OBLIGATIONS AND

CONTRACTS
NEW CIVIL CODE OF THE PHILIPPINES
ARTS. 1156-1304 (OBLIGATIONS)
ARTS. 1305-1422
 GENERAL PROVISIONS

OBLIGATIONS
(CIVIL OBLIGATIONS)
A juridical necessity
To give, to do or not to do.
JURIDICAL NECESSITY
• CONNOTE THAT IN CASE OF NON-COMPLIANCE , THERE WILL BE
LEGAL SANCTIONS
SOURCES OF OBLIGATIONS 2
(LACQ )

1.LAW
2.CONTRACTS
3. QUASI-CONTRACTS
4.ACTS OR OMISSIONS PUNISHED BY LAW
5. QUASI-DELICTS (ART. 1157, NCC)
LAW
• A RULE OF CONDUCT, JUST AND OBLIGATORY, LAID DOWN BY
LEGITIMATE AUTHORITY FOR THE COMMON OBSERVANCE AND
BENEFIT.
CONTRACT
• IS A MEETING OF THE MINDS
• BETWEEN TWO PERSONS
• WHEREBY ONE BINDS HIMSELF
• WITH RESPECT TO THE OTHER
• TO GIVE SOMETHING
• OR TO RENDER SOME SERVICE (ART. 1305, NCC)
QUASI-CONTRACTS
• REFER TO CERTAIN, LAWFUL, VOLUNTARY AND UNILATERAL ACTS
• GIVING RISE TO A JURIDICAL RELATION
• TO THE END THAT NO ONE SHALL BE UNJUSTLY ENRICHED
• AT THE EXPENSE OF ANOTHER

UNJUST ENRICHMENT
- RETAINS A BENEFIT TO THE LOSS OF ANOTHER
TWO TYPES OF QUASI-CONTRACT
1. NEGOTIORUM GESTIO
- REFERS TO THE VOLUNTARY ADMINISTRATION OF THE PROPERTY,
BUSINESS OR AFFAIRS OF ANOTHER
- WITHOUT HIS CONSENT OR AUTHORITY

2. SOLUTIO INDEBITI
- REFERS TO PAYMENT BY MISTAKE OF AN OBLIGATION WHICH WAS
NOT DUE WHEN PAID.
ACTS OR OMISSIONS PUNISHABLE BY LAW
• THESE ARE CRIMES OR FELONIES. THE COMMISSION OF THE CRIME
MAKES THE OFFENSER CIVILLY LIABLE.
QUASI-DELICTS (ALSO KNOWN AS
”TORT/CULPA-AQUILIANA” )
• ACTS OR OMISSIONS THAT CAUSE DAMAGE TO ANOTHER THERE
BEING FAULT OR NEGLIGENCE BUT WITHOUT ANY PRE-EXISTING
CONTRACTUAL OBLIGATION
ESSENTIAL REQUISITES OF AN OBLIGATION
(JAPP)

1. JURIDICAL OR LEGAL TIE/ EFFICIENT

CAUSE/VINCULUM JURIS
2. ACTIVE SUBJECT/CREDITOR/OBLIGEE
3. PASSIVE SUBJECT/DEBTOR/OBLIGOR
4. PRESTATION/OBJECT
ESSENTIAL REQUISITES OF AN OBLIGATION
1. JURIDICAL OR LEGAL TIE/ EFFICIENT CAUSE/VINCULUM JURIS
- Which binds the parties to an obligation.
- It may be any of the five sources of obligation
ACTIVE SUBJECT
• KNOWN AS THE CREDITOR/OBLIGEE
• WHO CAN DEMAND THE FULFILLMENT OF THE OBLIGATION
PASSIVE SUBJECT
• KNOWN AS THE DEBTOR/OBLIGOR
• FROM WHOM THE OBLIGATION IS JURIDICALLY DEMANDABLE
PRESTATION/FACT/SERVICE
• WHICH CONSTITUTES THE OBJECT OF THE OBLIGATUIN
• IT MAY BE AN OBJECT
• IT MAY CONSIST OF GIVING, DOING OR NOT DOING SOMETHING
PRESTATION
1.OBLIGATION TO GIVE
- consists in the delivery of a movable or immovable thing to the
creditor.

EXAMPLES:
OBLIGATIONS TO DELIVER THE THING IN SALE, DEPOSIT, PLEDGE AND
DONATION
PRESTATION
2.OBLIGATION TO DO
- Covers all kinds of works or services whether physical or mental

EXAMPLES:
CONTRACT FOR PROFESSIONAL SERVICES LIKE PAINTING ,
MODELLING, SINGING
PRESTATION
2.OBLIGATIONS NOT TO DO
- CONSISTS IN REFRAINING FROM DOING SOME ACTS
KINDS OF OBLIGATIONS
• (A) AS TO JUDICIAL ENFORCEABILITY
• (B) AS TO THE SUBJECT MATTER
• C AS TO THE NUMBER OF PERSONS BOUND TO PERFORM
• D. AS TO THE CAPABILITY OF FULFILLMENT
• E. AS TO SUSCEPTIBILITY OF PARTIAL FULFILLMENT
• F. AS TO THEIR DEPENDENCE UPON ONE ANOTHER
• G. AS TO THE EXISTENCE OF A BURDEN OR CONDITION
• H. AS TO THE NATURE OF PERFORMANCE
• I. AS TO THE NATURE OF CREATION OF THE OBLIGATION
• J. AS TO THE CHARACTER OF RESPONSIBILITY OR LIABILITY
• K. AS TO THE GRANT OF RIGHT TO CHOOSE ONE PRESTATION OUT OF
SEVERAL OR TO SUBSTITUTE THE FIRST ONE.
• L. AS TO THE IMPOSITION OF PENALTY
 NATURE AND EFFECTS OF OBLIGATION
1. DETERMINATE OR SPECIFIC THING
- IS SOMETHING WHICH IS SUSCEPTIBLE OF PARTICULAR DESIGNATION
OR SPECIFICATION
- PARTICULARLY DESIGNATED OR PHYSICALLY SEGREGATED FROM ALL
OTHERS OF THE SAME CLASS
EXAMPLE; A MERCEDES BENZ CAR, MODEL 2000, CHASSIS NO.232323
WITH PLATE NO. AAA 999
2. INDETERMINATE THING OR GENERIC THING
- IS SOMETHING WHICH IS NOT PARTICULARIZED OR SPECIFIED BUT
HAS REFERENCE ONLY TO A CLASS OR GENUS
- EXAMPLE: A CAR, AN OUNCE OF GOLD

• GENUS NEVER PERISHES (GENUS NUNGUAM PERIT)

IN OBLIGATIONS TO GIVE
• IF THE OBLIGATION IS DETERMINATE, DUTIES WHICH ARE IMPOSED
UPON THE DEBTOR ARE:
1. TO DELIVER THE THING WHICH HE HAS OBLIGATED HIMSELF TO
GIVE;
2. TO TAKE CARE OF THE THING WITH THE PROPER DILIGENCE OF A
GOOD FATHER OF A FAMILY;
3. TO DELIVER ALL ACCESSIONS AND ACCESSORIES
4. TO PAY DAMAGES IN CASE OF BREACH OF OBLIGATION
OBLIGATIONS IS GENERIC:
• 1. TO DELIVER A THING WHICH MUST BE NEITHER OF SUPERIOR NOR
INFERIOR QUALITY

• 2. TO PAY DAMAGES IN CASE OF BREACH OF THE OBLIGATION

PROBLEM:
MR. A bound himself to deliver to B a (1) 21-inch 1983 model TV set,
and (2) the 13 cubic feet White Westinghouse refrigerator with Motor
No.WERT-385 , which B saw in A’s store, and (3)to repair B’s piano. A
did none of these things.

May B compel A to deliver the TV set and the refrigerator and repair
the piano?
OBLIGATION TO GIVE
QUESTION:
IF THE OBJECT OF THE OBLIGATION TO GIVE IS
LOST OR DESTROYED THROUGH A FORTUITOUS
EVENT, CAN THE DEBTOR OR OBLIGOR STILL BE
HELD LIABLE FOR DAMAGES?
ANSWER:

IT DEPENDS.
• OBLIGATION IS DETERMINATE
General Rule: The obligor or debtor cannot be held liable for damages
provided there is no delay or fault on the part of obligor.
REASON: DESTROYED BY FORTUITOUS EVENT

• OBLIGATION IS INDETERMINATE
• DEBTOR/OBLIGOR CAN STILL BE LIABLE FOR DAMAGES
REASON: GENUS NUMQUAM PERUIT
(GENERIC THING CAN NEVER PERISH)
CAUSES OF BREACH OF OBLIGATION
CAUSES OF BREACH OF OBLIGATION
1. DEFAULT OR MORA
2. FRAUD OR DOLO
3. NEGLIGENCE OR CULPA
4. CONTRAVENTION OF THE TENOR OF THE
OBLIGATION
CAUSES OF BREACH OF OBLIGATION
1. DEFAULT OR MORA

- DELAY IN THE FULFILLMENT OF AN OBLIGATION

- NON-FULFILLMENT OF AN OBLIGATION WITH
RESPECT TO TIME
CAUSES OF BREACH OF OBLIGATION
KINDS DEFAULT OR MORA
1.MORA SOLVENDI
- DELAY OF OF THE
OBLIGOR/DEBTOR TO PERFORM HIS
OBLIGATION
CAUSES OF BREACH OF OBLIGATION
KINDS DEFAULT OR MORA
2. MORA ACCIPIENDI
- DELAY OF OF THE
OBLIGEE/CREDITOR TO ACCEPT THE
DELIVERY OF THE THING W/C IS THE
OBJECT OF THE OBLIGATION
CAUSES OF BREACH OF OBLIGATION
KINDS DEFAULT OR MORA
3. COMPENSATIO MORAE
- DELAY OF THE PARTIES/OBLIGORS
IN RECIPROCAL OBLIGATIONS
DEFAULT OR MORA

QUESTION:
IN OBLIGATIONS TO GIVE OR TO
DO, WHEN DOES THE
OBLIGOR/DEBTOR INCUR
DELAY?
ANSWER: NON-FULFILLMENT OF OBLIGATION
DESPITE DESPITE OF DEMAND.
• DEBTOR INCURS IN DELAY FROM THE TIME THE
CREDITOR JUDICIALLY OR EXTRAJUDICIALLY DEMANDS
FROM HIM THE FULFILLMENT OF HIS OBLIGATION

• AND IN SPITE OF SUCH DEMAND

• HE IS UNABLE TO COMPLY WITH THE OBLIGATION

DEFAULT/MORA

WHEN IS DEMAND BY THE CREDITOR

NOT NECESSARY IN ORDER THAT DELAY
MAY EXIST?
DEMAND BY CREDITOR IS NOT NECESSARY:
TROUL
1. OBLIGATION OR THE LAW EXPRESSLY SO DECLARES

2. TIME IS OF THE ESSENCE

- THE NATURE AND THE CIRCUMSTANCES OF THE OBLIGATION IT
APPEARS THAT THE DESIGNATION OF THE TIME WAS A
CONTROLLING MOTIVE FOR THE ESTABLISHMENT OF THE CONTRACT
3. DEMAND WOULD BE USELESS
4. RECIPROCAL OBLIGATIONS
DEFAULT/MORA
• RECIPROCAL OBLIGATIONS
WHERE THE OBLIGATIONS ARISE OUT OF THE SAME CAUSE AND MUST
BE FULFIILED AT THE SAME TIME.

- FROM THE MOMENT ONE OF THE PARTIES

FULFILLS HIS OBLIGATION, DELAY BY THE OTHER
BEGINS, DESPITE THE ABSENCE OF DEMAND
EFFECTS OF DELAY
• ON THE PART OF THE DEBTOR

1. LIABLE FOR DAMAGES

2. OBLIGATION CONSISTS IN THE DELIVERY OF DETERMINATE THING
-RESPONSIBLE FOR ANY FORTUITOUS EVENT UNTIL HE EFFECTED THE
DELIVERY.
EFFECTS OF DELAY
• ON THE PART OF CREDITOR

1. BEAR THE RISK OF LOSS

2. SHOULDER THE PRESERVATION OF THE THING
3. DEBTOR MAY RESORT TO CONSIGNATION OF THE THING DUE.
CAUSES OF BREACH OF OBLIGATION

2. FRAUD/DOLO

- DELIBERATE/INTENTIONAL EVASION BY THE DEBTOR OF NORMAL

COMPLIANCE OF HIS OBLIGATION
KINDS OF FRAUD/DOLO
• FRAUD IN OBTAININNG CONSENT

1. CAUSAL FRAUD/DOLO CAUSANTE

- FRAUD W/OUT W/C CONSENT WOULD NOT HAVE BEEN GIVEN.

EFFECT:
CONTRACT IS VOIDABLE.
KINDS OF FRAUD/DOLO
• FRAUD IN OBTAININNG CONSENT

1. CAUSAL FRAUD/DOLO CAUSANTE

EXAMPLE: B BOUGHT A RING FROM S WHO TOLD HIM
THAT THE RING WAS EMBELLISHED WITH BLUE
DIAMOND WHICH IS NOT TRUE.
KINDS OF FRAUD/DOLO
• FRAUD IN OBTAININNG CONSENT

2. INCIDENTAL FRAUD/DOLO INCIDENTE

- FRAUD WITHOUT WHICH CONSENT WOULD HAVE STILL BEEN GIVEN
BUT THE PERSON GIVING IT WOULD HAVE AGREED ON DIFFERENT
TERMS.
- EFFECTS: CONTRACT IS VALID, GUILTY PARTY LIABLE FOR DAMAGES
KINDS OF FRAUD/DOLO
• FRAUD IN THE PERFORMACE OF THE OBLIGATION

- DELIBERATE ACT OF EVADING FULFILLMENT OF AN OBLIGATION IN A

NORMAL MANNER
- PRESUPPOSES AN EXISTING OBLIGATION
EFFECT: FRAUD NO EFEFCT ON THE VALIDITY OF THE CONTRACT SINCE
IT WAS EMPLOYED AFTER PERFECTION. GUILTY PARTY LIABLE FOR
DAMAGES.
BREACHES OF AN OBLIGATION
3. NEGLIGENCE/CULPA

- OMISSION OF THAT DELIGENCE

- WHICH IS REQUIRED BY THE NATURE OF THE OBLIGATION;
- AND CORRESPONDS WITH THE CIRCUMSTANCES OF THE PERSON , OF
THE TIME AND OF THE PLACE
KINDS OF NEGLIGENCE
1. CULPA CONTRACTUAL/CONTRACTUALL NEGLIGENCE
- NEGLIGENCE IN THE PERFORMANCE OF A CONTRACT

2. CULPA AQUILIANA/ CIVIL NEGLIGENCE/TORT/QUASI-DELICT

- ACTS OR OMISSION THAT CAUSE DAMAGE TO ANOTHER, NO
CONTRACTUAL RELATION BETWEEN PARTIES.

3.CULPA CRIMINAL/ CRIMINAL NEGLIGENCE

- NEGLIGENCE THAT RESULTS IN THE COMMISSION OF A CRIME.
BREACHES OF AN OBLIGATION
3. NEGLIGENCE/CULPA

TEST OF NEGLIGENCE:
WHETHER THE DEFENDANT IN DOING THE ALLEGED
ACT USED THAT REASONABLE CARE AND CAUTION
WHICH AN ORDINARY PERSON WOULD HAVE USED
IN THE SAME SITUATION
BREACHES OF AN OBLIGATION
3. NEGLIGENCE/CULPA

WHAT KIND OF DILIGENCE ?

GEN. RULE:DILIGENCE OF A GOOD FATHER OF A FAMILY.
IF THE LAW OR CONTRACT DOES NOT STATE THE DILIGENCE TO BE
OBSERVED IN THE PERFORMANCE OF THE OBLIGATION
 FORTUITOUS EVENTS

•ARE THOSE EVENTS THAT COULD NOT

BE FORESEEN OR WHICH, THOUGH
FORESEEN, ARE INEVITABLE.
ELEMENTS OF F.E
1. CAUSE MUST BE INDEPENDENT OF THE DEBTOR’S WILL

2. UNFORSEEABLE/UNAVOIDABLE
- THERE MUST BE IMPOSSIBILITY OF FORESEEING/AVOIDING THE
EVENT IF CAN BE FORESEEN.

3. RENDERS IT IMPOSSIBLE FOR THE DEBTOR TO PERFORM HIS

OBLIGATION IN A NORMAL MANNER
LIABILITY FOR F.E
• GENERAL RULE: NO PERSON SHALL BE LIABLE
FOR FORTUITOUS EVENT. OBLIGATION WILL BE
EXTINGUISHED.

• PROVIDED: DEBTOR COMMITTED NO

NEGLIGENCE/MISCONDUCT
LIABILITY FOR F.E: LAS
EXCEPTIONS :
1. LAW EXPRESSLY PROVIDES
2. STIPULATION OF THE PARTIES
3. NATURE OF THE OBLIGATION REQUIRES THE
ASSUMPTION OF RISK
REASON: NO WRONG IS DONE TO ONE WHO
CONSENTS ( VOLENTI NON FIT INJURIA)
EXCEPTIONS:
4. OBJECT OF THE OBLIGATION IS LOST AND THE LOSS IS DUE PARTLY
TO THE FAULT OF THE DEBTOR.

5. OBJECT OF THE OBLIGATION IS LOST AND THE LOSS OCCURS AFTER

THE DEBTOR HAS INCURRES DELAY

6. DEBTOR PROMISED TO DELIVER THE SAME THING TO TWO OR MORE

PERSONS WHO DO NOT HAVE THE SAME INTERESTS;
EXCEPTIONS:
7. OBLIGATION TO DELIVER ARISES FROM A CRIMINAL OFFENSE

8. OBLIGATION IS GENERIC
QUESTION:

WHAT ARE THE REMEDIES WHICH ARE

AVAILABLE TO THE CREDITOR IN ORDER
TO PROTECT HIS RIGHTS AGAINST THE
DEBTOR?
ANSWER: THERE ARE 3 GENERAL REMEDIES.
1. EXHAUST THE PROPERTY IN POSSESSION OF THE DEBTOR
2. ACCION SUBROGATORIA
- TO BE SUBROGATED TO ALL OF THE RIGHTS AND ACTIONS OF THE
DEBTOR SAVE THOSE WHICH ARE INHERENT ON HIS PERSON
3 . ACCION PAULIANA
- TO IMPUGN THE ACTS WHICH THE DEBTOR MAY HAVE DONE TO
DEFRAUD HIM.
- REMEDY OF LAST RESORT
TRANSMISSIBILITY OF RIGHTS

GENERAL RULE: ALL RIGHTS

ACQUIRED IN VIRTUE OF AN
OBLIGATION ARE TRANSMISSIBLE.
EXCEPTIONS:
1. LAW PROHIBITS THE TRANSMISSION OF THE RIGHT
2. STIPULATION OF PARTIES
3. RIGHT IS BY NATURE NOT TRANSMISSIBLE
EXAMPLE: SCHOLARSHIP GRANT, LOVE,
KINDS OF OBLIGATIONS
MODES OF EXTINGUISHING
OBLIGATIONS
CAUSES OF EXTINGUISMENT 2 3
(P LC N- PARF)
1. PAYMENT OR PERFORMANCE
2. LOSS OF THE THING DUE
3. CONDONATION OR REMISSION OF DEBT
4. CONFUSION OR MERGER OF THE RIGHTS OF THE CREDITOR AND
DEBTOR
5. COMPENSATION
6. NOVATION
7. ANNULMENT
8. RESCISSION
9. FULFILLMENT OF A RESOLUTORY CONDITION
10. PRESCRIPTION
CAUSES OF EXTINGUISHMENT
1.PAYMENT OR PERFORMANCE

- DELIVERY OF MONEY
- PERFORMACE OF OBLIGATION
CAUSES OF EXTINGUISHMENT
1.PAYMENT OR PERFORMANCE

- DELIVERY OF MONEY
- PERFORMACE OF OBLIGATION
HOW PAYMENT MUST BE MADE?
1. DELIVERY OF THE THING OR RENDITION OF SERVICE

KEY POINTS TO REMEMBER:

A. DEBTOR CANNOT COMPEL THE CREDITOR TO ACCEPT AN ACT (IN
OBLIGATIONS TO DO OR NOT TO DO) OR THING DIFFERENT FROM
AGREED UPON BY PARTIES.
HOW PAYMENT MUST BE MADE?
1. DELIVERY OF THE THING OR RENDITION OF SERVICE

KEY POINTS TO REMEMBER:

B. CREDITOR CANNOT DEMAND A THING OF SUPERIOR QUALITY NOR
THE DEBTOR DEMAND A THING OF INFERIOR QUALITY.
- IN OBLIGATIONS TO GIVE A GENERIC THING, QUALITY AND
CIRCUMSTANCES WERE NOT STATED,
HOW PAYMENT MUST BE MADE?
C. IF OBLIGATION IS A MONETARY OBLIGATION
- PAYMENT MUST BE IN LEGAL TENDER
HOW PAYMENT MUST BE MADE?
2. PAYMENT OR PERFORMACE MUST BE COMPLETE.

EXCEPTIONS: IN THE FF. CASES, OBLIGATION IS DEEMED FULLY

COMPLIED
A. SUBSTANTIAL PERFORMACE OF OBLIGATION IN GOOD FAITH

B. ACCEPTANCE OF PERFORMANCE/PAYMENT , WITHOUT OBJECTION,

KNOWING ITS INCOMPLETENESS/IRREGULARITY
PARTIAL PAYMENTS
GEN. RULE: CREDITOR CANNOT BE COMPELLED TO RECEIVE AND
DEBTOR CANNOT BE COMPELLED TO MAKE PARTIAL PAYMENT.

EXCEPTIONS:
A. AGREEMENT
B. DEBT IS IN PART LIQUIDATED AND UNLIQUIDATED
WHO MUST MAKE THE PAYMENT?
PAYMENT MUST BE MADE BY THE DEBTOR
WHO MUST POSSESS THE FOLLOWING:
1. FREE DISPOSAL OF THE THING DUE

1. CAPACITY TO ALIENATE THE THING

QUESTION:

MAY A THIRD PERSON COMPEL THE

CREDITOR TO ACCEPT PAYMENT OR
PERFORMACE OF AN OBLIGATION?
ANSWER: NO.
• EXCEPTIONS:
1. MADE BY A THIRD PERSON WHO HAS AN INTEREST IN THE
FULFILLMENT OF THE OBLIGATION
E.G: GUARANTOR/ CO-DEBTOR

2. THERE IS STIPULATION TO THE CONTRARY

PAYMENT OF PERFORMANCE

QUESTION: IF A THIRD PERSON PAYS

AN OBLIGATION, WHAT ARE THE RIGHTS
WHICH ARE AVAILABLE TO HIM?
ANSWER:
RIGHTS OF THIRD PERSON WHO MAKES THE PAYMENT
1. WITH KNOWLEDGE/CONSENT OF DEBTOR
REIMBURSEMENT
SUBROGATED IN THE RIGHTS OF CREDITOR

2. W/OUT KNOWLEDGE/AGAINST THE WILL OF DEBTOR

• RECOVER: IF PAYMENT HAS BEEN BENEFECIAL TO THE DEBTOR
TO WHOM SHALL PAYMENT BE
MADE?
TO WHOM PAYMENT BE MADE:
1. CREDITOR (PERSON IN WHOSE FAVOR THE
OBLIGATION HAS BEEN CONSTITUTED)
2. SUCCESSOR’S INTEREST SUCH AS HEIRS OR
ASSIGNS
3. ANY PERSON AUTHORIZED TO RECEIVE
PAYMENTS
GEN. RULE: PAYMENT TO AN UNAUTHORIZED
PERSON IS NOT VALID
EXCEPTIONS :
1. PAYMENT HAS REDOUNDED TO THE BENEFIT OF CREDITOR

1. PAYMENT IS MADE IN GOOD FAITH TO A PERSON IN POSSESSION

OF THE CREDIT
WHERE PAYMENT MUST BE MADE?
1. PLACE DESIGNATED IN THE STIPULATION
2. NO STIPULATION:

A. DETERMINATE THING (OBLIGATION TO GIVE)

- PLACE OF THE THING AT THE TIME OF CONSTITUTION OF
OBLIGATION.

B. GENERIC THING/ OBLIGATION TO DO

- DOMICILE OF DEBTOR
SPECIAL FORMS OF PAYMENT (DAPAT)
1. DATION IN PAYMENT
2. APPLICATION OF PAYMENT
3. PAYMENT BY CESSION
4. TENDER OF PAYMENT AND CONSIGNATION
SPECIAL FORMS OF PAYMENT (DAPAT)
1. DATION IN PAYMENT/DACION EN PAGO
- A special form of payment where the ownership
of property is transferred to his creditor to pay a
debt in money.
SPECIAL FORMS OF PAYMENT (DAPAT)
1. DATION IN PAYMENT/DACION EN PAGO

Example: Mr. S owes Mr. T P5M. On due date, S

proposes to T to accept a house and lot as
payment of his Debt. T agreed to D’s proposal and
accepts the house/lot.
SPECIAL FORMS OF PAYMENT (DAPAT)
2.APPLICATION OF PAYMENT
- designation of the debt to which payment shall
be applied when the debtor owes several debts in
favor of the same creditor.
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF APPLICATION OF PAYMENT:

1. TWO OR MORE DEBTS

2. DEBTS MUST OF THE SAME KIND
3. DEBTS OWED BY THE SAME CREDITOR &
DEBTOR
4. ALL DEBTS ARE DUE
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF APPLICATION OF PAYMENT:
4. ALL DEBTS ARE DUE

EXCEPTIONS:
1. STIPULATION TO APPLY TO A DEBT NOT YET
DUE
2. APPLICATION MADE BY PERSON IN WHOSE
FAVOR THE TERM IS CONSTITUTED
APPLICATION OF PAYMENT
KEY POINTS:
1. DEBTOR IS GIVEN PREFERENTIAL RIGHT TO DESIGNATE DEBT TO BE
PAID.
2. IF HE DOES NOT MAKE DESIGNATION, CREDITOR MAY EXERCISE THE
SAME.
3. NEITHER DEBTOR NOR CREDITOR MAKES DESIGNATION, THEN
PAYMENT BY OPERATION OF LAW WILL APPLY.
A. PAYMENT APPLIED TO ONEROUS DEBTS.
B. DEBTS OF THE SAME NATURE, APPLIED PAYMENTS
PROPORTIONATELY.
SPECIAL FORMS OF PAYMENT (DAPAT)
3. PAYMENT BY CESSION
- ABANDONMENT OR ASSIGNMENT BY THE
DEBTOR OF ALL HIS PROPERTY IN FAVOR OF HIS
CREDITORS, SO THE LATTER MAY SELL THEM AND
RECOVER THEIR CLAIMS OUT OF THE PROCEEDS.
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF PAYMENT BY CESSION
1. TWO OR MORE CREDITORS
2. DEBTOR IS INSOLVENT
3. DEBTOR ABANDONS ALL HIS PROPERTIES
EXCEPT THOSE WHICH ARE EXEMPT FROM
EXECUTION
4. CREDITORS ACCEPT ABANDONMENT
SPECIAL FORMS OF PAYMENT (DAPAT)
4. TENDER OF PAYMENT
- CONSISTS IN MANIFESTATION MADE BY THE
DEBTOR TO THE CREDITOR OF HIS DECISION TO
COMPLY IMMEDIATELY WITH HIS OBLIGATION.
CONSIGNATION
- ACT OF DEPOSITING THE SUM OR THING DUE
WITH THE JUDICIAL AUTHORITIES
SPECIAL FORMS OF PAYMENT (DAPAT)
4. TENDER OF PAYMENT & CONSIGNATION
EXAMPLE: D BORROWED P5M FROM C. ON DUE
DATE, D TENDERED PAYMENT IN P100 BILLS
TOTALLING 5M. C REFUSED TO ACCEPT PAYMENT.

HERE: PAYMENT TENDERED BY D WAS LEGAL

TENDER, HENCE C WAS NOT JUSTIFIED IN
REFUSING TO ACCEPT IT.
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF CONSIGNATION
1. DEBT IS DUE.
2. VALID TENDER OF PAYMENT
3. CREDITOR REFUSES W/OUT CAUSE TO ACCEPT
PAYMENT
4. NOTICE OF CONSIGNATION
5. THING/AMOUNT DUE PLACED IS DEPOSITED W/
JUDICIAL AUTHORITIES
6. AFTER CONSIGNATION, NOTICE TO PERSONS
INTERESTED IN THE FULFILLMENT OF OBLIGATION.
SPECIAL FORMS OF PAYMENT (DAPAT)
EFFECTS OF CONSIGNATION:
EXTINGUISHES THE OBLIGATION
IF CREDITOR ACCEPTED CONSIGNATION OR
DECLARATION FROM JUDGE THAT CONSIGNATION
HAS BEEN PROPERLY MADE
SPECIAL FORMS OF PAYMENT (DAPAT)
WHAT ARE THE EXCEPTIONS TO THE
RULE THAT BEFORE CONSIGNATION
SHALL PRODUCE THE EFFECTS OF
PAYMENT, IT IS ESSENTIAL THAT THERE
MUST BE A PREVIOUS TENDER OF
PAYMENT?
ANSWER:
1. CREDITOR IS ABSENT/UNKNOWN/DOES NOT APPEAR AT THE PLACE
OF PAYMENT
2. INCAPACITATED
3. W/OUT JUST CAUSE, REFUSES TO GIVE RECEIPT
4. TWO OR MORE PERSONS CLAIM THE RIGHT TO COLLECT
5. TITLE OF THE OBLIGATION HAS BEEN LOST
CAUSES OF EXTINGUISHMENT:
LOSS OF THE THING DUE
- THAT THE THING WHICH CONSTITUTES THE OBJECT
OF THE OBLIGATION PERISHES,
- OR GOES OUT OF COMMERCE OF MAN
- OR DISAPPEARS IN SUCH A WAY THAT ITS EXISTENCE
IS UNKNOWN OR IT CANNOT BE RECOVERED
CAUSES OF EXTINGUISHMENT:
REQUISITES OF LOSS OF THE THING DUE
1. THING WHICH IS LOST IS
DETERMINATE
2. THING IS LOST W/OUT ANY FAULT OF
THE DEBTOR
3. THING IS LOST BEFORE THE DEBTOR
INCURRED DELAY
CAUSES OF EXTINGUISHMENT:
LOSS OF THE THING DUE
EXCEPTIONS:
1. LIABLE FOR FORTUITOUS EVENTS
2. ASSUMPTION OF RISK
3. PARTLY DUE TO THE FAULT OF THE DEBTOR
4. LOSS OCCURS AFTER DEBTOR INCURRED DELAY
5. DEBTOR PROMISES TO DELIVER TO 2 MOR MORE
PERSONS
6. OBLIGATION IS GENERIC
CAUSES OF EXTINGUISHMENT:
REMISSION
- Gratuitous abandonment by the creditor of
his right
- Forgiveness of an indebtedness
CAUSES OF EXTINGUISHMENT:
REQUISITES OF REMISSION
A. GRATUITOUS
B. MUST BE ACCEPTED BY THE OBLIGOR
C. OBLIGATION MUST BE DEMANDABLE
CAUSES OF EXTINGUISHMENT:
KINDS OF REMISSION/CONDONATION
1. AS TO AMOUNT/EXTENT
2. AS TO FORM
3. AS TO CONSTITUTION
CAUSES OF EXTINGUISHMENT:
KINDS OF REMISSION/CONDONATION
1. AS TO AMOUNT/EXTENT
a) TOTAL – PRINCIPAL & ACCESSORY
OBLIGATION
a) PARTIAL

2. AS TO FORM
a) EXPRESS – ORALLY/WRITING
b) IMPLIED - INFERRED BY CONDUCT
CAUSES OF EXTINGUISHMENT:
KINDS OF REMISSION/CONDONATION
3. AS TO CONSTITUTION
a) INTER VIVOS
- CONSTITUTED BY AGREEMENT OF BOTH
PARTIES (PARTAKES OF A DONATION)
b) MORTIS CAUSA
- CONSTITUTES BY LAST WILL & TESTAMENT
CAUSES OF EXTINGUISHMENT:
KINDS OF REMISSION/CONDONATION
3. AS TO CONSTITUTION
a) INTER VIVOS
- CONSTITUTED BY AGREEMENT OF BOTH
PARTIES (PARTAKES OF A DONATION)
b) MORTIS CAUSA
- CONSTITUTES BY LAST WILL & TESTAMENT
CAUSES OF EXTINGUISHMENT:
CONFUSION/MERGER
- MEETING IN THE SAME PERSON OF THE
QUALITIES OF CREDITOR AND DEBTOR WITH
RESPECT TO ONE AND THE SAME
OBLIGATION.
CAUSES OF EXTINGUISHMENT:
MERGER IN A JOINT OBLIGATION

MERGER EXTINGUISHES ONLY THE SAHRE

OF THE JOINT CREDITOR/DEBTOR IN WHOM
THE CHARACTERS FO DEBTOR/CREDITOR
CONCUR.
CAUSES OF EXTINGUISHMENT:
MERGER IN A JOINT OBLIGATION

EXAMPLE: A, B and C are joint debtors of X

P9K. The promissory note evidencing the
debt is assigned by X to Y, Y to Z and Z and
A.
CAUSES OF EXTINGUISHMENT:
MERGER IN A JOINT OBLIGATION
EFFECTS:
- A’S SHARE OF P3K IS EXTINGUISHED BY THE
MERGER
- B AND C ARE STILL LIABLE ON THE NOTE
WITH A NOW AS THE CREDITOR FOR 6K
CAUSES OF EXTINGUISHMENT:
MERGER IN A SOLIDARY OBLIGATION
MERGER IN ONE OF THE SOLIDARY
DEBTORS/SOLIDARY CREDITORS
EXTINGUISHED THE WHOLE OBLIGATION
CAUSES OF EXTINGUISHMENT:
MERGER IN A SOLIDARY OBLIGATION
EXAMPLE:
A, B AND C are solidary debtors of X for P9K.
The promissory note evidencing the debt is
assigned by X to Y, Y to Z and Z to A.
EFFECTS:

- WHOLE OBLIGATION IS EXTINGUISHED BY CONFUSION WITH ALL THE

DEBTORS NOW BEING THE CREDITORS
- A MAY DEMAND REIMBURSEMENT FROM B AND C P3K EACH.
CAUSES OF EXTINGUISMENT:

COMPENSATION
- MODE OF EXTINGUISHING IN THEIR
CONCURRENT AMOUNT THOSE
OBLIGATIONS OF PERSONS WHO IN
THEIR OWN RIGHT ARE CREDITORS AND
DEBTORS OF EACH OTHER.
ESSENTIAL REQUISITES OF COMPENSATION
1. TWO PARTIES , PRINCIPAL CREDITORS AND PRINCIPAL DEBTORS;

2. BOTH DEBT CONSISTS IN MONEY/FUNGIBLE THINGS, SAME KIND &

QUALITY

3. BOTH DEBTS ARE DUE

4. LIQUIDATED AND DEMANDABLE DEBTS

5. NO RETENTIO/CONTROVERSY COMMENCED BY THIRD PERSON

6. COMPENSATION NOT PROHIBITED BY LAW

KINDS OF COMPENSATION
a) AS TO CAUSE
1. LEGAL – WHEN IT TAKES EFFECT BY OPERATION OF LAW FROM THE
MOMENT ALL OF THE REQUISITES PRESCRIBED BY LAW ARE
PRESENT.
2. VOLUNTARY
3. JUDICIAL
B) AS TO EXTENT
1. TOTAL – DEBTS COMPENSATED ARE EQUAL IN AMOUNT
2. PARTIAL – DEBTS ARE NOT EQUAL
 NOVATION
• IS THE SUBROGATION OR CHANGE OF AN OBLIGATION BY ANOTHER,
RESULTING IN ITS EXTINGUISMENT OR MODIFICATION, EITHER BY;
CAUSES OF NOVATION:
1. CHANGING ITS OBJECT OR PRINCIPAL CONDITION
2. SUBSTITUTING ANOTHER IN PLACE OF THE DEBTOR
3. SUBROGATING A THIRD PERSON IN THE RIGHTS OF THE CREDITOR
EXAMPLE:
REQUISITES OF NOVATION
1. PREVIOUS VALID OBLIGATION
2. AGREEMENT BETWEEN THE PARTIES TO
MODIFY OR EXTINGUISH THE OBLIGATION
3. EXTINGUISHMENT OF OLD OBLIGATION
4. VALIDITY OF NEW OBLIGATION
KINDS OF NOVATION

A.ACCDG. TO PURPOSE
B.ACCDG., TO FORM
C.ACCDG; TO EXTENT
KINDS OF NOVATION

A.ACCDG. TO PURPOSE
1. REAL/OBJECTIVE
2. PERSONAL/SUBJECTIVE
KINDS OF NOVATION
2 FORMS OF NOVATION BY SUBSITUTION
OF THE PERSON OF THE DEBTOR :
1. EXPROMISION
- IS EFFECTED W/ CONSENT OF CREDITOR
AT THE INSTANCE OF THE NEW DEBTOR
EVEN W/OUT KNOWLEDGE/WILL OF
DEBTOR
 KINDS OF NOVATION
TWO FORMS OF NOVATION BY SUBSITUTION
OF THE PERSON OF THE DEBTOR :
2. DELEGACION
- EFFECTED WITH THE CONSENT OF THE
CREDITOR AT THE INSTANCE OF THE OLD
DEBTOR W/ CONCURRENCE OF THE NEW
DEBTOR
CONTRACTS