LESSON 1 Introduction to the Course

Unit 1 Introduction to Law and the Philippine Legal System

This is a study of the Philippine law on Obligations and Contracts. The first part of the course
deals with Obligations, specifically its nature and effect, the various kinds of obligations and its
mode of extinguishment. The second part is a study of the Philippine Law on Contracts, its
essential requisites, the forms of contract, the rules of interpretation of contract and the various
kinds of defective contracts under the Philippine Law.

Overview:

This lesson will explain the Philippine legal system as a mixture of customary usage,
Roman (civil law) and Anglo-American (common law) systems, and Islamic law. The legal
system is the result of the immigration of Muslim Malays in the fourteenth century and the
subsequent colonisation of the islands by Spain and the United States. The civil law operates in
areas such as family relations, property, succession, contract and criminal law while statutes
and principles of common law origin are evident in such areas as constitutional law, procedure,
corporations law, taxation, insurance, labour relations, banking and currency.

Learning Objectives:

After successful completion of this lesson, you should be able to:

1. Explain the different sources of Philippine Laws, including its history and source;
2. Critically assess the effects of these laws, specifically those involved in Obligations and
Contracts and determine its effects on the day to day life.

Course Materials:

Law is a rule of conduct, just, obligatory, promulgated by legitimate authority, and of common
observance and benefit.

The Philippine legal system is a mixture of customary usage, Roman (civil law) and Anglo-
American (common law) systems, and Islamic law. The legal system is the result of the
immigration of Muslim Malays in the fourteenth century and the subsequent colonisation of the
islands by Spain and the United States. The civil law operates in areas such as family relations,
property, succession, contract and criminal law while statutes and principles of common law
origin are evident in such areas as constitutional law, procedure, corporations law, taxation,
insurance, labour relations, banking and currency.

The main sources of Philippine law are:

● the 1987 Philippine Constitution - the fundamental and supreme law of the land
● statutes - including Acts of Congress, municipal charters, municipal legislation, court rules,
administrative rules and orders, legislative rules and presidential issuances.
● treaties and conventions - these have the same force of authority as statutes.
● judicial decisions - Art 8 of the Civil Code provides that ‘judicial decisions applying to or
interpreting the laws or the Constitution shall form a part of the legal system of the
Philippines’. Only decisions of its Supreme Court establish jurisprudence and are binding on
all other courts.
To some extent, customary law also forms part of the Filipino legal system. Art 6, paragraph 2 of
the Constitution provides that ‘the State shall recognise, respect, and protect the rights of
indigenous cultural communities to preserve and develop their cultures, traditions and
institutions’.
The primary sources of Muslim law / Shariah are the Quran, Sunnaqh, Ijma and Qiyas

Activities/Assessments:

I. Introduction of students involving their personal information and their expectations on the
subject, as well as their idea on what is expected of them in return.
II. Lecture and Discussion of the topic.
III. Exercises: Do the following:

1. Read the 1987 Philippine Constitution and topics on evolution of Philippine laws.
● https://unimelb.libguides.com/c.php?g=402982&p=5443355
● https://www.coursehero.com/file/12912044/THE-LAW-ON-OBLIGATIONS-AND-
CONTRACTS-INTRODUCTION/
● 1987 Philippine Constitution
● The New Civil Code of the Philippines

2.Write a summary of the Evolution of Philippine Laws.

References:

● https://unimelb.libguides.com/c.php?g=402982&p=5443355
● https://unimelb.libguides.com/c.php?g=402982&p=5443355
● https://www.coursehero.com/file/12912044/THE-LAW-ON-OBLIGATIONS-AND-
CONTRACTS-INTRODUCTION/
● 1987 Philippine Constitution
● The New Civil Code of the Philippines

Unit 2 General Provisions on Obligations

Overview:

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

Learning Objectives:

After successful completion of this lesson, you should be able to:

1. Understand the basic concepts of Obligations including its definition and nature.
2. Have a deeper knowledge on the concept of Obligation and the importance of knowing how
this could affect the individual rights of the people.
Course Materials:
ART. 1156. An obligation is a juridical necessity to give, to do or not to do. _ Civil Code of the
Philippines

An obligation is a juridical necessity because in case of noncompliance therewith, the aggrieve

party may ask for the intervention of the courts to enforce the fulfillment of the obligation, or in
default thereof, the economic value that it represents.

Nature and Effects of Obligations

The following are the rights available to a creditor in obligations to give:

If it is a determinate thing:
1. To compel specific performance
2. To recover damages in case of breach
3. Acquires personal right to the fruits of the thing from the time the obligation to deliver arises
4. Acquires real right over the thing once the thing has been delivered to him
5. Rights over the accessories and accessions.

If it is a generic thing:
1. To ask for performance of the obligation
2. To ask that the obligation be complied with at the expense of the debtor. A determinate thing
is one that is particularly designated or physically segregated from all others of the same class.

A generic thing is one whose determination is confined to that of its nature, to the genus to
which it pertains such asa horse, a chair.
e.g.
A contract of sale uses a determinate thing, while a contract of loan uses a generic thing. The
following are the obligations of the passive subject in: (-- Article 1460, Civil Code of the
Philippines -- De Leon vs. Soriano, 87 Phil. 196.)

a) Obligations to give a determinate thing:

1. To deliver the thing which he has obligated himself to give.
2. To take care of the thing with the proper diligence of a good father of a family.
3. To deliver all its accessories and accessions.
4. To pay damages in case of breach of obligation.

b) Obligations to do:
1. If the debtor fails to do what he is obliged to do, it will be done at his expense.
2. If the work is done in contravention of the tenor of the obligation, it will be re-
done at debtor‘s expense.
3. If the work is poorly done, it will be redone at debtor‘s expense.

In obligations to do, you will note that you cannot compel the passive subject to perform,
otherwise, it will constitute involuntary servitude which is in violation of the Constitution.
However, the passive subject may be held liable for damages.

The sources of liability (for damages) of a party in an obligation are as follows:

(1) Fraud.
a. The fraud is incidental fraud (dolo incidente) which is fraud incident to the performance of an
obligation. In fraud, there is an intent to evade the normal fulfillment of the obligation and to
cause damage. (Refer to Articles 2199-2201 of the Civil Code of the Philippines.)
 b. The fraud is causal (dolo causante) or when fraud used to induce a person to agree to a
contract. This kind of fraud is a ground for annulment of the contract plus damages;

(2) Negligence.
The negligence referred here, in the case of contracts (i.e. common carrier) is culpa contractual,
the lack of diligence or carelessness. Negligence consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of the
persons, or the time and of the place.

Application of the Law Case:

Dr. Felipa Pablo, an associate professor in the University of the Philippines, and a research
grantee of the Philippine Atomic Energy Agency was invited to take part at a meeting of the
Department of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in
Food and Agriculture of the United Nations in Ispra, Italy.

To fulfill this engagement, Dr. Pablo booked passage with Alitalia, an Italian airline company.
She arrived in Milan on the day before the meeting in accordance with the itinerary and time
table set for her by Alitalia. She was however told by the Alitalia personnel there at Milan that
her luggage was "delayed inasmuch as the same x x x (was) in one of the succeeding flights
from Rome to Milan." Her luggage consisted of two (2) suitcases: one contained her clothing
and other personal items; the other, her scientific papers, slides and other research material.
But the other flights arriving from Rome did not have her baggage on board. Feeling desperate,
she went to Rome to try to locate her bags herself. There, she inquired about her suitcases in
the domestic and international airports, and filled out the forms prescribed by Alitalia for people
in her predicament. However, her baggage could not be found. Completely distraught and
discouraged, she returned to Manila without attending the meeting in Ispra, Italy. As it turned
out, Dr. Pablo's suitcases were,in fact,located and forwarded to Ispra, Italy, but only on the day
after her scheduled appearance and participation at the U.N. meeting there. Of course,Dr. Pablo
was no longer there to accept delivery; she was already on her way home to Manila. And for
some reason, the suitcases were not actually restored to Prof. Pablo by Alitalia until eleven (11)
months later. Is Dr. Pablo entitled to damages for the negligence committed by Alitalia?
Legal Opinion:
Yes, Prof. Pablo should be entitled to nominal damages. Apart from this, there can be no doubt
that Dr. Pablo underwent profound distress and anxiety, which gradually turned to panic and
finally despair, from the time she learned that her suitcases were missing up to the time when,
having gone to Rome, she finally realized that she would no longer be able to take part in the
conference. As she herself put it, she "was really shocked and distraught and confused."

Activities/Assessments:

I. Lecture and Class Discussion

II. Exercises: Answer the following:

1. What is an Obligation as defined under the New Civil Code?
2. What do you think are your five primary Obligations as a human being. Discuss why you
consider each act as your obligation?

a.

b.

c.

d.

e.

References:

● The New Civil Code of the Philippines

● De Leon, Hector S. The Law on Obligations and Contracts. Latest Edition, Rex Bookstore
● Comments and Jurisprudence on Obligations and Contractsby Desiderio P. Jurado, Latest
Edition, Rex Bookstore

LESSON 2 OBLIGATIONS

Unit 1 Elements of Obligations

Overview:
This unit will discuss the elements of an obligation. Absence of one of the elements would not
give rise to any legal obligation.

Learning Objectives:

After successful completion of this lesson, you should be able to:

1. Analyze the elements of an obligation.
3. Understand the importance of each element and the principles related to each.

Course Materials:

An obligation is a juridical necessity to give, to do or not to do. (Art. 1156 of the New Civil Code
of the Philippines) An obligation is a legal bond (vinculum juris) by which one or more parties
(obligants) are bound to act or refrain from acting. Thus, an obligation imposes on the obligor a
duty to perform, and simultaneously creates a corresponding right to demand performance by
the obligee to whom performance is to be tendered. en.wikipedia.org/wiki/Law_of_obligations.

Justinian first defines an obligation (obligatio) in his Institutiones, Book 3, section 13 as "a legal
bond, with which we are bound by necessity of performing some act according to the laws of our
State." He further separates the law of obligations into contracts, delicts, quasi-contracts, and
quasi-delicts. (Justinian. "Institute." Trans. John B. Moyle. (Oxford: Oxford University Press.
1889) at 132.)

Every obligation has four essential elements: an active subject; a passive subject; the
prestation; and the legal tie.

The ACTIVE SUBJECT is the person who has the right or power to demand the performance or
payment of the obligation. He is also called the obligee or the creditor.

The PASSIVE SUBJECT is the person bound to perform or to pay. He is the one against whom
the obligation can be demanded. He is also called the obligor or the debtor.

The PRESTATION is the object of the contract. It is the conduct required to be observed by the
debtor or the obligor. It may be an obligation to give, to do, or not to do.

The VINCULUM JURIS is also known as the juridical or legal Tie. Other authors call it the
efficient cause. It is that which binds or connects the parties to the obligation. (De Leon) In other
words, it is the legal relation between the debtor and the creditor (or obligor and obligee).

Activities/Assessments:

Exercise: Answer the following questions concisely yet completely:

1. Can an obligee be the obligor at the same time? Explain your reason why.

2. If the fact, prestation, or service constitutes the object of the obligation, what is its
difference from a juridical tie? Explain.

References:
 ● https://www.projectjurisprudence.com/2019/11/elements-of-obligation.html
● The New Civil Code of the Philippines
● De Leon, Hector S. The Law on Obligations and Contracts. Latest Edition, Rex Bookstore
● Comments and Jurisprudence on Obligations and Contractsby Desiderio P. Jurado, Latest
Edition, Rex Bookstore

Unit 2 Sources of Obligation

Overview:

Obligations may arise from different sources. The determination of these sources is primodial
for the purpose of ensuring that there is actually an existing legal obligation.

Learning Objectives:

After successful completion of this lesson, you should be able to:

1. Analyze the various sources of obligation.
3. Understand their nature and the differences among them.
4. Determine the legal implication of each source of obligation.

Course Materials:

Sources of Obligations
a) Law
b) Contracts
c) Quasi-contracts
d) Crimes/delicts
e) Quasi-delicts

a) Law – are not presumed; only those expressly determined in this code or in special
laws are demandable (Art. 1158)
b) Contracts – stipulation of parties; law between the parties; characteristic of
compellability (Art. 1159)
c) Quasi-contracts – lawful, voluntary and unilateral acts which are enforceable to the
end that “no one shall be unjustly enriched at the expense of another”
- Solutio indebiti and negotiorum gestio
d) Crimes/Delicts – “every person criminally liable is also civilly liable”
e) Quasi Delicts – damages cause by act or omission (fault or negligence); no
contractual relationship between the parties

Application of the Law Case:

Anabel was crossing the street coming from the hotel to the nearby shopping mall. She was
accidentally hit by a hotel car driven by Leandro, a driver employed by the hotel. Can Anabel
sue to driver? Can she sue the hotel?
Legal Opinion:
Yes, Anabel may sue the driver and the hotel for damages on the ground of
culpa-aquiliana.
The pedestrian may also sue the driver and the owner of the hotel for damages for reckless
imprudence arising from a crime under the Revised Penal Code.
Activities/Assessments:

I. Class discussion
II. Assignment: Answer the following:
Based on the foregoing, give an example for each source of obligation. Explain.
1.

2.

3.

4.

5.

References:

● https://www.studocu.com/ph/document/university-of-san-carlos/bachelor-of-science-and-
accoutancy/lecture-notes/oblicon-chap-1-5-lecture-notes-1/2830091/view
● The New Civil Code of the Philippines
● De Leon, Hector S. The Law on Obligations and Contracts. Latest Edition, Rex Bookstore
● Comments and Jurisprudence on Obligations and Contractsby Desiderio P. Jurado, Latest
Edition, Rex Bookstore

LESSON 3 Nature and Effect of Obligations

Overview:

This unit will discuss the nature and effect of Obligations. The different classification of
obligation and how each type affects the day to day life of individuals.

Learning Objectives:

After successful completion of this lesson, you should be able to:

1. Analyze the legal effects of each action taken.
2. Understand the different kinds of obligation and the legal effect of each.

Course Materials:

Nature And Effect Of Obligations

Art. 1163 to 1166 – obligation to give

2 Kinds of Object in an obligation to give

a) Specific or determinate - Particularly designated or physically segregated from others of the
same class
b) Generic or indeterminate - Cannot be pointed out with particularity

Duties of debtor in obligation to give a determinate thing

1) Preserve the thing – only ordinary care or diligence of a good father of a family unless
another standard of care is stipulated
2) Deliver the fruits of the thing (Art. 1164)
- Creditor has a personal right to the fruits at the time obligation of debtor arises
- Creditor acquires real rights only upon delivery; Delivery transfers ownership

3 Kinds of fruits
a) Natural fruits – spontaneous products of the soil, and products of animals
b) Industrial fruits – produced by lands through labor
c) Civil fruits – derived by virtue of a juridical relation i.e rentals

3) Deliver the accessions and accessories even not mentioned (Art. 1166)
- Accessions are the fruits of a thing or improvements upon a thing i.e. trees on land
- Accessories are things joined to the thing for embellishment, better use or completion
i.e. car sound system
4) Deliver the thing itself
- Creditor can compel debtor to make delivery or specific performance (Art. 1165)
- Debtor is liable for damages if there is (a) delay and (b) double promise to deliver,
even if a fortuitous event caused the damage.

Fortuitous event – an event which cannot be foreseen, or though foreseen is inevitable i.e. Acts
of man like robbery and Acts of God like earthquake

- No person is responsible for fortuitous event (Art. 1174) except

a) Specified by law
b) Stipulated
c) Nature of the obligation requires assumption of risk.

Duties of debtor in obligation to deliver a generic thing

1) Deliver a thing which is of the quality intended
- Not necessary to compel delivery of specific performance as creditor can ask another
to person to perform the obligation
- However, creditor may ask the performance of the obligation.
Those who in the performance of obligation shall be liable for damages if any of the
following is present: (Art. 1170)

1) Fraud (Dolo)
- incidental fraud or fraud in the performance (damages)
- Not causal fraud or fraud employed in getting ones consent (voidable)
- any waiver of an action for future fraud is void (Art. 1171) based on law and public
policy
- a past fraud can be subject of a valid waiver of action.

Types
1. Dolo Causante (Causal Fraud) – this affects the validity of the contract + damages
2. Dolo Incidente (Incidental Fraud) – there is already an existing valid contract, no effect
on the validity of the contract + damages

2) Negligence
- voluntary act or omission, there being no malice, which prevents the normal fulfilment
of the obligation
- either contractual negligence (culpa contractual), civil negligence (culpa aquiliana/quasi-delict),
or criminal negligence (culpa criminal)
- waiver of action for future negligence is valid except those which requires extraordinary care
(common carrier)
- waiver of action for past negligence is also valid
- when negligence shows bad faith or deliberate, considered fraud (Art. 1173)
3) Delay
4) Contravention or violation of the terms of the obligation.

Other provisions
Art. 1175 – usurious transactions (legally non-existent)

Art. 1176 – disputable presumption as to the payment of interest and the payment of a prior
installment
- Interest is presumed paid if the principal is paid unless reserved.
- Later installment is presumed paid if prior installment is paid unless
indicated that prior installment is not paid.
- Presumption does not apply to the payment of taxes

Art. 1177 – remedies of the creditor to satisfy their claims (damages)

1) Levy the property of the debtor (except those exempt from attachment)
2) Redeem the property of the debtor which is mortgaged.
3) Collect from the debtor of the debtor
4) Ask for cancellation of the contracts that defraud the creditor.

Art. 1178 – transmissibility of rights acquired in an obligation

- All rights acquired by virtue of an obligation is transmissible except:
a) Prohibited by law i.e. partnership, agency, and commodatum

Activities/Assessments:
I. Class Discussion
II. Exercises: Answer the following:

1. What is a fortuitous event?

2. How does it affect a persons liability?

3. What are the exceptions from the general rule that, “No person shall be liable for fortuitous
event?”

References:

● https://www.studocu.com/ph/document/university-of-san-carlos/bachelor-of-science-and-
accoutancy/lecture-notes/oblicon-chap-1-5-lecture-notes-1/2830091/view
● The New Civil Code of the Philippines
● De Leon, Hector S. The Law on Obligations and Contracts. Latest Edition, Rex Bookstore
● Comments and Jurisprudence on Obligations and Contractsby Desiderio P. Jurado, Latest
Edition, Rex Bookstore