OBLIGATIONS AND

CONTRACTS
Article 1156. An obligation is a
juridical necessity to give, to
do or not to do.
Juridical necessity – in case of
non-compliance, there will be
legal sanctions.
An obligation is a juridical relation
whereby a person (called the creditor)
may demand from another (called the
debtor) the observance of a determinative
conduct (the giving, doing or not doing),
and in case of breach, may demand
satisfaction from the assets of the
latter. (Makati Stock Exchange v.
Campos, GR. No. 138814, April 16, 2009)
ESSENTIAL ELEMENTS OF OBLIGATION
1. Efficient cause or juridical tie or vinculum juris
- established by the various sources of obligations
2. active subject (obligee or creditor) – the person
who can demand the fulfiillment of the obligation.
3. passive subject (obligor or debtor) – the person
from whom the obligation is juridically demandable
4. Object or prestation – the particular conduct
required to be observed by the debtor (to give, to
do or not to do)
• (Ang Yu Asuncion v. CA, GR. No. 109125, 1994)
 REQUISITES OF PRESTATION

1. it must be licit
2. it must be possible, physically &
juridically
3. it must be determinate or
determinable
4. it must have a possible equivalent in
money (but it need not necessarily
have an economic value)
 EXAMPLE

D is obliged to give C
P100,000.00 with interest of 12%
per annum on December 31,
2015 pursuant to a contract of
loan they executed on January 1,
2015.
 EXAMPLE
D here is the passive subject or obligor;
C is the active subject or obligee;
the giving of P100,000.00 with 12%
itnterest is the prestation;
and the contract of loan is the effifcient
cause.
 EXAMPLE

S and B executed a deed of sale

wherein S sold his lot to B for
P500,000.00.
 EXAMPLE
With respect to the giving of the lot,
which is the prestation, S is the passive
subject; B is the active subject; and the
efficient cause is the deed of sale
(contract).
 EXAMPLE
With respect to the giving of P500,000.00
which is the prestation, B is the passive
subject; S is the active subject; and the
deed of sale is also the efficient cause.
 Classification of Obligation

 1. From the Viewpoint of Sanction

Civil
Natural
Moral
2. From the Viewpoint of Subject Matter
Real
Personal
3. From the Viewpoint of Persons obliged
Unilateral
Bilateral
Civil Obligation is based on positive
law. It gives a right to compel their
performance.
 Example

D borrowed P50,000.00 from C

payable on July 31, 2015.
As evidence of the debt, D executed a
promissory note.
If D makes no payment on due date, C
may enforce payment by filing a court
action within a period of 10 years from
due date.
Natural obligation is based on equity
and natural law. It does not grant a
right of action to compel their
performance, but after voluntary
fulfillment by the obligor, they authorize
the retention of what has been
delivered or rendered by reason
thereof.
 Example

D obtained a loan of P50,000.00 from C.

The debt, which is secured by a promissory
note, is due on September 30, 2015.
No action was filed in court by C within 10
years from such date. Hence the debt
prescribed (the right of the creditor to
enforce its payment by court action was lost
due to lapse of time.
 Example

However, D, knowing that the debt had

prescribed, voluntarily paid C.
D cannot recover what he had
voluntarily paid because although
payment was no longer required, in
equity and moral justice, he still owed C
the amount of P50,000.00.
Unilateral obligation – only one party
is required to perform a particular
conduct.
Bilateral obligation – each party is
required to perform a particular
conduct.
 Sources of Obligation

Article 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law;
and
(5) Quasi-delicts. 
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.
 DEFINITION OF LAW

A rule of conduct, just and

obligatory, laid down by the
legitimate authority for the
common observance and
benefits.
(I Sanchez Roman, 23)
 EXAMPLES

1. Obligation to pay taxes (NIRC);

2. The obligation of a person to reserve a portion
of his estate to cover the legitime of his or her
compulsory heir (Art. 886, Civil Code);
3. Obligation of parents and children to support
each other (Family Code);
4. Obligation of the husband and wife to live
together, observe mutual love, respect,
fidelity, and to render mutual help and
support. (Family Code)
 CONTRACTS
Article 1159. Obligations arising
from contracts have the force of
law between the contracting
parties and should be complied
with in good faith.
 DEFINITION OF CONTRACT
It is a meeting of the minds
between two or more persons
whereby one binds himself, with
respect to the other, to give
something or to render some
service. (Art. 1305)
 Examples:
1. Contract of sale;
2. Contract of employment;
3. Contract of loan;
4. Contract of pledge;
5. Etc.
 QUASI-CONTRACTS

Article 1160. Obligations
derived from quasi-contracts
shall be subject to the
provisions of Chapter 1, Title
XVII, of this Book.
 DEFINITION OF QUASI-
CONTRACT
A juridical relation arising from
lawful, voluntary and
unilateral acts, based on the
principle that no one shall be
unjustly enriched or benefited
at the expense of another.
(Art. 2142)
Principal Kinds of Quasi-contracts:

Negotiorum gestio

– arises whenever a person

voluntarily takes charge of the agency
or management of the business or
property of another without any power
or authority from the latter. (Art. 2144)
Principal Kinds of Quasi-contracts:

1. Negotiorum gestio
- the owner of the property or business who
enjoys the advantages of the same shall be
liable for obligations incurred in his interest, and
shall reimburse the officious manager for the
necessary and useful expenses and for the
damages which the latter may have suffered in
the performance of his duties. (Art. 2150)
 Example

D and C are owners of adjacent piggery farms. D

was hospitalized and had no one to tend to his
farm.
When C noticed that D had not been around for
two days, he took it upon himself to feed the
pigs, clean the pig pens, and performed other
acts to preserve D’s property.
C incurred necessary and useful expenses in the
process.
D must reimburse C for the said expenses.
Principal Kinds of Quasi-contracts:

2. Solutio indebiti

– 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. (Art. 2154)
 Example

D, the payee of a check amounting to

P5,000.00, cashed the check with the
bank.
As soon as he arrived at his office, he
counted the bills and discovered that the
teller gave him 6 pieces of P1,000.00 bills
or a total of P6,000.00.
D must return the excess payment of
P1,000.00 that he received by mistake.
 Other forms of quasi-contracts

Article 2164. When, without the

knowledge of the person obliged 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
 Other forms of quasi-contracts

Article 2165. When funeral expenses are

borne by a third person, without the
knowledge of those relatives who were
obliged to give support to the
deceased, said relatives shall reimburse
the third person, should the latter claim
reimbursement.
 Other forms of quasi-contracts

Article 2166. 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.
 Other forms of quasi-contracts

Article 2167. 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.
 Other forms of quasi-contracts

Article 2168. When during a fire, flood,

storm, or other calamity, property is
saved from destruction by another
person without the knowledge of the
owner, the latter is bound to pay the
former just compensation.
 Other forms of quasi-contracts

Article 2169. When the government, upon

the failure of any person to comply with
health or safety regulations concerning
property, undertakes to do the necessary
work, even over his objection, he shall be
liable to pay the expenses.
 Other forms of quasi-contracts

Article 2170. When by accident or other

fortuitous event, movables separately
pertaining to two or more persons are
commingled or confused, the rules on
co-ownership shall be applicable.
 Other forms of quasi-contracts

Article 2174. When in a small community a

majority of the inhabitants of age decide
upon a measure for protection against
lawlessness, fire, flood, storm or other
calamity, any one who objects to the
plan and refuses to contribute to the
expenses but is benefited by the
project as executed shall be liable to pay
his share of said expenses.
 Other forms of quasi-contracts

Article 2175. Any person who is constrained

to pay the taxes of another shall be
entitled to reimbursement from the latter.
 DELICTS

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.
 DELICTS
These are crimes or felonies. The
commission of crime makes the
offender civilly liable.
 DELICTS

Article 100 of the Revised Penal Code

provides:

Civil liability of a person guilty of

felony. - Every person criminally liable
for a felony is also civilly liable.
 DELICTS

Underlying the legal principle that a

person who is criminally liable is also
civilly liable is the view that from the
standpoint of its effects, a crime has
dual character:
 DELICTS

(1) as an offense against the state

because of the disturbance of the
social order;
 DELICTS

(2) as an offense against the private person

injured by the crime unless it involves the
crime of treason, rebellion, espionage,
contempt and others wherein no civil
liability arises on the part of the offender
either because there are no damages to
be compensated or there is no private
person injured by the crime.
 DELICTS

In the ultimate analysis, what gives rise to

the civil liability is really the obligation
of everyone to repair or to make whole
the damage caused to another by
reason of his act or omission, whether
done intentional or negligently and
whether or not punishable by law.
(Occena v. Icamina, G.R. No. 82146 ,
January 22, 1990)
 DELICTS

In other words, criminal liability will give

rise to civil liability only if the same
felonious act or omission results in
damage or injury to another and is the
direct and proximate cause thereof.
Damage or injury to another is evidently
the foundation of the civil action.
(Banal v. Tadeo, Jr., G.R. No. 78911-25,
December 11, 1987)
 DELICTS

Article 104 (RPC):

Article 104. What is included in civil liability. - The

civil liability established in Articles 100, 101, 102,
and 103 of this Code includes:
1. Restitution;
2. Reparation of the damage caused;
3. Indemnification for consequential damages.
 DELICTS

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.

The thing itself shall be restored, even though it be

found in the possession of a third person who has
acquired it by lawful means, saving to the latter his
action against the proper person, who may be
liable to him. (Art. 105, RPC)
 DELICTS

If restitution is possible, reparation

includes the repair of the material
damage of the object of the crime;
if it is not possible, reparation includes
the price of the object of the crime,
whenever possible, and its
sentimental value to the offended
party. (Art. 106, RPC)
 DELICTS

 Indemnification for consequential

damages shall include not only
those caused the injured party,
but also those suffered by his
family or by a third person by
reason of the crime.
 EXAMPLE

 D stole the taxi cab of C.

If D is found guilty of car napping, he has a civil
liability consisting of restoring the taxi cab to
C.
If the taxi cab cannot be returned because it
was completely destroyed even without D’s
fault, D has to pay its value to C.
D also has to pay the lost profits and moral and
other damages sustained by C.
 Enforcement of Civil Liability
When the criminal action is instituted, the civil
action for the recovery of civil liability is
impliedly instituted with the criminal action,
unless the offended party waives the civil
action, reserves his right to institute it
separately, or institutes the civil action prior to
the criminal action. (Section 1, Rule 111,
Rules of Court.)
Effect of acquittal of the
accused
 Effect of acquittal of the
accused
The civil action based on delict may be
deemed extinguished if there is a finding
on the final judgment in the criminal action
that:
1.the act or omission from which the civil
liability may arise did not exist or
2. where the accused did not commit the
acts or omission imputed to him.
 Instances where acquittal does
not extinguished civil liability
extinction of the penal action does not carry with it the
extinction of the civil liability where:

(a)the acquittal is based on reasonable doubt as only

preponderance of evidence is required;
(b)the court declares that the liability of the accused is only
civil; and
(c)the civil liability of the accused does not arise from or is
not based upon the crime of which the accused is
acquitted.
 Effect of death of accused
pending appeal
1. With respect to his criminal liability, the
same is extinguished;
2. With respect to his civil liability arising
from the crime or delict, the same is also
extinguished. It is because there is no
final judgment or conviction yet rendered
by the time of his death.
 QUASI DELICTS
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.
 QUASI DELICTS
An 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. (Art. 2176, Civil Code)
 Requisites of Quasi-Delict
a.) Damages suffered by the plaintiff;
b.) Fault or negligence of the defendant, or
some other person whose act he must
respond; and
c.) The connection of cause and effect
between the fault of negligence of the
defendant and the damages incurred by
the plaintiff. (Josefa v. Meralco, GR. No.
182705, July 18, 2014)
 Basis of offender’s liability
The liability of a person for quasi-delict
is founded upon the principle of
equity, that one should be
responsible for the act done by him
by reason of his fault or negligence
which causes damages to another.
 Example
D was cleaning the window pane of his
condominium unit.
Due to lack of care, he used the glass to
break and fall on the street, the splinters
hitting the head of a pedestrian and the
cars that were parked on the ground.
D shall be liable for damages to the
pedestrian for any injury sustained by him
and to the car owner for the scratches and
dents on the car.
 Scope of Quasi-Delict
1. Covers act or omission criminal in
character.

Article 2176 of the Civil Code, where it refers

to “fault or negligence,” covers not only
acts “not punishable by law” but also acts
criminal in character, whether intentional
and voluntary or negligent.
 Scope of Quasi-Delict
Hence, the same intentional, voluntary, and
negligent act causing damages and
punished by law may produce two kinds of
civil liability:

1.Civil liability arising from the crime under

Article 100 of the RPC; or
2.Civil liability arising from quasi-delict under
Article 2176 of the Civil Code.
An 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. (Art. 2176, Civil Code)
 Other terms for quasi-delict
1. culpa extra contractual

2. culpa aquilana
 Double Recovery not allowed
Article 2177. xxxxx. But the plaintiff cannot
recover damages twice for the same act or
omission of the defendant.
 Double Recovery not allowed
The Civil Code expressly prohibits the
plaintiff from recovering damages twice
under delict and quasi-delict for the same
act or omission of the defendant.
Effect of pre-existing contractual
relations
As a rule, pre-existing contract between
parties may bar the applicability of the law
on quasi-delict.
Effect of pre-existing contractual
relations
However, by way of exception, existence of
a contract between parties does not bar the
commission of a tort (quasi-delict) by one
against the other and the consequent
recovery of damages therefor, when the act
that breaks the contract is also a tort.
 Culpa contractual distinguish from culpa
extra contractual/culpa aquilana
1. In the first, the source of obligation is
contract; while in the second, the source of
obligation is quasi-delict.
 Culpa contractual distinguish from culpa
extra contractual/culpa aquilana
2. In the first, the negligence is merely
incidental to the performance of an already
existing obligation (arising from contract)
and that the vinculum juris exists independly
of the negligence; while in the second, the
negligence is substantive and independent
in that it is the negligence itself which
creates the vinculum juris.
 Culpa contractual distinguish from culpa
extra contractual/culpa aquilana
3. In the first, proof of the contract and of its
non-perfrormance is sufficient prema facie to
warrant recovery, hence it is not necessary
to prove the negligence; while in the second,
the burden of proof rests upon the plaintiff to
prove the negligence and failure to do so
shall result in the dismissal of the action.
 SAMPLE PROBLEM

Taxi driver, driving recklessly, killed his

passenger. Discuss the sources of
obligations of the driver and employer to the
passenger and the defenses available to the
employer.
 SAMPLE PROBLEM

There are three possible sources of

obligations in this situation.
1. Breach of Contract of carriage
Who is liable?
The liability devolves upon the employer
because the driver is not a party to the
contract of carriage and may not be held
liable under the contract.
The employer cannot relieve himself of
liability by proving that he exercised all
the diligence of a good father of a family
in the selection and supervision of his
employees.

At best, such proof of due diligence may

only serve to mitigate his liability.
2. Delict (Crime of reckless imprudence
resulting to homicide)
Who shall be liable?
The employee (taxi driver) is directly and
primarily liable, while the employer is
subsidiary liable.
Nonetheless, before the employer’s liability is
enforced, adequate evidence must exist
establishing that:
1. They are indeed the employers of the convicted
employees;
2. They engaged in some kind of industry;
3. The crime was committed by the employees in
the discharge of their duties;
4. and the execution against the employees has
been satisfied due to insolvency.
3. Quasi-Delict
Who shall be liable?
a. The employee, under Article 2176 of the
New Civil Code; and/or

b. The employer, under Article 2180 of the

New Civil Code.
In quasi-delict, the negligence or fault should
be clearly established because it is the
basis of the action.
Whenever an employee’s negligence cause
damage or injury to another, there
instantly arises a presumption that the
employer failed to exercise due diligence
in the selection or supervision of its
employees.
In an action based on quasi-delict, the liability of
the employer under Article 2180 of the New
Civil Code is direct and primary, subject to the
defense of due diligence in the selection and
supervision of the employee.

If the employee and the employer are sued

together, their liability is solidary.
An employer’s liability for acts of its employees
attaches only when the tortuous conduct of the
employee relates to, or is in the course of, his
employment.

Hence, an employer incurs no liability under quasi-

delict when an employee’s conduct, act or
omission is beyond range of employment.
In quasi-delict, the employers are liable for the
damages caused by their employees acting
within the scope of their assigned tasks.
Under the law on common carriage, however, the
common carrier or employer is liable for the
death of or injuries to passengers through
negligence or willful acts of the former’s
employees, although such employees may
have acted beyond the scope of his/her
authority or in violation of the orders of the
common carrier or employer.
Such liability does not cease upon proof that the
common carrier or employer exercised all the
diligence of a good father or a family in the
selection and supervision of its employees.

Note that in the contract of common carriage, the

source of employer’s obligation is not quasi-
delict but contract of common carriage.
 Quasi-Delict vs. Delict
1. Crimes affect the public interest,
while quasi-delicts are only of
private concern.
 Quasi-Delict vs. Delict
2. Consequently, the Penal Code
punishes or corrects the criminal act,
while the Civil Code, by means of
indemnification, merely repairs the
damage.
 Quasi-Delict vs. Delict
3. That delicts are not as broad as
quasi-delicts, because the former are
punished only if there is a penal law
clearly covering them, while the
latter, quasi-delicts, include all acts in
which "any king of fault or negligence
intervenes. (Barredo v. Garcia, G.R.
No. L-48006, July 8, 1942)
 Scope of quasi-delict
Quasi-delict also covers acts which are
criminal in character.