Obligations - Law on Obligations and Contracts PDF

OBLIGATIONS Law on Obligations and Contracts What is an obligation? A juridical necessity to give, to do, or not to do. Elements of an Obligation 1. The Vinculum juris or Juridical tie 2. The Active Subject or obligee/creditor 3. The Passive Subject or obligor/debtor 4. The Object o...

OBLIGATIONS Law on Obligations and Contracts What is an obligation? A juridical necessity to give, to do, or not to do. Elements of an Obligation 1. The Vinculum juris or Juridical tie 2. The Active Subject or obligee/creditor 3. The Passive Subject or obligor/debtor 4. The Object or Prestation Vinculum Juris or Juridical Tie The legal bond that binds the parties to the obligation, creating the duty for the debtor to perform and the right of the creditor to demand fulfillment. Active Subject The obligee or creditor, who can demand the fulfillment of the obligation. Passive Subject The obligor or debtor, against whom the obligation is juridically demandable. Object/Prestation A prestation is the object of an obligation, and it is the conduct required by the parties to do or not to do, or to give.  KINDS OF PRESTATION: 1. To give 2. To do 3. Not to do FORMS OF OBLIGATION It is settled that once perfected, a contract (obligations arising from contracts) is generally binding in whatever form it may have been entered into, whether written or oral, provided the essential requisites for its validity are present. Obligations arising from other sources do not have any form at all. KINDS OF OBLIGATIONS Obligations may be classified as: 1. Viewpoint of Sanction 2. Viewpoint of Performance 3. Viewpoint of Subject Matter 4. Viewpoint of Person Obliged Viewpoint of Sanction a. Civil Obligations- an obligation, which if not fulfilled when it becomes due and demandable, may be enforced in court through an action. b. Natural Obligations- not based on positive law but on equity and natural law; do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize retention of what has been delivered or rendered by reason thereof Viewpoint of Performance a. Positive Obligation- the obligation to give or to do b. Negative Obligation- when the obligor must refrain from giving or doing something Viewpoint of Subject Matter a. Personal Obligation (obligation to do or not to do)- that in which the subject matter is an act to be done or not to be done b. Real Obligation (obligation to give)- that in which the subject matter is a thing which the obligor must deliver to the obligee Viewpoint of Person Obliged a. Unilateral- where only one party is bound; and b. Bilateral or Mutual- where both parties are mutually or reciprocally bound. SOURCES OF OBLIGATION 1. Law; 2. Contracts; 3. Quasi-contracts; 4. Acts or omissions punished by law; and 5. Quasi-delicts OBLIGATION ARISING FROM LAW (EX-LEGE) Obligations derived from law are not presumed. OBLIGATIONS ARISING FROM CONTRACTS Obligations arising from contracts have the force of law between the contracting parties and should be complied with good faith. Meaning of Contract A contract is a meeting of the minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Binding Force of a Contract Contracts are perfected by mere consent, and from that moment the parties are bound to: 1. the fulfillment of what has been expressly stipulated 2. to all of the consequences which according to the nature of the obligations, may be in keeping with good faith, usage, and law. Breach of Contract (Culpa Contractual) In culpa contractual, the mere proof of the existence of the contract and failure of its compliance justify, prima facie, a corresponding right of relief. The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof. QUASI-CONTRACTS (QUASI EX- CONTRACTUAL) Juridical relations arising from 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 expense of another. Two Main Kinds Quasi-Contract: 1. Negotiorum Gestio 2. Solutio Indebiti Negotiorum Gestio (Officious Management) Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. Elements of Negotiorum Gestio The essential requisites of negotiorum gestio are as follows: 1. No meeting of the minds. 2. Taking Charge of another’s business or property; 3. Property or business must have been Abandoned or neglected; 4. The offi cious manager must Not have been expressly or implicitly authorized; and 5. The offi cious manager (gestor) must have Voluntarily taken charge- there must be no vitiated consent, such as error in thinking that he owned the property or the business. Solution Indebiti (Payment not due) If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. Elements of Solutio Indebiti The principle of solutio indebiti applies where: 1. A payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and 2. The payment is made through mistake, and not through liberality or some other cause. Other Quasi- Contracts Recognized Under the Civil Code 1. Right to claim support given by a stranger, from the person obliged to give support. 2. Right to reimburse the funeral expenses, borne by a third person, from the relatives obliged to give support to the deceased. 3. Right of reimbursement of stranger who furnishes support to an orphan, an insane person, or other indigent person, from the person obliged to give support to the latter. 4. Obligation of the person injured or seriously ill to pay for the services of the physician or other person, who treated or helped him while he is not in a condition to give consent. 5. Obligation of the owner of the property to pay a just compensation to the person who saved it from destruction. 6. Obligation of the person who failed to comply with health or safety regulations to pay the expenses of the government in undertaking to do the necessary work. 7. Co-ownership of movables commingled or confused by accident or other fortuitous event. 8. Rights and obligations of the finder of lost personal property. 9. Right of every possessor in good faith to reimbursement for necessary and useful expenses. 10. Right to beneficial reimbursement by a third person who pays the debt of another without his knowledge. 11. Obligation of a person benefited by measure for protection against lawlessness, fire, fl ood, storm or other calamity to pay his share of expenses. 12. Right of reimbursement by a person constrained to pay the taxes of another from the latter. DELICT (EX-DELICTO OR CULPA CRIMINAL) Civil obligations arising from criminal offense shall be governed by the penal laws. Every person criminally liable for a felony is also civilly liable. Every crime gives rise to: 1. A criminal action for the punishment of the guilty party; and 2. A civil action for the restitution of the thing, repair of the damage, and indemnification for the losses. Scope of Civil Liability Ex Delicto 1. Restitution of Property taken; 2. Reparation of damage caused; or 3. Indemnification for consequential damages Effect of Extinguishment of Criminal Liability on Civil Liability If criminal liability was extinguished on the ground that the accused was not the author of the acts complained of as a felony or offense, no civil liability arises in relation thereto. If criminal liability is extinguished by some other manner, but where it is clear that the accused was the author of the act or omission complained of as having caused damage or injury to a private complainant, the civil liability is not extinguished and can be enforced in the same action or a separate action. QUASI-DELICT Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict. Requisites of Quasi-delict 1. Damage suffered by the plaintiff; 2. Fault or negligence of the defendant; and 3. Causal connection between the fault or negligence of defendant and the damage incurred by the plaintiff. Negligence Negligence is defined as the failure to observe for the protection of the interest of another person that degree of care, precaution, and vigilance which the circumstance justly demand, whereby such other person suffers injury. Proximate Cause Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any effi cient intervening cause, produces the injury, and without which the result would not have occurred. Res Ipsa Loquitor (the thing speaks for itself) The requisites of res ipsa loquitor are as follows: 1. The event is of a kind which does not ordinarily occur unless someone is negligent; 2. The cause of the injury was under the exclusive control of the person in charge; and 3. The injury suffered must not have been due to any voluntary action or contribution on the part of the person injured. Prohibition from Double Recovery Although a single act or omission may give rise to two different causes of action, the plaintiff cannot recover damages twice for the same act or omission of the defendant.