BUSINESS LAW

Module 1: Introduction to Law and General Provisions on Law on Obligations

MODULE 1

INTRODUCTION TO LAW
AND
GENERAL PROVISIONS ON
LAW ON OBLIGATIONS

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Module 1: Introduction to Law and General Provisions on Law on Obligations

TABLE OF CONTENTS
Title Page

Gospel Reflection
3

Guide to abbreviations and citations

4

INTRODUCTION TO LAW
5- 11

CHAPTER 1. - GENERAL PROVISIONS ON THE LAW ON OBLIGATIONS

12- 18

PRACTICE EXERCISE 1: INTRODUCTION TO LAW AND GENERAL PROVISIONS ON

OBLIGATIONS 19- 25

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Module 1: Introduction to Law and General Provisions on Law on Obligations

GOSPEL REFLECTION

Psalm 119: 1
“Blessed are those whose ways are blameless,
who walk according to the law of the Lord.”

Instruction: Using the space below, write a reflection essay.

Share your personal reflection based on the images and the bible verse above. How do you relate the images and
bible verse into your personal life? How do you think this bible verse connect to this module?

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Module 1: Introduction to Law and General Provisions on Law on Obligations

Guide to abbreviations and citations

Art ……………………………. Article

Sec ………………………….… Section
Ibid. ……………………............. the same reference
supra ……………………….…… above
infra …………………………….…. below
i.e. …………………..……….. that is
e.g. …………………...………. for example

1. The Law on Obligations and Contracts consists of 275 Articles, from Article 1156 to
Article 1430.
2. When the citation is prefixed by “see” as, for example, (see Art. 1423), the provision is
cited to support the statement, or to emphasize that it is related or relevant to the matter
being discussed, or to indicate that a topic or termed mentioned is discussed thereunder.
3. Ibid. is used when reference is made to the previously cited Article and/or Section on the
same or preceding page to avoid repeating the citation.
4. supra is used to indicate that a topic or term mentioned is discussed earlier under another
section of the same Article.
5. If the topic or term is discussed under another Article instead of supra or infra, reference
is made to the Article and Section prefixed by “see” as for example (See Article 2180).

In law references, it is not unusual that a period is put at the end of every citation of legal
publications, court decisions, or provisions of the Constitution or law. Incidentally, many
law book authors put a period at the end of every heading and subheading of their
explanations or discussions of the law. Following legislative style which is also observed
in most administrative rules and regulations issued to implement existing laws, the period
after subheading is followed by a short dash. (De leon, Constitution Made Simple, p. v &
vi)

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Module 1: Introduction to Law and General Provisions on Law on Obligations

INTRODUCTION TO LAW

This topic discusses the general nature of law: (1) definition of law in general, (2) the
divisions of law, (3) subjects of law, (4) concepts of (state) law, (5) characteristics, necessity and
functions of law, (6) sources of law, (7) rules in case of doubt in interpretation or application of
laws, (8) organs of social control, (9) comparison of law with other means of social control, (10)
organization of courts, (11) classifications of law. The last part of this topic covers the following:
(12) definition of law on obligations and contracts, (13) Civil Code of the Philippines, (14) Civil
Code provisions on obligations and contracts, and lastly, (15) the rule on conclusive presumption
of knowledge of law.

CHAPTER OUTCOMES
Course Learning Outcomes Module Learning Outcomes Chapter Learning Outcomes
CLO1. Explain what the Discuss the introduction to Discuss the kinds of law,
Philippine law on obligations law and the general provisions sources of law and judicial
and contracts is and the of the law on obligations. system in the country.
prevailing jurisprudence
relating thereto, specifically
on the nature and effect of
obligations, different kinds of
obligations, extinguishment of
obligations, nature of
contracts and its essential
requisites, form of contracts,
interpretation of contracts and
the various kinds of defective
contracts under the Philippine
law.

INTRODUCTION TO LAW (De leon, The Law on Obligations and Contracts, p. 1-16)
(1) Definition of law in general. In its widest and most comprehensive sense, the term law
means any rule of action or any system of uniformity. Thus, law in general, determines not
only the activities of men as rational beings but also the movements or motions of all
objects of creation, whether animate or inanimate.

(2) General divisions of law.

Law (in its strict legal sense)
Promulgated by the state
Enforced by the state
Known as the state law
(3) Subjects of law.
Law (in the non-legal sense)
Not promulgated by the state
Not enforced by the state
Includes divine law, natural law, moral law, and physical
law
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Divine Law Natural Law Moral Law Physical Law State Law
is the law of Divine The totality of In the operation The law that is
religion and faith inspiration in the norms of or course of promulgated and
which concerns man of the sense good and right nature, there are enforced by the
itself with the of justice, conduct growing uniformities of state. Also called
concept of sin fairness, and out of the actions and positive law,
and salvation. righteousness collective sense orders of municipal or
of right or wrong sequence which civil law, or
of every are the physical imperative law.
community. phenomena that
we sense and
feel.
Source
Promulgated by Not by divine
God and revelation or
revealed to formal
mankind by promulgation,
means of direct but by internal
revelation. dictates of reason
alone.
Sanction
Lies in the If a member of
assurance of the community
certain rewards disregards the
and punishments moral norms, a
in the present life spontaneous
or in the life to social reaction is
come. produced in the
form of public
displeasure,
contempt or even
indignation.
Binding Force
Ever present and Is not absolute; As a rule of
binding on all varies with the action, only state
men everywhere changing times, law is enforced
and at all times. conditions, or by the state, with
convictions of the aid of its
the people. physical force, if
necessary.

(4) Concepts of (state) law.

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In General or Abstract Sense In Specific or Material Sense

Refers to all the laws taken together; it may be defined
as “the mass of obligatory rules established for the
purpose of governing the relations of persons in
society.”
Examples of the use of law in this sense are: “law of
the land,” “rule of law and not of men.” “equality
before the law,” “enforcement of the law,” etc.
law has been defined as a “rule of conduct, just
and obligatory, promulgated by legitimate
authority, and of common observance and
benefit.”
It has this second connotation when we refer to
a particular statute or legal rule, e.g., the law on
obligations and contracts.

(5) Characteristics of Law

A rule of conduct Obligatory Promulgated by Of common
legitimate authority observance and benefit
Tells us what shall be done Law is considered a In a democratic Law is intended by
and what shall not be done. positive command country like the man to serve man.
imposing a duty to Philippines, the
obey and involving a legitimate or
sanction which forces competent authority is
obedience. the legislature.
As a rule of human conduct, Under the It regulates the
law takes cognizance of Constitution, laws relations of men to
external acts only. called “statutes” are maintain harmony in
enacted by Congress society and to make
which is the name of order and co-
the legislative branch existence possible.
of or government; Law must, therefore,
LGUs are also be observed by all for
empowered to enact the benefit of all.
ordinances which
have the binding force
of laws.

(6) Necessity and Functions of law.

What would life be without law?
Society comes into existence because
its members could not live without it.
The need for internal order is as
constant as the need for external
defense. No society can be stable in
which either of these requirements
fails to be provided for.
(7) Sources of law.
What does law do?
Law secures justice, resolves
social conflict, orders society,
protects interests, controls
such relations.
Life without basic laws against
theft, violence, and destruction
would be solitary, nasty, brutish,
and short…less orderly, less
healthful, less wholesome, etc.
What is our duty as members of
society?
The sum of such rules as
existing in a given society,
under whatever particular
forms is what we refer to as the
legal system.
Since we find law necessary,
every citizen should have
some understanding of law
and observe it for the common
good.
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Constitution Legislation Administrative Judicial Custom Other

or executive decisions or sources
orders, jurisprudence
regulations
and rulings
“The written It consists in the They are those The decisions of “It consists of To the
instrument by declaration of issued by the courts, those habits and aforementioned
which the legal rules by a administrative particularly the practices which sources of law
fundamental competent officials under Supreme Court, through long may be added
powers of the authority. It is legislative applying or and (1) principles of
government are the authority. interpreting the uninterrupted justice and
established, preponderant Administrative laws or the usage have equity, (2)
limited and source of law in rules and Constitution become decisions of
defined and by the Philippines. regulations are form part of the acknowledged foreign
which these Acts passed by intended to clarify legal system of and approved tribunals, (3)
powers are legislature are or explain the law the Philippines. by society as opinions of
distributed so-called and carry into The decisions of binding rules of textwriters, and
among the enacted law or effect its general a superior court conduct.” It has religion. They
several statute law. provisions. on a point of law the force of law are, however,
departments for Legislation are binding on all when only
their safe and includes subordinate recognized and supplementary,
useful exercise ordinances courts. This is enforced by the that is, they are
for the benefit of enacted by called the state. resorted to by
the people.” LGUs. doctrine of the courts in the
precedent or absence of all
stare decisis. the other
sources.
The Administrative The Supreme A custom must They are,
fundamental acts are valid only Court, however, be proved as a however, not
law or supreme when they are not may reverse or fact according binding on the
law or highest contrary to the modify any of its to the rules of courts.
law of the land. laws and previous rulings. evidence.
Constitution.

(8) Rules in case of doubt in interpretation or application of laws.

Art. 9. “No judge or court shall decline to render judgment by reason of the silence, obscurity
or insufficiency of the laws.”
Art. 10. “In case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail.”
Case in Point: Pangan vs Court of Appeals, 166 SCRA 375
Doctrine: In our country, courts are not only courts of law but also of justice.
Faced with a choice between a decision that will serve justice and another that will deny it
because of a too strict interpretation of the law, courts must resolve in favor of the former, for
the ultimate end of the law is justice.

(9) Organs of social control. Law is not an end in itself. It may be viewed as a means of social
control- the control of social behavior that affects others.
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The following organizations, through rules, regulations and orders, control some of the behavior of their members.
Legal Institutions Churches Corporations Political Trade Associations
Parties
Labor Unions Professional Social Clubs Schools Families
Organizations

(10) Comparison of law with other means of social control.

Social Control Through Law
1. Laws are made and administered by the only
institutions in society authorized to act on behalf of
the entire citizenry.
2. Only the legal institutions within the society can
make rules, regulations, and orders with which the
entire citizenry must comply.
3. Citizens of a state cannot terminate their
relationship with the latter unless they choose to
leave the geographical area in which the state is
sovereign.
4. The sanctions or techniques of control through
law are more varied and complex, i.e.,
imprisonment, deportation, denial of license,
confiscation of property, imposition of civil
liability, dissolution of organizations, and denial of
privileges. For example, revocation
of ABS-CBN franchise.
5. Before the law “operates” against an individual,
various procedural steps are required, or due
process of law must strictly be observed.
Social Control Through Other Methods
Churches act only for their members.
The rules of social and economic organizations
govern only limited numbers.
People associated with an organization can
ordinarily terminate their relationship and thereby
free themselves from the impact of its rules and
regulations.
The sanctions or techniques of control available to
organizations such as churches, labor unions, and
political parties are limited. Expulsion is usually
the most powerful technique available to such
organizations to secure compliance with their rules,
etc.
Organs of social control other than those provided
by law are generally not required to comply with
such procedures in acting against individuals.
Except when their rules provide therefor.

(11) Organization of courts.

Supreme Court

Court of Appeals

Regional Trial Court

Municipal Trial Court

Legal Basis: Article VIII, Sec. 1, Philippine Constitution

“The judicial power or the power to decide actual cases and controversies involving the interpretation and
application of laws is vested in one Supreme Court and in such lower courts as may be established by laws.”

(12) Classifications of law.

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As to purpose:
Substantive Law (C-D-R) Adjective Law/Remedial Law/Procedural Law
The body of law creating, defining, and regulating rights The body of law prescribing the manner or
and duties which may be either public or private in procedure by which rights may be enforced or their
character. violations redressed.
Example: Law on Obligations and Contracts Example: The provision of law which says that
action for recovery of real property shall be filed
with the Regional Trial Court of the region where
the property or any part thereof lies.
As to subject matter:
Public Law Private Law
The body of legal rules which regulates the rights and duties The body of rules which regulates the relations of
arising from the relationship of the state to the people. individuals with one another for purely private ends.
Example: Criminal Law, International Law, Constitutional Example: Law on Obligations and Contracts, Civil
Law, Administrative Law, Criminal Procedure Law, Commercial Law and Civil Procedure

(13) Definition of law on obligations and contracts.

The body of rules which deals with the nature and sources of obligations and the rights arising
from agreements and the particular contracts.

(14) Civil Code of the Philippines.

✓ The Law on Obligations and Contracts is found in R.A. No. 386, otherwise known as
the Civil Code of the Philippines.
✓ DID YOU KNOW? Based mainly on the Civil Code of Spain which took effect in the
Philippines on December 7, 1889;
✓ DID YOU KNOW? Approved on June 18, 1949 and took effect on August 30, 1950
✓ DID YOU KNOW? The Civil Code is divided into four (4) books.

(15) Civil Code provisions on obligations and contracts.

❖ Book IV of the Civil Code deals with obligations and contracts.
❖ The General Provisions on Obligations are contained in Title I- Art. 1156-1304.
❖ The General Provisions on Contracts are contained in Title II- Art. 1305-1422.
❖ The general rules of law governing contracts are also applicable to the particular kinds
of contracts (like sale, agency, partnership, barter, etc.) in addition to the special
provisions of law governing each type of contract.
❖ Book IV also contains new provisions dealing with natural obligations which are found
in Title III, Articles 1423-1430.

(16) The Rule on Conclusive Presumption of Knowledge of Law.

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Art. 3. Ignorance of the law excuses no one from compliance therewith.

✓ “Ignorantia legis non excusat.” “Ignorance of the law excuses no one.”
✓ A mistake of law cannot be utilized as a lawful justification, because everyone is
presumed to know the law and its consequences.
✓ The rule, therefore, is founded not only on expediency and policy but also on necessity.
(Zulueta v. Zulueta, G.R. No. 428, April 30, 1902)
✓ “Evasion of the law would be facilitated and the administration of justice would be
defeated if persons could successfully plead ignorance of the law to escape the legal
consequence of their acts, or to excuse non-performance of their legal duties.”
➢ Conclusive Presumption. Every person is presumed to know the law even if he has no
actual knowledge of the law. (Tanada v. Tuvera)
➢ It applies only to mandatory and prohibitory laws. This may be deduced from the
language of the provision, which, notwithstanding a person’s ignorance does not excuse
his or her compliance with the laws. (D.M. Consunji, Inc. v. CA, G.R. No. 137873, April
20, 2001)
➢ This applies to all kinds of domestic laws, whether civil or penal (Luna v. Lunatoc, G.R.
No. L-22378, June 29, 1968) and whether substantive or remedial. (Zulueta v. Zulueta)
➢ Foreign law not included. The presumption does not apply to foreign laws because
there is no judicial notice of such foreign laws; such laws must be proved like any other
matter of fact. (Ching Huat v. Co Heong, G.R. No. L-1211, January 30, 1947).
➢ Doctrine of Processual Presumption. Where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that the foreign law is the same as ours. (EDI-
Staff Builders Int’l., Inc. v. NLRC, G.R. No. 145587, October 26, 2007)
➢ Mistake in the Application as Basis of Good Faith.
A mistake in the application or interpretation of difficult or doubtful provisions of law
may be the basis of good faith and has been given the same effect as a mistake of fact,
which may excuse one from the legal consequences of his conduct. (Civil Code, Art.
526, par 3 and Art. 2155)

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TITLE 1- OBLIGATIONS
CHAPTER 1. - GENERAL PROVISIONS
See Arts. 1156 – 1162

This chapter discusses the general provisions on the law on obligations:

Art. 1156, (1) meaning of obligation, (2) the definition of juridical necessity, (3) nature of obligations under the Civil
Code, (4) essential requisites of an obligation, (5) form of obligations, (6) distinction among obligation, right and
wrong, (7) kinds of obligations according to the subject matter;

Art. 1157, (8) sources of obligation, (9) sources classified;

Art. 1158, (10) legal obligations;

Art. 1159, (11) contractual obligations, (12) compliance in good faith;

Art. 1160, (13) quasi-contractual obligations, (14) kinds of quasi-contracts;

Art. 1161, (15) civil liability arising from crimes or delicts, (16) scope of civil liability; and

Art. 1162, (17) obligations arising from quasi-delicts, (18) requisites of quasi-delicts, (19) distinction between crime
and quasi-delict.

CHAPTER OUTCOMES
Course Learning Outcomes Module Learning Outcomes Chapter Learning Outcomes
CLO1. Explain what the Discuss the introduction to Discuss the general provisions
Philippine law on obligations law and the general provisions on the law on obligations.
and contracts is and the of the law on obligations.
prevailing jurisprudence
relating thereto, specifically
on the nature and effect of
obligations, different kinds of
obligations, extinguishment of
obligations, nature of
contracts and its essential
requisites, form of contracts,
interpretation of contracts and
the various kinds of defective
contracts under the Philippine
law.

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Art. 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

GENERAL PROVISIONS (De leon, The Law on Obligations and Contracts, p. 17-31)
(1) Meaning of Obligation.
✓ DID YOU KNOW? Obligation is derived from ➢ which means
the Latin word “obligatio” “tying” or
“binding.”
✓ a tie of law or a juridical ➢ by virtue of which ➢ this “something” is
bond one is bound in what we call
favor of another to “prestation” which
render “something” may consist in
giving a thing, doing
a certain act, or not
doing a certain act.
✓ a legal relation established between one party and another, whereby the latter (debtor) is
bound to the fulfillment of a prestation which the former (creditor) may demand of him.”

(2) The Definition of Juridical Necessity.

“Obligation is a juridical necessity because in ➢ Therefore, the keyword to
case of non-compliance, the courts of justice remember is “JURIDICAL.”
may be called upon to enforce its fulfillment or, in ➢ The word juridical converts the
default thereof, the economic value that it obligation to become a “CIVIL
represents.” OBLIGATION.”
“The debtor must comply with his obligation ➢ The debtor may be held liable for
whether he likes it or not; otherwise, his failure damages, which pertains to the sum
will be visited with some harmful or undesirable of money given as a compensation
legal consequences.” for the injury or harm that was
suffered by the creditor for the
violation of his rights.

(3) Nature of obligations under the Civil Code.

➢ Refers to obligations which give to the creditor
Civil obligations or obligee a right of action in courts of justice
to enforce their performance.
➢ not being based on positive law but on equity
DID YOU KNOW?
Natural and natural law, do not grant a right of action
obligations to enforce their performance.
(see Title III, ➢ Art. 1423- although in case of voluntary
Arts. 1423- 1430) fulfillment by the debtor, the latter may not

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recover what has been delivered or rendered

by reason thereof.

(4) Essential Requisites of an Obligation.

(1) Passive subject (2) Active (3) Object or (4) Juridical or
subject prestation legal tie
➢ called debtor or ➢ called ➢ subject matter ➢ also called
obligor creditor or of the efficient cause
obligee obligation
➢ the person who is ➢ the person ➢ the con- duct ➢ that which
bound to the who is required to be binds or
fulfillment of the entitled to observed by connects the
obligation; he who demand the the debtor. It parties to the
has a duty; fulfillment may consist in obligation.
of the giving, doing, The tie in an
obligation; or not doing. obligation can
he who has a (see Art. 1232.) easily be
right; determined by
knowing the
➢ source of the
obligation.
(Art. 1157.)

Son Ye-Jin entered into a contract with Hyun Bin for the construction of her Crash Landing On
You Commercial Center Building. Hyun Bin bound himself to construct the said building for
Son Ye-Jin for Php100,000,000.00.
➢ Here, Hyun Bin is ➢ Son Ye-Jin is ➢ The ➢ The agreement
the passive subject. the active construction or contract,
subject. of the which is the
commercial source of the
building is the obligation, is
object or the juridical
prestation. tie.
PRACTICE WHAT YOU KNOW: Suppose Hyun Bin had already constructed the commercial
building and it was the agreement that Son Ye-Jin would pay Hyun Bin after the construction is
finished. Fill the space below with your answer with the essential requisites of the new
obligation formed.
(1) Passive subject (2) Active (3) Object or (4) Juridical or
subject prestation legal tie

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(5) Form of obligations.

Legal Bases:
✓ Art. 1356. As a general rule, the law does not require any form in obligations arising from
contracts for their validity or binding force.
✓ Obligations arising from other sources (Art. 1157.) do not have any form at all.

(6) Distinction among obligation, right and wrong (cause of action).

Obligation Right A wrong (cause of action)
❖ is the act or performance ❖ is the power which ❖ is an act or omission
which the law will enforce. a person has under of one party in
the law, to demand violation of the
from another any legal right or rights
prestation. of another, causing
injury to the latter.
Note: In a breach of contract, the contract violated is the subject matter, while the breach
thereof by the obligor is the cause of action. The subject matter is the item with respect to
which the controversy has arisen or concerning which the wrong has been done, and is
ordinarily the right, the thing or the contract under dispute. (Bachrach Corporation vs.
Court of Appeals, 296 SCRA 487 [1998]

(7) Kinds of obligations according to the subject matter.

Real obligation Personal obligation
❖ obligation to give ❖ obligation to do or not to do
❖ that in which the subject matter is a ❖ that in which the subject matter is an
thing which the obligor must deliver to act to be done or not to be done.
the obligee
Kinds of Personal Obligation
Positive Personal obligation Negative Personal obligation
❖ Art. 1167- obligation to do or to render ❖ Art. 1168- obligation not to do
service ❖ which naturally includes obligations
“not to give”

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ART. 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)

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; and as to what has not been fore- seen, by the
provisions of this Book. (1090)

ART. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. (1091a)

ART. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of
Chapter 1, Title XVII, of this Book. (n)

ART. 1161. Civil obligations arising from criminal offenses shall be governed by the penal
laws,14 subject to the provisions of Article 2177,15 and of the pertinent provisions of Chapter
2, Preliminary Title on Human Relations,16 and of Title XVIII of this Book, regulating
damages. (1092a)

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. (1093a)

(8) Sources of obligation.

(1) Law (2) Contracts; (3) Quasi- (4) Acts or omissions (5) Quasi-delicts.
contracts; punished by law
- when they are - when they - when they - when they arise - when they arise
imposed by the arise from the arise from from civil liability from damage
law itself stipulation of the lawful, which is the caused to another
parties (Art. voluntary and consequence of a through an act or
1306.) unilateral acts criminal offense omission, there
and which are (Art. 1161.) being fault or
enforceable to negligence, but no
the end that no contractual
one shall be relation exists
unjustly between the
enriched or parties (Art.
benefited at the 2176.),
expense of

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another (Art.
2142.),

e.g., obligation e.g., the e.g., the e.g., the obligation of a thief e.g., the obligation of
to pay taxes; obligation to obligation to to return the car stolen by the head of a family
obligation to repay a loan by return money him; the duty of a killer to that lives in a building
support one’s virtue of an paid by mistake indemnify the heirs of his or a part thereof to
family (see Art. agreement; or which is not victim answer for damages
195, Family due. (Art. caused by things
Code.) 2154.) In a thrown or falling from
sense, these the same (Art. 2193.);
obligations may the obligation of the
be considered as possessor of an animal
arising from to pay for the damage
law; which it may have
caused. (Art. 2183.)
KINDS OF QUASI-CONTRACT
Negotiorum gestio: unauthorized management; arises whenever a person voluntarily takes charge of the
agency or management of another’s abandoned business or property without the latter’s authority
Solutio indebiti: undue payment. Arises when a person unduly delivers a thing through mistake to
another who has no right to demand it (must not be through liberality or some other cause)
(1) Law (2) Contracts; (3) Quasi-contracts; (4) Acts or (5) Quasi-delicts.
omissions punished by
law
- OBLIGATION - OBLIGATION - OBLIGATION EX - OBLIGATION EX - OBLIGATION EX
EX-LEGE EX QUASI- MALEFICIO OR EX QUASI- DELICTO Or
CONRACTU CONTRACTU DELICTO EX QUASI
MALEFICIO
Must be - Must be - Juridical relation RPC: Art. 100 Every - It is an act or omission
expressly or complied with in resulting from person criminally arising from fault or
impliedly set good faith; lawful, voluntary liable for a felony is negligence which
forth and cannot - it is the “law” and unilateral acts, also civilly liable. causes damage to
be presumed between parties; which has for its another, there being no
purpose, the pre-existing contractual
- neither party payment of relations between the
may unilaterally indemnity to the end parties
evade his that no one shall be
obligation in the unjustly enriched or
contract, unless: benefited at the
a. Contract expense of another.
authorizes it
b. Other party
assents
Parties may Distinguished from GOVERNING RULES ELEMENTS:
freely enter into other Sources 1. Articles 100-113 of 1. There must be an act
any stipulations 1. act giving rise to a the RPC and other or omission
provided they quasi- contract must penal laws subject to
are not contrary 2. There must be fault
be LAWFUL Art 2177 Civil Code
to law, morals, or negligence
distinguishing it (quasi-delict);
good customs, attributable to the
from delict; person charged

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public order or 2. act must be 2. Chapter 2, 3. There must be

public policy VOLUNTARY Preliminary title, on damage or injury
distinguishing it Human Relations 4. There must be a
from quasi-delict (Civil Code) direct relation of cause
which is based on and effect between the
fault or negligence; 3. Title 18 of Book IV
act arising from fault or
3. act must be of the Civil Code on negligence and the
UNILATERAL damages damage or injury
distinguishing it (proximate cause );
from contract which 5. There is no pre-
is based on existing contractual
agreement. relation between the
(Tolentino, Volume parties.
IV, p. 68)
SCOPE OF CIVIL LIABILITY IN DELICTS
1. Restitution 2. Reparation for damage 3. Indemnity for
caused consequential damages

EFFECT OF ACQUITTAL IN CRIMINAL CASE

1. When due to reasonable doubt – no civil liability
2. When due to exempting circumstances – there is civil liability
3. When there is preponderance of evidence – there is civil liability

CRIMES WITHOUT CIVIL LIABILITY

1. Contempt 2. Insults to persons in 3. Gambling 4. Violations of traffic
authority regulations

QUASI-DELICT/TORTS (OBLIGATION EX QUASI- DELICTO Or EX QUASI MALEFICIO )

✓ It is an act or omission arising from fault or negligence which causes damage to another, there being no
pre-existing contractual relations between the parties
ELEMENTS OF QUASI-DELICT/TORTS
1. There must be an 2. There must be 3. There must be 4. There must be a 5. There is no pre-
act or omission fault or negligence damage or injury direct relation of existing contractual
attributable to the cause and effect relation between the
person charged between the act parties.
arising from fault or
negligence and the
damage or injury
(proximate cause );

NEGLIGENCE
Case in Point: US v. Barrias, 23 Phil. 434 [1912]
Doctrine: Negligence is the failure to observe for the protection of the interests of another person, that
degree of care, precaution and vigilance which the circumstances justly demand, whereby such other
person suffers injury.

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ASSESSMENT TITLE Module 1: Introduction to Law and General Provisions on Law on Obligations
ASSESSMENT TYPE QUIZ 1 ESTIMATED 60 MINUTES
NUMBER
DURATION
OUTCOMES Discuss the introduction to law and the general provisions of the law on obligations.
ASSESSED

You can fill out this part yourself and see how well you did.

TOTAL POINTS 30 Points POINTS RECEIVED GRADE

Name :
Course :
Instructor: Atty. Khervy B. Reyes, CPA
Date :
I. MULTIPLE CHOICE
Determine the best answer for each of the following questions. Encircle the letter of the correct
answer.

1. It is a rule of conduct, just, obligatory, promulgate by legitimate authority, and of common

observance and benefit.
a) Law
b) Obligation
c) Contract
d) Memorandum of Agreement

2. A system of norms or rules of a character general and common which regulate the relations
of persons, individual or collective, and which protects the person in his personality as well
as his interest both moral and patrimonial.
a) Business law
b) Civil law
c) Criminal law
d) Taxation law

3. I. The object of civil law is the redress of wrong by compelling compensation or restitution.
II. In case of crimes, the main object of the law is to punish the wrong doer.
a) Only I is true
b) Only II Is true
c) Both are true
d) Both are false

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4. It is a juridical necessity to give, to do or not to do.

a) Law
b) Obligation
c) Contract
d) Memorandum of Agreement

5. Which of the following is not considered as quasi-contract?

a) Solutio indebiti
b) When in fact manager has been tacitly authorized by the owner
c) Negotiorum gestio
d) Reimbursement due the person who saved from destruction the property during
fire or storm without knowledge of the owner

6. I. An obligation “to do” includes all kinds of work or service.

II. An obligation “to give” is a prestation which consists in the delivery of a movable or
an immovable thing.
a) Only I is true
b) Only II is true
c) Both are true
d) Both are false

7. It is a claim or title to an interest is anything whatsoever that is enforceable by law.

a) Receivable
b) Warranty
c) Right
d) Property

8. I. An obligation is a power, privilege, or immunity guaranteed under a construction, statute or

decisional law, or recognized as a result of long usage, constitutive of a legally enforceable
claim of one person against the other.
II. For every right enjoyed by any person, there is a corresponding obligation on the part
of another person to respect such right.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

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9. It is a juridical relation whereby a person may demand from another the observance of a
determinative conduct, and in case of breach, may demand satisfaction from the assets of the
latter.
a. Law
b. Action
c. Contract
d. Obligation

10. X has been missing for some time leaving no one to manage his properties. A and B jointly
took charge of the management thereof. However, due to the negligence of A, the properties
of X for damages shall be:
a. Only A shall be liable
b. Both shall be jointly liable
c. Both shall be solidarily liable
d. A and B are not liable

11. It is one by which a party sues another for the enforcement or protection of a right, or the
prevention or redress of a wrong.

a. Civil action
b. Special Proceeding
c. Administrative action
d. Criminal action

12. It the act or omission by which a party violates a right of another,

a. Reason of action
b. Motive of action
c. Cause of action
d. Source of action

13. The three essential elements of a cause of action are the following, except:
a. The legal right of the plaintiff.
b. The correlative obligation of the defendant.
c. The act or omission of the plaintiff in violation of said legal right.
d. The act or omission of the defendant in violation of said legal right.

14. Obligation of the debtor to deliver a thing, movable or immovable, to the creditor.
a. Obligation to give
b. Obligation not to give
c. Obligation to do
d. Obligation not to do

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15. When a thing is particularly designated or physically segregated from all other of the same
class.
a. Specific thing
b. Generic thing
c. Indeterminate thing
d. All of the above

16. Where X voluntarily takes charge of the neglected business of Y without the latter’s authority
where reimbursement must be made for necessary and useful expenses, there is a:
a. Quasi delict
b. Quasi contract
c. Negotiorum gestio
d. Solutio indebiti

17. when a thing is designated merely by its class or genus without any particular designation or
physical segregation from all others of the same class.
a. Specific thing
b. Determinate thing
c. Indeterminate thing
d. All of the above

18. I. Obligation to do is also known as negative personal obligation.

II. Obligation not to do is otherwise known as positive personal obligation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

19. The following are the essential elements of an obligation, except:

a. Debtor
b. Creditor
c. Presentation
d. Juridical tie

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20. The following are the sources of an obligation, except:

a) Contract
b) Law
c) Prestation
d) Quasi-delict

21. It 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.
a) Contracts;
b) Quasi-contact
c) Law
d) Quasi-delict

22. It refers to certain lawful, voluntary and unilateral acts to the end that no one shall be
unjustly enriched or benefited at the expense of another.
a. Contract
b. Quasi-contract
c. Law
d. Quasi-delict

23. Whoever voluntarily takes charge of the agency or management of the business or property
of another, without any power from the latter, is obliged to continue the same until the
termination of the affair and its incidents, or to require the person concerned to substitute him, if
the owner is in a position to do so.
a. Quasi-contract
b. Quasi-delict
c. Negotiorum gestio
d. Solution indebiti

24. There is no negotiorum gestio in one of these instances:

I. When the property or business is not neglected or abandoned.
II. If in fact the manager has been tacitly authorized by the owner.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

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25. If something is received when there is no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises.
a. Quasi-contract
b. Quasi-delict
c. Negotiorum gestio
d. Solution indebiti

26. It refers to an act or omission which causes damage to another, there being fault or
negligence. The parties has no pre-existing contractual relation.
a. Quasi-contract
b. Quasi-delict
c. Negotiorum gestio
d. Solutio indebiti

27. X by mistake delivered to A and B a sum of money which should have been delivered to C
and D. X now demand the return of the same from A and B. The liability of the latter for the sum
of money to which they are not entitled shall be:
a. A and B shall be liable solidarily
b. A and B shall be liable jointly
c. They are not liable
d. X has no right to recover

28. In delict or acts or omissions punished by law, what is not included in civil liability?
a. Restitution
b. Reparation of the damaged caused
c. Indemnification for consequential damages
d. Interest

29. The following are requisites of quasi-delict, except:

a. Damage suffered by defendant.
b. Damage suffered by plaintiff.
c. Fault or negligence of the defendant.
d. Connection of cause and effect between the fault or negligence of defendant an the
damage incurred by plaintiff.

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30. I. Negligence is the failure to observe that degree of care, precaution, and vigilance that the
circumstances justly demand.
II. Negligence is the failure to observe for the protection of the interests of another person
that degree of care, precaution, and vigilance which the circumstances justly demand, whereby
such other person suffers injury.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

“Better the storm with Christ than smooth waters without HIM.”

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