University of Santo Tomas

AMV – College of Accountancy

IAC 16 – Integrated Review in Business Law

OBLIGATIONS
 If an obligation cannot be enforced through the courts, it may be disregarded with impunity.
 Requisites of an Obligation: (A-PPE)
1. Active Subject (Creditor or Obligee) (CAGe)
2. Passive Subject (Debtor or Obligor) (DOor Pass)
3. Prestation
4. Efficient Cause (Vinculum or Legal/Juridical Tie) (VinEL)
 Civil Obligation – positive law; enforceable in courts
 Natural Obligation – natural law; exists in equity and moral justice (EMJ)
 10 years from due date – prescriptive periods for actions upon a written contract
 Sources of Obligation: (2 Quasi LCD)
1. Law – not presumed
2. Contracts – have force of law between the contracting parties
3. Quasi-contracts
- lawful, voluntary and unilateral acts (LoVe U)
- Examples: (Others SING)
a. Negotiorum Gestio – voluntary administration
b. Solutio Indebiti – payment by mistake
c. Other Quasi-contracts:
 When, without the knowledge of the person obliged to give support, it is given
by a stranger, the latter shall have the right to claim the same from the former,
unless it appears that he gave it out of piety and without intention of being
paid.
 When funeral expenses are borne by a third person, without knowledge of
those relatives who were obliged to give support to the deceased, said
relatives shall reimburse the third person, should the latter claim reimbursement.
 When the person obliged to support an orphan, or an insane or other indigent
person unjustly refuses to give support to the latter, any third person may furnish
support to the needy individual, with right of reimbursement from the person
obliged to give support.
 When through an accident or other cause a person is injured or becomes
seriously ill, and he is treated or helped while he is not in a condition to give
consent to a contract, he shall be liable for the services of the physician or
other person aiding him, unless the service has been rendered out of pure
generosity.
 When during a fire, flood, storm or other calamity property is saved from
destruction by another person without the knowledge of the owner, the latter
is bound to pay the former just compensation.
 When the government, upon failure of any person to comply with health or
safety regulations concerning property, undertakes to do necessary work,
even over his objection, he shall be liable to pay the expenses.
 When by accident or other fortuitous event, movables separately pertaining to
two or more persons are commingled or confused, the rules on co-ownership
are applicable.
  When in a small community, a majority of the inhabitants of age decide upon
a measure of protection against lawlessness, fire, flood, storm or other calamity,
any one 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.
4. Delicts (FCD)
- Crimes or Felonies
- Civil liability: (IRR)
a. Indemnification of consequential damages
b. Restitution (give back the thing)
c. Reparation of the damage caused
5. Quasi-delicts (CQT)
- Tort or Culpa acquiliana
- Fault or negligence
- For a quasi-delict case to prosper, the complainant must establish: (DGC)
a. Damages to the complainant
b. Guilty of negligence
c. Connection of cause and effect between such negligence and damages (must be
the proximate cause)
 Determinate Thing and Indeterminate (or Generic) Thing
 The loss of a determinate thing through a fortuitous event extinguishes the obligation.
 Obligations of one obliged to give a determinate thing: (Care and Deliver the FAT)
1. To take good care of the thing
2. To deliver the thing
3. To deliver the fruits of the thing
- Kinds: (CaIN)
a. Civil Fruits – result of judicial relation
b. Industrial Fruits
c. Natural Fruits – without human intervention, but always include the young and other
products of animals.
- Creditor has the right to the fruits from the time the obligation to deliver it arises.
 Pure Obligation – at perfection
 Obligation subject to a suspensive period/obligation – upon arrival of period or
upon fulfillment of obligation
- Rights of the Creditor:
a. Personal Right – Jus in personam or Jus ad rem (Personal JIP or JAR)
b. Real Right – Jus in re (Real JIR)
4. To deliver its accessions and accessories, even if not mentioned
 Remedies of the Creditor:
A. Debtor fails to deliver a
 Determinate Thing = Compel delivery + Damages
 Generic Thing = Ask the obligation to be complied with at the debtor’s expense +
damages
B. Debtor fails to perform his obligation in obligations to do = Have the obligation executed or
undone (if poor quality) at the debtor’s expense + damages
C. Debtor does what has been forbidden to him = Demand that what has been done be
undone + damages
 Damages – harm done; money that may be recovered
 Injury – wrongful, unlawful or tortuous acts (WUTA)
 Kinds of Damages: (MANTLE)
A. Moral Damages
B. Actual or Compensatory Damages – proof of pecuniary loss is required
C. Nominal Damages – damages to vindicate a right
D. Temperate or Moderate Damages
E. Liquidated Damages – agreed upon to be paid in case of breach
F. Exemplary or Corrective Damages
 Grounds for liability to pay damages: (FaNDaC)
1. Fraud (Dolo) – deliberate or intentional evasion
A. According to Meaning
I. Fraud in obtaining consent (CausIn)
a. Causal Fraud (Dolo Causante)
- Voidable contract
- Consent would not have been given
b. Incidental Fraud (Dolo Incidente)
- Valid contract + damages
- Would have agreed on different terms
II. Fraud in the performance of obligation
B. According to Time of Commission
a. Future Fraud – waiver is void
b. Past Fraud – waiver is valid
2. Negligence (Culpa)
 Kinds: (ContaMiNa)
a. Culpa Contractual (Contractual Negligence)
- Master-servant rule applies
- Defense of a good father of a family may be used by the employer to
mitigate the liability
b. Culpa Criminal (Criminal Negligence)
- Defense of a good father of a family is not proper because the employee’s
guilt is automatically the employer’s civil guilt if the former is insolvent
c. Culpa Aquiliana (Civil Negligence, Tort Quasi-delict or Culpa Extra-contractual)
- Defense of a good father of a family is a valid defense of the employer to
escape liability
3. Delay (Default or Mora)