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Class notes OBLICON (LAW001)
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this is a reviewer from business law that discussed article 1156 to 1304. This is the simplified explanation of different articles
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Some examples from this set of practice questions
1.
It is derived from the Latin word “obligatio” which means a “tying” or “binding.”
Answer: Obligation
2.
Obligation is a juridical necessity because in case of non-compliance, the courts of justice may be called upon to enforce its fulfillment or, in default thereof, the economic value that it represents.
Answer: juridical necessity
3.
Nature of obligations under the Civil Code
Answer: Civil Obligations Natural Obligations
4.
which give to the creditor or obligee a right of action in courts of justice to enforce
Answer: Civil Obligations
5.
not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance although in case of voluntary fulfillment by the debtor, the latter may not recover what has been delivered or rendered by reason thereof. (Art. 1423-1430)
Answer: Natural Obligations
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OBLIGATIONS AND CONTRACT(APRS NOTES)
GENERAL PROVISIONS
(Arts. 1156-1304.)
ARTICLE 1156.
An obligation is a juridical necessity to give, to do or not to do.
Meaning of obligation.
The term obligation is derived from the Latin word “obligatio” which means a “tying” or “binding.”
It is a tie of law or a juridical bond by virtue of which one is bound in favor of another to render something — and
this may consist in giving a thing, doing a certain act, or not doing a certain act.
Juridical necessity
Obligation is a juridical necessity because in case of non-compliance, the courts of justice may be called upon
to enforce its fulfillment or, in default thereof, the economic value that it represents.
In a proper case, the debtor may also be made liable for damages, which represent the sum of money
given as a compensation for the injury or harm suffered by the creditor or obligee (he who has the right
to the performance of the obligation) for the violation of his rights.
o In other words, the debtor must comply with his obligation whether he likes it or not; otherwise,
his failure will be visited with some harmful or undesirable legal consequences.
Nature of obligations under the Civil Code.
1) Civil Obligations – which give to the creditor or obligee a right of action in courts of justice to enforce
their performance
2) Natural Obligations – not being based on positive law but on equity and natural law, do not grant a right
of action to enforce their performance although in case of voluntary fulfillment by the debtor, the latter
may not recover what has been delivered or rendered by reason thereof. (Art. 1423-1430)
Essential requisites of an obligation.
1) A passive subject (called debtor or obligor) or
the person who is bound to the fulfillment of the obligation; he who has a duty;
2) An active subject (called creditor or obligee) or
the person who is entitled to demand the fulfillment of the obligation; he who has a right;
3) Object or prestation (subject matter of the obligation) or the conduct required to be observed by the
debtor. It may consist in giving, doing, or not doing. (Art. 1232.)
Without the prestation, there is nothing to perform.
In bilateral obligations (Art. 1191.), the parties are reciprocally debtors and creditors; and
4) A juridical or legal tie (also called efficient cause) or 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. (Art.
1157.)
EXAMPLE:
Under a building contract, X bound himself to construct a house for Y for P1,000,000.00.
Here,
X is the passive subject,
Y is the active subject,
the building of the house is the object or prestation, and
the agreement or contract, which is the source of the obligation, is the juridical tie.
Suppose X had already constructed the house and it was the agreement that Y would pay X after the construction
is finished. X, then, becomes the active subject and Y, the passive subject.
, OBLIGATIONS AND CONTRACT
(APRS NOTES)
Form of obligation
(1) As a general rule, the law does not require any form in obligations arising from contracts for their validity or
binding force. (Art. 1356.)
(2) Obligations arising from other sources (Art. 1157.) do not have any form at all.
Obligation, right, and wrong (cause of action) distinguished.
1. Obligation is the act or performance which the law will enforce.
2. Right, on the other hand, is the power which a person has under the law, to demand from another any
prestation.
3. A wrong (cause of action), according to its legal meaning, is an act or omission of one party in violation
of the legal right or rights of another, causing injury to the latter;
Essential elements of cause of action.
a) Its essential elements are:
a. a legal right in favor of a person (creditor/plaintiff) by whatever means and under whatever law it
arises or is created;
b. a correlative legal obligation on the part of another (debtor/defendant) to respect or not to
violate said right; and
c. an act or omission in breach or violation of said right by the defendant with consequential
injury or damage to the plaintiff for which he may maintain an action for the recovery of damages
or other appropriate relief.
If any of these elements is absent, the complaint becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action.
The presence of a cause of action rests on the sufficiency, and not on the veracity, of the allegations in
the complaint, which will have to be examined during the trial on the merits.
ILLUSTRATIVE CASE:
S rejected or cancelled a contract to sell his property even before the arrival of the period in the exercise of the
option to buy by the purchaser who has already made a downpayment.
Facts: S and B entered into a contract to sell, whereby B, after making a downpayment, was given the option to
pay the balance of the purchase price of a parcel of land. Later, S “rejected the contract to sell’’ even before the
arrival of the period for the exercise of said option on the ground that the terms and conditions of the contract
are grossly disadvantageous and highly prejudicial to his interest. S sent two (2) checks to B in an apparent effort
to return the downpayment.
S contends that the complaint was prematurely fi led because at the time of the institution of the complaint, B
has yet to exercise his option under the “Option of Buyer’’ clause of the contract.
Issue: Has B a cause of action against S for prematurity?
Held: Yes.
(1) All the elements of a cause of action are present. — First, there is a legal right in favor of B, i.e., the right
to complete the payment of the purchase price should he choose to do so; there is an obligation on the part of
S to sell the subject property exclusively to B upon full payment of the purchase price; and there was a breach
of S’s obligation to sell the property, when S rejected the contract to sell even before B could exercise his option
to buy notwithstanding that he had already made a downpayment.
(2) S rejected contract to sell in no uncertain terms. — The fact that the rejection or cancellation of the
contract by S was not made judicially or by notarial act (Art. 1592.) is of no moment. It is enough for purposes
of determining the existence of a cause of action that S has declared in no uncertain terms his refusal to be
bound by the contract to sell. Such declaration, coupled with S’s act of returning B’s down payment, clearly
indicates S’s rejection of the contract to sell. (Leberman Realty Corporation vs. Typingco, 293 SCRA 316 [1998].)
Cause of action based upon a written contract
, OBLIGATIONS AND CONTRACT
(APRS NOTES)
Actions based upon a written contract should be brought within 10 years from the time the right of action accrues.
(Art. 1144.) The accrual refers to the cause of action. Accordingly, an action based on a contract accrues only
when an actual breach or violation thereof occurs.
Contract of Sale on installment basis
> cause of action arises at the time the last installment is not paid.
Obligation is payable on demand
> breach starts when demand is made
Contract of loan with real estate mortgage
> action for annulment of the foreclosure sale is from the date the debtor discovers the increased interest rate.
Agreement to buy and sell was conditioned upon the conduct of a preliminary survey of land
> the right for specific performance arose when the plaintiff discovered the completion of the survey.
Money claims arising from a contract of employment
> cause of action arises from the date the employer denies the employees claim.
Reformation of contract
> the cause of action for reformation would arise only when the contract appeared disadvantageous.
Nature of product sold
> In case of short deliveries, the cause of action will arise only from the discovery of the same with certainty.
Injury, damage, and damages distinguished.
INJURY DAMAGE DAMAGES
the illegal invasion of a the loss, hurt, or harm which results denote the sum of money
legal right; it is the wrongful from the injury. recoverable as amends for
act or omission which the wrongful act or
causes loss or harm to omission
another the recompense or
the legal wrong to be compensation awarded or
redressed recoverable for the damage
or loss suffered.
Existence of one without the other.
There may be injury without damage and damage without injury.
Proof of loss for injury. —
A wrongful violation of his legal right is not sufficient to entitle a person to sue another in a court of justice for the
enforcement or protection of said right.
As a rule, there must be, in addition, loss or damage caused to him by the violation of his right.
But except for actual or compensatory damages (Art. 2199.),
o no pecuniary proof is necessary in order that moral, nominal, temperate, liquidated, or exemplary
damages may be awarded. (Art. 2216.)
Liability for damages of a person for exercising his legal rights. —
A person has the right to take all legal steps to enforce his legal and/ or equitable rights.
One who makes use of his legal right does no injury. Qui jure suo utitur mullum damnum facit.
, OBLIGATIONS AND CONTRACT
(APRS NOTES)
If damage results from a person’s exercising his legal rights, it is damnum absque injuria (damage without
injury).
The plaintiff must establish that the damage to him resulted from a breach or violation of legal duty which the
defendant owned to him; otherwise, the consequences must be borne by the plaintiff alone.
In other words, in order that the law will give redress for an act (or omission) causing damage, that act
must be not only hurtful, but wrongful.
ILLUSTRATIVE CASE:
Acts of importer contesting forfeiture, delay in the delivery of goods to highest bidder.
Facts: X imported certain goods. The Collector of Customs declared the goods forfeited in favor of the
government and ordered the sale thereof at public auction. The bid of Y was approved and the goods were
awarded to him.
Under the law, X has the right to have the decision of the Collector of Customs reviewed by the Commissioner
of Customs, and from the decision of the latter, to appeal to the Court of Tax Appeals (Secs. 2313, 402, Tariff
and Customs Code.), and from the latter’s decision, to the Supreme Court. X will be prejudiced if the sale is
not set aside. (Art. 1397.)
Issue: Is X liable to Y for damages from the consequent delay in the delivery of the goods?
Held: NO,
Such delay is an incident to the exercise by X of his right to contest the forfeiture and the sale of his goods.
(Auyong Hian vs. Court of Appeals, supra.)
Kinds of obligation according to subject matter.
Real obligation (obligation to give) or that in which the subject matter is a thing which the obligor must deliver
to the obligee; or
Personal obligation (obligation to do or not to do) or that in which the subject matter is an act to be done or
not to be done.
There are thus two (2) kinds of personal obligation:
a) Positive personal obligation or obligation to do or to render service (see Art. 1167.); and
b) Negative personal obligation or obligation not to do (which naturally includes obligations “not to
give”). (see Art. 1168.)
ART. 1157.
Obligations arise from:
(1) Law;
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