Obligations & Contracts: Extracts From New Civil Code ON

EXTRACTS FROM NEW CIVIL CODE
ON
OBLIGATIONS & CONTRACTS

OBLIGATIONS
Article 1156. An obligation is a juridical necessity to give,
to do or not to do.
It is a tie or bond recognized by law by virtue
of which one is bound in favor of another to
render something and may consist in giving
a thing, doing a certain act or not doing.
Obligation is a legal duty, however created,
the violation of which may become the basis
of an action of law.
Derived from latin word “obligatio” that means
“tying” or binding.
ESSENTIAL REQUISITES OF AN OBLIGATION
 Obligee or Creditor
 Obligor or Debtor
 Prestations or Object
 Juridical or Legal Tie

 Obligee  is an active subject
 The person who is entitled to demand the fulfillment of
the obligation; who has right.
 Debtor  is the passive subject

 The person who is bound to the fulfillment of the
obligation; who has duty
 Prestations  The conduct required to be observed by the debtor that

consist in giving, doing, or not doing.
 a duty to do or not to do something in fulfillment of an
obligation or the performance of such duty.
 Legal Tie  Binds or connects the parties to the obligation. The tie in
an obligation can easily be determined by knowing the
source of the obligation.
OBLIGATION ARISE FROM:
1. Law
2. Contracts
3. Quasi-contracts
4. Crimes or Acts or Omissions punished by law
5. Quasi-delicts or Torts
1. Law
 when they are imposed by law itself
2. Contracts
 when they arise from the stipulation of parties
3. Quasi-contracts
 when they 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.
4. Crimes or Acts or Omissions punished by law
 When they arise from civil liability which is the
consequence of a criminal offense.
5. Quasi-delicts or Torts
 When they arise from damage caused to another
through an act or omission, there being fault or
negligence, but no contractual relation exists
between the parties.
MODES OF EXTINGUISHING
OBLIGATIONS:
Article 1231. Obligations are extinguished:
1. By payment or performance
2. By the loss of the thing due
3. By the condonation or remission of debt
4. By the confusion or merger of the rights of creditor and debtor
5. By compensation
6. By novation
CAUSES OF EXTINGUISHMENT
1. Death of a party in case of an obligation requiring personal

service
2. Mutual desistance or withdrawal
3. Arrival of resolutory period
4. Compromise
5. Impossibility of fulfillment
6. Happening of fortuitous event
CONTRACTS
Article 1305. A contract is a meeting of minds between
two persons whereby one binds himself, with
respect to the other, to give something or to
render some service.
A contract is a legal agreement between

people, companies in a document on which
the words of a contract are written.
CLASSIFICATION OF CONTRACTS
Contracts may be categorized in various ways depending on the
characteristics in them which is emphasized.
1. According to their relation to other contracts

 Preparatory – when it is entered into as means to an end
– which have further object the establishment of
an addition in law which is necessary as preliminary step
towards the celebration of another subsequent contract.
Example: Partnership or Agency
 Principal – which have success independently from other
contracts and whose purpose can be fulfilled by
themselves.
Example: Sale, Lease
 Accessory – those which can exist only as a consequence

of or in relation with another prior contract.
– when it is dependent upon another contract it secures
or guarantees for its existence and validity.
Example: Mortgage or Guaranty
2. According to liability
 Unilateral – those which give rise ro an obligation for only one
of the parties.
– when it creates an obligation on the part of only
one of the parties.
Example: commodatum, gratuitous deposit
 Bilateral – which give rise to reciprocal obligations for both

parties.
Example: sale, lease
3. According to name or designation
 Nominate Contract – which has a specific name or
designation in law.
Example: commodatum, lease, agency, sale
 Innominate Contract – which has no specific name or

designation in law.
Kinds of Innominate Contract

1. do ut des ( I give that you may give)
2. do ut facias ( I give that you may do)
3. facto ut des ( I do that you may give)
4. facto ut facias ( I do that you may do)
KINDS OF DEFECTIVE CONTRACTS
 Rescissible contracts
 Voidable contracts
 Unenforceable contracts
 Void or Inexistent contracts

 Rescissible contracts – are valid because all the essential
requisites of a contract exist but by reason of economic injury
or damage to one of the parties or to third persons, such as
creditors, the contract may be rescinded. In rescissible
contract, there is no defect at all but by reason of some
external facts, its enforcement would cause injustice.
 Voidable contracts – are also valid until annulled unless

there has been a ratification. In a voidable contract, the
defect is caused by vice of consent.
Voidable or Annullable Contracts are those which possess all
the essential requisites of a valid contract but one of the
parties is incapable of giving consent, or consent is vitiated
by mistake, violence, intimidation, undue influence or fraud.
 Unenforceable contracts – are cannot be sued upon or
enforced unless they are ratified. An unenforceable contract
occupies an intermediate ground between a voidable and a
void contract.
Article 1403. (1) Those entered into the name of another

person by one who has been given no
authority or legal representation or who has
acted beyond his powers.
 Void or Inexistent contracts – they are absolutely null and
void. Void contracts have no effect at all and cannot be
ratified.
Inexistent contracts refer to agreements which lack some of
the elements (consent, object, and cause) or do not comply
with formalities which are essential for the xistence of a
contract.
Article 1409. (1) Those who cause, object or purpose is contrary to

law, morals, good customs, public order or public
policy.
(2) Those which are absolutely simulated or fictitious
(3) Those expressly prohibited or declared void by law.

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EXTRACTS FROM NEW CIVIL CODE

OBLIGATIONS & CONTRACTS

 Juridical or Legal Tie

 Debtor  is the passive subject

 Prestations  The conduct required to be observed by the debtor that

4. Crimes or Acts or Omissions punished by law

1. Death of a party in case of an obligation requiring personal

A contract is a legal agreement between

1. According to their relation to other contracts

 Accessory – those which can exist only as a consequence

 Bilateral – which give rise to reciprocal obligations for both

 Innominate Contract – which has no specific name or

Kinds of Innominate Contract

 Void or Inexistent contracts

 Voidable contracts – are also valid until annulled unless

Article 1403. (1) Those entered into the name of another

Article 1409. (1) Those who cause, object or purpose is contrary to

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