THE LAW ON OBLIGATIONS

Law Governing Obligations in the Philippines in General

－Article 1156-1304 of Republic Act No. 386

－The New Civil Code became effective on August 30, 1950

－The said code did not undergo any changes since 1950

MEANING OF OBLIGATION AND ITS ESSENTIAL ELEMENTS

 Definition of OBLIGATION

－from the Latin word obligatio or obligare meaning “to tie” or “to bind”

－“a juridical necessity to give, to do, or not to do” (Article 1156)

 Significance of the term “JURIDICAL NECESSITY”

－it means “enforceable in court”. It signifies that the creditor can sue in court if the obligation is not performed by the debtor.

 Difference between CIVIL OBLIGATIONS and NATURAL OBLIGATIONS

CIVIL OBLIGATION NATURAL OBLIFATION

- based on positive law - based on natural law

- the creditor can sue in court if the - the creditor is not given the right to sue
obligation is not performed (enforceable in court if the obligation is not performed
in court) (not enforceable in court)

 ESSENTIAL ELEMENTS of Civil Obligation (P.A.L.O.)

 P- passive subject－ the “debtor” or “obligor” (has the duty)

→ the party to be sued in case the obligation is not performed

 A- active subject－ the “creditor” or “obligee” (has the right)

→ the party given by law the right to sue in court if the obligation is not performed by debtor

 L- legal tie－ also referred as “juridical tie”, “vinculum juris”, or “efficient cause”

→ it is what binds or ties the debtor and the creditor in the performance of the obligation

→ the source of the obligation

 O- object－ or prestation, the subject matter of the obligation

→ it can be in the form of obligation to give, obligation to do, or obligation not to do

SOURCES OF OBLIGATION

I. LAW
－the principal source of obligations

－it means, in a general sense, a body or rules of action or conduct prescribed by controlling authority and having binding
legal force or that which must be obeyed and followed by citizens subject to sanctions or legal conditions

－it is a rule of civil conduct prescribed by supreme power in the state, commanding what is right and prohibiting what is
wrong

 Kinds of Law

 State Law

 Constitution

 Statutes

 Civil Law

 Commercial Law

 Criminal Law

 Remedial Law

 Non State Law

 Divine Law

 Natural Law

 Moral Law

 Physical Law

 General Principles and Concepts

 Ignorance of the law is not an excuse (Ignorantia Legis Non Excusat) － every individual is conclusively presumed
to know the law

 Obligations arising from law are not presumed (Article 1158)

 The law looks forward and not backward (Lex Propicit Non Respicit) － generally, laws have prospective effects,
they affect only things which happen after their effectivity and not before

 Any statute which violates the Constitution can be judicially declared as unconstitutional and therefore void

 Examples of Obligations arising from Law

 Income earners’ obligation to pay income taxes to the government.

 Doctor’s obligation to indicate the generic name of the medicine he is prescribing to his patients.

 Employer’s obligation to pay minimum wages, holiday pay and overtime pay.

 Businessmen’s obligations to secure business permits.

 Construction companies’ obligation to secure building permit before constructing a building.

 Parent’s obligation to support their children.

II. CONTRACT

－ “Meeting of minds between two persons whereby one binds himself with respect to the other, to give something or to
render some service.” (Article 1305)

 Kinds of Contracts

 As to PERFECTION

a) Consensual－ perfected by mere consent

b) Formal－ perfected by observing certain formalities required by law

c) Real－ perfected by the delivery of the object

 As to INDEPENDENCE

a) Principal－ can exist independently of other contracts

b) Accessory－ its existence depends on the existence of another account

 As to EXISTENCE of CONSIDERATION

a) Onerous－ for a consideration

b) Gratuitous－ without any consideration, gift

c) Remunerative－ consideration is service

 As to whether it has a NAME or DESIGNATION

a) Nominate－ specific designation which differentiates it from other contracts

b) Innominate－ without any special name to distinguish it from other contract

 Do ut Facias－ I give that you may do

 Facio ut Des－ I do that you may give

 Facio ut Facias－ I do that you may do

 Do ut Des－ I give that you may give, barter

 As to NUMBER OF OBLIGATIONS CREATED

a) Bilateral－ both parties have obligation

b) Unilateral－ only one party is obliged

 As to EXISTENCE of DEFECT

a) Perfectly Valid

b) Defective
  Imperfectly Valid－ defective but capable of producing legal effects

 Rescissible－ valid until annulled and its defect is economic in nature

 Voidable－ valid until annulled and its defect has to do with consent

 Unenforceable－ valid but cannot be sued upon in court

 Void－ non-existing and thus, cannot produce effect

 General Principles and Concepts

 The essential elements of a contract are CONSENT, SUBJECT, CAUSE. In the absence of any of these three
elements, there will be no existing contract.

 Most contracts are perfected by mere consent.

 A void contract does not exist and cannot produce any legal effect whatsoever.

 The contract is the law between the contracting parties and thus must be complied with in good faith.

 Examples of Obligations arising from Law

 Debtor’s obligation to pay debt (Contract of Loan)

 Buyer’s obligation to pay the price of what he bought (Contract of Sale)

 Tenant’s obligation to pay rentals (Contract of Lease)

 Employer’s obligation to pay wages (Contract of Employment)

 Passenger’s obligation to pay his fares (Contract of Transportation)

 Bank’s obligation to pay interest on bank deposits (Contract of Loan, Mutuum)

III. QUASI-CONTRACT

－a juridical relation arising from certain lawful, voluntary, and unilateral acts to the end that no one shall be unjustly
enriched or benefited at the expense of the other (Article 2142)

－consent is absent in quasi-contract unlike in contracts

 Kinds of Quasi-Contract

 Negotiorum Gestio－the voluntary management of an abandoned or neglected business or property of another

without its owner’s consent (Article 2144)

 Solutio Indebiti (Mistake in the Payment)－such as when the seller erroneously overpaid the buyer his change or
when a taxpayer mistakenly pays the Government taxes which he is not obliged by law to pay (Article 1254)

 Other Kinds of Quasi-Contract

 Obligation to return a lost property (Article 2171)

 “When during 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.” (Article 2168)

 “Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter.”
(Article 2175)
  General Principles and Concepts

 The purpose of quasi-contract is to prevent unjust enrichment

 For an obligation arising from quasi-contract to exist, the act done must be lawful, voluntary, and unilateral

 Examples of Obligations arising from Law

 Obligation of the patient who was brought to the hospital unconscious to pay his medical bills for the treatment
given to him by the said hospital.

 Government’s obligation to refund overpayment of taxes.

 Obligation to refund the amount paid together with its fruits and interest by an obligor who paid before the arrival of
the period of the said debt unaware of the said debt unaware of the said period or under the belief that the obligation
had become due and demandable already. (Article 1195)

IV. DELICT

－also called “Felony” or “Crime”

－an act or omission punishable by law (Article 3, Revised Penal Code)

 Kinds of Delict

 Mala en se (wrong by itself)－inherently wrong, it is still bad even if we remove the law penalizing the act as a
crime

 Mala prohibita (wrong because prohibited by law)－it is bad or evil only because there is a law punishing it as a
crime

 General Principles and Concepts

 For a delict to be a source of an obligation, there must be an overt act done and the said act must be punishale by
law as a crime

 Delict gives rise to two kinds of obligation:

(1) Civil Obligations- to pay damages to the victim

(2) Criminal Obligation- to go to jail

 If the act is justified by law, there will be no civil or criminal liability

 If an act is merely exempted by law from criminal liability, civil liability may still be recovered.

 Examples of Obligations arising from Law

 Thief’s obligation to return the cellphone he stole

 Rapist’s obligation to pay damages to the victim

V. QUASI-DELICT

－also called “Torts”

－so called a legal wrong committed through fault or negligence on the person or property of another independent of contract

 Kinds of Delict

 Single tortfeasor－only one is liable

 Joint tortfeasor－more than one are liable

 General Principles and Concepts

 Quasi-delict or torts is unintentional unlike delict which is intentionally committed

 Proximate Cause Doctrine－no damages can be recovered if the immediate and proximate cause of the victim’s
injury is his very own negligence

 Contributory Negligence－if the victim’s negligence is not the proximate cause of his injury but is merely
contributory to it, he can still recover damages but it will be reduced

 Doctrine of Last Clear Chance－the one who has the last opportunity to prevent the harm done but fails to do so is
the one liable for damages

 If there is a contract existing between the party causing the injury and the injured party, the source of obligation is
not quasi-delict but contract.

 Another word for quasi-delict is culpa aquillana or civil negligence.

 Examples of Obligations arising from Law

 Government’s obligation to pay damages to a passerby who fell into an open manhole.

 Driver’s obligation to pay damages to a pedestrian who was injured by his reckless driving.

 Dog owner’s obligation to pay for medical bills of persons bitten by his dog.

 Manufacturer’s obligation to pay damages to consumers injured by its harmful products.