THE LAW ON OBLIGATIONS AND CONTRACTS

LESSON NO. 2

GENERAL PROVISIONS ON OBLIGATIONS

Definition of Obligation

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

The term obligation is derived from the Latin word obligation which means tying or binding. It
is a tie or bind recognized by law by virtue of which one is bound in favor of another to render
something – and this may consist in giving a thing, doing a certain act, or not doing a certain act.

Article 1156 gives the Civil Code definition of obligation, in its passive aspect. It merely stresses
the duty under the law of the debtor or obligor (he who has the duty of giving, doing, or not
doing) when it speaks of obligation as a juridical necessity.

Obligation is a juridical necessity because 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. In a proper case, the debtor or obligor may also be made liable for
damages. Which represents the sum of money given as a compensation for the injury or harm
suffered by the creditor or obligee (he who has the right to the performance of the obligation) for
the violation of his rights.

The debtor must comply with his obligation whether he likes it or not; otherwise, his failure will
be visited with some harmful or undesirable consequences. If obligations were not made
enforceable, then people can disregard them with impunity. There are, however, obligations that
cannot be enforced because they are not recognized by law as binding.

Essential Requisites of an Obligation

Every obligation has four (4) essential requisites, namely:

1. A passive subject
The passive subject is the debtor or obligor, or the person who is bound to the
fulfillment of the obligation. The passive subject is he who has a duty.

2. An active subject
The active subject is the creditor or oblige, or the person who is entitled to
demand the fulfillment of the obligation. The active subject is he who has a right.

3. Object or prestation

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 The object or prestation is the subject matter of the obligation. It is the conduct
required to be observed by the debtor. It may consist in giving, doing, or not doing.
Without the prestation, there is nothing to perform.

4. Juridical tie
The juridical tie is also called efficient cause. It is that which binds or connects
the parties to the obligation. The tie in an obligation can easily be determined by knowing
the sources of the obligation.

Example:
Under a building contract, A bound himself to build a house for B for
P2,000.000.00. In this case:
 A is the passive subject
 B is the active subject
 The building of the house is the object or prestation
 The contract or agreement, which is the source of obligation, is the juridical
tie.

Forms of obligations

The form of an obligation refers to the manner in which an obligation is manifested or

incurred. It may be oral, or in writing, or partly oral and partly in writing.

As a general rule, the law does not require any form in obligations arising from contracts
for their validity or binding force. Obligations arising from other sources do not have any form at
all.

Kinds of Obligations According to the Subject Matter

From the viewpoint of the subject matter, obligation may be either real or personal.

1. Real Obligation
A real obligation is an obligation to give. It is that in which the subject matter is a
thing which the obligor must deliver to the obligee.

Example:
A, the seller, binds himself to deliver a guitar to B, the buyer.

2. Personal Obligation
A personal obligation is an obligation to do or not to do. It is that in which the
subject matter is an act to be done or not to be done. A personal obligation may be
positive or negative.

a. Positive Personal Obligation

It refers to the obligation to do or to render some service.

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 Example:
A binds himself to repair the laptop of B.

b. Negative Personal Obligation

It refers to the obligation not to do, which naturally includes obligation not
to give.

Example:
A 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.

Sources of Obligations

ARTICLE 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts

As stated in the above legal provision, the sources of obligations are law, contracts,
quasi-contracts, acts or omissions punished by law (delicts), and quasi-delicts.

1. Law

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.

Article 1158 refers to legal obligations or obligations arising from law. They are
not presumed because they are considered a burden upon the obligor. They are the
exceptions, not the rule. To be demandable, they must be clearly set forth in the law.

Example:
A private school has no obligation to provide clothing allowance to its teachers
because there is no law which imposes this obligation upon schools.

Special laws refer to all other laws not contained in the Civil Code. Examples of
such laws are Corporation Code, Negotiable Instruments Law, and Insurance Code.

2. Contracts

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 ARTICLE 1159. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.

Article 1159 speaks of contractual obligations or obligations arising from contracts or

voluntary agreements. It presupposes that the contracts entered into are valid and
enforceable.

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

Obligations arising from contracts have the force of law between the contracting parties.
They have the same binding effect of obligations imposed by laws. This does not mean,
however, that contract is superior to the law. As a source of enforceable obligation, a
contract must be valid and it cannot be valid if it is against the law. It must not be
contrary to law, morals, good customs, public order, and public policy.

In the eyes of the law, a void contract does not exist. Consequently, no obligations will
arise. A contract may be valid but cannot be enforced. This is true in the case of
unenforceable contracts.

Compliance in good faith means compliance or performance in accordance with the

stipulations or terms of the contract or agreement. Sincerity and honesty must be
observed to prevent one party from taking advantage over the other. Non-compliance by
a party with his legitimate obligations after receiving the benefits of a contract would
constitute unjust enrichment on his part.

Examples:

1. If A agrees to sell his house to B and B agreed to buy the house of A, voluntarily and
willingly, then they are bound by the terms of their contract and neither party may,
upon his own will, and without any unjustifiable reason, withdraw from the contract
or escape from his obligations thereunder. That which is agreed upon is the law
between A and B and must be complied with in good faith.

2. A contract whereby A will rape B in consideration of P100,000.00 to be paid by C, is

void and non-existent because raping a person is contrary to law.

3. Quasi-contracts

ARTICLE 1160. Obligations derived from quasi-contracts shall be subject to the

provisions of Chapter 1, Title XVII of this Book.

Article 1160 talks about obligations arising from quasi-contracts or contracts implied by
law.

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 A 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 will
be unjustly enriched at the expense of another. It is not properly a contract at all. In a
contract, there is a meeting of minds or consent, and the parties must have deliberately
entered into a formal agreement. In a quasi-contract, 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,
in order to prevent injustice.

Kinds of Quasi-contracts
The principal kinds of quasi-contracts are the following:

1. Negotiorum gestio
It is the voluntary management of the property or affairs of another without the
knowledge or consent of the latter.
Example:
A went to Apayao with his family without leaving somebody to look after
his house in Manila. While in Apayao, a big fire broke out near the house of A.
Through the effort of B, a neighbor, the house of A was saved from being burned.
B, however, incurred expenses. In this case, applying the principle of quasi-
contract, A has the obligation to reimburse B for said expenses, although he did
not actually give his consent to the act of B in saving his house.

2. Solutio indebiti
It is the juridical relation which is created when something is received whent here
is no right to demand it and it was unduly delivered through mistake.

The requisites are:

i. There is no right to receive the thing delivered; and
ii. The thing was delivered through mistake.

Example:
A owes B P50,000.00. If B paid C believing that T was authorized to
receive payment for B, the obligation to return on the part of C arises. If A paid B
P52,000.00 by mistake, B must return the excess of P2,000.00.

4. Acts or omissions punished by law (Delicts)

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.

Article 1161 deals with civil liability for damages arising from crimes or delicts. The
commission of a crime causes not only moral evil but also material damage. From this

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 principle, the rule has been established that every person criminally liable for an act or
omission is also civilly liable for damages.

The extent of civil liability for damages arising from crimes is governed by the Revised
Penal Code and the Civil Code. This civil liability includes:

i. Restitution;
ii. Reparation for the damage caused; and
iii. Indemnification for consequential damages.

Example:
A stole the car of B. If A is convicted, the court will order X:
1. To return the car or to pay its value if it was lost or destroyed;
2. To pay for any damage caused to the car; and
3. To pay such other damages suffered by Y as a consequence of the crime.

5. Quasi-delicts

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.

Article 1162 deals with obligations arising from quasi-delicts.

A quasi-delict is an act or omission by a person (tortfeasor) which causes damage to another

in his person, property, or rights giving rise to an obligation to pay for the damage done,
there being fault or negligence but there is no pre-existing contractual relation between the
parties.

Before a person can be held liable for quasi-delict, the following requisites must be present:
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 basketball with his friends, A broke the window glass of the house
of B which is located near the basketball court. The accident would not have happened if A
did not throw the ball too far. In this case, A is under the obligation to pay the damage caused
to B by his act although there is no pre-existing contractual relation between him and B,
because he is guilty of fault or negligence.

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 EXERCISES
1. Give the meaning of the following:
a. Obligation
b. Contract
c. Law
d. Quasi-contract
e. Delict
f. Quasi-delict
g. Negotiorum gestio
h. Solutio indebiti
i. Real Obligation
j. Personal Obligation

2. What are the essential requisites of an obligation? Give an example to illustrate them.

3. May a person incur obligations even without entering into any contractual or voluntary
agreement? Explain your answer.

4. “A” agreed to deliver a car to “B” for a consideration of P500,000.00. Identify the
following:
a. the active subject
b. the passive subject
c. the prestation
d. the juridical tie.

5. “A” killed “B” and he was charged with Homicide before a court of law. He was
sentenced to 12 years of imprisonment. Identify the following:
a. the active subject
b. the passive subject
c. the prestation
d. the juridical tie.

ALYSSA JOYCE B. DU-SAMPAGA

Instructor

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