THE LAW ON OBLIGATIONS AND CONTRACTS

LAW
- Any rule of action
- Any system of uniformity
SUBJECTS OF LAW
Moral law – public displeasure; right or wrong; no definite legal sanction
Divine law – law of religion and faith; deals on the concept of sin and salvation
Natural law – dictates of reason alone; based on heart and conscience
Physical law – laws of physical science or physical law; physical phenomena that people feel and
sense, ex: law on gravity
State law – imprisonment and/or fine or damages; enforced by the state; ex: marriage, laws on
obligation and contracts
CONCEPT OF STATE LAW
- Promulgated and enforced by the state
General sense: The mass of obligatory rules established for the purpose of governing the
relations of persons in society.
Specific sense: rule of conduct, just, and obligatory, promulgated by the legitimate authority for
common observance and benefit.
CHARACTERISTICS OF LAW
1. Rule of conduct
- Right or wrong; what shall and what shall not be done
2. Obligatory
- Imposed a duty to be obeyed with sanction for disobedience
3. Promulgated legitimate authority
- Legislature/legislative branch of the government
4. For common observance and benefit
- Law must be observed by all for the benefit of all
Title 1 – obligations (articles 1156-1304, civil code)
 Article 1156. An obligation is a juridical necessity to give, to do or not to do.
 Obligation = Latin word which means tying or binding
CIVIL CODE DEFINITION
Article 1156 – defines obligation in its passive aspect

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 EXAMPLES OF SPECIAL LAWS:
1. Corporation codes
2. Negotiable instruments law – notice
3. Insurance code
4. National internal revenue code
5. Revised penal code
6. Labor code
ESSENTIAL REQUISITES OF AN OBLIGATION
1. Passive subject (debtor or obligor) – person who is bound to the fulfillment of the
obligation; he who has a duty
2. Active subject (creditor or obligee) – person who is entitled to demand the fulfillment of
the obligation; he who has a right
3. Object or prestation (subject matter of the obligation) – conduct required to be observed
by the debtor; without prestation, there is nothing to perform
4. A juridical or legal tie (called efficient cause) – that which binds or connects the parties to
the obligation; tie in an obligation can easily be determined by knowing the sources of
the obligation
KINDS OF OBLIGATION ACCORDING TO THE SUBJECT MATTER
1. Real obligation (obligation to give) – subject matter is a thing which the obligator must
deliver to the obligee; ex. Seller binds himself to deliver a piano to the buyer
2. Personal obligation (obligation to do or not to do) – subject matter is an act to be done;
positive/negative
SOURCES OF OBLIGATIONS
1. Law – when they are imposed by law itself; ex. Obligation to pay taxes
2. Contracts – when they arise from the stipulations of the parties; contract = meeting of
minds between 2 persons whereby 1 binds himself, with respect to the other, to give
something or to render some service. (article 1305); ex. Obligation to repay a loan or debt
by virtue of an agreement
3. Quasi contracts – arise from lawful voluntary and unilateral acts which are enforceable to
the end that no one shall be unjustly enriched or benefited at the expense of another; ex.
Obligation to return money paid by mistake or which is not due
CONTRACTUAL OBLIGATIONS
1. Binding force – obligations arising from contracts have the force of law between the
contracting parties; binding effect of obligations imposed by laws = does not mean that
contract is superior to the law
2. Requirement of a valid contract – a contract is valid if it is bot contrary to law, morals,
good customs, public order, and public policy; invalid if it is contrary (article 1306)

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 REQUISITES OF QUASI-DELICT
1. There must be an act or omission;
2. There must be fault or negligence;
3. There must be a damage caused;
4. There must be a direct relation or connection of cause and effect between the act or
omission and the damage;
5. There is no pre-existing contractual relation between the parties

[NOTES]
 Void = not valid
 Supreme court decisions = judicial decisions or jurisprudence
 Concurring opinion = agree result; disagree reason
 Dissenting opinion = disagree result; disagree reason
 Law can be substantive or adjective
 Public law = government and people
 Private law = individual only
 Mercantile law = commercial law
 Book IV civil code = obligations and contracts
 Obligation = tying or binding
 Mandated = imposed
 Stipulation = agreement
 Quasi contracts = no one shall be unjustly enriched ore benefited at the expense of
another; Ex: obligation to return money paid by mistake or which is not date; obligation
created by law for reasons of justice and fairness; obligation that is imposed by the courts
to avoid injustice
 Negotiorum gestio (for “management of business”) = agency without specific
authorization;
ex. You saw a child alone crying and went near him treat him food bought him clothes
then once you get back you saw his parents and accused you for kidnapping her child
(you didn’t know that the child isn’t missing)
 Solutio indebiti = juridical relation which is created when something is received when
there is no right to demand it and it was unduly delivered through mistake
 Crimes or acts or omissions punished by law = ex. Obligation of thief to return the car
 Quasi-delicts or torts = damage caused to another through an act or omissions, there
being a fault or negligence, but no contractual relation exist between the parties; no crime
committed in purpose but because of negligence you must pay the damages you caused
ex. Obligation of the possessor of an animal to pay for the damage which it may cause
 Article 1158 = It must be stated in the law, if not, then it is not an obligation
 Contract = meeting of minds between 2 persons
 Void contract = never exists (article 1409)
 Unenforceable contract = may be valid but cannot be enforced (article 1403)

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  Obligation arising from other sources do not have any form at all
 General rule = law does not require any form in obligations arising from contracts for
their validity of binding force
 Contractual obligation = obligations arising from contracts or voluntary agreements
 Voidable contract = a contract which may appear to be valid and has all of the necessary
elements to be enforceable
 Compliance in good faith – performance in accordance with the stipulations or terms of
the contract or agreement
 The requisites are = (1) no right to receive the thing delivered (2) thing was delivered
through mistake
 Article 1162. = obligation derived from quasi-delicts shall be governed by the provisions

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