Article 1156 - Definition of Obligation
An obligation is defined as a juridical necessity to give, to do, or not to do something.
- Juridical necessity – something necessary or required by law
Article 1305 - Definition of Contract
A contract is a meeting of minds between two persons, whereby one binds himself, with respect to
the other, to give something or to render some service.
Elements of Obligation
1. Active Subject (Obligee/Creditor)
- The person who has the right to demand the fulfillment of the obligation.
2. Passive Subject (Obligor/Debtor)
- The person who is bound to perform the obligation.
3. Prestation
- The subject matter of the obligation; it refers to what is to be done, not done, or given.
4. Efficient Cause
- The legal tie or vinculum juris that binds the parties and creates the obligation, arising from law,
contract, or other sources.
Sources of Obligation (Article 1157)
1. Law - Obligations that are imposed by law itself, even without the consent of the parties.
- is never presumed
Ex. Parents are obligated to send their children in school (family code)
Paying income taxes on or before April15 of the year (NIRC-National Internal Revenue Code)
2. Contracts
- Arise from agreements between parties, which become the law between them as long as they
are not contrary to law, morals, good customs, public order, or public policy.
- meeting of minds between the parties
- binds both contracting parties
- it has the force of law between parties
Ex. Marriage Contract – highest form of contract and foundation of the country or nation
3. Quasi-Contracts
- Arise from lawful, voluntary, and unilateral acts that result in the enrichment of one party at the
expense of another (e.g., negotiorum gestio or solutio indebiti).
- almost a contract. but not really a contract
- “do not enriched yourself at the expense of others”
Solutio Indebiti – you receive something when you have no right to receive it
Ex. Mistakenly receive a change
Negotiorum Gestio – When a person manages another’s affairs without their consent but
in their best interest, the law may require reimbursement of expenses incurred.
- unaothorized management
- Ex. Obligated to share a portion of shares to the owner of the land
4. Acts or Omissions Punished by Law (Delicts or Crimes)
- Arise when a person commits a criminal offense and is civilly liable for restitution, reparation, or
indemnification.
- for every crime there is two component
o Civil Liability Component – payment of damages
o Criminal Liability Component – imprisonment of a person
- affidavit of desistance – no longer filing a criminal case
5. Quasi-Delicts (Torts)
- Arise from acts or omissions that cause damage to another through fault or negligence but
without a preexisting contractual relationship.
- almost a crime but not really a crime
- has three elements; negligence, damage or injury & no pre-existing relationship between the
parties, they must be all present.
Innominate Contracts
Contracts that do not have specific names under the law but are enforceable based on equity.
These are governed by the general principles of obligations and contracts. Applied on a case to
case basis.
1. Do ut des
- "I give that you may give."
- Example: Exchange of goods (barter).
2. Do ut facias
- "I give that you may do."
- Example: Payment for a service (e.g., hiring a professional).
3. Facio ut des
- "I do that you may give."
- Example: Performance of an act in exchange for payment.
4. Facio ut facias
- "I do that you may do."
- Example: Reciprocal services (e.g., collaboration between professionals).
Damnum Absque Injuria
- Latin for “damage without injury” means that even though damage occurred, there is no
civil liability because no wrongful act was committed under the law.
1163 - General Rule on Diligence
- Obligation to exercise the diligence of a "good father of the family" (bonum pater familia)
means acting with ordinary prudence and care. Always perform an obligation. Doing what is
basically correct without being told so
Exceptions:
1. When the law requires a different standard of care (e.g., professionals like doctors have a
higher duty).
2. When the parties agree to a different standard (stipulation in a contract).
1164 - Rights & Delivery
Personal Right – A right against a specific person (e.g., right to demand payment from a debtor).
Real Right – A right enforceable against the world (e.g., ownership of property).
Kinds of Delivery:
Actual Delivery – Physical transfer of the thing.
Constructive Delivery – Transfer of ownership/control without physical handover.
INCHOATE RIGHT – right that has not been ripened
Types of Constructive Delivery:
1. Traditio Simbolica – Delivery through a symbolic act (e.g., handing over keys to a house).
2. Traditio Longa Manu – Delivery by mere pointing or showing of the object. Indirect transfer of
ownership.
3. Traditio Brevi Manu – Transferring ownership of an item to someone who already has a physical
control of it. In latin it means “brief delivery or convinient.
4. Traditio Constitutum Possessorium – refers to an agreement to transfer possession of property
while retaining control of it.
5. Tradition by Execution of Legal Forms – Ownership transfer through a legal document.
1165 - Delivery of a Specific Object
A specific object is uniquely identifiable (e.g., "Honda Vios 2020 model with plate 123" or
"Obligations and Contracts book, 2020 edition by De Leon").
If a debtor fails to deliver a specific object, the creditor may seek:
1. Specific Performance
A remedy where the court compels the breaching party (the debtor) to perform exactly as
agreed in the contract.
Typically used when the subject matter is unique or when monetary damages wouldn’t
adequately compensate the non-breaching party.
o E.g. Unique Art or Real Estate: Imagine a buyer contracts to purchase a one-of-a-kind
painting or a specific parcel of land. Because such items have unique qualities that can’t be
readily replaced, if the seller refuses to deliver, the buyer might seek a court order for
specific performance to force the sale.
2. Cancellation of the Obligation (Rescission)
This remedy effectively nullifies the contract, releasing both parties from any further
obligations under the agreement.
It’s often used when there’s a fundamental flaw in the contract—such as fraud,
misrepresentation, or mutual mistake—making the agreement voidable.
o E.g. Fraudulent Transactions: Suppose a buyer enters into a contract based on false claims
about a product’s quality. If it turns out that the information was misleading or fraudulent, the
buyer could ask the court to cancel (rescind) the contract, thereby returning both parties to
their positions before the contract was made.
3. Damages
Monetary compensation awarded to the non-breaching party for losses resulting from the
breach of contract.
Damages are meant to put the injured party in the position they would have been in had the
contract been fully performed.
Types of Damages:
o Expectation Damages: Cover the benefit that was expected from the contract.
o Reliance Damages: Reimburse costs incurred in reliance on the contract.
o Restitution Damages: Aim to prevent the breaching party from being unjustly enriched.
E.g. Failure to Deliver Goods: If a seller fails to deliver a unique collectible, and a buyer
suffers a loss (for instance, losing an opportunity to acquire the item at a good price), the
buyer might seek damages to cover the difference between the contract price and the
current market value, or other losses incurred due to the breach.
