LAW ON OBLIGATIONS AND CONTRACTS

▪ Small Claims – doesn’t exceeds in 200k

▪ Motion for Reconsideration (MR) – filed with the
same court that gave the decision; appeal
• Law – rule of action or system of uniformity
▪ Katarungang Pambarangay Law – Where Kapitan is
• Civil Code – Encompasses all laws in regard to the
empowered to act as mediator.
relationship of man with contracts, people, and
business.
❖ 3 CO-EQUAL BRANCHES

✓ Rule of action can be seen in any provision of law.

• EXECUTIVE – President, Mayor; Approved Law
✓ Any provision is a rule of action.
➢ Executive Order > President
✓ The revised penal code of the Philippines is the
➢ Administrative Order > Cabinet
repository of the criminal laws in the Philippines.
✓ Taking all the articles into account form a system of
• LEGISLATIVE – Congress > craft laws; Senate
uniformity.
and House of Representatives
➢ Republic Acts
❖ 3 WAYS OF CHANGING THE CONSTITUTION
➢ Ordinances
➢ People’s initiative
➢ Congress upon a three-fourths vote of all
• JUDICIAL – Courts; Lawyers
its Members (Congress acting as a
➢ Publish decisions
Constituent Assembly, fondly called “Con-
➢ Jurisprudence > Decision by Supreme Court
Ass”).
➢ Quasi-judicial bodies/Agencies that
➢ A constitutional convention (fondly called
exercise Quasi-Judicial power.
“ConCon”).
o Example: DOLE

• THE 1987 CONSTITUTION OF THE REPUBLIC

4) Protects Individual Rights and Liberties
OF THE PHILIPPINES
➢ Must be taken an account to #2
➢ Supreme Law of the land
➢ Laws are the bedrock of individual right
➢ Every law that grafted by Legislation
➢ The action of an individual must be aligned
with what is considered proper conduct
❖ What is the purpose of Law?
o Universal Declaration of Human
➢ It is the cornerstone of mankind, peace,
Rights
order, and stability
o Primordial Right – to live
▪ RIGHTS – legal entitlements
5 PRINCIPAL PURPOSE OF THE LAW
▪ OBLIGATION – corresponding liabilities/
(M-E-R-P-R)
responsibilities

1) Maintains Order Stability

5) Regulates Commerce and Relationship
➢ ORDER – everything is in its proper place;
➢ Refers to contractual agreements/
promotes fairness and justice
contracts
➢ STABILITY – proceeds order; when
▪ COMMERCE – trade and business
there’s peace
▪ RELATIONSHIP – relation
between one person to another
❖ JUSTICE is the fair and proper application and
▪ CONTRACTS – provides the
administration of Laws; and the recognition and
structure for every business
enforcement of Laws by our courts
o UNILATERAL – 1 person
o BILATERAL – both
❖ SUCCESSION – if the person dies it will be
parties
collected in estate and tabulated by accountants
and have to pay taxes and debts before it can be
• STATE LAW
passed to heirs.
o Sources:
▪ Constitution
2) Establishes Standards ▪ Legislation
➢ Minimally accepted behavior in a society ▪ Executive Orde; Administrative
➢ Without standard, people won’t be Order
presentable and there will be crime ▪ Jurisprudence
➢ Laws can change ▪ Custom
➢ If there are no standard, we settle for o Applicable to:
less. ▪ All Filipino Citizen
▪ Foreign Visitors
3) Resolves Disputes ▪ Resident Aliens
➢ Disputes are unavoidable o Sanction:
➢ Philippine Justice System ▪ Rine and/or punishments for
crimes; indemnification
❖ PHILIPPINE JUSTICE SYSTEMS
• DIVINE LAW
➢ LOWER COURTS – deals with trivials/small o Source:
claims ▪ Faith/Divine being/ GOD
➢ REGULAR COURTS – criminal and civil cases o Sanction:
(RTC) ▪ Punishment in the afterlife
➢ SPECIAL COURTS – special anti-graft courts
➢ COURT OF APPEALS – middle court
➢ SUPREME COURT – Jurisprudence; highest
court
• NATURAL LAW LAW under the NEW CIVIL CODE
o Source: ➢ Rule of Conduct, dictates actions just,
▪ Man’s inner goodness obligatory, promulgated by legitimate
o Sanction: authority and of common observance and
▪ Man’s guilty conscience benefit

• MORAL LAW ❖ LAW is a source of OBLIGATION, because of

o Source: the law itself
▪ Collective standard of the o Examples of Law:
community ▪ Payment of Taxes – BIR
o Sanction: • Source: NIRC (National
▪ Public cancellation/ condemnation Internal Revenue Code)
▪ Violation of Crimes – Law
• PHYSICAL LAW: Enforcement and Courts
o Source: • Source: Revised Penal
▪ Nature and science – deals with Code
how things are made ▪ Payment of Child Support –
o Sanction: Family Court
▪ None • Source: Civil Code of the
Philippines particularly
OBLIGATION (Makati Stock Exchange Inc. V. Family Code of the PH.
Campos, GR. No. 138814, April 16, 2009)
➢ An obligation is a juridical relation whereby CIVIL ACTION
a person (called the creditor) may demand ➢ One where a party sues another for the
from another (called the debtor) of the enforcement or protection of a right or
OBSERVANCE OF A DETERMINATIVE prevention or redress of a wrong.
CONDUCT and in case of breach may
demand satisfaction from the assets of the ▪ REDRESS – another word for remedy –
latter giving solution
▪ PREVENTION – avoiding wrong doing
▪ CREDITOR – person who possess rights ▪ PLAINTIFF – person who sues/ party
▪ DEBTOR – person who posses duty to fulfill suing
creditor’s need ▪ DEFENDANT – person/party who had
been sued
✓ Juridical – from latin word “Jurice” means law
✓ Necessity – mandatory/requirement CAUSE OF ACTION – basis of civil action
✓ Juridical Necessity – Lawful legal requirement ➢ Act/omission by which a party violates
the rights of the others
• DETERMINATIVE CONDUCT o ACT – take action; do something
➢ Prestations o OMMISSION – not ding; failed to
o To Give do the mission
o To Do
o Not To Do ▪ CONTRACTS – Promissory Note: has the
▪ Consists of delivery of instrument of transfer and enforcement of
movable (not land) or law
immovable (land) ▪ OBLIGATIONS – require no form
things/properties
▪ To create real Right
• Use of the ARTICLE 2142 – QUASI-CONTRACT
Recipient
• Simple 2 TYPES OF QUASI-CONTRACT
Possession
• To return to its • Negotiorum Gestio – management of
Owner business
o Negotiorum Gestor
4 ESSENTIAL ELEMENTS of an OBLIGATION ▪ Person who manages the
(J-A-P-O) transaction
▪ Always have claim for
➢ Juridical Tie/Legal Tie/Vinculumjuries reimbursements
➢ Active Subject – Creditor/Obligee o Dominos Negotii
➢ Passive Subject – Debtor/Obligor ▪ Whose business is being
➢ Object or Prestation managed

▪ Form of Obligations: Oral/Writing • Solution Indebiti – unduly delivered

▪ The nature of obligation is always Civil in nature through mistake
▪ Positive Law -> State Law
DELICTS
• Civil Obligation ➢ Every person criminally liable shall also be
o Stems from Civil/State Law civilly liable (monetary/payment)
o Have consent/agreement from both parties ➢ When you are criminally liable for felony,
you are civilly liable
• Natural Obligations
o Natural Law • CIVIL LIABILITIES FROM DELICTS
o No formality/agreement
 o RESTITUTION
▪ Returning to the rightful owner
his/her property
▪ Court determines the amount of
restitution
o REPARATION
▪ Reparation of damages; not
returning anything
▪ Court determines the amount of
reparation (price of the missing
thing; court will determine the
sentimental value
o INDEMNIFICATION FOR
CONSEQUENTIAL DAMAGES
▪ When party is included in claim
▪ For the unwilling victims
TITLE I: OBLIGATIONS
(Arts. 1156-1304, Civil Code)
ARTICLE 1156. An Obligation is a juridical necessity to
give, to do, or not to do
▪ Meaning of Obligation
o Derived from Latin word “obligatio” means
tying or binding
o It is a tie or bond recognized by law by
virtue of which one is bound in favor of
another to render something – and this may
consist of giving a thing, doing a certain act,
or not doing a certain act.
▪ Essential Requisites of an Obligation
o Juridical Tie/Legal Tie/Vinculumjuries
▪ Also called efficient cause
▪ Which binds/connects the parties
to the obligation
o Active Subject
▪ Creditor/Obligee
▪ Person who is entitled to demand
the fulfillment of the obligation
▪ Who has a right
o Passive Subject
▪ Debtor/Obligor
▪ Person who is bound to the
fulfillment of the obligation
▪ Who has a duty
o Object or Prestation
▪ The conduct required to be
observed by the debtor
▪ Obligation, Right, and Wrong distinguished
o Obligation
▪ Ac or performance which the law
will enforce
o Right
▪ Power which a person has under
the law, to demand from another
any prestation
o Wrong (cause of action)
▪ An act or omission of one party in
violation of the legal right or
rights of another law
▪ In law, the term “injury” is also
used to refer the wrongful
violation of the legal right of
another
ARTICLE 1157. Obligations arise from:
i. Law;
ii. Contracts;
iii. Quasi-Contracts;
iv. Acts or Omissions punished by
Law; and
v. Quasi-Delicts
1. LAW – when they are imposed by law itself\
2. CONTRACTS – when they arise from the stipulation
of the parties
3. QUASI-CONTRACTS – when they arise from
lawful, voluntary, and unilateral acts which are
enforceable to the end that no one shall be unjustly
enriched or benefited at the expense of another;
may be considered as arising from law.
4. CRIME OR ACTS OR OMISSIONS PUNISHED
BY LAW – when they arise from civil liability which
is the consequence of a criminal offense
5. QUASI-DELICTS or TORTS – when they arise
from damage caused to another through an act or
omission, there being fault or negligence, but no
contractual relation exists between the parties
ARTICLE 1158. 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)
❖ Legal Obligations (Article 1168) or Obligations
arising from law. They are not presumed because
they are considered a burden upon the obligor. They
are the exception, not the rule.
❖ Special Laws are all other laws not contained in the
Civil Code.
ARTICLE 1159. Obligations arising from contracts have
the force of law between the contracting parties and
should be compiled with in good faith. (1091a)
❖ Contractual Obligations
➢ It presupposes that the contracts entered
into are valid and enforceable ; presumption
is valid and enforceable
❖ Contract under the New Civil Code
➢ A contract is a meeting of minds between
two (2) or more persons whereby one binds
himself, with respect to the other, to give
something, or to render some service (Art.
1305)
❖ Compliance in Good Faith
➢ Compliance/performance in accordance
with the stipulations or terms of the
contract/agreement
➢ Sincerity and Honest Intention must be
observed in Compliance in Good Faith.
✓ In case of breach there is:
o Entitlement of compensation
o Enforcement of the contract
ARTICLE 1160. Obligations derived from quasi-contracts
shall be subject to the provisions of Chapter 1, Title XVII
of this Book.
❖ QUASI-CONTRACT
➢ It is not properly, a contract at all; There’s
no consent but the same is supplied by
fiction of law. In other words, the law
considers the parties as having entered
into a contract to prevent injustice or the
unjust enrichment of a person at the
expense of another.
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 Chapter 2, Preliminary Title, on Human
Relations, and of Title XVIII of this Book, regulating
damages. (1092a)
✓ This article deals with civil liability for damages
arising from crimes or delicts (Art 1157 [4])
1. Civil Liability in Addition to Criminal Liability
➢ Commission of a crime causes not only oral
evil but also material damage; person
criminally liable for an act or omission is
also civilly liable for damages suffered by
the aggrieved party.
2. Criminal Liability without Civil Liability
➢ Crimes cause no material damage; there’s
no civil liability to be enforced.
3. Civil Liability without Criminal Liability
➢ Person not criminally responsible may still
be liable civilly (failure to pay a contractual
debt)
❖ Duties of Debtor in Obligation to give a
Determinate Thing
1) Preserve or take care of the thing
➢ The obligor has the incidental
duty to take care of the things
due with the diligence of a good
father of a family pending
delivery
a) Diligence of a Good Father of a
Family
b) Extraordinary Diligence – highest
level of diligence usually in
transportation
c) Specific Standard of Care – when
debtor and creditor come to an
agreement on both must be done.
2) Deliver the Fruit of the Thing
3) Deliver the Accession and Accessories
4) Deliver the Thing itself
5) Answer for damages in case of non-
fulfillment or breach
❖ Duties of Debtor in Obligation to Deliver a
Generic Thing
1) To deliver a thing which is of the quality
intended by the parties taking into
consideration the purpose of the
obligation and other circumstances.
2) To be liable for damages in case of fraud,
negligence, or delay, in the performance of
his obligation, or contravention of the
tenor thereof.

ARTICLE 1162. Obligations derived from quasi-delicts

shall be governed by the provisions of Chapter 2, Title
XVII of this Book, and by special laws. (1093a)

❖ QUASI-DELICTS / CULPA AQUILIANA /

TORTS
➢ Arise from damage caused to another
through an act or omission, there being
fault or negligence, but no contractual
relation exists.

ARTICLE 1163. Every person obliged to give something

is also obliged to take care of it with the proper
diligence of a good father of a family, unless the law or
the stipulation of the parties requires another standard
of care. (1094a)

❖ SPECIFIC or DETERMINATE THING

➢ Has ownership; can be differentiate by
others
➢ Particularly designated or physically
segregated from others of the same class,
identified by individuality

❖ GENERIC or INDETERMINATE THING

➢ Refers only to a class or genus to which it
pertains and can’t be pointed out with
particularly
➢ Identified only by its specie.