Obligations and Contracts

● Article 1156

An obligation is a juridical necessity to give, to do or not

to do.

In other words, it is duty of a person to satisfy a specific and demandable claim of another
person, which if not complied, is enforceable in court.

Elements of Obligation
▪ Active subject – the one who is demanding the obligation

▪ Passive subject – the one who has the duty to perform the
obligation

▪ Prestation – subject matter of the obligation (to give, to do, or

not to do).

▪ Juridical tie – that which binds or connects the parties to the

obligation (sources of obligations)

Kinds of obligation according to subject matter

▪ Real obligations: To give – deliver a thing
▪ Personal obligations:
▪ To do – all kinds of works or services
▪ Not to do – refraining from doing some acts

Sources of Obligations
▪ Art. 1157
▪ Obligations arise from:
▪ 1) Law
▪ 2) Contracts
▪ 3) Quasi-contracts
▪ 4) Delicts
▪ 5) Quasi-delicts

Sources of Obligations (Law)

● 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 foreseen, by the provisions of this book.
▪ Legal obligations arising from law.

▪ To be demandable, the obligation must be clearly written in the law.

▪ Cannot be presumed.

▪ Ex. An employer has no obligation to give free legal assistance to his employees because no
law requires this.

Sources of Obligations (Contract)

▪ Art. 1159

▪ Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.

▪ A contract is a meeting of the minds between two or more persons whereby one binds
himself, with respect to the other, to give something or to render some service.

Essential elements of a contract:

▪ 1. Consent of the contracting parties;
▪ Meeting of the minds
▪ Legal capacity

▪ 2. Object certain which is the subject matter of the contract;

▪ Definite and certain
▪ Otherwise, there is no meeting of the minds.

▪ 3. Cause of the obligation which is established.

▪ Reason why a party assumes the obligation

Requirements of a valid contract, aside from

the essential elements:
▪ 1. The contract is not contrary to law, morals, good customs, public order, and public
policy.

Sources of Obligations (Quasi-contract)

▪ Art. 1160

▪ Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1,

Titlw XVII of this Book.

▪ A quasi-contract is a juridical relation which arises from a lawful,

voluntary and unilateral act or acts executed by somebody for the benefit of another and for
which the former must be indemnified to the end that no one shall be enriched or benefited at
the expense of another.
▪ Negotiorum Gestio – when somebody takes charge of the agency or management of the
business or property of another without any power from the latter. The owner of the business
or property shall reimburse the “gestor” for the damages suffered by him in the performance
of his functions as gestor.

▪ Solutio Indebiti – when somebody receives something from another without any right to
demand for it, and the thing was unduly delivered to him through mistake. The obligation to
return the thing arises on the part of the recipient.

Sources of Obligations (Delict)

▪ Art. 1161

▪ Civil obligations arising from criminal offenses xxx.

▪ Civil liability – material damage due to the

criminal act

▪ Restitution – return what is taken

▪ Reparation for the damage caused – repair what was broken

▪ Indemnification – pay for what was broken

▪ Quasi-delict – act or omission by a person 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.

Kinds of Obligations (Pure and Conditional Obligations)

▪ Art. 1179

▪ Every obligation whose performance does not depend upon a future or uncertain event, or
upon a past event unknown to the parties, is demandable at once.

▪ Every obligation which contains a resolutory condition shall also

be demandable, without prejudice to the effects of the happening of the event.

▪ Pure obligation – one which is not subject to any condition and no specific date is
mentioned for its fulfillment and is, therefore, immediately demandable.

▪ Ex. Upon demand, or without a term.

▪ Condition – a future and uncertain event, upon the happening of which, the acquisition or
extinguishment of an obligation subject to it depends.

▪ Characteristics of a condition:

▪ Future and uncertain;

▪ Past but unknown;

*A condition must not be impossible.

▪ Two principal kinds of condition:

▪ Suspensive – fulfillment of which gives rise to an obligation; and

▪ Resolutory – fulfillment of which will extinguish an obligation already existing.

Kinds of Obligations (With a term/period)

▪ Art. 1180

▪ When the debtor binds himself to pay when his means permit him to do so, the obligation
shall be deemed to be one with a period xxx.

▪ A period is a future and certain event upon the arrival of which, the obligation subject to it
either arises or is extinguished.