OBLIGATIONS AND CONTRACTS

DEFINITION OF OBLIGATION
2 An obligation is a juridical necessity to give, to do or not to do.

ESSENTIAL ELEMENTS
 PASSIVE SUBJECT
(DEBTOR/OBLIGOR)  TO GIVE (REAL)
 ACTIVE SUBJECT  TO DO (PERSONAL)
(CREDITOR/OBLIGEE)
 NOT TO DO (NEGATIVE)
 PRESTATION

 JURIDICAL TIE SOURCES OF OBLIGATION (ART. 1157)

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 SOURCES OF OBLIGATION
3
LAW ACTS OR OMISSIONS PUNISHED
 NOT PRESUMED BY LAW (DELICT/CRIMES)
 ARTICLE 100 OF THE REVISED
CONTRACTS PENAL CODE
 CONSENT
 OBLIGATORY FORCE
 FREEDOM TO STIPULATE QUASI-DELICT
 NEGLIGENCE
QUASI-CONTRACTS
 UNJUST ENRICHMENT

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 SOURCES; DELICT
4 Article 100. Civil liability of a person guilty of felony. - Every person criminally
liable for a felony is also civilly liable.
CRIME

CONVICTED ACQUITTED

REASONABLE NOT THE AUTHOR

CIVIL LIABILITY (ART. 104) DOUBT OF THE CRIME
 RESTITUTION
 REPARATION
 INDEMNIFICATION FOR POSSIBLE CIVIL NO CIVIL
CONSEQUENTIAL DAMAGES LIABILITY LIABILITY

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
5 The following are the elements of an obligation, except:

A. Vinculum juris
B. Obligee
C. Prestation
D. Contract

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
6 Problem
Jayson agrees to give Jaylen a brand new car on August 31, 2022.

Identify the essential elements of the obligation.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
7 True or False.

1. There can be no obligation without a valid contract, express or implied.

2. The obligation of the employers in case of overtime work, to pay at least an

additional compensation equivalent to his regular wage plus at least twenty-five
percent (25%) thereof, is an obligation arising from contract.

3. The principle of obligatory force of contracts provides that the parties are free to
stipulate terms and conditions provided it is not contrary to law, morals, good
customs, public order, or public policy.

4. The acquittal of the accused automatically absolves the accused of criminal and
civil liability.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 SOURCES; QUASI-CONTRACT
8 Certain lawful, voluntary and unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be unjustly enriched or benefited at the
expense of another.

NEGOTIORUM GESTIO SOLUTIO INDEBITI OTHER QUASI-CONTRACTS

ART. 2144 ART. 2154 ART. 2164-2175

NOT EXCLUSIVE
ARTICLE 2143. The provisions for quasi-contracts in this Chapter do not
exclude other quasi-contracts which may come within the purview of the
preceding article.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 QUASI-CONTRACT; Negotiorum Gestio
9 ARTICLE 2144. Whoever voluntarily takes charge of the agency or management of the
business or property of another, without any power from the latter, is obliged to continue
the same until the termination of the affair and its incidents, or to require the person
concerned to substitute him, if the owner is in a position to do so.
Requisites Obligations of officious manager
a. Officious manager voluntarily assumes a. Continue the affairs until termination
the agency or management of the b. Perform duties with DGFF
business or property of another. c. Pay damages for fault/negligence
b. The business or property is neglected
Obligations of Owner
or abandoned.
a. To make good of obligations incurred
c. There is no authorization from the
in his interest
owner, either express or implied.
b. Reimburse officious manager for
d. The assumption of agency or
necessary and useful expenses
management is done in good faith.
c. Reimburse OM for damages
OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA
 QUASI-CONTRACT; Negotiorum Gestio
10 Other concepts
 The liability of two or more officious manager is SOLIDARY
 The OM should be liable for fortuitous events (absolute):
(1) If he undertakes risky operations which the owner was not accustomed
to embark upon;
(2) If he has preferred his own interest to that of the owner;
(3) If he fails to return the property or business after demand by the owner;
(4) If he assumed the management in bad faith.
 The OM should also be liable for fortuitous events, as a general rule:
(1) If he is manifestly unfit to carry on the management;
(2) If by his intervention he prevented a more competent person from taking up the
management.
XPN: If management was assumed to save the property or business from imminent danger
OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA
 QUASI-CONTRACT; Solutio Indebiti
11 ARTICLE 2154. If something is received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return it arises.
Requisites
a. The payment was received when there is no right to demand it
b. The payment was made thru mistake

OBLIGATIONS OF THE PAYEE/S

In good faith
 Return the thing delivered
 Answer for loss or impairment, insofar
as the payee has been benefited
In bad faith
 Return the thing delivered
 Answer for loss or impairment
 Pay legal interest (money)
 Deliver fruits

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 QUASI-CONTRACT; Other Quasi-Contracts
12  Support given by stranger
 Funeral expenses borne by third persons
 Support to an orphan, insane, or indigent
 Expenses of a good Samaritan
 Saving of property from destruction in case of calamity
 Government work for health and safety regulations
 Expense for the welfare of the community
 Payment of taxes by third persons

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 QUASI-DELICT, DEFINED
13 ARTICLE 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter

Requisites
a) Damage suffered by the plaintiff
b) Fault or negligence of the defendant
c) Connection of cause and effect between (a) and (b)

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 Contract, Delict and Quasi-Delict
14 Problem
Steph, taxi driver of Klay Taxi Company, driving recklessly, hit a pedestrian, Jordan,
injuring him, and also caused serious physical injuries to his passenger, Draymond.

Discuss the obligations arising from the case.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
15 Harry owns a house and lot in Odiongan. Due to the travel restrictions imposed during the pandemic, he
was not able to go home as he usually does.

Five years have passed since Harry went to Odiongan. Severus, a neighbor, saw the deteriorating state of
the property. Out of concern, he hired two workers to clean the house of Harry, paying them P500 each.
When Harry was finally able to come home, he was approached by Severus, and the latter asked him for
reimbursement of P1,000.

Harry refused, arguing that he did not authorize Severus to incur such expense.

Can Severus recover P1,000.00 from Harry?

a) No, because there was no authorization from Harry.

b) Yes, because there was an implied contract between Harry and Severus.
c) Yes, because Severus is considered an officious manager under negotiorum gestio.
d) No, because there was no contract between Harry and Severus.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
16 On February 14, 2022, Paolo and Yen decided to celebrate their first Valentine’s Day together. Paolo
wants to surprise Yen, and so he ordered a 12-inch Hawaiian pizza, with extra pineapples on top, with an
instruction to just leave the pizza on the doorstep. The pizza was fully paid.

LJ, their neighbor, is in the meantime, alone in her house and is craving for pizza, but does not have extra
money to spend, and does not have someone who would buy pizza for her. To her surprise, a 12-inch
Hawaiian pizza was delivered to her doorstep, with a note “Happy Valentine’s Day”. Thinking that a
secret admirer sent the pizza to her, she immediately consumed the 12-inch pizza.

The mistake was later on discovered. Can the pizza company recover from LJ?

a) No, because the pizza company should bear the loss.

b) Yes, because LJ was unjustly enriched at the expense of the pizza company.
c) Yes, because of an implied contract of sale between LJ and the pizza company.
d) No, because she received the pizza in good faith.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
17 Kim, passenger, suffers injuries due to the negligence of Jeff, a taxi driver employed by Kolorum
Company. Which of the following statements is true?

a) Kim may recover damages against both the Jeff and Kolorum.
b) Kim may recover damages in an action for breach of contract against Jeff.
c) The existence of a contract of common carriage prevents Kim from filing a civil action for damages
based on quasi-delict against Jeff.
d) Kim may recover damages either against the taxi driver or against the employer.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
18 True or False

1. Negotiorum gestio and solutio indebiti are implied contracts.

2. For negotiorum gestio to arise, authorization from the owner is indispensable.

3. The liability of two or more recipients in quasi-contracts is joint.

4. The pre-existing contractual relation between the plaintiff and defendant prevents the plaintiff from
recovering against the defendant based on quasi-delict.

5. The officious manager is always liable for fortuitous event if he is manifestly unfit to carry on the
management of the property.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 Natural Obligations
19 ARTICLE 1423. Obligations are civil or natural. Civil obligations give a right of action
to compel their performance. Natural obligations, not being based on positive law but on
equity and natural law, do not grant a right of action to enforce their performance, but
after voluntary fulfillment by the obligor, they authorize the retention of what has been
delivered or rendered by reason thereof. Some natural obligations are set forth in the
following articles.

Payment of prescribed debt Voluntary Fulfillment after Failure to

Enforce Obligation
Voluntary Reimbursement
Payment of Deceased’s Debt Exceeding
Payment of Legacy in Void Will Inheritance

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

NATURE AND EFFECTS
 KINDS OF OBLIGATION AS TO PRESTATION
21 AS TO PRESTATION

REAL PERSONAL

SPECIFIC GENERIC TO DO NOT TO DO

 REFERRED
 PARTICULARLY TO BY ITS
DESIGNATED REASON FOR CLASSIFICATION
CLASS OR
 PHYSICALLY GENUS  ACCESSORY OBLIGATIONS
SEGREGATED (SPECIFIC)
 REMEDIES AVAILABLE IN CASE
OF BREACH
OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA
 SPECIFIC – ACCESSORY OBLIGATIONS
22 SPECIFIC – ACCESSORY OBLIGATIONS

DELIVER ACCESSIONS
PRESERVE THE THING DELIVER THE FRUITS AND ACCESSORIES
 ACCESSORIES

FOR ORNAMENTATION,
EXERCISE DUE DILIGENCE FROM MOMENT
USE, PRESERVATION
OBLIGATION TO DELIVER
 REQUIRED BY LAW ARISES  ACCESSION
 STIPULATED BY  PERFECTION (GR)
PARTIES
 FULFILLMENT OF
 DILIGENCE OF A GOOD
SUSPENSIVE CONDITION
FATHER OF A FAMILY

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 REMEDIES IN CASE OF BREACH
23
DELAY, FRAUD, NEGLIGENCE,
BREACH
CONTRAVENTION OF TENOR

SPECIFIC NOT TO DO
 SPECIFIC PERFORMANCE  UNDO WHAT WAS DONE
 DAMAGES  UNDONE AT DR’s EXPENSE
 DAMAGES
GENERIC
TO DO
 SPECIFIC PERFORMANCE
 SUBSTITUTE PERFORMANCE (GR)
 SUBSTITUTE PERFORMANCE
 UNDONE AT DR’s EXPENSE
 DAMAGES

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 BREACH OF OBLIGATIONS
24 ARTICLE 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are
liable for damages.
DAMAGES (MENTAL)
1 DELAY
 MORAL

2  EXEMPLARY
FRAUD
 NOMINAL
3 NEGLIGENCE  TEMPERATE
 ACTUAL
4 CONTRAVENTION
 LIQUIDATED

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 DELAY
25 DELAY IN THE
DELAY/MORA FULFILLMENT OF
OBLIGATION

MORA COMPENSATIO
MORA SOLVENDI
ACCIPIENDI MORAE
 LIABLE FOR  RECIPROCAL
DAMAGES OBLIGATIONS
 DEBTOR IS LIABLE
EVEN FOR
FORTUITOUS EVENTS

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 MORA SOLVENDI
26 ARTICLE 1169. Those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.

GENERAL RULE
NO DEMAND, NO DELAY

EXCEPTIONS (RTOLD)

 TIME IS OF THE  LAW SO PROVIDES

 RECIPROCAL ESSENCE
OBLIGATIONS  OBLIGATION SO  DEMAND WOULD BE
PROVIDES USELESS

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 FRAUD
27 ARTICLE 1171. Responsibility arising from fraud is demandable in all obligations.
Any waiver of an action for future fraud is void.

FRAUD/DOLO

IN OBTAINING CONSENT IN FULFILLMENT OF OBLIGATION

RENDER CONTRACT VOIDABLE  LIABILITY FOR DAMAGES

 RESPONSIBILITY FOR FUTURE
FRAUD NOT WAIVABLE
OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA
 NEGLIGENCE
28 ARTICLE 1172. Responsibility arising from negligence in the performance of every
kind of obligation is also demandable, but such liability may be regulated by the courts,
according to the circumstances.
WHAT IS NEGLIGENCE?

ARTICLE 1173. The fault or

negligence of the obligor
consists in the omission of
that diligence which is
required by the nature of the
obligation and corresponds
with the circumstances of the
persons, of the time and of
the place.
OBLIGATIONS AND CONTRACTS
 REQUIRED BY LAW
DILIGENCE  STIPULATED BY PARTIES
REQUIRED?
 DILIGENCE OF A GOOD
FATHER OF A FAMILY
ATTY. KRISTOFFERSON DELA CRUZ, CPA
 GENERAL REMEDIES OF CREDITORS
29 BREACH

1 REQUIRE PERFORMANCE

2 EXHAUST PROPERTIES OF DRs

3 ACCION SUBROGATORIA

4 ACCION PAULIANA

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 FORTUITOUS EVENTS
30 FORTUITOUS EVENTS ARE EVENTS WHICH CANNOT BE FORESEEN OR IF
CAN BE FORESEEN, IS INEVITABLE
REQUISITES GENERAL RULE
 Cause must be independent of NO PERSON SHALL BE LIABLE FOR FORTUITOUS
will of debtor EVENTS
 Event rendered impossible to
fulfill obligation in normal EXCEPTIONS
manner
 LAW SO PROVIDES
 Debtor must be free from any
participation in or aggravation  STIPULATED BY PARTIES
of the injury to the creditor
 NATURE OF THE OBLIGATION REQUIRES THE
 Object is specific ASSUMPTION OF RISK

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 OTHER ARTICLES
31 ARTICLE 1176. The receipt of the principal by the creditor, without reservation with
respect to the interest, shall give rise to the presumption that said interest has been
paid.

The receipt of a later installment of a debt without reservation as to prior installments,

shall likewise raise the presumption that such installments have been paid.

ARTICLE 1178. Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary.

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
32 Which of the following is not correct in an obligation to do?
a. To require that what has been poorly done be undone
b. To sue the debtor for specific performance if he refused to voluntarily
fulfill the obligation
c. The debtor shoulders the cost of execution should he fail to do so
d. To require the debtor to pay damages in case of breach

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
33 Unless the law or the stipulation of the parties require another standard of
care, every person obliged to give something is also obliged to take care of it
with the proper diligence
a. Observing ordinary diligence
b. Observing utmost care
c. Of a father of a good family
d. Observing extraordinary care

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
34 A natural obligation under the New Civil Code of the Philippines is one
which
a. The obligee may enforce through the court if violated by the obligor
b. Cannot be judicially enforced but authorizes the obligee to retain the
obligor’s payment or performance
c. The obligor has a moral obligation to do, otherwise entitling the obligee to
damages
d. Refers to an obligation in writing to do or not to do

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
35 Action to impugn or rescind acts or contracts done by the debtor to defraud
the creditors
a. Accion subrogatoria
b. Accion quanti-minoris
c. Accion reinvindicatoria
d. Accion pauliana

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
36 A borrowed money from B payable on December 10, 2021. If A failed to pay
on due date, will A
be in delay?
a. Yes, if the obligation is in writing.
b. Yes, because there is stipulation as regards the due date.
c. No, if A has the money to pay B
d. No, because demand has not been made by B

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
37 A obliged himself to deliver to B the following:
A. 2021 Sing-It Yamaha Organ
B. Malagona passenger jeepney with engine No. 69 and chasis No. 88

I. In case A failed to deliver a 2021 Yamaha Organ, the court may compel A
to deliver a 2021 Yamaha Organ plus damages

II. In case A failed to deliver the jeepney, the court may compel A to deliver
the jeepney plus damages
a. True, True
b. True, False
c. False, True
d. False, False
OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA
 KNOWLEDGE CHECK
38 I. If a person obliged to do something fails to do it, the same shall be
executed at his cost.

II. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay and those who in any manner contravene the tenor
thereof, are liable for damages.

a. True, True
b. True, False
c. False, True
d. False, False

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
39 I. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for fraud is void.
II. If the law or contract does not state the diligence which is to be observed
in the performance of an obligation, that which is expected of a father of a
good family shall be required.
a. True, True
b. True, False
c. False, True
d. False, False

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
40 I. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for fraud is void.
II. If the law or contract does not state the diligence which is to be observed
in the performance of an obligation, that which is expected of a father of a
good family shall be required.
a. True, True
b. True, False
c. False, True
d. False, False

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

 KNOWLEDGE CHECK
41 I. When what is to be delivered is a determinate thing, the creditor may
compel the Debtor to make the delivery and if the debtor refuses, he creditor
may ask that the obligation be complied with at the expense of the debtor.

II. The obligation to give a determinate thing includes that of delivering all
its accessions and accessories, even though they may not have been
mentioned.
a. True, True
b. True, False
c. False, True
d. False, False

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA

OBLIGATIONS AND CONTRACTS ATTY. KRISTOFFERSON DELA CRUZ, CPA