LAW ON OBLIGATIONS AND CONTRACTS

Article 1156-1162

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

The term obligation is derived from the word "obligatio" which means tying or binding. It is a tie which
binds a person to render something to another that may consist in giving a thing, doing an act, or not
doing an act. While juridical necessity connotes that in case of non-compliance, there will be legal
sanction. It is duty of a person (debtor) to satisfy a specific and demandable claim of another person
(creditor) which if breached is enforced in court.

There are four Essential requisites of an obligation namely:

A passive subject- also known as debtor or obligor; he who has a duty of giving, doing or not doing and
the one who is bound to the fulfillment of the obligation.
1. An active subject- also known as creditor or obligee; possessor of the right and the one who has the
power to demand the fulfillment of the obligation.

2. Object or prestation- the subject matter of the obligation; it is the conduct in which the debtor should
act upon and without the prestation, there is nothing to perform.

3. A juridical or legal me- also called efficient cause, which binds the parties to the obligation and the
reason why the obligation exists

EXAMPLE: Lily and Lala has a contract where Lala is bound to build a house for Lily for

P2,000,000. In this case, Lala is the passive subject or the debtor, she has a duty to build a house for
Lily. While Lily is the active subject or creditor and has the right to demand for fulfillment.

The building of the house is the object or prestation and the contract is the juridical tie which is the source
of the obligation.

Kinds of obligation according to the subject matter.

1. Real obligation- It is an obligation to give which the subject matter is a thing and the debtor must
deliver to the creditor. For instance. A binds himself to deliver cabinet to B.
2. Personal obligation- It is an obligation to do or not to do which the subject matter is an act to be done
or not to be done. There are two kinds of personal obligation namely:

* Positive personal obligation- obligation to do and it includes all kinds of work or services. For instance, A
binds himself to assemble the cabinet of B.
* Negative personal obligation- obligation not to do and it includes obligation not to give, it is ceasing from
doing acts. For instance, C obliges himself not to barricade a portion of his lot in favor for D who is
entitled to a right of way.

Articlel157. Obligations arise from: (1) Law; (2) Contracts: (3) Quasi contracts; (4) Acts or
omissions punished by law; and (5) Quasi-delicts.

There are five sources of obligation namely:

1. Law- There is obligation when it was imposed by the law. For instance, the obligation of both husband
and wife to support their family.
2. Contracts- When both parties arise from stipulation. For instance, Selena borrowed money from
Barbie, Selena has the obligation to pay by virtue of agreement.
3. Quasi-Contract- This are judicial relation arising from certain lawful, voluntary, and unilateral acts by
virtue of which the parties become bound to each other based on the principle that no one shall be
unjustly enriched or benefited at the expenses of another.
 For instance, Teddy is the coworker of Mr.
Bean. In the absence of Mr.Bean, Teddy received the amount of 5000 for the payment of Mr.Bean's labor.
Teddy has the obligation to give the amount to Mr. Bean.
4. Crimes or acts or omissions punished by law - Civil liability is arise and it is the consequences of
the criminal offense committed. For instance, Buttercup inflicted serious physical injury to Blossom, so
Buttercup will be liable for the payment of all medical expenses and damages to Blossom.

5. Quasi-delicts or torts - When they arise from damages caused to another, there being fault or
negligence, giving rise to the obligation to pay for the damage done. There must be no pre-existing
contractual relation between the parties. For instance, Jomari got bitten by his neighbor's dog, the
possessor of that dog is liable for Joman's injury caused by that dog.

Article 158. 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.
(1090)

An obligation derived from law are not presumed which means that obligation must be clearly set forth in
law. For example, an obligation to pay taxes is one type of obligation derived from law and you promise to
the BIR that if you cannot pay your tax that year, you agreed to render free-service in exchange of the
payment of the taxes

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

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. Moreover, an obligation arising from contracts
presupposes that the contracts entered into are valid and enforceable. Thus, compliance or performance
in accordance with the stipulations or terms of the contractor agreement. Sincerity and honesty must be
observed to prevent one party from taking unfair advantage over the other. For instance, Liza contract
whereby Enrique will kill Barbie in consideration of 10,000 to be paid by Liza, is void and non-existent
since killing a person is contrary to law.

Article 1160. Obligations derived from quasi-contracts shall be subject to the provisions of
Chapter1, Title XVII of this Book.

Quasi-contracts are not properly a contract at all. In contract, there is a meeting of minds or consent.
While in quasi-contract, there is no consent but the same is supplied by fiction of law. In other sense, the
law considers the parties as having entered into a contract, although they have not actually done so, and
irrespective of their intention, to prevent injustice at the expense of another.
There are two principal kinds of quasi-contracts namely, negotiorum gestio and solution indebiti.

Example of negotiorum gestio is that when A went to Manila with his family without leaving somebody to
look after his house. While away, a big fire broke near the house of A. Through the effort of B, his
neighbor, the house of A was saved from being burned. However, B incurred expenses. Moreover, an
example of solution indebiti is when X owes Y 1,000. IF X paid Z believing that Z was authorized to
receive payment for Y, the obligation to return the part of Z arises. It is a payment by mistake.

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 Chapter2, Preliminary
Title, on Human Relations, and of Title XVII of this Book, regulating damages.

A person is not criminally responsible may still be liable civilly, such as failure to pay a contractual debt,
causing damage to another's property without malicious or criminal intent or negligence. Civil liability
includes restitution, reparation for the damages caused, and indemnification for consequential damages.

For instance, Phineas stole the car of Ferbs. If Phineas is convicted, the court will order Phineas: to return
the car or to pay its value if it was lost or destroyed, to pay for any damage caused to the car, and to pay
such other damages suffered by Ferbs as a consequence of the crime

Article 1162. Obligations derived from quasi-delicts shall be governed by the provisions of
Chapter2, Title XVII of this Book, and by special laws.

Obligations arising from quasi-delicts. There are five requisites namely, there must be an act or omission,
there must be fault or negligence, there must be damage caused, there must be a direct relation or
connection of cause and effect between the act or omission and the damage, and there is no pre-existing
contractual relation between the parties.

For example, while playing soft ball with his friends, Lolo broke the window glass of Lili, his neighbor. The
accident would not have happened if they played a little farther from the house of Lili. In this case, Lolo is
liable to pay the damage caused to Lili by his act even so there is no pre-existing contractual relation
between them for he is guilty of fault or negligence.