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General Provisions notes

General Provisions notes

OBLIGATIONS & CONTRACTS

ATTY. RUDITH ANN W. QUIACHON

OBLIGATIONS
General Provisions

Article 1156. An obligation is a juridical necessity to give, to do or not to

do. (n)

COMMENTS:

• Derived from the latin word obligatio which means tying or binding.
• Article 1156 is the civil code definition of obligation in its passive aspect
• Our law merely stresses the duty of the debtor/obligor (who has the duty of giving,
doing or not doing) when it speaks of obligation as a juridical necessity.
• Juridical necessity – in case of noncompliance, 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.
• Article 1156 refers only to civil obligations which are enforceable in court when
breached.
• It does NOT cover natural obligations (Article 1423-1430) because the latter are
obligations that cannot be enforced in court on equity and natural law and not on
positive law .

CIVIL OBLIGATIONS DISTINGUISHED FROM NATURAL OBLIGATIONS

1. Civil Obligations grant a right of action by which their performance can be compelled.
2. Natural Obligations, not being based on positive law but on equity and natural law,
do not grant such a right. After their voluntary fulfillment by debtor, however, they
authorize the retention of what was delivered or rendered by reason thereof.

ESSENTIAL ELEMENTS OF AN OBLIGATION.

An obligation is created upon the concurrence of the following essential elements:

1. The vinculum juris or juridical tie (Also called the efficient cause) – that which
binds or connect the parties to the obligation. The tie in an obligation can
easily be determined by knowing the source of the obligation.
2. The object which is the prestation (subject matter of the obligation) – the
conduct required to be observed by the debtor. Ex: to give, to do, or not to do)
3. The passive subject (called debtor or obligor) – the person who is bound to the
fulfillment of the obligation; he who has a duty
4. The active subject (creditor or obligee) – the person who is entitled to demand
the fulfillment of the obligation; he who has a right

Example:

Under a building contract, x bound himself to build a house for Y for 1m.
X – passive subject
Y – active subject
Building of the house – object or prestation
Agreement/contract – source of obligation – juridical tie
Supposed x had already constructed the house and it was the agreement that y would
pay x after the construction is finished, x then becomes the active subject and y, the
passive subject.

SOURCES OF OBLIGATION

Obligations arise from:

• Law – imposed by law itself.
Ex.obligation to pay taxes

• Contracts – arise from the stipulation of the parties.

Ex. obligation to repay an indebtedness by virtue of an agreement

• Quasi-contracts – arise from lawful, voluntary and unilateral acts which are
enforceable to the end that no one shall be unjustly enriched or benefited at the
expense of another.
Ex. Obligation to return money paid by mistake

• Acts or omissions punished by law – arise from civil liability which is the
consequence of a criminal offense.
Ex. The duty of the killer to indemnify the heirs of the victim

• Quasi-delicts or torts – arise from the damage caused to another through an act or
omission, there being fault or negligenc, but no contractual relation exists between
the parties.

Ex. The obligation of the possessor of an animal to pay for the damage which it may
have caused.

FORM OF OBLIGATIONS

• Refer to the manner in which an obligation is manifested or incurred. It may be

oral, writing or party oral and party in writing.

• General rule: The law does not require any form in obligations arising from
contracts for their validity or binding force (Article 1356)

• Exceptions:

1. When the form is ESSENTIAL to the VALIDITY of the contract as required by law.

Example: Transfer of rights over immovable property must be embodied in a public

document like a Deed of Absolute Sale notarized before a Notary Public.

1. When the contract is unenforceable unless it is in a certain form, such as those under
the Statute of Frauds as formulated in Article 1403. Example: A special promise to
answer for the debt, default or miscarriage of another.
• Obligations arising from other sources do not have any form at all.

Kinds of obligation according to the subject matter

• Either real or personal

1. REAL OBLIGATIONS (Obligation to give) – the subject matter is a thing which the
obligor must deliver to the obligee .

Example: to deliver a piano to the buyer

1. PERSONAL OBLIGATIONS (obligation to do or not to do) – subject matter is an act

to be done or not to be done.

There are two kinds:

• Positive personal obligation – obligation to do or to render a service such as x binds
himself t repair the piano

• Negative personal obligation- obligation not to do which naturally includes the

obligation not to give such as x obliges himself not to build a fence on a certain
portion of his lot in favor of y who is entitled to a right of way over said lot.

Article 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.

COMMENTS:

First sentence: Obligations derived from law are not presumed.

• They are not presumed because they are considered a burden upon the obligor.
• They are the exception, not the rule.
• To be demandable, they must be clearly set forth in the law.

Ex. An employer has no obligation to furnish free legal assistance to his employees
because no law requires this, and therefore, an employee, may not recover from his
employer the amount he may have paid a lawyer hired by him to recover damages
caused to said employee by a stranger while in the performance of his duties.

• Special laws - Refers to all other laws not contained in the civil code such as the
Corporation Code, Negotiable Instruments Law, Insurance Code, National Internal
Revenue Code, Revised Penal Code, Labor Code.

Article 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith. (1091a)
CONTRACTUAL OBLIGATIONS
• Obligations arising from contracts or voluntary agreements.
• It presupposes that the contracts entered into are valid and enforceable.

Contracts - It is a meeting of minds between two persons in which one binds himself,
with respect to another, to give something or to render some service. (Art. 1305)

valid – essential elements of a valid contract is present and it is not contrary to law,
morals, customs, public order or public policy.

Ex. Contract to kill someone in consideration for money is void because it is contrary
to law. Hence there is no obligation to comply with his agreements.

Enforceable- capable of being enforced in courts of law

Binding force - have the force of law between the contracting parties, they have the
same effect of obligations imposed by laws. Does not mean they are superior to the
law

COMPLIANCE IN GOOD FAITH

• Compliance in accordance with the stipulations or terms of the contract or

agreement.
• Sincerity and honesty must be observed to precent one party from taking unfair
advantage over the other.

Example:

If S agrees to sell his house to B and B agrees to buy the house of S, voluntarily and
willingly, then they are bound by the terms of their contract and neither party may,
upon his own will, and without any justifiable reason, withdraw from the contract or
escape from his obligations thereunder.

That which is agreed upon in the contract is the law between s and b and must be
complied with in good faith.

OBLIGATIONS ARISING FROM LAW VS. OBLIGATIONS ARISING FROM

CONTRACTS

Law / Contract
Obligations arising from law must be clearly and expressly stated in the law in order
for them to be demandable. / Obligations arising from contracts are based on the
stipulations between the parties which are the law between them as long as they are
not contrary to law, morals, good customs, public policy, or public order.
Consent is not necessary to be bound. /Consent, object, and cause or consideration
are essential requisites.
Prescriptive period is 10 years. / Prescriptive period is 10 years for written contracts,
6 years for oral contracts.
Article 1160. Obligations derived from quasi-contracts shall be subject to
the provisions of Chapter 1, Title XVII, of this Book. (n)

COMMENTS

• Quasi Contract is that juridical relation resulting from lawful, voluntary and
unilateral acts by virtue of which the parties become bound to each other to the end
that no one shall be unjustly enriched or benefited at the expense of another. (n)
• Not properly called a contract at all as there is no consent but the same is supplied
by fiction of law.
• In other words, the law considers the parties as having entered into a contract,
although they have not actually did so, and irrespective of their intention to prevent
injustice.

KINDS OF QUASI CONTRACT

1. Negotiorum gestio – voluntary management of the property or affairs of another

without the knowledge or consent of the latter.
2. Solutio indebiti –juridical relation which is created when something is received when
there is no right to demand it and it was unduly delivered through mistake.

NEGOTIORUM GESTIO

Article 2144. Whoever voluntarily takes charge of the agency or management of the
business or property of another, without any power from the latter, is obliged to
continue the same until the termination of the affair and its incidents, or to require
the person concerned to substitute him, if the owner is in a position to do so. This
juridical relation does not arise in either of these instances:

(1) When the property or business is not neglected or abandoned;

(2) If in fact the manager has been tacitly authorized by the owner.

In the first case, the provisions of articles 1317, 1403, No. 1, and 1404 regarding
unauthorized contracts shall govern.
In the second case, the rules on agency in Title X of this Book shall be applicable.
(1888a)

Example

X went to baguio with his family without leaving somebody to look after his house in
Manial. While in baguio, a big fire broke out near the house of X. through the effort
of Y, a neighbor, the house of X was saved from being burned. Y, however, incurred
expenses.
In this case, X has the obligation to reimburse Y for said expenses, although he did
not actually give his consent to the act of Y in saving his house, on the principle of
quasi-contract.

SOLUTIO INDEBITI

Article 2154. 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.
Requisites:
1. There is no right to receive the thing delivered
2. The thing was delivered through mistake

Example

D owes C P1,000. if D paid T believing that T was authorized to receive payments for
C, the obligation to return on the part of T arises. If D paid C P2000 by mistake, C
must return the excess of P1000

• Other examples of quasi-contracts are provided in Article 2164 to Article 2175 of the
Civil Code.

NEGOTIORIUM GESTIO VS. SOLUTIO INDEBITI

Negotiorium Gestio / Solutio Indebiti

Voluntary management of the property of another without authority, resulting in the

unjust enrichment of the owner of the property. / Payment made by mistake where
there was no right to receive payment, resulting in the unjust enrichment of the
payee.

The obligation of the debtor is to pay the necessary and useful expenses of the
officious manager, as well as the damages he suffered in the performance of his
duties. / The obligation of the debtor is to return what he received by mistake.
OBLIGATIONS ARISING FROM CONTRACTS VS. OBLIGATIONS ARISING FROM
QUASI-CONTRACTS

Contracts / Quasi-contracts
Obligations arising contracts due to the stipulations between the parties /
Obligations arise from quasi-contracts to prevent unjust enrichment
Contracts are due to bilateral actions. Their elements are consent, object, and cause
or consideration. / Quasi-contracts are due to the lawful, voluntary, and unilateral
acts of one person so that no one shall be unjustly enriched or benefited at the
expense of another.
Prescriptive period is 10 years for written contracts; 6 years for oral contracts. /
Prescriptive period is 6 years.

Article 1161. 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)

COMMENTS:

• This deals with civil liability arising from crimes or delicts.

• Crimes also causes material damage.
• Article 100, Every person criminally liable for an act or omission is also civilly
liable.
• But in crimes which causes no material damage (such as traffic violations) there is
no civil liability to be enforced.
• But a person not criminally responsible may still be liable civily such as failure to
pay contractual debt.

SCOPE OF CIVIL LIABILITY

Article 104. What is included in civil liability. - The civil liability includes:

1. Restitution- act of restoring to previous state

2. Reparation of the damage caused – give satisfaction to wrong or injury
3. Indemnification for consequential damages.

Example: x Stole the car of Y. if X is convicted, the court will order:

1. To return the car (or to pay value if lost or destroyed)

2. Pay for damages caused to the car
3. Pay such other damages suffered by Y as a consequence of the crime

Article 1162. Obligations derived from quasi-delicts shall be governed by

the provisions of Chapter 2, Title XVII of this Book, and by special laws.
(1093a)

COMMENTS:

• Treats of obligations arising from quasi-delicts or torts (See article 2176 to 2194)
• Quasi-delict – is an act or omission by a person which causes damage to another in
his person, property or rights giving rise to an obligation, there being fault or
negligence, to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.

REQUISITES

1. There must be an act or omission

2. There must be fault or negligence
3. There must be damage caused
4. There must be a direct relation or connection of cause and effect between the act or
omission and the damage; and
5. There is no pre-existing contractual relation between the parties

example

While playing softball with friends, X broke the window glass of Y, his neighbor. The
accident would not have happened had they played a little farther from the house of
Y.
In this case, X is under the obligation to pay the damage caused to Y by his act
although there is no pre-existing contractual relation between them because he is
guilty of fault or negligence.

CRIMES VS. QUASI-DELICT

 1. In crime, there is criminal or malicious intent or criminal negligence, while in quasi-
delict, there is only negligence
2. In crime, the purpose is punishment, while in quasi-delict, indemnification of the
offended party
3. Crime affects public interest, while in quasi-delict concerns private interest
4. In crime, there are generally two liabilities: criminal and civil, while in quasi-delict,
there is only civil liability
5. Criminal liability cannot be compromised or settled by the parties themselves, while
the liability for quasi-delict can be compromised as any other civil liability
6. In crime, the guilt of the accused must be proved beyond reasonable doubt, while in
quasi-delict, the fault or negligence of the defendant need only be proved by
preponderance (superior or greater weight) of evidence.

OBLIGATIONS ARISING FROM DELICTS VS. OBLIGATIONS ARISING FROM

QUASI-DELICTS

Delicts / Quasi-delicts

Obligations arising from delicts due to the crime committed. These offenses are
punishable under the RPC or other penal laws. / Obligations arise from quasi-delicts
because of the damage due to an act or omission, through fault or negligence, when
there is no pre-existing contractual relations between the parties.

The civil liability arises from the crime or offenses punishable under the RPC or
penal laws. / Liability arises due to fault or negligence.

The civil liability includes restitution, reparation, and indemnification for damages. /
Liability consists in the payment of damages.

Prescriptive periods are those stated in the RPC or penal laws. / Prescriptive period
is 4 years.

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