OBLIGATIONS AND

An obl i
gati
on isa j uri
dicalrelati
on
CONTRACTS (bec.t her ear e2par t
ies)wher ebyaper son
shoul d engageorr efrainfrom engagi ng i
n
Ti
tl
eI.-
-OBLI
GATI
ONS ac ertain activit
yfort hesat i
sfacti
on ofthe
pr i
vat ei nter
estsofanot her,whoi nc aseof
CHAPTER 1.-
-GENERALPROVI
SIONS non- fulfil
ment of suc h dut y may obt ain
from t he pat rimony oft he f
ormert hrough
Balane: Obser vati
on on t hetit
leofBook proper j udicial pr oceedings t he ver y
IV,"Obligati
ons and Cont ract
s." Book IV prest ati
on due or i n def aultthereof,the
start
s wi th an inaccuracy. It gives t
he
ec onomi c equi val
ent ( damages) t hat i t
impression thatobligati
ons and contracts
repr esent s.(Di azPiero.)
areofthesamest atus,w/ct heyarenot .A
contract is only one of t he sources of
Now,t
hisi
sal
ong but compl
ete
obli
gations. Book I V should have been
de.ni
tion.
simplyt i
tl
ed" Obli
gations."
Char
act
eri
sti
csofanObl
igat
ion:
Et ymol ogy .-- The wor d obl i
gation comes
from t wo Lat in wor ds,l i
gar e,meani ng " t o
1. I tr epresents an exclusi
vely private
bind"and ob w/ci sapr oposition used t o
interest
intensi fy a ver b. Li terally obligar e means
2. I t creates ties that are by nat ure
"tobi ndsecur ely."I nt heear l
yRomanl aw, transitory
the l aw on obl i
gations cont ained a l iter al 3. I tinvol ves the power to make t he
meani ng. I t meant bei ng " bound i n juridical ti
e e:ect ive in case of non-
chai ns. " The enf orcement ofcr edit was ful.llment t
hrough an economi c
bar bar ic. I ft he credi tori s notpai d,t he equivalent obt ained f r
om t he debt or '
s
credi torhas t he r ightt o have t he debt or patrimony .
placedi n chainsandsol dt osl aver yi nt he
mar ke tpl ace f ort hree days. Pr oceeds of Li
nes ofDevel
opmenti
n Moder
n Law on
thesal ewi l
lbeusedt opayt hedebt .I ft he Obli
gati
ons:
debt ori snotbought ,t hedebt orwi lleither
be chopped i nto pieces and f ed t ot he 1. Pr ogressive spiri
tualizati
on ofthe law
.shesi nt her iverorsol dt oslaver yacr oss
on obl i
gat i
ons.-
- Thi s means t hat t he
theTi ber.Li tt
lebyl i
ttle,t hesever it
yoft he
intentoft hepar ti
esi semphasi zed rather
law wasmi t
igated. I n Ci cero'st ime,t her e
than thef orm. Spi ri
tualizedmeans" made
wasnomor e" bindingi n chains. " Rat her ,
abstract.
" The emphasi s now is on t he
obl i
gat ion wasl ooked upon as" bi ndi ngi n
"mee t
ing oft hemi nds"oft heparti
es. I n
law."Thel aw hasnow beenhumani zed.
the Roman l aw,obl igat
ions,par t
icularly
,
contractual obl igati
ons, r equi
red st ri
ct
Ar
t. 1156. An obl
igat
ion i
s a
compl i
ancew/f or mf orvalidit
y.
j
uridi
calnecessi
tyt
ogi
ve,t
odoornott o
do.
2.Thepr inc i
pleofautonomyofwi llisnow
bei
ng signific
antl
yr estr
icted ormodi fied.-
-
Bal ane: De.niti
on.
-- Art.1156givesusa
In Roman l aw,the parties can enteri nto
simpl e but incompl
e t
e de.nit
ion. I tis
anyagreementt hattheywi sh. Now,t hey
incompl et
ebec.i tl
ooksatobl i
gation onl
y
can ent
eri ntoanyagr eementpr ovidedt he
from t he poi
ntofvi ew ofthe debtor
. A
samei snotcont r
aryt ol aw,mor als,good
be t
terde.niti
onwoul dbe,

1
customs, publ i
c order, or publ
ic policy. On t he .r stt wo el ement s: They
The r eason forthisis SocialJustice and mustbede t
er minateorde termi nable. The
some pol i
cy consider
ations. Ithas been fol
lowi ngar epossi bl
ecombi nations:
obser ved,however ,that this wil
l give a a. Bot h par t
ies ar ede termined at
greatert endency forthe govtt ointerfer
e thet imeoft heexecut ionoft heobl i
gation.
intopr ivat
ea:ai rs. b. An obl i
gation wher ei
n onepar ty
is de t
er mined att he const i
tution oft he
3. Themi ti
gation ofthepr i
nciplet hatt he obligation and t heot hert obede termined
debtormustanswerwi th allhi s property subsequent lyi n accor dance w/ a cr it
eria
forhisobl igati
on.-
-I nRomanl aw,t hiswas thati spr evi
ousl yestabl i
shed.
absolute. Now, not al lpr operty of t he c.An obl igati
on i nw/ct hesubj ect
debtorcan bel evied upon f ort hepur pose is de termi ned i n accor dance w/ hi s
ofsat i
sfyingan obl igation. Now,t herear e rel
at i
on t oat hi
ngand t hereforitchanges
some pr oper ti
es (inf act,there ar e many) wher et het hingpassesf rom oneper son to
w/car eexempt edf rom at t
achmentorl evy
, anot her. This i s a pr operty-li
nked
likethef ami l
yhome. obligation.

4. Weaki ng ofthe pri

nc i
plethatli
abili
ty 3. Objectoftheobli
gati
on.-- Thi
srefer
st o
result
sfrom r
esponsi
bili
ty.-
- Thisisbec.of the conduct or act i
vit
y t hat must be
Social Just
ice considerati
ons. ( kulang observed bythedebtor. Theobjectoft he
i
t o.
..
.) obli
gation i
salwaysanact i
vityorconduct,
theprestati
on.
5. Tendency of uni ty i n moder n
legi
slation.-- In the ASEAN r egi
on, for Requisit
esofanobject:
instance,t here are moves t
o standardi
z e a.Itmustbel i
cit.
the rul es on handl i
ng goods, lett
ers of b.Itmustbepossi bl
e.
credit
,bank t ransacti
ons,etc. Ther ei s c. I t must be de ter
minate or
now t he t endency to make t hese rul
es deter
minable.
uniform.Thi sisbec.tradewillalways.nd d. I
tmusthavepecuni aryval
ueso
aconveni entway. thatifnotper for
med itis conver
ted i
nto
damages.
Essent
ialEl
ement
sofanObl
igat
ion:
4. Vi nculum juris(legal ti
e).
-- Upon
1. Ac tive Subject
.-- Thisr ef
erst ot he defaultorr ef
usalofthedebt ortoperf
orm,
credi
torort he obl
igee. St
rictl
y speaki
ng the creditor can go to court. When a
the two ar e not the same. A cr edi
tor person says" Ipromiset opayyou when I
generall
y used i n an obli
gation to give l
ike to,"t her
ei s no obli
gati
on here bec.
while obli
gee is used i
n an obligat
ion to thereisnovi nculum j
uris
do.
Allt hese .r
st t
hree f
our elements are
2. Passive Subject.
-- Thisr ef
er stothe agreedupon bycomment at
orsasessenti
al
debtorort heobligor
.I fyou wantt obea el
ement s. The fol
lowi
ng t wo ar
e being
civi
li
st,debtorisused in an obligat
ion to debated.
givewhileobligorisused in an obli
gati
on
todo. 5.Causadebendi /obl
igat
iones(Castan)
.--
Thi
s i s what makes t he obligati
on
demandable. Thi
sisthepr oxi
matewhyof
anobli
gati
on.
 w/carevol
unt
ary and ar
epuni
shabl
e by
6. Form. -
- Thisiscontr
over
sial
. Thisis l
aw (
cri
mes.
)
acceptable onl
y i fform means some
mani f
estati
onoftheint
entofthepart
ies.
SAGRADA ORDEN VS.NACOCO [ 91 P
503] - I fdef .-appel lant( NaCoCo)i sliabl e
I
.Sour
cesofObl
igat
ions atal l,itsobl i gat i
onsmustar i
sef rom any
oft he 4 sour ces ofobl igations,namel y,
Art
.1157.Obl igati
onsari
sef r
om: law,cont ractorquasicont ract,cr ime,or
(
1)Law; negl i
gence. ( Ar t
. 1089, OCC. ) Def .-
(
2)Contracts; appel lanti snotgui ltyofanyo:enseatal l
,
(
3)Quasi-contract
s; bec. i t ent er ed i nt o t he pr emi ses and
(
4)Acts oromi ssi
ons punished by occupi edi tw/t heper mission oft heent ity
l
aw;and w/ch had t he l egalcont r
oland admi n.
(
5)Quasi-deli
cts ther eof ,t he Al ien Pr op. Admi n. (APA)
Nei ther was t her e any negl igence on i ts
par t.Ther ewasal sonopr i
vity( ofcont ract
Balane: Law asasour ceofobl i
gat i
on.--I or obl igat ion)be t.t he APA and Tai wan
am under t he i mpr ession t hat al l Tekkosho,w/chadsecur edt hepossessi on
obli
gat i
onsar eder ived from law. I tismy oft hepr op.f r om t hepl t:-appel l
eebyt he
opinion that t her
ei s an over lap int he use ofdur ess,such t hatt he Al ien Pr op.
enumer at
ion bec.allobligat i
onsar i
sefrom Cust odi an ori tsper mi t
tee( def .-appellant )
law. So,whati sthei dea ofenumer ating maybehel dr esponsi blef ort hesupposed
law as onl y one of t he sour ces of an ill
egal ityoft heoccupat ion oft hepr op.by
obli
gat i
on asi fiti
sonl yoneoft hem when sai d Tekkosho. The APA had t he cont rol
the f
our.nd t hei
rsour ces inl aw? I sit and admi n.oft hepr op.notassuccessor
true t hat law i s t he onl y sour ce of tot hei nt er est soft heenemyhol deroft he
obli
gat i
on? Yes and No. Yes,l aw ist he title, t he T. Tekkosho, but by expr ess
onlysour ceofobl i
gat i
on i fyou talkofi tin pr ovision ofl aw. Nei theri si tat rusteeof
theul ti
mat esense. No,i fyou ar etalking thef ormerowner ,thepl t:- appel leeher ei n,
oflaw asapr oximatesour ce. I
nt hiscase, buta t rust ee oft he US Govt ,i ni ts own
therear e.vesour cesofobl gati
ons.Law i s right ,t ot heexcl usion of ,and agai nstt he
botht heul ti
mat eand a pr oximat esour ce clai m ort itle of ,t heenemy owner . Fr om
ofobligati
ons. Aug. 1946, when def .-appel lant t ook
possessi on,t ot hedat eoft hej udgmenton
Sour ces of Obl igations accor ding t o 2/28/48,t heAPAhadt heabsol utecont rol
SanchezRoman. -- Accor ding to Sanchez oft hepr op.ast rusteeoft heUS Govt ,w/
Roman, t here ar e onl y 2 sour ces of powert odi sposeofi tbysal eorot herwi se,
obligations: Law andAct s. Thel atterar e as t hough i t wer et he absol ut e owner .
furthercl assi.ed,asf oll
ows: ( 1) li
citact s Ther efore,even i fdef .wer el i
abl et ot he
created by concur rence of wi lls APA f orr ent al s,t hesewoul d notaccr uet o
(contract s);(2) licitactsei thervol untar y thebene.toft hepl t:.,t heol d owner ,but
or invol unt ary w/o concur rence ofwi lls thet heUSGovt .
(quasi-cont r
act);( 3) i lli
cit acts of civil
char acter w/c ar e not puni shabl e,
volunt ary or i nvoluntar y( t
or t
s and al l Balane: I
stheenumer ati
on in Art.1157
damagesar i
singf r
om del ay);(4)i l
li
citact s excl
usiveormerel
yil
lustr
ative? Thesense
thatthecaseofSagr
adaOr den tel
lsusis
that t he enumer at io i s excl usive. I n t
o have pl
aced thi
srulein alaw rather
resolving t he i ssue of whe ther t he def . t
haninamer eadmini
str
ati
ver
egulat
ion.
shoul d be l iabl et o pay r ent als,t he SC
usedt hepr ocessofexcl usion.Fort her eto Art
icles 1158 -1162 speci
fythe gener
al
be an obl igat ion t o pay r ent als, t hat pri
nciples regar
ding t he sources of
obligat i
onmustar isef rom ei theroft he.ve obl
igati
onenumer at
edinAr t
.1157.
(5)sour ces ofobl igat i
ons. I fi tdoes not ,
then t her ei s no obl igation. The cl ear
impl icat ion oft hisr ul i
ngi st hat ,these.ve Art. 1158. Obl igat
ions derived
(5)ar et heonl ysour cesofobl igat i
ons. from law ar e not presumed.Onl yt hose
Thepr obl em w/Ar t.1157i st hatit expressly det
ermined i nthis Code or in
mi ght not cover al l situat ions. For speciallawsar edemandabl e,and shallbe
exampl e: Car ale uses Dove as hi s soap. regulatedbyt hepreceptsoft helaw which
He t hen hear s an adver tisement f rom establi
shed them;and ast owhathasnot
Proct or& Gambl et hati tiso:er i
ngani ce been foreseen,by t he provi
sions oft hi
s
tumbl er f or t hose who can col lect 30 Book.
wr apper sofTi debef or eFeb.29,1996.So,
Car ale st opped usi ng Dove and st arted
usi ngTi de.Hewasabl et oconsumeal l30 Art.1159.Obl i
gati
onsarisingfr
om
wr apper son Feb.29,1996. Het hen went cont
ractshavethef or
ceoflaw be
t weenthe
to Pr octor& Gambl e( P & G)t o exchange cont
racti
ng par ties and shoul d be
the30Ti dewr apper sforat umbl er. ButP compli
edwi t
hi ngoodf ai
th.
&Gt ol d Car al et hatt heirt umbl er srun
out ofst ock. Car al e cont ract ed a ski n Balane: Ther earetwopar tsin Art.1159.
all
er gyasar esul tofusi ngTi dei ntaki nga The .r stpar tisthatobl i
gations derived
bat h. Thequest ion i s: DoesP & G have fr
om cont r
acthasthef or
ceofl aw bet
.t he
anyobl igat i
on t oCar ale. Ifwel ookatAr t
. contractingparti
es(juscivi
li.
) Thesecond
1157,t hi ssit uat ion doesnotf allin anyof partist hatt her
e mustbe compl iance in
the .ve sour ces. So,we know have a goodf ait
h( j
usgenti
um.)
probl em. The Ger man Ci vi lCode ( BGB)
cover st hi ssi tuat ion.TheBGB hasasi xth
sour ce ofobl igat ion,t he Ausl obung,w/c PEOPLE' S CAR VS. COMMANDO
meansa uni later alo:er . Ar t
.657 oft he SECURI TY [ 51SCRA 40]- Pl t:.( People's
BGB pr ovi des: Car )wasi nl aw l
iabletoi tscustomer sfor
the damages caused t he customer '
s car,
Ar . 657. Bi
t nding pr omise. A w/c had been ent rusted intoits cust ody.
personwho,bypubl i
cnot ice,announcesa Plt:. therefor e was in l aw just i
.ed i n
rewardf orthe per f
ormance ofan act ,i n maki nggood such damagesandr elyingi n
parti
cularforthepr oduct i
on ofar esul
t,is turnondef .
(CommandoSecur it
y)t ohonor
bound topayar ewardt oanyper son who it
s cont ract and i ndemni f
yi tf or such
hasper f
ormed t heact ,even i fhedi d not undi sputed damages, w/c had been
actwithavi ew t
ot her ewar d. caused di r
ect ly by t he unl awf ul and
wrongf ulact s ofdef .
's securi
ty guar di n
Note: We now have a DTI breachoft hei rcontract.
regulat
ion coveri
ngt hissituat
ion. Thi
si s
an admi nist
rati
ve regulat
ion w/c has t
he
forceoflaw. Buti twouldhavebeen better Art
.1160.Obli
gat
ionsderi
vedfr
om
quasi
-cont
ract
s shal
l be subj
ect t
ot he
provi
sionsofChapt
er1,Ti
tl
eXVI
IIoft
his impression thatiftherei sa contr
actbe t
.
Book. thepar ties,thepart
iescannotbel iabl
efor
quasi-delict on an area covered by the
contract. The case ofCangco has not
Art.1161.Ci vi
lobl
igations ari
sing real
lyr esolvethi
scontroversy
.
from cr iminalo:enses shallbe gover ned
byt hepenall aws,subj
ectt
ot hepr ovi
sions CANGCO VS.MANI LA RAI LROAD CO. [ 38
of ar t
icl
e 2177, and of t he per t
inent P768]- Bal ane:Ther ear etwoi mpor tant
pr ovisi
onsofChapt er2,Preli
mi naryTitle, princi plest hatwel earnf rom t hiscase:( 1)
on Human Rel ati
ons,and ofTitleXVIIIof Thedi :er encei nconceptbe t.cont ractand
thi sBook,r egulat
ingdamages. quasi -delictist hatinacont ract,t hereisa
pre-exi sti
ng j uridi
calt ie be t
.t he par ti
es.
Art. 2177. Violation of t he cont ract gi ves r ise t o
Responsi bilit
y f or fault or li
abi li
ty but not t o t he j uridical t ie.
negl igence under the Jur idicalt i
ei snotbor nebyavi ol ation.I n
pr ecedi ng articleis entir
ely quasi -delict,itispreciselyt hewr ongf ulact
separ ate and di stinct f
rom w/cgi vesr iset othejur i
di calt i
e. Li abili
t y
the ci vi
l l i
abi l
ity ar i
sing andj ur i
dicalt i
earesimul taneous.
from negl igence under t he (2) Cont ract
s and quasi -deli
ct s
PenalCode.Butt heplainti: creat et wo concent ri
c ci rcles w/ quasi -
cannot r ecover damages delictast hebi ggercir
cle.
twi ce f or the same act or
omi ssionoft hedef endant . [
Note: Ther
ei salitt
lemistakein Cangco.
The SC sai
dt hatthe dri
vercan be sued
underculpa contr
actual. Thisis wrong.
Ar
t .1162.Obligat
ionsder
ivedf
rom The dri
vercannotbe sued as he has no
quasi-
delicts shal
l be governed by the pri
vit
yofcontractw/t hepassenger
.]
provi
sions ofChapter2,Ti tl
eXVIIofthis
Book,andbyspeci allaws. So,t hequest ion now is:I si tpossi blet hat
even i ft her eisacont ractbe t.t hepar ties,
a quasi - deli
ct can st illbe commi tted by
Balane: The Code Commi ssi
on di d not one agai nstt he otherr egarding t he ar ea
chooset ouset ort. Thisisbec.t ortdoes cover edbyt hecont ract ? Yes,accor dingt o
not exactly have t he same meani ng as the case ofAr anetav .de Joya,57 SCRA
quasi-del
ict. Tortcover sintentionaltor t
s 59. The same act can gi ve r ise t o
w/c in quasi -del
ictis considered as civil obligat ionsar i
singfrom di :er entsour ces.
li
abil
ity arising from act s or omi ssions Forexampl e,Al ineai st heownerof
punishablebyl aw. Therear esomequasi - abusco. ,theAl i
neaBusCo. ,Mol inai sa
deli
ctsw/car enotcover ed bytort. Dean driverofone oft he buses ofAl inea Bus
Bocobo suggest ed theanci entterm c ulpa Co. Lagdameo r odet hebusbei ng dr iven
aquil
iana. But t his did not mer itt he by Mol ina. As a r esult oft he r eckl ess
approvaloft heCodeCommi ssion. driving of Mol i
na, Lagdameo su:er ed
injur ies. I nt his case,Lagdameo has a
Quest ion: Iftherei s a cont
ractbet
.t he choi ce- - he can sue on ei thercont r
act ,
parties, can t her
e be a quasi -delict quasi -delictoron cr i me. I fhedeci ded t o
commi tt
ed by one agai nst the other sue on t he breach of t he cont ract of
regardingt heareacoveredbyt hecontract. carr iage, al l he has t o pr ove i s t he
If you l ook at Art. 2176, you gett he (existenceoft hecont ract)and t hati twas
notper for med.I nt hiscase,hecansuet he whom hedesignatesorper mit
st or un i
t,
common car r i
erbutnott hedr iverbec.he wherethecarisoccupied and beingused
hasnocont ractw/t hedr i
ver. attheti
meoft hei
nj ur
yforthepl easur
eof
Ifhe sues on quasi -
del ict
,he can othermembersoft heowner'sfami l
ythan
sue bot h t he common car rier and t he thechi
lddri
vingit
.
driver. Thedef enseoft hedr iverwoul d be
dili
gence i n dr i
ving (or fort
ui tous event.
)
Thedef enseoft hecommon car ri
erwoul d A.Quasi
-Cont
ract
s
be di ligence i n t he sel ect i
on and
super visionofempl oyees. Art. 2142. Cer t
ain l awful,
Ifhe sues undercr ime,he has t o vol
unt ary and unilater
alact s gi
ve r
ise t
o
sue t he dr iver. I n case the dr i
ver is the j
ur i
dicalrelat
ion ofquasi -cont
ractto
convicted and hasbeen sent enced t o pay the end t hat no one shal l be unjustl
y
civilli
abi l
ity,theempl oyer(AlineaBusCo. ) enri
ched or bene.t ed at t
he expense of
is subsi diar i
ly l i
abl e. If Mol i
na i s another.
insolvent ,AlineaBusCo.wi l
lpay .

Noti
ce thatthe choi
ce ofcause of Art. 2175. Any per son who i s
action willdetermine t
hree things: t
he constr
ained to pay t
he taxes ofanother
theory ofthe plai
nti:,the def
ense oft
he shallbe entit
led t
or ei
mbur sement f
rom
def.andt hequestionofwhom tosue. thelatt
er.

Again,r
emembert hati nthiscase,
t
hevi ctim hasachoice. Provided thathe Art.22.Everyperson whot hrough
i
sconsi stentw/ histheory and provided, an actofper formance by another,orany
f
urther,t hathe cannot recover damages other means, acqui res or comes i nto
t
wicef orthesameinjury. possession ofsomethingatt heexpenseof
the latter wit
hout just or legal gr
ound
Not
e: Thereisst
il
la brewi
ngcontr
oversy shallreturnthesamet ohim.
amongcivi
li
stsw/regardtothi
squest
ion.
Thi
sisonlymyopinion.
Art.23.Evenwhenanactorevent
causingdamaget oanother'
spr opert
ywas
GUTI ERREZVS.GUTI ERREZ [ 56P177]- notdue t ot he f
aul tornegligence oft
he
One G,a passengeri n at r
uck,r ecovers defendant,t he latt
er shall be li
ablefor
damagesi nt heamountofP5, 000f rom t he indemni t
yi fthrough the actoreventhe
ownerofapvt .automobi l
enoti nt hecar , wasbene.t t
ed.
the machi ne being operated by a son 18
yrs.ofage,w/ot hermember soft hef ami l
y
accomadat ed t herein, and f r
om t he 1.Bene.t
sConf
err
edVol
unt
ari
ly
chau:eur and owner of t he t ruck w/c
colli
ded w/ t he pvt . automobi le on a (
a)Pr
eser
vat
ionofPr
oper
tyorBusi
ness
bridge,causingphysi calinjuriest oG asa
resultoftheaut omobi l
eaccident . (
1)Negot
ior
um Gest
io
Thehead ofahouse,t heownerof
an aut omobile,who mai ntains itf or the
gener aluse ofhi sfami l
y,isl iablef orits Art
. 2144. Whoever vol
untari
ly
negligentoperation byoneofhi schi l
dren, t
akeschar
geoftheagencyormanagement
of the busi ness or pr operty of anot her, represent
ati
on,or who has
without any power f rom t he l att er,i s actedbeyondhispower
s;
obliged to cont inue t he same unt i lthe
terminat i
on oft hea:ai randi tsi nci dent s, Ar
t. 1404.
or t or equiret he per son concer ned t o Unauthor
ized contr
acts ar
e
subs tit
ute hi m, i ft he owner i s i n a gover
ned by ar ti
cle 1317
position to do so.Thi sj ur i
dicalr el ati
on andtheprinci
plesofagency
doesnotar i
sei nei t
heroft hesei nst ances: inTit
leXofthisBook.
(
1)When t hepr operty orbusi ness
isnotnegl ectedorabandoned;
(
2)Ifinf actt hemanagerhasbeen Art.2145. The oOci ous manager
tacitl
yaut horizedbyt heowner ; shall perfor
m hi s dut i
es wi t
h al lt he
I
nt he .r stcase,t he pr ovisi ons of dil
igenceofa good fatherofa fami l
y,and
arti
cles 1317, 1403, No. 1, and 1404 pay thedamages whi ch through hisfault
regarding unat hor i
zed cont ract s shal l ornegligencemaybesu:er edbyt heowner
govern. of t he pr opert
y or busi ness under
I
nt he second case,t he r ules on management .
agency i n Titl
e X oft his Book shal lbe The court
s may ,however,increase
appl i
cable. or moder atethe indemni t
y according to
thecircumstancesofeachcase.
Ar t.1317. No one
maycont ractinthenameof
another wi thout bei ng Ar t
.2146. I ftheoOci ousmanager
author ized by the latt
er,or delegatest oanot herper son allorsomeof
unlesshehasbyl aw ar ight hisdut ies,heshal lbel i
ablef ort heactsof
torepresenthi m. the del egate, without pr ej
udi ce t o the
A cont ract ent ered directobl i
gation oft he latt
er t owardt he
intoint henameofanot her owneroft hebusi ness.
by one who has no The r esponsibil
ity oft wo or mor e
author it
y or legal oOci ous manager s shal l be sol idary
,
represent ation,or who has unl ess the managementwas assumed t o
acted beyond hi s power s, savet het hingorbusi nessfrom i mminent
shall be unenf orceabl e, danger .
unless i t i s r ati.ed,
expressly or i mpli
edly, by
theper son on whosebehal f Art.2147. The oOci ous manager
ithasbeen execut ed,bef or e shallbeliableforanyfort
uitousevent :
itisr evoked by t he ot her (
1) I f he under t akes r i
sky
contractingpar t
y. operati
ons whi ch the owner was not
accustomedt oembarkupon;
Ar t
. 1403. The (
2) I f he has pref
err ed hi
s own
foll
owing cont racts ar e int
eresttot hatoftheowner ;
unenf orceabl
e, unless they (
3)I fhefail
storeturnt hepropert
y
arer ati
.ed: orbusinessaf terdemandbyt heowner ;
(1) Those ent ered (
4)I fheassumed t hemanagement
intoi nt henameofanot her inbadf ai
th.
personbyonewhohasbeen
given no aut hori
ty orlegal
 Art. 2148. Except when t he
management was assumed t o save the Ar t.2152. The oOci ous manager
property or busi ness f rom i mmi nent isper sonal l
yl i
ableforcontr
act swhi ch he
danger,t he oOcious manager shal l be hasent ered into wi
ththird persons,even
li
ableforfort
uitousevents: though heact edi nthenameoft heowner
(1)I
fhei smanifestlyun.tt ocarry and thi rd persons.Thesepr ovisi
ons shall
ont hemanagement ; notappl y:
(2) If by hi s i nter
vention he (1)I ft he owner has expressly or
prevented a more compe t
entper son fr
om tacit
lyr ati.edt hemanagement ,or
takingupt hemanagement . (2) When t he contract referst o
things per tai
ning to the owner of t he
business.
Art
.2149. The rat
i.cati
on ofthe
managementbyt heownerofthebusiness
producest hee:ect
sofan expressagency
, Art. 2153. The management i s
even ifthe busi
ness may nothave been ext
inguished:
successful
. (
1)When t heownerr epudiat
esitor
putsanendt her
eto;
(
2) When t he oOci ous manager
Ar t
.2150.Al t
hough t he oOci ous wit
hdraws f r
om t he managementsubject
managementmaynothavebeen expr essly totheprovisi
onsofar t
icl
e2144;
rati.ed, the owner of t he pr operty or
busi nesswhoenj oystheadvant agesoft he Art.2144. Whoever
same shal l be liable f or obl i
gat i
ons volunt aril
yt akes char ge of
incur r
ed i n his i nterest, and shal l the agency ormanagement
reimbur se the oOcious manager f or the oft hebusi ness orpr operty
necessar yandusef ulexpensesandf orthe of anot her, wi thout any
damages whi ch the l atter may have power f rom t he l at
ter,i s
su:er edi ntheperf
ormanceofhi sdut i
es. obliged t o cont inue t he
The same obl igation shal l be same unt i
lt he terminat i
on
incumbent upon hi m when t he of t he a:ai r and i ts
management had f or i ts pur pose t he incident s,ort or equirethe
prevent i
on ofan i mmi nentand mani fest person concer ned to
loss,al t
hough no bene.tmay have been subst i
t utehi m,ift heowner
derived. isinaposi tiont odoso.xxx

(3)By t
hedeat h,civi
lint
erdi
cti
on,
Ar t
.2151. Even t hough theowner insani
tyorinsolvencyoftheownerort he
did notder i
ve any bene.tand t here has oOciousmanager .
been noi mmi nentand mani festdangerto
the proper ty or business, t he owner is
l
iable asundert he.r stpar agraph ofthe
precedingar ti
cle,provided:
(1)TheoOci ousmanagerhasact ed (
2)Fi
nderofLostPr
oper
ty
i
ngoodf ai
th;
(2) The pr operty or busi ness is Art
. 2171. The r i
ght
s and
i
nt act
,r eadytober e t
ur nedtot heowner . obl
igat
ions oft
he .nder ofl
ostpersonal
proper
tyshal
lbegover
ned byar
ticl
es719 Art
. 2172. The right of every
and720. possessorin good f
ait
htor
eimbur sement
for necessar
y and useful expenses is
Ar t
. 719. Whoever governedbyar t
icl
e546.
.nds a movabl e, whi ch i s
nott reasur e,mustr eturni t Art.546. Necessar y
toi t
s pr evious possessor .If expenses shal lbe r efunded
the latter i s unknown,t he toever ypossessor ;butonl y
.nder shal l i mmedi ately the possessori n good faith
deposi ti twi tht hemayorof may r e
t ai
nt he t hing unt i
l
the ci t y or muni cipality he has been r eimbursed
wher et he.ndi nghast aken therefor.
place. Useful expenses
The .ndi ng shal lbe shall be r efunded onl yt o
publ i
cly announced by t he the possessori n good faith
mayor f or two consecut ive witht hesamer i
ghtofr eten-
weeksi nt hewayhedeems ti
on, t he per son who has
best. defeated hi m i
n the
If t he movabl e possessi on having t he
cannot be kept wi thout option of r ef unding t he
deteriorat i
on,orwi thoutt he amountoft he expenses or
expenses which of payi ng t he i ncrease i n
consider abl y di mini sh i ts value whi ch t he t hing may
value, i t shal l be sol d at have acqui red by r eason
publ i
c auct ion ei ght days thereof.
afterthepubl i
cat ion.
Sixmont hsf rom the (
b)Payment
sbyThi
rdPer
sons
publ i
cat ion havi ng el apsed
without t he owner havi ng Ar
t.2173. When a t hi
rd per
son,
appear ed,t he t hing f ound, withouttheknowl edgeofthedebt
or,pays
or i t
s val ue, shal l be the debt,the rights of t
he f
ormer are
awar ded t ot he .nder .The governedbyarti
cles1236and1237.
.nderand t he owner shal l
beobl i
ged,ast hecasemay
be, t o r eimbur se t he Art. 1236. The cr editor i s not
expenses. bound t o acceptpaymentorper f
ormance
by a third person who hasno i nterestin
the ful.ll
ment of t he obli
gat i
on, unl ess
Art. 720. I ft he thereisast ipulat
iontothecont r
ar y.
owner shoul d appear i n Whoever pays f or anot her may
time,heshal lbeobliged t
o demandf rom thedebtorwhathehaspai d,
pay, as a r eward to the except t hat i f he pai d wi t
hout t he
.nder,one-t
enth ofthesum knowledgeoragai nstt
hewi lloft hedebt or,
oroft he pr
ice ofthe thi
ng hecanr ecoveronlyinsof
arast hepayment
found. hasbeenbene.ci altothedebt or.
 Art.1237. Whoeverpayson behal f not cl aim i t wi thin t he
ofthe debtor wit
hout t he knowledge or period of one mont h, the
agai
nstthewi l
lofthel at
ter,cannotcompel depositary shal lbe r eli
eved
thecredi
tortosubr ogatehimi n hi
sr ights of al l r esponsibilit
y by
such as those ar
ising from a mor tgage, returning the t
hing
guaranty
,orpenalty. depositedt ot hedeposi tor.
Ifthedeposi taryhas
2.Bene.t
sInvol
unt
ari
lyConf
err
ed reasonabl e gr ounds t o
believe that t he thing has
(
a)Sol
uti
oIndebi
ti not been l awfully acqui r
ed
byt hedeposi tor,thef ormer
Art
. 2154. I f some thing was mayr e
tur nt hesame.
r
eceivedwhen t
hereisnor ighttodemand
i
t,and it was unduly deli
ver
ed t hrough
mist
ake,theobl
igat
iontor e
turni tari
ses. Ar
t.2159. Whoever i n bad faith
accept san unduepayment ,shallpaylegal
Art.2155. Paymentbyr eason ofa int er
estifa sum ofmoney i sinvol
ved,or
mistakeintheconstruct
ion orapplicati
on shal lbeliabl
ef orfruit
sr ecei
ved orwhi ch
ofa doubtfulordi Ocultquesti
on ofl aw shoul d have been r ecei
ved ift he thing
may come wi t
hin the scope of t he pr oducesfrui
ts.
precedi
ngarticl
e. Heshallfurthermorebeanswer able
for any loss or impairment oft he thing
Art. 2156. I fthe payer was i
n from any cause,and f ordamages t ot he
doubtwhe thert hedebtwasdue,hemay per son whodel i
vered thething,untilitis
recoverifhepr ovest
hatitwasnotdue. recovered.

Ar
t.2157.Ther esponsibi
li
tyoftwo
or more payees, when there has been Art
.2160. He who i n good faith
paymentofwhatisnotdue,i ssol
idar
y. acceptsanunduepaymentoft hingcer tain
and determinateshallonlyber esponsible
Ar
t. 2158. When t he pr
oper
ty f
ort hei mpairmentorl ossoft hesameor
deli
veredormoneypai dbelongstoathi
rd it
s accessori
es and accessions insof
aras
person,the payee shallcomply wi
ththe he has thereby been bene.ted.I fhe has
provisi
onsofarti
cle1984. ali
enated it
,he shal lretur
nt he price or
assigntheactiontocollectthesum.
Art. 1984. The
deposit
ar y cannot demand
thatthedeposi torpr ovehis Ar t. 2161. As r egar
ds the
ownershi p of t he t hing reimbursement f or i mprovements and
deposit
ed. expenses incurred by him who undul y
Nevertheless,shoul d recei
vedt hething,theprovisi
onsofTi
tl
eV
he discover t hat the thing ofBookI Ishallgovern.
hasbeen st olen andwhoi ts
true owner i s, he must
advise t he l atter of t he Art
.2162.Heshal lbeexemptf r
om
deposit
. theobli
gati
on tor est
orewho,believi
ng in
Iftheowner ,in spi
te good f
aitht hat t
he payment was bei ng
of such i nformat ion, does madeofal egiti
mat eandsubsi
stingclaim,
destroyed t he document , or allowed t he t
hird per
son,t
he obl
igor cannot r
ecover
acti
on t opr escri
be,orgaveupt hepl edges, whathehaspai
d.
orcancel l
ed t he guaranti
es f
orhi sr i
ght.
He who pai d undul y may pr oceed onl y
againstt het ruedebt orort heguar antors Art
.1428.When,af t
eran action t
o
withr egardt o whom t he action is stil
l enf
orce a ci
vilobli
gati
on has f
ail
ed,t he
e:ective. def
endant vol untari
ly performs t he
obli
gat
ion,hecannotdemandt hereturnof
whathe has deli
vered ort
he paymentof
Art. 2163. I ti s presumed that theval
ueoftheservicehehasrendered.
there was a mi st
ake int he payment if
some t
hing whi ch had neverbeen due or
had already been paid was deliver
ed;but Ar t
. 1429. When a t estat
e or
hef r
om whom t her eturni sclaimed may i
nt estat
ehei rvoluntaril
ypaysadebtoft he
prove thatt he deli
very was made outof decedent exceedi ng t he value of t he
li
berali
tyorf oranyot herjustcause. proper t
y whi ch he received by wil
lorby
thel aw ofint est
acyfrom t heestateofthe
deceased,t hepaymenti svalidandcannot
(
1)Di
sti
ngui
shedf
rom Nat
uralObl
igat
ions ber escindedbyt hepayer.

Art.1423. Obl igati

onsar ecivi
lor
nat ural.Ci vilobligati
ons gi ve a right of Ar t
.1430. When awi llisdeclared
action t o compel t hei r per f
ormance. void because i thas notbeen execut ed in
Nat uralobl igati
ons,not bei ng based on accordancewi ththeformal it
iesr equi
redby
posi t
ivelaw butonequi tyandnat urallaw, law,butoneoft heintestatehei r
s,aft
ert he
do notgr anta r i
ghtofact i
on to enforce sett
lementoft he debt s oft he deceased,
their per formance, but af ter vol
unt ar y paysal egacyi n compliancewi t
h acl ause
ful.llmentby t he obligor,t hey authoriz e in the def ecti
ve wi l
l,t he payment i s
ther e t
enti
onofwhathasbeendel i
veredor e:ectiveandi r
revocable.
render ed byr eason ther eof.Somenat ur al
obligations ar e se
tf orthi nt he f
oll
owi ng
articles. Art
.1960. I fthe bor rower pays
int
erest when t here has been no
sti
pulat
ion t
herefor
,thepr ovi
sions ofthis
Art
. 1424. When a r ight to sue Code concer ni
ng sol ut
io i ndebiti
, or
upon a ci vil obli
gati
on has l apsed by naturalobli
gati
ons,shallbe appl i
ed,as
extinct
ive prescri
pti
on, the obligor who thecasemaybe.
voluntari
ly perf
orms the contractcannot
recoverwhathehasdel iver
ed orthevalue
oftheservicehehasr endered. Art
.1956. Noi nterestshallbedue
unl
essithasbeen expresslystipulat
ed i
n
wri
ti
ng.
Ar t
. 1425. When wi t
hout the
knowledgeoragai nstt
hewi llofthedebtor,
at hir
d per son pays a debt whi ch t
he (
b)Perf
ormanceofObligat
ionsimposed by
obli
gorisnotl egallyboundt opaybecause l
aw i
ntheinter
estoft
hepubl i
c
theaction thereon hasprescribed,butthe
debtor later voluntari
ly reimbur ses t
he (
1)Suppor
t
 supporttot heneedyindivi
dual,withr i
ght
Art. 2164. When, wi thout t he ofreimbursementf r
om theper son obli
ged
knowledge oft he per
son obli
ged t o give to gi
ve support.This Arti
cle shallapply
support,i
tisgi venbyastranger,thelatter parti
cularl
ywhent hef at
herormot herofa
shallhavear ighttoclai
m thesamef rom chil
d under the age ofmaj or
ity unjustl
y
theformer,unlessitappearst hathegave ref
usest osupportorf ai
lstogi vesupport
itoutofpietyand wi t
houtintentofbei ng tothechildwhenur gentl
yneeded.( Id.)
repai
d.

(
3)Funer
alexpenses
Art.2165. When f uneralexpenses
are borne by a thi
rd person,wi thoutt he Art.2165. When f uneralexpenses
knowledge of t hose rel
atives who wer e are borne by a thi
rd person,wi thoutt he
obli
ged t o gi
ve supportt ot he deceased, knowledge of t hose rel
atives who wer e
sai
dr elati
ves shallreimbur se the third obli
ged t o gi
ve supportt ot he deceased,
person, shoul d t he l atter cl aim sai
dr elati
ves shallreimbur se the third
rei
mbur sement . person, shoul d t he l atter cl aim
rei
mbur sement .

Art. 2166. When t he per son

obligedt osupportanor phan,orani nsane (
4)Heal
thorsaf
etyr
egul
ati
onr
epr
oper
ty
orot heri ndigentper son unj ustl
yr efuses
to give suppor tt ot he latter,any t hird
person mayf urnish suppor tt otheneedy Art.2169. When t hegover nment,
individual, with ri
ght of r eimbur sement upon the fail
ureofany per son t o comply
from t he person obliged to give suppor t
. with heal th or saf et
y r egul ati
ons
The pr ovisi
ons ofthis articl
e appl y when concerningpr operty
,under t
akest odot he
the f ather or mother of a chi ld under necessarywor k,evenoverhisobj ection,he
eighteen years ofage unj ust lyrefuses to shallbeliabletopayt heexpenses.
suppor thi m.

(5) Const
rai
nt of li
fe or property on
occasi
onofandacci
dentorcalamity
(
2)Unjustref
usalto suppor
tan or
phan,
i
nsaneorot
herindi
gent
Art
. 2167. When t hrough an
Art. 206. When, wi t
hout t he accidentorot hercauseaper soni si
nj ur
ed
knowledge oft he person obli
ged to give orbecomesser i
ouslyill
,and hei streat
ed
support,i
tisgi venbyast ranger,thel
atter orhel pedwhi lehei snoti n acondition to
shallhavear ightt oclai
m thesamef rom give consent t o a contr
act,he shal lbe
theformer,unlessi tappearst hathegave li
able t o pay f or the ser vices of the
itwithoutintent i
on ofbeing reimbursed. physician or ot her person ai ding him,
(Famil
yCode.) unlesst heser vi
ceshasbeen r ender
edout
ofpur egenerosity.
Art.207. When theperson obl
iged
toto supportanotherunjustl
yr ef
uses or
fai
lst
ogi vesupportwhen urgentl
yneeded Art. 2168. When duri
ng a .re,
bythelatter
,anythirdperson mayfurnish Pood,s
tor
m,orot hercal
ami
ty,proper
tyis
saved f
rom dest
ructi
on byanotherper son one' sown act soromi ssi ons,butal so f or
withoutthe knowledge ofthe owner
,t he those of per sons f or whom one i s
lat
ter i
s bound to pay t he f
ormer just responsi ble.
compensati
on. Thef atherand,i ncaseofhi sdeat h
ori ncapaci ty,t he mot her ,ar er esponsi ble
for t he damages caused by t he mi nor
Ar t
. 2174. When i n a smal l chi ldrenwhol i
vei nt heircompany .
communi tyamaj ori
tyoft heinhabi
tantsof Guar dians ar el iablef or damages
agedecideupon a measur eforprotect
ion caused by t he mi nor s or i ncapaci tat ed
againstlawlessness,.r e,Pood,s torm or per sonswhoar eundert hei raut hor it
yand
othercalamity,anyonewhoobj ect
st othe livei nt hei rcompany .
plan and r efuses to cont ri
butet o the The owner s and manager s ofan
expenses buti s bene.tted by t
he proj
ect est ablishment or ent er pr i
se ar el i
kewi se
asexecutedshal lbeliabletopayhi sshare responsi blef or damages caused by t heir
ofsaidexpenses. empl oyeesi nt heser viceoft hebr anchesi n
whi ch t he l atter ar e empl oyed or on t he
occasi onoft hei rfunct ions.
Art.2170. When by acci dent or Empl oyer s shal lbe l iabl ef or t he
otherfort
uitousevent,movabl esseparat
ely damages caused by t hei r empl oyees and
pertai
ning tot wo or mor e persons are househol dhel persact i
ngwi t
hi nt hescope
commi ngled orconfused,ther uleson co- oft hei rassi gned t asks,even t hough t he
ownershipshal lbeapplicabl
e. for merar enotengagedi n anybusi nessor
indust ry .
The St at ei sr esponsi blei n l ike
manner when i t act st hrough a speci al
B.Quasi
-del
ict
s agent ;butnotwhen t hedamagehasbeen
caused by t he oOci alt o whom t he t ask
Art. 2176. Whoever by act or donepr oper l
yper t
ai ns,i nwhi chcasewhat
omi ssion causesdamaget oanother,there is pr ovi ded i n ar ticle 2176 shal l be
beingf aultornegl i
gence,isobli
ged topay appl i
cabl e.
for t he damage done. Such f ault or Last ly, t eacher s or heads of
negligence, i ft here is no pr e-exi
sti
ng est ablishment sofar tsandt radesshal lbe
cont r
act ualrelat
ionbe tweenthepar ti
es,is liabl ef ordamages caused by t heirpupi l
s
call
edaquasi -
delictandi sgover
nedbyt he and st udent s or appr ent ices,so l ong as
provisionsoft hisChapt er
. theyr emai ni nt heircust ody .
Ther esponsi bilit
yt reatedofi nt his
ar ticle shal l cease when t he per sons
Art
.2177. Responsi bil
ityforfaul
t her einment i
onedpr ovet hatt heyobser ved
ornegl i
gence undert he preceding ar
ticl
e al lthedi ligenceofagoodf atherofaf ami l
y
is entirel
y separate and di
stinctfrom the topr eventdamage.
civilli
abili
tyarisingfrom negli
genceunder
the PenalCode.Butt he plainti
: cannot
recoverdamagest wi
cefort hesameactor Art
.2182. I fthe minorori nsane
omi ssionofthedef endant. person causi
ngdamagehasnopar entsor
guardian,theminorori nsanepersonshall
beanswer abl
ewi t
hhi sown propertyinan
Art
.2180. Theobli
gati
on i
mposed acti
on againsthim wher e a guardian ad
byar
ticle2176isdemandablenotonl
yfor li
tem shallbeappointed.
 exerci
sed the pr oper di l
igence r equi
red
undert heparti
cularci r
cumst ances.
Ar
t.2194.Theresponsi
bil
ityoft
wo Al
lothercasesnotcover ed bythis
ormorepersonswho areliabl
eforquasi- and t he pr eceding ar ticles shal l be
del
icti
ssoli
dary. governed by the pr ovisions of t he Civi
l
Codeonquasi -deli
cts.( Id.)

Art.1728.The contractorisliable
forallthe cl
aims oflaborers and ot
her s C.Law
employed byhim,and ofthird per
sonsf or
deat
h or physi cal i
njuri
es dur ing the Art. 1158. Obl igat
ions derived
constr
uction. from law ar e not presumed.Onl yt hose
expressly det
ermined i nthis Code or in
speciallawsar edemandabl e,and shallbe
Art.1763. A common car r
ier i
s regulatedbyt hepreceptsoft helaw which
responsi ble for injuri
es su:er ed by a establi
shest hem;and ast owhathasnot
passengeron accountoft hewi l
fulactsor been foreseen,by t he provi
sions oft hi
s
negligence of ot her passengers or of Book.
stranger s, i f t he common car ri
er'
s
empl oyees t hrough the exercise of the Art.294. The cl aim f or suppor t
,
dili
genceofagoodf atherofaf amilycould when pr operand t woormor eper sonsar e
have pr evented or stopped t he act or obliged t o give it,shallbe made i nt he
omi ssion. fol
lowi ngor der :
(
1)Fr om t hespouse;
Art. 218. The school , i ts (
2)Fr om t he descendant s of the
admi nistrators and t eacher s, or t he near estdegr ee;
individual,ent it
y or i nsti
tut ions engaged (
3)Fr om t he ascendant s,al so of
in chi l
d car e shallhave speci alpar ental thenear estdegr ee;
author ityandr esponsi bil
ityovert hemi nor (
4)Fr om t hebr ot
hersandsi st
ers.
chil
d whi le under t heir super vision, Among descendant s and
instructionorcust ody. ascendant st he or der in whi ch t hey are
Authority and r esponsi bi
lit
y shal l call
ed t ot he i ntestate succession oft he
applyt o allauthor ized activities whe t
her person who has a r ightt o claim suppor t
insi
de or out side the pr emi ses of t he shal lbeobser ved.
schoolent i
tyori nstit
ut i
on.( Fami l
yCode. )
Under the NCC, f ol
low t
he or
der of
i
ntest
atesuccessi
on
Art.219.Thosegi vent heaut horit
y
and r esponsibi
lit
y under t he pr eceding
Arti
cle shallbe pr inci
pal ly and sol idaril
y Art.199. Whenever t wo or mor e
li
ablef ordamages caused by t he acts or personsareobl igedtogivesupport,
omissions of the unemanci pated mi nor. theliabi
lit
yshal ldevol
veupon the
The par ents, j
udi cial guar dians or t he f
ollowing per sons i n t he or
der
personsexer ci
singpar ent alaut hor ityover hereinprovided:
saidmi norshallbesubsi diarilyliable. (
1)Thespouse;
The respective liabiliti
es of t hose (
2)Thedescendant sint henearest
ref
erred toi n the pr ecedi ng par agraph degree;
shallnotappl yi fiti s pr oved t hatt hey
 (
3)The ascendant
sinthe nearest Ar t
.548. Expenses
degr
ee; for pur e luxur y or mer e
(
4) The br other
s and si st
ers. pleasure shal l not be
(
Fami l
yCode.) refundedt ot hepossessori n
good f aith; but he may
remove t he ornaments wit h
Art.448. Theowneroft hel andon whi ch he has embel l
ished
which anyt hing has been bui l
t ,sown,or the pr incipal thing i fi t
planted i n good faith,shal lhavet her ight su:er s no i njuryt hereby,
to appr opriate as hi s own t he wor ks, and ifhi s successorint he
sowing orpl anting,af terpaymentoft he possession does not pr efer
indemi ni t
ypr ovidedf ori nar ti
cles546and to r ef
und t he amount
548,or t o oblige the one who bui l
t or expended.
planted t o pay the pr ice oft he land,and
the one who sowed, t he pr oper r ent.
However ,thebui l
derorpl antercannotbe Art.636. Easement s establi
shed
obli
ged t o buy t he land i fi ts val ue i s bylaw i nthei nt
erestofpr ivateper sonsor
consi derably mor e t han t hat of t he f
orpr i
vate use shal lbe gover ned by the
building ort rees.I n such case,he shal l provisi
ons oft his Tit
le,withoutpr ejudice
pay r easonabl er ent ,ift he owner oft he tot he provi
sions ofgener alorl ocallaws
land does notchoose t o appr opriatet he andor dinancesfort hegener alwel f
are.
building or t rees af t
er pr oper i ndemni ty
. These easement s may be modi .ed
Thepar tiesshal lagr eeupon t het ermsof by agr eement of t he interested par ti
es,
thel easeand i n caseofdi sagreement ,t he whenevert hel aw doesnotpr ohibititorno
cour tshal l.xt het ermst her eof
. inj
ur yissu:er edbyat hi
rdper son.

Art.546. Necessar y
expenses shal lbe r efunded Ar t. 2014. No act i
on can be
toever ypossessor ;butonl y mai ntainedbyt hewi nnerforthecol
lecti
on
the possessori n good faith ofwhathehaswon i n a gameofchance.
may r etai
nt he t hing unt i
l Butany l oser in a game ofchance may
he has been r eimbursed recoverhi slossfrom thewi nner
,withlegal
theref
or. interestfrom thet i
mehepai dtheamount
Useful expenses lost,and subsi di
aril
yf r
om t heoper
atoror
shall be refunded onl yt o manageroft hegambl inghouse.
the possessori n good faith
witht hesamer i
ghtofr eten-
ti
on, t he per son who has
defeated hi m i
n the
possession having t he D.Cont
ract
s
option of r ef unding t he
amountoft he expenses or Art.1159.Obl igati
onsarisi
ngfr
om
of paying t he i ncrease i n cont
ractshavethef or
ceofl aw be
tweenthe
value which t he t hing may cont
racti
ng par ties and shoul d be
have acqui red by r eason compli
edwi thingoodf ait
h.
thereof.
 Art.1306. Thecont ractingparties pecuniary penalties, liabil
ityt heref
or is
may establ
ish such sti
pulations,clauses, exti
nguished only when t he death oft he
ter
ms and condi ti
ons as they may deem o:enderoccursbef ore.nalj udgment .
conveni
ent,providedtheyar enotcont rary 2.Byser viceoft hesent ence;
tolaw,morals,goodcustoms,publ icorder, 3. By amnest y,whi ch compl et
ely
orpubli
cpol i
cy. exti
nguishesthepenal tyandal litse:ects;
4.Byabsol ut epar don;
5.Bypr escr i
ptionoft hecrime;
6.Bypr escr i
ptionoft hepenalty;
7. Byt hemar ri
ageoft heo:ended
woman,aspr ovided i n Arti
cle344 oft his
E.Del
ict Code.( I
d.)

Art.1161.Ci vi
lobl
igations ari
sing
from cr iminalo:enses shallbe gover ned Art . 344. xxx I n
byt hepenall aws,subj
ectt
ot hepr ovi
sions cases of seduct ion,
of ar t
icl
e 2177, and of t he per t
inent abduct i
on, acts of
pr ovisi
onsofChapt er2,Preli
mi naryTitle, lasci
vi ousnessandr ape,t he
on Human Rel ati
ons,and ofTitleXVIIIof mar riage of t he o:ender
thi sBook,r egulat
ingdamages. with t he o:ended par ty
shall extinguish the
cor
rel
atet
hisw/Ar
t.100,RPC criminalact i
on orr emi tt he
penal ty al ready i mposed
Ar
t .100. Civi
lLiabi
li
tyofaper son upon hi m.Thepr ovisionsof
guil
ty offelony.-
- Everyperson cr
iminall
y thispar agr aph shal lal sobe
li
ableforaf elonyisal
socivi
llyl
iable. applicabl e t o t he co-
principals,accompl icesand
accessor ies af t
ert hef actof
Art. 108. Obl igation t o make the above-ment i
oned
restor at
ion, r epar at
ion f or damages, crimes.( Id.)
indemni .cati
on forconsequent ialdamages
and act i
on to demand t he same -Upon
whom i tdevolves.-Theobl i
gation tomake Bal ane: Crimeasasour ceofobligation.-
-
restor at
ion orr eparati
on fordamagesand Ther e are many cr imes f rom w/c, ci vil
indemni .cati
on forconsequent ialdamages liabil
ity arises in t heir commissi on, in
devol ves upon t he heirs of the person addi t
ion tot he cr i
mi nalpenal t
y at tached
li
abl e. tot hem. Thi sunder li
nest hetwoaspect s
The action to demand r es
torat
ion, in acr ime: one,asan o:enseagai nstt he
repar ati
on, and i ndemni.cat i
on l i
kewise state,and t wo as an o:ense agai nstt he
descends t o t he hei rs of t he person victim. I tisi nt he l att
ercase t hatci vi
l
injur ed.(RevisedPenalCode. ) liabil
ityisrecoverabl e.
Asfarascr i
mei sconcer ned,ci vi
l
law isnotconcer nedw/t hepenalliabili
ty
Art.89. How cr iminalli
abi
li
tyis butonl yw/t heci villiab.
t
otal
lyexti
ngui shed.-Criminalli
abi
lit
yis
t
otal
lyext
inguished:
1. Byt hedeath oftheconvi
ct,as
t
o the per sonal penal
t i
es; and as to
(
noti
nBavi
era'
sout
line)

CHAPTER 2.
--NATURE AND EFFECTOF Art
.1164. Thecr edit
orhasar i
ght
OBLI
GATIONS tothefrui
tsoft hethingf r
om theti
met he
obli
gati
on to deli
verarises. However
,he
Art
icl
es 1163 - 1168 i
nrel
ati
on t
o Ar
t. shallhave no realri
ghtoveri tuntilthe
1156. samehasbeendel i
ver
edt ohi m.

Balane: Threetypes ofobli

gati
ons.
--( 1) Balane: Fr om t he time t he obl igation
obli
gati
on t
ogive;(2)obligat
ion t
odo;and ari
ses,t he cr edi t
or has a per sonalr ight
(3)obli
gati
onnott odo. againstt hedebt orast ot hefrui t
s. Buthe
has no r ealr ightovert hem unt i
lact ual
I
.Obl
igati
ontogive deliver y. Real r ight isar ight w/c i s
A.Speci
.cthing enfor ceabl e agai nstt he whole wor l
d. He
B.Genericthi
ng has onl yt he per sonalr ight against t he
debt orw/r egar dt ot heundel iveredf ruits.
I
I.Todo Thisi s bec.oft he princi e Non nudi
pl s
pact i
s, sed t radi ti
one, domi nia r erum
I
II. Not to do (thisi ncludes al
l tr
ansf erentur." (
It is not by mer e
negat
ive obl
igat
ions l
ike obl
igation notto agreement ,butby del ivery,is owner ship
gi
ve.) tr
ansf erred.)Per sonalr i
ghtar i
sesf rom t he
ti
me t he obl igation t o del iver ar ises
Kinds of perfor
mance. -
- ( 1) spec ific wher east her ealr ightdoesnotar i
seunt il
perf
ormance( performance by the debtor actualdel ivery.
himself
); (2) subst
it
ute performanc e
(per
for
manceatt heexpenseofthedebt or )
;
(3) equi val
ent per f
ormanc
e ( grant of Arti
cles1165-1167. -
- Remedi
esAvai lable
damages.) to the Cr edi
tor (speci
.c performance,
substit
ute perf
ormance, equivalent
Art
icl
es 1163 -1166 cover obl
igat
ion t
o perf
ormance.)
gi
ve.
A.I
nobl
igat
ionstogi
ve
ThreeAccessor yObl i
gations: 1. Ade t
ermi
nat ething
1. Ar t
.1163. -- Tot akecar eofthet hi
ng a.Speci.cper f
ormance
w/t hedi li
genceofagoodf atherofafamily b.Equivalentperfor
mance
untilactualdel iver
y.
2. Art.1164. -- Todel i
vert hefrui
tstothe 2.A gener
ict
hing,al
lremedi
esar
e
credit
or(fr uit
spr oducedaf terobli
gati
on to avai
labl
e
deli
verar ises.)
3. Ar t
.1166. -- Todeliveraccessionsand B. I n an obl i
gation to do, make a
accessories. dist
incti
on:
1. Obligati
on to do w/c is pur
ely
Art
.1163. Everyper son obl
iged t
o personal,onl
y equivalentperformance is
givesome thingisalsoobliged t
ot akecare avail
able
ofi twitht he properdil
igence ofa good 2. Obl igati
on to do w/c i s not
fatherofa f amily,unl
ess t he l
aw ort he personal
stipul
ation oftheparti
esr equiresanother a.subst it
uteperfor
mance
standardofcar e. b.equi val
entperformance
 Note t hat i
n obl i
gati
ons t o do,
speci.cper for
mancei snotavai l
able. The Ar
t. 1168. When t he obli
gati
on
reasonf orthisisthatspeci.cperformance consi
stsi
n notdoi ngandt heobl i
gordoes
willgiverisetoinvol
untaryservitude. whathasbeen forbidden hi
m,i tshallal
so
beundoneathi sexpense.
C.Obl
igat
ionnottodo
1.substit
uteperf
ormance
2.equival
entperf
ormance. Art
icl
es 1169 - 1174.
-- I
rregul
ari
ty of
Per
formance.
In allt hese cases,the credi
tor has t
he
opti
on ofr esoluti
on or resci
ssi
on under Bal
ane:
Art.1191. I n additi
on,hecan alsoclaim
damat es. TwoClassesofIrregul
ari
tyofPer
for
mance:
I.At
tri
but abletothedebtor
A.Fr aud
B.Negl i
gence
Art
. 1165. When whati st o be C.Del ay
delivered is a de terminate t hi ng, the
creditor,in addi t
ion t ot he rightgr anted I
I.Notat
tri
butabl
etothedebt
or
him by ar ti
cle 1170, may compel t he A.Fort
uitousevent
.
debt orktomaket hedel ivery.
I
ft he t hing i si ndetermi nate or
gener i
c,hemayaskt hatt heobl igati
on be Ar t.1169. Thoseobl iged t odel iver
compl iedwi thatt heexpenseoft hedebt or
. ort odosome t
hingi ncuri n delayf rom t he
I
f t he obl igor del ays, or has timet heobl igeej udi ciall
yorext r
aj udi ci
al l
y
promi sed todelivert hesamet hingt ot wo demandsf rom t hem t heful .ll
mentoft heir
ormor epersonswhodonothavet hesame obligation.
interest,he shal lbe r esponsi blef or any However , t he demand by t he
fortuit
ous eventunt ilhe has e:ect ed the credi t
or shal lnot be necessar yi n or der
delivery. thatdel aymayexi st:
(1)When t heobl i
gat i
on ort hel aw
expr esslysodecl are;
Art.1166. Theobl i
gat
ion togivea (2)When f rom t he nat ur eand t he
determinate t hing i ncl
udes t hat of circumst ancesoft heobl igation itappear s
deliveri
ng it
s accessi
ons and accessori
es, thatt hedesi gnat i
on oft het imewhen t he
even t hough they may not have been thingi st obedel iver edort heser vicei st o
ment ioned. be r ender ed was a cont rolli
ng mot ive for
theest abl ishmentoft hecont r act;
(3) When demand woul d be
Art.1167.I fapersonobligedt odo useless,aswhen t heobl igorhasr ender ed
some thi
ngf ail
st odoit,thesameshal lbe itbeyondhi spowert oper form.
executedathi scost. In r ecipr ocal obl igat i
ons, nei t
her
Thissamer ul
eshallbeobser vedif par t
yi ncur si n delayi ftheot herdoesnot
hedoesi tin contr
aventi
on ofthet enorof compl y or i s not r eady t o compl yi na
the obligati
on. Fur thermore,it may be proper manner wi th what i si ncumbent
decreedt hatwhathasbeenpoor l
ydonebe upon hi m.Fr om t he momentone oft he
undone.
parti
esful.l
lshi
sobl
igat
ion,del
aybyt
he Sotto was supposed t o make Ella'
s( the
otherbegi
ns. bride)weddinggown. Feb.14 comes,no
gown wasdel ivered. El l
a getsmar ried i
n
Bal
ane: bluejeansandt -shirt
.Fi nall
y,onFeb.15,
Inno deli
verst he gown. xxx El la sues
When doesdel ayseti
n?- - Delayse tsinin Inno forbreach. I nno says ther
ewasno
thefol
lowingmanner : demand. I nt his case, demand i s not
1. For Reci procal si multaneous necessaryinor derthatdel aymayexi st.
obli
gati
ons.-- by the readiness ofone of
thepar t
iesto perf
orm and hi sletti
ng the (
3)When demand woul d be usel
ess,as
otherpar t
y know;and t he otherpar tyis when the obl
igorhas r endered i
tbeyond
notreadyt ocomplyinapr opermannerw/ hispowertoperform.-
-Exampl eisthecase
whatisincumbentuponhi m. ofChavezv.Gonz es,i
al nfra.

2. ForReci pr
ocalobl igat
ionsw/car enot
simultaneous.-
- Gen.Rul e: Demand i s BALANE CASES:
necessary( Art. 1169, par . 1.) Thisi s
caledmor
l asolvendiexper sona. AGCAOI LIVS.GSI S [ 165 S 1] - Ther e
Except
ion: When demand i s not wast hen a per f
ected cont ractofsal ebe t.
necessary(theexceptionsar efoundinAr t
. the par ti
es;t here had been a mee ting of
1169,par .2.)Thi siscalledmor asol
vendi themi ndsupon t hepur chasebyAgcaoi li
exre ofade t
ermi natehouseandl otint heGSI S
Housi ng Pr oj
ect at Nangka, Mar ikina,
Rizal , at a de.ni t e pr ice payabl e i n
What kind of demand is necessar
y?-
- amor ti
z ati
onsatP31. 56permo. ,andf rom
Judi
cialorext
ra-
judi
cial themomentt hepar t i
esacqui r
ed ther ight
tor eciprocally demand per formance. I t
Except
ions: was,t o besur e,thedut y oft heGSI S,as
sell
er ,t o del i
ver t he t hing sol d i n a
(1) When t he obl i
gation or t he l aw condi tion sui t
ablefori tsenj oymentbyt he
expressly sodec l
are.
-- when t hecontract buyer f or the pur pose cont empl ated, i n
says thatw/o t he necessity ofdemand, otherwor ds,t odelivert hehousesubj ectof
default setsin upon t he fail
ure of the thecont r
acti n ar easonabl yl ivablest at e.
obligor to perf
orm on due dat e. Ther e Thisi tf ai
ledt odo.
must be some thing i
nt he contr
act w/c xxx
explici
tl
ys t
ates that t
he demand i s not Since GSI S di d not f ul.l
lt hat
necessaryi norderthatdel aymayse ti
n. obligat i
on,and wasnotwi ll
ing t oputt he
housei n habi t
ables t
at e,itcannoti nvoke
Agcoi li'
s suspensi on of payment of
(2) When f r om t he nat ure and t he amor ti
z ati
on as cause t o cancel t he
cir
cumstances oft he obligation i
tappears cont ractbe t
.t hem. I ti s axiomat ict hat
thatthedesi gnation oft he t i
me when the "(i
)nr eciprocalobl igations,nei ther par t y
thi
ngi stobedel ivered ort heser vi
ceisto incur si n del ay ift he ot her does not
be render
ed was a c ont roll
ing moti
ve f
or compl y or i s not r eady t o compl yi na
theestabl
ishmentoft hec ont ract
. proper manner wi th what i si ncumbent
Ill
ust rat
ion: Bong Bayl on is uponhi m.
getti
ng mar ried in Val ent i
nes '96. Inno
SSS VS. MOONWALK [ 221 S 119] - ARRI ETAVS.NARI C [10S79]- Onewho
Requi sites i n or dert hatdebt orma be i n assumesacont r
actualobligation andfai l
s
def aul t;Nec essi ty ofdemand. -
- To be i n to per f
orm t he same on account ofhi s
def aul t" xxxi sdi :er entf r om mer edelayi n inabili
ty to mee t cer tai
n bank
thegr ammat icalsense,bec.i ti nvolvest he requirementswhi ch inabil
ityheknew and
begi nni ng ofaspeci alcondi t
ion ors tatus was awar e ofwhen he ent ered int
ot he
w/c has i ts own pecul iar e:ect s or contract,shoul dbehel dli
abl ein damages
resul ts."I n or dert hatt hedebt ormaybe forbreachofcont ract.
indef aul ti tisnecessar yt hatt hef oll
owi ng UnderAr t.1170,notonl y debtors
requi si t
es be pr esent : ( 1) t hat t he guilty offr
aud,negl igence ordef aultbut
obl i
gat i
on be demandabl e and al ready alsoever ydebt or,in gener
al,whof ai
lst he
liquidat ed; ( 2) t hat t he debt or del ays performanceofhi sobl i
gati
on i sbound t o
per formanc e; and ( 3) t hat t he c r
edi tor indemni fy for the l osses and damages
requi res t he per f
or manc e j udi ci
all
y or causedt hereby.
ext rajudi cially. Def aul t gener al l
y begi ns
from t hemomentt hecr edi tordemandst he Meaning ofphr ase" in any manner
per formance oft he obl igat ion. Noweher e contravene t he tenor" of t he obl i
gat i
on. -
-
in t hi s case di d i t appear t hat SSS The phr ase incl
udes any i ll
icitt ask w/c
demanded f rom Moonwal kt hepaymentof i
mpai r
st hestri
ctandf aithfulful.llmentof
its mont hl y amor ti
zation. Nei therdi di t the obl igat
ion,or ever y kind ofdef ective
show t hat pe tit
ioner demanded t he performance.
payment oft he st ipulat ed penal ty upon Balane: Thi sphr asei sa cat ch- all
the f ai lure of Moonwal k t o mee t i ts provision. Atwor st,itisasuper Puity. At
mont hl y amor tiz
at i
on. What t he best,ther eisasaf etyne tj ustincaset here
compl ai nti tselfshowedwast hatSSS t r ied i
s a cul pablei r
regular i
ty ofper formance
to enf or ce t he obl i
gat ion some thime i n w/ci snotcover ed byf r
aud,negl igenceor
Sept ,1977 by f oreclosing t he r ealest ate delay.I nt hiscase,t heSC wasappar ent l
y
mor tgagesexecut ed byMoonwal ki nf avor notsur e as to whatcat egor yt he br each
ofSSS. Butt hisf oreclosur edi d notpush f
ell. Thi s phr ase i s not r eall
y an
thr ough upon Moonwal k'sr equest s and i
ndependentgr ound.
pr omi sest opayi nf ull
. Thenextdemand
for payment happened on Oct .1,1979
when SSS i ssued a St atementofAccount TELEFASTVS.CASTRO [ 158s445] - I n
toMoonwal k. And i n accor dancew/ sai d the case at bar , peti
tioner and pr ivate
st atement ,Moonwal k pai di tsl oan inf ul l
. respondentSo.aC.Cr ouch enteredi ntoa
Whati scl ear ,t herefore,i st hatMoonwal k contract wher eby,for a f ee, pe ti
tioner
was never i n def aul t bec. SSS never under t
ook t o send sai d pr ivate
compel ledper for mance. respondent '
s message over seas by
tel
egram. Thi s, pe
tit
ioner did not do,
despite perf
ormance by sai d pvt.resp.of
Art. 1170. Those who i n t he her obl igat
ion by payi ng t he r equired
perf
ormance oft hei
robligation are guil
ty charges. Pe t
iti
onerwast heref
oregui l
t yof
offraud,negligence or del
ay ,and t hose contravening it
sobl i
gati
on to said private
who in any mannercont ravene the tenor respondentandi sthusliablefordamages.
ther
eof,arel
iablefordamages.

BALANE CASES: NPC VS.CA [ 161 S 334] - NPC c

annot
esc
apeliabi
li
tybec.it
snegligenc
ewast he
pr oximat ec ause oft he l oss and damage he must be free from any pr evi
ous
even t hough t he t yphoon was an ac tof negl
igenc
e ormi
sconductby w/cthe l
oss
God. -
-I tiscl earf r om t heappel latecour t'
s ordamagemayhavebeenoc c
asioned.
deci sion t hatbased on i ts.ndi ngsoff act
andt hatoft het r i
alcour t's,pe t
it i
onerNPC
wasundoubt edl y negl igentbec.i topened RCPIVS.RODRI GUEZ [ 182 S 889] -
thespi l
lway gat esoft heAngatDam onl y Resp.Rodr iguez and RCPIent er
ed i ntoa
att hehei ghtoft yphoon" Wel mi ng"wheni t contractwher ebyforaf eeRCPIunder took
knew ver y wel lt hati twas saf ert o have to send t he r espondent '
s message
opened t hesamegr adual lyand ear li
er,as overseas.When,t heref
ore,resp.Rodr iguez
itwasal so undeni abl et hatNPC knew of paid RCPIt odel iverhismessageover seas
thecomi ngoft het yphoon atl east4 days by t elegram, RCPI obl i
gated i tself to
bef .itact ual ly st r uck. And even t hough transmi tt he messages t othe addr essee.
thet yphoon wasan actofGodorwhatwe Clearly
, RCPI r eneged on i ts obl i
gation
maycal lf or cemaj eur e,NPC cannotescape when itf ailedt odeliverthemessagesort o
liabi l
ity bec. i ts negl i
gence was t he infor
m t hesenderaboutt henon- delivery
,
pr oximat e cause oft he l oss and damage. thusmaki ngi tli
ablefordamages.
Aswehavesai di nJuanNakpi l& Sonsvs.
CA,144SCRA596,
Thus,i fupon t he happeni ng ofa Fr
aud
for t
ui tous eventor an actofGod,t here
concur s a cor respondi ng f
raud, Bal
ane: I
sitcorrectt
o say t
hatfr
aud in
negl igence, del ay or vi ol ation or Art
. 1170 means deceit or i
nsiduous
cont r
avent ion i n anymanneroft het enor machi
nati
ons? No.
oft he obl igat ion as pr ovided f or in Ar t
.
1170,w/cr esul tsi n al ossordamage,t he LEGASPI OI L VS. CA [ 224 S 213] -
obl igor cannot escape l i
abi lity. The DefinitionofFr aud. -
-I ngener al,f
raudmay
pr inciple embodi ed i n t he act of God bede.ned ast hevol untaryexecut i
on ofa
doct r
inest rictlyr equi r
est hatt heac tmust wr ongfulact ,orwi l
lfulomi ssion,knowing
be one oc c asioned exc lusi vely by t he and i nt ending t he e:ect s w/c naturally
violenc eofnat ur eandhumanagenc i
esar e and necessar i
ly ar ise from such act or
to be exc luded f rom c reat ing or ent ering omi ssion;t hefr audr eferredt oinArt.1170
intot he c ause oft he mi sc hief. When t he ist hedel i
berateand i nt
entionalevasion of
e:ect , t he cause of w/c i s t o be the nor malf ulfil
lment ofobl igat
ion;iti s
consi der ed, i sf ound t o be i n par tt he distingui shed f r
om negl igence by t he
resul foft hepar tici pation ofman,whe ther presence of del iberate i ntent, w/c i s
itbef rom act ivei nt ervent ion ornegl ect,or lackingi nthelat ter.
failuret o act ,t he whol e occur ence is
ther eby humani zed, as i t was, and Balane: Fr aud as used i
n Art.1170 i s
removed f r om t he r ules appl icabl et ot he di:erentfrom f
raudasacausef orvit
iat
ion
act sofGod. Thus,i thasbeen hel dt hat of consent in contracts(more properly
when t he negl igence ofa per son concur s call
ed deceit w/c prevent
st he contract
w/anactofGodi npr oduci ngal oss,such fr
om ar i
sing;thisi
sfound in Ar
t.1380,e t
per son i s not exempt f rom l iabi l
ity by seq.)
showi ng t hatt he i mmedi ate cause oft he
damagewast heactofGod. Tobeexempt Q:Whati sasynonym f
orf
raudasusedi
n
from l iabilityf orl ossbec .ofanac tofGod, Ar
t.1170?
A:Malice.
 ninedaysaf terr eceipfoft hecr editmemo.
E:ectsofFraud: Clear ly
,pe titi
onerbank was r emiss i ni ts
1. Cr edi
tor may insist on performance, dut y and obl igation t ot r
eat pvt.r esp' s
speci
.corsubstit
ute( Art.1233.) account w/ t he hi ghest degr ee of car e,
2. Cr edit
or may r esol
ve/ r escind (
Art. consi dering t he .duci ar y nature of t he
1191.) relationship.Thebanki sunderobl igat ion
3.Damagesi neithercase( Art.1170.) tot reatt heaccount sofi tsdepositor sw/
me ticulous car e, whe t
her such account
Negl
igence consi stsonl yofaf ew hundr edpesosorof
mi ll
ions.I tmustbeart hebl amef orf ailing
Negli
gence i
sthe absence of somethi
ng to di scover t he mi stake of i ts empl oyee
thatshoul
dbether
e--duedi li
gence. despi te t he est ablished procedur e
requi ri
ng bank paper st o pass t hrough
bank per sonnelwhosedut yiti stoc heck
Del
ay andcount ercheckt hem f orpossi bleer r ors.
Responsi bil
ity ar i
sing f r om negl i
gence i n
Del
ay i s the non-ful
.ll
ment of t
he theper f
or manceofever yki ndofobl igat ion
obl
igat
ionw/respectt
oti
me. isdemandabl e.xxx

Ki
ndsofDel
ay: I
I.Di
li
gencer
equi
red

1. Mor a Solvendi -- del ay i n the Bal

ane:
perfor
mance( ont hepartofthedebtor)
;
2. Mor a Ac ci
piendi -- delay i n the Negl
igence i
s cover
ed by Ar
ticl
es 1170,
acceptance(onthepar toft
hecr edi
tor)
; 1172and1173
3.Compensat ionMor ae--mut ualdelay
Ar t.1173. Thef aultornegli
gence
Ar t
. 1171. Reponsi
bil
ity ari
sing oftheobl igorconsi st
si nt heomission of
from f raud i s demandable i n al l that di
ligence whi ch i sr equi
red by t he
obligat
ions. Any waiverofan acti
on for nature oft he obl
igation and corresponds
futurefraudi svoi
d. withtheci rcumstancesoft hepersons,of
theti
meandoft hepl ace.Whennegl i
gence
Art
.1172. Responsi bil
ity ari
sing showsbad f ai
th,thepr ovisi
onsofar ti
cles
from negligence in the per f
ormance of 1171and2201,par agr aph2,shallappl y.
every ki nd of obl i
gation i s al so
demandabl e,butsuch liabil
ityshall may Art. 1171.
be regulat
ed by the courts,according to Responsibili
ty ari
sing fr
om
thecircumstances. fr
aud i s demandablei n al
l
obligat
ions. Any waiver of
an action f
orfuturefr
audi s
BALANE CASE: void.

METROBANK VS.CA [ 237 S 761] - As Art.2201.xxx

borneoutbyt herecords,thedishonori
ng (2) In contr
actsand
ofthe resp.
's checks commi t
ted thr
ough quasi-
contracts, the
negli
gence by t he pe ti
ti
oner bank on damages f or whi ch t he
4/6/82 wasr ecti
.ed only on 4/15/82 or obl
igor who act ed in good
 faithisl iableshal lbet hose JIMENEZ VS.CI TY OF MANI LA [ 150 S
that ar et he nat ural and 510] - Ci ty ofMl a.f ai l
ed t oexer cise the
probabl e consequences of dili
genc eofagoodf atherofaf ami lyw/ci s
thebr each oft heobl igati
on, a def ense i n quasi - delict.
-- As a def ense
and whi ch t hepar ti
es have agai nst l i
abi lity on t he basi s of quasi -
foreseen or coul d have delict, one must have exer cised t he
reasonabl yf oreseen at t he dili
genceofagoodf atherofaf ami ly.Ther e
time t he obl i
gat i
on was isno ar gumentt hati tist hedut y oft he
const i
tut ed. CityofMl a.t oexer ciser easonabl ecar et o
I n caseoff raud,bad keept hepubl i
cmar ketr easonabl ysaf ef or
faith, mal ice or want on peopl e f r
equent ing t he pl ace f or t heir
attitude,t heobl igorshal lbe mar ke ti
ng needs. Whi l
e i t may be
responsi blef oral ldamages conceded t hat t he f ul.llment of such
whi ch may be r easonably dut iesi sext remel ydi Ocul tdur ings t
or ms
attributed t o t he non- and Poods,i tmust ,however ,beadmi tted
per f
ormance of the thator dinar ypr ecaut ionscoul dhavebeen
obligation. takendur inggoodweat hert omi nimi zet he
danger s t o l i
fe and l i
mb under t hose
diOcul tci rcumst ances. Fori nst ance,t he
Bal
ane: drainage hol e coul d have been pl aced
undert hest allsinst ead ofon t hepassage
Negli
gence i
sthe absence of some
thi
ng ways. Even mor ei mpor tanti st he f act,
thatshoul
dbether
e--dili
gence. thatt he Ci ty shoul d have seen t oi tt hat
the openi ngs wer e cover ed. Sadl y,t he
Measur eofDueDi l
igence.-- Therearetwo evidence i ndi cates t hat l ong bef ore
guides: pe t
itioner f el li ntot he openi ng, i t was
(
1) Di l
igence demanded by already uncover ed,and 5 mos.af ter t he
ci
rcumst ancesofper son,placeandt ime incidenthappened,t he openi ng was st il
l
(
2)Car er equi redofagoodf atherof uncover ed. Mor eover , whi le t her e ar e
afami l
y(.ctionalbonuspat erfamili
aswho .ndi ngs t hat dur ing Poods t he vendor s
wast heembodi mentofcar e,cauti
on and removet hei ron gr illst ohast en thePow of
protect
ioninRomanl aw.) wat er,t here i s no showi ng t hat such
pract ice has ever been pr ohi bited,much
Incommonl aw,thedegreeofcar
er equired lesspenal iz
ed byt heCi t
yofMl a. Nei ther
ist
hedili
genceofapr udentbusinessman. was i t shown t hat any si gn had been
Thi
sisact uall
ythesameast hediligence placed t hereabout st o war n passer s-by of
ofagoodfatherofaf
ami ly
. thei mpendi ngdanger .

E:ectsofNegli
gence:
1. Cr edi
tor may insist on performance,
speci
.corsubst i
tut
e( Art.1233.) Ext
raor
dinar
ydi
li
gencer
equi
red
2. Cr edit
or may r esol
ve/ r escind (
Art.
1191.) A.I
nnkeeper
3.Damagesi neithercase( Art.1170.)
Ar
t. 2000. The responsibil
ity
ref
erred t
oi nt he t
wo preceding ar
ticl
es
BALANE CASE: shallincl
udet helossof,orinjurytot he
personalpropert
yoft heguestscaused by
theser vantsorempl oyeesoft hekeepersof (4)The charact
er oft
he goods or
hotel
sori nnsaswel lasbyst r
angers;but def
ectsinthepackingorinthecontai
ners;
notthatwhi ch maypr oceedfrom anyf orce (5)Orderoractofcompet
entpublic
majeur e. The f act t hat travell
ers ar e authori
ty.
constrained torelyon t hevigil
anceoft he
keeper of the hot el
ss or i nns shal l be
considered in determi ning the degree of C.LesseeofAgr
icul
tur
all
and
carerequiredofhi m.
Ar t.1680.Thel esseeshal lhaveno
righttoar educt i
on ofther enton account
Ar
t.2001. The actofa t hi
efor oft he s t
er i
li
ty oft he land leased,or by
robber,who has entered t
he hotelis not reason oft hel ossoffruitsduet oor dinary
deemed force majeure,unless i
ti s done fortuit
ous event s;butheshal lhavesuch
with the use of ar ms or t hrough an rightin caseofl ossofmor et han one- hal
f
i
r r
esist
ibl
eforce. of the f ruitst hrough extraordinary and
unforeseen f ortuit
ous events,save always
when t her eisaspeci .cst ipulati
on tot he
cont r
ary.
B.CommonCar
rier
s Ext raordinaryfortuit
ousevent sar e
under stood t o be: .r e, war, pesti
lence,
Art.1733. Common car r
ier
s,from unusual Pood, l ocusts, earthquake, or
the nat ure of t heir busi ness and f or others whi ch ar e uncommon,and whi ch
reasons of publ i
c pol icy, ar e bound t o the cont racting par t
ies coul d not have
observe ext raordinar y diligence i n t he reasonabl yforeseen.
vigi
lanceovert hegoodsand f orthesafety
of the passenger st ranspor ted by them,
accordingt oallt heci rcumst ancesofeach
case. I
II.Lossduet
oFor
tui
tousEvent
s
Such ext r
aor dinarydi ligenceint he
vigi
lance over t he goods i s furt
her
expressed in ar ticl
es 1734, 1735, and Art. 1174. Except i n cases
1745, Nos. 5, 6, and 7, whi le t he expressly speci.ed by l aw, or when i t
extraordi
nar y diligence for t he safet
y of otherwisedecl ar
edbyst ipulati
on,orwhen
passengersi sf urtherse tforthi n art
icles the natur e ofthe obl
igation requir
es t he
1755and1756. assumpt ion ofr isk,no per son shal lbe
responsiblef orthose events which coul d
notbef oreseen,orwhich, thoughf oreseen,
Art.1734. Common car ri
ers are wereinevi t
able.
responsiblef or the loss, destruction, or
deteri
orationoft hegoods,unl essthesame Bal
ane:
isduet oanyoft hefollowingcausesonl y:
(1) Fl ood, st orm, ear thquake, Gener al Rule: The happeni ng of a
li
ghtning, or ot her nat ural disaster or f
ortuitouseventexoner atesthedebt orfr
om
calamity; l
iabili
ty.
(2)Actoft hepubl icenemyi n war, Except i
ons:
whe t
heri nternationalorci vi
l; 1.When t helaw sospeci .es.
-- e.g.
,ifthe
(3)Actoromi ssion oft he shipper debtori salr
eadyi n delay (Art.1165,par.
orowneroft hegoods; 3.)
2.Whent hepart
iessoagree par ti
es, convi nces t his Cour t of t he
3. When t he natur
e of the obl
igati
on correct nessoft heessent ialconcl usion of
requi
res t
he assumption ofri
sk,e.g.,an botht het r i
alandappel latecour tsthatt he
i
nsurancecontract. evidencedoesi ndeedf ailtopr oveanywant
otdi ligence on t he par tofPAL,or t hat,
BALANE CASES: mor e speci .cally,ithad f ail
ed t o compl y
with appl icabler egul
at ions,oruni versally
NAKPI L & SONS VS.CA [ 144 S 596] - accept ed and obser ved pr ocedur es t o
Requi sit
es f orexempt ion from li
abi l
ity due precludehi jacking;andt hatt hepar ti
cul ar
toan" ac tofGod. "-- Toexemptt heobl igor acts si ngled out by t he pe t
itioner s as
from l iabi l
ityunderAr t .1174,forabr each supposedl y demonst rative of negl igence
ofanobl i
gat i
on duet oan" actofGod, "t he wer e,i nt hel i
ghtoft heci r
cumst ances of
followi ngmustconcur : the case, not i n t rut h negl igent act s
(a) t hecauseoft hebr each oft he "suOci entt o overcome t he force maj eur e
obl igation mustbei ndependentoft hewi l
l natur eoft hear med r obber y." TheCour t
oft hedebt or; quite agr ees, t oo, w/ t he Appel late
(b) t he event must be ei ther Tribunal 's wr y obser vat i
on t hat PAL' s
unf or seeabl eorunavoi dable; fai
lur e t o t ake cer tai n s teps t hat a
(c) t he eventmustbe such as t o passenger i n hi ndsight bel i
eves shoul d
renderi ti mpossi blef ort hedebt ort oful .l
l have been t aken is nott he negl igence or
hisobl igat i
oni nanor malmanner ;and misconductw/cmi nglesw/f orcemaj eur e
(d)t hedebt ormustbef eef r
om any asanact i
veandcooper ativecause. "
par ticipat i
on i n, or aggr avati
on of t he
injur yt ot hecr editor.
Bal ane:Someoft heelement swer e BACHELOR EXPRESSVS.CA [ 188S216]
pr esenti nt hiscase.Whatwasabsentwas - The r unni ng amuck oft he passenger
thel astel ement . wast hepr oximat ecauseoft hei ncidentas
itt ri
gger ed o: a commot ion and pani c
among t he passenger s such t hat t he
NAKPI L & SONS VS.CA [ 160 S 334] - passenger sstar tedr unni ngt ot hesol eexi t
"Onewho negl i
gently cr
eatesadanger ous shovingeach ot herr esul ti
ngi nt hef alling
condition cannot escape liabili
tyfor the o: t he bus by passenger s Be ter and
natural and pr obable consequences Raut rautcausi ng t hem f atali njur i
es w/c
thereof,al
though theactofat hi
rdperson, kill
ed t hem. The sudden act of t he
or an act of God f or w/c he i s not passengerwhost abbed anot herpassenger
responsible,inter
venes to pr eci
pit
atet he int he bus i s w/i nt he cont ext off orce
loss.
"( cit
ingTuckerv .Milan,49OG 4379, maj eur e.
4380. ) However ,i n or dert hata common
carrier may be absol ved from l iabilityi n
caseoff orcemaj eur e,i tisnotenough t hat
QUI SIMBING VS.CA [ 189S605]- PAL' s theacci dentwascaused byf orcemaj eur e.
fai
luretot ake cert
ain st eps thata c ertain Thec ommon c ar riermustst i
llpr ovet hati t
passenger i n hindsight bel i
eves shoul d was notnegl igenti nc ausing t he i njur ies
have been taken is nott he negligenc e or resultingf r
om suc hac c i
dent.
misconductw/cmi ngles w/ f orcemaj eure Consi der i
ngt hef actual.ndi ngsof
as an ac t
ive and c ooper at
ive cause. -- A the CA- - the bus dr iver di d not
carefulanalysi
soft her ecordi nrelation to immedi atelys top t hebusatt hehei ghtof
thememor andaandot herpl eadingsoft he thecommot ion;t hebuswasspeedi ngf rom
af ul lst op;the vi ct i
ms f ellfrom t he bus BoxNo.54wasl ocat ed. I nview ther eof,it
dor rwhen i twasopenedorgavewaywhi l
e should havel ostno t ime i n notif
yi ng t he
the bus was st il
lr unni ng;t he conduct or peti
tioneri n ordert hatt heboxcoul dhave
pani ckedandbl ew hi swhi stleafterpeopl e been oped t or etrieve t he stamps, t hus
hadal readyf al
leno: t hebus;andt hebus savi
ngt hesamef rom f ur therdeterior ati
on
was not pr operly equi pped w/ door si n and l oss. I n t hisr espect,i tf ailed t o
accor dance w/ l aw- - i ti s clear t hat exerciset hr easonabl ecar eand pr udence
petitioner s have f ail
ed t o over come t he expect ed of a good f ather of a f ami ly
,
presumpt i
on off aul tand negl i
gencef ound thereby becomi ng a par ty t o t he
int hel aw gover ningcommoncar riers. aggravat i
on of t he i njury or l oss.
The pe titi
oner 's ar gumentt hatt he Accordi ngly,t he af orement ioned f our th
petitioner s "are not i nsur er s of t heir charact eri
sti
c( thedebt ormustbef eef rom
passenger s"deser ves no mer i
tin vi ew of anypar ti
cipation in,oraggr avati
on oft he
thef ailur eoft hepe t
itioner st opr ovet hat inj
ur yt ot hecr editor)ofaf ortui
tousevent
the deat hs of t he 2 passenger s wer e isabsent .xxx
exclusi velyduet of orcemaj eureandnott o
the f ailure oft he pe titioner st o obser ve
extraor dinary di l
igence i n t r
anspor ting NPC VS.CA [ 223 S 649] - Pe ti
tioner s
safelyt he passenger st ot heirdest ination haver ai
sed thesamei ssuesand def enses
aswar rant edbyl aw. as int he 2 other decided cases t herein
ment i
oned. Pr edictably therefore, thi s
NPC VS.CA [ 222 S 415] - Pe titioner s peti
ti
on mustper force be dismissed bec.
cannotbehear dt oinvoket heactofGodor thelosses and damagessust ained byt he
for
c emaj euret oescapel iabili
tyfort hel oss pri
vate r esp.'
s had been pr oximatel y
or damage sust ained by t he pvt . causedbyt henegligenceoft hepe titi
oner s,
respondent s since t hey,t he pe ti
tioner s, alt
hough t he typhoon w/c pr eceded t he
wer egui l
tyofnegl igence. Theeventt hen Pooding could be consi ed as a f
der orce
wasnotoccasi onedexcl usivel
ybyanactof majeure.
God or f orce maj eure;a human f actor--
negl i
gence or i mpr udence-- had
intervened. The e:ectt hen oft he f orce
maj eurei n quest i
on may be deemed t o A.Except
ions
have,even i fonl ypar tl
y,resulted from t he
par ti
cipation ofman. Thus,t he whol e 1.Expr
essPr
ovi
sionofLaw
occur ence was t hereby humani zed,as i t
wer e, and r emoved f r
om t he r ules Deposi
tar
y
appl i
cablet oact sofGod.
Art.1979. Thedeposi tar
yi sliabl
e
f
or t he l oss of t he t hing through a
SIA VS. CA [ 222 S 24] - SBTC' s f
ortuitousevent :
negli
gence aggr avat ed the i njury or (1)Ifi
tissost ipulated;
damaget othepe tit
ionerw/cr esult
edfrom (2)Ifheusest het hingwithoutthe
the loss or i nj
ur y or damage t o the depositor'
sper mission;
peti
ti
oner w/c r esulted f
rom t he loss or (3)Ifhedelaysi t
sr etur
n;
destr
uction ofthest ampcollection. SBTC (4)Ifheallowsot herstousei t
,even
wasawar eoft hePoodsof1985and1986; though he hi mself may have been
i
t al so knew t hat t he Poodwat ers author i
zedt ouset hesame.
i
nundat ed the room wher e Safe Deposit
 (2) I
f by hi s int
ervention he
Bai
leei
ncommodat
um prevent
ed a mor
e compet
entper son f
rom
takingupthemanagement.
Ar t
.1942. Thebai lee isl i
abl efor
thel ossoft het hing,even i fitshoul d be
throughaf or t
uitousevent : Payeei
nSol
uti
oIndebi
ti
(
1)I fhe devot es t he t hi
ng t o any
pur pose di :erent f rom t hatf or whi ch it Ar
t.2159. Whoever i n bad faith
hasbeenl oaned; accept san unduepayment ,shallpaylegal
(
2)I fhe keeps i tl onger t han t he int er
estifa sum ofmoney i sinvol
ved,or
period st i
pul ated, or af ter t he shal lbeliabl
ef orfruit
sr ecei
ved orwhi ch
accompl i
shmentoft he use f orwhi ch the shoul d have been r ecei
ved ift he thing
commodat um hasbeenconst ituted; pr oducesfrui
ts.
(
3)I fthe t hi ng l oaned has been Heshallfurthermorebeanswer able
delivered wi t
h appr ai sal of i ts val ue, for any loss or impairment oft he thing
unlesst her eisast ipul ation exempt ingt he from any cause,and f ordamages t ot he
bailee f rom r esponsi bili
tyi n case of a per son whodel i
vered thething,untilitis
for
tui t
ousevent ; recovered.
(
4)I fhel endsorl easest het hingt o
athi rdper son,whoi snotamemberofhi s
househol d; Lessee
(
5)I f,beingabl et osaveei thert he
thing bor r owed or hi s own t hing, he Art. 1648. Ever yl ease of r eal
choosest osavet helat ter. estat
emay ber ecor
ded intheRegi stry of
Propert
y. Unless a lease i
sr ecorded, it
Negot
ior
um Gest
io shallnotbebindingupont hirdper sons.

Art.2147. The oOci ous manager Art.1671. Ifthel esseecont inues

shallbeliableforanyfort
uitousevent : enjoyi
ng the t hi
ng aft
erthe expi r
at i
on of
(
1) I f he under t akes r i
sky the contract,over the l
essor's objecti
on,
operati
ons whi ch the owner was not the f ormer shal l be subj ect t o t he
accustomedt oembarkupon; responsibil
iti
esofapossessori nbadf ai
th.
(
2) I f he has pref
err ed hi
s own
int
eresttot hatoftheowner ; Art
.552.xxx.
(
3)I fhefail
storeturnt hepropert
y A possessor i
n bad f
aith shal
lbe
orbusinessaf terdemandbyt heowner ; li
ablef or deter
iorat
ion or l
oss in every
(
4)I fheassumed t hemanagement case,evenifcausedbyaf ort
uitousevent.
inbadf ai
th.

I
ndependentCont
ract
or
Art. 2148. Except when t he
management was assumed t o save the
property or busi ness f r
om immi nent Art
. 1727. The contract
or is
danger,t he oOcious manager shall be responsibl
eforthewor
k donebypersons
li
ableforfort
uitousevents: employedbyhim.
(
1)Ifhei smanifest
lyun.ttocarry
ont hemanagement ;
 Art.1728. Thecont r
actorisliable (
2)When f rom the nat ureand t he
forallthe cl
aims oflaborers and ot
her s cir
cumst ancesoft heobligation itappear s
employed byhim,and ofthird per
sonsf or thatt hedesi gnation ofthet imewhen t he
deat
h or physi cal i
njuri
es dur ing the thingi st obedel i
veredort heser viceist o
constr
uction. be render ed was a cont rolli
ng mot i
ve for
theest ablishmentoft hecont r act
;
(
3) When demand woul d be
useless,aswhen t heobligorhasr endered
itbeyondhi spowert oper form.
I
n r ecipr
ocal obligations, nei t
her
CommonCar
rier partyi ncur sin delayiftheot herdoesnot
compl y or i s not ready t o compl yi na
Art.1763. A common car r
ier i
s proper manner wi th what i si ncumbent
responsi ble for injuri
es su:er ed by a upon hi m.Fr om t he momentone oft he
passengeron accountoft hewi l
fulactsor partiesf ul.ll
shi sobligation,del aybyt he
negligence of ot her passengers or of otherbegi ns.
stranger s, i f t he common car ri
er'
s
empl oyees t hrough the exercise of the Art
.552.xxx
dili
genceofagoodf atherofaf amilycould A possessor i
n bad f
aith shal
lbe
have pr evented or stopped t he act or li
ablef or deter
iorat
ion or l
oss in every
omi ssion. case,evenifcausedbyaf ort
uitousevent.

2.Mor
aordef
aul
t b.Mor
aacci
piendi

a.Mor
asol
vendi Art.1718. Thecont ractorwhohas
undertaken to putonl y hi s wor k orski l
l,
Ar t
.1165.xxx. cannotcl ai
m anycompensat ioni fthewor k
xxx should be dest royed beforei ts del ivery,
If t he obli
gor delays, or has unlesst herehasbeendel ayi nr eceivi
ngi t,
promi sed todel
iverthesamet hingtot wo or ifthe destruction was caused by t he
ormor epersonswhodonothavet hesame poorqual ityofthemat erial,provided t hi
s
interest,he shallbe responsi
blefor any factwascommuni cated i
n duet imet ot he
for
t uit
ous eventunt i
lhe has e:ect
ed the owner.I ft he materialisl ost t hrough a
delivery. fort
uit
ous event , t he cont r
act i s
exti
ngui shed.

Art.1169. Thoseobl iged t

odeliver
ortodosome thingi ncurin delayfrom the Ar t. 1504. Unl ess ot herwise
ti
met heobl i
geejudi ci
all
yorext raj
udici
al l
y agreed,t he goods r emain att he sel l
er's
demandsf rom them t heful.ll
mentoft heir ri
sk unt il the owner ship t herei
n i s
obligation. tr
ansfer red tot he buyer, but when t he
However , t he demand by t he owner ship t herein ist ransferr
ed t ot he
credi t
or shal lnot be necessar yin order buyer the goods ar e att he buyer 'sr i
sk
thatdel aymayexi st: whe t
heract ualdel i
veryhasbeen madeor
(1)When t heobl igati
on ort helaw not,exceptt hat:
expr esslysodecl are; (1)Wher edel iver
yoft hegoodshas
been madet othebuyerort o a bail
eef or
the buyer ,in pur suance oft he contract Speciallaw on usury.
-- The Usury Law
and t heowner shipi nthegoodshasbeen wasActNo.2655. Thi slaw wasrepeal
ed
ret
ai ned by t he sell
er mer elyto secur e during t
he peri
od ofmar ti
allaw,leavi
ng
performance by t he buyer of hi s part
iesfreetost
ipulat
ehigherrat
es.
obligati
ons undert hecont r
act,thegoods
are att he buyer '
sr isk f
rom t he ti
me of
suchdel ivery; Art. 1176. The r eceipt of the
(2)Wher eact ualdeliveryhasbeen principal by t he cr edit
or wi thout
delayed t hr
ough t he fault of eit
her t he reservat i
on wi th r espect t ot he inter
est
buyerorsel lerthegoodsar eatt her i
skof shallgi veriset othepr esumpt i
ont hatsaid
thepar tyinf aul
t. interesthasbeenpai d.
Ther eceiptofal aterinstall
mentof
a debt wi thout r eservation as t o pr i
or
installments, shal l likewi se r ai
se t he
3.Expr
essagr
eement presumpt i
on t hatsuch i nstall
ment s have
beenpai d.
Art.1306. Thecont ractingparties
may establ
ish such sti
pulations,clauses,
ter
ms and condi ti
ons as they may deem Art. 1177. The cr editor
s, after
conveni
ent,providedtheyar enotcont rary havingpur suedt hepr opertyinpossession
tolaw,morals,goodcustoms,publ icorder, ofthe debt orto satisfyt heirclaims,may
orpubli
cpol i
cy. exerci
se allt he rights and br ing allthe
acti
onsoft helatterfort hesamepur pose,
save those whi ch ar ei nherent in hi s
4.Al
eat
oryCont
ract person;t hey may al so impugn t he act s
whicht hedebt ormayhavedonet odefraud
Ar t
.2010.Byanal eatorycontr
act, them.
oneofthepar tiesorbothr ecipr
ocall
ybind
themselves t
o give orto do some t
hing in Balane: Agai
nst what can t
he obl
igee
consi
der at
ion ofwhatt heot hershallgive demandperf
ormance?
or do upon t he happening ofan event
which i
suncer tain,orwhich istooccurat 1. Agai nstnon-exemptpr opert
ies ofthe
anindeterminatet i
me. debtor.
-- Thedebt orisli
ablewi th al
lhis
property, pr
esent and f uture, for the
ful.l
lmentofhisobl i
gat
ions,subjecttothe
(
noti
nBavi
era'
sout
line) exemptionsprovi
dedbyl aw.(Art.2236. )

Art.1175. Usuri
ous t
ransact
ions 2. I fnumber one is nog enought ,the
shal
lbegover
nedbyspeci
all
aws. credi
torgoestoanyclaimsw/ct hedebtor
may have agai
nstthird persons. Thisis
Tol
ent
ino: caled ac
l cion subr
ogatori
a, wherein the
credi
torissubrogat
ed inther ight
soft he
Usur y.
-- Usur yist he cont
racti
ng foror debtor.
receivi
ng some thing in excess of t he
amount al lowed by law for t
he loan or 3. Acci
on pauli
ana (
Art
icl
es 1387-89)
.--
forbearanceormoney ,goodsorchattel
s. Thisi
st he r
ightofcr
edi
torsto setasi
de
fr
audul
enttransf
ersw/cthedebt ormade
so much ofi
tas i
s necessar
yto pay t
he
debts. A. Pure Obligati
on.-- A pur e
obli
gati
on i
s one w/c is notsubj
ectt
oa
condit
ionoraterm.
Art.1178. Subjecttothelaws,all
ri
ghts acqui
red i
n virt
ue ofan obli
gati
on
aretransmissi
ble, i
ft her
e has been no Art.1179.Ever y obligati
on whose
st
ipul
at i
ontothecont r
ary. performance does not depend upon a
futureoruncer t
ain event,orupon a past
event unknown t o t he par ti
es, i s
CHAPTER 3.
--DIFFERENTKI
NDSOF demandabl eatonce.
OBLI
GATIONS Ever y obli
gation whi ch contains a
resolutor
y condi ti
on shal l al so be
Sect
i -
on1.-PureandCondi
ti
onal demandabl e, wi t
hout pr ej
udi ce to the
Obli
gat
ions e:ectsoft hehappeni ngoft heevent .

Balane: Art
icl
es 1179 - 1230.-
- The
tr
oublew/ t
hecl assi
.cat
ion i
sthatt
her
e PAY V.PALANCA [ 57 SCRA 618] - Fr om
i
snosystem. themanneri n w/ct hep/n wasexecut ed,
itwoul dappeart hatpe ti
tionerwashopef ul
Cl
assi
.cat
ionofObl
igat
ions: thatt hesat i
sfacti
on ofhi scr editcoul d be
reali
z ed ei ther thr ough t he debt or sued
1.
.Ac
cordi
ngtoc r
iter
iaofdemandabi
li
ty: receivingcash paymentf rom t heest at
eof
a.Pure the lat e Car los Palanca pr esumpt ively as
b.Conditi
onal oneoft hehei rs,or,asexpr essed t herein,
c.W/at erm "upon demand. " Ther ei s not hing i nt he
recordt hatwoul di ndicatewhe t
herornot
2.Ac
cordi
ngt oplur
ali
tyofobj
ect
s: the.r stal ternativewasf ul.lled. Whati s
a.Single undeni ablei st haton 8/26/67,mor ethan
b.Alternati
ve 15 yr s.af tert heexecut ion oft he p/n on
c.Facultati
ve 1/30/52, t his pe tit
ion was .l ed. The
defense i nt erposed was pr escription. I ts
3.Ac
cordi
ngtoPl
ural
it
yofsubj
ect
s: mer i
ti sr atherobvi ous. Ar t
.1179,par .1
a.Joi
nt saysso.xxx
b.Sol
idar
y The obl i
gat i
on bei ng due and
demandabl e, i t woul d appear t hat t he
4.Ac
cordi
ngtoPerfor
manc
e: .lingoft hesui taft
er15yr s.wasmucht oo
a.Divi
sibl
e late.
b.Indi
visi
ble

5.Ac
cordi
ngtoSanc
tionsforBr
eac
h: B.Condi
ti
onalObl
igat
ions
a.Simpl
e
b.W/apenalcl ause Art. 1181. I
n condi tional
obli
gati
ons,t he acquisi
ti
on ofr i
ghts,as
wellastheextinguishmentorlossoft hose
I
V.Di
:er
entTypesofCi
vilObl
igat
ions alr
eady acquired,shalldepend upon t he
happening oft heeventwhich const
itutes
1.Ast
oCr
iter
iaofDemandabi
li
ty thecondit
ion.
 Obligat
ions wi t
h a r esolutory
per i
od take e:ectatonce,butt er minate
Balane: A c ondit
ion is a f
uture and uponar ri
valofthedaycer t
ain.
uncertain eventupon w/can obli
gati
on or A day certai
ni s under
stood t o be
provi
sionismadet odepend.xxx Fut ur
ity that whi ch must necessar il
y come,
and uncer tai
nty must concur as althoughi tmaynotbeknownwhen.
character
isticsoftheevent.(
IVTolent
ino.) If the uncer taint
y consi sts i n
whe ther the day will come or not ,t he
A past thing can never be a obligati
on is condit
ional,and itshal lbe
condi
tion. A condit
ion i
s al
ways f
utur
e regulated by the rules ofthe pr eceding
anduncertai
n. Sect i
on.

Past event unknown t o t he Balane: A t er

m i sa future anc certain
parties.--I tisr eall
yt heknowl edgeoft he event upon w/c t he demandabi lit
y ( or
eventw/cconst i
tutest hef uture. Itisthe exti
nguishment)ofanobl i
gationdepends.
knowl edge w/c i sf utur e and uncer tain. At erm orper i
od is an i
ntervalof
Forexampl e,when Isay" Iwi lltr
eatyou ti
me, w/c, exerti
ng an i nPuence on an
forlunchi fyouge tthehi ghestscorei nthe obli
gati
on asa consequenceofa j uridical
CivilLaw Fi nalExams( on t heassumpt i
on act,eit
hersuspends i t
s demandabi l
ity or
that Pr of. Balane has al ready .ni shed producesitsext
inguishment .(Manresa.)
checking t he paper s.
)" Her e,t he event
(get
tingt hehi ghestscor e)isalreadyapast Aterm canei therbe:
event, ye tt he knowl edge i sf ut
ur e and 1. suspensi ve condi
tion (ex di
e-- f r
om
uncer tain. theday)oronet hearrivalofw/cwillmake
theobligationdemandabl e
Condi
tioncompar edtoat erm.--As 2. resolutorycondi ti
on ( i
ndie--i nt
ot he
to element of f ut
ur i
ty, conditi
on and day) or one t he ar rival of w/c wi l
l
el
ementar ethesame. They di :eri nthe exti
ngui sht heobl i
gati
on.
aspect of cer tai
nty-- a condi ti
on is
uncertainwher easat er
mi scertain.
Ki
ndsofCondi
ti
onalObl
igat
ions
Conditionscanei therbe:
1. Suspensive condi
tion (
i)Condi
tionpr
ecedent
(condit
ion precedent) wher ein the
happeni ng oft he eventgives bir t
ht o an Art. 1187. The e:ect s of a
obligat
ion conditi
onal obl i
gation t o gi ve, once t he
2. Resol utorycondition (condi
tion conditi
on hasbeen f ul.lled,shal lr etroact
subsequent)wher einthehappeni ngoft he to the day of t he const itution of t he
eventwi l
lexti
ngui sht heobligati
on. obli
gation. Never theless, when t he
obli
gation imposes r ecipr ocalpr est ati
ons
upon thepar ties,thef ruitsand i nt erests
duringt hependencyoft hecondi t
ion shal l
Di
sti
ngui
shedf
rom t
erm orper
iod be deemed t o have been mut ual l
y
compensat ed. I f t he obl igation i s
Art.1193. Obl igat
ions f
orwhose unilat
eral,thedebt orshal lappr opr iatet he
ful
.llmenta day cert
ain has been .xed, frui
ts and interestsr eceived,unl ess f rom
shallbe demandable only when thatday the nat ure and ci rcumst ances of t he
comes. obli
gation itshoul d be i nfer red thatt he
int
ention oft he person const
ituti
ng t he Balane: Art. 1190 r
efer
stor esol
utory
samewasdi :er ent. condit
ions. Thisisjustthe opposit
e of
I
n obl i
gat i
onst odoand nott odo, Art.1189.
the courts shallde t
ermine,in each case,
ther et
roactivee:ectoft hecondi t
ion that 3.Ki
ndsofcondi
tions
hasbeencompl iedwith.
Art
.1182. When t heful.ll
mentof
Balane: Thi s arti
cler efer
st o suspensi ve the condit
ion depends upon the sol e will
condition. Thi sar ticlese tsf ortht her ul e ofthe debt or
,t he conditi
onalobl igation
of retr
oactivityi n an obl igat i
on t o gi ve. shallbevoid.Ifitdependsupon chanceor
Thisr uleisl ogicalbuti mpr act ical. Many upon t he wi l
l of a t hird person, t he
moder nCi vilCodeshavedi scardedi t
. obli
gation shalltake e:ectin confor mi t
y
No Re troacti
vi t
y ast ot heFr uits.-- wit
ht hepr ovi
sionsofthisCode.
Notice thatt her eis no r etroact i
vity wi th
respect to t he f rui t
s. The f ruit
s ar e Balane: We ar e tal
king her
e of a
deemed t o cancelouteach ot her.I fonl y suspensi
vecondi
tion.
one oft he thing pr oduces f r uits,therei s
noobl igat
iont odel i
vert hef ruits. First sent
ence of Ar t
. 1182.-- The
conditi
on mustbesuspensive,potest
ati
ve
anddependson t hesol
ewillofthedebtor.
(
ii
)Condi
tionsubsequent E.g.,"
Ipromisetosel
lyoumycarf orP1.00
wheneverIlike.
"
Art.1190. When t he condi t
ions
havef ort heirpur poset heext inguishment Q:Whydoesi
tmaket
heobl
igat
ionvoi
d?
ofan obl i
gation togive,t hepar ti
es,upon
the f ul.ll
ment of sai d condi ti
ons, shal l A:Bec.suchanobl igat
ionl acksoneoft he
return t o each ot her what t hey have essenti
al element s of an obl i
gation, the
received. vincul
um j uris, t
he binding f orce-- t he
In caseoft hel oss,deteriorat i
on or meansbyw/ci tisenforceableincour t
.I n
impr ovementoft he thing,t he pr ovisions thiscase,ther eisnobi ndingf orce. There
whi ch,wi thr especttot hedebt or,ar el ai
d isnoobl i
gation.I ti
saj oke.
down i n t he preceding ar ticl
e shal l be
appl i
ed t ot he party who i s bound t o
return. Potestati
ve Condit
ion is one w/c
Asf orobligati
onst odoand nott o depends solely on t
he willofeither one
do,t hepr ovisionsoft hesecondpar agraph party
. E.g.,"Iwi l
lgiveyou myplantation
of ar ticl
e 1187 shal l be obser ved as i
n Davao pr ovi
ded you resi
de in Davao
regardst hee:ectoft heext ingui shmentof permanently."
theobl igation.
CasualCondit
ion i
sonewher ethe
Art.1187.xxx conditi
on ismadet odepend upon athi
rd
In obli
gati
ons to do person orupon chance. E.g.,"Iwi
llgi
ve
and not to do,t he cour
ts you my l and in Flori
dablanca i
f Mt .
shall det
ermine, in each Pinatuboeruptsthi
syear."
case,t
her et
roacti
vee:ectof
theconditi
on thathasbeen Mi
xed Condi t
ion is one w/c
compli
edwi th. dependspar
tlyupon t
hewil
lofoneoft
he
part
iesand par
tlyon ei
therchanceort
he can swi m across t
he Paci
.c Ocean for2
wil
lofathi
rdper son. hour s."
(2) Impossibl
einl aw orone w/c
Q: Whati fthe condi
ti
on is suspensive, attaches an i ll
egal conditi
on, e.g.
," I
pot
estat
iveand dependssolelyon thewi ll promi setosellmycart oMr .M forP2 on
ofthecredi
tor
,isthecondit
ionalobligat
ion condi t
ion that he burns the Col
lege of
val
id? Law."

A:Yes.I nfact
,theobli
gati
onisnotevena E:ectofI mpossibleCondi
ti
on.--Itannul s
condit
ion obligat
ion. It i
s a pur e the obli
gation w/c depends upon them.
obli
gati
on,bindingatonce. The entirej uri
dicalt
ieistainted by t
he
i
mpossi ble conditi
on. Correl
atethis w/
Art
icles 727and873.
BALANE CASES:
Art. 727. I ll
egal or i
mpossi
ble
SMITH BELL V.SOTELO MATTI [ 44 P condit
ions in simple and remunerat
ory
874] - Wher et he ful.l
lment of the donati
ons shal l be consi
dered as not
conditi
on does notdepend on t he wil
lof imposed.
the obli
gor,buton t hatofa 3r d person
whocan,i n nowaybecompel l
ed tocar r
y Art
. 873. I mpossible condit
ions
itout,theobligor'
spartoft hecontractis andt hosecontrar
yt olaw orgoodcustoms
complied w/,ifhe does allthatisi n his shallbe considered as notimposed and
power, and itt hen becomes incumbent shallinnomannerpr ej
udicetheheir,even
upont heothercontract
ingpar t
yt ocompl y ift
het est
atorshouldotherwiseprovi
de.
w/t hetermsoft hecontract.
Accor ding t o Tol enti
no: In
cont r
acts,an i mpossi blecondi ti
on annul s
(
noti
nBavi
era'
sout
line) the cont r
act . In gr atuit
ous di sposit
ions,
the i mpossi ble condi ti
on i s si mply
Art.1183. I mpossi ble condi ti
ons, disregarded.
thosecontraryto good cust omsorpubl i
c The .r st statement i si naccurate
poli
cy and those pr ohi bit
ed by l aw shal l bec. donat ion i s a cont ract and i n a
annultheobl i
gat i
on whi ch dependsupon donat i
on, t he impossi ble condi ti
on does
them. I fthe obligation is divisible,that not annul t he cont ract. I ti s simpl y
partthereofwhi ch i s nota:ect ed by the disregarded. The pr operway t o say itis
impossi
ble orunl awf ulcondi tion shallbe that: I n an oner ous t ransaction, an
vali
d. impossiblecondi t
ion annul st hecondi tion
The condi tion not t o do an obligati
on. I n agr atuitousdi spositi
on,as
impossi
blet hi
ng shal lbe consi dered as in adonat ion ort estament arydi spositi
on,
nothavingbeenagr eedupon. an i mpossible condi tion at t
ached t ot he
dispositi
on i s simpl y consi dered as not
Balane: Thi s r ef
ers t
o a suspensi ve imposed.
condit
ion.
There ar
e 2 cl
asses ofimpossi ble Q:Whyi
sther
eadi
:er
ence?
condit
ions:
(1) I mpossibl
e in f act, e.
g.," I A: Bec.in a donation aswel
lasi na
promisetosellmycart oMr.M f orP2i fhe test
ament ary disposi
tion, the causa or
considerati
on i
st heliberal
ityoft
hedonor
ort estator
,ast hecasemaybe.Eveni fyou If no t i
me has been .xed, the
takeaway t hei mpossible condi ti
on,t her e condit
ion shallbedeemedful.l
ledatsuch
is st i
lla r eason for t he di spositi
on t o ti
me as may have pr obably been
exist-- l iberali
ty. They ( donation and contemplated,bear
ingin mind thenat
ure
testament ary dispositi
on)have bot ht heir oftheobligati
on.
under pi
nnings,l i
beralit
y.
But in an oner ous t r
ansact ion, Balane: Thi
sar
ticl
eref
erst
oasuspensi
ve
since an oner ous pr estati
on w/c i s condit
ion.
reciprocal requires concomi tttant
perfor mances, that i mpossi ble condi tion
becomes par toft he c ausa. Ther ef
or e,if Art
.1186. Thecondit
ion shal
lbe
thecondi t
ion isimpossi ble,thereisf ailure deemed f ul
.ll
ed when t he obl igor
ofc ausa. I n no c ausa,t herei s also no vol
untari
lypr
event
sitsf
ul.l
lment.
cont ract.
Balane: Thi
sar
ticl
eref
erst
oasuspensi
ve
Par
as'out
lineoni
mpossi
blecondi
tions: condit
ion.

1. Posi ti
vesuspensi vecondi t
ion todoan Doct rine of Const ructive Compl iance.-
-
impossi bl
e/ illegalthing- - Theobl igation Ther ear ethreer equisit
esi nordert hatthis
isvoid( Art.1183,par .1. ) articlemayappl y:
2. A negat ive condition (not to do an 1. Intenton t hepar toft heobl i
gor
impossi bl
et hing)-- Just di sregard t he topr eventful.llmentoft hecondi ti
on.The
condi t
ion( Art.1183,par .2.) intentdoesnothavet obemal i
cious.
3. A condi ti
on nott o do an il
legalt hing 2. Actualpr evention ofcompl iance
(negative)
-- Thi si snotexpr esslypr ovided (byt heobligor )
fori nt he provision buti simpl i
ed. The
obligati
on i s vali
d. E. g."Iwi l
lsel lyou a Const ructi
ve compl i
ance can have
piece ofl and pr ovided you do notpl ant applicati
on onl y i f t he condi
tion i s
mar ij
uanaoni t.
" potestati
ve. I t can also appl
yto Mi xed
condition as t
ot hatpartw/c the obl
igor
Art
.1184.Thecondi t
ionthatsome shoul dperfor
m.
event will not happen at a det
erminate
time shall exti
nguish the obli
gati
on as
soon as t he time expires or i
fit has BALANE CASES:
becomei ndubitablethattheeventwillnot
takeplace. TAYAG V.CA [ 219SCRA480]- I nsofaras
the3r ditem oft hecont r
actisconcer ned,
Balane: This art
icl
erefersto suspensi
ve xxxr esp.cour tappl i
ed Art.1186,NCC on
condit
ions. Iftheconditi
on i
sr esol
utory, const ructi
ve f ul.l
lment w/c pe t
iti
oner s
thee:ectistheopposit
e. claim shoul d not have been appr eciated
bec.t heyar etheobl i
geeswhi l
et hepr oviso
in poi nt speaks of t he obligor
. But ,
Art.1185.Theconditionthatsome petiti
oner s must concede t hat i n a
evenwi llnothappen atadeterminatetime reciprocal obligati
on l i
ke a cont ract of
shallr ender t
he obl
igati
on e:ective f
rom pur chase, bot h par t
ies ar e mut ual l
y
the moment t he time indicated has obligorsand al soobl gees,and any oft
i he
elapsed,ori fithas become evidentt hat cont racti
ng par ti
es may , upon non-
theeventcannotoccur . ful.ll
mentbyt heotherpr ivyofhispar tof
thepr estati
on,rescindthecont ractorseek A: Bec. as a mat ter of fact
, al
though
ful.ll
ment . I n shor t,i tis puer il
ef or techni
cal
lyt hecredit
orst il
lhavenor i
ght
,
petiti
oner sto say thatt hey arethe onl y he is al
ready expect ing a r i
ght. You
obligeesundert hecont r
actsincet heyar e cannot l
ett he creditor si
t and fold hi
s
also bound as obl i
gorst or espect t he armsand wai tforhisr i
ghtofexpectancy
stipulati
on i n per mitt
ing pvt.r esp. to toberenderedil
lusory .
assume t he loan w/ t he Phi. Veterans
Bank w/c pe ti
tionersimpeded when t hey
paidt hebal anceofsaidl oan. Asvendor s, Resci
ssi
on
theyar esupposedt oexecutethe.naldeed
ofsal euponf ullpaymentoft hebal anceas Art.1191. The power t or escind
determinedher eafter
. obligationsisi mpliedi nr eci
pr ocalones,i n
caseoneoft heobl i
gor sshoul dnotcompl y
Arr t
. 1188. The cr editor may, withwhati si ncumbentuponhi m.
beforet he f ul
.llment of t
he condi ti
on, The i njured par ty may choose
bring t he appr opri
ate act
ions f or the between t hef ul.ll
mentand t her escission
preservationofhisr i
ght
. of t he obligation, wi t
h t he payment of
The debt or may r ecover what damagesi n ei
thercase.Hemayal soseek
dur i
ng t he same t ime he has paid by rescission, even af ter he has chosen
mistakei ncaseofasuspensi veconditi
on. ful.llment ,i ft he latt
er shoul d become
impossi ble.
Balane: This ar
ticl
eref
erst
o suspensi
ve The cour t shal l decr ee t he
condit
ions. rescission claimed,unl ess there by j ust
causeaut hor i
zingthe.xi ngofaper i
od.
Br i
ng t he appr oriate act ions . ..-
- Thisi s under stood to be wi thout
Accor ding t o Mr .Just ice JBL Reyes,t he prejudice t ot he rights oft hird per sons
phr ase " may xxx br ing t he appr opriate who have acqui red t he t hing, i n
actions"i si naccur ate. To br i
ngact ion is accor dance wi th articl
es 1385 and 1388
to .l e a sui t. But t he cr editor is not andt heMor tgageLaw.
restrict
ed t o.l ingasui t. Thepr operver b
isnot" br ing"but" t
ake. " Forexampl e,i
na
sale of l and subj ect t o suspensi ve Arti
cl e 1385.
condi ti
on, t he cr editor shoul d have t he Resci ssion creates t he
suspensi ve condi ti
on annot ated on t he obligation t o r eturn t he
tit
leoft hel and. Thi si snotbr inging an things whi ch wer e t he
appr opriat e act ion but t aki ng an object of t he cont ract,
appr opriat eaction. toge t
her wi th theirf ruits,
The pr inciple i n t his ar ti
cle is: and t he pr i
ce wi th i ts
Vigilantibus et non dor mi enti
bus j ur a interest; consequent l
y, i t
subveni untw/c means t hatt he l aws ai d can be car ri
ed out onl y
thosewhoar evi gil
ant ,nott hosewhosl eep when he who demands
upont hei rr i
ghts. rescission can r
eturn
what everhemaybeobl i
ged
Q: WhydoesAr t.1188gi vethecredit
ora tor estore.
recorse al
though techni
call
yt he credi
tor Neither shall
sti
llhavenor i
ght? rescission t ake place when
the t hings whi ch ar et he
object of t he cont r
act ar e
 legal
lyi nt he possessi
on of 1. Bot h pr
estati
on arise fr
om the
third persons who di d not samesour ce
actinbadf ai
th. 2. Each pr est
ati
on isi ntended t
o
In t
his case, be the counterpar
t or equivalent ofthe
indemi t
yf or damages may ot qui
her( dproquo)
be demanded f r
om t he
personcausi ngt heloss.
BALANE CASES:
Ar ti
cle 1388.
Whoever acqui res i n bad UNVI VERSAL FOOD CORP V. CA [ 33
faiththet hingsal i
enat ed in SCRA 1] - Resc ission f or br eac h of
fraud of cr editors, shal l cont rac tand r esc ission byr eason ofl esi on
indemni fy t he l atter f or orec onomi c pr ejudic e,di stingui shed. -- A
damages su:er ed by t hem resci ssi onf orbr eachofcont ractunderAr t.
on account of t he 1191,NCC i snotpr edi cat ed on i njur yto
alienati
on,whenever ,duet o economi ci nt er ests oft he par ty plt
:.but
any cause, i t shoul d be on t he br each off ai th by t he def.,t hat
impossi bleforhi mt or et
ur n violat est her eci procit ybe t.t hepar ties. I t
them. isnota subsi diar y act ion,and Ar t
.1191
Ift here ar et wo or maybescanned w/o di scl osing anywher e
mor e al i
enations, t he .r st thatt heact ion f orr esci ssi on ther eunderi s
acquirershal lbel i
abl e.rst, subor di nat ed t o anyt hing ot her t han t he
andsoonsuccessi vely. culpabl e br each ofhi s obl igations by t he
def. Thi sr esci ssi on i sa pr incipalact ion
retaliat or yi n char act er,i t bei ng unj ust
Bal
ane: thata par ty be hel d bound t of ul
.l lhi s
promi seswhen t heot hervi olateshi s. As
Q: Why i st his ar ti
cleint his Secti
on expr essed i nt heol d Lat in aphor ism: Non
enti
tl
ed "
Pur e and Condit
ional servandifidem,non est fides ser vanda.
Obli
gat i
ons.
" I st here a connecti
on bet. Hence,t he r epar at i
on ofdamages f ort he
the right of r escissi
on and Pur e and breachi spur elysecondar y.
condit
ionalobligations? On t heot herhand,i n ar esci ssion
byr eason ofl esi on oreconomi cpr ejudi ce
A: Yes. I
n ar eci
procalobligat
ion,breach underARt .1381,etseq. ,NCC,t hecause
by one par t
y i s a t acit resol
utory ofact ion issubor di
nat ed t ot heexi st ence
condit
ion. Thi s means t hat the other oft hatpr ejudi ce, bec.i ti st her aisond'et r
e
part
ywhoi svicti
mized bythebr each may as wel las t he measur e oft he r ight t o
decl
aretheobligati
onr esol
ved. resci nd.Hence,wher et hedef .makesgood
thedamagecaused,t heact i
on cannotbe
Note: Ar t. 1191 r efer
s t o reciprocal mai nt ained or cont inued, as expr essly
obl
igations ( mut ual, i mples some provi dedi n Ar t s.1383and1384. Butt he
cor
r espondence),e.g.,a cont ract ofsal e oper at i
on oft hese 2 ar ticles isl imit ed to
w/ci st hemostr ecipr
ocalofal lcontracts, cases ofr esci ssi on forl esion enumer ated
the ar chi
type, t he pr ot
o-type, t he in Ar t.1381 and doesnotappl yt o cases
paradigm,t he di
stil
lation ofallreciprocal underAr t
.1191.
obl
igations.
Resci
ssion under t
he CivilCode.
--
Twor
equi
sit
esofaReci
procalObl
igat
ions: The 2 instances of r esci
ssi
on ar e
defectively t ermed " rescission" w/o 2. Oncer esoluti
on i
savailedof,ther
eisa
distinction bet
.t henundert heNCC unl ike duty of mut ual resti
tuti
on be t. t
he
the pr evious OCC, t hat di :erent
iated parties-- when a r eci
procalobli
gati
on is
"resolution"forbr each ofsti
pul ati
onsfrom resolved, the e:ect i s t o cancel t
he
"rescission"byr easonofl esi
onordamage. j
ur idical relati
on. Par ti
es should be
restoredtot heirst
atusquoant e
Bal
ane:

Doct
inesl
aiddowni
nthi
scase: UPV.DE LOSANGELES [ 35SCRA 102]-
Ther ei snot hingi nt hel aw t hatpr ohi bits
1. Resol uti
on is not pr edicat
ed on the par ties f rom ent er i
ng i nto agr eement
economici njurybutonbr eachorvi olat
ion thatvi ol at i
on oft het ermsoft hecont ract
2. I tis nota subsidiaryr emedy buta woul d cause cancel lation t her eof, even
princi
palonew/ci sre
tali
atoryi nnat ur
e. w/ocour ti nter vent i
on. I n ot herwor ds,i t
is not al ways necessar yf or t he i njur ed
partyt or esor tt ocour tforr escissi onoft he
MAGDALENA ESTATE V.MYRI CK [ 71 P contr act .
344] - Thecont r
actofsal econt ainsno Ofcour se,i tmustbe under stood
provisi on aut horizing t he vendor ,i nt he that t he act of a par tyi n t reating a
eventoff ail
ur eoft hevendeet ocont inuei n contr act as cancel led or r esol ved on
the payment of t he st ipulated mont hly account of i nfr actions by t he ot her
installment s,t ore t
ai nt heamount spai dt o contr act ingpar t ymustbemadeknown t o
him onaccountoft hepur chasepr ice.The theot herand i sal wayspr ovi sional ,bei ng
claim,t herefore,oft he pe ti
tioner thati t eversubj ectt oscr utinyand r evi ew byt he
has t he r ightt of or f
eitsai d sums i ni ts propercour t.I ftheot herpar tydeni est hat
favori s unt enabl e. xxx [ H]e may choose rescission i sj usti.ed,i ti sfreet or esor tt o
be t
. demandi ng t he f ul.ll
ment of t he judicialact ion ini tsown behal f,andbr ing
cont ractori tsr esol ution. Theser emedi es the mat ter t o cour t. Then,shoul dt he
are al ternative and not cumul at
ive,and cour t,af terdue hear ing,deci de t hatt he
thepe t i
ti
oneri nt hiscase,havi ng elected resolut ion of t he cont ract was not
tocancelt hecont ract ,cannotavai lhi mself war ract ed,t he r esponsi ble par ty wi llbe
of t he ot her r emedy of exact ing sentenced t o damages; i n t he cont r ary
per f
or mance. As a consequence oft he case,t her esol ution wi llbeaOr med,and
resolut ion,thepar tiesshoul d ber estored, theconsequenti ndemni ty awar ded t ot he
as f ar as pr acticabl e, tot heir or i
ginal partypr ej udiced.
situationw/ccanbeappr oximat edonl yby In ot her wor ds, t he par ty who
order ing,aswedo now,t her etur
n oft he deemst hecont ractvi olated mayconsi der
thingsw/cwer et heobj ectoft hecont r
act, it r esol ved or r esci nded, and act
w/ t hei rf ruits and of t he pr ice, w/ accor dingl y
, w/o pr evious cour t act ion,
interest ,comput ed f rom t he date oft he buti tpr oceeds ati ts own r i
sk. Fori ti s
institut i
onoft heact ion. only t he .nal j udgment of t he
correpondi ng cour tt hatwi llconcl usi vely
Bal
ane: and.nal lyse ttlewhe t hert heact ion t aken
wasorwasnotcor recti nl aw.xxx
Doct
rinesl
aiddowni
nthi
scase:

1. Ri ght of r
esolut
ion i
s i
mpl
ied i
n
reci
procalcont
racts.
 Angeles,supr
a.and Zul
uet
av.Mar
iano,
Bal
ane: supra.

Doct
rinesl
aiddowni
nthi
scase:
ANGELES V.CALASANZ [ 135 SCRA 323]
1. Ri ght or r esol ution i n Art
.1191 i s - rei
terat
ed the r
uli
ng i
n UP v .De los
impled.--I tisavai labl eeven ifthereisno Angel
es,supr
a.andUFC vCA,supr a.
sti
pulat i
on i nt he cont ract.(Thisi s not
new; it mer elyr eit
er ates what was l aid
downi nMagdal enaEst atev.Myr i
ck.) BOYSAW V. I NTERPHI L PROMOTI ONS
2. Ri ghtofr esol uti
on may be exer cised [148SCRA 635] - Ther eisnodoubtt hat
extraj
udi cially and wi l
lt ake e:ect upon the cont ract in quest i
on gave r ise t o
communi cation by t he aggr i
eved partyt o reciprocal obl igati
ons. "Reciprocal
thebreachi ngpar ty. obligations ar ethose w/c ar ise fr
om t he
3. Exer ciseoft hisr ighti salwayssubj ect same cause,and i n w/c each par tyi sa
tojudi cialr eview. I ti s up tot he other debt or and a cr edit
or oft he other,such
partytogot othecour t. that t he obl i
gati
on ofone i s dependent
upon t heobl i
gation oft heot her.Theyar e
These doct
rines ar
eimpl
ied f
rom t
hese to be per f
ormed si mul taneously,so t hat
rul
ingsinthiscase: the per f
ormance of one i s condi t
ioned
upon t he simultaneous f ul.llmentoft he
a. I ft he aggrived par ty has not ye t other .
performed hispr estat
ion,al lhehast odo Thepowert or escindi sgiven tot he
istor efusetoperformi fher esolves. injured par ty. Wheret hepl t=i sthepar ty
b. I f he has al r
eady per f
ormed, upon who di d notper f
ormt he under t
aking w/c
resolution,hecan demand r estit
ution. I
f he was bound by t he t erms of t he
her efuses,hecansuef orr ecoveryandnot agreementt operfor
m,hei snotent i
tled to
forr esolut
ion (
fort he ret
ur n ofwhatyou insistupon t heper f
ormanc eoft hec ontract
gave.) by thedef .,orrecoverdamagesby r eason
ofhi sownbr each.
ZULUETA V.MARI ANO [ 111SCRA 206] -
True,thecont r
actbe t.t hepar tiespr ovi
ded
forextrajudi cialr escission. Thi shasl egal PILIPINASBANK V.I AC [151SCRA 546]-
e:ect,however ,wher et heot herpar tydoes Aut omaticrescissi
on cannotbeavai led of
notoppose i t. Wher ei tis obj ected to,a wher e there i s a clear waiver of the
judi
cialde ter minat i
on oft hei ssue i sstil
l sti
pul at
ed rightofautomat icresci
ssi
on as
necessary . " A stipulat i
on ent it
li
ng one evidenced byt hemanyext ensi
onsgranted
partyt ot ake possessi on oft he land and to prvt resps.by pe t
iti
oner to pay their
buil
ding i ft he ot her par ty vi ol
ates t he arrearages and updat et heirinstal
lment
contractdoesnotexpr opr i
ovi goreconf er paymentundert hecontract.
upon t he f ormer t he r ight t o t ake
possession t hereof i f obj ected t o w/o
judi
cialint er ventionandde termi nation." SONGCUAN V.I AC [ 191 SCRA 28] -
Neit
herdo we agree t
hatt he r
ightoft he
Alvi
arstor epurchase may be rescinded
PALAY,INC.V.CLAVE [
124 SCRA 638] - underArt.1191. Songcuan asser tst hat
rei
ter
ated t
he ruli
ng i
n UP v . De l
os theOct.10,1966cont ractheenteredi nto
w/ t he Alviar
s cr eated a r eciprocal
obligation be t.t hem- -f orhi mt or econvey PRESBI TERO V.CA [ 217 SCRA 372] -
thesubj ectpr emi sesandf ort heAl viar st o Rescission of a cont ract wi ll not be
leaset her eal tiest ohi m- - andt her efusal permi t
tedf oraslightorcasualbr each,but
oft hel attert of ul .l lt hei robl igat ion gi ves onlyforsuchsubst anti
alandf undament al
himt her ight ,under1191,t or esci nd " the breach aswoul d defeatt heeveryobj ectof
right of[ the Al viar s]t or epur chase" t he the parties i
n maki ng theagr eement ;the
realti
es. Thepowert or esci nd obl igat ions question ofwhe therabr eachofcont racti s
isimpl iedi nr eci procalones,i ncaseoneof substant ialdepends upon t he at tending
theobl igor sshoul dnotcompl yw/whati s cir
cumst ances.
incumbentupon hi m. xxx" ( Ar t.1191. )
Theci tedl aw i snotappl icabl ei nt hi scase.
Although t hepar tiesar eeach obl igorand TAYAG V.CA [ 219 SCRA 480] - The
obligee oft he ot her ,t hei r cor respondi ng suggest ion ofpe titioner sthatt hecovenant
obligation can har dl ybecal l
ed r eci pr ocal. must be cancel led i n t he l ight of pvt .
Inr ecipr ocalobl igat ions,t heobl igat ion of respondent 's so- called br each seems t o
one i s a r esol utor y condi ti
on of t he over look pe titi
oner '
s demeanor who,
obligation oft heot her ,t henon- ful .llment inst ead of i mmedi ately .l ing t he case
ofw/cent itles t heot herpar tyt or esci nd pr eciselyt or esci nd t hei nst rumentbec.of
thecont ract .I nt hecaseatbar ,t her ear e non- compl i
ance, al lowed pvt .r esp. t o
2 separ ate and di stinctobl i
gat i
ons,each e:ectnumer ouspayment spost er iort othe
independentoft heot her .Theobl igat ionof graceper iodpr ovidedi nthecont r act .Thi s
Songcuan t or econvey t hepr oper tyi snot apat hy ofpe titioner s who even per mitt
ed
dependenton t heobi gat ion oft heAl viar s pvt .r esp.t ot aket hei ni
tiat i
vei n .l i
ngt he
tol ease t he pr emi ses t ot he f ormer . The sui tf orspeci .cper formanceagai nstt hem,
obligationoft heAl vi arsi snotan essent ial is aki nt o wai verorabondonmentoft he
par toft hecont ract . Thi sisevi denti nt he rightt or escind nor mal l
yconf err edbyAr t.
wor dings of t he " P.S. ( Addi tional 1191,NCC.
condi tions) ,"i tselfw/cs tatest hat" int he xxx
event( the Al viar s)exer cised t he r i
ghtof Indeed,t he r ightt or esc ind i s not
repur chase xxx and becomes t he owner absol ute and wi l
lnotbe gr ant ed wher e
and possessoroft hepr emi ses,t heyshal l ther e had been subst antialc ompl ianc e by
xxxbeobl igedt ogi ve( Songcuan)t her i
ght par tial payment s. By and l arge,
ofl ease and ar exxx obl iged t o execut ea pe titioner'sact uat ion issuscept ibl eofbut
lease cont r actxxx. " I n ot herwor ds,t he one cont ruct i
on- - t hat t hey ar e now
obligation of t he Al viar s t o l ease t o est opped f rom r eneging f r om t heir
Songcuant hesubj ectpr emi sesar isesonl y commi tmenton accountofaccept ance of
aftert hel atterhad r econveyed t her eal ti
es bene.t s ar isi
ng f rom over due account s of
tot hem. pvt .r esp.

BINALBAGAN V.CA [ 219SCRA 777] - A

RAMOS V.CA [ 179 SCRA 719] - The party to a cont ract cannot demand
ri
ghttor esci
nd acont r
actmaybewai ved. perf
ormance of t he ot her par t
y's
Inthecaseatbar ,theremedyprovided is pbli
gati
ons unless he isin a position t o
notresci
ssion undertheNCC butt hatse t complyw/hi sown obl igat
ions. Simi larl
y,
f
orthint he rules and r
egul
ati
ons forthe the ri
ght tor esci
nd a cont ract can be
MakatiStockExchange. demanded onlyi fapar tytheret
oisr eady,
wil
ling and ableto compl y w/ hi s own
obli
gati
onsthereunder .
 BALANE CASE:
VERMEN V.CA [224 SCRA 549] - I n
reciprocalobl
igations,t he performance of CENTRALV.CA [ 231SCRA 379] - Si nce
one is conditi
oned on t he si mult
aneous Isl
and Savi ngs Bank was i n def aul ti n
ful.ll
mentoft heot herobl igation.xxx ful.lli
ng i ts r eci pr ocal obl itai on under
Generall
y ,r escissi
on ofa cont ract theirl oan agr eement ,Sul picio Tol ent ino,
willnotbeper mi ttedf orasl ightorcasual underAr t.1191 may choose be t
.speci .c
breach butonl yf orsuch subs tant
ialand per f
or manceorr esci ssion w/ damages i n
fundament albr each as woul d def
eatt he either case. But si nce I sland i s now
veryobj ectofthepar t
iesin executingt he prohi bited f rom doi ngf ur t herbusi nessby
agreeemt n. theMone tar yBoar dResol ution,wecannot
grantspeci .c per for mance i nf avor ofS.
Tolent i
no.
PRUDENCE REALTY V.CA [ 231 SCRA Resci ssion i st he onl y al ter nat i
ve
379] - Habana seeks r escission oft he remedy l ef t. We r ul e, however ,t hat
compr omise agr eement under Ar t.1191. rescission i s onl yf or t he P63, 000 l oan,
However ,t his provision appl ies onl y to bec.t hebank i si n def aul tonl yi nsof aras
reci
procalobl i
gationsi n generaland nott o such amounti sconcer ned,ast her ei sno
obli
gations ar ising f rom a j udic
ial doubt t hat t he bank f ailed t o gi ve t he
compromi se xxx.Thus: Judgmentupon P63, 000. As f arast he par ti
alr elease of
agreementoft he par ti
es is mor ethan a P17T, w/c S. Tol ent ino accept ed and
mer econt ractbinding upon t hem;havi ng execut ed a p/n t o coveri t,t he bank was
the sanction oft he cour tand ent ered as deemed t ohavecompl ied w/i tsr eci procal
itsdeterminat i
on oft hecont r
over syithas obligat i
ont of ur ni shaP17Tl oan.Thep/n
theforceande:ectofanyot herjudgment . gave r ise t o S. Tol ent ino's r eci procal
obligat i
on t o pay t he P17T l oan when i t
fal
ls due. Hi sf ailur et o pay t he over due
Quest
ions: amor ti
zat ionsundert hep/n madehi m a
par tyi n def ault , hence not ent ilted t o
1. Can t heparti
essuppr esst
hisr i
ghtto rescission.I fther eisar ightt or esci ndt he
resol
veinAr t
.1191? p/n,i tshal lbel ongt ot heaggr ievedpar ty
,
2. Can t hey sti
pul atet hatthe rightof thati s,I sland.I fTol ent inohadnotsi gned
resol
uti
on mustbeexer ci
sed onlythrough ap/n se ttingt hedat eforpaymentofP17T
thecourts? w/i n3yr s.,hewoul dbeent i
tledt oaskf or
3.Cant hepar ti
esst ipulatethattherewil
l rescissionoft heent irel oanbec.hecannot
be no mut ual r estit
ution in case of possi blybei ndef aul tast herewasnodat e
resol
uti
on? forhi mt oper form hi sreci procalobl igation
topay .
xxx We r ul et hatt he l iabi li
ty of
Art.1192. I n case both par t
ies Isl
and f ordamages i n notf ur nishi ng t he
havecommi tt
edabr each oftheobligat
ion, ent i
rel oan i s o:se t by t he l iabi lity of
the l
iabili
ty oft he .r stinfr
actorshallbe Sul picio M.Tol ent i
no f ordamages,i nt he
equit
abl yt emper ed by t he courts. I
fi t form ofpenal ties and sur char ges,f ornot
cannotbede termi nedwhi ch ofthepar t
ies payi nghi sover dueP17, 000debt( t hecour t
.rstviolated thecont r act
,thesameshal l citi
ngAr t.1192. )
be deemed ext i
ngui shed,and each shal l
bearhisowndamages.
 3. Ast ot i
me.
-- A per
iod al
waysr ef
erto
C.Obl
igat
ionswi
thaper
iod thefuture,whi
leaconditi
on mayrefertoa
pasteventunknownt ot
hepar t
ies.
1.Ki
nds
4. Astowi llofdebt or
.-- A condit
ion w/c
Art.1193. Obl igati
ons forwhose depends exclusively on t he will of t
he
ful.llmenta day cer t
ain has been .xed, debtorannulst heobl i
gation,butaper i
od
shal lbe demandabl e only when t hatday l
eftt othe debtor's wil
lmer ely empower s
comes. thecourtto.xsuchper i
od.
Obligat
ions wi th a r esolutory
per i
od take e:ectatonce,butt erminate Bal
ane:
uponar ri
valofthedaycer t
ain.
A day certai
ni s under st
ood t o be In a(suspensive)ter
m,t heobli
gat
ion has
that whi ch must necessar i
ly come, alr
eady arisen except t
hat i
ti s not ye
t
althoughi tmaynotbeknownwhen. demandabl e.
If the uncer tainty consi sts i n
whe ther the day will come or not ,t he
obligati
on is condit
ional ,and itshal lbe Ar
t. 1194. In case of l oss,
regulated by the rules oft he preceding det
eri
orat
ion orimprovementoft he t
hing
Sect i
on. bef
orethe arri
valofthe day cer
tain,the
rul
esinarti
cle1189shallbeobserved.
I
VTol
ent
ino:

ConceptofTer m.-- At er
m orper iod i
sa Art.1189. When t he condi tions
spaceoft i
mew/c,exert
ingani nPuenceon have been i mposed wi tht he intent ion of
obligati
onsasaconsequenceofaj uridi
cal suspendi ngt heeOcacyofan obl igat i
on to
act, suspends t hei
r demandabi l
ity or give,thef ollowi ngr ulesshal lbeobser ved
determi nes t
heir ext
inguishement. in case of t he i mpr ovement ,l oss or
(Manr esa.) deterioration of t he t hi ng dur ing t he
pendencyoft hecondi tion.
Di
sti
ngui
shedf
rom Condi
ti
on: (
1)I ft he thi ng i sl ostwi thoutt he
faultoft hedebt or
,t heobl igat i
on shal lbe
1. As tof ulfil
lment.
-- A condi
tion i
s an extingui shed;
uncert
ain event ,whilea ter
m isan event (
2)I ft het hi ng i sl ostt hrough t he
thatmustnecessar il
ycome,whe theron a faultoft hedebt or,heshal lbeobl iged to
dateknown bef orehand orata timew/c pay damages;i ti s under stood t hat t he
cannotbepr ede ter
mined. thingi sl ostwhen i tper ishes,orgoesout
ofcommer ce,ordi sappear si n such away
2. As t oi n>uence on t he obli
gat
ion.-- thati tsexi stencei sunknown ori tcannot
Whi le a condi ti
on gi ves ri
se t o an ber ecover ed;
obligation or ext i
ngui shes one already (
3) When t he t hing de ter i
orates
exisiti
ng,a per i
od hasno e:ectupon t he without t he f ault of t he debt or ,t he
existence of obligati
ons, but onl yt heir impai rmenti st obebor nebyt hecr editor;
demandabi li
ty or performance. Bec. of (
4) I fi t de terior ates t hrough t he
thisdi :erence,aper i
oddoesnotcar ryw/ faultoft hedebt or,thecr editormaychoose
it
, except when t her e is a speci al be t
ween t he r escission oft he obl igation
agreement ,anyr etr
oactivee:ect. and i tsf ul .llment , wi th i ndemi nityf or
damagesi nei thercase:
 (
5)I fthe t
hing isimpr oved by it
s Balane: Mi staken Pr emat ure Del ivery.--
nature,orbyt i
me,thei mpr ovementshal l This ar t
icle assumes 2 t hings: ( 1) t he
inuretothebene.toft hecr editor
; deli
ver y was by mi stake;( 2) t he mi st
ake
(
6)Ifi tisi
mpr oved att heexpense wasdi scoveredbef .thet erm ar ri
ves.
ofthedebt or,heshallhavenoot herri
ght Bot ht het hi
ngsand t hefrui tscan
thant hatgrantedtotheusuf ructuary. berecover ed.
Ifthet erm hasal readyar rived,t he
question ismootand academi c. Butcan
Balane:Ther ear ethreerequisi
tesinor der her ecovert hef r uit
spr oduced dur i
ng t he
forArt.1189t oapply-- meant ime? I tdependson whatschoolof
1. Therei sloss,de teri
orat
i on or thoughtyouf ollow:
delay 1. Accor di
ng t o one school of
2. Thereisan obligat
ion todel i
ver thought ,thedebt orisent it
ledt othef ruits
a determinatet hing (on the part oft he producedi nthemeant ime( Tolentino. )
debtor) 2. Accor dingt oanot herschool of
3. Therei sloss,de teri
orat
i on or thought ,allt hef ruitsr eceived dur i
ngt he
improvementbef orethe happeni ng oft he pendencyoft het erm bel ongt othecr editor
conditi
on. (Caguioa.)
4.Thecondi ti
onhappens.
When f r
ui ts & i nt erests cannot be
Ri
ght
sofausuf
ruc
tuar
y recovered not wi
t hstandi ng pr emature
deliver
y:
Ar t
. 579. The 1. When t heobl igation isr eciprocaland
usufructuar y may make on therehasbeen pr emat ureper f
or mance( by
the pr operty hel d i n bothpar ties);
usufruct such usef
ul 2. When t he obl
igation isa l oan i n w/c
improvement s or expenses thedebt ori sboundt opayi nterest;
formerepl easureashemay 3. When t he period i sfort he cr edi
tor'
s
deem pr oper , provi
ded he exclusivebene.t ;
does not al t
er itsf orm or 4. When t hedebtori sawar eoft heper iod
substance; but he shal l andpaysanyway .
have no r ight t o be
indemni .ed t heref
or. He
may ,however ,remove such
improvement s,shoul di tbe
possibl
et o do so wi t
hout 2.Pr
esumedf
orwhosebene.t
damaget ot hepr operty.
Ar t
. 1196. Whenever i n an
(
noti
nBavi
era'
sout
line) obli
gati
on a per iod i
s desi gnated, i
ti s
presumedt ohavebeen est abli
shed f
ort he
Art
. 1195. Anyt hi
ng pai d or bene.tofbot hthecredit
orandt hedebt or
,
del
ivered befor
et he arrivalofthe period, unlessfrom thetenorofthesameorot her
theobl i
gorbeingunawar eoft heperiod or ci
rcumstances itshoul d appear thatt he
bel
ievi
ng t hatt he obli
gation has become periodhasbeenest abl
ishedi nfavorofone
due and demandabl e,may be r ecovered, oroftheot her
.
wit
ht hef r
uitsandi nterests.
Balane: General rul
e: If a per
iod is
at
tachedin anobl
igati
on,t
hepresumpti
on
isthatitisforthebene.tofbot h par
ties. peri
od was i
ntended,t
he cour
ts may .x
The consequence i s that the creditor thedurat
ionthereof
.
cannotcompelt heperf
ormancebef orethe xxx
arri
val of t
he t er
m; the debtor cannot
compelacceptance bef
.t he ar
rivalofthe Except
ions: (
a)Ar
t.1682
ter
m.
Ar ti
cle1682. Thel easeofa piece
Ift he term is for the bene.t of t
he ofr urall and,when its durati
on has not
credit
or.
-- The cr edit
or can demand been .xed, i s underst
ood t o have been
performance anytime; but t he debtor made f or allthe ti
me necessar yfor the
cannotinsistonpaymentbef.theperi
od. gathering oft he f
ruits which the whole
estatel eased may yiel
di n one year ,or
Ift
het ermi sforthebene.toft hedebt or.-
- whi ch itmayyi el
d once,al t
hough two or
The creditorcannotdemand per f
ormance mor e year s may have to elapse f
or the
anyti
me; but t he debtor can i nsi
st on pur pose.
perf
ormanceanyt ime.
I
ll
ust r
ations: " I promise to pay
wit
hin 60 days. " Thi sisat erm fort he
bene.toft hedebt or
. Ar
t.1687,.r
st
"
Ipr omiset opayCl arat hesum of sent
ence
P100,000 on or bef or
e Oct . 31, 1996."
Thisisat ermf orthebene.toft hedebt or. Arti
cle 1687. Iftheperi
od fort he
leasehasnotbeen .xed,i tisunder st
ood
3.Whenper
iodi
s.xed to befr
om yeart o year
,iftherentagreed
uponisannual ;from monthtomont h,ifit
Art.1197. I ft he obli
gation does ismonthly;from week toweek,ifther ent
not.x a per iod,butf rom its natur e and isweekly;and from daytoday,ifther ent
theci rcumst ancesi tcanbei nf
erredt hata istobepaiddai l
y.
period was i ntended,t he courts may .x xxx
thedur ationt hereof.
The cour t
s shal l also .x t he (
b) Art. 1606 in
dur ation oft he per iod when i t depends pactodere
trosal
ewher et
heper
iodisnot
upont hewi l
loft hedebt or
. speci
.edbythepart
ies
In ever y case, t he court s shall
deter mine such per iod as may undert he Ar t
.1606. Ther ightrefer
red t
oi n
cir
cumst ances have been pr obably arti
cle 1601 (the right of conventi
onal
cont empl atedbyt hepar ti
es.Once.xedby redemption on the partofthe vendor a
thecour ts,t heper iod cannotbechanged ret
ro),in t he absence of an expr ess
byt hem. agreement,shalllastfouryear sfrom the
dateofthecontract.
Bal
ane: Caseswher
etheCour
tsmay.xa xxx
per
iod.
--
(c) contr
act of
1.Ar
t.1197,par
.1 servi
cesforan inde.nit
eterm (bec..xi
ng
ofa peri
od byt hecourts may amountto
Ar
t.1197. Ifthe obli
gation does invol
untaryser
vitude)
not.x a peri
od,butfr
om its nature and
theci
rcumstancesi
tcanbei nf
erredthata 2.Ar
t.1197,par
.2
 When fixi ng a period is meref ormal ity.--
Art
.1197.xxx Wher et he def. virt
ual l
y admi tted non-
The courts shall al
so .x t he perf
or mancebyr eturningt hetypewr iterhe
durat
ion ofthe per
iod when it depends was obl iged tor epairi n a non- wor king
uponthewi l
loft
hedebtor. condition,w/ essent ialpar t
s,mi ssing,he
cannoti nvokeAr t.1197 oft heNCC. The
3.Ar
t.1191,par
.3 ti
me f or compl iance havi ng evi dent ly
expir
ed, and t her e being a br each of
Art
.1191.xxx contract by non- performance, i t was
xxx academi c f or the pl t:. t o have .r st
The cour t shall decree the peti
ti
oned t hecour tfo.xaper iod f ort he
resci
ssi
on cl
aimed,unless t
her
e be j
ust perf
or mance oft he cont r
actbef ore .l ing
causeauthor
izi
ngthe.xingofaperi
od. hiscompl ai
ntint hiscase. The.xi ngofa
xxx peri
odwoul dthusbeamer efor
mal i
tyand
wouldser venopur poset hant odel ay.
4. Art.1687,second,t
hir
d and f
our
th
sent
ences
ENCARNACI ON V.BALDOMAR [ 77P470]
Art. 1687. xxx However , even - Thecont inuance and f ul.llmentoft he
though a mont hlyr ent i
s paid,and no cont ract of l ease cannot be made t o
per i
od f or the lease has been se t
,t he depend sol ely and excl usivel y upon t he
cour tsmay.xal ongert ermf orthel ease freeanduncont roll
edchoi ceoft hel essees
afterthel esseehasoccupi edt hepr emises be t
.cont inui ng payi ng ther entalsornot ,
foroveroneyear .Ifther entisweekl y,the compl et
elydepr ivingt heownerofal lsayi n
cour ts may l ikewise de t
ermine a l onger the mat ter. For i ft his wer e al l
owed,so
per i
od af ter t he l essee has been i n longasdef s.el ected tocont inuet hel ease
possessi on f
oroversi xmont hs. In caseof by cont inui ng t he paymentoft he rentals
dailyr ent,thecour tsmayal so.xal onger the owner woul d never be abl e t o
per i
od af t
ert he lessee has stayed int he discont inue i t
; conver sel
y , although t he
placef oroveronemont h. ownershoul ddesi r ethel easet ocont inue,
the l essees coul d e:ect ivelyt hwar t his
pur posei ftheyshoul d prefert ot ermi nate
5.Ar
t.1180 the cont ract by t he si mple expedi ent of
stoppi ngpaymentoft her ent als. Thi s,of
Ar
t.1180. When thedebtorbinds cour se,ispr ohibitedbyar t.1256,NCC.
himselftopaywhenhi smeansper mithi
m
todoso,t heobli
gati
on shallbedeemedto
be one wi th a period, subj
ect t
o the
provi
sionsofart
icl
e1197. ELEIZEUI V. LAWN TENNI S CLUB [ 2
P309] - The t erm of a lease whose
termination isexpresslylef
ttot hewillof
the lessee must be .xed by t he cour t
s
accordingt othechar acterand condi
ti
ons
ofthemut ualunder t
akings,i
n an action
BALANE CASES: broughtf orthatpurposexxx.

CHAVEZ V.GONZALES [ 32 SCRA 547] -

Where obl
igat
ion does not fix a per
iod;
PHILBANKING V.LUISHE [21SCRA53]- both the l essor and the l
essee. Most
Aleasetoan ali
en f
orareasonabl
eper
iod importantly,Ar t
.1197 appli
esonl y where
i
svalid. acont ractofleaseclear
lyexi
sts.Her e,the
contractwasnotr enewedatall,therewas
infactnocont ractatallt
heper i
odofw/c
LIM V.PEOPLE [ 133 SCRA 333] - I tis couldhavebeen.xed.
clearintheagr eementt hatt
hepr oceedsof
the sal
e ofthe t obacco should be t urned
over tothe compl ainant as soon as t he
samewassol d,or ,thatt heobligation was
immedi at
ely demandabl e as soon as t he Ar
t.1180. When thedebtorbinds
tobaccowasdi sposedof .Hence,Ar t.1197 himselftopaywhenhi smeansper mithi
m
oft heNCC,w/cpr ovidesthatt hecour t
s todoso,t heobli
gati
on shallbedeemedto
may.xt hedur ation oftheobligation ifit be one wi t
h a per iod, subj
ect t
o the
doesnot.xaper iod,doesnotappl y. provi
sionsofart
icl
e1197.

ARANETA,I NC.V.PHI L.SUGAR ESTATES

[20SCRA 330]- xxx Ar t
.1197i nvol vesa
two-st ep pr ocess. ( 1) The Cour tmust
.rst de t
er mine t hat " the obl i
gation does 4.Whendebt
orl
osest
hebene.tofper
iod
not .x a per iod."( or t hatt he per iod is
made t o depend upon t he wi l
l of t he Ar t.1198. The debt or shal ll ose
debt or)
," but f rom t he nat ure and t he everyr ightt omakeuseoft heper iod:
circumst ances i t can be i nferred t hat a (1)When af ter t he obligation has
per i
od was i nt ended. " (2) Thi
s been cont r
acted, he becomes i nsol vent ,
preliminar y pointse tt
led,t heCour tmust unlesshegi vesaguar ant yorsecur ityf or
then pr oceed t ot he second st ep, and thedebt ;
decide what per iod was " pr obably (2)Whenhedoesnotf urnisht ot he
cont emplated by t he par t
ies." So t hat, credit
ort heguar ant i
esorsecur it
ieswhi ch
ultimately,theCour tcan not.x a per i
od hehaspr omi sed;
mer elybec.i ni t
sopi nioni tisorshoul dbe (3)When by hi s own act s he has
reasonabl e,butmustse tthet i
met hatt he impairedsai dguar antiesorsecur it
iesaf ter
par t
iesar eshownt ohavei ntended.xxx theirest ablishment ,and when t hrough a
fort
uitouseventt heydi sappear,unl esshe
immedi at ely gi ves new ones equal ly
MILLARE V.HERNANDO [ 151 SCRA 484] satisf
act ory;
- Par. 1 of Ar t
. 1197 i s cl earl
y (4)When t he debt or violates any
i
nappl i
cabl e,si nce the Cont ractofLease under taki ng,inconsi der ati
onofwhi cht he
didinf act.xan or iginalper iod of5 yr s., credit
oragr eedt ot heper iod;
w/chadexpi red. Iti sal socl earf rom par . (5) When t he debt or attempt st o
13oft hecont r actthatt hepar tiesr eserved abscond.
tothemsel vest hef acul tyofagr eeingupon
the period oft he renewalcont r
act . The (
6) Ar t.2109 -Ifthe credi
tor i
s
2nd par . of Ar t
. 1197 i s equal l
y decei
vedont hesubst
anceorqualityofthe
i
nappl i
cabl e si nce t he dur ation of t he thi
ngpledged,hemayeithercl
aim another
renewalper i
od was notl ef
tt ot he wi l
lof thi
ng inits st
ead,ordemand i mmediate
thelesseeal one,butr athert ot hewi l
lof
paymentofthepri
ncipalobl
igat
ion. (The
si
xthgroundwasaddedbyProf.Balane.) Balane: Towhom doest herightofchoi ce
belong? Gener alrule: Tothedebt or(Ar t
.
(
7)Accel
erat
ioncl
ause 1200.)
Exception: When expr essly
Bal
ane:I nnumberone,fact
ualinsolvency grantedtothecr edit
or
i
s enough. A j udi
cial decl
arati
on of Therei sa t hi
rd possibi
li
ty wher e
i
nsolvencyi
snotrequi
red. thechoicemaybemadebyat hi
rdper son
uponagr eementoft hepar t
ies.

2.Ac
cor
dingt
opl
ural
it
yofobj
ect
s: Q: Whatisthe technicalterm of
the actofmaki
ng a choi
ce i
n alternat
ive
A.Si
mpl
e obl
igati
ons?

B.Mul
ti
ple A:Concent
rat
ion.

1. Conj unct i
ve wher et he
debtor must per for
m mor e than one Art. 1201. The choice shal
l
prestati
on produce no e:ectexceptfr
om the t
ime i
t
2. Al ter
nat i
ve Obligations hasbeencommuni cated.
wheret hedebt ormustper f
orm anyoft he
prestati
ons Balane:Requi rementofCommuni cationof
3. Facul tati
ve wher e only choice.-- I ft he choi ce belongs t ot he
one t hing i
s due but t he debt or has creditor,ofcour se,hehast ocommuni cate
reserved the r i
ght to subst i
tutei t w/ hischoi cet othedebt or
. Thedebt ori snot
another( I
VTolentino)(Art.1206.) apr ophe t
.
Q: I ft he choice bel ongs t ot he
Al
ter
nat
iveObl
igat
ions debt or,whyr equi recommuni cat i
on bef ore
performance i ft he choice belongs t o him
Art.1199. A per son alt
ernati
vely anyway?
bound by di :erent pres
tati
ons shal l A: To gi ve t he cr editor an
completel
yper f
orm oneofthem. oppor tuni tyto consent t ot he choi ce or
Thecr edit
orcannotbecompel l
edt o impugni t
.( Ongv .Sempi o-
Dy ,46P592. )
recei
ve partofone and par tofthe other BUThow cant hecreditori mpugni t
undertaking. ifthe choi ce belongs tot he debt or. The
betterr eason woul d betogi vet hecr editor
Tol
entino: Thecharact
eri
sticofalt
ernat
ive achancet opr epar efortheper formance.
obl
igati
ons ist hat
,severalobject
s bei
ng
due,theful.ll
mentofonei ssuOcientxxx.
Art
icles 1202 t
o 1205 tal
k ofthe l
oss of
some of t he pr estat
ions bef ore
Art. 1200. The r i
ght of choice perf
ormance.
belongs tot he debt or
,unl ess ithasbeen
expresslygrantedt ot hecreditor. 1.I
fthechoi
cei
sdebt
or'
s
The debt orshal lhave no r ightto
choose t hose pr estat
ions whi ch ar e a. When onl
yoneprestati
on i
sleft
impossible,unl awf ulor whi ch could not (
whe ther or not t he t
he r est of t
he
havebeent heobj ectoftheobl igat
ion. prest
ations have been l ost t hr
ough
f
ortuit
ouseventort hrough t
hefaul
tofthe
debtor)
,the debtor may perf
orm t
he one f.Ifallprestati
onsbutonear elost
thatislef
t.-
-Art.1202. through f ort
ui t
ous event , and t he
remainingprestati
on wasl ostthr
ough the
Art
.1202. The debt or shalllose debtor'
s fault
,t he latter is li
abl
e t o
the right of choice when among t he i
ndemni fythecreditorfordamages.
prest
ations whereby he is alternati
vely
bound,onl yoneispract
icabl
e. g. Ifallbutone ar elostthr
ough
thef aultofthedeborandt helastonewas
lostt hr
ough through f
ort
uitousevent,t
he
b. Ifthechoi
ceisli
mit
ed thr
ough obligati
oni sext
ingui
shed.
t
hecredit
or'
sown act
s,t
hedebtorcan ask
f
orr
esoluti
onplusdamages.
--Art
.1203 2.Choi
cei
sthecr
edi
tor
's

Art
.1203. Ifthr
ough thecreditor'
s Art.1205. When t he choi ce has
actst he debt
or cannot make a choi ce been expr essly gi ven t ot he cr editor ,t he
accor
di ng t
othe terms ofthe obligat
ion, obligat ion shal l cease t o be al ternat ive
the l
atter may r
escind the cont
ractwi th from t hedaywhen t hesel ecti
on hasbeen
damages. communi cat edt ot hedebt or.
Unt ilthen t her esponsi bi l
ityoft he
debt orshal lbe gover ned by t he fol lowing
c. Ifever
yt hingi slostthr
ough the rules:
debt
or'
s f ault,t he l atter is li
able to (1) I f one of t he t hings i sl ost
i
ndemni f
yt hecredi t
orf ordamages.-- Art
. through a f or tui tous event , he shal l
1204. perfor m t he obl i
gat ion by del ivering t hat
whi ch t he cr editor shoul d choose f rom
Art.1204.Thecr editorshal lhavea among t he r emai nder , or t hat whi ch
right t o indemni t
y f or damages when, remai nsi fonl yonesubsi sts;
through t he fault oft he debt or
,al lt he (2)I fthel oss ofone oft het hings
thingswhi ch arealternat ivelyt heobj ectof occur st hrough t hef aul toft hedebt or,the
the obl i
gat i
on have been l ost, or t he credi tormaycl ai m anyoft hosesubsi sting,
compl iance oft he obl igat i
on has become or t he pr ice oft hatwhi ch,t hr ough t he
impossi ble. faultoft hef ormer ,hasdi sappear ed,wi tha
Thei ndemni tyshal lbe.xedt aking rightt odamages;
asabasi st hevalueoft hel astthingwhi ch (3)I fallt het hingsar elostt hr ough
disappear ed,ort hatoft he ser vi
ce whi ch the f aul toft he debt or,the choi ce by t he
lastbecamei mpossible. credi torshal lfallupont hepr iceofanyone
Damages ot her t han t he val ue of ofthem,al sowi thi ndemni tyfordamages.
the l ast t hing or ser vi ce may al so be Thesamer ulesshal lbeappl ied to
awar ded. obligat ionst odoornott odoi n caseone,
some or al l of t he pr es t
ations shoul d
becomei mpossi ble.
d. Ifsomet hingsarelostthr
ough
the debtor
'sf aul
t,t he debt
or can sti
ll a. Ifoneorsomear el
ostthrough
choosefr
om thoser emaini
ng. fort
uit
ous event,t
he credi
tormay choose
from those remai
ning.
-- Ar t
. 1205 (1)
,
e. I
fallar
elostthrough f
ort
uit
ous supra.
event
,theobli
gati
onisexti
nguished.
 b. Ifoneorsomear elostthrough
thedebt or
'sfault
,thecr edit
orhaschoi ce 2. Ast onul li
ty: Inal ternati
veobligat
ions,
from the remainder or the value ofthe the nul l
ity of one pr estat
ion does not
thingslostplusdamages. -- Art
.1205 (2)
, invalidatet he obligation, w/c is stil
li n
supra. forcew/r espectt ot hosew/chavenovi ce;
whi lei n f acultati
ve, t he nullit
y of t he
c. I f all ar
el ost t
hrough t
he principal pr estation i nvali
dates t he
debtor
'sfault
,t he choi
ce ofthe cr
edi
tor obligation andt hecr editorcannotdemand
shallf
allupont hepri
ceofanyofthem,w/ thesubst i
tut eevenwhent hisisvalid.
indemnityfor damages.
-- Art.1205 (
3),
supra. 3.Ast ochoice: I
nal t
ernat
ive,therightto
choosemaybegi ven tothecredit
or;while
d. Ifsome arelost t
hrough the infacul
tati
ve,onlyt hedebtor can choose
credi
tor
'sfaul
t,the cr
edi
tor may choose thesubsti
tuteprestati
on.
fr
om theremai
nder.
4. Astoe=ec tofloss: Inal t
ernat ive,only
e. I
fallar
elostthrough f
ort
uit
ous theimpossibi
lityofallt heprestat ionsdue
event
,theobli
gati
onisexti
nguished. w/o faultoft he debtor exti
ngui shes t he
obli
gati
on; whi l
e i n f acultative, t he
f. I f al
l ar
e lost t
hrough t
he impossi
bili
tyoft hepr inci
palpr estation i
s
credi
tor
's f ault
, t he obl i
gat
ion i s suOcient to ext i
nguish t he obl i
gati
on,
exti
nguished. evenifthesubstit
uteispossi ble.

Facul
tat
iveobl
igat
ions Bal ane: Facul tative obligati
ons always
involvechoi cebyt hedebt or.
Art. 1206. When onl y one Int heory,iti seasyt odisti
nguish
prestati
on hasbeen agr eed upon,butt he af acultati
veobligat ion f
rom an alt
ernat
ive
obligor may r ender anot her in subst it
u- one. But i n pr actice, i
ti s di
Ocultt o
ti
on,t heobligationiscalledf acultative. distinguish thetwo. You j usthaveto.nd
The l oss or de teriorati
on of t he outwhatt hepar tiesr eal
lyintended.
thing intended as a subst i
tute,t hr ough
the negligence of t he obl igor, does not
render hi m l i
able. But once t he 3.Ac
cor
dingt
oPl
ural
it
yofsubj
ect
s:
subs ti
tuti
on hasbeen made,t heobl igoris
li
abl efor the loss of t he subst i
tute on A.Joi
ntandSol
idar
yObl
igat
ions
accountofhi sdel ay,negligenceorf r
aud.
a.Joi
ntObl
igat
ions
I
V Tolentino: Di
sti
ngui
shed f
rom
Al
ter
nat
ive.
-- Balane: Joi nt Obl i
gati
on.-- A j oint
obli
gati
onisonei nw/ceachoft hedebt ors
1. Ast oc ont
entsoft heobligati
on: Inthe isli
ableonlyforapr oporti
onatepar toft he
alt
er nati
ve,there are var
ious pr est
ati
ons debtoreach cr edi
tori sentit
led onlytoa
all of w/c const i
tute par ts of t he proport
ionatepartoft hecredit
.
obligati
on;whi leinf acultati
ve,onl ythe Inj oi
nt obligati
ons, there are as
principal pr est
ation const it
utes t he many obl i
gations as t here are debt ors
obligati
on, the accessory bei ng only a mul t
ipl
iedbyt henumberofcr edit
ors.
meanst ofaci
li
tat
epayment .
 There are t hr ee kinds of j oi
nt Ar t.1208. I ffrom t he law,ort he
obli
gations: ( 1) Ac t
ive joint wher ethe natureort hewor dingoft heobl i
gationst o
obli
gationisjointont hecredi t
or '
sside;(
2) which t he pr ecedi ng ar t
icle r ef
ers the
Passive j
ointwher ethe obl igation isjoi
nt contrar
y does not appear ,t he cr edit or
on t
hedebt or
'sside;and( 3) Mul ti
pleJoi
nt debtshal lbepr esumed t obedi vided i
nt o
wheret here are mult i
ple par t
ies on each as many equal shar es as t here ar e
si
deofaj oi
ntobligation. credi
tors ordebt ors,the cr edit
s ordebt s
being consi der ed di sti
nct f rom one
IVTolent
ino:Thej oi
ntobli
gationhasbeen another, subject t ot he Rul es of Cour t
var
iously t ermed manc omunada or governi
ngt hemul t
ipli
cityofsui ts.
manc omunada simple or prorata. The
phrase"Wepr omiseto pay,
"used by2 or Ar t. 1209. I ft he di vision is
moresigners,cr
eatesaprorataliabi
li
ty. impossibl e,ther ightoft hecr edi t
or smay
bepr ejudi ced onlybyt heircollectiveacts,
E:ect
sofJoi
ntLi
abi
li
ty: and t he debt can be enf orced onl y by
proceedi ngagai nstallt
hedebt ors.I foneof
1. Thedemand byonecr edi
torupon one the lattershoul d be i
nsolvent ,t he other
debtor,producesthee:ect sofdef
aultonly shallnotbel iableforhisshare.
w/ respecttot hecr edi
torwho demanded
and thedebt oron whom t hedemand was
made,butnotw/r especttotheother
s; Art.1210. Theindivisi
bil
ity ofan
obl
igat
ion doesnotnecessari
lygiveriseto
2. Thei nter
r upti
on ofpr escr i
ption byt he sol
idar
ity
. Nor does sol i
darit
y of i t
sel
f
judi
cialdemand ofone cr edit
or upon a implyi
ndivisi
bil
it
y.
debtor,doesnotbene.tt heot hercreditors
nori nterruptt hepr escripti
on ast o ot
her
debtors. On t hesamepr i
nciple,apar t i
al Di
sti
ngui
shedf
rom Sol
idar
yObl
igat
ions
paymentoracknowl edgementmadebyone
ofsever aljointdebt ors does nots t
op t he Ar t. 1224. A j oint indivisi
ble
runningoft hest atuteofl imi t
ationsast o obli
gati
on gi ves r i
se t o i ndemni ty for
theot hers; damages f rom t he time anyone of t he
debtor
s does not compl y wi th hi s
3. The vi ces ofeach obligat
ion ar
isi
ng undertaking.The debt ors who may have
fr
om t he personaldefect ofa parti
cular been ready tof ul.l
lt hei
r pr omises shall
debtor or credit
or does not a:ect the notcont r
ibutetot heindemni t
ybeyondt he
obli
gati
onorr ightsoft
heot hers; corr
espondi ng porti
on oft he pr
ice oft he
thi
ng or oft he value oft he service in
4. The insolvency ofa debt or does not whicht heobligati
onconsi sts.
i
ncrease the r esponsi
bil
ity of hi s co-
debt
ors,nordoesi tauthoriz
eacr edi
torto
demandanyt hingfrom hi
sco- creditor
s; b.Sol
idar
yobl
igat
ions

5. Int he joi
nt di
visi
ble obli
gation,the Balane:Sol idar
yObl igat
ions.
-- Asol i
dar y
enseofr
def esjudi
cataisnotext endedfr
om obli
gationisonei nw/ct hedebt orisliable
onedebt
ort oanot
her.(Manr esa.) fortheent i
reobligat
ion oreach credit
ori s
enti
tled to demand t he whol
e obl i
gation.
Thereis only one obli
gati
on is a sol
idary
obli
gati
on.
 Ther
ear et hreeki ndsofsol idarit
y: Balane: When i san obl igati
on w/sever al
(1) Ac t
ivesolidarywher etherear eseveral parti
es on ei t
her si de JointorSol idary?
creditors w/ one debt or in a sol idary The pr esumption ist hatan obl igation i s
obligati 2) Passi
on; ( ve soli
dar i
ty wher e joi
ntbec.aj ointobligation islessoner ous
therei s one cr edi
tor w/ sever aldebt ors thatasol idaryone.
soli
dar ybound;( 3)Mi xedSol i
daritywher e Therei ssolidaryobl i
gati
on onl yi n
there ar e several creditors and sever al three cases: ( 1) when t he obligation
debt orsinasol i
dar yobligati
on. expresslysost ates;or(2)when t hel aw or
the (3)nat ure oft he obl igati
on r equi r
es
soli
darity.
IV Tol ent i
no: Sol idary obl igations may
also be r eferred t o as manc omunada Char
act
eri
sti
csofAct
iveSol
idar
ity:
sol i
dar iaorj ointandsever alori nsol idum.
It has al so been hel d t hat t he t erms 1. Si nce i
ti sar eciprocalagency,the
"junt os osepar adament e"in a pr omi ssor y death of a solidar
y cr edit
or does not
not ecr eatesasol idar yr esponsi bi li
ty;t hat tr
ansmi tthesol
idari
tyt oeach ofhishei
rs
wher et her ear enowor dsused t oi ndi cate but to al
lof them t aken together
. (IV
the char acterofa l iabil
ity
,t he phr ase "I Tolent
ino)
;
pr omi set opay ,"followedbyt hesi gnat ures
of2 or mor e per sons, gives r i se t o an 2. Each cr editorrepr esentsot her sinthe
indi vidualorsol idar yresponsi bi lit
y. The actofr equi r
ing payment ,and i n allot
her
wor ds " i
ndi vidual l
y and col lectively"al so actsw/ct end tosec uret hecreditormake
cr eate a sol idaryl iabili
ty. So does an it mor e advant ageous. Henc e, if he
agr eeementt o be " individuall yl iabile"or receives onl y a parti
alpayment ,he must
"indi vidual l
yandj oint l
yliable." dividei tamongt heot herc r
editors.Hec an
interrupt t he per i
od of pr esc ript
ion or
(
i) Act
ive rendert hedebt orindef ault,f
ort hebenefit
Sol
idar
ity ofal lotherc r
editor
s;

Art. 1211. Sol idar

ity may exist 3. A credi
tonce paidis shar
ed equall
y
al
though the cr edi
tors and the debtors among the credi
tor
s unless a di:er
ent
may notbe bound i nthe same manner int
ent
ionappears;
andbyt hesameper iodsandconditions.
4.Debtormaypayanyoft hecredi
torsbut
i
fany demand,judi
cialorextr
ajudici
alis
Art
.1207. Theconcur r enceoft wo made on hi
m,he mustpay onl yto one
ormor ecredi
tor soroftwoormor edebt ors demandingpayment(Art
.1214);
in one and t he same obligati
on does not
impl yt hateach one oft he for merhas a 5. One c redit
or does not r epresent t
he
rightt o demand,ort hateach one oft he othersinsuc hac tsasnovat ion(evenifthe
latterisboundt orender
,ent i
recompl iance credi
t bec omes mor e advant ageous),
wi t
h t he pr estati
on. There i s soli
dar y compensation and r emission. I n these
liabil
ityonlywhen t heobligati
on expr essly cases,even i fthe debtorisr eleased,the
sos t
ates,orwhen t helaw ort henat ureof otherc r
edi
torsc an sti
llenforcetheirri
ghts
theobl igat
ionr equir
essoli
dar i
ty . against the c redi
tor who made t he
novation,c
ompensat i
onorr emission;
6. Eac hc redit
ormay renounce hi
sr i
ght IV Tolentino: When t he law requires
evenagai nstthewil
lofthedebtor
,and the soli
darity
.-- The l iabil
ity of j oint
latt
erneednott her
eaft
erpayt heobli
gat
ion tort
feasors,w/c include allpersons who
totheformer. commmand,i nsti
gate,promote,encourage,
(Parts in i t
ali
cs were taken f r
om I V advise,countencance,cooperatein,aid or
Tolenti
no.) abett he commi ssi
on of a t or
t, or who
approve ofit,aft
eriti s done,ifdone for
thei
rbene.t .
Char
act
eri
sti
csofPassi
veSol
idar
ity:
Sol idari
tyf rom Nat ure of Obl igati
ons. -
-
1.Eachdebt ormayber equi
redtopayt he Liabi l
ity may arise from the provisions of
entireobligat
ion butaft
erpayment ,hecan articles19t o22oft heNCC. I f2ormor e
recoverfr
om t heco-debtorsthei
rrespect
ive per sonsactingj ointl
ybecomel iabileunder
shares ( this is some thing similar to these pr ovi
sions,t heirliabi
lit
y shoul d be
subrogation); solidar y bec. of t he nat ure of t he
obl i
gation. xxx The act s giving rise to
2. I nterruption ofprescription as to one li
abi li
ty under t hese ar t
icles have a
debt or a:ects al lthe ot her s; but t he common el ement -
- t hey ar e mor all
y
renunc iat
ion by one debtorofpr esc
ripti
on wr ong. A mor alwr ongcannotbedi vided
already had doesnotpr ejudic etheot hers, into par t
s;hence,t hel i
abil
ityf oritmust
bec .theextinguishmentoft heobl i
gati
onby besol i
dary.
presc ri
pti
on extingui
shes al so t he mutual
representati
onamongt hesol idar ydebtors.
BALANE CASES:
3. Thedebt orwhoisrequir
ed topaymay
setup by way ofc ompensation hi
s own RONQUI LLO V.CA [ 132S 274] - Cl ear ly
cl
aim againstthec
redit
or,i
nt hiscase,t
he then, by t he expr ess t erm of t he
e=ecti
st hesameast hatofpayment; compr omi se agr eement and t he deci sion
based upon i t, t he def s. obl igated
4. Thetotalremi ssi
on ofthedebti nfavor themsel ves t o pay t hei r obl igat i
on
ofa debtor releases allthe debtor
s;but "indivi dual ly and j ointly
." The t erm
when t
hisr emission a=ectsonlytheshar e "indivi dual ly" has t he same meani ng as
ofone debt or
,t he other debt
ors are st
il
l "collect ively,"" separat el
y,"" distinctively ,
"
li
abl
eforthebal anc eoftheobli
gati
on. "respect ively"or" severally.
" An agr eement
to be " individual ly l i
able" undoubt edl y
5. Allthedebtorsareli
ablef orthelossof creat esasever alobl i
gat i
on,anda" sever al
obligat ion"i s one by w/c one i ndi vidual
thething due,even i
fsuchl ossi scaused
binds hi msel f t o per form t he whol d
by the faultofonly one oft hem,or by
obligat ion.
for
tuit
ouseventafteroneofthedebt orshas
xxx [T]he phr ase j untos or
i
nc ur
redindelay;
separ adament e used i n t he p/n i s an
expr ess s t
at ement maki ng each of t he
6.Thei nt
erestsduebyreasonofthedelay
persons who si gned i ti ndi vidual lyl iabl e
ofone ofthe debtor
s ar
e borne by al
lof
fort hepaymentoft hef ullamountoft he
them.
obligat ion cont ainedt herein. xxx I nt he
(Words in itali
cs were taken fr
om I V
absenceofa.ndi ngoff actst hatt hedef s.
Tolent
ino.
)
madet hemsel vesi ndividual lyl iablef ort he
debt si ncur redt heyar eeachl iableonl yf or
1/2ofsai damount . Theobli
gation i
nthe entir
e compl i
ance w/ the prestat
ion (Art
.
case at bar bei ng descr i
bed as 1207.) The cr edit
ormay pr oceed agai
nst
"i
ndividuall
y and j ointl
y,"the same i s anyoneoft hesol i
darydebtorsorsomeor
ther
efore enforceabl
e against one of t
he allofthem simul t
aneousl
y.
numer ousobl i
gors.

QUI SI MBI NG V.CA [ 189 S 325] - Joi nt

MALAYAN I NSURANCE V.CA [ 165S 536] obl igat i
on di stinguished f rom sol idary
- The di rectl iability oft he i nsur erunder obl igat i
ons; Conc ept of ac tive sol idar i
ty--
indemni ty c ontrac t
s agai nst t hird-par ty Di st i
ngui ng i tf rom t he j oi nt obl i
gat i
on,
li
abi l
itydoesnotmeant hatt hei nsur erc an Tol ent ino makes t he :.obser vat ion: A
be hel d sol idar il
yl iable wi t
ht he i nsur ed jointobl i
gation i sonei n w/ceach oft he
and/ ort he ot herpar ties found atf ault.-- debt orsi sl iable onl yf ora pr opor tionate
Whi l
ei ti st ruet hatwher et hei nsur ance par t of t he debt , and each cr editor is
cont ract pr ovide f or i ndemni ty agai nst ent itledonl yt oapr opor ti
onat epar toft he
liabil
ityt o3r d per sons,such 3r d per sons credi t. A solidar yobl igat i
on i sonei n w/c
can di rect l
y suet hei nsur er,however ,t he each debt or i s l i
abl e f or t he ent ir
e
di r
ect l i
abi l
ity oft he i nsur er under t he obl igat i
on,and each cr edi t
ori sent itl
ed to
indemni ty cont ract s agai nst t hi rd par t y demand t he whol e obl igation. Hence,i n
liab.does notmean t hatt he i nsur ercan thef or mer ,each cr edit orcan r ecoveronl y
be hel d solidar ilyl i
abl e w/ t he i nsur ed his shar e of t he obl igat ion, and each
and/ ort he ot herpar ties found atf aul t. debt orcan bemadet o pay onl y hi spar t;
The l iab. of t he i nsur er i s based on wher eas,i nt he l atter,each cr edi tormay
cont ract;t hatoft he i nsur ed i s based on enf or ce t he ent ire obl igation, and each
tort. debormaybeobl i
gedt opayi tinf ul l.
Int he case at bar ,pe titioner as The same wor k descr ibes t he
insur erofSi oChoy ,isl iablet or espondent concept of act ive sol idar ityt hus: The
Val l
ejos,buti tcannot ,asi ncor rectlyhel d essenceofact i
vesol idar it
yconsi stsi nt he
by t he t r i
al cour t, be made " solidar i
ly" aut hor it
y ofeach cr edi tor t o cl aim and
liable w/ t he 2 pr incipal t or tf
easor s, enf or cet her ight s ofal l
,w/ t her esul t
ing
namel yr espondent s Si o Choy and San obl igat i
on of payi ng ever y one what
Leon Ri ce Mi ll,I nc. For i f pe titioner - bel ongst ohi m;t her ei sno mer ger ,much
insur er wer e sol i
dar ilyl iable w/ sai d2 less a r enunci ation of r ight s, but onl y
respondent s by r eason oft he i ndemni t y mut ualr esti
tut i
on.
cont ract, agai nst 3r d par ty l iaibilit
y- -
underw/cani nsur ercan bedi rect l
ysued
by a 3r d par ty--t his wi llr esul ti n a REPUBLI C PLANTERS BANK [ 216 S 738]
violation of t he pr inciples under lyi
ng - Ani nstr
umentw/cbegi nsw/" I,
""WE"or
solidar y obl igations and i nsur ance "Eit
herofus"pr omisetopay,when si gned
cont racts. by t wo or mor e persons, makes t hem
soli
dar i
lyli
able. Thefactt hatthesi ngul ar
RCBC V.CA [ 178 S 739] - Wher e an pronoun i s used i ndicates t hat t he
obligati
on expressly states a sol i
dar y promi se i
si ndividual as to each ot her;
li
abi l
itythe concur r
ence of 2 or mor e meani ng that each of t he co- si
gner si s
creditorsor2 ormor edebt or
sin oneand deemed t o have made an i ndependent
thesameobl igati
on impli
est hateach ofof singularpromi setopayt henot esi nful l.
thef ormerhasar i
ghttodemand,ort hat In the case at bar ,t he soli dar y
each oneoft helatterisbound t orender, li
abili
t yofprivateresp.F.Canl asi smade
cl
earer and cer tai
n, w/o r eason f or Balane:Gener alRule.
-- Adebtormaypay
ambiguit
y,by the presence ofthe phr
ase anyoft hesol i
darycredit
ors.
"j
oint and several" as descr i
bing the Excepti
on.-
-I fdemandi smadeby
uncondit
ionalpromiset opayt otheorder onecr editorupon thedebt or
,in w/ccase
ofRepubli
cPlanter
sBank.xxx thelattermustpayt hedemandingcredi
tor
only.
CERNA V.CA [ 220 SCRA 517] - Onl y
Del gadosi ngedt hep/n andaccor dinl y,he Cases:
wast heonl yoneboundbyt hecont ractof 1.Debt oruponwhom demandwas
loan. Nowher e didi tappeari nt he p/n madepayst oacr editorot hert han theone
thatpe titi
onerwasaco- debtor.Thel aw i s whomadet hedemand i n viol
ation ofArt
.
clear t hat " (
c)ontract s take e:ect onl y 1214.-- Thisis consi dered paymentt oa
be t
ween t he par ti
es xxx" But by some thir
d person (Art
.1241,par .2)and t he
stretch oft he imagi nation,pe ti
ti
onerwas debtorcan stil
lbemadet o pay thedebt.
held sol i
dar i
lyliablef orthedebtal legedl y Theonl yconcession given tot hedebtoris
bec.hewasaco- mor t
gagoroft hepr inci pal thathei sallowed to deductt heshar eof
debt or,Del gado. Thi si gnores the basi c the receivi
ng cr editor f rom t he tot
al
precept t hat "(t)herei s solidaryl iability amount due even i fhe pai dt he enti
re
only when t he obl i
gation expr essly so amountduet othatcredi t
or.
states,orwhent hel aw ort henatur eoft he
obligationr equiressolidarity. 2. Cr edi
tor A makes demand on
debtorY.Doesi tmeant hathecannotpay
the shar e pertai
ning t o creditor B?
Ar t
.1212.Eachoneoft hesolidar
y Accordi
ng to commentators he can. But
credit
or smaydowhat evermaybeusef ulto thisis danger
ous bec.there may already
theot hers,butnotanythingwhich maybe be an agr eement on t he par t of the
prejudicialtot
helat
ter. credi
tors.

Balane: Ther eisan appar entconPi ctbe t

. 3. Therearethreecredi
tor
s- -A,B
Art.1212and1215. Ar t.1212st atest hat & C and t
herear ethreedebtor
s- -X,Y &
theagencyext endsonl ytot hingsw/cwi l
l Z. A makes a demand on Y. X pays B.
bene.tal lco-credit
ors. Butnotanyt hing Thi
si snotcoveredbyAr t
.1214.
w/c is prejudicicaltothe l atter
. I n Ar t
.
1215,hecan doan act spr ejudici
alt ot he
othercredit
ors,likeremissi
onf orinst ance. Art. 1215. Novat i
on,
compensat ion,conf usi
on or remission of
the debt , made by any of t he solidary
Art. 1213. A sol i
dar
y credi
tor creditors or wi th any of t he solidary
cannot assign his ri
ght
s without t
he debtor s, shall exti
nguish the obli
gat i
on,
consentoftheother
s. without pr ejudice to the provisi
ons of
arti
cle1219.
The cr edit
or who may have
Art
.1214. Thedebt ormaypayany execut ed any oft hese act
s,aswel lashe
one ofthe sol
idar
y credit
ors;buti fany whocol lectsthedebt ,shallbeli
abletot he
demand,judici
alorext
r aj
udici
al,hasbeen othersf or the shar ei n t he obli
gation
madebyoneoft hem,paymentshoul d be correspondi ngt othem.
madetohim.
 Art. 1219. The simul taneousl y .Thec hoicei sundoubt edl y
remi ssi
on made by t he leftt ot he sol idar yc redit
or t o det ermi ne
creditoroft he share whi ch agai nstwhome he wi l
lenf orc ec ollect i
on.
a:ect s one oft he solidary In case of t he deat h of t he sol idar y
debt orsdoesnotr eleaset he debt ors,he ( t he cr edi t
or)may ,ifhe so
latterfrom hisresponsibilit
y chooses, pr oceed agai nst t he sur vi ving
towar ds the co-debtors, in solidar y debt or s w/o necessi ty of.l ing a
case t he debt had been claimi nt heest ateoft hedeceaseddebt or s.
totally paid by anyone of Itisnotmandat oryf orhimt ohavet hec ase
them bef or ethe remi ssion dismi ssed agai nst t he sur viving debt ors
wase:ect ed. and fil ei tsc laim i n t he est ate of t he
dec easedsol idar ydebt or.
Rul es of Pr ocedur ec annot pr evai l
Art.1915. Iftwo ormor epersons oversubst antivel aw.--I fSec.6,Rul e86,
have appoi nted an agent for a common ROC wer e appl ied l it
erally, Ar t. 1216
transacti
on orunder taking,they shallbe woul d,i n e:ect ,be r epealed si nce under
soli
darilyl i
ablet othe agent for allthe the ROC,pe titionerhas no choi ce butt o
consequencesoft heagency . proceed agai nst t he est ate of Manuel
Bar redo onl y. Obvi ousl y
,t hi s pr ovi sion
Bavier
a: Pr inci
pal s ar e al
ways l i
able dimi nishes t he Bank' sr i
ght under t he
sol
idaril
y;Agents are notli
able sol
idari
ly NCC t opr oceed agai nstanyone,someor
unlessexpr
esslystipul
ated all of t he sol idar y debt ors. Such a
const ruct ion i s not sanct i
oned by t he
(
ii
) Passi
ve princi ple xxx t hat a subst antive l aw
Sol
idar
ity cannotbe amended by a pr ocedur all aw.
Ot her wises tat ed,Sec.6ofRul e86cannot
Art. 1216. The cr edi
tor may be made t o pr evailover Ar t. 1216, t he
proceed against any one oft he sol
idary formerbei ngmer elypr ocedur al,whi l
et he
debtors or some or al l of t
hem si mul- latter,subst ant i
ve.
taneously.Thedemand madeagai nstone
ofthem shal lnotbean obst aclet othose
which may subsequent ly be di r
ected OUANO V.ALEONAR [ 202 SCRA 619] -
againsttheot her
s,sol ongast hedebthas Thec r
editormay pr oc eed againstany one
notbeenf ull
ycol l
ect
ed. oft he solidary debt or or some or al lof
them si mul t
aneousl y.-- I ft hat wer et o
BALANE CASES: happen,pe ti
tionerhasonl yi t
selft
obl ame.
Ital l
owed t he per i
od f orappealt ol apse
PNB V.I NDEPENDENT PLANTERS [ 122 w/o appeal i
ng. Ar t.1216 pr ovi
des t hat
SCRA 113]- I foneoft heal l
egedsol i
dar y "[T]
he cr editor may pr oceed against any
debt os dies dur ing t he pendenc y of t he oneoft hesol idarydebororsomeoral lof
col
lec ti
on c ase,t he c ourtwher e saidc ase them si mul taneously." Thus I PI, as
is pendi ng ret ains j urisdic
tion toc ontinue soli
dar y creditor,has the r i
ghtt o enforce
hear ingthec har geasagai nstthesur viving thet ri
alcour t
'sdecision againstpe ti
ti
oner
defendant s. -
- I ti s cr ytalcleart hatAr t
. OASI .
1216 i st he appl i
cabl e provision int his xxx
mat ter. Sai d pr ovision gives the cr edi tor
ther i
ghtt opr oceed agai nstanyoneoft he
solidary debt ors or some or al loft hem
 Ar t
.1217.Paymentmadebyoneof in so f
aras his shareis concer
ned. His
the sol idary debt ors ext ingui shes t he li
abil
ityin case ofinsol
vency ofone co-
obligati
on.I ft woormor esol idar ydebt ors credi
torisnota:ected.
o:ert opay ,thecr editormaychoosewhi ch
o:ert oaccept . Q: Can A demandt
heP9,
000f
rom
He who made t he payment may Y.
claim from hi s co-debt ors onl yt he shar e A: Yes.But he can r
ecover t
he
whi ch cor responds t o each, wi th t he samef
rom W,X & Z.
interestfort he paymental ready made.I f
the paymenti s made bef oret he debti s
due,noi nterestfort hei nter veningper iod Ar t
.1220. The r emission ofthe
maybedemanded. whole obligat
ion,obtai
ned by one oft he
When one oft he soli dary debt ors sol
idary debtors,does notent i
tle hi
m to
cannot , because of hi s i nsolvency, rei
mbur sementf r
om hisco-debtors.
reimbur se his sharet othe debt orpayi ng
theobl igati
on,such shar eshal lbebor ne
byal lhi sco- debtors,in pr opor tion tot he Art.1221. I ft he t hing has been
debtofeach. lost or i ft he pr est ation has become
impossi blewi thoutt hef aul toft hesoli
dar y
debt or s, t he obl igat i
on shall be
extingui shed.
Ar t
.1218. Paymentby a sol i
dary Iftherewasf aul tont hepar tofany
debtor shal l not ent it
le hi m t
o oneoft hem,al lshal lber esponsi bletot he
rei
mbur sementfr
om hisco-debtorsifsuch credit or,fort hepr iceand t hepaymentof
paymenti s made af
terthe obl
igat
ion has damagesandi nt erest,wi thoutpr ejudi
cet o
prescr
ibedorbecomei l
legal
. theiract ion agai nstt hegui ltyornegl igent
debt or .
Ifthr ough a f or t
ui t
ous event ,t he
Art.1219. Ther emissi
on madeby thing i s l ost or t he per formance has
thecredi t
oroft hesharewhi ch a:ectsone becomei mpossi bleaf teroneoft hesoli
dar y
ofthesol i
dar ydebtorsdoesnotr el
easethe debt or shasi ncur red i n del ayt hrough the
lat
terfr om hisr esponsibi
li
tyt owards t
he judicialorext raj udici aldemandupon hi m
co-debtors, in case the debt has been by t he cr editor ,t he pr ovisions of t he
tot
ally paid by anyone ofthem beforethe precedi ngpar agr aphshal lappl y.
remissionwase:ect ed.

Bal
ane: E:ectofRemi ssi
on.-
- Pr obl
em: Art.1895. I fsolidari
ty has been
Sol
idarydebtor
sW,X,Y & Z ar ei
ndebted agreed upon, each of t he agent s i s
toA forP12,
000. A r
emitstheshar eofY responsiblefort he non-ful
.ll
mentoft he
(
P3,000.) agency,and f orthe faultornegligence of
hisfell
ow agent s,exceptinthelat t
ercase
Q:CanYbesued? when t he fel
low agents act
ed beyond the
A: Yes,for t
he P9,
000 (
P12,
000 scopeoft heirauthority
.
l
essP3,
000shareofY.)

Q:SupposingXisinsol
vent? Art
.1222. A soli
dary debtormay,
A: Y can st il
l be made t o i
n act
ions .l
ed by t he creditor
, avai
l
cont
ribut
e. Remissi
on wi
llbene.tY onl
y hi
msel
fofalldef
enses which are der
ived
from the nat ure oft he obl
igati
on and of alt
hough the other pvt
.r esps had not
those whi ch ar e personal to hi m, or joi
nedintheappeal,thedecisi
on render
ed
pertaint o hisown shar e.Wi threspectt o bytheresp.cour
tinuredtotheirbene.t.
those whi ch per sonal
ly belong t o the
others,he may avai lhimselfther eofonly Art. 1215. Novat i
on,
asr egardst hatpar tofthedebtf orwhi ch compensat ion,conf usi
on or remission of
thelatterar eresponsibl
e. the debt , made by any of t he solidary
creditors or wi th any of t he solidary
Bal
ane: debtor s, shall exti
nguish the obli
gat i
on,
without pr ejudice to the provisi
ons of
Thr eeDef ensesi nPassi veSol idarit
y: arti
cle1219.
1. Those der ived f
r om t he nature oft he The cr edit
or who may have
obligation i s a t otal def ense, e. g.
, execut ed any oft hese act
s,aswel lashe
prescr i
ption,i l
legali
tyofobl i
gation. whocol lectsthedebt ,shallbeli
abletot he
2. Thosedef ensesper sonalt ot hedebt or
- othersf or the shar ei n t he obli
gation
defendant , e.g. ,insani t
y. I fi tinvolves correspondi ngt othem.
viti
at i
on ofconsent ,t otaldef ense. I fit
involves a speci alt erm ora condi t
ion,a Art. 1219. The
part i
aldef ense. remi ssi
on made by t he
3. Those def enses per sonal to ot her creditoroft he share whi ch
debt ors,e. g.
,par ti
aldef ense,i sa def ense a:ect s one oft he solidary
as t ot he shar e cor respondi ng t o other debt orsdoesnotr eleaset he
debt ors.) latterfrom hisresponsibilit
y
towar ds the co-debtors, in
case t he debt had been
BALANE CASE: totally paid by anyone of
them bef or ethe remi ssion
UNI VERSALMOTORSV.CA [ 205S448]- wase:ect ed.
When t he obligation oft he ot hersol idar y
debt orsi ssodependentont hatoft heirc o-
solidar ydebt or,ther eleaseoft heonewho 4.Ac
cor
dingt
oPer
for
manc
e:
appeal ed,pr ovided i tbe noton gr ounds
personalt o suc h appeal ing pr i
vat er esp. Indi
visi
ble and Di
visi
ble
oper atesaswel last ot heot her swhodi d Obl
igat
ions
notappeal . I tisf ort hi sr eason,t hata
decisi onorj udgmenti nf avoroft hepr ivate Balane: Thi s kind of obl i
gati
ons has
resp.whoappeal ed can bei nvoked asr es some t
hingt odow/ t hepr est
ati
on,notto
judicat abyt heot herpr i
vat erespondent s. thething.
xxx I ti sobvi ous t hatt her esp. Divisi
ble obli
gati
on i
s one
cour tcommi t
tednoer rori nr ul i
ngt hati ts susceptible of partial per
formance. An
decisi on inur es t ot he bene.tofal lt he indi
visi
bl e obl
igati
on is one thatmustbe
privat er esps.r egar dless oft he f actt hat perf
ormedi noneact .
onlyoneappeal ed. I ti ser roneoust or ule
thatt hedecisionoft het rialcour tcoul dbe General r ul
e: Obli
gati
on i s
rever sed as tot he appeal ing pr vater esp. indi
vi si
ble w/c means t hatithas to be
and cont i
nue i nf orce agai nst t he ot her perf
or med in one actsingly
. Why? Bec.
pvt.r esps. The l atter coul d notr emai n the law provides so: Unless t
hereis an
bound af terthef ormerhad been r eleased; express stipulat
ion t o that e:ect
,t he
creditor cannotbe compel l
ed parti
all
yt o suscept ibleofpar ti
alper f
or manceshal lbe
receive t he pr estati
ons in whi ch t he deemedt obei ndivi
si bl
e.
obligati
on consi st
s. Nei ther may t he When t he obl igati
on has f or its
debt or be r equired t o make par ti
al objectt heexecut ionofacer tainnumberof
payment s.xxx ( Ar t.1248,par.1.
) daysofwor k,t heaccompl ishmentofwor k
by me trical units, or anal ogous t hings
Three Except i
ons t
o t
he Rul
e on which by t heir natur e are suscept ible of
Indi
visi
bil
ity: partialper formance,i tshal lbedi visible.
However ,even though t heobj ector
1. When t he par
ties so provide. (Ar t
. service may be physi cally di vi
sible, an
1248,par.1.) obligation i sindivisibl
ei fso pr ovided by
2. When t he nature of the obl i
gation law ori ntendedbyt hepar t
ies.
necessar
ilyentai
lsperf
or mancei npar t
s. In obli
gationsnott odo,di visibili
ty
3.Wher ethelaw provi
desot herwise. orindi visibil
ityshal lbede t erminedbyt he
char acter of t he pr estat i
on i n each
Divi
sibili
ty of Obl igati
on di sti
ngui shed particularcase.
fr
om di vi
sibil
ityofobj ect.- - Di vi
sibil
ityof
obli
gation or pr es t
ation does not
necessaril
y mean a di vi sible obl igati
on. Art. 1209. I ft he di vi
sion is
Divi
sibili
ty ofobj ect is nott he same as impossible,ther ightoft hecr edi t
orsmay
divi
sibi
lityofobl i
gation.Butt her eversei s bepr ejudiced onlybyt heircollectiveact
s,
not the same. I ndivisibilit
y of obj ect and t he debt can be enf orced onl y by
meansani ndivisibi
leobl igat i
on. proceedingagai nstallthedebt ors.Ifoneof
the l
attershoul d be insolvent,t heothers
shallnotbel iableforhisshar e.
Art
. 1223. The di visi
bil
ity or
indivi
sibi
li
ty of t
he things that aret he
objectofobli
gati
onsin which thereisonly Exampl
esofI
ndi
visi
bleObl
igat
ions
onedebt orand onlyonecr edi
tordoesnot
alt
erormodi fytheprovi
sionsofChapt er2 (
1)Byvi
rtueofi
tsobj
ect
of t hi
s Ti tl
e (Nature and E:ect of
Obligati
ons). Art. 618. Easement s ar e
indivi
sible.Iftheservientestateisdivided
between t wo or mor e per sons, t he
Ar t. 1224. A j oint indivisi
ble easement i s not modi .ed, and each of
obli
gati
on gi ves r i
se t o i ndemni ty for them must bear i t on the par t which
damages f rom t he time anyone of t he correspondst ohi m.
debtor
s does not compl y wi th hi s Ifitist hedomi nantestat ethatis
undertaking.The debt ors who may have divi
dedbe t
weent woormor eper sons,each
been ready tof ul.l
lt hei
r pr omises shall of them may use t he easement i n i t
s
notcont r
ibutetot heindemni t
ybeyondt he entiret
y,wi t
houtchangi ngt hepl aceofi t
s
corr
espondi ng porti
on oft he pice oft he use,ormaki ngi tmorebur densomei nany
thi
ng or oft he value oft he service in otherway .
whicht heobligati
onconsi sts.
(
2)Expr
esspr
ovi
sionofl
aw
Art.1225. Fort hepurposesofthe
precedi
ng ar t
icles, obli
gat
ions to give Art.2089. A pl
edgeormor t
gageis
de.nitethings and those which ar
e not i
ndi
visi
ble,even t
hough the debtmay be
divided among t he successor si nint erest should they f
ailto do so, t
he vendee
ofthedebt ororoft hecr editor. cannotbecompelledt
oconsenttoaparti
al
Ther efore,t hedebt or '
shei rwhohas redempt
ion.
paid apar toft hedebtcannotask f ort he
propor tionat e ext inguishment of t he
pledgeormor tgageasl ongast hedebti s Art. 1248. Unl ess t herei s an
notcompl etelysat i
s.ed. expr ess st i
pulat i
on t o t hat e:ect ,the
Nei thercan t hecr edi t
or'shei rwho credi t
or cannotbe compel l
ed partial
lyt o
received hi s shar e oft he debtr et
ur nt he receive t he pr estati
ons i n whi ch t he
pledge or cancel t he mor t
gage, tot he obligation consists.Neithermayt hedebt or
prejudi ceoft heot herhei r
swho havenot ber equi r
edt omakepar ti
alpayment s.
beenpai d. However,when t he debti si n part
Fr om t hese pr ovisions, i t i s li
qui dated and i n par tunl i
quidated,the
expect ed t he case i n whi ch,t her
e bei ng credi t
ormaydemand and t hedebt ormay
severalt hingsgi ven in mor tgageorpl edge, e:ectt he paymentoft he for merwi t
hout
each one of t hem guar antees onl y a waitingf ortheliqui dati
onoft helat
ter.
determi nat epor tionoft hecr edit.
Thedebt or ,int hiscase,shal lhave
ar i
ghtt ot heext ingui shmentoft hepl edge Art
. 1583. Unless ot herwi se
ormor tgageast hepor tion oft hedebtf or agr eed,thebuyerofgoodsi snotboundt o
whi cheacht hingi sspeci allyanswer ablei s acceptdel iveryt her eofbyi nst al
lment s.
satis.ed. Wher et her eisacont ractofsal eof
goods t o be del i
vered by st ated
inst al
lment s,whi ch ar et o be separ ately
Ar t
.2090. The i ndi
visi
bil
ity ofa pai df or,and t he sel ler makes def ective
pledge ormortgage i
s nota:ected by t
he del i
veries i n r espect of one or mor e
f
act that the debtors ar
e not solidar
ily inst al
lment s, or t he buyer negl ects or
l
iable. refuseswi thoutj ustcauset ot akedel i
ver y
oforpay f orone ormor ei nstallments,i t
dependsi n each caseon t het ermsoft he
Ar t
. 1612. I f several per
sons, cont ract and t he ci rcumst ances of t he
joi
nt ly and i nt he same contract,should case,whe thert hebr each ofcont ractisso
sellan undi vided immovabl e wi
th ar i
ght mat er
ialast oj ustifythei njured par t
yi n
ofr epur chase,noneoft hem maye xerci
se refusing to pr oceed f urtherand sui ng for
thisr i
ght f or mor et han hisr especti
ve damagesf orbr each oft heent i
recont ract,
shar e. orwhe t
hert hebr each i ssever able,giving
The same r ule shallapplyi fthe riset oacl aimf orcompensat ion butnott o
person who sol d an immovabl ealonehas ar ight tot r
eat t he whol e cont ract as
lef
tsever alheirs,inwhi chcaseeachoft he br oken.
lat
termayonl yr edeem thepar twhich he
mayhaveacqui red.
(
3)Expr
essagr
eeement

Art
. 1613. I n the case of the Art
.1714. I
fthecontractoragrees
precedingarti
cle,t
hevendeemaydemand t
o pr oduce the work f r
om mat eri
al
ofal lthe vendors or co-hei
rst hat t
hey f
urnished by him, he shall deli
ver the
come t o an agr eement upon t he t
hing pr oduced to the empl oyer and
repurchaseoft hewhol ething sold;anbd t
ransfer domini
on over the thing. This
contractshallbegovernedbythefol
lowing (
a) Ifthereis a sti
pul ati
on that
arti
cles as wel l as by t he perti
nent both penal
tyand damagesar er ecover
able
provisi
onson war r
antyoftit
leandagainst i
ncaseofbr each
hiddendef ect
sandt hepaymentofpricein (
b) I
ftheobli
gorrefusest opayt he
acont ractofsal
e. penalty
(
c) I
ftheobligori
sgui l
tyoff raud
i
nt heful.l
lmentofhisobli
gation.
5.Ac
cor
dingt
oSanc
tionsf
orBr
eac
h:

A.Si
mpl
e
Ar t
.1226. I n obligations witha
B.Obl
igat
ionswi
thaPenalCl
ause penalcl ause,t hepenal ty shal lsubstitute
the indemni ty f or damages and t he
Bal
ane: payment of i nterests i n case of non-
compliance,i fthereisnost i pulationtot he
Arti
cles 1226 t
o 1230 on obl
igat
ion w/ a contr
ar y.Never theless,damages shal lbe
penal clause i
st he same as liquidat
ed paid ift he obligor refuses t o pay t he
damagesf oundinAr t
icl
es2226t o2228by penalt
y or i s gui l
ty of f r
aud i n t he
authori
tyofLamber tv.Fox,26Phil.588. ful
.ll
mentoft heobl i
gation.
The penal ty may be enf orced only
Penal Cl ause.-
- A penal cl ause is an when iti sdemandabl ein accor dancewi th
accessory under taki
ng to assume greater theprovi sionsofthisCode.
li
abili
tyi n caseofbreach. Thepur posei s
to strengthen t he coer
cive for
ce of t he
obli
gat i
on. When a penal cl ause i s BALANE CASES:
present,damagesdonothavet obepr oved.
BACHRACH V.ESPI RITU [ 52 P 346] -
Characterist
icsofPenalCl ause: Art. 1152 of t he OCC per mit s the
1. Subsidiary(alsocal led alt
ernative)w/c agreementupon a penal ty apar tfrom the
means t hatupon non- performance,onl y interest
. Shoul d t her e be such an
thepenal t
ymaybedemanded. agreement ,t he penal t
y xxx does not
Excepti
on: Wher e penaltyi sj oint includet heinterest
,and assuch t het wo
(cumulative) - wher e botht he pr i
nci pal aredi :erentand di sti
nctt hingsw/cmay
under t
aking and penal ty may be be demanded separ ately. The penal tyi s
demanded - - Ar
t .1227,secondsent ence: not t o be added tot he i nterest for t
he
"xxx unless thisr i
ght has been cl early determination of whe ther t he i nterest
grantedhi m." Noticethewor dcl early( not exceeds the rate .xed by l aw,si nce said
expli
citl
y)w/cmeanst hatt her ightcanbe ratewas.xedonl yfort hei nterest.
clear
lygrantedbyi mplicati
on.

2. Exc l
usive w/c means that a penal ROBES- FRANCISCO V.CFI [ 86 S 59] -
cl
auseisforreparat
ion. I
ttakestheplace Pe t
iti
oner cont ends t hat t he deed of
ofdamages. absolute sal e executed be t.the parties
Except
ion: When i tis for the stipulates thatshoul dt he vendor fai
lt o
punishmentin w/ccaseboth penal
tyand issuet het ransf
ercert.oft i
tl
ew/i n 6mos.
damagesmaybedemanded,namel y-
- from t he dat e of f
ull payment ,it shall
refundt ot hevendeet het ot
alamountpai d
for w/ i nt
erest at t
he r ate of 4% p.a.,
hence,thevendeeisboundbyt heter
msof damagesofP10, 000 foranybr each ofthe
the provi
sion and cannot r
ecover mor
e contr
act. Thepr oven damagessuper sede
thanwhati sagreedupon.xxx thesti
pul
at edliquidat
eddamages.
This vi ew .nds suppor tin t he
HELD: The f oregoing ar gument of opini
on ofManr esa t
hati n casesoff raud
petitioner i
st otall
y devoid ofmer i
t. We thedi:erencebe t.thepr ovendamagesand
woul d agreew/ pe ti
tioneriftheclausein thesti
pulat edpenaltymayber ecovered.
quest ion weret obeconsi dered asapenal
clause. Never theless, for very obvi
ous
reasons,sai d clause doesnotconvey any
penal ty,for even wi thoutit
,pur suantto COUNTRYBANKERS V.CA [ 201S 458] -
Ar t
.2209oft heNCC,t hevendeewoul dbe A pr ovi sion w/c cal lsf ort he f orf
eitur e of
entitled t
or ecovert heamountpai dbyher the r emai ning deposi t st il
l i n t he
w/ l egalrateofi nterestw/ci seven more possessi on oft hel essor ,w/o pr ejudicet o
thant he4% pr ovidedf orintheclause. any ot her obl igation st ill owi ng, i n t he
eventoft het ermi nat i
on orcancel l
ation of
Balane: The SC consi dered the 4% the agr eement by r eason oft he lessee' s
int
erestasnotapenalclausebec.itdoes violation of any of t he t erms and
not str
engt
hen t
he coer
cive for
ce ofthe condi tions of t he agr eement i s a penal
obli
gati
on. clauset hatmaybeval idl yent eredi nt o. A
penal c l
ause i s an ac c essor y obl igat i
on
PAMI NTUAN V.CA [ 94 S 556] - Wehol d w/c t he par t
ies at t
ac h t o a pr i
nc i
pal
that appel lant 's cont ention cannot be obligat i
on f ort he pur pose ofi nsur i
ng t he
sust ained bec.t hesecond sent enceofar t
. per f
or manc et hereof by i mposi ng on t he
1226 i tself pr ovides t hat " nevertheless, debt or a spec i
al pr est at
ion ( gener ally
damagesshal lbepai di ftheobl igorxxxi s consi sting i nt he payment of a sum of
gui lt
y off r
aud i nt he ful.llment oft he money)i nc aset heobl igat ioni snotf ulfill
ed
obl i
gat i
on." xxx The t ri
alcour tand t he or isi rregularly or i nadequat el yf ulfil
led.
CA f ound t hat Pami ntuan was gui lty of Asagener alrul e,inobl igat i
onsw/apenal
fraud bec.he di d not make a compl ete clause, t he penal t
y shal lsubst i
tutet he
deliver y oft he pl astic shee ti
ngs and he indemni tyfordamagesandt hepaymentof
over pricedthesame. xxx interest si n caseofnon- compl i
ance. Thi s
Penalt yandLi quidateddamages. -- is speci .call
y pr ovided f or i n Ar t
.1226,
Ther ei s no j usti.cati
on f or the NCC t o par . 1. I n such case, pr oof of act ual
makean appar entdi sti
nct i
on be t.penal ty damages su:er ed by t he cr edi t
or i s not
and l i
quidat ed damages bec.t he se t
tled necessar yinor dert hatt hepenal tymaybe
rulei st hat t herei s no di :erence be t
. demanded.xxx
penal t
yand l i
qui dated damagesi nsofaras Butt her ear ecaseswhen bot ht he
legalr esultsar econcer nedandei thermay penal ty and t he act ualdamages may be
ber ecovered w/o t henecessi ty ofpr oving recover ed, such as when t her e i s a
act ualdamagesand bot h mayber educed stipul ation t ot he cont rar y or when t he
whenpr oper. obligori sgui l
tyoff raud.
xxx
Wef ur therhol dt hatj usticewoul d Balane: Count
ry Banker
s case is be
tter
be adequat ely done i n t his case by than Pami
ntuan v
.CA. Bot ht hepenalty
allowi ng Yu Pi ng Kun Co. ,Inc.t or ecover and damages ar e r ecoverabl
e i n
onl yt he actualdamages pr oven,and not
to awar dt oi tt he st ipulated l i
qui dated
excepti
onal ci
rcumst
ances. You do not penalt
ymayal sober
educedbyt hecour
ts
mer gethet
wo. i
fitisini
qui
tousorunconsci
onable.

SSS V.MOONWALK [ 221 S 119] - A

penalcl ausei san accessor y undertaking Art.1230. Thenul li
tyofthepenal
to assume gr eater liabilit
y i n case of cl
ause does notcar ry wi
thi tt
hatoft he
breach. I thasadoubl ef unction: (1) t o pri
ncipalobli
gation.
providef orl i
qui dateddamages;and ( 2) t o The nul li
ty of t he princi
pal
strengt hen t he coer ci
ve f or ce of t he obl
igati
on carri
erwi t
hi tthatofthepenal
obligation by t he t hreat of gr eater cl
ause.
responsi bili
tyint heeventofbr each.Fr om
thef oregoing,iti scleart hatapenalcl ause
isi ntended t o pr event the obl igor from 1. Di st
ingui
shed f
rom al
ter
nat
ive
defaulting i n t he per f
or mance of hi s obl
igat
ions
obligation. Thus, i ft here shoul d be
default,t hepenal tymaybeenf orced. Ar t
. 1227. The debt or cannot
exempt hi msel ff rom t he per f
or mance of
theobl igation bypayi ng thepenal ty
,save
Ar t
. 1227. The debt or cannot in t he case wher e hisr i
ght has been
exempt hi msel ff rom t he per f
or mance of expr esslyr eservedf orhim.Nei thercant he
theobl igation bypayi ng thepenal ty
,save credi t
or demand t he f ul.ll
ment of t he
in t he case wher et hisr i
ght has been obligat i
on and t he sat i
sfaction of t he
expr esslyr eservedf orhim.Nei thercant he penal tyatt hesamet i
me,unl esst hisright
credi t
or demand t he f ul.ll
ment of t he has been cl ear l
y granted him.However ,if
obligat i
on and t he sat i
sfaction of t he aftert hecr editorhasdeci dedt or equir
et he
penal tyatt hesamet i
me,unl esst hisright ful.llment of t he obl i
gat ion, t he
has been cl ear l
y granted him.However ,if per f
or mance t hereof shoul d become
aftert hecr editorhasdeci dedt or equir
et he impossi ble wi thouthi sfaul t
,t he penal ty
ful.llment of t he obl i
gat ion, t he maybeenf orced.
per f
or mance t hereof shoul d become
impossi ble wi thouthi sfaul t
,t he penal ty
maybeenf orced. Art. 1200. The r i
ght of choice
belongs tot he debt or
,unl ess ithasbeen
expresslygrantedt ot hecreditor.
Art.1228. Proofofact
ualdamages The debt orshal lhave no r ightto
su:ered by t
he credit
oris notnecessar
y choose t hose pr estat
ions whi ch ar e
inor
der t hat t he penal ty may be impossible,unl awf ulor whi ch could not
demanded. havebeent heobj ectoftheobl igat
ion.

Baviera: Courts enf

orce cont
ract
s
accordingt
othei
rterms 2. Di st
ingui
shed f
rom f
acul
tat
ive
obl
igat
ions

Art. 1229. The j udge shall Art

. 1227. The debt or cannot
equitabl yr educe the penal
ty when the exempt himsel ffrom the perf
ormance of
principal obl i
gat
ion has been partly or theobl i
gation bypaying t
hepenal t
y,save
ir
regul arly compli
ed with by the debt
or. in the case wher et hi
sr ight has been
Eveni ft herehasbeennoper formance,t
he expresslyreservedforhi
m.Nei t
hercant he
creditor demand t he ful .ll
ment of t he then we have el even modes of
obligation and t he satisfaction of the extingui shing an obl igat ion under Ar t
.
penal tyatt hesamet i
me,unl essthisri
ght 1231.
has been cl ear l
y granted him.However ,if Thi s enumer at i
on i snotexcl usive.
afterthecr editorhasdeci dedt orequi
rethe Ot her modes of ext ingui shing an
ful.ll
ment of t he obl i
gat i
on, t he obligationar et hef ollowi ng:
per f
ormance t hereof shoul d become 1.Deat h,par t i
cul arlywher et heobl i
gat i
on
impossi ble withouthi sfaul t
,t he penalt
y is pur el y per sonal , e. g., deat h of one
maybeenf orced. par tnerdi ssolvest hapar tner ship.
2.Renunci at ionbyt hecr edi tor
3.Compr omi se
Art. 1206. When onl y one 4.Ar ri
valofr esol ut oryt er m
prestati
on hasbeen agr eed upon,butt he 5. Mut ualdesi stance or mut uo di senso
obligor may r ender anot her in subst it
u- (Saur av .DBP. )
ti
on,t heobligationiscalledf acultat
ive. 6. I n some cases,uni l
at eralwi thdr awal,
The l oss or de teriorati
on of t he e.g.,i n par tner shi p, any par t
ner can
thing intended as a subst i
tute,thr ough withdr aw anyt imef r om t hepar t
ner shi p.
the negl i
gence of t he obl i
gor does not 7. I n somecases,change ofci vilst atus,
render hi m l i
able. But once t he e.g.,ifmar ri
agei sannul ed,i textingui shes
subs ti
tuti
on hasbeen made,t heobligoris obligations l ike t he obl igat i
on t o gi ve
li
abl efor the loss of t he subst it
ute on suppor t
,amongot her s.
accountofhi sdel ay,negligenceorf raud. 8. Unf orseen event s( rebus si cstant ibus)
(Art.1267. )
9.Wantofi nt erest
V.Ext
ingui
shmentofObl
igat
ions
Il
lust r
at ion: Car ale owns a
Ar t
. 1231. Obligations ar e restaur ant. Hehi r esMol inaasachef .I n
extingui shed: the cont ractofempl oyment ,t her e was a
(1)Bypaymentorper f
or mance; stipulation t hat i f Mol i
na r esigns f r om
(2)Byt helossoft hethingdue; Car ale'
s r est aur ant , he cannot seek
(3) By t he condonat i
on or empl oymentf rom anot herr estaur antf ora
remi ssionoft hedebt ; per i
odof.veyear s. Subsequent ly,Mol ina
(4)By t he confusion ormer gerof resignsf rom Car ale'sr estaur antandwant s
ther ight softhecreditoranddebt or; to appl yt o Mi ldo'sHouseofChi cken. I n
(5)Bycompensat i
on; thiscase,Mol ina cannotwor k w/ Mi l
do' s
(6)Bynovat ion. bec.oft he st ipul at ion int he cont racthe
Ot hercausesofext i
ngui shmentof signed w/ Car ale. Suppose, however ,
obligations, such as annul ment, Car ale,cl oses down hi sr estaur ant and
rescission, f ul.l
lment of a r esol
utory engages i n at otally di :er entbusi ness,a
condi ti
on,and pr escripti
on ar e governed const ructionbusi ness,f orexampl e,Mol ina
elsewher einthisCode. can appl yf orwor k atMi l
do' s even bef ore
thel apseoft he.veyearpr ohi bitiveper iod.
Balane: Art.1231 gi vesust en modesof Int hiscase,Mol inacanmakeouta
exti
guishi
ng an obl igation. One oft he caseofext ingui shmentofobl igationont he
modes ment ioned isr escissi
on. But i t ground ofwantofi nterest . The obvi ous
doesnott el
luswhe thert hisisresci
ssi
on pur pose oft he st ipulat i
on i st o pr event
underAr t
.1191 ( r
esol ution)orr esci
ssi
on unf aircompe tition.
underAr t
.1380,e t.seq. I fitmeansbot h,
10.Judi
ciali
nsol
vency of neit
her inferi
or or super ior
qual
it
y( Art. 1246). I t must be
somethi
ngint hemi ddle.Incaseof
BALANE CASE: money,ther
ear especialrul
es:

SAURA I MPORT & EXPORT BANK VS. (i

) Gover ning r ul e:
DBP [ 44S445]- Wher eafterappr ovalof RA 529 as amended by RA
hisl oan,t hebor rower,insteadofi nsisting 4100- - I n case ofmoney
for itsr el
ease,asked t hat t he mor tgage debt s,you wi llhavet opay
given as secur it
y be cancel l
ed and t he in l egal t ender i n t he
creditoracceded t heret
o,theact ion t aken Philippi nes. This l aw
by bot h par ties was i n the nat ur e of super sedesAr t.1249.
mut ualdesi stance- whatManr esat er ms If the par t
ies
"mut uo di senso" - w/c i s a mode of sti
pul atet hatpaymentwi l
l
extinguishi ng obl igat
ions. Iti sa concept bemadei nf oreigncur rency ,
thatder i
ves fr om t hepr i
nciplethatsi nce theobl igation topayi sval i
d
mut ualagr eementcan cr eate a cont ract
, butt heobl igation topayi n
mut ualdi sagr eementby t he par t
ies can for
ei gn cur rency i s voi d.
causei tsext ingui shement . Payment wi ll be made i n
Phil.cur rency .
How doyou c onver t?
In caseofan obl igation w/c
A.PaymentorPer
for
mance is not a l oan i n f oreign
cur rency ,ifincur redbef .RA
Balane'
s Out
li
ne of t
he Ar
ticl
es on 529,conver sion mustbeas
Payment: of the t i
me t he obl igation
was i ncur red. I fi ncur red
Requi
sit
esofPaymentorPer
for
mance: aft
er RA 529 became
e:ect ive, t he conver sion
I
. Re:Thepr est
ati
on mustbe asoft he t ime t he
1.Identi
ty obligat ion was i ncur red
2.Integr
ity (Kalal ov .Luz .)I fthel oani s
3.Indivi
sibi
li
ty in f oreign cur rency , t he
conver sion isasoft het i
me
I
I. Re:Theparti
es ofpayment .(RA529. )
1.Payor/obl
igor/debtor
2.Payee/obl
igee/credit
or (i
i) Payment i n
negotiablepaper-- Thismay
I
II. Re:Ti
meandpl
ance be refused by t he creditor
.
Paymenti nmanager 'scheck
I
.Wi
thr especttopr est
ation: or cer t
i.ed check i s not
1.I dentit
y payment i n legal t ender.
a.I fspeci.cprestati
on,t hi
s The rul i
ng i n Seneris has
requisit
emeanst hatthever ything been reversedint hecaseof
orser vicemustbedel i
vered. (Art. Bishop of Mal olos. The
1244. ) Malolos ruling i
sbe tter. I
b. I fgener i
c,the requisit
e found ithar dtoacceptt hat
requires the deli
very ofsome thing manager 'scheck orcer ti
.ed
 check i s good as l egal I
n bot
h cases, t
her
eisa
tender . Ther e ar e al ways vol
unt
arychangei
ntheobject
.
risks t o w/c cashi er's
checksar esubj ect . Whati f
after havi ng i ssued a 2. I ntegr
ity.-
- Ther e must be
cashi er'
scheck,t hedr awee- del
iveryoft heentirepr est
ation due. (Art.
bank cl oses,whathappens 1233. ) Theexcept ionst other equirement
toyourcashi er '
scheck? ofi
nt egrit
yar e:
In any event, a. I n case ofsubst antial
payment by check can be performance i n good f ait
h ( Art.
refusedbyt hecr edi t
or.And 1234. )Thisi sanequi tyrule.
even i fpaymentbycheck i s b. I n case of wai ver of
accept edbyt hecr editor,the obligee/creditor(Art.1235.)
accept ance i s i s onl y a c. In caseofappl i
cation of
pr ovisi
onal payment unt il payment s if several debt s ar e
thechecki s(a)encashedor equal l
yoner ous(Art.1254,par .2.)
(b) when t hrough t hef ault
of t he cr editor t hey have
been i mpai r
ed. Thecaseof 3. Indi vi si
bilit
y. -- Thi smeanst hat
Namar co v . Feder ati
on, 49 theobli
gormustper f
or mt hepr estation i n
SCRA 238, i nt erpre t
s t he one act and not i n par ts. ( Ar t.1248. )
phr ase "when t hr ough t he There are sever al except ions t o t hi s
faul t of the cr edi tor,t hey requi
rement :
have been i mpai red" as t o a. I n case or expr ess
appl y onlyt o a check used sti
pul at ion.( Ar t.1248. )
in payment i fi ssued by a b. I n case of pr estations
per son ot her t han t he w/c necessar ily ent ail par tial
debt or. Why? Bec.i fthe perfor mance.( Ar t.1225,par .2)
check was i ssued by t he c. I fthe debti sliqui dat ed
debt orhi msel f,al lt hatt he in par tand unl i
qui dated i n par t.
debt orhavet odoi stoi ssue (Art.1248. )
anot hercheck. d. I n caseofj oi
ntdi visibl e
obligat i
ons( Ar t.1208. )
(i
ii
) Reval uati
on i n e. I n sol idary obl igations
case of ext raordinary when t hedebt orsar ebound under
inPation or dePat i
on ( Ar
t. di:er ent t erms and condi ti
ons.
1250. )
--Thi srulehasnever (Art.1211. )
been used. I t was onl y f.I n compensat ion when a
dur i
ng t
he Japanese balancei sleft.( Art .1290.)
occupat i
on thattherewasa g. I ft he wor k ist o be
recogniti
on ofextraordinary deli
ver ed par tially,t he pr ice or
inPationint hi
scount ry
. compensat ion f oreach par thavi ng
been.xed.( Art.1720. )
c.Except i
onstotherequi
rementof h. In case of sever al
ident
ity guar ant or s who demand t he r i
ght
(i) Dacion en pago (Ar
t. ofdi vision.( Art.2065. )
1245.
)
(ii
)Novati
on
 i
.Incaseofimpossi
bil
ityor b.Hi ssuccessorort ransf er
ee(Art
.
ext
reme di Ocul
ty of si ngle 1240.)
perf
ormance. c.Hi sagent(ibid.)
d. Anyt hird person subj ecttothe
I
I.Wi
thr especttotheparti
es fol
lowingqual i
.cations:
Therearet woparti
esinvolved: (
1)pr ovideditr edoundedt o
1.Payor /obli
gor/debtor theobligee'
sbene.tandonl ytothe
2.Payee/obl i
gee/credit
or ext
entofsuch bene.t .( Ar t
.1241,
par.2.)
Requir
ements: (
2) I fi tf al
ls under Ar t
.
1. Ar t
.1226 -1238. Who shoul
dthe 1241,par .2 nos.1,2 & 3,bene.t
payorbe: isdeemedt obet ot
al.
e. Anyone i n possessi on of the
a. Wit
houtneed oft he credit
or'
s credi
t.( Art.1242.)
consent
(1)Thedebtorhimsel f In allthese .ve (
5) cases, i
tis
(2)Hisheir
sorassi gns requi
red t
hat the debt shoul
d not have
(3)Hisagent beengarnished.(
Art.1243.
)
(4)Anyoneinterest
edi nthe
ful
.llment of the obli
gati
on, e. g., a
guarantor II
I. Wit
hr especttot het i
meand pl aceof
payment
b. Wi t
hthe credit
or's consent- - 1. When payment t o be made:
Anyone. Thisisadepar t
uref r
om t her ul
e Whendue
intheOl d Civi
lCodew/cdi d notr equir
e 2.Pl ace(Art
.1251. )
consentont hepar
tofthecr edit
or. a. Pr i
mary r ul e: As
sti
pulat
ed
c. E:ect ofpayment by a t
hir
d b. Secondar yr ul e: Pl ace
per
son: wher et hethingwasatt het imet he
obligation was const i
tut ed i fthe
(1) Ifthe paymentwas w/ obligation i s t o del iver a
the debtor'
s consent,he becomes deter minatething.
theagentoft hedebt or
. Thee:ect c. Tertiaryr ule: At t he
i
s subr ogati
on ( Arti
cles 1236- debt or'sdomicil
e
1237.) Except i
on: I fthe per
son
payingintendedittobeadonat ion. Art
. 1232. Payment means not
(
Ar t
.1238. ) onl
yt he del
iver
y ofmoney butalso t
he
per
formance,in any ot
hermanner
,ofan
(
2) Ifpaymentwaswi thout obl
igat
ion.
the debt or
's consent
,t he third
person may demand r epaymentt o Balane: PaymentorPer formancear eused
theextentthatthedebt orhasbeen int
erchangeably
. Butt echnical
ly,payment
bene.ted.(Art.1236,par.2.) is used in obligat
ions to give wher eas
perf
ormance is used in obli
gati
ons to do.
Payment /perf
ormancei st heparadigmat i
c
2.Whomaybet hepayee? mode ofext i
nguishmentofan obl igati
on.
a. The obl
igee pr
oper (
Art
icl
es Itistheonl ynormalwayofext inguishing
1240,1626.
) anobligati
on.
 TAYAG V.CA [ 219S480]- Bot ht het r
ial
courtandt heappel latecour tswer ecor rect
Art. 1233. A debt shal l not be in sust aining t he cl aim of pvt r esps.
under st
ood t o have been pai
d unl ess t
he anchor ed on est oppel or wai ver by
thing or service in which the obl i
gati
on accept anceofdel ayedpayment sunderAr t.
consists has been compl e
tely del
ivered or 1235 consi der i
ng t hatt he hei rs ofJuan
rendered,ast hecasemaybe. Galicia,Sr .accommodat ed pvt .r esp.by
accept ingt helatt er'
sdelayedpayment snot
only beyond t he gr ace per iods but al so
Art.1234. I fthe obligation has dur i
ng t he pendency of t he case f or
beensubstantial
lyperformedi ngoodf aith, speci.cper formance. I ndeed,t her ightt o
the obl
igor may recover as t
hough t here rescind i s not absol ute and wi llnot be
hadbeen ast r
ictandcompl et
ef ul.ll
ment , granted wher e wher e t here has been
l
essdamagessu:er edbyt heobl i
gee. substant ial c ompl iance by part
ial
payment s. By and l ar ge, pe tit
ioner s'
actuat ion i s suscept i
ble of but one
BALANE CASES: const r
uct ion- -t hatt heyar enow est opped
from r enegi ng from t heircommi tmenton
LEGARDA HERMANOS V.SALDANA [ 55S accountofaccept ance ofbene.t s arisi
ng
324] - The Cour t'
s doctri
ne in J.
M. from over dueaccount sofpvt .r esps.
Tuason v.Javieri
sful
ly appl
icabl
etothe
presentcase.

Art. 1235. When t he obl i

gee
J.M.TUASON V.JAVI ER [31S 829] - In accept s t he perf
ormance, knowi ng its
the i
nterest ofjust
ice and equit
y,court incompl et
enessorirr
egular
ity,andwi thout
maygr antthevendeeanew t erm wherehe expr essing any prot
est or object
ion,t he
substanti
all
y per f
ormed i n good f ai
th obligationi sdeemedful
lycompl iedwith.
accor
ding to Art
.1234,r egardl
ess ofArt.
1592oft hesameCode.
BALANE CASES:

PRESBI TERO V.CA [ 217S 372] - Under AZCONA V.JAMANDRE [ 151 S 317] -
Art. 1234, i ft he obl igati
on has been xxx I ft he pe tit
ioneri sf ussy enough t o
subs tanti
allyperformed i n GF,t heobl i
gor invokei tnow,i tst andst or eason t hathe
(pri
vat e resp. Leonar do Canoso) may woul d havef ussed ittooi nt her ecei
pthe
recoverast hough therehad been a st rict will
ingly si gned af t
er accept i
ng, w/o
and coml ete ful.llment ,l ess damages reservation and appar ently w/o pr otest
su:er ed by t he obl i
gee ( Presbit
ero.) onlyP7, 000.Ar t
.1235i sappl icable.
Mor eover, when t he obl i
gee accept st he xxx
performance as what happened i n t his Pe ti
ti
oner says t hat he coul d not
case, knowi ng i ts i ncompl eteness or demand paymentoft he bal ance ofP200
irr
egul ari
ty, and w/o expr essing any on 10/26/60, dat e of r ecei pt bec. t he
protest or obj ecti
on, t he obl i
gation i s rentalfort hecr opyear1961- 1962wasdue
deemedf ull
ycompl iedw/. on orbef ore1/30/61. Butt hiswoul d not
havepr evented hi m from r eser ving int he
receipt hisr ight to col l
ect t he bal ance
when i tf ell due. Mor eover ,t here i s
evi
dencei ntherecordthatwhen t
hedue Manuelsquar elyf all
s upon itsel
fby i ts
datearri
ved,hemadeanydemand,wr i
tten own act ion and cannotbepassed byi tto
orverbal
,forthepaymentoft
hatamount. pe t
itioners as i nnocent parti
es. I ti s
element ary t hat payment made by a
judgmentdebt orto a wrong party cannot
PAGSI BI GAN V.CA [ 221S202]- Wehol d extinguisht hej udgmentobligati
onofsuch
thatt hepaymentamount i
ngt oP8, 500f or debt ortoitscreditor.xxx
the bal ance ofP3, 558. 20 as of8/26/78
plus t he P1, 000 i twas asked t o pay on
4/24/84woul datt hever yl eastconst itute PAL V.CA [ 181 S 557] - A paymenti n
subs tant ialper formance. xxx Pe titioner order t o be e=ec ti
ve t o di scharge an
int hiscasehast her ightt omovef ort he obli
gat ion must be made t ot he pr oper
cancel lation of t he mor tgage and t he parties.--I n gener al,a payment ,in order
release of t he mor tgaged pr op., upon to be e:ect ive to di schar ge an obl i
gat i
on,
paymentoft hebal anceoft hel oan.xxx mustbemadet ot hepr operper son.Thus,
Thus,asi de from t he f actt hatt he payment must be made t ot he obl i
gee
resp.bankwasest oppedf rom enf or cingi ts himsel for t o an agenthavi ng aut hority,
right t o f oreclose by vi rtue of i ts expressori mpl ied,t or eceivet hepar ti
cular
accept ance oft he del ayed payment sf ora payment . Paymentmade t o one havi ng
per i
od of mor e t han si x year s, t he appar entaut horityt or eceive t he money
appl i
cat i
onofsuchpaymentt othei nterest will
,asar ule,bet reat edast hough act ual
and t he pr incipaldur ing t he .r st t hree author ity had been gi ven for i tsr eceipt.
payment s const itutes a vi r tualwai ver of Likewi se,ifpaymenti smadet oonewhoby
the accel eration cl ause pr ovided i n t he law isaut hor i
zed t oactf ort hecr editor
,i t
cont ract .Wecannotsust aint hel egal ityof will wor k a di schar ge. The r eceipt of
thef or eclosur eundert hepecul i
arf act sof money due on a j udgmentby an oOcer
this case, bec. t her e i s subst ant i
al author ized by l aw t o accept i t wi l
l,
per f
or manceoft heobl igation on t hepar t thereforesat isfythedebt .
ofpe titioner.xxx xxx Thet heor yi swher eapayment
is made t o a per son aut hor i
zed and
recogni zed byt hecr edi tor
,t hepaymentt o
1.Towhom paymentshoul
dbemade such a per son so aut hor i
zed i s deemed
paymentt ot hecr edi tor.xxx

Art.1240. Paymentshallbemade Unl

ess aut horized by l aw or by
tot heperson i
nwhosef avort
heobligat
ion consentoft heobligee,a publ icoFc erhas
hasbeen const it
uted,orhissuccessorin noaut hori
tyt oacceptanyt hing ot herthan
i
nt erest
, or any per son authori
zed to moneyi npaymentofanobl igat i
onundera
receiveit. judgmentbei ngexec ut
ed.--I nt heabsence
ofanagr eement,ei t
herexpr essori mpl i
ed,
BALANE CASES: paymentmeanst hedi schargeofadebtor
obl i
gationinmoneyandunl esst hepar t
ies
ARANAS V. TUTAAN [ 127 S 828] - soagr ee,adebtorhasnor ight s,exceptat
Paymentby judgmentdebt ortothewr ong hi s own per i
l,t
o subst it
ute some thing in
part
ydoesnotext inguish judgmentdebt.-
- lieu ofcash asmedi um ofpaymentofhi s
The burden of recoveri
ng t he supposed debt . Consequent ly
,Unl essaut horized by
payments ofthe cash dividends made by law orbyconsentoft heobl igee,a publ i
c
UTEX tothewr ongpar ti
esCast anedaand oOcerhasnoaut hor i
tytoacceptanyt hing
other t han money i n payment of an Whoever pays f or anot her may
obli
gation under a j udgment bei ng demandf rom thedebtorwhathehaspai d,
executed. St
rict
ly speaki ng, t he except that i f he paid wi t
hout the
acceptancebyt hesher i
: ofthepe ti
tioner'
s knowledgeoragainstthewilloft hedebt
or,
checks,i nthecaseatbar ,doesnot ,perse, hecanr ecoveronlyi
nsofarast hepayment
operate as a discharge oft he judgment hasbeenbene.ci alt
ot hedebtor.
debt.

Art.1237. Whoeverpayson behal f

Art .1241. Payment t o a per son ofthe debtor wit
hout the knowledge or
who i si ncapaci tated t o admi nister hi s agai
nstthewi l
lofthelatt
er,cannotcompel
property shal lbeval idi fhehaskeptt he thecredi
tortosubrogatehimi n hi
srights,
thingdel ivered,ori nsof arast hepayment such as those ar
ising f
rom a mor tgage,
hasbeenbene.ci altohi m. guaranty
,orpenalty.
Payment made t oat hird per son
shall also be val id i nsof ar as i t has
redounded t ot he bene.toft he cr edit
or. Art
. 1238. Payment made by a
Such bene.tt ot he cr edi torneed notbe thir
d person who does noti ntend t
o be
provedi nt hefollowi ngcases: rei
mbur sedbyt hedebtorisdeemedtobea
(1)I faf t
ert he payment ,t he t hir
d donation, which r equi
res the debt or'
s
personsacqui rest hecr edi tor '
sr ight s; consent.Butt he paymenti sin any case
(2) I ft he cr edi tor r ati
.es t he vali
d ast othecr edi
torwho hasaccept ed
paymentt ot het hirdper son; it
.
(3)I fbyt hecr edi tor '
sconduct ,the
debtor has been l ed t o bel ieve t hat the (OtherQuasi-
Cont ract
s)
third person had aut hor ityt or ecei ve t
he Ar
t.2173. When a t hi
rd per
son,
payment . withouttheknowl edgeofthedebt
or,pays
the debt,the rights of t
he f
ormer are
Bavi
era:Numbert
hreei
sEst
oppeli
nPai
s governedbyarti
cles1236and1237.

Ar t
.1242. Paymentmadei n good
fai
tht o any person i
n possessi
on ofthe Art.1239. I n obli
gati
ons to gi
ve,
credi
tshallreleasethedebt
or. paymentmadebyonewho doesnothave
the free disposal of t
he thing due and
(Assignment of Cr edit
s and Ot her capacityto al i
enateitshallnotbe valid,
IncorporealRights) without pr ejudice t
o t he provi
sions of
Art.1626. Thedebt orwho,before arti
cle 1427 under t he Ti
tle on "
Natural
havingknowl edgeoft heassi gnment,pays Obligati
ons."
his creditor shall be released fr
om t he
obligati
on.
Art
.1427. When a
2.Whoshal
lmakepayment minorbe tween eighteen and
twenty-one year s of age,
Art. 1236. The cr edi
tor is not who has ent ered int o a
bound t o acceptpaymentorper f
ormance contract without t
he
by a thir
d per son who hasno interestin consent of t he par ent or
the ful.l
lment of t he obl
igati
on, unless guardian,volunt ari
lypaysa
ther
ei sast ipulat
iontothecontrary. sum ofmoney ordel iversa
 fungi
blet hi
ngi nful.ll
ment debt oro:er sanot hert hingt ot hecr editor
oftheobligat
ion,thereshall whoaccept sitasequi valentofpaymentof
be no right t
or ecover the anout standi ngdebt .
same fr
om t he obli
gee who Dac ion en pago i nt he nat ure of
hasspentorconsumedi tin sale.-- Theunder taki
ngr eallypar takesi n
goodfai
th. onesenseoft henat ureofsal e,t hati s,the
credi t
or i s r eall
y buyi ng t he t hing or
NOTE:ageofmaj
ori
tyi
snow 18. proper tyoft hedebt or,paymentf orw/ci s
tobechar gedagai nstthedebt or 'sdebt .As
Ar
t .1243. Paymentmade t ot he such,t heessent i
alelement sofacont ract
credi
torbyt hedebtorafterthelat
terhas ofsal e,namel y,consent ,obj ect cer tain,
been judicial
ly or
dered t
or e
tai
nt he debt and cause or consi deration must be
shallnotbeval i
d. present .
Dac ion en pago i n i ts moder n
conc ept.-
- I ni ts moder n concept ,what
Art.1244. The debt orofa thing actual lytakespl ace in dac ion en pago i s
cannot compelt he credi
tor torecei
ve a an obj ective novat i
on of t he obl igat i
on
di:erentone,althought helatt
ermaybeof wher et he t hing o:er ed as an accept ed
thesameval ueas,ormor evaluablethan equi valent of t he per f
ormance of an
thatwhi chisdue. obligat i
on i s considered as t he obj ectof
I
nobl i
gationstodoornott odo,an the cont ract of sale, whi let he debt i s
actorf orbearance cannotbe substit
uted consi dered ast hepur chasepr ice. I n any
byanot heractorf or
bearanceagainstthe case, common consent i s an essent ial
obli
gee'swill
. prerequi si
t e,bei tsaleornovat ion,t ohave
thee:ectoft otal
lyext i
ngui shi ngt hedebt
orobl igation.
Art
. 1245. Dat i
on i n payment
,
wher eby property is al i
enated to the CITIZENS SURETY V.CA [ 162 S 738] -
credi
t ori
n sati
sfact
ion ofadebti n money
, Ther eisnodat ion i
n paymentwhen t here
shallbegovernedbyt hel aw ofsal
es. is no obligati
on to be extinguished.-- The
transaction coul c not be dat i
on i n
BALANE CASES: payment . xxx [
W] hen t he deed of
assignmentwasexecut edon 12/4/59,t he
FILINVEST V.PHI L.ACETYLENE [ 111 S obligati
on oft he assignor t or efund the
421] - We .nd appel l
ant 's contenti
on assignee h ad not ye tar i
sen. I n other
devoid of per suasive f orce. The mer e wor ds,ther ewasno obl igation yeton the
return oft he mor tgaged mot orvehi cle by par t of the pe ti
ti
oner , Citizens' to pay
themor t
gagor,theher ei
n appel l
ant,t ot
he Singer Sewi ng Machi ne Co. Ther e was
mor tgagee,t he herei n appel lee,does not nothing t o be exti
ngui shed on t hatdat e,
cons titut
e dat i
on i n payment i n the hence,t her ecould nothavebeen adat ion
absence,expr ess or i mpl ied oft he tr
ue inpayment .
intentionoft hepar ties.
Dacion en pago, accor ding t o
Manr esa, i s the t r
ansmi ssion of t he Art. 1246. When t he obli
gati
on
owner ship ofa thi
ng by t he debt ortothe consist
s i n t he del ivery of an
creditoras an ac c
ept ed equi valentoft he indet
ermi nate or gener ic thing, whose
performanc eofanobl i
gat i
on. I n dacionen quali
ty and ci rcumstances have notbeen
pago,as a speci almode ofpayment ,t
he stat
ed,t hecr edit
orcannotdemandat hi
ng
ofsuperiorquali
ty. Nei
thercan thedebtor Canl as'fees,t he li
en on hi s shareoft he
deli
ver a thing of i
nferi
or quali
ty. The estatei st hereby extinguished- - a quite
purpose of t he obl i
gation and ot her obvious pr opositi
on, t o be sur e. The
cir
cumst ances shal l be t aken i nto clausecannotbeconst rued asgr anti
ngt o
consider
ation. any oft he obl igors, by i
mpl icati
on, the
option t o pay i n install
ment s, or as
impl i
edlybi ndingon t heobl igeet oaccept
Art.1247. Unl ess i
tis otherwise paymentbypar t
s.xxx
sti
pulated, t he ext rajudi
cial expenses
required by the paymentshal lbe fort he
account of t he debtor. Wi th regardt o
judici
al costs,the Rul es ofCour t shal
l Art.1249.Thepaymentofdebt sin
govern. money shal l be made i n the cur rency
stipulated, and i fiti s not possiblet o
deliver such cur rency , then i n t he
Art. 1248. Unl ess therei s an cur rency whi ch isl egal tender in t he
expr ess stipulation t o that e:ect ,the Phi l
ippines.
credi t
or cannotbe compel l
ed partial
lyt o The del i
ver
y of pr omi ssory notes
receive t he pr es t
ations in whi ch t he payabl et o order,or bills ofexchange or
obligation consi sts. Nei ther may t he othermer cantiledocument sshal lproduce
debt or be r equi red t o make par t
ial thee:ectofpaymentonl ywhen t heyhave
payment s. been cashed,orwhen t hrough t hefaultof
However,when t he debtisi n part thecr editortheyhavebeeni mpaired.
li
qui dated and i n par t unli
quidated,the Inthemeant i
me,t heact ionder i
ved
credi t
ormaydemand and t hedebt ormay from t he origi
nalobl i
gat i
on shal lbe held
e:ectt he paymentoft he f
or merwi t
hout inabeyance.
waitingf ortheliquidat i
onoft helat
ter.
BALANE CASES:
BALANE CASE:
KALALO V.LUZ [ 34 S 337] - UnderRA
NASSER V.CUEVAS [ 188S 812] - Ther e 529,i ftheobligati
on wasi ncurredpr iorto
isnot hingi nt heci t
edpr ovi sot ojustif
yt he theenact menti n apar ticularkindofcoi n
readingt hatt hepe titi
onerwoul dgi vet oit
. orcur rencyot herthan t hePhi l.cur rency
Thepar .i n w/ci ti sf ound doesno mor e the same shal l be di scharged i n Phi l
.
than est abl ish "on allt hepr oper t
iesoft he currencymeasur edatt hepr evaili
ngr ateof
Estat e, r eal and per sonal, her ein exchange att he t i
me t he obl i
gation was
adjudi cat ed and ot her pr oper t
ies notye t incurred. RA 529doesnotpr ovidefort he
adjudi cat ed,achar gi ngl ien xxxt osecur e rate ofexchange f or the paymentoft he
the paymentof( Canl as')at t
orney'sf ees;
" obli
gat i
on incurred aft
ert heenact mentot
this,w/ t he express agr eementofal lt he said Act. The l ogicalconcl usion ist hat
signat ories. The pr oviso t hat" upon f ul
l the r ate of exchange shoul d be t hat
paymentoft hecor respondi ngl iabil
ityofa prevaili
ngatt het imeofpaymentf orsuch
par ty t he l i
en on hi s/her shar e i s contracts.
extingui shed, "evident ly cont empl ates the
probabi lityt hatt he hei rs obl i
ged t o pay
Canl as'f eeswoul d pay atdi :erentt imes, PONCE V.CA [ 90 S 533] - I tisto be
anddenot esnot hingmor et han thatifone not
ed thatwhile an agr
eementto pay in
oft heobl igorssepar atelypayshi sshar ein dol
lar
si sdecl
aredasnul landvoidandof
no e:ect , what t he l aw speci .call
y payablet ot he or der oft he deposi tor,or
prohibitsi s payment i n cur rency other any otherobl igati
on itcan assume. The
than legalt ender . I t does not defeat a object of certif
ying a chec k, as r egards
credit
or's cl aim f or payment , as i t both parti
es,i stoenabl et hehol dert ouse
speci.cally pr ovides t hat " every other itas money. " When t he holderpr ocures
domest icobligationxxxwhe t
herornotany the check t o be cer ti.ed, " t
he check
such pr ovi
sion ast opaymenti scontained operatesasan assi gnmentofapar toft he
therein ormadew/ r espectt heret
o,shal l funds t o t he cr edit
or s." Hence, t he
be discharged upon paymenti n any coin exception tot he r ule enunci ated under
orcur rencyw/catt het i
meofpaymenti s Sec.63 oft heCB Actt ot hee:ectt hat" a
legaltenderf orpubl ic and pvt .use." A check w/c has been cl eared and cr edi
ted
contraryr ule woul d al l
ow a per son to tot he accoun of t he cr editor shal l be
pro.t or enr ich hi mselfi nequitably at equivalentto a del i
veryt othe cr editorin
another '
sexpense. cash in an amountequalt ot he amount
credit
edt ohi saccount "shal lappl yi nthis
case.
NEW PACI FI C TIMBER V.SENERI S[ 101S
686] - I ti st o be emphasi zed t hatt he
check deposi ted by t he pe tit
ioner i nt he BISHOPOFMALOLOS V.I AC [191S411]
amount of P50, 000 i s not an or dinary - Si nceanegot i
ableinstrumentisonl ya
check but a Cashi er 's check of t he subst i
tutef ormoney and notmoney ,the
Equi t
abl e Banki ng Cor p.,a bank ofgood deliver y ofsuch an instrumentdoes not ,
standi ng and r eput ation. I twas even a by i tself
,oper ate as payment. Ac heck,
cert i
.ed cr ossed check. I tis wel lknown whet her a manager '
sc heck or or
dinary
and accept ed pr act i
ce i n t he busi ness chec k,isnotl egaltender,andan o:erofa
sect orthataCashi er'
sc hecki sdeemedas check i n paymentofa debti snota val id
cash. tender of payment and may be r efused
Mor eover ,si ncet hesai d check has receiptbyt heobligeeorcredi
tor.
been cer ti.ed byt hedr aweebank,byt he
cert i
.cat ion,t hef undsr epresent ed byt he
checkar et ransf erredf rom t hecr editoft he DBP V. SI MA WEI [ 219 S 736] -
makert ot hatoft hepayeeorhol der,and Notwithst anding t he above, i t does not
for al li nt ent s and pur poses, t he l att
er necessar il
yf oll
ow t hat t he drawer Si ma
becomest hedeposi toroft hedr aweebank, Weii sfreedf r
om l i
abi li
tyt opetit
ionerbank
w/ r ight s and dut i
es of one i n such under t he loan evi denced by t he p/n
situat i
on. Wher e a check i s cer ti
.ed by agreed t o byher. Heral legati
on thatshe
the bank on w/c i t i s dr awn, t he haspai dt hebalanceofherl oan w/t he2
cert i
.cat ion i s equi val ent t o accept ance. checkspayabl et o pe ti
tionerBank hasno
Saidcer ti.cat i
on" i
mpl i
est hatt hechecki s mer i
tf or xxx t hese checks wer e never
drawn upon suOci entf undsi nt hehands deli
vered t o peti
tioner Bank. And even
of t he dr awee, t hat t hey have been se t granting,w/o admi tti
ng,t hat there was
apar tforti ts sat isfaction,and t hatt hey deli
ver ytoope tit
ionerBank,t hedel i
veryof
shal lbesoappl ied whenevert hecheck i s checks i n paymentofan obl i
gation does
present ed f or payment . I
t i s an not const itute payment unl ess they are
under standi ng t hat t he check i s good cashed ort heirvaluei si mpaired through
then,and shal lcont inue good,and t his the faul toft he cr editor. None oft hese
agreementi sasbi ndi ngont hebankasi ts exceptionswer eal l
egedbyr esp.SimaWei .
not esi n cir culation,acer t
i.cat eofdeposi t
 1. xxx The pe titi
on shoul d be
TIBAJA V.CA [ 223S272]- I nt her ecent dismi ssed on t he gr ound t hat t he
cases ofPAL v .CA and Roman Cat hol i
c stipul at
ion oft hepar tiesi si n vi olat i
on of
Bishop ofMal olos v.IAC,t hisCour thel d RA529,aka,CuencoLaw.
that-- " A check, whe ther a manager '
s TheCour tci ted Sec.1 oft hesai d
check or or di nary check, i s not l egal law.
tender,andan o:erofachecki n payment xxx [ T]he sai dl aw pr ohi bi tst wo
ofadebti snotaval i
dt enderofpayment things i n al l domest ic cont ract s: ( 1)
and mayber efused recei ptbyt heobl igee giving t he obl igee t he r ight t or equi re
orcr edit
or.
" The r uli
ng i nt hese 2 cases paymenti naspeci .edcur rencyot hert han
mer el
y appl i
es t he st at utory pr ovisions Phi l
.cur rency;and ( 2) gi vi ng t heobl i
gee
w/cl aydown t her ulet hatacheck i snot ther i
ghtt or equi repayment" inanamount
legaltenderandt hatacr editormayval idl
y of money of t he Phi lippi nes measur ed
refusepaymentbycheck,whe theri tbea ther eby."
manager 's check, cashi er'
s check or When t hepar tiesst ipul atedt hati n
personalcheck. the event of mone tar y Puct uat ion, t he
unpai d bal ance account of t he her ein
vendee on t he af oresai d subdi vi sion l ot
PALANCAV.CA [ 238S593]- I nt hecase shal lbe i ncreased pr opor tionat el y on t he
at bar ,t he cl ear under standi ng of t he basi s oft he pr esentval ue ofpeso t ot he
par tiesi st hatt her eshoul d bean upwar d USdol l
a,t heobl i
geewasgi vent her ightt o
adj ust ment of t he pur chase pr ice the demand payment of t he bal . of t he
momentt her eisade t
er i
or at i
onoft hePhi l
. pur chasepr ice" in an amountofmoneyof
vis- a-vis t he US dol lar. Thi s i s the the Phi ls.measur ed"by a f oreign coi n or
"mone t
ar y Puct uation" cont empl ated by cur rency .
them as woul d j ust i
fyt he adj ust ment. xxx Congr ess passed RA 529,
Undert hi
s scenar io,i ti s an i dlet ask to havi ng i n mi nd t he pr eser vat ion of t he
de termi ne whe thert he cont racthas been value oft he Phi l.peso. A cur rency has
visitedbyan" ext r
aor dinar yi nPat ion"ast o valuebec.peopl ear ewi lli
ngt oaccepti ti n
triggert heoper ation ofAr t.1250. Whi le exchange f or goods and ser vices and i n
the cont r
act may cont ain an " escalator paymentf ordebt s.xxx I fi nstead oft he
clause"pr ovidingt hati nt heoccur enceof Phi l
. cur rency ,t he peopl e woul d use a
cer tain event s,t hecont r actpr i
ceshal lbe foreign cur rency as t he mode ofpayment
incr easedt oa.xedper cent ageoft hebase oras basi sf ormeasur ing t he amountof
price,st il
lt heaut onomy oft hepar ti
est o money t o be pai di n Phi l.cur rency ,such
provi de such escal ator cl auses may be usage woul d adver sely a:ect t he
li
mi ted by l aw. The pe tition shoul d be con.dence of t he publ ic on t he Phi l
.
dismi ssed on t he gr ound t hat t he mone tarysyst em.
stipul ation oft hepar t
iesi si n violat i
on of
RA529,asamended. 2. Thel i
beralization oft hef orei
gn
xxx exchange r egulati
ons on r eceipt s and
We cannot gr antt he pe tition but disbur sement s of residents ar i
si ng from
notont hegr oundsr elieduponbyt het r
ial bot h non-tradeandt radet ransact ionsdid
cour tand t heCA t hatt her eshoul d bean notr epealori n any way amend RA 529.
"ext raordinar y i
nPat i
on" bef ore a In essence, sai d CB Ci rculars mer el
y
stipul ation f or an upwar d adj ust ment of allowed t he free sal e and pur chase of
thepur chasepr icecanbeenf orced. foreign exchange out side t he banki ng
system and ot her transact ions i nvolvi
ng
for
eign cur
rency pr
evi
ousl
y subj
ectt
o CB In>at ionDefined. -- Ext raordinar yi nPat ion
control
. exist s when " there i s a decr ease or
incr ease i nt he pur chasing power oft he
Phi l
.cur r ency w/c i s unusualorbeyond
the common Puct uat i
on i nt he val ue of
Art
.1250.I ncaseanext raor
dinary said cur r ency , and such decr ease or
inPati
on or dePat ion of the cur rency incr ease coul d nothave been r easonabl y
sti
pulated should supervene,theval ueof foreseen or was mani f
est l
y beyond t he
the cur rency at t he t i
me of t he cont empl at ion oft hepar t
iesatt het i
meof
establ
ishment oft he obli
gat
ion shal lbe theest abl ishmentoft heobl i
gation.
the basis ofpayment ,unless thereis an The t rial cour t poi nted out ,
agreementt othecont r
ary. however , t hat t his i s a wor l
dwi de
occur ence, but har dly pr oof t hat t he
inPat ion i s ext raor dinary i n the sense
Bavier
a: This ar
ticle appl
ies t
o cont
racts cont empl at ed i n Ar t. 1250, w/c was
only adopt ed by t he Code Commi ssion t o
EXTRAORDI NARY means unusual provi de " a j ust sol ut i
on" t o t he
or beyond t
he common Puct uati
on, not "uncer taint y and conf usion asa r esul tof
for
eseen cont ract s ent ered int o orpayment s made
dur ing t he l ast war ." Whi le appel l
ant '
s
BALANE CASES: volumi nous st at i
stics and r ecords pr oved
that t her e has been a decl ine i n t he
VELASCO V.MERALCO [ 42 S 556] - pur chasi ng power oft he Phi l.peso,t his
From t he empl oyment of t he wor ds downwar df alloft he cur rency cannotbe
"extraordinar yi nPation ordePat i
on oft he consi der ed " extraor dinar y
."I tissi mpl ya
cur rencyst i
pul ated"inAr t.1250,itcanbe uni ver salt rend t hathas notspar ed our
seen t hatt hesameenvi sages cont r
actual count ry.
obligations wher e a speci .c currency is
slected by t he par ti
es as t he medium of
payment ; hence i t is i nappli
cabl e to DELROSARI O V.SHELL [ 164S556]- I n
obligationsar isingf rom tortand notf r
om thecaseatbar ,whi lenoexpr essr eference
cont ract. Besi des,t herei s no showi ng has been made t o me talli
c cont ent ,there
thatt hef actualassumpt i
on ofsaid articl
e none thel essi sar educt ion in parval ueor
hascomei ntoexi stence. int hepur chasingpowerofPhi l.cur r
ency.
Even assumi ng ther ehasbeen no oOci al
COMMI SSIONER OF PUBLI C HI GHWAYS devaluat i
on as t he t er m i s t echni cal
ly
V.BURGOS [ 96S 831] - Ar t
.1250does under stood,t hef actist hatther ehasbeen
appliesonlyto caseswher ea cont ractor a di muni t
ion or l essening i n t he
agreementi sinvolved. I tdoes notappl y purchasi ng poweroft hepeso,t hust here
wher etheobli
gationt opayar i
sesf rom law, has been a " depr eciation" ( opposi te of
independentofcont racts. The t aking of "appr eciation. "
) Mor eover ,when l aymen
privateproper
tybyt hegovtint heexer cise unski lled i nt he semant ics ofeconomi cs
ofitspowerofemni nentdomai n doesnot use t he t erms " devaluat ion" or
giverisetoacontr actualobli
gation. "depreci ation"t heycer tainlymeant hem i n
theiror dinar y signi.cat ion-- decr ease in
value. Hence, as cont empl ated by t he
FI
LIPI
NO PI
PE & FOUNDRY CORP V. partiesher eini nt heirleaseagr eement ,the
NAWASA [161 S 32] - Ext
raor
dinar
y term " deval uation" may be r egar ded as
synonymous w/ " depreciation,
" f or 3.Paymentbycesi
on(Subsect
ion2.
)
certai
nly bothrefert o a dec r
ease int he 4.Consi
gnati
on(Subsect
ion3.)
valueoft hecurrency . Therent alsshould
theref
ore, by t heir agr eement , be Discussion:
proporti
onatel
yincr eased. 1.Dac ionenpago

SANGRADOR V.VALDERAMA [ 168S215] Art

. 1245. Dat i
on i n payment
,
- Si nce pe t
itioner sf ail
ed to pr ove the wher eby property is al i
enated to the
super veningofext raordinar yinPat ion bet
. credi
t ori
n sati
sfact
ion ofadebti n money
,
4/6/84 and 12/7/84- - no pr oof s were shallbegovernedbyt hel aw ofsal
es.
pr esent ed on how much,f ori nstance,t he
pr ice index of goods and ser vices had Balane: Dac ion en pago ( In Roman l aw,
risen dur ing t he i ntervening per iod--an call
ed " datio i n sol utum" ,i n Fr ench,
ext raordinar y i
nPat i
on cannot be "dati
on en pai ement ,"i n Spani sh," dac ion
assumed;consequent ly
,t herei snor eason en pago. ") Dat ion i n paymenti spossi ble
orbasi s,legalorf actual,foradj ust i
ngt he onlyifther ei sadebti nmoney .I nsteadof
val ueoft hePhi l.pesoi nt hese ttlementof money ,at hingi sdel i
ver ed in sat i
sfact ion
respondent s'obl i
gat i
on. ofthedebti nmoney .
Dat ion i n paymenti s gover ned by
thelaw on sal esbec.i ti sasi fthecr edi tor
isnow t hevendee, andt hedebt orbecomes
(
noti
nBavi
era'
sout
line) now thevendor .
Dat ion en pagoi sexpl ained i nt he
Ar t.1251. Paymentshal lbemade caseofFi linvestv .Phi lAce tyl
ene,supr a.
inthepl acedesi gnat edintheobl igati
on. Ther e ar et wo ways atl ooking at
Ther ebeing no expr essst ipulation dacionenpago:
and i ft he under t
aki ng i
st o del i
ver a 1. Cl assi calway wher e dacion en
determinat et hi
ng,t he paymentshal lbe pagoi streat edasasal e.
madewher evert het hi
ng mightbeatt he 2. Moder n concept w/c t reat s
momentt heobl igationwasconst i
t ut
ed. dacionenpagoasanovat ion.
In any ot her case t he pl ace of Cast an has anot her vi ew- - Bot h
payment shal l be t he domi cil
e of t he arewr ong. A dac i
on enpagoi snotasal e
debtor. bec.t herei s no i nt ent i
on t o ent eri nt oa
Ift he debt orchanges hi s domi cil
e contractofsal e. I ti snotal soanovat ion
in bad f aith or af t
erhe has i ncur r
ed i n bec. in novat ion, t he ol d obl igation i s
delay,t he addi ti
onal expenses shal l be exti
ngui shed and a new obl igation t akes
bornebyhi m. it
s place. Buther e,t he ol d obligation i s
These pr ovisions ar e wi thout exti
ngui shed. What t akes i ts pl ace?
prejudice t o venue under t he Rul es of Nothing.Sowhati si t?I tisaspeci alf or m
Cour t
. ofpaymentw/cr esembl esasal e.

There ar e two mor e t hings to

rememberi nthecasesofFi l
investv.Phil
.
FourSpeci
alKi
ndsofPayment
s: Acytel
ene,supr a.and Lopez v .CA,114
SCRA671:
1.Dacionenpago(Art.1245.
) 1. Dacion en pago can takeplace
2. Appli
cat
ion ofpayments (Subsect
ion onlyifbot
hpar tiesconsent
.
1.
)
 2. Towhatext entistheobligation Art.1252. He who has var ious
extinguished? Upt othevalueofthet hing debtsoft hesameki ndi nfavorofoneand
given (
thet hingmustbeappr ai
sed)unl ess thesamecr editor,maydecl areatt het ime
the par ti
es agr ee on a total ofmaki ng thepayment ,towhi ch oft hem
extinguishment .(
Lopez.v.CA,supra.) the same must be appl ied. Unl ess t he
2.Appl icationofPayment parties so st i
pul ate, or when t he
application of payment i s made by t he
Balane: Appl ication of payment partyf orwhosebene.tt het erm hasbeen
(I
mput ac i
on in Spani sh)i st hedesi gnati
on const i
tuted,appl ication shallnotbemade
ofadebtwhi ch isbei ngpai dbyt hedebt or ast odebt swhi char enotye tdue.
who has sever alobl i
gat i
ons oft he same Ift he debt or accept s f r
om t he
kind inf avoroft hecr editort o whom t he creditora r eceiptin whi ch an appl ication
paymenti smade( quot ingTol enti
no. ) ofthepaymenti smade,t heformercannot
Rul es wher et he amount sent by compl ain oft he same,unl ess ther ei sa
thedebt ortot hecr editori sl esst han all causef ori nvali
dat i
ngt hecont ract.
thatisdue.
Fi r
strule: Appl yin accor dancew/
theagr eement . Art
.1253. I ft he debt produces
Sec ond rule: Debt ormayappl ythe i
nterest
,paymentofthepr i
ncipalshallnot
amount( an obviousl imi tation bec.oft he be deemed t
o have been made unt ilthe
principles of indi visi
bi l
ity and i ntegri
ty) i
nterest
shavebeencovered.
wher ether ewoul dbepar tialpayment .
Thi r
dr ule: Cr edit
orcan maket he
application. Ar t
. 1254. When t he payment
Four t
hr ule: Appl yt ot he most cannotbeappl i
ed in accordancewi t
ht he
onerousdebt .(Ar t.1252,par .1.) preceding r ules,ori fappl i
cation can not
bei nfer
red f r
om ot herci rcumst ances,the
debtwhi ch i smostoner oust othedebt or
,
amongt hosedue,shal lbedeemedt ohave
What ar e t he r ules t o beensat is.ed.
determi new/ci sthemostoner ous Ift he debt s due ar e ofthe same
debt? natur eand bur den,t hepaymentshal lbe
1. I foneisi nterestpayi ng appliedtoal loft hem pr oporti
onately.
and theot heri snot ,thedebtw/c
isinterestpayi ngismor eoner ous.
2. I foneisa secur ed debt (
noti
nBavi er
a'soutli
ne)
and t he ot heris not ,the secur ed Subsect
ion2.-- PaymentbyCessi
on
debti smor eonerous
3. I fboth areinterestf ree, Balane: Conceptofpaymentbyc essi
on.-
-
one i s ol der than t he .r st,t he Propert
yi stur
nedoverbythedebtortothe
newer one i s mor e oneous bec. credi
torwho acquires t
he r
ightto selli
t
prescription wi l
lt ake longer w/ and di vide the net proceeds among
respectt ot henewerdebt . themselves.

Fif
thr
ule: Pr
oport
ionalappl
icat
ion Whyispaymentby c essi
on aspecialf
orm
i
fthedebt
sareequal
lyonerous. of payment?-- Bec. there i s no
compl
etenessofper
formance(re:i
ntegr
ity
.)
Inmostcases,t
herewillbeabalancedue.
 acci
piendi (
when t
he credit
or w/o j
ust
Di:er ence be tween dac ion en pago and cause,ref
usest
oacceptpayment
.)
paymentbyc ession.
--I n dacion en pago,
therei sa t ransferofowner shipfrom the Consequence when t he credit
orw/o j ust
debt or t ot he cr edi
tor. I n payment by cause,ref uses t o acceptpayment -
- The
cesion,t herei s no transferofowner ship. debtor may j ust del ay payment . But
The cr editors si
mpl y acquirethe r i
ghtt o some t
hingst illhangsabovehi shead. He
sellt hepr operti
esoft hedebt orand appl y istherefore,gi ven the option to consi
gn.
thepr oceedsoft hesal etot hesatisf
acti
on Disti
ngui sh thisf rom BGB ( German Ci vi
l
ofthei rcr edit. Code) w/c st at es that mora ac c
ipi
endi
exti
nguishest heobl i
gation.
Does payment by c ession terminat
e all
debtsdue?-- Gener ally
,no. Butonl yto
the extent of t
he ne t proceeds. The Art.1256. I fthecr edit
ort owhom
exti
nguishment of the obl igat
ion is pr
o tenderofpaymenthasbeen mader efuses
tanto. Thisist o be di st
inguished f
rom withoutj ustcauset oaccepti t
,t hedebt or
Legalcessi
on wheret heext i
nguishmentof shallber eleasedf rom responsibilit
ybyt he
the obli
gat
ion i
st otal. Legalcessi on i
s consi gnationoft het hingorsum due.
governedbytheInsolvencyLaw. Consi gnation alone shal lpr oduce
thesamee:ecti nt hefollowingcases:
Ar t.1255. Thedebt ormaycedeor (
1)When t he creditoris absentor
assign hi s pr opert
yt o his credit
orsi n unknown,ordoesnotappearatt hepl ace
paymentofhi sdebt s. Thiscesion,unless ofpayment ;
therei s stipulati
on tot he contrar
y,shall (
2) When he i si ncapaci tat
ed t o
onlyr el
easet hedebt orfrom responsibi
li
ty receivet hepaymentatt het imei tisdue;
forthene tpr oceedsoft hethingassigned. (
3)When,wi t
hout j ustcause,he
Theagr eement swhi ch,on thee:ectoft he refusest ogi vear eceipt;
cession,ar emadebe tween thedebtorand (
4) When t wo or mor e per sons
hiscr edi
t orsshal lbegover ned byspecial claimt hesamer i
ghtt ocollect
;
laws. (
5)When t het it
leoft heobl i
gation
hasbeenl ost.
B.TenderofPaymentandConsi
gnat
ion

Subsect
ion3.
-- TenderofPayment& BALANE CASES:
Consignati
on
SOCO V. MI LITANTE [ 123 S 160] -
Balane: The t i
tl
e of t he subsect i
on is Consignat
ion Defined.
-- Consi gnat
ion is
wrong. Itshoul d havebeen Consi gnati
on theactofdepositingthet hi ngduew/t he
only because thatist he specialmode of courtorjudici
alaut hori
tieswhenevert he
paymentandnott het enderofpayment .It credi
torcannotacceptorr efusestoaccept
isaspeci almodeofpaymentbec.payment paymentand i tgenerall
yr equir
es a pr
ior
is made not t ot he creditor but tot he tenderofpayment.
court.
Consignati
on is an opt ion on the Requisi
tesofaVal i
dConsi gnati
on.-
-
part of t he debt or bec. consi gnati
on Thedebtormustshow ( 1)t hattherewasa
assumes t hat the creditor was in mor a debtdue;(2) thattheconsi gnati
on ofthe
obli
gat
ion hadbeen madebec.t hecredit
or
to whom t ender of payment was made
refusedt oaccepti t,orbec.hewasabsent ignores the f
actthat consignat
ion al
one
or incapaci t
ated,or bec.sever alper sons producedt hee:ectofpaymenti nthecase
claimed t o be ent i
tled t o recei
ve t he atbar bec.i twas establi
shed that2 or
amountdue;( 3) t hatpr evious not i
ce of mor eheirsofJuanGalicia,Sr.cl
aimedthe
the consi gnat ion had been gi ven t ot he samer ighttocol
lect
.
personi nterestedint heper formanceoft he
obligat i
on (Ar t
.1257) ;(4)t hattheamount
duewaspl acedatt hedi sposalofthecour t MANI LA REMANANT V.CA [ 231S 272] -
(consi gnation pr oper)
;( 5) t hataft er the xxx[ U]ponconsi
gnation byt
heVent anil
las
consi gnation had been made t he per son oft hesum due,t hetri
alcourtmayent er
interested was not i
fed t hereof (second judgment cancelling the t i
tle of t he
not i
ce. ) Fail
ure of any of t hese pe t
iti
oner over t he pr opert
y and
requir ement sisenoughgr oundt orendera transferr
ingthesamet ot herespondent s.
consi gnationi ne:ect i
ve. Thisj udgmentsshallhavethesamef orce
and e:ectasa conveyance duly executed
in accordancew/ therequir
ement soft he
ALFONSO V.CA [ 168 S 545] - Such law.
rejection r ender ed t he pr oposal of f ree
rentalw/of or ceand e:ect . Def .ther efore
wasdut yboundt opayt her entalsast hey Ar t
. 1257. I n or der that the
falldue i n or der t o abor tany ej ectment consignat i
on ofthethingduemayr el
ease
proceedi ngs agai nst hi m. .I ft he l essor theobl igor,itmust.r stbeannounced t o
refuses t o acceptt he payment ,as int he theper sonsi nt
erest
edi nthef ul.l
lmentof
caseatbar ,def .hadar emedypr ovidedf or theobligation.
by l aw,namel y consi gnat i
on i n cour tor The consi gnation shall be
deposi tinabanki nt hel essor r'
snamew/ ine:ectual ifiti s not made st ri
ctl
yi n
duenot i
cet ot hel essor. Unf ortunatel y,it consonance wi th the provisions which
isofr ecordt hatdef .did notavai lofsuch regulat
epayment .
remedy so t hatwhen pl ainti:s .led t he
ejectment pr oceedi ngs agai nst hi m, t he
rental scor respondi ngt het hemo.ofApr i
l Art
.1258. Consi gnation shallbe
toJul y1984hadnotye tbeen pai dbydef . madebydeposi ting thethi ngsdueatt he
Tender of payment i s not enough- - disposalofj udicialauthor i
ty,beforewhom
consi gnat i
on must f ollow i n or der t o thet enderofpaymentshal lbepr oved,ina
extingui sh thedebt . Ot her wise,failur et o propercase,andt heannouncementoft he
compl y w/ t he r equi rement s provided f or consi gnati
oni not hercases.
underSec.5,par .( b),PB 25 i sa gr ound The consi gnat
ion havi ng been
for eject ment . Del ayed consi gnation or made,t hei nter
ested partiesshal lalso be
deposi twi llnotdo. noti.edt hereof.

TAYAG V. CA [ 219 S 480] - xxx Art

. 1259. The expenses of
[P]e
tit
ionersarguet hattherewasnoval i
d consi
gnati
on,when pr
operly made,shal
l
tenderofpaymentnorconsi gnat i
on ofthe bechargedagai
nstt
hecredi
tor
.
sum ofP18, 520 w/ct hey acknowl edge t
o
havebeen deposited in courton 1/22/81 Art.1260. Once t
heconsi
gnat
ion
.veyear saft
ertheamountofP27, 000had has been dul
y made,thedebt
ormayask
to be paid.xxx Agai nstt his suggest
ion
thej udge to ordert hecancel lat
ion ofthe thingshal lbeext i
nguished ifitshoul d be
obli
gat i
on. lostordest r
oyed wi thoutt he faultofthe
Beforethecr edit
orhasaccept edt he debt or, and bef or
e he has i ncur red in
consignation, or bef ore a j udicial delay .
declarati
ont hatt heconsi gnati
onhasbeen When by l aw or st i
pul at
ion, t
he
properly made,t he debtor may wi t
hdr aw obligori sliableeven f orfortuit
ousevent s,
the thing ort he sum deposi t
ed,allowing the loss oft he thing does notext ingui
sh
theobl i
gationtor emaini nf or
ce. theobl i
gation,andheshal lber esponsibl e
fordamages.Thesamer uleappl i
eswhen
the nat ur e ofthe obl igati
on requires t
he
Art. 1261. I f
,t he consignat i
on assumpt ionofr isk.
having been made, t he credi
tor shoul d
authori
zethedebt ortowithdraw thesame, Bal ane: Ar t
. 1262 i s t he same as
he shalllose every pref
erence whi ch he fortuitouseventi nAr t.1174.Thee:ecti s
may have overthe thing.The co- debtors, thesame:Theobl i
gat i
oni sext i
ngui shedif
guarantor
sandsur et
iesshallbereleased. the obl i
gat i
on ist o del ivera de terminate
thing. I fthe obl i
gat ion i s t del iver a
gener ic t hing, t he obl i
gat i
on i s not
C.LossorI
mpossi
bil
ityofPer
for
mance extingui shed. Genus nunquam per i
t
("Genus never per ishes. " Thi s i s the
Bal ane: Appl i
cabl e pr ovisi ons. -
- I n an gener alr ule. Butwhati snotcover ed by
obligati
on t ogi veade ter minat ething( Art. thisr ulei s an obl igat i
on t o del iver a
1262) ;i n an obl igation t o gi ve a gener ic limited gener ic(some thing i n be t.speci.c
thing (Ar t.1263) ;i n an obl i
gat i
on t o do and gener i
ct hing), e.g. ," For P3, 000, I
(Art.1266. ) promi se t o del i
ver t o you one of my
Ther ear etwoki ndsofi mpossibili
t y wat ches. " This obligation does notr eal
ly
of per formance: (
1) an or igi
nal fallunderei t
herAr t.1262 orAr t
.1263.
impossi bi l
ity and (2) super vening Butt his obligati
on r eallyf alls underAr t
.
impossi bi l
ity
. The ki nd of i mpossi bli
t y 1262. I nt hiscase,t heobl igation maybe
talked about her e i s super vening extingui shed byt hel oss ofal lt het hings
impossi bi l
ity
. An or iginal i mpossibili
t y throughf ortuit
ousevent .
makest heobl igation voi d. I twi llbecase
of an obl igati
on w/o a cause ( see Ar t.
1409,no.2 " those wher et he cause or
object di d not exi st at t he t ime oft he Art. 1263. I n an obligati
on to
transact ion"--t hephr ase" didnotexi stat deli
ver a gener ic thi
ng, the l oss or
thet imeoft het ransact ion"i si naccur ate; destructi
on ofanyt hi
ng ofthe sameki nd
itispossi bletoent eri nt ocont ractswher e doesnotext inguishtheobl
igat
ion.
theobj ectdi d notexi statt het imeoft he
transact ion, e.g.,cont r act over a f utur e
thing;t hephr aseshoul dhavebeen " could Art
. 1264. The cour ts shall
notexi st" ) A cont ractwhosepr estati
on i s determine, whether, under t
he
impossi bl e at the begi nni ng i s not t he cir
cumst ances, the par t
ial loss of t
he
concer n ofl ossoft hingdue/i mpossibili
t y objectoftheobl i
gation i
ssoi mpor t
antas
ofper f
or mance. toextinguishtheobligati
on.

Ar
t. 1262. An obl i
gati
on which
consi
stsint he del
iver
y ofa det
ermi
nate
 Art.1265. Whenevert he thing i
s the actcannot be done by anyone.The
lostinthepossessi onoft hedebtor
,itshal
l e:ect of obj ecti
ve i mpossi bil
it
y i s t o
bepr esumed t hatt helosswasduet ohis exti
nguish t he obli gat i
on. I n subj ective
fault
,unl esstherei sprooftothecontrary
, impossibili
ty, the obl i
gat i
on becomes
and withoutpr ejudicet otheprovi
sionsof impossibleonly w/ r espectt ot heobl igor.
arti
cle 1165.Thi s presumpti
on does not There are 3 views as t ot he e:ect ofa
applyi n caseofear t
hquake,Pood,storm, subject
ive impossibi lity: ( 1) One vi ew
orothernat uralcalami ty
. holds t hat t he obl igati
on i s not
exti
nguished. The obl igor shoul d ask
Art. 1165. When anothert odot heobl igation. (2) Anot her
whati sto bedel ivered isa view hol ds t hat t he obl igati
on i s
de t
er mi nate t hing, t he exti
nguished. (3) A t hird vi ew
credit or,in addi ti
on t ot he dist
inguishes one pr es t
at i
on w/c i s ver y
rightgr ant ed him byar t
icl
e personaland one w/c ar e not personal
1170, may compel t he such that subj ective i mpossibili
tyi sa
debt ort omaket hedel ivery. cause for extinguishes a ver y per sonal
If t he t
hi ng i
s obli
gati
on butnotanobl igati
on w/ci snot
inde termi nat eorgener ic,he verypersonal.
mayask t hatt heobl igation
be compl i
ed wi t
h at t he
expenseoft hedebt or.
Ift heobl i
gordel ays,or BALANE CASES:
haspr omi sed to del i
vert he
same t hing t ot wo ormor e PEOPLE V. FRANKLI N [ 39 S 363] -
persons who do not have Appelant now cont ends t hat the l ower
the same i nterest
,he shal l court shoul d have r eleased i
tf r
om al l
be r esponsi ble f or any liabi
li
ty undert he bai lbond posted by it
fortuitouseventunt i
lhehas bec.i t
sf ai
luret o produce and sur render
e:ect edt hedel i
ver y
. theaccused wasduet ot henegligenceof
thePhi l.Govti t
selfi nissuing a passport
Ar
t.1170. Those who to said accused,t hereby enabli
ng hert o
int he performance oft heir leave the count ry. I n suppor t of this
obligat
ions ar e gui l
ty of contention,thepr ovisi
onsofAr t.1266ar e
fraud,negl igence,or delay, invoked.
and t hose who i n any
manner cont ravene t he HELD: Ar t.1266,NCC doesnotappl yt oa
tenort hereof ar eliabl
ef or suretyupon abai lbond. -
- Ar t.1266 does
damages. notappl yt oasur e
t yupon abai lbond,as
saidAr t.speaksofar elation be t.adebt or
andcr editor,w/cdoesnotexi stint hecase
Art. 1266. The debt or i n ofasur etyuponabai lbond,ononehand,
obli
gations to do shallalso be rel
eased and t he St at
e,on t he ot her. For whi le
when t he prestat
ion becomes legall
y or sureti
esuponabai lbond( orr ecogniz ance)
physicall
yi mpossi
ble wit
houtt he f
aultof can dischar gethemsel vesf r
om l iabilityby
theobligor. surrendering t heir principal,sur eties on
ordinary bonds or commer cialcont r act
s,
Bal
ane: Obj
ective and Subj ect
ive asagener alr ule,can onl yber eleased by
I
mpossi
bil
it
y.-
- In object
ive i
mpossi
bil
it
y,
paymentofthedebtorper
for
manceoft
he of t hi ngs as t hey st and. "
) Thi si sa
actst
ipul
ated. princi pl e ofi nt er nat i
onall aw w/c hol ds
thatwhen 2 count r i
esent eri nto at reaty
,
they ent er t aki ng i nt o account t he
IMMACULATA V.NAVARRO [ 160S 211] - circumst ances att he t ime i twas ent ered
Weher eby gr
antsai d alternative causeof intoandshoul dt heci rcumst anceschange
action or pr ayer. Whi let he sal e was ast omaket hef ul.l lmentoft het reatyvery
original
lyexecut edsome tingin Dec.1969, diOcul t,onemayask f orat er mi nati
on of
it was only on Feb. 3,1974 when, as thet r eat y. Thi spr incipleofi nter nati
onal
prayed forbypr vt
.res,and asor der ed by law hasspi ll
edoveri nt oCivill aw.
thecour taquo,adeedofconveyancewas Thi s doct rine i s also cal led the
formally executed. Si nce t he o:er t o doct rine of ext reme di Ocul ty and
redeem was made on 3/24/75,t hi
s was frustr ationofcommer cialobj ect .
clearly w/in t he 5-yr. per iod of l egal Ithasf our( 4)r equisites:
redempt i
onal l
owedbyt hePubl i
cLandAct . 1. Theeventorchangecoul d not
have been f or eseen at t he t ime of t he
execut ionoft hecont ract .
PNCC V.NLRC [ 193 S 401] - An obl igor 2. Theeventorchangemakest he
shal lber eleased f r
om hi sobl igation when per f
or mance ext r
emel y di Ocul t but not
the pr estati
on has bec ome l egal ly or impossi ble.
physi call
yi mpossi ble wi thoutf aulton hi s 3.Theeventmustnotbeduet oan
par t..-- Pe t
iti
onercannotbehel dl i
abl efor actofei therpar ty.
br each ofcont r
actf ort hr eer easons. xxx 4. The cont ract i sf or a f uture
The second r eason i sf ound i nt he r ule prest ation. I ft hecont r
acti sofi mmedi ate
thatan obl igorshal lber eleased f rom hi s ful.llment ,t he gr oss i nequal i
ty of t he
obl i
gat ionwhent hepr est ationhasbecome recipr ocalpr est ation mayi nvol vel esi
on or
legal l
y orphysi call
yi mpossi bl e w/o f aul t wantofcause.
onhi spar t.Thesuper veni ngi mpossi bilit
y
ofper formance,based upon some f actor I
nt hecase ofNaga,t
hecourtdid
independent of t he wi ll of t he obl i
gor , not consi
der the 4th element as an
releases t he obl igor from hi s obl igation el
ement.
af t
er r esti
tution of what he may have
recei ved,i fany ,in advancef rom t heot her The at ti
tude oft he courts on this
cont r acting par ty;t he obl igor i ncur s no doctrineisver ystrict. Thisprinciplehas
liabilityf or damages f or hi si nabi lityt o alwaysbeen st rict
ly appli
ed. To gi ve i
ta
per for m. li
beral appl icati
on i st o under mine t he
binding f orce of an obl i
gati
on. Ever y
obli
gat i
on i s diOcul t. The per formance
must be ext remely di Oculti n order for
Art.1267. When t he servi
ce has rebussi cstantibust oapply.
become so di Ocult as t
o be mani f
estly
beyond the cont
emplation ofthe parties, BALANE CASES:
theobli
gormayal sober el
easedt heref
rom,
i
nwhol eorinpar t. LAGUNA V.MANABAT [ 59 S 650] - Art
.
1680, it wi l
l be observed is a speci
al
ane: Rebus si
Bal c st
anti
bus.
-- Liter
all
y provisi
on for leases ofrurallands. No
means" thi
ngsast heystand."I ti
sshort otherlegalprovisi
on makesitappli
cableto
orc
f lausularebussi
cs t
anti
bus("agr
eement ordinaryleases.xxx
 Even i ft he ci ted ar ti
ecle wer ea the f
orceoflaw bet
.the part
ies,so as to
gener al r ul e on l ease, i ts pr ovisions substi
tute its own t erms f or t hose
never t hel ess do notext end t o pe t i
tioner s. covenantedbythepart
iesthemselves.
Oneoft her equi sitesi st hatt hecauseof
the l oss oft he f r uits oft he l eased pr op. Balane: Int hiscaset heinterpr
etati
on of
mustbean " ext raor dinar y and unf or seen the courti st oo liter
al. Accordi
ng tothe
fortui tous event ." The ci r
cumst ances of court,i t can r elease a debtor f
rom the
thecasef ailtosat isfysuch r equi site. xxx obli
gation but i t cannot make t he
[T]heal leged causesf ort hesuspensi on of obli
gation lighter. Buti fyou look atArt.
oper at ionsont hel inesl eased,namel y,the 1267,par tialreleasei spermitt
ed.
high pr ices ofspar e par ts and gasol ine
andt her educt ion oft hedol laral locat ions, NAGA TELEPHONE V.CA [ 230 S 351] -
"alreadyexi stedwhen t hecont r actofl ease Thet erm" ser vic e"shoul dbeunder stoodas
was execut ed. " The cause ofpe tit
ioner s' referring t o t he " per formanc e" of t he
inabi lityt o oper at e on t he l i
nes cannot , obligat i
on. -- Ar t.1267 speaksof" service"
ther efor e,beascr ibed t of ortuitousevent s w/chasbecomeso di Ocul t. Taki ng i nt o
orci rcumst ancesbeyondt heircont r
ol,but consi der at i
on t he r ational e behi nd t hi s
tot hei rownvol unt arydesi stance. provi sion, t he t erm " ser vice" shoul d be
xxx Per formancei snotexcusedby under stood as r efer r i
ng to the
subsequent i nabi lity t o per for m, by "per f
or mance" oft he obl igation. I nt he
unf orseen di Ocul ties, by unusual or presentcase,t he obl i
gat ion ofpr vt.r esp.
unexpec ted expenses, by danger , by consi stsi n al lowi ng pe titioner st o use i ts
inevi tabl e acci dent , by t he br eaki ng of post si n Naga Ci ty, w/c i st he ser vice
machi ner y, by st rikes, by si ckness, by cont empl atedi nsai dar ticle.Fur ther mor e,
fail
ur e ofa par tyt o avai lhi msel foft he abar er eadi ngoft hisar ticler eveal sthati t
benefit st o be had undert he c ont ract,by is nota r equi rementt her eundert hatt he
weat herc ondi t
ions,byfinanc ialst ringenc y, cont ractbe f or f utur e ser vice w/ f ut ur e
orby st agnat i
on ofbusi ness. Nei theri s unusualchange. Accdg.t oTol ent ino,Ar t.
perfor manc e exc used by t he fac tt hatt he 1267 st at es i n our l aw t he doct r i
ne of
cont rac t t urns out t o be har d and unf orseen event s. Thi si ssai dt obebased
impr ovi dent ,unpr ofitabl e or i npr ac ti
cable, on t he di scr edi ted t heor y of r ebus si c
ill
-advi sed or even f oolish, or l ess stant ibus i n publ ic i nt ernat i
onal l aw;
profitabl e,orunexpec tedl ybur densome. undert hi st heor y,t hepar t
iesst ipul atei n
the l ightofcer tain pr evai l
ing condi tions,
OCCENA V.JABSON [ 73 S 637] - and once t hese condi tions cease t o exi st
Respondent 's compl aintseeks notr el
ease the cont ract al so ceases t o exi st.
from thesubdi vi
sion contractbutt hatt he Consi der ing pr actical needs and t he
cour t" r
ender j udgement modi fying t he demands of equi t
y and good f ai th, t he
termsand condi t
ionsoft hecont ract .
..by disappear ance oft he basi s ofa cont ract
.xing t he pr oper shar es t hat shoul d givesr iset oar ightt or el iefinf avoroft he
pertaint ot he her ein par t
ies out oft he par typr ejudi ced.
gross pr oceeds f rom t he sal es of
subdi vi
ded l ots of subj ect subdi vision.
" Balane: The Courtwentt oo f
arinthis
Ar t
.1267 does notgr antthe cour tst hi
s case. I t even went to the ext
ent of
aut hori
tyt or emake,modi fy,orr eviset he sti
pulati
ng forthepar
ties i
nt henameof
cont r
actort o.xt hedi vi
sionofshar esbe t. equity
.
thepar tiesascont ractuallystipulat ed w/
 Art. 1268. When t he debt ofa requires t
he acceptance by the obli
gor.I
t
thing certain and de t
erminate pr oceeds maybemadeexpr esslyorimpl i
edly.
from a crimi nalo:ense,t he debt orshall One and t he other kind shallbe
notbe exempt ed fr
om t he paymentofi ts subject t o t he r ules whi ch govern
pr i
ce,what evermay be t he cause fort he inoOci ous donations. Express condona-
loss,unlesst het hinghavingbeen o:er ed tion shall
,further more,compl y withthe
byhi mt otheper sonwhoshoul dr eceiveit
, formsofdonat i
on.
the lat
terr efused withoutj ust
i.cation to
acceptit. 1.ModesofCondonat
ion

a.Bywi
ll
Art.1269. The obli
gati
on having
been exti
nguishedbythelossoft hething, Ar t
.935. The l egacy ofa cr edit
the credit
or shal
lhave allthe r i
ghts of againstat hird per son oroft her emissi
on
acti
on whi ch t
hedebtormayhaveagai nst orr eleaseofadebtoft hel egat eeshallbe
thi
rdper sonsbyreasonoftheloss. e:ect ive only as r egards thatpar toft he
creditordebtexi sting att he t ime oft he
deat hoft het est ator.
D.Condonat
ionorRemi
ssi
on Int he .r stcase,t he est at
e shall
compl ywi tht hel egacybyassi gni ngtot he
Balane: Condonat ion orr emi ssion is an legatee al lr ight s ofact i
on i t may have
act of l iberal
ity by vi rt
ue of w/c, w/o againstt hedebt or.I nt hesecond case,by
receiving any equi valent, the cr edit
or giving t he legatee an acqui ttance,shoul d
renounces enf orcement of an obl i
gation her equestone.
w/ci sext inguishedi nwhol eori npar t
. In bot h cases, t he l egacy shal l
Thishasf our( 4)requisi
tes: compr isealli nterestson t hecr editordebt
1. Debtt hati sexist
ing. You can whi ch maybeduet het estatoratt het i
me
remitadebtevenbef oreitisdue. ofhi sdeat h.
2. Renunci ati
on must be
gratui tous. I fr enunci ati
on i s for a
consi der ation,themodeofext i
ngui shment Ar t.936. Thel egacyref
erred t
oi n
may be some t
hing el se. I t may be the pr ecedi ng ar ti
cle shalllapse ift he
novat ion,compr omi seofdac i
onenpago. testat
or,af terhavi ngmadei t
,shoul dbring
3.Accept ancebyt hedebt or anact ionagai nstthedebt orforpaymentof
4.Capaci tyoft hepar ti
es. hisdebt ,even i fsuch paymentshoul d not
havebeene:ect edatt hetimeofhisdeat h.
The form of donat i
on must be The l egacy t ot he debtor of the
observed. I ft he condonation involves thing pl edged by hi m i s understood to
movabl es,apply Art.748. I fitinvolves dischargeonl yther ightofpledge.
immovabl es,applyArt.749.Butnot ethat
thecredi t
ormayj ustref
usetocol l
ect(w/o
observing any form.) I nthis case,t he b.ByAgr
eement
obli
gation wi l
l be extingui
shed not by
vir
tueofcondonat i
on butbywai verunder Art
. 1270. Condonat ion or
Art.6. r
emission is essenti
all
y gratuitous, and
r
equir
es the acceptance by t
he obl i
gor
.It
Art
. 1270. Condonati
on or maybemadeexpr esslyorimpliedly
.
r
emi
ssi
on is essent
ial
ly grat
uit
ous, and
 One and the other kind shallbe
subject to t he r ules whi ch govern
inoOcious donat i
ons. Express condona- Art. 749. I n order t hat t he
tion shal
l,furthermore,compl y wit
ht he donation ofan i mmovabl emaybeval i
d,it
formsofdonation. must be made i n a publ ic document ,
specif
ying t herei
n t he property donat ed
and t he value oft he charges whi ch the
Art
. 746. Accept
ance must be doneemustsat i
sfy.
madeduri
ngt heli
fet
imeoft hedonorand Theaccept ancemaybemadei nt he
oft
hedonee. same deed ofdonat ion or in a separate
public document , but it shall not take
e:ectunl essi tisdonedur ingthel if
eti
me
Art.752. The pr ovision ofart
icle ofthedonor .
750 notwit
hstanding,no per son maygi ve Ift he acceptance i s made i n a
orrecei
ve,bywayofdonat i
on,mor ethan separatei nstrument ,the donor shal lbe
hemaygi veorreceivebywi l
l. notif
ed ther eofin an authenticform,and
Thedonat i
onshal lbei noOciousi n this st ep shal l be not ed i n bot h
al
lthatitmayexceedt hislimit at
ion. instr
ument s.

Art. 750. The

donat ion may compr ehend 2.Pr
esumpt
ionofCondonat
ion
allthe pr esent propert y of
the donor ,or par tt hereof, Balane: Ar ti
cles1271 and1272r efertoa
provided her eserves,inf ull kind of impl ied renunci at
ion when t he
owner shi p or i n usuf ruct, credi
tordi vestshimsel foftheproofcr edit.
suOci ent means f or t he According t o De di ego,this pr
ovision i s
suppor t ofhi mself,and of absurd and i mmor ali nthati tauthor iz
es
allrelativeswho,att het ime thedebt orandhi shei rst
opr ovethatt hey
of the accept ance of t he paidt he debt ,when t he provi
sion i t
self
donat ion ar ebyl aw entitl
ed assumest hatt herehasbeen ar emi ssi
on,
to be suppor ted by t he w/cisgr atuitous.( Tolent
ino.)
donor . Without such
reservation, t he donat i
on
shallber educedon pe tit
ion Art.1271. Thedel i
ver yofapr i
vate
ofanyper sona:ect ed. document , evi dencing a cr edi
t, made
volunt aril
y by t he creditort ot he debt or
,
impl ies the r enunciation of t he act ion
Art. 748. The donat ion of a whi cht heformerhadagai nstt hel att
er.
movabl emaybemadeor al
lyori nwr i
ting. Ifin orderto nul lif
yt his waiverit
An or al donat ion r equires t he shoul d be claimed to be i noOci ous,t he
simul
t aneous del i
very oft he t hing or of debt or and hi s hei r
s may uphol di t by
the document r epresenting t he r ight providi ng t hat t he del ivery of t he
donated. documentwasmadei n virt
ueofpayment
Ift
heval ueoftheper sonalpr oper t
y ofthedebt .
donatedexceeds.vet hrousand pesos,t he
donation and t he acceptance shal l be Li
mited t
oPrivat
eDocument.-- Art.1271
madei n wri
ting.Ot herwise,t hedonat ion has no appl
icat
ion t
o publ
ic documents
shal
lbevoi d.
bec.thereisal waysacopyi nthear chi
ves (b)Thatan unl awfulactwasdone
w/ccanbeusedt opr ovethecredit
. withanunl awfulintent;
Private document r ef
ers t o the xxx
ori
ginalor i
ginalin orderf orArt.1271 to (j
) That a per son f ound i n
apply.(Tr
ans- Paci.c.v.CA,supra.) possession ofat hi
ngt akeni nt hedoingof
awr ongf ulactisthet akeranddoeroft he
wholeact ;other
wise,t hatt hi
ngswhi ch a
BALANE CASES: person possesses, or exer ci
ses act s of
owner shipover,areownedbyhi m;
TRANS- PACI FI
C V.CA [ 234 S 494] - I t (k)Thata per son in possession of
may notbe ami ss to add t hatAr t.1271 an order on hi msel ffor the payment of
raisesapr esumpt ion,notofpayment ,but money ,or t he deli
very ofanyt hing,has
of the r enunci ati
on of t he cr edit wher e paid t he money or del i
vered t he thi
ng
mor econvi cingevi dencewoul dber equi red accordingly;
than whatnor mal l
ywoul d becal led fort o xxx
provepayment . Ther at
ional eforal lowi ng
the pr esumpt ion of r enunci at
ion i n t he Under the 1985 Rul
es of Cour
t, as
delivery of a pr ivatei nstrument i st hat, amended
unl i
ke thatofa publ ici nst rument ,t here
coul d bej ustonecopy oft heevi denceof Rul e 131, Sec. 3. Di sput able
credit. Wher e severalor iginals ar e made presumpt i
ons.-- The followi ng
outofapr ivat
edocument ,t hei ntendment presumpt i
ons are satisfactor y i
f
oft he law woul dt hus be t or efert ot he uncont radi ct
ed,butmay be cont radi cted
deliveryonl yoft heor iginalor i
ginalr ather andover comebyot herevi dence:
than t ot he originaldupl ic ate ofw/c t he xxx
debor woul d nor mal l
yr e tain a copy . I t (c) That a per son i nt ends t he
woul dt husbeabsur di fAr t.1271 wer et o ordinary consequences of hi s vol unt ary
beappl i
eddi :erent l
y. act;
xxx
(f) That money pai d by one t o
anotherwasduet ot hel atter;
Ar
t.1272. Whenever t he private (g)Thatat hi ngdel ivered byonet o
document i n which t he debt appearsi s anotherbel ongedtot hel atter;
found int he possession ofthe debtor,it (h)Thatan obl igat i
on del iver ed up
shall be pr esumed t hat the cr editor tothedebt orhasbeenpai d;
deli
vereditvoluntaril
y,unlessthecont rary (i)Thatpr i
orr ent sori nstal l
ment s
isproved. had been pai d when ar ecei ptf ort hel ater
onesi spr oduced;
Rule131,Sec.5(
b),(
j)
,(k)
,Rul
esofCour
t. (k)Thata per son i n possessi on of
pl
easecheckagai
n anor deronhi msel ffort hepaymentoft hey
money ,or t he deliver y ofanyt hing,has
Rul e 131, Sec. 5. Disputable paid the money or del i
ver ed t he t hing
presumpti
ons.-- The foll
owi ng accordingl y;
presumptions are sati
sfact
ory i
f xxx
uncontradict
ed,butmay be cont radicted
andovercomebyot herevidence:
xxx 3.E:ectofPar
tialRemi
ssi
on
 Art.1273. Ther enunci
ati
on ofthe cont
ractofpledge,thatthethi
ng pl
edged
princi
pal debt shal l exti
nguish t he beplacedinthepossessi
on oft
hecredi
tor
,
accessory obligati
ons;but the waiver of orofat hi
rdpersonbycommonagreement.
thelattershallleavethefor
merinforce.

(Ext
inguishmentofGuar anty) Art.2105. Thedebt orcannotask
Art.2076. The obl igati
on oft he forthereturn ofthethingpledged agai
nst
guarantorisexti
ngui
shedatt hesamet i
me thewillofthecredit
or,unlessandunt ilhe
as thatoft he debt
or,and f or t
he same has paidt he debtand itsi nt
erest,with
causesasal lot
herobli
gati
ons. expensesinapr opercase.

Art.2080. The guar ant ors,even

t
hough theybesol idary
,arereleased from
t
hei
robl igat
ion wheneverby some actof E.Conf
usi
onorMer
gerofRi
ght
s
t
hecreditortheycannotbesubr ogated to
t
he ri
ghts,mor tgages,and preferences of
t
helatt
er. Ar t
. 1275. The obl igat
ion is
ext
inguished f
rom t
heti
met hecharact
ers
(Provisi
ons Common t o Pl edge and ofcredi
torand debtorare merged inthe
Mor tgage) sameper son.
Art.2085. Thefollowi
ngr equisi
tes
areessentialtothecontractsofpledgeand Balane: Confusion isthemeet
ing in one
mor tgage: person ofthequalit
iesofthecredi
torand
(1) That they be constituted to debtorwithrespecttothesameobligat
ion.
secur e the f ul
.ll
ment of a pr i
ncipal
obligati
on; Therearet
wo(2)requi
sit
es:
xxx 1. Itmusttakeplacebetween t
he
credi
tor and the pri
nci
ple debtor (
Art.
1276.)
Art
.1274. I tispresumed t hatthe 2. Theverysameobl i
gati
on must
accessory obli
gati
on ofpl edge has been beinvol
ved.ddd
remitt
ed when t het hi
ng pledged,afteri
ts
deli
veryt ot he credit
or,isf ound int he Rational
e.-- Youbecomeyourowncr editor
possession of the debtor, or of a thi
rd oryou becomeyourown debt or. So how
personwhoownst hething. canyousueyour self
.
Whatmaycauseamer gerorconfusi
on?- -
Balane:Theaccesor yobl i
gati
onofpl edged (1) Successi on, whe ther compulsory,
isextinguishedbec.pl edgeisapossessor y test
ament ary or i
ntest
ate;(2) Donat ion;
li
en. Thepr esumpti
on i nthiscasei sthat (3)Negotiat
ionofanegot i
ablei
nstrument .
the pl edgee has sur render
ed t he thing
pledged t ot he pl
edgor . Thi si s not a Because ofi t
s nat
ur e,confusi
on/
conclusive presumption according to Art
. mer ger may overlap w/ other causes of
2110,par .2. exti
ngui shment. Forexampl e,Iowe Ms.
OloresP100, 000.Shebequeat htomet hat
Art
. 2093. I n addition t
o the credit. And then shedied. I nthiscase,
requi
sitesprescr
ibed i
n ar
ticl
e2085,itis therei s ext
inguishemnt both by merger.
necessary,in or der to consti
tut
e the
Butinthiscase,mer
gercoul
d over
lap w/ Art. 1277. Conf usion does not
payment
. extinguish a joint obl
igat
ion except as
regards the share corr
esponding tot he
(
nori
nBavi
era'
sout
li
ne) creditor or debtor in whom t he two
char act
ersconcur.
Art. 1276. Mer ger which takes
placei nt heper son ofthepri
ncipaldebt or 4.Sol
idar
yObl
igat
ions
or cr editor bene.t s the guar antors.
Conf usion whi ch takespl
aceintheper son Art. 1215. Novat i
on,
ofanyoft hel atterdoesnotexti
ngui sh t
he compensat ion,conf usi
on or remission of
obligation. the debt , made by any of t he solidary
creditors or wi th any of t he solidary
Bal
ane: Thisis per
fect
lyi
n consonance debtor s, shall exti
nguish the obli
gat i
on,
w/Art.1275. without pr ejudice to the provisi
ons of
arti
cle1219.
The cr edit
or who may have
execut ed any oft hese act
s,aswel lashe
1.Pr
inci
palPar
ties whocol lectsthedebt ,shallbeli
abletot he
othersf or the shar ei n t he obli
gation
Art. 1276. Mer ger which takes correspondi ngt othem.
placei nt heper son ofthepri
ncipaldebt or
or cr editor bene.t s the guar antors. Ar ti
cle 1219. The
Conf usion whi ch takespl
aceintheper son remi ssi
on made by t he
ofanyoft hel atterdoesnotexti
ngui sh t
he creditoroft he share whi ch
obligation. a:ect s one oft he solidary
debt orsdoesnotr eleaset he
2.Amongguar
ant
ors latterfrom hisresponsibilit
y
towar ds the co-debtors, in
(E:ects of Guar anty as Be t
ween Co- case t he debt had been
Guar antors) totally paid by anyone of
Ar t
.2073. When t herear et wo or them bef or ethe remi ssion
mor e guar antors oft he same debt orand wase:ect ed.
forthe same debt ,t he one among t hem
who haspai d maydemand ofeach oft he
otherst he shar e whi ch is proportionally Art. 1216. The cr edi
tor may
owingf rom hi m. proceed agai
nstanyofoneoft hesolidary
Ifanyoft heguar antor
sshoul d be debtors or some or al l of t hem
insol
vent ,hisshar eshal lbebor nedbyt he simultaneously.Thedemandmadeagai nst
others,i ncluding t he payer ,i
nt he same one oft hem shallnotbe an obstaclet o
propor t
ion. thosewhi ch maysubsequent
lybedi rected
Thepr ovisions oft his arti
cle shall againsttheothers,solongasthedebthas
notbeappl i
cable,unl esst hepaymenthas notbeenf ull
ycollect
ed.
been madei n vi
r tueofa j udicialdemand
orunl esst hepr i
nci paldebt orisinsolvent .
Art.1217.Paymentmadebyoneof
3.Joi
ntObl
igat
ions the soli
dary debtors ext
ingui
shes the
obl
igat
ion.Iftwoormor esoli
darydebt
ors
o:ert opay,t hecr editormaychoosewhi ch Dist
inguishedf r
om Confusion.--In
o:ert oaccept . compensati
on,t here are 2 par
ties and 2
He who made t he payment may debt
s,wher eas in confusi
on,there are2
claim from hi s co-debt ors onlyt he shar e debt
sandonl y1par ty
.
whi ch cor responds t o each, wi th t he
interestfort he paymental ready made.I f
the paymenti s made bef oret he debti s Art. 1278. Compensat ion shal
l
due,noi nterestfort hei nterveningper iod takeplacewhen twopersons,inthei
rown
maybedemanded. right
,ar e cr
edit
ors and debt
ors ofeach
When one oft he solidary debt ors other
.
cannot , because of hi s i nsolvency,
reimbur se his sharet othe debt orpayi ng BALANE CASES:
theobl igat
ion,such shar eshal lbebor ne
byal lhi sco- debtors,in pr oportion tot he GAN TI ON V.CA [ 28 S 235] - Awar d of
debtofeach. attorney' s f ees as subj ect of l egal
compensat ion.-- The awar di s made i n
5.I
ndi
visi
bleObl
igat
ions favoroft hel itigant ,notofhi scounsel ,and
is j ust i.ed by way of i ndemnity f or
Art. 1209. I ft he di vi
sion is damagesr ecover ablebyt hef ormerint he
impossible,ther ightoft hecr edi t
orsmay casesenumer at ed in Art.2208. I ti st he
bepr ejudiced onlybyt heircollectiveact
s, lit
igant , not hi s counsel , who i s t he
and t he debt can be enf orced onl y by judgementcr editorand who may enf orce
proceedingagai nstallthedebt ors.Ifoneof the j udgmentby execut ion. Such cr edit
,
the l
attershoul d be insolvent,t heothers ther efore,may pr operly be the subjectof
shallnotbel iableforhisshar e. legalcompensat ion. Qui t
e obviousl y,it
woul d be unj ust t o compelpe ti
ti
oner t o
Art.1224. A j oi
ntindivisi
blegi ves payhi sdebtf orP500when admi t
tedlyhi s
rise t oi ndemnityf or damages f r
om t he credi tori si ndebt ed to him formor et han
timeanyoneoft hedebt orsdoesnocompl y P4, 000.
wi th hi s undertaking. The debtors who
may have been r eady to f ul.llt heir
pr omi ses shall not cont ri
but e t o t he PNB V.ONG ACERO [ 148S 166] - Ther e
indemni ty beyond t he cor respondi ng is no compensat ion wher ethe parties ar e
por ti
on oft hepr iceoft hethingoroft he notc redit
ors and debt ors ofeac h other .-
-
val ueoft heserviceinwhi chtheobl igation Thei nsuper ableobstacl etothesuccessof
consi sts. PNB' s cause ist he factual.nding oft he
IAC thati thas notpr oven by compe tent
F.Compensat
ion evidence thati ti s a credit
or ofI SABEL.
The onl y evidence pr esented by PNB
Balane: De.ni ti
on of Compensat i
on.-- towardst hisend consi stsof2 document s
Compensat ion i
samodeofext i
nguishing, mar ked initsbehal f. Butast heI AC has
totheconcur rentamount ,theobligati
ons cogent l
y obser ved, these document s do
ofthosepersonswhoi nt heirownrightar e notpr oveanyi ndebtednessofI SABELA t o
reci
procall
y debtors and credit
ors ofeach PNB. Al ltheydo pr ovei sthata letterof
other
.( Castan.) credit mi ght have been opened f or
Perhaps, next t o payment , ISABELA byPNB,butnott hatthecr edit
compensat i
on isthe mostcommon mode waseveravai led of[by I SABELA" sfor eign
ofexti
nguishinganobl i
gation. correspondent( MAN) ],or thatt he goods
t
herebycovered wer
einf
actshi
pped,and
r
eceivedbyISABELA. a. Legal Compensat ion (
Art
icl
es
1279,1290)w/ct akespl
aceautomati
call
y
byoper at
ion ofl
aw oncealltherequi
sit
es
FRANCI AV.I AC [ 162S753]-[ T]herecan arepresent.
be no o:- setting of t axes agai nst t he
claimst hatt het axpayermayhaveagai nst Ar t. 1279. In or der t hat
thegovt . A per son cannotr efuset opaya compensat ion may be pr oper , i t i s
taxon t hegr ound t hatt hegovtoweshi m necessar y:
anamountequalt oorgr eatert hant het ax (1)Thateachoneoft heobl i
gor sbe
being col l
ected. The col lection ofa t ax bound pr incipally
,and t hathe be att he
cannot awai tt he r esul ts of a l awsui t samet imeapr incipalcreditoroft heot her;
againstt hegovt . (2)That bot h debt s consi st ina
Acl aimf ort axesi snotsuchadebt , sum ofmoney ,or ift he things due ar e
demand, cont ract or j udgment as i s consumabl e,t heybeoft hesameki nd,and
allowed t obese t-o: xxx Thegener alr ule also oft he same qual i
tyi ft he l at
terhas
based on gr oundsofpubl icpol i
cyi swel l
- beens tated;
settl
ed t hatno se t-o: admi ssible agai nst (3)Thatt het wodebt sbedue;
demands f or t axes l evied f or gener alor (4) That t hey be l iqui dated and
localgover nment alpur poses. Ther eason demandabl e;
onw/ct hegen.r ulei sbased,i sthatt axes (5)Thatovernei theroft hem t here
arenoti nt henat ur eofcont r
act sbe t.t he by any r e t
ention or cont roversy,
par t
y and par ty butgr ow outofdut yt o, commenced by t hi
rd per sons and
andar et heposi tiveact soft hegovtt ot he communi catedi nduet imet ot hedebt or.
maki ngandenf or ci ngofw/c,t heper sonal
consent of i ndi vi dual t axpayer si s not Bal
ane:
requi red. xxx ( Republ ic v . Mambul ao
Lumber .) Requi
sit
esunderAr
t.1279:
In Cor der ov .Gonda,wehel dt hat:
"xxxi nter nalr evenuet axescan notbet he 1. Mut ualDebt orsand Cr edit
ors.--
subj ect of compensat ion: Reason: govt Thepar ti
esmustbemut uall
ydebt orsand
and t axpayer ' ar e notmut ual l
y credi tors creditors(1)int heirownr i
ght,and( 2)as
anddebt orsofeach ot herunderAr t.1278 principals. Therecanbenocompensat ion
and a" claimf ort axesi snotsuch adebt , if1 par ty occupies onlyar epresentati
ve
demand, cont ract or j udgment as i s capaci t
y. Li kewise, there can be no
allowedt obese t -o:. compensat i
on ifin oneobl i
gation,apar t
y
is a pr i
ncipal obligor and i n anot her
obligati
on,hei saguar antor
.
Art. 1286. Compensat ion t akes
placebyoper at
ion oflaw,even though t he 2. Fungi ble Things Due. -- The
debts may be payable atdi:erentpl aces, word consummabl eiswr ong. UnderAr t.
but there shal l be an i ndemni t
y f or 418,consummabl ethi
ngs ar et hose w/c
expensesofexchangeort ranspor t
ation to cannotbeusedi namannerappr opr i
atet o
theplaceofpayment . thei
rnat urew/ot hei
rbeingconsumed.I n
ar eciprocalobligati
on to deliver hor ses,
thet hings due arenotconsummabl e;ye t
there can be compensat ion. ( Tolentino.)
1.Di
:er
entKi
ndsofCompensat
ion: The pr operter
mi nol
ogy is" f
ungi ble"w/c
ref
erstothi
ngs oft
he same ki
nd w/c i
n of par
agr
aph 2 of ar
ticl
e
paymentcanbesubsti
tut
edf
oranother
. 301.

3. Mat
uri
tyofDebt
s.-
- Both debt
s
mustbeduetopermi
tcompensat
ion. Art
. 1288. Neit
her
shalltherebecompensat
ion
4. Demandabl e and Li quidat ed ifone ofthedebtsconsist
s
Debt s.-- Tolentino: Demandabl e means in ci
villi
abil
ityar
isi
ngfrom
that t he debts ar e enfor ceablei n cour t, apenalo:ense.
ther ebei ngnoappar entdef ensesi nher ent
int hem. The obl i
gations must be ci vil
obligations, excl uding t hose t hat ar e Art. 1794. Ever y
pur ely natural. xxx Bef oreaj udici al partnerisr esponsi bl et othe
decr ee of r escissi
on or annul ment ,a partnership f or damages
rescissible or voidable debti s val i
d and su:er ed by itt hrough hi s
demandabl e; hence, i t can be fault
, and he cannot
compensat ed. compensat et hem wi tht he
A debt i s l i
qui dated when i ts pro.ts and bene.t s whi ch
existenceandamountar ede termined.xxx hemayhaveear ned f ort he
And a debti s considered l iquidated,not partnershipbyhi si ndust ry.
only when i ti s expr essed al ready i n However ,t he cour ts may
de.ni te .gur es w/c do not r equi re equitably lessen t
hi s
veri.cat i
on, but al so when the responsibil
ityi fthr ough t he
deter mination of t he exact amount partner'
s extraor dinar y
depends onl y on a si mpl e ar i
thme t
ical e:ortsi n otheract ivities of
oper ation.xxx the par tnershi p, unusual
pro.tshavebeenr eal ized.
5.Debtmustnotbegar
nished.

(addi
ti
onalrequir
ement ) BALANE CASES:
6. Compensat i
on is notprohi
bit
ed
byanypr ovi
sion ofl
aw likeAr t
icl
es1287, REPUBLI C V.DE LOS ANGELES [ 98 S
1288and1794. 103] - Compensat i
on ofdebt s arising
even withoutpr oofofl iqui
dation ofc l
ai m,
Art. 1287. wher ethec laimi sundi sputed.-- Proofof
Compensat ion shal lnotbe the li
quidation ofa cl aim,i n or der that
proper when one of t he therebecompensat ion ofdebt s,ispr oper
debts ar ises f rom a ifsuchcl ai
mi sdisputed.But ,ifthecl aim
depositum or f r
om t he is undisputed,as i nt he case atbar ,t he
obli
gations ofa deposi tary statementi ssuOci entand noot herpr oof
or of a bail
ee i n mayber equired.xxx
commodat um.
Neither can
compensat ion be se t up SOLI NAPV.DELROSARI O [ 123S 640] -
againstacr editorwhohasa Petit
ionercontendsthatr espondentjudge
clai
m f or suppor t due by gravely abused her di screti
on i n not
gratuit
ous t i
tle, wi thout declari
ng the mut ual obli
gations of t
he
prej
udi ce tot he pr ovi
sions partiesext
inguihsed t
ot heext entoftheir
respect ive amount s. He r elies on Ar t
. agen ofAl bertSmi th and/ orDr .Dwi ght
1278t ot hee:ectt hatcompensat ion shal l Dill. Compensat ion t akesplaceonlywhen
take pl ace when 2 per sons,i nt hei rown two per sons i n t heir own r ight ar e
right ,ar e cr editor s and debt or s ofeach creditor
s and debt ors ofeach other ,and
ot her. Thear gumentf ailstoconsi derAr t
. that each one oft he obl i
gorsis bound
1279 w/cpr ovi dest hatcompensat i
on can principally and i s at t he same t i
me a
take pl ace onl yi f bot h obl igat ions ar e principalcr edit
oroft he ot
her. Mor eover
,
liqui dat ed. I n t he case at bar ,t he xxx Lapuz di d not consent t ot he o:-
pe titioner '
scl ai m agai nstt her esp.Lut eros setting of his obli gation w/ petiti
oner '
s
isst illpendi ngde t
ermi nat i
onbyt hecour t
. obligati
ont opayfort he500shar es.
Whi lei ti s notf orUs t o pass upon t he
mer itsoft hepl t:'scauseofact ion int hat
case,i tappear st hatt he clai m asser ted CI A.MARI TIMA V.CA [ 135 S 593] -
ther ei ni sdi sput edbyt heLut er oson bot h Compensat i
onc annott akepl acewher eone
fact ual and l egal gr ounds. Mor e, t he oft hedebt si snotl iqui datedaswhent here
count erclaim i nterposed by t hem, i f is a r unni ng i nterest st i
llt o be pai d
ul ti
mat el yf ound t o be mer itor ious, can ther eon.-- Mor e,t hel egali nterestpayabl e
def eat pe ti
tioner '
s demand. Upon t his from 2/3/51 on t he sum ofP40, 797. 54,
pr emi se,hi scl aim i nt hatcasecannotbe repr esent i
ng usef ulexpenses i ncur red by
cat egor iz ed as l iquidat ed cr edi tw/c may PAN- ORI ENTAL,i s al so st illunl iqui dated
pr oper l
y be se t-o: agai nsthi s obl i
gat ion. sincei nterestdoesnots t
opaccr uing" until
Compensat ion c annot t ake pl ac e wher e theexpensesar ef ullypai d."Thus,we.nd
one' sc laim agi nst t he ot her i s st illt he w/o basi s REPUBLI C's al legation t hat
subbj ec t of c our tl iti
gat i
on. I ti s a PAN- ORI ENTAL' S cl aim i nt he amountof
requi rement ,f or c ompensat ion t o t ake P40, 797.54 was extingui shed by
plac e,t hatt heamounti nvolved bec ertain compensat ion si ncet her ent alspayabl eby
andl iquidat ed. PAN- ORI ENTAL amountt o P59, 500 whi l
e
the expenses r each onl y P40, 797. 54.
Deduct i
ng t he l atter amount f rom t he
SYCI P V . CA [134 S 317] - former ,REPUBLI C cl aimst hatP18, 702. 46
Compensat i
on c annot t ake pl ac e wher e, woul d stillbeowi ngbyPAN- ORI ENTAL t o
wi t
hr espectt ot he money i nvol ved int he REPUBLI C. Thatar gumentl osessi ghtof
estafac ase,t he c ompl ainantwas mer ely thef actthatt ot hesum ofP40, 797. 54wi ll
acting as agentofanot her.I n set-o= the stillhave t o be added t he l egalr ate of
two per sons musti nt heir own r ightbe inter est "from Feb. 3, 1951 unt i
lf ull
y
creditor and debt or of eac h ot her.-
- pai d."
Petitionercont endst hatr esp.CA er red in
not appl ying t he pr ovisions on
compensat i
on or se tti
ng- o: debt s under INTERNATI ONAL CORPORATE BANK V.
Ar t
. 1278 and 1279, despi te evi dence IAC [ 163 S 296] - Requi site ofl egal
showi ngt hatJoseLapuzst i
llowedhi m an compensat i
onunderAr t
.1279. -
- Pe ti
ti
oner
amountofmor et han P5, 000 and i n not contends t hat af t
er f orecl
osing t he
dismi ssingt heappealconsi deringt hatt he mortgage,t hereisst
il
lduef r
om pr vt
.resps
latt
eri snotl egal l
yt heagr ivedpar ty. This asde.ci encyt heamountofP6. 81 million
cont ention is unt enabl e. Compensat i
on agai
nstw/ci thasther i
ghttoappl yorse t
cannott ake pl ace int his case si nce t he o: prvt.respondent'smoneymar ketcl aim
evidenceshowst hatJoseLapuzi sonl yan ofP1, 062,063.83. The argumenti s w/o
merit. Compensat ion shal lt ake pl ace
when t wo per sons,i nt hei rown r ightar e and debt ors ofeach ot her. When al lt he
creditor sanddebt orsofeach ot her. When requisites ment ioned i n Ar t. 1279 ar e
allthe r equi sites ment ioned i n Ar t .1279 present , compensat ion t akes e:ect by
arepr esent ,compensat ion takese:ectby operation ofl aw,even w/ot heconsentor
operat ion ofl aw,even w/ot heconsentor knowl edgeoft hedebt ors.( Ar t
.1290. )Ar t
.
knowl edgeoft hedebt ors.( Art.1290. )Ar t. 1279 r equi res mong ot her s,thati n or der
1279 r equi resamongot her s,thati n or der thatl egalcompensat ion shal ltake pl ace,
thatl egalcompensat ion shal ltake pl ace, the2debt sbedueand t heybel iquidat ed
'
the t wo debt s be due' and ' they be and demandabl e. Compensat i
on i s not
li
quidat ed and demandabl e.' proper wher et he cl aim of t he per son
Compensat ion i s not pr oper wher et he asserting t he set-o: agai nstt he ot heri s
claim oft he per son asser ti
ng t he se t-o: not cl ear nor l iqui
dat ed; compensat ion
against t he ot her i s not cl ear nor cannot ext end t o unl i
quidat ed,di sput ed
li
quidat ed;compensat ion cannotext endt o clai
m ar i
singf rom breachofcont r
act.
unliqui dat ed,di sput ed cl aim ar ising f rom
breachofcont ract.Ther ecanbenodoubt
thatpe titioneri sindebt edt opr vtr esp. i n SI LAHI S MARKETI NG V.I AC [ 180S 21] -
theamountofP1, 062, 063. 83 represent ing Compensat i
on i s not pr oper wher et he
the pr oceeds of her money mar ke t claim oft he per son asser ti
ng the se t-
o:
investment . Thi s i s admi tted. But agai nst t he ot her i s not cl ear nor
whe therpr vt.r espi sindebt edt ope tit
ioner liquidated;compensat ion cannotext endt o
in t he amount of P6. 81 mi llion unl iquidated,disput ed cl aim existingfrom
represent ing t he de.ci ency bal ance af t er br eachofcont ract .xxx
thef orecl osur eoft hemor tgageexecut edt o Undoubt edl y,pe tit
ioneradmi tst he
secur e t he l oan ext ended t o her ,i s val i
dity of its out standi ng account s w/
vigorousl y di sput ed. Thi s ci rcumst ance pr vt.resp.int heamountofP22, 213. 75as
prevent sl egalcompensat ion f rom t aki ng cont ainedi nitsanswer .Butwhe therpr vt
.
place. resp.i sl i
ablet opayt hepe t
iti
onera 20%
mar gi
n or compensat i
on on t he subj ect
sal e to Dol e Phi l
s.,I nc. is vi gorously
ONG V.CA [ 177 S 402] - Requi sites of di sputed. Thi s ci rcumst ance pr events
Compensat ion.-- Fermin obviouslycannot legalcompensat ionf rom t akingpl ace.
take r ef
uge i n Ar t
.1279. As t he r esp.
Cour tcorrectly observed in holding t hat
the above pr ovisi
on was not appl icable: Ar
t. 1280. Not wi
thst
anding the
Thei nst
antcasedoesnotcer tainl
ysat i
sf y provisions of the precedi
ng art
icle, t
he
theabovebecause ( 1) appel lantisnota guarant or may set up compensation as
debt orofappel l
e,itisonl ythel atterwho regards what t he cr
editor may owe the
isi ndebted t o appellant
;( 2) t he debt s, principaldebtor
.
even admi tti
ng,t hat the delivery oft he
zipper sto pl t:.is a debt ,do not bot h
consi stin asum ofmoneynorar et heyof Art
.1283.I foneofthepar t
iestoa
thesamequal ityandki nd.xxx sui
t over an obl
igati
on has a claim for
damagesagainsttheother
,theformermay
setit o: by proving hi
sr ight to said
PIONEER INSURANCE V.CA [ 180 S 126] damagesandt heamountt her
eof.
- Compensation shal
ltakeplacewhen 2
persons,i
nt hei
rown r i
ght,are cr
editors E:ectofLegalCompensat
ion
 oper ation ofl aw. -- I tis cl ear from t he
Ar t
.1289. Ifaperson should have recor dt hat bot h cor porat i
ons,pe t
iti
oner
agai
nst hi m several debts whi ch ar e Mi ndanao Por t
land Cement Cor p.
suscept
ibleofcompensation,ther uleson (appel lant )and r esp.Pacwel d SteelCor p.
theapplicati
on ofpaymentsshallappl yto (appel lee),wer e cr editors and debt ors of
theorderofthecompensation. each ot her,t heir debt s t o each ot her
consi sting i n .nal and execut or y
Ar t
.1290. When al ltherequisi
tes judgement soft heCFIi n 2separ atecases,
mentioned i n articl
e 1279 are pr
esent, order ingt hepaymentt oeach ot heroft he
compensat i
on takese:ectbyoper at
ion of sum ofP10Tbywayofat torney'sf ees.The
law,and extinguishes both debtstot he 2 obl igat i
ons,t herefore,r espect i
vely o:se t
concurrent amount , even though t he each ot her, compensat ion havi ng t aken
credi
torsand debt orsarenotawareoft he e:ectbyoper at i
onofl aw andext ingui shed
compensat i
on. both debt st ot he concur rentamountof
P10T,pur suantt ot he pr ovisions ofAr t.
Art.1279. I n order 1278, 1279 and 1290, si nce al lt he
that compensat i
on may be requi sites pr ovided i n Ar t. 1279 f or
proper ,itisnecessar y: aut omat iccompensat ion " even though t he
(1)Thateach one of credi torsand debt orsar enotawar eoft he
the obl i
gor s be bound compensat i
on"wer edul ypr esent.
princi pall
y,and t hathe be
att hesamet imeapr i
ncipal
credi t
oroft heot her; b. Fac ult
ative Compensation w/c
(2)That bot h debt s takes place when compensat i
on i s
consi sti n a sum ofmoney , clai
mable by only one oft he par
ties but
or i ft he t hings due ar e notoft
heot her,e.g.
,Articl
es1287,1288.
consumabl e,they beoft he
same ki nd,and al so oft he Art.1287. Compensat ion shal lnot
same qual it
yi fthe l atter be proper when one oft he debts ar ises
hasbeenst ated; fr
om a deposi tum orfrom theobl igations
(3) That t he t wo of a deposi tar
y or of a bai lee i n
debt sbedue; commodat um.
(4) That t hey be Neithercancompensat ionbese tup
li
qui datedanddemandabl e; agai
nst a cr edit
or who has a cl ai m f or
(5)Thatovernei ther support due by gr at
uitous ti
tle,wi thout
of t hem t here by any prej
udicetot hepr ovi
sionsofpar agr aph 2
retention or cont roversy, ofarti
cle301.
commenced by t
hir d
per sons and communi cated Art.301. The right
induet i
met ot hedebt or. toreceivesupportcannotbe
renounced; nor can it be
BALANE CASE: transmi t
ted t o a t hird
person. Neither can it be
MINDANAO PORTLAND CEMENT V. CA compensat ed wi
th whatt he
120 S 930] - Aut
[ omat i
cc ompensati
on, recipi
entowest heobli
gor.
r
equi
sit
es of
, present; Exti
nguishment of However,supporti n
t
wodebt sar
isi
ngf rom finaland execut
ory arrearsmaybecompensat ed
j
udgments due t o c ompensation by and r enounced, and t he
 ri
ght t
o demand the same E:ectofAssi
gnmentofCr
edi
t
may be t ransmitt
ed by
oner
ousorgrat
uitoustit
le. Art.1285. The debt or who has
consent ed to t he assi gnment of r i
ght s
Bavi
era: Not
ethatAr
t.301 oft
heNCC i
s made by a cr editor in f avor of a t hird
notf
oundi nFC person,cannotse tupagai nstt heassi gnee
thecompensat i
on whi ch woul d per tai
nt o
Balane: The depositary cannot set up him agai nst t he assi gnor , unl ess t he
compensation w/ respect tot he thi
ngs assignorwasnot i
.ed byt hedebt oratt he
deposit
ed to hi
m. Butt he deposi
torcan ti
mehegavehi sconsent ,thather eser ved
setupt hecompensati
on. hisr i
ghttot hecompensat ion.
Ift he cr edit
or communi cated t he
Art
.1288. Neithershal
lther
e be cession to hi m but t he debt or did not
compensati
on i
foneoft hedebt
sconsist
s consentt her e
to,t hel attermayse tup t he
in civi
lliabi
li
ty ar
isi
ng from a penal compensat i
on of debt s pr evious t ot he
o:ense. cession,butnotofsubsequentones.
Iftheassi gnmenti smadewi thout
theknowl edgeoft hedebt or ,hemayse tup
c. Contract
ual/ Conventional thecompensat ion ofal lcr edi tspr i
ort ot he
compensat ion w/c t akes place when same and al so l ater ones unt i
lhe had
parti
es agr ee t o set-o: even if t he knowl edgeoft heassi gnment .
requisi
tes ofl egalcompesnation ar
e not
present,e.g.,Art.1282. Balane: Ther
ear e3 si
tuati
onscover
ed i
n
thi
sar t
icl
e:
Art
.1282. The par t
ies may agree 1. Assi gnment w/ the debtor
's
upon thecompensat
ion ofdebt
swhi ch are consent;
notyetdue. 2. Assi gnment w/ the debtor
's
knowledgebutw/ohi sconsent
;and
Tolenti
no: Vol untaryCompensation isnot 3. Assi gnment w/o t
he debtor
's
li
mi t
ed toobl i
gationsw/car enotyetdue. knowledge ( and obviously w/o hi s
Thepar ti
esmaycompensat ebyagreement consent.
)
any obl i
gations, i n w/c t he object
ive
requisi
tespr ovided f
orlegalcompensation Rul
es:
arenotpr esent.xx
1. Assi
gnmentw/ the debt
or'
sconsent
.--
Debtorcannotse
tup compensati
on atall
d. Judi c
ial Compensati
on when unlesst
her i
ghti
sreser
ved.
decreedbythecourtin acasewherether
e
i
sacount ercl
aim,suchast hatpr
ovi
dedin 2. Assi
gnmentw/t hedebt or
'sknowledge
Art.1283. butw/ohisc onsent
.-
- Thedebt orcan se
t
up compensation w/ a cr edi
t alr
eady
Art
.1283.I foneofthepar t
iestoa exi
sti
ngatthet i
meoft heassi
gnment .
sui
t over an obl
igati
on has a claim for
damagesagainsttheother
,theformermay 3. Assi
gnment w/o t he debtor'
s
setit o: by proving hi
sr ight to said knowledge.-- Debt or can se t up as
damagesandt heamountt her
eof. compensation any cr edit exi
sti
ng at t
he
ti
meheacqui redknowl edgeeveni fi
tar
ose
aft
ertheact ualassi
gnment .
 subst i
tut ingt heper sonoft hedebt or,orby
subr ogat i
ngat hirdper son int her i
ght sof
BALANE CASE: thecr edi t
or .(Manr esa.)
Novat ioni sthemostunusualmode
SESBRENO V. CA [222 S 466] - ofext ingui shi ng an obl igation. I ti st he
Compensat ionmaydef eatassi gnee' sr ight s only mode wher eby an obl i
gat ion i s
beforenot iceoft he assi gnmenti sgi ven t o extingui shed and a new obl igation i s
the debt or.
- - I n other wor ds,pe titioner createdt ot akei t
spl ace. Theot hermodes
not i
.ed Del ta of hisr ights as assi gnee ofext i
ngui shinganobl igat i
on areabsol ute
after compensat ion had t aken pl ace by int he sense t hatt he ext inguishmentof
oper ation of l aw bec. t he o:se tting theobl igat ion istotal(w/ t heexcept i
on of
instrument shadbot hr eachedmat ur i
ty.I t compr omi se.) Novat i
on, on t he ot her
isa.r ml yse tt
led doct ri
net hatt her ight s hand,i sa r elati
ve mode ofext i
ngui shing
ofanassi gneear enotanygr eat ert hant he anobl igat ion.
rightsoft heassi gnor ,sincet heassi gneei s
mer ely subst it
ut ed i n t he place of t he Cl
assi
.cat
ionofNovat
ion:
assingor and t hat the assi gnee acqui res
hisr ight ssubj ecttot heequi ti
es- -i .e.,t he
defenses- -w/c t he debt orcoul d have se t
up agai nst the or iginal assi gnor bef ore 1. Subj
ect
ive(Per
sonal
)ornovat
ion
not i
ceoft heassi ngmentwasgi ven t ot he byachangeofsubject
debt or.Att het imet hatDel tawas.r stput
tonot iceoft heassi ngmenti n pe t
itioner '
s a. Ac t
ive subject
ive or a
favoron 7/14/81,DMC PN NO.2731 had change of cr edi
tor
; al so known as
alreadybeen di schar ged bycompensat ion. subrogat
ion.
Since t he assignor Phi l
.nance coul d not b. Passive subjec
tive or a
have t hen compel led payment anew by changeofdebtor
Del t
a ofDMC PN No.2731,pe titi
oner ,as
assignee of Phi l.nance, i s si mi lar l
y 2. Obj ect
ive (Real)ornovat ion by
disabl ed f rom col l
ect ing from Del tat he change i nt he objector i nt he pri
ncipal
por t
ionoft heNot eassi gnedt ohi m. condi t i
ons. Novat i
on by a change i nt he
princi pal condi ti
ons i s t he most
(
noti
nBavi
era'
sout
line) probl emat i
ckindofnovat ion bec.you have
tode t ermi newhe therornott hechangei n
Art
.1284.Whenoneorbot hdebts the condi ti
ons i s pr incipal or mer ely
areresci
ssible or voi
dable,t
hey may be incident al
. For exampl e,a change f rom
compensated against each other bef
ore straightt ermst oi nstal
lmentt ermsand a
theyarej
udi ci
all
yrecsindedoravoi
ded. change f rom non- i
nt er
est bear ing
obligat ion to an interestbear i
ng one are
changesi nt heprincipalcondi ti
ons.
G.Novat
ion

Concept ofNovat ion.-

- Novat ion isthe 3. Mi xed novat
ion w/c is a
ext
inguishment of an obl i
gation by the combi
nation of both subject
ive and
substi
tuti
on orchangeoft heobl igati
on by obj
ect
ivenovat
ion.
a subsequent one w/c ext i
ngui shes or
modi.es the .rst
,ei t
herby changi ng t
he Requi
sit
esofNovat
ion:
obj
ect of pr incipal condit
ions, or by
1. Ther e must be a pr evious val i
d impl iedly novat ged by r eason of
obli
gation; incompat ibil
ityresul ti
ngf rom thef actthat,
2.Agreementoft he part
ies to createthe wher east hej udgementwasf orP1, 538.04
new obligat
ion; payabl e atone t i
me,di d notpr ovi de f
or
3.Ext i
ngui shmentoftheoldobl igati
on.( I attorney' sfees,and was notsecur ed,t he
would considerthisan e:ect,rat herthan new obl igation i sf or P1200 payabl ei n
arequisiteofnovat
ion--Balane); instal l
ment s,st i
pul ates forat t
orney' sfees
4.Validityofthenew obli
gati
on. and i s secur ed by a mor tgage. The l ater
(Ti
uSi ucov .Habana,45P707. ) agreementdi d notmer elyext end t het i
me
to pay t he judgment ,bec.i twas t herein
recited t hat appel lants pr omised t o pay
Art
. 1292. I n order that an P1,200 t o appellee asa se tt
lementoft he
obli
gation maybeextingui
shedbyanot her saidj udgment . Saidj udgmentcannotbe
which substitut
ethesame,itisi
mperative saidt o have been se t
tled,unl ess i twas
that i
t be so decl ared i
n unequivocal extingui shed.
terms, or t hat t
he old and the new
obli
gationsbeon everypointi
ncompatible
witheachot her. MI LLAR V.CA [ 38 S 642] - Wher et he
new obl igati
on mer elyr eiteratesorr ati.es
the ol d obl i
gat ion, al though t he f or mer
BALANE CASES: e:ect s but mi nor al terations or sl i
ght
modi .cat i
ons w/ r espectt ot he cause or
FUAV.YAP [ 74P287]- Appel l
eobt ained object or condi tions of t he l at t
er, such
int he CFI -Mla.a j udgement sent enci ng changesdonote:ect uateanysubst ant i
al
appel ants t o pay P1, 538. 04 w/ l egal incompat i
bili
ty be t.t he 2 obl igat i
ons.
interest and cost s. Subsequent ly
, Onl y t hose essent ial and pr incipal
appel lantsexecut ed amor tgagei nf avorof changesi ntroduced byt henew obl igation
appel le, wher ein it was st ipulated t hat produci ngan al terat
ion ormodi .cation of
their obl i
gation under t he j udgmentwas theessenceoft heol d obl igation r esul ti n
reduced t oP1, 200 w/cwasmadepayabl e implied novat ion. I nt hecaseatbar ,t he
in 4 inst allment sofP300;t hatt osecur e mer er educt i
on oft he amountdue i n no
the paymentt he said P1,200,a camar in sense const itut es a suOci enti ndi cium of
belongi ng to appellantswasmor t
gaged t o incompat i
bili
ty,especi allyi nt hel i
ghtof( a)
appel lee; that i n case t he appel l
ant s theexpl anat ion byt hepe titi
onert hatt he
defaul ted int he payment ofany oft he reducedi ndebt ednesswast her esul toft he
installment s,theywoul dpayt enper centof par t
ialpayment smadebyt her esp.bef ore
theunpai dbal .asat t
orney'sf ees,plust he the execut i
on of t he chat tel mor tgage
costs of t he act ion to be br ought by agreement ,and( b) t hel atter'sadmi ssions
appel leebyr easonofsuchdef ault,andt he bear i
ngt hereon.
furtheramountofP338,r epr esent i
ng t he
discountconcededt oappellant s.
SANDI CO V. PIGUING [ 42 S 322] -
HELD: Theappel l
ant '
sl iabil
ityundert he Novati
on resul
tsin 2sti
pulati
ons-- onet o
judgment had been ext inguished by the ext
inguishanexisti
ngobl i
gati
on,theot her
statement evidenced by t he mor tgage to substi
tute a new one i n its place.
executed by t
hem inf avoroft he appelle. Fundament alitisthatnovation e:ectsa
Although sai
d mor tgagedi d notexpressl y substi
tuti
on or modi .cati
on of an
cancel the ol d obl igati
on, t hi
s was obl
igati
on by another or an
extingui shment ofone obl igation by t he the same t i
me. I n bot h obj ect ive and
creation ofanot her.I nt hecaseathand, subj ect ive novat ion, a dual pur pose i s
we f ailt o see what new or modi .ed achi eved- - an obl igat ion i s ext ingui shed
obligation aroseoutoft hepaymentbyt he andanew onei scr eat edi nl ieut her eof .
resp.oft hereducedamountofP4, 000and Novat ion i s never pr esumed. -- I f
subs tit
ut ed t he mone t
ar y l iability for object i
ve novat ion i st ot ake pl ace,i ti s
P6,000 of t he sai d r esp. under t he imper at ive t hat t he new obl igat ion
appel l
at e court'
sj udgment . Addi tionally
, expr essl ydecl ar et hatt heol d obl i
gat i
on i s
to sust ain novat i
on necessi tates t hatt he thereby ext i
ngui shed, or t hat t he new
same be so decl ared i n unequi vocal obligat i
on beon ever y poi nti ncompat ibl e
terms- - clearl
y and unmi stakabl y shown w/ t he ol d one. Novat ion i s never
byt heexpr essagr eementoft hepar ti
esor presumed;i tmustbeest abl ishedei t herby
byact sofequi valentimpor t-- ort hatt here the di schar ge of t he ol d debt by t he
iscompl eteandsubst antialincompat i
bili
ty expr esst ermsoft henew agr eement ,orby
bet.the2obl i
gations. theact soft hepar t
ieswhosei nt ent ion t o
dissol ve t he ol d obl i
gat ion as a
consi der at i
on oft heemer genceoft henew
NPC V.DAYRI T[ 125S849]- Novat ioni s onemustbecl ear lydi scer ni ble.
never pr esumed but must be expl ic
itly If ol d debt or i s not r el eased, no
stated; No novat i
on in the absenc e of novat i
on oc curs and t he t hi r
d per son who
explicitnovati
onori ncompat i
bili
tyonever y assumed t he obl igat i
on bec omes a c o-
point bet ween t he old and t he new debt ororsur etyorac o- sur ety. -- Agai n,i f
agreement soft heparties.
--I nt hecaseat subj ect ive novat ion by a c hange i nt he
bar,t hereisnot hingint heMay14,1982 person oft he deboti st o occur ,i ti s not
agreement w/c suppor tst he peti
tioner's enough t hatt hej ur i
di calr elat ion be t.t he
cont enti
on. Ther e i s neither expl i
cit part iest ot heor iginalcont racti sext ended
novat ionnorincompat ibil
ityonever ypoi nt toat hi rd per son. I ti sessent ialt hatt he
bet.t he"old"andt he"new"agr eement s. old debt orber el easedf romtheobl igat ion,
and t he t hird per son ornew debt ort ake
thepl acei nt henew r el ation. I Ft heol d
COCHI NGYAN V.R & B SURETY [ 151 S debt ori snotr eleased,nonovat ion occur s
339]- Novat iondefined. -- Novat ioni st he andt het hirdper sonwhohasassumedt he
extingui shment of an obl igat i
on by t he olbligat ion oft hedebt orbecomesmer elya
subs ti
tut ion orchangeoft heobl igat ion by co-debt ororsur etyoraco- sur et y.
asubsequentonew/ct erminat esi t
,ei ther Novat ion i s noti mpl ied when t he
by changi ng i ts obj ect or pr inci pal parties t ot he new obl igat ion expr essl y
condi ti
ons,orbysubst i
tutinganew debt or negat ed t hel apsi ngoft heol d obl igat ion. --
inpl aceoft heol done,orbysubr ogat inga Neither can t he pe titioner s anchor t hei r
third per son tot he ri
ghts oft he cr edi tor
. defense on i mpl i
ed novat ion. Absentan
Novat i
on t hrough achangeoft heobj ector unequi vocaldecl ar ation ofext ingui shment
principal condi tions of an exi sting ofa pr e- exist i
ng obl igat ion,a showi ng of
obligation i sr eferred to as obj ecti
ve ( or compl e tei ncompat ibility be t.t he ol d and
real)novat i
on. Novat ion byt hechangeof the new obl igat ion ( and not hing el se)
eithert he per son oft he debt ororoft he woul d sust ai n a .ndi ng of novat ion by
creditor i s descr bed as subj
i ec t
ive ( or impl icat i
on. Butwher e,as i nt his case,
personal )novat ion. Novat ion mayal so be thepar t iest ot henew obl igat ion expr essl y
bot h obj ecti
ve and subj ective (mi xed)at recogni z et he cont inui ng exi st ence and
validi ty oft he ol d one,wher e,i n ot her
words,the part
ies expressl
y negat
ed the old and t henew agr eement s.-
-I nt hecase
lapsi
ngoftheol d obl
igati
on,therecan be atbar ,ther eis not hing int he REM w/c
no novati
on. The i ssue of implied n suppor t
s appel l
ant s' submi ssion. The
ovati
onisnotreachedatal l. contr act on i tsface does not show t he
existence of an expl ici
t novat ion nor
BALI LA V.I AC [ 155S 262] - Subsequent incompat ibil
ityon ever ypoi ntbe t.theol d
mut ual agr eement s and ac t
ions of and t he new agr eement s as t he second
pet i
tioner s and pr i
vate r espondent s contr actevi dentl
yi ndicatest hatt hesame
allowi ngt hef or merext ensionoft imet opay wasexecut edasnew addi tionalsecur i
tyt o
their obl igat i
ons and i n i nstallment s the CM pr evi
ousl y entered i nto by the
novat ed and amended t he per i
od of par t
ies.
paymentdec reed by t he tri
alc ourti ni ts Novat i
on was noti ntended i nthe
judgement by c ompr omise. -
- The f act case at baras t he REM was t aken as
ther efore r emai ns t hat t he amount of addi ti
onalsec uri
tyf ort he performanc e of
P84, 000payabl eonorbef or eMay15,1981 thec ontrac t
.
decr eed byt het rialcour ti ni tsj udgment
bycompr omi sewasnovat ed and amended BROADWAY CENTRUM V.TROPI CAL HUT
byt hesubsequentmut ualagr eement sand [224 S 302] - We st ar
t w/ t he basi c
act i
ons of pe titi
oner s and pr vt.r esps. conception t hat novat ion i s t he
Pet i
tioner spai dt heaf orestatedamounton exti
ngui shment of an obl igati
on by t he
an i nst allmentbasi s and t hey wer egi ven substit
ut ion of t hat obl igati
on w/ a
bypr vt .respsnol esst han 8ext ensi onsof subsequentone,w/ct erminatesi t,either
time t o pay t heir obl igation. These by changi ng i t
s obj ect or pr incipal
transact ions t ook pl ace dur ing t he conditi
onsorbysubst i
t uti
nganew debt or
pendency oft he mot ion forr econ.oft he inplaceoft heol done,orbysubr ogatinga
order oft he t ri
alcour t dat ed 4/26/83, 3rd per son tot he r i
ght s ofthe cr editor.
dur ing t he pedency of t he pe titi
on f or xxx
cer t
ior aribef oret heI AC andaf tert he.l ing Ifobjecti
venovat ioni stotakepl ac e,
oft hepe tition bef .Us. Thi sanswer st he itis essent i
al that t he new obl igation
claim oft he r esps.on t he f ailure oft he expressly declarethatt heol d obli
gation i s
pe ti
tioner st o pr esentevi dences orpr oof s to be ext inguished or t hat the new
ofpayment i nt he l ower cour t and t he obli
gation be on ever y poi ntincompat ibl e
appel l
at ecour t. w/t heol done.xxx

PEOPLE' SBANK V.SYVEL' S[ 164S247]- Ar t

. 1291. Obl i
gati
ons may be
Whendoesnovat iontakepl ace;Novat ionis modi .edby:
never presumed.- - Novation t akes place (1) Changi ng t heir object or
when the objectorpr i
ncipalcondi ti
on of pri
nci palconditi
ons;
an obli
gation i
schanged oral tered. Itis (2)Subst i
tuti
ng the person oft
he
elementary t hat novat ion i s never debtor;
presumed;i tmustbe expl icitl
ys tat
ed or (3)Subr ogat
ing a thir
d person i
n
theremustbemani f
estincompat i
bilit
ybe t
. theright softhecredit
or.
the ol
d and the new obl igations in every
aspect.
Absence ofexist
enc e ofan expl ici
t BALANE CASE:
novati
on nor inc ompati
bil
ity bet ween t he
LAND BANK V.CA [ 181S610]- Noneof (i
) Legal(Art
.1302)--I nall
the requi rement s ofnovat i
on ei theroft he cases of Art. 1302, subrogati
on
subjec tmat t
eroft hebond agr eementorof takespl
acebyoper ationofl
aw.
subrogat ion oft he c reditor t hereunder ,is
visi
bl eint he instantc ase. -- Fi nal ly,iti s Art. 1302. I ti s presumed t hat
not easy t o under st and t he t hr ust of therei slegalsubrogat i
on:
respondent 's argumentt hatnovat ion had (
1)When a cr editor pays anot her
takenpl acei nr espectoft hei rbondswhen creditorwhoi spreferred,ev en withoutt he
theyhad t heirr egistered bondsconver t
ed debtor '
sknowl edge;
intobear erbonds. I fr espondent smeant o (
2) When a t hird per son, not
sugges tt hatt hepr inted t erms oft henew inter
est ed i
nt heobl igation,payswi tht he
bearer bonds wer e somehow novat ed by expressort aci
tappr ovaloft hedebt or;
thenot ation theyhad i nser ted int heLBP (
3) When, even wi thout t he
Forms64soast oobl igatet heLand Bank knowl edge of t he debt or, a per son
topayapor tion oft heNov .21,1974-May inter
est ed i
nt heful.llmentoft heobl iga-
20, 1975 i nterest not t ot he hol der or tion pays,wi thoutpr ejudicet ot hee:ect s
bearerofsuch bonds ( as r equi red by t he ofconf usionast othel at t
er'sshar e;
terms t hereof) but r at her t o t he
respondent s, such suggest ion must be (
ii
) Conventi
onal/
.rml yr ejected. Noneoft her equi rement s Contr
actual(Art.1301)-- Consent
ofnovat i
on ei theroft hesubj ectmat t
erof oft
he3par t
ies(ol
dcr edi
tor
,debtor
the bond agr eement or of ( par ti
al) andnew credit
or)arerequi
red.
subr ogat i
on of t he cr edi tor ( obl igee)
thereunder ,isvi siblei nt hei nst antcase. Art. 1301. Conventi
onal
Ofequali mpor tance i st he f actt hatt he subrogat
ion ofat
hird per
son requiresthe
unilateralnot ati
on oft her espondent swas consentoftheori
ginalpar t
iesand oft he
not i nser ted i n t he new bear er bond thi
rdperson.
certi
.cat es. The mi schiefi mpl i
ci ti nt he
(assumed)suggest i
on oft he r espondent s
isplaint osee.

Q: Isitpossiblefora cr editorto
tr
ansfer hi
s credi
t w/o consent of t he
Subj
ect
iveNovat
ion debt
or ?
A:Yes.Butt hisisnotnovat ionbu
a. In case of acti
ve subj
ect
ive anassignmentofright
sunderAr t
.1624.
novat
ion(Ar
t.1300-
-subr ogati
on)
: Assi
gnmenti salso a novation but
muchsi mpl
er.Buti snotsubrogation.
Art.1300. Subr ogati
on ofa t hir
d
per son i n the ri
ghts of the creditor is
eitherl egalorconventional.Thef or
meri s
notpr esumed,excepti n cases expressl
y (
1)Ki
nds
ment i
onedi nt hi
sCode;t helatt
ermustbe
clearlyes tabl
ished i
n ororderthati tmay (
a)Legal
takee:ect .
Art. 1302. Iti s pr
esumed t
hat
t
her
eislegalsubrogat
ion:
 (1)When a cr editor pays another Art.1629. I n caset heassignori n
creditorwhoi spr eferred,even wi t
houtt he good f ait
h shoul d have made hi mself
debtor '
sknowl edge; responsiblefort hesol vencyoft hedebt or
,
(2) When a t hird person, not and t he cont racti
ng par ti
es should not
inter
est ed i
nt heobl igation,payswi t
ht he have agr eed upon t he dur ati
on of t he
expressort acitappr ovaloft hedebt or
; li
abilit
y,itshalllastforoneyearonl y
,from
(3) When, even wi t
hout t he the time oft he assignmenti fthe period
knowl edge of t he debt or, a per son hadal readyexpi red.
inter
est ed i
nt hef ul.llmentoft heobl i
ga- Ift he cr edit should be payabl e
tion pays,wi t
houtpr ejudicet othee:ect s within at erm orper iod which hasnotye t
ofconf usionast othel at t
er'sshare; expired,the liabili
ty shallcease one year
afterthemat ur i
ty.
Art. 1177. The cr editor
s, after
havingpur suedt hepr opertyinpossession Art.2207.I fthepl ai
nt i
:'spr operty
ofthe debt orto satisfyt heirclaims,may has been i nsured,and he has r eceived
exerci
se allt he rights and br ing allthe indemni t
yf r
om thei nsur ancecompanyf or
acti
onsoft helatterfort hesamepur pose, thei njuryorl ossar isingoutoft hewr ong
save those whi ch ar ei nherent in hi s or br each ofcont ractcompl ained of ,t he
person;t hey may al so impugn t he act s insur ancecompanyshal lbesubr ogatedt o
whicht hedebt ormayhavedonet odefraud the r i
ghts of t he i nsured agai nst t he
them. wr ongdoerort heper son whohasvi olated
the cont ract.Ift he amountpai d by t he
(ConventionalRedempti
on) insur ance company does not f ull
y cover
Ar t. 1610. The credit
ors of t
he the i njury or loss, t he aggrieved par ty
vendor cannot make use oft he ri
ghtof shallbe ent i
tl
ed tor ecovert he de.ciency
redemption againstt
hevendee,unt i
lafter from t hepersoncausi ngthelossori njury.
they have exhausted t
he propert
y ofthe
vendor.
(
2)E:ect
Art.1729. Those who put t heir
laborupon orf urnish mat eri
alsforapi ece Art. 1304. A cr edit
or,to whom
ofwor kunder t
aken byt hecont ractorhave part
ial payment has been made, may
an at ion agai nst t he owner up t ot he exer
cisehisr i
ghtforther emainder,andhe
amount owi ng from t he l att
er t o t he shallbe pref
erred tothe person who has
contract oratt het i
met hecl aim ismade. been subrogated i
n his place i
n virt
ue of
However ,thef oll
owi ng shallnotpr ejudice theparti
alpaymentoft hesamecr edit.
thel abor ers,empl oyeesand f urnishersof
mat eri
al s: Art.1303.Subr ogationt ransf
erst o
(
1)Payment smadebyt heownert o the person subrogated the cr editwith all
thecont ractorbeforet heyar edue; the r i
ghts t her
eto apper taining, either
(
2)Renunci aionbyt hecont ractor against t he debt or or agai nst t hird
ofanyamountduehi mf rom theowner . persons,bet heyguar ant orsorpossessor s
Thisar ti
cleissubj ectt othe ofmor tgages,subjectt o stipulati
on ina
provisi
onsofspeci allaws. conventionalsubrogation.

(
Assi
gnmentofCredi
tsandOt
her
I
ncorpor
ealRi
ght
s)
 b. Passive Subject
ive Novat
ion resp.Dual an onl yunder t
ook ei t
hert opay
(
Subst
itut
ionoft
hedebtor
) orel se allow t he l and's being sol di ft he
mor tgage cr edi tor coul d not or di d not
Art.1293.Novationwhi ch consists obtain paymentf rom t hepr incipaldebt or
insubst i
tutinganew debtorint heplaceof when t he debt mat ured. Not hi ng el se.
the or i
ginal one, may be made even Cer t
ai nly
,t he buyer di d not obl igated
withoutt heknowl edgeoragainstt hewi l
l himsel ft o r epl ace t he debor i n t he
oft helatter,butnotwithoutt heconsent princi palobligat ion,and hecoul d notdo
oft hecreditor
.Paymentbyt henew debt or soi nl aw w/ot hecr editor'
sconsent .(Ar t
.
giveshimt her i
ghtsmentioned in ar
ticles 1293)
1236and1237. The obl igation t o di schar ge t he
mor tgagei ndebt ednesst herefore,r emai ned
Art. 1236. The on t he shoul der s oft he originaldebt or s
creditor i s not bound t o and t heir heir s,pe ti
ti
oner s herein,si nce
accept payment or the r ecordi s devoi d ofany evi dence of
performance by a t hird contr aryintent .xxx
person who hasno i nterest
in t he f ul.l
lment of t he
obligation,unlesst herei sa
sti
pul ationtot hecont r
ar y.
Whoever pays f or Art.1835.xxx
anot her may demand f rom A par t
ner shipi s dischar ged from
the debt or what he has any existing l
iabili
ty upon di ssolution of
paid,exceptt hati fhe pai d the par t
nership by an agr eementt ot hat
without t he knowl edge or e:ect be tween hi msel f
,t he par tnership
against t he wi ll of t he credit
or and t he per son or par tnership
debt or,he can r ecoveronl y continuing t he busi ness; and such
insofarast hepaymenthas agreementmaybei nferredfr
om t hecour se
been bene.ci al t o t he of dealing be t
ween t he cr editor havi ng
debt or. knowl edge of t he di ssolution and t he
person or par tner ship cont inuing t he
Art.1237. Whoever business.
payson behal fofthedebt or
without t he knowl edge or
againstthewi llofthel att
er, E:ectofi
nsol
vencyofnew debt
or
cannotcompelt he creditor
to subr ogate him i n hi s Art.1294. I ft he subst it
ution is
ri
ght s, such as t hose withoutt heknowl edgeoragai nstt hewi l
l
ari
sing f rom a mor tgage, ofthedebt or
,thenew debt or
'si nsolvency
guarantyorpenal ty
. or non- f
ul.ll
mentoft he obligation shall
notgiver isetoanyl iabil
ityon thepar tof
theoriginaldebtor
.
BALANE CASE:
Art
.1295. The i nsolvency ofthe
new debt or,whohasbeen pr oposedbyt he
RODRIGUEZ V.REYES [ 37 S 195] - By original debt or and accept ed by t he
buyi
ng the pr
opert
y cover
ed by TCT No. creditor,shallnotrevivet heact i
on ofthe
48979 w/ noti
ce t
hatitwas mor tgaged, latter agai
nstt he or
iginalobl igor
,except
when sai
dinsol
vencywasal r
eadyexist
ing thi
rd persons who di
d not gi
ve t
hei
r
and ofpubl
icknowledge,orknown t
ot he consent
.
debt
or,whenhedelegatedhi
sdebt.
Balane: E:ectofnovat ion ast oaccessory
obli
gat i
ons. -
- Accessor y obligati
ons may
Bal
ane: Passive Subj
ect
ive Novat
ion-
- subsistonl yi nsofar as t hey may bene.t
Art
icl
es1293and1295 thi
rd per sons who di d not gi ve t heir
consent ,e.g.,stipul
at i
onpourat rui
Art.1293t alksofexpromissi on(
not Gener alr ule: I n a novat i
on,t he
upon t
he old debt or'
siniti
ati
ve. I tcould accesoryobl igat i
oni sext i
nguished.
beupon thei nit
iativeofthecr editororof Except i
on: I n an activesubj ecti
ve
thenew debtor
.) novation, t he guar antors, pl edgors,
Art. 1295 t alks of del egac
ion mor t
gagor sar enotr el
eased.
(
changeatt heolddebt or'
sinit
iative.)
Look at Ar t. 1303, accessor y
n expr
I omissi
on,t hechangeint he obli
gati
onsarenotextinguished. Sot here
person of the debt or is not upon the is a conPict. How do you r esolve?
i
ni t
iat
iveoft heold debtor,whet
herornot Accordi
ng to commentator
s,Ar t
.1303 i s
he gave his consent. As soon as a new anexcepti
ontoAr t
.1296.
debtorand cr edit
oragree,novation t
akes
place. Ar
t.1297. Ifthenew obligation i
s
void,theorigi
naloneshallsubsist,unless
I
n both cases, t
he int
ent of t
he the par t
ies int
ended t hat the f ormer
par
tiesmustbetor el
easetheol
ddebtor. rel
ation should be ext
inguished in any
event.
What i st he di :erence i n e:ect
betweenexpr omissionanddel egac i
on? Ar t.1298. Thenovat ion i
svoidi f
In expromi ssion,t her eleaseoft he the original obl
igat
ion was void, except
old debtori sabsol ute( even ifi ttur nsout when annul mentmaybecl aimed only by
thatt henew debt ori sinsol vent .) the debtor,or when r at
i.cat
ion val
idates
In delegacion,t her eleaseoft heold act
swhi charevoidable.
debtori s notabsol ute. He may be hel d
li
able( 1) i fthe new debt orwas al r
eady Ar t
.1299.Iftheorigi
nalobligation
insolventatt het i
meoft hedel egacion;and wassubj ecttoasuspensiveorr esolutory
(2) such i nsolvency wasei therknown t o condit
ion, t he new obli
gation shal l be
theol ddebt ororofpubl i
cknowl edge. under t he same condit
ion, unless iti s
other
wi sest i
pul
ated.
Cases of expr
omi
ssi
on ar
e qui
te
r
are.

E:ectofNovat
ion

Art. 1296. When t he pr inci

pal
obl
igati
on isexti
nguished in consequence
ofa novation,accessory obl
igati
ons may
subsistonlyinsofar as t
hey may bene.t