TITLE I: OBLIGATIONS

Chapter 1 – General Provisions

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

Obligation
- Obligatio (latin) meaning tying or binding
1) Tie of law / juridical bond by virtue – bound in favor of another to render something
2) Manresa – legal relation established bet. one party and another
3) Our law stresses the duty of the debtor

Juridical necessity
- The courts of justice may be called upon to enforce its fulfillment
- The debtor must comply with his obligation whether he likes it or not
- If obligations were not made enforceable, people can disregard them with impunity

Nature of obligations under the Civil Code

• Civil obligations – give to the creditor a right of action in courts of justice to enforce
their performance
• Natural obligations – do not grant a right of action to enforce their performance

Essential requisites of an obligation

1) Passive subject (debtor or obligor) – person who is bound to the fulfillment of the
obligation
2) Active subject (creditor or oblige) – person who is entitled to demand the fulfillment of
the obligation
3) Object or prestation (subject matter) – conduct required to be observed by the debtor
4) Juridical or legal tie (efficient cause) – binds or connects the parties to the obligation

Form of obligation
- Manner in which an obligation is manifested or incurred
- May be oral or in writing, or partly oral and partly writing
1) As a general rule, the law does not require any form in obligations arising from contracts
for their validity or binding force
2) Obligations arising from other sources do not have any form at all

Obligation, right and wrong (cause of action) distinguished. 1) Obligation –

act or performance
2) Right – power which a person has under the law
3) Wrong – act or omission of one party in violation of the legal right

** BREACH OF CONTRACT **
Subject matter – contract violated
Cause of action – breach by the obligor

Essential elements of cause of action

a) Legal right in favor of a person (plaintiff)
b) Correlative legal obligation (defendant)
c) Act or omission in breach or violation of said right
- If any of the elements is absent, the complaint becomes vulnerable to a motion to
dismiss (grounds of failure to state cause of action)
- A cause of action only accrues when an actual breach or violation occurs

Cause of action based upon a written contract

- Actions based upon a written contract should be brought within 10 years from the time
the right of action accrues (Art. 1144) o Action based on a contract accrues only when
an actual breach or violation occurs
1) To rescind a contract of sale on installment basis – if last installment is not paid
2) Overdraft agreement stipulates that the obligation is payable on demand – when the
demand is made
3) Contract of loan with real estate mortgage – from the date the debtor discovered the
increased interest rate
4) Agreement to buy and sell was conditioned upon the conduct of a preliminary survey –
when the plaintiff discovered the completion of the survey
5) Money claims arising from a contract of employment – from the date the employer
made a definite denial of the employee’s claim
6) Reformation of a contract – when the contract appeared disadvantageous
7) Nature of the product sold – from the discovery of the same with certainty

Injury, damage, and damages distinguished

• Injury – illegal invasion of a legal right; wrongful act or omission which causes loss or
harm to another; legal wrong to be redresses
• Damage – loss, hurt, or harm which results from the injury
• Damages – sum of money recoverable as amends for the wrongful act or omission;
recompense or compensation awarded for the damage or loss suffered

Existence of one without the other

- There may be injury without damage and damage without injury.
1) Proof of loss for injury – wrongful violation of legal right is not sufficient to entitle a
person to sue another; there must be loss or damage caused by the violation of his right
(Art. 2199)
2) Liability for damages of a person for exercising his legal rights – right to take all legal
steps to enforce his legal and/or equitable rights o Qui jure suo utitur mullum damnun
facit – one who makes use of his legal right does no injury
 o Damnun absque injuria – damage without injury o The plaintiff must
establish that the damage to him resulted from a breach of legal duty
- ** ART. 19 **
- every person must act with justice, give everyone his due, and observe honesty and
good faith
- prescribes primordial limitation on all rights

Kinds of obligation (subject matter)

1) Real obligation – obligation to give
2) Personal obligation – obligation to do or not to do
a. Positive – obligation to do or to render service (Art. 1167)
b. Negative – obligation not to do (Art. 1168)

Sources of obligations
1) Law – imposed by the law itself (ex. To pay taxes)
2) Contracts – arise from stipulation of the parties
3) Quasi-contracts – arise from lawful, voluntary, and unilateral acts and which are
enforceable to the end that no one shall be unjustly enriched at the expense of another
(Art. 2142)
4) Crimes or acts or omissions punished by law – arise from civil liability which is the
consequence of a criminal offense
5) Quasi-delicts or torts – arise from damage caused to another through an act or
omission, there being fault or negligence, but no contractual relation exists between the
parties

Sources classified
1) Emanating from law
2) Emanating from private acts
a. Arising from licit acts
b. Arising from illicit acts

Legal obligations
- Article 1158 – legal obligations / legal obligations arising from law; special law refers to
all other laws not contained in the Civil Code
1) An employer has no obligation to furnish free legal assistance to his employees because
no law requires this
2) A private school has no legal obligation to provide clothing allowance to its teachers
because there is no law which imposes this obligation

Contractual obligations
- Contract – meeting of minds between two persons whereby one binds himself to give
something or to render some service (Art. 1305)
 1) Binding force: governed primarily by the agreement of the contradicting parties
a. The law recognizing the obligatory force of contracts (Arts. 1139, 1308, 1315,
1356), will not permit a party to be set free from liability for any kind of
misperformance of the contractual undertaking or a contravention of the
tenor thereof (Art. 1170)
- The mere proof of the existence of contract and the failure of its
compliance justify prima facie (first impression; accepted as correct
until proved otherwise)
b. In law, whatever fairly puts a person on inquiry is sufficient notice, where the
means of knowledge are at hand, which if pursued by proper inquiry, the full
truth might have been ascertained
c. Allege defect must be proved by convincing evidence since its validity or
compliance cannot be left to will of one of them
d. Courts have no alternative but to enforce contracts as they were agreed
upon and written when the terms thereof are clear and leave no room for
interpretation
- Does not mean contract is superior to the law
e. A compromise agreement is immediately executory and not appealable,
except for vices of consent or forgery
- Res judicata - refers to the rule that a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the rights of
the parties or their privies in all later suits on all points and matters
determined in the former suit
2) Requirements of a valid contract – a contract is not contrary to law, morals, good
customs, public order, and public policy; a void contract does not exist
3) Contract requires approval by the government – such contract becomes the law bet.
the contracting parties only when approved, and where there is nothing in which it
is contrary to law; its validity must be sustained
4) Compliance in good faith – compliance or performance in accordance with the
stipulations or terms of the contract or agreement
5) Liability for breach of contract – our law on contracts recognizes the principle that
actionable injury inheres in every contractual breach
6) Preservation of interest of promise – a breach upon a contract confers upon the
injured party a valid cause for recovering that which may have been lost or suffered

Quasi-contractual obligations
- Article 1160 – treats of obligations arising from quasi-contracts or contracts implied in
law
- Quasi-contract – 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 at the expense of another
 - There is no consent but the same is supplied by fiction of law – law considers the parties
as having entered into contract, irrespective of their intention, to prevent injustice

Kinds of quasi-contracts
1) Negotiorum gestio – voluntary agreement of the property or affairs of another without
the knowledge or consent of the latter Does not arise:
a. Property of a business is not neglected or abandoned
b. Manager has been tacitly authorized by the owner
2) Solutio indebiti – juridical relation which is created when something is received when
there is no right to demand it and it was unduly delivered through mistake; based on
the ancient principle that no one
shall enrich himself unjustly at the expense of another Applies:
a. Payment is made when there exists no binding relation bet. the payor and the
person who received the payment
b. Payment is made through mistake and not through liberality or some other
cause
3) Other cases – Art. 2164 to 2175 of the civil code

Civil liability arising from crimes or delicts

1) Commission of an offense has two-pronged effect
a. On the public – breaches social order
b. Upon the private victim – causes personal sufferings or injury
2) Commission of a crime causes not only moral evil but also material damage
o Every person criminally liable for a felony is also civilly liable o No material
damage = no civil liability to be enforced o A person not criminally responsible
may still be liable civilly

Scope of civil liability

- Governed by the Revised Penal Code and the Civil Code
1) Restitution
2) Reparation for the damage caused
3) Indemnification for consequential damages

Obligations arising from quasi-delicts

- Quasi-delict – an act or omission by a person (tort feasor) which causes damage to
another in his person, property, or rights giving rise to an obligation to pay for the
damage done, there being fault or negligence but there is no pre-existing contractual
relation bet. the parties

Requisites of quasi-delict
1) Act or omission by the defendant
2) Fault or negligence of the defendant
 3) Damage caused to the plaintiff
4) Direct relation or connection of cause and effect bet. the act or omission and the
damage
5) No pre-existing contractual relation bet. the parties

Crimes distinguished from quasi-delict

Crime Quasi-delict
- There is criminal or malicious - Negligence intent or criminal negligence
- Affects public interest - Concerns private interest
- 2 liabilities: criminal and civil - Civil liability
- Liability cannot be - Liability can be comprised as compromised or settled by
any other civil liability parties themselves
- Guilt of the accused must be - Fault or negligence of the
proved beyond reasonable defendant need only be
doubt proved by preponderance of
evidence
- Liability of the person - Direct and primary responsible for the author of
the negligent act or omission is subsidiary

Enumeration
General divisions of law: -
Strict legal sense
- Non-legal sense

Subjects of law -
Divine
- Natural
- Moral
- Physical
- State

Characteristics of law (specific)

- Rule of conduct
- Obligatory
- Promulgated by legit authority
- Common observance and benefit

Source of law
- Constitution
- Legislation
 - Admin / exec orders, regulations, and rulings
- Judicial decision / jurisprudence
- Custom
- Other sources

Organization of courts
- Regular o Court of appeals o RTC
o Metropolitan TC o
Municipal Circuit TC
- Special
o Sandiganbayan o Court
of tax appeals
- Quasi-judicial agencies o NLRC o SEC
o LTFRB
o Insurance commission
o Independent constitutional commission
 CSC
 COE
 COA Classifications of law
- Purpose
o Substantive - describes the offence and identifies the facts to be proven for
conviction
o Adjective - deadline by which a party must file documents in a lawsuit
- Subject matter o Public law
 Criminal law
 International law
 Constitutional law
 Criminal procedure o Private law

ObliCon
- Title I Obligations (1156-1304)
- Title II Contracts (1305-1422)
- Title III Natural Obligations (1423-1430)
- Title IV Estoppel (1431-1439)

Estoppel - legal principle that prevents someone from arguing something or asserting a right
that contradicts what they previously said or agreed to by law