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

4 ELEMENTS OF OBLIGATION
1. ACTIVE SUBJECT (creditor/obligee) whose obligation is
constituted
2. PASSIVE SUBJECT (debtor/obligor) has duty to give, to
do or not to do
3. OBJECT/PRESTATION subject matter
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) reason
CIVIL OBLIGATION
enforceable by court action
derived from positive law
NATURAL OBLIGATION
derived from equity & justice
not enforceable by court action
5 SOURCES OF OBLIGATION
1. LAW
2. CONTRACTS
3. QUASI-CONTRACTS arise from lawful, voluntary acts; no
one shall be unjustly enriched...
2 Kinds
a. Solutio indebiti something received (delivered on a
mistake), no right to demand it
b. Negotiorum gestio voluntary mgt of property/affairs of
another w/o his knowledge/consent
4. QUASI-DELICT/TORTS arise from damage;
fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law arise from
civil liability that is a consequence of a criminal offense
DILIGENCE OF A GOOD FATHER OF A FAMILY
- care need to be exercised by a debtor to deliver/give
determinate thing
Exception: When law/stipulation of parties requires a different
standard of care (slight/extraordinary diligence).
When creditor is entitled to the fruits
Rule: The creditor has personal right (right to ask for delivery)
from the time the obligation to deliver arises.
But NO real right (right enforceable against the whole world)
until it is delivered.
3 KINDS OF FRUITS
1. NATURAL w/o human intervention
2. INDUSTRIAL w/ human intervention
3. CIVIL derived by virtue of juridical relation
Creditors rights if debtor fails to comply w/ the obligation
1. Determinate
a. Performance
b. Damages
2. Generic
a. Performance
b. Damages
c. Obligation be complied at debtors expense
Creditors rights if debtor does in contravention
1. Damages
2. Ask it be UNDONE at debtors expense

3. Assumption of risk
4. Delay
5. Debtor promises deliver to 2/more persons who do not have
same interest (bad faith)
EFFECTS OF FORTUITOUS EVENT to thing to be delivered
- extinguish the obligation if determinate; generic does not
extinguish the obligation
3 MISCELLANEOUS RULES ON PERFORMANCE OF
OBLIGATION
1. When to deliver determinate, accessions (additions/
improvements) and accessories (joined/included with the
principal) are INCLUDED even not mentioned.
2. If debtor fails to do, it shall be DONE AT HIS EXPENSE,
same with doing the contravention; poorly done be undone.
3. In obligation not to do, and obligor does what is forbidden,
shall be UNDONE AT HIS EXPENSE.
4 GROUNDS FOR LIABILITY
1. Default/mora
2. Fraud/dolo
3. Negligence/culpa
4. Contrary to terms of obligation
1. DEFAULT/MORA delay
3kinds
a. Mora solvendi debtors delay to give (real ob.), to do
(personal ob.)
b. Mora accipiende creditors delay to accept
c. Compensatio Morae delay of both in reciprocal
obligation
CONCEPT OF DELAY
General Rule: No demand, No delay
Exceptions:
1. Law states
2. Obligation states
3. Time is the essence
4. Demand be useless if delay
5. Debtor guilty of delay
EFFECTS OF DELAY
1. Damages
2. When to deliver determinate thing, STILL LIABLE in
fortuitous event.
2. FRAUD/DOLO conscious, deliberate, intentional evasion
of fulfillment
2 Kinds
a. Dolo causante/Causal fraud fraud in obtaining
consent; consent is defective, contract is voidable. Remedy:
annulment
b. Dolo incidente/Incidental fraud fraud w/c vitiates
consent. Remedy: damages
3. NEGLIGENCE/CULPA voluntary act/omission; no bad
faith intended
3 Kinds
a. Culpa aquiliana/Civil negligence quasi-delict/torts
b. Culpa contractual/Contractual negligence breach
c. Culpa criminal/Criminal negligence crime/delict
4. Contrary to the terms of obligation

FORTUITOUS EVENT force majeure cannot be foreseen, if

foreseen, inevitable
General Rule: No person liable to fortuitous event.
Exceptions:
1. Law states
2. Stipulation/contract states

2 RULES OF PRINCIPAL & INSTALLMENT

1. Receipt of principal w/o mention of interest, presumed
interest is paid also.
2. Receipt of latter installment w/o mention of prior installment,
presumed prior installment is paid also.
4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim
against DEBTOR
1. Exact payment
2. Attach debtors properties
3. Accion subrogatoria exercise rights & actions except
inherent in person
4. Accion pauliana cancel acts/contracts by debtor to defraud
creditor
TRANSMISSIBILITY OF RIGHTS
General Rule: ALL RIGHTS are transmissible.
Exceptions:
1. Law states
2. Contract states
3. Obligation is purely personal
10 Kinds of Obligation
1. Pure
2. Conditional
3. Alternative
4. Facultative
5. Joint
6. Solidary
7. Divisible
8. Indivisible
9. Obligation w/ a period
10. Obligation w/ a penal clause
1. PURE OBLIGATION
- w/o condition, demandable at once (pure has resolutory
condition/period)
2. CONDITIONAL OBLIGATION
- there is condition in performance; future & uncertain
2 Kinds
a. Suspensive condition happening of condition gives
RISE to obligation
b. Resolutory condition happening of condition
EXTINGUISHES obligation
6 MISCELLANEOUS RULES ON CONDITIONAL
OBLIGATION
1. Impossible conditions, contrary to law, shall ANNUL
obligation.
2. The condition not to do an impossible thing is considered not
agreed upon.
3. The condition that happens in determinate time,
EXTINGUISHES obligation.
4. The condition that happens in INDETERMINATE time,
obligation only effective at arrival.
5. The condition is fulfilled if DEBTOR prevents fulfillment.
6. The effect of conditional obligation, once fulfilled:
- to give: retroact to the day of constitution of obligation
- has reciprocal prestations: fruits & interests be mutually
compensated
- has unilateral obligation: debtor shall give fruits & interests
RULES in case of Loss, Improvement, or Deterioration of thing
during the pendency of condition
1. LOST
a. w/ debtors fault damages
b. w/o debtors fault extinguishes obligation

2. DETERIORATION
a. w/ debtors fault - (1) cancel obligation & damages; or (2)
fulfill obligation w/ damages
b. w/o debtors fault creditor suffer impairment
3. IMPROVEMENT
a. By nature/time benefit to creditor
b. at expense of debtor debtor no right than that granted to
usufructuary (debtor no right to compensate amount for
improvement)
EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION
General Rule: The obligation becomes effective retroactively to
the day obligation was constituted.
Exceptions:
1. In reciprocal obligation, fruits & interests during pendency of
condition shall compensate each other.
2. In unilateral obligation, debtor gets fruits & interests unless
there is a contrary intent.
3 EFFECTS OF FULFILLMENT OF RESOLUTORY
CONDITION
1. Extinguish obligation.
2. Both parties restore what they received plus fruits &
interests.
3. The rule on L, D, or I will apply to person who has to return
the thing.
When one of debtors in reciprocal obligation does not comply
w/ his obligation
1. The right of injured party is (1) cancel contract & damages;
or (2) fulfill obligation & damages
3 Kinds of Obligation (According to PERSON OBLIGED)
1. UNILATERAL only 1 party obliged to comply
2. BILATERAL both parties; performance not same time
3. RECIPROCAL both parties; performance same time
3. OBLIGATION W/ A PERIOD
- demandability/ extinguishment subject to the expiration of
period
PERIOD interval of time; either suspends demandability or
produces extinguishment
DAY CERTAIN must come, not known when
7 CASES CONSIDERED TO BE OBLIGATION W/ A
PERIOD
1. Little by little
2. In partial payment
3. Payable ASAP
4. When I can afford it
5. When I have the money
6. When I am able to
7. When my means permit me to do so
PERIOD

Certain

future only

(*influence upon obligation) only upon its

demandability
CONDITION

uncertain

future/past but unknown

(*) on the very existence of obligation itself

FOR WHOSE BENEFIT IS THE PERIOD?

General Rule: Both the debtor & creditor.
Therefore, NEITHER of them can demand performance of
obligation.
Exception: If the term of obligation has to favor one of them.
5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE
PERIOD
1. Debtor is insolvent.
2. Debtor attempts to abscond.
3. Impairment of guarantees/securities.
4. Failure to furnish guarantees/securities promised.
5. Violation of undertaking.
4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be substituted.
ALTERNATIVE prestations LOST w/ debtors fault
Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
2. All prestations lost/become impossible due to debtors fault.
ALTERNATIVE OBLIGATION

several prestations due, giving one is sufficient

right to choose (debtor) unless granted to creditor

If 1 of the prestation is illegal, others may be valid,
obligation remain
loss/impossibility of ALL prestations due, w/o debtors
fault, extinguishes obligation

FACULTATIVE OBLIGATION

one prestation due, but can be subtituted

right to choose DEBTOR ONLY

nullity of principal carries w/ it nullity of accessory/

substitute

loss/impossibility of presta-tion due, w/o debtors fault,

extinguishes obligation
(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF
DEBTOR IN ALTERNATIVE OBLIGATION
1. If 1 of prestations lost through fortuitous event, shall still be
perform by choosing (creditor) from the remainder.
2. If 1 of prestations lost through debtors fault, creditor may
claim any of remainders w/ damages.
3. If ALL prestations lost through debtors fault, creditor choose
price w/ damages.
RULES on LOSS/DETERIORATION of the thing intended as
SUBSTITUTE in FACULTATIVE OBLIGATION
1. If there is a loss/deterioration of thing intended as substitute,
debtor is NOT liable if NOT HIS FAULT.
But if substitution is already made, debtor is liable for loss of
substitute when in DELAY, NEGLIGENCE, or FRAUD.
6. JOINT OBLIGATION
- obligation is to be paid proportionately by debtors or to be
demanded proportionately by creditors
7. SOLIDARY OBLIGATION

- each one of debtors has right to render or each one of

creditors has right to demand the entire compliance w/
prestation
MAXIMS & SYNONYMS
JOINT Obligation

To each his own

proportionate
SOLIDARY Obligation

One for all, all for one

individually & collectively

(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
1. Law states
2. Stipulation states
3. Nature of obligation requires
2 PRESUMPTIONS THAT OBLIGATION IS JOINT
1. The debts be divided as many shares as there are
debtors/creditors.
2. The debtors/creditors are distinct from one another.
8. DIVISIBLE OBLIGATION
- prestation is capable of partial performance
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance
10. OBLIGATION W/ A PENAL CLAUSE
- one w/ accessory undertaking attached to obligation to
assume greater liablity in case of breach/non-fulfillment of
obligation
3 PURPOSES OF PENAL CLAUSE
1. Ensure performance of obligation
2. Substitute for damages & interest in case of noncompli-ance
3. Penalize debtor in case of breach
In case obligation has a PENAL CLAUSE
General Rule: Penalty takes the place of damages & interest in
case of non-compliance.
Exceptions:
1. Stipulation states.
2. Debtor refuse to pay penalty.
3. Debtor guilty of fraud in performance of obligation.
NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL
CLAUSE
Nullity of principal obligation = nullity of penal clause
Nullity of penal clause = NOT nullity of principal obligation
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
1. Payment or performance
2. Prescription
3. Compensation
4. Confusion/merger
5. Condonation/remission
6. Fulfillment of resolutory condition
7. Annulment
8. Rescission
9. Novation
10. Loss of thing due
1. PAYMENT/PERFORMANCE
- Payment means delivery of money & performance of
obligation
2 PLACE OF PAYMENT
1. At place agreed upon

2. If w/o agreement
a. Object is indeterminate paid at domicile of DEBTOR
b. Object is determinate place of thing at the time of
constitution of obligation

4 SPECIAL MODES OF PAYMENT

a. Application of payment
b. Cession
c. Tender of payment & consignation
d. Dacion in payment
a. APPLICATION OF PAYMENT
- designation of debt to w/c payment must be applied when
debtor has several obligations of same kind in favor of same
creditor.
3 REQUISITES OF APPLICATION OF PAYMENT
1. Only 1 debtor & 1 creditor
2. 2 or more debts, same kind
3. All debts are due
4. Insufficient payment to exinguish ALL debts
3 RIGHTS TO MAKE APPLICATION OF PAYMENT
1. Right belongs to CREDITOR.
2. If debtor does not avail, creditor can give him receipt
designating the debt from which payment will be applied.
3. If debtor accepts the receipt, he cannot complain unless
THERE IS just cause to invalidate the contract.
b. CESSION
- debtor abandons ALL his property for creditors benefit to
obtain payment from proceeds of his property
5 REQUISITES OF VALID CESSION
1. 1 debtor & 2 or more creditors
2. Debtor is in partial/total insolvency.
3. Debtor to deliver ALL his property to creditors
4. Debt is due & demandable.
5. Creditors must sell the properties & apply the proceeds to
their respective credits proportionately.
c. DACION IN PAYMENT (dacion en pago)
- alienation of property to the creditor in satisfaction of debt
3 REQUISITES OF DACION IN PAYMENT
1. Consent of creditor
2. NOT prejudicial to another creditor
3. Debtor not insolvent declared by a judicial decree
CESSION

all properties

require more than 1 creditor

NOT act of novation

NOT transfer ownership

requires partial/total insolvency

DACION IN PAYMENT

NOT all properties

NOT require all creditors

act of novation

transfer ownership

may happen during solvency of debtor

d. TENDER OF PAYMENT & CONSIGNATION
TENDER OF PAYMENT act of offering the creditor what is
due to him w/ a demand that the creditor accept it
CONSIGNATION act of depositing thing due w/ the court
when creditor cannot/refuses acceptance of payment

5 REQUISITES OF CONSIGNATION
1. Debt due.
2. Creditor refused the tender of payment w/o just cause
3. Notice of consignation already given to persons interested
in fulfillment of obligation
4. Consignation of thing/amount due
5. Subsequent notice of consignation to interested persons
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF
PAYMENT
1. Creditor is absent/unknown.
2. Creditor is incapacitate to receive at time it is due.
3. Creditor refused give a receipt, w/o just cause.
4. 2 or more persons claim the right to collect.
5. Title of obligation lost.
2. LOSS OF THING DUE
- perishes, disappears, or goes out of commerce; existence is
unknown; cannot be recovered
3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO
LOSS
1. Determinate thing.
2. W/o debtors fault.
3. No delay.
3. CONDONATION/REMISSION
- gratuitous abandonment of right by the creditor
3 REQUISITES OF A VALID CONDONATION/REMISSION
1. It must be gratuitous.
2. Accepted by obligor.
3. Obligation is demandable.
4. CONFUSION/MERGER
- meeting in 1 person of qualities of debtor & creditor w/ same
obligation
3 REQUISITES OF VALID CONFUSION/MERGER
1. The merger of characters of debtor & creditor must be in
same person.
2. Take place between principal debtor & creditor.
3. Clear & definite.
5. COMPENSATION
- 2 persons are debtors & creditors of each other
6 ESSENTIAL REQUISITES OF COMPENSATION
1. Parties both principal debtors & creditors of each other.
2. Compensation is not prohibited by law.
3. No retention/controversy by 3rd person.
4. 2 debts are due & demandable.
5. 2 debts are liquidated.
6. 2 debts both in money/consumable things.
(2) CLASSES OF COMPENSATION
1. As to effect
a. TOTAL obligations completely extinguished.
b. PARTIAL a balance remains
2. As to origin or cause
a. LEGAL by law
b. VOLUNTARY/CONVENTIONAL agreement of parties
c. JUDICIAL order from the court
d. FACULTATIVE 1 of parties can choose/oppose claiming
compensation
6. NOVATION

- substitution/change of obligation
- substitution of debtor
- subrogation of creditor
(3) OBLIGATIONS MAY BE MODIFIED BY:
1. (REAL NOVATION)- Changing object/principal conditions.
2. (PERSONAL NOVATION)-Changing the person of
debtor/creditor.
a. Substitution change of debtor
b. Subrogation change of creditor
3. (MIXED NOVATION)- Changing person of the parties & the
objects of principal condition.
4 REQUISITES OF NOVATION
1. Old valid obligation.
2. Agreement of parties to new obligation.
3. Extinguishment of old obligation.
4. Validity of new obligation.
2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR
1. EXPROMISSION w/ consent of creditor, NO consent of old
debtor
2 REQUISITES
a. Initiative of 3rd person.
b. Consent of creditor.
2. DELEGACION all must agree (creditor, old debtor, new
debtor)
3 REQUISITES
a. Initiative from old debtor.
b. Consent of debtor.
c. Acceptance by creditor.
7. SUBROGATION
- change of creditor
2 KINDS OF SUBROGATION
1. CONVENTIONAL consent of original parties & 3rd person
2. LEGAL by law
a. creditor pays another preferred creditor even w/o debtors
knowledge
b. 3rd person pays the express approval of debtor
c. 3rd person pays even w/o knowledge of debtor

CONTRACT meeting of minds between 2 persons to give

something or to render service.
3 ELEMENTS OF CONTRACT
1. ESSENTIAL w/o them, contract cannot exist
a. CONSENT of contracting parties
b. OBJECT CERTAIN subject matter
c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
d. FORM
e. DELIVERY
2. NATURAL found in certain contract, presumed to exist
unless stipulated
3. ACCIDENTAL various particular stipulations that may be
agreed upon by contracting parties
(7) CLASSIFICATION OF CONTRACTS
According to:
1. PERFECTION/FORMATION
a. CONSENSUAL perfected by mere consent
b. REAL perfected by delivery

c. FORMAL/SOLEMN special formalities are essential

before perfection of contract

2. PARTIES OBLIGATED
a. UNILATERAL only 1 has obligation
b. BILATERAL both parties require to render reciprocal
prestations
3. CAUSE
a. ONEROUS exchange of considerations
b. GRATUITOUS no consideration received in exchange
of what is given
c. REMUNERATORY something is given for
benefit/service that had been rendered previously
4. RISK OF FULFILLMENT
a. COMMUTATIVE equivalent values are given by both
parties
b. ALEATORY fulfillment of contract depends on chance
(eg. insurance)
5. IMPORTANCE
a. PRINCIPAL contract may stand alone (eg. sale,
partnership)
b. ACCESSORY existence depends on another contract
(pledge, guarantee)
c. PREPARATORY contract not an end by itself but a
means thru w/c other contracts may be made (eg. agency)
6. NAME
a. NOMINATE contract given a particular/special name
(eg. partnership)
b. INNOMINATE not given special name (eg. I give that
you may give)
7. SUBJECT MATTER
a. Contracts involving things
b. Contracts involving rights/credits
c. Contracts involving services
3 STAGES OF CONTRACT
1. PREPARATION/CONCEPTION preparatory steps to
perfect contract
2. PERFECTION/BIRTH meeting of minds between 2
contracting parties
3. CONSUMMATION/TERMINATION terms of contract are
performed, & contract is fully executed
5 BASIC PRINCIPLES/CHARACTERISTICS OF A
CONTRACT
1. PRINCIPLE OF AUTONOMY (liberty to contract)
Provided they are not contrary to:
a. Law
b. Morals
c. Good customs
d. Public order
e. Public policy
2. MUTUALITY OF CONTRACTS
- the contract must bind both parties; its validity/compliance
cannot be left to the will of one of them
3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the parties, their assigns
& heirs except when there are rights & obligations not
transmissible:
a. by their nature

b. by stipulation (stipulation por autri)

c. by provision of law

4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere consent
Exceptions:
a. REAL CONTRACTS perfected by delivery
b. FORMAL/SOLEMN CONTRACTS special form
required for its perfection
5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the force of law between
parties which bound to comply in good faith
4 KINDS OF INNOMINATE CONTRACTS
1. I give that you may give
2. I do that you may do
3. I give that you may do
4. I do that you may give
4 RULES FOR INNOMINATE CONTRACTS
1. Agreement of parties
2. Law on Obligations & Contracts
3. Rules on most analogous nominate contract
4. Customs of place
STIPULATION POR AUTRI
- stipulation in favor of 3rd person
5 REQUISITES OF STIPULATION POR AUTRI
1. Stipulation in favor of 3rd person

2. Stipulation is only PART, not the whole of the contract.

3. Both parties must conferred upon a favor of 3rd person
4. 3rd person must accept & say it to debtor before its
revocation/cancellation
5. Neither of both parties be the legal representation/authorization of 3rd person
CONSENT
- meeting of offer (certain) & acceptance (absolute) upon a
thing
5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
2. Parties are capacitate to enter in contract
3. No vitiation of consent
4. No conflict between declared & intended
5. Legal formalities must be complied
7 RULES ON OFFER/ACEPTANCE
1. An offer must be certain.
2. Business advertisements for sale are NOT offers but ONLY
invitations to make an offer.
3. Advertisements for bidders are ONLY invitations.
4. An acceptance made by letter/telegram does NOT bind
offeror EXCEPT from the TIME it came to his knowledge.
5. An offer made through an agent is accepted from the TIME
the acceptance is done through an agent.
6. An offer is ineffective upon death, insanity, insolvency, of
EITHER party BEFORE acceptance is made.
7. When offeror allowed offeree a certain period to accept, offer
MAY be withdrawn AT ANYTIME unless there is something
PAID/PROMISED.