RIVERA, WILLIAM DC Law of Obligation and Contract September 12, 2020

BSA 2A Ms. Precious Swelan Santiago

1. Define obligation?

As according to Article 1156 of Republic ACT No 386 of CIVIL CODE OF THE PHILIPPINES stated that the
Obligation is a juridical necessity to give, to do and not to do.
Juridical necessity. Why? Because it is enforceable in the court in case it was not complied in which the
court can enforce its fulfilment. Therefore if you have an obligation, you must fulfil it (either in giving,
doing or not doing something) or else, the courts can enforce you to do it.

2. What are the sources of obligation?

According to DE Leon, there are 2 main sources of obligations: law and contracts.
But based on article 1157: law, there are 4 laws of Obligations:
Contracts, quasi-contracts, delicts and quasi-delicts.

Obligations that arise from law are not presumed because those laws must be expressly stated
or must be set forth in the law, specifically, on the civil code or special laws to be demandable.

Contracts
Contracts is a meeting of the minds between two persons wherein one binds himself to the
other to fulfil something agreed by both of them. Contractual obligations have the force of law
between contracting parties, meaning, one can be demandable on court if there is non-
compliance with respect to the obligation to be fulfilled.

Quasi-contracts is a juridical relation due to lawful, voluntary and UNILATERAL acts that makes
two parties be bound to each other but with the effect that no one will be unjustly enriched or
benefited at the expense of the other at the end. In here, there is no meeting of the minds but
to prevent injustice, parties are being considered as having entered into a "contract"

Delicts
Here, there is a criminal intent or criminal negligence. Obligations are also derived from delicts
because a person committing such act is criminally liable and liable civilly. Civil liabilty includes
restitution, reparation for damages and indemnification for consequential damages by such act.

Quasi-delicts
Unlike delicts, quasi-delicts are acts or ommisions that causes fault or negligence wherein there
was a damage on the part of the other person that results to a civil liability on the part of the
person causing the act. In here, there is no pre-existing contractual between the parties
involved.

3. What are the requisites for a valid obligation?

For an obligation to be valid, it must have: a passive subject, an active subject, an object or prestation
and a juridical or legal tie. The passive subject is the debtor or obligor who is bound to fulfill the
obligatio. The active subject is the creditor or obligee who is entitled or who has the right to demand the
fulfillment of the obligation. The object or prestation is the subject matter of the obligation wherein the
debtor observes the act of giving, doing or not doing the object or prestation. The juridical or legal tie is
RIVERA, WILLIAM DC Law of Obligation and Contract September 12, 2020
BSA 2A Ms. Precious Swelan Santiago

the cause of the binding of parties to the obligation. An example of a juridical or legal tie is the
agreement or the contract.

4. Compare and contrast obligation and right.

Obligation pertains to act or performance which is enforceable by law. Like for instance, creditor
and debtor having agreed upon to build a house in which they also executed a contract of that being
stipulated. In this case, creditor has a right to demand debtor to build the house which the debtors
obligation. Obligation is a juridical necessity to give, to do, or not to do. In case of non-compliance,
the aggrieved party can enforce its fulfilment thru the help of court.
Right pertains to power of a person or parties involved under the law, ex. To demand the prestation.
And failure either of the parties will give the other a cause of action for enforcement of their
respective rights. Rights refer to entitlement given by the law.

5. Differentiate real and personal obligation.

Real obligations to give to do. Real Obligation there is a thing that something to deliver while
personal obligation is an act or service- it could be positive personal obligation or negative
personal obligation... It's an obligation to do or not to do.

6. What are the duties of the debtor and the rights of the creditor?

Basically, the debtor must pay, deliver the service on his obligation. It is the duty of the debtor to deliver
or perform the service within the period and then do it with diligence.

Duties of debtor in obligation to deliver a generic thing

 Deliver a thing which is the quality intended
 Be liable for damages

Duties of debtor to specific thing

 Preserve the thing
 Deliver the fruits of the thing
 Deliver the accessions and accessories
 Deliver the thing itself
 To be liable for damages

The creditor, on the other hand, has the right to charge, chase the debtor for what he has not done.
Rights of a creditor in obligations to give:
If it is a determinate thing:
1. To compel specific performance
2. To recover damages in case of breach
3. Acquires personal right to the fruits of the thing from the time the obligation to deliver arises
4. To acquire real rights once it has been delivered to him
5. Rights of accession at accessories

If in generic thing
1. To ask for the performance of the obligation
RIVERA, WILLIAM DC Law of Obligation and Contract September 12, 2020
BSA 2A Ms. Precious Swelan Santiago

2. To for the performance of the obligation at the expense of the debtor

7. How the presence of fraud, negligence, delay, breach, and fortuitous event affect an obligation?

Fraud is the intentional evasion or falsification of something. Like you lied intentionally in terms of
contract. The debtor will be liable for damages.

Negligence is the lack of diligence. It is not intentional but the effect of it is that may cause damages. It is
often found in quasi-delicts (culpa aquiliana), contracts (culpa contractual) and delicts (culpa criminal).
Negligence results a person or the negligent person to be liable for damages (an obligation formed).

Delay
Nonfulfillment of obligation within the designated time or period. This results to the liability to pay for
damages. But, in order for the debtor to be in delay, there must be a demand from the creditor. If the
debtor is now in delay, he will still be liable from damages even though there is a fortuitous event that
happened during the time that the debtor is in delay.

Breach
From the word itself, breach is the breaking of obligation, terms, agreement, etc. It is liable for damages
or extinguishment of obligation.

A fortuitous event is any unforeseeable event. In here, no person shall be liable. In other words, the
obligation will be extinguished. But there are exceptions here such as if there is a delay and a fortuitous
event, if expressly declared by law or stipulation etc. I just can’t remember the others

And it can lead to the extinguishment of the obligation. And also, it can result in damages wherein the
restitution, reparation, and indemnification will enter.

8. What is a condition?

Condition is a future and uncertain event, upon the happening of which, the effectively or
extinguishment of an obligation subject to it depends.
It means that the condition is a past but unknown or future and uncertain event.

An event you are not sure that it will fulfil or not

Example: I will pay you 20k if you will graduate in college
The condition is if you can graduate. So this is a condition. Why? Because I'm not sure if you can
graduate or not. You are not sure if that event will happen or not.

Is it possible that the condition will becoming a Conditional Obligation?

Let based to the example: I will pay you 20k if you will graduate in college
The condition is if you can graduate.
Is this will be a conditional obligation when you say if you will graduate in college? No. Because there is
no obligation attached
Therefore from the word conditional obligation, there must be a condition AND corresponding
obligation so that we can actually call it a conditional obligation
RIVERA, WILLIAM DC Law of Obligation and Contract September 12, 2020
BSA 2A Ms. Precious Swelan Santiago

9. Explain the following obligations: pure, conditional, with a penal clause, alternative, facultative, divis
ible, indivisible, joint and solidary.

Pure obligation—w/out terms or condition and demand able at once.

Ex. I promise to give you ₱5,000. In that case, immediately demandable being no terms or condition
indicated.
Conditional obligation
—Demandability or extinguishment depends upon happening of condition.
—must be uncertain, refers to past and future events.
2 classification of condition
*Suspensive or ex die —happening of condition will give rise to obligation. (Clue word — "if")
*Resolutory or in Diem — happening of condition extinguishes the obligation. (Clue word—"until")

The 2 classification mentioned will not only be applied to condition but to obligation with a period also.

Alternative— several prestation are due. Delivery of one or more may extinguished the obligation. Ex. I
is obliged to deliver a ball, ring, and phone. The delivery of any prestation may extinguished the
obligation.

Facultative —only one prestation is due but subject to substitution if debtors want with having agreed
upon by the creditor.
Facultative opposite of alternative. But always look forward to alternative because that is the most
important obligation as to achievement.
Example.
I is obliged to deliver a ball to U with the agreement that I can/may deliver a ring as a substitute.

Joint—2 or more debtors and creditors in one and same obligation. Liable to the extent of proportionate
ratio in debt.
Solidary —each debtors are liable for whole and each creditors is entitled to demand payment as a
whole but subject to pro rata as to sharing of collection if 2 or more creditor.

General rule: if silent as to what obligation, obligation is pressumed joint

In the case of joint and solidary problems the point of view is always to joint as to what general rule
state.

10. How is obligation extinguished?

An obligation is extinguished by the following:

 By payment or performance
 By loss of the thing due
 By the condonation or remission of debt
 By the confusion or merger of rights
 By compensation
 By Novation

11. What are the special forms of payment?
RIVERA, WILLIAM DC Law of Obligation and Contract September 12, 2020
BSA 2A Ms. Precious Swelan Santiago

Payment or performance- you paid off the debt or you fulfilled the obligation. There are special forms
for that payment. The special forms of payment are Dation en pago, cession en pago, application of
payment at legal tender.

Let's prioritize the legal tender. This is the currency or money that the debtor can combine with his
creditor for debt repayment. Since we live in Philippines the currency he will pay is in peso amount
should. Question can he pay you for each binding? Yes is the answer. But there are limitations to that I
forgot that article already * anyway,
1k pesos for denomination of
A. 1 (peso), 5 pesos, 10 pesos coins
B.100 pesos for denomination of 1 cent 5 cents, 10 cents and 25 cents.
C. All bills are legal tender up to any amount.

Dation en pago naman or dation payment

I remember here is that your ownership of a property is transferred to the creditor to pay off the debt.
Example.
You owe me 10000. On the due date, you still have no money but let say you have a ring worth 10k you
can propose to me to just accept it instead of 10k cash. If I agree to take it, your debt is automatically
extinguished.

Cession is about the abandonment of your property to pay off your debt. So why abandonment?
Because you are insolvent, you have no money. It's just property against your creditor to charge you.
Suppose you are addicted to debt and you have no money but you have property. Let say your debt is
20m so the creditor will sell your land let say what he sold is 22m all he will take there is 20m and he will
give you the remaining 2M.

12. When a thing is considered loss?

Through this extinguishment. There is more through payment or performance and loss of thing due
Payment or performance- you paid off the debt or you fulfilled the obligation. There are special forms
for that payment.
In the loss of thing due, the obligation can only be extinguished when: the obligation is to deliver the
SPECIFIC thing, the delivery is lost but the debtor is not at fault (it could be through fortuitous events)
and if the debtor is not guilty of delay.
The thing is considered a loss if the object lost is a specific or determinate thing. And if it perishes, goes
outside the commerce of men or disappears wherein it cannot be recovered

13. Explain the following: condonation, confusion, compensation, and novation.

Condonation it is a form of extinguishment of obligation where it seems that the debtor's obligation
(example: pay the creditor) has been announced or abandoned by the creditor and is like a form of
donation.
Example
The debtor has an obligation to pay the creditor 10k. The creditor decides not to let the debtor pay what
he has to pay. And that is where the abandonment of obligation comes in, which, is now extinguished
due to condonation.
RIVERA, WILLIAM DC Law of Obligation and Contract September 12, 2020
BSA 2A Ms. Precious Swelan Santiago

Confusion or merger
Debtor and creditor in one person

Example debtor owes A 5K pesos. Then A, owes B 5k then B, owes the debtor (which is now the creditor)
of 5k
Like in the same obligation, he became a debtor or creditor in one

The compensation, on the other hand, is extinguishing the obligation because you have an obligation to
each other and because you are paying an equal amount, you are extinguishing that obligation.
But in the case that the amount of money you owe to each other is not equal, the compensation is only
up to the extent of the amount of smaller value.

Example:
A's debt to B is 5k. B's debt to A is 10k
In compensation, their debt is offset to each other but B still has 5k left in debt to A.

What is the difference between confusion and compensation?

Confusion, only one party or person became debtor and creditor in 1 (like the example in confusion)
In compensation, 2 parties are involved and both of them are debtors and creditors of each other
When novation is always remembered there must be a previous valid obligation.

Novation this is the mode of extinguishment that you can change the object itself, principal condition (if
this is given) or substitute the person of the debtor can also be through third party subrogation
Example. You owe me 20000
1. Changing of object. You can say that you can only pay for the ring since it is also 20k. If I do not accept
that payment. There is the presence of novation through changing object or prestation.
2. Suppose you do not have an object then you have a friend. He can substitute you as debtor if he
agrees and I agree since I am the one who lent. Here comes the novation by substitution if the debtor. I
also forgot the subrogation, maybe I had a snack here before, and I don't remember (what article is that)
as long as I know they are just the same as novation through substitution but the only difference is, it
improves the creditor's rights.