Notes on Law on Obligations/by Atty. Romarico F.

Lutap

OBLIGATIONS
 Juridical necessity – aggrieved must go to court or to a person in
authority. One should not take the law into his own hands.
 To give – the seller of a car must deliver the specific car to the buyer
who has already paid
 To do – perform or render some service. A mechanic who agrees to
repair a car must comply with it. Failure to do will make the mechanic
liable
 Not to do – a prohibition from doing something. A property owner
who is obligated to allow a right of way to another property owner is
not allowed to close such right of way otherwise he will be liable for
blocking the path or disallowing passage.

ESSENTIAL REQUISITES OF AN OBLIGATION:

• Active Subject (creditor or obligee) he has the right to the fulfillment

of the obligation. (nagpautang, naniningil, tinatakbuhan ng may utang)
• Passive Subject (debtor or obligor) he is bound to the fulfillment of
the obligation. (may utang, sinisingil)
• Object or Prestation (subject matter of the obligation) consists in
giving, doing or not doing. (to deliver, to perform, not allowed to do
something)
• Juridical tie (efficient cause or vinculum) it is the agreement or
contract between the parties.
 SOURCES OF OBLIGATIONS
1) LAW – a rule of conduct promulgated by legitimate authority, which is
just and obligatory and of common observance and benefit. Ex. Taxes
2) CONTRACTS (Art. 1306) - agreements of the parties. ex. Deed of Sale
Contract of Lease, Loan, Mortgage
3) QUASI-CONTRACTS – Arts. 2142 – 2175
 “No one shall be unjustly enriched at the expense of another.”

Kinds of Quasi-Contracts:

3.1) Negotiorum Gestio – voluntary management of one’s property

without any agreement and the property owner is benefited.
Note: The property owner must reimburse the person for the
expenses that he incurred.
3.2) Solutio Indebiti - receiving something which is not yours.
Ex. Receiving an amount which is in excess of the amount
due. The excess must be returned.

 4) ACTS or OMISSIONS PUNISHED BY LAW

A person who is criminally liable is also civilly liable. (Art. 100, RPC)
For criminal offenses there is a principal penalty of imprisonment.
Reckless imprudence cases that amount to injuries, damage to
property, or death are criminal in nature. The offender failed or
omitted to observe diligence.

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 Civil liability arising from crimes or delicts:
 a) Restitution – to return the thing
 b) Reparation – to restore the thing in its original state.
 c) Indemnification – payment for damages

Criminal liability can never be subject of a compromise.

The civil liability may be subject to an amicable settlement or
Compromise agreement.

5) QUASI-DELICTS- (Arts. 2176 – 2194)

The owner of a dog is liable if the dog bites another person.
There is solidary liability in quasi-delicts.
There is no criminal liability in quasi-delicts. There is only civil liability

NATURE AND EFFECT OF OBLIGATIONS:

• DUTIES OF DEBTOR (Art.1163)

Kinds of Diligence:
Contractual – the parties may agree on the kind of diligence to be
observed.
Legal – the law requires the observance of EXTRAORDINARY
DILIGENCE
Default (bonum pater familia) – in the absence of any agreement or
requirement by law, the Diligence of a Good Father of a
family will be observed.

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DETERMINATE OR SPECIFIC THINGS

Duties of the Debtor

• Preservation of thing – observe the required diligence
• Deliver the thing itself (Art. 1165) – the specific thing
• Deliver the fruits (Art. 1164) – natural, industrial, civil
• Deliver the accessions and accessories (Art. 1166)
• (Answer for damages arising from fraud, negligence, delay)

GENERIC OR INDETERMINATE THINGS

• Duties of the Debtor

• Deliver quantity and quality intended
• Neither inferior nor superior quality can be delivered
• Answer for damages for fraud, negligence and delay
KINDS OF DELIVERY
• ACTUAL DELIVERY (TRADITIO) actual transfer
• CONSTRUCTIVE DELIVERY
• Traditio simbolica – giving key to the house
• Traditio longa manu – pointing out to the object.
• Traditio brevi manu – possessor to owner. Ex. Tenant or lessee buys
the apartment unit.
• Traditio constitutum possessorium – change status to non-owner. Ex.
Owner sells the apartment to a buyer but former owners stays in the
apartment as a tenant or lessee.
• Tradition by execution of legal forms – Deed of Absolute Sale

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 FORTUITOUS EVENTS

• Fortuitous Event Force Majeure

• Acts of Man Acts of God
Theft, arson, Earthquakes, natural calamities,
strikes, lockdown volcanic eruptions, floods

Generally, the happening of a fortuitous event extinguishes an

obligation.

EFFECTS OF FORTUITOUS EVENT ON DELIVERY

• Expressly specified by law, damages (Art. 1170) – guilty of fraud,

negligence, delay or contravene the tenor of the agreement
• Obligation arising from a crime (Art. 1268) – a thief is not exempted
from paying the price of the stolen thing in spite of its loss. But he is
not liable if he has offered to return the thing and the owner
unreasonably refused to receive it (note: mora accipiendi)
• When stipulated in an agreement (Art. 1306) – the contract is the law
between the parties. The terms therein must be followed.
• Nature of obligation requires assumption of risk (Art. 1174, Insurance
Code of the Philippines). Note: The assumption of risk may be subject
to agreement between the parties.

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 LIABILITY FOR DAMAGES

• Deceit or Fraud
• Dolo causante (causal fraud)– at the inception, during the execution
• Dolo incidente (incidental fraud)– during the performance, no evident
•

Fault or Negligence – omission to observe the required diligence

• Culpa contractual- negligence in the performance of the contract
• Culpa criminal – reckless imprudence cases. A bus driver who bumps a
pedestrian is presumed negligent in operating the bus. There is a
penalty of imprisonment if found guilty beyond reasonable doubt.
• Culpa aquiliana – the damage caused is not intentional. There is civil
liability.

Delay or Mora

• Mora solvendi – debtor is in delay

• Mora accipiendi – creditor is in delay
• Compensatio morae – refers to reciprocal obligations. There is only
delay when one of the contracting parties complies with his obligation
and the other fails to do the same. If neither of the parties complied
there is no delay.

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 DELAY, WHEN DEMAND NOT NEEDED

• Stipulated – parties agree in the contract that failure to comply within

a specified period is considered delay without need of demand
• Provided by Law – compliance beyond the prescriptive period set
under the law is automatically considered a delay and the imposable
penalties shall be assessed.
• Time is of the essence – this is important in specific events. The
performance of the obligation must be on the exact date, time, place.
Failure to do so is clear delay.
• Demand is useless – if the specific thing to be delivered is lost or the
service could no longer be performed.
• Performance by one party in a reciprocal obligation – refer to
compensatio morae.

Note: Although demand is not needed under the foregoing circumstances, it

is still prudent and good practice to send a written demand especially if the
aggrieved party is contemplating to go to court. The document is the best
evidence.

REMEDIES

• Specific performance – to exact fulfillment of the contract

• Rescission – to cancel or withdraw from the contract
• Case for Damages – usually a claim for damages is coupled either in
the case for Specific Performance or Rescission. However, an action
for Damages, by itself, may be instituted alone.

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 • Undoing of acts done (Arts. 1167 & 1168) – in all cases, the obligor will
rectify everything at his own expense.

• Levy or attachment of property (Art. 1177) – The levy or attachment is

recorded on the title belonging to the debtor thereby legally placing
the properties of the obligor or debtor in the custody of the court.
Interested buyers of the property are put on notice that the properties
are in the safekeeping of the court.

REAL RIGHTS vs. PERSONAL RIGHTS

Real Rights Personal Rights

Right or interest over specific There is a definite passive
thing without definite passive subject. Ex. Loan, there
subject. Ex. Ownership, Mortgage is definite debtor
Adverse claim, Lis Pendens

DIFFERENT KINDS OF OBLIGATIONS

• PURE – no condition. It is demandable at once.

• CONDITIONAL – depends upon a future and uncertain event
Suspensive – the happening of the condition gives rise to an
obligation. Obligation is demandable only when condition is fulfilled.
Resolutory – the happening of the condition extinguishes an
obligation. The obligation is demandable at the beginning.
• Potestative – depends upon the will of one of the contracting parties
• With a PERIOD – depends upon future and certain event

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 • Suspensive – arrival of the period gives rise to an obligation
• Resolutory – arrival of the period terminates the obligation

• ALTERNATIVE – there are several prestations. Only one of the

prestations should be performed to satisfy the obligation.
• FACULTATIVE – there is only one prestation but a substitute may be
given.
• CONJUNCTIVE – there are several prestations and all are due
• DISTRIBUTIVE- one or more of the prestations are due

• JOINT – to each his own. Each debtor is individually liable for his own
share of the obligation only.
• SOLIDARY – one for all; all for one. Any one of the solidary debtors
may be made to pay for the entire obligation.

• DIVISIBLE – capable of partial fulfillment

• INDIVISIBLE – not capable of partial fulfillment
Rule: It depends on the Intention of the parties
Exception: If the obligation or thing is not susceptible to partial
performance.

• WITH A PENAL CLAUSE substitutes indemnity for damages and

interests.
• It is an accessory obligation.
• Nullity of the penal clause does not nullify the principal obligation.
• Nullity of the principal obligation nullifies the penal clause.

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 EXTINGUISHMENT OF OBLIGATIONS

• PAYMENT or PERFORMANCE

• SPECIAL FORMS OF PAYMENT:

• Dation in Payment or Dacion en pago. (Art. 1245)

The debtor offers his property to the creditor as an accepted payment
for his debt. It is governed by the contract on sales.

• Application of payments (Art. 1253),

- There is one debtor one creditor
- There are two or more debts
- Debts are of the same kind
- The obligations must be due
- Payment is insufficient to cover all debts.
- It must be indicated to which obligation the debtor shall apply the
payment.

• Payment by cession (Art. 1255) – the debtor cedes or assigns his

properties to the creditors. The creditors shall sell the properties and
and shall satisfy their claims from the proceeds of the sale.

• Tender of payment and consignation (Arts. 1256-1261)

Tender of payment is merely an offer. It is a prerequisite before
consignation can be resorted to. Consignation is judicial in nature.
Consignation is not limited to money only, it may involve things.
Consignation has the effect of extinguishing the obligation of the
debtor.

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 CONFUSION or MERGER – the characters of the creditor and the debtor
are merged in one and the same person.
 COMPENSATION – I owe you; You owe me. It may total or partial.

 NOVATION
• Changing their object or principal obligation
• Substitution
• Expromission – without knowledge or consent of debtor
• Delegacion – with consent of debtor or at his instance
• Subrogation – a third party is placed into the shoes of the creditor
OTHER CAUSES
• ANNULMENT – contract is rendered void
• RESCISSION – cancellation of the contract
• FULFILLMENT OF A RESOLUTORY CONDITION – ends an obligation
• PRESCRIPTION – an obligation is extinguished due to passage of time
• DEATH OF A PARTY – if the obligation is personal
• MUTUAL DESISTANCE – withdrawal of the complaint and
counterclaims

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NATURAL OBLIGATIONS –
They are based on equity and natural law.
They do not grant a right of action to enforce their performance which
means that one cannot file a case in court based on a natural obligation.
However, if the obligor voluntary fulfills his obligation, the creditor is given
the right under the law to retain payment.

10 COMMANDMENTS FOR REVIEWEES

 1. Be prepared, Never cram.

 2. Have a regular routine.
 3. First answer is usually the correct answer.
 4. Get plenty of sleep.
 5. Be confident but not too over-confident.
 6. Don’t discuss answers immediately after the exam.
 7. Answer all questions.
 8. Have some recreation.
 9. Think positive.
 10. PRAY.

“LIFE IS NOT A FINAL EXAM. IT’S DAILY POP QUIZZES”- (Reader’s Digest)

GOOD LUCK!

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