OBLIGATION AND CONTRACTS
person whereby one binds himself with respect to the
Definition: An obligation is a juridical necessity to give,
to do or not to do. (Article 1156 of the New Civil Code)
ESSENTIAL REQUISITES OF AN OBLIGATION
(APOT)
a) An active subject, who has the power to demand the
prestation, known as the CREDITOR or OBLIGEE
b) A passive subject, who is bound to perform the
prestation, known as DEBTOR or OBLIGOR
c) An object or the prestation which may consist in the
ACT OF GIVING, DOING or NOT DOING something.
d) The juridical tie/ necessity 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 constituents the SOURCE OF OBLIGATION
• Bruno contracted the services of Geodetic Engineer.
Juan to conduct a relocation survey of his twenty four
hectares of land for a professional fee of 180,000. Identify
the object.
a) BRUNO b) ENGR. JUAN
c) LAND d) TO SURVEY
WHAT IS THE DIFFERENCE BETWEEN OBLIGATION
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.
SOURCE OF OBLIGATIONS (LCQAQ)
• ➢ EXAMPLE:
❖ Law
❖ Contracts;
❖ Quasi – contracts;
❖ Acts or omissions punished by law;
❖ Quasi - delicts
ARISING FROM LAW
Examples:
- it is the duty of the Spouses to support each other.
(Article. 291. New civil code)
- and under the National Internal Revenue Code, it is the
duty of every person having an income to pay taxes.
CONTRACTS (SEE SEPARATE DISCUSSION)
• Contract is the MEETING BETWEEN MINDS between two
other.
• Obligation arising from contracts have the force of law
between the contracting parties because that which is
agreed upon in the contract is the law between them,
thus, the agreement should be complied with in good
faith.
EXAMPLES:
➢ A contract of lease was executed between Cardo
as the lessee and Alyana (owner) as the lessor for
the rent of an apartment.
➢ Contract of sale or Contract of Service
QUASI - CONTRACTS
• The “Quasi” literally means “as if”
• Quasi – Contract is the juridical relation resulting
from a lawful, unilateral and voluntary 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.
EXAMPLES OF QUASI - CONTRACTS
➢ It is the juridical relation which arises when a person
is obliged to return something RECEIVED BY HIM
THROUGH ERROR or MISTAKE.
➢ EXAMPLE:  Receiving a big amount in your bank
account by mistake.
➢ It is the VOLUNTARY MANAGEMENT or
ADMINISTRATON BY A PERSON OF THE
ABANDONED BUSINESS OR PROPERTY OF ANOTHER
without any authority or power from the latter.
❖  Kobe, a wealthy landowner suddenly left for
abroad leaving his livestock farm unattended.
Lebron managed the farm thereby incurring
expenses. When kobe returns, he has the
obligation to reimburse Lebron for the expenses
incurred by him and to pay him for his services.
•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.
QUASI - DELICTS
• Quasi – delicts is one where whoever by act or omission
CAUSES DAMAGE TO ANOTHER, there being fault or
negligence, is obliged to pay for damage done.
• EXAMPLE: 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.
OBLIGATION TO GIVE (REAL OBLIGATION)
 PARTICULARLY DESIGNATED or physically segregated
from all other of the same class identified by individuality
(cannot be substituted).
 Example: To deliver a specific lot number
 OBJECT ID DESIGNATED ONLY ITS class / genus /
species. (can be substituted by any of the same class and
same kind)
 Example: Money
DUTIES OF THE DEBTOR (OBLIGOR)
1. Preserve or take care of the thing due
2. To deliver the thing itself
3. To deliver the fruits of the thing
4. To deliver the accessions and accessories
5. To pay for damages incase of breach
ACCESSORIES (TO BE DISCUSSED IN
PROPERTY LAW)
•
 Is the right pertaining to the owner of a thing over its
products and whatever is attached thereto either
naturally or artificially.
 Example:
▪ ACCRETION which refers to the gradual and
addition of sediment to the shore by action of
water.
▪ ACCESSORIES are those things which are joined
attached to the principal object as ornament or to
render it perfect.
▪ EX: key to a car
RIGHTS OF THE CREDITOR (OBLIGEE)
• To compel delivery of the thing due or specific
performance
• To recover damages in case of breach from the debtor
(non-fulfillment of the obligation)
• Entitled to fruits and interest from the time the
obligation to deliver arises
1) NATURAL FRUITS – the spontaneous products of the
soil, and the young and other products of animals (i.e.
grass, trees and plants on lands produced without the
intervention of man)
2) INDUSTRIAL FRUITS – those produced by lands of any
kind THROUGH CULTIVATION OR LABOR (i.e. vegetables,
rice and all products of lands brought about by a reason
of human labor)
3) CIVIL FRUITS – those derived by virtue of a JURIDICAL
RELATION (i.e rents of buildings)
DEFAULT OR DELAY (MORA)
•Failure to perform an obligation on time which
constitutes breach of the obligation.
1. MORA SOLVENDI - delay ON THE PART OF THE DEBTOR
to fulfill his obligation either to give or to do.
2. MORA ACCIPIENDE – delay ON THE PART OF THE
CREDITOR to accept the performance of the obligation
3. COMPENSATIO MORAE – delay of BOTH PARTIES in
reciprocal obligation
•FRAUD in the performance of obligation – Intentional
evasion of the normal fulfillment of an obligation
(panloloko / manloloko)
NEGLIGENCE IN THE PERFORMANCE OF AN
OBLIGATION
• Omission of that diligence which is required by the
nature of obligation (substandard fulfillment of an
obligation)
• Note:  In performing an obligation, ordinary diligence
required is diligence of a good father
REMEDIES AVAILABLE TO CREDITOR IN CASE OF BREACH,
DELAY OR FRAUD
1. Specific performance by the debtor
2. Right to rescind or cancel the contract
3. Damages if debtor is guilty of fraud, negligence or
delay.
• MORAL
• EXEMPLARY OR CORRECTIVE
• NOMINAL
• TEMPERATE OR MODERATE
• ACTUAL OR COMPENSATORY
• LIQUIDATED • Juan promised to pay ENGR. Maria 150,000 pesos if she
can undertake a subdivision survey of his property, which
FORTUITOUS EVENT (FORCE MAJEURE) is located in an MNLF infested area.This is an example of
__________________.
• A legal excuse for breach of obligation (except delivery
of generic things) a) PURE OBLIGATION
• A happening Independent of the will of the debtor and b) MIXED OBLIGATION
which makes the normal fulfillment of the obligation
impossible c) CASUAL OBLIGATION

• IN SHORT “MGA DI INAASAHANG PANGYAYARE” d) CONDITIONAL OBLIGATION

EXTINGUISHMENT OF OBLIGATION

1. ACT OF GOD Due directly or exclusively to natural
causes without human intervention (i.e. calamity,
tsunami)
2. ACT OF MAN Essentially an act of man includes
unavoidable accidents but no fault or negligence on part
of the debtor
1. Payment (obligation has been done)
➢ Consignation – depositing of object of an obligation
in a competent court
2. Condonation or remission of debt
3. Confusion – creditor and debtor becomes one person

4. Compensation – offsetting of two obligations which

are reciprocally extinguished if they are lot same value
1. PURE OBLIGATION Does not depend on any condition 5. Novation – substitution or change of the obligation by
or term subsequent one.
2. CONDITIONAL OBLIGATION Subject to a condition and
the effectivity of which is subordinated to the fulfillment CONTRACTS
or non fulfillment of a future and uncertain event REQUISITES OF CONTRACTS (COC)

CONDITIONAL OBLIGATION 1.Consent of the Contracting Parties

2.Object certain which is the subject matter of the

Contract:
 SUSPENSIVE CONDITION – shall only be effective upon 3.Consideration
the fulfillment of the condition

➢ EX: “I will give you a car if you pass the GE BOARD

CONSENT
EXAM” The following cannot give consent to a contract:
 RESOLUTORY CONDITION – immediately demandable 1. Minors
but subject to threat by the happening of the resolutory
2. Insane or demented persons, and deaf mutes who do
condition.
not know how to write.
➢ EX: “You can stay in my house until you get a job.”
GENERALLY, form is not required for a contract to be
• POTESTATIVE CONDITION – fulfillment of the condition valid. It can be done orally. It is enough that there be
depends upon the will of one of the contracting parties consent, subject matter and consideration.
• CASUAL CONDITION – depends on chance or will of a
third person
1. Formal Contracts
• MIXED CONDITION – partly potestative and partly casual
2. Real Contracts
3. OBLIGATION WITH A PERIOD OR TERM

4. FACULTATIVE (One object and can be substituted by

another) or alternative (several objects) obligation. • Contracts which are perfected not merely by consent
5. JOINT (liable to proportionate share only) or Solidary but by delivery, actual or constructive, of the object of
(all for one, one for all) the obligation.

6. DIVISIBLE or INDIVISIBLE OBLIGATION • Example: Contract of SALE

FORMAL CONTRACT
 •Contracts for which a special form is necessary for its
perfection
• The donation of a movable may be made orally or in
writing
• If the value of the personal property donated exceeds
FIVE THOUSAND PESOS (5,000), the donation and the
acceptance shall be made in writing, otherwise, the
donation shall be VOID.
➢ DONATION OF IMMOVABLE PROPERTY (Ex. Land) of
any value must be in a PUBLIC DOCUMENT
(Notarized).
X and Y were to marry in 3 months. To express his
affection, X donated a house and lot to Y, which
donation X wrote in a letter to Y. Y accepted the
donation and took possession of the property. Before
the wedding, however, Y suddenly died of heart broken
attack (LOL). CanY’s heirs get the property?
a. No, since the marriage did not take place.
b. Yes, since all the requisites of a donation of an
immovable are present.
c. No, since the donation and its acceptance are not in a
public instruments
d. Yes, since X freely donated the property toY who
became its owner
EFECTIVE CONTRACTS ( VURV):
1. VOID Contracts
2.UNENFORCEABLE Contracts
3. RESCISSIBLE Contracts
4. VOIDABLE Contracts
VOID CONTRACTS
• No legal effect at all
• Examples:
➢ Those whose cause, object or purpose is contrary to
law, morals, good customs, public order or public
policy
➢ Those which are absolutely simulated or fictitious
➢ Those whose object is outside the commerce of men
➢ Those which contemplate an impossible service
UNENFORCEABLE CONTRACTS
• Those that cannot be enforced in court by reason of
certain defects provided by law until and unless they are
ratified according to law.
• Examples:
➢ 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;
➢ Formal contracts not made in writing
➢ Both parties are incapable of giving consent
RESCISSIBLE CONTRACTS
• Valid until rescinded. All essential requisites of a
contract exist but there is INJURY or Damage to one of the
parties or to third persons.
1. When the acts of administration cause lesion or
damage to the ward they represent
2. When the acts of administration cause lesion or
damage to the absentee they represent
3. When the creditors cannot in any other manner collect
the claims due them
4. If entered into by the defendant without the
knowledge and approval of the litigants or competent
judicial authority
VOIDABLE CONTRACTS
The following contracts are voidable or annullable:
1. Those where one of the parties is incapable of giving
consent to a contract;
2. Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
Cardo entered into a contract to sell with Tonying
undertaking to convey to the latter one of the five lots he
owns, without specifying which lot it was, for the price of
one million (1M). Later, the parties could not agree which
of five lots he owned Cardo undertook to sell to Ramon.
What is the status of the Contract?
a) Rescissible
b) Unenforceable
c) Void
d) Voidable
➢ This referenced is based from the 2017 GE BOARD
EXAM REVIEW HANDOUTS
Purely situational question on Land laws and Regulations:
Explain your answer in every situational question.
1. May the owner of a building constructed on an
unregistered land belonging to another apply for the
registration of such building under the Land Registration
Act and PD 1529?

2. Maria failed to pay the realty taxes on her unregistered

agricultural land located in Magdugo, Toledo City. To
satisfy the taxes due, the city sold it at public auction to
Juan whose bid at P10,000.00 pesos was the highest.
Maria refused to turn over the possession of the property
to Juan alleging that she had been granted a free patent.
Did maria divest of her ownership through the tax sale?

3. “A” owned a parcel of unregistered land located on the

Tarlac side of the boundary between Tarlac and
Pangasinan. His brother “B” owned the adjoining parcel of
unregistered land on the Pangasinan side. “A”sold the
tarlac parcel to “X” in a deed of sale executed as a public
instrument. After “X” paid in full the price of the sale, “X”
took possession of the Pangasinan parcel in the belief that
it was the tarlac parcel. After twelve (12) years, a
controversy arose between “B” and “X” on the issue of
the ownership of the Pangasinan parcel.Who is the
rightful owner of Pangasinan parcel?

4. In 1950, the Bureau of Lands issued a Homestead

patent to “A”. Three (3) years later, “A” sold the
homestead to “B”. “A” died in 1990, and his heirs filed an
action to recover the homestead from “B” on the ground
that its sale by their father to the latter is void under
Section 118 of the Public Land Law. Can the heirs still
recover the homestead patent?

5. Juan and his sister Juana inherited from their mother

two parcels of farmland with exactly the same areas. For
convenience, the Torrens certificates of title covering
both lots were placed in Juan’s name alone. In 1996, Juan
sold to an innocent purchaser one parcel in its entirely
without the knowledge and consent of juana, and
wrongfully kept for himself the entire price paid.What can
juana do?