LECTURE NOTES – ARTICLES 1262 TO 1277

Section 2 GENERAL RULE: Obligation to deliver a

LOSS OF THE THING DUE determinate thing is extinguished if it should
be lost or destroyed.
Art. 1262. – An obligation which consists in
the delivery of a determinate thing shall be Loss must be AFTER the obligation has been
extinguished if it should be lost or incurred. If loss was PRIOR, there would be
destroyed without the fault of the debtor, no obligation.
and before he has incurred in delay.
REQUISITES for the application of the GR
When by law or stipulation, the obligor is 1. Obligation is to deliver a determinate
liable even for fortuitous events, the loss of thing
the thing does not extinguish the 2. Thing is lost without fault of the
obligation, and he shall be responsible for debtor
the damages. The same rule applies when 3. Thing is lost before debtor incurs
the nature of the obligation requires the delay
assumption of risk.
EXCEPTIONS
*Loss under this Section includes (Obligation to deliver specific thing is
impossibility of performance. extinguished because there is no more thing
to be given. Obligation is converted into a
WHEN IS THERE LOSS? monetary obligation for damages.)
1. When the object perishes, i.e.
physically, it is destroyed 1. Law so provides (Arts. 1174 & 1262)
2. When it goes out of commerce a. Debtor promised to deliver
3. When it disappears in such a way the same thing to two or
that more persons who do not
a. Its existence is unknown have the same interest (Art.
b. It cannot be recovered (Art. 1165)
1189 (2) b. Obligation is to deliver a
generic thing (Art. 1263)
WHAT IMPOSSIBILITY OF PERFORMANCE c. Obligation to deliver a specific
INCLUDES thing arises from a crime
1. Physical impossibility (Art. 1268)
d. Loss of the thing occurs with
2. Legal impossibility the fault of the debtor (Art.
a. Directly caused as when 1262)
prohibited by law; or e. Loss of the thing occurs after
b. Indirectly caused as when the debtor incurs delay (Arts.
debtor is required to enter a 1262 & 1165)
military draft f. A borrower of an object has
lent the thing to another who
3. Moral impossibility, i.e. is not a member of his own
impracticability (Art. 1267) household (Art. 1942 [4])

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 LECTURE NOTES – ARTICLES 1262 TO 1277

g. Thing loaned has been the obligation of the employer to furnish

delivered with appraisal of the work became a legal impossibility.
value, unless there is a
stipulation exempting the Art. 1263. – In an obligation to deliver a
borrower from responsibility generic thing, the loss or destruction of
in case of a fortuitous event anything of the same kind does not
(Art. 1942 [3]) extinguish the obligation.
h. Payee in solutio indebiti is in
bad faith (Art. 2159) EFFECT OF LOSS ON OBLIGATION TO
DELIVER A GENERIC THING
2. Stipulation so provides (Art. 1262,
op. cit.) GENERAL RULE: Obligation continues to
exist because a generic thing does not really
3. Nature of obligation requires perish (genus nunquam perit – genus never
assumption of risk on the part of the perishes)
debtor (Ibid.)
EXCEPTIONS:
Asia Bed Factory vs National Bed Worker’s 1. If the generic thing is delimited, e.g.
Union 50 kilos of sugar from my 1999
L-9126, Jan 31, 1957 harvest when such harvest is
completely destroyed
FACTS: The company and its employees, in a
collective bargaining agreement, agreed that 2. If the generic thing has already been
“employees shall be provided with work on segregated or set aside, in which
Sundays at time and a half (150% wages); case it has become specific.
and that in the event NO work on Sundays is
available thru no fault of the employees, they 3. Partial loss where the courts
shall be paid the equivalent of their wages as determine that the such partial loss is
if they had performed work for that day.” so important as to extinguish the
Three months later, the Blue Sunday Law obligation. (Art. 1264)
was passed, prohibiting work on Sundays.
The employees contended that they should Art. 1264. – The courts shall determine
nevertheless be paid on Sundays since this whether, under the circumstances, the
prohibition by law was not their fault. partial loss of the object of the obligation is
so important as to extinguish the
ISSUE: Should the employees be paid? obligation.

HELD: No, the employees should not be paid Art. 1265. – Whenever the thing is lost in
because the company was prohibited by law the possession of the debtor, it shall be
to provided them work on Sundays. The presumed that the loss was due to his fault,
company’s duty to provide work on Sundays unless there is proof to the contrary, and
was extinguished by law, so it is unfair to without prejudiced to the provisions of
require it to pay the employees who after all Article 1165. This presumption does not
would not be working on said days. Indeed,

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 LECTURE NOTES – ARTICLES 1262 TO 1277

apply in case of earthquake, flood, storm or involved such as when only a particular
other natural calamity. company is prohibited by law to furnish work
on a certain day.
PRESUMPTION / GENERAL RULE
Debtor is presumed to be at fault. If a EFFECT OF LOSS THROUGH FORTUITOUS
person, for example is entrusted with several EVENT IN RECIPROCAL OBLIGATIONS
heads of cattle and he cannot account for
some missing ones, he is presumed to be at GENERAL RULE: Obligation remains.
fault (Palacio vs Sudario, 7 Phil 275)
E.g.
NO PRESUMPTION / EXCEPTION If after perfection, a building that was sold is
In case of natural calamity. Presumption can destroyed by lightning, the buyer must still
be controverted by proof to the contrary. pay, for he bears the loss even if the building
had not yet been delivered to him. (See Art.
Art. 1266. – The debtor in obligations to do 1191, 2nd sentence of par2 (Power to rescind
shall also be released when the prestation obligations, implied in reciprocal ones: “xxx
becomes legally or physically impossible to He may also seek rescission, even after he
do without the fault of the obligor. has chosen fulfillment, if the latter should
become impossible.”)
LOSS IN PERSONAL OBLIGATIONS w/o
DEBTOR’S FAULT EXCEPTIONS
1. Legal impossibility 1. In case of lease, if the object is
2. Physical impossibility destroyed, both the lease and the
obligation to pay rent are
NOTE: Impossibility must exist AFTER the extinguished. (See Art. 1655)
constitution of the obligation. If it was
BEFORE, there is nothing to extinguish. If 2. In contracts for a piece of work.
performance was impossible from the start, Here, the worker or contractor
obligation is void. cannot successfully ask for the price
if the thing be lost by a fortuitous
Examples of impossibility: event prior to delivery. Here, the risk
1. Legal impossibility (Asia Bed case) is on the worker.
2. Physical impossibility
To install a motor in a ship that was Art. 1267. – When the service has become
lost after perfection of the contract so difficult as to be manifestly beyond the
but prior to such installation. (Milan contemplation of the parties, the obligor
vs Rio y Olabarrieta, 45 Phil 718) may also be released therefrom, in whole
or in part.
EFECT OF SUBJECTIVE IMPOSSIBILITY
If the act is subjectively impossible for the *This Article refers to moral impossibility or
debtor himself, but otherwise objectively impracticability due to change of certain
possible for others, the obligation usually conditions; also known as “Doctrine of
subsists (Reyes vs Caltex, 47 OG 1193), Unforeseen Events.”
UNLESS personal considerations are

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 LECTURE NOTES – ARTICLES 1262 TO 1277

Rebus sic stantibus – a treaty or agreement Art. 1268. – When the debt of a thing
remains valid only if the same conditions certain and determinate proceeds from a
prevailing at the time of contracting continue criminal offense, the debtor shall not be
to exist at the time of performance. exempted from the payment of its price,
whatever may be the cause of the loss,
*Applies only to personal obligations unless the thing having been offered by him
(“service”), not real obligations (to give). to the person who should receive it, the
latter refused justification to accept it.
Example 1 (MORAL IMPOSSIBILITY;
OBLIGOR CAN BE RELEASED) EFFECT OF LOSS IN CRIMINAL OFFENSES
The duty to construct a railroad when such Fortuitous event does not extinguish the
construction was possible but very obligation.
dangerous to life and property, is excused
by law. Therefore, failure to grind sugar cane EXCEPTION
in view of the non-construction of the When the creditor (the offended party in the
railroad does NOT give rise to damages. crime) is in mora accipiendi.
(Labayen vs Talisay-Silay Milling Co., 52 Phil
440) E.g.
However, if instead of extreme danger there Q1: A commits theft, and is asked to return
is only mere inconvenience, unexpected the car stolen from the owner, B. If, before
impediments or increased expenses, the the car is delivered to B, it is destroyed by
same would not be enough to relieve a fortuitous event, is A’s liability extinguished?
debtor from his “bad bargain.” (Castro, et al.
vs Longa, 89 Phil 581) A1: No, A’s liability is not extinguished. A’s
obligation to deliver the car arose from a
REQUISITES of Art. 1267 criminal offense, and in such case, the rule
1. Service must become so difficult that is, he is liable even if the loss occurs
it was manifestly beyond the because of a fortuitous event.
contemplation of BOTH parties. It is
not enough that neither party actually Q2: Suppose A had previously asked the
anticipated or foresaw the difficulty. owner to accept the car, but the owner
The difficulty could not possibly have without any justifiable reason refuses to
been anticipated or foreseen. accept the car, is A still responsible if the car
is lost later by a fortuitous event?
2. One of the parties must ask for relief. A2: In this case, the criminal could no longer
be liable because here, the creditor is in
3. Object must be a future service with mora accipiendi. This is the exception to the
future unusual change in conditions. rule.
Naturally, an aleatory contract or one
dependent on chance, in view of the Q3: If the creditor refuses to accept the thing
risks being foreseen does not come due from the criminal, what should the latter
under the scope of 1267. do?

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 LECTURE NOTES – ARTICLES 1262 TO 1277

A3: The criminal may either consign the furthermore, comply with the forms of
thing or else keep the thing in his donation.
possession. If he does the latter thing, he is
still obliged to care for it with due diligence, Remission or Condonation – Gratuitous
but this time he will not be liable if the thing abandonment by the creditor of his right
is lost through a fortuitous event.
ESSENTIAL REQUISITES OF REMISSION
Art. 1269. – The obligation having been 1. There must be an AGREEMENT
extinguished by the loss of the thing, the (since acceptance by the debtor of
creditor shall have all the rights of action the offer is required)
which the debtor may have against third
persons by reason of the loss. 2. The parties must be CAPACITATED
and must CONSENT (therefore, it is
TRANSFER OF RIGHTS FROM THE DEBTOR beyond the power of the courts or of
TO THE CREDITOR IN CASE OF LOSS Congress to condone interest unless
the creditor consents) (Bañez vs
E.g. Young, L-4635, Oct 27, 1952)
S is obliged to deliver his car to B. But X
destroys the car B has a right to sue X. The 3. There must be SUBJECT MATTER
right is given to B instead of S because (object of the remission – otherwise,
otherwise S would unduly profit in that he there would be nothing to condone)
will gain two things: first, his obligation to
give the car or its value is already 4. The cause or consideration must be
extinguished; second, he would be allowed liberality (for remission is
to recover from X. It is obvious that S must ESSENTIALLY GRATUITOUS).
not unduly profit at the expense of B. Otherwise, the act may be dation in
payment, or a novation, or a
Rights of action – right to bring a specific compromise
case to court; includes the insurance
indemnity that may have been received. 5. The obligation remitted must have
been DEMANDABLE at the time of
Section 3 remission. Otherwise, the remission
CONDONATION OR REMISSION OF THE is useless.
DEBT
6. Remission must NOT be
Art. 1270. – Condonation or remission is INOFFICIOUS (otherwise, it would be
essentially gratuitous, and requires the reducible, so that the legitimes of the
acceptance by the obligor. It may be made compulsory heirs would not be
expressly or impliedly. impaired.)

One and the other kinds shall be subject to 7. Formalities of a donation are required
the rules which govern inofficious in the case of an express (not
donations. Express condonation shall, implied) remission. (Art. 1270); must

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 LECTURE NOTES – ARTICLES 1262 TO 1277

be in a public instrument in order to o In a separate public

be valid (Art. 749) document
o But shall not take effect
8. Waivers or remissions are not to be unless acceptance is done
presumed generally. They must be during the lifetime of the
CLEARLY and CONVINCINGLY donor
SHOWN, either by express stipulation - If acceptance is made in a
or by acts admitting of no other separate document, donor shall
reasonable explanation (Arrieta vs be notified thereof in an authentic
NARIC, L-15645, Jan 31, 1964) form and this step shall be noted
in both instruments
Inofficious donations – those that exceed its
limitations. KINDS / CLASSES OF REMISSION
1. As to form
Art. 750. – The donations may comprehend a. Express – When made in
all the present property of the donor, or part accordance with formalities of
thereof, provided he reserved, in full donation if inter vivos; or of a
ownership or in usufruct, sufficient means will or codicil if mortis causa
for the support of himself, and all relatives b. Implied – When, although not
who, at the time of the acceptance of the made in accordance with
donation, are by law entitled to be supported formalities prescribed by law
by the donor. Without such reservation, the for donations, it can be
donation shall be reduced in petition of any deduced from the acts of the
person affected. obligee or creditor; conduct is
Art. 752. – The provisions of Article 750 sufficient
notwithstanding, no person may give or
receive by way of donation, more than that 2. As to extent or effect
he may give or receive by will. a. Total – entire obligation is
extinguished
LIMITS OF DONATION b. Partial – Only a portion is
Donation of movable (Art. 748): remitted; or may refer only to
- P5k and below – no need to be in accessory obligation, or an
writing aspect thereof which affects
- >P5k – needs to be in writing the debtor, as for instance
solidarity
Donation of immovable (Art. 749):
- Made in public instrument, 3. As to constitution / date of effectivity
specifying therein the property a. Inter vivos – during lifetime of
donated and the value of the donor; constituted by
charges which the done must agreement of the obliged and
satisfy the obligor
- There must be acceptance b. Mortis causa – after death of
o Made in the same deed; donor; constituted by last will
or and testament

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 LECTURE NOTES – ARTICLES 1262 TO 1277

E.g. delivery of the document was made in

FACTS: H & W solidarily owe X Corp P500k. virtue of payment of the debt.
When the loan fell due, H & W were not able
to pay. Because of non-payment, principal Art. 1272. – Whenever the private
obligation ballooned to P650k to include document in which the debt appears is to
interest of P100k and penalty charges of be found in the possession of the debtor, it
P50k. H & W went to the P, company shall be presumed that the creditor
president of X Corp asking that the penalties delivered it voluntarily, unless the contrary
amounting to P50k be condoned and they is proved.
can pay the entire P600k (principal P500k +
interest P100k). P agreed. EFFECT OF DELIVERY OF PRIVATE
DOCUMENT EVIDENCING CREDIT
When H & W paid P600k, a voucher stating Remission is presumed. Note that the article
that the amount of P600k was paid as “full speaks of “private,” not public instrument.
payment of the loan.” X Corp demands that
H & W still pay additional P50k. H & W Lopez Vito vs Tambunting
claims, however that the P50k has been 33 Phil 226
condoned already by P as evidenced by the
voucher. FACTS: Steffi made a promissory note in
favor of Agassi in the amount of P700. For
ISSUE: Whether or not X Corp is entitled to the purpose of collecting fees for his
additional P50k. services, Agassi voluntarily delivered the
promissory note to Steffi without collecting
HELD: Yes, X Corp is still entitled to the P700. Steffi is now in possession of the
additional P50k. Art. 1270, par 2 provides said note.
that express condonation must comply with
the forms of donation. Since the amount ISSUE: W/N there is a disputable
exceeds P5k, it must be made in writing. presumption that there has been a
Otherwise, the same is void. remission. Was there remission?

In the case at bar, the alleged agreement to HELD: Yes, there is a presumption that there
condone P50k was not reduced to writing. was remission as given under Art. 1188
(Patterned after Yam and Sunt Lent vs CA, et (now Art. 1271), NCC. However, this
al., GR No. 104726, Feb 11, 1999) presumption cannot stand if sufficient proof
to the contrary is adduced. There was no
Art. 1271. – The delivery of a private remission in this case because the
document evidencing a credit, made presumption was overturned.
voluntarily by the creditor to the debtor,
implies the renunciation of the action which For such a presumption may be taken into
the former had against the latter. account, it is necessary that the evidence of
the obligation be delivered up to the debtor
If in order to nullify this waiver it should be and that the delivery of the instrument
claimed to be inofficious, the debtor and proving the credit be made voluntarily by the
his heirs may uphold it by proving that the creditor to the debtor. In the present case, it

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 LECTURE NOTES – ARTICLES 1262 TO 1277

cannot be said that these circumstances Art. 1273. – The renunciation of the
concurred, inasmuch as when the plaintiff principal debt shall extinguish the
sent the receipt to the defendant for the accessory obligation; but the waiver of the
purpose of collecting his fee, it was not his latter shall leave the former in force.
intention that that document should remain
in the possession of the defendant if the RENUNCIATION OF PRINCIPAL
latter did not forthwith pay the amount EXTINGUISHES ACCESSORY, BUT NOT VICE
specified therein. VERSA

NOTE: E.g.
While Art. 1271 gives a presumption of A remission of the penalty does not remit
remission, Art. 1272 gives a presumption of the principal obligation, but if the principal
voluntary delivery. debt is condoned, the penalty is also
condoned.
EFFECT IF THE OBLIGATION IS JOINT OR
SOLIDARY Art. 1274. – It is presumed that the
accessory obligation of pledge has been
E.g. remitted when the thing pledged, after its
A & B owe C P100k, evidenced by a private delivery to the creditor, is found in the
document. possession of the debtor, or of a third
person who owns the thing.
Q1: If the private document is found in the
possession of A, who is a joint debtor, what REMISSION OF PLEDGE
is the presumption? Here, only the accessory obligation of pledge
is presumed remitted. The principal
A1: Presumption is that only A’s debt has obligation (loan) remains in force.
been remitted. A’s debt is not P100k, but
only P50k. Presumption is only disputable, for the
debtor or the third person may be in
Q2: If the private document is found in the possession of the property by theft or
possession of A who is a solidary debtor, because it had been sent for repairs, or for
what is the presumption? similar causes.

A2: Since this is a solidary obligation, the REASON FOR THE PRESUMPTION
presumption is that the whole obligation, not It is essential in pledge that the thing is
just A’s share, has been remitted. delivered to the creditor, or to a third person
by common agreement.
Q3: In both cases, may the presumption be
rebutted? POSSESSION BY A THIRD PERSON
If the third person does not own the thing,
A3: yes, presumption in both cases can be the presumption does not arise. As a matter
overcome by superior contrary evidence. of fact, the stranger may just have found it
or it may have been delivered to him only for
safekeeping.

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 LECTURE NOTES – ARTICLES 1262 TO 1277

Pledge - contract by virtue of which the 2. Merger must be clear and definite
debtor delivers to the creditor or to a third
person a movable or instrument evidencing NOTE: This does not mean that the
incorporeal rights for the purpose of extinguishment of the obligation must be
securing the fulfillment of a principal complete or total in character. It merely
obligation with the understanding that when means that whether the merger refers to the
the obligation is fulfilled, the thing delivered entire obligation or only a part thereof, it
shall be returned with all the fruits and must be of such character that there will be
accessions. a complete and definite meeting of all the
qualities of a creditor and debtor in the
Section 4 obligation or in the part of the aspect thereof
CONFUSION OR MERGER OF RIGHTS which is affected by the merger. (Jurado)

Art. 1275. – The obligation is extinguished 3. Very obligation involved must be the
from the time the characters of creditor and same or identical because if the
debtor are merged in the same person. debtor acquires certain rights from
the creditor with respect to other
Merger or Confusion – Meeting in one things, there is no merger. (Testate
person of the qualities of creditor and debtor Estate of Mota vs Serra, 47 Phil 464)
with respect to the same obligation. If a
debtor is his own creditor, enforcement of NOTE: If an heir is a debtor of the deceased,
the obligation becomes absurd, since one merger does not necessarily follow, for other
cannot claim against himself. Thus, the creditors may be prejudiced.
obligation is extinguished.
Example of Confusion or Merger
REQUISITES A makes a check payable to bearer, and
1. Should take place between the hands the check to C, who hands it to D who
principal debtor and creditor. Merger finally hands it to A. Here, A owes himself.
of the character of the creditor and This is clear case of merger. Hence,
debtor must be in the SAME obligation of A is extinguished.
PERSON.
EFFECT OF TRANSFER OF RIGHTS
NOTE: Confusion of the creditor with the Mere transfer to a third person of rights
person of the guarantor does not extinguish belonging to both the debtor and creditor
the principal obligation. (Art. 1276) In such BUT not the credit as against the debt does
case, only the accessory obligation of not result in merger.
guaranty is extinguished.
E.g.
NOTE2: There can also be NO CONFUSION FACTS: A and B were co-owners of a piece
or MERGER if the debtor and creditor of property worth P1M. For some repairs
represent different juridical entities even if thereon, B paid P200k. Because they were
the officers of both are the same. (Kapisanan co-debtors, A had to share in said expenses,
ng mga Manggagawa sa MRR vs Credit and so A owed B P100k. A sold his share in
Union, et al., L-14332, May 20, 1960) the property to C and B also sold his share

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 LECTURE NOTES – ARTICLES 1262 TO 1277

in the property to C. Later B brought this E.g.

action to recover P100k from A. A claimed P borrowed P1M from Q. As security, P
that since C is now the owner of the mortgaged his land to Q. Later P sold the
property, C owes himself, and therefore said land to Q. The mortgage is extinguished but
merger had extinguished his debt to B. P still owes Q P1M.

ISSUE: Should A pay B? Had Q assigned his credit of P1M to a friend

and the friend assigned the credit to P, both
HELD: Yes, A should pay B, since there was the principal obligation and the mortgage are
really no merger here. What had been sold extinguished.
to C were the half shares of each of the co-
owners, or P500k worth of property from Art. 1277. – Confusion does not extinguish
each. C did not acquire the indebtedness of a joint obligation except as regards the
P100k from the repairs, hence there can be share corresponding to the creditor or
no merger with reference to that debt. debtor in whom the two characters concur.

EXTINCTION OF REAL RIGHTS In a joint obligation, if the confusion takes

Real rights, such as usufruct over property, place in one of the joint debtors, the
may be extinguished by merger when the principal obligation is partially extinguished
naked owner himself becomes the up to the share which corresponds to him.
usufructuary. (Called consolidation of This is because of the nature of a joint
ownership) obligation wherein the joint debtors are liable
pro rata or equally or that the debts being
E.g. considered distinct from one another.
A had two brothers B and C. A gave a parcel
of land to B in usufruct (right to the use and
right to the fruits), and the same parcel to C
in naked ownership. If later, C donated the
naked ownership of the land to B, B will now
have the full ownership (his ownership is
consolidated) and it is as if merger had
resulted.

REVOCABILITY OF CONFUSION OR MERGER

If the reason for the confusion ceases, the
obligation is revived.

EFFECT IS MORTGAGEE BECOMES THE

OWNER OF THE MORTGAGED PROPERTY
If the mortgagee becomes the owner of the
property that had been mortgaged to him,
the mortgage is naturally extinguished but
the principal obligation may remain. (Yak
Ton Lin Fire vs Yusingco, 64 Phil 1062)

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