Title I Obligations PDF

# Title I ## 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 **Meaning of obligation** The term obligation is derived from the Latin word obligatio which means tying or binding....

# Title I ## 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 **Meaning of obligation** The term obligation is derived from the Latin word obligatio which means tying or binding. It is a tie or bond recognized by law by virtue of which one is bound in favor of another to render something - and this may consist in giving a thing, doing a certain act, or not doing a certain act. **Civil Code definition** Article 1156 gives the Civil Code definition of obligation, in its passive aspect. It merely stresses the duty under the law of the debtor or obligor (he who has the duty of giving, doing, or not doing) when it speaks of obligation as a juridical necessity. **Meaning of juridical necessity** Obligation is a juridical necessity because in case of noncompliance, 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, the debtor or obligor may also be made liable for damages, which represents the 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. In other words, the debtor must comply with his obligation whether he likes it or not; otherwise, his failure will be visited with some harmful or undesirable consequences. If obligations were not made enforceable, then people can disregard them with impunity. There are, however, obligations that cannot be enforced because they are not recognized by law as binding. **Nature of obligations under the Civil Code** Obligations which give to the creditor or obligee a right under the law to enforce their performance in courts of justice are known as civil obligations. They are to be distinguished from natural obligations, which, not being based on positive law but 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. **Natural obligations** are discussed under the Title dealing with "Natural Obligations". **Essential requisites of an obligation** Every obligation has four essential requisites, namely: 1. A passive subject (called debtor or obligor) - the person who is bound to the fulfillment of the obligation; he who has a duty; 2. An active subject (called creditor or obligee) - the person who is entitled to demand the fulfillment of the obligation; he who has a right; 3. Object or prestation (subject matter of the obligation) - the conduct required to be observed by the debtor. It may consist in giving, doing, or not doing. Without the prestation, there is nothing to perform. In bilateral obligations, the parties are reciprocally debtors and creditors; and 4. A juridical or legal tie (also called efficient cause) - that which binds or connects the parties to the obligation. The tie in an obligation can easily be determined by knowing the source of the obligation **Example:** Under a building contract, X bound himself to build a house for Y for P1,000,000. Here, X is the passive subject, Y is the active subject, the building of the house is the object or prestation, and the agreement or contract, which is the source of the obligation, is the juridical tie. **Form of obligations** The form of an obligation refers to the manner in which an obligation is manifested or incurred. It may be oral, or in writing, or partly oral and partly in writing. - 1. As a general rule, the law does not require any form for obligations arising from contracts for their validity or binding force. 2. Obligations arising from other sources do not have any form at all. **Obligation, right, and wrong distinguished** 1. Obligation is the act or performance which the law will enforce. 2. Right, on the other hand, is the power which a person has under the law, to demand from another any prestation. 3. A 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., recognized by law) of ariother. In law, the term injury is also used to refer to the wrongful violation of the legal right of another. The essential elements of a legal wrong or injury are: a. a legal right in favor of a person b. a correlative legal obligation on the part of another to respect or not to violate said right; and c. an act or omission by the latter in violation of said right with resulting injury or damage to the former. **Example:** In the preceding example, Y has the legal right to have his house constructed by X who has the correlative legal obligation to build the house of Y under their contract. X has the right to be paid the agreed compensation provided the house is built according to the terms and conditions of the 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 him for the violation of his right. **Kinds of obligation according to the subject matter** From the viewpoint of the subject matter, obligation may either be real or personal. 1. **Real obligation (obligation to give)** is that in which 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). 2. **Personal obligation (obligation to do or not to do)** is that in which the subject matter is an act to be done or not to be done. There are two kinds of personal obligation: * Positive personal obligation or obligation to do or to render service. **Example:** X binds himself to repair the piano of Y. * Negative personal obligation is obligation not to do (which naturally includes obligations "not to give"). **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. **Article 1157.** Obligations arise from: 1. Law; 2. Contracts; 3. Quasi-contracts; 4. Acts or omissions punished by law; and 5. Quasi-delicts. **Sources of obligations** The sources of obligations are enumerated below: 1. Law - when they are imposed by law itself. **Examples:** Obligation to pay taxes; obligation to support one's family. 2. **Contracts** - when they arise from the stipulation of the parties. **Example:** The obligation to repay a loan or indebtedness by virtue of an agreement. 3. **Quasi-contracts** - when they arise from lawful, voluntary and unilateral acts which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another. 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. 4. **Crimes or acts or omissions punished by law** - when they arise from civil liability which is the consequence of a criminal offense. **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. 5. **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. **Examples:** The obligation of the head of a family that lives in a building or a part thereof to answer for damages caused by things thrown or falling from the same; the obligation of the possessor of an animal to pay for the damage which it may have caused. There is no obligation as defined in Article 1156, if its source is not any of those enumerated in Article 1157. **Sources classified** The law enumerates five sources of obligations. They may be classified as follows: 1. Those emanating from law; and 2. Those emanating from private acts which may be further subdivided into: - Those arising from licit acts, in the case of contracts and quasi-contracts - Those arising from illicit acts, which may be either punishable in the case of delicts or crimes, or not punishable in the case of quasi-delicts or torts. Actually, there are only two sources: law and contracts, because obligations arising from quasi-contracts, delicts, and quasi-delicts are really imposed by law. **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. **Legal Obligations** Article 1168 refers to legal obligations or obligations arising from law. They are not presumed because they are considered a burden upon the obligor. They are the exception, not the rule. To be demandable, they must be clearly set forth in the law, i.e., the Civil Code or special laws. **Examples:** * 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 caused to said employee by a stranger or strangers while in the performance of his duties. * 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. This obligation is provided by law. Under Article 1158, special laws refer to all other laws not contained in the Civil Code. Examples of such laws are Corporation Code, Negotiable Instruments Law, Insurance Code, National Internal Revenue Code, Revised 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. **Contractual obligations** The above article speaks of contractual obligations or obligations arising from contracts or voluntary agreements. It presupposes that the contracts entered into are valid and enforceable. A contract is a meeting of minds between two (or more) persons whereby one binds himself, with respect to the other, to give something or to render some service. 1. 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 is against the law. 2. Requirement of a valid contract. A contract is valid (assuming all the essential elements are present) if it is not contrary to law, morals, good customs, public order, and public policy. It is invalid or void if it is contrary to law, morals, good customs, public order, or public policy. In the eyes of the law, a void contract does not exist. Consequently, no obligations will arise. A contract may be valid but cannot be enforced. This is true in the case of unenforceable contracts. 3. Breach of contract - A contract may be breached or violated by a party in whole or in part. A breach of contract 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 in good faith means 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 obligations after receiving the benefits of a contract would constitute unjust enrichment on his part. Although a contract provides no penalty for its violation, a party cannot breach it with impunity. The oppressed party is afforded remedies to protect his rights **Article 1160.** Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII of this Book. **Quasi-contractual obligations** Article 1160 treats of obligations arising from quasi-contracts or contracts implied in law. A quasi-contract is that 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. It is not, properly, a contract at all. In contract, there is a meeting of the minds or consent; the parties must have deliberately entered into a formal agreement. In a quasi-contract, there is no consent but the same is supplied by fiction of law. In other words, the 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. **Kinds of quasi-contracts** The principal kinds of quasi-contracts are negotiorum gestio and solutio indebiti. 1. **Negotiorum gestio** is the voluntary management of the property or affairs of another without the knowledge or consent of the latter. **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 has 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. 2. **Solutio indebiti** is the juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake. It is based on the principle that no one shall enrich himself unjustly at the expense of another. The requisites are: * There is no right to receive the thing delivered; * The thing was delivered through mistake. **Example:** Dowes CP1,000. 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. The presumption, however, is that "money paid by one to another was due to the latter," unless the payor proves otherwise. **Article 1161.** 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. **Civil llability arising from crimes or delicts** This article deals with civil liability for damages arising from crimes or delicts. 1. Civil liability in addition to criminal liability. Oftentimes, 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 suffered by the aggrieved party. 2. Criminal liability without civil liability. - 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. 3. Civil liability without criminal liability. - A person not criminally responsible may still be liable civilly (Art. 29; Sec. 2[c], 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., or when the obligation arises from quasi-delict, not alleged and proved as a criminal offense. **Scope of civil liability** The extent of the civil liability for damages arising from crimes is governed by the Revised Penal Code and the Civil Code. This civil liability includes: * Restitution; * Reparation for the damage caused; and * Indemnification for consequential damages. **Example:** 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; * to pay for any damage caused to the car; and * to pay such other damages suffered by Y as a consequence of the crime. **Article 1162.** Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws. **Obligations arising from quasi-delicts** The above provision treats of obligations arising from quasi-delicts or torts. A quasi-delict is an act or omission by a person (tortfeasor) 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. **Requisites of quasi-delict** Before a person can be held liable for quasi-delict, the following requisites must be present: * There must be an act or omission; * There must be fault or negligence; * There must be damage caused; * There must be a direct relation or connection of cause and effect between the act or omission and the damage; and * There is no pre-existing contractual relation between the parties. **Example:** While playing softball with his friends, X broke the window glass of Y, his neighbor. The accident would not have happened had they played a little farther from the house of Y. In this case, X is under obligation to pay the damage caused to Y by his act although there is no pre-existing contractual relation between them because he is guilty of mere fault or negligence without any criminal intent. **Crime distinguished from quasi-delict** The following are the distinctions: * In crime, there is criminal or malicious intent or criminal negligence, while in quasi-delict, there is only negligence; * In crime, the purpose is punishment, while in quasi-delict, indemnification of the offended party; * Crime affects public interest, while quasi-delict concerns private interest; * In crime, there are generally two liabilities: criminal and civil, while in quasi-delict, there is only civil liability; * Criminal liability can not be compromised or settled by the parties themselves, while the liability for quasi-delict can be compromised as any other civil liability; and * In crime, the guilt of the accused must be proved beyond reasonable doubt, while in quasi-delict, the fault or negligence of the defendant need only be proved by preponderance (i.e., superior or greater weight) of evidence. **Definitions** * **Obligation** - the act or performance which the law will enforce. * **Quasi-contract** - that 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. * **Compliance in good faith** - compliance or performance in accordance with the stipulations or terms of the contract or agreement. * **Wrong** - an act or omission of one party in violation of the legal right or rights (i.e., recognized by law) of another. * **Solutio indebiti** - the juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake. **Discussions** 1. What are the essential requisites of an obligation? Give examples to illustrate them. 2. Why are obligations under the Civil Code a juridical necessity? Explain. 3. What are the elements or requisites in order that a person may acquire a right of action in court against another to enforce the performance of the latter's obligation? 4. May a person incur obligations even without entering into any contract or voluntary agreement? Explain. **Problems** Explain or state briefly the rule or reason for your answers: 1. X saw at about one (1:00 p.m.) in the afternoon a child alone in a shopping mall. The child who strayed from Y, his mother, was in tears and appeared very hungry. Out of pity, X took him to a restaurant to eat for which he spent P150. Y did not give her consent to the good deed of X. Furthermore, they were on their way home before the child got lost. Is X entitled to be reimbursed by Y for the amount of P150? 2. While the car of X was parked by the roadside, it was bumped at the rear by a jeep belonging to Y. Only the car of X suffered damage. Under the circumstances, does it follow that Y is liable to X for the damage? 3. In the same problem, has X the right to ask indemnity from R, employer of X, on the ground that when the accident occurred X was then on his way to transact business with a client of R? 4. D (debtor) borrowed P10,000 from C (creditor). On the due date of the loan, D could not pay C because he lost to a robber the P10,000 intended for C. In addition, he suffered financial reverses, and he was short of cash even for his current family's needs. Is D legally justified to refuse to pay C?