"OBLICON REVIEWER "

Definition of Obligation (Art. 1156) and Contract (Art. 1305):

Obligation: Refers to a legal relationship wherein a person (active subject) is bound to give, to do, or
not to do something in favor of another (passive subject).

Contract: A specific type of obligation defined by law, wherein the parties involved create mutual
obligations that they are bound to fulfill

Elements of Obligation

Active Subject: The person who has the obligation to fulfill or perform a certain act.
Passive Subject: The person who has the right to demand the fulfillment or performance of the act
from the active subject.
Prestation: The subject matter or object of the obligation.
Efficient Cause: The legal basis or reason for the obligation to exist.

Sources of Obligation (Art. 1157)

Law: Obligations may arise from laws enacted by the government.

Contract: Obligations may arise from agreements or contracts between parties.
Quasi-Contract: Obligations may arise from certain situations where there is no contract, but the law
implies an obligation to prevent unjust enrichment.
Acts or Omissions Punished by Law: Obligations may arise from actions or failures to act that are
punishable by law.
Quasi-Delict: Obligations may arise from quasi-delicts or wrongful acts that cause harm to another
person, even without the presence of a contract.

Innominate Contracts
Innominate contracts are those contracts that do not fall into any specific category or classification,
and they are characterized by their specific obligations or prestations. There are four types:

● Do ut Des (Give-Give): Obligation to give something in exchange for receiving something.

Example: A agrees to exchange his bicycle for B's laptop. In this case, both parties have obligations
to give something in exchange for receiving something. A gives his bicycle to B, and B gives his
laptop to A.
● Do ut Facias (Give-Do): Obligation to perform an act in exchange for receiving something.
Example: A agrees to pay B $500 if B repairs A's car. Here, A's obligation is to pay $500 (give), and
B's obligation is to repair the car (do).

● Facio ut Des (Do-Give): Obligation to give something in exchange for another party
performing an act.
 Example: A agrees to paint B's house if B provides the necessary paint and materials. Here,
A's obligation is to perform the act of painting (do), and B's obligation is to provide the paint
and materials (give).

● Facio ut Facias (Do-Do): Obligation to perform an act in exchange for another party
performing an act. Example: A agrees to design a website for B if B agrees to provide
marketing services for A's business. In this case, both parties have obligations to perform an
act in exchange for the other party performing an act. A designs the website (do), and B
provides marketing services (do).

Quasi-Contract

Quasi-contractual obligations arise not from the agreement of the parties but by operation of law to
prevent unjust enrichment or benefit at the expense of another. Two common forms of quasi-
contractual obligations are:

Solutio Indebiti: The payment of something not due. For example, if A mistakenly pays B an amount
greater than what is owed.

Negotiorum Gestio: The management of another person's affairs without their consent but with the
intention of benefiting them. For example, if A manages the business affairs of B without B's
knowledge or consent, but it results in a benefit to B.

Crime
Criminal Liability: Refers to the responsibility imposed by law for the commission of an act defined as
a crime. It involves punishment by the state, such as imprisonment or fines.

Civil Liability: In addition to criminal liability, a person who commits a crime may also incur civil
liability, which involves the obligation to compensate the victim for the damages or losses suffered
as a result of the crime.

Quasi-Delict
A quasi-delict, also known as a tort, refers to an act or omission that causes damage or injury to
another, resulting in the obligation to compensate the injured party. Key elements of quasi-delict
include:

● Damage or Injury: There must be actual damage or injury suffered by the victim.
No Pre-existing Relations between Parties: Unlike contracts, there are no pre-existing
contractual relations between the parties involved.

● Negligence: The damage or injury must be caused by the negligence or fault of the person
responsible.

● Damnum Absque Injuria

Damnum absque injuria refers to a situation where there is damage or loss suffered by a person, but
there is no legal basis for imposing civil liability on the party causing the damage. In other words,
while there may be damage, there is no legal injury that would give rise to a claim for compensation.

General Rule of Diligence (Art. 1163):

The general rule is that a person must observe the diligence of a good father of the family (bonum
pater familias) in the performance of their obligations.

Exceptions to the General Rule of Diligence (Art. 1163);

● Law Requires Another Standard of Care: When the law specifies a different standard of care
that must be observed.
● Stipulation of Parties: When the parties involved agree to a different standard of care through
a stipulation or contractual agreement.

Personal Right and Real Right (Art. 1164)

• Personal Right: A right that is enforceable against a specific person or persons.

Example: A lends money to B. In this scenario, A holds a personal right against B, as B is obligated
to repay the borrowed money to A. This right is enforceable only against B, the specific debtor, and
does not affect the ownership or possession of any specific property.

● Real Right: A right that is enforceable against the whole world.

Example: A purchases a piece of land from B. Upon completion of the sale and transfer of
ownership, A becomes the rightful owner of the land, which constitutes a real right. This right is
enforceable not only against B but also against the whole world, meaning that A has the exclusive
right to possess, use, and dispose of the land within the limits prescribed by law.

Kinds of Delivery:
● Actual Delivery: Physical transfer or handing over of the object. :
● Constructive Delivery: Delivery not involving physical transfer, but rather symbolic or legal
acts.

Kinds of Constructive Delivery:

● Traditio Symbolica: Symbolic delivery through the transfer of something representing the
object, like handing over keys to a house.
● Traditio Longa Manu: Delivery by extending one's hand toward the object, indicating transfer
of possession. An example is Handing over a book by extending your hand and passing it to
someone else.
● Traditio Brevi Manu: Delivery by taking possession of an object previously held by another
person. An example is Taking possession of a bicycle that was previously owned by your
friend.
 ● Traditio Constitutom Possessorium: Delivery by the act of constituting or establishing
possession of the object. It typically involves the physical transfer of control or possession,
along with any necessary legal documentation to formalize the transfer of ownership.

● Tradition by Execution of Legal Forms: Delivery through the execution of legal documents or
forms.

End of Constructive Delivery:

● Traditio Symbolica: Symbolic delivery.

● Traditio Longa Manu: Delivery by extending one's hand.

● Traditio Brevi Manu: Delivery by taking possession.

● Traditio Constitutom Possessorium: Delivery by establishing possession.

● Tradition by Execution of Legal Forms: Delivery through legal forms or documents.

Delivery of Specific Object (Art. 1165):

A specific object (SO) is capable of particular designation, meaning it can be clearly identified or
specified.
Example: "Honda Vios 2020 model with plate number 123" is an example of a specific object.

Remedies of Creditor for Failure to Deliver a Specific Object:

When there is a failure to deliver a specific object, the creditor (person entitled to receive the object)
may pursue various remedies:

● Specific Performance: The creditor may seek a court order compelling the debtor (person
obligated to deliver the object) to fulfill their obligation by delivering the specific object as
agreed upon. Cancellation: If specific performance is not feasible or satisfactory, the creditor
may seek to cancel the contract, terminating the obligation to deliver the specific object.

● Damages: The creditor may also seek monetary compensation for any losses or damages
suffered due to the failure to deliver the specific object. This compensation aims to put the
creditor in the position they would have been in if the contract had been fulfilled.
Accessories Follow the Principal (Art. 1166)

This principle means that whatever is essential or principal in a contract, everything that is
connected with it follows its nature. Means that everything related to the main part of a contract
follows the same rules or characteristics as that main part.

Obligation to Do (Art. 1167)

✔An obligation to do refers to a situation where a person is obligated to perform a specific act or
task.

Obligation Not to Do (Art. 1168)

✔An obligation not to do refers to a situation where a person is obligated to refrain from doing a
specific act or task.

Delay (Ordinary Delay)/ Default (Legal Delay) (Art. 1169);

● Delay (Ordinary Delay): Refers to the failure of a debtor to fulfill their obligation within the
agreed-upon time frame.

● Default (Legal Delay): Refers to the failure of a debtor to fulfill their obligation, regardless of
whether a specific time frame was set.

Exceptions of Delay/Default:

● Law Itself Provides: In some cases, the law explicitly states the consequences of delay or
default.

● Time is of the Essence: When the timely performance of the obligation is crucial, and failure
to meet the deadline constitutes a breach of contract.

● Useless: When the obligation becomes useless due to circumstances beyond the control of
the parties, making it impractical or impossible to fulfill.

Example:
Law Itself Provides: If the contract says there are penalties for being late, that's the law's way of
dealing with delays.

● Time is of the Essence: Sarah really needs the job done on time because she has a big
family event coming up.

● Useless: If something unexpected happens, like a storm damaging the house, it's impossible
to finish the job, so the delay is excused.

Reciprocal Obligation (Art. 1169)

✓ Reciprocal obligations are those where the performance of the obligation depends upon both
contracting parties fulfilling their respective obligations.

Mora Solvendi (Default on the Part of the Debtor): Mora solvendi refers to the default or delay in the
fulfillment of an obligation on the part of the debtor, also known as debtor's default.
Mora Accipiendi (Default on the Part of the Creditor): Mora accipiendi refers to the default or delay in
accepting performance of an obligation on the part of the creditor, also known as creditor's default.

Compensatio Morae (When Both Creditor and Debtor are in Default): Compensatio morae occurs
when both the creditor and the debtor are in default or delay in fulfilling their respective obligations.
In such cases, the default of one party may be excused or mitigated by the default of the other party.

Example:
In a practical scenario, consider the following example to illustrate mora solvendi, mora accipiendi,
and compensatio morae: Sarah, a freelance graphic designer, is contracted by John, a small
business owner, to create a logo for his company. The contract stipulates that Sarah will deliver the
logo files to John by a specified date, and John will pay her $500 upon receipt of the completed
work.

1. Mora Solvendi (Default on the Part of the Debtor):

Sarah encounters unexpected technical issues with her computer, delaying the completion of the
logo beyond the agreed-upon deadline. This delay constitutes mora solvendi, as Sarah, the debtor,
has defaulted on her obligation to deliver the logo files to John on time.

2. Mora Accipiendi (Default on the Part of the Creditor):

Even after Sarah resolves the technical issues and delivers the logo files to John, he fails to
acknowledge receipt or provide payment within the agreed-upon timeframe. This delay constitutes
mora accipiendi, as John, the creditor, has defaulted on his obligation to accept the performance
(delivery of the logo files) and make the payment to Sarah on time.

3. Compensatio Morae (When Both Creditor and Debtor are in Default):

Due to the mutual defaults of both parties (Sarah's delay in delivering the logo and John's delay in
accepting performance and making payment), the circumstances may warrant compensatio morac.
In this case, the default of one party (Sarah) may be excused or mitigated by the default of the other
party (John), leading to potential adjustments or remedies to address the mutual defaults.

Grounds for Damages

Fraud: Damages may be awarded when one party intentionally deceives or misleads the other party,
causing harm or loss. Negligence: Damages may be awarded when one party fails to exercise
reasonable care, resulting in harm or loss to the other party.

Default: Damages may be awarded when a party fails to fulfill their obligation under an agreement or
contract.

Any Violation of the Agreement: Damages may be awarded for any breach or violation of the terms
and conditions of an agreement or contract.
Kinds of Damages:

Mental or Moral Damages: Awarded for physical or mental pain and suffering endured by the
aggrieved party.

Exemplary Damages: Awarded to set an example or punish the wrongdoer for particularly egregious
conduct.

Nominal Damages: Awarded when no other damages may be awarded, typically to recognize a
technical violation of rights. Temperate Damages: Awarded when the exact amount of damage
cannot be precisely established, but some injury has been suffered.

Actual Losses: Refers to damages awarded to compensate for actual losses suffered by the
aggrieved party.

Liquidated Damages: Refers to damages where the amount is predetermined or agreed upon
beforehand in the contract.

Example:
In a scenario where Sarah, a tenant, leased an apartment from John, the landlord, several types of
damages may be applicable due to John's failure to maintain the apartment properly. Sarah
experiences physical discomfort, mental distress, and inconvenience due to various issues such as
water leaks, electrical problems, and pest infestations in the apartment. She also incurs expenses
for repairs and medical bills.

In this scenario:

•Mental or Moral Damages: Sarah may be awarded damages for the physical and mental pain and
suffering endured due to the poor living conditions.

Exemplary Damages: If John's failure to maintain the apartment is found to be particularly egregious
or intentional, Sarah may be awarded exemplary damages to punish John and set an example for
other landlords.

Nominal Damages: Even if Sarah cannot prove significant financial losses, she may still be awarded
nominal damages to recognize the violation of her rights as a tenant.

Temperate Damages: If Sarah can demonstrate that she suffered some injury or harm, but the exact
amount of damage cannot be precisely established, she may be awarded temperate damages.

Actual Losses: Sarah can claim damages to compensate for her actual losses, including expenses
for repairs and medical bills incurred due to the poor living conditions.

Liquidated Damages: If the lease agreement includes a clause specifying the amount of damages
for breach of contract, Sarah may be entitled to liquidated damages as predetermined or agreed
upon in the contract.
Fortuitous Event

● Refers to unforeseeable events or acts of nature, often referred to as "acts of God."

Examples include flood, lightning, thunder, storm, typhoon, earthquake, etc.

Force Majeure

● Refers to unforeseeable events or acts caused by humans, often referred to as "acts of

man."
Examples include war, riot, rumbles, violent rallies, etc.

General Rule
Parties are excused from fulfilling their obligations if the non-performance is due to a fortuitous event
or force majeure.

Exceptions to General Rule

● When the Law Itself Provides: For example, default or bad faith may not be excused even if
caused by a fortuitous event.

● When There is Stipulation: Parties may agree in advance on how to handle situations
involving fortuitous events.

● When the Nature of the Obligation Requires the Assumption of Risk: Some obligations
inherently involve risk, and parties may be expected to bear the consequences even in the
event of a fortuitous event.

Remedies of Creditor After Pursuing Collection and There is Still a Balance

Demand for Exact Fulfillment: The creditor can demand the full payment or exact fulfillment of the
obligation from the debtor.

Attachment of Properties: The creditor may seek attachment of the debtor's properties to satisfy the
outstanding debt.

Accion Pauliana: The creditor has the right to impugn or cancel acts or contracts entered by the
debtor if they were done to defraud the creditor.

Types of Obligations

Pure Obligation
An obligation without any condition attached to it.

Example: "I'll buy you a laptop."

Conditional Obligation

✔An obligation with a condition attached to it.

Example: "I'll buy you a laptop if you pass the CSC exam." If you pass the exam, I am obligated to
buy you the laptop. If you do not pass the exam, I am not obligated to buy you the laptop.

Suspensive Condition

✔The happening of the condition gives rise to the obligation.

Example: "I'll buy you a laptop, but if you fail the CSC exam, the obligation to buy the laptop is
extinguished." Here, I am initially obligated to buy you the laptop. However, if you fail the exam, that
event triggers the termination of the obligation to buy the laptop.

Resolutory Condition

✔The happening of the condition extinguishes the obligation.

Example: "I'll buy you a laptop, but if you fail the CSC exam, the obligation to buy the laptop is
extinguished." Here, the

obligation to buy the laptop exists, but it will be extinguished if the condition (failing the CSC exam)
occurs.

The main difference lies in their effects: a conditional obligation determines the existence of the
obligation itself, while a resolutory condition causes the termination of an existing obligation.

Alternative Obligation

✔An obligation with two or more prestations or subject matters, but only one may be given.

Example: "I'll buy you a laptop or cellphone or iPhone."

Facultative Obligation

✔An obligation where only one prestation or subject matter has been agreed upon but may be
replaced or substituted by another.

Example: "I'll buy you a laptop, but if the laptop is not available, I'll replace it with a Samsung S26
phone." Obligation with a Penal Clause

✔An obligation with a penalty attached to it.

Example: "A owes B 20k payable within 1 month. If B fails to pay within 1 month, A will charge B with
an interest of 10 percent"
Solidary Obligation

One for all, all for one; in solidum; jointly and severally.

Example: "Debtors A, B, and C owe creditor D 9,000. Upon maturity, creditor can collect the whole
amount of 9,000 from either A, B, or C, subject to a refund from the others."

Joint Obligation

✔Pro rata, proportionate, to each his own.

Example: "Debtors A, B, and C owe creditor D 9,000. Upon maturity, creditor can only collect 3,000
each from A, B, and C

General Rule and Exception

General Rule:
Joint Obligation. The obligation is presumed to be joint, meaning each debtor is liable only for their
share of the obligation.

Exception: Solidary Obligation. If the obligation expressly states or if the law or the nature of the
obligation requires solidarity, the obligation becomes solidary, and each debtor is liable for the entire
obligation.

Extinguishment of Obligation

Payment or Performance

✔The fulfillment of the obligation through the delivery of the agreed-upon consideration.

Example: Sarah owes $500 to John for repairing her car. Sarah delivers $500 in cash to John as
agreed upon, fulfilling her obligation.

Loss of the Thing Due

✔The destruction or loss of the object of the obligation through no fault of the debtor.

Example: Sarah is supposed to repay John with a specific antique vase she borrowed.
Unfortunately, the vase is destroyed in a house fire, resulting in the loss of the object of the
obligation.

Condonation or Remission of Debts

✔The creditor's intentional relinquishment of the right to demand payment from the debtor.
Example: John, the creditor, intentionally forgives Sarah's debt of $200, relinquishing his right to
demand payment from her.

Confusion or Merger of Rights

✓ When the qualities of creditor and debtor are merged into the same person, thereby extinguishing
the obligation.

Example: Let's say Sarah loans $100 to her friend John. Later on, Sarah inherits $100 from John's
estate after he passes away. Now, Sarah becomes both the creditor (the person owed the money)
and the debtor (the person who owes the money) because she inherited the debt she is owed. Since
Sarah now owes the money to herself, there is no longer a distinct creditor-debtor relationship. The
obligation to repay the $100 is extinguished due to the confusion or merger of

✔ When two persons, in their own right, are creditors and debtors of each other, they shall
compensate their respective credits and debts, and the extinguishment of these obligations to the
concurrent amount.

Novation

Example: John owes Sarah $100 for a repair service, while Sarah owes John $80 for purchasing
goods. They agree to compensate each other, and John pays Sarah $20 to settle the difference
between their debts.

✔The substitution of an old obligation with a new one, either by changing the object or principal
conditions, or by substituting a new debtor or creditor. Example: Sarah owes John $500 for a loan.
They agree to replace the original obligation by entering into a new

agreement where Sarah will pay $300 by a certain date, effectively substituting the old obligation
with a new one.

Forms of Payment:

a) Application of Payment

When a debtor has several debts to the creditor and all matured, but the money available is not
enough to pay them all, the debtor decides which debt to pay.

Example: Let's say Sarah owes John money for various loans, and all the debts have matured.
Sarah owes $300 for a personal loan, $200 for a car loan, and $100 for a credit card debt. However,
Sarah only has $300 available to pay off her debts. In this scenario, Sarah must decide which debt
to prioritize and pay off with the available $300. Since Sarah owes multiple debts to John, and the
money is not sufficient to pay all of them in full, she decides to allocate the $300 to the debt she
considers most urgent or important. For instance, if Sarah believes that paying off the personal loan
of $300 is the most pressing, she will allocate the entire $300 to that debt. As a result, Sarah would
have effectively applied the payment to the personal loan, fulfilling her obligation for that particular
debt.

b) Dacion en Pago

Instead of paying cash, the debtor transfers ownership of a property to the creditor as an acceptable
form of payment.

c) Payment by Cession

The debtor transfers all his properties in favor of the creditor to be sold, and payment is made from
the proceeds of the sale.

d) Tender of Payment

The debtor offers to pay with a demand that it be accepted by the creditor.

Example: John owes Sarah $100 for a service she provided. John goes to Sarah's office with $100
in cash and offers it to her, stating that he is there to settle his debt. This act of offering the money to
Sarah constitutes a tender of

payment.

e) Consignation

If the creditor refuses to accept payment, the debtor deposits the payment before the court.

Example: Sarah owes John $500 for a loan, but John refuses to accept the payment because he
disputes the amount owed. In this case, Sarah can initiate consignation by depositing the $500 with
the court, effectively demonstrating her willingness to pay. The court will then handle the funds
according to legal procedures, ensuring that Sarah's obligation is fulfilled despite John's refusal to
accept payment directly.

✔ When two persons, in their own right, are creditors and debtors of each other, they shall
compensate their respective credits and debts, and the extinguishment of these obligations to the
concurrent amount.

Novation

Example: John owes Sarah $100 for a repair service, while Sarah owes John $80 for purchasing
goods. They agree to compensate each other, and John pays Sarah $20 to settle the difference
between their debts.

✔The substitution of an old obligation with a new one, either by changing the object or principal
conditions, or by substituting a new debtor or creditor. Example: Sarah owes John $500 for a loan.
They agree to replace the original obligation by entering into a new
agreement where Sarah will pay $300 by a certain date, effectively substituting the old obligation
with a new one.

Forms of Payment:

a) Application of Payment

When a debtor has several debts to the creditor and all matured, but the money available is not
enough to pay them all, the debtor decides which debt to pay.

Example: Let's say Sarah owes John money for various loans, and all the debts have matured.
Sarah owes $300 for a personal loan, $200 for a car loan, and $100 for a credit card debt. However,
Sarah only has $300 available to pay off her debts. In this scenario, Sarah must decide which debt
to prioritize and pay off with the available $300. Since Sarah owes multiple debts to John, and the
money is not sufficient to pay all of them in full, she decides to allocate the $300 to the debt she
considers most urgent or important. For instance, if Sarah believes that paying off the personal loan
of $300 is the most pressing, she will allocate the entire $300 to that debt. As a result, Sarah would
have effectively applied the payment to the personal loan, fulfilling her obligation for that particular
debt.

b) Dacion en Pago

Instead of paying cash, the debtor transfers ownership of a property to the creditor as an acceptable
form of payment.

c) Payment by Cession

The debtor transfers all his properties in favor of the creditor to be sold, and payment is made from
the proceeds of the sale.

d) Tender of Payment

The debtor offers to pay with a demand that it be accepted by the creditor.

Example: John owes Sarah $100 for a service she provided. John goes to Sarah's office with $100
in cash and offers it to her, stating that he is there to settle his debt. This act of offering the money to
Sarah constitutes a tender of

payment.

e) Consignation

If the creditor refuses to accept payment, the debtor deposits the payment before the court.
Example: Sarah owes John $500 for a loan, but John refuses to accept the payment because he
disputes the amount owed. In this case, Sarah can initiate consignation by depositing the $500 with
the court, effectively demonstrating her willingness to pay. The court will then handle the funds
according to legal procedures, ensuring that Sarah's obligation is fulfilled despite John's refusal to
accept payment directly.