Documentos de Académico
Documentos de Profesional
Documentos de Cultura
NOTES
General Provisions
ARTICLE 1156
ELEMENTS OF OBLIGATION
‘obligare” – to bind
OBLIGEE or CREDITOR – the possessor of a right; he in whose favor the obligation is
constituted
OBLIGOR or DEBTOR – he who has the duty of giving, doing, or not doing.
OBJECT or PRESTATION – the subject matter of the obligation
the EFFICIENT CAUSE – the reason why the obligation exists (the juridical tie)
PRESTATION: an obligation; may consist of giving, doing, or not doing a certain act. As a
juridical necessity, non-compliance of obligation can results in juridical or legal sanction.
KINDS OF OBLIGATION
1. From the viewpoint of SANCTION
a. CIVIL OBLIGATION (or perfect obligation): The sanction is judicial process (Art.
1156).
b. NATURAL OBLIGATION: the duty not to recover what has voluntarily been paid
although payment was no longer required
c. MORAL OBLIGATION (or imperfect obligation): the duty of a Catholic to hear mass
on Sunday… the law of the church.
(4) A juridical or legal tie (also called effi cient cause) or that which binds or connects the parties
to the obligation. The tie in an obligation can easily be determined by knowing the source of
the obligation. (Art. 1157.)
ARTICLE 1157
Sources of obligations.
ARTICLE 1158
ARTICLE 1159
ARTICLE 1160
2 Kinds of quasi-contracts. [no one shall be unjustly enriched or benefited at the expense
of another]
(1) Negotiorum gestio [undue management] is the voluntary management of the property or
affairs of another without the knowledge or consent of the latter.
(2) Solutio indebiti [undue payment] is the juridical relation which is created when something is
received when there is no right to demand it and it was unduly delivered through mistake.
ARTICLE 1161
Civil liability arising from crimes or delicts. Every person criminally liable (moral evil) for a
felony is also civilly liable (material damage).
1. Restitution
2. Reparation of damage caused
3. Indemnification for consequential damages
Degree of Proof.
1. Civil action – preponderance of evidence
2. Criminal action – beyond reasonable doubt
Effects of Acquittal.
1. Acquittal because the accused could not have committed the act – no civil liability
2. Acquittal because of exempting circumstance (insane) – there is civil liability
3. Independent civil action -
ARTICLE 1162
Meaning of quasi-delicts. an act or omission by a person (tort feasor) which causes damage
to another in his person, property, or rights giving rise to an obligation to pay for the damage
done, there being fault or negligence but there is no pre-existing contractual relation between
the parties.
Obligations and Contract
NOTES
Requisites of quasi-delict.
(1) There must be an act or omission by the defendant;
(2) There must be fault or negligence of the defendant;
(3) There must be damage caused to the plaintiff;
(4) There must be a direct relation or connection of cause and effect between the act or
omission and the damage; and
(5) There is no pre-existing contractual relation between the parties.
ARTICLE 1163
Duties of Debtor
Five (5) Duties of debtor in obligation to Two (2) Duties of debtor in obligation to
give a determinate thing. deliver a generic thing.
1. Preserve the thing 1. To deliver a thing which is of the quality
2. Deliver the fruits of the thing intended by the parties taking into
3. Deliver the accessions and accessories consideration the purpose of the
4. Deliver the thing itself obligation and other circumstances (Art.
5. Answer for damages in case of non- 1246.); and
fulfillment or breach 2. To be liable for damages in case of fraud,
negligence, or delay, in the performance
of his obligation, or contravention of the
tenor thereof. (see Art. 1170.)
Duties of Debtor
Five (5) Duties of debtor in obligation to give a determinate thing.
2. Deliver the
thing itself
ARTICLE 1164
When obligation to deliver arises.
1. arises from the time of the perfection of the contract. Perfection in this case refers to the
birth of the contract or to the meeting of the minds between the parties. (Arts. 1305, 1315,
1319.)
2. If the obligation is subject to a suspensive condition or period (Arts. 1179, 1189, 1193.), it
arises upon fulfillment of the condition or arrival of the period.
3. In a contract of sale, the obligation arises from the perfection of the contract even if the
obligation is subject to a suspensive condition or a suspensive period where the price has
been paid. [subject to suspensive condition or suspensive period]
4. In obligations to give arising from law, quasi-contracts, delicts, and quasi-delicts, the time of
performance is determined by the specific provisions of law applicable. [determined by
specific provision of law applicable]
Ownership ACQUISITION.
Ownership and other real rights over property are acquired and transmitted
1. by law,
2. by donation,
3. by testate and intestate succession, and
4. in consequence of certain contracts by tradition (Art. 712.) or delivery – creditor does not
become the owner until the specific thing has been delivered to him;
Obligations and Contract
NOTES
ARTICLE 1164
Illustration:
Seller Perfection – Nov 3, 2007 (Y has no right over the fruits)
Buyer
X > sold House Planned Delivery – Dec 3, 2017 (Y has personal right enforceable against
and Lot to > Y X acquired from this point until actual delivery)
V Actual Delivery – Jan 3, 2018 (real right begins, can now demand from
lessee)
Leased to
Kinds of Delivery
1. Actual or Real (Art. 1497) – where physically the property changes hands.
3. Quasi-Traditio (Art. 1501) – delivery of rights, credits or incorporeal real property, made by
placing the titles of ownership in the hands of the vendee or lawyer, by execution of a
public instrument, or by allowing the vendee to use his rights as new owner with the
consent of the vendor.
Ownership is transferred by delivery which could be either actual or constructive. (Art. 1477)
The remedy of the buyer when there is no delivery despite demand is to file a complaint for
“SPECIFIC PERFORMANCE AND DELIVERY” because he is not yet the owner of the property
before the delivery.
ARTICLE 1166
ARTICLE 1165
Remedies of creditor in real obligation (TO GIVE). In a specific real obligation (obligation to
deliver a determinate thing), the creditor may exercise the following remedies or rights in case
the debtor fails to comply with his obligation:
1. demand specific performance or fulfillment (if it is still possible) of the obligation with a right
to indemnity for damages; or
2. demand rescission or cancellation (in certain cases) of the obligation also with a right to
recover damages (Art. 1170.); or
3. demand the payment of damages only (see Art. 1170.) where it is the only feasible remedy.
An indeterminate thing cannot be the object of destruction by a fortuitous event because genus
nunquam perit (genus never perishes). (see Arts. 1174, 1263). He can still be compelled to
deliver a thing of the same kind (see Art. 1263.) or held liable for damages. (Art. 1170)
ARTICLE 1167
1. If the debtor fails to comply with his obligation to do, the creditor has the right:
a. to have the obligation performed by himself, or by another (THIRD PERSON) unless
personal considerations are involved, at the debtor’s expense; and
b. to recover damages. (Art. 1170.)
2. If debtor’s performance was contrary to the terms agreed upon, it may be ordered (by the
court) that it be undone the same at the expense of the debtor
3. If poorly done, it may be ordered (by the court) that it be, undone if it is still possible to undo
what was done.
ARTICLE 1168
Remedies of creditor in negative personal obligation (NOT TO DO). The remedy of the
obligee is the undoing of the forbidden thing plus damages. (Art. 1170.)
Obligations and Contract
NOTES
ARTICLE 1169
Meaning of delay.
(1) Ordinary delay is merely the failure to perform an obligation on time; no CONSEQUENCE,
NO LIABILITY
(2) Legal delay or default or mora is the failure to perform an obligation on time which failure,
constitutes a breach of the obligation.
Exceptions:
1. When the law or obligation so expressly declares;
2. When from the nature of the contract, time us the essence and motivating factor for its
establishment;
3. When demand would be useless (prestation is impossible);
4. In reciprocal obligations, from the moment one of the parties fulfills his obligation (Art. 1191);
5. When the debtor admits he is in default
1. Mora solvendi or the delay on Requisites of LEGAL delay or default by the debtor.
the part of the debtor to fulfill his (1) Obligation is due (condition is fulfilled, period has arisen)
obligation (to give or to do) by (2) Obligation is liquidated -
reason of a cause imputable to (3) failure of the debtor to perform his (positive) obligation on
him; does not apply to obligation the date agreed upon;
NOT TO DO (only fulfillment and (4) demand (not mere reminder or notice) made by the creditor
violation are possible) upon the debtor to fulfill, perform, or comply with his
obligation which demand, may be either judicial (when a
complaint is filed in court) or extra-judicial (when made
outside of court, orally or in writing); and
(5) failure of the debtor to comply with such demand.
Effects of delay.
(1) He is liable for INTEREST in case of obligations to pay
money (Art. 2209.) or DAMAGES in other obligations. (Art.
1170.) In the absence of extrajudicial demand, the interest
shall commence from the filing of the complaint;
(2) He is liable even for a fortuitous event when the obligation
is to deliver a determinate thing. (Arts. 1165, 1170.)
Effects of delay.
1. The creditor is guilty of breach of obligation;
2. He is liable for damages suffered, if any, by the debtor;
3. He bears the risk of loss of the thing due;
Obligations and Contract
NOTES
4. Where the obligation is to pay money, the debtor is not liable
for interest from the time of creditor’s delay; and
5. The debtor may release himself from the obligation by the
consignation or deposit in court of the thing or sum due
Obligation –
If not subject to a period, performance is immediate
If subject to a condition or period, demand is necessary
In compensation morae, if without period, performance is simultaneous without need of
demand
ARTICLE 1170
2. Interest –
a. Compensatory interest – in writing
b. Monetary interest – should not be unconscionable or legal interest
ARTICLE 1171
According to the time of commission, fraud may be past or future.
Tax evasion – connotes fraud if there is use of devices to lessen or defeat taxes
ARTICLE 1172/1173
Meaning of Negligence
Failure to exercise due diligence in taking care of the obligation
the omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the person, of the time and of the place
Fraud/DOLO Negligence/CULPA
1. there is deliberate intention to cause 1. there is no such intention;
damage or injury, 2. such waiver may, in a certain sense, be
2. Waiver of the liability for future fraud is allowed in negligence;
void (Art. 1171.), 3. presumed from the breach of a
3. Fraud must be clearly proved, mere contractual obligation
preponderance of evidence not being 4. liability for negligence may be reduced
sufficient, while negligence is; according to the circumstances. (Art.
4. liability for fraud cannot be mitigated by 1173)
the courts,
Double Recovery:
In negligence cases, the aggrieved party has the choice between (1) an action to enforce civil
liability arising from crime under Article 100 of the Revised Penal Code; and (2) a separate
action for quasi delict under Article 2176 of the Civil Code of the Philippines. Once the choice is
made, the injured party can not avail himself of any other remedy because he may not recover
damages twice for the same negligent act or omission of the accused
Obligations and Contract
NOTES
ARTICLE 1174
FORTUITOUS EVENTS
Meaning: any extraordinary event which cannot be foreseen, or which, though foreseen, is
inevitable. In other words, it is an event which is either impossible to foresee or impossible to
avoid.
Force Majeure
1. Acts of man – acts of men, e.g., robbery, theft
2. Acts of God – do not have human intervention
Note: The absence of any of the above requisites (all of which must be proved) would prevent
the obligor from being exempt from liability.
ARTICLE 1175
USURIOUS TRANSACTIONS
Usury Law is suspended; there is no limit, but subject to agreement of the parties, so long it is
not contrary to public policy and moral.
Meaning: receiving interest in excess of the amount allowed by law for the loan
Obligations and Contract
NOTES
ARTICLE 1176
2 kinds of presumption
1. Conclusive – cannot be contradicted
2. Disputable – can be contradicted by presenting a proff
In case when debtor does not comply with his obligation – creditor’s remedies include [the
debtor is liable with all his property present and future, except those exemptions provided by
law]
ARTICLE 1178
Transmissibility of Rights
All rights acquired in virtue of an obligation are generally transmissible. (see Art. 1311.) The
exceptions to this rule are the following:
1. Prohibited by law – rights in partnership, agency and commodatum
2. Prohibited by stipulation of parties – stipulation against transmission must not be
contrary to public policy.
Obligations and Contract
NOTES
CLASSIFICATION OF OBLIGATIONS
1. Primary classifications
a. Pure and conditional
b. Obligations with a period
c. Alternative and facultative
d. Joint and solidary
e. Divisible and indivisible obligations
f. With a penal clause
2. Secondary classifications
a. Unilateral and bilateral
b. Real and personal
c. Determinate and generic
d. Positive and negative
e. Civil and natural obligations
f. Legal, conventional and penal obligations
KINDS OF OBLIGATIONS
ARTICLE 1179
Definition
PURE OBLIGATION CONDITIONAL OBLIGATION
1. not subject to any condition; Consequences are subject to fulfillment of a
2. no specific date for fulfillment; condition
3. immediately demandable
ARTICLE 1181
ARTICLE 1182
ARTICLE 1183
ARTICLE 1184/5
ARTICLE 1186
CONSTRUCTIVE FULFILLMENT OF SUSPENSIVE CONDITION
Requisites:
1. the condition is suspensive
2. the obligor prevents the fulfillment
3. the obligor acts voluntarily
ARTICLE 1187-89
EFFECTS OF SUSPENSIVE CONDITION
ARTICLE 1190
EFFECTS OF RESOLUTORY CONDITION
ARTICLE 1191
POWER TO RESCIND IN RECIPROCAL OBLIGATIONS
5. The right to rescind is implied to exist and therefore, need not be expressly stipulated.
6. The right to rescind may be waived, expressly or impliedly.
Effect of rescission.
1. annul the contract and restore the parties to the relative positions
2. mutual restitution is required to bring back the parties to their original situation prior to
the inception of the contract
EXCEPTIONS:
Obligations and Contract
NOTES
1. Rights of Forfeiture – payable in installments, in case of default, seller may rescind the
contract, all payments may be forfeited
Should not be unconscionable
Maceda Law, in case of cancellation, at least 24 months, at least 50% of
payments made may be reimbursed.
READ CASES!
ARTICLE 1193
DEFINITION
PERIOD - a day certain; will certainly arrive; which determines effectivity or the extinguishment of
obligations.
Classifications of Period.
According to definiteness
Definite Indefinite
The exact date or time is known and given. It will happen but the date of happening is
unknown
According to source
Legal Conventional Judicial
Provided by law. Agreed upon by the parties Ordered by the court
According to effect
Ex Die In Diem
A period with a suspensive effect… obligation A period with a resolutory effect… obligation
begins terminates
ARTICLE 1196
CONSEQUENCES OF A PERIOD
1. Both parties get benefitted – When there is interest stipulated. The creditor is interested in the
term because of the interests that would be earned; the debtor is interested because he is given
enough time to pay. Thus, both cannot be compelled to perform obligation.
2. Debtor gets benefitted – When there is no interest; debtor cannot be compelled to pay
3. Creditor gets benefitted – When the creditor is interested in keeping his money safely invested or
when he wants to protect himself from dangers of currency depreciation.
ARTICLE 1199
SECTION 5. —
Joint and Solidary Obligations
ARTICLE 1207
Plurality of Parties
Article 1216
and Surety
Solidarity Surety
1. Both are solidary obligors
2. Both can demand reimbursement
1. Solidary debtor is indebted for his own share 1. the surety is indebted only for the share of the
only; principal debtor;
2. Can be reimbursed what he has paid minus 2. can be reimbursed for everything he paid
his own share 3. Defenses: all defenses of principal can be
3. Defenses: goes to the nature of obligation used
Article 1222
SECTION 5. —
Divisible and Indivisible Obligations
ARTICLE 1223
Applicability: object or prestation of the obligation, which may be to deliver a thing (real obligation) or to
render some service (personal obligation).
NOTE: The divisibility of an obligation should not be confused with the divisibility of the thing which is the
object thereof.
TEST FOR DISTINCTION – controlling circumstance is not the possibility or impossibility of partial
prestation but the PURPOSE of the obligation or the intention of the parties
Kinds of Division
1. Qualitative – specific property
2. Quantitative - can be divided in terms of number
3. Ideal or intellectual – the use of specific property
Kinds of indivisibility.
1. Legal indivisibility. — divisible rendered indivisible by provision of law (Art.1225, par. 3.)
2. Conventional indivisibility. — divisible rendered indivisible by the will of the parties
3. Natural indivisibility. — where the nature of the object or prestation does not admit of division,
e.g., to give a particular car, to sing a song, etc. (Ibid., par. 1.)
ARTICLE 1224
NOTES:
Obligations “to do” and “not to do” are generally indivisible.
Obligations “to do” stated in paragraph 2 of Article 1225 are divisible
Divisible and indivisible obligations are not to be confused with divisible and indivisible contracts.
Obligations and Contract
NOTES
SECTION 6. —
Obligations with a Penal Clause
ARTICLE 1226
PENAL CLAUSE – an accessory undertaking to assure greater liability in case of breach of obligation
PRINCIPAL obligation – can stand by itself; does not depend for its validity and existence upon
another obligation.
ACCESSORY obligation is one which is attached to a principal obligation and, therefore, cannot
stand alone.
EXCEPTIONS TO THE GENERAL RULE THAT PENALTY TAKES THE PLACE OF DAMANGES
(Additional damages may be recovered)
1. There is express stipulation
2. When the debtor refuses to pay the penalty
3. When the debtor is guilty of fraud or dolo in the fulfillment of the obligation
Notes:
If the obligation cannot be fulfilled due to a fortuitous event, the penalty is not demandable.
ARTICLE 1227
Penalty not substitute for performance.
The debtor can exempt himself from the non-fulfillment of the obligation only when “this right has
been expressly reserved for him.”
Penal clause presumed subsidiary.
ARTICLE 1228
when damages may be recovered in addition to the penalty (Art. 1227.), the creditor must prove
the amount of such damages which he actually suffered resulting from the breach of the principal
obligation.
ARTICLE 1230
Effect of nullity of the principal obligation - penal clause is likewise void; if debtor is in bad
faith, penalty may be enforced
Obligations and Contract
NOTES
Chapter 4
EXTINGUISHMENT
OF OBLIGATIONS
ARTICLE 1231
[6 ways: BY
1. PoP – 1232
2. LotTD –
3. CoRotD –
4. CoMotRoCaD –
5. C –
6. N –
Meaning of payment. Not only delivery of money; also giving of a thing, doing of an act, or not
doing of an act = PERFORMANCE
Elements of payment.
1. Integrity of the object; should be delivered completely
2. Identity of the object; can’t deliver other things
3. Identity of the obligee,
4. Identity of the obligor or authorized or third party
5. Time and place of payment
Burden of proof – presentation of evidence of the facts in issue necessary to prove truth of his
claim or defense by the amount of evidence required by law.
burden of proving extinguishment by payment devolves upon the debtor who pleads
payment or offers such a defense to the claim of the creditor rather than on the latter to
prove non-payment. [A receipt of payment, although not exclusive, is deemed to be the best evidence of payment.]
In the absence of receipt, testimonial evidence
ARTICLE 1233
When debt considered paid. an obligation to deliver money, to deliver a thing (other than
money), to do an act, or not to do an act
(1) Integrity of the prestation – prestation must be fulfilled completely; Partial or irregular
performance will not produce the extinguishment of an obligation as a general rule.
(2) Identity of the prestation – very prestation due must be delivered or performed
Meaning of “accept,” take as “satisfactory or suffi cient,” or to “give assent to,” or to “agree” or
“accede” to an incomplete or irregular performance.
Form of protest of creditor. So long as the acts of the creditor, at the time of the incomplete or
irregular payment by the debtor, or within a reasonable time thereafter, evince that the former is
not satisfied or agreeable to said payment or performance, the obligation shall not be deemed
extinguished
ARTICLE 1236
In subrogation, the person who pays for the In reimbursement, the third person entitled by
debtor is put into the shoes of the creditor reason of payment has merely the bare right to be
refunded without the right to
The payer acquires not only the right to be the guarantees and securities of the original
reimbursed for what he has paid but also all other obligation.
rights which the creditor could have exercised
pertaining to the credit either against the debtor or
against third persons, be they guarantors or
possessors of mortgages.
ARTICLE 1238
[embodies the idea that no one should be compelled to accept the generosity of another]
Payment by a third person who does not intend to be reimbursed. If the paying third person
does not intend to be reimbursed the payment is deemed a donation which requires the debtor’s
consent
ARTICLE 1239
Free disposal of the thing due means that the Capacity to alienate means that the person is not
thing to be delivered must not be subject to any incapacitated to enter into contracts and for that
claim or lien or encumbrance of a third matter, to make a disposition of the thing due.
person.
ARTICLE 1240
(2) Creditor at the time the payment is to be made not at the constitution of the obligation.
(3) When payment is made to the wrong party, the obligation is not extinguished as to the
creditor who is without fault or negligence even if the debtor acted in outmost good faith and by
mistake as to the person of the creditor or through error induced by fraud of a third
person.
Obligations and Contract
NOTES
Meaning of “any person authorized to receive it.” not only a person authorized by the
creditor, also a person authorized by law to receive the payment, such as a
1. guardian, executor or administrator of the estate of a deceased, and
2. assignee or liquidator of a partnership or corporation as well as
3. any other person who may be authorized to do so by law.
in addition to SPA… the nature and extent of the alleged powers and authority granted to
the agent must be presented as well
ARTICLE 1241
Effect of payment to an incapacitated person. not valid unless the incapacitated keeps the
payment for his own benefit… Proof of such benefit is incumbent upon the debtor who paid.
Effect of payment to a third person. not valid except insofar as it has redounded to the benefit
of the creditor… … Proof of such benefit is incumbent upon the debtor who paid
ARTICLE 1242
ARTICLE 1243
ARTICLE 1245
(2) There must be some difference between the prestation due and that which is given in
substitution (aliud pro alio); and
(3) There must be an agreement between the creditor and debtor that the obligation is
immediately extinguished by reason of the performance of a prestation different from that
due.
Governing law. law of sales governs… As such, the essential elements of a contract (see Art.
1318.) must be present.
ARTICLE 1246
Rule of the medium quality. A principle of equity in that it supplies justice in cases where there
is lack of precise declaration in the obligation of the quality or kind of thing to be delivered…
purpose of the obligation… The benefit of this article may be waived by the creditor by
accepting a thing of inferior quality and by the debtor by delivering a thing of superior quality.
ARTICLE 1247
ARTICLE 1248
Complete performance of obligation necessary. Applies only where there is one creditor and
only one debtor
Alternative exceptions:
[4. Joint debtors; 5. In case of compensation when obligation is not equal]
Obligations and Contract
NOTES
ARTICLE 1249
Meaning of legal tender. Legal tender is that currency which a debtor can legally compel a
creditor to accept in payment of a debt in money
Legal tender in the Philippines. In the Philippines, all coins and notes issued by the Bangko
Sentral ng Pilipinas constitute legal tender for all debts
ARTICLE 1250
Inflation Deflation
Inflation is a sharp sudden increase of money Deflation is the reduction in volume and
or credit or both without a corresponding circulation of the available money or credit,
increase in business transactions. Inflation resulting in a decline of the general price
causes a drop in the value of money, level; it is the opposite of inflation.
resulting in rise of the general price level.
Devaluation depreciation
involves an official reduction in the value of downward change in the value of one
one currency from an officially fixed level currency in terms of the currencies of other
imposed by monetary authorities. nations which occurs as a result of market
forces in the foreign exchange market
Both refer to the decrease in the value of the currency
ARTICLE 1251
(1) If there is a stipulation, the payment shall be made in the place designated
(2) If there is no stipulation and the thing to be delivered is specific, the payment shall be made
at the place where the thing was, at the perfection of the contract (par. 2.);
(3) If there is no stipulation and the thing to be delivered is generic, the place of payment shall
be the domicile of the debtor. (par. 3.) In this case, the creditor bears the expenses in going to
the debtor’s place to accept payment (see Art. 1247.) subject to the rule in paragraph 4.
Note: Venue is the place where a court suit or action must be filed or instituted.
Concept of domicile. It is believed that the term “domicile,” as used in Article 1251, connotes
“actual” or “physical’’ habitation of a person as distinguished from “legal” residence.
ARTICLE 1252
Meaning of application of payments. is the designation of the debt to which should be applied
the payment made by a debtor who has various debts of the same kind in favor of one and the
same creditor.
apply payment, the creditor has the subsidiary right to make the designation by specifying
in the receipt which debt is being paid;
(4) If the creditor has not also made the application, or if the application is not valid (par. 2.),
the debt, which is most onerous to the debtor among those due, shall be deemed to have
been satisfied;
(5) If the debts due are of the same nature and burden, the payment shall be applied to all of
them proportionately. and
(6) If neither party has exercised its option and there is disagreement as to debts to which
payment must be applied, the court will apply the payment according to the justice and
equity of the case, taking into consideration all its circumstances.
The rules in Articles 1252 to 1254 apply to a person owing several debts of the same kind
to a single creditor. They are not applicable to a person whose obligation as a mere
surety is both contingent and singular.
ARTICLE 1253
Interest earned paid ahead of principal. the debtor cannot choose to credit his payment to the
principal before the interest is paid.
ARTICLE 1254
Application of payment to more onerous debts. A debt is more onerous than another when
it is more burdensome to the debtor.
ARTICLE 1255
Meaning of payment by cession. The assignment or abandonment of all the properties of the
debtor for the benefit of his creditors for the latter to sell the same.
3. does not involve all the property of the 3. extends to all the property of the
debtor debtor subject to execution
4. the creditor becomes the owner of the 4. the creditors only acquire the right to
thing given by the debtor sell the thing and apply the proceeds
5. an act of novation to their credits pro rata
5. not an act of novation.
Both are substitute forms of payment or performance.
They are governed by the law on sales.
Obligations and Contract
NOTES
ARTICLE 1256
Tender of payment is the act, on the part of Consignation is the act of depositing the thing
the debtor, of offering to the creditor the thing or amount due with the proper court
or amount due … the creditor does not desire, or refuses
… must be in possession of the thing being to accept payment,
offered … cannot receive it, after complying with the
… an act preparatory to consignation formalities required by law.
ARTICLE 1257
Prior notice to persons interested required. Tender of payment and notice of consignation
may be done in the same act, e.q., sending a letter that should the creditor fail to accept the
payment tendered, the debtor would consign the amount in court.
Tender of payment of judgment. Articles 1256 and 1257 are not applicable
ARTICLE 1258
ARTICLE 1259
ARTICLE 1260
ARTICLE 1261
ARTICLE 1267
doctrine of unforeseen events
theory of rebus sic stantibus the parties stipulate in the light of certain prevailing conditions, and once
these conditions cease to exist the contract also ceases to exist.
Requisites:
1. difficult.. could not be foreseen at the time of constitution
2. one of the parties ask for relief
3. future prestation
4. business risks
Obligations and Contract
NOTES
General Rule: The obligation is extinguished. But the loss must be AFTER the perfection of the contract,
i.e., the obligation has been incurred. If prior, there would not be any SUBJECT MATTER, there would
not have been any OBLIGATION at all.
Exceptions: [obligation remains because there can still be monetary obligation DAMAGES]
1. if the debtor is at fault
2. when the debtor is made liable for a fortuitous even because
a. of a contractual stipulation
b. of a provision of law (Arts. 1170, 1165[par. 3], 1263.)
i. there is delay when the debtor is in default (delay/mora)
ii. obligation arises from a crime (Article 1268)
c. the nature of the obligation requires the assumption of risk on the part of the debtor (par. 2;
see Art. 1174.)
ARTICLE 1263
Generic thing never perishes. Thus, obligation cannot be extinguished. The debtor can still be
compelled to deliver a thing of the same kind. The creditor, however, cannot demand a thing of
superior quality and neither can the debtor deliver a thing of inferior quality. (see Art.1246.)
ARTICLE 1264
Effect of partial loss of a specific thing. In case of partial loss, the court is given the
discretion, in case of disagreement between the parties, to determine whether under the
circumstances it is so important in relation to the whole as to extinguish the obligation. In other
words, the court will decide whether the partial loss is such as to be equivalent to a complete or
total loss.
ARTICLE 1265
General Rule: It is the debtor who must prove that he was not at fault. the debtor who has the
custody and care of the thing can easily explain the circumstances of the loss.
Exemption: In case of natural calamities, the presumption of fault does not apply. Lack of fault
on the part of the debtor is more likely. So it is unjust to presume negligence on his part.”
ARTICLE 1266
ARTICLE 1267
potestative condition
What Article 1267 authorizes is a total or partial release from an obligation, not a modifi cation
or revision of the terms and conditions of the contract between the parties
Requisites
1. Obligation must become so difficult that it was manifestly beyond the contemplation of
both parties.
2. The difficulty could not have been foreseen at the time of the constitution of the contract.
3. One of the parties must ask for relief.
4. The object must be a future service with future unusual change in conditions.
5. Business risk
ARTICLE 1268
Article 1268 is another instance where a fortuitous event does not exempt the debtor from
liability, except when creditor is in Mora Accipiendi. (Arts. 1174, 1262.)
ARTICLE 1269
Right of creditor to proceed against third persons. The rule finds frequent application in
insurance. In the case where a third person lost the car the debtor was supposed to deliver to
the creditor, whatever rights of debtor against the third person will be subrogated to the creditor.
In such case, debtor’s obligation is extinguished.
Obligations and Contract
NOTES
Kinds of remission.
(1) As to its extent:
(a) Complete. — when it covers the entire obligation; (Solidary Obligation)
(b) Partial. — when it does not cover the entire obligation. (Joint Obligation)
ARTICLE 1271
ARTICLE 1272
ARTICLE 1273
ARTICLE 1274
Obligations and Contract
NOTES
If the pledge was found in the possession of the debtor, or of the third person who owns the
thing, the presumption is that the pledge, as an accessory obligation, has been remitted.
However, this presumption can be rebutted by the creditor if he proves that the thing is stolen,
returned for repairs, etc., in which case, there shall be no remission.
ARTICLE 1275
Requisites of confusion.
(1) It must take place between the principal debtor and creditor;
(2) It must be complete and definite; and
(3) the very obligation must be the same and identifical
ARTICLE 1276
Effect of merger in the person of principal debtor or creditor.
Merger in the person of the principal debtor or creditor extinguishes the obligation. Hence, the
accessory obligation of guaranty is also extinguished
ARTICLE 1277
SECTION 5. — Compensation
ARTICLE 1278
Meaning of compensation.
Obligations and Contract
NOTES
SECTION 6. — Novation
ARTICLE 1291
Meaning of novation.
It is the total or partial extinction of an obligation through the creation of a new one which
substitutes it. It is the substitution or change of an obligation by another, which extinguishes or
modifies the first, either by
1. changing its object or principal conditions,
2. substituting another in place of the debtor, or by
3. subrogating a third person in the rights of the creditor.
Kinds of novation.
(1) According to the subject:
(a) Real or OBJECTIVE. — when the object (or cause) or principal conditions of the
obligation are changed (Art. 1291[1]
(b) Personal or SUBJECTIVE. — when the person of the debtor is substituted and/or when a
third person is subrogated in the rights of the creditor (Ibid., [2, 3].); or
(c) Mixed. — when the object or principal condition of the obligation and the debtor or the
creditor or both the parties, are changed. It is a combination of real and personal
novations. (Ibid.)
Novation of judgment.
A final judgment of a court that had been executed but not yet fully satisfied, may be novated
by compromise.
There could be no novation if the parties in the new contract are not the same parties in the old
contract.
Obligations and Contract
NOTES
The incompatibility should take place in any of the essential elements of the obligation, i.e.:
(a) the juridical relation or tie, such as from a mere commodatum to lease of things, or from
negotorium gestio to agency, or from a mortgage to antichresis, or from a sale to one of loan;
or
(b) the object or principal conditions such as a change of the nature of the prestation; or
the subjects, such as the substitution of a debtor or the subrogation of the creditor.
Test of Incompatibility
Whether or not the old and new obligation can stand together, each one having an independent
existence. No incompatibility exists when they can stand together. Hence, there is no novation.
Incompatibility exists when they cannot stand together. Hence, there is novation.
ARTICLE 1293
(1) Expromision when a third person of his Right of new debtor who pays.
own initiative and without the (1) In expromision, payment by the new
knowledge or against the will of the debtor gives him the right to beneficial
original debtor assumes the latter’s reimbursement (Article 1236(2)).
obligation with the consent of the (2) If the payment was made with the
creditor. It is essential that the old consent of the original debtor or on his
debtor be released from his obligation; own initiative (delegacion), the new debtor
Obligations and Contract
NOTES
ARTICLE 1294/95
In expromision In delegacion
will not revive the action of the creditor General Rule: old debtor is not liable to the
against the old debtor creditor in case of the insolvency of the new
debtor
Exceptions:
(1) The said insolvency was already existing
and of public knowledge (although it was
not known to the old debtor) at the time
of the delegacion; or
(2) The insolvency was already existing and
known to the debtor (although it was not
of public knowledge) at the time of the
delegacion.
ARTICLE 1296
Effects
In General If Original Obligation is Void If New Obligation is Void
Old obligation is extinguished Novation is void if the original New obligation is void, the old
and replaced by the new one obligation was void, except Obligation subsists, unless the
stipulated. when annulment may be parties intended that the former
claimed only by the debtor, or relations shall be extinguished in
when ratification validates acts any event. (Art. 1297)
that are voidable. (Art. 1298)
(1) New obligation void: No
6. Original obligation is void: novation
No novation (2) New obligation voidable:
7. Original obligation voidable: Novation is effective
Effective if contract is
ratified before novation
Accessory obligations are also extinguished, but may subsist only insofar as they may
benefit 3rd persons who did not give their consent to the novation OR may not be affected
upon agreement between the parties.
ARTICLE 1299
ARTICLE 1230
Meaning of subrogation. It is
(1) the substitution of one person in the place of another
(2) with reference to a lawful claim or right,
(3) so that he who is substituted succeeds to the right of the other
(4) in relation to a debt or claim, including its remedies and securities.
Kinds of subrogation.
(1) Conventional. — when it takes place by express agreement of the original parties (the debtor
and the original creditor) and the third person (the new creditor) (Art. 1301.); or
(2) Legal. — when it takes place without agreement but by operation of law. (Art. 1302.)
Conventional subrogation must be clearly established in order that it may take place. (Arts.
1292, 1300.) Legal subrogation is not presumed except in the cases expressly provided by law.
(Art. 1302.)
Obligations and Contract
NOTES
https://www.slideshare.net/babyclaudiagarcia/sample-problems-with-suggested-answers
https://www.academia.edu/7716510/UP_2010_OBLICON_reviewer