BUSINESS LAW Flashcards by King David Ostan

An obligation is a juridical necessity to
give, to do or not to do

Article 1156

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a tie of law which binds us, according to the rules of our civil
law, to render something

Justinian institute

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a legal relation between one person and another, who is bound to the
fulfillment of a prestation which the former may demand of him

Manresa

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the juridical necessity to comply with a prestation

Sanchez Roman

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a juridical necessity to give, to do or not to do

Civil code of the Philippines

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a juridical relation whereby a person (called creditor) may
demand from another (called the debtor) the observance of a determinate conduct,
and in case of breach, may obtain satisfaction from the assets of the letter.

Justice J.B.L. Reyes

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Implies the existence of legal sanctions that may be
imposed upon the debtor in case of breach of the
obligation. The creditor may seek appropriate reliefs from
the courts in case of such breach.

Juridical Necessity

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What are the essential elements of Obligations

Juridical tie (vinculum juris)
Object or Prestation
Active Subject (Creditor)
Passive Subject (Debtor

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that which essentially binds the parties to
the object of the obligation, by virtue of which the
debtor is bound to the creditor to fulfill a determinate
prestation.

Juridical Tie

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always a prestation,
which is defined as the particular conduct required to be
observed by the debtor and which can be demanded by
the creditor.

Object of the obligation

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has the right to demand.

Active Subject

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is bound to perform

Passive subject

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What are the three obligations in article 1156?

• To give
• To do
• Not to do

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What are the basic kinds of obligation

Moral
•Natural (Art. 1423 CC)
•Civil/Juridical (Art. 1156 CC)

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What are the sources of obligation?

(1) Law;
(2) Contracts;
(3) Quasi-Contracts
(4) Acts or omissions punished by law (Delict); and
(5) Quasi-delicts.

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a legal provision that states that obligations that arise from the law are not automatically assumed to exist. Only obligations that are explicitly stated in the law, either in the Civil Code or in special laws, can be legally enforced. These obligations will be governed by the specific laws that establish them, and if there are any issues that are not covered by these laws, they will be governed by the general provisions of the Civil Code.

Article 1158

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a meeting of minds between
two persons whereby one binds himself,
with respect to the other, to give
something or to render some service.

Contracts

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means that when you make a contract with someone, the things you agreed to in the contract are like a law that both of you have to follow. You have to be honest and fair in keeping the promises you made in the contract, just like how you have to follow the law.

Article 1159

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Certain lawful, voluntary and unilateral acts
give rise to the juridical relation of this to the end that no one shall be
unjustly enriched or benefited at the
expense of another.

Quasi-contracts

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Whoever voluntarily takes charge of the agency or management of the
business or property of another, without any power from the latter, is
obliged to continue the same until the termination of the affair and its
incidents, or to require the person concerned to substitute him, if the
owner is in a position to do so. This juridical relation does not arise in
either of these instances:
(1) When the property or business is not neglected or abandoned;
(2)If in fact the manager has been tacitly authorized by the owner

Negotiorum Gestio

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If something is received when there is no right
to demand it, and it was unduly delivered
through mistake, the obligation to return it
arises.

Solutio Indebiti

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What are the other Quasi-contracts?

•Giving of legal support and payment of funeral expenses
• Acts of a good Samaritan
• Third person pays debt or taxes of another
• Acts in consideration of general welfare

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Article 1161. Civil 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.

Delict or crime

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, also known as an “accidental fault” or “culpa aquiliana,” is a legal concept that refers to an act or omission that causes damage to another person, even in the absence of a contract or pre-existing relationship between the parties. In other words, it is a type of civil wrong that is committed by someone who acted negligently or carelessly, causing harm to another person, but without any pre-existing legal obligation or contract between them. Examples of quasi-delicts include car accidents caused by reckless driving, slips and falls in public places due to lack of maintenance, or any other type of accidental harm caused by someone’s negligence.

Quasi-delict

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What are the elements of Quasi Delict

1. Damage suffered by the plaintiff; 2. Fault or negligence of the defendant; and 3. Connection of cause and effect between the fault or negligence of defendant and the damage incurred by the plaintiff.

What is the difference between a delict and quasi delict

(1) Crimes affect the public interest, while quasi-delicts are only of private concerns; (2) That, consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code, by means of of indemnification merely repairs the damage; and (3) That delicts are not as broad as quasi-delicts, because the former are punished only if there is a penal law clearly covering them, while the quasidelicts, include all acts in which any kind of fault or negligence intervenes.

means that a person cannot recover damages twice for the same act or omission of another person. Even though a person may seek compensation in both a civil and criminal case, they cannot recover damages twice for the same harm or damage caused by the other person's actions or negligence.

Article 2177

states that if a person's own negligence is the main reason they got hurt, they cannot recover damages. But if their negligence only contributed to the injury, and the main reason was the other party's lack of care, the person can still get damages. However, the amount of damages may be reduced by the courts.

Article 2179

says that people are responsible not only for their own actions but also for the actions of those under their care or control. For example, parents are responsible for any harm caused by their minor children, and business owners are responsible for any harm caused by their employees while working. It's a way of making sure that people are accountable for any harm caused by those who are under their care or control.

Article 2180

states that if a person pays for damages caused by their dependents (such as children) or employees, they have the right to recover the amount they paid from those who caused the damage. This article is important because it allows people who have paid for damages caused by someone else to recover their losses from the actual wrongdoer, rather than having to bear the cost themselves.

Article 2181

If the minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed.

Article 2182

The possessor of an animal or whoever may make use of the same is responsible for the damage which it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come from force majeure or from the fault of the person who has suffered damage.

Article 2183

What are the kinds of obligation

1. Civil or natural 2. Real or Personal 3. Pure, conditional or with a term 4. Conjunctive or distributive, and the distributive may be alternative or facultative 5. Joint or solidary 6. Divisible or indivisible 7. With a penal clause

This give a right of action to compel their performance. This, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles.

Civil or Natural

One which gives a right of action to compel its performance. It is one which provides for a legal sanction in case of its breach. Hench, the creditor is authorized to invoke the power of the State, through the courts, either to compel its performance or to demand any other alternative relief.

Civil Obligation

Which does not grant a right of action to enforce its performance, but after voluntary fulfillment by the debtor, it authorizes the retention of what has been delivered or rendered by reason thereof.

Natural Obligation

may either be generic (indeterminate) or specific (determinate) depending on the nature of the thing to be delivered.

Real obligation

an obligation to deliver a certain quantity or amount of goods, without specifying the specific items to be delivered. Ex. I will deliver a horse to Mark for the payment of my debt last month.

Generic

obligation consists in the delivery of a specific or determinate thing Ex. I will deliver a 2 year old white horse to Mark for the payment of my debt

Specific or determine obligation

an obligation “to do”

Positive Personal Obligation

an obligation “not to do”

Negative Personal Obligation

not only when it is not performed, but also when it is performed in contravention of its tenor. If the nonfulfillment of the obligation is not due to the debtor’s fault but by reason of a fortuitous event, the debtor, as a rule, is not liable.

Breach of Obligation

is the non-fulfillment of the obligation with respect to time

Delay

delay in the fulfillment of an obligation

Mora Solvendi

delay on the part of both parties because neither has completed their part in their reciprocal obligations

Compensatio Morae

delay on the part of the obligee in accepting the performance of the obligation by the obligor.

Mora Accipiendi

the obligation is already exists and this is committed only during its performance.

Fraud

impossibility of performing the obligations may provide the debtor with a legal excuse for his non-performance, if the same occurs without his fault and prior to him incurring delay

Fortuitous event

wrongful or negligent act or omission which creates a vinculum juris and gives rise to an obligation between two persons not formally bound by any other obligation;

Culpa Aquiliana/Culpa extra contractual

refers to the fault or negligence incident in the performance of an obligation which already existed, and which increases the liability from such already existing obligation.

Culpa Contractual

an obligation that is not subject to any conditions or restrictions. It means that the debtor must fulfill the obligation, and the creditor has the right to demand that the obligation be fulfilled, without any limitations.

Pure Obligation

That which must necessarily come, although it may not be known when.

Term

What are the Classification of a Term:

Suspensive Resulutory

Acquisitions of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event that constitutes the condition. “uncertain event upon which an obligation or provision is made to depend.”

Conditional Obligation

its fulfillment depends upon the exclusive will of either of the parties to the juridical relation

Protestative

if its fulfillment depends upon chance or the will of a 3rd person

Casual

if its fulfillment is dependent partly upon the will of either of the parties and partly upon chance or will of a third person.

Mixed

those which require the happening of an event;

Positive

the condition that some event will not happen at a determinate time shall render the obligation effective from the moment the time indicated has elapsed, or if it has become evident that the event cannot occur.

Negative

According to as whether by its nature, by agreement or under the law, the condition can be performed by parts.

Divisible and indivisible

According to as whether, when there are several, all of them or only one must be performed. If all are required to be performed, it is this

Conjunctive and alternative

According as to whether a condition is stated or merely inferred. If stated, it is this; if merely inferred, it is this.

Express and implied

if the date is fixed or when the date of the happening of the event is known;

Definite

if the event is sure to happen but the exact timing of its happening in not know;

Indefinite

depending on its source, or that which is fixed by law

Legal

that which is fixed by the parties;

Conventional

fixed by the courts

Juridical

is that whose consequences or effects are subjected in one way or another to the expiration of said term or period. A term or period is defined as a space of time which, exerting an influence in an obligation as a result of a juridical act either suspends its demandability or produces its extinguishment.

Obligation with a period

There is more than one object (prestation), and the fulfillment of one is sufficient, determined by the choice of the debtor who generally has the right of the election

Alternative Obligation

Whether the right of choice pertains to the debtor or to the creditor, he has no right to choose those prestations which are impossible, unlawful or which could not have been the object of the obligation.

Limitations of the right of choice

The choice becomes irrevocable and binding upon he who made it and he will not thereafter be permitted to renounce his choice and take an alternative which was at first open to him. Since both parties are bound by the choice made by the party (who is entitled to exercise the right of choice), the debtor has no other recourse except to perform the chosen prestation. As a consequence, the obligation ceases to be alternative and is converted into a pure or simple one.

Effect of the choice

The effects of the loss of one, some or all of the prestations will depend on who has the right of choice and the reason for the loss of the same. •Loss is due to fortuitous event •Loss is due to debtor’s fault •Loss is due to creditor’s fault •Loss after Election

Effect of loss of Object (Prestation) in Alternative Obligation

one where only one prestation has been agreed upon but the obligor may render another in substitution.

Facultative Obligation

An obligation where there is a concurrence of several creditors, or of several debtors, or of several creditors or debtors, by virtue of which each of the creditors has a right to demand, and each of the debtors is bound to render, compliance with his proportionate part of the prestation which constitutes the object of the obligation.

Joint Obligation

Art. 1210 CC, expressly clarifies that the indivisibility of an obligation does not necessarily give rise to solidarity nor does solidarity of itself imply indivisibility. Solidarity refers to the vinculum or legal of the obligations. On the other hand, indivisibility refers to the prestation or object of the obligation.

Joint Indivisible Obligations

every debtor will become liable to perform the entire obligation. Hence in the event of the nonperformance of the obligation, the creditor may proceed against any debtor for the payment of the indemnity, incliding the price of the thing or the value of the service constituting the obligation and the damages, even if the latter was ready and willing to perform.

Indivisible Solidary Obligation

The general rule is that when there is a concurrence of two or more debtors under a single obligation, the obligation is presumed to be joint. The law further provides that to consider the obligation as solidary in nature, it must expressly be stated as such, or the law or the nature of the obligation itself must require solidary.

Solidary Obligation

when the obligation expressly so states. However, it is not necessary that the agreement should use precisely the word ”solidary” for an obligation to be so.

Solidary Liability by Express Stipulation

The fact that the obligation is indivisible does not necessarily gives rise to solidarily give rise to solidarity in the absence of express and indubitable terms characterizing the obligation as solidary

Nature of Obligation Requires Solidarity

is one that exists only among the creditors

Active Solidary

that which exists only among the debtors.

Passive solidary

that which exists among the creditors and debtors.

Mixed solidary

the essence of active solidarity. In active solidarity, every creditor is considered an agent of the others and he has the power to claim and exercise the rights of all of them in relation to their debtor or debtors. As a consequence, each creditor is entitled to demand the whole obligation

Mutual Agency

Art.1213 CC, prohibits the assignment if rights of a solidary creditor without the consent of the others. The rule is premised on the existence of mutual agency among the creditors, which implies mutual confidence in them, in addition to the power of every solidary creditor to cause the extinguishment of the debtor’s obligation without the knowledge and consent of the others.

Effect of Unauthorized Assignment of Right

What are the effects between Solidary Creditors and Debtors

)The debtors may pay any one of the solidary creditors; but if any demand judicial or extrajudicial, has been made by one of hem, payment should be made to him; (2)Any solidary creditor may extinguish the obligation by novation, compensation, confusion, remission or any other mode of extinguishment; but the creditor who may have executed any of theses acts shall be liable to the others for the share in the obligation corresponding to them.

In view of the mutual agency existing among the solidary creditors, their debtor or debtors may pay any one of them.

Effect of demand by solidary creditor

when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement.

Novation

a mode of extinguishment to the concurrent amount the debts of persons who in their own right are creditors and debtors of each other.

Compensation and merger

an act of liberality on the part of the creditor who receives no price or equivalent thereof, renounces the enforcement of the obligation, which is extinguished in its entirety or in that part or aspect of the same to which the remission refers.

Remission and condonation

Is that which has for its object a thing or an act which in its delivery or performance is susceptible of division.

Divisible obligation

A kind of division when the things separated do not form a homogenous whole, such as an inheritance.

Qualitative

When a homogenous whole is divided either by separating into parts (like in the case of movables) or by fixing their limits (like in the case of immovables).

Quantitative

When the thing is not materially divided but an ideal or fractional portion is given to each person as in the case of co-ownership.

Ideal

Which does not admit of division, or even though it does, neither the nature of contract nor the intention of the parties permits it to be fulfilled by parts.

Indivisible obligation

Determining whether the obligation is Divisible or Indivisible

the nature of the object (2)The provisions of the law affecting the prestations (3)The will or the intention of the parties, either express or tacit (4)The end or purpose of the obligation

when the nature of the object does not admit its division.

Absolute

although the prestation is susceptible of division, it is considered an integral, indivisible amount.

Relative

shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

Obligations with penal clause

Those that can stand alone independently of the existence of other obligations and have their independent and individual purpose.

Principal obligation

Those attached to a principal obligation in order to complete the same or take their place in case of breach

Accessory obligation

What is the concept of penal clause

to provide for liquidated damages (2)To strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach.

What are the penalty and damages

1)When there is a stipulation to that effect; (2)When the obligor having failed to comply with the principal obligation also refuses to pay the penalty, in which case the creditor is entitled to interest in the amount of the penalty, in accordance to Art. 2209; (3)When the obligor is guilty of fraud in the fulfillment of the obligation.

What are the penal clause demandable

(1)the total non-fulfillment of the obligation or the defective fulfillment is chargeable to the fault of the debtor; and (2)That the penalty may be enforced in accordance with the provisions of the law.

A penal clause constitutes an obligation, although accessory; while a condition is not. Thus, a penalty may be demanded in case of non-fulfillment of the principal obligation, and even with it alone; while a condition can never be demanded to be fulfilled, but whether it happens or not, only the obligation which it affects may be demanded.

Penalty Distinguished From Condition

In case of total non-fulfillment of the principal obligation, the rule is that the debtor cannot exempt himself from the performance of the principal obligation by paying the penalty.

Right of debtor

in case of total nonfulfillment of the obligation, the creditor cannot, as a general rule, demand the fulfillment of the principal obligation and the satisfaction of the penalty at the same time.

Right of the creditor