TITLE 1 OBLIGATIONS (Arts. 1156-1304; Civil Code)

Chapter 1: General Provisions

Article 1156

• An obligation is a juridical necessity to give, to do or not to do.

• Stresses the duty under the law of the debtor or obligor (he who has the duty of giving doing or not doing)

Obligation

• derived from the Latin word obligatio, which means tying or binding

• tie or bond recognized by law by virtue of which one is bound in favor of another to render something

• may consist in giving a thing, doing a certain act or not doing a certain act

Juridical necessity

• in case of non compliance of the obligation, the courts of justice may be called upon by the aggrieved party to enforce its fulfillment or, in default thereof, the economic value that it represents

• in a proper case, debtor or obligor may be made liable for damages

Damages

sum of money given as a compensation for the injury or harm suffered by the creditor or obligee (he who has the right to the performance of the obligation) for the violation of his rights

Civil Obligations

• based on positive law

• obligations which give to the creditor or obligee a right under the law to enforce their performance in courts of justice

Natural Obligations

• based on equity and natural law

• do not grant a right of action to enforce their performance although in case of voluntary fulfillment by the debtor, the latter may not recover what has been delivered or rendered by reason thereof (Art. 1423)

Passive subject

• called debtor or obligor

• person who is bound to the fulfillment of the obligation

• he who has a duty

1. Passive subject

2. Active subject

3. Object or prestation

4. Juridical or legal tie

Every obligation has four (4) essential requisites, namely:

Active subject

• creditor or obligee

• person who is entitled to demand the fulfillment of the obligation

• he who has a right

Object or prestation

• subject matter of the obligation

• conduct required to be observed by the debtor

• may consist in giving, doing or not doing

• without this, there is nothing to perform

Bilateral obligation

Parties are reciprocally debtors and creditors (Art. 1191)

Juridical or legal tie

• also called efficient cause

• which binds or connects the parties to the obligation

• can easily be determined by knowing the source of the obligation (Art. 1157)

1. Passive Subject - X

   Active Subject - Y

   Prestation - to build a house for Y

   Juridical tie - building contract

2. Passive Subject - Y

   Active Subject - X

   Prestation - to demand P1,000,000 from Y

   Juridical tie - building contract

Identify the passive subject, active subject, prestation, and juridical tie on the given example:

1. Under a building contract, X bound himself to build a house for Y for P1,000,000.

2. Suppose X had already constructed the house and it was the agreement that Y would pay X after the construction is finished.

Form of an Obligation

• Manner in which an obligation is manifested or incurred

• May be oral, in writing or partly oral and partly in writing

Article 1356

As a general rule, the law does not require any form in obligations arising from contracts for their validity or binding force

Article 1157

Obligations arising from other sources does not have any form at all

Obligation

The act or performance which the law will enforce

Right

The power which a person has under the law, to demand from another any prestation

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 (i.e.z recognized by law) of another

• In law, the term injury is also used to refer to the wrongful violation of the legal right of another

1. Legal right in the favor of a person (creditor/obligee/plaintiff)

2. Correlative legal oblogation on the part of another (debtor/obligor/defendant); to respect or not to violate said right; and

3. Act or omission by the latter in violation of said right with resulting injury or damage to the former

Essential elements of a legal wrong or injury

• Y has the legal right to have his house constructed by X. X also has the right to be paid the agreed compensation providee the house is built according to the terms and conditions of the contract.

• X has the correlative legal obligation to build the house of Y under their contract.

• The failure of either party to comply with such terms and conditions gives the other a cause of action for the enforcement of his right/and or recovery of indemnity for the loss or damage caused to hik for the violation of his right.

Identify who has the legal right, correlative legal obligation and act or omission in the preceding example

Under a building contract, X bound himself to build a house for Y for P1,000,000.

1. Real obligation (obligation to give)

2. Personal obligation (obligation to do or not to do)

Kinds of obligation according to the subject matter

Real obligation (obligation to give)

• The subject matter is a thing which the obligor must deliver to the obligee

• EXAMPLE: X (e.g., seller) binds himself to deliver a piano to Y (buyer)

Personal obligation (obligation to do or not to do)

The subject matter is an act to be done or not to be done

Positive and Negative

Two Kinds of Personal Obligation

Positive Personal Obligation

• Obligation to do or to render service (Article 1167)

• EXAMPLE: X binds himself to repair the piano of Y

Negative Personal Obligation

• Obligation not to do (naturally includes obligations “not to give“). (Art. 1168)

• EXAMPLE: X obliges himself not to build a fence on a certain portion of his lot in favor of Y who is entitled to a right of way over said lot.

1. Law;

2. Contracts;

3. Quasi-contracts

4. Acts or omissions punished by law; and

5. Quasi-delicts

Article 1157. Obligations arise from:

Law

• When they are imposed by law itself

• EXAMPLE: Obligation to pay taxes; obligation to support one's family. (Art.291)

Contracts

• When they arise from the stipulation (condition) of the parties (Art. 1306)

• EXAMPLE: The obligation to repay a loan or indebtedness by virtue of an agreement.

Quasi-contracts

• When they arise from lawful, voluntary, and unilateral acts which are enforceable to the end that no one shall unjustly enriched or benefited at the expense of another. (Art. 2142).

• In a sense, these obligations may be considered as arising from law.

• EXAMPLE: The obligation to return money paid by mistake or which is not due. (Art. 2154)

Crimes or acts or omissions punished by law

• When they arise from civil liability which is the consequence of a criminal offense. (Art. 1161)

• EXAMPLE: The obligation of a thief to return the car stolen by him; the duty of a killer to indemnify the heirs of his victim

Quasi-delicts or torts

• When they arise from damage caused to another through an act or omission, there being fault or negligence, but no contractual relation exists between the parties. (Art. 2176)

• EXAMPLES: The obligation of the head of the family that lives in a building or a part thereof to answer for damages caused by things thrown or falling from the same (Art. 2193); the obligation of the possessor of an animal to pay for the damage which it may have caused. (Art. 2183)

1. Those emanating from law; and

2. Those emanating from private acts which may be further subdivided into: (a) those arising from licit acts, in the case of contracts and quasi-contracts; and (b) those arising from illicit acts, which may be either ounishable in the case of delicts or crimes, or not punishable in the case of quasi-delicts or torts.

Law enumerates five (5) sources of obligations. They may be classified as follows:

Two (2): law and contracts because obligations arising from quasi-contracts, delicts and quasi-delicts are really imposed by law. (Leung Ben vs O'Brien, 38 Phil. 182)

How many sources are actually there? What are they?

Article 1158

• Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book.

• It refers to legal obligations or obligations arising from law. They are not presumed because they are considered a burden upon the obligor. They are exceptions not the rule. To be demandable, they must be clearly set forth in the law, i.e., the Civil Code or special laws.

• EXAMPLES: (1) An employer has no obligation to furnish free legal assistance to his employees because no law requires this, and therefore, an employee may not recover from his employer the amount he may have paid a lawyer hired by him, to recover damages cause to said employee by a stranger or strangers, while in the performance of his duties; (2) A private school has no legal obligation to provide clothing allowance to its teachers because there is no law which imposes this obligation upon schools. But a person who wins money in gambling has the duty to return his winnings to the loser as this obligation is provided by law (Art. 2014)

Special laws

• All other laws not contained in the Civil Code

• Examples include Corporation Code, Negotiable Instruments Law, Insurance Code, National Internal Revenue Code, Revise Penal Code, Labor Code, etc.

Article 1159

• Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

• It speaks of contractual obligations or obligations arising from contracts or voluntary agreements. It presupposes that the contracts entered into are valid and enforceable.

Contract

Meeting of minds between two (2) persons whereby one binds himself, with respect to the others to give something or to render some service (Art. 1305)

Binding force

Obligations arising from contracts have the force of law between the contracting parties, i.e., they have the same binding effect of obligations imposed by laws. This does not mean, however, that contract is superior to the law. As a source of enforceable obligation, contract must be valid and it cannot be valid if it against the law.

Requirement of a valid contract

A contract is valid (assuming all the essential elements are present; Art. 1318.) if it is not contrary to law, morals, good customs, public order, and public policy. (Art. 1306).

In the eyes of the law, a void contract does not exist (Art. 1409.) Consequently, no obligations will arise. A contract may be valid but cannot be enforced. This is true in the case of unenforceable contracts. (Art. 1307, 1403)

Breach of contract

• Contract may be violated by a party in whole or in part

• Takes place when a party fails or refuses to comply without legal reason or justification, with his obligation under the contract as promised

Compliance in good faith

• Compliance or performance in accordance with the stipulations or terms of the contract or agreement. Sincerity and honesty must be observed to prevent one party from taking unfair advantage over the other.

• Non-compliance by a party with his legitimate obligation after receiving the benefits of a contract would constitute unjust enrichment on his part

• EXAMPLE 1: If S agrees to sell his house to B and B agrees to buy the house of S, voluntarily and willingly, then they are bound by the terms of their contract and neither party may, upon his will and without any justifiable reason, withdraw from the contract or escape from his obligations thereunder.

• EXAMPLE 2: A contract whereby S will kill B in consideration of P1,000 to be paid by C, is void and non-existent because killing a person is contrary to law. Likewise, an agreement whereby S will render domestic service gratuitously until his loan to B is pair, is void as being contrary to law and morals. In both cases, S has no obligation to comply with his agreements

Article 1160

Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII of this Book.

Quasi-contract

• Juridical relation resulting from lawful, voluntary and unilateral acts by virtue of which the parties become bound to each other to the end that no one will be unjustly enriched or benefited at the expense of another. (Art. 2142)

• Not properly a contract at all (no consent but the same is supplied by friction of law) Law considers the parties as having entered into a contract, although they have not actually done so, and irrespective of their intention, to prevent injustice or the unjust enrichment of a person at the expense of another

Negotiorum Gestio and Solutio Indebiti

The principal kinds of quasi-contracts

Negotiorum Gestio

• Voluntary management of the priperty or affairs of another without the knowledge or consent of the latter (Art. 2144.)

• EXAMPLE: X went to Baguio with his family without leaving somebody to look after his house in Manila. While in Baguio, a big fire broke out near the house of X. Through the effort of Y, a neighbor, the house of X was saved from being burned. Y, however, incurred expenses. In this case, X had the obligation to reimburse Y for said expenses, although he did not actually give his consent to the act of Y in saving his house, on the principle of quasi-contract.

Solutio Indebiti

• Juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake (Art. 2154.)

• The requisites are: (a) There is no right to receive the thing delivered; and (b) The thing was delivered through mistake

• EXAMPLE: D owes C P1,000. If D paid T believing that T was authorized to receive payment for C, the obligation to return on the part of T arises. If D paid C P2,000 by mistake, C must return the excess of P1,000.

Other examples of quasi-contracts

• provided in Article 2164 to Article 2175 of the Civil Code

• cases are of infinite variety

• recovery cannot be had on a true contract, recovery may be allowed on the basis of this contract

• EXAMPLE: S, seller of goat’s milk leaves milk at the house of B each morning. B uses the milk and places the empty bottles on the porch. After one (1) week, S asks payment for the milk delivered. Here, an implied contract is understood to have been entered into by the very acts of S and B, creating an obligation on the part of B to pay reasonable value of the milk, otherwise, B would be unjustly benefited at the expense of S.

Article 1161

• This article deals with civil liability for damages arising from crimes or delicts. (Art. 1157)

• Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the provisions of article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of this Book, regulating damages

• Often times, the commission of a crime causes not only moral evil but also material damage. From this principle, the rule has been established that every person criminally liable for an act or omission is also civilly liable for damages (Art. 100, Revised Penal Code)

• In crimes, however, which cause no material damage (like contempt, insults to persons in authority, gambling, violations of traffic regulations, etc.), there is no civil liability to be enforced. But a person not criminally responsible may still be liable civilly (Art. 29, Sec. 2, Rule 111. Rules of Court), such as failure to pay a contractual debt; causing damage to another’s property without malicious or criminal intent or negligence, etc.

1. Restitution

2. Reparation for the damage caused; and

3. Indemnification for consequential damages. (Art. 104, Revised Penal Code)

The extent of the civil liability for damages arising from crimes is governed by the Revisal Penal Code and the Civil Code. This civil liability includes:

Restitution

Identify the civil liability enforced in the situation

X stole the car of Y. If X is convicted, the court will order X to return the car or to pay its value if it was lost or destroyed

Reparation for the damage caused

X stole the car of Y. If X is convicted, the court will order X to pay for any damage caused to the car

Indemnification for consequential damages

X stole the car of Y. If X is convicted, the court will order X to pay for such damages sufferred by Y as a

Article 1162

• Obligations derived from quasi-delicts shall be govern by the provisions of Chapter 2, Title XVII of this Book, and by special laws

• Treats of obligations arising from quasi-delicts or torts (Art. 2176 to 2194)

Quasi-delicts

• act or omission by a person (tort-feasor) which causes damage to another in his person, property, or rights giving rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-existing contractual relation between the parties (Art. 2176)

1. There must be an act or omission;

2. There must be fault or negligence

3. There must be damage caused

4. There must be a direct relation or connection of cause and effect between the act or omission and the damage; and

5. There is no pre-existing contractual relation between the parties

Before a person can be held liable for quasi-delict, the following requisites must be present:

• Act or omission - X kicking the ball and hitting the glass window of his neighbor, Y.

• Fault or negligence - X playing softball too close from the house of Y.

• Damage caused - Broken glass window

• Direct relation of cause and effect between the act or omission and the damage - X kicking the ball and hitting the glass window of his neighbor, Y resulting to it being broken

• There was no pre-existing contractual relationship them because he is guilty of fault or negligence

Identify the requisites present in the given problem on quasi-delicts

While playing softball with his friends, X broke the window glass of Y, his neighbor.

Crime

• There is criminal or malicious intent or criminal negligence

• The purpose is punishment

• It affects public interest

• There are generally two liabilities: criminal and civil

• Liability cannot be compromised by the parties themselves

• The guilt of the accused must be proved beyond reasonable doubt

Quasi-delict

• There is only negligence

• The purpose is indemnification of the offended party

• It concerns private interest

• Liability can be compromised as any other civil liability

• The fault or negligence of the defendant need only be proved by preponderance (i.e., superior or greater weight) of evidence