RFBT – 01: OBLIGATIONS
Definition - an obligation is a juridical necessity
to give, to do or not to do. (Art. 1156 of the Civil
Code of the Philippines).
Requisites/elements of an obligation:
a. Active Subject (creditor or obligee) – the
party who has the right to demand
performance of the obligation;
b. Passive Subject (debtor or obligor) – the
party who is obliged to perform the
obligation;
c. Prestation – the object or subject matter
of the obligation; it may consist of
giving, doing or not doing something;
d. Efficient Cause – The vinculum juris or
legal tie which binds the parties to an
obligation; the legal tie may be any of the
five sources of obligation.
Sources of Obligation:
a. Law – a rule of conduct, just and
obligatory, laid down by legitimate
authority for common observance and
benefit. (Sanchez Roman).
b. Contracts – a contract is a meeting of the
minds between two or more persons
whereby one binds himself with respect
to the other, to give something or to
render some service; obligations have the
force of law between the parties and must
be complies with in good faith.
c. Quasi-contacts – they refer to certain
lawful, voluntary and unilateral acts
giving rise to a juridical relation to the
end that no one shall be unjustly enriched
at the expense of another.
 Nominate Quasi- Contracts:
1. Negotiorum Gestio – this refers to the
voluntary administration of the
property, business or affairs of
another without his consent or
authority. What is the obligation
created? → the obligation to
reimburse the gestor/inofficious
manager for necessary and useful
expenses.
2. Solutio indebti – this refers to the
payment by mistake of an obligation,
in excess of what should have been
paid or payment to a person not due
to receive it.
d. Delicts – acts or omissions punishable by
law; this refer to crimes or felonies
defined under the law to be punishable as
such.
e. Quasi-delict – (also known as tort or
culpa aquiliana) – these are acts or
omissions that cause damage to another
there being fault or negligence but
without any existing contractual relation
between the parties; what is the
obligation created? → the obligation to
pay for damages.
Nature and Effect of Obligations:
a. Determinate thing and generic thing –
when is a thing a determinate thing?
When it is particularly designated and
physically segregated from all other
objects of the same class (Art. 1460).
b. What is the importance of knowing
whether a thing is determinate or
generic?
1. To know concurrent obligations of
the debtor;
2. To know the rights and remedies of
the creditor in case the debtor fails to
comply; and
3. To know the consequences in case
the thing is lost due to a fortuitous
event.
c. What are the obligations of a debtor
obliged to give a determinate thing?
1. To take good care of the thing with
the diligence of a good father of a
family unless the law or agreement if
the parties requires another standard
of care.
2. To deliver the thing.
3. To deliver the fruits of the thing.
 Kinds of Fruits
I. Natural Fruits – they are the
spontaneous products of the soil
and the young and other products
of animals.
II. Industrial Fruits – they refer to
those produced by land of any
kind through cultivation or labor.
 III. Civil Fruits – they refer to fruits
that are the result of a juridical
relation.
4. To deliver its accessions and
accessories even if they have not
been mentioned. jenesaisquoi
a. Accessions - they are everything
that it is incorporated or attached
to a thing, either naturally or
artificially.
b. Accessories – those joined to pr
included with the principal thing
for the latter’s better use,
perfection or enjoyment.
Grounds for liability to pay damages/Sources of
Damages:
 Damages vis-à-vis injury – Damages
refer to harm done and the sum of money
that may be recovered in reparation for
the harm done; injury refers to the
wrongful, unlawful or tortuous act which
causes loss or harm to another. It is the
legal wrong to be redressed.
 Kinds of Damages:
1. Actual/Compensatory Damages –
these refer to the pecuniary loss that
was actually incurred by the plaintiff.
It includes the actual value of the loss
suffered and profits not realized.
2. Moral Damages – they include
physical suffering, mental anguish,
fright, serious anxiety, besmirched
reputation, wounded feelings, moral
shock and social humiliation;
3. Nominal Damages – Damages
awarded to a party whose right has
been violated;
4. Temperate or moderate Damages –
they are more than nominal but less
than actual damages; The court may
award temperate damages if the court
finds some pecuniary loss has been
suffered but its amount cannot, from
the nature of the case, be proved with
certainty;
5. Liquidated Damages – damages
agreed upon by the parties to a
contract, to be paid in case of breach;
6. Exemplary or Corrective Damages –
These are imposed by way of
example or correction for public
good, in addition to the moral,
temperate, liquidated or
compensatory damages.
 Fraud
1. Definition – Fraud is the deliberate or
intentional evasion by the debtor of
the normal compliance of his
obligation (Art. 1170) – refers to the
fraud committed by the debtor at the
time of the performance of the
obligation. Art. 1338 – 1344 – refers
to fraud employed in obtaining
consent (Through insidious words or
machinations of one of the
contracting parties, the other is
induced to enter into contract,
without which, he would not have
agreed to.)
2. Kinds of Fraud
a. Fraud in obtaining consent
i. Causal Fraud or Dolo Causante
– fraud of a serious kind,
without which, consent would
not have been given; it renders
the contract, voidable for it is a
defect in one of the essential
elements of a contact –
CONSENT.
ii. Incidental Fraud or Dolo
Incidente – this refers to fraud
without which consent would
have still been given but the
person giving such consent
would have agreed on different
terms. It would not render the
contract void but the party
committing the fraud shall be
liable for damages.
b. Fraud in the performance of the
obligation – this is the deliberate
act of evading fulfillment of an
obligation in a normal manner.
The party committing fraud shall
be liable for damages.
3. Rules in waiver of Fraud
a. Past Fraud or fraud committed in
the past can be waived; such act
 is considered as liberality on the
part of the creditor;
b. Future Fraud or fraud still to be
committed cannot be waived even
if there is an agreement to that
effect; such stipulation is void for
being contrary to public policy.
 Negligence
1. Definition – It is the omission of that
diligence which is required by the
nature of the obligation and
corresponds with the circumstance of
the person, of the time, and of the
place; it is the failure to observe the
required degree of care, precaution
and vigilance that the circumstances
justly demand.
2. Diligence to be observed – if the law
or contract does not state the
diligence which is to be observed in
the performance of the obligation, the
debtor must observe the diligence of
a good father of a family, as required
by the nature of the obligation and
which corresponds with the
circumstances of the person, of the
time or of the place.
3. Kinds of Negligence
a. Culpa Contractual – negligence in
the performance of a contract; it
supposes a preexisting
contractual relationship between
the parties; negligence in the
performance of the obligation
arising from a contract results to
damages.
b. Culpa Aquiliana – (civil
negligence, or tort or quasi-deficit
or culpa extra contractual) – this
is quasi delict where the
negligence itself is the
independent source of the
obligation (the obligation to pay
damages).
c. Culpa Criminal (Criminal
Negligence) – this is negligence
that results in the commission of
a crime (Reckless imprudence
resulting to…)
 Delay or Default or Mora
1. Definition – the non-fulfillment of an
obligation with respect to time or
delay in the fulfillment of an
obligation, contrary to what was
agreed upon.
2. Kinds
a. Mora Solvendi – delay on the part
of the debtor;
b. Morra Accipiendi – delay on the
part of the creditor; it exists when
the creditor unjustly refuses to
accept the thing;
c. Compensatio Morae – Delay in
reciprocal obligations, both
parties are in default; it is as if
there is no delay.
3. When is there delay? (In obligations
to give or to do; there is NO delay in
obligations NOT TO DO) As a rule,
the debtor incurs delay from the time
the creditor demands fulfillment of
the obligation (either judicially or
extra-judicially) and the debtor fails
to comply with such demand. Hence,
no demand, no delay.
4. Exceptions to the no demand, no
delay rule:
a. When the law or the obligation so
provides;
 When there is an express
provision of the law or
stipulation by the parties that
there is no need for a demand
for the performance of the
obligation.
b. When the time is of the essence
of the contract;
 When the designation of the
time for the performance of the
obligation is the controlling motive for
the establishment of the obligation.
c. When demand would be useless
as when the obligor has rendered
it beyond his power to perform.
d. In reciprocal obligations, from
the moment one of the parties
fulfills his obligation, delay by
the other begins notwithstanding
the absence of a demand.
5. Effects of Delay
a. On the part of the debtor:
 i. The debtor shall be liable for
the payment of damages;
ii. If the obligation consists in
the delivery of a determinate
thing he shall be liable even if
the thing is lost due to a
fortuitous event.
b. On the part of the creditor:
i. He shall bear the risk of loss and
shall shoulder the expenses for the
preservation of the thing;
ii. The debtor may resort to the
consignation of the thing due.
 Contravention of the tenor of the
obligation – this is an
encompassing source of damages
that covers all other cases of total
breach or non-compliance to
certain stipulations in an
obligation or the defective
performance of an obligation.
Fortuitous Events
 Concept – those events that could not be
foreseen or which, though foreseen are
inevitable. It is not enough that the event
should not been foreseen or anticipated, but
it must be one impossible to foresee or
avoid.
 Requisites of fortuitous event to be accepted
as a justification for the non-performance of
an obligation to deliver a determinate thing:
1. The cause must be independent of the
debtor’s will;
2. There must be impossibility of
foreseeing the event or if it can be
foreseen, it must be impossible to avoid;
3. The occurrence must be of such
magnitude as to render it impossible for
the debtor to perform his obligation;
4. The debtor must be free from
participation in the non-performance,
damage or loss of the property brought
about by the fortuitous event.
 GENERAL RULE: If the foregoing
requisites are present in a case, then the
debtor shall not liable for non-
performance of the obligation due to a
fortuitous event; his obligation is
extinguished.
 Exceptions:
o When the debtor is in delay;
o When the debtor promised the same
thing to two or more persons who
do not have the same interest;
o When the parties stipulate or agree
that the debtor will not be
exempted from liability even if
non-performance of the obligation
is due to a fortuitous event;
o When the nature of the obligation
requires the assumption of risk;
o When the thing to be delivered is
generic.
Presumptions on receipt of principal and
installment payments (Art. 1176)
 The receipt of the principal without
reservation as to interest, shall give rise to
the presumption that the interest has been
paid;
 The receipt of a later installment without
reservation as to prior installments, shall
give rise to the presumption that prior
installments have been paid.
 The foregoing are mere presumptions and
the creditor may rebut such with clear and
convincing evidence to the contrary.
Different remedies of the creditor to enforce
payment of his claims against the debtor (Art.
1177):
1. Specific performance: exact fulfillment of
the obligation by specific or substitute
performance with a right to damages in
either case
2. Rescission (resolution in reciprocal
obligations)
3. Damages (in any event)
4. Subsidiary remedies if creditors:
a. Accion subrogatoria: to be subrogated
to all the rights and actions of the
debtor save those which are inherent
in his person
b. Accion pauliana: asking the court to
rescind or to impugn all the acts
which the debtor may done to
defraud the creditors.
c. Accion directa: right of the lessor to
go directly to sub lessee for unpaid
rents of the lessee; right of the
laborers or persons who furnish
 materials for a piece of work
undertaken by a contractor to go
directly to the owner for any unpaid
clams due to the contractor.
Relativity of Contracts: A contract can only bind
the parties who had entered into it or their
successors who have assumed their personality
or their juridical position and that, as a
consequence, such contract can neither favor nor
prejudice a third person.
Exceptions: intransmissible rights and
obligations:
a. By their nature as when the special or
personal qualification of the obligor
constitutes one of the principal motives for
the establishment of the contract.
b. By stipulation of the parties, as when the
contract expressly provides that the obligor
shall perform an act y himself and not
through another.
c. By provision of law, as in the case of those
arising from a contract of partnership or of
agency.
Kinds of Obligations:
i. Pure Obligations – is one without a term or
condition and is demandable immediately.
ii. Conditional Obligation – an obligation
where its demandability or creation depends
on the fulfillment of a condition.
 Classifications of Conditions
1. Suspensive – a condition where the
happening of which will give rise to
the obligation, also known as
condition antecedent or condition
precedent.
2. Resolutory – a condition where the
happening of which extinguishes the
obligation, also known as condition
subsequent. The obligation is
demandable immediately but shall be
extinguished upon the happening of
the Resolutory condition.
3. Potestative – a condition that depends
upon the will of one of the contracting
parties.
4. Casual – a condition that depends
upon chance or upon the will of a third
person.
5. Mixed – a condition that depends
partly upon the will of one of the
parties and partly upon chance or upon
the will of a third person.
6. Possible – one that is capable of
fulfillment by nature or law.
7. Impossible – one that is not capable of
fulfillment in its nature or impossible
in law; the effect would be to nullify
both the condition and obligation.
8. Positive – a condition that is supposed
to happen or occur or something that
must be done.
9. Negative – a condition characterized
by an event not supposed to happen or
something that must be not done.
10. Divisible – one that is capable of
partial performance.
11. Indivisible – one that is not capable of
partial performance based on the
nature of the obligations or by law or
by agreement of the parties.
 Effect of fulfillment of Suspensive
condition (Art. 1187)
 As a rule, the effect of fulfillment of a
Suspensive condition retroacts to the
day of the constitution of the obligation.
 Rights of the parties before the fulfillment
of a condition (Art. 1188)
 Creditor – he may bring appropriate
actions for the preservation of his
right,, such as registering his claim
with the Registry of Deeds, if
appropriate, to notify all third persons,
or asking the debtor to provide a
security if the debtor is about to
become insolvent;
 Debtor – he may recover what he has
paid by mistake.
 Effect when the debtor voluntarily
prevents the fulfillment of the
condition – the condition is deemed
fulfilled if the debtor voluntarily
prevents its fulfillment; hence, the
obligation becomes demandable at
once.
 Rule in case of loss, deterioration or
improvement of determinate thing
before the fulfillment of a Suspensive
condition (Art. 1189)
iii. Obligations with a period – An obligation
with a period is one whose demandability
or extinguishment depends on the arrival
of a period that is certain to come.
 If a condition is a future andjenesaisquoi
uncertain event, a period is a future
and CERTAIN event.
 Kinds of Period
1. Suspensive or Ex die – a period
with a Suspensive effect or the
obligation becomes demandable
upon the arrival of the period.
2. Resolutory or In diem – a
period with a Resolutory effect.
Here the obligation is
demandable upon perfection but
is extinguished upon the lapse
of the period.
 Instances when the court may fix a
period
1. If the obligation does not fix a
period but from its nature and
circumstances, it can be inferred
that a period was intended.
2. When the duration of the period
depends upon the will of the
debtor.
iv. Alternative Obligations – is one where
several prestations are due but the
complete performance of one of them is
sufficient to extinguish the obligation. The
right to choose belongs to the DEBTOR,
unless it has been expressly given to the
creditor. (Art. 1199)
v. Facultative Obligation – an obligation
where only one prestation is due but the
debtor may render another as a substitute.
The right of choice belongs to the debtor
only; if the principal obligation is
impossible or void, the debtor is not
required to perform the substitute
obligation.
vi. Joint and Solidary Obligations
 A joint or solidary obligation is
characterized by a concurrence of two
or more debtors and/or two or more
creditors in one and the same
obligation;
 Joint Obligation – an obligation where
each debtor is liable only for a
proportionate portion of the debt and
each creditor is entitled only to a
proportionate part of the credit; debt
shall be divided into as many debtors
and creditors.
 Other terms for joint obligation:
proportionately, pro rata,
mancomunada or mancomunada
simple;
 Solidary Obligation – an obligation
where each is liable for the whole
obligation and each creditor is entitled
to demand payment of the entire
obligation.
 Other terms – jointly and severally,
individually and collectively, in
solidum, mancomunada solidaria
and juntos o separademente.
 Kinds of Solidary Obligation:
1. Passive Solidarity – this is
solidarity on the part of the
debtors.
2. Active Solidarity – Solidarity on
the part of the creditors and
3. Mixed Solidarity – on the part of
both the debtors and creditors.
vii. Divisible and Indivisible Obligations
 A divisible obligation is one that is
capable of partial performance. The
following are deemed visible.
o When the obligation has for its
object the execution of a certain
number of days or work such as an
obligation to work for one month;
o When the obligation has for its
object the accomplishment of
work by metrical units such as an
obligation to construct a 20 meter-
long and 2-meter wide wall;
o Analogous things which by their
nature are susceptible partial
performance.
 An indivisible obligation is one that is
not capable of partial performance.
The following obligations are
deemed indivisible:
o Obligations to give definite things
such as obligation to deliver a
specific cat;
o Those not susceptible of partial
performance such as an obligation
to sing in a wedding;
 o Those where the object or service is
physically divisible but it is
indivisible by provision of law
such as the (obligation to pay
certain taxes.) jenesaisquoi
viii. Obligation with a penal clause – an
obligation with a penal clause is one
which provides for a greater liability on
the part of the debtor is called a penal
clause; the penal clause is generally
undertaken to insure performance and
works as either, or both, punishment and
reparation; there is no need to present
proof of actual damages in order for the
penalty to be demanded (Art. 1228)
Extinguishment of Obligations
a. Payment or Performance – payment in
extinguishment of obligations refer not
only to the delivery of money but also
performance of an obligation in any
manner;
b. Dation in Payment
 A special form of payment where the
ownership of property is transferred to
his creditor to pay a debt in money. In
effect, Dation in Payment is an
objective novation and a sale of the
debtor’s property with the debt as the
purchase price. It is important that both
debtor and creditor consent to such
arrangement.
c. Application of Payment
 It is the designation of the debt to
which payment shall be applied when
the debtor owes several debts in favor
of the same creditor.
 Requisites of application of payment:
a. There must be two or more debts;
b. The debts must be of the same
kind;
c. The debts are owed by the same
debtor to the same creditor;
d. All debts are due, except:
i. When the parties have stipulated
that payment may be applied to a
debt bot yet due or;
ii. When the application is made by
the party for whose benefit the
term has been constituted.
d. Payment by Cession - It is the
abandonment or assignment by the
debtor of all his property in favor of his
creditors so that the latter may sell them
and recover their claims out of the
proceeds.
 The cession or assignment operates
only to authorize the creditors to
sell the debtor’s property; hence,
ownership is not transferred to
them.
e. Tender of Payment and Consignation
 Tender of payment is the act of the
debtor offering to his creditor the
performance of an obligation.
Consignation is the act of depositing
the sum or the thing due in court
whenever the creditor unjustly
refuses or in case when the creditor
cannot accept it.
 Sequence of events in Tender of
Payment and Consignation
a. There must be a valid tender of
payment – must possess all the
elements of a valid payment;
b. The creditor unjustly refuses to
receive payment;
c. The debtor shall notify the
creditor or any person interested
in the fulfillment of the
obligation of his (the debtor’s)
intention to deposit the sum or
thing due with the judicial
authorities;
d. The sum or thing due is
deposited in court/judicial
authorities;
e. The debtor shall AGAIN notify
the persons interested in the
fulfillment of the obligation that
consignation has been made.
f. Loss of the thing due – A thing is
considered lost when it perishes or
goes out of commerce or disappears in
such a way that its existence is
unknown or it cannot be recovered;
g. Condonation or remission – It is known
as the gratuitous abandonment by the
creditor of his right to go after the
debtor for the fulfillment of the latter’s
obligation to the former.
 1. Kinds of Condonation
a. As to amount or extent:
i. Total – When the entire
obligation is remitted;
ii. Partial – When only a part of
the obligation or an accessory
jenesaisquoi
obligation is remitted.
b. As to form:
i. Express – Expressly made by
the creditor either orally or in
writing although the required
formalities for donation must
be observed:
1. When the condonation
involves the immovable/real
property, the condonation
and the acceptance must be
in a public instrument.
 Acceptance can be made
in the deed of donation
itself or in a separate
public document.
2. When the condonation
involves immovable/personal
property:
a. If the value of the
property EXCEEDS
P5,000, the condonation
and the acceptance must
be in writing (public or
private).
b. If the value of the
property is P5,000 or
less, the condonation
and the acceptance may
be in any form. If the
condonation is made
orally, it would require
the simultaneous
delivery of the
document representing
the debt and the
acceptance.
ii. Implied – one where it can be
inferred from the conduct of
the parties.
h. Confusion or Merger – Confusion or
merger is the meeting in one person of
the characters of the creditor and
debtor. (Art. 1275)
i. Compensation – Compensation shall
take place when two persons, in their
own right are creditors and debtors of
each other.
1. Kinds of Compensation
a. As to extent
i. Total – debts are of the same
amount;
ii. Partial – debts are of different
amounts;
b. As to cause or origin
i. Legal – compensation by
operation of law;
ii. Voluntary or conventional –
when the parties agree to
compensation when debts are
not yet due.
iii. Judicial – this compensation
ordered by the court like when
one party has a claim for
damages over another.
iv. Facultative – this is
compensation that may be
claimed by only one of the
parties.
2. Compensation in Solidary Obligations
- it would result to the solidary
creditor, who exercised
compensation, a liability to give to
the other solidary creditors their
respective shares.
j. Novation – Novation is the modification
or extinguishment of an obligation by
another, either by changing the object
of the obligation or by substituting the
person of the debtor or subrogating a
third person in the rights of the
creditor.
Novation has two functions – one is to
extinguish an existing obligation, the
other is to substitute a new one in its
place.