Obligations and Contracts Reviewer
What is Quasi Contract?
- These are judicial relation arising from
certain lawful, voluntary and unilateral
acts by virtue of which the parties
become bound to each other based on
the principle that no one shall be
unjustly enriched or benefited at the
expenses of another.
- is a legal agreement created by the
courts between two parties who did not
have a previous obligation to each
other.
- an obligation of one party to another
imposed by law independently of an
agreement between the parties.
Two kinds of Quasi Contract:
- Solutio Indebiti, exist when;
a) Something is recieved;
b) When there is no right to demand it;
c) It was unduly delivered through
mistake.
Example;
Mr. A the assistant of Mr.B,in the
absence of Mr.B, Mr.A received the
amount of 5000 for the payment of B’s
labor. Mr.A has the obligation to give
the amount to Mr.B.
- Negotiorum Gestio, Which exist when
one:
a) Voluntary takes charge of the agency
or management of the business or
property of another.
b) Without any power from the latter.
Example;
Mr. Juan the caretaker of house for rent
received the amount of more than the
boarders due. Mr. Juan without the
power of the owner of the house
increase the payment which is not due
to the boarders. Mr.Juan has the
obligation to return the money paid
which is not due to the boarders.
Elements of an Obligation
- Active subject
- Passive subject
What is Obligation?
- Is the juridical necessity to give, to do or
not to do
Essential Elements of an Obligation:
- Parties - the actors involved in an
obligation:
 active
subject (creditor/obligee) - one
who demands the fulfillment of
an obligation.
 passive subject (debtor/obligor)
- one who has the duty to fulfill
an obligation.
- Prestation - the conduct to be
performed by the passive subject for
the active subject.
- Juridical Tie (efficient cause) - the
relation that binds the parties to an
obligation.
Example: Under a contract of sale, D
agreed to deliver a book to C for
Php1000.
 C is the active subject
 D is the passive subject
the delivery of the book is the
prestation
the contract of sale is the juridical tie
that binds X and Y.
Suppose X had already delivered the
book but Y has not yet paid for it.In this
case, X becomes the active subject and
Y is the passive subject.
The active subject has the right to go to
court in case of non-performance by the
passive subject. The passive subject
should hence comply with the
obligation to avoid civil action against
him.
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Juridical Necessity
- Article 1156. An obligation is a juridical
necessity to give, to do or not to do.
Discussion of the Law
- An obligation is a legal duty, however
created, the violation of which may
become the basis of an action of law.
Sources of Damages
- Art. 1170. Those who in the
performance of their obligations are
guilty of fraud, negligence, or delay, and
those who in any manner contravene
the tenor thereof, are liable for
damages.
Sources of Obligation
- Law - when there is an enforcement of
law itself; the obligation cannot be
presumed, and should be expressly or
clearly provided for in the law in order
to demandable;[3] such as the
obligation of income earning persons to
pay taxes according to the National
Internal Revenue Code.
- Contract - when there is a meeting of
the minds between the parties; the
obligation have the force of law and
should be complied with in good
faith;[4] such as the contract of sale of a
book for Php1000.
- Quasi-contract - when there is no
meeting of the minds between parties,
but one party benefited at the expense
of the other party; there is an obligation
to pay for compensation so that no one
shall be unjustly enriched or benefited
at the expense of another.[5]
- Negotiorum gestio - if one (the officious
manager) voluntarily takes charge of
the agency or management of another
person's property on his behalf without
his consent or authority;[6] such as the
obligation to reimburse the expenses
incurred by someone who voluntarily
saved your abandoned house from fire.
- Solutio indebiti - if one received
something that does not rightfully and
legally belong to him;[7] such as
the obligation to return a money
received by mistake.
- Delict - when there is a civil liability
resulting from criminal offense; should
be governed by the penal laws;[8]such
as the obligation of a thief to return the
money he had stolen.
- Quasi-delict - when there is fault or
negligence that causes damage on
another, there being no prior meeting
of the minds between the parties; there
is an obligation to pay for the damage
done;[9] such as the obligation of a
driver to pay for the damages he caused
to another due to negligence.
Active subject
- (creditor/obligee) - one who demands
the fulfillment of an obligation.
Passive subject
- (debtor/obligor) - one who has
the duty to fulfill an obligation.
Why do parties enter a contract?
- for a contract to be an enforceable
instrument, it must contain an
agreement between two parties, intent
to fulfill its promises and consideration.
Also, both parties must have capacity or
mental ability, which means being free
of mental illness.
- A party to a contract is one who holds
the obligations and receives the
benefits of a legally binding agreement.
Object
- An object (subject matter) is a thing,
service, or right that constitutes the
Obligations and Contracts Reviewer
prestation of an obligation in a contract.
It could be anything that is within the
commerce of men, either present or
future.
Kinds of Object
- Determinate or specific
 particularly designated or
physically segregated others of
the same class.- it is identified
by its individuality- the debtor
cannot substitute it with
another although the latter is of
the same kind and quality
without the consent of the
creditor.
- Indeterminate or generic
 refers only to a class or genus to
which it pertains and cannot be
pointed out with particularity .
 it is identified only by its specie
 the debtor can give anything of
the same class as long as it is of
the same kind.
 Monetary obligation is a generic
thing.
 It does not perish or die.
Exemptions of a generic thing
Exemptions of a specific thing
- When destroyed by a furfitious event, it
will be considered extinguished.
Unless:
1. stipulated by parties
2. so provided for by the law
3. nature of obligation
Constructive fulfillment
- Article 1186. The condition shall be
deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
(1119)
- Constructive fulfillment refers to an
obligation prevented by the obligor
from happening.
for the condition to be considered fulfilled
these two requisites shall be present.
- Intent of the obligor to prevent
fulfillment of the condition
- Actual prevention of compliance
Alternative fulfillment
Penal Clause
- In obligations with a penal clause, the
penalty shall substitute the indemnity
for damages and the payment of
interest in case of noncompliance, if
there is no stipulation to the contrary.
Nevertheless, damages shall be paid if
the obligor refuses to pay the penalty or
is guilty of fraud in the fulfilment of the
obligation.
- The penalty may be enforced only when
it is demandable in accordance with the
provisions of this Code.
- Penalty clause is an accessory obligation
or undertaking attached to a principal
obligation, which imposes an additional
liability in case of breach of the
principal obligation, in order to secure
the performance of the principal
obligation.