CONCEPT & PRINCIPLES IN OBLIGATIONS AND CONTRACTS

1.  Juridical Necessity - Obligation is a judicial necessity (to give, to do, or not
to do) because failure or refusal to. perform the obligation gives rise to a right of
action.

2.  Vinculum Juris - The term Vinculum Juris signi es a civil obligation which
has a binding operation in law. Vinculum juris gives to the obligee the right of
enforcing the obligation in a court of justice. Civil obligations are divided into
express and implied, pure and conditional, primitive and secondary, principal
and accessory, absolute and alternative, determinate and indeterminate,
divisible and indivisible, single and penal, and joint and several. Civil obligations
can also be purely personal, real, and both real and mixed at the same time.

3.  Natural Obligation - A natural obligation is an obligation that has no legal
basis and hence does not give a right of action to enforce its performance. It is
based on equity, morality, and natural law, and should be voluntary.

4.  Quasi-Contract - A quasi contract is a legal obligation imposed by law to

prevent unjust enrichment. This is also called a contract implied in law or a
constructive contract.

5.  Solutio Indebiti - The rule is that no person shall unjustly enrich himself at
the expense of another.

6.  Negotiorum Gestio - whenever a person voluntarily takes charge of the

agency or management of the business or property of another without any
power or authority from the latter.

7.  Quasi-Delict or Culpa Aquiliana - When a person is guilty of culpa

aquiliana, he or she is guilty of an act or failure to act. This act causes damages
to somebody else without any type of contractual relationship between the
defendant and the victim.

8.  Negligence - occurs when a person fails to exercise ordinary care,

sometimes referred to as “due diligence”. 

9.  Proper Diligence of a Good Father of a Family - Diligence of a good father

of a family means an ordinary care. Just like a father of a family, it is a care that
an average person would do in taking care of his property. II. To deliver the
thing.

10.  Fortuitous Event - under Article 1174 may either be an “act of God,” or
natural occurrences such as oods or typhoons, storms, earthquakes or other
cataclysmic events; or an “act of man,” such as riots, strikes, wars,
governmental prohibitions, robbery, etc.

11.  Determinate Thing - A determinate thing is a concrete particularized object

indicated by its own individuality

12.  Generic Thing - one whose determination is con ned to that of its nature,
to the genus (genero) to which it pertains, such as a horse, a chair.

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 13.  Delivery - it occurs when legal title to the goods is transferred to the buyer,
even if the seller retains physical possession of the goods. The execution of a
deed of sale of incorporeal property is deemed delivery.

14.  Accessions - Accessions are the fruits of, or additions to, or improvements
upon, a thing (the principal), e.g., house or trees on a land; rents of a building; air
conditioner in a car; pro ts or dividends accruing from shares of stocks; etc.

15.  Accessory - Accessory obligation is one which is attached to a principal

obligation and, therefore, cannot stand alone.

16.  Accessory Follows the Principal - The general rule is that all accessions
and accessories are considered included in the obligation to deliver a
determinate thing although they may not have been mentioned.

17.  Delay, Default, Mora - The word delay, as used in the law, is not to be
understood according to its meaning in common parlance. A distinction,
therefore, should be made between ordinary delay and legal delay (default or
mora) in the performance of an obligation.

18.  Time is of the Essence - The delivery of balloons on a particular date when
a children’s party will be held; the making of a wedding dress where the wedding
is scheduled at a certain time; payment of money at a particular time so that the
creditor could pay o certain debts due on the same date; the delivery of a car
to be used in a trip at a particular time; etc.

19.  Demand would be Useless - S obliged himself to deliver a speci c horse

to B on December 5. Through S’s negligence or deliberate act, or by reason of a
fortuitous event for which S has expressly bound himself responsible, the horse
died on December 2. Under this situation, any demand for the delivery of the
horse on December 5 would be useless as S has made it impossible for him to
perform his obligation.

20.  Reciprocal Obligation - In case of reciprocal obligations, the performance

of one is conditioned upon the simultaneous ful llment on the part of the other.

21.  Compensatio Morae - Compensatio morae or the delay of the obligors in

reciprocal obligations (like in sale), i.e., the delay of the obligor cancels the delay
of the obligee, and vice versa.

22.  Dolo Causante - is the fraud employed by one party prior to or

simultaneous with the creation of the contract to secure the consent of the
other. It is the fraud used by a party to induce the other to enter into a contract
without which the latter would not have agreed to, taking into account the
circumstances of the case.

23.  Dolo Incidente - the fraud is employed for the purpose of evading the
normal ful llment of an obligation and its existence merely results in breach
thereof giving rise to a right by the innocent party to recover damages. The Civil
Code refers to civil fraud. Criminal fraud gives rise to criminal liability.

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 24.  In Contravention with the Tenor of the Obligation - This is the violation of
the terms and conditions stipulated in the obligation. The contravention must
not be due to a fortuitous event or force majeure.

25.  Moral Damages - Moral damages include physical su ering, mental

anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral
shocks, social humiliation, and similar injury.

26.  Exemplary - Exemplary damages cannot be recovered as a matter of right;

the court will decide whether or not they should be adjudicated.

27.  Liquidated Damages - Liquidated damages are those agreed upon by the

parties to a contract, to be paid in case of breach thereof. Article 2227.
Liquidated damages, whether intended as an indemnity or a penalty, shall be
equitably reduced if they are iniquitous or unconscionable.

28.  Nature of the Obligation requires the Assumption of Risk - it

includes determining the likelihood that a vulnerability, threat, or occurrence
could impact the organization and what the consequences or mpact would be if
it were to occur.

29.  Concurrent Negligence - negligence of two of more persons acting

independently. It may happen when plainti and defendant both contribute to
produce the injury for which damages are claimed.

30.  Future or Uncertain Event - upon the happening of which, the e ectivity or
extinguishment of an obligation (or rights) subject to it depends. It is an
uncertain event which wields an in uence on a legal relationship. Meaning of
conditional obligation.

31.  Past Event Unknown to the Parties - A condition may refer to a past event
unknown to the parties. If it refers to a future event, both its very occurrence
and the time of such occurrence must be uncertain; otherwise, it is not a
condition.

32.  Resolutory Condition - he happening of which extinguishes the obligation.

33.  Pure Obligation - is one which is not subject to any condition and no
speci c date is mentioned for its ful llment and is, therefore, immediately
demandable.

34.  When His Means Permits Him to Do So - When the debtor binds himself
to pay when his means permit him to do so, the obligation shall be deemed to
be one with a period, subject to the provisions of Article 1197.

35.  Suspensive Condition - one the ful llment of which will give rise to an
obligation (or right). In other words, the demandability of the obligation is
suspended until the happening of a future and uncertain event which constitutes
the condition.

36.  Facultative Condition - is one where only one prestation has been agreed
upon but the obligor may render another in substitution.

37.  Impossible Condition - the condition is not capable of ful llment, legally or
physically.

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 38.  Constructive or Presumed Ful llment - refers to an obligation prevented
by the obligor from happening. for the condition to be considered ful lled these
two requisites shall be present.

39.  A Day Certain - A day certain is that which must necessarily come although
it may not be known exactly when. The classic example of a day certain is
death. Death is certain, although it may not be known when.

40.  Term or Period - It consists in a space or length of time upon the arrival of
which, the demandability or extinguishment of an obligation is determined.

41.  Suspensive Period - is an obligation that begins only when the day certain
arrives.

42.  Resolutory Period - obligations with a resolutory period take e ect at once,

but terminate upon arrival of the day certain. 

43.  Alternative Obligation - when two things are equally due, under an
alternative. The obligor is bound to render only one of two or more items of
performance.

44.  Facultative Obligation - is one where only one prestation has been agreed
upon but the. obligor may render another in substitution.

45.  Joint Obligation - is one where the whole obligation is to be paid or ful lled
proportionately by the di erent debtors and/or is to be demanded
proportionately by the di erent creditors.

46.  Solidary Obligation - is one where each one of the debtors is bound to
render, and/or each one of the creditors has a right to demand entire compliance
with the prestation.

47.  Divisible Obligation - the condition is susceptible of partial performance

48.  Indivisible Obligation - the condition is not susceptible of partial

performance.

49.  Obligation with a Penal Clause - is 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 ful llment.

50.  Payment - the performance of an obligation to pay money.

51.  Loss of the Thing Due - An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be lost or destroyed without
the fault of the debtor, and before he has incurred in delay.

52.  Ino cious Remission -  when the remission given is more than that which
the creditor can give by will.

53.  Confusion or Merger - is the meeting in one person of the qualities of

creditor and debtor with respect to the same obligation.

54.  Compensation - It is a source of balancing two obligations. It is the

extinguishment in the concurrent amount of the obligations of those persons
who are reciprocally debtors and creditors of each other. It shall take place when
two persons, in their own right, are creditors and debtors of each other.

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55.  Freedom to Contract - The parties may establish such stipulations,
clauses, terms, and conditions as they may deem convenient, provided, they are
not contrary to law, morals, good customs, public order, and public policy

56.  Mutuality of Contract - Contracts must bind both and not one of the
contracting parties; their validity or compliance cannot be left to the will of one
of them.

57.  Relativity of Contract - Contracts take e ect only between the parties,
their assigns and heirs, except in cases where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation, or by
provision of law.

58.  Consensuality - Contracts are perfected, as a general rule, by mere

consent,4 and from that moment the parties are bound not only by the ful llment
of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law

59.  Cognition Theory - The contract is perfected from the moment the
acceptance COMES TO THE KNOWLEDGE OF THE OFFEROR.

60.  Unemancipated Minors - A person under age 21 who has never been
married or who has been married but had the marriage annulled, and who
remains under the control of his parents, whether or not he or she lives with
them.

61.  Lucid Interval - is a temporary period of sanity. A contract entered into by

an insane or demented person during a lucid interval is valid.

62.  Simulation of Contract - is the act of deliberately deceiving others, by

feigning or pretending by agreement, the appearance of a contract which is
either non-existent or concealed or is di erent from that which was really
executed.

63.  Outside the Commerce of Men - Things of public ownership such as

sidewalks, public places, bridges, streets, etc.; things that are common to
everybody such as air, sunlight, rain, etc.

64.  Inadequacy of Cause - in this contract, both parties are obligated to - does
not render a contract void each other Ex. failure to pay the full amount stipulated
in Ex.

65.  Reformation of Instrument - is a remedy in equity where a valid existing

contract is allowed by law to be revised to express the true intentions of the
contracting parties. The rationale is that it would be unjust to enforce a written
instrument which does not truly re ect the real agreement of the parties.

66.  Clear and Unequivocal Terms - it means that such term is unambiguous,
free from any interpretation.

67.  Rescissible Contracts -  is one that was entered into legally by the
contracting parties but has resulted in economic damage to one of the parties or
an outside party. The court can therefore rescind, or set aside, the contract for
equitable reasons.

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 68.  Voidable Contracts - voidable contracts are those contracts which may be
voided due to certain instances such as contracts done in the in uence of fraud,
vitiated consents, etc.

69.  Unenforceable Contracts - They cannot be sued upon or enforced unless

they are rati ed. As regards the degree of defectiveness, voidable contracts are
further away from absolute nullity than unenforceable contracts. In other words,
an unenforceable contract occupies an intermediate ground between a voidable
and a void contract

70.  Void or Inexistent Contracts - They are absolutely null and void. They have
no legal e ect at all and cannot be rati ed.

71.  Annulment of Contract - An action for annulment of contract is one led

where consent is vitiated by lack of legal capacity of one of the contracting
parties, or by mistake, violence, intimidation, undue in uence or fraud.

72.  Statute of Fraud - The term “statute of frauds’’ is descriptive of statutes

which re- quire certain classes of contracts to be in writing. This statute does
not deprive the parties of the right to contract with respect to the matters therein
involved, but merely regulates the formalities of the contract necessary to render
it enforceable.

73.  Pari Delicto - it means that both parties or two or more people are at fault
or are guilty of a crime.
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