and

OBLIGATIONS
CONTRACTS
Presentation by: Jo Arita G. Suarez
TOPIC OUTLINE
OBLIGATIONS

GENERAL PROVISIONS

NATURE AND EFFECT OF OBLIGATIONS

KINDS OF OBLIGATIONS

EXTINGUISHMENT OF OBLIGATIONS
TOPIC OUTLINE
CONTRACTS

GENERAL PROVISIONS

FORMALITY

DEFECTIVE CONTRACTS
TOPIC OUTLINE
NATURAL OBLIGATIONS

DEFINITION

KIND OF ESTOPPEL

LACHES
TOPIC OUTLINE
SPECIAL CONTRACTS

SALES LOAN

TRUSTS DEPOSIT

AGENCY LEASE

COMPROMISE
TOPIC OUTLINE
QUASI-CONTRACTS

NEGOTIORUM GESTIO (UNAUTHORIZED MANAGEMENT)

SOLUTION INDEBITI (UNDUE PAYMENT)

 and
OBLIGATIONS
CONTRACTS


GENERAL

PROVISIONS
OBLIGATION
ART. 1156 OF THE CIVIL CODE

Definition.
An obligation is a juridical necessity to give, to do or not to do.

A creditor may demand the debtor the observance of a determinative

conduct, and in case of breach, may obtain satisfaction of the assets of the
latter.
ELEMENTS OF AN OBLIGATION

01 02 03 04

Active Subject Passive Subject Prestation Vinculum Juris

Obligee/Creditor Obligor/Debtor Object Juridical or Legal Tie
or Efficient Cause
SOURCES OF OBLIGATION
ART. 1157 OF THE CIVIL CODE

Obligations may arise from:

01 02 03 04 05

Law Contracts Quasi-contracts Acts or omissions Quasi-delicts

punishable by law
 and
NATURE
EFFECT

OF OBLIGATIONS
ART. 1163
Every person obliged to give something is also obliged to take
care of it with the proper diligence of a good father of a family,
unless the law or the stipulation of the parties requires another standard of
care.
OBLIGATION TO GIVE
TYPES OF THINGS
01
Specific or
Determinate Thing
physically segregated from
all others of the same class
cannot be substituted against
the obligee’s will.
02
Generic Thing
object is designated only by
its class/genus/species
can be substituted by any of the
same class and same kind.
03
Limited Generic Thing
generic objects are confined
to a particular class
can be substituted by any of the
same particular class.
ART. 1164
The creditor has a right to the fruits of the thing from the time
the obligation to deliver it arises.

However, he shall acquire no real right over it until the same has been
delivered to him.
OBLIGATION TO GIVE
Rights and Duties of Parties (to give a SPECIFIC thing)

DUTIES OF THE

DEBTOR RIGHTS OF THE CREDITOR

To preserve or take care of the thing due To compel delivery

To deliver the thing itself To the fruits from the time the obligation to deliver arises

To deliver the fruits of the thing To the accessions and accessories

To deliver its accessions and accessories Not to be compelled to receive a different one

To pay damages in case of breach To recover damages in case of breach

FRUITS

NATURAL
FRUITS INDUSTRIAL

FRUITS CIVIL FRUITS

spontaneous products of
those produced by lands of any those derived by virtue of a
the soil, and the young and
kind through cultivation or labor juridical relation
other products of animals

ACCESSIONS

ACCESSORIES

everything which is produced by a things designed for the embellishment,

thing, or which is incorporated or use or preservation of another thing of
attached thereto, excluding fruits more importance

Definition
OBLIGATION TO GIVE
Rights and Duties of Parties (to give a GENERIC thing)

DUTIES OF THE

DEBTOR RIGHTS OF THE CREDITOR

To take care of the thing To ask that the obligation be complied with

To ask that the obligation be complied with by a third

To deliver a thing of the quality intended
person at the expense of the debtor

Creditor cannot demand a thing of superior quality To recover damages in case of breach

To pay damages in case of breach Not to be compelled to receive a different one

TRANSMISSIBILITY OF
OBLIGATIONS

General Rule.
All rights acquired by virtue of an obligation are transmissible.
[Art. 1178, CC]; Contracts take effect only between the parties,
their assigns and heirs [Art. 1311, CC]

Exceptions: Nature of obligation, law or stipulation to the contrary [Art. 1178].

PERFORMANCE OF
OBLIGATIONS
ART. 1232 OF THE CIVIL CODE

Definition. Payment or Performance.

Payment means not only the delivery of money, but also the
performance, in any other manner, of an obligation.

General Rule or Requirement.

The thing or service in which the obligation consists [must be] completely
delivered or rendered, as the case may be.
BREACHES OF OBLIGATIONS

01 02 03 04

Fraud Negligence Delay Any illicit act which

(dolo) (culpa) (mora) impairs the fulfillment
of the obligation
BREACHES OF OBLIGATIONS
Fraud (Dolo) in the Performance of the Obligation

ART. 1171 OF THE CIVIL CODE

Responsibility arising from fraud is demandable in all obligations. Any

waiver of an action for future fraud is void.

Two types of Fraud: Dolo Causante and Dolo Incidente

BREACHES OF OBLIGATIONS
Negligence (culpa) in the Performance of the Obligation

ART. 1172 OF THE CIVIL CODE

Responsibility arising from negligence in the performance of every kind of

obligation is also demandable, but such liability may be regulated by the
courts, according to the circumstances.

Two types of Civil Negligence: Culpa Contractual and Culpa Aquiliana

BREACHES OF OBLIGATIONS
Kinds of delay

MORA SOLVENDI

MORA ACCIPIENDI

COMPENSATIO

MORAE

Delay on the part of the debtor Delay on the part of the

Delay of both parties in
to fulfil his obligation either to creditor to accept the
reciprocal obligations.
give or to do performance of the obligation.
 BREACHES OF OBLIGATIONS
Effect of Failure to Perform

SUBSTANTIAL

BREACH SLIGHT OR CASUAL BREACH

Total breach Partial breach

Amounts to nonperformance, basis for rescission There is partial/substantial performance in good faith

To undo what has been poorly done Gives rise to liability for damages only

General Rule. Rescission of a contract will not be permitted for a slight or causal breach, but only for
such substantial and fundamental breach as would defeat the very object of the parties in executing
the agreement.
 KINDS of

OBLIGATIONS
PURE OBLIGATION
ART. 1179 OF THE CIVIL CODE

Definition.
One which is not subject to any condition and no specific date is mentioned for its
fulfillment, and is therefore, immediately demandable.

Every obligation whose performance does not depend upon a future or

uncertain event, or upon a past event unknown to the parties, is
demandable at once.
CONDITIONAL OBLIGATION
ART. 1181 OF THE CIVIL CODE

Definition.
One whose consequences are subject in one way or another to the fulfillment of a
condition.

In conditional obligations, the acquisition of rights, as well as the

extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition.
OBLIGATION WITH A
PERIOD OR A TERM
Definition.
One whose effects or consequences are subjected in one way or another to the expiration
or arrival of said period or term.

When the debtor binds

Obligations for whose Obligations with a
himself to pay when his
fulfillment a day certain has resolutory period ⎯ take
means permit him to do so,
been fixed ⎯ shall be effect at once, but
the obligation shall be
demandable only when that terminate upon arrival of
deemed to be one with a
day comes. the day certain.
period.
ALTERNATIVE OR FACULTATIVE
ALTERNATIVE
OBLIGATIONS FACULTATIVE OBLIGATIONS

One wherein various prestations are due but the

performance of one of them is sufficient as One where only one prestation has been agreed
determined by the choice which, as a general upon but the obligor may render in substitution.
rule, belongs to the debtor.

May be complied with by performance of

May be complied with by performance of one of
another prestation in substitution of that which
the prestations which are alternatively due
is due

Loss/impossibility of the prestation due to a

Loss/impossibility of all prestations due to a
fortuitous event is sufficient to extinguish the
fortuitous event shall extinguish the obligation
obligation
JOINT AND SOLIDARY
OBLIGATIONS

JOINT OBLIGATIONS

SOLIDARY OBLIGATIONS

one where the whole obligation is to be
paid or fulfilled proportionately by the
different debtors and/or is to be
demanded proportionately by the
different creditors.
one where each one of the debtors is bound
to render, and/or each one of the creditors
has a right to demand from any of the
debtors, entire compliance with the
prestation.
OBLIGATIONS WITH A
PENAL CLAUSE
Definition.
One which contains an accessory undertaking to pay a previously stipulated indemnity in
case of breach of the principal prestation, intended primarily to induce its fulfillment.

Principal obligation is one which can stand Accesory obligation is one which is
by itself and does not depend for its validity attached to a principal obligation, and,
and existence upon another obligation. therefore cannot stand alone.
EXTINGUISHMENT
OBLIGATIONS
MODES OF EXTINGUISHING
OBLIGATIONS

02 03

01 04
By the loss of the thing By the condonation or
due remission of the debt
By the confusion or
By payment or
merger of the rights of
performance
creditor and debtor
05 06

By compensation By novation
CONTRACTS
CONTRACT
ART. 1305 OF THE CIVIL CODE

Definition.

A contract is a meeting of the minds between two persons whereby

one binds himself, with respect to the other, to give something or to
render some service.

Contract is one of the sources of obligations.

 STAGES OF CONTRACTS

PREPARATION

PERFECTION

CONSUMMATION

begins from time the parties

when the parties agreed
manifest their interest and when parties fulfill or
upon essential elements of
ends prior to the moment of perform the agreement
contract
agreement
 ESSENTIAL REQUISITES

CONSENT

OBJECT

CAUSE OF CONTRACTS

The meeting of the minds The subject matter; the thing,

The essential and impelling
of the parties on the right or service which is the
reason why a party
subject matter and cause subject matter of the obligation
assumes an obligation.
of the contract. arising from the contract.
FORMALITY
ART. 1356 OF THE CIVIL CODE
General rule.

No form necessary for contracts provided that all the essential

requisites for their validity are present

EXCEPT

I O N S

When the law requires that a When the law requires that a When the law requires a contract to
contract be in some form in contract be proved in a certain be in some form for convenience, or
order that it may be valid way to be enforceable to be effective against third parties
 DEFECTIVE CONTRACTS
Rescissible
contracts
caused a particular damage
to one of the parties or to a
third person and which for
EQUITABLE REASONS may be
set aside even if valid.
Voidable contracts
CONSENT of one of the parties is
defective, either because of WANT
OF CAPACITY or because it is
VITIATED, but which contract is VALID
until JUDICIALLY set aside.
Unenforceable Void or inexistent
contracts contracts
ABSOLUTE NULLITY and
CANNOT BE ENFORCED,
produces NO EFFECT, as if
UNLESS RATIFIED in the
it had never been
manner PROVIDED BY LAW.
executed or entered into.
 NATURAL
OBLIGATIONS
NATURAL OBLIGATIONS
ART. 1423 OF THE CIVIL CODE

Definition.

Natural obligations, not being based on positive law but on equity and
natural law, do not grant a right of action to enforce their performance,
but after voluntary fulfillment by the obligor, they authorize the retention
of what has been delivered or rendered by reason thereof.

Two Conditions Necessary for Natural Obligations:

(1) juridical tie between two persons; and (2) that this tie is not given effect by law
ESTOPPEL
ART. 1431 OF THE CIVIL CODE
Definition.

A condition or state by virtue of which an admission or representation is

rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon

Kinds of Estoppel
(1) Equitable Estoppel or Estoppel in pais or by conduct
(2) Technical Estoppels
(3) Estoppel by Judgment
(4) Estoppel by laches
LACHES
ART. 1431 OF THE CIVIL CODE

Definition.

The failure or neglect for an unreasonable and unexplained length of time

to do that which, by exercising due diligence, could or should have been
done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.
 SPECIAL
CONTRACTS
CONTRACT OF SALE
ART. 1458 OF THE CIVIL CODE

Definition.

By the contract of sale one of the contracting parties obligates himself to

transfer the ownership and to deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent.

Ownership is transferred upon delivery and Non-payment is a resolutory condition.

CONTRACT TO SELL
ART. 1478 OF THE CIVIL CODE

Definition.

The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price

Ownership is only transferred upon full payment of price and nonpayment would not give
rise to the obligation to transfer ownership.
TRUSTS
Definition.

A trust is the legal relationship between one person having an equitable

ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the
latter.
AGENCY
ART. 1868 OF THE CIVIL CODE

Definition.

By the contract of agency, a person binds himself to render some service

or to do something in representation or on behalf of another, with the
consent or authority of the latter [Art. 1868,

Four essential elements: consent, object, agent acts as a representative,

agent acts within the scope of his authority
.
COMPROMISE
ART. 2028 OF THE CIVIL CODE

Definition.

A compromise is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already commenced.

Kinds: Judicial and Extrajudicial

LOAN
ART. 1933 OF THE CIVIL CODE

Definition.

By the contract of loan, one of the parties delivers to another, either

something not consumable so the latter may use the same for a certain
time and return it, in which case the contract is called a commodatum, or
money or other consumable thing, upon the condition that the same
amount of the same kind and quality shall be paid, in which case the
contract is simply called a loan or mutuum.

Types: Commodatum and Mutuum (Simple Loan)

DEPOSIT
ART. 1962 OF THE CIVIL CODE

Definition.

A deposit is constituted from the moment a person receives a thing

belonging to another, with the obligation of safely keeping it and of
returning the same.

Kinds: Judicial and Extrajudicial (voluntary and necessary)

LEASE
ART. 1642 OF THE CIVIL CODE
Definition.

The contract of lease may be of things, or of work and service.

Lease of Things Lease of Work and Service

one of the parties binds himself to give to another the one of the parties binds himself to execute a piece of
enjoyment or use of a thing for a price certain, and for a work or to render to the other some service for a price
period, which may be definite or indefinite. However, no certain, but the relationof principal and agent does not
lease for more than ninety-nine years shall be valid. exist between them.
 QUASI
CONTRACTS
QUASI-CONTRACTS
ART. 2142 OF THE CIVIL CODE

Definition.

A quasi-contract is that juridical relation resulting from a lawful, voluntary

and unilateral act, and which has for its purpose the payment of indemnity
to the end that no one shall be unjustly enriched or benefited at the
expense of another.

Unlike contracts, here there is absence of consent.

NEGOTIORIUM GESTIO
ART. 2144 OF THE CIVIL CODE
Definition.

Negotiorum gestio takes place when a person voluntarily takes charge of

another’s abandoned business or property without the owner’s authority

Requisites The obligation does not arise:

1. Person voluntary takes charge of;

1. When the property or business is not neglected or
2. the agency or management of a business or property
abandoned;
belonging to another;
2. If in fact the manager has been tacitly authorized
3. property or business is neglected or abandoned; and
by the owner
4. manager has not been tacitly authorized by the owner.
SOLUTIO INDEBITI
ART. 2154 OF THE CIVIL CODE
Definition.

Solutio indebiti takes place when something is received when there is no

right to demand it, and it was unduly delivered through mistake. The
recipient has the duty to return it.

Requisites

1. Something has been unduly delivered through mistake; and

2. Something was received when there was no right to demand it.
-END-