Law on Obligation

• An obligation is a juridical necessity to give, to do or not to do.
• Obligations are civil or natural.
• Civil obligations give a right of action to compel their performance.
• Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance but authorize the retention of what has been delivered or rendered by reason thereof.
• Essential elements or requisites of an obligation include an active subject, who has the power to demand prestation, also known as the obligee or creditor; a passive subject, who is bound to perform the prestation, also known as the obligor or debtor; object or prestation, which is the promise or particular conduct to be performed in the performance of an obligation, and may consist of giving, doing or not doing a thing; and efficient cause, the tie which binds the parties to the obligation, also known as juridical tie or vinculum juris.
• Sources of obligation include law, contract, quasi-contract, quasi-delict or culpa aquiliana or torts or civil negligence, and crime or delict.
• An obligation to give something which is determinate may require the delivery of the thing, taking care of the thing with the proper diligence of a good father of a family, delivering all accessions and accessories, and paying damages in case of breach of the obligation.
• An obligation to give something which is indeterminate may require the delivery of a thing which must be neither superior nor inferior quality, and paying damages in case of breach of the obligation.
• Diligence required in an obligation may be provided by law, as in the case of common carriers with respect to passengers, or stipulated by the parties.
• Legal tender in the Philippines can be up to P100 in coins like 1 centavo, 5 centavos, 10 centavos, 25 centavos.
• Cession or assignment is the process by which a debtor transfers all his properties in favor of his creditors so that the latter may sell them and apply the proceeds to their credits.
• Legal tender in the Philippines can have unlimited legal tender power in bills like P20, P50, P100, P200, P500, P1,000.
• If there is no stipulation, delivery of a determinate thing is made at the place where the thing was at the time of perfection.
• Application of payment is the designation of the debt to which should be applied when payment is made by the debtor who owes several debts in favor of the same creditor.
• Delivery of an indeterminate thing is made at the domicile of the debtor.
• Condonation or remission is a mode of extinguishing obligation by which the creditor renounces the enforcement of the obligation.
• A check is not a legal tender even if it is a manager’s check.
• Dation in payment or dacion en pago is the mode of extinguishing an obligation whereby the debtor alienates property in favor of the creditor in satisfaction of a monetary obligation.
• Consignation is the deposit of the thing or money due to the proper judicial authorities.
• Legal tender in the Philippines can be up to P1,000 in bills like P1, P5, P10.
• When the check has lost its value because of the fault of the creditor, acceptance of the check is equivalent to payment.
• When the check has been cashed, acceptance of the check is equivalent to payment.
• Acceptance of the check is equivalent to payment when the creditor is in estoppel or the creditor had previously promised accept the check.
• Tender of payment is a manifestation made by the debtor to the creditor of his willingness to comply with his obligation.
• Legal tender in the Philippines refers to the currency which the creditor cannot refuse to accept as payment.
• If there is a stipulation, payment of an obligation is made at the place designated.
• Jointly and severally, mancomunada, individually and collectively, mancomunada simple, mancomunada solidaria are different ways to express the concept of joint liability.
• Indivisible obligation is not susceptible of partial performance and the law provides that the performance of the obligation is indivisible or the contract provides that the performance of the obligation is indivisible.
• Modes of extinguishing an obligation include payment or performance, loss of the thing due, condonation or remission of the debt, confusion or merger of the rights of creditor and debtor, compensation, and novation.
• Divisible obligation is susceptible of partial performance, allowing the debtor to legally perform the obligation by parts and the creditor to demand a single performance of the entire obligation.
• The nullity of the penal clause does not carry with it that of the principal obligation.
• Payment or performance consists in the delivery of a sum of money or a thing, or doing a thing, or not doing something.
• Penal clause is an accessory undertaking to assume greater liability in case of breach.
• When the obligation has for its object the execution of a certain number of days of work, the accomplishment of work by metrical units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible.
• Payment to a third person is not valid, except when the third person is authorized to receive it, when the payment to the third person has redounded to the benefit of the creditor, or when the third person is in possession of the credit and payment was made in good faith.
• Even though the object or service may be physically divisible, an obligation is indivisible if so provided by law or intended by the parties.
• Payment by a third person is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.
• A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with his undertaking.
• Obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible.
• In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary.