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Obligation from the Latin word obligare meaning to bind; a juridical necessity to give, to do or not to

Other liable persons:

do

1.
2.
3.
4.
5.
6.

Obligation to give
Obligation to do
Obligation not to do

Father, or mother in case of death or incapacity

Guardians
Owners and managers of an establishment or enterprise
Employers
The State when it acts through a special agent
Teachers or heads of establishments of arts and trades

ESSENTIAL REQUISITES OF OBLIGATION

NATURE AND EFFECT OF OBLIGATION

1.

Passive subject the person who is bound or has the duty to fulfill the obligation, called the debtor

Obligations:

2.

or obligor
Active subject the person who can demand the fulfillment of the object or presentation, called the

1.
2.

3.

creditor or obligee
Object or presentation it is either the giving of a thing, or the doing, or not the doing of

4.

something; the subject matter of the obligation

Juridical tie, legal tie or the vinculum binds the parties to the obligation; known as the efficient

Accession pertains to the fruits of a thing or additions to or improvements upon a thing

3.
4.
5.

cause

Obligations derived from law laws that are not presumed

Obligations derived from contracts have the force of law between the contracting parties and

3.

should be complied with in good faith

Obligations derived from quas-contracts lacks the element of consent
a.
Quasi-contract the juridical relation resulting from lawful, voluntary and unilateral acts by

ii.

particularity
1.

Natural fruits the spontaneous products came out or produced without intervention of human

2.
3.

labor
Industrial fruits produced through cultivation
Civil fruits those derived by virtue of juridical or legal relations (rents on houses)

Instances where demand is not necessary to put debtor in delay:

without the knowledge or consent of the other

Solutio indebiti a juridical relation which takes place when something is received when

1.

When the obligation so provides such as when it was agreed upon that one incurs in delay without

there is no right to demand it, and it was unduly delivered through mistake, giving rise to the

2.
3.

any demand
When the law provides
When the demand is useless such as when the object of the obligation was lost through a fortuitous

4.
5.

event
When time is of the essence
When a party does not comply with what is incumbent upon him in reciprocal obligation

obligation to return it
Obligations derived from delicts or crimes

4.

of the same class

Generic/indeterminate when it refers only to a class or genus and cannot be pointed out with

Kinds of fruits:

virtue of which the parties become bound to each other to the end that no one will be unjustly
enriched or benefited at the expense of another
i. Negotiorum gestio the voluntary management of the property or affairs of another

Obligation to do
Obligation not to do
Obligation to deliver
a.
Specific/determinate when it is particularly designed or physically segregated from all others
b.

SOURCES OF OBLIGATIONS
1.
2.

Obligation to be diligent
Obligation to give a determinate thing

Crimes/delict acts or missions punished by law

Civil Liability includes:
a.
b.
c.
5.

Restitution
Reparation for the damage caused
Indemnification for consequential damages
Obligations derived from quasi-delicts
Quasi-delict an act or omission by one person which causes damage to another giving rise to

Fraud when a party to the contract intentionally evades the performance of his obligation through deceit
thereby causing injury or damage to other
Negligence the failure to use such care as a reasonably prudent and careful person who would use under
similar circumstances

the obligation to pay for the damage done there being fault or negligence, and there is no preexisting contractual relation between the parties; includes acts whether intentional or voluntary,
or negligence which result in damage to another

PRIMARY CLASSIFICTIONS OF OBLIGATIONS

1.
2.
3.

Pure and conditional obligation

Obligations with a period
Alternative and facultative obligations

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4.
5.
6.

Joint and solidary obligations

Divisible and indivisible obligations
Obligations with a penal cause

SECONDARY CLASSIFICATION OF OBLIGATIONS

1.
2.
3.
4.
5.

Unilateral and bilateral obligations

Real and personal obligations
Determinate and generic obligations
Civil and natural obligations
Legal, conventional, and penal obligations

Pure obligation obligation which is not subject to any condition or burden and whose performance does
not depend upon a future or uncertain event or past event unknown to the parties and immediately
demandable

There is solidary liability when:

a.
b.
c.

The obligation expressly so states

The law requires solidarity
The nature of the obligation requires solidarity

Terms to indicate solidarity

a.
b.
c.
d.
e.
f.

Jointly and/or severally

Solidaria
In solidum
Together and/or separately
Individually and/or collectively
Juntos separadamente

Divisible obligation an obligation capable of partial performance

Indivisible obligation not capable of partial performance
Obligation with a penal cause an obligation which contains an accessory undertaking to assume

Conditional obligation an obligation whose performance is subject to any condition

greater liability in case of breach; attached to the principal obligation primarily to insure their performance

a) Suspensive condition the fulfillment of which gives rise to an obligation

b) Resolutory condition the fulfillment of which extinguishes an obligation already existing
Obligation with a period obligation whose performance is subject to the expiration of said period or

TYPES OF PENALTY
a) subsidiary penalty in case of breach, only the penalty can be demanded
b) joint penalty both the principal obligation and the penalty can be enforced

term
Term/period a future and certain event upon the arrival of which, the right subject to it either
arises or is terminated
Period classification
a.
b.

Ex die / suspensive period a period having a suspensive effect

In diem / resolutory period takes effect immediately but is terminated upon the arrival of

c.
d.
e.

the day certain

Legal period the period for compliances is fixed by the law such as payment of taxes
Conventional / voluntary period one that is agreed upon by the parties
Judicial period one that is provided or fixed by the courts

Alternative obligation one wherein various prestations are due, but the performance of one of them is
sufficient determined by the choice which rightfully belongs to the debtor (obligor) unless it has been
granted expressly to the creditor (obligee)
Facultative obligation an obligation where one prestation is due but the obligor may substitute another
Joint obligation an obligation where the whole obligation is to be fulfilled proportionally by the
different debtors and each one of the creditors is entitled to a proportionate part of the credit
Terms used to indicate joint liability
a.
b.
c.
d.
e.
f.

Mancomunada
Mancomunadamante
Pro rata
Proportionately
Individually
Separately

Solidary obligation each of the debtors is liable for the whole obligation and each of the creditors has a
right to demand compliance of the entire obligation

MODES OF EXTINGUISHING OBLIGATIONS (New Civil Code)

1.
2.
3.
4.
5.
6.

payment or performance
loss of the thing due
condonation or remission of the debt
confusion or merger of the rights of the creditor and debtor
compensation
novation

Other causes of extinguishment of obligations

1.
2.
3.

annulment
recession
fulfillment of a resolutory condition and prescription

Modes of extinguishing obligation

1.
2.
3.
4.
5.
6.

Death of a party in personal obligation

Impossibility of fulfillment
Happening of fortuitous event
Arrival of a resolutory period
Compromise agreement
Mutual disagreement of parites

Principle of mutuality of contracts the validity or compliance of a contract between the parties cannot
be left to the will of one of them
Payment consists of not only the delivery of money but also the performance of an obligation
To whom payment shall be made
a.
b.
c.

Creditor (obligee)
Successor-in-interest (heir)
Any person authorized to receive it authorized by the creditor or the law

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Place of payment
a.
b.

Requisites of novation

If there is stipulation, the payment shall be made at the place designated in the obligation
If there is no stipulation and the thing to be delivered is generic, the place of payment shall be

a.
b.
c.
d.

the domicile of the debtor

Legal tender an obligor (debtor) may compel an obligee (creditor) to accept payment of debt, public or

A previous valid obligation

The agreement of all parties to the new contract
The extinguishment of the old obligation
The validity of the new one

Kinds of substitution

private

a.

Expromission takes place when a third person at own initiative and without the knowledge or
against the will of the original debtor assumes the latters obligation with the consent of the

SPECIAL FORMS OF PAYMENT

a.

Dation in payment or dacion en pago giving by the debtor(obligor) ad receipt by the creditor

b.

(obligee) of something in payment of a debt, instead of a sum of money

Application of payments the act of designating the debt to which should be applied the payment

c.
d.

made by a debtor who incurs various debts of the same kind in favor of one and the same creditor
Payment by cession the assignment of properties of the debtor to his creditors in payment of debts
Tender of payment and consignation
i.
Tender of payment the act of which a debtor offers to the creditor the thing or the amount of
ii.

money which he considers to be due

Consignation an act by which the debtor deposits the thing or the amount due with the court
of competent jurisdiction whenever the creditor unreasonably refuses to accept or cannot
receive it after complying with the formalities provided by law

b.

creditor
Delegacion takes place when the debtor asks the creditor to accept a third person to take his
place as obligor

Contract a meeting of minds between two persons whereby one binds himself, with respect to the other,
to give something or to render some service;
-(Sanchez Roman) a juridical convention manifested in legal form, by virtue of which one or more persons
bind themselves in favor of another or others, or reciprocally to the fulfillment of a prestation to give, to
do, or not to do;
- the very agreement of the parties
Obligation the legal relation; the remedy which the law affords for its enforcement

Consignation may be made:

a.
b.
c.
d.
e.

When the creditor is absent or unknown, or does not appear at the place of payment
When he is incapacitated to receive payment at the time it is due
When without just cause, he refuses to give a receipt
When two or more persons claim the same right to collect
When the title of the obligation has been lost

Kinds of contracts
1.
2.

Contract to give something

Contract to render some service

ELEMENTS OF A CONTRACT
Condonacion / condonation / remission the gratuitous abandonment by the creditor of his right
Confusion / merger the union of the qualities of debtor and creditor in the same person, the effect of

1.
2.

Essential elements those without which no contract can validly exist

Natural elements those that are presumed and exist in certain contracts unless the contrary is

3.

express(ive/ion/es) stipulated by the parties

Accidental elements the particular clauses, terms or conditions established by the parties in their

which is generally to extinguish the debt

Compensation takes place when persons, in their own right are creditors and debtors of other; takes

contract

effect by ration of law and extinguishes the concurrent amount of debts although the parties (creditors and
debtors) are aware of the compensation
KINDS OF COMPENSATION
a.
b.
c.
d.

Legal takes place by operation of law

Voluntary or conventional takes place by the agreement of the parties
Judicial takes place with the concurrence of the court of competent jurisdiction
Partial takes place when two obligations are different amounts and a balance remains

e.

unextinguished
Total takes place when two debts are of the same amount

Novation takes place when it substitutes new party and discharges one of the original parties and
contract by agreement of all the parties.

REQUISITES OF A CONTRACT
1.
2.
3.

Consent of the contracting parties

Object contain which is the subject matter of the contract
Cause or consideration of the obligation which is established

STAGES OF A CONTRACT
1.
2.
3.

Preparation, conception, or generation

Perfection or birth
Consummation or termination

Obligation of contract may be legally impaired by:

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1.
2.
3.

The police power of the state

The power of eminent domain
The right to impair the obligation

6.

According to risk involved

a.
Commutative those in which what is given by one party is considered an equivalent
b.

UNLAWFUL CONTRACTS
1.
2.
3.

Contract whereby it provides payment of usurious interest is void

Parties cannot enter into contract that will deprive a court of jurisdiction conferred it by law
A waiver is signed by a student-scholar whereby he extinguishes his right to transfer to another

4.
5.

school unless he refunds to the university the equivalent of his scholarship grants
A contract whereby services will be rendered without remunation is contrary to law and morality
A promise of marriage based on illicit .. tion

7.

Obligatory force of contracts based on the principle that once the contract is perfected it shall have

2.

obligatory force upon contracting parties

Autonomy of contracts based on the principle that the contracting parties are free to enter into a
contract and establish such terms and conditions provided they are not contrary to the law, morals,

3.

good customs, public order, or public policy

Mutuality of contracts based on the principle that the contract must bind both contracting parties

4.

and necessarily there must be mutual consent

Relativity of contracts based on the principle that the contract takes effect only between the

happening of an uncertain event

According to relations with other contracts
a.
Principal those that exist independently from other contracts
b.
Accessory those which cannot exist without another prior contract

ESSENTIAL REQUISITES OF CONTRACTS

1.
2.
3.

ESSENTIAL CHARACTERISTICS OF CONTRACTS

1.

given by the other

Aletory those in which the cause or consideration is unequal and depend upon the

Consent of the contracting parties

Object certain which is the subject matter of the contract
Cause of the obligation which is established

Consent the conformity of wills; the agreement of the will of one contracting party with that of another
or others upon the object and terms of the contract; manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are the acceptance absolute
PERSONS WHO CANNOT GIVE CONSENT
1.
2.

Unemancipated minors below 21 yrs and not been released from parental authority by marriage
Insane or demented persons insane denotes that degree of mental illness which negates

3.

individuals legal responsibility or capacity

Deaf mute deaf, dumb, and those who do not know how to write cannot give consent

parties, their assigns and heirs

Pour autrui the clear and conferment of favor upon a third person

ESSENTIAL CHARACTERISTICS OF CONSENT

CLASSIFICATION OF CONTRACTS
1.

2.

According to their designation

a.
Nominate those that can be identified by their individuality and are regulated by
special provisions of law
b.
Innominate those which lack individuality are regulated by the stipulation of parties
According to their perfection
a.
Consensual those which are perfected by mere consent of the parties without need of
b.

3.
4.
5.

1.
2.
3.

formalities
Real those which requires not only the consent of the parties but also the delivery of the

object of the contract which is necessary

According to the their form
a.
Common of informal those which do not require any formality
b.
Special or formal those for which the .. prescribes some formalities
According to the nature of the obligation and procedure
a.
Unilateral those which give rise to an obligation for only one of the parties
b.
Bilateral those which give rise to reciprocal obligations
According to their cause or consideration
a.
Onerous those in which benefit is derived through something which is given or
b.

promised
Gratuitous those in which one of the parties derives benefit without giving any
equivalent or compensation

It is intelligent
It is free and voluntary
It is conscious or spontaneous

VICES OF CONSENT
1.
2.
3.
4.
5.

Error or mistake
Violence or force violence refers to unjust and unwarranted exercise of force
Intimidation threat or duress
Undue influence
Fraud or deceit

REQUISITES OF THINGS AS OBJECTS OF CONTRACT

1.
2.
3.
4.

It must not be outside the commerce or men

It must not be contrary to law, morals, good customs, public order or public policy
It must not be impossible either physically or legally
It must be determinate as to its kind

Cause the essential or more approximate purpose which contracting parties have in view the time of
entering into the contract
Form the procedure or manner to be adhered to in the execution of a contract

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Rescission a remedy granted by the law to the contracting parties and even to third persons, to obtain
Exceptions in whatever form of contract shall be obligatory

reparation from damages caused them by a valid contract, by means of restoration of the things to their

1.
2.

former status prior to the contract

Those contracts for which the law prescribes a certain form in order to be valid
Those contracts for which the law requires a certain form in order to be enforceable

NECESSARY FORMALITIES FOR VALIDITY OF CONTRACTS

1.

2.
3.

Contracts which must appear in writing

a.
Donations of personal property whose value exceeds P5000
b. Sale of a piece of land or any interest therein by an agent
c.
In a contract of antichresis, the principal and the interest must be in writing
Contracts which must appear in a public document
a.
Donation of immovable property
b. In partnership where real property or real rights are contributed to the common fund
Contracts which must be registered
a.
Chattel Mortgage
b. Sale and transfer of large cattle

Rescissible contracts valid contracts which contains all the essential requisites for their validity but the
contract is set aside on the basis of justice and equity
Rescissible contracts:
1.

Those which are entered into by guardian whenever the wards whom they represent suffer damage

2.

by more than one-fourth of the value of the things which are the object thereof
Those agreed upon in representation to absentees, if the latter suffer damage stated in the preceding

3.

number
Those which refer to things under litigation if they have been entered into by the defendant without

4.

the knowledge and approval of the litigants or competent judicial authority

All other contracts specially declared by law to be subject to rescission

Voidable / annullable contracts valid contracts; one of the parties is incapable of giving consent, or
Reformation a remedy in equity by means of which written instrument is made or construed so as to

consent is vitiated by mistake, violence, intimidation, undue influence, or fraud

express and conform to the real intention of the parties by reason of fraud, has been committed

Annulment the remedy granted by the law to render the inefficacy of the contract
1.
2.
3.

There is no reformation in:

1.
2.
3.

A simple donation inter vivos wherein no obligation is imposed

Wills
When the real agreement is void

Interpretation refers to the art or process for discovering and ascertaining the meaning of a statute of

In cases of intimidation, violence, or undue influence from the time the intimidation ceases
In the case of mistake or fraud, from the time it is discovered
In the case of contracts entered into by minors and incapacitated persons, from the time the
guardianship ceases

Requisites to confer one to bring action for annulment:

1.
2.

The person must have an interest in the contract

The person whose right is impaired and not the party responsible for the defect

contract or other written document

Ratification may be manifested expressly or impliedly.
GOVERNING RULES OF INTERPRETATION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Literal meaning controls

Evident intention of parties prevails
Contemporaneous subsequent acts to be principally considered
Special intent prevails over a general intent
Interpretation of a contract with several meaning
Interpretation of various stipulations
Custom or usage as aid in interpretation
Obscure terms construed against one who drafted the contract
If doubts are impossible to settle, the least transmission of rights and interest shall prevail
Principles of interpretation in the Rules of Court are applicable

Express when it takes in the form of writing

Implied / tacit when it is manifested by silence or acquiescence or by acts showing approval
Unforceable contracts those which cannot be sued or enforced by the law unless they are ratified
1.

Unauthorized contracts or those who entered into the name of another by one without or acting

2.
3.

in excess of authority
Those that do not comply with the Statute of Frauds
Those where both parties are incapable of giving consent to a contract

Void contracts valid contracts but the cause, object or purpose are contrary to law, morals, good
customs, public order or public policy, or the contract itself is prohibited or declared to be law to be void

DEFECTIVE CONTRACTS
1.
2.
3.
4.

Rescissible contracts
Voidable contracts
Unenforceable contracts
Void or inexistent contracts

CHARACTERISTICS OF VOID CONTRACTS

1.
2.
3.
4.
5.

The defense of illegality of a contract cannot be waived

It is imprescriptable
The defense of illegality is not available to third persons
(No?) need for an action to declare illegality
It cannot be ratified

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Pari delicto equal fault, or equal in guilt or fault