What is an obligation?

Obligation is a juridical necessity to give, to do or not to do.

Elements of an Obligation

a. An ​active subject​, who has the power to demand prestation, also known as the ​obligee or
creditor​.

b. A ​passive subject​, who is bound to perform the prestation, also known as the ​obligor or debtor​.

c. ​Object or prestation​, which is the promise or particular contract to be performed in the

performance of an obligation, and may consist of giving, doing or not doing a thing. The

Requisites of an object or prestation of an Obligation are

i. It must be possible, physically and juridically.

ii. It must be determinate, or, at least, determinable according to pre-established elements or

criteria.

iii. It must have possible equivalent in money.

d. ​Efficient cause​, the tie which binds the parties to the obligation, also known as ​juridical tie or
vinculum​. ​Examples of juridical tie or vinculum are:

i. Relation established by law

ii. Relation established by contract

iii. Relation established by quasi-contract

iv. Relation established quasi-delict or culpa aquiliania or tort

v. Relation established by crime or delict

Types of Obligation

a. ​Positive obligation ​refers to an obligation which consists of giving or doing something.

b. ​Real obligation​ refers to an obligation which consists to the delivery or giving of personal or
real object.
c. ​Personal obligation ​refers to an obligation which consists of doing a particular prestation but
not delivery of an object.

d. ​Negative obligation ​refers to an obligation which consists of abstaining from some act.
Civil Obligation vs Natural Obligation

Civil obligations ​derive their binding force from positive law or substantive law, while ​natural
obligations​ derive their binding effect from equity and natural justice.

Civil obligations ​can be enforced by court action or the coercive power of public authority, while
the fulfillment of

Natural obligations ​cannot be compelled by court action but depends exclusively upon the good
conscience of the debtor

Sources of civil obligation demandable in a court of law

a. ​Law​ refers to the principles and regulations established in a community by some authority and
applicable to its people, whether in the form of legislation or of custom and policies recognized
and enforced by judicial decision.

i. Only obligations expressly determined in the Civil Code or in special laws are demandable.

ii. The obligations derived from law are never presumed.

iii. The law cannot exist as a source of obligations, unless the acts to which its principles may be
applied exist.

iv. The obligations and correlative rights arising from law shall be governed by the law by which
they are created.

b. ​Contract​ is a meeting of minds between two persons whereby one binds himself, with respect
to the other, to give something or to render some service.

i. Obligations arising from contracts have the force of law between contracting parties.

ii. Obligations arising from contracts should be complied with in good faith.

c. ​Quasi-contract​ is a juridical relation which arises from certain lawful, voluntary and unilateral
acts, to the end that no one may be unjustly enriched or benefited at the expense of another.

i. ​Two Types of Quasi-Contracts are:

1. ​Negotiorum Gestio​ refers to the voluntary management of the property or affairs of another
without the knowledge or consent of the latter.
2. ​Solutio Indebiti​ refers to the juridical relation which is created when something is received
when there is no right to demand it and it was unduly delivered through mistake.

ii.​ ​Examples of Quasi-Contract

1. A person voluntary takes charge of the agency or management of business or property of

another without authority or consent of the latter.

2. A person receives something when there is no right to demand it or it was unduly delivered
through mistake.

3. A stranger gives support to a child of another person without the knowledge of the person
obliged to give support.

4. A person saves the property of another person during fire, flood, storm or other calamity
without the knowledge of the owner.

d. ​Quasi-delict or culpa aquiliana or torts​ refers to a source of an obligation wherein a person by

act or omission causes damage to another, there being fault or negligence. Requisites of
Tort/Quasi-Delict or Culpa-Aquiliana

i. There is no pre-existing relation between the offender and offended parties.

ii. There exists a wrongful act or omission imputable o the defendant by reason of his fault or
negligence.

iii. There exists a damage or injury which must be proved by the person claiming recovery.

iv. There must be a direct causal connection or a relation of cause and effect between the fault or
negligence and the damage or injury, or that the fault or negligence be the cause of the damage
or injury.

e. ​Crime or delicts​ refers to any act or omission which is punishable by law.

i. ​Persons who are exempted from criminal liability but still civilly liable for their crime committed

1. An imbecile or insane person.

2. A person under 18 of age.

3. Any person who acts under the compulsion of an irresistible force.

4. Any person who acts under the impulse of an uncontrollable fear of an equal or greater injury.

ii. ​Persons who are exempt from criminal liability and civil liability

1. Any person who acts in self-defense.

2. Any person who acts in the performance of his duties or obligations.

3. Any person suffering from battered woman syndrome.

iii. ​Components of Civil Liability arising from Crime

1. ​Restitution​ refers to restoration of the thing itself even though it be found in the possession of
a third person who has acquired it by lawful means.

2. ​Reparation of the damage caused​ shall be determined by the Court taking into consideration
of the price of the thing and its sentimental value.

3. ​Indemnification for consequential damages​ shall include not only those caused the injured
party but also those suffered by his family or by a third person by reason of the crime.
Quasi-Delict vs. Crime

a. The right violated by a quasi-delict is a private right while the right violated by a crime is a
public right.

b. Every quasi-delict gives rise to liability for damages to the injured party but there are crimes
from which no civil liability arises.

c. Criminal liability can never be compromised except in criminal negligence but liability from
quasi-delict can be compromised.

d. In quasi-delict, criminal intent is not necessary, while in crime, criminal intent is necessary
except in criminal negligence.

Claims arising from quasi delict must be proven by preponderance of evidence while crime must
be proven by proof beyond reasonable doubt.

Kinds of Object or Thing

A ​generic or indeterminate thing​ is only indicated by its kind, without being designated and
distinguished from others of the same kind. (Note: Generic thing never perishes.)

A ​determinate or specific thing​ is one that is individualized and can be identified or distinguished
from others of its kind.
Incidental obligations in an obligation to deliver a determinate thing

a.​ ​Obligation to preserve the determinate thing with due care.

b.​ ​Obligation to deliver the fruits of the determinate thing if the fruits occur after the obligation to
deliver the determinate thing arises.

i.​ ​Kinds of fruits under the Civil Code

1. ​Natural fruits​ are the spontaneous products of the soil, and the young and other products of
animals.

2. ​Industrial fruits​ are those produced by lands of any kind through cultivation or labor.
3. ​Civil fruits​ are fruits as a result of civilization or fruit arising out of a juridical relation or
contracts such as are the rents of buildings, the price of leases of lands and other property and
the amount of perpetual or life annuities or other similar income.

c.​ ​Obligation to deliver the accessions and accessories of the determinate thing.

i. ​Accessories ​refer to those which destined for the embellishment, use or their preservation of
another thing or more importance, have for their object the completion of the latter for which they
are indispensable or convenient.

ii. ​Accessions​ include everything which is produced by a thing, or which is incorporated or

attached thereto, either naturally or artificially.

Degree of diligence to be exercised by the obligor

a. Diligence required by law

b. Diligence stipulated in the contract

c. Ordinary diligence or diligence of a good father of a family or diligence of a reasonably prudent

person.
Types of Rights of Creditor over the thing and its fruits

A ​real right​ is the power belonging to a person over a specific thing, without a passive subject
individually determined, against whom such right may be personally exercised.

A ​personal right ​is the power belonging to one person to demand of another, as a definite
passive subject, the fulfillment of a prestation to give, to do or not to do.
General remedies available to creditor when debtor fails to comply

a. Action for specific performance

b. Action to rescind the obligation

c. Action for damages, exclusively or in addition to either of the first two actions.
Remedies of the creditor in the case the debtor fails to comply

Remedies of the creditor in the case the debtor fails to comply with his obligation to deliver a
determinate or specific thing

a. Action for specific performance in addition to damages under Article 1170.

b. Action for damages

Remedies of the creditor in the case the debtor fails to comply with his obligation to deliver an
indeterminate or generic thing

a. Action for specific performance with damages.

b. He may ask the obligation to be complied by a third person with at the expense of the debtor
with damages.

Remedy of the creditor if the debtor fails to do the prestation in obligation to do

The creditor or third person may do it in a proper manner at the expense of the debtor.

**In an obligation to do whereby only the debtor can do the thing, remedy of the creditor if the
debtor fails to do the prestation

Action for indemnification for damages.

**In an obligation to do, remedy of the creditor in case the debtor did it in contravention of the
tenor of the obligation or did it poorly

The creditor or third person may do it in a proper manner or it may be decreed that what had
been poorly done be undone at the expense of the debtor.

** In an obligation consisting in not doing, remedy of the creditor in case the debtor does what
has been forbidden him

It shall be undone at the expense of debtor with indemnification for damages.

Requisites in order that the debtor may be in default

a. The obligation must be demandable and already liquidated.

b. The debtor delays performance of the obligation.

c. The creditor demands the performance either judicially or extrajudicially.

nstances when demand by the creditor shall not be necessary

Exceptional instances when demand by the creditor shall not be necessary in order that delay
may exist

a. When the obligation or the law expressly so declares the demand is excused.

b. When from the nature and the circumstances of the obligation it appears that the designation
of the time when the thing is to be delivered or the service is to be rendered was a controlling
motive for the establishment of the contract.

c. When demand would be useless, as when the obligor has rendered it beyond his power to
perform.
Moment of delay in reciprocal obligation

From the moment one of the parties fulfills his obligation.

Types of Delay or Default (Mora)

a. ​Mora solvendi​ - Debtor’s delay

i.​ ​Effects of delay on the part of the debtor

1. The debtor becomes liable for damages for the delay.

2. When it has for its object a determinate thing, the delay places the risk of the thing on the
debtor.

b. ​Mora accipiendi​ - Creditor’s delay

i. ​Effects of the delay on the part of the creditor

1. The creditor becomes liable for damages.

2. The debtor may relieve himself of the obligation by the consignation of the thing.

3. The creditor bears the risk of the loss of the thing.

4. The responsibility of the debtor for the thing is reduced and limited to fraud and gross
negligence.

5. All expenses for the preservation of the thing after the mora shall be chargeable to the
creditor.

c. ​Compensatio morae​ - Delay of both parties

i.​ ​Effect of compensatio morae

The delays of both parties are compensated or offsetted.

Grounds for damages for breach of contract

Fraud ​-​ Dolo​ refers to the deliberate and intentional evasion of the normal fulfillment of
obligations.

Negligence​ -​ Fault ​-​ Culpa​ is the failure to observe for the protection of the interests of another
person, that degree of care, precaution and vigilance which the circumstances justly demand,
whereby such person suffers injury.

Delay ​-​ Default ​-​ Mora​ refers to the non-fulfillment of the obligation with respect to time.

Contravention of the tenor of obligation​ refers to illicit act which impairs the strict and faithful
fulfillment of the obligation or every kind of defective performance.
Types of civil damages that may be awarded by Court

a. ​Moral damages​ - which consists of physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury
b. ​Exemplary damages​ - or corrective damages which are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or compensatory
damages.

c. ​Nominal damages​ - are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.

d. ​Temperate damages or ​-​ moderate damages​ are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has
been suffered but its amount can not, from the nature of the case, be provided with certainty.

e. ​Actual damages or ​-​ compensatory damages​ are those pecuniary losses suffered and duly
proved by the plaintiff (Legal interest of 6% per annum starting July 1, 2013 and 12% before)

f.​ Liquidated damages​ - are those agreed upon by the parties to a contract, to be paid in case of
breach thereof. It refers to the type of damages that is not assessed by the court but merely
applied.
Waiver of fraud

Future Fraud and Past fraud

Degree of Diligence to be observed by Contracting Parties

a. Provided by law

i. Contract of common carrier - Extraordinary diligence

ii. Contract of bank deposits - Extraordinary diligence

b. Valid stipulation of parties

c. Ordinary diligence or diligence of a good father of a family or diligence of a reasonably prudent

person

Instances when a party is liable even if there is fortuitous event

a. In cases expressly specified by law such as when the debtor incurs delay.

b. When there is stipulation that the obligor is still liable even in cases of fortuitous events.

c. When the nature of the obligation requires the assumption of risks.

d. When the fortuitous event is not the proximate cause of the damage or injury and the
contracting party is guilty of contributory negligence

Requisites of fortuitous events to exempt the obligor from liability

a. The cause of the unforeseen and unexpected occurrence or the failure of the debtor to comply
with his obligation must be independent of the debtor’s will.

b. It must be impossible to foresee the event which constitutes the case fortuito or if it can be
foreseen, it must be impossible to avoid.

c. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner.

d. The obligor must not participate in the aggravation of the injury resulting to the creditor.

Principles on issuance of receipt

a. The receipt of the principal by the creditor, without reservation with respect to the interest,
shall give rise to rebuttable presumption that said interest has been paid.

b. The receipt of a later installment of a debt without reservation as to prior installments, shall
likewise raise rebuttable presumption that such prior installments have been paid.

Unpaid creditor successive rights in order of priority

In order to satisfy their claims against the debtor, the unpaid creditor has the following
successive rights in order of priority

a. To levy by attachment and execution upon all the property of the debtor, except such as
exempt by law from execution. (Remedy after prevailing in action for specific performance)

b. To exercise all rights and actions of the debtor, except such as are inherently personal to him.
(Accion subrogatoria)

c. To ask for the rescission of the contracts made by the debtor in fraud of his rights. (Accion
pauliana)

d. To file an action for damages against the third person who acquired the property in bad faith.
Principle on transmissibility of rights acquired from an obligatio

Subject to the provisions of laws, they are transmissible unless there is stipulation to the
contrary.
Types of Obligations as to demandability
a. ​Pure obligation​ - refers to an obligation which contains no term or condition whatever upon
which depends the fulfillment of the obligation contracted by the debtor.

b. ​Conditional obligation​ - refers to an obligation subject to a condition.

c. Obligation with a period​ - refers to an obligation subject to a space of time which is certain to
happen.

Obligations demandable at once

a. Pure obligation

b. Obligation in diem or obligation with a resolutory period

c. Obligation with a resolution condition

Obligations not demandable at once

a. Obligation ex die or obligation with a suspensive period

b. Obligation with a suspensive condition

Distinctions between suspensive and resolutory conditions

a. If the ​suspensive condition​ happens, the obligation arises while if the ​resolutory condition
happens, the rights and obligations already existing are extinguished.

b. In ​suspensive condition​, the rights and obligations do not exist before the happening of the
condition while in ​resolutory condition​, the rights and obligation already exist even before the
happening of the condition.

c. Obligation subject to a ​suspensive condition​ is not demandable at once while obligation

subject to ​resolutory condition ​is demandable at once.

d. Suspensive condition​ is known as condition precedent while ​resolutory condition​ is condition

subsequent.

Types of conditions

a. ​Potestative Condition​ is one which depends upon the will of one of the contracting parties.
b. ​Casual Condition​ is one which depends exclusively upon chance or other factors, and not
upon will of the contracting parties.

c. ​Mixed Condition​ is one which depends upon the will of the contracting parties and other
circumstances, including the will of a third person.
Conditions that annul the obligation which depends upon them

a. Impossible conditions

b. Suspensive conditions which depend upon sole will of debtor

c. Conditions contrary to good customs or public policy

d. Conditions prohibited by law

Effect if the obligor voluntarily prevented the fulfillment of the condition of an obligation

The condition shall be deemed fulfilled and the obligation becomes demandable.

Retroactive effect of fulfillment of conditions in suspensive conditional obligation to give

Shall retroact to the day of the constitution of the obligation once the condition has been fulfilled.

Effects of fulfillment of condition

a. In conditional reciprocal obligation, the fruits and interests during the pendency of the condition
shall be deemed to have been mutually compensated.

b. In conditional unilateral obligation to give or unilateral obligation to give subject to a period,

They shall inure to the sole benefit of the debtor in the absence of stipulation to the contrary.

c. In conditional obligation to do or not to do, The courts shall determine, in each case, the
retroactive effect of the condition that has been complied with taking into account the agreement
of the parties.

d. Before the fulfillment or pendency of the suspensive condition, the creditor may bring
appropriate actions for the preservation of his right.

Effects of payment/delivery by mistake subject to a suspensive condi

a. During the pendency of the suspensive condition, the debtor has paid by mistake a sum of
money, the debtor can recover the sum of money with interests only if the creditor acted in bad
faith.
b. During the pendency of the period in an obligation with a period, the debtor has paid by
mistake a sum of money, The debtor can recover the sum of money with interests even if the
creditor acted in good faith.

c. During the pendency of the suspensive condition, the debtor has delivered a determinate or
specific thing by mistake, the debtor may file an Accion reinvidicatoria if the thing is still with the
creditor or indemnification for damages if the thing is no longer with the creditor.
Rules to be observed

Rules to be observed in case of the improvement, loss or deterioration of the thing during the
pendency of the suspensive condition in an obligation to give or pendency of the suspensive
period in obligation to give

a. If the thing is lost without the fault of the debtor, the obligation shall be extinguished.

b. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages.

c. When the thing deteriorates without the fault of the debtor, the impairment is to be borne by
the creditor.

d. If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of
the creditor.

e. If it is improved at the expense of the debtor, he shall have no other right than that granted to
the usufructuary which means that he shall only have the right to use the improved thing for a
reasonable period.
Remedies of creditor

Remedies of creditor when the thing deteriorates through the fault of the debtor during the
pendency of the condition in an obligation to give

a. He may ask for the rescission of the obligation with indemnity for damages.

b. He may ask for the performance of the obligation with indemnity for damages.
Instances when the thing is considered lost

a. When it perishes.

b. When it goes out of commerce.

c. When it disappears in such a way that its existence is unknown or it cannot be recovered.

d. When it is a destroyed specific thing.

Effects of fulfillment of resolutory condition

a. There will be mutual restitution.

b. The fruits shall be returned by the person who will make the restitution with deduction for the
expenses for the production, gathering and preservation of the fruits.
Reciprocal obligation

Refers to a type of obligation which arises from the same cause and in which each party is a
debtor and creditor of the other, such than the obligation of one is dependent upon the obligation
of the other.
Rescission of Reciprocal Obligation

The injured party can ask for judicial rescission of the obligations in case one of the obligors
should not comply with what is incumbent upon him because the power to rescind obligations is
implied in reciprocal ones.
Alternative remedies in case of breach of reciprocal obligation

a. The injured party may rescind the obligation with damages even if exact fulfillment is selected
if the latter becomes impossible after selection.

b. The injured party may ask for the fulfillment of obligation with damages and can no longer ask
for rescission after selecting this remedy.
Principles concerning reciprocal obligations

a. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing
of a period.

b. In case both parties have committed a breach of the obligation, the liability of the first infractor
shall be equitably tempered by the courts.

c. If it cannot be determined which of the parties first violated the contract, the same shall be
deemed extinguished, and each shall bear his own damages.
Obligation with a period

Is an obligation which is subject to a space of time which, exerting an influence on obligations as

a consequence of a juridical act, suspends their demandability or determines their
extinguishment.
Condition vs period

a. A condition is an uncertain event while a period is an event that must necessarily come.
b. While a condition gives rise to an obligation or extinguishes one already existing, a period has
no effect upon the existence of obligation, but only its demandability or performance and thus, a
period does not carry with it any retroactive effect.

c. A condition may refer to a past event and unknown to parties while a period always refers to
the future.

d. A period which depends exclusively on the will of the debtors does not annul the obligation but
merely authorizes the court to fix the period but a condition left to the debtor’s will does annul the
obligation.

Types of Period

a. Ex die - suspensive period

b. In diem - resolutory period

Benefit of the period

It is presumed to be for the benefit of both creditor and debtor in the absence of contrary
agreement.

Instances wherein the debtor shall lose every right

Instances wherein the debtor shall lose every right to make use of the period and therefore the
obligation with a period becomes due and demandable

a. When after the obligation has been contracted, the debtor becomes insolvent and he
does not give a guaranty or security for the debt.

b. When the debtor does not furnish to the creditor the guaranties or securities which he
has promised.

c. When by debtor’s own acts he has impaired or destroyed said guaranties or securities
after their establishment, unless he immediately gives new one equally satisfactory.

d. When through a fortuitous event the guaranties of securities after their establishment
disappeared, unless the debtor immediately gives new one equally satisfactory.

e. When the debtor violates any undertaking, in consideration of which the creditor agreed
to the period.

When the debtor attempts to abscond.

Alternative obligation vs facultative obligation

a. In alternative obligation, several objects being due, the fulfillment of one is sufficient,
determined by the choice of the debtor who generally has the right of election while in
facultative obligation, only one thing is due, but the debtor has reserved the right to
substitute in with another.

b. In alternative obligation, the loss of one of the things due through the fault of debtor
may affect the obligation while in facultative obligation, the loss of that which may be
given as substitute does not affect the obligation.

c. In alternative obligation, the right of choice may be granted to the creditor while in
facultative obligation, the right of choice can never be granted to creditor.

d. In alternative obligation, the loss of one of the things does not extinguish the obligation
while in facultative obligation, the loss of that which is due as the object of the obligation
will extinguish such obligation.

Alternative obligation vs facultative obligation

a. In alternative obligation, several objects being due, the fulfillment of one is sufficient,
determined by the choice of the debtor who generally has the right of election while in
facultative obligation, only one thing is due, but the debtor has reserved the right to
substitute in with another.

b. In alternative obligation, the loss of one of the things due through the fault of debtor
may affect the obligation while in facultative obligation, the loss of that which may be
given as substitute does not affect the obligation.

c. In alternative obligation, the right of choice may be granted to the creditor while in
facultative obligation, the right of choice can never be granted to creditor.

d. In alternative obligation, the loss of one of the things does not extinguish the obligation
while in facultative obligation, the loss of that which is due as the object of the obligation
will extinguish such obligation.

Joint Obligation vs. Solidary Obligation

Soliday obligation​ is one in which each debtor is liable for the entire obligation and each
creditor is entitled to demand the whole obligation.

Joint obligation​ is one in which each of the debtors is liable only for a proportionate part of
the debt and each creditor is entitled only to a proportionate share of the credit.
Instances when the obligation is considered solidary

a. When the obligation expressly so states that the obligation is solidary.

b. When the law requires the obligation to be solidary.

c. When the nature of the obligation requires it to be solidary.

Principal consequences of the joint character of the obligation

a. The demand by one creditor upon one debtor produces the effects of default only with
respect to the creditor who demanded and the debtor on whom the demand was made,
but not with respect to the others.

b. The interruption of prescription by the judicial demand of one creditor upon a debtor,
does not benefit the other creditors nor interrupt the prescription as to other debtors.

c. The vices of each obligation arising from the personal effect of a particular debtor or
creditor do not affect the obligation or rights of the others.

d. The insolvency of a debtor does not increase the responsibility of his co-debtors and it
does not authorize a creditor to demand anything from his co-creditors.

Principles concerning joint and solidary obligations

a. If the division is impossible, the right of the creditors may be prejudiced only by their
collective acts, and the debt can be enforced only by proceeding against all the debtors
and if the latter should be insolvent, the others shall not be liable for his share.

b. The indivisibility of an obligation does not imply solidarity.

c. The solidarity of an obligation does not imply indivisibility.

d. Solidary may exist although the creditors and the debtors may not be bound in the
same manner and by the same period and conditions.

Principles concerning solidary obligation

a. Each one of the solidary creditors may do whatever may be useful to the others, but not
anything which may be prejudicial to the latter.

b. A solidary creditor cannot assign his rights without the consent of the others.

c. The debtor may pay any one of the solidary creditors.

d. If any demand, judicial or extrajudicial, has been made by any one of the solidary
creditors, payment should be made to him.