Polytechnic University of the Philippines

1016 Anonas, Santa Mesa, Manila

OBLICON REVIEWER
Obligation Obligations, Right, Cause of Action, Injury,
-​ Article 1156 Damage, & Damages
→ Juridical necessity to give, to do, or
not to do Right
→ Power which a person has, under the law, to
Juridical Necessity demand from another any prestation
→ Noncompliance, courts of justice may be Cause of Action
called upon → Act or omission which violates a right
Injury
Nature of Obligations Under the Civil Code → Act or omission which causes harm
Civil Obligations Damage
→ Creditor/obligee has right under law to → Harm done to a party
enforce their performance in courts of justice Damages
Natural Obligations → Sum of money recoverable by reason of
→ Not based on positive law damage done
→ Not enforceable by a court of action
→ Equity and natural law Kinds of Obligation According to Subject
-​ Do not grant a right of action to enforce Matter
their performance 1) Real Obligation
-​ Voluntary fulfillment of debtor = may not → Subject matter is a thing which the obligor
recover what has been must deliver to the obligee (Obligation to give)
delivered/rendered
2) Personal Obligation
Essential Requisites of an Obligation → Subject matter is an act to be done or not to
1) Passive Subject be done
→ Debtor or Obligor
→ Person bound to fulfillment of the obligation a)​ Positive Personal Obligation
→ To do or to render service
2) Active Subject
→ Creditor or Obligee b)​ Negative Personal Obligation
→ Person entitled to demand the fulfillment of → Not to do or not to give
the obligation
Classifications of Obligations as to Juridical
3) Object or Prestation Quality
→ Subject matter of the obligation 1) Natural
→ Conduct required to be observed by debtor → Obligation in accordance with the natural law
→ May consist in giving, doing, or not
4) Juridical or Legal Tie 2) Civil
→ Vinculum Juris → positive law
→ Binds & connects the parties to the
obligation 3) Mixed
Form of Obligations → natural & positive law
→ Manner in which an obligation is manifested
or incurred As to parties
-​ Oral
-​ Written
1) Unilateral
-​ Partly
→ 1 party is bound
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
→ Obligation is susceptible of partial
2) Bilateral performance
→ Both parties are mutually or reciprocally Indivisible
bound → Obligation is not susceptible of partial
3) Individual performance
→ Only one obligor

4) Collective Principal
→ Several obligors → It is the undertaking
→ Could be joint or solidary
Accessory
a)​ Joint → When it is merely an undertaking to
→ Each obligor is liable only for his guarantee the fulfillment of the principal
proportionate share of obligation obligation
b)​ Solidary
→ Each of the obligor may be held liable As to Perfection and Extinguishment
for the entire obligation 1) Pure
→ Obligation is not subject to any
As to object condition/term that is immediately demandable
1) Determinate
→ When the object is specific 2) Conditional
→ Obligation is subject to a condition
2) Generic → Suspensive or resolutory
→ When the object is designated by its class or
genus a)​ Suspensive
→ Happening or fulfillment of the
3) Simple condition results in birth of obligation
→ There is only one undertaking
b)​ Resolutory
4) Multiple → Happening or fulfillment of the
→ There are several undertakings condition results in the extinguishment
→ Conjunctive or distributive of the obligation
a)​ Conjunctive
→ All undertakings are demandable With a term or period
at the same time → Suspensive or resolutory
b)​ Distributive
→ Only one undertaking out of 1) Suspensive or from a day certain
several is demandable → Obligation is demandable only upon the
→ Alternative or Facultative expiration of the term

Alternative 2) Resolutory or to a day certain

→ Obligor allowed to choose one out of → Obligation is extinguished upon the
several obligations which may be due & expiration of the term
demandable
Article 1157
Facultative → Obligations arise from:
→ Obligor is allowed to substitute another 1.​ Law
obligation for one which is due & demandable 2.​ Contracts
3.​ Quasi-contracts
Possible 4.​ Acts or omissions punished by law
→ Obligation is capable of fulfillment in nature 5.​ Quasi-delicts
or in law
Impossible 1) Law (Obligation ex lege)
→ Obligation is not capable of fulfillment either → Imposed by law itself
in nature or in law → Article 1158
Divisible
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
-​ Obligations derived from law are not
presumed 5) Quasi-delicts (Obligations ex quasi delicto)
→ Article 2176
2) Contracts (Obligation ex contractu) -​ Whoever by act or omission causes
→ Arise from stipulation of the parties damage to another, there being no fault
→ Article 1159 or negligence, is obliged to pay for the
-​ Have force of law between contracting damage done
parties & should be complied with in Nature and Effects of Obligation
good faith (Civil Code)
Obligation to Give
→ Specific/determinate thing
3) Quasi-contracts (Obligation ex quasi -​ Object is particularly designated
contractu) -​ Physically segregated
→ Article 2142
-​ Juridical relation which arises from → Generic/indeterminate thing
certain lawful, voluntary and unilateral -​ Object is merely designated by its
acts, to the end that no one shall be class/genus
unjustly enriched or benefited at the -​ No physical segregation from same
expense of another (Civil Code) class

Principle Types of Quasi-contract Purpose of obligation to give

a) Negotiorum Gestio → To transfer ownership
→ Require the person concerned to substitute → To transfer of mere possession or right
him, if the owner is in a position to do so
→ Article 2144 Obligations of One Obliged to Give in
-​ Voluntary takes charge without any Determinate Thing
power from latter, is obliged to continue → Article 1166
the same until the termination of the -​ Includes that of delivering all its
affair and its incidents accessories & accessions, even though
they may not have been mentioned
b) Solutio Indebiti
→ Article 2154 a)​ Principal Obligation
-​ If something is received when there is → To deliver the thing
no right to demand it, and it was
unduly delivered through mistake, the b)​ Accessory obligations
obligation to return it arises (this avoids → Take care of the things to be
unjust enrichment) delivered with diligence of a good
father of a family
4) Delicts (Obligation ex delicto) → Deliver the accession and
→ Article 100, Revised Penal Code accessories
-​ Every person criminally liable is also → Deliver the fruits the moment the
civilly liable obligation arises (Article 1164)
Exceptions
→ Unless otherwise provided by law, there are Diligence of a Good Father of a Family
offenses & special crimes without civil liability → Ordinary care that an average person
→ A person who is not criminally liable may still exercises in taking care of his property (Article
be civilly liable 1163)

Criminal Liability Exceptions:

→ Purpose is to punish the offender → When the law requires a different degree of
→ Effect = affects social order diligence
→ When the parties agree on or stipulate a
Civil Liability different standard of care
→ Purpose is to repair damages suffered by
aggrieved party
→ Effect = affects private rights
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
2) If the debtor Performs But Contravenes The
Accession Tenor of the Obligation
→ Everything that is produced by a thing or is
incorporated or attached thereto, either naturally a)​ Article 1167
or artificially b)​ Article 1170

Accessories 3) Debtor Performs the obligation but Does It

→ Those joined to or include with the principal Poorly
thing for the latter’s better use, perfection or
enjoyment a)​ Creditor may have the same undone at
the expense of the debtor (Article 1167)
Fruits b)​ Action for Damages (Article 1170)
→ Natural, industrial and civil fruits
B) Obligation not to do
Obligation to Deliver 1) Debtor does what has been forbidden him
→ Either without a period or condition or with a
period or condition a)​ Creditor may demand what has been
done, be undone (Article 1168)
Effects of Failure to Exercise Due Diligence b)​ Article 1170
→ Obligor or debtor may be liable for damages
→ Liable even if there was a fortuitous event Breach of Obligation

Remedies of the Creditor Classification of Breach

1) Debtor fails to deliver a determinate thing 1) Total Breach
→ Breach/non-fulfillment
a)​ Article 1165 → Not doing anything
→ Compel debtor to make delivery → Doing all the things that are not supposed to
(specific performance) be done
b)​ Article 1170
→ Action for damages 2) Defective Performance
→ Breach by doing something that was not
2) Debtor fails to deliver a generic thing agreed upon on
→ Partial performance
a)​ Article 1165 → Poorly or badly performing the obligation
→ Ask that obligation be complied with → Delay in performance, defect relates to the
b)​ Substitute performance (Article 1165) time of performance
c)​ Action for damages (Article 1170) → Performing the obligation but not in
accordance with specifications, terms &
Obligation To Do & Not To Do conditions

To do Modes of Breaching the Obligation

→ Includes all kinds of work or services -​ Fraud
-​ Negligence
Not to do -​ Delay
→ Abstaining from the act -​ Any manner that contravenes the tenor
thereof
A) Obligation to do
Remedies of the Creditor 1) Breach Through Fraud
1) If debtor Fails To Perform the obligation → Deliberate or intentional evasion
→ Voluntary execution of a wrongful act
a)​ Creditor may have the obligation → Knowing & intending the effects which
executed at the expense of the debtor naturally arise from such act or omission
(Article 1167)
b)​ Action for damages (Article 1170)
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
Kinds of Fraud in General c)​ Culpa Criminal
1) Fraud in Obtaining Consent → Negligence that results in criminal
liability
a)​ Causal Fraud (dolo causante)
→ Article 1338 3) Breach Through Delay
-​ Deceptions/misrepresentation of → Article 1169
serious character employed by -​ Those obliged to deliver or to do
one party & without which the something incur in delay from the time
other party would not have the obligee judicially or extrajudicially
entered into the contract demands from them the fulfillment of
their obligation
b)​ Incidental Fraud (dolo incidente)
-​ Those which are not serious in Note:
character and without which, the There is no delay in obligation not to do as one
other party would still have cannot be in delay for not doing something
entered the contract
Kinds of Delay or Mora
2) Fraud in the Performance of the Obligation 1) Mora Solvendi
→ Evading fulfillment of an obligation in a → Delay on the part of the debtor
normal manner
→ Fraud has no effect on validity of the contract; a)​ Mora solvendi ex reAl
employed after perfection → Delay in obligations to give
b)​ Mora solvendi ex personaL
c)​ Future Fraud → delay in obligations to do
→ Article 1171
-​ Waiver for future fraud cannot 2) Mora accipiendi or creditoris
be made, if there is an → Delay on the part of the creditor
agreement
3) Compensatio morae
d)​ Past Fraud → Both parties are in delay
→ A waiver of an action for past fraud
may be made since the commission of When is debtor in delay?
fraud can no longer be encouraged → No demand, no delay

2) Breach Through Negligence 1) The debtor does not perform his obligation to
→ Article 1173 do or to give on the date it is due
-​ Fault or negligence of obligor consists in 2) The creditor demand the performance of the
omission of that diligence which is obligation either judicially or extrajudicially
required by the nature of the obligation 3) The debtor does not comply with creditor’s
corresponds with the circumstances of demand
the persons, of the time, and of the
place Exceptions:
a)​ When the law so stipulates
a)​ Culpa Aquiliana b)​ When the obligation expressly so
→ Article 2176 declares
-​ Acts or omissions that cause c)​ When the time is of the essence of the
damage to another, there being contract
no contractual relation d)​ When demand would be useless
between the parties e)​ In reciprocal obligations, where the
Master-Servant Rule does not apply obligation arise out of the same cause
b)​ Culpa Contractual and must be fulfilled at the same time,
→ Refers to negligence in the from the moment one of the parties
performance of a contract fulfills his obligation, delay by the other
begins notwithstanding the absence of
Master-Servant Rule applies demand
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
4) Breach Through Contravening the Tenor of Liability to Pay Interest
the Obligation a)​ There is an agreement that interest shall
→ Catch-all mode that covers all other cases of be earned
total breach or performance of the obligation b)​ The agreement that interest shall be due
shall be expressly stipulated in writing
→ It may constitute breach through defective c)​ The rate of interest must not be usurious
performance (legally non-existent) or excessive or
unconscionable
Effects of Delay
Legal Interest
a)​ The debtor shall be liable for the → The debtor shall be liable to pay interest:
payment of damages (Article 1170) a)​ There is agreement that interest will be
paid but there is no agreement as to the
b)​ If the obligation consists in the delivery rate thereof
of a determinate thing, he shall be b)​ From the time of delay or default in an
responsible for any fortuitous event he obligation consisting of payment of sum
has effected the delivery (Article 1165) of money, even if no interest was agreed
upon
c)​ From the time the decision in favor of
the creditor for the enforcement of an
Fortuitous Event obligation for sum of money becomes
→ Acts of God final and executory
→ Event which could not be foreseen or d)​ The interest due shall also earn legal
which, though foreseen, is inevitable interest from the time it has been
judicially/extrajudicially demanded
Requisites Presumptions on Receipt of Principal or of
1)​ The cause of the unforeseen and Later Installment
unexpected occurrence or of the failure → receipt of a later installment of debt without
to debtor to comply with his obligation, reservation as to prior installments, shall
must be independent of the human will likewise raise the presumption that such
2)​ There must be impossibility of installments have been paid
foreseeing the event or it can be → Article 1176
foreseen but it is impossible to avoid -​ Receipt of the principal by the creditor
3)​ The occurrence of the event be of such without reservation with respect to the
character as to render it impossible for interest, shall give rise to the
the debtor to perform his obligation in a presumption that said interest has been
normal manner paid

Exceptions Remedies of the Creditor to Enforce Payment

a)​ Obligor delays of his Claim Against Debtor
b)​ Obligor promised the same thing to two 1) Principal Remedies
or more persons who do not have the a)​ Specific Performance (Articles 1165 &
same interest 1167)
c)​ Stipulation or agreement that the obligor b)​ Substitute Performance (Article 1165)
will not be excused c)​ Equivalent Performance (Articles 1168
d)​ When there is assumption of risk as & 1170)
required by the nature of obligation
e)​ Thing to be delivered is generic 2) Subsidiary Remedies
f)​ Obligor is also at fault, fortuitous event a)​ Subrogatory action or accion
is in effect humanized subrogatoria (Article 1177)
g)​ Nature of obligation makes obligor liable b)​ Rescissory action or accion pauliana
(e.g. insurance) (Articles 1177 and 1381)
h)​ Law makes the obligor liable c)​ Accion Directa
i)​ Liability from delicts
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
Subrogatory Action/Accion Subrogatoria 2.​ Conditional Obligation
→ Creditor will file a case in behalf of the debtor → One whose demandability or extinguishment
with respect to another obligation that is due to depends upon the happening of a condition
the debtor
Condition
a)​ Creditor has a right of credit against the → Depends upon the will of one of the
debtor contracting parties
b)​ Credit must be due and demandable
c)​ There must be failure of the debtor to Suspensive Potestative Condition
collect from third person persons → Fulfillment of the suspensive condition that
(Debtor of the debtor) whether willfully will give rise to the obligation depends upon
or through negligence the will of the debtor/obligor, the conditional
d)​ The assets in the hands of the debtor obligation is void
are insufficient
e)​ Right and actions are not purely → If obligation depends upon the will of the
personal or inherent in the person of the creditor, the obligation is valid
debtor Resolutory Potestative Condition
→ Fulfillment of resolutory potestative condition
Rescissory Action or Accion Pauliana depends upon the will of the debtor or obligor,
Requisites: the obligation is valid
→ Plaintiff asking for rescission, has a credit → If the fulfillment depends upon the will of the
prior to the alienation, although demandable creditor, the obligation is valid
later
2. Casual Condition
→ The debtor has made a subsequent contract → Fulfillment of obligation is dependent upon
conveying a patrimonial benefit to a third person chance and/or the will of a third person

→ That the creditor has no other legal remedy to 3. Mixed Condition

satisfy his claim, but would benefit by rescission → Fulfillment of obligation depends partly on the
of the conveyance to the third person will of one of the parties and partly upon chance
or upon the will of a third person
→ That the act being impugned is fraudulent
A.​ Possible & Impossible Conditions
→ The third person who received the property
conveyed knee of the fraudulent act Possible
→ Capable of fulfillment in its nature and by law

Rules on transmissibility of rights and Impossible

exceptions thereto (Article 1178) → Not capable of fulfillment in its nature or due
to operation of law
→ All rights acquired in virtue of an obligation
are transmissible -​ Judicial Impossibility
→ When legal and permanent obstacle
Exceptions! obstructs its realization
→ When the law expressly prohibits transfer
→ When the parties agreed against the -​ Physical Impossibility
transmission → Contrary to nature
→ When the rights is purely personal
B.​ Positive and Negative Conditions

DIFFERENT KINDS OF OBLIGATION Positive

→ Condition that some event happen at a
1.​ Pure Obligation determinate time
→ One without a term or condition and is → Obligation is extinguished as soon as the
demandable at once time expires or it has become indubitable that
the event will not take place
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
→ Thing is considered lost when it perishes or
goes out of commerce or disappears in such a
Negative way that its existence is unknown or cannot be
→ Condition that some event will not happen at recovered
a determinate time
→ Obligation becomes effective as soon as the Loss of a thing:
time indicated has elapsed or it has become -​ Without debtor’s fault
evident that the event will not occur → Obligation extinguished

C.​ Divisible & Indivisible -​ With debtor’s fault

→ Debtor is obliged to pay damages
Divisible
→ capable of partial performance
-​ Article 1183
→ If the obligation is divisible, that part Deterioration of the thing
thereof which is not affected by -​ Without debtor’s fault
impossible or unlawful condition shall be → Impairment shall be borne by the
valid creditor, i.e., no liability on the art of the
debtor to pay damages
Indivisible
→ Not capable of partial performance by its -​ With debtor’s fault
nature or by law or agreement of the parties → Creditor may choose between the
following remedies:
Effect of Fulfillment of Suspensive -​ Rescission, plus damages
Conditions -​ Fulfillment, plus damages
→ The effect of fulfillment of the suspensive
condition retroacts to the day of the constitution Improvement of the thing
of the obligation -​ By nature or by time
→ Improvement shall inure to the
Exceptions: benefit of the creditor
→ There shall be no retroactive effect with
respect to the fruits and interest as follows: -​ At the expense of the debtor
-​ In reciprocal obligations, each party will → Debtor will have the rights granted to
retain the fruits that they received and a usufructuary
shall redeemed mutually compensated
Rules in case the fulfillment of
-​ In unilateral obligations, the debtor Resolutory condition
keeps the fruits and interest received
before the fulfillment of the obligation → Upon the fulfillment the resolutory
condition, the obligation is extinguished
Rights of the parties BEFORE the fulfillment
of the condition → Parties shall return to each other
what they have received
A.​ Creditor
→ The creditor may bring the appropriate → In case of loss, deterioration, or
actions for the preservation of his right improvement of the thing, the provision
in the above rule (Article 1189) which
B.​ Debtor pertains to the debtor shall be applied to
→ He may recover what he has paid by mistake the party who is bound to return.

Rules in case of loss of a determinate thing

BEFORE the fulfillment of the suspensive
condition 3. Obligation with a Period
→ Obligation is with a period if an interval of
Concept of Loss time is provided
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
Concept of a period and day certain Definite
→ Exact date is specified
Period
→ Space of time which determines the effectivity Indefinite
or extinguishment of an obligation → The date is not fixed

A day certain Presumption as to who has the benefit of the

→ Which must necessarily come although it may period
not be known when
→ Article 1196
Period vs Condition -​ Whenever a period is designated in an
​ obligation, it shall be presumed to have
Period been established for the benefit of both
-​ Involves a future and certain time or the creditor and debtor unless from the
event tenor of the obligation or other
circumstances it should appear that it
-​ Suspensive period affects only the has been established for the benefit of
demandability of the obligation only one of the parties

-​ Generally no retroactive effect → Therefore, the debtor cannot be compelled to

perform and the creditor cannot be compelled to
-​ The obligation is still existing if the accept performance, before the term expires
period depends upon the will of the
obligor Period is for the benefit of one party

Condition For the benefit of the debtor

-​ Involves a future and uncertain event → He cannot be compelled to perform his
obligation before the expiration of the term, but
-​ Suspensive condition affects the birth of he may choose to perform before such
the obligation and not merely its expiration at his option
demandability
When debtor loses the benefit of a period
-​ With retroactive
1.​ When after the obligation has been
-​ The obligation is void if the condition contracted, he becomes insolvent,
depends upon the will of the obligor unless he gives a guaranty or security
for the debt
Kinds of Period
2.​ When he does not furnish the
Suspensive (Ex die) guaranties or securities that he has
→ Suspends the demandability of the obligation promised
up to the period agreed upon
3.​ When his own acts he had impaired said
Resolutory (In diem) guaranties or securities after their
→ Obligation is immediately demandable, but establishment and when through a
will be extinguished when the period arrives fortuitous event they disappear, unless
he gives new ones equally satisfactory
Legal
→ Fixed by law itself 4.​ When the debtor violates any
undertaking in consideration of which
Conventional the creditor agreed to the period
→ Agreed upon by the parties
5.​ When he attempts to abscond
Judicial
→ One that is fixed by the court
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
4. Alternative Obligation c)​ Analogous things which by their nature
→ When there are two or more prestations but are susceptible to partial performance
the debtor is obliged to completely perform
only one 8. Indivisible Obligation
→ Is one not capable of partial performance
Rules in case of loss or impossibility of
service if the choice is with the DEBTOR The following obligations are deemed indivisible
(Article 1225)
1.​ If only one or some are lost through the
debtor’s fault, the debtor may deliver a)​ Obligation to give definite things
any of the remainder, or that which b)​ Those not susceptible to partial
remains if only one subsists performance
c)​ Those where the object or service is
2.​ If all are lost through a fortuitous event, physically divisible but it is indivisible by
the obligation is extinguished (based on provision of law
the rule that no person shall be d)​ Those where the object or service is
responsible for fortuitous event) physically divisible but it is indivisible by
the intention of the parties
3.​ If all are lost through the debtor’s fault,
the debtor shall pay the value of the last 9. Obligation with a Penal Clause
thing that was lost plus damages → Provides for a greater liability on the part of
the debtor in case of noncompliance
5. Facultative Obligation
→ Obligation where only one prestation is due → Accessory undertaking on the part of the
but the debtor may render another substitution debtor is called the penal clause

6. Joint and Solidary Obligations Kinds of Penal Clause

→ In joint and solidary obligations, there is a 1)​ Legal and Conventional
concurrence of two or more debtors and/or two a)​ Legal → Imposed by law
or more creditors in one and the same obligation
b)​ Conventional → Agreement of
→ In a joint obligation, each debtor is liable the parties
only for a proportionate part of the debt, and
each creditor is entitled only to proportionate 2) Subsidiary and Joint
part of the credit c)​ Subsidiary → When only the
penalty may be enforced
→ In a solidary obligation, each debtor is liable
for the whole obligation, and each creditor is d)​ Joint → When both the
entitled to demand payment of the whole obligation and the penalty may
obligation be enforce

7. Divisible Obligations Article 1228

→ Is one capable of partial performance → Proof of actual damages suffered by the
creditor is not necessary in order that the
The following obligations are deemed divisible penalty may be demanded
(Article 1225)
Rules in case obligation has a penal clause
a)​ When the obligation has for its object → Penalty takes the place of the damages and
the execution of a certain number of interest in case of non-compliance
days of work
Exceptions (aside from the penalty, damages
b)​ When the obligation has for its object and interest may also be demanded:)
the accomplishment of work by metrical
units a)​ When there is stipulation to that effect
b)​ When the debtor refuses to pay the
penalty
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
c)​ When the debtor is guilty of fraud in the
performance of the obligation (Article Characteristics of a Valid Payment (1233)
1226) 1. Identity
→ This is so because there is no waiver → Only the prestation agreed upon and no other
of an action for future fraud (Article must be complied with
1171)
2. Completeness
→ The thing or service must be completely
delivered or rendered

Principle of Integrity (1233)

General Rule:
→ A debt shall not be understood to have been
paid unless the thing or service in which the
obligation consists has been completely
delivered or rendered as the case may be

Exceptions:
1.​ When the obligation has been
substantially performed in good faith,
Extinguishment of Obligation the obligor may recover as though there
had been a strict & complete fulfillment
Payment or Performance (1232) less damage suffered by the obligee
(1234)
Concept
→ Payment is fulfillment of the prestation due, a 2.​ When the obligee accepts performance
fulfillment that extinguishes the obligation by the knowing its incompleteness or
realization of the purpose for which it was irregularity & without expressing any
constituted protest (ESTOPPEL) (1235)
→ Article 1232
-​ Not only the delivery of money but also
the performance, in any manner, of an Who Must Pay
obligation
In General
Burden of Proving Payment 1.​ Debtor
→ Devolves upon the debtor who pleads 2.​ Anyone acting on the debtor’s behalf
payment rather than on the creditor to prove a.​ Duly authorized agent or legal
non-payment representative
b.​ Successors in interest and
Requisites of Payment assignees
1.​ Payor or person who pays
2.​ Payee or person to whom payment is Third Person who is an Interested Party
made → One who has an interest in the
3.​ Things to be paid extinguishment of the obligation such as:
4.​ Manner, Time, and Place of payment
1.​ Co-debtors
Kinds of Payment 2.​ Sureties
1. Normal 3.​ Guarantors
→ When the debtor voluntarily performs the 4.​ Owners of mortgaged property of pledge
prestation as agreed upon
Note: The creditor cannot refuse the valid tender
2. Abnormal of payment from the aforementioned individuals
→ When the debtor is forced by means of a
judicial proceeding either to comply with the
prestation or pay indemnity
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
Effects of Payment a.​ The creditor ratifies the payment
1.​ Obligation is extinguished (Ratification)
2.​ Debtor is to fully reimburse the 3rd b.​ Estoppel
person who is an interested party c.​ If after the payment, the 3rd person
3.​ 3rd Person is subrogated to the rights of acquires the creditor’s rights
the creditor (Subrogation)
Third Person who is Not an Interested Party but
with Debtor’s Consent 1.​ Payment to the possessor of the credit
made in good faith (1242)
General Rule: 2.​ In obligations to give, payment to an
→ The creditor is not bound to accept payment incapacitated person is valid when:
or performance by a 3rd person who has no a.​ The incapacitated person has
interest in the fulfillment of the obligation (1236 kept the amount or thing
(1)) delivered or paid
b.​ Payment has been beneficial to
Exception: the incapacitated person (1241
→ Unless there is a stipulation to the contrary (1))

Effects of Payment Payment made to the creditor by the debtor after

1.​ Third person is entitled to full the latter has been judicially ordered to retain
reimbursement the debt shall not be valid (Article 1243) unless
2.​ There is legal subrogation otherwise stipulated, extrajudicial expenses
required by the payment shall be for the account
Third Person who is not an Interested Party & of the debtor (Article 1247)
Without Knowledge or Against the Will of the
Debtor
→ 3rd person can only recover in so far as the
payment has been beneficial to the debtor Things to be Paid

Payment Made by a 3rd Person who Does Not Rule in Monetary Obligations (1249)
Intend to be Reimbursed 1.​ Must be paid in the currency stipulated,
if it is not possible to deliver such
Effects of Payment currency then in the currency which is
1.​ Presumed to be a donation (1238) legal tender in the Philippines
2.​ Once the consent of the debtor is
secured, rules of an ordinary donation 2.​ Delivery of promissory note payable to
will apply order or bills of exchange or other
3.​ If the consent is not secured, Article mercantile documents shall not produce
1236 and 1237 will apply the effect of payment

To Whom Payment Must be Made (1240) EXCEPT:

1.​ The person in whose favor the a.​ They have been encased
obligation has been constituted b.​ When through the fault of the creditor
(creditor) they have been impaired
2.​ His successors in interest
3.​ Any person authorized to receive it Legal Tender
→ Such currency which may be used for the
Effect of Payment to Unauthorized Person payment of all debts, whether private or public
→ It shall not be a valid even though made in → The debtor may compel the creditor to accept
good faith it in payment of a debt

Exception: Extraordinary Inflation or Deflation (1250)

1.​ Provided it has redounded to the benefit
of the creditor 1.​ There must be a decrease or increase in
the purchasing power of the currency
Benefit of the Creditor is Presumed in the ff:
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
which is unusual or beyond the common are subject to different terms &
fluctuation in the value of the currency conditions
3.​ When the debt is in part liquidated and
2.​ Such decrease or increase could not in part unliquidated
have been reasonably foreseen or
which was manifestly beyond the Place of Payment (1251)
contemplation of the parties at the time 1.​ Place agreed upon by the parties
the obligation was established
2.​ If there is no stipulation – delivery of
There must be a declaration of such determinate thing – place where the
extraordinary inflation or deflation by the BSP. thing might be located at the time the
Without such declaration, the creditors cannot obligation was constituted
demand an increase and the debtors a decrease
of what is due to or from them 3.​ If any other case – at the domicile of the
(Ramos vs CA, G.R. No. 119872, July 7, 1992) debtor

Rule when the Obligation Consists in the SPECIAL FORMS OF PAYMENT

Delivery of a Determinate Thing 1.​ Application of payments
→ Debtor cannot fulfill his obligation by 2.​ Payment by cession
delivering a thing which is a different one, 3.​ Tender of payment and consignation
although the latter maybe of the same value as,
or more valuable than which is due (1244 (1)) Application of Payment (1252)
→ Designation of the debt to which the payment
Rule when the Obligation is To Do or Not To Do must be applied when the debtor has several
& The Act is Specific obligations of the same kind in favor of the same
→ Obligor cannot fulfill the obligation by creditor
substituting another act or forbearance against
the obligee’s will (1244 (2))
General Rule:
Rule when the Obligation Consists in the → The right to designate the debt to which the
Delivery of Indeterminate or Generic Thing payment shall be made belongs to the debtor
→ If the contract does not specify the quality & → This right is available to the debtor at the time
circumstances the payment is made

1.​ Creditor cannot demand a thing of

superior quality Exception:
2.​ Debtor cannot deliver a thing of inferior → If the debtor does not apply, the creditor may
quality but if he so desires he may designate which debt is paid by specifying it in
deliver one of superior quality provided it the receipt
is not of a different kind (1246)
Note:
→ If the debt produces interest, payment of the
principal shall not redeemed to have been made
until the interest have been paid
Rule (1248 (1))
→ The creditor cannot be compelled partially to Legal Application (1254)
receive the prestations in which obligation → The debt more onerous to the debtor, among
consists those due, shall be deemed to have been
→ Neither may the debtor be required to make satisfied
partial payments
Example
Exception: (1248 (2)) 1.​ Oldest debts vs recent ones
1.​ When the obligation expressly stipulates 2.​ Interest bearing debts
the contrary 3.​ Between interest bearing debts, the debt
2.​ When the different prestations which with a higher interest rate
constitute the objects of the obligation 4.​ A secured debt
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
5.​ A debt in which the debtor is a solidary consignation, the accrual of interest on
debtor the obligation will be suspended from
the date of tender
Nature and Burden (1254 (2))
→ Where the debts are if the same nature and 2.​ When the tender of payment is not
burden, there must always be a pro rata accompanied by the means of payment,
application of the payment, even if the sum paid and the debtor did not take any
is exactly the same amount of one of the immediate step to make a consignation,
obligations then interest is not suspended from the
time of tender

Payment by Cession (1255) Consignation

→ You seed your property to the creditor → Form of payment, presupposes that there
→ Special form of payment whereby the debtor must be debt that must be paid
assigns or abandons all of his property for the → Tender of payment alone would not be
benefit of the creditors in order that from the sufficient
proceeds thereof, the latter may obtain payment
of their credits 1.​ Existence of a valid debt
2.​ Consignation was made because of the
1.​ Plurality of debts legal causes provided for under Article
2.​ Partial or relative insolvency of the 1256
debtor 3.​ Previous notice of the consignation has
3.​ Acceptance of the cession by the been given to the creditor
creditor 4.​ Amount was placed at the disposal of
the court
Kinds of Payment by Cession 5.​ After the consignation had been made,
1.​ Contractual (Article 1255) the creditor was notified
2.​ Judicial (Governed by Insolvency Law)
a.​ Voluntary Article 1256
b.​ Involuntary 1.​ When the creditor is absent or unknown
or does not appear at the place of
Tender of Payment and Consignation payment

Tender of Payment 2.​ When he is incapacitated to receive

→ Consists in the manifestation made by the payment at the time it is due
debtor to the creditor of his decision to comply
immediately with his obligation with the offer of 3.​ When, without just cause, he refuses to
immediate performance give a receipt

Consignation 4.​ When two or more persons claim the

→ Is the deposit of the object of the obligation in right to collect
a competent court in accordance with the rules
prescribed by law, after the tender of payment 5.​ When the title of the obligation has been
has been refused or because of circumstances lost
which render direct payment to the creditor
impossible or inadvisable Effect of Consignation
1.​ If the creditor accepts the thing or
amount consigned without contesting
the validity or efficacy of the
Effect on Interest consignation the obligation is
1.​ When the tender of payment is made in extinguished (1261)
such a form that the creditor could have
immediately realized payment if he had 2.​ If the creditor contests the validity of the
accepted the tender, followed by a consignation or if he is absent, the result
prompt attempt of the debtor to deposit is litigation
the means of payment in court by way of
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
Effects of Withdrawal of the Object/Amount Exception
Deposited → No such presumption in case of earthquake,
flood, storm, or other natural calamity (Fortuitous
1.​ Before the creditor has accepted Event)
a.​ Withdrawal by the debtor is a
matter of right because he is still Effect of Impossibility of Performance of
the owner of the thing/amount Obligation To Do
→ Obligor is released from the performance of
the obligation (1266)

1.​ With consent of the creditor Doctrine of Unforeseen Events

a.​ Creditor losses every → When the service has become so difficult as
preference which he may have to be manifestly beyond the contemplation of the
over the thing parties, the court should authorize to release

b.​ Solidary co-debtor, guarantors

and sureties are released Rule if Obligation Arises from a Criminal
Offense (1268)
c.​ Solidary debtors are released
only from their solidary liability General Rule:
but not from their shares in the → Debtor shall not be exempted from the
obligation payment of the price whatever may be the cause
for the loss
d.​ The obligation is revived
Exception:
Loss of the Thing Due → When the thing having been offered by the
To give the determinate thing (1262) debtor to the person who should receive it, the
→ Obligation is extinguished latter refused without justification

1.​ Thing lost is determinate

2.​ There was no fault on the part of the
debtor Condonation or Remission of Debt
3.​ The thing is lost before the debtor → Act of liberality by virtue of which the obligee,
incurred in delay without receiving any price or equivalent,
renounces the enforcement of the obligation, as
Generic Things (1263) a result of which it is extinguished in its entirety
→ Does not extinguish the obligation Genus or in that part or aspect of the same to which
never perishes remission refers

Effect of Partial Loss (1264) 1.​ It must be gratuitous (walang kapalit)

2.​ It must be accepted by the obligor
General Rule: 3.​ The obligation must be demandable
→ Does not extinguish the obligation 4.​ Parties have the capacity
5.​ Not inofficious
Exception: 6.​ Must comply with the forms of donation
When the partial loss or destruction of the thing should it be express
is of such importance that would be tantamount
to a complete loss Kinds of Remission
1. As to Form
If the thing is in the debtor’s Possession a.​ Express → Made in accordance with the
(1265) formalities prescribed by law for
donations
→ It shall be presumed that the loss was due to
his fault unless there is proof to the contrary b.​ Implied → Can be deduced from the
acts of the obligee
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
of principal obligation, only substitution
1. As to Extent (1276)
a.​ Total → Entire obligation is extinguished
3.​ If confusion takes place in 1 of the joint
b.​ Partial → Only an aspect of the debtors → Principal obligation
obligation is extinguished extinguished up to the share which
corresponds to him (1277)
1. As to Constitution
a.​ Inter Vivos → By agreement of the 4.​ If confusion takes place in 1 of the
obligee and obligor solidary debtors → entire obligation is
extinguished
b.​ Mortis Causa → When it is constituted
by last will and testament Compensation
→ “Quits na sila kasi may utang naman sila sa
Implied Remission isa’t isa”
→ If the creditor voluntarily delivers the private → Mode of extinguishing the concurrent amount
document evidencing the credit to the debtor of the obligation of those persons who are
(1271) reciprocally debtors and creditors of each other
→ It extinguishes both debts to the extent of the
Presumption of Renunciation amount covered by the amount of the other
→ When such private document is found in the
possession of the debtor, it is presumed that the Kinds of Compensation
creditor voluntarily delivered the same (1272) 1.​ As to cause
a.​ Legal → Takes effect by
Joint: operation of law
→ Presumption of remission pertains only to the b.​ Voluntary
share of the debtor who is in possession of the c.​ Judicial
document d.​ Facultative

Solidary: 2. As to Effect
→ Total Obligation a.​ Total
b.​ Partial
Confusion or Merger of Rights
Confusion
→ It is the merger of the characters of the Requisites
creditor and the debtor in one and the same
person with respect to the same obligation, by 1.​ The parties are principal creditors and
virtue of which the obligation is extinguished debtors of each other
(1275)
2.​ Both debts consist in a sum of money or
Requisites of consumable of the same kind &
1.​ Must take place between the creditor quality
and debtor
2.​ Very same obligation must be involved 3.​ The 2 debts are due or demandable
3.​ Confusion must be total
4.​ The 2 debts are liquidated

Effects of Confusion/Merger (1276-1277) 5.​ No retention or controversy commenced

1.​ If confusion takes place in the person of by a third person
either the principal creditor or principal
debtor → Entire obligation is Effects of Assignment of Rights
extinguished 1.​ With the consent of the debtor → Debtor
cannot set compensation unless he
2.​ If confusion takes place in the person of reserved his right to compensation
either the subsidiary creditor or
subsidiary debtor → No extinguishment
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
2.​ With knowledge but without consent of → Whether or not the old and new obligation
debtor → Debtor may set-up can stand together, each having its own
compensation prior to the assignment independent existence
but not to subsequent ones → If they can stand together, there is no
incompatibility hence, no novation
3.​ If without the knowledge of the debtor →
May set up compensation of all credits → If they cannot stand together, there is
which he may have against the assignor incompatibility, consequently, there is novation
and which may have become
demandable before he was informed of → Novation is never presumed
the assignment
Objective Novation
Debts which cannot be Compromised 1. Changing the cause of the obligation
1.​ Arising from depositum
2.​ Commodatum 2. Changing the object of the obligation
3.​ Claims for support
3. Changing the principal or essential conditions
of the obligation
Novation
→ It is the substitution or change of an 4. New obligation expressly declares that the old
obligation by another, resulting in its is extinguished or
extinguishment or modification, either by
changing its object or principal conditions, or by 5. New obligation is on every point incompatible
substituting another in place of the debtor, or by with the old (Ajax Marketing vs. CA 118585,
subrogating a third person in the rights of the September 14, 1995)
creditor (1291)
1.​ Expromission
→ Old obligation is extinguished, New one is → Effected with the consent of the creditor at the
created instance of the new debtor even without the
consent of the old debtor
Requisites
1.​ Previous valid & existing obligation Requisites
2.​ Capacity of the contracting parties → Initiative for substitution must come from the
3.​ Animus Novandi (Intention to novate) new debtor
4.​ Substantial difference between the old → Consent of the creditor to the substitution
and the new obligation → Old debtor must be released from the
5.​ Validity of the new obligation obligation

Kinds of Novation Kinds of Substitution by Expromission

1. Substitution with the knowledge and consent
1.​ As to its Essence of the old debtor

2.​ Extent/Effect 2.​ Substitution without the knowledge or

a.​ Objective/Real against the will of the old debtor
b.​ Total
c.​ Subjective/Personal Delegacion
d.​ Partial → Effected with the consent of the creditor at the
e.​ Mixed instance of the old debtor (delegante) with the
concurrence of the new debtor (delegado)
1.​ Form
a.​ Express 1.​ Initiative must come from the old debtor
b.​ Implied 2.​ Consent of the new debtor
3.​ Acceptance by the creditor (delegatorio)
Test of Incompatibility 4.​ Old debtor must be released from his
obligation
 Polytechnic University of the Philippines
1016 Anonas, Santa Mesa, Manila
TAKE NOTE!
→ In either of the two modes of substitution, the
consent of the creditor is an indispensable Effects of Condition in Novation
requirement → If the original obligation was subject to
suspensive condition, the new obligation shall
Rights of the New Debtor (Delegado) be under the same condition, unless otherwise
stipulated (1299)
1. Expromission
a.​ With the knowledge of the original Novation by Subrogation
debtor → Reimbursement and → A personal novation effected by subrogating a
subrogation third person in the rights of the creditor

b.​ Without knowledge of the original debtor 1.​ Legal

→ Reimbursement only 2.​ Conventional

2. Delegacion Effects of Subrogation

→ Reimbursement and subrogation
1. Total
→ Transfers to the person subrogated the credit
with all the rights to the original creditor has
against the debtor or third persons
Effect of Insolvency or Non-fulfillment by New
Debtor 2. Partial
→ A creditor to whom partial payment has been
1. Expromision made may exercise his right for the remainder
a.​ With knowledge & consent of the and he shall be preferred to the person who has
original debtor → It shall revive the been subrogated in his place
original debtor’s liability to the creditor
Compromise
b.​ Without the knowledge & against the will → A contract whereby the parties, by making
of the original debtor → The new reciprocal concessions, avoid litigation or put an
debtor’s insolvency or nonfulfillment end to one already commenced
shall now revive the original debtor’s
liability to the creditor Cannot be compromised:
1.​ Civil status of persons
1. Delegacion 2.​ Validity of marriage
→ The right of the creditor can no longer be 3.​ Legal separation
revived except in the following cases: 4.​ Future support

a.​ Insolvency already existing & of public

knowledge at the time when the original
debtor delegated his debt

b.​ Insolvency was already existing and

known to the original debtor when he
delegated his debt

Effects of Novation Upon Accessory Obligations

General Rule!!
→ When the principal obligation is extinguished
in consequence of a novation, accessory
obligation may subsist only insofar as they may
benefit third persons who did not give their
consent