Do we need to study Obligations and Contract?

Can we apply it is our daily activities?

All these questions can be answered by YES

Every day we enter in to an obligation without noticing it. For example when be buy food
at the canteen or when we ride in a jeep.

It is important that we need to study and understand well the law on Obligations and
Contracts.

Now I will walk you through to the Law on Obligations and Contracts.

I. GENERAL PROVISIONS

What is Obligation?

Obligation is a juridical necessity to give, to do or not to do.

What is juridical necessity – failure or non-compliance, there will be legal sanctions.

Let go further to the definition of obligation.

Kinds of Obligations:
1. To give- obligation to deliver a movable or an immovable thing in order to create
a real right, or for the use of the recipient or for its simple possession, or in order
to return to its owner. (e.g. sale, deposit, pledge, donation)
2. To do – covers all kinds of works and services whether physical or mental.
3. Not to do – consists in abstaining from doing some act. This obligation includes
the obligation not to give.

Elements of Obligation: (PATO)

1. Passive subject - (debtor or obligor) the person who is bound to the fulfillment of
the obligations. Who has a duty.
2. Active subject – (creditor or obligee) the person who is entitled to demand the
fulfillment of the obligations. Who has a right.
3. Object or prestation – the subject matter of the obligation.
4. Juridical tie or vinculum juris – the cause which create the relation between the
passive subject and active subject.

SOURCES OF OBLIGATIONS

Obligations arise from:

1. Law;
2. Contracts;
 3. Quasi-Contract;
4. Act or omissions punished by law or delicts; and
5. Quasi- Delicts

The sources of obligation are enumerated as follows:

1. Law – when they are imposed by law itself. Such obligations are not presumed.
They are expressly determined the code or is special law.
Example: to pay taxes; obligation to support one’s family.

2. Contracts – they arises from the stipulation of the parties.

Example: sale

3. Quasi – Contracts – arises from lawful voluntary and unilateral acts by virtue of
which the parties become bound to each other.

Based on the principle

 No one must justify enrich himself at the expenses of another.

Example: Negotiorium gestio and Solutio indebiti

4. Act or omissions punished by law or delicts – when they are arise from civil
liability which is the consequence of a criminal offense.

Example: Obligation of a thief to return the stolen object;

5. Quasi- Delicts – who ever by acts or omissions causes damage to another, there
being fault or negligence, is obliged to pay for the damage done.

II. NATURE AND EFFECT OF OBLIGATION

Art. 1163 – Every person obliged to give something is also obliged to:
1. Deliver the thing itself;
2. Preserve the thing with due care;
3. Deliver the accessions and accessories; and
4. Deliver the fruits.

When the creditor is entitled to the fruits of the thing to be delivered?

-the creditor us entitled to the fruits from the time the obligations to make delivery
arises.

Kinds of fruits
1. Natural fruits- are the spontaneous product of the soil and the young and the other
products of animals;
2. Industrial fruits – are those produced by lands of any kind through cultivation or
labor.
3. Civil fruits – those derived by virtue of a juridical relation.
When there is a delay?

Delay –the failure to perform an obligation on time.

Kinds of Delay
1. Mora Solvendi – delay on the part of the debtor to fulfill his obligation.
2. Mora Accipiendi – delay on the part of the creditor to accept the performance of the
obligation;
3. Compesatio morae – delay of the obligors in reciprocal obligations.

General Rule:

NO DEMAND NO DELAY
- Delay by the debtor begins only form the moment a demand, judicial or
extra-judicial, for the fulfillment of the former’s obligation is made by the
creditor. Without such demand, the effect of default will not arise.

Exceptions:
1. When the obligations provides;
2. When the law so provides;
3. When time is of the essence;
4. When the demand would be useless; and
5. When there is performance by a party in reciprocal obligations.

III. KINDS OF OBLIGATIONS

The following is the primary classification of obligations:

1. Pure obligation – is the one whose effectivity or extinguishment does not
depend upon the fulfillment or non-fulfillment of a condition or upon the
expiration of the term or period and which as a consequence is
characterized by the quality of immediate demand.

2. Conditional obligation – when its effectivity is subordinated to the fulfillment or

non-fulfillment of a future and uncertain fact or event.

3. Alternative obligation – refer to those juridical relations which comprehend

several objects or prestation which are due, but the payment or
performance of one of them would be sufficient.

4. Facultative obligation – refer to those juridical relations where only one object
or prestation has been agreed upon the parties to the obligation, but the
obligor may deliver or render another is substitution.

5. Joint Obligation - it is one wherein a debtor is obliged to pay a portion of the full
amount of debt that corresponds only to his share. Likewise, the joint
 creditor can only demand a portion of the full amount that corresponds to
his share.

6. Solidary obligation - refers to a kind of obligation wherein either one of the

creditors has the right to demand full compliance of the obligation from
either one of the solidary debtors.

7. Divisible obligation – the prestation or the object is capable of partial

performance.

8. Indivisible Obligation – the prestation of the object is not capable of partial

performance.

9. With a penal clause - if the obligation is not complied with, the penalty imposed
shall substitute for the damages and the payment of interest unless
otherwise stipulated..

EXTINGUISHMENT OF OBLIGATIONS

Art. 1231. Obligations are extinguished:

1. By payment or performance - delivery of money and performance, in any other
manner of the obligation

2. By the loss of the thing due- partial or total/ includes impossibility of

performance

3. By the condonation or remission of the debt- Gratuitous abandonment of debt

4. By the confusion or merger of the rights of creditor and debtor - character of

debtor and creditor is merged in same person with respect to same
obligation

5. By compensation - Set off. It is a mode of extinguishment to the concurrent

amount the obligation of persons who are in their own right reciprocally
debtors or creditors

6. By novation. – Extinguishment of obligation by creating/ substituting a new one

in its place. Changing object or principal conditions; Substituting person of
debtor; Subrogating 3rd person in right of creditor

7. Other causes of extinguishment of obligations, such as annulment, rescission,

fulfillment of a resolutory condition, and prescription, are governed
elsewhere in this Code.