Philippine Laws: Obligations and

Contracts
paulthebeloved (52)in #philippines • 6 years ago

Obligation: Concepts and Sources

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An obligation is a juridical necessity to give, to do or not to do.1 An obligation

needs to be juridical in nature in order for it to have the force of law. Through
this, a court may be asked to order the performance of an obligation.

An obligation are civil or natural. Civil Obligation is based on a positive law

and gives right of action to compel their performance, while Natural
Obligation is based on natural law, but on equity and moral justice. Hence, it is
not enforceable by court action, but after voluntary performance of the debtor,
he can no longer recover what he has given.

Example: Romeo executed a promissory note in favor of Juliet for $50, 000.
Romeo is the debtor (payor) while Juliet is the creditor (payee). If Romeo does
not pay on due date, Juliet can enforce the fulfillment of the obligation by court
action. If Juliet does not file a court action against Juliet within 10 years from
due date which is the prescriptive period for an action against a written contract.
Juliet looses the right to exact performance by court action. However, if Romeo,
out of his love for Juliet, voluntarily makes the payment to Juliet thought such
obligation has prescribed, Romeo will no longer be allowed to recover what he
has given as payment because although the obligation has prescribed, in equity
and moral justice, Romeo still owed Juliet the amount of $50, 000.

( Article 1144 (3), Civil Code of the Philippines. Upon a written contract;
actions must be brought withing 10 years from the time the right of action
accrues. )

There are 4 essential requisites of an obligation in order to exist. All of these

must be present:

1. Active subject - It is the party (creditor or obligee) who has the right to
demand the performance of an obligation.

2. Passive subject - It is the one (debtor or obligor) who is obliged to perform

the obligation.

3. Prestation - It is the object of the obligation. It is what the obligation is all

about either to give, to do, not to do, or a combination.
4. Efficient Cause - The juridical tie that binds the parties to an obligation. It is
what binds the parties (e.g. contracts, quasi contracts).

Example: Romeo executed a contract of loan to borrow money from Juliet

whom he wishes to spend in courting Juliet. Juliet in turn agreed and lend
money to Romeo.

In the preceding example, Romeo is the passive subject while Juliet is the active
subject. Their prestation is the money being borrowed while their efficient cause
is the contract of loan. All of the essential requisites of an obligation is present,
hence such contract creates an obligation.

The law clearly defines what the different sources of an Obligation are.

Obligations arise from:2

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punishable by law; and

(5) Quasi-delicts. (1089a)

Law
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. (1090)3

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A law is a binding custom or practice of a community : a rule of conduct or

action prescribed or formally recognized as binding or enforced by a controlling
authority.4 Obligation derived from law must not be presumed. If the law does
not include, therefore it excludes. Only those which the law clearly stipulate or
express are demandable.

Example of this is the obligation to pay Taxes. Those which are clearly
stipulated in the National Internal Revenue Code (R.A. 8424) are demandable
and those which are not clearly expressed are not presumed.

Contracts
Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. (1091a)5
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A contract 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.
(125a).6 A contract, according to article 1159 and 1305, bind two persons to
perform an obligation that are incumbent upon them based on their agreement
having in them the force of law and should be complied in good faith. The two
persons are the active and passive subject while their agreement and what they
have agreed upon are the prestation and efficient cause.

An example of this is a contract of loan, wherein the active subject is the

creditor; the passive subject is the debtor. The prestation is money to be
borrowed and the efficient cause is the contract.

Example: Romeo executed a contract of loan to borrow money from Juliet

whom he wishes to spend in courting Juliet. Juliet in turn agreed and lend
money to Romeo. The meeting of the minds of Romeo and Juliet created the
contract of loan and to enforce what they have agreed upon they put it in writing
(contract of loan) which is what the statute of fraud demand.

Quasi-contracts
Obligations derived from quasi-contracts shall be subject to the provisions of
Chapter 1, Title XVII, of this Book. (n)7
Certain lawful, voluntary and unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be unjustly enriched or benefited at
the expense of another (n).8 Quasi-contract arises because of these acts which
might result to an unjust enrichment. There is unjust enrichment when a person
unjustly retains a benefit at the loss of another that is against the fundamental
principles of justice, equity and good conscience.

Examples of these acts that give rise to quasi-contract are Negotiorum

gestio and Solutio indebiti.

a. Negotiorum gestio

Negotiorum gestio is the voluntary administration of the property, business or

affairs of another, without his consent or authority, that creates an obligation for
reimbursement for the necessary expenses the gestor had spent.9

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Example: Juliet left her farm unattended for 1 week because she is having a
vacation. Romeo, a concerned lover in secrecy, noticed that Juliet has not been
around and the plants are slowly dying. Out of affection, Romeo cultivated the
land, watered the plants, buy fertilizers and placed fertilizers to the plants,
removed the weeds and do all what a farmer should do. Romeo spent necessary
expenses which needs to be reimbursed in order for Juliet not to unjustly enrich
herself at the expense of Romeo.

b. Solutio indebiti

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. (1895)10

Solutio indebiti refers to payment by mistake. It is receiving payment by

mistake that is not due or does not have such right to demand such payment. It
creates an obligation to return such payment.

Example: Romeo bought goods from Juliet Store. The goods cost $1500.
Romeo gave $2000 to the store cashier and receive a change of $700. Romeo is
duty bound to return the excess of $200 to the store. Otherwise, he will be
unjustly enriching himself at the expense of Juliet Store.

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Another example, Romeo commutes via jeepney on his way to school. Juliet, a
jeepney driver, receives Php 10 from Romeo. Because of the handsomeness and
cuteness of Romeo, Juliet thought that Romeo is a student. So, she gave Romeo
a change of Php 4 rather than Php 2 if no discount given. By solutio indebiti,
Romeo has no right to receive the excess Php 2. Therefore, Romeo is bound to
return the excess Php 2 or else he will be unjustly enriching himself at the
expense of Juliet.

Acts or omissions punishable by law

Civil obligations arising from criminal offenses shall be governed by the penal
laws, subject to the provisions of Article 2177, and of the pertinent provisions of
Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of this
Book, regulating damages. (1092a)11

Every person criminally liable for a felony is also civilly liable.12 Commission of
a crime makes the offender civilly liable. Such civil liability includes:13

1. Restitution;
2. Reparation of the damage caused;
3. Indemnification for consequential damages.

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Example: Romeo, a horse racing enthusiast, steals the horse of Juliet. Romeo
commits the crime of stealing Juliet's beloved horse. Romeo is criminally liable.
In addition, Romeo is also civilly liable. He is liable to return the horse, paying
for its value if he cannot return the horse and indemnifying Juliet of the
consequential damages she had suffered.

Quasi-delict
Obligations derived from quasi-delicts shall be governed by the provisions of
Chapter 2, Title XVII of this Book, and by special laws. (1093a)14

Quasi-delict (also known as tort or culpa aquiliana ) are acts or omissions that
cause damage to another, there being fault or negligence, is obliged to pay for
the damage done but without any pre-existing contractual relations between the
party.15 There is quasi-delict if there is damages sustained, negligence by act or
omission, and the connection of the cause and effect between such negligence
and damages.

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Example: Romeo, a handsome try hard baseball player, was playing baseball
outside Juliet's house. Upon seeing Juliet, Romeo suddenly got excited and hit
the ball so hard that it fly straight to Juliet's window shattering it into pieces and
bounce right into Juliet's face injuring her beloved nose. Though Romeo and
Juliet has no contractual relation at all. They are now bound to each other
because of quasi-delict. Because of Romeo's negligence, he will be liable for the
damages to Juliet.
Sources
1
Article 1156, Civil Code of the Philippines
2
Article 1157, Civil Code of the Philippines
3
Article 1158, Civil Code of the Philippines
4
Merriam-Webster Dictionary
5
Article 1159, Civil Code of the Philippines
6
Article 1305, Civil Code of the Philippines
7
Article 1160, Civil Code of the Philippines
8
Article 2142, Civil Code of the Philippines
9
Article 2144, Civil Code of the Philippines
10
Article 2154, Civil Code of the Philippines
11
Article 1161, Civil Code of the Philippines
12
Article 100, Revised Penal Code of the Philippines
13
Article 104, Revised Penal Code of the Philippines
14
Article 1162, Civil Code of the Philippines
15
Article 2176, Civil Code of the Philippines
Civil Code of the Philippines

The topic on contracts will soon to be discussed. It is a broad topic. What is in

this post is just a nutshell of what contract is. Additional topics will soon be
posted. Keep in touch.
For any queries or topics you want to be discussed feel free to comment.