Obligation- juridical necessity to give, to do, or not to b.

The business or property is

do. neglected or abandoned;
c. There is no express or
Etymology: Latin, obligare meaning to bind through implied authority from the
giving, doing, or not doing something. owner;
Requisites of an obligation: d. There is no prohibition from
the owner; and
a. Juridical Tie or Vinculum- link that binds the e. The management must be
parties. for an intention to protect
b. Prestation- giving, doing, or not doing the interest of the owner.
something.
c. Active Subject or Obligee/Creditor - holds the Solutio indebiti or payment of debt. Juridical relation
right to demand the prestation. which is created by virtue of a payment by mistake
d. Passive Subject or Obligor/Debtor- person consequently, obliging the payee to return to payor what
against whom the prestation may be demanded. he has received.

Sources of obligations: Article 1157 of the Civil Code

a. Law; OBLIGATIONS ARISING FROM CRIMES. Known
b. Contract; as "Civil Liability" arising from crimes which may be
c. Quasi-contracts; complied with in the form of restitution, indemnification,
d. Acts or omissions punishable by law; and or reparation of damages.
e. Quasi-delicts

OBLIGATIONS FROM QUASI-DELICT. Quasi-

OBLIGATIONS ARISING FROW LAW. A kind of delict is a legal wrong committed through fault or
obligation dictated by the law where everyone is negligence causing damage to a person or property
assumed to know as ignorance of the law excuses no thereby obliging the wrong doer to pay for damages.
none. DILIGENCE REQUIRED IN THE
When parties have met their conditions in a PERFORMANCE OF OBLIGATION. Every person
contract, obligations therefore arise in the contract, and obliged to give something is also obliged to take care of
full force of law can be enacted. it, unless the law or the stipulation of both parties
requires another standard of care.

OBLIGATIONS ARISING FROM QUASI-

CONTRACTS. Contracts implied by law, which acts as RIGHTS OF THE FRUITS OF THE THING TO BE
a remedy for a dispute between parties that do not have DELIVERED. While the fruits have not been delivered,
a legal contract forms Legal Obligations the obligee only acquires a personal right, but once
received, the obligee acquires the real right of ownership.

Quasi-contract- is a juridical relation arising from

lawful, voluntary, and unilateral acts by virtue of which RULE WHEN OBLIGOR INCURS DELAY
the parties become bound to each other even if they have Those obliged to deliver or do something incur in delay
not consented to be obliged. from the time the obligee demands the fulfillment of the
Two kinds of Quasi-contract and obligation obligation.

1. Negotiorium gestio or business In Reciprocal Obligations, neither party incurs delay if

management. Voluntary both parties is not ready to comply. However, the
administration or management of moment one of the parties fulfills his/her obligation,
abandoned business or property delay by the other begins.
belonging to another without consent
provided that:
a. The management must refer
to specific affairs;
LIABILITY OF OBLIGOR FOR FRAUD, is one without a term or condition and is
NEGLIGENCE, DELAY, ETC. Those who in the demandable at once
performance of their obligation are guilty of fraud,
negligence, or delay are liable for the damages done. CONDITIONAL OBLIGATION- is one, whose
performance is subject to a condition which may either
Delay- exists when the obligor fails to fulfill his be suspensive or resolutory in effect.
obligation on the date agreed upon and after a
demand by the obligee, either judicially (with is one without a term or condition and is
court intervention, or extra judicially orally or demandable at once.
in writing, has been made on the obligor. Suspensive Condition- is one which upon
Fraud- the voluntary and deliberate act of the fulfillment gives rise to the obligation
obligor to evade or cheat for personal gain the dependent upon it.
fulfillment of the obligation. Resolutory Condition- - is a condition the
Negligence or Fault- it consists in the failure to happening of which extinguishes the
observe for the protection of the interest of obligation. The obligation is demandable at
another person, that degree of care, precaution once, but it shall be extinguished upon the
and vigilance which is demanded by the happening of the condition.
circumstances and because of which the other Potestative Condition-- is a condition that
party suffers damage or injury. depends upon the will of one of the contracting
parties.
Casual Condition- a condition that depends
LIABILITY ARISING FROM FORTUITOUS upon chance or upon the will of a third
EVENTS person.
In cases when the nature of the obligation Mixed Condition- is a condition that depends
requires the assumption of risk as declared by the law or partly upon the will of one of the parties and
the stupulation, no person shall be responsible for events partly upon chance or upon the will of the
that could not be foreseen or simply inevitable. third person
However, if there is no stipulation requiring Possible Condition- is one that is capable of
assumption of risks, in an event of a fortuitous events the fulfillment in its nature and by law.
obligor is only relieved when it is shown that the event
caused the impossibility of the obligation. Impossible Condition- is one that is not capable
of fulfillment in its nature or due to operation of
law. The obligation and the condition are void.
(Article 1183)
KINDS OF OBLIGATIONS. THE CIVIL CODE
CLASSIFIES OBLIGATIONS INTO: Positive Condition- is a condition that some
event will happen at a determinate time.
A.) Pure and Conditional
Negative Condition- is a condition that some
B.) Obligation with a Period event will not happen at a determinate time.
C.) Alternative and Facultative Divisible Condition- Is one that is capable of
D.) Joint and Solidary partial performance. Under Article 1183, if the
obligation in divisible, that part thereof which
E.) Divisible and Indivisible is not affected by the impossible or unlawful
F.) Obligation with a penal all clause condition shall be valid.
Indivisible Condition- is one that is not capable
of partial performance by its nature or by law or
PURE OBLIGATION- is one which is not subject to agreement of the parties.
any condition or burden and whose fulfillment is neither
dependent upon a future or uncertain or even past event
unknown to the parties, hence immediately demandable.
OBLIGATION WITH A PERIOD- is one in which a DIVISIBLE OBLIGATIONS- Is one that is capable of
day certain has been fixed for its fulfillment. being performed partially.
Is an obligation whose demandability or INDIVISIBLE OBLIGATIONS- exact opposite of
extinguishment is subjected to the expiration of the term divisible obligation as no partial performance is
which must necessarily come. There is a day certain permitted.
when the obligation will arise or cease.
OBLIGATION WITH A PENAL CLAUSE- contains
Day Certain- is that which must necessarily an accessory undertaking to assume a greater liability in
come although it may not be known when. case of a breach. The penal clause is attached to the
(Article 1193) principal obligation to insure its fulfillment.
Different Types of Periods The penal clause may either be: Subsidiary or Joint
1. Ex die or Suspensive Period (Latin term Subsidiary- when only the penalty is
meaning “from a certain day”)- is a period with a demandable.
suspensive effect.
2. In diem or Resolutory Period (Latin term Joint- when both the principal and the penalty can
meaning “until a certain day”) - is a period with be enforced.
a resolutory effect

MODES OF EXTINGUISHING OBLIGATIONS

Legal Period – is a period that is foxed by the law.
Voluntary Period – is a period that is fixed by the 1. By payment or performance
parties. 2. By loss of the thing due
Judicial Period – is a period that is fixed by the court. 3. By condonation or remission of the debt
4. By confusion or merger of the rights of
creditor and debtor
ALTERNATIVE OBLIGATION- is one where various 5. By compensation
presentation are due, but the performance of one, usually 6. By novation
chosen by the obligor is sufficient. The choice maybe
granted to obligee or creditor. 1. PAYMENT OR PERFORMANCE- Consists not
only of delivery of money but also the performance of
FACULTATIVE OBLIGATION- in this obligation, an obligation in any other manner.
only one prestation is due but the obligor or debtor may
substitute another in lieu of the prestation due. Special Forms of Payment
a) Dacion in Payment or Dacion en Pago – is the
JOINT OBLIGATION- is one where the entire conveyance of the ownership of a thing which is
obligation is to be fulfilled proportionately by the various accepted by the oblige as payment of a debt in
obligors or debtors, and each one of the obligees or lieu of money.
creditors is entitled and can demand a proportionate part
of credit of the credit due from each of them. Example: X is indebted to Y in the amount of
SOLIDARY OBLIGATION- is exactly the opposite of P10,000. Instead of paying money, X delivered
a joint obligation in the sense that each of the solidary a TV worth the same amount which is accepted
debtors is liable for the entire obligation as long as the by Y.
same has not been performed, and each of the creditors
can demand compliance. b) Payment by Cession – consists of the
assignment of all the properties of the debtor to
Among the terms usually indicating solidarity are “jointly his creditors in order that the same may be sold
and severally”, “in solidum”, and “individually and by the creditors to satisfy their credits.
collectively.”
A solidary obligation may exist only when: Cession or assignment may be of two kinds:
a) Voluntary Cession - the consent of the
a) The obligation so provides; creditors is needed.
b) When the law so provides; and b) Legal or Judicial Cession – approval of the
c) The nature of the obligation requires court is required; governed by the
solidarity. Insolvency Law.
 Example: Y is indebted to X in amount of P5000. On
Example: M is indebted to X, Y, and Z in the the due date of the obligation, Y offered to pay but X
amount of P30,000. If M is insolvent, partially renounces his right to collect as he won in the
or tally, he may assign or cede his properties to sweepstakes. This is a complete remission. But if the
X, Y, and Z who may sell them and apply the renunciation is only fr one-half, Y should still pay
proceeds to the payment proportionally to his P2,500
various debts.
“For remission or condonation to be valid, it should not
c) Tender of Payment and Consignation – done violate the rule of in officious donation.”
through the actual offering (not just a proposal)
by the debtor to the creditor of the thing or sum Because while a person is free to make donations as
which he considers to be due. If this tender is he may please no one can give more than that which
unjustly refused, the debtor shall complete this he may give by will, otherwise the excess is
by making a consignation, by depositing the considered inofficious and shall be reduced
thing or the amount due with the court of accordingly as the compulsory heirs are prejudiced.
competent jurisdiction in accordance with the Thus, testamentary dispositions which impair the
formalities required by law. share of the heirs may be reduced on petition of
prejudiced heirs.
Consignation shall be made also to extinguish
the obligation in the following cases: 4. CONFUSION OR MERGER- this model takes
a) When the creditor is absent or is unknown, place when the qualities of the obligor and that of the
does not appear at the place of payment; oblige meet in one person, the effect of which generally
b) When he is incapacitated to receive payment extinguishes the obligation.
at the time it is due;
c) When without just cause, he refuses to give Example: X is indebted to Y P10,000 for which he
a receipt; issued a promissory note. Later, Y indorsed it to Z
d) When two or more persons claim the same who then indorsed it back to X. In this case, the
right to collect; and obligation is extinguished since X had become his
e) When the title to the obligation has been own vcreditor and debtor.
lost.
To completely extinguish the obligation however,
the merger should take place in the person of the
2. LOSS OF THING- The thing due is considered lost
principal debtor or creditor and not to parties
when it perishes, or goes out of commerce, or disappears
subsidiarily liable. If this takes place in the person of
in such a way that its existence is unknown or cannot be
recovered. the guarantor, only the accessory obligation of
guarantee, not the principal obligation, is
Example: X obliged himself to deliver a specific extinguished.
Australian horse to Y. Before the agreed date of
delivery, the hose died without X’s fault. In this case For example: Suppose that the obligation of 10,000
the obligation is extinguished because it consists of above is guaranteed by M. In such a case, the
the delivery of a determinate thing. But if the endorsement of Z to X will benefit M, the guarantor,
obligation is to deliver a generic thing, the loss or since the principal obligation of P10,000 is
destruction of anything of the same kind does not extinguished. But if the endorsement is made to M,
extinguish the obligation. the obligation will not be extinguished since the
character of principal debtor and creditor is not
merged in any of them.
3. CONDONATION OR REMISSION- It is an act of
liberality by which the obligee, who receives no price or 5. Compensation- Compensation takes place when two
equivalent thereof, renounces the enforcement of an or more persons, in their own rights are creditors and
obligation, which is extinguished in whole or part. debtors to each other.
This means that by operation of law, the debts of the
parties who are creditors and debtors in their own
rights are extinguished to the concurrent amount
 even if they do not know it, provided that the
following requisites are present.
Requisites for compensation:
1) That each of the obligors is bound principally,
and that he be at the same time, a principal
creditor of the other.
2) That both debts consist in a sum of money, or if
the things due are consumable, they be of the
same kind and of the same quality if the latter has
been stated.
3) The two debts be due.
4) That they be liquidated and demandable
5) That over neither of them there be any retention
or controversy, commenced by third persons and
communicated in due time to the debtor.

Example: X is indebted to Y in the amount of 20,000,

whereas Y is indebted to X in the same amount. If
both debts are due and demandable and no
prohibition against any of them exists, compensation
shall take place since both are creditors and debtors
in their own right.
Distinction between confusion and compensation.
(Confusion vs. Compensation)
Confusion- One person, and One obligation
Compensation- Two Person, Two Obligation

6. NOVATION. Is the change, substitution, or renewal

of an obligatory relation, with the intention of
extinguishing or modifying essentially the former,
debitum pro debito (new debt for an old debt).