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The term law means any rule of action or any system of uniformity. In the strict legal sense, law
is that which is promulgated and enforced by the state and more commonly known as STATE LAW.
State law may also be referred to as positive law, municipal law, civil law or imperative law.

The characteristics of law are:

a. It is a rule of conduct. Law tells us what shall be done and what shall not be done.

b. It is obligatory. Law is considered a positive command imposing a duty to obey and involving a
sanction in case of disobedience.

c. It is promulgated by legitimate authority. Statutes are enacted by Congress which is the name of
the legislative branch of our government while local government units are also empowered to
enact ordinances.

d. It is of common observance and benefit.

Sources of Law

1. Constitution. It is often referred to as the fundamental law or supreme law or highest law of the
land because it is promulgated by the people themselves, binding on all individual citizens and all
agencies of the government.

2. Legislation. Acts passed by the legislature are called enacted law or statute law. It may also
include ordinances enacted by local government units.

3. Administrative or executive orders, regulations and rulings. These rules are intended to clarify
or explain the law and carry into effect its general provisions.

4. Judicial decisions or jurisprudence. Supreme Court decisions which apply and interpret the
laws or the Constitution form part of the legal system of the Philippines.

5. Custom. It consists of those habits and practices which through long and uninterrupted usage
have become acknowledged and approved by society as binding rules of conduct.

6. Other sources.

The Law on Obligations and Contracts is the body of rules which deals with the nature and the rights
and duties arising from the rights and duties from agreements and the particular contracts.

I. DEFINITION OF AN OBLIGATION

An obligation is a juridical necessity to give, to do or not to do. It is derived from the Latin word
obligation which means tying or binding. Juridical necessity means that in case of noncompliance, the
courts may be called upon by the aggrieved party to enforce its fulfillment or in default thereof, the
economic value it represents.
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REQUISITES OF AN OBLIGATION

The following are the requisites of an obligation:

a. A juridical or legal tie, which binds the parties to the obligation, and which may arise from either
bilateral or unilateral acts of persons;

b. An active subject known as the obligee or creditor, who can demand fulfillment of the obligation;

c. A passive subject known as the obligor or debtor, against whom the obligation is juridically
demandable; and

d. The fact, prestation or service which constitutes the object of the obligation.

III.SOURCES OF OBLIGATION
Obligations arise from:

a. Law;
b. Contracts;
c. Quasi-contracts;
d. Acts or omissions punished by law; and
e. Quasi-delicts.

A. OBLIGATIONS ARISING FROM 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.

When the law established the obligation and the act or condition upon which it is based is nothing more
than a factor for determining the moment when it becomes demandable, then the law itself is the
source of the obligation; however, when the law merely recognizes or acknowledges the existence of
an obligation generated by an act which may constitute a contract, quasi-contract, criminal offense or
quasi-delict and its only purpose is to regulate such obligation, then the act itself is the source of the
obligation and not the law.

B.OBLIGATIONS ARISING FROM CONTRACTS

A contract is a meeting of minds between two (2) persons whereby one binds himself with
respect to the other, to give something or to render some service.

Unlike other kinds of obligations, those arising from contracts are governed primarily by the agreement
of the contracting parties. Parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order
or public policy.

Compliance in good faith means compliance or performance in accordance with the stipulations or
terms of the contract or agreement.
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C.OBLIGATIONS ARISING FROM QUASI-CONTRACTS

Quasi-contracts are those juridical relations arising from lawful, voluntary and unilateral acts, by
virtue of which the parties become bound to each other, based on the principle that no one shall be
unjustly enriched or benefited at the expense of another.

a. Negotiorum gestio – juridical relation which arises whenever a person voluntarily takes charge of
the agency or management of the business or property or another without any power or authority
from the latter.
b. Solutio indebiti – juridical relation which arises whenever a person unduly delivers a thing
through mistake to another who has no right to demand it. The person to whom delivery is unduly
made shall have the obligation to return the property delivered or the money paid.

D.OBLIGATIONS ARISING FROM CRIMINAL OFFENSES

As a rule, every person liable for a felony is also civilly liable.[] But a person who is not criminally liable
may still be civilly liable.

What if an accused is acquitted?

1. If the acquittal of the accused is based on the ground that his guilt has not been proved, beyond
reasonable doubt, a civil action to recover damages based on the same act or omission may still
be instituted.
2. If the acquittal is based on the ground that he did not commit the offense charged, or what
amounts to the same thing, or if the fact from which the civil liability might arise did not exist, the
subsequent institution of a civil action to recover damages is, as a general rule, no longer possible.

Under Article 104 of the Revised Penal Code, civil liability includes:

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

E. OBLIGATIONS FROM QUASI-DELICTS

The term quasi-delicts refers to all of those obligations which do not arise from law, contracts,
quasi-contracts or criminal offenses.[] It may be defined as the fault or negligence of a person, who, by
his act or omission, connected or unconnected with, but independent from, any contractual relation,
causes damage to another person.

In actions based on quasi-delicts, before the person injured can recover damages from the defendant, it
is necessary that he must be able to prove the following:

1. The fault or negligence of the defendant;

2. The damage suffered or incurred by the plaintiff; and
3. The relation of cause and effect between the fault or negligence of the defendant and the damage
incurred by the plaintiff.
4. There must be no pre existing contractual relation between the parties.
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DIFFERENCE BETWEE CRIMES AND QUASI-DELICTS

Crimes Quasi-Delicts
Affects public interest Private concern
Penal Code punished or corrects the Civil Code merely repairs the damages
criminal act incurred
Two liabilities: criminal and civil Only civil liability
Punished only if there is a law which clearly Any kind of fault or negligence
defines it
Criminal liability can be compromised or Liability for quasi delict can be
settled compromised as any other civil liability