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Abatement of nuisance per se;
Social Justice Society, et al. v. Atienza, Jr., GR No. 156052,
February 13, 2008 - Essentially, the oil companies are fighting
for their right to property. They allege that they stand to lose
billions of pesos if forced [to] relocate. However, based on the
hierarchy of constitutionally protected rights, the right to life
enjoys precedence over the right to property. The reason is
obvious: life is irreplaceable, property is not. When the state or
[local government unit] LGU's exercise of police power clashes
with a few individuals' right to property, the former should prevail,".
Carlos Superdrug Corp. vs. DSWD,et al., GR No. 166494, June
29, 2007 (Expanded Senior Citizens Act of 2003)- When
conditions so demand, as determined by the legislature, property
rights must bow to the primacy of police power because property
rights, though sheltered by due process clause, must yield to the
general welfare.
Yrasuegi vs. PAL, Inc., 565 SCRA 467- In the absence of
governmental interference, the liberties guaranteed by the
constitution cannot be invoked. The Bill of Rights is not meant to
be invoked against acts of private individuals.
Procedural Due Process- Banco Español-Filipino vs. Palanca
Serano vs NLRC, 323 SCRA 445- Due process clause of the
constitution is a limitation on government powers. It does not
apply to the exercise of private power, such as the termination
of employment under the Labor Code.
Chavez vs. Romulo, 431 SCRA 534- The license to carry firearm
is neither a property nor a property right. Neither does it create a
vested right. A permit to carry a firearm outside of one's residence
maybe revoked at anytime.
MMDA vs. Garin, GR No. 130230, April 15, 2005- A license to
operate a motor vehicle is not a property right, but a privilege
granted by the State, which may be suspended or revoked by the
State in the exercise of police power.
Mercury Drug Corp. vs. Serrano, March 10, 2006- In dismissing
an employee, the employer must serve the employee two notices:
(1) the first to inform the employee of the particular acts or
omissions for which the employer seeks his dismissal, and (2) the
second to inform the employee of his employer's decision to
terminate him. The first notice must state that the employer seeks
dismissal for the act or omission charged against the employee,
otherwise, the notice does not comply with the rules.
Macias vs. Macias, September 3, 2003- Denial of due process
suffices to cast on the official act taken by whatever branch of the
government the impress of nullity.
Estrada vs. Desierto, April 3, 2001- Alleged violations of the right
to impartiality due to adverse publicity must be substantiated by
proof of actual prejudice.
Alauya vs. COMELEC, 395 SCRA 742- due process is satisfied
even if there was no oral argument if a party was able to file
pleadings.
INSTANCES WHEN HEARINGS ARE NOT NECESSARY:
When administrative agencies are exercising their quasi-legislative
functions;
Granting by courts of provisional remedies;
Preventive suspension; (Co. Vs. Barbers)
Removal of temporary employees in the government service;
Issuance of warrants of distraint and/or levy by the BIR Commissioner;
Cancellation of passport of a person charged with a crime;
Issuance of sequestration orders
Judicial order which prevents an accused from traveling abroad
Suspension of bank's operations by the Monetary Board upon a prima
facie finding of liquidity problems in such bank.
Extradition proceedings ([evaluation stage]- Sec of Justice vs. Lantion;
Cuevas vs. Munoz, 2000)
Reinvestigation (criminal cases)
Ang Tibay vs. CIR, Administrative Due Process
Equal Protection of the Law
Trillanes IV vs. Pimentel, GR No. 179817, June 27, 2008 Election to
Congress is not a reasonable classification in criminal law enforcement
as the functions and duties of the office are not substantial distinctions
which lift one from the class of prisoners interrupted in their freedom
and restricted in liberty of movement.
People vs. Jalosjos, 324 SCRA 689, Election to the position of a
Congressman is not reasonable classification in criminal law
enforcement. The functions and duties of the office are not substantial
distinctions which lift him from the class of prisoners interrupted in their
freedom and restricted in liberty of movement.
USA vs. Puruganan, September 3, 2002- The position of
Congressman is not a reasonable classification in criminal law
enforcement. The functions and duties of the office are not substantial
distinctions which lift him from the class of prisoners interrupted in their
freedom and restricted in liberty of movement. Lawful arrest and
confinement are germane to the purposes of the law and apply to all
those belonging to the same class.
Fariñas vs. Executive Secretary, 417 SCRA 503, December 10,
2003, Substantive distinctions exist between elective officials and
appointive officials. The former occupy their office by virtue of the
mandate of the people while the latter hold their office by virtue of their
designation by an appointing authority.
PAGCOR vs. BIR, GR No. 172087, March 15, 2011- PAGCOR
cannot find support in the equal protection clause of the constitution. It
was granted a franchise , subject to amendment, alteration or repeal
by Congress.
Section 2- Unreasonable searches & seizures
The right to security of a person- (Secretary of National Defense
vs. Manalo, GR No. 180908, October 7, 2008)-is a gurarantee of
protection of one's rights by the government. In the context of the writ
of amparo, this right is built into the guarantees of the right to life and
liberty under Art. III, Sec. 1 of the 1987 constitution and the right to
security of person (as freedom from threat and guarantee of bodily and
psychological integrity) under Art. III, Sec. 2.
PROBABLE CAUSE- Read: Stone Hill vs. Diokno; Lim vs. Felix;
Webb vs. de Leon; Roan vs. Gonzales; Papa vs. Mago; Aniag vs.
COMELEC.
Del Rosario vs. People, May 31, 2001- Seizure of evidence in plain
view is justified only when:
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there is prior valid intrusion based on a valid warrantless arrest in
which the police are legally present in the pursuit of their official
duties;
the evidence was inadvertently discovered by the police who had
the right to be there where they are;
the evidence must be immediately apparent; and
plain view justified the seizure without further search conducted.
Manalili vs. CA, 280 SCRA 400- The following are valid
warrantless searches and seizures:
Search incidental to lawful arrest (PP vs. Tiu Won Chua, 405
SCRA 280; PP vs. Estella, 395 SCRA 553);
search of a moving vehicle (PP vs. Tampis, 407 SCRA 582);
seizure in plain view (PP vs. Go, 411 SCRA 81, The counterfeit
nature of the seals and stamps was not apparent and established
until after they have been turned over to the Chinese embassy and
the Bureau of Immigration for verification. Hence, not considered
as evidence in plain view);
customs search (Salvador vs. PP, July 15, 2005);
waiver by the accused( 1. right to be waived exists; 2. person
waiving has knowledge of such right, actually or constructively;
and 3. he/she has actual intention to relinquish the right.) Silahis
Int'l Hotel vs. Soluta, Feb. 20, 2006; Valdez vs. People, 538
SCRA 611)- It is the State which has the burden of proving, by
clear and positive testimony, that the necessary consent was
obtained and that it was freely and voluntarily given.
stop & frisk (limited protective search); Terry Search - (Terry vs,
Ohio, 1968; Malacat vs CA, Dec. 1, 1997) it is a stop of a person
by law enforcement officer based upon "reasonable suspicion" that
a person may have been engaged in criminal activity, whereas an
arrest requires "probable cause" that a suspect committed a
criminal offense.
Armed conflict (war time)
Check points (limited to visual search; PP vs. Escaño, GR No.
129756-58, January 28, 2000);
Exigent and emergency circumstances (PP vs. De Gracia, 233
SCRA 716), where a warrantless search was allowed where there
was a prevailing general chaos and disorder because of an
ongoing coup;
Conduct of "Area Target Zone" and "Saturation Drives" in the
exercise of military powers of the President (Guanzon vs. Villa,
181 SCRA 623);
Routine Airport Security Procedure (PP vs. Suzuki, October 23,
2003; PP vs. Johnson, GR No. 138881, December 18, 2000).
WARRANTLESS ARREST
HOT PURSUIT- Requisites:
The pursuit of the offender by the arresting officer must be
continuous from the time of the commission of the offense to the
time of the arrest.
There must be no supervening event which breaks the continuity
of the chase.
Ladlad/Beltran, et al. vs. Gonzales/Velasco, June 1, 2007-
Inquest proceedings are proper only when the accused has been
lawfully arrested without warrant.
PP vs. dela Cruz, 571 SCRA 469- arrest in flagrante delicto to
be availed, the following requisites must concur: (1) the
person to be arrested must execute an overt act indicating that he
has just committed, is actually committing or is attempting to
commit a crime. (2) such commission of a crime must be done in
the presence and within the view of the arresting officer.
PP vs. Del Rosario, 305 SCRA 740, There must be a large measure
of immediacy between the time of the offense was committed and the
time of the warrantless arrest. If there was an appreaciable lapse of
time between the arrest and the commission of the crime, a warrant of
arrest must be secured.
Padilla vs. CA, 269 SCRA 402, When the law speaks of a crime
committed in the presence of an arresting officer, it is not limited to
actually seeing the commission of the crime. The requirement of the
law is complied where the arresting officer was within an earshot
from the scene although he did not personally witness the
commission of the crime.
PP vs. Martin, 193 SCRA 57, The Bill of Rights is protection against
the State. The protection against unreasonable searches and
seizures cannot be extended to acts committed by private
individuals so as to bring it within the ambit of alleged unlawful
intrusion by the government. Right applies only against the
government and agencies tasked with the enforcement of the law.
Only a judge may validly issue a warrant- EXCEPT: By administrative
authorities (CID; BOC) only for the purpose of carrying out a final
finding of violation of law.
Jackson vs. Macalino, November 24, 2003- the Commissioner of the
Immigration can issue a warrant of arrest against a foreigner who has
been ordered to be deported.
SCATTER SHOT WARRANT- is a warrant having been issued to
more than one offense.
PRECISE AND MINUTE DETAIL AS TO THE PLACE TO BE
SEARCHED AND THINGS OR PERSONS TO BE SEIZED NOT
REQUIRED- the constitution does not require that the things to be
seized must be described in precise and minute detail as to no room
for doubt on the part of the searching authorities; TECHNICAL
DESCRIPTION IS NOT REQUIRED- It is only necessary that there be
reasonable certainty or particularity as to the identity of the property to
be searched for and seized so that the warrant shall not be a mere
roving commission. THE TEST as would be as to what is to be taken,
nothing is left to the discretion of the officer executing the warrant.
VALLEJO VS. CA, 427 SCRA 658, April 14, 2004.
Administrative arrest-Causes:
If you breach peace or if you are planning to do so, you can be
arrested but only if it is absolutely necessary to do so. You will be freed
as soon as you no longer represent a threat to public security.
If you disrupt a court hearing;
If you are in a drunken state on the public highway;
In case of brawling;
If you block traffic without authorization;
If you refuse to give your ID documents or if these are questionable;
If you are in the country illegally.
Section 3- Privacy of communication & correspondence-
In the matter of petition for habeas corpus of Capt. G. Alejano, et
al. vs. Cabuay, G.R. No. 160792, August 25, 2005- The letters
alleged to have been read by the ISAFP authorities were not
confidential letters between the detainees and their lawyers. The
petitioner who received the letters from detainees Trillanes and
Maestrecampo was merely acting as the detainees' personal courier
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and not as their counsel when he received the letters for mailing.
In the present case, since the letters were not confidential
communication between the detainees and their lawyers, the
officials of the ISAFP Detention Center could read the letters. If
the letters are marked confidential communication between the
detainees and their lawyers, the detention officials should not read
the letters but only open the envelopes for inspection in the
presence of the detainees. That a law is required before an
executive officer could intrude on a citizen's privacy rights is
a guarantee that is available only to the public at large but not
to persons who are detained or imprisoned. The right to
privacy of those detained is subject to Section 4 of RA 7438, as
well as to the limitations inherent in lawful detention or
imprisonment. By the very fact of their detention, pre-trial
detainees and convicted prisoners have a diminished
expectation of privacy rights.
Roxas vs. Zuzuarregei, June 12, 2007- To prevent liability from
attaching on account of his letter, he invokes his rights to free
speech and privacy of communication. The invocation of these
rights will not, however, free him from liability. As already stated,
his letter contained defamatory statements that impaired public
confidence in the integrity of the judiciary. The making of
contemptuous statements directed against the Court is not an
exercise of free speech; rather, it is an abuse of such right.
Unwarranted attacks on the dignity of the courts cannot be
disguised as free speech, for the exercise of said right cannot be
used to impair the independence and efficiency of courts or public
respect therefor and confidence therein. Free expression must
not be used as a vehicle to satisfy one's irrational obsession to
demean, ridicule, degrade and even destroy this Court and its
magistrates.
Right to Privacy - Re Iggy Arroyo's right to privacy ( the right
to be let alone) Read: PP vs. Molina, et al., - right to privacy
may be waived by the defendant).
Basis: It is expressly recognized in Section 3(1) of the Bill of
Rights:Other facets of the right to privacy are protected in various
provisions of the Bill of Rights, viz: Sections1; 2; 6; 8; and 17.
Zones of privacy are likewise recognized and protected in our
laws. The Civil Code provides that "[e]very person shall respect the
dignity, personality, privacy and peace of mind of his neighbors
and other persons" and punishes as actionable torts several acts
by a person of meddling and prying into the privacy of another. It
also holds a public officer or employee or any private individual
liable for damages for any violation of the rights and liberties of
another person, and recognizes the privacy of letters and other
private communications. The Revised Penal Code makes a crime
the violation of secrets by an officer, the revelation of trade and
industrial secrets, and trespass to dwelling. Invasion of privacy is
an offense in special laws like the Anti-Wiretapping Law, the
Secrecy of Bank Deposit Act and the Intellectual Property Code.
The Rules of Court on privileged communication likewise
recognize the privacy of certain information. (Ople vs. Torres, July
23, 1998.
In the matter of petition for habeas corpus of Camilo Sabio,
October 17, 2006- In evaluating a claim for violation of the
right to privacy, a court must determine whether a person has
exhibited a reasonable expectation of privacy and, if so,
whether that expectation has been violated by unreasonable
government intrusion.
SJS vs. Dangerous Drugs Board and PDEA, GR No. 157870,
November 3, 2008- Supreme Court declared as unconstitutional the
provisions of RA 9165 requiring mandatory drug testing of candidates
for public office and persons accused of crimes. However, the
Supreme Court upheld the constitutionality of the said RA insofar as
random drug testing for secondary and tertiary school students, as well
as for officials and employees of public and private offices is
concerned. The need for drug testing to at least minimize illegal drug
use is substantial enough to override the individual's privacy interest
under the premises.
Read: Ayer Productions vs. Capulong- The right of privacy or the
right to be let alone is not an absolute right where the person is a
public figure and the information sought to be elicited from him or to be
published about him constitute matters of a public character.
Zulueta vs. CA, 253 SCRA 699- The only exception to the prohibition
in the constitution is if there is a "lawful order from a court or when
public safety or order requires otherwise, as prescribed by law".
Relate to emails and other ways of communication.
RA 4200 (Anti-Wiretapping Act)-A violation of the Anti Wire Tapping
Law (R.A. 4200) which prohibits not only the unauthorized taping of
private conversations, but also: (a) the possession of such tapes with
the knowledge of their nature as illegal wiretaps; (b) the replaying of
the tapes to any person; and (c) to communicate the contents thereof
either verbally or in writing, such as the provision of transcripts. The
potential jail term, if convicted, ranges from six months to six years.
Arts. 290, 291, 292 and 299 of the Revised Penal Code
RA No. 9372 (Human Security Act)- The provisions of RA 4200 to
the contrary notwithstanding, a police or law enforcement official and
members of his team may, upon a written order of the Court of
Appeals, listen to intercept, and record, with the use of any mode,
form, kind or type of electronic or other surveillance equipment or
intercepting and tracking devices, or with the use of any other suitable
ways and means for that purpose, any communication, message,
conversation, discussion or spoken or written words between members
of a judicially declared and outlawed terrorist organization, association,
or group of persons or any person charged with or suspected of the
crime of terrorism or conspiracy to commit terrorism. Provided, that
surveillance, interception and recording of communications
between lawyers and clients, doctors and patients, journalists
and their sources and confidential business correspondence
shall not be authorized.
Writ of habeas data
Section 4- Freedom of expression-
Bayan vs Ermita, April 25, 2006 - The provisions of B.P. No. 880
practically codify the ruling in Reyes: (draw diagram)
It is very clear, therefore, that B.P. No. 880 is not an absolute ban of
public assemblies but a restriction that simply regulates the time,
place and manner of the assemblies.
In sum, the Supreme Court reiterates its basic policy of upholding the
fundamental rights of our people, especially freedom of expression and
freedom of assembly. In several policy addresses, Chief Justice
Artemio V. Panganiban has repeatedly vowed to uphold the liberty of
our people and to nurture their prosperity. He said that "in cases
involving liberty, the scales of justice should weigh heavily against the
government and in favor of the poor, the oppressed, the marginalized,
the dispossessed and the weak. Indeed, laws and actions that restrict
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fundamental rights come to the courts with a heavy presumption
against their validity. These laws and actions are subjected to
heightened scrutiny."
For this reason, the so-called calibrated preemptive response
policy has no place in our legal firmament and must be struck
down as a darkness that shrouds freedom. It merely confuses our
people and is used by some police agents to justify abuses. On
the other hand, B.P. No. 880 cannot be condemned as
unconstitutional; it does not curtail or unduly restrict
freedoms; it merely regulates the use of public places as to
the time, place and manner of assemblies. Far from being
insidious, "maximum tolerance" is for the benefit of rallyists,
not the government. The delegation to the mayors of the
power to issue rally "permits" is valid because it is subject to
the constitutionally-sound "clear and present danger"
standard.
IBP v. Atienza, GR No. 175241, February 24, 2010- Atienza
gravely abused his discretion when he did not immediately inform
the IBP which should have been heard first on the matter of his
perceived imminent and grave danger of a substantive evil that
may warrant the changing of the venue under BP 880, the Public
Assembly Act. It found that Atienza failed to indicate how he had
arrived at modifying the terms of the permit against the standard of
a clear and present danger test which is an indispensable
condition to such modification. "Nothing in the issued permit
adverts to an imminent and grave danger of a substantive evil,
which ‘blank' denial or modification would, when granted
imprimatur as the appellate court would have it, render illusory any
judicial scrutiny thereto,"
A heckler's veto occurs when an acting party's right to freedom of
speech is curtailed or restricted by the government in order to
prevent a reacting party's behavior. The common example is that
of demonstrators (reacting party) causing a speech (given by the
acting party) to be terminated in order to preserve the peace.
Social Weather Stations vs. COMELEC, May 5, 2001- Election
surveys are covered by the protection to freedom of expression as
they refer to the measurement of opinions and perception of voters
as regards to a candidate's popularity, qualifications, platforms or a
matter of public discussion in relation to the election, including the
voter's preference for candidates or publicly discussed issues
during the campaign period.
The prohibition imposed by Section 5.4 of RA 9006 (Fair
Election Act) is invalid because: 1) it imposes prior restraint on
the freedom of expression; 2) it is a direct and total suppression of
a category of expression even though such suppression is only for
a limited period; and 3) the government interest sought to be
promoted can be achieved by means other than the suppression of
freedom of expression.
TESTS of Valid Government Interference:
Clear & Present Danger
Balancing of Interests
Dangerous Tendency Rule
When prior restraints may be permitted:
1. Content based and 2. content neutral regulations-
Regulations of speech may either be content-based (the subject of
the speech or utterance is sought to be regulated) and content-
neutral (it regulates only the conduct associated with speech, such
as the time, place and manner). To pass constitutional muster, any
content-based regulation must show that the government has a
compeling or overiding interest in the subject regulation. A
content neutral restriction, on the other hand, need only show an
important government interest, as long as it leaves open alternative
channels of communication.
Chavez vs. Secretary Gonzales, GR No. 168338, February 15,
2008- The acts of the Secretary of Justice and the NTC in warning
television stations against playing the "Garci tapes" under pain of
revocation of their licenses, were content-based restrictions and
should be subjected to the "clear and present and danger test".
Newsounds Broadcasting Network, Inc., et al. vs. Dy, et al., GR
No. 170270/GR No. 179411, April 2, 2009- The immediate
implication of the application of the "strict scrutiny" test is that the
burden falls upon respondents as agents of the government to prove
that their actions do not infringe upon petitioners' constitutional rights.
As content regulation cannot be done in the absence of compelling
reason to infringe the right to free expression.
- Content neutral regulation- intermediate approach test-
restrictions to promote an important or significant government interest
that is unrelated to the suppression of expression.
The overbreadth and the vagueness doctrines have special
application only to free-speech cases, and are not appropriate for
testing the validity of penal statutes. The doctrines of strict scrutiny,
overbreadth, and vagueness are analytical tools developed for testing
"on their faces" statutes in free speech cases or, as they are called in
American law,
A statute or act suffers from the defect of vagueness when it lacks
comprehensible standards that men of common intelligence must
necessarily guess at its meaning and differ as to its application. It is
repugnant to the Constitution in two respects: (1) it violates due
process for failure to accord persons, especially the parties targeted by
it, fair notice of the conduct to avoid; and (2) it leaves law enforcers
unbridled discretion in carrying out its provisions and becomes an
arbitrary flexing of the Government muscle.[57] The overbreadth
doctrine, meanwhile, decrees that a governmental purpose to control
or prevent activities constitutionally subject to state regulations may
not be achieved by means which sweep unnecessarily broadly and
thereby invade the area of protected freedoms.
As distinguished from the vagueness doctrine, the overbreadth
doctrine assumes that individuals will understand what a statute
prohibits and will accordingly refrain from that behavior, even though
some of it is protected.
A "facial" challenge is likewise different from an "as-applied" challenge.
Distinguished from an as-applied challenge which considers only
extant facts affecting real litigants, a facial invalidation is an
examination of the entire law, pinpointing its flaws and defects, not
only on the basis of its actual operation to the parties, but also on the
assumption or prediction that its very existence may cause others not
before the court to refrain from constitutionally protected speech or
activities.[60]
The vagueness and overbreadth doctrines, as grounds for a facial
challenge, are not applicable to penal laws. A litigant cannot thus
successfully mount a facial challenge against a criminal statute on
either vagueness or overbreadth grounds.
The allowance of a facial challenge in free speech cases is justified by
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the aim to avert the "chilling effect" on protected speech, the
exercise of which should not at all times be abridged.[62] As
reflected earlier, this rationale is inapplicable to plain penal
statutes that generally bear an "in terrorem effect" in deterring
socially harmful conduct. In fact, the legislature may even forbid
and penalize acts formerly considered innocent and lawful, so long
as it refrains from diminishing or dissuading the exercise of
constitutionally protected rights.
The rule established in our jurisdiction is, only statutes on free
speech, religious freedom, and other fundamental rights may be
facially challenged. Under no case may ordinary penal statutes be
subjected to a facial challenge. The rationale is obvious. If a facial
challenge to a penal statute is permitted, the prosecution of crimes
may be hampered. No prosecution would be possible. A strong
criticism against employing a facial challenge in the case of penal
statutes, if the same is allowed, would effectively go against the
grain of the doctrinal requirement of an existing and concrete
controversy before judicial power may be appropriately exercised.
A facial challenge against a penal statute is, at best, amorphous
and speculative. It would, essentially, force the court to consider
third parties who are not before it. As I have said in my opposition
to the allowance of a facial challenge to attack penal statutes, such
a test will impair the State's ability to deal with crime. If warranted,
there would be nothing that can hinder an accused from defeating
the State's power to prosecute on a mere showing that, as applied
to third parties, the penal statute is vague or overbroad,
notwithstanding that the law is clear as applied to him.[65]
(Emphasis and underscoring
It is settled, on the other hand, that the application of the
overbreadth doctrine is limited to a facial kind of challenge and,
owing to the given rationale of a facial challenge, applicable only to
free speech cases.
By its nature, the overbreadth doctrine has to necessarily apply a
facial type of invalidation in order to plot areas of protected
speech, inevitably almost always under situations not before the
court, that are impermissibly swept by the substantially overbroad
regulation. Otherwise stated, a statute cannot be properly
analyzed for being substantially overbroad if the court confines
itself only to facts as applied to the litigants.
In restricting the overbreadth doctrine to free speech claims, the
Court, in at least two cases,[67] observed that the US Supreme
Court has not recognized an overbreadth doctrine outside the
limited context of the First Amendment,[68] and that claims of
facial overbreadth have been entertained in cases involving
statutes which, by their terms, seek to regulate only spoken
words.[69] In Virginia v. Hicks,[70] it was held that rarely, if ever,
will an overbreadth challenge succeed against a law or regulation
that is not specifically addressed to speech or speech-related
conduct. Attacks on overly broad statutes are justified by the
"transcendent value to all society of constitutionally protected
expression."
American jurisprudence[74] instructs that "vagueness challenges
that do not involve the First Amendment must be examined in light
of the specific facts of the case at hand and not with regard to the
statute's facial validity."
In this jurisdiction, the void-for-vagueness doctrine asserted under
the due process clause has been utilized in examining the
constitutionality of criminal statutes. In at least three cases,[76] the
Court brought the doctrine into play in analyzing an ordinance
penalizing the non-payment of municipal tax on fishponds, the crime of
illegal recruitment punishable under Article 132(b) of the Labor Code,
and the vagrancy provision under Article 202 (2) of the Revised Penal
Code. Notably, the petitioners in these three cases, similar to those in
the two Romualdez and Estrada cases, were actually charged with the
therein assailed penal statute, unlike in the present case.
From the definition of the crime of terrorism in the earlier cited Section
3 of RA 9372, the following elements may be culled: (1) the offender
commits an act punishable under any of the cited provisions of the
Revised Penal Code, or under any of the enumerated special penal
laws; (2) the commission of the predicate crime sows and creates a
condition of widespread and extraordinary fear and panic among the
populace; and (3) the offender is actuated by the desire to coerce the
government to give in to an unlawful demand.
Before a charge for terrorism may be filed under RA 9372, there must
first be a predicate crime actually committed to trigger the operation of
the key qualifying phrases in the other elements of the crime, including
the coercion of the government to accede to an "unlawful demand."
Given the presence of the first element, any attempt at singling out or
highlighting the communicative component of the prohibition cannot
recategorize the unprotected conduct into a protected speech.
ABS-CBN vs. COMELEC, 323 SCRA 811 (2000)- The prohibition of
publication of exit poll or electoral survey would be unreasonably
restrictive because it effectively prevents the use of exit poll data not
only for election day projections, but also for long term research.
MTRCB vs. ABS-CBN, et al., January 17, 2005- P.D. No. 1986 gives
petitioner "the power to screen, review and examine "all television
programs," emphasizing the phrase "all television programs". Thus,
when the law says "all television programs," the word "all" covers all
television programs, whether religious, public affairs, news
documentary, etc. The principle assumes that the legislative body
made no qualification in the use of general word or expression. It then
follows that since "The Inside Story" is a television program, it is within
the jurisdiction of the MTRCB over which it has power of review.
Soriano v. Laguardia, GR No. 164785; Soriano v. MTRCB GR No.
165636, April 29, 2009-The Supreme Court said that Soriano's
"statement can be treated as obscene, at least with respect to the
average child," and thus his utterances cannot be considered as
protected speech. Ang Dating Daan has earlier been given a "G" rating
for general viewership. The Supreme Court said the MTRCB
suspension was limited only to the show Ang Dating Daan, not
Soriano, as the MTRCB "may not suspend television
personalities, for such would be beyond its jurisdiction."
Borjal vs. CA, 301 SCRA 1, In order to maintain a libel suit, it is
essential that the victim is identifiable although it is not necessary that
he be named. It must also be shown that a third party could identify
him as the object of the libelous article. Every defamatory imputation is
presumed to be malicious, even if it be true, if no good intention and
justifiable motive for making it is shown, except in the following:
1. private communication made by any person to another in the
performance of any legal, moral or social duty;
2. a fair and true report, made in good faith, without remarks, of any
judicial, legislative or other official proceeding which are not
confidential in nature including any statement made therein or act
performed by public officer.
A privileged communication may either be absolutely privileged (those
which are not actionable or even if author acted in bad faith, e.g.
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speech by member of Congress therein or any committee thereof)
or qualified privileged (those containing defamatory imputations
which are not actionable unless found to have been made without
good intention or justifiable motive, e.g., private communications
and fair and true reports without any comments/remarks).
Fair commentaries on matters of public interest are privileged
and constitute a valid defense in an action for libel or slander.
The doctrine of fair comment means that while in general
every discreditable imputation publicly made is deemed false,
because every man is presumed innocent until his guilt is
judicially proved.
Section 5- Freedom of Religion-
Ebralinag vs. Div. Superintendent of Schools of Cebu, 219
SCRA 256 - members of Jehovah's witnesses may validly refuse
participating in flag ceremonies (singing the national anthem,
saluting the flag, etc.) on account of their religious beliefs.
Iglesia ni Cristo vs. CA, 259 SCRA 529- The exercise of religious
freedom can be regulated when it will bring about clear and
present danger of a substantive evil which the State has a duty to
prevent. However, criticism on certain catholic tenets and dogmas
does not constitute clear and present danger.
Tolentino vs. Sec. of Finance, 235 SCRA 630 - Freedom of
religion does not prohibit imposition of a generally applicable sales
and use tax on the sale of religious materials by a religious
organization. For the purpose of defraying cost of registration.
Islamic Da'wah Council of the Philippines vs. Executive
Secretary, 405 SCRA 497- Classifying a food product as halal is
a religious function because the standards are drawn from the
Qur'an and Islamic beliefs. By giving the Office of the Muslim
Affairs exclusive power to classify food products as halal, E. O. No.
46 encroached on the religious freedom of Muslim organization to
interpret what food products are fit for Muslim consumption. The
State has in effect forced Muslim to accept its own interpretation of
the Qur'an and Sunnah on halal food.
Citing Art. III, sec. 5 of the Constitution, the Court stressed that
"[n]o law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof." Thus, it found a grave
violation of the non-establishment clause for the COMELEC to
utilize the Bible and Koran to justify the exclusion of Ang Ladlad.
The Court held that moral disapproval "is not a sufficient
governmental interest to justify exclusion of homosexuals from
participation in the party list system." Upholding equal protection,
the Court ruled that from the standpoint of the political process,
LGBTs have the same interest in participating in the party-list
system on the same basis as other political parties similarly
situated. As such, laws of general application should apply with
equal force to LGBTs and they deserve to participate in the party
list system on the same basis as other marginalized and
underrepresented sectors. The Court also found that there was a
transgression of Ang Ladlad's fundamental right of freedom of
expression since, by reason of the COMELEC action, the former
was precluded from publicly expressing its views as a political
party and participating on an equal basis in the political process
with other party-list candidates. (GR No. 190582, Ang Ladlad
LGBT Party v. COMELEC, April 8, 2010)
Conscientious objector test
A person who, because of principles of religious training and moral
belief, is opposed to all war regardless of its cause.
A conscientious objector may be released from the obligation to serve
in the armed forces or to participate in selective service registration. A
conscientious objector must oppose war in any form, and not just a
particular war, in order to avoid military service. He does not have to
be a member of a religious congregation that forbids participation in
war. Under the Military Selective Service Act (50 App. U.S.C.A. § 451
et seq. [1967]), a registrant needs only a conscientious scruple against
war in all forms to obtain conscientious objector status. A
conscientious scruple against war is an objection to war based on
moral beliefs. A conviction that war is wrong, arrived at solely on
intellectual and rational grounds, does not entitle one to exemption as
a conscientious objector.
Under prior draft laws, conscientious objectors were divided into two
classes. One class was composed of those who were opposed to all
military service, regardless of whether it was combatant or
noncombatant. This class was required to serve in civilian work that
contributed to the national welfare, such as the Red Cross, but was
exempt from military service. The other class was opposed to only
combatant military service. These conscientious objectors were drafted
into the Armed Services for noncombatant duty, such as in the medical
corps.
Taruc vs. Bishop dela Cruz, et al., GR No. 144801, March 10, 2005-
The expulsion/excommunication of members of a religious
institution/organization is a matter best left to the discretion of the
officials, and the laws and canons, of said institution/organization.
Section 6- Liberty of abode & Right to travel-
Read: Villavicencio vs. Lukban; Manotoc vs. CA; Silverio vs CA-
Relate to suspension of deployment of OFWs to SARs infected
countries. In relation to bail (Manotoc vs. CA; Santiago vs. Vasquez)-
valid restriction on his right to travel.
Marcos vs. Sandiganbayan, GR No. 115132, August 9, 1995- The
person's right to travel is subject to the usual constraints imposed by
the very necessity of safeguarding the system of justice. Whether the
accused should be permitted to leave the country for humanitarian
reasons is a matter addressed to the court's discretion. (Yap vs. CA,
GR No. 141529, June 6, 2001).
Yap vs. CA- 6/6/01- court my restrict right of abode in granting bail.
Art. 13 (2), Universal Declaration of Human Rights- provides that
everyone has the right to leave any country, including his own, and to
return to his country.
Art. 12 (4), Covenant on Civil and Political Rights- provides that
noone shall be arbitrarily deprived of the right to enter his own country.
Human Security Act- house arrest, restricted travel and
communication. (Sec. 26)
Watchlist/Hold Departure Order
Section 7- Right to Information
Chavez vs. Public Estates Authority, July 9, 2002- The
constitutional right to information includes official information on on-
going negotiations before a final contract is consummated. The
information, however, must constitute definite propositions by the
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government and should not cover recognized exceptions liked
privileged information, military and diplomatic secrets and similar
matters affecting national security and public order.
Legazpi vs. CSC; Valmonte vs. Belmonte; BARA vs.
COMELEC
Berdin vs. Mascarinas, 526 SCTA 592- While access to official
records may not be prohibited, it certainly may be regulated.
Right to information act- still pending.
Section 8- Right to form Unions of public sector
United Pepsi Cola Supervisory Union vs. Laguesma, 288 SCRA
15- Congress, via Art. 125 of the Labor Code, validly prohibited
supervisors from forming labor unions. the right to strike does form
an integral part of the Right to Association.
Section 9- Expropriation
Republic vs. Gingoyon, December 19, 2005- Rule 67 outlines
the procedure under which eminent domain may be exercised by
the Government. Yet by no means does it serve at present as the
solitary guideline through which the State may expropriate private
property. For example, Section 19 of the Local Government Code
governs as to the exercise by local government units of the power
of eminent domain through an enabling ordinance. And then there
is Rep. Act No. 8974, which covers expropriation proceedings
intended for national government infrastructure projects.
Rep. Act No. 8974, which provides for a procedure eminently more
favorable to the property owner than Rule 67, inescapably applies
in instances when the national government expropriates property
"for national government infrastructure projects".
Republic vs. Holy Trinity Realty Development Corp., 551
SCRA 303- There are at least two crucial differences between the
respective procedure under RA No. 8974 and Rule 67. Under the
statute, the government is required to make immediate payment to
the property owner upon the filing of the complaint to be entitled to
a writ of possession, whereas Rule 67, the government is required
only to make an initial deposit with an authorized government
depositary, and Rule 67 prescribes that the initial deposit be
equivalent to the assessed value of the property for purpose of
taxation, unlike RA 8974 which provides, as the relevant standard
for initial compensation, the market value of the property as stated
in the tax declaration or the current relevant zonal value of the BIR,
whichever is higher, and the value of the improvements and/or
structures using the replacement cost method.
ATO vs. Tongoy, 551 SCRA 320- the right of the previous owners
who were able to prove the commitment of the government to
allow them to repurchase their land.
Asia's Emerging Dragon Corp. vs. DOTC, 552 SCRA 59- The
State, through expropriation proceedings may take private property
even if, admittedly, it will transfer this property again to another
private party as long as there is public purpose to the taking.
Tiongson vs. NHA, 558 SCRA 56- Where the initial taking of a
property subject to expropriation was by virtue of a law which was
subsequently declared unconstitutional, just compensation is to be
determined as of the date of the filing of the complaint, and not the
earlier taking.
MCWD vs. J. King and Sons Co., Inc., GR No. 175983, April 16,
2009 - For MCWD to exercise its power of eminent domain, two
requirements should be met, namely: first, its board of directors
passed a resolution authorizing the expropriation, and second, the
exercise of the power of eminent domain was subjected to review by
the LWUA.
Republic vs. Lim, June 29, 2005- Section 9, Article III of the
Constitution is not a grant but a limitation of power. This limiting
function is in keeping with the philosophy of the Bill of Rights against
the arbitrary exercise of governmental powers to the detriment of the
individual's rights. Given this function, the provision should therefore
be strictly interpreted against the expropriator, the government, and
liberally in favor of the property owner.
While the prevailing doctrine is that "the non-payment of just
compensation does not entitle the private landowner to recover
possession of the expropriated lots, however, in cases where the
government failed to pay just compensation within five (5) years from
the finality of the judgment in the expropriation proceedings, the
owners concerned shall have the right to recover possession of their
property. This is in consonance with the principle that "the government
cannot keep the property and dishonor the judgment." To be sure, the
five-year period limitation will encourage the government to pay just
compensation punctually. This is in keeping with justice and equity.
After all, it is the duty of the government, whenever it takes property
from private persons against their will, to facilitate the payment of just
compensation.
Local government units possessed the delegated power of eminent
domain, subject to judicial review (City of Manila vs. Chinese
Community).
Any property owned by a municipal corporation in its private capacity
(patrimonial), in any expropriation proceeding, must be paid just
compensation. If the property owned is public or otherwise held in
trust then no compensation need be paid (City of Baguio vs.
NAWASA).
To set just compensation is a judicial prerogative (EPZA vs. Dulay).
GR No. 177056, Office of the Solicitor General v. Ayala Land
Incorporated, September 18, 2009- The Court said that the total
prohibition against the collection by respondents of parking fees from
persons who use the mall parking facilities has no basis in the National
Building Code or its implementing rules and regulations. It added that
the State also cannot impose the same prohibition by generally
invoking police power, since said prohibition amounts to a taking
of respondents' property without payment of just compensation.
Cmsr. of IR vs. Central Luzon Drug Corp., GR No. 148512, June
26, 2006, Cmsr. of IR vs. Bicolandia Drug Corp., GR No. 148083,
July 21, 2006 - The tax credit given to commercial establishments for
the discount enjoyed by senior citizens pursuant to RA 7432 is a form
of just compensation for private property taken by the State for public
use, since the privilege enjoyed by senior citizens does not come
directly from the State, but from private establishments concerned.
Public use does not mean use by the public. As long as the purpose of
the taking is public, then power of eminent domain comes into play. It
is inconsequential that private entities may benefit as long as in the
end, public interest is served (Ardona vs. Reyes).
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Reyes v. National Housing Authority, 395 SCRA 494, Taking of
property for socialized housing is for public use.
Lands for socialized housing are to be acquired n the following
order: 1) government lands; 2) alienable lands of the public
domain; 3) unregistered or abandoned or idle lands; 4) lands within
the declared areas for priority development, zonal improvement
program sites, slum improvement and resettlement sites which
have not yet been acquired; 5) BLISS sites which have not yet
been acquired; and 6) privately-owned lands (City of Mandaluyong
vs. Aguilar, 350SCRA 487 2001).
Section 10- Non-impairment clause
There is no impairment in the imposition of the VAT against real
estate transactions entered or perfected even prior to its
imposition. The contract clause is not a limitation on the exercise
of the State's power of taxation save only where a tax exemption
has been granted for a valid consideration. (Tolentino vs. Sec. of
Finance)
The non-impairment clause includes prohibition on judicial acts
that impair contract. (Ganzon vs. Inserto, 123 SCRA 135)
Sections 11 & 12 - Custodial Investigation Rights
Read: Miranda vs. Arizona, Gamboa vs. Cruz, Escobedo vs.
Illinois.
Applies to preliminary investigation, PP vs. Sunga, 399 SCRA
624
PP vs. Vallejo, May 9, 2002- To be an effective counsel, a lawyer
need not challenge all the questions being propounded to his
client. The presence of counsel to preclude the slightest coercion
as would lead the accused to admit something false. Indeed
counsel should not prevent an accused from freely and
voluntarily telling the truth.
PP vs. Domantay, 307 SCRA 1- RA 7438 has extended the
constitutional guarantee to situations in which an individual has not
been formally arrested but has merely been "invited" for
questioning.
PP vs. Garcia, 400 SCRA 229, A confession made to a private
person is admission in evidence.
PP vs. Lozada, 406 SCRA 494, An unwritten confession is
inadmissible.
A party in an administrative inquiry may or may not be assisted by
counsel (Ampong vs. CSC, 563 SCRA 293).
Van Luspo vs. People, GR No. 188487, February 14, 2011- The
court sustained the admissibility of the sworn statements of the
other accused, explaining that the investigations performed by the
PNP were administrative and not custodial in nature.
Perez vs. People, 544 SCRA 532- While investigations by an
administrative body may at times be akin to a criminal proceeding,
a party in an administrative inquiry may or may not be assisted by
counsel, irrespective of the nature of the charges and of
respondent's capacity to represent himself, and no duty rests on
such body to furnish the person being investigated with counsel.
Section 13- Bail
Where the accused was originally charged with a capital offense but
later convicted of non-capital and which he appeals, bail cannot be
granted as a matter right (Obosa vs. CA, 266 SCRA 281).
The constitutional right to bail is available only in criminal
proceedings. The right is not available in extradition proceedings
that are not criminal in nature. In the absence of any provision in the
constitution, the law or the treaty, adopting the practice of not granting
bail, as a general rule, would be a step towards deterring fugitives
from coming to the Philippines to hide from or evade their prosecutors.
Notwithstanding the rule that bail is not a matter of right in extradition
cases, bail may be applied for and granted as an exception, only upon
a clear and convincing showing: 1) that, once granted bail, the
applicant will not be a flight risk or a danger to the community; and 2)
that there exist special, humanitarian and compelling reasons (Gov't. of
USA vs. Purganan, September 24, 2002).
Government of Hongkong Special Administrator Region vs.
Judge Olalia, Jr., April 19, 2007 - Potential extraditee may be granted
bail on the basis of "clear and convincing evidence" that the person is
not a flight risk and will abide with all the orders and processes of the
extradition court.
Section 14- Rights of accused
Presumption of innocence- as against presumption of law.
The right to be heard
The vagueness doctrine merely requires reasonable degree of
certainty for the law to be upheld- not absolute precision or
mathematical exactitude ( Estrada vs. Desierto, November 19, 2001).
Despite the allegation of minority of the victim, an accused appellant
may not be sentenced to death under RA 7659 due to the failure of the
information to allege relationship to the victim. It would be a denial of
the right of the accused to be informed of the charges against him
and, consequently, a denial of due process (PP vs. Sandoval, 348
SCRA 476).
A person subject of an extradition request from another sovereign
State is bereft of the right to notice and hearing during the
evaluation stage of the extradition process. An extradition
proceeding is sui generis. It is not criminal proceeding which will call
into operations all the rights of an accused as guaranteed by the Bill of
Rights. The extraditee's right to notice and hearing is present only
when the petition for extradition is filed in court- it is only then
when he has the opportunity to meet the evidence against him
(Secretary of Justice vs. Lantion, 343 SCRA 377, 2000).
3. Right to public trial
A public trial is not synonymous with publicized trial; it only implies that
the court doors must be open to those who wish to come, sit in the
available seats, conduct themselves with decorum and observe trial
(Sec of Justice vs. Estrada, June 29, 2001).
RE: PETITION FOR RADIO AND TELEVISION COVERAGE OF THE
MULTIPLE MURDER CASES AGAINST MAGUINDANAO
GOVERNOR ZALDY AMPATUAN, ET AL., [A.M. No. 10-11-6-SC ]-
The impossibility of holding such judicial proceedings in a courtroom
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that will accommodate all the interested parties, whether private
complainants or accused, is unfortunate enough. What more if the
right itself commands that a reasonable number of the general
public be allowed to witness the proceeding as it takes place inside
the courtroom. Technology tends to provide the only solution to
break the inherent limitations of the courtroom, to satisfy the
imperative of a transparent, open and public trial. Thus, the
Supreme Court PARTIALLY GRANTS PRO HAC VICE the
request for live broadcast by television and radio of the trial court
proceedings of the Maguindanao Massacre cases, subject to the
guidelines outlined therein.
Right to face to face confrontation
The absence of cross-examination by the defense due to the
supervening death of plaintiff/witness does not necessarily render
the deceased's testimony inadmissible. Where no fault can be
attributed to plaintiff/witness, it would be a harsh measure to strike
out all that has been obtained in the direct examination (PP vs.
Narca, 275 SCRA 696).
Section 16- Speedy disposition
Where the case for violation of the Anti-Graft Law was pending for
preliminary investigation with the Office of the Tanodbayan for 3
years and it is indicated that the case is of simple nature and was
prosecuted for political reasons, it is held that there was violation
of the accused's right to speedy disposition of case. Right to
speedy disposition extends to preliminary investigations. (Tatad vs.
Sandiganbayan, 159 SCRA 70).
Section 17- Against Self-incrimination
The right against self-incrimination is available in administrative
hearings when the nature of the penalty is penal in nature (like
forfeiture of property or dismissal from employment) and the
hearing partakes the nature of criminal proceeding (Cabal vs.
Kapunan, 6 SCRA 1059).
Applicable to a proceeding that could possibly result in the loss of
the privilege to practice medical profession (Pascual vs. Board
of Medical Examiners, ).
Standard Chartered Bank vs. Senate Committee on Banks,
541 SCRA 456- The right against self incrimination is extended in
an administrative investigations that partake of the nature of or are
analogous to criminal proceedings. The privilege has consistently
been held to extend to all proceedings sanctioned by law; and all
cases in which punishment is sought to be visited upon a witness,
whether a party of not.
The right against self-incrimination is defeated by the public
nature of documents sought to be accessed (Almonte vs.
Vasquez).
In the recent case of PEOPLE vs. YATAR, G.R. No. 150224, May
19, 2004, the Supreme Court affirmed the admissibility and
probative value of DNA (deoxyribonucleic acid). Citing the first
ever Supreme Court decision on the admissibility of DNA
evidence, i.e., People v. Vallejo, G.R. No. 144656, 9 May 2002,
382 SCRA 192, 209, the Court, in Yatar, held that in assessing the
probative value of DNA evidence, courts should consider, inter
alia, the following factors: "how the samples were collected, how
they were handled, the possibility of contamination of the samples,
the procedure followed in analyzing the samples, whether the proper
standards and procedures were followed in conducting the tests, and
the qualification of the analyst who conducted the tests".
In Yatar, in an attempt to exclude the DNA evidence, the appellant
contended "that the blood sample taken from him as well as the DNA
tests were conducted in violation of his right to remain silent as well as
his right against self-incrimination under Secs. 12 and 17 of Art. III of
the Constitution".
The Court rejected the argument. It held that "the kernel of the right is
not against all compulsion, but against testimonial compulsion", citing
Alih v. Castro, G.R. No. 69401, 23 June 1987, 151 SCRA 279. It held
that "the right against self- incrimination is simply against the
legal process of extracting from the lips of the accused an
admission of guilt" and that "it does not apply where the evidence
sought to be excluded is not an incrimination but as part of object
evidence".
Citing People v. Rondero, G.R. No. 125687, 9 December 1999, 320
SCRA 383, the Court held that "although accused-appellant insisted
that hair samples were forcibly taken from him and submitted to the
National Bureau of Investigation for forensic examination, the hair
samples may be admitted in evidence against him, for what is
proscribed is the use of testimonial compulsion or any evidence
communicative in nature acquired from the accused under duress."
Hence, according to the Court, "a person may be compelled to submit
to fingerprinting, photographing, paraffin, blood and DNA, as there
is no testimonial compulsion involved". It cited People v. Gallarde, G.R.
No. 133025, 27 February 2000, 325 SCRA 835, where immediately
after the incident, "the police authorities took pictures of the
accused without the presence of counsel". In that case, the Court
ruled that "there was no violation of the right against self-incrimination".
It further stated that "the accused may be compelled to submit to a
physical examination to determine his involvement in an offense of
which he is accused".
Section 18 - Involuntary servitude:
(Article 272 of the Revised Penal Code)
Exceptions:1. Punishment for a crime;
2.service in defense of the state
3.naval enlistment
4. posse comitatus
5.return to work order
6. patria potestas
Section 19- Death penalty
The death penalty is not a cruel punishment. There was no total
abolition of the death penalty. The ConCom had deemed it proper for
Congress to determine its reimposition because of compelling reasons
involving heinous crimes. (PP v, Echegaray, 267 SCRA 682).
Section 20- Non-imprisonment for Debt
The civil liability from a crime is not "debt" within the purview of the
constitutional provision against imprisonment for non payment of
"debt".
Vergara vs. Gedorio, 402 SCRA 520- Debt, as used in the
Constitution, refers to a civil debt or one not arising from a criminal
offense. Clearly, the non payment of rentals is covered by the
constitutional guarantee against imprisonment.
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Section 21- Double Jeopardy

As a rule, a judgment of acquittal cannot be reconsidered because

it places the accused under double jeopardy (Re MR in Lejano vs.
People, GR No. 176389, January 18, 2011).

The impeachment proceedings against petitioner Estrada was not

concluded as a series of events prompted the Senate to declare
the impeachment functus officio- thus, he was neither acquitted
nor was the impeachment proceeding dismissed without his
express consent. Neither was there conviction/ It follows then that
the claim of double jeopardy must fail. (Estrada vs. Desierto, April
3, 2001).

Under Sec. 8, Rule 117 of the Rules of Court, a provisional

dismissal of a case becomes permanent after the lapse of one
year for offenses punishable by imprisonment of not exceeding six
years or a lapse of two years for offenses punishable by
imprisonment of more than six years.

For this rule to bar the subsequent filing of a similar case against
the accused, the following must be established: 1) the provisional
dismissal had express consent of the accused; 2) the provisional
dismissal was ordered by the court after notice to the offended
party; 3) the 1 yr. or 2-yr. period to revive had lapsed; 4) there is
no justification to file a subsequent case beyond the period of one
or two years. (PP vs. Lacson, May 28, 2002).

The order approving the plea of guilty to homicide was not a

judgment of conviction. It merely approved the agreement between
the parties on the plea to a lesser offense by the accused and the
condition attached to it. (PP vs. Romero, 399 SCRA 386)

Section 22- Ex post facto law/bill of attainder

RA 8249, an act which further defines the jurisdiction of the

Sandiganbayan, is not penal law but a substantive law on
jurisdiction whose retroactive application is constitutional (Lacson
vs. Exec. Secretary, 301 SCRA 298).

Nasi-Villar vs. People, 571 SCRA 202- A law can never be

considered ex-post facto law as long as it operates prospectively
since its stricture would cover only offenses committed after and
not before its enactment.

The prohibition of ex post facto laws and bill of attainder applies to

court doctrines pursuant to the maxim "legis interpretatio legis
vim obtinet"- the interpretation placed upon the written law by a
competent court has the force of law ( PP vs. Jabinal, 55 SCRA
602).

The law making the use of an unlicensed firearm a qualifying

circumstance in murder cannot apply retroactively. (PP vs. Patoc,
398 SCRA 62).

Re DNA tests conducted by the prosecution against accused being

unconstitutional on the ground that resort thereto was tantamount
to the application of an ex-post facto law- Describing the argument
as specious, the Supreme Court held "no ex-post facto law was
involved in the case at bar". It added that "the science of DNA
typing involved the admissibility, relevance and reliability of the
evidence obtained under the Rules of Court". Whereas, "an ex-
post facto law referred primarily to a question of law, DNA profiling
requires a factual determination of the probative weight of the
evidence presented". (PP vs. Yatar, May 19, 2004)
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Section 3. ALTERNATIVE AND FACULTATIVE OBLIGATIONS
Articles 1199 – 1206
CONCEPT
KINDS OF OBLIGATION ACCORDING TO OBJECT
1. Simple obligation – where there is only one prestation
2. Compound obligation – where there are two or more
prestations
a. Conjunctive obligation – where there are several
prestations and all of them are due.
b. Distributive obligation – where there are several
prestations and only one is due.
 Alternative obligation – where there are several
prestations which are due but the delivery of one is
sufficient.
 Facultative obligation – where only one
prestation is due, but debtor may render another
in substitution.
ALTERNATIVE OBLIGATION
1199. A person alternatively bound by different presentations shall
perform completely one of them. The creditor cannot be compelled
to receive part of one of other undertaking.
ALTERNATIVE OBLIGATION
One wherein various prestations are due but the performance of
one of them is sufficiently determined by the choice, which, as a
general rule, belongs to the debtor.
Example:
1. D borrowed from C P10, 000. It was agreed that D could
comply with his obligation by giving C P10, 000, or a
television set, or by painting the house of C.
Here, compliance of any of the three choices is sufficient
to fulfil the obligation. Provided, the performance is
complete.
RIGHT OF CHOICE IN ALTERNATIVE OBLIGATIONS
1200. The right of choice belongs to the debtor, unless it has been
expressly granted to the creditor. The debtor shall have no right to
choose between prestations which are impossible, unlawful or
which could not have been the object of the obligation.
GENERAL RULE
In alternative obligations, the right of choice belongs to the debtor.
Once he has made the choice and communicated the same to the
creditor, the obligation becomes a simple obligation.
EXCEPTIONS
1. When the right of choice has expressly been granted to
the creditor
2. When it has been expressly granted to a third person
LIMITATIONS UPON RIGHT OF CHOICE
1. Debtor cannot choose those prestations or undertakings
which are impossible, unlawful or which could not have
been the object of the obligation.
However, their presence does not invalidate the obligation
because there are remaining valid prestations.
2. The debtor has no more right of choice, when among the
prestations whereby he is alternatively bound, only one is
practicable. Here, obligation becomes simple.
3. The debtor cannot choose part of one prestation and part
of another prestation.
WHEN CHOICE TAKES EFFECT
1201. The choice shall produce no effect, except from the time it has
been communicated.
COMMUNICATION OF NOTICE THAT CHOICE HAS BEEN MADE
Effect of Notice
Until the choice is made and communicated, the obligation remains
alternative.
a. Once the notice of the choice has been communicated to
the creditor, the obligation ceases to be alternative and
becomes simple.
b. Such choice is irrevocable and cannot be renounced.
Concurrence of the creditor to the choice is not required.
Proof of Form of Notice
The burden of proving that such communication has been made is
upon him who made the choice. The law does not require any
particular form regarding the giving of notice – either orally or in
writing, expressly or impliedly.
However, it is always much better to make the notification either in
a notarized document or in any other authentic writing.
WHEN ONLY ONE PRESTATION IS PRACTICABLE
1202. The debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one prestation is
practicable.
EFFECT
When only one prestation can be performed because all of the
others are impracticable, the debtor loses his right of choice
altogether. Therefore, the obligation becomes simple.
ARTICLE 1200 V. ARTICLE 1202
Art 1200 Art 1202
There are still other prestations There is only one prestation which
which can be performed can be performed
Obligation is still alternative because Obligation is converted into a
the debtor can still exercise simple obligation
his right of choice
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WHEN DEBTOR MAY RESCIND THE CONTRACT
1203. If through the creditor’s acts, the debtor cannot make a choice
according to the terms of the obligation, the debtor may rescind the
contract with damages.
Example:
Debtor borrowed from creditor P20, 000. It was agreed that instead
of P20, 000, D could deliver item 1, item 2, or item 3.
If through the fault of the creditor, item 1 is destroyed:
1. Debtor can rescind the contract. In which case, debtor has
to return to creditor the amount of P20, 000. Creditor, in
turn, must pay debtor the value of item 1, plus damages.
2. Debtor, instead of rescinding the contract, may choose
item 2 or item 3 with a right to recover damages.
3. If debtor chooses item 1, his obligation is extinguished.
Creditor is not liable for damages.
EFFECT OF LOSS OF OBJECTS OF OBLIGATION
1204. The creditor shall have a right to indemnity for damages
when, through the fault of the debtor, all the things which are
alternatively the object of the obligation have been lost, or the
compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis the value of the last
thing which disappeared, or that of the service which last became
impossible. Damages other than the value of the last thing or service
may also be awarded.
1205. When the choice has been expressly given to the creditor, the
obligation shall cease to be alternative from the day when the
selection has been communicated to the debtor.
EFFECT OF LOSS OF OBJECTS OF THE OBLIGATION
What is the effect upon the obligation if one, some or all of the
things or prestations which are alternatively the object of the
obligation has been lost or cannot be complied with?
1. Whether the right of choice belongs to the debtor or
creditor
2. Whether the loss or impossibility was due to a fortuitous
event or to the fault of the debtor
RIGHT OF CHOICE BELONGS TO THE DEBTOR
Some of the objects
If some of the objects of the obligation have been lost or have
become impossible even through the fault of the debtor, debtor is
not liable since he has the right of choice and the obligation can still
be performed.
All of the objects
If all of them have been lost or have become impossible through the
debtor’s fault, the creditor shall have a right to indemnity for
damages since the obligation can no longer be complied with. (The
indemnity shall be fixed taking as basis the last thing to be lost)
If loss is due to a fortuitous event
The obligation is extinguished.
IF RIGHT OF CHOICE BELONGS TO THE CREDITOR
When a thing is lost through a fortuitous event
Creditor can choose from among the remainder.
When all the things are lost through a fortuitous event
The obligation of the debtor shall be extinguished.
When a thing is lost through debtor’s fault
a. Creditor can claim from the remainder of the objects, with
a right to recover damages, or
b. Creditor can claim the price of the item lost with damages.
When all the things are lost through debtor’s fault
Creditor can demand the payment of the price of any of the objects
with a right to recover damages.
RULE APLICABLE TO PERSONAL OBLIGATIONS
The above rules are also applicable to personal obligations. The
responsibility of the debtor for damages depends upon whether the
cause which has rendered the obligation impossible was due to his
fault or not.
FACULTATIVE OBLIGATIONS
1206. When only one prestation has been agreed upon, but
the obligor may render another in substitution, the obligation is
called facultative. The loss or deterioration of the thing
intended as a substitute, through the negligence of the obligor,
does not render him liable. But once the substitution has been
made, the obligor is liable for the loss of the substitute on
account of his delay, negligence or fraud.
NATURE OF FACULTATIVE OBLIGATIONS
Only one prestation is due but if the obligor fails to deliver such
object or perform such prestation, he can still comply with his
obligation by delivering another object, in substitution.
Examples:
1. I will give you my piano but I may give my television set as
a substitute.
(In this obligation, only the piano is due. Hence, its loss
through the debtor’s fault will make him liable)
2. I will mortgage my land to secure my debt which shall be
payable within 90 days upon my failure to pay my debt in
30 days.
(Here, the debtor may mortgage his land in substitution of
the obligation to make payment within 30 days)
WHEN SUBSTITUTION TAKES EFFECT
Although Art 1206 is silent with respect to time when the
substitution will take effect, it is clear that Art 1201 can be applied
by analogy.
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Who is empowered to make the substitution? Examples:

The only one who is empowered to make the substitution is the
debtor. However, in order that the creditor will be bound by the
substitution, the debtor must communicate such fact to the
creditor.
When does the substitution become effective?
The substitution becomes effective from the time it has been
communicated to the creditor.
ALTERNATIVE V. FACULTATIVE OBLIGATIONS
Effect once substitution is made
The obligation ceases to be facultative. It is finally converted into a
simple obligation to deliver the thing or to perform the prestation
which has been substituted.
1. S will give item one, or if S wants, item two.
a. If item 1 is lost with or without the fault of S, S is not
liable since his obligation is to deliver item 2.
b. If item 2 is lost through a fortuitous event, the
obligation of S is extinguished.
c. If item 2 is lost through the fault of S, S is liable for
damages
Facultative Alternative

EFFECT OF LOSS As to objects Only one object is due Several objects are
due due
BEFORE SUBSTITUTION
1. Principal thing - If the principal thing is lost through a
fortuitous event, the obligation is extinguished. Otherwise, the As to By delivering another By delivering any of
debtor is liable for damages. compliance object in substitution of the objects which are
that which is due alternatively due
2. Substitute - The loss of the thing intended as a substitute with
or without the fault of the debtor does not render him liable.
The reason is that the thing intended as a substitute is not Right to make the Right of choice may
due. The effect of the loss is merely to extinguish the As to right of substitution is given be given to the
facultative character of the obligation. choice only to the debtor. creditor or a third
person
Take Note: The loss or deterioration through the bad faith or fraud
of the obligor does not render him liable because to hold otherwise
would destroy the facultative character of the obligation. Loss of the thing due Loss of one or more
As to effect of extinguishes the of the alternatives
Examples: fortuitous loss obligation. through a fortuitous
event does not
1. S will give item one, or if S wants, item two. extinguish the
a. If item 1 is lost through a fortuitous event, the obligation.
obligation is extinguished.
b. If item 1 is lost through the fault of S, S is liable for
damages. The culpable loss of the
c. If item 2 is lost with or without the fault of S, S is still object which the debtor Culpable loss of any
liable to deliver item 1. He is not liable for damage for As to effect of may deliver in of the objects which
loss of item 2 because it is not due. culpable loss substitution before the are alternatively due
substitution is effected before the choice is
AFTER SUBSTITUTION does not give rise to made may give rise
any liability on the part to a liability on the
1. Principal thing – If the principal thing is lost, the debtor is not of the debtor part of the debtor.
liable whatever may be the cause of the loss because it is no
longer due.
2. Substitute – If the substitute is lost, the liability of the debtor As to nullity of Nullity of the prestation Nullity of a prestation
depends upon whether or not the loss is due through his fault. prestation agreed upon invalidates does not invalidate
the obligation the others
The debtor shall be liable for the loss or deterioration of the
substitute on account of his delay, negligence or fraud once the
substitution has been made.

Rationale: Because once substitution is made, the obligation is

converted into a simple one with the substituted thing or prestation
as the object of the obligation.

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Section 4. JOINT AND SOLIDARY OBLIGATIONS
Articles 1207 – 1222
CONCEPT OF COLLECTIVE OBLIGATIONS
CONCEPT
When there is concurrence of two or more creditors or of two or
more debtors in one and the same obligation, the obligation may
either be:
a. Joint obligation (obligacion mancomunada)
b. Solidary obligation (obligacion solidaria)
Joint Obligation
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 creditors has a right to demand, and each of the
debtors is bound to render compliance with his proportionate part
of the prestation which constitutes the object of the obligation.
In other words, each of the creditors is entitled to demand the
payment of only a proportionate part of the credit, while each of the
debtors is liable for the payment of only a proportionate part of the
debt.
Solidary Obligation
An obligation where there is concurrence of several creditors, or of
several debtors, or of several creditors and debtors – by virtue of
which each of the creditors has a right to demand, and each of the
debtors is bound to render entire compliance with the prestation
which is the object of the obligation.
In other words, each of the creditors is entitled to demand the
payment of the entire credit, while each of the debtors is liable for
the payment of the entire debt.
Sharruf v. Tayabas Land Co. and Ginainati
A person writing in English may at times find it conducive to
precision to use the expanded expression “apportionable joint
obligation” and “solidary joint obligation”
KINDS OF OBLIGATION ACCORDING TO THE NUMBER OF PARTIES
1. Individual obligation – one where there is only one obligor
and one obligee.
2. Collective obligation – one where there are two or more
debtors and/or two or more creditors. It may be joint or
solidary.
a. Joint obligation – one where the whole obligation is
to be paid or fulfilled proportionately by the different
debtors and/or is to be demanded proportionately by
the different creditors.
b. Solidary obligation – one where each one of the
debtors is bound to render, and/or each one of the
creditors has a right to demand entire compliance
with the prestation.
NATURE OF COLLECTIVE OBLIGATIONS IN GENERAL
1207. The concurrence of two or more creditors or debtors in one
and the same obligation does not imply that each one of the former
has a right to demand or that each one of the latter is bound to
render entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or when the
law or the nature of the obligation requires solidarity.
GENERAL RULE
When there is a concurrence of several creditors or of several
debtors or of several creditors and debtors in one and the same
obligation, there is a presumption that the obligation is joint.
Hence, where the obligation is silent with respect to the nature or
character of the right of the creditors or of the liability of the
debtors, each of the creditors is entitled to demand only for the
payment of his proportionate share of the credit, while each of the
debtors can be compelled to pay only his proportionate share of the
debt.
EXCEPTIONS
1. When the obligation expressly states that there is
solidarity
2. When the law requires solidarity
3. When the nature of the obligation requires solidarity
Take Note: In these three cases, each creditor is entitled to demand
for the payment of the entire credit and each debtor can be
compelled to pay for the entire debt.
First exception
Before the first exception can be applied, the solidary character of
the obligation must be made in express terms. It is not, however,
necessary that the agreement shall employ precisely the word
“solidary” in order that the obligation will be so. It is enough that the
agreement will say, “each one of them can be obligated for the
aggregate value of the obligation.”
Second exception
Examples are Arts. 927, 1824, 1911, 1915, 2157 and 2194 of the Civil
Code; Art. 11 of the Revised Penal Code regarding liability of
principals, accomplices and accessories of a felony.
Third exception
Examples are obligations arising from criminal offenses and torts.
The responsibility of two or more persons guilty of a criminal offense
or liable for a tort is solidary.
JOINT DIVISIBLE OBLIGATIONS
1208. If from the law, or the nature of the wording of the obligations
to which the preceding article refers the contrary does not appear,
the credit or debt shall be presumed to be divided into as many
equal shares as there are creditors or debtors, the credits or debts
being considered distinct from one another, subject to the Rules of
Court governing multiplicity of suits.
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MOST FUNDAMENTAL EFFECT Suppose that X proceeds against A alone for payment, how much
can he collect? Why?
a. Each creditor can demand only for the payment of his
proportionate share of the credit
If X proceeds against A alone for payment, the most that he will be
b. Each debtor can be held liable only for the payment of his
able to collect will be only P1, 000.
proportionate share of the debt.
D. Suppose that C is insolvent, can A and B be held liable for his
Corollary to this rule
share in the obligation? Why?
The credit or debt shall be presumed, in the absence of any law or
stipulation to the contrary, to be divided into as many shares as
If C is insolvent, his co-debtors cannot be held liable for his share in
there are creditors and debtors, the credits and debts being
the obligation. This necessarily follows from the principle that in
considered distinct from one another.
joint obligations, the credit or debt shall be presumed to be divided
into as many equal shares as there are creditors and debtors, the
Therefore:
credits or debts being considered distinct from one another. (Art
a. A joint creditor cannot act in representation of the others
1208)
b. A joint debtor cannot be compelled to answer for the
liability of the others. (Hence, if there is a breach of the
E. Suppose that the obligation was about to prescribe but X wrote
obligation by reason of the act of one of the debtors, the
a letter to A demanding for payment of the entire debt, will this
damages must be borne by him alone)
have the effect of interrupting the running of the period of
prescription?
Take Note:
The payment or acknowledgment by one of the joint debtors will
The demand made by X upon A for the period of interrupting the
NOT stop the running of the period of prescription as to the others.
running of the prescription period shall only prejudice A and not the
Interruption of prescription by claim of a creditor addressed to a
other debtors. Consequently, if after 10 years, X, Y and Z should
single debtor or by acknowledgment made by one of the debtors in
bring an action against A, B and C to collect the debt, the defense of
favour of one or more creditors – is not to be understood as
prescription would be absolute insofar as B and C are concerned, but
prejudicial to or in favour of the other debtors or creditors.
partial insofar as A is concerned. In other words, A can still be
compelled to pay P1000 to X. The reason for this is the fact that the
SAMPLE PROBLEMS principle of mutual agency is not applicable in joint obligations.

A, B and C executed a promissory note binding themselves to pay X, Y and Z owe A and B P12, 000 in a joint obligation. The obligation
P9, 000 to X, Y and Z. The note now is due and demandable. is now due and demandable.
Can the creditors proceed against A alone for payment of the
How many obligations exist in this case, who are the parties in
entire obligation? Why?
each obligation and for how much? Why?
Answer: NO. The creditors cannot proceed against A alone for the
There are six obligations in the above case. The parties and the
payment of the entire obligation. Since the promissory not is silent
amount of each obligation are:
with respect to the rights and liabilities of the creditors and debtors,
respectively, the obligation is therefore presumed to be joint.
1. X as debtor for P2, 000 in favour of A as creditor
Hence, the only right of such creditors against A would be to collect
2. X as debtor for P2, 000 in favour of B as creditor
P3, 000 from him, which is his proportionate share in the obligation.
3. Y as debtor for P2, 000 in favour of A as creditor
4. Y as debtor for P2, 000 in favour of B as creditor
Once the amount has been collected, it will then be divided equally
5. Z as debtor for P2, 000 in favour of A as creditor
among X, Y and Z or P1, 000 each. This is because under the law, the
6. Z as debtor for P2, 000 in favour of B as creditor
credit or debt shall be presumed to be divided into as many equal
shares as there are creditors or debtors, in the absence of any legal
The above answers are clearly deducible from Art. 1208 of the Civil
provision or stipulation of the parties to the contrary.
Code which declares that if the obligation is joint, the credit or debt
shall be presumed to be divided into as many equal shares as there
Can X alone proceed against A, B and C for payment of the entire
are creditors and debtors, the credits and debts being considered as
obligation? Why?
distinct from one another.
Answer: NO. X alone cannot proceed against A, B and C for the
Take the P12, 000 credit for instance. Since there are two creditors,
payment of the entire obligation for the same reason stated above.
there will also be two credits of P6, 000 for each creditor. In the case
The most that X can collect from the three debtors will be his
of P12, 000 debt, since there are three debtors, there will also be
proportionate share in the obligation which is P3, 000.
three debts of P4, 000 against each debtor. Now as far as A, the first
Consequently, X can collect only P1, 000 from A, P1, 000 from B and
creditor, is concerned, if he wants to collect his credit of P6, 000, he
P1, 000 from C.
must proceed against all the debtors. This, he will be able to collect
P2, 000 from X, P2, 000 from Y and P2, 000 from Z. The same is true
in the case of B, the second creditor.

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COLLECTIVE OBLIGATIONS PRESUMED JOINT
1. If A is liable to B for P9,000, there can be no problem
regarding the determination of the following:
a. The person liable to pay
b. The person entitled to demand payment
c. The extent of the liability of the debtor
d. The extent of the right of the creditor
2. Where there is plurality of parties (two or more debtors
and/or two or more creditors) and the share of each in the
obligation is specified, the correlative rights and
obligations of the parties are known. Thus, if A, B, and C
are liable to D for P9,000, and it is states that the
corresponding share of each debtor is P3,000, we know
that A, B and C are liable only for P3,000 each and that D is
not entitled to collect from each debtor more than their
corresponding share.
3. On the other hand, let us suppose that in the same
obligation, the share of each debtor or each creditor is not
specified. What is the extent of liability of A, B, and C? In
such case, the presumption s that the obligation is joint.
Hence, as a consequence:
a. There as a many debts are there are debtors
b. There are as may credits as there are creditors
c. The debts and/or credits are considered distinct
and separate from one another
d. Each debtor is liable only for a proportionate
part of the debt
e. Each creditor is entitled only for a proportionate
part of the credit.
Take Note: The presumption established in Art. 1208
is rebuttable.
EXAMPLES
1. A, B and C borrowed P9, 000 from D. The presumption is
that A, B, and C are jointly liable. Here there are 3 debts
and only 1 credit. D can demand only P3, 000 each from A
B, and C. Consequently, since the debts are distinct and
separate from each other, the insolvency of one debtor
shall not make the others liable.
2. A borrowed from B, C, and D P9, 000. Unless the contrary
appears, the obligation is prima facie a joint one. In this
case, there is only 1 debt and 3 credits. Each creditor can
demand only P3, 000 from A.
3. A and B are liable to C and D for P9, 000. The same
presumption applies. There are 2 debts and 2 credits. Each
creditor can demand only P4, 500 from either debtor. Of
course, the total liability of A or B and the total collection
of C or D cannot exceed P4, 500.
Illustrative Case:
Final judgment against several defendants does not specify that
their liability is solidary.
Facts: Under a contract, the obligation of A, B and C was solidary.
However, the judgment rendered against them which has become
final, was for the total amount sued without stating the nature or
extent of their liability.
Issue: May judgment be executed on the property of C alone to
satisfy the entire obligation?
Held: NO. Each of the defendants is liable only for his proportionate
part of the judgment which superseded the action for the
enforcement of the contract. A court has no power to amend a
judgment that has become final. (Oriental Commercial v. Cebato)
Presumption subject to rules on multiplicity of suits
The presumption in Article 1208 is made subject to the Rules of
Court governing the multiplicity of suits. Otherwise, situations may
arise where there are as man suits as there are debtors and
creditors. (Sec 2 Rule 1, and Sec 6 Rule 3 of Rules of Court)
Words used to indicate joint liability
1. Mancomunada
2. Mancomundamente
3. Pro rata
4. Proportionately
5. Jointly
6. We promise to pay
JOINT INDIVISIBLE OBLIGATIONS
1209. If the division is impossible, the right of the creditors may be
prejudiced only by their collective acts, and the debt can be
enforced only by proceeding against all the debtors. If one of the
latter should be insolvent, the others shall not be liable for his share.
JOINT INDIVISIBLE OBLIGATION
This article speaks of a joint indivisible obligation. Joint because the
parties are merely proportionately liable and indivisible because the
object or subject matter is not physically divisible into different
parties. In other words, it is joint as to liabilities of the debtors and
rights of the creditors, but indivisible as to compliance.
Take Note: This obligation constitutes the middle ground between a
joint obligation and a solidary obligation. However, it still retains the
two fundamental characteristics of a joint obligation:
a. No creditor can act in representation of the others
b. No debtor can be compelled to answer for the liability of
the others.
Characteristics of a Joint indivisible obligation
1. If there are 2 or more debtors, the fulfillment of the
obligation requires the concurrence of all of the debtors,
although each for his own share. Consequently the
obligation can be enforced only by proceeding against all
of the debtors.
Example: A, B and C obligated themselves to deliver jointly
a certain horse to X. Since the obligation is both joint and
indivisible, X can compel fulfillment only by proceeding
against A, B and C.
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2. If there are 2 or more creditors, the concurrence or 2. The act of a joint creditor which would ordinarily interrupt
collective act of all the creditors, although each for his own the period of prescription would not be valid because the
share, is also necessary for the enforcement of the indivisible character of the obligation requires collective
obligation. This is because the obligation is joint, hence, action of the creditors to be effective. Hence, if a written
the creditor cannot act in representation of the others, demand is made by one creditor only, the debtor upon
and it is also indivisible hence, not susceptible of partial whom the demand is made cannot pay to him alone.
fulfillment. Payment must be made to all. Hence, the act of one alone
is ineffective. (This view is more logical)
EFFECT OF BREACH
Since in a joint indivisible obligation, compliance can only be INDIVISIBILITY AND SOLIDARITY
enforced by proceeding against all of the debtors, it necessarily
follows that if one of the joint debtors fails to comply with his 1210. The indivisibility of an obligation does not necessarily give rise
undertaking, the obligation can no longer be fulfilled or performed. to solidarity. Nor does solidarity of itself imply divisibility.
Consequently, it is converted into one of indemnity for damages.
The first sentence simply means that the liability in an indivisible
However, the debtors who may have been ready to fulfil or perform obligation may be either joint or solidary. The second sentence
what was incumbent upon them shall not contribute to the means that in a solidary obligation, the subject matter may be
indemnity beyond the corresponding portion of the price of the divisible or indivisible.
thing in which the obligation consists.
INDIVISIBILITY V. SOLIDARITY
Example: They are not identical. They may be distinguished from each other in
A, B, and C are jointly liable to give X a car valued at P300, 000. On the following ways.
the date of the delivery, A and B are willing to deliver, but C is not. In
this case, X has no cause of action against C alone for the delivery of
the car because as a joint debtor, C is liable only for a proportionate Indivisibility Solidarity
part of the obligation (P100, 000). Since the car is indivisible, the
debt can only be enforced by proceeding against all the debtors for
compliance. Refers to the Refers to the legal tie or
As to nature prestation which vinculum and
Hence, the liability is converted into one for damages. So A, B and C constitutes the consequently, to the
will be liable for P100, 000 each which is the value of the car without object of the subjects or parties of
increase of responsibility for A and B. The unwilling debtor, C, shall obligation the obligation
be liable for damages to D for having violated the obligation.
Consequently, if A and B suffered damages by reason of the non-
fulfillment of C, they may recover them from C. As to requisites Plurality of subjects Plurality of subjects is
is not required (can indispensable (there
EFFECT OF INSOVENCY OF A DEBTOR exist although there must at least be two
If one debtor should be insolvent, the others shall not be liable for is only one debtor debtors or two
his share. The rule is logical because to hold otherwise would and creditor) creditors)
destroy the joint character of the obligation.

Example: As to liability in Only the debtor All of the debtors are

A, B, and C are jointly liable to give X a car valued at P300, 000. On terms of breach guilty of breach of liable for the breach of
the date of the delivery, A became insolvent. If this is the case, B and obligation is liable for the obligation
C cannot be held liable to pay A’s share. X must wait until the damages committed by a co-
insolvent debtor can pay. debtor.
INTERRUPTION OF PERIOD OF PRESCRIPTION
If there are two or more creditors or debtors, will the claim of a
As to effect of When the obligation When there is liability
creditor addressed to a single debtor or the acknowledgment made
breach is converted into one on the part of the
by one of the debtors in favour of one or more of the creditors be
of indemnity for debtors because of
sufficient to interrupt the period of prescription?
damages because of breach, solidarity
breach, indivisibility among the debtors
Two views:
of the obligation is remains.
1. Since Art 1209 merely provides that the right of the terminated
creditors may be prejudiced only by their collective acts, it
can, therefore, be inferred that should the act of a joint
creditor be per se beneficial to the others, as for instance,
the interruption of the period of prescription, the act of
one would be sufficient.

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Examples:
1. Joint Indivisible obligation
A and B are jointly liable to deliver to X a particular car.
Here the prestation is indivisible but the liability of A and B
are joint.
2. Solidary Indivisible obligation
A and B obliged themselves solidarily to deliver to X a
particular car.
3. Joint Divisible obligation
A and B are jointly liable to pay X P10, 000.
4. Solidary Divisible obligation
A and B promised in solidum to pay X P10, 000.
KINDS OF SOLIDARITY
1211. Solidarity may exist although the creditors and the debtors
may not be bound in the same manner by the same periods and
conditions.
According to parties bound
1. Passive solidarity – Solidarity on the part of the debtors
where any one of them can be made liable for the
fulfillment of the entire obligation.
Characteristics: (In the nature of a mutual guaranty)
 Plurality of debtors
 Unity of prestation
Example:
A and B are solidary debtors of C in the amount of P10,
000. There is only 1 debt, the debt of A and B in the
amount of P10, 000, and 1 credit, the credit of C in the
amount of P10, 000 against A and B. C may demand
payment from either A or B, or both of them
simultaneously, the whole obligation. Payment by A (or B)
extinguishes the obligation but A (or B) may claim from the
other the share which corresponds to him.
2. Active solidarity – Solidarity on the part of the creditors,
where any one of them can demand the fulfillment of the
entire obligation.
Essential feature: Mutual representation among the
solidary creditors with power to exercise the rights of
others in the same manner as their rights.
Example:
A is liable for P10, 000 in favour of B and C who are
solidary creditors. A may pay either B or C. If B (or C)
received payment, he is liable to C (or B) for the latter’s
share in the credit. The liability of An cannot exceed P10,
000 which is the extent of his liability.
3. Mixed solidarity – Solidarity on the part of the debtors
and creditors, where each one of the debtors is liable to
render, and each of one of the creditors has a right to
demand, entire compliance with the obligation.
Example:
A and B are solidary liable to C and D, solidary creditors in
the amount of P10, 000. A (or B) can pay either C or D. C
(or D) can demand payment from either A or B. The
payment by A (or B) of P10, 000 to C (or D) extinguishes
the obligation.
A (or B) can ask reimbursement from B (or A) in the
amount of P5, 000 or such amount agreed upon between
them. C (or D) in turn is liable to give to D (or C) the latter’s
share of P5, 000 or the amount stipulated.
According to source:
1. Conventional solidarity – where the solidarity is agreed
upon by the parties. If nothing is mentioned in the
contract relating to solidarity, the obligation is only joint.
2. Legal solidarity – where solidarity is imposed by the law.
Examples:
 Art 2194 – responsibility of two or more persons
liable for quasi-delict is solidary.
 Art 1945 – When there are two or more bailees
to whom a thing is loaned in the same contract,
they are liable solidarily.
 Art 911 – Even when the 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 powers.
 Art 2157 – Responsibility of two or more payees
when there has been a payment of what is not
due is solidary.
3. Real solidarity – where the solidarity is imposed by the
nature of the obligation
According to legal tie:
1. Uniform solidarity – where the parties are bound by the
same stipulations or clauses
2. Non-uniform or varied solidarity – where the parties are
not subject to the same stipulations or clauses.
EFFECT OF ACTIVE SOLIDARITY IN GENERAL
The most fundamental effect of active solidarity is the creation of a
relationship of mutual agency among the solidary creditors by virtue
of which each creditor is empowered to exercise against the debtors
not only the rights which correspond to him, but also all the rights
which correspond to the other creditors – with the consequent
obligation to render an accounting of his acts to such creditors.
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EFFECT OF PASSIVE SOLIDARITY IN GENERAL 3. Obligation of the third is pure

4. Or if the debtors are bound by different conditions or
Each solidary debtor, insofar as the creditors are concerned, is the
periods.
debtor of the entire amount. However, with respect to his co-
debtors, he is a debtor only to the extent of his share in the
Hence, the creditor in such cases can still commence an action
obligation. Hence, the fundamental effect of passive solidarity is the
against anyone of the debtors for compliance with the entire
liability of each debtor for the payment of the entire obligation, with
obligation minus the portion or share which corresponds to the
the consequent right to demand reimbursement from the others for
debtor affected by the condition or period.
their corresponding shares once payment has been made.
Example:
PASSIVE SOLIDARITY V. SOLIDARTY GUARANTY (SURETYSHIP)
A, B and C borrowed P60, 000 from X binding themselves jointly and
Article 2047, par 2 Title XV – Guaranty severally to pay the entire obligation.
“If a person binds himself solidarily with the principal debtor, the 1. In the case of A, the obligation shall become due and
provisions of Section 4, Chapter 3, Title 1 of this Book shall be demandable on June 15, 1972
observed. In such case, the contract is called a suretyship. 2. B – June 15, 1974
3. C – June 15, 1976
Similarities
1. Both the solidary debtor and the surety/guarantor are This is a solidary obligation where the right of the creditor is limited
solidarily liable to the creditor for the payment of the to the recovery of the share owed by the debtor whose obligation
entire obligation. has already matured leaving in suspense his right to recover the
2. Both answers for a debt which is not properly his own. shares corresponding to the other debtors whose obligations have
3. Both may demand reimbursement after payment from the not yet matured. (This restriction does not destroy the solidary
other debtors. character of the obligation because ultimately, X can still compel
one and the same debtor to pay the entire obligation)
Distinctions
a. June 15, 1972 – X can collect only P20, 000 from A.
Solidary debtor Surety b. June 15, 1974 –X can collect P20, 000 from either A or B.
c. June 15, 1976 – X can collect another P20, 000 from either
A, B or C.
Liable for payment of the debt
of another and also for the Liable only for the payment of
the debt of another Take Note: The rule is that the whole solidary obligation can be
payment of a debt which is
recovered from ANY of the solidary debtors MINUS the share of
properly his own
those with unmatured conditions or terms.
If he pays the entire amount of Inchausti & Co v. Yulo
If a surety pays the entire
the obligation, he has a right to Facts: August 12, 1909 – six brothers and sisters executed an
amount of the obligation, he has
demand reimbursement from instrument admitting their solidary indebtedness for P253, 446.42 at
a right to demand
his co-debtors of the debtors of 10% annual interest, payable in 5 annual installments. (First
reimbursement from the
the shares which correspond to installment to be paid on June 13, 1910)
principal debtor of the entire
them in the obligation.
amount that he has paid.
Plaintiff sued Gregorio Yulo because of default in the payment of the
first installment, for the payment of the entire debt plus interests.
An extension of time granted by Subsequently, three of the debtors entered into an agreement with
the creditor to one of the plaintiff, by virtue of which the amount of debt was reduced to
solidary debtors for the payment P255, 000 at 6% annual interest, payable in 8 annual installments.
An extension granted to the
of the obligation without the
principal debtor would release
knowledge or consent of the Issues:
the surety from the obligation.
other solidary debtors would 1. Can the plaintiff sue Yulo alone, considering that there are
NOT have the effect of releasing other debtors?
the latter from their obligation. 2. What is the effect of the partial remission of the debt
made by the creditor in favour of the three debtors?
EFFECT OF VARIED CONDITIONS OR PERIODS 3. What is the effect of the extension of time for payment
The legal tie which binds the creditors and debtors in solidary granted by the creditor to three of the debtors?
obligation may be either uniform or varied, depending upon
whether they are bound in the same manner and by the same Ruling
conditions or periods or not. 1. Yes. The plaintiff can bring its action in toto against any
one of them since the obligation is solidary. Also, solidarity
The relationship of solidarity is NOT destroyed by the fact that the: may exist even though the debtors are not bound by the
same manner, periods or conditions.
1. Obligation of one debtor is conditional
2. Obligation of another is with a term or period
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2. Since the obligation is solidary, the remission of any part of
the debt made by a creditor in favour of one or more of
the solidary debtors, necessarily benefits the others.
Hence, Mr. Yulo has the right to enjoy the benefits of the
partial remission of the debt granted by the plaintiff.
Therefore, the only recoverable amount is P225, 000.
3. Yulo cannot allege as a defense to the action that it is
premature because when the suit was brought on March
27, 1911, the first installment of the obligation had already
matured, according to the express agreement of the
parties.
EFFECT OF BENEFICIAL AND PREJUDICIAL ACTS
1212. Each one of the solidary creditors may do whatever may be
useful to the others, but not anything which may be prejudicial to
the latter.
BENEFICIAL ACTS
Each creditor may demand the payment or performance of the
entire obligation from one some or all of the debtors. Such a
demand will have the effect of benefiting all the solidary creditors.
PREJUDICIAL ACTS
There is a need to distinguish between the effect of acts upon the
relationship of the solidary creditors with the debtors, and the effect
upon the entirely different relationship among the solidary creditors
themselves.
Relationship with the debtors
A prejudicial act performed by a solidary creditor shall be valid and
binding because of the principle of mutual representation which
exists among the creditors.
Example:
X owes B and C (solidary creditors), the sum of P2, 000. B may
demand for the payment of the obligation for this will benefit C.
Under the law, the prescription of actions is interrupted when they
are filed before the court. So also, if B collects from X, C will be
benefited.
In case of remission or condonation effected by B, the obligation will
be extinguished but since C cannot be prejudiced by the remission, B
has to reimburse C for the latter’s share.
Relationship among the solidary creditors
The creditor who performed the prejudicial act shall incur the
obligation of indemnifying the others for damages.
ASSIGNMENT OF RIGHTS
1213. A solidary creditor cannot assign his rights without the
consent of the others.
Rationale: Since active solidarity is essentially a mutual agency, and
therefore, it is predicated upon mutual confidence which implies
that the personal qualifications of each of the solidary creditors had
been taken into consideration when the obligation was constituted.
EFFECT OF ASSIGNMENT OF RIGHTS
What is the effect if a solidary creditor assigns his rights without the
consent of the other solidary creditors? The answer should be
qualified.
If the assignment is made to anyone of the other solidary creditors
There is no violation of the precept stated in Art 1213 because in
such case, there can be no violation of the personal or confidential
relationship existing among the solidary creditors.
If assignment is made to a third person
There would be a clear violation of the precept, in which case, the
other solidary creditors as well as the debtors are not bound to
recognize the validity or efficacy of the assignment. (This is without
prejudice to the liability of the creditor-assignor for damages which
the other solidary creditors may have incurred as a result of the
prohibited assignment.
EFFECT OF DEMAND BY A CREDITOR
1214. The debtor may pay any one of the solidary creditors; but if
any demand, judicial or extra-judicial has been made by one of
them, payment should be made to him.
PAYMENT TO ANY OF THE SOLIDARY CREDITORS
The debtor may pay any one of the solidary creditors. But when a
demand has been made by one of them, payment should be made
to him to avoid confusion as well as prejudice to the more diligent
creditor.
Otherwise, the obligation will not be extinguished (except insofar as
the creditor-payee’s share is concerned) in case the latter does not
give to the other creditors their shares in the payment.
Effect of demand
The demand has the effect of terminating the mutual agency among
the solidary creditors.
EFFECT OF MIXED SOLIDARITY
A judicial or extrajudicial demand would prohibit the debtor upon
whom the demand is made, from making a payment to any creditor
other than to the one who made the demand. However, such
prohibition does not apply to the other debtors whom no demand
has been made. In which case, they can pay to any one of the
solidary creditors other than the one who made the demand.
NOVATION, COMPENSATION, CONFUSION OR REMISSION
1215. Novation, compensation confusion or remission of the debt,
made by any of the solidary creditors or with any of the solidary
debtors, shall extinguish the obligation, without prejudice to the
provisions of Article 1219.
The creditor who may have executed any of these acts, as well as he
who collects the debt, shall be liable to the others for the share in
the obligation corresponding to them.
NOVATION
The change or substitution of an obligation by another, resulting in
its extinguishment or modification, either by changing its object or
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principal condition, or by substituting another in place of the debtor, a principal debtor. Hence, a solidary debtor cannot be considered a
or by subrogating a third person in the rights of creditor. guarantor of his co-debtor.
Feature of novation
While it extinguishes the obligation, it creates a new one in lieu of COMPENSATION AND CONFUSION
the old. Hence, the liability of the solidary creditor who effected the
novation to the other solidary creditors shall depend upon the Compensation
characters of the new obligation which is created. A figurative operation of weighing two obligations simultaneously in
order to extinguish them to the extent that the amount of one is
Novation by changing its object or principal condition covered by the amount of the other.
The new obligation which is created may be either prejudicial or
beneficial to the other solidary creditors depending upon the Confusion
circumstances of each particular case. Merger of the qualities of creditor and debtor in one and the same
person with respect to one and the same obligation.
1. If prejudicial – The solidary creditor who effected the novation
shall reimburse the others for damages incurred by them. If the confusion or compensation is partial
There may be some doubt as to the part of the obligation to which
2. If beneficial – The creditor who effected the novation and who
the confusion or compensation shall be applied. In such case, the
is able to secure performance of the new obligation shall be
question is resolved by applying the rules established in this Code
liable to the others for the share which corresponds to them
regarding application of payment. However, this is without prejudice
not only in the obligation, but also in the benefits.
to the right of the other creditors who have NOT caused the
confusion or compensation to be reimbursed to the extent that their
By substituting another person in place of the debtor
rights are diminished or affected.
The solidary creditor who effected the novation is liable for the acts
of the new debtor in case there is a deficiency in performance or in
If the confusion or compensation is total
case damages are incurred by the other solidary creditors as a result
The obligation is extinguished altogether and what is left is the
of the substitution.
ensuing liability for reimbursement within each group. The creditor
causing the confusion or confusion is obliged to reimburse the other
Novation by subrogating a third person in the rights of the solidary
creditors, and the debtors who benefited by the extinguishment is
creditor responsible for the novation
obliged to reimburse the debtor who made the confusion or
The obligation of the debtor or creditors is not in reality
compensation possible.
extinguished, because in this type of novation, the relation between
the other creditors are not substituted and the other debtor or
REMISSION
debtors is still maintained.
An act of pure liberality by virtue of which, the creditor, without
having received any compensation or equivalent, renounces his right
Novation by subrogating a third person in the rights of all the
to enforce the obligation, thereby extinguishing the same either in
solidary creditors
its entirety or in the part or aspect thereof to which the remission
The creditor responsible for such novation is liable to the other
refers.
creditors for the share which corresponds to them in the obligation.
Remission may be:
EFFECT OF EXTENSION OF TIME
1. Total or partial
2. Effected by one, some, but not all of the solidary creditors
General Rule: An extension of time for the payment of the
3. In favour of one, some or all of the debtors
obligation granted by the creditor to a solidary debtor does not
constitute a novation with that will discharge the other solidary
Whether total or partial
debtors. The latter shall be liable for the whole debt less the share
The obligation is extinguished in its entirety or in that part thereof to
of the debtor granted the extension. Upon expiration of the term,
which the remission refers. This also gives rise to the liability on the
the creditor can demand payment of the unpaid share from any of
part of the creditor responsible for the remission to reimburse the
the solidary debtors.
others for their share in the obligation.
In suretyship, the effect of the extension given to the principal
Take Note: Such liability does not arise among the creditors
debtor without the consent of the surety is to extinguish the
responsible for the remission.
contract of suretyship.
Effects of remission on the solidary debtors
Except where a surety is liable for different payments such as
installments or rents – an extension of time as to one or more will
1. If the remission covers the entire obligation, obligation is
not affect the liability of the surety for the others.
totally extinguished. This is true even when the remission
was obtained by only one solidary debtor. (Not entitled to
Take Note:
reimbursement – remission is a donation; an act of pure
In suretyship, a person (surety) binds himself solidarily with the
liberality)
principal debtor. In a solidary obligation, a solidary debtor is himself

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2. If the remission is for the benefit of one of the debtors and
it covers his entire share in the obligation, he is completely
released from the creditors, but he is still bound to his co-
debtors. (Hence, in case of insolvency of one of his co-
debtors, he shall still have to share in the portion which
corresponds to the insolvent)
3. If the remission is for the benefit of one of the debtors and
covers only a part of his share in the obligation, his
character as a solidary debtor is not affected – it continues
both with respect to the creditor and to the other debtors.
Take Note:
Whether the remission covers the entire share of a solidary debtor
in the obligation or only a part thereof, such debtor can always avail
of the defense of partial remission, in case the creditor proceeds
against any one of the other solidary debtors for payment of the
entire obligation.
However, the above rules cannot apply when the debt had already
been totally paid by one of the solidary debtors before the remission
was effected. (Reason: Possibility of fraudulent condonation by a
creditor of the share of the debtor whom he desires to favour)
EFFECT OF PAYMENT TO A CREDITOR
If one of the solidary creditors is able to collect the entire amount of
the debt from one or some or all of the solidary debtors – the
obligation is totally extinguished. (However, there is a consequent
obligation on the part of the creditor who was able to collect to
render an account to his co-creditors)
EFFECT OF DEMAND UPON A DEBTOR
1216. The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. The
demand made against one of them shall not be an obstacle to
those which may subsequently be directed against the others, so
long as the debt has not been fully collected.
CREDITOR MAY PROCEED AGAINST ANY SOLIDARY DEBTOR
In a solidary obligation, any one or some or all of the solidary
debtors may be made to pay simultaneously, so long as it has not
been fully collected. The bringing of an action against a solidary
debtor to enforce the payment of the obligation is not inconsistent
with and does not preclude the bringing of another to compel the
others to fulfil their obligation.
Example:
A creditor’s right to proceed against the surety exists independently
of his right to proceed against the principal.
Palmares v. Court of Appeals
A surety is bound equally and absolutely with the principal, and as
such, is deemed an original promissory and debtor from the
beginning. (Reason: Since in suretyship, there is but one contract
and the surety is bound by the same agreement which binds the
principal)
Effect of death
General Rule: The death of either the creditor or the debtor does
NOT extinguish the obligation for obligations are transmissible to the
heirs, except when:
a. Prevented by the law
b. Prevented by the stipulation of the parties
c. Prevented by the nature of the obligation
Take Note: Only obligations which are personal or are identified with
the persons themselves are extinguished by death.
Sec 5 Rule 86 of the Rules of Court
Expressly allows the prosecution of money claims arising from a
contract against the estate of a deceased debtor.
Stronghold Insurance Company Inc. v. Republic-Asahi Glass Corp.
Whatever monetary liabilities or obligations the deceased Jose
Santos had under his contracts with respondent Republic Asahi were
transmissible. Hence, death did not result in the extinguishment of
those obligations or liabilities, which merely passed on to the estate
of Santos. Death is not a defense that he or his estate can set up to
wipe out the obligations under the performance bond.
Consequently, Stronghold Insurance as surety, cannot use his death
to escape its monetary obligation under its performance bond.
EFFECT OF PAYMENT BY A SOLIDARY DEBTOR
1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor
may choose which offer to accept.
He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment
already made. If the payment is made before the debt is due, no
interest for the intervening period may be demanded.
When one of the solidary debtors cannot because of his insolvency,
reimburse his share to the debtor paying the obligation, such share
shall be borne by all his co-debtors, in proportion to each debt.
1218. Payment by a solidary debtor shall not entitle him to
reimbursement from his co-debtors if such payment is made after
the obligation has prescribed or become illegal.
EFFECT OF PAYMENT BY A DEBTOR
Article 1217 refers to the effects of payment by one of the solidary
debtors. It is not applicable where no such payment has been made.
1. Between the solidary debtors and creditors
Payment made by one of the solidary debtors extinguishes
the obligation. However, the creditor, for his protection, is
given the right to choose which offer to accept if two or
more solidary debtors offered to pay.
2. Among the solidary debtors
Payment by one of the solidary debtors does not create a
real case of subrogation. It merely entitles him to claim
reimbursement from his co-debtors for their
proportionate shares with legal interest only from the time
of payment. However, in case of insolvency of any of the
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solidary debtors, the others assume the share of the
insolvent one pro rata.
Take Note: This right, however, is not available to a debtor
who makes the payment after the obligation has
prescribed or has become illegal.
RULE ON INTEREST
Interest shall be computed from the time payment was made,
except if payment was made before the debt became due. In which
case, no interest during the intervening period may be demanded.
In other words, interest shall be computed NOT from the time
payment was made, but from the time the debt became due.
Example:
A, B and C became indebted solidarily to X for P30, 000 to be paid on
December 1, 1966. However, payment was made by A on June 1,
1965. (almost a year earlier)
In which case, A can only demand from B and C the share which
corresponds to each, as well as the interest thereon from December
1, 1966.
NATURE OF RIGHT OF DEBTOR
Before payment
The right of the solidary debtor to demand reimbursement from his
co-debtors is merely contingent and conditional.
After payment
The right becomes real and existing. The old obligation in favour of
the creditor is extinguished, but a new obligation is created in favour
of the solidary debtor who made the payment.
Take note: There is, therefore, no real case of subrogation.
BPI v. McCoy
Facts: This action was instituted by plaintiff bank against McCoy and
6 other solidary debtors for the payment of the P16, 000 debt.
McCoy entered into a compromise with plaintiff and paid P12, 000 in
satisfaction of the debt.
Issue: Can McCoy be substituted as plaintiff against her former co-
defendants for the purpose of compelling them to reimburse to her
their proportionate shares in the obligation?
Held: By paying off the claim which was originally the subject of
litigation, McCoy was subrogated to the rights of the original
plaintiff bank. Hence, she necessarily acquired the right to prosecute
the action for contribution against her co-defendants. It was a
proper case of substitution of parties resulting from the subrogation
of one of the defendants to the right of the plaintiff.
Wilson v. Berkenkotter
Facts: June 30, 1938 – Berkenkotter, Wilson and Gulick executed a
promissory note promising solidary to pay their P90, 000 debt to the
Chartered Bank of India, Australia and China, plus interest. On
November 1944 Berkenkotter paid, with Japanese military notes.
After liberation, he demanded from his co-debtors reimbursement
of their shares. Wilson tendered P625.51 in accordance with the
Ballantyne schedule, which Berkenkotter refused to accept. Wilson
brought an action to compel Berkenkotter to accept the said
amount.
Issue: Is the Ballantyne schedule applicable?
Held: If the obligation on the part of Wilson to pay Berkenkotter was
created during the occupation, then the Ballantyne schedule is
applicable. However, if it was created before the war, as when they
signed the promissory note in favour of the Bank, then it may not be
applied.
Contention of Berkenkotter: Wilson, by signing the promissory note,
impliedly undertook to pay anyone of his co-debtors who might pay
off the debt. By paying the entire loan to the Bank, Berkenkotter has
become a subrogee of the said Bank.
Ruling: When Berkenkotter paid the entire loan plus interests, the
whole obligation was extinguished. The solidary co-debtors were no
longer under any obligation to the Bank, but a new obligation was
created in favour of Berkenkotter to enforce his claim against his
other co-debtors. This is not a real case of subrogation, hence, he
cannot step into the shoes of the bank and enforce the original
obligation created in 1938.
Therefore, the obligation of Wilson to pay Berkenkotter was created
during Japanese occupation. Hence, the Ballantyne Schedule is
applicable.
EFFECT OF TOTAL PAYMENT BEFORE REMISSION
1219. The remission made by the creditor of the share which affects
one of the solidary debtors does not release such solidary debtor
from his responsibility towards his co-debtors, in case the debt has
been totally paid by any one of the solidary debtors BEFORE the
remission was effected.
1220. The remission of the whole obligation obtained by one of the
solidary debtors, does not entitle him to reimbursement from his co-
debtors.
EFFECT OF TOTAL PAYMENT BEFORE REMISSION
In case the debt has been totally paid by any one of the solidary
debtors BEFORE the remission was effected:
Effect: The remission made by the creditor of the share which
affects one of the solidary debtors – DOES NOT release such solidary
debtor from his responsibility towards his co-debtors.
Take note: The remission of the whole obligation obtained by one of
the solidary debtors, does not entitle him to reimbursement from
his co-debtors.
EFFECT OF LOSS OR IMPOSSIBILITY OF PERFORMANCE
Without the fault of the solidary debtors
The obligation is extinguished.
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Through the fault of one of the solidary debtors
The obligation is converted into an obligation of indemnity for
damages, but the solidary character of the obligation remains.
Hence, the creditor can still proceed against one, some or all of the
debtors for the payment of the price plus damages, without
prejudice to the right of the debtor who paid, to ask for
reimbursement from the guilty or negligent debtor.
Example: A, B and C – deliver 30 cavans of rice. However, the cavans
were lost through C’s fault. X decides to proceed against A alone.
Once A has settle the obligation, he can proceed against C for
reimbursement of the entire amount, plus interest.
Take Note: The same rule applies when the loss or impossibility was
due to a fortuitous event after one of the debtors has already
incurred in delay.
DEFENSES AVAIALBLE TO A SOLIDARY DEBTOR
1222. A solidary debtor may, in actions filed by the creditor, avail
himself of all defenses which are derived from the nature of the
obligation and of those which are personal to him, pertain to
his own share. With respect to those which personally belong to
others he may avail himself thereof only as regards that part of the
debt for which the latter responsible.
DEFENSES AVAILABLE TO A SOLIDARY DEBTOR
The creditor may proceed against any of the solidary debtors or all
of them simultaneously for the payment of the obligation. But
whether only one or all of the solidary debtors are sued jointly, any
solidary debtor may interpose against the claim of the creditor any
of the following defenses:
1. Defenses derived from the very nature of the obligation
Examples: Res judicata, prescription, those which
invalidate the contaract such as mistake, violence, undue
influence, fraud, etc.
2. Defenses personal to him or pertaining to his own share
Examples: minority, insanity, and other defenses purely
personal to the debtor.
3. Defenses personal to others, but only as regards to that
part of the debt for which the latter are responsible
(ONLY PARTIAL DEFENSE)
Examples: Minority or insanity of co-debtors. (such
defense will benefit the debtor only with regard to that
part of the debt which the minors are responsible.
Section 5. DIVISIBLE AND INDIVISIBLE OBLIGATIONS
Articles 1223 – 1225
CONCEPT OF DIVISIBLE AND INDIVISIBLE OBLIGATIONS
CONCEPT
Divisible obligations – Those which have as their object a prestation
which is susceptible of partial performance without the essence of
the obligation being changed.
Indivisible obligations – Those which have as their object a
prestation which is not susceptible of partial performance, because
otherwise, the essence of the obligation will be changed.
RELATION TO DIVISIBILITY OR INDIVISIBILITY OF THINGS
The divisibility of an obligation must not be confused with the
divisibility of the prestation which constitutes the object of the
obligation.
Divisibility of obligation Divisibility of prestation
Refers to the performance of
the prestation which constitutes Refers to the prestation itself
the object of the obligation
However, this does not mean that the in/divisibility of the object
can have no effect upon the in/divisibility of the obligation itself.
On the contrary, its in/divisibility is a very important factor in
determining whether the prestation is susceptible of partial
performance or not.
WHEN IS AN OBJECT IN/DIVISIBLE?
Indivisible – when, if separated into parts, its essence is changed or
its value is decreased disproportionately.
Divisible – when, 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 is homogenous and analogous to each
other as well as to the thing itself.
Essential condition of divisibility
It must be possible to reconstruct the thing itself into its condition
prior to division.
THREE KINDS OF DIVISION
1. Quantitative – when the thing can be materially divided
into parts and such are homogenous to each other.
2. Qualitative – can be materially divided but the parts are
not exactly homogenous (i.e. partition of an inheritance)
3. Ideal or intellectual – when the thing can only be
separated into ideal or undivided parts, not material parts
(i.e. case of co-ownership)
EFFECT OF DIVISIBLE OR INDIVISIBLE OBLIGATIONS
1223. The in/divisibility of the things that are the object of
obligations in which there is only one debtor and only one creditor
does not alter or modify the provisions of Chapter 2 of this Title.
1224. A joint indivisible obligation gives rise to indemnity for
damages from the time anyone of the debtors does not comply with
his undertaking. The debtors ho may have been ready to fulfil their
promises shall not contribute to the indemnity beyond the
corresponding portion of the price of the thing in which the
obligation consists.
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EFFECT OF DIVISIBLE OR INDIVISIBLE OBLIGATIONS
Where there is only one creditor or only one debtor, the
in/divisibility of the obligation is of little significance.
General Rule: The creditor cannot be compelled partially to receive
the prestation in which the obligation consists, and neither may the
debtor be required to make partial payments.
Exceptions:
1. When the obligation expressly stipulates to the contrary
2. When the different prestations constituting the objects of
the obligation are subject to different terms and
conditions
3. When the obligation is in part liquidated and in part
unliquidated
WHEN THERE IS A PLURALITY OF DEBTORS AND CREDITORS
The effect of divisible or indivisible character of the obligation shall
depend upon whether the obligation is joint or solidary.
 If solidary – the provisions of Art 1211 to 1222 are applicable
 If joint divisible – Art 1208 divided into as many equal shares
as there are creditors and debtors
 If joint indivisible – Art 1209 rights of creditor can only be
prejudiced by collective acts; debt can be enforced by going
against all the debtors. Art 1224 only the irresponsible
debtor is liable for damages on top of his share.
BREACH OF JOINT INDIVISIBLE OBLIGATIONS
In a joint indivisible obligation like the delivery of a horse or an
automobile, the obligation can only be enforced by proceeding
against all of the debtors. If one of the debtors should fail or refuse
to comply with the obligation, it is converted into one of indemnity
for damages.
However, the debtors who may have been ready to fulfil or perform
what was incumbent upon them shall not contribute to the
indemnity beyond the corresponding portion of the price of the
thing in which the obligation consists.
DETERMINATION OF IN/DIVISIBILITY
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.
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.
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, in/divisibility shall be determined by the
character of the prestation is each particular case.
DETERMINATION OF IN/DIVISIBILITY
The true test of divisibility is whether the obligation is susceptible of
partial compliance or not. This should be understood, however, NOT
in the sense of im/possibility of the delivery of a thing or
performance of an act in separate parts, but in the sense of the
possibility of realizing the end or purpose which the obligation seeks
to attain.
Hence, the purpose of the obligation is the controlling circumstance.
This applies NOT ONLY to obligations to give, but also to obligations
to do or not to do.
IN OBLIGATIONS TO GIVE
It is in obligations to give that the divisible or indivisible nature of
the prestation is the most important factor to be considered in
determining whether the obligation is susceptible to partial
performance or not.
Obligation to give a definite thing which is naturally indivisible
It is evident that it is not susceptible of partial performance. Hence it
shall be deemed to be indivisible. The rule is absolute.
Obligation to give a definite thing which is naturally divisible
General rule: Obligation is also divisible since it is evidently
susceptible of partial compliance. This rule is not absolute.
Exceptions:
1. When provided by the law
2. When intended by the parties
a. Express
b. Implied – May be inferred or presumed either:
 From the fact that although the object of the
obligation can be separated into parts, yet each
part constitutes a necessary complement of the
other parts
 From the very purpose of the obligation itself
which requires delivery of all the parts.
IN OBLIGATIONS TO DO
By its very nature not susceptible of partial performance
If the obligation is to perform some prestation or service which by
its very nature is not susceptible of partial performance, it shall be
deemed indivisible. This rule is absolute.
By its very nature susceptible of partial performance
It is divisible. However, certain qualifications must be made:
1. The object or purpose of the obligation must always be
considered. It is divisible when it has for its object:
a. The execution of a certain number of days of work
b. The accomplishment of work by metrical units
c. The accomplishment of analogous things which by
their nature are susceptible of partial performance
2. It may still be indivisible if provided so by law or intended
by the parties (express or implied)
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IN OBLIGATIONS NOT TO DO
Whether it is divisible or indivisible shall depend upon the character
of the prestation in each particular case. Hence, the determination
of the character of the obligation will depend upon the court’s
sound discretion.
Section 6. OBLIGATIONS WITH A PENAL CLAUSE
Articles 1226 - 1230
CONCEPT OF OBLIGATIONS WITH A PENAL CLAUSE
CONCEPT
An obligation with a penal clause is one to which an accessory
undertaking is attached for the purpose of insuring its performance,
by virtue of which, the obligor is bound to pay a stipulated
indemnity or perform a stipulated prestation in case of breach.
The penal clause or penalty is an accessory obligation attached to
the principal obligation.
Purpose of Penalty
1. General purpose: To insure the performance of the obligation
2. Compensatory purpose: To liquidate the amount of damages
to be awarded to the injured party in case of breach of the
principal obligation
3. Punitive purpose: To punish the obligor in case of breach of
the principal obligation
KINDS OF PENALTY
As to origin
 Legal – constituted by law
 Conventional – constituted by agreement of the parties
As to purpose
 Compensatory – when established for the purpose of
indemnifying the damages suffered by the creditor in case of
breach of the obligation
 Punitive – when established for the purpose of punishing the
debtor in case of breach
As to effect
 Subsidiary – when only the penalty may be demanded in case
of breach of the obligation
 Joint – when the injured party may demand the enforcement
of both the penalty and the principal obligation
EFFECT OF PENALTY, GENERAL RULE
Article 1226. In obligations with a penal clause, the penalty shall
substitute the indemnity for damages and the payment of interests
in case of noncompliance, if there is no stipulation to the contrary.
Nevertheless, damages shall be paid if the obligor refuses to pay
the penalty or is guilty of fraud in the fulfillment of the obligation.
EFFECT OF PENALTY
The penal clause may be considered either as reparation or
substitute for damages or as punishment in case of breach of the
obligation.
As reparation or compensation – the question of damages is
resolved since the stipulated indemnity or prestation represents a
legitimate estimate made by the contracting parties of the damages
caused by the nonfulfillment or breach of the obligation. Hence,
proof of actual damages is not necessary in order that the stipulated
penalty may be demanded.
As penalty – the question of damages is not yet resolved.
Consequently, the right to damages, besides the penalty, still
subsists. Therefore, if the injured party desires to recover the
damages actually suffered by him in addition to the penalty, he must
prove such damages.
GENERAL RULE
Penalty is fixed by the contracting parties as a compensation or
substitute for damages in case of breach of the obligation. In other
words, penalty in its compensatory aspect (general rule) and penalty
in its strictly penal aspect (exception)
Example:
Parties to a contract of sale payable in several installments agree
that should the vendee fail to pay the amount corresponding to
each installment in due time, the vendor may rescind the contract
and keep the amount already paid. (Has for its purpose not only to
insure performance but also to measure beforehand the damages
which would result from noncompliance.
Here, the penal clause does away with the duty to prove the
existence and measure of the damages caused by the breach.
Manila Racing Club v. Manila Jockey Club
Facts: Parties entered into a contract of sale of a parcel of land for
P1, 200, 000, payable in 5 monthly installments. Should the vendee
fail to pay the amount corresponding to each installment in due
time, the vendor may rescind the contract and keep the amount
paid. The vendee only paid the first 2 installments amounting to
P100, 000. As a result, the vendor rescinded the contract. Vendee
filed an action to recover the forfeited amount on the ground that
the agreement is contrary to law, morals and public order.
Held: The clause of the contract referring to the forfeiture should
the purchaser fail to pay the subsequent installments, is valid. It is in
the nature of a penal clause which may be legally established by the
parties. Also because it was voluntarily agreed upon by the parties.
The amount forfeited constitutes only 8% of the stipulated price,
which is not excessive if considered as the profit which would have
been obtained had the contract been complied with. This is also
because it was proved that the vendor had to reject other
propositions to buy the same property.
Caridad Estate v. Santero
Facts: This action is brought by the vendor against the vendee for
the recovery of the property sold because of the failure to pay the
stipulated installments in due time. In the contract, it was stipulated
that should the vendee fail to pay the amount corresponding to
each installment in due time, the vendor may rescind the contract
and keep the amount paid. Vendee contends that such stipulation
constitutes a pactum commissorium, which is prohibited by Art 2088
of the Civil Code.
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Pactum commissorium – an agreement in a contract of pledge,
mortgage or antichresis by virtue of which, if the debtor cannot fulfil
his obligation, the creditor can appropriate or dispose of the thing
given.
Held: The objection is without legal basis. A pactum commissorium
presupposes the existence of mortgage or pledge or that of
antichresis. The provision is a penal clause which carries the express
waiver of the vendee to any and all sums he had paid when the
vendor upon his inability to comply with his duty, seeks to recover
possession of the property. Said provisions are not unjust or
inequitable and does not make the vendor unduly rich at his cost.
EXCEPTIONS
Exceptions to the rule that the penalty shall substitute the indemnity
for damages and the payment of interests in case of noncompliance
with the principal obligation:
1. When there is a stipulation to the contrary
2. When the obligor is sued for refusal to pay the agreed
penalty
3. When the obligor is guilty of fraud.
In these cases, the obligee can recover from him not only the
penalty, but also the damages or interests resulting from the breach
of the principal obligation.
Bachrach Motor Co. v. Espiritu
Facts: Two cases were tried together.
 The first case – involves an action brought by the plaintiff
corporation for the recovery of P10, 477.82 from the
defendant which is the unpaid balance of the price of a two-
ton White truck. In addition, the said corporation also asks for
12% of the said amount and 25% thereon as penalty.
 The second case – involves a second action brought by the
corporation for the recovery of P4, 208.28 from the same
defendant which is the unpaid balance of the purchase price
of a one-ton truck of the same make. In addition, the said
corporation also asks for 12% of the said amount and 25%
thereon as penalty.
The basis of the action in each case is a contract of sale wherein the
parties agreed that 12% interest would be paid upon the unpaid
portion of the price, and in case of non-payment of the total debt
upon its maturity, 25% as penalty. Defendants argue that the 25%
penalty upon the debt, in addition to the 12% interest per annum
would make the contract usurious.
Held: Such a contention is not well-founded. Art 1226 permits the
agreement upon a penalty apart from the interest. Should there be
such an agreement, the penalty does not include the interest, and as
such, the two are different and distinct things which may be
demanded separately. The penalty is not to be added to the interest
to determine whether the interest exceeds the rate fixed by law.
Cabarroguis v. Vincente
Facts: Vicente, owner & operator of the jeepney on which
Cabarroguis (plaintiff) was a passenger, entered into a compromise
agreement with plaintiff to pay to her P2, 5000 as damages for the
physical injuries sustained by her when the said jeepney hit another
vehicle. Additional P200 as liquidated damages in case defendant
fails to complete payment within 60 days. A balance of P1, 000 was
left unpaid and defendant failed, despite repeated demands, and
refused to comply with his obligation. Plaintiff brought suit. CFI
sentenced defendant to pay P1, 2000 with legal interest from the
date of the filing of the complaint until full payment. Is the decision
correct?
Held: In obligations with a penal clause, the penalty shall substitute
the indemnity for damages and the payment of interest, except (1)
when the contrary is stipulated, (2) when the obligor refuses to pay
the penalty, or (3) when the obligor is guilty of fraud in the
fulfillment of the obligation. Hence, applying the law, it is evident
that no interest can be awarded in the principal obligation because
the penalty of P200 took the place of the payment of interest and
indemnity for damages, the case not falling under any of the
exceptions.
In obligations for the payment of a sum of money when a penalty is
stipulated for default, both the principal obligation and the penalty
can be demanded by the creditor. Because defendant refused to pay
when demand was made by plaintiff, the plaintiff is clearly entitled
to interest on the amount of the penalty.
ENFORCEABIITY OF PENALTY
The penalty may be enforceable only when it is demandable.
Consequently, upon the breach or nonfulfillment of the principal
obligation by the debtor – the penalty stipulated becomes
demanded, PROVIDED that it is not contrary to law, morals, good
customs, public or public policy.
Take Note: Where both the contracting parties are unable to comply
with their respective obligations, although the breach is not wilful or
culpable like fortuitous event, the penal clause cannot be invoked by
anyone of them to prejudice the other. Rationale: Because the law
must work both ways.
LIMITIATIONS ON THE RIGHT OF DEBTORS AND CREDITORS
1227. The debtor cannot exempt himself from the performance of
the obligation by paying the penalty, save in the case where this
right has been expressly reserved for him. Neither can the creditor
demand the fulfillment of the obligation and the satisfaction of the
penalty at the same time, unless this right has been clearly granted
him. However, if after the creditor has decided to require the
fulfillment of the obligation, the performance thereof should
become impossible without his fault, the penalty may be enforced.
LIMITATION UPON RIGHT OF DEBTOR
Debtor cannot exempt himself from the performance of the
principal obligation by paying the stipulated penalty.
Exception: When this right has been expressly reserved for him.
LIMITATION UPON RIGHT OF CREDITOR
Creditor cannot demand fulfillment of the principal obligation and
the satisfaction of the s penalty at the same time.
Exception: When the right has been clearly granted to him. (A tacit
or implied grant is admissible)
If the principal obligation is not complied with
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Creditor can choose between demanding the fulfillment of the
obligation and demanding the satisfaction of the penalty.
HOWEVER, he cannot demand both at the same time.
If creditor chooses to demand fulfillment of the obligation and its
performance should become impossible without his fault
Creditor may still demand the satisfaction of the penalty.
If there was fault on the part of the debtor
Creditor may demand not only the satisfaction of the penalty but
also the payment of damages. If he chooses to demand the
satisfaction of the penalty, he cannot afterwards demand the
fulfillment of the obligation.
PROOF OF ACTUAL DAMAGES
1228. Proof of actual damages suffered by the creditor is not
necessary in order that the penalty may be demanded.
PROOF OF ACTUAL DAMAGES
Proof of actual damages suffered by the creditor is NOT necessary in
order that the penalty may be demanded. This is applicable only to
the general rule stated in Art 1226 and not the exceptions.
General Rule: Penalty is fixed by the contracting parties as a
compensation or substitute for damages in case of breach of the
obligation. (No need for proof of actual damages; the penalty is
exactly identical with “liquidated damages”)
Exceptions:
1. When there is a stipulation to the contrary
2. When the obligor is sued for refusal to pay the agreed penalty
3. When the obligor is guilty of fraud.
In these cases, the obligee can recover not only the penalty, but also
the damages or interests resulting from breach. Hence, in order to
be able to recover damages in addition to the penalty, he must
prove the amount of damages which he had actually suffered.
Lambert v. Fox
Facts: Plaintiff and defendant, majority stockholders of a certain
corporation, entered into a contract by virtue that should either
dispose of his holding in the company to anyone with one year from
the time of the signing of the contract – shall pay P1 000 as
liquidated damages. Defendant breached the agreement. Plaintiff
filed an action to collect P1, 000 from the defendant. Defendant
claims that he cannot be compelled to pay since plaintiff is unable to
prove damages suffered by him.
Held: There is no difference between a penalty and liquidated
damages, as far as legal results are concerned. In which case,
plaintiff is entitled to recover the sum stipulated without the need of
proving damages. In fact, one of the primary purposes in fixing a
penalty or in liquidating damages, is to avoid such necessity.
WHEN PENALTY MAY BE REDUCED
1229. The judge may equitably reduce the penalty when the
principal obligation has been partly or irregularly complied with by
the debtor. Even if there has been no performance, the penalty may
also be reduced by the courts it is iniquitous or unconscionable.
WHEN PENALTY MAY BE REDUCED
The court may equitably reduce the stipulated penalty when:
1. The principal obligation has been partly complied with
2. The principal obligation has been irregularly complied with
3. The penalty is iniquitous or unconscionable even if there
has been no performance
The principal obligation has been partly complied with
Some, but not all of the prestations are complied with by the debtor.
Refers to the quantity or quality of the performance.
The principal obligation has been irregularly complied with
All of the prestations are complied with but not in accordance with
the tenor of the agreement. Refers to the form.
The penalty is iniquitous or unconscionable even if there has been
no performance
Contemplates a case in which he only question raised is whether the
amount of the stipulated penalty is reasonable or unconscionable.
While the parties are free to stipulate a particular amount which the
debtor must pay by way of attorney’s fees and costs in case of non-
fulfillment of obligation, it is within the sound discretion of the
courts to determine whether the amount should be reduced or not
depending upon whether it is excessive or reasonable.
Question: Can the Court delete the penalty clause?
Answer: Yes. In three cases:
1. When there has been substantial performance in good
faith by the obligor.
2. When the penalty clause itself suffers from fatal infirmity
3. When exceptional circumstances so exists as to warrant it.
Umali v. Miclat
Facts: Umali, president and general manager of Maharlika Pictures,
executed contract by which he agreed to pay plaintiff Miclat a
certain amount for his services. It was expressly stipulated that shold
Umali fail to pay after the lapse of 30 days, he shall pay a subcharge
of 10% for every 30 days of default until the amount has been fully
paid. Umali failed to pay hence Miclat filed an action to recover the
amount plus damages.
Lower court ruled that Umali pay the amount plus 10% subcharge
for every 30 days of default and 6% interest per annum as damages
from the date of the filing of the complaint. Umali claims that the
subcharge is unconscionable because it is tantamount to imposing
an interest of 10% a month and therefore should be reduced. He
also claims that the award of 6% interest per annum by way of
damages is contrary to law since Art 1226 states that the penalty
shall be a substitute for damages or interests.
Held: The subcharge is unconscionable because while it partakes of
the nature of a penal clause which the parties may freely stipulate,
the same is unconscionable. However, the award of 6% interest per
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annum by way of damages is not contrary to law because under Art
1226, the penalty takes the place of the interest only if there is no
stipulation to the contrary, and even them damages may still be
collected if the obligor refuses to pay the penalty. In this case, not
only is there an express stipulation to pay damages in addition to
penalty, but Umali also failed to pay his obligation as well as the
penalty. Hence, the imposition of interest is justified.
EFFECT OF NULLITY OF OBLIGATION OR PENALTY
1230. The nullity of the penal clause does not carry with it that of
the principal obligation.
EFFECT OF NULLITY OF PENALTY
If the principal obligation is void, it follows that the penal clause
shall also be void. Rationale: Because the penalty is merely an
accessory obligation.
However, if the penal clause is void, the validity of the obligation is
NOT affected. Rationale: Since the efficacy of such obligation is not
dependent upon the efficacy of the penal clause.
CHAPTER 4. EXTINGUISHMENT OF OBLIGATIONS
1231. Obligations are extinguished by:
1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger of the rights of the creditor & debtor
5. Compensation
6. Novation
OTHER MODES OF EXTINGUISHING OBLIGATIONS
1. Renunciation Or waiver by the creditor
2. Compromise
3. Expiration of the resolutory term or period
4. Will of one of the contracting parties in certain contracts
5. Mutual assent or dissent
Section 1. PAYMENT OR PERFORMANCE
Articles 1232 - 1260
PAYMENT OR PERFORMANCE
CONCEPT
Broadest sense – fulfillment of the obligation either voluntarily or
involuntarily, including its extinguishment by any means or mode
Limited sense – Normal and voluntary fulfillment of the obligation
by the realization of the purposes for which it was constituted
More limited sense – fulfillment of the obligation by the delivery of
a sum of money.
Take Note: The Civil Code adopts the limited sense. Hence, payment
means not only the delivery of money but also the performance, in
any other manner, of an obligation.
WHEN OBLIGATIONS IS PAID OR PERFORMED
1233. A debt shall not be understood to have been paid unless the
thing or service in which the obligation consists has been completely
delivered or rendered, as the case may be.
1234. If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been strict and
complete fulfillment, less damages suffered by the obligee.
1235. When the obligee accepts the performance, knowing its
incompleteness or irregularity, and without expressing any protest
or objection, the obligation is deemed fully complied with.
WHEN OBLIGATIONS IS UNDERSTOOD PAID OR PERFORMED
General Rule
1. Obligation to give
When the debtor has completely delivered the thing which
he obligated himself to deliver
2. Obligation to do
When the debtor has completely rendered the service which
he had obligated himself to render.
3. Obligation not to do
When the obligor has completely refrained from doing that
which he had obligated himself to do.
Exceptions
1. When the obligation has been substantially performed in
good faith. Hence, the debtor may recover as though there
has been a strict and complete fulfillment, less damages
suffered by the creditor.
Rationale: The creditor is benefited by the substantial
performance.
2. When the creditor accepts the performance, knowing its
incompleteness or irregularity, and without expressing any
protest or objective. Based on the principle of estoppel.
3. When the obligation is converted into one for indemnity of
damages and when the same is paid in fall. (Strictly,
however, this falls under the general rule)
PERSONS WHO MAY PAY THE OBLIGATION
1236. The creditor is not bound to accept payment or performance
by a third person who has no interest in the fulfillment of the
obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he
has paid, except that if he paid without the knowledge or against the
will of the debtor he can recover only insofar as the payment has
been beneficial to the debtor.
1237. Whoever pays on behalf of the debtor without the knowledge
or against the will of the latter, cannot compel the creditor to
subrogate him in his rights, such as those arising from a mortgage,
guaranty, or penalty.
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PERSONS WHO MAY PAY THE OBLIGATION
1. The debtor himself or his legal representative
2. Any third person
Effect: The effect in both cases is the extinguishment of the
obligation when the payment is effected in accordance with the
requisites prescribed by law.
PAYMENT BY A THIRD PERSON
A third person may pay the obligation, whether he has an interest in
the obligation or not, and whether the payment was made without
the knowledge and consent of the debtor or not.
These rules, however, cannot be applied to the case of a third
person who pays the redemption price in sales with right of
repurchase. Rationale: Because the vendor a retro is not a debtor
within the meaning of the law.
Gonzaga v. Garcia
Facts: Francisco sold a parcel of land to Martin with right of
repurchase. Subsequently, by virtue of a court judgment rendered
against Francisco, the right of repurchase was purchased at an
execution sale by Del Rosario (the judgment creditor). Francisco,
therefore, as the judgment debtor, was unable to redeem the right
to repurchase.
Meanwhile, Francisco paid the redemption price to the vendee a
retro, Martin, without the knowledge of Del Rosario. Later, Del
Rosario sold the right to plaintiff Gonzaga.
Issue: Whether or not the provision of Art 1236 is applicable or not.
Held: Del Rosario was not a debtor. He was under no obligation to
repurchase the land from Martin. He had a right to do so but
whether he exercised this right or not depended upon his own
volition. Art 1236 is not therefore applicable.
Facts: Francisco sold a parcel of land a retro to somebody. In the
registry records, the right to repurchase was therefor annotated.
Francisco sold later this right of repurchase to Del Rosario who in
turn sold the same to Gonzaga.
Francisco later paid on his own behalf the repurchase money to the
buyer a retro, and the annotation of the right to redeem in the
Registry of Property was cancelled. Gonzaga now seeks to have the
land registered under his name on the theory that Francisco had
paid for his (Gonzaga’s) “debt,” and therefore the land now properly
belongs to him (Gonzaga).
Held: Petition of Gonzaga will not prosper, because Art. 1236, being
applicable only to “debts,” cannot be used in this case. Gonzaga was
not a true debtor. While Gonzaga had the right to repurchase, such
right was only a right, not a duty. In a true debt, there is a duty. In a
case of the right to repurchase, whether or not the property would
be repurchased depends entirely on Gonzaga. Therefore, Francisco’s
act of repurchasing did not make Del Rosario or his transferree,
Gonzaga, the owner and cannot have the land registered under his
name.
RIGHT OF CREDITOR
Old rule: Creditor cannot refuse payment by a third person.
New Rule: The creditor should have the right to insist on the liability
of the debtor and should not be compelled to accept payment from
a third person whom he may dislike or distrust.
Exceptions:
1. If there is a stipulation to the contrary. In this case, the
creditor is deemed to have waived his right to refuse to
deal with strangers to the obligation.
2. If said person has an interest in the fulfillment of the
obligation (co-debtor, guarantor, joint debtor)
RIGHTS OF THIRD PERSON
If a third person pays the obligation WITH the knowledge and
consent of the debtor, there are two rights available to him.
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.
However, if the payment is made WITHOUT the knowledge or
against the will of the debtor, there is only one right available to him
1. He can recover only insofar as the payment has been
beneficial to the said debtor.
Right of reimbursement
Whether the payment is effected with or without the knowledge
and consent of the debtor, the third person who made the payment
is always entitled to reimbursement, although the extent or amount
of recovery is different in either case.
Except:
When the payment was made without the consent by the debtor,
after the obligation has been extinguished. (In which case, the third
person cannot recover anything from the debtor)
Take Note: The remedy of the third person would be to proceed
against the creditor who was unduly paid applying the principle of
unjust enrichment.
Defense of debtor
From the viewpoint of the debtor, the provision that “the third
person can recover only insofar as the payment has been beneficial
to the debtor”, when made against his express will, is a defense
which may be availed of by the debtor only and not by the creditor,
for it affects solely the right of the debtor.
Provided, that the debtor opposed the payment before or at the
time it was made and NOT after.
Right of subrogation
The third person who made the payment shall be subrogated to all
of the rights which the creditor could have exercised against the
debtor and third persons, PROVIDED that payment was effected
with the knowledge and consent of the debtor.
Exception: If payment was made without the knowledge and
consent of the debtor.
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Reimbursement v. Subrogation
Subrogation is not the same as the right of reimbursement, although
it includes the latter.
Reimbursement Subrogation
A simple personal action A right available to the third
available to the third person person where he is entitled not
against the debtor to recover only to demand reimbursement
from the latter what he has paid but also to exercise all of the
insofar as the payment has been rights against the debtor and
beneficial to the said debtor. third persons
Illustrations:
1. In 1972, D executed a promissory note to pay C P10, 000
within four years, guaranteed by G. In 1976, P, a third
person paid the entire amount WITH the knowledge and
consent of D. What are the respective rights and
obligations?
Answer: P shall be subrogated to all of the rights of C, not
only against D, but also against G since the payment was
with the knowledge and consent of D. Therefore, P can
demand reimbursement from D of the P10, 000 and in
case of the latter’s insolvency, against G.
2. If C condoned ½ f the obligation in 1975 and subsequently
in 1976, P paid the entire amount, unaware of the
remission, WITHOUT the knowledge and consent of D.
Answer: P can only recover from D P5, 000 because it is
only to that extent that D benefited from the payment. P
cannot go against G because he paid without the consent
and knowledge of D, hence, he is not subrogated to the
rights of C. However, P can go against C for the recovery of
the P5, 000 applying the principle of unjust enrichment.
Gratuitous payments
If the payment was made by a third person who does not intend to
be reimbursed by the debtor, the presumption arises that such is a
donation. Hence, debtor’s consent is NECESSARY, as in the case of
done in ordinary donations.
 If consent of the debtor is secured, the rules on ordinary
donations will apply.
 If consent is not secured, the rules in Arts 1236 and 1237
will still apply.
Take Note: As far as the creditor who accepted the payment is
concerned, the debtor’s consent is immaterial. Hence, payment is
valid in any case.
GRATUITOUS PAYMENTS
1238. Payment made by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which
requires the debtor's consent. But the payment is in any case valid
as to the creditor who has accepted it.
WHY DEBTOR HAS TO CONSENT
For the payment to be considered as a donation, the debtor has to
consent because no one should be compelled to accept the
generosity of another.
Example:
A owes B P1 million. C, in behalf of A, pays B P1 million against the
consent of A, although C had previously told A that he did not intend
to be reimbursed. Needless to say, B accepted the payment by C in
behalf of A.
(a) Is A’s obligation towards B extinguished?
(b) May C still recover from A, because of the fact that A did not
consent to what the law deems a donation on the part of C in favor
of A?
Answers:
(a) Yes, A’s obligation toward B is extinguished even if A did not
consent to the donation. The law says: “But the payment is in any
case valid as to the creditor who has accepted it.”
(b) Yes, C may still recover from A, although originally C did not
intend to be reimbursed. This is so because here there has been no
real donation. However, inasmuch as the payment by C had been
effected against the will of A, all that C can recover from A is to the
extent that A has been benefited by C’s payment to B in A’s behalf.
PAYMENT BY INCAPACITATED PERSONS
1239. In obligations to give, payment made by one who does not
have the free disposal of the thing due and capacity to alienate it
shall not be valid, without prejudice to the provisions of article 1427
under the Title on "Natural Obligations."
CAPACITY TO MAKE PAYMENT
It is essential that the person who pays the obligation has the
necessary legal capacity to effect such payment. This is essentially
true in obligations to give. Payor must have the free disposal of the
thing due and the capacity to alienate it. Absence of one or the
other will affect the validity of the payment.
PAYMENT BY AN INCAPACITATED PERSON
Payment made by one who has no free disposal of the thing due and
the capacity to alienate it (ex. Insane or minor), such payment is not
valid. Hence, even if creditor has accepted the payment, the same
may still be annulled by a proper action in court.
General Rule — If person paying has no capacity to give:
(a) Payment is not valid — even if accepted;
(b) Creditor cannot even be compelled to accept it;
(c) The remedy of consignation would not be proper.
Exception (as provided for in Art. 1427, Civil Code):
When a minor between eighteen and twenty-one years of age, who
has entered into a contract without the consent of the parents or
guardian voluntarily pays a sum of money or delivers a fungible
thing in fulfillment of the obligation, there shall be no right to
recover the same from the obligee who has spent or consumed it in
good faith.”
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Example:
A, a minor, entered into a contract without the consent of his
parents. In said contract, A was supposed to pay to B the sum of P1
million. B did not know of A’s minority, and when A voluntarily paid
him the money, B accepted the sum. Out of this amount, B spent
P800,000. Later, the parents of A learned of the transaction, and
brought an action in court to recover the P1 million paid to B. How
much can the parents recover from B?
Answer: The parents can recover only P200, 000 inasmuch as the
P800, 000 had already been spent in good faith.
TO WHOM PAYMENT MUST BE MADE
1240. Payment shall be made to the person in whose favour the
obligation has been constituted, or his successor in interest, or any
person authorized to receive it.
TO WHOM PAYMENT MUST BE MADE
1. To the person in whose favour the obligation has been
constituted (the creditor)
(Note: This refers to the creditors at the time of payment,
not the original creditor at the time the obligation was
constituted)
2. To the successor-in-interest (like the heirs)
3. To any person authorized to receive it.
(Note: The authorization may be by agreement or by law,
expressed or implied)
PERSONS AUTHORIZED TO RECEIVE PAYMENT
1. Persons authorized by the creditor
2. Persons authorized by law (ex. Guardian, administrator of
the estate of a deceased person, assignee or liquidator of a
partnership or corporation)
PAYMENT TO UNATHORIZED PERSONS
If payment is made to a person other than those enumerated above,
it shall not be valid.
Exceptions:
1. Payment made to a third persons, provided that it has
redounded to the benefit of the creditor
2. Payment made to the possessor of the credit provided
that it was made in good faith
PAYMENT TO INCAPACITATED PERSONS
1241. Payment to a person who is incapacitated to administer his
property shall be valid if he has kept the thing delivered, or insofar
as the payment has been beneficial to him.
Payment made to a third person shall also be valid insofar as it has
redounded to the benefit of the creditor. Such benefit to the
creditor need not be proved in the following cases:
(1) If after the payment, the third person acquires the creditor’s
rights;
(2) If the creditor ratifies the payment to the third person;
(3) If by the creditor’s conduct, the debtor has been led to believe
that the third person had authority to receive the payment.
EFFECT OF PAYMENT TO AN INCAPACITATED PERSON
General rule: Payment to a person incapacitated to administer or
manage his property is not valid.
Effect: Debtor may be made to pay again either at the instance of:
(1) The incapacitated person upon recovering capacity
(2) The legal representative of such person during such
incapacity
Take Note: The rule is applicable ONLY to obligations to give.
Exceptions:
1. If he kept the thing paid or delivered
2. If he benefited from the payment (does not literally mean that
it should have been invested or used for expenses)
Note 1. If the incapacitated person kept or preserved the amount or
thing paid or delivered, the act is beneficial to him. Hence, the first
case is actually included in the second.
Note 2. Proof of benefit is incumbent upon the debtor who paid.
CONSIGNATION
Payment should be made to his legal representative. If this is not
possible, the debtor may relieve himself from responsibility by the
consignation in court of the thing or sum due.
EFFECT OF PAYMENT TO A THIRD PERSON NOT DULY AUTHORIZED
Payment made to a third person is valid but only to the extent of
benefit to the creditor. Hence, payment should have redounded to
the benefit of the creditor.
Benefit to creditor not presumed
Benefit to the creditor is not presumed and must therefore be
satisfactorily established by the person interested in proving this
fact. In the absence of such proof, the payment in error or in good
faith will not deprive the creditor of his right to demand payment.
Exceptions:
The debtor is relieved from proving benefit to the creditor in case of:
1. Subrogation of the payer in the creditor’s rights (If after the
payment, the third person acquires the creditor’s rights)
Example: An impostor-agent, after payment to him, becomes
the owner of the company-creditor.
2. Ratification by the creditor (If the creditor ratifies the payment
to the third person)
Example: If the Meralco, a few days after its unauthorized
collector had collected from you, tells you that the payment to
him is all right. Here the defect is cured.
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3. Estoppel on the part of the creditor (If by the creditor’s
conduct, the debtor has been led to believe that the third
person had authority to receive the payment)
Example: This is a case of estoppel, as when the impostor-
agent had been given by the Meralco the usual uniform for
collectors.)
PAYMENT TO POSSESSORS OF CREDIT
1242. Payment made in good faith to any person in possession of
the credit shall release the debtor.
PAYMENT TO THIRD PERSON IN POSSESSION OF CREDIT
This article gives another instance when there is valid payment to a
third person. Another exception to the general rule in Art 1240 and
is applicable only to obligations to give.
Requisites:
1. Payee must be in possession of the credit itself and not
merely of the document or instrument evidencing the
credit.
2. Payment by payer must be made in good faith. (Honest
belief that he is making a valid payment and that the
payee is the owner of the credit)
Take Note: Good faith, however, is presumed.
Take Note: If these two requisites are present, the debtor is released
from his obligation. Hence, the remedy of the creditor would be to
proceed against the possessor of the credit to whom the payment
was improperly made.
This article covers also these two instances
1. Payment made to the original creditor by a debtor who is
not aware of the fact that the credit has already been
assigned to another person.
2. Payment made to an assignee, although the assignment is
afterwards rescinded or annulled.
Illustrations
1. Tanya is indebted to Feds in the amount of P1, 000 which
was evidenced by a promissory not signed by Tanya in
favour of Feds. Feds lost the promissory note which was
later found by Kadz who demanded payment from Tanya.
Payment by Tanya to Kadz is NOT VALID because Kadz is
the possessor merely of the document evidencing the
credit and not the credit itself.
2. If the promissory note is payable to bearer or holder, the
obligation will be extinguished if Tanya pays Kadz in good
faith.
If the promissory note was endorsed by Feds to Kadz
under a private agreement that Kadz would collect from
Tanya, then payment by Tanya in good faith to Kadz will
extinguish the debt. Bad faith of Kadz is immaterial.
PAYMENT AFTER JUDICIAL ORDER OF RETENTION
1243. Payment made to the creditor by the debtor after the latter
has been judicially ordered to retain the debt shall NOT be valid.
PAYMENT AFTER JUDICIAL ORDER TO RETAIN
If the debtor pays the creditor after he has been judicially ordered to
retain the debt, such payment shall not be valid.
Consequently, after the debtor has received the notice of
attachment or garnishment, payment can no longer be made to the
creditor whose credit has been attached to satisfy a judgment in
favour of another person.
Atty. Soleng
Demand letter – file an action for collection of money with prayer
for issuance of writ of preliminary attachment – sheriff is
commanded to issue notices of garnishment to any holder of credits
– file notice of levy – personal properties
GARNISHMENT OF DEBTOR’S CREDIT
The proceeding by which a debtor’s creditor is subjected to the
payment of his own debt to another is known as garnishment.
It consists in the citation of some stranger to the litigation, who is
the debtor of one of the parties to the action. By this means such
debtor-stranger becomes a forced intervenor, and the court, having
acquired jurisdiction over his person by means of the citation
required of him to pay his debt, not to his former creditor, but to the
new creditor, who is the creditor in the main litigation.
Example:
Tanya owes Feds P1,000,000. Feds, in turn, owes Kadz P100,000.
Kadz brings an action against Feds, who, however, claims insolvency
but admits the credit which he has over Tanya. Before Tanya pays
Feds, Tanya is summoned into the proceedings, and asked to retain
the debt in the meantime. Thus, the debt is “garnished.”
The reason is Tanya should not pay Feds, and instead he should pay
Kadz, should Kadz really be adjudged the creditor of Feds. Any
payment made by Tanya to Feds in the meantime is considered
invalid under the law.
Note 1. Pending garnishment, payment must be made to the proper
officer of the court issuing the writ of attachment or garnishment in
conformity with the provisions of Sec 8 Rule 57 New Rules of Court.
Note 2. The benefit granted by Art 1243 can only be invoked by the
creditor who secures the order of retention.
VERY PRESTATION DUE MUST BE COMPLIED WITH
1244. The debtor of a thing cannot compel the creditor to receive a
different one, although the latter may be of the same value as, or
more valuable than that which is due.
In obligations to do or not to do, an act or forbearance cannot be
substituted by another act or forbearance against the obligee’s will.
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VERY PRESTATION DUE MUST BE COMPLIED WITH
First paragraph – refers to a real obligation to deliver a specific
thing. A thing different from that due cannot be offered or
demanded against the will of the creditor or debtor.
Second paragraph – refers to personal (positive and negative)
obligations. The act to be performed or the act prohibited cannot be
substituted against the obligee’s will.
Take Note: In both cases, the creditor cannot be compelled to
accept the delivery of the thing or the substitution of the act or
forbearance. HOWEVER, if he accepts the same, such acceptance
shall give to the delivery or substitution the same effect as
fulfillment or performance of the obligation.
be charged against the debtor’s debt. However, it may also be called
a “novation.” But sales and novation require common consent.
Example:
Tanya executed a promissory note in 1966 to pay Feds P5, 000
within four years. In 1969, the two entered into an agreement by
virtue of which, Tanya shall deliver her automobile to Feds as an
equivalent of the performance of the obligation
Effect:
The transformation of the previous contract into a contract of sale
with the automobile as the object and the loan of P5, 000 as the
purchase price.
SALE DISTINGUISHED FROM DATION IN PAYMENT

INSTANCES WHEN ART 1244 DOES NOT APPLY Sale Dation in payment
There is no pre-existing debt There is a pre-existing debt
1. In case of facultative obligations Gives rise to an obligation Extinguishes the obligation
2. In case there is another agreement resulting in either: The consideration is the
a. Dation in payment extinguishment of the debt from
b. Novation The consideration is the price the debtor’s viewpoint and the
3. In case of waiver by the creditor (express or implied) paid from the buyer’s viewpoint acquisition of the object offered
in credit from the creditor’s
viewpoint
DATION IN PAYMENT
There is more freedom in fixing There is less freedom in
1245. Dation in payment, whereby property is alienated to the the price determining the price
creditor in satisfaction of a debt in money, shall be governed by the Buyer has still to pay the price The payment is received before
law of sales. the contract is perfected
Parties deliver and receive the Parties deliver and receive the
SPECIAL FORMS OF PAYMENT thing as seller and buyer thing as debtor and creditor

There are four special forms of payment under the Civil Code
1. Dation in payment
2. Application of payments
3. Payment by cession
4. Tender of payment and consignation
DATION IN PAYMENT
The conveyance of ownership of a thing by the debtor as an
accepted equivalent or performance of a monetary obligation. It is
that mode of extinguishing an obligation whereby the debtor
alienates in favour of the creditor, property for the satisfaction of
monetary debt.
Example: To pay my debt of P1,000,000 in favour of Bella, I gave her
with her consent a diamond ring instead worth P1,000,000.
Requisites
1. Existence of a money obligation
2. Alienation to the creditor of a property by the debtor with
the consent of the former
3. Satisfaction of the money obligation of the debtor
GOVERNED BY THE LAW OF SALES
This is so because dation in payment — the transfer or conveyance
of ownership of a thing as an accepted equivalent of performance
really partakes in one sense of the nature of sale, i.e., the creditor is
really buying some property of the debtor, payment for which is to
RULE ON THE MEDIUM QUALITY
1246. When the obligation consists in the delivery of an
indeterminate or generic thing, whose quality and circumstances
have not been stated, the creditor cannot demand a thing of
superior quality. Neither can the debtor deliver a thing of inferior
quality. The purpose of the obligation and other circumstances shall
be taken into consideration.
EFFECT IF OBJECT IS GENERIC
If the obligation is to deliver a generic thing, the purpose of the
obligation and other circumstances shall be taken into consideration
to determine the quality or kind of the thing to be delivered.
Examples:
1. Tanya promised to deliver to Feds a horse. Feds cannot
compel Tanya to deliver a price-winning race horse and
nether can Feds require Tanya to accept an old sickly
horse.
a. If Feds owns a stable of race horses which fact is
known to Tanya and the price agreed upon is the
reasonable price of a race horse, then Tanya must
deliver a race horse.
b. If Feds happens to be a calesa driver, then that kind
of horse may be delivered.

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c. If Feds is a veterinarian and his only purpose in buying
a horse is to examine its organs in connection with his
work, this may show that an old sickly horse was
intended by the parties to be delivered.
REASONS FOR THE ARTICLE
This Article gives a principle of equity in that it applies justice in a
case where there is lack of precise declaration in the obligation. It is
always hard to find one thing that is exactly similar to another. But
in this kind of obligation, there is the question of relative
appreciation in that one party appreciates the same thing as the
other party does. If there is disagreement between them, then the
court steps in and declares whether the contract has been complied
with or not, according to the circumstances.
Effect: The creditor cannot demand a thing of the best quality and
nether can the debtor deliver a thing of the worst quality. In case of
disagreement, the law steps in.
RULE ON WAIVER
If the contract does not specify the quality:
a. The creditor cannot demand a thing of superior quality (but if
he desires, he may demand and accept one of inferior quality)
b. The debtor cannot deliver a thing of inferior quality, but if he
so desires, he may deliver one of superior quality (provided it
is not of a different kind).
EXPENSES OF PAYMENT
1247. Unless it is otherwise stipulated, the extrajudicial expenses
required by the payment shall be for the account of the debtor. With
regard to judicial costs, the Rules of Court shall govern.
DEBTOR PAYS GENERALLY FOR EXTRAJUDICIAL EXPENSES
General Rule
The debtor has to pay for the extrajudicial expenses incurred during
the payment. Reason: The obligation is extinguished when payment
is made and it is therefore the debtor who is primarily benefited.
Take note: Judicial costs are governed by Rule 142, Rules of Court.
Exception
When there is a stipulation to the contrary.
LOSING PARTY GENERALLY AYS JUDICIAL COSTS
Rules of Court Sec 1 Rule 142, the costs of an action, as a rule, shall
be paid by the losing party. The court may however for special
reasons, adjudge that either party shall pay the costs, or that the
same be divided as may be equitable. Take note: No costs are
allowed against the government, unless otherwise provided by law.
CHARACTER OF PAYMENT
1248. Unless there is an express stipulation to that effect, the
creditor cannot be compelled partially to receive the prestations in
which the obligation consists. Neither may the debtor be required to
make partial payments.
However, when the debt is in part liquidated and in part
unliquidated, the creditor may demand and the debtor may effect
the payment of the former without waiting for the liquidation of the
latter.
COMPLETE PERFORMANCE OF AN OBLIGATION NECESSARY
In order that payment may extinguish the obligation, it is necessary
that there be complete performance of the prestation. The creditor
may accept but he cannot be compelled to accept partial
performance.
Take Note: Applicable only when there is just one debtor and
creditor. Not applicable when there is plurality of parties.
Conditions
In order that the prestation may be considered as paid or
performed, there conditions must concur:
1. Identity – only the prestation agreed upon and no other must
be complied with.
2. Completeness – the thing or service in which the obligation
consists must be completely delivered.
3. Indivisibility – payment or performance must be indivisible.
GENERAL RULE AND EXCEPTIONS
General Rule: The creditor cannot be compelled partially to receive
the prestation in which the obligation consists, and neither may the
debtor be required to make partial payments.
Exceptions: Three cases when partial performance may be either
required or insisted.
1. When the obligation expressly stipulates to the contrary
2. When the different prestations constituting the objects of
the obligation are subject to different terms and
conditions.
Example: Debt payable in installments
3. When the obligation is in part liquidated and in part
unliquidated
Example: D owes C P3 million plus damages. Even if the
amount of damages has not yet been ascertained, the P3
million is already known or liquidated. This is already
demandable and payable.
RULE IN MONETARY OBLIGATIONS
1249. The payment of debts in money shall be made in the currency
stipulated, and if it is not possible to deliver such currency, then in
the currency which is legal tender in the Philippines.
The delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the effect of
payment only when they have been cashed, or when through the
fault of the creditor they have been impaired. In the meantime, the
action derived from the original obligation shall be held in abeyance.

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RULE IN PAYMENT OF MONETARY OBLIGATIONS
First paragraph – In monetary obligations, payment shall be made in
the currency stipulated. If not possible, then payment should be
made in legal tender of the Philippines.
Take note: Not applicable where the contract between the parties is
to pay in Philippine currency. The phrase “currently stipulate” refers
to money different from that which is the legal tender or legally
current in the Philippines.
Zagala v. Jimenez
A judgment awarding an amount in U.S. dollar may be paid with its
equivalent amount in local currency in the conversion rate prevailing
at the time of payment. If the parties cannot agree on the same, the
court should determine such conversion rate.
EFFECT OF REPUBLIC ACT NOS. 529 AND 4100
An act to assure the uniform value of Philippine coins and currency.
This modified the first paragraph of Art 1249. Under this Act, the
rule in the Civil Code that payment of debts in money shall be made
in the currency stipulated as completely abrogated.
Feature: This law requires the payment of monetary domestic
obligations in Philippine currency and declares as against public
policy and null and void any provision in a contract requiring the
payment of such obligations in a currency other than Philippine
currency.
Take note: The obligation itself is not declared void, only the
provision. Hence, the void provision does not defeat a creditor’s
claim for payment in Philippine currency.
Rate of exchange
RA No. 529 does not provide for the rate of exchange for the
payment of the obligation incurred after the enactment of the act.
Hence, rate of exchange should be that prevailing at the time of
payment.
Illustrations
1. Tanya, an American resident of Manila, sold his car to Feds
for US $2, 000, the payment to be made 10 days after
delivery to Kadz, a third party depositor agreed upon, who
shall deliver the car to Feds upon receipt of Kadz of the
purchase price. It was stipulated that ownership is retained
by Tanya until delivery of the car to Kadz. Five days after
delivery of the car to Kadz, the car was destroyed in a fire
which gutted the house of Kadz, without the fault of either
Kadz or Feds.
Question 1: Is buyer Feds still legally obligated to pay the
purchase price? Explain.
Answer: Yes, Feds is still legally obligated to pay the
purchase price. It must be observed that Tanya had already
delivered the car to Kadz and it was agreed that ownership
is retained by Tanya until delivery to Kadz. Therefore, there
was already a transfer of the right of ownership over the car
to Feds. Since the purpose is to secure performance by the
buyer of his obligation to pay the purchase price, the
fortuitous loss of the car shall be assumed by Feds.
Question 2: May seller Tanya demand payment in US
dollars?
Answer: No, Tanya cannot demand payment un US dollars
because according to the law, an agreement that payment
shall be made in currency other than Philippine currency is
void because it is contrary to public policy. However, Tanya
can still demand payment from Feds in Philippine currency.
To hold otherwise would be unjust enrichment at the
expense of another.
STIPULATION OF ANOTHER CURRENCY
 Under the first paragraph of Art. 1249, payment may be
either:
a. In the currency stipulated
b. If it is not possible to deliver such currency, then in
Philippine legal tender.
 Said first paragraph of Art. 1249 has already been modified by
RA 529. Under the said Act, obligations incurred AFTER RAA
529 (Jun. 16, 1950), which are for the purpose of payment in:
a. A foreign currency
b. An amount of Philippine money to be measured by gold or
foreign currency, should be null, void and of no effect.
 Rep. Act 529, in connection with Art. 1249 of the Civil Code
Thus, the Court has ruled that if the debtor promises to pay in
a currency other than Philippine legal tender, the stipulation
with respect to the currency is VOID. All that the creditor can
demand is payment in Philippine legal tender measured at the
exchange rate prevailing not at the time of payment, but at
the time of contracting or incurring the debt.
 However, RA 529 has in turn been amended by RA 4100, which
took effect on Jun. 19, 1964.
LEGAL TENDER
It is that currency which a debtor may compel a creditor to accept in
payment of the debt, whether public or private. Under or law, the
legal tender of the Philippines would be all notes and coins issued by
the Central Bank.
Payments with Japanese military notes
One of the problems which confronted the courts after Japanese
liberation was the determination of the validity of payments made
during Japanese occupation of pre-war debts which were then due
in depreciated Japanese military notes. Some of these payments
were made during the last few months of the occupation when
these notes had depreciated so much in value. Hence a just solution
based on the law then in force was called for.
Rules to follow:
1. If the pre-war obligation contains a stipulation that
payment shall be made in a certain currency
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Rule: For the payment to be valid, it must be made in the
currency stipulated.
Hence, if payment was made in Japanese military notes
and the creditor refused to accept, payment would still not
be valid even if it was followed by consignation.
2. It the pre-war obligation contains a stipulation that
payment shall be made in the currency which is the legal
tender of the Philippines at the time when payment is to
be made or if such obligation is silent with respect to the
currency
Rule: Payment in Japanese military notes is valid and
effective.
Payment with Emergency notes
Emergency notes issued either by the Commonwealth government
during the invasion or by recognized guerrilla governments during
the occupation are considered as legal tender BUT only in those
places which were under the control of either the Commonwealth or
of the guerrilla government issuing the notes.
Payments with Negotiable paper
Negotiable papers or mercantile documents such as promissory
notes payable to order or bills of exchange are NOT legal tender.
Effect: Payment by means of mercantile documents does not
produce the effect of payment and does not extinguish the
obligation, EXCEPT:
a. When the document has been cashed
b. When it has been impaired through the fault of the
creditor – applicable only to a document executed by a
third person and delivered by the debtor to the creditor.
Ex. A bill of exchange was delivered by the defendant to
the plaintiff and upon maturity, it was dishonoured by the
drawee because of forged signature. The negligence of the
plaintiff in not protesting the non-payment resulted in the
impairment of the value of the bill of exchange because of
the right to proceed against other parties who might be
held liable. Consequently, the defendant can no longer be
held liable.
Example: If debtor tenders a check to the creditor as payment of an
obligation, the creditor has the perfectly valid right to refuse it even
if the check may be good. Hence, the tender shall not produce the
effect of payment. This is true even if the refusal of the creditor is
followed by consignation, whether the check is ordinary or
manager’s.
Hidalgo v. Heirs of Tuazon, Inc.
Facts: August 31, 1943, plaintiffs obtained a loan of P100, 000 from
the defendant and by way of a guarantee, plaintiff executed a
mortgage on four parcels of land belonging to them. It was agreed
that debtors may pay their debt at any time BEFORE the expiration
of the term of the contract, subject however to the following
conditions:
1. If payment is made before the termination of the
hostilities between America and Japan – debt should be
paid with an increase of 100%
2. If payment is made thereafter, a 30-day notice in advance
should be given to defendant corporation.
Dec 6, 1944 – Eduardo Hidalgo sent a check for P101, 673.50 as
payment of his share in the obligation. However, the same was
rejected by the defendant claiming that such mode of payment was
contrary to their agreement.
Dec 29, 1944 – Felipe Hidalgo sent another check for the same
amount and was received by Nicasio Tuason. No further action was
taken and when liberation came, plaintiffs brought this action to the
CFI Manila praying the defendant execute a document releasing
them from their obligation and cancelling the mortgage.
Defendant answered that notwithstanding the express provisions of
the mortgage, the loan shall not be made except in genuine
Philippine currency after the war.
Issue: Whether or not the obligation has already been paid.
Held: The draft tendered by Eduardo Hidalgo which was rejected did
not ripen into payment because of such rejection. The remedy of
Hidalgo was to make a consignation was required by law and give
notice thereof to defendant. Such was not done and so the tender of
payment was ineffective.
As to the draft tendered by Felipe Hidaldo, it is true that such was
accepted by Nicasio Tuason, but such tender cannot also have the
effect of payment because under the law, payment made in check
has the effect of payment only when actually cashed. There is no
showing that the check has been chased. Therefore, plaintiffs are
still indebted to defendant and unless they pay the same, they
cannot ask for the cancellation of the mortgage.
Considering however that indebtedness may be wholly or partially
discharged even before the termination of hostilities between
America and Japan, plaintiffs can only be made to pay the same
subject to the conversion under the Ballantyne scale of values.
Soleng case: Papa v. Valencia
Case illustrating the effect of Section 63 of the Central Bank Act
New Pacific Timber & Supply v. Seneris
Facts: Petitioner, as payment for the judgment obligation, deposited
with the Clerk of Court of CFI Zamboanga, in his capacity as the Ex-
Officio Sheriff the sum of P63, 130 consisting of the ff:
a. P50, 000 in cashier’s check
b. P31, 000 in cash
Respondent contends that the same are not valid legal tenders and
thus, a writ of execution should be issued to levy the personal
properties of the petitioner in satisfaction of the claims.
Issue: Whether or not the respondent can validly refuse acceptance
of the payment of the judgment obligation made by the petitioner
consisting of P50, 000 in cashier’s check and P13, 130 in cash which
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it deposited with the Ex-Officio sheriff before the date of the
scheduled auction sale.
Held: Sec 63 of the Central Bank Act provides that checks
representing deposit money do not have legal tender power and
their acceptance is at the option of the creditor. However, a check
which has been cleared and credited to the account of the creditor
shall be equivalent to a delivery in cash.
The check deposited by the petitioner is not an ordinary check but a
Cashier’s check of the Equitable Banking Corporation, a bank of good
standing and reputation. It is a certified crossed check and it is a
well-known and accepted practice in the business sector that a
Cashier’s check is deemed as cash.
EFFECT OF EXTRAORDINARY INFLATION OR DEFLATION
1250. In case an extraordinary inflation or deflation of the currency
stipulated should supervene, the value of the currency at the time of
the establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary.
INFLATION AND DEFLATION DEFINED
Inflation
A sharp sudden increase of money or credit or both without a
corresponding increase in business transaction. Inflation causes a
drop in the value of money, resulting in the rise of the general price
level.
Deflation
Reduction in volume and circulation of the available money or
credit, resulting in a decline of the general price level.
EXTRAORDINARY INFLATION OR DEFLATION
That which is unusual or beyond the common fluctuation in the
value of the currency, which the parties could not have reasonably
foreseen or which was manifestly beyond their contemplation at the
time when the obligation was established.
Requisites:
1. There must be a decrease or increase in the purchasing
power of the currency which is unusual or beyond the
common fluctuation in the value of the said currency
2. Such decrease or increase could not have been reasonably
foreseen or was manifestly beyond the contemplation of
the parties at the time of the establishment of the
obligation.
Example: Tanya leased a house and lot to Feds at a monthly rental of
P500 for a period of 25 years. An option to buy the property was
given to Feds for the same period with the rentals already paid
constituting a part of the purchase price which the parties fixed at
an amount equivalent to the aggregate rentals for 25 years.
May Tanya now demand for an adjustment of the rent and the
purchase price on the ground that there is an extraordinary inflation
supervening?
Yes, since both of the requisites are present. The purchasing power
of the Philippine peso now is much less that its PP in 1955. The
official rate of exchange in 1955 between Philippine peso and
American dollar was 2:1, while today it is 20.5:1.
Effect of extraordinary inflation or deflation
In the event of another war resulting in extraordinary inflation, the
juridical relations of creditor and debtor should be equitably
adjusted. Consequently, the basis of payment would be the value of
the currency at the time of the establishment of the obligation.
APPLICABLE ONLY TO MONETARY CONTRACTUAL OBLIGATIONS
From the employment of the words “extraordinary inflation or
deflation of the currency stipulated”, it can be seen that the legal
rule means contractual obligations where a currency is selected by
the parties as the medium of payment. Hence, it is applicable only to
cases where there is contract or agreement. it does not apply where
obligation to pay arises from other sources like law, quasi-contract,
tort or crime.
BASIS OF PAYMENT
The purchasing vale of the currency at the time of the establishment
of the obligation shall be the basis of payment, in case of any
extraordinary deflation or inflation.
Take Note: Only basis of payment and not the actual amount to be
paid. Hence, the courts are given some latitude in fixing the amount
to be paid. (Exception: If there is a contrary stipulation/agreement)
WAR TIME OBLIGATIONS
Payment of obligations incurred during Japanese occupation. The
question is with respect to the amount that had to be paid by the
debtor considering the fact that Japanese military notes were no
longer legal tender after the liberation of the Philippines, and
consequently, the obligation had to be paid in Philippine currency.
Question: Shall the amount be computed in accordance with the
rate of one Philippine peso for each peso due in Japanese military
notes or shall the amount be adjusted in accordance with the
Ballantyne Scale of Values?
BALLANTYNE SCHEDULE
Submitted by Dr. Ballantyne to the President in his capacity as
economic adviser of the Commonwealth government. It contained a
recommendation for the adoption of measures which were greatly
needed to solve the problem created by transactions made during
the Japanese occupation and to hasten the economic recovery.
The said schedule assumes that there was only 1 rate of equivalence
throughout the islands, when it a well-known fact that the
conversion rate changed from place to place. Such schedule was
therefore yield to proof of actual transactions.
Application
Except when sheer necessity demands it because of the absence of
other evidence, there is every reason for NOT applying the
Ballantyne schedule. In order that the Ballantyne Scale of Values
shall be applicable, three requisites must concur:
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Requisites:
1. The obligation should have been contracted during the
Japanese occupation
2. It could have been paid during the Japanese occupation
3. It could have been paid with Japanese military notes
PLACE OF PAYMENT
1251. Payment shall be made in the place designated in the
obligation. There being no express stipulation and if the undertaking
is to deliver a determinate thing, the payment shall be made
wherever the thing might be at the moment the obligation was
constituted. In any other case the place of payment shall be the
domicile of the debtor. If the debtor changes his domicile in bad
faith or after he has incurred in delay, the additional expenses shall
be borne by him.
These provisions are without prejudice to venue under the Rules of
Court.
WHERE PAYMENT MUST BE MADE
1. If there is a stipulation – in the place designated
2. If there is no stipulation
a. Obligation to deliver a determinate thing – payment
shall be made at the place where the thing might be
at the time the obligation was constituted.
b. If the obligation is any other thing (generic or
personal obligations) – delivery must be made at the
domicile of the debtor.
EFFECT OF DELAY AND CHANGE OF DOMICILE IN BAD FAITH
Additional expenses shall be borne by the debtor if:
a. He changes his domicile in bad faith
b. He incurred delay
Subsection 1. Application of Payment
Articles 1252 - 1254
APPLICATION OF PAYMENT
1252. He who has various debts of the same kind in favour of one
and the same creditor, may declare at the time of making the
payment, to which of them the same must be applied. Unless the
parties so stipulate, or when the application of payment is made by
the party for whose benefit the term has been constituted,
application shall not be made as to debts which are not yet due.
If the debtor accepts from the creditor a receipt in which an
application of the payment is made, the former cannot complain of
the same, unless there is a cause for invalidating the contract.
APPLICATION OF PAYMENT
Designation of the debt to which the payment must be applied when
the debtor has several obligations of the same kind in favour of the
same creditor.
Importance
It is important to know rules on application of payments because
otherwise, we may not know which one, of two or more debts, has
been extinguished.
Example: A owes B P1 million payable Apr. 1. A also owes B P1
million payable Apr. 5. On Apr. 10, A pays B P1 million. Here, we will
not know which debt has been extinguished unless we know the
rules on the application of payments.
REQUISITES
1. There must be only one debtor and only one creditor
2. There must be two or more debts of the same kind
3. All of the debts must be due
4. The amount paid by the debtor must not be sufficient to
cover the total amount of all the debts.
First requisite
There must be only one creditor and only one debtor. However, the
rule on application may extend to solidary obligations because the
solidary debtor who paid may have obligations other than the
solidary obligation in favour of the creditor to whom payment is
made.
It can also extend to rules on application of payment to a case in
which a person is indebted at the same time in separate and
demandable sums to a partnership and to the managing partner.
Second requisite
Debtor must have two or more debts in favour of the same creditor
and each debt must be identical or homogenous. (i.e. payment of
money and delivery of things other than money)
Exception:
If at the time the designation or application is made, such
obligations had already been converted into obligations to
indemnify with damages by reason of breach or nonfulfillment.
Third requisite
General rule: Application of payment is possible only when all of the
debts are due.
Exceptions:
1. When there is a stipulation to the contrary
2. When the application of payment is made by the party for
whose benefit the term or period has been constituted.
The exception is logical because if the term or period is for his
benefit, if he so desires, he may renounce the benefit of such term
or period by performing his obligation in advance.
Fourth requisite
The requirement that the amount paid by the debtor must not be
sufficient to cover the total amount of all the debts is indispensable,
because, otherwise, there would be no necessity of designating the
debt or debts to which the payment shall be applied.
PREFERENTIAL RIGHT OF DEBTOR
It is the debtor who is given by the law the right to select which debt
to pay. This right, however, is not absolute.
Exceptions:
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1. If there was a valid prior but contrary agreement
2. The debtor cannot choose to pay part of the principal
ahead of the interest, unless the creditor consents.
Take note: If the debtor makes a proper application and the creditor
refuses, the creditor will be in mora accipiendi.
GENERAL RULE AND EXCEPTION
If the debtor does not avail himself of the right to designate the debt
to which the payment shall be applied, and subsequently, he accepts
from creditor a receipt in which an application of payment is made,
the debtor cannot complain of the same, unless there is a cause for
invalidation the contract
General Rule: Application of payment by the debtor.
Exception: Application by creditor
Take Note: However, it is not accurate to say that application is
made by the creditor because what the creditor merely does is to
propose the application by giving to the debtor a receipt in which
the application of payment is subject to the express or tacit approval
of the debtor.
Hence, debtor can accept or reject the application. If receipt is
accepted, the application of payment can no longer be impugned,
except:
1. There is a cause (mistake, fraud, force, undue influence)
which will invalidate the application.
TIME WHEN RIGHT IS EXERCISED
The right to make an application of payment must be exercised at
the time payment is made. If he fails to exercise such right, the
initiative is taken away from him and the creditor may not exercise
the right provided that such application is approved by the debtor.
Distinction: The debtor can decide for himself, while the creditor
only proposes to the debtor who may or may not agree.
HOW APPLICATION IS MADE
1. The debtor makes the designation
2. If not, the creditor makes it, be stating in the receipt that
he issues, “unless there is cause for invalidating the
contract”
Instances where the application is void:
a. If the obligation itself is void.
b. If the debtor’s consent in accepting the receipt was
vitiated
c. If the creditor makes the application without the
knowledge and consent of the debtor
3. If neither the debtor nor the creditor makes the
application, or if the same is not valid, then application is
made by operation of law.
LIMIATION UPON THE RIGHT TO APPLY PAYMENT
1253. If the debt produces interest, payment of the principal shall
not be deemed to have been made until the interests have been
covered.
INTEREST MUST BE PAID FIRST
Whether or not the rule is suppletory or obligatory?
Manresa – It shall be obligatory because it is more in consonance
with justice. Consequently, the creditor may impugn any application
of payment which is contrary to the above rule.
Effect: the debtor cannot insist that his payment be credited to the
principal instead of the interest. However, if the creditor agrees, this
is alright.
Contrary view of the Supreme Court
However, the Supreme Court in two recent cases held that the
provision applies only in the absence of a verbal or written
agreement to the contrary. Hence it is merely directory and not
mandatory.
EFFECT IF PAYMENT IS CREDITED TO THE PRINCIPAL
Reduction of the principal would result in the decrease of the total
interest collectible.
LEGAL APPLICATION OF PAYMENT
1254. When payment cannot be applied in accordance with the
preceding rules, or if application cannot be inferred from other
circumstances, the debt which is most onerous to the debtor,
among those due, shall be deemed to have been satisfied.
If the debts due are of the same nature and burden, the payment
shall be applied to all of them proportionately.
APPLICATION OF PAYMENT TO MORE ONEROUS DEBTS
In case no application of payment has been made by the debtor and
creditor, the payment shall be applied to the most onerous debt,
and if the debts are of the same nature and burden, to all of them
proportionately.
Rules to determine which debt is more burdensome
1. All things being equal, older debts are more onerous.
2. An interest bearing debt is more onerous than a non-
interest bearing debt, even if the latter is an older one.
3. Of two interest bearing debts, the one with a higher
interest rate is onerous
4. Where the debtor is bound as principal in one obligation
and as guarantor or surety in another, the former is more
onerous.
5. Solidary debt is more onerous than sole debt.
6. Debts secured by mortgage or pledge are more onerous
that unsecured debts.
7. Debts with a penal clause.
8. Liquidated debts.
9. Within a solidary obligation, the share which corresponds
to a solidary debtor is more onerous.
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Subsection 2. Payment by Cession As to object merely considered debtor is the universality

Article 1255 as the equivalent of all his property

PAYMENT BY CESSION
Payment Payment merely to
1255. The debtor may cede or assign his property to his creditors in As to effect of extinguishes the release the debtor for
payment of his debts. This cession, unless there is stipulation to the payment obligation to the the net proceeds of the
contrary, shall only release the debtor from responsibility for the net extent of the value things ceded
proceeds of the thing assigned. The agreements which, on the effect of the thing
of the cession, are made between the debtor and his creditors shall delivered
be governed by special laws.

CESSION OR ASSIGNMENT As to transfer of Creditor becomes Creditors only acquire

ownership the owner of the the right to sell the thing
A special form of payment whereby the debtor abandons all of his
thing given and apply the proceeds
properties for the benefit of his creditors in order that from the
to their credits
proceeds thereof the latter may obtain payment of their credits.

Kinds of cession As to novation An act of novation Not an act of novation

1. Contractual – cession referred to in this article
2. Judicial - governed by insolvency law (may be voluntary or
involuntary)
Requisites
1. Plurality of debts
2. Partial or relative insolvency of the debtor
3. Acceptance of the cession by the creditors
Take note: In case of non-acceptance, a similar result may be
obtained by proceeding in accordance with the Insolvency Law.
EFFECTS OF CESSION
1. The assignment by the debtor of all his properties to the
creditors shall ONLY release him from responsibility for the
net proceeds of the property assigned. Hence, the
extinguishment is only partial.
2. The creditors do not become the owners, but merely
assignees with authority to sell.
Subsection 3. Tender of Payment and Consignation
Article 1256 – 1261
TENDER OF PAYMENT AND CONSIGNATION
1256. If the creditor to whom tender of payment has been made
refuses without just cause to accept it, the debtor shall be released
from responsibility by the consignation of the thing or sum due.
Consignation alone shall produce the same effect in the following
cases: (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 two or more persons
claim the same right to collect; (5) When the title of the obligation
has been lost.
1257. In order that the consignation of the thing due may release
the obligor, it must first be announced to the persons interested in
the fulfillment of the obligation.

3. The debtor is released up to the amount of the net The consignation shall be ineffectual if it is not made strictly in
proceeds of the sale, unless there is a stipulation to the consonance with the provisions which regulate payment.
contrary. The balance remains collectible.
1258. Consignation shall be made by depositing the things due at
the disposal of judicial authority, before whom the tender of
CESSION V. DATION IN PAYMENT
payment shall be proved, in a proper case, and the announcement
of the consignation in other cases. The consignation having been
made, the interested parties shall also be notified thereof.
Dation in payment Cession
CONCEPT
As to number of There may be only Plurality of creditors is
one creditor Tender of Payment - The act of offering the creditor what is due him
parties essential
together with a demand that the creditor accept the same.

As to financial Debtor is not Debtor is in a state of Consignation – Refers to the deposit of the object of the obligation
condition of necessarily in a partial or relative in a competent court in accordance with the rules prescribed by law
parties state of financial insolvency after refusal or inability of the creditor to accept the tender of
difficulty payment.

What is delivered is What is ceded by the

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EFFECT OF TENDER WITHOUT CONSIGNATION
Tender of payment WITHOUT consignation does not extinguish the
debt. Consignation must follow.
Examples
1. A owes B a sum of money. A gives B the money but B
refuses without just reason to accept it. What should A
now do?
Answer: A must deposit the money in court, since his
tender of payment was refused without just reason. His
deposit in court is called consignation.
1. When a debtor owes money lent him with interest, is it
sufficient to just tender the principal without the interest?
Answer: No. The tender of the principal must be
accompanied with the tender of the interest which has
accrued. Otherwise, said tender will not be valid.
TENDER OF PAYMENT V. CONSIGNATION
Tender of payment Consignation
Antecedent of consignation; Principal act which produces the
preparatory act effect of payment
Extrajudicial in character Judicial in character
REQUISITES OF CONSIGNATION
General requisites: (Requisites relative to payment)
1. Person who pays
2. Person to whom payment is made
3. Object of the obligation which must be paid or performed
4. Time when payment or performance becomes
demandable
Special requisites:
Those arising from the very nature of consignation
1. Existence of a valid debt which is due
2. Tender of payment by the debtor and refusal without
justifiable reason by the creditor to accept it
Requisites:
a. Tender of payment must have been made prior
to the consignation
b. It must have been unconditional
c. The creditor must have refused to accept the
payment without just cause
Effect of valid tender of payment
The obligation is not extinguished unless it is completed by
consignation. However, it has the effect of exempting the
debtor from payment of interest and/or damages. Good
faith on the part of the debtor should in simple justice
excuse him from paying interest after the offer was
rejected.
3. Previous notice of consignation to persons interested in
the fulfillment of the obligation
A formal act directly announcing the consignation which
will be made as a result of the unjust refusal of the
creditor to accept payment.
4. Consignation of the thing or sum due
The thing or amount due had been placed at the disposal
of judicial authority like the Clerk of Court.
5. Subsequent notice of consignation made to the interested
parties.
Reason: To enable the creditor to withdraw the goods or
money deposited. It would be unjust to make him suffer
the risk for any deterioration or loss by reason of lack of
knowledge of the consignation.
Two possible situations after valid consignation
1. There is the possibility that the creditor may finally accept
the thing or amount deposited. In which case the question
of payment is settled.
2. There is also the possibility that he refuses to accept the
thing or amount deposited. In which case, litigation will
arise.
SUBJECT MATTER OF CONSIGNATION
Not only movables, but even immovables may be the subject matter
thereof. Consignation of immovable property should be allowed
because it would unjust to charge the debtor indefinitely with the
task of preserving the immovable property which constitutes the
object of the obligation.
GENERAL RULE & EXCEPTIONS
General Rule: Consignation shall produce effects of payment only if
there is a valid tender of payment.
Exceptions:
Instance where previous tender of payment is not necessary
a. When the creditor is absent or unknown or does not appear
at the place of payment
b. When he is incapacitated to receive the payment at the time
it is due
c. When without just case, he refuses to give a receipt
d. When two or more persons claim the right to collect
e. When the title of the obligation has been lost
Sy v. Eufemio
Facts: Husband and wife entered into a compromise agreement by
virtue of which the wife undertook to pay to her husband P10, 000
in cash and P25, 000 by installments within 10 years, and
Ponce de Leon v. Syjuco, Inc.
EXPENSES OF CONSIGNATION
1259. The expenses of consignation, when properly made, shall be
charged against the creditor.
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EXPENSES OF CONSIGNATION Effects of improper consignation

General Rule: The creditor bears the expenses for consignation.
Reason: Since consignation is due to the creditor’s fault, for had he
accepted, there would not have been any need for consignation.
Exception: If consignation is not properly made, the cost is
chargeable to the debtor.
1. The obligation remains because the consignation is not
effective as payment
2. If at the time of the consignation, the debt was already
due, and one of the requisites for consignation is absent,
the debtor is in default.
WHEN MAY DEBTOR WITHDRAW THE THING CONSIGNED

Take Note: Before the creditor can be charged with the expenses of 1. As a matter of right
consignation, it is essential that such consignation must have been a. Before the creditor has accepted the consignation
properly made. b. Before there is judicial declaration that consignation
has been properly made
WHEN CONSIGNATION IS CONSIDERED PROPERLY MADE
2. As a matter of privilege
1. When the creditor accepts the thing or amount deposited
as payment of the obligation without contesting the a. When after the consignation had been properly made
efficacy of validity of the consignation and the creditor authorizes the debtor to withdraw.
2. When the creditor contests the efficacy or validity of the
consignation and the court finally decides that it has been EFFECT OF WITHDRAWAL
properly made or cancels the obligation at the instance of
the debtor.
Kind of withdrawal Effect
EFFECTS OF CONSIGNATION

1260. Once the consignation has been duly made, the debtor may Withdrawal by the debtor of the Obligation remains in force
ask the judge to order the cancellation of the obligation. thing deposited before the
creditor accepted the
Before the creditor has accepted the consignation, or before a consignation
judicial declaration that the consignation has been properly made,
the debtor may withdraw the thing or the sum deposited, allowing
the obligation to remain in force Withdrawal by the debtor of the Creditor loses every preference
thing deposited before a judicial which he may have over the
1261. If, the consignation having been made, the creditor should declaration that the thing. Solidary co-debtors,
authorize the debtor to withdraw the same, he shall lose every consignation has been properly guarantors and sureties,
preference which he may have over the thing. The co-debtors, made however, are released
guarantors and sureties shall be released.

EFFECT OF CONSIGNATION Section 2. LOSS OF THE THING DUE

Article 1262 – 1269
1. If the creditor accepts the thing or amount deposited as
payment of the obligation without contesting the efficacy LOSS OF THE THING DUE
of validity of the consignation = OBLIGATION IS
CANCELLED OR EXTINGUISHED WHEN IS THERE A LOSS

2. When the creditor contests the efficacy or validity of the In its broad sense
consignation, or is unknown or absent = LITIGATION Impossibility of compliance with the obligation through any case.

3. If during the trial on the merits of the case, the debtor is In its strict sense
able to establish that all of the requisites of a valid and a. When the object perishes
effective consignation had been complied with = b. When it goes out of commerce
OBLIGATION IS EXTINGUISHED c. When it disappears in such a way that
- its existence is unknown
Effects of proper consignation - it cannot be recovered
1. The debtor may ask the judge to order the cancellation of
the obligation
EFFECT OF LOSS IN DETERMINATE OBLIGATIONS TO GIVE
2. The running of interest is suspended

Take Note: Before the creditor accepts or before the judge 1262. An obligation which consists in the delivery of a determinate
declares that consignation has been properly made, the thing shall be extinguished if it should be lost or destroyed without
obligation remains. the fault of the debtor, and before he has incurred in delay.

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When by law or stipulation, the obligor is liable even for fortuitous
events, the loss of the thing does not extinguish the obligation, and
he shall be responsible for damages. The same rule applies when the
nature of the obligation requires the assumption of risk.
EFFECT OF LOSS IN DETERMINATE OBLIGATIONS TO GIVE
General rule: Obligation is extinguished.
Requisites:
1. The thing which is lost must be determinate
2. The thing is without any fault of the debtor
3. The thing is lost before the debtor has incurred in delay
Exceptions:
a. When expressed by law
b. When stipulated by the parties
c. When nature of the obligation requires assumption of risk
d. When the object of the obligation is lost and the loss is
due partly to the fault of the debtor
e. When the loss of the thing occurs after the debtor has
incurred in delay
f. When the debtor promised to deliver the same thing to
two or more persons who do not have the same interest
g. When the obligation to deliver arises from a criminal
offense
h. When the obligation is generic
Take Note: The said obligation is converted into one for indemnity of
damages.
EFFECT OF LOSS IN GENERIC OBLIGATIONS TO GIVE
1263. In an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the
obligation.
EFFECT OF LOSS IN GENERIC OBLIGATIONS TO GIVE
General rule: The obligation continues to exist because a generic
thing does not perish (genus nunquam peruit)
Exceptions:
1. If the generic thing is delimited
Example: 50 kilos of sugar from my 1999 harvest and such
harvest was destroyed
2. If the generic thing has already been segregated or set
aside, in which case it has become specific.
EFFECT OF PARTIAL LOSS
1264. The courts shall determine whether, under the circumstances,
the partial loss of the object of the obligation is so important as to
extinguish the obligation.
EFFECT OF PARTIAL LOSS
Whether or not the partial loss or destruction of the thing is of such
importance that it would be tantamount to a complete loss or
destruction shall depend upon the sound discretion of the court.
Example:
In certain cases, partial loss may indeed be equivalent to a complete
loss, such as the loss of a specific fountain pen minus the cover. In
other cases, the loss may be insignificant. Hence, judicial
determination of the effect is needed.
PRESUMPTION THAT LOSS WAS DUE TO DEBTOR’S FAULT
1265. Whenever the thing is lost in the possession of the debtor, it
shall be presumed that the loss was due to his fault, unless there is
proof to the contrary, and without prejudice to the provisions of
Article 1165. This presumption does not apply in case of earthquake,
flood, storm, or other natural calamity.
PRESUMPTION THAT LOSS WAS DUE TO DEBTOR’S FAULT
When the thing which constitutes the object of the obligation is lost
in the possession of the debtor, there arises a DISPUTABLE
presumption that the loss was due to his fault.
Effect: The obligation is not extinguished. Hence, the debtor is still
liable to the creditor for damages.
Take Note: Burden of proof of absence of fault is on the debtor.
WHEN PRESUMPTION DOES NOT APPLY
The presumption of fault does not apply in the case of a natural
calamity like earthquake, flood, storm, etc.
This is because in cases of a natural calamity, lack of fault is more
likely.
Take Note: Although fire is not a natural calamity, if tenant is able to
prove that the fire was purely accidental, he is not liable.
IMPOSSIBIILITY IN PERSONAL OBLIGATIONS
1266. The debtor in obligations to do shall also be released when
the prestation becomes legally or physically impossible without the
fault of the obligor.
IMPOSSIBILITY OF PERFORMANCE IN OBLIGATIONS TO DO
Requisites:
1. The prestation must have become legally or physically
impossible of compliance
2. The impossibility is without the fault of the obligor and
before he has incurred in delay
3. The impossibility must have occurred after the
constitution of the obligation
KINDS OF IMPOSSIBILITY
Two causes of impossibility as to source:
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1. Legal impossibility - Impossibility from law, although
physically it may be possible of performance
a. Direct – when the law prohibits the performance of the
work agreed upon as where it is immoral or dangerous
Example: The furnishing of work on Sundays when the
same is prohibited by law; refusal of the government to
issue a building permit.
b. Indirect – as where the law imposes duties of a
superior character upon the obligor which are
incompatible with the work agreed upon.
2. Physical impossibility - Impossibility from a fact which
rendered performance impossible, although no law is
violated.
May arise from:
a. The death of the obligor when the act to be performed
requires his personal qualifications
b. The obligee when the act can be of possible benefit
only to him.
c. Accident
d. Acts of the debtor himself in which there is no fault
e. Acts of third person affecting the debtor’s capacity to
execute the work agreed upon
Example: To install a motor in a ship that was lost after the
perfection of the contract but prior to such installation.
Take note: In both cases, the obligor is released from his obligation.
EFFECT OF IMPOSSIBILITY
When the prestation which constitutes the object of the obligation
become legally or physically impossible without the fault of the
debtor – HE IS RELEASED FROM THE OBLIGATION.
Examples
1. When a contract is entered between the creditor and the
principal debtor without the knowledge and consent of
the surety, the latter can no longer be held liable
2. Where the obligation was unable to comply with his
obligation to reconstruct certain apartments including a
movie house because of the refusal of the City Engineer to
issue the necessary building permit due to the plan of the
Urban Planning Commission to widen the street adjoining
the lots where such buildings were to be reconstructed.
3. Where compliance with the prestation will prove
dangerous to life or property
Labayen v. Talisay-Silay Milling Co.
Facts: Plaintiff and defendant entered into a contract whereby it was
agreed that the latter shall extend its railroad from its sugar central
to a certain hacienda. Defendant failed to comply because the
extension would be very costly and dangerous to life and property
by reason of the contour of the land through which the said railroad
would be constructed.
Issue: Is there a breach of contract which would render the
defendant liable for damages?
Held: It is elemental that the law requires the parties to do what
they have agreed to do. A showing of mere inconvenience,
unexpected impediments or increased expenses is not enough.
However, not to sanction an exception to the general rule would run
counter to public policy and the law by forcing the performance of a
contract undesirable and harmful.
EFFECT IN OBLIGATIONS NOT TO DO
There are rare or exceptional cases in which legal or physical
impossibility will occur in obligations not to do as when the obligor is
compelled to do that which he had obligated himself to refrain from
performing.
Effect: Obligation is extinguished.
EFFECT OF RELATIVE IMPOSSIBILITY
1267. When the service has become so difficult as to be manifestly
beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part.
EFFECT OF RELATIVE IMPOSSIBILITY
Impossibility of performance of an obligation to do shall release the
obligor. However, when the service has become so difficult as to be
manifestly beyond the contemplation of the parties the court shall
be authorized to release the obligor in whole or in part.
Take note: The intention of the parties should govern and if it
appears that the service turns out to be so difficult as to have been
beyond their contemplation, it would be doing violence to that
intention to hold the obligor still responsible.
REBUS SIC STANTIBUS
This Article refers to moral impossibility or impracticability due to
change of certain conditions (rebus sic stantibus — a treaty or
agreement remains valid only if the same conditions prevailing at
the time of contracting continue to exist at the time of performance.
Example:
The duty to construct a railroad when such construction was
possible but very dangerous to life and property, is excused by the
law; therefore, failure to grind sugar cane in view of the non-
construction of the railroad does NOT give rise to damages.
NON-APPLICABILITY TO REAL OBLIGATIONS
Art 1267 contemplates of “service” which has become so difficult.
The word service should be understood as referring to the
performance of the obligation. Thus, real obligations (to give) are
not included within its scope.
EFFECT OF LOSS IN CRIMINAL OFFENSES
1268. When the debt of a thing certain and determinate proceeds
from a criminal offense, the debtor shall not be exempted from the
payment of its price, whatever may be the cause for the loss, unless
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the thing having been offered by him to the person who should
receive it, the latter refused without justification to accept it.
RULE IF OBLIGATION ARISES FROM CRIMINAL OFFENSES
This rule is applicable to cases:
1. Where there is an obligation of restitution of a certain and
determinate thing on the part of the person criminally
liable
2. Where such obligation arises by virtue of reparation or
indemnification
This rule is applicable to persons:
1. Who are principally liable
2. Who are subsidiary liable
General rule: In all these cases, if the thing is lost, the debtor shall
NOT be exempted from the payment of the price of the thing,
whatever may be the cause of the loss.
Exception: When the creditor (offended party) is in mora accipiendi,
as when he refused to accept the thing without justification.
WHEN THERE IS REFUSAL FROM CREDITOR
When the offer is made by the debtor and the creditor refuses to
accept it without justification, he may choose between:
1. He may make a consignation of the thing
Effect: Completely relieves the debtor from further liability
2. He may keep the thing in his possession.
Effect: Obligation shall still subsists, only that he cannot be
held liable for loss due to fortuitous event.
EFFECT OF EXTINGUISHMENT OF OBLIGATION
1269. The obligation having been extinguished by the loss of the
thing, the creditor shall have all the rights of action which the debtor
may have against third persons by reason of the loss.
EFFECT OF EXTINGUISHMENT OF OBLIGATION
If the obligation is extinguished by the loss of the thing, all of the
rights of action which the debtor may have against third persons by
reason of the loss are transmitted by operation of law to the
creditor.
Example:
1. S is obliged to deliver his car to B. But X destroys the car. B
has a right to sue X. The right is given to B instead of S
because otherwise S would unduly profit in that he will
gain two things: first, his obligation to give the car or its
value is already extinguished; second, he would be allowed
to recover from X. It is obvious that S must not unduly
profit at the expense of B.
2. Where the object which is due is insured and by reason of
some cause is lost or destroyed. In such case, the creditor
can collect the indemnity from the insurer.
3. Where the object is expropriated. In such case, the
creditor can collect the compensation which is due by
reason of the expropriation.
Section 3. CONDONATION AND REMISSION OF THE DEBT
Articles 1270 – 1274
CONDONATION AND REMISSION OF DEBT
CONCEPT OF REMISSION OR CONDONATION
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, it is extinguished in its entirety or in that part
or aspect of the same to which the remission refers. Sanchez Roman
– the gratuitous abandonment by the creditor of his right.
REQUISITES
In order that there will be a remission which will result in the total or
partial extinguishment of the obligation:
1. It must be gratuitous
2. It must be accepted by the debtor
3. The obligation must be demandable
KINDS
As to form
1. Express remission – when it is made in accordance with
the formalities prescribed by law for donations.
2. Implied remission – when it can be deduced from the acts
of the creditor, although not made in accordance with the
formalities prescribed by law for donations.
As to extent
1. Total remission – when the entire obligation is
extinguished
2. Partial remission – refers only to the principal or to the
accessory obligation or to an aspect thereof which affects
the debtor. (i.e. solidarity)
As to constitution
1. Inter vivos – that which is constituted by agreement of the
obligee and the obligor in which case it partakes of the
nature of a donation inter vivos.
2. Mortis causa – that which is constituted by last will and
testament in which case it partakes of the nature of a
donation mortis causa.
GRATUITOUS CHARACTER OF REMISSION
1270. Condonation or remission is essentially gratuitous, and
requires the acceptance by the obligor. It may be made expressly or
impliedly. One and the other kinds shall be subject to the rules
which govern inofficious donations. Express Condonation shall,
furthermore, comply with the forms of donation.
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GRATUITOUS CHARACTER OF REMISSION
The remission must be gratuitous. Hence, the creditor should not
have received any price or equivalent from the debtor as a result of
his act in renouncing the enforcement of the obligation.
NECESSITY OF ACCEPTANCE BY DEBTOR
Because remission is by its very nature a donation, the Code
requires that must be accepted by the debtor. Reason: Because no
one should be compelled to accept the generosity of another.
Whether or not remission is a bilateral or unilateral act?
It is by its very nature a bilateral act because it requires the
acceptance by the debtor and this view is in conformity with the rule
which subjects express remission to the forms of donations.
APPLICABILITY OF RULES ON DONATION
Rules on donation are applicable with regard to
1. The necessity of acceptance by the debtor
2. Forms of donations if the remission is express
3. Extent or amount of the donation
4. Revocation of donations
EXTENT OF REMISSION
Whether express or implied, the extent of the remission or
Condonation shall be governed by the rules regarding inofficious
donations.
A. Art 750 – Donation may comprehend all the present
properties of the donor, provided that he reserves full
ownership sufficient means for the support of himself and
his relatives whom he is entitled to support.
B. Art 751 – Donations cannot comprehend future property
C. Art 752 – No person may give or receive by way of
donation more than he may give or receive by will
Remedy: Rule 771 The heirs of the creditor-donor can proceed
against the debtor-donee for the reduction or even suppression of
the remission.
FORM OF EXPRESS REMISSION
A. Art 748 – Donation of a movable may be made orally or in
writing. If the value exceeds P5, 000, the donation and the
acceptance shall be made in writing. Otherwise, it is void.
B. Art 749 – Donation of an immovable must be in a public
instrument, specifying the property donated and the value
of the charges which the donee must satisfy.
Take note: With respect to express remission of an obligation to
giver personal property, acceptance by the debtor may be implied,
provided that the value of the debt which is condoned is not more
than P5, 000.
FORM OF IMPLIED REMISSION
The Code is silent with respect to the form of implied remission. It
may only be deduced from any act or acts of the creditor which
clearly show the intent to condone the obligation. Examples are Arts
2171 to 1274.
Question: May an express remission defective in form be considered
an implied remission?
Answer: No, otherwise, the requirement of the law on express
remission would be rendered useless. Thus, an express remission,
not made in due form, cannot affect the creditor if it is withdrawn in
due time. It would affect him only when new acts of waiver confirm
the express purpose of the former, as one of the bases on which
tacit or implied remission may rest.
EFFECT OF DELIVERY OF EVIDENCE OF CREDIT TO DEBTOR
1271. The delivery of a private document evidencing a credit, made
voluntarily by the creditor to the debtor, implies the renunciation of
the action which the former had against the latter.
If in order to nullify this waiver it should be claimed to be inofficious,
the debtor and his heirs may uphold it by proving that the delivery
of the document was made in virtue of payment of the debt.
PRESUMPTION OF REMISSION
When the creditor voluntarily delivers the private document
evidencing the credit to the debtor
Effect: There is a presumption that he renounces his right of action
against the debtor for the collection of the said credit.
Take note: The article speaks of a “private document,” not a public
one because in the case of the latter, a copy is easily obtainable,
being a public record.
Example
Steffi made a promissory note in favor of Agassi in the amount of
P100 million. After some time, Agassi voluntarily delivered the
promissory note to Steffi without collecting the P100 million. Steffi is
now in possession of said note. There is a disputable presumption
that there has been a remission. The presumption is merely
disputable and not conclusive because it may be that the instrument
was delivered only for examination by Steffi or for collection.
REQUISITES
1. That the document evidencing the credit must have been
delivered by the creditor to the debtor
2. That the document must be a private document
3. That the delivery must be voluntary
REMEDY OF THE CREDITOR AND/OR DEBTOR
Creditor: The heirs of the creditor may try to impugn or nullify the
renunciation or Condonation by establishing that it is inofficious
pursuant to Art 771.
Debtor: If this happens, the debtor or his heirs may uphold it
proving that the delivery of the private document was made
because the debt has already been fully paid. However, this is
ridiculous because there is an absurd spectacle of a debtor or his
heirs trying to uphold a presumption of remission by proving that
the debt had already been paid, when as a matter of fact, it is not.
CONFLICT OF PRESUMPTION
It should be noted that as between the presumption of remission
and presumption of payment, the first ordinarily prevails.
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PRESUMPTION OF VOLUNTARY DELIVERY
1272. Whenever the private document in which the debt appears is
found in the possession of the debtor, it shall be presumed that the
creditor delivered it voluntarily, unless the contrary is proved.
PRESUMPTION OF VOLUNTARY DELIVERY
Whenever the private document evidencing the credit is found in
the possession of the debtor
Effect: There arises a presumption that the creditor delivered it to
him voluntarily, unless the contrary is proved.
Examples:
1. Where the promissory note evidencing the credit is already
in the possession of the debtor, there arises a disputable
presumption that the creditor must have delivered it
voluntarily to him. Consequently, in the absence of proof to
the contrary, an implied renunciation of the debt may be
presumed.
2. A owed B a sum of money. B sent a receipt signed by him to
A through a collector, who was supposed to collect a debt. A
did not pay, however, although he kept the receipt. The
creditor (B) was able to prove that the only reason he had
sent the receipt was to collect the money. Issue: Is there
remission here?
HELD: No, there is no remission here; the creditor has been
able to prove the real reason why the debtor had in his
possession the receipt. Hence, the presumption of remission
has been overcome.
RENUNCIATION OF PRINCIPAL EXTINGUISHES ACCESSORY
1273. The renunciation of the principal debt shall extinguish
the accessory obligation; but the waiver of the latter shall leave
the former in force.
1274. It is presumed that the accessory obligation of pledge has
been remitted when the thing pledged, after its delivery to the
creditor, is found in the possession of the debtor, or of a third
person who owns the thing.
EFFECT OF REMISSION IN GENERAL
To extinguish the obligation in its entirety or in the part or aspect
thereof to which the remission refers.
If joint obligation – the remission can only affect the share of the
creditor who makes the remission and the corresponding share of
the debtor in whose favour the remission is made
If solidary obligation – Arts 1215, 1219 and 1220 shall govern.
EFFECT UPON ACCESSORY OBLIGATIONS
If the remission refers to the principal obligation all the accessory
obligations are extinguished. Reason: Since the latter depend upon
the former for the existence.
However, if the remission refers to accessory obligations, the
principal obligation still subsists.
RULE IN PLEDGE
When the thing pledged, after its delivery to the creditor, is found in
the possession of the debtor or of a third person who owns the thing
Effect: There is a presumption that the accessory obligation of
pledge has been remitted
Take note
 It is only the accessory obligation of pledge that is presumed
remitted. The principal obligation (loan) remains in force.
 The presumption is only disputable, for the debtor or third
person may be in possession of the property by theft or
because the same has been sent for repairs, etc.
Example:
If A pledged his watch to B as security for a indebtedness of P100,
and subsequently the watch is found in A’s possession, there arises a
presumption of remission. The P100 debt however is not affected.
Possession by a third person
The law says “or of a third person who owns the thing.” Therefore, if
the third person does not own the thing, the presumption does not
arise. As a matter of fact, the stranger may just have found it or it
may have been delivered to him only for safekeeping.
Section 4. CONFUSION OR MERGER OF RIGHTS
Articles 1275 – 1277
CONFUSION OR MERGER OF RIGHTS
1275. The obligation is extinguished from the time the characters of
creditor and debtor are merged in the same person.
CONFUSION DEFINED
The merger of the characters of the creditor and debtor in one and
the same person by virtue of which the obligation is extinguished.
Sanchez Roman: The meeting in one and the same person of the
qualities of creditor and debtor with respect to one and the same
obligation.
Effect: Confusion will necessarily result in the extinguishment of the
obligation because of the impossibility of enforcing it since it would
be absurd for a person to enforce a claim against himself.
REQUISITES
1. The merger of the characters of creditor and debtor must be
in the same person
2. That it must take place in the person of either the principal
creditor or the principal debtor
3. That it must be complete and definite
Take note: It does not follow however that the
extinguishment of the obligation should be complete or total
in character. It merely means that whether the merger refers
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to the entire obligation or only a part thereof, it must be of
such character that there will be a complete and definite
meeting of all the qualities of creditor and debtor in the
obligation or in the part or aspect thereof which is affected
by the merger.
Example:
A makes a check payable to bearer, and hands the check to C, who
hands it to D who finally hands it to A. Here A owes himself. This is a
clear case of merger, and hence the obligation of A is extinguished.
KINDS
As to cause or constitution
A. Inter vivos – when constituted by agreement of the parties
B. Mortis causa – when constituted by succession
As to extent or effect
A. Total – if it results in the extinguishment of the entire
obligation
B. Partial – if it results in the extinguishment of only a part of
the obligation
 When the confusion or merger refers only to a part of
the obligation
 When the obligation is joint
EFFECT OF MERGER ON GUARANTORS
1276. Merger which takes place in the person of the principal debtor
or creditor benefits the guarantors. Confusion which takes place in
the person of any of the latter does not extinguish the obligation.
EFFECT OF MERGER ON GUARANTORS
If the confusion will take place in the person of either the principal
creditor or the principal debtor, the effect is the extinguishment, not
only of the principal obligation but even the accessory obligation.
Consequently, guarantors shall be benefited by the confusion of
rights.
Accessory follows the principal
The guaranty being considered the accessory obligation, hence, if
there is merger with respect to the principal debt, the guaranty is
extinguished.
Examples
1. A owes B P700,000, guaranteed by C. B assigns his credit
to X. X assigns the credit to Y. Y assigns the credit to A. A’s
obligation is extinguished and C is released from his
obligation as guarantor.
2. A owes B P700,000, guaranteed by C. B assigns his credit
to X. X assigns his credit to Y. Y assigns his credit to C, the
guarantor. Does A still have to pay C?
Answer: Yes. However, the contract of guaranty is
extinguished, but not A’s obligation to pay the P700, 000.
EFFECT UPON COLLECTIVE OBLIGATIONS
1277. Confusion does not extinguish a joint obligation except as
regards the share corresponding to the creditor or debtor in whom
the two characters concur.
MERGER IN JOINT OBLIGATIONS
The confusion which takes place in one of the debtors shall only
refer to the share which corresponds to him. Consequently, there is
merely a partial extinguishment of the debt.
Take note: As for solidary obligations, the entire obligation is
extinguished, without prejudice to the rights and obligations of the
solidary creditors and debtors among themselves.
Example:
A and B jointly owe C P1,000, 000. If C assigns the entire credit to A,
A’s share is extinguished, but B’s share remains. In other words, B
would still owe A the sum of P500, 000. In a joint obligation, the
debts are distinct and separate from each other.
Section 5. COMPENSATION
Articles 1278 - 1290
COMPENSATION
1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
CONCEPT OF COMPENSATION
A mode of extinguishing in their concurrent amount those
obligations of persons who are reciprocally debtors and creditors of
each other. It involves a figurative operation of weighing two
obligations simultaneously in order to extinguish them to the extent
in which the amount of one is covered by the amount of the other.
USEFULNESS OF COMPENSATION
Compensation presents a more convenient and less expensive
method of effecting the payments of two obligations. Consequently,
it deserved the name “simplified payment” because the two debts
are extinguished without requiring the transfer of money or
property from one party to the other.
Double advantage
1. Facility of payment
2. Guaranty for the effectivity of the credit, because
otherwise, if the parties will still have to comply with the
formalities of ordinary payment, one can be easily
prejudiced by fraud or insolvency of the other.
KINDS OF COMPENSATION
As to cause
A. Legal compensation – when it takes effect by operation of
law from the moment all the requisites are present
B. Voluntary compensation – when the parties who are
mutually creditors and debtors agree to compensate their
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respective obligations, even though all of the requisites

REQUISITES OF LEGAL COMPENSATION
may not then be present.
1279.
C. Judicial compensation – when it takes effect by judicial REQUISITES OF LEGAL COMPENSATION
decree.
1. There must be two parties, who, in their own right, are
Example: Where one of the parties to a suit over an principal creditors and debtors of each other.
obligation has a claim for damages against the other and 2. Both debts must consist in money, or if the things due are
the former sets it off by proving his right to said damage consumable, they must be of the same kind and quality
and the amount thereof. 3. Both debts must be due
4. Both debts must be liquidated and demandable
D. Facultative compensation – effected by a party who is 5. There must be no retention or controversy commenced by
entitled to oppose the compensation because he would be third persons over either of the debts and communicated
prejudiced thereby. in due time to the debtor
6. The compensation must not be prohibited by law
Example: When the obligation of one is with a term, while
that of the other is pure, and the former renounces the AS TO PARTIES
benefit of the term, consequently making the A. The parties must be mutually creditors and debtors in their
compensation possible. own right
B. They must be bound as principals
As to effect
A. Total compensation – when the debts to be compensated Take note: There can be no compensation:
are equal in amount 1. Between obligations of a legal representative, guardian or
administrator incurred in his personal capacity and the
B. Partial compensation – when the debts to be obligations of third persons to the person represented.
compensated are not equal in amount. 2. With regard to obligations incurred by the partnership as a
juridical person and the individual credits of any one of the
DISTINGUISHED FROM PAYMENT, MERGER AND COUNTERCLAIM partners.
Compensation Payment
Takes effect by Takes effect by Garcia v. Lim Chiu Sing
operation of law the act of the parties Facts: Defendant who is indebted to the Mercantile Bank of China
Capacity to give and to Capacity to give and to for P9, 105.17 contends that such debts must be compensated by
acquire is not necessary acquire is essential his shares of stock with the Bank.
Partial extinguishment As a rule, complete
is permitted and indivisible Held: A share of stock is not an indebtedness and therefore, not a
credit. Stockholders are not creditors of the corporation. Therefore,
Lim Sing, not being a creditor of the Mercantile Bank of China
Compensation Merger
although the bank is the creditor of Lim Sing, there is no sufficient
There must be two persons There is only one person in
ground to justify a compensation.
who, in their own right, are whom is merged the qualities
creditors and debtors of each of creditor and debtor
Illustrations
other
1. Tanya borrowed from Feds P1, 000 payable in one year.
There must be at There is only one obligation
When Feds was in the province, his 17 year old son
least two obligation
borrowed P500 from Tanya for his school tuition.
However, the son spent it instead nightclubbing. When the
Compensation Counterclaim debt fell due, Tanya only tendered P500 claiming
Requires that the two debts compensation on the other P500 borrowed by Feds’ son. Is
must consist in money or if the there legal compensation?
things due are fungibles, they This is not necessary
must be of the same Answer: There is no legal compensation. In order that
kind and quality there will be a valid compensation, it is essential that there
Requires that the debts This is not necessary must be two parties who in their own right, are principal
must be liquidated creditors and debtors of each other. In the case, Feds
Need not be pleaded Must be pleaded to be cannot be considered a party to the act of his son
effectual borrowing P500 from Tanya. Hence, he did not become a
principal debtor of Tanya, and neither did Tanya become a
principal creditor of Feds. Ergo, there can be no partial
compensation.

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AS TO OBJECTS
Both debts must consist in money, or if the things due are
consumable, they must be of the same kind and quality. Only applies
to obligations to give. Reason: Not applicable in obligations to do
because of the difference in the respective capacities of the obligor.
Consumable must be taken to mean fungible
Reason: Because of the fact that consumables are those movables
which cannot be used in a manner appropriate to their nature
without being consumed, while fungibles are those which may be
exchanged or compensated by another of the same kind and quality.
Fungible – susceptible of substitution, if such be the intention.
Example:
A owes B a fountain pen (generic). B owes A also a fountain pen
(generic). There can be compensation here because the objects are
fungible (although not consumable).
Take Note: Had specific fountain pens been agreed upon, there can
be no legal compensation. Also, ten sacks of corn cannot be
compensated for ten sacks of rice.
AS TO MATURITY
Both debts must be due. Consequently, before the fulfillment of the
event which constitutes the condition or period, the obligations
cannot be compensated.
Example:
Solita owes Edmundo P1 million payable Apr. 1, 2005. Edmundo
owes Solita P1 million payable Jun. 8, 2005. Can there be legal
compensation on Apr. 1, 2005?
Answer: No, for one of the debts is not yet due. However, there can
be voluntary compensation upon agreement.
AS TO LIQUIDATION AND DEMANDABILITY
Both debts must be liquidated and demandable.
Liquidated debts – debts the amount of which may be determined
by a simple arithmetical operation. Hence, if one of the debts is still
unliquidated, there can be no compensation.
Take note: If both are partially liquidated, compensation may take
place with respect to the parts which are liquidated.
Demandable debts – debts which are due and liquidated; neither of
the debts has prescribed or that the obligation is not invalid or
illegal.
AS TO CLAIM OF THIRD PERSONS
There must be no retention or controversy commenced by third
persons over either of the debts and communicated in due time to
the debtor.
Retention – consists in the application of the credit of one of the
parties to the satisfaction of the claims of a third person.
Effect: No compensation is possible, except when there is an excess
or balance remaining after the application of the credit.
Controversy – refers to a case in which a third person claims to be
the creditor. In other words, the party interested in the
compensation and the third person each claims that he is the real
creditor.
Effect: Provisional suspension of the compensation. If the credit is
adjudicated to the person interested in the compensation,
compensation takes place. If to the third person, compensation
cannot take place.
Example:
Tanya owes Feds P100, 000, and Feds owes Tanya P100, 000.
However, Tanya’s credit of P100, 000 has been garnished by Kadz
who claims to be an unpaid creditor of Tanya. Feds has been duly
notified of the controversy. There can be NO compensation here.
Any possible compensation is in the meantime suspended. If Kadz
wins his claim, there can be no compensation; if he loses, the
controversy is resolved, and compensation can take place.
RIGHT OF GUARANTOR TO SET UP COMPENSATION
1280. Notwithstanding the provisions of the preceding article, the
guarantor may set up compensation as regards what the creditor
may owe the principal debtor.
RIGHT OF GUARANTOR TO SET UP COMPENSATION
This is an exception to the preceding article because a guarantor is
subsidiarily and not principally bound.
Reason: Extinguishment (partial or total) of principal obligation
extinguishes (partially or totally) the guaranty (which is merely an
accessory obligation).
Examples:
1. Tanya owes Feds P500. Kadz is the guarantor of Tanya. Feds
owes Tanya P100. When Feds sues Tanya and Tanya cannot
pay, for how much will Kadz be liable?
Answer: Kadz will be liable for only P400 , because he can set
up the P100,000 credit of Tanya as the basis for partial
compensation.
2. Tanya owes Feds P500. Kadz is the guarantor of Tanya. Feds
owes Kadz P500. When Feds sues Tanya for the P500, may
Tanya successfully put up the defense of compensation in
that, after all, his creditor (Feds) owes Kadz the same amount?
Answer: There can be no compensation here because in the
obligation which Kadz guaranteed for Tanya, he (Kadz) is not
bound in his own right. Neither is Tanya the creditor of Feds.
(NOTE: If Tanya cannot pay and Feds sues the guaranty, Kadz
will not be liable anymore because the obligation of guaranty
has been extinguished by compensation.)
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VOLUNTARY COMPENSATION
1281. Compensation may be total or partial. When the two debts
are of the same amount, there is a total compensation.
Prevention of Unfairness
To avoid unfairness if rescission or annulment is later on decreed by
the court, it is as if NO compensation ever took place. The decree
thus acts retroactively.

1282. The parties may agree upon the compensation of debts which Example:
are not yet due. A owes B P1 million. Later, A forced B to sign a promissory note for
P1 million in A’s favor. The first debt is valid; the second is voidable.
TOTAL OR PARTIAL COMPENSATION But if all the requisites for legal compensation are present, both
This article is true for all the different kinds of compensation, debts are extinguished since B’s debt is not yet annulled. This is
whether legal or voluntary. obviously unfair if, later on, B’s debt is annulled by the court. Thus
here, the compensation that has taken place will be cancelled.
VOLUNTARY COMPENSATION
Example: If the obligation of A is pure, while the obligation of B is EFFECT OF ASSIGNMENT OF RIGHTS
with a term or period which has not yet expired:
1285. The debtor who has consented to the assignment of rights
made by a creditor in favour of a third person, cannot set up against
General rule: There can be no compensation because B’s obligation
the assignee the compensation which would pertain to him against
is not yet due and demandable.
the assignor, unless the assignor was notified by the debtor at the
time he gave his consent, that he reserved his right to the
Exception: When the parties nevertheless agree upon the
compensation.
compensation of the two obligations.
If the creditor communicated the cession to him but the debtor did
JUDICIAL COMPENSATION
not consent thereto, the latter may set up the compensation of
debts previous to the cession, but not of subsequent ones.
1283. If one of the parties to a suit over an obligation has a claim for
damages against the other, the former may set it off by proving his If the assignment is made without the knowledge of the debtor, he
right to said damages and the amount thereof. may set up the compensation of all credits prior to the same and
also later ones until he had knowledge of the assignment.
JUDICIAL COMPENSATION
This refers to judicial compensation or set-off. Hence, pleading and
EFFECT OF ASSIGNMENT ON COMPENSATION OF DEBTS
proof of the counterclaim must be made. This is so because by its
very nature, a set off or counterclaim can have no effect unless it is
What is the effect of the assignment by a creditor of his credit to a
pleaded. In addition, the claim is not liquidation. Hence,
third person upon the debtor’s right to set up the defense of
compensation cannot take place.
compensation in case the assignee tries to enforce the credit against
him?
However, when the defendant who has an unliquidated claim for
damages against the plaintiff sets it off by proving his right to said
It depends. Distinguish between the effects of assignment:
damage and the amount thereof, it is converted into a liquidated
A. When compensation has already taken place
claim by court decree. In which case, compensation shall take effect
B. When compensation has NOT yet taken place
from the moment the judgment liquidating the claim has become
final.
WHEN COMPENSATION HAS TAKEN PLACE
RULES IN CASE OF RESCISSIBLE OR VOIDABLE DEBTS General Rule: When all the requisites mentioned in Art. 1279 are
present, compensation takes effect by operation of law, and
1284. When one or both debts are rescissible or voidable, they may
extinguishes both debts to the concurrent amount, even though the
be compensated against each other before they are judicially
creditors and debtors are not aware of the compensation.”
rescinded or avoided.
Thus, compensation takes place automatically or ipso jure. Now
RULES IN CASE OF RESCISSIBLE OR VOIDABLE DEBTS
then, if AFTER compensation has taken place one of the
Exception to the general rule of demandability in order that
extinguished debts is ASSIGNED to a stranger, ordinarily this would
compensation shall take place.
be a useless act since there is nothing more to assign.
Reason: Rescissible or voidable debts are considered demandable
Effect: The defense of compensation could be set up by the debtor.
while the vices with which they are tainted are not yet judicially
Remedy of the assignee: Demand indemnity for damages from the
declared. Hence they valid until rescinded or voided, in which case
assignor on the ground of fraud.
compensation is allowed.
Exception: When the assignment after compensation has already
taken place was made with the consent of the debtor. (Such consent
operates as a waiver of the rights to compensation)

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Effect: Assignee can still demand for the payment of credit.
Exception to the exception: When at the time he gave his consent,
he reserved his right to the compensation.
WHEN COMPENSATION HAS NOT TAKEN PLACE
When compensation has not yet taken place because of the absence
of any or some of the requisites, the effects of such assignment once
all of the requisites for compensation are present shall depend upon
whether the assignment was made:
A. With the consent of the debtor
B. With the knowledge but without the consent of the debtor
C. Without the knowledge of the debtor
case, the debtor can set up the defense of compensation
of debts contracted prior to the assignment.
3. If the notification is given after the assignment had already
been made – The assignment must have been effected
without the knowledge and consent of the debtor, in
which case the debtor can set up the defense of
compensation of debts contracted prior to the assignment
until he had knowledge thereof.
Examples:
1. A owes B P1,000. B owes A P200. Both debts are already
due. Later B, with the knowledge but without the consent
(or against the will) of A, assigned the P1,000 credit to C.
How much can C successfully collect from A?

With consent of the debtor
General rule: If the creditor assigned his credit to a third person with
the consent of the debtor, the latter cannot set up against the
assignee the defense of compensation because there has been
consent, and therefore a waiver.
2.
Exception: If the debtor notified the assignor at the time he gave his
consent that he is reserving his right to the compensation. (Effect:
Defense of compensation can still be set up)
Example:
A owes B P1,000. B in turn owes A P200. Because both debts are
already due, and because all other requisites for legal compensation
are present, both debts are extinguished automatically up to the
amount of P200. Later however, B, with the consent of A, assigned
his (B’s) P1,000 credit to C. How much can C collect successfully from
A?
ANS.: If A sets up the defense of partial compensation as
to previously maturing debts, C can collect only P800.
There had already been compensation with respect to the
P200.
A owes B P1,000,000 due on Apr. 2; B owes A P200,000
due also on Apr. 2. On Feb. 4 (when there was no legal
compensation yet), B assigned his P1,000,000 credit to C,
with the knowledge but without the consent of A. On Apr.
2, how much can C successfully collect from A?
ANS.: P1,000,000, because if at all there would be
compensation here, it took place after the assignment, not
before. It does not matter that the P200,000 had been
incurred prior to the cession, for when the law speaks of
“debts previous to the cession,” it refers to debts maturing
before the cession (not to debts incurred prior to such
cession which have not yet matured before said cession).

ANS.: C can collect from A the whole P1,000. A cannot set up the
defense of compensation as of the P200 in view of his consent to the
assignment.
(NOTE: Had A reserved his right to the compensation, A would be
forced to give only P800.)
With knowledge but without consent of debtor
If the creditor notified the debtor of the assignment but the debtor
did not consent thereto and subsequently, the assignee demands
the payment from the debtor –
Without the knowledge of the debtor
If the assignment is made without the knowledge of the debtor and
subsequently the assignee demands the payment of the credit which
was assigned –
Effect: Debtor can set up compensation as a defense for all debts
maturing prior to his knowledge of the assignment (whether the
debts matured before or after the assignment)
Remedy of the assignee: A personal action for indemnification
against the assignor.

Effect: Debtor may set up the defense of compensation of debts

COMPENSATION BY OPERATION OF LAW
prior to the assignment, but not of subsequent ones. (Purpose of the
rule is to prevent fraud)
1286. Compensation takes place by operation of law, even though
the debts may be payable at different places, but there shall be an
Rules:
indemnity for expenses of exchange or transportation to the place of
1. If the notification preceded the assignment – The effects
payment.
of the assignment are produced from the time it is made
and NOT from the time the notification is given. Hence,
COMPENSATION BY OPERATION OF LAW
the debtor can set up the defense of compensation of
debts contracted prior to the assignment.
A. This applies to compensation by operation of law.
B. “Indemnity for expenses of transportation” (this applies to
2. If the notification and assignment are made
transportation of the goods or of the object).
simultaneously – There can be no question about the time
C. “Indemnity for expenses of exchange” (this refers to monetary
when the effects of the assignment are produced. In such

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Example:
A owes B P1M payable in Manila and B owes A P1M payable in
England. Whoever claims compensation must pay for the exchange
rate of currency.
DEBTS WHICH CANNOT BE COMPENSATED
1287. Compensation shall not be proper when one of the debts
arises from a depositum or from the obligations of a depository or of
a bailee in commodatum. Neither can compensation be set up
against a creditor who has claim for support due by gratuitous title,
without prejudice to the provisions of paragraph 2 of Article 301
1288. Neither shall there be compensation if one of the debts
consists in civil liability arising from a penal offense.
DEBTS WHICH CANNOT BE COMPENSATED
Five kinds of debts which are not susceptible of legal compensation
1. Debts arising from contracts of depositum (not a bank
deposit for this is really a loan)
Note: The purpose is to prevent breach of trust and
confidence. Also, it is the depository who cannot claim
compensation. The depositor is allowed to claim.
2. Debts arising from contracts of commodatum (borrower of
property who pays nothing for the loan)
Note: The lender may claim compensation. The borrower
cannot.
3. Claims for support due by gratuitous title
Note: Support for arrears may be compensated but not
future support for this is vital to the life of the recipient
4. Obligations arising from criminal offenses
Reason: Because the satisfaction of such obligation is
imperative.
Note: But the victim can claim compensation as when he is
indebted to the accused.
5. Certain obligations in favour of the government (i.e. taxes,
fees, duties and others of similar nature)
FACULTATIVE COMPENSATION
The kind of compensation whereby only one side can claim
compensation but not the other.
1. In contracts of commodatum -- The lender may claim
compensation, but the borrower cannot.
2. In contracts of depositum – The depositor can claim
compensation but the desository cannot
3. In obligations arising from a criminal offense – the victim
can claim compensation but the accused cannot
COMPENSATION BY OPERATION OF LAW
1289. If a person should have against him several debts which are
susceptible of compensation, the rules on the application of
payments shall apply to the order of the compensation.
1290. When all the requisites mentioned in Article 1279 are present,
compensation takes effect by operation of law, and extinguishes
both debts to the concurrent amount, even though the creditors and
debtors are not aware of the compensation.
EFFECT OF COMPENSATION
Most fundamental effect: Extinguishes both debts to the extent that
the amount of one is covered by the amount of the other. If the
compensation is total because the amounts of both debts are equal,
then both debts would totally be extinguished. However, if the
compensation is partial because the amounts are different, it is
evident that the extinguishment would be total with respect to one
and partial with respect to the other.
WHEN COMPENSATION TAKES EFFECT
Since compensation takes effect by operation of law, it will take
effect from the moment all the essential requisites are present, even
though the creditor and debtor are not aware thereof. Legal
compensation operates even against the will of the interested
parties.
When used as a defense, it retroacts to the day when its requisites
are fulfilled.
AUTOMATIC COMPENSATION WHEN ALL REQS ARE PRESENT
A. Note that legal compensation takes place automatically
unless there has been valid waiver thereof.
B. Compensation which extinguishes principal obligations
also extinguishes accessory obligations.
C. “To the concurrent amount” means that if one debt is
larger than the other, the balance subsists as debt.
Section 6. NOVATION
Articles 1291 - 1300
NOVATION
1291. Obligations may be modified by:
(1) Changing their object or principal conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the right of the creditor.
CONCEPT OF NOVATION
Novation is the substitution or change of an obligation by another,
resulting in its extinguishment or modification, either by changing its
object or principal conditions, or by substituting another in place of
the debtor, or by subrogating a third person in the rights of the
creditor.
Distinctive feature: Although it extinguishes the obligation, it also
gives birth to another obligation.
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Two-fold purpose:
1. Extinguishing the old obligation
2. Giving birth to a new obligation to take place of the old
Take note: Unlike others, as a mode of extinguishment, it is relative
in character and not absolute.
REQUISITES OF NOVATION
1. A previous valid obligation
2. Agreement of the parties to the new obligation
3. Extinguishment of the old obligation
4. Validity of the new obligation
KINDS OF NOVATION
As to essence
1. Objective or Real – refers to the change either in the
cause, object or principal conditions of the obligations
2. Subjective or Personal – refers to the change of persons
A. Active - Substitution of the person of the debtor
B. Passive - Subrogation of a third person in the right of
the creditor
Take note: change of creditor may be by agreement
or by operation of law
3. Mixed – combination of objective and subjective novation.
Hence, change of object and parties
As to form or constitution
1. Express – when it is declared in unequivocal terms that the
old obligation is extinguished by a new one which
substitutes the same
2. Implied – when the old and the new obligations are
incompatible with each other on every point.
As to extent or effect
1. Modificatory – when the old obligation subsists to the
extent it remains compatible with the amendatory
agreement.
2. Extinctive – when an old obligation is terminated by the
creation of a new obligation that takes the place of the
former
OBJECT OF NOVATION
Objective or real novation may be effected by:
1. Changing the cause of the obligation
2. Changing the object of the obligation
3. Changing the principal or essential conditions of the
obligation
CHANGE OF CAUSE
Example: A contract of sale or lease in which the price has not yet
been paid to the vendor or lessor. If the parties subsequently enter
into a new agreement whereby the obligation to pay is converted
into a loan made to the vendee or lessee, the result is a real or
objective novation.
CHANGE OF OBJECT
Where a certain amount is due to the obligee or creditor, any
modification in the amount due or any change whereby the
obligation to pay is converted into an obligation to render a personal
service would constitute a novation. The same is true in case of
dation in payment
CHANGE OR PRINCIPAL CONDITIONS
The change or modification must refer to a principal, not incidental,
condition resulting in the alteration or modification of the essence
of the obligation. Hence, only those changes of an essential, not
accidental, character can effect a novation of the previous or original
obligation.
FORM OF EXTINGUISHMENT
1292. In order that an obligation may be extinguished by another
which substitutes the same, it is imperative that it be so declared in
unequivocal terms, or that the old and the new obligations be on
every point incompatible with each other.
FORM OF EXTINGUISHMENT
What is the form of extinguishment of obligation? The Code does
not provide any specific form. However, it may be express or
implied.
 Express – when declared in unequivocal terms that the old
obligation is extinguished by the new which substitutes it
 Implied – when the old and new obligations are incompatible
on very point.
Take note: Novation by presumption is never favoured. To be
sustained, it must be established that the old and new contracts or
incompatible in all points. Hence animus novandi (intent to
substitute a new obligation for the old one must be clearly
established)
TEST OF INCOMPATIBILITTY
Whether or not the old and new obligations can stand together,
each having its own independent existence.
 If they can stand together, there is no incompatibility.
Consequently, there is no novation.
 If they cannot stand together, there is incompatibility.
Consequently, there is novation.
WHEN IMPLIED NOVATION MAY BE MADE
Implied novation is done by making substantial changes
A. In the object or subject matter of the contract (Example:
delivery of a car instead of a diamond ring)
B. In the cause or consideration of the contract [Example: an
upward change in the price. (NOTE: Reduction in price
implies a remission.
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C. In the principal terms or conditions of the contract
Examples:
1. If a debt subject to a condition is made an absolute one
without a condition.
2. Reduction of the term or period originally stipulated.
3. When, without the consent of some subscribers, the
capital stock of a corporation is increased. Here the
subscribers who did not consent to the increase are
released or freed from their subscription.
[NOTE: Novation thru change of the object, cause, or
principal terms and conditions is not presumed; clear
proof of novation must be given.
Instances where there is no extinctive novation
Here the original contract or obligation remains, subject only to the
slight modifications introduced. In other words, only a modificatory
novation has been effected.
1. When there are only slight alterations or modifications in
the construction plans of a building.
2. When the new contract merely contains supplementary
agreement.
3. When additional interest is agreed upon.
4. When additional security is given.
5. When, after a final judgment, a contract was entered into
precisely to provide a method of payment other than that
stated in the judgment.
[NOTE: But the Supreme Court has held that if the object
of the new contract is to settle the judgment, by reducing
the amount stated in the judgment, and by stipulating an
attorney’s fees in case of non-payment, and by inserting a
penalty clause, the judgment may be considered to have
been novated.
6. When a guarantor enters into an agreement with the
creditor that he will also be a principal debtor. (Here the
original principal debtor is not released from his
obligation)
7. When the creditor in the meantime refrains from (or
forbears from) suing the debtor or even when the creditor
merely extends the term of payment, for here the period
merely affects the performance, not the creation of the
obligation.
[NOTE: However, guarantors who do not consent to the
extension of term are released from their obligation of
guaranty by express provision of the law, and not because
of any extinctive modification.
8. When the place of payment is changed or when there is a
variation in the amount of partial payments.
9. When a public instrument is executed to confirm a valid
contract, whether oral or in a private instrument.
10. When payment of the purchase price for certain trucks is
made by the execution of a promissory note for said price.
Here, there is no novation of the contract of sale.
NOVATION BY SUBSTITUTION OF DEBTOR
1293. Novation which consists in substituting a new debtor in the
place of the original one, may be made even without the knowledge
or against the will of the latter, but not without the consent of the
creditor. Payment by the new debtor gives him the rights mentioned
in Articles 1236 and 1237.
PERSONAL OR SUBJECTIVE NOVATION
There are two kinds of personal or subjective novation:
1. Passive – change of the debtor (Art 1293 speaks of passive
subjective novation)
2. Active – change of the creditor
NOVATION BY SUBSTITUTION OF DEBTOR
Consists in the substitution of a new debtor in the place of the
original debtor, which must be effected with the consent of the
creditor at the instance of either the new debtor or the old debtor.
Two forms of novation by substituting the person of the debtor
depending on whose initiative it comes from:
1. Expromision
2. Delegacion
FORMS OF SUBSTITUTION OF DEBTORS
Expromision
Effected with the consent of the creditor at the instance of the new
debtor even WITHOUT the knowledge or consent of the old debtor.
Requisites:
A. Initiative for substitution must emanate from the new debtor
B. Consent of the creditor to the substitution
Two kinds of substitution by expromision:
1. Substitution with the knowledge and consent of the old
debtor
2. Substitution without the knowledge or consent of the old
debtor
Example:
D owes C P1,000,000. F, friend of D, approaches C and tells him: “I
will pay you what D owes you. From now on, consider me your
debtor, not D. D is to be excused. Do you agree?” C agrees. Is there
expromision here?
Answer: Yes, and even if F does not pay C, D cannot be held liable
anymore because his obligation has already been extinguished. (Art.
1294 provides that: “If the substitution is without the knowledge or
against the will of the debtor, the new debtor’s insolvency or non-
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fulfillment of the obligation shall not give rise to any liability on the
part of the original debtor.”
Delegacion
A method of novation caused by the replacement of the old debtor
by a new debtor, who (the old debtor) has proposed him to the
creditor, and which replacement has been agreed to by said creditor
and by said new debtor.
Effected with the consent of the creditor at the instance of the old
debtor with the concurrence of the new debtor
Requisites:
A. Initiation for substitution must emanate from the old debtor
B. Consent of the new debtor
C. Acceptance by the creditor
Example:
If a debtor phones his creditor and tells him that F, a friend, will pay
the debt, and the creditor agrees, this does not necessarily mean
that a delegacion has been effected, for after all, the friend may be
acting only as an agent, messenger, or employee of the debtor.
Upon the other hand, if the debtor tells the creditor, “My friend F
will pay my debt. I, therefore, wish to be released from my
obligation,” and both the friend and the creditor agree, this would
be a correct example of delegacion. In such a case, if F fails to pay,
will the old debtor be excused?
Answer: Generally yes, in view of the novation, except if F’s failure
to pay was due to insolvency, and such insolvency was already
existing and of public knowledge OR already existing and known to
the debtor when he delegated his debt. (Art. 1295). The reason for
the exception is evident: his obvious bad faith.
Effects:
1. New debtor can demand reimbursement from the
original debtor only insofar as the payment has been
beneficial to such debtor
2. But cannot be subrogated in the rights of the creditor.
C. If substitution was effected WITHOUT the knowledge and
consent of the original debtor and subsequently, payment
is made by the new debtor WITH the knowledge and
consent of the original debtor –
Effects:
1. New debtor can demand reimbursement from the
original debtor of the entire amount which he has
paid and the same time
2. New debtor can be subrogated in all of the rights of
the creditor.
Delegacion
Since the substitution was effected with the consent of all the
parties --
Effects:
1. New debtor can demand reimbursement from the original
debtor of the entire amount which he has paid.
2. New debtor can compel the creditor to subrogate him in
all of his rights
EFFECT OF NONPAYMENT BY NEW DEBTOR
1294. If the substitution is without the knowledge or against the will
of the debtor, the new debtor’s insolvency or nonfulfillment of the
obligation shall not give rise to any liability on the part of the original
debtor.

NECESSITY OF CREDITOR’S CONSENT
Whether the substitution is effected through expromision or
delegacion the consent of the creditor must always be secured.
Reason: Substitution of one debtor for another may delay or
prevent the fulfillment or performance of the obligation by the
temporary inability or insolvency of the new debtor
1295. The insolvency of the new debtor, who has been proposed by
the original debtor and accepted by the creditor, shall not revive the
action of the latter against the original obligor, except when said
insolvency was already existing and of public knowledge, orknown
to the debtor, when he delegated his debt.

EFFECT OF PAYMENT BY NEW DEBTOR

Expromision
A. If substitution was effected WITH the knowledge and
consent of the original debtor and subsequently payment
is made WITH OR WITHOUT the knowledge and consent of
the original debtor –

Effects:
1. New debtor can demand reimbursement from the
original debtor of the entire amount which he has
paid
2. Be subrogated in all of the rights of the creditor.

B. If substitution was effected WITHOUT the knowledge and

consent of the original debtor and subsequently, payment
is made by the new debtor WITHOUT the knowledge and
consent of the original debtor –

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