OBLIGATIONS

and
CONTRACTS

Atty. Robert V. Labe, Jr.

College of Business and Management
Pamantasan ng Lungsod ng Pasig
 CHAPTER 1
General Provisions

Article 1156. An obligation is a juridical necessity to

give, to do or not to do.

Article 1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)
 CHAPTER 1
General Provisions

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.
(1090)

Article 1159. Obligations arising from contracts have the

force of law between the contracting parties and should be
complied with in good faith. (1091a)

Article 1160. Obligations derived from quasi-contracts shall

be subject to the provisions of Chapter 1, Title XVII, of this
Book. (n)
 CHAPTER 1
General Provisions

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. (1092a)

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. (1093a)
 Obligation
- a juridical necessity to give, to do or not to do.

- derived from the Latin word “obligatio” which means a

“tying” or “binding.”

- It is a tie of law or a juridical bond by virtue of which

one is bound in favor of another to render something —
and this may consist in giving a thing, doing a certain act,
or not doing a certain act.

- “a legal relation established between one party and

another, whereby the latter is bound to the fulfillment of a
prestation which the former may demand of him.”
 Article 1156 gives the Civil Code definition of
obligation, in its passive aspect. Our law merely
stresses the duty of the debtor or obligor (he who
has the duty of giving, doing, or not doing) when it
speaks of obligation as a juridical necessity.
 Obligation is a juridical necessity because in
case of non-compliance, the courts of justice may
be called upon to enforce its fulfillment or, in
default thereof, the economic value that it
represents. In a proper case, the debtor may also
be made liable for damages, which represent the
sum of money given as a compensation for the
injury or harm suffered by the creditor or obligee
(he who has the right to the performance of the
obligation) for the violation of his rights.
Nature of obligations under the Civil
Code
Obligations which give to the creditor or
obligee a right of action in courts of justice to
enforce their performance are known as civil
obligations.
They are to be distinguished from natural
obligations which, not being based on positive law
but on equity and natural law, do not grant a right
of action to enforce their performance although in
case of voluntary fulfillment by the debtor, the
latter may not recover what has been delivered or
rendered by reason thereof. (Art. 1423 NCC)
Essential Requisites of an Obligation:

1. A passive subject (called debtor or obligor) or

the person who is bound to the fulfillment of the
obligation; he who has a duty;

2. An active subject (called creditor or obligee)

or the person who is entitled to demand the
fulfillment of the obligation; he who has a
right;
Essential Requisites of an Obligation:

3. Object or prestation (subject matter of the

obligation) or the conduct required to be
observed by the debtor. It may consist in
giving, doing, or not doing. (see Art. 1232.)
Without the prestation, there is nothing to
perform. In bilateral obligations (see Art.
1191.), the parties are reciprocally debtors
and creditors; and
Essential Requisites of an Obligation:

4. A juridical or legal tie (also called

efficient cause) or that which binds or
connects the parties to the obligation. The
tie in an obligation can easily be
determined by knowing the source of the
obligation. (Art. 1157.)
EXAMPLE:
Under a building renovation
contract, A bound himself to
construct a house for B for
P2,000,000.00.
Here, A is the passive subject, B is the
active subject, the building
renovation of the house is the object
or prestation, and the agreement or
contract, which is the source of the
obligation, is the juridical tie.
Suppose A had already constructed
the house and it was the agreement
that B would pay A after the
construction is finished. A, then,
becomes the active subject and B, the
passive subject.
Obligation, right, and wrong (cause of
action) distinguished.

(1) Obligation is the act or performance which the law

will enforce.

(2) Right, on the other hand, is the power which a

person has under the law, to demand from another any
prestation.

(3) A wrong (cause of action), according to its legal

meaning, is an act or omission of one party in violation
of the legal right or rights of another, causing injury to
the latter
Essential elements of cause of action.

(1) Its essential elements are:

(a) a legal right in favor of a person
(creditor/plaintiff) by whatever means and under
whatever law it arises or is created;

(b) a correlative legal obligation on the part of

another (debtor/defendant) to respect or not to
violate said right; and

(c) an act or omission in breach or violation of said

right by the defendant with consequential injury or
damage to the plaintiff for which he may maintain an
action for the recovery of damages or other
appropriate relief.
EXAMPLE:
S rejected or cancelled a contract to sell his property even
before the arrival of the period in the exercise of the option to buy
by the purchaser who has already made a downpayment.

Facts:
S and B entered into a contract to sell, whereby B, after
making a downpayment, was given the option to pay the balance
of the purchase price of a parcel of land. Later, S “rejected the
contract to sell’’ even before the arrival of the period for the
exercise of said option on the ground that the terms and
conditions of the contract are grossly disadvantageous and highly
prejudicial to his interest. S sent two (2) checks to B in an
apparent effort to return the downpayment. S contends that the
complaint was prematurely fi led because at the time of the
institution of the complaint, B has yet to exercise his option under
the “Option of Buyer’’ clause of the contract. Issue: Has B a
cause of action against S for prematurity?
Issue:
Has B a cause of action against S for prematurity?

Resolution:

Yes. All the elements of a cause of action are present.

— First, there is a legal right in favor of B, i.e., the right to
complete the payment of the purchase price should he
choose to do so; there is an obligation on the part of S to
sell the subject property exclusively to B upon full payment
of the purchase price; and there was a breach of S’s
obligation to sell the property, when S rejected the
contract to sell even before B could exercise his option to
buy notwithstanding that he had already made a
downpayment
(2) If any of these elements is absent, the complaint
becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action

(3) A cause of action only arises when the last

element occurs
ART. 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts.
An obligation imposed on a person and the
corresponding right granted to another must be
rooted in at least any of the following sources:

(1) Law. — when they are imposed by the law

itself, e.g., obligation to pay taxes; obligation to
support one’s family (see Art. 195, Family
Code.);

(2) Contracts. — when they arise from the

stipulation of the parties (Art. 1306.), e.g., the
obligation to repay a loan by virtue of an
agreement;
(3) Quasi-contracts. — when they 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
(Art. 2142.), e.g., the obligation to return money
paid by mistake or which is not due. (Art. 2154.) In
a sense, these obligations may be considered as
arising from law;

(4) Crimes or acts or omissions punished by

law. — when they arise from civil liability which is
the consequence of a criminal offense (Art. 1161.),
e.g., the obligation of a thief to return the car stolen
by him; the duty of a killer to indemnify the heirs of
his victim;
(5) Quasi-delicts or torts. — when they arise
from damage caused to another through an act
or omission, there being fault or negligence, but
no contractual relation exists between the
parties (Art. 2176.), e.g., the obligation of the
head of a family that lives in a building or a part
thereof to answer for damages caused by things
thrown or falling from the same (Art. 2193.); the
obligation of the possessor of an animal to pay
for the damage which it may have caused. (Art.
2183.) The enumeration by the law is exclusive;
hence, there is no obligation as defined in
Article 1156, if its source is not any of those
enumerated.