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TITLE I.

OBLIGATIONS minds between two persons whereby one


binds himself, with respect to the other, to
CH. 1 GENERAL PROVISIONS give something or to render some
service.
I. Concept
a. Definition QUASI-CONTRACTS
Article 1160. Obligations derived from
quasi-contracts shall be subject to the
Article 1156. An obligation is a juridical
provisions of Chapter 1, Title XVII, of this
necessity to give, to do or not to do. (n)
Book

Article 2142. Certain lawful, voluntary


b. Elements
and unilateral acts give rise to the juridical
i. Active Subject
relation of quasi-contract to the end that
ii. Passive Subject
no one shall be unjustly enriched or
iii. Prestation or Object
benefited at the expense of another.
iv. Efficient cause or
juridical tie or
Negotiorum Gestio
vinculum juris
Art. 2144. Whoever voluntarily takes
c. Distinction between
charge of the agency or management of
Natural & Civil Obligations
the business or property of another,
i. As to enforceability
without any power from the latter, is
ii. As to basis
obliged to continue the same until the
termination of the affair and its incidents,
II. Sources of Obligation
or to require the person concerned to
substitute him, if the owner is in a position
Article 1157. Obligations arise from:
to do so. This juridical relation does not
(1) Law;
arise in either of these instances:
(2) Contracts;
● (1) When the property or business
(3) Quasi-contracts;
is not neglected or abandoned;
(4) Acts or omissions punished by
● (2) If in fact the manager has been
law; and
tacitly authorized by the owner.
(5) Quasi-delicts
In the first case, the provisions of Articles
1317, 1403, No. 1, and 1404 regarding
LAW
unauthorized contracts shall govern.
Article 1158. Obligations derived from
law are not presumed. Only those
In the second case, the rules on agency
expressly determined in this Code or in
in Title X of this Book shall be applicable.
special laws are demandable, and shall
be regulated by the precepts of the law
Art. 2145. The officious manager shall
which establishes them; and as to what
perform his duties with all the diligence of
has not been foreseen, by the provisions
a good father of a family, and pay the
of this Book. (1090)
damages which through his fault or
negligence may be suffered by the owner
CONTRACTS
of the property or business under
Article 1159. Obligations arising from
management.
contracts have the force of law between
the contracting parties and should be
The courts may, however, increase or
complied with in good faith.
moderate the indemnity according to the
circumstances of each case.
Article 1305. A contract is a meeting of
Art. 2146. If the officious manager duties.
delegates to another person all or some
of his duties, he shall be liable for the acts The same obligation shall be incumbent
of the delegate, without prejudice to the upon him when the management had for
direct obligation of the latter toward the its purpose the prevention of an imminent
owner of the business. and manifest loss, although no benefit
may have been derived.
The responsibility of two or more officious
managers shall be solidary, unless the Art. 2151. Even though the owner did not
management was assumed to save the derive any benefit and there has been no
thing or business from imminent danger. imminent and manifest danger to the
property or business, the owner is liable
Art. 2147. The officious manager shall be as under the first paragraph of the
liable for any fortuitous event: preceding article, provided:
● (1) If he undertakes risky ● (1) The officious manager has
operations which the owner was acted in good faith, and
not accustomed to embark upon; ● (2) The property or business is
● (2) If he has preferred his own intact, ready to be returned to the
interest to that of the owner; owner.
● (3) If he fails to return the property
or business after demand by the Art. 2152. The officious manager is
owner; personally liable for contracts which he
● (4) If he assumed the has entered into with third persons, even
management in bad faith. though he acted in the name of the
Art. 2148. Except when the management owner, and there shall be no right of
was assumed to save property or action between the owner and third
business from imminent danger, the persons. These provisions shall not apply:
officious manager shall be liable for ● (1) If the owner has expressly or
fortuitous events: tacitly ratified the management, or
● (1) If he is manifestly unfit to carry ● (2) When the contract refers to
on the management; things pertaining to the owner of
● (2) If by his intervention he the business.
prevented a more competent
person from taking up the Art. 2153. The management is
management. extinguished:
Art. 2149. The ratification of the (1) When the owner repudiates it or puts
management by the owner of the an end thereto;
business produces the effects of an (2) When the officious manager
express agency, even if the business may withdraws from the management, subject
not have been successful. to the provisions of Article 2144;
(3) By the death, civil interdiction, insanity
Art. 2150. Although the officious or insolvency of the owner or the officious
management may not have been manager.
expressly ratified, the owner of the
property or business who enjoys the Solutio Indebiti
advantages of the same shall be liable for Art. 2154. If something is received when
obligations incurred in his interest, and there is no right to demand it, and it was
shall reimburse the officious manager for unduly delivered through mistake, the
the necessary and useful expenses and obligation to return it arises.
for the damages which the latter may
have suffered in the performance of his Art. 2155. Payment by reason of a
mistake in the construction or application action to prescribe, or gave up the
of a doubtful or difficult question of law pledges, or cancelled the guaranties for
may come within the scope of the his right. He who paid unduly may
preceding article. proceed only against the true debtor or
the guarantors with regard to whom the
Art. 2156. If the payer was in doubt action is still effective.
whether the debt was due, he may
recover if he proves that it was not due. Art. 2163. It is presumed that there was a
mistake in the payment if something
Art. 2157. The responsibility of two or which had never been due or had already
more payees, when there has been been paid was delivered; but he from
payment of what is not due, is solidary. whom the return is claimed may prove
that the delivery was made out of
Art. 2158. When the property delivered or liberality or for any other just cause.
money paid belongs to a third person, the
payee shall comply with the provisions of Other quasi contracts
article 1984. Art. 2164. When, without the knowledge
of the person obliged to give support, it is
Art. 2159. Whoever in bad faith accepts given by a stranger, the latter shall have a
an undue payment, shall pay legal right to claim the same from the former,
interest if a sum of money is involved, or unless it appears that he gave it out of
shall be liable for fruits received or which piety and without intention of being
should have been received if the thing repaid.
produces fruits.
Art. 2165. When funeral expenses are
He shall furthermore be answerable for borne by a third person, without the
any loss or impairment of the thing from knowledge of those relatives who were
any cause, and for damages to the obliged to give support to the deceased,
person who delivered the thing, until it is said relatives shall reimburse the third
recovered. person, should the latter claim
reimbursement.
Art. 2160. He who in good faith accepts
an undue payment of a thing certain and Art. 2166. When the person obliged to
determinate shall only be responsible for support an orphan, or an insane or other
the impairment or loss of the same or its indigent person unjustly refuses to give
accessories and accessions insofar as he support to the latter, any third person may
has thereby been benefited. If he has furnish support to the needy individual,
alienated it, he shall return the price or with right of reimbursement from the
assign the action to collect the sum. person obliged to give support. The
provisions of this article apply when the
Art. 2161. As regards the reimbursement father or mother of a child under eighteen
for improvements and expenses incurred years of age unjustly refuses to support
by him who unduly received the thing, the him.
provisions of Title V of Book II shall
govern. Art. 2167. When through an accident or
other cause a person is injured or
Art. 2162. He shall be exempt from the becomes seriously ill, and he is treated or
obligation to restore who, believing in helped while he is not in a condition to
good faith that the payment was being give consent to a contract, he shall be
made of a legitimate and subsisting claim, liable to pay for the services of the
destroyed the document, or allowed the physician or other person aiding him,
unless the service has been rendered out ACTS/OMISSIONS PUNISHED BY LAW
of pure generosity. Article 1161. Civil obligations arising from
criminal offenses shall be governed by
Art. 2168. When during a fire, flood, the penal laws, subject to the provisions
storm, or other calamity, property is saved of article 2177, and of the pertinent
from destruction by another person provisions of Chapter 2, Preliminary Title,
without the knowledge of the owner, the on Human Relations, and of Title XVIII of
latter is bound to pay the former just this Book, regulating damages.
compensation.
QUASI-DELICTS
Art. 2169. When the government, upon Article 1162. Obligations derived from
the failure of any person to comply with quasi-delicts shall be governed by the
health or safety regulations concerning provisions of Chapter 2, Title XVII of this
property, undertakes to do the necessary Book, and by special laws.
work, even over his objection, he shall be
liable to pay the expenses. Article 2176. Whoever by act or omission
causes damage to another, there being
Art. 2170. When by accident or other fault or negligence, is obliged to pay for
fortuitous event, movables separately the damage done. Such fault or
pertaining to two or more persons are negligence, if there is no pre-existing
commingled or confused, the rules on co- contractual relation between the parties,
ownership shall be applicable. is called a quasi-delict and is governed by
the provisions of this Chapter.
Art. 2171. The rights and obligations of
the finder of lost personal property shall (Distinguish quasi-delicts from delicts)
be governed by Articles 719 and 720. Liability for fault of others
Article 2180. The obligation imposed by
Art. 2172. The right of every possessor in article 2176 is demandable not only for
good faith to reimbursement for one's own acts or omissions, but also for
necessary and useful expenses is those of persons for whom one is
governed by Article 546. responsible.

Art. 2173. When a third person, without The father and, in case of his death or
the knowledge of the debtor, pays the incapacity, the mother, are responsible for
debt, the rights of the former are the damages caused by the minor
governed by Articles 1236 and 1237. children who live in their company.

Art. 2174. When in a small community a Guardians are liable for damages caused
nationality of the inhabitants of age by the minors or incapacitated persons
decide upon a measure for protection who are under their authority and live in
against lawlessness, fire, flood, storm or their company.
other calamity, any one who objects to the
plan and refuses to contribute to the The owners and managers of an
expenses but is benefited by the project establishment or enterprise are likewise
as executed shall be liable to pay his responsible for damages caused by their
share of said expenses. employees in the service of the branches
in which the latter are employed or on the
Art. 2175. Any person who is constrained occasion of their functions.
to pay the taxes of another shall be
entitled to reimbursement from the latter. Employers shall be liable for the damages
caused by their employees and may ask that the obligation be complied
household helpers acting within the scope with at the expense of the debtor.
of their assigned tasks, even though the If the obligor delays, or has promised to
former are not engaged in any business deliver the same thing to two or more
or industry. persons who do not have the same
interest, he shall be responsible for any
The State is responsible in like manner fortuitous event until he has effected the
when it acts through a special agent; but delivery.
not when the damage has been caused
by the official to whom the task done SPECIFIC THING (duties of the obligor)
properly pertains, in which case what is Article 1244. The debtor of a thing
provided in article 2176 shall be cannot compel the creditor to receive a
applicable. different one, although the latter may be
of the same value as, or more valuable
Lastly, teachers or heads of than that which is due.
establishments of arts and trades shall be In obligations to do or not to do, an act or
liable for damages caused by their pupils forbearance cannot be substituted by
and students or apprentices, so long as another act or forbearance against the
they remain in their custody. obligee's will.
The responsibility treated of in this article
shall cease when the persons herein Article 1163. Every person obliged to
mentioned prove that they observed all give something is also obliged to take
the diligence of a good father of a family care of it with the proper diligence of a
to prevent damage. good father of a family, unless the law or
the stipulation of the parties requires
Article 218 & 219 of the Family Code another standard of care.

Civil Liability Arising From Crime Article 1164. The creditor has a right to
Rule 111, Rules on Criminal Procedure the fruits of the thing from the time the
obligation to deliver it arises. However, he
Article 1161. Civil obligations arising from shall acquire no real right over it until the
criminal offenses shall be governed by same has been delivered to him.
the penal laws, subject to the provisions
of article 2177, and of the pertinent Article 1166. The obligation to give a
provisions of Chapter 2, Preliminary Title, determinate thing includes that of
on Human Relations, and of Title XVIII of delivering all its accessions and
this Book, regulating damages. accessories, even though they may not
have been mentioned.

CH. 2 NATURE AND EFFECTS OF GENERIC THING


OBLIGATIONS Article 1246. When the obligation
consists in the delivery of an
I. Kinds of Prestation indeterminate or generic thing, whose
a. Obligation to give quality and circumstances have not been
stated, the creditor cannot demand a
Article 1165. When what is to be thing of superior quality. Neither can the
delivered is a determinate thing, the debtor deliver a thing of inferior quality.
creditor, in addition to the right granted The purpose of the obligation and other
him by article 1170, may compel the circumstances shall be taken into
debtor to make the delivery. consideration.
If the thing is indeterminate or generic, he
b. Obligation to do/not to do performance, that which is expected of a
Article 1244. The debtor of a thing good father of a family shall be required.
cannot compel the creditor to receive a
different one, although the latter may be DELAY (Mora)
of the same value as, or more valuable Article 1169. Those obliged to deliver or
than that which is due. to do something incur in delay from the
In obligations to do or not to do, an act or time the obligee judicially or extrajudicially
forbearance cannot be substituted by demands from them the fulfillment of their
another act or forbearance against the obligation.
obligee's will. However, the demand by the creditor
shall not be necessary in order that delay
may exist:
II. Breach of Obligation (1) When the obligation or the law
a. Concept expressly so declare; or
(Distinction between (2) When from the nature and the
substantial & casual breach) circumstances of the obligation it appears
b. Modes of Breach that the designation of the time when the
Article 1170. Those who in the thing is to be delivered or the service is to
performance of their obligations are guilty be rendered was a controlling motive for
of fraud, negligence, or delay, and those the establishment of the contract; or
who in any manner contravene the tenor (3) When demand would be useless, as
thereof, are liable for damages. when the obligor has rendered it beyond
his power to perform.
TOTAL BREACH (Absolute Failure of In reciprocal obligations, neither party
Refusal to Perform) incurs in delay if the other does not
- Rule 39, Sec. 10, 1997 Revised comply or is not ready to comply in a
Rule on Civil Procedure proper manner with what is incumbent
upon him. From the moment one of the
FRAUD (Dolo) parties fulfills his obligation, delay by the
Article 1171. Responsibility arising from other begins.
fraud is demandable in all obligations.
Any waiver of an action for future fraud is III. Remedies of Creditor in Case
void. of Breach
a. Action for Performance
NEGLIGENCE (Specific performance in
Article 1172. Responsibility arising from specific thing; substituted
negligence in the performance of every performance for generic
kind of obligation is also demandable, but thing; substituted
such liability may be regulated by the performance or undoing poor
courts, according to the circumstances. work for obligation to do;
undoing obligation not to do)
Article 1173. The fault or negligence of Article 1165. When what is to be
the obligor consists in the omission of that delivered is a determinate thing, the
diligence which is required by the nature creditor, in addition to the right granted
of the obligation and corresponds with the him by article 1170, may compel the
circumstances of the persons, of the time debtor to make the delivery.
and of the place. When negligence shows If the thing is indeterminate or generic, he
bad faith, the provisions of articles 1171 may ask that the obligation be complied
and 2201, paragraph 2, shall apply. with at the expense of the debtor.
If the law or contract does not state the If the obligor delays, or has promised to
diligence which is to be observed in the deliver the same thing to two or more
persons who do not have the same Article 1192. In case both parties have
interest, he shall be responsible for any committed a breach of the obligation, the
fortuitous event until he has effected the liability of the first infractor shall be
delivery. equitably tempered by the courts. If it
cannot be determined which of the parties
Rule 39, Sec. 10, Revised Rule on Civil first violated the contract, the same shall
Procedure be deemed extinguished, and each shall
bear his own damages
Article 1167. If a person obliged to do
something fails to do it, the same shall be IV. Subsidiary Remedies of
executed at his cost. Creditor
This same rule shall be observed if he ACCION SUBROGATORIA
does it in contravention of the tenor of the Article 1177. The creditors, after having
obligation. Furthermore, it may be pursued the property in possession of the
decreed that what has been poorly done debtor to satisfy their claims, may
be undone. exercise all the rights and bring all the
actions of the latter for the same purpose,
Article 1168. When the obligation save those which are inherent in his
consists in not doing, and the obligor person; they may also impugn the acts
does what has been forbidden him, it which the debtor may have done to
shall also be undone at his expense. defraud them.

b. Action for damages Exception (inherent rights of debtor)


Article 1170. Those who in the Article 772. Only those who at the time of
performance of their obligations are guilty the donor's death have a right to the
of fraud, negligence, or delay, and those legitime and their heirs and successors in
who in any manner contravene the tenor interest may ask for the reduction or
thereof, are liable for damages. inofficious donations.
Those referred to in the preceding
c. Action for rescission paragraph cannot renounce their right
Article 1191. The power to rescind during the lifetime of the donor, either by
obligations is implied in reciprocal ones, express declaration, or by consenting to
in case one of the obligors should not the donation.
comply with what is incumbent upon him. The donees, devisees and legatees, who
The injured party may choose between are not entitled to the legitime and the
the fulfillment and the rescission of the creditors of the deceased can neither ask
obligation, with the payment of damages for the reduction nor avail themselves
in either case. He may also seek thereof.
rescission, even after he has chosen
fulfillment, if the latter should become ACCION PAULIANA
impossible. Article 1177 (supra)
The court shall decree the rescission
claimed, unless there be just cause Article 1381. The following contracts are
authorizing the fixing of a period. rescissible:
This is understood to be without prejudice (1) Those which are entered into by
to the rights of third persons who have guardians whenever the wards whom
acquired the thing, in accordance with they represent suffer lesion by more than
articles 1385 and 1388 and the Mortgage one-fourth of the value of the things which
Law. are the object thereof;
(2) Those agreed upon in representation
of absentees, if the latter suffer the lesion
stated in the preceding number; repurchase, without prejudice to the
(3) Those undertaken in fraud of provisions of the Mortgage Law and the
creditors when the latter cannot in any Land Registration Law with respect to
other manner collect the claims due third persons.
them;
(4) Those which refer to things under Article 1893. In the cases mentioned in
litigation if they have been entered into by Nos. 1 and 2 of the preceding article, the
the defendant without the knowledge and principal may furthermore bring an action
approval of the litigants or of competent against the substitute with respect to the
judicial authority; obligations which the latter has
(5) All other contracts specially declared contracted under the substitution. (1722a)
by law to be subject to rescission.
V. Extinguishment of Liability in
OTHER SPECIFIC SUBSIDIARY Case of Breach Due to
REMEDIES (Direct Actions) Fortuitous Event
Article 1652. The sublessee is Article 1174. Except in cases expressly
subsidiarily liable to the lessor for any specified by the law, or when it is
rent due from the lessee. However, the otherwise declared by stipulation, or
sublessee shall not be responsible when the nature of the obligation requires
beyond the amount of rent due from him, the assumption of risk, no person shall be
in accordance with the terms of the responsible for those events which could
sublease, at the time of the extra-judicial not be foreseen, or which, though
demand by the lessor. foreseen, were inevitable.
Payments of rent in advance by the
sublessee shall be deemed not to have Exceptions
been made, so far as the lessor's claim is Article 1174 (supra)
concerned, unless said payments were
effected in virtue of the custom of the Article 1165. When what is to be
place. delivered is a determinate thing, the
creditor, in addition to the right granted
Article 1729. Those who put their labor him by article 1170, may compel the
upon or furnish materials for a piece of debtor to make the delivery.
work undertaken by the contractor have If the thing is indeterminate or generic, he
an action against the owner up to the may ask that the obligation be complied
amount owing from the latter to the with at the expense of the debtor.
contractor at the time the claim is made. If the obligor delays, or has promised
However, the following shall not prejudice to deliver the same thing to two or
the laborers, employees and furnishers of more persons who do not have the
materials: same interest, he shall be responsible
(1) Payments made by the owner to the for any fortuitous event until he has
contractor before they are due; effected the delivery.
(2) Renunciation by the contractor of any
amount due him from the owner. This Article 552. A possessor in good faith
article is subject to the provisions of shall not be liable for the deterioration or
special laws. loss of the thing possessed, except in
cases in which it is proved that he has
Article 1608. The vendor may bring his acted with fraudulent intent or negligence,
action against every possessor whose after the judicial summons.
right is derived from the vendee, even if in A possessor in bad faith shall be liable for
the second contract no mention should deterioration or loss in every case, even if
have been made of the right to caused by a fortuitous event.
Article 1268. When the debt of a thing
Article 1942. The bailee is liable for the certain and determinate proceeds from a
loss of the thing, even if it should be criminal offense, the debtor shall not be
through a fortuitous event: exempted from the payment of its price,
(1) If he devotes the thing to any purpose whatever may be the cause for the loss,
different from that for which it has been unless the thing having been offered by
loaned; him to the person who should receive it,
(2) If he keeps it longer than the period the latter refused without justification to
stipulated, or after the accomplishment of accept it.
the use for which the commodatum has
been constituted; VI. Usurious Transactions
(3) If the thing loaned has been delivered a. PD 858, PD 1685
with appraisal of its value, unless there is b. Monetary Board Circular
a stipulation exempting the bailee from No. 905 (lifting ceiling)
responsibility in case of a fortuitous event; Article 2209. If the obligation consists in
(4) If he lends or leases the thing to a the payment of a sum of money, and the
third person, who is not a member of his debtor incurs in delay, the indemnity for
household; damages, there being no stipulation to
(5) If, being able to save either the thing the contrary, shall be the payment of the
borrowed or his own thing, he chose to interest agreed upon, and in the absence
save the latter. of stipulation, the legal interest, which is
six per cent per annum.
Article 1979. The depositary is liable for
the loss of the thing through a fortuitous c. Monetary Board No. 799
event: (July 1, 2013)
(1) If it is so stipulated;
(2) If he uses the thing without the VII. Fulfilment of Obligations
depositor's permission; a. Chapter 4: Payment
(3) If he delays its return; b. Presumptions in Payments
(4) If he allows others to use it, even of interests and
though he himself may have been installments
authorized to use the same. Article 1176. The receipt of the principal
by the creditor without reservation with
Article 2001. The act of a thief or robber, respect to the interest, shall give rise to
who has entered the hotel is not deemed the
force majeure, unless it is done with the presumption that said interest has been
use of arms or through an irresistible paid.
force. The receipt of a later installment of a debt
without reservation as to prior
Article 2147. The officious manager shall installments, shall likewise raise the
be liable for any fortuitous event: presumption that such installments have
(1) If he undertakes risky operations been paid.
which the owner was not accustomed to
embark upon; VIII. Transmissibility of Rights
(2) If he has preferred his own interest to Article 1178. Subject to the laws, all
that of the owner; rights acquired in virtue of an obligation
(3) If he fails to return the property or are transmissible, if there has been no
business after demand by the owner; stipulation to the contrary.
(4) If he assumed the management in bad
faith.
CH. 3 DIFFERENT KINDS OF been complied with.
OBLIGATIONS
Article 1188. The creditor may, before the
I. Pure and Conditional fulfillment of the condition, bring the
PURE OBLIGATIONS appropriate actions for the preservation of
Article 1179. Every obligation whose his right. The debtor may recover what
performance does not depend upon a during the same time he has paid by
future or uncertain event, or upon a past mistake in case of a suspensive
event unknown to the parties, is condition.
demandable at once.
Every obligation which contains a
resolutory condition shall also be RESOLUTORY
demandable, without prejudice to the
effects of the happening of the event. (Cause/Origin)
Article 1182. When the fulfillment of the
condition depends upon the sole will of
CONDITIONAL OBLIGATIONS the debtor, the conditional obligation shall
Article 1181. In conditional obligations, be void. If it depends upon chance or
the acquisition of rights, as well as the upon the will of a third person, the
extinguishment or loss of those already obligation shall take effect in conformity
acquired, shall depend upon the with the provisions of this Code.
happening of the event which constitutes
the condition. POTESTATIVE
Article 1180. When the debtor binds
himself to pay when his means permit
a. Kinds of Conditions him to do so, the obligation shall be
(Effect on Obligation) deemed to be one with a period, subject
Article 1181 (supra) to the provisions of article 1197.

SUSPENSIVE CASUAL
Article 1187. The effects of a conditional MIXED
obligation to give, once the condition has
been fulfilled, shall retroact to the day of (Possibility)
the constitution of the obligation. POSSIBILE
IMPOSSIBLE
Nevertheless, when the obligation Article 1183. Impossible conditions,
imposes reciprocal prestations upon the those contrary to good customs or public
parties, the fruits and interests during the policy and those prohibited by law shall
pendency of the condition shall be annul the obligation which depends upon
deemed to have been mutually them. If the obligation is divisible, that
compensated. If the obligation is part thereof which is not affected by the
unilateral, the debtor shall appropriate the impossible or
fruits and interests received, unless from unlawful condition shall be valid.
the nature and circumstances of the
obligation it should be inferred that the The condition not to do an impossible
intention of the person constituting the thing shall be considered as not having
same was different. been agreed upon.

In obligations to do and not to do, the


courts shall determine, in each case, the (Mode)
retroactive effect of the condition that has
POSITIVE the debtor, he shall be obliged to pay
Article 1184. The condition that some damages; it is understood that the thing is
event happen at a determinate time shall lost when it perishes, or goes out of
extinguish the obligation as soon as the commerce, or disappears in such a way
time expires or if it has become that its existence is unknown or it cannot
indubitable that the event will not take be recovered;
place. (3) When the thing deteriorates without
the fault of the debtor, the impairment is
NEGATIVE to be borne by the creditor;
Article 1185. The condition that some (4) If it deteriorates through the fault of
event will not happen at a determinate the debtor, the creditor may choose
time shall render the obligation effective between the rescission of the obligation
from the moment the time indicated has and its fulfillment, with indemnity for
elapsed, or if it has become evident that damages in either case;
the event cannot occur. (5) If the thing is improved by its nature,
or by time, the improvement shall inure to
If no time has been fixed, the condition the benefit of the creditor;
shall be deemed fulfilled at such time as (6) If it is improved at the expense of the
may have probably been contemplated, debtor, he shall have no other right than
bearing in mind the nature of the that granted to the usufructuary.
obligation.
Article 1190. When the conditions have
for their purpose the extinguishment of an
(Susceptible to partial realization) obligation to give, the parties, upon the
DIVISIBLE fulfillment of said conditions, shall return
INDIVISIBLE to each other what they have received.
In case of the loss, deterioration or
(Number of conditions) improvement of the thing, the provisions
SINGULAR which, with respect to the debtor, are laid
MULTIPLE down in the preceding article shall be
- Conjunctive applied to the party who is bound to
- Disjunctive return.
 Alternative As for the obligations to do and not to do,
 Facultative the provisions of the second paragraph of
IMPLIED article 1187 shall be observed as regards
EXPRESS the effect of the extinguishment of the
obligation
b. Loss, deterioration, or
improvement pending the c. Effects of prevention of the
happening of the condition fulfillment of the condition
Article 1189. When the conditions have by the obligor
been imposed with the intention of Article 1186. The condition shall be
suspending the efficacy of an obligation to deemed fulfilled when the obligor
give, the following rules shall be observed voluntarily prevents its fulfillment.
in case of the improvement, loss or
deterioration of the thing during the d. Reciprocal Obligations
pendency of the condition: Aaa
(1) If the thing is lost without the fault of Article 1191. The power to rescind
the debtor, the obligation shall be obligations is implied in reciprocal ones,
extinguished; in case one of the obligors should not
(2) If the thing is lost through the fault of
comply with what is incumbent upon him. the rules of the preceding Section.

The injured party may choose between


the fulfillment and the rescission of the (Expression)
obligation, with the payment of damages EXPRESS
in either case. He may also seek IMPLIED
rescission, even after he has chosen
fulfillment, if the latter should become (Definiteness)
impossible. DEFINITE
INDEFINITE
The court shall decree the rescission
claimed, unless there be just cause (Source)
authorizing the fixing of a period. VOLUNTARY
LEGAL
This is understood to be without prejudice JUDICIAL
to the rights of third persons who have
acquired the thing, in accordance with c. Loss, deterioration, or
articles 1385 and 1388 and the Mortgage improvement before arrival
Law. of period
Article 1194. In case of loss,
Article 1192. In case both parties have deterioration or improvement of the thing
committed a breach of the obligation, the before the arrival of the day certain, the
liability of the first infractor shall be rules in article 1189 shall be observed.
equitably tempered by the courts. If it
cannot be determined which of the parties Article 1189 (supra)
first violated the contract, the same shall d. Effects of payment in
be deemed extinguished, and each shall advance
bear his own damages. Article 1195. Anything paid or delivered
before the arrival of the period, the obligor
II. Obligation with A Period being unaware of the period or believing
a. Period or Term that the obligation has become due and
(v. Condition) demandable, may be recovered, with the
b. Kinds of Period fruits and interests.
(Effect)
SUSPENSIVE [Ex die] Article 1197. If the obligation does not fix
RESOLUTORY [In diem] a period, but from its nature and the
Article 1193. Obligations for whose circumstances it can be inferred that a
fulfillment a day certain has been fixed, period was intended, the courts may fix
shall be demandable only when that day the duration thereof.
comes. Obligations with a resolutory
period take effect at once, but terminate The courts shall also fix the duration of
upon arrival of the day certain. the period when it depends upon the will
of the debtor.
A day certain is understood to be that
which must necessarily come, although it In every case, the courts shall determine
may not be known when. such period as may under the
circumstances have been probably
If the uncertainty consists in whether the contemplated by the parties. Once fixed
day will come or not, the obligation is by the courts, the period cannot be
conditional, and it shall be regulated by changed by them.
CONCEPT
e. Benefit of Period Article 1199. A person alternatively
Article 1196. Whenever in an obligation a bound by different prestations shall
period is designated, it is presumed to completely perform one of them.
have been established for the benefit of The creditor cannot be compelled to
both the creditor and the debtor, unless receive part of one and part of the other
from the tenor of the same or other undertaking.
circumstances it should appear that the
period has been established in favor of RIGHT OF CHOICE
one or of the other. Article 1200. The right of choice belongs
to the debtor, unless it has been
Article 1198. The debtor shall lose every expressly granted to the creditor.
right to make use of the period: The debtor shall have no right to choose
(1) When after the obligation has been those prestations which are impossible,
contracted, he becomes insolvent, unless unlawful or which could not have been
he gives a guaranty or security for the the object of the obligation.
debt;
(2) When he does not furnish to the EFFECT OF NOTICE OF CHOICE
creditor the guaranties or securities which
he has promised; WHEN NOTICE PRODUCES EFFECT
(3) When by his own acts he has Article 1201. The choice shall produce
impaired said guaranties or securities no effect except from the time it has been
after their establishment, and when communicated.
through a fortuitous event they disappear,
unless he immediately gives new ones EFFECT OF LOSS/IMPOSSIBILITY OF
equally satisfactory; ONE/ALL PRESTATIONS
(4) When the debtor violates any Article 1202. The debtor shall lose the
undertaking, in consideration of which the right of choice when among the
creditor agreed to the period; (5) When prestations whereby he is alternatively
the debtor attempts to abscond. bound, only one is
practicable.
f. When court may fix a
period Article 1203. If through the creditor's acts
Article 1197. If the obligation does not fix the debtor cannot make a choice
a period, but from its nature and the according to the terms of the obligation,
circumstances it can be inferred that a the latter may rescind the contract with
period was intended, the courts may fix damages.
the duration thereof.
Article 1204. The creditor shall have a
The courts shall also fix the duration of right to indemnity for damages when,
the period when it depends upon the will through the fault of the debtor, all the
of the debtor. things which are alternatively the object of
the obligation have been lost, or the
In every case, the courts shall determine compliance of the obligation has become
such period as may under the impossible.
circumstances have been probably The indemnity shall be fixed taking as a
contemplated by the parties. Once fixed basis the value of the last thing which
by the courts, the period cannot be disappeared, or that of the service which
changed by them. last became impossible.
Damages other than the value of the last
III. Alternative thing or service may also be awarded.
right to demand, or that each one of the
Article 1205. When the choice has been latter is bound to render, entire
expressly given to the creditor, the compliance with the prestation. There is a
obligation shall cease to be alternative solidary liability only when the obligation
from the day when the selection has been expressly so states, or when the law or
communicated to the debtor. the nature of the obligation requires
Until then the responsibility of the debtor solidarity.
shall be governed by the following rules:
(1) If one of the things is lost through a Article 1208. If from the law, or the
fortuitous event, he shall perform the nature or the wording of the obligations to
obligation by delivering that which the which the preceding article refers the
creditor should choose from among the contrary does not appear, the credit or
remainder, or that which remains if only debt shall be presumed to be divided into
one subsists; as many shares as there are creditors or
(2) If the loss of one of the things occurs debtors, the credits or debts being
through the fault of the debtor, the considered distinct from one another,
creditor may claim any of those subject to the Rules of Court governing
subsisting, or the price of that which, the multiplicity of suits.
through the fault of the former, has b. Solidary Obligations
disappeared, with a right to damages; 1. Kinds
(3) If all the things are lost through the (As to source)
fault of the debtor, the choice by the Article 1208 (supra)
creditor shall fall upon the price of any
one LEGAL
of them, also with indemnity for damages. Article 1915. If two or more persons have
The same rules shall be applied to appointed an agent for a common
obligations to do or not to do in case one, transaction or undertaking, they shall be
some or all of the prestations should solidarily liable to the agent for all the
become impossible. consequences of the agency.

a. Facultative Obligations Article 1945. When there are two or


Article 1206. When only one prestation more bailees to whom a thing is loaned in
has been agreed upon, but the obligor the same contract, they are liable
may render another in substitution, the solidarily.
obligation is called facultative.
Article 2194. The responsibility of two or
The loss or deterioration of the thing more persons who are liable for quasi-
intended as a substitute, through the delict is solidary.
negligence of the obligor, does not render
him liable. But once the substitution has Article 119 of Revised Penal Code
been made, the obligor is liable for the
loss of the substitute on account of his (As to parties bound)
delay, negligence or fraud. ACTIVE
PASSIVE
IV. Joint and Solidary MIXED
a. Joint Obligations
Article 1207. The concurrence of two or (As to uniformity)
more creditors or of two or more debtors UNIFORM
in one and the same obligation does not VARIED/NON-UNIFORM
imply that each one of the former has a Article 1211. Solidarity may exist
although the creditors and the debtors payment is made before the debt is due,
may not be bound in the same manner no interest for the intervening period may
and by the same periods and conditions. be demanded.
When one of the solidary debtors cannot,
2. Effects because of his insolvency, reimburse his
Article 1212. Each one of the solidary share to the debtor paying the obligation,
creditors may do whatever may be useful such share shall be borne by all his co-
to the others, but not anything which may debtors, in proportion to the debt of each.
be prejudicial to the latter.
Article 1218. Payment by a solidary
Article 1213. A solidary creditor cannot debtor shall not entitle him to
assign his rights without the consent of reimbursement from his co-debtors if
the others. such payment is made after the obligation
has prescribed or become illegal.
Article 1214. The debtor may pay any
one of the solidary creditors; but if any Article 1219. The remission made by the
demand, judicial or extrajudicial, has creditor of the share which affects one of
been made by the solidary debtors does not release the
one of them, payment should be made to latter from his responsibility towards the
him. co-debtors, in case the debt had been
totally paid by anyone of them before the
Article 1215. Novation, compensation, remission was effected.
confusion or remission of the debt, made Article 1220. The remission of the whole
by any of the solidary creditors or with obligation, obtained by one of the solidary
any of the solidary debtors, shall debtors, does not entitle him to
extinguish the obligation, without reimbursement from his co-debtors.
prejudice to the provisions of article 1219.
The creditor who may have executed any Article 1221. If the thing has been lost or
of these acts, as well as he who collects if the prestation has become impossible
the debt, shall be liable to the others for without the fault of the solidary debtors,
the share in the obligation corresponding the obligation shall be extinguished.
to them. If there was fault on the part of any one of
them, all shall be responsible to the
Article 1216. The creditor may proceed creditor, for the price and the payment of
against any one of the solidary debtors or damages and interest, without prejudice
some or all of them simultaneously. The to their action against the guilty or
demand made against one of them shall negligent debtor.
not be an obstacle to those which may If through a fortuitous event, the thing is
subsequently be directed against the lost or the performance has become
others, so long as the debt has not been impossible after one of the solidary
fully collected. debtors has incurred in delay through the
judicial or extrajudicial demand upon him
Article 1217. Payment made by one of by the creditor, the provisions of the
the solidary debtors extinguishes the preceding paragraph
obligation. If two or more solidary debtors shall apply.
offer to pay, the creditor may choose
which offer to accept.
He who made the payment may claim 3. Defenses available
from his co-debtors only the share which to a solidary debtor
corresponds to each, with the interest for against creditor
the payment already made. If the Article 1222. A solidary debtor may, in
actions filed by the creditor, avail himself b. Indivisible Obligations
of all defenses which are derived from the (v. Solidary Obligations)
nature of the obligation and of those c. Kinds
which are personal to him, or pertain to d. Presumptions
his own share. With respect to those e. Obligations not to do
which personally belong to the others, he Article 1225. For the purposes of the
may avail himself thereof only as regards preceding articles, obligations to give
that part of the debt for which the latter definite things and those which are not
are responsible. susceptible of partial performance shall
c. Joint Indivisible be deemed to be indivisible.
Obligations
Article 1209. If the division is impossible, When the obligation has for its object the
the right of the creditors may be execution of a certain number of days of
prejudiced only by their collective acts, work, the accomplishment of work by
and the debt can be enforced only by metrical units, or analogous things which
proceeding against all the debtors. If one by their nature are susceptible of partial
of the latter should be insolvent, the performance, it shall be divisible.
others shall not be liable for his share.
However, even though the object or
Article 1210. The indivisibility of an service may be physically divisible, an
obligation does not necessarily give rise obligation is indivisible if so provided by
to solidarity. Nor does solidarity of itself law or intended by the parties.
imply indivisibility
In obligations not to do, divisibility or
Article 1224. A joint indivisible obligation indivisibility shall be determined by the
gives rise to indemnity for damages from character of the prestation in each
the time anyone of the debtors does not particular case.
comply with his undertaking. The debtors
who may have been ready to fulfill their f. Effects
promises shall not contribute to the Article 1223
indemnity beyond the corresponding Article 1233
portion of the price of the thing or of the
value of the service in which the Article 1224. A joint indivisible obligation
obligation consists. gives rise to indemnity for damages from
the time anyone of the debtors does not
V. Divisible and Indivisible comply with his undertaking. The debtors
a. Divisible Obligations who may have been ready to fulfill their
Article 1223. The divisibility or promises shall not contribute to the
indivisibility of the things that are the indemnity beyond the corresponding
object of obligations in which there is only portion of the price of the thing or of the
one debtor and only one creditor does not value of the service in which the
alter or modify the provisions of Chapter 2 obligation consists.
of this Title.
g. Cessation of indivisibility
Article 1233. A debt shall not be
understood to have been paid unless the VI. Obligations with a Penal
thing or service in which the obligation Clause
consists has been completely delivered or a. Concept
rendered, as the case may be. b. Kinds
c. Demandability of Penalty
d. Effects of Penal Clause
Article 1226. In obligations with a penal principal obligation carries with it that of
clause, the penalty shall substitute the the penal clause.
indemnity for damages and the payment
of interests in case of noncompliance, if CH. 4 EXTINGUISHMENT OF
there is no stipulation to the contrary. OBLIGATIONS

Nevertheless, damages shall be paid if I. Modes of Extinguishment


the obligor refuses to pay the penalty or is Aa
guilty of fraud in the fulfillment of the Article 1231. Obligations are
obligation. extinguished:
(1) By payment or performance;
The penalty may be enforced only when it (2) By the loss of the thing due;
is demandable in accordance with the (3) By the condonation or remission of the
provisions of this Code. debt;
(4) By the confusion or merger of the
Article 1227. The debtor cannot exempt rights of creditor and debtor;
himself from the performance of the (5) By compensation;
obligation by paying the penalty, save in (6) By novation.
the case where this right has been
expressly reserved for him. Neither can Other causes of extinguishment of
the creditor demand the fulfillment of the obligations, such as annulment,
obligation and the satisfaction of the rescission, fulfillment of a resolutory
penalty at the same time, unless this right condition, and prescription, are governed
has been clearly granted him. However, if elsewhere in this Code.
after the creditor has decided to require
the fulfillment of the obligation, the II. Payment or Performance
performance thereof should become a. Concept
impossible without his fault, the penalty Article 1232. Payment means not only
may be enforced. the delivery of money but also the
performance, in any other manner, of an
Article 1228. Proof of actual damages obligation.
suffered by the creditor is not necessary
in order that the penalty may be b. Requisites
demanded. Article 1302. It is presumed that there is
legal subrogation:
e. When penalty shall be (1) When a creditor pays another creditor
equitably reduced who is preferred, even without the
Article 1229. The judge shall equitably debtor's knowledge;
reduce the penalty when the principal (2) When a third person, not interested in
obligation has been partly or irregularly the obligation, pays with the express or
complied with by the debtor. Even if there tacit approval of the debtor;
has been no performance, the penalty (3) When, even without the knowledge of
may also be reduced by the courts if it is the debtor, a person interested in the
iniquitous or unconscionable. fulfillment of the obligation pays, without
prejudice to the effects of confusion as to
f. Nullity of Principal the latter's share.
Obligation or penal clause
Article 1230. The nullity of the penal Article 1236. The creditor is not bound to
clause does not carry with it that of the accept payment or performance by a third
principal obligation. The nullity of the person who has no interest in the
fulfillment of the obligation, unless there is person;
a stipulation to the contrary. (3) If by the creditor's conduct, the debtor
Whoever pays for another may demand has been led to believe that the third
from the debtor what he has paid, except person had authority to receive the
that if he paid without the knowledge or payment.
against the will of the debtor, he can
recover only insofar as the payment has Article 1242. Payment made in good
been beneficial to the debtor. faith to any person in possession of the
credit shall release the debtor.
Article 1237. Whoever pays on behalf of
the debtor without the knowledge or Article 1243. Payment made to the
against the will of the latter, cannot creditor by the debtor after the latter has
compel the creditor to subrogate him in been judicially ordered to retain the debt
his rights, such as those arising from a shall not be
mortgage, guaranty, or penalty. valid. (1165)

Article 1238. Payment made by a third Article 1244. The debtor of a thing
person who does not intend to be cannot compel the creditor to receive a
reimbursed by the debtor is deemed to be different one, although the latter may be
a donation, which requires the debtor's of the same value as, or more valuable
consent. But the payment is in any case than that which is due.
valid as to the creditor who has accepted In obligations to do or not to do, an act or
it. forbearance cannot be substituted by
another act or forbearance against the
Article 1239. In obligations to give, obligee's will. (1166a)
payment made by one who does not have
the free disposal of the thing due and Article 1246. When the obligation
capacity to alienate it shall not be valid, consists in the delivery of an
without prejudice to the provisions of indeterminate or generic thing, whose
article 1427 under the Title on "Natural quality and circumstances have not been
Obligations." stated, the creditor cannot demand a
thing of superior quality. Neither can the
Article 1240. Payment shall be made to debtor deliver a thing of inferior quality.
the person in whose favor the obligation The purpose of the obligation and other
has been constituted, or his successor in circumstances shall be taken into
interest, or any person authorized to consideration. (1167a)
receive it.
Article 1249. The payment of debts in
Article 1241. Payment to a person who is money shall be made in the currency
incapacitated to administer his property stipulated, and if it is not possible to
shall be valid if he has kept the thing deliver such currency, then in the
delivered, or insofar as the payment has currency which is legal tender in the
been beneficial to him. Philippines.
Payment made to a third person shall The delivery of promissory notes payable
also be valid insofar as it has redounded to order, or bills of exchange or other
to the benefit of the creditor. Such benefit mercantile documents shall produce the
to the creditor need not be proved in the effect of payment only when they have
following cases: been cashed, or when through the fault of
(1) If after the payment, the third person the creditor they have been impaired.
acquires the creditor's rights; (2) If the In the meantime, the action derived from
creditor ratifies the payment to the third the original obligation shall be held in the
abeyance. (1170) paid.
The receipt of a later installment of a debt
Article 1250. In case an extraordinary without reservation as to prior
inflation or deflation of the currency installments, shall likewise raise the
stipulated should supervene, the value of presumption that such installments have
the currency at the time of the been paid.
establishment of the obligation shall be
the basis of payment, unless there is an Article 1169. Those obliged to deliver or
agreement to the contrary. to do something incur in delay from the
time the obligee judicially or extrajudicially
Article 1956. No interest shall be due demands from them the fulfillment of their
unless it has been expressly stipulated in obligation.
writing. However, the demand by the creditor
shall not be necessary in order that delay
Article 1233. A debt shall not be may exist: (1) When the obligation or the
understood to have been paid unless the law expressly so declare; or
thing or service in which the obligation (2) When from the nature and the
consists has circumstances of the obligation it appears
been completely delivered or rendered, that the designation of the time when the
as the case may be. thing is to be delivered or the service is to
be rendered was a controlling motive for
Article 1248. Unless there is an express the establishment of the contract; or
stipulation to that effect, the creditor (3) When demand would be useless, as
cannot be compelled partially to receive when the obligor has rendered it beyond
the prestations in which the obligation his power to perform.
consists. Neither may the debtor be In reciprocal obligations, neither party
required to make partial payments. incurs in delay if the other does not
However, when the debt is in part comply or is not ready to comply in a
liquidated and in part unliquidated, the proper manner with what is incumbent
creditor may demand and the debtor may upon him. From the moment one of the
effect the payment of the former without parties fulfills his obligation, delay by the
waiting for the liquidation of the latter. other begins.

Article 1234. If the obligation has been Article 1251. Payment shall be made in
substantially performed in good faith, the the place designated in the obligation.
obligor may recover as though there had There being no express stipulation and if
been a strict and complete fulfillment, less the undertaking is to deliver a
damages suffered by the obligee. (n) determinate thing, the payment shall be
made wherever the
Article 1235. When the obligee accepts thing might be at the moment the
the performance, knowing its obligation was constituted.
incompleteness or irregularity, and In any other case the place of payment
without expressing any protest or shall be the domicile of the debtor.
objection, the obligation is deemed fully If the debtor changes his domicile in bad
complied with. faith or after he has incurred in delay, the
additional expenses shall be borne by
Article 1176. The receipt of the principal him. These provisions are without
by the creditor without reservation with prejudice to venue under the Rules of
respect to the interest, shall give rise to Court.
the
presumption that said interest has been c. Application of Payments
d. Payment by Cession
e. Dation in Payment
f. Tender of Payment and
Consignation

III. Loss or Impossibility


a. Loss of thing due
b. Impossibility of
Performance
IV. Condonation or Remission
a. Concept
b. Kinds
c. Requisites
d. Presumptions
e. Effects
f. Governing Rules
g. Renunciation of
Principal/Accessory
Obligation

V. Confusion or Merger of Rights


a. Concept
b. Requisites
c. Effects
d. Confusion in Principal or
Accessory Obligation
VI. Compensation
a. Concept
b. Kinds
c. Legal Compensation
d. When Compensation is
NOT allowed
e. Compensation of Debts to
be Compensated
f. Effects of Nullity of Debts
to be Compensated
g. Effects of Assignment of
Credit

VII. Novation
a. Concept
b. Kinds
c. Requisites
d. Effects
e. Effects of Status of the
Original or New Obligation
f. Objective Novation
g. Subjective Novation