Introduction to Law 1
Law: Any rule of action or any sense of uniformity
- Not only for activities but also the
movements/motions
o All objects (inanimate/animate)
General Divisions
1. Strict legal sense
a. Promulgated and enforced by law
b. State law
2. Non-legal sense
a. Vice-versa
b. Divine, natural, moral, physical law
State, divine, natural, moral law apply to men as
rational beings
Physical law operates on all things
Divine Law: Concept of sin and salvation
- Promulgated by God
o Ten commandments
o Differs from what one believes
- Sanction is rewards/punishments in the life
to come
Natural law: internal dictates of reason alone
- Moral nature of man
o Simply good, bad, or evil
o Sense of justice, fairness, and
righteousness
- Impressed in man at the very moment of
being
- REASONABLE BASIS of state law
Moral Law: Totality of norms of good and right
conduct
- Collective sense of right and wrong
o Good for the welfare of the group
- Disregarded: public displeasure, contempt,
indignation
- Conformity: pleasure, approval, joy
- Varies w/ changing times
- INFLUENCES/SHAPES state law
Physical Law: laws of physical science
- Course of nature
- Certain results follow certain causes
State Law: positive, municipal, civil, imperative law
- Only law enforced by the state
Concepts of State Law
1. General sense
a. Mass of obligatory rules for the
purpose of governing the relations of
people in society
2. Specific Sense
a. A rule of conduct, just, obligatory,
promulgated by legitimate authority,
and of common observance and
benefit
Characteristics of SL
1. Rule of conduct: be done/not be done
2. Obligatory: duty to obey
3. Promulgated by legitimate authority
4. Common observance and benefit: intended
by man to serve man; all for the benefit of all
Functions of SL
1. Need for internal order is constant as need
for external defense
2. Life without basic laws would be solitary,
nasty, brutish, and short
3. No society can last w/o rules of social order
binding on its members
Sources of SL
1. Constitution
a. Fundamental, supreme, highest law
b. Binding on all individual citizens and
all agencies
c. Laws inconsistent with const. are
void
2. Legislation
a. Enacted, statute laws
b. Laws by LGUs
3. Administrative/ Executive orders

a. Issued by admin officials under
legislative auth.
b. Valid only if not contrary to laws
4. Judicial decisions/ Jurisprudence
a. Decisions of the Supreme Court
i. Doctrine of precedent (stare
decisis)
1. Binding on all subordinate
courts
b. SC may reverse/modify any previous
ruling
5. Custom
a. Habits through long usage are
approved by society as binding rules
of conduct
6. Other Sources
a. Foreign tribunals, opinions of text
writers
i. Supplementary and not binding
on courts
“No judge or court shall decline to render judgement
by reason of the silence, obscurity or insufficiency of
laws” (Art. 9, Civil Code)
Law as means of social control – control of social
behavior that affects others
Ex. Churches, trade assn., labor unions, etc.
You may leave the org. and sanctions are
more complex (ex. Expulsion)
In law, you cannot leave and sanction is
imprisonment or deportation
Organs of Social Control
I. Regular Courts: Hierarchy of courts
1. SC
2. Court of Appeals
3. Regional Trial Court
4. Metropolitan TC
5. Municipal Circuit TC
II. Special Courts
1. Sandiganbayan
i. Special anti-graft court
2. Court of Tax Appeals
Introduction to Law 2
III. Quasi-judicial agencies: admin bodies under
exec. Branch performing quasi-judicial func.
1. Natl Labor Relations Commission
2. SEC
3. LTFRB etc.
Involve the settlement/adjudication of
controversies or disputes
Classification of Law
I. As to its purpose
1. Substantive Law:
i. creating, defining, regulating
rights/duties
ii. Public/private
2. Adjective: manner/procedure rights
may be enforced
i. Remedial/procedural law
ii. Governed by Rules of Court;
promulgated by SC
II. As to its subj. matter
1. Public Law: regulates rights/duties
arising from relationship of State to
people
i. Criminal law
ii. Intl. Law, Const. law, Admin.
law, Criminal procedure
2. Private Law: regulates relationship
of individuals w/ one another
i. Law on Oblicon
ii. Civil law, Commercial law,
Civil Procedure
1. Means by which
private rights may be
enforced
Law of Oblicon (RA No. 386)
“The law of obligations and contracts is the body of
rules which deals w/ the nature and sources of
obligs. And the rights and duties arising from
agreements and the particular contracts” (Art. 1307)
- Took effect on December 7, 1889
- Divided into 4 books
Ignorance of law excuses no one from
compliance therewith (Art. 3, Civil Code)
Everyone is conclusively presumed to know the law.
 General Provisions of Obligations 1

Obligation: obligatio: tying/binding Requisites of a Legal Wrong:

- One is bound in favor of another to render 1. Legal right
something 2. Legal oblig
o To give, to do, not to do 3. Act/omission by the latter

An obligation is a juridical necessity to give, to An oblig cannot exist w/o a corresponding right in
do or not to do. – Art. 1156 favor of another, vice-versa

Civil Code definition: oblig in its passive aspect Kinds of oblig acc. to subj. matter
- Merely stresses the duty of the debtor (D) or 1. Real oblig: to give
obligor (He who gives doing and not doing) a. Subj matter is a THING
2. Personal oblig: ACT to be done
Juridical necessity: courts of justice may be called a. Positive personal oblig: to do
in case of non-compliance to enforce fulfillment b. Negative personal oblig: not to do
- D must comply whether he likes it or not
o Unless not recognized by law as Obligations arise from: (1) Law; (2) Contracts;
binding (3) Quasi Contracts; (4) Acts or omissions
punished by law; (5) Quasi delicts. – Art. 1157
Civil oblig Natural Oblig
Give to the creditor (C) Based on equity and Sources of oblig
rights under the law to natural law 1. Law: Imposed by law itself
enforce performance in 2. Contracts: from stipulation of parties
courts of justice 3. Quasi-contracts: from lawful, voluntary,
unilateral acts
Essential requisites of an oblig a. There is no consent
1. Passive subj: D b. No one shall be unjustly
2. Active subj: C enriched/benefited at the expense of
3. Object/prestation: subj. matter another – Art. 2142
4. Juridical/legal tie: source of oblig 4. Delicts (Crimes): from civil liability
a. Consequence of a criminal offense
Form of obligs 5. Quasi-delicts (Torts)
1. Oral a. From damage caused to another
2. Writing through an act/omission
3. Partly oral/writing b. Fault/negligence
Law does not require any form of oblig from i. no contractual relation
contracts for their validity
Classification of Sources
Obligation Right Wrong From Law From Private acts
Act/performance Power a Violation of Licit acts Illicit acts
law will enforce person has the legal right Law Contracts Delicts
under the law of another Quasi-contracts Quasi-delicts
 General Provisions of Obligations 2

Obligations derived from law are not presumed. Civil obligations arising from criminal offenses
Only those expressly determined in this Code shall be governed by the penal laws, subject to
or in special laws are demandable, and shall be the provisions of article 2177, and of the
regulated by the precepts of the law which pertinent provisions of Chapter 2, Preliminary
establishes them; and as to what has not been Title, on Human Relations, and of Title XVIII of
foreseen’ by the provisions of this Book. – Art this Book, regulating damages – Art. 1161
1158
Civil liability from Delicts
Legal obligs to be demandable; they must be clearly 1. Criminally liable: Civilly liable for damages
set forth in the law (i.e., Civil Code/special laws) 2. Not Criminally liable: Civilly liable
a. Fails to pay contractual debt
Obligations arising from contracts have the b. Negligent damage to other’s property
force of law between the contracting parties
and should be complied with in good faith – Art. Scope of Civil liability
1159 1. Restitution
a. making good of or giving an
Contractual obligs: valid and enforceable equivalent for some injury
- Contract: one binds himself to give 2. Reparation for the damage caused
something or render some service 3. Indemnification for consequential damages
- Not superior to the law
o Invalid if it is contrary to law Obligations derived from Quasi-delicts shall be
- May be valid but not enforceable governed by the provisions of Chapter 2, Title
o Unauthorized contracts XVII of this Book, and by special laws – Art.
o Do not comply with statute of frauds 1162
o Where both parties are incapable of
giving Requisites of a quasi-delict
- Breach of contract: a party fails/refuses to 1. Act or omission
comply w/o legal reason/justification 2. Fault or negligence
- Compliance in good faith: performance with 3. Damage caused
sincerity and honesty is observed 4. Direct cause and effect relationship betw act
and damage
Obligations derived from quasi-contracts shall 5. No pre-existing contractual relation
be subject to the provisions of Chapter 1, Title
XVII of this Book. – Art. 1160 Delict Quasi-delict
w/ criminal intent Only negligence
Kinds of Quasi-contracts Purpose is punishment Concerns private-
1. Negotiorum gestio: voluntary mgt. of intrest
property w/o the knowledge of another Civil and Criminal Only Civil Liablity
2. Solutio indebiti: unduly delivered through Liability
mistake; no right to receive No compromised Can be compromised
3. Other examples Guilt proven w/o Negligence proved by
a. Milk placed at your door and you unreasonable doubt great weight of
should pay if you drink evidence
 Nature and Effect of Obligations 1

Every person obliged to give something is also
obliged to take care of it with the proper
diligence of a good father of a family, unless
the law or stipulation of the parties requires
another standard of care – Art. 1163
The creditor has a right to the fruits of the thing
from the time the obligation to deliver it arises.
However, he shall acquire no real right over it
until the same has been delivered to him – Art.
1164

Specific/Determinate Generic/Indeterminate Kinds of fruits

physically segregated class/genus 1. Natural Fruits: products of soil, animals
others of the same 2. Industrial Fruits: produced by lands through
class cultivation/labor
Cannot be substituted Can be given any of the 3. Civil Fruits: by virtue of juridical relation
without the consent of same class as long as it
C is of the same kind Right of C to the fruits
- Entitled from time the oblig to make delivery
Duties of D in oblig to give a determinate thing arises
1. Preserve the thing: incidental duty to take
care When oblig to deliver fruits arises
a. Diligence of a good father of a family 1. Perfection of the contract: meeting of the
i. Ordinary care minds
b. Another standard of care 2. If subj. to a suspensive cond./period
i. Common carrier a. The fulfillment of cond.
ii. Extraordinary care needed b. Arrival of the term
iii. May stipulate if less or more 3. In contract of sale
than that of a good father a. perfection of contract
c. If due by a fortuitous event (force 4. In oblig to give arising from law
majeure) a. Determined by specific provisions
i. D is not liable for his failure
d. To insure thing would subsist in the Personal right Real right
same condition as when it was Right of C to demand Right of a person over
contracted from D a specific thing
2. Deliver the fruits of the thing Definitive active subj Definitive active subj
3. Deliver the accession and accessories Definitive passive subj
4. Deliver the thing itself Enforceable only Directed against the
5. Answer for damages in case of non- against a particular whole world
fulfillment/breach person

Duties of D in oblig to give a generic thing “He shall acquire no real right over it until the same
1. Deliver which is of the quality intended by has been delivered to him,”
parties - When there is no delivery yet
a. Consider purpose o Action of C is…
2. Liable for damages in case of fraud,  Specific performance
negligence, delay, or contravention of the  Rescission of the oblig
tenor thereof  NOT RECOVERY

When what is to be delivered is a determinate
thing, the creditor, in addition to the right
granted him by Art. 1170, may compel the
debtor to make the delivery
If the things is indeterminate or generic, he may
ask that the obligation be complied with at the
expense of the debtor
If the obligor delays, or has promised to deliver
the same thing to two or more persons who do
not have the same interest, he shall be
responsible for fortuitous event until he has
effected the delivery – Art. 1165
Remedies of C in Real Oblig
I. In specific real oblig
1. Specific performance
i. w/ right to indemnity for
damages
2. Rescission/cancellation
i. w/ right to recover damages
3. Payment of damages only
i. When it is the only feasible
remedy
C cannot use violence/force upon D. C must bring
the matter to court
II. In generic real oblig
1. Can be performed by a third person
2. Has the right to recover damages in
case of breach
Fortuitous event does not exempt D from
responsibility when… (refers to determinate
things)
1. If D delays
2. If D promises to deliver to same thing to two
or more persons
The obligation to give a determinate thing
includes that of delivering all its accession and
accessories, even though they may not have
been mentioned. – Art 1166
Nature and Effect of Obligations 2
Accession: fruits of a thing/additions/improvements
Accessory: things joined/included for better use/
completion
Accession Accessory
Not necessary to the Must go together with
principal the principal
Air-conditioner of a car Key of a house
Stock dividends Bow of a violin
General rule, all accessories and accessions are
included in oblig to deliver a determinate thing
unless stipulated
- Accessory follows the principal
If a person obliged to do something fails to do
it, the same shall be executed at his cost.
This same rule shall be observed if he does it in
contravention of the tenor of the obligation.
Furthermore, it may be decreed that what has
been poorly done be undone. – Art. 1167
Remedies of C in Positive Personal oblig
I. D fails to comply w/ his oblig to do
1. Oblig performed by C or another at
D’s expense
2. Recover damages
II. Thing poorly done be undone if it is still
possible to undo what was done
A personal real oblig to deliver a GENERIC thing
can be done by a third person.
D can be compelled to deliver a SPECIFIC thing
BUT not a SPECIFIC PERFOMANCE
- Involuntary servitude is prohibited under our
Const.
If personal qualifications are determining motive,
performance of the same by another is impossible
then, INDEMNIFICATION FOR DAMAGES is the
only feasible remedy
 Nature and Effect of Obligations 3

When the obligation consists in not doing, and 3. Compensatio morae: delay in reciprocal
the obligor does what has been forbidden him, oblig
it shall be undone at his expense – Art. 1168 Delay is impossible in negative personal oblig (not
to do)
Remedies of C in Negative personal oblig
1. Undoing of the forbidden thing plus Requisites of Mora Solvendi (Delay of D)
damages 1. Failure of D to perform on the date
D cannot be guilty of delay 2. Demand by C (judicial/extrajudicial)
3. Failure of D to comply with demand
Those obliged to deliver or to do something
incur in delay from time the oblige judicially or Effects of Delay
extrajudicially demands from them the Mora Solvendi Mora Compensatio
fulfillment of their obligation. accipiendi morae
D is guilt of C is guilty of Both are guilty
However, the demand by the creditor shall not breach breach of breach
be necessary in order that delay may exist: Liable to C for Liable to D for No default on
interest/damages damages part of both
(1) When the obligation or the law expressly parties
so declares; or Determinate: Bears risk of
(2) When from the nature and the Liable for loss of the
circumstances of the obligation it fortuitous event things due
appears that the designation of the time unless maprove
when the thing is to be delivered or the na same lang
service is to be rendered was a mangyayari kahit
controlling motive for the establishment nadelay
of the contract; or Generic: D is not liable
(3) When demand would be useless, as compelled to for interest from
when the obligor has rendered it beyond deliver same C’s delay (if
his power to perform. kind/liable for money)
In reciprocal obligations, neither party incurs in damages
delay if the other does not comply or is not D may
ready to comply in proper manner with what is deposit/consign
incumbent upon him. From the moment one of the oblig in
the parties fulfills his obligation, delay by the court and be
other begins – Art. 1169 released

Ordinary Delay: failure to perform an oblig on time
Legal Delay: default/mora: failure constitutes
breach
Kinds of Delay/default
1. Mora solvendi: delay of D to fulfill
2. Mora accipiendi: delay of C to accept
When demand is not necessary to put D in
delay
1. When the oblig so provides
a. Mere fixing of period is not enough
(arrival just makes it demandable)
b. Must use “D will be in default” / “I will
be liable for damages”

2. When the law so provides
a. Taxes
3. When time is of the essence
a. Need not state that time is of
essence; intent is enough
b. Ex. Delivery of balloons for wedding
4. When demand would be useless
5. When there is performance by a party in
reciprocal oblig
a. If one party is ready to fulfill oblig;
delay begins
Those who in the performance of their
obligations are guilty of fraud, negligence, or
delay and those who in any manner contravene
the tenor thereof, are liable for damages. – Art.
1170
Grounds for Liability
1. Fraud (deceit/dolo)
a. Intentional evasion
b. Implies malice/dishonesty
c. Incidental fraud (dolo incidente)
i. Committed after the contract
d. Causal fraud (dolo causante)
i. Vitiates consent before
perfection of the contract
2. Negligence (fault/culpa)
a. Voluntary act/omission
b. No bad faith/malice
3. Delay (mora)
4. Contravention of the terms of the oblig
a. Violation of terms and cond.
b. Contravention must not be due to
force majeure
Fraud Negligence
Deliberate intention No intention
Waiver of liability is not May be allowed
allowed
Must be clearly proved Is presumed
Liab. Cannot be Liab. May be reduced
mitigated/reduced acc. to instances
Nature and Effect of Obligations 4
Responsibility arising from fraud is
demandable in all obligations. Any waiver of an
action for future fraud is void. – Art. 1171
Court is not given the power to mitigate/reduce the
damages to be awarded
- Fraud is evil and serious
Fraud may be past/future
- Waiver for future fraud is VOID
o Makes oblig illusory
- Waiver for past fraud is VALID
o Considered as an act of
generosity/magnanimity on the part
of the party who is the victim of fraud
o Act of forgiveness
o Intention of oblige to give up his right
against the obligor
Responsibility arising from negligence in the
performance of every kind of obligation is also
demandable, but such liability may be
regulated by the courts, according to the
circumstances. – Art. 1172
Negligence is a question which must necessarily
depend upon the circumstances of each particular
case
- Court may inc/dec the damages recoverable
Validity of waiver from Negligence
1. Future negligence may be allowed EXCEPT
when nature of oblig REQUIRES
EXTRAORDINARY DILIGENCE
a. Ex. Common carriers
2. When negligence shows bad faith=FRAUD
a. Waiver=VOID
Kinds of negligence acc. to the source of oblig
1. Contractual negligence (culpa contractual)
a. Not a source of oblig
b. Just makes D liable for damages
2. Civil negligence (culpa acquiliana)
a. Source of an oblig
b. From quasi-delict/tort

3. Criminal negligence (culpa criminal)
a. From delict/crime
b. Aggrieved party may choose
i. Criminal action
ii. Civil action for damages
iii. NOT BOTH for same ACT
“When the plaintiff’s own negligence was the
immediate and proximate cause of his injury, he
cannot recover damages. But if his negligence was
only contributory, the immediate and proximate
cause of the injury being the defendant’s lack of due
care, the plaintiff may recover damages, but the
courts shall mitigate the damages awarded”
In other words, to be entitled to damages, it is not
required that the negligence of the defendant should
be the cause of the damage
The fault or negligence of the obligor consists
in the omission of that diligence which is
required by the nature of the obligation and
corresponds with the circumstances of the
person, of the time and of the place. When
negligence shows bad faith, the provisions of
articles 1171, and 2201, paragraph 2, shall
apply.
If the law or contract does not state the
diligence which is to be observed in the
performance, that which is expected of a good
father of a family shall be required. – Art. 1173
Fault/negligence: failure to observe for the
protection of the interests of another person
whereby such person suffers injury
Factors to be considered in negligence
1. Nature of the obligation
2. Circumstance of the person
3. Circumstance of time
4. Circumstances of the place
Nature and Effect of Obligations 5
Damages is to place the innocent party in the same
position he would have occupied if oblig was
performed
Kinds of diligence required
1. Agreed upon by the parties
2. Required by the law
a. Extraordinary diligence
i. Common carriers
3. Expected of a good father of a family
Except in cases expressly specified by the law,
or when it is otherwise declared by stipulation,
or when the nature of the obligation requires
the assumption of risk, no person shall be
responsible for those events which could not
be foreseen, or which though foreseen, were
inevitable. – Art. 1174
Fortuitous event: cannot be foreseen; inevitable
- Independent of the will of D
- Acts of Man: war, fire, robber, murder
- Acts of God: earthquake, flood, rain etc.
Kinds of fortuitous events
1. Ordinary: common, can be foreseen
a. rain
2. Extra-ordinary: uncommon
a. Earthquake, fire, war, pestilence
Requisites of a fortuitous event
1. Independent of the human will
2. Could not be foreseen; inevitable if foreseen
3. Renders D impossible to comply
4. D must be free from any participation of
negligence
Absence of 1 prevents D from exemption to
liability
Mere inability/poverty is not an excuse
Difficulty to foresee is not an excuse
MUST BE IMPOSSIBLE TO AVOID

Not liable for fortuitous events EXCEPT WHEN
1. Expressly specified by law
a. D is guilt of fraud, negligence, delay,
or contravention of the tenor of oblig
b. D has promised to deliver the same
thing to 2 or more persons w/ diff
interests
c. Oblig to deliver a specific thing arises
from a crime
d. The thing to be delivered is generic
2. Declared by stipulation
3. Nature of the oblig requires the assumption
of risk
a. Insurance
Usurious transactions shall be governed by
special laws. – Art. 1175
Simple loan/mutuum: contract where one delivers
to another, money/consumable thing, upon the
cond. that the same amount of same kind, and qual
is paid
Usury: contracting for receiving interest in excess of
the amount allowed by law
Requisites to recover interest
1. Expressly stipulated
2. Must be in WRITING
3. Interest must be lawful
Stipulation of usurious interest is VOID
The receipt of the principal by the creditor,
without reservation with respect to the interest,
shall give rise to the presumption that said
interest has been paid.
The receipt of a later installment of a debt
without reservation as to prior installments,
shall likewise raise the presumption that such
installments have been paid. – Art. 1176
Presumption: inference of a fact from its usual
connection which is known and proved
Nature and Effect of Obligations 6
Kinds of Presumption
1. Conclusive: cannot be contradicted
2. Disputable: can be contradicted upon
presentation of proof
When Presumption do not apply:
1. With reservation as the interest
2. Receipt w/o indication of particular
installment paid
a. Not enough na dated lang
3. Receipt for a part of the principal
4. Payment of taxes
a. No presumption that prev. taxes
have been paid
5. Non-payment proven
a. Presumption cannot prevail over a
proven fact
The creditors, after having pursued the
property in possession of the debtor to satisfy
their claims, may exercise all the rights and
bring all the actions of the latter for the same
purpose, save those which are inherent in his
person; they may also impugn the acts which
the debtor may have done to defraud them. –
Art. 1177
Remedies available to C for satisfaction of their
claims
1. Exact fulfillment w/ right to damages
2. Pursue the leviable property of D
3. Exercise all rights and bring all actions of D
a. Right to collect from D to D
4. Ask the court to rescind/impugn
acts/contracts which D may have done to
defraud them
Subject to the laws, all rights acquired in virtue of an
obligation are transmissible, if there has been no
stipulation to the contrary. – Art 1178
All rights are transmissible except when:
1. Prohibited by law (contract of partnership,
agency, commodatum)
 Nature and Effect of Obligations 7

2. Prohibited by stipulation of the parties

In case of death,
1. Goes to estate first
2. Only then would the kin be subjected to pay

Rights are transmissible because instead of looking

at it as an obligation to obligation; the nature is
deconstructed and then incapsulates the essence
where it starts and needs to be finished as a result
of the set of obligations associated with the person.

Every obligation whose performance does not
depend upon a future or uncertain event, or
upon a past event unknown to the parties, is
demandable at once.
Every obligation which contains a resolutory
condition shall also be demandable, without
prejudice to the effects of the happening of the
event. – Art. 1179
Pure Oblig
- Not subj to any cond. and no specific date
Conditional Oblig
- Subj. to the fulfillment of a cond.
Characteristics of a cond.
1. Future and uncertain
2. Past but unknown
3. Must not be impossible
Principal kinds of oblig
1. Suspensive cond.
- Demandability until the happening of the
uncertain event which constitutes the
cond.
- Fulfilled; oblig arises
- Mere hope
2. Resolutory cond.
- Fulfillment will extinguish an oblig.
- Possibility of termination
An oblig is demandable at once when….
1. Pure (Art 1179, par.1)
2. Subj to a Resolutory cond. (par.2)
3. Subj to a resolutory period (Art 1193 par.3)
a. A day certain is understood to be that
which must necessarily come,
although it may not be known when.
Past event cannot be said to be a cond.
Unless knowledge acquired in the future of a past
event is unknown to the parties.
Pure and Conditional Obligations 1
When the debtor binds himself to pay when his
means permit him to do so, the obligation shall
be deemed to be one with a period, subject to
the provisions of Article 1197. – Art. 1180
Period: Future and certain event
Duration of period depend on debtor when…
1. Debtor promises to pay when his means
permit him to do so
a. Court shall affix time if parties cannot
agree
2. Other cases:
a. Little by little
b. As soon as possible
c. From time to time
d. At any time I have the money
e. In partial payments
f. When I am in a position to pay
In conditional obligations, the acquisition of
rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the
happening of the event which constitutes the
condition. – Art. 1181
Acquisition of Rights
Suspensive cond. Resolutory cond.
If cond. does not take Happening of event
place an it is certain produces
that it will not be fulfilled extinguishment of
then no cond. oblig rights already acquired
would seem to have
existed
When the fulfillment of the condition depends
upon the sole will of the debtor, the conditional
obligation shall be void. If it depends upon
chance or upon the will of a third person, the
obligation shall take effect in conformity with
the provisions of this Code. – Art. 1182
 Pure and Conditional Obligations 2

Classifications of Conditions
I. As to effect: Sole will of debtor
a. Suspensive: rises Debtor is naturally
b. Resolutory: extinguishes interested in its
II. As to form fulfillment
a. Express: clearly stated VALID
b. Implied: inferred *same position as creditor during suspensive
III. As to possibility
a. Possible b. Casual: will of third person VALID
b. Impossible c. Mixed: partly chance and third pers.
i. Physically: nature of things Partly will of debtor Partly will of third
ii. Legally: contrary to law, Debtor may still not VALID
morals, good customs, public comply
order/policy Same treatment as sole
Effects of Impossible cond. will of debtor
Cond. Oblig is VOID PURE AND VALID
If cond. oblig depends Cond. is NEGATIVE VOID
on the impossible cond. “not to do”
Cond. may not be given Impossible conditions, those contrary to good
an impossible thing customs or public policy and those prohibited
by law shall annul the obligation which
AFFECTED oblig is Only cond. is VOID depends upon them. If the obligation is
VOID divisible, that part thereof which is not affected
If divisible If oblig is preexisting by the impossible or unlawful condition shall
be valid. – Art. 1183
IV. As to cause/origin
a. Potestative: sole will of one partner The condition not to do an impossible thing shall be
considered as not having been agreed upon.
If Suspensive
Sole will of debtor Sole will of creditor Impossibility already Impossibility rises
Easily demandable Cond. can be void if existed after creation of
Pwedeng di gawin preexisting cond. exists oblig.
cond. to not be liable ART.1183 Art. 1266
No burden/juridical tie VALID VOID If no fault of obligor
to debtor then debtor released

VOID The debtor in obligations to do shall also be

released when the prestation becomes legally
REMEMBER: Art. 1156. An obligation is a juridical or physically impossible without the fault of the
necessity to give, to do or not to do obligor. – Art. 1266
 Pure and Conditional Obligations 3

The condition that some event happen at a Constructive fulfillment of …

determinate time shall extinguish the obligation Suspensive cond. Resolutory cond.
as soon as the time expires or if it has become 1. Cond. is Same applies with
indubitable that the event will not take place. – suspensive respect to debtor who
Art. 1184 2. Obligor is bound to return what
prevents he has received upon
The condition that some event will not happen fulfillment the fulfillment of a cond.
at a determinate time shall render the 3. he acts
obligation effective from the moment the time voluntarily Art 1190
indicated has elapsed, or if it has become *Not required to act
evident that the event cannot occur. – Art. 1185 with malice/fraud as
long as purpose is to
If no time has been fixed, the condition shall be prevent
deemed fulfilled at such time as may have probably
been contemplated, bearing in mind the nature of When the conditions have for their purpose the
the obligation. extinguishment of an obligation to give, the
parties, upon the fulfillment of said conditions,
Positive Negative cond. shall return to each other what they have
(Suspensive) cond. received. – Art. 1190
Happening of an event Event will not happen at
at a determinate time a determinate time The effects of a conditional obligation to give,
once the condition has been fulfilled, shall
Extinguished when: Effective and Binding retroact to the day of the constitution of the
- Time expires when: obligation. Nevertheless, when the obligation
(w/o event - Time expires imposes reciprocal prestations upon the
taking place) (w/o event parties, the fruits and interests during the
- No question taking place) pendency of the condition shall be deemed to
event will not - No question have been mutually compensated. If the
take place event will not obligation is unilateral, the debtor shall
take place appropriate the fruits and interests received,
unless from the nature and circumstances of
Art. 1184 Art 1185 the obligation it should be inferred that the
*if no time is fixed, circumstance shall be intention of the person constituting the same
considered was different. – Art. 1187

The condition shall be deemed fulfilled when In obligations to do and not to do, the courts shall
the obligor voluntarily prevents its fulfillment. – determine, in each case, the retroactive effect of the
Art. 1186 condition that has been complied with.
 Pure and Conditional Obligations 4

Retroactive effects of fulfillment of obligation to give, the following rules shall be

Suspensive cond. observed in case of the improvement, loss or
In oblig to give In oblig to do/not do deterioration of the thing during the pendency
Oblig is DEMANDABLE NO FIXED RULE of the condition:
upon fulfillment of
cond. Courts are empowered (1) If the thing is lost without the fault of the
by sound discretion debtor, the obligation shall be extinguished;
Oblig will then retroact
to the date of If intention is… (2) If the thing is lost through the fault of the
constitution Extinguish: retroact debtor, he shall be obliged to pay damages; it
Gratis (favor): not is understood that the thing is lost when it
perishes, or goes out of commerce, or
disappears in such a way that its existence is
unknown or it cannot be recovered;
Retroactive effects as to fruits/interests in
oblig to give (3) When the thing deteriorates without the
In Reciprocal oblig In Unilateral oblig fault of the debtor, the impairment is to be
No retroactivity Usually no retroactivity borne by the creditor;
(gratuitous)
Deemed to have been (4) If it deteriorates through the fault of the
mutually compensated Fruits belong to debtor debtor, the creditor may choose between the
unless intention is diff rescission of the obligation and its fulfillment,
with indemnity for damages in either case;

The creditor may, before the fulfillment of the (5) If the thing is improved by its nature, or by
condition, bring the appropriate actions for the time, the improvement shall inure to the benefit
preservation of his right. of the creditor;

The debtor may recover what during the same (6) If it is improved at the expense of the
time he has paid by mistake in case of a debtor, he shall have no other right than that
suspensive condition. – Art. 1188 granted to the usufructuary. – Art. 1189

Rights of creditor Rights of debtor Art. 1189 applies only if:

May go to court to Recover payments 1. Oblig is a REAL oblig.
prevent the made by mistake 2. Obj. is specific/determinate thing
alienation/concealment 3. Obj is subj. to susp. cond.
of the property the Solutio indebiti 4. Cond. is fulfilled
debtor is bound to No one shall enrich 5. There is a loss/deterioration/improvement of
deliver himself at the expense the thing during the pendency of the
of another condition

V. As to mode
When the conditions have been imposed with
a. Positive: perf. of act
the intention of suspending the efficacy of an
b. Negative: omission
 Pure and Conditional Obligations 5

VI. As to numbers upon the fulfillment of said conditions, shall return to

a. Conjunctive: all cond. should be each other what they have received.
fulfilled In case of the loss, deterioration or improvement of
b. Disjunctive: one or some fulfilled the thing, the provisions which, with respect to the
VII. As to divisibility debtor, are laid down in the preceding article shall
a. Divisible: open to partial perf. be applied to the party who is bound to return.
b. Indivisible: cannot be
As for the obligations to do and not to do, the
Kinds of Loss provisions of the second paragraph of Article 1187
1. Physical Loss shall be observed as regards the effect of the
a. Thing perishes extinguishment of the obligation. – Art. 1190
2. Legal Loss
a. goes out of commerce Effects of fulfilling resolutory cond.
b. becomes illegal In oblig to give In oblig to do/not do
3. Civil Loss Return to status quo Depends on the court
a. Disappears and existence is
unknown Oblig of mutual
b. Cannot be recovered restitution is absolute
Rules in case of Loss
LOSS w/o debtor’s LOSS w/ DF If thing to be returned is
fault legally with third pers.
Oblig is extinguished Demand damages Then remedy is
restitution against third
Art 1174
Not liable for a In oblig to give susp.
fortuitous event cond., retroactivity
Deterio w/o DF Deterio w/ DF admits exceptions
Suffer for yourself Rescission accdg to if oblig is
Fulfillment of oblig unilateral or bilateral
w/damages The fulfillment of a resolutory cond. converts the
Improvement by Improvement at creditor into debtor, vice versa
nature/time expense of debtor
Benefit goes to you Fruits enjoyed by The power to rescind obligations is implied in
debtor reciprocal ones, in case one of the obligors
should not comply with what is incumbent
Usufructuary-right to upon him.
enjoy the use and fruits
of a thing belonging to The injured party may choose between the
another fulfillment and the rescission of the obligation,
(temporary only) with the payment of damages in either case. He
may also seek rescission, even after he has
When the conditions have for their purpose the chosen fulfillment, if the latter should become
extinguishment of an obligation to give, the parties, impossible.
 Pure and Conditional Obligations 6

Rescission without judicial decree

The court shall decree the rescission claimed,
unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to
the rights of third persons who have acquired
the thing, in accordance with Articles 1385 and
1388 and the Mortgage Law. – Art. 1191
Kinds of oblig acc. to the person obliged
1. Unilateral: only 1 party is obliged to comply
2. Bilateral: debtors and creditors to both each
other
a. Reciprocal
b. Non-reciprocal: perf. is not
dependent upon the simultaneous
perf. by the other
1. Automatic rescission is expressly stipulated
2. Contract is still executory
a. No perf yet by both parties
b. One is ready and willing
i. Can rescind
Both are guilty of breach when….
1. First infractor known…
a. One violated and also other
b. Liability of first should be reduced
2. First infractor cannot be determined
a. Contract EXTINGUISHED
b. Bear own damages

Remedies for reciprocal

1. Fulfillment of specific perf w/ damages
2. Rescission w/ damages
a. Must check if reason is for
i. Damage/lesion
ii. Contract cancellation
Court may grant guilty party term for perf only
when…
1. Guilty party is willing to comply but needs
time and not because he refuses

Limitations of Rescission…
1. Must resort to court
2. Power of court to fix period
3. If the subj matter of oblig is w/ third pers
(who acted in good faith)
a. Then rescission not available
4. There should be substantial violation of
contract
5. Right to rescind may be waived
 Obligations with a Period 1

Obligations for whose fulfillment a day certain Kinds of Period

has been fixed, shall be demandable only when I. Acc to effect
that day comes. a. Suspensive
b. Resolutory
Obligations with a resolutory period take effect II. Acc to source
at once, but terminate upon arrival of the day a. Legal
certain. i. When for by laws
b. Conventional/voluntary
A day certain is understood to be that which i. When agreed by parties
must necessarily come, although it may not be c. Judicial
known when. i. When fixed by court
III. Acc to definiteness
If the uncertainty consists in whether the day a. Definite
will come or not, the obligation is conditional, i. When fixed/know when to
and it shall be regulated by the rules of the come
preceding Section. – Art. 1193 b. Indefinite
i. Not fixed/not known
Oblig with a period
- Effects are subjected to the expiration/arrival Where the period is NOT FIXED but a PERIOD is
of said period INTENDED, courts usually fix
Period: Future and certain event
- Upon arrival will give rise/terminate an oblig In case of loss, deterioration or improvement of
- Must necessarily come the thing before the arrival of the day certain,
- May not be known (death of a person) the rules in Article 1189 shall be observed. –
Art. 1194
Period Condition
Fulfillment Certain Uncertain Anything paid or delivered before the arrival of
Time Only refers to May be the period, the obligor being unaware of the
future unknown past period or believing that the obligation has
to both become due and demandable, may be
Influence on Merely fixes Causes an recovered, with the fruits and interests. – Art.
oblig time oblig to 1195
exist/cease
Effect when Empowers Invalidates the Art 1195 only applies to oblig TO GIVE
left to court to fix obligation *Creditor cannot unjustly enrich himself by retaining
debtor’s will duration the thing received before the arrival of the period
Retroactivity No retroactive Has
of effects effect retroactive Debtor/obligor can recover fruits/interests if
(unless effect premature delivery/performance can be prove that
stipulated) he is unaware of the period NOT YET BEING DUE

Obligor cannot recover what he has not done

(therefore Art 1195 does not apply obligs to do/not
to do)

Whenever in an obligation a period is
designated, it is presumed to have been
ESTABLISHED FOR THE BENEFIT OF BOTH
THE CREDITOR AND THE DEBTOR, unless from
the tenor of the same or other circumstances it
should appear that the period has been
established in favor of one or of the other. – Art.
1196
Before the expiration of the period, debtor may not
fulfill oblig and neither should creditor demand
without consent with each other (rebuttable though)
Exception apply if it is stipulated that there is
intention to benefit one of them
1. Term is for benefit of debtor alone
a. Cannot be ordered to pay early but
can
2. Term is for the benefit of creditor alone
a. Can demand early but not forced to
accept payment early
Computation of term/period
1. Legal Periods (Administrative Code of 1987)
a. “Year”=12 calendar months
b. “month”=thirty days; unless a specific
calendar month is referred
c. “day”=24 hrs
d. “night”=sunset to sunrise
If the obligation does not fix a period, but from
its nature and the circumstances it can be
inferred that a period was intended, the courts
may fix the duration thereof.
The courts shall also fix the duration of the
period when it depends upon the will of the
debtor.
In every case, the courts shall determine such
period as may under the circumstances have
been probably contemplated by the parties.
Once fixed by the courts, the period cannot be
changed by them. – Art. 1197
Obligations with a Period 2
If the oblig does not state a period and no period is
intended, the court is not authorized to fix a period
Legal Effect upon will of debtor
1. Period=perf w/ respect to time that is left to
the will of the debtor is only affected
2. If condition is upon will of debtor then oblig is
VOID because FULFILLMENT na yun
Court cannot fix another period if there is already a
period agreed upon
The debtor shall lose every right to make use of
the period:
(1) When after the obligation has been
contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
(2) When he does not furnish to the creditor the
guaranties or securities which he has
promised;
(3) When by his own acts he has impaired said
guaranties or securities after their
establishment, and when through a fortuitous
event they disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any undertaking,
in consideration of which the creditor agreed to
the period;
(5) When the debtor attempts to abscond. – Art.
1198

A person alternatively bound by different
prestations shall completely perform one of
them.
The creditor cannot be compelled to receive
part of one and part of the other undertaking. –
Art. 1199
Kinds of oblig acc to obj
1. Simple oblig: 1 prestation
2. Compound oblig: 2 or more prestation
a. Conjunctive: several pres; all due
b. Distributive: 2 or more pres due
i. Alternative: several due; 1
OK na
1. Choice of Debtor
ii. Facultative: only 1 due; may
substitute another
The right of choice belongs to the debtor,
unless it has been expressly granted to the
creditor.
The debtor shall have no right to choose those
prestations which are impossible, unlawful or
which could not have been the object of the
obligation. – Art. 1200
Generally, debtor may choice unless stated
otherwise or by a third person
Limitations:
1. Cannot be (otherwise VOID prest.):
a. Impossible
b. Unlawful
c. Not object of oblig
Oblig is NOT INVALIDATED
Rights limited NOT EXTINGUISHED
2. No more right of choice when ONLY 1 is
practicable (oblig becomes simple)
3. Cannot choose part of another prest and
another
Alternative Obligations 1
The choice shall produce no effect except from the
time it has been communicated. – Art. 1201
Effects of notice
No choice made and Choice made and
communicated communicated
Remains alternative irrevocable
Same if choice binigay kay creditor
Who made the choice should PROVE
1. Orally or writing
a. Expressly or implied
The debtor shall lose the right of choice when
among the prestations whereby he is
alternatively bound, only one is practicable –
Art. 1202
If through the creditor's acts the debtor cannot
make a choice according to the terms of the
obligation, the latter may rescind the contract
with damages. – Art. 1203
Rescission: oblig to return things obj of contract w/
fruits and price w/ interest
Debtor will rescind
To rescind Make a choice
Recover damages Oblig is extinguished
Not liable for damage
Debtor not bound to rescind
The creditor shall have a right to indemnity for
damages when, through the fault of the debtor,
all the things which are alternatively the object
of the obligation have been lost, or the
compliance of the obligation has become
impossible.
The indemnity shall be fixed taking as a basis
the value of the last thing which disappeared,
or that of the service which last became
impossible.
 Alternative Obligations 2

upon the price of any one of them, also with

Damages other than the value of the last thing indemnity for damages.
or service may also be awarded. – Art. 1204
The same rules shall be applied to obligations
Right of choice w/ creditor: Art 1203, 1204 to do or not to do in case one, some or all of the
Right of choice w/debtor: Art 1205 prestations should become impossible. – Art.
1205
Effects of loss of obj of oblig
Fault of debtor Before creditor makes selection, debtor cannot
Some of obj All of obj incur in delay
Not liable kasi may Creditor can indemnify
options pa for damages In case of loss before creditor chooses
Lost through Lost through DF
Exception to Art 1170 If fortuitous then oblig is fortuitous event
extinguished Choose among the Choose from other or
remainder price of item 1
Indemnity: fixed taking value of last thing/service
lost All with damages
If disagreement: creditor needs to prove
what was last (value) lost All lost through DF All lost through FE
Right to demand Oblig is extinguished
When the choice has been expressly given to payment of price of any
the creditor, the obligation shall cease to be w/damages
alternative from the day when the selection has Applies to personal obligs
been communicated to the debtor.
When only one prestation has been agreed
Until then the responsibility of the debtor shall upon, but the obligor may render another in
be governed by the following rules: substitution, the obligation is called facultative.

(1) If one of the things is lost through a The loss or deterioration of the thing intended
fortuitous event, he shall perform the obligation as a substitute, through the negligence of the
by delivering that which the creditor should obligor, does not render him liable. But once
choose from among the remainder, or that the substitution has been made, the obligor is
which remains if only one subsists; liable for the loss of the substitute on account
of his delay, negligence or fraud. – Art. 1206
(2) If the loss of one of the things occurs
through the fault of the debtor, the creditor may Loss of Principal
claim any of those subsisting, or the price of Through Otherwise
that which, through the fault of the former, has FE
disappeared, with a right to damages; Oblig Debtor
exting liable for
(3) If all the things are lost through the fault of damages
the debtor, the choice by the creditor shall fall
 Alternative Obligations 3

Effect of loss of facultative

Before substitution After substitution
Debtor not liable Liable for damages
- Depends if w or
w/o DF
 Joint and Solidary Obligations 1

The concurrence of two or more creditors or of

1
Solidarity liability when
3

two or more debtors in one and the same 1. Oblig expressly states so
obligation does not imply that each one of the 2. Law requires solidarity
former has a right to demand, or that each one 3. Nature of oblig requires solidarity
of the latter is bound to render, entire Exists when imposed in final judgment against
compliance with the prestation. There is a several defendants
solidary liability only when the obligation
expressly so states, or when the law or the Other ways to indicate solidarity
nature of the obligation requires solidarity. – 1. Each of debtors is compelled to pay entire
Art. 1207 oblig
2. Proceeded against for the full amt of oblig
If from the law, or the nature or the wording of 3. Jointly and/or severally
the obligations to which the preceding article 4. Solidaria
refers the contrary does not appear, the credit 5. In solidum
or debt shall be presumed to be divided into as 6. Together and/or separately
many shares as there are creditors or debtors, 7. Individually and/or collectively
the credits or debts being considered distinct 8. Juntos o seperadamente
from one another, subject to the Rules of Court 9. “I promise to pay”
governing the multiplicity of suits. – Art. 1208 2
a. Signed by two or more

Kinds of oblig acc to no. of parties Kinds of Solidarity

1. Individual oblig: 1 obligor; 1 obligee I. Acc to parties bound
2. Collective oblig: 2 or more of both a. Passive solidarity: on part of debtor
b. Active solidarity: on part of creditor
Joint oblig Solidary oblig c. Mixed solidarity: on part of creditors
Whole oblig fulfilled Each debtor is bound to and debtors
PROPORTIONALY render (creditor to Agreement betw each as to the
demand) extent of the share of each to one
Solvency of 1 shall not another
make other liable ENTIRE COMPLIANCE II. Acc to source
a. Conventional solidarity: solidarity
Other words for joint obligations: agreed upon by the parties
1. Mancomunada b. Legal solidarity: imposed by the law
2. Mancomunadamente c. Real solidarity: imposed by the
3. Pro rata nature of the oblig
4. Proportionately Intent or purpose of the law is to have the oblig
5. “we promise to pay” satisfied in full but the law itself does not expressly
a. Signed by 2 or more require solidarity

1Concurrence: happening of the same event twice 3

Solidarity: unity/agreement among individuals w/common interest
2
multiplicity of suits: more than 1 lawsuit regarding same
occurrence
Presumption is Joint because if solidary…
- Create unusual rights and liab
- Responsibility inc for debtor
- Rights inc for creditor
If the division is impossible, the right of the
creditors may be prejudiced only by their
collective acts, and the debt can be enforced
only by proceeding against all the debtors. If
one of the latter should be insolvent, the others
shall not be liable for his share. – Art. 1209
Joint indivisible oblig: oblig is joint because party
is proportionately liable but subj matter is not
physically divisible
- Joint as to liabilities but indivisible as to
compliance
The indivisibility of an obligation does not
necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility. – Art. 1210
Indivisibility Solidarity
Refers to prestation Juridical or legal tie
Only debtor guilty of All debtors are liable
breach is liable for
damages
Can exist with 1 At least 2 debtors and 2
creditor and 1 debtor creditors
Others not liable in Others are
case of insolvency proportionately liable
Solidarity may exist although the creditors and
the debtors may not be bound in the same
manner and by the same periods and
conditions – Art. 1211
Kinds of solidary oblig acc to legal tie
1. Uniform: bound by same stipulations
2. Non-uniform (varied): not subj to same
Creditor may bring his action in toto against solidary
debtors upon the fulfillment of the cond where the
creditor will have the right to demand the payment
(less any prepayments made)
Each one of the solidary creditors may do
whatever may be useful to the others, but not
anything which may be prejudicial to the latter.
– Art. 1212
If so he shall be responsible to others for damages
and oblig is extinguished
A solidary creditor cannot assign his rights
without the consent of the others – Art. 1213
Kasi baka di mapagkakatiwalaaan or of the same
interest yung third pers and baka di ibigay pera
kapag nakuha na
If co-creditor yung proxy edi G lang no need
consent
The debtor may pay any one of the solidary
creditors; but if any demand, judicial or
extrajudicial, has been made by one of them,
payment should be made to him. – Art. 1214
If may nagdemand na sa kanya magbayad dun
ibibigay otherwise oblig not yet extinguished kahit
pa di ipamigay ng pinag abutan sa co-creditors
Applicable also for mixed solidarity
Novation, compensation, confusion or
remission of the debt, made by any of the
solidary creditors or with any of the solidary
debtors, shall extinguish the obligation, without
prejudice to the provisions of Article 1219.
The creditor who may have executed any of
these acts, as well as he who collects the debt,
shall be liable to the others for the share in the
obligation corresponding to them. – Art. 1215
Causes of extinguishment of oblig Effect of payment ng Solidary debtor
1. Novation Paid by 1 solidary D Offer paid by 2 SD
2. Compensation Extinguishes oblig Solidary creditor can
3. Confusion choose
4. Remission Paying solidary debtor can demand for
When executed makes creditor liable to others reimbursement (PAGBAYARIN) now becomes a
considering the act he has done joint oblig among co-debtors (naghahatian na sila
ng bayarin)
When joint oblig however, di affected others, ung
nagkasala lang If may insolvency paghahatian share nung isa (pro
rata)
The creditor may proceed against any one of
the solidary debtors or some or all of them Reimbursing of payment ng Solidary debtor
simultaneously. The demand made against one Before due date After debt is due
of them shall not be an obstacle to those which w/o interest w/interest for paym
may subsequently be directed against the made
others, so long as the debt has not been fully
collected. – Art. 1216 Payment by a solidary debtor shall not entitle
him to reimbursement from his co-debtors if
Not applicable to joint oblig. such payment is made after the obligation has
prescribed or become illegal. – Art. 1218
Anyone of the solidary debtors can be made to pay
as all as DI PA BAYAD NG BUO, pili nalang siya Cannot get reimbursement when…
kanino siya maniningil 1. Oblig already prescribed
2. Oblig became illegal
Di karin pwede tumanggi if pinili ka kasi choice yun Therefore, oblig is extinguished.
ni creditor
Prescription: one acquires ownership and other
Payment made by one of the solidary debtors rights through the lapse of time under following
extinguishes the obligation. If two or more conditions:
solidary debtors offer to pay, the creditor may
choose which offer to accept. Dapat within … ff actions must be:
Brought w/in Commenced Instituted
He who made the payment may claim from his 10 years w/in 6 yrs w/in 4 yrs
co-debtors only the share which corresponds
Upon written Upon oral Upon an injury
to each, with the interest for the payment
contract contract to the rights of
already made. If the payment is made before
plaintiff
the debt is due, no interest for the intervening
Upon an oblig Upon a quasi-
period may be demanded.
created by law contract Upon a quasi-
delict
When one of the solidary debtors cannot,
Upon a
because of his insolvency, reimburse his share
judgement
to the debtor paying the obligation, such share
Limitations may be superseded by a contract betw
shall be borne by all his co-debtors, in
parties
proportion to the debt of each. – Art. 1217
The remission made by the creditor of the
4
If the thing has been lost or if the prestation
share which affects one of the solidary debtors has become impossible without the fault of the
does not release the latter from his solidary debtors, the obligation shall be
responsibility towards the co-debtors, in case extinguished.
the debt had been totally paid by anyone of
them before the remission was effected. – Art. If there was
1219 fault on the part of any one of them, all shall be
Loss w/o fault and Loss w/solidary D responsible to the creditor, for the price and
delay fault the payment of damages and interest, without
Oblig is extinguished All liable for price prejudice to their action against the guilty or
and damages and negligent debtor.
interest
If through a fortuitous event, the thing is lost or
Without prejudice sa the performance has become impossible after
nagkasala (guilty one of the solidary debtors has incurred in
debtor) delay through the judicial or extrajudicial
Loss w/o fault demand upon him by the creditor, the
w/delay provisions of the preceding paragraph shall
All liable for price apply. – Art. 1221
and damages
A solidary debtor may, in actions filed by the
Effect of remission of share after paym creditor, avail himself of all defenses which are
Paym then remission Remission then Paym derived from the nature of the obligation and of
No effect Solutio indebiti arises those which are personal to him, or pertain to
No more oblig to remit If may insolvency, his own share. With respect to those which
maghahatian kayo kasi personally belong to the others, he may avail
creditor has no right to himself thereof only as regards that part of the
alter/modify obligs and debt for which the latter are responsible. – Art.
rights among 1222
themselves
*to forestall fraud and para di ka na magbayad if Defenses available to solidary debtor
you’ll just suffer any loss or damage 1. From nature of the oblig
a. complete defense
The remission of the whole obligation, obtained b. Ex. Fraud, prescription, remission,
by one of the solidary debtors, does not entitle illegality, absence of consideration,
him to reimbursement from his co-debtors. – res judicata, non-performance of a
Art. 1220 suspensive condition
2. Personal to, or pertains to share of debtor
Di ka naman kasi nagbayad so bat may kukunin sued
ka?? Unless may case of novation, compensation, a. Partial defense
confusion. 3. Personal to other solidary debtors

4
Remission=cancellation of a debt, charge, penalty

The divisibility or indivisibility of the things that
are the object of obligations in which there is
only one debtor and only one creditor does not
alter or modify the provisions of Chapter 2 of
this Title. – Art. 1223
May refer to oblig/prestation which is to “deliver a
thing” or “render some service”
Divisible oblig: capable of partial fulfillment
Indivisible oblig: not capable
Test for distinction:
1. Purpose of oblig/intention to parties
a. May be physically divisible but oblig
is indivisible
b. If physically indivisible, oblig is
ALWAYS indivisible (ABSOLUTE)
c. Indivisible if 1 creditor and 1 debtor
Kinds of Division:
1. Qualitative (qual>quan)
2. Quantitative
3. Ideal/Intellectual
a. Exists only in the minds of parties
Kinds of indivisibility
1. Legal
a. Law declares
2. Conventional
a. By will of parties
3. Natural
a. Nature itself does not allow division
A joint indivisible obligation gives rise to
indemnity for damages from the time anyone of
the debtors does not comply with his
undertaking. The debtors who may have been
ready to fulfill their promises shall not
contribute to the indemnity beyond the
corresponding portion of the price of the thing
or of the value of the service in which the
obligation consists. – Art. 1224
Divisible and Indivisible Obligations 1
Non-compliance=one for damages (no
rescission/perf allowed)
For the purposes of the preceding articles,
obligations to give definite things and those
which are not susceptible of partial
performance shall be deemed to be indivisible.
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.
However, even though the object or service
may be physically divisible, an obligation is
indivisible if so provided by law or intended by
the parties.
In obligations not to do, divisibility or
indivisibility shall be determined by the
character of the prestation in each particular
case. – Art. 1225
Indivisible Obligations:
1. To give definite things
2. Obligs not susceptible of partial perf
3. Provided by law to be indivisible even if
physically div
4. Obligs intended by parties to be indivisible
Divisible obligs:
1. Obligs execution is no. of days’ work
2. Obligs accomplished by metrical units
3. Obligs naturally susceptible of partial perf
In negative obligs (not to do) depends on the case
Generally, obligs “to do” or “not to do” are generally
indivisible unless stated in Art 1225.
 Obligations with a Penal Cause 1

In obligations with a penal clause, the penalty III. As to its demandability/effect

shall substitute the indemnity for damages and
the payment of interests in case of non-
compliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid
if the obligor refuses to pay the penalty or is
guilty of fraud in the fulfillment of the
obligation.
1. Subsidiary/alternative: only the
penalty can be enforced
2. Joint/cumulative: both principal and
penal clause can be observed
Proof of actual damages suffered by C is not
necessary in order that the penalty may be enforced

The penalty may be enforced only when it is C can recover damages in addition to penalty
demandable in accordance with the provisions when…
of this Code. – Art. 1226 1. Stipulated by parties
2. D refuses to pay penalty, where C can
Principal oblig: one can stand by itself recover legal interest
Accessory oblig: cannot stand alone 3. D is guilty of fraud, where C may recover
damages caused by fraud
Penal clause: an oblig to assume greater liability in
case of breach Penalty is demandable only if there is a breach of
the obligation and it is not contrary to law, morals,
Purpose of Penal Clause good customs, public order, and policy
1. Creates an effective deterrent (reparation)
a. Consequences to be as onerous as Penalty may be reduced in case there is
possible partial/irregular fulfillment
2. Substitute a penalty for the indemnity for
damages or to punish D for the non- The debtor cannot exempt himself from the
fulfillment (punishment) performance of the obligation by paying the
penalty, save in the case where this right has
Penal clause Condition been expressly reserved for him. Neither can
Constitutes an oblig Does not the creditor demand the fulfillment of the
May be demandable in Never demandable obligation and the satisfaction of the penalty at
case of unperformed the same time, unless this right has been
oblig clearly granted him. However, if after the
creditor has decided to require the fulfillment of
Kinds of penal clause the obligation, the performance thereof should
I. As to its origin become impossible without his fault, the
1. Legal: provided by law penalty may be enforced. – Art. 1227
2. Conventional: by stipulation of
parties If D is allowed to pay the penalty, this would be an
II. As to its purpose oblig with an alternative
1. Compensatory: penalty takes place
of damages The remedies are alternative and not cumulative nor
2. Punitive: imposed as punishment successive
 Obligations with a Penal Cause 2

If D has fraud, C may recover the penalty plus

damages for non-fulfillment
Proof of actual damages suffered by the
creditor is not necessary in order that the
penalty may be demanded. – Art. 1228

Fixing a penalty is to avoid the difficulties involved in

litigations

C cannot recover more than the stipulated penalty

(fixed) even if he proves that the amount of
damages exceeds the penalty

If penalty is not fixed, proof of damages must be

proven

The judge shall equitably reduce the penalty

when the principal obligation has been partly or
irregularly complied with by the debtor. Even if
there has been no performance, the penalty
may also be reduced by the courts if it is
iniquitous or unconscionable. – Art. 1229

Penalty can be reduced by the courts when…

1. Partial or irregular performance
2. Penalty agreed upon is iniquitous or
unconscionable

The nullity of the penal clause does not carry

with it that of the principal obligation.

The nullity of the principal obligation carries

with it the nullity of the penal clause. – Art. 1230

Principal is Void Penal clause is Void

Penal clause is also Principal remains valid
void and demandable

But if void because of

D, who acted in bad
faith, penalty may still
be enforced
 Extinguishment of Obligations General Provisions 1

Obligations are extinguished: (1) by payment or

performance; (2) by the loss of the thing due;
(3) by the condonation or remission of the debt;
(4) by the confusion or merger of the rights of
creditor and debtor; (5) by compensation; (6)
by novation.

Other causes of extinguishment of obligations,

such as annulment, rescission, fulfillment of a
resolutory condition, and prescription, are
governed elsewhere in this Code. – Art. 1231

Other causes of extinguishment of obligations

1. Death of a party in an oblig requiring
personal service
2. Mutual desistance or withdrawal
a. Since mutual agreement can create
contracts;
b. Mutual disagreements can cause
extinguishment
3. Arrival of resolutory cond.
4. Compromise
5. Impossibility of fulfillment
6. Happening of a fortuitous event
7. Renunciation/waiver of rights
8. Change of civil status

Payment means not only the delivery of money
but also the performance, in any other manner,
of an obligation – Art. 1232
Ordinary parlance: delivery of money
Legal: not only the delivery of money but also the
giving of a thing, doing of an act, or not doing of an
act
In law, payment and performance are synonymous
A debt shall not be understood to have been
paid unless the thing or service in which the
obligation consists has been completely
delivered or rendered, as the case may be. –
Art. 1233
Integrity of prestation: Partial/irregular
performance will not produce the extinguishment of
an oblig as a general rule
Identity of prestation: the very prestation due
must be delivered/performed
If the obligation has been substantially
performed in good faith, the obligor may
recover as though there had been a strict and
complete fulfillment, less damages suffered by
the obligee. – Art. 1234
Recovery is allowed in case of substantial
performance in good faith
- Obligee (C) is benefited
- Obligor (D) should be allowed to recover as
if there had been strict and complete
fulfillment
Requisites for Recovery in substantial
performance
1. Substantial performance
2. D must be in good faith
If only first, then subj. to rescission/cancellation
If second, allows only a proportionate reduction
- Doctrine of substantial performance
Payment or Performance 1
Good faith is always presumed in the absence of
proof
When the obligee accepts the performance,
knowing its incompleteness or irregularity, and
without expressing any protest or objection,
the obligation is deemed fully complied with. –
Art. 1235
Recovery is allowed when incomplete/irregular
performance is waived
1. Incomplete payment may properly be
rejected by C
2. In accepted, the whole oblig is extinguished
Requisites of 1235
1. C knows the perf is incomplete/irregular
2. C accepts without protest/objection
The creditor 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.
Whoever pays for another may demand from
the debtor what he has paid, except that if he
paid without the knowledge or against the will
of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.
– Art. 1236
Who pays Who gets paid
Debtor Creditor
Heir Heirs
Assigned Successor in interest
Third person Authorized persons
C should not be compelled to accept payment from
a third person whom he may dislike/distrust
 Payment or Performance 2

Payment to a third person Payment made by a third person who does not
w/o knowledge of D w/ knowledge of D intend to be reimbursed by the debtor is
Recover only up to the Shall have rights of deemed to be a donation, which requires the
extent/amt of the debt reimbursement and debtor’s consent. But the payment is in any
beneficial to D subrogation to what he case valid as to the creditor who has accepted
has paid it. – Art. 1238

Acquire all the rights of w/o consent of D w/ consent of D

C Donator may recover D is not liable and oblig
from D is extinguished
Whoever pays on behalf of the debtor without
the knowledge or against the will of the latter Oblig of D to C is
cannot compel the creditor to subrogate him in extinguished
his rights, such as those arising from
mortgage, guaranty, or penalty. – Art. 1237 D cannot legally refuse
to pay Donator and
Thirds person pays in behalf of D insist on paying C
w/ consent of D w/o consent of D
Entitled to subrogation Cannot compel C to In obligations to give, payment made by one
subrogate him who does not have the free disposal of the
thing due and capacity to alienate it shall not
If C permits, then there be valid, without prejudice to the provisions of
would be legal article 1427 under the Title on “Natural
subrogation Obligations” – Art. 1239

Subrogation Reimbursement Free disposal of the thing due: not subj to any claim
Payer is put in the Merely the bare right to by TP
shoes of C be refunded Capacity to alienate: not incapacitated to enter in
- Acquires right to contracts
be reimbursed
- All other rights If does not have the free disposal of the things due
which C can and capacity to alienate is invalid; thing paid can be
exercise (ex. recovered
Against - Unless if fungible thing is delivered; then
guarantors) there is no right to recover in case it has
been spent/consumed in good faith
There is no real
extinction of oblig, only Payment shall be made to the person in whose
change in C favor the obligation has been constitute, or his
successor in interest, or any person authorized
to receive it. – Art. 1240

Payment to any other person in not valid unless
provided by Art. 1241
Payment to the wrong party is not an excuse
Payment in good faith to any person in possession
of the credit is valid even if di authorized to receive
“any person authorized to receive it”
- Not only authorized by C
- Also authorized by law
Payment to a person who is incapacitated to
administer his property shall be valid if he has
kept the thing delivered, or insofar as the
payment has been beneficial to him.
Payment made to a third person shall also be
valid insofar as it has redounded to the benefit
of the creditor. Such benefit to the creditor
need not to be proven in the following cases:
(1) If after the payment, the third person
acquires the creditor’s rights
(2) If the creditor ratifies the payment to the
third person;
(3) If by the creditor’s conduct, the debtor
has been led to believe that the third
person had authority to receive the
payment. – Art. 1241
Payment to an incapacitated person is not valid
unless the person kept the thing paid/delivered
Proof of such benefit is incumbent upon the debtor
who paid
Payment to a wrong party is invalid except insofar
as it has redounded to the benefit of C
C is benefited by payment of D to a TP is not
presumed
- Absence of proof shall not deprive C the
right to demand payment
Payment or Performance 3
Benefit to C need not to be proven by D when…
1. Subrogation of the payer in the creditor’s
rights
2. Ratification by the creditor
3. Estoppel on the part of the creditor
Benefit to C in these cases is presumed
Payment made in good faith to any person in
possession of the credit shall release the
debtor. – Art. 1242
Must be:
1. In possession of credit ITSELF
a. Not merely the document/instrument
evidencing credit
2. Payer must act in good faith, in his honest
belief he is making a valid payment
3. Good faith is presumed
Payment made to the credit by the debtor after the
latter has been judicially ordered to retain the debt
shall not be valid. – Art. 1243
When…
1. In an action against D who is the C of E
2. May be ordered to retain the debt of E to D
until C in the main litigation is resolved
3. C may hold E liable to the debt of D
a. Oblig of C and D is extinguished
b. D is now liable to E
4. Any payment made by E to D is invalid
The debtor of a thing cannot compel the
creditor to receive a different one, although the
latter may be of the same value as, or more
valuable, than that which is due.
In obligations to do or not to do, an act or
forbearance cannot be substituted by another
act or forbearance against the obligee’s will. –
Art. 1244

Thing diff (oblig to deliver a specific thing) from what
is due cannot be offered or demanded against the
will of C or D
The act (personal positive/negative obligs) cannot
be substituted against the obligee’s will
Prestation may be substituted only when…
1. In facultative obligs
a. D is given the right to render another
in substitution
2. Allowed by stipulation w/ consent of C
Dation in payment whereby property is
alienated to the creditor in satisfaction of a
debt in money, shall be governed by the laws of
sale. – Art. 1245
Special forms of Payment
1. Dation in payment
2. Application of payments
a. In strict sense, not actually a form of
payment
3. Payment by cession
4. Tender of payment and consignation
Dation: ownership of a thing as an accepted
equivalent of performance
- Piano as payment for debt
When the obligation consists in the delivery of
an indeterminate or generic thing, whose
quality and circumstances have not been
stated, the creditor cannot demand a thing of
superior quality. Neither can the debtor deliver
a thing of inferior quality. The purpose of the
obligation and other circumstances shall be
taken into consideration. – Art. 1246
Rule of medium quality
- Principle of equity
- In case of disagreement, the law steps in
- May be waived if C accepts the inferior and
D delivers a superior
Payment or Performance 4
Deliver a generic Deliver a specific
Purpose of the oblig Very thing must be
shall be considered to delivered
determine quality and
kind
Unless it is otherwise stipulated, the
extrajudicial expenses required by the payment
shall be for the account of the debtor. With
regard to judicial costs, the Rules of Court shall
govern. – Art. 1247
Debtor pays for extrajudicial expenses unless
stipulated otherwise
- Does not apply to expenses b C in going to
D’s domicile
The costs of an action shall, as a rule be paid by the
losing party
- Court may allow equitable division
- No costs are allowed against the govt.
unless provided by law
Unless there is an express stipulation to that
effect, the creditor cannot be compelled
partially to receive the prestations in which the
obligation consists. Neither may the debtor be
required to make partial payments.
However, when the debt is in part liquidated
and in part unliquidated, the creditor may
demand and the debtor may effect the payment
of the former without waiting for the liquidation
of the latter. – Art. 1248
Partial performance is allowed when…
1. Expressly stipulated
2. Debt is in part liquidated and in part
unliquidated
3. Different prestations are subj. to diff terms/
conditions

The payment of debts in money shall be made
in the currency stipulated, and if it is not
possible to deliver such currency, then in the
currency which is legal tender in the
Philippines.
The delivery of promissory notes payable to
order, or bills of exchange or other mercantile
documents shall produce the effect of payment
only when they have been cashed, or when
through the fault of the creditor they have been
impaired.
In the meantime, the action derived from the
original obligation shall be held in abeyance. –
Art. 1249
Legal tender: currency offered by D in right amount
- C must accept in payment of debt in money
- 0.25, 1, 5, 10 ≤ 100
- 1, 5, 10 ≤ 1000
Right of creditor when payment through
instruments
1. May accept w/o producing effect of payment
a. Demandability of oblig is suspended
2. C must cash the instrument
a. If dishonored, can bring action of
non-payment
Effect on oblig when paid through instruments
1. Not extinguished until
a. Cashed
b. Unless impaired by the fault of C
In case an extraordinary inflation or deflation of
the currency stipulated should supervene, the
value of the currency at the time of the
establishment of the oblig shall be the bases of
payment, unless there is an agreement to the
contrary. – Art. 1250
Inflation: sharp sudden increase of
money/credit/both: drop in value of money
Payment or Performance 5
Deflation: reduction in volume/circulation of money
- Decline in general price level
The purchasing value at the time shall be the basis
of payment unless stipulated.
- Ex. Debt is 5,000 at the time, deflation
occurs becomes 10,000 (10k is to paid
unless stipulated)
Payment shall be made in the place designated
in the obligation.
There being no express stipulation and if the
undertaking is to deliver a determinate thing,
the payment shall be made wherever the thing
might be at the moment the obligation was
constituted.
In any other case the place of payment shall be
the domicile of the debtor.
If the debtor changes his domicile in bad faith
or after he has incurred in delay, the additional
expenses shall be borne by him.
These provisions are without prejudice to
venue under the Rules of Court. – Art. 1251
Payment shall be made…
1. Place designated in stipulation
2. Place at the perfection of contract
3. Domicile of D if no stipulation
a. C bears expenses in going to D to
accept payment
 Payment or Performance 6

Domicile Residence Rules of application of payment

place of a person’s only an element of
habitual residence domicile
requires bodily requires bodily
presence and intent to presence as inhabitant
make a place a in a given place
domicile
He who has various debts of the same kind in
favor of one and the same creditor, may declare
at the time of making the payment, to which of
them the same must be applied. Unless the
parties so stipulate, or when the application of
payment is made by the party for whose benefit
the term has been constituted, application shall
be not be made as to debts which are not yet
due.
If the debtor accepts from the creditor a receipt
in which an application of the payment is made,
the former cannot complain of the same, unless
there is a cause for invalidating the contract. –
Art. 1252
Application of payments: designation of debt to
which payment will be applied
Requisites of application of payments
1. 1 D and 1 C
2. 2 or more debts
3. Debts must be of the same kind
4. Debt paid by D must be due
5. Payment must not be sufficient to cover all
debts
Application of payment to debts not due cannot
be made unless…
1. There is a stipulation
2. Made by C or D whose benefit the period
has been constituted
1. D has the first choice
a. Must indicate which debt is being
paid
2. Irrevocable unless C consents to change
3. If D does not apply, C designates
4. If C does not designate, most onerous shall
be satisfied
5. If debts are of same nature/burden, payment
shall be applied proportionately to all
If the debt produces interest, payment of the
principal shall not be deemed to have been
made until the interests have been covered. –
Art. 1253
Interest must be in writing – Art. 1956
Art. 1253 is mandatory. Payment should be applied
first to interest before principal unless stipulated or
waived by C
When the payment cannot be applied in
accordance with the preceding rules, or if
application cannot be inferred from other
circumstances, the debt which is most onerous
to the debtor, among those due, shall be
deemed to have been satisfied.
If the debts due are of the same nature and
burden, the payment shall be applied to all of
them proportionately. – Art. 1254
A debt is more onerous when
1. Interest-bearing over non-interest bearing
2. Sole D over solidary D
3. Secured debts by mortgage over unsecured
4. One w/ higher interest rate
5. Oblig w/ penal clause over w/o penal clause
If cannot be determined, then applied to them
proportionately

The debtor may cede or assign his property to

his creditors in payment of his debts. This

cession, unless there is stipulation to the
contrary, shall only release the debtor from
responsibility for the net proceed of the thing
assigned. The agreements which, on the effect
of cession, are made between the debtor and
creditors shall be governed by special laws. –
Art. 1255
Payment by cession: assignment of property to Cs
in order for C to sell and apply proceeds to satisfy
debt
Requisites of payment by cession
1. 2 or more Cs
2. D must be (partially) insolvent
3. Must involve all properties of D
4. Cession must be accepted by Cs
D is still liable if there is a balance
Dation Cession
1C Several Cs
Does not presuppose D is insolvent
insolvency
Does not involve all Involves all properties
properties
C becomes owner of C only acquires right to
the thing sell and apply proceeds
to debt proportionately
An act of novation Not an act of novation
Substitute forms of payment/performance
If the creditor to whom tender of payment has
been refused without just cause to accept it,
the debtor shall be released from responsibility
by the consignation of the thing or sum due.
Consignation alone shall produce the same
effect in the following cases:
(1) When the creditor is absent or unknown,
or does not appear at the place of
payment;
Payment or Performance 7
(2) When he id incapacitated to receive the
payment at the time it is due;
(3) When, without just cause, he refuses to
give a receipt;
(4) When two or more persons claim the
same right to collect;
(5) When the title of the obligation has been
lost. – Art. 1256
Tender of payment: act of D offering to C the
thing/amt due
Consignation: depositing the thing/amt due to
proper court when C does not desire or cannot
receive it
Requisites of a valid consignation
1. Existence of valid debt due
2. Tender of payment by D and unjust refusal
of C to accept
3. Previous notice of consignation to interested
persons
4. Consignation of the thing/sum due
5. Subsequent notice of consignation made to
interested parties
D does not incur default by failing to make a fruitless
tender after notification from C that the money will
not be received
Requisites for valid tender of payment
1. Tender must comply with rules on payment
a. Tender itself does not produce
legally payment unless completed by
consignation
2. Unconditional and for the whole oblig due
3. Must be actually made
a. Mere desire/intention to pay is not
enough
In order that the consignation of the thing due
may release the obligor, it must first be
announced to the persons interested in the
fulfillment of the obligation
 Payment or Performance 8

D may withdraw the sum or thing deposited

The consignation shall be ineffectual if it is not
made strictly in consonance with the
provisions which regulate payment. – Art. 1257
In absence of prior notice to interested parties,
payment shall be void
when…
1. Before C has accepted the consignation
2. Before a judicial declaration that the
consignation has been properly made
a. He is still the owner, not the court

Consignation shall be made by depositing the
things due at the disposal of judicial authority,
before whom the tender of payment shall be
proved, in a proper case, and the
announcement of the consignation in other
cases.
If, the consignation having been made, the
creditor should authorize the debtor to
withdraw the same, he shall lose every
preference which he may have over the thing.
The co-debtors, guarantors and sureties shall
be released. – Art. 1261

The consignation having been made, the Solidary debtors (guarantors) are released only from
interested parties shall also be notified thereof. their solidary liability
– Art. 1258 - Not from their shares of the oblig

Second notice is to enable withdrawal of the thing or

sum deposited

The expenses of consignation, when properly

made, shall be charged against the creditor. –
Art. 1259

Consignation is properly made when…

1. C accepts the thing w/o objection
2. C questions the validity of consignation but
court declares it has been made properly
3. C neither accepts/questions the validity of
consignation and the court cancels the oblig

Once the consignation has been duly made, the

debtor may ask the judge to order the
cancellation of the obligation.

Before the creditor has accepted the

consignation, or before a judicial declaration
that the consignation has been properly made,
the debtor may withdraw the thing or sum
deposited, allowing the obligation to remain in
force. – Art. 1260

An obligation which consists in the delivery of
a determinate thing shall be extinguished if it
should be lost or destroyed without the fault of
the debtor, and before he has incurred in delay.
Where by law or stipulation, the obligor is liable
even for fortuitous events, the loss of the thing
does not extinguish the obligation, and he shall
be responsible for damages. The same rule
applies when the nature of the obligation
requires the assumption of risk. – Art. 1262
Thing is lost when:
1. It perishes
2. Goes out of commerce
3. Disappears in such a way that its existence
is unknown
Loss of a determinate thing = impossibility of perf.
Loss of a thing will extinguish oblig to give when…
1. Oblig is to deliver specific/determinate
2. Loss w/o fault of D
3. D is not guilty of delay
Loss of a thing WILL NOT extinguish oblig when…
1. Law so provides
2. Stipulation
3. Nature of oblig requires assumption of risk
4. Oblig to deliver a specific thing arises from
crime
In an obligation to deliver a generic thing, the
loss or destruction of anything of the same kind
does not extinguish the obligation. – Art. 1263
A generic thing never perishes (genus nunquam
perit)
The courts shall determine whether, under the
circumstances, the partial loss of the object of
the obligation is so important as to extinguish
the obligation. – Art. 1264
Loss of the Thing Due 1
Partial loss when
1. Only a portion is lost/destroyed
2. Suffers depreciation/ deterioration
The court will decide whether the partial loss is such
as to be equivalent to complete or total loss
Whenever the thing is lost in the possession of
the debtor, it shall be presumed that the loss
was due to his fault, unless there is proof to the
contrary, and without prejudice to the
provisions of article 1165. This presumption
does not apply in case of earthquake, flood,
storm, or other natural calamity. – Art. 1265
The debtor in obligations to do shall also be
released when the prestation becomes legally
or physically impossible without the fault of the
debtor. – Art. 1266
Impossibility of the perf. will result in the extinction of
the oblig
Impossibility must take place after the const. of the
oblig
- If impossible from the beginning then VOID
Kinds of impossibility
1. Physical
a. Ex. D dies
2. Legal
When the service has become so difficult as to
be manifestly beyond the contemplation of the
parties, the obligor may also be released
therefrom, in whole or in part. – Art. 1267
Court is authorized to release D in whole or in part
Applicable not only to personal oblig (to do) but also
real oblig (to give)
 Loss of the Thing Due 2

When the debt of a thing certain and

determinate proceeds from a criminal offense,
the debtor shall not be exempted from the
payment of its price, whatever may be the
cause for the loss, unless the thing having
been offered by him to the person who should
receive it, the latter refused without justification
to accept it. – Art 1268

Even if it is a fortuitous event, D is still liable

- Ex. D stole from C, D must return the thing to
C but then it got destroyed
- It must be paid for

The obligation having been extinguished by the

loss of the thing, the creditor shall have all the
rights of action which the debtor may have
against third persons by reason of the loss. –
Art. 1269

C has the right to proceed against the TP who is the

reason for the loss
- Oblig of D to C is extinguished
- C can run after TP

Condonation or remission is essentially
gratuitous, and requires the acceptance by the
obligor. It may be made expressly or impliedly.
One and other kind shall be subject to the rules
which govern inofficious donations. Express
condonation shall, furthermore, comply with
the forms of donation. – Art. 1270
Condonation/remission: gratuitous abandonment
of C’s right against D
Requisites of condonation/remission
1. Gratuitous
2. Accepted by D
3. Parties must have capacity
4. Not inofficious
5. Made expressly, must comply with forms of
donations
Kinds of remission:
I. As to its extent
1. Complete: covers entire oblig
2. Partial: does not cover entire
II. As to its form
1. Express: either verbally/writing
2. Implied: inferred
III. As to its date of effectivity
1. Inter vivos: take effect during lifetime
2. Mortis causa: upon death of donor
i. Will
No one can give more than that which he can give
by will
Legitimate: property that cannot be disposed
because law has reserved it for certain heirs
(compulsory heirs)
Condonation or Remission of Debt 1
The delivery of a private document evidencing
a credit, made voluntarily by the creditor to the
debtor, implied the renunciation of the action
which the former had against the latter.
If in order to nullify this waiver it should be
claimed to be inofficious, the debtor and his
heirs may uphold it by proving that the delivery
of the document was made in virtues of
payment of debt. – Art. 1271
If C delivers the documenting evidencing credit to C,
then it is presumed that he is renouncing his rights
against D, unless rebuttable by contrary evidence
If the oblig is joint: remission pertains only to share
of D possessing the document
If solidary, for the whole oblig
Presumption does not apply to public documents as
they are easily obtainable
Remission becomes null and void upon proof that it
is inofficious
Whenever the private document in which the
debt appears is found in the possession of the
debtor, it shall be presumed that the creditor
delivered it voluntarily, unless the contrary is
proved – Art. 1272
Presumption of voluntary delivery = Presumption of
payment
- Only when it is known that there is no
payment should there be presumption of
remission
The renunciation of the principal debt shall
extinguish the accessory obligations; but the
waiver of the latter shall leave the former in
force. – Art. 1273
 Condonation or Remission of Debt 2

It is presumed that the accessory obligation of

pledge has been remitted when the thing is
pledged, after its delivery to the creditor, is
found in the possession of the debtor, or of a
third person who owns the thing. – Art. 1274

If the thing pledged is later found in the hands of D

or TP, only the accessory oblig of pledge is
presumed remitted, not the oblig itself
 Confusion or Merger of Rights 1

The obligation is extinguished from the time the

characters of creditor and debtor are merged in
the same person. – Art. 1275

Confusion/merger: meeting in 1 person of qualities

of C and D in same oblig

A person cannot claim payment from himself

Requisites of confusion
1. Betw principal debt and C
2. Must be complete

Merger which takes place in the person of the

principal debtor or creditor benefits the
guarantors.

Confusion which takes place in the person of

any of the latter does not extinguish the
obligation. – Art. 1276

Merger betw Merger of guarantor

Principal D and C
Extinguishes oblig as Extinguishes accessory
well as accessory oblig not the principal oblig

Confusion does not extinguish a joint

obligation except as regards the share
corresponding to the creditor or debtor in
whom the two characters concur. – Art. 1277

Confusion in joint Confusion on

solidary
Only to the share of D Merger in the person of
or C na nagmerge 1 of solidary Ds shall
extinguish ENTIRE
oblig

He who makes
payment may
reimburse from co-
debtors for their share

Compensation shall take place when two
persons, in their own right, are creditors and
debtors of each other. – Art. 1278
Compensation: 2 persons are C and D of each
other
Object of compensation:
- Prevent unnecessary litigation and
payments
- Simplified payment
Compensation Confusion
1 C and 1 D of each 1 person who is C and
other D waiver
2 obligs Only 1 oblig
Indirect payment Impossibility of
payment
Kinds of compensation
I. By its effect/extent
1. Total: both obligs same amt
2. Partial: balance remains
II. By its cause/origin
1. Legal: operation of law
2. Voluntary: agreement of parties
3. Judicial: order of court/litigation
4. Facultative: set up only by 1 party
In order that compensation may be proper, it is
necessary:
(1) That each one of the obligors be bound
principally, and that he be at the same
time a principal creditor of the other;
(2) That both debts consist in a sum of
money, of if the things due are
consumable, they may be of the same
kind, and also of the same quality if the
latter has been stated;
(3) That the two debts be due
(4) That they be liquidated and demandable
(5) That over neither of them there be any
retention or controversy, commenced by
Compensation 1
third persons and communicated in due
time to the debtor. – Art. 1279
Requisites of legal compensation
1. Principal C and D of each other
2. Both debts consist in a sum of
money/consumable things of the same kind
and quality, unless both agree
3. Two debts are due OR demandable
a. If debt is subj to a suspensive cond.
compensation cannot take place
4. Two debts are liquidated
5. No retention or controversy by a TP
a. No compensation where there is a
Notwithstanding the provisions of the
preceding article, the guarantor may set up
compensation as regards what the creditor
may owe the principal debtor. – Art. 1280
Guarantor is given the right to setup compensation
because extinguishment of principal oblig carries
with it the extinguishment of the accessory oblig
(guaranty)
Compensation may be total or partial. When the
two debts are of the same amount, there is total
compensation. – Art. 1281
The parties may agree upon the compensation
of debts which are not yet due. – Art. 1282
Voluntary/conventional compensation takes place
by agreement
- Sufficient that the contract of parties is valid
If one of the parties to a suit over an obligation
has a claim for damages against the other, the
former may set it off by proving his right to said
damages and the amount thereof. – Art. 1283
Judicial compensation: when so declared by final
judgement of a court

When one or both debts are rescissible or
voidable, they may be compensated against
each other before they are judicially rescinded
or avoided. – Art. 1284
Rescissible and voidable obligs are valid until
judicially rescinded or avoided
The effect of annulment is retroactive and same as if
there had been no compensation
The debtor who has consented to the
assignment of rights made by the creditor in
favor of a third person, cannot set up against
the assignee the compensation which would
pertain to him against the assignor, unless the
assignor was notified by the debtor at the time
he gave his consent, that he reserved his right
to the compensation.
If the creditor communicated the cession to him
but the debtor did not consent thereto, the
latter may set up the compensation of debts
previous to the cession, but not of subsequent
ones.
If the assignment is made without the
knowledge of the debtor, he may set up the
compensation of all credits prior to the same
and also later ones until he had knowledge of
the assignment. – Art 1285
Compensation before assignment
- Can only assign the right applicable as a
defense of compensation
- If given the consent before assignment,
previous defense of compensation is lost
Compensation has taken place after assignment
1. Assignment w/ consent of D
a. A owes B, B owes A, B assigns C
b. A cannot set up against C
c. Liable to C for whole but may collect
from B
Compensation 2
2. Assignment w/ knowledge, w/o consent of D
a. A owes B Nov 1
b. B owes A Nov 10
c. A owes B Nov 15
d. A assigns C Nov 12
e. B can only set up compensation
before Nov 12
3. Assignment w/o knowledge of D
a. In this case the crucial time is when
acquired knowledge of the
assignment and not the date of the
assignment will determine when he
can raise the defense of
compensation; otherwise he cannot
The indemnity of expenses of monetary exchange
and expenses of transportation shall be paid by who
raises the defense of compensation
Compensation shall not be proper when one of
the debts arises from a depositum or from the
obligations of a depositary or od a bailee in
commodatum.
Neither can compensation be set up against a
creditor who has a claim for support due by
gratuitous title, without prejudice to the
provisions of paragraph 2 of article 301. – Art.
1287
Neither shall there be compensation if one of
the debts consists in civil liability arising from a
penal offense. – Art. 1288
When legal compensation is not allowed
1. One of the debts arises from a depositum
a. Nagsangla ako ng singsing tas
Nawala nung tindera
b. Pwede niya kong kasuhan, ako rin
pwede ko siyang kasuhan
2. One of the debts arises from commodatum
a. Commodatum: gratuitous contract
whereby one of the parties delivers
to another something not
 Compensation 3

consumable so the latter may use the

same for a certain time and return it
b. Pinahiram ko sayo kaya dapat ibalik
mo
3. One of the debts arises from a claim for
support due by gratuitous title
a. Support compromises everything
that is indispensable for sustenance,
dwelling, etc. in keeping with the
financial capacity of the family
b. Right to receive support cannot be
compensated with what the recipient
owes the obligor
i. Because it is essential to the
life of the recipient
4. One of the debts consists in civil liability
arising from a penal offense

If a person should have against him several

debts which are susceptible of compensation,
the rules of application of payments shall apply
to the order of the compensation. – Art. 1289

When all the requisites mentioned in article

1279 are present, compensation takes effect by
operation of law, and extinguishes both debts
to the concurrent amount, even though the
creditors and debtors are not aware of the
compensation. – Art. 1290

Consent of parties not required in legal

compensation when…
1. Compensation takes place automatically by
mere operation of law
2. Full legal capacity of parties not required
a. Not needed to be in
i. Legal age
ii. If Muslim: puberty
 Novation 1

Obligations may be modified by: Requisites of novation:

(1) Changing their object or principal
conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the rights
of the creditor. – Art. 1291
Novation: total/partial extinction of an oblig through
creation of new one that substitutes it
Novation:
1. Modifies/extinguishes an existing oblig
2. Substitutes a new one in place
Kinds of novation
I. Acc to origin
1. Legal: operation by law
2. Conventional: agreement of parties
II. Acc to how it was constituted
1. Express: declared in unequivocal
terms
2. Implied: when old and new are
incompatible
III. Acc to extent or effect
1. Total/extinctive: old oblig completely
extinguished
2. Partial/modificatory: merely modified
old
IV. Acc to subject
1. Real/objective: object/principal cond.
2. Personal/subjective: D is substituted
or TP in the rights of C
3. Mixed
1. Previous valid oblig
2. Capacity and intention to modify/extinguish
3. Modification/extinguishment
4. Creation of a new valid oblig
Novation is never presumed; must be clearly and
unmistakably established
Burden of showing novation is on part of the party
who claims its existence
Kinds of Personal novation
1. Substitution: D is substituted
2. Subrogation: TP in the rights of C
Kinds of substitution
Expromision Delegacion
TP in his own initiative C accepts a TP
w/o knowledge/will of D All parties must agree
w/ consent of C
New D right to New D right to
beneficial reimbursement and
reimbursement subrogation
Must release D If C releases D then
otherwise no there is delegacion
expromision
If the substitution is without the knowledge or
against the will of the debtor, the new debtor’s
insolvency or non-fulfillment of the obligation
shall not give rise to any liability on the part of
the original debtor. – Art. 1294

In order that an obligation may be extinguished
by another which substitutes the same, it is
imperative that it be so declared in unequivocal
terms, or that the old and the new obligations
be on every point incompatible with each other.
– Art. 1292
The insolvency of the new debtor, who has
been proposed by the original debtor and
accepted by the creditor, shall not revive the
action of the latter against the original obligor,
except when said insolvency was already
existing and of public knowledge, or known to
the debtor, when he delegated his debt. – Art
1295
 Novation 2

A void oblig cannot be novated because there is

Effect of insolvency of New D nothing to novate
Expromision Delegacion - If voidable, it is valid until annulled in court
Non-fulfillment of ND Shall not revive action
will not revive action of against OD unless If the original obligation was subject to a
C against OD - Insolvency was suspensive/regulatory condition, the new
already existing obligation shall be under the same condition,
and of public unless it is otherwise stipulated. – Art. 1299
knowledge
- Insolvency was If suspensive not If resolutory is complied
known by D to complied with with
be existing No oblig arises Old oblig is
extinguished
The exceptions are intended to prevent fraud on
part of OD Subrogation of a third person in the rights of
the creditor is either legal or conventional. The
When the principal obligation is extinguished in former is not presumed, except in cases
consequence of novation, accessory expressly mentioned in this Code; the latter
obligations may subsist only insofar as they must be clearly established in order that it may
may benefit third persons who did not give take effect. – Art. 1300
their consent. – Art. 1296
Subrogation: substitution of 1 in place of C
Accessory oblig of a TP remains in force unless the - Given all rights of C and right to employ all
TP gives consent to the novation remedies to enforce payment

If the new obligation is void, the original one Kinds of Subrogation

shall subsist, unless the parties intended that 1. Conventional: by agreement of original
the former relation should be extinguished in parties
any event. – Art. 1297 a. must be clearly established for it to
take place
New oblig must be valid; no novation if oblig is VOID 2. Legal: by operation of law
- Cannot extinguish the first a. Not presumed

If new oblig is only voidable, novation can take place Conventional subrogation of a third person
until it is annulled requires the consent of the original parties and
- Novation seem as not have taken in place of the third person. – Art. 1301
- Original oblig can be enforced
Consent of all required in conventional
The novation is void if the original obligation is subrogation:
void, except when annulment may be claimed 1. Consent of D
only by the debtor, or when ratification 2. Consent of old C
validates acts which are voidable. – Art. 1298 3. Consent of new C
 Novation 3

It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor C who is partially paid by New C remains a C to the
who is preferred, even without the extent of the balance of the debt
debtor’s knowledge;
(2) When a third person, not interested in In case of insolvency of D, C is given preferential
the obligation, pays with the express or right against new C for the remainder.
tacit approval of the debtor;
(3) When, even without the knowledge of
the debtor, a person interested in the
fulfillment of the obligation pays, without
prejudice to the effects of confusion as
to the latter’s share. – Art. 1302

Cases of Legal subrogation:

1. When C pays another C who is preferred
2. When TP w/o interest in the oblig pays with
D’s approval
3. When a TP w/interest in the oblig pays even
w/o D’s knowledge
a. In case of confusion, the guaranty is
extinguished but the principal oblig
still takes place
In all cases, subrogation is produced from payment

Subrogation transfers to the person

subrogated the credit with all the rights thereto
appertaining, either against the debtor or
against third persons, be they guarantors or
possessors of mortgages, subject to stipulation
in a conventional subrogation. – Art. 1303

Legal subrogation transfers to new C the credit and

all rights and actions old C can exercise against D
or TPs unless otherwise stipulated

A creditor, to whom partial payment has been

made, may exercise his right for the remainder,
and he shall be preferred to the person who
has been subrogated in his place in virtue of
the partial payment of the same credit. – Art.
1304