OBLIGATIONS AND CONTRACTS

MA. CHRISTY C. PALLONES

BSECE-5
CHAPTER 1 GENERAL PROVISIONS

Art. 1156. An obligation is a juridical necessity to give, to do or not to do.

 An incomplete definition because it only refers to the debt side; it only refers to the conduct to be
observed by the obligor; there is no debt without credit.

 Complete definition: A juridical relation between two persons, known as the creditor and debtor, whereby
the former can demand from the latter the observance of a determinate conduct and in case of breach, may
obtain satisfaction from the assets of the latter.

 Why is it a juridical necessity? Because the term, “juridical necessity” connotes that in case of
noncompliance, there will be legal sanction. - Note: It covers only civil obligations, not natural
obligations.
 CHARACTERISTICS OF AN OBLIGATION

1. It represents an exclusively private interest

2. It creates ties that are by nature transitory
3. It involves the power to make the juridical tie effective in case of non-fulfilment through an economic
equivalent obtained from the debtor's patrimony.
 TYPES OF OBLIGATIONS:

 a. Civil obligations - those which derive their binding force from positive law, and can be enforced by court
action or the coercive power of public authority.
 b. Natural obligations - refer to those which derive their binding force from equity and natural justice, and its
fulfilment cannot be compelled by court action but depends exclusively on the conscience of the debtor.
 c. Moral obligations - are those which arise from moral law developed by the church and not enforceable in
court. It deals with the spiritual obligation of a person in relation to his God and church
ELEMENTS OF AN OBLIGATION CODE: A P O E
A. Active subject (creditor, obligee)-
 Has the power to demand the prestation; it is he who in his favor the obligation is constituted, established or created;
it is he who has the right to demand.

B. Passive subject (debtor, obligor)

 One who is bound to perform the prestation; passive because without the demand, there will be no action, he has to
wait for the demand from the creditor. Has the juridical necessity of adjusting his conduct to the demand of the
creditor pursuant to the obligatory tie.

 NB: It is not necessary that the active/passive subject (also known as the personal elements of the obligation) be
determinate at the time of the constitution, but they must at least be determinable. When the subject cannot be
determined, the obligatory tie can have no effect.
ELEMENTS OF AN OBLIGATION CODE: A P O E

C. The object or the prestation

 The object is not a thing but a particular conduct of the debtor. It is the subject matter of the obligation which has an
economic value or susceptible to pecuniary substitution in case of noncompliance.

D. Efficient cause or juridical tie between the two subjects

 The vinculum by which the debtor is bound to in favor of the creditor to perform the prestation. It is determined by
knowing the sources of the obligation (Art. 1157)
ELEMENTS OF AN OBLIGATION CODE: A P O E

Note: Additional elements from RAM Notes:

 5. Causa debendi/ obligationes (Castan).--
 This is what makes the obligation demandable. This is the proximate why of an obligation.

 6. Form.--
 This is controversial. This is acceptable only if form means some manifestation of the intent of the parties.
KINDS OF PRESTATION:

 a. “to give” consists of the delivery of a movable or immovable thing which is either determinate (specific) or
indeterminate (generic). This is in order to create a real right, or for the use of the creditor, or for its simple
possession, or in order to return to its owner.

 b. “to do” involves all kinds of work or services whether physical or mental, but in most cases the essence of the
act man not be such, but merely the necessity of concluding a juridical operation, such as, when a person promises
to give a bond.

 c. “not to do” is a negative obligation which consists of abstaining from some act, it includes “not to give”.
REQUISITES OF PRESTATION

1. it must be physically and juridically possible;

2. it must be determinate or at least determinable according to pre-established elements or criteria;

3. it must have a possible equivalent in money or a pecuniary value. (why: so in case of breach, one can demand
damages)
 Article 1157 – Sources of obligation
a. Law;
b. Contracts;
c. Quasi-Contracts;
d. Crimes;
e. Quasi-delicts;

 The enumeration of the sources of obligation is exclusive; no obligation exists if its source is not one of those
enumerated above.
 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 establishes them;
and as to what has not been foreseen, by the provisions of this Book.

 Articles 1158 - 1162 specify the general principles regarding the sources of obligation enumerated in Art. 1157.

 Note: When we say that law is an independent source of obligation, it does not mean that law and human acts
exclude each other completely. The law cannot exist as a source of obligation, unless the acts to which its
principles may be applied exists. But once those acts exist, the obligations arising from them by virtue of law are
entirely independent of the agreement of the parties.

 NB: When the law merely acknowledges the existence of an obligation generated by an act which constitutes a
contract, quasicontract, delict or quasi-delict, and its only purpose is to regulate such obligation which did not
arise from it, the act itself is the source of obligation and not the law. But, when the law creates the obligation, and
the act upon which it is bases is nothing more that a mere factor in determining the moment when it becomes
demandable, then the source of obligation is the law itself. (i.e. a husbands’ obligation to his spouse is not
anchored upon the contract of marriage but on the law which dictates it.)
 Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.

 Known as the Principle of autonomy of will. The parties can stipulate anything (they have the freedom), provided
that the terms of the contract are not contrary to law, public policy or public order.

 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. Since a contract has the force of law between parties, each is
bound to fulfill what has been expressly stipulated therein.

 does not apply to attorney’s contracts: courts can decide whether or not attorney’s fees are reasonable.
 Art. 1164.The creditor has a right to the fruits of the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it until the same has been delivered to him.

 Delivery is essential to acquire real right1.

 WHEN DOES OBLIGATION TO DELIVER ARISE?

 a. Perfection of contract if no term/condition;

 b. From the moment the term/condition arrives if there is a term

 The creditor has a right to the fruits of the thing from the time to deliver it arises. The fruits referred involve only
determinate things.
 Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title
XVII, of this book.

 A quasi-contract is a juridical relation which arises from certain lawful, voluntary and unilateral act/s executed by
somebody for the benefit of another and for which the former must be indemnified to the end that no one shall
be enriched or benefited at the expense of another; It is a kind of contract created without the consent of one
party but whose missing consent is given by law (presumptive consent).

 Characteristics of a Quasi-Contract
 a. The acts executed must be lawful
 b. The acts executed must be voluntary
 c. The acts executed must be unilateral
TWO PRINCIPLE TYPES:

 1. NEGOTIORUM GESTIO- (officious manager) juridical relation which takes place when somebody takes charge
of the agency or management of the business or property of another without any power form the latter. The
owner shall reimburse the gestor for the necessary and useful expenses incurred by the latter, and for the
damages suffered by him in the performance of his functions.

 2. SOLUTIO INDEBITI – a juridical relation which takes place when somebody received something from another
without any right to demand for it, and the thing was unduly delivered through mistake (compared to Art. 22 or
unjust enrichment wherein there was no mistake). Obligation to return the thing arises on the part of the
recipient.
 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.

 Basis is Article 100 of RPC, that every person criminally liable is also civilly liable


 Art. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title
XVII of this Book, and by special laws.


CHAPTER 2- NATURE AND EFFECT OF OBLIGATIONS

Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper
diligence of a good father of a family, unless the law or the stipulation of the parties requires another
standard of care.

 Refers to the obligation to give.

 The obligation to give may refer to a determinate object / thing or to an indeterminate or generic thing.
 A generic thing/ indeterminate thing is one that is indicated by its kinds, without being designated and
distinguished from the others of the same kind. In an obligation to deliver a generic or indeterminate thing, the thing is
determinable and becomes determinate from the time the obligation has been fulfilled or performed. A generic thing is
something which is not particularized or specified but has reference to a class or genus.

 A limited generic obligation is one when a the generic objects are classified to a particular class, i.e. one of my cars

 A Determinate thing is something which is susceptible of particular designation or specification. It is one which is
individualized and can be identified or distinguished form the others of its kind.

Read in relation to Art. 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.When negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply.

 Effect of breach: Liability for damages, unless the loss or damage of the thing is due to a fortuitous event.
 Kinds of fruits: (cf: Property)
 1) Natural
 2) Civil
 3) Industrial

 The moment when the obligation to deliver arises varies in different types of obligations:

 a. In obligations arising form law, quasi-delicts, quasi-contracts and crimes, the specific provisions of law applicable
to the obligation determine when the delivery should be made.
 b. Suspensive conditions attached to an obligation to deliver arises only form the moment the condition happens.

 c. Suspensive periods agreed upon for the performance of the obligation gives rise to its delivery only upon the
expiration of the term.

 d. Pure obligations are immediately demandable

 The right to the fruits of the thing shall only be personal, and only upon the delivery of the thing, its fruits,
accessory and accession shall the creditor acquire a real right over it.
 1 REAL right- is the power belonging to a person over a specific thing, without a passive subject individually
determined, against whom such right may be personally exercised. It gives to a person a direct and immediate
juridical power over a thing, which is susceptible of being exercised against the whole world. There is a need for
tradition or delivery since from the time the obligation to deliver a determinate thing arises, the creditor has only
a personal right. He can only demand that the debtor deliver such thing and its fruit. The delivery or tradition of a
thing constitutes a necessary and indispensable requisite for the purpose of acquiring ownership. The ownership
of things is transferred not by mere agreements but by delivery.
Classes of Delivery or Tradition:

 a. REAL or ACTUAL tradition- This contemplates the actual delivery of the thing from the hand of the grantor to
the hand of the grantee , if it is a personal property. If it is a real property, it is manifested by certain possessory
acts executed by the grantee with the consent of the grantor such as by taking over the property; occupying the
property.
 b. CONSTRUCTIVE tradition- when the delivery of the thing is not actual but representative or symbolical in
essence. But there must be intention to deliver the ownership.

 Kinds of CONSTRUCTIVE TRADITION:

 i. Tradicion Symbolica- delivery of certain symbols or things representing the thing to be delivered such as keys,
titles.

 ii. Tradicion Instrumental – consists in the delivery of the instrument of conveyance to the grantee by the grantor.

 iii. Tradicion Longa Manu – consists in the pointing to a movable property within sight by the grantor to the
grantee but which at the time of the transaction, the thing could not be placed yet in the possession of the
grantee.

 iv. Tradicion Brevi Manu – consists in the grantee’s continuation of his possession over the thing delivered but now
under a title of ownership as in case of a lessee who had purchased the property leased to him. (Jovellanos)
 v. Tradicion Constitutum Possessorium – consists in the owner’s continuous possession of the property he had
sold to another person and his present possession thereof is no longer that of the owner but of a lessee.

 vi. Tradicion by operation of law – consists in the delivery of the thing by operation of law such as intestate
succession

 vii. Quasi-Tradicion- consists in the delivery of incorporeal property.

 Art. 1156. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted
to him by article 1170, may compel the debtor to make the delivery.

If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of
the debtor.

If the obligor delays, or has promised to deliver the same thing to 2 or more persons who do not have the
same interest, he shall be responsible for any fortuitous event until he has effected the delivery.

RULES:

OBLIGATION TO DELIVER REMEDY 1. Determinate thing Creditor may compel debtor to deliver 2. Indeterminate or generic thing Creditor may ask for compliance at the expense of the
debtor

REMEDIES OF CREDITOR

a. Demand for specific performance - This action presupposes that it is based on a contractual relationship between the contending parties. Specific performance is available even if the thing
to be delivered is indeterminate. b. Rescission of the obligation which is under Art. 1380. c. Resolution of the contract under Art. 1191 if it is a reciprocal obligation. d. Damages exclusively
or in addition to either of the first actions.

General Rule: Obligation to deliver a specific thing is extinguished by fortuitous event; Indeterminate thing is however not extinguished.

Exceptions: 1. If obligor delays or in default; 2. Obligor is guilty of bad faith;