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Julius Mila
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Oblicon-Reviewer - Summary The Law on Obligations and
Contracts
Bachelor of Science in Accountancy (University of the Assumption)
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86
OBLIGATIONS AND CONTRACTS
REVIEWER
TITLE I – OBLIGATIONS
CHAPTER 1
GENERAL PROVISIONS
1156. An obligation is a juridical necessity to give, to
do, or not to do.
JURIDICAL NECESSITY – juridical tie; connotes that in case of
noncompliance, there will be legal sanctions.

An obligation is nothing more than the duty of a
person (obligor) to satisfy a specific demandable
claim of another person (obligee) which, if breached,
is enforceable in court.

A contract necessarily gives rise to an obligation but
an obligation does not always need to have a
contract.
DAMAGES – sum of money given as a compensation for the
injury or harm suffered by the obligee for the violation of his
right.
KINDS OF OBLIGATION
A. From the viewpoint of “sanction” (a) CIVIL OBLIGATION – that defined in Article
1156; an obligation, if not fulfilled when it
becomes due and demandable, may be
enforced in court through action; based on
law; the sanction is judicial due process
(b) NATURAL OBLIGATION – a special kind of
obligation which cannot be enforced in court
but which authorizes the retention of the
voluntary payment or performance made by
the debtor; based on equity and natural law.
(i.e. when there is prescription of duty to
pay, still, the obligor paid his dues to the
obligee – the obligor cannot recover his
payment even there is prescription) the
sanction is the law, but only conscience had
originally motivated the payment.
(c) MORAL OBLIGATION – the sanction is
conscience or morality, or the law of the
church. (Note: If a Catholic promises to hea r
mass for 10 consecutive Sundays in order to
receive
P1,000, this obligation becomes a
civil one.)
B. From the viewpoint of subject matter (a) REAL OBLIGATION – the obligation to give
(b) PERSONAL OBLIGATION the obligation to
(c) NEGATIVE OBLIGATION – the obligation not
to do (which naturally inludes not to give)
D. From the viewpoint of persons obliged “sanction” (a) UNILATERAL – where only one of the parties
is bound (e.g. Plato owes Socrates P1,000.
Plato must pay Socrates.)
(d) BILATERAL – where both parties are bound
(e.g. In a contract of sale, the buyer is
obliged to deliver)
- may be:
(b.1) reciprocal
(b.2) non-reciprocal – where performance by one is nondependent upon performance by the other
ELEMENTS OF OBLIGATION
a)
ACTIVE SUBJECT – (Creditor / Obligee) the person who
is demanding the performance of the obligation;
b)
PASSIVE SUBJECT – (Debtor / Obligor) the one bound to
perform the prestation or to fulfill the obligation or duty;
c)
PRESTATION – (to give, to do, or not to do) object;
subject matter of the obligation; conduct required to be
observed by the debtor;
d)
EFFICIENT CAUSE – the JURIDICAL TIE which binds the
parties to the obligation; source of the obligation.
e)
CAUSA (causa debendi/causa obligationes) - why
obligation exists
PRESTATION (Object)
1. TO GIVE – delivery of a thing to the creditor (in sale,
deposit, pledge, donation);
2. TO DO – covers all kinds of works or services
(contract for professional services);
3. NOT TO DO – consists of refraining from doing some
acts (in following rules and regulations).
Requisites of Prestation / Object:
1) licit (if illicit, it is void)
2) possible (if impossible, it is void)
3) determinate or determinable (or else, void)
4) pecuniary va lue


INJURY – wrongful act or omission which causes loss
or harm to another
DAMAGE – result of injury (loss, hurt, harm)
1157.
Obligation arises
– (1)
law; (2)punished
contracts;
(3) quasi-contracts;
(4)from
acts or
omissions
by
law; (5) quasi-delicts.
(1) LAW (Obligation ex lege)
imposed by law itself; must
(b) PERSONAL OBLIGATION – the obligation to
do or not to do (e.g. the duty to paint a
house, or to refrain from committing a
nuisance)
C. From the affirmativeness and negativeness of the
obligation (a) POSITIVE OR AFFIRMATIVE OBLIGATION –
the obligation to give or to do
(1) LAW (Obligation ex lege) – imposed by law itself; must
be expressly or impliedly set forth and cannot be presumed
- [See Article 1158]
(2) CONTRACTS (Obligation ex contractu) – arise from
stipulations of the parties: meeting of the minds / formal
agreement
- must be complied with in good faith because it is the “law”
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86
OBLIGATIONS AND CONTRACTS
REVIEWER
between parties; neither party may unilaterally evade his
obligation in the contract, unless:
a) contract authorizes it
b) other party assents
Note:
Parties may freely enter into any stipulations, provided they
are not contrary to law, morals, good customs, public order
or public policy
- [See Article 1159]
(3) QUASI-CONTRACTS (Obligation ex quasi-contractu) –
arise from lawful, voluntary and unilateral acts and which are
enforceable to the end that no one shall be unjustly enriched
or benefited at the expense of another
- 2 kinds:
a. Negotiorum gestio - unauthorized management;
This takes place when a person voluntarily takes
charge of another’s abandoned business or
property without the owner’s authority
b. Solutio in debiti - undue payment; This takes
place when something is received when there is
no right to demand it, and it was unduly
delivered thru mistake
- [See Article 1160]

Code itself.
Special laws – refer to all other laws not contained in
the Civil Code.
1159. Obligations arising from contracts have the force
of law between the contracting parties and should be
complied with in good faith.
CONTRACT – meeting of minds between two persons whereby
one
binds himself,
with some
respect
to the other,
to give,
to doby
something
or to render
service;
governed
primarily
the agreement of the contracting parties.
VALID CONTRACT – it should not be against the law, contrary
to morals, good customs, public order, and public policy.

In the eyes of law, a void contract does not exist and
no obligation will arise from it.
OBLIGATIONS ARISING FROM CONTRACTS – primarily
governed by the stipulations, clauses, terms and conditions of
their agreements.

If a contract’s prestation is unconscionable (unfair)
or unreasonable, even if it does not violate morals,
law, etc., it may not be enforced totally.
(4) DELICTS (Obligation ex maleficio or ex delicto) – arise
from civil liability which is the consequence of a criminal
offense
- Governing rules:
1. Pertinent provisions of the RPC and other penal laws
subject to Art 2177 Civil Code
COMPLIANCE IN GOOD FAITH – compliance or performance in
accordance with the stipulations or terms of the contract or
agreement.
[Art 100, RPC – Every person criminally liable for a felony is
also civilly liable]
2
Chapter 2 Preliminary title on Human Relations
FALSIFICATION OF A VALID CONTRACT – only the
unauthorized insertions will be disregarded; the original terms

Interpretation of contract involves a question of law.
2.
Chapter 2, Preliminary title, on Human Relations
( Civil Code )
3. Title 18 of Book IV of the Civil Code – on damages
- [See Article 1161]
(5) QUASI-DELICTS / TORTS (Obligation ex quasi-delicto
or ex quasi-maleficio) – arise from damage caused to another
through an act or omission, there being no fault or
negligence, but no contractual relation exists between the
parties
- [See Article 1162]
1158. Obligations from law are not presumed. Only
those (1) expressly determined in this code or (2) 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
code.


unauthorized insertions will be disregarded; the original terms
and stipulations should be considered valid and subsisting for
the partied to fulfill.
1160. Obligations derived from quasi-contracts shall be
subject to the provisions of chapter 1, title 17 of this
book.
QUASI-CONTRACT – juridical relation resulting from lawful,
voluntary and unilateral acts by virtue of which, both parties
become bound to each other, to the end that no one will be
unjustly enriched or benefited at the expense of the other.

There is no consent - consent is PRESUMED.
Unless such obligations are EXPRESSLY provided by
law, they are not demandable and enforceable, and
(1) NEGOTIORUM GESTIO – juridical relation
which takes place when somebody
voluntarily manages the property affairs of
another without the knowledge or consent
of the latter; owner shall reimburse the
gestor for necessary and useful expenses
cannot be presumed to exist.
The Civil Code can be applicable suppletorily to
obligations arising from laws other than the Civil
incurred by the latter for the performance of
his function as gestor.
(2) SOLUTIO INDEBITI – something is received
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