Econ 163 Midterms Reviewer

• Law on Obligations and Contracts


  The body of rules which deals with the nature and resources of obligations and rights and duties arising from agreements and contracts
• Civil Code of the Philippines

  The source of the Law on Obligations and Contracts, which took effect on August 30, 1950 and is derived from the Civil Code of Spain of 1889
• Obligation


  A juridical necessity to give, do or not to do
• The definition of obligation in the Civil Code is criticized as it views obligation from the debit side, and a better definition is one given by Arias Ramos: An obligation is a juridical relation whereby a person (called creditor) may demand from another (called debtor) the observance of a determinative conduct (the giving, doing or not doing) and in case of breach, may demand satisfaction from assets of the latter
• Kinds of obligations based on its definition

  • Real obligation - obligation to give
  • Personal obligation - obligation to do or not to do
• Types of personal obligations

  • Positive personal obligation - to do
  • Negative personal obligation - not to do
• Essential Requisites of obligation

  • Active Subject - the obligee or creditor
  • Passive Subject - the obligor or debtor
  • Object or Prestation - subject matter of the obligation
  • Juridical or Legal Tie - the vinculum juris
• 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. The debtor may be made liable for damages for the violation of the creditor's right.
• Obligation


  The act or performance that the law will enforce
• Right


  The power which a person has under the law to demand from another any prestation
• Wrong (cause of action)

  An act or omission of one party in violation of the legal right (a right recognized by law) of another
• Kinds of Obligations (Viewpoint of sanctions)

  • Civil obligations
  • Natural obligations
  • Moral obligations
• Kinds of Obligations (Viewpoint of performance)

  • Positive - to give or to do
  • Negative - not to do
• Kinds of Obligations (Viewpoint of subject matter)

  • Real obligation - to give
  • Personal obligation - to do or not to do
• Sources of obligations (Article 1157 of the Civil Code)

  • Law
  • Contracts
  • Quasi-contracts
  • Act or omission punishable by law
  • Quasi-delicts
• Obligations derived from law

  They are not presumed, must be expressly determined in the Civil Code or by special laws, and shall be regulated by the law which established them
• Obligations derived from law


  • Obligation of husband and wife to support each other
  • Obligation of a taxpayer to file income tax return
  • Obligation of legitimate ascendants and descendants to support each other
• The owner is not liable to reimburse the employee's legal expenses incurred in defending a criminal case, as this is not a legal obligation but at most a moral one
• Obligations arising from contracts

  They have the force of law between the contracting parties and should be complied with in good faith
• For a contract to be valid and enforceable, it must not be contrary to law, morals, good customs, public order or public policy
• Quasi-contracts


  Judicial relations arising from certain lawful, voluntary, and unilateral acts, to the end that no one may be unjustly enriched or benefited at the expense of another
• Principal kinds of Quasi-contracts

  • Negotiorum Gestio (unauthorized management)
  • Solutio Indebiti (undue payment)
• The distinction between contract and quasi-contract is that in contract, there is consent of the parties while in quasi-contract, the obligation arises without a contract
• Examples of Quasi-Contracts


  • Voluntary management of another's property
  • Payment by mistake of an obligation not due
  • Providing aid to an injured person without their consent
  • Saving property from destruction during a calamity
  • Contributing to community protection measures
• Difference between Quasi-contract and Natural Obligation

  Quasi-contracts arise from lawful, voluntary and unilateral acts to prevent unjust enrichment, while natural obligations are not based on positive law but on equity and natural law, and cannot be judicially enforced but can be retained if voluntarily performed
• Delict


  An act or omission punishable by law
• Civil Liability Arising from Delicts or Acts or Omissions Punishable by Law

  • Restitution - Restoring the thing itself
  • Reparation of the damage caused
  • Indemnification for Consequential Damages
• Every person who is criminally liable is also civilly liable under the Revised Penal Code, and the civil liability is to be declared and enforced in the same criminal proceeding unless the injured party reserves the right to file a separate civil action
• Quasi-delict or culpa aquiliana or tort


  A source of obligation which causes damage to another, there being fault or negligence, but there is no pre-existing contractual relation between the parties
• Culpa - Negligence (Culpa Aqulliana, torts)


  The omission of that diligence required by the circumstances of person, time, place and nature of the act
• Culpa


  Negligence (Culpa Aqulliana, torts) - omission of that diligence required by the circumstances of person, place and time
• Negligence is a question of FACT
• Requisites of Quasi-Delicts


  • There must be act or omission
  • There must be fault or negligence
  • There must be damage caused
  • There must be direct relation of cause and effect between act or omission and the damage
  • There is no pre-existing contractual relation between the parties
• Proximate Cause


  Adequate and efficient cause which in the natural order of events necessarily produces the damage or injury complained of
• Different kinds of Culpa (Negligence)

  • Culpa contractual (Contractual negligence) - negligence in the performance of the contract
  • Culpa Aquiliana (Civil Negligence) - wrong or negligence committed independent of a contract and without criminal intent
  • Culpa Criminal (Criminal negligence) - Those resulting to the commission of the crime punishable under Article 365 of the Revised Penal Code
• Specific or determinate thing


  The thing is particularly designated or segregated from all others of the same class
• Generic or indeterminate thing


  The thing is not particularly designated or segregated, hence it still belongs to the class or genus
• Diligence of a Good father of the Family


  That which is required by the nature of the obligation and corresponds with the circumstances of person, time and place
• If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of family shall be required
• If the law or contract provides for a different standard of care, said law or stipulation must prevail