OBLICON PERSONAL SYLLABUS

PRESCRIPTION Laches

Two concepts of prescription: Miguel vs. Florendo Catalino (1968)

 Courts cannot look with favor at parties who, by their silence,
1. Prescription as a mode of acquisition or as a mode of losing delay and inaction, knowingly induce another to spend time,
ownership; effort and expense in cultivating the land, only to spring from
2. Prescription as a statute of limitations; Extinctive Prescription; ambush and claim title when the possessor’s efforts and rise
Liberatory Prescription; Prescription of Actions. of land values offer an opportunity to make easy profit at his
expense.
 An action to declare contract as null and void does not
Acquisitive Prescription
prescribe.

Requisites of acquisitive prescription:

Agra vs. PNB (1999)
 Four requisites of laches
1. In the concept of an owner – not license, not tolerance;
2. Public;
Sps. Aboitiz vs. Sps. Po (2017)
3. Peaceful;
 Sps. Po is not barred by laches. There is no showing that they
4. Uninterrupted; abandoned their right to the property.
5. Adverse.
Extinctive Prescription
Abalos and Sps. Salazar vs. Heirs of Vicente Torio (2011)
 Possession in good faith
Interruption of extinctive prescription:
 Just title
1. When action is filed before the court (judicial demand);
Distinguish “interruption” from “suspension” (tolling).
2. Written extra-judicial demand;
3. Written acknowledgment of debt by debtor.
Interruption of acquisitive prescription:
Rights that may not be extinguished by prescription:
1. Natural interruption;
2. Civil interruption
1. Right to demand right of way;
Exceptions of civil interruption:
2. Right to demand compulsory or legal easement of drainage;
i. If it should be void for lack of legal solemnities;
3. Action to demand partition of co-ownership (as long as no
ii. If the plaintiff should desist from the complaint or should
repudiation);
allow the proceedings to lapse;
4. Action to declare contract null and void;
iii. If the possessor should be absolved from the complaint.
5. Action to have a will probated;
3. When there is any express or tacit recognition which the
6. Action to quiet title as long as plaintiff is in possession of property;
possessor may make of the owner’s right.
7. Right to demand support (present and future);
8. Action to recover property placed in express trust (unless there is
Things that may not be acquired by prescription:
repudiation);
9. Action to compel reconveyance of property with a Torrens Title (if
1. Things outside the commerce of man;
registered owner is in bad faith);
2. Property of the State or any of its subdivisions, not patrimonial in
10. Action by registered owner of land covered by Torrens Title to
character;
recover possession of land;
3. Those protected by a Torrens title;
11. Action of buyer of land to compel seller to execute proper deed of
4. Movables acquired through crimes;
conveyance (provided the buyer is still in possession).
5. Prescription does not run between: husband and wife, parents
and children during the minority or insanity of the latter;
- oOo -
guardians and ward during the continuance of the guardianship.

Mercado vs. Espinocilla (2012)

 Petitioners are barred by extinctive prescription (more than 10
years had already elapsed);
 Macario himself had already acquired the property by
acquisitive prescription (more than 30 years [e.g. 55 years]
had already elapsed).

Page 1 of 11
 OBLICON PERSONAL SYLLABUS

OBLIGATIONS Joaquin vs. Aniceto (1964)

 Requisites for an employer to be subsidiarily liable
General Provisions for the crime of employee.
 Note: If action is based under Article 100 of the
Classification of Obligations. Revised Penal Code (not based on quasi-delict),
the employer can be held subsidiarily liable only
upon prior conviction of the employee.
1. SANCTION
i. Civil Obligation
Note: Effect of Death of the Criminal pending trial on his civil
ii. Natural Obligation
liability.
iii. Moral/Imperfect Obligation
2. SUBJECT MATTER
People vs. Paras (2014) citing People vs. Bayotas
i. Real (obligation to give)
 The death of the accused extinguishes his criminal
ii. Personal (obligation to do or not to do)
liability as well as the civil liability based solely
3. AFFIRMATIVENESS/NEGATIVENESS thereon.
i. Positive/Affirmative (to dive or to do)  Guidelines as enunciated by People vs. Bayotas.
ii. Negative (not to do)
4. PERSONS OBLIGED Bernardo vs. People (2015)
i. Unilateral (e.g. commodatum)  In B.P. 22 cases, the criminal action shall be
ii. Bilateral (e.g. contract of sale) deemed to include the corresponding civil actions.
Instead of instituting two separate cases, only a
Elements of an Obligation. single suit is filed and tried.
 The death of Bernardo did not automatically
1. Active subject extinguish the action. The independent civil
2. Passive Subject liability based on contract, which was deemed
3. Prestation or Object instituted in the criminal action for BP 22 may still
4. Efficient Cause be enforced against her estate.
5. In some cases, form.
Note: There are crimes without civil liability because they do not
Different kinds of Prestation. have an offended party.

1. To give (real obligation);  Treason

2. To do (positive personal obligation);  Rebellion
3. Not to do (negative personal obligation).  Gambling
 Illegal possession of firearms
Sources of Obligations.  Illegal possession of prohibited drugs

Metrobank vs. Rosales (2014) 5) Quasi-Delict / Culpa Aquiliana

 “Hold Out” Clause
 Rosales is not liable under any of the 5 sources of obligation. Note: Foundation of quasi-delict is negligence.
 No legal basis for the bank to issue the “Hold Out” Order.
Note: Vicarious Liability.
1) Law
Pacis vs. Morales (2010)
OSG vs. Ayala Land (2009)  Accidental discharge of firearm inside gun store.
 The requirement of free-of-charge parking has no  Since this is a business dealing with dangerous
basis in the National Building Code or its weapons, the degree of diligence should have
Implementing Rules and Regulation. been extraordinary diligence.
 Obligations derived from law are not presumed; it  Employer cannot be excused on the mere
has to be expressly provided for under the law. allegation that he was not around during the
discharge or that he exercised due diligence in the
2) Contract selection of employees.

3) Quasi-Contract Quasi-Delict vs. Crime

Characteristics of Quasi-Contracts: Quasi-Delict vs. Culpa Contractual

i. Lawful Acts;
ii. Voluntary Acts;
iii. Unilateral Acts.

Two Principal Kinds of Quasi-Contracts:

i. Negotiorum Gestio;
ii. Solutio Indebitii.

Solutio Indebitii vs. Accion in rem verso.

4) Delict / Acts or Omissions Punished by Law

Page 2 of 11
 OBLICON PERSONAL SYLLABUS

Nature and Effect of Obligations

Remedies in Case of Breach of Obligations.
Rules applicable in obligation to give a determinate or specific thing.
(I) REAL OBLIGATIONS
1. Every person obliged to give a determinate thing is also obliged to
take care of it with the proper diligence of a good father of a i. If the subject matter is specific:
family (Art. 1163).
1. Compel to perform (Art. 1165);
2. The obligation to give a determinate thing includes that of 2. Rescission (Art. 1380);
delivering all its accessions and accessories (Art. 1166). 3. Resolution (Art. 1190);
4. Damages (Art. 1170).
3. The creditor has the right to the fruits of the thing from the time
the obligation to deliver it arises (Art. 1164). ii. If the subject matter is generic:

 Personal Right: From the time the obligation to deliver it 1. Compel to perform (Art. 1165);
arises until before delivery. 2. Rescission (Art. 1380);
3. Resolution (Art. 1190);
 Real Right: From the time of delivery onwards. 4. Damages (Art. 1170);
5. Obligation may be complied at the expense of the debtor
(Reason: Tradition, in consequence of certain contracts, (substituted performance) (Art. 1165).
transfers ownership.)
(II) PERSONAL OBLIGATIONS (Art. 1167-1168)
“Delivery, in consequence of certain contracts, transfers ownership.”
i. If a person obliged to do something fails to do it, the same shall be
Cruzado vs. Bustos executed at his cost.
 Plaintiff already bought property from the defendant, and
despite payment, the defendant did not deliver the land. ii. The same rule shall be observed if he does it in contravention of
 No delivery = No transfer of ownership. the tenor of the obligation.
 Remedy is NOT accion reinvindicatoria (recovery of
ownership). iii. It may be decreed that what has been poorly done be undone.
 Remedy is Complaint for Specific Performance.
Gaite vs. The Plaza, Inc. (2011)
“Kinds of Delivery”  Here, because the constructions made by Gaite
was not in accordance with the agreed plan, the
1. Real or actual tradition. same shall be executed at his cost.
2. Constructive tradition.  All cost of the construction in relation to the work
i. Tradition symbolica which was not in accordance with the plan should
ii. Tradition instrumental be borne by Gaite.
iii. Tradition longa manu  SC also ordered the return of the downpayment
iv. Tradition brevi manu because the law says that the same shall be
v. Tradition constitutum possessorium executed at your cost.
vi. Tradition by operation of law
iv. When the obligation consists in not doing, and the obligor does
vii. Quasi-tradition
what has been forbidden him, it shall also be undone at his
expense.
Norkis Distributors, Inc. vs CA (1991)
 The issuance of sales invoice does not prove transfer of
ownership of the thing sold to the buyer. Fajardo vs. Freedom to Build, Inc. (2000)
 In all forms of delivery, it is necessary that the act of delivery  The petitioners extended the roof of their house
whether constructive or actual, be coupled with the intention and expanded the second floor, despite
of delivering the thing. The act, without the intention, is prohibition in the contract to sell.
insufficient.  SC held that even if it is not mentioned in the
contract, it is mentioned in Article 1168 that
“when the obligation consists in not doing, and the
Equatorial Realty Development vs. Mayfair (2001)
obligor does what has been forbidden him, it shall
 The execution of a contract of sale as a form of constructive
be undone at his expense.
delivery is a legal fiction.
 Demolition is a way of undoing what was done.
 It holds true only when there is NO IMPEDIMENT that may
prevent the passing of the property from the hands of the
vendor into those of the vendee. When the obligation shall be performed. (CF Article 1169)
 When there is such impediment, “FICTION YIELDS TO REALITY
– the delivery has not been effected.”  Upon demand (judicial or extrajudicial) (oral or written)
 General Rule: There is no delay when there is no demand.
Rules applicable in obligation to give an indeterminate or generic thing.
When demand shall be made.
1. There is no obligation to observe due diligence;
2. There is no obligation to deliver fruits;  Demand shall be made on the day fixed in the contract. (Art.
3. There is no obligation to delivery specific accessions and 1193)
accessories.  If the contract does not fix a period but a period was intended,
remedy is to ask the court to fix a period. (Art. 1197)

Page 3 of 11
 OBLICON PERSONAL SYLLABUS

DBP vs. Guariῆa Agricultural (2014) Kinds of Default:

 Loan is a reciprocal obligation.
 By its failure to release the proceeds of the loan in their
entirety, DBP had no right yet to exact on Guariῆa the latter’s
compliance with its own obligation under the loan.
 It would only be when a demand to pay had been made and
was subsequently refused that a borrower could be
considered in default, and the lender could obtain the right to
collect the debt or to foreclose the mortgage. Hence, Guarina
Corporation would not be in default without the demand.
 The letter sent by DBP was not considered as a demand.
Vasquez vs. Ayala Corporation (2004)
 In order that the debtor may be in default, it is necessary that
the following requisites be present:
a. That the obligation be demandable and already
liquidated;
b. That the debtor delays performance; and
Solar Harvest vs. Davao Corrugated Carton Corp. (2010)
c. That the creditor requires the performance judicially or
extrajudicially.
 At best, petitioners’ letters can only be construed as mere
reminders which cannot be considered as demands for
performance because it must appear that the tolerance or
benevolence of the creditor must have ended.
 There must be a categorical demand.
General Rule: No demand, no delay.
Price Stabilization Inc. vs. Relloraza
Exceptions: (No need for demand.)
1. When the obligation expressly so declares;
2. When the law expressly so declares;
3. When from the nature and the circumstances of the obligation, it
appears that the designation of the time when the thing is to be
delivered or the service is to be rendered was a controlling motive
for the establishment of the contract.
1. Mora Solvendi
2. Mora Accipiendi
Sps. Nameal vs. Luna (2013)
 Debtor contends that since the creditor is in mora
accipiendi (by refusing payment), the running of
the interest should already be stopped from the
time they tendered payment to the creditor. (no)
 Take Note: Effect of tender of payment r/t
interest.
 In this case, there was no consignation so the
running of prescriptive period did not stop.
3. Compensatio Morae
 The parties can fix different dates for performance of the
obligation.
 Even in reciprocal obligations, if the period for the fulfillment
of the obligation is fixed, demand upon the obligee is still
necessary before the obligor can be considered in default and
before a cause of action for rescission will accrue.
 If different periods are fixed, the seller still has to make a
demand upon the buyer to place the latter in default.
 Monthly installment payments require demand for each
month to place debtor in default for every monthly
installment.
 GR: Default in one installment does not place debtor in default
for others.
 XPN: Acceleration Clause – nonpayment in one installment
makes all other installments due and demandable. However,
demand is still required to place debtor in default.

Rodriquez vs. Belgica Liability for damages. (CF Article 1170)

 Considering that the reciprocal obligation has
been established by the compromise agreement, I. FRAUD
the sequence in which the reciprocal obligations of
the parties are to be performed, is quite clear. i. Fraud in the performance (dolo incidente)
 The giving by the plaintiff of the authority to sell or Remedy: Damages (Art. 1170)
mortgage precedes the obligation of the
defendants to pay. ii. Fraud in the execution (dolo causante) [voidable]
 The SC said that from the very nature of the
Remedy: Annulment of the contract w/ Damages
obligation assumed by the plaintiffs, demand on
the defendant was not necessary.
Waiver:
4. When demand would be useless, as when the obligor has
o Waiver of future fraud is void.
rendered it beyond his power to perform.
o Waiver of an action for damages based on fraud already
committed is allowed.
University of Mindanao vs. BSP (2016)
 As a general rule, a person defaults and
prescriptive period for action runs when (1) the II. NEGLIGENCE
obligation becomes due and demandable; and (2)
demand for payment has been made. i. Gross negligence – can never be waived
 The prescriptive period for filing an action in this ii. Simple negligence – there can be waiver of liability (Note
case may run either: that waiver of liability cannot be applied to contracts of
1) From 1990 when the loan became due, if adhesion.)
the obligation was covered by the
exceptions under Article 1169; or III. DELAY
2) From 1999 when respondent demanded
payment, if the obligation was not covered IV. CONTRAVENTION OF TENOR OF OBLIGATION
by exceptions under Article 1169.
 There was a circumstance that placed the case
Kinds of Damages that may be awarded:
under the exception.
 Even if there was demand, it would be useless
1. Moral;
because FISLAI was liquidated.
 Therefore, start counting from 1990. 2. Exemplary;
3. Nominal;
5. When the debtor expressly admits that he has been in default. 4. Temperate;
5. Actual;

Page 4 of 11
 OBLICON PERSONAL SYLLABUS
6. Liquidated.
“Resolution” / Rescission under Article 1190.
1. Applies to reciprocal obligations. Both parties are debtor and
creditor of each other.
2. Reciprocity must arise from identify of the cause. Obligations
created at the same time.
3. Not applicable to contract to sell.
Reyes vs. Tuparan (2011)
 Article 1191 does not apply in contract to sell
because there is yet no reciprocal obligation and
yet no breach.
 Respondent’s failure to pay in full the purchase
price is not the breach of contract contemplated
under Article 1191 of the NCC, but rather just an
event that prevents the petitioner from being
bound to convey title to the respondent.
4. Right to cancel or resolve is based on breach of faith, not
economic injury.
Limitations on the Implied Power to Rescind under Article 1191.
1. Due Process if there is already performance by the other party.
University of the Philippines vs. Delos Angeles
 Parties can stipulate that there can be rescission
even without going to court.
 There is nothing in the law that prohibits the
parties from entering into agreement that
violation of the terms of the contract would cause
cancellation thereof, even without court
intervention.
2. The right to rescind is subordinated to the rights of third persons
who acquired thing in good faith.
3. Court may order fixing of period instead of rescission.
XPN: If fixing the period would serve no other purpose but to
delay.
4. Casual or slight breaches will not justify rescission.
Consolidated Industrial vs. Alabang Medical Center (2013)
 Rescission of a contract will not be permitted for a
slight or casual breach, but only for such
substantial and fundamental violations as would
defeat the very object of the parties in making the
agreement.
 Whether breach is substantial is largely
determined by the attendant circumstances.
5. Remedy of rescission is alternative to specific performance.
Note: Filing of both rescission and specific performance can be
dismissed on ground of splitting a cause of action or res judicata.
GENERAL RULE: Specific Performance is alternative to Rescission.
EXCEPTIONS:
i. Even if specific performance was filed first, if
performance is no longer possible, you can file
rescission.
ii. Even if rescission was filed first, if there is valid basis for
extension of performance of the obligation, court will
not decree rescission but will instead fix period for
fulfillment.
6. Rescission can only be filed by the injured party.
Almira vs. Court of Appeals (2003)
 The power to rescind is only given to the injured
party.
 The injured party is the party who has faithfully
fulfilled his obligation or is ready and willing to
perform his obligation.
 In this case, petitioners were not ready, willing,
and able to comply with their obligation to deliver
a separate title in the name of Garcia to
respondent.
Distinction between Article 1191 and Article 1380.
Congregation vs. Orola (2008)
 The remedy of resolution, under Article 1191, applies only to
reciprocal obligations such that a party’s breach of obligation
partakes of a tacit resolutory condition which entitles the
injured party to rescission.
 Rescission under Article 1381 is a subsidiary action, and is not
based on a party’s breach of obligation.
 The rescission on account of breach of stipulations is not
predicated on injury to economic interests of the party
plaintiff but on the breach of faith by the defendant, that
violates the reciprocity between the parties.
Remedies of CREDITOR:
1. Accion Subrogatoria
2. Accion Pauliana
3. Action Directa
i. Subsidiary liability of sublessee to lessor
ii. Vendor may bring his action against every possessor whose
right is derived from the vendee
iii. Laborers engaged by the contractor have an action against
the owner up to the amount owing from the owner to the
contractor.
iv. In agency, the principal may bring an action against the
substitute.
Remedies of DEBTOR:
 Fortuitous Event (CF. Article 1174)
Requisites:
i. The cause of the breach must be independent of the will of
the obligor;
ii. The event must either be unforeseeable or unavoidable;
iii. The event must be such as to render impossible for the
obligor to fulfill his obligation in a normal manner;
iv. The obligor must be free from any participation or
aggravation of the injury to the obligee.
Philippine Realty vs. Ley Construction:
 The following were considered as fortuitous events: shortage
of supplies and cements, typhoons, power failures and
interruptions of water supply.
 Since Ley Construction could not possible continue
constructing the building under the circumstances prevailing,
it cannot be held liable for any delay that resulted from the
causes aforementioned.
Page 5 of 11
 OBLICON PERSONAL SYLLABUS

Yobido vs. CA
 Tire blowout was not caso fortuito.
 The cause of the blowout, if due to a factory defect, improper
mounting, excessive tire pressure, that would not be
considered as a fortuitous event because it would not be an
unavoidable event.

Real vs. Belo

 The fire was not fortuitous event.
 There was negligence because they failed to show that the
LPG stove and tank were maintained in good condition and
checked for defects.

Metro Concast vs. Allied Bank (2013)

 The violation by Peakstar of the MOA is not fortuitous event.
 While it may be argued that the breach of Peakstar was
unforeseen by petitioners, the same is clearly not “impossible”
to foresee or “independent of human will.”
 Moreover, an obligation to pay money cannot be extinguished
by fortuitous event. Because money is generic. It can never be
extinguished. It can be replaced by another.

Gaisano Cagayan vs. Insurance Co.

 When the obligation consists in the payment of money, the
failure of the debtor to make the payment even by reason of a
fortuitous event shall not relieve him of his liability.
 The rule that the obligor should be held exempt from liability
when the loss occurs through a fortuitous event only holds
true when the obligation consists in the delivery of a
determinate thing and there is no stipulation holding him
liable even in case of fortuitous event.

General Rule: Fortuitous event extinguishes obligation.

Exceptions: (Debtor still liable despite fortuitous event)

1. When it is expressly specified by law.

i. If the debtor is already in delay (default);

ii. When the obligor has promised the same thing to 2 or
more persons who do not have the same interest;
iii. When the possessor is in bad faith and the thing is lost or
deteriorated due to fortuitous event.

2. When it is declared by stipulation.

3. When the nature of the obligation requires the assumption of risk

(Doctrine of Created Risk)

Jimmy Co vs. CA
 Private respondent is engaged in the sale,
distribution and repair of motor vehicles.
 Carnapping per se cannot be considered as a
fortuitous event.
 Nonetheless, pursuant to Articles 1174 and 1262,
liability attaches even if the loss was due to a
fortuitous event if – the nature of the obligation
requires the assumption of risk.
 Carnapping is a normal business risk for those
engaged in the repair of motor vehicles.

Page 6 of 11
 OBLICON PERSONAL SYLLABUS

Different Kinds of Obligations

Buce vs. Court of Appeals (2000)
Kinds of Civil Obligations.  “The lease shall be for a period of 15 years effective June 1,
1979, subject to renewal for another 10 years, under the same
1. Pure and Simple Obligations. terms and conditions.”
2. Conditional Obligations.  The period of the lease contract is deemed to have been set
3. Obligations subject to a Term or Period. for the benefit of both parties.
 Renewal may be had only upon their mutual agreement.
Pure and Conditional Obligations
Article 1197.
Different Kinds of Conditions.
 If based on the tenor of the obligation, it appears that a period is
intended but it does not specify, the court can fix the period.
1. Suspensive condition;
 The court will fix the period based on what was intended by the
2. Resolutory condition;
parties.
3. Potestative condition;
4. Casual condition;
5. Mixed condition; Radiowealth Finance vs. Sps. De Rosario (2000)
 This is not the case when there’s failure to fix the period
6. Impossible condition
because here, there was really a period agreed upon but it
was just not written in the contract.
Suspensive Conditions.
 The contemporaneous and subsequent acts of the parties
manifest their intention that the monthly installments would
Special Rules Applicable to Suspensive Conditions. be due and demandable each month.
 The conclusion is that the installments had become due and
i. Art. 1187: Retroactive effect of fulfillment demandable.
ii. Art. 1188: Bringing of actions  Therefore, the court need not fix a period and the action here
is not premature.
Special Rules Applicable to Obligations with Suspensive Conditions in
case of Improvements, Loss, Deterioration of Specific Thing. When debtor loses right to make use of period.

(CF Article 1189)  (CF Article 1198)

Potestative Conditions. Gaite vs. Fonacier (1961)

VOID: If potestative + suspensive + dependent upon will of debtor.
Catungal vs. Rodriguez
 There should be a distinction between a condition
imposed on PERFECTION of a contract and a
condition imposed on PERFORMANCE of
obligation.
 Even if it is a condition which is dependent upon
the sole will of the debtor and it is imposed upon
the perfection – potestative suspensive on the part
of the debtor and imposed upon perfection of
contract – that is the one which will make the
condition obligation void.
 If it is a potestative suspensive condition on the
part of the debtor, but is a condition which is
imposed merely on the performance of the
contract, that will not make obligation void. This
merely gives the other party the option to refuse
to proceed with the sale or to waive the condition.
Obligations with a Period
Distinguish Alternative vs. Facultative Obligation.
Effect:
Rules in case of Loss through Debtor’s Fault:
 The debtor cannot be compelled to perform prior to arrival of
period.
 The creditor cannot be compelled to accept prior to the arrival of
the period.
Distinguish Article 1195 vs. Solutio Indebitii.
Concepts to Remember.
For whose benefit:
 General Rule: For the benefit of both the creditor and debtor.
 Exception: If it appears otherwise.
 “To be paid out of the first Letter of Credit covering the first
shipment of iron ores or the first amount derived from the
local sale of iron ore.”
 This is not a condition. It is just a suspensive period or term.
 What characterizes a conditional obligation is the fact that its
efficacy or obligatory force is subordinated to the happening
of a future and uncertain event. If the suspensive condition
does not take place, the parties will stand as if the condition
and obligation have never existed.
 Here in the contract, the words do not express any
contingency of the buyer’s obligation.
 The amount would have to be paid, only that it’s not known
when. What is undetermined is the exact date at which it
would be made.
 Assuming that there could be doubt whether by the wording
of the contract the parties intended a suspensive condition or
a suspensive period, the rules of interpretation would incline
the scales in favor of “the greatest reciprocity of interests,”
since sale is essentially onerous.
Alternative Obligations
I. If choice belongs to debtor
II. If choice belongs to creditor
Joint Obligations
1. Presumption is JOINT unless otherwise indicated by the law or
nature of obligation (Art. 1207).
2. Each credit is distinct from one another, therefore a joint debtor
cannot be required to pay for the share of another with debtor,
although he may pay if he wants to.

Page 7 of 11
 OBLICON PERSONAL SYLLABUS
3. Insolvency of joint debtor: others are not liable for his share.
Marsman Drysdale vs. Gotesco (2010)
 Marsman and Gotesco entered into JVA: Marsman to
contribute property with value at 420M, whereas Gotesco
shall contribute cash at 420M.
 The Court finds that both are jointly liable.
 Under the law, when there is concurrence of two or more
debtors in one and the same obligation, in the absence of any
agreement as to solidarity, the obligation is joint.
Sps. Ibanez vs. Harper (2017)
 In this case, given that solidarity could not be inferred from
the agreement, the presumption under the law applies – the
obligation is joint.
Solidary Obligations
Words Used.
 “Solidarily”
 “In solidum”
 “Jointly and Severally”
Concepts to Remember.
1. Anyone of the solidary creditors may collect or demand payment
of whole obligation.
2. Any of the solidary debtors may be required to pay the whole
obligation; there is mutual agency among solidary debtors.
3. Each solidary creditor may do whatever may be useful to the
others, but not anything prejudicial to them; however, any
novation, compensation, confusion or remission of debt executed
by any solidary creditor shall extinguish the obligation without
prejudice to his liability for the shares of the other solidary
creditors.
Defenses Available to Solidary Debtor.
 Defenses derived from the nature of the obligation
o Prescription
o Payment
o Statute of Frauds
 Defenses personal to the debtor himself
o Minority
o Insanity
 Defenses available to the other solidary debtors
o Insanity
Indivisible Obligations
Solidary Obligation vs. Indivisible Obligation
 Solidary Obligation – juridical tie that binds the parties
 Indivisible Obligation – Subject matter of the obligation, whether
it is capable of partial performance
Sps. Lam vs. Kodak (2016)
 The letter agreement contained an indivisible obligation.
 Based on the contract, the intention of the parties is for there
to be a single transaction covering all three units of the
Minilab Equipment.
Obligations with a Penal Clause
General Rule: Penalty shall substitute indemnity for damages and payment of
interests in case of noncompliance.
Exception: Stipulation to the contrary (e.g. penalty + damages + interest)
DM Ragasa Enterprises vs. BDO (2018)
 A penal clause is an accessory obligation which the parties
attach to a principal obligation for the purpose of ensuring the
performance thereof by imposing on the debtor a special
prestation which is generally consisting on the payment of the
sum of money in case the obligation is not fulfilled, or is
irregularly or inadequately fulfilled.
 A penal clause has THREE-FOLD PURPOSE. (C-L-P)
 When purpose is for REPARATION or COMPENSATION, there is
no need to prove the amount of damages because when the
parties agreed on that amount, they already made
computations of the probable amount of damages that they
could suffer.
 When purpose is for PUNISHMENT, there is need to prove
amount because the question on damages is not yet resolved,
inasmuch as the right of damages besides the penalty still
subsists (e.g. penalty + damages).
 A penal clause may be classified according to: (S-D-P)
1. Source | Legal or Conventional
2. Demandability | Complementary or Subsidiary
3. Purpose | Cumulative or Reparatory
Factual Discussion:
 Item 8(n): “To pay a penalty of 3% of the monthly rental, for
every month of delay of payment of the monthly rental.”
 Item 10: “In the event that a Court Litigation has been
resorted to by the LESSOR or LESSEE, due to non-compliance of
any of the foregoing provisions, the aggrieved party shall be
paid by the other party, no less than fifteen thousand
(P15,000) pesos, Philippine Currency, for Attorney's fees, and
other damages that the honorable court may allow.”
 Reading these two items together, it’s saying that aside from
the penalty, the aggrieved party can also recover damages.
 Therefore, pursuant to Article 1226, the aggrieved party can
be awarded damages in addition to the penalty, which is the
forfeiture of the deposit.
 The bank cannot insist on paying only the penalty, because the
provisions provided the payment of “penalty + damages.”
 However, since Items 8(n) and 10 are considered as
punishment, the injured party is nonetheless required to
prove the “other damages” that it actually suffered. (When
purpose of the penal clause is for PUNISHMENT, there is need
to prove amount.)
Page 8 of 11
 OBLICON PERSONAL SYLLABUS
Extinguishment of Obligations
(CF Article 1231)
Payment or Performance
Article 1235. When Obligee Accepts Performance.
De Castro vs. CA (2002)
 Mere receipt of a partial payment is not equivalent to the
required acceptance or performance as would extinguish the
whole obligation.
 So there must be a distinction between acceptance and mere
receipt. So he merely received the partial payment without
waiving the balance.
Article 1236. Creditor is not bound to accept payment from third person.
If creditor accepts payment from third person, there must be distinction:
 If third person paid with consent of debtor, then there is
subrogation.
 If third person paid without consent of debtor or against the will
of debtor, there will no subrogation. But the third person can still
demand for beneficial reimbursement from the debtor.
Dominion Insurance vs. CA (2002)
 Revolving fund case
 Having deviated from the instructions of the principal, the
expenses that Guevarra incurred in the settlement of the
claims of the insured may not be reimbursed from the
Insurance Company, pursuant to Article 1918 of the New Civil
Code.
 However, while the law on agency prohibits Guevarra from
obtaining reimbursement, the right to recover may still be
justified under the general law on obligations and contracts,
pertaining to beneficial reimbursement.
 To rule otherwise would result in the unjust enrichment of
petitioner.
Article 1238. Payment made by third person who does not intend to be
reimbursed is deemed to be a donation.
Requires consent from the debtor.
Lentfer vs. Wolff (2004)
 Petitioners insist that respondent did not intend to be
reimbursed for said payment and that the debtor consented
to it. That by virtue of Article 1238, payment by respondent is
deemed a donation.
 Petitioners were not able to present any evidence that they
had a close relationship with Wolff that would justify
donation.
 Assuming that there was a donation, it must comply with the
mandatory formal requirements for validity (e.g. the donation
of money as well as its acceptance should have been in
writing).
 It was not. Hence, the donation is invalid for non-compliance
with the formal requisites prescribed by law.
Jalandoli vs. Encomienda (2017)
 Even if Jalandoni asserverates that Encomienda’s payment of
her houselold bills was without her knowledge or against her
will, she cannot deny the fact that the same inured to her
benefit and Encomienda must there be consequently
reimbursed for it.
Article 1245. Dacion in Payment
 Property is alienated to the creditor in satisfaction of a debt in
money.
 TAKE NOTE: There has to be acceptance by the creditor.
 Once dacion in payment happens, it is equivalent to a novation.
 The obligation is now novated.
Tan Shuy vs. Sps. Maulawin (2012)
 Dation in payment extinguishes the obligation to the extent of
the value of the thing delivered, unless the parties by
agreement or by their silence consider the thing as equivalent
to the obligation, in which case the obligation is totally
extinguished.
Article 1249. Payment shall be made in the currency stipulated.
 General Rule: Legal Tender
 Exception: Stipulation to pay in another currency.
Payment of Check –
 Does not extinguish obligation.
 Will only extinguish when (1) the check has already been
encashed, or (2) through the fault of creditor, their value had
been impaired.
Papa vs. Valencia (1998)
 After more than 10 years from the payment by check, the
presumption is that the check had been encashed.
 Granting that petitioner had never encashed the check, his
failure to do so for more than 10 years undoubtedly resulted
in the impairment of the check through his unreasonable and
unexplained delay.
 The acceptance of the check implies an undertaking of due
diligence in presenting it for payment, and if he from whom it
is received sustains loss by want of such diligence, it will be
held to operate as actual payment of the debt or obligation for
which it was given.
Evangelista vs. Screenex, Inc. (2017)
 Despite the lapse of three (3) years from the time the checks
were issued, the obligation still subsisted and was merely
suspended until the payment by commercial document could
actually be realized.
Payment through Credit Card –
Mandarin Villa vs. CA (1996)
 While credit card is not considered as legal tender (as they’re
not currencies), Mandarin is still obliged to accept the credit
card for two reasons:
1. The application of the law on privity of contracts,
stipulation pour autri. There was a stipulation in the
contract that Mandarin will honor all subsisting and
unexpired credit cards issued by Bankard.
2. Estoppel. In the establishment of Mandarin, there was a
notice, “Bankard Credit Cards are accepted here.”
Article 1250. Extraordinary Inflation or Deflation.
Equitable PCI Bank vs. Ng Sheung Ngor (2007)
 Three Requisites of Extraordinary Inflation or Deflation
1. Official declaration of extraordinary inflation or deflation
from the Bangko Sentral ng Pilipinas;
2. Obligation is contractual in nature;
3. Parties expressly agreed to consider the effects of
extraordinary inflation or deflation.
Apo Fruits Corporation vs. CA (2007)
 Article 1250 does NOT apply.
 Article 1250 applies only to obligations arising from contracts.
 Here, the obligation arises not from contract, but from law,
specifically the exercise by the government of the right to
expropriate.
Page 9 of 11
OBLICON PERSONAL SYLLABUS

Page 10 of 11
 OBLICON PERSONAL SYLLABUS

Payment by Cession
Loss of the Thing Due
(CF Article 1255)
Article 1267. Difficulty in Performance in Personal Obligation.
Cession is form of payment. The properties will be sold and the proceeds will
be apportion among all his creditors. Osmena vs. SSS (2007)
 Rebus Sic Stantibus
Sps. Villaluz vs. Land Bank (2017)
 When Milflores executed the Deed of Assignment, it was not Condonation or Remission of Debt
Dation in payment, it was not cession. It was merely an
additional security for the loan. Ways of Effecting Condonation:
 It was not payment by cession under Article 1255 for the plain
and simple reason that there was only one creditor (Land 1. Express Condonation
Bank). 2. Implied Condonation
 Article 1255 contemplates the existence of two or more
creditors and involves the assignment of all of the debtor’s Reyna vs. COA (2011)
property.
 “Write-off” is not one of the legal grounds for extinguishing an
obligation under the Civil Code.
Application of Payment
Compensation
(CF Article 1252)
Requisites of Legal Compensation
 One Debtor
 One Creditor (CF Article 1279)
 Several debts due to that one creditor
EGV Realty vs. Cristina Condominium (1999)
Limitations:  Debt vs. Claim

1. He cannot choose to apply the payment to debts which are not Novation
yet due.
2. He cannot compel the creditor to accept partial payment. Kinds of Novation
3. When the debt produces interest, the payment must be applied
first to the interest, before the principal. 1. Objective / Real
2. Subjective / Personal
(CF Article 1253) i. Passive (expromision / delegaction)
ii. Active (subrogation)
Marquez vs. Elisan Credit Corporation (CF Article 1301, 1302, 1303)
 The rule under Article 1253 that payments shall first be
applied to the interest and not to the principal shall govern if Requisites of Extinctive Novation:
two facts exist:
1. The debt produces interest (e.g. the payment of interest 1. Existence of previous valid obligation;
is expressly stipulated); 2. Agreement of all parties to the new contract;
2. The principal remains unpaid.
3. Extinguishment of old obligation or contract;
 Only when there is waiver of interest would Article 1176
4. Validity of new one.
become relevant.

Tender of Payment and Consignation

Procedure:

1. Tender of Payment
2. Formal complaint for consignation, not merely to deposit the
amount with the Clerk of Court
3. Debtor must show jurisdictional facts.

Ramos vs. Sarao (2005)

 Sending to the creditor a tender of payment and notice of
consignation may be done in the same act.
 Two notices sent: (1) intention to consign; (2) successful
consignation.

General Rule: Consignation alone, without prior tender of payment, is not

effective as payment.

Exceptions: Article 1256.

Sps. Cacayorin vs. Armed Forces (2013)

 Consignation is judicial in character.
 Article 1258 precludes consignation in venues other than the
courts.

Page 11 of 11