SOURCES OF OBLIGATION.pptx

Discussion as to Sources of Obligation and the jurisprudence

1. BUSINESS LAW (SOURCES OF OBLIGATIONS)

2. ARTICLE 1157 Obligations arise from: (1)  Law; (2)  Contracts; (3)  Quasi-contracts; (4)  Acts or omissions punished by law; and (5)  Quasi-delicts. This enumeration is EXCLUSIVE ; hence, there is no obligation as defined in Article 1156, if its source is not any of those enumerated.

3. SOURCES CLASSIFIED EMANATING FROM LAW EMANATING FROM PRIVATE ACTS Those arising from licit acts ( contracts, quasi-contracts) Those arising from illicit acts (crimes, quasi-delicts)

4. LAW ART. 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable , and shall be regulated by the precepts of the law which establishes them; and as to what has not been fore- seen, by the provisions of this Book. LEGAL OBLIGATION

5. PELAYO VS. LAURON The rendering of medical assistance in case of illness is comprised among the mutual obligations to which the spouses are bound by way of mutual support. (Arts. 142 and 143.) If every obligation consists in giving, doing or not doing something (art. 1088), and spouses are mutually bound to support each other, there can be no question but that, when either of them by reason of illness should be in need of medical assistance, the other is under the unavoidable obligation to furnish the necessary services of a physician in order that health may be restored, and he or she may be freed from the sickness by which life is jeopardized; the party bound to furnish such support is therefore liable for all expenses, including the fees of the medical expert for his professional services. This liability originates from the above-cited mutual obligation which the law has expressly established between the married couple.

6. The defendants were not, nor are they now, under any obligation by virtue of any legal provision , to pay the fees claimed, nor in consequence of any contract entered into between them and the plaintiff from which such obligation might have arisen. Within the meaning of the law, the father and mother-in-law are strangers with respect to the obligation that devolves upon the husband to provide support among which is the furnishing of medical assistance to his wife at the time of her confinement; and, on the other hand , it does not appear that a contract existed between the defendants and the plaintiff physician , for which reason it is obvious that the former can not be compelled to pay fees which they are under no liability to pay because it does not appear that they consented to bind themselves.

7. DELA CRUZ v. NORTHERN THEATRICAL ENTERPRISES INC. An employer has no obligation to furnish free legal assistance to his employees because no law requires this, and, therefore, an employee may not recover from his employer the amount he may have paid a lawyer hired by him to recover damages caused to said employee by a stranger or strangers while in the performance of his duties.

8. CONTRACTS ART. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. CONTRACTUAL OBLIGATION

9. MANZANO vs. LAZARO It is basic that a contract is the law between the parties. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 14  Unless the stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the same are binding as between the parties. Petitioner's claim of breach of obligation consisted only of his uncorroborated and self-serving statement which was contradicted by the evidence on record.

10. I t bears emphasis that vitiated consent does not make a contract unenforceable but merely voidable. Such contract is binding on all the contracting parties until annulled and set aside by a court of law. If indeed appellant's consent was vitiated, his remedy would have been to annul the contract, considering that voidable contracts produce legal effects until they are annulled. This is the clear import of Article 1390 (2) of the Civil Code, which provides: Art. 1390. - The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties. 1. Those where one of the parties is incapable of giving consent to a contract. 2. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.

11. An annullable contract may be rendered perfectly valid by ratification , which can be express or implied . Implied ratification may take the form of accepting and retaining the benefits of a contract. This is what happened in this case. No action was taken by appellant to annul the professional service contract. Appellant also did not confront appellee regarding the latter's poor campaign services. This silence, taken together with appellant's demand for appellee to make an inventory of equipment and a liquidation of the funds used during the campaign, constitutes in itself an effective ratification of the original agreement in accordance with Article 1393 of the Civil Code

12. NHA vs. GRACE BAPTIST CHURCH and CA It is a fundamental rule that contracts, once perfected, bind both contracting parties, and obligations arising therefrom have the force of law between the parties and should be complied with in good faith. However, it must be understood that contracts are not the  only  source of law that govern the rights and obligations between the parties. More specifically, no contractual stipulation may contradict law, morals, good customs, public order or public policy. The mere  inexistence  of a contract, which would ordinarily serve as the law between the parties, does not automatically authorize disposing of a controversy based on equitable principles alone . Notwithstanding the absence of a perfected contract between the parties, their relationship may be governed by  other existing laws  which provide for their reciprocal rights and obligations.

13. It must be remembered that contracts in which the Government is a party are subject to the same rules of contract law which govern the validity and sufficiency of contract between individuals. All the essential elements and characteristics of a contract in general must be present in order to create a binding and enforceable Government contract It appearing that there is no dispute that this case involves an unperfected contract, the Civil Law principles governing contracts should apply.  Thus, the alleged contract involved in this case should be more accurately denominated as  inexistent . There being no concurrence of the offer and acceptance, it did not pass the stage of generation to the point of perfection.  As such, it is without force and effect from the very beginning or from its incipiency, as if it had never been entered into, and hence, cannot be validated either by lapse of time or ratification. 26  Equity can not give validity to a void contract, 27  and this rule should apply with equal force to inexistent contracts.

14. QUASI- CONTRACTS ART. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book. QUASI-CONTRACTUAL OBLIGATION

15. DEFINITION QUASI-CONTRACT - the juridical relation resulting from certain lawful, voluntary and unilateral acts by virtue of which the parties become bound to each other to the end that no one shall be unjustly enriched or benefited at the expense of another.

16. KINDS OF QUASI-CONTRACTS NEGOTIORUM GESTIO- the voluntary management of the property or affairs of another without the knowledge or consent of the latter SOLUTIO INDEBITI- the juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake - This is based on the ancient principle that “ no one shall enrich himself unjustly at the expense of another” - This applies where: Payment is made when there exists no binding relation between the payor, who has no duty to pay, and the persons who received the payment; and The payment is made through mistake, and not through liberality or some other cause.

17. BPI vs. SARMIENTO There is  solutio indebiti   where: payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause. x x x The quasi-contract of  solutio indebiti  is based on the ancient principle that no one shall enrich himself unjustly at the expense of another. Both elements are lacking in the present case . Mr. Cascarro , the Head of the Branches Division Investigation Unit, had categorically stated that respondent was only terminated from service on August 26, 1988. Respondent was not suspended from office. Consequently, during the period in question, there still existed an employer-employee relationship between petitioner and respondent which entitled respondent to the payment of her salary during the said period. Thus, there can be no mistaken payment in this case. Moreover, it has been shown that the payment of respondent's salary was with the knowledge and approval of respondent's immediate superior officers. Hence, the principle of  solutio indebiti  finds no application in this case.

18. REYES vs. LIM On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10 million down payment. The application of equity always involves a balancing of the equities in a particular case, a matter addressed to the sound discretion of the court. Here, we find the equities weigh heavily in favor of Lim, who paid the P10 million down payment in good faith only to discover later that Reyes had subsequently sold the Property to another buyer. The principle that no person may unjustly enrich himself at the expense of another is embodied in Article 22 38  of the Civil Code. This principle applies not only to substantive rights but also to procedural remedies. One condition for invoking this principle is that the aggrieved party has no other action based on contract, quasi-contract, crime, quasi-delict or any other provision of law. 39  Courts can extend this condition to the hiatus in the Rules of Court where the aggrieved party, during the pendency of the case, has no other recourse based on the provisional remedies of the Rules of Court.

19. Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller himself seeks rescission of the sale because he has subsequently sold the same property to another buyer. 40  By seeking rescission, a seller necessarily offers to return what he has received from the buyer. Such a seller may not take back his offer if the court deems it equitable, to prevent unjust enrichment and ensure restitution, to put the money in judicial deposit. There is 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.  In this case, it was just, equitable and proper for the trial court to order the deposit of the P10 million down payment to prevent unjust enrichment by Reyes at the expense of Lim.

20. DELICT ART. 1161. 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, Preliminary Title on Human Relations, and of Title XVIII of this Book, regulating damages. CIVIL LIABILITY ARISING FROM CRIMES OR DELICTS

21. The commission of an offense has a two-pronged effect: On the public ( criminal) as it breaches the social order; and Upon the private victim ( civil ) as it causes personal sufferings or injury Article 100, Revised Penal Code- “Every person criminally liable for a felony is also civilly liable” SCOPE OF CIVIL LIABILITY- It includes: Restitution Reparation for the damage caused; and Indemnification for consequential damages

22. PEOPLE vs. CATUBIG "ARTICLE 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. Such damages are separate and distinct from fines and shall be paid to the offended party. As a rule, relationship is held to be aggravating in crimes against chastity, such as rape and acts of lasciviousness, whether the offender is a higher or a lower degree relative of the offended party.

23. The term "aggravating circumstances " used by the Civil Code, the law not having specified otherwise, is to be understood in its broad or generic sense. The commission of an offense has a two-pronged effect, one on the public as it breaches the social order and the other upon the private victim as it causes personal sufferings, each of which is addressed by, respectively, the prescription of heavier punishment for the accused and by an award of additional damages to the victim. The increase of the penalty or a shift to a graver felony underscores the exacerbation of the offense by the attendance of aggravating circumstances, whether ordinary or qualifying, in its commission. Unlike the criminal which is basically a State concern, the award of damages, however, is likewise, if not primarily, intended for the offended party who suffers thereby. It would make little sense for an award of exemplary damages to be due the private offended party when the aggravating circumstance is ordinary but to be withheld when it is qualifying. Withal, the ordinary or qualifying nature of an aggravating circumstance is a distinction that should only be of consequence to the criminal, rather than to the civil, liability of the offender . In fine, relative to the civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should entitle the offended party to an award of exemplary damages within the unbridled meaning of Article 2230 of the Civil Code.

24. QUASI-DELICT/TORTS ART. 1161. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws. OBLIGATIONS ARISING FROM QUASI-DELICTS

25. DEFINITION QUASI-DELICT – an act or omission by a person (tortfeasor) which causes damage to another in his person, property or rights giving rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-existing contractual relation between the parties.

26. REQUISITES There must be an act or omission by the defendant; There must be fault or negligence of the defendant; There must be damage caused to the plaintiff; There must be a direct relation or connection of cause and effect between the act or omission and the damage; and There is no pre-existing contractual relation between the parties.

27. AIR FRANCE vs. CARRASCOSO The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion . The evidence shows that the defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the "first class" seat that he was occupying to, again using the words of the witness Ernesto G. Cuento , a "white man" whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this "white man" had any "better right" to occupy the "first class" seat that the plaintiff was occupying, duly paid for, and for which the corresponding "first class" ticket was issued by the defendant to him. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in law.  41  For the willful malevolent act of petitioner's manager, petitioner, his employer, must answer. Article 21 of the Civil Code says: ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

28. A contract to transport passengers is quite different in kind and degree from any other contractual relation.  43  And this, because of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages . Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier — a case of  quasi-delict . Damages are proper.

29. ASSIGNMENT Articles 1163-1178