Engineering Laws, contracts and Ethics

Law
 Law – any rule of action or any system of uniformity.
 thus, law in general, determines not only the activities of men as rational beings but also the
movements or motions of all objects of creation, whether animate or inanimate

General divisions of law:

 Legal sense – law which is promulgated and enforced by the state;
 Non-legal sense – law which is not promulgated and enforced by the state.
 Divine Law – the law of religion
 Natural Law – divine inspiration in man of the sense of justice, fairness, and righteousness
 Moral Law – the totality of the norms of good and right conduct growing out of the collective
sense of right and wrong of every community.
 Physical Law – laws in the operation or course of nature (they are uniformities of actions and
orders of sequence which are the physical phenomena that we sense and feel).

Characteristics of Law
1. It is a rule of conduct – law tells us what shall be done and what shall not be done.

2. It is obligatory – law is considered a positive command imposing a duty to obey and involving sanction
which forces obedience.
3. It is promulgated by legitimate authority – the legitimate authority is the legislature.
4. It is of common observance and benefit – law is intended by man to serve man

Sources of Law
1. Constitution – the fundamental law or supreme law of the land
2. Legislation – consists in the declaration of legal rules by a competent authority.
3. Administrative or executive orders, regulations and rulings – those issued by administrative officials
under legislative authority.
4. Judicial decisions or jurisprudence – the decision of the courts (particularly the Supreme Court),
applying or interpreting the laws or Constitution.
5. Custom – consists of those habits and practices which through long and uninterrupted usage have
become acknowledged and approved by society as binding rules of conduct.

Classifications of Law
1. As to its purpose:
a. Substantive law – portion of the body of law creating and defining rights and duties which may
either be public or private in character.
b. Adjective law – prescribes the manner or procedure by which rights may be enforced.
2. As to its subject matter:
a. Public law – regulates the rights and duties arising from the relationship of the state to the
people
b. Private law – regulates the relations of individuals with one another for purely private ends.

Law on Obligations and Contracts

“The law of obligations and contracts is the body of rules which deals with the nature and sources of
obligations and the rights and duties arising from agreements and the particular contracts.”
* The law on obligations and contracts is found in Republic Act No. 386, otherwise known as the Civil
Code of the Philippines

Conclusive presumption of knowledge of law

 Everyone is conclusively presumed to know the law!
 Art. 3, Civil Code “Ignorance of the law excuses no one from compliance therewith”
Obligation
- Juridical necessity to give, to do or not to do. (Art 1156)
- It is a tie or bond recognized by law by virtue of which one is bound in favor of another to
render something – and this may consist in giving a thing, doing a certain act, or not doing a
certain act.
- Juridical necessity, in case of noncompliance, the courts of justice may be called upon by the
aggrieved party to enforce its fulfillment or, in default thereof, the economic value that it
represents.

Essential requisites of obligation:

1. Juridical or legal tie—which binds the parties to the obligation and which may arise either from
bilateral or unilateral acts of persons;
2. Active subject—the creditor or obligee
--who can demand the fulfillment of the obligation;
3. Passive subject—the debtor or obligor
--from whom the obligation is juridically demandable
4. Fact, prestation, or service which constitutes the object of the obligation.

Nature and Effect of Obligations

Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper
diligence of a good father of a family, unless the law or the stipulation of the parties requires another
standard of care. (1094a)

Determinate obligation—the object thereof is particularly designated or physically segregated from all others of
the same class.
Ex. The watch I am wearing, the car sold by X.

Generic or indeterminate thing —when it refers only to a class, to a genus, and cannot be pointed out with
particularity.

Ex. A police dog, a 1995 Toyota car.

Art. 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories,
even though they may not have been mentioned. (1097a)

Duties imposed upon the debtor:

If obligation is determinate:
 to deliver the thing which he has obligated himself to give
 to take care of the thing with the proper diligence of a good father of a family (Art 1163)
 to deliver all accessions and accessories (Art 1166)
 to pay damages in case of breach of the obligation (Art 1170)
If the obligation is indeterminate or generic:
 to deliver a thing which must be neither of superior nor inferior quality (Art 1246)
 to pay damages in case of breach of the obligation (Art 1170)

Effects of Delay
 The debtor is guilty of breach or violation of the obligation;
 The debtor is liable to the creditor for interest.
 The debtor is liable even for a fortuitous event when the obligation is to deliver a determinate thing.

When demand is not necessary to put debtor in delay.

1. When the obligation so provides. –
Ex. D promised to pay C the sum of 20 pesos on or before November 30 without the need of any
demand. Therefore, if D fails to pay on the said date, he is automatically in default.
2. When the law so provides. –
Ex. Under the law, taxes should be paid on or before a specific date; otherwise, penalties and surcharges
are imposed without the need of demand for payment by the government.
 3. When time is of the essence. –
Ex. The delivery of balloons on a particular date when a children’s party will be held.
4. When demand would be useless. –
Ex. S obliged himself to deliver a specific horse to B on September 5. By reason of fortuitous event for
which S has expressly bound himself responsible, the horse died on September 2.
Under this situation, any demand for the delivery of the horse on September 5 would be useless as S has
made it impossible for him to perform his obligation.

Fortuitous event—an event which cannot be foreseen, or which though foreseen, is inevitable. (Art 1174)

 Rule regarding fortuitous event: NO PERSON SHALL BE RESPONSIBLE FOR LOSS OF PRESTATION (Art
1174)

Kinds of Obligations:
 Primary Classification
 Secondary Classification (under the civil code)

Primary Classification
 Pure and Conditional obligations (Art 1179-1192)
 Obligation with a period (Art 1193 – 1198)
 Alternative and facultative Obligation (Art 1199-1206)
 Joint and solidary (Art 1207-1223)
 Divisible and indivisible (Art 1223-1225)
 Obligations with a penal clause (Art 1226-1230)
Secondary Classification
 Unilateral and bilateral (Art 1169 – 1191)
 real and personal (Art 1163-1168)
 determinate and generic (Arts 1163-1164)
 natural and civil (Art 1156, 1423)
 legal, conventional, and penal (Arts 1158-1162)

Pure obligation
- is one which is not subject to any condition and no specific date is mentioned for its fulfillment and is,
therefore, immediately demandable.

Conditional obligation
- is one whose consequences are subject in one way or another to the fulfillment of a condition.

Condition — a future and uncertain event upon which an obligation is subordinated or made to depend.
Term or Period — that which necessarily must come, whether the parties know when it will happen or not; thus,
a future and certain event.

“Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a
past event unknown to the parties, is demandable at once. x x x”
--the condition here is not the past event per se, but the future knowledge of the past event.

Conditions are classified as:

 Suspensive or Resolutory
 Potestative or Casual or Mixed
 Possible or Impossible
 Positive or Negative
 Divisible or Indivisible
 Conjunctive or Alternative
 Express or Implied

Suspensive - when the fulfillment of the condition results in the acquisition of rights arising out of the obligation.
Resolutory - when the fulfillment of the condition results in the extinguishment of rights arising out of the
obligation.
Potestative - when the fulfillment of the condition depends upon the will of a party to the obligation
Casual - when the fulfillment of the condition depends upon chance and/or upon the will of a third person
Mixed - when the fulfillment of the condition depends partly upon the will of a party to the obligation and partly
upon chance and/or the will of a third person.

Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional
obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take
effect in conformity with the provisions of this Code. (1115)

Possible - when the condition is capable of realization according to nature, law, public policy, or good
customs
Impossible - when the condition is not capable of realization according to nature, law, public policy, or good
customs.

Art. 1183. Impossible conditions, those contrary to good customs or public policy and those prohibited by law
shall annul the obligation which depends upon them. If the obligation is divisible, that part
thereof which is not affected by the impossible or unlawful condition shall be valid.

The condition not to do an impossible thing shall be considered as not having been agreed upon. (1116a)”
Conjunctive - when there are several conditions, all of which must be realized
Alternative - when there are several conditions, one of which must be realized
Express - when the condition is stated expressly.
Implied - when the condition is tacit.

Art. 1184. The condition that some event happen at a determinate time shall extinguish the obligation as soon
as the time expires or if it has become certain that the event will not take place. (1117)

Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. (1119)

When the obligation is subject to a suspensive condition, and that, during the pendency of the condition, the
thing:
 is lost:
(lost — perishes, goes out of commerce, disappears in such a way that its existence is unknown or it
cannot be recovered)
A. without the fault of the debtor, the obligation shall be extinguished
B. through the fault of the debtor, he shall be obliged to pay damages
 has deteriorated:
C. without the fault of the debtor, the impairment is to be borne by the creditor
D. through the fault of the debtor, the creditor may choose between rescission of the obligation
and its fulfillment, with indemnity for damages in either case
 has improved
A. by its nature, by time, the improvement shall take effect to the benefit of the creditor
B. at the expense of the debtor, he (debtor) shall have no other right than that granted to the
usufructuary. (Art 1189)
--he is not entitled to reimbursement but he may remove the improvements provided he does
not, by doing so, damage the property.

Obligation with a term or period

- an obligation whose demandability or extinguishment are subject to the expiration of a term
or period.

Requisites of a period:
(1) Futurity; (2) Certainty.

Condition vs Period:
 In general: a condition refers to an event, while a period refers to an interval of time.
 As to fulfillment: a condition may or may not happen while a period will surely come to pass, although it
may not be known when.
 As to influence upon obligation: a condition exerts an influence upon the very existence of the
obligation itself, while a period exerts an influence only upon its demandability.
 As to retroactivity of effects: a condition has retroactive effects, while a period does not have
retroactive effects unless there is an agreement to the contrary.
  As to effect of will of debtor: when a condition is left exclusively to the will of the debtor, the very
validity of the obligation is affected; when the period is left exclusively to the will of the debtor, the
obligation is still valid.

Kinds of Period:
 Suspensive or Resolutory
 Suspensive--when the obligation becomes demandable only upon the arrival of a day certain
 Resolutory--when the obligation is demandable at once, although it is terminated upon the
arrival of a day certain
 Legal, Conventional, or Judicial
 Legal--when it is granted by law
 Conventional--when it is stipulated by the parties
 Judicial--when it is fixed by the courts
 Definite or Indefinite
 Definite--when the date or time is known beforehand
 Indefinite--when it can only be determined by an event which must necessarily come to pass,
although it may not be known when.

The debtor shall lose every right to make use of the period:
 when, after the obligation has been contracted, he becomes in debt, unless he gives a guaranty or
security for the debt;
 when he does not furnish to the creditor the guaranties or securities which he has promised;
 when by his own acts he has impaired said guaranties or securities after their establishment, and when
through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;
 when the debtor violates any undertaking in consideration of which the creditor agreed to the period;
and
 when the debtor attempts to escape. (Art 1198)

Alternative obligation - juridical relations which comprehend several objects or prestations which are due, but
the payment or performance of one of them would be sufficient.
Facultative obligation - juridical relations where only one object or prestation has been agreed upon by the
parties to the obligation, but the obligor may deliver or render another in substitution.

In case of loss in alternative obligation:

1. if right of choice belongs to debtor
A. loss due to a fortuitous event
B. loss due to the fault of the debtor
--damages only when none remains

2. if right of choice belongs to creditor

A. loss due to a fortuitous event
B. loss due to the fault of the debtor
--note when liability for damages exist

In facultative obligation, if the substitute is lost or destroyed through the fault of the debtor:
1. After the substitution has been made, the debtor is liable for damages.
2. Before the substitution could be effected, the debtor cannot be held liable for damages.

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

Solidary obligation — obligation where there is a concurrence of several creditors, or of several debtors, or of
several creditors and debtors, by virtue of which each of the creditors has a right to
demand, while each of the debtors is bound to render entire compliance with the
prestation which constitutes the object of the obligation.
In Joint obligation– “. . . each of the debtor is bound to render compliance with his proportionate part of the
prestation.”
In Joint obligation— “. . . each of the creditors has a right to demand, his proportionate part of the prestation
which constitutes the object of the obligation.”
In Solidary obligation— “. . . each of the debtors is bound to render entire compliance with the prestation which
constitutes the object of the obligation.”
In Solidary obligation— “. . . each of the creditors has a right to demand entire compliance with the prestation
which constitutes the object of the obligation.”
**As a general rule, the obligation is joint.
The obligation is solidary when:
 the obligation expressly so states;
 the law requires solidarity;
 the nature of the obligation requires solidarity. (Art 1207)

Effect of payment made by one of a solidary debtor

- Total or partial extinguishment of the obligation. There arises immediately a consequent right
of such paying debtor to claim from his co-debtors the share which corresponds to them, with
interests for the payment already made. (Art 1217)

Art. 1217. “. . . When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the
debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.
(1145a)

Art. 1215. “. . . The creditor . . . who collects the debt, shall be liable to the others for the share in the obligation
corresponding to them. (1143)”

A solidary creditor cannot assign his rights without the consent of the other solidary creditors.

Art. 1213. A solidary creditor cannot assign his rights without the consent of the others. (n)

A third person CANNOT compel the creditor to accept payment or performance of an obligation. Except:
 when it is made by a third person who has an interest in the fulfillment of the obligation (Art 1236)
 when there is a stipulation to the contrary (Art 1236).
Payment shall be made to:
 the person in whose favor the obligation has been constituted; or
 to his successor in interest; or
 any person authorized to receive it (Art 1240)
Four special forms of payment:
 application of payment (Art 1252-1254)
 dation in payment (Art 1245)
 payment by cession (Art 1255)
 tender of payment and consignation (Art 1256-1261

Application of payment (Art 1252-1254)

- the designation of the debt to which the payment must be applied when the debtor has several
obligations of the same kind in favor of the same creditor.

Dation in payment (Art 1245)

- property is alienated by the debtor to the creditor in satisfaction of a debt in money. (Law on
sales shall govern)

Payment by cession (Art 1255)

- debtor abandons all of his property for the benefit of his creditors in order that from the
proceeds thereof the latter may obtain payment of their credits. (debtor insolvent)

Tender of payment and consignation (Art 1256-1261)

Tender of payment - consists in the manifestation made by the debtor to the creditor of his decision to
comply immediately with his obligations.
Consignation - refers to the deposit of the object of the obligation in a competent court in accordance
with the rules prescribed by law after refusal or inability of the creditor to accept the
tender of payment.
Loss of the thing due
- means that the thing which constitutes the object of the obligation perishes, or goes out of the
commerce of man, or disappears in such a way that its existence is unknown or it cannot be
recovered. (Art 1189)
General rule: OBLIGATION EXTINGUISHED.

Exception to the Rule:

(**same under fortuitous events)
 when expressly specified by the law;
 when otherwise declared by stipulation;
 when the nature of the obligation requires the assumption of risk (Art 1174)
 when the object of the obligation is lost and the loss is due partly to the fault of the debtor;
 when the object of the obligation is lost and the loss occurs after the debtor has incurred in
delay;
 when the debtor promised to deliver the same thing to two or more persons who do not have
the same interest; (Art 1165, 1262)
 when the obligation to deliver arises from a criminal offense;
 when the obligation is generic. (Art 1268, 1263)
Remission—act of liberality by virtue of which the obligee, without receiving any price or equivalent,
renounces the enforcement of the obligation, as a result of which it is extinguished in its entirety or in
that part or aspect of the same to which the remission refers.

Condonation to be valid requires the acceptance by the obligor.

Art. 1270. Condonation or remission is essentially gratuitous, and requires the acceptance by the
obligor. It may be made expressly or impliedly. . .

Confusion - merger of the characters of creditor and debtor in the same person by virtue of which
the obligation is extinguished.
Compensation - mode of extinguishing in their concurrent amount those obligations of persons who in
their own right are creditors and debtors of each other.
Novation - substitution or change of an obligation by another, resulting in its extinguishment or
modification, either by changing its object or principal conditions, or by substituting
another in place of the debtor, or by subrogating a third person in the rights of the
creditor.