Obligation – a juridical necessity to give, to do or not to do.

 Four Essential Requisites:

1. Juridical or Legal Tie
- Tie which binds the parties to the obligations
- Refers to the sources of obligations:
1. Law
2. Contracts
3. Quasi-contracts
4. Delicts (Crimes)
5. Quasi-delicts (Negligence)

2. Active Subject
- The party who can demand the fulfillment of the obligation.
3. Passive Subject
- The party who should perform the obligation.
4. Prestation
- The giving/doing/not doing of something.
- Benefaction?
Example: Allan promises to deliver a particular parcel of land to Ben.
a. Legal tie = The promise of Allan to deliver.
b. Active Subject = Ben
c. Passive Subject = Allan
d. Prestation = Giving of the land

Obligation vs Subject vs Cause of Action

a. Obligation – the juridical necessity
b. Subject Matter – the ITEM which is the source of controversy
c. Cause of Action – Act or omission which is in violation of the law or legal right of the
other.
Example: A contract where A has promised to sell a particular car to B for 800,000 Pesos on
August 30, 2021.
a. The contract is the SUBJECT MATTER
b. If A has failed to fulfill his obligation, which is violative of the right of B, then that is the
act/omission which constitutes the Cause of Action (breach of contract).
c. The obligation is A’s selling of the car to B, and B’s purchasing of the car from A.
Sources of Obligations:
1. Law
a. Example: Obligations to give support (Family Code)
2. Contracts
a. Example: Contract of Sale
3. Quasi-contracts
a. Undue Payment
i. Example: When payment is not yet due, but payor still paid, then receiver
HAS THE OBLIGATION to return payment.
b. Unauthorized Management
i. Example: You were out of the country and suddenly a fire broke out of
your home. Your neighbor tried to save your belongings yet you did not
tell your neighbor to do so. By virtue of a Quasi-contract, you are
obligated to compensate your neighbor for his efforts to save your
belongings.
4. Delicts
a. Civil Liability
i. Example: Theft, you have to pay or return the stolen item.
b. Criminal Liability
i. Example: Theft, you have to serve the punishment/sentence.
5. Quasi-delicts or Torts
a. Article 2176 of the Civil Code
i. Negligence, act or omission that may be violative of the legal right of the
other, therefore giving rise to an obligation.
*ENUMERATION IS EXCLUSIVE*

Contracts have the force of law (between contracting parties)

- Parties must abide with the provisions of the contracts and comply with good
faith.
- Aggrieved party will have the remedy to file a case for BREACH OF
CONTRACT
- Contract must not be contrary to LAW, MORALS, GOOD CUSTOMS, PUBLIC
ORDER or PUBLIC POLICY. This is the LIMITATION to the FREEDOM TO
CONTRACT.
- Article 1159
- Contracts are binding to the contracting parties, but only referring to the
OBLIGATORY NATURE of the contract. The LAW is NOT INFERIOR to
contracts.
Quasi-contracts – Juridical relations arising from lawful, voluntary and unilateral acts by virtue
of which the parties become bound to each other.
- No one must be unjustly enriched at the expense of the other.

1. Negotiorium Gestio (Unauthorized Management)

- Person takes charge of the business or property of another, without authority.
- The person BENEFITTING FROM IT must JUSTLY COMPENSATE the other
person.
2. Solutio Indebeti (Undue Payment)
- Person unduly delivers a thing by mistake to another, who has no right to demand
it.
- Obligation to RETURN.
- Requisites:
1. Payment is made without a binding contract between the two parties.
2. Payment is made through MISTAKE, not through liberality.
*ALL REQUISITES MUST BE PRESENT*
BPI v. Sarmiento – Appellee Sarmiento could not be obliged to return his salary that he received
because of a pre-existing contractual relation (employer-employee relationship).
The Bank was saying that appellee must return his salary to them, but Supreme Court stated and
has found that since Sarmiento’s supervisor told him not to go to work while the investigation
was ongoing, the SC said that it was the reason that Sarmiento went sparingly to work, hence the
salary given to him was not given by mistake by virtue of his supervisor under the contractual
relationship of employer/employee relationship.
*NO PRE-EXISTING CONTRACTS BETWEEN THE PARTIES*