ACT180 A8 LAW OF OBLIGATIONS AND CONTRACTS Thus, we know that killing for the sake of killing or stealing for

the sake of stealing is bad or evil because it is contrary to what

Introduction to Law we believe is just, fair or righteous. When we speak of this
inward instinct of justice, fairness and righteousness in man as
divinely inspired by the dictates of his higher nature, we are
talking about natural law or the law of nature. (see C. Pascual,
THE GENERAL NATURE OF LAW The Nature and Elements of the Law, 1954 ed., pp. 9-10.)
Law b) Compared to divine law — While natural law and divine law
— any rule of action or any system of uniformity are very similar, they are not, however, the same. Divine law, as
— thus, law, in general, determines not only the activities of the law of religious faith, is made known to man by means of
men as rational beings but also the movements or motions direct revelation. On the other hand, natural law is said to be
of all objects of creation, whether animate or inanimate impressed in man as the core of his higher self at the very
moment of being or, perhaps, even before that. (see C. Pascual,
GENERAL DIVISIONS OF LAW Legal Method, 2nd ed., p. 111.)
1. Law (in the strict legal sense) c) Place in state law — Natural law has been regarded as the
— which is promulgated and enforced by the state reasonable basis of state law.
— refers to what is known as the state law
3. Moral Law
2. Law (in the non-legal sense) — the totality of the norms of good and right conduct
— which is not promulgated and enforced by the state growing out of the collective sense of right and wrong of
— includes divine law, natural law, moral law, and physical every community
law
a) Determination of what is right and wrong — "At a
SUBJECTS OF LAW comparatively early stage of their existence human beings
— state law, divine law, natural law, and moral law are learned that it was good for the welfare of the group that the
comprised in the definition of law as a rule of action privilege to determine what is right and what is wrong was not
— they apply to men as rational beings only left to each member of the group. The mores or ways of life
— on the other hand, physical law operates on all things, were then evolved which were always considered right and
including men, without regard to the latter's use of their correct, and obedience to them was demanded by the group."
will power and intelligence
o it is called law only figuratively speaking b) Sanction — As distinguished from state law, there is no definite
— before proceeding with the discussion of state law, let us legal sanction (punishment imposed by law like imprisonment
first dispose of those laws with which the state is not and/or payment of fines or dam-ages) for violation of purely
directly concerned moral law. "If a member of the community disregards the moral
norms, a spontaneous social reaction is produced in the form of
1. Divine Law public displeasure, contempt or even indignation. If, on the other
— the law of religion and faith which concerns itself with hand, there is conformity to the moral norms, there is created
the concept of sin (as contrasted with crime) and spontaneous social response which may be in the form of public
salvation pleasure, approval or even joy." (see C. Pascual, The Nature
and Elements of Law, 1954 ed., p. 16.)
a) Source — it is formally promulgated by God and revealed or
divulged to mankind by means of direct revelation
c) Binding force — Moral law is not absolute. It varies with the
changing times, conditions or convictions of the people. For
i. Under the Old Testament, divine law is embodied in the
example, polygamy is considered immoral (it is also a crime) in
Ten Commandments. It is believed by Christians that these
the Philippines, whereas it is allowed in some parts of the world.
laws were formally given by God through Moses, the great
Today's fashions in women's dress are socially allowed but at
Hebrew prophet and leader. (see C. Pascual, Legal
different times, they would have been morally condemned.
Method, 2nd ed., pp. 7-8.)

ii. Of course, divine law differs according to what one believes d) Place in state law — Moral law, to a great extent, influences or
to have been established and communicated to mankind by shapes state law.
revelation. Thus, to the Mohammedans, divine law is
embodied in the Muslim Quoran. 4. Physical Law
— in the operation or course of nature, there are
b) Sanction — lies in the assurance of certain rewards and uniformities of actions and orders of sequence which are
punishments in the present life or in the life to come. (Clark, the physical phenomena that we sense and feel
Elementary Law, p. 5.) o they are known as the laws of physical science
or physical law (Ibid., p. 19.)
2. Natural Law
— the divine inspiration in man of the sense of justice, a) Order or regularity in nature — A law of physical science,
fairness, and righteousness, not by divine revelation or being addressed to objects which have no power to disobey, is
formal promulgation, but by internal dictates of reason in reality nothing more than an order or regularity in nature by
alone which certain results follow certain causes. (Clark, Elementary
Law, p. 34.)
a) Binding force — Natural law is ever present and binding on all
men everywhere and at all times. There is in every man a basic b) Called law only by analogy — In other words, this order or
understanding of right and wrong based on an understanding of regularity is called law only by analogy. "Examples of physical
the fundamental standard or criterion of good and evil. In other law are many. The more conspicuous ones are the law of
words, there are some acts, or conduct which man knows in his gravitation and the law of chemical combination. (see C.
heart and his conscience, not by theorizing, but by the dictates Pascual, Legal Method, 2nd ed., p. 13.)
of his moral nature, are simply good or bad or evil.
5. State Law / Positive / Municipal / Civil / Imperative No society can be stable in which either of these
— particularly concerns us in this work is the state law or requirements fails to be provided for. (see F. Pollack, A
the law that is promulgated and enforced by the state First Book on Jurisprudence, 5th ed., p. 6.)

a) Other terms used — This law is also called positive law, 2. What does the law do?
municipal law, civil law, or imperative law. It is the law that we — It has been said that law secures justice, resolves social
refer to when we speak of law in connection with obligations and conflict, orders society, protects interests, controls social
contracts, marriage, the administration of justice, the conduct of relations. Life without basic laws against theft, violence,
elections, and the entire governmental process itself. and destruction would be solitary, nasty, brutish, and
short. Life without other laws such as, those regulating
b) Binding force — As a rule of action, only state law is enforced traffic, sanitation, employment, business, redress of
by the state, with the aid of its physical force, if necessary. harm or of broken agreements, etc. - would be less
orderly, less healthful, less wholesome, etc. (see
c) Concern of state law — The fields of state law are different Howard and Summers, Law, Its Functions, and Its
from those of divine law, natural law, and moral law. State law Limits, 1965 ed., pp. 35-37.
does not concern itself with violations of the latter rules of action
unless they also constitute violations of its commands. A full 3. What is our duty as members of society?
examination of divine law properly belongs to the fields of — No society can last and continue without means of social
philosophical theology; of natural law, to metaphysics; of moral control, without rules of social order binding on its
law, to ethics; and of physical law, to physical science or members. The sum of such rules as existing in a given
physics. (M.J. Gamboa, op. cit., p. 5.) society, under whatever particular forms, is what, in
common speech, we understand by law or is also
referred to as the legal system. Since we find law
CONCEPTS OF STATE LAW necessary, every citizen should have some
understanding of law and observe it for the common
1. General / abstract sense good.
— the term refers to all the laws taken together
— it may be defined as the mass of obligatory rules SOURCES OF LAW
established for the purpose of governing the relations of
persons in society 1. Constitution
— examples: law of the land, rule of law and not of men, — with particular reference to the Constitution of the
equality before the law, enforcement of the law Philippines, it may be defined as the written instrument
by which the fundamental powers of the government are
2. Specific / Material sense established, limited, and defined, and by which these
— the term has been defined as a rule of conduct, just, powers are distributed among the several departments
obligatory, promulgated by legitimate authority, and of for their safe and useful exercise for the benefit of the
common observance and benefit people
— it has this second connotation when we refer to a — it is often referred to as the fundamental law or supreme
particular statute or legal rule law or highest law of the land because it is promulgated
— example: the law on obligations and contracts by the pecple themselves, binding on all individual
citizens and all agencies of the government
Characteristics Of Law in Its Specific Sense — it is the law to which all other laws enacted by the
legislature (as well as administrative or executive acts,
1. It is a rule of conduct — Law tells us what shall be done and orders and regulations having the force of law) must
what shall not be done. As a rule of human conduct, law takes conform
cognizance of external acts only — this means that laws which are declared by the courts to
be inconsistent with the Constitution shall be void and
2. It is obligatory — Law is considered a positive command the latter shall govern
imposing a duty to obey and involving a sanction which forces
obedience 2. Legislation
— it consists in the declaration of legal rules by a
3. It is promulgated by legitimate authority — In a democratic competent authority
country, like the Philippines, the legitimate or competent — it is the preponderant source of law in the Philippines
authority is the legislature. Under the Constitution, laws called — acts passed by the legislature are so-called enacted
statutes are enacted by Congress which is the name of the law or statute law
legislative branch of our government; local government units are — legislation includes ordinances enacted by local
also empowered to enact ordinances which have the binding governments units
force of laws
3. Administrative or executive orders, regulations, and rulings
— they are those issued by administrative officials under
4. It is of common observance and benefit — Law is intended
legislative authority
by man to serve man. It regulates the relations of men to
— are intended to clarify or explain the law and carry into
maintain harmony in society and to make order and co-
effect its general provisions
existence possible. Law must, therefore, be observed by all for
— administrative acts are valid only when they are not
the benefit of all.
contrary to the laws and Constitution
Necessity and Functions of Law
4. Judicial decisions or jurisprudence
— the decisions of the courts, particularly the Supreme
1. What would life be without law?
Court, applying or interpreting the laws or the
— If we can answer this question, we can answer the more
Constitution form part of the legal system of the
basic question of whether law is necessary. If life without
Philippines
law would be the same as it is now, obviously law is not
— the decisions of a superior court on a point of law are
necessary. Society comes into existence because its
binding on all subordinate courts
members could not live without it. The need for internal
o this is called the doctrine of precedent or stare
order is as constant as the need for external defense.
decisis (to stand by things decided)
 — the Supreme Court, however, may reverse or modify a) Laws are made and administered by the only institutions in
any of its previous rulings society authorized to act on behalf of the entire citizenry.
— until then, the decisions of the Supreme Court applying Churches, for example, act only for their members
or interpreting the laws or the Constitution are laws by
their own right because they declare what the laws say b) Only the legal institutions within the society can make rules,
or mean regulations and orders with which the entire citizenry must
— unlike rulings of the lower courts, which bind the parties comply. The rules, etc., of social and economic organizations,
to specific cases alone, its judgments are applied to all for example, govern only limited numbers

5. Custom c) People associated with an organization can ordinarily terminate

— it consists of those habits and practices which through their relationship and thereby free themselves from the impact of
long and uninterrupted usage have become its rules and regulations. Citizens of a state, however, cannot do
acknowledged and approved by society as binding this unless they choose to leave the geographical area in which
rules-of-conduct the state is sovereign;
— it has the force of law when recognized and enforced by
the state d) The sanctions or techniques of control through law are more
— for instance, in a contract for services rendered where varied and complex than the techniques available to
no definite compensation is stipulated, the organizations such as churches, labor unions, and political
compensation to be paid may be ascertained from parties. Expulsion is usually the most powerful technique
customs and usages of the place available to such organizations to secure compliance with their
— a custom must be proved as a fact according to the rules, etc. For the employee, it is the loss of his job. Aside from
rules of evidence. (Art. 12, Civil Code.) imprisonment and deportation, there are many other sanctions
— it may be applied by the courts in the absence of law or available to the law, including denial or revocation of license,
statute exactly applicable to the point in controversy confiscation of property, imposition of civil liability for certain
— but customs which are contrary to law, public order or kinds of conduct, dissolution of organizations, and denial of
public policy are not countenanced. (Art. 11, Ibid.) privileges. A sanction is remedial if the object is the
indemnification of the person who has suffered damages or
6. Other sources injury from a violation of law, and penal if the object is the
— to the above may be added principles of justice and punishment of the violator
equity, decisions of foreign tribunals, opinions of
textwriters, and religion e) Before the law "operates" against an individual, various
— they are, however, only supplementary, that is, they are procedural steps are required. Thus, the individual must
resorted to by the courts in the absence of all the other ordinarily be given a hearing and a fair opportunity to show why
sources. They are, however, not binding on the courts. he should not, for example, be ordered to pay money to a
claimant, or be deprived of his liberty. Such steps are commonly
referred to as "due process" of law. Organs of social control
Rule in Case of Doubt in Interpretation or Application of Laws other than those provided by law are generally not required to
comply with such procedures in acting against individuals
Our Civil Code provides that "no judge or court shall decline to render except when their rules provide therefor. (Ibid., pp. 43-44.)
judgment by reason of the silence, obscurity or insufficiency of the
laws." (Art. 9, Civil Code.) "In case of doubt in the interpretation or
application of laws, it is presumed that the lawmaking body intended ORGANIZATION OF COURTS
right and justice to prevail." (Art. 10, Ibid.)
Under the Constitution, the judicial power or the power to decide
In our country, courts are not only courts of law but also of justice. actual cases and controversies involving the interpretation and
Faced with a choice between a decision that will serve justice and application of laws, is "vested in one Supreme Court and in such
another that will deny it because of a too strict interpretation of the lower courts as may be established by laws." (Art. VIII, Sec. 1
law, courts must resolve in favor of the former, for the ultimate end of thereof.) The judiciary, composed of the courts, is one of the three (3)
the law is justice. (Pangan vs. Court of Appeals, 166 SCRA 375.) main divisions of power in our system of government.
This is particularly true where what is at stake is the life, liberty, or
property of an individual, and more so if he is poor or disadvantaged. 1. Regular courts
— the Philippine judicial system consists of a hierarchy of
courts resembling a pyramid with the Supreme Court at
Organs of Social Control the apex
— under present legislation, the other courts are
Law is not an end in itself. It may be viewed as a means of social o One Court of Appeals
control - the control of social behaviour that affects others. (Howards o Regional Trial Courts sitting in the different
and Summers, op. cit., p. 38.) provinces and cities
o Metropolitan Trial Courts in Metropolitan areas
In modern pluralistic societies, there are many organs of social established by law; Municipal Trial Courts in
control. For instance, in the Philippines, in addition to legal cities not forming part of a metropolitan area, and
institutions – national and local – there are churches, corporations, in municipalities; and Municipal Circuit Trial
political parties, trade associations, schools, labor unions, Courts in areas defined as municipal circuits
professional organizations, social clubs, families, and host of others. • Circuit courts exercise jurisdiction over
Such organizations, through rules, regulations and orders, control two (2) or more cities and/or
some of the behavior of their members. municipalities. The Supreme Court, the
Court of Appeals, and the Regional
Trial Courts are considered courts of
Law Compared with Other Means of Social Control general or superior jurisdiction.
There are several basic differences between social control through 2. Special courts
law and control through other methods, to wit: — aside from these courts, there is, under the Constitution,
a special anti-graft court, the Sandiganbayan. (Art. XI,
Sec. 4 thereof.) It forms part of the judicial hierarchy
 together with the Court of Tax Appeal, a special tax — the law on obligations and contracts comes under this
court created by law, on the same level as the Court of heading because it deals with the rights and obligations
Appeals. of the contracting parties only
— the state, however, is also involved in private law; it
3. Quasi-judicial agencies enforces private law but simply as an arbiter and not as
— administrative bodies under the executive branch a party
performing quasi-judicial functions, like the National — included in private law are civil law, commercial or
Labor Relations Commission, the Securities and mercantile law, and civil procedure. Civil procedure is
Exchange Commission, Land Transportation that branch of private law which provides for the means
Franchising and Regulatory Board, Insurance by which private rights may be enforced.
Commission, etc., and the independent Constitutional
Commissions (Civil Service Commission, Commission Law On Obligations and Contracts
on Elections and Commission on Audit) do not form part — the body of rules which deals with the nature and sources of
of the integrated judicial system. obligations and the rights and duties arising from
— their functions are described as quasi-judicial because agreements and the particular contracts
they involve also the settlement or adjudication of
controversies or disputes Civil Code of the Philippines
— the law on obligations and contracts is found in Republic Act
No. 386, otherwise known as the Civil Code of the
CLASSIFICATIONS OF LAW Philippines
— when we speak of civil law, we refer to the law found
1. As to its purpose primarily in our Civil Code
— the Civil Code of the Philippines is based mainly on the Civil
a) Substantive law Code of Spain which took effect in the Philippines. on
— or that portion of the body of law creating, defining, and December 7, 1889. (Mijares vs. Neri, 3 Phil. 196.)
regulating rights and duties which may be either public — it was approved as Republic Act No. 386 on June 18, 1949
or private in character and took effect on August 30, 1950. (Lara vs. Del Rosario,
— an example of substantive private law is the law on 94 Phil 778.)
obligations and contracts — it is divided into four (4) books

b) Adjective / Remedial/ Procedural law

— or that portion of the body of law prescribing the manner Civil Code Provisions on Obligations and Contracts
or procedure by which rights may be enforced or their
violations redressed Book IV of the Civil Code deals with obligations and contracts. The
— the provision of law which says that actions for the general provisions on obligations are contained in Title I, Articles
recovery of real property shall be filed with the Regional 1156-1304, while those on contracts, in Title II, Articles 1305-1422.
Trial Court of the region where the property or any part The general rules of law governing contracts are also applicable to
thereof lies, is an example of private adjective law. the particular kinds of contracts (like sale, agency, partnership,
barter, etc.) in addition to the special provisions of law governing
Rights and duties are useless unless they can be enforced. It is not each type of contract.
enough, therefore, that the state regulates the rights and duties of all
who are subject to the law; it must also provide legal remedies by Book IV also contains new provisions dealing with natural obligations
which substantive law may be administered. Hence, the need for which are found in Title III, Articles 1423-1430.
adjective law.

The adjective law in the Philippines is governed by the Rules of Court Conclusive Presumption of Knowledge of Law
promulgated by the Supreme Court and by special laws. — Ignorance of law excuses no one from compliance
therewith. (Art. 3, Civil Code.) "Everyone, therefore, is
2. As to its subject matter conclusively presumed to know the law."
— this presumption is far from reality but it has been
a) Public law established because of the obligatory force of law
— or the body of legal rules which regulates the rights and — thus, ignorance of the provisions of the law imposing a
duties arising from the relationship of the state to the penalty for illegal possession of firearms, or punishing the
people possession of prohibited drugs, does not constitute a valid
— an example of public law is criminal law, the law which excuse for their violation
defines crimes and provides for their punishment. In
legal theory, when a person commits a crime, he The following reasons have been advanced for this
violates not only the right of the individual victim but presumption:
primarily that of the state because the crime disturbs the
peace and order of the state a) If laws will not be binding until they are actually known, then
— also included are: international law or that law which social life will be impossible, because most laws cannot be
governs the relations among nations or states; enforced due to their being unknown to many
constitutional law or that which governs the relations
between the state and its citizens; it establishes the b) It is almost impossible to prove the contrary when a person
fundamental powers of the government; administrative claims ignorance of the law
law or that which governs the methods by which the
functions of administrative authorities are to be c) It is absurd to absolve those who do not know the law and
performed; and criminal procedure or that branch of increase the obligations of those who know it
private law which governs the methods of trial and
punishment in criminal cases d) In our conscience, we carry norms of right and wrong, and a
sense of duty, so that our reason indicates many times what we
b) Private law have to do and in more complicated juridical relations, there are
— or the body of rules which regulates the relations of lawyers who should be consulted (A. Tolentino, op. cit., pp. 18-
individuals with one another for purely private ends 19.)
e) Evasion of the law would be facilitated and the administration of
justice would be defeated if persons could successfully plead
ignorance of the law to escape the legal consequences of their
acts, or to excuse non-performance of their legal duties. The
rule, therefore, is dictated not only by expediency but also by
necessity." (Ibid., p. 7; Zulueta vs. Zulueta, 1 Phil. 254.)

JUDICIAL COMPOSITION AND HIERARCHICAL LAYERS

1. Fourth Level Court

a) Supreme Court (SC) — is the highest court and the only

constitutional court in the Philippines being specially provided
for in the Constitution. It is presided over by a Chief Justice and
is composed of fourteen (14) Associate Justices. Its members
serve the court until retirement at age 70 or unless sooner
removed by reason of ill health, death, or conviction after
impeachment.

2. Third Level Courts

a) Court of Appeals (CA) — the primary appellate court of the

Philippines, exercising its powers, functions, and duties through
23 divisions of three members each

b) Sandiganbayan (SB) — the anti-graft court of the country. It

conducts “expeditious trials of criminals and civil cases involving
offenses committed by public officers and employees, including
those employed in government-owned and controlled
corporations” (Sandiganbayan website)

c) Court of Tax Appeals (CTA) — exercises exclusive appellate

jurisdiction to review by appeal, decisions of the Commissioner
of Internal Revenue and Commissioner of Customs related to
tax cases and custom duties liabilities

3. Second Level Courts

a) Regional Trial Courts (RTCs) — are established in each of the

thirteen (13) regions in the Philippines. Each RTC may be
composed of a single sala or of several branches

b) Shari'a District Courts (SDCs) it is the same level as RTC.

SDC decisions are reviewed by the Supreme Court

4. First Level Courts

a) Metropolitan Trial Courts (MeTCs) — are established in

Metropolitan Manila

b) Municipal Trial Courts in Cities (MTCCs) are established in

every city which does not form part of Metropolitan Manila

c) Municipal Trial Courts (MTCs) are established in each of the

other cities or municipalities

d) Municipal Circuit Trial Courts (MCTCs) are created in each

circuit comprising such cities and/or municipalities as grouped
by law

e) Shari'a Circuit Courts (SCCs) Shari'a Courts have been

established in Islamic regions and provinces to interpret and
apply the Code of Muslim Personal Laws (under Presidential
Decree No. 1083)