Obligations and Contracts
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Civil Code follows the Gaian order – 3 parts:
Persons, Things and Obligations
“Obligations and Contracts” – inaccurate;
should only be “Obligations” since Contract
is one of the sources of obligation.
“ob” and “ligare” - to bind or tie together
“Ligare” – source of words such as ligament
and litigation
“Obligatio” - initially a physical act of being
chained with shackles.
As time passed, , “ligatio” doesn’t mean
vinculum of chains but vinculum juris (bond
of law)
Art. 1156. An obligation is a juridical necessity
to give, to do or not to do.
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incomplete; pov of debtor
Obligations are bilateral. It should include
what can be required, the remedy and the
means by which the creditor can take to
pursue the remedy.
An obligation is a juridical relation whereby
a person (called a creditor) may demand
from another (called the debtor) the
observance of a determinate conduct,
and, in case of breach, may obtain
satisfaction from the assets of the latter
(Arias Ramos).
Characteristics of Obligations
1. It represents an exclusively private
interest
2. It creates ties which are by nature
transitory
- obligations are extinguished, but the
period is relative)
3. It involves the power to make the
juridical tie defective in case of nonfulfillment through satisfaction of the
debtor‘s property
Trends in the Modern Law of Obligations
1. Progressive spiritualization of the law on
obligations
- Before: very formal & ritualistic; If it’s
not in the proper form, no obligations
will assume
- Now: emphasis is in the meeting of
the minds, not on form.
Consensuality is the prevailing
doctrine. As long as it can be
manifest - and any kind of
manifestation will do - it is sufficient
2. The principle of autonomy of will of the
parties is now subject to several
restrictions.
- (Art. 1305) Restrictions: not contrary
to
(1) Law
(2) Morals
(3) Good customs
(4) Public order
(5) Public policy
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Those which are against these five
restrictions are void (Art. 1409)
However, now we have restrictions
such as social justice, environmental
preservation, etc.. because of the
rising tide of social discontent,
hence social legislation came to be
for the underprivileged.
^rationale: social justice (those who
have less in life have more in law)
Social justice is "neither communism,
nor despotism, nor atomism, nor
anarchy," but the humanization of
laws and the equalization of social
and economic forces by the State so
that justice in its rational and
objectively secular conception may
at least be approximated (Calalang
v. Williams)
3. The mitigation of the principle that the
debtor should answer with all his
property
- Before: debtor has to answer his
debts with ALL his property
- Now: certain properties are exempt
and these can be found in
o substantive law (i.e., family
home)
o and in procedural law (i.e.
support – magtitira para
masupportahan ang anak)
- the debtor may not be imprisoned
for non-payment of debts
- rationale: leave the debtor
something to live decently by
4. The weakening of the principle that
liability arises from responsibility
- basically the principle in quasi-delicts
- a person may be held liable even if
not responsible
- i.e. minor is responsible – guardian is
liable
Requisites of the Object of the obligation
a. Licit – Example: Can‘t validly enter
into a contract for sexual services
b. Possible both in fact and in law –
physical and legal possibility
c. Determinate or determinable
d. Must have pecuniary value
5. The tendency of unity in modern
legislation
- can be manifest in the rise of a
“global village”
- seen particularly in trade laws
- tendency is to make things uniform
especially in commerce. Different
rules would impede commerce.
4. Vinculum juris (Juridical tie)
- consists of the enforceability of the
obligation
- If the debtor does not conform, the
creditor has the power to go to court
to make the debtor perform
(coercive force)
- Voluntariness goes into entering into
an obligation. But once you enter, it
becomes involuntary.
Essential Requisites of Obligations
1. Active subject
- to give: creditor
- to do: obligee
2. Passive subject
- to give: debtor
- to do: obligor
5. Causa
- causa debendi or causa
obligationes
- the why of an obligation
6. Form (not an essential requisite)
- general rule: no specific form for a
valid obligation.
- if form means that there is some
external manifestation, fine.
However, there should still be no
specific form.
How can both subjects be determinate or
determinable?
a) Obligations where the subjects are
completely and absolutely determined at
the birth of an obligation.
b) Obligations where one subject is
determined at the moment of the birth of
the obligation and the other subject is to be
determined subsequently at some fixed
criterion, which criterion is fixed at the start
of the obligation. (i.e. promissory note
endorsement)
c) Obligations in which subjects are
determined in accordance with its relation
to a thing. (i.e. mortgage attached to a
purchased property can be demandable
from the new owner)
3. Object/Prestation
- always consists in an activity or
conduct to be observed by the
debtor towards the creditor
- prestation = object of obligation – to
deliver car
- car = object of the prestation
Sources of Obligations
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
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Is this exclusive? AFFIRMATIVE (Sagrada
Orden v. NACOCO) However, this is only
by implication or indication.
Many believe that the list is not exclusive
one more possible source - public offer.
1. Law
Art. 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
- There is only 1 ultimate source of
obligations – law
2. Contract
Art. 1159. Obligations arising from contracts
have the force of law between the contracting
parties and should be complied with in good
faith.
- combines two concepts of Roman law equity or good faith and strict
compliance by the parties
- A contract is a meeting of minds
between 2 persons whereby one binds
himself, with respect to the other, to
give something or to render some
service (Art. 1305)
- The contracting parties may establish
such stipulations, clauses, terms and
conditions as they may deem
convenient, provided they are not
contrary to law, morals, good customs,
public order, or public policy (Art. 1306)
- Contracts are perfected by mere
consent, and from that moment the
parties are bound not only to the
fulfillment of what has been expressly
stipulated but also to all the
consequences which, according to
their nature, may be in keeping with
good faith, usage and law (Art. 1315)
- In case of doubt, the interpretation
consistent with good faith is followed
- Party cannot excuse themselves on
the ground that it has become
unprofitable
3. Quasi-contract
Art. 1160. Obligations derived from quasicontracts shall be subject to the provisions of
Chapter 1, Title XVII, of this Book.
- Juridical relation which arises 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.
a. Negotiorum Gestio
- 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
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owner is in a position to do so. (Art.
2144)
Requisites:
(1) Business/property must be
neglected or abandoned
(2) Officious manager must not
have been authorized by the
owner
Obligation to reimburse belong to
the owner of the property
It is not necessary that some benefit
has been given. There may be no
actual benefit. As long as benefit
could have possibly accrued
Rules:
(1) There must be no ratification.
Otherwise, it may fall under the
contract of agency
o If there was no ratification, the
owner must reimburse the
inofficious of the useful and
necessary expenses as well as
the damages he suffered in
discharge of his functions
b. Solutio Indebiti
- Juridical relation which takes place
when somebody receives something
from another without any right to
demand for it and the thing was
unduly delivered to him through
mistake
- Not applicable when there is a
motivation by an act of liberality
- Does mistake include mistake of
law? If payment by mistake includes
it, we are deviating from provisions of
art. 3 (ignorance of the law excuses
no one of compliance therewith.)
No one can ever claim a mistake of
law as a defense.
- Payment by a mistake in
interpretation of a difficult question
of law qualifies as a mistake that can
justify an act of recovery of what
have been paid under the principle
of solutio indebiti.
- (Art. 2155) Payment by reason of a
mistake in the construction or
application of a doubtful or difficult
question of law may come within the
scope of the preceding article.
4. Delict
Art. 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.
- General Rule: If you commit a crime, you
are liable both criminally and civilly.
- Exception: No private offended party (i.e.
contempt)
5. Quasi-delict
Art. 1162. Obligations derived from quasidelicts shall be governed by the provisions of
Chapter 2, Title XVII of this Book, and by
special laws.
- Art. 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.
- Requisites:
(1) There is fault or negligence of the
defendant resulting to a wrongful
act or omission, whether voluntary or
not, whether criminal or not.
(2) There is damage or injury suffered by
another
(3) There is a direct causa relation
between the fault or negligence
and the resulting damage and injury
(proximate cause)
- a civil law term while tort is a common
law term
- Difference between Contractual Liability
and Quasi-Delict
o QD: the obligation arises only when
there is a violation. Without violation,
there is no obligation. It is the breach
itself which gives rise to the obligation.
o Contracts: there is already an
obligation which exists prior to or even
without a breach. The breach of the
contract is immaterial to the legal
obligation.
- Breach and quasi-delict are inseparable.
But contract and breach may be
separable.
- Are contracts and quasi-delicts mutually
exclusive? NO
Kinds of Obligations
1. To give (Articles 1163-1166)
a. To give a determinate thing
- Primary Obligation: Giving what is
supposed to be given
- 3 Accessory Obligations:
(1) to take care of it with the proper
diligence of a good father of the
family (Art. 1163)
o General Rule: Diligence of a
good father of the family
o Exception: Law or stipulation
requires different standard of
care
(2) To account and deliver to the
creditor the fruits if the thing
bears fruits upon the time the
obligation to deliver it arises (Art.
1164)
(3) To deliver the accessions and
accessories (Art. 1166)
o Don‘t take accession in the
technical sense. Understand it
to mean things that go with
the thing to be delivered (i.e.
car radio)
- Remedies Available to the Creditor
o Specific performance - the
debtor must perform it
personally
o Equivalent performance –
damages (may be obtained
exclusively or in addition to
other remedies)