Obligations and Contracts: Sources of Law

Obligations and Contracts

Law

• Law, according to Sanchez Roman, consists of rules of conduct that are just, obligatory, and promulgated by legitimate authority for common observance and benefit.

Sources of Law

• Sources of law can be legislative, from the constitution, through administrative orders, from judicial decisions, and/or from customs.
• The legislative consists of legal rights by a competent authority.
• In the Philippines, which has a democratic government, the Legistlative branch is the law-making body.
• For national government, that is Congress (House of Representatives and the Senate).
• For provinces, there is the Sangguniang Panlalawigan for every province.
• For towns, the Sangguniang Pambayan (local Municipal council).
• At the Barangay level is the Sangguniang Pambarangay.
• The Constitution is the fundamental law governing a nation in relation to its citizens.
• All laws need to conform and comply with the provisions of the Constitution, otherwise it becomes unconstitutional.
• Administrative or executive orders, regulations, and rulings, must also adhere to constitutional provisions.
• Judicial decisions interpreting laws or the Constitution form part of the Philippine legal system.
• Judicial decisions serve as evidenceof what the law means.
• An interpretation by the Supreme Court upon a law is considered part of the law as it establishes legislative intent.
• Custom consists of habits and practices acknowledged and approved by society through long and uninterrupted usage, becoming a binding rule of conduct.
• Principles of justice and equity, decisions of foreign tribunals, opinions of text writers, and even religion can also be sources of law.

Kinds of Law

• Divine law is formally promulgated by God and revealed to mankind through direct revelation.
• Natural law is impliedly promulgated in our conscience and body and it is the divine interpretation in man of justice, fairness, right, and equity by internal dictate of reason on our mind.
• Physical law refers to the governing rules of action and movement.
• Human law is promulgated by man to regulate human relations.

Classification of Human Law: General or Public Law

• Public law encompasses rules regulating rights and duties between the State and its inhabitants, consisting of various subcategories.
• International law governs relations and dealings between nations.
• Constitutional law governs relations between the State and its citizens.
• Administrative law establishes the competence of authorities executing the law and remedies for rights violations.
• Political law deals with the organization and operation of governmental organs and defines the relations between the state and its inhabitants within its territory.
• Criminal law guarantees law's coercive power, governing trial methods and punishment for crimes.

Classification of Human Law: Individual or Private Law

• Private law governs private relations between persons.
• Civil law addresses family organization and property regulation, setting precepts for assistance, authority, and obedience among society members to protect private interests.
• Commercial law is a body of jurisprudence for the rights, intercourse, and relations of individuals engaged in commerce, trade, or mercantile pursuits (Black's law dict. 338).
• Procedural Law, also known as Remedial Law, indicates how rights are enforced or redressed, unlike Substantive law, which creates, defines, and regulates those rights.

Courts

• Courts are defined as entities, bodies, or tribunals vested with part of the judicial power. (Lontok V. Battung 63 Phil 1054)
• Judicial power includes settling actual controversies involving rights and determining abuse of discretion by government branches.

Different courts of Justice

• Supreme Court
• Sandigan-bayan
• Court of Appeals
• Regional Trial Court
• Metropolitan / Municipal Trial Courts

General Provisions on Obligation.

• Obligations definition establishes the debtor's unilateral act to give, do, or not as a patrimonial obligation, which implies that the debtor has the obligation and the creditor has the right.
• The main sources of obligation are Law and Contracts, with other sources being established by law as well.
• Obligations, as defined by ARIAS RAMOS, is a juridical relation whereby a creditor may demand determinate conduct from a debtor, and if the debtor breaches, the creditor can seek satisfaction from the debtor's assets.
• Legal backing was provided via Mr. Justice J. B. L. Reyes.
• Patrimonial obligations have pecuniary value and are assessable in terms of money.
  • They represent private interest.
  • They create ties that are transitory.
  • Power exists to enforce the economic equivalent of non-fulfillment from the debtor's patrimony.
• Juridical Necessity means rights and duties arising from obligation are legally demandable, allowing courts to enforce performance through proper action.
• Action means an ordinary suit in court where one party prosecutes another for enforceable right, protection, prevention, or redress.
  • For example, if Gaya buys a refrigerator from Tito but doesn't pay, Tito can sue Gaya to demand payment or recover the refrigerator.
• Essential requisites of an obligation
  • Active subject: The creditor or obligee has the power to demand fulfillment of the obligation.
  • Passive subject: The debtor or obligor is bound to perform the obligation.
  • Object: The prestation may consist of giving, doing, or not doing something.
  • Vinculum juris: The juridical tie between the subjects that binds the debtor to perform for the creditor, and constitutes the source and coercive force of the obligation.
• Illustration: Gaya contracts to sell a GE refrigerator to Tito, who pays; Gaya not delivering results in a unilateral obligation of refrigerator delivery.
• If Gaya delivers and Tito doesn't pay, Tito then becomes the debtor bound to pay, with Gaya as the creditor having prestation rights.
• Distinctions between Obligations and Contracts:
  • Contract is the only one source of obligation, while obligations have other sources: law, quasi-contracts, delicts, or quasi-delicts.
  • Contract is a bilateral obligation while obligation is a unilateral one.
  • All contracts are obligations, but not all obligations are contracts.
• Civil obligations derive their binding force from positive law.
• Natural Obligations are derived from equity and natural justice.
• Civil obligations can be enforced by court action, while the fulfillment of Natural obligations cannot be compelled by court action and depends on the debtor's conscience.

Source of Obligations

• Obligations imposed by specific provisions of law are not presumed and that to be demandable.
• Legal obligations must be clearly provided for, either expressly or impliedly.
  • Example: the duty of spouses to support each other (Art. 291, New Civil Code).
  • Example: the duty of every person having an income to pay taxes (National Internal Revenue Code).
• Contract as defined in Art. 1305, NCC, is the meeting of minds between two people in which one binds himself.
• Obligations arising from contracts have the force of law between the contracting parties, according to Art. 1159.
• Agreements in contracts should be complied with in good faith.
• A contract of lease between Gaya (lessee) and Tito (lessor) for an apartment rent is an example.
• Contracts are subject to legal limitations, as stated in Art. 1306, NCC.
• Contracting parties may establish stipulations, clauses, terms, and conditions as long as they are not contrary to law, morals, good custom, public order, or public policy.
• Quasi-contracts source obligations, with 'quasi' meaning 'as if'.
• Quasi-contract is a juridical relation from a lawful, voluntary, unilateral act for indemnity to prevent unjust enrichment (Art. 2142, NCC).
• Contracts and quasi-contracts distinguished:
  • contracts necessitate consent, while quasi-contracts imply consent by law.
  • contract is a civil obligation while quasi-contract is a natural obligation.
• Two Kinds of Quasi-contracts
  • Solutio Indebiti (Payment by mistake)
    • Juridical relation which arises when a person is obliged to return something received by him through error or mistake.
      • For example, Arvin owes Ian P1,000.00, but mistakenly pays P2,000.00. Ian is obligated to return the P1000.00 excess because the payment was by mistake.
  • Negotiorum gestio(management of another's property)
• It is the voluntary management or administration by a person of the abandoned business or property of another without any authority or power from the latter (Art. 2144, NCC). For example, Victor leaves his livestock farm unattended when leaving for abroad. Ramon manages the farm and incurs expenses. Victor must reimburse Ramon for expenses and pay for services, so no one is enriched unjustly.

Obligations and Delicts

• Delicts or acts or omissions punished by law are a source of obligations.
• Acts or omission punished by law is known as Delict or Felony or Crime.
• Criminal acts that are felonious give rise to civil liability if damage is caused. Civil liability arising from delicts:
  • Restitution is the restoration of or returning the object of the crime to the injured party.
  • Reparation is payment by the offender for the value of the object of the crime, if it cannot be returned to the injured party.
  • Indemnification includes payment of damages caused to the injured party.

Illustration

• Mario, convicted of theft of Rito's gold watch, may be ordered to return (restitution).
• If restitution isn't possible, Mario must pay the value of the watch (reparation).
• In addition, Mario pays for damages (indemnification) suffered by Rito.

Sources of Obligations. Quasi Delicts.

• Quasi-delict exists when damage is caused to another by an act or omission with fault or negligence, obligating the responsible party to pay for the damage, in the absence of a pre-existing contract (Art. 2176).
• Example: If Pedro's negligent driving causes injury to Jose, who is walking on the sidewalk,. Then Pedro is liable for violation of quasi-delict.

Requisites of a quasi-delicts

• There must be fault of negligence attributable to the offender
• There must be damage or injury caused to another
• There is no pre-existing contract. Negligence is the failure to observe the degree of care, precaution, and vigilance justly demanded which causes injury to another person (Judge Cooley).

Kinds of Negligence

• Culpa Aquiliana, also known as quasi-delict or negligence as a source of obligation.
• Culpa contractual or negligence in the performance of a contract.