OBLIGATIONS & CONTRACTS

(Reviewer for Midterm Exam)

1. Obligation – a juridical necessity to give, to do or not to do (Art. 1156).

2. Distinguish Civil Obligation from Natural Obligation Obligation – civil obligation is
based on (or arises from) positive law while natural obligation is based on (or arises from)
equity and natural law. Civil Obligation can be enforced before the court of law while
natural obligation cannot be enforced before the court.
3. Elements of an Obligation:
a) Active subject (the obligee or creditor);
b) Passive subject (the obligor or debtor);
c) Subject matter (the object or prestation); and
d) Juridical tie (the vinculum or legal tie).
4. Sources of Obligations (Explain briefly and give an example):
a) Law – a rule of conduct, just and obligatory, and being imposed by the proper authority
to govern the relationships of persons in the society. Obligations derived therefrom are
not presumed; they must be clearly and expressly set forth therein. (Example – the duty
to pay taxes and to support one’s family).
b) Contracts – the meeting of the minds. Obligations arising therefrom have the full force
of law between the contracting parties and should be complied with in good faith.
(Example – the duty to repay a loan by virtue of an agreement).
c) Quasi-contracts – there is no meeting of the minds in quasi-contract, and it is the law
that supplements the consent. This juridical relation is intended for reimbursement of
expenses in the case of negotiorum gestio (unauthorized management), and for the
return of money in the case of solution indebiti (undue payment) as no one shall be
unjustly enriched or benefited at the expense of another. (Example – the duty to refund
or return an “over-change” of money).
d) Delicts (or crimes) – acts or omissions punishable by law. This is based on the penal
provision which states that every person criminally liable for a felony is also civilly
liable. (Example – the duty to return the stolen carabao [restitution]).
e) Quasi-delicts (or torts) – the obligation here is derived from one’s fault or negligence
which causes damage or injury to another, there being no pre-existing contractual
relations between the parties, otherwise known as culpa aquiliana. (Example – the duty
to repair damage due to negligence).
5. Classification of Obligation:
REAL PERSONAL
(Obligation to give) (Obligation to do, or not to do)
Determinate Indeterminate Positive Negative
(Specific ) (Generic) (To do) (Not to do)
6. Distinguish Determinate from Indeterminate Object or Thing:
a) A determinate object refers to a specific one which is being capable of particular
designation. As such and being the only one in the world, it cannot be replaced or
substituted in case of loss. (Example – A brand-new white Honda car with Plate No.
ABC-123).

b) An indeterminate object refers to a generic one which can be substituted by another

one of the same kind or class in case of loss. (Example – a car to be used as “taxi”).
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 7. To pay a sum of money is obviously an obligation to give, and not an obligation to do or
not to do. Hence, and considering that money is a generic object, to pay a sum thereof is a
real obligation.
8. Rights and Obligations of the Parties in Real Obligation:
A. Determinate (Involving Specific Object/Thing)
Rights of the Creditor (Obligee) Obligations of the Debtor (Obligor)
1) To demand delivery of the specific thing, 1) To take care of the specific thing before it
or compel specific performance. is delivered to the creditor with due
diligence of a good father of a family.
2) To rescind the contract. 2) To deliver the specific thing (substitution
of such thing is not allowed).
3) To claim for damages under Art. 1170. 3) To include in the delivery of such
determinate thing all its accessions and
accessories.
4) To pay for damages under Art. 1170.
B. Indeterminate (Involving Generic Object/Thing)
Rights of the Creditor (Obligee) Obligations of the Debtor (Obligor)
1) To demand delivery of the thing, or 1) To deliver a generic thing which is
compel performance of the obligation. neither of superior nor of inferior quality.
2) To ask for the compliance of the 2) To pay for the expenses spent in fulfilling
obligation by 3rd person at the expense the obligation made by a third person.
of the debtor.
3) To rescind the contract. 3) To pay for damages under Art. 1170.
4) To claim for damages under Art. 1170.

9. Rights and Obligations of the Parties in Personal Obligation:

A. Positive (An obligation to do)
Rights of the Creditor Obligations of the Debtor
1) To demand performance of the 1) To perform the obligation.
obligation.
2) To look for a third person to perform the 2) To pay for the expenses spent in
obligation at the expense of the debtor. performing the obligation done by a third
person.
3) To rescind the contract. 3) To pay for damages under Art. 1170.
2) To claim for damages under Art. 1170.
B. Negative (An obligation not to do)
Rights of the Creditor Obligations of the Debtor
1) To demand the undoing of the 1) To undo the prohibited thing.
prohibited thing.
2) To look for a third person to undo the 2) To pay for the expenses incurred in the
prohibited thing at the debtor’s undoing of the prohibited thing by a third
expense. person.
3) To claim for damages under Art. 1170. 3) To pay for damages under Art. 1170.
10. Article 1169 provides that those obliged to deliver or to do something, incur in delay (or in
default) from the time the obligee (creditor) judicially or extrajudicially demands from them
the fulfillment of their obligation.
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11. As a general rule (under Article 1169), DEMAND (it may be judicial or extrajudicial) is
needed in order to put the debtor (obligor) in default (or in delay).
12. Exceptions to the General Rule (When Demand is not needed to put the debtor in
default):
a) When the obligation or the law expressly so declares; or
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; or
c) When demand would be useless, as when the obligor has rendered it beyond his power
to perform.
13. In reciprocal obligations (arising from one and the same contract), both parties have
concomitant rights and obligations. From the moment one of the parties fulfills his
obligation, delay by the other begins.
14. Requisites for mora solvendi (default on the part of the debtor):
a) The obligation must be due and demandable.
b) There must be non-performance of the obligation.
c) There must be a demand (judicially or extrajudicially), unless it is not required.
15. Failure to perform the obligation is a breach thereof imputable either to something
voluntary in character, such as; fraud, negligence, default, or contravention of the tenor
of the obligation (FNDC) or involuntary one, such as; circumstances beyond the control
of the debtor/obligor (fortuitous event). Accordingly, the debtor/obligor is liable for
damages in the former case, while in the latter case, he is not liable therefor, unless
excepted.
16. Any waiver of an action for future fraud is void.
17. Fraud – an intentional evasion of the normal fulfillment of the obligation.
18. Grounds for Liability in the Performance of Obligations (FNDC):
a) Fraud
b) Negligence
c) Default
d) Contravention of the tenor of the obligation
19. Kinds of Culpa (negligence):
a) Culpa contractual (contractual negligence – or that which results in a breach of a
contract).
b) Culpa aquiliana (civil negligence – or that which derives from tort or quasi-delict).
c) Culpa criminal (criminal negligence – or that which results in the commission of a
crime or a delict).
20. Kinds of Diligence required to be observed in the performance of the obligation:
a) That which is agreed upon by the parties.
b) In the absence of such agreement, that which is required by the law.
c) If the law does not provide, that which is expected of a good father of a family.
21. Fortuitous event – that which could not be foreseen, or if though foreseen, is inevitable.
22. As a general rule, no person shall be responsible for fortuitous event, except in the
following cases (when the debtor is responsible therefor), to wit (LSA):
a) When expressly declared by the law;
b) When expressly declared by stipulation or contract; and
c) When the nature of the obligation requires the assumption of risk.
23. Essential Characteristics of a Fortuitous Event:
a) The cause of the breach of the obligation must be independent of the will of the debtor;
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 b) The event must be either unforeseeable or unavoidable;
c) The event must be such as to render it impossible for the debtor to fulfill his obligation
in a normal manner; and
d) The debtor must be free from any participation in, or aggravation of the injury resulting
to the creditor.
24. What are the particular provisions of law that expressly declare liability even in the
case of fortuitous event:
a) When the debtor (obligor) is in bad faith under par. 2, Art. 552, Civil Code.
b) When the debtor (obligor) is in delay (or in default) or has made a double promise of
delivery of the same thing under Art. 1165.
c) When the obligation derives from criminal offense.
d) Liability of the bailee under Art. 1942.
e) Liability of depositary under Art. 1979.
f) Liability of officious manager under Arts. 2147-2148.
g) In the case of undue payment or unjust enrichment under Art. 2159.
h) In the case of delivery of indeterminate (generic) thing under Art. 1263.
25. Rule on the loss of specific thing if there is a combination of fortuitous event and
negligence on the part of the debtor:
a) If the fortuitous event was the proximate cause, the obligation is extinguished.
b) If the negligence was the proximate cause, the obligation is not extinguished.
26. In view of the abolition of the usury law, interest shall now depend on the mutual
agreement of the borrower and the lender.
27. Rule on the payment of debt/loan:
a) Receipt of the principal by the creditor, without reservation with respect to the interest,
shall give rise to the presumption that said interest has been paid.
b) Receipt of a later installment of a debt without reservation as to prior installment, shall
also raise a presumption that such installments have been paid.
28. Two kinds of presumptions:
a) Disputable (or prima facie) – one which is presumed to be true, unless disproved by
contrary evidence.
b) Conclusive – a clear and convincing one which is beyond dispute or question.
29. Exclusive (one after the other) Remedies of the creditor if debtor refused to pay his debt
after the former demanded payment thereof by the latter:
a) To exhaust all the debtor’s properties not exempted by the law thru garnishment or
levy.
b) To exercise all the rights and actions of the debtor against other persons except
personal ones and those involving public interest (accion subrogatoria).
c) To impugn or rescind all the acts or contracts done by the debtor to defraud the
creditor (accion pauliana).
30. Subrogation – stepping into the shoes of others and exercising their rights on their behalf.
31. Exceptions (LCP) to the General Rule which states, “all rights acquired in virtue of an
obligation are transmissible,” to wit:
a) If the law expressly provides otherwise.
b) If the contract or agreement by the parties expressly provides otherwise.
c) If the obligation is purely personal.
32. Rights are transmitted to and thru the following:
a) Heirs – Succession
b) Assignees – Deed of Assignment
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 c) Transferees – Deed of Transfer
33. It should be borne in mind that not only rights are inherited, but obligations as well..
34. Distinguish Pure Obligation from Conditional Obligation. (Give example each)
ANSWER: Pure obligation is one without a condition, or a term or period, and as such,
demandable at once. Conditional obligation, on the other hand, is one where its effectivity
is dependent or subject to a condition, and it is demandable only upon the happening of the
suspensive condition, but demandable at once if the condition is resolutory.
35. Condition – an event characterized by futurity and uncertainty.
36. Term – an event sure to happen, or one characterized by certainty. (Example – death)
37. As provided under Article 1179, a past event can also be a condition, provided that the
same is unknown to both parties.
38. When an obligation demandable at once (immediately):
a) When it is pure; or
b) When it has a resolutory condition.
39. Classification of Conditions (Briefly explain and give example each):
a) Suspensive – one which suspends the effectivity of the obligation, and which will rise
only upon the happening of the condition. In the meantime, the creditor has a mere
hope or expectancy which will ripen into a right only upon the happening of the
condition. (Example: I will give you my car, provided you pass the bar exam this year).
b) Resolutory – one where the rights and obligation of the parties are subject to the threat
of extinction, considering that the happening of the condition shall terminate or
extinguish the obligation. (Example: I promise to give you my car, but if you fail this
year’s bar exam, you have to return it to me).
c) Potestative – one which depends on the exclusive will of one of the parties. (Example:
I will sell to you my car at a very low price if I like).
d) Casual – one which depends on chance or the will of a third person. (Example: I will
give you my car if I win in the lotto).
e) Mixed – one which depends partly on the will of one of the parties, and partly on
chance or the will of a third person. (Example: I promise to give you my car if I pass
the bar this year).
f) Possible – one which is capable of realization (or fulfillment) in nature and in law.
(Example: I will lend you my car, provided you will inform me of the result of your
bar examination).
g) Impossible – one which is incapable of realization (or fulfillment) as it goes against the
law, good customs, or public policy.(Example: I will give you my car, provided you
will regularly supply me with shabu).
40. Effects of the following conditions:
a) Potestative – depends on the sole will of the debtor – suspensive – Void
(because there is already a pre-existing obligation) – resolutory – Valid
– depends on the sole will of the creditor – - - - - - - - - - Valid
b) Casual - Valid
c) Mixed - Valid (Article 1182)
d) Possible - Valid
e) Impossible - Void
41. Articles 1180; 1181; 1183 (CP); 1184 & 1185 (distinction); 1187; 1186 (see Quiz 7, I.a);
1189 & comment #2; #86(PBL); (see Quiz 8,I.); 1191 (comment #2); 1193 (comment
#3,8,10);1196; 1197 (see Quiz 8,II); 1198; 1199 (comment #1); sign of star, notes.