligatory laid down by legitimate
authorities for the common observance
and benefit.
When the law merely acknowledges the
existence of an obligation generated by an
act which constitutes a contracts,
quasi-contracts, delicts or quasi-delicts
and its only purpose is to regulate such
obligation which did not arise from it. The
act itself is the source of obligation and
not the law. But when the law creates the
obligation and the act upon which it is
based is nothing more than the clear
factor in determining the moment when it
becomes demandable then the source of
obligation is the law itself.
Example: The obligation to pay taxes,
when you enter into a contract of sale
you'll need to pay taxes. Is the obligation
to pay taxes a consequence of the
contract? NO, it is a requirement of the
law. The law itself states that when you
enter into this kind of contract you have to
pay these kinds of taxes. So the law
created that obligation and the act which
is the execution of the Deed of Sale is
nothing more than a mere factor in
determining the moment when the
obligation becomes demandable.
If there is a conflict with respect to the
New Civil Code and the special law
respecting an obligation that is founded
on law. Then you have to apply the special
law first because the latter prevails unless
the contrary has been expressly stipulated
in the New Civil Code.
Contracts
Article 1305. 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.
Article 1159. Obligations arising from
contracts have the force of law between
the contracting parties and should be deem convenient, provided they are not
compiled with in good faith. contrary to the law, morals, good customs,
public order or public policy.
● Known as the principle of
autonomy of will
It just means that parties are free to agree
● Article 1306. The contracting
on the terms of the contract subject to the
parties may establish such
limitations laid down in 1306 hence
stipulations,clauses, terms and
neither party may unilaterally and upon
conditions as they may deem
his own exclusive volition escape his
convenient, provided they are not
obligations under the contract unless the
contrary to law, morals, good
other party assented thereto or unless for
customs, public order or public
causes sufficient in law and pronounced
policy.
adequate by a component tribunal they
are allowed to unilaterally rescind the
*What is a contract? A contract is a
contract. So di pwede basta bastang
meeting of minds between two persons
babawiin yung agreement nyo unless the
whereby one binds himself, with respect
other party allows you to or the court
to the other, to give something or render
allows you for some justifiable reason.
some service. It's an agreement between
Compliance in good faith means the
two persons where one binds himself in
obligation must be interpreted not by the
relation to another, to give something or
letter that killeth but the spirit that giveth
render some service. How is it different
it life. So you have to look at the intention
from an obligation? An obligation is a
of the parties behind the obligation to see
result of a contract or some other source.
what was supposed to be given, done or
Hence, a contract, if valid, always results
not done. Essentially you have to look at
in obligations but not all obligations come
what was the point of them entering into
from contracts as already demonstrated
that obligation whenever you're trying to
by Art. 1157. Moreover, a contract always
interpret a contract.
presupposes a meeting of the minds but
this is not always the case in all kinds of
obligations like in Art.1159 which states
UNITED ALLOY VS UCPB
that “obligations arising from contracts
have the force of law between the HELD:
contracting parties and should be
Petitioners do not deny their liability
complied with in good faith.”
under the above quoted Surety
Agreement.
Now Art. 1159 as also known as the
principle of autonomy of will and this is As correctly held by both the RTC and the
explained in art 1306 that the contracting CA, Article 1159 of the Civil Code expressly
parties may establish such stipulations, provides that "[o]bligations arising from
clauses, terms and conditions as they may contracts have the force of law between
the contracting parties and should be
complied with in good faith." The RTC as
well as the CA found nothing which would
justify or excuse petitioners from
non-compliance with their obligations
under the contract they have entered into.
Thus, it becomes apparent that petitioners
are merely attempting to evade or, at
least, delay the inevitable performance of
their obligation to pay under the Surety
Agreement and the subject promissory
notes which were executed in
respondent's favor.
The Court notes, however, that the
interest rates imposed on the subject
promissory notes were made subject to
review and adjustment at the sole
discretion and under the exclusive will of
UCPB. Moreover, aside from the
Consolidated Statement of Account
attached to the demand letters addressed
to petitioner spouses Chua and their
co-defendants,19 no other competent
evidence was shown to prove the total
amount of interest due on the above
promissory notes. In fact, based on the
attached Consolidated Statement of
Account, UCPB has already imposed a 24%
interest rate on the total amount due on
respondents' peso obligation for a short
period of six months. Settled is the rule
that any contract which appears to be
heavily weighed in favor of one of the
parties so as to lead to an unconscionable
result is void.19 Any stipulation regarding
the validity or compliance of the contract
which is left solely to the will of one of the
parties, is likewise, invalid.20
Moreover, courts have the authority to
strike down or to modify provisions in
promissory notes that grant the lenders
unrestrained power to increase interest
rates, penalties and other charges at the
latter's sole discretion and without giving
prior notice to and securing the consent of
the borrowers.21 This unilateral authority
is anathema to the mutuality of contracts
and enable lenders to take undue
advantage of borrowers.22 Although the
Usury Law has been effectively repealed,
courts may still reduce iniquitous or
unconscionable rates charged for the use
of money.
*We have the case of united alloy v. UCPB.
In this case united alloy or uni alloy was
granted a loan by UCPB in the amount of
50 mil now uni alloy failed to pay its
obligations so ucpb filed an action for sum
of money against uni allow. Uni alloy also
filed its own complaint against UCPB for
annulment of the contract alleging that
the contract was attended with fraud. The
main issue in this case is whether or not
uni alloy should be liable for the amount
awarded by the trial court bc the trial
court ended up awarding the entire loan
amount plus interest ok? So the SC said in
this case that uni alloy should be made to
pay, they do not deny their liability and
their surety agreement and if you look at
the application of 1159 in this case the SC
said art 1159 of CC expressly provides that
“obligations arising from contracts have
the force of law between the contracting
parties and should be complied with good
faith”. Both the trial court and CA found
nothing that would justify or excuse
unialloy for noncompliance with their
obligations kasi if you look at the
allegations sabi ni alloy may fraud daw but
sc said it becomes apparent that uni alloy
is merely attempting to evade or at least
delay the inevitable performance of their
obligation under the surety agreement.
Now with respect to the interest rates that
were imposed on the promissory notes
the sc said that these had to be struck or
at least reduced bc there was supposedly
an authority in favor of UCPB wc would
allow it to unilaterally increase the
interest rates at its sole discretion and
under its exclusive will. But the Sc said
that settled is the rule that any contract
which appears to be heavily weighed in
favor of one of the parties so as to lead to
an unconscionable result is void. Any
stipulation regarding the validity or
compliance of the contract which is left
solely to the will of one the parties is
likewise invalid. This unilateral authority is
anathema to the mutuality of contracts
and enable lenders to take undue
advantage of borrowers. So ultimately
even if the SC found that uni alloy should
be made to pay its debt at the same time
it could not uphold unilateral power of
ucpb to increase the interest rates due on
the debt okay? Bc whether its autonomy
of will, it has to be, it should not be
contrary to law, public policy and morals
as well. In this case the interest rates
became unconscionable therefore the sc
had to void the same agreement. Ok?
Article 1160. Obligations derived from
quasi-contracts shall be subject to the
provisions of Chapter 1, title XVII of this
book.
● Quasi-contracts - a judicial relation
which arises from certain lawful
voluntary and unilateral act/s
executed by somebody for the
benefit of another and for which
the former must be indemnified to
the end that no one shall be
enriched at the expense of
another.
● Characteristics:
○ It should be a lawful act
○ It should be a voluntary act
○ It should be a unilateral act
*What is a quasi-contract? It is a juridical
relation which arises from certain lawful,
voluntary and unilateral act/s executed by
somebody for the benefit of another and
for which the former must be indemnified
to the end that no one shall be enriched
at the expense of another. A
quasi-contract should be a lawful act, it
should be voluntary, and it should be
unilateral.
So when we say it's lawful it means that
the act performed is not violative or
contrary to the law.
When we say voluntary, it must have been
performed free from violence, force or
intimidation or undue influence.
When we say unilateral, it comes solely
from the own volition of the party who
performs the act. He does not act as a
result of an agreement or contract with
the other. He is driven to act by his own
independent will.
Two Principal Types
1. Negotiorum gestio - juridical
relation which takes place when
somebody takes charge of the
agency or management of the
 business or property of another
without any power from the latter.
The owner shall reimburse the
gestor for the necessary and useful
expenses incurred by the latter,
and for the damages suffered by
him in the performance of his
functions.
2. Solutio indebiti - a juridical relation
which takes place when somebody
received something from another
without any right to demand for it,
and the thing was unduly delivered
through mistake. The obligation to
return the thing arises on the part
of the recipient (*because he does
not have the right to receive that
thing).
*Example of Negotiorum Gestio: A
temporarily uses the house and B takes
care of the house while he is away. Then
when a fire broke out in their
neighborhood B put the house with water
to prevent it from burning any further. In
this case, there was no prior authority
from A but B took charge of the house.
Does the act of B lawful? It's not
prohibited to help another person from
his house burning. Is it voluntary? Yes, he
did it without being forced, without being
vitiated, or without his consent being
vitiated or being intimidated into doing it.
Was it unilateral in his part? Yes, because
he was the only one who initiated the act
there was no request from the owner of
the house. So in this case A should
reimburse B for any costs B may have
incurred in saving his house, like if he got
injured trying to carry the bucket of water
because it was too heavy A will have to
pay first bills because A was benefited by
B's act. Otherwise, the law will view that
as unjust enrichment.
Solutio indebiti on the other hand is
payment by mistake. Example: A owed B
10,000 and they reduced their agreement
in writing. How many years does B have to
collect on the debt considering it's a
written contract? It's 10 years, so if B fails
to collect within 10 years, the action to
recover the debt has already been
prescribed.
But what if A still pays after 11 years not
knowing that the obligation has already
prescribed? Can he still recover? Yes, he
can because he made a mistake.
But if A pays knowing that the 10 year
period has prescribed, can he still recover
his payment? No he cannot because it's
no longer payment by mistake because he
is aware that despite the 10 year period
he still paid. Meaning he was aware that
the debt had already prescribed but he
still made that payment, there could not
have been any mistake.
This also ties back on how you cannot
renounce a right that you did not know
you have. In the former case you did not
know you were already entitled to the
defense of prescription. Hence, even if the
payment acted as a sort of renunciation of
prescription the fact that you didn't know
that you were renouncing that right
means that there could not have been an
effective renunciation.
DOMESTIC PETROLEUM RETAILER CORP.
VS MIAA
FACTS: DPRC was a lessee of MIAA,
sometime in 1998 MIAA passed a
resolution increasing the rentals to be
paid by its lessees. DPRC protested this in
writing but continued to pay the increased
rentals. Eventually the resolution issued
by MIAA with respect to the increase in
the rentals was struck down by the courts.
so DPRC stopped paying the increased
rentals rate and instead paid the original
rental rate. MIAA however still required
the payment of the increased rentals until
2007 which DPRC refused to pay
prompting MIAA to send a final demand
letter to DPRC. MIAA then filed a
complaint for collection against DPRC.
HELD:
For the concept of solutio indebiti to
apply, the undue payment must have been
made by reason of either an essential
mistake of fact or a mistake in the
construction or application of a doubtful
or difficult question of law. Mistake entails
an error, misconception, or
misunderstanding.
In the instant case, petitioner DPRC made
the overpayments in monthly rentals from
December 11, 1998 to December 5, 2005
not due to any mistake, error, or omission
as to any factual matter surrounding the
payment of rentals. Nor did petitioner
DPRC make the overpayments due to any
mistaken construction or application of a
doubtful question of law.
Instead, petitioner DPRC deliberately
made the payments in accordance with
respondent MIAA's Resolution No. 98-30,
albeit under protest. It must be recalled
that after the issuance of Resolution No.
98-30, on December 8, 1998, petitioner
DPRC protested in writing to respondent
MIAA, alleging that Resolution No. 98-30
was invalidly issued. However, petitioner
DPRC also signified its intention to comply
in good faith with the terms and
conditions of the lease contract by paying
the amount charged in accordance with
Resolution No. 98-30 despite registering
its objection to its validity.
Solutio indebiti applies when payment
was made on the erroneous belief of facts
or law that such payment is due. In the
case at hand, petitioner DPRC's
overpayment of rentals from 1998 to 2005
was not made by sheer inadvertence of
the facts or the misconstruction and
misapplication of the law. Petitioner DPRC
did not make payment because it
mistakenly and inadvertently believed that
the increase in rentals instituted by the
subsequently voided Resolution No. 98-30
was indeed due and demandable. From
the very beginning, petitioner DPRC was
consistent in its belief that the increased
rentals were not due as Resolution No.
98-30 was, in its view, void.
However, petitioner DPRC still made
payment despite its objection, not due to
any mistaken belief, but for the sole
reason that prior to the Court's Decision in
Manila International Airport Authority v.
Airspan Corporation, et al., Resolution No.
98-30 was still presumed to be legal,
having the force of law in the absence of
any judicial declaration to the contrary.
Hence, without any judicial declaration on
the nullity of Resolution No. 98-30 at that
time, petitioner DPRC had no alternative
but to make the subject payments, though
under protest. Therefore, it is not correct
to say that the subject payments made by
petitioner DPRC were made by mistake or
inadvertence.

*So in this case they could not recover the

payment based on solutio indebiti.