(BL 01) Obligation and Contract

Module 2: OBLIGATION

BOOKS OF THE CIVIL CODE

Book I – Person and Family Relations

Book II – Property, Ownership and its modifications.
Book III – Different Modes of Acquiring Ownership (Succession)
BOOK IV – OBLIGATIONS AND CONTRACTS
Book V – Special contracts

GENERAL PROVISION OF LAW

The definition of obligations establishes the unilateral act of the debtor either to give, to do or not to do
as a patrimonial obligation. It means that the debtor has the obligation while the creditor has its rights.
On the sources of obligation, the main sources are really Law and Contracts. The other sources are also
established by law.

OBLIGATION
ART 1156. An obligation is a juridical necessity to give to do or not to do.

OBLIGATIONS as defined, is a juridical relation whereby a person (called the creditor) may demand
from another (called the debtor) the observance of a determinate conduct, and, in case of breach, may obtain
satisfaction from the assets of the latter. (Approved by Mr. Justice J. B. L. Reyes)

The obligations referred to in our manual is a patrimonial obligation that is, those obligations with
pecuniary value or assessable in terms of money.

1. Characteristics of PATRIMONIAL OBLIGATIONS:

1. They represent an exclusively private interest.
2. They create ties that are by nature transitory.
3. They exist a power to make effective in case of non-fulfillment, the economic equivalent obtained
at the patrimony of a debtor.

2. Meaning of JURIDICAL NECESSITY – it means the rights and duties arising from obligation are legally
demandable and the courts of justice may be called upon through proper action to order the performance

Action means an ordinary suit in court of justice by which one party prosecutes another for the enforceable or
protection for a right or a prevention or redress of a wrong (Sec. 1. Rules of court).

EXAMPLE –Gaya bought refrigerator from Tito but Gaya did not pay the refrigerator. If after demand, Gaya
still did not pay, Tito can sue Gaya in Court either to demand payment or for recovery of the refrigerator.

3. Essential requisites of an obligation:

i. An ACTIVE SUBJECT, who has the power to demand the prestation, known as the creditor or oblige;
ii. A PASSIVE SUBJECT, who is bound to perform the prestation, known as debtor or obligor.
iii. An OBJECT or THE PRESTATION which may consist in the act of giving, doing or not doing
something.
iv. EFFICIENT CAUSE - the vinculum or the legal or juridical tie that binds the parties to an obligation.
It may consist of any of the five sources of obligation (law, contract, quasi-contract, delict and quasi-
delict). The VINCULUM JURIS or the JURIDICAL TIE between the two subjects by reason of
which the debtor is bound in favor of the creditor to perform the prestation. It is the legal tie which
constitutes the source of obligation— the coercive force which makes the obligation demandable. It is
the legal tie which constitutes the devise of obligation… the coercive force which makes the obligation
demandable

Juridical Tie
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Example:
Gaya enters into a contract of sale with Tito who paid the purchase of a GE refrigerator. Gaya did not
deliver the refrigerator. Gaya is the passive subject or debtor and Tito is the active subject or creditor. The
object or prestation is the GE refrigerator and the obligation to deliver is the legal tie or the vinculum juris
which binds Gaya and Tito

This is also known as a UNILATERAL OBLIGATION, that is, the obligation of the debtor to fulfill or
comply his commitment, in this case, the delivery of the refrigerator.

ON THE OTHER HAND, if Gaya, delivered the refrigerator and Tito did not pay, then Tito becomes
the debtor who is bound to pay while Gaya is the creditor who has the right to demand the prestation.

4. Distinctions between Obligations and Contracts:

 Contract is the only one of the sources of obligation, while obligations have other sources like law,
quasi-contracts, delicts or quasi-delicts;
 Contract is a bilateral obligation while obligation is a unilateral obligation;
 All contracts are obligations while not all obligations are contracts

5. Civil obligations as distinguished from Natural obligations –

Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations are a right
of action to compel their performance. Natural obligations, not being based on positive law but on equity and
natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the
obligor, they authorize the retention of what has been delivered or rendered by reason thereof".

 Civil obligations derive their binding force from positive law; Natural Obligation derives their binding
effect from equity and natural justice.
 Civil can enforced by court action of the coercive power of public authority;

NATURAL – the fulfillment cannot be compelled by court action but depends on the good conscience of
debtor

Civil obligation Natural obligation

1. Based on law 1. Based on equity and moral justice
2. Enforceable by court actions 3. Cannot be enforced by court action
FORMS OF OBLIGATION
1. Oral
2. In writing
3. Partly oral and partly in writing

OBLIGATION ACCORDING TO SUBJECT MATTER

1. Real obligation (obligation to give) – the subject matter is the thing which the obligor must deliver to
the obligee
Example. A bound himself to deliver to B 10 sacks of rice

2. Personal obligation (obligation to do or not to do) – the subject matter is the act to be done or not to
be done
 POSITIVE PERSONAL OBLIGATION – obligation to do or to render service
Example: A bounds himself to paint the house of B
 NEGATIVE PERSONAL OBLIGATION – obligation not to do (which naturally
includes “not to give”)

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Example: X binds himself not to construct a fence on a portion of his lot in favor
of W who is entitled to right of way.

ART. 1157. Obligations arise from:

 Law;
 Contracts;
 Quasi-contracts;
 Acts or omissions punished by law; and
 Quasi-delicts. (1089a)

On the SOURCES OF OBLIGATION, the main sources are really Law and Contracts. The other sources
are also established by law.

SOURCE OF OBLIGATIONS
1. LAW as a source of obligations –
- The provisions of Art. 1158 refer to the legal obligations or obligations imposed by specific
provisions of law, which means that obligations arising from law are not presumed and that to be
demandable must be clearly provided for, expressly or impliedly in the law.

Examples:
 It is the duty of the Spouses to support each other. (Art. 291, New Civil Code)
 And under the National Internal Revenue Code, it is the duty of every person having an income to pay
taxes

2. CONTRACT as a source of obligations –

Contract as defined in Art. 1305, NCC is the meeting of minds between two person whereby one binds
himself with respect to the other,
Obligations arising from contracts have the force of law between the contracting parties because that
which is agreed upon in the contract by the parties is the law between them, thus, the agreement should be
complied with in good faith. (Art. 1159).

For examples:
A contract of lease was executed between Gaya as the lessee and Tito as the lessor for the rent of an
apartment.

- Although contracts have the force of law, it does not mean that contract are over and above the law.
Contracts are with the limitations imposed by law in Art. 1306, NCC, it states that the contracting
parties may establish such stipulations, clauses terms and conditions as, they may deem convenient,
provided that are not contrary to law, morals, good custom, public order or public policy.

3. QUASI-CONTRACTS as a source of obligations

The ‘QUASI’ literally means ‘AS IF’.

Quasi-contract is the juridical relation resulting from a lawful, voluntary and unilateral act which has
for its purpose the payment of indemnity to the end that no one shall unjustly enrich or benefited at the
expense of another. (Art. 2142, NCC)

Contracts and quasi-contracts distinguished:

 in a contract, consent is essential requirement for its validity while in quasi-contract, there is no
consent as the same is implied by law;
 CONTRACT is a CIVIL OBLIGATION while QUASI-CONTRACT is a NATURAL
OBLIGATION

2 KINDS OF QUASI-CONTRACTS

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1. SOLUTIO INDEBITI (PAYMENT BY MISTAKE)

 It is the juridical relation which arises when a person is obliged to return something received by him
through error or mistake.
 Refers to the juridical relation which arises whenever a person unduly delivers a thing through mistake
to another who has no right to demand it.

Example
Arvin owed Ian the sum of P1, 000.00. By mistake, Arvin paid P2, 000.00. Ian has the obligation
to return the P1, 000.00 excess because there was payment by mistake.

2. NEGOTIORUM GESTIO (MANAGEMENT OF ANOTHER’S PROPERTY)

 It is the voluntary management or administration by a person of the abandoned business or property of
another without any authority or power from the latter. (Art. 2144, NCC)
 Voluntary administration of the property, business, or affairs of another without the latter’s consent or
authority. It is a type of spontaneous agency or interference by a person, called a negotiorum gestor, in
the affairs of another, in his absence. The gestor is only entitled to reimbursement for expenses and not
to remuneration.

Example
Victor, a wealthy landowner suddenly left for abroad leaving his livestock farm unattended.
Ramon, a neighbor of Victor managed the farm thereby incurring expenses. When Victor returns, he has
the obligation to reimburse Ramon for the expenses incurred by him and to pay him for his services. It is
bases on the principle that no one shall enrich himself at the expense of another

4. DELICTS or acts or omissions punished by law as a source of obligations

Acts or omission punished by law is known as Delict or Felony or Crime.

 While an act or omission is felonious because it is punished by law, the criminal act gives rise to civil
liability as it caused damage to another.

CIVIL LIABILITY ARISING FROM DELICTS:

Article 100 of the Revised Penal code provides, “Every person criminally liable for a felony is also
civilly liable”. Article 104. The civil liability of this Code includes:
 Restitution – which is the restoration of or returning the object of the crime to the injured party.
 Reparation – which is the payment by the offender of the value of the object of the crime, when
such object cannot be returned to the injured party.
 Indemnification – the consequential damages which includes the payment of other damages that
may have been caused to the injures party.

Illustration:
Mario was convicted and sentenced to imprisonment by the Court for the crime of theft, the gold
wrist watch, of Rito. In addition to whatever penalty that the Court may impose, Mario may also be
ordered to return (restitution) the gold wrist watch to Rito. If restitution is no longer possible, for Mario
to pay the value (reparation) of the gold wrist watch. In addition to either restitution or reparation, Mario
shall also pay for damages (indemnification) suffered by Rito

5. QUASI-DELICTS as a source of obligations

Concepts of Quasi-Delict –
QUASI-DELICT also known as “TORT” or “CULPA AQUILIANA”. These are acts or omissions that
cause damage to another, there being no contractual relation between the parties (Art.2176). It refers to a
negligent act or omission which causes harm or damage to the person or property of another, and thus exposes a
person to civil liability as if the act or omission was intentional

Example

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If Pedro drives his car negligently and because of his negligence hits Jose, who is walking on the
sidewalk of the street, inflicting upon him physical injuries. Then Pedro becomes liable for damages
based on quasi-delict

REQUISITES OF A QUASI-DELICTS
a. There must be an act or omission
b. There must be fault, negligence or imprudence not legally excusable
c. There must be damage caused
d. There is a direct relation between of cause and effect between the act or omission and the damage; and
e. There is no pre-existing contractual relations between the parties

DISTINCTION BETWEEN CRIME AND QUASI-DELICT

Crime Quasi-Delict
There is malicious intent There is negligence
Purpose is punishment Purpose is indemnification of parties
Affects public interest Affects private interest
2 liabilities – criminal and civil Only civil liability
Criminal liability cannot be compromised Liability can be the subject of compromise
Guilt of the accused must be proved beyond reasonable Negligence needs to be proved only by
doubt preponderance of evidence
ART. 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. (1090)

ART. 1159. Obligations arising from contracts have the force of law between the contracting parties and should
be complied with in good faith. (1091a

ART. 1160. Obligations derived from quasicontracts shall be subject to provisions.

ART. 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 regulating damages. (1092a)

ART. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title
XVIII of this Book, and by special law. (1093a)

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