BUSINESS LAW

ARTICLE 1156 1220

ANNE EIKO GIZELLE LUMBAYON
CHAPTER 1: GENERAL PROVISIONS
Article 1156
An obligation is a juridical
necessity to give, to do, or not to
do
Latin: obligation (tying or binding)
Juridical necessity in case of
noncompliance, courts may be
called upon
Civil, moral and natural obligations
Essential requisites of an obligation
(passive subject - debtor, active
subject - creditor, object or
prestation, juridical tie)
Form of an obligation manner in
which an obligation is incurred
(oral/writing)
Obligation act or performance
which the law will enforce
Right power to demand for
prestation
Wrong act or omission of one
party in violation of the legal right
Kind of obiligation according to
subject matter: REAL (to give or
not to give) and PERSONAL (to do
+ or not to do -)
Article 1157
Obligations arise from:
LAW
CONTRACTS meeting of the
minds
QUASI-CONTRACTS lawful,
voluntary, unilateral acts which are
enforceable that no one should be
unjustly benefited
ACTS OR OMISSIONS PUNISHED BY
LAW arise from civil liability which
is the consequence of a criminal
offense
QUASI-DELICTS (torts) when they
arise from damage but no
contractual relation exists

Article 1158
Obligations derived from law are
NOT presumed, only those
expressed or are in special laws
are demandable
Example: employee may not
demand damages from employer
for legal expenses incurred
because of giving service to their
client (not provided by law)
Example: money won from
gambling, person must return
money to loser (there is a law)
Article 1159
Obligations arising from contracts
have the force of law between the
contracting parties and should be
complied with in good faith
Binding force doesn't mean that
the contract is superior to the law,
must be valid and considered void
if it is against the law
Breach of contract when one
party refuses to comply
Article 1160 (QUASI-CONTRACTS)
No meeting of the minds
Negotiorum gestio voluntary
management of the property or
affairs of another without the
knowledge or consent of the latter
Solutio indebiti something is
received when there is no right to
receive it
No one should be unjustly
benefited at the expense of
someone else
Article 1161
Civil obligations arising from
criminal offenses shall be governed
by the penal laws
RESTITUTION RETURN
REPARATION FOR DAMAGE
CAUSED
INDEMNIFICATION PAY MONEY
FOR DAMAGES

Ex: X stole the Car of Y, gawin niya

lahat yan sa taas

Article 1162 (QUASI-DELICTS)

For it to be considered as a quasi-delict,
there must be an:
act or omission
fault or negligence
damage caused
direct cause and effect relation
no pre-existing contractual
relations

deliver accessions and accessories

deliver the thing itself
answer for damages in case of
breach

Article 1164 no real right over a thing

until it has been delivered to him
Fruits
natural
industrial
civil fruits rent
Acquiring of right to the fruits of the
thing: PERFECTION OF THE CONTRACT
if sale, if Buyer had paid the price
and the contract is perfected
personal and real right (personal is
the right to demand; right over a
specific thing)

CRIME
Malicious intent
Punishment
Public interest
Criminal and civil
liab
Cant be settled by
parties only
Beyond reasonable
doubt (guilt of the
accused)

QD
Negligence
Indemnification
Private interest
Civil liab only
Can be
compromised
Preponderance
(greater weight of
evidence)

CHAPTER 2: NATURE AND EFFECT OF

OBLIGATIONS
Article 1163
specific/determinate thing
particularly segregated or
physically segregated from the
same class
generic/indeterminate thing
refers only to a class or genus
Duties of debtor in obligation to give a
SPECIFIC thing
preserve the thing (diligence of a
good father of a family/ordinary
care)
deliver the fruits of the thing

Article 1165
when the thing to be delivered is
SPECIFIC, C may compel B to
deliver the thing
when the thing to be delivered is
GENERIC, he may ask that the
obligation be complied with at the
expense of the debtor
ask for damages when there is
delay
GENUS NUNQUAM PERIT (incase of
delay and of fortuitous event, D is
still liable because GENUS NEVER
PERISHES)
Article 1166
Accessions fruits of the thing or
additions and improvements upon
the principal thing (ex. aircon in
car)
Accessories things joined to or
included with the principal thing
(keys)
Article 1167 and 1168 (Performance of
a third person)

D promised to sing at Cs bday,

indemnification for damages by C
Paint house white, but painted
pink. C may request someone else
to paint it white, at the expense of
S and may ask for indemnification
(1168) if a person is obliged NOT
TO do something, it may be
undone at the expense of the
debtor

Article 1169 (DELAY)

ordinary delay merely the failure
to perform an obligation on time
legal delay or default or mora
failure to perform an obligation
which failure constitutes breach of
obligation
mora solvendi delay on part of
debtor
mora accipiendi delay to accept
of creditor
compensatio morae both delay
(offset)
no delay in negative personal
obligation (not to do)
delay arises when DEMAND has
been made even if lumampas na
sa date (ordinary delay) [ex.
deliver on dec 10/dec 15 demand.
15 onwards, delay na]; in case of
absence of evidence, from the
filing of complaint

delay doesn't happen: when

demand is already stated in the
obligation, when the law so
provides (taxes), when time is of
the essence, when demand is
useless, reciprocal obligations

Article 1170 (FRAUD, NEGLIGENCEM

DELAY, CONTRAVENTION OF TERMS
OF OBLIGATION)
4 GROUNDS FOR LIABILITY AND
ENTITLEMENT TO DAMAGES
(1) FRAUD
fraud/deceit/dolo intentional
evasion of the normal fulfillment of
the obligation

dolo incidente incidental fraud;

after meeting of the minds
dolo causante causal fraud;
reason by which there was a
contract (ex. wine)

(2) NEGLIGENCE (FAULT/CULPA)

voluntary act or omission, no bad
faith or malice. (ex. taxi driver
driving @ 120kph negligence)
(3) DELAY OR MORA
(4) CONTRAVENTION
violation of terms and conditions
Article 1171
Any waiver of an action for future
fraud is void
Waiver of action for past fraud is
valid
Article 1172
Kinds of negligence according to source
of obligation
Contractual negligence breach of
contracts (source: contracts)
Civil negligence negligence is the
source of obligation (source: QD)
Criminal negligence negligence
resulting to a commission of a
crime (source: acts/omissions by
law)
To be entitled to damages, it is not
required that the negligence of the
defendant be the sole cause of the
damage (reduced indemnification,
contributory din ang passenger ng
bus)

Article 1173
Negligence failure to observe the
protection of another person
Damages signify the money
compensation
Article 1174

Unless otherwise stipulated, one

cannot be liable for loss due to
FORTUITOUS EVENTS
FTTS EVENTS any event which
cannot be foreseen or though
foreseen, is inevitable
^ may be an ACT OF MAN (war,
robbery, murder) OR FORCE
MAJEURE (flood, rain, lightning)
ordinary (predictable:rain) and
extraordinary ftts events

Article 1175 (USURIOUS

TRANSACTIONS SHALL BE
GOVERNED BY LAW)
SIMPLE LOAN/MUTUUM contract
whereby one of the parties delivers
to another, money (may be with
interest)
Usury contracting for receiving
interest in excess of the amount
allowed by law
(agreement must be in writing, lawful
and interest must be expressly
stipulated)
Article 1176
Presumption inference of a fact
not actually known arising from its
usual connection with another
which is known or proved
Conclusive one which cannot be
contradicted
Disputable/rebuttable can be
rebutted by proof to the contrary

Article 1179
Every obligation whose
performance does not depend
upon future or uncertain events,
and is subject to resolutory
condition and period, is
DEMANDABLE at once
(1)Pure Obligation not subject to any
condition
(2)Conditional Obligation one whose
consequences are subject to
fulfillment of a condition
(3)Condition future and uncertain
event, upon the happening of
which, effectivity or
extinguishment arises
(4)Suspensive condition give rise to
an obligation
(5)Resolutory condition will
extinguish an obligation
Article 1180
Period future and certain event
(death), upon the arrival of which,
the obligation either arises or is
extinguished
Article 1182
Potestative condition depends
upon the sole will of one of the
parties
If the suspensive condition
depends upon will of debtor,
conditional obligation is void (kasi
parang Ill pay you whenever I
want
Physically impossible and legally
impossible conditions (no rain for a
year; will kill her)
Article 1186
Obligation is deemed extinguished
when the obligor voluntarily
prevents its fulfillment

CHAPTER 3: DIFFERENT KINDS OF

OBLIGATIONS

Article 1189
Physical, Legal and Civil loss (dog
is lost for some unknown reason)
Loss of thing without debtors fault
obligation is extinguished
Ds fault liable for damages
Deterioration without Ds fault
creditor shall suffer impairment
Ds fault creditor may cancel and
ask for damages
Improvement thru time creditor
will enjoy, debtor cant ask for addtl
payment
Improvement at expense of debtor
usufruct, right to enjoy fruits of
the thing (he may remove the
improvements so long as it does
not damage the car)
Article 1191
Unilateral when only one party is
obliged to comply with prestation
Bilateral when both parties are
mutually bound to each other
Under bilateral:
(1)Reciprocal obligations same
cause
(2)Non-recip not same cause
Remedies in recip obligations
(1)Fulfillment of obligation +
Damages
(2)Rescission + damages
Di pwedeng ipagsabay ang fulfillment at
rescission
Rescission substantial, for slight
breaches, dili pwede
Article 1192
Incase both parties have
committed a breach, the first
infractor shall be equitably
tempered by the courts (reduce)

First infractor not known

extinguished, and each shall bear
own damages

Article 1193
Suspensive and resolutory period
Article 1196
When a period is designated, it is
presumed to have been set for the
benefit of both parties
Article 1199
Simple obligation one where
there is only one prestation
Compound obligation 2 or more
prestations
(1)conjunctive obli several
prestations all of them are due
(2)distributive one or two or more of
the prestations is due
alternative lot of prest, one is
sufficient
facultative pwede substitute
Article 1200 (RIGHT OF CHOICE
BELONGS TO THE DEBTOR)
the right to choose the prestation
belongs to the debtor unless
EXPRESSLY granted to the creditor
right of choice of debtor is NOT
absolute: impossble, unlawful, only
one prestation is practicable
dili pwede half half
Article 1201
choice has been made and
COMMUNICATED
Article 1203
D borrowed 10T from C. In
payment, he may deliver 1, 2, 3. If
thru fault of C, item 1 is destroyed,
D may rescind contract. D must
resturn 10T with interest, and C
must pay the value of 1 with
damages.

If he chooses 2, no damages is
needed and the obligation is
extinguished

Article 1204
Value of the last thing lost if not
thru fortuitous events
All of the objects are lost thru Ds
fault, indemnification is needed.
Article 1205 (CHOICE BELONGS WITH
CREDITOR)
Choice belongs to creditor
Among prestations, nawala ang
isa, pwede hingin ng Creditor ang
value ng nawala plus damages (if
di nya piliin ang isa pang subsiting
prestation)
If all the things are lost thru fault of
debtor, value of any of the
prestations kung ano piliin ni
creditor plus damages
Article 1206
Article 1207 and Article 1208
Kinds of obligations according to number
of parties
Individual obligation 1 obligor, 1
obligee
Collective obligation 2 debtors
and 2 creditors
(a) Joint obligation is to be paid
and demanded proportionately

(b)Solidary entire compliance

with the prestation, no half half
Kinds of solidarity
Passive debtors, any one of them
can be made liable for the
fulfillment of entire obligation
Active creditors, demand
fulfillment of entire obligation
Mixed each one is a debtor and
creditor of one another
CONVENTIONAL SOLI agreed
upon by the parties
LEGAL imposed by the law
REAL imposed by nature of the
obligation
IKAW NA BASA:
Article 1209
Article 1210
Article 1211
Article 1212
Article 1213
Article 1214
Article 1215
Article 1216
Article 1217
Article 1218
Article 1219
Article 1220