Introduction to Obligation

Obligation

Introduction to Obligation Nature and Effect of Obligations

• Law • Kinds of Real Obligations -
• Legal recognition of business entities Determinate thing and generic thing
• Business law • Obligation of one obliged to give a
determinate thing
• Obligation
• Kinds of personal obligation – positive
• Requisites of an Obligation and negative
• Civil Obligation and Natural • Remedies of the creditor
Obligation • Grounds for liability to pay damages
• Sources of Obligations • Fortuitous events
 Obligation
Different kinds of obligations (Civil
Code) Extinguishment of obligations
• Pure obligation • Payment or performance
• Conditional obligation • Loss of the thing due
• Obligation with a period • Condonation or remission of the debt
• Confusion or merger of rights of creditor and debtor
• Alternative obligation
• Compensation
• Facultative obligation
• Novation
• Joint obligation • Annulment
• Solidary obligation • Rescission
• Divisible obligation • Fulfillment of resolutory condition
• Indivisible obligation • Prescription
• Obligation with a penal clause • Other causes
 Law
• Law - consists of rules and regulations established and enforced by a governing body.
• governing body - is the group of people given the power and authority to form the policy and guide or control
the overall direction of an organisation.

• Who are the governing body? This system revolves around three separate and sovereign yet
interdependent branches:
• 1. legislative branch (the law-making body)
• Legislative power is vested in both the government and the two-chamber congress—the Senate (the upper
chamber) and the House of Representatives (the lower chamber).
• 2. executive branch (the law-enforcing body)
• Executive power is exercised by the government under the leadership of the president.
• The president is both the head of state and the head of government.
• 3. judicial branch (the law-interpreting body).
• Judicial power is vested in the courts with the Supreme Court of the Philippines as the highest judicial body.
 Sources of National and Local law
• What are the sources of national and local law?
• The Constitution is the supreme law of the land.
• The Constitution contains the most important rules of our political system.
• It protects the rights of the people inside the country, and it explains their
obligations.
 Legal Recognition of Business Entities
• What effect does the legal recognition of business entities have on
the conduct of business?
• Business entities exist pursuant to state laws recognizing their
existence.
• They are efficient mechanisms through which to carry on business.
• They allow for greater economic productivity and this provides an overall
benefit to society.
• The business entity is generally considered to be separate being from its
owners or employees.
 Business Law
• Business law (also called commercial law or mercantile law) - the body of rules,
whether by convention, agreement, or national or international legislation, governing
the dealings between persons in commercial matters.

• Business law falls into two distinctive areas:

• (1) the regulation of commercial entities by the laws of
• partnership
• corporation
• (2) the regulation of commercial transactions by the laws of
• Obligations
• Contracts of Sales, Agency, Pledge, and Mortgage
• Negotiable Instruments
 Obligation
• Law on obligations and contracts – is the body of rules which delas
with the nature and sources of obligations and rights and duties
arising from agreement and contracts.

• The term obligation is derived from the Latin word “obligatio” which
means a “tying” or “binding.”
 Obligation
• An obligation is a juridical relation whereby the creditor may demand
from the debtor the observance of the giving, doing or not doing, and in
case of breach, may demand satisfaction from the assets of the latter.
• Debtor or obligor - he who has the duty of giving, doing, or not doing
• Creditor or obligee - he who has the right to the performance of the obligation

• Kinds of obligations – Viewpoint of persons obliged:

• In unilateral obligation, only one party (debtor) is required to perform.
• In bilateral obligations (see Art. 1191.), the parties are reciprocally debtors and
creditors.
 Obligation
• An obligation is a juridical necessity to give, to do or not to do. (Article 1156)
• Juridical necessity – means that the court may be asked to order the performance of
an obligation if the debtor refuses to perform it.

• Kinds of obligations – Viewpoint of performance:

• Positive obligation – to give or to do
• Negative obligation – not to do
• Kinds of obligations – Viewpoint of subject matter:
• Real obligation – to give
• Personal obligation – to do or not to do
 Kinds of Obligations:
Viewpoint of Sanction
• 1. Civil Obligation – is based on positive law, hence, it is enforceable by court
action.
• Positive law - statutes which have been laid down by a legislature, court, or other human
institution and can take whatever form the authors want.
• 2. Natural Obligation – is based on natural law, hence, it is not enforceable by
court action.
• Natural law is a philosophical theory that states that humans have certain rights, moral
values, and responsibilities that are inherent in human nature.
• If the debtor voluntarily performs it, he can no longer recover what he has given.
• Prescription is generally used with reference to the acquisition or loss of a right by the lapse
of time.
• Prescriptive period – refers to the time within which an action must be brought; otherwise,
such right to file the action is lost.
 Requisites of an Obligation
• (1) passive subject (debtor or obligor) - the party who is obliged to perform the obligation.
• (2) active subject (creditor or obligee) - the party who has the right to demand performance
of the obligation.
• (3) prestation – the object or subject matter of the obligation. It may consist of giving,
doing, or not doing. Without the prestation, there is nothing to perform.
• (4) juridical or legal tie (also called efficient cause or vinculum juris) - 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.
• The sources of obligation are Law, Contracts, Quasi-contracts, Acts or omissions punished by law and
Quasi-delicts.

• party - a person or group taking one side of a question, dispute, or contest.

 Sources of Obligations
• 1. Law
• 2. Contracts
• 3. Quasi-contracts
• 4. Delict (aka as Acts or omissions punishable by law)
• 5. Quasi-delicts or torts (also known as culpa aquiliana)
 Sources of Obligations:
Law
• (1) Law – a rule of conduct, just and obligatory, laid down by legitimate
authority for common observance and benefit.
• legal obligations or obligations arising from law are not presumed (to assume to
be true without proof).
• Only those expressly determined in the Civil Code or in special laws are
demandable. (special laws refer to all other laws not contained in the Civil Code.)
• Examples: The National Internal Revenue Code which provides for the payment of taxes. The
Anti-Mendicancy Law which prohibits the giving of alms to beggars.
• Examples of not expressly stated in the law:
• An employer has no obligation to furnish free legal assistance to his employees because no
law requires this.
• 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.
 Sources of Obligations:
Contracts
• (2) Contracts - arise from the stipulation of the parties.
• Contractual obligations or obligations arising from contracts or voluntary
agreements
• Stipulation - something specified or agreed to.
• Examples:
• the obligation to repay a loan by virtue of an agreement
• A contract of lease which provides for the payment of rental by the lessee.
• A contract of sale which requires the seller to deliver the thing sold and the buyer to the
pay the price.
 Sources of Obligations:
Quasi-Contracts
• (3) Quasi-contracts — when they arise from lawful, voluntary and
unilateral acts and which are enforceable to the end that no one shall
be unjustly enriched or benefited at the expense of another (Art.
2142)
• Aka obligations arising from quasi-contracts or contracts implied in law.
• Unjust enrichment - when a person unjustly retains a benefit to the loss of
another or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience.
• Equity – means the quality of being fair and impartial.
 Sources of Obligations:
Quasi-Contracts
• Types of Quasi-contracts:
• a) Solutio indebti – is created when something is received when there is no right to
demand it and it was unduly delivered through mistake. (Art. 2154.)
• b) Negotiorum gestio – Refer to the voluntary management of the property,
business or affairs of another without the knowledge, authority, or consent of the
latter (Art. 2144)
• It creates the obligation to reimburse the gestor (a manager of another's affairs) for necessary
and useful expenses.
• Example: If through the efforts of X, a neighbor, the house of Y was saved from being burned,
Y has the obligation to reimburse X for the expenses X incurred although Y did not actually
give his consent to the act of X in saving his house on the principle of quasi-contract.
• c) Other quasi-contracts
 Sources of Obligations:
Quasi-Contracts
• c) Other quasi-contracts:
• Support given by a stranger – the stranger shall have a right to claim the same
from the person obliged to give support, unless it appears that the stranger gave it
out of piety and without intention of being repaid. (piety – means devotion and
reverence to religious practices and God.)
• Funeral expenses borne by a third party – relatives who were obliged to give
support to the deceased shall reimburse the third person, should the latter claim
reimbursement. (borne – means carried or transported by the thing specified.)
• Support an orphan, or an insane or other indigent person by a third person – the
third person has the right of reimbursement from the person obliged to give
support. This applies when the father or mother of a child under 18 years of age
unjustly refuses to support him.
 Sources of Obligations:
Quasi-Contracts
• c) Other quasi-contracts:
• Physician’s services or other person aiding the Injured person or seriously
ill person due to an accident or other cause – the injured person shall be
liable to pay for those who treated or helped him, unless the service has
been rendered out of pure generosity.
• Property is saved from destruction due to fire, flood, storm, or other
calamity by another person – the owner of the property is bound to pay the
person who saved the property just compensation.
• Undertakes to do the necessary work by the government to comply with
the health or safety regulations concerning property – any person who did
not comply and with his objection shall be liable to pay the expenses.
 Sources of Obligations:
Quasi-Contracts
• c) Other quasi-contracts:
• Movables separately pertaining to 2 or more persons are commingled (mixed or
combined) or confused (o fail to distinguish between) due to accident or other
fortuitous event – the rules on co-ownership shall be appliable.
• Fortuitous event - an event of natural or human origin that could not have been reasonably
foreseen or expected and is out of the control of the persons concerned (as parties to a contract).
• When in a small community, a nationality of the inhabitants of age, decide upon a
measure for protection against lawlessness, fire, flood, storm or other calamity –
anyone who objects to the plan and refuses to contribute to the expenses but is
benefited by the project as executed shall be liable to pay his share of said expenses.
• Any person who is constrained to pay the taxes of another – shall be entitled to
reimbursement from the latter.
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• (4) Delict (aka as Acts or omissions punishable by law) – a violation of
the law especially, a wrongful act or omission giving rise to a claim for
compensation.
• Every person criminally liable for a felony is also civilly liable (Art 100, Revised
Penal Code).
• If a person is guilty of crime charged, he must not only be imprisoned but he shall also
answer for damages as a civil obligation.
• Commission of a crime or felony will not always make a person civilly liable.
• Not all crimes cause material injury. If there is no material damage to be compensated
or to be indeminified, there is no civil liability to be indemnified.
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• Scope of Civil liabilities in delict: restitution, reparation of the damage caused,
indemnification for the consequential damages
• Restitution – restoration of the thing with allowance for any deterioration, or diminution
of value, e.g., the obligation of a thief to return the car stolen by him to the owner
• Reparation of the damage caused – the amount of damage plus the price of the thing
and its special sentimental value to the injured party.
• Indemnification for the consequential damages – those damages caused the injured
party and suffered by his family or by a third person by reason of the crime, e.g. the duty
of a killer to indemnify the heirs of his victim
• Example:
• X stole the car of Y. If X is convicted, the court will order X: (1) to return the car (or to pay its value if it
was lost or destroyed); (2) to pay for any damage caused to the car; and (3) to pay such other damages
suffered by Y as a consequence of the crime
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• When civil liability for damage is included in the criminal case
• Proof or evidence beyond reasonable doubt
• When claim for damage is filed separately with the criminal action
• Mere preponderance of evidence

• Standard to meet: The evidence must establish a significantly greater

than 50% probability that a claim is true.
• preponderance of evidence requires a mere 51% or greater probability and
beyond
• Proof or evidence beyond reasonable doubt - requires closer to 100%.
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• Effect if the guilty party died pending trial
• The civil obligation is not extinguished.
• The injured party may claim against the estate of the offender, but the heirs are
not liable beyond the value of the property they received from the decedent.

• Effect if the guilty party is acquitted of the criminal action filed

• The extinction of he penal action does not carry with it extinction of the civil
action.
• However, the civil action based on delict shall be deemed extinguished if there
is a finding in a final judgment in the criminal action that the act or omission
from which the civil liability may arise did not exist.
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• Minimum amount recoverable in case of death
• The minimum amount of damages recoverable in case of death caused by a
crime (delict) or quasi-delict (fault or negligence) is P75,000 without the need
of presenting evidence or proof of damages.
• However, other damages may be recovered by the injured party.
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• May a person who committed an act constituting a crime may be
exempted from criminal liability? Yes
• The following 7 persons are exempted from criminal liability even if the
act committed constitutes a crime:
• 1. An imbicile or insane person, unless he acted during a lucid interval.
• 2. A person under 9 years old.
• 3. A person over 9 years old but below 15, unless he acted with
discernment.
• 4. Accident – not exempted from civil liability
 Sources of Obligations:
Delict (Acts or Omissions Punishable by Law)
• May a person who committed an act constituting a crime may be exempted from criminal
liability? Yes
• The following persons are exempted from criminal liability even if the act committed
constitutes a crime:
• 5. Persons acting under the compulsion of an irresistible force.
• 6. Persons acting under the impulse of an uncontrollable lfear of an equal or greater injury.
• 7. Persons who fail to perform an act required by law when prevented by some lawful or
insuperable cause - not exempted from civil liability

• Note: These persons are exempted from criminal liability but not from civil liability, except
4 and 7. this civil liability shall devolve upon their guardians or persons whom they are
under control or authority.
 Sources of Obligations:
Quasi-delicts or Torts (Culpa Aquiliana)
• (5) Quasi-delicts or torts (also known as culpa aquiliana) — are acts or
omissions that cause damage to another, there being fault or negligence
but without any pre-existing contractual relation between the parties
(Art. 2176).

• Basis of liability – Principle of Equity:

• The fault or negligence cannot prejudice anyone else besides its author.
• A man is responsbile not only for his voluntary willful act executed
consciously and intentionally, but also for those acts performed with lack
of foresight, care and deligence, which caused material harm to others.
 Sources of Obligations:
Quasi-delicts or Torts (Culpa Aquiliana)
• Negligence – is the omission of that diligence which is required by the
circumstances of person, place, and time.
• Diligence - the quality of working carefully and with a lot of effort:

• Kinds of negligence:
• Civil negligence: Culpa aquiliana or quasi-delicts – negligence as a source
of an obligation
• Civil negligence: Culpa contractual – negligence in the performance of a
pre-existing contract.
• Criminal negligence: Culpa criminal – negligence that results to a crime.
 Sources of Obligations:
Quasi-delicts or Torts (Culpa Aquiliana)
• 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 (Art.
2193.);
• the obligation of the possessor of an animal to pay for the damage which it
may have caused. (Art. 2183.)
• If a person, while cleaning his window, causes a flower pots to fall through his
negligence thereby injuring someone passing by, the former is liable for
damages to the latter.
The End