OBLIGATION 

– juridical necessity to give, to do or not to 2. Generic

do a. Performance
b. Damages
4 ELEMENTS OF OBLIGATION c. Obligation be complied at debtor’s expense
1. ACTIVE SUBJECT (creditor/obligee) – whose
obligation is constituted Creditor’s rights if debtor does in contravention
2. PASSIVE SUBJECT (debtor/obligor) – has duty to 1. Damages
give, to do or not to do 2. Ask it be UNDONE at debtor’s expense
3. OBJECT/PRESTATION – subject matter
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) – FORTUITOUS EVENT – cannot be foreseen, if foreseen,
reason inevitable
General Rule: No person liable to fortuitous event.
CIVIL OBLIGATION NATURAL OBLIGATION Exceptions:
derived from positive law derived from equity & 1. Law states
justice 2. Stipulation/contract states
enforceable by court action not enforceable by court 3. Assumption of risk
action 4. Delay
5. Debtor promises deliver to 2/more persons who do not
5 SOURCES OF OBLIGATION have same interest (bad faith)
1. LAW
2. CONTRACTS EFFECTS OF FORTUITOUS EVENT to thing to be
3. QUASI-CONTRACTS – arise from lawful, voluntary delivered
acts; no one shall be unjustly enriched... - extinguish the obligation if determinate; generic does
     2Kinds not extinguish the obligation
     a. Solutio indebiti – something received (delivered on
a mistake), no right to demand it 3 MISCELLANEOUS RULES ON PERFORMANCE OF
     b. Negotiorum gestio – voluntary mgt of OBLIGA-TION
property/affairs of another w/o his knowledge/consent 1. When to deliver determinate, accessions (additions/
4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise improvements) and accessories (joined/included with the
from damage; fault/negligence principal) are INCLUDED even not mentioned.
5. CRIMES/ACTS/OMISSIONS punished by law – arise 2. If debtor fails to do, it shall be DONE AT HIS
from civil liability that is a consequence of a criminal EXPENSE, same with doing the contravention; poorly
offense done be undone.
3. In obligation not to do, and obligor does what is
DILIGENCE OF A GOOD FATHER OF A FAMILY forbidden, shall be UNDONE AT HIS EXPENSE.
- care need to be exercised by a debtor to
deliver/give determinate thing 4 GROUNDS; debtor liable for damages
Exception: When law/stipulation of parties requires a 1. Default/mora
differnt standard of care (slight/extraordinary diligence). 2. Fraud/dolo
3. Negligence/culpa
When creditor is entitled to the fruits 4. Contrary to terms of obligation
Rule: The creditor has personal right (right to ask for
delivery) from the time the obligation to deliver arises. 1. DEFAULT/MORA – delay
But NO real right (right enforceable against the whole      3kinds
world) until it is delivered.      a. Mora solvendi – debtor’s delay to give (real ob.), to
do (personal ob.)
3 KINDS OF FRUITS      b. Mora accipiende – creditor’s delay to accept
1. NATURAL – w/o human intervention      c. Compensatio Morae – delay of both in reciprocal
2. INDUSTRIAL – w/ human intervention obligation
3. CIVIL – derived by virtue of juridical relation
CONCEPT OF DELAY
Creditor’s rights if debtor fails to comply w/ the obligation General Rule: No demand, No delay
1. Determinate Exceptions:
a. Performance 1. Law states
b. Damages 2. Obligation states
3. Time is the essence 7. Divisible
4. Demand be useless if delay 8. Indivisible
5. Debtor guilty of delay 9. Obligation w/ a period
10. Obligation w/ a penal clause
EFFECTS OF DELAY
1. Damages 1. PURE OBLIGATION
2. When to deliver determinate thing, STILL LIABLE in - w/o condition, demandable at once (pure has resolutory
fortuitous event. condition/period)
2. FRAUD/DOLO – conscious, deliberate, intentional
evasion of fulfillment 2. CONDITIONAL OBLIGATION
     2Kinds - there is condition in performance; future & uncertain
     a. Dolo causante/Causal fraud – fraud in obtaining      2Kinds
consent; consent is defective, contract is voidable.      a. Suspensive condition – happening of condition
Remedy: annulment gives RISE to obligation
     b. Dolo incidente/Incidental fraud – fraud w/c vitiates      b. Resolutory condition – happening of condition
consent. Remedy: damages EXTINGUISHES obligation

3. NEGLIGENCE/CULPA – voluntary act/omission; no 6 MISCELLANEOUS RULES ON CONDITIONAL

bad faith intended OBLIGATION
     3Kinds 1. Impossible conditions, contrary to law, shall ANNUL
     a. Culpa aquiliana/Civil negligence – quasi-delict/torts obligation.
     b. Culpa contractual/Contractual negligence – breach 2. The condition not to do an impossible thing is
     c. Culpa criminal/Criminal negligence – crime/delict considered not agreed upon.
3. The condition that happens in determinate time,
4. Contrary to the terms of obligation EXTINGUISHES obligation.
4. The condition that happens in INDETERMINATE time,
2 RULES OF PRINCIPAL & INSTALLMENT obligation only effective at arrival.
1. Receipt of principal w/o mention of interest, presumed 5. The condition is fulfilled if DEBTOR prevents
interest is paid also. fulfillment.
2. Receipt of latter installment w/o mention of prior 6. The effect of conditional obligation, once fulfilled:
installment, presumed prior installment is paid also. - to give: retroact to the day of constitution of obligation
- has reciprocal prestations: fruits & interests be mutually
4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim compensated
against DEBTOR - has unilateral obligation: debtor shall give fruits &
1. Exact payment interests
2. Attach debtor’s properties
3. Accion subrogatoria – exercise rights & actions except RULES in case of Loss, Improvement, or Deterioration of
inherent in person thing during the pendency of condition
4. Accion pauliana – cancel acts/contracts by debtor to 1. LOST
defraud creditor a. w/ debtor’s fault – damages
b. w/o debtor’s fault – extinguishes obligation
TRANSMISSIBILITY OF RIGHTS
General Rule: ALL RIGHTS are transmissible. 2. DETERIORATION
Exceptions: a. w/ debtor’s fault  - (1) cancel obligation & damages; or
1. Law states (2) fulfill obligation w/ damages
2. Contract states b. w/o debtor’s fault – creditor suffer impairment
3. Obligation is purely personal
3. IMPROVEMENT
10 Kinds of Obligation a. By nature/time – benefit to creditor
1. Pure b. at expense of debtor – debtor no right than that
2. Conditional granted to usufructuary (debtor no right to compensate
3. Alternative amount for improvement)
4. Facultative
5. Joint EFFECTS OF FULFILLMENT OF SUSPENSIVE
6. Solidary CONDITION
General Rule: The obligation becomes effective Exception: If the term of obligation has to favor one of
retroactively to the day obligation was constituted. them.
Exceptions:
1. In reciprocal obligation, fruits & interests during 5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE
pendency of condition shall compensate each other. “PERIOD”
2. In unilateral obligation, debtor gets fruits & interests 1. Debtor is insolvent.
unless there is a contrary intent. 2. Debtor attempts to abscond.
3. Impairment of guarantees/securities.
3 EFFECTS OF FULFILLMENT OF RESOLUTORY 4. Failure to furnish guarantees/securities promised.
CONDITION 5. Violation of undertaking.
1. Extinguish obligation.
2. Both parties restore what they received plus fruits & 4. ALTERNATIVE OBLIGATION
interests. - w/ 2 or more prestations, only 1 is due.
3. The rule on L, D, or I will apply to person who has to
return the thing. 5. FACULTATIVE OBLIGATION
When one of debtors in reciprocal obligation does not - w/ ONLY 1 prestation but can be substituted.
comply w/ his obligation
1. The right of injured party is (1) cancel contract & ALTERNATIVE prestations LOST w/ debtor’s fault
damages; or (2) fulfill obligation & damages Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
3 Kinds of Obligation (Accdng to PERSON OBLIGED) 2. All prestations lost/become impossible due to debtor’s
1. UNILATERAL – only 1 party obliged to comply fault.
2. BILATERAL – both parties; performance not same
time ALTERNATIVE FACULTATIVE
3. RECIPROCAL – both parties; performance same time OBLIGATION OBLIGATION
several prestations due, one prestation due, but can
3. OBLIGATION W/ A PERIOD giving one is sufficient be subtituted
- demandability/extinguishment subject to the expiration right to choose (debtor) right to choose DEBTOR
of period unless granted to creditor ONLY
If 1 of the prestation is nullity of principal carries
PERIOD – interval of time; either suspends illegal, others may be valid, w/ it nullity of accessory/
demandability or produces extinguishment obligation remains substitute
loss/impossibility of ALL loss/impossibility of presta-
DAY CERTAIN – must come, not known when prestations due, w/o tion due, w/o debtor’s fault,
debtor’s fault, extinguishes extinguishes obligation
7 CASES CONSIDERED TO BE “OBLIGATION W/ A obligation
PERIOD”
1. Little by little (3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS
2. In partial payment OF DEBTOR IN ALTERNATIVE OBLIGATION
3. Payable ASAP 1. If 1 of prestations lost through fortuitous event, shall
4. When I can afford it still be perform by choosing (creditor) from the remainder.
5. When I have the money 2. If 1 of prestations lost through debtor’s fault, creditor
6. When I am able to may claim any of remainders w/ damages.
7. When my means permit me to do so 3. If ALL prestations lost through debtor’s fault, creditor
choose price w/ damages.
PERIOD CONDITION
certain uncertain RULES on LOSS/DETERIORATION of the thing
future only future/past but unknown intended as SUBSTITUTE in FACULTATIVE
(*influence upon obligation) (*) on the very existence of OBLIGATION
only upon its demandability obligation itself 1. If there is a loss/deterioration of thing intended as
substitute, debtor is NOT liable if NOT HIS FAULT.
FOR WHOSE BENEFIT IS THE PERIOD? But if substitution is already made, debtor is liable for loss
General Rule: Both the debtor & creditor. of substitute when in DELAY, NEGLIGENCE, or FRAUD.
Therefore, NEITHER of them can demand performance
of obligation. 6. JOINT OBLIGATION
- obligation is to be paid proportionately by debtors or to 10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
be demanded proportionately by creditors 1. Payment or performance
2. Prescription
7. SOLIDARY OBLIGATION 3. Compensation
- each one of debtors has right to render or each one of 4. Confusion/merger
creditors has right to demand the entire compliance w/ 5. Condonation/remission
prestation 6. Fulfillment of resolutory condition
7. Annulment
MAXIMS & SYNONYMS 8. Rescission
MAXIMS SYNONYMS 9. Novation
JOINT Obligation “To each his proportionate 10. Loss of thing due
own”
SOLIDARY “One for all, all individually & 1. PAYMENT/PERFORMANCE
Obligation for one” collectively - Payment means delivery of money & performance of
obligation
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
1. Law states 2 PLACE OF PAYMENT
2. Stipulation states 1. At place agreed upon
3. Nature of obligation requires 2. If w/o agreement
a. Object is indeterminate – paid at domicile of DEBTOR
2 PRESUMPTIONS THAT OBLIGATION IS JOINT b. Object is determinate – place of thing at the time of
1. The debts be divided as many shares as there are constitution of obligation
debtors/creditors.
2. The debtors/creditors are distinct from one another. 4 SPECIAL MODES OF PAYMENT
a. Application of payment
8. DIVISIBLE OBLIGATION b. Cession
- prestation is capable of partial performance c. Tender of payment & consignation
d. Dacion in payment
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance a. APPLICATION OF PAYMENT
- designation of debt to w/c payment must be
10. OBLIGATION W/ A PENAL CLAUSE applied when debtor has several obligations of same kind
- one w/ accessory undertaking attached to obligation to in favor of same creditor.
assume greater liablity in case of breach/non-fulfillment
of obligation 3 REQUISITES OF APPLICATION OF PAYMENT
1. Only 1 debtor & 1 creditor
3 PURPOSES OF PENAL CLAUSE 2. 2 or more debts, same kind
1. Ensure performance of obligation 3. All debts are due
2. Substitute for damages & interest in case of 4. Insufficient payment to exinguish ALL debts
noncompli-ance
3. Penalize debtor in case of breach 3 RIGHTS TO MAKE APPLICATION OF PAYMENT
1. Right belongs to CREDITOR.
In case obligation has a PENAL CLAUSE 2. If debtor does not avail, creditor can give him receipt
General Rule: Penalty takes the place of damages & designating the debt from which payment will be applied.
interest in case of non-compliance. 3. If debtor accepts the receipt, he cannot complain
Exceptions: unless THERE IS just cause to invalidate the contract.
1. Stipulation states.
2. Debtor refuse to pay penalty. b. CESSION
3. Debtor guilty of fraud in performance of obligation. - debtor abandons ALL his property for creditor’s benefit
to obtain payment from proceeds of his property
NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL
CLAUSE 5 REQUISITES OF VALID CESSION
Nullity of principal obligation = nullity of penal clause 1. 1 debtor & 2 or more creditors
Nullity of penal clause = NOT nullity of principal obligation 2. Debtor is in partial/total insolvency.
3. Debtor to deliver ALL his property to creditors
4. Debt is due & demandable. 3. No delay.
5. Creditors must sell the properties & apply the proceeds
to their respective credits proportionately. 3. CONDONATION/REMISSION
- gratuitous abandonment of right by the creditor
c. DACION IN PAYMENT (dacion en pago)
- alienation of property to the creditor in satisfaction of 3 REQUISITES OF A VALID
debt CONDONATION/REMISSION
1. It must be gratuitous.
3 REQUISITES OF DACION IN PAYMENT 2. Accepted by obligor.
1. Consent of creditor 3. Obligation is demandable.
2. NOT prejudicial to another creditor
3. Debtor not insolvent declared by a judicial decree 4. CONFUSION/MERGER
- meeting in 1 person of qualities of debtor & creditor w/
CESSION DACION IN PAYMENT same obligation
all properties NOT all properties
require more than 1 NOT require all creditors 3 REQUISITES OF VALID CONFUSION/MERGER
creditor 1. The merger of characters of debtor & creditor must be
NOT act of novation act of novation in same person.
NOT transfer ownership transfer ownership 2. Take place between principal debtor & creditor.
3. Clear & definite.
requires partial/total insol- may happen
vency during solvency of debtor
5. COMPENSATION
- 2 persons are debtors & creditors of each other
d. TENDER OF PAYMENT & CONSIGNATION
6 ESSENTIAL REQUISITES OF COMPENSATION
TENDER OF PAYMENT – act of offering the creditor
1. Parties both principal debtors & creditors of each
what is due to him w/ a demand that the creditor accept it
other.
CONSIGNATION – act of depositing thing due w/ the
2. Compensation is not prohibited by law.
court when creditor cannot/refuses acceptance of
3. No retention/controversy by 3rd person.
payment
4. 2 debts are due & demandable.
5. 2 debts are liquidated.
5 REQUISITES OF CONSIGNATION
6. 2 debts both in money/consumable things.
1. Debt due.
2. Creditor refused the tender of payment w/o just cause
(2) CLASSES OF COMPENSATION
3. Notice of consignation  already given to persons
1. As to effect
interested in fulfillment of obligation
a. TOTAL – obligations completely extinguished.
4. Consignation of thing/amount due
b. PARTIAL – a balance remains
5. Subsequent notice of consignation to interested
persons
2. As to origin or cause
a. LEGAL – by law
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF
b. VOLUNTARY/CONVENTIONAL – agreement of
PAYMENT
parties
1. Creditor is absent/unknown.
c. JUDICIAL – order from the court
2. Creditor is incapacitate to receive at time it is due.
d. FACULTATIVE – 1 of parties can choose/oppose
3. Creditor refused give a receipt, w/o just cause.
claiming compensation
4. 2 or more persons claim the right to collect.
5. Title of obligation lost.
6. NOVATION
- substitution/change of obligation
2. LOSS OF THING DUE
- substitution of debtor
- perishes, disappears, or goes out of commerce;
- subrogation of creditor
existence is unknown; cannot be recovered
(3) OBLIGATIONS MAY BE MODIFIED BY:
3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO
1. Changing object/principal conditions. (REAL
LOSS
NOVATION)
1. Determinate thing.
2. W/o debtor’s fault.
2. Changing the person of debtor/creditor. (PERSONAL
NOVATION)
a. Substitution – change of debtor
b. Subrogation – change of creditor
3. Changing person of the parties & the objects of
principal condition. (MIXED NOVATION)

4 REQUISITES OF NOVATION
1. Old valid obligation.
2. Agreement of parties to new obligation.
3. Extinguishment of old obligation.
4. Validity of new obligation.

2 FORMS OF NOVATION BY SUBSTITUTION OF

DEBTOR
1. EXPROMISION – w/ consent of creditor, NO consent
of old debtor
     2REQUISITES
     a. Initiative of 3rd person.
     b. Consent of creditor.
2. DELEGACION – all must agree (creditor, old debtor,
new debtor)
     3REQUISITES
     a. Initiative from old debtor.
     b. Consent of debtor.
     c. Acceptance by creditor.

7. SUBROGATION
- change of creditor

2 KINDS OF SUBROGATION
1. CONVENTIONAL – consent of original parties &
3rd person
2. LEGAL – by law
     a. creditor pays another preferred creditor even w/o
debtor’s knowledge
     b. 3rd person pays the express approval of debtor
     c. 3rd person pays even w/o knowledge of debtor