OLBIGATIONS AND CONTRACTS
Only those expressly determined in this Code or in special laws
Art. 1156. An Obligation is a juridical necessity to give, to do or
not to do.
Elements of an Obligation:
1. An active Subject (Obligee or Creditor) – the possessor of a
right; he in whose favor the obligation is constituted.
2. A passive Subject (Obligor or Debtor) – he who has the duty
of giving, doing, or not doing.
3. The object or prestation – the subject matter of the
obligation.
4. The efficient cause (the vinculum or juridical tie) – the reason
why the obligation exists.
Example:
A promises to paint B’s picture as an result of an agreement
A – obligor, B – obligee, B’s picture - prestation,
agreement/contract – efficient cause
Prestation – is an obligation; more specifically, it is the subject
matter of the obligation – may consist of giving a thing, doing or
not doing a certain act.
KINDS OF OBLIGATIONS
a. viewpoint of sanctions
1. Civil Obligation – that defined in Art. 1156. The sanction is
juridical process.
2. Natural Obligation – the duty not to recover what has
voluntarily been paid although payment was no longer required.
3. Moral Obligation - the duty of a Catholic to hear mass on
Sundays and holy days of obligation. The Sanction is conscience
or morality.
b. viewpoint of subject matter
1. real obligation – the obligation to give
2. personal obligation – the obligation to do or not to do
c. viewpoint of affirmativeness and negativeness of obligation
1. positive or affirmative obligation – the obligation to give or
to do.
2. negative obligation – the obligation not to do includes not to
give.
d. viewpoint of persons obliged
1. unilateral – where only one party is bound
2. bilateral - where both parties are bound
Ex. Contract of sale: the buyer is obliged to pay; seller obliged to
pay.
2.1. reciprocal
2.2 non reciprocal
Art. 1157. Obligations arise from:
1. Law;
2. Contracts;
3. Quasi-contracts
4. Acts or omissions punished by law; and
5. Quasi-delicts
Sources of Obligation
a. Law (obligation ex lege) – like the duty to pay taxes
and support ones family
b. Contracts (obligation ex contracto) – duty to repay a
loan by virtue of an agreement
c. Quasi-contracts (obligation quasi-contractu) – like the
duty to refund an “over change” of money because of
the “solutio indebiti”
d. Crimes or Acts or Omissions Punishable by Law
(obligation ex maleficio or ex delicto) – like the duty to
return a stolen carabao
e. Quasi delicts or Torts (obligation ex quasi-delicto or
ex quasi maleficio) – like the duty to repair damage
due to negligence.
Art. 1158. Obligations derived from law are not presumed.
are demandable, and shall be regulated by the precepts of the
law which establishes them; and as to what has not been
foreseen , by the provisions of this Book.
Obligation Ex Lege
Examples:
1. Duty to support
2. The duty to pay taxes
Art. 1159. Obligations arising from contracts have the force of
law between the contracting parties and should be complied
with in good faith.
Difference between an Obligation and Contract
Obligation is a result of a contract, while a Contract, if valid,
always results in obligations, not all obligations come from
contracts.
The so-called Innominate Contracts
“contratos innominados”
a. Do ut des- I give that you may give
b. Du ut facias – I give that you may do
c. Facio ut des – I do that you may give
d. Facio ut facas – I do that you may do
Art. 1160. Obligations derived from quasi-contracts shall be
subject to the provisions of Chapter 1, Title XVII, of this Book.
Quasi-Contract is a juridical relations resulting foma lawful,
voluntary and unilateral act, and which has for its purpose the
payment of indemnidty to the end that no one shall be ujustly
enriched or benefited at the expense of another
2 Principal Kinds
1. Negotiorum Gestio; whena person voluntarily takes
charge of anothers abandoned business of property
without the owners authority.
2. Solutio Indebiti; when something is received when
there is no right to demand it, and it was unduly
delivered thru mistake. The recipient has the duty to
return.
Art. 1161. Civil obligations arising fromcriminal offenses should
be governed by the penal laws, subject to the provisions of
Articile 2177, and of the pertinent provisions of Chapter 2,
Preliminary Title, on Human Relations, and of Title XVIII of this
Book regulationg damages.
Pertinent Provisions of the Revised Penal Code:
Art. 100, RPC says: “Every person criminally liable for a felony is
also civilly liable”
Liability of an Insane Criminal
An insane criminal who commits a crime is exempted from
criminal liability, but his guardian can be held civily liable unless
the latter was diligent in his task of taking care the insane.
Civil Liability arising from a Crime includes:
1. Restitution
2. Reparation of the damage caused;
3. Indemnification for consequential damages
Effects of acquittal in Criminal Case
a. If the reason why there was an acquittal was because
the accused could not have committed the act, no civil
action.
b. If the reason for the acquittal was because of an
exempting circumstatnce (insane) still civily liable.
c. If there is an independent civil action allowed by the
law.
 Art. 1162. Obligations derived from quasi-delicts shall be
governed by the provisions of Chapter 2, Title XVII of this
Book, and by special laws.
Another name for quasi-delicts is “tort” or “culpa
aquiliana”.
Quasi-delicts is a fault or act of negligence (or omission of
care) which causes damagesto another, there being no pre
existing contractual relations between the parties.
Examples:
a. While driving a car recklessly, I injured a pedestrian
b. While cleaning my windows sill, cause the flower pot
to fall breaking the arms of my neighbor.
Negligence (Culpa) is the failure to observe, for the
protection of the interests of another person, that degree
of care, precaution and vigilance which circumstances
justly demand.
Requisites Before a Person Can Be Held Liable for a Quasi-
Delict
1. There must be fault or negligence attributable to the
person charged;
2. There must be damage or injury;
3. There must be a direct relation of cause and effect
between the fault or negligence on the one hand and
the damage or injury on the other.
NATURE AND EFFECT OF OBLIGATION
Art. 1163. Every person obliged to give something is also
obliged to take care of it with the proper diligence of a good
father of a family, unless the law or the stipulations of the
parties requires another standard of care.
Determinate - specific
Indeterminate – on of class
Diligence Needed:
a. That which is required by the nature of the obligatin
and corresponds with the circumstances of person,
time, and place. Diligence of a good father of a family.
b. If the law or contract provides a different standard of
care.
Ex: “A common carrier bound to carry the passengers
safely as far as human care and foresight can provide.
Art. 1164. The creditor has a right to the fruits of the thing
from the time the obligation to deliver it arises. However, he
shall acquire no real right over it until the same has been
delivered to him.
Personal right is also called jus in personam or jud ad rem; it is
the power demandable by one person to another – to give, to
do or not to do.
Real right is also called jus in re; power of the specific thing like
the right of ownership or possession and is binding on the whole
world.
Kinds of delivery:
a. Actual delivery (or traditio) – where physically, the
proper changes hands. Ex: if a sells B a fountain pen,
the giving by A to B of the pen is actual delivery.
b. Constructive delivery – that where the physical
transfer is implied. This may be don by:
1. Traditio simbolica (symbolical tradition (keys of
the bodega are given)
2. Traditio longa manu (delivery by mere consent or
the pointing out of the object.
3. Traditio brevi manu (delivery by the short hand)
4. Traditio constitutum possessorium – the delivery
whereby a possessor of a thing as an owner,
retains possession no longer as an owner.
5. Traditio by execution of legal forms and
solemnities (like an execution of public
instrument selling land)
When does the Obligation to Deliver Arise
a. If there is no term or condition, from the perfection
of the contract.
b. If there is a condition or term, from the moment the
term arrives or the condition happens.
Art. 1165. When what is to be delivered is a determinate
thing, the creditor, in addition to the right granted him by
Article 1170, may compel to the debtor to make the delivery.
If the thing is indeterminate or generic thing, he may
ask that the obligation be complied with at the expense of the
debtor,
If the obligation delays, or has promised to delvier
the same thing to two or more persons who do not have the
same interest, he shall be responsible for fortuitous event until
has effected the delivery.
Specific or Determinate things – when it is capable of particular
designation. Ex: this car, tha car owned by A on Sept. 12, 2005,
the care with the plate number 1815, th particular picture of
Mayela in my notebook.
Generic or Indeterminate Things – refers only to class, to a
genus, and cannot be pointed out with particularity.
Ex.: A car, a 2005 BMW, the sum of P5 Million, a kilo of sugar.
Remedies of the Creditor When Debtor Fails to Comply with his
Obligations:
a. Demand for specific performance of the obligation.
b. Demand for rescission or cancellation
c. Demand for damages either with or without either of
the first two. (a or b)
Effect of Fortuitous Events:
a. To deliver a Determinate thing; obligation is
extinguished.
b. To deliver an Indeterminate thing; obligation is not
extinguished.
Fortuitous Event does not Exempt;
a. Of the obligor delays
b. Of the obligor is guilty of BAD FAITH
Ordinary Delay – merely non-performance at the stipulated
time;
Legal Delay (default) – which amounts to a virtual
nonfulfillment of the obligation.
Art. 1156. The Obligation to give a determinate thing includes
that of deliviering all its accession and accessories even though
they may not have been mentioned.
Accessories – those joined to or included with the principal for
the latters better use, perfection or enjoyment. (Ex: keys of a
house, dishes on a restaurant.)
Acessions – additions to or improvements of a thing. (ex: soil
river bank, whatever is built, planted or sown on a persons
parcel of land.
Art. 1167. If a person obliged to do something fails to do it,
the same shall be executed at his cost
This same rule shall be observed if he does it in
contravention if the tenor of the obligation. Furthermore, it
may be decreed that what has been poorly undone.
Article 1167 - Positive Personal Obligation (TO DO)
Remedies of the Creditor if Debtor fails to do
1. To have the obligation performed (by himself or by
another) at debtors expense.
2. Also – to obtain damages
Art.1168. When the obligation consists in not doing, and the
obligor does what has been forbidden him, it shall also be
undone at his expense.
Negative Personal Obligation
Remedies: Undoing of the prohibited thing and damages.
Art. 1169. Those obliged to deliver or to do something incur in
delay from the time the obligee juridically or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be
necessary in order that delay may exist:
1. When the obligation or the law expressly so declares
2. Or when from the nature and the circumstances of
the obligation it appears that the designation of the
time when the thing is to be delivered of the service
to be rendered was a controlling motive for the
establishment of the contract; or
3. When demand would be useless, as when the obliger
has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the
other does not comply or is in ready to comply in a proper
manner with what is incumbent upon him. From the moment
one of the parties fulfill his obligation, delay by the other
begins.
When Demand is Not Needed to Put the Debtor in Default;
a. When the law so provides
b. When the obligation so provides
c. When time is essence of the contract
d. When demand would be useless
e. When the obligor has expressly acknowledge that he
really is in default.
Different Kinds of Mora (default)
a. Mora Solvendi (default on the part of the debtor)
1. Mora solvendi ex re (debtors default in real
obligations)
2. Mora solvendi ex persona (debtors default in
personal obligations)
b. Mora accippiendi (default on the part of the creditor)
c. Compensatio Morae (when in reciprocal obligation
both parties ar in default)
Mora Solvendi
Requisites:
a. Obligation must be due, enforceable and already
liquidated or determinate in amount.
b. There must be non-performance
c. There must be demand, unless the demand is not
required.
d. The demand must be for the obligation that is due.
Effects:
a. Debtors default, liable for interest or damages.
b. Bear the risk of loss,
c. Liable even for a fortuitous event.
Mora Accipiendi
The creditor is guilty of default when he unjustifiably refuses to
accept payment or performance at the time said payment or
performance can be done.
Reciprocal Obligations
Depend upon each other for performance
Art. 1170. Those who in the performance of their obligation
are guilty of fraud, negligence, or delay and those in any
manner contravene the tenor thereof, are liable for damages.
Grounds for Liability in the Performance of Obligations;
a. Fraud (deceit or dolo)
b. Negligence (fault or culpa)
c. Default (mora)
d. Violation of the terms of obligation
Kinds of Damages (MENTAL)
a. Moral – (mental and physical anguish)
b. Exemplary – (to set an example)
c. Nominal – (to vindicate a right)
d. Temperate – (when the exact amount of damages
cannot be determined)
e. Actual – (actual losses as well as unrealized profit)
f. Liquidated – (predetermine d beforehand)
Art. 1171. Responsibility arising from fraud is demandable in
all obligations. Any waiver of an action for future fraud is void.
Art. 1172. Responsibility arising from negligence in the
performance of every kind of obligation is also demandable,
but such liability may be regulated by the courts, according to
the circumstances.
Fraud Distinguished from Negligence
Fraud has deliberate intention to cause damage while
negligence has no deliberate intention.
Fraud Liability cannot be mitigated or reduced by courts while
negligence can be reduced.
Waiver of an action is void while negligence is allowed.
4 Kinds of Culpa:
a. Culpa Contractual – that which results in a breach of
contract.
b. Culpa Aquiliana – Civil Negligence or tort or quasi
delict.
c. Culpa Criminal – that which results in the commission
of a crime or a delict.
Art. 1173. The fault or negligence of the obligor consists on the
omission of that diligence which is required by the nature of
the obligation and corresponds with the circumstances of the
person, of the time and place. When the negligence shows bad
faith, the provisions of Article 1171 and 2201, paragraph 2,
shall apply.
If the law or contract does not state the diligence
which is to be observed in the performance, that which is
expected of a good father of a family shall be required.
Degrees of Culpa Under Roman Law:
a. Culpa lata – grave negligence;
b. Culpa levis – ordinary negligence;
c. Culpa levissima – slight negligence
Kinds of Diligence Under the Civil Code:
a. That agreed by the parties
b. In absence of (a), that required by law
c. In absence of (b), that expected of a good father of a
family
Art. 1174. Except in cases expressly specified by the law, or
when it is otherwise declared by the stipulation or when the
nature of the obligation requires the assumption of risk, no
person shall be responsible for those events which could not
be foreseen, or which though foreseen, where inevitable.
No Liability for a fortuitous event
Exceptions:
a. When expressly declared by law
b. When expressly declared by stipulation or contract
c. When the nature of the obligation requires the
assumption of risk
Equivalent Terms for Fortuitous Event
a. Caso fotuito
b. Act of God
c. Force majeure (like war or armed robbery)
d. Unavoidable accident (like a tire blow out)
Characteristics of Fortuitous events:
a. The cause must be independent of the will of the
debtor
b. Impossibility of foreseeing or impossibility of avoiding
it, even if foreseen
c. The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a
normal manner.
Art. 1175. Usurious transactions shall be governed by special
laws.
Usury – it is contracting for or receiving something in excess of
the amount allowed by the law for the loan or us of money,
goods, chattels, or credits.
Kinds of Interest:
a. Given for compensation or use of the money
b. Given by way of damages
Art. 1176. The receipt of the Principal by the creditor, without
reservation with respect to the interest, shall give rise to the
presumption that said interest has been paid.
The receipt of a later installment of a debt withouth
reservation as to prior installment, shall likewise raise the
presumption that such installments have been paid.
Art. 1177. The creditors, after having pursued the property in
possession of the debtor to satisfy their claims, may exercise
all the rights and bring all the actions of the latter for the same
purpose, save thoes which are inherent in the person; they
may also impugn the acts which the debtor may have to
defraud them.
Rights of Creditors:
a. Exact payment
b. Exhausts debtors properties, generally by attachment
c. Accion subrogatoria
d. Accion pauliana
Art. 1178. Subject to the laws, all rights acquired in virtue of
an obligation are transmissible, if there has been no
stipulation to the contrary.
Transmissibility of Rights
Rights are transmissible.
Exeptions:
a. If the law provides otherwise;
b. If the contract provides otherwise;
c. If the obligation is purely persona
DIFFERENT KINDS OF OBLIGATIONS
Section 1
Art. 1179. Ever y obligation whose performance does not
depend upon a future or certain event, or upon a past event
unknown to the parties, is demandable at one.
Every obligation which contains a resolutory
condition shall also be demandable, without prejudice to the
effects of the happening of the event.
Pure Obligation – one without a condition or a term
Conditional Obligation – When there is a condition.
Condition – “it is an uncertain event which wields an influence
on a legal relationship”.
Term or Period – which necessarily must come whether the
parties know when it will happen or not.
When an obligation is Demandable at Once
a. When it is pure;
b. When it is a resolutory condition
Classification of Conditions
1. Suspensive – the happening of the condition gives rise
to the obligation.
2. Resolutory – the happening of the condtion
extinguishes the condition.
3. Protestative – depends upon the will of the debtor.
4. Casual – depends the chance or hazard or the will of a
third person.
5. Mixed – depends partly on the will of one of the
parties and partly on chance or the will of a third
person.
6. Divisible – capable of partial performance.
7. Indivisible – not capable of partial performance
because of the nature of the thing.
8. Positive – an act is to be performed.
9. Negative – something will be omitted.
10. Express – the condition is stated.
11. Implied – the condition is merely inferred.
12. Possible - capable of the fulfillment in nature and in
law.
13. Impossible – not capable of fulfillment due to nature
or due to the operation of the law or morals or public
policy.
14. Conjunctive – if all the conditions must be performed.
15. Alternative – if only few of the conditions have to be
performed.
Art. 1180. When the debtor binds himself to pay when
his means permit him to do so, the obligation shall be
deemed to be one with a period, subject to the provisions
of Article 1197.
Art. 1181. In conditional obligations, the acquistions of
rights, as well as the extinguishment or loss of those
already acquired, shall depend upon the happening of the
event which constitutes the condition.
Suspensive Condition - – the happening of the condition
gives rise to the obligation.
Resolutory Condition - – the happening of the condtion
extinguishes the condition.
Art. 1182. When the fulfillment of the condition depends
upon the sole will of the debtor, the conditional
obligation shall be void. If it depends upon chance or
upon the will of a third person, the obligation shall take
effect in conformity with the provision of this Code.
Protestative – depends on the exclusive will of one parties.
Casual – depends on chance OR upon the will of a third
person.
Protestative on the Part of the DEBTOR:
If suspensive: void
If resolutory: valid
Protestative on the part of the CREDITOR: valid
Art. 1183. Impossible conditions, those contrary to good
customs or public policy and those prohibited by law shall
annul the obligation which depends upon them. If the
obligation is divisible, that part thereof which is not
affected by the impossible or unlawful condition shall be
valid.
The condition no to do an impossible thing shall be
considered as not having been agreed upon.
Classification:
a. Impossible: physical- to make a dead man live
Logically – to make a circle that is the same timesquare
 b. Illegal – prohibited by good customs, public policy,
prohibited, directly or indirectly by law; like killing X, a
friend.
EFFECTS:
a. If condition is to do an IMPOSSIBLE or ILLEGAL thing:
VOID
b. If condition is NEGATIVE, not to do the impossible,
JUST REGARD the condition but obligation REMAINS
c. If the condition is NEGATIVE, not to do the illegal
thing, condition and obligation are VALID.
Art. 1184. The condition that some event happen at a
determinate time shall extinguish the obligation as soon as the
time expires or If it has become indubitable that the event will
not take place. (Refers to POSITIVE Conditions)
Art. 1185. The condition that same event will not happen at a
determinate time shall render the obligation effective from the
moment the time indicated has elapsed, or if it has become
evident that the event cannot occur.
If no time has been fixed, the condition shall be
deemed fulfilled at such time as may have probably been
contemplated bearing in mind the nature of the obligation.
(refers to NEGATIVE Conditions)
Art. 1186. The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment.
Rule: CONSTRUCTIVE or PRESUMED FULFILLMENT
Requisites:
a. VOLUNTARILY made
b. Actually PREVENTS
Art. 1187.
Effects of Fulfillment of Suspensive Conditions:
a. RETROACTS (as general rule) to the day the obligation
was constituted.
b. No Retroactivity with reference only to:
1. Fruits or interest.
2. Period of Prescription
No Retroactive Effects as to Fruits and Interest;
a. Unilateral; debtors gets the fruits and interest unless
there is a contrary intent.
b. Reciprocal; the fruits and interest during the pendency
of the condition shall be deemed to compensate each
other.
SCOPE OF FRUITS:
Fruits here refer to natural, industrial, and civil fruits (rent)
Art. 1188. The creditor may, before the fulfillment of the
condition, bring the appropriate actions for the preservation of
his right.
The debtor may recover what during the same time
he has paid by mistake in case of a suspensive condition.
Bring appropriate actions – sue in court
Other appropriate actions:
a. Ask for security if the debtor is insolvent
b. Ask the court to prevent alienation or concealment.
Art. 1189. When then conditions have been imposed with the
intention of suspending the efficacy of an obligation to give,
the following rules shall be observed in case of the
improvement, loss, or deterioration;
1. If the thing is lost without the fault of the debtor, the
Obligation shall be extinguished;
2. If the thing is lost through the fault of the debtor, he
Shall be obliged to pay damages; it is understood that the
when the thing is lost when perishes, or goes out of
commerce, or disappear in such a way that its existence is
unknown or it cannot be recovered;
3. When the thing deteriorates without the fault of the
The fault of the debtor, the impairment is to be bourne by the
creditor;
4. If deteriorates through the fault of the debtor, the
Creditor may choose between the rescission of the obligation
and its fulfillment, with indemnity for damages in either case;
5. If the thing is improved at the expense of the debtor,
He shall have no right than that granted to him usufractuary.
Loss – it is understood that the thing is lost;
a. When it perishes
b. When it goes our of commerce
c. When it disappears In such a way that its existence is
unknown.
d. When it disappears in such a way that it cannot be
recovered.
Art. 1190:
Effects when Resolutory Condition is Fulfilled
a. The obligation is extinguished
b. Because the obligation had been extinguished and
considered to have had no effect, the parties should
restore to each other what they received.
c. Aside from the actual things received, the fruits or
interests thereon should also be return.
d. The rules given n Art. 1189. Will apply to whoever has
the duty to return in case of loss, deterioration, or
improvement of the thing.
e. The courts are given power to determine the
retroactivity of the fulfillment of resolutory
conditions.
Art. 1191. The power to rescind obligations is implied in
reciprocal ones, in case on of the obligors should not comply
with what is incumbent upon him.
The injured party may choose between the
fulfillment and rescission of the obligation, with the payment
of damages in either case. He may also seek rescission, even
after he has chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with
Article 1385 and 1388 and the Mortgage Law.
Right to Rescind – right to cancel the contract or reciprocal
obligation in case of nonfulfillment on the part of one.
Characteristic of the Right to Rescind or Resolve:
a. It exists only in reciprocal obligation.
b. It can be demanded only if plaintiff is ready, willing
and able to comly with his own obligation
Section 2
OBLIGATIONS WITH A PERIOD
Art. 1193. Obligation for whose fulfillment a day certain has
been fixed, and shall be demandable only when that day
comes.
Obligations with a resolutory period take effect at
one, but terminate upon arrival of the day certain.
A day certain is understood to be that which must
necessarily come, although it may not to be known when.
If the uncertainty consists in whether the day will
come or not, the obligation is conditional and it shall be
regulated by the rules of the preceding Section.
Period – is a certain length of time which determines the
effectivity or the extinguishmwnt of obligations
Period Distinguished from Condition
a. In their fulfillment
A condition is an uncertain event; but period is an event which
must happen sooner or later.
b. Reference to time;
A period always refers to the future, a condition may under the
law refer even to the past.
c. As to influence of obligation;
A condition causes an obligation arise or to cease, but a period
merely fixes the time or the efficiaciousness of an obligation.

Different kinds of terms or Periods

1. Definite – the exact date or time
2. Indefinite – something that will surely happen,
3. Legal – a period granted under the provision of law
4. Conventional – period agreed by parties
5. Judicial – the period or term fixed by the courts
6. Ex die – a period with suspensive effect
7. In diem – a period or term with a resolutory effect.

Requisites for a Valid Period or Term;

a. It must refer to the future.
b. It must be certain but can be extended.
c. It must be physical and legally possible, otherwise the
obligation is void.

Art. 1194. In case of loss, deterioration or improvement of the

thing before the arrival of the day certain, the rules in Art.
1189 shall be observed.

Art. 1195. Anything paid or delivered before thearrival of the

period, the obligor being un nawware of the period or
believeing that the obligation has become due and
demandable, may be recovered, with the fruits and interests.

Art. 1196. Whenever in an obligation a period is designated, it

is presumed to have been established for the benefit of both
the creditor anddebtor, unless from the tenor of the same or
other circumstances it should appear that the period has been
established in favor of one or of the other.
Art. 1197. If the obligation does not fix period, but from its
nature and cirtcumstance it can be inferred that a period was
intended, the courts may fix the duration therof,
The courts shall also fix the duration of the period
when it depends upon the will of the debtor.
In every case the courts shall determine such period
as may under the crcumstances have been probably
contemplated by the parties, once fixed by the courts, the
period cannot be changed by them.
Art. 1198. The debtor shall lose every right to make use the of
the period:
1. When after the obligation has been contracted,
Art. 1231. Obligations are extinguished:
1. By Payment of Performance;
2. By the loss of the thing due;
3. By condonation or remission of the debt;
4. By the confusion or merger of the rights of creditor
and debtor;
5. By compensation;
6. By novation.
Other causes of extinguishment of obligation, such as
annulment, rescission, fulfillment of a resolutory
condition, and prescription, are governed elsewhere in
this Code.
SECTION 1
PAYMENT OR PERFORMANCE
Art. 1232. Payment means not only the delivery of money but
also the performance, in any other manner, of an obligation.

Payment - mode of extinguishment of obligation which consist

of;
a. Delivery of money or
b. The performance in any manner of an obligation.

Art. 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.

Requisites of valid Payment:

a. The very thing or service contemplated must be paid.
b. Fulfillment must be complete.

How Payment or Performance is Made

a. If the debt is a monetary obligation, by the delivery of
the money.
b. If the debt is the delivery of a thing or things, by the
delivery of the thing(s).
c. If the debt is the doing of a personal undertaking, by
the performance of said personal undertaking.
 d. If the debt is not doing of something, by refraining
from doing the action.
Presentation of Receipts – means of proving payment
Art. 1234. If the Obligation has been substantially perfrormed
in good faith, the obligor may recover as though there has
been strict and complete fulfillment, less damages suffered by
the obligee.
Substantial Performance – the obligee is benefited
Art. 1235. When the obligee accepts the performance,
knowing its incompeleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed
fully complied with.
Art. 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.
Right of Creditor to Refuse Payment by Third Person:
The creditor can refuse payment by a stranger except:
a. If there is a stipulation allowing this;
b. If the third person has an interest in the fulfillment of
the obligation.
to alienate it shall not be valid, without prejudice to the
provisions of Article 1427 under the Title on “Natural
Obligations.”
Payment by an Incapacitated Person;
a. Payment is not valid – if accepted;
b. Creditor cannot even be compelled to accept it;
c. The remedy of consignation would not be proper
Art. 1240. Payment shall be made to the person in whose favor
the obligation has been constituted, or his successor in
interest, or any person authorized to receive it.
Art. 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 to be proved in the following
cases;
1. If after payment, the third person requires the
creditors rights;
2. If the creditor ratifies the payment to the third
person;
3. If by the creditors conduct, the debtor has been led
to believe that the third person had authority to
receive the payment.
Effect in General: Payment to the third party, the payment is
valid BUT only to the extent of benefit to the creditor.

Payment by the Third Person (BAR) Art. 1242. Payment made in good faith to any person in
The third person may pay: possession of the credit shall release the debtor.

a. With the knowledge and consent of the debtor Art. 1243. Payment made to the creditor by the debtor after
The payor is entitled to REIMBURSEMENT and the latter has been judicially ordered to retain the debt shall
SUBROGATION to such rights as guaranty, penalty not be valid.
clause, or mortgage.
b. Without the debtors knowledge or against his will. Garnishment – the proceeding by which a debtors creditor is
The payor is not entitled to subrogation; moreover he subjected to the payment of his own debt to another
is allowed only for BENEFICIAL REIMBURSEMENT.
Interpleader – technical name of the action in which a certain
Art. 1237. Whoever pays on behalf of the debtor without the person in possession of certain property wants claimants to
knowledge or against the will of the latter, cannot compel the litigate among themselves for the same.
creditor to subrogate him in his rights, such as those arising
from a mortgage, guaranty, or penalty. Injunction – it is a judicial process by virtue of which a person is
generally ordered to refrain from doing something.
Subrogation – means the act of putting somebody into the
shoes of the creditor, hence, enabling the former to exercise all
the rights and actions that could have been exercised by the
latter.

Rights which may be Exercised by the Person Subrogated in

the Place of the Creditor:
a. Mortgage
b. Guaranty
c. A penalty or penal clause

Subrogation Distinguished from Reimbursement

Subrogation recourse can be had to guaranty or pledge;
Reimbursement there is no recourse.
Subrogation there is something more than personal action of
recovery; Reimbursement only a personal action to recover the
amount.

Art. 1238. Payments made by a third person who does not

intend to be reimbursed by the debtor is deemed to be a
donation, which requires the debtors consent. But the
payment is in any case valid as to the creditor who has
accepted it.

Art. 1239. In obligation to give, payment made by one who

does not have the free disposal of the thing due and capacity