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Published by Yum Abdulla

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Published by: Yum Abdulla on Sep 14, 2012
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Obligations and Contracts: Sources 2006 Lectures of Atty. Lydia Galas (Hann Sevilla), 2007 Case Digests (from Erwin Vicente), Book of Tolentino, RAM NotesCompiled by: Hanniyah Sevilla, Christ May Andolana, Ferlyn Ong for 4
th
year Batch 2009
OBLIGATIONS & CONTRACTS
Chapter 1-
 
GENERAL PROVISIONS
Art. 1156.An obligation is a juridical necessity to give, to do or not to do.
 An incomplete definition because it only refers to the debt side; it only refers to the conduct to be observed by theobligor; there is no debt without credit.
o
Complete definition:
A juridical relation between two persons, known as the creditor and debtor, wherebythe former can demand from the latter the observance of a determinate conduct and in case of breach, mayobtain satisfaction from the assets of the latter.
Why is it a juridical necessity? Because the term, “juridical necessity” connotes that in case of noncompliance, therewill be legal sanction.
-
Note: It covers only civil obligations, not natural obligations.
Characteristics of an Obligation:
1.It represents an exclusively private interest2.It creates ties that are by nature transitory3.It involves the power to make the juridical tie effective in case of non-fulfillment through an economic equivalentobtained from the debtor's patrimony.
Types of obligations
:
a.
Civil obligations
- those which derive their binding force from positive law, and can be enforced bycourt action or the coercive power of public authority.
 b.
Natural obligations
- refer to those which derive their binding force from equity and natural justice,and its fulfillment cannot be compelled by court action but depends exclusively on the conscience of thedebtor.
c.
Moral obligations
- are those which arise from moral law developed by the church and notenforceable in court. It deals with the spiritual obligation of a person in relation to his God and church
ELEMENTS of an OBLIGATION CODE: A P O E
A.
 Active subject 
(creditor, obligee)-
Has the power to demand the prestation; it is he who in his favor the obligation is constituted,established or created; it is he who has the right to demand.
B.
Passive subject 
(debtor, obligor)
One who is bound to perform the prestation; passive because without the demand, there will be noaction, he has to wait for the demand from the creditor.
Has the juridical necessity of adjusting his conduct to the demand of the creditor pursuant to theobligatory tie.
NB
: It is not necessary that the active/passive subject (also known as the personal elements of theobligation) be determinate at the time of the constitution, but they must at least be determinable. Whenthe subject cannot be determined, the obligatory tie can have no effect.
C.The object or the prestation
The object is not a thing but a particular conduct of the debtor. It is the subject matter of the obligationwhich has an economic value or susceptible to pecuniary substitution in case of noncompliance.
D.Efficient cause or juridical tie between the two subjects
The vinculum by which the debtor is bound to in favor of the creditor to perform the prestation. It isdetermined by knowing the sources of the obligation (Art. 1157)Note: Additional elements from RAM Notes:
5.
Causa debendi/ obligationes
(Castan).-- This is what makes the obligation demandable. This is the proximate why of an obligation.
 
1
 
Obligations and Contracts: Sources 2006 Lectures of Atty. Lydia Galas (Hann Sevilla), 2007 Case Digests (from Erwin Vicente), Book of Tolentino, RAM NotesCompiled by: Hanniyah Sevilla, Christ May Andolana, Ferlyn Ong for 4
th
year Batch 2009
6.
 Form
.-- This is controversial. This is acceptable only if form means some manifestation of the intent of the parties.
KINDS OF PRESTATION:
a.
to give
consists of the delivery of a movable or immovable thing which is either determinate (specific) or indeterminate (generic). This is in order to create a real right, or for the use of the creditor, or for its simplepossession, or in order to return to its owner.
 b.
“to do
” involves all kinds of work or services whether physical or mental, but in most cases the essence of the actman not be such, but merely the necessity of concluding a juridical operation, such as, when a person promises togive a bond.
c.
not to do
” is a negative obligation which consists of abstaining from some act, it includes “not to give”.
REQUISITES OF PRESTATION
1.it must be physically and juridically possible;2.it must be determinate or at least determinable according to pre-established elements or criteria;3.it must have a possible equivalent in money or a pecuniary value. (why: so in case of breach, one can demanddamages)
Article 1157
– Sources of obligationa.Law;b.Contracts;c.Quasi-Contracts;d.Crimes;e.Quasi-delicts;
The enumeration of the sources of obligation is exclusive; no obligation exists if its source is not one of those enumerated above.
Note:
1.Unilateral promise is admitted by modern doctrine, which recognizes that unilateral engagementsmay give rise to obligations without the need of acceptance.2.Contrary to Pineda, Tolentino supports that it cannot be said with certainty that the enumerationin this article is exclusive because there is nothing which expressly precludes other sources of obligation, such as theunilateral promise to the public of an award for a certain act or accomplishment.
3.The clear implication of Sagrada Orden vs. Nacoco is that, these five (5) are the only sources of obligations.
Articles 1158 - 1162
specify the general principles regarding the sources of obligation enumerated in Art. 1157.
Art. 1158
. Obligations derived from law are not presumed. Only those expressly determined inthis Code or in special laws are demandable, and shall be regulated by the precepts of the lawwhich establishes them; and as to what has not been foreseen, by the provisions of this Book.Note: When we say that law is an independent source of obligation, it does not mean that law and human acts exclude eachother completely. The law cannot exist as a source of obligation, unless the acts to which its principles may be applied exists.But once those acts exist, the obligations arising from them by virtue of law are entirely independent of the agreement of theparties.NB: When the law merely acknowledges the existence of an obligation generated by an act which constitutes a contract,quasi-contract, delict or quasi-delict, and its only purpose is to regulate such obligation which did not arise from it, the act itself is the source of obligation and not the law. But, when the law creates the obligation, and the act upon which it is bases isnothing more that a mere factor in determining the moment when it becomes demandable, then the source of obligation is thelaw itself. (i.e. a husbands’ obligation to his spouse is not anchored upon the contract of marriage but on the law which dictatesit.)
Art. 1159.
Obligations arising from contracts have the force of law between the contractingparties and should be complied with in good faith.
Known as the
Principle of autonomy of will 
. The parties can stipulate anything (they have the freedom), providedthat the terms of the contract are not contrary to law, public policy or public order.
2
 
Obligations and Contracts: Sources 2006 Lectures of Atty. Lydia Galas (Hann Sevilla), 2007 Case Digests (from Erwin Vicente), Book of Tolentino, RAM NotesCompiled by: Hanniyah Sevilla, Christ May Andolana, Ferlyn Ong for 4
th
year Batch 2009
Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which according to their nature, may be inkeeping with good faith, usage and law. Since a contract has the force of law between parties, each is bound to fulfillwhat has been expressly stipulated therein.
does not apply to attorney’s contracts: courts can decide whether or not attorney’s fees are reasonable.
Art. 1160.
Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII,of this book.
 A quasi-contract is a juridical relation which arises from certain lawful, voluntary and unilateral act/s executed bysomebody for the benefit of another and for which the former must be indemnified to the end that no one shall beenriched or benefited at the expense of another; It is a kind of contract created without the consent of one party butwhose missing consent is given by law (presumptive consent).
Characteristics of a Quasi-Contract
a.The acts executed must be lawfulb.The acts executed must be voluntaryc.The acts executed must be unilateral
TWO PRINCIPLE TYPES
:
1.
NEGOTIORUM GESTIO - (officious manager) juridical relation which takes place when somebody takescharge of the agency or management of the business or property of another without any power form the latter.The owner shall reimburse the gestor for the necessary and useful expenses incurred by the latter, and for thedamages suffered by him in the performance of his functions.
2.
SOLUTIO INDEBITIa juridical relation which takes place when somebody received something fromanother without any right to demand for it, and the thing was unduly delivered
through mistake
(compared to Art.22 or unjust enrichment wherein there was no mistake). Obligation to return the thing arises on the part of therecipient.
Art. 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, PreliminaryTitle on Human Relations, and of Title XVIII of this Book, regulating damages.
Basis is Article 100 of RPC, that every person criminally liable is also civilly liable
Art. 1162.
Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws.
Chapter 2- NATURE AND EFFECT OF OBLIGATIONSArt. 1163.
Every person obliged to give something is also obliged to take care of it with theproper diligence of a good father of a family, unless the law or the stipulation of the partiesrequires another standard of care.
Refers to the obligation to give.
The obligation to give may refer to a determinate object / thing or to an indeterminate or generic thing.
A generic thing/ indeterminate thing
is one that is indicated by its kinds, without being designated anddistinguished from the others of the same kind. In an obligation to deliver a generic or indeterminate thing, the thing isdeterminable and becomes determinate from the time the obligation has been fulfilled or performed. A generic thing issomething which is not particularized or specified but has reference to a class or genus.
 A
limited generic obligation
is one when a the generic objects are classified to a particular class, i.e. one of my cars
A Determinate thing
is something which is susceptible of particular designation or specification. It is one which isindividualized and can be identified or distinguished form the others of its kind.
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