Laws on

OBLIGATIONS and
CONTRACTS
 Obligation, defined
• ARTICLE 1156. AN OBLIGATION IS A JURIDICAL
NECESSITY TO GIVE, TO DO OR NOT TO DO.
• Obligation – derived from Latin word, “obligatio” - tying or binding

• Juridical necessity – in case of non-compliance, courts may be called

upon by aggrieved party to enforce its fulfillment or in default, the
economic value that it represents
 Essential Requisites of an Obligation
1. Passive Subject – also known as debtor or obligor. – person who is bound to the
fulfillment of the obligation;
2. Active Subject – also known as creditor or obligee – the person who is entitled to
demand the fulfillment of the obilgation
3. Object or prestation – refers to the subject matter of the obligation, consists of
giving, doing, and not doing
4. Juridical tie, legal tie or efficient cause – binds parties to the obligation, refers to
the source of obligation
 Form of Obligations
• Refers to the manner in which an obligation is manifested or
incurred.
• GR: law does not require any form of obligation
• Can be oral, writing, partly oral and partly writing,
• EXC. exceptions provided for by law
 Kinds of Obligation
according to subject matter

1. Real obligation (obligation to give)

2. Personal obligation (obligation to do or not to do
2 kinds:
a) Positive personal obligation
b) Negative personal obliation
 Sources of OBLIGATIONS (5)

1. Law
2. Contracts (culpa contractual)
3. Quasi-contracts
4. Acts or omissions punished by law (culpa criminal)
5. Quasi-delict (culpa aquiliana)
 LAW
• These obligations which are imposed by the law itself
• Examples: obligation to follow traffic signs; obligations
to pay taxes
 CONTRACTS
• Obligation to follow agreement of the parties based on the contract
entered into by them
• What is a contract?
• A meeting of the minds between two persons whereby one binds himself
with respect to the other to give something or to render some service
• Obligations of the parties in it, have the force of law between them
• Contract is valid if all essential elements are present
• Contract may be breached in whole or in part
• Compliance in good faith – compliance of the agreement
 Quasi-Contract
• They arise from lawful, voluntary and unilateral acts which are enforceable to the
end that no one shall be enriched or be benefited at the expense of another.
• Not a proper contract, no explicit consent, consent is assumed
• Kinds of Quasi-contract
1. Negotiorum Gestio – voluntary management of property or affairs of another
without knowledge or consent of latter
2. Solutio Indebiti – juridical relation when something is received when there is no
right to demand it and it was unduly deliveryed through mistake
 Quasi-Delict
• Also known as Torts
• They arise from damage caused to another through an act or omission, there being
fault or negligence but not contractual relationship exists between the parties
• Requisites:
• Act or omission
• Fault or negligence
• Damage caused
• Direct relation or connection of cause and effect between act or omission and damage
• No pre-existing contractual relation
 Acts or Omissions punished by law
• They refer to CRIMES
• Acts punished under the Revised Penal Code
• Differed from quasi delicts:
C – Purpose is punishment while QD – indemnification
C – criminal intent while QD – only negligence
C – public interest while QD – private
C – has 2 liabilities, criminal and civil while QD - civil only
C – cant be compromised, QD – can be compromised
C- guilty must be proven beyond reasonable doubt, QD – preponderance of evidence
 Scope of Civil Liability

• Restitution
• Reparation of damage caused
• Indemnification for consequential damages