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OBLIGATIONS AND CONTRACTS by: Hector S. de Leon Obligation is a JURIDICAL NECESSITY to give, to do or not to do (a.

a.115) Obligatio Latin word meaning tying or binding Obligation is a LEGAL RELATION established between one party and another whereby the latter is bound to the fulfillment of a PRESTATION (the conduct which has to be observed by the Debtor/Obligor) which the former may demand from him Juridical Necessity in case of non-compliance the courts may call upon to enforce its fulfillment or, the economic value it represents. Damages represents the SUM OF MONEY given as a compensation for the injury or harm suffered by the creditor/oblige for the violation of his rights. Creditor or Obligee he who has the RIGHT TO THE PERFORMANCE of the Obligation. Debtor or Obligor he who has the Obligation to comply otherwise shall be visited by Harmful/ Undesirable Legal Consequences NATURE OF OBLIGATIONS (CC): 1. Civil Obligations obligations which give to the creditor/obligee a RIGHT OF ACTION in courts of justice to enforce their performance. 2. Natural Obligations NOT based on Positive Law (Law recognized by govt authority); but on EQUITY and NATURAL LAW (derived from nature and binding upon society); does NOT grant a Right of Action to enforce their performance; if voluntary fulfillment by debtor, cannot recover what has been delivered ESSENTIAL ELEMENTS OF OBLIGATIONS: (1) Active Subject (Creditor/Obligee) or the person who is entitled to DEMAND the fulfillment of the obligation; he who has the RIGHT <power a person has under the law to demand from another any prestation> (2) Passive Subject (Debtor/Obligor) person who is bound to the fulfillment of the obligation; he who has the DUTY/OBLIGATION <act or performance which the law will enforce> (3) Object/Prestation SUBJECT MATTER of the obligation or the CONDUCT required to be observed by the debtor (giving, doing, or not doing) (4) Juridical Tie/Legal Tie EFFICIENT CAUSE or that which BINDS OR CONNECTS the parties to the obligation. The tie can be be easily determined by knowing the source of obligation. Example: X bound himself to construct a house for Y for 1M, contract X is the debtor/obligor/passive subject Y is the creditor/oblige/active subject House object/prestation Contract juridical tie ESSENTIAL ELEMENTS OF THE CAUSE OF ACTION: 1. Essential Elements: a. There is a LEGAL RIGHT in favor of a person b. There is a LEGAL OBLIGATION on the part of another c. There is an ACT or OMISSION in breach or violation of the said right by the defendant (one being sued in civil action or prosecuted in a criminal action) with consequential injury or damage to the plaintiff (one who brings an action at law) for which he may maintain an act for damages or appropriate relief (assistance) 2. If any element is absent, complaint becomes vulnerable to motion to dismiss on the ground of failure to state a cause of action 3. A cause of action only arises when the last element occurs the moment a right has been transgressed (trespassed). a. Right of action distinguished from maintain b. Right of action/Right to commence <procedural law laws which establish procedure and rules of court and the court system and which matters are conducted> ii. Right to maintain an action <substantive law written law controlling rights and actions of persons within jurisdiction> b. For every Right enjoyed by a person, there is a corresponding obligation on the part of another to respect such right. Wrong/ Cause of Action ACT OR OMISSION of one party in violation of the legal right(s) of another, causing injury to the latter. Example: breach of contract

Action per Contracts should be brought within 10 YEARS from the time the Right of Action Accrues <to exist as legally enforceable claim>

(Contracts) accrues only when an actual breach or violation occurs Period of Prescription from the occurrence of breach Injury the ILLEGAL INVASION of a legal right; wrongful act or omission which causes loss or harm to another Damage Is the LOSS, HURT, or HARM which results from the injury Damages denotes the SUM OF MONEY recoverable as amends <compensation for loss or injury> for the wrongful act or omission Injury is the LEGAL WRONG to be redressed <remedied/compensated> PROOF OF LOSS FOR INJURY: There must be (1) Wrongful Violation of a legal right/ Injury; (2) Loss or Damage caused to him by such violation * One who makes use of his legal right does no injury * Qui jure suo utitur mullum damnum facit * If damages result from a persons exercise of legal right * Damnum absque injuria (damage without injury)

As a General Rule, the Law does not require any FORM in Obligations arising from contract nor from other sources

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Art.19. Every Person must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith. KINDS OF OBLIGATIONS (SUBJECT MATTER): (1) Real Obligations (obligation to give) The subject matter is a thing which the obligor must deliver to the oblige; (2) Personal Obligation (obligation to do or not to do) The subject matter is an act to be done or not to be done; a. Positive Personal Obligation Obligation to do or to render service; b. Negative Personal Obligation Obligation not to do, includes not to give SOURCES OF OBLIGATIONS: Obligations arise from: 1. Law statutes, legislative enactments; 2. Contracts meeting of minds between two persons whereby one binds himself, with respect to the other to give something or to render service; Quasi-contracts obligation arising not from an agreement between them but from some relationship between them; Acts/Omissions punished by law when they arise from a civil liability as a consequence of some criminal offense; Quasi-delicts when they arise from damage caused to another through an act or omission, there being fault or negligence, but theres no contractual relation




CLASSIFICATIONS OF SOURCES: (1) Those emanating from LAW (2) Those emanating from PRIVATE ACTS: a. Licit Acts Contracts & Quasi-contracts b. Illicit Acts Punishable-delicts; not punishable-quasi-delicts

Art. 1158. Obligations derived from LAW are not presumed. Only those expressly determined in the CC or in special laws <other laws no in CC> are demandable and shall be regulated by the percepts of the law which establishes them; as to what has not been foreseen, by the provisions of this book. LAW (OBLIGATION EX LEGE) Legal Obligations or Obligations arising from law: are not presumed because they are considered a burden upon the obligor. Must be expressly <explicit, defined, clear> set forth and cannot be presumed.

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