OBLIGATIONS AND

CONTRACTS
LECTURE 1
By: Atty. Wilfred Francis B. Martinez
INTRODUCTION AND CLASS POLICIES
About the Course
 Course Title: OBLIGATIONS AND CONTRACTS (“OBLICON”)
 Class hours: 3 hours
 Professor: Atty. Wilfred Francis B. Martinez
 About the professor:
 A lawyer with expertise in Corporation Law, particularly, corporate
structuring, corporate structures, and corporate transactions.
 A graduate of De La Salle University – College of Law
 A graduate of De La Salle – College of St. Benilde, AB-Multimedia
Arts
 Contact Details:
 wilfredmartinezfd@gmail.com
 09778139455
About the Course
 About the students:
1. Bring one index card next meeting and complete the
following:
 Name of the Student (Last Name, First Name, Middle Name) –
Include your preferred nickname
 Student Number
 Degree and Year
 Contact Number
 E-mail address
 Expectation from the class (i.e. what do you expect to learn)
 Please elect a class president and vice-president now.
Course Description
 It is important for every entrepreneur to ensure that they
conduct their business in compliance with Philippine laws,
rules and regulations.
 To be effective, entrepreneurs must possess an
understanding of the laws in order for them to know and
protect their rights, avoid penalties and liabilities, and
ensure that the basic principle of fair play is observed.
 To learn the basics of law is not just reserved for aspiring
entrepreneurs however, it is also beneficial to everyone,
since every single person in the country will be subjected
to it.
Course Objectives
 The course aims to provide students with an overview of
the laws related to (1) obligations; (2) contracts; (3)
setting up of businesses; and (4) the basic rules in regard
to the operation and maintenance of their business. The
course will include lectures and discussions of Republic
Act No. 386 otherwise known as the Civil Code of the
Philippines and Batas Pambansa Blg. 68 or the Corporation
Code of the Philippines.

 To supplement the discussions, the course will also include

case studies decided by the Supreme Court in order to
provide the students with a real-world perspective on how
the laws are applied. The students are expected to read
and understand all assigned readings and participate in
class recitation.
Grading System

Class Participation (Quizzes, 30%

Seatworks, Recitation, and
Attendance)

Long Exams 40%

Final Exams 30%

Total: 100%
Class Policies (Quizzes and Seatworks)
 All quizzes are announced (no surprise quiz)
 None of the seatworks will be announced. Seatworks will
be conducted randomly during the lecture to ensure
student attentiveness.
 Objective Type (Multiple Choice / True or False /
Identification / Essay)
 The student is responsible for missed exams (quiz,
seatwork, and long exam). Make-up quiz is allowed
provided that the absence of the student was justified.
 Long exams will be conducted in a similar manner as that
of quizzes.
Class Policies (Quizzes and Seatworks)
 Always have yellow pad papers on hand.

Type of Exam Type of Paper

Seatworks 1/4 Yellow Paper
Quizzes 1/2 Yellow Paper
Long and Final Exam Whole Yellow Paper
Class Policies (Attendance)
 Maximum allowed absences: 5
 On the 6th absence: Automatic fail unless the absence was
justified (i.e. medical certificate)
 Unused allowable absences will be converted as
additional points to be applied to your final exam grade.
Class Policies (Cheating and Discipline)
 Any form of cheating during exams, quizzes, seatworks, or
recitation is absolutely prohibited
 Any form of communications during an exam will be
considered as cheating
 Going to the bathroom during an exam is prohibited
 Observe proper conduct
Class Policies (Electronic Devices and Power Point
Presentation)
 Students are allowed to use tablets or laptops to take
notes
 The professor will send each presentation to the Class
Beadle / Class President who shall distribute the same to
the rest of the class.
References
 Republic Act No. 386 (The New Civil Code)
 Batas Pambansa Blg. 68 (The Corporation Code)
 Business Law: A Compact Presentation of the Basic
Principles of Business Law by Diaz, Virginia M. (Available
at the PCC Library)
 Business Law Book 1 by Cruz, Rex (Available at the PCC
Library)
 Comments and Jurisprudence on Obligations and
Contracts – Fifth Edition by Jurado, Desiderio P.
 The Law on Obligations and Contracts – by Hector S. De
Leon
INTRODUCTION TO LAW
Law In General
 The term “Law”, in its widest sense, means any rule of
action, norm of conduct, or expression of uniformity.
 In other words, Law is what dictates proper procedure,
action, or behavior.
 General Divisions of Law:
1. Laws made and enforced by human society (State Law)
2. Laws not made and enforced by human society:
a) Divine law;
b) Natural law;
c) Moral law; and
d) Physical law.
Law In General
 Divine Law:
 The law of religion and faith which concerns itself with the
concept of sin (as opposed to crimes under State law).
 It is promulgated by a higher power.
 Example: The Ten Commandments
 Natural Law:
 Man’s natural instinct for justice, fairness, and
righteousness.
 It is not based by a higher power but by simple logic,
common sense and reason.
 Example: Crimes Mala in se vs Mala Prohibitum
Law In General
 Moral Law:
 The totality of the norms of good and right conduct growing
out of the collective sense of right and wrong.
 Unlike State Law, Moral Law, when violated, does not have
any sanction other than the negative social reaction of the
rest of the community.
 Physical Law:
 This is the law of physical science, being addressed to
objects which have no power to disobey.
 Example: Law of Gravity
Law In General
 State Law:
 These are the man made laws. They are made by the State and
enforced by the State.
 It is also called Positive Law, Municipal Law, Civil Law, or
Imperative Law.
 This is the type of law we speak of in connections to obligations
and contracts, marriage, criminal prosecution, conduct of
elections, and basically the entire government process itself.
 Only State Law can be enforced in the courts of justice. State Law
does not concern itself with violations of the other types of laws,
unless it also constitutes a violation of the state law.
History of Philippine Law
 Tribal laws through the different customs of the different
tribes in the Philippines prior to Spanish colonialization;
 Civil Law under the Spanish Rule;
 Common Law under the American Rule;
 Currently, the Philippines is predominantly a Civil Law
country, but has adopted certain aspects of Common Law
(“Mixed Law”);
Common Law vs Civil Law
 Common Law: Law that is derived from custom and judicial precedent
(Court cases).
 Example: US Case of Roe vs Wade (1973) wherein the US Supreme
Court said that abortion is impliedly allowed in the US Constitution.
 Civil Law: Law derived from written statutes.
 In Civil Law jurisdictions, courts are only allowed to interpret and
apply the law. They are not allowed to make them (Judicial
Legislation).
 Example: The constitutional rule that foreign nationals are not
allowed to own real property in the Philippines.
 Civil Law is dominant in the Philippines, however, it has adopted
certain aspects of common law into its jurisdiction.
 Example:
 The Power of Judicial Review (Section 4 (2), Article VIII of the 1987
Constitution)
 Stare Decisis
Stare Decisis
 Stare Decisis Et Non Quieta Movere
 It is the practice wherein Courts will look back at previous
decisions (particularly decisions of the Supreme Court) for
guidance in the resolution of a present day issue.
 In Common Law Jurisdictions, decisions of previous Courts
technically becomes law to be followed by the succeeding
Courts (unless there exists a special circumstance to
repeal it)
 In Civil Law Jurisdictions, decisions of previous Courts
serves as mere guidance to the current courts.
 Example: The Maria Clara Doctrine
Classification of Law
 Substantial
 Creates, defines, and regulates rights and duties concerning
life, liberty, or property.
 Example: Civil Code, Revised Penal Code of the Philippines
 Procedural Law
 Methods of enforcing those rights and obligations created by
substantive law by providing a procedural system for
obtaining redress for the invasion of rights and violations of
duties.
 It lays down the rules and procedure that is to be followed
by the parties and the courts.
 Example: Rules of Court
Sources of Law
 Legislation
 Written law passed down by Congress
 Precedent
 Decisions of previous Court decisions become law
 Customs
 The ultimate source of law
 Law develops from already pre-existing habits and practices of
society.
 Customs become law if:
1. It is universally applied in the jurisdiction;
2. It has been uniformly observed as a right; and
3. It must have been practiced from time immemorial.
Important Notes
 DURA LEX SED LEX – The law is harsh, but that is the law.
 This principle of law essentially means that, even the harshest and most dictatorial
and draconian laws must be followed. If one disagrees with this law, then one must
have the law repealed, revised, or replaced.

 IGNORANTIA LEGIS NON EXCUSAT – Ignorance of the law excuses no one.

 This is a principle of law that conclusively presumes that everyone knows the law.
 It may not be realistic, but it is followed because if a majority of the population
does not know the law, then that would mean that the law has no force and effect.
 This is principle forces the people to keep themselves updated on the latest
developments when it comes to newly enacted laws. This is why new laws are
always published in multiple publications such as newspapers, and the Official
Gazette. In today’s digital world, the new law even spreads via the internet and
social media. Because of this, there is no reason why a person would not know
about newly enacted laws.
The Supreme Law of the Land
 What is the supreme law of the land in the Philippines?

 What happens if a law is in conflict with the supreme law?

 Example: Ex post facto law
Class Participation (SW1)
 Instructions: True or false. If your answer is false, explain
why. (4 Points)
1. The Philippine legal system is a mix of Common Law and
Civil Law.
2. Between Common Law and Civil Law, Common Law is the
dominant system in the Philippines.
3. Divine Law is enforceable in Philippine Courts.
4. Laws are made by the Legislative Branch of the
Government.
Discussion of the Syllabus
Thank you.