OBLIGATIONS AND CONTRACTS

REVIEWER ON THE CIVIL CODE BOOK IV ]

I. OBLIGATIONS
A. General Provisions
1. Definition
a) Obligation – According to Civil Code, Article 1156 “Obligation is the Juridical
Necessity to give, to do or not to do.”
b) Juridical Necessity – when there is non-compliance, the court of justice may be
called upon for its fulfillment.
c) Right – the power which a person has under the law, to demand any prestation
d) 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
[see Bachrach Corporation vs. Court of Appeals, 296 SCRA 487 (1998) ; Dela Rosa Vs.
Mendiola, 401 SCRA 704 (2003).]
(1) Essential elements of a cause of action / wrong
(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;
(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. [ see Ma-ao Sugar
Central Co. Vs. Barrios, 79 Phil. 66 (1948); Teves Vs. People’s Homesite and
Housing Corp., 23 SCRA 1141 (1948); Development Bank of the Philippines Vs.
Court of Appeals, 269 SCRA 727 (1997); Nadela Vs. City of Cebu, 411 SCRA
315 (2003).]
(2) If any of this is absent, the complaint becomes vulnerable to a motion to dismiss
on the ground of failure to state a cause of action. [San Lorenzo Village Assoc., Inc. Vs.
Court of Appeals, 288 SCRA 115 (1998); Uy Vs. Evangelista, 361 SCRA 95 (2001).]
(a) The Presence of a cause of action rests on the sufficiency, and not on the
veracity, of the allegations in the complaint, which will have to be examined during
the trial of merits. [Pioneer International Ltd. Vs. Guadiz, Jr., 535 SCRA 584
(2007).]
(i) The test is whether the material allegations of the complaint,
assuming to be true, state ultimate facts which constitutes plaintiff’s
cause of action such that plaintiff is entitled to a favorable judgment as a
matter of law. [ Rovels Enterprises, Inc. Vs. Ocampo, 391 SCRA 176
(2002).]
(3) A cause of action only arises when the last element occurs, at the moment a right
has been transgressed.
 (a) It is to be distinguished from right of action or the right to commence and
maintain an action, in that the former [cause of action] is governed by the
procedural law while the latter [right of action] depends on substantive law.
(i) The right of action springs from the cause of action, but it does
not accrue until all the facts constitute the cause of action have occurred.
[Multi-Realty Dev. Corp. Vs. Makati Tuscany Condominium Corp., 491
SCRA 9 (2006); Borbe Vs. Calalo, 535 SCRA 89 (2007).]
(a) The action shall be brought in the name of the party who by
law is entitled to the right to be enforced.
(b) An obligation on the part of a person cannot exist without a corresponding
right existing in favor of another, and vice-versa, for every right enjoyed by a
person, there is a corresponding obligation on the part of another to respect such
right.
e) Injury – is the illegal invasion of a legal right
(1) It is the wrongful act or omission which causes loss or harm to another
(2) It is the legal wrong to be redressed.
f) Damage – is the loss, hurt, or harm which results from the injury
g) Damages – denote the sum of money recoverable as amends for the wrongful act
or omission.
(1) The recompense or compensation awarded or recoverable for the damage or loss
suffered. [ Custodio Vs. Court of Appeals, 253 SCRA 483 (1996).]
h) There may be Injury without damage and damage without Injury.
(1) Proof of loss for injury. – A wrongful violation of legal right is not sufficient to
entitle a person to sue another in a court of justice for the enforcement or protection of said
right.
(a) As a rule, there must be, in addition, loss or damage caused to him by the
violation of his right.
(i) But except for actual or compensatory damages [ Art. 2199], no
pecuniary proof is necessary in order that moral, nominal, temperate,
liquidated, or exemplary damages may be awarded. [Art. 2216]
(2) Liability for damages of a person for excercising his legal rights- A person has the
right to take all legal steps to enforce legal and/or equitable rights. One who makes use of
his legal right does no injury.
(a) qui jure suo utitur mullum damnum facit. If damage result from a person\s
excersis

2. Essential Requisites
a) Vinculum Juris / Juridical Tie
(1) The Efficient Cause
(2) The Reason why Obligation Exists.
b) Object / Prestation
(1) The subject matter of the obligation.
 c) Active Subject
(1) Called the Obligee or Creditor
(2) The possessor of a right;
(3) He in whose favor the obligation is constituted.
d) Passive Subject
(1) Called the Obligor or Debtor
(2) He who has the duty of giving, doing, or not doing
e) Form
(1) The Manner in which the obligation is manifested
(2) Note: There is no particular form, Except in Rare Cases, to make obligations
binding.

3. Sources
a) Law [Obligations Ex Lege]
b) Contracts [Obligations Ex Contractu]
c) Quasi-Contracts [Obligations Ex Quasi-Contractu]
d) Delicts / Crimes [Obligations Ex Maleficio or Ex Delicto]
e) Quasi-Delicts [Obligations Ex Quasi-Delicto or Ex Quasi-Maleficio]
f) Criticism of the Enumeration Listed Down by the Law
(1) The Enumeration is not scientific because in reality there are only two sources:
The law and Contracts, because obligations arising from Quasi-Contracts, Crimes, Quasi-
Delicts are really imposed by the law. [Leung Ben Vs. O’Brien, 38 Phil. 182]

4. Kinds of Obligations
a) From the Viewpoint of “Sanction”
(1) Civil Obligation / Perfect Obligation
(a) That Define in Art. 1156. The Sanction is Judicial Process
(2) Natural Obligation
(a) The duty not to recover wat has voluntarily been paid although payment
was no longer required.
(b) The sanction is the law.
(3) Moral Obligation / Imperfect Obligation
(a) The sanction here is conscience or morality
b) From the viewpoint of subject matter
(1) Real Obligation
(a) The Obligation to give.
(2) Personal Obligation
(a) The obligation to do or not to do.
c) From the affirmativeness and negativeness of the obligation
(1) Positive / affirmative Obligation
 (a) The obligation to give or to do
(2) Negative Obligation
(a) The obligation not to do
(3) From the viewpoint of persons obliged
(a) Unilateral
(i) where only one of the parties is bound.
(b) Bilateral
(i) Where both parties are bound
(a) Note: Bilateral obligation may be:
(i) Reciprocal
(ii) Non-Reciprocal – where performance by one is
non-dependent upon performance by the other.
5. Criticism of the Definition by the Code
a) Art. 1156 – stress merely duty of the debtor (passive element) without emphasizinga
corresponding right on the part of the creditor (active element).
(1) The Definition of Arias Ramos: “An Obligation is a juridical relation whereby a
person (called the creditor) may demand from another (called the debtor) the observance
of a determinative conduct (the giving, doing or not doing), and in case of breach, may
demand satisfaction from the asset of the latter.”
(a) [Note: This definition is accurate because it views “obligation” from a
“total” standpoint (both active and passive viewpoint).]

6. Cases
a) Pedro Vs. Lauron [ 12 Phil. 453]
(1) FACTS: A wife was about to deliver a child. Her parents-in-law called the doctor.
(2) ISSUE: Who should pay the doctor: the husband or the parents?
(3) HELD: The Husband should pay, even if he was not the one who called the doctor.
It is his duty to support the wife, and support includes medical attendance. The duty to pay
is an obligation to give, and is imposed by the law.
b) Poss vs. Gottlieb [193 N.Y.S. 418]
(1) FACTS: There were two partners engaged in buying and reselling land. After they
had bought a piece of land, one asked the other to sell the latter’s share to him for the price
invested by the latter. The first partner, who now completely owned the land, resold it at a
huge profit to a third person. The second partner would not have sold his share had he
known that a big offer had been made by such third person. The first partner alleged that
he should not blamed on the ground that he, after all did not tell the latter that nobody
wanted the land.
(2) ISSUE: May the second partner successfully bring an action for damges against
the first partner?
 (3) HELD: Yes, because the first partner is liable. He had the duty not only to make
any false concealment but also to abstain from all kinds of concealment insofar as the
partnership was concerned. This is an obligation to do (to relay pertinent information0.
c) Joaquin P. Nemenzo vs. Bernabe Sabillano [L-20977, Sept, 7, 1968]
d) Leonide Pengson Vs. Court of Appeals [GR L-65622, Jun, 29, 1984]
e) Phil. National Bank Vs. Court of Appeals [74 SCAD 786] (1996)
f) Heirs of Luis Bacus, et al. Vs. CA&Spouses Faustino and Victoriana Duray [GR
127695, Dec. 3, 2001]
7. Articles Mention
a) ARTICLE 1156
b) ARTICLE 1157
c) ARTICLE 1158
d) ARTICLE 1159
e) ARTICLE 1160
f) ARTICLE 1161
g) ARTICLE 1162
B. Nature and Effect of Obligation
1. Articles Mention
2. Cases
3. Prestation
4. Diligence of a Good Father of a Family
5. Fruits
6. Delivery and Compliance
C. Classification of Obligations
1. Pure and Conditional Obligation
a) Pure Obligation
b) Conditional Obligation
c) Suspensive Condition
d) Resolutory Condition
e) Potestative, Casual or Mixed Condition
f) Impossible, Immoral and Unlawful Obligation
g) Loss or Deterioration
h) Cases
i) Articles mention
2. Obligation with a period
a) Day Certain
 b) Benefit of the Period
c) Cases
d) Articles Mention
(1)

3. Alternative and Facultative Obligation

a) Right of Choice
b) Limitation on Right of Choice
c) Responsibility of Debtor
d) Facultative
e) Cases
f) Articles Mention
(1)

4. Joint and Solidary Obligation

a) Joint Obligation
b) Solidary Obligation
c) Cases
d) Articles Mention
(1)

5. Divisible and Indivisible Obligation

a) Divisible Obligation
b) Indivisible Obligation
c) Cases
d) Articles Mention
(1)

6. Obligation with a Penal Clause

a) Penal Clause
b) Cases
c) Articles Mention
(1)

D. Extinguishment of Obligation
1. Payment or Performance
2. Loss of the thing Due
3. Condonation or Remission
4. Confusion or Merger
5. Compensation
6. Novation
 7. Other Clauses
8. Cases
9. Articles Mention
a)
E. Natural Obligation
1. Extinctive Prescription
2. Acts of Third Party
3. Voluntary Return
4. Voluntary Payment
5. Debt of Estate
6. Legacy
7. Cases
8. Articles Mention
a)

II. CONTRACTS
A. Essential Requisites
B. Kinds of Contracts
C. Objects, Cause and Form of Contracts
D. Reformation of Instruments
E. Interpretation of Contracts
F. Rescissible Contracts
G. Voidable Contracts
H. Unenforceable Contracts
I. Void and Inexistent Contracts

III. ESTOPPEL

IV. TRUSTS
 A. Definition
B. Kinds of Trust
1. Express Trust
2. Implied Trust

V. SALES
A. Nature and Form of Contract
B. Capacity to Buy or Sell
C. Effects of the Contracts when the Thing Sold has been lost
D. Obligations of the Vendor
E. Obligations of the Vendee
F. Breach of Contract
1. [Includes] Recto Law: Sale of movables on Installment (Art. 1484-1489, Civil
code)
2. Maceda Law: Sale of Immovable on installment (RA 6552)
G. Extinguishment of Sale
H. Assignment of Credits

VI. BARTER OF EXCHANGE

VII. LEASE
A. General Provisions
1. Lease of Things
2. Lease of Work and Services
B. Lease of Rural and Urban Lands
C. Rights and Obligations of Lessor and Lessee
D. Special Rules for Lease of Rural/ Urban Lands
VIII. PARTNERSHIP
A. Contract of Partnership
B. Rights and Obligations of Partnership
C. Rights and Obligations of Partners Among Themselves
D. Obligations of Partnership/ Partners to Third Persons
E. Dissolution and Winding Up
F. Limited Partnership

IX. AGENCY
A. Definition
B. Nature, Form and Kinds of Agency
C. Obligations of the Agent
D. Obligations of the Principal
E. Modes of Extinguishment

X. CREDIT TRANSACTIONS
A. LOAN
B. DEPOSIT
C. GUARANTY AND SURETYSHIP
D. PLEDGE, MORTGAGE AND ANTICHRESIS, CHATTEL
MORTGAGE
E. QUASI-CONTRACTS
F. CONCURRENCE AND PREFERENCE OF CREDITS

XI. ALEATORY CONTRACTS

XII. COMPROMISES AND ARBITRATIONS

XIII. DAMAGES
A. General Provisions
B. Actual and Compensatory Damages
C. Moral Damages
D. Nominal Damages
E. Temperate or Moderate Damages
F. Liquidated Damages
G. Exemplary or Corrective Damages
H. Damages in Case of Death

XIV. LAND TITLES AND DEEDS

A. Torrens System
B. Original Registration
C. Subsequent Registration

XV. TORTS AND DAMAGES

A. DEFINITION, ELEMENTS
B. CLASSIFICATION OF TORTS
1. Negligent Torts
2. Intentional Torts
3. Strict Liability
C. THE TORTFEASOR
1. Direct Tortfeasor
2. Persons made responsible for others
3. Nature of liability
 D. The Concepts and Doctrine of Res Ipsa Loquitur, Last Clear Chance,
Proximate Cause, Damnum Absque Injuria, Presumption of Negligence,
Vicarious Liability.
E. Legal Injury

XVI. SUCCESSION
A. General Provisions
B. Testamentary Succession / Wills
C. Legal or Interstate Succession
D. Provisions Common to Testate and Interstate Succession