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Nature of obligations under Civil Code

Civil Obligations legally demandable and the
courts of justice may compel their performance.

Natural Obligations based on morality,

natural law and conscience, they are not legally

Requisites of Obligations

Juridical or legal tie the vinculum or the link that

binds the party
Prestation - consist in giving, doing or not doing
Active subject person who can demand the
performance of the obligation or known as the
creditor or oblige
Passive subject the person from whom prestation
is demandable or known as the debtor or obligor

Sources of Obligations


the meeting of minds between two
persons whereby one binds himself
with respect to the other to give
something or to render service.

the act of a person, permitted by
law, by which he obligates himself
towards another, or by which
another binds himself to him,
without any agreement between

Acts or omissions punished by law

refers to a crime or a penal offense.

a legal wrong, committed
through fault or negligence,
on a person or property,
independent of contract.

Requisites of Quasi-delicts
An act or omission;
Accompanied by fault or negligence;
Causing damage to another;
There must be no pre-existing
contractual relation between the parties.


Pure and Conditional Obligations

Pure Obligations one which is not subject

to conditions nor does it mention a specific
date for its fulfillment.

Conditional Obligations is one which is

subject to a condition
Two Kinds of Conditions

Suspensive Condition a condition which

suspends the demandability of the obligation until
the fulfilment of the condition.
extinguishment of an
happening of the event.

obligation upon


Obligations With a Period

those whose consequences are subjected in
one way or the other to the expiration of
said term.

Alternative Obligations
is one wherein various things are due, but
the payment of one of them is sufficient,
determined by the choice which as a
general rule belongs to the obligor.

Joint and Solidarity Obligations

Joint Obligations is one which each of the
debtors is answerable only for a proportionate
part of the debt and each one of the creditors is
entitled to a proportionate part of the credit.

Solidarity Obligations is one which each

of the debtors is liable for the whole
obligation and each of the creditors may
demand compliance of the entire

Divisible and Indivisible Obligations

Divisible Obligation is one which is capable of
partial performance.

Indivisible Obligation is one which is not

capable of partial performance.

Obligations With a penal Clause

Definition of Penal Clause an accessory undertaking
to assume greater liability in case of a breach.

Two Classifications of Penal Clause

Subsidiary when only the penalty can be

Joint when both the principal contract and the
penal clause can be enforced

By Payment or Performance payment means not only
the delivery of money but also the performance, in any
other manner, of an obligation.
By the loss of the thing due when it perishes or goes
out of commerce or disappears in such a way that its
existence is unknown or it cannot be recovered.
By the condition or remission of the debt it is an act
of liberality by which the oblige, who receives no price
or equivalent thereof, renounces the enforcement of
the obligation, which is extinguished in its entirely or in
that part or aspect of the same to which the remission

By the confusion or merger of the rights of
creditor and debtor it is the meeting in one
person of the qualities of obligee and obligor
with respect to the same obligation.
By compensation takes place when two
persons, in their own right, are creditors and
debtors of each other.
By novation it is the change, substitution, or
renewal of an obligation or obligatory relation,
with the intention of extinguishing or
modifying essentially the former(new debt for
old debt).


Contract is the meeting of the minds between two

persons whereby one binds himself with respect to the
other to give something or to render service. It comes
from the Latin word contractus which signifies an

Elements of Contracts

Essential Elements
consent of the parties
object or subject matter
cause or consideration
Natural elements are those the existence of which is resumed by law
unless there is an agreement to the contrary
Accidental elements consist of the unusual stipulation of the parties
such as conditions, terms, etc.

Stages of a Contract

Preparation or Conception

Perfection or Birth
Consummation or Termination

Preparation or Conception includes all the initial

stages up to the time the parties agree upon the terms
of the contract.
Juan offers to sell his horse to Pedro for P2,000.00. Pedro asks
Juan to bring his horse to his place to enable him to see
whether the horse is fit for carretela purposes. Juan brings the
horse to Pedros place and the latter is allowed by Juan to use
his horse in pulling Pedros carretela to enable the latter to
see whether the horse has sufficient speed, is physically fit,
etc. After trying the horse, Pedro bargains with Juan as to the
price. Up to this stage, the parties are doing things leading to
the meeting of the minds.

Perfection or Birth the time when the minds of the

parties meet in agreement upon the object or subject
matter as well as to the price or consideration.

Juan agrees to receive P2,000.00 for his horse and Pedro

agrees to take the horse for that amount. The contract here is
perfected because there is already a meeting of the minds.

Consummation or Termination
Juan delivers the horse to Pedro and the same is accepted.
Pedro gives the amount P2,000.00 as purchase price and the
latter receives it. In here, the contract is consummated and

Classification of Contracts
Express and Implied Contracts is one written in the intent of the parties is shown by
words, oral or written.
Executed and Executory Contracts
Executed contract is one that has already been performed
Executory contract is one that is not yet performed
Consensual and Real Contracts
Consensual contract is one perfected by mere consent
Real contract is one perfected by the delivery of the thing which is the object
of the contract
Unilateral and Bilateral Contracts
Unilateral contract only one of the parties has an obligation
Bilateral contract both parties has an obligation

Limitations upon the right to contract

Contrary to law The parties to a contract cannot agree to an object or purpose which
is against the law.

A, for and in consideration of P1,000.00, entered into a contract with B whereby the
latter agreed to murder C.
Against morals No contact may be entered into which is against virtuous conduct
and ethical precept.
A entered into a contract with B whereby for and in consideration of P1,000.00 the
latter agrees to live with A without the benefit of marriage.

Contrary to good customs The contracting parties are prohibited from entering into
contracts which conflict with good and established practice or customs.
Pedro and Maria decided to get married on October 10, 2007. Invitations were printed
and distributed to relatives and friends and apparel were purchased including
matrimonial bed. Pedro, however walked out of it and was never heard of again.

Contrary to public order Signifies the public weal which are permanent and essential
in institutions.
An agreement that the creditor can use force or violence to compel the debtor to pay is
contrary to public order.
Contrary to public policy Refers not only to public safety but also to considerations
which are moved by the common good.

A entered into a contract with B whereby A will not enter into any enterprise whatever
in the Philippines. This is against public policy as it is a contract in restraint of trade.


Consent manifested by the meeting of the offer and the

acceptance upon the thing and the cause which are to constitute
the contract.
Object of Contracts it may be things, rights and services
Things must be within the commerce of men, must not be
impossible, either
physical or legally and must be
determinate as to their kind.

Rights may be transmissible or not transmissible. Examples

of these rights are the
right to vote, rights flowing from a
contract of marriage, parental authority, etc.

Cause of Contracts the immediate, direct and

proximate reason which justifies the creation of
an obligation thru the will of the contracting

Classification of Contracts as to its Cause

Onerous Contract the cause is the mutual

undertaking or promise of either of the
contracting parties.

Remunetory Contract the cause is the

service or benefit for which the
remuneration is given.

Gratuitous Contract the cause is the pure

liberality of the giver.

Requisites of a valid cause or consideration

The cause must be in existence.
That the cause must be lawful and not
contrary to law, morals, good customs, public
policy, and
The cause must be true because the
statement of a false cause renders the contract

Reformation is a remedy in equity by means of which a written
instrument is made or construed so as to express or conform to the
real intention of the parties when some error or mistake has been
Requisites of Reformation

There is a valid contract;

The contract is in writing;
The written contract fails to express the true intention of the
The failure of the written contract to express the true
intention is due to mutual mistake, fraud, inequitable conduct,
or accident.

Types of Defective Contracts

Rescissible Contract
Voidable Contracts
Unenforceable Contracts
Void or Inexistent Contracts

Rescissible Contract it has all the essential requisites of a contract

and the contract itself is valid, but by reason of injury or damage to
third persons, such as creditors, the contract may be rescinded.

Voidable Contracts is one that possesses all the essential

requisites of a valid contract, namely, consent, object and cause or
consideration. It is a valid contract until it is annulled.
Unenforceable Contracts a contract is said to be unenforceable
when it cannot be sued upon or enforced in court unless it is
Void or Inexistent Contracts one which is absolutely without
legal force or effect. It is not susceptible of ratification.

Damages is the sum of money which the law awards or imposes
as percuniary compensation, recompense, or satisfaction for an
injury done or a wrong sustained as a consequence either of a
breach of a contractual obligation or a tortious act.

Types of Damages

Actual or Compensatory Damages

Moral Damages
Nominal Damages
Temperate or Moderate Damages
Liquidated Damages
Exemplary or Corrective Damages

Actual or Compensatory Damages damages that cover actual

injury or economic loss. It is intended to put the injured party in
the position he was in prior to the injury. It typically includes
medical expenses, lost wages and the repair or replacement of
Moral Damages includes physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury.

Nominal Damages these are small and trivial sums awarded for
a technical injury due to a violation of some legal right, and as a
consequence of which some damages must be awarded to
determine the right.

Temperate or Moderate Damages Temperate damages are such

damages as are reasonable compensation for the injury. They are
more than nominal damages but less than compensatory damages
and may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of
the case, be proved with certainty.

Liquidated Damages the amount of which has been agreed

upon by the parties or fixed by the judgement of a competent
Exemplary or Corrective Damages damages which are given in
enhancement merely of the ordinary damages on account of
wanton, reckless, malicious, or oppressive character of the acts
complained of.