Definition of Obligation:
- According to the Civil Code of the Philippines, an obligation is a juridical necessity to give, to do, or not to do (Art. 1156).
- Obligations create a binding force that mandates one or more persons to undertake or refrain from undertaking certain acts.
Elements of an Obligation:
- Active Subject (Creditor/Obligee): The party entitled to demand fulfillment.
- Passive Subject (Debtor/Obligor): The party obliged to perform.
- Object/Prestation: The obligation's subject matter (i.e., to give, to do, or not to do).
- Juridical or Legal Tie: The binding cause or source of the obligation, like a contract or law.
Sources of Obligations (Art. 1157):
- Law: Obligations imposed by law, independent of the will of the parties.
- Contracts: Agreements with the force of law due to the parties' voluntary engagement.
- Quasi-Contracts: Arise when certain lawful, voluntary acts produce obligations.
- Delicts: Obligations arising from crimes or offenses.
- Quasi-Delicts (Torts): Obligations from damage caused by fault or negligence not constituting a criminal offense.
Types of Obligations:
- Pure and Conditional Obligations: Unconditional or conditioned on certain events.
- Obligations with a Period: With a determinate time for fulfillment.
- Alternative and Facultative Obligations: Various modes of performance.
- Joint and Solidary Obligations: Divisible or indivisible obligations among parties.

To Give:
- Obligations involving the delivery of a thing.
- The obligor must take care of the thing as a good father of a family (Art. 1163).
To Do:
- Involves undertaking a certain act.
- Non-performance allows the creditor to obtain performance at the debtor’s expense.
Not to Do:
- Obliges the debtor to refrain from specific actions.
- Breach allows the creditor to demand the undoing of the act at the debtor’s expense.

Payment or Performance:
- General Rule: Delivery and payment extinguish obligations.
- Special Rules: Partial payments or performances may not extinguish the whole obligation.
Loss of the Thing Due:
- When the specific thing is lost or destroyed without fault of the obligor, the obligation is extinguished (Art. 1262).
Condonation or Remission:
- Voluntary release by the creditor of the obligation of the debtor.
Confusion or Merger:
- When the qualities of the creditor and debtor are merged in one person.
Compensation:
- When two parties owe each other and offset their obligations mutually.
Novation:
- Replacing an old obligation with a new one, either by changing the object, principal, or parties.

Definition of Contract (Art. 1305):
- A meeting of minds between two or more persons whereby one binds oneself, with respect to the other, to give something or render some service.
Essential Requisites of Contracts (Art. 1318):
- Consent: Agreement between the parties.
- Object: The subject matter must be within the commerce of men.
- Cause: The consideration or reason for the contract.
Stages of a Contract:
- Preparation or Negotiation: Parties propose terms.
- Perfection or Birth: Parties agree on the contract's terms.
- Consummation: Performance and fulfillment of the contract.
Classifications of Contracts:
- As to Perfection: Consensual, real, and formal contracts.
- As to Cause: Onerous, gratuitous, and remunerative contracts.
- As to Parties: Unilateral (one party is bound) and bilateral (both parties are bound).
Freedom to Contract:
- Contracts can be created as long as they are not contrary to law, morals, good customs, public order, or public policy.

Contract of Sale:
- Ownership is transferred upon delivery of the thing sold and payment of the price.
Lease of Things or Services:
- Lease of Things: A person binds oneself to give enjoyment of a thing for a certain period in exchange for price.
- Lease of Services: One party binds oneself to render a service for a price.
Agency:
- A person binds oneself to render some service or do something on behalf of another with the latter's consent.

Rescissible Contracts:
- Valid but can be rescinded due to external circumstances, such as prejudice to creditors.
Voidable Contracts:
- Valid until annulled due to defects in consent, like fraud, intimidation, or incapacity.
Unenforceable Contracts:
- Cannot be enforced unless ratified due to a lack of authority, lack of proper formalities, or absence of legal representation.
Void Contracts:
- No legal effect due to a violation of essential legal requirements, such as those contrary to public policy.

Specific Performance:
- Demanding actual fulfillment of the contract’s obligations.
Rescission:
- Canceling the contract due to substantial breach.
Damages:
- Claim for compensation due to breach:
  - Actual Damages: Compensate actual losses.
  - Moral Damages: Awarded for emotional suffering.
  - Exemplary Damages: To deter similar conduct.
  - Nominal Damages: Symbolic amount when no actual loss.