RENATO P.

MAGBALON III

OBLIGATIONS AND
CONTRACTS; AN
OBLIGATIONS; GENERAL PRINCIPLES

An obligation is a juridical necessity to give, to do, or not to do (NCC, Art.

1156).

It is a juridical relation or a juridical necessity whereby a person (creditor) may

demand from another (debtor) the observance of a determinative conduct
(giving, doing, or not doing), and in case of breach, may demand satisfaction
from the assets of the latter (Makati Stock Exchange v. Campos, G.R. No.
138814, April 16, 2009).

It is a juridical necessity because in case of non- compliance, the courts of justice

may be called upon by the aggrieved party to enforce its fulfillment or, in default
thereof, the economic value that it represents.
ESSENTIAL REQUISITES FOR AN OBLIGATION

1. A PASSIVE SUBJECT
(DEBTOR/OBLIGOR),
2. ACTIVE SUBJECT
(CREDITOR/OBLIGEE),
3. OBJECT OR PRESTATION
(SUBJECT MATTER OF THE
OBLIGATION)
4. AND A JURIDICAL OR LEGAL
TIE (EFFICIENT CAUSE).
SOURCES OF OBLIGATIONS

1. LAW
2. CONTRACTS
3. QUASI- CONTRACTS
4. DELICT
5. QUASI- DELICT
*EXCLUSIVE
1. OBLIGATIONS ARISING FROM LAW/ OBLIGATIONS EX LEGE

Obligations derived from law are not presumed. Only those expressly
determined in the 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 Book IV of NCC
(NCC, Art. 1158).
Examples:
1. According to Art. 2014 of the NCC, a loser in a game of chance
may recover his loss from the winner, with legal interest from the
time he paid the amount lost (Leung Ben v. O’Brien, G.R. No. L-
13602, April 6, 1918)
2. The obligation to pay taxes. (Rabuya, 2017)
OBLIGATIONS ARISING FROM CONTRACTS/ EX CONTRACTS

REQUISITES:
1. IT MUST CONTAIN ALL THE
ESSENTIAL REQUISITES OF A
CONTRACT (NCC, ART. 1318)
2. IT MUST NOT BE CONTRARY
TO LAW, MORALS, GOOD
CUSTOMS, PUBLIC ORDER, AND
PUBLIC POLICY (NCC, ART. 1306)
 BINDING FORCE OF OBLIGATION EX CONTRACTU

Obligations arising from contracts have the force of law between the
parties and should be complied with in good faith (NCC, Art. 1159).
This is known as the “principle of obligatory force of contracts”
(Rabuya, 2017).

Good faith is performance in accordance with the stipulation,

clauses, terms and conditions of the contract (Pineda, 2000).
OBLIGATIONS ARISING FROM QUASI-CONTRACT/ EX QUASI-
CONTRACTU

Quasi-contract
A juridical relation arising from lawful, voluntary and unilateral acts based on
the principle that no one shall be unjustly enriched or benefited at the expense
of another (NCC, Art. 2142).

Example:
Solutio indebiti (Unjust Enrichment) – Takes place when a person received
something from another without any right to demand for it, and the thing was
unduly delivered to him through mistake (NCC, Art. 2154).
OBLIGATIONS ARISING FROM CRIME OR DELICT/ EX DELICTO

Art. 100 of the Revised Penal Code provides:

“Every person criminally liable for a felony is also civilly liable.”
OBLIGATIONS ARISING FROM TORT OR QUASI-DELICT

Quasi-delict or tort
An act or omission arising from fault or negligence which causes
damage to another, there being no pre-existing contractual relations
between the parties (NCC, Art. 2176).

Elements:
1. Negligent or wrongful act or omission;
2. Damage or injury caused to another;
3. Causal relation between the negligence and damage;
4. There is no pre-existing contractual relationship between the
TEXT

EXERCISES
▸ Q: Jerry hired a lawyer to sue Joseph who caused him injury
while he’s in the performance of his duties. He then paid the
legal assistance. Thereafter, Jerry demands to recover the
amount he has paid the lawyer hired by him from his
employer. Is the claim of Jerry tenable?
TEXT

▸ No. An employer has no obligation to furnish free legal

assistance to his employees because no law requires this.
TEXT

▸ Debtor borrowed P100,000 from Creditor. On due date of the

loan, D could not pay C because he lost to a robber the
P100,000intended for C. In addition, he suffered financial
reverses, and he was short of cash even for his current
family needs. Is D legally justified to refuse to pay C?
TEXT

▸ No. Mere pecuniary inability or poverty is not an excuse for

the non-fulfillment of an obligation.
TEXT

▸ Can Selma and Paul enter a contract where one has to slap
a public officer?
TEXT

▸ No. A contract should not be contrary to law, morals, good

customs, public order and public policy. From the facts is an
act considered as against morals hence void. (Art. 1306)
TEXT

▸ Lia and Bianca entered into an agreement. It was agreed

that if Lia will attend mass for four consecutive Sundays,
Bianca will give Lia the amount of P100,000. Is Lia’s
obligation legally enforceable?
TEXT

▸ Yes. It has complied with the essential requisites of a

contract and involves money.
TEXT

▸ Q: Selma entered an agreement with Paul to render

domestic service gratuitously until his loan to Paul is paid. Is
this a valid contract?
TEXT

▸ Void as being contrary to law or morals.

TEXT

▸ You went to the bank and let the teller change your
P1,000.00 bill. By error, the teller gave you P1,100.00. What
is your obligation?
TEXT

▸ Obligation to return the amount in excess of the 1,000.00.

This is a case of solutio indebiti.
TEXT

▸ Kenneth ordered 13-year old Carlo to climb a high and

slippery santol tree, and promised to give the boy 2 kilos of
the santolhe will be able to pick. While climbing the tree,
however, Carlo’s foot slipped. As a result, Carlo fell from the
tree to the ground and died instantaneously. Will Kenneth be
liable in damages for the death of Carlo?
TEXT

▸ The facts show that Kenneth was negligent enough to let the
boy climb the tree, as such person in bad faith may be liable
to pay for the expenses that might be incurred upon the boy
who died. This is a case of indemnification for consequential
damage. (Art. 104, RPC)
TEXT

▸ While Tin and her friends were playing football, the football
kicked by Tin hit and broke the glass of the neighbor. The
neighbor asked Tin to pay the damages. Tin insisted that
she should not be liable because there were no pre-existing
contractual relation between them and it was just an
accident. Decide.
TEXT

▸ Tin is under the obligation to pay the damage because she is

guilty of fault or negligence hence a quasi-delict arose.
TEXT

THANK YOU!
REMEMBER,
IBALIK ANG
SOBRANG SUKLI
SA JEEP.
Renato P. Magbalon III