UP Obligation

CIVIL LAW REVIEW
Notes, Cases and Commentaries on Obligations

Compiled by Rodell A. Molina
UP Law Batch 199
This reviewer follows the outline of Prof. Araceli Baviera in Civil Law Review
!! RAM
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B##$ IV
#BLI%A&I#'( A') C#'&RAC&(
&itle I.!! #BLI%A&I#'(
CHAPTER 1.-- GENERAL PR!"#"N#
Balane$ %servation on the title of Boo& "!' (%li)ations an* Contracts.( Boo& "! starts with
an inaccurac+. "t )ives the i,-ression that o%li)ations an* contracts are of the sa,e status'
w.c the+ are not. A contract is onl+ one of the sources of o%li)ations. Boo& "! shoul* have
%een si,-l+ title* (%li)ations.(
Etymolo*y.!! The wor* o%li)ation co,es fro, two Latin wor*s' ligare' ,eanin) (to %in*( an*
ob w.c is a -ro-osition use* to intensif+ a ver%. Literall+ obligare ,eans (to %in* securel+.(
"n the earl+ Ro,an law' the law on o%li)ations containe* a literal ,eanin). "t ,eant %ein)
(%oun* in chains.( The enforce,ent of cre*it was %ar%aric. "f the cre*itor is not -ai*' the
cre*itor has the ri)ht to have the *e%tor -lace* in chains an* sol* to slaver+ in the ,ar&et
-lace for three *a+s. Procee*s of the sale will %e use* to -a+ the *e%t. "f the *e%tor is not
%ou)ht' the *e%tor will either %e cho--e* into -ieces an* fe* to the fishes in the river or sol*
to slaver+ across the Ti%er. Little %+ little' the severit+ of the law was ,iti)ate*. "n Cicero/s
ti,e' there was no ,ore (%in*in) in chains.( Rather' o%li)ation was loo&e* u-on as (%in*in)
in law.( The law has now %een hu,ani0e*.
A+t. 11,. An obli*ation i- a ./+idical nece--ity to *i0e1 to do o+ not to do.
Balane$ )e2inition.!! Art. 1112 )ives us a si,-le %ut inco,-lete *efinition. "t is inco,-lete
%ec. it loo&s at o%li)ation onl+ fro, the -oint of view of the *e%tor. A %etter *efinition woul*
%e'
An obligation is a juridical relation 3%ec. there are 4 -arties5 whereby a person should
engage or refrain from engaging in a certain activity for the satisfaction of the private
interests of another, who in case of non-fulfillment of such duty may obtain from the
patrimony of the former through proper judicial proceedings the very prestation due or in
default thereof, the economic equivalent 3*a,a)es5 that it represents. 36ia0 Piero.5
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Now' this is a lon) %ut co,-lete *efinition.
Cha+acte+i-tic- o2 an #bli*ation3
1. "t re-resents an e7clusivel+ -rivate interest
4. "t creates ties that are %+ nature transitor+
8. "t involves the -ower to ,a&e the 9uri*ical tie effective in case of non-fulfill,ent throu)h an
econo,ic e:uivalent o%taine* fro, the *e%tor/s -atri,on+.
Line- o2 )e0elopment in Mode+n Law on #bli*ation-3
1. Progressive spiritualization of the law on obligations.-- This ,eans that the intent of the
-arties is e,-hasi0e* rather than the for,. #-irituali0e* ,eans (,a*e a%stract.( The
e,-hasis now is on the (,eetin) of the ,in*s( of the -arties. "n the Ro,an law' o%li)ations'
-articularl+' contractual o%li)ations' re:uire* strict co,-liance w. for, for vali*it+.
4. The principle of autonomy of will is now being significantly restricted or modified.-- "n
Ro,an law' the -arties can enter into an+ a)ree,ent that the+ wish. Now' the+ can enter
into an+ a)ree,ent -rovi*e* the sa,e is not contrar+ to law' ,orals' )oo* custo,s' -u%lic
or*er' or -u%lic -olic+. The reason for this is #ocial ;ustice an* so,e -olic+ consi*erations.
"t has %een o%serve*' however' that this will )ive a )reater ten*enc+ for the )ovt to interfere
into -rivate affairs.
8. The mitigation of the principle that the debtor must answer with all his property for his
obligation.-- "n Ro,an law' this was a%solute. Now' not all -ro-ert+ of the *e%tor can %e
levie* u-on for the -ur-ose of satisf+in) an o%li)ation. Now' there are so,e -ro-erties 3in
fact' there are ,an+5 w.c are e7e,-te* fro, attach,ent or lev+' li&e the fa,il+ ho,e.
<. ea!ing of the principle that liability results from responsibility.-- This is %ec. of #ocial
;ustice consi*erations. 3&ulan) ito....5
1. Tendency of unity in modern legislation.-- "n the A#EAN re)ion' for instance' there are
,oves to stan*ar*i0e the rules on han*lin) )oo*s' letters of cre*it' %an& transactions' etc.
There is now the ten*enc+ to ,a&e these rules unifor,. This is %ec. tra*e will alwa+s fin* a
convenient wa+.
E--ential Element- o2 an #bli*ation3
1. Active "ubject.-- This refers to the cre*itor or the o%li)ee. #trictl+ s-ea&in) the two are
not the sa,e. A cre*itor )enerall+ use* in an o%li)ation to )ive while o%li)ee is use* in an
o%li)ation to *o.
4. Passive "ubject.-- This refers to the *e%tor or the o%li)or. "f +ou want to %e a civilist'
*e%tor is use* in an o%li)ation to )ive while o%li)or is use* in an o%li)ation to *o.
n the first two ele,ents$ The+ ,ust %e *eter,inate or *eter,ina%le. The followin)
are -ossi%le co,%inations$
a. Both -arties are *eter,ine* at the ti,e of the e7ecution of the o%li)ation.
%. An o%li)ation wherein one -art+ is *eter,ine* at the constitution of the o%li)ation
an* the other to %e *eter,ine* su%se:uentl+ in accor*ance w. a criteria that is -reviousl+
esta%lishe*.
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c. An o%li)ation in w.c the su%9ect is *eter,ine* in accor*ance w. his relation to a
thin) an* therefor it chan)es where the thin) -asses fro, one -erson to another. This is a
-ro-ert+-lin&e* o%li)ation.
8. #bject of the obligation.-- This refers to the con*uct or activit+ that ,ust %e o%serve* %+
the *e%tor. The o%9ect of the o%li)ation is alwa+s an activit+ or con*uct' the -restation.
Re:uisites of an o%9ect$
a. "t ,ust %e licit.
%. "t ,ust %e -ossi%le.
c. "t ,ust %e *eter,inate or *eter,ina%le.
*. "t ,ust have -ecuniar+ value so that if not -erfor,e* it is converte* into *a,a)es.
<. $inculum juris 3le)al tie5.-- =-on *efault or refusal of the *e%tor to -erfor,' the cre*itor
can )o to court. >hen a -erson sa+s (" -ro,ise to -a+ +ou when " li&e to'( there is no
o%li)ation here %ec. there is no vinculum juris

All these first three four ele,ents are a)ree* u-on %+ co,,entators as essential ele,ents.
The followin) two are %ein) *e%ate*.
1. %ausa debendi& obligationes 3Castan5.-- This is what ,a&es the o%li)ation *e,an*a%le.
This is the -ro7i,ate wh+ of an o%li)ation.
2. 'orm.-- This is controversial. This is acce-ta%le onl+ if for, ,eans so,e ,anifestation of
the intent of the -arties.
". #ources of %li)ations
A+t. 11,4. #bli*ation- a+i-e 2+om3
516 Law7
586 Cont+act-7
596 :/a-i!cont+act-7
5;6 Act- o+ omi--ion- p/ni-hed by law7 and
5,6 :/a-i!delict-
Balane$ Law a- a -o/+ce o2 obli*ation.!! " a, un*er the i,-ression that all o%li)ations are
*erive* fro, law. "t is ,+ o-inion that there is an overla- in the enu,eration %ec. all
o%li)ations arise fro, law. #o' what is the i*ea of enu,eratin) law as onl+ one of the
sources of an o%li)ation as if it is onl+ one of the, when the four fin* their sources in law? "s
it true that law is the onl+ source of o%li)ation? @es an* No. @es' law is the onl+ source of
o%li)ation if +ou tal& of it in the ultimate sense. No' if +ou are tal&in) of law as a -ro7i,ate
source. "n this case' there are five sources of o%l)ations. Law is %oth the ulti,ate an* a
-ro7i,ate source of o%li)ations.
(o/+ce- o2 #bli*ation- acco+din* to (anche< Roman.!! Accor*in) to #anche0 Ro,an'
there are onl+ 4 sources of o%li)ations$ Law an* Acts. The latter are further classifie*' as
follows$ 315 licit acts create* %+ concurrence of wills 3contracts5A 345 licit acts either
voluntar+ or involuntar+ w.o concurrence of wills 3:uasi-contract5A 385 illicit acts of civil
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character w.c are not -unisha%le' voluntar+ or involuntar+ 3torts an* all *a,a)es arisin) fro,
*ela+5A 3<5 illicit acts w.c are voluntar+ an* are -unisha%le %+ law 3cri,es.5

(A%RA)A #R)E' V(. 'AC#C# BC1 P 1D8E - "f *ef.-a--ellant 3NaCoCo5 is lia%le at all' its
o%li)ations ,ust arise fro, an+ of the < sources of o%li)ations' na,el+' law' contract or :uasi
contract' cri,e' or ne)li)ence. 3Art. 1DFC' CC.5 6ef.-a--ellant is not )uilt+ of an+ offense
at all' %ec. it entere* into the -re,ises an* occu-ie* it w. the -er,ission of the entit+ w.ch
ha* the le)al control an* a*,in. thereof' the Alien Pro-. A*,in. 3APA5 Neither was there an+
ne)li)ence on its -art. There was also no -rivit+ 3of contract or o%li)ation5 %et. the APA an*
Taiwan Te&&osho' w.c ha* secure* the -ossession of the -ro-. fro, the -ltff-a--ellee %+ the
use of *uress' such that the Alien Pro-. Custo*ian or its -er,ittee 3*ef.-a--ellant5 ,a+ %e
hel* res-onsi%le for the su--ose* ille)alit+ of the occu-ation of the -ro-. %+ sai* Te&&osho.
The APA ha* the control an* a*,in. of the -ro-. not as successor to the interests of the
ene,+ hol*er of the title' the T. Te&&osho' %ut %+ e7-ress -rovision of law. Neither is it a
trustee of the for,er owner' the -ltff-a--ellee herein' %ut a trustee of the =# Govt' in its own
ri)ht' to the e7clusion of' an* a)ainst the clai, or title of' the ene,+ owner. Gro, Au). 1C<2'
when *ef.-a--ellant too& -ossession' to the *ate of the 9u*),ent on 4.4F.<F' the APA ha*
the a%solute control of the -ro-. as trustee of the =# Govt' w. -ower to *is-ose of it %+ sale
or otherwise' as thou)h it were the a%solute owner. Therefore' even if *ef. were lia%le to the
APA for rentals' these woul* not accrue to the %enefit of the -ltff.' the ol* owner' %ut the the
=# Govt.
Balane$ "s the enu,eration in Art. 111H e7clusive or ,erel+ illustrative? The sense that the
case of #a)ra*a r*en tells us is that the enu,eratio is e7clusive. "n resolvin) the issue of
whether the *ef. shoul* %e lia%le to -a+ rentals' the #C use* the -rocess of e7clusion. Gor
there to %e an o%li)ation to -a+ rentals' that o%li)ation ,ust arise fro, either of the five 315
sources of o%li)ations. "f it *oes not' then there is no o%li)ation. The clear i,-lication of this
rulin) is that' these five 315 are the onl+ sources of o%li)ations.
The -ro%le, w. Art. 111H is that it ,i)ht not cover all situations. Gor e7a,-le$ Carale
uses 6ove as his soa-. He then hears an a*vertise,ent fro, Proctor I Ga,%le that it is
offerin) a nice tu,%ler for those who can collect 8D wra--ers of Ti*e %efore Ge%. 4C' 1CC2.
#o' Carale sto--e* usin) 6ove an* starte* usin) Ti*e. He was a%le to consu,e all 8D
wra--ers on Ge%. 4C' 1CC2. He then went to Proctor I Ga,%le 3P I G5 to e7chan)e the 8D
Ti*e wra--ers for a tu,%ler. But P I G tol* Carale that their tu,%lers run out of stoc&.
Carale contracte* a s&in aller)+ as a result of usin) Ti*e in ta&in) a %ath. The :uestion is$
6oes P I G have an+ o%li)ation to Carale. "f we loo& at Art. 111H' this situation *oes not fall
in an+ of the five sources. #o' we &now have a -ro%le,. The Ger,an Civil Co*e 3BGB5
covers this situation. The BGB has a si7th source of o%li)ation' the Auslobung' w.c ,eans a
unilateral offer. Art. 21H of the BGB -rovi*es$
A+t. ,4. Binding promise. A pe+-on who1 by p/blic notice1 anno/nce- a +ewa+d 2o+ the
pe+2o+mance o2 an act1 in pa+tic/la+ 2o+ the p+od/ction o2 a +e-/lt1 i- bo/nd to pay a +ewa+d to
any pe+-on who ha- pe+2o+med the act1 e0en i2 he did not act with a 0iew to the +ewa+d.
Note$ >e now have a 6T" re)ulation coverin) this situation. This is an a*,inistrative
re)ulation w.c has the force of law. But it woul* have %een %etter to have -lace* this rule in
a law rather than in a ,ere a*,inistrative re)ulation.
A+ticle- 11,= ! 118 s-ecif+ the )eneral -rinci-les re)ar*in) the sources of o%li)ation
enu,erate* in Art. 111H.
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A+t. 11,=. #bli*ation- de+i0ed 2+om law a+e not p+e-/med. #nly tho-e e>p+e--ly
dete+mined in thi- Code o+ in -pecial law- a+e demandable1 and -hall be +e*/lated by
the p+ecept- o2 the law which e-tabli-hed them7 and a- to what ha- not been 2o+e-een1
by the p+o0i-ion- o2 thi- Boo?.
A+t. 11,9. #bli*ation- a+i-in* 2+om cont+act- ha0e the 2o+ce o2 law between the
cont+actin* pa+tie- and -ho/ld be complied with in *ood 2aith.
Balane$ There are two -arts in Art. 111C. The first -art is that o%li)ations *erive* fro,
contract has the force of law %et. the contractin) -arties 3jus civili.5 The secon* -art is that
there ,ust %e co,-liance in )oo* faith 3jus gentium.5
PE#PLE@( CAR V(. C#MMA')# (ECURI&A B11 #CRA <DE - Pltff. 3Peo-le/s Car5 was in
law lia%le to its custo,ers for the *a,a)es cause* the custo,er/s car' w.c ha* %een
entruste* into its custo*+. Pltff. therefore was in law 9ustifie* in ,a&in) )oo* such *a,a)es
an* rel+in) in turn on *ef.3Co,,an*o #ecurit+5 to honor its contract an* in*e,nif+ it for such
un*is-ute* *a,a)es' w.c ha* %een cause* *irectl+ %+ the unlawful an* wron)ful acts of
*ef./s securit+ )uar* in %reach of their contract.
A+t. 11B. #bli*ation- de+i0ed 2+om C/a-i!cont+act- -hall be -/b.ect to the
p+o0i-ion- o2 Chapte+ 11 &itle DVIII o2 thi- Boo?.
A+t. 111. Ci0il obli*ation- a+i-in* 2+om c+iminal o22en-e- -hall be *o0e+ned by
the penal law-1 -/b.ect to the p+o0i-ion- o2 a+ticle 81441 and o2 the pe+tinent p+o0i-ion-
o2 Chapte+ 81 P+elimina+y &itle1 on E/man Relation-1 and o2 &itle DVIII o2 thi- Boo?1
+e*/latin* dama*e-.
A+t. 8144. Re-pon-ibility 2o+ 2a/lt o+ ne*li*ence /nde+ the
p+ecedin* a+ticle i- enti+ely -epa+ate and di-tinct 2+om the ci0il liability
a+i-in* 2+om ne*li*ence /nde+ the Penal Code. B/t the plainti22 cannot
+eco0e+ dama*e- twice 2o+ the -ame act o+ omi--ion o2 the de2endant.
A+t. 118. #bli*ation- de+i0ed 2+om C/a-i!delict- -hall be *o0e+ned by the
p+o0i-ion- o2 Chapte+ 81 &itle DVII o2 thi- Boo?1 and by -pecial law-.
Balane$ The Co*e Co,,ission *i* not choose to use tort. This is %ec. tort *oes not e7actl+
have the sa,e ,eanin) as :uasi-*elict. Tort covers intentional torts w.c in :uasi-*elict is
consi*ere* as civil lia%ilit+ arisin) fro, acts or o,issions -unisha%le %+ law. There are so,e
:uasi-*elicts w.c are not covere* %+ tort. 6ean Boco%o su))este* the ancient ter, culpa
aquiliana. But this *i* not ,erit the a--roval of the Co*e Co,,ission.
Juestion$ "f there is a contract %et. the -arties' can there %e a :uasi-*elict co,,itte* %+ one
a)ainst the other re)ar*in) the area covere* %+ the contract. "f +ou loo& at Art. 41H2' +ou )et
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the i,-ression that if there is a contract %et. the -arties' the -arties cannot %e lia%le for
:uasi-*elict on an area covere* %+ the contract. The case of Can)co has not reall+ resolve
this controvers+.
CA'%C# V(. MA'ILA RAILR#A) C#. B8F P H2FE - Balane$ There are two i,-ortant
-rinci-les that we learn fro, this case$ 315 The *ifference in conce-t %et. contract an* :uasi-
*elict is that in a contract' there is a -re-e7istin) 9uri*ical tie %et. the -arties. !iolation of the
contract )ives rise to lia%ilit+ %ut not to the 9uri*ical tie. ;uri*ical tie is not %orne %+ a violation.
"n :uasi-*elict' it is -recisel+ the wron)ful act w.c )ives rise to the 9uri*ical tie. Lia%ilit+ an*
9uri*ical tie are si,ultaneous.
345 Contracts an* :uasi-*elicts create two concentric circles w. :uasi-*elict as the
%i))er circle.
BNote$ There is a little ,ista&e in Can)co. The #C sai* that the *river can %e sue* un*er
cul-a contractual. This is wron). The *river cannot %e sue* as he has no -rivit+ of contract
w. the -assen)er.E
#o' the :uestion now is$ "s it -ossi%le that even if there is a contract %et. the -arties' a :uasi-
*elict can still %e co,,itte* %+ one a)ainst the other re)ar*in) the area covere* %+ the
contract? @es' accor*in) to the case of Araneta v. *e ;o+a' 1H #CRA 1C. The sa,e act can
)ive rise to o%li)ations arisin) fro, *ifferent sources.
Gor e7a,-le' Alinea is the owner of a %us co.' the Alinea Bus Co.' Molina is a *river of
one of the %uses of Alinea Bus Co. La)*a,eo ro*e the %us %ein) *riven %+ Molina. As a
result of the rec&less *rivin) of Molina' La)*a,eo suffere* in9uries. "n this case' La)*a,eo
has a choice-- he can sue on either contract' :uasi-*elict or on cri,e. "f he *eci*e* to sue
on the %reach of the contract of carria)e' all he has to -rove is the 3e7istence of the contract5
an* that it was not -erfor,e*. "n this case' he can sue the co,,on carrier %ut not the *river
%ec. he has no contract w. the *river.
"f he sues on :uasi-*elict' he can sue %oth the co,,on carrier an* the *river. The
*efense of the *river woul* %e *ili)ence in *rivin) 3or fortuitous event.5 The *efense of the
co,,on carrier woul* %e *ili)ence in the selection an* su-ervision of e,-lo+ees.
"f he sues un*er cri,e' he has to sue the *river. "n case the *river is convicte* an*
has %een sentence* to -a+ civil lia%ilit+' the e,-lo+er 3Alinea Bus Co.5 is su%si*iaril+ lia%le. "f
Molina is insolvent' Alinea Bus Co. will -a+.
Notice that the choice of cause of action will *eter,ine three thin)s$ the theor+ of the
-laintiff' the *efense of the *ef. an* the :uestion of who, to sue.
A)ain' re,e,%er that in this case' the victi, has a choice. Provi*e* that he is
consistent w. his theor+ an* -rovi*e*' further' that he cannot recover *a,a)es twice for the
sa,e in9ur+.

Note$ There is still a %rewin) controvers+ a,on) civilists w. re)ar* to this :uestion. This is
onl+ ,+ o-inion.
%U&IERREF V(. %U&IERREF B12 P 1HHE - ne G' a -assen)er in a truc&' recovers
*a,a)es in the a,ount of P1'DDD fro, the owner of a -vt. auto,o%ile not in the car' the
,achine %ein) o-erate* %+ a son 1F +rs. of a)e' w. other ,e,%ers of the fa,il+
acco,a*ate* therein' an* fro, the chauffeur an* owner of the truc& w.c colli*e* w. the -vt.
auto,o%ile on a %ri*)e' causin) -h+sical in9uries to G as a result of the auto,o%ile acci*ent.
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The hea* of a house' the owner of an auto,o%ile' who ,aintains it for the )eneral
use of his fa,il+' is lia%le for its ne)li)ent o-eration %+ one of his chil*ren' who, he
*esi)nates or -er,its to run it' where the car is occu-ie* an* %ein) use* at the ti,e of the
in9ur+ for the -leasure of other ,e,%ers of the owner/s fa,il+ than the chil* *rivin) it.
A. :/a-i!Cont+act-
A+t. 81;8. Ce+tain law2/l1 0ol/nta+y and /nilate+al act- *i0e +i-e to the ./+idical
+elation o2 C/a-i!cont+act to the end that no one -hall be /n./-tly en+iched o+ bene2ited
at the e>pen-e o2 anothe+.
A+t. 814,. Any pe+-on who i- con-t+ained to pay the ta>e- o2 anothe+ -hall be
entitled to +eimb/+-ement 2+om the latte+.
A+t. 88. E0e+y pe+-on who th+o/*h an act o2 pe+2o+mance by anothe+1 o+ any
othe+ mean-1 acC/i+e- o+ come- into po--e--ion o2 -omethin* at the e>pen-e o2 the
latte+ witho/t ./-t o+ le*al *+o/nd -hall +et/+n the -ame to him.
A+t. 89. E0en when an act o+ e0ent ca/-in* dama*e to anothe+@- p+ope+ty wa-
not d/e to the 2a/lt o+ ne*li*ence o2 the de2endant1 the latte+ -hall be liable 2o+
indemnity i2 th+o/*h the act o+ e0ent he wa- bene2itted.
1. Bene2it- Con2e++ed Vol/nta+ily
3a5 Preservation of Pro-ert+ or Business
315 Ne)otioru, Gestio
A+t. 81;;. Whoe0e+ 0ol/nta+ily ta?e- cha+*e o2 the a*ency o+ mana*ement o2 the
b/-ine-- o+ p+ope+ty o2 anothe+1 witho/t any powe+ 2+om the latte+1 i- obli*ed to
contin/e the -ame /ntil the te+mination o2 the a22ai+ and it- incident-1 o+ to +eC/i+e the
pe+-on conce+ned to -/b-tit/te him1 i2 the owne+ i- in a po-ition to do -o. &hi- ./+idical
+elation doe- not a+i-e in eithe+ o2 the-e in-tance-3
516 When the p+ope+ty o+ b/-ine-- i- not ne*lected o+ abandoned7
586 I2 in 2act the mana*e+ ha- been tacitly a/tho+i<ed by the owne+7
In the 2i+-t ca-e1 the p+o0i-ion- o2 a+ticle- 19141 1;B91 'o. 11 and 1;B; +e*a+din*
/natho+i<ed cont+act- -hall *o0e+n.
In the -econd ca-e1 the +/leon a*ency in &itle D o2 thi- Boo? -hall be
applicable.
A+t. 1914. 'o one may cont+act in the name o2 anothe+ witho/t bein*
a/tho+i<ed by the latte+1 o+ /nle-- he ha- by law a +i*ht to +ep+e-ent him.
A cont+act ente+ed into in the name o2 anothe+ by one who ha- no
a/tho+ity o+ le*al +ep+e-entation1 o+ who ha- acted beyond hi- powe+-1 -hall be
/nen2o+ceable1 /nle-- it i- +ati2ied1 e>p+e--ly o+ impliedly1 by the pe+-on on
7
CIVIL LAW REVIEW
who-e behal2 it ha- been e>ec/ted1 be2o+e it i- +e0o?ed by the othe+ cont+actin*
pa+ty.
A+t. 1;B9. &he 2ollowin* cont+act- a+e /nen2o+ceable1 /nle-- they a+e
+ati2ied3
516 &ho-e ente+ed into in the name o2 anothe+ pe+-on by one who ha-
been *i0en no a/tho+ity o+ le*al +ep+e-entation1 o+ who ha- acted beyond hi-
powe+-7
A+t. 1;B;. Una/tho+i<ed cont+act- a+e *o0e+ned by a+ticle 1914 and the
p+inciple- o2 a*ency in &itle D o2 thi- Boo?.
A+t. 81;,. &he o22icio/- mana*e+ -hall pe+2o+m hi- d/tie- with all the dili*ence o2
a *ood 2athe+ o2 a 2amily1 and pay the dama*e- which th+o/*h hi- 2a/lt o+ ne*li*ence
may be -/22e+ed by the owne+ o2 the p+ope+ty o+ b/-ine-- /nde+ mana*ement.
&he co/+t- may1 howe0e+1 inc+ea-e o+ mode+ate the indemnity acco+din* to the
ci+c/m-tance- o2 each ca-e.
A+t. 81;. I2 the o22icio/- mana*e+ dele*ate- to anothe+ pe+-on all o+ -ome o2 hi-
d/tie-1 he -hall be liable 2o+ the act- o2 the dele*ate1 witho/t p+e./dice to the di+ect
obli*ation o2 the latte+ towa+d the owne+ o2 the b/-ine--.
&he +e-pon-ibility o2 two o+ mo+e o22icio/- mana*e+- -hall be -olida+y1 /nle--
the mana*ement wa- a--/med to -a0e the thin* o+ b/-ine-- 2+om imminent dan*e+.
A+t. 81;4. &he o22icio/- mana*e+ -hall be liable 2o+ any 2o+t/ito/- e0ent3
516 I2 he /nde+ta?e- +i-?y ope+ation- which the owne+ wa- not acc/-tomed to
emba+? /pon7
586 I2 he ha- p+e2e++ed hi- own inte+e-t to that o2 the owne+7
596 I2 he 2ail- to +et/+n the p+ope+ty o+ b/-ine-- a2te+ demand by the owne+7
5;6 I2 he a--/med the mana*ement in bad 2aith.
A+t. 81;=. E>cept when the mana*ement wa- a--/med to -a0e the p+ope+ty o+
b/-ine-- 2+om imminent dan*e+1 the o22icio/- mana*e+ -hall be liable 2o+ 2o+t/ito/-
e0ent-3
516 I2 he i- mani2e-tly /n2it to ca++y on the mana*ement7
586 I2 by hi- inte+0ention he p+e0ented a mo+e competent pe+-on 2+om ta?in* /p
the mana*ement.
A+t. 81;9. &he +ati2ication o2 the mana*ement by the owne+ o2 the b/-ine--
p+od/ce- the e22ect- o2 an e>p+e-- a*ency1 e0en i2 the b/-ine-- may not ha0e been
-/cce--2/l.
A+t. 81,B. Altho/*h the o22icio/- mana*ement may not ha0e been e>p+e--ly
+ati2ied1 the owne+ o2 the p+ope+ty o+ b/-ine-- who en.oy- the ad0anta*e- o2 the -ame
-hall be liable 2o+ obli*ation- inc/++ed in hi- inte+e-t1 and -hall +eimb/+-e the o22icio/-
8
CIVIL LAW REVIEW
mana*e+ 2o+ the nece--a+y and /-e2/l e>pen-e- and 2o+ the dama*e- which the latte+
may ha0e -/22e+ed in the pe+2o+mance o2 hi- d/tie-.
&he -ame obli*ation -hall be inc/mbent /pon him when the mana*ement had 2o+
it- p/+po-e the p+e0ention o2 an imminent and mani2e-t lo--1 altho/*h no bene2it may
ha0e been de+i0ed.
A+t. 81,1. E0en tho/*h the owne+ did not de+i0e any bene2it and the+e ha- been
no imminent and mani2e-t dan*e+ to the p+ope+ty o+ b/-ine--1 the owne+ i- liable a-
/nde+ the 2i+-t pa+a*+aph o2 the p+ecedin* a+ticle1 p+o0ided3
516 &he o22icio/- mana*e+ ha- acted in *ood 2aith7
586 &he p+ope+ty o+ b/-ine-- i- intact1 +eady to be +et/+ned to the owne+.
A+t. 81,8. &he o22icio/- mana*e+ i- pe+-onally liable 2o+ cont+act- which he ha-
ente+ed into with thi+d pe+-on-1 e0en tho/*h he acted in the name o2 the owne+ and
thi+d pe+-on-. &he-e p+o0i-ion- -hall not apply3
516 I2 the owne+ ha- e>p+e--ly o+ tacitly +ati2ied the mana*ement1 o+
586 When the cont+act +e2e+- to thin*- pe+tainin* to the owne+ o2 the b/-ine--.
A+t. 81,9. &he mana*ement i- e>tin*/i-hed3
516 When the owne+ +ep/diate- it o+ p/t- an end the+eto7
586 When the o22icio/- mana*e+ withd+aw- 2+om the mana*ement -/b.ect to the
p+o0i-ion- o2 a+ticle 81;;7
A+t. 81;;. Whoe0e+ 0ol/nta+ily ta?e- cha+*e o2 the a*ency o+
mana*ement o2 the b/-ine-- o+ p+ope+ty o2 anothe+1 witho/t any powe+ 2+om the
latte+1 i- obli*ed to contin/e the -ame /ntil the te+mination o2 the a22ai+ and it-
incident-1 o+ to +eC/i+e the pe+-on conce+ned to -/b-tit/te him1 i2 the owne+ i- in
a po-ition to do -o. >>>
596 By the death1 ci0il inte+diction1 in-anity o+ in-ol0ency o2 the owne+ o+ the
o22icio/- mana*e+.
345 Gin*er of Lost Pro-ert+
A+t. 8141. &he +i*ht- and obli*ation- o2 the 2inde+ o2 lo-t pe+-onal p+ope+ty -hall
be *o0e+ned by a+ticle- 419 and 48B.
A+t. 419. Whoe0e+ 2ind- a mo0able1 which i- not t+ea-/+e1 m/-t +et/+n it
to it- p+e0io/- po--e--o+. I2 the latte+ i- /n?nown1 the 2inde+ -hall immediately
depo-it it with the mayo+ o2 the city o+ m/nicipality whe+e the 2indin* ha- ta?en
place.
&he 2indin* -hall be p/blicly anno/nced by the mayo+ 2o+ two
con-ec/ti0e wee?- in the way he deem- be-t.
I2 the mo0able cannot be ?ept witho/t dete+io+ation1 o+ witho/t the
e>pen-e- which con-ide+ably dimini-h it- 0al/e1 it -hall be -old at p/blic
a/ction ei*ht day- a2te+ the p/blication.
9
CIVIL LAW REVIEW
(i> month- 2+om the p/blication ha0in* elap-ed witho/t the owne+
ha0in* appea+ed1 the thin* 2o/nd1 o+ it- 0al/e1 -hall be awa+ded to the 2inde+.
&he 2inde+ and the owne+ -hall be obli*ed1 a- the ca-e may be1 to +eimb/+-e the
e>pen-e-.
A+t. 48B. I2 the owne+ -ho/ld appea+ in time1 he -hall be obli*ed to pay1
a- a +ewa+d to the 2inde+1 one!tenth o2 the -/m o+ o2 the p+ice o2 the thin* 2o/nd.
A+t. 8148. &he +i*ht o2 e0e+y po--e--o+ in *ood 2aith to +eimb/+-ement 2o+
nece--a+y and /-e2/l e>pen-e- i- *o0e+ned by a+ticle ,;.
A+t. ,;. 'ece--a+y e>pen-e- -hall be +e2/nded to e0e+y
po--e--o+7 b/t only the po--e--o+ in *ood 2aith may +etain the thin* /ntil
he ha- been +eimb/+-ed the+e2o+.
U-e2/l e>pen-e- -hall be +e2/nded only to the po--e--o+ in *ood
2aith with the -ame +i*ht o2 +etention1 the pe+-on who ha- de2eated him in
the po--e--ion ha0in* the option o2 +e2/ndin* the amo/nt o2 the
e>pen-e- o+ o2 payin* the inc+ea-e in 0al/e which the thin* may ha0e
acC/i+ed by +ea-on the+eo2.
3%5 Pa+,ents %+ Thir* Persons
A+t. 8149. When a thi+d pe+-on1 witho/t the ?nowled*e o2 the debto+1 pay- the
debt1 the +i*ht- o2 the 2o+me+ a+e *o0e+ned by a+ticle- 189 and 1894.
A+t. 189. &he c+edito+ i- not bo/nd to accept payment o+ pe+2o+mance by a
thi+d pe+-on who ha- no inte+e-t in the 2/l2illment o2 the obli*ation1 /nle-- the+e i- a
-tip/lation to the cont+a+y.
Whoe0e+ pay- 2o+ anothe+ may demand 2+om the debto+ what he ha- paid1 e>cept
that i2 he paid witho/t the ?nowled*e o+ a*ain-t the will o2 the debto+1 he can +eco0e+
only in-o2a+ a- the payment ha- been bene2icial to the debto+.
A+t. 1894. Whoe0e+ pay- on behal2 o2 the debto+ witho/t the ?nowled*e o+
a*ain-t the will o2 the latte+1 cannot compel the c+edito+ to -/b+o*ate him in hi- +i*ht-
-/ch a- tho-e a+i-in* 2+om a mo+t*a*e1 */a+anty1 o+ penalty.
8. Bene2it- In0ol/nta+ily Con2e++ed
3a5 #olutio "n*e%iti
A+t. 81,;. I2 -omethin* wa- +ecei0ed when the+e i- no +i*ht to demand it1 and it
wa- /nd/ly deli0e+ed th+o/*h mi-ta?e1 the obli*ation to +et/+n it a+i-e-.
10
CIVIL LAW REVIEW
A+t. 81,,. Payment by +ea-on o2 a mi-ta?e in the con-t+/ction o+ application o2 a
do/bt2/l o+ di22ic/lt C/e-tion o2 law may come within the -cope o2 the p+ecedin* a+ticle.
A+t. 81,. I2 the paye+ wa- in do/bt whethe+ the debt wa- d/e1 he may +eco0e+ i2
he p+o0e- that it wa- not d/e.
A+t. 81,4. &he +e-pon-ibility o2 two o+ mo+e payee-1 when the+e ha- been
payment o2 what i- not d/e1 i- -olida+y.
A+t. 81,=. When the p+ope+ty deli0e+ed o+ money paid belon*- to a thi+d pe+-on1
the payee -hall comply with the p+o0i-ion- o2 a+ticle 19=;.
A+t. 19=;. &he depo-ita+y cannot demand that the depo-ito+ p+o0e hi-
owne+-hip o2 the thin* depo-ited.
'e0e+thele--1 -ho/ld he di-co0e+ that the thin* ha- been -tolen and who
it- t+/e owne+ i-1 he m/-t ad0i-e the latte+ o2 the depo-it.
I2 the owne+1 in -pite o2 -/ch in2o+mation1 doe- not claim it within the
pe+iod o2 one month1 the depo-ita+y -hall be +elie0ed o2 all +e-pon-ibility by
+et/+nin* the thin* depo-ited to the depo-ito+.
I2 the depo-ita+y ha- +ea-onable *+o/nd- to belie0e that the thin* ha-
not been law2/lly acC/i+ed by the depo-ito+1 the 2o+me+ may +et/+n the -ame.
A+t. 81,9. Whoe0e+ in bad 2aith accept- an /nd/e payment1 -hall pay le*al
inte+e-t i2 a -/m o2 money i- in0ol0ed1 o+ -hall be liable 2o+ 2+/it- +ecei0ed o+ which
-ho/ld ha0e been +ecei0ed i2 the thin* p+od/ce- 2+/it-.
Ee -hall 2/+the+mo+e be an-we+able 2o+ any lo-- o+ impai+ment o2 the thin* 2+om
any ca/-e1 and 2o+ dama*e- to the pe+-on who deli0e+ed the thin*1 /ntil it i- +eco0e+ed.
A+t. 81B. Ee who in *ood 2aith accept- an /nd/e payment o2 thin* ce+tain and
dete+minate -hall only be +e-pon-ible 2o+ the impai+ment o+ lo-- o2 the -ame o+ it-
acce--o+ie- and acce--ion- in-o2a+ a- he ha- the+eby been bene2ited. I2 he ha-
alienated it1 he -hall +et/+n the p+ice o+ a--i*n the action to collect the -/m.
A+t. 811. A- +e*a+d- the +eimb/+-ement 2o+ imp+o0ement- and e>pen-e-
inc/++ed by him who /nd/ly +ecei0ed the thin*1 the p+o0i-ion- o2 &itle V o2 Boo? II -hall
*o0e+n.
A+t. 818. Ee -hall be e>empt 2+om the obli*ation to +e-to+e who1 belie0in* in
*ood 2aith that the payment wa- bein* made o2 a le*itimate and -/b-i-tin* claim1
de-t+oyed the doc/ment1 o+ allowed the action to p+e-c+ibe1 o+ *a0e /p the pled*e-1 o+
cancelled the */a+antie- 2o+ hi- +i*ht. Ee who paid /nd/ly may p+oceed only a*ain-t the
t+/e debto+ o+ the */a+anto+- with +e*a+d to whom the action i- -till e22ecti0e.
A+t. 819. It i- p+e-/med that the+e wa- a mi-ta?e in the payment i2 -omethin*
which had ne0e+ been d/e o+ had al+eady been paid wa- deli0e+ed7 b/t he 2+om whom
the +et/+n i- claimed may p+o0e that the deli0e+y wa- made o/t o2 libe+ality o+ 2o+ any
othe+ ./-t ca/-e.
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CIVIL LAW REVIEW
315 6istin)uishe* fro, Natural %li)ations
A+t. 1;89. #bli*ation- a+e ci0il o+ nat/+al. Ci0il obli*ation- *i0e a +i*ht o2 action
to compel thei+ pe+2o+mance. 'at/+al obli*ation-1 not bein* ba-ed on po-iti0e law b/t
on eC/ity and nat/+al law1 do not *+ant a +i*ht o2 action to en2o+ce thei+ pe+2o+mance1
b/t a2te+ 0ol/nta+y 2/l2illment by the obli*o+1 they a/tho+i<e the +etention o2 what ha-
been deli0e+ed o+ +ende+ed by +ea-on the+eo2. (ome nat/+al obli*ation- a+e -et 2o+th in
the 2ollowin* a+ticle-.
A+t. 1;8;. When a +i*ht to -/e /pon a ci0il obli*ation ha- lap-ed by e>tincti0e
p+e-c+iption1 the obli*o+ who 0ol/nta+ily pe+2o+m- the cont+act cannot +eco0e+ what he
ha- deli0e+ed o+ the 0al/e o2 the -e+0ice he ha- +ende+ed.
A+t. 1;8,. When witho/t the ?nowled*e o+ a*ain-t the will o2 the debto+1 a thi+d
pe+-on pay- a debt which the obli*o+ i- not le*ally bo/nd to pay beca/-e the action
the+eon ha- p+e-c+ibed1 b/t the debto+ late+ 0ol/nta+ily +eimb/+-e- the thi+d pe+-on1 the
obli*o+ cannot +eco0e+ what he ha- paid.
A+t. 1;8=. When1 a2te+ an action to en2o+ce a ci0il obli*ation ha- 2ailed1 the
de2endant 0ol/nta+ily pe+2o+m- the obli*ation1 he cannot demand the +et/+n o2 what he
ha- deli0e+ed o+ the payment o2 the 0al/e o2 the -e+0ice he ha- +ende+ed.
A+t. 1;89. When a te-tate o+ inte-tate hei+ 0ol/nta+ily pay- a debt o2 the
decedent e>ceedin* the 0al/e o2 the p+ope+ty which he +ecei0ed by will o+ by the law o2
inte-tacy 2+om the e-tate o2 the decea-ed1 the payment i- 0alid and cannot be +e-cinded
by the paye+.
A+t. 1;9B. When a will i- decla+ed 0oid beca/-e it ha- not been e>ec/ted in
acco+dance with the 2o+malitie- +eC/i+ed by law1 b/t one o2 the inte-tate hei+-1 a2te+ the
-ettlement o2 the debt- o2 the decea-ed1 pay- a le*acy in compliance with a cla/-e in
the de2ecti0e will1 the payment i- e22ecti0e and i++e0ocable.
A+t. 19B. I2 the bo++owe+ pay- inte+e-t when the+e ha- been no -tip/lation
the+e2o+1 the p+o0i-ion- o2 thi- Code conce+nin* -ol/tio indebiti1 o+ nat/+al obli*ation-1
-hall be applied1 a- the ca-e may be.
A+t. 19,. 'o inte+e-t -hall be d/e /nle-- it ha- been e>p+e--ly -tip/lated in
w+itin*.
3%5 Perfor,ance of %li)ations i,-ose* %+ law in the interest of the -u%lic
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CIVIL LAW REVIEW
315 #u--ort
A+t. 81;. When1 witho/t the ?nowled*e o2 the pe+-on obli*ed to *i0e -/ppo+t1 it
i- *i0en by a -t+an*e+1 the latte+ -hall ha0e a +i*ht to claim the -ame 2+om the 2o+me+1
/nle-- it appea+- that he *a0e it o/t o2 piety and witho/t intent o2 bein* +epaid.
A+t. 81,. When 2/ne+al e>pen-e- a+e bo+ne by a thi+d pe+-on1 witho/t the
?nowled*e o2 tho-e +elati0e- who we+e obli*ed to *i0e -/ppo+t to the decea-ed1 -aid
+elati0e- -hall +eimb/+-e the thi+d pe+-on1 -ho/ld the latte+ claim +eimb/+-ement.
A+t. 81. When the pe+-on obli*ed to -/ppo+t an o+phan1 o+ an in-ane o+ othe+
indi*ent pe+-on /n./-tly +e2/-e- to *i0e -/ppo+t to the latte+1 any thi+d pe+-on may
2/+ni-h -/ppo+t to the needy indi0id/al1 with +i*ht o2 +eimb/+-ement 2+om the pe+-on
obli*ed to *i0e -/ppo+t. &he p+o0i-ion- o2 thi- a+ticle apply when the 2athe+ o+ mothe+
o2 a child /nde+ ei*hteen yea+- o2 a*e /n./-tly +e2/-e- to -/ppo+t him.
345 =n9ust refusal to su--ort an or-han' insane or other in*i)ent
A+t. 8B. When1 witho/t the ?nowled*e o2 the pe+-on obli*ed to *i0e -/ppo+t1 it
i- *i0en by a -t+an*e+1 the latte+ -hall ha0e a +i*ht to claim the -ame 2+om the 2o+me+1
/nle-- it appea+- that he *a0e it witho/t intention o2 bein* +eimb/+-ed. 5Gamily Code.6
A+t. 8B4. When the pe+-on obli*ed to to -/ppo+t anothe+ /n./-tly +e2/-e- o+ 2ail-
to *i0e -/ppo+t when /+*ently needed by the latte+1 any thi+d pe+-on may 2/+ni-h
-/ppo+t to the needy indi0id/al1 with +i*ht o2 +eimb/+-ement 2+om the pe+-on obli*ed to
*i0e -/ppo+t. &hi- A+ticle -hall apply pa+tic/la+ly when the 2athe+ o+ mothe+ o2 a child
/nde+ the a*e o2 ma.o+ity /n./-tly +e2/-e- to -/ppo+t o+ 2ail- to *i0e -/ppo+t to the child
when /+*ently needed. 5Id.6
385 Guneral e7-enses
A+t. 81,. When 2/ne+al e>pen-e- a+e bo+ne by a thi+d pe+-on1 witho/t the
?nowled*e o2 tho-e +elati0e- who we+e obli*ed to *i0e -/ppo+t to the decea-ed1 -aid
+elati0e- -hall +eimb/+-e the thi+d pe+-on1 -ho/ld the latte+ claim +eimb/+-ement.
3<5 Health or safet+ re)ulation re -ro-ert+
A+t. 819. When the *o0e+nment1 /pon the 2ail/+e o2 any pe+-on to comply with
health o+ -a2ety +e*/lation- conce+nin* p+ope+ty1 /nde+ta?e- to do the nece--a+y wo+?1
e0en o0e+ hi- ob.ection1 he -hall be liable to pay the e>pen-e-.
315 Constraint of life or -ro-ert+ on occasion of an* acci*ent or cala,it+
13
CIVIL LAW REVIEW
A+t. 814. When th+o/*h an accident o+ othe+ ca/-e a pe+-on i- in./+ed o+
become- -e+io/-ly ill1 and he i- t+eated o+ helped while he i- not in a condition to *i0e
con-ent to a cont+act1 he -hall be liable to pay 2o+ the -e+0ice- o2 the phy-ician o+ othe+
pe+-on aidin* him1 /nle-- the -e+0ice- ha- been +ende+ed o/t o2 p/+e *ene+o-ity.
A+t. 81=. When d/+in* a 2i+e1 2lood1 -to+m1 o+ othe+ calamity1 p+ope+ty i- -a0ed
2+om de-t+/ction by anothe+ pe+-on witho/t the ?nowled*e o2 the owne+1 the latte+ i-
bo/nd to pay the 2o+me+ ./-t compen-ation.
A+t. 814;. When in a -mall comm/nity a ma.o+ity o2 the inhabitant- o2 a*e decide
/pon a mea-/+e 2o+ p+otection a*ain-t lawle--ne--1 2i+e1 2lood1 -to+m o+ othe+ calamity1
any one who ob.ect- to the plan and +e2/-e- to cont+ib/te to the e>pen-e- b/t i-
bene2itted by the p+o.ect a- e>ec/ted -hall be liable to pay hi- -ha+e o2 -aid e>pen-e-.
A+t. 814B. When by accident o+ othe+ 2o+t/ito/- e0ent1 mo0able- -epa+ately
pe+tainin* to two o+ mo+e pe+-on- a+e commin*led o+ con2/-ed1 the +/leon co!
owne+-hip -hall be applicable.
B. Juasi-*elicts
A+t. 814. Whoe0e+ by act o+ omi--ion ca/-e- dama*e to anothe+1 the+e bein*
2a/lt o+ ne*li*ence1 i- obli*ed to pay 2o+ the dama*e done. (/ch 2a/lt o+ ne*li*ence1 i2
the+e i- no p+e!e>i-tin* cont+act/al +elation between the pa+tie-1 i- called a C/a-i!delict
and i- *o0e+ned by the p+o0i-ion- o2 thi- Chapte+.
A+t. 8144. Re-pon-ibility 2o+ 2a/lt o+ ne*li*ence /nde+ the p+ecedin* a+ticle i-
enti+ely -epa+ate and di-tinct 2+om the ci0il liability a+i-in* 2+om ne*li*ence /nde+ the
Penal Code. B/t the plainti22 cannot +eco0e+ dama*e- twice 2o+ the -ame act o+
omi--ion o2 the de2endant.
A+t. 81=B. &he obli*ation impo-ed by a+ticle 814 i- demandable not only 2o+
one@- own act- o+ omi--ion-1 b/t al-o 2o+ tho-e o2 pe+-on- 2o+ whom one i-
+e-pon-ible.
&he 2athe+ and1 in ca-e o2 hi- death o+ incapacity1 the mothe+1 a+e +e-pon-ible 2o+
the dama*e- ca/-ed by the mino+ child+en who li0e in thei+ company.
%/a+dian- a+e liable 2o+ dama*e- ca/-ed by the mino+- o+ incapacitated pe+-on-
who a+e /nde+ thei+ a/tho+ity and li0e in thei+ company.
&he owne+- and mana*e+- o2 an e-tabli-hment o+ ente+p+i-e a+e li?ewi-e
+e-pon-ible 2o+ dama*e- ca/-ed by thei+ employee- in the -e+0ice o2 the b+anche- in
which the latte+ a+e employed o+ on the occa-ion o2 thei+ 2/nction-.
Employe+- -hall be liable 2o+ the dama*e- ca/-ed by thei+ employee- and
ho/-ehold helpe+- actin* within the -cope o2 thei+ a--i*ned ta-?-1 e0en tho/*h the
2o+me+ a+e not en*a*ed in any b/-ine-- o+ ind/-t+y.
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CIVIL LAW REVIEW
&he (tate i- +e-pon-ible in li?e manne+ when it act- th+o/*h a -pecial a*ent7 b/t
not when the dama*e ha- been ca/-ed by the o22icial to whom the ta-? done p+ope+ly
pe+tain-1 in which ca-e what i- p+o0ided in a+ticle 814 -hall be applicable.
La-tly1 teache+- o+ head- o2 e-tabli-hment- o2 a+t- and t+ade- -hall be liable 2o+
dama*e- ca/-ed by thei+ p/pil- and -t/dent- o+ app+entice-1 -o lon* a- they +emain in
thei+ c/-tody.
&he +e-pon-ibility t+eated o2 in thi- a+ticle -hall cea-e when the pe+-on- he+ein
mentioned p+o0e that they ob-e+0ed all the dili*ence o2 a *ood 2athe+ o2 a 2amily to
p+e0ent dama*e.
A+t. 81=8. I2 the mino+ o+ in-ane pe+-on ca/-in* dama*e ha- no pa+ent- o+
*/a+dian1 the mino+ o+ in-ane pe+-on -hall be an-we+able with hi- own p+ope+ty in an
action a*ain-t him whe+e a */a+dian ad litem -hall be appointed.
A+t. 819;. &he +e-pon-ibility o2 two o+ mo+e pe+-on- who a+e liable 2o+ C/a-i!
delict i- -olida+y.
A+t. 148=. &he cont+acto+ i- liable 2o+ all the claim- o2 labo+e+- and othe+-
employed by him1 and o2 thi+d pe+-on- 2o+ death o+ phy-ical in./+ie- d/+in* the
con-t+/ction.
A+t. 149. A common ca++ie+ i- +e-pon-ible 2o+ in./+ie- -/22e+ed by a pa--en*e+
on acco/nt o2 the wil2/l act- o+ ne*li*ence o2 othe+ pa--en*e+- o+ o2 -t+an*e+-1 i2 the
common ca++ie+@- employee- th+o/*h the e>e+ci-e o2 the dili*ence o2 a *ood 2athe+ o2 a
2amily co/ld ha0e p+e0ented o+ -topped the act o+ omi--ion.
A+t. 81=. &he -chool1 it- admini-t+ato+- and teache+-1 o+ the indi0id/al1 entity o+
in-tit/tion- en*a*ed in child ca+e -hall ha0e -pecial pa+ental a/tho+ity and
+e-pon-ibility o0e+ the mino+ child while /nde+ thei+ -/pe+0i-ion1 in-t+/ction o+ c/-tody.
A/tho+ity and +e-pon-ibility -hall apply to all a/tho+i<ed acti0itie- whethe+ in-ide
o+ o/t-ide the p+emi-e- o2 the -chool entity o+ in-tit/tion. 5Gamily Code.6
A+t. 819. &ho-e *i0en the a/tho+ity and +e-pon-ibility /nde+ the p+ecedin*
A+ticle -hall be p+incipally and -olida+ily liable 2o+ dama*e- ca/-ed by the act- o+
omi--ion- o2 the /nemancipated mino+. &he pa+ent-1 ./dicial */a+dian- o+ the pe+-on-
e>e+ci-in* pa+ental a/tho+ity o0e+ -aid mino+ -hall be -/b-idia+ily liable.
&he +e-pecti0e liabilitie- o2 tho-e +e2e++ed to in the p+ecedin* pa+a*+aph -hall not
apply i2 it i- p+o0ed that they e>e+ci-ed the p+ope+ dili*ence +eC/i+ed /nde+ the
pa+tic/la+ ci+c/m-tance-.
All othe+ ca-e- not co0e+ed by thi- and the p+ecedin* a+ticle- -hall be *o0e+ned
by the p+o0i-ion- o2 the Ci0il Code on C/a-i!delict-. 5Id.6
C. Law
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CIVIL LAW REVIEW
A+t. 11,=. #bli*ation- de+i0ed 2+om law a+e not p+e-/med. #nly tho-e e>p+e--ly
dete+mined in thi- Code o+ in -pecial law- a+e demandable1 and -hall be +e*/lated by
the p+ecept- o2 the law which e-tabli-he- them7 and a- to what ha- not been 2o+e-een1
by the p+o0i-ion- o2 thi- Boo?.
A+t. 89;. &he claim 2o+ -/ppo+t1 when p+ope+ and two o+ mo+e pe+-on- a+e
obli*ed to *i0e it1 -hall be made in the 2ollowin* o+de+3
516 G+om the -po/-e7
586 G+om the de-cendant- o2 the nea+e-t de*+ee7
596 G+om the a-cendant-1 al-o o2 the nea+e-t de*+ee7
5;6 G+om the b+othe+- and -i-te+-.
Amon* de-cendant- and a-cendant- the o+de+ in which they a+e called to the
inte-tate -/cce--ion o2 the pe+-on who ha- a +i*ht to claim -/ppo+t -hall be ob-e+0ed.
=n*er the NCC' follow the or*er of intestate succession
A+t. 199. Whene0e+ two o+ mo+e pe+-on- a+e obli*ed to *i0e -/ppo+t1 the liability
-hall de0ol0e /pon the 2ollowin* pe+-on- in the o+de+ he+ein p+o0ided3
516 &he -po/-e7
586 &he de-cendant- in the nea+e-t de*+ee7
596 &he a-cendant- in the nea+e-t de*+ee7
5;6 &he b+othe+- and -i-te+-. 5Gamily Code.6
A+t. ;;=. &he owne+ o2 the land on which anythin* ha- been b/ilt1 -own1 o+
planted in *ood 2aith1 -hall ha0e the +i*ht to app+op+iate a- hi- own the wo+?-1 -owin*
o+ plantin*1 a2te+ payment o2 the indeminity p+o0ided 2o+ in a+ticle- ,; and ,;=1 o+ to
obli*e the one who b/ilt o+ planted to pay the p+ice o2 the land1 and the one who -owed1
the p+ope+ +ent. Eowe0e+1 the b/ilde+ o+ plante+ cannot be obli*ed to b/y the land i2 it-
0al/e i- con-ide+ably mo+e than that o2 the b/ildin* o+ t+ee-. In -/ch ca-e1 he -hall pay
+ea-onable +ent1 i2 the owne+ o2 the land doe- not choo-e to app+op+iate the b/ildin* o+
t+ee- a2te+ p+ope+ indemnity. &he pa+tie- -hall a*+ee /pon the te+m- o2 the lea-e and in
ca-e o2 di-a*+eement1 the co/+t -hall 2i> the te+m- the+eo2.
A+t. ,;. 'ece--a+y e>pen-e- -hall be +e2/nded to e0e+y po--e--o+7 b/t
only the po--e--o+ in *ood 2aith may +etain the thin* /ntil he ha- been
+eimb/+-ed the+e2o+.
U-e2/l e>pen-e- -hall be +e2/nded only to the po--e--o+ in *ood 2aith
with the -ame +i*ht o2 +etention1 the pe+-on who ha- de2eated him in the
po--e--ion ha0in* the option o2 +e2/ndin* the amo/nt o2 the e>pen-e- o+ o2
payin* the inc+ea-e in 0al/e which the thin* may ha0e acC/i+ed by +ea-on
the+eo2.
A+t. ,;=. E>pen-e- 2o+ p/+e l/>/+y o+ me+e plea-/+e -hall not be
+e2/nded to the po--e--o+ in *ood 2aith7 b/t he may +emo0e the o+nament- with
which he ha- embelli-hed the p+incipal thin* i2 it -/22e+- no in./+y the+eby1 and i2
hi- -/cce--o+ in the po--e--ion doe- not p+e2e+ to +e2/nd the amo/nt e>pended.
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CIVIL LAW REVIEW
A+t. 9. Ea-ement- e-tabli-hed by law in the inte+e-t o2 p+i0ate pe+-on- o+ 2o+
p+i0ate /-e -hall be *o0e+ned by the p+o0i-ion- o2 thi- &itle1 witho/t p+e./dice to the
p+o0i-ion- o2 *ene+al o+ local law- and o+dinance- 2o+ the *ene+al wel2a+e.
&he-e ea-ement- may be modi2ied by a*+eement o2 the inte+e-ted pa+tie-1
whene0e+ the law doe- not p+ohibit it o+ no in./+y i- -/22e+ed by a thi+d pe+-on.
A+t. 8B1;. 'o action can be maintained by the winne+ 2o+ the collection o2 what
he ha- won in a *ame o2 chance. B/t any lo-e+ in a *ame o2 chance may +eco0e+ hi-
lo-- 2+om the winne+1 with le*al inte+e-t 2+om the time he paid the amo/nt lo-t1 and
-/b-idia+ily 2+om the ope+ato+ o+ mana*e+ o2 the *amblin* ho/-e.
6. Contracts
A+t. 11,9. #bli*ation- a+i-in* 2+om cont+act- ha0e the 2o+ce o2 law between the
cont+actin* pa+tie- and -ho/ld be complied with in *ood 2aith.
A+t. 19B. &he cont+actin* pa+tie- may e-tabli-h -/ch -tip/lation-1 cla/-e-1
te+m- and condition- a- they may deem con0enient1 p+o0ided they a+e not cont+a+y to
law1 mo+al-1 *ood c/-tom-1 p/blic o+de+1 o+ p/blic policy.
E. 6elict
A+t. 111. Ci0il obli*ation- a+i-in* 2+om c+iminal o22en-e- -hall be *o0e+ned by
the penal law-1 -/b.ect to the p+o0i-ion- o2 a+ticle 81441 and o2 the pe+tinent p+o0i-ion-
o2 Chapte+ 81 P+elimina+y &itle1 on E/man Relation-1 and o2 &itle DVIII o2 thi- Boo?1
+e*/latin* dama*e-.

correlate this w. Art. 1DD' RPC
A+t. 1BB. Civil Liability of a person guilty of felony.-- E0e+y pe+-on c+iminally
liable 2o+ a 2elony i- al-o ci0illy liable.
A+t. 1B=. #bli*ation to ma?e +e-to+ation1 +epa+ation 2o+ dama*e-1 indemni2ication
2o+ con-eC/ential dama*e- and action to demand the -ame ! Upon whom it de0ol0e-. !
&he obli*ation to ma?e +e-to+ation o+ +epa+ation 2o+ dama*e- and indemni2ication 2o+
con-eC/ential dama*e- de0ol0e- /pon the hei+- o2 the pe+-on liable.
&he action to demand +e-to+ation1 +epa+ation1 and indemni2ication li?ewi-e
de-cend- to the hei+- o2 the pe+-on in./+ed. 5Re0i-ed Penal Code.6
A+t. =9. Eow c+iminal liability i- totally e>tin*/i-hed. ! C+iminal liability i- totally
e>tin*/i-hed3
1. By the death o2 the con0ict1 a- to the pe+-onal penaltie-7 and a- to pec/nia+y
penaltie-1 liability the+e2o+ i- e>tin*/i-hed only when the death o2 the o22ende+ occ/+-
be2o+e 2inal ./d*ment.
8. By -e+0ice o2 the -entence7
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CIVIL LAW REVIEW
9. By amne-ty1 which completely e>tin*/i-he- the penalty and all it- e22ect-7
;. By ab-ol/te pa+don7
,. By p+e-c+iption o2 the c+ime7
. By p+e-c+iption o2 the penalty7
4. By the ma++ia*e o2 the o22ended woman1 a- p+o0ided in A+ticle 9;; o2 thi-
Code. 5Id.6
A+t. 9;;. >>> In ca-e- o2 -ed/ction1 abd/ction1 act- o2 la-ci0io/-ne--
and +ape1 the ma++ia*e o2 the o22ende+ with the o22ended pa+ty -hall e>tin*/i-h
the c+iminal action o+ +emit the penalty al+eady impo-ed /pon him. &he
p+o0i-ion- o2 thi- pa+a*+aph -hall al-o be applicable to the co!p+incipal-1
accomplice- and acce--o+ie- a2te+ the 2act o2 the abo0e!mentioned c+ime-. 5Id.6
Balane$ C+ime a- a -o/+ce o2 obli*ation.!! There are ,an+ cri,es fro, w.c' civil lia%ilit+
arises in their co,,ission' in a**ition to the cri,inal -enalt+ attache* to the,. This
un*erlines the two as-ects in a cri,e$ one' as an offense a)ainst the state' an* two as an
offense a)ainst the victi,. "t is in the latter case that civil lia%ilit+ is recovera%le.
As far as cri,e is concerne*' civil law is not concerne* w. the -enal lia%ilit+ %ut onl+
w. the civil lia%ilit+.
3not in Baviera/s outline5
CEAP&ER 8.!! 'A&URE A') EGGEC& #G #BLI%A&I#'(
Articles 1128 - 112F in relation to Art. 1112.
Balane$ &h+ee type- o2 obli*ation-.!! 315 o%li)ation to )iveA 345 o%li)ation to *oA an* 385
o%li)ation not to *o.
". %li)ation to )ive
A. #-ecific thin)
B. Generic thin)
"". To *o
""". Not to *o 3this inclu*es all ne)ative o%li)ations li&e o%li)ation not to )ive.5
$ind- o2 pe+2o+mance.!! 315 specific performance 3-erfor,ance %+ the *e%tor hi,self5A 345
substitute performance 3-erfor,ance at the e7-ense of the *e%tor5A 385 equivalent
performance 3)rant of *a,a)es.5
A+ticle- 119 ! 11 cover o%li)ation to )ive.
&h+ee Acce--o+y #bli*ation-3
1. Art. 1128.-- To ta&e care of the thin) w. the *ili)ence of a )oo* father of a fa,il+ until
actual *eliver+.
4. Art. 112<.-- To *eliver the fruits to the cre*itor 3fruits -ro*uce* after o%li)ation to *eliver
arises.5
8. Art. 1122.-- To *eliver accessions an* accessories.
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CIVIL LAW REVIEW
A+t. 119. E0e+y pe+-on obli*ed to *i0e -omethin* i- al-o obli*ed to ta?e ca+e o2
it with the p+ope+ dili*ence o2 a *ood 2athe+ o2 a 2amily1 /nle-- the law o+ the -tip/lation
o2 the pa+tie- +eC/i+e- anothe+ -tanda+d o2 ca+e.
A+t. 11;. &he c+edito+ ha- a +i*ht to the 2+/it- o2 the thin* 2+om the time the
obli*ation to deli0e+ a+i-e-. Eowe0e+1 he -hall ha0e no +eal +i*ht o0e+ it /ntil the -ame
ha- been deli0e+ed to him.
Balane$ Gro, the ti,e the o%li)ation arises' the cre*itor has a -ersonal ri)ht a)ainst the
*e%tor as to the fruits. But he has no real ri)ht over the, until actual *eliver+. Real ri)ht is a
ri)ht w.c is enforcea%le a)ainst the whole worl*. He has onl+ the -ersonal ri)ht a)ainst the
*e%tor w. re)ar* to the un*elivere* fruits. This is %ec. of the -rinci-le (on nudis pactis, sed
traditione, dominia rerum transferentur.) 3"t is not %+ ,ere a)ree,ent' %ut %+ *eliver+' is
ownershi- transferre*.5 Personal ri)ht arises fro, the ti,e the o%li)ation to *eliver arises
whereas the real ri)ht *oes not arise until actual *eliver+.

A+ticle- 11, ! 114.!! Re,e*ies Availa%le to the Cre*itor 3s-ecific -erfor,ance' su%stitute
-erfor,ance' e:uivalent -erfor,ance.5
A. "n o%li)ations to )ive
1. A *eter,inate thin)
a. #-ecific -erfor,ance
%. E:uivalent -erfor,ance
4. A )eneric thin)' all re,e*ies are availa%le
B. "n an o%li)ation to *o' ,a&e a *istinction$
1. %li)ation to *o w.c is -urel+ -ersonal' onl+ e:uivalent -erfor,ance is availa%le
4. %li)ation to *o w.c is not -ersonal
a. su%stitute -erfor,ance
%. e:uivalent -erfor,ance
Note that in o%li)ations to *o' s-ecific -erfor,ance is not availa%le. The reason for
this is that s-ecific -erfor,ance will )ive rise to involuntar+ servitu*e.
C. %li)ation not to *o
1. su%stitute -erfor,ance
4. e:uivalent -erfor,ance.
"n all these cases' the cre*itor has the o-tion of resolution or rescission un*er Art. 11C1. "n
a**ition' he can also clai, *a,ates.
A+t. 11,. When what i- to be deli0e+ed i- a dete+minate thin*1 the c+edito+1 in
addition to the +i*ht *+anted him by a+ticle 114B1 may compel the debto+? to ma?e the
deli0e+y.
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CIVIL LAW REVIEW
I2 the thin* i- indete+minate o+ *ene+ic1 he may a-? that the obli*ation be
complied with at the e>pen-e o2 the debto+.
I2 the obli*o+ delay-1 o+ ha- p+omi-ed to deli0e+ the -ame thin* to two o+ mo+e
pe+-on- who do not ha0e the -ame inte+e-t1 he -hall be +e-pon-ible 2o+ any 2o+t/ito/-
e0ent /ntil he ha- e22ected the deli0e+y.

A+t. 11. &he obli*ation to *i0e a dete+minate thin* incl/de- that o2 deli0e+in*
it- acce--ion- and acce--o+ie-1 e0en tho/*h they may not ha0e been mentioned.
A+t. 114. I2 a pe+-on obli*ed to do -omethin* 2ail- to do it1 the -ame -hall be
e>ec/ted at hi- co-t.
&hi- -ame +/le -hall be ob-e+0ed i2 he doe- it in cont+a0ention o2 the teno+ o2 the
obli*ation. G/+the+mo+e1 it may be dec+eed that what ha- been poo+ly done be /ndone.
A+t. 11=. When the obli*ation con-i-t- in not doin* and the obli*o+ doe- what
ha- been 2o+bidden him1 it -hall al-o be /ndone at hi- e>pen-e.
A+ticle- 119 ! 114;.!! "rre)ularit+ of Perfor,ance.
Balane$
&wo Cla--e- o2 I++e*/la+ity o2 Pe+2o+mance3
". Attri%uta%le to the *e%tor
A. Grau*
B. Ne)li)ence
C. 6ela+
"". Not attri%uta%le to the *e%tor
A. Gortuitous event.

A+t. 119. &ho-e obli*ed to deli0e+ o+ to do -omethin* inc/+ in delay 2+om the
time the obli*ee ./dicially o+ e>t+a./dicially demand- 2+om them the 2/l2illment o2 thei+
obli*ation.
Eowe0e+1 the demand by the c+edito+ -hall not be nece--a+y in o+de+ that delay
may e>i-t3
516 When the obli*ation o+ the law e>p+e--ly -o decla+e7
586 When 2+om the nat/+e and the ci+c/m-tance- o2 the obli*ation it appea+- that
the de-i*nation o2 the time when the thin* i- to be deli0e+ed o+ the -e+0ice i- to be
+ende+ed wa- a cont+ollin* moti0e 2o+ the e-tabli-hment o2 the cont+act7
596 When demand wo/ld be /-ele--1 a- when the obli*o+ ha- +ende+ed it beyond
hi- powe+ to pe+2o+m.
In +ecip+ocal obli*ation-1 neithe+ pa+ty inc/+- in delay i2 the othe+ doe- not
comply o+ i- not +eady to comply in a p+ope+ manne+ with what i- inc/mbent /pon him.
G+om the moment one o2 the pa+tie- 2/l2ill- hi- obli*ation1 delay by the othe+ be*in-.
Balane$
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CIVIL LAW REVIEW
When doe- delay -et inH!! 6ela+ sets in in the followin) ,anner$
1. Gor Reci-rocal si,ultaneous o%li)ations.-- %+ the rea*iness of one of the -arties to
-erfor, an* his lettin) the other -art+ &nowA an* the other -art+ is not rea*+ to co,-l+ in a
-ro-er ,anner w. what is incu,%ent u-on hi,.
4. Gor Reci-rocal o%li)ations w.c are not si,ultaneous.-- Gen. Rule$ 6e,an* is necessar+
3Art. 112C' -ar. 1.5 This is calle* mora solvendi e* persona.
E7ce-tion$ >hen *e,an* is not necessar+ 3the e7ce-tions are foun* in Art. 11 2C'
-ar. 4.5 This is calle* mora solvendi e* re
What ?ind o2 demand i- nece--a+yH!! ;u*icial or e7tra-9u*icial
E>ception-3
+,- hen the obligation or the law e*pressly so declare.-- when the contract sa+s that w.o
the necessit+ of *e,an*' *efault sets in u-on the failure of the o%li)or to -erfor, on *ue
*ate. There ,ust %e so,ethin) in the contract w.c e7-licitl+ states that the *e,an* is not
necessar+ in or*er that *ela+ ,a+ set in.
+.- hen from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered was
a controlling motive for the establishment of the contract.
"llustration$ Bon) Ba+lon is )ettin) ,arrie* in !alentines /C2. "nno #otto was
su--ose* to ,a&e Ella/s 3the %ri*e5 we**in) )own. Ge%. 1< co,es ' no )own was *elivere*.
Ella )ets ,arrie* in %lue 9eans an* t-shirt. Ginall+' on Ge%. 11' "nno *elivers the )own. 777
Ella sues "nno for %reach. "nno sa+s there was no *e,an*. "n this case' *e,an* is not
necessar+ in or*er that *ela+ ,a+ e7ist.
+/- hen demand would be useless, as when the obligor has rendered it beyond his power
to perform.-- E7a,-le is the case of Chave0 v. Gon0ales' infra.
BALANE CA#E#$
A%CA#ILI V(. %(I( B121 # 1E - There was then a -erfecte* contract of sale %et. the
-artiesA there ha* %een a ,eetin) of the ,in*s u-on the -urchase %+ A)caoili of a
*eter,inate house an* lot in the G#"# Housin) Pro9ect at Nan)&a' Mari&ina' Ri0al' at a
*efinite -rice -a+a%le in a,orti0ations at P81.12 -er ,o.' an* fro, the ,o,ent the -arties
ac:uire* the ri)ht to reci-rocall+ *e,an* -erfor,ance. "t was' to %e sure' the *ut+ of the
G#"#' as seller' to *eliver the thin) sol* in a con*ition suita%le for its en9o+,ent %+ the %u+er
for the -ur-ose conte,-late*' in other wor*s' to *eliver the house su%9ect of the contract in a
reasona%l+ liva%le state. This it faile* to *o.
777
#ince G#"# *i* not fulfill that o%li)ation' an* was not willin) to -ut the house in
ha%ita%le state' it cannot invo&e A)coili/s sus-ension of -a+,ent of a,orti0ation as cause to
cancel the contract %et. the,. "t is a7io,atic that (3i5n reci-rocal o%li)ations' neither -art+
incurs in *ela+ if the other *oes not co,-l+ or is not rea*+ to co,-l+ in a -ro-er ,anner with
what is incu,%ent u-on hi,.
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CIVIL LAW REVIEW
((( V(. M##'WAL$ B441 # 11CE - 0equisites in order that debtor ma be in default1
(ecessity of demand.-- To %e in *efault (777 is *ifferent fro, ,ere *ela+ in the )ra,,atical
sense' %ec. it involves the %e)innin) of a s-ecial con*ition or status w.c has its own -eculiar
effects or results.( "n or*er that the *e%tor ,a+ %e in *efault it is necessar+ that the followin)
re:uisites %e -resent$ 315 that the obligation be demandable and already liquidatedA 345 that
the debtor delays performanceA an* 385 that the creditor requires the performance judicially
or e*trajudicially. 6efault )enerall+ %e)ins fro, the ,o,ent the cre*itor *e,an*s the
-erfor,ance of the o%li)ation. Nowehere in this case *i* it a--ear that ### *e,an*e* fro,
Moonwal& the -a+,ent of its ,onthl+ a,orti0ation. Neither *i* it show that -etitioner
*e,an*e* the -a+,ent of the sti-ulate* -enalt+ u-on the failure of Moonwal& to ,eet its
,onthl+ a,orti0ation. >hat the co,-laint itself showe* was that ### trie* to enforce the
o%li)ation so,ethi,e in #e-t' 1CHH %+ foreclosin) the real estate ,ort)a)es e7ecute* %+
Moonwal& in favor of ###. But this foreclosure *i* not -ush throu)h u-on Moonwal&/s
re:uests an* -ro,ises to -a+ in full. The ne7t *e,an* for -a+,ent ha--ene* on ct. 1'
1CHC when ### issue* a #tate,ent of Account to Moonwal&. An* in accor*ance w. sai*
state,ent' Moonwal& -ai* its loan in full. >hat is clear' therefore' is that Moonwal& was
never in *efault %ec. ### never co,-elle* -erfor,ance.
A+t. 114B. &ho-e who in the pe+2o+mance o2 thei+ obli*ation a+e */ilty o2 2+a/d1
ne*li*ence o+ delay1 and tho-e who in any manne+ cont+a0ene the teno+ the+eo21 a+e
liable 2o+ dama*e-.
BALANE CA#E#$
ARRIE&A V(. 'ARIC B1D # HCE - ne who assu,es a contractual o%li)ation an* fails to
-erfor, the sa,e on account of his ina%ilit+ to ,eet certain %an& re:uire,ents which ina%ilit+
he &new an* was aware of when he entere* into the contract' shoul* %e hel* lia%le in
*a,a)es for %reach of contract.
=n*er Art. 11HD' not onl+ *e%tors )uilt+ of frau*' ne)li)ence or *efault %ut also ever+
*e%tor' in )eneral' who fails the -erfor,ance of his o%li)ation is %oun* to in*e,nif+ for the
losses an* *a,a)es cause* there%+.
2eaning of phrase )in any manner contravene the tenor) of the obligation.-- The
-hrase inclu*es an+ illicit tas& w.c i,-airs the strict an* faithful fulfill,ent of the o%li)ation' or
ever+ &in* of *efective -erfor,ance.
Balane$ This -hrase is a catch-all -rovision. At worst' it is a su-erfluit+. At %est' there
is a safet+ net 9ust in case there is a cul-a%le irre)ularit+ of -erfor,ance w.c is not covere*
%+ frau*' ne)li)ence or *ela+. "n this case' the #C was a--arentl+ not sure as to what
cate)or+ the %reach fell. This -hrase is not reall+ an in*e-en*ent )roun*.
&ELEGA(& V(. CA(&R# B11F s <<1E - "n the case at %ar' -etitioner an* -rivate res-on*ent
#ofia C. Crouch entere* into a contract where%+' for a fee' -etitioner un*ertoo& to sen* sai*
-rivate res-on*ent/s ,essa)e overseas %+ tele)ra,. This' -etitioner *i* not *o' *es-ite
-erfor,ance %+ sai* -vt. res-. of her o%li)ation %+ -a+in) the re:uire* char)es. Petitioner
was therefore )uilt+ of contravenin) its o%li)ation to sai* -rivate res-on*ent an* is thus lia%le
for *a,a)es.
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CIVIL LAW REVIEW
'PC V(. CA B121 # 88<E - (P% cannot escape liability bec. its negligence was the
pro*imate cause of the loss and damage even though the typhoon was an act of 3od.-- "t is
clear fro, the a--ellate court/s *ecision that %ase* on its fin*in)s of fact an* that of the trial
court/s' -etitioner NPC was un*ou%te*l+ ne)li)ent %ec. it o-ene* the s-illwa+ )ates of the
An)at 6a, onl+ at the hei)ht of t+-hoon (>el,in)( when it &new ver+ well that it was safer
to have o-ene* the sa,e )ra*uall+ an* earlier' as it was also un*enia%le that NPC &new of
the co,in) of the t+-hoon at least < *a+s %ef. it actuall+ struc&. An* even thou)h the
t+-hoon was an act of Go* or what we ,a+ call force majeure' NPC cannot esca-e lia%ilit+
%ec. its ne)li)ence was the -ro7i,ate cause of the loss an* *a,a)e. As we have sai* in
;uan Na&-il I #ons vs. CA' 1<< #CRA 1C2'
Thus' if u-on the ha--enin) of a fortuitous event or an act of Go*' there concurs a
corres-on*in) frau*' ne)li)ence' *ela+ or violation or contravention in an+ ,anner of the
tenor of the o%li)ation as -rovi*e* for in Art. 11HD' w.c results in a loss or *a,a)e' the o%li)or
cannot esca-e lia%ilit+. The -rinci-le e,%o*ie* in the act of Go* *octrine strictl+ re:uires that
the act must be one occasioned e*clusively by the violence of nature and human agencies
are to be e*cluded from creating or entering into the cause of the mischief. >hen the effect'
the cause of w.c is to %e consi*ere*' is foun* to %e in -art the resulf of the -artici-ation of
,an' whether it %e fro, active intervention or ne)lect' or failure to act' the whole occurence
is there%+ hu,ani0e*' as it was' an* re,ove* fro, the rules a--lica%le to the acts of Go*.
Thus' it has %een hel* that when the ne)li)ence of a -erson concurs w. an act of Go* in
-ro*ucin) a loss' such -erson is not e7e,-t fro, lia%ilit+ %+ showin) that the i,,e*iate
cause of the *a,a)e was the act of Go*. To be e*empt from liability for loss bec. of an act
of 3od, he must be free from any previous negligence or misconduct by w&c the loss or
damage may have been occasioned.
RCPI V(. R#)RI%UEF B1F4 # FFCE - Res-. Ro*ri)ue0 an* RCP" entere* into a contract
where%+ for a fee RCP" un*ertoo& to sen* the res-on*ent/s ,essa)e overseas. >hen'
therefore' res-. Ro*ri)ue0 -ai* RCP" to *eliver his ,essa)e overseas %+ tele)ra,' RCP"
o%li)ate* itself to trans,it the ,essa)es to the a**ressee. Clearl+' RCP" rene)e* on its
o%li)ation when it faile* to *eliver the ,essa)es or to infor, the sen*er a%out the non-
*eliver+' thus ,a&in) it lia%le for *a,a)es.
Grau*
Balane$ "s it correct to sa+ that frau* in Art. 11HD ,eans *eceit or insi*uous ,achinations?
No.
LE%A(PI #IL V(. CA B44< # 418E - 4efinition of 'raud.-- "n )eneral' frau* ,a+ %e *efine*
as the voluntar+ e7ecution of a wron)ful act' or willful o,ission' &nowin) an* inten*in) the
effects w.c naturall+ an* necessaril+ arise fro, such act or o,issionA the frau* referre* to in
Art. 11HD is the deliberate and intentional evasion of the normal fulfillment of obligationA it is
*istin)uishe* fro, ne)li)ence %+ the -resence of *eli%erate intent' w.c is lac&in) in the latter.
Balane$ Grau* as use* in Art. 11HD is *ifferent fro, frau* as a cause for vitiation of consent
in contracts 3,ore -ro-erl+ calle* *eceit w.c -revents the contract fro, arisin)A this is foun*
in Art. 18FD' et se:.5
J$ >hat is a s+non+, for frau* as use* in Art. 11HD?
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CIVIL LAW REVIEW
A$ Malice.
E22ect- o2 G+a/d3
1. Cre*itor ,a+ insist on -erfor,ance' s-ecific or su%stitute 3Art. 1488.5
4. Cre*itor ,a+ resolve. rescin* 3Art. 11C1.5
8. 6a,a)es in either case 3Art. 11HD.5
Ne)li)ence
'e*li*ence is the a%sence of so,ethin) that shoul* %e there-- *ue *ili)ence.
6ela+
)elay is the non-fulfill,ent of the o%li)ation w. res-ect to ti,e.
$ind- o2 )elay3
1. 2ora "olvendi -- *ela+ in the -erfor,ance 3on the -art of the *e%tor5A
4. 2ora Accipiendi -- *ela+ in the acce-tance 3on the -art of the cre*itor5A
8. %ompensation 2orae -- ,utual *ela+
A+t. 1141. Repon-ibility a+i-in* 2+om 2+a/d i- demandable in all obli*ation-. Any
wai0e+ o2 an action 2o+ 2/t/+e 2+a/d i- 0oid.
A+t. 1148. Re-pon-ibility a+i-in* 2+om ne*li*ence in the pe+2o+mance o2 e0e+y
?ind o2 obli*ation i- al-o demandable1 b/t -/ch liability -hall may be +e*/lated by the
co/+t-1 acco+din* to the ci+c/m-tance-.
BALANE CA#E$
ME&R#BA'$ V(. CA B48H # H21E - As %orne out %+ the recor*s' the *ishonorin) of the
res-./s chec&s co,,itte* throu)h ne)li)ence %+ the -etitioner %an& on <.2.F4 was rectifie*
onl+ on <.11.F4 or nine *a+s after recei-f of the cre*it ,e,o. Clearl+' -etitioner %an& was
re,iss in its *ut+ an* o%li)ation to treat -vt. res-/s account w. the hi)hest *e)ree of care'
consi*erin) the fi*uciar+ nature of the relationshi-. The %an& is un*er o%li)ation to treat the
accounts of its *e-ositors w. ,eticulous care' whether such account consists onl+ of a few
hun*re* -esos or of ,illions. "t ,ust %ear the %la,e for failin) to *iscover the ,ista&e of its
e,-lo+ee *es-ite the esta%lishe* -roce*ure re:uirin) %an& -a-ers to -ass throu)h %an&
-ersonnel whose *ut+ it is to chec& an* counterchec& the, for -ossi%le errors.
Res-onsi%ilit+ arisin) fro, ne)li)ence in the -erfor,ance of ever+ &in* of o%li)ation is
*e,an*a%le. 777
"". 6ili)ence re:uire*
Balane$
Ne)li)ence is covere* %+ Articles 11HD' 11H4 an* 11H8
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A+t. 1149. &he 2a/lt o+ ne*li*ence o2 the obli*o+ con-i-t- in the omi--ion o2 that
dili*ence which i- +eC/i+ed by the nat/+e o2 the obli*ation and co++e-pond- with the
ci+c/m-tance- o2 the pe+-on-1 o2 the time and o2 the place. When ne*li*ence -how-
bad 2aith1 the p+o0i-ion- o2 a+ticle- 1141 and 88B11 pa+a*+aph 81 -hall apply.
A+t. 1141. Re-pon-ibility a+i-in* 2+om 2+a/d i- demandable in all
obli*ation-. Any wai0e+ o2 an action 2o+ 2/t/+e 2+a/d i- 0oid.
A+t. 88B1. >>>
586 In cont+act- and C/a-i!cont+act-1 the dama*e- 2o+ which the obli*o+
who acted in *ood 2aith i- liable -hall be tho-e that a+e the nat/+al and p+obable
con-eC/ence- o2 the b+each o2 the obli*ation1 and which the pa+tie- ha0e
2o+e-een o+ co/ld ha0e +ea-onably 2o+e-een at the time the obli*ation wa-
con-tit/ted.
In ca-e o2 2+a/d1 bad 2aith1 malice o+ wanton attit/de1 the obli*o+ -hall be
+e-pon-ible 2o+ all dama*e- which may be +ea-onably att+ib/ted to the non!
pe+2o+mance o2 the obli*ation.
Balane$
'e*li*ence is the a%sence of so,ethin) that shoul* %e there-- *ili)ence.
Mea-/+e o2 )/e )ili*ence.!! There are two )ui*es$
315 6ili)ence *e,an*e* %+ circu,stances of -erson' -lace an* ti,e
345 Care re:uire* of a )oo* father of a fa,il+ 3fictional bonus pater familias who was
the e,%o*i,ent of care' caution an* -rotection in Ro,an law.5
"n co,,on law' the *e)ree of care re:uire* is the *ili)ence of a -ru*ent %usiness,an. This
is actuall+ the sa,e as the *ili)ence of a )oo* father of a fa,il+.
E22ect- o2 'e*li*ence3
1. Cre*itor ,a+ insist on -erfor,ance' s-ecific or su%stitute 3Art. 1488.5
4. Cre*itor ,a+ resolve. rescin* 3Art. 11C1.5
8. 6a,a)es in either case 3Art. 11HD.5
BALANE CA#E$
IIME'EF V(. CI&A #G MA'ILA B11D # 11DE - %ity of 2la. failed to e*ercise the diligence of
a good father of a family w&c is a defense in quasi-delict.-- As a *efense a)ainst lia%ilit+ on
the %asis of :uasi-*elict' one ,ust have e7ercise* the *ili)ence of a )oo* father of a fa,il+.
There is no ar)u,ent that it is the *ut+ of the Cit+ of Mla. to e7ercise reasona%le care to &ee-
the -u%lic ,ar&et reasona%l+ safe for -eo-le fre:uentin) the -lace for their ,ar&etin) nee*s.
>hile it ,a+ %e conce*e* that the fulfill,ent of such *uties is e7tre,el+ *ifficult *urin)
stor,s an* floo*s' it ,ust' however' %e a*,itte* that or*inar+ -recautions coul* have %een
ta&en *urin) )oo* weather to ,ini,i0e the *an)ers to life an* li,% un*er those *ifficult
circu,stances. Gor instance' the *raina)e hole coul* have %een -lace* un*er the stalls
instea* of on the -assa)e wa+s. Even ,ore i,-ortant is the fact' that the Cit+ shoul* have
seen to it that the o-enin)s were covere*. #a*l+' the evi*ence in*icates that lon) %efore
-etitioner fell into the o-enin)' it was alrea*+ uncovere*' an* 1 ,os. after the inci*ent
ha--ene*' the o-enin) was still uncovere*. Moreover' while there are fin*in)s that *urin)
floo*s the ven*ors re,ove the iron )rills to hasten the flow of water' there is no showin) that
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CIVIL LAW REVIEW
such -ractice has ever %een -rohi%ite*' ,uch less -enali0e* %+ the Cit+ of Mla. Neither was
it shown that an+ si)n ha* %een -lace* therea%outs to warn -assers-%+ of the i,-en*in)
*an)er.
E7traor*inar+ *ili)ence re:uire*
A. "nn&ee-er
A+t. 8BBB. &he +e-pon-ibility +e2e++ed to in the two p+ecedin* a+ticle- -hall
incl/de the lo-- o21 o+ in./+y to the pe+-onal p+ope+ty o2 the */e-t- ca/-ed by the
-e+0ant- o+ employee- o2 the ?eepe+- o2 hotel- o+ inn- a- well a- by -t+an*e+-7 b/t not
that which may p+oceed 2+om any 2o+ce ma.e/+e. &he 2act that t+a0elle+- a+e con-t+ained
to +ely on the 0i*ilance o2 the ?eepe+ o2 the hotel-- o+ inn- -hall be con-ide+ed in
dete+minin* the de*+ee o2 ca+e +eC/i+ed o2 him.
A+t. 8BB1. &he act o2 a thie2 o+ +obbe+1 who ha- ente+ed the hotel i- not deemed
2o+ce ma.e/+e1 /nle-- it i- done with the /-e o2 a+m- o+ th+o/*h an i++e-i-tible 2o+ce.
B. Co,,on Carriers
A+t. 1499. Common ca++ie+-1 2+om the nat/+e o2 thei+ b/-ine-- and 2o+ +ea-on- o2
p/blic policy1 a+e bo/nd to ob-e+0e e>t+ao+dina+y dili*ence in the 0i*ilance o0e+ the
*ood- and 2o+ the -a2ety o2 the pa--en*e+- t+an-po+ted by them1 acco+din* to all the
ci+c/m-tance- o2 each ca-e.
(/ch e>t+ao+dina+y dili*ence in the 0i*ilance o0e+ the *ood- i- 2/+the+ e>p+e--ed
in a+ticle- 149;1 149,1 and 14;,1 'o-. ,1 1 and 41 while the e>t+ao+dina+y dili*ence 2o+
the -a2ety o2 pa--en*e+- i- 2/+the+ -et 2o+th in a+ticle- 14,, and 14,.
A+t. 149;. Common ca++ie+- a+e +e-pon-ible 2o+ the lo--1 de-t+/ction1 o+
dete+io+ation o2 the *ood-1 /nle-- the -ame i- d/e to any o2 the 2ollowin* ca/-e- only3
516 Glood1 -to+m1 ea+thC/a?e1 li*htnin*1 o+ othe+ nat/+al di-a-te+ o+ calamity7
586 Act o2 the p/blic enemy in wa+1 whethe+ inte+national o+ ci0il7
596 Act o+ omi--ion o2 the -hippe+ o+ owne+ o2 the *ood-7
5;6 &he cha+acte+ o2 the *ood- o+ de2ect- in the pac?in* o+ in the containe+-7
5,6 #+de+ o+ act o2 competent p/blic a/tho+ity.
C. Lessee of A)ricultural lan*
A+t. 1=B. &he le--ee -hall ha0e no +i*ht to a +ed/ction o2 the +ent on acco/nt o2
the -te+ility o2 the land lea-ed1 o+ by +ea-on o2 the lo-- o2 2+/it- d/e to o+dina+y
2o+t/ito/- e0ent-7 b/t he -hall ha0e -/ch +i*ht in ca-e o2 lo-- o2 mo+e than one!hal2 o2
the 2+/it- th+o/*h e>t+ao+dina+y and /n2o+e-een 2o+t/ito/- e0ent-1 -a0e alway- when
the+e i- a -peci2ic -tip/lation to the cont+a+y.
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E>t+ao+dina+y 2o+t/ito/- e0ent- a+e /nde+-tood to be3 2i+e1 wa+1 pe-tilence1
/n/-/al 2lood1 loc/-t-1 ea+thC/a?e1 o+ othe+- which a+e /ncommon1 and which the
cont+actin* pa+tie- co/ld not ha0e +ea-onably 2o+e-een.
""". Loss *ue to Gortuitous Events
A+t. 114;. E>cept in ca-e- e>p+e--ly -peci2ied by law1 o+ when it othe+wi-e
decla+ed by -tip/lation1 o+ when the nat/+e o2 the obli*ation +eC/i+e- the a--/mption o2
+i-?1 no pe+-on -hall be +e-pon-ible 2o+ tho-e e0ent- which co/ld not be 2o+e-een1 o+
which 1tho/*h 2o+e-een1 we+e ine0itable.
Balane$
General Rule$ The ha--enin) of a fortuitous event e7onerates the *e%tor fro, lia%ilit+.
E7ce-tions$
1. >hen the law so s-ecifies.-- e.).' if the *e%tor is alrea*+ in *ela+ 3Art. 1121' -ar. 8.5
4. >hen the -arties so a)ree
8. >hen the nature of the o%li)ation re:uires the assu,-tion of ris&' e.).' an insurance
contract.
BALANE CA#E#$
'A$PIL J (#'( V(. CA B1<< # 1C2E - 0equisites for e*emption from liability due to an )act
of 3od.)-- To e7e,-t the o%li)or fro, lia%ilit+ un*er Art. 11H<' for a %reach of an o%li)ation
*ue to an (act of Go*'( the followin) ,ust concur$
3a5 the cause of the %reach of the o%li)ation ,ust %e in*e-en*ent of the will of the
*e%torA
3%5 the event ,ust %e either unforseea%le or unavoi*a%leA
3c5 the event ,ust %e such as to ren*er it i,-ossi%le for the *e%tor to fulfill his
o%li)ation in a nor,al ,annerA an*
3*5 the *e%tor ,ust %e fee fro, an+ -artici-ation in' or a))ravation of the in9ur+ to the
cre*itor.
Balane$ #o,e of the ele,ents were -resent in this case. >hat was a%sent was the
last ele,ent.
'A$PIL J (#'( V(. CA B12D # 88<E - (ne who ne)li)entl+ creates a *an)erous
con*ition cannot esca-e lia%ilit+ for the natural an* -ro%a%le conse:uences thereof' althou)h
the act of a thir* -erson' or an act of Go* for w.c he is not res-onsi%le' intervenes to
-reci-itate the loss.( 3citin) Tuc&er v. Milan' <C G <8HC' <8FD.5
:UI(IMBI'% V(. CA B1FC # 2D1E - PA56s failure to ta!e certain steps that a certain
passenger in hindsight believes should have been ta!en is not the negligence or misconduct
w&c mingles w& force majeure as an active and cooperative cause.-- A careful anal+sis of the
recor* in relation to the ,e,oran*a an* other -lea*in)s of the -arties' convinces this Court
of the correctness of the essential conclusion of %oth the trial an* a--ellate courts that the
evi*ence *oes in*ee* fail to -rove an+ want ot *ili)ence on the -art of PAL' or that' ,ore
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CIVIL LAW REVIEW
s-ecificall+' it ha* faile* to co,-l+ with a--lica%le re)ulations' or universall+ acce-te* an*
o%serve* -roce*ures to -reclu*e hi9ac&in)A an* that the -articular acts sin)le* out %+ the
-etitioners as su--ose*l+ *e,onstrative of ne)li)ence were' in the li)ht of the circu,stances
of the case' not in truth ne)li)ent acts (sufficient to overco,e the force ,a9eure nature of the
ar,e* ro%%er+.( The Court :uite a)rees' too' w. the A--ellate Tri%unal/s wr+ o%servation that
PAL/s failure to ta&e certain ste-s that a -assen)er in hin*si)ht %elieves shoul* have %een
ta&en is not the ne)li)ence or ,iscon*uct w.c ,in)les w. force ,a9eure as an active an*
coo-erative cause.(
BACEEL#R EDPRE(( V(. CA B1FF # 412E - The runnin) a,uc& of the -assen)er was the
-ro7i,ate cause of the inci*ent as it tri))ere* off a co,,otion an* -anic a,on) the
-assen)ers such that the -assen)ers starte* runnin) to the sole e7it shovin) each other
resultin) in the fallin) off the %us %+ -assen)ers Beter an* Rautraut causin) the, fatal
in9uries w.c &ille* the,. The su**en act of the -assen)er who sta%%e* another -assen)er in
the %us is w.in the conte7t of force majeure.
However' in or*er that a co,,on carrier ,a+ %e a%solve* fro, lia%ilit+ in case of
force majeure' it is not enou)h that the acci*ent was cause* %+ force majeure. The common
carrier must still prove that it was not negligent in causing the injuries resulting from such
accident.
Consi*erin) the factual fin*in)s of the CA-- the %us *river *i* not i,,e*iatel+ sto-
the %us at the hei)ht of the co,,otionA the %us was s-ee*in) fro, a full sto-A the victi,s fell
fro, the %us *orr when it was o-ene* or )ave wa+ while the %us was still runnin)A the
con*uctor -anic&e* an* %lew his whistle after -eo-le ha* alrea*+ fallen off the %usA an* the
%us was not -ro-erl+ e:ui--e* w. *oors in accor*ance w. law-- it is clear that -etitioners
have faile* to overco,e the -resu,-tion of fault an* ne)li)ence foun* in the law )overnin)
co,,on carriers.
The -etitioner/s ar)u,ent that the -etitioners (are not insurers of their -assen)ers(
*eserves no ,erit in view of the failure of the -etitioners to -rove that the *eaths of the 4
-assen)ers were e7clusivel+ *ue to force majeure an* not to the failure of the -etitioners to
o%serve e7traor*inar+ *ili)ence in trans-ortin) safel+ the -assen)ers to their *estination as
warrante* %+ law.
'PC V(. CA B444 # <11E - Petitioners cannot %e hear* to invo&e the act of Go* or force
majeure to esca-e lia%ilit+ for the loss or *a,a)e sustaine* %+ the -vt. res-on*ents since
the+' the -etitioners' were )uilt+ of ne)li)ence. The event then was not occasione*
e7clusivel+ %+ an act of Go* or force majeureA a hu,an factor-- ne)li)ence or i,-ru*ence--
ha* intervene*. The effect then of the force majeure in :uestion ,a+ %e *ee,e* to have'
even if onl+ -artl+' resulte* fro, the -artici-ation of ,an. Thus' the whole occurence was
there%+ hu,ani0e*' as it were' an* re,ove* fro, the rules a--lica%le to acts of Go*.
(IA V(. CA B444 # 4<E - #BTC/s ne)li)ence a))ravate* the in9ur+ or *a,a)e to the
-etitioner w.c resulte* fro, the loss or in9ur+ or *a,a)e to the -etitioner w.c resulte* fro,
the loss or *estruction of the sta,- collection. #BTC was aware of the floo*s of 1CF1 an*
1CF2A it also &new that the floo*waters inun*ate* the roo, where #afe 6e-osit Bo7 No. 1<
was locate*. "n view thereof' it shoul* have lost no ti,e in notif+in) the -etitioner in or*er
that the %o7 coul* have %een o-e* to retrieve the sta,-s' thus savin) the sa,e fro, further
*eterioration an* loss. "n this res-ect' it faile* to e7ercise th reasona%le care an* -ru*ence
e7-ecte* of a )oo* father of a fa,il+' there%+ %eco,in) a -art+ to the a))ravation of the
in9ur+ or loss. Accor*in)l+' the afore,entione* fourth characteristic 3the *e%tor ,ust %e fee
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CIVIL LAW REVIEW
fro, an+ -artici-ation in' or a))ravation of the in9ur+ to the cre*itor5 of a fortuitous event is
a%sent. 777
'PC V(. CA B448 # 2<CE - Petitioners have raise* the sa,e issues an* *efenses as in the
4 other *eci*e* cases therein ,entione*. Pre*icta%l+ therefore' this -etition ,ust -erforce
%e *is,isse* %ec. the losses an* *a,a)es sustaine* %+ the -rivate res-./s ha* %een
-ro7i,atel+ cause* %+ the ne)li)ence of the -etitioners' althou)h the t+-hoon w.c -rece*e*
the floo*in) coul* %e consi*ere* as a force majeure.
A. E7ce-tions
1. E7-ress Provision of Law
6e-ositar+
A+t. 1949. &he depo-ita+y i- liable 2o+ the lo-- o2 the thin* th+o/*h a 2o+t/ito/-
e0ent3
516 I2 it i- -o -tip/lated7
586 I2 he /-e- the thin* witho/t the depo-ito+@- pe+mi--ion7
596 I2 he delay- it- +et/+n7
5;6 I2 he allow- othe+- to /-e it1 e0en tho/*h he him-el2 may ha0e been
a/tho+i<ed to /-e the -ame.
Bailee in co,,o*atu,
A+t. 19;8. &he bailee i- liable 2o+ the lo-- o2 the thin*1 e0en i2 it -ho/ld be
th+o/*h a 2o+t/ito/- e0ent3
516 I2 he de0ote- the thin* to any p/+po-e di22e+ent 2+om that 2o+ which it ha-
been loaned7
586 I2 he ?eep- it lon*e+ than the pe+iod -tip/lated1 o+ a2te+ the accompli-hment o2
the /-e 2o+ which the commodat/m ha- been con-tit/ted7
596 I2 the thin* loaned ha- been deli0e+ed with app+ai-al o2 it- 0al/e1 /nle-- the+e
i- a -tip/lation e>emptin* the bailee 2+om +e-pon-ibility in ca-e o2 a 2o+t/ito/- e0ent7
5;6 I2 he lend- o+ lea-e- the thin* to a thi+d pe+-on1 who i- not a membe+ o2 hi-
ho/-ehold7
5,6 I21 bein* able to -a0e eithe+ the thin* bo++owed o+ hi- own thin*1 he choo-e-
to -a0e the latte+.
Ne)otioru, Gestio
A+t. 81;4. &he o22icio/- mana*e+ -hall be liable 2o+ any 2o+t/ito/- e0ent3
516 I2 he /nde+ta?e- +i-?y ope+ation- which the owne+ wa- not acc/-tomed to
emba+? /pon7
586 I2 he ha- p+e2e++ed hi- own inte+e-t to that o2 the owne+7
596 I2 he 2ail- to +et/+n the p+ope+ty o+ b/-ine-- a2te+ demand by the owne+7
5;6 I2 he a--/med the mana*ement in bad 2aith.
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CIVIL LAW REVIEW
A+t. 81;=. E>cept when the mana*ement wa- a--/med to -a0e the p+ope+ty o+
b/-ine-- 2+om imminent dan*e+1 the o22icio/- mana*e+ -hall be liable 2o+ 2o+t/ito/-
e0ent-3
516 I2 he i- mani2e-tly /n2it to ca++y on the mana*ement7
586 I2 by hi- inte+0ention he p+e0ented a mo+e competent pe+-on 2+om ta?in* /p
the mana*ement.
Pa+ee in #olutio "n*e%iti
A+t. 81,9. Whoe0e+ in bad 2aith accept- an /nd/e payment1 -hall pay le*al
inte+e-t i2 a -/m o2 money i- in0ol0ed1 o+ -hall be liable 2o+ 2+/it- +ecei0ed o+ which
-ho/ld ha0e been +ecei0ed i2 the thin* p+od/ce- 2+/it-.
Ee -hall 2/+the+mo+e be an-we+able 2o+ any lo-- o+ impai+ment o2 the thin* 2+om
any ca/-e1 and 2o+ dama*e- to the pe+-on who deli0e+ed the thin*1 /ntil it i- +eco0e+ed.
Lessee
A+t. 1;=. E0e+y lea-e o2 +eal e-tate may be +eco+ded in the Re*i-t+y o2 P+ope+ty.
Unle-- a lea-e i- +eco+ded1 it -hall not be bindin* /pon thi+d pe+-on-.
A+t. 141. I2 the le--ee contin/e- en.oyin* the thin* a2te+ the e>pi+ation o2 the
cont+act1 o0e+ the le--o+@- ob.ection1 the 2o+me+ -hall be -/b.ect to the +e-pon-ibilitie-
o2 a po--e--o+ in bad 2aith.
A+t. ,,8. >>>.
A po--e--o+ in bad 2aith -hall be liable 2o+ dete+io+ation o+ lo-- in e0e+y ca-e1
e0en i2 ca/-ed by a 2o+t/ito/- e0ent.
"n*e-en*ent Contractor
A+t. 1484. &he cont+acto+ i- +e-pon-ible 2o+ the wo+? done by pe+-on- employed
by him.
A+t. 148=. &he cont+acto+ i- liable 2o+ all the claim- o2 labo+e+- and othe+-
employed by him1 and o2 thi+d pe+-on- 2o+ death o+ phy-ical in./+ie- d/+in* the
con-t+/ction.
Common Ca++ie+
A+t. 149. A common ca++ie+ i- +e-pon-ible 2o+ in./+ie- -/22e+ed by a pa--en*e+
on acco/nt o2 the wil2/l act- o+ ne*li*ence o2 othe+ pa--en*e+- o+ o2 -t+an*e+-1 i2 the
common ca++ie+@- employee- th+o/*h the e>e+ci-e o2 the dili*ence o2 a *ood 2athe+ o2 a
2amily co/ld ha0e p+e0ented o+ -topped the act o+ omi--ion.
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4. Mora or *efault
a. Mora solven*i
A+t. 11,. >>>.
>>>
I2 the obli*o+ delay-1 o+ ha- p+omi-ed to deli0e+ the -ame thin* to two o+ mo+e
pe+-on- who do not ha0e the -ame inte+e-t1 he -hall be +e-pon-ible 2o+ any 2o+t/ito/-
e0ent /ntil he ha- e22ected the deli0e+y.
A+t. 119. &ho-e obli*ed to deli0e+ o+ to do -omethin* inc/+ in delay 2+om the
time the obli*ee ./dicially o+ e>t+a./dicially demand- 2+om them the 2/l2illment o2 thei+
obli*ation.
Eowe0e+1 the demand by the c+edito+ -hall not be nece--a+y in o+de+ that delay
may e>i-t3
516 When the obli*ation o+ the law e>p+e--ly -o decla+e7
586 When 2+om the nat/+e and the ci+c/m-tance- o2 the obli*ation it appea+- that
the de-i*nation o2 the time when the thin* i- to be deli0e+ed o+ the -e+0ice i- to be
+ende+ed wa- a cont+ollin* moti0e 2o+ the e-tabli-hment o2 the cont+act7
596 When demand wo/ld be /-ele--1 a- when the obli*o+ ha- +ende+ed it beyond
hi- powe+ to pe+2o+m.
In +ecip+ocal obli*ation-1 neithe+ pa+ty inc/+- in delay i2 the othe+ doe- not
comply o+ i- not +eady to comply in a p+ope+ manne+ with what i- inc/mbent /pon him.
G+om the moment one o2 the pa+tie- 2/l2ill- hi- obli*ation1 delay by the othe+ be*in-.
A+t. ,,8. >>>
A po--e--o+ in bad 2aith -hall be liable 2o+ dete+io+ation o+ lo-- in e0e+y ca-e1
e0en i2 ca/-ed by a 2o+t/ito/- e0ent.
%. Mora acci-ien*i
A+t. 141=. &he cont+acto+ who ha- /nde+ta?en to p/t only hi- wo+? o+ -?ill1
cannot claim any compen-ation i2 the wo+? -ho/ld be de-t+oyed be2o+e it- deli0e+y1
/nle-- the+e ha- been delay in +ecei0in* it1 o+ i2 the de-t+/ction wa- ca/-ed by the poo+
C/ality o2 the mate+ial1 p+o0ided thi- 2act wa- comm/nicated in d/e time to the owne+. I2
the mate+ial i- lo-t th+o/*h a 2o+t/ito/- e0ent1 the cont+act i- e>tin*/i-hed.
A+t. 1,B;. Unle-- othe+wi-e a*+eed1 the *ood- +emain at the -elle+@- +i-? /ntil the
owne+-hip the+ein i- t+an-2e++ed to the b/ye+1 b/t when the owne+-hip the+ein i-
t+an-2e++ed to the b/ye+ the *ood- a+e at the b/ye+@- +i-? whethe+ act/al deli0e+y ha-
been made o+ not1 e>cept that3
516 Whe+e deli0e+y o2 the *ood- ha- been made to the b/ye+ o+ to a bailee 2o+ the
b/ye+1 in p/+-/ance o2 the cont+act and the owne+-hip in the *ood- ha- been +etained
by the -elle+ me+ely to -ec/+e pe+2o+mance by the b/ye+ o2 hi- obli*ation- /nde+ the
cont+act1 the *ood- a+e at the b/ye+@- +i-? 2+om the time o2 -/ch deli0e+y7
586 Whe+e act/al deli0e+y ha- been delayed th+o/*h the 2a/lt o2 eithe+ the b/ye+
o+ -elle+ the *ood- a+e at the +i-? o2 the pa+ty in 2a/lt.
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8. E7-ress a)ree,ent
A+t. 19B. &he cont+actin* pa+tie- may e-tabli-h -/ch -tip/lation-1 cla/-e-1
te+m- and condition- a- they may deem con0enient1 p+o0ided they a+e not cont+a+y to
law1 mo+al-1 *ood c/-tom-1 p/blic o+de+1 o+ p/blic policy.
<. Aleator+ Contract
A+t. 8B1B. By an aleato+y cont+act1 one o2 the pa+tie- o+ both +ecip+ocally bind
them-el0e- to *i0e o+ to do -omethin* in con-ide+ation o2 what the othe+ -hall *i0e o+
do /pon the happenin* o2 an e0ent which i- /nce+tain1 o+ which i- to occ/+ at an
indete+minate time.
A+t. 114,. U-/+io/- t+an-action- -hall be *o0e+ned by -pecial law-.
Tolentino$
U-/+y.!! =sur+ is the contractin) for or receivin) so,ethin) in e7cess of the a,ount allowe*
%+ law for the loan or for%earance or ,one+' )oo*s or chattels.
(pecial law on /-/+y.!! The =sur+ Law was Act No. 4211. This law was re-eale* *urin) the
-erio* of ,artial law' leavin) -arties free to sti-ulate hi)her rates.
A+t. 114. &he +eceipt o2 the p+incipal by the c+edito+ witho/t +e-e+0ation with
+e-pect to the inte+e-t -hall *i0e +i-e to the p+e-/mption that -aid inte+e-t ha- been
paid.
&he +eceipt o2 a late+ in-tallment o2 a debt witho/t +e-e+0ation a- to p+io+
in-tallment-1 -hall li?ewi-e +ai-e the p+e-/mption that -/ch in-tallment- ha0e been
paid.
A+t. 1144. &he c+edito+-1 a2te+ ha0in* p/+-/ed the p+ope+ty in po--e--ion o2 the
debto+ to -ati-2y thei+ claim-1 may e>e+ci-e all the +i*ht- and b+in* all the action- o2 the
latte+ 2o+ the -ame p/+po-e1 -a0e tho-e which a+e inhe+ent in hi- pe+-on7 they may al-o
imp/*n the act- which the debto+ may ha0e done to de2+a/d them.
Balane$ A)ainst what can the o%li)ee *e,an* -erfor,ance?
1. A)ainst non-e7e,-t -ro-erties of the *e%tor.-- The *e%tor is lia%le with all his -ro-ert+'
-resent an* future' for the fulfill,ent of his o%li)ations' su%9ect to the e7e,-tions -rovi*e* %+
law. 3Art. 4482.5
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4. "f nu,%er one is no) enou)ht' the cre*itor )oes to an+ clai,s w.c the *e%tor ,a+ have
a)ainst thir* -ersons. This is calle* accion subrogatoria' wherein the cre*itor is su%ro)ate*
in the ri)hts of the *e%tor.
8. Accion pauliana 3Articles 18FH-FC5.-- This is the ri)ht of cre*itors to set asi*e frau*ulent
transfers w.c the *e%tor ,a*e so ,uch of it as is necessar+ to -a+ the *e%ts.
A+t. 114=. (/b.ect to the law-1 all +i*ht- acC/i+ed in 0i+t/e o2 an obli*ation a+e
t+an-mi--ible1 i2 the+e ha- been no -tip/lation to the cont+a+y.
CEAP&ER 9.!! )IGGERE'& $I')( #G #BLI%A&I#'(
(ection 1.-- Pure and Conditional Obligations
Balane$ Articles 11HC - 148D.-- The trou%le w. the classification is that there is no s+ste,.
Cla--i2ication o2 #bli*ation-3
,.. According to criteria of demandability7
a. Pure
%. Con*itional
c. >. a ter,
.. According to plurality of objects7
a. #in)le
%. Alternative
c. Gacultative
/. According to Plurality of subjects7
a. ;oint
%. #oli*ar+
8. According to Performance7
a. 6ivisi%le
%. "n*ivisi%le
9. According to "anctions for :reach7
a. #i,-le
%. >. a -enal clause
"!. 6ifferent T+-es of Civil %li)ations
1. As to Criteria of emandability
A. Pure %li)ation.-- A -ure o%li)ation is one w.c is not su%9ect to a con*ition or a
ter,.
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CIVIL LAW REVIEW
A+t. 1149. E0e+y obli*ation who-e pe+2o+mance doe- not depend /pon a 2/t/+e o+
/nce+tain e0ent1 o+ /pon a pa-t e0ent /n?nown to the pa+tie-1 i- demandable at once.
E0e+y obli*ation which contain- a +e-ol/to+y condition -hall al-o be
demandable1 witho/t p+e./dice to the e22ect- o2 the happenin* o2 the e0ent.
PAA V. PALA'CA B1H #CRA 21FE - Gro, the ,anner in w.c the -.n was e7ecute*' it woul*
a--ear that -etitioner was ho-eful that the satisfaction of his cre*it coul* %e reali0e* either
throu)h the *e%tor sue* receivin) cash -a+,ent fro, the estate of the late Carlos Palanca
-resu,-tivel+ as one of the heirs' or' as e7-resse* therein' (u-on *e,an*.( There is nothin)
in the recor* that woul* in*icate whether or not the first alternative was fulfille*. >hat is
un*enia%le is that on F.42.2H' ,ore than 11 +rs. after the e7ecution of the -.n on 1.8D.14'
this -etition was file*. The *efense inter-ose* was -rescri-tion. "ts ,erit is rather o%vious.
Art. 11HC' -ar. 1 sa+s so. 777
The o%li)ation %ein) *ue an* *e,an*a%le' it woul* a--ear that the filin) of the suit
after 11 +rs. was ,uch too late.
B. Con*itional %li)ations
A+t. 11=1. In conditional obli*ation-1 the acC/i-ition o2 +i*ht-1 a- well a- the
e>tin*/i-hment o+ lo-- o2 tho-e al+eady acC/i+ed1 -hall depend /pon the happenin* o2
the e0ent which con-tit/te- the condition.
Balane$ A condition is a future an* uncertain event u-on w.c an o%li)ation or -rovision is
,a*e to *e-en*. 777 Guturit+ an* uncertaint+ ,ust concur as characteristics of the event.
3"! Tolentino.5
A -ast thin) can never %e a con*ition. A con*ition is alwa+s future an* uncertain.
Pa-t e0ent /n?nown to the pa+tie-.!! "t is reall+ the &nowle*)e of the event w.c
constitutes the future. "t is the &nowle*)e w.c is future an* uncertain. Gor e7a,-le' when "
sa+ ( " will treat +ou for lunch if +ou )et the hi)hest score in the Civil Law Ginal E7a,s 3on the
assu,-tion that Prof. Balane has alrea*+ finishe* chec&in) the -a-ers.5( Here' the event
3)ettin) the hi)hest score5 is alrea*+ a -ast event' +et the &nowle*)e is future an* uncertain.
Condition compa+ed to a te+m.!! As to ele,ent of futurit+' con*ition an* ele,ent are
the sa,e. The+ *iffer in the as-ect of certaint+-- a con*ition is uncertain whereas a ter, is
certain.
Condition- can eithe+ be3
1. #us-ensive con*ition 3con*ition -rece*ent5 wherein the ha--enin) of the event
)ives %irth to an o%li)ation
4. Resolutor+ con*ition 3con*ition su%se:uent5 wherein the ha--enin) of the event
will e7tin)uish the o%li)ation.
6istin)uishe* fro, ter, or -erio*
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CIVIL LAW REVIEW
A+t. 1199. #bli*ation- 2o+ who-e 2/l2illment a day ce+tain ha- been 2i>ed1 -hall be
demandable only when that day come-.
#bli*ation- with a +e-ol/to+y pe+iod ta?e e22ect at once1 b/t te+minate /pon
a++i0al o2 the day ce+tain.
A day ce+tain i- /nde+-tood to be that which m/-t nece--a+ily come1 altho/*h it
may not be ?nown when.
I2 the /nce+tainty con-i-t- in whethe+ the day will come o+ not1 the obli*ation i-
conditional1 and it -hall be +e*/lated by the +/le- o2 the p+ecedin* (ection.
Balane$ A term is a future anc certain event u-on w.c the *e,an*a%ilit+ 3or e7tin)uish,ent5
of an o%li)ation *e-en*s.
A ter, or -erio* is an interval of ti,e' w.c' e7ertin) an influence on an o%li)ation as a
conse:uence of a 9uri*ical act' either sus-en*s its *e,an*a%ilit+ or -ro*uces its
e7tin)uish,ent. 3Manresa.5
A te+m can eithe+ be3
1. sus-ensive con*ition 3e* die -- fro, the *a+5 or one the arrival of w.c will ,a&e the
o%li)ation *e,an*a%le
4. resolutor+ con*ition 3in die -- into the *a+5 or one the arrival of w.c will e7tin)uish the
o%li)ation.
Kin*s of Con*itional %li)ations
3i5 Con*ition -rece*ent
A+t. 11=4. &he e22ect- o2 a conditional obli*ation to *i0e1 once the condition ha-
been 2/l2illed1 -hall +et+oact to the day o2 the con-tit/tion o2 the obli*ation.
'e0e+thele--1 when the obli*ation impo-e- +ecip+ocal p+e-tation- /pon the pa+tie-1 the
2+/it- and inte+e-t- d/+in* the pendency o2 the condition -hall be deemed to ha0e been
m/t/ally compen-ated. I2 the obli*ation i- /nilate+al1 the debto+ -hall app+op+iate the
2+/it- and inte+e-t- +ecei0ed1 /nle-- 2+om the nat/+e and ci+c/m-tance- o2 the
obli*ation it -ho/ld be in2e++ed that the intention o2 the pe+-on con-tit/tin* the -ame
wa- di22e+ent.
In obli*ation- to do and not to do1 the co/+t- -hall dete+mine1 in each ca-e1 the
+et+oacti0e e22ect o2 the condition that ha- been complied with.
Balane$ This article refers to sus-ensive con*ition. This article sets forth the rule of
retroactivit+ in an o%li)ation to )ive. This rule is lo)ical %ut i,-ractical. Man+ ,o*ern Civil
Co*es have *iscar*e* it.
'o Ret+oacti0ity a- to the G+/it-.!! Notice that there is no retroactivit+ with res-ect
to the fruits. The fruits are *ee,e* to cancel out each other. "f onl+ one of the thin)
-ro*uces fruits' there is no o%li)ation to *eliver the fruits.
3ii5 Con*ition su%se:uent
A+t. 119B. When the condition- ha0e 2o+ thei+ p/+po-e the e>tin*/i-hment o2 an
obli*ation to *i0e1 the pa+tie-1 /pon the 2/l2illment o2 -aid condition-1 -hall +et/+n to
each othe+ what they ha0e +ecei0ed.
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CIVIL LAW REVIEW
In ca-e o2 the lo--1 dete+io+ation o+ imp+o0ement o2 the thin*1 the p+o0i-ion-
which1 with +e-pect to the debto+1 a+e laid down in the p+ecedin* a+ticle -hall be applied
to the pa+ty who i- bo/nd to +et/+n.
A- 2o+ obli*ation- to do and not to do1 the p+o0i-ion- o2 the -econd pa+a*+aph o2
a+ticle 11=4 -hall be ob-e+0ed a- +e*a+d- the e22ect o2 the e>tin*/i-hment o2 the
obli*ation.
A+t. 11=4. >>>
In obli*ation- to do and not to do1 the co/+t- -hall dete+mine1 in each
ca-e1 the +et+oacti0e e22ect o2 the condition that ha- been complied with.
Balane$ Art. 11CD refers to resolutor+ con*itions. This is 9ust the o--osite of Art. 11FC.
8. Kin*s of con*itions
A+t. 11=8. When the 2/l2illment o2 the condition depend- /pon the -ole will o2 the
debto+1 the conditional obli*ation -hall be 0oid. I2 it depend- /pon chance o+ /pon the
will o2 a thi+d pe+-on1 the obli*ation -hall ta?e e22ect in con2o+mity with the p+o0i-ion- o2
thi- Code.
Balane$ >e are tal&in) here of a sus-ensive con*ition.
Girst sentence of Art. 11F4.-- The con*ition ,ust %e sus-ensive' -otestative an* *e-en*s on
the sole will of the *e%tor. E.).' (" -ro,ise to sell +ou ,+ car for P1.DD whenever " li&e.(
J$ >h+ *oes it ,a&e the o%li)ation voi*?
A$ Bec. such an o%li)ation lac&s one of the essential ele,ents of an o%li)ation' the vinculum
juris' the %in*in) force-- the ,eans %+ w.c it is enforcea%le in court. "n this case' there is no
%in*in) force. There is no o%li)ation. "t is a 9o&e.
Pote-tati0e Condition is one w.c *e-en*s solel+ on the will of either one -art+. E.).'
( " will )ive +ou ,+ -lantation in 6avao -rovi*e* +ou resi*e in 6avao -er,anentl+.(
Ca-/al Condition is one where the con*ition is ,a*e to *e-en* u-on a thir* -erson
or u-on chance. E.).' (" will )ive +ou ,+ lan* in Glori*a%lanca if Mt. Pinatu%o eru-ts this
+ear.(
Mi>ed Condition is one w.c *e-en*s -artl+ u-on the will of one of the -arties an*
-artl+ on either chance or the will of a thir* -erson.
J$ >hat if the con*ition is sus-ensive' -otestative an* *e-en*s solel+ on the will of the
cre*itor' is the con*itional o%li)ation vali*?
A$ @es. "n fact' the o%li)ation is not even a con*ition o%li)ation. "t is a -ure o%li)ation'
%in*in) at once.
BALANE CA#E#$
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CIVIL LAW REVIEW
(MI&E BELL V. (#&EL# MA&&I B<< P FH<E - >here the fulfill,ent of the con*ition *oes
not *e-en* on the will of the o%li)or' %ut on that of a 8r* -erson who can' in no wa+ %e
co,-elle* to carr+ it out' the o%li)or/s -art of the contract is co,-lie* w.' if he *oes all that is
in his -ower' an* it then %eco,es incu,%ent u-on the other contractin) -art+ to co,-l+ w.
the ter,s of the contract.
A+t. 11=9. Impo--ible condition-1 tho-e cont+a+y to *ood c/-tom- o+ p/blic
policy and tho-e p+ohibited by law -hall ann/l the obli*ation which depend- /pon them.
I2 the obli*ation i- di0i-ible1 that pa+t the+eo2 which i- not a22ected by the impo--ible o+
/nlaw2/l condition -hall be 0alid.
&he condition not to do an impo--ible thin* -hall be con-ide+ed a- not ha0in*
been a*+eed /pon.
Balane$ This refers to a sus-ensive con*ition.
There are 4 classes of i,-ossi%le con*itions$
315 ",-ossi%le in fact' e.).' (" -ro,ise to sell ,+ car to Mr. M for P4 if he can swi,
across the Pacific cean for 4 hours.(
345 ",-ossi%le in law or one w.c attaches an ille)al con*ition' e.).' (" -ro,ise to sell
,+ car to Mr. M for P4 on con*ition that he %urns the Colle)e of Law.(

E22ect o2 Impo--ible Condition.!! "t annuls the o%li)ation w.c *e-en*s u-on the,. The
entire 9uri*ical tie is tainte* %+ the i,-ossi%le con*ition. Correlate this w. Articles H4H an*
FH8.
A+t. 484. Ille*al o+ impo--ible condition- in -imple and +em/ne+ato+y donation- -hall be
con-ide+ed a- not impo-ed.
A+t. =49. Impo--ible condition- and tho-e cont+a+y to law o+ *ood c/-tom- -hall be
con-ide+ed a- not impo-ed and -hall in no manne+ p+e./dice the hei+1 e0en i2 the te-tato+
-ho/ld othe+wi-e p+o0ide.
Accor*in) to Tolentino$ "n contracts' an i,-ossi%le con*ition annuls the contract. "n
)ratuitous *is-ositions' the i,-ossi%le con*ition is si,-l+ *isre)ar*e*.
The first state,ent is inaccurate %ec. *onation is a contract an* in a *onation' the
i,-ossi%le con*ition *oes not annul the contract. "t is si,-l+ *isre)ar*e*. The -ro-er wa+ to
sa+ it is that$ "n an onerous transaction' an i,-ossi%le con*ition annuls the con*ition
o%li)ation. "n a )ratuitous *is-osition' as in a *onation or testa,entar+ *is-osition' an
i,-ossi%le con*ition attache* to the *is-osition is si,-l+ consi*ere* as not i,-ose*.
J$ >h+ is there a *ifference?
A$ Bec. in a *onation as well as in a testa,entar+ *is-osition' the causa or consi*eration
is the li%eralit+ of the *onor or testator' as the case ,a+ %e. Even if +ou ta&e awa+ the
i,-ossi%le con*ition' there is still a reason for the *is-osition to e7ist-- li%eralit+. The+
3*onation an* testa,entar+ *is-osition5 have %oth their un*er-innin)s' li%eralit+.
But in an onerous transaction' since an onerous -restation w.c is reci-rocal re:uires
conco,itttant -erfor,ances' that i,-ossi%le con*ition %eco,es -art of the causa.
Therefore' if the con*ition is i,-ossi%le' there is failure of causa. "n no causa' there is also
no contract.
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Pa+a-@ o/tline on impo--ible condition-3
1. Positive sus-ensive con*ition to *o an i,-ossi%le. ille)al thin)-- The o%li)ation is voi*
3Art. 11F8' -ar. 1.5
4. A ne)ative con*ition 3not to *o an i,-ossi%le thin)5-- ;ust *isre)ar* the con*ition 3Art.
11F8' -ar. 4.5
8. A con*ition not to *o an ille)al thin) 3ne)ative5-- This is not e7-ressl+ -rovi*e* for in the
-rovision %ut is i,-lie*. The o%li)ation is vali*. E.). (" will sell +ou a -iece of lan* -rovi*e*
+ou *o not -lant ,ari9uana on it.(
A+t. 11=;. &he condition that -ome e0ent will not happen at a dete+minate time
-hall e>tin*/i-h the obli*ation a- -oon a- the time e>pi+e- o+ i2 it ha- become
ind/bitable that the e0ent will not ta?e place.
Balane$ This article refers to sus-ensive con*itions. "f the con*ition is resolutor+' the effect is
the o--osite.
A+t. 11=,. &he condition that -ome e0en will not happen at a dete+minate time
-hall +ende+ the obli*ation e22ecti0e 2+om the moment the time indicated ha- elap-ed1 o+
i2 it ha- become e0ident that the e0ent cannot occ/+.
I2 no time ha- been 2i>ed1 the condition -hall be deemed 2/l2illed at -/ch time a-
may ha0e p+obably been contemplated1 bea+in* in mind the nat/+e o2 the obli*ation.
Balane$ This article refers to a sus-ensive con*ition.
A+t. 11=. &he condition -hall be deemed 2/l2illed when the obli*o+ 0ol/nta+ily
p+e0ent- it- 2/l2illment.
Balane$ This article refers to a sus-ensive con*ition.
)oct+ine o2 Con-t+/cti0e Compliance.!! There are three re:uisites in or*er that this article
,a+ a--l+$
1. "ntent on the -art of the o%li)or to -revent fulfill,ent of the con*ition. The intent
*oes not have to %e ,alicious.
4. Actual -revention of co,-liance 3%+ the o%li)or5
Constructive co,-liance can have a--lication onl+ if the con*ition is -otestative. "t can also
a--l+ to Mi7e* con*ition as to that -art w.c the o%li)or shoul* -erfor,.
BALANE CA#E#$
&AAA% V. CA B41C #CRA <FDE - "nsofar as the 8r* ite, of the contract is concerne*' 777
res-. court a--lie* Art. 11F2' NCC on constructive fulfill,ent w.c -etitioners clai, shoul* not
have %een a--reciate* %ec. the+ are the o%li)ees while the proviso in -oint s-ea&s of the
o%li)or. But' -etitioners ,ust conce*e that in a reci-rocal o%li)ation li&e a contract of
-urchase' %oth -arties are ,utuall+ o%li)ors an* also o%li)ees' an* any of the contractin)
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-arties ,a+' u-on non-fulfill,ent %+ the other -riv+ of his -art of the -restation' rescin* the
contract or see& fulfill,ent. "n short' it is -uerile for -etitioners to sa+ that the+ are the onl+
o%li)ees un*er the contract since the+ are also %oun* as o%li)ors to res-ect the sti-ulation in
-er,ittin) -vt. res-. to assu,e the loan w. the Phi. !eterans Ban& w.c -etitioners i,-e*e*
when the+ -ai* the %alance of sai* loan. As ven*ors' the+ are su--ose* to e7ecute the final
*ee* of sale u-on full -a+,ent of the %alance as *eter,ine* hereafter.
A++t. 11==. &he c+edito+ may1 be2o+e the 2/l2illment o2 the condition1 b+in* the
app+op+iate action- 2o+ the p+e-e+0ation o2 hi- +i*ht.
&he debto+ may +eco0e+ what d/+in* the -ame time he ha- paid by mi-ta?e in
ca-e o2 a -/-pen-i0e condition.
Balane$ This article refers to sus-ensive con*itions.
B+in* the app+o+iate action- ...-- Accor*in) to Mr. ;ustice ;BL Re+es' the -hrase (,a+ 777
%rin) the a--ro-riate actions( is inaccurate. To %rin) action is to file a suit. But the cre*itor is
not restricte* to filin) a suit. The -ro-er ver% is not (%rin)( %ut (ta&e.( Gor e7a,-le' in a sale
of lan* su%9ect to sus-ensive con*ition' the cre*itor shoul* have the sus-ensive con*ition
annotate* on the title of the lan*. This is not %rin)in) an a--ro-riate action %ut ta&in) an
a--ro-riate action.
The -rinci-le in this article is$ $igilantibus et non dormientibus jura subveniunt w.c
,eans that the laws ai* those who are vi)ilant' not those who slee- u-on their ri)hts.
J$ >h+ *oes Art. 11FF )ive the cre*itor a recorse althou)h technicall+ the cre*itor still have
no ri)ht?
A$ Bec. as a ,atter of fact' althou)h technicall+ the cre*itor still have no ri)ht' he is alrea*+
e7-ectin) a ri)ht. @ou cannot let the cre*itor sit an* fol* his ar,s an* wait for his ri)ht of
e7-ectanc+ to %e ren*ere* illusor+.
Rescission
A+t. 1191. &he powe+ to +e-cind obli*ation- i- implied in +ecip+ocal one-1 in ca-e
one o2 the obli*o+- -ho/ld not comply with what i- inc/mbent /pon him.
&he in./+ed pa+ty may choo-e between the 2/l2illment and the +e-ci--ion o2 the
obli*ation1 with the payment o2 dama*e- in eithe+ ca-e. Ee may al-o -ee? +e-ci--ion1
e0en a2te+ he ha- cho-en 2/l2illment1 i2 the latte+ -ho/ld become impo--ible.
&he co/+t -hall dec+ee the +e-ci--ion claimed1 /nle-- the+e by ./-t ca/-e
a/tho+i<in* the 2i>in* o2 a pe+iod.
&hi- i- /nde+-tood to be witho/t p+e./dice to the +i*ht- o2 thi+d pe+-on- who
ha0e acC/i+ed the thin*1 in acco+dance with a+ticle- 19=, and 19== and the Mo+t*a*e
Law.
A+ticle 19=,. Re-ci--ion c+eate- the obli*ation to +et/+n the thin*- which
we+e the ob.ect o2 the cont+act1 to*ethe+ with thei+ 2+/it-1 and the p+ice with it-
inte+e-t7 con-eC/ently1 it can be ca++ied o/t only when he who demand-
+e-ci--ion can +et/+n whate0e+ he may be obli*ed to +e-to+e.
'eithe+ -hall +e-ci--ion ta?e place when the thin*- which a+e the ob.ect
o2 the cont+act a+e le*ally in the po--e--ion o2 thi+d pe+-on- who did not act in
bad 2aith.
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In thi- ca-e1 indemity 2o+ dama*e- may be demanded 2+om the pe+-on
ca/-in* the lo--.
A+ticle 19==. Whoe0e+ acC/i+e- in bad 2aith the thin*- alienated in 2+a/d
o2 c+edito+-1 -hall indemni2y the latte+ 2o+ dama*e- -/22e+ed by them on acco/nt
o2 the alienation1 whene0e+1 d/e to any ca/-e1 it -ho/ld be impo--ible 2o+ him to
+et/+n them.
I2 the+e a+e two o+ mo+e alienation-1 the 2i+-t acC/i+e+ -hall be liable 2i+-t1
and -o on -/cce--i0ely.
Balane$
J$ >h+ is this article in this #ection entitle* (Pure an* Con*itional %li)ations.( "s there a
connection %et. the ri)ht of rescission an* Pure an* con*itional o%li)ations?
A$ @es. "n a reci-rocal o%li)ation' %reach %+ one -art+ is a tacit resolutor+ con*ition. This
,eans that the other -art+ who is victi,i0e* %+ the %reach ,a+ *eclare the o%li)ation
resolve*.
Note$ Art. 11C1 refers to reci-rocal o%li)ations 3,utual' i,-les so,e corres-on*ence5' e.).' a
contract of sale w.c is the ,ost reci-rocal of all contracts' the archit+-e' the -roto-t+-e' the
-ara*i),' the *istillation of all reci-rocal o%li)ations.
&wo +eC/i-ite- o2 a Recip+ocal #bli*ation-3
1. Both -restation arise fro, the sa,e source
4. Each -restation is inten*e* to %e the counter-art or e:uivalent of the other 3 quid
pro quo5
BALANE CA#E#$
U'VIVER(AL G##) C#RP V. CA B88 #CRA 1E - 0escission for breach of contract and
rescission by reason of lesion or economic prejudice, distinguished.-- A rescission for %reach
of contract un*er Art. 11C1' NCC is not -re*icate* on in9ur+ to econo,ic interests of the -art+
-ltff. %ut on the %reach of faith %+ the *ef.' that violates the reci-rocit+ %et. the -arties. "t is
not a su%si*iar+ action' an* Art. 11C1 ,a+ %e scanne* w.o *isclosin) an+where that the
action for rescission thereun*er is su%or*inate* to an+thin) other than the cul-a%le %reach of
his o%li)ations %+ the *ef. This rescission is a -rinci-al action retaliator+ in character' it %ein)
un9ust that a -art+ %e hel* %oun* to fulfill his -ro,ises when the other violates his. As
e7-resse* inthe ol* Latin a-horis,$ (on servandi fidem, non est fides servanda. Hence' the
re-aration of *a,a)es for the %reach is -urel+ secon*ar+.
n the other han*' in a rescission %+ reason of lesion or econo,ic -re9u*ice un*er
ARt. 18F1' et seq.' NCC' the cause of action is su%or*inate* to the e7istence of that
-re9u*ice'%ec. it is the raison d6 etre as well as the ,easure of the ri)ht to rescin*. Hence'
where the *ef. ,a&es )oo* the *a,a)e cause*' the action cannot %e ,aintaine* or
continue*' as e7-ressl+ -rovi*e* in Arts. 18F8 an* 18F<. But the o-eration of these 4
articles is li,ite* to cases of rescission for lesion enu,erate* in Art. 18F1 an* *oes not a--l+
to cases un*er Art. 11C1.
0escission under the %ivil %ode.-- The 4 instances of rescission are *efectivel+
ter,e* (rescission( w.o *istinction %et. then un*er the NCC unli&e the -revious CC' that
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*ifferentiate* (resolution( for %reach of sti-ulations fro, (rescission( %+ reason of lesion or
*a,a)e.
Balane$
)octine- laid down in thi- ca-e3
1. Resolution is not -re*icate* on econo,ic in9ur+ %ut on %reach or violation
4. "t is not a su%si*iar+ re,e*+ %ut a -rinci-al one w.c is retaliator+ in nature.
MA%)ALE'A E(&A&E V. MARIC$ BH1 P 8<<E - The contract of sale contains no -rovision
authori0in) the ven*or' in the event of failure of the ven*ee to continue in the -a+,ent of the
sti-ulate* ,onthl+ install,ents' to retain the a,ounts -ai* to hi, on account of the -urchase
-rice. The clai,' therefore' of the -etitioner that it has the ri)ht to forfeit sai* su,s in its
favor is untena%le. 777 BHEe ,a+ choose %et. *e,an*in) the fulfill,ent of the contract or its
resolution. These re,e*ies are alternative an* not cu,ulative' an* the -etitioner in this
case' havin) electe* to cancel the contract' cannot avail hi,self of the other re,e*+ of
e7actin) -erfor,ance. As a conse:uence of the resolution' the -arties shoul* %e restore*'
as far as -ractica%le' to their ori)inal situation w.c can %e a--ro7i,ate* onl+ %+ or*erin)' as
we *o now' the return of the thin)s w.c were the o%9ect of the contract' w. their fruits an* of
the -rice' w. interest' co,-ute* fro, the *ate of the institution of the action.
Balane$
)oct+ine- laid down in thi- ca-e3
1. Ri)ht of resolution is i,-lie* in reci-rocal contracts.
4. nce resolution is availe* of' there is a *ut+ of ,utual restitution %et. the -arties-- when a
reci-rocal o%li)ation is resolve*' the effect is to cancel the 9uri*ical relation. Parties shoul* %e
restore* to their status quo ante
UP V. )E L#( A'%ELE( B81 #CRA 1D4E - There is nothin) in the law that -rohi%its the
-arties fro, enterin) into a)ree,ent that violation of the ter,s of the contract woul* cause
cancellation thereof' even w.o court intervention. "n other wor*s' it is not alwa+s necessar+
for the in9ure* -art+ to resort to court for rescission of the contract.
f course' it ,ust %e un*erstoo* that the act of a -art+ in treatin) a contract as
cancelle* or resolve* on account of infractions %+ the other contractin) -art+ ,ust %e ,a*e
&nown to the other an* is alwa+s -rovisional' %ein) ever su%9ect to scrutin+ an* review %+ the
-ro-er court. "f the other -art+ *enies that rescission is 9ustifie*' it is free to resort to 9u*icial
action in its own %ehalf' an* %rin) the ,atter to court. Then' shoul* the court' after *ue
hearin)' *eci*e that the resolution of the contract was not warracte*' the res-onsi%le -art+
will %e sentence* to *a,a)esA in the contrar+ case' the resolution will %e affir,e*' an* the
conse:uent in*e,nit+ awar*e* to the -art+ -re9u*ice*.
"n other wor*s' the -art+ who *ee,s the contract violate* ,a+ consi*er it resolve* or
rescin*e*' an* act accor*in)l+' w.o -revious court action' %ut it proceeds at its own ris!. Gor
it is onl+ the final 9u*),ent of the corre-on*in) court that will conclusivel+ an* finall+ settle
whether the action ta&en was or was not correct in law. 777
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Balane$
)oct+ine- laid down in thi- ca-e3
1. Ri)ht or resolution in Art. 11C1 is i,-le*.-- "t is availa%le even if there is no sti-ulation in
the contract. 3This is not newA it ,erel+ reiterates what was lai* *own in Ma)*alena Estate v.
M+ric&.5
4. Ri)ht of resolution ,a+ %e e7ercise* e7tra9u*iciall+ an* will ta&e effect u-on
co,,unication %+ the a))rieve* -art+ to the %reachin) -art+.
8. E7ercise of this ri)ht is alwa+s su%9ect to 9u*icial review. "t is u- to the other -art+ to )o to
the court.
&he-e doct+ine- a+e implied 2+om the-e +/lin*- in thi- ca-e3
a. "f the a))rive* -art+ has not +et -erfor,e* his -restation' all he has to *o is to refuse to
-erfor, if he resolves.
%. "f he has alrea*+ -erfor,e*' u-on resolution' he can *e,an* restitution. "f he refuses' he
can sue for recover+ an* not for resolution 3for the return of what +ou )ave.5
FULUE&A V. MARIA'# B111 #CRA 4D2E - True' the contract %et. the -arties -rovi*e* for
e7tra9u*icial rescission. This has le)al effect' however' where the other -art+ *oes not
o--ose it. >here it is o%9ecte* to' a 9u*icial *eter,ination of the issue is still necessar+. (A
sti-ulation entitlin) one -art+ to ta&e -ossession of the lan* an* %uil*in) if the other -art+
violates the contract *oes not e* pro prio vigore confer u-on the for,er the ri)ht to ta&e
-ossession thereof if o%9ecte* to w.o 9u*icial intervention an* *eter,ination.(
PALAA1 I'C. V. CLAVE B14< #CRA 28FE - reiterate* the rulin) in =P v. 6e los An)eles'
su-ra. an* Lulueta v. Mariano' su-ra.
A'%ELE( V. CALA(A'F B181 #CRA 848E - reiterate* the rulin) in =P v. 6e los An)eles'
su-ra. an* =GC v CA' su-ra.
B#A(AW V. I'&ERPEIL PR#M#&I#'( B1<F #CRA 281E - There is no *ou%t that the
contract in :uestion )ave rise to reci-rocal o%li)ations. (Reci-rocal o%li)ations are those w.c
arise fro, the sa,e cause' an* in w.c each -art+ is a *e%tor an* a cre*itor of the other' such
that the o%li)ation of one is *e-en*ent u-on the o%li)ation of the other. The+ are to %e
-erfor,e* si,ultaneousl+' so that the -erfor,ance of one is con*itione* u-on the
si,ultaneous fulfill,ent of the other.
The -ower to rescin* is )iven to the in9ure* -art+. here the pltff is the party who did
not perform the underta!ing w&c he was bound by the terms of the agreement to perform, he
is not entitled to insist upon the performance of the contract by the def., or recover damages
by reason of his own breach.
PILIPI'A( BA'$ V. IAC B111 #CRA 1<2E - Auto,atic rescission cannot %e availe* of where
there is a clear waiver of the sti-ulate* ri)ht of auto,atic rescission as evi*ence* %+ the
,an+ e7tensions )rante* to -rvt res-s. %+ -etitioner to -a+ their arreara)es an* u-*ate their
install,ent -a+,ent un*er the contract.
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(#'%CUA' V. IAC B1C1 #CRA 4FE - Neither *o we a)ree that the ri)ht of the Alviars to
re-urchase ,a+ %e rescin*e* un*er Art. 11C1. #on)cuan asserts that the ct. 1D' 1C22
contract he entere* into w. the Alviars create* a reci-rocal o%li)ation %et. the,-- for hi, to
reconve+ the su%9ect -re,ises an* for the Alviars to lease the realties to hi,-- an* the
refusal of the latter to fulfill their o%li)ation )ives hi, the ri)ht' un*er 11C1' to rescin* (the
ri)ht of Bthe AlviarsE to re-urchase( the realties. The -ower to rescin* o%li)ations is i,-lie* in
reci-rocal ones' in case one of the o%li)ors shoul* not co,-l+ w. what is incu,%ent u-on
hi,. 777( 3Art. 11C1.5 The cite* law is not a--lica%le in this case. Althou)h the -arties are
each o%li)or an* o%li)ee of the other' their corres-on*in) o%li)ation can har*l+ %e calle*
reci-rocal. "n reci-rocal o%li)ations' the o%li)ation of one is a resolutor+ con*ition of the
o%li)ation of the other' the non-fulfill,ent of w.c entitles the other -art+ to rescin* the
contract. "n the case at %ar' there are 4 se-arate an* *istinct o%li)ations' each in*e-en*ent
of the other. The o%li)ation of #on)cuan to reconve+ the -ro-ert+ is not *e-en*ent on the
o%i)ation of the Alviars to lease the -re,ises to the for,er. The o%li)ationof the Alviars is not
an essential -art of the contract. This is evi*ent in the wor*in)s of the (P.#. 3A**itional
con*itions5'( itself w.c states that (in the event 3the Alviars5 e7ercise* the ri)ht of re-urchase
777 an* %eco,es the owner an* -ossessor of the -re,ises' the+ shall 777 %e o%li)e* to )ive
3#on)cuan5 the ri)ht of lease an* are 777 o%li)e* to e7ecute a lease contract 777.( "n other
wor*s' the o%li)ation of the Alviars to lease to #on)cuan the su%9ect -re,ises arises onl+
after the latter ha* reconve+e* the realties to the,.
RAM#( V. CA B1HC #CRA H1CE - The ri)ht to rescin* a contract ,a+ %e waive*. "n the
case at %ar' the re,e*+ -rovi*e* is not rescission un*er the NCC %ut that set forth in the
rules an* re)ulations for the Ma&ati #toc& E7chan)e.
PRE(BI&ER# V. CA B41H #CRA 8H4E - Rescission of a contract will not %e -er,itte* for a
sli)ht or casual %reach' %ut onl+ for such su%stantial an* fun*a,ental %reach as woul*
*efeat the ever+ o%9ect of the -arties in ,a&in) the a)ree,entA the :uestion of whether a
%reach of contract is su%stantial *e-en*s u-on the atten*in) circu,stances.
&AAA% V. CA B41C #CRA <FDE - The su))estion of -etitioners that the covenant ,ust %e
cancelle* in the li)ht of -vt. res-on*ent/s so-calle* %reach see,s to overloo& -etitioner/s
*e,eanor who' instea* of i,,e*iatel+ filin) the case -recisel+ to rescin* the instru,ent %ec.
of non-co,-liance' allowe* -vt. res-. to effect nu,erous -a+,ents -osterior to the )race
-erio* -rovi*e* in the contract. This a-ath+ of -etitioners who even -er,itte* -vt. res-. to
ta&e the initiative in filin) the suit for s-ecific -erfor,ance a)ainst the,' is a&in to waiver or
a%on*on,ent of the ri)ht to rescin* nor,all+ conferre* %+ Art. 11C1' NCC.
777
"n*ee*' the right to rescind is not absolute and will not be granted where there had
been substantial compliance by partial payments. B+ an* lar)e' -etitioner/s actuation is
susce-ti%le of %ut one contruction-- that the+ are now esto--e* fro, rene)in) fro, their
co,,it,ent on account of acce-tance of %enefits arisin) fro, over*ue accounts of -vt. res-.
BI'ALBA%A' V. CA B41C #CRA HHHE - A -art+ to a contract cannot *e,an* -erfor,ance
of the other -art+/s -%li)ations unless he is in a -osition to co,-l+ w. his own o%li)ations.
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CIVIL LAW REVIEW
#i,ilarl+' the ri)ht to rescin* a contract can %e *e,an*e* onl+ if a -art+ thereto is rea*+'
willin) an* a%le to co,-l+ w. his own o%li)ations thereun*er.
VERME' V. CA B 44< #CRA 1<CE - "n reci-rocal o%li)ations' the -erfor,ance of one is
con*itione* on the si,ultaneous fulfill,ent of the other o%li)ation. 777
Generall+' rescission of a contract will not %e -er,itte* for a sli)ht or casual %reach
%ut onl+ for such su%stantial an* fun*a,ental %reach as woul* *efeat the ver+ o%9ect of the
-arties in e7ecutin) the a)reee,tn.
PRU)E'CE REAL&A V. CA B481 #CRA 8HCE - Ha%ana see&s rescission of the co,-ro,ise
a)ree,ent un*er Art. 11C1. However' this provision applies only to reciprocal obligations in
general and not to obligations arising from a judicial compromise 777. Thus$ ;u*),ent u-on
a)ree,ent of the -arties is ,ore than a ,ere contract %in*in) u-on the,A havin) the
sanction of the court an* entere* as its *eter,ination of the controvers+ it has the force an*
effect of an+ other 9u*),ent.
Juestions$
1. Can the -arties su--ress this ri)ht to resolve in Art. 11C1?
4. Can the+ sti-ulate that the ri)ht of resolution ,ust %e e7ercise* onl+ throu)h the courts?
8. Can the -arties sti-ulate that there will %e no ,utual restitution in case of resolution?

A+t. 1198. In ca-e both pa+tie- ha0e committed a b+each o2 the obli*ation1 the
liability o2 the 2i+-t in2+acto+ -hall be eC/itably tempe+ed by the co/+t-. I2 it cannot be
dete+mined which o2 the pa+tie- 2i+-t 0iolated the cont+act1 the -ame -hall be deemed
e>tin*/i-hed1 and each -hall bea+ hi- own dama*e-.
BALANE CA#E$
CE'&RAL V. CA B481 #CRA 8HCE - #ince "slan* #avin)s Ban& was in *efault in fulfillin) its
reci-rocal o%litaion un*er their loan a)ree,ent' #ul-icio Tolentino' un*er Art. 11C1 ,a+
choose %et. s-ecific -erfor,ance or rescission w. *a,a)es in either case. But since "slan* is
now -rohi%ite* fro, *oin) further %usiness %+ the Monetar+ Boar* Resolution' we cannot
)rant s-ecific -erfor,ance in favor of #. Tolentino.
Rescission is the onl+ alternative re,e*+ left. >e rule' however' that rescission is
onl+ for the P28'DDD loan' %ec. the %an& is in *efault onl+ insofar as such a,ount is
concerne*' as there is no *ou%t that the %an& faile* to )ive the P28'DDD. As far as the -artial
release of P1HT' w.c #. Tolentino acce-te* an* e7ecute* a -.n to cover it' the %an& was
*ee,e* to have co,-lie* w. its reci-rocal o%li)ation to furnish a P1HT loan. The -.n )ave
rise to #. Tolentino/s reci-rocal o%li)ation to -a+ the P1HT loan when it falls *ue. His failure
to -a+ the over*ue a,orti0ations un*er the -.n ,a*e hi, a -art+ in *efault' hence not
entilte* to rescission. "f there is a ri)ht to rescin* the -.n' it shall %elon) to the a))rieve*
-art+' that is' "slan*. "f Tolentino ha* not si)ne* a -.n settin) the *ate for -a+,ent of P1HT
w.in 8 +rs.' he woul* %e entitle* to as& for rescission of the entire loan %ec. he cannot
-ossi%l+ %e in *efault as there was no *ate for hi, to -erfor, his reci-rocal o%li)ation to -a+.
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CIVIL LAW REVIEW
777 >e rule that the lia%ilit+ of "slan* for *a,a)es in not furnishin) the entire loan is
offset %+ the lia%ilit+ of #ul-icio M. Tolentino for *a,a)es' in the for, of -enalties an*
surchar)es' for not -a+in) his over*ue P1H'DDD *e%t 3the court citin) Art. 11C4.5

C. %li)ations with a -erio*
1. Kin*s
A+t. 1199. #bli*ation- 2o+ who-e 2/l2illment a day ce+tain ha- been 2i>ed1 -hall be
demandable only when that day come-.
#bli*ation- with a +e-ol/to+y pe+iod ta?e e22ect at once1 b/t te+minate /pon
a++i0al o2 the day ce+tain.
A day ce+tain i- /nde+-tood to be that which m/-t nece--a+ily come1 altho/*h it
may not be ?nown when.
I2 the /nce+tainty con-i-t- in whethe+ the day will come o+ not1 the obli*ation i-
conditional1 and it -hall be +e*/lated by the +/le- o2 the p+ecedin* (ection.
"! Tolentino$
Concept o2 &e+m.!! A term or period is a s-ace of ti,e w.c' e7ertin) an influence on
o%li)ations as a conse:uence of a 9uri*ical act' sus-en*s their *e,an*a%ilit+ or *eter,ines
their e7tin)uishe,ent. 3Manresa.5
)i-tin*/i-hed 2+om Condition3
1. As to fulfillment.-- A con*ition is an uncertain event' while a ter, is an event that ,ust
necessaril+ co,e' whether on a *ate &nown %efore han* or at a ti,e w.c cannot %e
-re*eter,ine*.

4. As to influence on the obligation.-- >hile a con*ition )ives rise to an o%li)ation or
e7tin)uishes one alrea*+ e7isitin)' a -erio* has no effect u-on the e7istence of o%li)ations'
%ut onl+ their *e,an*a%ilit+ or -erfor,ance. Bec. of this *ifference' a -erio* *oes not carr+
w. it' e7ce-t when there is a s-ecial a)ree,ent' an+ retroactive effect.
8. As to time.-- A -erio* alwa+s refer to the future' while a con*ition ,a+ refer to a -ast
event un&nown to the -arties.
<. As to will of debtor.-- A con*ition w.c *e-en*s e7clusivel+ on the will of the *e%tor annuls
the o%li)ation' %ut a -erio* left to the *e%tor/s will ,erel+ e,-owers the court to fi7 such
-erio*.
Balane$
"n a 3sus-ensive5 ter,' the o%li)ation has alrea*+ arisen e7ce-t that it is not +et *e,an*a%le.
A+t. 119;. In ca-e o2 lo--1 dete+io+ation o+ imp+o0ement o2 the thin* be2o+e the
a++i0al o2 the day ce+tain1 the +/le- in a+ticle 11=9 -hall be ob-e+0ed.
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CIVIL LAW REVIEW
A+t. 11=9. When the condition- ha0e been impo-ed with the intention o2
-/-pendin* the e22icacy o2 an obli*ation to *i0e1 the 2ollowin* +/le- -hall be ob-e+0ed in
ca-e o2 the imp+o0ement1 lo-- o+ dete+io+ation o2 the thin* d/+in* the pendency o2 the
condition.
516 I2 the thin* i- lo-t witho/t the 2a/lt o2 the debto+1 the obli*ation -hall be
e>tin*/i-hed7
586 I2 the thin* i- lo-t th+o/*h the 2a/lt o2 the debto+1 he -hall be obli*ed to pay
dama*e-7 it i- /nde+-tood that the thin* i- lo-t when it pe+i-he-1 o+ *oe- o/t o2
comme+ce1 o+ di-appea+- in -/ch a way that it- e>i-tence i- /n?nown o+ it cannot be
+eco0e+ed7
596 When the thin* dete+io+ate- witho/t the 2a/lt o2 the debto+1 the impai+ment i-
to be bo+ne by the c+edito+7
5;6 I2 it dete+io+ate- th+o/*h the 2a/lt o2 the debto+1 the c+edito+ may choo-e
between the +e-ci--ion o2 the obli*ation and it- 2/l2illment1 with indeminity 2o+ dama*e-
in eithe+ ca-e3
5,6 I2 the thin* i- imp+o0ed by it- nat/+e1 o+ by time1 the imp+o0ement -hall in/+e
to the bene2it o2 the c+edito+7
56 I2 it i- imp+o0ed at the e>pen-e o2 the debto+1 he -hall ha0e no othe+ +i*ht than
that *+anted to the /-/2+/ct/a+y.
Balane$ There are three re:uisites in or*er for Art. 11FC to a--l+--
1. There is loss' *eterioration or *ela+
4. There is an o%li)ation to *eliver a *eter,inate thin) 3on the -art of the *e%tor5
8. There is loss' *eterioration or i,-rove,ent %efore the ha--enin) of the con*ition.
<. The con*ition ha--ens.
0ights of a usufructuary
A+t. ,49. &he /-/2+/ct/a+y may ma?e on the p+ope+ty held in /-/2+/ct
-/ch /-e2/l imp+o0ement- o+ e>pen-e- 2o+ me+e plea-/+e a- he may deem
p+ope+1 p+o0ided he doe- not alte+ it- 2o+m o+ -/b-tance7 b/t he -hall ha0e no
+i*ht to be indemni2ied the+e2o+. Ee may1 howe0e+1 +emo0e -/ch imp+o0ement-1
-ho/ld it be po--ible to do -o witho/t dama*e to the p+ope+ty.
A+t. 119,. Anythin* paid o+ deli0e+ed be2o+e the a++i0al o2 the pe+iod1 the obli*o+
bein* /nawa+e o2 the pe+iod o+ belie0in* that the obli*ation ha- become d/e and
demandable1 may be +eco0e+ed1 with the 2+/it- and inte+e-t-.
Balane$ Mi-ta?en P+emat/+e )eli0e+y.!! This article assu,es 4 thin)s$ 315 the *eliver+
was %+ ,ista&eA 345 the ,ista&e was *iscovere* %ef. the ter, arrives.
Both the thin)s an* the fruits can %e recovere*.
"f the ter, has alrea*+ arrive*' the :uestion is ,oot an* aca*e,ic. But can he
recover the fruits -ro*uce* *urin) the ,eanti,e? "t *e-en*s on what school of thou)ht +ou
follow$
1. Accor*in) to one school of thou)ht' the *e%tor is entitle* to the fruits -ro*uce* in
the ,eanti,e 3Tolentino.5
4. Accor*in) to another school of thou)ht' all the fruits receive* *urin) the -en*enc+
of the ter, %elon) to the cre*itor 3Ca)uioa.5
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CIVIL LAW REVIEW
When 2+/it- J inte+e-t- cannot be +eco0e+ed notwith-tandin* p+emat/+e deli0e+y3
1. >hen the o%li)ation is reci-rocal an* there has %een -re,ature -erfor,ance 3%+ %oth
-arties5A
4. >hen the o%li)ation is a loan in w.c the *e%tor is %oun* to -a+ interestA
8. >hen the -erio* is for the cre*itor/s e7clusive %enefitA
<. >hen the *e%tor is aware of the -erio* an* -a+s an+wa+.
4. Presu,e* for whose %enefit
A+t. 119. Whene0e+ in an obli*ation a pe+iod i- de-i*nated1 it i- p+e-/med to
ha0e been e-tabli-hed 2o+ the bene2it o2 both the c+edito+ and the debto+1 /nle-- 2+om
the teno+ o2 the -ame o+ othe+ ci+c/m-tance- it -ho/ld appea+ that the pe+iod ha- been
e-tabli-hed in 2a0o+ o2 one o+ o2 the othe+.
Balane$ General rule$ "f a -erio* is attache* in an o%li)ation' the -resu,-tion is that it is for
the %enefit of %oth -arties. The conse:uence is that the cre*itor cannot co,-el the
-erfor,ance %efore the arrival of the ter,A the *e%tor cannot co,-el acce-tance %ef. the
arrival of the ter,.
I2 the te+m i- 2o+ the bene2it o2 the c+edito+.!! The cre*itor can *e,an* -erfor,ance
an+ti,eA %ut the *e%tor cannot insist on -a+,ent %ef. the -erio*.
I2 the te+m i- 2o+ the bene2it o2 the debto+.!! The cre*itor cannot *e,an* -erfor,ance
an+ti,eA %ut the *e%tor can insist on -erfor,ance an+ti,e.
"llustrations$ (" -ro,ise to -a+ within 2D *a+s.( This is a ter, for the %enefit of the
*e%tor.
(" -ro,ise to -a+ Clara the su, of P1DD'DDD on or %efore ct. 81' 1CC2.( This is a
ter, for the %enefit of the *e%tor.
8. >hen -erio* is fi7e*
A+t. 1194. I2 the obli*ation doe- not 2i> a pe+iod1 b/t 2+om it- nat/+e and the
ci+c/m-tance- it can be in2e++ed that a pe+iod wa- intended1 the co/+t- may 2i> the
d/+ation the+eo2.
&he co/+t- -hall al-o 2i> the d/+ation o2 the pe+iod when it depend- /pon the will
o2 the debto+.
In e0e+y ca-e1 the co/+t- -hall dete+mine -/ch pe+iod a- may /nde+ the
ci+c/m-tance- ha0e been p+obably contemplated by the pa+tie-. #nce 2i>ed by the
co/+t-1 the pe+iod cannot be chan*ed by them.
Balane$ Ca-e- whe+e the Co/+t- may 2i> a pe+iod.!!
1. Art. 11CH' -ar. 1
A+t. 1194. I2 the obli*ation doe- not 2i> a pe+iod1 b/t 2+om it- nat/+e and the
ci+c/m-tance- it can be in2e++ed that a pe+iod wa- intended1 the co/+t- may 2i> the d/+ation
the+eo2.
>>>
E7ce-tions$ 3a5 Art. 12F4
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CIVIL LAW REVIEW
A+ticle 1=8. &he lea-e o2 a piece o2 +/+al land1 when it- d/+ation ha- not been 2i>ed1 i-
/nde+-tood to ha0e been made 2o+ all the time nece--a+y 2o+ the *athe+in* o2 the 2+/it- which
the whole e-tate lea-ed may yield in one yea+1 o+ which it may yield once1 altho/*h two o+ mo+e
yea+- may ha0e to elap-e 2o+ the p/+po-e.
Art. 12FH' first sentence
A+ticle 1=4. I2 the pe+iod 2o+ the lea-e ha- not been 2i>ed1 it i- /nde+-tood to be 2+om
yea+ to yea+1 i2 the +ent a*+eed /pon i- ann/al7 2+om month to month1 i2 it i- monthly7 2+om wee?
to wee?1 i2 the +ent i- wee?ly7 and 2+om day to day1 i2 the +ent i- to be paid daily.
>>>
3%5 Art. 12D2 in -acto *e retro sale where the -erio* is not s-ecifie* %+
the -arties
A+t. 1B. &he +i*ht +e2e++ed to in a+ticle 1B1 5the +i*ht o2 con0entional +edemption on
the pa+t o2 the 0endo+ a retro61 in the ab-ence o2 an e>p+e-- a*+eement1 -hall la-t 2o/+ yea+-
2+om the date o2 the cont+act.
>>>
3c5 contract of services for an in*efinite ter, 3%ec. fi7in) of a -erio* %+
the courts ,a+ a,ount to involuntar+ servitu*e5

4. Art. 11CH' -ar. 4
A+t. 1194. >>>
&he co/+t- -hall al-o 2i> the d/+ation o2 the pe+iod when it depend- /pon the will o2 the
debto+.
8. Art. 11C1' -ar. 8
A+t. 1191. >>>
>>>
&he co/+t -hall dec+ee the +e-ci--ion claimed1 /nle-- the+e be ./-t ca/-e a/tho+i<in*
the 2i>in* o2 a pe+iod.
>>>
<. Art. 12FH' secon*' thir* an* fourth sentences
A+t. 1=4. >>> Eowe0e+1 e0en tho/*h a monthly +ent i- paid1 and no pe+iod 2o+ the lea-e
ha- been -et1 the co/+t- may 2i> a lon*e+ te+m 2o+ the lea-e a2te+ the le--ee ha- occ/pied the
p+emi-e- 2o+ o0e+ one yea+. I2 the +ent i- wee?ly1 the co/+t- may li?ewi-e dete+mine a lon*e+
pe+iod a2te+ the le--ee ha- been in po--e--ion 2o+ o0e+ -i> month-. In ca-e o2 daily +ent1 the
co/+t- may al-o 2i> a lon*e+ pe+iod a2te+ the le--ee ha- -tayed in the place 2o+ o0e+ one month.
1. Art. 11FD
A+t. 11=B. When the debto+ bind- him-el2 to pay when hi- mean- pe+mit him to do -o1
the obli*ation -hall be deemed to be one with a pe+iod1 -/b.ect to the p+o0i-ion- o2 a+ticle 1194.
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CIVIL LAW REVIEW
BALANE CA#E#$
CEAVEF V. %#'FALE( B84 #CRA 1<HE - here obligation does not fi* a period1 hen
fi*ing a period is mere formality.-- >here the *ef. virtuall+ a*,itte* non--erfor,ance %+
returnin) the t+-ewriter he was o%li)e* to re-air in a non-wor&in) con*ition' w. essential
-arts' ,issin)' he cannot invo&e Art. 11CH of the NCC. The ti,e for co,-liance havin)
evi*entl+ e7-ire*' an* there %ein) a %reach of contract %+ non--erfor,ance' it was aca*e,ic
for the -ltff. to have first -etitione* the court fo fi7 a -erio* for the -erfor,ance of the contract
%efore filin) his co,-laint in this case. The fi7in) of a -erio* woul* thus %e a ,ere for,alit+
an* woul* serve no -ur-ose than to *ela+.
E'CAR'ACI#' V. BAL)#MAR BHH P <HDE - The continuance an* fulfill,ent of the contract
of lease cannot %e ,a*e to *e-en* solel+ an* e7clusivel+ u-on the free an* uncontrolle*
choice of the lessees %et. continuin) -a+in) the rentals or not' co,-letel+ *e-rivin) the
owner of all sa+ in the ,atter. Gor if this were allowe*' so lon) as *efs. electe* to continue
the lease %+ continuin) the -a+,ent of the rentals the owner woul* never %e a%le to
*iscontinue itA conversel+' althou)h the owner shoul* *esire the lease to continue' the
lessees coul* effectivel+ thwart his -ur-ose if the+ shoul* -refer to ter,inate the contract %+
the si,-le e7-e*ient of sto--in) -a+,ent of the rentals. This' of course' is -rohi%ite* %+ art.
1412' NCC.
ELEIFEUI V. LAW' &E''I( CLUB B4 P8DCE - The ter, of a lease whose ter,ination is
e7-ressl+ left to the will of the lessee ,ust %e fi7e* %+ the courts accor*in) to the character
an* con*itions of the ,utual un*erta&in)s' in an action %rou)ht for that -ur-ose 777.
PEILBA'$I'% V. LUI (EE B41 #CRA 18E - A lease to an alien for a reasona%le -erio* is
vali*.
LIM V. PE#PLE B188 #CRA 888E - "t is clear in the a)ree,ent that the -rocee*s of the sale
of the to%acco shoul* %e turne* over to the co,-lainant as soon as the sa,e was sol*' or'
that the o%li)ation was i,,e*iatel+ *e,an*a%le as soon as the to%acco was *is-ose* of.
Hence' Art. 11CH of the NCC' w.c -rovi*es that the courts ,a+ fi7 the *uration of the
o%li)ation if it *oes not fi7 a -erio*' *oes not a--l+.
ARA'E&A1 I'C. V. PEIL. (U%AR E(&A&E( B4D #CRA 88DE - 777 Art. 11CH involves a two-
ste- -rocess. 315 The Court ,ust first *eter,ine that (the o%li)ation *oes not fi7 a -erio*.(
3or that the -erio* is ,a*e to *e-en* u-on the will of the *e%tor5'( %ut fro, the nature an*
the circu,stances it can %e inferre* that a -erio* was inten*e*.( 345 This -reli,inar+ -oint
settle*' the Court ,ust then -rocee* to the secon* ste-' an* *eci*e what -erio* was
(-ro%a%l+ conte,-late* by the parties.( #o that' ulti,atel+' the Court can not fi7 a -erio*
,erel+ %ec. in its o-inion it is or shoul* %e reasona%le' %ut ,ust set the ti,e that the -arties
are shown to have inten*e*. 777
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CIVIL LAW REVIEW
MILLARE V. EER'A')# B111 #CRA <F<E - Par. 1 of Art. 11CH is clearl+ ina--lica%le' since
the Contract of Lease *i* in fact fi7 an ori)inal -erio* of 1 +rs.' w.c ha* e7-ire*. "t is also
clear fro, -ar. 18 of the contract that the -arties reserve* to the,selves the facult+ of
a)reein) u-on the -erio* of the renewal contract. The 4n* -ar. of Art. 11CH is e:uall+
ina--lica%le since the *uration of the renewal -erio* was not left to the will of the lessee
alone' %ut rather to the will of %oth the lessor an* the lessee. Most i,-ortantl+' Art. 11CH
a--lies onl+ where a contract of lease clearl+ e7ists. Here' the contract was not renewe* at
all' there was in fact no contract at all the -erio* of w.c coul* have %een fi7e*.
A+t. 11=B. When the debto+ bind- him-el2 to pay when hi- mean- pe+mit him to
do -o1 the obli*ation -hall be deemed to be one with a pe+iod1 -/b.ect to the p+o0i-ion-
o2 a+ticle 1194.
<. >hen *e%tor loses the %enefit of -erio*
A+t. 119=. &he debto+ -hall lo-e e0e+y +i*ht to ma?e /-e o2 the pe+iod3
516 When a2te+ the obli*ation ha- been cont+acted1 he become- in-ol0ent1 /nle--
he *i0e- a */a+anty o+ -ec/+ity 2o+ the debt7
586 When he doe- not 2/+ni-h to the c+edito+ the */a+antie- o+ -ec/+itie- which
he ha- p+omi-ed7
596 When by hi- own act- he ha- impai+ed -aid */a+antie- o+ -ec/+itie- a2te+ thei+
e-tabli-hment1 and when th+o/*h a 2o+t/ito/- e0ent they di-appea+1 /nle-- he
immediately *i0e- new one- eC/ally -ati-2acto+y7
5;6 When the debto+ 0iolate- any /nde+ta?in*1 in con-ide+ation o2 which the
c+edito+ a*+eed to the pe+iod7
5,6 When the debto+ attempt- to ab-cond.
325 Art. 41DC - "f the cre*itor is *eceive* on the su%stance or :ualit+ of the thin)
-le*)e*' he ,a+ either clai, another thin) in its stea*' or *e,an* i,,e*iate -a+,ent of the
-rinci-al o%li)ation. 3The si7th )roun* was a**e* %+ Prof. Balane.5
3H5 Acceleration clause
Balane$ "n nu,%er one' factual insolvenc+ is enou)h. A 9u*icial *eclaration of insolvenc+ is
not re:uire*.
!. A""ording to plurality of ob#e"ts$
A. #i,-le
B. Multi-le
1. Con9unctive where the *e%tor ,ust -erfor, ,ore than one -restation
4. Alternative %li)ations where the *e%tor ,ust -erfor, an+ of the
-restations
8. Gacultative where onl+ one thin) is *ue %ut the *e%tor has reserve* the
ri)ht to su%stitute it w. another 3"! Tolentino5 3Art. 14D2.5
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CIVIL LAW REVIEW
Alternative %li)ations
A+t. 1199. A pe+-on alte+nati0ely bo/nd by di22e+ent p+e-tation- -hall completely
pe+2o+m one o2 them.
&he c+edito+ cannot be compelled to +ecei0e pa+t o2 one and pa+t o2 the othe+
/nde+ta?in*.
Tolentino$ The characteristic of alternative o%li)ations is that' several o%9ects %ein) *ue' the
fulfill,ent of one is sufficient 777.
A+t. 18BB. &he +i*ht o2 choice belon*- to the debto+1 /nle-- it ha- been e>p+e--ly
*+anted to the c+edito+.
&he debto+ -hall ha0e no +i*ht to choo-e tho-e p+e-tation- which a+e impo--ible1
/nlaw2/l o+ which co/ld not ha0e been the ob.ect o2 the obli*ation.
Balane$ To who, *oes the ri)ht of choice %elon)? General rule$ To the *e%tor 3Art. 14DD.5
E7ce-tion$ >hen e7-ressl+ )rante* to the cre*itor
There is a thir* -ossi%ilit+ where the choice ,a+ %e ,a*e %+ a thir* -erson u-on
a)ree,ent of the -arties.
J$ >hat is the technical ter, of the act of ,a&in) a choice in alternative o%li)ations?
A$ Concentration.
A+t. 18B1. &he choice -hall p+od/ce no e22ect e>cept 2+om the time it ha- been
comm/nicated.
Balane$ ReC/i+ement o2 Comm/nication o2 choice.!! "f the choice %elon)s to the cre*itor'
of course' he has to co,,unicate his choice to the *e%tor. The *e%tor is not a -ro-het.
J$ "f the choice %elon)s to the *e%tor' wh+ re:uire co,,unication %efore
-erfor,ance if the choice %elon)s to hi, an+wa+?
A$ To )ive the cre*itor an o--ortunit+ to consent to the choice or i,-u)n it. 3n) v.
#e,-io-6+' <2 P 1C4.5
B=T how can the cre*itor i,-u)n it if the choice %elon)s to the *e%tor. The %etter
reason woul* %e to )ive the cre*itor a chance to -re-are for the -erfor,ance.
A+ticle- 18B8 to 18B, tal& of the loss of so,e of the -restations %efore -erfor,ance.
1. "f the choice is *e%tor/s
a. >hen onl+ one -restation is left 3whether or not the the rest of the -restations
have %een lost throu)h fortuitous event or throu)h the fault of the *e%tor5' the *e%tor ,a+
-erfor, the one that is left.-- Art. 14D4.
A+t. 18B8. &he debto+ -hall lo-e the +i*ht o2 choice when amon* the p+e-tation-
whe+eby he i- alte+nati0ely bo/nd1 only one i- p+acticable.
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%. "f the choice is li,ite* throu)h the cre*itor/s own acts' the *e%tor can as& for
resolution -lus *a,a)es.-- Art. 14D8
A+t. 18B9. I2 th+o/*h the c+edito+@- act- the debto+ cannot ma?e a choice
acco+din* to the te+m- o2 the obli*ation1 the latte+ may +e-cind the cont+act with
dama*e-.
c. "f ever+thin) is lost throu)h the *e%tor/s fault' the latter is lia%le to in*e,nif+ the
cre*itor for *a,a)es.-- Art. 14D<.
A+t. 18B;. &he c+edito+ -hall ha0e a +i*ht to indemnity 2o+ dama*e- when1
th+o/*h the 2a/lt o2 the debto+1 all the thin*- which a+e alte+nati0ely the ob.ect o2 the
obli*ation ha0e been lo-t1 o+ the compliance o2 the obli*ation ha- become impo--ible.
&he indemnity -hall be 2i>ed ta?in* a- a ba-i- the 0al/e o2 the la-t thin* which
di-appea+ed1 o+ that o2 the -e+0ice which la-t became impo--ible.
)ama*e- othe+ than the 0al/e o2 the la-t thin* o+ -e+0ice may al-o be awa+ded.
*. "f so,e thin)s are lost throu)h the *e%tor/s fault' the *e%tor can still choose fro,
those re,ainin).
e. "f all are lost throu)h fortuitous event' the o%li)ation is e7tin)uishe*.
f. "f all -restations %ut one are lost throu)h fortuitous event' an* the re,ainin)
-restation was lost throu)h the *e%tor/s fault' the latter is lia%le to in*e,nif+ the cre*itor for
*a,a)es.
). "f all %ut one are lost throu)h the fault of the *e%or an* the last one was lost
throu)h throu)h fortuitous event' the o%li)ation is e7tin)uishe*.
4. Choice is the cre*itor/s
A+t. 18B,. When the choice ha- been e>p+e--ly *i0en to the c+edito+1 the
obli*ation -hall cea-e to be alte+nati0e 2+om the day when the -election ha- been
comm/nicated to the debto+.
Until then the +e-pon-ibility o2 the debto+ -hall be *o0e+ned by the 2ollowin*
+/le-3
516 I2 one o2 the thin*- i- lo-t th+o/*h a 2o+t/ito/- e0ent1 he -hall pe+2o+m the
obli*ation by deli0e+in* that which the c+edito+ -ho/ld choo-e 2+om amon* the
+emainde+1 o+ that which +emain- i2 only one -/b-i-t-7
586 I2 the lo-- o2 one o2 the thin*- occ/+- th+o/*h the 2a/lt o2 the debto+1 the
c+edito+ may claim any o2 tho-e -/b-i-tin*1 o+ the p+ice o2 that which1 th+o/*h the 2a/lt
o2 the 2o+me+1 ha- di-appea+ed1 with a +i*ht to dama*e-7
596 I2 all the thin*- a+e lo-t th+o/*h the 2a/lt o2 the debto+1 the choice by the
c+edito+ -hall 2all /pon the p+ice o2 any one o2 them1 al-o with indemnity 2o+ dama*e-.
&he -ame +/le- -hall be applied to obli*ation- to do o+ not to do in ca-e one1
-ome o+ all o2 the p+e-tation- -ho/ld become impo--ible.
a. "f one or so,e are lost throu)h fortuitous event' the cre*itor ,a+ choose fro,
those re,ainin).-- Art. 14D1 315' supra.
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%. "f one or so,e are lost throu)h the *e%tor/s fault' the cre*itor has choice fro, the
re,ain*er or the value of the thin)s lost -lus *a,a)es.-- Art. 14D1 345' supra.
c. "f all are lost throu)h the *e%tor/s fault' the choice of the cre*itor shall fall u-on the
-rice of an+ of the,' w. in*e,nit+ for *a,a)es.-- Art. 14D1 385' supra.
*. "f so,e are lost throu)h the cre*itor/s fault' the cre*itor ,a+ choose fro, the
re,ain*er.
e. "f all are lost throu)h fortuitous event' the o%li)ation is e7tin)uishe*.
f. "f all are lost throu)h the cre*itor/s fault' the o%li)ation is e7tin)uishe*.
Gacultative o%li)ations
A+t. 18B. When only one p+e-tation ha- been a*+eed /pon1 b/t the obli*o+ may
+ende+ anothe+ in -/b-tit/tion1 the obli*ation i- called 2ac/ltati0e.
&he lo-- o+ dete+io+ation o2 the thin* intended a- a -/b-tit/te1 th+o/*h the
ne*li*ence o2 the obli*o+1 doe- not +ende+ him liable. B/t once the -/b-tit/tion ha-
been made1 the obli*o+ i- liable 2o+ the lo-- o2 the -/b-tit/te on acco/nt o2 hi- delay1
ne*li*ence o+ 2+a/d.
"! Tolentino$ )i-tin*/i-hed 2+om Alte+nati0e.!!
1. As to contents of the obligation7 "n the alternative' there are various -restations all of w.c
constitute -arts of the o%li)ationA while in facultative' onl+ the -rinci-al -restation constitutes
the o%li)ation' the accessor+ %ein) onl+ a ,eans to facilitate -a+,ent.
4. As to nullity7 "n alternative o%li)ations' the nullit+ of one -restation *oes not invali*ate the
o%li)ation' w.c is still in force w. res-ect to those w.c have no viceA while in facultative' the
nullit+ of the -rinci-al -restation invali*ates the o%li)ation an* the cre*itor cannot *e,an*
the su%stitute even when this is vali*.
8. As to choice7 "n alternative' the ri)ht to choose ,a+ %e )iven to the cre*itorA while in
facultative' onl+ the *e%tor can choose the su%stitute -restation.
<. As to effect of loss7 "n alternative' onl+ the i,-ossi%ilit+ of all the -restations *ue w.o fault
of the *e%tor e7tin)uishes the o%li)ationA while in facultative' the i,-ossi%ilit+ of the -rinci-al
-restation is sufficient to e7tin)uish the o%li)ation' even if the su%stitute is -ossi%le.

Balane$ Gacultative o%li)ations alwa+s involve choice %+ the *e%tor.
"n theor+' it is eas+ to *istin)uish a facultative o%li)ation fro, an alternative one. But
in -ractice' it is *ifficult to *istin)uish the two. @ou 9ust have to fin* out what the -arties reall+
inten*e*.
%. A""ording to Plurality of sub#e"ts$
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CIVIL LAW REVIEW
A. ;oint an* #oli*ar+ %li)ations
a. ;oint %li)ations
Balane$ Ioint #bli*ation.!! A joint obligation is one in w.c each of the *e%tors is lia%le onl+
for a -ro-ortionate -art of the *e%t or each cre*itor is entitle* onl+ to a -ro-ortionate -art of
the cre*it.
"n 9oint o%li)ations' there are as ,an+ o%li)ations as there are *e%tors ,ulti-lie* %+
the nu,%er of cre*itors.
There are three &in*s of 9oint o%li)ations$ 315 Active joint where the o%li)ation is 9oint
on the cre*itor/s si*eA 345 Passive joint where the o%li)ation is 9oint on the *e%tor/s si*eA an*
385 2ultiple ;oint where there are ,ulti-le -arties on each si*e of a 9oint o%li)ation.
"! Tolentino$ The 9oint o%li)ation has %een variousl+ ter,e* mancomunada or
mancomunada simple or pro rata. The -hrase (>e -ro,ise to -a+'( use* %+ 4 or ,ore
si)ners' creates a pro rata lia%ilit+.
E22ect- o2 Ioint Liability3
1. The *e,an* %+ one cre*itor u-on one *e%tor' -ro*uces the effects of *efault onl+ w.
res-ect to the cre*itor who *e,an*e* an* the *e%tor on who, the *e,an* was ,a*e' %ut
not w. res-ect to the othersA
4. The interru-tion of -rescri-tion %+ the 9u*icial *e,an* of one cre*itor u-on a *e%tor' *oes
not %enefit the other cre*itors nor interru-t the -rescri-tion as to other *e%tors. n the sa,e
-rinci-le' a -artial -a+,ent or ac&nowle*)e,ent ,a*e %+ one of several 9oint *e%tors *oes
not sto- the runnin) of the statute of li,itations as to the othersA
8. The vices of each o%li)ation arisin) fro, the -ersonal *efect of a -articular *e%tor or
cre*itor *oes not affect the o%li)ation or ri)hts of the othersA
<. The insolvenc+ of a *e%tor *oes not increase the res-onsi%ilit+ of his co-*e%tors' nor *oes
it authori0e a cre*itor to *e,an* an+thin) fro, his co-cre*itorsA
1. "n the 9oint *ivisi%le o%li)ation' the *efense of res judicata is not e7ten*e* fro, one *e%tor
to another. 3Manresa.5
A+t. 18B=. I2 2+om the law1 o+ the nat/+e o+ the wo+din* o2 the obli*ation- to which
the p+ecedin* a+ticle +e2e+- the cont+a+y doe- not appea+1 the c+edit o+ debt -hall be
p+e-/med to be di0ided into a- many eC/al -ha+e- a- the+e a+e c+edito+- o+ debto+-1 the
c+edit- o+ debt- bein* con-ide+ed di-tinct 2+om one anothe+1 -/b.ect to the R/le- o2
Co/+t *o0e+nin* the m/ltiplicity o2 -/it-.
A+t. 18B9. I2 the di0i-ion i- impo--ible1 the +i*ht o2 the c+edito+- may be
p+e./diced only by thei+ collecti0e act-1 and the debt can be en2o+ced only by
p+oceedin* a*ain-t all the debto+-. I2 one o2 the latte+ -ho/ld be in-ol0ent1 the othe+
-hall not be liable 2o+ hi- -ha+e.
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A+t. 181B. &he indi0i-ibility o2 an obli*ation doe- not nece--a+ily *i0e +i-e to
-olida+ity. 'o+ doe- -olida+ity o2 it-el2 imply indi0i-ibility.
6istin)uishe* fro, #oli*ar+ %li)ations
A+t. 188;. A .oint indi0i-ible obli*ation *i0e- +i-e to indemnity 2o+ dama*e- 2+om
the time anyone o2 the debto+- doe- not comply with hi- /nde+ta?in*. &he debto+- who
may ha0e been +eady to 2/l2ill thei+ p+omi-e- -hall not cont+ib/te to the indemnity
beyond the co++e-pondin* po+tion o2 the p+ice o2 the thin* o+ o2 the 0al/e o2 the -e+0ice
in which the obli*ation con-i-t-.
%. #oli*ar+ o%li)ations
Balane$ (olida+y #bli*ation-.!! A soli*ar+ o%li)ation is one in w.c the *e%tor is lia%le for the
entire o%li)ation or each cre*itor is entitle* to *e,an* the whole o%li)ation. There is only
one obligation is a solidary obligation.
There are three &in*s of soli*arit+$ 315 Active solidary where there are several
cre*itors w. one *e%tor in a soli*ar+ o%li)ationA 345 Passive solidarity where there is one
cre*itor w. several *e%tors soli*ar+ %oun*A 385 2i*ed "olidarity where there are several
cre*itors an* several *e%tors in a soli*ar+ o%li)ation.
"! Tolentino$ #oli*ar+ o%li)ations ,a+ also %e referre* to as mancomunada solidaria or 9oint
an* several or in solidum. "t has also %een hel* that the ter,s )juntos o separadamente) in a
-ro,issor+ note creates a soli*ar+ res-onsi%ilit+A that where there are no wor*s use* to
in*icate the character of a lia%ilit+' the -hrase (" -ro,ise to -a+'( followe* %+ the si)natures of
4 or ,ore -ersons' )ives rise to an in*ivi*ual or soli*ar+ res-onsi%ilit+. The wor*s
(in*ivi*uall+ an* collectivel+( also create a soli*ar+ lia%ilit+. #o *oes an a)reee,ent to %e
(in*ivi*uall+ lia%ile( or (in*ivi*uall+ an* 9ointl+ lia%le.(
3i5 Active #oli*arit+
A+t. 1811. (olida+ity may e>i-t altho/*h the c+edito+- and the debto+- may not be
bo/nd in the -ame manne+ and by the -ame pe+iod- and condition-.
A+t. 18B4. &he conc/++ence o2 two o+ mo+e c+edito+- o+ o2 two o+ mo+e debto+-
in one and the -ame obli*ation doe- not imply that each one o2 the 2o+me+ ha- a +i*ht to
demand1 o+ that each one o2 the latte+ i- bo/nd to +ende+1 enti+e compliance with the
p+e-tation. &he+e i- -olida+y liability only when the obli*ation e>p+e--ly -o -tate-1 o+
when the law o+ the nat/+e o2 the obli*ation +eC/i+e- -olida+ity.
Balane$ >hen is an o%li)ation w. several -arties on either si*e ;oint or #oli*ar+? The
-resu,-tion is that an o%li)ation is 9oint %ec. a 9oint o%li)ation is less onerous that a soli*ar+
one.
There is soli*ar+ o%li)ation onl+ in three cases$ 315 when the o%li)ation e7-ressl+ so
statesA or 345 when the law or the 385 nature of the o%li)ation re:uires soli*arit+.
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Cha+acte+i-tic- o2 Acti0e (olida+ity3
1. #ince it is a reci-rocal a)enc+' the *eath of a soli*ar+ cre*itor *oes not trans,it the
soli*arit+ to each of his heirs %ut to all of the, ta&en to)ether. 3"! Tolentino5A
4. Each cre*itor re-resents others in the act of re:uirin) -a+,ent' and in all other acts w&c
tend to secure the credit or ma!e it more advantageous. <ence, if he receives only a partial
payment, he must divide it among the other creditors. <e can interrupt the period of
prescription or render the debtor in default, for the benefit of all other creditors1
8. A cre*it once -ai* is share* e:uall+ a,on) the cre*itors unless a *ifferent intention
a--earsA
<. 6e%tor ,a+ -a+ an+ of the cre*itors %ut if an+ *e,an*' 9u*icial or e7tra9u*icial is ,a*e on
hi,' he ,ust -a+ onl+ to one *e,an*in) -a+,ent 3Art. 141<5A
9. #ne creditor does not represent the others in such acts as novation +even if the credit
becomes more advantageous-, compensation and remission. =n these cases, even if the
debtor is released, the other creditors can still enforce their rights against the creditor who
made the novation, compensation or remission1
>. ?ach creditor may renounce his right even against the will of the debtor, and the latter
need not thereafter pay the obligation to the former.
3Parts in italics were ta&en fro, "! Tolentino.5
Cha+acte+i-tic- o2 Pa--i0e (olida+ity3
1. Each *e%tor ,a+ %e re:uire* to -a+ the entire o%li)ation %ut after -a+,ent' he can
recover fro, the co-*e%tors their res-ective shares 3this is so,ethin) si,ilar to su%ro)ation5A
4. "nterru-tion of -rescri-tion as to one *e%tor affects all the othersA but the renunciation by
one debtor of prescription already had does not prejudice the others, bec. the e*tinguishment
of the obligation by prescription e*tinguishes also the mutual representation among the
solidary debtors.
/. The debtor who is required to pay may set up by way of compensation his own claim
against the creditor, in this case, the effect is the same as that of payment1
8. The total remission of the debt in favor of a debtor releases all the debtors1 but when this
remission affects only the share of one debtor, the other debtors are still liable for the balance
of the obligation.
9. All the debtors are liable for the loss of the thing due, even if such loss is caused by the
fault of only one of them, or by fortuitous event after one of the debtors has incurred in delay1
>. The interests due by reason of the delay of one of the debtors are borne by all of them.
3>or*s in italics were ta&en fro, "! Tolentino.5
"! Tolentino$ When the law +eC/i+e- -olida+ity.!! The lia%ilit+ of 9oint tortfeasors' w.c inclu*e
all -ersons who co,,,an*' insti)ate' -ro,ote' encoura)e' a*vise' countencance'
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coo-erate in' ai* or a%et the co,,ission of a tort' or who a--rove of it' after it is *one' if
*one for their %enefit.

(olida+ity 2+om 'at/+e o2 #bli*ation-.!! Lia%ilit+ ,a+ arise fro, the -rovisions of articles 1C
to 44 of the NCC. "f 4 or ,ore -ersons actin) 9ointl+ %eco,e lia%ile un*er these -rovisions'
their lia%ilit+ shoul* %e soli*ar+ %ec. of the nature of the o%li)ation. 777 The acts )ivin) rise
to lia%ilit+ un*er these articles have a co,,on ele,ent-- the+ are ,orall+ wron). A ,oral
wron) cannot %e *ivi*e* into -artsA hence' the lia%ilit+ for it ,ust %e soli*ar+.
BALANE CA#E#$
R#':UILL# V. CA B184 # 4H<E - Clearl+ then' %+ the e7-ress ter, of the co,-ro,ise
a)ree,ent an* the *ecision %ase* u-on it' the *efs. o%li)ate* the,selves to -a+ their
o%li)ation (in*ivi*uall+ an* 9ointl+.( The ter, (in*ivi*uall+( has the sa,e ,eanin) as
(collectivel+'( (se-aratel+'( (*istinctivel+'( (res-ectivel+( or (severall+.( An a)ree,ent to %e
(individually liable( un*ou%te*l+ creates a several o%li)ation' an* a (several o%li)ation( is one
%+ w.c one in*ivi*ual %in*s hi,self to -erfor, the whol* o%li)ation.
777 BTEhe -hrase juntos or separadamente use* in the -.n is an e7-ress state,ent
,a&in) each of the -ersons who si)ne* it individually liable for the -a+,ent of the full
a,ount of the o%li)ation containe* therein. 777 "n the a%sence of a fin*in) of facts that the
*efs. ,a*e the,selves in*ivi*uall+ lia%le for the *e%ts incurre* the+ are each lia%le onl+ for
1.4 of sai* a,ount. The o%li)ation in the case at %ar %ein) *escri%e* as (in*ivi*uall+ an*
9ointl+'( the sa,e is therefore enforcea%le a)ainst one of the nu,erous o%li)ors.
MALAAA' I'(URA'CE V. CA B121 # 182E - The direct liability of the insurer under
indemnity contracts against third-party liability does not mean that the insurer can be held
solidarily liable with the insured and& or the other parties found at fault.-- >hile it is true that
where the insurance contract -rovi*e for in*e,nit+ a)ainst lia%ilit+ to 8r* -ersons' such 8r*
-ersons can *irectl+ sue the insurer' however' the *irect lia%ilit+ of the insurer un*er the
in*e,nit+ contracts a)ainst thir* -art+ lia%. *oes not ,ean that the insurer can %e hel*
soli*aril+ lia%le w. the insure* an*. or the other -arties foun* at fault. The lia%. of the insurer
is %ase* on contractA that of the insure* is %ase* on tort.
"n the case at %ar' -etitioner as insurer of #io Cho+' is lia%le to res-on*ent !alle9os'
%ut it cannot' as incorrectl+ hel* %+ the trial court' %e ,a*e (soli*aril+( lia%le w. the 4 -rinci-al
tortfeasors' na,el+ res-on*ents #io Cho+ an* #an Leon Rice Mill' "nc. Gor if -etitioner-
insurer were soli*aril+ lia%le w. sai* 4 res-on*ents %+ reason of the in*e,nit+ contract'
a)ainst 8r* -art+ liai%ilit+-- un*er w.c an insurer can %e *irectl+ sue* %+ a 8r* -art+-- this will
result in a violation of the -rinci-les un*erl+in) soli*ar+ o%li)ations an* insurance contracts.
RCBC V. CA B1HF # H8CE - >here an o%li)ation e7-ressl+ states a soli*ar+ lia%ilit+ the
concurrence of 4 or ,ore cre*itors or 4 or ,ore *e%tors in one an* the sa,e o%li)ation
i,-lies that each of of the for,er has a ri)ht to *e,an*' or that each one of the latter is
%oun* to ren*er' entire co,-liance w. the -restation 3Art. 14DH.5 The cre*itor ,a+ -rocee*
a)ainst an+ one of the soli*ar+ *e%tors or so,e or all of the, si,ultaneousl+.
:UI(IMBI'% V. CA B1FC # 841E - ;oint obligation distinguished from solidary obligations1
%oncept of active solidarity-- 6istin)uin) it fro, the 9oint o%li)ation' Tolentino ,a&es the ff.
o%servation$ A 9oint o%li)ation is one in w.c each of the *e%tors is lia%le onl+ for a
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CIVIL LAW REVIEW
-ro-ortionate -art of the *e%t' an* each cre*itor is entitle* onl+ to a -ro-ortionate -art of the
cre*it. A soli*ar+ o%li)ation is one in w.c each *e%tor is lia%le for the entire o%li)ation' an*
each cre*itor is entitle* to *e,an* the whole o%li)ation. Hence' in the for,er' each cre*itor
can recover onl+ his share of the o%li)ation' an* each *e%tor can %e ,a*e to -a+ onl+ his
-artA whereas' in the latter' each cre*itor ,a+ enforce the entire o%li)ation' an* each *e%or
,a+ %e o%li)e* to -a+ it in full.
The sa,e wor& *escri%es the conce-t of active soli*arit+ thus$ The essence of active
soli*arit+ consists in the authorit+ of each cre*itor to clai, an* enforce the ri)hts of all' w. the
resultin) o%li)ation of -a+in) ever+ one what %elon)s to hi,A there is no ,er)er' ,uch less a
renunciation of ri)hts' %ut onl+ ,utual restitution.
REPUBLIC PLA'&ER( BA'$ B412 # H8FE - An instrument w&c begins w& )=,) )?) or
)?ither of us) promise to pay, when signed by two or more persons, ma!es them solidarily
liable. The fact that the sin)ular -ronoun is use* in*icates that the -ro,ise is in*ivi*ual as to
each otherA ,eanin) that each of the co-si)ners is *ee,e* to have ,a*e an in*e-en*ent
sin)ular -ro,ise to -a+ the notes in full.
"n the case at %ar' the soli*ar+ lia%ilit+ of -rivate res-. G. Canlas is ,a*e clearer an*
certain' w.o reason for a,%i)uit+' %+ the -resence of the -hrase (9oint an* several( as
*escri%in) the uncon*itional -ro,ise to -a+ to the or*er of Re-u%lic Planters Ban&. 777
CER'A V. CA B44D #CRA 11HE - nl+ 6el)a*o sin)e* the -.n an* accor*inl+' he was the
onl+ one %oun* %+ the contract of loan. Nowhere *i* it a--ear in the -.n that -etitioner was a
co-*e%tor. The law is clear that (3c5ontracts ta&e effect onl+ %etween the -arties 777( But %+
so,e stretch of the i,a)ination' -etitioner was hel* soli*aril+ lia%le for the *e%t alle)e*l+ %ec.
he was a co-,ort)a)or of the -rinci-al *e%tor' 6el)a*o. This i)nores the %asic -rece-t that
(3t5here is soli*ar+ lia%ilit+ onl+ when the o%li)ation e7-ressl+ so states' or when the law or
the nature of the o%li)ation re:uires soli*arit+.
A+t. 1818. Each one o2 the -olida+y c+edito+- may do whate0e+ may be /-e2/l to
the othe+-1 b/t not anythin* which may be p+e./dicial to the latte+.
Balane$ There is an a--arent conflict %et. Art. 1414 an* 1411. Art. 1414 states that the
a)enc+ e7ten*s onl+ to thin)s w.c will %enefit all co-cre*itors. But not an+thin) w.c is
-re9u*icical to the latter. "n Art. 1411' he can *o an acts -re9u*icial to the other cre*itors' li&e
re,ission for instance.
A+t. 1819. A -olida+y c+edito+ cannot a--i*n hi- +i*ht- witho/t the con-ent o2 the
othe+-.
A+t. 181;. &he debto+ may pay any one o2 the -olida+y c+edito+-7 b/t i2 any
demand1 ./dicial o+ e>t+a./dicial1 ha- been made by one o2 them1 payment -ho/ld be
made to him.
Balane$ General Rule.-- A *e%tor ,a+ -a+ an+ of the soli*ar+ cre*itors.
E7ce-tion.-- "f *e,an* is ,a*e %+ one cre*itor u-on the *e%tor' in w.c case the
latter ,ust -a+ the *e,an*in) cre*itor onl+.
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CIVIL LAW REVIEW
Cases$
1. 6e%tor u-on who, *e,an* was ,a*e -a+s to a cre*itor other than the one who
,a*e the *e,an* in violation of Art. 141<.-- This is consi*ere* -a+,ent to a thir* -erson
3Art. 14<1' -ar. 45 an* the *e%tor can still %e ,a*e to -a+ the *e%t. The onl+ concession
)iven to the *e%tor is that he is allowe* to *e*uct the share of the receivin) cre*itor fro, the
total a,ount *ue even if he -ai* the entire a,ount *ue to that cre*itor.
4. Cre*itor A ,a&es *e,an* on *e%tor @. 6oes it ,ean that he cannot -a+ the share
-ertainin) to cre*itor B? Accor*in) to co,,entators he can. But this is *an)erous %ec.
there ,a+ alrea*+ %e an a)ree,ent on the -art of the cre*itors.
8. There are three cre*itors -- A' B I C an* there are three *e%tors -- M' @ I L. A
,a&es a *e,an* on @. M -a+s B. This is not covere* %+ Art. 141<.
A+t. 181,. 'o0ation1 compen-ation1 con2/-ion o+ +emi--ion o2 the debt1 made by
any o2 the -olida+y c+edito+- o+ with any o2 the -olida+y debto+-1 -hall e>tin*/i-h the
obli*ation1 witho/t p+e./dice to the p+o0i-ion- o2 a+ticle 1819.
&he c+edito+ who may ha0e e>ec/ted any o2 the-e act-1 a- well a- he who
collect- the debt1 -hall be liable to the othe+- 2o+ the -ha+e in the obli*ation
co++e-pondin* to them.
A+t. 1819. &he +emi--ion made by the c+edito+ o2 the -ha+e which a22ect-
one o2 the -olida+y debto+- doe- not +elea-e the latte+ 2+om hi- +e-pon-ibility
towa+d- the co!debto+-1 in ca-e the debt had been totally paid by anyone o2
them be2o+e the +emi--ion wa- e22ected.
A+t. 191,. I2 two o+ mo+e pe+-on- ha0e appointed an a*ent 2o+ a common
t+an-action o+ /nde+ta?in*1 they -hall be -olida+ily liable to the a*ent 2o+ all the
con-eC/ence- o2 the a*ency.
Baviera$ Princi-als are alwa+s lia%le soli*aril+A A)ents are not lia%le soli*aril+ unless
e7-ressl+ sti-ulate*
3ii5 Passive #oli*arit+
A+t. 181. &he c+edito+ may p+oceed a*ain-t any one o2 the -olida+y debto+- o+
-ome o+ all o2 them -im/ltaneo/-ly. &he demand made a*ain-t one o2 them -hall not be
an ob-tacle to tho-e which may -/b-eC/ently be di+ected a*ain-t the othe+-1 -o lon* a-
the debt ha- not been 2/lly collected.
BALANE CA#E#$
P'B V. I')EPE')E'& PLA'&ER( B144 #CRA 118E - =f one of the alleged solidary debtos
dies during the pendency of the collection case, the court where said case is pending retains
jurisdiction to continue hearing the charge as against the surviving defendants. -- "t is cr+tal
clear that Art. 1412 is the a--lica%le -rovision in this ,atter. #ai* -rovision )ives the cre*itor
the ri)ht to -rocee* a)ainst an+one of the soli*ar+ *e%tors or so,e or all of the,
si,ultaneousl+. The choice is undoubtedly left to the solidary creditor to determine against
whome he will enforce collection. "n case of the *eath of the soli*ar+ *e%tors' he 3the
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CIVIL LAW REVIEW
cre*itor5 ,a+' if he so chooses' -rocee* a)ainst the survivin) soli*ar+ *e%tors w.o necessit+
of filin) a clai, in the estate of the *ecease* *e%tors. =t is not mandatory for him to have the
case dismissed against the surviving debtors and file its claim in the estate of the deceased
solidary debtor.
0ules of Procedure cannot prevail over substantive law.-- "f #ec. 2' Rule F2' RC
were a--lie* literall+' Art. 1412 woul*' in effect' %e re-eale* since un*er the RC' -etitioner
has no choice %ut to -rocee* a)ainst the estate of Manuel Barre*o onl+. %viousl+' this
-rovision *i,inishes the Ban&/s ri)ht un*er the NCC to -rocee* a)ainst an+ one' so,e or all
of the soli*ar+ *e%tors. #uch a construction is not sanctione* %+ the -rinci-le 777 that a
su%stantive law cannot %e a,en*e* %+ a -roce*ural law. therwise state*' #ec. 2 of Rule
F2 cannot %e ,a*e to -revail over Art. 1412' the for,er %ein) ,erel+ -roce*ural' while the
latter' su%stantive.
#UA'# V. ALE#'AR B4D4 #CRA 21CE - The creditor may proceed against any one of the
solidary debtor or some or all of them simultaneously.-- "f that were to ha--en' -etitioner has
onl+ itself to %la,e. "t allowe* the -erio* for a--eal to la-se w.o a--ealin). Art. 1412
-rovi*es that (BTEhe cre*itor ,a+ -rocee* a)ainst an+ one of the soli*ar+ *e%or or so,e or all
of the, si,ultaneousl+.( Thus "P"' as soli*ar+ cre*itor' has the ri)ht to enforce the trial
court/s *ecision a)ainst -etitioner A#".
777
A+t. 1814. Payment made by one o2 the -olida+y debto+- e>tin*/i-he- the
obli*ation. I2 two o+ mo+e -olida+y debto+- o22e+ to pay1 the c+edito+ may choo-e which
o22e+ to accept.
Ee who made the payment may claim 2+om hi- co!debto+- only the -ha+e which
co++e-pond- to each1 with the inte+e-t 2o+ the payment al+eady made. I2 the payment i-
made be2o+e the debt i- d/e1 no inte+e-t 2o+ the inte+0enin* pe+iod may be demanded.
When one o2 the -olida+y debto+- cannot1 beca/-e o2 hi- in-ol0ency1 +eimb/+-e
hi- -ha+e to the debto+ payin* the obli*ation1 -/ch -ha+e -hall be bo+ne by all hi- co!
debto+-1 in p+opo+tion to the debt o2 each.
A+t. 181=. Payment by a -olida+y debto+ -hall not entitle him to +eimb/+-ement
2+om hi- co!debto+- i2 -/ch payment i- made a2te+ the obli*ation ha- p+e-c+ibed o+
become ille*al.
A+t. 1819. &he +emi--ion made by the c+edito+ o2 the -ha+e which a22ect- one o2
the -olida+y debto+- doe- not +elea-e the latte+ 2+om hi- +e-pon-ibility towa+d- the co!
debto+-1 in ca-e the debt ha- been totally paid by anyone o2 them be2o+e the +emi--ion
wa- e22ected.
Balane$ E22ect o2 Remi--ion.!! Pro%le,$ #oli*ar+ *e%tors >' M' @ I L are in*e%te* to A for
P14'DDD. A re,its the share of @ 3P8'DDD.5
J$ Can @ %e sue*?
A$ @es' for the PC'DDD 3P14'DDD less P8'DDD share of @.5
J$ #u--osin) M is insolvent?
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CIVIL LAW REVIEW
A$ @ can still %e ,a*e to contri%ute. Re,ission will %enefit @ onl+ in so far as his
share is concerne*. His lia%ilit+ in case of insolvenc+ of one co-cre*itor is not affecte*.
J$ Can A *e,an* the PC'DDD fro, @.
A$ @es. But he can recover the sa,e fro, >' M I L.
A+t. 188B. &he +emi--ion o2 the whole obli*ation1 obtained by one o2 the -olida+y
debto+-1 doe- not entitle him to +eimb/+-ement 2+om hi- co!debto+-.
A+t. 1881. I2 the thin* ha- been lo-t o+ i2 the p+e-tation ha- become impo--ible
witho/t the 2a/lt o2 the -olida+y debto+-1 the obli*ation -hall be e>tin*/i-hed.
I2 the+e wa- 2a/lt on the pa+t o2 any one o2 them1 all -hall be +e-pon-ible to the
c+edito+1 2o+ the p+ice and the payment o2 dama*e- and inte+e-t1 witho/t p+e./dice to
thei+ action a*ain-t the */ilty o+ ne*li*ent debto+.
I2 th+o/*h a 2o+t/ito/- e0ent1 the thin* i- lo-t o+ the pe+2o+mance ha- become
impo--ible a2te+ one o2 the -olida+y debto+- ha- inc/++ed in delay th+o/*h the ./dicial o+
e>t+a./dicial demand /pon him by the c+edito+1 the p+o0i-ion- o2 the p+ecedin*
pa+a*+aph -hall apply.
A+t. 1=9,. I2 -olida+ity ha- been a*+eed /pon1 each o2 the a*ent- i- +e-pon-ible
2o+ the non!2/l2illment o2 the a*ency1 and 2o+ the 2a/lt o+ ne*li*ence o2 hi- 2ellow a*ent-1
e>cept in the latte+ ca-e when the 2ellow a*ent- acted beyond the -cope o2 thei+
a/tho+ity.
A+t. 1888. A -olida+y debto+ may1 in action- 2iled by the c+edito+1 a0ail him-el2 o2
all de2en-e- which a+e de+i0ed 2+om the nat/+e o2 the obli*ation and o2 tho-e which a+e
pe+-onal to him1 o+ pe+tain to hi- own -ha+e. With +e-pect to tho-e which pe+-onally
belon* to the othe+-1 he may a0ail him-el2 the+eo2 only a- +e*a+d- that pa+t o2 the debt
2o+ which the latte+ a+e +e-pon-ible.
Balane$
&h+ee )e2en-e- in Pa--i0e (olida+ity3
1. Those *erive* fro, the nature of the o%li)ation is a total *efense' e.).' -rescri-tion'
ille)alit+ of o%li)ation.
4. Those *efenses -ersonal to the *e%tor-*efen*ant' e.).' insanit+. "f it involves vitiation of
consent' total *efense. "f it involves a s-ecial ter, or a con*ition' a -artial *efense.
8. Those *efenses -ersonal to other *e%tors' e.).' -artial *efense' is a *efense as to the
share corres-on*in) to other *e%tors.5

BALANE CA#E$
U'IVER(AL M#&#R( V. CA B4D1 # <<FE - hen the obligation of the other solidary
debtors is so dependent on that of their co-solidary debtor, the release of the one who
appealed, provided it be not on grounds personal to such appealing private resp. operates as
well as to the others who did not appeal. "t is for this reason' that a *ecision or 9u*),ent in
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CIVIL LAW REVIEW
favor of the -rivate res-. who a--eale* can %e invo&e* as res judicata %+ the other -rivate
res-on*ents.
777 "t is o%vious that the res-. court co,,itte* no error in rulin) that its *ecision
inures to the %enefit of all the -rivate res-s. re)ar*less of the fact that onl+ one a--eale*. "t
is erroneous to rule that the *ecision of the trial court coul* %e reverse* as to the a--ealin)
-rvate res-. an* continue in force a)ainst the other -vt. res-s. The latter coul* not re,ain
%oun* after the for,er ha* %een release*A althou)h the other -vt. res-s ha* not 9oine* in the
a--eal' the *ecision ren*ere* %+ the res-. court inure* to their %enefit.
A+t. 1819. &he +emi--ion made by the c+edito+ o2 the -ha+e which a22ect-
one o2 the -olida+y debto+- doe- not +elea-e the latte+ 2+om hi- +e-pon-ibility
towa+d- the co!debto+-1 in ca-e the debt had been totally paid by anyone o2
them be2o+e the +emi--ion wa- e22ected.
&. A""ording to Performan"e$
"n*ivisi%le an* 6ivisi%le %li)ations
Balane$ This &in* of o%li)ations has so,ethin) to *o w. the -restation' not to the thin).
4ivisible obligation is one susce-ti%le of -artial -erfor,ance. An indivisible obligation
is one that ,ust %e -erfor,e* in one act.
General rule$ %li)ation is in*ivisi%le w.c ,eans that it has to %e -erfor,e* in one act
sin)l+. >h+? Bec. the law -rovi*es so$ =nless there is an e7-ress sti-ulation to that effect'
the cre*itor cannot %e co,-elle* -artiall+ to receive the -restations in which the o%li)ation
consists. Neither ,a+ the *e%tor %e re:uire* to ,a&e -artial -a+,ents. 777 3Art. 14<F' -ar.
1.5
&h+ee E>ception- to the R/le on Indi0i-ibility3
1. >hen the -arties so -rovi*e. 3Art. 14<F' -ar. 1.5
4. >hen the nature of the o%li)ation necessaril+ entails -erfor,ance in -arts.
8. >here the law -rovi*es otherwise.
)i0i-ibility o2 #bli*ation di-tin*/i-hed 2+om di0i-ibility o2 ob.ect.!! 6ivisi%ilit+ of o%li)ation
or -restation *oes not necessaril+ ,ean a *ivisi%le o%li)ation. 6ivisi%ilit+ of o%9ect is not the
sa,e as *ivisi%ilit+ of o%li)ation. But the reverse is not the sa,e. "n*ivisi%ilit+ of o%9ect
,eans an in*ivisi%ile o%li)ation.
A+t. 1889. &he di0i-ibility o+ indi0i-ibility o2 the thin*- that a+e the ob.ect o2
obli*ation- in which the+e i- only one debto+ and only one c+edito+ doe- not alte+ o+
modi2y the p+o0i-ion- o2 Chapte+ 8 o2 thi- &itle 5'at/+e and E22ect o2 #bli*ation-6.
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CIVIL LAW REVIEW
A+t. 188;. A .oint indi0i-ible obli*ation *i0e- +i-e to indemnity 2o+ dama*e- 2+om
the time anyone o2 the debto+- doe- not comply with hi- /nde+ta?in*. &he debto+- who
may ha0e been +eady to 2/l2ill thei+ p+omi-e- -hall not cont+ib/te to the indemnity
beyond the co++e-pondin* po+tion o2 the pice o2 the thin* o+ o2 the 0al/e o2 the -e+0ice
in which the obli*ation con-i-t-.
A+t. 188,. Go+ the p/+po-e- o2 the p+ecedin* a+ticle-1 obli*ation- to *i0e de2inite
thin*- and tho-e which a+e not -/-ceptible o2 pa+tial pe+2o+mance -hall be deemed to
be indi0i-ible.
When the obli*ation ha- 2o+ it- ob.ect the e>ec/tion o2 a ce+tain n/mbe+ o2 day-
o2 wo+?1 the accompli-hment o2 wo+? by met+ical /nit-1 o+ analo*o/- thin*- which by
thei+ nat/+e a+e -/-ceptible o2 pa+tial pe+2o+mance1 it -hall be di0i-ible.
Eowe0e+1 e0en tho/*h the ob.ect o+ -e+0ice may be phy-ically di0i-ible1 an
obli*ation i- indi0i-ible i2 -o p+o0ided by law o+ intended by the pa+tie-.
In obli*ation- not to do1 di0i-ibility o+ indi0i-ibility -hall be dete+mined by the
cha+acte+ o2 the p+e-tation in each pa+tic/la+ ca-e.
p+oceedin* a*ain-t all the debto+-. I2 one o2 the latte+ -ho/ld be in-ol0ent1 the othe+-
E7a,-les of "n*ivisi%le %li)ations
315 B+ virtue of its o%9ect
A+t. 1=. Ea-ement- a+e indi0i-ible. I2 the -e+0ient e-tate i- di0ided between two o+ mo+e
pe+-on-1 the ea-ement i- not modi2ied1 and each o2 them m/-t bea+ it on the pa+t which
co++e-pond- to him.
I2 it i- the dominant e-tate that i- di0ided between two o+ mo+e pe+-on-1 each o2 them
may /-e the ea-ement in it- enti+ety1 witho/t chan*in* the place o2 it- /-e1 o+ ma?in* it mo+e
b/+den-ome in any othe+ way.
345 E7-ress -rovision of law
A+t. 8B=9. A pled*e o+ mo+t*a*e i- indi0i-ible1 e0en tho/*h the debt may be di0ided
amon* the -/cce--o+- in inte+e-t o2 the debto+ o+ o2 the c+edito+.
&he+e2o+e1 the debto+@- hei+ who ha- paid a pa+t o2 the debt cannot a-? 2o+ the
p+opo+tionate e>tin*/i-hment o2 the pled*e o+ mo+t*a*e a- lon* a- the debt i- not completely
-ati-2ied.
'eithe+ can the c+edito+@- hei+ who +ecei0ed hi- -ha+e o2 the debt +et/+n the pled*e o+
cancel the mo+t*a*e1 to the p+e./dice o2 the othe+ hei+- who ha0e not been paid.
G+om the-e p+o0i-ion-1 it i- e>pected the ca-e in which1 the+e bein* -e0e+al thin*- *i0en
in mo+t*a*e o+ pled*e1 each one o2 them */a+antee- only a dete+minate po+tion o2 the c+edit.
&he debto+1 in thi- ca-e1 -hall ha0e a +i*ht to the e>tin*/i-hment o2 the pled*e o+
mo+t*a*e a- the po+tion o2 the debt 2o+ which each thin* i- -pecially an-we+able i- -ati-2ied.
A+t. 8B9B. &he indi0i-ibility o2 a pled*e o+ mo+t*a*e i- not a22ected by the 2act that the
debto+- a+e not -olida+ily liable.
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CIVIL LAW REVIEW
A+t. 118. I2 -e0e+al pe+-on-1 .ointly and in the -ame cont+act1 -ho/ld -ell an /ndi0ided
immo0able with a +i*ht o2 +ep/+cha-e1 none o2 them may e>e+ci-e thi- +i*ht 2o+ mo+e than hi-
+e-pecti0e -ha+e.
&he -ame +/le -hall apply i2 the pe+-on who -old an immo0able alone ha- le2t -e0e+al
hei+-1 in which ca-e each o2 the latte+ may only +edeem the pa+t which he may ha0e acC/i+ed.
A+t. 119. In the ca-e o2 the p+ecedin* a+ticle1 the 0endee may demand o2 all the
0endo+- o+ co!hei+- that they come to an a*+eement /pon the +ep/+cha-e o2 the whole thin*
-old7 anbd -ho/ld they 2ail to do -o1 the 0endee cannot be compelled to con-ent to a pa+tial
+edemption.
A+t. 18;=. Unle-- the+e i- an e>p+e-- -tip/lation to that e22ect1 the c+edito+ cannot be
compelled pa+tially to +ecei0e the p+e-tation- in which the obli*ation con-i-t-. 'eithe+ may the
debto+ be +eC/i+ed to ma?e pa+tial payment-.
Eowe0e+1 when the debt i- in pa+t liC/idated and in pa+t /nliC/idated1 the c+edito+ may
demand and the debto+ may e22ect the payment o2 the 2o+me+ witho/t waitin* 2o+ the liC/idation
o2 the latte+.
A+t. 1,=9. Unle-- othe+wi-e a*+eed1 the b/ye+ o2 *ood- i- not bo/nd to accept deli0e+y
the+eo2 by in-tallment-.
Whe+e the+e i- a cont+act o2 -ale o2 *ood- to be deli0e+ed by -tated in-tallment-1 which
a+e to be -epa+ately paid 2o+1 and the -elle+ ma?e- de2ecti0e deli0e+ie- in +e-pect o2 one o+ mo+e
in-tallment-1 o+ the b/ye+ ne*lect- o+ +e2/-e- witho/t ./-t ca/-e to ta?e deli0e+y o2 o+ pay 2o+
one o+ mo+e in-tallment-1 it depend- in each ca-e on the te+m- o2 the cont+act and the
ci+c/m-tance- o2 the ca-e1 whethe+ the b+each o2 cont+act i- -o mate+ial a- to ./-ti2y the in./+ed
pa+ty in +e2/-in* to p+oceed 2/+the+ and -/in* 2o+ dama*e- 2o+ b+each o2 the enti+e cont+act1 o+
whethe+ the b+each i- -e0e+able1 *i0in* +i-e to a claim 2o+ compen-ation b/t not to a +i*ht to
t+eat the whole cont+act a- b+o?en.
385 E7-ress a)reee,ent
A+t. 141;. I2 the cont+acto+ a*+ee- to p+od/ce the wo+? 2+om mate+ial 2/+ni-hed by him1
he -hall deli0e+ the thin* p+od/ced to the employe+ and t+an-2e+ dominion o0e+ the thin*. &hi-
cont+act -hall be *o0e+ned by the 2ollowin* a+ticle- a- well a- by the pe+tinent p+o0i-ion- on
wa++anty o2 title and a*ain-t hidden de2ect- and the payment o2 p+ice in a cont+act o2 -ale.
'. A""ording to (an"tions for Brea")$
A. #i,-le
B. %li)ations with a Penal Clause
Balane$
A+ticle- 188 to 189B on o%li)ation w. a -enal clause is the sa,e as li:ui*ate* *a,a)es
foun* in Articles 4442 to 444F %+ authorit+ of La,%ert v. Go7' 42 Phil. 1FF.
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CIVIL LAW REVIEW
Penal Cla/-e.!! A -enal clause is an accessor+ un*erta&in) to assu,e )reater lia%ilit+ in
case of %reach. The -ur-ose is to stren)then the coercive force of the o%li)ation. >hen a
-enal clause is -resent' *a,a)es *o not have to %e -rove*.
Cha+acte+i-tic- o2 Penal Cla/-e3
1. "ubsidiary 3also calle* alternative5 w.c ,eans that u-on non--erfor,ance' onl+ the
-enalt+ ,a+ %e *e,an*e*.
E7ce-tion$ >here -enalt+ is 9oint 3cu,ulative5 - where %oth the -rinci-al un*erta&in)
an* -enalt+ ,a+ %e *e,an*e* -- Art. 144H' secon* sentence$ (777 unless this ri)ht has
%een clearl+ )rante* hi,.( Notice the wor* clearl+ 3not e7-licitl+5 w.c ,eans that the ri)ht can
%e clearl+ )rante* %+ i,-lication.

4. ?*clusive w.c ,eans that a -enal clause is for re-aration. "t ta&es the -lace of *a,a)es.
E7ce-tion$ >hen it is for the -unish,ent in w.c case %oth -enalt+ an* *a,a)es ,a+
%e *e,an*e*' na,el+--
3a5 "f there is a sti-ulation that %oth -enalt+ an* *a,a)es are recovera%le in case of
%reach
3%5 "f the o%li)or refuses to -a+ the -enalt+
3c5 "f the o%li)or is )uilt+ of frau* in the fulfill,ent of his o%li)ation.

A+t. 188. In obli*ation- with a penal cla/-e1 the penalty -hall -/b-tit/te the
indemnity 2o+ dama*e- and the payment o2 inte+e-t- in ca-e o2 non!compliance1 i2 the+e
i- no -tip/lation to the cont+a+y. 'e0e+thele--1 dama*e- -hall be paid i2 the obli*o+
+e2/-e- to pay the penalty o+ i- */ilty o2 2+a/d in the 2/l2illment o2 the obli*ation.
&he penalty may be en2o+ced only when it i- demandable in acco+dance with the
p+o0i-ion- o2 thi- Code.
BALANE CA#E#$
BACERACE V. E(PIRI&U B14 P 8<2E - Art. 1114 of the CC -er,its the a)ree,ent u-on a
-enalt+ a-art fro, the interest. #houl* there %e such an a)ree,ent' the -enalt+ 777 *oes
not inclu*e the interest' an* as such the two are *ifferent an* *istinct thin)s w.c ,a+ %e
*e,an*e* se-aratel+. The -enalt+ is not to %e a**e* to the interest for the *eter,ination of
whether the interest e7cee*s the rate fi7e* %+ law' since sai* rate was fi7e* onl+ for the
interest.
R#BE(!GRA'CI(C# V. CGI BF2 # 1CE - Petitioner conten*s that the *ee* of a%solute sale
e7ecute* %et. the -arties sti-ulates that shoul* the ven*or fail to issue the transfer cert. of title w.in 2
,os. fro, the *ate of full -a+,ent' it shall refun* to the ven*ee the total a,ount -ai* for w. interest at
the rate of <N -.a.' hence' the ven*ee is %oun* %+ the ter,s of the -rovision an* cannot recover ,ore
than what is a)ree* u-on. 777
HEL6$ The fore)oin) ar)u,ent of -etitioner is totall+ *evoi* of ,erit. >e woul* a)ree w.
-etitioner if the clause in :uestion were to %e consi*ere* as a -enal clause. Nevertheless'
for ver+ o%vious reasons' sai* clause *oes not conve+ an+ -enalt+' for even without it,
-ursuant to Art. 44DC of the NCC' the ven*ee woul* %e entitle* to recover the a,ount -ai*
%+ her w. legal rate of interest w&c is even more than the 8@ provided for in the clause.

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CIVIL LAW REVIEW
Balane$ The #C consi*ere* the <N interest as not a -enal clause %ec. it *oes not stren)then
the coercive force of the o%li)ation.
PAMI'&UA' V. CA BC< # 112E - >e hol* that a--ellant/s contention cannot %e sustaine*
%ec. the secon* sentence of art. 1442 itself -rovi*es that (nevertheless' *a,a)es shall %e
-ai* if the o%li)or 777 is )uilt+ of frau* in the fulfill,ent of the o%li)ation.( 777 The trial court
an* the CA foun* that Pa,intuan was )uilt+ of frau* %ec. he *i* not ,a&e a co,-lete
*eliver+ of the -lastic sheetin)s an* he over-rice* the sa,e. 777
Penalty and 5iquidated damages.-- There is no 9ustification for the NCC to ,a&e an
a--arent *istinction %et. -enalt+ an* li:ui*ate* *a,a)es %ec. the settle* rule is that there is
no *ifference %et. -enalt+ an* li:ui*ate* *a,a)es insofar as le)al results are concerne* an*
either ,a+ %e recovere* w.o the necessit+ of -rovin) actual *a,a)es an* %oth ,a+ %e
re*uce* when -ro-er.
777
>e further hol* that 9ustice woul* %e a*e:uatel+ *one in this case %+ allowin) @u Pin)
Kun Co.' "nc. to recover onl+ the actual *a,a)es -roven' an* not to awar* to it the sti-ulate*
li:ui*ate* *a,a)es of P1D'DDD for an+ %reach of the contract. The proven damages
supersede the stipulated liquidated damages.
This view fin*s su--ort in the o-inion of Manresa that in cases of frau* the *ifference
%et. the -roven *a,a)es an* the sti-ulate* -enalt+ ,a+ %e recovere*.
C#U'&RA BA'$ER( V. CA B4D1 # <1FE - A -rovision w.c calls for the forfeiture of the
re,ainin) *e-osit still in the -ossession of the lessor' w.o -re9u*ice to an+ other o%li)ation
still owin)' in the event of the ter,ination or cancellation of the a)ree,ent %+ reason of the
lessee/s violation of an+ of the ter,s an* con*itions of the a)ree,ent is a -enal clause that
,a+ %e vali*l+ entere* into. A penal "lause is an accessory obligation w&c the parties attach
to a principal obligation for the purpose of insuring the performance thereof by imposing on
the debtor a special prestation +generally consisting in the payment of a sum of money- in
case the obligation is not fulfilled or is irregularly or inadequately fulfilled. As a )eneral rule' in
o%li)ations w. a -enal clause' the -enalt+ shall su%stitute the in*e,nit+ for *a,a)es an* the
-a+,ent of interests in case of non-co,-liance. This is s-ecificall+ -rovi*e* for in Art. 1442'
-ar. 1. "n such case' -roof of actual *a,a)es suffere* %+ the cre*itor is not necessar+ in
or*er that the -enalt+ ,a+ %e *e,an*e*. 777
But there are cases when %oth the -enalt+ an* the actual *a,a)es ,a+ %e
recovere*' such as when there is a sti-ulation to the contrar+ or when the o%li)or is )uilt+ of
frau*.
Balane$ Countr+ Ban&ers case is %etter than Pa,intuan v. CA. Both the -enalt+ an*
*a,a)es are recovera%le in e7ce-tional circu,stances. @ou *o not ,er)e the two.
((( V. M##'WAL$ B441 # 11CE - A -enal clause is an accessor+ un*erta&in) to assu,e
)reater lia%ilit+ in case of %reach. "t has a *ou%le function$ 315 to -rovi*e for li:ui*ate*
*a,a)esA an* 345 to stren)then the coercive force of the o%li)ation %+ the threat of )reater
res-onsi%ilit+ in the event of %reach. Gro, the fore)oin)' it is clear that a -enal clause is
inten*e* to -revent the o%li)or fro, *efaultin) in the -erfor,ance of his o%li)ation. Thus' if
there shoul* %e *efault' the -enalt+ ,a+ %e enforce*.
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A+t. 1884. &he debto+ cannot e>empt him-el2 2+om the pe+2o+mance o2 the
obli*ation by payin* the penalty1 -a0e in the ca-e whe+e thi- +i*ht ha- been e>p+e--ly
+e-e+0ed 2o+ him. 'eithe+ can the c+edito+ demand the 2/l2illment o2 the obli*ation and
the -ati-2action o2 the penalty at the -ame time1 /nle-- thi- +i*ht ha- been clea+ly
*+anted him. Eowe0e+1 i2 a2te+ the c+edito+ ha- decided to +eC/i+e the 2/l2illment o2 the
obli*ation1 the pe+2o+mance the+eo2 -ho/ld become impo--ible witho/t hi- 2a/lt1 the
penalty may be en2o+ced.
A+t. 188=. P+oo2 o2 act/al dama*e- -/22e+ed by the c+edito+ i- not nece--a+y
ino+de+ that the penalty may be demanded.
Baviera$ Courts enforce contracts accor*in) to their ter,s
A+t. 1889. &he ./d*e -hall eC/itably +ed/ce the penalty when the p+incipal
obli*ation ha- been pa+tly o+ i++e*/la+ly complied with by the debto+. E0en i2 the+e ha-
been no pe+2o+mance1 the penalty may al-o be +ed/ced by the co/+t- i2 it i- iniC/ito/-
o+ /ncon-cionable.
A+t. 189B. &he n/llity o2 the penal cla/-e doe- not ca++y with it that o2 the
p+incipal obli*ation.
&he n/llity o2 the p+incipal obli*ation ca++ie+ with it that o2 the penal cla/-e.
1. 6istin)uishe* fro, alternative o%li)ations
obli*ation by payin* the penalty1 -a0e in the ca-e whe+e hi- +i*ht ha- been e>p+e--ly
A+t. 18BB. &he +i*ht o2 choice belon*- to the debto+1 /nle-- it ha- been e>p+e--ly
*+anted to the c+edito+.
&he debto+ -hall ha0e no +i*ht to choo-e tho-e p+e-tation- which a+e impo--ible1
/nlaw2/l o+ which co/ld not ha0e been the ob.ect o2 the obli*ation.
4. 6istin)uishe* fro, facultative o%li)ations
obli*ation by payin* the penalty1 -a0e in the ca-e whe+e thi- +i*ht ha- been e>p+e--ly
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CIVIL LAW REVIEW
A+t. 18B. When only one p+e-tation ha- been a*+eed /pon1 b/t the obli*o+ may
+ende+ anothe+ in -/b-tit/tion1 the obli*ation i- called 2ac/ltati0e.
&he lo-- o+ dete+io+ation o2 the thin* intended a- a -/b-tit/te1 th+o/*h the
ne*li*ence o2 the obli*o+ doe- not +ende+ him liable. B/t once the -/b-tit/tion ha- been
made1 the obli*o+ i- liable 2o+ the lo-- o2 the -/b-tit/te on acco/nt o2 hi- delay1
ne*li*ence o+ 2+a/d.
!. E7tin)uish,ent of %li)ations
A+t. 1891. #bli*ation- a+e e>tin*/i-hed3
516 By payment o+ pe+2o+mance7
586 By the lo-- o2 the thin* d/e7
596 By the condonation o+ +emi--ion o2 the debt7
5;6 By the con2/-ion o+ me+*e+ o2 the +i*ht- o2 the c+edito+ and debto+7
5,6 By compen-ation7
56 By no0ation.
#the+ ca/-e- o2 e>tin*/i-hment o2 obli*ation-1 -/ch a- ann/lment1 +e-ci--ion1
2/l2illment o2 a +e-ol/to+y condition1 and p+e-c+iption a+e *o0e+ned el-ewhe+e in thi-
Code.
Balane$ Art. 1481 )ives us ten ,o*es of e7ti)uishin) an o%li)ation. ne of the ,o*es
,entione* is rescission. But it *oes not tell us whether this is rescission un*er Art. 11C1
3resolution5 or rescission un*er Art. 18FD' et. se:. "f it ,eans %oth' then we have eleven
,o*es of e7tin)uishin) an o%li)ation un*er Art. 1481.
This enu,eration is not e7clusive. ther ,o*es of e7tin)uishin) an o%li)ation are the
followin)$
1. 6eath' -articularl+ where the o%li)ation is -urel+ -ersonal' e.).' *eath of one -artner
*issolves tha -artnershi-.
4. Renunciation %+ the cre*itor
8. Co,-ro,ise
<. Arrival of resolutor+ ter,
1. Mutual *esistance or mutuo disenso 3#aura v. 6BP.5
2. "n so,e cases' unilateral with*rawal' e.).' in -artnershi-' an+ -artner can with*raw an+
ti,e fro, the -artnershi-.
H. "n so,e cases' chan)e of civil status' e.).' if ,arria)e is annule*' it e7tin)uishes
o%li)ations li&e the o%li)ation to )ive su--ort' a,on) others.
F. =nforseen events 3rebus sic stantibus5 3Art. 142H.5
C. >ant of interest
"llustration$ Carale owns a restaurant. He hires Molina as a chef. "n the contract of
e,-lo+,ent' there was a sti-ulation that if Molina resi)ns fro, Carale/s restaurant' he cannot
see& e,-lo+,ent fro, another restaurant for a -erio* of five +ears. #u%se:uentl+' Molina
resi)ns fro, Carale/s restaurant an* wants to a--l+ to Mil*o/s House of Chic&en. "n this
case' Molina cannot wor& w. Mil*o/s %ec. of the sti-ulation in the contract he si)ne* w.
Carale. #u--ose' however' Carale' closes *own his restaurant an* en)a)es in a totall+
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CIVIL LAW REVIEW
*ifferent %usiness' a construction %usiness' for e7a,-le' Molina can a--l+ for wor& at Mil*o/s
even %efore the la-se of the five +ear -rohi%itive -erio*.
"n this case' Molina can ,a&e out a case of e7tin)uish,ent of o%li)ation on the
)roun* of want of interest. The o%vious -ur-ose of the sti-ulation is to -revent unfair
co,-etition.
1D. ;u*icial insolvenc+

BALANE CA#E$
(AURA IMP#R& J EDP#R& BA'$ V(. )BP B<< # <<1E - >here after a--roval of his loan'
the %orrower' instea* of insistin) for its release' as&e* that the ,ort)a)e )iven as securit+ %e
cancelle* an* the cre*itor acce*e* thereto' the action ta&en %+ %oth -arties was in the nature
of ,utual *esistance - what Manresa ter,s (,utuo *isenso( - w.c is a ,o*e of e7tin)uishin)
o%li)ations. "t is a conce-t that *erives fro, the -rinci-le that since ,utual a)ree,ent can
create a contract' ,utual *isa)ree,ent %+ the -arties can cause its e7tin)uishe,ent.
A. Payment o+ Pe+2o+mance
Balane/s utline of the Articles on Pa+,ent$
ReC/i-ite- o2 Payment o+ Pe+2o+mance3
". Re$ The -restation
1. "*entit+
4. "nte)rit+
8. "n*ivisi%ilit+
"". Re$ The -arties
1. Pa+or. o%li)or. *e%tor
4. Pa+ee. o%li)ee. cre*itor
""". Re$ Ti,e an* -lance
". >ith res-ect to -restation$
1. =dentity
a. "f s-ecific -restation' this re:uisite ,eans that the ver+ thin) or service
,ust %e *elivere*. 3Art. 14<<.5
%. "f )eneric' the re:uisite re:uires the *eliver+ of so,ethin) of neither inferior
or su-erior :ualit+ 3Art. 14<25. "t ,ust %e so,ethin) in the ,i**le. "n case of ,one+'
there are s-ecial rules$
3i5 Governin) rule$ RA 14C as a,en*e* %+ RA <1DD-- "n case of
,one+ *e%ts' +ou will have to -a+ in le)al ten*er in the Phili--ines. This law
su-erse*es Art. 14<C.
"f the -arties sti-ulate that -a+,ent will %e ,a*e in forei)n currenc+'
the o%li)ation to -a+ is vali* %ut the o%li)ation to -a+ in forei)n currenc+ is
voi*. Pa+,ent will %e ,a*e in Phil. currenc+.
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CIVIL LAW REVIEW
<ow do you convertA "n case of an o%li)ation w.c is not a loan in
forei)n currenc+' if incurre* %ef. RA 14C' conversion ,ust %e as of the ti,e the
o%li)ation was incurre*. "f incurre* after RA 14C %eca,e effective' the
conversion ,ust %e as of the ti,e the o%li)ation was incurre* 3Kalalo v. Lu0.5
"f the loan is in forei)n currenc+' the conversion is as of the ti,e of -a+,ent.
3RA 14C.5
3ii5 Pa+,ent in ne)otia%le -a-er-- This ,a+ %e refuse* %+ the cre*itor.
Pa+,ent in ,ana)er/s chec& or certifie* chec& is not -a+,ent in le)al ten*er.
The rulin) in #eneris has %een reverse* in the case of Bisho- of Malolos. The
Malolos rulin) is %etter. " foun* it har* to acce-t that ,ana)er/s chec& or
certifie* chec& is )oo* as le)al ten*er. There are alwa+s ris&s to w.c cashier/s
chec&s are su%9ect. >hat if after havin) issue* a cashier/s chec&' the *rawee-
%an& closes' what ha--ens to +our cashier/s chec&?
"n an+ event' -a+,ent %+ chec& can %e refuse* %+ the cre*itor. An*
even if -a+,ent %+ chec& is acce-te* %+ the cre*itor' the acce-tance is is onl+
a -rovisional -a+,ent until the chec& is 3a5 encashe* or 3%5 when throu)h the
fault of the cre*itor the+ have %een i,-aire*. The case of Na,arco v.
Ge*eration' <C #CRA 48F' inter-rets the -hrase (when throu)h the fault of the
cre*itor' the+ have %een i,-aire*( as to a--l+ onl+ to a chec& use* in -a+,ent
if issue* %+ a -erson other than the *e%tor. >h+? Bec. if the chec& was
issue* %+ the *e%tor hi,self' all that the *e%tor have to *o is to issue another
chec&.
3iii5 Revaluation in case of e7traor*inar+ inflation or *eflation 3Art.
141D.5-- This rule has never %een use*. "t was onl+ *urin) the ;a-anese
occu-ation that there was a reco)nition of e7traor*inar+ inflation in this
countr+.
c. E7ce-tions to the re:uire,ent of i*entit+
3i5 4acion en pago 3Art. 14<1.5
3ii5 Novation
"n %oth cases' there is a voluntar+ chan)e in the o%9ect.
4. =ntegrity.-- There ,ust %e *eliver+ of the entire -restation *ue. 3Art. 1488.5 The
e7ce-tions to the re:uire,ent of inte)rit+ are$
a. "n case of su%stantial -erfor,ance in )oo* faith 3Art. 148<.5 This is an
e:uit+ rule.
%. "n case of waiver of o%li)ee. cre*itor 3Art. 1481.5
c. "n case of a--lication of -a+,ents if several *e%ts are e:uall+ onerous 3Art.
141<' -ar. 4.5
8. =ndivisibility.-- This ,eans that the o%li)or ,ust -erfor, the -restation in one act
an* not in -arts. 3Art. 14<F.5 There are several e7ce-tions to this re:uire,ent$
a. "n case or e7-ress sti-ulation. 3Art. 14<F.5
%. "n case of -restations w.c necessaril+ entail -artial -erfor,ance. 3Art.
1441' -ar. 45
c. "f the *e%t is li:ui*ate* in -art an* unli:ui*ate* in -art. 3Art. 14<F.5
*. "n case of 9oint *ivisi%le o%li)ations 3Art. 14DF.5
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e. "n soli*ar+ o%li)ations when the *e%tors are %oun* un*er *ifferent ter,s
an* con*itions. 3Art. 1411.5
f. "n co,-ensation when a %alance is left. 3Art. 14CD.5
). "f the wor& is to %e *elivere* -artiall+' the -rice or co,-ensation for each
-art havin) %een fi7e*. 3Art. 1H4D.5
h. "n case of several )uarantors who *e,an* the ri)ht of *ivision. 3Art. 4D21.5
i. "n case of i,-ossi%ilit+ or e7tre,e *ifficult+ of sin)le -erfor,ance.
"". >ith res-ect to the -arties
There are two -arties involve*$
1. Pa+or. o%li)or. *e%tor
4. Pa+ee. o%li)ee. cre*itor
Re:uire,ents$
1. Art. 1442 - 148F. >ho shoul* the -a+or %e$
a. >ithout nee* of the cre*itor/s consent
315 The *e%tor hi,self
345 His heirs or assi)ns
385 His a)ent
3<5 An+one intereste* in the fulfill,ent of the o%li)ation' e.).' a )uarantor
%. >ith the cre*itor/s consent -- An+one. This is a *e-arture fro, the rule in the l*
Civil Co*e w.c *i* not re:uire consent on the -art of the cre*itor.
c. Effect of -a+,ent %+ a thir* -erson$
315 "f the -a+,ent was w. the *e%tor/s consent' he %eco,es the a)ent of the
*e%tor. The effect is su%ro)ation 3Articles 1482-148H.5 E7ce-tion$ "f the -erson
-a+in) inten*e* it to %e a *onation. 3Art. 148F.5
345 "f -a+,ent was without the *e%tor/s consent' the thir* -erson ,a+ *e,an*
re-a+,ent to the e7tent that the *e%tor has %een %enefite*. 3Art. 1482' -ar. 4.5
4. >ho ,a+ %e the -a+ee?
a. The o%li)ee -ro-er 3Articles 14<D' 1242.5
%. His successor or transferee 3Art. 14<D.5
c. His a)ent 3i%i*.5
*. An+ thir* -erson su%9ect to the followin) :ualifications$
315 -rovi*e* it re*oun*e* to the o%li)ee/s %enefit an* onl+ to the e7tent of
such %enefit. 3Art. 14<1' -ar. 4.5
345 "f it falls un*er Art. 14<1' -ar. 4 nos. 1' 4 I 8' %enefit is *ee,e* to %e total.
e. An+one in -ossession of the cre*it. 3Art. 14<4.5
"n all these five 315 cases' it is re:uire* that the *e%t shoul* not have %een )arnishe*.
3Art. 14<8.5
""". >ith res-ect to the ti,e an* -lace of -a+,ent
1. >hen -a+,ent to %e ,a*e$ >hen *ue
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4. Place 3Art. 1411.5
a. Pri,ar+ rule$ As sti-ulate*
%. #econ*ar+ rule$ Place where the thin) was at the ti,e the o%li)ation was
constitute* if the o%li)ation is to *eliver a *eter,inate thin).
c. Tertiar+ rule$ At the *e%tor/s *o,icile
A+t. 1898. Payment mean- not only the deli0e+y o2 money b/t al-o the
pe+2o+mance1 in any othe+ manne+1 o2 an obli*ation.
Balane$ Pa+,ent or Perfor,ance are use* interchan)ea%l+. But technicall+' -a+,ent is
use* in o%li)ations to )ive whereas -erfor,ance is use* in o%li)ations to *o. Pa+,ent.
-erfor,ance is the -ara*i),atic ,o*e of e7tin)uish,ent of an o%li)ation. "t is the onl+
nor,al wa+ of e7tin)uishin) an o%li)ation.
A+t. 1899. A debt -hall not be /nde+-tood to ha0e been paid /nle-- the thin* o+
-e+0ice in which the obli*ation con-i-t- ha- been completely deli0e+ed o+ +ende+ed1 a-
the ca-e may be.
A+t. 189;. I2 the obli*ation ha- been -/b-tantially pe+2o+med in *ood 2aith1 the
obli*o+ may +eco0e+ a- tho/*h the+e had been a -t+ict and complete 2/l2illment1 le--
dama*e- -/22e+ed by the obli*ee.
BALANE CA#E#$
LE%AR)A EERMA'#( V. (AL)A'A B11 # 84<E - The Court/s *octrine in ;.M. Tuason v.
;avier is full+ a--lica%le to the -resent case.
I.M. &UA(#' V. IAVIER B81 # F4CE - "n the interest of 9ustice an* e:uit+' court ,a+ )rant
the ven*ee a new ter, where he su%stantiall+ -erfor,e* in )oo* faith accor*in) to Art. 148<'
re)ar*less of Art. 11C4 of the sa,e Co*e.
PRE(BI&ER# V. CA B41H # 8H4E - =n*er Art. 148<' if the o%li)ation has %een su%stantiall+
-erfor,e* in GG' the o%li)or 3-rivate res-. Leonar*o Canoso5 ,a+ recover as thou)h there
ha* %een a strict an* co,lete fulfill,ent' less *a,a)es suffere* %+ the o%li)ee 3Pres%itero.5
Moreover' when the o%li)ee acce-ts the -erfor,ance as what ha--ene* in this case'
&nowin) its inco,-leteness or irre)ularit+' an* w.o e7-ressin) an+ -rotest or o%9ection' the
o%li)ation is *ee,e* full+ co,-lie* w..
&AAA% V. CA B41C # <FDE - Both the trial court an* the a--ellate courts were correct in
sustainin) the clai, of -vt res-s. anchore* on esto--el or waiver %+ acce-tance of *ela+e*
-a+,ents un*er Art. 1481 consi*erin) that the heirs of ;uan Galicia' #r. acco,,o*ate* -vt.
res-. %+ acce-tin) the latter/s *ela+e* -a+,ents not onl+ %e+on* the )race -erio*s %ut also
*urin) the -en*enc+ of the case for s-ecific -erfor,ance. "n*ee*' the ri)ht to rescin* is not
a%solute an* will not %e )rante* where where there has %een substantial compliance %+
-artial -a+,ents. B+ an* lar)e' -etitioners/ actuation is susce-ti%le of %ut one construction--
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that the+ are now esto--e* fro, rene)in) fro, their co,,it,ent on account of acce-tance
of %enefits arisin) fro, over*ue accounts of -vt. res-s.
A+t. 189,. When the obli*ee accept- the pe+2o+mance1 ?nowin* it-
incompletene-- o+ i++e*/la+ity1 and witho/t e>p+e--in* any p+ote-t o+ ob.ection1 the
obli*ation i- deemed 2/lly complied with.
BALANE CA#E#$
AFC#'A V. IAMA')RE B111 # 81HE - 777 "f the -etitioner is fuss+ enou)h to invo&e it
now' it stan*s to reason that he woul* have fusse* it too in the recei-t he willin)l+ si)ne*
after acce-tin)' w.o reservation an* a--arentl+ w.o -rotest onl+ PH'DDD. Art. 1481 is
a--lica%le.
777
Petitioner sa+s that he coul* not *e,an* -a+,ent of the %alance of P4DD on
1D.42.2D' *ate of recei-t %ec. the rental for the cro- +ear 1C21-1C24 was *ue on or %efore
1.8D.21. But this woul* not have -revente* hi, fro, reservin) in the recei-t his ri)ht to
collect the %alance when it fell *ue. Moreover' there is evi*ence in the recor* that when the
*ue *ate arrive*' he ,a*e an+ *e,an*' written or ver%al' for the -a+,ent of that a,ount.
PA%(IBI%A' V. CA B441 # 4D4E - >e hol* that the -a+,ent a,ountin) to PF'1DD for the
%alance of P8'11F.4D as of F.42.HF -lus the P1'DDD it was as&e* to -a+ on <.4<.F< woul* at
the ver+ least constitute su%stantial -erfor,ance. 777 Petitioner in this case has the ri)ht to
,ove for the cancellation of the ,ort)a)e an* the release of the ,ort)a)e* -ro-.' u-on
-a+,ent of the %alance of the loan. 777
Thus' asi*e fro, the fact that the res-. %an& was esto--e* fro, enforcin) its ri)ht to
foreclose %+ virtue of its acce-tance of the *ela+e* -a+,ents for a -erio* of ,ore than si7
+ears' the a--lication of such -a+,ent to the interest an* the -rinci-al *urin) the first three
-a+,ents constitutes a virtual waiver of the acceleration clause -rovi*e* in the contract. >e
cannot sustain the le)alit+ of the foreclosure un*er the -eculiar facts of this case' %ec. there
is su%stantial -erfor,ance of the o%li)ation on the -art of -etitioner. 777
1. &o whom payment -ho/ld be made
A+t. 18;B. Payment -hall be made to the pe+-on in who-e 2a0o+ the obli*ation
ha- been con-tit/ted1 o+ hi- -/cce--o+ in inte+e-t1 o+ any pe+-on a/tho+i<ed to +ecei0e
it.
BALANE CA#E#$
ARA'A( V. &U&AA' B14H # F4FE - Payment by judgment debtor to the wrong party does
not e*tinguish judgment debt.-- The %ur*en of recoverin) the su--ose* -a+,ents of the
cash *ivi*en*s ,a*e %+ =TEM to the wron) -arties Castane*a an* Manuel s:uarel+ falls
u-on itself %+ its own action an* cannot %e -asse* %+ it to -etitioners as innocent -arties. "t
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is ele,entar+ that -a+,ent ,a*e %+ a 9u*),ent *e%tor to a wron) -art+ cannot e7tin)uish
the 9u*),ent o%li)ation of such *e%tor to its cre*itor. 777
PAL V. CA B1F1 # 11HE - A payment in order to be effective to discharge an obligation must
be made to the proper parties.-- "n )eneral' a -a+,ent' in or*er to %e effective to *ischar)e
an o%li)ation' ,ust %e ,a*e to the -ro-er -erson. Thus' -a+,ent ,ust %e ,a*e to the
o%li)ee hi,self or to an a)ent havin) authorit+' e7-ress or i,-lie*' to receive the -articular
-a+,ent. Pa+,ent ,a*e to one havin) a--arent authorit+ to receive the ,one+ will' as a
rule' %e treate* as thou)h actual authorit+ ha* %een )iven for its recei-t. Li&ewise' if
-a+,ent is ,a*e to one who %+ law is authori0e* to act for the cre*itor' it will wor& a
*ischar)e. The recei-t of ,one+ *ue on a 9u*),ent %+ an officer authori0e* %+ law to acce-t
it will' therefore satisf+ the *e%t.
777 The theor+ is where a -a+,ent is ,a*e to a -erson authori0e* an* reco)ni0e*
%+ the cre*itor' the -a+,ent to such a -erson so authori0e* is *ee,e* -a+,ent to the
cre*itor. 777
Bnless authorized by law or by consent of the obligee, a public officer has no
authority to accept anything other than money in payment of an obligation under a judgment
being e*ecuted.-- "n the a%sence of an a)ree,ent' either e7-ress or i,-lie*' -a+,ent
,eans the *ischar)e of a *e%t or o%li)ation in ,one+ an* unless the -arties so a)ree' a
*e%tor has no ri)hts' e7ce-t at his own -eril' to su%stitute so,ethin) in lieu of cash as
,e*iu, of -a+,ent of his *e%t. Conse:uentl+' =nless authori0e* %+ law or %+ consent of the
o%li)ee' a -u%lic officer has no authorit+ to acce-t an+thin) other than ,one+ in -a+,ent of
an o%li)ation un*er a 9u*),ent %ein) e7ecute*. #trictl+ s-ea&in)' the acce-tance %+ the
sheriff of the -etitioner/s chec&s' in the case at %ar' *oes not' -er se' o-erate as a *ischar)e
of the 9u*),ent *e%t.
A+t. 18;1. Payment to a pe+-on who i- incapacitated to admini-te+ hi- p+ope+ty
-hall be 0alid i2 he ha- ?ept the thin* deli0e+ed1 o+ in-o2a+ a- the payment ha- been
bene2icial to him.
Payment made to a thi+d pe+-on -hall al-o be 0alid in-o2a+ a- it ha- +edo/nded to
the bene2it o2 the c+edito+. (/ch bene2it to the c+edito+ need not be p+o0ed in the
2ollowin* ca-e-3
516 I2 a2te+ the payment1 the thi+d pe+-on- acC/i+e- the c+edito+@- +i*ht-7
586 I2 the c+edito+ +ati2ie- the payment to the thi+d pe+-on7
596 I2 by the c+edito+@- cond/ct1 the debto+ ha- been led to belie0e that the thi+d
pe+-on had a/tho+ity to +ecei0e the payment.
Baviera$ Nu,%er three is Esto--el in Pais
A+t. 18;8. Payment made in *ood 2aith to any pe+-on in po--e--ion o2 the c+edit
-hall +elea-e the debto+.
3Assi)n,ent of Cre*its an* ther "ncor-oreal Ri)hts5
A+t. 18. &he debto+ who1 be2o+e ha0in* ?nowled*e o2 the a--i*nment1 pay- hi-
c+edito+ -hall be +elea-ed 2+om the obli*ation.
8. Who -hall ma?e payment
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A+t. 189. &he c+edito+ i- not bo/nd to accept payment o+ pe+2o+mance by a
thi+d pe+-on who ha- no inte+e-t in the 2/l2illment o2 the obli*ation1 /nle-- the+e i- a
-tip/lation to the cont+a+y.
Whoe0e+ pay- 2o+ anothe+ may demand 2+om the debto+ what he ha- paid1 e>cept
that i2 he paid witho/t the ?nowled*e o+ a*ain-t the will o2 the debto+1 he can +eco0e+
only in-o2a+ a- the payment ha- been bene2icial to the debto+.
A+t. 1894. Whoe0e+ pay- on behal2 o2 the debto+ witho/t the ?nowled*e o+
a*ain-t the will o2 the latte+1 cannot compel the c+edito+ to -/b+o*ate him in hi- +i*ht-1
-/ch a- tho-e a+i-in* 2+om a mo+t*a*e1 */a+anty1 o+ penalty.
A+t. 189=. Payment made by a thi+d pe+-on who doe- not intend to be
+eimb/+-ed by the debto+ i- deemed to be a donation1 which +eC/i+e- the debto+@-
con-ent. B/t the payment i- in any ca-e 0alid a- to the c+edito+ who ha- accepted it.
3ther Juasi-Contracts5
A+t. 8149. When a thi+d pe+-on1 witho/t the ?nowled*e o2 the debto+1 pay- the
debt1 the +i*ht- o2 the 2o+me+ a+e *o0e+ned by a+ticle- 189 and 1894.
A+t. 1899. In obli*ation- to *i0e1 payment made by one who doe- not ha0e the
2+ee di-po-al o2 the thin* d/e and capacity to alienate it -hall not be 0alid1 witho/t
p+e./dice to the p+o0i-ion- o2 a+ticle 1;84 /nde+ the &itle on K'at/+al #bli*ation-.K
A+t. 1;84. When a mino+ between ei*hteen and twenty!one yea+- o2 a*e1
who ha- ente+ed into a cont+act witho/t the con-ent o2 the pa+ent o+ */a+dian1
0ol/nta+ily pay- a -/m o2 money o+ deli0e+- a 2/n*ible thin* in 2/l2illment o2 the
obli*ation1 the+e -hall be no +i*ht to +eco0e+ the -ame 2+om the obli*ee who ha-
-pent o+ con-/med it in *ood 2aith.
NTE$ a)e of ,a9orit+ is now 1F.
A+t. 18;9. Payment made to the c+edito+ by the debto+ a2te+ the latte+ ha- been
./dicially o+de+ed to +etain the debt -hall not be 0alid.
A+t. 18;;. &he debto+ o2 a thin* cannot compel the c+edito+ to +ecei0e a di22e+ent
one1 altho/*h the latte+ may be o2 the -ame 0al/e a-1 o+ mo+e 0al/able than that which
i- d/e.
In obli*ation- to do o+ not to do1 an act o+ 2o+bea+ance cannot be -/b-tit/ted by
anothe+ act o+ 2o+bea+ance a*ain-t the obli*ee@- will.
A+t. 18;,. )ation in payment1 whe+eby p+ope+ty i- alienated to the c+edito+ in
-ati-2action o2 a debt in money1 -hall be *o0e+ned by the law o2 -ale-.
BALANE CA#E#$
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CIVIL LAW REVIEW
GILI'VE(& V. PEIL. ACE&ALE'E B111 # <41E - >e fin* a--ellant/s contention *evoi* of
-ersuasive force. The ,ere return of the ,ort)a)e* ,otor vehicle %+ the ,ort)a)or' the
herein a--ellant' to the ,ort)a)ee' the herein a--ellee' *oes not constitute *ation in
-a+,ent in the a%sence' e7-ress or i,-lie* of the true intention of the -arties.
4acion en pago' accor*in) to Manresa' is the transmission of the ownership of a
thing by the debtor to the creditor as an accepted equivalent of the performance of an
obligation. "n dacion en pago' as a s-ecial ,o*e of -a+,ent' the *e%tor offers another thin)
to the cre*itor who acce-ts it as e:uivalent of -a+,ent of an outstan*in) *e%t.
4acion en pago in the nature of sale.-- The un*erta&in) reall+ -arta&es in one sense
of the nature of sale' that is' the cre*itor is reall+ %u+in) the thin) or -ro-ert+ of the *e%tor'
-a+,ent for w.c is to %e char)e* a)ainst the *e%tor/s *e%t. As such' the essential ele,ents
of a contract of sale' na,el+' consent' o%9ect certain' an* cause or consi*eration ,ust %e
-resent.
4acion en pago in its modern concept.-- "n its ,o*ern conce-t' what actuall+ ta&es
-lace in dacion en pago is an o%9ective novation of the o%li)ation where the thin) offere* as
an acce-te* e:uivalent of the -erfor,ance of an o%li)ation is consi*ere* as the o%9ect of the
contract of sale' while the *e%t is consi*ere* as the -urchase -rice. "n an+ case' co,,on
consent is an essential -rere:uisite' %e it sale or novation' to have the effect of totall+
e7tin)uishin) the *e%t or o%li)ation.
CI&IFE'( (URE&A V. CA B124 # H8FE - There is no dation in payment when there is no
obligation to be e*tinguished.-- The transaction coulc not %e *ation in -a+,ent. 777 B>Ehen
the *ee* of assi)n,ent was e7ecute* on 14.<.1C' the o%li)ation of the assi)nor to refun* the
assi)nee h a* not +et arisen. "n other wor*s' there was no o%li)ation +et on the -art of the
-etitioner' Citi0ens/ to -a+ #in)er #ewin) Machine Co. There was nothin) to %e e7tin)uishe*
on that *ate' hence' there coul* not have %een a *ation in -a+,ent.
A+t. 18;. When the obli*ation con-i-t- in the deli0e+y o2 an indete+minate o+
*ene+ic thin*1 who-e C/ality and ci+c/m-tance- ha0e not been -tated1 the c+edito+
cannot demand a thin* o2 -/pe+io+ C/ality. 'eithe+ can the debto+ deli0e+ a thin* o2
in2e+io+ C/ality. &he p/+po-e o2 the obli*ation and othe+ ci+c/m-tance- -hall be ta?en
into con-ide+ation.
A+t. 18;4. Unle-- it i- othe+wi-e -tip/lated1 the e>t+a./dicial e>pen-e- +eC/i+ed
by the payment -hall be 2o+ the acco/nt o2 the debto+. With +e*a+d to ./dicial co-t-1 the
R/le- o2 Co/+t -hall *o0e+n.
A+t. 18;=. Unle-- the+e i- an e>p+e-- -tip/lation to that e22ect1 the c+edito+
cannot be compelled pa+tially to +ecei0e the p+e-tation- in which the obli*ation
con-i-t-. 'eithe+ may the debto+ be +eC/i+ed to ma?e pa+tial payment-.
Eowe0e+1 when the debt i- in pa+t liC/idated and in pa+t /nliC/idated1 the c+edito+
may demand and the debto+ may e22ect the payment o2 the 2o+me+ witho/t waitin* 2o+
the liC/idation o2 the latte+.
BALANE CA#E$
'A((ER V. CUEVA( B1FF # F14E - There is nothin) in the cite* -roviso to 9ustif+ the
rea*in) that the -etitioner woul* )ive to it. The -ar. in w.c it is foun* *oes no ,ore than
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esta%lish (on all the -ro-erties of the Estate' real an* -ersonal' herein a*9u*icate* an* other
-ro-erties not +et a*9u*icate*' a char)in) lien 777 to secure the -a+,ent of 3Canlas/5
attorne+/s feesA( this' w. the e7-ress a)ree,ent of all the si)natories. The -roviso that (u-on
full -a+,ent of the corres-on*in) lia%ilit+ of a -art+ the lien on his.her share is e7tin)uishe*'(
evi*entl+ conte,-lates the -ro%a%ilit+ that the heirs o%li)e* to -a+ Canlas/ fees woul* -a+ at
*ifferent ti,es' an* *enotes nothin) ,ore than that if one of the o%li)ors se-aratel+ -a+s his
share in Canlas/ fees' the lien on his share of the estate is there%+ e7tin)uishe*-- a :uite
o%vious -ro-osition' to %e sure. The clause cannot %e construe* as )rantin) to an+ of the
o%li)ors' %+ i,-lication' the o-tion to -a+ in install,ents' or as i,-lie*l+ %in*in) on the
o%li)ee to acce-t -a+,ent %+ -arts. 777
A+t. 18;9. &he payment o2 debt- in money -hall be made in the c/++ency
-tip/lated1 and i2 it i- not po--ible to deli0e+ -/ch c/++ency1 then in the c/++ency which
i- le*al tende+ in the Philippine-.
&he deli0e+y o2 p+omi--o+y note- payable to o+de+1 o+ bill- o2 e>chan*e o+ othe+
me+cantile doc/ment- -hall p+od/ce the e22ect o2 payment only when they ha0e been
ca-hed1 o+ when th+o/*h the 2a/lt o2 the c+edito+ they ha0e been impai+ed.
In the meantime1 the action de+i0ed 2+om the o+i*inal obli*ation -hall be held in
abeyance.
BALANE CA#E#$
$ALAL# V. LUF B8< # 88HE - =n*er RA 14C' if the o%li)ation was incurre* -rior to the
enact,ent in a -articular &in* of coin or currenc+ other than the Phil. currenc+ the sa,e shall
%e *ischar)e* in Phil. currenc+ ,easure* at the -revailin) rate of e7chan)e at the ti,e the
o%li)ation was incurre*. RA 14C *oes not -rovi*e for the rate of e7chan)e for the -a+,ent of
the o%li)ation incurre* after the enact,ent ot sai* Act. The lo)ical conclusion is that the rate
of e7chan)e shoul* %e that -revailin) at the ti,e of -a+,ent for such contracts.
P#'CE V. CA BCD # 188E - "t is to %e note* that while an a)ree,ent to -a+ in *ollars is
*eclare* as null an* voi* an* of no effect' what the law s-ecificall+ -rohi%its is -a+,ent in
currenc+ other than le)al ten*er. "t *oes not *efeat a cre*itor/s clai, for -a+,ent' as it
s-ecificall+ -rovi*es that (ever+ other *o,estic o%li)ation 777 whether or not an+ such
-rovision as to -a+,ent is containe* therein or ,a*e w. res-ect thereto' shall %e *ischar)e*
u-on -a+,ent in an+ coin or currenc+ w.c at the ti,e of -a+,ent is le)al ten*er for -u%lic
an* -vt. use.( A contrar+ rule woul* allow a -erson to -rofit or enrich hi,self ine:uita%l+ at
another/s e7-ense.
'EW PACIGIC &IMBER V. (E'ERI( B1D1 # 2F2E - "t is to %e e,-hasi0e* that the chec&
*e-osite* %+ the -etitioner in the a,ount of P1D'DDD is not an or*inar+ chec& %ut a Cashier/s
chec& of the E:uita%le Ban&in) Cor-.' a %an& of )oo* stan*in) an* re-utation. "t was even a
certifie* crosse* chec&. "t is well &nown an* acce-te* -ractice in the %usiness sector that a
%ashier6s chec! is deemed as cash.
Moreover' since the sai* chec& has %een certifie* %+ the *rawee %an&' %+ the
certification' the fun*s re-resente* %+ the chec& are transferre* fro, the cre*it of the ,a&er
to that of the -a+ee or hol*er' an* for all intents an* -ur-oses' the latter %eco,es the
*e-ositor of the *rawee %an&' w. ri)hts an* *uties of one in such situation. >here a chec& is
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certifie* %+ the %an& on w.c it is *rawn' the certification is e:uivalent to acce-tance. #ai*
certification (i,-lies that the chec& is *rawn u-on sufficient fun*s in the han*s of the *rawee'
that the+ have %een set a-art fort its satisfaction' an* that the+ shall %e so a--lie* whenever
the chec& is -resente* for -a+,ent. "t is an un*erstan*in) that the chec& is )oo* then' an*
shall continue )oo*' an* this a)ree,ent is as %in*in) on the %an& as its notes in circulation'
a certificate of *e-osit -a+a%le to the or*er of the *e-ositor' or an+ other o%li)ation it can
assu,e. The o%9ect of certif+in) a chec&' as re)ar*s %oth -arties' is to enable the holder to
use it as money.( >hen the hol*er -rocures the chec& to %e certifie*' (the chec& o-erates as
an assi)n,ent of a -art of the fun*s to the cre*itors.( Hence' the e7ce-tion to the rule
enunciate* un*er #ec. 28 of the CB Act to the effect that (a chec& w.c has %een cleare* an*
cre*ite* to the accoun of the cre*itor shall %e e:uivalent to a *eliver+ to the cre*itor in cash
in an a,ount e:ual to the a,ount cre*ite* to his account( shall a--l+ in this case.
BI(E#P #G MAL#L#( V. IAC B1C1 # <11E - #ince a ne)otia%le instru,ent is onl+ a
su%stitute for ,one+ an* not ,one+' the *eliver+ of such an instru,ent *oes not' %+ itself'
o-erate as -a+,ent. A chec!, whether a manager6s chec! or ordinary chec!, is not legal
tender' an* an offer of a chec& in -a+,ent of a *e%t is not a vali* ten*er of -a+,ent an*
,a+ %e refuse* recei-t %+ the o%li)ee or cre*itor.
)BP V. (IMA WEI B41C # H82E - Notwithstan*in) the a%ove' it *oes not necessaril+ follow
that the *rawer #i,a >ei is free* fro, lia%ilit+ to -etitioner %an& un*er the loan evi*ence* %+
the -.n a)ree* to %+ her. Her alle)ation that she has -ai* the %alance of her loan w. the 4
chec&s -a+a%le to -etitioner Ban& has no ,erit for 777 these chec&s were never *elivere* to
-etitioner Ban&. An* even )rantin)' w.o a*,ittin)' that there was *eliver+ too -etitioner
Ban&' the *eliver+ of chec&s in -a+,ent of an o%li)ation *oes not constitute -a+,ent unless
the+ are cashe* or their value is i,-aire* throu)h the fault of the cre*itor. None of these
e7ce-tions were alle)e* %+ res-. #i,a >ei.
&IBAIA V. CA B448 # 4H4E - "n the recent cases of PAL v. CA an* Ro,an Catholic Bisho-
of Malolos v. "AC' this Court hel* that-- (A chec&' whether a ,ana)er/s chec& or or*inar+
chec&' is not le)al ten*er' an* an offer of a chec& in -a+,ent of a *e%t is not a vali* ten*er of
-a+,ent an* ,a+ %e refuse* recei-t %+ the o%li)ee or cre*itor.( The rulin) in these 4 cases
,erel+ a--lies the statutor+ -rovisions w.c la+ *own the rule that a chec& is not le)al ten*er
an* that a cre*itor ,a+ vali*l+ refuse -a+,ent %+ chec&' whether it %e a ,ana)er/s chec&'
cashier/s chec& or -ersonal chec&.
PALA'CA V. CA B48F # 1C8E - "n the case at %ar' the clear un*erstan*in) of the -arties is
that there shoul* %e an u-war* a*9ust,ent of the -urchase -rice the ,o,ent there is a
*eterioration of the Phil. vis-a-vis the =# *ollar. This is the (,onetar+ fluctuation(
conte,-late* %+ the, as woul* 9ustif+ the a*9ust,ent. =n*er this scenario' it is an i*le tas&
to *eter,ine whether the contract has %een visite* %+ an (e7traor*inar+ inflation( as to tri))er
the o-eration of Art. 141D. >hile the contract ,a+ contain an (escalator clause( -rovi*in)
that in the occurence of certain events' the contract -rice shall %e increase* to a fi7e*
-ercenta)e of the %ase -rice' still the autono,+ of the -arties to -rovi*e such escalator
clauses ,a+ %e li,ite* %+ law. The -etition shoul* %e *is,isse* on the )roun* that the
sti-ulation of the -arties is in violation of RA 14C' as a,en*e*.
777
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>e cannot )rant the -etition %ut not on the )roun*s relie* u-on %+ the trial court an*
the CA that there shoul* %e an (e7traor*inar+ inflation( %efore a sti-ulation for an u-war*
a*9ust,ent of the -urchase -rice can %e enforce*.
1. 777 The -etition shoul* %e *is,isse* on the )roun* that the sti-ulation of the
-arties is in violation of RA 14C' a&a' Cuenco Law.
The Court cite* #ec. 1 of the sai* law.
777 BTEhe sai* law -rohi%its two thin)s in all *o,estic contracts$ 315 )ivin) the
o%li)ee the ri)ht to re:uire -a+,ent in a s-ecifie* currenc+ other than Phil. currenc+A an* 345
)ivin) the o%li)ee the ri)ht to re:uire -a+,ent (in an a,ount of ,one+ of the Phili--ines
,easure* there%+.(
>hen the -arties sti-ulate* that in the event of ,onetar+ fluctuation' the un-ai*
%alance account of the herein ven*ee on the aforesai* su%*ivision lot shall %e increase*
-ro-ortionatel+ on the %asis of the -resent value of -eso to the =# *olla' the o%li)ee was
)iven the ri)ht to *e,an* -a+,ent of the %al. of the -urchase -rice (in an a,ount of ,one+
of the Phils. ,easure*( %+ a forei)n coin or currenc+.
777 Con)ress -asse* RA 14C' havin) in ,in* the -reservation of the value of the
Phil. -eso. A currenc+ has value %ec. -eo-le are willin) to acce-t it in e7chan)e for )oo*s
an* services an* in -a+,ent for *e%ts. 777 "f instea* of the Phil. currenc+' the -eo-le woul*
use a forei)n currenc+ as the ,o*e of -a+,ent or as %asis for ,easurin) the a,ount of
,one+ to %e -ai* in Phil. currenc+' such usa)e woul* a*versel+ affect the confi*ence of the
-u%lic on the Phil. ,onetar+ s+ste,.
4. The li%erali0ation of the forei)n e7chan)e re)ulations on recei-ts an*
*is%urse,ents of resi*ents arisin) fro, %oth non-tra*e an* tra*e transactions *i* not re-eal
or in an+ wa+ a,en* RA 14C. "n essence' sai* CB Circulars ,erel+ allowe* the free sale an*
-urchase of forei)n e7chan)e outsi*e the %an&in) s+ste, an* other transactions involvin)
forei)n currenc+ -reviousl+ su%9ect to CB control.
A+t. 18,B. In ca-e an e>t+ao+dina+y in2lation o+ de2lation o2 the c/++ency
-tip/lated -ho/ld -/pe+0ene1 the 0al/e o2 the c/++ency at the time o2 the e-tabli-hment
o2 the obli*ation -hall be the ba-i- o2 payment1 /nle-- the+e i- an a*+eement to the
cont+a+y.
Baviera$ This article a--lies to contracts onl+
EMTRAR6"NAR@ ,eans unusual or %e+on* the co,,on fluctuation' not foreseen
BALANE CA#E#$
VELA(C# V. MERALC# B<4 # 112E - Gro, the e,-lo+,ent of the wor*s (e7traor*inar+
inflation or *eflation of the currenc+ sti-ulate*( in Art. 141D' it can %e seen that the sa,e
envisa)es contractual o%li)ations where a s-ecific currenc+ is slecte* %+ the -arties as the
,e*iu, of -a+,entA hence it is ina--lica%le to o%li)ations arisin) fro, tort an* not fro,
contract. Besi*es' there is no showin) that the factual assu,-tion of sai* article has co,e
into e7istence.
C#MMI((I#'ER #G PUBLIC EI%EWAA( V. BUR%#( BC2 # F81E - Art. 141D *oes a--lies
onl+ to cases where a contract or a)ree,ent is involve*. "t *oes not a--l+ where the
o%li)ation to -a+ arises fro, law' in*e-en*ent of contracts. The ta&in) of -rivate -ro-ert+ %+
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CIVIL LAW REVIEW
the )ovt in the e7ercise of its -ower of e,ninent *o,ain *oes not )ive rise to a contractual
o%li)ation.
GILIPI'# PIPE J G#U')RA C#RP V. 'AWA(A B121 # 84E - ?*traordinary =nflation
4efined.-- E7traor*inar+ inflation e7ists when (there is a *ecrease or increase in the
-urchasin) -ower of the Phil. currenc+ w.c is unusual or %e+on* the co,,on fluctuation in
the value of sai* currenc+' an* such *ecrease or increase coul* not have %een reasona%l+
foreseen or was ,anifestl+ %e+on* the conte,-lation of the -arties at the ti,e of the
esta%lish,ent of the o%li)ation.
The trial court -ointe* out' however' that this is a worl*wi*e occurence' %ut har*l+
-roof that the inflation is e7traor*inar+ in the sense conte,-late* in Art. 141D' w.c was
a*o-te* %+ the Co*e Co,,ission to -rovi*e (a 9ust solution( to the (uncertaint+ an*
confusion as a result of contracts entere* into or -a+,ents ,a*e *urin) the last war.( >hile
a--ellant/s volu,inous statistics an* recor*s -rove* that there has %een a *ecline in the
-urchasin) -ower of the Phil. -eso' this *ownwar* fall of the currenc+ cannot %e consi*ere*
(e7traor*inar+.( "t is si,-l+ a universal tren* that has not s-are* our countr+.
)EL R#(ARI# V. (EELL B12< # 112E - "n the case at %ar' while no e7-ress reference has
%een ,a*e to ,etallic content' there nonetheless is a re*uction in -ar value or in the
-urchasin) -ower of Phil. currenc+. Even assu,in) there has %een no official *evaluation as
the ter, is technicall+ un*erstoo*' the fact is that there has %een a *i,unition or lessenin) in
the -urchasin) -ower of the -eso' thus there has %een a (*e-reciation( 3o--osite of
(a--reciation.(5 Moreover' when la+,en uns&ille* in the se,antics of econo,ics use the
ter,s (*evaluation( or (*e-reciation( the+ certainl+ ,ean the, in their or*inar+ si)nification--
*ecrease in value. Hence' as conte,-late* %+ the -arties herein in their lease a)ree,ent'
the ter, (*evaluation( ,a+ %e re)ar*e* as s+non+,ous w. (*e-reciation'( for certainl+ %oth
refer to a decrease in the value of the currenc+. The rentals shoul* therefore' %+ their
a)ree,ent' %e -ro-ortionatel+ increase*.
(A'%RA)#R V. VAL)ERAMA B12F # 411E - #ince -etitioners faile* to -rove the
su-ervenin) of e7traor*inar+ inflation %et. <.2.F< an* 14.H.F<-- no -roofs were -resente* on
how ,uch' for instance' the -rice in*e7 of )oo*s an* services ha* risen *urin) the
intervenin) -erio*-- an e7traor*inar+ inflation cannot %e assu,e*A conse:uentl+' there is no
reason or %asis' le)al or factual' for a*9ustin) the value of the Phil. -eso in the settle,ent of
res-on*ents/ o%li)ation.
A+t. 18,1. Payment -hall be made in the place de-i*nated in the obli*ation.
&he+e bein* no e>p+e-- -tip/lation and i2 the /nde+ta?in* i- to deli0e+ a
dete+minate thin*1 the payment -hall be made whe+e0e+ the thin* mi*ht be at the
moment the obli*ation wa- con-tit/ted.
In any othe+ ca-e the place o2 payment -hall be the domicile o2 the debto+.
I2 the debto+ chan*e- hi- domicile in bad 2aith o+ a2te+ he ha- inc/++ed in delay1
the additional e>pen-e- -hall be bo+ne by him.
&he-e p+o0i-ion- a+e witho/t p+e./dice to 0en/e /nde+ the R/le- o2 Co/+t.
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Go/+ (pecial $ind- o2 Payment-3
1. 4acion en pago 3Art. 14<1.5
4. A--lication of -a+,ents 3#u%section 1.5
8. Pa+,ent %+ cesion 3#u%section 4.5
<. Consi)nation 3#u%section 8.5
6iscussion$
1. a"ion en pago
A+t. 18;,. )ation in payment1 whe+eby p+ope+ty i- alienated to the c+edito+ in
-ati-2action o2 a debt in money1 -hall be *o0e+ned by the law o2 -ale-.
Balane$ 4acion en pago 3"n Ro,an law' calle* (datio in solutum(' in Grench' (dation en
paiement'( in #-anish' (dacion en pago.(5 6ation in -a+,ent is -ossi%le onl+ if there is a
*e%t in ,one+. "nstea* of ,one+' a thin) is *elivere* in satisfaction of the *e%t in ,one+.
6ation in -a+,ent is )overne* %+ the law on sales %ec. it is as if the cre*itor is now
the ven*ee'an* the *e%tor %eco,es now the ven*or.
6ation en -a)o is e7-laine* in the case of Gilinvest v. Phil Acet+lene' su-ra.
There are two wa+s at loo&in) at *acion en -a)o$
1. Classical wa+ where dacion en pago is treate* as a sale.
4. Mo*ern conce-t w.c treats dacion en pago as a novation.
Castan has another view-- Both are wron). A dacion en pago is not a sale %ec. there
is no intention to enter into a contract of sale. "t is not also a novation %ec. in novation' the
ol* o%li)ation is e7tin)uishe* an* a new o%li)ation ta&es its -lace. But here' the ol*
o%li)ation is e7tin)uishe*. >hat ta&es its -lace? Nothin). #o what is it? "t is a s-ecial for,
of -a+,ent w.c rese,%les a sale.
There are two ,ore thin)s to re,e,%er in the cases of Gilinvest v. Phil. Ac+telene'
su-ra. an* Lo-e0 v. CA' 11< #CRA 2H1$
1. 4acion en pago can ta&e -lace onl+ if %oth -arties consent.
4. To what e7tent is the o%li)ation e7tin)uishe*? =- to the value of the thin) )iven
3the thin) ,ust %e a--raise*5 unless the -arties a)ree on a total e7tin)uish,ent. 3Lo-e0. v.
CA' su-ra.5
8. Application o2 Payment
Balane$ A--lication of -a+,ent 3=mputacion in #-anish5 is the *esi)nation of a *e%t which is
%ein) -ai* %+ the *e%tor who has several o%li)ations of the sa,e &in* in favor of the cre*itor
to who, the -a+,ent is ,a*e 3:uotin) Tolentino.5
Rules where the a,ount sent %+ the *e%tor to the cre*itor is less than all that is *ue.
'irst rule$ A--l+ in accor*ance w. the a)ree,ent.
"econd rule$ 6e%tor ,a+ a--l+ the a,ount 3an o%vious li,itation %ec. of the
-rinci-les of in*ivisi%ilit+ an* inte)rit+5 where there woul* %e -artial -a+,ent.
Third rule7 Cre*itor can ,a&e the a--lication.
'ourth rule7 A--l+ to the ,ost onerous *e%t. 3Art. 1414' -ar. 1.5
>hat are the rules to *eter,ine w.c is the ,ost onerous *e%t?
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1. "f one is interest -a+in) an* the other is not' the *e%t w.c is interest -a+in)
is ,ore onerous.
4. "f one is a secure* *e%t an* the other is not' the secure* *e%t is ,ore
onerous
8. "f %oth are interest free' one is ol*er than the first' the newer one is ,ore
oneous %ec. -rescri-tion will ta&e lon)er w. res-ect to the newer *e%t.
'ifth rule7 Pro-ortional a--lication if the *e%ts are e:uall+ onerous.
A+t. 18,8. Ee who ha- 0a+io/- debt- o2 the -ame ?ind in 2a0o+ o2 one and the
-ame c+edito+1 may decla+e at the time o2 ma?in* the payment1 to which o2 them the
-ame m/-t be applied. Unle-- the pa+tie- -o -tip/late1 o+ when the application o2
payment i- made by the pa+ty 2o+ who-e bene2it the te+m ha- been con-tit/ted1 applica!
tion -hall not be made a- to debt- which a+e not yet d/e.
I2 the debto+ accept- 2+om the c+edito+ a +eceipt in which an application o2 the
payment i- made1 the 2o+me+ cannot complain o2 the -ame1 /nle-- the+e i- a ca/-e 2o+
in0alidatin* the cont+act.
A+t. 18,9. I2 the debt p+od/ce- inte+e-t1 payment o2 the p+incipal -hall not be
deemed to ha0e been made /ntil the inte+e-t- ha0e been co0e+ed.
A+t. 18,;. When the payment cannot be applied in acco+dance with the
p+ecedin* +/le-1 o+ i2 application can not be in2e++ed 2+om othe+ ci+c/m-tance-1 the debt
which i- mo-t one+o/- to the debto+1 amon* tho-e d/e1 -hall be deemed to ha0e been
-ati-2ied.
I2 the debt- d/e a+e o2 the -ame nat/+e and b/+den1 the payment -hall be applied
to all o2 them p+opo+tionately.
(/b-ection 8.!! Payment by Cession
Balane$ Concept o2 payment by "ession.!! Pro-ert+ is turne* over %+ the *e%tor to the
cre*itor who ac:uires the ri)ht to sell it an* *ivi*e the net -rocee*s a,on) the,selves.
Why i- payment by "ession a -pecial 2o+m o2 paymentH!! Bec. there is no co,-leteness
of -erfor,ance 3re$ inte)rit+.5 "n ,ost cases' there will %e a %alance *ue.
)i22e+ence between da"ion en pago and payment by "ession.!! "n dacion en pago' there
is a transfer of ownershi- fro, the *e%tor to the cre*itor. "n payment by cesion' there is no
transfer of ownershi-. The cre*itors si,-l+ ac:uire the ri)ht to sell the -ro-erties of the
*e%tor an* a--l+ the -rocee*s of the sale to the satisfaction of their cre*it.
)oe- payment by "ession te+minate all debt- d/eH!! Generall+' no. But onl+ to the e7tent
of the net -rocee*s. The e7tin)uish,ent of the o%li)ation is pro tanto. This is to %e
*istin)uishe* fro, Le)al cession where the e7tin)uish,ent of the o%li)ation is total. Le)al
cession is )overne* %+ the "nsolvenc+ Law.
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A+t. 18,,. &he debto+ may cede o+ a--i*n hi- p+ope+ty to hi- c+edito+- in
payment o2 hi- debt-. &hi- ce-ion1 /nle-- the+e i- -tip/lation to the cont+a+y1 -hall only
+elea-e the debto+ 2+om +e-pon-ibility 2o+ the net p+oceed- o2 the thin* a--i*ned. &he
a*+eement- which1 on the e22ect o2 the ce--ion1 a+e made between the debto+ and hi-
c+edito+- -hall be *o0e+ned by -pecial law-.
B. &ende+ o2 Payment and Con-i*nation
(/b-ection 9.!! *ender of Payment + Consignation
Balane$ The title of the su%section is wron). "t shoul* have %een Consi)nation onl+ %ecause
that is the s-ecial ,o*e of -a+,ent an* not the ten*er of -a+,ent. "t is a s-ecial ,o*e of
-a+,ent %ec. -a+,ent is ,a*e not to the cre*itor %ut to the court.
Consi)nation is an o-tion on the -art of the *e%tor %ec. consi)nation assu,es that
the cre*itor was in ,ora accipiendi 3when the cre*itor w.o 9ust cause' refuses to acce-t
-a+,ent.5
Conse:uence when the cre*itor w.o 9ust cause' refuses to acce-t -a+,ent-- The *e%tor ,a+
9ust *ela+ -a+,ent. But so,ethin) still han)s a%ove his hea*. He is therefore' )iven the
o-tion to consi)n. 6istin)uish this fro, BGB 3Ger,an Civil Co*e5 w.c states that mora
accipiendi e7tin)uishes the o%li)ation.
A+t. 18,. I2 the c+edito+ to whom tende+ o2 payment ha- been made +e2/-e-
witho/t ./-t ca/-e to accept it1 the debto+ -hall be +elea-ed 2+om +e-pon-ibility by the
con-i*nation o2 the thin* o+ -/m d/e.
Con-i*nation alone -hall p+od/ce the -ame e22ect in the 2ollowin* ca-e-3
516 When the c+edito+ i- ab-ent o+ /n?nown1 o+ doe- not appea+ at the place o2
payment7
586 When he i- incapacitated to +ecei0e the payment at the time it i- d/e7
596 When1 witho/t ./-t ca/-e1 he +e2/-e- to *i0e a +eceipt7
5;6 When two o+ mo+e pe+-on- claim the -ame +i*ht to collect7
5,6 When the title o2 the obli*ation ha- been lo-t.
BALANE CA#E#$
(#C# V. MILI&A'&E B148 # 12DE - %onsignation 4efined.-- Consi)nation is the act of
*e-ositin) the thin) *ue w. the court or 9u*icial authorities whenever the cre*itor cannot
acce-t or refuses to acce-t -a+,ent an* it )enerall+ re:uires a -rior ten*er of -a+,ent.
0equisites of a $alid %onsignation.-- The *e%tor ,ust show 315 that there was a *e%t
*ueA 345 that the consi)nation of the o%li)ation ha* %een ,a*e %ec. the cre*itor to who,
ten*er of -a+,ent was ,a*e refuse* to acce-t it' or %ec. he was a%sent or inca-acitate*' or
%ec. several -ersons clai,e* to %e entitle* to receive the a,ount *ueA 385 that -revious
notice of the consi)nation ha* %een )iven to the -erson intereste* in the -erfor,ance of the
o%li)ation 3Art. 141H5A 3<5 that the a,ount *ue was -lace* at the *is-osal of the court
3consi)nation -ro-er5A 315 that after the consi)nation ha* %een ,a*e the -erson intereste*
was notife* thereof 3secon* notice.5 Gailure of an+ of these re:uire,ents is enou)h )roun*
to ren*er a consi)nation ineffective.
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CIVIL LAW REVIEW
ALG#'(# V. CA B12F # 1<1E - #uch re9ection ren*ere* the -ro-osal of free rental w.o
force an* effect. 6ef. therefore was *ut+ %oun* to -a+ the rentals as the+ fall *ue in or*er to
a%ort an+ e9ect,ent -rocee*in)s a)ainst hi,.. "f the lessor refuses to acce-t the -a+,ent' as
in the case at %ar' *ef. ha* a re,e*+ -rovi*e* for %+ law' na,el+ consi)nation in court or
*e-osit in a %an& in the lessorr/s na,e w. *ue notice to the lessor. =nfortunatel+' it is of
recor* that *ef. *i* not avail of such re,e*+ so that when -laintiffs file* the e9ect,ent
-rocee*in)s a)ainst hi,' the rentals corres-on*in) the the ,o. of A-ril to ;ul+ 1CF< ha* not
+et %een -ai* %+ *ef. Ten*er of -a+,ent is not enou)h-- consi)nation ,ust follow in or*er
to e7tin)uish the *e%t. therwise' failure to co,-l+ w. the re:uire,ents -rovi*e* for un*er
#ec. 1' -ar. 3%5' PB 41 is a )roun* for e9ect,ent. 6ela+e* consi)nation or *e-osit will not *o.
&AAA% V. CA B41C # <FDE - 777 BPEetitioners ar)ue that there was no vali* ten*er of
-a+,ent nor consi)nation of the su, of P1F'14D w.c the+ ac&nowle*)e to have %een
*e-osite* in court on 1.44.F1 five +ears after the a,ount of P4H'DDD ha* to %e -ai*. 777
A)ainst this su))estion i)nores the fact that consi)nation alone -ro*uce* the effect of
-a+,ent in the case at %ar %ec. it was esta%lishe* that 4 or ,ore heirs of ;uan Galicia' #r.
clai,e* the sa,e ri)ht to collect.
MA'ILA REMA'A'& V. CA B481 # 4H4E - 777 B=E-on consi)nation %+ the !entanillas of the
su, *ue' the trial court ,a+ enter 9u*),ent cancellin) the title of the -etitioner over the
-ro-ert+ an* transferrin) the sa,e to the res-on*ents. This 9u*),ents shall have the sa,e
force an* effect as a conve+ance *ul+ e7ecute* in accor*ance w. the re:uire,ents of the
law.
A+t. 18,4. In o+de+ that the con-i*nation o2 the thin* d/e may +elea-e the
obli*o+1 it m/-t 2i+-t be anno/nced to the pe+-on- inte+e-ted in the 2/l2illment o2 the
obli*ation.
&he con-i*nation -hall be ine22ect/al i2 it i- not made -t+ictly in con-onance with
the p+o0i-ion- which +e*/late payment.
A+t. 18,=. Con-i*nation -hall be made by depo-itin* the thin*- d/e at the
di-po-al o2 ./dicial a/tho+ity1 be2o+e whom the tende+ o2 payment -hall be p+o0ed1 in a
p+ope+ ca-e1 and the anno/ncement o2 the con-i*nation in othe+ ca-e-.
&he con-i*nation ha0in* been made1 the inte+e-ted pa+tie- -hall al-o be noti2ied
the+eo2.
A+t. 18,9. &he e>pen-e- o2 con-i*nation1 when p+ope+ly made1 -hall be cha+*ed
a*ain-t the c+edito+.
A+t. 18B. #nce the con-i*nation ha- been d/ly made1 the debto+ may a-? the
./d*e to o+de+ the cancellation o2 the obli*ation.
Be2o+e the c+edito+ ha- accepted the con-i*nation1 o+ be2o+e a ./dicial
decla+ation that the con-i*nation ha- been p+ope+ly made1 the debto+ may withd+aw the
thin* o+ the -/m depo-ited1 allowin* the obli*ation to +emain in 2o+ce.
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A+t. 181. I21 the con-i*nation ha0in* been made1 the c+edito+ -ho/ld a/tho+i<e
the debto+ to withd+aw the -ame1 he -hall lo-e e0e+y p+e2e+ence which he may ha0e
o0e+ the thin*. &he co!debto+-1 */a+anto+- and -/+etie- -hall be +elea-ed.
C. Lo-- o+ Impo--ibility o2 Pe+2o+mance
Balane$ Applicable p+o0i-ion-.!! "n an o%li)ation to )ive a *eter,inate thin) 3Art. 14245A in
an o%li)ation to )ive a )eneric thin) 3Art. 14285A in an o%li)ation to *o 3Art. 1422.5
There are two &in*s of i,-ossi%ilit+ of -erfor,ance$ 315 an ori)inal i,-ossi%ilit+ an*
345 su-ervenin) i,-ossi%ilit+. The &in* of i,-ossi%lit+ tal&e* a%out here is su-ervenin)
i,-ossi%ilit+. An ori)inal i,-ossi%ilit+ ,a&es the o%li)ation voi*. "t will %e case of an
o%li)ation w.o a cause 3see Art. 1<DC' no. 4 (those where the cause or o%9ect *i* not e7ist at
the ti,e of the transaction(-- the -hrase (*i* not e7ist at the ti,e of the transaction( is
inaccurateA it is -ossi%le to enter into contracts where the o%9ect *i* not e7ist at the ti,e of
the transaction' e.).' contract over a future thin)A the -hrase shoul* have %een (coul* not
e7ist(5 A contract whose -restation is i,-ossi%le at the %e)innin) is not the concern of loss
of thin) *ue. i,-ossi%ilit+ of -erfor,ance.
A+t. 188. An obli*ation which con-i-t- in the deli0e+y o2 a dete+minate thin*
-hall be e>tin*/i-hed i2 it -ho/ld be lo-t o+ de-t+oyed witho/t the 2a/lt o2 the debto+1
and be2o+e he ha- inc/++ed in delay.
When by law o+ -tip/lation1 the obli*o+ i- liable e0en 2o+ 2o+t/ito/- e0ent-1 the
lo-- o2 the thin* doe- not e>tin*/i-h the obli*ation1 and he -hall be +e-pon-ible 2o+
dama*e-. &he -ame +/le applie- when the nat/+e o2 the obli*ation +eC/i+e- the
a--/mption o2 +i-?.
Balane$ Art. 1424 is the sa,e as fortuitous event in Art. 11H<. The effect is the sa,e$ The
o%li)ation is e7tin)uishe* if the o%li)ation is to *eliver a *eter,inate thin). "f the o%li)ation is
t *eliver a )eneric thin)' the o%li)ation is not e7tin)uishe*. 3enus nunquam perit 3(Genus
never -erishes.( This is the )eneral rule. But what is not covere* %+ this rule is an o%li)ation
to *eliver a li,ite* )eneric 3so,ethin) in %et. s-ecific an* )eneric thin)5' e.).' (Gor P8'DDD' "
-ro,ise to *eliver to +ou one of ,+ watches.( This o%li)ation *oes not reall+ fall un*er either
Art. 1424 or Art. 1428. But this o%li)ation reall+ falls un*er Art. 1424. "n this case' the
o%li)ation ,a+ %e e7tin)uishe* %+ the loss of all the thin)s throu)h fortuitous event.

A+t. 189. In an obli*ation to deli0e+ a *ene+ic thin*1 the lo-- o+ de-t+/ction o2
anythin* o2 the -ame ?ind doe- not e>tin*/i-h the obli*ation.
A+t. 18;. &he co/+t- -hall dete+mine1 whethe+1 /nde+ the ci+c/m-tance-1 the
pa+tial lo-- o2 the ob.ect o2 the obli*ation i- -o impo+tant a- to e>tin*/i-h the obli*ation.
A+t. 18,. Whene0e+ the thin* i- lo-t in the po--e--ion o2 the debto+1 it -hall be
p+e-/med that the lo-- wa- d/e to hi- 2a/lt1 /nle-- the+e i- p+oo2 to the cont+a+y1 and
witho/t p+e./dice to the p+o0i-ion- o2 a+ticle 11,. &hi- p+e-/mption doe- not apply in
ca-e o2 ea+thC/a?e1 2lood1 -to+m1 o+ othe+ nat/+al calamity.
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A+t. 11,. When what i- to be deli0e+ed i- a dete+minate thin*1 the
c+edito+1 in addition to the +i*ht *+anted him by a+ticle 114B1 may compel the
debto+ to ma?e the deli0e+y.
I2 the thin* i- indete+minate o+ *ene+ic1 he may a-? that the obli*ation be
complied with at the e>pen-e o2 the debto+.
I2 the obli*o+ delay-1 o+ ha- p+omi-ed to deli0e+ the -ame thin* to two o+
mo+e pe+-on- who do not ha0e the -ame inte+e-t1 he -hall be +e-pon-ible 2o+
any 2o+t/ito/- e0ent /ntil he ha- e22ected the deli0e+y.
A+t. 114B. &ho-e who in the pe+2o+mance o2 thei+ obli*ation- a+e */ilty o2
2+a/d1 ne*li*ence1 o+ delay1 and tho-e who in any manne+ cont+a0ene the teno+
the+eo2 a+e liable 2o+ dama*e-.
A+t. 18. &he debto+ in obli*ation- to do -hall al-o be +elea-ed when the
p+e-tation become- le*ally o+ phy-ically impo--ible witho/t the 2a/lt o2 the obli*o+.
Balane$ #b.ecti0e and (/b.ecti0e Impo--ibility.!! "n o%9ective i,-ossi%ilit+' the act cannot
%e *one %+ an+one. The effect of o%9ective i,-ossi%ilit+ is to e7tin)uish the o%li)ation. "n
su%9ective i,-ossi%ilit+' the o%li)ation %eco,es i,-ossi%le onl+ w. res-ect to the o%li)or.
There are 8 views as to the effect of a su%9ective i,-ossi%ilit+$ 315 ne view hol*s that the
o%li)ation is not e7tin)uishe*. The o%li)or shoul* as& another to *o the o%li)ation. 345
Another view hol*s that the o%li)ation is e7tin)uishe*. 385 A thir* view *istin)uishes one
-restation w.c is ver+ -ersonal an* one w.c are not -ersonal such that su%9ective i,-ossi%ilit+
is a cause for e7tin)uishes a ver+ -ersonal o%li)ation %ut not an o%li)ation w.c is not ver+
-ersonal.
BALANE CA#E#$
PE#PLE V. GRA'$LI' B8C # 828E - A--elant now conten*s that the lower court shoul*
have release* it fro, all lia%ilit+ un*er the %ail %on* -oste* %+ it %ec. its failure to -ro*uce
an* surren*er the accuse* was *ue to the ne)li)ence of the Phil. Govt itself in issuin) a
-ass-ort to sai* accuse*' there%+ ena%lin) her to leave the countr+. "n su--ort of this
contention' the -rovisions of Art. 1422 are invo&e*.
HEL6$ Art. ,.>>, (%% does not apply to a surety upon a bail bond. -- Art. 1422 *oes not
a--l+ to a suret+ u-on a %ail %on*' as sai* Art. s-ea&s of a relation %et. a *e%tor an* cre*itor'
w.c *oes not e7ist in the case of a suret+ u-on a %ail %on*' on one han*' an* the #tate' on
the other. Gor while sureties u-on a %ail %on* 3or reco)ni0ance5 can *ischar)e the,selves
fro, lia%ilit+ %+ surren*erin) their -rinci-al' sureties on or*inar+ %on*s or co,,ercial
contracts' as a )eneral rule' can onl+ %e release* %+ -a+,ent of the *e%t or -erfor,ance of
the act sti-ulate*.
IMMACULA&A V. 'AVARR# B12D # 411E - >e here%+ )rant sai* alternative cause of action
or -ra+er. >hile the sale was ori)inall+ e7ecute* so,etin) in 6ec. 1C2C' it was onl+ on Ge%.
8' 1CH< when' as -ra+e* for %+ -rvt. res' an* as or*ere* %+ the court a :uo' a *ee* of
conve+ance was for,all+ e7ecute*. #ince the offer to re*ee, was ,a*e on 8.4<.H1' this
was clearl+ w.in the 1-+r. -erio* of le)al re*e,-tion allowe* %+ the Pu%lic Lan* Act.
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P'CC V. 'LRC B1C8 # <D1E - An obligor shall be released from his obligation when the
prestation has become legally or physically impossible without fault on his part..-- Petitioner
cannot %e hel* lia%le for %reach of contract for three reasons. 777 The secon* reason is
foun* in the rule that an o%li)or shall %e release* fro, his o%li)ation when the -restation has
%eco,e le)all+ or -h+sicall+ i,-ossi%le w.o fault on his -art. The su-ervenin) i,-ossi%ilit+
of -erfor,ance' %ase* u-on so,e factor in*e-en*ent of the will of the o%li)or' releases the
o%li)or fro, his o%li)ation after restitution of what he ,a+ have receive*' if an+' in a*vance
fro, the other contractin) -art+A the o%li)or incurs no lia%ilit+ for *a,a)es for his ina%ilit+ to
-erfor,.
A+t. 184. When the -e+0ice ha- become -o di22ic/lt a- to be mani2e-tly beyond
the contemplation o2 the pa+tie-1 the obli*o+ may al-o be +elea-ed the+e2+om1 in whole
o+ in pa+t.
Balane$ ,ebus si" stantibus.-- Literall+ ,eans (thin)s as the+ stan*.( "t is short for
clausula rebus sic stantibus 3(a)ree,ent of thin)s as the+ stan*.(5 This is a -rinci-le of
international law w.c hol*s that when 4 countries enter into a treat+' the+ enter ta&in) into
account the circu,stances at the ti,e it was entere* into an* shoul* the circu,stances
chan)e as to ,a&e the fulfill,ent of the treat+ ver+ *ifficult' one ,a+ as& for a ter,ination of
the treat+. This -rinci-le of international law has s-ille* over into Civil law.
This *octrine is also calle* the *octrine of e7tre,e *ifficult+ an* frustration of
co,,ercial o%9ect.
"t has four 3<5 re:uisites$
1. The event or chan)e coul* not have %een foreseen at the ti,e of the e7ecution of
the contract.
4. The event or chan)e ,a&es the -erfor,ance e7tre,el+ *ifficult %ut not i,-ossi%le.
8. The event ,ust not %e *ue to an act of either -art+.
<. The contract is for a future -restation. "f the contract is of i,,e*iate fulfill,ent'
the )ross ine:ualit+ of the reci-rocal -restation ,a+ involve lesion or want of cause.

"n the case of Na)a' the court *i* not consi*er the <th ele,ent as an ele,ent.
The attitu*e of the courts on this *octrine is ver+ strict. This -rinci-le has alwa+s %een
strictl+ a--lie*. To )ive it a li%eral a--lication is to un*er,ine the %in*in) force of an
o%li)ation. Ever+ o%li)ation is *ifficult. The -erfor,ance ,ust %e e7tre,el+ *ifficult in or*er
for rebus sic stantibus to a--l+.
BALANE CA#E#$
LA%U'A V. MA'ABA& B1C # 21DE - Art. 12FD' it will %e o%serve* is a s-ecial -rovision for
leases of rural lan*s. No other le)al -rovision ,a&es it a--lica%le to or*inar+ leases. 777
Even if the cite* artiecle were a )eneral rule on lease' its -rovisions nevertheless *o
not e7ten* to -etitioners. ne of the re:uisites is that the cause of the loss of the fruits of the
lease* -ro-. ,ust %e an (e7traor*inar+ an* unforseen fortuitous event.( The circu,stances
of the case fail to satisf+ such re:uisite. 777 BTEhe alle)e* causes for the sus-ension of
o-erations on the lines lease*' na,el+' the hi)h -rices of s-are -arts an* )asoline an* the
re*uction of the *ollar allocations' (alrea*+ e7iste* when the contract of lease was e7ecute*.(
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The cause of -etitioners/ ina%ilit+ to o-erate on the lines cannot' therefore' %e ascri%e* to
fortuitous events or circu,stances %e+on* their control' %ut to their own voluntar+ *esistance.
777 Perfor,ance is not e7cuse* %+ su%se:uent ina%ilit+ to -erfor,' %+ unforseen
*ifficulties' %+ unusual or une*pected e*penses' %+ *an)er' %+ inevita%le acci*ent' %+ the
%rea&in) of ,achiner+' %+ stri&es' %+ sic&ness' %+ failure of a party to avail himself of the
benefits to be had under the contract, by weather conditions, by financial stringency, or by
stagnation of business. (either is performance e*cused by the fact that the contract turns
out to be hard and improvident, unprofitable or inpracticable, ill-a*vise* or even foolish' or
less profitable, or une*pectedly burdensome.
#CCE'A V. IAB(#' BH8 # 28HE - Res-on*ent/s co,-laint see&s not release fro, the
su%*ivision contract %ut that the court (ren*er 9u*)e,ent ,o*if+in) the ter,s an* con*itions
of the contract... %+ fi7in) the -ro-er shares that shoul* -ertain to the herein -arties out of
the )ross -rocee*s fro, the sales of su%*ivi*e* lots of su%9ect su%*ivision.( Art. 142H *oes
not )rant the courts this authorit+ to re,a&e' ,o*if+' or revise the contract or to fi7 the
*ivision of shares %et. the -arties as contractuall+ sti-ulate* w. the force of law %et. the
-arties' so as to su%stitute its own ter,s for those covenante* %+ the -arties the,selves.
Balane$ "n this case the inter-retation of the court is too literal. Accor*in) to the court' it can
release a *e%tor fro, the o%li)ation %ut it cannot ,a&e the o%li)ation li)hter. But if +ou loo&
at Art. 142H' -artial release is -er,itte*.
'A%A &ELEPE#'E V. CA B48D # 811E - The term )service) should be understood as
referring to the )performance) of the obligation.-- Art. 142H s-ea&s of (service( w.c has
%eco,e so *ifficult. Ta&in) into consi*eration the rationale %ehin* this -rovision' the ter,
(service( shoul* %e un*erstoo* as referrin) to the (-erfor,ance( of the o%li)ation. "n the
-resent case' the o%li)ation of -rvt. res-. consists in allowin) -etitioners to use its -osts in
Na)a Cit+' w.c is the service conte,-late* in sai* article. Gurther,ore' a %are rea*in) of this
article reveals that it is not a re:uire,ent thereun*er that the contract %e for future service w.
future unusual chan)e. Acc*). to Tolentino' Art. 142H states in our law the *octrine of
unforseen events. This is sai* to %e %ase* on the *iscre*ite* theor+ of rebus sic stantibus in
-u%lic international lawA un*er this theor+' the -arties sti-ulate in the li)ht of certain -revailin)
con*itions' an* once these con*itions cease to e7ist the contract also ceases to e7ist.
Consi*erin) -ractical nee*s an* the *e,an*s of e:uit+ an* )oo* faith' the *isa--earance of
the %asis of a contract )ives rise to a ri)ht to relief in favor of the -art+ -re9u*ice*.
Balane$ The Court went too far in this case. "t even went to the e7tent of sti-ulatin) for the
-arties in the na,e of e:uit+.
A+t. 18=. When the debt o2 a thin* ce+tain and dete+minate p+oceed- 2+om a
c+iminal o22en-e1 the debto+ -hall not be e>empted 2+om the payment o2 it- p+ice1
whate0e+ may be the ca/-e 2o+ the lo--1 /nle-- the thin* ha0in* been o22e+ed by him to
the pe+-on who -ho/ld +ecei0e it1 the latte+ +e2/-ed witho/t ./-ti2ication to accept it.
A+t. 189. &he obli*ation ha0in* been e>tin*/i-hed by the lo-- o2 the thin*1 the
c+edito+ -hall ha0e all the +i*ht- o2 action which the debto+ may ha0e a*ain-t thi+d
pe+-on- by +ea-on o2 the lo--.
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). Condonation o+ Remi--ion
Balane$ Con*onation or re,ission is an act of li%eralit+ %+ virtue of w.c' w.o receivin) an+
e:uivalent' the cre*itor renounces enforce,ent of an o%li)ation w.c is e7tin)uishe* in whole
or in -art.
This has four 3<5 re:uisites$
1. 6e%t that is e7istin). @ou can re,it a *e%t even %efore it is *ue.
4. Renunciation ,ust %e )ratuitous. "f renunciation is for a consi*eration' the ,o*e
of e7tin)uish,ent ,a+ %e so,ethin) else. "t ,a+ %e novation' co,-ro,ise of dacion en
pago.
8. Acce-tance %+ the *e%tor
<. Ca-acit+ of the -arties.
The for, of *onation ,ust %e o%serve*. "f the con*onation involves ,ova%les' a--l+
Art. H<F. "f it involves i,,ova%les' a--l+ Art. H<C. But note that the cre*itor ,a+ 9ust refuse
to collect 3w.o o%servin) an+ for,.5 "n this case' the o%li)ation will %e e7tin)uishe* not %+
virtue of con*onation %ut %+ waiver un*er Art. 2.
A+t. 184B. Condonation o+ +emi--ion i- e--entially *+at/ito/-1 and +eC/i+e- the
acceptance by the obli*o+. It may be made e>p+e--ly o+ impliedly.
#ne and the othe+ ?ind -hall be -/b.ect to the +/le- which *o0e+n ino22icio/-
donation-. E>p+e-- condonation -hall1 2/+the+mo+e1 comply with the 2o+m- o2 donation.
1. Mo*es of Con*onation
a. B+ will
A+t. 99,. &he le*acy o2 a c+edit a*ain-t a thi+d pe+-on o+ o2 the +emi--ion o+
+elea-e o2 a debt o2 the le*atee -hall be e22ecti0e only a- +e*a+d- that pa+t o2 the c+edit
o+ debt e>i-tin* at the time o2 the death o2 the te-tato+.
In the 2i+-t ca-e1 the e-tate -hall comply with the le*acy by a--i*nin* to the
le*atee all +i*ht- o2 action it may ha0e a*ain-t the debto+. In the -econd ca-e1 by *i0in*
the le*atee an acC/ittance1 -ho/ld he +eC/e-t one.
In both ca-e-1 the le*acy -hall comp+i-e all inte+e-t- on the c+edit o+ debt which
may be d/e the te-tato+ at the time o2 hi- death.
A+t. 99. &he le*acy +e2e++ed to in the p+ecedin* a+ticle -hall lap-e i2 the te-tato+1
a2te+ ha0in* made it1 -ho/ld b+in* an action a*ain-t the debto+ 2o+ payment o2 hi- debt1
e0en i2 -/ch payment -ho/ld not ha0e been e22ected at the time o2 hi- death.
&he le*acy to the debto+ o2 the thin* pled*ed by him i- /nde+-tood to di-cha+*e
only the +i*ht o2 pled*e.
%. B+ A)ree,ent
A+t. 184B. Condonation o+ +emi--ion i- e--entially *+at/ito/-1 and +eC/i+e- the
acceptance by the obli*o+. It may be made e>p+e--ly o+ impliedly.
#ne and the othe+ ?ind -hall be -/b.ect to the +/le- which *o0e+n ino22icio/-
donation-. E>p+e-- condonation -hall1 2/+the+mo+e1 comply with the 2o+m- o2 donation.
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A+t. 4;. Acceptance m/-t be made d/+in* the li2etime o2 the dono+ and o2 the
donee.
A+t. 4,8. &he p+o0i-ion o2 a+ticle 4,B notwith-tandin*1 no pe+-on may *i0e o+
+ecei0e1 by way o2 donation1 mo+e than he may *i0e o+ +ecei0e by will.
&he donation -hall be ino22icio/- in all that it may e>ceed thi- limitation.
A+t. 4,B. &he donation may comp+ehend all the p+e-ent p+ope+ty o2 the
dono+1 o+ pa+t the+eo21 p+o0ided he +e-e+0e-1 in 2/ll owne+-hip o+ in /-/2+/ct1
-/22icient mean- 2o+ the -/ppo+t o2 him-el21 and o2 all +elati0e- who1 at the time
o2 the acceptance o2 the donation a+e by law entitled to be -/ppo+ted by the
dono+. Witho/t -/ch +e-e+0ation1 the donation -hall be +ed/ced on petition o2
any pe+-on a22ected.
A+t. 4;=. &he donation o2 a mo0able may be made o+ally o+ in w+itin*.
An o+al donation +eC/i+e- the -im/ltaneo/- deli0e+y o2 the thin* o+ o2 the
doc/ment +ep+e-entin* the +i*ht donated.
I2 the 0al/e o2 the pe+-onal p+ope+ty donated e>ceed- 2i0e th+o/-and pe-o-1 the
donation and the acceptance -hall be made in w+itin*. #the+wi-e1 the donation -hall be
0oid.
A+t. 4;9. In o+de+ that the donation o2 an immo0able may be 0alid1 it m/-t be
made in a p/blic doc/ment1 -peci2yin* the+ein the p+ope+ty donated and the 0al/e o2
the cha+*e- which the donee m/-t -ati-2y.
&he acceptance may be made in the -ame deed o2 donation o+ in a -epa+ate
p/blic doc/ment1 b/t it -hall not ta?e e22ect /nle-- it i- done d/+in* the li2etime o2 the
dono+.
I2 the acceptance i- made in a -epa+ate in-t+/ment1 the dono+ -hall be noti2ed
the+eo2 in an a/thentic 2o+m1 and thi- -tep -hall be noted in both in-t+/ment-.
4. Presu,-tion of Con*onation
Balane$ Articles 14H1 an* 14H4 refer to a &in* of i,-lie* renunciation when the cre*itor
*ivests hi,self of the -roof cre*it. Accor*in) to 6e *ie)o' this -rovision is a%sur* an*
i,,oral in that it authori0es the *e%tor an* his heirs to -rove that the+ -ai* the *e%t' when
the -rovision itself assu,es that there has %een a re,ission' w.c is )ratuitous. 3Tolentino.5
A+t. 1841. &he deli0e+y o2 a p+i0ate doc/ment1 e0idencin* a c+edit1 made
0ol/nta+ily by the c+edito+ to the debto+1 implie- the +en/nciation o2 the action which the
2o+me+ had a*ain-t the latte+.
I2 in o+de+ to n/lli2y thi- wai0e+ it -ho/ld be claimed to be ino22icio/-1 the debto+
and hi- hei+- may /phold it by p+o0idin* that the deli0e+y o2 the doc/ment wa- made in
0i+t/e o2 payment o2 the debt.
Limited to P+i0ate )oc/ment.!! Art. 14H1 has no a--lication to -u%lic *ocu,ents %ec. there
is alwa+s a co-+ in the archives w.c can %e use* to -rove the cre*it.
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Private *ocu,ent refers to the ori)inal ori)inal in or*er for Art. 14H1 to a--l+. 3Trans-
Pacific. v. CA' su-ra.5
BALANE CA#E#$
&RA'(!PACIGIC V. CA B48< # <C<E - "t ,a+ not %e a,iss to a** that Art. 14H1 raises a
-resu,-tion' not of -a+,ent' %ut of the renunciation of the cre*it where ,ore convicin)
evi*ence woul* %e re:uire* than what nor,all+ woul* %e calle* for to -rove -a+,ent. The
rationale for allowin) the -resu,-tion of renunciation in the *eliver+ of a private instrument is
that' unli&e that of a -u%lic instru,ent' there coul* %e 9ust one co-+ of the evi*ence of cre*it.
>here several ori)inals are ,a*e out of a -rivate *ocu,ent' the inten*,ent of the law woul*
thus %e to refer to the *eliver+ onl+ of the ori)inal original rather than to the ori)inal duplicate
of w.c the *e%or woul* nor,all+ retain a co-+. "t woul* thus %e a%sur* if Art. 14H1 were to %e
a--lie* *ifferentl+.
A+t. 1848. Whene0e+ the p+i0ate doc/ment in which the debt appea+- i- 2o/nd in
the po--e--ion o2 the debto+1 it -hall be p+e-/med that the c+edito+ deli0e+ed it
0ol/nta+ily1 /nle-- the cont+a+y i- p+o0ed.
R/le 1911 (ec. , 5b61 5.61 5?61 R/le- o2 Co/+t.
-lease chec& a)ain
R/le 1911 (ec. ,. isputable presumptions.-- &he 2ollowin* p+e-/mption- a+e
-ati-2acto+y i2 /ncont+adicted1 b/t may be cont+adicted and o0e+come by othe+ e0idence3
>>>
5b6 &hat an /nlaw2/l act wa- done with an /nlaw2/l intent7
>>>
5.6 &hat a pe+-on 2o/nd in po--e--ion o2 a thin* ta?en in the doin* o2 a w+on*2/l act i-
the ta?e+ and doe+ o2 the whole act7 othe+wi-e1 that thin*- which a pe+-on po--e--e-1 o+
e>e+ci-e- act- o2 owne+-hip o0e+1 a+e owned by him7
5?6 &hat a pe+-on in po--e--ion o2 an o+de+ on him-el2 2o+ the payment o2 money1 o+ the
deli0e+y o2 anythin*1 ha- paid the money o+ deli0e+ed the thin* acco+din*ly7
>>>
=n*er the 1CF1 Rules of Court' as a,en*e*
R/le 1911 (ec. 9. isputable presumptions.!! &he 2ollowin* p+e-/mption- a+e
-ati-2acto+y i2 /ncont+adicted1 b/t may be cont+adicted and o0e+come by othe+ e0idence3
>>>
5c6 &hat a pe+-on intend- the o+dina+y con-eC/ence- o2 hi- 0ol/nta+y act7
>>>
526 &hat money paid by one to anothe+ wa- d/e to the latte+7
5*6 &hat a thin* deli0e+ed by one to anothe+ belon*ed to the latte+7
5h6 &hat an obli*ation deli0e+ed /p to the debto+ ha- been paid7
5i6 &hat p+io+ +ent- o+ in-tallment- had been paid when a +eceipt 2o+ the late+ one- i-
p+od/ced7
5?6 &hat a pe+-on in po--e--ion o2 an o+de+ on him-el2 2o+ the payment o2 they money1
o+ the deli0e+y o2 anythin*1 ha- paid the money o+ deli0e+ed the thin* acco+din*ly7
>>>
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8. Effect of Partial Re,ission
A+t. 1849. &he +en/nciation o2 the p+incipal debt -hall e>tin*/i-h the acce--o+y
obli*ation-7 b/t the wai0e+ o2 the latte+ -hall lea0e the 2o+me+ in 2o+ce.
3E7tin)uish,ent of Guarant+5
A+t. 8B4. &he obli*ation o2 the */a+anto+ i- e>tin*/i-hed at the -ame time a-
that o2 the debto+1 and 2o+ the -ame ca/-e- a- all othe+ obli*ation-.
A+t. 8B=B. &he */a+anto+-1 e0en tho/*h they be -olida+y1 a+e +elea-ed 2+om thei+
obli*ation whene0e+ by -ome act o2 the c+edito+ they cannot be -/b+o*ated to the
+i*ht-1 mo+t*a*e-1 and p+e2e+ence- o2 the latte+.
3Provisions Co,,on to Ple*)e an* Mort)a)e5
A+t. 8B=,. &he 2ollowin* +eC/i-ite- a+e e--ential to the cont+act- o2 pled*e and
mo+t*a*e3
516 &hat they be con-tit/ted to -ec/+e the 2/l2illment o2 a p+incipal obli*ation7
>>>
A+t. 184;. It i- p+e-/med that the acce--o+y obli*ation o2 pled*e ha- been
+emitted when the thin* pled*ed1 a2te+ it- deli0e+y to the c+edito+1 i- 2o/nd in the
po--e--ion o2 the debto+1 o+ o2 a thi+d pe+-on who own- the thin*.
Balane$ The accesor+ o%li)ation of -le*)e* is e7tin)uishe* %ec. -le*)e is a -ossessor+ lien.
The -resu,-tion in this case is that the -le*)ee has surren*ere* the thin) -le*)e* to the
-le*)or. This is not a conclusive -resu,-tion accor*in) to Art. 411D' -ar. 4.
A+t. 8B99. In addition to the +eC/i-ite- p+e-c+ibed in a+ticle 8B=,1 it i- nece--a+y1
in o+de+ to con-tit/te the cont+act o2 pled*e1 that the thin* pled*ed be placed in the
po--e--ion o2 the c+edito+1 o+ o2 a thi+d pe+-on by common a*+eement.
A+t. 81B,. &he debto+ cannot a-? 2o+ the +et/+n o2 the thin* pled*ed a*ain-t the
will o2 the c+edito+1 /nle-- and /ntil he ha- paid the debt and it- inte+e-t1 with e>pen-e-
in a p+ope+ ca-e.
E. Con2/-ion o+ Me+*e+ o2 Ri*ht-
A+t. 184,. &he obli*ation i- e>tin*/i-hed 2+om the time the cha+acte+- o2 c+edito+
and debto+ a+e me+*ed in the -ame pe+-on.
Balane$ Confusion is the ,eetin) in one -erson of the :ualities of the cre*itor an* *e%tor
with res-ect to the sa,e o%li)ation.
There are two 345 re:uisites$
1. "t ,ust ta&e -lace %etween the cre*itor an* the -rinci-le *e%tor 3Art. 14H2.5
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4. The ver+ sa,e o%li)ation ,ust %e involve*.***
Rationale.!! @ou %eco,e +our own cre*itor or +ou %eco,e +our own *e%tor. #o how can
+ou sue +ourself.
What may ca/-e a me+*e+ o+ con2/-ionH!! 315 #uccession' whether co,-ulsor+'
testa,entar+ or intestateA 345 6onationA 385 Ne)otiation of a ne)otia%le instru,ent.
Because of its nature' confusion. ,er)er ,a+ overla- w. other causes of
e7tin)uish,ent. Gor e7a,-le' " owe Ms. lores P1DD'DDD. #he %e:ueath to ,e that cre*it.
An* then she *ie*. "n this case' there is e7tin)uishe,nt %oth %+ ,er)er. But in this case'
,er)er coul* overla- w. -a+,ent.
3nor in Baviera/s outline5
A+t. 184. Me+*e+ which ta?e- place in the pe+-on o2 the p+incipal debto+ o+
c+edito+ bene2it- the */a+anto+-. Con2/-ion which ta?e- place in the pe+-on o2 any o2
the latte+ doe- not e>tin*/i-h the obli*ation.
Balane$ This is -erfectl+ in consonance w. Art. 14H1.
1. Princi-al Parties
A+t. 184. Me+*e+ which ta?e- place in the pe+-on o2 the p+incipal debto+ o+
c+edito+ bene2it- the */a+anto+-. Con2/-ion which ta?e- place in the pe+-on o2 any o2
the latte+ doe- not e>tin*/i-h the obli*ation.
4. A,on) )uarantors
3Effects of Guarant+ as Between Co-Guarantors5
A+t. 8B49. When the+e a+e two o+ mo+e */a+anto+- o2 the -ame debto+ and 2o+ the
-ame debt1 the one amon* them who ha- paid may demand o2 each o2 the othe+- the
-ha+e which i- p+opo+tionally owin* 2+om him.
I2 any o2 the */a+anto+- -ho/ld be in-ol0ent1 hi- -ha+e -hall be bo+ned by the
othe+-1 incl/din* the paye+1 in the -ame p+opo+tion.
&he p+o0i-ion- o2 thi- a+ticle -hall not be applicable1 /nle-- the payment ha-
been made in 0i+t/e o2 a ./dicial demand o+ /nle-- the p+incipal debto+ i- in-ol0ent.
8. ;oint %li)ations
A+t. 1844. Con2/-ion doe- not e>tin*/i-h a .oint obli*ation e>cept a- +e*a+d- the
-ha+e co++e-pondin* to the c+edito+ o+ debto+ in whom the two cha+acte+- conc/+.
<. #oli*ar+ %li)ations
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A+ticle 1819. &he +emi--ion made by the c+edito+ o2 the -ha+e which
a22ect- one o2 the -olida+y debto+- doe- not +elea-e the latte+ 2+om hi-
+e-pon-ibility towa+d- the co!debto+-1 in ca-e the debt had been totally paid by
anyone o2 them be2o+e the +emi--ion wa- e22ected.
A+t. 181. &he c+edito+ may p+oceed a*ain-t any o2 one o2 the -olida+y debto+-
o+ -ome o+ all o2 them -im/ltaneo/-ly. &he demand made a*ain-t one o2 them -hall not
be an ob-tacle to tho-e which may -/b-eC/ently be di+ected a*ain-t the othe+-1 -o lon*
a- the debt ha- not been 2/lly collected.
A+t. 1814. Payment made by one o2 the -olida+y debto+- e>tin*/i-he- the
obli*ation. I2 two o+ mo+e -olida+y debto+- o22e+ to pay1 the c+edito+ may choo-e which
o22e+ to accept.
Ee who made the payment may claim 2+om hi- co!debto+- only the -ha+e which
co++e-pond- to each1 with the inte+e-t 2o+ the payment al+eady made. I2 the payment i-
made be2o+e the debt i- d/e1 no inte+e-t 2o+ the inte+0enin* pe+iod may be demanded.
When one o2 the -olida+y debto+- cannot1 beca/-e o2 hi- in-ol0ency1 +eimb/+-e
hi- -ha+e to the debto+ payin* the obli*ation1 -/ch -ha+e -hall be bo+ne by all hi- co!
debto+-1 in p+opo+tion to the debt o2 each.
1. "n*ivisi%le %li)ations
p+oceedin* a*ain-t all the debto+-. I2 one o2 the latte+ -ho/ld be in-ol0ent1 the othe+-
A+t. 188;. A .oint indi0i-ible *i0e- +i-e to indemnity 2o+ dama*e- 2+om the time
anyone o2 the debto+- doe- no comply with hi- /nde+ta?in*. &he debto+- who may ha0e
been +eady to 2/l2ill thei+ p+omi-e- -hall not cont+ib/te to the indemnity beyond the
co++e-pondin* po+tion o2 the p+ice o2 the thin* o+ o2 the 0al/e o2 the -e+0ice in which
the obli*ation con-i-t-.
G. Compen-ation
Balane$ )e2inition o2 Compen-ation.!! Co,-ensation is a ,o*e of e7tin)uishin)' to the
concurrent a,ount' the o%li)ations of those -ersons who in their own ri)ht are reci-rocall+
*e%tors an* cre*itors of each other. 3Castan.5
Perha-s' ne7t to -a+,ent' co,-ensation is the ,ost co,,on ,o*e of e7tin)uishin)
an o%li)ation.
)i-tin*/i-hed 2+om Con2/-ion.!! "n co,-ensation' there are 4 -arties an* 4 *e%ts'
whereas in confusion' there are 4 *e%ts an* onl+ 1 -art+.
A+t. 184=. Compen-ation -hall ta?e place when two pe+-on-1 in thei+ own +i*ht1
a+e c+edito+- and debto+- o2 each othe+.
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BALANE CA#E#$
%A' &I#' V. CA B4F # 481E - Award of attorney6s fees as subject of legal compensation.--
The awar* is ,a*e in favor of the liti)ant' not of his counsel' an* is 9ustifie* %+ wa+ of
in*e,nit+ for *a,a)es recovera%le %+ the for,er in the cases enu,erate* in Art. 44DF. "t is
the liti)ant' not his counsel' who is the 9u*)e,ent cre*itor an* who ,a+ enforce the 9u*),ent
%+ e7ecution. #uch cre*it' therefore' ,a+ -ro-erl+ %e the su%9ect of le)al co,-ensation.
Juite o%viousl+' it woul* %e un9ust to co,-el -etitioner to -a+ his *e%t for P1DD when
a*,itte*l+ his cre*itor is in*e%te* to hi, for ,ore than P<'DDD.
P'B V. #'% ACER# B1<F # 122E - There is no compensation where the parties are not
creditors and debtors of each other.-- The insu-era%le o%stacle to the success of PNB/s
cause is the factual fin*in) of the "AC that it has not -roven %+ co,-etent evi*ence that it is
a cre*itor of "#ABEL. The onl+ evi*ence -resente* %+ PNB towar*s this en* consists of 4
*ocu,ents ,ar&e* in its %ehalf. But as the "AC has co)entl+ o%serve*' these *ocu,ents *o
not -rove an+ in*e%te*ness of "#ABELA to PNB. All the+ *o -rove is that a letter of cre*it
,i)ht have %een o-ene* for "#ABELA %+ PNB' %ut not that the cre*it was ever availe* of B%+
"#ABELA(s forei)n corres-on*ent 3MAN5E' or that the )oo*s there%+ covere* were in fact
shi--e*' an* receive* %+ "#ABELA.
GRA'CIA V. IAC B124 # H18E - BTEhere can %e no off-settin) of ta7es a)ainst the clai,s that
the ta7-a+er ,a+ have a)ainst the )ovt. A -erson cannot refuse to -a+ a ta7 on the )roun*
that the )ovt owes hi, an a,ount e:ual to or )reater than the ta7 %ein) collecte*. The
collection of a ta7 cannot await the results of a lawsuit a)ainst the )ovt.
A clai, for ta7es is not such a *e%t' *e,an*' contract or 9u*),ent as is allowe* to %e
set-off 777 The )eneral rule %ase* on )roun*s of -u%lic -olic+ is well-settle* that no set-off
a*,issi%le a)ainst *e,an*s for ta7es levie* for )eneral or local )overn,ental -ur-oses.
The reason on w.c the )en. rule is %ase*' is that ta7es are not in the nature of contracts %et.
the -art+ an* -art+ %ut )row out of *ut+ to' an* are the -ositive acts of the )ovt to the ,a&in)
an* enforcin) of w.c' the -ersonal consent of in*ivi*ual ta7-a+ers is not re:uire*. 777
3Re-u%lic v. Ma,%ulao Lu,%er.5
"n Cor*ero v. Gon*a' we hel* that$ (777 internal revenue ta7es can not %e the su%9ect
of co,-ensation$ Reason$ )ovt an* ta7-a+er /are not ,utuall+ cre*itors an* *e%tors of each
other un*er Art. 14HF an* a (clai, for ta7es is not such a *e%t' *e,an*' contract or 9u*),ent
as is allowe* to %e set-off.
A+t. 18=. Compen-ation ta?e- place by ope+ation o2 law1 e0en tho/*h the debt-
may be payable at di22e+ent place-1 b/t the+e -hall be an indemnity 2o+ e>pen-e- o2
e>chan*e o+ t+an-po+tation to the place o2 payment.
1. )i22e+ent $ind- o2 Compen-ation3
a. 5egal %ompensation 3Articles 14HC' 14CD5 w.c ta&es -lace auto,aticall+ %+
o-eration of law once all the re:uisites are -resent.
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A+t. 1849. In o+de+ that compen-ation may be p+ope+1 it i- nece--a+y3
516 &hat each one o2 the obli*o+- be bo/nd p+incipally1 and that he be at the
-ame time a p+incipal c+edito+ o2 the othe+7
586 &hat both debt- con-i-t in a -/m o2 money1 o+ i2 the thin*- d/e a+e
con-/mable1 they be o2 the -ame ?ind1 and al-o o2 the -ame C/ality i2 the latte+ ha-
been -tated7
596 &hat the two debt- be d/e7
5;6 &hat they be liC/idated and demandable7
5,6 &hat o0e+ neithe+ o2 them the+e by any +etention o+ cont+o0e+-y1 commenced
by thi+d pe+-on- and comm/nicated in d/e time to the debto+.
Balane$
ReC/i-ite- /nde+ A+t. 18493
1. 2utual 4ebtors and %reditors.!! The -arties ,ust %e ,utuall+ *e%tors an*
cre*itors 315 in their own ri)ht' an* 345 as -rinci-als. There can %e no co,-ensation if 1
-art+ occu-ies onl+ a re-resentative ca-acit+. Li&ewise' there can %e no co,-ensation if in
one o%li)ation' a -art+ is a -rinci-al o%li)or an* in another o%li)ation' he is a )uarantor.
4. 'ungible Things 4ue.!! The wor* consu,,a%le is wron). =n*er Art. <1F'
consu,,a%le thin)s are those w.c cannot %e use* in a ,anner a--ro-riate to their nature
w.o their %ein) consu,e*. "n a reci-rocal o%li)ation to *eliver horses' the thin)s *ue are not
consu,,a%leA +et there can %e co,-ensation. 3Tolentino.5 The -ro-er ter,inolo)+ is
(fun)i%le( w.c refers to thin)s of the sa,e &in* w.c in -a+,ent can %e su%stitute* for another.
8. 2aturity of 4ebts.!! Both *e%ts ,ust %e *ue to -er,it co,-ensation.
<. 4emandable and 5iquidated 4ebts.-- Tolentino$ 6e,an*a%le ,eans that the
*e%ts are enforcea%le in court' there %ein) no a--arent *efenses inherent in the,. The
o%li)ations ,ust %e civil o%li)ations' e7clu*in) those that are -urel+ natural. 777 Before a
9u*icial *ecree of rescission or annul,ent' a rescissi%le or voi*a%le *e%t is vali* an*
*e,an*a%leA hence' it can %e co,-ensate*.
A *e%t is li:ui*ate* when its e7istence an* a,ount are *eter,ine*. 777 An* a *e%t is
consi*ere* li:ui*ate*' not onl+ when it is e7-resse* alrea*+ in *efinite fi)ures w.c *o not
re:uire verification' %ut also when the *eter,ination of the e7act a,ount *e-en*s onl+ on a
si,-le arith,etical o-eration. 777
1. 4ebt must not be garnished.
3a**itional re:uire,ent5
2. %ompensation is not prohibited by any provision of law li&e Articles 14FH' 14FF an*
1HC<.
A+t. 18=4. Compen-ation -hall not be p+ope+ when one o2 the debt-
a+i-e- 2+om a depo-it/m o+ 2+om the obli*ation- o2 a depo-ita+y o+ o2 a bailee in
commodat/m.
'eithe+ can compen-ation be -et /p a*ain-t a c+edito+ who ha- a claim
2o+ -/ppo+t d/e by *+at/ito/- title1 witho/t p+e./dice to the p+o0i-ion- o2
pa+a*+aph 8 o2 a+ticle 9B1.
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A+t. 18==. 'eithe+ -hall the+e be compen-ation i2 one o2 the debt-
con-i-t- in ci0il liability a+i-in* 2+om a penal o22en-e.
A+t. 149;. E0e+y pa+tne+ i- +e-pon-ible to the pa+tne+-hip 2o+ dama*e-
-/22e+ed by it th+o/*h hi- 2a/lt1 and he cannot compen-ate them with the p+o2it-
and bene2it- which he may ha0e ea+ned 2o+ the pa+tne+-hip by hi- ind/-t+y.
Eowe0e+1 the co/+t- may eC/itably le--en thi- +e-pon-ibility i2 th+o/*h the
pa+tne+@- e>t+ao+dina+y e22o+t- in othe+ acti0itie- o2 the pa+tne+-hip1 /n/-/al
p+o2it- ha0e been +eali<ed.
BALANE CA#E#$
REPUBLIC V. )E L#( A'%ELE( BCF # 1D8E - %ompensation of debts arising even without
proof of liquidation of claim, where the claim is undisputed.-- Proof of the li:ui*ation of a
clai,' in or*er that there %e co,-ensation of *e%ts' is -ro-er if such clai, is *is-ute*. But' if
the clai, is un*is-ute*' as in the case at %ar' the state,ent is sufficient an* no other -roof
,a+ %e re:uire*. 777
(#LI'AP V. )EL R#(ARI# B148 # 2<DE - Petitioner conten*s that res-on*ent 9u*)e
)ravel+ a%use* her *iscretion in not *eclarin) the ,utual o%li)ations of the -arties
e7tin)uihse* to the e7tent of their res-ective a,ounts. He relies on Art. 14HF to the effect
that co,-ensation shall ta&e -lace when 4 -ersons' in their own ri)ht' are cre*itors an*
*e%tors of each other. The ar)u,ent fails to consi*er Art. 14HC w.c -rovi*es that
co,-ensation can ta&e -lace onl+ if %oth o%li)ations are li:ui*ate*. "n the case at %ar' the
-etitioner/s clai, a)ainst the res-. Luteros is still -en*in) *eter,ination %+ the court. >hile it
is not for =s to -ass u-on the ,erits of the -ltff/s cause of action in that case' it a--ears that
the clai, asserte* therein is *is-ute* %+ the Luteros on %oth factual an* le)al )roun*s.
More' the counterclai, inter-ose* %+ the,' if ulti,atel+ foun* to %e ,eritorious' can *efeat
-etitioner/s *e,an*. =-on this -re,ise' his clai, in that case cannot %e cate)ori0e* as
li:ui*ate* cre*it w.c ,a+ -ro-erl+ %e set-off a)ainst his o%li)ation. %ompensation cannot
ta!e place where one6s claim aginst the other is still the subbject of court litigation. =t is a
requirement, for compensation to ta!e place, that the amount involved be certain and
liquidated.
(ACIP V . CA B18< # 81HE - %ompensation cannot ta!e place where, with respect to the
money involved in the estafa case, the complainant was merely acting as agent of another.
=n set-off the two persons must in their own right be creditor and debtor of each other. --
Petitioner conten*s that res-. CA erre* in not a--l+in) the -rovisions on co,-ensation or
settin)-off *e%ts un*er Art. 14HF an* 14HC' *es-ite evi*ence showin) that ;ose La-u0 still
owe* hi, an a,ount of ,ore than P1'DDD an* in not *is,issin) the a--eal consi*erin) that
the latter is not le)all+ the a)rive* -art+. This contention is untena%le. Co,-ensation cannot
ta&e -lace in this case since the evi*ence shows that ;ose La-u0 is onl+ an a)en of Al%ert
#,ith an*. or 6r. 6wi)ht 6ill. Co,-ensation ta&es -lace onl+ when two -ersons in their own
ri)ht are cre*itors an* *e%tors of each other' an* that each one of the o%li)ors is %oun*
-rinci-all+ an* is at the sa,e ti,e a -rinci-al cre*itor of the other. Moreover' 777 La-u0 *i*
not consent to the off-settin) of his o%li)ation w. -etitioner/s o%li)ation to -a+ for the 1DD
shares.
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CIA. MARI&IMA V. CA B181 # 1C8E - %ompensation cannot ta!e place where one of the
debts is not liquidated as when there is a running interest still to be paid thereon.-- More' the
le)al interest -a+a%le fro, 4.8.11 on the su, of P<D'HCH.1<' re-resentin) useful e7-enses
incurre* %+ PAN-R"ENTAL' is also still unli:ui*ate* since interest *oes not sto- accruin)
(until the e7-enses are full+ -ai*.( Thus' we fin* w.o %asis REP=BL"C/s alle)ation that PAN-
R"ENTAL/# clai, in the a,ount of P<D'HCH.1< was e7tin)uishe* %+ co,-ensation since the
rentals -a+a%le %+ PAN-R"ENTAL a,ount to P1C'1DD while the e7-enses reach onl+
P<D'HCH.1<. 6e*uctin) the latter a,ount fro, the for,er' REP=BL"C clai,s that P1F'HD4.<2
woul* still %e owin) %+ PAN-R"ENTAL to REP=BL"C. That ar)u,ent loses si)ht of the fact
that to the su, of P<D'HCH.1< will still have to %e a**e* the le)al rate of interest (fro, Ge%.
8' 1C11 until full+ -ai*.(
I'&ER'A&I#'AL C#RP#RA&E BA'$ V. IAC B128 # 4C2E - 0equisite of legal
compensation under Art. ,.CD.-- Petitioner conten*s that after foreclosin) the ,ort)a)e'
there is still *ue fro, -rvt. res-s as *eficienc+ the a,ount of P2.F1 ,illion a)ainst w.c it has
the ri)ht to a--l+ or set off -rvt. res-on*ent/s ,one+ ,ar&et clai, of P1'D24'D28.F8. The
ar)u,ent is w.o ,erit. Co,-ensation shall ta&e -lace when two -ersons' in their own ri)ht
are cre*itors an* *e%tors of each other. >hen all the re:uisites ,entione* in Art. 14HC are
-resent' co,-ensation ta&es effect %+ o-eration of law' even w.o the consent or &nowle*)e
of the *e%tors. 3Art. 14CD.5 Art. 14HC re:uires a,on) others' that in or*er that le)al
co,-ensation shall ta&e -lace' /the two *e%ts %e *ue/ an* /the+ %e li:ui*ate* an*
*e,an*a%le./ Co,-ensation is not -ro-er where the clai, of the -erson assertin) the set-off
a)ainst the other is not clear nor li:ui*ate*A co,-ensation cannot e7ten* to unli:ui*ate*'
*is-ute* clai, arisin) fro, %reach of contract. There can %e no *ou%t that -etitioner is
in*e%te* to -rvt res-. in the a,ount of P1'D24'D28.F8 re-resentin) the -rocee*s of her
,one+ ,ar&et invest,ent. This is a*,itte*. But whether -rvt. res- is in*e%te* to -etitioner
in the a,ount of P2.F1 ,illion re-resentin) the *eficienc+ %alance after the foreclosure of the
,ort)a)e e7ecute* to secure the loan e7ten*e* to her' is vi)orousl+ *is-ute*. This
circu,stance -revents le)al co,-ensation fro, ta&in) -lace.
#'% V. CA B1HH # <D4E - 0equisites of %ompensation.-- Ger,in o%viousl+ cannot ta&e
refu)e in Art. 14HC. As the res-. Court correctl+ o%serve* in hol*in) that the a%ove -rovision
was not a--lica%le$ The instant case *oes not certainl+ satisf+ the a%ove %ecause 315
a--ellant is not a *e%tor of a--elle' it is onl+ the latter who is in*e%te* to a--ellantA 345 the
*e%ts' even a*,ittin)' that the *eliver+ of the 0i--ers to -ltff. is a *e%t' *o not %oth consist in
a su, of ,one+ nor are the+ of the sa,e :ualit+ an* &in*. 777
PI#'EER I'(URA'CE V. CA B1FD # 142E - Co,-ensation shall ta&e -lace when 4
-ersons' in their own ri)ht' are cre*itors an* *e%tors of each other. >hen all the re:uisites
,entione* in Art. 14HC are -resent' co,-ensation ta&es effect %+ o-eration of law' even w.o
the consent or &nowle*)e of the *e%tors. 3Art. 14CD.5 Art. 14HC re:uires ,on) others' that in
or*er that le)al co,-ensation shall ta&e -lace' the 4 *e%ts %e *ue an* the+ %e li:ui*ate* an*
*e,an*a%le. Co,-ensation is not -ro-er where the clai, of the -erson assertin) the set-off
a)ainst the other is not clear nor li:ui*ate*A co,-ensation cannot e7ten* to unli:ui*ate*'
*is-ute* clai, arisin) fro, %reach of contract.
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CIVIL LAW REVIEW
(ILAEI( MAR$E&I'% V. IAC B1FD # 41E - Co,-ensation is not -ro-er where the clai, of
the -erson assertin) the set-off a)ainst the other is not clear nor li:ui*ate*A co,-ensation
cannot e7ten* to unli:ui*ate*' *is-ute* clai, e7istin) fro, %reach of contract. 777
=n*ou%te*l+' -etitioner a*,its the vali*it+ of its outstan*in) accounts w. -rvt. res-. in
the a,ount of P44'418.H1 as containe* in its answer. But whether -rvt. res-. is lia%le to -a+
the -etitioner a 4DN ,ar)in or co,-ensation on the su%9ect sale to 6ole Phils.' "nc. is
vi)orousl+ *is-ute*. This circu,stance -revents le)al co,-ensation fro, ta&in) -lace.
A+t. 18=B. 'otwith-tandin* the p+o0i-ion- o2 the p+ecedin* a+ticle1 the */a+anto+
may -et /p compen-ation a- +e*a+d- what the c+edito+ may owe the p+incipal debto+.
A+t. 18=9. I2 one o2 the pa+tie- to a -/it o0e+ an obli*ation ha- a claim 2o+
dama*e- a*ain-t the othe+1 the 2o+me+ may -et it o22 by p+o0in* hi- +i*ht to -aid
dama*e- and the amo/nt the+eo2.
Effect of Le)al Co,-ensation
A+t. 18=9. I2 a pe+-on -ho/ld ha0e a*ain-t him -e0e+al debt- which a+e
-/-ceptible o2 compen-ation1 the +/leon the application o2 payment- -hall apply to the
o+de+ o2 the compen-ation.
A+t. 189B. When all the +eC/i-ite- mentioned in a+ticle 1849 a+e p+e-ent1
compen-ation ta?e- e22ect by ope+ation o2 law1 and e>tin*/i-he- both debt- to the
conc/++ent amo/nt1 e0en tho/*h the c+edito+- and debto+- a+e not awa+e o2 the
compen-ation.
A+t. 1849. In o+de+ that compen-ation may be p+ope+1 it i- nece--a+y3
516 &hat each one o2 the obli*o+- be bo/nd p+incipally1 and that he be at
the -ame time a p+incipal c+edito+ o2 the othe+7
586 &hat both debt- con-i-t in a -/m o2 money1 o+ i2 the thin*- d/e a+e
con-/mable1 they be o2 the -ame ?ind1 and al-o o2 the -ame C/ality i2 the latte+
ha- been -tated7
596 &hat the two debt- be d/e7
5;6 &hat they be liC/idated and demandable7
5,6 &hat o0e+ neithe+ o2 them the+e by any +etention o+ cont+o0e+-y1
commenced by thi+d pe+-on- and comm/nicated in d/e time to the debto+.
BALANE CA#E$
MI')A'A# P#R&LA') CEME'& V. CA B14D # C8DE - Automatic compensation, requisites
of, present1 ?*tinguishment of two debts arising from final and e*ecutory judgments due to
compensation by operation of law.-- "t is clear fro, the recor* that %oth cor-orations'
-etitioner Min*anao Portlan* Ce,ent Cor-. 3a--ellant5 an* res-. Pacwel* #teel Cor-.
3a--ellee5' were cre*itors an* *e%tors of each other' their *e%ts to each other consistin) in
final an* e7ecutor+ 9u*)e,ents of the CG" in 4 se-arate cases' or*erin) the -a+,ent to each
other of the su, of P1DT %+ wa+ of attorne+/s fees. The 4 o%li)ations' therefore' res-ectivel+
offset each other' co,-ensation havin) ta&en effect %+ o-eration of law an* e7tin)uishe*
%oth *e%ts to the concurrent a,ount of P1DT' -ursuant to the -rovisions of Art. 14HF' 14HC
an* 14CD' since all the re:uisites -rovi*e* in Art. 14HC for auto,atic co,-ensation (even
thou)h the cre*itors an* *e%tors are not aware of the co,-ensation( were *ul+ -resent.
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%. 'acultative %ompensation w.c ta&es -lace when co,-ensation is clai,a%le %+
onl+ one of the -arties %ut not of the other' e.).' Articles 14FH' 14FF.
A+t. 18=4. Compen-ation -hall not be p+ope+ when one o2 the debt- a+i-e- 2+om
a depo-it/m o+ 2+om the obli*ation- o2 a depo-ita+y o+ o2 a bailee in commodat/m.
'eithe+ can compen-ation be -et /p a*ain-t a c+edito+ who ha- a claim 2o+
-/ppo+t d/e by *+at/ito/- title1 witho/t p+e./dice to the p+o0i-ion- o2 pa+a*+aph 8 o2
a+ticle 9B1.
A+t. 9B1. &he +i*ht to +ecei0e -/ppo+t cannot be +eno/nced7 no+ can it be
t+an-mitted to a thi+d pe+-on. 'eithe+ can it be compen-ated with what the
+ecipient owe- the obli*o+.
Eowe0e+1 -/ppo+t in a++ea+- may be compen-ated and +eno/nced1 and
the +i*ht to demand the -ame may be t+an-mitted by one+o/- o+ *+at/ito/- title.
Baviera$ Note that Art. 8D1 of the NCC is not foun* in GC
Balane$ The *e-ositar+ cannot set u- co,-ensation w. res-ect to the thin)s *e-osite* to
hi,. But the *e-ositor can set u- the co,-ensation.
A+t. 18==. 'eithe+ -hall the+e be compen-ation i2 one o2 the debt- con-i-t- in
ci0il liability a+i-in* 2+om a penal o22en-e.
c. %ontractual& %onventional compensation w.c ta&es -lace when -arties a)ree to
set-off even if the re:uisites of le)al co,-esnation are not -resent' e.).' Art. 14F4.
A+t. 18=8. &he pa+tie- may a*+ee /pon the compen-ation o2 debt- which a+e not
yet d/e.
Tolentino$ !oluntar+ Co,-ensation is not li,ite* to o%li)ations w.c are not +et *ue. The
-arties ,a+ co,-ensate %+ a)ree,ent an+ o%li)ations' in w.c the o%9ective re:uisites
-rovi*e* for le)al co,-ensation are not -resent. 77
*. ;udicial %ompensation when *ecree* %+ the court in a case where there is a
counterclai,' such as that -rovi*e* in Art. 14F8.
A+t. 18=9. I2 one o2 the pa+tie- to a -/it o0e+ an obli*ation ha- a claim 2o+
dama*e- a*ain-t the othe+1 the 2o+me+ may -et it o22 by p+o0in* hi- +i*ht to -aid
dama*e- and the amo/nt the+eo2.
Effect of Assi)n,ent of Cre*it
A+t. 18=,. &he debto+ who ha- con-ented to the a--i*nment o2 +i*ht- made by a
c+edito+ in 2a0o+ o2 a thi+d pe+-on1 cannot -et /p a*ain-t the a--i*nee the compen-ation
which wo/ld pe+tain to him a*ain-t the a--i*no+1 /nle-- the a--i*no+ wa- noti2ied by
the debto+ at the time he *a0e hi- con-ent1 that he +e-e+0ed hi- +i*ht to the
compen-ation.
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I2 the c+edito+ comm/nicated the ce--ion to him b/t the debto+ did not con-ent
the+eto1 the latte+ may -et /p the compen-ation o2 debt- p+e0io/- to the ce--ion1 b/t
not o2 -/b-eC/ent one-.
I2 the a--i*nment i- made witho/t the ?nowled*e o2 the debto+1 he may -et /p the
compen-ation o2 all c+edit- p+io+ to the -ame and al-o late+ one- /ntil he had
?nowled*e o2 the a--i*nment.
Balane$ There are 8 situations covere* in this article$
1. Assi)n,ent w. the *e%tor/s consentA
4. Assi)n,ent w. the *e%tor/s &nowle*)e %ut w.o his consentA an*
8. Assi)n,ent w.o the *e%tor/s &nowle*)e 3an* o%viousl+ w.o his consent.5
Rules$
1. Assignment w& the debtor6s consent.-- 6e%tor cannot set u- co,-ensation at all unless
the ri)ht is reserve*.
4. Assignment w& the debtor6s !nowledge but w&o his consent.-- The *e%tor can set u-
co,-ensation w. a cre*it alrea*+ e7istin) at the ti,e of the assi)n,ent.
8. Assignment w&o the debtor6s !nowledge.-- 6e%tor can set u- as co,-ensation an+ cre*it
e7istin) at the ti,e he ac:uire* &nowle*)e even if it arose after the actual assi)n,ent.
BALANE CA#E$
(E(BRE'# V. CA B444 # <22E - %ompensation may defeat assignee6s rights before notice
of the assignment is given to the debtor.-- "n other wor*s' -etitioner notifie* 6elta of his
ri)hts as assi)nee after co,-ensation ha* ta&en -lace %+ o-eration of law %ec. the offsettin)
instru,ents ha* %oth reache* ,aturit+. "t is a fir,l+ settle* *octrine that the ri)hts of an
assi)nee are not an+ )reater than the ri)hts of the assi)nor' since the assi)nee is ,erel+
su%stitute* in the -lace of the assin)or an* that the assi)nee ac:uires his ri)hts su%9ect to
the e:uities-- i.e.' the *efenses-- w.c the *e%tor coul* have set u- a)ainst the ori)inal
assi)nor %efore notice of the assin),ent was )iven to the *e%tor. At the ti,e that 6elta was
first -ut to notice of the assin),ent in -etitioner/s favor on H.1<.F1' 6MC PN N. 4H81 ha*
alrea*+ %een *ischar)e* %+ co,-ensation. #ince the assi)nor Philfinance coul* not have
then co,-elle* -a+,ent anew %+ 6elta of 6MC PN No. 4H81' -etitioner' as assi)nee of
Philfinance' is si,ilarl+ *isa%le* fro, collectin) fro, 6elta the -ortion of the Note assi)ne* to
hi,.
A+t. 18=;. When one o+ both debt- a+e +e-ci--ible o+ 0oidable1 they may be
compen-ated a*ain-t each othe+ be2o+e they a+e ./dicially +ec-inded o+ a0oided.
G. Novation
Concept o2 'o0ation.!! Novation is the e7tin)uish,ent of an o%li)ation %+ the su%stitution
or chan)e of the o%li)ation %+ a su%se:uent one w.c e7tin)uishes or ,o*ifies the first' either
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%+ chan)in) the o%9ect of -rinci-al con*itions' or %+ su%stitutin) the -erson of the *e%tor' or
%+ su%ro)atin) a thir* -erson in the ri)hts of the cre*itor. 3Manresa.5
Novation is the ,ost unusual ,o*e of e7tin)uishin) an o%li)ation. "t is the onl+ ,o*e
where%+ an o%li)ation is e7tin)uishe* an* a new o%li)ation is create* to ta&e its -lace. The
other ,o*es of e7tin)uishin) an o%li)ation are a%solute in the sense that the e7tin)uish,ent
of the o%li)ation is total 3w. the e7ce-tion of co,-ro,ise.5 Novation' on the other han*' is a
relative ,o*e of e7tin)uishin) an o%li)ation.
Cla--i2ication o2 'o0ation3
1. "ubjective +Personal- or novation %+ a chan)e of su%9ect
a. Active subjective or a chan)e of cre*itorA also &nown as su%ro)ation.
%. Passive subjective or a chan)e of *e%tor
4. #bjective +0eal- or novation %+ chan)e in the o%9ect or in the -rinci-al con*itions.
Novation %+ a chan)e in the -rinci-al con*itions is the ,ost -ro%le,atic &in* of novation %ec.
+ou have to *eter,ine whether or not the chan)e in the con*itions is -rinci-al or ,erel+
inci*ental. Gor e7a,-le' a chan)e fro, strai)ht ter,s to install,ent ter,s an* a chan)e
fro, non-interest %earin) o%li)ation to an interest %earin) one are chan)es in the -rinci-al
con*itions.
8. 2i*ed novation w.c is a co,%ination of %oth su%9ective an* o%9ective novation.
ReC/i-ite- o2 'o0ation3
1. There ,ust %e a -revious vali* o%li)ationA
4. A)ree,ent of the -arties to create the new o%li)ationA
8. E7tin)uish,ent of the ol* o%li)ation. 3" woul* consi*er this an effect' rather than a
re:uisite of novation-- Balane5A
<. !ali*it+ of the new o%li)ation.
3Tiu #iuco v. Ha%ana' <1 P HDH.5
A+t. 1898. In o+de+ that an obli*ation may be e>tin*/i-hed by anothe+ which
-/b-tit/te the -ame1 it i- impe+ati0e that it be -o decla+ed in /neC/i0ocal te+m-1 o+ that
the old and the new obli*ation- be on e0e+y point incompatible with each othe+.
BALANE CA#E#$
GUA V. AAP BH< P 4FHE - A--elle o%taine* in the CG"-Mla. a 9u*)e,ent sentencin)
a--elants to -a+ P1'18F.D< w. le)al interest an* costs. #u%se:uentl+' a--ellants e7ecute* a
,ort)a)e in favor of a--elle' wherein it was sti-ulate* that their o%li)ation un*er the
9u*),ent was re*uce* to P1'4DD w.c was ,a*e -a+a%le in < i nstall,ents of P8DDA that to
secure the -a+,ent the sai* P1'4DD' a ca,arin %elon)in) to a--ellants was ,ort)a)e* to
a--elleeA that in case the a--ellants *efaulte* in the -a+,ent of an+ of the install,ents' the+
woul* -a+ ten -ercent of the un-ai* %al. as attorne+/s fees' -lus the costs of the action to %e
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%rou)ht %+ a--ellee %+ reason of such *efault' an* the further a,ount of P88F' re-resentin)
the *iscount conce*e* to a--ellants.
HEL6$ The a--ellant/s lia%ilit+ un*er the 9u*),ent ha* %een e7tin)uishe* %+ the state,ent
evi*ence* %+ the ,ort)a)e e7ecute* %+ the, in favor of the a--elle. Althou)h sai*
,ort)a)e *i* not e7-ressl+ cancel the ol* o%li)ation' this was i,-lie*l+ novat)e* %+ reason
of inco,-ati%ilit+ resultin) fro, the fact that' whereas the 9u*)e,ent was for P1'18F.D<
-a+a%le at one ti,e' *i* not -rovi*e for attorne+/s fees' an* was not secure*' the new
o%li)ation is for P14DD -a+a%le in install,ents' sti-ulates for attorne+/s fees an* is secure*
%+ a ,ort)a)e. The later a)ree,ent *i* not ,erel+ e7ten* the ti,e to -a+ the 9u*),ent'
%ec. it was therein recite* that a--ellants -ro,ise* to -a+ P1'4DD to a--ellee as a settle,ent
of the sai* 9u*),ent. #ai* 9u*),ent cannot %e sai* to have %een settle*' unless it was
e7tin)uishe*.
MILLAR V. CA B8F # 2<4E - >here the new o%li)ation ,erel+ reiterates or ratifies the ol*
o%li)ation' althou)h the for,er effects %ut ,inor alterations or sli)ht ,o*ifications w. res-ect
to the cause or o%9ect or con*itions of the latter' such chan)es *o not effectuate an+
su%stantial inco,-ati%ilit+ %et. the 4 o%li)ations. nl+ those essential an* -rinci-al chan)es
intro*uce* %+ the new o%li)ation -ro*ucin) an alteration or ,o*ification of the essence of the
ol* o%li)ation result in i,-lie* novation. "n the case at %ar' the ,ere re*uction of the a,ount
*ue in no sense constitutes a sufficient in*iciu, of inco,-ati%ilit+' es-eciall+ in the li)ht of 3a5
the e7-lanation %+ the -etitioner that the re*uce* in*e%te*ness was the result of the -artial
-a+,ents ,a*e %+ the res-. %efore the e7ecution of the chattel ,ort)a)e a)ree,ent' an* 3%5
the latter/s a*,issions %earin) thereon.
(A')IC# V. PI%UI'% B<4 # 844E - Novation results in 4 sti-ulations-- one to e7tin)uish an
e7istin) o%li)ation' the other to su%stitute a new one in its -lace. Gun*a,ental it is that
novation effects a su%stitution or ,o*ification of an o%li)ation %+ another or an
e7tin)uish,ent of one o%li)ation %+ the creation of another. "n the case at han*' we fail to
see what new or ,o*ifie* o%li)ation arose out of the -a+,ent %+ the res-. of the re*uce*
a,ount of P<'DDD an* su%stitute* the ,onetar+ lia%ilit+ for P2'DDD of the sai* res-. un*er the
a--ellate court/s 9u*),ent. A**itionall+' to sustain novation necessitates that the sa,e %e so
*eclare* in une:uivocal ter,s-- clearl+ an* un,ista&a%l+ shown %+ the e7-ress a)ree,ent of
the -arties or %+ acts of e:uivalent i,-ort-- or that there is co,-lete an* su%stantial
inco,-ati%ilit+ %et. the 4 o%li)ations.
'PC V. )AARI& B141 # F<CE - (ovation is never presumed but must be e*plicitly stated1 (o
novation in the absence of e*plicit novation or incompatibility on every point between the old
and the new agreements of the parties.-- "n the case at %ar' there is nothin) in the Ma+ 1<'
1CF4 a)ree,ent w.c su--orts the -etitioner/s contention. There is neither e7-licit novation
nor inco,-ati%ilit+ on ever+ -oint %et. the (ol*( an* the (new( a)ree,ents.
C#CEI'%AA' V. R J B (URE&A B111 # 88CE - (ovation defined.-- Novation is the
e7tin)uish,ent of an o%li)ation %+ the su%stitution or chan)e of the o%li)ation %+ a
su%se:uent one w.c ter,inates it' either %+ chan)in) its o%9ect or -rinci-al con*itions' or %+
su%stitutin) a new *e%tor in -lace of the ol* one' or %+ su%ro)atin) a thir* -erson to the
ri)hts of the cre*itor. Novation throu)h a chan)e of the o%9ect or -rinci-al con*itions of an
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e7istin) o%li)ation is referre* to as objective +or real- novation. Novation %+ the chan)e of
either the -erson of the *e%tor or of the cre*itor is *escri%e* as subjective +or personal-
novation. Novation ,a+ also %e %oth o%9ective an* su%9ective 3,i7e*5 at the sa,e ti,e. "n
%oth o%9ective an* su%9ective novation' a *ual -ur-ose is achieve*-- an o%li)ation is
e7tin)uishe* an* a new one is create* in lieu thereof.
(ovation is never presumed.-- "f o%9ective novation is to ta&e -lace' it is i,-erative
that the new o%li)ation e7-ressl+ *eclare that the ol* o%li)ation is there%+ e7tin)uishe*' or
that the new o%li)ation %e on ever+ -oint inco,-ati%le w. the ol* one. Novation is never
-resu,e*A it ,ust %e esta%lishe* either %+ the *ischar)e of the ol* *e%t %+ the e7-ress ter,s
of the new a)ree,ent' or %+ the acts of the -arties whose intention to *issolve the ol*
o%li)ation as a consi*eration of the e,er)ence of the new one ,ust %e clearl+ *iscerni%le.
=f old debtor is not released, no novation occurs and the third person who assumed
the obligation becomes a co-debtor or surety or a co-surety.-- A)ain' if su%9ective novation
%+ a chan)e in the -erson of the *e%ot is to occur' it is not enou)h that the 9uri*ical relation
%et. the -arties to the ori)inal contract is e7ten*e* to a thir* -erson. "t is essential that the
ol* *e%tor %e release* fro,t he o%li)ation' an* the thir* -erson or new *e%tor ta&e the -lace
in the new relation. "G the ol* *e%tor is not release*' no novation occurs an* the thir* -erson
who has assu,e* the ol%li)ation of the *e%tor %eco,es ,erel+ a co-*e%tor or suret+ or a co-
suret+.
(ovation is not implied when the parties to the new obligation e*pressly negated the
lapsing of the old obligation.-- Neither can the -etitioners anchor their *efense on i,-lie*
novation. A%sent an une:uivocal *eclaration of e7tin)uish,ent of a -re-e7istin) o%li)ation' a
showin) of co,-lete inco,-ati%ilit+ %et. the ol* an* the new o%li)ation 3an* nothin) else5
woul* sustain a fin*in) of novation %+ i,-lication. But where' as in this case' the -arties to
the new o%li)ation e7-ressl+ reco)ni0e the continuin) e7istence an* vali*it+ of the ol* one'
where' in other wor*s' the -arties e7-ressl+ ne)ate* the la-sin) of the ol* o%li)ation' there
can %e no novation. The issue of i,-lie* n ovation is not reache* at all.
BALILA V. IAC B111 # 424E - "ubsequent mutual agreements and actions of petitioners and
private respondents allowing the former e*tension of time to pay their obligations and in
installments novated and amended the period of payment decreed by the trial court in its
judgement by compromise.-- The fact therefore re,ains that the a,ount of PF<'DDD -a+a%le
on or %efore Ma+ 11' 1CF1 *ecree* %+ the trial court in its 9u*),ent %+ co,-ro,ise was
novate* an* a,en*e* %+ the su%se:uent ,utual a)ree,ents an* actions of -etitioners an*
-rvt. res-s. Petitioners -ai* the aforestate* a,ount on an install,ent %asis an* the+ were
)iven %+ -rvt. res-s no less than F e7tensions of ti,e to -a+ their o%li)ation. These
transactions too& -lace *urin) the -en*enc+ of the ,otion for recon. of the or*er of the trial
court *ate* <.42.F8' *urin) the -e*enc+ of the -etition for certiorari %efore the "AC an* after
the filin) of the -etition %ef. =s. This answers the clai, of the res-s. on the failure of the
-etitioners to -resent evi*ences or -roofs of -a+,ent in the lower court an* the a--ellate
court.
PE#PLE@( BA'$ V. (AVEL@( B12< # 4<HE - hen does novation ta!e place1 (ovation is
never presumed.-- Novation ta&es -lace when the o%9ect or -rinci-al con*ition of an
o%li)ation is chan)e* or altere*. "t is ele,entar+ that novation is never -resu,e*A it ,ust %e
e7-licitl+ state* or there ,ust %e ,anifest inco,-ati%ilit+ %et. the ol* an* the new o%li)ations
in ever+ as-ect.
Absence of e*istence of an e*plicit novation nor incompatibility between the old and
the new agreements.-- "n the case at %ar' there is nothin) in the REM w.c su--orts
a--ellants/ su%,ission. The contract on its face *oes not show the e7istence of an e7-licit
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novation nor inco,-ati%ilit+ on ever+ -oint %et. the ol* an* the new a)ree,ents as the
secon* contract evi*entl+ in*icates that the sa,e was e7ecute* as new a**itional securit+ to
the CM -reviousl+ entere* into %+ the -arties.
(ovation was not intended in the case at bar as the 0?2 was ta!en as additional
security for the performance of the contract.
BR#A)WAA CE'&RUM V. &R#PICAL EU& B44< # 8D4E - >e start w. the %asic conce-tion
that novation is the e7tin)uish,ent of an o%li)ation %+ the su%stitution of that o%li)ation w. a
su%se:uent one' w.c ter,inates it' either %+ chan)in) its o%9ect or -rinci-al con*itions or %+
su%stitutin) a new *e%tor in -lace of the ol* one' or %+ su%ro)atin) a 8r* -erson to the ri)hts
of the cre*itor. 777
=f objective novation is to ta!e place, it is essential that the new obligation e*pressly
declare that the old obligation is to be e*tinguished or that the new obligation be on every
point incompatible w& the old one. 777
A+t. 1891. #bli*ation- may be modi2ied by3
516 Chan*in* thei+ ob.ect o+ p+incipal condition-7
586 (/b-tit/tin* the pe+-on o2 the debto+7
596 (/b+o*atin* a thi+d pe+-on in the +i*ht- o2 the c+edito+.
BALANE CA#E$
LA') BA'$ V. CA B1F1 # 21DE - (one of the requirements of novation either of the subject
matter of the bond agreement or of subrogation of the creditor thereunder, is visible in the
instant case.-- Ginall+' it is not eas+ to un*erstan* the thrust of res-on*ent/s ar)u,ent that
novation ha* ta&en -lace in res-ect of their %on*s when the+ ha* their re)istere* %on*s
converte* into %earer %on*s. "f res-on*ents ,ean to su))est that the printed terms of the
new %earer %on*s were so,ehow novate* %+ the notation the+ ha* inserte* in the LBP
Gor,s 2< so as to o%li)ate the Lan* Ban& to -a+ a -ortion of the Nov. 41' 1CH<- Ma+ 4D'
1CH1 interest not to the hol*er or %earer of such %on*s 3as re:uire* %+ the ter,s thereof5 %ut
rather to the res-on*ents' such su))estion ,ust %e fir,l+ re9ecte*. None of the
re:uire,ents of novation either of the su%9ect ,atter of the %on* a)ree,ent or of 3-artial5
su%ro)ation of the cre*itor 3o%li)ee5 thereun*er' is visi%le in the instant case. f e:ual
i,-ortance is the fact that the unilateral notation of the res-on*ents was not inserte* in the
new %earer %on* certificates. The ,ischief i,-licit in the 3assu,e*5 su))estion of the
res-on*ents is -lain to see.
#u%9ective Novation
a. "n case of active su%9ective novation 3Art. 18DD-- su%ro)ation5$
A+t. 19BB. (/b+o*ation o2 a thi+d pe+-on in the +i*ht- o2 the c+edito+ i- eithe+
le*al o+ con0entional. &he 2o+me+ i- not p+e-/med1 e>cept in ca-e- e>p+e--ly
mentioned in thi- Code7 the latte+ m/-t be clea+ly e-tabli-hed in o+ o+de+ that it may
ta?e e22ect.
105
CIVIL LAW REVIEW
3i5 Le)al 3Art. 18D45-- "n all cases of Art. 18D4' su%ro)ation ta&es -lace %+
o-eration of law.
A+t. 19B8. It i- p+e-/med that the+e i- le*al -/b+o*ation3
516 When a c+edito+ pay- anothe+ c+edito+ who i- p+e2e++ed1 e0en witho/t the
debto+@- ?nowled*e7
586 When a thi+d pe+-on1 not inte+e-ted in the obli*ation1 pay- with the e>p+e-- o+
tacit app+o0al o2 the debto+7
596 When1 e0en witho/t the ?nowled*e o2 the debto+1 a pe+-on inte+e-ted in the
2/l2illment o2 the obli*ation pay-1 witho/t p+e./dice to the e22ect- o2 con2/-ion a- to the
latte+@- -ha+e7
3ii5 Conventional. Contractual 3Art. 18D15-- Consent of the 8 -arties 3ol*
cre*itor' *e%tor an* new cre*itor5 are re:uire*.
A+t. 19B1. Con0entional -/b+o*ation o2 a thi+d pe+-on +eC/i+e- the con-ent o2
the o+i*inal pa+tie- and o2 the thi+d pe+-on.
J$ "s it -ossi%le for a cre*itor to transfer his cre*it w.o consent of the *e%tor?
A$ @es. But this is not novation %u an assi)n,ent of ri)hts un*er Art. 124<.
Assi)n,ent is also a novation %ut ,uch si,-ler. But is not su%ro)ation.
315 Kin*s
3a5 Le)al
A+t. 19B8. It i- p+e-/med that the+e i- le*al -/b+o*ation3
516 When a c+edito+ pay- anothe+ c+edito+ who i- p+e2e++ed1 e0en witho/t the
debto+@- ?nowled*e7
586 When a thi+d pe+-on1 not inte+e-ted in the obli*ation1 pay- with the e>p+e-- o+
tacit app+o0al o2 the debto+7
596 When1 e0en witho/t the ?nowled*e o2 the debto+1 a pe+-on inte+e-ted in the
2/l2illment o2 the obli*ation pay-1 witho/t p+e./dice to the e22ect- o2 con2/-ion a- to the
latte+@- -ha+e7
A+t. 1144. &he c+edito+-1 a2te+ ha0in* p/+-/ed the p+ope+ty in po--e--ion o2 the
debto+ to -ati-2y thei+ claim-1 may e>e+ci-e all the +i*ht- and b+in* all the action- o2 the
latte+ 2o+ the -ame p/+po-e1 -a0e tho-e which a+e inhe+ent in hi- pe+-on7 they may al-o
imp/*n the act- which the debto+ may ha0e done to de2+a/d them.
3Conventional Re*e,-tion5
A+t. 11B. &he c+edito+- o2 the 0endo+ cannot ma?e /-e o2 the +i*ht o2
+edemption a*ain-t the 0endee1 /ntil a2te+ they ha0e e>ha/-ted the p+ope+ty o2 the
0endo+.
106
CIVIL LAW REVIEW
A+t. 1489. &ho-e who p/t thei+ labo+ /pon o+ 2/+ni-h mate+ial- 2o+ a piece o2
wo+? /nde+ta?en by the cont+acto+ ha0e an ation a*ain-t the owne+ /p to the amo/nt
owin* 2+om the latte+ to the cont+acto+ at the time the claim i- made. Eowe0e+1 the
2ollowin* -hall not p+e./dice the labo+e+-1 employee- and 2/+ni-he+- o2 mate+ial-3
516 Payment- made by the owne+ to the cont+acto+ be2o+e they a+e d/e7
586 Ren/nciaion by the cont+acto+ o2 any amo/nt d/e him 2+om the owne+.
&hi- a+ticle i- -/b.ect to the p+o0i-ion- o2 -pecial law-.
3Assi)n,ent of Cre*its an* ther "ncor-oreal Ri)hts5
A+t. 189. In ca-e the a--i*no+ in *ood 2aith -ho/ld ha0e made him-el2
+e-pon-ible 2o+ the -ol0ency o2 the debto+1 and the cont+actin* pa+tie- -ho/ld not ha0e
a*+eed /pon the d/+ation o2 the liability1 it -hall la-t 2o+ one yea+ only1 2+om the time o2
the a--i*nment i2 the pe+iod had al+eady e>pi+ed.
I2 the c+edit -ho/ld be payable within a te+m o+ pe+iod which ha- not yet e>pi+ed1
the liability -hall cea-e one yea+ a2te+ the mat/+ity.
A+t. 88B4. I2 the plainti22@- p+ope+ty ha- been in-/+ed1 and he ha- +ecei0ed
indemnity 2+om the in-/+ance company 2o+ the in./+y o+ lo-- a+i-in* o/t o2 the w+on* o+
b+each o2 cont+act complained o21 the in-/+ance company -hall be -/b+o*ated to the
+i*ht- o2 the in-/+ed a*ain-t the w+on*doe+ o+ the pe+-on who ha- 0iolated the
cont+act. I2 the amo/nt paid by the in-/+ance company doe- not 2/lly co0e+ the in./+y o+
lo--1 the a**+ie0ed pa+ty -hall be entitled to +eco0e+ the de2iciency 2+om the pe+-on
ca/-in* the lo-- o+ in./+y.
345 Effect
A+t. 19B;. A c+edito+1 to whom pa+tial payment ha- been made1 may e>e+ci-e hi-
+i*ht 2o+ the +emainde+1 and he -hall be p+e2e++ed to the pe+-on who ha- been
-/b+o*ated in hi- place in 0i+t/e o2 the pa+tial payment o2 the -ame c+edit.
A+t. 19B9. (/b+o*ation t+an-2e+- to the pe+-on -/b+o*ated the c+edit with all the
+i*ht- the+eto appe+tainin*1 eithe+ a*ain-t the debto+ o+ a*ain-t thi+d pe+-on-1 be they
*/a+anto+- o+ po--e--o+- o2 mo+t*a*e-1 -/b.ect to -tip/lation in a con0entional
-/b+o*ation.
%. Passive #u%9ective Novation 3#u%stitution of the *e%tor5
A+t. 1899. 'o0ation which con-i-t- in -/b-tit/tin* a new debto+ in the place o2
the o+i*inal one1 may be made e0en witho/t the ?nowled*e o+ a*ain-t the will o2 the
latte+1 b/t not witho/t the con-ent o2 the c+edito+. Payment by the new debto+ *i0e- him
the +i*ht- mentioned in a+ticle- 189 and 1894.
A+t. 189. &he c+edito+ i- not bo/nd to accept payment o+ pe+2o+mance
by a thi+d pe+-on who ha- no inte+e-t in the 2/l2illment o2 the obli*ation1 /nle--
the+e i- a -tip/lation to the cont+a+y.
Whoe0e+ pay- 2o+ anothe+ may demand 2+om the debto+ what he ha-
paid1 e>cept that i2 he paid witho/t the ?nowled*e o+ a*ain-t the will o2 the
107
CIVIL LAW REVIEW
debto+1 he can +eco0e+ only in-o2a+ a- the payment ha- been bene2icial to the
debto+.
A+t. 1894. Whoe0e+ pay- on behal2 o2 the debto+ witho/t the ?nowled*e
o+ a*ain-t the will o2 the latte+1 cannot compel the c+edito+ to -/b+o*ate him in
hi- +i*ht-1 -/ch a- tho-e a+i-in* 2+om a mo+t*a*e1 */a+anty o+ penalty.
BALANE CA#E$
R#)RI%UEF V. REAE( B8H # 1C1E - B+ %u+in) the -ro-ert+ covere* %+ TCT No. <FCHC w.
notice that it was ,ort)a)e*' res-. 6ualan onl+ un*ertoo& either to -a+ or else allow the
lan*/s %ein) sol* if the ,ort)a)e cre*itor coul* not or *i* not o%tain -a+,ent fro, the
-rinci-al *e%tor when the *e%t ,ature*. Nothin) else. Certainl+' the %u+er *i* not o%li)ate*
hi,self to re-lace the *e%or in the -rinci-al o%li)ation' an* he coul* not *o so in law w.o the
cre*itor/s consent. 3Art. 14C85
The o%li)ation to *ischar)e the ,ort)a)e in*e%te*ness therefore' re,aine* on the
shoul*ers of the ori)inal *e%tors an* their heirs' -etitioners herein' since the recor* is *evoi*
of an+ evi*ence of contrar+ intent. 777
A+t. 1=9,. >>>
A pa+tne+-hip i- di-cha+*ed 2+om any e>i-tin* liability /pon di--ol/tion o2 the
pa+tne+-hip by an a*+eement to that e22ect between him-el21 the pa+tne+-hip c+edito+
and the pe+-on o+ pa+tne+-hip contin/in* the b/-ine--7 and -/ch a*+eement may be
in2e++ed 2+om the co/+-e o2 dealin* between the c+edito+ ha0in* ?nowled*e o2 the
di--ol/tion and the pe+-on o+ pa+tne+-hip contin/in* the b/-ine--.

Effect of insolvenc+ of new *e%tor
A+t. 189;. I2 the -/b-tit/tion i- witho/t the ?nowled*e o+ a*ain-t the will o2 the
debto+1 the new debto+@- in-ol0ency o+ non!2/l2illment o2 the obli*ation -hall not *i0e
+i-e to any liability on the pa+t o2 the o+i*inal debto+.
A+t. 189,. &he in-ol0ency o2 the new debto+1 who ha- been p+opo-ed by the
o+i*inal debto+ and accepted by the c+edito+1 -hall not +e0i0e the action o2 the latte+
a*ain-t the o+i*inal obli*o+1 e>cept when -aid in-ol0ency wa- al+eady e>i-tin* and o2
p/blic ?nowled*e1 o+ ?nown to the debto+1 when he dele*ated hi- debt.
Balane$ Passive #u%9ective Novation-- Articles 14C8 an* 14C1
Art. 14C8 tal&s of e*promission 3not u-on the ol* *e%tor/s initiative. "t coul* %e u-on
the initiative of the cre*itor or of the new *e%tor.5
Art. 14C1 tal&s of delegacion 3chan)e at the ol* *e%tor/s initiative.5
108
CIVIL LAW REVIEW
"n e*promission' the chan)e in the -erson of the *e%tor is not u-on the initiative of the
ol* *e%tor' whether or not he )ave his consent. As soon as a new *e%tor an* cre*itor a)ree'
novation ta&es -lace.
"n %oth cases' the intent of the -arties ,ust %e to release the ol* *e%tor.
>hat is the *ifference in effect %etween e*promission an* delegacionA
"n e*promission' the release of the ol* *e%tor is a%solute 3even if it turns out that the
new *e%tor is insolvent.5
"n delegacion' the release of the ol* *e%tor is not a%solute. He ,a+ %e hel* lia%le 315
if the new *e%tor was alrea*+ insolvent at the ti,e of the delegacionA an* 345 such
insolvenc+ was either &nown to the ol* *e%tor or of -u%lic &nowle*)e.
Cases of e*promission are :uite rare.
Effect of Novation
A+t. 189. When the p+incipal obli*ation i- e>tin*/i-hed in con-eC/ence o2 a
no0ation1 acce--o+y obli*ation- may -/b-i-t only in-o2a+ a- they may bene2it thi+d
pe+-on- who did not *i0e thei+ con-ent.
Balane$ E22ect o2 no0ation a- to acce--o+y obli*ation-.!! Accessor+ o%li)ations ,a+
su%sist onl+ insofar as the+ ,a+ %enefit thir* -ersons who *i* not )ive their consent' e.).'
stipulation pour atrui
General rule$ "n a novation' the accesor+ o%li)ation is e7tin)uishe*.
E7ce-tion$ "n an active su%9ective novation' the )uarantors' -le*)ors' ,ort)a)ors are
not release*.
Loo& at Art. 18D8' accessor+ o%li)ations are not e7tin)uishe*. #o there is a conflict.
How *o +ou resolve? Accor*in) to co,,entators' Art. 18D8 is an e7ce-tion to Art. 14C2.
A+t. 1894. I2 the new obli*ation i- 0oid1 the o+i*inal one -hall -/b-i-t1 /nle-- the
pa+tie- intended that the 2o+me+ +elation -ho/ld be e>tin*/i-hed in any e0ent.
A+t. 189=. &he no0ation i- 0oid i2 the o+i*inal obli*ation wa- 0oid1 e>cept when
ann/lment may be claimed only by the debto+1 o+ when +ati2ication 0alidate- act- which
a+e 0oidable.
A+t. 1899. I2 the o+i*inal obli*ation wa- -/b.ect to a -/-pen-i0e o+ +e-ol/to+y
condition1 the new obli*ation -hall be /nde+ the -ame condition1 /nle-- it i- othe+wi-e
-tip/lated.
109

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CIVIL LAW REVIEW

Notes, Cases and Commentaries on Obligations

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