OBLIGATION juridical necessity to give, to do or not to do 4.

Delay
5. Debtor promises deliver to 2/more persons who do not have
4 ELEMENTS OF OBLIGATION same interest (bad faith)
1. ACTIVE SUBJECT (creditor/obligee) whose obligation is
constituted EFFECTS OF FORTUITOUS EVENT to thing to be delivered
2. PASSIVE SUBJECT (debtor/obligor) has duty to give, to - extinguish the obligation if determinate; generic does not
do or not to do extinguish the obligation
3. OBJECT/PRESTATION subject matter
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) reason 3 MISCELLANEOUS RULES ON PERFORMANCE OF
OBLIGATION
CIVIL OBLIGATION 1. When to deliver determinate, accessions (additions/
NATURAL OBLIGATION improvements) and accessories (joined/included with the
derived from positive law principal) are INCLUDED even not mentioned.
derived from equity & justice 2. If debtor fails to do, it shall be DONE AT HIS EXPENSE,
enforceable by court action same with doing the contravention; poorly done be undone.
not enforceable by court action 3. In obligation not to do, and obligor does what is forbidden,
shall be UNDONE AT HIS EXPENSE.
5 SOURCES OF OBLIGATION
1. LAW 4 GROUNDS FOR LIABILITY
2. CONTRACTS 1. Default/mora
3. QUASI-CONTRACTS arise from lawful, voluntary acts; no 2. Fraud/dolo
one shall be unjustly enriched... 3. Negligence/culpa
2 Kinds 4. Contrary to terms of obligation
a. Solutio indebiti something received (delivered on a
mistake), no right to demand it 1. DEFAULT/MORA delay
b. Negotiorum gestio voluntary mgt of property/affairs of 3kinds
another w/o his knowledge/consent a. Mora solvendi debtors delay to give (real ob.), to do
4. QUASI-DELICT/TORTS arise from damage; (personal ob.)
fault/negligence b. Mora accipiende creditors delay to accept
5. CRIMES/ACTS/OMISSIONS punished by law arise from c. Compensatio Morae delay of both in reciprocal
civil liability that is a consequence of a criminal offense obligation

DILIGENCE OF A GOOD FATHER OF A FAMILY CONCEPT OF DELAY

- care need to be exercised by a debtor to deliver/give General Rule: No demand, No delay
determinate thing Exceptions:
Exception: When law/stipulation of parties requires a different 1. Law states
standard of care (slight/extraordinary diligence). 2. Obligation states
3. Time is the essence
When creditor is entitled to the fruits 4. Demand be useless if delay
Rule: The creditor has personal right (right to ask for delivery) 5. Debtor guilty of delay
from the time the obligation to deliver arises.
But NO real right (right enforceable against the whole world) EFFECTS OF DELAY
until it is delivered. 1. Damages
2. When to deliver determinate thing, STILL LIABLE in
3 KINDS OF FRUITS fortuitous event.
1. NATURAL w/o human intervention 2. FRAUD/DOLO conscious, deliberate, intentional evasion
2. INDUSTRIAL w/ human intervention of fulfillment
3. CIVIL derived by virtue of juridical relation 2 Kinds
a. Dolo causante/Causal fraud fraud in obtaining
Creditors rights if debtor fails to comply w/ the obligation consent; consent is defective, contract is voidable. Remedy:
1. Determinate annulment
a. Performance b. Dolo incidente/Incidental fraud fraud w/c vitiates
b. Damages consent. Remedy: damages
2. Generic
a. Performance 3. NEGLIGENCE/CULPA voluntary act/omission; no bad
b. Damages faith intended
c. Obligation be complied at debtors expense 3 Kinds
a. Culpa aquiliana/Civil negligence quasi-delict/torts
Creditors rights if debtor does in contravention b. Culpa contractual/Contractual negligence breach
1. Damages c. Culpa criminal/Criminal negligence crime/delict
2. Ask it be UNDONE at debtors expense
4. Contrary to the terms of obligation
FORTUITOUS EVENT force majeure cannot be foreseen, if
foreseen, inevitable
General Rule: No person liable to fortuitous event.
Exceptions:
1. Law states
2. Stipulation/contract states
3. Assumption of risk
2 RULES OF PRINCIPAL & INSTALLMENT 2. DETERIORATION
1. Receipt of principal w/o mention of interest, presumed a. w/ debtors fault - (1) cancel obligation & damages; or (2)
interest is paid also. fulfill obligation w/ damages
2. Receipt of latter installment w/o mention of prior installment, b. w/o debtors fault creditor suffer impairment
presumed prior installment is paid also.
3. IMPROVEMENT
4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim a. By nature/time benefit to creditor
against DEBTOR b. at expense of debtor debtor no right than that granted to
1. Exact payment usufructuary (debtor no right to compensate amount for
2. Attach debtors properties improvement)
3. Accion subrogatoria exercise rights & actions except
inherent in person EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION
4. Accion pauliana cancel acts/contracts by debtor to defraud General Rule: The obligation becomes effective retroactively to
creditor the day obligation was constituted.
Exceptions:
TRANSMISSIBILITY OF RIGHTS 1. In reciprocal obligation, fruits & interests during pendency of
General Rule: ALL RIGHTS are transmissible. condition shall compensate each other.
Exceptions: 2. In unilateral obligation, debtor gets fruits & interests unless
1. Law states there is a contrary intent.
2. Contract states
3. Obligation is purely personal 3 EFFECTS OF FULFILLMENT OF RESOLUTORY
CONDITION
10 Kinds of Obligation 1. Extinguish obligation.
1. Pure 2. Both parties restore what they received plus fruits &
2. Conditional interests.
3. Alternative 3. The rule on L, D, or I will apply to person who has to return
4. Facultative the thing.
5. Joint When one of debtors in reciprocal obligation does not comply
6. Solidary w/ his obligation
7. Divisible 1. The right of injured party is (1) cancel contract & damages;
8. Indivisible or (2) fulfill obligation & damages
9. Obligation w/ a period
10. Obligation w/ a penal clause 3 Kinds of Obligation (According to PERSON OBLIGED)
1. UNILATERAL only 1 party obliged to comply
1. PURE OBLIGATION 2. BILATERAL both parties; performance not same time
- w/o condition, demandable at once (pure has resolutory 3. RECIPROCAL both parties; performance same time
condition/period)
3. OBLIGATION W/ A PERIOD
2. CONDITIONAL OBLIGATION - demandability/ extinguishment subject to the expiration of
- there is condition in performance; future & uncertain period
2 Kinds
a. Suspensive condition happening of condition gives PERIOD interval of time; either suspends demandability or
RISE to obligation produces extinguishment
b. Resolutory condition happening of condition
EXTINGUISHES obligation DAY CERTAIN must come, not known when

6 MISCELLANEOUS RULES ON CONDITIONAL 7 CASES CONSIDERED TO BE OBLIGATION W/ A

OBLIGATION PERIOD
1. Impossible conditions, contrary to law, shall ANNUL 1. Little by little
obligation. 2. In partial payment
2. The condition not to do an impossible thing is considered not 3. Payable ASAP
agreed upon. 4. When I can afford it
3. The condition that happens in determinate time, 5. When I have the money
EXTINGUISHES obligation. 6. When I am able to
4. The condition that happens in INDETERMINATE time, 7. When my means permit me to do so
obligation only effective at arrival.
5. The condition is fulfilled if DEBTOR prevents fulfillment. PERIOD
6. The effect of conditional obligation, once fulfilled: Certain
- to give: retroact to the day of constitution of obligation future only
- has reciprocal prestations: fruits & interests be mutually (*influence upon obligation) only upon its
compensated demandability
- has unilateral obligation: debtor shall give fruits & interests
CONDITION
RULES in case of Loss, Improvement, or Deterioration of thing uncertain
during the pendency of condition future/past but unknown
1. LOST (*) on the very existence of obligation itself
a. w/ debtors fault damages
b. w/o debtors fault extinguishes obligation
FOR WHOSE BENEFIT IS THE PERIOD? MAXIMS & SYNONYMS
General Rule: Both the debtor & creditor.
Therefore, NEITHER of them can demand performance of JOINT Obligation
obligation. To each his own
Exception: If the term of obligation has to favor one of them. proportionate
SOLIDARY Obligation
5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE One for all, all for one
PERIOD individually & collectively
1. Debtor is insolvent.
2. Debtor attempts to abscond. (3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
3. Impairment of guarantees/securities. 1. Law states
4. Failure to furnish guarantees/securities promised. 2. Stipulation states
5. Violation of undertaking. 3. Nature of obligation requires

4. ALTERNATIVE OBLIGATION 2 PRESUMPTIONS THAT OBLIGATION IS JOINT

- w/ 2 or more prestations, only 1 is due.
5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be substituted.
ALTERNATIVE prestations LOST w/ debtors fault
Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
2. All prestations lost/become impossible due to debtors fault.
1. The debts be divided as many shares as there are
debtors/creditors.
2. The debtors/creditors are distinct from one another.
8. DIVISIBLE OBLIGATION
- prestation is capable of partial performance
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance

ALTERNATIVE OBLIGATION 10. OBLIGATION W/ A PENAL CLAUSE

several prestations due, giving one is sufficient
right to choose (debtor) unless granted to creditor
If 1 of the prestation is illegal, others may be valid,
obligation remain
loss/impossibility of ALL prestations due, w/o debtors
fault, extinguishes obligation
- one w/ accessory undertaking attached to obligation to
assume greater liablity in case of breach/non-fulfillment of
obligation
3 PURPOSES OF PENAL CLAUSE
1. Ensure performance of obligation
2. Substitute for damages & interest in case of noncompli-ance
3. Penalize debtor in case of breach

FACULTATIVE OBLIGATION In case obligation has a PENAL CLAUSE

one prestation due, but can be subtituted General Rule: Penalty takes the place of damages & interest in
right to choose DEBTOR ONLY case of non-compliance.
Exceptions:
nullity of principal carries w/ it nullity of accessory/
1. Stipulation states.
substitute
2. Debtor refuse to pay penalty.
loss/impossibility of presta-tion due, w/o debtors fault, 3. Debtor guilty of fraud in performance of obligation.
extinguishes obligation
NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL
(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF CLAUSE
DEBTOR IN ALTERNATIVE OBLIGATION Nullity of principal obligation = nullity of penal clause
1. If 1 of prestations lost through fortuitous event, shall still be Nullity of penal clause = NOT nullity of principal obligation
perform by choosing (creditor) from the remainder.
2. If 1 of prestations lost through debtors fault, creditor may 10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
claim any of remainders w/ damages. 1. Payment or performance
3. If ALL prestations lost through debtors fault, creditor choose 2. Prescription
price w/ damages. 3. Compensation
4. Confusion/merger
RULES on LOSS/DETERIORATION of the thing intended as 5. Condonation/remission
SUBSTITUTE in FACULTATIVE OBLIGATION 6. Fulfillment of resolutory condition
1. If there is a loss/deterioration of thing intended as substitute, 7. Annulment
debtor is NOT liable if NOT HIS FAULT. 8. Rescission
But if substitution is already made, debtor is liable for loss of 9. Novation
substitute when in DELAY, NEGLIGENCE, or FRAUD. 10. Loss of thing due
6. JOINT OBLIGATION 1. PAYMENT/PERFORMANCE
- obligation is to be paid proportionately by debtors or to be - Payment means delivery of money & performance of
demanded proportionately by creditors obligation
2 PLACE OF PAYMENT
7. SOLIDARY OBLIGATION 1. At place agreed upon
- each one of debtors has right to render or each one of 2. If w/o agreement
creditors has right to demand the entire compliance w/ a. Object is indeterminate paid at domicile of DEBTOR
prestation b. Object is determinate place of thing at the time of
constitution of obligation
4 SPECIAL MODES OF PAYMENT 3. Notice of consignation already given to persons interested
a. Application of payment in fulfillment of obligation
b. Cession 4. Consignation of thing/amount due
c. Tender of payment & consignation 5. Subsequent notice of consignation to interested persons
d. Dacion in payment
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF
a. APPLICATION OF PAYMENT PAYMENT
- designation of debt to w/c payment must be applied when 1. Creditor is absent/unknown.
debtor has several obligations of same kind in favor of same 2. Creditor is incapacitate to receive at time it is due.
creditor. 3. Creditor refused give a receipt, w/o just cause.
4. 2 or more persons claim the right to collect.
3 REQUISITES OF APPLICATION OF PAYMENT 5. Title of obligation lost.
1. Only 1 debtor & 1 creditor
2. 2 or more debts, same kind 2. LOSS OF THING DUE
3. All debts are due - perishes, disappears, or goes out of commerce; existence is
4. Insufficient payment to exinguish ALL debts unknown; cannot be recovered

3 RIGHTS TO MAKE APPLICATION OF PAYMENT 3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO

1. Right belongs to CREDITOR. LOSS
2. If debtor does not avail, creditor can give him receipt 1. Determinate thing.
designating the debt from which payment will be applied. 2. W/o debtors fault.
3. If debtor accepts the receipt, he cannot complain unless 3. No delay.
THERE IS just cause to invalidate the contract.
3. CONDONATION/REMISSION
b. CESSION - gratuitous abandonment of right by the creditor
- debtor abandons ALL his property for creditors benefit to
obtain payment from proceeds of his property 3 REQUISITES OF A VALID CONDONATION/REMISSION
1. It must be gratuitous.
5 REQUISITES OF VALID CESSION 2. Accepted by obligor.
1. 1 debtor & 2 or more creditors 3. Obligation is demandable.
2. Debtor is in partial/total insolvency.
3. Debtor to deliver ALL his property to creditors 4. CONFUSION/MERGER
4. Debt is due & demandable. - meeting in 1 person of qualities of debtor & creditor w/ same
5. Creditors must sell the properties & apply the proceeds to obligation
their respective credits proportionately.
3 REQUISITES OF VALID CONFUSION/MERGER
c. DACION IN PAYMENT (dacion en pago) 1. The merger of characters of debtor & creditor must be in
- alienation of property to the creditor in satisfaction of debt same person.
2. Take place between principal debtor & creditor.
3 REQUISITES OF DACION IN PAYMENT 3. Clear & definite.
1. Consent of creditor
2. NOT prejudicial to another creditor 5. COMPENSATION
3. Debtor not insolvent declared by a judicial decree - 2 persons are debtors & creditors of each other

CESSION 6 ESSENTIAL REQUISITES OF COMPENSATION

all properties 1. Parties both principal debtors & creditors of each other.
require more than 1 creditor 2. Compensation is not prohibited by law.
NOT act of novation 3. No retention/controversy by 3rd person.
NOT transfer ownership 4. 2 debts are due & demandable.
requires partial/total insolvency 5. 2 debts are liquidated.
6. 2 debts both in money/consumable things.
DACION IN PAYMENT
NOT all properties (2) CLASSES OF COMPENSATION
NOT require all creditors 1. As to effect
a. TOTAL obligations completely extinguished.
act of novation
b. PARTIAL a balance remains
transfer ownership
may happen during solvency of debtor 2. As to origin or cause
a. LEGAL by law
d. TENDER OF PAYMENT & CONSIGNATION b. VOLUNTARY/CONVENTIONAL agreement of parties
TENDER OF PAYMENT act of offering the creditor what is c. JUDICIAL order from the court
due to him w/ a demand that the creditor accept it d. FACULTATIVE 1 of parties can choose/oppose claiming
CONSIGNATION act of depositing thing due w/ the court
compensation
when creditor cannot/refuses acceptance of payment
6. NOVATION
5 REQUISITES OF CONSIGNATION
- substitution/change of obligation
1. Debt due. - substitution of debtor
2. Creditor refused the tender of payment w/o just cause - subrogation of creditor
(3) OBLIGATIONS MAY BE MODIFIED BY: 2. PARTIES OBLIGATED
1. (REAL NOVATION)- Changing object/principal conditions. a. UNILATERAL only 1 has obligation
2. (PERSONAL NOVATION)-Changing the person of b. BILATERAL both parties require to render reciprocal
debtor/creditor. prestations
a. Substitution change of debtor
b. Subrogation change of creditor 3. CAUSE
3. (MIXED NOVATION)- Changing person of the parties & the a. ONEROUS exchange of considerations
objects of principal condition. b. GRATUITOUS no consideration received in exchange
of what is given
4 REQUISITES OF NOVATION c. REMUNERATORY something is given for
1. Old valid obligation. benefit/service that had been rendered previously
2. Agreement of parties to new obligation.
3. Extinguishment of old obligation. 4. RISK OF FULFILLMENT
4. Validity of new obligation. a. COMMUTATIVE equivalent values are given by both
parties
2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR b. ALEATORY fulfillment of contract depends on chance
1. EXPROMISSION w/ consent of creditor, NO consent of (eg. insurance)
old debtor
2 REQUISITES 5. IMPORTANCE
a. Initiative of 3rd person. a. PRINCIPAL contract may stand alone (eg. sale,
b. Consent of creditor. partnership)
2. DELEGACION all must agree (creditor, old debtor, new b. ACCESSORY existence depends on another contract
debtor) (pledge, guarantee)
3 REQUISITES c. PREPARATORY contract not an end by itself but a
a. Initiative from old debtor. means thru w/c other contracts may be made (eg. agency)
b. Consent of debtor.
c. Acceptance by creditor. 6. NAME
a. NOMINATE contract given a particular/special name
7. SUBROGATION (eg. partnership)
- change of creditor b. INNOMINATE not given special name (eg. I give that
you may give)
2 KINDS OF SUBROGATION
1. CONVENTIONAL consent of original parties & 3rd person 7. SUBJECT MATTER
2. LEGAL by law a. Contracts involving things
a. creditor pays another preferred creditor even w/o debtors b. Contracts involving rights/credits
knowledge c. Contracts involving services
b. 3rd person pays the express approval of debtor
c. 3rd person pays even w/o knowledge of debtor 3 STAGES OF CONTRACT
1. PREPARATION/CONCEPTION preparatory steps to
perfect contract
2. PERFECTION/BIRTH meeting of minds between 2
CONTRACT meeting of minds between 2 persons to give contracting parties
something or to render service. 3. CONSUMMATION/TERMINATION terms of contract are
performed, & contract is fully executed
3 ELEMENTS OF CONTRACT
1. ESSENTIAL w/o them, contract cannot exist 5 BASIC PRINCIPLES/CHARACTERISTICS OF A
a. CONSENT of contracting parties CONTRACT
b. OBJECT CERTAIN subject matter 1. PRINCIPLE OF AUTONOMY (liberty to contract)
c. CAUSE/CONSIDERATION Provided they are not contrary to:
In some contracts, ff are also essential: a. Law
d. FORM b. Morals
e. DELIVERY c. Good customs
d. Public order
2. NATURAL found in certain contract, presumed to exist e. Public policy
unless stipulated
2. MUTUALITY OF CONTRACTS
3. ACCIDENTAL various particular stipulations that may be - the contract must bind both parties; its validity/compliance
agreed upon by contracting parties cannot be left to the will of one of them

(7) CLASSIFICATION OF CONTRACTS 3. RELATIVITY OF CONTRACTS

According to: - Contracts take effect only between the parties, their assigns
1. PERFECTION/FORMATION & heirs except when there are rights & obligations not
a. CONSENSUAL perfected by mere consent transmissible:
b. REAL perfected by delivery a. by their nature
c. FORMAL/SOLEMN special formalities are essential b. by stipulation (stipulation por autri)
before perfection of contract c. by provision of law
4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere consent
Exceptions:
a. REAL CONTRACTS perfected by delivery
b. FORMAL/SOLEMN CONTRACTS special form
required for its perfection

5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the force of law between
parties which bound to comply in good faith

4 KINDS OF INNOMINATE CONTRACTS

1. I give that you may give
2. I do that you may do
3. I give that you may do
4. I do that you may give

4 RULES FOR INNOMINATE CONTRACTS

1. Agreement of parties
2. Law on Obligations & Contracts
3. Rules on most analogous nominate contract
4. Customs of place

STIPULATION POR AUTRI

- stipulation in favor of 3rd person

5 REQUISITES OF STIPULATION POR AUTRI

1. Stipulation in favor of 3rd person
2. Stipulation is only PART, not the whole of the contract.
3. Both parties must conferred upon a favor of 3rd person
4. 3rd person must accept & say it to debtor before its
revocation/cancellation
5. Neither of both parties be the legal representation/autho-
rization of 3rd person

CONSENT
- meeting of offer (certain) & acceptance (absolute) upon a
thing

5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
2. Parties are capacitate to enter in contract
3. No vitiation of consent
4. No conflict between declared & intended
5. Legal formalities must be complied

7 RULES ON OFFER/ACEPTANCE
1. An offer must be certain.
2. Business advertisements for sale are NOT offers but ONLY
invitations to make an offer.
3. Advertisements for bidders are ONLY invitations.
4. An acceptance made by letter/telegram does NOT bind
offeror EXCEPT from the TIME it came to his knowledge.
5. An offer made through an agent is accepted from the TIME
the acceptance is done through an agent.
6. An offer is ineffective upon death, insanity, insolvency, of
EITHER party BEFORE acceptance is made.
7. When offeror allowed offeree a certain period to accept,
offer MAY be withdrawn AT ANYTIME unless there is
something PAID/PROMISED.