Atty.

Rabuya Audio Notes (ObliCon)

I
OBLIGATION
BASIC PRINCIPLES OF OBLIGATION:
-Juridical necessity to give, to do, and not to do.
THE BASIC CONCEPT OF OBLIGATION:
-It is unitary but it has two aspects (passive, w/c is the debt; and
active sides, w/c is the right); not limited only to debts (fulfillment of
duty).

BASIC ELEMENTS OF OBLIGATION:

1. OBJECTIVE- the object of every obligation is always a prestation (in
object of obligation only, not in object of a contract).

*Do not be confused with the object of obligation (always a prestation)

with the object of a contract, because the object of obligation is a
particular conduct required of the debtor, either that of giving, doing,
and not doing.

2. SUBJECTIVE ELEMENT- either,

A. PASSIVE SUBJECT (DEBTOR)
depends on the action active subject (creditor); the action of the debtor
will simply rely on the action of the creditor. If the creditor will n ot
actively pursue his credit, pwedeng tumahimik na lang si debtor, and
possibly, the obligation may extinguished by way of prescription (?).

B. ACTIVE SUBJECT (CREDITOR)

3. JURIDICAL OR LEGAL TIE- AKA "BINCULUM JURIS(?)

binds the object and the subject.
-came from 5 SOURCES OF OBLIGATION.
 FIVE SOURCES OF OBLIGATION
1. LAW
2. CONTRACT
3. QUASI-CONTRACT (favorite topic of every bar examiner)
- a juridical relation w/c arises from a (l.u.v) lawful, unitary, and
voluntary act for the purpose of preventing unjust enrichment.
-no consent because the juridical relationship arises out of unitary
action of a certain person.
- the basis of the contract is the law (no person shall unjustly
enriched at the expense of the other).
- 2 FORMS:

A. NEGOTIORUM GESTIO(?)
-the officous(?) manager voluntarily assumes the
management or agency of a certain business or
property which has been abandoned and belonging to
another person.

- only arise when the following elements are present:

1. There is voluntary assumption of the

management or agency of a certain business
or property belonging to another person.

2. It is important that the property or a

business has been neglected or abandoned.
(If not neglected or abandoned and someone
voluntarily assumed the property or
business, there is no Negotiorum Gestio.
What will arise is Unauthorized Agency).

3. It is necessary that the assumption of

management or agency must not been
 authorized by the owner, either expressly or
impliedly. (Otherwise, if there is
authorization coming from the owner, it is
not the case of N.G. but a case of Express
Agency).

4. (Most importantly) The assumption of the

agency or management of the business or
property was done in good faith.

-What are the obligations created in N.G.?

(The one who assumes the agency or
management of a business or of a property belonging
to another is referred to as the "gestor" or officious
manager (pakialamero).He has not been authorized.

ANSWER:
Once the gestor assumes the agency or
management of the business or property belonging to
another person, he has the obligation to continue the
management or agency until the termination of its
affairs. He can only ask the owner to substitute for him
of the owner is in position to do so, otherwise, he has
no obligation to continue the management or agency.

Q: If the gestor entered into a contract to a 3rd

person in the course of his management or agency of
the property, who will be liable for the obligation
arising from the contract in relation to the 3rd person?
Is it the owner of the property or business, or the
gestor?
 A: The law provides that it is still the gestor who
is personally and directly liable to the 3rd person. So,
there is no direct relationship b/w the 3rd person and
the owner of the business or property. There will be no
cause of action b/w the two. But of course, any
liabilities incurred by the gestor out of that contract,
he can demand reimbursement from the owner. That
is the general rule, unless: (1) The owner ratifies the
contract expressly or impliedly, or; (2) If the object of
the contract is a thing pertaining to the owner.

On the other hand, the owner has the liability to:

(1) reimburse the gestor for any obligations incurred
by the gestor in relation to contracts the gestor had
entered into with the 3rd person; (2) refund a usefull
and nacessary expenses incured by the gestor and
any damages suffered by the gestor in the
performance of his obligation as such.

B. SOLUTIO INDIBETI- arises when a person, by mistake,

delivers something to another without any legal or just
ground.
-Two (2) Elements:
1. There must be no relationship between the
giver and the recipient (the giver has no
obligation to pay and the recipient has no right to
receive what has been unduly delivered to him).

2. The delivery has without legal or justifiable

ground or cause and it must be by reason of
mistake.
-Obligation: To return what has been delivered
through mistake. (With interest? Yes, if it was
delivered in bad faith)

-Sample Question: Teng have a rich Tita residing in US

na nagpapaaral sa kanya. Every semester, she deposit
1k US dollar a money in Teng's local bank account. The
problem is, the US court put 1M US dollar instead of 1k
US dollar. It was deposited to Teng's account and
withdrew it. Can the US Bank directly sue you? Is there
any existing relationship between you and Us Bank?

Held: Yes, US Bank can direcly sue Teng. There is a

direct relationship by reason juridical relation created
by S.I. (due to mistake). Teng is now the debtor and
the Us Banks is the creditor. There is now a direct
relationship b/w the two by reason of quasi-contract of
S.I., and that can be the basis of action to be filed by
US Bank directly against Teng. Take note that contract
is only 1 of the 5 sources of liabilities, there are other
4. If the basis of the recovery of the bank is not SI, that
contract, definitely there is no brevity of contracts b/w
the two. But if the cause of action will based on SI, that
action will definitely proper.

-In Rem Versu- can be found in Art. 22 of New Civil

Code.

-Something has been unduly delivered which has

without legal or justifiable grounds (almost same as S.I.
but different).
 - the difference is that, in action In Rem Versu
can only prosper if there is no other legal
remedy under the sources of obligation.

-Not based on mistake. (Ex. If the delivery is by reason

by mistake, the remedy is S.I. You cannot resort to
action In Rem Versu)

-Implied Contact- there is still consent although given

impliedly.

-The basis of the contract is the will of the parties.

4. DELICT OR CRIME
-Element (Same as Quasi-delicts)
Q: when do we know that there is a civil liability in a crime?

A: If there is a private offended party who will be

indemnified, that is the time that there is a civil liability i a
commission of the crime.

5. QUASI-DELICT - there is an act or omission characterized by fault or

negligence.
-In order to recover, the following ELEMENTS must be present:
a. Someone must suffered damages.

b. The reason for that damages is an act or omission

committed by another person w/c is characterized either by
fault or negligence.

c. There must be a causal connection b/w the act or

omission and the damage suffered.
- The act is unlawful (unlike quasi-contract as distinguished)
 - If you have private offended party, to recover, there are possible
two sources of obligation (delicts or quasi-delicts). But you cannot
recover the damages twice.
-civil liability is not totally extinguished because Q-D is an
institution that is distinct and separate from the delict.

KINDS OF OBLIGATION (Part 2)

1. CIVIL OBLIGATION
-Concept: Gives a right of action to demand for its performance.
You can go to court to demand for its performance.

2. NATURAL OBLIGATION
-does not give you a right of action. You cannot go to court for its
performance, but, there is still a JURIDICAL TIE. (May juridical tie
pala, bakit can't go to court? Because there has something
happened to juridical tie)

Ex: The right of action is extinguished by way of PRESCRIPTION

(Sa katagalan ng panahon).

-not legally compellable.

-the performance resides on the conscience of the debtor, but still
recognize as an obligation under our law (there is still a juridical
tie).
-Is natural obligation a moral obligation? No!
-Free from coercion and free from error or mistake.
-produces legal consequences (unlike by Purely Moral Obligation).
This are the following:
a. Can be ratified and can be converted again into a civil
obligation.
 b. If the N.O. has been voluntarily fulfilled by the debtor, the
creditor, under our law is authorized to retain the payment.

In other words, if the debtor has been bothered by his

conscience and he chooses to voluntarily fulfill or perform
his obligation, although it is now a natural one, he can no
longer change his mind and recover the payment. Once
fulfilled, the creditor is now authorized to retain the
payment, wala ng saulian. (In order that the creditor may
authorized the payment, it must be done VOLUNTARILY).
Voluntarily means that it is free from coercion and freedom
from error or mistake.

See Art. 1956 of the civil code. It states that the

agreement with respect to the payment of interest must be
stipulated in writing, otherwise, it is not due. Meaning,
even it there is an agreement in the payment of interest but
it is not stipulated in writing, the creditor cannot demand
legally to the debtor for the interest, even if he goes to
court.

Q: The agreement of payment of interest was made verbally. Is

the agreement considered void?

A: No. The interest is simple not due.

Q: What if the interest has already been paid, although it was not
stipulated in writing? What will be the legal consequence?

A: The answer is provided under Art. 1960. It is the case of Solutio

Indebiti or Natural Obligation.
 If the interest is paid by mistake or unintentionally, it is the
case of Solutio Indebiti under Quasi- contract. The obligation is
to return.

If the payment of the interest is on then will of the debtor,

although he knows that he can pay without interest and was
not stipulated in writing, he can no longer reimbursed the
interest to the creditor. This is the case of Natural Obligation.

Example: From civil to natural obligation. (Natural

Obligation, stated in Art. 1424). If the right of action has already
prescribed and extinguished (the civil obligation) by way of
"extinctive prescription", the concept of civil obligation is already
lost but nonetheless, there is still obligation which is converted
into a natural one.

May utang ka sa isang tao with a promissory note with a

prescriptive period of 10 years (10 years to pay). There is no
collection of payment after 10 years. (This is the part of civil
obligation). After 15 years, may utang ba ba sya? Does he has still
an obligation? Civil, wala na, but you have still a natural
obligation. Because it was already lapsed, the creditor can no
longer go to court to demand for the performance of that
obligation. Ang pwede na lang nyang gawin is mangonsensya sa
fb. If the debtor is nakonsensya and voluntarily payed for the
obligation, that is now the case of natural fulfillment of obligation.

Q: How can you know that a situation is a Natural Obligation or

Purely Moral Obligation?

A: If it is not found in the civil code, then it is purely moral

obligation. If it is found in the civil code, then it is Natural
Obligation.
 The enumeration of Natural Obligation can be found in
different articles of the civil code (From Art. 1424-1430), and in
other art. (scattered)
PURELY MORAL OBLIGATION- not recognizable by law (unlike by
Natural Obligation) because it does not produce any legal
consequence.
-No juridical tie, no legal consequence.

3. REAL OR PERSONAL OBLIGATION - the basis of classification is from

the point of view of the kind of PRESTATION that is involved in an
obligation.

A. REAL OBLIGATION
-The prestation is to TO GIVE.
-What is to be delivered is a DETERMINATE/SPECIFIC THING
(TO GIVE). Generally, the principal obligation is to deliver
what is due.
-In D/S obligation, the standard of care that is to be observe
by the debtor is that of BONUS PATER FAMILIA (Diligence of
the good father of a family). How it has been observed?

This is how: Example, what would be the action of a

prudent and reasonable person if he is confronted with a
given situation? Eh di gawa ka ng way para maalagaan
mo yung hiniram mo. Hal, may hiniram kang sasakyan tapos
pinark mo sa binabaha na lugar. tapos umulan. ano gagawin
mo? Eh d alisin mo at ilagay sa safe na lugar!

Concept: ALAGAAN MO NA SINUBLIAN MO MAN

SANA! That the concept of Diligence of the Good Father of a
Family.
 - Is the degree of diligence can be valid by agreement or by
law?
a. If an agreement in which the debtor is liable when
fortuitous event happen? YES, the debtor is liable, if
the agreement so provided for it! (Art. 1174)
b. Can the parties agree on the kind of diligence is
lower than that of a good father of a family (agreed to
observe slight care)? Is it legal? YES, expressly
provided in Art. 1163.

c. Can the parties agree on the kind of diligence that

will make the debtor absolutely free or exempt from
liability for any damages arising from his own
negligence? NO! It will violate public policy.
-In case of breach in the obligation to deliver an
indeterminate thing, what are the remedies to the creditor?

A: To compel the debtor to deliver what is due, and

compel to pay damages.

B. PERSONAL OBLIGATION
-The prestation is TO DO, and NOT TO DO.
-The INDETERMINATE/GENERIC THING
-What are the remedies to creditor if
Indeterminate/Generic is delivered in breach?
A: The creditor can ask a person to make the delivery
and charge the cost to the debtor.
-2 KINDS:
1. POSITIVE PO- involves that of doing.
-in case of breach, what is the remedy of the
creditor? (Simple ask another person of the
obligation to do (to make the delivery) and
charge the debtor about the cost of delivery. The
 creditor cannot compel the debtor to deliver it by
himself because it is tantamount to involuntary
servitude which is against the constitution.

2. NEGATIVE PO- involves that of not doing.

-Legal Consequences:
a. If the obligation is DETERMINATE OR SPECIFIC, then there
is 3 accessories of obligations:
1. (Art 1163)

2. If the creditor already acquired the right to the

fruits, then the debtor also obliged to deliver the fruits.

3. The debtor has the obligation to deliver the

accession and accessories even it has not mentioned
(art. 1166)

KINDS OF OBLIGATION
(Primary Classification Under the Civil Code)

1. PURE AND CONDITIONAL OBLIGATION

A. PURE OB- not subject to any condition or term or period

- Legal consequence: IMMEDIATELY DEMANDABLE.

B. CONDITIONAL OB- subject to a condition.

- Future and the happening of the event is a certain event.
-Elements: FUTURITY AND UNCERTAINTY. (Ex: passing the
bar, not sure if will pass)
-can be:
A. SUSPENSIVE CONDITION- rights in obligation will be
created or dependent or will only come in the
existence upon the happening of the event.
-the affected one is merely the existence of an
obligation.
-rights and obligation are not yet inexistence
upon the happening of the event.
-if the obligation is to give and the obligation is
reciprocal with respect to the fruits and interest, then
wala ng sulian or deemed mutually compensated
(Art. 1187).
- if the obligation is to deliver determinate thing
and the obligation is reciprocal, the obligation to
deliver the fruits and the interest are deemed mutually
compensated. The purpose is to avoid accounting
(Magkano ang fruits, magkano ang interest. In the law
they are equal). (Art. 1187)
-Effects of happening (affects merely the
existence of obligation): will not go back to zero
because there are effects that will remain such as the
fruits and interest will not touch and return.
- Prior to the happening of the event, there is not
yet an actual debtor and actual creditor, because the
obligation is not created. What we have is a case of an
expectant debtor/ creditor. The rights of the expectant
creditor is simply that of expectancy. He is expecting
that the event will fulfilled and that is the time that his
right will come into an existence.

-Prior to fulfillment of the event, what is the

nature of interest of the expectant creditor?
 A: Simple a hope or expectation. This enjoys
protection under our law (Art. 1188). But,
as provided for in Art. 1187, upon the
happening or effects of a suspensive
obligation, the rights in obligation will
retroact to the day the constitution of the
obligation. This will only become important
when creditor was able to protect his hope
and expectancy.

B. RESOLUTORY CONDITION- rights and obligation

already exist, but the obligation is subject to
extinguishment upon the happening or fulfillment of
an event.
-Rights and obligation is extinguished (as if there
was no obligation was created in the first place). No
effects will be recognized.
-Effects upon the happening of resolutory:
everything will be returned. Why? Because there was
no obligation that was created in the first place. You
cannot produce something out of nothing. The things
that has been produce will wipe out by returning
everything that was produced by the obligation.
-The previous debtor who has already delivered
to the creditor, he (debtor) will become the expectant
debtor, because if the resolutory condition is fulfilled,
the previous debtor will entitled to the return of what
he had delivered (That’s why may nakatagong
suspensive in every resolutory), and also entitled to
avail of the benefits provided in Art. 1188 which is to
bring the appropriate action for the perfection of his
hope and expectancy.
 -There is always a suspensive obligation in every
resolutory.

C. POTESTATIVE CONDITION- the fulfillment of that

condition made to depend upon the will of either the
debtor or creditor. We have:
1. POTESTATIVE UPON THE DEBTOR- if the
condition is subject to the debtors will.

2. POTESTATIVE UPON THE CREDITOR- upon or

depend the creditors will.

D. CASUAL CONDITION- the fulfillment of the

condition does not depend upon the will of the parties
but either upon chance or upon the 3rd person.

E. MIXED CONDITION- partly potestative and partly

casual.
-EFFECTS ON OBLIGATION:
1. If the condition or fulfillment of
obligation is potestative or exclusively
dependent upon the debtor and at the
same time suspensive, then the obligation
will become void.

2. If the condition or fulfillment of the

obligation is potestative or exclusively
dependent upon the debtor and at the
same time resolutory, the obligation is
valid.

3. If condition is casual, whether dependent

upon chance or 3rd person, it will not affect
 the validity of obligation. The obligation is
valid.

4. If the condition is mixed, the obligation is

valid.

-Example (partly upon the will of the debtor and

partly upon chance):

Don (debtor) will give Bebot (creditor) a

cellphone if it will rain tomorrow, and while it is
raining, Don will kiss Bebot.

HELD: It rained (chance is fulfilled), but Don

as a debtor, did not kiss Bebot out of the rain
(solely upon the will of the debtor). From this,
the condition is not fulfilled. Then the condition is
VOID. (Apply Art. 1186 only when the condition
is mixed. Constructive fulfillment of the
condition)

F. IMPOSSIBLE CONDITION-physically or legally

impossible.
-Impossibility: Must be physical and legal.
-Example: Don will give Bong a book if the sun
will rise from the south. It is impossible because the
sun rises from the east, not south.
-TIP TO KNOW THE EFFECT OF IC: where is the
impossible condition attached?
1. If it is attached to simple or remunatory
donation (under Art. 727), disregard the IC,
then it will not affect the validity of an
obligation.
 2. If attached to the provision of the will,
simply disregard the provision, then it will
not affect the validity of the obligation.

3. If attached to an ordinary obligation w/c

is not a donation and not a testamentary
provision, then it will invalidate or void the
obligation (Art. 1183)

2. OBLIGATION WITH A TERM OR PERIOD-future and the happening in

which certain event.
-Elements: futurity and certainty. (Ex: death)
-can be:
A. SUSPENSIVE TERM-something that we are sure that it will
happened.
-there is already the existence, but not yet
demandable.
-does not affect the existence of an obligation.
-effects upon the happening (affects merely the
demandability of obligation)
-demadable only upon the arrival of the suspensive
term.

B. RESOLUTORY TERM (opposite ST)- Effect: upon its arrival

is the termination of the obligation.
-does not affect the obligation (as distinguished to ST).
The obligation is simply terminated (simply cut the juridical
tie or relationship existing between the Cr and Deb without
affecting the effects that were produced).
3. ATERNATIVE OBLIGATION- the classification of obligation is the
number of prestation involved or plurality of prestation in one and the
same obligation.
-Concept: there are several prestation involved in one and the
same obligation but the debtor is not required to perform all of them
before the obligation is considered to be extinguished.
-can be:
A. CONJUNCTIVE- there are several prestation (no problem);
before the obligation of the debtor is extinguished, he is
required to perform all prestation.

B. DISTRIBUTIVE- if there are several prestation involved

and the debtor is not required to perform all obligation
(perform only one, or some, but not all obligations), several
questions may arise such as:

1. Which of the prestation is he required to perform in

order to his obligation to be extinguished?

2. Who has the right of choice, the debtor or the

creditor?

A: Generally, to the debtor, but the right can be

given to the creditor by way of AGREEMENT.

- The creditor or debtor cannot choose partly from one of the

prestations and partly from another.
-Effects of loss of one, or some, or all of the prestation? (Ans. will
depends on two things)
-When was the choice be effective (very important)? A: From the
moment that it has been duly communicated to the other party. So, if
the right of choice belongs to the debtor, it will be effective/ binding
upon the creditor from the moment the creditor gain knowledge of
that choice, and vice versa.

-Who has the right of choice?

(Creditor: yung bibigyan ng thing/ prestation)???
(Debtor: yung magbibigay ng thing /prestation)???

A. IF THE RIGHT OF CHOICE BELONGS TO THE DEBTOR:

a. All Prestation Are Lost By Fortuituous Event.

-Legal consequence: debtor's obligation will be
extinguished because as general rule, no person shall
be responsible for fortuitous event, unless the law or
agreement or stipulation is provided otherwise.
b. All Prestation Are Lost Due To Creditor's Fault.
Obligation is extinguished (the debtor cannot exercise
the right to choose because all the prestation were
lost).

c. All Prestations Were Lost Due To Debtors Fault.

Obligation is not extinguished.
-REMEDY: the creditor is entitled to recover the
value of the prestation which was the LAST to
disappear (If the right of choice belongs to the debtor).
Meaning, the debtor is liable to pay the prestation w/c
was last to disappear.

d. Only One Prestation Is Left, Others Were Lost.

-Since the right of choice belongs to the debtor,
he will probably choose the prestation that was left,
not the prestation that was already lost. The obligation
is converted into a simple one of performing that
prestation which subsists.
 e. Only One Or Two Prestation Was Left Due To
Creditors Fault. Is the debtor limited to choose if
others were lost by reason of creditors fault? NO.
Pursuant to our law, if the right of choice of the debtor
can no longer be exercise by him, for reasons
attributable to the creditor because it was the creditor
was responsible for the loss of other prestations, the
law gives the debtor another right to rescind the
contract plus damages or to choose from the
remaining.

f. Two Prestation Were Left, Others Were Lost.

-Effect: None. The debtor can still choose among
the remaining (may pagpipilin pa eh).

B. THE RIGHT OF CHOICE BELONGS THE CREDITOR.

a. All Prestation Were Lost Due To Creditor's Fault:
-Will result to the extinguishment of an
obligation. (nawala ko lahat, hindi ako makapili.
makakaangal ba ako? syempre dai ta ako man sana ang
nakawara).

b. Lost By Fortuituous Event: obligation of debtor will

extinguished.

c. All Prestations Were Lost Due To Debtor's Fault:

The creditor may recover the price or value of
any of the prestations which was lost by reason of
debtor's fault. (common sense na lang)???

d. One Prestation Was Left, Others Were Lost Due To

Creditors Fault: (sisisihin ba nya ang sarili nya for the
 loss of others? of course not). He will have to choose
the remaining prestation, w/c obligation is converted
in a simple obligation of performing that w/c is still
subsisting.

e. One Prestation Was Left Due To Debtor's Fault:

Is the creditor limited to that w/c is subsisting?
NO. He could have chosen the others, so the creditor
may choose either any of the prestation w/c was lost
plus he may recover damages from the debtor. But of
course the creditors may choose the fulfillment of that
prestation w/c are still subsisting. If kung ito ang
pipiliin nya, he cannot recover the damages from the
debtor.

4. FACULTATIVE OBLIGATION- the classification of obligation is the

number of prestation involved or plurality of prestation in one and the
same obligation (same as AO).
-(to distinguished from alternative) There is only one prestation
which is due.
-Who has the right of choice: the debtor, as always. Whether he
wants to perform the original or substitute one.

A. If intends to perform original prestation:

-the debtor is NOT required to notify the creditor that
he will performing the original prestation . BECAUSE THIS IH
WHAT IS DUE.

B. If intends to perform SUBSTITUTE prestation:

-the debtor is REQUIRED to notify the creditor that he
will performing the substitute prestation in lieu of original.
 -effect if lost: will not produce any effect. (ano man
kung nawara? ok lang.) Why? Because it is not what is due.
What is due is the original one.
-But if the substitute is no longer a substitute
prestation because it is now what is due (for the reason that
the debtor already communicated to the creditor that he is
aware that it is a substitute one), it will become what is due.
The loss now of that substitute prestation will become
material.

-When will the choice become effective:

A: from the moment the creditor gained knowledge of

the choice that was made by the debtor.
-Cannot be given to the creditor, because if will, then it is not
anymore a facultative obligation and will destroy the character of
obligation being a facultative one.
-The debtor has the right to perform a substitute prestation in lieu
of the original one.
-magiging facultative lang ang ob if the parties are agreed that the
debtor offer a sustitute prestation otherwise is a simple ordinary
obligation of performing of that prestation w/c is due.

6. JOINT AND SOLIDARY OBLIGATION- will only come in place in case of

plurality of the subjects (two or more debtors or creditors).
-Basis of classification is based on subjects.
-referring to one and same obligation, but there are several
subjects.
-How to know that it is Joint than Solidary?
a. the law presumes that it is joint if it has many subjects.

A. JOINT OBLIGATION- the credits and the debts are to be divided

proportionately.
 -each debtors and / or each creditors are only liable for a
portion of the indebtedness.
- IMPORTANT PRINCIPLE: The share of each of the debtors
in the indebtedness or share of each creditors is distinct and
separate from the others. LEGAL CONSEQUENCES:
1. If only one of the joint debtors was a recipient of a
demand, but the debtors do not receive any demand
coming from the creditor, only the recipient of the
demand will be in default or in delay, others will not
(because distinct and separate from the shares of
others).

2. Likewise, in case of insolvency of one of the joint

debtors, that will not affect the liability of the other
joint debtors (because the shares of insolvency is
distinct and separate from the shares of the other
debtors).

3. In the matter of prescription: if the one of the joint

debts had already prescribed, that will not effect upon
the shares of other debtors who's debts are not yet
prescribed.

-How to apportion or divide the credits: The shares must be

EQUAL, unless there is proof to contrary.

B. SOLIDARY OBLIGATION- each one of the debtors is oblige to

pay the whole obligation, while each one of the creditors are
entitled to collect the entire credits.
-only exist when:
1. When the law so provides.
2. When the agreement or stipulation of the parties
provides for solidarity.
 3. In the absence of law or agreement of the parties,
when the nature of obligation requires solidarity.

-if the debtors are solidary, each one of them is liable to pay
the entire indebtedness.

-on the part of solidary creditors, each one has the right to
demand the entire credit.
- Words that indicates solidarity: (a) joint and several; (b)
jointly and severally; (c) in solidum; (d) individually and
collectively.
Ex: (In a promissory note) I, promise to pay the amount
of P100k to the creditor Z, on or before April 3, 2020. (Then,
below were the signatures of the several makers (A, B, C),
not only by him).

Q: What will be the nature obligation of A, B, and C?

A: According to Negotiable Instruments Law, if the
pronoun I is used in a promissory note followed by several
signatures of several co makes, their obligations will now
become solidary instead of being joint (watch out for the I,
then many co makers). But, if the pronoun used is "We",
with same co makers or situation, then that is the case of a
Joint Ob.

-PASSIVE SOLIDARITY- may only exist on the sides of the

debtors (creditors are not solidary but merely joint creditors).
-CHARACTERISTICS:
1. Each one of the solidary debtors does not
represent as agent of the other debtors.

2. There is NO mutual agency that exist among

the solidary debtors.
 3. What only exist is a MUTUAL GUARANTEE,
NOT a mutual agency (each one of them
guarantees the shares of the others). Each one of
them can pay the entire obligation).

5. If solidary debtors, the creditors can choose

anyone of them, and one of them can be
made of the entire obligation.

-3 AVAILABLE DEFENSES ON THE PART OF SOLIDARY

DEBTORS:
1. Defense based on the nature of obligation
itself. (Ex: If the defense of obligation itself is
void, unenforceable).
-Effect: A complete defense that is available
to the entire indebtedness and available to
each one of solidary debtors.

2. Defense that is personal to the solidary

debtors he is invoking (Ex: Pwede nyang sabihin
na he is not liable to pay the entire indebtedness.
"I was mentally insane by the time the contract
was made".
-Effect: Complete defense but only the part
of the solidary. Debtor who put of that
defense.

Defense that is personal to the debtor and yet

the effect of that is limited only to his share
(when the share solidary debtor is subject to a
condition or term) in w/c that condition or term
is not yet fulfilled or not yet arrived.
 -Effect: Only a partial defense available only
in his portion of indebtedness.

3. Defense w/c are personal to the others. (Ex. I

will not pay my obligation because by the time
the debt was contracted, she is mentally insane)

-ACTIVE SOLIDARITY- may only exist on the sides of the

CREDITORS (debtors are not solidary).
-CHARACTERISTICS:
1. Each one of the solidary debtors represents of
the all of them.

2. There is a MUTUAL AGENCY OR

REPRESENTATION that exist among the solidary
debtors. (Take note that the mutual agency or
representation is only for the benefit of the
solidarity, but not prejudicial to others. So, each
one of them can act or can be a representative or
agent for the others for so long as it will benefit
others) as provided in Art 1212.

But there is another provision in Art 1215,

that in novation, compensation, condonation,
effected by one of the solidary creditors, the
solidary debtors will extinguished the
indebtedness.

Art 1212 and 1215 has no consistency

because:
A. Art 1212 is directed or govern the
relationship existing upon
only to the creditors themselves.
 B. Art 1215 seeks to govern the
relationship existing among the creditors
disobey (???) their debtors. So if one of
the solidary creditors will condone the
entire indebtedness of the debtors, that
would be a valid act in so far as the
debtors are concerned( sol debtors will
extinguished the indebtedness). But in
so far as the CREDITORS are concerned,
THAT ACT IS NOT VALID AMONG THEM.
eACH ONE OF THE CREDITORS CAN go
after the erring creditor for their
respective shares.

Ex # 1: ABC are sol debtors of XYZ as sol creditors.

Nagkasulubong sina A and X. X demanded to A
ON HIS DEBT of P900k. Sabi ni X kay A, "I am
condoning the entire P900k."
Q: Is the liabilities of AB and C extinguished?
A: Yes, as expressly provided in 1215.
Ff. Q: What about the shares of Y and Z?
A: They can go to X, pursuant to Art. 1212, that
each one of the sol creditors may only do at what
is beneficial but not of w/c is prejudicial.
Ff. Situation # 1: A is very happy. He informed B
and C about the condonation. He then required B
and C to pay him of only P50k instead of P300
each to the creditors.
Q: Is A right on his contention?
A: No, that was made in a pure liberality, A
cannot made any reimbursement from the other
solidary debtors as provided Art. 1220 (???).
 Situation # 2: Same on ex. # 1, but this
time, X ask a question on how much is the share
of A in their debts. A responded, "P300k". Then, X
condoned the P300k debt of A.
Q: What will be the effect of that
condonation of the entire share of A (may
balance pa na P600)?

A: He's liability is extinguished(wala na

muna sya sa pic).

fF. Q:What will be the effect of that

condonation of the entire share of A (may
balance pa na P600) if B becomes insolvent
(unable to pay)?

A: Since B become unable to pay, A and C

will pay the remaining P600k (P300k),
although A share was already condoned.
(sinalo ni A su reponsibilidad ni B).
Situation # 3: Same as on situation # 2, but
this time, X told that he will condoned half
of A's share (P150k). (may balance pang
P750k)
Q: May the balance of P750 be still
collected from A?

A: Yes. If only a portion of share has been

condoned by one of the sol creditors, he
will remain to be a debtor even if so far as
the sol creditors are concerned.
 -GENERAL RULE: Each one of the solidary debtors can
be made to pay the entire obligation and each one of
the solidary creditors has the right to collect the entire
credit, except pagpapasok yung principle provided in
Art 1214. What is that? A: If there has been a demand
made by one of the solidary creditors addressed to one
of the solidary debtors.

Ex: A, B, and C are solidary debtors of X,Y,and Z

which are solidary creditors for the amount of P900k.
Gen. rule, A, B, And C can pay the entire, and X, Y, Z
can collect the entire credits. ?????d is that the
relationship for the meantime, fix b/w X and C. In so
far as X and C are concerned (parang sila lang ang
deptor and creditor.

-Effect: If C was the recipient of that demand in

so far a C is concerned, only X is the creditor. If C will
make a tender repayment to A, then it will become an
invalid payment made to a wrong party. So C will pay
again. In so far as X is concerned, only C is the debtor
for the meantime (wala muna sa picture si A and B). If
X made a demand upon C, and it was B trying to pay X,
then X unjustly refuse the payment (the refusal is a
just/ valid one). (Effect of Art 1214 w/c limited to the
two, as stated).

-MIXED SOLIDARITY- exists on both debtors and creditors.

8. JOINT AND INDIVISIBLE OBLIGATION- (Art 1210) The indivisibility of

an obligation does not imply or give rise to solidarity neither solidarity
will give rise to indivisibility (Hindi porke indivisible ay solidary na at
hindi porke solidary eh indivisible na). Why? Because those concepts
refer to two different situations.
-When we talk of solidarity, it has reference to JURIDICAL
TIE/VINCULUM THAT BINDs THE SUBJECTS (Yun yung tinitingnan
natin).
-When we talk of indivisibility, we are looking to an object of
obligation/PRESTATION.
Q: Is prestation capable of partial performance?

A: If YES, then it is divisible.

If NO, then it is indivisible.

-Solidarity affects the juridical tie, but indivisibility affects the

object of obligation.
-JOINT refers to the number of subjects; INDIVISIBLE refers to the
nature of prestations. This can now be DEFINED as: Law pressumes
joint in case of plurality of the subject even if the prestation is divisible,
the law pressumes that obligation is joint rather than solidary, because
the indivisivility of an obligation does not give rise to solidarity and
neither solidarity imply indivisibility.

Ex: A and B have the obligation to deliver a particular

specific cow to X (this is an example of joint indivisible
obligation). Why? There is plurality of the subjects (two
debtors, A and B) w/c pressumes by the law as joint. At the
same time with respect to the object of
obligation/prestation, is incapable of partial performance.
(hindi pwede yung ulo lang muna, or tung paa, etc) (joint on
the side of debtors)

Ex: (Baliktarin natin, pwede namang joint on the side of

creditors) B has the obligation to deliver a cow to X and Y.
 (In the absence of stipulations, the law presumes that X and
Y are merely a joint creditors).

-The difficulty lies in: while the obligation is joint (a portion only
ha), the object is incapable of performance. So, even if one of the
solidary creditors is entitled only to recover his share, he cannot ask for
the head of the cow (correct?). Because prestation is incapable of
partial performance.

- in order to perform J and I Ob: It will require acollective action of

the debtors and creditors.
Ex #1: A and B are oblidge to deliver a particular car to X
(nagbili ng car kay A and B, joint debtors). They were not
deliverd the car on the agreed date of delivery. X, as
creditor, send a demand only to A compelling him to make
the delivery.

Q: Will that put A in delay?

A: NO, because that demand is not effective because it was

only adressed to A. A cannot perform the entire obligation.
Why? Because the obligation is joint. His liability is limited to
a portion of indebtedness, not liable for entire. X must
demand to both A and B to fulfill the obligation.

Ex #2: (in the case of joint creditors) B is oblidge to deliver a

particular car to X and Y

Q: Will X incur delay? NO (same ans in ex. # 2).

-Dont forget to remember that the obligation is still joint,

notwithstanding the fact that the prestation is indivisible. Why?
Because in case of insolvency, the shae of one is distinct and separate
from the others. So, in case of insolvency of one joint debtors, the
other joint debtors is not liable for the share of the insolvent debtor.
- In case of breach:
A. (Remedy of creditor) Ex. There are A, B, and C (joint
debtors) oblidge to deliver a car to X, and were not able to
deliver because C did not or was not able to pay his share.
What will be the remedy of X?

Anwer:
1. Since the thing to be delivered is a determinate or
real thing, X has the right to compel the AB and C to make
the delivery, or, if the creditor had choose to perform a
SPECIFIC PERFORMANCE, X has the right or required to sue
all (not just the one or two debtors) the joint debtors. Why?
Because the performance of obligation, the delivery can only
be made through a collective/ consolidated actions of all
joint debtors.

2. If the REMEDY choose by the creditor is to the

RECOVERY OF DAMAGES, he may convert to the payment of
the damages. It will now become JOINT AND DIVISIBLE
OBLIGATION. He can recover:
a. P300k to A
b. P300k to B
c. P300k to C plus damages since C is the reason
for not delivering of the car.
- Since the remedy is recovery of damages, can X sue
only one or two of the debtors? A: Theoretically YES (but
subject to the Law of Procedure). In civil law, you can sue
one or anyone of them because the share of one is
different/distinct share from the others, and this time , the
obligation is divisible.
 MODES OF EXTINGUISHING OBLIGATIONS

1. PAYMENT- PERFORMANCE
-Rules:
1. Must be complete and regular. Exceptions:
A. although incomplete, it must be made in good faith
(must not made in fault).
a. must be substantial- meaning, must more than
half.
B. although not complete, must have a waiver from
the creditor.
a. But if the creditor just get the payment silently,
then it will not result to extinguishment of the
obligation. Silence merely not deduced to the
acceptance of payment, must insist a waiver by
means of intention actions, words, gestures, etc.
2. Must come from the proper party to compel the creditor
to accept the payment. Who are they?
A. If the payment is coming from the debtor himself or
from his authorized representative, the creditor may
compel to accept the payment.
B. If the payment is coming from the 3rd person? It
depends:
a. If the 3rd person has the interest in the
fulfillment of that obligation (Ex. the payment is
coming from guarantor or surety), the creditor
may likewise accept the payment.

b. If the 3rd person has no interest at all in the

fulfillment of obligation, but with the CONSENT of
the debtor, the rule is that, the creditor may or
may not compel to receive or accept the
 payment. This time, the creditor has valid reason
to refuse the tender of payment.

Take note that the option has given to the

creditor (whether to accept the payment or not).
If he accepts it, although the 3rd person has no
interest, still, it is a valid one. The obligation of
the debtor is extinguished.

The 3rd person has the right to reimburse the

payment to the debtor (with or without interest).

c. If the 3rd person has no interest at all in the

fulfillment of obligation, but WITHOUT the
CONSENT of the debtor, the rule is that, the
creditor, STILL, may or may not compel to receive
or accept the payment. This time, the creditor
has valid reason to refuse the tender of payment.

The 3rd person’s right to reimburse the payment

is limited such a way that the payment is
beneficial of the debtor (with without interest).

3. The party paying must have the capacity to pay. (Dasion)

4. Payment must be made to a proper person. Who are

they (Art. 1240):
1. Original creditor.

2. The successor in interest of the original creditor (The

original creditor is not now not entitled for the
payment if this successor is present).
 3. Person authorized by the creditor or by law.

Outside of those enumerated, the payment is

considered invalid. Exemptions (to be considered valid again
even if the payment was made in a wrong person):

1. If the payment is beneficial to the creditor.

Q: Who has the burden to proof that the wrong
payment has redounded to the creditors benefit?

A: That is the problem of the debtor. Why? (1) He

is the one who is responsible for the mistake; (2)
It is the debtor who is interested in the
extinguishment of his obligation.

But there are situations in the civil code, that the

debtor is no longer dound to proof that his wrong
payment to a wrong person has redounded to the
creditors benefit. What are they? (Enumerated in Art.
1241, read)

a. if after the payment made to a wrong person

(if the creditor has led the debtor or believed that
the recipient of the payment has the authority to
accept the payment, under our law, that
payment is valid) (????)

2. If the person is a possessor of the credit, and the

payment was made in good faith, the debtor also
extinguished his obligation.
 Art 1242 (read) Sino yung tinatawag nating
possessor of the credit? He must not entitle for
the payment, it is a wrong payment.

Ex. #1. The debtor to evidence the indebtedness

executed a promissory note, payable to specific
creditor. Without any assignment of the promissory
note, that note was landed to a 3rd person. If that
person will demand from the debtor, and the debtor
pays, will the debtors obligation be extinguished?

A: No. That is the case of a wrong payment,

because the one who demanded payment is not
a possessor of a credit. He is merely in possession
of the document evidencing the credit but he is
not a possessor of the credit. Therefore, that is
an invalid payment.

Ex. # 2: (This time, the promisory note is in

Negotiable Instrument w/c is payable to the order of
creditor). The creditor did was to negotiate by
endorsing it and delivered it to a 3rd person and he
(3rd person) demanded payment from the debtor. Is
that payment valid?

A: Yes. Payment w/c does not falls under 1242. It

will fall under the payment of general rule. Why?
Because the 3rd person is now a successor in
interest of the original creditor.

Ex. # 3: (This time, the promisory note is NON

NEGOTIABLE Instrument). THIS TIME, THERE IS AN
assignment of credit from original creditor to the
 assignee, and the assignee demanded payment from
the debtor. Is that a valid payment?

A: Yes, but is NOT under exemption under 1242,

but valid pursuant under the general rule. Why?
Because the assignee will become successor in
interest of the original creditor.

Examples that fall under of Art. 1242

(exceptions):

Ex. # 1. The promissory note is a negotiable

instrument because it is payable to bearer. The
creditor hides the instrument in his office.
Unknowingly, it was seen by the creditor's officemate,
get it (payable to bearer), and he presented it to the
debtor for payment. Debtor knows that he
(officemate) was a creditor's friend. The happening is
not known to the creditor. The payment was then
made. Is the 3rd party (officemate) has the right to
demand the payment to the debtor? (This is an
example in which the holder of the instrument is a
possessor of the credit, because the instrument is
payable to bearer. He is a possessor of the credit and
the payment by debtor was made in good faith. So that
is an example of example in ART. 1242, WHERE THE
PAYMENT was made to a wrong person but valid
because that 3rd person is the possessor of that credit
and at the same time the debtor made the payment in
good faith).

A: NO. He is not the creditor, he is not a

successor in interest. In order to the instrument
 payable to bearer, there must be an intentional
delivery, which is not present in this case.

3. If there was already an assignment of the credit, the

original creditor ceases (no longer) to entitled for the
payment. It is now the assignee is entitled for
payment. (Does not require the debtors consent).
Assignment of credit can be made without the debtors
knowledge/consent to be valid. You just need is the
assignor and assignee (new creditor). But of course,
before the debtor can be considered bound by the
assignment, he must have the knowledge of that
assignment (???). The payment to the wrong person is
now valid although not known to original creditor.

5. With respect to the identity of payment:

A. If the ob is determinate one, the creditor may not
be compel to accept any other thing EXCEPT w/c is
due.

B. If the ob is GENERIC one, the creditor may not

DEMAND for a thing w/c is superior quality and
neither may the debtor compel the creditor to accept a
thing of inferior quality. Dapat SAKTO LANG.

-If payment is in a form of sum of money, the rule is

that, the payment was be made in the currency agreed
upon by the parties, otherwise, the creditors may not
compelled to accept the payment.

- Even if there was an agreement (stipulations) or not,

with respect to the currency, but if it will already be
impossible to deliver the currency, the rule is that, the
payment that should be made by the creditor must be
in LEGAL TENDER

- LEGAL TENDER (Coins and Notes)

a. the kind of money that the debtor can compel
his creditor to accept in a right amount.

b. a coins and notes issued by BSP and guaranted

by the RP, no more no less (pursuant to Sec. 52 of
the New Central Bank Act).

c. a note/ promissory note of the your gov't.

d. NOTES (perang papel) has no limitation,

whatever the denominations are, they are
considered as legal tender (WON P20
denominatios, P100, P500, etc.)

e. COINS have limited legal tender power or

denominations.
-if denomination is less than P1 (yung mga
centavos), they are considered legal tender only
up to a maximum amount of P100.

-if denomination is P1, P5, P10, etc, they are

considered legal tender only up to a maximum
amount of P1000.

(Ex. You ordered a food that cost P120. You

paid it with a sampaguita worth P120. The
casher will not accept that payment (or
pwede man, pero karapatan nya na
magrefuse for that payment) because it is
 not a legal tender. Coin and notes lang ang
legal tender.

-Cheque is not a legal tender (So, the creditor has the

right to refuse payment). Cash only. Not legal tender
thing is invalid (as general rule). EXCEPTIONS:

A. If the purpose of cheque was not for the

extinguishment of an obligation, but rather,
for the purpose of exercising a right (Ex: rights
of redemption, purchase, first refusal, etc) the
concept of legal tender (Art 1249) does not
apply. (Art. 1249, extinguishment of
obligation).

Ex: X pays in a form of cheque to a bank for

his right of purchase, but the bank refuse
because of the contention that it is not a legal
tender. Will X be resorted to consignation?
What is the remedy?

A: No, consignation is a form

extinguishment of obligation w/c requires
that the debt is due. X is not paying for the
extinguishment of ob but a right of purchase.
The remedy must not consignation but a
SPECIFIC PERFORMANCE.

-SPECIAL FORMS OF PAYMENT:

1.DASION EMPAGO (Art.1245)- the original form of

payment is a sum of money, but because the debtor has no
money, he payed his property (in lieu of money). (tandaan:
 pag ang binayad sa payment is kwarta, then bako sa dasion.
pero pag property, then dasion yun).
- referring to specific/identifiable property that has
been segregated (as distinguished to Cession)

-a special form of payment, NOVATION ia not a special

form of payment.
Ex: walang pera si X. Imbis na magbayad ng pera,
nagrequest na si debtor kung pwede i-massage
na lang si X. Nag agree naman si X.

Q: Is the obligation extinguished?

A: Yes. but not in a form of Dation Empago
(because massage is not a property), but
NOVATION.

-CONSENSUAL AND CONTRACTUAL (by agreement of

the parties). Because dasion empago (property) is not a legal
tender. If nag agree and creditor na property na lang and
ibayad, then it is valid (although not legal tender/money).

-Q: Up to what extent will dasion be

extinguished?

A: (1)must be agreed by the parties; (2) property

must be of fair value
-Purpose: Absolutely conveyance to extinguished the
debtors obligation (pumapatay). Must not be correlated to
Law on Sale because it gives rise to obligation
(bumubuhay)creditors.

-Can resort regardless of the numbers of creditors

(pwedeng isa or marami) (as distinguished in cession).
 -If there was a delivery of the property, and its delivery
was accepted by the creditor as a form of payment, there
must be a corresponding transfer of ownership from debtor
to creditor ONLY UPON DELIVERY, NOT upon the execution
of CONTRACT OF AGREEMENT. (contract is not a mode of
transferring an ownership. In mater of contracts it is the
delivery w/c transfer the ownership). (as distuinguished to
cession)

2. PAYMENT BY CESSION- universality of property of the

debtor.
-Concept: will come only in place in case of insolvency
(unable to pay) of the debtor.
-The debtor has several creditors and his assets are not
sufficient to pay his obligations to several creditors due to
insolvency.
- Requires plurality of creditors (maraming creditors).
-There is no transfer of ownership UPON DELIVERY.
The property is delivered for the purpose of SALE. Out of the
proceeds of the sale, the respective credits of the various
creditors will have to be satisfied.
-the obligation will only extinguished ONLY WHEN THE
PROCEEDS OF THE SALE HAD BEEN APPLIED OR GIVEN TO
VARIOUS CREDITORS.

3. CONSIGNATION- the creditor refuses the tender of

payment (money) WITHOUT JUST OR VALID REASON, the
rule is that, the debtor's obligation is not extinguished. A
mere tender alone without followed by a consignation is not
sufficient to extinguish the obligation.
-Rules for consignation to be valid (must be strictly
provided):
1. A debt must be due (consignation is not valid if
NOT DUE).

Ex: If the obligation is payable on demand.

In order for an obligation to be due,
creditor may ask for demand. Di ka
pwedeng magbayad in the absence of
demand, the ob is not due. So, you cannot
resort to consignation, because it is not yet
due (or demanded by creditor).

2. There must be a prior announcement of the

debtors intention to resort into consignation.
Prior announcement must not only resorts to the
CREDITORS but also TO ALL CONCERNED (Ex:
guarantor, sureties, etc.)

3. The tender of payment must be deposited in

court.

4. There must be a post notice addressed to the

creditors and other persons interested in the
fulfillment of obligation that the payment is
already deposited in court.

PURPOSE: To know by the creditors and others

that the payment is already deposited in court.
Then, by the time the creditor accepts it, then the
ob is extinguished. If not accepted, there will be a
litigation (Soco vs. Melitante)
-always a judicial act (you are to file a complaint for
consignation in court, hindi yung basta mo lang
ipapatago sa court).

-when will the debtors obligation be extinguished?

1. Even w/out the judgment that the
consignation is valid, the creditor already
accepted the payment in court. The judgment of
the court will retroact by the time the complaint
was filed in the court.

-TENDER OF PAYMENT (DIFFERENT FROM LEGAL

TENDER!)- in order to be valid:

1. The debtor must not have only the intention,

the capacity to make a payment, but most
importantly, he must be IN THE ACT OF
PERFORMING THE OBLIGATION.

Ex: If the debtor only wrote a letter to the

creditor that he will pay his debt, then it is
not considered as a tender of payment).

2. Must be made in ABSOLUTE TERMS (without

any condition or qualification).

Ex: Bago magbayad yung debtor,

pinapaamin muna yung creditor na bakla
sya. Pag di umamin, hindi magbabayad,
pero pag umamin, magababyad.

Q: Will the debtor resort validly to

consignation?
 A: NO. Because the tender of payment was
not valid.

2. LOSS OF THE THING DUE- not limited to real obligation (TO GIVE) but
also applicable to personal obligation (TO DO), (Ex. Art 1265 and Art.
1266, in w/c when an obligation is legally or physically impossible, the
ob is extinguish by way of loss. Like, if the service has become difficult
to manifest beyond the contemplation of the parties, an obligation to
do is considered extinguished by way of loss)
- applicable only to real obligation (DETERMINATE THING),
because of its susceptivility to lost. MUST BE:
A. The lost must be without the fault of the debtor.
B. tHE LOST MUST HAVE occured prior to the debtor
incurring delay.
-Generally, debtor is not liable if the loss of the thing due is by
reason of fortuitous event. EXCEPT:
1. When the law provides that he still liable although it is by
reason of fortuitous event.
2. Agreement b/w the parties that he is still liable.
3. If the nature of obligation requires assumption of risk.
- GENERIC THING IS NOT SUSCEPTIBLE FOR extinguishment by way
of LOSS (gENUS nuncuam perit (???)).
-The lost must be without the fault of the debtor

3. MERGER OR CONFUSION- the characters of the debtor and creditor

are to be found in one and the same person.

Ex: For the evidence of Negotiable instrument, A executed a

negotiable promisory note in favor of B (creditor). And since that
the instrument is negotiable, B has also a debt to C. He payed the
negotiable instrument that was given by A. C also has a debt to D
 and give the n.i. provided to him by B. D has a debt to A. He gave
the n.i. to A as a form of payment. A sees that he is the debtor of
promissory note. There is now the merger of the debtor and
creditor in one and the same person. This will now result to the
extingishment of the debtor's obligation.

4. CONDONATION (PAGPAPATAWAD) OR REMISSION OF THE DEBT-

not only involved the act of the creditor.
-in order to be valid:
a. acceptance by the debtor

-not a unilateral act on the part of the creditor. That will require a
consent from the debtor. Why? You cannot impose your own
generosity in one person. Why? May mga times na ayaw mong
tumanaw ng utang na loob sa ibang tao (specially ng debtor ??). That is
the reason for requiring debtors consent or acceptance by the
debtor where the creditor is condemning or remitting the obligation.

Q: Is your unilaterally renunciation of the credit by the

creditor a mode of extinguishing the debtors obligation?

A: No. Why? The debtor may still choose to pay even if the
creditor had already unilaterally renounce the credit. The
tender of payment will not be accepted by the creditor. The
debtor can resort to CONSIGNATION. The creditor cannot
impose his own generosity upon the debtor.
-What really happens in a unilateral renounciation of the credit is
that it may be possible for the ob to perish but not by way of
renounciation but by means of prescription (???). Of course if the
creditor will unilaterally renounce his credit, will no longer actively
collcet the credit. At kung wala naming gagawin si debtor,
maghihintay lang sya ng any action from the creditor at walang
gumalaw sa kanila through lapse of time, the debt will be extinguished
by way of prescription (PRESCRIPTION MEANS, LINIPASAN NA NG
PANAHON).

-Can be done either expressly (in writing) or impliedly (verbally).

1. EXPRESS CONDONATION- the law requires that the

parties must follow the formalities required in a simple donation.
What are those formalities in donation.
a. what is to be donated is PERSONAL PROPERTY and
the value of that exceeds P5k, the law requires that
both the donation and the acceptance of the donations
must be in a form of writing, otherwise the donation is
not valid.(Ibig sabihin, pagpinatawad ung P5k up na
debt mo by the creditor, it must be in writing tapos
PAPIRMAHIN MO KAAGAD, otherwise, condonation is
NOT valid).

b. If what is to be condoned is an obligation to deliver

a REAL PROPERTY, the law requires that the offer of
condonation and the acceptance of that donation must
be embodied in a PUBLIC INSTRUMENT, otherwise, the
condonation is not valid.

2. IMPLIED CONDONATION- no form.

-CERTAIN PRESUMPTIONS IN CONDONATION

A. If the document evidencing the credit is a form of a
private document (your own document, NOT YET
NOTARIZED). If the INDEBTEDNESS is in a form of a private
document, it is usually kept or in the possession of the
creditor. But if it was later on found in the possession of the
debtor, that will give rise to two presumptions:
 1. That it was voluntarily delivered by the creditor to
the debtor. Why? Isang documento na dapat hawak ni
creditor ay makikita sa debtor, the law pressumes that
it was delivered by the creditor to debtor, because the
law always in favor in good faith or presumptions of
inocence.(Nasa creditor muna yung documents tapos
pag nekabayd na, ibabalik na de debtor.

2. That the debt has been condoned.

Q: How to rebut the presumption of condonation.
A: Presumption is not conclusive. Must be prove that
there was no delivery or the delivery was not
voluntarily.

B. If what was condoned is a CONTRACT OF PLEDGE (mere

accessory contract), it is the only one considered to be
extinguished without affecting the PRINCIPAL CONTRACT OF
LOAN.

C. If what was condoned is a PRINCIPAL CONTRACT OF

LOAN, the contract of pledge is also extinguished because
the accessory cannot stand alone without the principal.

5. COMPENSATION- OFF-SETTING (icancel o bawasan ang something)

of two (2) obligations up to there concurrent amount.
-Distinguishments:
1. Payment (performance of obligation)
2. Loss (will require the loss of thing that is due)
3. Condonation/ Remission ( pagpapatawad)
4. Merger/ Confusion (requires the merging of debtors and
creditor as one the same person)
 -KINDS (parties are mutually creditors and debtors of each other
in their own rights):

1. JUDICIAL COMPENSATION (Contract claim)- takes place

by reason of court order.

2. VOLUNTARY/ CONVENTIONAL- agreement of the parties

(Contractual)
-will not require any requisites, except that the parties
are mutually creditors and debtors of each other in
their own rights.
3. LEGAL- takes place by reason of provision of law.
-requisites of valid legal take place:
a. the parties are mutually creditors and debtors
of each other in their own rights. (Ex: If one is a
debtor merely in a representative of a capacity as
a guardian of a certain ward, legal compensation
will not take in place because they are not
mutually creditors and debtors of each other in
their own rights).

b. the parties must be mutually creditors and

debtors of each other as principals. (Ex: If one is a
mere guarantor, legal compensation will not
takes place because it is necessary that both are
principals).

c.both debts must be due, demandable, and

liquidated

d. must consist in form of money. Pwede man

consumables but of the same kind and quality.
e. over either of the debts, there must be no
retention or controversies communicated in due
time by a 3rd person.

Ex: Just remember Voltez V (If all requisites

volts in, tapos na ang laban). If the Volsenian
(traitor) will try to break the 5th requisite that
was already volted in, then it was too late, at was
already formed, legal compensation take place.
But if the Volsenian impire will prevented the
Voltez V to volt in (Ex, if the 5th not
communicated in due time by a 3rd person
requisite to volt), then the legal compensation
will not take place.

Situation: A and B are mutually debtors and

creditors of each other as principals of their
own right up to the concurrent amount of
P1M. Both debts are due, liquidated, and
demandable, and both consist of payable by
money (in short, all requisites are present),
except that, A is also indebted to C, and C
was able to get a judgment in his favor for
the amount of payment of P1M. To satisfy
that judgment, C will get a Writ of Execution
allowing the court to look for the property
of A. Unfortunately, no property was seen
to A, except a debt to B. The court can
garnish that credit of A. The court will issue
a garnishment addressed to B informing B
not to pay A, but instead, pay it to the court
in favor of C. That is the example of
retention or controversy commenced by
 3rd person. If that will be communicated in
DUE TIME (meaning, all requisites are
already taken place) at dumating yung
NOTICE OF GARNISHMENT, THAT WILL
ALREADY BE TOO LATE. Why? If the debt is
already due, liquidated and demandable,
the two obligations of A and B will be
compensated by way of legal compensation
up to the concurrent amout of P1M. So,
pagdating ng garnishment, since
compensation operates by way of law, and
4 requisites are already present, kit will
takes place by operation of law, pagdating
na notice of garnishment, is there astill a
credit to be retain? WALA NA, because it
was already extinguished by way of
compensation.

6. NOVATION- unique because has a dual function.

-while novation results to the extinguishment of obligation, the
debtor extinguished by creating a new obligation.
-new obligation will result to the extinguishment of the old
obligation.
-KINDS/CLASSIFICATION OF NOVATION:

1. EXTINCTIVE AND MODIFICATORY

A. EXTINCTIVE (ART 1291)- will result to the
extinguishment of debtors obligation.

B. MODIFICATORY- does not extinguished an

obligation, but instead, the mode of obligation is
modified by the new agreement.
 -either express or implied.
1. EXPRESS NOVATION-it is necessary that in the
new agreement, there must be a clear provision
that the new contract is for the purpose of
extinguishing the old obligation. In the absence of
that statement in the new contract, novation is
not presumed.

2. IMPLIED NOVATION- only exist when there

will be a total incompatibility or repugnancy b/w
two (2) obligations. Absence of total repugnancy
b/w the two obligations' if they can be
harmonized, what we have is simply a case of
modificatory novation, not extinctive.

2. REAL OR PERSONAL NOVATION

A. REAL NOVATION- involves in change in object of
obligation or principal condition. (1st par of Art. 1291)

B. PERSONAL NOVATION- if it involves in change in

person of the debtor or creditor, the cause or
consideration is principal condition. (2nd and 3rd par
of Art. 1291)

a. 2nd par- if what it to be change is the person

of the debtor, the change is refer to as
SUBSTITUTION.
- since novation is not to be presumed before the
substitution of the old to new debtor, it is
necessary that there is a clear agreement that
the old debtor is being released from his
obligation and that he is being substituted by the
new debtor.
Ex: X borrowed from a bank by purchasing a car
with a monthly amortization payable for 5 years.
After 2 years, X decided to sell the car to Y. X then
executed a deed of sale with assumption of
mortgage informing that Y will assumes the
remaining mortgage to the bank. Y informed the
bank that he will resumes the payment made by
X. Bank accepted the payments by Y.
Unfortunately, Y stop paying after a year.

Q: Can the bank go after X (previous owner of the

car)?

A: Yes. There is still no novation by way of

substitution of the person of the debtor. To take
place, it is necessary that the novation was made
expressly. There must be a clear agreement that
the old debtor is being released.

Ff. Q: Can the banc cannot consider the payment

of Y as a form of consent that he will be the one
to pay the rest of mortgage?

A: NO. The acceptance of the bank in the

payment coming from the new owner of the car
NOT INCONSISTENT with existence of the old
obligation. It is still compatible to the old
obligation. Why? The creditor (Bank) can accepts
payment from anybody.

-TWO (2) WAYS OF SUBSTITUTION (DEBTOR):

(listen pa more on 53min, part 5)
 1. EX PROMICION- if the initiative of
substitution is NOT emanated from the
debtor himself.

2. DELEGACION- if the initiative of

substitution is emanated from the
PREVIOUS debtor himself (the debtor who
offer the substitute)

Q: May it be possible for the action of the

previous debtor to be revive?

A: YES! iN TWO SITUATIONS (delegation only): (1)

If there was fraud, where delegacion offer a
substitute person that is insolvent which is
known to the debtor; and (2) KATANGAHAN,
DELEGACION offer substitution that is insolvent
known to the public, except to the debtor.

b. 3rd par- if what it to be change is the person of the

CREDITOR, the change is refer to as SUBROGATION.
-TWO KINDS:
1. LEGAL- provision of law (enumerated in
Art 1302).

Examples:
a. If the one who paid the obligation is
a 3rd person who has the interest in
the fulfillment of obligation whether
the payment was made with or
without the debtors consent, legal
subrogation will take place.
 b. If the one who paid the obligation
is a 3rd person who has NO interest in
the fulfillment of obligation, legal
subrogation will take place ONLY with
debtors consent,

2. CONVENTIONAL- change is the person of

the CREDITOR by agreement of the parties
(old creditor, new creditor, and the debtor)
- all three must give there consent,
otherwise there is no conventional
subrogation.
- almost similar to ASSIGNMENT OF
CREDIT (but different) in w/c there is a old
creditor(assignor), new creditor (assignee),
and debtor.

Q: Is the Assignment of Credit similar to

Conventional Subrogation?

A: NO. the MAIN DIFFERENCE is that, In C.S

requires that the three involved must have
the consent, whereas, in AoC it only
requires the assignor and assignee for its
validity.

Debtor only needs a NOTICE for the

purpose of binding the debtor to
assignment, because if not, he will pay the
previous debtor.