THE LAW ON OBLIGATIONS AND CONTRACTS

(notes from YouTube)

THE GENERAL PROVISION

➢ What is Obligation?
o Article 1156 defines obligation as a juridical necessity to
give, to do, or not do.
➢ Examples of Civil Obligations
o Obligation to pay your tuition fee at school (to give)
o Obligation of a parent to take care of their children (to do)
o Obligation of anyone not to steal (not to do)
➢ Why civil obligation is a juridical necessity?
o In case of non-compliance, the courts of justice may be
called upon to enforce its fulfillment or, in default the
economic value that it represents
➢ NOT a juridical necessity (thereof NOT civil obligation)
o Your obligation to attend masses (moral obligation)
o To pay back your debt of gratitude (natural obligation)
➢ Essential requisites
o Passive subject (obligor)
▪ Person who is bound to the fulfillment of the obligation
o Active subject (obligee)
▪ Person who is entitled to demand the fulfillment of the
obligation
o Prestation/object/subject/matter
▪ Conduct required to be observed by the debtor (it may
consist in giving, doing, or not doing)
 o Juridical/vinculum/vinculum juris
▪ Binds or connects the parties to the obligation
➢ Obligations, Right, Cause of Action (Wrong)
o Obligation
▪ Juridical necessity to give, to do, or not to do
o Right
▪ Power which a person has under the law, to demand
from another any prestation
o Cause of Action
▪ Act or omission which violates a right
➢ Injury, Damage, and Damages
o Injury
▪ Act or omission which causes harm
o Damage
▪ The harm done to a party
o Damages
▪ Sum of money recoverable by reason of damage done
➢ Types of obligations according to prestation
o Real obligations
▪ To give
o Personal obligations
▪ Positive personal – to do
▪ Negative personal – not to do
➢ Sources of Obligations
o Article 1157. Obligations arises from:
▪ Law
▪ Contracts
▪ Quasi-contracts
▪ Acts or omissions punished by law
▪ Quasi-delicts
➢ Obligations arising from law
o When imposed by the law itself, e.g.,
▪ Pay taxes (tax code)
▪ Obligations of parents to the family (family code)
➢ Obligations arising from contracts
o A meeting of minds between two persons whereby one
bonds himself, with respect to the other, to give something
or to render some service
➢ Obligations arising from quasi-contracts
o Juridical relation resulting from certain lawful, voluntary
and unilateral acts by virtue of which the parties become
bound to each other to the end that no one will be unjustly
enriched or benefited at the expense of another, e.g.,
▪ You received excessive change after buying from a
store, it is your obligation to return the excessive
change (Solutio Indebiti)
▪ Another person took care of your dog while you’re
away, it is your obligations to reimburse him the
necessary expenses he incurred (Negotiorum Gestio)
➢ Obligations arises from delicts
o Also known as crime or felony; unlike other sources of
obligations, delicts produce both criminal and civil liabilities
▪ E.g., estafa, murder, rape (doing these crimes could get
you imprisoned)
➢ Obligations arising from quasi-delicts
o Also known as tort or culpa; this is an act or omission by
one party which causes damage to another party wherein
there is no pre-exiting contract
o E.g., You bumped into a child and the child suffered injuries
because you are not careful while running in busy sidewalk
 ➢ Scope of civil liabilities
o Restitution
▪ The restitution of the thing itself must be made
whenever possible, with allowance for any
deterioration, or diminution of value as determined by
the court
o Reparation for the damage caused
▪ Court shall determine the amount of damage, taking
into consideration the price of the thing, whenever
possible, and its special sentimental value to the
injured party, and reparation shall be made accordingly
o Indemnification for consequential damages
▪ It shall include not only those cause the injured party,
but also those suffered by his family or by third person
by reason of the crime
Example situation:
- Gen stole the vehicle of Senku. Gen was sighted by the authority
and was engaged in a car chase. After a while, Gen was
apprehended by the authority but the vehicle he stole from
Senku got damaged. Furthermore, Senku should have presented
the vehicle in a car show the same day Gen stole the said
vehicle. As a result, Senku loss potential income from the car
show
o Restitution – return the vehicle
o Reparation – answer for the damage caused to the vehicle
o Indemnification – since Gen’s resulted Senku’s loss, Gen will
also answer for the said loss
➢ Obligations arising from law
o Article 1158, e.g.,
▪ An employer has no obligation to furnish free legal
assistance to his employees
▪ A private school has no legal obligation to provide
clothing allowance to its teacher
➢ Obligations arising from contracts
o Article 1159
▪ Contracts have the force of law and should be
complied with in good faith
➢ Obligations arising from delicts
o Article 1161
▪ Criminal offenses shall be governed by the penal laws
➢ Obligations arising from quasi-contracts
o Article 2142
▪ Certain lawful, voluntary and unilateral acts give rise to
the juridical relation of quasi-contract to the end that
no on shall be unjustly enriched or benefited at the
expense of another
o Negotiorum Gestio
▪ This juridical relation does not arise in either of these
istances:
• When the property or business is not neglected or
abandoned (unauthorized contract)
• If in fact the manager has been tacitly authorized
by the owner (contract of agency)
o Other quasi-contracts
▪ When, without the knowledge of the person obliges to
give support, it is given by a stranger, the latter shall
have a right to claim the same from the former, unless
 it appears that he gave it out of piety and without
intention of being repaid
▪ When funeral expenses are borne by a third person,
without the knowledge of those relatives shall
reimburse the third person should the latter claim
reimbursement
▪ When the person obliged to support an orphan, or an
insane or other indigent person unjustly refuses to give
support to the latter, any third person may furnish
support to the needy individual, with right of
reimbursement from the person obliged to give
support. The provisions of this article apply when the
father or mother of a child under eighteen years of age
unjustly refuses to support him
▪ When through an accident or other cause a person is
injured or becomes seriously ill, and he is treated or
helped while he is not in a condition to give consent to
a contract, he shall be liable to pay for the services of
the physician or other person aiding him, unless the
service has been rendered out of pure generosity
➢ Quasi-delicts (article 2176-2194)
o Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the
damage done
o This is demandable not only for one’s own acts or omission,
but also for those of persons for whom one is responsible
Example situations:
- The father and, in case of his death or incapacity, the mother,
are responsible for the damage caused by the minor children
who live in their company
- The owners and managers of an establishment or enterprise are
likewise responsible for damages cause by their employees in
the service of the branches in which the latter are employed or
on the occasion of their functions
- The possessor of an animal or whoever may make use of the
same is responsible for the damage which it may cause,
although it may escape or be lost. This responsibility shall cease
only in case the damage should come from force majeure or
from the fault of the person who has suffered damage
- Teachers or heads of establishments of arts and trades shall be
liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody
NATURE AND EFFECTS OF OBLIGATIONS
➢ Types of obligations according to its prestation
o Real obligations
▪ To give specific thing: particularly designated or
physically segregated
- Nick bound himself to deliver to you his only dog tomorrow
- Jonathan obliged himself to give you as a Christmas give his car
with plate number ABC 123
▪ To give generic thing
- Gary bound himself to give Ricardo P10,000 tomorrow
- Blake obliged himself to deliver a pig on John’s birthday
o Personal obligations
▪ Positive – to do
 - Iruma bound himself to fix Jojo’ car the following day
- Dave obliged himself to wash Jotaro’s uniform before school
starts
▪ Negative – not to do
- Kars and Wamuu agreed not to build any structure on the
boundaries of their properties
Obligations of the Debtor Rights of the Creditor
Obligations to give specific thing Principal rights
Obligation to give a generic thing Subsidiary rights
Obligation to do
Obligation no to do
➢ Rights of Creditors over a thing

➢ Obligations of the debtor

o In specific thing
▪ To deliver the thing
▪ To take care of the thing before delivery
▪ To deliver the fruits of the thing
▪ To deliver accessions and accessories although they
were not mentioned
▪ To pay damages if guilty of fraud, negligence, delay, or
contravention of the terms of the obligations
o In generic thing
 ▪ To deliver the thing
▪ To bear the expenses of having someone else comply
with the obligations
▪ To pay damages if guilty of fraud, negligence, delay, or
contravention of the terms of the obligation
o In to do
▪ To do the obligation
▪ To bear the expenses of having someone else comply
with the obligation
▪ To undo what has been poorly done
▪ To bear the expenses of having some else undo what
has been poorly done
▪ To pay damages if guilty of fraud, negligence, delay, or
contravention of the terms of the obligations
o Not to do
▪ Not to do what has been forbidden
▪ To undo what has been done that is forbidden
▪ To bear the expenses of having some else undo what
has been done that is forbidden
▪ To pay damages if guilty of fraud, negligence, delay, or
contravention of the terms of the obligation
➢ Different classifications of delivery
o Real delivery
▪ involves the actual physical transfer of goods
o Constructive delivery
▪ involves the legal recognition of possession transfer
through certain acts, documents, or symbols
Rights and Remedies of the Creditor
➢ Principal Right/ Remedies
o Ask specific performance
 o Ask performance
o Ask substituted performance
o Ask damages
o Rescission
o Attachment and execution of Debtor’s properties

➢ Subsidiary rights/remedies
o Accion Subrogatoria
▪ Exercise all the rights of the debtor
o Accion Pauliana
▪ To impugn contracts that were entered to defraud the
creditor
DIFFERENT TYPES OF BREACHES IN OBLIGATIONS
➢ Fraud
o Causal fraud (dolo causante)
▪ Fraud in obtaining consent
o Incidental fraud (dolo incidente)
▪ Fraud in the performance of the obligation
- You obliged yourself to deliver 100kg of premium sugar. The
sugar is ready but before actual delivery, you decided to mix
50kg of low-quality sugar to cut cost
➢ Negligence
o Culpa aquiliana
 ▪ Quasi-delict
o Culpa contractual
▪ Contract
o Culpa criminal
▪ delict
➢ Delay
o Mora solvendi
▪ Delay of debtor
o Mora accipiendi
▪ Delay of creditor
o Compensation morae
▪ Delay of both creditor and debtor (no delay)

Negligence illustrative problem

- Yami is the driver of a carefully driven bus owned by the Black
Bulls Incorporated. While traversing a highway, Yami didn’t
notice Asta (a pedestrian) while crossing a pedestrian lane.
Since the bus’s speed is not fast, Asta suffered serious but not
 fatal injuries. Yuno, a passenger of the bus likewise suffered
serious but not fatal injuries
- What action can Asta and Yuno take against Yami and/or Black
Bulls Incorporated?

➢ Delay illustrative problem (unilateral obligations)

o Rowan promised to give his dog named “Ben” to Alan to be
delivered on September 15, 2020
General rule: no demand, no delay
 ➢ Analysis
o supposed, on September 15, 2020, Alan did not demand
the delivery of the dog and Rowan did not deliver the dog
until September 16
▪ Rowan is not yet in delay
o Supposed, on September 15, 2020, Alan demanded in
delivery of the dog and Rowan did not deliver the dog until
September 16
▪ Rowan is in delay
➢ Exceptions
o When the obligations or the law expressly so declares
▪ Supposed Rowan and Alan agreed that Allan does not
need to make demand to Rowan to incur delay on
September 15, 2020 (obligations to provides)
▪ Payment of taxes (law so provides)
o Time is the controlling motive for the establish of obligation
▪ Supposed Ben (dog) is talented dog and Rowan obliged
himself to deliver Ben to Allan to perform in Alan’s
birthday party on September 15, 2020
o Demand would be useless
▪ Supposed Ben died because of the negligence of
Rowan
➢ Delay illustrative problem (reciprocal obligations)
o Adam sold his only car to Byron for P150,000. There was no
agreement regarding the time of delivery and time of
payment
General rule: when one party fulfills his obligations, delay on the
other starts
➢ Analysis
o Supposed Byron paid P150,000 the following day, Adam
must deliver the car on the same day to avoid incurring
delay
o Supposed Adam delivered the car the following day Byron
must pay the P150,000 on the same day to avoid incurring
delay
➢ Damages

o Actual or compensatory
o Moral
o Nominal
o Temperate or moderate
o Exemplary or corrective
o Liquidated
KINDS OF OBLIGATIONS
IMPOSSIBLE CONDITIONS
POSITIVE AND NEGATIVE CONDITIONS
WHEN CONDITIONS ARE DEEMED FULFILLED
RETROACTIVE EFFECTS IN SUSPENSIVE CONDITIONS
 RIGHTS OF THE CREDITOR AND DEBTOR IN A CONDITIONAL
OBLIGATION
 - Ex. Sa contract of sale, if una nag loko si seller, naa syay bayaran
nga damage under the contract of sale. But if next nag loko si
buyer, and I determined na damage is kay seller
OBLIGATION WITH A PERIOD
WHEN THE COURT MAY FIX THE PERIOD