LESSON 1

ATTY. ELEAZA MARIE P. ENCISA, RN, RM

“ WHAT IS AN
OBLIGATION?
”
Art. 1156 of the Civil Code

 ARTICLE 1156. An obligation is a juridical

necessity to give, to do or not to do.
OBLIGATION

It is a tie of law or a juridical bond by virtue

of which one is bound in favor of another to
render something — and this may consist in
giving a thing, doing a certain act, or not doing a
certain act.
(Makati Stock Exchange v. Campos,
G.R. No. 138814, April 16, 2009)

Obligation is a juridical relation or a juridical

necessity whereby a person (creditor) may demand
from another (debtor) the observance of a determinative
conduct (giving, doing, or not doing), and in case of
breach, may demand satisfaction from the assets of the
latter.
 Obligation is a juridical necessity

Obligation is a juridical necessity because in case of non-compliance, the courts of

justice may be called upon to enforce its fulfillment or, in default thereof, the economic
value that it represents.
In a proper case, the debtor may also be made liable for damages, which represent the
sum of money given as a compensation for the injury or harm suffered by the creditor or
obligee (he who has the right to the performance of the obligation) for the violation of his
rights.
In other words, the debtor must comply with his obligation whether he likes it or not;
otherwise, his failure will be visited with some harmful or undesirable legal consequences.
If obligations were not made enforceable, then people can disregard them with impunity.
If an obligation cannot be enforced, it may be only a natural obligation.
Elements of an Obligation

1. Passive Subject
2. Active Subject
3. Object or prestation
4. Juridical or legal tie
Passive Subject

A passive subject (called debtor or obligor) or the

person who is bound to the fulfillment of the obligation;
he who has a duty
Active Subject

An active subject (called creditor or obligee) or the

person who is entitled to demand the fulfi llment of the
obligation; he who has a right;
Object or Prestation

Object or prestation (subject matter of the obligation) or the

conduct required to be observed by the debtor. It may consist in
giving, doing, or not doing. (see Art. 1232.) Without the
prestation, there is nothing to perform. In bilateral obligations
(see Art. 1191.), the parties are reciprocally debtors and
creditors;
Object or Prestation

NOTE: In order to be valid, the object or prestation must

be: 1. Licit or lawful;
2. Possible, physically, & judicially;
3. Determinate or determinable; and
4. Pecuniary value or possible equivalent in money.
Juridical or legal tie

A juridical or legal tie (also called effi cient cause) or that

which binds or connects the parties to the obligation. The tie
in an obligation can easily be determined by knowing the
source of the obligation. (Art. 1157.)
Under a building contract, X bound
himself to construct a house for Y for
P1,000,000.00.

1.What is the passive subject?

2.What is the active subject?
3.What is the object or prestation?
4.What is the juridical or legal tie?
Under a building contract, X bound
himself to construct a house for Y for
P1,000,000.00.

Here, X is the passive subject, Y is the

active subject, the building of the house is
the object or prestation, and the agreement
or contract, which is the source of the
obligation, is the juridical tie.
Suppose X had already constructed the
house and it was the agreement that Y would
pay X after the construction is finished.

Who is the active subject?

Who is the passive subject?
Suppose X had already constructed the
house and it was the agreement that Y would
pay X after the construction is finished.

X, then, becomes the active subject and Y,

the passive subject.
Distinctions between Natural and
Civil Obligations
Civil Obligations Natural Obligations
Obligations which give to Obligations which do not
the creditor or obligee a grant a right of action to
right of action in courts of enforce their performance
justice to enforce their although in case of
performance voluntary fulfillment by the
debtor, the latter may not
recover what has been
delivered or rendered by
reason thereof. (Art.*
1423.)
based on positive law Based on equity and
natural law
Art. 1156 refers only to civil obligations which are
enforceable in court when breached. It does not cover
natural obligations (Arts. 1423 -1430) because the
latter are obligations that cannot be enforced in court
on equity and natural law and not on positive law
(Pineda, 2000).
Sources of Obligations

Art. 1157. Obligations arise from:

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

Legal obligations. Article 1158 refers to legal

obligations or obligations arising from law. They are
not presumed because they are considered a burden
upon the obligor. To be demandable, they must be
clearly set forth in the law, i.e., the Civil Code or
special laws. Thus:
1. Law

An employer has no obligation to furnish free legal assistance to

his employees because no law requires this, and, therefore, an
employee may not recover from his employer the amount he
may have paid a lawyer hired by him to recover damages
caused to said employee by a stranger or strangers while in the
performance of his duties. (De la Cruz vs. Northern Theatrical
Enterprises, 95 Phil. 739 [1954].)
1. Law

Facts: X, by virtue of having been sent for by B and C,

attended as physician and rendered professional
services to a daughter-in-law of B and C during a diffi
cult and laborious childbirth.
Issue: Who is bound to pay the bill: B and C, the parents-
in-law of the patient, or the husband of the latter?
1. Law

Held: The rendering of medical assistance in case of illness is

comprised among the mutual obligations to which spouses are
bound by way of mutual support. If spouses are mutually bound to
support each other, there can be no question that when either of
them by reason of illness should be in need of medical assistance,
the other is to render the unavoidable obligation to furnish the
services of a physician and is liable for all expenses, including the
fees for professional services. This liability originates from the
above-mentioned mutual obligation which the law has expressly
established between the married couple. B and C not having
personally bound themselves to pay are not liable. (Pelayo vs.
Lauron, 12 Phil. 453 [1909].)
2. Contracts

ART. 1159. Obligations arising from

contracts have the force of law between the
contracting parties and should be complied
with in good faith.
2. Contracts

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. (Art. 1305.) It is the formal expression by the
parties of their rights and obligations they have
agreed upon with respect to each other.
2. Contracts

Binding force. — Obligations arising from contracts are governed

primarily by the agreement of the contracting parties.
Once perfected, valid contracts have the force of law between the
parties who are bound to comply therewith in good faith, and neither
one may without the consent of the other, renege therefrom. (Tiu Peck
vs. Court of Appeals, 221 SCRA 618 [1993].)
In characterizing contracts as having the force of law between the
parties, the law stresses the obligatory nature of a binding and valid
agreement, absent any allegation that it is contrary to law,
morals, good customs, public order, or public policy. (Art. 1306.)
2. Contracts

It behooves every contracting party to learn and to

know the contents of an instrument before signing
and agreeing to it. (Dio vs. St. Ferdinand Memorial
Park, Inc., supra.)
2. Contracts

Courts have no alternative but to enforce contracts as they

were agreed upon and written when the terms thereof are
clear and leave no room for interpretation. (Art. 1370.).
This does not mean, however, that contract is superior to the
law. Although a contract is the law between the contracting
parties, the provisions of positive law which regulate such
contracts are deemed included and shall limit and govern the
relations between the parties. (Asia World Recruitment, Inc.
vs. National Labor Relations Commission, 313 SCRA 1 [1999].)
2. Contracts

Courts have no alternative but to enforce contracts as they

were agreed upon and written when the terms thereof are
clear and leave no room for interpretation. (Art. 1370.).
This does not mean, however, that contract is superior to the
law. Although a contract is the law between the contracting
parties, the provisions of positive law which regulate such
contracts are deemed included and shall limit and govern the
relations between the parties. (Asia World Recruitment, Inc.
vs. National Labor Relations Commission, 313 SCRA 1 [1999].)
2. Contracts

A compromise agreement is immediately executory and

not appealable, except for vices of consent (Art. 1330.)
or forgery. Upon the parties, it has the effect and the
authority of res judicata, once entired into. To have the
force of law between the parties, it must comply with
the requisites of contracts. (Art. 1318.) It may be either
extrajudicial (to prevent litigation) or judicial (to end a
litigation). (Magbanua vs. Uy, 458 SCRA 184 [2005].)
2. Contracts

Requirements of a valid contract. — As a source of

obligation, a contract must be valid and enforceable. (see
Art. 1403.) A contract is valid (assuming all the
essential elements are present, Art. 1318.) if it is not
contrary to law, morals, good customs, public order,
and public policy. It is invalid or void if it is contrary to law,
morals, good customs, public order, or public policy. In the
eyes of the law, a void contract does not exist. (Art. 1409.)
Consequently, no obligations will arise.
2. Contracts

Compliance in good faith. — It means compliance or

performance in accordance with the stipulations
or terms of the contract or agreement. Good faith
and fair dealing must be observed to prevent one party
from taking unfair advantage over the other. Evasion
by a party of legitimate obligations after receiving the
benefits under the contract would constitute unjust
enrichment on his part.
2. Contracts

Compliance in good faith. — It means compliance or

performance in accordance with the stipulations
or terms of the contract or agreement. Good faith
and fair dealing must be observed to prevent one party
from taking unfair advantage over the other. Evasion
by a party of legitimate obligations after receiving the
benefits under the contract would constitute unjust
enrichment on his part.
3. Quasi-Contracts

ART. 1160. Obligations derived from

quasi-contracts shall be subject to
the provisions of Chapter 1, Title XVII,
of this Book.
3. Quasi-Contracts

Quasi-contractual obligations. Article 1160 treats of

obligations arising from quasi-contracts or
contracts implied in law. A quasi-contract is that
juridical relation resulting from certain lawful,
voluntary and unilateral acts by virtue of which the
parties become bound to each other to the end
that no one will be unjustly enriched or benefited
at the expense of another. (Art. 2142.)
2. Quasi-Contracts

1. It is not, properly, a contract at all.

2. In a contract, there is a meeting of the minds or consent; the parties
must have deliberately entered into a formal agreement. In a quasi-
contract, there is no consent but the same is supplied by fiction of law.
In other words, the law considers the parties as having entered
into a contract, irrespective of their intention, to prevent
injustice.
3. Corollarily, if one who claims having enriched somebody has done so
pursuant to a contract with a third party, his cause of action should be
against the latter, who, in turn, may, if there is any ground therefor,
seek relief against the party benefited.
3. Quasi-Contracts

Facts: By virtue of an agreement between X and Y,

X assisted Y in improving a large tract of land which
was later declared by the court as belonging to C.

Issue: Has X the right to be reimbursed by Z for X’s

services and expenses on the ground that the
improvements are being used and enjoyed by Z?
2. Quasi-Contracts

Held: No. From the language of Article 2142, it is

obvious that a presumed quasi-contract cannot
emerge as against one party when the subject
matter thereof is already covered by an existing
contract with another party. X’s cause of action
should be against Y who, in turn, may seek relief
against Z. (Cruz vs. J.M. Tuazon Co., Inc., supra.)
3. Quasi-Contracts

Kinds:
1. Negotiorum gestio
2. Solutio indebiti
2. Quasi-Contracts

(1) Negotiorum gestio is the voluntary management of the

property or affairs of another without the knowledge or
consent of the latter. (Art. 2144.)
(2) Thus, if through the efforts of X, a neighbor, the house
of Y was saved from being burned, Y has the obligation
to reimburse X for the expenses X incurred although Y
did not actually give his consent to the act of X in
saving his house on the principle of quasi-contract.
2. Quasi-Contracts

This juridical relation does not arise in either of these

instances:
(a) When the property or business is not neglected or
abandoned, in which case the provisions of the Civil Code
regarding unauthorized contracts (Arts. 1317, 1403[1],
1404.) shall govern; or
(b) (b) If, in fact, the manager has been tacitly authorized by
the owner, in which case the rules on agency shall
govern. (Art. 2144.)
2. Quasi-Contracts

(2) Solutio indebiti is the juridical relation which is created when something is
received when there is no right to demand it and it was unduly delivered
through mistake. (Art. 2154.)
The obligation to pay money mistakenly paid arises from the moment said
payment was made, and not from the time the payee admits the obligation to
reimburse. (Comm. of Internal Revenue vs. Esso Standard Eastern, Inc., 172
SCRA 364 [1989].)
Under the principle, the government has to restore (credit or refund) to the
taxpayer the amounts representing erroneous payments of taxes. (Phil.
Geothermal, Inc. vs. Comm. of Internal Revenue, 465 SCRA 308 [2005].) The
quasi-contract of solutio indebiti is based on the ancient principle
that no one shall enrich himself unjustly at the expense of another.
2. Quasi-Contracts

Solutio indebiti applies where:

(a) payment is made when there exists no binding
relation between the payor, who has no duty to pay,
and the person who received the payment; and
(b) the payment is made through mistake and not
through liberality or some other cause
2. Quasi-Contracts

Facts: X, a tax-exempt cooperative store,

paid taxes to the City of Manila, believing
that it was liable.
Issue: May X recover the payment?
Held: Yes, as it was made under a mistake.
4. Acts or Omissions punished by law

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,16 and of Title XVIII of
this Book, regulating damages.
4. Acts or Omissions punished by law

The commission of an offense has a two-pronged

effect: one, on the public as it breaches the
social order and the other, upon the private
victim as it causes personal sufferings or
injury, each of which is addressed, respectively,
by the imposition of heavier punishment on the
accused and by an award of additional damages
to the victim. (People vs. Catubig, 363 SCRA 621
[2001].)
4. Acts or Omissions punished by law

The rule that every person criminally liable for a

felony is also civilly liable. (Art. 100, Revised
Penal Code)
4. Acts or Omissions punished by law

The rule that every person criminally liable for a

felony is also civilly liable. (Art. 100, Revised
Penal Code)
4. Acts or Omissions punished by law

The extent of the civil liability arising from crimes is

governed by the Revised Penal Code and the Civil
Code.18 This civil liability includes:
(1) Restitution;
(2) Reparation for the damage caused; and
(3) Indemnifi cation for consequential damages. (Art.
104, Revised Penal Code.)
4. Acts or Omissions punished by law

X stole the car of Y. If X is convicted, the court will order

X: (1) to return the car (or to pay its value if it was lost
or destroyed);
(2) to pay for any damage caused to the car; and
(3) to pay such other damages suffered by Y as a
consequence of the crime.
4. Quasi-delicts

ART. 1162. Obligations derived from

quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of
this Book, and by special laws.
4. Quasi-delicts

A quasi-delict is an act or omission by a

person (tortfeasor) which causes damage
to another in his person, property, or rights
giving rise to an obligation to pay for the
damage done, there being fault or
negligence but there is no pre-existing
contractual relation between the parties.
4. Quasi-delicts

Requisites of quasi-delict. Before a person can

be held liable for quasi-delict, the following
requisites must be present:
(1) There
must be an act or omission by the
defendant;
(2) There
must be fault or negligence of the
defendant;
(3) There must be damage caused to the plaintiff;
4. Quasi-delicts

Requisites of quasi-delict.
(4) There must be a direct relation or connection
of cause and effect between the act or omission
and the damage; and
(5) There is no pre-existing contractual relation
between the parties.