OBLIGATIONS AND CONTRACTS

Chapter 1
GENERAL PROVISIONS

Art. 1156
 Definition of Obligation
-a juridical necessity to give, to do or not to do.
-a juridical relation whereby a person (called the creditor) may demand from another (called
the debtor) the observance of a determinate conduct (the giving, doing, or not doing), and in
case of breach, may demand satisfaction from the assets of the latter.” ( Arias Ramos, p. 74)
 “Judicial necessity” because non-compliance can result in judicial or legal sanction.
 Elements of Obligation:
1) an active subject (obligee or creditor): the possessor of a right; he in whose favor the
obligation is constituted;
2) a passive subject (obligor or debtor): he who has the duty of giving, doing or not doing;
3) the object or prestation: the subject matter of the obligation; it may consist of giving a thing,
or doing or not doing a certain act;
4) the efficient cause (vinculum or juridical tie): the reason why the obligation exists and
5) Causa (causa debendi/causa obligationes) - why obligation exists

Requisites of Object:
a. licit - if illicit, it is void
b. possible - if impossible, it is void
c. determinate or determinable - or else, void
d. pecuniary value

 Kinds of Obligations
1) From the viewpoint of sanction
a) civil obligation (perfect obligation) : defined in Art. 1156, Civil Code, and sanctioned
by judicial process
b) natural obligation: the duty not to recover what has voluntarily been paid although
payment was no longer required
: it is sanctioned by law, but only because conscience had originally motivated the
payment
Example: Knowing that it already prescribed, a debtor still paid his debt to the
creditor.
c) moral obligation: sanctioned by conscience or morality, or the laws of the church.
Example: the duty of a catholic to hear mass on Sundays

2) From the viewpoint of subject matter

a) real obligation: the obligation to give
b) personal obligation: to obligation to do or not to do

3) From the affirmativeness and negativeness of the obligation

a) positive or affirmative obligation: the obligation to give or to do
b) negative obligation: the obligation not to give or not to do

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 4) From the persons obliged
a) unilateral: when only one of the parties is bound
b) bilateral: where both parties are or may be bound
i) reciprocal: the performance of one is dependent upon the performance of the
other
ii) non-reciprocal: the performance of one is not dependent on the performance by
the other

Article 1157, Articles 1158-62

Art. 1157
 Sources of Obligation (LCQAQ)
1) Law, (OBLIGATION EX LEGE ) - Must be expressly or impliedly set forth and cannot be
presumed
2) Contracts, (OBLIGATION EX CONTRACTU ) - Must be complied with in good faith
because it is the “law” between parties; neither party may unilaterally evade his obligation
in the contract, unless:
a) contract authorizes it
b) other party assents
Parties may freely enter into any stipulations, provided they are not contrary to law, morals, good
customs, public order or public policy
3) Quasi-contracts (OBLIGATION EX QUASI-CONTRACTU ) - That juridical relation
resulting from a lawful, voluntary and unilateral act, and which has for its purpose, the
payment of indemnity to the end that no one shall be unjustly enriched or benefited at the
expense of another
4) Acts or omissions punishable by law/Delicts (OBLIGATION EX MALEFICIO OR EX
DELICTO ) and
5) Quasi delicts/Torts ( OBLIGATION EX QUASI-DELICTO or EX QUASI MALEFICIO ) -
It is a fault or act of negligence ( or omission of care ) which causes damage to another,
there being no pre-existing contractual relations between the parties

Art. 1158: law

 Obligations derived from law are
1) not presumed but must be expressly determined in this Code or other special laws;
2) regulated by the precepts of law which establishes them; and as to what not has been
foreseen, by the provisions of this book.

Art. 1159: contracts

 Obligations arising from contracts:
1) have the force of law between the parties; and
 meaning that neither party may unilaterally and upon his own exclusive volition, escape his
obligations under the contract, unless the other party assented thereto, or unless for causes
sufficient in law and pronounced adequate by a competent tribunal. (p. 81)
2) should be complied with in good faith.
 “Compliance in good faith” means that we must interpret “not by the letter that killeth but by
the spirit that giveth life.” (p. 81)

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 Principle of Privity of Contracts: The terms of the contract cannot be extended to third parties
or those not included in the contract.

Article 1160: quasi-contracts

 Obligations derived from quasi-contract shall be subject to the provisions of Chapter 1, Title
XVII, of this Book.
 Definition of Quasi-contract: that juridical relation resulting from a lawful, voluntary, and
unilateral act, and which has for its purpose the payment of indemnity to the end that no one
shall be unjustly enriched or benefited at the expense of another. (Art. 2142, Civil Code)
 Kinds of Quasi-contract
1) Negotiorium gestio (unauthorized management): takes place when a person voluntarily
takes charge of another’s abandoned business or property without the owner’s
authority;
 Reimbursement should be made to the gestor for necessary and useful expenses.
2) Solutio Indebiti (undue payment) : takes place when something is received when there
is no right to demand it, and it was unduly delivered by mistake.
 The recipient has the duty to return what was received.

Art. 1161: Ex Delicto or Ex Maleficio

 Rules that govern:
1) pertinent provisions of the Revised Penal Code and other penal laws, subject to the
provisions of Art. 2177, Civil Code;
2) Chapter 2, Preliminary Title, on Human Relations of the Civil Code;
3) Title 18 of Book IV of the Civil Code (on damages).

What civil liability arising from a crime includes:

a. restitution
b. reparation of damage caused
c. indemnity for consequential damages

Effect of acquittal in criminal case:

 when acquittal is due to reasonable doubt – no civil liability
 when acquittal is due to exempting circumstances – there is civil liability
 when there is preponderance of evidence – there is civil liability

Art. 1162: Ex Quasi-Delicts or Ex Quasi-Maleficio

 Rules that govern:
1) Chapter 2, Title 17, Book IV, Civil Code
2) Special laws.

 Definition of Quasi-delict: a fault or act of negligence (or omission of care), which causes
damages to another, there being no pre-existing contractual relations between the parties.
 Definition of Negligence: the omission of that diligence which is required by the circumstances
of person, place and time (Art. 1173)
 Requirements before a Person can be held Liable for a Quasi Delict
1) There must be fault or negligence attributable to the person charged;

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 2) There must be damage or injury;
3) There must be a direct relation of cause and effect between the fault or negligence on the
one hand and the damage or injury on the other hand (proximate cause).
 “Proximate cause” is that adequate and efficient cause, which in the natural order of events,
necessarily produces the damages or injury complained of. (p. 102)

In Sagrada v. Naccoco, the Supreme Court held that the sources of obligation in Art 1157
is exclusive. Many commentators believe, however that it should not be. At present, there is
one more possible source of obligations - PUBLIC OFFER (Public Offer is in fact a source of
obligation in the German Civil Code)

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