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OBLIGATION

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0% found this document useful (0 votes)
49 views25 pages

OBLIGATION

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© © All Rights Reserved
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OBLIGATION ESSENTIAL REQUISITES/ELEMENTS OF

OBLIGATION (A-P-O-J)
ARTICLE 1156 1. Active Subject/Obligee/Creditor
JURIDICAL NECESSITY – means we can – can demand. The person demanding the
performance of the obli.
DEMAND, FILE A CASE IN COURT.
2. Passive Subject/Obligor/Debtor
OBLIGATION – comes from the Latin word – perform the obligation/ pays. The person
“OBLIGATIO” which means tying or binding. bound to perform the prestation to give, to
do, or not to do.
 In general, it is juridical necessity to give 3. Object/Prestation/Service
(real obligation), to do, or not to do – subject matter of obligation.
(personal obli) 4. Juridical Tie or Vinculum/Efficient Cause
- reason/ binds the party to obli. The
DIFFERENT KINDS OF PRESTATION efficient cause by virtue of which the debtor
becomes bound to perform the prestation.
1. Obligation to Give – delivery of a thing to the
creditor. OBLIGATION VS. RIGHT VS. WRONG
Plaintiff – Has the right to file
Ex: Sale, deposit, pledge, donation, antichresis
Defendant - Person that should do the obli but not
2. Obligation to Do – rendering of works or do it
services, whether physical or mental. Cause of Action – If the defendant violated the
right of plaintiff.
Ex: Contract for professional services like painting,
modeling, singing, etc.
ARTICLE 1157: SOURCES OF OBLIGATION
3. Obligation Not to Do – refraining from doing (LA-CO-SI-DE-DE)
certain acts.
1. LAW – legal obligation or the law itself that
Ex: Negative easement, restraining order, or
establishes the obligation.
injunction Ex: Paying tax, monthly support to children
CIVIL OBLI vs. NATURAL OBLI from father code
- Positive Law - Equity&Natural Law 2. CONTRACT – meeting of minds, agreement,
- Enforceable/ - Cannot demand, if it there is consent. Governed primarily by stipulations,
Demandable exceeds the prescriptive period clauses, terms, and conditions of the parties
period period agreement.
3. QUASI-CONTACT – “parang contract”, there is
PRESCRIPTION/STATUTE OF LIMITATIONS no consent. Arises from lawful, voluntary, and
- Extinctive (x) unilateral acts based on the principle that no one
- Acquisitive (/) shall be unjustly enriched or benefited at the
expense of another.
PRESCIPTIVE PERIODS IN OBLIGATION  2 KINDS OF QUASI-CONTACT
10 YEARS: 1. Negotiorium Gestio
1. Written Contract - voluntarily management
2. Obligation created by Law 2. Solutio Indebiti
3. Judgment of the Contract - payment by mistake/undue payment
6 YEARS: - received something from another/was
1. Oral-Contract und unduly delivered
2. Quasi-Contract 4. DELICT/CRIME/FELONY – act or omission
4 YEARS: punishable by law.
1. Inquiry to the rights of plaintiff In delict, there are 2 liabilities:
2 Quasi-Delict 1. Criminal
1 YEAR: 2. Civil
1. Defamation GR: Every person criminally liable is also civilly
2. Ejectment liable.
E: Every person criminally liable is not civilly liable.
5. QUASI-DELICT/TORT – no contract but there is 4. PERSON OBLIGED
damage caused due to negligence. a. Unilateral – only one party is bound
- an act or omission arising from fault or negligence b. Bilateral – both parties are bound
which causes damage to another, there being no
pre-existing contractual relations between the
parties. 5. EXISTENCE OF BURDEN OR CONDITION
a. Pure – not burdened with any condition or term
COMBINED EXAMPLE FOR SOURCES OF OBLI: (Art 1179)
Taxicab Driver Accident b. Conditional – subject to a condition which may
be suspensive or resolutory (Art 1181)
Driver (A) Passenger (B) (C) Died becacuse of
- Drunk hitting
6. CHARACTER OF RESPONSIBILITY OR
- Driving fast & w/o
seatbelt LIABILITY
- No driver’s license a. Joint – each debtor is liable only for a part of the
whole liability and to each creditor shall belong a part
of the correlative rights (Art. 1207) - Presumed by
law (Art. 1208)
Crossing Pedestrian b. Solidary – each of the debtor is obliged to pay the
Sources of obli present in this example: entire obligation, and each one of the creditors has
1. Laws the right to demand from any of the debtors the
Laws violated: payment or fulfillment of the entire obligation
- Drunk driving – influence of alcohol - Not presumed. Must be expressly
- Driving fast & w/o seatbelt stipulated by the parties, or when the law or
- No driver’s license the nature of the obligation requires solidarity
2. Contract
(Art. 1207)
- common carriage violated for passenger B
– the obligation to bring the passenger
safely. 7. SUSCEPTIBILITY OF PARTIAL FULFILLMENT
3. Quasi-Contract – none a. Divisible – obligation is capable of partial
4. Delict – homicide because there was no intention performance (Art. 1223; 1224)
to kill. b. Indivisible – obligation is not susceptible of
5. Quasi-Delict – driver cause negligence partial performance because otherwise the
obligation will be changed
CLASSIFICATION OF OBLIGATIONS
1. CREATION 8. RIGHT TO CHOOSE AND SUBSTITUTION
a. Legal – imposed by law (Art. 1158) a. Alternative - obligor may choose to completely
b. Conventional – by agreement of parties perform one out of the several prestations (Art.
(e.g. contracts) 1199)
2. OBJECT b. Facultative – only one prestation has been
a. Determinate/ Specific – particularly agreed upon, but the obligor may render one in
designated or physically segregated from all substitution of the first one (Art. 1206)
others of the same class; c. Conjunctive – obligor has to perform all of the
b. Indeterminate/ generic – designated several prestations to extinguish the obligation.
merely by its class or genus;
c. Delimited generic – generic objects 9. IMPOSITION OF PENALTY
confined to a particular class a. Simple – there is no penalty imposed for violation
3. PERFORMANCE of the terms (Art 1226)
a. Positive – to give; to do b. Obligations with a penal clause – obligation
b. Negative – not to do which imposes a penalty for violation of the terms
(Art. 1226)
10. SANCTION NOTE:
a. Civil – gives a right of action to compel their What transfers ownership on obligation?
performance; - DELIVERY
When will be entitled to the fruits?
b. Natural – not based on positive law, but on equity
- From the time the obligation to deliver it
and natural law; does not grant a right of action to arises
enforce their performance, but after voluntary
fulfillment by the obligor, they authorize retention of OBLIGATIONS OF A DEBTOR IN AN
what has been delivered or rendered by reason OBLIGATION TO DELIVER
thereof;
c. Moral – cannot be enforced by action but are 1. SPECIFIC
binding on the party who makes it in conscience a) Deliver the thing agreed upon (Art. 1165)
and natural law. b) Must deliver all accession, accessories,
and fruits of the thing even though they may
not have been mentioned (Art. 1166)
NATURE AND EFFECTS OF OBLIGATION c) Fortuitous event extinguishes the
Art. 1163 – Obligation to Give a obligation
Determinate/Specific Thing d) Remedies of creditor in case of failure to
deliver:
3 BASIC OBLIGATIONS: i. specific performance
1. To preserve & take good care of the thing ii. rescission (Art. 1380)
(DGFF) iii. resolution (Art. 1191)
2. To deliver including the fruits
3. To deliver all accessions and accessories 2. GENERIC
a) Deliver the thing which is neither of superior
SPECIFIC/ GENERIC/ nor inferior quality, if quality and
DETERMINATE vs. INDETERMINATE circumstances have not been stated by the
- by its individuality - by its class parties (Art. 1246)
- cannot substituted - can be substituted b) Delivery of another thing within the same
genus as the thing promised, if such thing is
LEVELS OF DILIGENCE: (Highest to Lowest) damaged due to lack of care or a general
 Extraordinary – highest diligence breach is committed.
c) Fortuitous event does not extinguish the
 Ordinary (DGFF) – diligence required by
obligation (genus never perishes).
law
d) Remedies of creditor in case of failure to
 Slight/Meager – lowest diligence
deliver:
i. specific performance
DILIGENCE REQUIRED:
ii. ask that the obligation be complied
1. By provision of law
with at the debtor’s expense with a
2. By stipulation of parties
right to recover damages
3. In the absence of both, DGFF/BONUM
iii. resolution or specific performance,
PATERFAMILIA will applied
with damages in either case
RIGHTS GIVEN:
REMEDIES (SUMMARY)
1. PERSONAL RIGHT (JUS IN PERSONAM)
Remedies of Creditors in Real Obligation – To
- demandable only from a specific person give/deliver
2. REAL RIGHT (JUS IN REM)
- demandable against the whole world. Generic Thing vs. Specific Thing
3. RIGHT TO THE FRUITS 1. Ask the debtor 1. Compel/Force the debtor
a. Natural – made by nature/spontenous 2. Ask a TP 2. Ask for damages
products of the soil. Ex: Trees 3. Ask for damages 3. Cannot ask TP
b. Industrial – man-made/cultivation of
labor labor *GENUS NUNQUAM PERUIT
Ex: Mango Plantation – genus never perishes
c. Civil – by virtue of juridical relaton
Ex: Lease, Rents, Employment
Remedies of Creditors in Positive Obligation REQUISITES FOR DELAY (LEGAL):
– TO DO 1. Ordinary Delay (Due Date)
2. Demand:
Involuntary Servitude – you cannot force a person  Extrajudicial – demand made outside the
to do something against his will. court
 Judicial – demand made inside the court
3 BASIC REMEDIES: 3. Failure to Comply
1. Ask the debtor
2. If the debtor refuses, ask a TP GR: No demand = no delay/default
3. Ask for damages, if personal consideration is Exception: Even if there is no demand, there is
involved. delay (L-S-T-U-R) when:
1. Law (Ex: Taxes)
Remedies of the Creditor to the Fruits 2. Stipulation/Agreement by the partners/parties
The creditor has a right to the fruits of the thing from 3. Time is of the essence
the time the obligation to deliver it arises. However, 4. Useless – di na kaya iperform bcs of some
he shall require no real right over it until the same circumstan circumstances
has been delivered to him. (Art 1164) 5. Reciproal Obligations

ACCESSIONS – fruits of a thing or additions 2. MORA ACCIPIENDI – delay/default on the part of


TYPES OF ACCESSIONS: the creditor/obligee.
 Discreta – natural, industrial, civil 3. COMPENSATIO MORAE – default on the part of
 Industrial – bldg, planting,sewing both the debtor and creditor in reciprocal obligations
 Natural – allusion, anulsion
KINDS OF DAMAGES (M-E-N-T-A-L)
ACCESSORIES – things joined or included with 1. Moral – feelings/reputation of person
principal thing 2. Exemplary/Corrective – example/correct the
wrong doing
ACCESSIO CEDIT PRINCIPAL – Accessory follows 3. Nominal – smallest form of damage
the principal 4. Temperate/Moderate – more than nominal but
less thanv actual (in between sya)
Principal – more important bcs it can stand alone. 5. Actual/Compensatory – proven w/ certainty
Accessory – cannot stand alone 6. Liquidated – agreen upon, fixed na yung
ibabayad sayong damages.
FORMS OF BREACH OF OBLIGATIONS
1. Voluntary – debtor is liable for damages if 2 KINDS OF FRAUD
he is guilty of: 1. DOLO CAUSANTE (CAUSAL FRAUD)
a) Default (mora)/Delay - this is the essential cause of the consent, without
b) Fraud (dolo)/Decit which the party would not have agreed to enter into
c) Negligence (culpa)/Fault the contract, it renders the contract voidable.
d) Breach through contravention of the
2. DOLO INCIDENTE (INCIDENTAL FRAUD)
tenor thereof/Violation/Breach
2. Involuntary – debtor is unable to perform the – this is the kind of fraud that is not the efficient
obligation due to fortuitous event, thus not cause for the giving of consent to the contract, refers
liable for damages merely to an incident therein, and which even if not
present, the contracting party would have still
3 KINDS OF DELAY agreed to the contract; it does not affect the validity
1. MORA SOLVENDI – default/delay on the part of
of the contract.
debtor/obligor.
 Mora Solvendi Ex re – Delay of the debtor to
give SUMMARY:
 Mora Solvendi Ex Persona – Delay of the DOLO CAUSANTE vs. DOLO INCIDENTE
debtor to do. - committed @ start - committed after creation of
obli obligation
No delay – Negative/Natural Obligation - annulment - ask for damages
-voidable - valid
- to get consent - to breach the obligation
FRAUD VS. NEGLIGENCE KINDS OF EVIDENCE
-Deliberate intention - No intention/not deliberate  Proof Beyond Reasonable Doubt – Guilty
- future fraud is VOID - Future negligence & past  Preponderance of Evidence – used in civil
Negligence is allowed cases/multitude of evidence
- clearly provided - presumed from violation  Substantial Evidence – normally used in
- cannot be mitigated - can be mitigated administrative cases

3 KINDS OF NEGLIGENCE APPLYING THE TAXICAB DRIVER INCIDENT


1. CULPA CONTRACTUAL – negligence results 1. REVISED PENAL CODE
from breach of contract. - Heirs of Passenger and Pedestrian can file
2. CULPA CRIMINAL – results from crime or delict. against the driver & employer.
3. CULPA AQUILIANA/CIVIL
NEGLIGENCE/TORT/QUASI-DELICT  CULPA CRIMINAL:
– acts or omission that cause damage to another, - Primary liable – DRIVER (liability is direct)
there being no contractual relation between the - Subsidiary liable – EMPLOYER
parties. No contract but there is negligence.
2. CIVIL CODE
ART. 1163 – GENERIC THING  CULPA AQUILIANA – Driver & Employer
GR: can be replaced are BOTH LIABLE
E: Limited Generic Thing – confined to a class - Can used DGFF as defense
Ex: If A promise to give one of his 4 horses, - Liability of BOTH: DIRECT/PRIMARY
but all of the horses died, the obligation will
be extinguished.  CULPA CONTRACTUAL – Employer is the
only liable for breach of contract (MASTER
ART. 1170 – NEGLIGENCE SERVANT RULE)
Master Servant Rule/Respondent - DGFF is not a defense because it should be
Superior/Command Responsibility extraordinary diligence.
- The fault of the employee is the fault of the
employer. ART. 1171 WAIVER
- Means will give up a right, hindi tatanggapin

CULPA CULPA CULPA CAN BE WAIVED?


CONTACTUAL AQUILIANA CRIMINAL Past Fraud – YES
Negligence is Direct & Direct & Future Fraud – NO, contrary to law, VOID
incidental Substantive Substantive Future Negligence – YES
There is pre- NONE NONE Past Negligence – YES
existing obli
DGFF Preponderance Proof TEST OF NEGLIGENCE – Question of FACT
of Evidence beyond
reasonable ART. 1173 – FACTORS TO BE CONSIDERED
dount WHEN A PERSON IS NEGLIGENT
DGFF is not a YES – DGFF can NO
defense, it be used as 1. Nature of Obligation
should be defense 2. Circumstance of Person
extraordinary 3. Circumstance of Time
diligence 4. Circumstance of Place
To be proved: To be proved: Presumed
Existing Negligence innocent CONTRAVENTION OF TENOR OF OBLIGATION
contract, The act of contravening the tenor or terms or
Breach of conditions of the contract is also known as “violatio”,
contract i.e. failure of common carrier to safely take its
Master & NO NO passenger to their destination.
Servant Rule However, violation of the terms of contract is
applies EXCUSED in proper cases by fortuitous events (Art.
1170).
ART.1174 - FORTUITOUS EVENT/CASO party performs the obligation or the same
FORTUITO/FORCE MAJUERE is performed at the expense of the debtor.

Kinds of Fortuitous Event: RESCISSION (RESOLUTION) (ART. 1191)


 Ordinary vs. Extraordinary  It is the cancellation of the contract or
 Acts of God vs. Acts of Man reciprocal obligation in case of breach on the
part of one, which breach is violative of the
REQUISITES OF FE: reciprocity between the parties. This is
1. Cause of breach is independent of will of the properly called resolution.
debtor  The rescission under Art. 1380 is rescission
2. Unforeseen or unavoidable event based on lesion or fraud upon creditors.
3. Occurrence renders it absolutely impossible for GR: The injured party can only choose either
the debtor to fulfill his obligation in a normal manner fulfillment or rescission of the obligation, and not
4. Debtor is free from any participation in the both.
aggravation of the injury to the creditor E: If fulfillment has become impossible, Art. 1191
allows the injured party to seek rescission even after
GR: If there is FE: he has chosen fulfillment.
- DEBTOR IS NOT LIABLE
- OBLIGATION IS EXTINGUISHED DAMAGES
E: Debtor is still liable to pay damages if:  Those liable under Art. 1170 shall pay
1. Law damages only if aside from the breach of
a. Art 1165 - fraud, malice, bad faith contract, prejudice or damage was caused.
- delay
b. Violation ART.1175 - MUTUUM VS. COMMODATUM
c. Generic Thing
d. Obligation to deliver a specific thing arises Mutuum – Simple loan/money
from a crime Commodatum – Borrow something that is not
Exception: delay on the part of creditor to money/thing
accept
e. Art 1942 LEGAL INTEREST – 6% rate of interest
2. Stipulation/Agreement Requisites for Interest:
3. Nature of the Obligation requires the 1. Agreement
assumption of risk. Ex: Insurance 2. In Writing
3. Lawful

REMEDIES IN CASE OF BREACH OF ART. 1176 – PRESUMPTION


OBLIGATION
Specific Performance 2 KINDS OF PRESUMPTION:
1. Exhaustion of the properties of the debtor; Conclusive – final/fixed, cannot be changed
2. Accion subrogatoria (subrogatory action) Disputable/Rebuttable – can be changed
– an indirect action brought in the name of
the debtor by the creditor to enforce the 1ST par of ART 1176 – Interest is paid ahead of
former’s rights except: principal (RULE)
i. Personal rights of the debtor; Presumption – interest is already paid, if it is
ii. Rights inherent in the person of the stated that principal is paid (Disputable/Rebuttable)
debtor;
iii. Properties exempt from execution. 2nd par of ART 1176 – Prior Installments are first
3. Accion Pauliana (rescissory action) – an Liquidated
action to impugn or assail the acts done or Presumption - Prior installments are already paid,
contracts entered into by the debtor in fraud if it is stated that the present installments are paid.
of his creditor.
Exception to Presumption:
Substitute Performance 1. Reservation
 It is a remedy of the creditor in case of non- 2. Taxes
performance by the debtor where another 3. Duly Proven
4. If receipt is dated but the month is not stated
Note: The condition shall be deemed fulfilled when
ART. 1177 – REMEDIES AVAILABLE TO the obligor voluntarily prevents its fulfillment (Art.
CREDITORS FOR SATISFACTION OF THEIR 1186)
MONETARY CLAIMS

Principal Remedy
- Specific Performance/Collection of Sum of
Money/Exact Fulfillment
Subsidiary Remedy:
1. Exhaust the property of debtor – find
other property
2. Accion Subrogatoria – substituted
3. Accion Pauliana – rescind

ART. 1178 – Obligations are not transmissible


GR: Rights are transmissible
E: 1. Prohibited by law
2. If prohibited by stipulation of parties
3. Not transmissible by nature – ex: voting rights

CLASSIFICATIONS OF OBLIGATION:
A. Primary Classification
1. Pure and Conditional
2. Obligation w/ a Period
3. Alternative and Facultative
4. Joint & Solidary constitution of the
5. Divisible & Indivisible obligation.
6. Obligation w/ a Penal Clause
INSTANCES WHEN OBLI IS DEMANDABLE @
B. Secondary Classification ONCE:
1. Unilateral & Bilateral 1. Pure Obligation
2. Real & Personal 2. Resolutory Condition
3. Determinate & Generic 3. Resolutory Period
4. Civil & Natural
5. Legal, Conventional, & Period CLASSIFICATION OF CONDITIONS:
As to effect As to form As to Possibility
- Suspensive - Express - Possible
ART.1179 - Resolutory - Implied - Impossible

PURE OBLIGATION – No condition + No period As to Cause/Origin As to Mode As to Divisibility


Effect: Demandable @ once/ Immediately - Potestative - Positive -Divisible
demandable - Casual - Negative - Indivisible
- An obligation whose performance does not - Mixed
depend upon a future or uncertain event, or
upon a past event unknown to the parties, As to Members
demandable at once (Art. 1179) Conjuctive – All conditions must be complied
Disjunctive – Only one condition must be complied.
CONDITIONAL OBLIGATION
- An obligation subject to a condition and the EFFECT OF HAPPENING OF CONDITION:
effectivity of which is subordinated to the 1. SUSPENSIVE – acquisition of rights
fulfillment or non-fulfillment of a future and 2. RESOLUTORY – termination of rights
uncertain event or a past event unknown to
the parties.

Condition – Future + Uncertain


Term/Period – Future + Certain
ART. 1186 – DOCTRINE OF CONSTRUCTIVE
SUSPENSIVE RESOLUTORY FULFILLMENT/DOCTRINE OF PRESUMED
CONDITION CONDITON FULFILLMENT
Condition Condition subsequent
precedent/antecedent Effect: Deemed Fulfilled
If condition is fulfilled: If condition is fulfilled: Why? The debtor prevented the happening
OBLIGATION ARISES OBLI IS EXTINGUISHED of the condition.
Demandability: Demandability:
SUSPENDED DEMANDABLE @ ONCE ART. 1184 – POSITIVE SUSPENSIVE CONDITION
When condition is not Its effect flow but there is (you have to do the thing)
fulfilled: mere hope or termination 1. Time expires
expectancy 2. Condition becomes indebitable

Effect: Obligation is extinguished (if time expires)


ART. 1180 – Duration of Period Depends on the Debtor is not liable (if condition becomes
Debtor indebitable)
- Debtor binds himself to pay when his means
permit to do so. ART.1185 – NEGATIVE OBLIGATION (not to do
*If the debtor and creditor cannot agree for specific the thing)
time of payment: COURT WILL FIX THE PERIOD 1. Time elapsed
2. Evident that event can’t occur
Effect: Obli becomes effective (if time elapsed)
ART.1182 – IF THE CONDITIONS DEPEND TO Debtor is liable (if evident that event can’t
THE DEBTOR: occur)

POTESTATIVE CONDITION – depends upon will of ART. 1186 - DOCTRINE OF CONSTRUCTIVE


one of contracting parties FULFILLMENT OF THE SUSPENSIVE
CASUAL CONDITION – depends upon chance or CONDITION
3rd person - If the debtor voluntary prevent the fulfillment
MIXED CONDITION – partly chance and partly 3rd of the condition, the condition is deemed
person fulfilled.

Exception to Condition on Debtor or if the ART.1188 – RIGHT PENDING THE FULFILLMENT


condition depends on debtor: OF THE SUSPENSIVE CONDITION
1. Resolutory Condition (Ex. Pacto de recto sale)
2. Pre-Existing Obligation 1st par – right of creditor
- Right to bring appropriate actions
ART.1183 IMPOSSIBLE CONDITION June May
- Void from the start Example: A s. land B A sell to C
CPALE
GR: Impossible Condition shall ANNUL the A promised to give B a specific land if he passed the
obligation, it means both OBLI & CONDITION are CPALE. Subsequently, A sell the land to C. Is it
VOID. valid?
- Yes, the sale is valid.
Exception: Only the impossible condition is void, Can B recover the land? Yes, if it is stated in
the obligation is valid under: Transfer Certificate of Title (TCT) upon sale to C.
1. Pre-existing obligation
2. Divisible 2nd par – right of debtor
3. Negative - Right to recover what he has paid by mistake
June May
2 Kinds of Impossible Condition Example: A s. land B
1. Physically Impossible – cannot exist or done CPALE
2. Legally Impossible – contrary to law, morals, etc. - If A believe that B passed the CPALE when
in fact not, he can recover what he give.
ART. 1187 – RETROACTIVE EFFECTS OF THE Example:
FULFILLMENT OF SC June May
Retroactive – means it goes back to the beginning Example: A s. car B
Law 1
June May 1. Loss of a thing w/out debtor’s fault – FE – Debtor
1. To Give Example: A s. land B is not liable because it was destroyed through FE
CPALE 2. Loss of thing through debtor’s fault – YES,
debtor is liable to pay for the loss plus damages bcs
The title of B to the land was on May. THERE IS of debtor’s negligence.
RETROACTIVE EFFECT. 3. Deterioration of thing w/out debtor’s fault – NO,
debtor is not liable
June May Jan May
2. To Do or Not To Do Example: A sing B Example: A s. car B
CPALE Law 1
*Suppose the value of the car on Jan. is 200k and in
NO RETROACTIVE EFFECT, the court will decide if May it was only 180 k. It was depreciated by 20k.
there is retroactive effect. *If the value of thing decreases, THE CREDITOR
WILL BEAR OR SUFFER THE LOSS.
3. Reciporcal Obligations – No retroactive effect.
Why? –Because parties are mutually compensated. 4. Deterioration of thing through debtor’s fault –
YES, debtor is liable.
4. Unilateral Obligation – No retroactive effect. It is Remedies given to B or to the creditor: The
gratuitous. Ex: A promise to give specific car to B moment B fulfilled the condition, (1) he can
demand spefic performance to A (he can
ART. 1190 – EFFECTS OF RESOLUTORY compel the debtor - A to deliver) plus
CONDITION damages. (2) He can also ask for rescission.
5. Improvement of thing by nature or by time – the
1. To Give – No retroactive effect. value of the thing increases
June May - Who will get the increase in improvement? – the
Example: A use of land B CREDITOR.
CPALE 6. Improvement at the expense of debtor – it
*When B passed the CPALE, it will extinguished the means the debtor introduce improvements.
right to use the land. * According to law, the debtor has THE RIGHTS OF
THE USUFRUCTUARY.
Note: Fulfillment of RC converts the debtor into
creditor, and vice versa. ART.1191 REMEDIES IN RECIPROCAL
OBLIGATION
ART. 1189 – 3 KINDS OF LOSS: - This remedies only apply if the reciprocity
PHYSICAL/LEGAL/CIVIL arises from the same cause meaning there is
one cause, one contract.
Ex: Physical – house burn - Only one of the parties refuses to comply.
Legal – Eminent Domain
Civil – The thing is loss but you are not certain Kinds of Obligation According to the Person
Obliged
5 REQUISITES FOR APPLICATION OF 1189 1. Unilateral – only 1 party is obliged. Ex: Donation
1. It must be obligation to give. Ex: A promised to give specific car to B. There is
2. It must be specific. only one obligation which is on the part of A.
3. It must be subject to a suspensive condition. 2. Bilateral – Both parties are mutually bound to
4. There is loss deterioration/improvement. each other.
5. Pending of fulfillment of suspensive condition. Ex: A promised to give something to A. B also
promised to give something to A. There are 2
RULES IN CASE OF LOSS, DETERIORATION obligations on the part of A and on the part of B.
OR IMPROVEMENT
2 KINDS OF BILATERAL
Deterioration – decreases its value 1. Reciprocal – arises from same cause and contract
Improvement – the property value increases 2. Non-reciprocal – different causes
REMEDIES IN RECIPROCAL OBLIGATION 2. First infractor cannot be determined –
- Alternative Remedies – meaning you can only obligation is EXTINGUISHED and each party shall
choose one of these remedies in reciprocal equally or bear his own damage.
obligation: (NOT CUMULATIVE/NOT
SUCCESSIVE) ART. 1193 - OBLIGATIONS W/ A PERIOD/TERM
1. Specific Performance (Exact fulfillment +
damages) Period – Future + Certain to happen
2. Rescission/Cancellation + Damages Day Certain – according to definition, it must
necessarily come or it is certain to happen but you
Example: don’t know when it will happen.
Classic example: death of a person
A sells his car to B for the amount of 100k.
Obligation of A – to deliver Kinds of Period
Obligation of B – to pay 1. Legal vs. Conventional vs. Judicial
*Suppose A wants to deliver but B don’t want to pay.  Legal – the period is fixed by law (ex:
A can apply or choose one of the remedies above. prescriptive period)
(Either specific perf or rescission)  Conventional – the period is fixed by
Remember: In ART. 1191, only one of the parties agreement of the parties.
refuses to comply.  Judicial – period is fixed by the court.
2. Definite vs. Indefinite
GR: Alternative Remedies Definite – very sure that it is going to happen
E: You can still choose the other remedies if it Indefinite –we don’t know the exact date but it will
becomes impossible. also come. (ex: death of a person)

If you are going to rescind: 3. Suspensive (Ex-Die) Period vs. Resolutory (In-
GR: Judicial rescission Diem) Period
E: Extrajudicial Rescission: Examples:
1. If expressly stipulated by the parties that
they do not need to file a case in court EX-DIE
2. If contract is still executory – meaning both A s. car B
parties do not yet performed their obli, the seller End of sem – it is considered as suspensive period
has not yet deliver and buyer has not yet paid. If *A promised to B to give a specific car at the end of
one of them already performed, it is now sem
executed.
IN-DIEM
LIMITATIONS ON THE POWER TO RESCIND A use my car B
1. Resort to courts mandated Until end of sem - it is considered resolutory period
2. Power of the court to fix the period – court can fix *A said that B can use his car until the end of sem.
the period especially if there is only minimal/minor
violation, the court can grant another period. ART. 1194/1189 – EFFECTS - SUSPENSIVE
3. If the property is already in the hands of TP acting PERIOD
in good faith. 6 SITUATIONS (Refer to the Rules in Case of
4. Substantial violation is needed. Loss, Deterioration or Improvement in ART.1189)
5. No waiver on the part of the creditor.
ART. 1195 PAYMENT BEFORE ARRIVAL OF
ART 1191 vs. ART 1381 THE PERIOD (GIVE)
- Breach of - Lesion or Damage -applies only in obligation to give (NOT IN
obligation PERSONAL OBLI)
- Principal action - Subsidiary Action
GR: Debtor is aware of the period
ART.1192 – Where BOTH parties violated or are E: Debtor is NOT AWARE, he pays by mistake
guilty of breach of the obligation. (before the date)
1. If the first infractor is known – meaning if we
know who first violated the obligation. liability of first What can be recovered? It depends when the
infractor is equitably tempered or reduced. debtor discovered:
- If before due date – he can recover 2 things: the - YES, because the period is for the benefit of B
principal plus interest Can A pay before August 30?
- If After due date – he cannot recover the -NO, because the period is not for the benefit of
principal because it is already due, he can only him. Advance payment is not allowed for the
recover the interest. debtor.

ART 1196. PRESUMPTION TO THE BENEFIT OF COMBINED EXAMPLE: The problem stated
THE PERIOD collectible on or before
Note: This article/provision is normally asked in the Question: For who’s benefit is that? – For the
board exam CREDITOR

GR: The period is for the benefit of BOTH EXERCISES: Identify for whose benefit is these
PARTIES. periods:
*There is no advance demand (the creditor cannot 1. Within 5 years – Benefit of the Debtor
make an advance demand) and there is also no 2. After 5 years – For the benefit of BOTH PARTIES
advance payment (the debtor cannot make an 3. 5 years on-demand - Benefit of the Creditor
advance payment) bcs we have to respect the 4. 5 years from the date – For the benefit of BOTH
period. PARTIES
Example: A owes B 9k with a 2% interest payable 5. Within 2 years on demand – Creditor (it is the
on December 30, 2020. combined example – same as collectible on or
Question: For who’s benefit is the period? before)
A: FOR BOTH A AND B, because A can pay before
dec 30 and for the benefit of B because it has ART. 1197
interest. GR: Court cannot fix the period
Why? – Because parties should fix it.
Exception to GR: For the benefit of ONLY ONE E: Court can fix the period:
party either: 1. If it is intended by the parties
1. For the benefit of DEBTOR 2. Duration of the period depends on the debtor (Ex:
Hint; If the problem has the words: “ON OR Little by little)
BEFORE” “WITHIN”, “NO INTEREST”, it is for the 3. Whenever his means permit him to do so
benefit of the debtor.
Classic example: On or Before
A owes B 9k payable on or before December 20, ART. 1198
2020. GR: Parties should respect the period
Questions: E: Debtor loses the period.
Can A (debtor) pay pay before Dec 20, 2020? Why loses? – Bcs debtor cannot pay the obli
–YES, because the period is for the benefit of A EFFECT if the period is removed: it becomes Pure
Can A (debtor) pay on Dec 20,2020? Obli (demandable @ once)
–YES, because the period is for the benefit of A
Can B (creditor) demand on A before December 20, 5 INTANCES THAT DEBTOR CANNOT PAY THE
2020? OBLI: (I-F-O-V-A)
- NO, because advance demand is not allowed for I-nsolvent (Exception: unless the debtor gives
the creditor security/guaranty for the obli)
Can B (creditor) demand on A on December 20, F-urnish (If the debtor does not furnish the guaranty
2020? or di na binigay yung guaranty na sinabi)
- YES O-wn, the debtor able to give the guaranty/security
but he impaired it through his OWN acts or thru
2. For the benefit of CREDITOR fortuitous event.
Hint; If the problem has the words: “collectible”, V-iolates the undertaking
“on demand”, it is for the benefit of the creditor A-ttempts to ABSCOND (abscond means nagtago
Example: A owes B 9k collectible/on demand on or ayaw magbayad)
August 30, 2021 SUMMARY: In all 5 instances (IFOVA), the debtor
Questions: loses the period and it becomes pure meaning
Can B demand before August 30? demandable @once)
-YES, because the period is for the benefit of B
Can B demand on August 30?
KINDS OF OBLI ACCORDING TO OBJECT ART. 1202 – Effect when only 1 prestation is
applicable.
1. Simple – only one obligation, prestation - It becomes SIMPLE OBLIGATION also.
2. Compound – 2 or more obligation Example: There are 3 obligations or objects.
Supposed object 1 is destroyed through FE, it is still
2 kinds of Compound alternative bcs there are still 2 objects. However, obj
a. Conjunctive –all/AND (there are 2 or more obli 2 is destroyed thru FE also. So in this, it ceases to
and you have to comply all obligation) be alternative bcs there is only 1 prestation. It
b. Distributive – is due/OR (there are 2 or more obli becomed simple obli.
but only one obli is due or must comply) *If for example the 3rd obj also destroyed thru FE, the
obligation will be extinguished bcs there will be no
2 kinds of Distributive remaining obj or prestation.
a. Alternative – among the objects or obli, he must
choose only one object to give or deliver. In Question: Is alternative obligation possible if it is
alternative, the debtor chooses. obligation to give or to do? – Yes, the law does not
b. Facultative – there is a principal and substitute. distinguished.
The debtor supposed to do the principal but he can
change it by placing the substitute. In facultative, the ART. 1203 – Debtor’s Choice but it’s the
debtor can substitute Creditor’s Fault
Example: A promised to B to paint the latter’s house
SIMILARITIES OF ALTERNATIVE AND or paint B’s portrait. The right to choose is given to A
FACULTATIVE: In both cases, you only have to do but B sold the house to C. Can A still choose the
one obligation house? – No because it was the fault of B.
Remedies on the part of debtor:
ART 1199- ALTERNATIVE OBLIGATIONS 1. Choose the remaining
GR: Compelete performance of one 2. Rescission/cancellation
- Only one of them (cannot partially deliver) *The creditor is liable to pay for damages bcs he
prevented the debtor from choosing.
ART 1200
GR: Debtor’s Choice in Alternative ART.1204 – Debtor’s Choice and Debtor’s Fault
E: Creditor or TP can choose if it is delegated or Ex: A has 3 obligations or objects.
authorized by the debtor. *Supposed 1st object is destroyed by A. Is a liable?
– No, because it is alternative he can choose
*If the problem does not mention who will choose? one of the 2 remaining.
– Debtor chooses. *Supposed A also destroyed object #2, is he now
*If the debtor does not choose, can creditor choose? liable?
- NO, the creditor can only file specific –No, bcs AGAIN he is given the right to
performance to compel the debtor to choose. choose and he can still choose object #3.
*Supposed the obj#3 is destroyed thru FE, is A now
LIMITATIONS ON THE DEBTOR’S RIGHT TO liable?
CHOOSE: – NO, look at the last object which was destroyed:
1. Art. 1199 (Par. 2) – debtor must completely If it is destroyed thru FE, debtor is not liable.
perform one of them, cannot deliver partly one of If it is destroyed thru his fault, he is now liable for
them. damages.
2. Art. 1200 (Par. 2) – he cannot deliver those things
which are impossible, unlawful, or which is not the BASIS OF INDEMNITY or LIABILITY for Damages
object of obligation. – Value of LAST THING which disappeared plus
3. Art. 1202 – if it becomes simple obligation. damages.

ART. 1201 – Effect of Communication of Choice ART. 1205 – Creditor’s Choice and Debtor’s Fault
- It becomes simple obligation. The moment - This is the exception to the general rule.
debtor chooses between the objects or the Example: A has 3 obligations or objects.
obligation, it becomes simple obli because *Supposed A destroyed the 1st object. Is he liable?
there is only one object now to deliver or to –YES.
fulfilled.
What are the remedies given to B? (Since he was Lost thru If debtor destroyed If the debtor
the one choosing) Debtor’s one of the alternative destroyed the
1. He can choose either of the two remaining, or Fault things, he is NOT principal
2. Choose the price or value of the thing disappeared LIABLE bcs he can before
plus damages choose the substitution,
remaining things he is LIABLE
Supposed A destroyed also the 2nd object. Is he
liable? –YES.
What are remedies of B? *Do we know what is due in Alternative? – No,
1. Choose the last remaining or; because debtor will choose between the
2. Choose the price or value of any one of the things alternatives.
disappeared or destroyed plus damages *Do we know what is due in Facultative? – Yes,
what is due is the PRINCIPAL. But always
BASIS OF INDEMNITY - Price of any one of them remember that it can be substituted.
plus damages
JOINT AND SOLIDARY OBLIGATIONS
ART. 1206 – FACULTATIVE OBLIGATION Kinds of Obligation Acc to No. of the Parties
Example: 1. Individual – there is only one party – 1 debtor and
Principal – Specific Jar 1 creditor
Substitute - Specific TV 2. Collective – numerous debtors and creditors -
either there are 2 debtors or 2 or more creditors
What is due in the obligation?
- The jar, it is the GR wherein you have to give *Only in collective obligation we can apply the
the principal thing unless the debtor principle of joint and solidary. It cannot be apply in
substitute. individ obli.

QUESTION: What is due: ART. 1208 JOINT OBLIGATION


1. Before Substitution – Principal - The parties are proportionately liable
*If the debtor destroys the principal before - Divided into as many shares
substitution, he is LIABLE. - “To each his own”
*If the debtor destroys the substitute before
substitution, he is NOT LIABLE bcs what is due is ART. 1207 SOLIDARY OBLIGATION
the principal. - Entire compliance/whole
2. After Substitution – Substitute Thing - “One for all, all for one”
*If the debtor destroys the principal after substitution, - In here, we don’t divide the
he is NOT LIABLE bcs what is due is the substitute. obligation/compliance because it must be
*If the debtor destroys the substitute after whole
substitution, he is LIABLE.
SYNONYMS
Alternative Facultative
Number of There are 2 or more Only 1 due JOINT SOLIDARY
Prestations obli but only one is but can
due substitute Latin Word Mancomunada In
Rt of GR: Debtor (creditor The right to Solidum/Solidaria
Choice cannot choose) substitute Another word Conjoint Jointly and
E: Creditor or TP only belongs Severally
can choose if to the debtor. Prorata Joint and
authorized/delegated Solidarily
Lost thru The debtor is not If principal is Proportionate Individually and
FE liable if there is FE destroyed Collectivelly
thru FE, obli is
extinguished “We promise to “I promise to pay”
bcs what is pay”
due is the
principal *If the problem does not mention if Joint or
Solidary: - IT IS JOINT
*It is possible that the problem does not mention the - Only the debtor guilty All debtors are liable
word joint and solidary and only pronouns are of breach is liable to pay
mention like “we” and “I” damages
WE – JOINT I – SOLIDARY - Can exist although There must be at least
there is 1 debtor and 1 2 debtors and 2
KINDS OF SOLIDARITY – ACC TO PARTIES: creditor creditors
1. Active Solidarity – the solidarity pertains to the - Plurality of subjects is Plurality of subjects is
creditors. In here, mas marami ang creditors. not required needed
Example: 1 debtor and 2 creditors.
2. Passive Solidarity – the solidarity pertains to the
debtors. In here, mas marami ang debtors. Ex: 2 Note: ART 1211-1222 (ALL
debtors and 1 creditor. PROBLEMS/SITUATIONS ARE FOR SOLIDARY
3. Mixed Solidarity – BOTH parties debtors and OBLIGATION)
creditors are equal. In here, we have multiplicity in
both parties. For ex: 2 debtors and 2 creditors ART. 1211 – Solidarity can exist although the parties
are bound by diff. periods, condition and manner
KINDS OF SOLIDARITY – ACC TO SOURCE
1. Conventional – by agreement of parties 1. Uniform Obligation
2. Legal 2. Non-Unifrom Obligation
3. Real – Classic ex: “Kabit System” Different Periods:
Remember: If the solidary obli has different periods,
Mutual Agency – mutual representation on the part don’t focus or look on the parties, look at the
of the creditor period.
Mutual Guaranty – mutual representation on the
part of the debtor Ex: Supposed A,B,C owes D 9k solidarily. A obli is
due Oct. 20, B obli is due Nov 20, C obli is due Dec
20.
IF PROBLEM IS SILENT WHETHER J OR S *If D demand to A on oct 20. How much A pays?
GR: JOINT - only 3k. why? –bcs we have to respect the period
Exception: If it is stated solidary even tho it is solidary obli. Since only oct 20 is due,
yun lang babayaran ni A.
*If one of the parties is insolvent *If D demand to B on oct 20. How much B pay?
IN JOINT – PARTNERS WILL NOT PAY FOR - 3k, because even tho B’s share is not yet due he
INSOLVENT PARTNER has to pay for here co-debtor bcs the obli is solidary.
IN SOLIDARY – PARTNERS WILL PAY FOR *If D demand to C on nov. 20. How much C pay?
INSOLVENT PARTNER -6k bcs 2 periods are due, oct 20 and nov 20. He
must pay even tho his share is not yet due, he has
ART.1209 – JOINT INDIVINSIBLE OBLIGATION to pay for the share of his 2 co-debtors.
Joint- refers to the parties *If D demands on Dec. 20. How much A pay?
Indivinsible – refers to the prestation -9k because all share are due.

- In Joint indivin obli, the obli is joint as to the Different Conditions:


liabilities of the debtors but indivinsible as to Remember: If the solidary obli has different
compliance. conditions, don’t focus or look on the parties, look
on the conditions fulfilled.
DIVISIBLE – thing can be divided
INDIVISIBLE – thing cannot be divided Ex: Supposed A,B,C owes D 9k solidarily. If A
- In here, we don’t divide the thing but rather, passes law 1 (3k will pay), if B passes CPALE board
we divide the value of that thing. For ex: Car exam (6k will be pay), If C marries X (9k will be pay).

INVISIBILITY VS. SOLIDARITY (ART.1210) Different Manner:


INDIVISIBILITY SOLIDARITY Ex: Supposed A,B,C owes D 9k solidarily. Supposed
-talks abt - talks abt the parties A obli is 5k due oct 20, B is 3k due nov 20, C is 1k
prestation/thing due dec 20.
*If D demand B on oct 20, how much 5 pay?
- 5K SINCE SOLIDARY and only 5k is due on oct Effect of Pre-mature payment
20. (Same analyzation with previous examples) Ex: A, B, C owes D 9k solidarily due on August 30.
A pays on june 30, it is pre-mature payment.
ART. 1212 – ACTS PREJUDICIAL AND *On june 20, can A demand reimbursement and
BENEFICIAL in SOLIDARY OBLI interest from B & C? – NO.
Note: On pre-mature payment, no interest can be
Prejudicial – something harmful and due
disadvantageous. NOT ALLOWED *On Aug 30, can A demand reimbursement from B
Ex: : A owes B and C 2k solidarily. B said to A that & C? –YES, 3k each from B&C
he do not have to pay the obli. It is not beneficial to *If B&C did not pay when A demand on due date
C, prejudicial to C. Not allowed. which is August 30 and they only pay on dec 2020,
 Can C still collect to A? –No, he can now A can demand both the principal and interest starting
collect to B his share of 1k August to December 2020.
Note: If the co-debtor is delayed in paying, interest
Beneficial – something good and advantageous. can be demand from the due date until the actual
ALLOWED date they pay.
Ex: A owes B and C 2k solidarily. Can B collect to A
the entire 2k? Yes and B will have to give C the 3rd paragraph – Insolvency of 1 Debtor in
share of 1k. Solidary
- The insolvency of 1 debtor have to be
ART.1213 – Assignment by Solidary Creditor shoulder by other solidary debtors.
1. If assignment is to co-creditor – YES, allowed For example: A, B, C are solidary debtors to D. A
2. If assignment is to TP – GR: Not allowed pays the obligation. He is entitled for reimbursement
Exception: If co-creditor agrees to B and C. If for example, C is insolvent. So A is
only entitled for reimbursement to B. So paghahatian
ART.1214- EXTRAJUDICIAL DEMAND nila yung share ni C and yun ang isoshoulder nila. If
GR: Payment to any Soli Creditor will extinguished C improves his financial situation, pwede nila singilin
the obli yung inabono nila.
E: If there is extrajudicial demand made by one of
the creditors, you have to pay to the creditor who ART. 1218
demanded it. GR: Reimbursement after payment
E: No reimbursement in 2 ff instances:
ART. 1216 – Right of Creditor to proceed against 1. Prescription
any solidary debtor 2. Illegal Payment
- Creditor can demand to any solidary debtor
until the obligation has been fully paid or ART. 1219
fulfilled. REMISSION/WAIVER/CONDONATION in
SOLIDARY OBLI
ART. 1217 – Effect of Payment by Solidary Verb: Remit, waived, condone, renounce
Debtor
1st paragraph – full payment extinguishes the Remission – telling the debtor not to pay the
obli obligation
2nd sentence of the parag – Right of creditor to There are 2 case/kinds of Remission:
choose who will pay from the debtors. 1. Entire Obligation
For ex: Lahat ng solidary debtor gusto 2. Partial Obligation
magbayad nung entire obli, so pipili lang ng
isa si creditor dun sa mga debtors to fulfill the Example: A, B, and C are solidary liable to D for 9k.
entire obligation. D remitted the obligation share of A. So this is Partial
Obligation. If D demand to B, the latter will pay only
2nd paragraph – right to demand reimbursement 6k bcs 3k on part of A is remitted.
- The moment one of the solidary debtor pays
the entire obli, the obli is extinguished and Effect of Remission in Solidary Obli
after it extinguish, the reimbursement If payment first then Remission – reimbursement will
follows. The one who pays is entitled for be demanded from Solidary Debtor
reimbursement to his other co-debtor. If remission first then Payment – reimbursement will
be demanded to the Creditor
so the 3 heirs will divide the property of A among
ART 1220. NO RIGHT TO REIMBURSEMENT IN the 3 of them)
CASE OF REMISSION:
1. Entire Obligation KINDS OF INDIVISIBILITY
Ex: A, B, C owes D 9k solidary. D tells A not to pay 1. Legal – inidivisibility by law
the entire obli. Can A ask for reimbursement to 2. Conventional – indivisibility by the agreement of
B&C? – NO, bcs he did not pay anything. parties
2. Partial Obligation 3. Natural – indivisibility by the nature of obli

ART. 1221 RULES IN CASE THING IS LOST OR PRINCIPLE OF QUANTUM MERUIT


PRESTATION BECOMES IMPOSSIBLE - As much as the person deserves
There are 3 intances: - This principle applies only to divisible obli
1. Lost is w/out fault and before delay – Solidary and not to indivisible obli
debtor is not liable, the obligation extinguished
because it is FE (ART.1174) ART. 1224 – SEE ART 1209 (same example)
2. Loss is due to the fault of solidary debtor – Both - Joint Indivisible Obligation
solidary debtor is liable
Note: The fault of one is the fault of all ART. 1225 - ONE DEBTOR + ONE CREDITOR
3. Loss w/out fault but after delay *if there is 1 debtor and 1 creditor, automatic it is
Note: The delay of one is the delay/fault of all indivisible obli.
*If there are 2 or more parties, it ceases or
becomes divisible obli
ART. 1222
DEFENSES: 1st paragraph INDIVISIBLE:
1. Complete Defense 1. Obligation to give definite thing
2. Partial Defense 2. Obligation not susceptible of partial performance
3. Obligation intended by the parties to be indivisible
3 kinds of Defenses: even if the thing or service is physically divisible
1. Defenses derived from nature of obligation 4. Obligation provided by law to be indivisible (Ex:
2. Defenses personal to or which pertain to share of Taxes)
debtor
3. Defenses personal to other solidary debtor 2nd paragraph DIVISIBLE:
1. Execution of certain no. of days
ART 1223 - DIVISIBLE AND INDIVISIBLE Ex: A promised B to paint latter’s house within 10
OBLIGATIONS days, indivisible bcs 1 creditor and 1 debtor but IT
BECOMES DIVISIBLE bcs it stated the certain # of
DIVISIBLE OBLIGATION days of execution it means it can be in partial perf.
- Capable of partial performance (ex.cake) 2. According to work by metrical units (same sa 1,
INDIVISIBLE OBLIGATION pag nakastate yung metrical units nagiging
- Not susceptible of partial performance DIVISIBLE)
(ex: specific car) 3. Obli which by their nature are susceptible of partial
performance. Ex: A promised to B to teach Law 1
TEST – INTENTION OF PARTIES this semester, it is capable of partial perf bcs you
GR: Divisible cannot teach it for only 1 day.
E: Stipulation of Parties

GR: Indivisible ART. 1226 - OBLIGATION with a PENAL CLAUSE


E: Stipulation of Parties (OPC)
- OPC is an accessory undertaking attached
KINDS OF DIVISION to a principal obligation. The moment there is
1. Qualitative – depends on the quality failure to comply the principal, the debtor will
2. Quantitative – divided based on be liable to pay for damages.
quantity/number
3. Ideal or Intellectual – division exist only in the
minds of the parties (Ex: A died and he has 3 heirs,
Classification of Penal Clause Why? – Bcs it is already liquidated
1. Legal vs. Conventional E: 1. Stipulation
2. Compensatory vs. Penal 2. Obligor’s refused to pay penalty
 Compensatory – to ensure the perf of the 3. Obligor’s fraud
obligation
 Penal – purpose to punish the debtor ART. 1228 – PENALTY IS DEMANDABLE W/OUT
3. Subsidiary/Alternative vs. Joint/Cumulative PROOF OF ACTUAL DAMAGES
 Subsidiary/Alternative – you can only Note: Penal Clause was already agreed upon by the
demand or choose one. Either principal or parties, if there is a violation what is necessary to be
the accessory. This is the GR. proven is the proof of violation and not the proof of
 Joint/Cumulative – both principal and actual damages.
accessory can be demanded
What is necessary? - Proof of Violation, not the
3 PURPOSES OF PENAL CLAUSE damages itself.
1. Ensure performance
2. Punish the debtor What if actual damages is more than the penalty,
3. Liquidate the damages can creditor recover the differences? –NO,
because the penal clause was already agreed by the
DIFFERENCES ART.1170 ART.1226 parties, it is liquidated and the thing to do is to
(Instances (Obli with enforce the penal clause.
debtor is Penal
liable to pay Clause) ART. 1229
damages) GR: Court cannot reduce the Penal Clause
Stipulation Not needed Needed bcs Why? – It is the stipulation of the parties
theres no E: Reduction of penal clause is allowed under these
stipulation circumstances:
there is no 1. Partial/Irregular Performance
penalty 2. PC is Inquitous/Unconscionable/Unfair
Proof of Required Not required, - If for example 10k principal then yung PC is 50k.
damages bcs parties
already ART. 1230 – EFFECT OF NULLITY OF PC
agreed on the - If PC is void, principal remains.
penalty - If principal is void, then PC is also void.
Remedies There are Only 2
many remedies: EXTINGUISHMENT OF OBLIGATIONS
remedies 1. Enforce the (PA-LO-RE-ME-CO-NO ) (AnRes3Pres)
Penal Clause
2. Require I. Payment or performance;
specific perf. II. Loss of the thing due;
III. Condonation or remission of debt;
IV. Confusion or merger;
ART. 1227 – RULES:
GR: Debtor cannot substitute the penalty for the V. Compensation;
VI. Novation;
principal obligation
Why? – To ensure performance of principal obli. VII. Annulment;
E: If there is stipulation of the parties that the debtor VIII. Rescission;
IX. Fulfillment of a resolutory condition;
can substitute the penalty for principal
X. Prescription.
GR: Creditor cannot demand both the principal
obligation and the penalty at the same time. Other causes of extinguishment
Why? – Bcs it is subsidiary/alternative meaning only 1. Death of Party in a Personal Obligation
one of them can be demanded, either principal or 2. Mutual Resistance or Withdrawal
accessory. 3. Arrival of Resolutory Period/Condition
E: If there is stipulation 4. Compromise
5. Impossibility of Fulfillment
GR: Only the stipulated penalty is recoverable in 6. Happening of a Fortuitous Event
case of breach
ART. 1240 – PAYMENT TO WHOM SHALL IT BE
PAYMENT/PERFORMANCE (ART. 1232-1261) MADE or to whom debtor will pay
3 Basic Characteristics/Principles 1. Creditor
 Rule of Indivisibility 2. Successor in interest (heirs/assigns)
 Rule of Integrity (1233/1248) 3. TP if authorized to receive – called AGENT
 Rule of Identity (1244)
ART. 1241
ART. 1232 – PAYMENT OR PERFORMANCE GR: Payment to TP is NOT VALID
- P or P - Synonymous/same E: Payment to TP is Valid if:
1. TP is authorized to receive it (agent)
ART. 1233 – RULE OF INTEGRITY 2. Payment to TP redounded to the benefit of the
GR: Complete or regular Payment/Performance of creditor (GR: proof of redounded must be given)
the obligation. 3. TP in possession of credit in good faith
E: Incompelete payment is allowed under: (P-A-S-
S) GR: Proof that it redounded must be given
P – Partially liquidated (1248) E: When proof of benefit not needed, 3 instances:
A – Acceptance/Waiver (1235) 1. Subrogation of TP in creditor’s rights
S – Substantial Performance in Good Faith (1234) 2. Ratification by creditor
S – Stipulation (1248) 3. Estoppel on the part of creditor

ART. 1234 – SUBSTANTIAL PERFORMANCE IN ART. 1239 – DEBTOR IS INCAPACITATED


GOOD FAITH FREE DISPOSAL OF THE THING (means call sell
or alienate the property)
ART. 1235 – WAIVER/ACCEPTANCE/ESTOPPEL CAPACITY TO ALIENATE (meaning you can enter
into a contract)
ART.1248 – STIPULATION/PARTIALLY
LIQUIDATED GR: Payment by an Incapacitated Person is NOT
1. Stipulation/Agreement VALID
2. Debt is in part liquidated and in part unliquidated. Effect of payment made – thing can be recovered
Exception: thing cannot be recovered if:
ART. 1236 – PERSONS FROM WHOM THE 1. Natural obligation
CREDITOR MUST ACCEPT PAYMENT 2. Not owned by debtor
1. Debtor/s
2. Person who has interest in the obligation ART.1241 – CREDITOR IS INCAPACITATED
(guarantor/mortgagor/surety) GR: Payment to Incapacitated Person is NOT
3. TP who has no interest in the obligation when VALID
there is a STIPULATION Effect: Payment can de demanded again by IP
Note: In 3 these instances, the creditor cannot Excpetion: It cannot be demanded again if:
refuse to accept the payment, the only reason that 1. The IP kept the thing
creditor may refuse is when there is incomplete 2. The debtor is benefited by the payment.
payment or performance
2nd paragraph of 1241
EFFECTS OF PAYMENT OF TP depends if: GR: Payment to TP is not valid
Without consent or against the will of debtor (1236) Exception: (3 instances stated in ART.1241)
- Beneficial reimbursement only
ART. 1243 – When payment to creditor is not
With consent or knowledge of debtor (1237) valid
- Reimbursement and Subrogation
ART. 1244 – RULE OF IDENTITY
ART 1238 – PAYMENT BY A TP WHO DOES - Applies only to obligation TO GIVE
NOT INTEND TO BE REIMBURSED - DEEMED a GR: Specific thing cannot be replace although of
DONATION same value or more valuable
- Acceptance is required to extinguish the When is substitution allowed:
obligation. 1. Stipulation
2. Facultative Obligation
3. Waiver/Acceptance
1 PESO/5 PESO/10 PESO – good for 1000 pesos
ART. 1246 – RULE OF MEDIUM QUALITY to be considered legal tender, anything beyond 1000
- Applies only to GENERIC obligation will not consider as legal tender
GR: Neither inferior nor superior quality. AVERAGE 25 cents & below – good for 100 pesos to be
VALUE ang ibibigay. considered legal tender, anything beyond 100 pesos
Ex: A promised to give B a car worth 200k. Can A will not considered as legal tender
replace it with 50k or 1M value car? –NO, average
value dapat. RA 8183 – All monetary obligations shall be settled
in PH currency which is the legal tender in PH.
ART 1247 – Expenses However, the parties may agree that the obli shall be
Extrajudicial Expenses – paid by the debtor settled in any other currency at the time of
Judicial – paid by losing party payment.
Consignation if properly made – paid by the creditor
ART. 1251 – Place where obligation shall be paid
ART. 1248 – RULE OF INTEGRITY GR: Stipulation/Agreement
E: If no stipulation
ART. 1250 – BASIS OF PAYMENT IN CASE OF 1. IF GENERIC – domicile of debtor
EXTRAORDINARY INFLATION OR DEFLATION 2. IF SPECIFIC – where the thing was at the time of
- Value of currency at the time of perfection of contract (kung nasan mismo yung
establishment of the obli thing)

ART. 1249 – LEGAL TENDER DOMICILE and RESIDENCE – not the same
DOMICILE – place of habitual residence (parang
Legal tender – coins and moneys issued by the permanent address/hometown)
central bank of the PH. RESIDENCE – current place mo

Current currency – PH PESO 4 SPECIAL FORMS OF PAYMENT


1. Dation in Payment - conveyance
Note: Promissory Note, Checks, Bill of Exhange – 2. Application of Payment - designation
not legal tender 3. Payment by Cession – abandonment
*Can creditor refuse to accept payment that is not 4. Tender of Payment
legal tender? – YES 5. Consignation
*Can creditor accept it? –YES, it is waiver
If creditor accepted it, what are the effects? 1. ART 1245. Dation in Payment (Dacion En
1. It does not produce payment, bcs it is not yet Pago/Adjudication)
legal tender - It is the conveyance of the ownership of the
2. Demandability of original obligation is thing as accepted equivalent for the perf of
suspended obligation

When is there payment? *In dacion en pago, obligation is money, payment


1. If it is incashed is property. If the creditor accept the payment in
2. Fault of creditor it is impaired – STALE CHECK property it is dacion en pago.
Lifespan of Checks – 180 days/6months Ex: A owes B 9k. A pays B a specific piano instead
Beyond 6 months – it is STALE CHECK of 9K.
3. When creditor is guilty of estoppel/waiver /or Is it accepted?
assented thereto – meaning the creditor accept GR: Depends on the value agreed upon
payment that is not legal tender for ex checks and E: If there is stipulation of full payment
stated that he accepted the check as full payment of
obli. 2. ART 1252 – APPLICATION OF PAYMENT
(IMPUTATION OF PAYMENT)
When is there a violation if checks was - designation of the debt to which should be applied
accepted? the payment made by the debtor when he has
- If the check bounces (BP22) several debts which are due. Debtor will choose
kung san nya iaapply yung payment.
5 REQUISITES OF APPLICATION OF PAYMENT:
1. 1 debtor and 1 creditor
2. 2 or more debts
3. Debts must be of same kind NOTE:
4. All debts are due DATION IN PAYMENT AND PAYMENT BY
5. Payment must not be sufficient CESSION SIMILARITIES:
1. What is given is property

SUMMARY OF RULES IN APPLICATION OF DIFFERENCES;


PAYMENT: In dation in payment,
1. Debtor chooses  there is only 1 creditor;
2. If debtor does not, creditor chooses  when the debtor gives the property to the
3. If BOTH did not, LAW chooses. The law will creditor, he becomes the owner of that.
choose:  Partial insolvency is not needed
- Legal Application of Payment
a. Most onerous debt b. If same burden, apply it In payment by cession
proportionately  there are numerous creditors and
 the creditors are only assignees to the
ART. 1253 – INTEREST IS AHEAD OF PRINCIPAL property not become owner.
 Partial insolvency is needed
ART. 1254 – LEGAL APPLICATION OF PAYMENT
a. Most onerous debt – means the most
difficult/burdensome to pay will be first to be paid. APPLICATION OF PAYMENT AND PAYMENT BY
b. If same burdensome, apply it proportionately. CESSION SIMILARITIES:
 There are 2 or more debts
Ex: A owes B 2k and 1k with interest. The most
onerous is the 1k with interest. So B will apply DIFFERENCES:
the payment to 1k. In APPLICATION OF PAYMENT
 theres only 1 creditor.
ART. 1255 – PAYMENT BY CESSION
 Choose of payment
- Assignment or abandonment. In here, the  Partial insolvency not needed
debtor will assign or abandon his properties
for the benefit of the creditors. In PAYMENT BY CESSION
- Debtor cedes his property to his creditors so  there are numerous creditors
the latter may sell the same and the  Assign/abandon property
proceeds realized applied to the debts of the  Partial insolvency needed
debtor. The proceeds of the sale of property
will be applied PROPORTIONATELY to the ART. 1156 – TENDER OF PAYMENT AND
creditors, not equally applied. CONSIGNATION
Tender of Payment – act of paying
5 REQUISITES OF PAYMENT BY CESSION: Consignation – act of depositing the thing in court
1. 2 or more creditors
2. Partial Insolvency on Debtor GR: There must be both tender of payment and
3. More than 1 debt consignation
4. Cession must be accepted E: Consignation alone extinguishes the obli
5. Abandonment
5 INSTANCES wherein tender of payment is not
SUMMARY OF RULES IN PAYMENT BY needed: (CREDITORS FAULT)
CESSION: 1. Creditor is absent
1. Creditors are only assignees. Creditors do not 2. Creditor is incapacitated to receive the payment
become owners of the property abandoned by the 3. There is refusal to give receipt
debtor. 4. 2 or more persons are claiming the property
2. Debtor is released only up to the extent of the 5. The title is lost
net proceeds.
3. Debtor is still liable for the balance.
5 REQUISITES 3. No delay on debtor
1. Existence of valid debt which is due
2. Tender of payment and refusal on the part of the GR: Loss extinguish the obligation
creditor to accept E: Debtor is still liable even there is loss:
3. Prior notice of consignation 1. Law provides otherwise (Art 1262);
4. The act of consignation 2. Nature of the obligation requires the assumption
5. The subsequent notice of consignation of risk;
3. Stipulation/agreement;
ART.1257 Prior notice to persons interested in 4. Debtor contributed to the loss;
obligation 5. Loss of the thing occurs after the debtor incurred
in delay;
ART. 1258 – Consignation must be made with 6. When debtor promised to deliver the same thing
proper authority or proper court to two or more persons who do not have the same
- Second notice of consignation interest (Art 1165);
7. When the debt of a certain and determinate thing
ART. 1259 – Creditor pays expenses if proceeds from a criminal offense (Art. 1268); and
consignation is properly made or when the 5 8. When the obligation is generic.
requisites are present.
ART. 1264 TOTAL LOSS vs. PARTIAL LOSS
ART.1260 – Withdrawal of the thing/sum GR: Total loss and partial loss are not the same.
deposited E: Court will decide whether partial loss is equivalent
The creditor can withdraw the thing under 2 to complete or total loss.
instances:
1. Before creditor has accepted consignation ART. 1265
2. Before judicial declaration of proper consignation GR: Debtor is presumed at fault if the thing is
destroyed
ART. 1261 Effect of Withdrawal of thing with Why? –Bcs debtor should apply DGFF to the thing
consent of Creditor E: Debtor is not at fault if loss was caused by natural
Should the creditor agree to the withdrawal? -NO disaster/FE
The Effects if the creditor agree:
1. Creditor loses preference over the thing ART.1266 – Impossibility of Fulfillment of
2. Co-debtors, guarantors and sureties are released Obligation

LOSS OF THE THING DUE (ART 1262-1269) ART.1183 vs. ART1266


ART. 1262 Impossibility happen
When is a thing considered lost? When? – at start - after the creation of obli
 It disappears in such a way that its existence Effect – ANNULLED - Debtor is released
is unknown
 It goes out of commerce ART. 1267 – DIFFICULTY OF PERFORMANCE
 It perishes (DOCTRINE OF UNFORESEEN EVENT)
 Its existence is unknown or if known, it - Effect: Debtor is released
cannot be recovered
 ART. 1268 – EFFECT OF FE where obligation
3 kinds of Loss proceeds from a criminal offense
Physical/Legal/Civil GR: Debtor is liable if obligation arises from crime
Physical – when thing perishes E: Debtor is not liable if the creditor is guilty of delay
Legal – goes out of commerce to accept the obli or mora accipiendi
Civil- its existence is unknown or if known, cannot be
recovered ART. 1269 – Right of Creditor to Proceed against
TP
REQUISITES TO EXTINGUISH THE OBLIG – it will Typical example: Insurance
become loss and obli is extinguish under these 3
instances:
1. Obligation is to deliver a specific/determinate
thing
2. No fault of debtor
ART 1270 ART. 1272 – PRESUMPTION IN CASE
CONDONATION/REMISSION/WAIVER/RENUNCI DOCUMENT FOUND IN POSSESSION OF
ATION DEBTOR
- this is also implied remission
- It is the gratuitous abandonment by the *Normally, ang document or yung promissory note
creditor of his right to collect against the ay nasa creditor. In case na nasa debtor na yung
debtor. docu or PN, it is found in possession of debtor, it is
- It is an act of liberality by virtue of which the presumed na dineliver din ng creditor yung
creditor, without receiving any price or document kay debtor although it is not clearly
equivalent, renounces the enforcement of mentioned or stated.
the obligation, as a result of which, it is
extinguished in its entirety or in that part or ART 1273 – Effect of Renunciation (both to
aspect of the same to which the condonation principal and accessory)
or remission refers. Ex: A owes B 9k.
*If pag sinabi ni B na wag na bayaran ni A ang
5 REQUISITES OF CONDONATION: principal obli, the principal together with
1. It must be gratuitous or for free guaranty/accessory will be extinguished bcs
2. It must be accepted by the obligor/debtor remember accessory cannot stand alone.
3. The parties must have capacity or capacitated * If sinabi naman ni B kay A na wag na bayaran ang
4. It must be not inofficious (or di dapat sobra sobra) accessory/guaranty, ang maeextinguish lang or
5. It must be complied with the form of donation ang di nya lang babayaran is yung accessory but the
principal will remains or babayaran pa rin.
KINDS OF REMISSION
1. As to Extent ART 1274 – PRESUMPTION IN CASE THING
a. Total Remission – entire obligation extinguish PLEDGED FOUND IN POSSESSION OF DEBTOR
b. Partial Remission – partial obligation lang ang - In here, pag isinauli yung pledge kay debtor,
extinguish ang maeextinguish lang is yung pledge but
not the principal.
2. As to Form
a. Express Remission – may be oral or writing NOTE/REMEMBER:
b. Implied Remission – based on the acts of the If ang accessory lang ang niwaived or remitted,
party yung accessory lang ang maeextinguish, not the
principal and promissory note.
3. Date of Effectivity If principal or Promissory Note ang winaived or
a. Intervivos – lifetime of donor (buhay ang donor) remitted, both principal and other accessories will be
b. Mortis Causa – upon death (teggy na ang donor) extinguish, everything will be extinguished.

ART. 1271 – PRESUMPTION IN CASE OF CONFUSION/MERGER


VOLUNTARY DELIVERY OF PRIVATE - It is the meeting in one person of the qualities
DOCUMENT OF INDEBTEDNESS of the creditor and debtor with respect to the
- It is implied remission same obligation.
- Not allowed for public docu bcs hindi pwede - In simple explanation, one person will
ang madaming docu become the debtor and the creditor in case
- Pag sinauli ng creditor ang proof of of confusion/merger.
indebtedness, it will extinguish the obli.
Requisites:
Ex: A owes B 9k with promissory note which is the 1. It must take place between the creditor and the
proof /evidence of indebtedness. A is the one who principal debtor (Art. 1276)
created the PN and ang may hawak naman ay si B. 2. The very same obligation must be involved;
Pag sinauli/return ni B kay A ang PN, it is implied 3. The confusion must be total or as regards with the
kasi wala naman sinabi si B na isasauli. So it will entire obligation.
extinguish the obli meaning it is condoned, remitted,
or waived bcs sinauli ng creditor ang proof of Merger comes from the word MERGE – meaning to
indebtedness kay debtor. combine
Ex of Merger/Confusion: A owes B 9k evidence by 4. Both debts are liquidated (liquidated means alam
a Promissory Note. B transfer the PN to C then C mo na kung magkano tatanggapin mo or yung
transfer to D. B is the original creditor pero binayad babayaran mo)
nya yung PN until mapunta kay D. So si D na yung 5. No retention or controversy commenced by a
magiging creditor, however bumili si D ng goods TP and compensation must not be prohibited by law
from A and ang ibinayad nya is yung PN din. So A is
the debtor and after D buys goods to A and pay with ART. 1280 – Compensation benefits the
PN, sya na rin yung naging creditor. guarantors
Ex: A owes B 9k. Also, B owes A 9k. A has
ART. 1276 – Effect of merger in the person of guarantor. Pag naextinguish yung dalawang
principal debtor/creditor principal, kasama na yung accessory or guarantor.
- All obligation extinguish including principal
and accessory/guaranty ART. 1281 – Total Compensation or Partial
Effect of merger in the person of guarantor Compensation
- Pag ang merger is sa guaranty, ang Total C – all obligation is extinguished
maeextinguish ay only the guaranty. The Partial C – may balance pa
principal obli remains.
REMEMBER: Pag present ang 5 requisites sa
ART 1277 – Confusion in JOINT OBLIGATION compensation, ang meron don is LEGAL
Note: May reimbursement sa merger or confusion. COMPENSATION.
Sa remission wala. *If kulang ng isa ang requisites pwede pa ba
magkaroon ng compensation? –YES, it is voluntary
CONFUSION VS. COMPENSATION compensation or by agreement of the parties

Confusion ART. 1282 – Voluntary Compensation


- Debtor and creditor is one person or same - By agreement of both parties
person. Ex: A owes B tv. B owes A electric fan. The two are
Compensation not of the same kind. But nag agree ang parties that
- Both parties are the debtor and creditor of the obligation will extinguish even tho it is not of the
each other same kind. So in here, maeextinguished pa rin yung
obli.
ART. 1278 – COMPENSATION
Synonym: Abbreviated Payment/Simplified ART. 1283 – Judicial Compensation
Payment/Set-Off - By court declaration
- Compensation is a mode of extinguishing Ex: A owes B 80k. A has a car. B demand the 80k
obligations that take place when two from A but A did not pay and said that he will not pay.
persons, in their own right, are creditors and Nagalit si B so he destroyed the car of A worth 50k.
debtors of each other. If B filed a case in court and A said na may utang
Ex: A owes B 9k. However, B also owes A 9k. sya kay B 80k but the latter destroyed his car 50k.
Effect: The obli is extinguished. The court decided that A will only pay B 30k. So in
here, the court was the one who declared the
4 KINDS OF COMPENSATION compensation.
1. Legal – declared by law
2. Judicial – declared by court ART. 1284 – Compensation of Voidable or
3 Voluntary – declared by both parties/agreement Rescissible Debts – ALLOWED
4. Facultative – only one party declares
ART. 1285
ART.1279 – 5 REQUISITES OF LEGAL Rule – Do not give your consent to the assignment
COMPENSATION in order for Legal Compensation to operate
REMEMBER: These requisites must be ALL automatically.
PRESENT. If not, walang legal compensation. Ex: Si A may utang kay B 9k. Si B may utang kay A
1. Both parties are principal debtors/creditors of 9k. Yung utang ni A kay B payable on Feb 14, 2024,
each other hindi pa due. Yung utang ni B kay A due feb 8, 2024
2. Same kind/quality (For ex: dapat same na money, due na. Si B ibenenta yung utang kay C on the same
thing or property ang inutang ng both parties) date feb 8, 2024. Ang tawag pag binenta ay
3. Both debts are deemed due & demandable assignment of credit.
Question: Pag dumating ang Feb 14 and both debts KINDS OF NOVATION
are demandable, Can C collect from A? – depende 1. Express – declared in clear terms
kung pumayag si A sa assignment or not. 2. Implied – essentially incompatible
*If pumayag si A - C can collect from A 3. Total/Extinctive – completely extinguished
*If di pumayag si A – C cannot collect from A 4. Partial/Modificatory – merely modified
5. Real/Objective – object ang pinapaltan
ART. 1286 – COMPENSATION WHERE DEBTS 6. Personal/Subjective – tao/parties ang
PAYABLE OF DIFFERENT PLACES pinapaltan. Either debtor or creditor.
Q: Pwede ba mag exist ang compensation even tho 7. Mixed – papaltan ang tao at object
the parties reside in different places? – YES na YES
for u, it is allowed. ART. 1292 – IMPLIED/TACIT NOVATION
- Cannot stand together
ART.1287/1288 – INSTANCES WHEN LEGAL Note: Novation is never presumed
COMPENSATION NOT ALLOWED: *If period of payment is shortened – there’s
1. One of the debts arises from depositum NOVATION
2. One of the debts arises from commodatum *If period of payment postponed/extended
3. Claim for Support by Gratuitous Title – there’s NO NOVATION
4. One of the debts arises from civil liability arising
from a penal offense/crime. Requisites of Novation:
Ex: A owes B 100k. A has a car. B demand from A 1. Valid old obligation
but A did not pay. Ninakaw nalang ni B yung car ni 2. Intent to extinguish or modify the old obligation;
A para makabawi sa utang ni A sa kanya. Ofcourse, 3. Capacity and consent of all parties to the new
IT IS NOT ALLOWED. obligation;
4. Substantial difference of the old and new
ART. 1289 – RULES ON APPLICATION OF obligation – on every point incompatible with each
PAYMENT APPLY TO COMPENSATION other; and
Q: Can compensation and application of payment 5. Valid new obligation
exist at the same time? –YES
ART. 1293 – PERSONAL NOVATION
ART 1290 – CONSENT OF PARTIES IS NOT In personal Novation – either debtor or creditor ang
REQUIRED IN LEGAL COMPENSATION pinapaltan.
Why? – bcs legal compensation is declared by law
In SUBSTITUTION - debtor ang pinaltan
NOVATION 2 KINDS OF SUBSTITUTION:
- Comes from the root word “NIOVATE”, 1. Delegacion – it is proposed by the old debtor
meaning to change - the substitution is initiated by the old debtor
- In novation, old oblig is extinguished, new himself by convincing another person to take
oblig arises his place and to pay his obligation to the
- It is the substitution or change of an creditor
obligation by another, resulting in its - Right of new debtor: reimbursement and
extinguishment or modification, either by subrogation
changing the object or principal conditions, 2. Expromission – it is proposed by a new debtor
or by substituting another on the place of the - The substitution of the old debtor by a new
debtor or by subrogating a third person to the debtor is upon the initiative or proposal of a
rights of the creditor. third person.
Ex: A promised to B to give specific car. - Right of new debtor: beneficial
*Can A and B change the car? – NO, bcs it is reimbursement
SPECIFIC THING
*Can A& B both agree to change the car? –YES, that In SUBROGARTION – creditor ang pinapaltan
is NOVATION Kinds of Subrogation
1. Legal subrogation – constituted by virtue of a law
DUAL PURPOSE OF NOVATION – Extinguish the and not presumed from agreement of parties;
obligation and to substitute or create a new valid 2. Voluntary or conventional subrogation – by
obligation voluntary agreement of the parties;
Conventional subrogation of a third person KINDS OF SUBROGATION (See above in
requires the consent of the original parties and of the ART.1293)
third person.
ART 1302 – CASES OF LEGAL SUBROGATION
ART 1294 – EFFECT OF NEW DEBTOR’S
INSOLVENCY IN EXPROMSSION Presumption of Legal Subrogation
General Rule: Old debtor is not liable General Rule: Legal subrogation is not presumed
(Art. 1300)
ART 1295 – EFFECT OF NEW DEBTOR’S Exception: Legal subrogation is presumed in 3
INSOLVENCY IN DELEGACION instances/CASES expressly mentioned in the law:
GR: Old debtor is not liable 1. When a creditor pays another creditor who is
E: Old debtor is liable in these instances: preferred, even without the debtor’s knowledge;
1. Public Knowledge 2. When a third person, not interested in the
2. OD knew the insolvency obligation, pays with the express or tacit
approval of the debtor;
ART. 1296 – EFFECT OF NOVATION IN 3. When, even without the knowledge of the debtor,
ACCESSORY OBLIGATION a person interested in the fulfillment of the
- Accessory obligation will not be obligation pays without prejudice to the effects of
extinguished. confusion as to the latter’s share. (Art. 1302)

NOVATION General R: Both old and new obligation ART 1303 – TOTAL SUBROGATION
must be valid in order to have novation Ex: A owes B 9k with mortgage, guarantor, and
surety. B will demand from A, pag di nagbayad si A
ART 1297 – IF NEW OBLIG IS VOID ang sisingilin naman is si Guarantor, next is surety,
GR: No novation and mortgage. If TP (Third person) will pay B and
E: 1. Intention of parties that it will be extinguished pumayag naman si A, lahat ng rights ni B as creditor
2. If it is only voidable is mapapalipat sa Third Party na nagbayad and ang
magiging new creditor na is si TP and he has now
ART 1298 – IF OLD OBLIG IS VOID the right to collect payment from either A (debtor),
GR: No novation guarantor, mortgagor. THIS IS TOTAL
E: 1. Old obligation is VOIDABLE SUBROGATION.
2. If it is ratified
ART 1304 – PARTIAL SUBROGATION
ART 1299 – PRESUMPTION WHERE THE OLD Ex: A owes B 9k. If TP/new creditor will pay 5k to B,
OBLIGATION IS SUBJECT TO A CONDITION it is not fully paid, only partial. So dito, magiging
Ex: A promised B to give the latter a specific land if dalawa na utang ni A, 4k kay B at 5k kay TP.
he passed the CPALE. Later on, sinabi ni B na car *If A’s money is insufficient or di sapat yung
na ang ibibigay and not the land, however they forgot pambayad nya sa dalawa, which is more preferred,
to mention the condition in new obli. the new creditor or the old creditor? – THE OLD
Question: *Is the new obligation subject to the same CREDITOR
condition? -YES
GR: New obli is subject to the same condition of old
obli
E: If the intention of the parties is that the new obli is
not subject to the same condition of old obli

ART 1300 – SUBROGATION


It is the active subjective novation characterized by
the transfer to a third person of all rights appertaining
to the creditor in the transaction concerned including
the right to proceed against the guarantors or
possessors of mortgages and similar others subject
to any applicable legal provision or any stipulation
agreed upon by the parties in conventional
subrogation.

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