SEC Express System

The Securities and Exchange Commission (SEC) has recently adopted an online express system where documents may be requested and paid through an Internet website portal. The service covers both plain or authenticated copies. Payment is done either through VISA or MasterCard. The documents are delivered within three working days to anywhere in the Philippines.

Concept and Nature of Obligations

Learning business law starts with understanding rights and obligations. From commencement until termination, a business acquires rights and incurs obligations.

An obligation is a juridical necessity to give, to do or not to do.[1] Otherwise stated, an obligation is one that creates a compulsion on a person to do or not to do an act that may be enforced through legal processes.

As a result, an obligation constructs a juridical relation whereby a person (who may either be a creditor or an obligee) may demand from another (who may either be a debtor or obligor) the performance or observance of a determinate conduct (which may either be an act of giving, doing, or not doing).[2]

Example: An accounting firm and a computer shop are two separate businesses that do not have any connection. If the accounting firm buys 20 sets of computers for P400,000.00 from the computer shop, then a legal connection (juridical relation) is created between the two enterprises. With a perfected written contract of sale, the accounting firm may demand from the computer shop the delivery of the 20 sets of computers.

Obligations are either civil or natural.[3] Civil obligations grant a person a right of action to compel their performance.[4] Natural obligations do not grant such right, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof.[5]

Example 1: In the earlier example involving an accounting firm and a computer shop, the two businesses are subject to civil obligations. With such kind of obligation, the accounting firm can exact performance on the computer shop to perform its obligation through court processes. Once judgment is rendered in its favor, the court can either compel the computer shop to deliver the 20 sets of computers or to reimburse the amount paid, with damages in either case.

Example 2: Using the same example above, the accounting firm has 10 years to pursue a legal action against the computer shop. Obligations arising from a written contract prescribes after 10 years from the time the cause of action accrues.[6] Suppose the 10 year period had lapsed, the accounting firm cannot anymore demand and compel performance on the part of the computer shop. However, if the computer shop despite knowing of the prescription of the cause of action still performed its obligation to deliver 20 sets of computers, the accounting firm has the right to keep them.

When an obligation is created, a corollary right generally results.[7] However, when a right is created, a corresponding obligation arises requiring the observance of that particular right. A right is a claim or title to an interest in anything whatsoever that is enforceable by law.[8] Unless otherwise expressly stipulated, any right acquired by virtue of an obligation is transmissible subject to applicable law.[9]

 

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[1] CIVIL CODE, Article 1156.

[2] J.B.L. Reyes, Lawyer’s Journal, 31 January 1951, p. 47.

[3] Ibid. Article 1423.

[4] Ibid. Article 1423.

[5] Ibid. Article 1423. Examples of natural obligations: (1) A debtor who willfully and voluntarily performs his contractual obligations cannot recover what he has delivered or the value of the services he rendered on the ground that the creditor’s right to file suit has lapsed by extinctive prescription (Article 1424, Civil Code); (2) A debtor cannot recover what he has paid to the third party, who paid the debtor’s debt without the knowledge or against the will of the latter and who was not legally bound to pay as the right to sue thereon has prescribed (Article 1425, Ibid.); (3) A defendant who voluntarily performs his obligations cannot demand the return of what he has delivered or the payment of the value of the services he rendered should the creditor’s action to enforce a civil obligation fail (Article 1428, Ibid.). Natural obligations are not based on positive law but on equity and natural law (Ibid.).

[6] CIVIL CODE. Article 1144.

[7] The creation of an obligation does not necessarily create a right. Citizens have obligations to the State; however, these do not necessarily result in rights created in favor of the State. In a decided case, it was held that the obligation to sing the national anthem is not enforceable on a citizen whose faith prohibits such an act.

[8] Makati Stock Exchange, Inc., et al., v. Miguel V. Campos, G.R. No. 138814, 16 April 2009, citing Balley v. Miller, 91 N.E. 24, 25, Ind. App. 475, cited in 37A Words and Phrases 363.

[9] CIVIL CODE. Article 1178.

Welcome to Legal Aspects!

LEGALASPECTS.PH is the online resource for business laws and best legal practices for managers in the Philippines.

The primary aim of studying and learning business law is to avoid incurring liabilities that may arise in the course of managing and operating a business. With various and increasing government regulations, a business can easily find itself short on legal compliance resulting in paying excessive fines or penalties. Further, without the legal framework to protect a business, an enterprise can easily suffer or be wiped out by costly, expensive, and protracted lawsuits.

Thus, the modern business manager is now expected to be armed with legal knowledge and skills that have to be applied in strategy management, administration, and operations.

For these reasons, LEGALASPECTS.PH aims to provide business managers with a rich content of information on business laws and best legal practices.

This Site serves as a repository of business laws for the quick and easy reference of entrepreneurs, business owners, and corporate managers. The content will include business-related statutes, regulations, and Supreme Court decisions. In addition, this Site promotes best legal practices through various articles explaining how business laws operate and should be applied in enterprises to avoid liabilities.

It is hoped that this site will help business managers in running, operating, and managing businesses in compliance with the law!