Law on Obligations and Contracts (Law 192)
Chapter 1: General Principles
The main reference of articles is the New Civil cheating issue of his partner, who
Code of the Philippines. is a friend, with someone else.
1. What is an obligation? [Link] Example: If A has a right of
1.1 Article 1156. An obligation is a juridical action, evidenced by a promissory
necessity to give, to do, or not to do. (n) note, to collect one thousand pesos
from B, and such promissory note
Explanation: Anything that requires a prescribes after the expiration of
person to give something, to do something, ten years from the time it accrues,
or not to do something is an obligation. although the latter is no longer
bound to pay the obligation in
Manresa, a famous civilist, defined accordance with the statute of
obligation as a “Legal relation established limitations, he is still bound to pay
between one person and another, whereby in accordance with equity and
the latter is bound to the fulfillment of a natural law.
prestation which the former may demand
of him.” 2. Requisites of Obligation
2.1 Active Subject
1.2 Article 1423. Obligations are civil or Obligee or creditor, who can demand
natural. Civil obligations give a right of action fulfillment of the obligation.
to compel their performance. Natural
obligations, not being based on positive law 2.2 Passive Subject
but on equity and natural law, do not grant a Obligor or debtor; who can demand
right of action to enforce their performance, fulfillment of the obligation.
but after voluntary fulfillment by the obligor,
they authorize the retention of what has been 2.3 Prestation
delivered or rendered by reason thereof. Some Object of the obligation (to give, not to
natural obligations are set forth in the give, to do, not to do).
following articles.
The focus is not the thing, but the
1.2.1 Civil Obligation obligation itself.
Based on positive law.
Enforceable in courts of justice. Example: A will give (to give) a cellphone
There is a legal basis. to B
Note: The focus of the Law 192 2.4 Juridical or Legal Tie
course. Binds the parties to the obligation, and
which may arise from either bilateral or
1.2.2 Natural Obligation unilateral acts of persons.
Based on equity and natural law.
Not enforceable in courts of justice. 2.4.1 Bilateral refers to a
There is no legal basis. transaction where both parties are
bound to do something – to give, to
1.2.3 Moral Obligation do, or not to do (e.g., they can be
Sanction of conscience or active and passive all at the same
mortality. time).
There is no legal basis.
2.4.2 Unilateral refers to a
[Link] Example: Telling a legal transaction where only one person
partner out of conscience about the is bound to do something (e.g., one
Fabros, Ezra Dean R.
BS ACCT – 1B
is an active subject, and the other Not presumed: These
is passive). obligations are not be
presumed because they
Example: Contract of sale, contract of constitute a limitation upon
lease, donation, usufruct. individual freedom,
Example: Under a contract of sale, D agreed to imposing duties which the
deliver a book to C for Php 1000. obligor cannot avoid; there
C is the active subject is no meeting of the minds.
D is the passive subject. Example: Obligation to pay
The delivery of the book is the prestation. taxes in accordance with
The contract of sale is the juridical tie that tax status; the obligation of
binds X and Y. the spouses to support each
other.
Suppose X had already delivered the book but Y
has not yet paid for it. In this case: Explanation: Uray haan mo kayat,
X becomes the active subject, and adda latta obligasyon mo nga
Y is the passive subject suruten gapu ta isu’t inbaga ti
batas.
Note: If none of these requisites apply, then there
is no obligation to speak of. 4.1.2 Contracts
Article 1159. Obligations arising
3. What are the classifications of obligations? from contracts have the force of
3.1 Pure and conditional obligations law between the contracting parties
3.2 Obligation with a period and should be complied with in
3.3 Alternative and facultative obligations good faith. (1091a)
3.4 Joint and solidary
3.5 Divisible and indivisible A contract is a meeting of minds
3.6 Obligation with a penal cause between two persons whereby one
binds himself, with respect to the
Note: These topics will be discussed up until the other, to give something or to
midterm exam. render some service.
4. What are the sources of obligation? Unlike other kinds of obligations,
4.1 Article 1157. Obligations arise from: those arising from contracts are
(1) Law; governed primarily by the
(2) Contracts; agreement of the contracting
(3) Quasi-contracts; parties.
(4) Acts or omissions punished by law;
and 4.1.3 Quasi-contracts
(5) Quasi-delicts. (1089a) Article 2142. Certain lawful,
voluntary and unilateral acts give
4.1.1 Law rise to the juridical relation of
Article 1158. Obligations derived quasi-contract to the end that no
from law are not presumed. Only one shall be unjustly enriched or
those expressly determined in this benefited at the expense of another.
Code or in special laws are (n)
demandable, and shall be regulated
by the precepts of the law which [Link] Negotiorum gestio
establishes them; and as to what Juridical relation which
has not been foreseen, by the arises whenever a person
provisions of this Book. (1090) voluntarily takes charge of
the agency or management
of the business or property
of another without any damages, missed opportunities, or
power or authority from the anything that the other party has
latter. lost because of the act of theft.
[Link] Solutio indebiti 4.1.5 Quasi-delicts
Juridical relation which Article 2176. Whoever by act or
arises whenever a person omission causes damage to another,
unduly delivers a thing there being fault or negligence, is
through mistake to another obliged to pay for the damage
who has no right to demand done. Such fault or negligence, if
it. there is no pre-existing contractual
relation between the parties, is
Here, the person to whom called a quasi-delict and is
the delivery is unduly made governed by the provisions of this
shall have the obligation to Chapter. (1902a)
return the property Note: Quasi-delict arises when a
delivered or the money damage is done to another person
paid. through fault and negligence.
Distinction: Contracts vs. If there is an absence of these two,
Quasi-contracts it is a damnum absque injuria – a
An implied The basis of an Latin phrase meaning "damage
contracts implied contract without legal injury," is a principle
requires consent is the will of the in civil law under which no legal
of the parties parties while liability arises when a person
while quasi- the basis of causes harm to another but does
contract is not quasi-contract is not violate a legal right or breach
predicated on law, to the end a duty. It serves as a defense in
consent, being a that there be no cases involving quasi-delicts
unilateral act. unjust (torts) where damages are alleged
enrichment. (respicio & co., 2024).
Table 1. Distinction between contracts and
quasi-contracts. [Link] “Fault and Negligence”
Consists in the omission of that
4.1.4 Delicts diligence which is required by the
Civil obligations arising from nature of the obligation and
offenses governed by penal laws. corresponds with the circumstances
of the person, time, and of the
Note: Whenever a crime is place.
committed, there is a civil aspect to
it. Or, in all criminal cases, there is Example: Disposing of
a civil aspect to it. When talking garbage/toxic materials not on the
about obligations arising from date it is intended to be (Disposal
delicts, it focuses on the civil –
aspect of the crime. Monday; Collection – Tuesday). It
could result to damage and injury
Example: A person committed a to the garbage collector, which the
theft and stole food and ate it. person can become liable for
He/she is required to pay for the physical injury and quasi-delict.
value because it is consumable and
non-refundable after eating. Aside [Link] Person Liable in Quasi-
from being required to pay, the delicts
person will be required to pay for General Rule:
Obligations arising from quasi- damage has been caused by the
delicts are demandable not only official to whom the task done
from the person directly properly pertains, in which case
responsible for the damage what is provided in Article
incurred. 2176 shall be applicable.
Exception: Article 2180
Lastly, teachers or heads of
establishments of arts and
Article 2180. The obligation
trades shall be liable for
imposed by Article 2176 is
damages caused by their pupils
demandable not only for one's
and students or apprentices, so
own acts or omissions, but also
long as they remain in their
for those of persons for whom
custody.
one is responsible.
The responsibility treated of in
The father and, in case of his
this article shall cease when the
death or incapacity, the persons herein mentioned prove
mother, are responsible for the that they observed all the
damages caused by the minor diligence of a good father of a
children who live in their family to prevent damage.
company. (1903a)
Guardians are liable for Note: The responsibility of
damages caused by the minors those mentioned in Article
or incapacitated persons who 2180 shall cease if they can
are under their authority and prove that they have observed
live in their company. all the diligence of a good
father of a family to prevent
damage.
The owners and managers of
an establishment or [Link] Requisites of Liability
enterprise are likewise 1. Fault or negligence of the
responsible for damages caused defendant;
by their employees in the 2. The damage suffered or
service of the branches in incurred by the plaintiff;
which the latter are employed and
or on the occasion of their 3. The relation of cause and
functions. effect between the fault or
negligence of the defendant
Employers shall be liable for and the damage incurred by
the plaintiff.
the damages caused by their
employees and household
[Link] Scope of Quasi-delict
helpers acting within the scope Note: “Fault or
of their assigned tasks, even negligence” covers not
though the former are not only acts not punishable by
engaged in any business or law but also acts criminal
industry. in character, whether
intentional or voluntary or
The State is responsible in like negligent (Elcano vs. Hill).
manner when it acts through a
Basis Delicts Quasi-delicts
special agent; but not when the 1. Intent Criminal / Negligence
malicious obligations: 1) delict; or 2)
2. Interest Affects Affects private
public interest Quasi-delict
interest Note further that the existence
3. Liability Criminal and Civil liability
civil of a contract between the
liabilities parties is not a bar to the
4. Purpose Purpose – Indemnificatio
punishment n recovery of civil liability under
5. Cannot be Can be quasi-delict.
Compromise compromise compromised
d Who shall be liable under
6. Guilt Proved Preponderance quasi-delict?
beyond of evidence
reasonable - The employee (Article
doubt 2176)
- The employer (Article
Table 2. Distinction between delicts and 2180)
quasi-delicts. The liability of the employer
under Article 2180 is direct and
Note: All of these sources have the requisites of primary and attaches only when
obligation. There is always a legal basis for these the tortious conduct of the
sources. employee relates to, or is in the
course of, his employment.
4.2 Sample Problem If the employee and the
Taxi driver, driving recklessly, killed his employer are sued together,
passenger. Discuss the source of their liability is solidary.
obligations of the driver and his employer
to the passenger.
Answer:
1. Breach of Contract of Carriage
The source of liability is the
breach of the contract because a
common carrier is obliged to
bring its passenger safely to his
destination.
Who shall be liable? The
liability devolves upon the
employer because the driver is
not a party to the contract of
carriage and may not be held
liable under the contract.
2. Delict (crime of reckless imprudence
resulting to homicide)
The source of obligation is the
crime committed by the
employee.
Who shall be liable? The
employee is directly and
primarily liable, while the
employer is subsidiarily liable.
3. Quasi-delict
Note that the same act or
omission, characterized by fault
or negligence, may produce
two distinct sources of