Sources of obligations, A1157-1158 Civil Code

1. Sources of obligations

Article 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a) (civil code)

Thus, the following are the sources of obligations:

1) Law;

2) Contracts;

3) Quasi-contracts;

4) Acts or omissions punished by law; and


5) Quasi-delicts.

a. Law

Law – refers to a body of rules that regulate conduct within a territory or jurisdiction.

Laws include:

1) 1987 Constitution,

2) Statutes or legislations,

3) Jurisprudence or Supreme Court Decisions, and

4) Implementing rules and regulations.

Article 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 foreseen, by the provisions of this Book. (1090) (Civil Code)

1) No presumption for obligations from law

Under this article, obligations derived from law “are not presumed.” This means that no one can easily claim that there is an obligation imposed by law by mere presumptions or suppositions. Rather, the person who makes such claims should be able to identify the specific legal provision which serves as the basis for a legal obligation.

As provided in the article, only “those expressly determined by [the Civil Code] or in special laws are demandable.” These in turn “shall be regulated by precepts of the law which establishes them; and as to what has been foreseen, by the provisions of [Book IV of the Civil Code]

Office of the Solicitor General v. Ayala Land Incorporated, G.R. No. 177056, September 18, 2009, Per Chico-Nazario, J.:

• Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping malls in various locations in Metro Manila. Respondent SM Prime constructs, operates, and leases out commercial buildings and other structures, among which, are SM City, Manila; SM Centerpoint, Sta. Mesa, Manila; SM City, North Avenue, Quezon City; and SM Southmall, Las Piñas.

• The shopping malls operated or leased out by respondents have parking facilities for all kinds of motor vehicles, either by way of parking spaces inside the mall buildings or in separate buildings and/or adjacent lots that are solely devoted for use as parking spaces. Respondents Ayala Land, Robinsons, and SM Prime spent for the construction of their own parking facilities. Respondent Shangri-la is renting its parking facilities, consisting of land and building specifically used as parking spaces, which were constructed for the lessor’s account.

• Respondents expend for the maintenance and administration of their respective parking facilities. They provide security personnel to protect the vehicles parked in their parking facilities and maintain order within the area. In turn, they collect the following parking fees from the persons making use of their parking facilities, regardless of whether said persons are mall patrons or not…

• The parking tickets or cards issued by respondents to vehicle owners contain the stipulation that respondents shall not be responsible for any loss or damage to the vehicles parked in respondents’ parking facilities.

• In 1999, the Senate Committees on Trade and Commerce and on Justice and Human Rights conducted a joint investigation for the following purposes: (1) to inquire into the legality of the prevalent practice of shopping malls of charging parking fees; (2) assuming arguendo that the collection of parking fees was legally authorized, to find out the basis and reasonableness of the parking rates charged by shopping malls; and (3) to determine the legality of the policy of shopping malls of denying liability in cases of theft, robbery, or carnapping, by invoking the waiver clause at the back of the parking tickets. Said Senate Committees invited the top executives of respondents, who operate the major malls in the country; the officials from the Department of Trade and Industry (DTI), Department of Public Works and Highways (DPWH), Metro Manila Development Authority (MMDA), and other local government officials; and the Philippine Motorists Association (PMA) as representative of the consumers’ group.

• After three public hearings held on 30 September, 3 November, and 1 December 1999, the afore-mentioned Senate Committees jointly issued Senate Committee Report No. 2255 on 2 May 2000, in which they concluded:

• In view of the foregoing, the Committees find that the collection of parking fees by shopping malls is contrary to the National Building Code and is therefor [sic] illegal. While it is true that the Code merely requires malls to provide parking spaces, without specifying whether it is free or not, both Committees believe that the reasonable and logical interpretation of the Code is that the parking spaces are for free. This interpretation is not only reasonable and logical but finds support in the actual practice in other countries like the United States of America where parking spaces owned and operated by mall owners are free of charge.

• Figuratively speaking, the Code has “expropriated” the land for parking – something similar to the subdivision law which require developers to devote so much of the land area for parks.

• Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines) provides that “it is the policy of the State to protect the interest of the consumers, promote the general welfare and establish standards of conduct for business and industry.” Obviously, a contrary interpretation (i.e., justifying the collection of parking fees) would be going against the declared policy of R.A. 7394.

• Section 201 of the National Building Code gives the responsibility for the administration and enforcement of the provisions of the Code, including the imposition of penalties for administrative violations thereof to the Secretary of Public Works. This set up, however, is not being carried out in reality.

• [SC RESOLUTION] The OSG argues that respondents are mandated to provide free parking by Section 803 of the National Building Code and Rule XIX of the IRR.

According to Section 803 of the National Building Code:

SECTION 803. Percentage of Site Occupancy

(a) Maximum site occupancy shall be governed by the use, type of construction, and height of the building and the use, area, nature, and location of the site; and subject to the provisions of the local zoning requirements and in accordance with the rules and regulations promulgated by the Secretary.

• In connection therewith, Rule XIX of the old IRR, provides:

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site occupancy, the following provisions on parking and loading space requirements shall be observed:

1. The parking space ratings listed below are minimum off-street requirements for specific uses/occupancies for buildings/structures:

1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00 meters for perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60 meters by 12.00 meters. The parking slot shall be drawn to scale and the total number of which shall be indicated on the plans and specified whether or not parking accommodations, are attendant-managed. (See Section 2 for computation of parking requirements).

x x x x

1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area

• The OSG avers that the aforequoted provisions should be read together with Section 102 of the National Building Code, which declares:

SECTION 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare, consistent with the principles of sound environmental management and control; and to this end, make it the purpose of this Code to provide for all buildings and structures, a framework of minimum standards and requirements to regulate and control their location, site, design, quality of materials, construction, use, occupancy, and maintenance.

• The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of safeguarding “life, health, property, and public welfare, consistent with the principles of sound environmental management and control.” Adequate parking spaces would contribute greatly to alleviating traffic congestion when complemented by quick and easy access thereto because of free-charge parking. Moreover, the power to regulate and control the use, occupancy, and maintenance of buildings and structures carries with it the power to impose fees and, conversely, to control — partially or, as in this case, absolutely — the imposition of such fees.

• The Court finds no merit in the present Petition.

• The explicit directive of the afore-quoted statutory and regulatory provisions, garnered from a plain reading thereof, is that respondents, as operators/lessors of neighborhood shopping centers, should provide parking and loading spaces, in accordance with the minimum ratio of one slot per 100 square meters of shopping floor area. There is nothing therein pertaining to the collection (or non-collection) of parking fees by respondents. In fact, the term “parking fees” cannot even be found at all in the entire National Building Code and its IRR.

• Statutory construction has it that if a statute is clear and unequivocal, it must be given its literal meaning and applied without any attempt at interpretation. Since Section 803 of the National Building Code and Rule XIX of its IRR do not mention parking fees, then simply, said provisions do not regulate the collection of the same. The RTC and the Court of Appeals correctly applied Article 1158 of the New Civil Code, which states:

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 foreseen, by the provisions of this Book. (Emphasis ours.)

• Hence, in order to bring the matter of parking fees within the ambit of the National Building Code and its IRR, the OSG had to resort to specious and feeble argumentation, in which the Court cannot concur.

• The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section 803 of the same Code and Rule XIX of the IRR, so as to include the regulation of parking fees. The OSG limits its citation to the first part of Section 102 of the National Building Code declaring the policy of the State “to safeguard life, health, property, and public welfare, consistent with the principles of sound environmental management and control”; but totally ignores the second part of said provision, which reads, “and to this end, make it the purpose of this Code to provide for all buildings and structures, a framework of minimum standards and requirements to regulate and control their location, site, design, quality of materials, construction, use, occupancy, and maintenance.” While the first part of Section 102 of the National Building Code lays down the State policy, it is the second part thereof that explains how said policy shall be carried out in the Code. Section 102 of the National Building Code is not an all-encompassing grant of regulatory power to the DPWH Secretary and local building officials in the name of life, health, property, and public welfare. On the contrary, it limits the regulatory power of said officials to ensuring that the minimum standards and requirements for all buildings and structures, as set forth in the National Building Code, are complied with.

• Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking spaces for buildings, Rule XIX of the IRR also mandates that such parking spaces be provided by building owners free of charge. If Rule XIX is not covered by the enabling law, then it cannot be added to or included in the implementing rules.

b. Contracts

Contract – refers to “a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code).” (Asuncion v. CA, En Banc, G.R. No. 109125, December 2, 1994, Per Vitug, J.)

[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. “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.” From the moment the contract is perfected, the parties are bound not only to the fulfillment of its stipulations, but also the consequences which, according to their nature, may be in keeping with good faith, usage, and law. In respecting the freedom to contract of the parties, courts cannot stipulate for them or amend their agreement. To do so would be to alter the real intention of the contracting parties when the contrary functio n of the courts is to give force and effect to their intention. (IP E-Game Ventures, Inc. v. Tan, G.R. No. 239576, June 30, 2021, Per Lopez, J., J.)

IP E-Game Ventures, Inc. v. Tan, G.R. No. 239576, June 30, 2021, Per Lopez, J., J.:

• In 2010, IP E-Game Ventures, Inc. (petitioner,) and George H. Tan (respondent) entered into an incentive agreement5 (Agreement). The Agreement was in connection to the intention of ePLDT to sell no less than 75% of the outstanding capital stock of Digital Paradise, Inc. in favor of petitioner, for the offered price of One Hundred Forty Five Million Pesos (P145,000,000.00). It stipulates that respondent would enter into negotiations with ePLDT for the latter to accept petitioner’s offered price. If successful, petitioner would award respondent with a monetary incentive and a certain number of shares. The salient provisions of the Agreement read:

WHEREAS, [respondent] has represented to [petitioner] that he can negotiate with ePLDT to accept the Offered Price of [petitioner].

WHEREAS, the parties wish to enter into an arrangement where [respondent] is given some incentive to negotiate with ePLDT to accept the Offered Price.

NOW THEREFORE, the parties hereby agree and confirm that in the event that [respondent] successfully negotiates with ePLDT to accept the Offered price for the Netopia Stake, [petitioner] shall provide the following to [respondent] no later than the date of the execution of the definitive agreement/s for the sale of the Netopia Stake by ePLDT to [petitioner] or on such other date that the parties may reasonably agree:

a. [Petitioner] shall pay [respondent] the amount of Five Million Pesos ([P]5,000,000.00) in cash; and

b. [Petitioner] shall convey to [respondent] such number of shares of stock of Netopia with the market value equivalent to Five Million Pesos ([P]5,000,000.00). (Emphasis ours)

• On April 1, 2011, an agreement for the sale of the shares was executed between petitioner and ePLDT. Subsequently, respondent received an amount of Three Million Seven Hundred Thousand Pesos (P3,700,000.00) for the successful negotiation. For failure of petitioner to settle the complete monetary incentive, with a remaining balance of One Million Three Hundred Thousand Pesos (P1,300,000.00), together with the shares equivalent to Five Million Pesos (P5,000,000.00) pursuant to the Agreement, respondent sent a demand letter dated February 7, 2012. Respondent sent another letter through counsel on March 5, 2012, notifying petitioner to settle the just and valid claims within 15 days from receipt thereof.

• On July 13, 2012, respondent sent a third letter, notifying petitioner that he has agreed to counter-offer a lump sum cash amount of Four Million Pesos (P4,000,000.00) as final settlement to settle their claims amicably without court intervention.

• On August 15, 2012, petitioner responded to the July 13, 2012 letter, asseverating that it did not make any counter-offer to reduce the monetary incentive demanded by respondent. It made mention of its March 19, 2012 letter sent to respondent, claiming that the parties had entered into a new agreement wherein they allegedly reduced the monetary incentive from P5,000,000.00 to P3,700,000.00 in view of unexpected expenses. For having extended the entire P3,700,000.00 to respondent, petitioner claimed it had already settled all its obligations. With respect to the share incentive, petitioner stressed that they have yet to reach an agreement on the valuation of the stock, considering that prices of stocks vary on a daily basis.

• Due to his unheeded demands, respondent filed a Complaint12 for specific performance through collection of sum of money with damages before the RTC on October 18, 2012. As petitioner still owes respondent P1,300,000.00 on the first payment, as well as shares of Netopia with a market value of P5,000,000.00, respondent was willing to reduce the amount to Four Million Pesos (P4,000,000.00). Thus, respondent prays that judgment be rendered ordering petitioner pay P4,000,000.00 in actual damages. Due to the unjustified, malicious, and fraudulent refusal of petitioner to settle its obligations, respondent allegedly suffered from, among others, mental anguish, serious anxiety, wounded feelings, moral shock, and sleepless nights. For this, he likewise prayed for the award of moral, nominal, temperate, and exemplary damages, as well as attorney’s fees.

• [SC RESOLUTION] While petitioner represents that the parties entered into a subsequent agreement, a judicious review of the records proves that no such copy of the said agreement was ever offered as evidence. Absent any other convincing evidence establishing its claim, the Court cannot merely rely on petitioner’s unsubstantiated allegations in the face of a perfected contract entered freely and voluntarily by the parties. Mere allegations not equivalent to proof.36 After all, the Agreement provides that there shall be no binding change, addition, or waiver of its provisions unless it shall be done in writing and signed by an authorized representative of each party. Consequently, given that no such requirement was complied with by the petitioner, the Court has no choice but to respect the provisions earlier agreed upon. When the terms of the contract are clear and leave no doubt as to the intention of the contracting parties, the rule is settled that the literal meaning of its stipulations should control.

• For petitioner’s manifest failure to settle the remaining balance of respondent’s monetary incentive, the Court is one with the lower courts in finding petitioner liable to pay the latter the remaining balance of the P5,000,000.00 as stated in the Agreement.

See related:

• A1305 Civil Code

c. Quasi-contracts

Quasi-contracts – refer to “licit and purely voluntary acts which create an obligation on the part of the actor in favor of a third person, and, at times, a reciprocal obligation between the parties concerned.” (Lao Chit v. Security Bank and Trust Co., G.R. No. L-11028, April 17, 1959, per Concepcion, J., citing Article 1887, Spanish Civil Code)

A quasi-contract involves a juridical relation that the law creates on the basis of certain voluntary, unilateral and lawful acts of a person, to avoid unjust enrichment. (Metropolitan Bank & Trust Company v. Absolute Management Corporation, G.R. No. 170498, January 9, 2013, Per Brion, J.)

See related:

• A2144, 2154, A2164, A2165, A2166, A2167, A2168, A2169, A2170, A2171, A2172, A2173, A2174, 2175

d. Delicts

Delicts or acts or omissions punished by law– refer to criminal offenses, which are punished via penalties, such as fines and/or imprisonment.

Penal laws – refer to criminal statutes.

Under this article, civil obligations arising out of or in connection with criminal offenses are:

1) governed by the penal laws, and

2) subject to the provisions of:

(a) article 2177, and

(b) of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of [Book IV of the Civil Code], regulating damages.

NB: Penal laws or criminal statutes often provide for civil liability. Thus, civil obligations are drawn from the applicable penal laws or criminal statutes which were violated. Notwithstanding, the resulting obligation is subject to: (a) Article 2177 of the Civil Code which provides for the provision on civil liability arising from quasi-delict; and (b) the Human Relations provisions.

See related:

• A2177 Civil Code

•Human Relations Provisions: A19 Civil Code | A20 Civil Code | A21 Civil Code | A22 Civil Code | A23 Civil Code | A24 Civil Code | A25 Civil Code | A26 Civil Code | A27 Civil Code | A28 Civil Code | A29 Civil Code | A30 Civil Code | A31 Civil Code | A32 Civil Code | A33 Civil Code | A34 Civil Code | A35 Civil Code | A36 Civil Code

e. Quasi-delicts

Quasi-delicts – refers to the civil liability resulting from damage caused by acts or omissions, there being fault or negligence, and there is no pre-existing contractual relation between the parties. (See CIVIL CODE, Article 2176)

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of [Chapter 2, Title XVII – Extra-Contractual Obligations, Book IV]. (CIVIL CODE)

A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code, with a substantivity all its own, and individuality that is entirely apart and independent from a delict or crime. (Diana v. Batangas Transportation Co., En Banc, G.R. No. L-4920, June 29, 1953, Per Bautisa Angelo, J.)

References

Chapter 1 – General Provisions, Title I, Book IV, Republic Act No. 386, Civil Code

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