OBLIGATIONS AND CONTRACTS

General Nature of Law

- A law is any rule of action or any system of uniformity. Applicable not only in the activities of men but also
through science.
- Divided in two general groups:
 Law in a legal sense – state law
 Law in a non-legal sense – divine, natural, moral and physical law.
State Law
- Promulgated and enforced by the state
- Mass obligatory rules for governing persons
- Rule of conduct, just obligatory, promulgated by legitimate authority and of common observance and benefit
- A positive Law, Municipal Law, Civil Law
- And Imperative Law
- Enforced by the state
Necessity and Function of Law
Law secures justice, resolves social conflict, orders society, protects interests, controls social relations.
Life without laws is destructive
Life without laws is less orderly, less healthful and less wholesome.
Sources of Law
Constitution – 1987 Constitution of the Philippines
- Written instrument by which the fundamental powers of the government are established, limited and defined,
and by which these powers are distributed among the several departments for their safe and useful exercise for
the benefit of the people
- Fundamental law of the land, Supreme Law, highest law, promulgated by the people and binding to all
Legislation – Declaration of laws enacted by a competent authority.
Administrative or executive orders, regulations and rulings – Issued by administrative officials (executive) under
legislative authority. Intended to clarify or explain the law and carry into effect its general provisions.
Judicial Decisions or Jurisprudence – The decisions of the Supreme Court, applying or interpreting the laws of the
Constitution form part of the legal system of the Philippines. The decision of the Supreme Court on a point of law are
binding on all subordinate courts, doctrine of precedent or stare decisis.
Custom – Consists of habits and practices which through long and uninterrupted usage have become acknowledged and
approved by society as binding rules of conduct. It must be proven as a fact. May be applied in courts in the absence of
law or statute exactly applicable to the controversy.
Other sources – principles of justice and equity, decisions of foreign courts, opinion.
Interpretation / Statutory Construction
“No judge or court shall decline to render judgment by reason of silence, obscurity or insufficiency of laws” (Art 9, Civil
Code).
“In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and
justice to prevail” (Art. 10, Civil Code).
 Classifications of Law
 As to purpose:
- Substantive Law – body of law creating and defining rights and duties which may be either public or private in
character. Ex. Obligations and Contracts, Sales, Negotiable Instruments, etc.
- Adjective/Remedial Law – body of law prescribing the manner or procedure by which rights may be enforced or
their violations redressed.
 As to subject matter
- Public Law – body of legal rules which regulates the rights and duties arising form the relationship of the state to
the people. Ex. Constitutional Law, Criminal Law, Taxation Law, etc.
- Private Law – body of rules which regulates the relations of individuals with one another for purely private ends.
Ex. Civil Law, Commercial Law, Mercantile Law, and Civil Procedure.
Law on Obligations and Contracts definition
- Body of rules which deals with the nature and sources of obligations and the rights and duties arising form
agreements and particular contracts. (Art. 1307 Civil Code).
- This is found in RA 386 otherwise known as Civil Code of the Philippines. Which we copied from Spanish Civil
Code.
- Article 1156-1304 (Obligations)
- Article 1305-1422
Presumptions of Law
“Ignorantia legis neminem excusat” (Art. 3)
- If not binding without being known to others, it will be impossible to enforce.
- It is impossible to prove the contrary when a person claims ignorance of the law.
 - We cannot absolve those who do not know the law and give obligations to those who know.
- We have norms of right and wrong
- There will be evasion of law *Laws take effect after 15 days following completion of its publication in the Official
Gazette or newspaper of general circulation. Publication is indispensable.
Obligations (Art. 1156-1304)
Art.1156 – Defines an obligation.
- A tie or bond recognized by law 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.
- Stresses the duty under the law of the debtor or obligor when it speaks of obligation as a juridical necessity.
- Juridical necessity because in case of non-compliance, the courts of justice may interfere.
Example – Gaya bought a refrigerator from Tito but Gaya did not pay the refrigerator. If after demand, Gaya still did not
pay, Tito can sue Gaya in Court either to demand payment or for recovery of the refrigerator.
Obligations which give to the creditor or obligee a right under the law to enforce their performance in courts of justice
are known as Civil Obligations.
Essential Requisites of an Obligation
Passive Subject (debtor or obligor) – person bound to fulfill the obligation. He who has the duty.
Active Subject (creditor or obligee) – person entitled to demand the fulfillment of the obligation. He who has a right.
Object (subject matter) – conduct required to be observed by the debtor/obligor.
Juridical/legal tie (efficient cause) – that which binds or connects the parties (Source)
Forms of Obligations
The form of an obligation refers to the manner in which an obligation is manifested or incurred. It may be oral, or in
writing, or partly oral and partly in writing.
- As a general rule, the law does not require any form in obligations arising from contracts for their validity or
binding force (Art 1356)
Obligation, legal right, wrong (cause of action)
Obligation is the act or performance which the law will enforce.
Right (legal right) is the power which a person has under the law, to demand from another any prestation or object.
Wrong (cause of action) is an act or omission of one party in violation of the legal right or rights of another. Legal right in
favor of an obligee, legal obligation on the part of the obligor to respect such right.
Kinds of Obligation (Subject Matter)
Real Obligation (obligation to give) – is that in which the subject matter is a thing which the obligor must deliver to the
obligee.
Personal Obligation (obligation to do or not to do) – is that in which the subject matter is an act to be done or not to be
done. Positive and negative obligation.
Sources of Obligations
Law – imposed by law itself. Example, Taxes and support.
Contracts – when it arises from stipulations of the parties. Example, Loan, build a house, etc.
Quasi Contracts – when they arise from lawful voluntary and unilateral acts which are enforceable to the end that no
one shall be unjustly enriched and benefited at the expense of another. Solutio Indebiti, Negotiorum Gestio.
Delict/Crimes/Acts or omissions punished by law – when they arise from civil liability which the consequence of a
criminal offense.
Quasi-delict/Quasi Crime/Torts – when they arise from damage caused to another through an act or omission, there
being fault or negligence but not contractual relations exist between the parties. Obligations of a dog and building
owner.