THE AWESOME NOTES

OBLIGATION

PRELIMINARY
OBLIGATION; defined
ART. 1156
an obligation is a juridical necessity to give, to
do or not to do

ESSENTIAL REQUISITES OF OBLIGATION

1. a juridical or legal tie; which binds the
parties to the obligation and which may
arise either from bilateral or unilateral acts
of persons
2. an active subject; known as the creditor or
obligee, who can demand the fulfillment of
the obligation
3. a passive subject; known as the debtor or
obligor, from whom the obligation is
juridically demandable
4. the fact, the prestation or service; which
constitutes the object of the obligation

DIFFERENT KINDS OF PRESTATION

1. to give
2. to do; and
3. not to do

NOTE
obligation not to give is already included in
obligation not to do
philippine definition of obligation is only
limited to obligation and does not include a
right. for this, no one can be compelled to
exercise a right, and a right is waivable while
an obligation is not.

CLASSIFICATION OF OBLIGATION

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SOURCES OF OBLIGATION
THE FF ARE SOUCES OF OBLIGATION
1. law
2. contracts
3. quasi-contracts
4. delicts; acts or omissions punishable by law
5. quasi-delicts

OBLIGATION DERIVED FROM LAW ARE

NOT PRESUMED
TEST IN DETERMINING WHETHER AN
OBLIGATION IS DERIVED FROM LAW
OR NOT

AN OBLIGATION IS DERIVED FROM

LAW; when
there is a law establishing the obligation
and the act or condition upon which it is
based is nothing more than a factor for
determining the moment when it becomes
demandable

AN OBLIGATION IS DERIVED FROM

OTHER SOURCES (OTHER THAN LAW);
when
the law merely recognizes or acknowledges
the existence of an obligation generated by
an act which may constitute a contract,
quasi-contract, delict or quasi-delict,
and its only purpose is to regulate
such obligation

FF OBLIGATIONS ARE DERIVED FROM

LAW
1. ART. 2014; no action can be maintained
by the winner for the collection of what
he has won in a game of chance. but
any loser in a game of chance may
recover his loss from the winner , with
legal interest from the time he paid the
amount lost, and subsidiarily from the
operator or manager of the gambling
house.
2. ART. 291; obligation of the spouses to
support each other
3. WORKMEN'S COMPENSATION ACT;
in re: obligation of the employer
4. ART. 634; obligations of the owners of
the dominant and servient estates in
legal easements
5. others....

Art. 1158.
Obligations derived from law are not
presumed. Only those expressly
determined in this Code or in special laws
are demandable, and shall be regulated by
the precepts of the law which establishes

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OBLIGATION
them; and as to what has not been
foreseen, by the provisions of this Book.

Art. 1159.
Obligations arising from contracts have the
force of law between the contracting parties
and should be complied with in good faith.

Art. 1160. Obligations derived from quasicontracts shall be subject to the provisions
of Chapter 1, Title XVII, of this Book. (n)

Art. 1161.
Civil obligations arising from criminal
offenses shall be governed by the penal
laws, subject to the provisions of Article
2177, and of the pertinent provisions of
Chapter 2, Preliminary Title, on Human
Relations, and of Title XVIII of this Book,
regulating damages. (1092a)

Art. 1162. Obligations derived from quasidelicts shall be governed by the provisions
of Chapter 2, Title XVII of this Book, and by
special laws. (1093a)

IF THE OBLIGATION IS DETERMINATE

1. to deliver the things which he has obligation
himself to give
2. to take care of the thing with the proper
diligence of a gfoaf
3. to deliver all accessions and accessories
4. to pay damages in case of breach of
obligation

IF THE OBLIGATION IS INDETERMINATE

1. to deliver the thing which must neither of
superior not inferior quality
2. to pay damages in case of breach of the
obligation

WHEN DOES THE CREDITOR ACQUIRES

RIGHT OVER THE THING WHICH IS THE
OBJECT OF THE OBLIGATION AS WELL AS
TO THE FRUITS THEREOF

IN RE: AS TO THE FRUITS

from the moment the obligation to deliver
arises

OBLIGATION TO GIVE
RIGHTS AVAILABLE TO CREDITOR
- would depend whether the obligation is
determinate/specific or indeterminate/generic

for obligations arising from law and

others;
- would depend upon the
provisions of NCC or of
special laws creating and
regulating them.

IF THE OBLIGATION IS DETERMINATE

1. to compel specific performance
2. to recover damaged in case of breach of
the obligation

IF THE OBLIGATION IS INDETERMINATE

1. to ask for performance of the obligation
2. to ask that the obligation be complied with
at the expense of the debtor
3. to recover damages in case of breach of
the of the obligation
AN OBLIGATION IS DETERMINATE;
when
the object thereof is particularly
designated or physically segregated
from all others of the same class

AN
O B L I G AT I O N
INDETERMINATE; when
opposite sa above. haha

when does obligation to deliver arises

for obligations arising from
contracts;
- from the moment of the
perfection of the contract
UNLESS: there is a
stipulation to the
contrary

DUTIES OR OBLIGATIONS WHICH ARE

IMPOSED UPON THE DEBTOR OR
OBLIGOR

NATURE AND EFFECTS

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what kinds of right acquired

prior to delivery; only personal right
- right to demand and compel
for the delivery

after delivery; real right is acquired

- a right which is enforceable
against the whole world

IS

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OBLIGATION
IN RE: LOST OF THE OBJECT DUE TO
FORTUITOUS EVENT; liability of the obligor

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ACTS OR OMISSION OF THE

OBLIGOR RESULTING TO
BREACH OF OBLIGATION

THEY ARE:
1. default or mora
2. fraud or dolo
3. negligence or culpa
4. negligence or culpa; and
5. contravention of the tenor of the obligation.

IF THE OBLIGATION IS DETERMINATE

GEN RULE:
obligor or debtor cannot be held liable for
damages
EXE:
1. when obligor is already in delay
2. when he is negligent
3. when he promised to deliver the same thing
to 2/more persons who do not have the
same interest

IF THE OBLIGATION IS INDETERMINATE

RULE:
debtor or obligor is still liable

RATION:
as only determinate thing or object can
be destroyed by a fortuitous event

DEFAULT OR MORA
ESSENCE
the non-fulfillment of an obligation with respect
to time

KINDS OF MORA
MORA SOLVENDI
- delay of the obligor to perform the obligation

genus numquam peruit

- genus never perishes

mora solvendi ex re; if the obligation is

an obligation to give

mora solvendi ex persona; when the

obligation is an obligation to do.

OBLIGATION TO DO
THE OBLIGOR IS OBLIGED TO
the obligation shall be executed at his cost;
when
1. he fails to do the obligation; or
2. he does it in contravention of he tenor
of the obligation
what has been done poorly shall be undone

OBLIGATION NOT TO DO
SHOULD THE OBLIGOR PERFORMS WHAT
HAS BEEN FORBIDDEN HIM
it shall be undone at his expense

MORA ACCIPIENDI
- delay of the obligee to accept the delivery of
the thing which is the object of the obligation

COMPENSATION MORAE
- delay the parties or obligor in reciprocal
obligation.

WHEN IS OBLIGOR OR DEBTOR INCUR

DELAY
RULE:
from the time the obligee or creditor demands
from him, judicial or extrajudicial, the
fulfillment of his obligation
- and in spite of such demand, he is unable to
comply with the obligation.

EXE: WHEN DEMEND IS DISPENSED WITH

1. when the obligation or the law expressly so
declares
2. when from the nature and 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
3. when demand would be useless, as when
the obligor has rendered it beyond his
power to perform

NOTE: a promissory note stating that the debt

shall be paid on a certain date does not

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OBLIGATION
dispenses the req of prior demand before a
debtor can be held in delay.
MANRESA
when the law or obligation expressly
so declares; as a basis of dispensing
the need of demand,
- it is indispensable that it is expressly
added either by stipulation or law that
the obligor shall incur in delay
if he fails to fulfill the obligation
upon the arrival of the
designated date or that upon
the arrival of such date
demand shall not be
necessary.

EXAMPLE WHEN DEMAND IS NO LONGER

NECESSARY
- when a capitalist partner fails to contribute
the amount stipulated to the the partnership
upon the arrival of the designated date.

failure to contribute the amount

promised upon the arrival of the
stipulated dated
- automatic that such capitalist partner
becomes a debtor of the partnership,
and likewise liable for interest and
damages from the time he should have
complied with his obligation

IN RE: RECIPROCAL OBLIGATION; when

does one of the party incur in delay

RULE:
neither party incurs in delay if the other does
not comply or is not ready to comply in a
proper manner with what is incumbent upon
him.

FRAUD OR DOLO
ESSENCE
conscious and intentional proposition to evade
the normal fulfillment of his obligation

2 KINDS OF DOLO

DOLO CAUSANTE

DOLO INCIDENTE

fraud in the
performance of a
pre-existing
obligation

fraud in the
perfection of the
contract

fraud is present only

during
the
performance of the
obligation

fraud is present only

at the time of the
birth
of
the
obligation

fraud is employed
- in order to evade
the normal fulfillment
of an obligation

fraud is employed
- for the purpose of
securing the consent
of the other party to
enter into the
contract

results to
- non-fulfillment or
breach of the
obligation

results to
- vitiation of consent

rights of the creditor/

obligee
- to recover
damages from the
debtor or obligor

rights of the creditor/

obligee/ innocent
party
- to ask for
annulment of he
contract; or
- f u l fi l l m e n t p l u s
damages

WHEN ONE BE DEEMED IN DELAY

from the moment one of the parties fulfills his
obligation, delay by the other begins.

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parang mali to. refer to pg. sa contracts part

NEGLIGENCE OR CULPA
ESSENCE
the omission of the diligence which is required
by the nature of the obligation, and
corresponds with the circumstances of the
persons, of the time and the place

NOTE:
IF COUPLED WITH BF
- art. 1171 and 2201 par. 2 will apply.

DILIGENCE REQUIRED
GEN RULE:
the diligence required as stated in the law or
contract

EXE: when there is no such desgnation:

- DOGFOAF

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TEST OF NEGLIGENCE
WON the defendant in doing the alleged
negligent act use the reasonable care and
caution which an ordinary and prudent person
would have used in the same situation?

CULPA
CONTRACTUAL

CULPA
AQUILIANA

there is a preexisting contract

there is none.
- quasi-delict

negligence
defendant is
an incident
performance
obligation

of the
merely
in the
of an

negligence of the
defendant
is
substantive and
independent

the source of liability

is breach of contract

the source of liability

is the defendant's
negligent act or
omission

sufficient prima facie

proof to warrant
recovery
- the contract itself
and its breach

negligence of the
defendant must be
proven.

liability of the
employer is based
on the principle that
- the negligence of
the employee is
conclusively
presumed to be the
negligence of the
employer

primarily liable
not a defense
- proof of due
diligence in the
selection and
supervision of the
employee

- the negligence of
the employee is
prima
facie
presumed to be the
negligence of the
employer

subsidiary
available defense

FORTUITOUS EVENT

FORTUITOUS EVENT
ESSENCE
is an event which cannot be foreseen, or which
though foresee, is inevitable

CONTRA FORCE MAJEURE

a fortuitous event which is dependent upon
human intervention (wars, strike, riots. etc)
- but nonetheless, ordinarily used
interchangeably with fortuitous event

KINDS OF FORTUITOUS EVENT

1. FORTUITOUS EVENT PROPER (ACTOF
GOD); absolutely independent of human
intervention
2. FORCE MAJEURE (FUERZA MAYOR); an
event which is dependent upon human
intervention other than the obligor
3. ORDINARY FORTUITOUS EVENT; which
usually happens or which could have been
reasonable foreseen
4. EXTRAORDINARY FORTUITOUS EVENT;
an event which does not usually happen
and which could not have been reasonably
foreseen.

IN RE: LIABILITY ARISING FROM

FORTUITOUS EVENT
GEN RULE:
no person shall be responsible
- for those events which could not be foreseen,
or which though foreseen, were inevitable.

REQUISITES; in order that the obligor

cannot be held liable due to fortuitous
event
a. the cause of the breach of the
obligation must be independent of
the human or will of the debtor
b. t h e e v e n t m u s t b e e i t h e r
unforeseeable or unavoidable
(impossibility to foresee or to
avoid, and not mere difficulty)
c. the event must be such as to
render it impossible for the debtor
to fulfill his obligation in a normal
manner; and
d. the debtor must be from any
participation in, or aggravation of
the injury to the creditor (note:
Austria Case, diamond ring,
ninakaw nung nag lalakad sya sa
madilim na lugar)

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OBLIGATION

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NOTE:
defective brakes, tire blowouts and
other similar nature, cannot be
classified as fortuitous event per se
within the meaning of the kaw

EXE:
1. expressly specified by law (NCC ART. 552
par 2, 1165 par 3, 1268, 1942, 1979, 2147,
2148, 2159)
2. when it is otherwise declared by stipulation
3. when the nature of the obligation requires
the assumption of risk (volenti non fit injuria
- no wrong is done to one who consents;
best ex. insurance contracts and
workmen's compensation act)

INSTANCES WHEN A PERSON IS CIVILLY

LIABLE EVEN WHEN NON-PERFORMANCE
IS DUE TO FORTUITOUS EVENT
1. when by law, the debtor us liable even for
fortuitous event
2. when by stipulation of the parties
3. when the nature of the obligation requires
the assumption of risk
4. when the object of the obligation requires
the assumption of risk
5. when the object of the obligation is list and
the loss is due partly to the fault of the
debtor
6. when the debtor promised to deliver the
same thing to 2/mire persons who do not
have the same interest
7. when obligation to deliver arise from a
criminal offense
8. when the obligation is generic

REMEDIES OF THE CREDITOR

3 GENERAL REMEDIES OF THE CREDITOR
for protection of his right against debtor
1. to exhaust the property in possession of the
debtor
2. to be subrogated to all of the rights and
actions of the debtor save those which are
inherent in his person (accion subrogatoria)
3. to impugn all of he acts which the debtor
may have dine to defraud him ( accion
pauliana)

NOTE: #2 and #3: are only subsidiary remedy

to #1

KINDS OF CIVIL OBLIGATION

FF PRIMARY CLASSIFICATION OF AN
OBLIGATION
1. pure, conditional and with a term or period
2. alternative and facultative
3. joint and solidary
4. divisible and indivisible
5. with and without a penal clause

OTHER CLASSIFICATION
1. natural and civil (1156, 1423)
2. legal, conventional and penal (1158-1162)
3. real and personal (1156, 1163-1168)
4. determinate and generic (1163-1164)
5. positive and negative (1163-1168)
6. accessory and principal (1166, 1230)
7. unilateral and bilateral (1191)
8. simple and multiple (119, 1206)
9. individual and collective (1207)

PURE AND CONDITIONAL

OBLIGATION

PURE OBLIGATION
DEFINITION
is one whose effectivity or extinguishment does
NOT depend upon the
fulfillment or non-fulfillment of a condition
or
upon the expiration of a term or a period
and which, as a consequence, is characterized
by the quality of immediate demandability

DISTINCTIVE CHARACTERISTIC
immediate demandability

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OBLIGATION
- but such is not infringed or violated when a
reasonable period is granted for performance
CONDITIONAL OBLIGATION

DEFINITION
an obligation whose effectivity is subordinated
to the fulfillment or non-fulfillment of a future
and uncertain fact or event

CONDITION; defined
a future and uncertain event upon which an
obligation is made to depend

REQUISITES OF A VALID CONDITION

1. futurity
2. uncertainty

IN RE: UNCERTAIN BUT PAST

EVENT

fulfillment of the
condition, the
obligation arises or
become effective

fulfillment of the
condition. the
obligation is
extinguished

if not fulfilled, no
juridical relation is
created

if not fulfilled, the

juridical relation is
consolidated

prior to fulfillment
- no right is
acquired, but there
is
hope
or
expectancy that they
will soon be
acquired, which is
protected by law

as a period/ term; when

past event is already known to the
whole world but unknown to the parties
- so that the proof or ascertainment will
surely come to pass

ie. A promises to pay B if B

can prove that C was born on
July 15, 2012

as a condition; when
past event unknown to the whole world
and to the parties
- so that the proof or ascertainment
thereof may or may not happen

ie. A promises to pay B if it can

prove that Gloria had an illicit
affair with Perez.

CLASSIFICATION OF CONDITION
IN RE: PERFECTION/EXTINGUISHMENT
SUSPENSIVE
- when the fulfillment of the condition
results in the acquisition of the rights
arising out of the obligation

RESOLUTORY
CONDITION

it shall be treated either as a term/

period or as a condition; depending on
the circumstances of the case.

SUSPENSIVE
CONDITION

VALID: provided that it is unknown to

the parties.

RESOLUTORY
- when the fulfillment of the condition
results in the extinguishment of rights
arising out of the obligation

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- rights are already

acquired but subject
to
threat
of
extinction

NOTE: condition shall be deemed

fulfilled when the obligor prevents its
fulfillment, voluntarily.

IN RE: IN WHOM DEPENDS THE

FULFILLMENT OF THE CONDITION
POTESTATIVE
- depends upon the will of a party to
the obligation

void if depends upon the will of

the debtor,
valid if dependent upon the will
of the creditor (being naturally
interested in the fulfillment of
the obligation).

note: as to the validity or

nullity, it only affects the
condition and not the
obligation itself. if invalid, it
shall be deemed as if not
written.

EXE: to the rule that the

condition is void when the
potestative condition is
dependent upon the will of the
debtor (therefor; still valid)
1. when the condition is a
resolutory condition, not
suspensive (only logical
as it is naturak that the
debtor is interest that he
can re-acquire the rights
which have already been
vested un the creditor
upon the constitution of
the obligation; the
position of the debtor

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OBLIGATION

when the cndition is

resolutory is exactly the
same as the position of
the creditor when the
condition is suspensive)
2. when the potestative
condition does not refer
to the perfection of an
obligation, rather to a
pre-existing obligation (ie.
babayaran ko yung utang
ko sayo last year
oagkatapos kung
mabenta yung bahay ko)

CASUAL
- depends upon chance and/or upon
the will of a 3rd person

MIXED
- depends partly upon the will of the
party to the obligation and partly upon
chance and/or 3rd person

ie.
debtor executed a PN
promising to pay his obligation
to the creditor as soon as he
has received funds derived
from the sale of his property in
a cretain place
- cannot be deemed
potestative condition; as the
sale does not solely depends
upon the will of the debtor, but
also upon the concurrence of
other factors such as:
acceptability of the price and
condition of sale, and
presence of buyer who is
ready, able and willing to
purchase the land

IN RE: CAPABILITY OF REALIZATION

POSSIBLE
- capable of realization according to
nature, law, public policy, or good
customs

DIVISIBLE
- susceptible of partial realization
INDIVISIBLE

IN RE: NUMBER OF CONDITIONS

CONJUNCTIVE
- when there are several conditions, all
of which must be realized

ALTERNATIVE
- when there are several conditions,
one of which must be realized

IN RE: MANNER IN WHICH A CONDITION IS

SET FORTH

EXPRESS
IMPLIED

WHO SHALL INURE THE BENEFITS OF

IMPROVEMENTS OR THE LOSS DUE TO
ITS DETERIORATION OR LOSS; when such
occurred prior to the happening of
suspensive condition.

AS TO THE LOSS
if without fault of the debtor
- obligation is extinguished

otherwise
- debtor is liable for damages
LOSS; defined
- when it perishes, or goes out of
commerce, or disappear in such a way
that its existence is unknown or it
cannot be recovered

AS TO DETERIORATION
if without fault of the debtor
- to be borne by the creditor

otherwise
- creditor may choose between
rescission or fulfillment, plus indemnity
for damages in either case

IMPOSSIBLE

IN RE: SUSCEPTIBILITY OF DIVISION

IN RE: NATURE OF CONDITION

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AS TO IMPROVEMENTS
POSITIVE
- involves the performance of an act

NEGATIVE
- involves non-performance of an act

if by nature or time
- shall inure to the benfit of the creditor

if at the expense of the debtor

- debtor has no right over the
improvement other than that granted to
usufructuary

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OBLIGATION

same rules will apply if the

obligation is subject to resolutory
condition
ANG NAIBA LANG
the debtor is the person who is obliged
to return the object of the obligation in
case of fulfillment of the condition,
while the creditor is the person in
whom the thing or object must be
returned.

ART. 1191
IN CASE OF NON-FULFILLMENT BY
ONE PARTY WHAT IS INCUMBENT
UPON HIM
the injured party may choose between
1. fulfillment; or
2. rescission of the obligation; or
- with payment of damages in either
case
3. rescission after he opted for
fulfillment; it fulfillment becomes
impossible

BASIS: the power to rescind obligation

is implied in reciprocal obligation
NOTE: as to rescission, there shall be
a corresponding obligation of mutual
restitution. but this shall be without
prejudice to the rights of third persons
who have acquired the thing in gf (Art.
1385 and 1388 and Mortgage Law)

NOTE: art. 1191 shall apply only when

the power to rescind is not expressly
granted in the contract or is silent in
the obligation. as there can be no
implied power when expressly
recognized.

can Art. 1191 be applied in lease

contract and in partnership?
IN LEASE CONTRACT; what is
applicable is Art. 1659
- while Art. 1656 is a restatement of
Art. 1191; however, the former omitted
the provision found in Art. 1191 giving
the court discretionary power to refuse
the rescission of contracts if in their
judgment the circumstances warrants
the fixing of a term which the obligor
may fulfill the obligation

exe: when failed to contribute the

whole amount, art. 1786 and 1788 will
apply

ART. 1192
WHAT IF BOTH OF THE PARTIES IN
RECIPROCAL OBLIGATION HAVE
COMMITTED BREACH; who shall be
liable

THE FIRST INFRACTOR

- who liability shall be equitably
tempered by the court

RECIPROCAL OBLIGATION
are those which are created or established at
the same time, out of the same cause, and
which results in mutual relationship of creditor
and debtor between the parties.

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IF IT CANNOT BE DETERMINED AS
TO WHO FIRST COMMITTED THE
BREACH
- obligation shall be extinguished, and
each shall bear his own danage

OBLIGATION WITH A PERIOD

DEFINITION
those obligations whose demandability or
extinguishment are subject to the expiration of
a term or a period

TERM OR PERIOD; defined

is an interval of time, which exerting an
influence on an obligation as a consequence of
a juridical act,
either suspending its demandability or
produces its extinguishment

CONDITION
IN GENERAL
refers to an event
REQUISITES
1. futurity
2. uncertainty
FULFILLMENT
may or may not
happen
INFLUENCE UPON
THE OBLIGATION
upon the very
existence of the
obligation itself

TERM/PERIOD

refers to an interval
of time

1. futurity
2. certainty

will surely come to

pass, although it
may not be known

only upon its

demandability

IN PARTNERSHIP
gen rule is, art. 1191 is applicable

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OBLIGATION
AS
TO
RETROACTIVE
EFFECTS
meron

AS
TO
THE
EFFECT OF THE
WILL OF DEBTOR
if the fulfillment of
the condition
depends solely upon
the will of the debtor,
it shall affect the
validity of the
obligation, in
general.

in general: no
UNLESS: there is a
stipulation to the
contrary

kahit na ganun,
obligation is still
valid

KINDS OF TERM OR PERIOD

SUSPENSIVE
- the obligation becomes demandable only
upon the arrival of a day certain

RESOLUTORY
- the obligation is demandable at once,
although it is terminated upon the arrival of a
day certain.

LEGAL
- granted by law
CONVENTIONAL
- by stipulation
JUDICIAL
- conditions given by court
DEFINITE
- the date or the time is known beforehand
- a day certain which must necessarily come,
although it may not be known when

INDEFINITE
- it can only be determined by an event which
must necessarily come to pass, although it
may not be known when

Q: if the happening of a future event

is fixed by the parties for the
fulfillment or extinguishment of an
obligation, what is the nature of the
obligation?

IT IS WITH A TERM; when

- the event will necessarily come,
although the date or time when it will
come may be uncertain.

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IT IS WITH A CONDITION; when

if the uncertainty consist whether the
day will come or not.

FOR WHOSE BENEFIT THE TERM/PERIOD

IN THE PERFORMANCE OF AN
OBLIGATION

GENERAL:
presumed that it is for the benefit of both the
creditor and debtor

HENCE:
neither can demand nor compel for the
performance of the obligation before
the expiration of the term or a period

EXE :
if it can be proved either from the tenor of the
obligation or from other circumstance that
- the period has been established for the
benefit of either the creditor or the debtor.

I N S TA N C E S W H E R E C O U R T I S
EMPOWERED TO FIX THE DURATION OF A
TERM OR A PERIOD
1. if the obligation does not fix a period but
from its nature and circumstances it can be
inferred that a period was intended by the
parties
2. if the duration of the period depends upon
the will of the debtor
3. if the debtor binds himself to pay when his
means permits him to do so

example for #2
when the terms of the obligation is for debtor to
pay as soon as his means permits him to do
so.
- in here, action for specific performance will
not lie on the ground of prematurity. the proper
remedy is to go to court for it to fix the duration
of a term or a period.

INSTANCES UNDER THE NCC WHEN THE

DEBTOR SHALL LOSE EVERY RIGHT TO
MAKE USE OF THE TERM OR PERIOD
1. when after he obligation has been
contracted, he becomes insolvent. unless,
he gives a guaranty or security for the debt
2. when he dies not furnish to the creditor the
guaranties or securities which he has
promised
3. when by his own act he has impaired said
guaranties or securities after their
establishment, and when through a
fortuitous event they disappear, unless he
immediately gives a new one equally
satisfactory
4. when the debtor violates any undertaking in
consideration of which the creditor agreed
to the period; and
5. when the debtor attempts to abscond

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THE AWESOME NOTES

OBLIGATION

Page 11 of 27

ALTERNATIVE AND
FACULTATIVE OBLIGATION
ALTERNATIVE OBLIGATION; defined
juridical relations which comprehends several
objectives or presentations which are due but
the payment or performance of one of them
would be sufficient

FACULTATIVE OBLIGATION; defined

juridical relations where only one object or
prestation has been agreed upon by the
parties to the obligation, but the obligor may
deliver or render another in substitution.

FACULTATIVE
AS TO OBJECT
DUE
only one object is
due
AS
TO
COMPLIANCE
may be complied
with by the delivery
of another object or
performance of
another prestation in
substitution of that
which is due
AS TO RIGHT OF
CHOICE
pertains to the
debtor
AS
TO
THE
EFFECT
OF
FORTUITOUS
EVENT
if without fault of the
debtor, the loss of
the object of the
obligation or
impossibility of
performance
results
to
extinguishment of
the obligation

ALTERNATIVE

several objects are

due

may be compiled
with by the delivery
of one of the objects
or
by
the
performance of one
of the prestation
which
are
alternatively due

may pertain even to

the creditor or a third
person

the
loss
or
impossibility of all of
the objects or
prestations which
are due without any
fault of the debtor is
necessary to the
extinguishment of
the obligation

AS
TO
THE
EFFECT
OF
CULPABLE LOSS
the culpable loss of
the object which the
debtor may deliver
in substitution before
the substitution is
effected does not
give rise to any
liability on the part of
such debtor

the culpable loss of

any of the object
which
are
alternatively due
before the choice is
made may give rise
to a liability on the
part of the debtor

ALTERNATIVE OBLIGATION; who has the

right of choice
GEN RULE: upon the debtor
EXE:
1. when the right has been expressly granted
to the creditor
2. when it has been expressly granted to 3rd
person

when are the parties bound by the choice

from the very moment that
- the choice has been communicated by the
party who has the right to make it to the other
party

supposing the right of choice belongs to

the debtor, does the creditor have the right
to impugn the choice made?
- no.

EFFECT IF 3 OR MORE OBJECTS WHICH

ARE ALTERNATIVELY DUE, IF ONE, OR
MORE, OR ALL OF THE OBJECTS ARE
DESTROYED

IF THE RIGHT OF CHOICE BELONGS TO

THE DEBTOR
(IF DUE TO FORTUITOUS EVENT)
1. if 2 or more of the objects remain, the
obligation still subsists retaining its
alternative character
2. if only one remains, the obligation still
subsits, but it cease to be alternative. it
becomes a simple obligation to deliver the
remaining object
3. i f n o n e r e m a i n s , t h e o b l i g a t i o n i s
extinguished

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THE AWESOME NOTES

OBLIGATION
(IF DUE TO THE FAULT OF THE DEBTOR)
1. if 2 or more objects remain, the obligation
still subsists retaining its alternative
character. debtor cannot be held liable for
damages.
2. if only one remains, the obligation still
subsists, but it ceased to be alternative. it
becomes an obligation to deliver the
remaining object. debtor cannot be held
liable for damages
3. if none remains, the obligation is converted
to an obligation to indemnify for damages.
the indemnity shall consist
- the value of the last object to be loss
PLUS: consequential
damages

IF RIGHT OF CHOICE BELONGS TO

CREDITOR

(IF DUE TO THE FAULT OF THE DEBTOR)

1. if 2 or mire of the objects remains, the
obligation still subsists, retaining its
alternative character. debtor is not liable for
damages. but should the creditor chooses
any of those which were lost, the debtor is
liable for the value of the object plus
damages.
2. if only one remains, the obligation still
subsists, but cease to be alternative. it
becomes a simple obligation to deliver the
remaining object or to indemnify for
damages depending upon the discretion of
the creditor. same as above should the
creditor chooses any of those which were
lost
3. if only one remains, the obligation is
converted into an obligation to indemnify for
damages.

THE INDEMNITY SHALL CONSIST

1. the price of the object chosen by
the creditor;
2. plus, consequential damages

IN FACULTATIVE OBLIGATION; should the

substitute is lost or destroyed through the
fault of the debtor

IF THE LOSS OR DESTRUCTION TOOK

PLACE AFTER THE SUBSTITUTION HAS
BEEN MADE
- debtor is liable for damages

BEFORE SUBSTITUTION
- debtor cannot be held liable

Page 12 of 27

JOINT AND SOLIDARY

OBLIGATION
JOINT OBLIGATION; defined
AKA mancum or mancimunada or pro rata
an obligation where there is a concurrence of
several creditors or several debtors, or of
several debtors or creditors, by virtue of which
each of the creditors has a right to
demand
while each of the debtor is bound to
render compliance with his proportionate
part of the prestation which constitute
the object of the obligation

SOLIDARY OBLIGATION; defined

AKA joint and several
an obligation where there is a concurrence of
several creditors, or of several debtors, or of
several creditors and debtors, by virtue of
which
each of the creditor has a right to
demand,
while each of the debtor is bound to
render entire compliance with the
prestation which constitute the object of
the obligation

NOTE:
THE LAW PRESUMES SOLIDARITY
UNLESS: when the stipulation, law
nature of the obligation requires
solidarity (ie, liability for torts)

CHARACTERISTICS OF A JOINT DIVISIBLE

OBLIGATION
1. each creditor can demand only for the
payment of his proportionate share of the
credit, while each debtor can be held liable
liable only for the payment of his proportion
share of the debt
2. a joint creditor cannot act in representation
of the other creditor, while a joint debtor
cannot be compelled to answer for the acts
or liability of the other debtor

HENCE; in a joint obligation, supposing the

debtors are X, Y, and Z, and the creditors are
A, B, C, there is actually 9 obligations
- x debt to a, to b, and to c.
- y debt to a, b and to c
- z debt to a, to b, and to c.

IN HERE: each debtor is liable to each

of the creditor, to the extent of his
proportionate share of the debt.
- should the co-creditor malveresed
the amount paid to him for the entire
debt, the injured creditor can still
compel the joint debtor to pay his
share on the debt.

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THE AWESOME NOTES

OBLIGATION
JOINT INDIVISIBLE
OBLIGATION

JOINT DIVISIBLE
OBLIGATION

obligation can be
enforced only by
proceeding against
all of the debtors.
- as compliance of
the obligation
requires
the
concurrence of all of
them
- not susceptible of
partial fulfillment
creditors cannot act
in representation of
the others
if anyone of the
debtor in a joint
indivisible obligation
should fail to comply
with his undertaking,
the obligation is
converted into one
of indemnity for
damages.
- however, the the
debtor who may
have been ready to
comply with what is
incumbent upon him
shall not contribute
to the indemnity
beyond
the
corresponding
portion of the price
of the thing or the
value of the service
in which the
obligation consists.
- while those who
failed or refuse to
comply, they are
liable not only to
liability mentioned
above but as well as
for damages
WHEN AN OBLIGATION IS DEEMED
SOLIDARY
1. when the obligation expressly so states
2. when the law requires solidarity
3. when the nature of the obligation requires
solidarity

Page 13 of 27

INSTANCES WHERE THE LAW REQUIRES

SOLIDARITY
1. if 2/more heirs take possession of the
estate, they shall be solidarily liable for the
loss or destruction of a thing devised or
bequeathed, even though only one of them
should have been negligent
2. all partners are liable solidarily with the
partnership for everything chargeable
against the partnership (Art. 1822 and
1824)
3. if 2 or more persons have appointed an
agent for a common transaction or
undertaking, they shall be solidarily liable to
the agent for all consequences of the
agency
4. even when an agent has exceeded his
authority, the principal is solidarily liable
with the agent if the former allowed the
latter to act as though he had full power
5. when there are 2/more bailees to whom a
thing is loaned in the same contract.
6. the responsibility of 2/more officious
manager shall be solidary, unless the
management has assumed to save the
thing or business from imminent danger
7. the responsibility of 2/more payees, when
there has been payment of what is not due
8. the responsibility of 2/more persons who
are liable for quasi delict is solidary
9. principal, accomplice and accessories,
each within their respective class, shall be
liable severally (in solidum) among
themselves for their quotas and subsidiarily
for those of the other persons liable.
though, may order of preference, first
against the principal, then to the
accomplice, and lastly to the accessory

KINDS OF SOLIDARITY
ACTIVE SOLIDARITY
- solidarity among creditors
- a tie or vinculum among several creditors of
one and of the same obligation by virtue of
each of them,
in relation to his co-creditors, possesses
the character of creditor only with
respect to his share in the obligation,
but in relation to the common debtor/s,
represents all of the other creditors.

~ mutual agency is created among the

solidary creditors. pwede mag demand
for the whole debt or demand including
the share pertaining to his co-creditor,
and liable to reimburse the latter's
share.

PASSIVE SOLIDARITY
- solidarity among debtors

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THE AWESOME NOTES

OBLIGATION
- a tie or vinculum among several debtors of
one and the same obligation by virtue of which
each of them,
in relation to the common creditor/s,
represents all of the other debtor, and
in relation to his co-debtors, possesses
the character of debtor only with respect
to his share in the obligation.

~ in here, each debtor is liable for the

entire amount of debt to the creditor,
but only liable to the extent of share in
the obligation to his co-debtors. hence,
should a solidary debtor pays the
entire debt, he may ask for
reimbursement from his co-debtor,
corresponding their shares on the obli.

MIXED SOLIDARITY
- solidarity among debtors and debtors
SOLIDARITY
AS TO NATURE
refers to legal tie or
vinculum and
consequently, to the
parties of the
obligation
AS
TO
REQUISITES
indispensable req:
- plurality of subjects
AS
TO
THE
EFFECT
OF
BREACH
when obligation is
converted into a
contract
of
i n d e m n i t y, t h e
solidary character of
the obligation
remains

INDIVISIBILITY

to the prestation
which constitutes
the object of the
obligation

not required

the indivisibility
character of the
obligation is
terminated.

Q: can solidarity exists although the

creditors or debtors may not be bound in
the same manner and by the same periods
and conditions?

A: yes
ART. 1211
HENCE; supposing there are different maturity
in a solidary obligation. the solidary creditor
cannot demand from a solidary debtor the
entire debt when some of the obligation is still
not matured.

Page 14 of 27

EFFECT OF REMISSION OF SOLIDARY

O B L I G AT I O N E F F E C T E D B Y T H E
SOLIDARY CREDITOR UPON THE
OBLIGATION ITSELF

ART. 1215
if the remission is total, the entire obligation is
extinguished. if it is partial, the obligation is
extinguished in that part or aspect thereof to
which the remission refers.

UPON SOLIDARY CREDITORS

the solidary creditor responsible for the
remission shall be liable to the other creditors
for the shares in the obligations corresponding
to them.
EXE: with their consent

UPON SOLIDARY DEBTORS

IF THE REMISSION COVERS THE
ENTIRE OBLIGATION
the obligation is totally extinguished
and the entire juridical relation among
debtors are terminated
does not entitle the debtor in whose
favor the remission, to be
reimbursed from his co-debtors
akin to donation

IF THE REMISSION IS IN FAVOR OF

ONE OF THE DEBTOR AND
C O V E R S O N LY I T S E N T I R E
OBLIGATION
the debtor in whose favor the debt was
remitted is released from the creditor/
s, but still liable to his co-debtor.
hence; still liable when one of his
co-debtor is insolvent, proportionate
to his share in the obligation

IF THE REMISSION IS FOR THE

BENEFIT OF ONE OF THE
DEBTORS AND IT COVERS ONLY
PART OF HIS SHARE IN THE
OBLIGATION
his character as a solidary debtor is
not affected. It shall continue with
resect to the creditor/s and his codebtors.

NOTE:
in case of payment made by a codebtor, the debtor is not subrogated to
all of the rights of the creditor.

RATION WHY NO SUBROGATION

kasi the old obligation is extinguished
upon payment made by the debtor,
and a new obligation is created, from
which his right to be subrogated is
derived at.

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THE AWESOME NOTES

OBLIGATION
EFFECT OF DEATH OF A PARTY TO AN
OBLIGATION (debtor/creditor)
GEN RULE:
it does not extinguish the obligation
- obligation is transmissible to their heirs

EXE: when transmission is prevented by

1. law
2. stipulation of the parties; and
3. nature of the obligation

Q: will the death of the principal debtor

convert, decrease or nullify the substantive
right of the solidary creditor, in re relation
to contract of surety vis-a-vis liability of the
surety?

A: NO
PRELIMINARY
although the contract of suretyship is merely
an accessory contract, its liability is solidary
with the principal creditor.

hence, upon death of the principal debtor, will

not affect the suretyship, in accordance with
the nature of the surety's liability under the
performance bond.
- in which the creditor may, sue, separately or
jointly the principal debtor and the surety.

EFFECT OF PAYMENT MADE BY ONE OF

THE SOLIDARY DEBTOR
either partial or total extinguishment of the
obligation, depending upon whether the entire
amount of the debt is paid or only a part
thereof.

I N R E : C O M P U TAT I O N O F
INTEREST
it is counted not from the date payment
was made, but on the date when the
obligation become due.
- hence, should the debtor pays the
obligation prior to its maturity date, he
can only collect the interest from his
co-debtors for the amount does paid,
from the time the debt matures and not
from the date of payment.

F F O B L I G AT I O N S W H I C H A R E N O T
EXTINGUISHED UPON DEATH OF A PARTY
RULE 86 SEC 5
1. All claims for money against the decedent,
arising from contract, express or implied,
whether the same be due, not due, or
contingent,
2. all claims for funeral expenses and
expenses for the last sickness of the
decedent, and
3. judgment for money against the decedent,

Page 15 of 27

EFFECT SHOULD ONE OF THE CODEBTOR IS INSOLVENT AND THUS

CANNOT REIMBURSE THE PAYING
DEBTOR
- the solvent debtors, including the
paying debtor, shall be borne by them,
in proportion to the debt of each.

DEFENSES AVAILABLE TO A SOLIDARY

DEBTOR IF THE CREDITOR PROCEEDS
AGAINST HIM ALONE FOR THE PAYMENT
OF THE ENTIRE OBLIGATION

DEFENSES DERIVED FROM THE NATURE

OF THE OBLIGATION
1. res judicata
2. prescription
3. vitiation of consent

D E F E N S E S P E R S O N A L TO H I M O R
PERTAINING TO HIS OWN SHARE
1. minority
2. insanity
3. other defenses purely personal to him (ie.
extenstion of time, but only with resect to
one of the co-debtor, and not to all of them)

DEFENSES PERSONAL TO OTHERS, BUT

ONLY AS REGARDS THAT PART OF THE
DEBT FOR WHICH THE LATTER ARE
RESPONSIBLE
only as a partial defense
- can be assailed only with respect to the share
of debt for which the debtor personally affected
is responsible.

IN CASE THE DEBTOR PAY IN FULL;

what are his rights against his codebtors
- the paying debtor has a right to claim
from his co-debtors the share which
corresponds to them, with interest for
the payment already made

EXE: no right to be reimbursed

- when the debtor paid the
obligation which has long
prescribed.

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THE AWESOME NOTES

OBLIGATION
DIVISIBLE AND INDIVISIBLE
OBLIGATION
DIVISIBLE OBLIGATION; defined
those which have as their object a prestation
which is susceptible of partial performance
without the essence of the obligation being
changed

TEST:
if separated into parts, its essence is
not changed or its value is not
decreased disproportionately,
- because each of the parts into which
it is divided are homogenous and
analogous to each other as well as to
the thing itself.

DIVISIBILITY OF THE OBLIGATION IN RE

AS TO THE DIVISIBILITY OF THE OBJECT
OF THE OBLIGATION

GEN RULE:
if the object of the obligation is divisible, the
obligation is also divisible, as evidently it is
susceptible of partial compliance

EXE:
1. if the obligation is indivisible by express
provision of law
2. that the obligation is indivisible by intention
of the parties

When the obligation has for its object

the execution of a certain number of
days of work, the accomplishment of
work by metrical units, or analogous
things which by their nature are
susceptible of partial performance, it
shall be divisible.

refers to the
performance of the
prestation which
constitutes the
object of the
obligation

DIVISIBILITY OF
THE THING;
which constitute
the object of the
obligation
refers to the
prestation itself,
divisibility

3 KINDS OF DIVISION

Art. 1225. For the purposes of the

preceding articles, obligations to give
definite things and those which are not
susceptible of partial performance
shall be deemed to be indivisible.

TEST
if separated into parts, its essence is
changed or its value is decreased
disproportionately
DIVISIBILITY OF
AN OBLIGATION

- as in the case of co-ownership

INDIVISIBLE OBLIGATION; defined

those which is not susceptible of partial
performance, because otherwise the essence
of the obligation will be changed.

Page 16 of 27

However, even though the object or

service may be physically divisible, an
obligation is indivisible if so provided
by law or intended by the parties.

In obligations not to do, divisibility or

indivisibility shall be determined by the
character of the prestation in each
particular case.

NOTE: indivisibility of the object of the

obligation necessarily follows that the
obligation is likewise indivisible.

QUANTITATIVE
when the thing can be materially divided into
parts and such parts are homogenous to each
other
- such as when the parts are separated from
each other as in the cade of movables, or
when the limits of the parts are fixed by metes
and bounds as in the case of immovables

QUALITATIVE
when the thing can be materially divided, but
the parts are not homogenous to each other,
- such as, partition of an inheritance

IDEAL OR INTELLECTUAL
when the thing can only be separated into
ideal or undivided parts, not material parts

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THE AWESOME NOTES

OBLIGATION

AS AN ACCESSORY OBLIGATION
attached to a principal obligation by virtue of
which the obligor is bound
- to pay a stipulated indemnity or
- to perform an agreed prestation
for the purpose of insuring the performance of
the obligation

PURPOSES

AS TO EFFECT
SUBSIDIARY; when only penalty may
be demanded in case of breach
JOINT; when the injured party may
both demand for the enforcement of
the obligation and the penalty.

NOTE: grossly exorbitant or unconscionable

penalty does not necessarily result to its
extinguishment.
- court is at the liberty of reducing it.

INSTANCES WHEN COURT MAY REDUCE

THE PENALTY
1. if it is unconscionable or exorbitant
2. when there is partial compliance or
3. when there is an irregular performance
made by the obligor or debtor

FUNCION COERCITIVA O DE GRANTIA

- to insure the performance of the obligation
FUNCION LIQUIDATORIA
- to liquidate the amount of the damages to be
awarded to the injured party in case of breach
of the principal obligation

FUNCION ESTICTAMENTE PENAL

- in certain exceptional cases, to punish the
obligor un case of breach of the principal
obligation.

PUNITIVE; when it is established for

the purpose of punishing the obligor or
the debtor in case of breach

OBLIGATION WITH A PENAL

CLAUSE
OBLIGATION WITH A PENAL CLAUSE;
defined
is one with an accessory undertaking by virtue
of which the obligor assumes a greater liability
in case of breach of the obligation

Page 17 of 27

NOTE: as a general rule, when the

obligation is with a penal clause, it
substitute the indemnity for damages
and the payment of interest in case of
breach. unless, damages will still lie
should the obligor
1. refuses to pay the penalty
2. is guilty of fraud in the fulfillment of
the obligation; or
3. s t i p u l a t i o n t o t h e c o n t r a r y
(stipulated that there will be a
penalty in case of default)

CLASSIFICATION OF PENALTY

NOTE!
INSTANCES WHEN COURT MAY
DELETE THE PENAL CLAUSE
a. i n c a s e t h e r e i s a s u b s t a n t i a l
compliance in GF
b. when the penal clause itself suffers
from fatal infirmity
c. when exceptional circumstances so
exists as to warrant it

DISTINCTION BETWEEN LIQUIDATED

DAMAGES
GEN RULE:
similar, if the penalty is compensatory.
- no need here of proof of actual damages

EXE:
when the penalty is punitive
- if it is punitive, not only the creditor or obligee
entitled for liquidated damages, but as well as
the stipulated penalty

AS TO ORIGIN
LEGAL; when it is constituted by law
CONVENTIONAL; by agreement of
the parties

AS TO PURPOSE
C O M P E N S AT O R Y; w h e n i t
established for the purpose
indemnifying the damages suffered
the obligee or creditor in case
breach

is
of
by
of

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THE AWESOME NOTES

OBLIGATION
MODES OF EXTINGUISHING
OBLIGATION
1.
2.
3.
4.

payment or performance
loss of the thing due
condonation or remission of the debt
confusion or merger of the rights of the
creditor and debtor
5. compensation; and
6. novation

PAYMENT; defined
not only the delivery of money but also the
performance, in any other manner, of an
obligation

GEN RULE: no. but creditor may accept it.

EXE:
1. when made by a 3rd person who has an
interest in the fulfillment of the obligation
(ie. guarantor, co-debtor; the 3rd person
here is not entire stranger to the contract)
2. when there is a stipulation to the contrary
(in here, the creditor waives his right to
refuse to. deal with strangers to the obli)

OF BENEFITS RECEIVED BY THE

DEBTOR
- to proceed against the creditor;
following the principle against unjust
enrichment at the expense of another

HENCE; payment made to person

other than those mentioned above, is
not be a valid payment.
EXE:
a. payment made to 3rd person,
redounded to the benefit of the
creditor
b. payment to the possessor of the
credit, provided that it was made
in gf

PAYMENT OR PERFORMANCE

PAYMENT BY 3RD PERSON; may it compel

the creditor to accept the payment

TO WHOM PAYMENT MUST BE MADE

1. the person in whose favor the obligation
has been constituted
2. his successor-in-interest; or
3. any person authorized to received it.

OTHER CAUSES
1. annulment
2. rescission
3. fulfillment of the resolutory condition
4. prescription

Page 18 of 27

when is such benefit to creditor (a.) is

presumed:
i. if after the payment, the 3rd
person acquires the creditor's right
ii. if the creditor ratifies the payment
to the 3rd person
iii. if by the creditor's conduct, the
debtor has been led to believe that
the 3rd person had authority to
receive the payment

RULE ON PARTIAL PAYMENT

unless there is a stipulation to the contrary
- the creditor cannot be compelled to accept
partial payments, neither the debtor be
compelled to make such payment

Q: si A may utang kay B worth 10k. 5k lang

pera ni A upon maturity date, which A offered to
B as payment, partially. this was refused by B.
ang ginawa ni A, binigay nya yung 5k sa anak
ni B, instructing him to give it to his father. pero
nanakaw yun kay anak. can A compel B to
accept partial payment? may B recover the full
amount of the debt?

A: creditor cannot be compelled to accept

partial payment. hence, refusal is valid.
B can still demand for the entire amount, kasi
si anak, hindi naman sya authorized
representative ni B nor authorized by the same
to receive such payment

RIGHTS OF THE 3RD PERSON WHO PAYS

THE OBLIGATION
IF WITH THE KNOWLEDGE AND CONSENT
OF THE DEBTOR
1. he can recover from the debtor the entire
amount which he has paid
2. he is subrogated to all of the rights of the
creditor
IF WITHOUT KNOWLEDGE OF AGAINST
THE WILL OF THE DEBTOR
1. he can recover only insofar as the payment
has been beneficial to the said debtor

REMEDY OF THE 3RD PERSON

WITH RESPECT TO THE
DIFFERENCE BETWEEN THE
AMOUNT PAID AND THE EXTENT

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THE AWESOME NOTES

OBLIGATION
IN WHAT CURRENCY SHALL PAYMENT BE
MADE (domestic obligation)

RULE
IN
CASE
OF
EXTRAORDINARY INFLATION OR
DEFLATION OF PHIL CURRENCY

RA 8183
all monetary obligations shall be settled in the
Philippine currency which is the legal tender in
the Philippines,
HOWEVER
the parties may agree that the
obligation or transaction shall be
settled in any other currency at the
time of the payment

WHAT WILL
BE THE BASIS OF
PAYMENT
- the value of the currency at the time
of the establishment of the obligation

LEGAL TENDER; defined

such currency which may be used for the
payment of all debts, whether public or private

HENCE: valid lagi yung payament

- so long as the currency used is considered
the legal tender of the Phil at the time the
payment was made.

PROVIDED: there is an official

pronouncement or declaration
of the existence of an
extraordinary inflation or
deflation
- absence of which; the rules
enunciated here will not be
applied

E X T R A O R D I N A RY I N F L AT I O N /
DEFLATION; defined
uncommon decrease or increase in the
purchasing power of the currency
which could not have been reasonably
foreseen.

NO VALID PAYMENT
by way of PN, BoE or other mercantile
documents

EXE:
1. after it has been cashed (for
negotiable instruments) or
2. when through the fault of the
debtor, such instruments were
impaired (only for papers and
documents executed by a 3rd
person and delivered by the
debtor to the creditor, may include
negotiable instrument, so long as
that the debtor is not the maker or
drawer)
3. cashier's check; which operates
as an assignment of a art of the
fund to the creditors. hence, it is
equivalent to delivery to the
creditor in cash in an amount
equivalent to the amount credited
to his account.

Page 19 of 27

REQUISITES
1. there must be a decrease or
increase in the purchasing power
of the currency which is unusual or
beyond common fluctuation in the
value of said currency; and
2. such increase or decrease could
not have been reasonably
foreseen or was manifested
beyond the contemplation of the
parties at the time of the
establishment of the obligation

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OBLIGATION

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EXE TO EXE:
should the debtor refuses it.
so in effect; wala talagang exception.
oh jurado, dimi mung pasikot!

SPECIAL FORMS OF PAYMENT

THE FF ARE SPECIAL FORMS OF

PAYMENT:
1. application for payment
2. dation in payment
3. payment by cession
4. tender of payment and consignation

LEGAL APPLICATION OF PAYMENT

when neither the debtor nor the creditor
makes any application of payment, or if it
cannot be inferred from other circumstances
which is the most onerous debt to the debtor
among those which are due,

APPLICATION FOR PAYMENT

APPLICATION FOR PAYMENT; defined

the designation of the debt which the payment
must be applied when the debtor has several
obligations of the same kind in favor of same
creditor

REQUISITES
1. there must be only one debtor and only one
creditor
2. there must be 2 or more debts of the same
kind
3. all of the debts must be due; and
4. the amount paid by the debtor must not be
sufficient to cover the total amount of all the
debts

EXE FOR #1
if a debtor is indebted to the
partnership and also to the managerial
partner at the same time, and both
debts are due and demandable
- the debtor may apply the payment to
the managerial partner, provided it is
more onerous
- in here; there are 2 creditors.

NOTE: di exe yung solidarity among

debtors, following the principle of
mutual agency among solidary
debtors. so in fact, there is only one
debtor, and hence, does not constitute
as an exception.

if the debts due are of the same nature and

burden,
- the payment shall be applied to all
proportionately

DATION IN PAYMENT

DACION EN PAGO/ DATION IN PAYMENT

A SPECIAL MODE OF PAYMENT
- the debtor offers another thing to the creditor
who accepts it as equivalent of payment of an
outstanding obligation.

TO WHOM DOES THE RIGHT TO MAKE AN

APPLICATION OF PAYMENT BELONGS

GEN RULE: to the debtor

EXE:
should the debtor fails to avail himself of this
right,
the creditor may wrest the initiative
from him by giving to him a receipt
designating the debt to which the
payment shall be applied.

THE FF RULES SHALL BE APPLIED

1. where there are various debts
which are due but were incurred
on different dates, the oldest is the
most onerous
2. where one bears interest and the
other does not, the former is more
onerous
3. where one is secured and other is
not, the former is more onerous
4. where the debtor is bound as
principal in one and as guarantor ir
surety in another, the former is
more onerous
5. where the debtor is bound as a
solidary debtor in one and as the
sole debtor in another, the former
is more onerous

AKIN TO CONTRACT OF SALE

an objective novation of the obligation
- where the thing offered as an
accepted equivalent of the
performance of an obligation is
considered as the object of the
contract of sake, while the debt is
considered as purchase price.

govern by the law on sales

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OBLIGATION
PAYMENT BY CESSION
DEFINITION
a special form of payment whereby the debtor
- abandons ALL of his property for the benefit
of his creditors in order that from the proceeds
thereof, the latter may obtain payment of their
credits

REQUISITES
1. plurality of debts
2. partial or relative insolvency of the debtor
3. acceptance by the creditor

KINDS
1. CONTRACTUAL; found in art. 1255
2. JUDICIAL; which is regulated by Insolvency
Law

DATION IN
PAYMENT
AS TO NUMBER OF
CREDITORS
there is only one
creditor
AS
TO
THE
F I N A N C I A L
CONDITION OF
THE DEBTOR
not necessarily in a
state of financial
difficulty
AS TO EFFECT
extinguishes the
obligation, but only
as to the extent of
the value of the
thing delivered
- either as agreed
upon or as may be
proved

EXE:
the silence of the
parties signifies that
they consider the
delivery of the thing
as the equivalent of
the performance of
the obligation

PAYMENT BY
CESSION

debtor is in the state

of partial or relative
insolvency

it merely releases
the debtor for the
net proceeds of the
things ceded or
assigned

EXE:
there is a contrary
intention

TENDER OF PAYMENT & CONSIGNATION

TENDER OF PAYMENT
the manifestation made by the debtor to the
creditor of his decision to comply immediately
with his obligations
- it involves a positive and unconditional act by
the obligor of offering legal tender currency as
payment to the obligee for the former's
obligation and demanding that the latter accept
the same

- as an antecedent of consignation
- extrajudicial in character

CONSIGNATION
the deposit of the object of the obligation in a
competent court in accordance with the rules
prescribed by law
after refusal or inability of the creditor
to accept the tender of payment.

- this is what produces payment, after

the tender of payment was refused
- judicial in character

plurality of creditors

Page 21 of 27

REQUISITES FOR A VALID CONSIGNATION

for it to produce the effect of payment,
1. that there is a debt due
2. that the consignation has been made either
because the creditor to whom tender of
payment was made fused to accept the
payment without just cause, or because
any of the cause stated by law for effective
consignation without previous tender of
payment exists
3. the previous notice of the consignation had
been given to the person interested in the
fulfillment of the obligation
4. that the thing or amount due had been
placed at the disposal of judicial authority
5. that after the consignation had been made,
the persons interested in the fulfillment of
the obligation had been notified

I N S TA N C E S W H E R E P R I O R
T E N D E R O F PAY M E N T I S
DISPENSED WITH FOR THERE TO
H AV E
AN
EFFECTIVE
CONSIGNATION
1. when the creditor is absent or
unknown, or does not appear at
the place of payment
2. when he is incapacitated to
receive the payment at the time it
is due
3. when, without just cause, he
refuses to give a receipt
4. when 2/more persons claim the
right to collect; and

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OBLIGATION
5. when the title of the obligation has
been lost

REASON OF CONSIGNATION
to avoid the performance of an
obligation from becoming more
onerous to the debtor by reason of
causes not imputable to him

NOTE: so pag ni refuse yung payment,

ang dapat gawin, is to consign the
amount tendered before the court.
failure to do si, the responsibility of the
obligor will still continue.

RULE:
the obligor is released from the obligation
EXE:
1. impossibility was due to his fault
2. the impossibility took place after he has
incurred in delay

NOTE: IN AN OBLIGATION NOT TO DO

- such obligation is extinguished after it has
become legally or physically impossible for him
to do the prohibited actions, provided not due
to his fault.

ie: bawal mag tayo ng commercial

complex sa subdivision lot for 10
years. what the obligor did, he
converted the house into a restaurant.
his defense, there is a valid ordinance
converting the area as commercial lots
from residential

LOSS OF THE THING; defined

when the object of the obligation perishes, or
goes out of the commerce of man or
disappears in such a way that its existence is
unknown or it cannot be recovered
REQUISITES; for loss of thing to extinguish
an obligation
1. that the thing which is lost is determinate
2. that thing is lost without any fault of the
debtor
3. the thing is lost before the debtor incurred a
delay.

NOTE: if the loss of the thing is due to

the fault of debtor, the obligation shall
be converted to as a contract of
indemnity

EXE: when the obligor or debtor will still be

held liable even if all of the requisites
mentioned above are present
1. when by law, the obligor is liable for
fortuitous events
2. when by stipulation, the obligor is liable
even for fortuitous events
3. when the nature of the obligation requires
the assumption of risk
4. when the loss of the thing is due partly to
the fault of the debtor
5. when the loss of the thing occurs after the
debtor has incurred a delay
6. when the debtor promised to deliver the
same thing to 2/more persons who does
not have the same interest
7. when the obligation is generic
8. when the debt of a certain and determinate
thing proceeds from a criminal offense

IMPOSSIBILITY (LEGAL OR PHYSICAL) OF

PERFORMANCE IN AN OBLIGATION TO DO

LOSS OF THE THING

Page 22 of 27

REMISSION / CONDONATION
DEFINITION
an act of liberality by virtue of which the
obligee, without receiving any price or
equivalent, renounces the enforcement of the
obligation,
as a result of which
it is extinguished in its entirety or in
that part or aspect of the same to
which the remission refers

REQUISITES
1. it must be gratuitous
2. it must be accepted by the obligor
3. the obligation must be demandable

KINDS OF REMISSION

AS TO FORM
EXPRESS REMISSION
- when it is made in accordance with
the formalities prescribed by law for
donations

- see ART. 748 and 749

IMPLIED REMISSION
- although not made in accordance
with the formalities of donation, it can
be deduced from the acts of the
obligee or creditor

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OBLIGATION

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AS TO THE EXTENT

PARTIAL REMISSION
- when it refers only to the principal or
to the accessory obligation or to an
aspect thereof which affects the
debtor, as for instance of solidarity

CONFUSION OR MERGER

TOTAL REMISSION
- when the entire obligation is
extinguished

AS TO CONSTITUTION
INTER VIVOS
- by agreement of the obligor and the
obligee, which partakes a donation
inter vivos

MORTIS CAUSA
- constituted by last will and testament,
in which it partakes the nature of
donation mortis causa

IN RE: IMPLIED ADMISSION

when not made not in accordance of the
formalities of donation, but it can be deduced
from the acts of the obligee or creditor

INSTANCES:
when the promissory note is in the
possession of the maker (debtor).
- law presumes that the delivery to him
is voluntarily made. (disputable)

DEFINITION
the merger of the characters of creditor and
debtor in the same person by virtue of which
the obligation is extinguished

REQUISITES
1. that the merger of the character of creditor
and debtor myst be in the same person
2. that it must be place in the person of either
the principal creditor or the principal debtor;
and
3. it must be complete and definite

COMPLETE AND DEFINITE

does not mean that it will results to total or
complete extinguishment of the obligation
It means
- whether the merger refers to the
entire obligation or only a part thereof,
it must be of such a character that
there will be a complete and definite
meeting of all the qualities of the
creditor and debtor in the obligation, or
in part or aspect thereof which is
affected by the merger.

REQUISITES
1. that the document evidencing the
credit was delivered by the
creditor to the debtor
2. that such document is a private
document; and
3. that the delivery was voluntary

when the thing pledged is in the possession

of the pledgor-debtor.
NOTE: mere letter remitting the debts and the
debtor accepted it by letter, does not amount to
implied remission of debt.
- as to allow otherwise, the purpose of last
sentence of ART. 1270 declaring that express
condonation shall comply with the forms of
donation, would be defeated.
- this is an instance kasi of an express
remission.

COMPENSATION
DEFINITION
mode of extinguishing in their concurrent
amount those obligations of persons who in
their own rights are creditors and debtors of
each other

REQUISITES
1. there must be 2 parties, who in their own
right, are principal creditor and principal
debtors of each other
2. both debt must consist in money, or if the
thing due is fungible (consumable), they
must be of the same kind and quality
3. both debts must be due
4. both debts must be liquidated and
demandable
5. there must be no retention or controversy
commenced by the third persons over
either of the debts and communicated in
due time to the debtor (exe: after
attachment or garnishment, there is still an
excess)
6. the compensation must not be prohibited
by law

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THE AWESOME NOTES

OBLIGATION

DIFFERENT KINDS OF COMPENSATION

AS TO CAUSE

COMPENSATION

VOLUNTARY
- when the parties who are mutually
creditors and debtors agree to
compensate their respective
obligations, even though all of the
requisites from compensation may not
be then present.
A K I N T O FA C U LTAT I V E
COMPENSATION
- when one of the obligation is
with a term and the other is a
pure obligation. and the former
renounces the. benefit of the
term, making it a pure
obligation and consequent
compensation possible.
- in here; the one who effects
the compensation is the party
who is entitled to oppose the
same, for his right alone is
prejudiced here.

JUDICIAL
- takes effect by judicial decree

AS TO EFFECT

ie,
in a suit for claim for damages.
the defendant was also able to
establish his entitlement for
damages against the
complainant.

TOTAL
- when the debts be compensated are
equal to the amount.

PARTIAL
-when the debts to be compensated
are not equal in amount.

PAYMENT

takes effect by
operation of law

takes effect by acts

of the parties

capacity to give and

acquire is not
necessary

required

as a rule, only partial

as a rule, complete
and indivisible

COMPENSATION

CONFUSION

AS TO NUMBER OF
PERSONS
- 2 persons, who in
their own rights, are
principal debtor and
principal creditor to
each other
AS TO NUMBER OF
OBLIGATION
at least 2 obligations
are involved

they have different requisites

LEGAL
- when it takes effect by operation of
law from the moment all of the
requisites prescribed by law are
present

Page 24 of 27

COMPENSATION

- there is only one

person in whom the
is merged the
qualities of the
creditor and debtor

there is only one

SET-OFF OR
COUNTERCLAIM

requires that the 2

debts must consist
in money, or if the
thing due are
fungible, they must
be of the same kind
and quality

not required

requires that the

debt must be
liquidated

not required

need not be pleaed

must be pleaded

NOTE:
bank has the right to set-off the deposit in
hands for the payment of any indebtedness to
it ob the part of the depositor
RATION:
when a person deposits his money in
bank, a creditor debtor relationship is
created, whereby the debtor is the
former and the bank as the latter.

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OBLIGATION
THEY MUST BE A PRINCIPAL CREDITOR
AND PRINCIPAL DEBTOR TO EACH OTHER
hence; walang compensation kung yung
anak nung crediotr yung nangutang kay
debtor
wala ding compensation over the shares held
by the SH over its indebtedness in the Corp,
kasi, the capital stock of a corporation is a
trust fund to be used more particularly for the
security of creditors (corporate)

NOVATION
DEFINITION
is the substitution or change of an obligation by
another, resulting in its extinguishment or
modification, either by
changing its object or principal condition, or
by substituting another in place of the debtor,
or
by subrogating a third person in the rights of
the creditor

OBJECTIVE OR REAL NOVATION

- the change either in the cause, object
or principal condition of the obligation

SUBJECTIVE OR PERSONAL
NOVATION
- the substitution of another in the
person of the debtor or to the
subrogation of a third person in the
rights of the creditor

PASSIVE SUBSTITUTION
- substitution of the person of
the debtor

ACTIVE SUBSTITUTION
- subrogation in the rights of
the creditor

AS TO FORM OR CONSTITUTION
EXPRESS
- declared in unequivocal terms that
the obligation is extinguished by a new
one which substitutes the same

TACIT
- when the old and the new obligations
are incompatible with each other on
every point

AS TO THE EXTENT OR EFFECT

TOTAL
- results to absolute extinguishment of
the old obligation

PARTIAL
- merely results to modification of the
old obligation

REQUISITES FOR EXTINCTIVE NOVATION

TO APPLY
1. the existence of a previous valid obligation
2. the agreement of all the parties to the new
contract; and
3. the extinguishment of the old obligation or
contract; and
4. the validity of the new one

FF ABOVE:
novation is never presumed.
- it must be proven that either express
or tacit novation took place.
- there must be animo novandi

KINDS OF NOVATION
AS TO ITS ESSENCE

MIXED NOVATION
- combination of objective and
subjective novation

THE FF ARE DEBTS NOT SUSCEPTIBLE TO

COMPENSATION
1. debts arising from contracts of depositum
2. d e b t s a r i s i n g f r o m c o n t r a c t s o f
commodatum
3. claims for support due by gratuitous title
4. obligations arising from criminal offense;
and
5. certain obligations in favor of the
government (ie. taxes, fees, duties and
other of a similar nature)

Page 25 of 27

ILLUSTRATION OF INSTANCES WHERE

THERE IS NO NOVATION:

walang tacit novation when deed of partial

partition was executed and a subsequent MOA
that they will share alike and receive in equal
shares in the proceeds of the sale of the
property subject of partition
- kasi, both agreements are not incompatible to
each other.

walang novation din where theparties agreed

on the conversion of the loan into shares in a
partnership and yet the new loan remained
despite of the conversion.
- kasi, the old obligation was not extinguished.

walang novation din when the second and the

new contract ratifies or acknowledges the old
contract
- kasi, not incompatible to each other.

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OBLIGATION
walang novation, when the second and the
new contract either extends the date of
payment for the old contract or provide another
mode in the performance of the contract
- di din kasi incompatible yung new contract sa
old contract, neither there is a change in the
obligatory relation between the parties which
will alter the essence of the old obligation

supposing in a new contract, it stipulates that a

third person will assume the payment or
performance of the old contract
- still no novation, as it does not provide that
the debtor shall be released from responsibility.

EXPROMISSION
- the substitution of debtor us effected with the
consent of the creditor at the instance of the
new debtor, even without the knowledge or
against the will of the old debtor

TEST WHETHER NOVATION TAKES PLACE

1. whether the 2 obligations can stand
together; and
2. if they can stand together; whether the 2
obligations are incompatible to each other

R E S U LT I N G S T I P U L AT I O N S F R O M
NOVATION
1. to extinguish an existing obligation; and
2. to substitute a new one in place of the
existing obligation

INSTANCES WHERE NOVATION TAKES

PLACE
the period for payment of an obligation is
shortened
RATION:
1. clear case of incompatibility between the
old and the new; and
2. there is an essential change or alteration of
the principal condition of the old obligation

PERO: extension of payment does not

results to novation
- as neither the old and the new
obligations are incompatible with each
other, nor it can be said that there is an
essential change of alteration of the
principal condition of the old obligation

HENCE; EXPROMISSION CAN

FURTHER BE CLASSIFIED TO
substitution with the knowledge and
consent of the old debtor
substitution without the knowledge
or against the will of the old debtor

DELEGACION
substitution of debtors effected with the
consent of the creditor at the instance of the
old debtor with the concurrence of the new
debtor

REQUISITES
1. the initiative for the substitution
must emanate from the new
debtor
2. consent of the creditor to the
substitution

same with if bond is provided for the

performance of the obligation,
- as the bond is merely an accessory to the
original contract, and cannot be deemed as a
new and separate contract

hence; a subsequent agreement reducing a

debt or money judgment does not results to
novation
- as there is no new or modified obligation
arose out of the payment by the judgment
debtor of the reduced amount to the creditor
- neither the two are incompatible with each
other

2 F O R M S O F N O VAT I O N S B Y
SUBSTITUTION OF THE PERSON OF THE
DEBTOR

Page 26 of 27

REQUISITES
1. the initiative for the substitution
must emanate from the old debtor
2. consent of the debtor
3. acceptance by the creditor

BASTA: regardless of the kind of substitution of

old debtor by 3rd person, consent of the
creditor is indispensable

CREDITOR'S CONSENT TO NOVATION IS

NEVER PRESUMED
- law requires that the consent of the creditor
must be express

FF: renuntiatio non praesumitur

a waiver of right may not be presumed
unless the will to waive is indisputably
shown by him who holds the right

Q: in expromission, if the new debtor is

unable to pay the obligation by reason of
insolvency, can the creditor then proceed
against the old debtor for payment?

A: NO
revival of the old obligation due to nonperformance by the new debtor, shall only lie in
delegacion, when the substitution was made
with the consent of the old debtor

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OBLIGATION
REQUISITES FOR THE OLD
OBLIGATION NOT TO BE REVIVED
DUE TO NON PERFORMANCE OF
THE NEW DEBTOR, IN
DELEGACION
1. when the insolvency of the new
debtor (delegado) was already
existing and of public knowledge
at the time when the original
debtor (delegante) delegated his
debt; OR
2. when such insolvency was already
existing and known to the original
debtor when he delegated his
debts.

2 FORMS OF NOVATION BY SUBROGATING

A THIRD PERSON IN THE RIGHTS OF THE
CREDITORS

CONVENTIONAL SUBROGATION
- takes place by agreement of the original
creditor, the third person substituting the
original creditor and the debtor

CONVENTIONAL
SUBROGATION
AS
TO
THE
GOVERNING
RULES
- Art. 1300 - 1304
NCC
AS
TO
THE
NECESSITY OF
THE DEBTOR's
CONSENT
- required
AS TO EFFECT
UPON OBLIGATION
extinguishment of
the old obligation
and giving rise to a
new one

LEGAL SUBROGATION
- takes place without agreement of the parties
but by operation of law because of certain
acts. ART. 1302

Art. 1302. It is presumed that there is legal

subrogation:
1. When a creditor pays another creditor who
is preferred, even without the debtor's
knowledge;
2. When a third person, not interested in the
obligation, pays with the express or tacit
approval of the debtor;
3. When, even without the knowledge of the
debtor, a person interested in the fulfillment
of the obligation pays, without prejudice to
the effects of confusion as to the latter's
share.

EFFECT OF SUBROGATION
IF THE SUBROGATION IS TOTAL
it transfers to the person subrogated the credit
with all the rights thereto appertaining either
against the debtor or against third person, be
they guarantors or possessors of mortgages,
subject to the stipulation in a conventional
subrogation

IF THE SUBROGATION IS PARTIAL

the creditor to whom partial payment has been
made may exercise his right for the remainder.
in other words, both the rights of the subrogee
and the rights of the creditor shall co-exist. in
case of conflict, the right of the creditor shall be
preferred.

AS TO EFFECT
UPON VICES
defect or vices in the
original obligation is
cured
AS TO THE TIME
OF EFFECTIVITY
from the moment of
subrogation or
novation

Page 27 of 27

ASSIGNMENT OF
RIGHTS

- Art. 1624 - 1627

NCC

- not required

transmitting the
rights of the creditor
to another person
without modifying or
extinguishing the
obligation.
- similar effect as in
case of sale, the
assignee would then
have right to
proceed against the
debtor

wala

as far as the debtor

is concerned, arises
from the moment of
notification

example of assignment of credit

bank purchases the credit of mr. X
- as it does not involve any change in the
original agreement between the buyer and the
seller, nor vary the rights and obligations of the
parties.

CONSENT OF THE DEBTOR IS NOT REQ

WHAT IS REQUIRED IS
a mere notice for the debtor
- only for the purpose of informing the debtor
from the date of the assignment, that the
payment should be made to the assignee

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