BUSINESS LAW Civil fruits- are those derived by virtue of a juridical
already existing.
PRELIM REVIEWER
WEEK 1
Law- means any rule of action or any system of
uniformity.
Obligation- is a juridical necessity to give, to do or not
to do.
Sources of Law
Constitution- it is often referred to as the fundamental
law or supreme law or highest law of the land.
Legislation- acts passed by the legislature are called
enacted law or statute law.
Administrative or executive orders, regulations and
rulings- these rules are intended to clarify or explain
the law and carry into effect its general provisions.
Judicial decisions or jurisprudence- supreme Court
decisions.
Custom- it consists of those habits and practices
Other sources- he Law on Obligations and Contracts
is the body of rules which deals with the nature and
the rights and duties
III. SOURCES OF OBLIGATION
Obligations arise from:
a. Law;
b. Contracts;
c. Quasi-contracts;
d. Acts or omissions punished by law; and
e. Quasi-delicts.
OBLIGATIONS ARISING FROM LAW- Obligations
derived from law are not presumed. Only those expressly
determined in this Code or in special laws are
demandable.
OBLIGATIONS ARISING FROM CONTRACTS- A
contract is a meeting of minds between two (2) persons
whereby one binds himself with respect to the other, to
give something or to render some service.
OBLIGATIONS ARISING FROM QUASI-
CONTRACTS- Quasi-contracts are those juridical
relations arising from lawful, voluntary and unilateral acts .
Negotiorum gestio – juridical relation which arises
whenever a person voluntarily takes charge.
Solutio indebiti – juridical relation which arises
whenever a person unduly delivers a thing through
mistake to another who has no right to demand it
D.OBLIGATIONS ARISING FROM CRIMINAL
OFFENSES- As a rule, every person liable for a felony is
also civilly liable.
WEEK 2
NATURE OF OBLIGATIONS TO GIVE- As a general
rule, every person obliged to give something is also
obliged to take care of it with the proper diligence of a
good father of a family.
Preserve the thing- diligence of a good father of a family
means ordinary care or that diligence which an average (a
reasonably prudent) persons exercise over his own
property.
Deliver the fruits of the thing- the creditor has a right to
the fruits of the thing from the time the obligation to
deliver it arises.
Natural fruits- are the spontaneous products of
the soil and the young and other products of
animals. (ex. calf, wild gras
Industrial fruits- are those produced by lands of any kind
through cultivation or labor. (ex. rice, vegetables)
relation. (ex. rent, amount of life annuities)
NATURE OF OBLIGATIONS TO DO- if a person
obliged to do something fails to do it, the same shall be
executed at his cost.
NATURE OF OBLIGATIONS NOT TO DO- when the
obligation consists in not doing, and the obligor does what
has been forbidden him, it shall be undone at his expense.
BREACHES OF OBLIGATIONS
DELAY- default or mora signifies the idea of delay in
the fulfillment of an obligation with respect to time
Default or mora has three kinds:
Mora solvendi- the delay of the obligor or debtor to
perform his obligation.
Mora accipiendi- is the delay of the creditor to accept the
delivery of the things which is the object of the
obligation
Compensatio morae- is the delay of the parties in
reciprocal obligations which results to a no actionable
default on the part of both parties.
FRAUD- or dolo consists in the conscious and
intentional proposition to evade the normal fulfillment of
an obligation.
Negligence or culpa- consists in the omission of
that diligence which is required by the nature of the
obligation and corresponds with the circumstances of
the persons, time and place.
CONTRAVENTION OF THE TENOR OF THE
OBLIGATION- This breach includes not only any illicit
acts which impairs the strict and faithful fulfillment of the
obligation but also every kind of defective performance.
FORTUITOUS EVENTS- as a general rule, no person
shall be responsible for those events which could not be
foreseen, or which, though foreseen, were inevitable.
It may be produced by two (2) causes:
(a) by nature- such as earthquakes, storms, floods,
epidemics (fortuitous event proper) and;
(b) by acts of man- such as an armed invasion, attack by
bandits, governmental prohibitions, robbery, etc.
Four (4) Essential Conditions:
1. The event must be independent of the will of
the obligor
2. The event must either be unforeseeable or
inevitable;
3. The event must be of such character as
to render it impossible for the obligor
to fulfill his obligation in a normal
manner;
4. The obligor must be free from any
participation in the aggravation of the
injury resulting to the obligee or
creditor.
5.
WEEK 3
PURE AND CONDITIONAL OBLIGATIONS
Pure Obligation- is one which is not subject to any
condition and no specific date is mentioned for its
fulfillment and is therefore immediately demandable.
Condition- is a future and uncertain fact or event upon
which an obligation is subordinate or made to depend
CLASSIFICATIONS OF CONDITIONS
As to nature
Suspensive (condition precedent or condition
antecedent)- The fulfillment of which will give rise
to an obligation or right.
Resolutory
(condition subsequent)- the fulfillment of
which will extinguish an obligation or right
As to fulfillment
Potestative- A condition suspensive in nature and
which depends upon the sole will of one of the
contracting parties
Casual- If the suspensive condition depends upon
chance or upon the will of a third person.
Mixed- The obligation is valid if the suspensive
condition depends partly upon chance and partly upon
the will of a third persons.
As to realization
Possible- When the condition is capable of
realization according to nature, law, public policy or
good customs.
Impossible- When the condition is not capable of
realization according to nature, law, public policy or
good customs.
a. Physically Impossible- By nature of
things, it cannot exist or cannot be done.
b. Legally Impossible- when they are contrary
to law, morals, good customs, public order
and public policy.
Divisible- the obligation is susceptible of partial
realization.
Indivisible- the obligation is not susceptible of
partial realization.
As to Time
Positive Condition- The obligation is
extinguished
Negative Condition- The obligation shall
become effective and binding.
A. SUSPENSIVE CONDITIONS
Constructive Fulfillment of a Suspensive Condition-
Article 1186 states that “The condition shall be deemed
fulfilled when the obligor voluntarily prevents its
fulfillment.” There are three (3) requisites for the
application of this article:
(1) the condition is suspensive;
(2) the obligor actually prevents the fulfillment
of the condition;
(3) and the acts voluntarily.
EFFECT OF LOSS, DETERIORATION AND
IMPROVEMENT
Loss- a thing is considered lost when:
(1) it perishes (Physical Loss)
(2) it goes out of commerce (Legal Loss)
(3) the thing disappears in such a way that its
existence is unknown or even if know,
it cannot be recovered (Civil Loss)
Deterioration- a thing deteriorates when its value is
reduced or impaired with or without the fault of the
debtor.
Improvement- a thing is improved when its value is
increased or enhanced by nature or by time or at the
expense of the debtor or creditor
RECIPROCAL OBLIGATIONS- Obligations can either
be unilateral, when only one (1) part is obliged to
comply with a prestation or bilateral, when both parties
are mutually bound to each other.
Remedies in case of breach- The remedies are
alternative and not cumulative, that is, he is privileged to
choose only one of the remedies and not both.
Rescission- It is essential that the right to rescind be
invoked judicially.
OBLIGATIONS WITH A PERIOD- A term or period
is an interval of time, which, exerting an influence on
an obligation as a consequence of a juridical act
CLASSIFICATIONS OF PERIOD OR TERM
Suspensive (ex die)- The obligation begins only from a
day certain upon arrival of period
Resolutory (in diem)- The obligation is valid up to a
day certain and terminates upon arrival of the period
Legal- When the term is provided for by law.
Conventional/voluntary- When it is agreed to by the
parties
Judicial- When the period is fixed by the courts
Definite- When the period is fixed or it is known when
it will come
Indefinite- When it is not fixed or it is not known when it
will come.
WEEK 4
COMPOUND OBLIGATIONS- compound obligations
comprehend several objects or prestations, it may be
either conjunctive or distributive.
Conjunctive obligations involve several prestations
and all of them are due and demandable
Distributive obligations involve several prestations but
only one is demandable.
FACULTATIVE OBLIGATIONS- when only
one prestation has been agreed upon, but the obligor
may render another in substitution, the obligation is
facultative.
COLLECTIVE OBLIGATIONS- an obligation
is considered individual if only two parties are involved,
one (1) obligor and one (1) obligee.
Joint obligation (obligacion mancomunada) the
creditors has a right to demand, and each of the debtors is
bound to render, compliance with his proportionate part
of the prestation which constitutes the object of the
obligation
Joint Indivisible Obligations- in this type of obligation,
the obligation is considered joint as to the liabilities
because each of the debtor remains proportionately liable
Solidary obligation (obligacion solidaria)- the creditors
has a right to demand and each of the debtors is bound to
render entire compliance with the prestation which
constitutes the object of the obligation
INDIVISIBILITY Indivisibility refers to the
prestation which constitutes the object of the obligation
SOLIDARITY Solidarity refers to the legal tie
or vinculum between the parties to an obligation
1. Rights of a Solidary Creditor- the creditor
may proceed against any one of the solidary
debtors or some or all of them
simultaneously
2. Payment by a Solidary Debtor- in the
absence of any judicial or extra judicial
demand, payment may be made by the
debtor to any of the solidary creditors.
3. Effect of Remission
Remission- is the gratuitous abandonment by the
creditor of his right against the debtor.
Effect of Loss or Impossibility of the Prestation
Loss/Impossibility is not due to the fault of the
solidary debtors and before delay- the obligation is
extinguished
Loss/Impossibility is due to fault on the part of a
solidary debtor- creditor can proceed against one,
some or all of the debtors for the payment of the price enforced
plus damages Joint/Cumulative- Both the principal obligation
Loss/Impossibility is due to a fortuitous even after and the penal clause can be enforced
one of the debtors incurred in delay- the obligation is
converted into an obligation of indemnity for damages
4. Defenses of a Solidary Debtor- in the event of a
demand from the creditor.
WEEK 5
Divisible obligations are those which have as a
prestation which is susceptible of partial performance
without the essence of the obligation being changed.
Indivisible obligations are those which have as their
object a prestation which is not susceptible of partial
performance
Kinds of Division
Qualitative Division divides the material thing but the
parts are not homogenous such as an inheritance.
Quantitative Division divides the material thing into parts
homogenous to each other.
Ideal or Intellectual Division is when the thing can
only be separated into ideal or undivided parts, not
material parts, as in the case of co ownership
Kinds of indivisibility
Legal Indivisibility when a specific provision of law
declares the thing as indivisible, obligations which by
nature are divisible.
Conventional indivisibility where the will of the
parties makes as indivisible, obligations which by
nature are divisible.
Natural indivisibility when the nature of the object or
prestation does not admit of division.
Joint Indivisible Obligations. In this type of
obligation, the obligation is considered joint as to the
liabilities because each of the debtor remains
proportionately liable.
Principal obligation is one which can standby itself and
does not depend for its validity and existence upon
another obligation.
Accessory obligation is one which is attached to a
principal obligation and therefore cannot stand alone.
Penal clause is an accessory undertaking attached to an
obligation to assume greater liability in case of breach
Purpose of penalty
Funcion coercetive o de garantia, to insure performance
of the obligation;
Funcion liquidatoria, to liquidate the amount of
damages to be awarded to the injured party in case of
breach of the obligation.
Funcion estrictamenta penal, to punish the obligor in case
of breach of the principal obligation.
Kinds of Penalty
Legal- Penalty is established by law
Conventional- Established through stipulation of the
parties
Subsidiary/Alternative- Only the penal clause may be